Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 152878

May 5, 2003

RIZAL COMMERCIAL BANKING CORPORATION, petitioner,

vs.
MAGWIN MARKETING CORPORATION, NELSON TIU, BENITO SY and
ANDERSON UY, respondents.
BELLOSILLO, J.:
WE ARE PERTURBED that this case should drag this Court in the banal attempts to decipher
the hazy and confused intent of the trial court in proceeding with what would have been a simple,
straightforward and hardly arguable collection case. Whether the dismissal without prejudice for
failure to prosecute was unconditionally reconsidered, reversed and set aside to reinstate the
civil case and have it ready for pre-trial are matters which should have been clarified and
resolved in the first instance by the court a quo. Unfortunately, this feckless imprecision of the
trial court became the soup stock of the parties and their lawyers to further delay the case below
when they could have otherwise put things in proper order efficiently and effectively.
On 4 March 1999 petitioner Rizal Commercial Banking Corporation (RCBC) filed a complaint
for recovery of a sum of money with prayer for a writ of preliminary attachment against
respondents Magwin Marketing Corporation, Nelson Tiu, Benito Sy and Anderson Uy.1 On 26
April 1999, the trial court issued a writ of attachment.2 On 4 June 1999 the writ was returned
partially satisfied since only a parcel of land purportedly owned by defendant Benito Sy was
attached.3 In the meantime, summons was served on each of the defendants, respondents herein,
who filed their respective answers, except for defendant Gabriel Cheng who was dropped
without prejudice as party-defendant as his whereabouts could not be located.4 On 21 September
1999 petitioner moved for an alias writ of attachment which on 18 January 2000 the court a quo
denied.5
Petitioner did not cause the case to be set for pre-trial.6 For about six (6) months thereafter,
discussions between petitioner and respondents Magwin Marketing Corporation, Nelson Tiu,
Benito Sy and Anderson Uy, as parties in Civil Case No. 99-518, were undertaken to restructure
the indebtedness of respondent Magwin Marketing Corporation.7 On 9 May 2000 petitioner
approved a debt payment scheme for the corporation which on 15 May 2000 was communicated
to the latter by means of a letter dated 10 May 2000 for the conformity of its officers, i.e.,
respondent Nelson Tiu as President/General Manager of Magwin Marketing Corporation and
respondent Benito Sy as Director thereof.8 Only respondent Nelson Tiu affixed his signature on
the letter to signify his agreement to the terms and conditions of the restructuring.9

On 20 July 2000 the RTC of Makati City, on its own initiative, issued an Order dismissing
without prejudice Civil Case No. 99-518 for failure of petitioner as plaintiff therein to "prosecute
its action for an unreasonable length of time . . .."10 On 31 July 2000 petitioner moved for
reconsideration of the Order by informing the trial court of respondents' unremitting desire to
settle the case amicably through a loan restructuring program.11 On 22 August 2000 petitioner
notified the trial court of the acquiescence thereto of respondent Nelson Tiu as an officer of
Magwin Marketing Corporation and defendant in the civil case.12
On 8 September 2000 the court a quo issued an Order reconsidering the dismissal without
prejudice of Civil Case No. 99-518 Acting on plaintiff's "Motion for Reconsideration" of the Order dated 20 July 2000
dismissing this case for failure to prosecute, it appearing that there was already
conformity to the restructuring of defendants' indebtedness with plaintiff by defendant
Nelson Tiu, President of defendant corporation per "Manifestation and Motion" filed by
plaintiff on 22 August 2000, there being probability of settlement among the parties, as
prayed for, the Order dated 20 July 2000 is hereby set aside.
Plaintiff is directed to submit the compromise agreement within 15 days from receipt
hereof. Failure on the part of plaintiff to submit the said agreement shall cause the
imposition of payment of the required docket fees for re-filing of this case.13
On 27 July 2000 petitioner filed in Civil Case No. 99-518 a Manifestation and Motion to Set
Case for Pre-Trial Conference alleging that "[t]o date, only defendant Nelson Tiu had affixed his
signature on the May 10, 2000 letter which informed the defendants that plaintiff [herein
petitioner] already approved defendant Magwin Marketing Corporations request for restructuring
of its loan obligations to plaintiff but subject to the terms and conditions specified in said
letter."14 This motion was followed on 5 October 2000 by petitioner's Supplemental Motion to
Plaintiffs Manifestation and Motion to Set Case for Pre-Trial Conference affirming that
petitioner "could not submit a compromise agreement because only defendant Nelson Tiu had
affixed his signature on the May 10, 2000 letter . . .."15 Respondent Anderson Uy opposed the
foregoing submissions of petitioner while respondents Magwin Marketing Corporation, Nelson
Tiu and Benito Sy neither contested nor supported them.16
The trial court, in an undated Order (although a date was later inserted in the Order), denied
petitioner's motion to calendar Civil Case No. 99-518 for pre-trial stating that Acting on plaintiff's [herein petitioner] "Manifestation and Motion to Set Case for PreTrial Conference," the "Opposition" filed by defendant Uy and the subsequent
"Supplemental Motion" filed by plaintiff; defendant Uy's "Opposition," and plaintiff's
"Reply;" for failure of the plaintiff to submit a compromise agreement pursuant to the
Order dated 8 September 2000 plaintiff's motion to set case for pre-trial conference is
hereby denied.17
On 15 November 2000 petitioner filed its Notice of Appeal from the 8 September 2000 Order of
the trial court as well as its undated Order in Civil Case No. 99-518. On 16 November 2000 the

trial court issued two (2) Orders, one of which inserted the date "6 November 2000" in the
undated Order rejecting petitioner's motion for pre-trial in the civil case, and the other denying
due course to the Notice of Appeal on the ground that the "Orders dated 8 September 2000 and 6
November 2000 are interlocutory orders and therefore, no appeal may be taken . . .."18
On 7 December 2000 petitioner elevated the Orders dated 8 September 2000, 6 November 2000
and 16 November 2000 of the trial court to the Court of Appeals in a petition for certiorari under
Rule 65 of the Rules of Civil Procedure.19 In the main, petitioner argued that the court a quo had
no authority to compel the parties in Civil Case No. 99-518 to enter into an amicable settlement
nor to deny the holding of a pre-trial conference on the ground that no compromise agreement
was turned over to the court a quo.20
On 28 September 2001 the appellate court promulgated its Decision dismissing the petition for
lack of merit and affirming the assailed Orders of the trial court21 holding that . . . although the language of the September 8, 2000 Order may not be clear, yet, a careful
reading of the same would clearly show that the setting aside of the Order dated July 20,
2000 which dismissed petitioner's complaint . . . for failure to prosecute its action for an
unreasonable length of time is dependent on the following conditions, to wit: a) The
submission of the compromise agreement by petitioner within fifteen (15) days from
notice; and b) Failure of petitioner to submit the said compromise agreement shall cause
the imposition of the payment of the required docket fees for the re-filing of the case; so
much so that the non-compliance by petitioner of condition no. 1 would make condition
no. 2 effective, especially that petitioner's manifestation and motion to set case for pretrial conference and supplemental motion . . . [were] denied by the respondent judge in
his Order dated November 6, 2000, which in effect means that the Order dated July 20,
2000 was ultimately not set aside considering that a party need not pay docket fees for the
re-filing of a case if the original case has been revived and reinstated.22
On 2 April 2002 reconsideration of the Decision was denied; hence, this petition.
In the instant case, petitioner maintains that the trial court cannot coerce the parties in Civil Case
No. 99-518 to execute a compromise agreement and penalize their failure to do so by refusing to
go forward with the pre-trial conference. To hold otherwise, so petitioner avers, would violate
Art. 2029 of the Civil Code which provides that "[t]he court shall endeavor to persuade the
litigants in a civil case to agree upon some fair compromise," and this Court's ruling in Goldloop
Properties, Inc. v. Court of Appeals23 where it was held that the trial court cannot dismiss a
complaint for failure of the parties to submit a compromise agreement.
On the other hand, respondent Anderson Uy filed his comment after several extensions asserting
that there are no special and important reasons for undertaking this review. He also alleges that
petitioner's attack is limited to the Order dated 8 September 2000 as to whether it is conditional
as the Court of Appeals so found and the applicability to this case of the ruling in Goldloop
Properties, Inc. v. Court of Appeals. Respondent Uy claims that the Order reconsidering the
dismissal of Civil Case No. 99-518 without prejudice is on its face contingent upon the
submission of the compromise agreement which in the first place was the principal reason of

petitioner to justify the withdrawal of the Order declaring his failure to prosecute the civil case.
He further contends that the trial court did not force the parties in the civil case to execute a
compromise agreement, the truth being that it dismissed the complaint therein for petitioner's
dereliction.
Finally, respondent Uy contests the relevance of Goldloop Properties, Inc. v. Court of Appeals,
and refers to its incongruence with the instant case, i.e., that the complaint of petitioner was
dismissed for failure to prosecute and not for its reckless disregard to present an amicable
settlement as was the situation in Goldloop Properties, Inc., and that the dismissal was without
prejudice, in contrast with the dismissal with prejudice ordered in the cited case. For their part,
respondents Magwin Marketing Corporation, Nelson Tiu and Benito Sy waived their right to file
a comment on the instant petition and submitted the same for resolution of this Court.24
The petition of Rizal Commercial Banking Corporation is meritorious. It directs our attention to
questions of substance decided by the courts a quo plainly in a way not in accord with applicable
precedents as well as the accepted and usual course of judicial proceedings; it offers special and
important reasons that demand the exercise of our power of supervision and review.
Furthermore, petitioner's objections to the proceedings below encompass not only the Order of 8
September 2000 but include the cognate Orders of the trial court of 6 and 16 November 2000.
This is evident from the prayer of the instant petition which seeks to reverse and set aside the
Decision of the appellate court and to direct the trial court to proceed with the pre-trial
conference in Civil Case No. 99-518. Evidently, the substantive issue involved herein is whether
the proceedings in the civil case should progress, a question which at bottom embroils all the
Orders affirmed by the Court of Appeals.
On the task at hand, we see no reason why RTC-Br. 135 of Makati City should stop short of
hearing the civil case on the merits. There is no substantial policy worth pursuing by requiring
petitioner to pay again the docket fees when it has already discharged this obligation
simultaneously with the filing of the complaint for collection of a sum of money. The procedure
for dismissed cases when re-filed is the same as though it was initially lodged, i.e., the filing of
answer, reply, answer to counter-claim, including other foot-dragging maneuvers, except for the
rigmarole of raffling cases which is dispensed with since the re-filed complaint is automatically
assigned to the branch to which the original case pertained.25 A complaint that is re-filed leads to
the re-enactment of past proceedings with the concomitant full attention of the same trial court
exercising an immaculate slew of jurisdiction and control over the case that was previously
dismissed,26 which in the context of the instant case is a waste of judicial time, capital and
energy.
What judicial benefit do we derive from starting the civil case all over again, especially where
three (3) of the four (4) defendants, i.e., Magwin Marketing Corporation, Nelson Tiu and Benito
Sy, have not contested petitioner's plea before this Court and the courts a quo to advance to pretrial conference? Indeed, to continue hereafter with the resolution of petitioner's complaint
without the usual procedure for the re-filing thereof, we will save the court a quo invaluable time
and other resources far outweighing the docket fees that petitioner would be forfeiting should we
rule otherwise.

Going over the specifics of this petition and the arguments of respondent Anderson Uy, we rule
that the Order of 8 September 2000 did not reserve conditions on the reconsideration and
reversal of the Order dismissing without prejudice Civil Case No. 99-518. This is quite evident
from its text which does not use words to signal an intent to impose riders on the dispositive
portion Acting on plaintiff's "Motion for Reconsideration" of the Order dated 20 July 2000
dismissing this case for failure to prosecute, it appearing that there was already
conformity to the restructuring of defendants' indebtedness with plaintiff by defendant
Nelson Tiu, President of defendant corporation per "Manifestation and Motion" filed by
plaintiff on 22 August 2000, there being probability of settlement among the parties, as
prayed for, the Order dated 20 July 2000 is hereby set aside.
Plaintiff is directed to submit the compromise agreement within 15 days from receipt
hereof. Failure on the part of plaintiff to submit the said agreement shall cause the
imposition of payment of the required docket fees for re-filing of this case.27
Contrary to respondent Uy's asseverations, the impact of the second paragraph upon the first is
simply to illustrate what the trial court would do after setting aside the dismissal without
prejudice: submission of the compromise agreement for the consideration of the trial court.
Nothing in the second paragraph do we read that the reconsideration is subject to two (2)
qualifications. Certainly far from it, for in Goldloop Properties, Inc. v. Court of Appeals28 a
similar directive, i.e., "[t]he parties are given a period of fifteen (15) days from today within
which to submit a Compromise Agreement," was held to mean that "should the parties fail in
their negotiations the proceedings would continue from where they left off." Goldloop
Properties, Inc. further said that its order, or a specie of it, did not constitute an agreement or
even an expectation of the parties that should they fail to settle their differences within the
stipulated number of days their case would be dismissed.
The addition of the second sentence in the second paragraph does not change the absolute
nullification of the dismissal without prejudice decreed in the first paragraph. The sentence
"[f]ailure on the part of plaintiff to submit the said agreement shall cause the imposition of
payment of the required docket fees for re-filing of this case" is not a directive to pay docket fees
but only a statement of the event that may result in its imposition. The reason for this is that the
trial court could not have possibly made such payment obligatory in the same civil case, i.e.,
Civil Case No. 99-518, since docket fees are defrayed only after the dismissal becomes final and
executory and when the civil case is re-filed.
It must be emphasized however that once the dismissal attains the attribute of finality, the trial
court cannot impose legal fees anew because a final and executory dismissal although without
prejudice divests the trial court of jurisdiction over the civil case as well as any residual power to
order anything relative to the dismissed case; it would have to wait until the complaint is
docketed once again.29 On the other hand, if we are to concede that the trial court retains
jurisdiction over Civil Case No. 99-518 for it to issue the assailed Orders, a continuation of the
hearing thereon would not trigger a disbursement for docket fees on the part of petitioner as this

would obviously imply the setting aside of the order of dismissal and the reinstatement of the
complaint.
Indubitably, it is speculative to reckon the effectivity of the Order of dismissal without prejudice
to the presentation of the compromise agreement. If we are to admit that the efficacy of the
invalidation of the Order of dismissal is dependent upon this condition, then we must inquire:
from what date do we count the fifteen (15)-day reglementary period within which the alleged
revival of the order of dismissal began to run? Did it commence from the lapse of the fifteen (15)
days provided for in the Order of 8 September 2000? Or do we count it from the 6 November
2000 Order when the trial court denied the holding of a pre-trial conference? Or must it be upon
petitioner's receipt of the 16 November 2000 Order denying due course to its Notice of Appeal?
The court a quo could not have instituted an Order that marked the proceedings before it with a
shadow of instability and chaos rather than a semblance of constancy and firmness.
The subsequent actions of the trial court also belie an intention to revive the Order of dismissal
without prejudice in the event that petitioner fails to submit a compromise agreement. The
Orders of 6 and 16 November 2000 plainly manifest that it was retaining jurisdiction over the
civil case, a fact which would not have been possible had the dismissal without prejudice been
resuscitated. Surely, the court a quo could not have denied on 6 November 2000 petitioner's
motion to calendar Civil Case No. 99-518 for pre-trial if the dismissal had been restored to life in
the meantime. By then the dismissal without prejudice would have already become final and
executory so as to effectively remove the civil case from the docket of the trial court.
The same is true with the Order of 16 November 2000 denying due course to petitioner's Notice
of Appeal. There would have been no basis for such exercise of discretion because the
jurisdiction of the court a quo over the civil case would have been discharged and terminated by
the presumed dismissal thereof. Moreover, we note the ground for denying due course to the
appeal: the "Orders dated 8 September 2000 and 6 November 2000 are interlocutory orders and
therefore, no appeal may be taken from . . .."30 This declaration strongly suggests that something
more was to be accomplished in the civil case, thus negating the claim that the Order of
dismissal without prejudice was resurrected upon the parties' failure to yield a compromise
agreement. A "final order" issued by a court has been defined as one which disposes of the
subject matter in its entirety or terminates a particular proceeding or action, leaving nothing else
to be done but to enforce by execution what has been determined by the court, while an
"interlocutory order" is one which does not dispose of a case completely but leaves something
more to be decided upon.31
Besides the semantic and consequential improbabilities of respondent Uy's argument, our ruling
in Goldloop Properties, Inc., is decisive of the instant case. In Goldloop Properties, Inc., we
reversed the action of the trial court in dismissing the complaint for failure of the plaintiff to
prosecute its case, which was in turn based on its inability to forge a compromise with the other
parties within fifteen (15) days from notice of the order to do so and held Since there is nothing in the Rules that imposes the sanction of dismissal for failing to
submit a compromise agreement, then it is obvious that the dismissal of the complaint on
the basis thereof amounts no less to a gross procedural infirmity assailable by certiorari.

For such submission could at most be directory and could not result in throwing out the
case for failure to effect a compromise. While a compromise is encouraged, very strongly
in fact, failure to consummate one does not warrant any procedural sanction, much less
an authority to jettison a civil complaint worth P4,000,000.00 . . . Plainly, submission of a
compromise agreement is never mandatory, nor is it required by any rule.32
As also explained therein, the proper course of action that should have been taken by the court a
quo, upon manifestation of the parties of their willingness to discuss a settlement, was to suspend
the proceedings and allow them reasonable time to come to terms (a) If willingness to discuss a
possible compromise is expressed by one or both parties; or (b) If it appears that one of the
parties, before the commencement of the action or proceeding, offered to discuss a possible
compromise but the other party refused the offer, pursuant to Art. 2030 of the Civil Code. If
despite efforts exerted by the trial court and the parties the negotiations still fail, only then should
the action continue as if no suspension had taken place.33
Ostensibly, while the rules allow the trial court to suspend its proceedings consistent with the
policy to encourage the use of alternative mechanisms of dispute resolution, in the instant case,
the trial court only gave the parties fifteen (15) days to conclude a deal. This was, to say the
least, a passive and paltry attempt of the court a quo in its task of persuading litigants to agree
upon a reasonable concession.34 Hence, if only to inspire confidence in the pursuit of a middle
ground between petitioner and respondents, we must not interpret the trial court's Orders as
dismissing the action on its own motion because the parties, specifically petitioner, were anxious
to litigate their case as exhibited in their several manifestations and motions.
We reject respondent Uy's contention that Goldloop Properties, Inc. v. Court of Appeals is
irrelevant to the case at bar on the dubious reasoning that the complaint of petitioner was
dismissed for failure to prosecute and not for the non-submission of a compromise agreement
which was the bone of contention in that case, and that the dismissal imposed in the instant case
was without prejudice, in contrast to the dismissal with prejudice decreed in the cited case. To
begin with, whether the dismissal is with or without prejudice if grievously erroneous is
detrimental to the cause of the affected party; Goldloop Properties, Inc. does not tolerate a
wrongful dismissal just because it was without prejudice. More importantly, the facts in
Goldloop Properties, Inc. involve, as in the instant case, a dismissal for failure to prosecute on
the ground of the parties' inability to come up with a compromise agreement within fifteen (15)
days from notice of the court's order therein. All told, the parallelism between them is
unmistakable.
Even if we are to accept on face value respondent's understanding of Goldloop Properties, Inc.
as solely about the failure to submit a compromise agreement, it is apparent that the present case
confronts a similar problem. Perhaps initially the issue was one of failure to prosecute, as can be
observed from the Order dated 20 July 2000, although later reversed and set aside. But
thereafter, in the Order of 6 November 2000, the trial court refused to proceed to pre-trial owing
to the "failure of the plaintiff to submit a compromise agreement pursuant to the Order dated 8
September 2000." When the civil case was stalled on account of the trial court's refusal to call
the parties to a pre-trial conference, the reason or basis therefor was the absence of a negotiated
settlement - a circumstance that takes the case at bar within the plain ambit of Goldloop

Properties, Inc. In any event, given that the instant case merely revolves around the search for a
reasonable interpretation of the several Orders of the trial court, i.e., as to whether the dismissal
without prejudice was revived upon petitioner's helplessness to perfect an out-of-court
arrangement, with more reason must we employ the ruling in Goldloop Properties, Inc. to
resolve the parties' differences of opinion.
We also find nothing in the record to support respondent Uy's conclusion that petitioner has been
mercilessly delaying the prosecution of Civil Case No. 99-518 to warrant its dismissal. A
complaint may be dismissed due to plaintiff's fault: (a) if he fails to appear during a scheduled
trial, especially on the date for the presentation of his evidence in chief, or when so required at
the pre-trial; (b) if he neglects to prosecute his action for an unreasonable length of time; or (c) if
he does not comply with the rules or any order of the court. None of these was obtaining in the
civil case.
While there was a lull of about six (6) months in the prosecution of Civil Case No. 99-518, it
must be remembered that respondents themselves contributed largely to this delay. They
repeatedly asked petitioner to consider re-structuring the debt of respondent Magwin Marketing
Corporation to which petitioner graciously acceded. Petitioner approved a new debt payment
scheme that was sought by respondents, which it then communicated to respondent Corporation
through a letter for the conformity of the latter's officers, i.e., respondent Nelson Tiu as
President/General Manager and respondent Benito Sy as Director thereof. Regrettably, only
respondent Nelson Tiu affixed his signature on the letter to signify his concurrence with the
terms and conditions of the arrangement. The momentary lag in the civil case was aggravated
when respondent Benito Sy for unknown and unexplained reasons paid no heed to the
adjustments in the indebtedness although curiously he has not opposed before this Court or the
courts a quo petitioner's desire to go ahead with the pre-trial conference.
Admittedly, delay took place in this case but it was not an interruption that should have entailed
the dismissal of the complaint even if such was designated as without prejudice. To constitute a
sufficient ground for dismissal, the inattention of plaintiff to pursue his cause must not only be
prolonged but also be unnecessary and dilatory resulting in the trifling of judicial processes. In
the instant case, the adjournment was not only fleeting as it lasted less than six (6) months but
was also done in good faith to accommodate respondents' incessant pleas to negotiate. Although
the dismissal of a case for failure to prosecute is a matter addressed to the sound discretion of the
court, that judgment however must not be abused. The availability of this recourse must be
determined according to the procedural history of each case, the situation at the time of the
dismissal, and the diligence of plaintiff to proceed therein.35 Stress must also be laid upon the
official directive that courts must endeavor to convince parties in a civil case to consummate a
fair settlement36 and to mitigate damages to be paid by the losing party who has shown a sincere
desire for such give-and-take.37 All things considered, we see no compelling circumstances to
uphold the dismissal of petitioner's complaint regardless of its characterization as being without
prejudice.
In fine, petitioner cannot be said to have lost interest in fighting the civil case to the end. A court
may dismiss a case on the ground of non prosequitur but the real test of the judicious exercise of
such power is whether under the circumstances plaintiff is chargeable with want of fitting

assiduousness in not acting on his complaint with reasonable promptitude. Unless a party's
conduct is so indifferent, irresponsible, contumacious or slothful as to provide substantial
grounds for dismissal, i.e., equivalent to default or non-appearance in the case, the courts should
consider lesser sanctions which would still amount to achieving the desired end.38 In the absence
of a pattern or scheme to delay the disposition of the case or of a wanton failure to observe the
mandatory requirement of the rules on the part of the plaintiff, as in the case at bar, courts should
decide to dispense rather than wield their authority to dismiss.39
Clearly, another creative remedy was available to the court a quo to attain a speedy disposition
of Civil Case No. 99-518 without sacrificing the course of justice. Since the failure of petitioner
to submit a compromise agreement was the refusal of just one of herein respondents, i.e., Benito
Sy, to sign his name on the conforme of the loan restructure documents, and the common
concern of the courts a quo was dispatch in the proceedings, the holding of a pre-trial conference
was the best-suited solution to the problem as this stage in a civil action is where issues are
simplified and the dispute quickly and genuinely reconciled. By means of pre-trial, the trial court
is fully empowered to sway the litigants to agree upon some fair compromise.
Dismissing the civil case and compelling petitioner to re-file its complaint is a dangerous, costly
and circuitous route that may end up aggravating, not resolving, the disagreement. This case
management strategy is frighteningly deceptive because it does so at the expense of petitioner
whose cause of action, perhaps, may have already been admitted by its adverse parties as shown
by three (3) of four (4) defendants not willing to contest petitioner's allegations, and more
critically, since this approach promotes the useless and thankless duplication of hard work
already undertaken by the trial court. As we have aptly observed, "[i]nconsiderate dismissals,
even if without prejudice, do not constitute a panacea nor a solution to the congestion of court
dockets. While they lend a deceptive aura of efficiency to records of individual judges, they
merely postpone the ultimate reckoning between the parties. In the absence of clear lack of merit
or intention to delay, justice is better served by a brief continuance, trial on the merits, and final
disposition of the cases before the court."40
WHEREFORE, the Petition for Review is GRANTED. The Decision dated 28 September 2001
and Resolution dated 2 April 2002 of the Court of Appeals in CA-G.R. SP No. 62102 are
REVERSED and SET ASIDE.
The Orders dated 8 September 2000, 6 November 2000 and 16 November 2000 of the Regional
Trial Court, Branch 135, of Makati City, docketed as Civil Case No. 99-518, are also
REVERSED and SET ASIDE insofar as these Orders are interpreted to impose upon and collect
anew from petitioner RIZAL COMMERCIAL BANKING CORPORATION docket or legal fees
for its complaint, or to dismiss without prejudice Civil Case No. 99-518, or to preclude the trial
court from calling the parties therein to pre-trial conference, or from proceeding thereafter with
dispatch to resolve the civil case.
Civil Case No. 99-518 is deemed REINSTATED in, as it was never taken out from, the dockets
of the Regional Trial Court, Branch 135, of Makati City. The trial court is ORDERED to
exercise its jurisdiction over Civil Case No. 99-518, to CONDUCT the pre-trial conference
therein with dispatch, and to UNDERTAKE thereafter such other proceedings as may be

relevant, without petitioner being charged anew docket or other legal fees in connection with its
reinstatement. Costs against respondents.
SO ORDERED.
Quisumbing, Austria-Martinez and Callejo, Sr., JJ ., concur.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
A.M. No. MTJ-03-1513

November 12, 2003

Spouses JAIME and PURIFICACION MORTA, Complainants.

vs.
Judge ANTONIO C. BAGAGAN, Municipal Trial Court, Guinobatan, Albay; and
Sheriff DANILO O. MATIAS, Regional Trial Court, Branch 14, Ligao, Albay,
Respondents.
DECISION
PANGANIBAN, J.:
Unreasonable delay in resolving motions opens a judge to administrative sanctions. Likewise, a
sheriff is administratively liable for delayed implementation of a writ of execution and failure to
render the required reports thereon. These are necessary lessons from the time-honored principle
that "justice delayed is justice denied."
The Case and the Facts
In their Administrative Complaint1 dated July 26, 2001, Spouses Jaime and Purificacion Morta
Sr. charged Judge Antonio C. Bagagan of the Municipal Trial Court (MTC) of Guinobatan,
Albay with gross ignorance of the law, incompetence, bias and delay. They also indicted Sheriff
Danilo O. Matias of the Regional Trial Court (RTC) of Ligao, Albay (Branch 14) with gross
ignorance of the law, negligence and connivance with the defendants in Civil Case Nos. 481 and
482 (MTC, Guinobatan, Albay). The Office of the Court Administrator (OCA) summarized the
factual antecedents as follows:
"x x x [In] a Complaint-Affidavit dated July 26, 2001 (with enclosures), x x x [Spouses] Jaime
and Purificacion Morta[,] through their counsel[,] Atty. Rodolfo R. Paulino[,] charg[ed]
[Respondent] Judge Antonio C. Bagagan and Sheriff Danilo O. Matias with gross ignorance of
the law and procedure, incompetence, bias and delay in the disposition of Civil Case No. 481,
entitled Jaime Morta, Sr. and Purficacion Padilla vs. Jamie Occidental and Atty. Mariano
Baranda, Jr., for Damages with Prayer for a Writ of Preliminary Injunction, and Civil Case No.

482 entitled Jaime Morta, Sr. and Purficacion Padilla vs. Jamie Occidental, Atty. Mariano
Baranda, Jr. and Daniel Corral, for Damages with Prayer for a Writ of Preliminary Injunction.
"Complainants, who are the plaintiffs in the aforementioned civil cases, allege[d] that on March
29, 1994[,] the Municipal Trial Court [of] Guinobatan, Albay rendered a decision in their favor.
The decretal portion of the decision reads:
WHEREFORE, in view of the foregoing considerations, judgment is rendered in favor of the
plaintiffs and against the defendants in both cases as follows:
1) Ordering the defendants not to molest and disturb the peaceful possession of the
plaintiffs in the lands in question situated at San Rafael, Guinobatan;
2) Condemning the defendants in Civil Case No. 481 to jointly and severally pay the
plaintiffs the total amount of P8,130.00 representing the value of the coconuts, pili nuts
and anahaw leaves and for the destroyed plants;
3) Ordering the defendants in Civil Case No. 481 jointly and severally to reimburse the
plaintiffs the amount of P202.00 as legal expenses incurred in filing their suit;
4) Condemning the defendants in Civil Case No. 482 jointly and severally to pay the
plaintiffs the total amount of P9,950.00 representing the value of the coconuts and
anahaw leaves;
5) Ordering the said defendants in Civil Case No. 482 to jointly and severally reimburse
the plaintiffs the sum of P202.00 as legal expenses in filing this suit.
"The defendants appealed to the Regional Trial Court [of] Ligao, Albay. In its decision dated
August 10, 1994, the Regional Trial Court [RTC] dismissed the aforesaid cases on the ground
that the claims for damages are tenancy-related problems which fall under the original and
exclusive jurisdiction of the Department of Agrarian Reform Adjudicatory Board (DARAB). On
September 9, 1994, the plaintiffs filed a petition for review with the Court of Appeals assailing
the decision of the RTC. However, in its decision dated May 31, 1995, the Court of Appeals
affirmed the lower courts ruling that the cases fall within the original and exclusive jurisdiction
of DARAB. Thereafter, the First Division of this Court, acting on the petition for review on
certiorari filed by the plaintiffs, rendered its decision dated June 10, 1999 in G.R. No. 123417
affirming the decision of the Municipal Trial Court, Guinobatan, Albay in Civil Case Nos. 481
and 482 and thereby setting aside the decision of the Court of Appeals in CA-GR SP No. 35300
and that of the Regional Trial Court in Civil Cases Nos. 1751 and 1752.
"They now complain that despite the fact that the decision of the Supreme Court in the aforesaid
case had already become final and executory, the respondent Judge still refused to issue a writ of
possession in their favor.
"Complainants further allege that on June 6, 2000 they filed a motion to cite Jaime Occidental
for contempt of court. Although more than one (1) year had already elapsed since the motion was

filed in the respondent Judges sala, the same had remained unresolved up to the filing of the
instant complaint.
"As against the respondent Sheriff, the complainants aver[red] that through his ignorance,
negligence and connivance with the defendants, he failed to execute in full the writ of execution
that had been previously issued by the court in Civil Case Nos. 481 and 482. Moreover, it took
respondent Sheriff a long time before he finally submitted his Sheriff's Return of Service on the
Writ of Execution."2
In his Answer/Comment3 dated April 2, 2002, respondent judge explained that he had denied
complainants Motion for the issuance of a writ of possession because, by the time Civil Case
Nos. 481 and 482 were finally decided by this Court on June 10, 1999, they had already been
ousted from the lots in question pursuant to the Decisions in DARAB Case No. 2413 and Civil
Case No. 1920. In Civil Case No. 1920, respondent judge ordered complainants to vacate the
disputed lots. A Writ of Execution/Demolition was thereafter issued on January 29, 1998. On the
other hand, the DARAB Decision, which became final and executory on October 27, 1998,
directed them to cease and desist from disturbing the peaceful possession of therein Petitioner
Jaime Occidental.
Regarding the alleged delay in the resolution of the Motion for Contempt filed by complainants,
respondent judge contended that an ocular inspection and a hearing had been conducted by his
court as early as June 16, 2000, to determine if their Motion had any basis. With the consent of
their counsel, the hearing had to be deferred, however, pending receipt of the Sheriffs Report in
Civil Case No. 1920.
For his part, Respondent Sheriff Matias admitted in his Comment4 dated April 18, 2002, that
there was delay in the full implementation of the Writ of Execution in Civil Case Nos. 481 and
482. Explaining that the delay was due to his heavy workload and thus unintentional, he begged
for compassion from this Court.
Evaluation and Recommendation of the OCA
The OCA found that the explanation of respondent judge for not granting the Motion for
Execution, filed by complainants, was sufficient. According to the court administrator, the
records showed that they had indeed been evicted from the lots they were claiming when Civil
Case Nos. 481 and 482 were finally decided by the Supreme Court on June 10, 1999.5 Moreover,
it emphasized that this Court had merely affirmed the Decision of the MTC insofar as the award
of damages was concerned.
As to complainants Motion to cite Occidental in contempt, the OCA held that the delay was due
primarily to the need of the court to clarify some important matters, not to the negligence or
partiality of respondent. Accordingly, it recommended that the charges against him be dismissed
for lack of merit.
On the other hand, the OCA found that Sheriff Matias had failed to implement the Writ of
Execution promptly and efficiently. It recommended that he be ordered to pay a fine of P1,000,

with a warning that a repetition of the same or a similar act in the future would be dealt with
more severely.
The Courts Ruling
We modify the OCAs findings and recommended penalties, consistent with Rule 140 of the
Revised Rules of Court and the Revised Uniform Rules on Administrative Cases in the Civil
Service.
Administrative Liability
We agree with the OCA that respondent judge acted correctly in not issuing a writ of
execution/possession. His action was consistent with the Decision of this Court in GR No.
123417 affirming that of the MTC as to damages. Besides, the latters Order directing defendants
not to molest complainants in their peaceful possession was rendered moot when they were
ousted from the disputed lots by virtue of the final and executory judgments in Civil Case No.
1920 and DARAB Case No. 2413. Indeed, the execution of a final judgment may be refused, as
in this case, when there has been a change in the situation of the parties that would make its
execution inequitable.6
The delay in the resolution of complainants Motion, however, is an altogether different matter.
The Code of Judicial Conduct enjoins trial court judges, as paragons of justice in the first
instance, to dispose of the courts business promptly7 and to decide cases and motions within the
required periods.8 Section 15(1) of Article VIII of the Constitution mandates them to do so
within three months from the date of submission for decision or final resolution. This Court,
through Administrative Circular No. 1,9 also specifically requires all of them to act promptly on
all motions and interlocutory matters pending before their courts.10
Hence, it is well-settled that the unexplained failure of judges to decide cases and resolve
motions and incidents within the reglementary period of 90 days, which is fixed by the
Constitution and the law, renders them administratively liable.11 We have stressed often enough
that delay in the administration of justice undermines the faith of the people in the judiciary,
which is expected to hear their supplications promptly. Delay reinforces in the mind of litigants
the impression that the wheels of justice grind ever so slowly.12 As the time-honored principle
goes, "justice delayed is justice denied."
In this case, respondent judge never resolved the Motion, filed on June 6, 2000, to cite Defendant
Occidental for contempt. While it is true that the former immediately conducted an ocular
inspection of the area to determine if the Motion had any basis, this act served only to mitigate
his infraction, but not absolve him from it. The Sheriffs Return of Service of the Writ of
Demolition issued in Civil Case No. 1920 would have clarified whether or not Occidental had
already been fully restored in possession. But while its absence was a valid reason to defer action
on the contempt Motion at the outset, it was certainly not an excuse for the prolonged inaction.
Had respondent judge been so minded, he would have requested a copy of the Sheriffs Report,
so that he could rule on the Motion with dispatch. He has not satisfactorily explained his failure

to do so, considering that the Writ of Demolition issued in Civil Case No. 1920 had been fully
executed as early as February 25, 1998, and the return thereon made on March 17, 1998.13
With respect to the charges against respondent sheriff, we agree with the OCA that he was
remiss in his duty to implement the Writ fully in Civil Case Nos. 481 and 482.1a\^/phi1 Time
and time again, we have impressed upon those tasked to implement court orders and processes to
see to it that the final stage in the litigation process -- the execution of judgment -- be carried out
promptly. They should exert every effort and indeed consider it their bounden duty to do so, in
order to ensure the speedy and efficient administration of justice.14 A decision that is left
unexecuted or delayed indefinitely because of the sheriffs inefficiency or negligence remains an
empty victory on the part of the prevailing party.15 For this reason, any inordinate delay in the
execution of judgment is truly deplorable and cannot be countenanced by the Court.1a\^/phi1
There is no mistaking the mandatory character of the period prescribed under Section 14 of Rule
39 of the Revised Rules of Court on the Return of a Writ of Execution, which reads:
"SEC. 14. Return of writ of execution. The writ of execution shall be returnable to the court
issuing it immediately after the judgment has been satisfied in part or in full. If the judgment
cannot be satisfied in full within thirty (30) days after his receipt of the writ, the officer shall
report to the court and state the reason therefor. Such writ shall continue in effect during the
period within which the judgment may be enforced by motion. The officer shall make a report to
the court every thirty (30) days on the proceedings taken thereon until the judgment is satisfied in
full, or its effectivity expires. The returns or periodic reports shall set forth the whole of the
proceedings taken, and shall be filed with the court and copies thereof promptly furnished the
parties."
A similar rule is stated in Administrative Circular No. 12 dated October 1, 1985, and
incorporated in the Manual for Clerks of Court.16 According to this Circular, all sheriffs and
deputy sheriffs shall submit to the judge concerned a report on actions taken on all writs and
processes assigned to them within 10 days from receipt.
Per the records of this case, a Writ of Execution was issued on November 22, 1999 in Civil Case
Nos. 481 and 482.17 Respondent Sheriffs Return of Service18 of that Writ was filed only on May
25, 2000, however, or six months thereafter. There is nothing in the records showing that he
submitted before then a periodic report on the actions he had taken on the Writ "every 30 days
from the date of receipt" as required. On the contrary, the Report indicates that the Writ was
partially executed on December 15-28, 1999 and January 11, 2000; and that the damages
adjudged were partly paid in the amount of P3,500 plus one unit of Karaoke machine. But it was
only on May 25, 2000, that this matter was reported to the trial court.
The excuse proffered by respondent sheriff -- heavy workload -- cannot absolve him from
administrative sanctions.19 As an officer of the court, he should at all times show a high degree
of professionalism in the performance of his duties.20 He has failed to observe that degree of
dedication required of him as a sheriff. The charge of connivance is, however, dismissed for lack
of basis.

Although the OCA recommended that Respondent Judge Bagagan be absolved of all charges,
we find him guilty of undue delay21 in resolving a pending motion, an infraction that also
constitutes a violation of a Court circular.22 Under Section 11(B) of Rule 140 of the Revised
Rules of Court, this less serious charge23 may be sanctioned by a fine of more than P10,000, but
not exceeding P20,000.
As to Sheriff Matias, we find him guilty of simple neglect of duty,24 a less grave offense under
the Revised Uniform Rules on Administrative Cases in the Civil Service. This infraction is
punishable by a suspension of one month and one day to six months.25 But under the
circumstances, we find it inadvisable to suspend respondent sheriff, considering that his work
would be left unattended in his absence. Instead, we adopt our previous ruling in Aquino v.
Lavadia 26 imposing a fine equivalent to his one-month salary, so that he can finally implement
the subject Writ and perform his other duties.
WHEREFORE, Judge Antonio C. Bagagan of the Municipal Trial Court of Guinobatan, Albay,
is found guilty of unreasonable delay and is FINED P11,000 with a stern warning that a
repetition of the same or a similar act in the future shall be dealt with more severely. On the other
hand, Sheriff Danilo O. Matias of the Regional Trial Court of Ligao, Albay (Branch 14), is
ordered to pay a fine equivalent to his one-month salary, with a similar warning of stiffer
sanctions for the same or a similar act.
SO ORDERED.
Puno, (Chairman), Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 133883

December 10, 2003

SPOUSES ARTURO AND NICETA SERRANO, petitioners,

vs.
COURT OF APPEALS AND HEIRS OF EMILIO S. GELI, respondents.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court of the
Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 45573 setting aside the Order of the
Regional Trial Court of Quezon City in Civil Case No. Q-24790 with motion of herein
petitioners, Spouses Arturo and Niceta Serrano, for the issuance of an alias writ of execution.2

The Antecedents
The Spouses Serrano were the owners of a parcel of land as well as the house constructed
thereon located at Road 4, Project 6, Diliman, Quezon City, covered by Transfer Certificate of
Title No. 80384, and a parcel of land located in Caloocan City, covered by Transfer Certificate
of Title No. 15191. The couple mortgaged the said properties in favor of the Government Service
Insurance System (GSIS) as security for a loan of P50,000. By June 1969, the couple was able to
pay only the amount of P18,000.
On June 23, 1969, the Spouses Serrano, as vendors, and Spouses Emilio and Evelyn Geli, as
vendees, executed a deed of absolute sale with partial assumption of mortgage over the parcel of
land covered by TCT No. 80384 and the house thereon for the price of P70,000. The Spouses
Geli paid the amount of P38,000 in partial payment of the property, the balance of P32,000 to be
paid by them to the GSIS for the account of the Spouses Serrano. The Spouses Geli thereafter
took possession of the property. In the meantime, Evelyn Geli died intestate and was survived by
her husband Emilio Geli and their children.
However, Emilio Geli and his children failed to settle the amount of P32,000 to the GSIS. The
latter forthwith filed a complaint against Emilio Geli and his children with the Regional Trial
Court of Quezon City for the rescission of the deed of absolute sale with partial assumption of
mortgage. The defendants therein alleged, by way of special defense, that the plaintiffs Spouses
Serrano failed to furnish them with a detailed statement of the account due from the GSIS, thus
accounting for their failure to remit the balance of the loan to the GSIS. On September 6, 1984,
the trial court rendered judgment ordering the rescission of the said deed, the decretal portion of
which reads:
WHEREFORE, judgment is hereby rendered: a) ordering the rescission of the Deed of Absolute
Sale with Assumption of Mortgage, dated June 23, 1969; b) ordering defendant Emilio S. Geli
and all persons claiming under him, including the other defendants Oswaldo, Eugenia, Marilyn,
Cristopher and Ray, all surnamed Geli, to vacate the house and lot located at No. 110 A-1, Road
4, Project 6, Quezon City, and to turn over the peaceful possession of the premises to plaintiffs
Arturo Serrano and Niceta M. Serrano; c) ordering defendant Emilio S. Geli to pay plaintiffs the
amount of P1,000.00 a month representing reasonable compensation for the use and occupancy
of the premises starting June 23, 1969 up to the time the defendant Geli and all other persons
claiming under them including the other defendants, shall have completely vacated the property,
deducting therefrom the sum of P38,000.00 paid by defendant Geli to plaintiffs as part of the
aforesaid compensation; and, d) ordering defendant Emilio S. Geli to pay plaintiffs the sum of
P10,000.00 representing exemplary damages. Costs against defendant Emilio S. Geli.3
Emilio Geli and his children appealed the decision to the CA on October 19, 1984. During the
pendency of the appeal, the GSIS foreclosed the real estate mortgage over the property for nonpayment of the P50,000 loan secured by the said property. At the sale on public auction, the
GSIS was the highest bidder. A certificate of sale over the property was thereby issued by the
sheriff in its favor on August 30, 1986. On October 30, 1987 and November 3, 1987, Emilio Geli
paid the redemption price of P67,701.844 to the GSIS. Official Receipts Nos. 905401 and 901685
for the said amount with the notation "for the account of Arturo Serrano" were issued.

Accordingly, on February 22, 1988, the GSIS executed a certificate of redemption5 and turned
over to Emilio Geli the owners copy of TCT No. 80384 in the names of the Spouses Serrano.
Emilio Geli did not inform the Spouses Serrano and the CA that he had paid the redemption
price to the GSIS.
On January 8, 1991, the CA dismissed the appeal of Emilio Geli and his children on the ground
that the appellants failed to pay the requisite docket fees despite notices from the appellate court.
No motion for the reconsideration of the resolution was filed. Thus, the said dismissal of the
appeal became final and executory. The Court of Appeals forthwith issued an Entry of Judgment
on February 27, 1991.
After the remand of the records, the Spouses Serrano filed with the RTC on January 14, 1994 a
motion for the execution of the trial courts September 6, 1984 Decision. On February 15, 1994,
the trial court issued an order granting the motion and forthwith issued a writ of execution. The
writ, however, was not implemented as the Spouses Serrano were then in the United States. On
August 1, 1995, the trial court issued an alias writ of execution on motion of the plaintiffs. This,
too, was not implemented, because of the defendants change of address. On May 9, 1996, the
trial court issued an order granting the motion of the plaintiffs for a second alias writ of
execution. On September 6, 1996, the defendants filed a motion to quash the same claiming, for
the first time, that defendant Emilio Geli had already redeemed the subject property in 1988 from
the GSIS. According to the defendants, this constituted a supervening event that would make the
execution of the trial courts decision unjust and inequitable.
On May 19, 1997, the trial court issued an order denying the aforesaid motion of the defendants.
It noted that the payment by defendant Emilio Geli of the redemption price to the GSIS took
place before the CA dismissed the appeal and before the decision of the RTC became final and
executory; hence, it did not constitute a supervening event warranting a quashal of the writ of
execution. The trial court cited the ruling of this Court in Lim v. Jabalde.6
On September 18, 1997, the trial court issued an order granting the motion for the issuance of
another alias writ of execution filed by the Spouses Serrano, to wit:
The Motion to Quash Writ of Execution, filed by defendants having been earlier denied and, it
being explicit under the New Rules of Civil Procedure (1997) that no appeals may be taken from
orders of execution, instead of giving due course to the appeal interposed by defendant, the court
resolves to grant the motion for the issuance of an Alias Writ of Execution.7
On September 26, 1997, the trial court issued an Alias Writ of Execution.8 Conformably with
said writ, the sheriff served a Sheriffs Notice to Vacate9 on the defendants. In the meantime,
Emilio Geli died intestate and was survived by his children.
On October 10, 1997, the heirs of Emilio Geli filed with the Court of Appeals a petition for
certiorari and/or prohibition praying for the nullification of the May 19, 1997 and September 18,
1997 Orders of the trial court. They alleged inter alia that when their father Emilio Geli paid the
redemption price to the GSIS on October 30, 1987 and November 3, 1987, their appeal of the
September 6, 1984 Decision of the RTC in Civil Case No. Q-24790 before the CA was still

pending resolution. Consequently, under the terms of the deed of absolute sale with assumption
of mortgage which was still subsisting at that time, they were ipso facto subrogated to the rights
of the Spouses Serrano as mortgagors of the property; hence, they became the owners of the
property and were entitled to the possession thereof. The petitioners therein further posited that
since they acquired ownership of the property before the CA dismissed their appeal and before
the September 6, 1984 Decision of the RTC became final and executory, the execution of the
decision against them was unjust and unfair. They then prayed for the following relief:
WHEREFORE, premises considered, it is respectfully prayed that the order of public respondent
Judge, dated 18 September 1997 and the Notice to Vacate issued by public respondent Sheriff,
dated 26 September 1997 be set aside. Likewise, to declare execution of judgment in Civil Case
No. Q-24790 to have been rendered impossible, as execution hereof would result to injustice. In
the meantime to obviate irreversible damage on the part of petitioners, a writ of PRELIMINARY
INJUNCTION be granted after due hearing, ORDERING public respondent Judge and public
respondent Sheriff to desist or refrain from implementing the September 18, 1997 order.
Other remedies available in law and equity are likewise prayed for.10
On January 5, 1998, the appellate court issued an order restraining the implementation of the
alias writ of execution and the notice to vacate issued by the trial court.11 On May 12, 1998, the
CA rendered the assailed decision in favor of the heirs of Emilio Geli, the decretal portion of
which reads:
WHEREFORE, the foregoing considered, the petition is hereby GRANTED, and the writ of
certiorari issued. The respondent court is hereby PERPETUALLY ENJOINED from issuing any
order or writ which would disturb the petitioners in their lawful ownership and possession of the
property subject matter of the instant case.12
The appellate court ruled that since Emilio Geli paid the redemption price for the property to the
GSIS in 1987 while his appeal was pending in the CA, the said redemption was a supervening
event which rendered the enforcement of the writ of execution issued by the trial court against
them unjust and inequitable.
The Spouses Serrano filed the instant petition and assigned to the CA the following errors:
I
THE COURT A QUO COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION WHEN IT PERMANENTLY ENJOINED THE
TRIAL COURT FROM DISTURBING THE RESPONDENTS IN THEIR LAWFUL
OWNERSHIP AND POSSESSION OF THE SAID PROPERTY, IT BEING CLEAR THAT
THEIR REDEMPTION WAS EFFECTED FOR AND ON BEHALF OF PETITIONER
ARTURO V. SERRANO.
II

THE COURT A QUO COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO

LACK OR EXCESS OF JURISDICTION WHEN IT HELD THAT THE REDEMPTION
CONSTITUTED A SUPERVENING EVENT WHICH CHANGE THE RELATIONS OF THE
PARTIES, THUS RENDERING EXECUTION INEQUITABLE UNDER THE PREMISES.13
The petitioners contend that the payment of the redemption price made by Emilio Geli in 1987
during the pendency of the appeal in the CA was ineffective because, subsequently, when the
respondents appeal was dismissed by the CA, the summary decision of the RTC declaring the
deed of absolute sale with partial assumption of mortgage rescinded had become final and
executory. The deed of absolute sale with partial assumption of mortgage executed by the
petitioners and the Spouses Geli had ceased to exist with its rescission as decreed by the RTC.
According to the petitioners, the payment of the redemption price was conditioned upon the
perfection and outcome of the appeal. Since the appeal of the respondents was dismissed by their
failure to pay the requisite docket fees, they must suffer the consequences thereof. The
petitioners assert that the redemption of a property is a right belonging to the mortgagor-debtor,
and since the deed of absolute sale with partial assumption of mortgage had been rescinded by
final judgment of the RTC, Emilio Geli was no longer a mortgagor or the successor-in-interest of
the mortgagors; hence, he could not redeem the property on behalf of the mortgagors without the
latters knowledge and consent.
For their part, the respondents echo the ruling of the CA that although the issuance by the trial
court of a writ of execution is ministerial upon the finality of its decision, the same is subject to
the onset of a supervening event which may, as in this case, render the same unwarranted, unjust
and inequitable.
The respondents contend that the petitioners lost their ownership over the property when they
failed to redeem the property within one year from the sale thereof at public auction to the GSIS.
Although the GSIS executed a Certificate of Redemption in favor of Emilio Geli on February 22,
1988, the deed was, in fact, a deed of conveyance because, by then, the one-year period to
redeem the property had already lapsed and the GSIS in the meantime had become the owner of
the property. Thus, the Spouses Geli acquired ownership thereof when they purchased the same
from the GSIS in 1988 for P67,701.84. The GSIS in effect sold the property to Emilio Geli and
did not merely allow him to redeem it. Departing from their submission before the CA, the
respondents now posit that their claim of ownership over the subject property was after all not
anchored on the deed of sale with assumption of mortgage, as it had been admittedly rescinded
by virtue of the finality of the trial courts September 6, 1984 Decision. Their claim of ownership
rests on the fact that they had acquired the property from the GSIS, the purchaser at public
auction. As owners of the property, they cannot now be evicted therefrom.
We find the petition to be meritorious.
Generally, the execution upon a final judgment is a matter of right on the part of the prevailing
party. It is the ministerial and mandatory duty of the trial court to enforce its own judgment once
it becomes final and executory. It may happen, however, that new facts and circumstances may
develop or occur after a judgment had been rendered and while an appeal therefrom is pending;
or new matters had developed after the appeal has been dismissed and the appealed judgment

had become final and executory, which the parties were not aware of and could not have been
aware of prior to or during the trial or during the appeal, as they were not yet in existence at that
time. In the first situation, any attempt to frustrate or put off the enforcement of an executory
decision must fail. Once a judgment has become final and executory, the only remedy left for
material attention thereof is that provided for in Rule 38 of the Rules of Court, as amended.
There is no other prerequisite mode of thwarting the execution of the judgment on equitable
grounds predicated on facts occurring before the finality of judgment.14 In the second situation,
the execution may be stayed, notwithstanding the affirmance of the appealed judgment by this
Court.15 It is required, however, that the supervening facts and circumstances must either have a
direct effect upon the matter already litigated and settled or create a substantial change in the
rights or relations of the parties therein which would render execution of a final judgment unjust,
impossible or inequitable or when it becomes imperative in the interest of justice.16 The
interested party may file a motion to quash a writ of execution issued by the trial court, or ask the
court to modify or alter the judgment to harmonize the same with justice and further supervening
facts.17 Evidence may be adduced by the parties on such supervening facts or circumstances.18
In this case, the payment by Emilio Geli of the amount of P67,701.84 on October 30 and
November 3, 1987 to the GSIS for the account of the petitioners was made while the appeal of
the private respondents from the summary judgment of the RTC was pending. The summary
judgment of the RTC had not yet become final and executory. It behooved the said respondents
to prosecute their appeal and file their brief, where they should have invoked the payment of the
redemption price as a ground for the reversal of the trial courts summary judgment in their
favor. The respondents failed to do so, and even concealed the payment of the loan for the
account of the petitioners. Worse, the respondents did not pay the requisite docket fees for their
appeal, which resulted in its dismissal. The respondents even opted not to file any motion for the
reconsideration of the resolution of the CA dismissing their appeal. In sum, the respondents
allowed the decision of the trial court to become final and executory. Consequently, the
enforcement of the summary judgment of the trial court can no longer be frustrated by the
respondents payment, through Emilio Geli, of the amount of P67,701.84 to the GSIS in 1987.
Irrefragably, the Spouses Geli, as vendees-mortgagors under the deed of absolute sale with
partial assumption of mortgage, would have been subrogated to the rights and obligations of the
petitioners under the said deed, including the right to redeem the property from the GSIS.19
However, the CA dismissed their appeal for failure to pay the requisite docket fees, and such
dismissal became final and executory. Hence, the summary judgment of the trial court declaring
the deed of absolute sale with partial assumption of mortgage rescinded had also become final
and executory.
Generally, the rule is that to rescind a contract is not merely to terminate it, but to abrogate and
undo it from the beginning; that is, not merely to release the parties from further obligations to
each other in respect to the subject of the contract, but to annul the contract and restore the
parties to the relative positions which they would have occupied if no such contract had ever
been made. Rescission necessarily involves a repudiation of the contract and a refusal of the
moving party to be further bound by it.20 With the rescission of the deed of sale, etc., the rights
of Emilio Geli under the said deed to redeem the property had been extinguished. The petitioners
cannot even be compelled to subrogate the respondents to their rights under the real estate

mortgage over the property which the petitioners executed in favor of the GSIS since the
payment of the P67,701.84 redemption price was made without the knowledge of the
petitioners.21 The respondents, however, are entitled to be reimbursed by the petitioners to the
extent that the latter were benefited.22
Neither did the respondents acquire title to the property under the certificate of redemption
executed by the GSIS on February 10, 1998.
First. In the certificate of redemption, the mortgagor-debtor in whose favor the certificate was
executed was the petitioner Arturo Serrano and not Emilio Geli and/or the respondents:
NOW, THEREFORE, for and in consideration of the foregoing premises and the sum of SIXTYSEVEN THOUSAND SEVEN HUNDRED ONE & 84/100 (P67,701.84) PESOS, Philippine
Currency, herein paid by EMILIO S. GELI, of legal age, married, Filipino, with residence and
postal address at 110 A-1, Road 4, Project 6, Quezon City, do hereby resell, retransfer and
reconvey by way of Certificate of Redemption in favor of ARTURO V. SERRANO, the abovedescribed parcel/s of land, together with the building/s and improvements existing thereon.
IN WITNESS WHEREOF, the GOVERNMENT SERVICE INSURANCE SYSTEM has caused
this instrument to be executed by its Director, Atty. Roque M. Fernando, Jr., at the City of
Manila, Philippines, this _______ day of ______, 19__.
GOVERNMENT SERVICE INSURANCE SYSTEM
Mortgagee-Purchaser
By: Sgd.
ROQUE M. FERNANDO, JR.
in his capacity as Director23
Second. Case law has it that the one-year period within which the mortgagor-debtor or his
successor-in-interest may redeem the property should be counted from the time the certificate of
sale was registered with the Register of Deeds.24 Upon the lapse of the one-year period, the right
to redeem becomes functus officio on the date of its expiry.25 The rule on redemption is actually
liberally construed in favor of the original owner of the property. The purpose of the law is to aid
rather than to defeat him in the exercise of his right of redemption.26 Before the lapse of the oneyear period, the mortgagor-debtor remains the owner of the property. The right acquired by the
purchaser at public auction is merely inchoate until the period of redemption has expired without
the right being exercised by the redemptioner.27 Such right becomes absolute only after the
expiration of the redemption period without the right of redemption having been exercised.28 The
purchaser is entitled as a matter of right to consolidation of title and to the possession of the
property.29 Where redemption is seasonably exercised by the mortgagor-debtor, what is actually
effected is not the recovery of ownership of his land, which ownership he never lost, but the
elimination from his title thereto of the lien created by the registration of a mortgage thereon.30

Upon the expiry of the redemption period without the mortgagor-debtor being able to redeem the
property, the purchaser can no longer be compelled to allow the former to redeem the property or
to resell the property; and if he agrees to sell the property, it may be for a price higher than that
for which he purchased the property at public auction.31
In this case, there is no showing in the records that the sheriffs certificate of sale in favor of the
GSIS had been registered in the Office of the Register of Deeds of Quezon City and if so, when
it was in fact registered in the said office. It cannot thus be argued that when Emilio Geli
remitted the amount of P67,701.84 to the GSIS in full payment of the account of the petitioners,
the one-year period to redeem the property had by then lapsed. Hence, the petitioners remained
the owners of the property. The GSIS never acquired title over the property and could not have
conveyed and transferred ownership over the same when it executed the certificate of redemption
to and in the name of the petitioner Arturo Serrano. As the Latin maxim goes: NEMO DAT
QUOD NON HABET.
We are not convinced by the ratiocination of the respondents that the enforcement of the
summary decision of the trial court and the alias writ of execution against them is unjust and
unreasonable.
The Spouses Geli and the respondents, as heirs and successors-in-interest of the said spouses,
were obliged under the deed of absolute sale with partial assumption of mortgage to pay to the
GSIS the balance of the petitioners account. The Spouses Geli reneged on their undertaking.
The petitioners were impelled to secure the services of counsel and sue the Spouses Geli with the
RTC for the rescission of the said deed with damages. The respondent spouses nevertheless
remained adamant and refused to pay the petitioners account with the GSIS which impelled the
latter to foreclose the real estate mortgage and sell the property at public auction. Emilio Geli
and the respondents did not inform the CA and the petitioners that Emilio Geli had paid the
amount of P67,701.84 for the account of the petitioners. The respondents even allowed their
appeal to be dismissed by the CA, and the dismissal to become final and executory. The
petitioners were impelled to spend money for their counsel and for sheriffs fees for the
implementation of the writ of execution and the alias writ of execution issued by the trial court.
In the meantime, the respondents remained in possession of the property from 1969, when the
said deed of absolute sale with partial assumption of mortgage was executed, up to the present,
or for a period of 34 years without paying a single centavo. For the Court to allow the
respondents to benefit from their own wrong would run counter to the maxim: Ex Dolo Malo
Non Oritur Actio (No man can be allowed to found a claim upon his own wrongdoing).32 Equity
is applied only in the absence of and never against statutory law or judicial rules of procedure.33
We reiterate our ruling that:
Justice is done according to law. As a rule, equity follows the law.1wphi1 There may be a moral
obligation, often regarded as an equitable consideration (meaning compassion), but if there is no
enforceable legal duty, the action must fail although the disadvantaged party deserves
commiseration or sympathy.
The choice between what is legally just and what is morally just, when these two options do not
coincide, is explained by Justice Moreland in Vales v. Villa, 35 Phil. 769, 788 where he said:

"Courts operate not because one person has been defeated or overcome by another, but because
he has been defeated or overcome illegally. Men may do foolish things, make ridiculous
contracts, use miserable judgment, and lose money by themindeed, all they have in the world;
but not for that alone can the law intervene and restore. There must be in addition, a violation of
law, the commission of what the law knows as an actionable wrong before the courts are
authorized to lay hold of the situation and remedy it." (Rural Bank of Paraaque, Inc. v.
Remolado, 62051, March 18, 1985) (135 SCRA 409, 412).34
In sum then, the respondents, as heirs of Emilio Geli, are obliged to vacate the subject property.
However, since the petitioners were benefited to the extent of P67,701.84 which was the total
amount paid by Emilio Geli to the GSIS as redemption price for the foreclosed property, the
petitioners are obliged to refund the said amount to the respondents.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed decision of the
Court of Appeals dated May 12, 1998 in CA-G.R. SP No. 45573 is SET ASIDE AND
REVERSED. The petitioners Spouses Serrano are obliged to refund to the respondents, as heirs
of Emilio S. Geli, the amount of P67,701.84 to be deducted from the amount due to the
petitioners under the September 6, 1984 Decision of the Regional Trial Court, Quezon City, in
Civil Case No. Q-24790.
SO ORDERED.
Puno, (Chairman), Quisumbing, Austria-Martinez, and Tinga, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 151325

June 27, 2005

D' ARMOURED SECURITY AND INVESTIGATION AGENCY, INC., petitioner,

vs.
ARNULFO ORPIA, LODUVICO ABUCEJO, ROWEL AGURO, EFREN ALMOETE,
ROMEO AMISTA, WARLITO BALAGOSA, ROMEO BALINGBING, RAMON
BARROA, MONTECLARO BATAWIL, ARNEL BON, RICARDO CAPENTES,
DANILO DADA, JOEL DELA CRUZ, HERNANO DELOS REYES, FLORENTINO
DELOS TRINO, ROGELIO DUERME, NONITO ESTRELLADO, JOSEPH FALCESO,
ISIDRO FLORES, VICTOR GUNGON, SONNY JULBA, PATRICIO LACANA, JR.,
FELIX LASCONA, JUANITO LUNA, RAUL LUZADAS, ROMMEL MAGBANUA,
ROGELIO MARIBUNG, NICOLAS MENDOZA, EZVENER OGANA, RICKY ORANO,
REYNALDO OZARAGA, SAMUEL PADILLA, EDWIN PARRENO, IRENEO
PARTOLAN, JUAN PIGTUAN, GUILLERMO PUSING, RODEL SIBAL, SILVESTRE
SOLEDAD, JOVENAR TEVER, VIRGILIO TIMAJO, ERMILIO TOMARONG, JR.,
VIRGILIO VERDEFLOR and JOEREX VICTORINO, respondents.

DECISION
SANDOVAL-GUTIERREZ, J.:
For resolution is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, assailing the Decision1 dated December 18, 2001 rendered by the Court
of Appeals in CA-G.R. SP No. 61799, entitled "DArmoured Security and Investigation Agency,
Inc. vs. National Labor Relations Commission, Arbiter Ariel C. Santos, NLRC Sheriff Ricardo
Perona, Arnulfo Orpia, Ludovico Abucejo, Rowel Aguro, Efren Almoete, Romeo Amista, Warlito
Balgosa, Romeo Balingbing, Ramon Barroa, Monteclaro Batawil, Arnel Bon, Ricardo Capentes,
Danilo Dada, Joel dela Cruz, Hernando delos Reyes, Florentino delos Trino, Rogelio Duerme,
Nonito Estrellado, Joseph Falceso, Isidro Flores, Victor Gungon, Sonny Julba, Patricio Lacana,
Jr., Felix Lascona, Juanito Luna, Raul Lozadas, Rommel Magbanua, Rogelio Maribung, Nicolas
Mendoza, Ezvener Ogana, Ricky Orano, Reynaldo Ozaraga, Samuel Padilla, Edwin Parreno,
Ireneo Partolan, Juan Pigtuan, Guillermo Pusing, Rodel Sibal, Silvestre Soledad, Jovener Tever,
Virgilio Timajo, Emilio Tomarong, Jr., Virgilio Verdeflor and Joerex Victorino."
On February 9, 1995, the above-named respondents, who were employed as security guards by
DArmoured Security and Investigation Agency, Inc., petitioner, and assigned to Fortune
Tobacco, Inc. (Fortune Tobacco), filed with the Labor Arbiter a complaint for illegal dismissal
and various monetary claims against petitioner and Fortune Tobacco, docketed as NLRC-NCR
Case No. 00-02-01148-95.
On June 11, 1998, the Labor Arbiter rendered a Decision, the dispositive portion of which reads:
"WHEREFORE, premises considered, all the respondents except Antonio Cabangon Chua are
jointly and severally liable to pay complainants the total sum of ONE MILLION SEVENTY
SEVEN THOUSAND ONE HUNDRED TWENTY FOUR AND TWENTY NINE CENTAVOS
(P1,077,124.29) for underpayment, overtime pay, legal holiday pay, service incentive leave pay,
13th month pay, illegal deduction and refund of firearms bond, as indicated in Annex A.
Finally, ten (10%) percent of all sums owing to complainants is hereby awarded as attorneys
fees.
SO ORDERED."
From the said Decision, Fortune Tobacco interposed an appeal to the National Labor Relations
Commission (NLRC). Petitioner did not appeal. On March 26, 1999, the NLRC rendered its
Decision affirming with modification the assailed Arbiters Decision in the sense that the
complaint against Fortune Tobacco was dismissed. This Decision became final and executory.
Thus, the award specified in the Decision of the Arbiter became the sole liability of petitioner.
The records were then remanded to the Arbiter for execution.
Upon respondents motion, the Arbiter issued a writ of execution. Eventually, the sheriff served
a writ of garnishment upon the Chief Accountant of Foremost Farms, Inc., a corporation with

whom petitioner has an existing services agreement. Thus, petitioners receivables with
Foremost were garnished.
Petitioner filed with the NLRC a "Motion to Quash/Recall Writ of Execution and Garnishment"
which was opposed by respondents.
On March 10, 2000, the Arbiter issued an Order denying the motion and directing the sheriff to
release the garnished sum of money to respondents pro rata.
Petitioners motion for reconsideration was denied, hence, it interposed an appeal to the NLRC.
In a Resolution dated July 27, 2000, the NLRC dismissed the appeal for petitioners failure to
post a bond within the reglementary period. Its motion for reconsideration was denied in a
Resolution dated September 25, 2000.
Forthwith, petitioner filed with the Court of Appeals a petition for certiorari and prohibition with
prayer for issuance of a writ of preliminary injunction.
In a Decision dated December 18, 2001, the Court of Appeals dismissed the petition.
Hence, this petition for review on certiorari.
In this petition, the issue posed is whether the Court of Appeals erred in holding that petitioners
monthly receivables from the Foremost Farms, Inc. (garnishee) are not exempt from execution.
The petition lacks merit. We have ruled that an order of execution of a final and executory
judgment, as in this case, is not appealable, otherwise, there would be no end to litigation.2
On this ground alone, the instant petition is dismissible.
Assuming that an appeal is proper, still we have to deny the instant petition. Section 1, Rule IV
of the NLRC Manual on Execution of Judgment provides:
"Rule IV
EXECUTION
SECTION 1. Properties exempt from execution. Only the properties of the losing party shall
be the subject of execution, except:
(a) The losing partys family home constituted in accordance with the Civil Code or
Family Code or as may be provided for by law or in the absence thereof, the homestead
in which he resides, and land necessarily used in connection therewith, subject to the
limits fixed by law;
(b) His necessary clothing, and that of his family;

(c) Household furniture and utensils necessary for housekeeping, and used for that
purpose by the losing party such as he may select, of a value not exceeding the amount
fixed by law;
(d) Provisions for individual or family use sufficient for three (3) months;
(e) The professional libraries of attorneys, judges, physicians, pharmacists, dentists,
engineers, surveyors, clergymen, teachers, and other professionals, not exceeding the
amount fixed by law;
(f) So much of the earnings of the losing party for his personal services within the month
preceding the levy as are necessary for the support of his family;
(g) All monies, benefits, privileges, or annuities accruing or in any manner growing out
of any life insurance;
(h) Tools and instruments necessarily used by him in his trade or employment of a value
not exceeding three thousand (P3,000.00) pesos;
(i) Other properties especially exempted by law."
The above Rule clearly enumerates what properties are exempt from execution. It is apparent
that the exemption pertains only to natural persons and not to juridical entities. On this point, the
Court of Appeals correctly ruled that petitioner, being a corporate entity, does not fall within the
exemption, thus:
"We cannot accede to petitioners position that the garnished amount is exempt from execution.
Section 13 of Rule 39 of the Rules of Court is plain and clear on what properties are exempt
from execution. Section 13 (i) of the Rules pertinently reads:
SECTION 13. Property exempt from execution. Except as otherwise expressly provided by
law, the following property, and no other, shall be exempt from execution:
xxxxxxxxx
(i) So much of the salaries, wages or earnings of the judgment obligor for his personal services
within the four months preceding the levy as are necessary for the support of his family.
The exemption under this procedural rule should be read in conjunction with the Civil Code, the
substantive law which proscribes the execution of employees wages, thus:
ART. 1708. The laborers wage shall not be subject to execution or attachment, except for debts
incurred for food, shelter, clothing and medical attendance.

Obviously, the exemption under Rule 39 of the Rules of Court and Article 1708 of the New Civil
Code is meant to favor only laboring men or women whose works are manual. Persons belonging
to this class usually look to the reward of a days labor for immediate or present support, and
such persons are more in need of the exemption than any other [Gaa vs. Court of Appeals, 140
SCRA 304 (1985)].
In this context, exemptions under this rule are confined only to natural persons and not to
juridical entities such as petitioner. Thus, the rule speaks of salaries, wages and earning from
the personal services rendered by the judgment obligor. The rule further requires that such
earnings be intended for the support of the judgment debtors family.
Necessarily, petitioner which is a corporate entity, does not fall under the exemption. If at all, the
exemption refers to petitioners individual employees and not to petitioner as a corporation.
x x x. Parenthetically, in a parallel case where a security agency claimed that the guns it gives to
its guards are tools and implements exempt from execution, the Supreme Court had the occasion
to rule that the exemption pertains only to natural and not to juridical persons, thus:
However, it would appear that the exemption contemplated by the provision involved is
personal, available only to a natural person, such as a dentists dental chair and electric fan
(Belen v. de Leon, G.R. No. L-15612, 30 Nov. 1962). As pointed out by the Solicitor General, if
properties used in business are exempt from execution, there can hardly be an instance when a
judgment claim can be enforced against the business entity [Pentagon Security and
Investigation Agency vs. Jimenez, 192 SCRA 492 (1990)].
It stands to reason that only natural persons whose salaries, wages and earnings are indispensable
for his own and that of his familys support are exempted under Section 13 (i) of Rule 39 of the
Rules of Court. Undeniably, a corporate entity such as petitioner security agency is not covered
by the exemption.
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED."
WHEREFORE, the petition is DENIED. The assailed Decision dated December 18, 2001 of the
Court of Appeals in CA-G.R. SP No. 61799 is AFFIRMED IN TOTO. Costs against petitioner.
SO ORDERED.
Panganiban, (Chairman), Corona, Carpio-Morales, and Garcia, JJ., concur.
Republic of the Philippines
SUPREME COURT
SECOND DIVISION

G.R. No. 157616. July 22, 2005

ISIDRO PEREZ and NARCISO A. RAGUA, Petitioners,
vs.
HON. COURT OF APPEALS, HON. VIVENCIO S. BACLIG and SPOUSES
GAUDENCIO DIGOS, JR. and RHODORA DIGOS, Respondents.
DECISION
CALLEJO, SR., J.:
The spouses Gaudencio Digos, Jr. and Rhodora Digos secured a loan of P5,800,000.00 from the
International Exchange Bank in December 1996, to finance their project for the construction of
townhouses on their property covered by Transfer Certificate of Title (TCT) No. 168790 located
in Tandang Sora, Quezon City. To secure the payment of the loan, the spouses Digos executed a
Real Estate Mortgage over the said property. However, the completion of their project was
delayed, partly because some homeowners in the Pillarville Subdivision (which abutted the
subject property) refused to allow them to build an access road through the subdivision to the
property. Thus, the equipment to be used for the project could not pass through the Pillarville
Subdivision.
Because of the spouses Digos failure to pay the amortizations on their loan, the bank caused the
extrajudicial foreclosure of their real estate mortgage. Consequently, the property was sold at
public auction, with the bank as the highest bidder at P4,500,000.00, which appeared to be the
account of the spouses Digos at the time. The Certificate of Sale executed by the sheriff was,
thereafter, registered at the Office of the Register of Deeds on September 7, 1998.1
In the meantime, the spouses Digos referred the matter of the right of way to the barangay
captain for settlement. Due to the vehement objections of some Pillarville Subdivision
homeowners, the barangay captain failed to resolve the matter.2
On July 2, 1999, the spouses Digos wrote the bank, requesting for a period of six (6) months
from September 7, 1999 within which to redeem the property.3 However, the bank denied the
request. On August 3, 1999, the spouses again wrote to the bank, pleading for an extension of at
least three (3) months to redeem the property.4 In a Letter5 to the spouses dated August 30, 1999,
the bank granted the spouses Digos a period of one month from September 8, 1999 (or until
October 8, 1999) within which to redeem the property. However, the bank consolidated its title
over the property, and on September 19, 1999, the Register of Deeds issued TCT No. 206979 in
the name of the bank.
Instead of repurchasing the property on or before October 8, 1999, the spouses Digos filed a
Complaint6 against the bank on October 7, 1999 with the Regional Trial Court (RTC) of Quezon
City, for the nullification of the extrajudicial foreclosure of the real estate mortgage and sale at
public auction and/or redemption of the property, with a prayer for a temporary restraining order
and a writ of preliminary injunction to enjoin the bank from consolidating its title over the
property. The spouses Digos also sought judgment for damages.

In their complaint, the spouses Digos alleged, inter alia, that they were denied their right to due
process because the foreclosure of the real estate mortgage was extrajudicial; the sale of their
property at public auction was without prior notice to them; the property was sold for only
P4,500,000.00, the balance of their account with the bank, but about 400% lower than the
prevailing price of the property; the bank rejected their plea for a five-month extension to
redeem, and their offer of P1,000,000.00 in partial payment of their loan account to reduce the
same to P3,500,000.00, but the bank granted them an extension of only one month to redeem the
property, designed to divest them of the same and enrich some characters at their expense;
because of the foregoing acts of the bank, they suffered sleepless nights, nervous tension and the
rise in their blood pressure for which they were entitled to moral damages in the amount of
P500,000.00, aside from the exemplary damages they were entitled to in the amount of
P100,000.00.
The spouses Digos prayed for a temporary restraining order to enjoin the bank from
consolidating its title over the property, and that judgment be rendered in their favor, thus:

2. Ordering the defendant Bank to allow plaintiffs to redeem their property;

3. Making the writ of injunction permanent;
4. Ordering the defendant Bank to pay moral damages of P500,000.00;
5. Ordering defendant Bank to pay exemplary damages of P200,000.00;
6. Ordering defendant Bank to pay attorneys fee of P30,000.00 plus P2,000.00 for every
appearance in Court;
Plaintiffs further pray for such other reliefs and remedies available within the premises.7
The case (first complaint, for brevity) was docketed as Civil Case No. Q-99-38941. The spouses
Digos caused the annotation of a notice of lis pendens at the dorsal portion of TCT No. 206979.
The trial court, however, did not issue a temporary restraining order or writ of preliminary
injunction.
Meanwhile, the bank filed a motion to dismiss the complaint and for the cancellation of the
notice of lis pendens on the following grounds:
1. The action for injunction has already been rendered moot and academic, title to the foreclosed
property having been consolidated in iBanks name;
2. Assuming arguendo that title to the foreclosed property has not yet been consolidated, still
plaintiffs have no cause of action for injunction against iBank.8

The spouses Digos opposed the motion. The bank filed a reply, appending thereto a copy of TCT
No. 206979 in its name.
In an Order dated December 9, 1999, the trial court granted the motion and dismissed the
complaint. It found that the spouses Digos admitted in their complaint that the period for the
redemption of the property was about to expire, and that they were given up to October 8, 1999
within which to do so. The court held that it had no authority to extend the period for
redemption, and since it had already expired, the spouses had no more right to redeem the
property; as such, the defendant had the right to consolidate its title over the property, and had, in
fact, been issued TCT No. 206979. The court also declared that the spouses Digos had no right to
demand that they be allowed to redeem the property.
Finally, since the act sought to be enjoined the consolidation of the banks title was already
fait accompli, the spouses Digos had no cause of action for injunction.9 The trial court ruled that
a writ of injunction cannot issue to enjoin a consummated act.10 It, thus, ordered the cancellation
of the notice of lis pendens annotated at the dorsal portion of TCT No. 206979.
The spouses Digos failed to appeal the order; instead, they filed a petition for certiorari with the
Court of Appeals (CA), assailing the Order of the RTC. The CA dismissed the petition because it
was filed out of time. The petitioners then filed a motion for reconsideration thereof, which they
later withdrew via a motion. The CA then resolved to grant the motion; hence, the CA resolution
dismissing the petition became final and executory on May 7, 2001. Entry of judgment was made
of record.11
Meanwhile, the bank sold the property to Isidro Perez and Narciso Ragua to whom the Register
of Deeds issued TCT No. 211888. The vendees caused the subdivision of the property into
eighteen (18) lots. The Register of Deeds issued titles for each subdivision lot in favor of Perez
and Ragua.12
On June 4, 2001, the spouses Digos filed a Complaint13 with the RTC of Quezon City, this time,
against the bank, Perez and Ragua, for the cancellation and annulment of the extrajudicial
foreclosure of the real estate mortgage executed by them in favor of the bank, the sale at public
auction as well as the certificate of sale executed by the sheriff, and the Torrens title issued to
them. The spouses Digos prayed for a writ of preliminary injunction and a temporary restraining
order. The petitory portion of the complaint reads:
WHEREFORE, premises considered, it is most respectfully prayed of this Honorable Court that
immediately upon the filing of the instant complaint, a temporary restraining order be issued, and
after hearing, a writ of preliminary injunction issue, enjoining defendants PEREZ and RAGUA
from further disposing of the subject property.
Likewise, it is most respectfully prayed of this Honorable Court that, after due hearing, judgment
be rendered ordering the CANCELLATION and ANNULMENT of the extrajudicial foreclosure
of sale, the Sheriffs Certificate of Sale and the consolidated title under the name of defendant
bank, as well as the transfer certificate/s of title issued or under the name of defendants iBANK,
PEREZ and RAGUA;

Further, it is most respectfully prayed also that judgment be rendered ordering the defendants:
1. to pay plaintiffs the amount of FIVE HUNDRED THOUSAND [PESOS] (P500,000.00), as
and by way of actual expenses:
2. to pay plaintiffs the amount of ONE MILLION AND FIVE HUNDRED THOUSAND PESOS
(P1,500,000.00), as and by way of moral damages;
3. to pay plaintiffs the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00), as and
by way of exemplary damages;
4. to pay plaintiffs the amount of FIVE HUNDRED THOUSAND PESOS (P500,000.00), as and
by way of attorneys fees; and,
5. to pay the expenses of litigation and costs of suit.
Plaintiffs further pray for other reliefs, just and equitable, under the circumstances.14
The spouses Digos reiterated the allegations in their complaint in Civil Case No. Q-99-38941
that they were not notified of the sale at public auction, and that the banks P4,500,000.00 bid for
the property was unconscionably low compared to the prevailing market price of
P25,000,000.00. They also admitted their failure to pay their amortization on their loans.
However, they alleged this time that the extrajudicial foreclosure of the real estate mortgage and
the sale at public auction were illegal because the bank charged much more than the amount due
on their loan account, to wit: interest of 26% per annum on the loan account covering January 2,
1998, whereas under the promissory note executed in favor of the bank, the new interest rate
should commence only on March 4, 1993; penalty charges of 26% of the account, and 5%
penalty charges on top of the 26% interest per annum, as shown by the banks statement of
account. The spouses Digos also averred that although they pleaded for a restructuring of their
loan account and a moratorium on the payment of their account, they were unaware of the
erroneous computation of the balance of their loan account. They maintained that the banks
consolidation of its title over the property on September 19, 1999 was premature because they
were given until October 8, 1999 to redeem the property.
The spouses Digos also alleged that as a consequence of the banks acts, they incurred actual
damages of P500,000.00, sustained moral damages of P1,500,000.00, and were entitled to
exemplary damages for P100,000.00.15
The case was docketed as Civil Case No. Q-01-44227. The defendant bank filed a motion to
dismiss the complaint on the following grounds:
A. THE PLAINTIFFS HAVE NO CAUSE OF ACTION AGAINST DEFENDANTS, THEY
BEING ESTOPPED FROM QUESTIONING THE REGULARITY OF THE EXTRAJUDICIAL
FORECLOSURE SALE.

B. PLAINTIFFS HAVE VIOLATED THE RULE AGAINST SPLITTING A SINGLE CAUSE

OF ACTION UNDER SECTION 4, RULE 2 OF THE RULES OF COURT IN INSTITUTING
THE INSTANT CASE.
C. PLAINTIFFS ARE GUILTY OF FORUM SHOPPING.
D. PLAINTIFFS ARE GUILTY OF FALSE CERTIFICATION AGAINST FORUM
SHOPPING, IN VIOLATION OF SECTION 5, RULE 7 OF THE RULES OF COURT.16
The bank alleged that the spouses Digos admitted in their complaint that, after the extrajudicial
foreclosure of the real estate mortgage and the sale of the property at public auction, they
pleaded to redeem the property but failed to do so and were granted a one-month extension. The
bank averred that, based on the said allegations, the spouses were estopped from assailing the
extrajudicial foreclosure of the real estate mortgage, the sale at public auction and the Torrens
title issued to it; hence, they had no cause of action. It further alleged that the spouses Digos
already assailed the extrajudicial foreclosure of the real estate mortgage and the sale of the
property at public auction on account of lack of due process and arbitrary abuse in their first
complaint; they again sought to do so in this case, this time grounded on the invalid foreclosure
of the real estate mortgage, and the sale at public auction of the property for an amount in excess
of the balance of the loan account. The bank argued that, in so doing, the spouses Digos were
guilty of splitting a single cause of action which is proscribed by Rule 2, Section 4 of the Rules
of Court; they were, likewise, barred by res judicata from filing the second complaint for the
same causes of action, even if additional defendants were impleaded. Consequently, the spouses
Digos were also guilty of forum shopping.17
Perez and Ragua filed a motion to dismiss on similar grounds of res judicata, splitting of a single
cause of action and forum shopping.18
On June 29, 2001, the trial court issued an Order19 denying the motion, ruling that there was no
identity of issue in the two actions because, in the second complaint (docketed as Civil Case No.
Q-01-44227), the spouses Digos assailed the legality of the extrajudicial foreclosure, on the sole
ground that the bank had unlawfully increased their obligation, contrary to the terms and
conditions of the loan contract. The court held that the causes of action in the two complaints
were not identical: in the first case, it was for the redemption of the mortgaged property, distinct
and separate from their cause of action in the second case which is rooted on the erroneous
computation of the balance of their loan account with the bank. The court also declared that in
the first complaint, the spouses Digos assailed the validity or regularity of the extrajudicial
foreclosure of the real estate mortgage and the sale at public auction. Consequently, the court
concluded, the complaint was not barred by res judicata; nor are they guilty of forum shopping.
The trial court denied the defendants motion for reconsideration in its Order20 dated December
6, 2001; hence, they filed a petition21 for certiorari, prohibition and mandamus with the CA,
alleging therein that the respondent judge committed a grave abuse of his discretion amounting
to excess or lack of jurisdiction in denying their motion to dismiss the complaint.

On November 25, 2002, the CA rendered judgment dismissing the petition and affirming the
assailed orders. The appellate court declared that there was no identity of causes of action in the
two cases because the first action was one for injunction and redemption of the property, whereas
the second action was for the nullification of the extrajudicial foreclosure of the real estate
mortgage and the sale at public auction due to the erroneous computation of the balance on the
respondents account with the bank; hence, the spouses Digos were not estopped from filing their
second action.22 The petitioners filed a motion for a reconsideration of the said decision, which
the appellate court denied.23
Petitioners Isidro Perez and Narciso Ragua forthwith filed the instant petition for review on
certiorari, raising the following issues:
WHETHER OR NOT THE JUDGMENT IN CIVIL CASE NO. Q-99-[38941] (REDEMPTION
OF MORTGAGE) IS RES JUDICATA TO CIVIL CASE NO. Q-01-44227 (CANCELLATION
AND ANNULMENT OF FORECLOSURE SALE)?
WHETHER OR NOT THE PRIVATE RESPONDENTS ARE ALREADY ESTOPPED FROM
ATTACKING THE VALIDITY OF THE FORECLOSURE SALE?24
It is the contention of the petitioners that the private respondents (the plaintiffs in both actions in
the RTC) are guilty of splitting their cause of action. The petitioners point out that the private
respondents failed to pray for the nullification of the extrajudicial foreclosure and sale at public
auction in their first action, and did so only in their second complaint. For such failure, the
second action was barred by res judicata, conformably with Section 4, Rule 2 of the Rules of
Court. The petitioners point out that the issue of the computation of the respondents balance on
their loan account had already been passed upon and resolved by the court in the first case, and,
as such, can no longer be assailed in the second case. The petitioners likewise maintain that the
validity of the foreclosure of the real estate mortgage and sale at public auction was raised and
resolved in the first case. The petitioners insist that the private respondents were barred from
assailing the extrajudicial foreclosure of the real estate mortgage and the sale at public auction of
the property in favor of the bank. They further point out that the private respondents repeatedly
requested the bank for extensions to redeem the property; such requests were eventually granted
but the private respondents still failed to redeem the property.
For their part, the private respondents aver that their action in the first case was for the grant of
an extension to redeem the property and avert the banks act of consolidating its title over the
property, while their action in the second case was for the nullification of the extrajudicial
foreclosure of the real estate mortgage and the sale of the property at public auction on account
of the arbitrary, unlawful and baseless imposition of unconscionable re-priced interest rates on
their loan account. They aver that there can be no conclusiveness of judgment in the first action
because the issues in the two cases are not identical. They insist that the issues in the first case
are not being relitigated in the second case; hence, their second action is not barred by res
judicata, nor did they split their cause of action.
The Ruling of the Court

Splitting a single cause of action consists in dividing a single or indivisible cause of action into
several parts or claims and instituting two or more actions therein.25 A single cause of action or
entire claim or demand cannot be split up or divided so as to be made the subject of two or more
different actions.26
A single act or omission may be violative of various rights at the same time, such as when the act
constitutes a violation of separate and distinct legal obligations.27 The violation of each of these
rights is a cause of action in itself. However, if only one right may be violated by several acts or
omissions, there would only be one cause of action. Otherwise stated, if two separate and distinct
primary rights are violated by one and the same wrong; or if the single primary right should be
violated by two distinct and separate legal wrongs; or when the two primary rights are each
broken by a separate and distinct wrongs; in either case, two causes of action would result.28
Causes of action which are distinct and independent, although arising out of the same contract,
transaction or state of fact may be sued separately, recovery on one being no bar to subsequent
actions on the others.
The mere fact that the same relief is sought in the subsequent action will not render the judgment
in the prior action as res judicata.29 Causes of action are not distinguishable for purposes of res
judicata by difference in the claims for relief.30
Comparing the material averments of the two complaints, it would appear that separate primary
rights of the respondents were violated by the banks institution of a petition for extrajudicial
foreclosure of the real estate mortgage and the sale at public auction; hence, the respondents had
separate and independent causes of action against the bank, to wit: (a) the first complaint relates
to the violation by the bank of the right to a judicial, not extrajudicial, foreclosure of the real
estate mortgage and for an extension of the period for the respondents to redeem the property
with damages; (b) the second complaint relates to the breach by the bank of its loan contract with
the respondents by causing the extrajudicial foreclosure of the real estate mortgage for
P4,500,000.00 which was in excess of their unpaid account with the bank.
However, we are convinced that the institution by the respondents of their second complaint
anchored on their claim that the bank breached its loan contracts with them by erroneously
computing the actual and correct balance of their account when the petition for extrajudicial
foreclosure of the real estate mortgage was filed by it designed to avert the dismissal of their
complaint due to splitting causes of action and res judicata, following the dismissal of their first
complaint and the dismissal of their appeal through their negligence. The Court is constrained to
conclude that this was a last-ditch attempt to resuscitate their lost cause, a brazen violation of the
principle of res judicata.
Section 49(b)(c), Rule 39 of the Rules of Court provides in part:
SEC. 49. Effect of judgments. The effect of a judgment or final order rendered by a court or
judge of the Philippines, having jurisdiction to pronounce the judgment or order, may be as
follows:

(b) In other cases the judgment or order is, with respect to the matter directly adjudged 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 subsequent to the commencement of the action or special
proceeding, litigating for the same thing and under the same title and in the same capacity.
(c) In any other litigation between the same parties or their successors in interest, that only is
deemed to have been adjudged in a former judgment which appears upon its face to have been so
adjudged, or which was actually and necessarily included therein or necessary thereto.
Section 49(b) enunciates the first concept of res judicata, known as bar by prior judgment or
estoppel by judgment, which refers to a theory or matter that has been definitely and finally
settled on its merits by a court of competent jurisdiction without fraud or collusion.
There are four (4) essential requisites which must concur for the application of this doctrine:
(a) finality of the former judgment;
(b) the court which rendered it had jurisdiction over the subject matter and the parties;
(c) it must be a judgment on the merits; and
(d) there must be, between the first and second actions, identity of parties, subject matter and
causes of action.31
A judgment or order is on the merits of the case when it determines the rights and liabilities of
the parties based on the ultimate facts as disclosed by the pleadings or issues presented for trial.
It is not necessary that a trial, actual hearing or argument on the facts of the case ensued. For as
long as the parties had the full legal opportunity to be heard on their respective claims and
contentions, the judgment or order is on the merits.32 An order of the trial court on the ground
that the complaint does not state a cause of action is a determination of the case on its merits.33
Such order whether right or wrong bars another action based upon the same cause of action.34
The operation of the order as res judicata is not affected by a mere right of appeal where the
appeal has not been taken or by an appeal which never has been perfected.35
Indeed, absolute identity of parties is not a condition sine qua non for the application of res
judicata. It is sufficient that there is a shared identity of interest.36 The rule is that, even if new
parties are found in the second action, res judicata still applies if the party against whom the
judgment is offered in evidence was a party in the first action; otherwise, a case can always be
renewed by the mere expedience of joining new parties in the new suit.37
The ultimate test to ascertain identity of causes of action is whether or not the same evidence
fully supports and establishes both the first and second cases. The application of the doctrine of
res judicata cannot be excused by merely varying the form of the action or engaging a different
method of presenting the issue.38

Section 49(c) of Rule 39 enumerates the concept of conclusiveness of judgment. This is the
second branch, otherwise known as collateral estoppel or estoppel by verdict. This applies where,
between the first case wherein judgment is rendered and the second case wherein such judgment
is involved, there is no identity of causes of action. As explained by this Court:
It has been held that in order that a judgment 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 issues be
identical. If a particular point or question is in issue in the second action, and the judgment will
depend on the determination of that particular point or question, a former judgment between the
same parties will be final and conclusive in the second if that same point or question was in issue
and adjudicated in the first suit; but the adjudication of an issue in the first case is not conclusive
of an entirely different and distinct issue arising in the second. In order that this rule may be
applied, it must clearly and positively appear, either from the record itself or by the aid of
competent extrinsic evidence that the precise point or question in issue in the second suit was
involved and decided in the first. And in determining whether a given question was an issue in
the prior action, it is proper to look behind the judgment to ascertain whether the evidence
necessary to sustain a judgment in the second action would have authorized a judgment for the
same party in the first action.39
In the present case, before the private respondents filed their first complaint, they already knew
that the balance of their account with the bank was P4,500,000.00. They even offered to make a
P1,000,000.00 partial payment of their loan to reduce their account to P3,500,000.00. These are
gleaned from the averments in the first complaint:
7. That the long process of negotiation for the right-of-way has unnecessarily delayed the project
of the plaintiffs and has nearly caused the foreclosure of the mortgage property by the private
defendant Bank, however, the said foreclosure was held in abeyance when plaintiffs offered to
pay the additional amount of P1,000,000.00 which should leave a balance of the loan in the
amount of P3,500,000.00;40

10. That as the auction sale was highly irregular, obviously, the only bidder is the defendant
Bank for the price limited to the remaining balance of the loan in the amount of P4,500,000.00,
no more, no less;41
More telling is the private respondents failure to object to the extrajudicial foreclosure of the
real estate mortgage and the sale at public auction; they even pleaded to be allowed to redeem
the property after it had already been sold at public auction. Patently then, the respondents were
proscribed from claiming that the foreclosure of the real estate mortgage was for an amount in
excess of the balance of their account and that the sale at public auction was irregular/illegal. As
the Court held in Aclon v. Court of Appeals:42
In the absence of evidence proving that a judgment debtor was merely trying to protect himself
or save his property, and that no reliance could or should have been placed upon his action in so
doing, an attempt to redeem from an execution sale has been construed as a waiver of defects or

irregularities therein, precluding him from relying upon them for the purpose of challenging its
validity. When Aclon sought to redeem his property from PNB he never made any reservation
with respect to his right to question the validity of the auction sale and to seek alternative relief
before the courts. In other words, there was no indication whatsoever that he does not recognize
the validity of the sale. If petitioner indeed felt that the assailed foreclosure proceedings were
attended with any irregularity he should have filed the appropriate action with the court. Instead,
he offered to repurchase the subject properties without any condition or reservation.
Nevertheless, Aclon failed to comply with his undertaking and instead defaulted in his
subsequent payments.
Redemption is inconsistent with the claim of invalidity of the sale. Redemption is an implied
admission of the regularity of the sale and would estop the respondents from later impugning its
validity on that ground.43 Thus, the private respondents pleas for extensions of time to redeem
the subject property are of the same genre.
The private respondents admitted in their complaint in the first case that the bank only gave a
one-month extension to redeem the property. Indeed, they made this declaration in their letter to
the bank, dated July 2, 1999, copy of which was appended to their complaint (and thus made an
integral part thereof), to wit:
Mr. Sonny Justiniano
Acquired Assets
International Exchange Bank
Salcedo Tower
169 H.V. De la Costa St.,
Salcedo Village, Makati City
Dear Sir:
Your deadline of September 7, 1999 is already fast approaching. Our action program to redeem
the property has been stalled due to the infighting of the homeowners association members. We
were not permitted to build access road to the property. They wont allow our equipment to pass
and start work unless we get the approval of all the members. At present, there are two factions
and they are at odds with each. Either side does not recognize the existence of the other. Our
only option at the moment is to go to court and you know very well that this takes time.
Our interested buyers wont budge unless they see improvements in the property like in place
drainage system and access road. We are ready to start work, however, the association has
prevented us based on [the] above-stated reasons.

We have no other alternative but to once again appeal to you. We respectfully request for an
extension of six months from September 7, 1999 to enable us to sort the association problem by
court proceedings and place in motion our action program to redeem the property.
We pray that your kind heart will once again grant our request.
Thank you very much.
Very truly yours,
(Sgd.)
GAUDENCIO DIGOS44
If indeed the bank made an erroneous computation of the balance of their account as claimed by
the private respondents in their second complaint, this should have been alleged in the first
complaint as one of their causes of action. They failed to do so. The private respondents
unequivocably admitted in their first complaint that the balance of their account with the bank
was P4,500,000.00 which was the precise amount for which the bank sought the foreclosure of
the real estate mortgage and the sale of the property at public auction; they even sought judicial
recourse to enable them to redeem the property despite the lapse of the one-year period therefor.
Relying on these admissions on the part of the private respondents, and the fact that the bank has
already consolidated its title over the property, the Court thus dismissed their first complaint. The
Order of the Court dismissing the first complaint is a judgment of the case on the merits.
The attempt of the respondents in their second complaint to avoid the application of the principle
of res judicata by claiming the nature of their account on the ground therefor and their legal
theory cannot prosper. Case law has it that where a right, question or fact is distinctly put in issue
and directly determined by a court of competent jurisdiction in a first case, between the same
parties or their privies, the former adjudication of that fact, right or question is binding on the
parties or their privies in a second suit irrespective of whether the causes of action are the same.45
The ruling of the CA that the action of the private respondents and their legal theory in their
second complaint were different from their causes of action and legal theory in the first
complaint is not correct. A different cause of action is one that proceeds not only on a
sufficiently different legal theory, but also on a different factual footing as not to require the trial
of facts material to the former suit; that is, an action that can be maintained even if all disputed
factual issues raised in the plaintiffs original complaint are concluded in defendants favor.46
In this case, the private respondents second complaint cannot be maintained without trying the
facts material to the first case, and the second case cannot be maintained if all the disputed
factual issues raised in the first complaint are considered in favor of the bank.
The principle of res judicata applies when the opportunity to raise an issue in the first complaint
exists but the plaintiff failed to do so. Indeed, if the pleading of a different legal theory would
have convinced the trial court to decide a particular issue in the first action which, with the use of

diligence the plaintiffs could have raised therein but failed to do so, they are barred by res
judicata.47 Nor do legal theories operate to constitute a cause of action. New legal theories do not
amount to a new cause of action so as to defeat the application of the principle of res judicata.48
Indeed, in Siegel v. Knott,49 it was held that the statement of a different form of liability is not a
different cause of action, provided it grows out of the same transaction or act and seeks redress
for the wrong. Two actions are not necessarily for different causes of action simply because the
theory of the second would not have been open under the pleadings in the first. A party cannot
preserve the right to bring a second action after the loss of the first, merely by having
circumscribed and limited theories of recovery opened by the pleadings in the first.50
It bears stressing that a party cannot divide the grounds for recovery.51 A plaintiff is mandated to
place in issue in his pleading, all the issues existing when the suit began. A lawsuit cannot be
tried piecemeal.52 The plaintiff is bound to set forth in his first action every ground for relief
which he claims to exist and upon which he relied, and cannot be permitted to rely upon them by
piecemeal in successive action to recover for the same wrong or injury.53
A party seeking to enforce a claim, legal or equitable, must present to the court, either by the
pleadings or proofs, or both, on the grounds upon which to expect a judgment in his favor. He is
not at liberty to split up his demands, and prosecute it by piecemeal or present only a portion of
the grounds upon which a special relief is sought and leave the rest to the presentment in a
second suit if the first fails. There would be no end to litigation if such piecemeal presentation is
allowed.54
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision and
Resolution of the Court of Appeals and the assailed Order of the RTC are SET ASIDE. The
Regional Trial Court is ORDERED to dismiss the complaint in Civil Case No. Q-01-44227.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 154739

January 23, 2007

ROGELIO (ROGER) PANOTES (thru ARACELI BUMATAY, as successor-in-interest),

Petitioner,
vs.
CITY TOWNHOUSE DEVELOPMENT CORPORATION, Respondent.
DECISION

SANDOVAL-GUTIERREZ, J.:
For our resolution is the instant Petition for Review on Certiorari assailing the Decision1 of the
Court of Appeals dated January 29, 2002 in CA-G.R. SP No. 52621 and its Resolution2 dated
August 5, 2002 denying the motion for reconsideration.
This case stemmed from a complaint filed with the National Housing Authority (NHA) in April
1979 by Rogelio (Roger) Panotes, petitioner, then president of the Provident Village
Homeowners Association, Inc., against Provident Securities Corporation (PROSECOR), ownerdeveloper of the Provident Village in Marikina City. The complaint, docketed as NHA Case No.
4175, alleges that PROSECOR violated Sections 19, 20, 21, 38, and 39 of Presidential Decree
(P.D.) No. 957.3 One of the violations complained of was its failure to provide an open space in
the said subdivision.
During the proceedings before the NHA, an ocular inspection showed that the subdivision has no
open space. The NHA found, however, that Block 40, with an area of 22,916 square meters,
could be utilized as open space. Thus, in its Resolution dated August 14, 1980, the NHA directed
PROSECOR to provide the Provident Village an open space which is Block 40.
In a letter of the same date, then NHA Acting General Manager Antonio A. Fernando ordered
PROSECOR to "provide Block 40 of the subdivision as open space."
PROSECOR was served copies of the NHA Resolution and the letter on August 22, 1980.
Considering that PROSECOR did not appeal from the NHA Resolution, it became final and
executory.
When Panotes filed a motion for execution of the NHA Resolution, it was found that the records
of the case were "mysteriously missing." Hence, his motion "was provisionally dismissed"
without prejudice.
Meanwhile, PROSECOR sold to City Townhouse Development Corporation (CTDC),
respondent, several lots in the subdivision. Among the lots sold were those comprising Block 40.
CTDC was unaware of the NHA Resolution ordering PROSECOR to have Block 40 utilized as
open space of Provident Village.
Eventually, Panotes was succeeded by Araceli Bumatay as president of the Provident Village
Homeowners Association, Inc. On July 17, 1990, she filed with the Housing and Land Use
Regulatory Board (HLURB) a complaint for revival of the NHA Resolution dated August 14,
1980. Impleaded therein as defendant was CTDC, whom she alleged as successor-in-interest of
PROSECOR.
In its answer, CTDC averred, among others, that (1) Araceli Bumatay has no legal personality to
file the action for revival of judgment; (2) there is a pending litigation between CTDC and
PROSECOR involving Block 40; and (3) other entities like the Bangko Sentral Ng Pilipinas and
Provident Savings Bank have existing liens over Block 40.

On October 15, 1991, the HLURB, through Housing and Land Use Arbiter Charito M. Bunagan,
rendered its Decision in favor of Bumatay, reviving the NHA Resolution and declaring Block 40
of the Provident Village as "open space" for the said subdivision, thus:
WHEREFORE, premises considered, judgment is hereby rendered declaring Block 40 (with an
area of 22,916 square meters) of the Subdivision Plan Pcs-5683 of the Provident Villages located
at Marikina, Metro Manila as the legally mandated "open space" for said subdivision project; and
the Register of Deeds for Marikina is hereby directed to cause the annotation of this fact on the
corresponding Torrens Title which describes and covers said open space; said area to be reserved
and utilized exclusively in the manner and for the purposes provided for under P.D. N0. 957 and
P.D. No. 1216.4
Furthermore, let a Cease and Desist Order be, as it is hereby, issued against respondent Provident
Securities Corp. and City Townhouse Development Corporation, restraining said respondents,
and all persons, agents, or other associations or corporate entities acting on their behalf, from
asserting or perpetrating any or further acts of dominion or claim over said Block 40, Pcs-5683,
the open space allocated and reserved for the Provident Villages in Marikina, Metro Manila.
IT IS SO ORDERED.
On appeal to the HLURB Board of Commissioners, Arbiter Bunagans Decision was affirmed
with modification in the sense that CTDC has the right to recover from PROSECOR "what it has
lost."
After its motion for reconsideration was denied, CTDC then interposed an appeal to the Office of
the President (OP). On February 10, 1999, the OP rendered its Decision affirming in toto the
judgment of the HLURB Board of Commissioners. CTDC filed a motion for reconsideration, but
it was denied in a Resolution dated April 14, 1999.
CTDC then filed with the Court of Appeals a petition for review under Rule 43 of the 1997 Rules
of Procedure, as amended, docketed therein as CA-G.R. SP No. 52621.
In a Resolution5 dated May 10, 1999, the Court of Appeals dismissed CTDCs petition for its
failure to attach thereto a certification against forum shopping. The Court of Appeals also found
that the petition was not supported by certified true copies of such material portions of the
records and other pertinent papers referred to in the petition.
CTDC filed a motion for reconsideration which was opposed by Bumatay.
On June 10, 1999, CTDC submitted to the Court of Appeals a certification of non-forum
shopping as well as the pleadings mentioned in its Resolution.
On July 27, 1999, the Court of Appeals issued a Resolution granting CTDCs motion for
reconsideration and reinstated its petition.

On January 29, 2002, the appellate court rendered its Decision reversing the Decision of the OP
and dismissing the complaint for revival of judgment, thus:
IN VIEW OF ALL THE FOREGOING, finding merit in this petition for review, the assailed
Decision of the Office of the President dated February 10, 1999, together with its Resolution
dated February 14, 1999 are REVERSED and SET ASIDE, and a new one entered dismissing
HLRB Case No. REM-071790-4052 (NHA Case No. 4175; HLRB Case No. REM-A-1089).
Costs against the respondent.
SO ORDERED.
The basic issue for our resolution is whether the NHA Resolution dated August 14, 1980 may be
enforced against CTDC.
An action for revival of judgment is no more than a procedural means of securing the execution
of a previous judgment which has become dormant after the passage of five years without it
being executed upon motion of the prevailing party. It is not intended to re-open any issue
affecting the merits of the judgment debtors case nor the propriety or correctness of the first
judgment.6
Here, the original judgment or the NHA Resolution sought to be revived was between Rogelio
Panotes and PROSECOR, not between petitioner Araceli Bumatay and respondent CTDC.
In maintaining that CTDC is bound by the NHA Resolution, petitioner claims that CTDC is the
successor-in-interest of PROSECOR and, therefore, assumed the obligations of the latter to
provide an open space for Provident Village.
CTDC purchased from PROSECOR Block 40 in the said village, not as an owner-developer like
PROSECOR, but as an ordinary buyer of lots. Even after the sale, CTDC did not become an
owner-developer. The Deed of Sale executed by CTDC, as buyer, and PROSECOR, as seller,
shows that the subject matter of the sale is the unsold lots comprising Block 40 within the
subdivision to CTDC. The contract does not include the transfer of rights of PROSECOR as
owner-developer of the said subdivision. Clearly, there is no basis to conclude that CTDC is the
successor-in-interest of PROSECOR.
It bears stressing that when CTDC bought Block 40, there was no annotation on PROSECORs
title showing that the property is encumbered. In fact, the NHA Resolution was not annotated
thereon. CTDC is thus a buyer in good faith and for value, and as such, may not be deprived of
the ownership of Block 40. Verily, the NHA Resolution may not be enforced against CTDC.
Section 2 of P.D. No. 1216 provides:
Section 2. Section 31 of Presidential Decree No. 957 is hereby amended to read as follows:

Section 31. Roads, Alleys, Sidewalks and Open Spaces. The owner or developer of a
subdivision shall provide adequate roads, alleys and sidewalks. For subdivision projects of one
(1) hectare or more, the owner shall reserve thirty percent (30%) of the gross area for open space.
xxx xxx xxx.
Clearly, providing an open space within the subdivision remains to be the obligation of
PROSECOR, the owner-developer and the real party-in-interest in the case for revival of
judgment. As aptly held by the Court of Appeals:
Quintessentially, the real party-in-interest in the revival of NHA Case No. 4175 is PROSECOR
and not CTDC. PROSECOR was the lone defendant or respondent in that case against whom
judgment was rendered. To insist that CTDC is a successor-in-interest of PROSECOR may have
some truth if we are talking about the ownership of the lots sold by PROSECOR in favor of
CTDC as a result of a civil action between the two. But then, to hold CTDC as the successor-ininterest of PROSECOR as the developer of the subdivision, is far from realty. CTDC is simply
on the same footing as any lot buyer-member of PVHIA. x x x.
Furthermore, strangers to a case, like CTDC, are not bound by the judgment rendered by a court.
It will not divest the rights of a party who has not and never been a party to a litigation.
Execution of a judgment can be issued only against a party to the action and not against one who
did not have his day in court.7
WHEREFORE, we DENY the petition and AFFIRM the assailed Decision and Resolution of
the Court of Appeals in CA-G.R. SP No. 52621. Costs against petitioner.
SO ORDERED.
ANGELINA SANDOVAL GUTIERREZ
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson
RENATO C. CORONA
Associate Justice

ADOLFO S. AZCUNA
Asscociate Justice

CANCIO C. GARCIA
Associate Justice
CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions
in the above Decision were reached in consultation before the case was assigned to the writer of
the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice