G.R. No. L-39047 April 30, 1985 ALBERTO PASCUA, CRISPINA PASCUA, SOTERA PASCUA, !

" E#UAR#O $OLINA, petitioners, vs. %ON. AL&RE#O C. &LOREN#O, C&I o' C ( ) !, CLE$ENTE CASTRO, !" *ULIANA O. CASTRO,respondents. Hermenigildo G. Rapanan for petitioner. GUTTIERE+, *R., J.: This is a petition for review on certiorari, seeking to annul the decision of the Court of First Instance of Cagayan which dismissed the petitioners' action for reconveyance with damages on the ground that the period within which to file the same had already prescribed. Petitioners, as plaintiffs, filed a complaint for reconveyance with damages against the private respondents, spouses Clemente and uliana Castro. The latter, as defendants, in lieu of filing an answer, filed a motion to dismiss the complaint on the grounds that the complaint states no cause of action and that the same is already barred by the statute of limitations. The trial court denied the respondents' motion after finding that the grounds relied upon by them did not appear on the face of the complaint. The court subse!uently declared the respondents in default for their having failed to file an answer within the reglementary period. Thus, the petitioners proceeded to present their evidence e"#parte $fter receiving the petitioners' evidence, the trial court made the following findings% From the evidence adduced during the presentation of evidence by plaintiffs, it was shown that $lberto Pascua is one of the plaintiffs in this case& that he knows his co#plaintiffs Crispina, 'otera, surnamed Pascua, and (duardo )olina, the first two being his sisters while the last is his nephew being the son of his sister $le*andra& that his father is ordan Pascua while his mother is )agdalena +umadag& that both his parents are already dead ,("hibits $, -, and C.& that $le*andra Pascua is also dead& that during the lifetime of ordan and )agdalena +umadag, they begot five children, namely $lberto, $le*andra, Crispina, )artin and 'otera& that ordan Pascua and )agdalena +umadag ac!uired a parcel of land located at +acalafugo, Camalaniugan, Cagayan, consisting of /.01.10 hectares and described in paragraph 2 of the complaint& that lately they came to know that their brother )artin Pascua sold the property to Clemente Castro, a resident of Camalaniugan, Cagayan& that when they went to complain to the $grarian office in Tuguegarao Clemente Castro showed them the deed of sale which they "ero" copied ,("hibit +.& that the signature $lberto Pascua appearing in ("hibit + is not his signature& that the genuine signature of $lberto Pascua appears in ("hibit (& that he and this co#plaintiffs did not give consent to the sale of the land sub*ect matter of this case& that the signature 'otera Pascua, appearing in ("hibit + is not also the signature of 'otera Pascua& that he and his co#plaintiffs did not appear before the 3otary Public& that the land sub*ect matter of this case was never given to )artin Pascua by their deceased father& that )artin Pascua is already dead& that the land is now titled in the name of the defendant uliana 4. Castro ,("hibits F and F#/. while the deed of sale was e"ecuted in favor of Clemente Castro ,("hibit +.& that the land is declared for ta"ation purposes under Ta" +eclaration 3o. /56 ,("hibit 7. in the name of uliana Castro& that plaintiffs and the defendants have been neighbors since before the war and defendants know that the land sold to them and sub*ect matter of this suit was inherited by the plaintiffs from their deceased father& that they ,plaintiffs. have been deprived of the fruits of the land for more than 10 years& that the land yields from thirty to forty sacks of palay valued at P 20.00 each& and that plaintiffs agreed to pay their counsel the amount of P /,100.00 out of which they have already paid P 100.00. From ("hibit + of the plaintiffs, it appears that the deed of sale was e"ecuted in favor the defendant Clemente Castro married to uliana 4rte8a by )artin Pascua on )ay 9, /:5/. $lberto Pascua and 'otera Pascua

testified that lately they came to know that this land was conveyed by )artin Pascua to the defendants and that said defendants have been in possession of the land in !uestion for more than 10 years. They testified further, however, that they have been deprived of the fruits of the land for more than twenty years. If such is the case, it is clear that the defendants have entered and occupied the property for more than twenty years and it is inconceivable that the plaintiffs did not come to know that the defendants bought the property from their brother )artin Pascua when they admitted that they have suffered damages by virtue of the dispossession for more than twenty years. The conclusion is obvious that the plaintiffs had knowledge of the transaction made by their brother about twenty years ago. From the evidence of the plaintiffs, the Court finds that there was really fraud committed by )artin Pascua in selling the entire property which said )artin Pascua and plaintiffs inherited from their parents thus e"cluding the shares of the plaintiffs. Certainly, )artin Pascua could only sell one#fifth of the property and that the four#fifths were fraudulently conveyed by him. It is clear that there was fraud on the part of )artin Pascua in selling the shares of his brother and sisters. The action for relief on the ground of fraud, however, may be brought only within four years from the discovery of the fraud. ,$rticle /2:/, 3ew Civil Code& 'ection ;2 ,c. $ct /:0.. """ """ """ In view of the fact that the deed of sale was e"ecuted on )ay 9, /:5/, or over twenty years before the filing of the complaint on )ay 2/, /:62, it is hard to believe that plaintiffs did not come to know of this deed of sale e"ecuted by their brother. The Court, therefore, comes to the inevitable conclusion that this action, having been filed 11 years after the e"ecution of the deed of sale, has long prescribed. 3ot satisfied with the trial court's decision, petitioners elevated the case to this Court through this petition. The petitioners ask us to e"amine the following alleged errors of the respondent court% /. T<( T=I$> C4?=T (==(+ I3 +I')I''I37 T<( C$'( 43 7=4?3+ 4F P=('C=IPTI43 $>T<4?7< IT <$' P=(@I4?'>A +(3I(+ $ )4TI43 T4 +I')I'' -$'(+ 43 T<( '$)( 7=4?3+. 1. T<( T=I$> C4?=T (==(+ I3 34T 7=$3TI37 =(>I(F T4 P>$I3TIFF' $>T<4?7< T<( +(F(3+$3T' B(=( +(C>$=(+ I3 +(F$?>T. The petitioners contend that the trial court acted with grave abuse of discretion when, after hearing their evidence presented e"#parte, the respondents having been declared in default, it dismissed the case on the ground that the action had already prescribed. Bhen the same ground was earlier raised, the court denied the motion to dismiss filed by the respondents. The petitioners argue that because of its denying the motion to dismiss, the trial court is estopped from dismissing the case on the same ground. Petitioners further contend that the court's conclusion that they had knowledge of the sale e"ecuted by their deceased brother, )artin Pascua about twenty years ago is based merely on surmises and con*ectures because, in reality, it was only in /:62 when they came to learn of the deed of sale e"ecuted by their deceased brother in /:5/. In /:62, the deed was shown to them by respondent Clemente Castro at the $grarian office. Therefore, the period of prescription should be counted from the knowledge of the petitioners of the deed of sale and not from the date it was e"ecuted. Petitioners' contention are without merit. The trial court denied the motion to dismiss because the grounds relied upon by the respondents for their motiondid not appear on the face of the complaint . There was no finding that the allegation of prescription had no merit. It cannot be said, therefore, that the trial court was already estopped from passing upon the issue of prescription. The issue was not ad*udicated on its merits and the doctrine of res *udicata had not set in yet. Be likewise find the petitioners' contention, that they came to know of the deed of sale by )artin Pascua in favor of the respondents only in /:62, highly improbable. $s the trial court correctly observed, it is inconceivable that the petitioners did not come to know about the purchase by the respondents of property from )artin Pascua. They admitted that they have been neighbors of the respondents since before the war or period of about 20 years and that the latter had CIVPRO CASES: PASCUA TO HEIRS OF PADILLA |1

deprived them of the fruits of the land in !uestion for more than 10 years. $lberto Pascua, one of the petitioners testified that his parents from whom they inherited the property died more than 15 years ago yet the children never e"erted any effort to have the property partitioned. This fact indicates that petitioners had knowledge of the sale, which e"plains why they had no interest at all in any pro*ect of partition. )ore important is the fact that after the respondents purchased the land they worked to secure an 4riginal Certificate of Title on the basis of a free patent application. This was way back in /:59, /5 years before the petitioners decided to file the action below. Clearly, the petitioners' action is now barred by the statute of limitations. In the case of Iglesia ni Cristo v. Hon. Judge, Court of First instance of Nueva Ecija, r. I ,/12 'C=$ 512., !uoting the case of !a"ora v. #a$ang%hirang ,26 'C=$ 2;C., we ruled% The rule in this *urisdiction, regarding public patents and the character of the certificate of title that may be issued by virtue thereof, is that where land is granted by the government to a private individual, the corresponding patent therefore, is recorded, and the certificate of title is issued to the grantee& thereafter, the land is automatically brought within the operation of the >and =egistration $ct, the title issued to the grantee becoming entitled to all the safeguards provided in 'ection 29 of said $ct. In other words, upon the e"piration of one year from its issuance, the certificate of title becomes irrevocable and indefeasible like a certificate issued in a registration proceeding. It is !uite obvious, therefore, that the respondents' title has already become indefeasible and irrevocable, the one#year period provided by law having e"pired in /:5:. )oreover, even if we add the lower court's finding that there was fraud on the part of )artin Pascua when he effected the sale of the disputed lot in favor of the respondents, the petitioners are still barred from recovering the lot because their action should have been filed within four ,;. years from their discovery of the fraud, which in turn, is deemed at the latest to have taken place in /:59, when the respondents were issued an original certificate of title. This was our ruling in the case of al"in v. &edalla ,/09 'C=$ CCC. where we stated% $n action for reconveyance of real property resulting from fraud may be barred by the statute of limitations, which re!uires that the action shall be filed within four ,;. years from the discovery of the fraud. 'uch discovery is deemed to have taken place when the petitioners herein were issued original certificates of title through either homestead or free patent grants, for the registration of said patents constitutes constructive notice to the whole world. ,7erona v. de 7u8man, // 'C=$ /52, and cited cases thereof .. In the case at bar, the latest patent was issued on 4ctober /;, /:5:. There is, therefore, merit in petitioners' contention that if any action for reconveyance should be commenced, the same should be filed on or before 4ctober /;, /:C2. -ut private respondents' complaint for reconveyance and annulment of titles with damages was filed only on $ugust 20, /:62 or more than /; years had already elapsed from the date of the issuance of the respective titles of the defendants. Conse!uently, the action for reconveyance of land titled in the names of defendants ,petitioners herein. had already prescribed. The petitioners raise as a second issue that the respondent court had no alternative but to grant the relief prayed for in their complaint as this was evident in the tenor of the summons issued by said court which in part stated% ... if you fail to appear within the time aforesaid, the plaintiff will take *udgment against you by default and demand from this Court the relief applied for in said complaint. ... Petitioners also anchor their contention on =ule /9, 'ection / of the =ules of Court which provides% udgment by default.DIf the defendant fails to answer within the time specified in these rules, the court shall, upon motion of the plaintiff and proof of such failure, declare the defendant in default. Thereupon the court shall proceed to receive the plaintiff's evidence and render *udgment granting him such relief as the complaint and the facts proven may warrant.

This provision applies where no answer is made to a counter#claim, cross# claim or third#party complaint within the period provided in this =ule. 3owhere in the afore!uoted provision nor in the summons issued by the respondent court is it stated that the petitioners are automatically entitled to the relief prayed for, once the respondents are declared in default. Favorable relief can be granted only after the court has ascertained that the evidence offered and the facts proven by the presenting party, petitioners in this case, warrant the grant of the same. 4therwise, it would be meaningless to re!uire presentation of evidence if everytime the other party is declared in default, a decision would automatically be rendered in favor of the non# defaulting party and e"actly according to the tenor of his prayer. This is not contemplated by the =ules nor is it sanctioned by the due process clause. In the case of !im 'anhu v. Ramolete ,CC 'C=$ ;51#;52., we had occasion to elaborate on this point. Be ruled% The =ules of Court contain a separate rule on the sub*ect of default, =ule /9. -ut said rule is concerned solely with default resulting from failure of the defendant or defendants to answer within the reglementary period. =eferring to the simplest form of default, that is, where there is only one defendant in the action and he fails to answer on time, 'ection I of the rule provides that upon 'proof of such failure, ,the court shall. declare the defendant in default. Thereupon the court shall proceed to receive the plaintiff's evidence and render *udgment granting him such relief as the complaint and the facts proven may warrant.' This last clause is clarified by 'ection 5 which says that 'a *udgment entered against a party in default shall not e"ceed the amount or be different in kind from that prayed for'. ?ne!uivocal, in the literal sense, as these provisions are, they do not readily convey the full import of what they contemplate. To begin with, contrary to the immediate notion that can be drawn from their language, these provisions are not to be understood as meaning that default or the failure of the defendant to answer should be 'interpreted as an admission by the said defendant that the plaintiff's cause of action find support in the law or that plaintiff is entitled to the relief prayed for.' ,)oran, supra, p. 525 citing )acondray E Co. v. (usta!uio, C; Phil. ;CC, citing with approval Chaffin v. )cFadden, ;/ $rk ;1& ohnson v. Pierce, /1 $rk. 5::& )ayden v. ohnson, 5: 7a. /05& People v. =ust, 1:1 Ill. 219& Fen v. >eopold, 1/ Ill. $. /C2& Chicago, etc. (lectric =. Co. v. Frempel, //C Ill. $. 152.. """ """ """ In other words, a defaulted defendant is not actually thrown out of court. Bhile in a sense it may be said that by defaulting he leaves himself at the mercy of the court, the rules see to it that any *udgment against him must be in accordance with law. The evidence to support the plaintiff's cause is, of course, presented in his absence, but the court is not supposed to admit that which is basically incompetent. $lthough the defendant would not be in a position to ob*ect, elementary *ustice re!uires that only legal evidence should be considered against him. If the evidence presented should not be sufficient to *ustify a *udgment for the plaintiff, the complaint must be dismissed. $nd if an unfavorable *udgment should be *ustifiable, it cannot e"ceed in amount or be different in kind from what is prayed for in the complaint. In the instant case, from the evidence presented e"#parte by the petitioners and from their very own allegations, the only *udgment that is warranted is the dismissal of the complaint. It is barred by the statute of limitations. B<(=(F4=(, the petition is hereby +I')I''(+ for lack of merit. 3o costs. '4 4=+(=(+.

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G.R. No. 151098 $ r,- .1, .00/ ERLIN#A GA*U#O, &ERNAN#O GA*U#O, *R., ESTELITA GA*U#O, BALTA+AR GA*U#O !" #ANILO ARA%AN C%UA, Petitioners, vs. TRA#ERS RO0AL BAN1, /=espondent. +(CI'I43 PANGANIBAN, CJ: The mere fact that a defendant is declared in default does not automatically result in the grant of the prayers of the plaintiff. To win, the latter must still present the same !uantum of evidence that would be re!uired if the defendant were still present. $ party that defaults is not deprived of its rights, e"cept the right to be heard and to present evidence to the trial court. If the evidence presented does not support a *udgment for the plaintiff, the complaint should be dismissed, even if the defendant may not have been heard or allowed to present any countervailing evidence. T-2 C 32 -efore us is a Petition for =eview 1 under =ule ;5 of the =ules of Court, assailing the une 1:, 100/ +ecision2 and +ecember C, 100/ =esolution; of the Court of $ppeals ,C$. in C$# 7= C@ 3o. ;299:. The C$ disposed as follows% G?P43 T<( @I(B B( T$F( 4F T<I' C$'(, T<?', the partial *udgment appealed from, must be, as it hereby is, @$C$T(+ and '(T $'I+(, and another one entered +I')I''I37 the complaint at bench. Bithout costs.G5 The assailed =esolution denied petitionersH )otion for =econsideration C for lack of merit. The Facts The C$ narrated the facts as follows% GIPetitionersJ filed a complaint before the =egional Trial Court of Kue8on City, -ranch :0, against IrespondentJ Traders =oyal -ank, the City 'heriff of Kue8on City and the =egister of +eeds of Kue8on City. +ocketed thereat as Civil Case 3o. K#;/102, the complaint sought the annulment of the e"tra#*udicial foreclosure and auction sale made by ItheJ city sheriff of Kue8on City of a parcel of land covered by TCT 3o. /C6// of the =egister of +eeds of Kue8on City, the conventional redemption thereof, and prayed for damages and the issuance of a writ of preliminary in*unction. GThe complaint alleged that in mid /:66I, PetitionerJ +anilo Chua obtained a loan from IrespondentJ bank in the amount of P65,000.00 secured by a real estate mortgage over a parcel of land covered by TCT 3o. /C6//, and owned in common by the IpetitionersJ& that when the loan was not paid, IrespondentJ bank commenced e"tra#*udicial foreclosure proceedings on the property& that the auction sale of the property was set on /0 une /:9/, but was reset to 2/ $ugust /:9/, on IPetitioner ChuaHsJ re!uest, which, however, was made without the knowledge and conformity of the other IpetitionersJ& that on the re# scheduled auction sale, ItheJ 'heriff of Kue8on City sold the property to the IrespondentJ bank, the highest bidder therein, for the sum of P1;,://.20& that the auction sale was tainted with irregularity because, amongst others, the bid price was shockingly or unconscionably, low& that the other IpetitionersJ failed to redeem the property due to their lack of knowledge of their right of redemption, and want of sufficient education& that, although the period of redemption had long e"pired, IPetitionerJ Chua offered to buy back, and IrespondentJ bank also agreed to sell back, the foreclosed property, on the understanding that Chua would pay IrespondentJ bank the amount of P;0,/25.52, representing the sum that the bank paid at the auction sale, plus interest& that IPetitionerJ Chua made an initial payment thereon in the amount of P;,000.00, covered by Interbank Check 3o. 0:/62:29, dated /C February /:9;, duly receipted by IrespondentJ bank& that, in a sudden change of position, IrespondentJ bank wrote Chua, on 10 February /:9;, asking that he could repurchase the property, but based on the current market value thereof& and that sometime later, or on 11 )arch /:9;, IrespondentJ bank wrote Chua anew, re!uiring him to tender a new offer to counter the offer made thereon by another buyer.

GTraversing IpetitionersHJ complaint, IrespondentJ bank, upon 05 uly /:9;, filed its answer with counterclaim, thereunder asserting that the foreclosure sale of the mortgaged property was done in accordance with law& and that the bid price was neither unconscionable, nor shockingly low& that IpetitionersJ slept on their rights when they failed to redeem the property within the one year statutory period& and that IrespondentJ bank, in offering to sell the property to IPetitionerJ Chua on the basis of its current market price, was acting conformably with law, and with legitimate banking practice and regulations. GPre#trial having been concluded, the parties entered upon trial, which draggedLlengthened to several months due to postponements. ?pon // une /:99, however, a big conflagration hit the City <all of Kue8on City, which destroyed, amongst other things, the records of the case. $fter the records were reconstituted, IpetitionersJ discovered that the foreclosed property was sold by IrespondentJ bank to the Ceroferr =ealty Corporation, and that the notice of lis pendens annotated on the certificate of title of the foreclosed property, had already been cancelled. $ccordingly, IpetitionersJ, with leave of court, amended their complaint, but the Trial Court dismissed the case Mwithout pre*udiceH due to IpetitionersHJ failure to pay additional filing fees. G'o, upon // une /::0, IpetitionersJ re#filed the complaint with the same Court, whereat it was docketed as Civil Case 3o. :0#56;:, and assigned to -ranch :9% the amended complaint substantially reproduced the allegations of the original complaint. -ut IpetitionersJ this time impleaded as additional defendants the Ceroferr =ealty Corporation andLor Cesar =o!ue, and >orna =o!ue, and included an additional cause of action, to wit% that said new defendants conspired with IrespondentJ bank in IcancelingJ the notice of lis pendens by falsifying a letter sent to and filed with the office of the =egister of +eeds of Kue8on City, purportedly for the cancellation of said notice. G'ummons was served on IrespondentJ bank on 1C 'eptember /::0, per 'heriffHs =eturn dated 09 4ctober /::0. 'upposing that all the defendants had filed their answer, IpetitionersJ filed, on 12 4ctober /::/, a motion to set case for pre#trial, which motion was, however, denied by the Trial Court in its 4rder of 15 4ctober /::/, on the ground that IrespondentJ bank has not yet filed its answer. 4n /2 3ovember /::/I, petitionersJ filed a motion for reconsideration, thereunder alleging that they received by registered mail, on /: 4ctober /::0, a copy of IrespondentJ bankHs answer with counterclaim, dated 0; 4ctober /::0, which copy was attached to the motion. In its 4rder of /; 3ovember /::/, the trial Court denied for lack of merit, the motion for reconsideration, therein holding that the answer with counterclaim filed by IrespondentJ bank referred to another civil case pending before -ranch :0 of the same Court. GFor this reason, IpetitionersJ filed on 01 +ecember /::/ a motion to declare IrespondentJ bank in default, thereunder alleging that no answer has been filed despite the service of summons on it on 1C 'eptember /::0. G4n /2 +ecember /::/, the Trial Court declared the motion submitted for resolution upon submission by IpetitionersJ of proof of service of the motion on IrespondentJ bank. GThus, on /C anuary /::1, upon proof that IpetitionersJ had indeed served IrespondentJ bank with a copy of said motion, the Trial Court issued an 4rder of default against IrespondentJ bank. G?pon 0/ +ecember /::1, on IpetitionersHJ motion, they were by the Court allowed to present evidence e" parte on 06 anuary /::2, insofar as IrespondentJ bank was concerned. GThereafter, or on 09 February /::2, the Trial Court rendered the new !uestioned partial decision.6 G$ggrieved, IrespondentJ bank filed a motion to set aside ItheJ partial decision by default against Traders =oyal -ank and admit IrespondentJ Traders =oyal -ankHs " " " $nswer with counterclaim% thereunder it averred, amongst others, that the erroneous filing of said answer was due to an honest mistake of the typist and inadvertence of its counsel. GThe Itrial courtJ thumbed down the motion in its 4rder of 1C uly /::2.G 9 =espondent bank appealed the Partial +ecision : to the C$. +uring the pendency of that appeal, Ceroferr =ealty Corporation andLor Cesar andLor >orna =o!ue filed a )anifestation
CIVPRO CASES: PASCUA TO HEIRS OF PADILLA |3

with )otion/0 asking the C$ to discharge them as parties, because the case against them had already been dismissed on the basis of their Compromise $greement // with petitioners. 4n )ay /;, /::C, the C$ issued a =esolution /1 granting Ceroferr et al.Hs )anifestation with )otion to discharge movants as parties to the appeal. The Court, though, deferred resolution of the matters raised in the Comment /2 of respondent bank. The latter contended that the Partial +ecision had been novated by the Compromise $greement, whose effect of res *udicata had rendered that +ecision functus officio. =uling of the Court of $ppeals The C$ ruled in favor of respondent bank. +eemed, however, to have rested on shaky ground was the latterHs G)otion to 'et $side Partial +ecision by +efault $gainst Traders =oyal -ank and $dmit +efendant Traders =oyal -ankHs $nswer.G /; The reasons offered by the bank for failing to file an answer were considered by the appellate court to be Gat once specious, shallow and sophistical and can hardly be dignified as a MmistakeH or Me"cusable negligence,H which ordinary prudence could not have guarded against.G/5 In particular, the C$ ruled that the erroneous docket number placed on the $nswer filed before the trial court was not an e"cusable negligence by the bankHs counsel. The latter had a bounden duty to be scrupulously careful in reviewing pleadings. $lso, there were several opportunities to discover and rectify the mistake, but these were not taken. )oreover, the bankHs )otion to 'et $side the Partial +ecision and to $dmit ItheJ $nswer was not accompanied by an affidavit of merit. These mistakes and the ine"cusable negligence committed by respondentHs lawyer were binding on the bank. 4n the issue of whether petitioners had convincingly established their right to relief, the appellate court held that there was no ground to invalidate the foreclosure sale of the mortgaged property. First, under 'ection 2 of $ct 3o. 2/25, an e"tra*udicial foreclosure sale did not re!uire personal notice to the mortgagor. 'econd, there was no allegation or proof of noncompliance with the publication re!uirement and the public posting of the notice of sale, provided under $ct 3o. 2/25, as amended. Third, there was no showing of inade!uacy of price as no competent evidence was presented to show the real market value of the land sold or the readiness of another buyer to offer a price higher than that at which the property had been sold. )oreover, petitioners failed to prove that the bank had agreed to sell the property back to them. $fter pointing out that the redemption period had long e"pired, respondentHs written communications to Petitioner Chua only showed, at most, that the former had made a proposal for the latter to buy back the property at the current market price& and that Petitioner Chua was re!uested to make an offer to repurchase the property, because another buyer had already made an offer to buy it. 4n the other hand, respondent noted that the Interbank check for P;,000 was for Gdeposit only.G Thus, there was no showing that the check had been issued to cover part of the repurchase price. The appellate court also held that the Compromise $greement had not resulted in the novation of the Partial +ecision, because the two were not incompatible. In fact, the bank was not even a party to the $greement. PetitionersH recognition of CeroferrHs title to the mortgaged property was intended to preclude future litigation against it. <ence this Petition./C Issues In their )emorandum, petitioners raise the following issues% G/. Bhether or not the =espondent Court of $ppeals erred in failing to apply the provisions of 'ection 2, =ule : of the /::6 =ules of Civil Procedure Iand in applying insteadJ the rule on preponderance of evidence under 'ection /, =ule /22 of the =ules of Court. G1. Bhether or not the respondent appellate court failed to apply the conventional redemption rule provided for under $rticle /C0/ of the 3ew Civil Code. G2. Bhether or not this <onorable Court can e"ercise its *udicial prerogative to evaluate the findings of facts.G/6 The first issue is one of law and may be taken up by the Court without hindrance, pursuant to 'ection / of =ule ;5 of the =ules of Court. /9 The second and the third issues, however, would entail an evaluation of the factual findings of the appellate court, a function ordinarily

not assumed by this Court, unless in some e"cepted cases. The Court will thus rule on the first issue before addressing the second and the third issues *ointly. The CourtHs =uling The Petition has no merit. First Issue% Kuantum of Proof Petitioners challenge the C$ +ecision for applying 'ection 2 of =ule : of the =ules of Court, rather than 'ection / of =ule /22 of the same =ules. In essence, petitioners argue that the !uantum of evidence for *udgments flowing from a default order under 'ection 2 of =ule : is not the same as that provided for in 'ection / of =ule /22. For ease of discussion, these two rules will be reproduced below, starting with 'ection 2 of =ule : of the =ules of Court% G'ec. 2. +efault& declaration of. N If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render *udgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion re!uires the claimant to submit evidence. 'uch reception of evidence may be delegated to the clerk of court. G,a. Effect of order of default. N $ party in default shall be entitled to notice of subse!uent proceedings but not to take part in the trial. G,b. Relief from order of default. N $ party declared in default may at any time after notice thereof and before *udgment file a motion under oath to set aside the order of default upon proper showing that his failure to answer was due to fraud, accident, mistake or e"cusable negligence and that he has a meritorious defense. In such case, the order of default may be set aside on such terms and conditions as the *udge may impose in the interest of *ustice. G,c. Effect of partial default. N Bhen a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render *udgment upon the evidence presented. G,d. E(tent of relief to "e a)arded . N $ *udgment rendered against a party in default shall not e"ceed the amount or be different in kind from that prayed for nor award unli!uidated damages. G,e. *here no defaults allo)ed. N If the defending party in an action for annulment or declaration of nullity of marriage or for legal separation fails to answer, the court shall order the prosecuting attorney to investigate whether or nor a collusion between the parties e"ists, and if there is no collusion, to intervene for the 'tate in order to see to it that the evidence submitted is not fabricated.G Be now !uote 'ection / of =ule /22% G'(CTI43 /. Preponderance of evidence, how determined. N In civil cases, the party having the burden of proof must establish his case by a preponderance of evidence. In determining where the preponderance or superior weight of evidence on the issues involved lies, the court may consider all the facts and circumstances of the case, the witnessesH manner of testifying, their intelligence, their means and opportunity of knowing the facts to which they are testifying, the nature of the facts to which they testify, the probability or improbability of their testimony, their interest or want of interest, and also their personal credibility so far as the same may legitimately appear upon the trial. The court may also consider the number of witnesses, though the preponderance is not necessarily with the greater number.G -etween the two rules, there is no incompatibility that would preclude the application of either one of them. To begin with, 'ection 2 of =ule : governs the procedure which the trial court is directed to take when a defendant fails to file an answer. $ccording to this provision, the court Gshall proceed to render *udgment granting the claimant such relief as his pleading may warrant,G sub*ect to the courtHs discretion on whether to re!uire the
CIVPRO CASES: PASCUA TO HEIRS OF PADILLA |4

presentation of evidence e" parte. The same provision also sets down guidelines on the nature and e"tent of the relief that may be granted. In particular, the courtHs *udgment Gshall not e"ceed the amount or be different in kind from that prayed for nor award unli!uidated damages.G $s in other civil cases, basic is the rule that the party making allegations has the burden of proving them by a preponderance of evidence. /: )oreover, parties must rely on the strength of their own evidence, not upon the weakness of the defense offered by their opponent.10 This principle holds true, especially when the latter has had no opportunity to present evidence because of a default order. 3eedless to say, the e"tent of the relief that may be granted can only be as much as has been alleged and proved 1/ with preponderant evidence re!uired under 'ection / of =ule /22. =egarding *udgments by default, it was e"plained in Pascua v. Florendo 11 that complainants are not automatically entitled to the relief prayed for, once the defendants are declared in default. Favorable relief can be granted only after the court has ascertained that the relief is warranted by the evidence offered and the facts proven by the presenting party. In +ascua, this Court ruled that G" " " it would be meaningless to re!uire presentation of evidence if every time the other party is declared in default, a decision would automatically be rendered in favor of the non#defaulting party and e"actly according to the tenor of his prayer. This is not contemplated by the =ules nor is it sanctioned by the due process clause.G12 The import of a *udgment by default was further clarified in >im Tanhu v. =amolete. 1; The following dis!uisition is most instructive% G?ne!uivocal, in the literal sense, as these provisions Ireferring to the sub*ect of default then under =ule /9 of the old =ules of Civil ProcedureJ are, they do not readily convey the full import of what they contemplate. To begin with, contrary to the immediate notion that can be drawn from their language, these provisions are not to be understood as meaning that default or the failure of the defendant to answer should Mbe interpreted as an admission by the said defendant that the plaintiffHs cause of action find support in the law or that plaintiff is entitled to the relief prayed for.H " " ". """"""""" G-eing declared in default does not constitute a waiver of rights e"cept that of being heard and of presenting evidence in the trial court. " " ". GIn other words, a defaulted defendant is not actually thrown out of court. Bhile in a sense it may be said that by defaulting he leaves himself at the mercy of the court, the rules see to it that any *udgment against him must be in accordance with law. The evidence to support the plaintiffHs cause is, of course, presented in his absence, but the court is not supposed to admit that which is basically incompetent. $lthough the defendant would not be in a position to ob*ect, elementary *ustice re!uires that only legal evidence should be considered against him. If the evidence presented should not be sufficient to *ustify a *udgment for the plaintiff, the complaint must be dismissed. $nd if an unfavorable *udgment should be *ustifiable, it cannot e"ceed in amount or be different in kind from what is prayed for in the complaint.G15 In sum, while petitioners were allowed to present evidence e" parte under 'ection 2 of =ule :, they were not e"cused from establishing their claims for damages by the re!uired !uantum of proof under 'ection / of =ule /22. 'tated differently, any advantage they may have gained from the e" parte presentation of evidence does not lower the degree of proof re!uired. Clearly then, there is no incompatibility between the two rules. 'econd and Third Issues% =eview of the (vidence Petitioners urge this Court to depart from the general rule that the lower courtsH findings of fact are not reviewable in a petition for review. 1C In support of their plea, they cite the conflicting findings of the trial and the appellate courts, as well as the alleged con*ectures and surmises made by the C$ in arriving at its +ecision. Indeed, the differences between the findings of the two courts a ,uo, leading to entirely disparate dispositions, is reason enough for this Court to review the evidence in this

case.16 Bhether the C$ indulged in surmises and con*ectures when it issued the assailed +ecision will thus be determined. $t the outset, it behooves this Court to clarify the C$Hs impression that no evidence was presented in the case which might have contributed to petitionersH challenge to its +ecision. The appellate courtHs observation was based on the notation by the lower courtHs clerk of court that there were no separate folders for e"hibits and transcripts, because Gthere was no actual hearing conducted in this case.G19 True, there was no hearing conducted "et)een petitioners and respondent, precisely because the latter had been declared in default, and petitioners had therefore been ordered to present their evidence e" parte. -ut the absence of a hearing did not mean that no evidence was presented. The Partial +ecision dated February 9, /::2, in fact clearly enumerated the pieces of evidence adduced by petitioners during the e" parte presentation on anuary 6, /::2. The documentary evidence they presented consisted of the following% /. $ copy of respondent bankHs Petition for the e"tra*udicial foreclosure and auction sale of the mortgaged parcel of land1: 1. The Certificate of 'ale that was a conse!uence of the foreclosure sale 20 2. $ 'tatement of $ccount dated February /5, /:9;, showing Petitioner ChuaHs outstanding debt in the amount of P;0,/25.522/ ;. $ copy of the Interbank check dated February /C, /:9;, in the amount of P;,00021 5. The 4fficial =eceipt issued by the bank acknowledging the check 22 C. The bankHs letter dated February 10, /:9;, advising Petitioner Chua of the sale of the property at an e"tra*udicial public auction& the lapse of the period of redemption& and an invitation to purchase the property at its current market price2; 6. $nother letter from the bank dated )arch 11, /:9;, inviting Petitioner Chua to submit, within five days, an offer to buy the same property, which another buyer had offered to buy25 9. $ copy of the 3otice of !is +endens, the filing of which was done after that of the $mended Complaint2C :. $ copy of the title showing the inscription of the 3otice of !is +endens26 /0. $ copy of the $bsolute +eed of 'ale to Cerrofer 29 //. $ copy of a letter dated $ugust 1:, /:9C, made and signed by petitionersH counsel, re!uesting the cancellation of the 3otice of !is +endens2: /1. $ copy of a page of the )emorandum of (ncumbrance from TCT 3o. ,2/;2;/. 6669LT#2:;0 <aving clarified this matter, we proceed to review the facts. Petitioners do not deny that the one#year period for legal redemption had already lapsed when respondent bank supposedly offered to sell the property in !uestion. The records clearly show that the Certificate of 'ale following the e"tra*udicial public auction of the property was registered on une 1/, /:91, the date from which the legal redemption period was to be reckoned.;/ Petitioners insist, though, that they had the right to repurchase the property through conventional redemption, as provided under $rticle /C0/ of the Civil Code, worded as follows% G$=T. /C0/. Conventional redemption shall take place when the vendor reserves the right to repurchase the thing sold, with the obligation to comply with the provisions of $rticle /C/C and other stipulations which may have been agreed upon.G It is true that the one#year period of redemption provided in $ct 3o. 2/25, as amended ## the law under which the property here was sold in a foreclosure sale ## is only directory and, as such can be e"tended by agreement of the parties. ;1 <owever, it has also been held that for legal redemption to be converted into conventional redemption, two re!uisites must be established% /. voluntary agreement of the parties to e"tend the redemption period& and 1. the debtorHs commitment to pay the redemption price on a fi"ed date.;2 Thus, assuming that an offer was made to Petitioner Chua to buy back the property
CIVPRO CASES: PASCUA TO HEIRS OF PADILLA |5

after the lapse of the period of legal redemption, petitioners needed to show that the parties had agreed to e"tend the period, and that Petitioner Chua had committed to pay the redemption price on a fi"ed date. The letters sent by the bank to Petitioner Chua on February 10 and )arch 11, /:9;, do not convincingly show that the parties arrived at a firm agreement for the repurchase of the property. Bhat can be gleaned from the February 10 letter is that Petitioner Chua proposed to pay the redemption price for the property, but that the bank refused to accede to his re!uest, because the one#year redemption period had already lapsed. ;; The bank, though, had offered to sell back the property to him at the current market value. Indeed, an e"amination of his earlier letter of February /6, /:9;, readily reveals that he e"pressed willingness to settle his account with the bank, but that his Gpresent financial situation precludes IhimJ from effecting an immediate settlement " " ".G;5 4n the other hand, the letter dated )arch 11, /:9;, clearly states that G" " " the -ank re*ected IhisJ re!uest to redeem said property due to ItheJ lapse of ItheJ one ,/. year legal redemption period.G;C 3onetheless, he was GIinvitedJ to submit an offer to buy the same property in five ,5. days from receipt Iof the letterJ.G ;6 Petitioner Chua was also informed that the bank had received an offer to purchase the foreclosed property. $s to the P;,000 check enclosed in his proposal dated February /6, /:9;, as a token of his good faith, he was advised that the amount was still outstanding in the books of the bank and could be claimed by him if he thought the invitation was not feasible. )ore important, there was no showing that petitioners had committed to pay the redemption price on a fi"ed date. True, Petitioner Chua had attempted to establish a previous agreement to repurchase the property for less than its fair market value. <e had submitted in evidence a 'tatement of $ccount;9 dated February /5, /:9;, showing a balance of P;0,/25.52& the Interbank check dated February /C, /:9; , for P;,000, which was deposited to the account of respondent bank&;: and the 4fficial =eceipt for the check.50 7ranting that these documents evinced an agreement, petitioners were still unable to establish a firm commitment on their part to pay the redemption price on a fi"ed date. 4n the contrary, the February /6 letter of Petitioner Chua to the bank clearly manifested that he was not capable of paying the account immediately. For this reason, he proposed to pay in Gthree or four installmentsG without a specification of dates for the payments, but with a plea for a reduction of the interest charges. That proposal was re*ected. Indeed, other than the Interbank check marked Gfor depositG by respondent bank, no other evidence was presented to establish that petitioners had offered to pay the alleged redemption price of P;0,/25.52 on a fi"ed date. For that matter, petitioners have not shown that they tendered payment of the balance andLor consigned the payment to the court, in order to fulfill their part of the purported agreement. These remedies are available to an aggrieved debtor under $rticle /15C of the Civil Code, 5/ when the creditor un*ustly refuses to accept the payment of an obligation. The ne"t !uestion that presents itself for resolution is the propriety of the C$Hs ruling vacating the Partial +ecision of the regional trial court ,=TC. and dismissing the case. To recall, the =TC had resolved to withhold a ruling on petitionersH right to redeem conventionally andLor order the reconveyance of the property in !uestion, pending a determination of the validity of the sale to Cerrofer =ealty Corporation and 'pouses Cesar and >orna =o!ue. The trial court, however, granted the prayer for damages against respondent bank. The =TC ruled as follows% GThe evidence presented by IpetitionersJ in so far as the cause of action against IrespondentJ Traders =oyal -ank is concerned are preponderant to support the claims of the IpetitionersJ. <owever, in view of the fact that the property sub*ect matter of this case has already been conveyed to defendant Cerrofer =ealty Corporation thus the issue as to whether or not the said conveyance or sale is valid is sill pending between the IpetitionersJ and IrespondentsJ Cerrofer =ealty Corporation and Cesar =o!ue and >orna =o!ue. <ence, this Court resolves to grant the prayer for damages against Traders =oyal -ank. GThe claims of the IpetitionersJ as against IrespondentJ Traders =oyal -ank having been established and proved by evidence, *udgment is hereby rendered ordering IrespondentJ

Traders =oyal -ank to pay IpetitionersJ actual damage or the market value of the land in !uestion in the sum of P500,000.00& the sum of P60,000.00 as compensatory damages& the sum of P100,000.00 to the heirs of IpetitionerJ +anilo Chua& and attorneyHs fees in the sum of P20,000.00.G51 In the light of the pending issue as to the validity of the sale of the property to the third parties ,Cerrofer =ealty Corporation and 'pouses =o!ue., the trial court properly withheld *udgment on the matter and thus left the prayer for damages as the sole issue for resolution. To ad*udge damages, paragraph ,d. of 'ection 2 of =ule : of the =ules of Court provides that a *udgment against a party in default Gshall not e"ceed the amount or be different in kind from that prayed for nor award unli!uidated damages.G The proscription against the award of unli!uidated damages is significant, because it means that the damages to be awarded must be proved convincingly, in accordance with the !uantum of evidence re!uired in civil cases. ?nfortunately for petitioners, the grant of damages was not sufficiently supported by the evidence for the following reasons. First, petitioners were not deprived of their property without cause. $s correctly pointed out by the C$, $ct 3o. 2/25, as amended, does not re!uire personal notice to the mortgagor.52 In the present case, there has been no allegation ## much less, proof ## of noncompliance with the re!uirement of publication and public posting of the notice of sale, as re!uired by Oct 3o. 2/25. 3either has there been competent evidence to show that the price paid at the foreclosure sale was inade!uate. 5; To be sure, there was no ground to invalidate the sale. 'econd, as previously stated, petitioners have not convincingly established their right to damages on the basis of the purported agreement to repurchase. Bithout reiterating our prior discussion on this point, we stress that entitlement to actual and compensatory damages must be proved even under 'ection 2 of =ule : of the =ules of Court. The same is true with regard to awards for moral damages and attorneyHs fees, which were also granted by the trial court. In sum, petitioners have failed to convince this Court of the cogency of their position, notwithstanding the advantage they en*oyed in presenting their evidence e" parte. 3ot in every case of default by the defendant is the complainant entitled to win automatically. B<(=(F4=(, this Petition is hereby +(3I(+ and the assailed +ecision and =esolution $FFI=)(+. Costs against petitioners. '4 4=+(=(+.

G.R. No. 1/8053 S2p42562r .1, .011 REBECCA T. AR7UERO, Petitioner, vs. COURT O& APPEALS 8&or52r T-ir422!4- #i9i3io!:; E#ILBERTO C. #E *ESUS, i! -i3
CIVPRO CASES: PASCUA TO HEIRS OF PADILLA |6

, p ,i4) 3 S2,r24 r) o' 4-2 #2p r452!4 o' E"<, 4io!; #R. PARALU$AN GIRON, #ir2,4or, R2(io! l O''i,2 I=-$I$AROPA, #2p r452!4 o' E"<, 4io!; #R. E#UAR#O LOPE+, S,-ool3 #i9i3io! S<p2ri!42!"2!4, P<2r4o Pri!,23 Ci4); !" NOR$A BRILLANTES, =espondents. +(CI'I43 PERALTA, J.: This is a petition for review on certiorari under =ule ;5 of the =ules of Court filed by petitioner =ebecca T. $r!uero against public respondents (dilberto C. +e esus ,+e esus., in his capacity as 'ecretary of (ducation, +r. Paraluman 7iron ,+r. 7iron., +epartment of (ducation ,+ep(d. +irector, =egional 4ffice I@#)I)$=4P$, +r. (duardo >ope8 ,>ope8., 'chools +ivision 'uperintendent, Puerto Princesa City, and private respondent 3orma -rillantes. Petitioner assails the Court of $ppeals ,C$. +ecision / dated +ecember /5, 100; and =esolution 1 dated )ay 2, 1005 in C$#7.=. 'P 3o. 959::. The assailed decision reversed and set aside the udgment by +efault 2 of the =egional Trial Court ,=TC., -ranch :5, Puerto Princesa City, while the assailed resolution denied petitionerHs motion for reconsideration. The facts of the case are as follows% 4n 4ctober /2, /:9:, Congress approved =epublic $ct ,=$. 3o. C6C5, or G$n $ct Integrating Certain <igh 'chools in the City of Puerto Princesa and in the Province of Palawan with the Palawan 3ational 'chool and $ppropriating Funds Therefor.G ?nder the law, the following schools were converted into national schools and integrated with the Palawan 3ational 'chool ,P3'. in the City of Puerto Princesa, Province of Palawan, as branches thereof% ,/. Puerto Princesa 'chool of Philippine Craftsmen& ,1. 'an ose -arangay <igh 'chool& ,2. Inagawan -arangay <igh 'chool& ,;. Puerto Princesa =ural <igh 'chool& all in the City of Puerto Princesa and ,5. Plaridel -arangay <igh 'chool in the )unicipality of $borlan& ,C. 3arra -arangay <igh 'chool in the )unicipality of 3arra& ,6. Kue8on )unicipal <igh 'chool in the )unicipality of Kue8on& ,9. Pulot -arangay <igh 'chool in the )unicipality of -rookeHs Point& ,:. -atara8a -arangay <igh 'chool in the )unicipality -atara8a& and ,/0. -alabac -arangay <igh 'chool in the )unicipality of -alabac& all in the Province of Palawan. ; 'ection 1 of the law provides that the P3' shall, in addition to general secondary education program, offer post#secondary technical#vocational and other relevant courses to carry out its ob*ectives. The P3' shall thus be considered the Gmother unitG and the integrated schools should benefit from a centrali8ed curriculum planning to eliminate duplication of functions and efforts relative to human resource development for the province.5 The law also provides that the Palawan Integrated 3ational 'chools ,PI3'. shall be headed by a @ocational 'chool 'uperintendent ,@''. who shall be chosen and appointed by the 'ecretary of the +epartment of (ducation, Culture, and 'ports ,now the +ep(d..C ("cept for Puerto Princesa 'chool of Philippine Craftsmen, which shall be headed by the <ome Industries Training 'upervisor, the P3' and each of its units or branches shall be headed either by a Principal or 'econdary 'chool <ead Teacher to be chosen in accordance with the +ep(d =ules and =egulations.6 <owever, no @'' was appointed. Instead, then +(C' =egion I@ 4ffice designated then P3' Principal (ugenio . dela Cuesta in a concurrent capacity as 4fficer#in#Charge ,4IC. of the PI3'. $fter the retirement of +ela Cuesta, petitioner took over as 'econdary 'chool Principal of the P3'.9 4n )arch /9, /::2, then +(C'#=egion I@ +irector I@ +esideria =e" ,+irector =e". designated petitioner as 4IC of the PI3'.: 4n +ecember /, /::;, +irector =e"Hs successor, Pedro -. Trinidad placed all satellite schools of the PI3' under the direct supervision of the 'chools +ivision 'uperintendent for Palawan effective anuary /, /::5. /0 This directive was later approved by the +ep(d in 'eptember /::C. Petitioner was instructed to turn over the administration and supervision of the PI3' branches or units. // In another memorandum, 'chools +ivision 'uperintendent Portia 7esilva was designated as 4IC of the PI3'. These events prompted different parties to institute various actions restraining the enforcement of the +ep(d orders.

Pursuant to =$ 910;, separate City 'chools +ivision 4ffices were established for the City of Puerto Princesa and the Province of Palawan. /1 4n )arch /;, 1000, =egional +irector -elen <. )agsino issued an 4rder addressed to the 'chools +ivision 'uperintendent of Palawan and Puerto Princesa City, and petitioner stating that the PI3' satellite schools shall be under the supervision of the division schools superintendents concerned, while petitioner should concentrate on the supervision and administration of the P3'./2 $gain, this prompted the filing of various court actions. 4n )ay /;, 1001, then +(C' ?ndersecretary aime +. acob issued an 4rder/; addressed to +r. 7iron, 4IC, +ep(d =egional 4ffice 3o. ;, stating that there being no more legal impediment to the integration, he ordered that the secondary schools integrated with the P3' be under the direct administrative management and supervision of the schools division superintendents of the divisions of Palawan and Puerto Princesa City, as the case may be, according to their geographical and political boundaries. Conse!uently, +r. 7iron instructed the secondary schoolsH principals concerned of the assumption of *urisdiction by the superintendent of the schools division offices of the city and province, and that their fiscal and financial transaction as turned over will be effected in uly /, 1001. <owever, then +ep(d ?ndersecretary =amon C. -acani ,-acani. ordered that the status ,uo be maintained and that no turn over of schools be made. /5 In the meantime, petitioner remained as the 4IC of the PI3'. 4n 'eptember /:, 1001, +r. 7iron withdrew the designation of petitioner as 4IC of the PI3', en*oining her from submitting to the =egional 4ffice all appointments and personnel movement involving the P3' and the satellite schools. 4n 3ovember 6, 1001, petitioner appealed to the Civil 'ervice Commission assailing the withdrawal of her designation as 4IC of the PI3'./C 4n )arch 19, 1002, then +ep(d 'ecretary (dilberto C. +e esus designated $ssistant 'chools +ivision 'uperintendent 3orma -. -rillantes ,hereafter referred to as private respondent. in concurrent capacity as 4IC of the PI3' entitled to representation and transportation allowance, e"cept the salary of the position. /6 Petitioner filed a )otion for =econsideration andLor Clarification/9 before the 4ffice of the +ep(d 'ecretary as to the designation of private respondent. 4n 'eptember /9, 1002, +r. 7iron filed a formal charge /: against petitioner who continued to defy the orders issued by the =egional 4ffice relative to the e"ercise of her functions as 4IC of the PI3' despite the designation of private respondent as such. The administrative complaint charged petitioner with grave misconduct, gross insubordination and conduct pre*udicial to the best interest of the service. Petitioner was also preventively suspended for ninety ,:0. days.10 4n 4ctober 1, 1002, petitioner filed the Petition for Kuo Barranto with Prayer for Issuance of Temporary =estraining 4rder andLor In*unctive Brit 1/ before the =TC of Palawan11 against public and private respondents. The case was docketed as Civil Case 3o. 295;. Petitioner argued that the designation of private respondent deprived her of her right to e"ercise her function and perform her duties in violation of her right to security of tenure. Considering that petitioner was appointed in a permanent capacity, she insisted that private respondentHs designation as 4IC of the P3' is null and void there being no vacancy to the position. Petitioner thus prayed that the =TC issue an order granting the writ of !uo warranto en*oining private respondent from assuming the position of 4IC of the P3', declaring the !uestioned designation null and void and without operative effect, and declaring petitioner to be entitled to the office of the principal of the P3'. 12 4n 4ctober C, 1002, the ("ecutive udge issued a 61#<our T=4 1; en*oining and restraining private respondent from assuming the position of 4IC and performing the functions of the 4ffice of the Principal of the P3'& and restraining public respondents from giving due course or recogni8ing the assailed designation of private respondent. The =TC later issued the writ of preliminary in*unction.15 =espondents failed to file their $nswer. <ence, on motion 1C of petitioner, the Court declared respondents in default in an 4rder 16 dated +ecember /5, 1002. In the same order, petitioner was allowed to present her evidence e" parte.
CIVPRO CASES: PASCUA TO HEIRS OF PADILLA |7

4n une /;, 100;, the =TC rendered a udgment by +efault, 19 the dispositive portion of which reads% B<(=(F4=(, premises considered and by preponderance of evidence, *udgment is hereby rendered% /. +eclaring petitioner =ebecca T. $r!uero as the lawful Principal and <ead of the Palawan Integrated 3ational <igh 'chool who is lawfully entitled to manage the operation and finances of the school sub*ect to e"isting laws& 1. +eclaring the formal charge against petitioner, the preventive suspension, the investigating committee, the proceedings therein and any orders, rulings, *udgments and decisions that would arise therefrom as null, void and of no effect& 2. 4rdering respondent 3orma -rillantes, or any person acting in her behalf, to cease and desist from assuming and e"ercising the functions of the 4ffice of the Principal of Palawan Integrated 3ational <igh 'chool, and respondents (dilberto C. +e esus, Paraluman =. 7iron and (duardo @. >ope8, or any person acting in their behalf, from giving due course or recogni8ing the same& and ;. )aking the writ of preliminary in*unction issued in this case permanent. IT I' '4 4=+(=(+.1: The =TC held that considering that the integrated school failed to offer post#secondary technical#vocational courses, the @'' position became functus officio. The P3', therefore, remains to be a general secondary school under the *urisdiction of the +ep(d.20 Conse!uently, supervision of the integrated school was automatically vested with the principal of the P3' without the necessity of appointment or designation. $s to the administrative case filed against petitioner, the =TC opined that the formal charge and preventive suspension are illegal for lack of due process. 2/ 4n appeal, the C$ reversed and set aside the =TC decision, the dispositive portion of which reads% B<(=(F4=(, premises considered, the present appeal is hereby 7=$3T(+. The appealed decision of the court a !uo in Civil Case 3o. 295; is hereby =(@(='(+ and '(T $'I+(. $ new *udgment is hereby entered +I')I''I37 the petition for !uo warranto filed by appellee =ebecca T. $r!uero. 3o pronouncement as to costs. '4 4=+(=(+.21 $pplying the rules on statutory construction, the appellate court emphasi8ed the need to harmoni8e the laws. The C$ held that the PI3' and its satellite schools remain under the complete administrative *urisdiction of the +ep(d and not transferred to the Technical (ducation and 'kills +evelopment $uthority ,T('+$.. It also e"plained that by providing for a distinct position of @'' with a higher !ualification, specifically chosen and appointed by the +ep(d 'ecretary that is separate from the school head of the P3' offering general secondary education program, =$ C6C5 intended that the functions of a @'' and 'chool Principal of P3' be discharged by two separate persons. 22 The C$ added that if we follow the =TC conclusion, petitioner would assume the responsibilities and e"ercise the functions of a division schools superintendent without appointment and compliance with the !ualifications re!uired by law.2; The appellate court likewise held that petitioner failed to establish her clear legal right to the position of 4IC of the PI3' as she was not appointed but merely designated to the position in addition to her functions as incumbent school principal of the P3'.25 Clearly, there was no violation of her right to due process and security of tenure when private respondent replaced her. $s to the validity of filing the administrative charge against her and the subse!uent imposition of preventive suspension, the C$ refused to rule on the matter due to the pendency of the administrative case which is within the *urisdiction of the +ep(d. <ence, this petition raising the following issues% $. T<( C4?=T 4F $PP($>'H +(CI'I43 +$T(+ T<( /5 T< +(C()-(= 100;, $3+ T<( =('4>?TI43 4F 2=+ )$A 1005, <$@( +(CI+(+ $ K?('TI43 4F '?-'T$3C(, 34T T<(=(T4F4=( +(T(=)I3(+ -A T<( '?P=()( C4?=T, 4= T<( $PP(>>$T( C4?=T <$' +(CI+(+ IT I3 $ B$A

P=4-$->A 34T I3 $CC4=+ BIT< >$B 4= BIT< T<( $PP>IC$->( +(CI'I43' 4F T<( <I7<('T C4?=T& 4= T<( =('P43+(3T C4?=T 4F $PP($>' <$' '4 F$= +(P$=T(+ F=4) T<( $CC(PT(+ $3+ ?'?$> C4?='( 4F ?+ICI$> P=4C((+I37' $' T4 C$>> F4= $3 (P(=CI'( 4F T<( P4B(= 4F '?P(=@I'I43. -. T<( C<$>>(37(+ +(CI'I43 B$' =(3+(=(+ 43 T<( -$'I' 4F )(=( ?3'?-'T$3TI$T(+ G$=7?)(3T$TI43'G 4F T<( I3+I@I+?$> =('P43+(3T'. 34 I4T$ 4F (@I+(3C(, T('TI)43I$> 4= +4C?)(3T$=A, B(=( P=('(3T(+ $3+ 4FF(=(+ F4= $ 'P(CIFIC P?=P4'( -A T<( =('P43+(3T' ,B<4 B(=( +(C>$=(+ I3 +(F$?>T.. T<(=(F4=(, T<( C43C>?'I43 4F T<( I)P?73(+ +(CI'I43 I' 34T '?PP4=T(+ -A =(C4=+(+ (@I+(3C(.2C The petition is without merit. Petitioner insists that respondents could not have appealed the =TC decision having been declared in default. 'he e"plains that the only issue that could have been raised is a purely legal !uestion, therefore, the appeal should have been filed with the Court and not with the C$. In )artine8 v. =epublic, 26 the Court has clearly discussed the remedies of a party declared in default in light of the /:C; and /::6 =ules of Court and a number of *urisprudence applying and interpreting said rules. Citing >ina v. Court of $ppeals, 29 the Court enumerated the above#mentioned remedies, to wit% a. The defendant in default may, at any time after discovery thereof and before *udgment, file a motion, under oath, to set aside the order of default on the ground that his failure to answer was due to fraud, accident, mistake or e"cusable neglect, and that he has meritorious defenses& ,'ec. 2, =ule /9. b. If the *udgment has already been rendered when the defendant discovered the default, but before the same has become final and e"ecutory, he may file a motion for new trial under 'ection / ,a. of =ule 26& c. If the defendant discovered the default after the *udgment has become final and e"ecutory, he may file a petition for relief under 'ection 1 of =ule 29& and d. <e may also appeal from the *udgment rendered against him as contrary to the evidence or to the law, even if no petition to set aside the order of default has been presented by him. ,'ec. 1, =ule ;/.2: The Court e"plained in )artine8 that the fourth remedy, that of appeal, is anchored on 'ection 1, =ule ;/ of the /:C; =ules. (ven after the deletion of that provision under the /::6 =ules, the Court did not hesitate to e"pressly rely on the >ina doctrine, including the pronouncement that a defaulted defendant may appeal from the *udgment rendered against him. )oreover, in =ural -ank of 'ta. Catalina v. >and -ank of the Philippines, ;0 the Court provided a comprehensive restatement of the remedies of the defending party declared in default% It bears stressing that a defending party declared in default loses his standing in court and his right to adduce evidence and to present his defense. <e, however, has the right to appeal from the *udgment by default and assail said *udgment on the ground, inter alia, that the amount of the *udgment is e"cessive or is different in kind from that prayed for, or that the plaintiff failed to prove the material allegations of his complaint, or that the decision is contrary to law. 'uch party declared in default is proscribed from seeking a modification or reversal of the assailed decision on the basis of the evidence submitted by him in the Court of $ppeals, for if it were otherwise, he would thereby be allowed to regain his right to adduce evidence, a right which he lost in the trial court when he was declared in default, and which he failed to have vacated. In this case, the petitioner sought the modification of the decision of the trial court based on the evidence submitted by it only in the Court of $ppeals.;/ ?ndoubtedly, a defendant declared in default retains the right to appeal from the *udgment by default on the ground that the plaintiff failed to prove the material allegations of the
CIVPRO CASES: PASCUA TO HEIRS OF PADILLA |8

complaint, or that the decision is contrary to law, even without need of the prior filing of a motion to set aside the order of default e"cept that he does not regain his right to adduce evidence.;1 The appellate court, in turn, can review the assailed decision and is not precluded from reversing the same based solely on the evidence submitted by the plaintiff. The ne"t !uestion to be resolved is whether petitioner has the right to the contested public office and to oust private respondent from its en*oyment. Be answer in the negative. $ !uo warranto proceeding is the proper legal remedy to determine the right or title to the contested public office and to oust the holder from its en*oyment. ;2 It is brought against the person who is alleged to have usurped, intruded into, or unlawfully held or e"ercised the public office.;; It may be brought by the =epublic of the Philippines or by the person claiming to be entitled to such office.;5 In !uo warranto, the petitioner who files the action in his name must prove that he is entitled to the sub*ect public office. In other words, the private person suing must show a clear right to the contested position. ;C 4therwise, the person who holds the same has a right to undisturbed possession and the action for !uo warranto may be dismissed. ;6 It is not even necessary to pass upon the right of the defendant who, by virtue of his appointment, continues in the undisturbed possession of his office. ;9 4n the basis of the evidence presented solely by petitioner and without considering the arguments and attachments made by respondents to rebut petitionerHs claims, we find that petitioner failed to prove that she is entitled to the contested position. It is undisputed that petitioner was appointed as the principal of the P3'. In addition, she was designated as the 4IC of the PI3'. 'aid designation was, however, withdrawn. Private respondent was, thereafter, designated as the new 4IC. This prompted petitioner to file the !uo warranto petition before the court a !uo. The contested position was created by =$ C6C5. 'ection 2 of the law provides% 'ection 2. The school shall be headed by a @ocational 'chool 'uperintendent. <e shall be chosen and appointed by the 'ecretary of (ducation, Culture and 'ports Inow 'ecretary of (ducationJ. )oreover, 'ection ; thereof states% 'ection ;. The <ome Industries Training 'upervisor of the Puerto Princesa 'chool of Philippine Craftsmen shall continue to serve as such. The main school and each of its units or branches shall be headed either by a Principal or 'econdary 'chool <ead Teacher to be chosen in accordance with the rules and regulations of the +epartment of (ducation, Culture and 'ports Inow the +epartment of (ducationJ. $s aptly observed by the C$, the law created two positions D the @'' and the principal or secondary school head teacher of each of the units or branches of the integrated school. The legislators clearly intended that the integrated schools shall be headed by a superintendent. $dmittedly, petitioner did not possess the !ualifications to hold the position and she was merely designated by the +ep(d as the 4IC of the PI3'. $t that time, she held in a concurrent capacity, the permanent position of principal of the P3'. <aving been appointed as 4IC without the necessary !ualifications, petitioner held the position only in a temporary capacity. The purpose of an acting or temporary appointment is to prevent a hiatus in the discharge of official functions by authori8ing a person to discharge those functions pending the selection of a permanent or another appointee. $n acting appointee accepts the position on the condition that he shall surrender the office once he is called to do so by the appointing authority. Therefore, his term of office is not fi"ed, but endures at the pleasure of the appointing authority. ;: The essence of an acting appointment is its temporariness and its conse!uent revocability at any time by the appointing authority. 50 Thus, under =$ C6C5, petitioner can only insist on her security of tenure as principal of the P3' but not as 4IC of the integrated school. ?pon the withdrawal of her designation, her right to the contested position ceased to e"ist. Petitioner also bases her right to the contested position on the enactment of =$ 66:C, or G$n $ct Creating the Technical (ducation and 'kills +evelopment $uthority, Providing for its Powers, 'tructure and for 4ther Purposes,G and =$ :/55, or G$n $ct Instituting a Framework of 7overnance for -asic (ducation, (stablishing $uthority and $ccountability,

=enaming the +epartment of (ducation Culture and 'ports as the +epartment of (ducation, and for 4ther Purposes.G 'he contends that under =$ 66:C, the position of @'' could no longer be filled up by the +ep(d having been absorbed by T('+$. $s such, the right to manage the operation and finances of the integrated schools is automatically vested with petitioner being the principal of the P3' without further appointment or designation. $gain, we do not agree. $s found by the =TC and affirmed by the C$, the PI3' failed to implement its technical# vocational education program. Conse!uently, the P3' and the other satellite schools never came under the *urisdiction of the -ureau of Technical and @ocational (ducation of the +ep(d nor the technical#vocational education in +ep(dHs regional offices. Thus, e"cept for the Puerto Princesa 'chool of Philippine Craftsmen, which is now within the *urisdiction of the T('+$, the P3' and the other units remained under the complete administrative *urisdiction of the +ep(d. $lthough the technical#vocational education program was not implemented, it does not alter the lawHs intent that the main school, which is the P3' and the other units integrated with it, shall be headed either by a principal or secondary school head teacher& while the PI3' or the integrated school shall be headed by another. Be cannot subscribe to petitionerHs insistence that the principal automatically heads the PI3' without appointment or designation. $s clearly e"plained by the C$, Gby providing for a distinct position with a higher !ualification ,that of a superintendent., specifically chosen and appointed by the +ep(d 'ecretary, separate from the school head of the P3' offering general secondary education program, the law clearly intended the functions of a @'' and school principal of the P3' to be discharged and performed by two different individuals.G 5/ 3either can petitioner rely on the enactment of =$ :/55. The law, in fact, weakens petitionerHs claim.-.)phi- =$ :/55 provides the framework for the governance of basic education. It also emphasi8es the principle of shared governance which recogni8es that every unit ,which includes the national, regional, division, school district, and school levels. in the education bureaucracy has a particular role, task and responsibility. The school shall be headed by a IprincipalJ or school head& a school district by a schools district supervisor& a division by a schools division superintendent& a region by a director& and the national level by the 'ecretary of (ducation. It must be recalled that the integration under =$ C6C5 involved certain high schools in different municipalities of the Province of Palawan and the City of Puerto Princesa. Be also note that =$ C6C5 intended that the integrated school shall be headed by a superintendent. 3owhere in the above laws can we find *ustification for petitionerHs insistence that she, and not private respondent, has a better right to hold the contested position. Clearly, petitioner failed to establish her right to the contested position. Therefore, the dismissal of her !uo warranto petition is in order. It must be emphasi8ed, however, that this declaration only involves the position of petitioner as 4IC of the PI3'. It does not in any way affect her position as principal of the P3' which she holds in a permanent capacity. B<(=(F4=(, premises considered, the petition is +(3I(+ for lack of merit. The Court of $ppeals +ecision dated +ecember /5, 100; and =esolution dated )ay 2, 1005 in C$#7.=. 'P 3o. 959::, are $FFI=)(+. '4 4=+(=(+.

G.R. No. 139//5 A<(<34 9, .001 $A. =IL$A S. LABA#, petitioner, vs. T%E UNI=ERSIT0 O& SOUT%EASTERN P%ILIPPINES, T%E BOAR# O& REGENTS>%ON. RICAR#O GLORIA 8#ECS S2,r24 r): C- ir5 !, #R. E#$UN#O B. PRANTILLA, =i,2 C- ir5 ! !" USP Pr23i"2!4, !" NE#A #IR. SANTIAGO ENGINCO, *R., $2562r, !" E=A $. ANTEPUESTO, USP PTA-LABORATOR0 SC%OOL PRESI#ENT, ET AL., respondents. CIVPRO CASES: PASCUA TO HEIRS OF PADILLA |9

GON+AGA-RE0ES, J.? -efore us is a petition for review on certiorari under =ule ;5 of the =ules of Court of the =esolution/ of the Court of $ppeals dated February 1;, /::: in the case entitled G)a. @ilma '. >abad vs. The ?niversity of 'outheastern PhilippinesG dismissing the appeal of )a. @ilma '. >abad herein petitioner and the =esolution dated uly 11, /::: denying the motion for reconsideration of petitioner. The facts of this case are as follows% Petitioner was a probationary faculty member of the ?niversity of 'outheastern Philippines ,hereafter respondent. >aboratory ,high school. and was designated as the adviser for the school's yearbook GT=$I>' :5G, the school's regular school organ GI3'I7<T'G, and the school's student government known as the G>'4C'7G. 4n February /, /::C, the officers and members of respondent university's Parents Teachers $ssociation filed a letter#complaint with the president of respondent university, charging petitioner with G+ishonestyG, G7rave )isconductG, and G?nfitness as a TeacherG. The letter# complaint reads in part% G/. 'he deliberately lied to the parents the total amount she paid for the printing of the Trails /::5. 'he publicly announced during the PT$ meeting that she paid PC;,000.00 but when the financial report of Tesoro Printing was given to us ,sic. the cost including the discount was P5;,000.00. " " " . 1. 'he violated several provisions of =.$. 606:, Campus ournalism $ct of /::/ " " ". 9. ?p to this point in time ,sic. the Aearbook /::5 is not receive ,sic. yet. This . . . is attributed to the inefficiency of the adviser or coordinator of the yearbook which I think she acknowledged her inefficiency and ineffectivity " " " . """ """ """ /1. 'he thrusted ,sic. an unfinished assignment to effrey Tero's mouth of ,sic. the full view of his classmates while she was seated on her table. <er temper is beyond control which could endanger our children physically, psychologically and emotionally./2. 'he grabbed the hair of some of her students in the computer class, again due to her temper and heartlessness. /;. 'he e"acts illegal collection to ,sic. our children for her test paper and handouts ranging from P0.50 to P50.00 which is not allowed by law. " " " . /5. 'he failed more than 20Q of her class because according to her, they cannot cope up ,sic. with her standard. " " " /C. )iss >abad does not possess the patience and the competence of a secondary school teacher. " " " """ """ """ 10. The 3'$T charge was e"orbitant without the benefit of li!uidation presented to the parents after the e"am nor end of the school year ,/::5.. " " " G1 The case was docketed as $dministrative Case 3o. :C#00/. In her, answer, petitioner denied the charges against her. The 4ffice of the President of respondent university then created an Investigating Committee to investigate the complaint. The Investigating Committee rendered a report recommending the penalty of dismissal from the service through the non#renewal of petitioner's probationary status on the ground of dishonesty and misconduct. =espondent university's -oard of =egents subse!uently approved and adopted the report of the Investigating Committee as its decision. =espondent then did not renew the probationary status of petitioner as teacher for the school year /::C#:6. Petitioner appealed said decision to the Civil 'ervice Commission. 4n $pril /;, /::9, the Civil 'ervice Commission issued a =esolution affirming the decision of respondent university's -oard of =egent. Petitioner filed a motion for reconsideration. 4n +ecember //, /::9, petitioner received the =esolution of the Civil 'ervice Commission dated 3ovember /2, /::9 denying the motion for reconsideration of petitioner. 4n +ecember 19, /::9, petitioner filed with the Court of $ppeals a )otion for ("tension of Period to File Petition for =eview asking for /5 days from +ecember 19, /::9 or until anuary /1, /::: to do so. 4n anuary /1, /:::, petitioner filed her Petition for =eview with the Court of $ppeals.

4n February /6, /:::, petitioner through counsel received a copy of the =esolution dated anuary 19, /::: issued by the Court of $ppeals, 'pecial Fifth +ivision, granting an e"tension of /5 days from +ecember 1C, /::9, or until anuary /0, /:::, to file the petition for review. The =esolution reads% G$cting on the motion filed by counsel for petitioner on +ecember 19, /::9, the Court resolves to grant petitioner an e"tension of fifteen ,/5. days from +ecember 1C, /::9, or until anuary /0, /:::, within which to file petition for review.G2 4n )arch /0, /:::, counsel of petitioner received a copy of the =esolution dated February 1;, /:::, issued by the Court of $ppeals, Former Fourth +ivision, dismissing the petition for review. It reads% GC43'I+(=I37 that the petition for review was filed on anuary /1, /::: by registered mail, beyond the e"tended period which e"pired on anuary /0, /:::, the petition for review is hereby +I')I''(+.G; 4n )arch 1;, /:::, petitioner filed a motion for reconsideration. 4n uly 1:, /:::, counsel of petitioner received a copy of the =esolution of the Court of $ppeals dated uly 11, /::: denying the motion for reconsideration of petitioner. The =esolution states% GC43'I+(=I37 that petitioner herself admits filing the petition at least one day late, the motion for reconsideration of 4ur dismissal is hereby +(3I(+.G5 <ence, this petition wherein petitioner raises the following issues% /. B<(T<(= P(TITI43(='' $PP($> BIT< T<( C4?=T 4F $PP($>' B$' TI)(>A P?='?$3T T4 '(CTI43 ;, =?>( ;2 I3 =(>$TI43 T4 '(CTI43 /, =?>( 11 4F T<( /::6 =(@I'(+ =?>(' 43 CI@I> P=4C(+?=(& 1. B<(T<(= T<( C4?=T 4F $PP($>'' =('4>?TI43' +$T(+ F(-=?$=A 1;, /::: +I')I''I37 T<( $PP($> $3+ T<( =('4>?TI43 +$T(+ ?>A 11, /::: +(3AI37 =(C43'I+(=$TI43 ,$33(P(' G$#=(@I(BG $3+ G-#=(@I(BG, '?P=$. D $=( I3 $CC4=+ BIT< T<( $F4=(#'T$T(+ =?>(' $3+ T<( '?P=()( C4?=T =?>I37' 4= ('T$->I'<(+ ?=I'P=?+(3C( I3 T<( C$'(' 4F G$'T$ )4'F4B'FA @'. <43. C4?=T 4F $PP($>', 7.=. 34. /0;11, )$=C< 2, /::; ,120 'C=$ C56.& G $@I(= @'. C4?=T 4F $PP($>'G, 7.=. 34. ;9/:;, )$=C< /5, /::0 ,/92 'C=$ /6/.& GC$P?>437 @'. B4=F)(3'' I3'?=$3C( C4)P$3A, I3C. ,/69 'C=$ 2/;.& $''4CI$T(+ >$-4= ?3I43 @'. 3>=C ,/9: 'C=$ 6;2.& $3+ 3$T$>I$ +( >$' $>$', (TC. @'. C4?=T 4F $PP($>', (T. $>., 7.=. 34. /#2900C, )$A /C, /:69& 2. B<(T<(= T<( C4?=T 4F $PP($>'' =('4>?TI43 +$T(+ ?>A 11, /::: B<IC< F$I>(+ T4 =?>( 43 T<( FI='T 7=4?3+ =$I'(+ -A P(TITI43(= I3 <(= )4TI43 F4= =(C43'I+(=$TI43 D T<$T T<( FI>I37 4F <(= $PP($>LP(TITI43 B$' I3 $CC4=+$3C( BIT< '(CTI43 ;, =?>( ;2 I3 =(>$TI43 T4 '(CTI43 /, =?>( 11 4F T<( /::6 =(@I'(+ =?>(' 43 CI@I> P=4C(+?=( D I' I3 $CC4=+ BIT< T<( >$B $3+ T<( )$3+$T(' 4F +?( P=4C('' D '?C< $' '(CTI43 /, =?>( 2C& $=TIC>( : 4F T<( 3(B CI@I> C4+( $3+ T<$T T<$T T<(A )?'T =?>( 43 G$>> C43T=4@(='I$> I''?('G, $' ('T$->I'<(+ -A ?=I'P=?+(3C(, $' I3 T<( C$'(' 4F G)$=C(>I34 $. -?'$C$A @'. $3T43I4 F. -?(3$@(3T?=$, 7.=. 34. >#595C, +$T(+ +(C()-(= 1:, /:52 $3+ G$74>T4 @'. C4?=T 4F $PP($>', >#12015 ,22 'C=$ 66/., +$T(+ ?3( 20, /:60& ;. B<(T<(= I3 T<( '$I+ =('4>?TI43', T<( C4?=T 4F $PP($>' +(P$=T(+ F=4) T<( $CC(PT(+ $3+ ?'?$> C4?='( 4F ?+ICI$> P=4C((+I37' $3+ '$3CTI43(+ T<( +(P$=T?=( -A T<( CI@I> '(=@IC( C4))I''I43 D B<IC< I' T4 P=4)4T( T<( 4- (CTI@( 4F '(C?=I37 $ ?'T, 'P((+A $3+ I3(PP(3'I@( +I'P4'ITI43 4F (@(=A $CTI43 $3+ P=4C((+I37 ,'(CTI43 C, =?>( I, 7(3(=$> P=4@I'I43, /::6 =?>(' 43 CI@I> P=4C(+?=(. $3+ T<$T 4F $ <4'T 4F ?=I'P=?+(3C(, $)437 B<IC< T<4'( 'T$T(+ I3 P=(@I4?'>A (3?)(=$T(+ 7=4?3+' $3+ I''?(', C43'I+(=I37 T<$T P(TITI43(= <$' P=('(3T(+ '?-'T$3TI@( $3+ F?3+$)(3T$> K?('TI43' 4F >$B, $)437 B<IC< $=( T<4'( 'P(CIFI(+ I3 T<( '?CC((+I37 P$=$7=$P<' D T<$T '<4?>+ <$@( )(=IT(+ ?+ICI$> +(T(=)I3$TI43, B<IC< -(C$?'( 4F T<( '$I+ CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 10

K?('TI43(+ =('4>?TI43' D B<(=( '?PP=(''(+ 43 T(C<3IC$> $3+ I3'?-'T$3TI$> =($'43'& 5. B<(T<(= '(CTI43 :, =(P?->IC $CT 34. ;C60 4T<(=BI'( F34B3 $' T<( )$73$ C$=T$ F4= P?->IC 'C<44> T($C<(=' $PP>I(' T4 T<4'( T($C<(=' I3 $ 'T$T( ?3I@(='ITA, '?C< $' P(TITI43(= $3+ I3 <(= C$'(& C. B<(T<(= T<( GC4))ITT((G C=($T(+ BIT<4?T $ =(P=('(3T$TI@( F=4) $3+ $PP4I3T(+ -A T<( T($C<(=' 4=7$3IR$TI43 B<(=( P(TITI43(= -(>437' D <$+ G ?=I'+ICTI43G T4 I3@('TI7$T( P(TITI43(= $3+ T<( G+(CI'I43G =(3+(=(+ T<(=(43 I' @$>I+ $3+ I3 $CC4=+$3C( BIT< T<( '$I+ P=4@I'I43 4F =.$. ;C60 4= T<( )$73$ C$=T$ F4= P?->IC 'C<44> T($C<(='& 6. B<(T<(= T<( C$'( 4F <43. $=)$3+ F$-(>>$, (TC. @'. T<( C4?=T 4F $PP($>', (T. $>., 7.=. 3o. //026:, +$T(+ 34@()-(= 19, /::6 I' $PP>IC$->( T4 P(TITI43(= $3+ <(= C$'(& 9. B<(T<(= ?'P $3+ IT' C4))ITT(( $3+ 34T T<( +(P$=T)(3T 4F (+?C$TI43, C?>T?=( $3+ 'P4=T' T<=? IT' =(7I43$> 4FFIC(, <$' ?=I'+ICTI43 4@(= T<( C$'( I3@4>@I37 T<( $PP>IC$TI43 4F =(P?->IC $CT 34. 606:, 4T<(=BI'( F34B3 $' T<( C$)P?' 4?=3$>I') $CT& :. B<(T<(= P(TITI43(='' 'T$T?' D 43 B<(T<(= '<( I' $ GP(=)$3(3TG 4= GP=4-$TI43$=AG ()P>4A(( $3+L4= <(= C$'( I' C4@(=(+ -A $3+L4= '<4?>+ -( '?- (CT T4 T<( CI@I> '(=@IC( >$B, IT' =?>(', T<( )$73$ C$=T$ F4= P?->IC 'C<44> T($C<(=' $3+ I' C43'I'T(3T BIT< T<( C$'( 4F GT<( ?3I@(='ITA 4F T<( P<I>IPPI3(', (T. $>. @(='?' T<( <43. T(4+4=4 P. =(7I34, 7.=. 34. 99/C6 +$T(+ )$A 2, /::2 ,11/ 'C=$ 5:9.G& /0. B<(T<(= T<( 'T$3+$=+' 4F +?( P=4C('' <$' -((3 )(T I3 T<( C$'( 4F P(TITI43(=& //. B<(T<(= P(TITI43(='' =I7<T T4 '(C?=ITA 4F T(3?=( ?3+(= T<( C43'TIT?TI43 <$' -((3 P=4T(CT(+& $3+ /1. B<(T<(= P(TITI43(= B$' I>>(7$>>A +I')I''(+ $3+ (3TIT>(+ T4 T<( $FFI=)$TI@( =(>I(F' 4F =(I3'T$T()(3T, -$CFB$7(' $3+ 4T<(= -(3(FIT'.C Bithout delving into the merits of this petition, we limit the discussion on the threshold issue of whether or not the Court of $ppeals erred in dismissing the petition for review filed by petitioner before it on the ground that the petition was filed late. Petitioner maintains that she timely filed her petition for review with the Court of $ppeals. 'he points out that she received the adverse resolution of the Civil 'ervice Commission on +ecember //, /::9. Petitioner then claims that from said date, she had /5 days or until +ecember 1C, /::9 to file her petition for review with the Court of $ppeals. 'ince +ecember 1C, /::9 was a 'aturday, it was on the ne"t business day, +ecember 19, /::9 which was a )onday, that petitioner filed a )otion for ("tension of Period to File Petition for =eview instead of filing her petition for review. In that motion for e"tension, petitioner sought an additional /5 days counting from +ecember 19, /::9 to file her petition, invoking the power of the Court of $ppeals to grant such e"tension as provided for by 'ection ;, =ule ;2 of the /::6 =ules of Civil Procedure.6 Bhile the Court of $ppeals favorably acted on the motion in a =esolution dated anuary 19, /:::, it granted the additional /5 days commencing from +ecember 1C, /::9 or until anuary /0, /:::, for petitioner to file her petition. Petitioner bewails the fact that she received the resolution embodying said grant only on February /6, /:::. -y that time, she had already filed her petition on anuary /1, /:::, having reckoned the e"tended period from +ecember 19, /::9, as she had prayed for in her motion for e"tension. In disputing the dismissal of her petition, petitioner insists that the /5#day e"tension was timely sought since +ecember 19, /::9, a )onday should be considered as the fifteenth day of filing her appeal, not +ecember 1C, /::9, which was a 'aturday. In support of her claim, petitioner relies on 'ection /, =ule 11 of the =ules of Court that provides% GIn computing any period of time prescribed or allowed by these =ules, or by order of the court, or by any applicable statute, the day of the act or event from which the designated period of time begins to run is to be e"cluded and the date of performance included. If the last da$ of the period, as thus computed, falls on a /aturda$, a

/unda$, or a legal holida$ in the place )here the court sits, the time shall not run until the ne(t )or0ing da$.G ,(mphasis supplied. Petitioner also contends that assuming that anuary /0, /:::, a 'unday, was the last day of the e"tension period, petitioner asserts that anuary //, /:::, a )onday, should be considered as the last day of filing the petition based on the *ust !uoted Glaw for pretemission of holidaysG. <ence, petitioner submits that the delay is only one ,/. day, a delay that is allegedly e"cusable due to a mistake in good faith and without any intention to delay, because the petition was filed the following day therefrom or on anuary /1, /:::. The petition has merit. -ased on 'ection /, =ule 11 of the =ules of Court and as applied in several cases, 9 where the last day for doing any act re!uired or permitted by law falls on a 'aturday, a 'unday, or a legal holiday in the place where the court sits, the time shall not run until the ne"t working day. In this case, petitioner still had until +ecember 19, /::9, a )onday and the ne"t business day to move for a /5#day e"tension considering that +ecember 1C, /::9, the last day for petitioner to file her petition for review fell on a 'aturday. The motion for e"tension filed on +ecember 19, /::9 was thus filed on time since it was filed before the e"piration of the time sought to be e"tended. : The ne"t issue to resolve then is when should the /5#day e"tension be reckoned, should it be counted from +ecember 1C, /::9 or +ecember 19, /::9S $s a rule, the e"tension should be tacked to the original period and commence immediately after the e"piration of such period./0 <owever, in &os0o)s0$ vs. Court of 1ppeals// and 2da. #e Capulong vs. *or0men3s Insurance Co., Inc.,/1 we allowed the e"tended period to commence from the specific time prayed for in the motion for e"tension. In this case, petitioner specifically manifested that she be granted an e"tension of /5 days from +ecember 19, /::9 or until anuary /1, /::: for her to file her petition for review. <ence, the period for reckoning the commencement of the additional /5 days should have been from +ecember 19, /::9, and not +ecember 1C, /::9. Thus, the petition filed by petitioner with the Court of $ppeals on anuary /1, /::9, e"actly /5 days from +ecember 19, /::9, was filed on time. The underpinning consideration in &os0o)s0i, 2da. de Capulong and in the case at bar, is the liberal interpretation of the =ules to achieve substantial *ustice. Petitioner would be outright denied her right to appeal if the original period of +ecember 1C, /::9 would be the basis of the /5#day e"tension period. Bhile the right to appeal is a statutory, not a natural right, nonetheless Git is an essential part of our *udicial system and courts should proceed with caution so as not to deprive a party of the right to appeal, but rather, ensure that every party#litigant has the amplest opportunity for the proper and *ust disposition of his cause, freed from the constraints of technicalities.G/2 The unfairness of the situation becomes even more apparent when we consider the fact that petitioner received notice that the e"tension was to be counted from the original period and not from the date that she had prayed for, a month after she had already filed her petition. The e!uitable solution in the case at bar, as amply supported by *urisprudence, is to thus base the e"tension from the period re!uested by petitioner. B<(=(F4=(, the petition is 7=$3T(+ and the case is hereby =()$3+(+ to the appellate court for further proceedings. 3o costs. '4 4=+(=(+.

G.R. No. 1544/. * !< r) 19, .011 SPOUSES RUBEN !" $0RNA LE0NES, Petitioners, vs. &OR$ER TENT% #I=ISION O& T%E COURT O& APPEALS, REGIONAL TRIAL COURT, BRANC% .1, BANSALAN, #A=AO #EL SUR, $UNICIPAL CIRCUIT TRIAL COURT, CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 11

BRANC% 1, BANSALAN, #A=AO #EL SUR, !" SPOUSES GUALBERTO @ RENE CABA%UG-SUPERALES, =espondents. +(CI'I43 LEONAR#O-#E CASTRO, J.: This Petition for Certiorari under =ule C5 of the =ules of Court assails the ,/. =esolution / dated +ecember 10, 100/ of the Court of $ppeals in C$#7.=. 'P 3o. ;;10#?+F, dismissing the Petition for Certiorari with prayer for a temporary restraining order ,T=4. and preliminary in*unction of petitioners spouses =uben and )yrna >eynes ,spouses >eynes.& and ,1. =esolution dated )ay 6, 1001 of the appellate court in the same case, denying the spouses >eynesH )otion for =econsideration. This case originated from a Complaint1 for forcible entry, damages, and attorneyHs fees filed by respondents spouses 7ualberto and =ene Cabahug 'uperales ,spouses 'uperales. against the spouses >eynes before the )unicipal Circuit Trial Court ,)CTC., -ranch / of -ansalan# )agsaysay, +avao del 'ur, and docketed as Civil Case 3o. ;6/ ,1000.#-. The Complaint alleged the following material facts% 2. That the Ispouses 'uperalesJ were the actual occupants and possessors, being lawful owners of that certain parcel of a residential lot within the 3ebrada 'ubd., -ansalan, +avao del 'ur, known as >ot 3o. 1;12#-#5#F#1, Psd#//#050;69, being a portion of lot 1;12#-#5#F, Psd#//#009/0;, covered by Transfer Certificate of Title 3o. T#;/1;0, containing an area of Three <undred Thirty 'i" ,22C. '!uare )eters, more or less, and registered in the name of =ene Cabahug 'uperales, in the =egister of +eeds for the Province of +avao del 'ur& """" ;. That sometime in February 1000, the Ispouses >eynesJ through force, stealth and strategy encroached upon and occupied a portion of the Ispouses 'uperalesHJ titled property consisting of 6C s!uare meters, more or less, dispossessed the Ispouses 'uperalesJ and constructed therein a comfort room as an e"tension of their house without first obtaining the re!uired building permit from the )unicipal (ngineerHs 4ffice, of -ansalan, +avao del 'ur& 5. That the Ispouses 'uperalesJ promptly called the attention of the Ispouses >eynesJ and protested their intrusion into their property but notwithstanding their protestations the Ispouses >eynesJ continued on their construction and occupation of a portion of the Ispouses 'uperalesHJ property& C. That the Ispouses 'uperalesJ reported to the -arangay Captain of -rgy. Poblacion, -ansalan, +avao del 'ur, the Ispouses >eynesHJ encroachment on their titled property and the illegal construction being made on a portion of their property and their complaint was docketed as -rgy. Case 3o. /C;:& 6. That $micable 'ettlement of the dispute was however, repudiated by the Ispouses >eynesJ when they refused to recogni8ed the relocation survey conducted on the property of the Ispouses 'uperalesJ and prevented the Ispouses 'uperalesHJ surveyor from planting monuments on the boundary between the Ispouses 'uperalesJ and the Ispouses >eynesHJ lot& """" 9. That as per relocation survey conducted, the Ispouses >eynesJ have encroached and occupied a total of 'eventy 'i" ,6C. '!uare )eters, of the Ispouses 'uperalesHJ titled property, thereby reducing the area of the Ispouses 'uperalesHJ lot from 22C '!uare )eters, more or less to 1C0 '!uare )eters, more or less& """" :. That the Ispouses 'uperalesJ also complained to the )unicipal (ngineerHs 4ffice in order to stop the illegal construction undertaken by the Ispouses >eynesJ, but Ispouses 'uperalesHJ complaint fell on deaf ears as no action has been taken by the )unicipal (ngineerHs 4ffice on the said illegal construction& """" /0. That the Ispouses >eynesJ have unlawfully occupied and are continuously occupying illegally a portion of the Ispouses 'uperalesHJ property consisting of 6C '!uare )eters, thereby denying the Ispouses 'uperalesJ the use and en*oyment of the said property being unlawfully withheld by the Ispouses >eynesJ&

//. That the Ispouses 'uperalesJ must be promptly restored to the full and peaceful possession of the portion of 6C '!uare )eters, of their property taken forcibly and illegally by the Ispouses >eynesJ, by ordering the Ispouses >eynesJ to remove andLor demolish their construction and improvements erected on the lot of the Ispouses 'uperalesJ, and should they fail or refuse to do so, Ispouses 'uperalesJ be given the authority to cause the removal of the Ispouses >eynesHJ improvements at the e"pense of the Ispouses 'uperalesJ& /1. That in the meantime that the Ispouses >eynesJ are occupying a portion of the Ispouses 'uperalesHJ property, Ispouses >eynesJ be made to pay the Ispouses 'uperalesJ the amount of P500.00 per month as reasonable rental for the property until they shall have restored the property to the full and peaceful possession of the Ispouses 'uperalesJ.2 'ummons together with a copy of the aforementioned Complaint was served on the spouses >eynes on )ay /0, 1000, giving them ten ,/0. days from receipt within which to file their answer pursuant to 'ection C of the =ules on 'ummary Procedure. The /0#day period for the filing of the spouses >eynesH answer prescribed on )ay 10, 1000, a 'aturday. The spouses >eynes filed their $nswer with Counterclaim on )ay 11, 1000, and their )otion to $dmit -elatedly Filed $nswer with attached $nswer with Counterclaim the day after, on )ay 12, 1000. The spouses >eynes e"plained that they were not able to file their $nswer with Counterclaim on )ay 10, 1000, even though there were court employees on duty that 'aturday, because they had to serve first a copy of said pleading on the spouses 'uperalesH counsel, whose office was located in +avao City. +avao City is appro"imately one#hour ride by bus from +igos City. The spouses >eynes added that they were not even sure if the office of the spouses 'uperalesH counsel was open on 'aturdays.; The spouses 'uperales opposed the spouses >eynesH )otion to $dmit -elatedly Filed $nswer contending that the answer should have been filed within /0 days from receipt of a copy of the complaint& and the spouses >eynesH motion to admit is in the nature of a motion for e"tension of time to file an answer, which is a prohibited pleading in summary proceedings. The spouses 'uperales further pointed out that the spouses >eynesH motion to admit was not set for hearing and was, thus, a pro forma motion which should be denied outright. The spouses 'uperales subse!uently filed an (" Parte )otion for udgment on )ay 12, 1000, in which they prayed that since the spouses >eynes failed to file their answer to the Complaint within the prescribed period, then *udgment could now be rendered based on the evidence and allegations contained in the Complaint. 4n )ay 1:, 1000, the )CTC rendered its udgment denying the spouses >eynesH )otion to $dmit -elatedly Filed $nswer and resolving Civil Case 3o. ;6/ ,1000.#- entirely in the spouses 'uperalesH favor. 'aid )CTC *udgment reads% This treats the e"#parte motion for *udgment filed by $tty. =ogelio (. 'arsaba, counsel for the Ispouses 'uperalesJ alleging in substance that the last day of filing of answer for the Ispouses >eynesJ was on )ay 10, 1000 and Ithe spouses >eynesJ did not file any. -e it noted on such date although it was 'aturday the Court was opened and Court personnel, -enedicta $bagon and $nastacia @ale were present at that time to receive cases and motions filed in Court. 4n )ay 11, 1000 Ispouses >eynesJ filed ItheirJ answer which answer was filed out of the time prescribed by law. ?nder 'ection 6 of =ule 60, /::6 =ules of Civil Procedure, the law provides% G'hould the defendants fail to answer the complaint within the period above provided, the court, motu proprio or on motion of the plaintiff, shall render *udgment as may be warranted by the facts alleged in the complaint and limited to what is prayed for therein. The Court, may in its discretion reduce the amount of damages and attorneys fees claimed for being e"cessive or otherwise unconscionable, without pre*udice to the applicability of 'ection 2 ,c., =ule : if there are two or more defendants.G From the foregoing facts, the Ispouses >eynesJ really failed to answer the complaint within the period prescribed by law, which period under the rules cannot be e"tended. B<(=(F4=(, the e"#parte motion for *udgment filed by the Ispouses 'uperalesJ is hereby $PP=4@(+, $3+ *udgment is hereby rendered ordering the Ispouses >eynesJ% /. To remove their construction andLor improvements on the 6C s!uare meters lot belonging to the Ispouses 'uperalesJ and surrendered ,sic. the same area promptly and peacefully to the Ispouses 'uperalesJ& CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 12

1. To pay the Ispouses 'uperalesJ the amount of P500.00 per month as reasonable rentals of the 6C s!uare meters lot occupied by the Ispouses >eynesJ from February 1000 until the said area shall have been delivered to the full possession and control of Ithe spouses 'uperalesJ in the concept of damages& 2. To pay the Ispouses 'uperalesJ the sum of P;,000.00 as reimbursement for the cost of the survey and the relocation of Ithe spouses 'uperalesHJ property& and ;. To pay the Ispouses 'uperalesJ the sum of P/5,000.00 as reimbursement for attorney fees.5 $ggrieved, the spouses >eynes appealed the foregoing )CTC udgment to the =egional Trial Court ,=TC., -ranch 1/ of -ansalan, +avao del 'ur. Their appeal was docketed as Civil Case 3o. PPI#119 ,00.. In its +ecision dated uly :, 100/, the =TC affirmed the appealed )CTC udgment, ruling thus% The lower court was right when it did not allow or entertain the belatedly filed $nswer with Counterclaim of the Ispouses >eynesJ. The G)otion to $dmit -elated $nswerG partakes of a motion for e"tension of time to file pleading which is not allowed as e"plicitly provided in 'ection /: of the /::/ =evised =ules on 'ummary Procedure. 'ince the law on this matter is unambiguous, une!uivocal, its application is imperative. Bherefore, the *udgment rendered by the )unicipal Circuit Trial Court is hereby affirmed, with the sole modification that the amount of monthly rental for the 'eventy#'i" ,6C. s!uare meter#lot be reduced from P500.00 to P100.00.C The spouses >eynes filed with the =TC a )otion for =econsideration in which they sought the recall of the +ecision dated uly :, 100/ and the remand of the case to the )CTC for trial on the merits. <owever, the =TC, in a =esolution also GstrangelyG dated uly :, 100/, refused to reconsider its earlier decision. The =TC stressed that% This case falls under the G=ules on 'ummary ProcedureG. $s such, the answer should be filed within ten ,/0. days from the service of summons and must be served on the plaintiff. The Ispouses >eynesJ, in filing a G)otion to $dmit -elated $nswerG in effect admitted that their $nswer was filed out of time. <aving made that admission, they may no longer be heard to claim otherwise. Bherefore, premises considered, the motion for reconsideration is hereby denied.6 4n 4ctober //, 100/, the spouses 'uperales filed with the =TC a )otion for ("ecution pursuant to =ule 60, 'ection 1/ of the =evised =ules of Court 9 which provides for the immediate e"ecution of the =TC *udgment against the defendant notwithstanding further appeal of the same before the Court of $ppeals or the 'upreme Court. ("pectedly, the spouses >eynes opposed the spouses 'uperalesH )otion for ("ecution. The spouses >eynes then filed a Petition for Certiorari with Prayer for the Issuance of Temporary =estraining 4rder and Preliminary In*unction with the Court of $ppeals on 3ovember /6, 100/. The petition was docketed as C$#7.=. 'P 3o. ;;10#?+F. In its =esolution dated +ecember 10, 100/, the Court of $ppeals dismissed the spouses >eynesH petition outright for being the wrong remedy and for failure to state the material dates. The appellate court e"plicated that% ,/. It is a wrong remedy. ?nder the heading GTimeliness 4f This PetitionG Ispouses >eynesJ alleged that the petition is directed against Gthe decision of the =egional Trial Court, -ranch 1/ in -ansalan, +avao del 'ur in the e"ercise of its appellate *urisdiction. This case originated from the )unicipal Circuit Trial Court, -ranch /, -ansalan#)agsaysay, +avao del 'ur ,docketed as Civil Case 3o. ;6/ I1000J#where, herein =espondents, 'pouses 7ualberto and =ene 'uperales filed a Complaint for Forcible (ntry against Petitioners, 'pouses =uben and )yrna >eynes.G If that be so, then the correct and appropriate mode of review should be appeal by way of a petition for review under =ule ;1 of the /::6 =ules. ?nder paragraph ; of 'upreme Court Circular 3o. 1#:0, an appeal taken to either the 'upreme Court or the Court of $ppeals by the wrong or inappropriate mode shall be dismissed. ,1. ?pon the other hand, if the present petition for certiorari were to be regarded as the correct or appropriate remedy N ,which it is not. N still it is procedurally flawed because Ithe spouses >eynesJ violated the amendment introduced to 'ection 2, =ule ;C of the /::6 =ules, as amended, by 'upreme Court Circular 3o. 2:#:9, effective 'eptember //, /::9, which states as follows ### 'ection 2. Contents and filing of petition& effect of non#compliance with re!uirements ###

"""" In actions filed under =ule C5, the petition shall further indicate the material dates showing when notice of *udgment or final order or resolution sub*ect thereof was received, when a motion for new trial or reconsideration, if any, was filed, and when notice of the denial thereof was received. """" The failure of the petitioner to comply with any of the foregoing re!uirements shall be sufficient ground for the dismissal of the petition. <ere, Ithe spouses >eynesJ did not indicate *ust when it was that they received the notice of the denial of the motion for reconsideration that they allegedly filed with the =TC of -ansalan, +avao del 'ur, -ranch 1/, on $ugust /9, 100/, the resolution whereon, denying their motion for reconsideration was allegedly GstrangelyG dated uly :, 100/. A%ERE&ORE, the present petition must be denied due course and conse!uently #IS$ISSE#. 3eedless to say, inasmuch as the prayer for a temporary restraining order and preliminary in*unction is merely an ad*unct to the main petition, the same must be pro tanto #ENIE#.: 4n anuary 19, 1001, the =TC issued an 4rder granting the spouses 'uperalesH )otion for ("ecution. The =TC observed that the Court of $ppeals did not issue a T=4 as prayed for by the spouses >eynes in their petition in C$#7.=. 'P 3o. ;;10#?+F. Instead, the =TC referred to the =esolution dated +ecember 10, 100/ of the Court of $ppeals dismissing outright the spouses >eynesH petition in C$#7.=. 'P 3o. ;;10#?+F. 'ubse!uently, the =TC issued a Brit of ("ecution on February 1, 1001, for the satisfaction of its +ecision dated uly :, 100/. 4n February //, 1001, the spouses >eynes filed with the =TC a )anifestation with motion to hold in abeyance the enforcement of the writ of e"ecution, considering their pending )otion for =econsideration of the =esolution dated +ecember 10, 100/ of the Court of $ppeals in C$#7.=. 'P 3o. ;;10#?+F. In its 4rder dated February /5, 1001, the =TC directed the 'heriff to hold in abeyance the implementation of the Brit of ("ecution until said trial court has resolved the spouses >eynesH latest motion. In a =esolution dated )ay 6, 1001, the Court of $ppeals found no reason to modify or overturn its earlier =esolution dated +ecember 10, 100/, which dismissed the spouses >eynesH petition in C$#7.=. 'P 3o. ;;10#?+F. The dispositive portion of said =esolution states% B<(=(F4=(, the motion for reconsideration, for lack of merit, must be as it hereby is +(3I(+.-.)phi- $ccordingly, the appended Petition for Certiorari is ordered e"punged from the records, and the enclosed Postal )oney 4rders 3os. 62/919; and - 1C69110, both dated /: 3ovember 100/, in the amount of P500.00 and P/,000.00, respectively, posted at the $teneo ?niversity, +avao City, payable to the clerk of court of this Court from a certain =uben >eynes, are hereby ordered returned to the senderLpayee./0 3ot long thereafter, on )ay /2, 1001, the =TC issued an 4rder resolving the issue of e"ecution of its +ecision dated uly 9, 100/. The =TC reasoned that% IIJn an e*ectment case, the appellate court which affirms a decision brought before it on appeal cannot decree its e"ecution in the guise of an e"ecution of the affirmed decision. The only e"ception to that is when said appellate court grants an e"ecution pending appeal. """" Considering that this does not involve a motion for e"ecution pending appeal, this Court ,sitting as an appellate court. cannot decree its e"ecution.// Thus, the =TC decreed% Bherefore, this case is hereby remanded to the court of origin, that is, the )unicipal Circuit Trial Court ,-r. 00/. -ansalan#)agsaysay with which the motion for e"ecution shall be filed./1 4n )ay /6, 1001, the spouses >eynes received a copy of the Court of $ppeals =esolution dated )ay 6, 1001 denying their )otion for =econsideration of the dismissal of their petition in C$# 7.=. 'P 3o. ;;10#?+F. Thereafter, on uly /6, 1001, the spouses >eynes filed the instant Petition for Certiorari charging the Court of $ppeals, as well as the =TC and the )CTC, with grave abuse of discretion, particularly committed as follows% I I3 +I')I''I37 Ithe spouses >eynesHJ ($=>I(= P(TITI43, T<( C4?=T 4F $PP($>' C4))ITT(+ 7=$@( $-?'( 4F +I'C=(TI43 C43'I+(=I37 T<$T IT +(3I(+ T<( P(TITI43 43 $ )(=( T(C<3IC$>ITA BIT<4?T C43'I+(=I37 T<$T T<( I''?(' =$I'(+ $=( 34@(> $3+ <I7<>A )(=IT4=I4?'. CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 13

II T<( )CTC -=$3C< / $3+ T<( =TC -=$3C< 1/ -4T< C4))ITT(+ 7=$@( $-?'( 4F +I'C=(TI43 $)4?3TI37 T4 >$CF 4= (PC('' 4F ?=I'+ICTI43 B<(3 IT +(3I(+ T4 $+)IT Ithe spouses >eynesHJ $3'B(= $3+ =?>I37 T<$T 'I3C( T<( >$'T +$A F4= FI>I37 Ithe spouses >eynesHJ $3'B(= F(>> 43 $ '$T?=+$A, T<( '$)( '<4?>+ <$@( -((3 FI>(+ 43 T<( '$I+ +$A 'I3C( T<(=( B(=( C4?=T P(='433(> 43 +?TA. III T<( )CTC -=$3C< / $3+ T<( =TC -=$3C< 1/ C4))ITT(+ 7=$@( $-?'( 4F +I'C=(TI43 $)4?3TI37 T4 >$CF 4= (PC('' 4F ?=I'+ICTI43 B<(3 IT +(CI+(+ T4 $+)IT Ithe spouses 'uperalesHJ C4)P>$I3T F4= F4=CI->( (3T=A 34TBIT<'T$3+I37 T<$T T<( '$)( B$' FI>(+ )4=( T<$3 43( A($= F=4) IT' '?PP4'(+ <$PP(3I37./2 Procedural )atters The Court of $ppeals dismissed the spouses >eynesH Petition for Certiorari in C$#7.=. 'P 3o. ;;10#?+F for being the wrong mode of appeal and for failure to state a material date. 'upreme Court Circular 3o. 1#:0 clearly lays down the proper modes of appeal to the Court of $ppeals from the =TCs% 2. $ppeals to the Court of $ppeals. N 4n the other hand, appeals by certiorari will not lie with the Court of $ppeals. $ppeals to that Court from =egional Trial Courts may be taken% a. by writ of error ,ordinary appeal. N where the appealed *udgment was rendered in a civil or criminal action by the regional trial court in the e"ercise of its original *urisdiction& or b. by petition for review N where the *udgment was rendered by the regional trial court in the e"ercise of its appellate *urisdiction. The mode of appeal in either instance is entirely distinct from an appeal by certiorari to the 'upreme Court. ;. (rroneous $ppeals. N $n appeal taken to either the 'upreme Court or the Court of $ppeals by the wrong or inappropriate mode shall be dismissed. ,(mphases ours.. The =TC decided Civil Case 3o. PPI#119 ,00. in its appellate *urisdiction. <ence, the =TC +ecision dated uly :, 100/, which affirmed the )CTC udgment of )ay 1:, 1000 against the spouses >eynes, and =esolution inadvertently also dated uly :, 100/, which denied the spouses >eynesH )otion for =econsideration, should have been appealed to the Court of $ppeals by means of a petition for review under =ule ;1 of the =ules of Court. The spouses >eynes, however, went before the Court of $ppeals via a Petition for Certiorari under =ule C5 of the =ules of Court. In )adrigal Transport, Inc. v. >apanday <oldings Corp.,/; we presented the following discourse distinguishing between an appeal ,whether an ordinary appeal or a petition for review. and a petition for certiorari, to wit% $ writ of certiorari may be issued only for the correction of errors of *urisdiction or grave abuse of discretion amounting to lack or e"cess of *urisdiction. The writ cannot be used for any other purpose, as its function is limited to keeping the inferior court within the bounds of its *urisdiction. For certiorari to prosper, the following re!uisites must concur% ,/. the writ is directed against a tribunal, a board or any officer e"ercising *udicial or !uasi#*udicial functions& ,1. such tribunal, board or officer has acted without or in e"cess of *urisdiction, or with grave abuse of discretion amounting to lack or e"cess of *urisdiction& and ,2. there is no appeal or any plain, speedy and ade!uate remedy in the ordinary course of law. GBithout *urisdictionG means that the court acted with absolute lack of authority. There is Ge"cess of *urisdictionG when the court transcends its power or acts without any statutory authority. G7rave abuse of discretionG implies such capricious and whimsical e"ercise of *udgment as to be e!uivalent to lack or e"cess of *urisdiction& in other words, power is e"ercised in an arbitrary or despotic manner by reason of passion, pre*udice, or personal hostility& and such e"ercise is so patent or so gross as to amount to an evasion of a positive duty or to a virtual refusal either to perform the duty en*oined or to act at all in contemplation of law. $ppeal and Certiorari +istinguished -etween an appeal and a petition for certiorari, there are substantial distinctions which shall be e"plained below.

$s to the Purpose. Certiorari is a remedy designed for the correction of errors of *urisdiction, not errors of *udgment. In Pure Foods Corporation v. 3>=C, we e"plained the simple reason for the rule in this light% GBhen a court e"ercises its *urisdiction, an error committed while so engaged does not deprive it of the *urisdiction being e"ercised when the error is committed. If it did, every error committed by a court would deprive it of its *urisdiction and every erroneous *udgment would be a void *udgment. This cannot be allowed. The administration of *ustice would not survive such a rule. Conse!uently, an error of *udgment that the court may commit in the e"ercise of its *urisdiction is not correctIaJble through the original civil action of certiorari.G The supervisory *urisdiction of a court over the issuance of a writ of certiorari cannot be e"ercised for the purpose of reviewing the intrinsic correctness of a *udgment of the lower court N on the basis either of the law or the facts of the case, or of the wisdom or legal soundness of the decision. (ven if the findings of the court are incorrect, as long as it has *urisdiction over the case, such correction is normally beyond the province of certiorari. Bhere the error is not one of *urisdiction, but of an error of law or fact N a mistake of *udgment N appeal is the remedy. $s to the )anner of Filing. 4ver an appeal, the C$ e"ercises its appellate *urisdiction and power of review. 4ver a certiorari, the higher court uses its original *urisdiction in accordance with its power of control and supervision over the proceedings of lower courts. $n appeal is thus a continuation of the original suit, while a petition for certiorari is an original and independent action that was not part of the trial that had resulted in the rendition of the *udgment or order complained of. The parties to an appeal are the original parties to the action. In contrast, the parties to a petition for certiorari are the aggrieved party ,who thereby becomes the petitioner. against the lower court or !uasi#*udicial agency, and the prevailing parties ,the public and the private respondents, respectively.. $s to the 'ub*ect )atter. 4nly *udgments or final orders and those that the =ules of Court so declare are appealable. 'ince the issue is *urisdiction, an original action for certiorari may be directed against an interlocutory order of the lower court prior to an appeal from the *udgment& or where there is no appeal or any plain, speedy or ade!uate remedy. $s to the Period of Filing. 4rdinary appeals should be filed within fifteen days from the notice of *udgment or final order appealed from. Bhere a record on appeal is re!uired, the appellant must file a notice of appeal and a record on appeal within thirty days from the said notice of *udgment or final order. $ petition for review should be filed and served within fifteen days from the notice of denial of the decision, or of the petitionerHs timely filed motion for new trial or motion for reconsideration. In an appeal by certiorari, the petition should be filed also within fifteen days from the notice of *udgment or final order, or of the denial of the petitionerHs motion for new trial or motion for reconsideration. 4n the other hand, a petition for certiorari should be filed not later than si"ty days from the notice of *udgment, order, or resolution. If a motion for new trial or motion for reconsideration was timely filed, the period shall be counted from the denial of the motion. $s to the 3eed for a )otion for =econsideration. $ motion for reconsideration is generally re!uired prior to the filing of a petition for certiorari, in order to afford the tribunal an opportunity to correct the alleged errors. 3ote also that this motion is a plain and ade!uate remedy e"pressly available under the law. 'uch motion is not re!uired before appealing a *udgment or final order. Certiorari 3ot the Proper =emedy if $ppeal Is $vailable Bhere appeal is available to the aggrieved party, the action for certiorari will not be entertained. =emedies of appeal ,including petitions for review. and certiorari are mutually e"clusive, not alternative or successive. <ence, certiorari is not and cannot be a substitute for an appeal, especially if oneHs own negligence or error in oneHs choice of remedy occasioned such loss or lapse. 4ne of the re!uisites of certiorari is that there be no available appeal or any plain, speedy and ade!uate remedy. Bhere an appeal is available, certiorari will not prosper, even if the ground therefor is grave abuse of discretion./5 The remedy of appeal to the Court of $ppeals was available to the spouses >eynes, only that they failed to avail of it in time. This much is clear from the following e"planation of the counsel for the spouses >eynes% /0. ?ntil the proceedings before the =egional Trial Court -ranch 1/, Ithe spouses >eynesJ were represented by their former counsel of record, $tty. Christopher $barilla. $ggrieved by the way CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 14

their case was handled by their former counsel of record, Ithe spouses >eynesJ engaged the services of the undersigned Counsel in the second week of 3ovember 100/ for the purpose of elevating their case to the Court of $ppeals. 'ince no other remedy under the =ules of Court was no longer available to Ithe spouses >eynesJ because the /5#day period within which to file a Certiorari under =ule ;1 had already lapsed, recourse under =ule C5 was instead resorted to as there was no appeal, or any plain, speedy and ade!uate remedy in the ordinary course of law by which Ithe spouses >eynesJ could !uestion the assailed decisions of both the lower court and the =TC -ranch 1/./C ,(mphasis ours.. Be reiterate the well#settled rule that certiorari is not available where the aggrieved partyHs remedy of appeal is plain, speedy and ade!uate in the ordinary course, the reason being that certiorari cannot co#e"ist with an appeal or any other ade!uate remedy. The e"istence and availability of the right to appeal are antithetical to the availment of the special civil action for certiorari. These two remedies are mutually e"clusive. /6 The special civil action of certiorari cannot be used as a substitute for an appeal which the petitioner already lost. /9 Furthermore, as the Court of $ppeals held, the spouses >eynesH Petition for Certiorari in C$# 7.=. 'P 3o. ;;10#?+F failed to comply with the re!uirement under =ule ;C, 'ection 2 of the =ules of Court that a petition for certiorari should indicate material dates, such as when notice of the *udgment or final order or resolution sub*ect thereof was received, when a motion for new trial or reconsideration, if any, was filed, and when notice of the denial thereof was received. The spouses >eynes did not refute that their Petition for Certiorari before the Court of $ppeals did not state the date they received a copy of the =TC =esolution denying their )otion for =econsideration. That the said =esolution was strangely dated uly :, 100/, the same date as the =TC +ecision sought to be reconsidered, is immaterial. The timeliness of the filing by the spouses >eynes of their petition before the Court of $ppeals is determined from the date they received the challenged =TC resolution and not the date the =TC issued the same. 'eeking recourse from this Court, the spouses >eynes once more filed a Petition for Certiorari under =ule C5 of the =ules of Court. The spouses >eynes yet again availed themselves of the wrong remedy. The proper remedy of a party aggrieved by a decision of the Court of $ppeals is a petition for review under =ule ;5 which is not similar to a petition for certiorari under =ule C5 of the =ules of Court. $s provided in =ule ;5 of the =ules of Court, decisions, final orders or resolutions of the Court of $ppeals in any case, i.e., regardless of the nature of the action or proceedings involved, may be appealed to us by filing a petition for review, which would be but a continuation of the appellate process over the original case. $ special civil action under =ule C5 is an independent action based on the specific grounds therein provided and, as a general rule, cannot be availed of as a substitute for the lost remedy of an ordinary appeal, including that under =ule ;5. $ccordingly, when a party adopts an improper remedy, his petition may be dismissed outright. /: 3evertheless, we bear in mind that the acceptance of a petition for certiorari, as well as the grant of due course thereto is, in general, addressed to the sound discretion of the court. The provisions of the =ules of Court, which are technical rules, may be rela"ed in certain e"ceptional situations. Bhere a rigid application of the rule that certiorari cannot be a substitute for appeal will result in a manifest failure or miscarriage of *ustice, it is within our power to suspend the rules or e"empt a particular case from its operation.10 Be pronounced in Tanenglian v. >oren8o 1/ that% $ll things considered, however, we do not agree in the conclusion of the Court of $ppeals dismissing petitioner's Petition based on a procedural fau( pa(. Bhile a petition for certiorari is dismissible for being the wrong remedy, there are e"ceptions to this rule, to wit% ,a. when public welfare and the advancement of public policy dictates& ,b. when the broader interest of *ustice so re!uires& ,c. when the writs issued are null and void& or ,d. when the !uestioned order amounts to an oppressive e"ercise of *udicial authority. In /e"astian v. &orales, we ruled that rules of procedure must be faithfully followed e"cept only when, for persuasive reasons, they may be rela"ed to relieve a litigant of an in*ustice not commensurate with his failure to comply with the prescribed procedure, thus% ICJonsidering that the petitioner has presented a good cause for the proper and *ust determination of his case, the appellate court should have rela"ed the stringent application of technical rules of procedure and yielded to consideration of substantial *ustice. The Court has allowed some meritorious cases to proceed despite inherent procedural defects and lapses. This is in keeping with the principle that rules of procedure are mere tools designed

to facilitate the attainment of *ustice and that strict and rigid application of rules which would result in technicalities that tend to frustrate rather than promote substantial *ustice must always be avoided. It is a far better and more prudent cause of action for the court to e"cuse a technical lapse and afford the parties a review of the case to attain the ends of *ustice, rather than dispose of the case on technicality and cause grave in*ustice to the parties, giving a false impression of speedy disposal of cases while actually resulting in more delay, if not a miscarriage of *ustice.11 ,(mphases ours.. 7iven the peculiar circumstances e"tant in the case at bar, the dismissal of the spouses >eynesH Petition for Certiorari would result in the miscarriage of *ustice. The spouses >eynes were un*ustly declared in default by the )CTC and deprived of the opportunity to present arguments and evidence to counter the spouses 'uperalesH Complaint. <ence, we are accepting and giving due course to the spouses >eynesH petition in the interests of substantial *ustice and e!uity. =eglementary Period The )CTC rendered its udgment dated )ay 1:, 1000 e" parte, declaring the spouses >eynes in default for their failure to file their answer to the spouses 'uperalesH Complaint within the reglementary period for doing so. $ccording to the )CTC, the spouses >eynes only had until )ay 10, 1000 to file an answer& and although )ay 10, 1000 was a 'aturday, the court was open and court personnel -enedicta $bagon and $nastacia @ale were present at that time to receive cases and motions filed with the court. Be disagree. 'ections C, =ule 60 of the /::/ =evised =ules on 'ummary Procedure gives a defendant /0 days from service of summons to file hisLher answer% 'ection C. $nswer. # Bithin ten ,/0. days from service of summons, the defendant shall file his answer to the complaint and serve a copy thereof on the plaintiff. $ffirmative and negative defenses not pleaded therein shall be deemed waived, e"cept lack of *urisdiction over the sub*ect matter. Cross#claims and compulsory counterclaims not asserted in the answer shall be considered barred. The answer to counterclaims or cross#claims shall be served and filed within ten ,/0. days from service of the answer in which they are pleaded. In computing said /0#day period, we resort to =ule 11, 'ection / of the =ules of Court, which reads% 'ection /. <ow to compute time. In computing any period of time prescribed or allowed by these =ules, or by order of the court, or by any applicable statute, the day of the act or event from which the designated period of time begins to run is to be e"cluded and the date of performance included. If the last day of the period, as thus computed, falls on a 'aturday, a 'unday, or a legal holiday in the place where the court sits, the time shall not run until the ne"t working day. ,(mphases ours.. Be emphasi8ed in -ank of the Philippine Islands v. Court of $ppeals, 12 that non#working days ,'aturdays, 'undays, and legal holidays. are e"cluded from the counting of the period only when the last day of the period falls on such days. =ule 11 does not provide for any other circumstance in which non#working days would affect the counting of a prescribed period. The spouses >eynes were served with the summons on )ay /0, 1000. The last day of the /0# day period within which the spouses >eynes should have filed their answer, )ay 10, 1000, fell on a 'aturday. The ne"t working day was )ay 11, 1000, a )onday, on which the spouses >eynes did file their $nswer with Counterclaim. -ased on the afore!uoted rules, the spouses >eynesH answer was filed within the reglementary period, and they were not in default. The )CTC should not have rendered an e" parte udgment against them. Court personnel were at the )CTC on )ay 10, 1000, a 'aturday, in compliance with the 'upreme Court $dministrative Circular 3o. 1#::, on 'trict 4bservance of Borking <ours and +isciplinary $ction for $bsenteeism and Tardiness, which took effect on February /, /:::. Pertinent provisions of said circular are reproduced below% $. ("ecutive udges of the =egional Trial Courts shall assign by rotation, udges of the )unicipal Trial Courts and )unicipal Circuit Trial Courts in multiple sala stations within their respective territorial areas, to be on duty on 'aturdays from 9%00 $.). to /%00 P.)., assisted by a skeletal force, also on rotation, primarily to act on petitions for bail and other urgent matters. """" -. Court offices, ,e.g., 4ffice of the Clerk. and units which deal directly with the public, such as receiving, process#serving and cashierHs units, shall maintain a skeletal force on 'aturdays from 9%00 $.). to noon, and from /1%20 P.). to ;%20 P.). Those assigned to work on 'aturdays shall CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 15

be notified of their assignment at least three days in advance. $n employee so assigned shall have a full day#off the following week, on a day to be specified by the usticeL udge concerned. ,)anual for Clerk of Courts, Chapter II, 'ection $, /. ,(mphases ours.. $dministrative Circular 3o. 1#:: should not affect the manner by which periods set by the rules or the courts are computed under =ule 11, 'ection / of the =ules of Court. $dministrative Circular 3o. 1#:: is an administrative issuance signed by then Chief ustice <ilario 7. +avide to govern the attendance of *udiciary officials and employees. It cannot amend or take precedence over the =ules of Court, duly approved by the Court en banc and published for the information of and compliance by the public. In fact, $dministrative Circular 3o. 1#:: itself states that Git supersedes and modifies accordingly any previous 4rders or Circulars on the matter,G but not the =ules of Court. )oreover, $dministrative Circular 3o. 1#:: re!uires certain trial court *udges and employees to be present on 'aturdays Gprimarily to act on petitions for bail and other urgent matters.G Be fail to see an answer to a complaint for forcible entry as among such urgent matters that would have re!uired filing by the party and action by the court not a day later. In addition, $dministrative Circular 3o. 1#:: directs the 4ffice of the Clerk of Court to maintain a skeletal force on 'aturdays. Civil Case 3o. ;6/ ,1000.#-, the spouses 'uperalesH complaint for forcible entry against the spouses >eynes, was already raffled to and pending before the )CTC#-ranch / of -ansalan#)agsaysay, +avao del 'ur& thus, the answer and other pleadings in said case should already be filed with the said -ranch and not with the 4ffice of the Clerk of Court. There is no showing that the 4ffice of the -ranch Clerk of Court was also open on )ay 10, 1000. )CTC urisdiction Be do not subscribe, however, to the spouses >eynesH argument that the spouses 'uperalesH Complaint for forcible entry had already prescribed. =ule 60, 'ection / of the =ules of Court provides% 'ec. /. Bho may institute proceedings, and when. N 'ub*ect to the provisions of the ne"t succeeding section, a person deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld after the e"piration or termination of the right to hold possession, by virtue of any contract, e"press or implied, or the legal representatives or assigns of any such lessor, vendor, vendee or other person, may, at any time within one ,/. year after such unlawful deprivation or withholding of possession, bring an action in the proper )unicipal Trial Court against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with damages and costs. ,(mphasis ours.. In forcible entry cases, the action must be brought within one year from the date of actual entry on the land. In paragraph ; of their Complaint, the spouses 'uperales alleged that the spouses >eynes, through force, stealth, and strategy, encroached upon and occupied a portion of the spouses 'uperalesH titled property, consisting of 6C s!uare meters, sometime in February 1000. The spouses 'uperales already filed their Complaint for forcible entry, damages, and attorneyHs fees, three months thereafter, in )ay 1000. (ven so, the )CTC rendered *udgment against the spouses >eynes e" parte. The spouses >eynesH $nswer with Counterclaim was not admitted by the )CTC and they had no opportunity to present evidence in support of their defenses. The spouses >eynes averred before us that% ;9. It is clear from the language of the law that Ithe spouses 'uperalesHJ cause of action accrued from the very moment they found in /::5 that Ithe spouses >eynesHJ buildings allegedly intruded into their supposed property when they ac!uired title over the same. -ut for the ne"t five years or so, Ithe spouses 'uperalesJ never raised a howl of protest over the alleged encroachment. 3ot having acted on their rights within the limits stipulated under the law, then the complaint for Forcible (ntry should also be considered as belatedly filed before the )CTC -ranch. ;:. IThe spouses 'uperalesJ, however, have been very careful to allege that Ithe spouses >eynesHJ structures were built in the year 1000 to enable them to get around the prescriptive period imposed by the =ules. -ut the truth is, and the same could have been very well established had a trial on the merits proceeded, the comfort rooms were built in /:95 and the bunkhouse followed two years later. IThe spouses 'uperalesJ then were not yet claimants or possessors of the land they now say is theirs. In /::5 when they surreptitiously ac!uired title over ose CabahugHs property, they contested for the first time, the location of Ithe spouses

>eynesHJ buildings. Aet, after having done so, Ithe spouses 'uperalesJ never filed the complaint for Forcible (ntry within the one ,/. year period as mandated. $t the onset therefore, Ithe spouses 'uperalesHJ cause of action was already tainted with a serious congenital infirmity which, had a trial been convened, would have necessarily resulted in the unwarranted complaint against Ithe spouses >eynesJ.1; These averments obviously involve factual matters which the spouses >eynes must back up with evidence. Be cannot rule on the same since this Court is not a trier of facts. Conse!uently, it is only prudent that the case be remanded to the )CTC for further proceedings. B<(=(F4=(, the Petition is 7=$3T(+. The e" parte udgment dated )ay 1:, 1000 of the )unicipal Circuit Trial Court, -ranch / of -ansalan#)agsaysay, +avao del 'ur, in Civil Case 3o. ;6/ ,1000.#-, is $33?>>(+ and '(T $'I+(. The case is =()$3+(+ to the same court which is +I=(CT(+ to admit the $nswer with Counterclaim of the spouses =uben and )yrna >eynes and accordingly conduct further proceedings. '4 4=+(=(+.

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G.R. No. 133119 A<(<34 17, .000 &INANCIAL BUIL#ING CORPORATION, petitioner, vs. &ORBES PAR1 ASSOCIATION, INC., respondent. +(CI'I43 #E LEON, *R., J.: -efore us is petition for review on certiorari of the +ecision/ dated )arch 10, /::9 of the Court of $ppeals 1 in C$#7= C@ 3o. ;9/:; entitled GForbes Park $ssociation, Inc. vs. Financial -uilding CorporationG, finding Financial -uilding Corporation ,hereafter, Financial -uilding. liable for damages in favor of Forbes Park $ssociation, Inc. ,hereafter, Forbes Park., for violating the latterHs deed of restrictions on the construction of buildings within the Forbes Park @illage, )akati. The pertinent facts are as follows% The then ?nion of 'oviet 'ocialist =epublic ,hereafter, ?''=. was the owner of a ;,112 s!uare meter residential lot located at 3o. /0, 3arra Place, Forbes Park @illage in )akati City. 4n +ecember 1, /:95, the ?''= engaged the services of Financial -uilding for the construction of a multi#level office and staff apartment building at the said lot, which would be used by the Trade =epresentative of the ?''=.2 +ue to the ?''=Hs representation that it would be building a residence for its Trade =epresentative, Forbes Park authori8ed its construction and work began shortly thereafter. 4n une 20, /:9C, Forbes Park reminded the ?''= of e"isting regulations; authori8ing only the construction of a single#family residential building in each lot within the village. It also elicited a reassurance from the ?''= that such restriction has been complied with. 5 Promptly, the ?''= gave its assurance that it has been complying with all regulations of Forbes Park.C +espite this, Financial -uilding submitted to the )akati City 7overnment a second building plan for the construction of a multi#level apartment building, which was different from the first plan for the construction of a residential building submitted to Forbes Park. Forbes Park discovered the second plan and subse!uent ocular inspection of the ?''=Hs sub*ect lot confirmed the violation of the deed of restrictions. Thus, it en*oined further construction work. 4n )arch 16, /:96, Forbes Park suspended all permits of entry for the personnel and materials of Financial -uilding in the said construction site. The parties attempted to meet to settle their differences but it did not push through. Instead, on $pril :, /:96, Financial -uilding filed in the =egional Trial Court of )akati, )etro )anila, a Complaint6for In*unction and +amages with a prayer for Preliminary In*unction against Forbes Park docketed as Civil Case 3o. /C5;0. The latter, in turn, filed a )otion to +ismiss on the ground that Financial -uilding had no cause of action because it was not the real party#in#interest. 4n $pril 19, /:96, the trial court issued a writ of preliminary in*unction against Forbes Park but the Court of $ppeals nullified it and dismissed the complaint in Civil Case 3o. /C5;0 altogether. Be affirmed the said dismissal in our =esolution,9 promulgated on $pril C, /:99, in 7.=. 3o. 6:2/: entitled GFinancial -uilding Corporation, et al. vs. Forbes Park $ssociation, et al.G $fter Financial -uildingHs case, 7.=. 3o. 6:2/:, was terminated with finality, Forbes Park sought to vindicate its rights by filing on 4ctober 16, /:9: with the

=egional Trial Court of )akati a Complaint : for +amages, against Financial -uilding, docketed as Civil Case 3o. 9:#5511, arising from the violation of its rules and regulations. The damages claimed are in the following amounts% ,a. P2,000,000.00 as actual damages& ,b. P/,000,000.00 as moral damages& ,c. P/,000,000.00 as e"emplary damages& and ,d. P/,000,000.00 as attorneyHs fees./0 4n 'eptember 1C, /::;, the trial court rendered its +ecision // in Civil Case 3o. 9:#5511 in favor of Forbes Park and against Financial -uilding, the dispositive portion of which reads, to wit% GB<(=(F4=(, in view of the foregoing, the Court hereby renders *udgment in favor of the plaintiff and against the defendant% ,/. 4rdering the defendant to removeLdemolish the illegal structures within three ,2. months from the time this *udgment becomes final and e"ecutory, and in case of failure of the defendant to do so, the plaintiff is authori8ed to demolishLremove the structures at the e"pense of the defendant& ,1. 4rdering the defendant to pay damages, to wit% ,a. P2,000,000.00 as actual damages by way of demolition e"penses& ,b. P/,000,000.00 as e"emplary damages& ,c. P500,000.00 as attorneyHs fees& ,d. the costs of suit. '4 4=+(=(+.G Financial -uilding appealed the said +ecision of the trial court in Civil Case 3o. 9:#5511 by way of a petition for review on certiorari/1 entitled GFinancial -uilding Corporation vs. Forbes Park $ssociation, Inc.G to the Court of $ppeals and docketed therein as C$#7= C@ 3o. ;9/:;. <owever, the Court of $ppeals affirmed it in its +ecision/2dated )arch 10, /::9, the dispositive portion of which reads% GB<(=(F4=(, the +ecision dated 'eptember 1C, /::; of the =egional Trial Court of )akati is $FFI=)(+ with the modification that the award of e"emplary damages, as well as attorneyHs fees, is reduced to fifty thousand pesos ,P50,000.00. each.G <ence, this petition, wherein Financial -uilding assigns the following errors% I. GT<( C4?=T 4F $PP($>' 7=$@(>A (==(+ I3 34T +I')I''I37 T<( C4)P>$I3T FI>(+ -A =('P43+(3T FP$ +('PIT( T<( F$CT T<$T IT' $>>(7(+ C>$I)' $3+ C$?'(' 4F $CTI43 T<(=(I3 $=( -$==(+ -A P=I4= ?+7)(3T $3+L4= $=( +(()(+ B$I@(+ F4= IT' F$I>?=( T4 I3T(=P4'( T<( '$)( $' C4)P?>'4=A C4?3T(=C>$I)' I3 CI@I> C$'( 34. /C5;0& II. T<( C4?=T 4F $PP($>' 7=$@(>A (==(+ I3 34T +I')I''I37 T<( C4)P>$I3T FI>(+ -A =('P43+(3T FP$ $7$I3'T P(TITI43(= F-C 'I3C( =('P43+(3T FP$ <$' 34 C$?'( 4F $CTI43 $7$I3'T P(TITI43(= F-C& III. T<( C4?=T 4F $PP($>' 7=$@(>A (==(+ I3 $B$=+I37 +$)$7(' I3 F$@4= 4F =('P43+(3T FP$ +('PIT( T<( F$CT T<$T 43 T<( -$'I' 4F T<( (@I+(3C( 43 =(C4=+, =('P43+(3T FP$ I' 34T (3TIT>(+ T<(=(T4 $3+ P(TITI43(= F-C I' 34T >I$->( T<(=(F4=&
CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 17

I@. T<( C4?=T 4F $PP($>' (==(+ I3 4=+(=I37 T<( +()4>ITI43 4F T<( I>>(7$> 'T=?CT?=(' >4C$T(+ $T 34. /0 3$==$ P>$C(, F4=-(' P$=F, )$F$TI CITA, C43'I+(=I37 T<$T T<( '$)( $=( >4C$T(+ 43 +IP>4)$TIC P=()I'('G /; Be grant the petition. First. The instant case is barred due to Forbes ParkHs failure to set it up as a compulsory counterclaim in Civil Case 3o. /C5;0, the prior in*unction suit initiated by Financial -uilding against Forbes Park. $ compulsory counterclaim is one which arises out of or is necessarily connected with the transaction or occurrence that is the sub*ect matter of the opposing partyHs claim./5 If it is within the *urisdiction of the court and it does not re!uire for its ad*udication the presence of third parties over whom the court cannot ac!uire *urisdiction, such compulsory counterclaim is barred if it is not set up in the action filed by the opposing party. /C Thus, a compulsory counterclaim cannot be the sub*ect of a separate action but it should instead be asserted in the same suit involving the same transaction or occurrence, which gave rise to it. /6 To determine whether a counterclaim is compulsory or not, we have devised the following tests% ,/. $re the issues of fact or law raised by the claim and the counterclaim largely the sameS ,1. Bould res judicata bar a subse!uent suit on defendantHs claim absent the compulsory counterclaim ruleS ,2. Bill substantially the same evidence support or refute plaintiffHs claim as well as the defendantHs counterclaimS and ,;. Is there any logical relation between the claim and the counterclaimS $ffirmative answers to the above !ueries indicate the e"istence of a compulsory counterclaim. /9 ?ndoubtedly, the prior Civil Case 3o. /C5;0 and the instant case arose from the same occurrence N the construction work done by Financial -uilding on the ?''=Hs lot in Forbes Park @illage. The issues of fact and law in both cases are identical. The factual issue is whether the structures erected by Financial -uilding violate Forbes ParkHs rules and regulations, whereas the legal issue is whether Financial -uilding, as an independent contractor working for the ?''=, could be en*oined from continuing with the construction and be held liable for damages if it is found to have violated Forbes ParkHs rules. $s a result of the controversy, Financial -uilding sei8ed the initiative by filing the prior in*unction case, which was anchored on the contention that Forbes ParkHs prohibition on the construction work in the sub*ect premises was improper. The instant case on the other hand was initiated by Forbes Park to compel Financial -uilding to remove the same structures it has erected in the same premises involved in the prior case and to claim damages for undertaking the said construction. Thus, the logical relation between the two cases is patent and it is obvious that substantially the same evidence is involved in the said cases. )oreover, the two cases involve the same parties. The aggregate amount of the claims in the instant case is within the *urisdiction of the regional trial court, had it been set up as a counterclaim in Civil Case 3o. /C5;0. Therefore, Forbes ParkHs claims in the instant case should have been filed as a counterclaim in Civil Case 3o. /C5;0. 'econd. 'ince Forbes Park filed a motion to dismiss in Civil Case 3o. /C5;0, its e"isting compulsory counterclaim at that time is now barred. $ compulsory counterclaim is au"iliary to the proceeding in the original suit and derives its *urisdictional support therefrom. /: $ counterclaim presupposes the

e"istence of a claim against the party filing the counterclaim. <ence, where there is no claim against the counterclaimant, the counterclaim is improper and it must dismissed, more so where the complaint is dismissed at the instance of the counterclaimant.10 In other words, if the dismissal of the main action results in the dismissal of the counterclaim already filed, it stands to reason that the filing of a motion to dismiss the complaint is an implied waiver of the compulsory counterclaim because the grant of the motion ultimately results in the dismissal of the counterclaim. Thus, the filing of a motion to dismiss and the setting up of a compulsory counterclaim are incompatible remedies.-.)phi-In the event that a defending party has a ground for dismissal and a compulsory counterclaim at the same time, he must choose only one remedy. If he decides to file a motion to dismiss, he will lose his compulsory counterclaim. -ut if he opts to set up his compulsory counterclaim, he may still plead his ground for dismissal as an affirmative defense in his answer.1/ The latter option is obviously more favorable to the defendant although such fact was lost on Forbes Park. The ground for dismissal invoked by Forbes Park in Civil Case 3o. /C5;0 was lack of cause of action. There was no need to plead such ground in a motion to dismiss or in the answer since the same was not deemed waived if it was not pleaded.11 3onetheless, Forbes Park still filed a motion to dismiss and thus e"ercised bad *udgment in its choice of remedies. Thus, it has no one to blame but itself for the conse!uent loss of its counterclaim as a result of such choice. Inasmuch as the action for damages filed by Forbes Park should be as it is hereby dismissed for being barred by the prior *udgment in 7.=. 3o. 6:2/: ,supra. andLor deemed waived by Forbes Park to interpose the same under the rule on compulsory counterclaims, there is no need to discuss the other issues raised by the herein petitioner. A%ERE&ORE, the instant petition is hereby 7=$3T(+ and the +ecision dated )arch 10, /::9 of the Court of $ppeals in C$#7.=. C@ 3o. ;9/:; is hereby =(@(='(+ and '(T $'I+(. Costs against respondent Forbes Park $ssociation, Inc. . '4 4=+(=(+.

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G.R. No. 143188 &26r< r) 14, .007 &LORENTINO PINE#A, Petitioner, vs. %EIRS O& ELISEO GUE=ARA, r2pr232!42" 6) ERNESTO E. GUE=ARA !" ISAGANI S. GUE=ARA, ! 52l)? ELISEO GUE=ARA, *R., +ENAI#A G. SAPALICIO, #ANTE G. GUE=ARA, #ANILO C. GUE=ARA, !" ISAGANI S. GUE=ARA, =espondents. +(CI'I43 TINGA, J.: 4n appeal by way of certiorari under =ule ;5 of the /::6 =ules of Civil Procedure are the +ecision/ and =esolution of the Court of $ppeals in C$#7.=. C@ 3o. 5;06;. The +ecision reversed the order of dismissal of the =egional Trial Court ,=TC., -ranch 162, )arikina, and directed the court a ,uo to conduct trial on the merits, while the =esolution denied petitioner PinedaHs motion for reconsideration. $s borne out by the records, the following are the factual antecedents. 4n 6 'eptember /::5, respondents (liseo 7uevara, r., Renaida 7. 'apalicio, +ante 7. 7uevara and Isagani '. 7uevara, collectively referred hereinafter as the 7uevara heirs, filed an action for the nullification of the certificates of title of a parcel of land measuring appro"imately 1,20; hectares situated in )arikina. 3amed defendants were the estate of the late Pedro 7on8ales, @irginia Pere8, Crisanta Pere8, ose Pere8, =oy 7uadalupe, >ino -ucad and Florentino Pineda. The complaint, docketed as Civil Case 3o. :5#/6/#)F, was raffled to -ranch 162 of the =TC of )arikina. The 7uevara heirs alleged in the complaint that they were the co#owners of a property originally covered by 4riginal Certificate of Title ,4CT. 3o. 29C issued on 6 +ecember /:/0 in favor of the spouses (miliano 7uevara and )atilde Crimen. The coupleHs son, and the 7uevara heirsH predecessor#in#interest, (liseo 7uevara, allegedly purchased the property on / anuary /:21 and had e"ercised ownership over the property since then by selling and donating portions thereof to third persons. The 7uevara heirs averred that the sale of the property to (liseo 7uevara was annotated at the back of 4CT 3o. 29C. $ccording to the 7uevara heirs, the defendants illegally claimed ownership and possession over a certain portion of the property, particularly that area covered by Transfer Certificate of Title ,TCT. 3o. 1122C/ issued to the estate of Pedro C. 7on8ales. TCT 3o. 1122C/ was derived from 4CT 3o. C1:, which the 7uevara heirs described as fake, having been issued only on 1C anuary /:/1 or subse!uent to the issuance of 4CT 3o. 29C. <ence, the 7uevara heirs prayed that 4CT 3o. C1: and its derivative titles, to wit, TCT 3os. 1122C/, 1;;;;6, 1;;;;9, 1;;;;: be cancelled, that the 7uevara heirs be declared owners of the property and that a new certificate of title be issued in their names. +efendant Pineda filed an answer with counterclaim, raising the defenses of lack of cause of action, prescription, laches and estoppel. <e averred that he was a buyer in good faith and had been in actual possession of the land since /:60 initially as a lessor and subse!uently as an owner. <e registered the property in his name and was issued TCT 3o. 156161. +efendants @irginia, Crisanta, and ose, all surnamed Pere8, filed an answer with compulsory counterclaim and averred that their father, )arcos Pere8, purchased the property from the late Pedro 7on8ales and had it declared in Pere8Hs name for ta"ation purposes. $ccording to them, they had been in actual possession of a lot measuring 265 s!uare meters before /:59 and had been regularly paying the property ta"es thereon.

The rest of the defendants, including the estate of Pedro 7on8ales, also filed an answer with counterclaim, raising the same defenses of laches and prescription and res judicata. They claimed that 4CT 3o. C1: was issued to the )unicipality of )arikina in /:/1 and that the late Pedro 7on8ales and his family started occupying the property as early as /:50 as lessees thereon. The late Pedro 7on8ales allegedly bought the property from the )unicipality of )arikina in a public bidding on 15 $pril /:CC and had allowed defendants to occupy the property. They asserted that the 7uevara heirs never actually occupied the property. 4n ; +ecember /::5, the =TC set the case for hearing as if a motion to dismiss had been filed. +uring the hearing, the parties presented oral arguments and were directed to file their memoranda. $fter submission of memoranda, the =TC issued an 4rder dated 6 )ay /::C, dismissing the action on the ground of laches. The 7uevara heirs appealed the order of dismissal, claiming the denial of their right to due process. 4n 12 $ugust /:::, the Court of $ppeals promulgated the assailed +ecision, which set aside the =TCHs order of dismissal and directed the reinstatement of Civil Case 3o. :5#/6/#)F. The appellate court ruled that a complaint cannot be dismissed under =ule /C, 'ection /1 of the =ules of Court based on laches since laches is not one of the grounds enumerated under said provision. $lthough the =TC order of dismissal did not rule on the other affirmative defenses raised by petitioners in the answer, such as lack of cause of action, prescription and res *udicata, the Court of $ppeals discussed them and ruled that none of these affirmative defenses raised were present to warrant the dismissal of the action. 4nly Pineda sought reconsideration. In its 2 )ay 1000 =esolution, the Court of $ppeals denied PinedaHs motion. <ence, the instant petition, attributing the following errors to the Court of $ppeals% T<( C4?=T 4F $PP($>' (==(+ I3 T$FI37 C473IR$3C( 4F T<( $PP($> 4F =('P43+(3T' B<IC< =$I'(+ 43>A P?=(>A K?('TI43' 4F >$B& $3+, T<(=(F4=(, IT $CT(+ BIT<4?T ?=I'+ICTI43 I3 <($=I37 $3+ +(CI+I37 T<( '$I+ $PP($>(+ C$'(. T<( C4?=T 4F $PP($>' (==(+ I3 34T C43'I+(=I37 T<( $FFI=)$TI@( +(F(3'( 4F >$C<(' $' $3$>474?' T4 P=('C=IPTI43. T<( C4?=T 4F $PP($>' (==(+ I3 <4>+I37 T<$T T<( T=I$> C4?=TH' +I')I''$> 4F T<( =('P43+(3T'H C4)P>$I3T I' (==43(4?' F4= T<( =($'43 T<$T T<( $FFI=)$TI@( +(F(3'( 4F >$C<(' I' 34T $)437 T<( 7=4?3+' F4= $ )4TI43 T4 +I')I'' ?3+(= T<( =?>(', B<IC< )$A -( $>>(7(+ $' $FFI=)$TI@( +(F(3'( T4 -( P=4@(+ +?=I37 T<( T=I$>. $' $ C4=4>>$=A T4 T<( T<I=+ $''I73(+ (==4= $-4@(, T<( C4?=T 4F $PP($>' (==(+ I3 34T T=($TI37 T<( $''$I>(+ 4=+(= 4F +I')I''$> 4F =('P43+(3T'H C4)P>$I3T -A T<( T=I$> C4?=T $' $ '?))$=A ?+7)(3T, T4 $@4I+ P=4T=$CT(+ >ITI7$TI43. T<( C4?=T 4F $PP($>' (==(+ I3 34T <4>+I37 T<$T B<I>( P=('C=IPTI43 I3 +(=47$TI43 4F T<( TIT>( T4 =(7I'T(=(+ 4B3(=' BI>> 34T >I(, >$C<(' BI>>.2 Counsel for the estate of Pedro 7on8ales filed a CommentL)anifestation, ; stating that her clients have adopted and *oined PinedaHs petition praying for the reinstatement of the trial courtHs order of dismissal. $t bottom, the petition raises two main issues, to wit% ,/. whether or not the appeal of the heirs of 7uevara was improperly elevated to the Court of $ppeals since, according to them, it raised a pure !uestion of law& and ,1. whether or not the trial
CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 19

court correctly dismissed the action on the ground of laches without conducting trial on the merits. Petitioner Pineda had ample opportunity to raise before the Court of $ppeals the ob*ection on the improper mode of appeal taken by the heirs of 7uevara. This, he failed to do. The issue of improper appeal was raised only in PinedaHs motion for reconsideration of the Court of $ppealsH +ecision. <ence, this Court cannot now, for the first time on appeal, pass upon this issue. For an issue cannot be raised for the first time on appeal.5 In any case, the appeal by the heirs of 7uevara also raised the issue regarding the e"istence of laches on the part of petitioners as defendants, which is factual in nature as discussed below. 3ow, did the trial court correctly order the dismissal of the complaint based on laches without conducting trial on the meritsS The Court of $ppeals disagreed, holding that under =ule /C, 'ection /C of the =ules of Court, laches is not enumerated under said provision, hence, it must be proved during trial. 4n the other hand, petitioner Pineda asserts that laches is analogous to prescription and, therefore, can be a ground of dismissing a complaint as though a motion to dismiss is filed. Bell#settled is the rule that the elements of laches must be proved positively. >aches is evidentiary in nature which could not be established by mere allegations in the pleadings and can not be resolved in a motion to dismiss. $t this stage therefore, the dismissal of the complaint on the ground of laches is premature. 6 Those issues must be resolved at the trial of the case on the merits wherein both parties will be given ample opportunity to prove their respective claims and defenses.9 The elements of laches are% ,/. conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation of which the complaint seeks a remedy& ,1. delay in asserting the complainantHs rights, the complainant having had knowledge or notice of the defendantHs conduct as having been afforded an opportunity to institute a suit& ,2. lack of knowledge or notice on the part of the defendant that the complainant would assert the right in which he bases his suit& and ,;. in*ury or pre*udice to the defendant in the event relief is accorded to the complainant, or the suit is not held barred.: Bhether or not the elements of laches are present is a !uestion involving a factual determination by the trial court. There is no absolute rule as to what constitutes laches or staleness of demand& each case is to be determined according to its particular circumstances./0 >aches is not concerned with the mere lapse of time, rather, the party must have been afforded an opportunity to pursue his claim in order that the delay may sufficiently constitute laches. // Bithout pre*udging the instant case, an apparent delay in the enforcement of oneHs claim does not automatically constitute laches. The party charged with negligence or omission in invoking his right must be afforded the opportunity to raise his defenses, which can be accommodated only in a contentious proceeding. In reversing the =TCHs order of dismissal, the Court of $ppeals held that Glaches could not be a ground to dismiss the complaint as it is not enumerated under =ule /C, 'ection /.G/1 This is not entirely correct. ?nder paragraph ,h. thereof, where a claim or demand set forth in the plaintiffHs pleading has been paid, waived, a"andoned, orother)ise e(tinguished, the same may be raised in a motion to dismiss. The language of the rule, particularly on the relation of the words GabandonedG and Gotherwise e"tinguishedG to the phrase Gclaim or demand deemed set forth in the plaintiffHs pleadingG is broad enough to include within its ambit the defense of bar by laches. Ho)ever, when a party moves for the dismissal of the complaint based on laches, the trial court must set a hearing on the motion where the parties shall submit not onl$ their arguments on the !uestions of law "ut also their evidence on the !uestions of fact involved./2 Thus, being factual in nature, the elements of laches

must be proved or disproved through the presentation of evidence by the parties. $s discussed above, an apparent delay in the filing of a complaint as shown in a pleading does not automatically warrant the dismissal of the complaint on the ground of laches. In the case at bar, while the trial court correctly set the case for hearing as though a motion to dismiss had been filed, the records do not reveal that it e"tended to the parties the opportunity to present evidence. For instance, counsel for the heirs of 7uevara filed and served written interrogatories/; on one of the defendants but the trial court held in abeyance the resolution of the motion to order the defendant to submit answers to the written interrogatories. /5 The trial court likewise denied the (" Parte )otion To 'et Trial filed by the heirs of 7uevara. /CThese were the instances which would have enabled the trial court to receive evidence on which to anchor its factual findings. $lthough the trial court heard oral arguments and re!uired the parties to submit their respective memoranda, the presentation of evidence on the defenses which are grounds for a motion to dismiss was not held at all. 4therwise, the oral arguments and memoranda submitted by the parties would have enabled this Court to review the trial courtHs factual finding of laches instead of remanding the case for trial on the merits. $ perusal of the records precludes this Court from making a categorical declaration on whether the heirs of 7uevara were guilty of laches. 3either does the affirmative defense of prescription alleged in an answer automatically warrant the dismissal of the complaint under =ule /C. $n allegation of prescription can effectively be used in a motion to dismiss only when the complaint on its face shows that indeed the action has already prescribed./6 4therwise, the issue of prescription is one involving evidentiary matters re!uiring a full#blown trial on the merits and cannot be determined in a mere motion to dismiss./9 PinedaHs theory that the defense of laches should be treated as an affirmative defense of prescription warranting the dismissal of the complaint is erroneous.-a)phi-.net There is also no basis in procedural law to treat the =TCHs order of dismissal as a summary *udgment. The trial court cannot motu proprio decide that summary *udgment on an action is in order. ?nder the applicable provisions of =ule 25, the defending party or the claimant, as the case may be, must invoke the rule on summary *udgment by filing a motion. /: The adverse party must be notified of the motion for summary *udgment10 and furnished with supporting affidavits, depositions or admissions before hearing is conducted.1/ )ore importantly, a summary *udgment is permitted only if there is no genuine issue as to any material fact and a moving party is entitled to a *udgment as a matter of law.11 -ased on the partiesH allegations in the complaint and answer, the issues in the case at bar are far from settled. For instance, both petitioner and respondents claim their ownership rights over the same property based on two different original certificates of title. =espondents charge petitioner of illegal occupation while the latter invokes good faith in the ac!uisition of the property. Clearly, these are factual matters which can be best ventilated in a full#blown proceeding before the trial court, especially when what are involved appear to be si8eable parcels of land covered by two certificates of title. ("cept for Pineda, the other defendants did not elevate the Court of $ppealsH +ecision to this Court. Bith respect to them, the appellate courtHs +ecision has already become final and conclusive, notwithstanding their adoption 12of PinedaHs petition. B<(=(F4=(, the instant petition for review on certiorari is +(3I(+ and the +ecision and =esolution of the Court of $ppeals in C$#7.=. C@ 3o. 5;06; are $FFI=)(+. >et the records of the case be remanded for further proceedings to the =egional Trial Court of )arikina City, which is hereby 4=+(=(+ to try and decide the case with deliberate speed.'4 4=+(=(+.
CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 20

G.R. No. 171/77 * !< r) 30, .013 P%ILIPPINE NATIONAL BAN1, 3<634i4<42" 6) TRANC%E 1 8SP=-A$C:, INC., Petitioner, vs. RINA PARA 0NO LI$ !" PUERTO A+UL LAN#, INC., =espondents. +(CI'I43 RE0ES, J.: This is a petition for review on certiorari/ under =ule ;5 of the =ules of Court to assail the +ecision1 dated 'eptember 1:, 1005 and =esolution2dated February 12, 100C of the Comi of $ppeals ,C$. in C$#7.=. 'P 3o. 91;25 entitled GPhilippine 3ational -ank substituted by Tranche / ,'P@#$)C., Inc. v. =ina Parayno >im and Puerto $8ul >and, Inc., the 4ffice of the President and the <ousing and >and ?se =egulatory -oard.G In its +ecision; dated 'eptember 1:, 1005, the C$ dismissed the petition for review filed by petitioner Philippine 3ational -ank ,P3-. from the +ecision 5 dated une /9, 1002 of the 4ffice of the President ,4P.. The dispositive portion of the C$ +ecision dated 'eptember 1:, 1005 reads% B<(=(F4=(, premises considered, the petition for review is hereby +I')I''(+. The +ecision of the 4ffice of the President dated une /9, 1002 is $FFI=)(+ BIT< )4+IFIC$TI43 that the award of moral damages and attorneyHs fees is +(>(T(+. '4 4=+(=(+.C In its =esolution6 dated February 12, 100C, the C$ denied P3-Hs )otion for =econsideration. $ntecedent Facts 4ne of herein respondents, Puerto $8ul >and, Inc. ,P$>I., is the owner and developer of @ista de >oro Condominium ,@ista de >oro., a condominium pro*ect that straddles on eight ,9. parcels of land located at the Puerto $8ul -each and <otel Comple", Ternate, Cavite. The lots are registered in P$>IHs name under Transfer Certificates of Title ,TCT. 3os. ;0;10/, ;0;101, ;0;102, ;0;10;, ;0;;21, ;0;;22, ;0;;2; and ;0;;15 of the Cavite Province =egistry of +eeds. 4n )ay /6, /::2, the <ousing and >and ?se =egulatory -oard ,<>?=-. issued in favor of P$>I, relative to @ista de >oro, a >icense to 'ell pursuant to Presidential +ecree ,P.+.. 3o. :56, otherwise known as GThe 'ubdivision and Condominium -uyersH Protective +ecreeG. 4n )ay /2, /::;, P$>I and P3- entered into a GCredit $greementG by virtue of which P3loaned to P$>IP/50,000,000.00 to finance the construction and development of @ista de >oro. $s security, P$>I mortgaged to P3- the eight ,9. lots mentioned above. In the GCredit $greementG, P$>I made several representations, one of which is as follows% 'ection C. =epresentation and Barranties. The -orrower P$>I represents and warrants to the -ank P3-as follows% """" C.01. $uthority& Corporate $ction& 3o @iolation. $t the time of the e"ecution and delivery of this $greement, the 3oteLs and the other documentation contemplated thereby, their e"ecution and delivery as well as the performance and observance by the borrower of the respective terms and provisional ,sic. thereof, ,I. will have been duly authori8ed by all necessary corporate actions, ,II. will have received such approvals, if any, of any court, office or administrative or regulatory agency or authority having *urisdiction over the transactions contemplated thereby, and ,III. will not contravene or violate any applicable provision of law or the -orrowerHs $rticles of Incorporation or -y#>aws, or of any contract or agreement or indenture or other instrument to which the borrower is a party or by which any of its properties may be bound.9 4n une 9, /::5 and 'eptember 15, /::C, P3- loaned to P$>I additional amounts of P/10,000,000.00 andP50,000,000.00. It was agreed that these two ,1. subse!uent loans shall likewise be secured by the same mortgage which was earlier constituted on the eight ,9. lots owned by P$>I. 4n 'eptember 9, /::6, P$>I and its co#respondent in the instant petition, =ina Parayno >im ,>im., entered into a Contract to 'ell, covering ?nit ;9C in Cluster +ominiko of @ista de >oro. ?nit ;9C is covered by Condominium Certificate of Title ,CCT. 3o. ;09 and Cluster +ominiko is situated on the land covered by TCT 3o. ;0;10/. P3-Hs mortgage is annotated on both titles.: P$>I defaulted in the payment of its loans. Thus, P3- moved for the foreclosure of the sub*ect mortgage and a 3otice of 'ale dated $pril /:, /::: was thereafter issued, scheduling the sale of the eight ,9. lots at public auction on )ay 15, /:::./0 /st $nnulment of )ortgage Case

4n )ay 1;, /:::, P$>I filed with the =egional Trial Court of 3aic, Cavite ,=TC. a Complaint// against P3- for the annulment of the sub*ect mortgage with application for the issuance of a temporary restraining order andLor writ of preliminary in*unction. P$>I alleged that the sub*ect mortgage is void as it was not approved by the <>?=- as re!uired by 'ection /9/1 of P.+. 3o. :56. P$>IHs complaint was docketed as Civil Case 3o. 3C#::#/005 and raffled to -ranch /5. In an 4rder/2 dated $ugust 1:, 1002, the =TC dismissed P$>IHs complaint stating that% The failure on the part of the plaintiff P$>I to comply with its undertaking to secure the approval of the mortgage by the <>?=- does not invalidate the mortgage or render it unenforceable. It would be rank in*ustice to hold otherwise for then the validity of the contract would be left to the entire discretion and whim of the plaintiff. """" In the instant case, it is the claim of plaintiff that it did not have free disposal of the mortgaged properties at the time the mortgage was constituted. Contrary to plaintiffHs submission, as the registered owner of the real properties covered by the mortgage, plaintiff had absolute title to such properties and may make use of it in such manner it may deem fit for its advantage so long as such use is not in*urious or harmful to others. Plaintiff can validly constitute the mortgage under consideration since the validity thereof does not depend on the written approval of the <>?=-. (ven in the absence of such approval, the mortgage remains valid and enforceable since P+ 3o. :56 merely prohibits the owner or developer from mortgaging any unit or lot without such approval. 3owhere in the said +ecree is it provided that a mortgage entered into by the owner or developer in violation thereof is not valid. " " ". """" It is !uite evident from the foregoing that plaintiff intended to be bound by its contract of mortgage with defendant P3-. Plaintiff may not now be heard to complain that its contract with P3- is invalid for its failure to seek the written approval from the <>?=- of the mortgage it has entered into and hide behind the mantle of P+ 3o. :56 which is meant for the protection of subdivision lot or condominium unit buyers and not the owner or developer which in the instant case is the plaintiff. B<(=(F4=(, premises considered, let *udgment be rendered in favor of the defendants and against the plaintiff% ,I. declare the =eal (state )ortgage sub*ect matter of this case as valid and enforceable& ,II. lifting the temporary restraining order issued& and ,III. allowing the foreclosure of the mortgaged properties. '4 4=+(=(+./; P$>I moved for reconsideration, which was denied by the =TC in an 4rder /5 dated )arch 20, 100;. The =TC declared the sub*ect mortgage as voidable since there is nothing in 'ection /9 of P.+. 3o. :56 suggesting that the failure to secure the approval of the <>?=- relative to the e"ecution of the said mortgage would render the same as void. 3onetheless, the =TC ruled that while the sub*ect mortgage is voidable, P$>I is estopped from !uestioning its validity. The =TC e"plained that% The point of contention is 'ection /9 of P.+. 3o. :56 which provides in part, to wit% G3o mortgage on any unit or lot shall be made by the owner or developer without prior written approval of the authority ,now the <ousing and >and ?se =egulatory -oard or <>?=-..G Certainly, the prohibition is mandatory since it commands and leaves no discretion in the matter. It is true that as provided by $rticle 5, Civil Code, G$cts e"ecuted against the provisions of mandatory or prohibitory laws shall be void, e"cept when the law itself authori8es their validity.G -ut the word GvoidG refers to both acts which are ipso facto void and to acts which are merely voidable ,)unicipality of Camiling vs. >ope8, :: Phil. /96, cited in $!uino and 7riTo#$!uino, The Civil Code of the Philippines and Family Code, /::0 ed., p. /1.. In the cited case, it was held that the lease of fishponds e"ecuted by a municipality, without the consent of the provincial governor as re!uired by law, was merely voidable and not void ab initio. The instant controversy is akin to the )unicipality of Camiling case in that a prior approval or consent by a specific authority is a pre#re!uisite to the validity of a given transaction. Aet, the absence of such previous consent merely makes the transaction voidable, or valid unless and until made void. Conse!uently, the real estate mortgage between the parties without the antecedent <>?=written approval is only voidable, and remains valid until set aside. CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 21

-ut may not Plaintiff have the mortgage be ,sic. annulled now, which is in fact the remedy it prays forS P$>I has the principle of estoppel against it, having misrepresented itself to have free disposal of the property sub*ect of the mortgage. It is P$>IHs responsibility to seek <>?=approval of the mortgage. 3ote that 'ection /9 of P.+. 3o. :56 prohibits a mortgage by an owner or developer without <>?=- approval. P$>I is the owner and developer of the @ista de >oro Condominium Pro*ect, sub*ect of the mortgage. 'ince the prohibition covers Plaintiff, it is incumbent upon it to secure the consent of <>?=- before the property can be mortgaged to P3-. P$>I cannot pass the buck to P3- by arguing that it is new in the business and P3- being vastly e"perienced, the responsibility lies with the latter. Ignorance of the law e"cuses no one from compliance therewith ,$rticle 2, Civil Code.. Truly, to nullify the real estate mortgage due to PlaintiffsH failure to secure the re!uired written <>?=- approval would be to allow Plaintiff to un*ustly benefit from its own inaction or negligence at the e"pense of P3-./C P$>I filed with this Court a petition for review on certiorari, which was docketed as 7.=. 3o. /C2266. In a =esolution/6 dated une 6, 100;, this Court denied P$>IHs petition. Thus% Considering the allegations, issues, and arguments adduced in the petition for review on certiorari of the orders of the =egional Trial Court, 3aic, Cavite, -ranch /5, dated $ugust 1:, 1002 and )arch 20, 100;, the Court =esolves to +(3A the petition for failure of the petitioner to sufficiently show that the =egional Trial Court committed any reversible error in the challenged orders as to warrant the e"ercise by this Court of its discretionary appellate *urisdiction in this case./9 This CourtHs =esolution dated une 6, 100; became final and e"ecutory on 'eptember /0, 100;./: 1nd $nnulment of )ortgage Case 4n uly /:, /:::, >im filed with the <>?=- a complaint 10 against P$>I, P3-, the =egistrar of +eeds of the Province of Cavite and $tty. ude ose F. >atorre, 'r., a 3otary Public for Cavite City, seeking for the nullification of the sub*ect mortgage, suspension of P$>IHs license to sell, and award of damages. >im claimed that apart from the fact that the sub*ect mortgage is pre*udicial to her interest, it is void for lack of the re!uisite approval of the <>?=-. >im likewise emphasi8ed that by the time she learned of the sub*ect mortgage, she had already paid P$>I the total amount of P5,651,1/5.1;. The =uling of the <>?=4n 4ctober 15, 1000, the <>?=- gave due course to >imHs complaint and rendered a +ecision,1/ the dispositive portion of which states% B<(=(F4=(, premises considered, *udgment is hereby rendered as follows% /. +eclaring the =eal (state )ortgage between P$>I and P3- dated )arch 11, /::; involving the @ista de >oro <eights condominium null and void& 1. 4rdering respondent P3- to return the CCT covering the property sub*ect of the instant case, particularly CCT 3o. ;09 to P$>I in order for the latter to cause delivery of the aforementioned title in the name of complainant, upon payment by the latter of the balance of the purchase price in the amount of P;/2,9;6.69& 2. 4rdering respondents P$>I and P3- to *ointly and solidarily pay complainant the following% a. the sum of P/0,000.00 as moral damages& b. the sum of P/5,000.00 as e"emplary damages& c. the sum of P/5,000.00 as attorneyHs fees& and d. cost of suit. ;. For violating 'ection /9 of P+ :56, the >icense to 'ell of P$>I over the sub*ect pro*ect is hereby ordered suspended and they are further directed to pay this -oard the sum of P/0,000.00 as administrative fine. '4 4=+(=(+.11 The <>?=- ruled that P$>IHs failure to secure its approval rendered the sub*ect mortgage void. Thus% From the arguments of respondents as well as the documentary e"hibits presented by complainant, more particularly the Complaint and $ffidavit of )erit of Cynthia <ermoso, it was strongly established that indeed the re!uired )ortgage Clearance was not procured before the )ortgage Contract between P$>I and P3- was e"ecuted. This act is not only prohibited but also penali8ed under P.+. 3o. :56.12

>ikewise ruling that litis pendentia will not bar >im from having the sub*ect mortgage annulled, the <>?=- ratiocinated as follows% The defense of litis pendentia and forum#shopping presupposes dual actions involving the same parties with identical reliefs sought. =espondent P$>I failed to submit any evidence to prove that complainant was a party to the case pending before the =egional Trial Court of 3aic, Cavite. urisdiction falls within this -oard over this case since the same involves the relief for violation of P.+. :56. This falls under the purview of unsound real estate business practice, as enunciated in P.+. /2;;.1; Conse!uently, P3- filed a Petition for =eview15 with the -oard of Commissioners of the <>?=-. In a +ecision1C dated 4ctober 1C, 100/, the Third +ivision of the <>?=-Hs -oard of Commissioners partially affirmed the <>?=-Hs +ecision dated 4ctober 15, 1000, vi8% Bherefore, the decision of the office below is hereby modified with the deletion of the award of e"emplary damages and of the directive for the suspension of the license to sell of respondent Puerto $8ul >and, Inc. In all other respects, the decision of the office below is affirmed. 'o ordered.16 P3- appealed to the 4P. 19 <owever, in a +ecision 1: dated une /9, 1002, the 4P affirmed the assailed decision of the <>?=-Hs -oard of Commissioners. Thus% $fter a careful and thorough evaluation and study of the records of this case, this 4ffice hereby adopts by reference the findings of fact and conclusions of law contained in the decisions. """" B<(=(F4=(, premises considered, *udgment appealed from is hereby $FFI=)(+ in toto. '4 4=+(=(+.20 P3- moved for reconsideration2/ but this was denied by the 4P in its 4rder 21 dated February /0, 100;. 4n )arch /9, 100;, P3- filed with the C$ a Petition for =eview 22 under =ule ;2 of the =ules of Court, assailing the 4PHs une /9, 1002 and February /0, 100; 4rders. P3- argued that% ,a. it is not bound by the contract between >im and P$>I as it is not a party thereto& ,b. the power to annul the sub*ect mortgage is *udicial in nature and e"clusively vested with the =TCs& ,c. in +y v. Court of $ppeals,2; this Court stated that there is nothing in 'ection /9 of P.+. 3o. :56 which provides that a mortgage without the <>?=-Hs approval is null and void& ,d. the remedy provided by 'ection 15 of P.+. 3o. :56 is redemption and not the nullification of the mortgage& and ,e. it is a mortgagee in good faith as P$>IHs titles do not bear an annotation of any lien or encumbrance at the time of the constitution of the sub*ect mortgage. P3- thereafter moved for substitution of parties stating that it had assigned its interest in P$>IHs loan and the sub*ect mortgage to Tranche / ,'P@#$)C., Inc. ,Tranche /. pursuant to =epublic $ct 3o. :/91.25 This was granted by the C$ in a =esolution2C dated 'eptember 1, 1005. The =uling of the C$ 4n 'eptember 1:, 1005, the C$ rendered the herein assailed +ecision 26 partially granting P3-Hs petition. The C$ upheld the <>?=-Hs *urisdiction to annul the sub*ect mortgage and dismissed P3-Hs claim that it is a mortgagee in good faith, the rights of which should prevail over >imHs rights as the buyer of ?nit ;9C. The C$, however, reversed the award of moral damages and attorneyHs fees in >imHs favor for lack of factual basis. The C$ ratiocinated that% Clearly, P$>IHs act of mortgaging parcels of land on which the condominium pro*ect is located without the approval of the <>?=- was not only an unsound real estate business practice but also highly pre*udicial to the buyer. The *urisdiction of the <>?=- to regulate the real estate trade is broad enough to include *urisdiction over complaints for annulment of the mortgage with damages ,<ome -ankers 'avings and Trust Co. vs. Court of $ppeals, et. al., $pril 1C, 1005 citing ?nion -ank of the Philippines vs. <ousing and >and ?se =egulatory -oard, 1/0 'C=$ 559.. P3- likewise contends that it is a mortgagee in good faith and for value, hence, should not be pre*udiced by declaring the mortgage null and void. 'uch claim is without merit. udicial notice can be taken of the uniform practice of banks to investigate, e"amine and assess the real estate offered as security for the application of a loan. Be cannot overemphasi8e the fact that the -ank cannot barefacedly argue that simply because the title or titles offered as security were clean of any encumbrances or lien, that it was thereby relieved of taking any other step to verify the over#reaching implications should the subdivision be auctioned on foreclosure CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 22

,<ome -ankers 'avings and Trust Co. vs. Court of $ppeals, et. al., $pril 1C, 1005.. Thus, the claim of P3- that it is a mortgagee in good faith cannot be sustained. $s to the award of damages, Be find the same improper. The decision of the <>?=- $rbiter ,which was modified by the -oard which decision was in turn affirmed in toto by the 4ffice of the President. states that the award of moral damages was based on the speculated moral suffering of >im. 3o proof of pecuniary loss is necessary in order that moral damages may be ad*udicated. <owever, there must be proof that petitioner caused physical suffering, mental anguish, fright, serious an"iety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar in*ury to the plaintiff ,>im.. 'peculated moral suffering as found by the <>?I=-J $rbiter is not sufficient to sustain the award. The decision likewise failed to state in the body of the decision the basis of the award of attorneyHs fees. Bhatever attorneyHs fees are awarded, the court must e"plicitly state in the body of its decision, and not only in the dispositive portion thereof, the legal reason for the award. The power of the courts to grant damages and attorneyHs fees demands factual, legal and e!uitable *ustification& its basis cannot be left to speculation or con*ecture ,=anola vs. Court of $ppeals, 211 'C=$ /.. Conse!uently, the issue of whether or not P3- can be held solidarily liable with P$>I for damages, is moot and academic.29 4n 3ovember 1, 1005, Tranche / filed a )otion for Partial =econsideration 2: but this was denied by the C$ in its =esolution;0 dated February 12, 100C. Issues The instant petition seeks the reversal of the herein assailed +ecision dated 'eptember 1:, 1005 and =esolution dated February 12, 100C of the C$, which declared the sub*ect mortgage as null and void. The petition is anchored on the following grounds% I. T<( <434=$->( C4?=T <$' $>=($+A =?>(+, I3 $ FI3$> $3+ (P(C?T4=A +(CI'I43, T<$T T<( /::; )4=T7$7( C43T=$CT I' @$>I+. II. T<( C4?=T 4F $PP($>' C4))ITT(+ 7=$@( (==4= I3 =?>I37 T<$T T<( <>?=- <$+ ?=I'+ICTI43 $3+ $?T<4=ITA T4 $33?> $3+ '(T $'I+( T<( /::; )4=T7$7( C43T=$CT -(TB((3 P3- $3+ P$>I. III. T<( C4?=T 4F $PP($>' C4))ITT(+ 7=$@( (==4= I3 =?>I37 T<$T P3B$' 34T $ )4=T7$7(( I3 744+ F$IT<.;/ The PetitionerHs $llegations Tranche / posits that pursuant to the principle of res *udicata, the =TC 4rder dated $ugust 1:, 1002, which this Court affirmed in its =esolution dated une 6, 100;, is a bar to a re#litigation of the issues relative to the ,a. <>?=-Hs *urisdiction to annul the sub*ect mortgage, and ,b. validity of the said mortgage. It is true that 'ection / of P.+. 3o :56 confers upon the <>?=- the authority to decide cases involving Gunsound real estate business practicesG and Gspecific performance of contractual and statutory obligations filed by buyers of subdivision or condominium unit against the owner, developer, broker or salesmanG. <owever, there is nothing in P.+. 3o. :56 or P.+. 3o. /2;;;1 which vests in the <>?=- the *urisdiction to annul mortgage contracts over subdivision lots and condominium units entered into between the owners and developers, on one hand, and third party lenders, on the other. Kuoting +y,;2 Tranche / likewise argues that Gthere is nothing in the said provision of P.+. 3o. :56 which states that a mortgage e"ecuted without the approval of the 3ational <ousing $uthority now <>?=- is null and voidG. -esides, in >ope8 and avelona v. (l <ogar Filipino,;; this Court was une!uivocal that Gprohibitory statute may itself point out the conse!uences of its violation& and if on a consideration of the whole statute, it appears that the legislature intended to define such conse!uences and to e"clude any other penalty or forfeiture than such as is declared in the statute itself, no other will be enforced, and if an action can be maintained on the transaction of which the prohibited transaction was a part, without sanctioning the illegality, such action will be entertained.G ;5 In P.+. 3o. :56, penalties are provided for, to wit, revocation of both the registration of the subdivision or condominium pro*ect and the developerHs license to sell, imposition of fines, andLor imprisonment against the persons responsible for the violations.

Tranche / also maintains that P3- is a mortgagee in good faith, the rights of which should prevail over the rights of >im, who is a buyer in bad faith. $t the time the sub*ect mortgage was constituted, P$>IHs titles bore no annotation of any lien or encumbrance. In contrast thereto, at the time >im purchased ?nit ;9C, the sub*ect mortgage was already annotated on TCT 3o. ;0;10/ and CCT 3o. ;09. <ence, it can be presumed that >im had constructive knowledge of the e"istence of the sub*ect mortgage. 'ection 15;C of P.+. 3o. :56 e"plicitly provides for redemption as a remedy available to a buyer of a condominium unit in case an outstanding mortgage covering the purchased property e"ists. >imHs $rguments In her Comment,;6 >im stresses that she was not a party to the first annulment of mortgage case filed with the =TC. Further, the <>?=-Hs *urisdiction over her complaint cannot be assailed since the relief she sought was posed against P$>I and P3-Hs acts which were violative of P.+. 3o. :56. Bhile >im admits that she was not privy to the sub*ect mortgage e"ecuted between P$>I and P3-, she was directly affected by the same. -esides, it is beyond dispute that no mortgage clearance was obtained from the <>?=-. Thus, the sub*ect mortgage cannot be enforced against her and the other buyers of units in the condominium pro*ect. $s to P3-, it failed to e"ercise due diligence relative to the e"ecution of the sub*ect mortgage. P3- cannot be considered as a mortgagee in good faith in the light of this CourtHs pronouncement in pertinent cases, that the rule stating that persons dealing with registered lands can rely solely on the certificates of title, does not apply to banks. P$>IHs Contentions In its Comment,;9 P$>I reiterates the arguments it had raised in the first annulment of mortgage case filed with the =TC and proceedings before the <>?=-. P$>I contends that the sub*ect mortgage is void for having been constituted sans <>?=-Hs approval, hence, in contravention of 'ection /9 of P.+. 3o. :56. Consonant to the foregoing, this Court ruled in Far (ast -ank E Trust Co. v. )ar!ue8 ;: that Uthe avowed purpose of IP.+. 3o.J :56 compels the reading of 'ection /9 as prohibitoryVacts committed contrary to it are void.W 50 Further, $rticle 5 of the 3ew Civil Code is e"plicit that Gacts e"ecuted against the provisions of mandatory or prohibitory laws shall be void, e"cept when the law itself authori8es their validity.G Therefore, even if P.+. 3o. :56 only provides for fines and imprisonment as penalties, they are not the sole conse!uences of violations of its provisions. The sub*ect mortgage is void for having been constituted without complying with the re!uirements laid down in P.+. 3o. :56. Citing $lonso v. Cebu Country Club, Inc., 5/ P$>I also posits that a minute resolution is not a precedent. P$>I thus concludes that this CourtHs affirmation, by way of a minute resolution, of the =TCHs ruling anent the validity of the sub*ect mortgage, does not constitute res *udicata. P$>I likewise refutes Tranche /Hs stance that >im should have instead availed of the remedy of redemption provided for in P.+. 3o. :56. P$>I emphasi8es that redemption presupposes that the sub*ect mortgage is valid. In the case at bar, the mortgage is void, hence, there is nothing to be redeemed. 4ur =uling Be partially grant the instant petition. $s the issues raised herein are interrelated, they shall be discussed *ointly. -y reason of res *udicata, the binding effect of the sub*ect mortgage on P3and P$>I cannot anymore be assailed. $s pointed out by Tranche /, this Court had already sustained the validity of the sub*ect mortgage by way of a minute resolution issued on une 6, 100;, which became final and e"ecutory on 'eptember /0, 100;. The said resolution affirmed the =TCHs finding that even if the sub*ect mortgage is voidable, P$>I is already estopped from challenging its validity for to rule otherwise would be tantamount to rewarding the latter to benefit from its own inaction or negligence. P$>I refutes the above and cites $lonso51 to argue that a minute resolution is not a precedent. In $lonso, we declared that a Gminute resolution may amount to a final action on the case but it is not a precedent.G 52 <owever, we continued to state that Git can not bind non#parties to the action.G5; Corollary thereto, we can conclude that a minute resolution, while not a precedent CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 23

relative to strangers to an action, nonetheless binds the parties therein, and calls for res *udicataHs application. 3ationwide 'ecurity and $llied 'ervices, Inc. v. @alderama 55 is instructive anent the effects of the issuance of a minute resolution, vi8% It is true that, although contained in a minute resolution, our dismissal of the petition was a disposition of the merits of the case. Bhen we dismissed the petition, we effectively affirmed the C$ ruling being !uestioned. $s a result, our ruling in that case has already become final. " " ". Bith respect to the same sub*ect matter and the same issues concerning the same parties, it constitutes res *udicata. <owever, if other parties or another sub*ect matter ,even with the same parties and issues. is involved, the minute resolution is not binding precedent. " " ".5C ,?nderlining ours. It is therefore clear from the above that for purposes of the application of res *udicata, minute resolutions issued by this Court are as much precedents as promulgated decisions, hence, binding upon the parties to the action. In <eirs of )a"imino +erla v. <eirs of Catalina +erla @da. de <ipolito, 56 we enumerated the following as the elements of res *udicata% a. The former *udgment or order must be final& b. It must be a *udgment or order on the merits, that is, it was rendered after a consideration of the evidence or stipulations submitted by the parties at the trial of the case& c. It must have been rendered by a court having *urisdiction over the sub*ect matter and the parties& and d. There must be, between the first and second actions, identity of parties, of sub*ect matter and of cause of action. This re!uisite is satisfied if the two ,1. actions are substantially between the same parties.59 In the case at bar, the validity of the sub*ect mortgage between P$>I and P3- was the primary issue raised by the parties and resolved by the =TC after the conclusion of a full#blown trial. 4n 'eptember /0, 100;, the issue was finally laid to rest. $ final and e"ecutory *udgment, no matter how erroneous, cannot be changed even by this Court. 5: Inevitably, res *udicata operates to bar P$>I and P3- from raising the same issue lest there will be no end to litigation. The <>?=has the authority to take cogni8ance of a complaint for nullification of a mortgage, but in the case at bar, its ruling shall only affect ?nit ;9C of @ista de >oro, which was the sub*ect of the Contract to 'ell e"ecuted between P$>I and >im The *urisdiction of the <>?=- to regulate the real estate trade is broad enough to include *urisdiction over complaints for annulment of mortgage.C0 This is pursuant to the intent of P.+. 3o. :56 to protect hapless buyers from the un*ust practices of unscrupulous developers which may constitute mortgages over condominium pro*ects sans the knowledge of the former and the consent of the <>?=-. In Far (ast -ank,C/ we held that% $cts e"ecuted against the provisions of mandatory or prohibitory laws shall be void.-.)phi- <ence, the mortgage over the lot is null and void insofar as private respondent is concerned. The remedy granted by the <>?=- and sustained by the 4ffice of the President is proper only insofar as it refers to the lot of respondent. In short, the mortgage contract is void as against him. 'ince there is no law stating the specifics of what should be done under the circumstances, that which is in accord with e!uity should be ordered. The remedy granted by the <>?=- in the first and the second paragraphs of the dispositive portionC1 of its +ecision insofar as it referred to respondentHs lot is in accord with e!uity. The <>?=-, however, went overboard in its disposition in paragraphs 2 and ;, which pertained not only to the lot but to the entire parcel of land mortgaged. 'uch ruling was improper. The sub*ect of this litigation is limited only to the lot that respondent is buying, not to the entire parcel

of land. <e has no personality or standing to bring suit on the whole property, as he has actionable interest over the sub*ect lot only.C2 ,Citations omitted and underlining ours. In Far (ast -ank, we sustained the <>?=- when it declared the mortgage entered into between the subdivision developer and the bank as unenforceable against the lot buyer. <owever, we were categorical that the <>?=- acted beyond bounds when it nullified the mortgage covering the entire parcel of land, of which the lot sub*ect of the buyerHs complaint is merely a part. In the case now before us, while it is within >imHs right to file a complaint before the <>?=- to protect her right as a condominium unit buyer, she has no standing to seek for the complete nullification of the sub*ect mortgage. 'he has an actionable interest only over ?nit ;9C of Cluster +ominiko of @ista de >oro, no more and no less. Further, notwithstanding the e"istence of the sub*ect mortgage, 'ection 15 C; of P.+. 3o. :56 affords >im the remedy of redemption. ?nder the said section, P$>I shall be compelled to redeem from P3- at least the portion of the mortgage corresponding to ?nit ;9C within si" months from the issuance of CCT 3o. ;09 to >im. Thereafter, P$>I should deliver to >im her title over the condominium unit free from all liens and encumbrances. The issue of whether or not P3was a mortgagee in good faith need not be resolved. The issue of whether or not P3- was in good faith need not be resolved since the validity of the mortgage between P$>I and P3- is a settled matter. Bhile diligence on the part of P3- was wanting when it failed to independently conduct in!uiries and verify circumstances surrounding the e"ecution of the sub*ect mortgage, the fact remains that it e"tended loans to P$>I in /::; long before >im purchased ?nit ;9C of Cluster +ominiko of @ista de >oro. It is thus offensive to the concept of fair play to declare P3- liable with P$>I for the latterHs violation of >imHs rights. B<(=(F4=(, I3 @I(B 4F T<( F4=(74I37, the petition is P$=T>A 7=$3T(+. The +ecision dated 'eptember 1:, 1005 and =esolution dated February 12, 100C of the Court of $ppeals in C$#7.=. 'P 3o. 91;25 are hereby )4+IFI(+ as follows% ,a. The real estate mortgage entered into between Puerto $8ul >and, Inc. and Philippine 3ational -ank remains valid pursuant to the =esolution dated une 6, 100;, which we issued relative to 7.=. 3o. /C2266, albeit without pre*udice to the rights provided for in 'ection 15 of Presidential +ecree 3o. :56 accruing to =ina Parayno >im and to those who are similarly situated& and ,b. The +ecision dated 4ctober 15, 1000 of the <ousing and >and ?se =egulatory -oard $rbiter is $FFI=)(+ e"cept items , /. and ,2. of the dispositive portionC5 thereof respectively declaring the real estate mortgage e"ecuted by and between Puerto $8ul >and, Inc. and Philippine 3ational -ank as void, and holding Philippine 3ational -ank solidarity liable with Puerto $8ul >and, Inc. to =ina Parayno >im for moral and e"emplary damages, attorney's fees and costs of suit. '4 4=+(=(+.

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G.R. No. 150134 O,4o62r 31, .007 ERNESTO C. #EL ROSARIO !" #A=AO TI$BER CORPORATION, petitioners, vs. &AR EAST BAN1 @ TRUST CO$PAN0 1 !" PRI=ATE #E=ELOP$ENT CORPORATION O& T%E P%ILIPPINES,respondents. #ECISION CARPIO $ORALES, J.? The =egional Trial Court ,=TC. of )akati City, -ranch GC5G ,sic. 1 having, by +ecision2 of uly /0, 100/, dismissed petitioners' complaint in Civil Case 3o. 00#5;0 on the ground of res judicata and splitting of a cause of action, and by 4rder of 'eptember 1;, 100/; denied their motion for reconsideration thereof, petitioners filed the present petition for review on certiorari. From the rather lengthy history of the present controversy, a recital of the following material facts culled from the records is in order. 4n )ay 1/, /:6;, petitioner +avao Timber Corporation ,+$TIC4=. and respondent Private +evelopment Corporation of the Philippines ,P+CP. entered into a loan agreement under which P+CP e"tended to +$TIC4= a foreign currency loan of ?' X1C5,000 and a peso loan of P1.5 million or a total amount of appro"imately P;.; million, computed at the then prevailing rate of e"change of the dollar with the peso. The loan agreement provided, among other things, that +$TIC4= shall pay% ,/. a service fee of one percent ,/Q. per annum ,later increased to si" percent ICQJ per annum. on the outstanding balance of the peso loan& ,1. /1 percent ,/1Q. per annum interest on the peso loan& and ,2. penalty charges of two percent ,1Q. per month in case of default. The loans were secured by real estate mortgages over si" parcels of land N one situated in )anila ,the 4tis property. which was registered in the name of petitioner (rnesto C. +el =osario, and five in )ati, +avao 4riental N and chattel mortgages over pieces of machinery and e!uipment. Petitioners paid a total of P2 million to P+CP, which the latter applied to interest, service fees and penalty charges. This left petitioners, by P+CP's computation, with an outstanding balance on the principal of more than P/0 million as of )ay /5, /:92. -y )arch 2/, /:91, petitioners had filed a complaint against P+CP before the then Court of First Instance ,CFI. of )anila for violation of the ?sury >aw, annulment of contract and damages. The case, docketed as Civil Case 3o. 91#9099, was dismissed by the CFI. 4n appeal, the then Intermediate $ppellate Court ,I$C. set aside the CFI's dismissal of the complaint and declared void and of no effect the stipulation of interest in the loan agreement between +$TIC4= and P+CP. P+CP appealed the I$C's decision to this Court where it was docketed as 7.=. 3o. 62/:9. In the interim, P+CP assigned a portion of its receivables from petitioners ,the receivables. to its co#respondent Far (ast -ank and Trust Company ,F(-TC. under a +eed of $ssignment dated $pril /0, /:96 5 for a consideration of P5,;25,000. The +eed of $ssignment was later amended by two 'upplements.C F(-TC, as assignee of the receivables, and petitioners later e"ecuted a )emorandum of $greement ,)4$. dated +ecember 9, /:99 whereby petitioners agreed to, as they did pay F(-TC 6 the amount of PC.; million as full settlement of the receivables. 4n 'eptember 1, /::1, this Court promulgated its +ecision in 7.=. 3o. 62/:99 affirming in toto the decision of the I$C. It determined that after deducting the P2 million earlier paid by petitioners to P+CP, their remaining balance on the principal loan was only P/.; million.

Petitioners thus filed on $pril 15, /::; a Complaint : for sum of money against P+CP and F(-TC before the =TC of )akati, mainly to recover the e"cess payment which they computed to be P5.2 million/0 N P;.225 million from P+CP, and P:C5,000 from F(-TC. The case, Civil Case 3o. :;#/C/0, was raffled to -ranch /21 of the )akati =TC. 4n )ay 2/, /::5, -ranch /21 of the )akati =TC rendered a decision // in Civil Case 3o. :;#/C/0 ordering P+CP to pay petitioners the sum of P;.025 million,/1 to bear interest at /1Q per annum from $pril 15, /::; until fully paid& to e"ecute a release or cancellation of the mortgages on the five parcels of land in )ati, +avao 4riental and on the pieces of machinery and e!uipment and to return the corresponding titles to petitioners& and to pay the costs of the suit. $s for the complaint of petitioners against respondent F(-TC, the trial court dismissed it for lack of cause of action, ratiocinating that the )4$ between petitioners and F(-TC was not sub*ect to this Court's +ecision in 7.=. 3o. 62/:9, F(-TC not being a party thereto. From the trial court's decision, petitioners and respondent P+CP appealed to the Court of $ppeals ,C$.. The appeal was docketed as C$#7.=. C@ 3o. 505:/. 4n )ay 11, /::9, the C$ rendered a decision /2 in C$#7.=. C@ 3o. 505:/, holding that petitioners' outstanding obligation, which this Court had determined in 7.=. 3o. 62/:9 to be P/.; million, could not be increased or decreased by any act of the creditor P+CP. The C$ held that when P+CP assigned its receivables, the amount payable to it by +$TIC4= was the same amount payable to assignee F(-TC, irrespective of any stipulation that P+CP and F(-TC might have provided in the +eed of $ssignment, +$TIC4= not having been a party thereto, hence, not bound by its terms. Citing $rticles 1/5;/; and 1/C2/5 of the Civil Code which embody the principle of solutio inde"iti, the C$ held that the party bound to refund the e"cess payment of P5 million/C was F(-TC as it received the overpayment& and that F(-TC could recover from P+CP the amount of P;.025 million representing its overpayment for the assigned receivables based on the terms of the +eed of $ssignment or on the general principle of e!uity. 3oting, however, that +$TIC4= claimed in its complaint only the amount of P:C5,000 from F(-TC, the C$ held that it could not grant a relief different from or in e"cess of that prayed for. Finally, the C$ held that the claim of P+CP against +$TIC4= for the payment of P/.; million had no basis, +$TIC4='s obligation having already been paid in full, overpaid in fact, when it paid assignee F(-TC the amount of PC.; million. $ccordingly, the C$ ordered P+CP to e"ecute a release or cancellation of the mortgages it was holding over the )ati real properties and the machinery and e!uipment, and to return the corresponding certificates of title to petitioners. $nd it ordered F(-TC to pay petitioners the amount of P:C5,000 with legal interest from the date of the promulgation of its *udgment. F(-TC's motion for reconsideration of the C$ +ecision was denied, and so was its subse!uent appeal to this Court. 4n $pril 15, 1000, petitioners filed before the =TC of )akati a Complaint/6 against F(-TC to recover the balance of the e"cess payment of P;.225 million./9 The case was docketed as Civil Case 3o. 00#5;0, the precursor of the present case and raffled to -ranch /;2 of the =TC. In its $nswer,/: F(-TC denied responsibility, it submitting that nowhere in the dispositive portion of the C$ +ecision in C$#7.=. C@ 3o. 505:/ was it held liable to return the whole amount of P5.;25 million representing the consideration for the assignment to it of the receivables, and since petitioners failed to claim the said whole
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amount in their original complaint in Civil Case 3o. :;#/C/0 as they were merely claiming the amount of P:C5,000 from it, they were barred from claiming it. F(-TC later filed a Third Party Complaint10 against P+CP praying that the latter be made to pay the P:C5,000 and the interests ad*udged by the C$ in favor of petitioners, as well as the P;.225 million and interests that petitioners were claiming from it. It posited that P+CP should be held liable because it received a consideration ofP5.;25 million when it assigned the receivables. $nswering1/ the Third Party Complaint, P+CP contended that since petitioners were not seeking the recovery of the amount of P:C5,000, the same cannot be recovered via the third party complaint. P+CP went on to contend that since the final and e"ecutory decision in C$#7.=. C@ 3o. 505:/ had held that +$TIC4= has no cause of action against it for the refund of any part of the e"cess payment, F(-TC can no longer re#litigate the same issue. )oreover, P+CP contended that it was not privy to the )4$ which e"plicitly e"cluded the receivables from the effect of the 'upreme Court decision, and that the amount of PC.; million paid by petitioners to F(-TC was clearly intended as consideration for the release and cancellation of the lien on the 4tis property. =eplying,11 F(-TC pointed out that P+CP cannot deny that it benefited from the assignment of its rights over the receivables from petitioners. It added that the third party claim being founded on a valid and *ustified cause, P+CP's counterclaims lacked factual and legal basis. Petitioners thereafter filed a )otion for 'ummary udgment 12 to which F(-TC filed its opposition.1; -y 4rder of )arch 5, 100/, the trial court denied the motion for summary *udgment for lack of merit.15 4n uly /0, 100/, the trial court issued the assailed +ecision dismissing petitioners' complaint on the ground of res judicata and splitting of cause of action. It recalled that petitioners had filed Civil Case 3o. :;#/C/0 to recover the alleged overpayment both from P+CP and F(-TC and to secure the cancellation and release of their mortgages on real properties, machinery and e!uipment& that when said case was appealed, the C$, in its +ecision, ordered P+CP to release and cancel the mortgages and F(-TC to pay P:C5,000 with interest, which +ecision became final and e"ecutory on 3ovember 12, /:::& and that a 3otice of 'atisfaction of udgment between petitioners and F(-TC was in fact submitted on $ugust 9, 1000, hence, the issue between them was finally settled under the doctrine of res *udicata. The trial court moreover noted that the )4$ between petitioners and F(-TC clearly stated that the Gpending litigation before the 'upreme Court of the Philippines with respect to the >oan e"clusive of the =eceivablesassigned to F(-TC shall prevail up to the e"tent not covered by this $greement.G That statement in the )4$, the trial court ruled, categorically made only the loan sub*ect to this Court's +ecision in 7.=. 3o. 62/:9, hence, it was with the parties' full knowledge and consent that petitioners agreed to pay PC.; million to F(-TC as consideration for the settlement. The parties cannot thus be allowed to welsh on their contractual obligations, the trial court concluded. =especting the third party claim of F(-TC, the trial court held that F(-TC's payment of the amount ofP/,11;,:0C.C6 ,P:C5,000 plus interest. to petitioners was in compliance with the final *udgment of the C$, hence, it could not entertain such claim because the Complaint filed by petitioners merely sought to recover from F(-TC the alleged overpayment of P;.225 million and attorney's fees of P100,000. Petitioners' motion for reconsideration1C of the uly /0, 100/ decision of the trial court was denied by 4rder of 'eptember 1;, 100/. <ence, the present petition.

In their )emorandum,16 petitioners proffer that, aside from the issue of whether their complaint is dismissible on the ground of res judicata and splitting of cause of action, the issues of /. whether F(-TC can be held liable for the balance of the overpayment of P;.225 million plus interest which petitioners previously claimed against P+CP in Civil Case 3o. :;#/C/0, and 1. whether P+CP can interpose as defense the provision in the +eed of $ssignment and the )4$ that the assignment of the receivables shall not be affected by this Court's +ecision in 7.=. 3o. 62/:9, be considered. 'tripped of the verbiage, the only issue for this Court's consideration is the propriety of the dismissal of Civil Case 3o. 00#5;0 upon the grounds stated by the trial court. This should be so because a =ule ;5 petition, like the one at bar, can raise only !uestions of law ,and that *ustifies petitioners' elevation of the case from the trial court directly to this Court. which must be distinctly set forth.19 The petition is bereft of merit. 'ection ;6 of =ule 2: of the =ules of Court, on the doctrine of res judicata, reads% 'ec. ;6. Effect of judgments or final orders. D The effect of a *udgment or final order rendered by a court of the Philippines, having *urisdiction to pronounce the *udgment or final order, may be as follows% """" ,b. In other cases, the *udgment or final order is, with respect to the matter directly ad*udged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subse!uent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity& and ,c. In any other litigation between the same parties or their successors in interest, that only is deemed to have been ad*udged in a former *udgment or final order which appears upon its face to have been so ad*udged, or which was actually and necessarily included therein or necessary thereto. ,?nderscoring supplied. The above#!uoted provision lays down two main rules. 'ection ;:,b. enunciates the first rule of res judicata known as Gbar by prior *udgmentG or Gestoppel by *udgment,G which states that the *udgment or decree of a court of competent *urisdiction on the merits concludes the parties and their privies to the litigation and constitutes a bar to a new action or suit involving the same cause of action either before the same or any other tribunal.1: 'tated otherwise, Gbar by former *udgmentG makes the *udgment rendered in the first case an absolute bar to the subse!uent action since that *udgment is conclusive not only as to the matters offered and received to sustain it but also as to any other matter which might have been offered for that purpose and which could have been ad*udged therein. 20 It is in this concept that the term res judicata is more commonly and generally used as a ground for a motion to dismiss in civil cases.2/ The second rule of res judicata embodied in 'ection ;6,c., =ule 2: is Gconclusiveness of *udgment.G This rule provides that any right, fact, or matter in issue directly ad*udicated or necessarily involved in the determination of an action before a competent court in which a *udgment or decree is rendered on the merits is conclusively settled by the *udgment therein and cannot again be litigated between the parties and their privies whether or not the claim or demand, purpose, or sub*ect matter of the two suits is the same. 21 It refers to a situation where the *udgment in the prior action operates as an estoppel only as to the matters actually determined or which were necessarily included therein.22 The case at bar satisfies the four essential re!uisites of Gbar by prior *udgment,G vi8% ,a. finality of the former *udgment&
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,b. the court which rendered it had *urisdiction over the sub*ect matter and the parties& ,c. it must be a *udgment on the merits& and ,d. there must be, between the first and second actions, identity of parties, sub*ect matter and causes of action.2; There is no doubt that the *udgment on appeal relative to Civil Case 3o. :;#/C/0 ,that rendered in C$#7.=. C@ 3o. 505:/. was a final *udgment. 3ot only did it dispose of the case on the merits& it also became e"ecutory as a conse!uence of the denial of F(-TC's motion for reconsideration and appeal.25 3either is there room to doubt that the *udgment in Civil Case 3o. :;#/C/0 was on the merits for it determined the rights and liabilities of the parties. 2C To recall, it was ruled that% ,/. +$TIC4= overpaid by P5.2 million& ,1. F(-TC was bound to refund the e"cess payment but because +$TIC4='s claim against F(-TC was only P:C5,000, the court could only grant so much as the relief prayed for& and ,2. P+CP has no further claim against +$TIC4= because its obligation had already been paid in full. =ight or wrong, that *udgment bars another case based upon the same cause of action.26 $s to the re!uisite of identity of parties, sub*ect matter and causes of action, it cannot be gainsaid that the first case, Civil Case 3o. :;#/C/0, was brought by petitioners to recover an alleged overpayment of P5.2 million NP:C5,000 from F(-TC and P;.225 million from P+CP. 4n the other hand, Civil Case 3o. 00#5;0, filed by the same petitioners, was for the recovery of P;.225 million which is admittedly part of the P5.2 million earlier sought to be recovered in Civil Case 3o. :;#/C/0. This time, the action was brought solely against F(-TC which in turn impleaded P+CP as a third party defendant. In determining whether causes of action are identical to warrant the application of the rule of res judicata, the test is to ascertain whether the same evidence which is necessary to sustain the second action would suffice to authori8e a recovery in the first even in cases in which the forms or nature of the two actions are different.29'imply stated, if the same facts or evidence would sustain both, the two actions are considered the same within the rule that the *udgment in the former is a bar to the subse!uent action. It bears remembering that a cause of action is the delict or the wrongful act or omission committed by the defendant in violation of the primary rights of the plaintiff.2: In the two cases, petitioners imputed to F(-TC the same alleged wrongful act of mistakenly receiving and refusing to return an amount in e"cess of what was due it in violation of their right to a refund. The same facts and evidence presented in the first case, Civil Case 3o. :;#/C/0, were the very same facts and evidence that petitioners presented in Civil Case 3o. 00#5;0. Thus, the same +eed of $ssignment between P+CP and F(-TC, the first and second supplements to the +eed, the )4$ between petitioners and F(-TC, and this Court's +ecision in 7.=. 3o. 62/:9 were submitted in Civil Case 3o. 00#5;0. 3otably, the same facts were also pleaded by the parties in support of their allegations for, and defenses against, the recovery of the P;.225 million. Petitioners, of course, plead the C$ +ecision as basis for their subse!uent claim for the remainder of their overpayment. It is well established, however, that a party cannot, by varying the form of action or adopting a different method of presenting his case, or by pleading *ustifiable circumstances as herein petitioners are doing, escape the operation of the principle that one and the same cause of action shall not be twice litigated.;0 In fact, authorities tend to widen rather than restrict the doctrine of res *udicata on the ground that public as well as private interest demands the ending of suits by re!uiring

the parties to sue once and for all in the same case all the special proceedings and remedies to which they are entitled.;/ This Court finds well#taken then the pronouncement of the court a !uo that to allow the re#litigation of an issue that was finally settled as between petitioners and F(-TC in the prior case is to allow the splitting of a cause of action, a ground for dismissal under 'ection ; of =ule 1 of the =ules of Court reading% '(C. ;. /plitting of a single cause of action4 effect of. N If two or more suits are instituted on the basis of the same cause of action, the filing of one or B<"(52!4 <po! 4-2 52ri43 i! !) o!2 i3 9 il 6l2 3 (ro<!" 'or 4-2 "i35i33 l o' 4-2 o4-2r3. ,(mphasis and underscoring supplied. This rule proscribes a party from dividing a single or indivisible cause of action into several parts or claims and instituting two or more actions based on it. ;1 -ecause the plaintiff cannot divide the grounds for recovery, he is mandated to set forth in his first action every ground for relief which he claims to e"ist and upon which he relies& he cannot be permitted to rely upon them by piecemeal in successive actions to recover for the same wrong or in*ury.;2 Clearly then, the *udgment in Civil Case 3o. :;#/C/0 operated as a bar to Civil Case 3o. 00#5;0, following the above#!uoted 'ection ;, =ule 1 of the =ules of Court. $ final word. Petitioners are sternly reminded that both the rules on res judicata and splitting of causes of action are based on the salutary public policy against unnecessary multiplicity of suits N interest reipu"licae ut sit finis litium .;; =e#litigation of matters already settled by a court's final *udgment merely burdens the courts and the ta"payers, creates uneasiness and confusion, and wastes valuable time and energy that could be devoted to worthier cases.;5 A%ERE&ORE, the Petition is #ENIE#. The assailed +ecision of the =TC, -ranch /;2, )akati dismissing petitioners' complaint in Civil Case 3o. 00#5;0 is A&&IR$E#. Costs against petitioners. SO OR#ERE#.

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G.R. No. 14.8.0 *<!2 .0, .003 AOL&GANG O. ROE%R, petitioner, vs. $ARIA CAR$EN #. RO#RIGUE+, %ON. *U#GE *OSE&INA GUE=ARA-SALONGA, Pr23i"i!( *<"(2 o' $ C 4i RTC, Br !,- 149, respondents. 7UISU$BING, J.? $t the core of the present controversy are issues of ,a. grave abuse of discretion allegedly committed by public respondent and ,b. lack of *urisdiction of the regional trial court, in matters that spring from a divorce decree obtained abroad by petitioner. In this special civil action for certiorari, petitioner assails ,a. the order / dated 'eptember 20, /::: of public respondent udge osefina 7uevara#'alonga, Presiding udge of )akati =egional Trial Court, 1 -ranch /;:, in Civil Case 3o. :C#/29: for declaration of nullity of marriage, and ,b. the order 2 dated )arch 2/, 1000 denying his motion for reconsideration. The assailed orders partially set aside the trial courtHs order dismissing Civil Case 3o. :C#/29:, for the purpose of resolving issues relating to the property settlement of the spouses and the custody of their children. Petitioner Bolfgang 4. =oehr, a 7erman citi8en and resident of 7ermany, married private respondent Carmen =odrigue8, a Filipina, on +ecember //, /:90 in <amburg, 7ermany. Their marriage was subse!uently ratified on February /;, /:9/ in Tayasan, 3egros 4riental.; 4ut of their union were born Carolynne and $le"andra Fristine on 3ovember /9, /:9/ and 4ctober 15, /:96, respectively. 4n $ugust 19, /::C, private respondent filed a petition 5 for declaration of nullity of marriage before the =egional Trial Court ,=TC. of )akati City. 4n February C, /::6, petitioner filed a motion to dismiss, C but it was denied by the trial court in its order 6 dated )ay 19, /::6. 4n une 5, /::6, petitioner filed a motion for reconsideration, but was also denied in an order9 dated $ugust /2, /::6. 4n 'eptember 5, /::6, petitioner filed a petition for certiorari with the Court of $ppeals. 4n 3ovember 16, /::9, the appellate court denied the petition and remanded the case to the =TC. )eanwhile, petitioner obtained a decree of divorce from the Court of First Instance of <amburg#-lankenese, promulgated on +ecember /C, /::6. The decree provides in part% ITJhe Court of First Instance, <amburg#-lankenese, -ranch 5/2, has ruled through udge van -uiren of the Court of First Instance on the basis of the oral proceedings held on ; 3ov. /::6% The marriage of the Parties contracted on // +ecember /:90 before the Civil =egistrar of <amburg#$ltona is hereby dissolved. The parental custody for the children Carolynne =oehr, born /9 3ovember /:9/ $le"andra Fristine =oehr, born on 15 4ctober /:96 is granted to the father. The litigation e"penses shall be assumed by the Parties.: In view of said decree, petitioner filed a 'econd )otion to +ismiss on )ay 10, /::: on the ground that the trial court had no *urisdiction over the sub*ect matter of the action or suit as a decree of divorce had already been promulgated dissolving the marriage of petitioner and private respondent. 4n uly /;, /:::, udge 7uevara#'alonga issued an order granting petitionerHs motion to dismiss. Private respondent filed a )otion for Partial =econsideration, with a prayer that the case proceed for the purpose of determining the issues of custody of children and the distribution of the properties between petitioner and private respondent. 4n $ugust /9, /:::, an 4pposition to the )otion for Partial =econsideration was filed by the petitioner on the ground that there is nothing to be done anymore in the instant case as the marital tie between petitioner Bolfgang =oehr and respondent )a. Carmen +. =odrigue8 had already been severed by the decree of divorce promulgated by the Court of First Instance of <amburg, 7ermany on +ecember /C, /::6 and in view of the fact that

said decree of divorce had already been recogni8ed by the =TC in its order of uly /;, /:::, through the implementation of the mandate of $rticle 1C of the Family Code,/0 endowing the petitioner with the capacity to remarry under the Philippine law. 4n 'eptember 20, /:::, respondent *udge issued the assailed order partially setting aside her order dated uly /;, /::: for the purpose of tackling the issues of property relations of the spouses as well as support and custody of their children. The pertinent portion of said order provides% $cting on the )otion for Partial =econsideration of the 4rder dated uly /;, /::: filed by petitioner thru counsel which was opposed by respondent and considering that the second paragraph of $rticle 1C of the Family Code was included as an amendment thru ("ecutive 4rder 116, to avoid the absurd situation of a Filipino as being still married to his or her alien spouse though the latter is no longer married to the Filipino spouse because heLshe had obtained a divorce abroad which is recogni8ed by hisLher national law, and considering further the effects of the termination of the marriage under 1rticle 56 in relation to 1rticle 78 and 79 of the same Code, )hich include the dissolution of the propert$ relations of the spouses, and the support and custod$ of their children, the :rder dismissing this case is partiall$ set aside )ith respect to these matters which may be ventilated in this Court. '4 4=+(=(+.// ,(mphasis supplied.. Petitioner filed a timely motion for reconsideration on 4ctober /:, /:::, which was denied by respondent *udge in an order dated )arch 2/, 1000. /1 Petitioner ascribes lack of *urisdiction of the trial court and grave abuse of discretion on the part of respondent *udge. <e cites as grounds for his petition the following% /. Partially setting aside the order dated uly /;, /::: dismissing the instant case is not allowed by /::6 =ules of Civil Procedure. /2 1. =espondent )aria Carmen =odrigue8 by her motion for Partial =econsideration had recogni8ed and admitted the +ivorce +ecision obtained by her e"#husband in <amburg, 7ermany. /; 2. There is nothing left to be tackled by the <onorable Court as there are no con*ugal assets alleged in the Petition for $nnulment of )arriage and in the +ivorce petition, and the custody of the children had already been awarded to Petitioner Bolfgang =oehr. /5 Pertinent in this case before us are the following issues% /. Bhether or not respondent *udge gravely abused her discretion in issuing her order dated 'eptember 20, /:::, which partially modified her order dated uly /;, /:::& and 1. Bhether or not respondent *udge gravely abused her discretion when she assumed and retained *urisdiction over the present case despite the fact that petitioner has already obtained a divorce decree from a 7erman court. 4n the first issue, petitioner asserts that the assailed order of respondent *udge is completely inconsistent with her previous order and is contrary to 'ection 2, =ule /C, =ules of Civil Procedure, which provides% 'ec. 2. Resolution of motion # $fter the hearing, the court ma$ dismiss the action or claim, den$ the motion, or order the amendment of the pleadin g. The court shall not defer the resolution of the motion for the reason that the ground relied upon is not indubitable. In every case, the resolution shall state clearly and distinctly the reasons therefor. ,(mphasis supplied.. Petitioner avers that a courtHs action on a motion is limited to dismissing the action or claim, denying the motion, or ordering the amendment of the pleading. Private respondent, on her part, argues that the =TC can validly reconsider its order dated uly /;, /::: because it had not yet attained finality, given the timely filing of respondentHs motion for reconsideration.
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Pertinent to this issue is 'ection 2 in relation to 'ection 6, =ule 26 of the /::6 =ules of Civil Procedure, which provides% 'ec. 2. 1ction upon motion for ne) trial or reconsideration .DThe trial court may set aside the *udgment or final order and grant a new trial, upon such terms as may be *ust, or may deny the motion. If the court finds that e"cessive damages have been awarded or that the judgment or final order is contrar$ to the evidence or la), it ma$ amend such judgment or final order accordingl$ . 'ec. 6. +artial ne) trial or reconsideration .DIf the grounds for a motion under this =ule appear to the court to affect the issues as to only a part, or less than all of the matters in controversy, or only one, or less than all, of the parties to it, the court ma$ order a ne) trial or grant reconsideration as to such issues if severa"le )ithout interfering )ith the judgment or final order upon the rest . ,(mphasis supplied.. It is clear from the foregoing rules that a *udge can order a partial reconsideration of a case that has not yet attained finality. Considering that private respondent filed a motion for reconsideration within the reglementary period, the trial court's decision of uly /;, /::: can still be modified. )oreover, in /a;ado v. Court of 1ppeals,/Cwe held that the court could modify or alter a *udgment even after the same has become e"ecutory whenever circumstances transpire rendering its decision un*ust and ine!uitable, as where certain facts and circumstances *ustifying or re!uiring such modification or alteration transpired after the *udgment has become final and e"ecutory /6 and when it becomes imperative in the higher interest of *ustice or when supervening events warrant it. /9 In our view, there are even more compelling reasons to do so when, as in this case, *udgment has not yet attained finality. $nent the second issue, petitioner claims that respondent *udge committed grave abuse of discretion when she partially set aside her order dated uly /;, /:::, despite the fact that petitioner has already obtained a divorce decree from the Court of First Instance of <amburg, 7ermany. In Garcia v. Recio,/: 2an #orn v. Romillo, Jr.,10 and !lorente v. Court of 1ppeals,1/ we consistently held that a divorce obtained abroad by an alien may be recogni8ed in our *urisdiction, provided such decree is valid according to the national law of the foreigner. =elevant to the present case is +ilapil v. I"a$%/omera,11 where this Court specifically recogni8ed the validity of a divorce obtained by a 7erman citi8en in his country, the Federal =epublic of 7ermany. Be held in +ilapil that a foreign divorce and its legal effects may be recogni8ed in the Philippines insofar as respondent is concerned in view of the nationality principle in our civil law on the status of persons. In this case, the divorce decree issued by the 7erman court dated +ecember /C, /::6 has not been challenged by either of the parties. In fact, save for the issue of parental custody, even the trial court recogni8ed said decree to be valid and binding, thereby endowing private respondent the capacity to remarry. Thus, the present controversy mainly relates to the award of the custody of their two children, Carolynne and $le"andra Fristine, to petitioner. $s a general rule, divorce decrees obtained by foreigners in other countries are recogni8able in our *urisdiction, but the legal effects thereof, e.g. on custody, care and support of the children, must still be determined by our courts. 12 -efore our courts can give the effect of res *udicata to a foreign *udgment, such as the award of custody to petitioner by the 7erman court, it must be shown that the parties opposed to the *udgment had been given ample opportunity to do so on grounds allowed under =ule 2:, 'ection 50 of the =ules of Court ,now =ule 2:, 'ection ;9, /::6 =ules of Civil Procedure., to wit% '(C. 50. Effect of foreign judgments . # The effect of a *udgment of a tribunal of a foreign country, having *urisdiction to pronounce the *udgment is as follows% ,a. In case of a *udgment upon a specific thing, the *udgment is conclusive upon the title to the thing& ,b. In case of a *udgment against a person, the *udgment is presumptive evidence of a right as between the parties and their successors in interest by a

subse!uent title& but the *udgment may be repelled by evidence of a want of *urisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. It is essential that there should be an opportunity to challenge the foreign *udgment, in order for the court in this *urisdiction to properly determine its efficacy. In this *urisdiction, our =ules of Court clearly provide that with respect to actions in personam, as distinguished from actions in rem, a foreign *udgment merely constitutes prima facieevidence of the *ustness of the claim of a party and, as such, is sub*ect to proof to the contrary. 1; In the present case, it cannot be said that private respondent was given the opportunity to challenge the *udgment of the 7erman court so that there is basis for declaring that *udgment as res judicata with regard to the rights of petitioner to have parental custody of their two children. The proceedings in the 7erman court were summary. $s to what was the e"tent of private respondentHs participation in the proceedings in the 7erman court, the records remain unclear. The divorce decree itself states that neither has she commented on the proceedings15 nor has she given her opinion to the 'ocial 'ervices 4ffice. 1C ?nlike petitioner who was represented by two lawyers, private respondent had no counsel to assist her in said proceedings. 16 )ore importantly, the divorce *udgment was issued to petitioner by virtue of the 7erman Civil Code provision to the effect that when a couple lived separately for three years, the marriage is deemed irrefutably dissolved. The decree did not touch on the issue as to who the offending spouse was. $bsent any finding that private respondent is unfit to obtain custody of the children, the trial court was correct in setting the issue for hearing to determine the issue of parental custody, care, support and education mindful of the best interests of the children. This is in consonance with the provision in the Child and Aouth Belfare Code that the childHs welfare is always the paramount consideration in all !uestions concerning his care and custody. 19 4n the matter of property relations, petitioner asserts that public respondent e"ceeded the bounds of her *urisdiction when she claimed cogni8ance of the issue concerning property relations between petitioner and private respondent. Private respondent herself has admitted in Par. /; of her petition for declaration of nullity of marriage dated $ugust 1C, /::C filed with the =TC of )akati, sub*ect of this case, that% GIpJetitioner and respondent have not ac!uired any con*ugal or community property nor have they incurred any debts during their marriage.G1:<erein petitioner did not contest this averment. -asic is the rule that a court shall grant relief warranted by the allegations and the proof. 20 7iven the factual admission by the parties in their pleadings that there is no property to be accounted for, respondent *udge has no basis to assert *urisdiction in this case to resolve a matter no longer deemed in controversy. In sum, we find that respondent *udge may proceed to determine the issue regarding the custody of the two children born of the union between petitioner and private respondent. Private respondent erred, however, in claiming cogni8ance to settle the matter of property relations of the parties, which is not at issue. A%ERE&ORE, the orders of the =egional Trial Court of )akati, -ranch /;:, issued on 'eptember 20, /::: and )arch 2/, 1000 are A&&IR$E# Di4- $O#I&ICATION . Be hereby declare that the trial court has *urisdiction over the issue between the parties as to who has parental custody, including the care, support and education of the children, namely Carolynne and $le"andra Fristine =oehr. >et the records of this case be remanded promptly to the trial court for continuation of appropriate proceedings. 3o pronouncement as to costs. SO OR#ERE#.

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G.R. No. 157/05 #2,2562r 13, .005 SPS. ENRI7UETA RAS#AS, !" TO$AS RAS#AS, SPS. ESPERAN+A A. =ILLA, !" ERNESTO =ILLA, !" LOLITA GALLEN, Petitioners, vs. *AI$E ESTENOR, =espondent. +(CI'I43 Ti!( , J.? The main issue in this +etition for Revie) under =ule ;5 is whether the complaint below is barred by res judicata. Be find that res judicata indeed obtains in this case, albeit of a mode different from that utili8ed by the trial court and the Court of $ppeals in dismissing the complaint. The antecedent facts, as culled from the assailed #ecision/ of the Court of $ppeals Tenth +ivision, follow. The dispute centers on a parcel of land with an area of 602 s!uare meters, situated in Ilagan, Isabela. 4n 1: 4ctober /::1, respondent as plaintiff filed a Complaint For Recover$ :f :)nership 1nd +ossession *ith #amages against petitioners as defendants. The complaint was docketed as Civil Case 3o. C62 and tried by the =egional Trial Court ,=TC. of Ilagan, Isabela, -ranch /C. In the same complaint, respondent asserted that he was the owner of the sub*ect property, which was then in the possession of petitioners. 4n C 3ovember /::5, the =TC decided Civil Case 3o. C62 in favor of petitioners. =espondent appealed the =TC decision before the Court of $ppeals, and his appeal was docketed as C$# 7.=. 3o. 51229. 4n 15 'eptember /::6, the Court of $ppeals reversed the *udgment of the =TC, and declared respondent as the owner of the sub*ect property. $s a result, petitioners were ordered to vacate the land. The dispositive portion of the appellate courtHs decision reads% B<(=(F4=(, the +ecision of the trial court dated 3ovember C, /::5 is =(@(='(+ and '(T $'I+(, and a new one is rendered declaring the plaintiff as the owner of the land in !uestion& and ordering the defendants#appellees to vacate the same and *ointly and severally to pay the plaintiff reasonable compensation of P200.00 a month for the use and en*oyment of the land from une /::/ up to the time the land is vacated& attorneyHs fees ofP/0,000.00 and litigation e"penses of P5,000.00. Costs against the defendants#appellees. '4 4=+(=(+.1 The decision became final and e"ecutory after a petition for certiorari assailing its validity was dismissed by this Court.2 Thereafter, a *rit of E(ecution and *rit of #emolition was issued against petitioners, who were ordered to demolish their houses, structures, and improvements on the property. Petitioners as plaintiffs then filed a Complaint dated C uly /::: against respondent for *ust compensation and preliminary in*unction with temporary restraining order. The case was docketed as Civil Case 3o. /0:0, and heard by the same =TC -ranch /C that ruled on the first complaint. 3otwithstanding the earlier pronouncement of the Court of $ppeals, petitioners asserted therein that they were the lawful owners of the sub*ect property ;, although they ultimately conceded the efficacy of the appellate courtHs final and e"ecutory decision. 'till, they alleged that they were entitled to *ust compensation relating to the value of the houses they had built on the property, owing to their purported status as builders in good faith. They claimed that the Court of $ppeals decision did not declare them as builders in bad faith, and thus, they were entitled to be reimbursed of the value of their houses before these could be demolished. 5 They posited that without such reimbursement, they could not be e*ected from their houses. =espondent as defendant countered with a &otion to #ismiss, arguing that petitionersH complaint was barred byres judicata, owing to the final and e"ecutory *udgment of the Court of $ppeals. The &otion to #ismiss was initially denied by the =TC in an :rder dated ; $ugust /:::C, and pre#trial ensued. <owever, before trial proper could begin, respondent filed a motion for preliminary hearing on the affirmative defense of lack of *urisdiction and res judicata. This motion was resolved in an :rder dated /C February 1000, wherein the =TC declared itself Gconstrained to apply the principle of res judicata,G thus reversing its earlier order. In doing so, the =TC concluded that the earlier decision of the Court of $ppeals had already effectively settled that petitioners were in fact builders in bad faith. Citing &endiola v. Court of 1ppeals,6 the =TC held that the causes of action between the final *udgment and the instant complaint of petitioners were identical, as it would entail the same evidence that would support and establish

the former and present causes of action. $ccordingly, the =TC ordered the dismissal of petitionersH complaint. The counsel for petitioners was likewise issued a warning for having violated the prohibition on forum#shopping on account of the filing of the complaint barred by res judicata. The finding of res judicata was affirmed by the Court of $ppeals in its assailed #ecision. It is this finding that is now sub*ect to review by this Court. Petitioners argue that since respondentsH &otion to #ismiss on the ground of res judicata had already been denied, the conse!uent preliminary hearing on the special defenses which precluded the dismissal of the complaint was null and void.9 Petitioners also claim that there was no identity of causes of action in Civil Case 3o. C62, which concerned the ownership of the land, and in Civil Case 3o. /0:0, which pertained to *ust compensation under $rticle ;;9 of the Civil Code. (ven assuming that res judicata obtains, petitioners claim that the said rule may be disregarded if its application would result in grave in*ustice. Be observe at the onset that it does appear that the =TCHs act of staging preliminary hearing on the affirmative defense of lack of *urisdiction and res judicata is not in regular order. ?nder 'ection C, =ule /C of the /::6 =ules of Civil Procedure, the allowance for a preliminary hearing, while left in the discretion of the court, is authori8ed only if no motion to dismiss has been filed but any of the grounds for a motion to dismiss had been pleaded as an affirmative defense in the answer. In this case, respondents had filed a motion to dismiss on the ground of res judicata, but the same was denied. They thus filed an answer alleging res judicata as a special affirmative defense, but later presented a &otion for +reliminar$ Hearing which was granted, leading to the dismissal of the case. The general rule must be reiterated that the preliminary hearing contemplated under 'ection C, =ule /C applies only if no motion to dismiss has been filed. This is e"pressly provided under the rule, which relevantly states GIiJf no motion to dismiss has been filed, any of the grounds for dismissal provided for in I=ule /CJ may be pleaded as an affirmative defense in the answer and, in the discretion of the court, a preliminary hearing may be had thereon as if a motion to dismiss had been filed.G $n e"ception was carved out in California and Ha)aiian /ugar Compan$ v. +ioneer Insurance,: wherein the Court noted that while 'ection C disallowed a preliminary hearing of affirmative defenses once a motion to dismiss has been filed, such hearing could nonetheless be had if the trial court had not categorically resolved the motion to dismiss. /0 'uch circumstance does not obtain in this case, since the trial court had already categorically denied the motion to dismiss prior to the filing of the answer and the motion for preliminary hearing. Be observe in this case that the *udge who had earlier denied the motion to dismiss, <on. Teodulo (. )irasol, was different from the *udge who later authori8ed the preliminary hearing,// <on. Isaac =. de $lban, a circumstance that bears some light on why the =TC eventually changed its mind on the motion to dismiss. 'till, this fact does not sanction the staging of a preliminary hearing on affirmative defenses after the denial of the motion to dismiss. If a *udge disagrees with hisLher predecessorHs previous ruling denying a motion to dismiss, the proper recourse is not to conduct a preliminary hearing on affirmative defenses, but to utili8e the contested ground as part of the basis of the decision on the merits 4n the part of the movant whose motion to dismiss had already been filed and denied, the proper remedy is to file a motion for reconsideration of the denial of the motion. If such motion for reconsideration is denied, the ground for the dismissal of the complaint may still be litigated at the trial on the merits. Clearly, the denial of a motion to dismiss does not preclude any future reliance on the grounds relied thereupon. <owever, nothing in the rules e"pressly authori8es a preliminary hearing of affirmative defenses once a motion to dismiss has been filed and denied. Thus, the strict application of 'ection C, =ule /C in this case should cause us to rule that the =TC erred in conducting the preliminary hearing. <owever, there is an e"ceptional *ustification for us to overlook this procedural error and nonetheless affirm the dismissal of the complaint. The complaint in !uestion is so evidently barred by res judicata, it would violate the primordial ob*ective of procedural law to secure a *ust, speedy and ine"pensive disposition of every action and proceeding /1 should the Court allow this prohibited complaint from festering in our *udicial system. Indeed, the rule sanctioning the liberal construction of procedural rules is tailor#made for a situation such as this, when a by#the# CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 30

numbers application of the rule would lead to absurdity, such as the continued litigation of an obviously barred complaint. Bhy is the sub*ect complaint barred by res judicataS It is uncontroverted that in the decision by the Court of $ppeals in Civil Case 3o. C62, it was observed% Bhen the occupancy of the lot by >uis $ggabao which was transmitted to his son @ivencio $ggabao, and later transmitted to the latterHs children . . . e"pired in $pril /:C5, the late @ivencio $ggabao verbally begged and pleaded to plaintiff#appellant that he be allowed to stay on the premises of the land in !uestion as his children, herein appellees, were still studying and it would be very hard fro them to transfer residence at that time. The plaintiff, out of Christian fellowship and compassion, allowed the appellees to stay temporarily on the land in !uestion. .... In this case, the possession of the land by the appellees derived from their father >uis $ggabao from )arch 2/, /:55 to )arch 2/, /:C5 was by virtue of a stipulation in the deed of sale ,e"h. 7., while their possession derived from their father, @ivencio $ggabao, from )arch 2/, /:C5 to /:91 ,the latter died in /:91. was only by tolerance because of the pleading of @ivencio $ggabao to the plaintiff#appellant that he be allowed to stay because of the children going to school. . . . /2 (vidently, the Court of $ppeals had previously ruled in the first case that as early as /:C5, the father of the petitioners ,and their predecessor#in#interest. had already known that he did not own the property, and that his stay therein was merely out of tolerance. 'uch conclusion in fact bolstered the eventual conclusion that respondents were the owners of the land and that petitioners should vacate the same. This fact should be seen in con*unction with the findings of the =TC and the Court of $ppeals in this case that the structures for which petitioners sought to be compensated were constructed in /:9: and /::0, or long after they had known they were not the owners of the sub*ect property. These premises remaining as they are, it is clear that petitioners are not entitled to the *ust compensation they seek through the present complaint. ?nder $rticle ;;9 of the Civil Code, the builder in bad faith on the land of another loses what is built without right to indemnity./; Petitioners were in bad faith when they built the structures as they had known that the sub*ect property did not belong to them. $re these conclusions though sufficient to *ustify dismissal on the ground of res judicataS The doctrine of res judicata has two aspects./5 The first, known as Gbar by prior *udgment,G or Gestoppel by verdict,G is the effect of a *udgment as a bar to the prosecution of a second action upon the same claim, demand or cause of action. The second, known as Gconclusiveness of *udgmentG or otherwise known as the rule of auter action pendant, ordains that issues actually and directly resolved in a former suit cannot again be raised in any future case between the same parties involving a different cause of action. /C It has the effect of preclusion of issues only./6 It appears that both the =TC and the Court of $ppeals deemed that the first aspect of res judicata, Gbar by prior *udgment,G applied in this case. /9 Be hold that it is the second kind of res judicata, Gconclusiveness of *udgment,G that barred the instant complaint. $s previously e"plained by this Court% ICJonclusiveness of *udgment D states that a fact or !uestion which was in issue in a former suit and there was *udicially passed upon and determined by a court of competent *urisdiction, is conclusively settled by the *udgment therein as far as the parties to that action and persons in privity with them are concerned and cannot be again litigated in any future action between such parties or their privies, in the same court or any other court of concurrent *urisdiction on either the same or different cause of action, while the *udgment remains unreversed by proper authority. It has been held that in order that a *udgment in one action can be conclusive as to a particular matter in another action between the same parties or their privies, it is essential that the issue be identical. If a particular point or !uestion is in issue in the second action, and the *udgment will depend on the determination of that particular point or !uestion, a former *udgment between the same parties or their privies will be final and conclusive in the second if that same point or !uestion was in issue and ad*udicated in the first suit. Identity of cause of action is not re!uired but merely identity of issues./: 'tated differently, any right, fact, or matter in issue directly ad*udicated or necessarily involved in the determination of an action before a competent court in which *udgment is rendered on the

merits is conclusively settled by the *udgment therein and cannot again be litigated between the parties and their privies whether or not the claim, demand, purpose, or sub*ect matter of the two actions is the same.10 Indeed, in cases wherein the doctrine of Gconclusiveness of *udgmentG is applicable, there is, as in the two cases sub*ect of this petition, identity of parties but not of causes of action. The *udgment is conclusive in the second case, only as to those matters actually and directly controverted and determined, and not as to matters merely involved therein. 1/ <erein, the fact that petitioners were in possession in bad faith as early as /:C5 was already determined in the first case. In order that they could successfully litigate their second cause of action, petitioners will have to convince that they were in possession in good faith at the time they built their structures, an argument that deviates the previous determination made in the final *udgment that resolved the first case. The reasons for establishing the principle of Gconclusiveness of *udgmentG are founded on sound public policy, and to grant this petition would have the effect of unsettling this well#settled doctrine. It is allowable to reason back from a *udgment to the basis on which it stands, upon the obvious principle that where a conclusion is indisputable, and could have been drawn only from certain premises, the premises are e!ually indisputable with the conclusion. 11 Bhen a fact has been once determined in the course of a *udicial proceeding, and a final *udgment has been rendered in accordance therewith, it cannot be again litigated between the same parties without virtually impeaching the correctness of the former decision, which, from motives of public policy, the law does not permit to be done.12 Contrary to the holdings of both courts below, in the case of &endiola v. Court of 1ppeals1; which they relied upon, this Court observed that the causes of action in the two cases involved were so glaringly similar that it had to affirm the dismissal of the second case by virtue of the Gbar of former *udgment rule.G 4ne final note. Petitioners, in their Repl$ before this Court, raise the argument that assuming that they were builders in bad faith, respondents should likewise be considered as being in bad faith, as the structures were built with their knowledge and without their opposition. That being the case, $rticle ;52 of the Civil Code would apply to the effect both parties could thus be deemed as being in good faith. $ccordingly, petitioners would still be entitled to compensation on the structures they built. Be are disinclined to accord merit to this argument. For one, it was raised for the first time in the Repl$ before this Court. It was not even raised in the Complaint filed with the =TC, hence it could not be said that petitionersH cause of action is grounded on $rticle ;52. Issues not previously ventilated cannot be raised for the first time on appeal 15, much less when first proposed in the reply to the comment on the petition for review. (ven assuming the issue is properly litigable, the Court can find no basis to declare that respondents were in bad faith as a matter of fact. Certainly, nothing in the first decision of the Court of $ppeals conclusively establishes that claim, its factual determination being limited to the finding that petitioners alonewere had been in possession of the property in bad faith. Be are not wont to ascribe points of fact in the said decision which were not e"pressly established or affirmed. B<(=(F4=(, the petition is +(3I(+. Costs against petitioners. '4 4=+(=(+.

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G.R. No. 18/730 *<!2 13, .01. *ESSE 0AP, Petitioner, vs. COURT O& APPEALS 8SPECIAL ELE=ENT% E114-F #I=ISION:, !" ELI+A C%UA !" E=EL0N TE,=espondents. =('4>?TI43 RE0ES, J.: This is a petition for review on certiorari of the +ecision / dated +ecember /0, 1009 and =esolution1 dated February /:, 100: of the Court of $ppeals ,C$. in C$#7.=. 'P 3o. :2:6;. The dispositive portion of the C$Hs assailed +ecision states% B<(=(F4=(, in view of the foregoing premises, *udgment is hereby rendered by us 7=$3TI37 the petition filed in this case and the 4rders issued by the public respondent udge =ommel 4. -aybay dated 4ctober 1/, 1005 and anuary /9, 100C are hereby '(T $'I+(. Conse!uently, Civil Case 3o. 0;#020 is hereby ordered as +I')I''(+ on account of litis pendentia and violation of the rule against forum#shopping. '4 4=+(=(+.2 4n anuary :, 100;, petitioner esse Aap ,Aap. filed a complaint against respondents (li8a Chua ,Chua. and (velyn Te ,Te. with the =egional Trial Court ,=TC. of )akati City principally praying for the cancellation or discharge of several checks that he drew against his account with the -ank of the Philippine Islands ,-PI.. AapHs complaint was docketed as Civil Case 3o. 0;#020 and raffled to -ranch CC. Aap alleged that he purchased several real properties through Te, a real estate broker, and as payment, delivered to her a number of checks either payable to her, the property owners or to the various individuals who agreed to finance his ac!uisitions. <e agreed to effect payment in such manner on TeHs claim that this will e"pedite the transfer of the titles in his favor. Chua, one of those who funded his purchases, asked him to issue checks with her as payee to replace the checks he delivered to Te. 4bliging, he drew si" ,C. checks payable to her against his account with -PI, which were uniformly postdated uly 20, /::6. Particularly% Check 3o. C5:5:: 609/59 609/C0 6/1;/9 6/1;/6 6161/; $mount P2,000,000.00 P1,500,000.00 P1,65C,CCC.00 P/0,:00,000.00 P/0,:00,000.00 P:C0,000.00

0616105 061610C

'eptember /5, /::6 'eptember 20, /::6

P660,922.22 P660,922.22

<e stopped payment on the above checks and closed his account when Te failed to deliver the titles on the properties. <e also did the same on the following checks that Te endorsed to Chua for rediscounting without his consent% Check 3o. +ate $mount

<e delivered to Te these checks, which were payable to a certain -adoria -agatao ,-agatao., for the purchase of a parcel of land that, as Te represented, -agatao supposedly owns. <e, however, was later informed of the contrary leading to the conclusion that as no consideration attended the contract with -agatao and all the other contracts of sale that he entered into through Te, it was *ust proper that the checks he issued as payment be cancelled or annulled. Chua presented an altogether different version of the facts. $ccording to Chua, she released P:,;/5,000.00 to Aap through a certain ovita +imalanta ,+imalanta. sometime in anuary /::6 in e"change for two ,1. postdated checks payable to her with a face value of P5,000,000.00 each. $ similar transaction took place in February /::6, where she delivered to +imalanta P:,;/5,000.00 upon re!uest of Aap, with the latter issuing in her favor two ,1. postdated checks payable to her in the total amount of P/0,000,000.00. Aap twice re!uested for an e"tension and for Chua not to encash the four ,;. checks. In return, he issued two ,1. checks payable to Chua with a face value of P/,;00,000.00 and P/,10C,0CC.CC to cover the interest due. Aap later replaced the four ,;. checks with a face value of P5,000,000.00 each with a check payable to Chua forP10,000,000.00 and postdated $pril 11, /::6. Bhen this check became due, Aap once again re!uested Chua for an e"tension and replaced it with -PI Check 3os. 6/1;/9 and 6/1;/6 to include the interest that would accrue until une /5, /::6. Thereafter, Aap, who asked for another e"tension, issued to Chua -PI Check 3o. 6161/; to include payment of the interest that would accrue until uly 20, /::6 on the P10,000,000.00 covered by -PI Check 3os. 6/1;/9 and 6/1;/6. $pparently, Aap also delivered to Chua -PI Check 3os. C5:5:: and 609/59 to replace the checks drawn against his account, which a certain esus +y endorsed to her. Aap likewise delivered a check payable to Canda )edical Clinic and <ospital to Te, who in turn, endorsed it to Chua for rediscounting. 'ometime in une /::6, Aap replaced this check with -PI Check 3o. 609/C0 to cover the interest from )arch to )ay /::6. Aap also gave Te two ,1. checks payable to -agatao, -PI Check 3os. 0616105 and 061610C, which were subse!uently endorsed to Chua for rediscounting. -PI Check 3os. C5:5::, 609/59, 609/C0, 6/1;/9, 6/1;/6 and 6161/; were dishonored for the reason Gaccount closedG. 4n the other hand, Aap stopped payment on -PI Check 3os. 616105 and 61610C. ; @erbal demands for Aap to make good the checks he issued proved to be futile. Thus, Chua filed with the =TC of 7eneral 'antos City a complaint 5 for sum of money against Aap and his wife, -essie. ChuaHs complaint was docketed as Civil Case 3o. C12C and raffled to -ranch 12. 4n une 9, 100/, the =TC of 7eneral 'antos City issued a +ecision, C the dispositive portion of which states% B<(=(F4=(, *udgment is hereby rendered in favor of plaintiff and against defendants, ordering the latter to pay the former the following% /. P21,559,221.00 as principal with interest at CQ per annum from the date of the filing of the case until the whole amount is fully paid& 1. P/50,000.00 as moral damages&
CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 32

2. P50,000,00 as e"emplary damages& ;. P/,000,000.00 in concept of attorneyHs fees& and 5. The cost of suit. The third#party complaint is +I')I''(+. 6 $rmed with the foregoing narration, Chua moved for the dismissal of Civil Case 3o. 0;#020 on the twin grounds of litis pendentia and forum shopping. Chua averred that Aap violated the rule against forum shopping when he failed to inform the =TC of )akati City of Civil Case 3o. C12C and the pendency of his appeal of the decision rendered therein. The elements of litis pendentia e"ist, and forum shopping as the logical conse!uence thereof, considering that the two ,1. cases arose from the same set of facts and involve the same parties. In an 4rder9 dated 4ctober 1/, 1005, the =TC of )akati City refused to dismiss the case, ratiocinating as follows% 4n litis pendentia as a ground for dismissal, the Court is not convinced. $s correctly stated by the plaintiff, the reliefs prayed for in the two cases are different from each other considering that the collection case before the =TC of 7eneral 'antos City is different from the instant case praying for the dischargeLannulment of issued checks. $s such the fundamental re!uisites of Ilitis pendentiaJ have not been met. $nent dismissal on ground of forum shopping, the same is likewise denied for lack of merit. It is well#settled that it is the duty of the plaintiff, not the defendant, to declare pending suits it initiated between and among parties in its verification and certificate of non#forum shopping and not the other way around. $ plaintiff in a civil case therefore, is not mandated under the =ules to declare that said plaintiff was a defendant in a prior suit instituted against him and other defendants by the defendant in a subse!uent case of different nature. : In an 4rder/0 dated anuary /9, 100C, the =TC of )akati City denied ChuaHs motion for reconsideration. Chua filed a petition for certiorari with the C$, alleging that grave abuse of discretion attended the 4rders of the =TC of )akati City dated 4ctober 1/, 1005 and anuary /9, 100C. -y virtue of the assailed decision, this was given due course and the C$ ordered the dismissal of Civil Case 3o. 0;#020. $fter a careful and *udicious scrutiny of the whole matter, together with the applicable laws and *urisprudence on the premises, we have come up with a finding that the respondent *udge committed grave abuse of discretion in issuing the assailed orders. The re!uisites of Ilitis pendentiaJ are% ,a. the identity of parties or at least such as representing the same interests in both actions& ,b. the identity of rights asserted and the relief prayed for, the relief being founded on the same facts& and ,c. the identity of the two cases such that *udgment in one, regardless of which party is successful, would amount to res *udicata in the other. The relief sought in Chua in Civil Case 3o. C12C was for Aap to pay the amount that he owed to Chua based on -PI Checks ,sic. 3os. 0616105, 061610C, C5:5::, 609/59, 609/C0, 6/1;/9, 6/1;/6 and 6161/; that he issued. 4n the other hand, the relief prayed for by Aap in Civil Case 3o. 0;#020 was for -PI Checks ,sic. 3os. 0616105, 061610C, C5:5::, 609/59, 609/C0, 6/1;/9, 6/1;/6 and 6161/; that he issued to Chua purportedly without any valid consideration to be declared as null and void.

The cause of action of Aap in Civil Case 3o. 0;#020 was also his defense in Civil Case 3o. C12C. 3ecessarily, in determining the liability of Aap in Civil Case 3o. C12C, the lower court addressed the issue of the validity of the sub*ect checks. -ranch 12 of the =TC in 7eneral 'antos City ruled that the checks were validly issued and declared Chua as a holder in due course thereof. )oreover, the lack of consideration was raised as an affirmative defense and as the basis for his counterclaim and third#party complaint by Aap in Civil Case 3o. C12C. Therefore, -ranch CC of the =TC in )akati City committed grave abuse of discretion amounting to lack of *urisdiction when it took cogni8ance of Civil Case 3o. 0;# 020 and denied ChuaHs motion to dismiss it on account of the pendency of another action in another court between them for the same case. Aap, in filing Civil Case 3o. 0;#020, also violated the rule against forum shopping. In the test to determine whether a party violated the rule against forum shopping, the most important factor to ask is whether the elements of litis pendencia ,sic. are present, or whether a final *udgment in one case will amount to res *udicata in another, i.e., whether in the two or more cases pending, there is identity of parties, rights or causes of action, and the reliefs sought. $ )otion to +ismiss was timely filed by Chua invoking litis pendencia ,sic. and violation of the rule against forum shopping. $fter having been appraised of the pending appeal before the 'upreme Court of a case involving the same parties based on the same rights and reliefs sought, the respondent *udge should have granted the said motion of Chua and dismissed Civil Case 3o. 0;# 020.// ,Citations omitted. Aap urges this Court to reverse and set aside the C$Hs dismissal of his complaint against Chua and Te, claiming that he is not guilty of forum shopping as the alleged e"istence of litis pendentia is belied by the incomparable causes of action he and Chua advanced in the separate complaints they initiated against each other. Aap claimed that his prayer for the cancellation or discharge of the sub*ect checks entails a determination of their validity and on whether a valid consideration e"ists for their issuance, which is immaterial or irrelevant in determining whether he should be liable for the amounts that Chua released to Te and +imalanta. Forum shopping is the institution of two or more actions or proceedings involving the same parties for the same cause of action, either simultaneously or successively, on the supposition that one or the other court would make a favorable disposition. Forum shopping may be resorted to by any party against whom an adverse *udgment or order has been issued in one forum, in an attempt to seek a favorable opinion in another, other than by appeal or a special civil action for certiorari. Forum shopping trifles with the courts, abuses their processes, degrades the administration of *ustice and congest court dockets./1 Bhat is critical is the ve"ation brought upon the courts and the litigants by a party who asks different courts to rule on the same or related causes and grant the same or substantially the same reliefs and in the process creates the possibility of conflicting decisions being rendered by the different fora upon the same issues./2 Billful and deliberate violation of the rule against forum shopping is a ground for summary dismissal of the case& it may also constitute direct contempt./; To determine whether a party violated the rule against forum shopping, the most important factor to ask is whether the elements of litis pendentia are present, or
CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 33

whether a final *udgment in one case will amount to res *udicata in another& otherwise stated, the test for determining forum shopping is whether in the two ,or more. cases pending, there is identity of parties, rights or causes of action, and reliefs sought./5 >itis pendentia as a ground for the dismissal of a civil action refers to that situation wherein another action is pending between the same parties for the same cause of action, such that the second action becomes unnecessary and ve"atious. The underlying principle of litis pendentia is the theory that a party is not allowed to ve" another more than once regarding the same sub*ect matter and for the same cause of action. This theory is founded on the public policy that the same sub*ect matter should not be the sub*ect of controversy in courts more than once, in order that possible conflicting *udgments may be avoided for the sake of the stability of the rights and status of persons. The re!uisites of litis pendentia are% ,a. the identity of parties, or at least such as representing the same interests in both actions& ,b. the identity of rights asserted and relief prayed for, the relief being founded on the same facts& and ,c. the identity of the two cases such that *udgment in one, regardless of which party is successful, would amount to res *udicata in the other./C The foregoing guided this Court in determining whether Aap is liable for forum shopping for filing a complaint for annulment or discharge of checks following ChuaHs filing of a complaint for a sum of money with the two cases allegedly involving the same factual antecedents, issues and arguments. In so doing, this Court agrees with the C$ that all the elements of litis pendentia e"ist and that Aap had indulged in the detestable act of forum shopping, warranting the outright and summary dismissal of Civil Case 3o. 0;#020. The first re!uisite of litis pendentia is present as there is identity of parties.-.)phi- The second and third re!uisites are likewise present.-.)phi- $part from the fact that the same factual antecedents prompted the filing of the two cases, that AapHs defense in Civil Case 3o. C12C constitutes his cause of action in Civil Case 3o. 0;#020 necessarily implies reliance on the same evidence for the resolution of both cases. <ornbook is the rule that identity of causes of action does not mean absolute identity& otherwise, a party could easily escape the operation of res *udicata by changing the form of the action or the relief sought. The test to determine whether the causes of action are identical is to ascertain whether the same evidence will sustain both actions, or whether there is an identity in the facts essential to the maintenance of the two actions. If the same facts or evidence would sustain both, the two actions are considered the same, and a *udgment in the first case is a bar to the subse!uent action. <ence, a party cannot, by varying the form of action or adopting a different method of presenting his case, escape the operation of the principle that one and the same cause of action shall not be twice litigated between the same parties or their privies. $mong the several tests resorted to in ascertaining whether two suits relate to a single or common cause of action are% ,/. whether the same evidence would support and sustain both the first and second causes of action& and ,1. whether the defenses in one case may be used to substantiate the complaint in the other. /6 $lso fundamental is the test of determining whether the cause of action in the second case e"isted at the time of the filing of the first complaint./9

This Court takes note of the fact that Aap filed his complaint for the annulment of the checks he issued to Chua after he was ad*udged by the =TC of 7eneral 'antos City liable. This strikes the Court as indicative of his deliberate and willful attempt to render nugatory and defeat the adverse decision of the =TC of 7eneral 'antos City and relieve himself of his obligation to pay by having the checks he issued annulled, albeit the remedy of appeal was available and which he, in fact, resorted to. ChuaHs complaint is anchored on the amounts Aap received from her and the =TC of 7eneral 'antos City decided in her favor on the strength of the checks that Aap issued and endorsed to her. -y seeking to cancel or discharge such checks, Aap attempted to use the =TC of )akati City to destroy the evidentiary foundation of the decision of the =TC of 7eneral 'antos City. In doing so, Aap trifled with court processes and e"posed the courts to the possibility of rendering conflicting decisions. Borse, Aap sought to accomplish the prohibited # a court reversing a decision rendered by a court of co#e!ual rank. Thus, it matters not that the factual findings and conclusions of law of the =TC of 7eneral 'antos City, the =TC of )akati City, the C$ and even of this Court may concur. It is the fact that our *udicial system is rendered vulnerable to such uncertainties and ve"ations that any and all efforts to forum shop should be treated with aversion. $s this Court held in )adara v. Perello%/: 4ther permutations depending on the rulings of the two courts and the timing of these rulings are possible. In every case, our *ustice system suffers as this kind of sharp practice opens the system to the possibility of manipulation& to uncertainties when conflict of rulings arise& and at least to ve"ation for complications other than conflict of rulings. Thus, it matters not that ultimately the Court of $ppeals may completely agree with the =TC& what the rule on forum shopping addresses are the possibility and the actuality of its harmful effects on our *udicial system.10 B<(=(F4=(, premises considered, the petition is +(3I(+. The +ecision dated +ecember /0, 1009 and =esolution dated February /:, 100: of the Court of $ppeals in C$#7.=. 'P 3o. :2:6; are $FFI=)(+. Costs against the petitioner. '4 4=+(=(+.

G.R. No. 1.0135

$ r,- 31, .003

CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 34

BAN1 O& A$ERICA NT @ SA, BAN1 O& A$ERICA INTERNATIONAL, LT#., petitioners, vs. COURT O& APPEALS, %ON. $ANUEL PA#OLINA, E#UAR#O LITON*UA, SR., !" AURELIO 1. LITON*UA, *R., respondents. AUSTRIA-$ARTINE+, J.? This is a petition for review on certiorari under =ule ;5 of the =ules of Court assailing the 3ovember 1:, /::; decision of the Court of $ppeals / and the $pril 19, /::5 resolution denying petitioners' motion for reconsideration. The factual background of the case is as follows% 4n )ay /0, /::2, (duardo F. >iton*ua, 'r. and $urelio . >iton*ua ,>iton*uas, for brevity. filed a Complaint1 before the =egional Trial Court of Pasig against the -ank of $merica 3TE'$ and -ank of $merica International, >td. ,defendant banks for brevity. alleging that% they were engaged in the shipping business& they owned two vessels% +on $urelio and (l Champion, through their wholly#owned corporations& they deposited their revenues from said business together with other funds with the branches of said banks in the ?nited Fingdom and <ongkong up to /:6:& with their business doing well, the defendant banks induced them to increase the number of their ships in operation, offering them easy loans to ac!uire said vessels& 2 thereafter, the defendant banks ac!uired, through their ,>iton*uas'. corporations as the borrowers% ,a. (l Carrier ;& ,b. (l 7eneral 5& ,c. (l ChallengerC& and ,d. (l Con!ueror 6& the vessels were registered in the names of their corporations& the operation and the funds derived therefrom were placed under the complete and e"clusive control and disposition of the petitioners& 9 and the possession the vessels was also placed by defendant banks in the hands of persons selected and designated by them ,defendant banks..: The >iton*uas claimed that defendant banks as trustees did not fully render an account of all the income derived from the operation of the vessels as well as of the proceeds of the subse!uent foreclosure sale&/0 because of the breach of their fiduciary duties andLor negligence of the petitioners andLor the persons designated by them in the operation of private respondents' si" vessels, the revenues derived from the operation of all the vessels declined drastically& the loans ac!uired for the purchase of the four additional vessels then matured and remained unpaid, prompting defendant banks to have all the si" vessels, including the two vessels originally owned by the private respondents, foreclosed and sold at public auction to answer for the obligations incurred for and in behalf of the operation of the vessels& they ,>iton*uas. lost si8eable amounts of their own personal funds e!uivalent to ten percent ,/0Q. of the ac!uisition cost of the four vessels and were left with the unpaid balance of their loans with defendant banks.// The >iton*uas prayed for the accounting of the revenues derived in the operation of the si" vessels and of the proceeds of the sale thereof at the foreclosure proceedings instituted by petitioners& damages for breach of trust& e"emplary damages and attorney's fees. /1 +efendant banks filed a )otion to +ismiss on grounds of forum non conveniens and lack of cause of action against them./2 4n +ecember 2, /::2, the trial court issued an 4rder denying the )otion to +ismiss, thus% GB<(=(F4=(, and in view of the foregoing consideration, the )otion to +ismiss is hereby +(3I(+. The defendant is therefore, given a period of ten ,/0. days to file its $nswer to the complaint. G'4 4=+(=(+.G/; Instead of filing an answer the defendant banks went to the Court of $ppeals on a GPetition for =eview on CertiorariG /5 which was aptly treated by the appellate court as a petition for certiorari. They assailed the above#!uoted order as well as the subse!uent denial of their )otion for =econsideration./C The appellate court dismissed the petition and denied petitioners' )otion for =econsideration./6 <ence, herein petition anchored on the following grounds% G/. =('P43+(3T C4?=T 4F $PP($>' F$I>(+ T4 C43'I+(= T<( F$CT T<$T T<( '(P$=$T( P(='43$>ITI(' 4F T<( P=I@$T( =('P43+(3T'

,)(=( 'T4CF<4>+(='. $3+ T<( F4=(I73 C4=P4=$TI43' ,T<( =($> -4==4B(='. C>($=>A '?PP4=T, -(A43+ $3A +4?-T, T<( P=4P4'ITI43 T<$T T<( P=I@$T( =('P43+(3T' <$@( 34 P(='43$>ITI(' T4 '?(. G1. T<( =('P43+(3T C4?=T 4F $PP($>' F$I>(+ T4 =($>IR( T<$T B<I>( T<( P=I3CIP>( 4FF:R<& N:N C:N2ENIEN/ I' 34T )$3+$T4=A, T<(=( $=(, <4B(@(=, '4)( 7?I+(>I3(' T4 F4>>4B I3 +(T(=)I3I37 B<(T<(= T<( C<4IC( 4F F4=?) '<4?>+ -( +I'T?=-(+. ?3+(= T<( CI=C?)'T$3C(' '?==4?3+I37 T<( I3'T$3T C$'(, +I')I''$> 4F T<( C4)P>$I3T 43 T<( 7=4?3+ 4F F:R<& N:N% C:N2ENIEN/ I' )4=( $PP=4P=I$T( $3+ P=4P(=. G2. T<( P=I3CIP>( 4F RE/ J<#IC1'1 I' 34T >I)IT(+ T4 FI3$> ?+7)(3T I3 T<( P<I>IPPI3('. I3 F$CT, T<( P(3+(3CA 4F F4=(I73 $CTI43 )$A -( T<( >(7$> -$'I' F4= T<( +I')I''$> 4F T<( C4)P>$I3T FI>(+ -A T<( P=I@$T( =('P43+(3T. C4=4>>$=A T4 T<I', T<( =('P43+(3T C4?=T 4F $PP($>' F$I>(+ T4 C43'I+(= T<( F$CT T<$T P=I@$T( =('P43+(3T' $=( 7?I>TA 4F F4=?) '<4PPI37.G /9 $s to the first assigned error% Petitioners argue that the borrowers and the registered owners of the vessels are the foreign corporations and not private respondents >iton*uas who are mere stockholders& and that the revenues derived from the operations of all the vessels are deposited in the accounts of the corporations. <ence, petitioners maintain that these foreign corporations are the legal entities that have the personalities to sue and not herein private respondents& that private respondents, being mere shareholders, have no claim on the vessels as owners since they merely have an inchoate right to whatever may remain upon the dissolution of the said foreign corporations and after all creditors have been fully paid and satisfied& /: and that while private respondents may have allegedly spent amounts e!ual to /0Q of the ac!uisition costs of the vessels in !uestion, their /0Q however represents their investments as stockholders in the foreign corporations. 10 $nent the second assigned error, petitioners posit that while the application of the principle of forum non conveniens is discretionary on the part of the Court, said discretion is limited by the guidelines pertaining to the private as well as public interest factors in determining whether plaintiffs' choice of forum should be disturbed, as elucidated in Gulf :il Corp. vs. Gil"ert1/ and +iper 1ircraft Co. vs. Re$no,11 to wit% GPrivate interest factors include% ,a. the relative ease of access to sources of proof& ,b. the availability of compulsory process for the attendance of unwilling witnesses& ,c. the cost of obtaining attendance of willing witnesses& or ,d. all other practical problems that make trial of a case easy, e"peditious and ine"pensive. Public interest factors include% ,a. the administrative difficulties flowing from court congestion& ,b. the local interest in having locali8ed controversies decided at home& ,c. the avoidance of unnecessary problems in conflict of laws or in the application of foreign law& or ,d. the unfairness of burdening citi8ens in an unrelated forum with *ury duty.G 12 In support of their claim that the local court is not the proper forum, petitioners allege the following% Gi. The -ank of $merica -ranches involved, as clearly mentioned in the Complaint, are based in <ongkong and (ngland. $s such, the evidence and the witnesses are not readily available in the Philippines& Gii. The loan transactions were o"tained, perfected, performed, consummated and partiall$ paid outside the +hilippines & Giii. The monies were advanced outside the Philippines. Furthermore, the mortgaged vessels were part of an offshore fleet, not "ased in the +hilippines& Giv. $ll the loans involved were granted to the Private =espondents' foreign C:R+:R1'I:N/& Gv. The =estructuring $greements were 1!! governed by the laws of (ngland&
CIVPRO CASES: PASCUA TO HEIRS OF PADILLA | 35

Gvi. The subse!uent sales of the mortgaged vessels and the application of the sales proceeds occurred and transpired outside the +hilippines , and the deliveries of the sold mortgaged vessels were likewise made outside the Philippines& Gvii. The revenues of the vessels and the proceeds of the sales of these vessels were 1!! deposited to the $ccounts of the foreign C:R+:R1'I:N/ abroad& and Gviii. -ank of $merica International >td. is not licensed nor engaged in trade or business in the Philippines.G1; Petitioners argue further that the loan agreements, security documentation and all subse!uent restructuring agreements uniformly, unconditionally and e"pressly provided that they will be governed by the laws of (ngland& 15that Philippine Courts would then have to apply (nglish law in resolving whatever issues may be presented to it in the event it recogni8es and accepts herein case& that it would then be imposing a significant and unnecessary e"pense and burden not only upon the parties to the transaction but also to the local court. Petitioners insist that the inconvenience and difficulty of applying (nglish law with respect to a wholly foreign transaction in a case pending in the Philippines may be avoided by its dismissal on the ground of forum non conveniens. 1C Finally, petitioners claim that private respondents have already waived their alleged causes of action in the case at bar for their refusal to contest the foreign civil cases earlier filed by the petitioners against them in <ongkong and (ngland, to wit% G/.. Civil action in (ngland in its <igh Court of ustice, Kueen's -ench +ivision Commercial Court ,/::1#Folio 3o. 10:9. against ,a. >I-(=I$3 T=$3'P4=T 3$@I7$TI43. '$.& ,b. ('<>(A C4)P$3I$ 3$@I(=$ '$., ,c. (> C<$>>(37(= '$& ,d. ('P=I43$ '<IPPI37 C4. '$& ,e. P$CIFIC 3$@I7$T4' C4=P. '$& ,f. (++I( 3$@I7$TI43 C4=P. '$& ,g. (+?$=+4 F. >IT43 ?$ E ,h. $?=(>I4 F. >IT43 ?$. G1.. Civil action in (ngland in its <igh Court of ustice, Kueen's -ench +ivision, Commercial Court ,/::1#Folio 3o. 11;5. against ,a. (> C<$>>(37(= '.$., ,b. ('P=I43$ '<IPPI37 C4)P$3A '.$., ,c. (+?$=+4 F$TIP?3$3 >IT43 ?$ and ,d. $?=(>I4 F$TIP?3$3 >IT43 ?$. G2.. Civil action in the 'upreme Court of <ongkong <igh Court ,$ction 3o. ;02: of /::1., against ,a. ('<>(A C4)P$3I$ 3$@I(=$ '.$., ,b. (> C<$>>(37(= '.$., ,c. ('P=I43$ '<IPPI37 C4)P$3A '.$., ,d. P$CIFIC 3$@I7$T4=' C4=P4=$TI43 ,e. (++I( 3$@I7$TI43 C4=P4=$TI43 '.$., ,f. >IT43 ?$ C<$=T(=I37 ,(+A'<IP. C4., I3C., ,g. $?=(>I4 F$TIP?3$3 >IT43 ?$, =., and ,h. (+?$=+4 F$TIP?3$3 >IT43 ?$. G;.. $ civil action in the 'upreme Court of <ong Fong <igh Court ,$ction 3o. ;0;0 of /::1., against ,a. ('<>(A C4)P$3I$ 3$@I(=$ '.$., ,b. (> C<$>>(37(= '.$., ,c. ('P=I43$ '<IPPI37 C4)P$3A '.$., ,d. P$CIFIC 3$@I7$T4=' C4=P4=$TI43 ,e. (++I( 3$@I7$TI43 C4=P4=$TI43 '.$., ,f. >IT43 ?$ C<$=T(=I37 ,(+A'<IP. C4., I3C., ,g. $?=(>I4 F$TIP?3$3 >IT43 ?$, = ., and ,h. (+?$=+4 F$TIP?3$3 >IT43 ?$.G and that private respondents' alleged cause of action is already barred by the pendency of another action or bylitis pendentia as shown above.16 4n the other hand, private respondents contend that certain material facts and pleadings are omitted andLor misrepresented in the present petition for certiorari& that the prefatory statement failed to state that part of the security of the foreign loans were mortgages on a 2:#hectare piece of real estate located in the Philippines& 19 that while the complaint was filed only by the stockholders of the corporate borrowers, the latter are wholly#owned by the private respondents who are Filipinos and therefore under Philippine laws, aside from the said corporate borrowers being but their alter#egos, they have interests of their own in the vessels.1: Private respondents also argue that the dismissal by the Court of $ppeals of the petition for certiorari was *ustified because there was neither allegation nor any showing whatsoever by the petitioners that they had no appeal, nor any plain, speedy, and

ade!uate remedy in the ordinary course of law from the 4rder of the trial *udge denying their )otion to +ismiss& that the remedy available to the petitioners after their )otion to +ismiss was denied was to file an $nswer to the complaint& 20 that as upheld by the Court of $ppeals, the decision of the trial court in not applying the principle of forum non conveniens is in the lawful e"ercise of its discretion. 2/ Finally, private respondents aver that the statement of petitioners that the doctrine of res judicata also applies to foreign *udgment is merely an opinion advanced by them and not based on a categorical ruling of this Court&21 and that herein private respondents did not actually participate in the proceedings in the foreign courts.22 Be deny the petition for lack of merit. It is a well#settled rule that the order denying the motion to dismiss cannot be the sub*ect of petition for certiorari. Petitioners should have filed an answer to the complaint, proceed to trial and await *udgment before making an appeal. $s repeatedly held by this Court% G$n order denying a motion to dismiss is interlocutory and cannot be the sub*ect of the e"traordinary petition for certiorari or mandamus. The remedy of the aggrieved party is to file an answer and to interpose as defenses the ob*ections raised in his motion to dismiss, proceed to trial, and in case of an adverse decision, to elevate the entire case by appeal in due course. """ ?nder certain situations, recourse to certiorari or mandamus is considered appropriate, i.e., ,a. when the trial court issued the order without or in e"cess of *urisdiction& ,b. where there is patent grave abuse of discretion by the trial court& or ,c. appeal would not prove to be a speedy and ade!uate remedy as when an appeal would not promptly relieve a defendant from the in*urious effects of the patently mistaken order maintaining the plaintiff's baseless action and compelling the defendant needlessly to go through a protracted trial and clogging the court dockets by another futile case.G2; =ecords show that the trial court acted within its *urisdiction when it issued the assailed 4rder denying petitioners' motion to dismiss. +oes the denial of the motion to dismiss constitute a patent grave abuse of discretionS Bould appeal, under the circumstances, not prove to be a speedy and ade!uate remedyS Be will resolve said !uestions in con*unction with the issues raised by the parties. First issue. +id the trial court commit grave abuse of discretion in refusing to dismiss the complaint on the ground that plaintiffs have no cause of action against defendants since plaintiffs are merely stockholders of the corporations which are the registered owners of the vessels and the borrowers of petitionersS 3o. Petitioners' argument that private respondents, being mere stockholders of the foreign corporations, have no personalities to sue, and therefore, the complaint should be dismissed, is untenable. $ case is dismissible for lack of personality to sue upon proof that the plaintiff is not the real party#in#interest. >ack of personality to sue can be used as a ground for a )otion to +ismiss based on the fact that the complaint, on the face thereof, evidently states no cause of action. 25 In /an !oren=o 2illage 1ssociation, Inc. vs. Court of 1ppeals,2C this Court clarified that a complaint states a cause of action where it contains three essential elements of a cause of action, namely% ,/. the legal right of the plaintiff, ,1. the correlative obligation of the defendant, and ,2. the act or omission of the defendant in violation of said legal right. If these elements are absent, the complaint becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of action. 26 To emphasi8e, it is not the lack or absence of cause of action that is a ground for dismissal of the complaint but rather the fact that the complaint states no cause of action. 29 GFailure to state a cause of action G refers to the insufficiency of allegation in the pleading, unlike G lac0 of cause of actionG which refers to the insufficiency of factual basis for the action. GFailure to state a cause of actionG may be raised at the earliest stages of an action through a motion to dismiss the complaint, while Glack of cause of actionG may be raised any time after the !uestions of fact have been resolved on the basis of stipulations, admissions or evidence presented.2:
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In the case at bar, the complaint contains the three elements of a cause of action. It alleges that% ,/. plaintiffs, herein private respondents, have the right to demand for an accounting from defendants ,herein petitioners., as trustees by reason of the fiduciary relationship that was created between the parties involving the vessels in !uestion& ,1. petitioners have the obligation, as trustees, to render such an accounting& and ,2. petitioners failed to do the same. Petitioners insist that they do not have any obligation to the private respondents as they are mere stockholders of the corporation& that the corporate entities have *uridical personalities separate and distinct from those of the private respondents. Private respondents maintain that the corporations are wholly owned by them and prior to the incorporation of such entities, they were clients of petitioners which induced them to ac!uire loans from said petitioners to invest on the additional ships. Be agree with private respondents. $s held in the 'an >oren8o case, ;0 G""" assuming that the allegation of facts constituting plaintiffs' cause of action is not as clear and categorical as would otherwise be desired, any uncertainty thereby arising should be so resolved as to enable a full in!uiry into the merits of the action.G $s this Court has e"plained in the 'an >oren8o case, such a course, would preclude multiplicity of suits which the law abhors, and conduce to the definitive determination and termination of the dispute. To do otherwise, that is, to abort the action on account of the alleged fatal flaws of the complaint would obviously be indecisive and would not end the controversy, since the institution of another action upon a revised complaint would not be foreclosed.;/ /econd Issue. 'hould the complaint be dismissed on the ground of forum non% conveniensS 3o. The doctrine of forum non%conveniens, literally meaning 'the forum is inconvenient', emerged in private international law to deter the practice of global forum shopping, ;1 that is to prevent non#resident litigants from choosing the forum or place wherein to bring their suit for malicious reasons, such as to secure procedural advantages, to annoy and harass the defendant, to avoid overcrowded dockets, or to select a more friendly venue. ?nder this doctrine, a court, in conflicts of law cases, may refuse impositions on its *urisdiction where it is not the most GconvenientG or available forum and the parties are not precluded from seeking remedies elsewhere.;2 Bhether a suit should be entertained or dismissed on the basis of said doctrine depends largely upon the facts of the particular case and is addressed to the sound discretion of the trial court.;; In the case of Communication &aterials and #esign, Inc. vs. Court of 1ppeals,;5 this Court held that G""" Ia Philippine Court may assume *urisdiction over the case if it chooses to do so& provided, that the following re!uisites are met% ,/. that the Philippine Court is one to which the parties may conveniently resort to& ,1. that the Philippine Court is in a position to make an intelligent decision as to the law and the facts& and, ,2. that the Philippine Court has or is likely to have power to enforce its decision.G;C (vidently, all these re!uisites are present in the instant case. )oreover, this Court enunciated in +hilsec. Investment Corporation vs. Court of 1ppeals,;6 that the doctrine offorum non conveniens should not be used as a ground for a motion to dismiss because 'ec. /, =ule /C of the =ules of Court does not include said doctrine as a ground. This Court further ruled that while it is within the discretion of the trial court to abstain from assuming *urisdiction on this ground, it should do so only after vital facts are established, to determine whether special circumstances re!uire the court's desistance& and that the propriety of dismissing a case based on this principle of forum non conveniens re!uires a factual determination, hence it is more properly considered a matter of defense.;9 'hird issue. $re private respondents guilty of forum shopping because of the pendency of foreign actionS 3o. Forum shopping e"ists where the elements of litis pendentia are present and where a final *udgment in one case will amount to res judicata in the other.;: Parenthetically, for litis

pendentia to be a ground for the dismissal of an action there must be% ,a. identity of the parties or at least such as to represent the same interest in both actions& ,b. identity of rights asserted and relief prayed for, the relief being founded on the same acts& and ,c. the identity in the two cases should be such that the *udgment which may be rendered in one would, regardless of which party is successful, amount to res judicata in the other.50 In case at bar, not all the re!uirements for litis pendentia are present. Bhile there may be identity of parties, notwithstanding the presence of other respondents, 5/ as well as the reversal in positions of plaintiffs and defendants 51, still the other re!uirements necessary for litis pendentia were not shown by petitioner. It merely mentioned that civil cases were filed in <ongkong and (ngland without however showing the identity of rights asserted and the reliefs sought for as well as the presence of the elements of res judicata should one of the cases be ad*udged. $s the Court of $ppeals aptly observed% G""" ITJhe petitioners, by simply enumerating the civil actions instituted abroad involving the parties herein """, failed to provide this Court with relevant and clear specifications that would show the presence of the above#!uoted elements or re!uisites for res judicata. Bhile it is true that the petitioners in their motion for reconsideration ,C$ =ollo, p. 61., after enumerating the various civil actions instituted abroad, did aver that GCopies of the foreign *udgments are hereto attached and made integral parts hereof as $nne"es '-', 'C', '+' and '('G, they failed, wittingly or inadvertently, to include a single foreign *udgment in their pleadings submitted to this Court as anne"es to their petition. <ow then could Be have been e"pected to rule on this issue even if Be were to hold that foreign *udgments could be the basis for the application of the aforementioned principle of res judicataSG52 Conse!uently, both courts correctly denied the dismissal of herein sub*ect complaint. B<(=(F4=(, the petition is +(3I(+ for lack of merit. Costs against petitioners. '4 4=+(=(+.

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G.R. No. 17/858 S2p42562r 15, .010 %EIRS O& *UANITA PA#ILLA, r2pr232!42" 6) CLAU#IO PA#ILLA, Petitioners, vs. #O$INA#OR $AG#UA, =espondent. +(CI'I43 CARPIO, J.: T-2 C 32 -efore the Court is a petition for review on certiorari / assailing the 4rders dated 9 'eptember 100C1 and /2 February 10062 of the =egional Trial Court ,=TC. of Tacloban City, -ranch 2;, in Civil Case 3o. 100/#/0#/C/. T-2 & ,43 uanita Padilla , uanita., the mother of petitioners, owned a piece of land located in 'an =o!ue, Tanauan, >eyte. $fter uanitaHs death on 12 )arch /:9:, petitioners, as legal heirs of uanita, sought to have the land partitioned. Petitioners sent word to their eldest brother =icardo -ahia ,=icardo. regarding their plans for the partition of the land. In a letter dated 5 une /::9 written by =icardo addressed to them, petitioners were surprised to find out that =icardo had declared the land for himself, pre*udicing their rights as co#heirs. It was then discovered that uanita had allegedly e"ecuted a notari8ed $ffidavit of Transfer of =eal Property; ,$ffidavit. in favor of =icardo on ; une /:CC making him the sole owner of the land. The records do not show that the land was registered under the Torrens system. 4n 1C 4ctober 100/, petitioners filed an action with the =TC of Tacloban City, -ranch 2;, for recovery of ownership, possession, partition and damages. Petitioners sought to declare void the sale of the land by =icardoHs daughters, osephine -ahia and @irginia -ahia#$bas, to respondent +ominador )agdua ,+ominador.. The sale was made during the lifetime of =icardo. Petitioners alleged that =icardo, through misrepresentation, had the land transferred in his name without the consent and knowledge of his co#heirs. Petitioners also stated that prior to /:CC, =icardo had a house constructed on the land. <owever, when =icardo and his wife Rosima separated, =icardo left for Inasuyan, Fawayan, -iliran and the house was leased to third parties. Petitioners further alleged that the signature of uanita in the $ffidavit is highly !uestionable because on /5 )ay /:69 uanita e"ecuted a written instrument stating that she would be leaving behind to her children the land which she had inherited from her parents. +ominador filed a motion to dismiss on the ground of lack of *urisdiction since the assessed value of the land was within the *urisdiction of the )unicipal Trial Court of Tanauan, >eyte. In an 4rder dated 10 February 100C,5 the =TC dismissed the case for lack of *urisdiction. The =TC e"plained that the assessed value of the land in the amount of P5:0.00 was less than the amount cogni8able by the =TC to ac!uire *urisdiction over the case.C Petitioners filed a motion for reconsideration. Petitioners argued that the action was not merely for recovery of ownership and possession, partition and damages but also for annulment of deed of sale. 'ince actions to annul contracts are actions beyond pecuniary estimation, the case was well within the *urisdiction of the =TC. +ominador filed another motion to dismiss on the ground of prescription. In an 4rder dated 9 'eptember 100C, the =TC reconsidered its previous stand and took cogni8ance of the case. 3onetheless, the =TC denied the motion for reconsideration and dismissed the case on the ground of prescription pursuant to 'ection /, =ule : of the =ules of Court. The =TC ruled that the case was filed only in 100/ or more than 20 years since the $ffidavit was e"ecuted in /:CC. The =TC

e"plained that while the right of an heir to his inheritance is imprescriptible, yet when one of the co#heirs appropriates the property as his own to the e"clusion of all other heirs, then prescription can set in. The =TC added that since prescription had set in to !uestion the transfer of the land under the $ffidavit, it would seem logical that no action could also be taken against the deed of sale e"ecuted by =icardoHs daughters in favor of +ominador. The dispositive portion of the order states% B<(=(F4=(, premises considered, the order of the Court is reconsidered in so far as the pronouncement of the Court that it has no *urisdiction over the nature of the action. The dismissal of the action, however, is maintained not by reason of lack of *urisdiction but by reason of prescription. '4 4=+(=(+.6 Petitioners filed another motion for reconsideration which the =TC denied in an 4rder dated /2 February 1006 since petitioners raised no new issue. <ence, this petition. T-2 I33<2 The main issue is whether the present action is already barred by prescription. T-2 Co<r4G3 R<li!( Petitioners submit that the =TC erred in dismissing the complaint on the ground of prescription. Petitioners insist that the $ffidavit e"ecuted in /:CC does not conform with the re!uirement of sufficient repudiation of co#ownership by =icardo against his co#heirs in accordance with $rticle ;:; of the Civil Code. Petitioners assert that the $ffidavit became part of public records only because it was kept by the Provincial $ssessorHs office for real property ta" declaration purposes. <owever, such cannot be contemplated by law as a record or registration affecting real properties. Petitioners insist that the $ffidavit is not an act of appropriation sufficient to be deemed as constructive notice to an adverse claim of ownership absent a clear showing that petitioners, as co#heirs, were notified or had knowledge of the $ffidavit issued by their mother in =icardoHs favor. =espondent +ominador, on the other hand, maintains that uanita, during her lifetime, never renounced her signature on the $ffidavit or interposed ob*ections to =icardoHs possession of the land, which was open, absolute and in the concept of an owner. +ominador contends that the alleged written instrument dated /5 )ay /:69 e"ecuted by uanita years before she died was only made known lately and conveys the possibility of being fabricated. +ominador adds that the alleged Mhighly !uestionable signatureH of uanita on the $ffidavit was only made an issue after 25 years from the date of the transfer in /:CC until the filing of the case in 100/. $s a buyer in good faith, +ominador invokes the defense of ac!uisitive prescription against petitioners. $t the outset, only !uestions of law may be raised in a petition for review on certiorari under =ule ;5 of the =ules of Court. The factual findings of the lower courts are final and conclusive and may not be reviewed on appeal e"cept under any of the following circumstances% ,/. the conclusion is grounded on speculations, surmises or con*ectures& ,1. the inference is manifestly mistaken, absurd or impossible& ,2. there is grave abuse of discretion& ,;. the *udgment is based on a misapprehension of facts& ,5. the findings of fact are conflicting& ,C. there is no citation of specific evidence on which the factual findings are based& ,6. the finding of absence of facts is contradicted by the presence of evidence on record& ,9. the findings of the Court of $ppeals are contrary to those of the trial court& ,:. the Court of $ppeals manifestly overlooked certain relevant and undisputed facts that, if properly considered, would *ustify a different conclusion& ,/0. the findings of the Court of $ppeals are beyond the issues of the case& and ,//. such findings are contrary to the admissions of both parties.9
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Be find that the conclusion of the =TC in dismissing the case on the ground of prescription based solely on the $ffidavit e"ecuted by uanita in favor of =icardo, the alleged seller of the property from whom +ominador asserts his ownership, is speculative. Thus, a review of the case is necessary. <ere, the =TC granted the motion to dismiss filed by +ominador based on 'ection /, =ule : of the =ules of Court which states% 'ection /. #efenses and o"jections not pleaded. N +efenses and ob*ections not pleaded either in a motion to dismiss or in the answer are deemed waived. <owever, when it appears from the pleadings or the evidence on record that the court has no *urisdiction over the sub*ect matter, that there is another action pending between the same parties for the same cause, or 4- 4 4-2 ,4io! i3 6 rr2" by a prior *udgment or 6) 34 4<42 o' li5i4 4io!3, the court shall dismiss the case. ,(mphasis supplied. The =TC e"plained that prescription had already set in since the $ffidavit was e"ecuted on 2/ )ay /:CC and petitioners filed the present case only on 1C 4ctober 100/, a lapse of more than 20 years. 3o action could be taken against the deed of sale made in favor of +ominador without assailing the $ffidavit, and the action to !uestion the $ffidavit had already prescribed. $fter a perusal of the records, we find that the =TC incorrectly relied on the $ffidavit alone in order to dismiss the case without considering petitionersH evidence. The facts show that the land was sold to +ominador by =icardoHs daughters, namely osephine -ahia and @irginia -ahia#$bas, during the lifetime of =icardo. <owever, the alleged deed of sale was not presented as evidence and neither was it shown that =icardoHs daughters had any authority from =icardo to dispose of the land. 3o cogent evidence was ever presented that =icardo gave his consent to, ac!uiesced in, or ratified the sale made by his daughters to +ominador. In its 9 'eptember 100C 4rder, the =TC hastily concluded that =icardoHs daughters had legal personality to sell the property% 4n the allegation of the plaintiffs ,petitioners. that osephine -ahia and @irginia -ahia#$bas had no legal personality or right to IsellJ the sub*ect property is of no moment in this case. It should be =icardo -ahia who has a cause of action against IhisJ daughters and not the herein plaintiffs. $fter all, =icardo -ahia might have already consented to or ratified the alleged deed of sale.: $lso, aside from the $ffidavit, +ominador did not present any proof to show that =icardoHs possession of the land had been open, continuous and e"clusive for more than 20 years in order to establish e"traordinary ac!uisitive prescription. /0 +ominador merely assumed that =icardo had been in possession of the land for 20 years based on the $ffidavit submitted to the =TC. The petitioners, on the other hand, in their pleading filed with the =TC for recovery of ownership, possession, partition and damages, alleged that =icardo left the land after he separated from his wife sometime after /:CC and moved to another place. The records do not mention, however, whether =icardo had any intention to go back to the land or whether =icardoHs family ever lived there. Further, +ominador failed to show that =icardo had the land declared in his name for ta"ation purposes from /:CC after the $ffidavit was e"ecuted until 100/ when the case was filed. $lthough a ta" declaration does not prove ownership, it is evidence of claim to possession of the land. )oreover, =icardo and petitioners are co#heirs or co#owners of the land. Co#heirs or co#owners cannot ac!uire by ac!uisitive prescription the share of the other co#heirs or co#owners absent a clear repudiation of the co#ownership, as e"pressed in $rticle ;:; of the Civil Code which states% $rt. ;:;. " " " 3o prescription shall run in favor of a co#owner or co#heir against his co#owners or co#heirs as long as he e"pressly or impliedly recogni8es the co# ownership.

'ince possession of co#owners is like that of a trustee, in order that a co#ownerHs possession may be deemed adverse to the cestui ,ue trust or other co#owners, the following re!uisites must concur% ,/. that he has performed une!uivocal acts of repudiation amounting to an ouster of the cestui ,ue trust or other co#owners, ,1. that such positive acts of repudiation have been made known to the cestui !ue trust or other co#owners, and ,2. that the evidence thereon must be clear and convincing.// In the present case, all three re!uisites have been met. $fter uanitaHs death in /:9:, petitioners sought for the partition of their motherHs land. The heirs, including =icardo, were notified about the plan. =icardo, through a letter dated 5 une /::9, notified petitioners, as his co#heirs, that he ad*udicated the land solely for himself. $ccordingly, =icardoHs interest in the land had now become adverse to the claim of his co#heirs after repudiating their claim of entitlement to the land. In Generosa v. +rangan%2alera,/1 we held that in order that title may prescribe in favor of one of the co#owners, it must be clearly shown that he had repudiated the claims of the others, and that they were apprised of his claim of adverse and e"clusive ownership, before the prescriptive period begins to run. <owever, in the present case, the prescriptive period began to run only from 5 une /::9, the date petitioners received notice of =icardoHs repudiation of their claims to the land. 'ince petitioners filed an action for recovery of ownership and possession, partition and damages with the =TC on 1C 4ctober 100/, only a mere three years had lapsed. This three#year period falls short of the /0#year or 20#year ac!uisitive prescription period re!uired by law in order to be entitled to claim legal ownership over the land. Thus, +ominador cannot invoke ac!uisitive prescription. Further, +ominadorHs argument that prescription began to commence in /:CC, after the $ffidavit was e"ecuted, is erroneous. +ominador merely relied on the $ffidavit submitted to the =TC that =icardo had been in possession of the land for more than 20 years. +ominador did not submit any other corroborative evidence to establish =icardoHs alleged possession since /:CC. In Heirs of &aningding v. Court of 1ppeals,/2 we held that the evidence relative to the possession, as a fact, upon which the alleged prescription is based, must be clear, complete and conclusive in order to establish the prescription. <ere, +ominador failed to present any other competent evidence to prove the alleged e"traordinary ac!uisitive prescription of =icardo over the land. 'ince the property is an unregistered land, +ominador bought the land at his own risk, being aware as buyer that no title had been issued over the land. $s a conse!uence, +ominador is not afforded protection unless he can manifestly prove his legal entitlement to his claim. Bith regard to the issue of the *urisdiction of the =TC, we hold that the =TC did not err in taking cogni8ance of the case. ?nder 'ection / of =epublic $ct 3o. 6C:/ ,=$ 6C:/., /; amending -atas Pambansa -lg. /1:, the =TC shall e"ercise e"clusive *urisdiction on the following actions% 'ection /. 'ection /: of -atas Pambansa -lg. /1:, otherwise known as the G udiciary =eorgani8ation $ct of /:90G, is hereby amended to read as follows% G'ec. /:. urisdiction in civil cases. N =egional Trial Courts shall e"ercise e"clusive original *urisdiction. G,/. In all civil actions in which the sub*ect of the litigation is incapable of pecuniary estimation& G,1. In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved e"ceeds Twenty Thousand Pesos ,P10,000.00. or, for civil actions in )etro )anila, where such value e"ceeds Fifty Thousand Pesos ,P50,000.00. e"cept actions for forcible entry into and unlawful detainer of lands or buildings, original *urisdiction over which is conferred
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upon the )etropolitan Trial Courts, )unicipal Trial Courts, and )unicipal Circuit Trial Courts& " " " 4n the other hand, 'ection 2 of =$ 6C:/ e"panded the *urisdiction of the )etropolitan Trial Courts, )unicipal Trial Courts and )unicipal Circuit Trial Courts over all civil actions which involve title to or possession of real property, or any interest, outside )etro )anila where the assessed value does not e"ceed Twenty thousand pesos ,P10,000.00.. The provision states% 'ection 2. 'ection 22 of the same law is hereby amended to read as follows% G'ec. 22. urisdiction of )etropolitan Trial Courts, )unicipal Trial Courts and )unicipal Circuit Trial Courts in Civil Cases. # )etropolitan Trial Courts, )unicipal Trial Courts, and )unicipal Trial Circuit Trial Courts shall e"ercise% """ G,2. ("clusive original *urisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not e"ceed Twenty thousand pesos ,P10,000.00. or, in civil actions in )etro )anila, where such assessed value does not e"ceed Fifty thousand pesos ,P50,000.00. e"clusive of interest, damages of whatever kind, attorneyHs fees, litigation e"penses and costs% Provided, That in cases of land not declared for ta"ation purposes, the value of such property shall be determined by the assessed value of the ad*acent lots.G In the present case, the records show that the assessed value of the land was P5:0.00 according to the +eclaration of Property as of 12 )arch 1000 filed with the =TC. -ased on the value alone, being way belowP10,000.00, the )TC has *urisdiction over the case. <owever, petitioners argued that the action was not merely for recovery of ownership and possession, partition and damages but also for annulment of deed of sale. 'ince annulment of contracts are actions incapable of pecuniary estimation, the =TC has *urisdiction over the case./5-avvphiPetitioners are correct. In 'ingson v. Isabela 'awmill,/C we held that% In determining whether an action is one the sub*ect matter of which is not capable of pecuniary estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether *urisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. <owever, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a conse!uence of, the principal relief sought, this Court has considered such actions as cases where the sub*ect of the litigation may not be estimated in terms of money, and are cogni8able by courts of first instance ,now =egional Trial Courts.. Bhen petitioners filed the action with the =TC they sought to recover ownership and possession of the land by !uestioning ,/. the due e"ecution and authenticity of the $ffidavit e"ecuted by uanita in favor of =icardo which caused =icardo to be the sole owner of the land to the e"clusion of petitioners who also claim to be legal heirs and entitled to the land, and ,1. the validity of the deed of sale e"ecuted between =icardoHs daughters and +ominador. 'ince the principal action sought here is something other than the recovery of a sum of money, the action is incapable of pecuniary estimation and thus cogni8able by the =TC. Bell#entrenched is the rule that *urisdiction over the sub*ect matter of a case is conferred by law and is determined by the allegations in the complaint and the character of the relief sought, irrespective of whether the party is entitled to all or some of the claims asserted./6 In sum, we find that the $ffidavit, as the principal evidence relied upon by the =TC to dismiss the case on the ground of prescription, insufficiently established +ominadorHs

rightful claim of ownership to the land. Thus, we direct the =TC to try the case on the merits to determine who among the parties are legally entitled to the land. A%ERE&ORE, we GRANT the petition. Be RE=ERSE AN# SET ASI#E the 4rders dated 9 'eptember 100C and /2 February 1006 of the =egional Trial Court of Tacloban City, -ranch 2; in Civil Case 3o. 100/#/0#/C/. '4 4=+(=(+.

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