Contents

RULE 14- SUMMONS........................................................................................6

Sec. 1. Clerk to issue summons....................................................................6
Optima Realty v. Hertz Phils., G.R. No. 183035, January 9, 2013..............6
Sec. 2. Contents.........................................................................................12
Sec. 3. By whom served.............................................................................12
Sec. 4. Return.............................................................................................12
Sec. 5. Issuance of alias summons.............................................................12
Sec. 6. Service on person of defendant......................................................12
Planters Development Bank v. Chandumal, G.R. No. 195619, September
5, 2012....................................................................................................12
Oaminal v. Castillo, G.R. No. 152776, October 8, 2003...........................18
Macasaet v. Co, G.R. No. 156759, June 5, 2013.......................................26
Sec. 7. Substituted service.........................................................................34
Planters Development Bank v. Chandumal, G.R. No. 195619, September
5, 2012 (Supra.)......................................................................................34
Macasaet v. Co, G.R. No. 156759, June 5, 2013 (Supra.).........................34
Gentle Supreme v. Consulta, G.R. No. 183182, September 1, 2010........34
Leah Palma v. Hon. Galvez, G.R. No. 165273, March 10, 2010................37
Sagana v. Francisco, G.R. No. 161952, October 2, 2009.........................44
Robinson v. Miralles, G.R. No. 163584, December 12, 2006....................50
Chu v. Mach Asia, G.R. No. 184333, April 1, 2013...................................53
Sec. 8. Service upon entity without juridical personality............................58
Sec. 9. Service upon prisoners...................................................................58
Sec. 10. Service upon minors and incompetents........................................58
Sec. 11. Service upon domestic private juridical entity..............................58
B.D. Long-Span Builders v. R.S. Ampeloquio, G.R. No. 169919, September
11, 2009..................................................................................................58
Tung Ho Steel v. Ting Guan, G.R. No. 182153, April 7, 2014...................63
Cathay Metal v. Laguna West, G.R. No. 172204, July 2, 2014.................70
Sec. 12. Service upon foreign private juridical entities..............................87
See: A.M. No. 11-3-6, March 15, 2011.....................................................87
Atiko Trans v. Prudential Guarantee, G.R. No. 167545, August 17, 2011 87

NM Rothschild v. Lepanto, G.R. No. 175799, November 28, 2011...........95

Sec. 13. Service upon public corporations................................................106
Sec. 14. Service upon defendant whose identity or whereabouts are
unknown...................................................................................................106
Pua v. Deyto, G.R. No. 173336, November 26, 2012 pdf.......................106
Cathay Metal v. Laguna West, G.R. No. 172204, July 2, 2014 (Supra.)..106
Sec. 15. Extraterritorial service................................................................106
NM Rothschild v. Lepanto, G.R. No. 175799, November 28, 2011 (Supra.)
..............................................................................................................106
Acance v. Court of Appeals, G.R. No. 159699, March 16, 2005.............106
Spouses Jose v. Spouses Boyon, G.R. No. 147369, October 23, 2003. . .112
Sec. 16. Residents temporarily out of the Philippines..............................118
Leah Palma v. Hon. Galvez, G.R. No. 165273, March 10, 2010 (Supra.) 118
Montefalcon v. Vasquez, G.R. No. 165016, June 17, 2008.....................118
Belen v. Belen, G.R. No. 175334, March 26, 2008.................................118
Sec. 17. Leave of court.............................................................................118
Sec. 18. Proof of service...........................................................................118
Sec. 19. Proof of service by publication....................................................118
Acance v. Court of Appeals, G.R. No. 159699, March 16, 2005 supra. . .118
Sec. 20. Voluntary appearance.................................................................118
Herrera-Felix v. Court of Appeals, G.R. No. 143736, August 11, 2004...118
JAPRIL Dev. Corp. v. Security Bank, G.R. No. 190107, June 6, 2011.......122
Rapid City Realty v. Villa, G.R. No. 184197, February 11, 2010.............128
Allan Co v. Cordero, G.R. No. 164703, May 4, 2010...............................131
Lhuillier v. British Airways, G.R. No. 171092, March 15, 2010...............148
Rodriguez vs. Alikpala, G.R. No. L-38314, June 25, 1974.......................156
RULE 15- MOTIONS......................................................................................160
Sec. 1. Motion defined..............................................................................160
Sec. 2. Motions must be in writing............................................................160
Sec. 3.Contents........................................................................................160
Sec. 4. Hearing of motion.........................................................................160
Anama v. Phil. Savings Bank, G.R. No. 187021, January 25, 2012 (Supra.)
..............................................................................................................160
Sec. 5. Notice of hearing..........................................................................171

Anama v. Phil. Savings Bank, G.R. No. 187021, January 25, 2012 (Supra.)
..............................................................................................................172
Tan v. Court of Appeals, G.R. No. 130314, September 22, 1998 (Supra.)
..............................................................................................................172
Sec. 6. Proof of service necessary............................................................178
Sec. 7. Motion day....................................................................................178
Sec. 8. Omnibus motion...........................................................................178
Tung Ho Steel v. Ting Guan, G.R. No. 182153, April 7, 2014 (Supra.)....178
Sec. 9. Motion for leave............................................................................179
Sec. 10. Form............................................................................................179
RULE 16- MOTION TO DISMISS.....................................................................179
Sec. 1. Grounds........................................................................................179
See: Sec. 1, Rule 9....................................................................................179
Obando v. Figueras, G.R. No. 134854, January 18, 2000.......................179
No jurisdiction over defendant.................................................................184
See: Sec. 20, Rule 14.............................................................................184
Planters Development Bank v. Chandumal, G.R. No. 195619, September
5, 2012 (Supra.)....................................................................................184
Carandang v. Heirs of de Guzman, G.R. No. 160347, November 29, 2006
(Supra.).................................................................................................184
No jurisdiction over the subject matter....................................................184
Allied Domecq Phil. v. Hon. Villon, G.R. No. 156264, September 30, 2004
(Supra.).................................................................................................185
Republic v. Bantigue Point Development, G.R. No. 162322, March 14,
2012 (Supra.)........................................................................................185
Tijam v. Sibonghanoy, L-21450, April 15, 1968 (Supra.).......................185
Improper Venue........................................................................................185
See: Rule 4................................................................................................185
Sec. 4, A.M. No. 02-11-10-SC, March 4, 2003...........................................185
Universal Robina v. Lim, G.R. No. 154338, October 5, 2007..................194
No legal capacity to sue...........................................................................199
Evangelista v. Santiago, G.R. No. 157447, April 29, 2005.....................199
B. Van Zuiden v. GTVL Manufacturing, G.R. No. 147905, May 28, 2007 209
Litis Pendentia..........................................................................................215
Spouses Marasigan v. Chevron, G.R. No. 184015, February 8, 2012
(Supra.).................................................................................................215

Quito v. Stop & Save Corp., G.R. No. 186657, June 11, 2014 (Supra.)...215
Benavidez v. Salvador, G.R. No. 173331, December 11, 2013 (Supra.) 215
Res Judicata..............................................................................................215
Heirs of Sotto v. Palicte, G.R. No. 159691, June 13, 2013 (Supra.)........215
Spouses Antonio v. Sayman, G.R. No. 149624, September 29, 2010
(Supra.).................................................................................................215
Prescription/Statute of Limitations............................................................215
Marquez v. Baldoz, G.R. No. 143779, April 4, 2003...............................215
States no cause of action.........................................................................219
Lucas v. Lucas, G.R. No. 190710, June 6, 2011 (Supra.)........................219
Lazaro v. Brewmaster, G.R. No. 182779, August 23, 2010....................230
NM Rothschild v. Lepanto, G.R. No. 175799, November 28, 2011 (Supra.)
..............................................................................................................237
Evangelista v. Santiago, G.R. No. 157447, April 29, 2005 (Supra.).......237
Paid, Waived, Abandoned, Extinguished...................................................237
Star Two v. Ko, G.R. No. 185454, March 23, 2011.................................237
Urethane v. Ong, G.R. No. 164632, October 29, 2008...........................241
Fernando v. Acuna, G.R. No. 161030, September 14, 2011..................244
Unenforceable..........................................................................................255
See: Art. 1403, Civil Code......................................................................255
Failure to comply with condition precedent..............................................255
Morata v. Go, 125 SCRA 444 (1983)......................................................255
Uy v. Contreras, 237 SCRA 167 (1994)..................................................260
Wingarts v. Mejia, 242 SCRA 436 (1995)...............................................270
Mendova v. Afable, 393 SCRA 390 (2002).............................................276
Aquino v. Aure, 546 SCRA 71 (2008).....................................................280
Pang-et v. Manacnes-dao-as, G.R. No. 167261, March 2, 2007.............288
Agbayani v. Court of Appeals, G.R. No. 183623, June 25, 2012.............296
Sec. 2. Hearing of motion.........................................................................308
Sec. 3. Resolution of the motion...............................................................308
Sec. 4. Time to plead................................................................................308
Sec. 5. Effect of dismissal.........................................................................308
NM Rothschild v. Lepanto, G.R. No. 175799, November 28, 2011 (Supra.)
..............................................................................................................308
Sec. 6. Pleading grounds as affirmative defenses....................................309

RULE 17- DISMISSAL OF ACTIONS................................................................309

Sec. 1. Dismissal upon notice by plaintiff.................................................309
Dael v. Spouses Beltran, G.R. No. 156470, April 30, 2008.....................309
Go v. Cruz, G.R. No. L-58986, April 17, 1989.........................................313
Sec. 2. Dismissal upon motion of plaintiff.................................................316
Sec. 3. Dismissal due to fault of plaintiff..................................................316
AFPRSBS v. Republic, G.R. No. 188956, March 20, 2013.......................316
Phil. Charter v. Explorer Machine, G.R. No. 175409, September 7, 2011
..............................................................................................................321
Republic v. Enriquez, G.R. No. 181458, March 20, 2013........................326
Shimizu Philippines v. Magasalin, G.R. No. 170026, June 2012.............333
Quintos v. Nicolas, G.R. No. 210252, June 16, 2014..............................342
Sec. 4. Dismissal of counterclaim, cross-claim, or third-party complainant
.................................................................................................................350
RULE 18- PRE-TRIAL.....................................................................................350
Sec. 1. When conducted...........................................................................350
See: A.M. No. 03-1-09-SC......................................................................350
Sarmiento v. Juan, G.R. No. 56605, January 28, 1983............................351
Eloisa Merchandising v. Banco de Oro, G.R. No. 192716, June 13, 2012
..............................................................................................................354
Espiritu v. Lazaro, G.R. No. 181020, November 25, 2009......................363
Paranque Kings v. Santos, G.R. No. 194638, July 2, 2014......................367
Corpus v. Hon. Ochotorena, A.M. No. RTJ-04-1861, July 30, 2004..........373
Sec. 2. Nature and Purpose......................................................................377
Suico Industrial Corp., v. Hon. Yap, G.R. No. 177711, September 5, 2012
..............................................................................................................377
Sec. 3. Notice of pre-trial..........................................................................386
Sec. 4. Appearance of parties...................................................................386
Fiesta World Mall Corp. v. Lindberg, G.R. No. 152471, August 18, 2006
..............................................................................................................386
Sec. 5. Effect of failure to appear.............................................................392
Chingkoe v. Republic, G.R. No. 183608, July 31, 2013...........................392
Durban Apartments v. Pioneer, G.R. No. 179419, January 12, 2011......400
Sec. 6. Pre-trial brief.................................................................................408
BPI v. Dando, G.R. No. 177456, September 4, 2009..............................408

Benavidez v. Salvador, G.R. No. 173331, December 11, 2013..............415

Sec. 7. Record of pre-trial.........................................................................425
See: Rule 10, Sec. 5, Rules of Court......................................................425
Rule 18, Sec. 7, Rules of Court..............................................................425
Lazo v. Republic Surety, G.R. No. L-27365, January 30, 1970 (Supra.). .425
Buce v. Court of Appeals, G.R. No. 136913, May 12, 2000 (Supra.)......432
Mercader v. DBP, G.R. No. 130699, May 12, 2000 (Supra.)...................436
RULE 19- INTERVENTION..............................................................................446
Sec. 1. Who may intervene.......................................................................446
Ongco v. Dalisay, G.R. No. 190810, July 18, 2012.................................446
Sec. 2. Time to intervene..........................................................................452
Quinto v. Comelec, G.R. No. 189698, February 22, 2010......................452
Sec. 3. Pleadings-in-intervention..............................................................481
Sec. 4. Answer to complaint-in-intervention.............................................481
Lim v. Napocor, G.R. No. 178789, November 14, 2012.........................481
RULE 20- CALENDAR OF CASES...................................................................484
RULE 21- SUBPOENA....................................................................................484
Lee v. Court of Appeals, G.R. No. 177861, July 13, 2010.......................484

RULE 14- SUMMONS

Sec. 1. Clerk to issue summons
Optima Realty v. Hertz Phils., G.R. No. 183035, January 9, 2013
G.R. No. 183035

January 9, 2013

OPTIMA REALTY CORPORATION, Petitioner,

vs.
HERTZ PHIL. EXCLUSIVE CARS, INC., Respondent.
DECISION
SERENO, CJ.:

Before us is a Rule 45 Petition assailing the Decision 1 and Resolution2 of the Court of
Appeals (CA) in CA-GR SP No. 99890, which reversed the Decision 3 and
Resolution4 of the Regional Trial Court (RTC), Branch 13 7, Makati City in Civil Case
No. 06-672. The RTC had affirmed in toto the 22 May 2006 Decision 5 of the
Metropolitan Trial Court (MeTC), Branch 64, Makati City in Civil Case No. 90842
evicting respondent Hertz Phil.
Exclusive Cars, Inc. (Hertz) and ordering it to pay back rentals and other arrearages
to petitioner Optima Realty Corporation (Optima).
Optima is engaged in the business of leasing and renting out commercial spaces
and buildings to its tenants. On 12 December 2002, it entered into a Contract of
Lease with respondent over a 131-square-meter office unit and a parking slot in the
Optima Building for a period of three years commencing on 1 March 2003 and
ending on 28 February 2006.6 On 9 March 2004, the parties amended their lease
agreement by shortening the lease period to two years and five months,
commencing on 1 October 2003 and ending on 28 February 2006. 7
Renovations in the Optima Building commenced in January and ended in November
2005.8 As a result, Hertz alleged that it experienced a 50% drop in monthly sales
and a significant decrease in its personnels productivity. It then requested a 50%
discount on its rent for the months of May, June, July and August 2005. 9
On 8 December 2005, Optima granted the request of Hertz. 10 However, the latter
still failed to pay its rentals for the months of August to December of 2005 and
January to February 2006,11 or a total of seven months. In addition, Hertz likewise
failed to pay its utility bills for the months of November and December of 2005 and
January and February of 2006,12 or a total of four months.
On 8 December 2005, Optima wrote another letter to Hertz, 13 reminding the latter
that the Contract of Lease could be renewed only by a new negotiation between the
parties and upon written notice by the lessee to the lessor at least 90 days prior to
the termination of the lease period. 14 As no letter was received from Hertz regarding
its intention to seek negotiation and extension of the lease contract within the 90day period, Optima informed it that the lease would expire on 28 February 2006 and
would not be renewed.15
On 21 December 2005, Hertz wrote a letter belatedly advising Optima of the
formers desire to negotiate and extend the lease. 16 However, as the Contract of
Lease provided that the notice to negotiate its renewal must be given by the lessee
at least 90 days prior to the expiration of the contract, petitioner no longer
entertained respondents notice.
On 30 January 2006, Hertz filed a Complaint for Specific Performance, Injunction and
Damages and/or Sum of Money with prayer for the issuance of a Temporary
Restraining Order (TRO) and Writ of Preliminary Injunction (Complaint for Specific
Performance) against Optima. In that Complaint, Hertz prayed for the issuance of a
TRO to enjoin petitioner from committing acts that would tend to disrupt
respondents peaceful use and possession of the leased premises; for a Writ of

Preliminary Injunction ordering petitioner to reconnect its utilities; for petitioner to

be ordered to renegotiate a renewal of the Contract of Lease; and for actual, moral
and exemplary damages, as well as attorneys fees and costs.
On 1 March 2006, Optima, through counsel, wrote Hertz a letter requiring the latter
to surrender and vacate the leased premises in view of the expiration of the
Contract of Lease on 28 February 2006.17 It likewise demanded payment of the sum
of 420,967.28 in rental arrearages, unpaid utility bills and other charges. 18 Hertz,
however, refused to vacate the leased premises. 19 As a result, Optima was
constrained to file before the MeTC a Complaint for Unlawful Detainer and Damages
with Prayer for the Issuance of a TRO and/or Preliminary Mandatory Injunction
(Unlawful Detainer Complaint) against Hertz. 20
On 14 March 2006, Summons for the Unlawful Detainer Complaint was served on
Henry Bobiles, quality control supervisor of Hertz, who complied with the telephone
instruction of manager Rudy Tirador to receive the Summons. 21
On 28 March 2006, or 14 days after service of the Summons, Hertz filed a Motion for
Leave of Court to file Answer with Counterclaim and to Admit Answer with
Counterclaim (Motion for Leave to File Answer). 22 In that Motion, Hertz stated that,
"in spite of the defective service of summons, it opted to file the instant Answer
with Counterclaim with Leave of Court." 23 In the same Motion, it likewise prayed
that, in the interest of substantial justice, the Answer with Counterclaim attached to
the Motion for Leave to File Answer should be admitted regardless of its belated
filing, since the service of summons was defective. 24
On 22 May 2006, the MeTC rendered a Decision, 25 ruling that petitioner Optima had
established its right to evict Hertz from the subject premises due to nonpayment of
rentals and the expiration of the period of lease. 26 The dispositive portion of the
Decision reads:
WHEREFORE, premises considered, the Court hereby renders judgment for the
plaintiff and against the defendant, ordering:
1. the defendant corporation and all persons claiming rights from it to
immediately vacate the leased premises and to surrender possession thereof
to the plaintiff;
2. the defendant corporation to pay the plaintiff the amount of Four Hundred
Twenty Thousand Nine Hundred Sixty Seven Pesos and 28/100 (P420,967.28)
representing its rentals arrearages and utility charges for the period of August
2005 to February 2006, deducting therefrom defendants security deposit;
3. the defendant corporation to pay the amount of Fifty Four Thousand Two
Hundred Pesos (P54,200.00) as a reasonable monthly compensation for the
use and occupancy of the premises starting from March 2006 until possession
thereof is restored to the plaintiff; and

4. the defendant corporation to pay the amount of Thirty Thousand Pesos

(P30,000.00) as and for attorneys fees; and
5. the cost of suit.
SO ORDERED.27
Hertz appealed the MeTCs Decision to the RTC. 28
Finding no compelling reason to warrant the reversal of the MeTCs Decision, the
RTC affirmed it by dismissing the appeal in a Decision 29 dated 16 March 2007.
On 18 June 2007, the RTC denied respondents Motion for Reconsideration of its
assailed Decision.30
Hertz thereafter filed a verified Rule 42 Petition for Review on Certiorari with the
CA.31
On appeal, the CA ruled that, due to the improper service of summons, the MeTC
failed to acquire jurisdiction over the person of respondent Hertz. The appellate
court thereafter reversed the RTC and remanded the case to the MeTC to ensure the
proper service of summons. Accordingly, the CA issued its 17 March 2008 Decision,
the fallo of which reads:
WHEREFORE, premises considered, the May 22, 2006 Decision of the Metropolitan
Trial Court of Makati City, Branch 64, in Civil Case No. 90842, and both the March
16, 2007 Decision, as well as the June 18, 2007 Resolution, of the Regional Trial
Court of Makati City, Branch 137, in Civil Case No. 06-672, are hereby REVERSED,
ANNULLED and SET ASIDE due to lack of jurisdiction over the person of the
defendant corporation HERTZ. This case is hereby REMANDED to the Metropolitan
Trial Court of Makati City, Branch 64, in Civil Case No. 90842, which is DIRECTED to
ensure that its Sheriff properly serve summons to only those persons listed in Sec.
11, Rule 14 of the Rules of Civil Procedure in order that the MTC could acquire
jurisdiction over the person of the defendant corporation HERTZ.
SO ORDERED.32
Petitioners Motion for Reconsideration of the CAs Decision was denied in a
Resolution dated 20 May 2008.33
Aggrieved by the ruling of the appellate court, petitioner then filed the instant Rule
45 Petition for Review on Certiorari with this Court. 34
THE ISSUES
As culled from the records, the following issues are submitted for resolution by this
Court:

1. Whether the MeTC properly acquired jurisdiction over the person of

respondent Hertz;
2. Whether the unlawful detainer case is barred by litis pendentia; and
3. Whether the ejectment of Hertz and the award of damages, attorneys fees
and costs are proper.
THE COURTS RULING
We grant the Petition and reverse the assailed Decision and Resolution of the
appellate court.
I
The MeTC acquired jurisdiction over the person of respondent Hertz.
In civil cases, jurisdiction over the person of the defendant may be acquired either
by service of summons or by the defendants voluntary appearance in court and
submission to its authority.35
In this case, the MeTC acquired jurisdiction over the person of respondent Hertz by
reason of the latters voluntary appearance in court.
In Philippine Commercial International Bank v. Spouses Dy, 36 we had occasion to
state:
Preliminarily, jurisdiction over the defendant in a civil case is acquired either by the
coercive power of legal processes exerted over his person, or his voluntary
appearance in court. As a general proposition, one who seeks an affirmative relief is
deemed to have submitted to the jurisdiction of the court. It is by reason of this rule
that we have had occasion to declare that the filing of motions to admit answer, for
additional time to file answer, for reconsideration of a default judgment, and to lift
order of default with motion for reconsideration, is considered voluntary submission
to the court's jurisdiction. This, however, is tempered by the concept of conditional
appearance, such that a party who makes a special appearance to challenge,
among others, the court's jurisdiction over his person cannot be considered to have
submitted to its authority.
Prescinding from the foregoing, it is thus clear that:
(1) Special appearance operates as an exception to the general rule on
voluntary appearance;
(2) Accordingly, objections to the jurisdiction of the court over the person of
the defendant must be explicitly made, i.e., set forth in an unequivocal
manner; and

(3) Failure to do so constitutes voluntary submission to the jurisdiction of the

court, especially in instances where a pleading or motion seeking affirmative
relief is filed and submitted to the court for resolution. (Emphases supplied)
In this case, the records show that the following statement appeared in
respondents Motion for Leave to File Answer:
In spite of the defective service of summons, the defendant opted to file the instant
Answer with Counterclaim with Leave of Court, upon inquiring from the office of the
clerk of court of this Honorable Court and due to its notice of hearing on March 29,
2005 application for TRO/Preliminary Mandatory Injunction was received on March
26, 2006. (Emphasis supplied)37
Furthermore, the Answer with Counterclaim filed by Hertz never raised the defense
of improper service of summons. The defenses that it pleaded were limited to litis
pendentia, pari delicto, performance of its obligations and lack of cause of
action.38 Finally, it even asserted its own counterclaim against Optima. 39
Measured against the standards in Philippine Commercial International Bank, these
actions lead to no other conclusion than that Hertz voluntarily appeared before the
court a quo. We therefore rule that, by virtue of the voluntary appearance of
respondent Hertz before the MeTC, the trial court acquired jurisdiction over
respondents.
II
The instant ejectment case is not barred by litis pendentia. Hertz contends that the
instant case is barred by litis pendentia because of the pendency of its Complaint
for Specific Performance against Optima before the RTC.
We disagree.
Litis pendentia requires the concurrence of the following elements:
(1) Identity of parties, or at least their representation of the same interests in
both actions;
(2) Identity of rights asserted and reliefs prayed for, the relief being founded
on the same facts; and
(3) Identity with respect to the two preceding particulars in the two cases,
such that any judgment that may be rendered in the pending case, regardless
of which party is successful, would amount to res judicata in the other case. 40
Here, while there is identity of parties in both cases, we find that the rights asserted
and the reliefs prayed for under the Complaint for Specific Performance and those
under the present Unlawful Detainer Complaint are different. As aptly found by the
trial court:

The Complaint for Specific Performance] seeks to compel plaintiff-appellee Optima

to: (1) renegotiate the contract of lease; (2) reconnect the utilities at the leased
premises; and (3) pay damages. On the other hand, the unlawful detainer case
sought the ejectment of defendant-appellant Hertz from the leased premises and to
collect arrears in rentals and utility bills. 41
As the rights asserted and the reliefs sought in the two cases are different, we find
that the pendency of the Complaint for Specific Performance is not a bar to the
institution of the present case for ejectment.
III
The eviction of respondent and the award of damages,
attorneys fees and costs were proper.
We find that the RTCs ruling upholding the ejectment of Hertz from the building
premises was proper. First, respondent failed to pay rental arrearages and utility
bills to Optima; and, second, the Contract of Lease expired without any request from
Hertz for a renegotiation thereof at least 90 days prior to its expiration.
On the first ground, the records show that Hertz failed to pay rental arrearages and
utility bills to Optima. Failure to pay timely rentals and utility charges is an event of
default under the Contract of Lease,42 entitling the lessor to terminate the lease.
Moreover, the failure of Hertz to pay timely rentals and utility charges entitles the
lessor to judicially eject it under the provisions of the Civil Code. 43
On the second ground, the records likewise show that the lease had already expired
on 28 February 2006 because of Hertzs failure to request a renegotiation at least
90 days prior to the termination of the lease period.
The pertinent provision of the Contract of Lease reads:
x x x. The lease can be renewed only by a new negotiation between the parties
upon written notice by the LESSEE to be given to the LESSOR at least 90 days prior
to termination of the above lease period.44
As the lease was set to expire on 28 February 2006, Hertz had until 30 November
2005 within which to express its interest in negotiating an extension of the lease
with Optima. However, Hertz failed to communicate its intention to negotiate for an
extension of the lease within the time agreed upon by the parties. Thus, by its own
provisions, the Contract of Lease expired on 28 February 2006.1wphi1
Under the Civil Code, the expiry of the period agreed upon by the parties is likewise
a ground for judicial ejectment. 45
As to the award of monthly compensation, we find that Hertz should pay adequate
compensation to Optima, since the former continued to occupy the leased premises

even after the expiration of the lease contract. As the lease price during the
effectivity of the lease contract was P54,200 per month, we find it to be a
reasonable award.
Finally, we uphold the award of attorney's fees in the amount of P30,000 and judicial
costs in the light of Hertz's unjustifiable and unlawful retention of the leased
premises, thus forcing Optima to file the instant case in order to protect its rights
and interest.
From the foregoing, we find that the MeTC committed no reversible error in its 22
May 2006 Decision, and that the RTC committed no reversible error either in
affirming the MeTC's Decision.
WHEREFORE, in view of the foregoing, the instant Rule 45 Petition for Review is
GRANTED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R.
SP No. 99890 are hereby REVERSED and SET ASIDE. The Decision of the Regional
Trial Court, Branch 13 7, Makati City in Civil Case No. 06-672 affirming in toto the
Decision of the Metropolitan Trial Court, Branch 64, Makati City in Civil Case No.
90842 is hereby REINSTATED and AFFIRMED.
SO ORDERED.
MARIA LOURDES P. A. SERENO
Chief Justice
Chairperson

Sec. 2. Contents

Sec. 3. By whom served

Sec. 4. Return

Sec. 5. Issuance of alias summons

Sec. 6. Service on person of defendant

Planters Development Bank v. Chandumal, G.R. No. 195619,

September 5, 2012
G.R. No. 195619

September 5, 2012

PLANTERS DEVELOPMENT BANK, Petitioner,

vs.
JULIE CHANDUMAL, Respondent.
DECISION
REYES, J.:
In this petition for review under Rule 45 of the Rules of Court, Planters Development
Bank (PDB) questions the Decision1 dated July 27, 2010 of the Court of Appeals (CA),
as well as its Resolution2 dated February 16, 2011, denying the petitioner's motion
for reconsideration in CA-G.R. CV No. 82861. The assailed decision nullified the
Decision3 dated May 31, 2004 of the Regional Trial Court (RTC), Las Pias City,
Branch 255 in Civil Case No. LP-99-0137.
Antecedent Facts
The instant case stemmed from a contract to sell a parcel of land, together with
improvements, between BF Homes, Inc. (BF Homes) and herein respondent Julie
Chandumal (Chandumal). The property subject of the contract is located in Talon
Dos, Las Pias City and covered by Transfer Certificate of Title No. T-10779. On
February 12, 1993, BF Homes sold to PDB all its rights, participations and interests
over the contract.
Chandumal paid her monthly amortizations from December 1990 until May 1994
when she began to default in her payments. In a Notice of Delinquency and
Rescission of Contract with Demand to Vacate4 dated July 14, 1998, PDB gave
Chandumal a period of thirty (30) days from receipt within which to settle her
installment arrearages together with all its increments; otherwise, all her rights
under the contract shall be deemed extinguished and terminated and the contract
declared as rescinded. Despite demand, Chandumal still failed to settle her
obligation.
On June 18, 1999, an action for judicial confirmation of notarial rescission and
delivery of possession was filed by PDB against Chandumal, docketed as Civil Case
No. LP-99-0137. PDB alleged that despite demand, Chandumal failed and/or refused
to pay the amortizations as they fell due; hence, it caused the rescission of the
contract by means of notarial act, as provided in Republic Act (R.A.) No.
6552.5 According to PDB, it tried to deliver the cash surrender value of the subject
property, as required under R.A. No. 6552, in the amount of P 10,000.00; however,
the defendant was unavailable for such purpose. 6
Consequently, summons was issued and served by deputy sheriff Roberto T. Galing
(Sheriff Galing). According to his return, Sheriff Galing attempted to personally serve
the summons upon Chandumal on July 15, 19 and 22, 1999 but it was unavailing as

she was always out of the house on said dates. Hence, the sheriff caused
substituted service of summons on August 5, 1999 by serving the same through
Chandumals mother who acknowledged receipt thereof. 7
For her failure to file an answer within the prescribed period, PDB filed on April 24,
2000 an ex parte motion to declare Chandumal in default. On January 12, 2001, the
RTC issued an Order granting the motion of PDB. 8
On February 23, 2001, Chandumal filed an Urgent Motion to Set Aside Order of
Default and to Admit Attached Answer. She maintained that she did not receive the
summons and/or was not notified of the same. She further alleged that her failure to
file an answer within the reglementary period was due to fraud, mistake or
excusable negligence. In her answer, Chandumal alleged the following defenses: (a)
contrary to the position of PDB, the latter did not make any demand for her to pay
the unpaid monthly amortization; and (b) PDB did not tender or offer to give the
cash surrender value of the property in an amount equivalent to fifty percent (50%)
of the actual total payment made, as provided for under Section 3(b) of R.A. No.
6552. Moreover, Chandumal claimed that since the total payment she made
amounts to P 782,000.00, the corresponding cash surrender value due her should
be P 391,000.00.9
Per Order10 dated August 2, 2001, the RTC denied Chandumals motion to set aside
the order of default. Her motion for reconsideration was also denied for lack of
merit.11 Conformably, the RTC allowed PDB to present its evidence ex parte. 12 On
May 31, 2004, the RTC rendered a
Decision13 in favor of PDB, the dispositive portion of which reads:
WHEREFORE, the foregoing considered, judgment is hereby rendered in favor of the
plaintiff Planters Development Bank and against defendant Julie Chandumal as
follows, to wit:
1. Declaring the notarial rescission of the Contract to Sell dated 03 January 1990
made by the plaintiff per the Notice of Delinquency and Rescission of Contract with
Demand to Vacate dated 14 July 1998 as judicially confirmed and ratified;
2. Requiring the plaintiff to deposit in the name of the defendant the amount
of P 10,000.00 representing the cash surrender value for the subject property with
the Land Bank of the Philippines, Las Pi[]as City Branch in satisfaction of the
provisions of R.A. No. 6552; and,
3. Ordering the defendant to pay the plaintiff the amount of P 50,000.00 as and by
way of attorneys fees, including the costs of suit.
SO ORDERED.14
From the foregoing judgment, Chandumal appealed to the CA.

On July 27, 2010, the CA, without ruling on the propriety of the judicial confirmation
of the notarial rescission, rendered the assailed decision nullifying the RTC decision
due to invalid and ineffective substituted service of summons. The dispositive
portion of the CA decision provides:
WHEREFORE, premises considered, the decision of Branch 255 of the Regional Trial
Court of Las Pias City, dated May 31, 2004, in Civil Case No. LP-99-0137 is
hereby NULLIFIED and VACATED.
SO ORDERED.15
PDB filed a motion for reconsideration but it was denied by the CA in its Resolution
dated February 16, 2011.
Hence, this petition based on the following assignment of errors:
I
The Honorable Court of Appeals erred in reversing the decision of the trial court on
the ground of improper service of summons;
II
The decision of the trial court is valid as it duly acquired jurisdiction over the person
of respondent Chandumal through voluntary appearance; and
III
The trial court did not err in confirming and ratifying the notarial rescission of the
subject contract to sell.16
PDB contends that the RTC properly acquired jurisdiction over the person of
Chandumal.1wphi1 According to PDB, there was proper service of summons since
the sheriff complied with the proper procedure governing substituted service of
summons as laid down in Section 7, Rule 14 of the Rules of Court. PDB alleges that
it is clear from the sheriffs return that there were several attempts on at least three
(3) different dates to effect personal service within a reasonable period of nearly a
month, before he caused substituted service of summons. The sheriff likewise
stated the reason for his failure to effect personal service and that on his fourth
attempt, he effected the service of summons through Chandumals mother who is
unarguably, a person of legal age and with sufficient discretion. PDB also argues
that Chandumal voluntarily submitted herself to the jurisdiction of the court when
she filed an Urgent Motion to Set Aside Order of Default and to Admit Attached
Answer.
For her part, Chandumal asserts that she never received a copy of the summons or
was ever notified of it and she only came to know of the case sometime in July or
August 2000, but she was already in the United States of America by that time, and

that the CA correctly ruled that there was no valid service of summons; hence, the
RTC never acquired jurisdiction over her person.
Issues
1. Whether there was a valid substituted service of summons;
2. Whether Chandumal voluntarily submitted to the jurisdiction of the trial court;
and
3. Whether there was proper rescission by notarial act of the contract to sell.
Our Ruling
The fundamental rule is that jurisdiction over a defendant in a civil case is acquired
either through service of summons or through voluntary appearance in court and
submission to its authority. If a defendant has not been properly summoned, the
court acquires no jurisdiction over its person, and a judgment rendered against it is
null and void.17
Where the action is in personam18 and the defendant is in the Philippines, service of
summons may be made through personal service, that is, summons shall be served
by handing to the defendant in person a copy thereof, or if he refuses to receive and
sign for it, by tendering it to him. 19 If the defendant cannot be personally served
with summons within a reasonable time, it is then that substituted service may be
made.20 Personal service of summons should and always be the first option, and it is
only when the said summons cannot be served within a reasonable time can the
process server resort to substituted service.21
No
summons

valid

substituted

service

of

In this case, the sheriff resorted to substituted service of summons due to his failure
to serve it personally. In Manotoc v. Court of Appeals, 22 the Court detailed the
requisites for a valid substituted service of summons, summed up as follows: (1)
impossibility of prompt personal service the party relying on substituted service or
the sheriff must show that the defendant cannot be served promptly or there is
impossibility of prompt service; (2) specific details in the return the sheriff must
describe in the Return of Summons the facts and circumstances surrounding the
attempted personal service; (3) a person of suitable age and discretion the sheriff
must determine if the person found in the alleged dwelling or residence of
defendant is of legal age, what the recipients relationship with the defendant is,
and whether said person comprehends the significance of the receipt of the
summons and his duty to immediately deliver it to the defendant or at least notify
the defendant of said receipt of summons, which matters must be clearly and
specifically described in the Return of Summons; and (4) a competent person in
charge, who must have sufficient knowledge to understand the obligation of the
defendant in the summons, its importance, and the prejudicial effects arising from
inaction on the summons.23 These were reiterated and applied in Pascual v.

Pascual,24 where the substituted service of summon made was invalidated due to
the sheriffs failure to specify in the return the necessary details of the failed
attempts to effect personal service which would justify resort to substituted service
of summons.
In applying the foregoing requisites in the instant case, the CA correctly ruled that
the sheriffs return failed to justify a resort to substituted service of summons.
According to the CA, the Return of Summons does not specifically show or indicate
in detail the actual exertion of efforts or any positive step taken by the officer or
process server in attempting to serve the summons personally to the defendant.
The return merely states the alleged whereabouts of the defendant without
indicating that such information was verified from a person who had knowledge
thereof.25 Indeed, the sheriffs return shows a mere perfunctory attempt to cause
personal service of the summons on Chandumal. There was no indication if he even
asked Chandumals mother as to her specific whereabouts except that she was "out
of the house", where she can be reached or whether he even tried to await her
return. The "efforts" exerted by the sheriff clearly do not suffice to justify
substituted service and his failure to comply with the requisites renders such
service ineffective.26
Respondent
voluntarily
to the jurisdiction of the trial court

submitted

Despite that there was no valid substituted service of summons, the Court,
nevertheless, finds that Chandumal voluntarily submitted to the jurisdiction of the
trial court.
Section 20, Rule 14 of the Rules of Court states:
Sec. 20. Voluntary appearance. The defendants voluntary appearance in the
action shall be equivalent to service of summons. The inclusion in a motion to
dismiss of other grounds aside from lack of jurisdiction over the person of the
defendant shall not be deemed a voluntary appearance.
When Chandumal filed an Urgent Motion to Set Aside Order of Default and to Admit
Attached Answer, she effectively submitted her person to the jurisdiction of the trial
court as the filing of a pleading where one seeks an affirmative relief is equivalent
to service of summons and vests the trial court with jurisdiction over the
defendants person. Thus, it was ruled that the filing of motions to admit answer, for
additional time to file answer, for reconsideration of a default judgment, and to lift
order of default with motion for reconsideration is considered voluntary submission
to the trial courts jurisdiction.27 The Court notes that aside from the allegation that
she did not receive any summons, Chandumals motion to set aside order of default
and to admit attached answer failed to positively assert the trial courts lack of
jurisdiction. In fact, what was set forth therein was the substantial claim that PDB
failed to comply with the requirements of R.A. No. 6552 on payment of cash
surrender value,28 which already delves into the merits of PDBs cause of action. In
addition, Chandumal even appealed the RTC decision to the CA, an act which
demonstrates her recognition of the trial courts jurisdiction to render said
judgment.

Given Chandumals voluntary submission to the jurisdiction of the trial court, the
RTC, Las Pias City, Branch 255, had all authority to render its Decision dated May
31, 2004. The CA, therefore, erred in nullifying said RTC decision and dispensing
with the resolution of the substantial issue raised herein, i.e., validity of the notarial
rescission. Instead, however, of remanding this case to the CA, the Court will resolve
the same considering that the records of the case are already before us and in order
to avoid any further delay.29
There
is
no
valid
contract
to
sell
pursuant to Section 3(b), R.A. No. 6552

rescission
of
by
notarial

the
act

That the RTC had jurisdiction to render the decision does not necessarily mean,
however, that its ruling on the validity of the notarial rescission is in accord with the
established facts of the case, the relevant law and jurisprudence.1wphi1
PDB claims that it has validly rescinded the contract by notarial act as provided
under R.A. No. 6552. Basically, PDB instituted Civil Case No. LP-99-0137 in order to
secure judicial confirmation of the rescission and to recover possession of the
property subject of the contract.
In Leao v. Court of Appeals,30 it was held that:
R. A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial,
commercial, residential) the right of the seller to cancel the contract upon nonpayment of an installment by the buyer, which is simply an event that prevents the
obligation of the vendor to convey title from acquiring binding force. The law also
provides for the rights of the buyer in case of cancellation. Thus, Sec. 3 (b) of the
law provides that:
"If the contract is cancelled, the seller shall refund to the buyer the cash surrender
value of the payments on the property equivalent to fifty percent of the total
payments made and, after five years of installments, an additional five percent
every year but not to exceed ninety percent of the total payments
made: Provided, That the actual cancellation of the contract shall take place after
thirty days from receipt by the buyer of the notice of cancellation or the demand for
rescission of the contract by a notarial act and upon full payment of the cash
surrender value to the buyer."31 (Citation omitted and emphasis ours)
R.A. No. 6552 recognizes the right of the seller to cancel the contract but any such
cancellation must be done in conformity with the requirements therein prescribed.
In addition to the notarial act of rescission, the seller is required to refund to the
buyer the cash surrender value of the payments on the property. The actual
cancellation of the contract can only be deemed to take place upon the expiry of a
thirty (30)-day period following the receipt by the buyer of the notice of cancellation
or demand for rescission by a notarial act and the full payment of the cash
surrender value.32

In this case, it is an admitted fact that PDB failed to give Chandumal the full
payment of the cash surrender value. In its complaint, 33 PDB admitted that it tried to
deliver the cash surrender value of the subject property as required under R.A. No.
6552 but Chandumal was "unavailable" for such purpose. Thus, it prayed in its
complaint that it be ordered to "deposit with a banking institution in the Philippines,
for the account of Defendants (sic), the amount of Ten Thousand Pesos
(P 10,000.00), Philippine Currency, representing the cash surrender value of the
subject property; x x x."34 The allegation that Chandumal made herself unavailable
for payment is not an excuse as the twin requirements for a valid and effective
cancellation under the law, i.e., notice of cancellation or demand for rescission by a
notarial act and the full payment of the cash surrender value, is
mandatory.35 Consequently, there was no valid rescission of the contract to sell by
notarial act undertaken by PDB and the RTC should not have given judicial
confirmation over the same.
WHEREFORE, the petition is DENIED. The Decision dated July 27, 2010 of the
Court of Appeals, as well as its Resolution dated February 16, 2011, denying the
Motion for Reconsideration in CA-G.R. CV No. 82861 areAFFIRMED in so far as there
was no valid service of summons. Further, the Court DECLARES that there was no
valid rescission of contract pursuant to R.A. No. 6552. Accordingly, the Decision
dated May 31, 2004 of the Regional Trial Court, Las Pias City, Branch 255 in Civil
Case
No.
LP-99-0
137
is REVERSED and SET
ASIDE,
and
is
therefore, DISMISSED for lack of merit.
SO ORDERED.
BIENVENIDO L. REYES
Associate Justice

Oaminal v. Castillo, G.R. No. 152776, October 8, 2003

THIRD DIVISION

[G.R. No. 152776. October 8, 2003]

HENRY S. OAMINAL, petitioner, vs. PABLITO M. CASTILLO and GUIA S.

CASTILLO, respondents.
DECISION
PANGANIBAN, J.:
In the instant case, the receipt of the summons by the legal secretary of the
defendants -- respondents herein -- is deemed proper, because they admit the

actual receipt thereof, but merely question the manner of service. Moreover, when
they asked for affirmative reliefs in several motions and thereby submitted
themselves to the jurisdiction of the trial court, whatever defects the service of
summons may have had were cured.

The Case
Before us is a Petition for Review [1] under Rule 45 of the Rules of Court, seeking
to nullify the March 26, 2002 Decision[2] of the Court of Appeals (CA) in CA-GR SP No.
66562. The assailed Decision disposed thus:
WHEREFORE, the [D]ecision dated 23 August 2001 is hereby NULLIFIED and SET
ASIDE and Civil Case No. OZC-00-13 ordered DISMISSED, without prejudice. Costs
against [petitioner].[3]

The Antecedents
The antecedents of the case were narrated by the CA as follows:
On 09 March 2000, [Petitioner Henry Oaminal] filed a complaint for collection
against [Respondents Pablito and Guia Castillo] with the Regional Trial Court [RTC] of
Ozamis City (Branch 35) x x x. The complaint prayed that [respondents] be ordered
to pay P1,500,000.00 by way of liquidated damages and P150,000.00 as attorneys
fees.
On 30 May 2000, the summons together with the complaint was served upon Ester
Fraginal, secretary of [Respondent] Mrs. Castillo.
On 06 June 2000, [respondents] filed their Urgent Motion to Declare Service of
Summons Improper and Legally Defective alleging that the Sheriff's Return has
failed to comply with Section (1), Rule 14 of the Rules of Court or substituted service
of summons.
The scheduled hearing of the Motion on 14 July 2000 did not take place because x
x x [RTC] Judge [Felipe Zapatos] took a leave of absence from July 17 to 19, 2000[;]
hence[,] it was re-scheduled to 16 August 2000.
On 19 October 2000, [petitioner] filed an Omnibus Motion to Declare [Respondents]
in Default and to Render Judgment because no answer [was] filed by [the latter].
[Respondents] forthwith filed the following:
a. Omnibus Motion Ad Cautelam to Admit Motion to Dismiss and Answer with
Compulsory Counter-claim dated 9 November 2000 which was set for hearing on 27
November 2000 at 8:30 a.m.;

b. x x x Urgent Motion to Dismiss also dated 9 November 2000 which was also set
for hearing on 27 November 2000 at 8:30 a.m. The said motion was anchored on
the premise that x x x [petitioner's] complaint was barred by improper venue
and litis pendentia; and
c. Answer with Compulsory Counter-Claim dated 9 November 2000.
On 16 November 2000, x x x [the] judge denied [respondents] Motion to Dismiss,
admitted [their] Answer, and set the pre-trial [on] 17 January 2001.
On 24 November 2000, [respondents] filed an Urgent Motion to Inhibit Ad
Cautelam against Judge [Zapatos], in the higher interest of substantial justice and
the [r]ule of [l]aw x x x.
On 27 December 2000, Judge [Zapatos] denied the motion and transferred the
January 17th pre-trial to 19 February 2001.
[Respondents] filed an Urgent Omnibus Motion for Reconsideration with the
Accompanying Plea to Reset dated 22 January 2001. The motion requested that it
be set for consideration and approval by the trial court on 05 February 2001 at 8:30
a.m. Said motion in the main prayed that an order be issued by the Honorable
Court reconsidering its adverse order dated 16 November 2000, by dismissing the
case at bar on the ground of improper venue or in the alternative, that the
Honorable Presiding Judge reconsider and set aside its order dated December 27,
2000 by inhibiting himself from the case at hand.
On 22 May 2001, Judge [Zapatos] ruled that [respondents] Omnibus Motion Ad
Cautelam to Admit Motion to Dismiss and Answer with Counterclaim was filed
outside the period to file answer, hence he (1) denied the Motion to Admit Motion to
Dismiss and Answer; (2) declared [respondents] in default; and (3) ordered
[petitioner] to present evidence ex-parte within ten days from receipt of [the] order,
[failing] which, the case will be dismissed.
On 23 August 2001, Judge [Zapatos] rendered a decision on the merits, with the
following dispositi[on]:
WHEREFORE, finding by preponderance of evidence, judgment is hereby rendered
in favor of [petitioner], ordering [respondents] to pay x x x:
1)

P1,500,000.00 by way of [l]iquidated [d]amages;

2)

P20,000.00 as attorney's fees and litigation expenses; and

3)

x x x cost[s].[4]

On September 11, 2001, respondents filed with the CA a Petition for certiorari,
prohibition and injunction, with a prayer for a writ of preliminary injunction or
temporary restraining order (TRO). In the main, they raised the issue of whether
the trial court had validly acquired jurisdiction over them.

On September 20, 2001, the appellate court issued a TRO to enjoin the lower
court from issuing a writ of execution to enforce the latters decision.

Ruling of the Court of Appeals

The CA ruled that the trial court did not validly acquire jurisdiction over
respondents, because the summons had been improperly served on them. It based
its finding on the Sheriffs Return, which did not contain any averment that effort
had been exerted to personally serve the summons on them before substituted
service was resorted to. Thus, the appellate court set aside the trial courts
Decision and dismissed, without prejudice, Civil Case No. OZC-00-13.
Hence, this Petition.[5]

Issues
Petitioner submits the following issues for our consideration:
I
Whether respondents recourse to a Petition for Certiorari [was] appropriate when
the remedy of appeal was available?
II
Whether the Decision of the trial court attained finality?
III
Whether the
entertaining
establish[ed]
plain, speedy

Honorable Third Division of the Court of Appeals [was] correct in

and in granting the Writ of Certiorari when the facts clearly
that not only was [an] appeal available, but x x x there were other
and adequate remedies in the ordinary course of law?

IV
Whether the Honorable Third Division of the Court of Appeals had jurisdiction to
nullify and set aside the Decision of the trial court and dismiss the case?
V
[Whether] receipt by a legal secretary of a summons [is deemed] receipt by a
lawyer in contemplation of law?[6]

Simply stated, the issues boil down to the following: (1) whether the Petition
for certiorari before the CA was proper; and (2) whether the trial court acquired
jurisdiction over respondents.
Since the Petition for certiorari was granted by the CA based on the trial courts
alleged lack of jurisdiction over respondents, the second issue shall be discussed
ahead of the former.

The Courts Ruling

The present Petition is partly meritorious.

First Issue:
Jurisdiction over Defendants
Petitioner contends that the trial court validly acquired jurisdiction over the
persons of respondents, because the latter never denied that they had actually
received the summons through their secretary. Neither did they dispute her
competence to receive it.
Moreover, he argues that respondents automatically submitted themselves to
the jurisdiction of the trial court when they filed, onNovember 9, 2000, an Omnibus
Motion to Dismiss or Admit Answer, a Motion to Dismiss on the grounds of improper
venue and litis pendentia, and an Answer with Counterclaim.
On the other hand, respondents insist that the substituted service of summons
on them was improper. Thus, they allege that the trial court did not have the
authority to render its August 23, 2001 Decision.
We clarify.

Service of Summons
In civil cases, the trial court acquires jurisdiction over the person of the
defendant either by the service of summons or by the latters voluntary appearance
and submission to the authority of the former. Where the action is in personam and
the defendant is in thePhilippines, the service of summons may be made through
personal or substituted service in the manner provided for by Sections 6 and 7 of
Rule 14 of the Revised Rules of Court, which read:
Section 6. Service in person on defendant. - Whenever practicable, the summons
shall be served by handing a copy thereof to the defendant in person, or, if he
refuses to receive and sign for it, by tendering it to him.
Section 7. Substituted service. - If, for justifiable causes, the defendant cannot be
served within a reasonable time as provided in the preceding section, service may

be effected (a) by leaving copies of the summons at the defendant's residence with
some person of suitable age and discretion then residing therein, or (b) by leaving
the copies at defendants office or regular place of business with some competent
person in charge thereof.
Personal service of summons is preferred over substituted service. Resort to the
latter is permitted when the summons cannot be promptly served on the defendant
in person and after stringent formal and substantive requirements have been
complied with.[7]
For substituted service of summons to be valid, it is necessary to establish the
following circumstances: (a) personal service of summons within a reasonable time
was impossible; (b) efforts were exerted to locate the party; and (c) the summons
was served upon a person of sufficient age and discretion residing at the partys
residence or upon a competent person in charge of the partys office or regular
place of business.[8] It is likewise required that the pertinent facts proving these
circumstances are stated in the proof of service or officers return.
In the present case, the Sheriffs Return [9] failed to state that efforts had been
made to personally serve the summons on respondents. Neither did the Return
indicate that it was impossible to do so within a reasonable time. It simply stated:
THIS IS TO CERTIFY that on the 30th day of May 2000, copies of the summons
together with the complaint and annexes attached thereto were served upon the
defendants Pablito M. Castillo and Guia B. Castillo at their place of business at No. 7,
21st Avenue, Cubao, Quezon City thru MS. ESTER FREGINAL, secretary, who is
authorized to receive such kind of process. She signed in receipt of the original as
evidenced by her signature appearing on the original summons.
That this return is submitted to inform the Honorable x x x Court that the same was
duly served.[10]
Nonetheless, nothing in the records shows that respondents denied actual
receipt of the summons through their secretary, Ester Fraginal. Their Urgent Motion
to Declare Service of Summons Improper and Legally Defective [11] did not deny
receipt thereof; it merely assailed the manner of its service. In fact, they admitted
in their Motion that the summons, together with the complaint, was served by the
Sheriff on Ester Fraginal, secretary of the defendants at No. 7, 21 st Avenue, Cubao,
Quezon City on 30 May 2000.[12]
That the defendants actual receipt of the summons satisfied the requirements
of procedural due process had previously been upheld by the Court thus:
x x x [T]here is no question that summons was timely issued and received by
private respondent. In fact, he never denied actual receipt of such summons but
confined himself to the argument that the Sheriff should prove that personal service
was first made before resorting to substituted service.
This brings to the fore the question of procedural due process. In Montalban v.
Maximo (22 SCRA 1077 [1968]) the Court ruled that The constitutional requirement
of due process exacts that the service be such as may be reasonably expected to

give the notice desired. Once the service provided by the rules reasonably
accomplishes that end, the requirement of justice is answered; the traditional
notions of fair play are satisfied; due process is served. [13]
There is likewise no showing that respondents had heretofore pursued the issue
of lack of jurisdiction; neither did they reserve their right to invoke it in their
subsequent pleadings. If at all, what they avoided forfeiting and waiving -- both in
their Omnibus Motion ad Cautelam to Admit Motion to Dismiss and Answer with
Compulsory Counter-Claim[14] and in their Motion to Dismiss[15] -- was their right to
invoke the grounds of improper venue and litis pendentia. They argued therein:
3. x x x. To be sure, the [respondents] have already prepared a finalized draft of
their [M]otion to [D]ismiss the case at bar, based on the twin compelling grounds of
improper venue and [the] additional fact that there exists a case between the
parties involving the same transaction/s covered by the plaintiffs cause of action. x
x x;
4. That as things now stand, the [respondents] are confronted with the dilemma of
filing their [M]otion to [D]ismiss based on the legal grounds stated above and thus
avoid forfeiture and waiver of these rights as provided for by the Rules and also file
the corresponding [M]otion to [A]dmit x x x [A]nswer as mandated by the Omnibus
Rule.
xxx

xxx

x x x[16]

Verily, respondents did not raise in their Motion to Dismiss the issue of
jurisdiction over their persons; they raised only improper venue and litis
pendentia. Hence, whatever defect there was in the manner of service should be
deemed waived.[17]

Voluntary Appearance
and Submission
Assuming arguendo that the service of summons was defective, such flaw was
cured and respondents are deemed to have submitted themselves to the
jurisdiction of the trial court when they filed an Omnibus Motion to Admit the Motion
to Dismiss and Answer with Counterclaim, an Answer with Counterclaim, a Motion to
Inhibit, and a Motion for Reconsideration and Plea to Reset Pre-trial. The filing of
Motions seeking affirmative relief -- to admit answer, for additional time to file
answer, for reconsideration of a default judgment, and to lift order of default with
motion for reconsideration -- are considered voluntary submission to the jurisdiction
of the court.[18] Having invoked the trial courts jurisdiction to secure affirmative
relief, respondents cannot -- after failing to obtain the relief prayed for -- repudiate
the very same authority they have invoked.[19]

Second Issue:
Propriety of the Petition for Certiorari

Petitioner contends that the certiorari Petition filed by respondents before the
CA was improper, because other remedies in the ordinary course of law were
available to them. Thus, he argues that the CA erred when it took cognizance of
and granted the Petition.
Well-settled is the rule that certiorari will lie only when a court has acted without
or in excess of jurisdiction or with grave abuse of discretion. [20] As a condition for
the filing of a petition for certiorari, Section 1 of Rule 65 of the Rules of Court
additionally requires that no appeal nor any plain, speedy and adequate remedy in
the ordinary course of law must be available. [21] It is axiomatic that the availability
of the right of appeal precludes recourse to the special civil action for certiorari. [22]
Here, the trial courts judgment was a final Decision that disposed of the case. It
was therefore a fit subject of an appeal. [23] However, instead of appealing the
Decision, respondents filed a Petition for certiorari on September 11, 2001.
Be that as it may, a petition for certiorari may be treated as a petition for review
under Rule 45. Such move is in accordance with the liberal spirit pervading the
Rules of Court and in the interest of substantial justice, especially (1) if the petition
was filed within the reglementary period for filing a petition for review; [24] (2) errors
of judgment are averred;[25] and (3) there is sufficient reason to justify the relaxation
of the rules.[26] Besides, it is axiomatic that the nature of an action is determined by
the allegations of the complaint or petition and the character of the relief sought.
[27]
The Court explained:
x x x. It cannot x x x be claimed that this petition is being used as a substitute for
appeal after that remedy has been lost through the fault of petitioner. Moreover,
stripped of allegations of grave abuse of discretion, the petition actually avers
errors of judgment rather than of jurisdiction, which are the subject of a petition for
review.[28]
The present case satisfies all the above requisites. The Petition
for certiorari before the CA was filed within the reglementary period of appeal. A
review of the records shows that respondents filed their Petition on September 11,
2001 -- four days after they had received the RTC Decision. Verily, there were still
11 days to go before the lapse of the period for filing an appeal. Aside from
charging grave abuse of discretion and lack of jurisdiction, they likewise assigned as
errors the order and the judgment of default as well as the RTCs allegedly
unconscionable and iniquitous award of liquidated damages. [29] We find the latter
issue particularly significant, considering that the trial court awarded P1,500,000 as
liquidated damages without the benefit of a hearing and out of an obligation
impugned by respondents because of petitioners failure to pay. [30] Hence, there are
enough reasons to treat the Petition for certiorari as a petition for review.
In view of the foregoing, we rule that the Petition effectively tolled the finality of
the trial court Decision.[31] Consequently, the appellate court had jurisdiction to
pass upon the assigned errors. The question that remains is whether it was correct
in setting aside the Decision and in dismissing the case.

Trial Courts Default

Orders Erroneous
A review of the assailed Decision reveals that the alleged lack of jurisdiction of
the trial court over the defendants therein was the reason why the CA nullified the
formers default judgment and dismissed the case without prejudice. However, we
have ruled earlier that the lower court had acquired jurisdiction over them. Given
this fact, the CA erred in dismissing the case; as a consequence, it failed to rule on
the propriety of the Order and the judgment of default. To avoid circuitousness and
further delay, the Court deems it necessary to now rule on this issue.
As much as possible, suits should be decided on the merits and not on
technicalities.[32] For this reason, courts have repeatedly been admonished against
default orders and judgments that lay more emphasis on procedural niceties at the
expense of substantial justice. [33]Not being based upon the merits of the
controversy, such issuances may indeed amount to a considerable injustice
resulting in serious consequences on the part of the defendant. Thus, it is
necessary to examine carefully the grounds upon which these orders and judgments
are sought to be set aside.[34]
Respondents herein were declared in default by the trial court on May 22, 2001,
purportedly because of their delay in filing an answer. Its unexpected volte
face came six months after it had ruled to admit their Answer on November 16,
2000, as follows:

That with respect to the Motion to Admit Answer, this Court is not in favor of
terminating this case on the basis of technicality for failure to answer on time,
hence, as ruled in the case of Nantz v. Jugo and Cruz, 43 O.G. No. 11, p. 4620, it was
held:
Lapses in the literal observance of a rule of procedure will be overlooked when they
do not involve public policy, when they arose from an honest mistake or unforeseen
accident, when they have not prejudiced the adverse party and have not deprived
the court ot its authority. Conceived in the best traditions of practical and moral
justice and common sense, the Rules of Court frown upon hairsplitting technicalities
that do not square with their liberal tendency and with the ends of justice unless
something in the nature of the factors just stated intervene. x x x
WHEREFORE, x x x in the interest of justice, the Answer of the [respondents] is
hereby admitted.[35]
Indiana Aerospace University v. Commission on Higher Education [36] held that no
practical purpose was served in declaring the defendants in default when their
Answer had already been filed -- albeit after the 15-day period, but before they were
declared as such. Applying that ruling to the present case, we find that respondents
were, therefore, imprudently declared in default.
WHEREFORE, the Petition is hereby GRANTED IN PART, and the Decision of the
Court of Appeals MODIFIED. The trial courts Order of Default dated May 22,

2001 and Judgment of Default dated August 23, 2001 are ANNULLED, and the case
remanded to the trial court for further proceedings on the merits. No costs.
SO ORDERED.
Puno, (Chairman), Sandoval-Gutierrez and Carpio Morales, JJ., concur.
Corona, J., on leave.

Macasaet v. Co, G.R. No. 156759, June 5, 2013

G.R. No. 156759

June 5, 2013

ALLEN A. MACASAET, NICOLAS V. QUIJANO, JR., ISAIAS ALBANO, LILY

REYES, JANET BAY, JESUS R. GALANG, AND RANDY HAGOS, Petitioners,
vs.
FRANCISCO R. CO, JR., Respondent.
DECISION
BERSAMIN, J.:
To warrant the substituted service of the summons and copy of the complaint, the
serving officer must first attempt to effect the same upon the defendant in person.
Only after the attempt at personal service has become futile or impossible within a
reasonable time may the officer resort to substituted service.
The Case
Petitioners defendants in a suit for libel brought by respondent appeal the
decision promulgated on March 8, 20021 and the resolution promulgated on January
13, 2003,2 whereby the Court of Appeals (CA) respectively dismissed their petition
for certiorari, prohibition and mandamus and denied their motion for
reconsideration. Thereby, the CA upheld the order the Regional Trial Court (RTC),
Branch 51, in Manila had issued on March 12, 2001 denying their motion to dismiss
because the substituted service of the summons and copies of the complaint on
each of them had been valid and effective. 3
Antecedents
On July 3, 2000, respondent, a retired police officer assigned at the Western Police
District in Manila, sued Abante Tonite, a daily tabloid of general circulation; its
Publisher Allen A. Macasaet; its Managing Director Nicolas V. Quijano; its Circulation
Manager Isaias Albano; its Editors Janet Bay, Jesus R. Galang and Randy Hagos; and
its Columnist/Reporter Lily Reyes (petitioners), claiming damages because of an
allegedly libelous article petitioners published in the June 6, 2000 issue of Abante
Tonite. The suit, docketed as Civil Case No. 00-97907, was raffled to Branch 51 of
the RTC, which in due course issued summons to be served on each defendant,

including Abante Tonite, at their business address at Monica Publishing Corporation,

301-305 3rd Floor, BF Condominium Building, Solana Street corner A. Soriano Street,
Intramuros, Manila.4
In the morning of September 18, 2000, RTC Sheriff Raul Medina proceeded to the
stated address to effect the personal service of the summons on the defendants.
But his efforts to personally serve each defendant in the address were futile
because the defendants were then out of the office and unavailable. He returned in
the afternoon of that day to make a second attempt at serving the summons, but he
was informed that petitioners were still out of the office. He decided to resort to
substituted service of the summons, and explained why in his sheriffs return dated
September 22, 2005,5 to wit:
SHERIFFS RETURN
This is to certify that on September 18, 2000, I caused the service of summons
together with copies of complaint and its annexes attached thereto, upon the
following:
1. Defendant Allen A. Macasaet, President/Publisher of defendant
AbanteTonite, at Monica Publishing Corporation, Rooms 301-305 3rd Floor, BF
Condominium Building, Solana corner A. Soriano Streets, Intramuros, Manila,
thru his secretary Lu-Ann Quijano, a person of sufficient age and discretion
working therein, who signed to acknowledge receipt thereof. That effort (sic)
to serve the said summons personally upon said defendant were made, but
the same were ineffectual and unavailing on the ground that per information
of Ms. Quijano said defendant is always out and not available, thus,
substituted service was applied;
2. Defendant Nicolas V. Quijano, at the same address, thru his wife Lu-Ann
Quijano, who signed to acknowledge receipt thereof. That effort (sic) to serve
the said summons personally upon said defendant were made, but the same
were ineffectual and unavailing on the ground that per information of (sic) his
wife said defendant is always out and not available, thus, substituted service
was applied;
3. Defendants Isaias Albano, Janet Bay, Jesus R. Galang, Randy Hagos and Lily
Reyes, at the same address, thru Rene Esleta, Editorial Assistant of defendant
AbanteTonite, a person of sufficient age and discretion working therein who
signed to acknowledge receipt thereof. That effort (sic) to serve the said
summons personally upon said defendants were made, but the same were
ineffectual and unavailing on the ground that per information of (sic) Mr.
Esleta said defendants is (sic) always roving outside and gathering news,
thus, substituted service was applied.
Original copy of summons is therefore, respectfully returned duly served.
Manila, September 22, 2000.

On October 3, 2000, petitioners moved for the dismissal of the complaint through
counsels special appearance in their behalf, alleging lack of jurisdiction over their
persons because of the invalid and ineffectual substituted service of summons.
They contended that the sheriff had made no prior attempt to serve the summons
personally on each of them in accordance with Section 6 and Section 7, Rule 14 of
the Rules of Court. They further moved to drop Abante Tonite as a defendant by
virtue of its being neither a natural nor a juridical person that could be impleaded as
a party in a civil action.
At the hearing of petitioners motion to dismiss, Medina testified that he had gone
to the office address of petitioners in the morning of September 18, 2000 to
personally serve the summons on each defendant; that petitioners were out of the
office at the time; that he had returned in the afternoon of the same day to again
attempt to serve on each defendant personally but his attempt had still proved
futile because all of petitioners were still out of the office; that some competent
persons working in petitioners office had informed him that Macasaet and Quijano
were always out and unavailable, and that Albano, Bay, Galang, Hagos and Reyes
were always out roving to gather news; and that he had then resorted to substituted
service upon realizing the impossibility of his finding petitioners in person within a
reasonable time.
On March 12, 2001, the RTC denied the motion to dismiss, and directed petitioners
to file their answers to the complaint within the remaining period allowed by the
Rules of Court,6 relevantly stating:
Records show that the summonses were served upon Allen A. Macasaet,
President/Publisher of defendant AbanteTonite, through LuAnn Quijano; upon
defendants Isaias Albano, Janet Bay, Jesus R. Galang, Randy Hagos and Lily Reyes,
through Rene Esleta, Editorial Assistant of defendant Abante Tonite (p. 12, records).
It is apparent in the Sheriffs Return that on several occasions, efforts to served (sic)
the summons personally upon all the defendants were ineffectual as they were
always out and unavailable, so the Sheriff served the summons by substituted
service.
Considering that summonses cannot be served within a reasonable time to the
persons of all the defendants, hence substituted service of summonses was validly
applied. Secretary of the President who is duly authorized to receive such
document, the wife of the defendant and the Editorial Assistant of the defendant,
were considered competent persons with sufficient discretion to realize the
importance of the legal papers served upon them and to relay the same to the
defendants named therein (Sec. 7, Rule 14, 1997 Rules of Civil Procedure).
WHEREFORE, in view of the foregoing, the Motion to Dismiss is hereby DENIED for
lack of merit..
Accordingly, defendants are directed to file their Answers to the complaint within
the period still open to them, pursuant to the rules.
SO ORDERED.

Petitioners filed a motion for reconsideration, asserting that the sheriff had
immediately resorted to substituted service of the summons upon being informed
that they were not around to personally receive the summons, and that Abante
Tonite, being neither a natural nor a juridical person, could not be made a party in
the action.
On June 29, 2001, the RTC denied petitioners motion for reconsideration. 7 It stated
in respect of the service of summons, as follows:
The allegations of the defendants that the Sheriff immediately resorted to
substituted service of summons upon them when he was informed that they were
not around to personally receive the same is untenable. During the hearing of the
herein motion, Sheriff Raul Medina of this Branch of the Court testified that on
September 18, 2000 in the morning, he went to the office address of the defendants
to personally serve summons upon them but they were out. So he went back to
serve said summons upon the defendants in the afternoon of the same day, but
then again he was informed that the defendants were out and unavailable, and that
they were always out because they were roving around to gather news. Because of
that information and because of the nature of the work of the defendants that they
are always on field, so the sheriff resorted to substituted service of summons. There
was substantial compliance with the rules, considering the difficulty to serve the
summons personally to them because of the nature of their job which compels them
to be always out and unavailable. Additional matters regarding the service of
summons upon defendants were sufficiently discussed in the Order of this Court
dated March 12, 2001.
Regarding the impleading of Abante Tonite as defendant, the RTC held, viz:
"Abante Tonite" is a daily tabloid of general circulation. People all over the country
could buy a copy of "Abante Tonite" and read it, hence, it is for public consumption.
The persons who organized said publication obviously derived profit from it. The
information written on the said newspaper will affect the person, natural as well as
juridical, who was stated or implicated in the news. All of these facts imply that
"Abante Tonite" falls within the provision of Art. 44 (2 or 3), New Civil Code.
Assuming arguendo that "Abante Tonite" is not registered with the Securities and
Exchange Commission, it is deemed a corporation by estoppels considering that it
possesses attributes of a juridical person, otherwise it cannot be held liable for
damages and injuries it may inflict to other persons.
Undaunted, petitioners brought a petition for certiorari, prohibition, mandamusin
the CA to nullify the orders of the RTC dated March 12, 2001 and June 29, 2001.
Ruling of the CA
On March 8, 2002, the CA promulgated its questioned decision, 8 dismissing the
petition for certiorari, prohibition, mandamus, to wit:
We find petitioners argument without merit. The rule is that certiorari will prosper
only if there is a showing of grave abuse of discretion or an act without or in excess

of jurisdiction committed by the respondent Judge. A judicious reading of the

questioned orders of respondent Judge would show that the same were not issued in
a capricious or whimsical exercise of judgment. There are factual bases and legal
justification for the assailed orders. From the Return, the sheriff certified that "effort
to serve the summons personally xxx were made, but the same were ineffectual
and unavailing xxx.
and upholding the trial courts finding that there was a substantial compliance with
the rules that allowed the substituted service.
Furthermore, the CA ruled:
Anent the issue raised by petitioners that "Abante Tonite is neither a natural or
juridical person who may be a party in a civil case," and therefore the case against
it must be dismissed and/or dropped, is untenable.
The respondent Judge, in denying petitioners motion for reconsideration, held that:
xxxx
Abante Tonites newspapers are circulated nationwide, showing ostensibly its being
a corporate entity, thus the doctrine of corporation by estoppel may appropriately
apply.
An unincorporated association, which represents itself to be a corporation, will be
estopped from denying its corporate capacity in a suit against it by a third person
who relies in good faith on such representation.
There being no grave abuse of discretion committed by the respondent Judge in the
exercise of his jurisdiction, the relief of prohibition is also unavailable.
WHEREFORE, the instant petition is DENIED. The assailed Orders of respondent
Judge are AFFIRMED.
SO ORDERED.9
On January 13, 2003, the CA denied petitioners motion for reconsideration. 10
Issues
Petitioners hereby submit that:
1. THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN HOLDING THAT
THE TRIAL COURT ACQUIRED JURISDICTION OVER HEREIN PETITIONERS.
2. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR BY SUSTAINING
THE INCLUSION OF ABANTE TONITE AS PARTY IN THE INSTANT CASE. 11
Ruling

The petition for review lacks merit.

Jurisdiction over the person, or jurisdiction in personam the power of the court to
render a personal judgment or to subject the parties in a particular action to the
judgment and other rulings rendered in the action is an element of due process
that is essential in all actions, civil as well as criminal, except in actions in rem or
quasi in rem. Jurisdiction over the defendantin an action in rem or quasi in rem is
not required, and the court acquires jurisdiction over an actionas long as it acquires
jurisdiction over the resthat is thesubject matter of the action. The purpose of
summons in such action is not the acquisition of jurisdiction over the defendant but
mainly to satisfy the constitutional requirement of due process. 12
The distinctions that need to be perceived between an action in personam, on the
one hand, and an action inrem or quasi in rem, on the other hand, are aptly
delineated in Domagas v. Jensen,13 thusly:
The settled rule is that the aim and object of an action determine its character.
Whether a proceeding is in rem, or in personam, or quasi in rem for that matter, is
determined by its nature and purpose, and by these only. A proceeding in personam
is a proceeding to enforce personal rights and obligations brought against the
person and is based on the jurisdiction of the person, although it may involve his
right to, or the exercise of ownership of, specific property, or seek to compel him to
control or dispose of it in accordance with the mandate of the court. The purpose of
a proceeding in personam is to impose, through the judgment of a court, some
responsibility or liability directly upon the person of the defendant. Of this character
are suits to compel a defendant to specifically perform some act or actions to fasten
a pecuniary liability on him. An action in personam is said to be one which has for
its object a judgment against the person, as distinguished from a judgment against
the property to determine its state. It has been held that an action in personam is a
proceeding to enforce personal rights or obligations; such action is brought against
the person. As far as suits for injunctive relief are concerned, it is well-settled that it
is an injunctive act in personam. In Combs v. Combs, the appellate court held that
proceedings to enforce personal rights and obligations and in which personal
judgments are rendered adjusting the rights and obligations between the affected
parties is in personam. Actions for recovery of real property are in personam.
On the other hand, a proceeding quasi in rem is one brought against persons
seeking to subject the property of such persons to the discharge of the claims
assailed. In an action quasi in rem, an individual is named as defendant and the
purpose of the proceeding is to subject his interests therein to the obligation or loan
burdening the property. Actions quasi in rem deal with the status, ownership or
liability of a particular property but which are intended to operate on these
questions only as between the particular parties to the proceedings and not to
ascertain or cut off the rights or interests of all possible claimants. The judgments
therein are binding only upon the parties who joined in the action.
As a rule, Philippine courts cannot try any case against a defendant who does not
reside and is not found in the Philippines because of the impossibility of acquiring
jurisdiction over his person unless he voluntarily appears in court; but when the
case is an action in rem or quasi in rem enumerated in Section 15, Rule 14 of the

Rules of Court, Philippine courts have jurisdiction to hear and decide the case
because they have jurisdiction over the res, and jurisdiction over the person of the
non-resident defendant is not essential. In the latter instance, extraterritorial service
of summons can be made upon the defendant, and such extraterritorial service of
summons is not for the purpose of vesting the court with jurisdiction, but for the
purpose of complying with the requirements of fair play or due process, so that the
defendant will be informed of the pendency of the action against him and the
possibility that property in the Philippines belonging to him or in which he has an
interest may be subjected to a judgment in favor of the plaintiff, and he can thereby
take steps to protect his interest if he is so minded. On the other hand, when the
defendant in an action in personam does not reside and is not found in the
Philippines, our courts cannot try the case against him because of the impossibility
of acquiring jurisdiction over his person unless he voluntarily appears in court. 14
As the initiating party, the plaintiff in a civil action voluntarily submits himself to the
jurisdiction of the court by the act of filing the initiatory pleading. As to the
defendant, the court acquires jurisdiction over his person either by the proper
service of the summons, or by a voluntary appearance in the action. 15
Upon the filing of the complaint and the payment of the requisite legal fees, the
clerk of court forthwith issues the corresponding summons to the defendant. 16 The
summons is directed to the defendant and signed by the clerk of court under seal. It
contains the name of the court and the names of the parties to the action; a
direction that the defendant answers within the time fixed by the Rules of Court;
and a notice that unless the defendant so answers, the plaintiff will take judgment
by default and may be granted the relief applied for. 17 To be attached to the original
copy of the summons and all copies thereof is a copy of the complaint (and its
attachments, if any) and the order, if any, for the appointment of a guardian ad
litem.18
The significance of the proper service of the summons on the defendant in an action
in personam cannot be overemphasized. The service of the summons fulfills two
fundamental objectives, namely: (a) to vest in the court jurisdiction over the person
of the defendant; and (b) to afford to the defendant the opportunity to be heard on
the claim brought against him.19 As to the former, when jurisdiction in personam is
not acquired in a civil action through the proper service of the summons or upon a
valid waiver of such proper service, the ensuing trial and judgment are void. 20 If the
defendant knowingly does an act inconsistent with the right to object to the lack of
personal jurisdiction as to him, like voluntarily appearing in the action, he is deemed
to have submitted himself to the jurisdiction of the court. 21 As to the latter, the
essence of due process lies in the reasonable opportunity to be heard and to submit
any evidence the defendant may have in support of his defense. With the proper
service of the summons being intended to afford to him the opportunity to be heard
on the claim against him, he may also waive the process. 21 In other words,
compliance with the rules regarding the service of the summons is as much an issue
of due process as it is of jurisdiction.23
Under the Rules of Court, the service of the summons should firstly be effected on
the defendant himself whenever practicable. Such personal service consists either
in handing a copy of the summons to the defendant in person, or, if the defendant

refuses to receive and sign for it, in tendering it to him. 24 The rule on personal
service is to be rigidly enforced in order to ensure the realization of the two
fundamental objectives earlier mentioned. If, for justifiable reasons, the defendant
cannot be served in person within a reasonable time, the service of the summons
may then be effected either (a) by leaving a copy of the summons at his residence
with some person of suitable age and discretion then residing therein, or (b) by
leaving the copy at his office or regular place of business with some competent
person in charge thereof.25 The latter mode of service is known as substituted
service because the service of the summons on the defendant is made through his
substitute.
It is no longer debatable that the statutory requirements of substituted service must
be followed strictly, faithfully and fully, and any substituted service other than that
authorized by statute is considered ineffective. 26 This is because substituted service,
being in derogation of the usual method of service, is extraordinary in character and
may be used only as prescribed and in the circumstances authorized by
statute.27 Only when the defendant cannot be served personally within a reasonable
time may substituted service be resorted to. Hence, the impossibility of prompt
personal service should be shown by stating the efforts made to find the defendant
himself and the fact that such efforts failed, which statement should be found in the
proof of service or sheriffs return. 28Nonetheless, the requisite showing of the
impossibility of prompt personal service as basis for resorting to substituted service
may be waived by the defendant either expressly or impliedly. 29
There is no question that Sheriff Medina twice attempted to serve the summons
upon each of petitioners in person at their office address, the first in the morning of
September 18, 2000 and the second in the afternoon of the same date. Each
attempt failed because Macasaet and Quijano were "always out and not available"
and the other petitioners were "always roving outside and gathering news." After
Medina learned from those present in the office address on his second attempt that
there was no likelihood of any of petitioners going to the office during the business
hours of that or any other day, he concluded that further attempts to serve them in
person within a reasonable time would be futile. The circumstances fully warranted
his conclusion. He was not expected or required as the serving officer to effect
personal service by all means and at all times, considering that he was expressly
authorized to resort to substituted service should he be unable to effect the
personal service within a reasonable time. In that regard, what was a reasonable
time was dependent on the circumstances obtaining. While we are strict in insisting
on personal service on the defendant, we do not cling to such strictness should the
circumstances already justify substituted service instead. It is the spirit of the
procedural rules, not their letter, that governs. 30
In reality, petitioners insistence on personal service by the serving officer was
demonstrably superfluous. They had actually received the summonses served
through their substitutes, as borne out by their filing of several pleadings in the RTC,
including an answer with compulsory counterclaim ad cautelam and a pre-trial brief
ad cautelam. They had also availed themselves of the modes of discovery available
under the Rules of Court. Such acts evinced their voluntary appearance in the
action.

Nor can we sustain petitioners contention that Abante Tonite could not be sued as a
defendant due to its not being either a natural or a juridical person. In rejecting their
contention, the CA categorized Abante Tonite as a corporation by estoppel as the
result of its having represented itself to the reading public as a corporation despite
its not being incorporated. Thereby, the CA concluded that the RTC did not gravely
abuse its discretion in holding that the non-incorporation of Abante Tonite with the
Securities and Exchange Commission was of no consequence, for, otherwise,
whoever of the public who would suffer any damage from the publication of articles
in the pages of its tabloids would be left without recourse. We cannot disagree with
the CA, considering that the editorial box of the daily tabloid disclosed that basis,
nothing in the box indicated that Monica Publishing Corporation had owned Abante
Tonite.
WHEREFORE, the Court AFFIRMS the decision promulgated on March 8, 2002; and
ORDERS petitioners to pay the costs of suit.
SO ORDERED.
LUCAS P. BERSAMIN
Associate Justice

Sec. 7. Substituted service

Planters Development Bank v. Chandumal, G.R. No. 195619,
September 5, 2012 (Supra.)
Macasaet v. Co, G.R. No. 156759, June 5, 2013 (Supra.)
Gentle Supreme v. Consulta, G.R. No. 183182, September 1, 2010
SECOND DIVISION
GENTLE SUPREME
PHILIPPINES, INC.,
Petitioner,
- versus -

RICARDO F. CONSULTA,
Respondent.

G.R. No. 183182

Present:
CARPIO, J., Chairperson,
NACHURA,
BERSAMIN,*
ABAD, and
MENDOZA, JJ.
Promulgated:

September 1, 2010
x --------------------------------------------------------------------------------------- x
ABAD, J.:
This case is about the service of summons on a corporation and its officers,
allegedly done improperly, resulting in the failure of the trial court to acquire
jurisdiction over the persons of the defendants and in the nullity of its proceedings.
The Facts and the Case
On September 29, 2005 petitioner Gentle Supreme Philippines, Inc. (GSP)
filed a collection case with application for a writ of preliminary attachment [1] against
Consar Trading Corporation (CTC), its president, respondent Ricardo Consulta
(Consulta), and its vice-president, Norberto Sarayba (Sarayba) before the Regional
Trial Court (RTC) of Pasig City, Branch 68, in Civil Case 70544. GSP alleged that CTC,
through Consulta and Sarayba, bought certain merchandise from it but refused to
pay for them.
Before summons could be served, the RTC issued a writ of preliminary
attachment[2] against the defendants after GSP filed the required bond.
[3]
Afterwards, the RTC issued summons against the defendants.
On October 11, 2005 as the sheriff failed to serve the summons and copies of
the complaint on any of CTCs authorized officers as well as on Consulta and
Sarayba, he left copies of such documents with Agnes Canave (Canave) who,
according to the sheriffs return, [4] was Saraybas secretary and an authorized
representative of both Sarayba and Consulta.
None of the defendants filed an answer to the complaint. Thus, upon motion,
on November 18, 2005 the RTC declared them in default [6] and proceeded to hear
GSPs evidence ex parte. Meanwhile, the sheriff attached a registered
land[7] belonging to Consulta.[8] After trial, the RTC ruled that having defrauded GSP,
defendants CTC, Consulta, and Sarayba were solidarily liable for the value of the
supplied goods plus attorneys fees and costs of the suit. [9] And upon motion, on
January 25, 2006 the RTC issued a writ of execution against the defendants. [10]
[5]

On June 9, 2006 respondent Consulta filed a petition for annulment of the RTC
decision before the Court of Appeals (CA) in CA-G.R. SP 94817. [11] He alleged 1) that
he found out about the case against him only on May 19, 2006 when he received a
notice of sale on execution of his house and lot in Marikina City; and 2) that he was
not properly served with summons because, although his address stated in the
complaint was his regular place of business, Canave, who received the summons,
was not in charge of the matter.
Consulta invoked the Courts ruling in Keister v. Judge Navarro,[12] that the
rule (on substituted service) presupposes that such relation of confidence exists
between the person with whom the copy is left and the defendant and, therefore,

assumes that such person will deliver the process to defendant or in some way give
him notice thereof. Consulta claimed that Canave was only Saraybas
secretary. Thus, neither the sheriff nor the RTC had basis for assuming that Canave
would find a way to let Consulta know of the pending case against him. Consulta
concluded that the RTC did not acquire jurisdiction over his person.
In its answer to the petition,[13] GSP insisted on the validity of the service of
summons on Consulta. Also, assuming that summons was not properly served,
Consultas ignorance was contrived. His knowledge of the case against him may be
proved by the following circumstances:
1.
On February 25, 2006 CTC faxed GSP a letter proposing a schedule of
payment for the adjudged amounts in the RTC decision. Admittedly, it was only
Sarayba who signed the letter. By the rules of evidence, however, the act and
declaration of a joint debtor is binding upon a party. [14] This means that Saraybas
knowledge and admission of the case and the defendants corresponding liability to
GSP was binding on Consulta. Besides, Consulta, together with Sarayba, signed the
postdated checks as partial payment of CTCs obligation to GSP;
2.
The RTCs sheriff garnished CTCs bank accounts on the day the
summons was served. As company president, it was incredulous that Consulta was
unaware of the garnishment and the reason for it;
3.
Consulta admitted that CTC was properly served with summons
through Canave. By that statement, it can be deduced that Canave was in charge
of the office, Consultas regular place of business, signifying proper service of the
summons on him.
On March 18, 2008 the CA rendered a decision, holding that the RTC sheriff
did not properly serve summons on all the defendants. It ordered the remand of the
case to the trial court, enjoining it to take steps to insure the valid service of
summons on them.[15]
Respondent Consulta filed a motion for partial reconsideration of the decision
but the CA denied it for being late. Petitioner GSP also filed a motion for
reconsideration[16] which the CA denied on May 29, 2008 for lack of merit, [17] hence,
this petition.
The Issue Presented
The sole issue presented in this case is whether the CA correctly ruled that
summons had not been properly served on respondent Consulta with the result that
the RTC did not acquire jurisdiction over his person and that the judgment against
him was void.
The Ruling of the Court
First of all, only Consulta brought an action for the annulment of the RTC
decision. CTC and Sarayba did not. Consequently, the CA had no business deciding

whether or not the latter two were properly served with summons. The right to due
process must be personally invoked and its circumstances specifically alleged by
the party claiming to have been denied such. [18]
Second, there is valid substituted service of summons on Consulta at his
place of business with some competent person in charge thereof. According to the
sheriffs return, which is prima facie evidence of the facts it states,[19] he served a
copy of the complaint on Canave, an authorized representative of both Consulta and
Sarayba.[20] Besides Consultas bare allegations, he did not present evidence to
rebut the presumption of regularity on the manner that the sheriff performed his
official duty.[21] Nor did Consulta present clear and convincing evidence that Canave
was not competent to receive the summons and the attached documents for him.
In fact, in his petition for annulment of judgment, Consulta said that CTC had
been apprised of the civil action through Canave. [22] In other words, Canave was a
person charged with authority to receive court documents for the company as well
as its officers who held office in that company. Absent contrary evidence, the
veracity of the returns content and its effectiveness stand.
Further, this Court has ruled that it is not necessary that the person in
charge of the defendants regular place of business be specifically authorized to
receive the summons. It is enough that he appears to be in charge. [23] In this case,
Canave, a secretary whose job description necessarily includes receiving documents
and other correspondence, would have the semblance of authority to accept the
court documents.
It is true that this Court emphasized the importance of strict and faithful
compliance in effecting substituted service. [24] It must, however, be reiterated that
when the rigid application of rules becomes a conduit for escaping ones
responsibility, the Court will intervene to set things right according to the rules. [25]
Further, Consulta does not deny a) that summons had been properly served
on Sarayba, his vice-president, through Canave at the companys office; b) that the
summons on him was served on the same occasion also through Canave; c) that the
sheriff had succeeded in garnishing his companys bank deposits; and d) that his
company subsequently made an offer to settle the judgment against it. The Court is
not dumb as to believe that Consulta became aware of the suit only when the
sheriff served a notice of execution sale covering his house and lot.
WHEREFORE, premises considered, the Court REVERSES the Court of
Appeals Decision in CA-G.R. SP 94817 dated March 17, 2008 and REINSTATES the
Regional Trial Courts Decision in Civil Case 70544 dated December 14, 2005.
SO ORDERED.
ROBERTO A. ABAD
Associate Justice

Leah Palma v. Hon. Galvez, G.R. No. 165273, March 10, 2010

LEAH PALMA,

G.R. No. 165273

Petitioner,
Present:

- versus -

HON. DANILO P. GALVEZ, in his

capacity as PRESIDING JUDGE of the
REGIONAL TRIAL COURT OF ILOILO
CITY, BRANCH 24; and PSYCHE
ELENA AGUDO,
Respondents.

CORONA, J., Chairperson,

VELASCO, JR.,
NACHURA,
PERALTA, and
MENDOZA, JJ.
Promulgated:
March 10, 2010

x-----------------------------------------------------------------------------------------x
DECISION
PERALTA, J.:
Assailed in this petition for certiorari under Rule 65 of the Rules of Court are
the Orders dated May 7, 2004[1] and July 21, 2004[2] of the Regional Trial Court (RTC)
of Iloilo City, Branch 24, granting the motion to dismiss filed by private respondent
Psyche Elena Agudo and denying reconsideration thereof, respectively.
On July 28, 2003, petitioner Leah Palma filed with the RTC an action for
damages against the Philippine Heart Center (PHC), Dr. Danilo Giron and Dr.
Bernadette O. Cruz, alleging that the defendants committed professional fault,
negligence and omission for having removed her right ovary against her will, and
losing the same and the tissues extracted from her during the surgery; and that
although the specimens were subsequently found, petitioner was doubtful and
uncertain that the same was hers as the label therein pertained that of somebody
else. Defendants filed their respective Answers. Petitioner subsequently filed a
Motion for Leave to Admit Amended Complaint, praying for the inclusion of
additional defendants who were all nurses at the PHC, namely, Karla Reyes, Myra

Mangaser and herein private respondent Agudo. Thus, summons were subsequently
issued to them.
On February 17, 2004, the RTC's process server submitted his return of
summons stating that the alias summons, together with a copy of the amended
complaint and its annexes, were served upon private respondent thru her husband
Alfredo Agudo, who received and signed the same as private respondent was out of
the country.[3]
On March 1, 2004, counsel of private respondent filed a Notice of Appearance
and a Motion for Extension of Time to File Answer [4] stating that he was just engaged
by private respondent's husband as she was out of the country and the Answer was
already due.
On March 15, 2004, private respondent's counsel filed a Motion for Another
Extension of Time to File Answer,[5] and stating that while the draft answer was
already finished, the same would be sent to private respondent for her
clarification/verification before the Philippine Consulate in Ireland; thus, the counsel
prayed for another 20 days to file the Answer.
On March 30, 2004, private respondent filed a Motion to Dismiss [6] on the
ground that the RTC had not acquired jurisdiction over her as she was not properly
served with summons, since she was temporarily out of the country; that service of
summons on her should conform to Section 16, Rule 14 of the Rules of
Court. Petitioner filed her Opposition [7] to the motion to dismiss, arguing that a
substituted service of summons on private respondent's husband was valid and
binding on her; that service of summons under Section 16, Rule 14 was not
exclusive and may be effected by other modes of service, i.e., by personal or
substituted service. Private respondent filed a Comment[8] on petitioner's
Opposition, and petitioner filed a Reply[9] thereto.
On May 7, 2004, the RTC issued its assailed Order granting private
respondent's motion to dismiss. It found that while the summons was served at
private respondent's house and received by respondent's husband, such service did
not qualify as a valid service of summons on her as she was out of the country at
the time the summons was served, thus, she was not personally served a summons;
and even granting that she knew that a complaint was filed against her,
nevertheless, the court did not acquire jurisdiction over her person as she was not
validly served with summons; that substituted service could not be resorted to since
it was established that private respondent was out of the country, thus, Section 16,
Rule 14 provides for the service of summons on her by publication.
Petitioner filed a motion for reconsideration, which the RTC denied in its Order
dated July 21, 2004.
Petitioner is now before us alleging that the public respondent committed a
grave abuse of discretion amounting to lack or excess of jurisdiction when he ruled
that:

I. Substituted service of summons upon private respondent, a

defendant residing in the Philippines but temporarily outside the
country is invalid;
II. Section 16, Rule 14, of the 1997 Rules of Civil Procedure limits
the mode of service of summons upon a defendant residing in the
Philippines, but temporarily outside the country, exclusively to
extraterritorial service of summons under section 15 of the same rule;
III. In not ruling that by filing two (2) motions for extension of
time to file Answer, private respondent had voluntarily submitted
herself to the jurisdiction of respondent court, pursuant to Section 20,
Rule 14 of the 1997 Rules of Civil Procedure, hence, equivalent to
having been served with summons;
IV. The cases cited in his challenged Order of May 7, 2004
constitute stare decisis despite his own admission that the factual
landscape in those decided cases are entirely different from those in
this case.[10]
Petitioner claims that the RTC committed a grave abuse of discretion in ruling
that Section 16, Rule 14, limits the service of summons upon the defendantresident who is temporarily out of the country exclusively by means of
extraterritorial service, i.e., by personal service or by publication, pursuant to
Section 15 of the same Rule. Petitioner further argues that in filing two motions for
extension of time to file answer, private respondent voluntarily submitted to the
jurisdiction of the court.
In her Comment, private respondent claims that petitioner's certiorari under
Rule 65 is not the proper remedy but a petition for review under Rule 45, since the
RTC ruling cannot be considered as having been issued with grave abuse of
discretion; that the petition was not properly verified because while the verification
was dated September 15, 2004, the petition was dated September 30, 2004. She
insists that since she was out of the country at the time the service of summons
was made, such service should be governed by Section 16, in relation to Section 15,
Rule 14 of the Rules of Court; that there was no voluntary appearance on her part
when her counsel filed two motions for extension of time to file answer, since she
filed her motion to dismiss on the ground of lack of jurisdiction within the period
provided under Section 1, Rule 16 of the Rules of Court.
In her Reply, petitioner claims that the draft of the petition and the verification
and certification against forum shopping were sent to her for her signature earlier
than the date of the finalized petition, since the petition could not be filed without
her signed verification. Petitioner avers that when private respondent filed her two
motions for extension of time to file answer, no special appearance was made to
challenge the validity of the service of summons on her.
The parties subsequently filed their respective memoranda as required.
We shall first resolve the procedural issues raised by private respondent.

Private respondent's claim that the petition for certiorari under Rule 65 is a
wrong remedy thus the petition should be dismissed, is not persuasive. A petition
for certiorari is proper when any tribunal, board or officer exercising judicial or
quasi-judicial functions has acted without or in excess of jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction and there is no
appeal, or any plain, speedy, and adequate remedy at law. [11] There is grave abuse
of discretion when public respondent acts in a capricious or whimsical manner in
the exercise of its judgment as to be equivalent to lack of jurisdiction.
Section 1, Rule 41 of the 1997 Rules of Civil Procedure states that an
appeal may be taken only from a final order that completely disposes of the
case; that no appeal may be taken from (a) an order denying a motion for new trial
or reconsideration; (b) an order denying a petition for relief or any similar motion
seeking relief from judgment; (c) an interlocutory order; (d) an order disallowing or
dismissing an appeal; (e) an order denying a motion to set aside a judgment by
consent, confession or compromise on the ground of fraud, mistake or duress, or
any other ground vitiating consent; (f) an order of execution; (g) a judgment or
final order for or against one or more of several parties or in separate
claims, counterclaims, cross-claims and third-party complaints, while the
main case is pending, unless the court allows an appeal therefrom; or (h)
an order dismissing an action without prejudice. In all the above instances where
the judgment or final order is not appealable, the aggrieved party may file an
appropriate special civil action for certiorari under Rule 65.
In this case, the RTC Order granting the motion to dismiss filed by private
respondent is a final order because it terminates the proceedings against her, but
it falls within exception (g) of the Rule since the case involves several defendants,
and the complaint for damages against these defendants is still pending. [12] Since
there is no appeal, or any plain, speedy, and adequate remedy in law, the remedy of
a special civil action for certiorari is proper as there is a need to promptly relieve the
aggrieved party from the injurious effects of the acts of an inferior court or tribunal.
[13]

Anent private respondent's allegation that the petition was not properly
verified, we find the same to be devoid of merit. The purpose of requiring a
verification is to secure an assurance that the allegations of the petition have been
made in good faith, or are true and correct, not merely speculative. [14] In this
instance, petitioner attached a verification to her petition although dated earlier
than the filing of her petition. Petitioner explains that since a draft of the petition
and the verification were earlier sent to her in New York for her signature, the
verification was earlier dated than the petition for certiorari filed with us. We accept
such explanation. While Section 1, Rule 65 requires that the petition for certiorari be

verified, this is not an absolute necessity where the material facts alleged are a
matter of record and the questions raised are mainly of law. [15] In this case, the
issue raised is purely of law.

Now on the merits, the issue for resolution is whether there was a valid
service of summons on private respondent.

In civil cases, the trial court acquires jurisdiction over the person of the
defendant either by the service of summons or by the latters voluntary appearance
and submission to the authority of the former. [16] Private respondent was a Filipino
resident who was temporarily out of the Philippines at the time of the service of
summons; thus, service of summons on her is governed by Section 16, Rule 14 of
the Rules of Court, which provides:

Sec. 16. Residents temporarily out of the Philippines.

When an action is commenced against a defendant who ordinarily
resides within the Philippines, but who is temporarily out of it,
service may, by leave of court, be also effected out of the Philippines,
as under the preceding section. (Emphasis supplied)

The preceding section referred to in the above provision is Section 15, which
speaks of extraterritorial service, thus:

SEC. 15. Extraterritorial service. When the defendant does not

reside and is not found in the Philippines, and the action affects the
personal status of the plaintiff or relates to, or the subject of which is,
property within the Philippines, in which the defendant has or claims a

lien or interest, actual or contingent, or in which the relief demanded

consists, wholly or in part, in excluding the defendant from any interest
therein, or the property of the defendant has been attached within the
Philippines, service may, by leave of court, be effected out of the
Philippines by personal service as under section 6; or by publication in a
newspaper of general circulation in such places and for such time as the
court may order, in which case a copy of the summons and order of the
court shall be sent by registered mail to the last known address of the
defendant, or in any other manner the court may deem sufficient. Any
order granting such leave shall specify a reasonable time, which shall
not be less than sixty (60) days after notice, within which the defendant
must answer.

The RTC found that since private respondent was abroad at the time of the
service of summons, she was a resident who was temporarily out of the country;
thus, service of summons may be made only by publication.

We do not agree.

In Montefalcon v. Vasquez,[17] we said that because Section 16 of

Rule 14
uses the words may and also, it is not mandatory. Other methods of service of
summons allowed under the Rules may also be availed of by the serving officer on a
defendant-resident who is temporarily out of the Philippines. Thus, if a resident
defendant is temporarily out of the country, any of the following modes of service
may be resorted to: (1) substituted service set forth in section 7 ( formerly Section
8), Rule 14; (2) personal service outside the country, with leave of court; (3) service
by publication, also with leave of court; or (4) in any other manner the court may
deem sufficient.[18]

In Montalban v. Maximo,[19] we held that substituted service of summons

under the present Section 7, Rule 14 of the Rules of Court in a suit in
personam against residents of the Philippines temporarily absent therefrom is the
normal method of service of summons that will confer jurisdiction on the court over

such defendant. In the same case, we expounded on the rationale in providing for
substituted service as the normal mode of service for residents temporarily out of
the Philippines.

x x x A man temporarily absent from this country leaves a definite

place of residence, a dwelling where he lives, a local base, so to speak,
to which any inquiry about him may be directed and where he is bound
to return. Where one temporarily absents himself, he leaves his affairs
in the hands of one who may be reasonably expected to act in his place
and stead; to do all that is necessary to protect his interests; and to
communicate with him from time to time any incident of importance
that may affect him or his business or his affairs. It is usual for such a
man to leave at his home or with his business associates information as
to where he may be contacted in the event a question that affects him
crops up. If he does not do what is expected of him, and a case comes
up in court against him, he cannot just raise his voice and say that he is
not subject to the processes of our courts. He cannot stop a suit from
being filed against him upon a claim that he cannot be summoned at
his dwelling house or residence or his office or regular place of
business.

Not that he cannot be reached within a reasonable time to

enable him to contest a suit against him. There are now advanced
facilities of communication. Long distance telephone calls and
cablegrams make it easy for one he left behind to communicate with
him.[20]

Considering that private respondent was temporarily out of the country, the
summons and complaint may be validly served on her through substituted service
under Section 7, Rule 14 of the Rules of Court which reads:

SEC. 7. Substituted service. If, for justifiable causes, the

defendant cannot be served within a reasonable time as provided in

the preceding section, service may be effected (a) by leaving copies of

the summons at the defendants residence with some person of
suitable age and discretion then residing therein, or (b) by leaving the
copies at defendants office or regular place of business with some
competent person in charge thereof.

We have held that a dwelling, house or residence refers to the place where the
person named in the summons is living at the time when the service is made, even
though he may be temporarily out of the country at the time. [21] It is, thus, the
service of the summons intended for the defendant that must be left with the
person of suitable age and discretion residing in the house of the
defendant. Compliance with the rules regarding the service of summons is as
important as the issue of due process as that of jurisdiction. [22]
Section 7 also designates the persons with whom copies of the process may
be left. The rule presupposes that such a relation of confidence exists between the
person with whom the copy is left and the defendant and, therefore, assumes that
such person will deliver the process to defendant or in some way give him notice
thereof.[23]
In this case, the Sheriff's Return stated that private respondent was out of the
country; thus, the service of summons was made at her residence with her
husband, Alfredo P. Agudo, acknowledging receipt thereof. Alfredo was presumably
of suitable age and discretion, who was residing in that place and, therefore, was
competent to receive the summons on private respondent's behalf.
Notably, private respondent makes no issue as to the fact that the place
where the summons was served was her residence, though she was temporarily out
of the country at that time, and that Alfredo is her husband. In fact, in the notice of
appearance and motion for extension of time to file answer submitted by private
respondent's counsel, he confirmed the Sheriff's Return by stating that private
respondent was out of the country and that his service was engaged by
respondent's husband. In his motion for another extension of time to file answer,
private respondent's counsel stated that a draft of the answer had already been
prepared, which would be submitted to private respondent, who was in Ireland for
her clarification and/or verification before the Philippine Consulate there. These
statements establish the fact that private respondent had knowledge of the case
filed against her, and that her husband had told her about the case as Alfredo even
engaged the services of her counsel.
In addition, we agree with petitioner that the RTC had indeed acquired
jurisdiction over the person of private respondent when the latter's counsel entered
his appearance on private respondent's behalf, without qualification and without
questioning the propriety of the service of summons, and even filed two Motions for

Extension of Time to File Answer. In effect, private respondent, through counsel, had
already invoked the RTCs jurisdiction over her person by praying that the motions
for extension of time to file answer be granted. We have held that the filing of
motions seeking affirmative relief, such as, to admit answer, for additional time to
file answer, for reconsideration of a default judgment, and to lift order of default
with motion for reconsideration, are considered voluntary submission to the
jurisdiction of the court.[24] When private respondent earlier invoked the jurisdiction
of the RTC to secure affirmative relief in her motions for additional time to file
answer, she voluntarily submitted to the jurisdiction of the RTC and is thereby
estopped from asserting otherwise.[25]
Considering the foregoing, we find that the RTC committed a grave abuse of
discretion amounting to excess of jurisdiction in issuing its assailed Orders.

WHEREFORE, the petition is GRANTED. The Orders dated May 7,

2004 and July 21, 2004 of the Regional Trial Court ofIloilo City, Branch 24, are
hereby SET ASIDE. Private respondent is DIRECTED to file her Answer within the
reglementary period from receipt of this decision.
SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

Sagana v. Francisco, G.R. No. 161952, October 2, 2009

SECOND DIVISION
ARNEL SAGANA,
Petitioner,

G.R. No.161952
Present:

- versus -

RICHARD A. FRANCISCO,
Respondent, **

YNARES-SANTIAGO,* J.
CARPIO MORALES,
Acting Chairperson,
BRION,
DEL CASTILLO, and
ABAD, JJ.
Promulgated:
October 2, 2009

x-----------------------------------------------------------x
DECISION
DEL CASTILLO, J.:
It is, at times, difficult to reconcile the letter of the law with its spirit. Thus, it is
not altogether surprising that two competing values are usually discernable in every
controversy the principle of dura lex sed lex versus the notion that technicalities
should yield to broader interests of justice. In our rules of procedure, for instance,
judges often struggle to find a balance between due process considerations and a
liberal construction to secure a just disposition of every action. In such cases,
where a measure of discretion is permitted, courts must tread carefully, with due
consideration of the factual milieu and legal principles involved. In so doing, we
take steps - sometimes tentative, sometimes bold - to apply prior experience and
precedent towards an eventual just resolution. It is these principles that animate
our decision in the instant case.
Assailed in this Petition for Review on Certiorari[1] under Rule 45 of the Rules of
Court is the 13 August 2003 Decision [2]of the Court of Appeals in CA-G.R. CV No.
66412 which reversed and set aside the 20 September 1999 Decision [3] of the
Regional Trial Court of Quezon City, Branch 99 in Civil Case No. Q-94-22445 and
held that there was no valid service of summons to respondent Richard A. Francisco.
On 13 December 1994, petitioner Arnel Sagana filed a Complaint [4] for
Damages before the Regional Trial Court of Quezon City docketed as Civil Case No.
Q-94-22445 and raffled to Branch 99. Petitioner alleged that on 20 November 1992,
respondent Richard A. Francisco, with intent to kill and without justifiable reason,
shot him with a gun hitting him on the right thigh. As a result, petitioner incurred
medical expenses and suffered wounded feelings, and was compelled to engage the
services of a lawyer, due to respondents refusal to pay said expenses. Petitioner
thus demanded payment of P300,000.00 as actual damages,P150,000.00 as moral
damages, P50,000.00, exemplary damages, and P50,000.00 as attorneys fees.
On 31 January 1995, process server Manuel S. Panlasigui attempted to serve
summons at respondents address at No. 36 Sampaguita St., Baesa, Quezon
City but was unsuccessful. In his Servers Return,[5] Panlasigui stated that he tried
to personally serve the summons to respondent at his given address at No. 36
Sampaguita St., Baesa, Quezon City. However, the occupant of that house, who
refused to give his identity, told him that respondent is unknown at said
address. Panlasigui also declared that diligent efforts were exerted to serve the
summons but these proved to be futile.[6] Subsequently, the trial court attempted to
serve summons to respondents office through registered mail on 9 February
1995. However, despite three notices, respondent failed to pick up the summons.
On 30 June 1995, the trial court dismissed the case on account of petitioners
lack of interest to prosecute.[7] It noted that since the filing of the Servers Return

on 8 February 1995, petitioner did not take any action thus indicating lack of
interest to prosecute the case.
Petitioner filed a Motion for Reconsideration [8] stating that after the Servers
Return was filed, he exerted efforts to locate the respondent, and it was confirmed
that respondent indeed lived at No. 36 Sampaguita St., Baesa, Quezon City. On 4
August 1995, the trial court granted petitioners motion for reconsideration,
conditioned upon the service of summons on the respondent within 10 days from
receipt of the Order.[9]
Thus, on 25 August 1995, Process Server Jarvis Iconar again tried to serve the
summons at the address of the respondent but no avail. According to Iconars
handwritten notation on the summons, [10] he was informed by Michael Francisco,
respondents brother, that respondent no longer lived at said address. However, he
left a copy of the summons to Michael Francisco.[11]
On 10 November 1995, petitioner filed a Motion to Declare Defendant in
Default,[12] alleging that despite service of summons, respondent still failed to file an
Answer. On 16 February 1996, the trial court issued an Order [13] finding that the
summons was validly served to respondent through his brother, Michael. It thus
declared respondent in default and allowed petitioner to present his evidence ex
parte. Nonetheless, copies of all pleadings and court documents were furnished to
respondent at No. 36 Sampaguita St.
In the meantime, on 1 March 1996, Michael Francisco, through his counsel,
Atty. Bernardo Q. Cuaresma, filed a Manifestation and Motion [14] denying that he
received the summons or that he was authorized to receive summons on behalf of
his brother, respondent Richard Francisco. He alleged that the substituted service
did not comply with Section 8, Rule 14 of the Rules of Court, since summons was
not served at defendants residence or left with any person who was authorized to
receive it on behalf of the defendant. Michael Francisco also prayed that his name
be stricken off the records as having received a copy of the summons.
In the Affidavit of Merit[15] submitted together with the Manifestation and
Motion, Michael Francisco asserted that he was 19 years of age; that his brother,
herein respondent Richard Francisco, had left their residence in March 1993; and
that respondent would just write his family without informing them of his address, or
would just call by phone.
Thereafter, petitioner and movant Michael Francisco submitted their
respective Opposition, Reply, and Rejoinder. In his Rejoinder, petitioner attached a
copy of an Affidavit[16] prepared by respondent Richard A. Francisco dated 23
December 1992, where he declared himself a resident of No. 36 Sampaguita
St. Interestingly, the lawyer who notarized the affidavit for the respondent, Atty.
Bernardo Q. Cuaresma, was the same lawyer who represented respondents brother
before the trial court.
On 4 October 1996, the trial court issued an Order[17] denying Michael
Franciscos Manifestation and Motion for lack of merit, holding thus:

It should be considered that earlier, plaintiff had already sent

numerous pleadings to defendant at his last known address. As also
pointed out by [petitioner] in his Opposition, movant has not adduced
evidence, except his affidavit of merit, to impugn the service of
summons thru him. Movant herein also admits that defendant
communicates with him through telephone. Movant, therefore, being a
person of sufficient age and discretion, would be able, more likely than
not, to inform defendant of the fact that summons was sent to him by
the court.[18]
Having failed to file an answer or any responsive pleading, respondent was
declared in default and petitioner was allowed to present evidence ex parte. On 20
September 1999, the trial court rendered its Decision, [19] the dispositive portion of
which reads:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of plaintiff and hereby orders defendant to pay
plaintiff the amount of THIRTY FIVE THOUSAND PESOS (PhP35,000.00)
as and for actual damages, the amount of FIFTEEN THOUSAND PESOS
(PhP15,000.00) as and for moral damages, the amount of TEN
THOUSAND PESOS (PhP10,000.00) for exemplary damages and the
amount of TWENTY THOUSAND PESOS (PhP20,000.00) as attorneys
fees.
No further costs.
SO ORDERED.[20]
On 23 November 1999, respondent Richard A. Francisco filed a Notice of
Appeal, claiming that he received a copy of the trial courts Decision on 9 November
1999; that the same was contrary to the law, facts, and evidence, and praying that
his appeal be given due course.[21]
On 5 June 2000, the Court of Appeals directed the parties to file their
respective briefs, a copy of which was sent to respondent by registered mail at No.
36 Sampaguita St., Baesa, Quezon City.[22] In his Appellants brief, respondent
argued that:
I
THE COURT A QUO ERRED IN ASSUMING JURISDICTION OVER THE
PERSON OF THE DEFENDANT-APPELLANT DESPITE THE IRREGULARITY
OF THE SUBSTITUTED SERVICE OF SUMMONS BY THE COURT PROCESS
SERVER.
II
THE COURT A QUO ERRED IN AWARDING ACTUAL DAMAGES IN THE
AMOUNT OF THIRTY FIVE-THOUSAND PESOS (P35,000.00) TO THE
PLAINTIFF-APPELLEE ALTHOUGH ONLY SEVENTEEN THOUSAND PESOS
(P17,000.00) WAS DULY SUPPORTED BY RECEIPTS.

III
THE COURT A QUO LIKEWISE ERRED IN AWARDING UNREASONABLE
MORAL DAMAGES IN THE AMOUNT OF FIFTEEN THOUSAND PESOS
(P15,000.00); EXEMPLARY DAMAGES IN THE AMOUNT OF TEN
THOUSAND PESOS (P10,000.00); AND ATTORNEYS FEES IN THE
AMOUNT OF TWENTY THOUSAND PESOS (P20,000.00) DESPITE THE
FACT THAT THERE IS NO FACTUAL AND SUBSTANTIVE BASIS FOR ALL
THESE.[23]
On 15 August 2002, the Court of Appeals issued a Resolution [24] ordering the
parties to personally appear for the conduct of preliminary conference to consider
amicably settling the appeal, pursuant to Sec. 1(a), Rule 7 of the Revised Internal
Rules of the Court of Appeals and the Courts Resolution A.M. No. 02-2-17-SC dated
16 April 2002 regarding the Pilot Testing of Mediation in the Court of
Appeals. Respondent was furnished [25] a copy of this Resolution at his address
at No. 36 Sampaguita Street, Baesa,Quezon City. Per Delivery Receipt of the Court
of Appeals, the same was personally received by respondent on 23 August 2002.[26]
On 3 September 2002, respondent attended the preliminary conference;
however the parties failed to reach an amicable settlement. [27] Thus, on 13 August
2003, the Court of Appeals rendered the herein assailed Decision granting the
appeal and setting aside the Decision of the trial court. The appellate court held
that the service of summons was irregular and such irregularity nullified the
proceedings before the trial court. Since it did not acquire jurisdiction over the
person of the respondent, the trial courts decision was void.
In brief, the Court of Appeals found that there was no valid service of
summons for the following reasons:
1.

Except for the notation made by the process server on the summons, no proof
of service by way of a Process Servers Return was prepared;

2.

The process server failed to state the specific facts and circumstances that
would justify valid substituted service of summons, to wit: (a) the
impossibility of service of summons within a reasonable time, (b) the efforts
exerted to locate the respondent, and (c) it was served on a person of
sufficient age and discretion residing therein.

3.

Petitioner failed to prove that, at the time summons

respondent actually lived in No. 36 Sampaguita St.

was

served,

Petitioner filed a Motion for Reconsideration [28] where he alleged that

respondent did, in fact, reside at No. 36 Sampaguita St. To prove this assertion,
petitioner submitted the original copy of the envelope containing respondents
Notice of Appeal, which indicated respondents return address to be No. 36
Sampaguita St.[29] Nonetheless, on 29 January 2004, the Court of Appeals denied
the Motion for Reconsideration.

Hence, petitioner filed this Petition for Review on Certiorari under Rule 45 of
the Rules of Court, raising the sole issue of whether there was valid service of
summons upon the respondent.
The petition is meritorious. Under the circumstances obtaining in this case,
we find there was proper substituted service of summons upon the respondent.
Section 8 of Rule 14 of the old Revised Rules of Court, the rules of procedure
then in force at the time summons was served, provided:
Section 8. Substituted service. If the defendant cannot be
served within a reasonable time as provided in the preceding section
[personal service on defendant], service may be effected (a) by leaving
copies of the summons at the defendants residence with some person
of suitable age and discretion then residing therein, or (b) by leaving the
copies at defendants office or regular place of business with some
competent person in charge thereof.
Jurisprudence has long established that for substituted service of summons to
be valid, the following must be demonstrated: (a) that personal service of summons
within a reasonable time was impossible; (b) that efforts were exerted to locate the
party; and (c) that the summons was served upon a person of sufficient age and
discretion residing at the party's residence or upon a competent person in charge of
the party's office or regular place of business. [30] It is likewise required that the
pertinent facts proving these circumstances be stated in the proof of service or in
the officer's return.[31]
In this case, personal service of summons was twice attempted by the trial
court, although unsuccessfully. In the first attempt, the resident of the house
refused to receive the summons; worse, he would not even give his name. In the
second attempt, respondents own brother refused to sign for receipt of the
summons, and then later claimed that he never received a copy, despite his
participation in the proceedings. The trial court also thrice attempted to contact the
respondent through his place of work, but to no avail. These diligent efforts to
locate the respondent were noted in the first sheriff's return, the process server's
notation, as well as the records of the case.
Clearly, personal service of summons was made impossible by the acts of the
respondent in refusing to reveal his whereabouts, and by the act of his brother in
claiming that respondent no longer lived at No. 36 Sampaguita St., yet failing to
disclose his brother's location. We also note that it was the trial court which
directed that the second service of summons be made within seven days; thus, the
reasonable time was prescribed by the trial court itself.
Undeniably, no Sheriffs Return was prepared by process server Jarvis Iconar;
the only record of the second service of summons was Mr. Iconars handwritten
notation in the summons itself. However, the information required by law and
prevailing jurisprudence, that is, that personal service was impossible because of
the claim that respondent no longer lived at the stated address, that efforts were
exerted to locate the respondent through the multiple attempts to serve summons,

and that summons was served upon a person of sufficient age and discretion, were
already in the records of the trial court.
Moreover, we find the claim that respondent moved out of their residence in
March 1993 without informing his brother or parents his whereabouts, despite
regular calls and letters, simply incredulous. What makes this version of events
even more implausible is respondents admission that he received a copy of the trial
court's Decision of 20 September 1999 that was sent toNo. 36 Sampaguita
Street. Respondent even filed a Notice of Appeal coincidentally indicating that his
address was No. 36 Sampaguita St., Baesa, Quezon City. He also received a copy of
the appellate courts order for preliminary conference that was sent to said
address. These were never denied by respondent, despite being given every
opportunity to do so.
Respondent also wishes us to believe that it was pure chance that he and his
brother were assisted by the same lawyer, Atty. Bernardo Q. Cuaresma, and yet it
never occurred to respondents own brother or lawyer to inform him about the
receipt of summons. All these militate against respondents self-serving declaration
that he did not reside at No. 36 Sampaguita St. Indeed, there was no proof
presented as to when respondent left and then returned to his original home, if he
actually did leave his home.
In view of the foregoing, we find that substituted service of summons was
validly made upon respondent through his brother.
We do not intend this ruling to overturn jurisprudence to the effect that
statutory requirements of substituted service must be followed strictly, faithfully,
and fully, and that any substituted service other than that authorized by the Rules is
considered ineffective.[32] However, an overly strict application of the Rules is not
warranted in this case, as it would clearly frustrate the spirit of the law as well as do
injustice to the parties, who have been waiting for almost 15 years for a resolution
of this case. We are not heedless of the widespread and flagrant practice whereby
defendants actively attempt to frustrate the proper service of summons by refusing
to give their names, rebuffing requests to sign for or receive documents, or eluding
officers of the court. Of course it is to be expected that defendants try to avoid
service of summons, prompting this Court to declare that, the sheriff must be
resourceful, persevering, canny, and diligent in serving the process on the
defendant.[33] However, sheriffs are not expected to be sleuths, and cannot be
faulted where the defendants themselves engage in deception to thwart the orderly
administration of justice.
The purpose of summons is two-fold: to acquire jurisdiction over the person of
the defendant and to notify the defendant that an action has been commenced so
that he may be given an opportunity to be heard on the claim against him. Under
the circumstances of this case, we find that respondent was duly apprised of the
action against him and had every opportunity to answer the charges made by the
petitioner. However, since respondent refused to disclose his true address, it was
impossible to personally serve summons upon him. Considering that respondent
could not have received summons because of his own pretenses, and has failed to

provide an explanation of his purported new residence, he must now bear the
consequences.[34]
WHEREFORE, the Petition for Review on Certiorari is GRANTED. The 13
August 2003 Decision of the Court of Appeals in CA-G.R. CV No. 66412 and its 29
January 2004 Resolution are REVERSED and SET ASIDE. The Decision of the
Regional Trial Court of Quezon City, Branch 99, dated 20 September 1999 in Civil
Case No. Q-94-22445 holding that there was valid service of summons, and ordering
respondent to pay petitioner the amounts of P35,000.00 as actual
damages, P15,000.00 as moral damages, P10,000.00 as exemplary damages,
and P20,000.00 as attorneys fees, is REINSTATED and AFFIRMED.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice

Robinson v. Miralles, G.R. No. 163584, December 12, 2006

REMELITA M. ROBINSON,
Petitioner,

G.R. No. 163584

Present:

- versus -

PUNO, C.J., Chairperson,

SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.
Promulgated:

CELITA B. MIRALLES,
Respondent.
December 12, 2006
x -------------------------------------------------------------------------------------- x
DECISION
SANDOVAL-GUTIERREZ, J.:

Before us is the instant petition for review on certiorari assailing the

Resolutions dated February 11[1] and May 11, 2004[2]of the Regional Trial Court
(RTC), Branch 274, Paraaque City, in Civil Case No. 00-0372.
On August 25, 2000, Celita Miralles, respondent, filed with the said court a
complaint for sum of money against Remelita Robinson, petitioner, docketed as Civil
Case No. 00-0372. Respondent alleged that petitioner borrowed from her
US$20,054.00 as shown by a Memorandum of Agreement they both executed
on January 12, 2000.
Summons was served on petitioner at her given address. However, per
return of service of Sheriff Maximo Potente datedMarch 5, 2001, petitioner no longer
resides at such address.
On July 20, 2001, the trial court issued an alias summons to be served at No.
19 Baguio St., Alabang Hills, Muntinlupa City, petitioners new address.
Again, the summons could not be served on petitioner. Sheriff Potente
explained that:
The Security Guard assigned at the gate of Alabang Hills refused
to let me go inside the subdivision so that I could effect the service of
the summons to the defendant in this case. The security guard alleged
that the defendant had given them instructions not to let anybody
proceed to her house if she is not around. I explained to the Security
Guard that I am a sheriff serving the summons to the defendant, and
if the defendant is not around, summons can be received by any
person of suitable age and discretion living in the same house.
Despite of all the explanation, the security guard by the name of A.H.
Geroche still refused to let me go inside the subdivision and served
(sic) the summons to the defendant. The same thing happened when I
attempted to serve the summons previously.
Therefore, the summons was served by leaving a copy thereof
together with the copy of the complaint to the security guard by the
name of A.H. Geroche, who refused to affix his signature on the
original copy thereof, so he will be the one to give the same to the
defendant.
Eventually, respondent filed a motion to declare petitioner in default for her
failure to file an answer seasonably despite service of summons.
On February 28, 2003, the trial court granted respondents motion declaring
petitioner in default and allowing respondent to present her evidence ex parte.
On June 20, 2003, the trial court issued an Order, the dispositive portion of
which reads:

WHEREFORE, judgment is hereby rendered in favor of the

plaintiff and against defendant ordering the defendant to pay the
plaintiff as follows:
1.
The sum of US$20,054.00 as the unpaid obligation, plus the
stipulated interest of 3% a month from May 2000 (date of
default) until fully paid;
2.
Php100,000.00 for moral damages;
3.
Php50,000.00 plus Php1,500.00 per appearance as attorneys
fees;
4.
Costs of suit.
SO ORDERED.
A copy of the Order was sent to petitioner by registered mail at her new
address.
Upon respondents motion, the trial court, on September 8, 2003, issued a
writ of execution.
On September 26, 2003, petitioner filed with the trial court a petition for relief
from the judgment by default. She claimed that summons was improperly served
upon her, thus, the trial court never acquired jurisdiction over her and that all its
proceedings are void.
On February 11, 2004, the trial court issued a Resolution denying the petition
for relief. Petitioner filed a motion for reconsideration, but it was denied by the trial
court in a Resolution dated May 11, 2004.
Hence, the instant recourse.
The sole issue for our resolution is whether the trial court correctly ruled that
a substituted service of summons upon petitioner has been validly effected.
Summons is a writ by which the defendant is notified of the action brought
against him or her.[3] In a civil action, service of summons is the means by which
the court acquires jurisdiction over the person of the defendant. [4] Any judgment
without such service, in the absence of a valid waiver, is null and void. [5] Where the
action is in personam and the defendant is in thePhilippines, the service of
summons may be made through personal or substituted service in the manner
provided for in Sections 6 and 7, Rule 14 of the 1997 Rules of Procedure, as
amended,[6] thus:
SEC. 6. Service in person on defendant. Whenever practicable,
the summons shall be served by handing a copy thereof to the
defendant in person, or if he refuses to receive and sign for it, by
tendering it to him.
SEC. 7. Substituted service. If, for justifiable causes, the
defendant cannot be served within a reasonable time as provided in the
preceding section, service may be effected (a) by leaving copies of the
summons at the defendants residence with some person of suitable

age and discretion then residing therein; or (b) by leaving the copies at
the defendants office or regular place of business with some competent
person in charge thereof.
Under our procedural rules, personal service is generally preferred over
substituted service, the latter mode of service being a method extraordinary in
character.[7] For substituted service to be justified, the following circumstances must
be clearly established: (a) personal service of summons within a reasonable time
was impossible; (b) efforts were exerted to locate the party; and (c) the summons
was served upon a person of sufficient age and discretion residing at the partys
residence or upon a competent person in charge of the partys office or place of
business.[8] Failure to do so would invalidate all subsequent proceedings on
jurisdictional grounds.[9]
Petitioner contends that the service of summons upon the subdivision
security guard is not in compliance with Section 7, Rule 14 since he is not related to
her or staying at her residence. Moreover, he is not duly authorized to receive
summons for the residents of the village. Hence, the substituted service of
summons is not valid and that the trial court never acquired jurisdiction over her
person.
We have ruled that the statutory requirements of substituted service must be
followed strictly, faithfully, and fully and any substituted service other than that
authorized by the Rules is considered ineffective. [10] However, we frown upon an
overly strict application of the Rules. It is the spirit, rather than the letter of the
procedural rules, that governs.
In his Return, Sheriff Potente declared that he was refused entry by the
security guard in Alabang Hills twice. The latter informed him that petitioner
prohibits him from allowing anybody to proceed to her residence whenever she is
out. Obviously, it was impossible for the sheriff to effect personal or substituted
service of summons upon petitioner. We note that she failed to controvert the
sheriffs declaration. Nor did she deny having received the summons through the
security guard.
Considering her strict instruction to the security guard, she must bear its
consequences. Thus, we agree with the trial court that summons has been properly
served upon petitioner and that it has acquired jurisdiction over her.
WHEREFORE, we DENY the petition and we AFFIRM the assailed Orders of
the RTC, Branch 274, Paraaque City, in Civil Case No. 00-0372. Costs against
petitioner.
SO ORDERED.
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice

Chu v. Mach Asia, G.R. No. 184333, April 1, 2013

G.R. No. 184333

April 1, 2013

SIXTO
N.
vs.
MACH ASIA TRADING CORPORATION, Respondent.

CHU, Petitioner,

DECISION
PERALTA, J.:
This is a petition for review on certiorari assailing the Decision 1 dated July 25, 2007
of the Court of Appeals (CA) in CA-G.R. CV No. 70666, and the Resolution 2 dated
August 28, 2008 denying petitioner's Motion for Reconsideration.
The factual and procedural antecedents are as follows:
Respondent Mach Asia Trading Corporation is a corporation engaged in importing
dump trucks and heavy equipments. On December 8, 1998, petitioner Sixto N. Chu
purchased on installment one (1) Hitachi Excavator worth P900,000.00 from the
respondent. Petitioner initially paid P180,000.00 with the balance of P720,000.00 to
be paid in 12 monthly installments through Prime Bank postdated checks. On March
29, 1999, petitioner again purchased two (2) heavy equipments from the
respondent on installment basis in the sum of P1,000,000.00, namely: one (1)
motorgrader and one (1) payloader. Petitioner made a down payment
of P200,000.00 with the balance of P800,000.00 payable in 12 monthly installments
through Land Bank postdated checks.3
However, upon presentment of the checks for encashment, they were dishonored
by the bank either by reason of "closed account," "drawn against insufficient funds,"
or "payment stopped." Respondent informed petitioner that the checks were
dishonored and invited him to its office to replace the checks. On September 16,
1999, respondent sent petitioner a formal demand letter urging the latter to settle
his accounts within five days from receipt of the letter. In response, petitioner sent
respondent a letter explaining that his business was badly hit by the Asian
economic crisis and that he shall endeavor to pay his obligation by giving partial
payments. He said that he shall also voluntarily surrender the subject units should
he fail to do so.4
On November 11, 1999, respondent filed a complaint before the Regional Trial Court
(RTC) of Cebu City for sum of money, replevin, attorneys fees and damages against
the petitioner. Respondent prayed for the payment of the unpaid balance
of P1,661,947.27 at 21% per annum until full payment, 25% of the total amount to
be recovered as attorneys fees, litigation expenses and costs. 5

On November 29, 1999, the RTC issued an Order 6 allowing the issuance of a writ of
replevin on the subject heavy equipments.
On December 9, 1999, Sheriff Doroteo P. Cortes proceeded at petitioners given
address for the purpose of serving the summons, together with the complaint, writ
of replevin and bond. However, the Sheriff failed to serve the summons personally
upon the petitioner, since the latter was not there. The Sheriff then resorted to
substituted service by having the summons and the complaint received by a certain
Rolando Bonayon, a security guard of the petitioner. 7
Petitioner failed to file any responsive pleading, which prompted respondent to
move for the declaration of defendant in default. On January 12, 2000, the RTC
issued an Order declaring defendant in default and, thereafter, allowed respondent
to present its evidence ex parte.
On December 15, 2000, after respondent presented its evidence, the RTC rendered
a Decision against the petitioner, thus:
1. By adjudicating and adjudging plaintiffs right of ownership and possession
over the subject units mentioned and described in the complaint, and which
were already seized and turned over to the plaintiff by virtue of the writ of
replevin.
2. Ordering defendants to pay to plaintiff the sum of (sic) equivalent to 25%
of the total amount recovered or value of the heavy equipments possessed as
attorneys fees, and to reimburse no less than P15,000.00 as expenses for
litigation, plus the cost of the premium of replevin bond in the amount
of P11,333.50.8
Aggrieved, petitioner sought recourse before the CA, docketed as CA-G.R. CV No.
70666. Petitioner argued that the RTC erred in concluding that the substituted
service of summons was valid, and that, consequently, there was error on the part
of the RTC when it declared him in default, in proceeding with the trial of the case,
and rendering an unfavorable judgment against him.
On July 25, 2007, the CA rendered a Decision 9 affirming the Decision of the RTC, the
decretal portion of which reads:
WHEREFORE, IN LIGHT OF THE FOREGOING, the Decision of the Regional Trial Court
of Cebu, Branch 17, in Civil Case No. CEB-24551, rendered on December 15, 2000,
is hereby AFFIRMED with the sole modification as to award of attorneys fees, which
is hereby reduced to 10% of the value of the heavy equipments recovered.
SO ORDERED.10
Ruling in favor of the respondent, the CA opined, among others, that the
requirement of due process was complied with, considering that petitioner actually
received the summons through his security guard. It held that where the summons
was in fact received by the defendant, his argument that the Sheriff should have

first tried to serve summons on him personally before resorting to substituted

service of summons deserves scant consideration. Thus, in the interest of fairness,
the CA said that the process servers neglect or inadvertence in the service of
summons should not unduly prejudice the respondents right to speedy justice.
The CA also noted that petitioner failed to set up a meritorious defense aside from
his contention that summons was not properly served.1wphi1 It went further and
decided the case on the merits and ruled that petitioner has an unpaid obligation
due to respondent for the heavy machineries he purchased from the latter. It,
however, reduced the amount of attorneys fees awarded to 10% of the value of the
heavy equipments recovered.
Petitioner filed a Motion for Reconsideration,
Resolution11 dated August 28, 2008.

but

it

was

denied

in

the

Hence, the petition assigning the following errors:

I
THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS ERROR IN
DEFIANCE OF LAW AND JURISPRUDENCE IN FINDING THAT THE TRIAL COURT
ACQUIRED JURISDICTION OVER THE PERSON OF THE DEFENDANT EVEN WHEN
THE SUBSTITUTED SERVICE OF SUMMONS WAS IMPROPER. 12
II
THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS ERROR IN
DEFIANCE OF LAW AND JURISPRUDENCE IN HOLDING THAT HEREIN
PETITIONER SHOULD HAVE SET UP A MERITORIOUS DEFENSE EVEN WHEN
THE SUMMONS WAS IMPROPERLY SERVED.13
Petitioner argues that there was no valid substituted service of summons in the
present case. He maintains that jurisdiction over the person of the defendant is
acquired only through a valid service of summons or the voluntary appearance of
the defendant in court. Hence, when there is no valid service of summons and no
voluntary appearance by the defendant, any judgment of a court, which acquired no
jurisdiction over the defendant, is null and void.
On its part, respondent posits that the RTC acquired jurisdiction over the person of
the petitioner and the judgment by default of the RTC was based on facts, law, and
jurisprudence and, therefore, should be enforced against the petitioner.
The petition is meritorious.
Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint. On the
other hand, jurisdiction over the defendants in a civil case is acquired either through
the service of summons upon them or through their voluntary appearance in court
and their submission to its authority.14

As a rule, summons should be personally served on the defendant. It is only when

summons cannot be served personally within a reasonable period of time that
substituted service may be resorted to. 15 Section 7, Rule 14 of the Rules of Court
provides:
SEC. 7. Substituted service. If, for justifiable causes, the defendant cannot be
served within a reasonable time as provided in the preceding section, service may
be effected (a) by leaving copies of the summons at the defendant's residence with
some person of suitable age and discretion then residing therein, or (b) by leaving
the copies at defendant's office or regular place of business with some competent
person in charge thereof.
It is to be noted that in case of substituted service, there should be a report
indicating that the person who received the summons in the defendant's behalf was
one with whom the defendant had a relation of confidence, ensuring that the latter
would actually receive the summons. 16
Also, impossibility of prompt personal service must be shown by stating that efforts
have been made to find the defendant personally and that such efforts have failed.
This is necessary because substituted service is in derogation of the usual method
of service. It is a method extraordinary in character, hence, may be used only as
prescribed and in the circumstances authorized by statute. The statutory
requirements of substituted service must be followed strictly, faithfully and fully,
and any substituted service other than that authorized by statute is considered
ineffective.17
In the case at bar, the Sheriffs Return provides:
Respectfully returned to the Honorable Regional Trial Court, Branch 17, Cebu City,
the Summons and writ issued in the above-entitled case with the following
information, to wit:
1. That the Summons, together with the complaint, writ of replevin and bond
was received on December 7, 1999, by Rolando Bonayon, a security guard on
defendant Sixto Chu at his given address who received and signed receipt
thereof.
2. That the writ of replevin was duly executed on the same date, December 7,
1999, Tacloban City and San Jorge, Samar of the following properties subject
of the writ.
a) Excavator Hitachi with Serial No. WHO44-116-0743
b) Motorgrader with Serial No. N525PS-1014
c) Payloader with Serial No. KLD70-54224
After the issuance of the Sheriffs inventory receipt, the units were turned over to Al
Caballero and companion, representatives of plaintiff, who shipped the same to

Cebu to be deposited with MACH ASIA TRADING CORPORATION, Block 26 MacArthur

Highway, Reclamation Area, Cebu City, for safekeeping, subject to the provision of
Sec. 6, Rule 60 of the Rules of Court. 18
Clearly, it was not shown that the security guard who received the summons in
behalf of the petitioner was authorized and possessed a relation of confidence that
petitioner would definitely receive the summons. This is not the kind of service
contemplated by law. Thus, service on the security guard could not be considered
as substantial compliance with the requirements of substituted service.
Moreover, the reasoning advanced by the CA in ruling against the petitioner was
based merely on conjectures and surmises. The CA even went as far as to conclude
that the process servers neglect should not have unduly prejudiced the respondent,
thus:
Hence, if Chu had actually received the summons through his security guard, the
requirement of due process would have nevertheless been complied with. x x x.
Based on the presumption that a person takes ordinary care of his concerns, the
security guard would not have allowed the sheriff to take possession of the
equipments without the prior permission of Chu; otherwise he would be accountable
to Chu for the said units. Chu, for his part, would not have given his permission
without being informed of the fact of the summons and the writ of replevin issued
by the lower court, which permission includes the authority to receive the summons
and the writ of replevin.
Thus, where summons was in fact received by defendant, his argument that the
sheriff should have tried first to serve summons on him personally before resorting
to substituted service of summons is not meritorious.
x x x x.
Evidently, plaintiff-appellee cannot be penalized, through no fault of its own, for an
irregular or defective return on service of summons. x x x.
x x x x.
In the interest of fairness, the process server's neglect or inadvertence in the
service of summons should not, thus, unduly prejudice plaintiff-appellee's right to
speedy justice. x x x 19
The service of summons is a vital and indispensable ingredient of due process. As a
rule, if defendants have not been validly summoned, the court acquires no
jurisdiction over their person, and a judgment rendered against them is null and
void.20 Since the RTC never acquired jurisdiction over the person of the petitioner,
the judgment rendered by the court could not be considered binding upon him for
being null and void.
WHEREFORE, premises considered, the petition is GRANTED. The Decision of the
Court of Appeals, dated July 25, 2007, as well as its Resolution dated August 28,

2008, in CA-G.R. CV No. 70666 is hereby REVERSED and SET ASIDE. The Decision of
the Regional Trial Court dated December 15, 2000 is declared NULL and VOID. The
Regional Trial Court is hereby ORDERED to validly serve summons upon Sixto N. Chu
and, thereafter, proceed with the trial of the main action with dispatch.
SO ORDERED.

Sec. 8. Service upon entity without juridical personality

Sec. 9. Service upon prisoners

Sec. 10. Service upon minors and incompetents

Sec. 11. Service upon domestic private juridical entity

B.D. Long-Span Builders v. R.S. Ampeloquio, G.R. No. 169919,
September 11, 2009

FIRST DIVISION

B. D. LONG SPAN BUILDERS,

INC.,
Petitioner,

- versus -

G.R. No. 169919

Present:
PUNO, C.J., Chairperson,
CARPIO,
CORONA,
LEONARDO-DE CASTRO, and
BERSAMIN, JJ.

R. S. AMPELOQUIO REALTY
Promulgated:
DEVELOPMENT, INC.,
Respondent.
September 11, 2009
x-----------------------------------------------------------------------------------------x

DECISION
CARPIO, J.:
The Case
This is a petition for review[1] of the Court of Appeals Decision[2] dated 14 July
2005 and Resolution dated 30 September 2005 in CA-G.R. CV No. 78259. The
Court of Appeals reversed the Decision [3] dated 14 January 2003 of the Regional Trial
Court of Muntinlupa City, Branch 206 (RTC).
The Antecedent Facts
Petitioner B. D. Long Span Builders, Inc. and respondent R. S. Ampeloquio
Realty Development, Inc. are corporations duly organized and existing under the
laws of the Republic of the Philippines.
On 31 July 1999, petitioner and respondent entered into an Agreement
wherein petitioner agreed to render rip rapping construction services at
respondents Ampeloquio International Resort in Ternate, Cavite, for the contract
price of P50 million. On the same day, the parties entered into a second Agreement
for the same construction project, stipulating a contract price of P30 million, hence
bringing the total contract price of the project to P80 million. Both Agreements
required petitioner to deposit with respondent a cash bond of one percent (1%) of
the contract price, to be returned to petitioner upon completion of the project. In
compliance, petitioner deposited with respondent a cash bond amounting
to P800,000.
Respondent failed to fulfill its obligations under the Agreements, resulting in
the cancellation of the project. Petitioner demanded the return of the P800,000 cash
bond, but respondent refused to do so. Petitioners legal counsel sent two (2)
demand letters dated 19 April 2002 and 10 May 2002 to respondent, but the latter
still refused to return the P800,000 cash bond.
On 24 September 2002, petitioner (plaintiff) filed with the RTC a complaint for
rescission of contract and damages against respondent (defendant). On 17 October
2002, summons and a copy of the complaint were served on respondent, through its
staff member, Romel Dolahoy.[4]
Respondent failed to file an Answer or any responsive pleading to the
complaint. Upon motion of petitioner, the RTC issued an Order dated 29 November
2002, declaring respondent in default, and allowing petitioner to present
evidence ex parte.

The Trial Courts Ruling

On 14 January 2003, the RTC rendered a Decision, the dispositive portion of
which reads:
WHEREFORE, finding preponderance of evidence in support of
the instant complaint, the same is granted.
Judgment is rendered declaring the aforesaid contracts entered into by
plaintiff with defendant, both dated July 31, 1999 for the rip rapping construction
project at the Ampeloquio International Resort in Ternate, Cavite, as RESCINDED.
Moreover, defendant corporation is ordered to:
1) Return the amount of P800,000.00 posted by the plaintiff as cash bond
with legal interest accruing thereto from the time of its demand until fully paid;
2) Pay the plaintiff the amount of P50,000.00 as nominal damages;
3) Pay the plaintiff the amount of P100,000.00 as exemplary damages;
4) Pay the plaintiff the amount of P50,000.00 as and by way of attorney's
fees; and
5) Pay the cost of suit in the amount of P10,539.00.
SO ORDERED.[5]

The Court of Appeals Ruling

Upon receipt of the RTC decision, respondent filed a Notice of Appeal dated
12 February 2003 with the Court of Appeals. After considering the pleadings filed by
petitioner and respondent, the Court of Appeals rendered judgment [6] which
reversed and set aside the decision of the RTC. The dispositive portion of the Court
of Appeals Decision reads:
WHEREFORE, in view of the foregoing, the decision dated
January 14, 2003 of the Regional Trial Court, Branch 206, Muntinlupa
City in Civil Case No. 02-217 is hereby REVERSED and SET ASIDE.
SO ORDERED.[7]
Petitioner filed a Motion for Reconsideration, but this was denied by the Court
of Appeals in its Resolution of 30 September 2005. [8]

Hence, this appeal.

The Issue
The sole issue for resolution in this case is whether the Court of Appeals erred
in ruling that there was invalid service of summons upon respondent, and hence the
trial court did not acquire jurisdiction over said respondent.

The Courts Ruling

We find the appeal without merit.
Courts acquire jurisdiction over the plaintiffs upon the filing of the
complaint. On the other hand, jurisdiction over the defendants in a civil case is
acquired either through the service of summons upon them or through their
voluntary appearance in court and their submission to its authority. [9] The service of
summons is a vital and indispensable ingredient of due process. [10] As a rule, if
defendants have not been validly summoned, the court acquires no jurisdiction over
their person, and a judgment rendered against them is null and void. [11]
Section 11 of Rule 14 of the 1997 Rules of Civil Procedure states:
SEC. 11. Service upon domestic private juridical entity. When
the defendant is a corporation, partnership or association organized
under the laws of the Philippines with a juridical personality, service
may be made on the president, managing partner, general manager,
corporate secretary, treasurer, or in-house counsel.

As a rule, summons should be personally served on the defendant. In case of

a domestic private juridical entity, the service of summons must be made upon an
officer who is named in the statute (i.e., the president, managing partner, general
manager, corporate secretary, treasurer, or in-house counsel), otherwise, the
service is insufficient.[12] The purpose is to render it reasonably certain that the
corporation will receive prompt and proper notice in an action against it or to insure
that the summons be served on a representative so integrated with the corporation
that such person will know what to do with the legal papers served on him.
[13]
However, if the summons cannot be served on the defendant personally within a
reasonable period of time, then substituted service may be resorted to. Section 7 of
Rule 14 provides:

SEC. 7. Substituted service. If, for justifiable causes, the

defendant cannot be served within a reasonable time as provided in the
preceding section, service may be effected (a) by leaving copies of the
summons at the defendant's residence with some person of suitable age
and discretion then residing therein, or (b) by leaving the copies at
defendant's office or regular place of business with some competent
person in charge thereof.

Nonetheless, the impossibility of prompt personal service must be shown by

stating that efforts have been made to find the defendant personally and that such
efforts have failed.[14] This is necessary because substituted service is in derogation
of the usual method of service. It is a method extraordinary in character and hence
may be used only as prescribed and in the circumstances authorized by statute.
[15]
The statutory requirements of substituted service must be followed strictly,
faithfully and fully, and any substituted service other than that authorized by
statute is considered ineffective.[16]

In Orion Security Corporation v. Kalfam Enterprises, Inc.,[17] this Court held

that in case of substituted service, there should be a report indicating that the
person who received the summons in the defendants behalf was one with whom
the defendant had a relation of confidence ensuring that the latter would actually
receive the summons.

In this case, the Return by Process Server provides:

This is to certify that:

On October 17, 2002 at about 11:00 o'clock in the morning,
undersigned tried to cause the service of the Summons together with
the attached complaint & its annexes in the above-entitled case to the
defendant at his given address on record. Mr Romel Dalahoy, a staff of
said Realty received the said Summons with the attached complaint &
its annexes as evidenced by the former's signature as appearing on the
original copy of the aforesaid Summons.

Henceforth, the said Summons with the attached complaint & its annexes to Atty.
Evangeline V. Tiongson, Clerk of Court V, this Court, is respectfully returned, DULY
SERVED, by substituted service.
October 17, 2002, Muntinlupa City
Angelito C. Reyes
Process Server[18]

Clearly, the summons was not served personally on the defendant (respondent)
through any of the officers enumerated in Section 11 of Rule 14; rather, summons
was served by substituted service on the defendants staff member, Romel
Dolahoy. Substituted service was resorted to on the servers first attempt at service
of summons, and there was no indication that prior efforts were made to render
prompt personal service on the defendant.

Moreover, nothing on record shows that Romel Dolahoy, the staff member who
received the summons in respondents behalf, shared such relation of confidence
ensuring that respondent would surely receive the summons. Thus, following our
ruling inOrion, we are unable to accept petitioners contention that service on Romel
Dolahoy constituted substantial compliance with the requirements of substituted
service.

Petitioners contention that respondents filing of Notice of Appeal effectively

cured any defect in the service of summons is devoid of merit. It is well-settled that
a defendant who has been declared in default has the following remedies, to wit: (1)
he may, at any time after discovery of the default but before judgment, file a
motion, under oath, to set aside the order of default on the ground that his failure to
answer was due to fraud, accident, mistake or excusable neglect, and that he has a
meritorious defense; (2) if judgment has already been rendered when he discovered
the default, but before the same has become final and executory, he may file a
motion for new trial under Section 1(a) of Rule 37; (3) if he discovered the default
after the judgment has become final and executory, he may file a petition for relief
under Section 2 of Rule 38; and (4) he may also appeal from the judgment rendered
against him as contrary to the evidence or to the law, even if no petition to set
aside the order of default has been presented by him. [19] Thus, respondent, which

had been declared in default, may file a notice of appeal and question the validity of
the trial courts judgment without being considered to have submitted to the trial
courts authority.

WHEREFORE, we DENY the petition. We AFFIRM the Court of Appeals

Decision dated 14 July 2005 and Resolution dated 30 September 2005 in CA-G.R. CV
No. 78259. Let the case be REMANDED to the trial court for further proceedings
upon valid service of summons to respondent.

SO ORDERED.

ANTONIO T. CARPIO
Associate Justice

Tung Ho Steel v. Ting Guan, G.R. No. 182153, April 7, 2014

G.R. No. 182153

April 7, 2014

TUNG
HO
STEEL
ENTERPRISES
vs.
TING GUAN TRADING CORPORATION, Respondent.

CORPORATION, Petitioner,

DECISION
BRION, J.:
We resolve the petition for review on, certiorari 1 filed by petitioner Tung Ho Steel
Enterprises Corp. (Tung Ho) to challenge the July 5, 2006 decision 2 and the March
12, 2008 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 92828.
The Factual Antecedents
Tung Ho is a foreign corporation organized under the laws of Taiwan, Republic of
China.4 On the other hand, respondent Ting Guan Trading Corp. (Ting Guan) is a
domestic corporation organized under the laws of the Philippines. 5
On January 9, 2002, Ting Guan obligated itself under a contract of sale to deliver
heavy metal scrap iron and steel to Tung Ho. Subsequently, Tung Ho filed a request
for arbitration before the ICC International Court of Arbitration (ICC) in Singapore

after Ting Guan failed to deliver the full quantity of the promised heavy metal scrap
iron and steel.6
The ICC ruled in favor of Tung Ho on June 18, 2004 and ordered Ting Guan to pay
Tung Ho the following: (1) actual damages in the amount of US$ 659,646.15 with
interest of 6% per annum from December 4, 2002 until final payment; (2) cost of
arbitration in the amount of US $ 47,000.00; and (3) legal costs and expenses in the
amount of NT $ 761,448.00 and US $ 34,552.83. 7
On October 24, 2004, Tung Ho filed an action against Ting Guan for the recognition
and enforcement of the arbitral award before the Regional Trial Court (RTC) of
Makati, Branch 145. Ting Guan moved to dismiss the case based on Tung Hos lack
of capacity to sue and for prematurity. Ting Guan subsequently filed a supplemental
motion to dismiss based on improper venue. Ting Guan argued that the complaint
should have been filed in Cebu where its principal place of business was located. 8
The Proceedings before the RTC
The RTC denied Ting Guans motion to dismiss in an order dated May 11, 2005. Ting
Guan moved to reconsider the order and raised the RTCs alleged lack of jurisdiction
over its person as additional ground for the dismissal of the complaint. Ting Guan
insisted that Ms. Fe Tejero, on whom personal service was served, was not its
corporate secretary and was not a person allowed under Section 11, Rule 14 of the
Rules of Court to receive a summons. It also asserted that Tung Ho cannot enforce
the award in the Philippines without violating public policy as Taiwan is not a
signatory to the New York Convention.9
The RTC denied the motion in an order dated November 21, 2005 and ruled that
Ting Guan had voluntarily submitted to the courts jurisdiction when it raised other
arguments apart from lack of jurisdiction in its motion to dismiss.
The Proceedings before the CA
Ting Guan responded to the denials by filing a petition for certiorari before the CA
with an application for the issuance of a temporary restraining order and a writ of
preliminary injunction.10
In its Memorandum, Tung Ho argued that a Rule 65 petition is not the proper
remedy to assail the denial of a motion to dismiss. It pointed out that the proper
recourse for Ting Guan was to file an answer and to subsequently appeal the case.
It also posited that beyond the reglementary period for filing an answer, Ting Guan
was barred from raising other grounds for the dismissal of the case. Tung Ho also
claimed that the RTC acquired jurisdiction over the person of Ting Guan since the
return of service of summons expressly stated that Tejero was a corporate
secretary.11
In its decision dated July 5, 2006, the CA dismissed the complaint for lack of
jurisdiction over the person of Ting Guan. The CA held that Tung Ho failed to
establish that Tejero was Ting Guans corporate secretary. The CA also ruled that a

petition for certiorari is the proper remedy to assail the denial of a motion to dismiss
if the ground raised in the motion is lack of jurisdiction. Furthermore, any of the
grounds for the dismissal of the case can be raised in a motion to dismiss provided
that the grounds were raised before the filing of an answer. The CA likewise ruled
that Tung Ho properly filed the complaint before the RTC-Makati. 12
Subsequently, both parties moved to partially reconsider the CA decision. Tung Ho
reiterated that there was proper service of summons. On the other hand, Ting Guan
sought to modify the CA decision with respect to the proper venue of the case. The
CA denied Ting Guans motion for partial reconsideration in an order dated
December 5, 2006.13
Ting Guan immediately proceeded to file a petition for review on certiorari before
this Court to question the CAs rulings as discussed below. In the interim (on
February 11, 2008), Tung Ho (whose motion for reconsideration of the CA decision
was still pending with that court) filed a "Motion to Supplement and Resolve Motion
for Reconsideration" before the CA. In this motion, Tung Ho prayed for the issuance
of an alias summons if the service of summons had indeed been defective, but its
motion proved unsuccessful.14
It was not until March 12, 2008, after the developments described below, that the
CA finally denied Tung Hos partial motion for reconsideration for lack of merit.
Ting Guans Petition before this Court
(G.R. No. 176110)
Ting Guans petition before this Court was docketed as G.R. No. 176110. Ting Guan
argued that the dismissal of the case should be based on the following additional
grounds: first, the complaint was prematurely filed; second, the foreign arbitral
award is null and void; third, the venue was improperly laid in Makati; and lastly, the
enforcement of the arbitral award was against public policy. 15
On April 24, 2007, Tung Ho filed its Comment dated April 24, 2007 in G.R. No.
176110, touching on the issue of jurisdiction, albeit lightly. Tung Ho complained in
its Comment that Ting Guan engaged in dilatory tactics when Ting Guan belatedly
raised the issue of jurisdiction in the motion for reconsideration before the RTC.
However, Tung Ho did not affirmatively seek the reversal of the July 5, 2006
decision. Instead, it merely stated that Ting Guans petition "cannot be dismissed on
the ground that the summons was wrongfully issued as the petitioner can always
move for the issuance of an alias summons to be served". Furthermore, Tung Ho
only prayed that Ting Guans petition be denied in G.R. No. 176110 and for other
just and equitable reliefs. In other words, Tung Ho failed to effectively argue its case
on the merits before the Court in G.R. No. 176110.
On June 18, 2007, we issued our Resolution denying Ting Guans petition for lack of
merit. On November 12, 2007, we also denied Ting Guans motion for
reconsideration. On January 8, 2008, the Court issued an entry of judgment in Ting
Guans petition, G.R. No. 176110.

After the entry of judgment, we referred the matter back to the RTC for further
proceedings. On January 16, 2008, the RTC declared the case closed and
terminated. Its order stated:
Upon examination of the entire records of this case, an answer with caution was
actually filed by the respondent to which a reply was submitted by the petitioner.
Since the answer was with the qualification that respondent is not waiving its claim
of lack of jurisdiction over its person on the ground of improper service of summons
upon it and that its petition to this effect filed before the Court of Appeals was acted
favorably and this case was dismissed on the aforementioned ground and it
appearing that the Decision as well as the Order denying the motion for
reconsideration of the petitioner now final and executory, the Order of November 9,
2007 referring this petition to the Court Annexed Mediation for possible amicable
settlement is recalled it being moot and academic. This case is now considered
closed and terminated.
On February 6, 2008, Tung Ho moved to reconsider the RTC order. Nothing in the
records shows whether the RTC granted or denied this motion for reconsideration.
Tung Hos Petition before this Court
(G.R. No. 182153)
On May 7, 2008, Tung Ho seasonably filed a petition for review on certiorari to seek
the reversal of the July 5, 2006 decision and the March 12, 2008 resolution of the
CA. This is the present G.R. No. 182153 now before us.
Tung Ho reiterates that the RTC acquired jurisdiction over the person of Ting Guan. It
also claims that the return of service of summons is a prima facie evidence of the
recited facts i.e., that Tejero is a corporate secretary as stated therein and that the
sheriff is presumed to have regularly performed his official duties in serving the
summons. In the alternative, Tung Ho argues that Ting Guans successive motions
before the RTC are equivalent to voluntary appearance. Tung Ho also prays for the
issuance of alias summons to cure the alleged defective service of summons. 16
Respondent Ting Guans Position
(G.R. No. 182153)
In its Comment, Ting Guan submits that the appeal is already barred by res judicata.
It also stresses that the Court has already affirmed with finality the dismissal of the
complaint.17 Ting Guan also argues that Tung Ho raises a factual issue that is
beyond the scope of a petition for review on certiorari under Rule 45 of the Rules of
Court.18
The Issues
This case presents to us the following issues:

1) Whether the present petition is barred by res judicata; and

2) Whether the trial court acquired jurisdiction over the person of Ting Guan,
specifically:
a) Whether Tejero was the proper person to receive the summons; and
b) Whether Ting Guan made a voluntary appearance before the trial
court.
The Courts Ruling
We find the petition meritorious.
I. The Court is not precluded from ruling on the jurisdictional issue raised in the
petition
A. The petition is not barred by res judicata
Res judicata refers to the rule that a final judgment or decree on the merits by a
court of competent jurisdiction is conclusive on the rights of the parties or their
privies in all later suits on all points and matters determined in the former suit. 19 For
res judicata to apply, the final judgment must be on the merits of the case which
means that the court has unequivocally determined the parties rights and
obligations with respect to the causes of action and the subject matter of the case. 20
Contrary to Ting Guans position, our ruling in G.R. No. 176110 does not operate as
res judicata on Tung Hos appeal; G.R. No. 176110 did not conclusively rule on all
issues raised by the parties in this case so that this Court would now be barred from
taking cognizance of Tung Hos petition. Our disposition in G.R. No. 176110 only
dwelt on technical or collateral aspects of the case, and not on its merits.
Specifically, we did not rule on whether Tung Ho may enforce the foreign arbitral
award against Ting Guan in that case.
B. The appellate court cannot be ousted of jurisdiction until it finally disposes of the
case
The courts jurisdiction, once attached, cannot be ousted until it finally disposes of
the case. When a court has already obtained and is exercising jurisdiction over a
controversy, its jurisdiction to proceed to the final determination of the case is
retained.21 A judge is competent to act on the case while its incidents remain
pending for his disposition.
The CA was not ousted of its jurisdiction with the promulgation of G.R. No. 176110.
The July 5, 2006 decision has not yet become final and executory for the reason that
there remained a pending incident before the CA the resolution of Tung Hos
motion for reconsideration when this Court promulgated G.R. No. 176110. In this
latter case, on the other hand, we only resolved procedural issues that are divorced
from the present jurisdictional question before us. Thus, what became immutable in

G.R. No. 176110 was the ruling that Tung Hos complaint is not dismissible on
grounds of prematurity, nullity of the foreign arbitral award, improper venue, and
the foreign arbitral awards repugnance to local public policy. This leads us to the
conclusion that in the absence of any ruling on the merits on the issue of
jurisdiction, res judicata on this point could not have set in.
C. Tung Hos timely filing of a motion for reconsideration and of a petition for review
on certiorari prevented the July 5, 2006 decision from attaining finality
Furthermore, under Section 2, Rule 45 of the Rules of Court, Tung Ho may file a
petition for review on certiorari before the Court within (15) days from the denial of
its motion for reconsideration filed in due time after notice of the judgment. Tung
Hos timely filing of a motion for reconsideration before the CA and of a Rule 45
petition before this Court prevented the July 5, 2006 CA decision from attaining
finality. For this Court to deny Tung Hos petition would result in an anomalous
situation where a party litigant is penalized and deprived of his fair opportunity to
appeal the case by faithfully complying with the Rules of Court.
II. The trial court acquired jurisdiction over the person of Ting Guan
A. Tejero was not the proper person to receive the summons
Nonetheless, we see no reason to disturb the lower courts finding that Tejero was
not a corporate secretary and, therefore, was not the proper person to receive the
summons under Section 11, Rule 14 of the Rules of Court. This Court is not a trier of
facts; we cannot re-examine, review or re-evaluate the evidence and the factual
review made by the lower courts. In the absence of compelling reasons, we will not
deviate from the rule that factual findings of the lower courts are final and binding
on this Court.22
B. Ting Guan voluntarily appeared before the trial court
However, we cannot agree with the legal conclusion that the appellate court
reached, given the established facts. 23 To our mind, Ting Guan voluntarily appeared
before the trial court in view of the procedural recourse that it took before that
court. Its voluntary appearance is equivalent to service of summons. 24
As a basic principle, courts look with disfavor on piecemeal arguments in motions
filed by the parties. Under the omnibus motion rule, a motion attacking a pleading,
order, judgment, or proceeding shall include all objections then available. 25 The
purpose of this rule is to obviate multiplicity of motions and to discourage dilatory
motions and pleadings. Party litigants should not be allowed to reiterate identical
motions, speculating on the possible change of opinion of the courts or of the
judges thereof.
In this respect, Section 1, Rule 16 of the Rules of Court requires the defendant to file
a motion to dismiss within the time for, but before filing the answer to the complaint
or pleading asserting a claim. Section 1, Rule 11 of the Rules of Court, on the other
hand, commands the defendant to file his answer within fifteen (15) days after

service of summons, unless a different period is fixed by the trial court. Once the
trial court denies the motion, the defendant should file his answer within the
balance of fifteen (15) days to which he was entitled at the time of serving his
motion, but the remaining period cannot be less than five (5) days computed from
his receipt of the notice of the denial.26
Instead of filing an answer, the defendant may opt to file a motion for
reconsideration. Only after the trial court shall have denied the motion for
reconsideration does the defendant become bound to file his answer. 27 If the
defendant fails to file an answer within the reglementary period, the plaintiff may
file a motion to declare the defendant in default. This motion shall be with notice to
the defendant and shall be supported by proof of the failure. 28
The trial courts denial of the motion to dismiss is not a license for the defendant to
file a Rule 65 petition before the CA. An order denying a motion to dismiss cannot
be the subject of a petition for certiorari as the defendant still has an adequate
remedy before the trial court i.e., to file an answer and to subsequently appeal the
case if he loses the case. 29 As exceptions, the defendant may avail of a petition for
certiorari if the ground raised in the motion to dismiss is lack of jurisdiction over the
person of the defendant30 or over the subject matter.31
We cannot allow and simply passively look at Ting Guans blatant disregard of the
rules of procedure in the present case. The Rules of Court only allows the filing of a
motion to dismiss once.32 Ting Guans filing of successive motions to dismiss, under
the guise of "supplemental motion to dismiss" or "motion for reconsideration", is not
only improper but also dilatory.33 Ting Guans belated reliance on the improper
service of summons was a mere afterthought, if not a bad faith ploy to avoid the
foreign arbitral awards enforcement which is still at its preliminary stage after the
lapse of almost a decade since the filing of the complaint.
Furthermore, Ting Guans failure to raise the alleged lack of jurisdiction over its
person in the first motion to dismiss is fatal to its cause. Ting Guan voluntarily
appeared before the RTC when it filed a motion to dismiss and a "supplemental
motion to dismiss" without raising the RTCs lack of jurisdiction over its person. In
Anunciacion v. Bocanegra,34 we categorically stated that the defendant should raise
the affirmative defense of lack of jurisdiction over his person in the very first motion
to dismiss. Failure to raise the issue of improper service of summons in the first
motion to dismiss is a waiver of this defense and cannot be belatedly raised in
succeeding motions and pleadings.
Even assuming that Ting Guan did not voluntarily appear before the RTC, the CA
should have ordered the RTC to issue an alias summons instead. In Lingner & Fisher
GMBH vs. Intermediate Appellate Court35, we enunciated the policy that the courts
should not dismiss a case simply because there was an improper service of
summons. The lower courts should be cautious in haphazardly dismissing
complaints on this ground alone considering that the trial court can cure this defect
and order the issuance of alias summons on the proper person in the interest of
substantial justice and to expedite the proceedings.
III. A Final Note

As a final note, we are not unaware that the present case has been complicated by
its unique development. The complication arose when the CA, instead of resolving
the parties separate partial motions for reconsideration in one resolution,
proceeded to first resolve and to deny Ting Guans partial motion. Ting Guan,
therefore, went to this Court via a petition for review on certiorari while Tung Hos
partial motion for reconsideration was still unresolved.
Expectedly, Ting Guan did not question the portions of the CA decision favorable to
it when it filed its petition with this Court. Instead, Ting Guan reiterated that the CA
should have included additional grounds to justify the dismissal of Tung Hos
complaint with the RTC. The Court denied Ting Guans petition, leading to the entry
of judgment that improvidently followed. Later, the CA denied Tung Hos partial
motion for reconsideration, prompting Tung Hos own petition with this Court, which
is the present G.R. No. 182153.
Under the Rules of Court, entry of judgment may only be made if no appeal or
motion for reconsideration was timely filed. 36 In the proceedings before the CA, if a
motion for reconsideration (including a partial motion for reconsideration 37) is timely
filed by the proper party, execution of the CAs judgment or final resolution shall be
stayed.38 This rule is applicable even to proceedings before the Supreme Court, as
provided in Section 4, Rule 56 of the Rules of Court. 39
In the present case, Tung Ho timely filed its motion for reconsideration with the CA
and seasonably appealed the CAs rulings with the Court through the present
petition (G.R. No. 182153).
To now recognize the finality of the Resolution of Ting Guan petition (G.R. No.
176110) based on its entry of judgment and to allow it to foreclose the present
meritorious petition of Tung Ho, would of course cause unfair and unjustified injury
to Tung Ho. First, as previously mentioned, the Ting Guan petition did not question
or assail the full merits of the CA decision. It was Tung Ho, the party aggrieved by
the CA decision, who substantially questioned the merits of the CA decision in its
petition; this petition showed that the CA indeed committed error and Tung Hos
complaint before the RTC should properly proceed. Second, the present case is for
the enforcement of an arbitral award involving millions of pesos. Tung Ho already
won in the foreign arbitration and the present case is simply for the enforcement of
this arbitral award in our jurisdiction. Third, and most importantly, Tung Ho properly
and timely availed of the remedies available to it under the Rules of Court, which
provide that filing and pendency of a motion for reconsideration stays the execution
of the CA judgment. Therefore, at the time of the entry of judgment in G.R. No.
176110 in the Supreme Court on January 8, 2008, the CA decision which the Court
affirmed was effectively not yet be final.
Significantly, the rule that a timely motion for reconsideration stays the execution of
the assailed judgment is in accordance with Rule 51, Section 10 (Rules governing
the CA proceedings) which provides that "entry of judgments may only be had if
there is no appeal or motion for reconsideration timely filed. The date when the
judgment or final resolution becomes executory shall be deemed as the date of its
entry." Incidentally, this procedure also governs before Supreme Court
proceedings.40 Following these rules, therefore, the pendency of Tung Hos MR with

the CA made the entry of the judgment of the Court in the Ting Guan petition
premature and inefficacious for not being final and executory.
Based on the above considerations, the Court would not be in error if it applies its
ruling in the case of Realty Sales Enterprises, Inc. and Macondray Farms, Inc. v.
Intermediate Appellate Court, et al.41 where the Court, in a per curiam resolution,
ruled that an entry of judgment may be recalled or lifted motu proprio when it is
clear that the decision assailed of has not yet become final under the rules:
The March 6, 1985 resolution denying reconsideration of the January 30, 1985
resolution was, to repeat, not served on the petitioners until March 20, 1985 - and
therefore the Jan. 30, 1985 resolution could not be deemed final and executory until
one (1) full day (March 21) had elapsed, or on March 22, 1985 (assuming inaction on
petitioners' part.) The entry of judgment relative to the January 30, 1985 resolution,
made on March 18, 1985, was therefore premature and inefficacious. An entry of
judgment does not make the judgment so entered final and execution when it is not
so in truth. An entry of judgment merely records the fact that a judgment, order or
resolution has become final and executory; but it is not the operative act that make
the judgment, order or resolution final and executory. In the case at bar, the entry of
judgment on March 18, 1985 did not make the January 30, 1985 resolution subject
of the entry, final and executory, As of the date of entry, March 18, 1985, notice of
the resolution denying reconsideration of the January 30, 1985 resolution had not
yet been served on the petitioners or any of the parties, since March 18, 1985 was
also the date of the notice (and release) of the March 6, 1985 resolution denying
reconsideration.1wphi1
According to this ruling, the motu proprio recall or setting aside of the entry of final
judgment was proper and "entirely consistent with the inherent power of every
court inter alia to amend and control its process and orders so as to make them
conformable to law and justice [Sec. 5(g), Rule 135, Rules of Court,]. That the recall
has in fact served to achieve a verdict consistent with law and justice is clear from
the judgment subsequently rendered on the merits." This course of action is
effectively what the Court undertook today, adapted of course to the circumstances
of the present case.
In light of these premises, we hereby REVERSE and SET ASIDE the July 5, 2006
decision and the March 12, 2008 resolution of the Court of Appeals in CA-G.R. SP No.
92828. SP. Proc. No. 11.-5954 is hereby ordered reinstated. Let the records of this
case be remanded to the court of origin for further proceedings. No costs.
SO ORDERED.
ARTURO D. BRION
Associate Justice

Cathay Metal v. Laguna West, G.R. No. 172204, July 2, 2014

G.R. No. 172204

July 2, 2014

CATHAY METAL CORPORATION, Petitioner,

vs.
LAGUNA WEST MULTI-PURPOSE COOPERATIVE, INC., Respondent.
DECISION
LEONEN, J.:
The Rules of Court governs court procedures, including the rules on service of
notices and summons. The Cooperative Code p~ovisions on notices cannot replace
the rules on summons under the Rules of Court. Rule 14, Section 11 of the Rules of
Court provides an-exclusive enumeration of the persons authorized to receive
summons for juridical entities. These persons are the juridical entity's president,
managing partner, general manager, corporate secretary, treasurer, or in-house
counsel.
This petition under Rule45 assails the Court of Appeals decision dated November
25, 2005, and its resolution dated April 5, 2006. The Court of Appeals remanded the
case to the trial court for respondents presentation of evidence.
Respondent Laguna West Multi-Purpose Cooperative is a cooperative recognized
under Republic Act No. 6657 or the Comprehensive Agrarian Reform Law. 1 It
allegedly entered into a joint venture agreement with farmer-beneficiaries through
Certificates of Land Ownership Award (CLOA) in Silang, Cavite. 2 While respondent
was negotiating with the farmer-beneficiaries, petitioner CathayMetal Corporation
entered into Irrevocable Exclusive Right to Buy (IERB) contracts with the same
farmerbeneficiaries.3 Under the IERB, the farmer-beneficiaries committed
themselves to sell to petitioner their agricultural properties upon conversion to
industrial or commercial properties or upon expiration of the period of prohibition
from transferringtitle to the properties.4
In 1996, respondent caused the annotation of its adverse claim on the farmerbeneficiaries certificates of title.5
On November 9, 1998, the Department of Agrarian Reform issued an order
converting the properties from agricultural to mixed use. 6
In 1999, petitioner and the farmer-beneficiaries executed contracts of sale of the
properties.7 Transfer certificates of titlewere also issued in the name of petitioner in
the same year.8 The annotations in the original titles were copied to petitioner's
titles.9
Respondents Vice-President, Orlando dela Pea, sent two letters dated March 20,
2000 and April 12, 2000 to petitioner, informing it of respondents claim to the
properties.10 Petitioner did not respond.11
On September 15, 2000,petitioner filed a consolidated petition for cancellation of
adverse claims on its transfer certificates of title with the Regional Trial Court of
Tagaytay City.12 It served a copy of the petition by registered mail to respondent's

alleged official address at "Barangay Mayapa, Calamba, Laguna." 13 The petition was
returned to sender because respondent could not be found at that address. 14 The
postman issued a certification stating that the reason for the return was that the
"cooperative [was] not existing." 15 Petitioner allegedly attempted to serve the
petition upon respondent personally. 16 However, this service failed for the same
reason.17
Upon petitioner's motion, the Regional Trial Court issued an order on December 15,
2000 declaring petitioners substituted service, apparently by registered mail, 18 to
have been effected,19 thus:
Acting on the "Manifestation And Motion For Substituted Service" filed by petitioner
Cathay Metal Corporation, thru counsel, and finding the reasons therein statedto be
meritorious, the same is hereby GRANTED.
Accordingly, this Court hereby declares that substituted service of the Consolidated
Petition for Cancellation of Adverse Claim on the President of Laguna West MultiPurpose Cooperative, Inc. has been effected. The latter ishereby given a period of
fifteen (15) days from the delivery of said pleadings to the Clerk of Court within
which to file their opposition to the Consolidated petition for cancellation of adverse
claim.20
Petitioner was later allowed to present its evidence ex parte. 21
Upon learning that a case involvingits adverse claim was pending, respondent,
through Mr. Orlando dela Pea, filed a manifestation and motion, alleging that
respondent never received a copy of the summons and the petition. 22 It moved for
the service of the summons and for a copy of the petition to be sent to No. 160,
Narra Avenue, Looc, Calamba, Laguna.23
The Regional Trial Court granted respondent's manifestation and motion on March
16, 2001.24 It ordered that respondent be furnished with a copy of the petition at its
new address.25
Instead of furnishing respondent with a copy of the petition, petitioner filed on April
16, 2001 a motion for reconsideration of the March 16, 2001 Regional Trial Court
order.26 In its motion for reconsideration, petitioner argued that the case was
already submitted for decision after all of petitioners evidence had been admitted,
and a memorandum had been filed. 27 Therefore, it was too late for respondent to
ask the court that it be furnished with a copy of the petition. 28 Moreover, because
respondent was already in default, a manifestation and motion, without allegations
of grounds for a motion to lift order of default, would not give it personality to
participate in the proceedings. 29 Petitioner sent a copy of the motion for
reconsideration to respondent by registered mail and set the motion for hearing on
April 20, 2001.30 Respondent failed to appear atthe hearing on the motion for
reconsideration. On April 20, 2001, the Regional Trial Court submitted the motion for
resolution.31

Respondent received a copy of the motion for reconsideration after the hearing. On
August 13, 2001, respondent filed a motion for leave to admit attached
opposition32 and opposition to petitioners motion for reconsideration of the March
16,2001 Regional Trial Court order. 33 Respondent argued that since petitioners ex
parte presentation of evidence was secured through extrinsic fraud, there should be
a new trial to give respondent a fair day in court. 34 This was opposed by petitioner
on September 6, 2001.35 Petitioner emphasized its alleged compliance with the
Cooperative Code rule on notices and respondents failure to file its comment
despite the courts order that approved petitioners substituted service. 36 Petitioner
further pointed out that it had always questioned the authority of Mr. dela Peato
act for respondent.37
On January 16, 2003, the Regional Trial Court granted petitioner's motion for
reconsideration.38 It found that respondent's alleged representatives failed to prove
their authorities to represent respondent. 39 It ruled that service should be made to
the address indicated in its Cooperative Development Authority Certificate of
Registration.40 The case was declared submitted for decision. 41
Respondent filed a motion for reconsideration of the January 16, 2003 order of the
Regional Trial Court.42
On March 21, 2003, the Regional Trial Court issued a decision granting petitioners
petition for cancellation of annotations. 43 The Register of Deeds of Cavite was
ordered to cancel the annotations onthe certificates of title. 44
On April 3, 2003, the Regional Trial Court issued an order 45 rescinding its March 21,
2003 decision for having been prematurely rendered, thus:
This is regard to the Decision dated March 21, 2003 which the Court has rendered in
this particular case.
A review of the records show that the court for reasons unexplained, has committed
an error in judgment in rendering said decision unmindful of the fact thatthere is
still a pending incident (Oppositor Lagunas Motion for Reconsideration) which has
first to be resolved.
Fully aware that the error if allowed to remain unrectified would cause a grave
injustice and deeply prejudiced [sic] the herein respondent, the Court, faithfully
adhering to the principle enunciated by the Honorable Supreme Court in the case of
Astraquilio vs Javier, 13 CRA 125 which provides that:
"It is one of the inherent powers of the court to amend and control its process and
orders so as to make them conformable to law and justice. This power includes the
right to reverse itself, especially when in its opinion it has committed an error or
mistake in judgment, and that to adhere to its decision will cause injustice to a party
litigant."

do hereby, with deep and sincere apologies to the party-litigants, more particularly
to the herein respondent Laguna West Multi-Purpose Cooperative, Inc., RECALL and
RESCIND its Decision which was prematurely rendered. 46
In an order dated May 26, 2003, the Regional Trial Court denied respondents
motion for reconsideration of the January 16, 2003 order. 47
On June 23, 2003, the Regional Trial Court decided to grant 48 petitioner's petition for
cancellation of annotation on the basis of the following facts: 49
. . . These annotations were subsequently copied to the Transfer Certificates of Titles
over the parcels of land subject of this suit that were issued in the name of Cathay. .
. . Upon verification, Cathay found that Laguna did not file any claim against the
farmer-beneficiaries or Cathay since the time the annotations were made. . . .
Moreover, affidavits of adverse claim and supporting documents that Laguna
supposedly submitted to the Register of Deeds of Cavite were certified bythe
Register of Deeds to be inexistent in the registry's vault. . . . Moreover, the
Cooperative Development Authority likewise certified that Laguna has been
inoperative since 1992 and during the period when the annotations were made in
1996. The Bureau ofPosts has also certified that Laguna's office at Barangay
Mayapa, Calamba, Laguna, its official address as indicated in its Articles of
Incorporation and Confirmation of Registration is "closed". 50
According to the Regional Trial Court, since respondent was inoperative at the time
when its adverse claims were annotated, "there [was] no reason for [it] to believe
that the person who caused the annotations of adverse claim on the titles of the
farmer-beneficiaries . . . was authorized to do so." 51
The Regional Trial Court ordered the Register of Deeds to cancel the annotations on
the transfer certificates of title. 52 It held that Section 70 of Presidential Decree No.
1529 or the Property Registration Decree declares that "an adverse claim is
effective [only]for a period of thirty (30) days and may be cancelled upon filing of a
verified petition after the lapse of this period." 53 Since the 30-day period had already
lapsed, the annotations were already the subject of cancellation. 54
Respondent appealed to the Court of Appeals based on two grounds:
1) Petitioner-appellee secured the favorable orders of the lower court in fraud
of appellant LagunaWest by sending the petition, all other pleadings, and
notices to its former address, thus, denying its day in court; and
2) The trial court erred in applying the rule on substituted service, thus, it did
not validly acquire jurisdiction over the appellant. 55
The Court of Appeals granted respondent's appeal on November 25, 2005. The
dispositive portion of the Court of Appeals' decision reads:

WHEREFORE, premises considered, the appeal is hereby granted. The case is

ordered remanded for appellant's presentation of evidence and thereafter, for the
trial court to render judgment, albeit with dispatch. 56
The Court of Appeals ruled thatthere was no valid service of summons upon
respondent in accordance with Rule 14, Section 11 of the Revised Rules of Civil
Procedure.57 Hence, the "court acquire[d] no jurisdiction to pronounce a judgment in
the case."58
The Court of Appeals denied petitioner's motion for reconsideration on April 5,
2006.59
The issue in this case is whether respondent was properly served with summons or
notices of the hearing on the petition for cancellation of annotations of adverse
claim on the properties.
Petitioner emphasized the following points:
Summons was served upon respondentat its official registered address at Barangay
Mayapa, Calamba, Laguna.60Since no one received the summons, petitioner insisted
that the trial court issue an order to effect substituted service. 61 Respondent still did
not file its answer.62
Later, a certain Orlando dela Pea would filea manifestation and motion dated
February 27, 2001 purportedly on behalf of respondent. 63 Mr. dela Pea claimed that
he was an authorized representative of respondent and that respondent was already
holding office at No. 160, Narra Avenue, Looc, Calamba, Laguna, which was not the
official address of respondent. 64 Mr. dela Pea never submitted proof of his authority
torepresent respondent. He was also never a memberof respondent cooperative. 65
However, Mr. dela Pea was stillallowed to file an answer or opposition. 66 Petitioner
filed a motion for reconsideration opposing the order allowing him to file an answer
or opposition on behalf of respondent. 67Respondent failed to oppose this. He did not
participate further.68 Later, a certain Mr. Geriberto Dragon would claim to be an
officer of respondent. He would file an opposition on its behalf after the period to file
an opposition had lapsed.69 Mr. Dragon alleged that respondents address was at No.
167, Barangay Looc, Calamba, Laguna.70Like Mr. dela Pea, Mr. Dragon had never
been a member or officer of respondent.71
Petitioner argued that Mr. dela Pea and Mr. Dragon never submitted proof of their
authority to represent respondent.72 They were never officers or members of
respondent cooperative.73 Therefore, petitioner cannot be blamed for being
skeptical about Mr. dela Peas and Mr. Dragons claims of authority. 74
Moreover, Mr. dela Pea and Mr. Dragon could not claim to have been authorized to
represent respondent because it was determined to be inoperative since 1992. 75 In
2002, respondent was dissolved by the Cooperative Development Authority. 76

Petitioners motion for reconsideration of the trial court order allowing respondent to
file an answer or opposition to the petition for cancellation of annotation was
granted because of Mr. dela Peas and Mr. Dragons failure to show evidence
ofauthority to act on behalf of respondent.77
Petitioner argued that summons could only be validly served to respondents official
address as indicated in its registration with the Cooperative Development
Authority.78 This is because respondent as a registered cooperative is governed by
Republic Act No. 6938, a substantive law that requires summons to be servedto
respondents official address.79
Substantive law takes precedence over procedural rules. 80
Petitioner cites Article 52 of Republic Act No. 6938:
Article 52. Address. Every cooperative shall have an official postal address to
which all notice and communications shall be sent. Such address and every change
thereof shall be registered with the Cooperative Development Authority.
Further, petitioner argues that there is no law that requires parties to serve
summons to "every unsubstantiated address alleged by [a] party." 81
Petitioner also argued that the Court of Appeals erred when it remanded the case
for trial because respondent already admitted that its adverse claims were based
not on a right over the property but on the "alarm[ing] . . . possibility of losing the
deal"82 with the owners of the property. There was no agreement yet vesting in
respondent any right over the properties. 83 Moreover, the annotations on the title
were made in 1996 when respondent was already inoperative. 84
Meanwhile, respondent emphasized thatit entered into a joint venture agreement
with the farmer-beneficiaries.85While in the process of negotiations, petitioner
suddenly entered into the picture by offering the farmer-beneficiaries an
IrrevocableExclusive Right to Buy (IERB) contracts. 86 It was then that respondent
caused the annotation of an adverse claim on the titles. 87
Respondent, through its Vice President, Mr. dela Pea, wrote two letters between
March and April 2000 relative to its adverse claims in an attempt to amicably settle
what seemed then as a brewing dispute. 88 These letters were written on
respondents letterheads indicating the address, No. 167, Barangay Looc, Calamba,
Laguna.89
Petitioner deliberately served summons upon respondent to its old address. 90 Later,
petitioner would be allowed to present evidence ex parte. 91
Moreover, respondent was unable to appear at the hearing on the motion for
reconsideration of the court order allowing respondent to file its answer or
opposition. Basedon the records, respondents failure to appear was due to
petitioner setting the hearing on April 20, 2001 and mailing respondents a copy of
the motion on April 16, 2001 or just four (4) days before the hearing. 92

Respondent filed a motion for leave to admit attached opposition to petitioners

motion for reconsideration. This was opposed by petitioner. Pending respondents
motion for leave toadmit attached opposition, the trial court already issued its order
dated January 16, 2013, granting petitioners motion for reconsideration of the order
allowing respondent to file its answer or opposition to the petition for cancellation of
adverse claims.93
Respondent filed a motion for reconsideration of the order dated January 16, 2003.
While the said incidents were pending,the trial court rendered its decision dated
March 21, 2003, granting petitioners petition to cancel the annotations of adverse
claims.94 This, according to respondent, was a premature decision. 95
The trial court rescinded the March 21, 2003 decision. On May 26, 2003, the trial
court denied respondents motion for reconsideration. 96
Within the period allowed for respondent to file its petition for certiorari, the trial
court rendered judgment granting petitioners petition to cancel the annotations of
adverse claims on the title.97
Respondent appealed to the Court of Appeals. The appellate court remanded the
case to the lower court so that respondent could be allowed to present evidence. 98
Respondent argued that petitioner was not being fair when it served summons to
respondents old address despite knowledge of its actual address. 99
Moreover, respondent argued that itsrights over the property should be best
determined after trial.100
According to respondent, had there been a trial, it would have:
4.2.1 Presented documentary evidence that its negotiation with the former
landowners had earned for it part-ownership of the properties, or at the very
least, the exclusive authority to deal with potential buyers or developers of
the properties such as petitioner.
4.2.2 Offered in evidence the actual Joint Venture Agreements ("JVA")
between the former landowners and Laguna West whereby Laguna West had
made partial payment of the former landowners 40% share in the joint
venture. Laguna Westhad thus acquired interest over the properties, or had
the same or better right than the registered owner thereof.
4.2.3 Proved by competent evidence that the annotation sought to be
cancelled was not a simple adverse claim but qualifies as a registration of an
interest over the subject properties;
4.2.4 Presented Laguna Wests authorized representatives, Orlando dela
Pea, Geriberto Dragon and Ediza Saliva, and one or two of the original
landowners to testify on their dealings with Laguna West.

4.2.5 Called on the officers of the CD on questions about a cooperatives

address of record vis--vis its actualaddress as known to the party that the
cooperativehad previously been communicating with, in this case,
petitioner.101
We rule that respondent was not validly served with summons or notice of the
hearing. However, its annotations of adverse claims should be cancelled for being
based on a future claim.
I
Respondent was not validly served with summons
Republic Act No. 6938 of 1990 or the Cooperative Code of the Philippines provides
that cooperatives are mandated to have an official postal address to which notices
shall be sent, thus:
Art. 52. Address. Every cooperative shall have an official postal address to which
all notices and communications shall be sent. Such address and every change
thereof shall be registered with the Cooperative Development Authority.
This provision was retained in Article 51 of RepublicAct No. 9520 or the Philippine
Cooperative Codeof 2008. Article 51 provides:
Art. 51. Address. Every cooperativeshall have an official postal address to which all
notices and communications shall be sent. Such address and every change thereof
shall be registered with the Authority.
Relying on the above provision, petitioner argued that respondent was sufficiently
served with summons and a copy of its petition for cancellation of annotations
because it allegedly sent these documents to respondents official address as
registered with the Cooperative Development Authority. Petitioner further argued
that the Rules of Procedure cannot trump the Cooperative Code with respect to
notices. This is because the Cooperative Code is substantive law, as opposed to the
Rules of Procedure, which pertains only to matters of procedure.
Petitioner is mistaken.
The promulgation of the Rules of Procedure is among the powers vested only in this
court. Article VIII, Section 5(5) provides:
Sec. 5. The Supreme Court shall have the following powers:
....
(5) Promulgate rules concerning the protection and enforcement of constitutional
rights, pleading, practice, and procedure in all courts, the admission to the practice
of law,the integrated bar, and legal assistance to the underprivileged.Such rules
shall provide a simplified and inexpensive procedure for the speedy disposition of
cases, shall be uniform for all courts of the same grade, and shall not diminish,

increase, or modifysubstantive rights. Rules of procedure of special courts and

quasi-judicial bodies shall remain effective unless disapproved by the Supreme
Court.
This means that on matters relating toprocedures in court, it shall be the Rules of
Procedure that will govern. Proper court procedures shall be determined by the
Rules as promulgated by this court.
Service of notices and summons on interested parties in a civil, criminal, or special
proceeding is court procedure. Hence, it shall be governed by the Rules of
Procedure.
The Cooperative Code provisions may govern matters relating to cooperatives
activities as administered by the Cooperative Development Authority. However, they
are not procedural rules that will govern court processes. A Cooperative Code
provision requiring cooperatives to have an official address to which all notices and
communications shall be sent cannot take the place of the rules on summonsunder
the Rules of Court concerning a court proceeding.
This is not to say that the noticescannot be sent to cooperatives in accordance with
the Cooperative Code. Notices may be sent to a cooperatives official address.
However, service of notices sent to the official address in accordance with the
Cooperative Code may not be used as a defense for violations of procedures,
specially when such violation affects another partys rights.
Section 11, Rule 14 of the Rules ofCourt provides the rule on service of summons
upon a juridical entity. It provides that summons may be served upon a juridical
entity only through its officers. Thus:
Sec. 11. Service upon domestic private juridical entity. When the defendant is a
corporation, partnership or association organized under the laws of the Philippines
with a juridical personality, service may be made on the president, managing
partner, general manager, corporate secretary, treasurer, or in-house counsel.
We have already established that the enumeration in Section 11 of Rule 14 is
exclusive.102 Service of summons upon persons other than those officers
enumerated in Section 11 is invalid. 103 Even substantial compliance is not sufficient
service of summons.104
This provision of the rule does not limit service to the officers places of residence or
offices. If summons may not be served upon these persons personally at their
residences or offices, summons may be served upon any of the officers wherever
they may be found.
Hence, petitioner cannot use respondent's failure to amend its Articles of
Incorporation to reflect its new address as an excuse from sending or attempting to
send to respondent copies of the petition and the summons. The Rules of Court
provides that noticesshould be sent to the enumerated officers. Petitioner failed to
do this. Nonotice was ever sent to any of the enumerated officers.

Petitioner insists that it should not be made to inquire further as to the whereabouts
of respondent after the attempt to serve the summons by registered mail to
respondents address as allegedly indicated in its Articles of Incorporation. The
Rules does not provide that it needs to do so. However, it provides for service by
publication. Service by publication is available when the whereabouts of the
defendant is unknown. Section 14, Rule 14 of the Rules of Court provides:
Sec. 14. Service upon defendant whose identity or whereabouts are unknown. In
any action where the defendant is designated as an unknown owner, or the like, or
whenever his whereabouts are unknown and cannot be ascertained by diligent
inquiry, service may, by leave of court, be effected upon him by publication in a
newspaper of general circulation and in such places and for such time as the court
may order. (Emphasis supplied)
This is not a matter of acquiringjurisdiction over the person of respondent since this
is an action in rem. In an action in rem, jurisdiction over the person is not required
as long asthere is jurisdiction over the res. This case involves the issue of fair play
and ensuring that parties are accorded due process.
In this case, petitioner served summons upon respondent by registered mail and,
allegedly, by personal service at the office address indicated in respondents
Certificate of Registration. Summons was not served upon respondents officers. It
was also not published in accordance with the Rules of Court. As a result,
respondent was not given an opportunity to present evidence, and petitioner was
able to obtain from the Regional Trial Court an order cancelling respondents
annotations of adverse claims.
Respondent was, therefore, not validly served with summons.
II
Respondents
operation
authorizing
its
proceedings

alleged
does
a
behalf

not
person

bar
to
in

it
act

nonfrom
on
court

Petitioner argues that failure to serve the summons upon respondent was due to
respondent's non-operation and failure to amend its Articles of Incorporation to
reflectits new address. Petitioner's conclusion that respondent was no longer
operating was based only on the postmaster's certification. According to the
postmasters certification, it failed to serve the petition for cancellation of
annotation to respondents official address becauseof respondents nonexistence or
closure. Petitioner failed to consider that the postmaster was not in the position to
make a reliable statement as to the existence or closure of an entity.
Moreover, the Cooperative Development Authority's certification stating that
respondent was not submitting any financial report since 1992, which was proof of
its non-operation, was a mere statement of what was indicative of non-operation. It
was not yet a conclusive statement that respondent was not in operation.

In any case, even assuming that respondent was not operating, it might still
exercise its powers as a cooperative until it would get dissolved. Section 9 of
Republic Act No. 6938 provides the powers and capacities of registered
cooperatives.
Section 9. Cooperative Powers and Capacities.- A cooperative registered under this
Code shall have the following powers and capacities:
(1) To sue and be sued in its cooperative name;
(2) Of succession;
(3) To amend its articles of cooperation in accordance with the provisions of
this code;
(4) To adopt by-laws not contrary to law, morals or public policy, and to
amend and repeal the same in accordance with this Code;
(5) To purchase, receive, take orgrant, hold, convey, sell, lease, pledge,
mortgage, and otherwise deal with such real and personal property as the
transaction of the lawful affairs of the cooperative may reasonably and
necessarily require, subject to the limitations prescribed by law and the
Constitution;
(6) To enter into division, mergeror consolidation, as provided in this Code;
(7) To join federations or unions, as provided in this Code;
(8) To accept and receive grants, donations and assistance from foreign and
domestic sources; and
(9) To exercise such other powers granted in this Code or necessary to carry
out its purpose or purposes as stated in its articles of cooperation.
Prior to dissolution, a cooperative isentitled to the exercise of these powers. It may
engage indeals involving its properties or rights. It may cause the annotation of
claims it deems to have in order to protect such claim. Contrary to petitioners
claim, respondent is not prevented from authorizing persons to act on its behalf.
In any case, even if petitioner alleged that respondent was already dissolved by
virtue of a November7, 2002 resolution of Cooperative Development Authority, the
relevant acts of respondent had occurred before such resolution.
The resolution of the issue of representation could have facilitated the resolution of
the case on the merits.
III
The
resolved

trial

court
the

could
issue

have
of

representation;
decisions elicit suspicion

premature

The court must not trifle with jurisdictional issues. It is inexcusable that a case
involving issues that the trial court had full control of had to be elevated to this
court for determination.
The trial court had every opportunityto resolve the validity of Mr. dela Peas and
Mr. Dragons alleged authority to act on behalf of respondent. The trial court had, in
fact, already allowed respondent to file its answer and oppose petitioners
petitionfor cancellation of annotation. It could have easily ordered Mr. dela Pea or
Mr. Dragon to produce evidence of their authority to represent respondent.
Moreover, there had been at least two motions for reconsideration filed before the
trial court finallydecided the petitioners petition for cancellation of annotation.
The first was filed by petitioner when the trial court granted respondents
manifestation and motion on March 16, 2001. The trial court could have heard the
parties on the issue of representation at this instance had it noted petitioners noncompliance with the rule that the notice of hearing must "be served in such a
manner as to ensure its receipt by the other party at least three (3) days before the
date of the hearing."105 Section 4, Rule 15 provides:
Sec. 4. Hearing of motion. Except for motions which the court may act upon
without prejudicing the rights of the adverse party, every written motion shall be set
for hearing by the applicant. Every written motion required to be heard and the
notice of the hearing thereof shall be served in such a manner as to ensure its
receipt by the other party at least three (3) days before the date of hearing, unless
the court for good cause sets the hearing on shorter notice.
In this case, petitioner set the case for hearing on April 20, 2001. It served a copy
upon respondent by registered mail only on April 16, 2001 or four (4) days before
the set date for hearing. To be covered by the three-day rule under Rule 15, Section
4, petitioner should ensure respondents receipt of the notice by April 17, 2001. We
take judicial notice that service by registered mail in our jurisdiction does not take
place in one day. Service of notice by registered mail only four (4) days before the
date of hearing, therefore, does not amount to ensuring the other partys receipt at
least three (3) days before the hearing.
The second motion for reconsideration was filed by respondent when the Regional
Trial Court granted petitioners motion for reconsideration of its order of March 16,
2001.Hence, for the second time, the trial court had an opportunity to hear whether
Mr. dela Pea or Mr. Dragon was properly authorized to act on behalf of respondent.
On one hand, nobodys rights would have been prejudiced had respondent been
allowed to prove the alleged representatives authorities. On the other hand, there
is a likelihood ofprejudice, in this case, if the court relied purely on technicalities.
Thus, we reiterate this courts ruling in Alonso v. Villamor: 106

. . . In other words, [processes] are a means to an end. When they lose the
character of the one and become the other, the administration of justice is at fault
and courts are correspondingly remiss in the performance of their obvious duty.
. . . To take advantage of [a purely technical error] for other purposes than to cure it,
does not appeal to a fair sense of justice. Its presentation as fatal to [a party]s case
smacks of skill rather than right. A litigation is not a game of technicalities in which
one, more deeply schooled and skilled in the subtle art of movement and position,
entraps and destroys the other. It is, rather, a contest in which each contending
party fully and fairly lays before the court the facts in issue and then, brushing aside
as wholly trivial and indecisive all imperfections of form and technicalities of
procedure, asks that justice be done upon the merits. Lawsuits, unlike duels, are not
to be won by a rapiers thrust. Technicality, when it deserts its proper office as anaid
to justice and becomes its great hindrance and chief enemy, deservesscant
consideration from courts. There should be no vested rights in technicalities. No
litigant should be permitted to challenge a record of a court of these Islands for
defect of form when his substantial rights have not been prejudiced thereby.
Both motions for reconsideration filed in the trial court were opportunities to hear
the parties on the issue of representation and to ensure that all parties were given
their fair opportunity to be heard. The trial court ignored both opportunities and
chose to rule based on technicalities to the prejudice of respondent.
The rules cannot be interpreted asa means to violate due process rights. Courts
should, as much as possible, give parties the opportunity to present evidence as to
their claims so that decisions will be made based on the merits of the case.
The trial court issued a decision pending incidents yet to be resolved. We take this
opportunity to remind courtsthat the issuance of fair decisions is the heart of our
functions. The judiciary is expected to take seriously its task of crafting decisions
with utmostjudiciousness. Premature decisions only elicit suspicion of the courts and
diminish our role as administrator of justice.
IV
Rights
are not adverse claims

still

under

negotiations

Ordinarily, this case would be remanded to the trial court for the presentation of
respondents evidence. However, this case has been pending in this court for about
eight (8) years.In the interest of judicial economy and efficiency, and given that the
court records are sufficient to make a determination on the validity of respondents
adverse claim, we shall rule on the issue. Respondent had been assailing the lack of
service of summons upon it and the resulting cancellation of its alleged adverse
claim on the titles. Its claim is anchored on its disrupted negotiations with the
farmer-beneficiaries involving the properties. In its memorandum filed on March 1,
2007, respondent stated:
1.2 Some ten (10) years ago, Laguna West entered into [sic] Joint Venture
Agreement ("JVA") with various farmer-CLOA beneficiaries in the Kaong-Kalayugan

area of Silang, Cavite for a total lot area of Eight Hundred Fifty Five Thousand and
Nine Hundred Fourteen (855,914) square meters.
1.3 To hold the CLOA beneficiaries to their commitment to submit their respective
lots to the JVA, Laguna West promised them a guaranteed share of 40% in the
proceeds of the project.
1.4 But, while Laguna West was still in the process of finalizing the negotiations with
these farmer-beneficiaries, petitioner entered the picture by offering an alleged
"Irrevocable Exclusive Right to Buy (IERB)" contracts with the same farmerlandowners for the purpose of converting the subject vast track [sic] of land into an
industrial, commercial and residential area.
1.5 Alarmed with the possibility that it could lose the deal to a big and moneyed
corporation, Laguna Westcaused the annotation of adverse claims on the thirty-nine
(39) TCTs in 1996.107 Respondents annotations on petitioners certificates of title are
similarly worded, thus:
Entry No. . . . -AFFIDAVIT OF ADVERSE CLAIM- Covering the parcel of land described
in this title as per Affidavit of Adverse Claim executed by Calisto M. Dela Pena [sic]
of Laguna West Multi-Purpose Cooperative Inc., wherein the registered owner
entered into a Joint Venture Agreement, as per Affidavit ofAdverse Claim, subs. and
sworn to before the Not. Public for . . ., a copy is on file in this registry.
Date of inst.- . . . .
Date of inscription- . . . .
NOTE: The foregoing annotations were copied from TCT. . . . 108
Another version of the annotation is worded as follows:
Entry No. . . . -ADVERSE CLAIM- Signed and executed by Calixto M. dela Pena [sic],
president and Chairman of Cooperative, [alleging] therein the existence of Joint
Venture Agreement with the registered owner and that there are aboutto dispose
said lot, exec. before the Not. Public . . . Copy is on file in this registry. Date of inst.- .
. . . Date of inscription- . . . .109
NOTE: The foregoing annotations were copied from TCT. . . .
The purpose of annotations of adverse claims on title is to apprise the whole world
of the controversy involving a property. These annotations protect the adverse
claimant's rights before or during the pendency of a case involving a property. It
notifies third persons that rights that may be acquired with respect to a property are
subject to the results of the case involving it.
Section 70 of Presidential Decree No. 1529 or the Property Registration Decree
governs adverse claims. It describes an adverse claim as a statement in writing

setting forth a subsequent right or interest claimed involving the property, adverse
tothe registered owner. Thus:
Section 70. Adverse claim. Whoever claims any part or interest in registered land
adverse to the registered owner, arising subsequent to the date of the original
registration, may, if no other provision is made in this Decree for registering the
same, make a statement in writing setting forth fully his alleged right or interest,
and how or under whom acquired, a reference to the number of the certificate of
title of the registered owner, the name of the registered owner, and a description of
the land in which the right or interest is claimed.
The statement shall be signed and sworn to, and shall state the adverse claimants
residence, and a place at which all notices may be served upon him. This statement
shall be entitled to registration as an adverse claim on the certificate of title. The
adverse claim shall be effective for a period of thirty days from the date of
registration. After the lapse ofsaid period, the annotation of adverse claim may be
cancelled upon filing of a verified petition therefor by the party in interest: Provided,
however, that after cancellation, no second adverse claim based on the same
ground shall be registered by the same claimant.
Before the lapse of thirty days aforesaid, any party in interest may file a petition in
the court of First Instance where the land is situated for the cancellation of the
adverse claim, and the court shall grant a speedy hearing upon the question of the
validity of such adverse claim, and shall render judgment as may be just and
equitable. If the adverse claim is adjudged to be invalid, the registration thereof
shall be ordered cancelled. If, in any case, the court, after notice and hearing, shall
find that the adverse claim thus registered was frivolous, it may fine the claimant in
an amount not less than one thousand pesos nor more than five thousand pesos, in
its discretion. Before the lapse of thirty days, the claimant may withdraw his
adverse claim by filing with the Register of Deeds a sworn petition to that effect.
A claim based on a future right does notripen into an adverse claim as defined in
Section 70 of Presidential Decree No. 1529. A right still subject to negotiations
cannot be enforced against a title holder or against one that has a legitimate title to
the property based on possession, ownership, lien, or any valid deed of transfer.
Respondents claim was not based on any of those.1awp++i1 Its claim was based
on a deal with the CLOA farmer-beneficiaries, which did not materialize.
Respondent alleged that had there been a trial, it could have "[p]resented
documentary evidence that its negotiation with the former landowners had earned
for it part-ownership of the properties, or . . . the exclusive authority to deal with
potential buyers or developers."110 Respondent contradicts itself. For there to be a
contract, there must be a meeting of the minds between the parties. There could
not have been any contract earning for respondent part-ownership or any right
since it was still undergoing negotiations with the farmer-beneficiaries. At that
stage, meeting of the minds was absent. The terms were not yet final. Hence, no
right or obligation could attach to the parties. In essence, parties cannot claim,
much less make an adverse claim of any right, from terms that are still under
negotiations.

Respondent also alleged that had it been allowed to offer as evidence the joint
venture agreement it entered with the farmer-beneficiaries, it would have shown
that it "had made partial payment of the former landowners 40% share in the joint
venture,"111 acquiring for itself an "interest over the properties, or . . . better right
than the registered owner[s]."112 Respondent was mistaken.
Republic Act No. 6657 or the Comprehensive Agrarian Reform Law prohibits its own
circumvention. The prohibition on disposition includes all rights relating to
disposition such as sale, and promise of sale of property upon the happening of
conditions that remove the restrictions on disposition.
Republic Act No. 6657 prohibits the sale, transfer, or conveyance of awarded lands
within ten (10) years, subject only to a few exceptions. Section 27 of the Act
provides:
SECTION 27. Transferability of Awarded Lands. Lands acquired by beneficiaries
underthis Act may not be sold, transferred or conveyed except through hereditary
succession, or to the government, or the LBP, or to other qualified beneficiaries for a
period of ten (10) years: provided, however, that the children or the spouse of the
transferorshall have a right to repurchase the land from the government or LBP
withina period of two (2) years. Due notice of the availability of the land shall be
given by the LBP to the Barangay Agrarian Reform Committee (BARC) of the
barangay where the land is situated. The Provincial Agrarian Reform Coordinating
Committee (PARCCOM) as herein provided, shall, in turn, be given due notice
thereof by the BARC.
If the land has not yet been fully paid by the beneficiary, the rights to the land may
be transferred orconveyed, with prior approval of the DAR, to any heir of the
beneficiary or to any other beneficiary who, as a condition for such transferor
conveyance, shall cultivate the land himself. Failing compliance herewith, the land
shall be transferred to the LBP which shall give due notice of the availability of the
land in the manner specified in the immediately preceding paragraph.
In the event of such transfer to the LBP, the latter shall compensate the beneficiary
in one lump sum for the amounts the latter has already paid, together with the
value of improvements he has made on the land Republic Act No. 6657 also
provides that the awarded lands may be converted to residential, commercial,or
industrial use if these are not economically feasible anymore or because of
urbanization, greater economic value will be derived with their conversion. Section
65 of the Act provides:
SECTION 65. Conversion of Lands. After the lapse of five (5) years from its award,
when the land ceases to be economically feasible and sound for agricultural
purposes, or the locality has become urbanized and the land will have a greater
economic value for residential, commercial or industrial purposes, the DAR, upon
application of the beneficiary or the landowner, with due notice to the affected
parties, and subject to existing laws, may authorize the reclassification or
conversion of the land and its disposition: provided, that the beneficiary shall have
fully paid his obligation.

These provisions imply the following on rules on sale of awarded lands:

1) Subject to a few exceptions, landsacquired by beneficiaries may be
conveyed to non-beneficiaries after ten (10) years.
2) Before the lapse of ten (10) years but after the lapse of five (5) years, a
beneficiary may dispose of the acquired land if it "ceases to be economically
feasible and sound for agricultural purposes, or the locality has become
urbanized and the land will have a greater economic value" 113 with its
residential, commercial, or industrial use.
These implications are easily abused. Hence, Republic Act No. 6657 included among
the prohibitions any act that will circumvent its provisions. Thus:
SECTION 73. Prohibited Acts and Omissions. The following are prohibited: (a) The
ownership or possession, for the purpose of circumventing the provisions of this Act,
of agricultural lands in excess of the total retention limits or award ceilings by any
person, natural or juridical, except those under collective ownership by farmerbeneficiaries. (b) The forcible entry or illegal detainer by persons who are not
qualified beneficiaries under thisAct to avail themselves of the rights and benefits of
the Agrarian Reform Program. (c) The conversion by any landowner of his
agricultural land into any nonagricultural use with intent to avoid the application of
this Act to his landholdings and to dispossess his tenant farmers of the land tilled by
them. (d) The willful prevention or obstruction by any person, association or entity
of the implementation of the CARP. (e) The sale, transfer, conveyance or change of
the nature of lands outside of urban centers and city limits either in whole or in part
after the effectivity of this Act. The date ofthe registration of the deed of
conveyance in the Register of Deeds with respect to titled lands and the date of the
issuance ofthe tax declaration to the transferee of the property with respect to
unregistered lands, as the case may be, shall be conclusive for the purpose of this
Act. (f) The sale, transfer or conveyance by a beneficiary of the right to use or any
other usufructuary right over the land he acquired by virtue of being a beneficiary,
in order to circumvent the provisions of this Act. (Emphasis supplied)
The prohibition from disposition of the properties encompasses all rights relating to
disposition, including the right to convey ownership or to promise the sale and
transfer of property from the farmer-beneficiaries to anyone upon the happening of
certain conditions that will remove the conveyance restrictions.
The conveyance of the property withinthe prohibited period or before its conversion
to non-agricultural use isan outright violation of Republic Act No. 6657. Meanwhile,
the promise of sale of properties upon the happening of conditions that will remove
restrictions carry with it an intent to circumvent the provisions of Republic Act No.
6657. This law prohibits its circumvention.
In this case, the CLOAs were awarded to the farmer-beneficiaries between 1990 and
1992.114 Since the affidavit of adverse claim annotated on petitioners certificates of
title was annotated in 1996 and the properties were converted only in 1998,

respondentsjoint venture agreement with the farmer-beneficiaries could not have

validly transferred rights to respondent.
The 10-year period of prohibition against conveyance had not yet lapsed at that
time.1wphi1 Neither were the properties already converted to non-agricultural use
at that time. Respondent's adverse claim, therefore, based on its alleged payment
of the farmer-beneficiaries' 40% could not be valid.
In sum, whether or not there were provisions on transfer of rights or promise to
transfer rights in the joint venture agreement, there could be no basis for
respondents adverse claim. Lack of that provision means that respondent does not
have any valid claim or right over the properties at all. Meanwhile, inclusion of such
provision is illegal and, therefore, void.
This ruling is also applicable to petitioner, which entered into irrevocable exclusive
right to buy contracts from the farmer-beneficiaries. These contracts provided that
the farmer-beneficiaries committed themselves to selling their properties to
petitioner upon expiration of the period of prohibition to transfer or upon conversion
of the properties from agricultural to industrial or commercial use, whichever comes
first. These contracts were execl!ted between farmer-beneficiaries and petitioner
during the period of prohibition and before the properties' conversion from
agricultural to mixed use. Upon conversion of the properties, these were
immediately sold to petitioner. Intent to circumvent the provisions of Republic Act
No. 6657 is, therefore, apparent. Petitioner's contracts are, therefore, also illegal
and void. Hence, this decision is without prejudice to the right of interested parties.
to seek the cancellation of petitioner's certificates of title obtained in violation of the
law.
WHEREFORE, the petition is GRANTED. The Register of Deeds of Cavite is ORDERED
to cancel the annotations of adverse claims on the transfer certificates of title.
SO ORDERED.
MARVIC MARIO VICTOR F. LEONEN
Associate Justice

Sec. 12. Service upon foreign private juridical entities

See: A.M. No. 11-3-6, March 15, 2011
AM. No. 11-3-6-SC
AMENDMENT OF SECTION 12, RULE 14 OF THE RULES OF COURT ON SERVICE
UPONFOREIGN PRIVATE JURIDICAL ENTITY

Section 12, Rule 14 of the Rules of Court is hereby amended to read as

follows:
"SEC. 12. Service upon foreign private juridical entity. When the defendant
is a foreign private juridical entity which has transacted business in the
Philippines, service may be made on its resident agent designated in
accordance with law for that purpose, or, i f there be no such agent, on the
government official designated by law to that effect, or on any of its officers
or agents within the Philippines.
If the foreign private juridical entity is not registered in the Philippines or has
no resident agent, service may, with leave of court, be effected out of the
Philippines through any of the following means:
a) By personal service coursed through the appropriate court in the foreign
country with the assistance of the Department of Foreign Affairs;
b) By publication once in a newspaper of general circulation in the country
where the defendant may be found and by serving a copy of the summons
and the court order by-registered mail at the last known address of the
defendant;
c) By facsimile or any recognized electronic means that could generate proof
of service; or
d) By such other means as the court may in its discretion direct."
This rule shall take effect fifteen (15) days after publication in a newspaper of
general circulation in the Philippines.
March 15, 2011
Atiko Trans v. Prudential Guarantee, G.R. No. 167545, August 17,
2011
Republic of the Philippines
Supreme Court
Manila
FIRST DIVISION
ATIKO TRANS, INC. and
CHENG LIE NAVIGATION
CO., LTD.,
Petitioners,

G.R. No. 167545

Present:

CORONA, C.J., Chairperson,

LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.

- versus -

PRUDENTIAL GUARANTEE
AND ASSURANCE, INC.,
Promulgated:
Respondent.
August 17, 2011
x---------------------------------------------------------------x
DECISION
DEL CASTILLO, J.:
Where service of summons upon the defendant principal is coursed thru its codefendant agent, and the latter happens to be a domestic corporation, the rules on service
of summons upon a domestic private juridical entity[1] must be strictly complied
with. Otherwise, the court cannot be said to have acquired jurisdiction over the person of
both defendants. And insofar as the principal is concerned, such jurisdictional flaw cannot
be cured by the agents subsequent voluntary appearance.
This Petition for Review on Certiorari assails the December 10, 2004 Decision[2] of
the Court of Appeals (CA) in CA-G.R. SP No. 82547 which affirmed the April 8, 2003
Decision[3] of the Regional Trial Court (RTC), Branch 150, Makati City. Said Decision of the
RTC affirmed the August 6, 2002 Decision [4] of the Metropolitan Trial Court (MeTC), Branch
63, Makati City, which disposed as follows:
WHEREFORE, judgment is rendered declaring defendants Cheng
Lie Navigation Co., Ltd. and Atiko Trans, Inc. solidarily liable to pay plaintiff
Prudential Guarantee & Assurance, Inc. the following amounts:
1.
P205,220.97 as actual damages with interest of 1% per
month from 14 December 1999 until full payment;
2.

P10,000.00 as Attorneys fees; and

3.

Costs of suit.

SO ORDERED.[5]

Likewise assailed is the CAs Resolution[6] dated March 16, 2005 which denied the
Motion for Reconsideration of the said December 10, 2004 Decision.

Factual Antecedents
On December 11, 1998, 40 coils of electrolytic tinplates were loaded on board M/S
Katjana in Kaohsiung, Taiwan for shipment toManila. The shipment was covered by Bill of
Lading No. KNMNI-15126[7] issued by petitioner Cheng Lie Navigation Co., Ltd. (Cheng Lie)
with Oriental Tin Can & Metal Sheet Manufacturing Co., Inc. (Oriental) as the notify
party. The cargoes were insured against all risks per Marine Insurance Policy No. 20RN18749/99 issued by respondent Prudential Guarantee and Assurance, Inc. (Prudential).
On December 14, 1998, M/S Katjana arrived in the port of Manila. Upon discharge
of the cargoes, it was found that one of the tinplates was damaged, crumpled and dented
on the edges. The sea van in which it was kept during the voyage was also damaged,
presumably while still on board the vessel and during the course of the voyage.
Oriental then filed its claim against the policy. Satisfied that Orientals claim was
compensable, Prudential paid Oriental P205,220.97 representing the amount of losses it
suffered due to the damaged cargo.
Proceedings before the Metropolitan Trial Court
On December 14, 1999, Prudential filed with the MeTC of Makati City a
Complaint[8] for sum of money against Cheng Lie and Atiko Trans, Inc. (Atiko). In addition to
the above undisputed facts, Prudential alleged that:
1.
Plaintiff (Prudential) is a domestic insurance corporation
duly organized and existing under the laws of the Philippines with office
address
at
Coyiuto
House,
119
Carlos
Palanca[,] Jr.
St., Legaspi Village, Makati City;
2.
Defendant Cheng Lie Navigation Co. Ltd., is [a] foreign
shipping company doing business in the Philippines [thru] its duly authorized
shipagent defendant Atiko Trans Inc. which is a domestic corporation duly
established and created under the laws of the Philippines with office address
at 7th Floor, Victoria Bldg., United Nation[s] Ave., Ermita, Manila, where both
defendants may be served with summons and other court processes;
3.
At all times material to the cause of action of this
complaint, plaintiff was and still is engaged in, among others, marine
insurance business; Whereas Defendant Cheng Lie Navigation Co. Ltd. was
and still is engaged in, among others, shipping, transportation and
freight/cargo forwarding business, and as such, owned, operated and/or
chartered the ocean going vessel M/S Katjana as common carrier to and

from any Philippine [port] in international trade [thru] its duly authorized
shipagent defendant Atiko Trans Inc. (Both defendants are hereinafter referred
to as the CARRIER);
xxxx
9.
Plaintiff, as cargo-insurer and upon finding that the consignees
insurance claim was in order and compensable, paid the latters claim in the
amount of P205,220.97 under and by virtue of the aforesaid insurance policy,
thereby subrogating herein plaintiff to all the rights and causes of action
appertaining to the consignee against the defendants;[9]
On March 20, 2000, Prudential filed a Motion to Declare Defendant in Default,
[10]
alleging among others that on March 1, 2000 a copy of the summons was served upon
petitioners thru cashier Cristina Figueroa and that despite receipt thereof petitioners failed to
file any responsive pleading. Acting on the motion, the MeTC issued an Order [11] declaring
Cheng Lie and Atiko in default and allowing Prudential to present its evidence ex-parte.
On August 6, 2002, the MeTC rendered its judgment by default. Atiko then filed a
Notice of Appeal[12] dated November 4, 2002.
Proceedings before the Regional Trial Court and the Court of Appeals
In its Memorandum of Appeal,[13] Atiko argued that Prudential failed to prove the
material allegations of the complaint. Atiko asserted that Prudential failed to prove by
preponderance of evidence that it is a domestic corporation with legal personality to file an
action; that Cheng Lie is a private foreign juridical entity operating its shipping business in
the Philippines thru Atiko as its shipagent; that Cheng Lie is a common carrier, which owns
and operates M/S Katjana; that Prudential was subrogated to the rights of Oriental; and, that
Atiko can be held solidarily liable with Cheng Lie.
Although assisted by the same counsel, Cheng Lie filed its own Memorandum of
Appeal maintaining that the MeTC never acquired jurisdiction over its person.
[14]

On April 8, 2003, the RTC rendered its Decision dismissing the appeal and affirming
the Decision of the MeTC. Atiko and Cheng Lie challenged the RTC Decision before the
CA via a Petition for Review[15] under Rule 42 of the Rules of Court but the appellate court
affirmed the RTCs Decision.
Hence, this petition.
Issues

In their Memorandum,[16] petitioners raised the following issues:

1.

WHETHER X X X THE DECISION OF MAKATI [MeTC] WHICH WAS

AFFIRMED BY MAKATI RTC AND THE COURT OF APPEALS IS NULL AND
VOID FOR FAILURE TO ACQUIRE JURISDICTION OVER THE PERSONS OF
THE PETITIONERS-DEFENDANTS CONSIDERING THAT THE SUMMONS
WERE NOT PROPERLY SERVED ON THEM AS REQUIRED BY RULE 14 OF
THE RULES OF COURT.

2.

WHETHER X X X THE RESPONDENT-PLAINTIFF IS REQUIRED TO

PROVE THE MATERIAL ALLEGATIONS IN THE COMPLAINT EVEN IN DEFAULT
JUDGMENT OR WHETHER OR NOT IN DEFAULT JUDGMENT, ALL
ALLEGATIONS IN THE COMPLAINT ARE DEEMED CONTROVERTED, HENCE,
MUST BE PROVED BY COMPETENT EVIDENCE.
2.1. WHETHER X X X RESPONDENT-PLAINTIFF IS OBLIGED TO PROVE
ITS LEGAL PERSONALITY TO SUE EVEN IN DEFAULT JUDGMENT.
2.2. WHETHER X X X RESPONDENT-PLAINTIFF IS OBLIGED TO PROVE
THAT PETITIONER-DEFENDANT ATIKO IS THE SHIPAGENT OF
PETITIONER-DEFENDANT CHENG LIE EVEN IN DEFAULT JUDGMENT.
2.3. WHETHER X X X THE TESTIMONIES OF THE WITNESSES AND THE
DOCUMENTARY EXHIBITS CAN BE CONSIDERED FOR PURPOSES
OTHER THAN THE PURPOSE FOR WHICH THEY WERE OFFERED.
2.4. WHETHER X X X A MOTION TO DECLARE DEFENDANT IN DEFAULT
ADDRESSED AND SENT TO ONLY ONE OF THE DEFENDANTS
WOULD BIND THE OTHER DEFENDANT TO WHOM THE MOTION
WAS NOT ADDRESSED AND NOT SENT.[17]

Our Ruling
The petition is partly meritorious. We shall first tackle the factual matters involved in
this case, then proceed with the jurisdictional issues raised.
Petitioners raised factual matters which are not
the proper subject of this appeal.

Petitioners contend that the lower courts grievously erred in granting the complaint
because, even if they were declared in default, the respondent still has the burden of
proving the material allegations in the complaint by preponderance of evidence. Petitioners
further argue that respondent miserably failed to discharge this burden because it failed to

present sufficient proof that it is a domestic corporation. Hence, respondent could not
possibly maintain the present action because only natural or juridical persons or entities
authorized by law can be parties to a civil action. Petitioners also claim that respondent
failed to present competent proof that Cheng Lie is a foreign shipping company doing
business in the Philippines thru its duly authorized shipagent Atiko. Lastly, petitioners
assert that respondent failed to prove that Cheng Lie is a common carrier which owned,
operated and/or chartered M/S Katjana thru its duly authorized shipagent Atiko. Petitioners
emphasize that there is no proof, testimonial or otherwise, which would support the material
allegations of the complaint. They also insist that respondents witnesses do not have
personal knowledge of the facts on which they were examined.
Respondent, for its part, assails the propriety of the remedy taken by the
petitioners. It posits that petitioners advanced factual matters which are not the proper
subject of a petition for review on certiorari. Besides, the lower courts consistently held that
the allegations in respondents complaint are supported by sufficient evidence.
We agree with respondent.
A cursory reading of the issues raised readily reveals that they involve factual
matters which are not within the province of this Court to look into. Well-settled is the rule
that in petitions for review on certiorari under Rule 45, only questions of law can be
raised. While there are recognized exceptions to this rule,[18] none is present in this
case. [A]s a matter of x x x procedure, [this] Court defers and accords finality to the factual
findings of trial courts, [especially] when such findings were [affirmed by the RTC and the
CA. These] factual determination[s], as a matter of long and sound appellate practice,
deserve great weight and shall not be disturbed on appeal x x x. [I]t is not the function of
the Court to analyze and weigh all over again the evidence or premises supportive of the
factual holding of the lower courts.[19]
MeTC properly acquired jurisdiction over the
person of Atiko.

Petitioners also argue that the MeTC did not acquire jurisdiction over the person of
Atiko as the summons was received by its cashier, Cristina Figueroa. They maintain that
under Section 11, Rule 14 of the Rules of Court, when the defendant is a domestic
corporation like Atiko, summons may be served only upon its president, general manager,
corporate secretary, treasurer or in-house counsel.
We are not persuaded. True, when the defendant is a domestic corporation, service
of summons may be made only upon the persons enumerated in Section 11, Rule 14 of the

Rules of Court.[20] However, jurisdiction over the person of the defendant can be acquired
not only by proper service of summons but also by defendants voluntary appearance
without expressly objecting to the courts jurisdiction, as embodied in Section 20, Rule 14 of
the Rules of Court, viz:
SEC. 20. Voluntary appearance. The defendants voluntary
appearance in the action shall be equivalent to service of summons. The
inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction
over the person of the defendant shall not be deemed a voluntary
appearance.

In the case at bench, when Atiko filed its Notice of Appeal, [21] Memorandum of
Appeal,[22] Motion for Reconsideration[23] of the April 8, 2003 Decision of the RTC, and Petition
for Review,[24] it never questioned the jurisdiction of the MeTC over its person. The filing of
these pleadings seeking affirmative relief amounted to voluntary appearance and, hence,
rendered the alleged lack of jurisdiction moot. In Palma v. Galvez,[25] this Court reiterated
the oft-repeated rule that the filing of motions seeking affirmative relief, such as, to admit
answer, for additional time to file answer, for reconsideration of a default judgment, and to
lift order of default with motion for reconsideration, are considered voluntary submission to
the jurisdiction of the court.
Moreover, petitioners contention is a mere afterthought. It was only in their
Memorandum[26] filed with this Court where they claimed, for the first time, that Atiko was
not properly served with summons. In La Naval Drug Corporation v. Court of Appeals,[27] it
was held that the issue of jurisdiction over the person of the defendant must be seasonably
raised. Failing to do so, a party who invoked the jurisdiction of a court to secure an
affirmative relief cannot be allowed to disavow such jurisdiction after unsuccessfully trying to
obtain such relief.[28]
It may not be amiss to state too that in our February 13, 2006 Resolution, [29] we
reminded the parties that they are not allowed to interject new issues in their
memorandum.
MeTC did not acquire jurisdiction over the person
of Cheng Lie.

Petitioners likewise challenge the validity of the service of summons upon Cheng Lie,
thru Atiko. They claim that when the defendant is a foreign private juridical entity which has
transacted business in the Philippines, service of summons may be made, among others,

upon its resident agent. In this case, however, there is no proof that Atiko is the local agent
of Cheng Lie.

SC,

[30]

On this score, we find for the petitioners. Before it was amended by A.M. No. 11-3-6Section 12 of Rule 14 of the Rules of Court reads:
SEC. 12. Service upon foreign private juridical entity. When the
defendant is a foreign private juridical entity which has transacted business in
the Philippines, service may be made on its resident agent designated in
accordance with law for that purpose, or, if there be no such agent, on the
government official designated by law to that effect, or on any of its officers or
agents within the Philippines.

Elucidating on the above provision of the Rules of Court, this Court declared
in Pioneer International, Ltd. v. Guadiz, Jr.[31] that when the defendant is a foreign juridical
entity, service of summons may be made upon:
1.

Its resident agent designated in accordance with law for that

purpose;

2.

The government official designated by law to receive summons if

the corporation does not have a resident agent; or,

3.

Any of the corporations officers or agents within the Philippines.

In the case at bench, no summons was served upon Cheng Lie in any manner
prescribed above. It should be recalled that Atiko was not properly served with summons as
the person who received it on behalf of Atiko, cashier Cristina Figueroa, is not one of the
corporate officers enumerated in Section 11 of Rule 14 of the Rules of Court. The MeTC
acquired jurisdiction over the person of Atiko not thru valid service of summons but by the
latters voluntary appearance. Thus, there being no proper service of summons upon Atiko
to speak of, it follows that the MeTC never acquired jurisdiction over the person of Cheng
Lie. To rule otherwise would create an absurd situation where service of summons is valid
upon the purported principal but not on the latters co-defendant cum putative agent
despite the fact that service was coursed thru said agent. Indeed, in order for the court to
acquire jurisdiction over the person of a defendant foreign private juridical entity under
Section 12, Rule 14 of the Rules of Court, there must be prior valid service of summons upon
the agent of such defendant.
Also, the records of this case is bereft of any showing that cashier Cristina Figueroa is
a government official designated by law to receive summons on behalf of Cheng Lie or that

she is an officer or agent of Cheng Lie within the Philippines. Hence, her receipt of
summons bears no significance insofar as Cheng Lie is concerned. At this point, we
emphasize that the requirements of the rule on summons must be strictly followed, [32] lest
we ride roughshod on defendants right to due process.[33]
With regard to Cheng Lies filing of numerous pleadings, the same cannot be
considered as voluntary appearance. Unlike Atiko, Cheng Lie never sought affirmative relief
other than the dismissal of the complaint on the ground of lack of jurisdiction over its
person. From the very beginning, it has consistently questioned the validity of the service of
summons and the jurisdiction of the MeTC over its person.
It does not escape our attention though that Cheng Lies pleadings do not indicate
that the same were filed by way of special appearance. But these, to our mind, are mere
inaccuracies in the title of the pleadings. What is important are the allegations contained
therein which consistently resisted the jurisdiction of the trial court. Thus, Cheng Lie cannot
be considered to have submitted itself to the jurisdiction of the courts.[34]
In fine, since the MeTC never acquired jurisdiction over the person of Cheng Lie, its
decision insofar as Cheng Lie is concerned is void.[35]
Cheng Lie was improperly declared in default.

Applying the above disquisition, the MeTC likewise erred in declaring Cheng Lie in
default. Settled is the rule that a defendant cannot be declared in default unless such
declaration is preceded by a valid service of summons.[36]
WHEREFORE, the instant petition is PARTIALLY GRANTED. The assailed
December 10, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 82547 is AFFIRMED
with the MODIFICATION that the judgment insofar as Cheng Lie Navigation Co., Ltd. is
concerned is declared VOID for failure to acquire jurisdiction over its person as there was
improper service of summons.
SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

NM Rothschild v. Lepanto, G.R. No. 175799, November 28, 2011

Republic of the Philippines

Supreme Court
Manila

FIRST DIVISION

NM
ROTHSCHILD
&
(AUSTRALIA) LIMITED,
Petitioner,

SONS
G.R. No. 175799

Present:
- versus -

LEPANTO CONSOLIDATED MINING

COMPANY,
Respondent.

CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.
Promulgated:

November 28, 2011

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION
LEONARDO-DE CASTRO, J.:
This is a Petition for Review on Certiorari assailing the Decision[1] of the Court
of Appeals dated September 8, 2006 in CA-G.R. SP No. 94382 and its
Resolution[2] dated December 12, 2006, denying the Motion for Reconsideration.
On August 30, 2005, respondent Lepanto Consolidated Mining Company filed
with the Regional Trial Court (RTC) of Makati City a Complaint [3] against petitioner NM
Rothschild & Sons (Australia) Limited praying for a judgment declaring the loan and
hedging contracts between the parties void for being contrary to Article 2018 [4] of
the Civil Code of the Philippines and for damages. The Complaint was docketed as
Civil Case No. 05-782, and was raffled to Branch 150. Upon respondents (plaintiffs)
motion, the trial court authorized respondents counsel to personally bring the
summons and Complaint to the Philippine Consulate General in Sydney, Australia for
the latter office to effect service of summons on petitioner (defendant).
On October 20, 2005, petitioner filed a Special Appearance With Motion to
Dismiss[5] praying for the dismissal of the Complaint on the following grounds: (a)
the court has not acquired jurisdiction over the person of petitioner due to the
defective and improper service of summons; (b) the Complaint failed to state a
cause of action and respondent does not have any against petitioner; (c) the action
is barred by estoppel; and (d) respondent did not come to court with clean hands.
On November 29, 2005, petitioner filed two Motions: (1) a Motion for Leave to
take the deposition of Mr. Paul Murray (Director, Risk Management of petitioner)
before the Philippine Consul General; and (2) a Motion for Leave to Serve
Interrogatories on respondent.
On December 9, 2005, the trial court issued an Order [6] denying the Motion to
Dismiss. According to the trial court, there was a proper service of summons
through the Department of Foreign Affairs (DFA) on account of the fact that the
defendant has neither applied for a license to do business in the Philippines, nor
filed with the Securities and Exchange Commission (SEC) a Written Power of
Attorney designating some person on whom summons and other legal processes
maybe served. The trial court also held that the Complaint sufficiently stated a
cause of action. The other allegations in the Motion to Dismiss were brushed aside
as matters of defense which can best be ventilated during the trial.
On December 27, 2005, petitioner filed a Motion for Reconsideration. [7] On
March 6, 2006, the trial court issued an Order denying the December 27, 2005
Motion for Reconsideration and disallowed the twin Motions for Leave to take
deposition and serve written interrogatories.[8]
On April 3, 2006, petitioner sought redress via a Petition for Certiorari[9] with
the Court of Appeals, alleging that the trial court committed grave abuse of

discretion in denying its Motion to Dismiss. The Petition was docketed as CA-G.R. SP
No. 94382.
On September 8, 2006, the Court of Appeals rendered the assailed Decision
dismissing the Petition for Certiorari. The Court of Appeals ruled that since the
denial of a Motion to Dismiss is an interlocutory order, it cannot be the subject of a
Petition forCertiorari, and may only be reviewed in the ordinary course of law by an
appeal from the judgment after trial. On December 12, 2006, the Court of Appeals
rendered the assailed Resolution denying the petitioners Motion for
Reconsideration.
Meanwhile, on December 28, 2006, the trial court issued an Order directing
respondent to answer some of the questions in petitioners Interrogatories to
Plaintiff dated September 7, 2006.
Notwithstanding the foregoing, petitioner filed the present petition assailing
the September 8, 2006 Decision and the December 12, 2006 Resolution of the Court
of Appeals. Arguing against the ruling of the appellate court, petitioner insists that
(a) an order denying a motion to dismiss may be the proper subject of a petition
for certiorari; and (b) the trial court committed grave abuse of discretion in not
finding that it had not validly acquired jurisdiction over petitioner and that the
plaintiff had no cause of action.
Respondent, on the other hand, posits that: (a) the present Petition should be
dismissed for not being filed by a real party in interest and for lack of a proper
verification and certificate of non-forum shopping; (b) the Court of Appeals correctly
ruled thatcertiorari was not the proper remedy; and (c) the trial court correctly
denied petitioners motion to dismiss.
Our discussion of the issues raised by the parties follows:
Whether petitioner is a real party in
interest
Respondent argues that the present Petition should be dismissed on the
ground that petitioner no longer existed as a corporation at the time said Petition
was filed on February 1, 2007. Respondent points out that as of the date of the
filing of the Petition, there is no such corporation that goes by the name NM
Rothschild and Sons (Australia) Limited. Thus, according to respondent, the present
Petition was not filed by a real party in interest, citing our ruling in Philips Export
B.V. v. Court of Appeals,[10] wherein we held:
A name is peculiarly important as necessary to the very
existence of a corporation (American Steel Foundries vs. Robertson,
269 US 372, 70 L ed 317, 46 S Ct 160; Lauman vs. Lebanon Valley R.
Co., 30 Pa 42; First National Bank vs. Huntington Distilling Co., 40 W Va
530, 23 SE 792). Its name is one of its attributes, an element of its
existence, and essential to its identity (6 Fletcher [Perm Ed], pp. 3-4).
The general rule as to corporations is that each corporation must have

a name by which it is to sue and be sued and do all legal acts. The
name of a corporation in this respect designates the corporation in the
same manner as the name of an individual designates the person
(Cincinnati Cooperage Co. vs. Bate, 96 Ky 356, 26 SW 538; Newport
Mechanics Mfg. Co. vs. Starbird, 10 NH 123); and the right to use its
corporate name is as much a part of the corporate franchise as any
other privilege granted (Federal Secur. Co. vs. Federal Secur. Corp., 129
Or 375, 276 P 1100, 66 ALR 934; Paulino vs. Portuguese Beneficial
Association, 18 RI 165, 26 A 36).[11]
In its Memorandum[12] before this Court, petitioner started to refer to itself
as Investec Australia Limited (formerly NM Rothschild & Sons [Australia]
Limited) and captioned said Memorandum accordingly. Petitioner claims that NM
Rothschild and Sons (Australia) Limited still exists as a corporation under the laws of
Australia under said new name. It presented before us documents evidencing the
process in the Australian Securities & Investment Commission on the change of
petitioners company name from NM Rothschild and Sons (Australia) Limited to
Investec Australia Limited.[13]
We find the submissions of petitioner on the change of its corporate name
satisfactory and resolve not to dismiss the present Petition for Review on the ground
of not being prosecuted under the name of the real party in interest. While we
stand by our pronouncement in Philips Export on the importance of the corporate
name to the very existence of corporations and the significance thereof in the
corporations right to sue, we shall not go so far as to dismiss a case filed by the
proper party using its former name when adequate identification is presented. A
real party in interest is the party who stands to be benefited or injured by the
judgment in the suit, or the party entitled to the avails of the suit. [14] There is no
doubt in our minds that the party who filed the present Petition, having presented
sufficient evidence of its identity and being represented by the same counsel as that
of the defendant in the case sought to be dismissed, is the entity that will be
benefited if this Court grants the dismissal prayed for.
Since the main objection of respondent to the verification and certification
against forum shopping likewise depends on the supposed inexistence of the
corporation named therein, we give no credit to said objection in light of the
foregoing discussion.
Propriety of the Resort to a Petition
for Certiorari with the Court of Appeals
We have held time and again that an order denying a Motion to Dismiss is an
interlocutory order which neither terminates nor finally disposes of a case as it
leaves something to be done by the court before the case is finally decided on the
merits. The general rule, therefore, is that the denial of a Motion to Dismiss cannot
be questioned in a special civil action for Certiorari which is a remedy designed to
correct errors of jurisdiction and not errors of judgment. [15] However, we have
likewise held that when the denial of the Motion to Dismiss is tainted with grave

abuse of discretion, the grant of the extraordinary remedy of Certiorari may be

justified. By grave abuse of discretion is meant:
[S]uch capricious and whimsical exercise of judgment that is
equivalent to lack of jurisdiction. The abuse of discretion must be
grave as where the power is exercised in an arbitrary or despotic
manner by reason of passion or personal hostility, and must be so
patent and gross as to amount to an evasion of positive duty or to a
virtual refusal to perform the duty enjoined by or to act all in
contemplation of law.[16]
The resolution of the present Petition therefore entails an inquiry into whether
the Court of Appeals correctly ruled that the trial court did not commit grave abuse
of discretion in its denial of petitioners Motion to Dismiss. A mere error in judgment
on the part of the trial court would undeniably be inadequate for us to reverse the
disposition by the Court of Appeals.
Issues more properly ventilated during
the trial of the case
As previously stated, petitioner seeks the dismissal of Civil Case No. 05-782
on the following grounds: (a) lack of jurisdiction over the person of petitioner due to
the defective and improper service of summons; (b) failure of the Complaint to state
a cause of action and absence of a cause of action; (c) the action is barred by
estoppel; and (d) respondent did not come to court with clean hands.
As correctly ruled by both the trial court and the Court of Appeals, the alleged
absence of a cause of action (as opposed to the failure to state a cause of action),
the alleged estoppel on the part of petitioner, and the argument that respondent is
in pari delicto in the execution of the challenged contracts, are not grounds in a
Motion to Dismiss as enumerated in Section 1, Rule 16 [17] of the Rules of Court.
Rather, such defenses raise evidentiary issues closely related to the validity and/or
existence of respondents alleged cause of action and should therefore be threshed
out during the trial.
As regards the allegation of failure to state a cause of action, while the same
is usually available as a ground in a Motion to Dismiss, said ground cannot be ruled
upon in the present Petition without going into the very merits of the main case.
It is basic that [a] cause of action is the act or omission by which a party
violates a right of another. [18] Its elements are the following: (1) a right existing in
favor of the plaintiff, (2) a duty on the part of the defendant to respect the plaintiff's
right, and (3) an act or omission of the defendant in violation of such right. [19] We
have held that to sustain a Motion to Dismiss for lack of cause of action, the
complaint must show that the claim for relief does not exist and not only that the
claim was defectively stated or is ambiguous, indefinite or uncertain. [20]

The trial court held that the Complaint in the case at bar contains all the three
elements of a cause of action, i.e., it alleges that: (1) plaintiff has the right to ask for
the declaration of nullity of the Hedging Contracts for being null and void and
contrary to Article 2018 of the Civil Code of the Philippines; (2) defendant has the
corresponding obligation not to enforce the Hedging Contracts because they are in
the nature of wagering or gambling agreements and therefore the transactions
implementing those contracts are null and void under Philippine laws; and (3)
defendant ignored the advice and intends to enforce the Hedging Contracts by
demanding financial payments due therefrom. [21]
The rule is that in a Motion to Dismiss, a defendant hypothetically admits the
truth of the material allegations of the ultimate facts contained in the plaintiff's
complaint.[22] However, this principle of hypothetical admission admits of
exceptions. Thus, inTan v. Court of Appeals, [23] we held:
The flaw in this conclusion is that, while conveniently echoing
the general rule that averments in the complaint are deemed
hypothetically admitted upon the filing of a motion to dismiss
grounded on the failure to state a cause of action, it did not take into
account the equally established limitations to such rule, i.e., that a
motion to dismiss does not admit the truth of mere epithets of
fraud; norallegations of legal conclusions; nor an erroneous
statement of law; nor mere inferences or conclusions from facts not
stated; nor mere conclusions of law; nor allegations of fact the
falsity of which is subject to judicial notice; nor matters of evidence;
nor surplusage and irrelevant matter; nor scandalous matter inserted
merely to insult the opposing party; nor to legally impossible facts; nor
to facts which appear unfounded by a record incorporated in the
pleading, or by a document referred to; and, nor to general averments
contradicted by more specific averments. A more judicious resolution
of a motion to dismiss, therefore, necessitates that the court be not
restricted to the consideration of the facts alleged in the complaint and
inferences fairly deducible therefrom. Courts may consider other facts
within the range of judicial notice as well as relevant laws and
jurisprudence which the courts are bound to take into account,
and they are also fairly entitled to examine records/documents
duly incorporated into the complaint by the pleader himself in
ruling on the demurrer to the complaint.[24] (Emphases supplied.)
In the case at bar, respondent asserts in the Complaint that the Hedging
Contracts are void for being contrary to Article 2018 [25] of the Civil
Code. Respondent claims that under the Hedging Contracts, despite the express
stipulation for deliveries of gold, the intention of the parties was allegedly merely to
compel each other to pay the difference between the value of the gold at the
forward price stated in the contract and its market price at the supposed time of
delivery.
Whether such an agreement is void is a mere allegation of a conclusion of
law, which therefore cannot be hypothetically admitted. Quite properly, the relevant

portions of the contracts sought to be nullified, as well as a copy of the contract

itself, are incorporated in the Complaint. The determination of whether or not the
Complaint stated a cause of action would therefore involve an inquiry into whether
or not the assailed contracts are void under Philippine laws. This is, precisely, the
very issue to be determined in Civil Case No. 05-782. Indeed, petitioners defense
against the charge of nullity of the Hedging Contracts is the purported intent of the
parties that actual deliveries of gold be made pursuant thereto. Such a defense
requires the presentation of evidence on the merits of the case. An issue that
requires the contravention of the allegations of the complaint, as well as the full
ventilation, in effect, of the main merits of the case, should not be within the
province of a mere Motion to Dismiss.[26] The trial court, therefore, correctly denied
the Motion to Dismiss on this ground.
It is also settled in jurisprudence that allegations of estoppel and bad faith
require proof. Thus, in Paraaque Kings Enterprises, Inc. v. Court of Appeals,[27] we
ruled:
Having come to the conclusion that the complaint states a valid
cause of action for breach of the right of first refusal and that the trial
court should thus not have dismissed the complaint, we find no more
need to pass upon the question of whether the complaint states a
cause of action for damages or whether the complaint is barred by
estoppel or laches. As these matters require presentation and/or
determination of facts, they can be best resolved after trial on
the merits.[28] (Emphases supplied.)
On the proposition in the Motion to Dismiss that respondent has come to
court with unclean hands, suffice it to state that the determination of whether one
acted in bad faith and whether damages may be awarded is evidentiary in
nature. Thus, we have previously held that [a]s a matter of defense, it can be best
passed upon after a full-blown trial on the merits. [29]
Jurisdiction
petitioner

over

the

person

of

Petitioner alleges that the RTC has not acquired jurisdiction over its person on
account of the improper service of summons. Summons was served on petitioner
through the DFA, with respondents counsel personally bringing the summons and
Complaint to the Philippine Consulate General in Sydney, Australia.
In the pleadings filed by the parties before this Court, the parties entered into
a lengthy debate as to whether or not petitioner is doing business in the
Philippines. However, such discussion is completely irrelevant in the case at bar, for
two reasons. Firstly,since the Complaint was filed on August 30, 2005, the
provisions of the 1997 Rules of Civil Procedure govern the service of
summons. Section 12, Rule 14 of said rules provides:
Sec. 12. Service upon foreign private juridical entity. When the
defendant is a foreign private juridical entity which has transacted

business in the Philippines, service may be made on its resident

agent designated in accordance with law for that purpose, or, if there
be no such agent, on the government official designated by law to that
effect, or on any of its officers or agents within the Philippines.
(Emphasis supplied.)
This is a significant amendment of the former Section 14 of said rule which
previously provided:
Sec. 14. Service upon private foreign corporations. If the
defendant is a foreign corporation, or a nonresident joint stock
company or association, doing business in the Philippines, service
may be made on its resident agent designated in accordance with law
for that purpose, or if there be no such agent, on the government
official designated by law to that effect, or on any of its officers or
agents within the Philippines. (Emphasis supplied.)
The coverage of the present rule is thus broader. [30] Secondly, the service of
summons to petitioner through the DFA by the conveyance of the summons to the
Philippine Consulate General in Sydney, Australia was clearly made not through the
above-quoted Section 12, but pursuant to Section 15 of the same rule which
provides:
Sec. 15. Extraterritorial service. When the defendant does not
reside and is not found in the Philippines, and the action affects the
personal status of the plaintiff or relates to, or the subject of which is
property within the Philippines, in which the defendant has or claims a
lien or interest, actual or contingent, or in which the relief demanded
consists, wholly or in part, in excluding the defendant from any interest
therein, or the property of the defendant has been attached within the
Philippines, service may, by leave of court, be effected out of the
Philippines by personal service as under section 6; or by publication in
a newspaper of general circulation in such places and for such time as
the court may order, in which case a copy of the summons and order of
the court shall be sent by registered mail to the last known address of
the defendant, or in any other manner the court may deem
sufficient. Any order granting such leave shall specify a reasonable
time, which shall not be less than sixty (60) days after notice, within
which the defendant must answer.
Respondent argues[31] that extraterritorial service of summons upon foreign
private juridical entities is not proscribed under the Rules of Court, and is in fact
within the authority of the trial court to adopt, in accordance with Section 6, Rule
135:
Sec. 6. Means to carry jurisdiction into effect. When by law
jurisdiction is conferred on a court or judicial officer, all auxiliary writs,

processes and other means necessary to carry it into effect may be

employed by such court or officer; and if the procedure to be followed
in the exercise of such jurisdiction is not specifically pointed out by law
or by these rules, any suitable process or mode of proceeding may be
adopted which appears comformable to the spirit of said law or rules.
Section 15, Rule 14, however, is the specific provision dealing precisely with
the service of summons on a defendant which does not reside and is not found in
the Philippines, while Rule 135 (which is in Part V of the Rules of Court entitled Legal
Ethics) concerns the general powers and duties of courts and judicial officers.
Breaking down Section 15, Rule 14, it is apparent that there are only four
instances wherein a defendant who is a non-resident and is not found in the country
may be served with summons by extraterritorial service, to wit: (1) when the action
affects the personal status of the plaintiffs; (2) when the action relates to, or the
subject of which is property, within the Philippines, in which the defendant claims a
lien or an interest, actual or contingent; (3) when the relief demanded in such action
consists, wholly or in part, in excluding the defendant from any interest in property
located in the Philippines; and (4) when the defendant non-resident's property has
been attached within the Philippines. In these instances, service of summons may
be effected by (a) personal service out of the country, with leave of court; (b)
publication, also with leave of court; or (c) any other manner the court may deem
sufficient.[32]
Proceeding from this enumeration, we held in Perkin Elmer Singapore Pte Ltd.
v. Dakila Trading Corporation[33] that:
Undoubtedly, extraterritorial service of summons applies
only where the action is in rem or quasi in rem, but not if an
action is in personam.
When the case instituted is an action in rem or quasi in rem,
Philippine courts already have jurisdiction to hear and decide the case
because, in actions in rem and quasi in rem, jurisdiction over the
person of the defendant is not a prerequisite to confer jurisdiction on
the court, provided that the court acquires jurisdiction over
the res. Thus, in such instance, extraterritorial service of summons
can be made upon the defendant. The said extraterritorial service of
summons is not for the purpose of vesting the court with jurisdiction,
but for complying with the requirements of fair play or due process, so
that the defendant will be informed of the pendency of the action
against him and the possibility that property in the Philippines
belonging to him or in which he has an interest may be subjected to a
judgment in favor of the plaintiff, and he can thereby take steps to
protect his interest if he is so minded. On the other hand, when the
defendant or respondent does not reside and is not found in
the Philippines, and the action involved is in personam,
Philippine courts cannot try any case against him because of

the impossibility of acquiring jurisdiction over his person

unless he voluntarily appears in court.[34] (Emphases supplied.)
In Domagas v. Jensen,[35] we held that:
[T]he aim and object of an action determine its character. Whether a
proceeding is in rem, or in personam, or quasi in rem for that matter, is
determined by its nature and purpose, and by these only. A
proceeding in personam is a proceeding to enforce personal rights and
obligations brought against the person and is based on the jurisdiction
of the person, although it may involve his right to, or the exercise of
ownership of, specific property, or seek to compel him to control or
dispose of it in accordance with the mandate of the court. The purpose
of a proceeding in personam is to impose, through the judgment of a
court, some responsibility or liability directly upon the person of the
defendant. Of this character are suits to compel a defendant to
specifically perform some act or actions to fasten a pecuniary liability
on him.[36]
It is likewise settled that [a]n action in personam is lodged against a person based
on personal liability; an action in rem is directed against the thing itself instead of
the person; while an action quasi in rem names a person as defendant, but its object
is to subject that persons interest in a property to a corresponding lien or
obligation.[37]
The Complaint in the case at bar is an action to declare the loan and
Hedging Contracts between the parties void with a prayer for damages. It
is a suit in which the plaintiff seeks to be freed from its obligations to the defendant
under a contract and to hold said defendant pecuniarily liable to the plaintiff for
entering into such contract. It is therefore an action in personam, unless and until
the plaintiff attaches a property within the Philippines belonging to the defendant, in
which case the action will be converted to one quasi in rem.
Since the action involved in the case at bar is in personam and since the
defendant, petitioner Rothschild/Investec, does not reside and is not found in the
Philippines, the Philippine courts cannot try any case against it because of the
impossibility of acquiring jurisdiction over its person unless it voluntarily appears in
court.[38]
In this regard, respondent vigorously argues that petitioner should be held to
have voluntarily appeared before the trial court when it prayed for, and was actually
afforded, specific reliefs from the trial court. [39] Respondent points out that while
petitioners Motion to Dismiss was still pending, petitioner prayed for and was able
to avail of modes of discovery against respondent, such as written interrogatories,
requests for admission, deposition, and motions for production of documents. [40]
Petitioner counters that under this Courts ruling in the leading case of La
Naval Drug Corporation v. Court of Appeals,[41] a party may file a Motion to Dismiss

on the ground of lack of jurisdiction over its person, and at the same time raise
affirmative defenses and pray for affirmative relief, without waiving its objection to
the acquisition of jurisdiction over its person. [42]
It appears, however, that petitioner misunderstood our ruling in La Naval. A
close reading of La Naval reveals that the Court intended a distinction between the
raising of affirmative defenses in an Answer (which would not amount to
acceptance of the jurisdiction of the court) and the prayer for affirmative
reliefs (which would be considered acquiescence to the jurisdiction of the court):
In the same manner that a plaintiff may assert two or
more causes of action in a court suit, a defendant is likewise
expressly allowed, under Section 2, Rule 8, of the Rules of
Court, to put up his own defenses alternatively or even
hypothetically. Indeed, under Section 2, Rule 9, of the Rules of Court,
defenses and objections not pleaded either in a motion to dismiss or in
an answer, except for the failure to state a cause of action, are
deemed waived. We take this to mean that a defendant may, in fact,
feel enjoined to set up, along with his objection to the court's
jurisdiction over his person, all other possible defenses. It thus appears
that it is not the invocation of any of such defenses, but the failure to
so raise them, that can result in waiver or estoppel. By defenses, of
course, we refer to the grounds provided for in Rule 16 of the
Rules of Court that must be asserted in a motion to dismiss or
by way of affirmative defenses in an answer.
Mindful of the foregoing, in Signetics Corporation vs.
Court of Appeals and Freuhauf Electronics Phils., Inc. (225
SCRA 737, 738), we lately ruled:
This is not to say, however, that the
petitioner's right to question the jurisdiction of the
court over its person is now to be deemed a
foreclosed matter. If it is true, as Signetics claims, that
its only involvement in the Philippines was through a
passive investment in Sigfil, which it even later disposed
of, and that TEAM Pacific is not its agent, then it cannot
really be said to be doing business in the Philippines. It is
a defense, however, that requires the contravention of the
allegations of the complaint, as well as a full ventilation,
in effect, of the main merits of the case, which should not
thus be within the province of a mere motion to dismiss.
So, also, the issue posed by the petitioner as to whether a
foreign corporation which has done business in the
country, but which has ceased to do business at the time
of the filing of a complaint, can still be made to answer for
a cause of action which accrued while it was doing
business, is another matter that would yet have to await
the reception and admission of evidence. Since these
points have seasonably been raised by the

petitioner, there should be no real cause for what

may understandably be its apprehension, i.e., that
by its participation during the trial on the merits, it
may, absent
an
invocation
of
separate
or
independent reliefs of its own, be considered to
have voluntarily submitted itself to the court's
jurisdiction.[43] (Emphases supplied.)
In order to conform to the ruling in La Naval, which was decided by this Court
in 1994, the former Section 23, Rule 14 [44]concerning voluntary appearance was
amended to include a second sentence in its equivalent provision in the 1997 Rules
of Civil Procedure:
SEC. 20. Voluntary appearance. The defendant's voluntary
appearance in the action shall be equivalent to service of
summons.The inclusion in a motion to dismiss of other grounds
aside from lack of jurisdiction over the person of the defendant
shall not be deemed a voluntary appearance. (Emphasis
supplied.)
The new second sentence, it can be observed, merely mentions other
grounds in a Motion to Dismiss aside from lack of jurisdiction over the person of the
defendant. This clearly refers to affirmative defenses, rather than affirmative
reliefs.
Thus, while mindful of our ruling in La Naval and the new Section 20, Rule 20,
this Court, in several cases, ruled that seeking affirmative relief in a court is
tantamount to voluntary appearance therein. [45] Thus, in Philippine Commercial
International Bank v. Dy Hong Pi,[46] wherein defendants filed a Motion for Inhibition
without submitting themselves to the jurisdiction of this Honorable Court
subsequent to their filing of a Motion to Dismiss (for Lack of Jurisdiction), we held:
Besides, any lingering doubts on the issue of voluntary
appearance dissipate when the respondents' motion for inhibition is
considered. This motion seeks a sole relief: inhibition of Judge
Napoleon Inoturan from further hearing the case. Evidently, by
seeking affirmative relief other than dismissal of the case,
respondents manifested their voluntary submission to the
court's jurisdiction. It is well-settled that the active participation of a
party in the proceedings is tantamount to an invocation of the court's
jurisdiction and a willingness to abide by the resolution of the case,
and will bar said party from later on impugning the court's jurisdiction.
[47]
(Emphasis supplied.)
In view of the above, we therefore rule that petitioner, by seeking affirmative
reliefs from the trial court, is deemed to have voluntarily submitted to the
jurisdiction of said court. A party cannot invoke the jurisdiction of a court to secure

affirmative relief against his opponent and after obtaining or failing to obtain such
relief, repudiate or question that same jurisdiction. [48] Consequently, the trial court
cannot be considered to have committed grave abuse of discretion amounting to
lack or excess of jurisdiction in the denial of the Motion to Dismiss on account of
failure to acquire jurisdiction over the person of the defendant.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision
of the Court of Appeals dated September 8, 2006 and its Resolution dated
December 12, 2006 in CA-G.R. SP No. 94382 are hereby AFFIRMED.
No pronouncement as to costs.
SO ORDERED.

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

Sec. 13. Service upon public corporations

Sec. 14. Service upon defendant whose identity or whereabouts

are unknown
Pua v. Deyto, G.R. No. 173336, November 26, 2012 pdf
Cathay Metal v. Laguna West, G.R. No. 172204, July 2, 2014 (Supra.)

Sec. 15. Extraterritorial service

NM Rothschild v. Lepanto, G.R. No. 175799, November 28, 2011
(Supra.)
Acance v. Court of Appeals, G.R. No. 159699, March 16, 2005
SECOND DIVISION

[G.R. No. 159699. March 16, 2005]

ROSALINO P. ACANCE, in his capacity as Attorney-in-Fact, Administrator of
property and as counsel of SPOUSES JESULITO P. ACANCE and VILMA
ACANCE, SPOUSES MANUEL P. ACANCE and GUIA ACANCE, and
SPOUSES NESTOR P. ACANCE and LYNNE ACANCE, petitioners,
vs. COURT OF APPEALS, SPOUSES YOLANDA QUIJANO TRIA and
AMBROCIO TRIA, SPOUSES EPIFANIA QUIJANO and RAPHAEL
VILLANUEVA, and SPOUSES NAPOLEON PAGLICAWAN QUIJANO and
PILAR Z. QUIJANO, represented by their attorney-in-fact, ENGR.
JULIUS VILLANUEVA, respondents.
DECISION
CALLEJO, SR., J.:
Before the Court is a petition for review on certiorari seeking to reverse and set
aside the Resolution[1] dated November 29, 2002 of the Court of Appeals (CA) in CAG.R. SP No. 71658. In the said resolution, the appellate court dismissed the petition
for certiorari filed therewith for failure to file a motion for reconsideration with the
court a quo. Likewise sought to be reversed is the appellate courts Resolution
dated August 27, 2003 denying the reconsideration of its earlier resolution.
The case stemmed from the following facts:
On May 23, 2001, Spouses Yolanda Quijano and Ambrocio Tria, Spouses Epifania
Quijano and Raphael Villanueva, Spouses Napoleon and Pilar Quijano (respondents
herein), represented by their attorney-in-fact Engr. Julius F. Villanueva, filed with the
Regional Trial Court (RTC) of Muntinlupa an amended complaint against Spouses
Jesulito and Vilma Acance, Spouses Nestor and Lynne Acance, and Spouses Manuel
and Guia Acance (petitioners herein). The case was docketed as Civil Case No. 01122 and raffled to Branch 276 of the RTC of Muntinlupa City.
The amended complaint sought to annul the Extra-Judicial Settlement of the
Estate of Deceased Jesus P. Acance and Waiver of Rights dated February 10, 1997,
executed by Jesulito, Manuel and Nestor, all surnamed Acance, and their mother
Angela. The estate covered by the said extra-judicial settlement included two
parcels of land with a total area of 1,044 square meters under Transfer Certificates
of Titles (TCT) Nos. 239998 and 242993 and the improvements thereon consisting of
a 9-door apartment units, situated in Muntinlupa City. Following the execution of
the extra-judicial settlement, TCT Nos. 239998 and 242993, which were in the
names of Jesus and Angela Acance, were cancelled and, in their stead, TCT Nos.
4365 and 4366 were issued in the names of the Acance siblings.
The amended complaint alleged that the siblings Yolanda, Epifania and
Napoleon were the legitimate children of Angela Paglicawan and Vernier Quijano.
The couple, however, became estranged after the birth of their youngest child.
Upon their separation, Vernier continued to reside in Looc, Occidental Mindoro while
Angela went to Manila to work as a nurse at the National Mental Hospital in
Muntinlupa City. While working thereat, Angela met Jesus Acance. They lived
together as common law husband and wife and bore the siblings Jesulito, Manuel
and Nestor.

Some time in 1966, Angela went to the United States to work as a nurse. With
the savings she earned therefrom, she acquired the subject parcels of land in
Muntinlupa and had the subject 9-door apartment units constructed thereon. Jesus
Acance lived with Angela in the United States. After Vernier passed away in 1989,
Jesus and Angela got married in 1990. Jesus died in 1996 in the United States.
In seeking to nullify the extra-judicial settlement of estate executed by the
Acance siblings and their TCT Nos. 4365 and 4366, the Quijano siblings alleged that
the subject real properties are conjugal properties of Angela and Vernier because
these were acquired by Angela during the subsistence of her first marriage with
Vernier. As such, they (the Quijano siblings) have a valid right to succeed over the
said properties as the lawful and compulsory heirs of Angela and Vernier.
The Quijano siblings impugned the validity of the extra-judicial settlement
claiming that the signature of Angela thereon was a forgery or that she affixed the
same without her free volition because at the time of its execution, she was already
senile. In any case, Angelas purported waiver of her rights over the subject
properties in favor of her children with Jesus (Acance siblings) and excluding her
children with Vernier (Quijano siblings) is against the law. Consequently, TCT Nos.
4365 and 4366 of the Acance siblings are allegedly also void as they emanated from
the forged deed of extra-judicial settlement.
On April 26, 2002, upon motion of the respondents (the Quijano siblings and
their spouses), as plaintiffs therein, the court a quo issued an order declaring the
petitioners (the Acance siblings and their spouses), as defendants therein, in default
for their failure to file an answer to the amended complaint.
On May 13, 2002, petitioner Rosalino Acance, as attorney-in-fact and
administrator of the subject properties, filed with the court a quo a Motion to Lift/Set
Aside Order of Default. In his affidavit of merit attached to the said motion,
petitioner Rosalino alleged that the Acance siblings had appointed him as their
private prosecutor in a criminal case involving the subject real properties. On
January 25, 2002, upon learning about Civil Case No. 01-122, he filed therein a
Motion to Represent Defendants and set the same for hearing on February 5, 2002.
On the said date, however, petitioner Rosalino found out that his motion was not
included in the court calendar for that day. Since there was no action on his motion,
he had the impression that the court a quo needed time to determine other
jurisdictional requirements considering that the petitioners are American citizens
and non-residents of the Philippines.
Petitioner Rosalino further alleged that he had not received a copy of the
complaint filed in Civil Case No. 01-122. The only pleading he received pertaining
to the case was that of the motion to declare the petitioners in default and setting
the hearing thereon on April 26, 2002. At the said hearing, the respondents motion
was granted and the petitioners were declared in default.
The affidavit of merit likewise alleged that the petitioners have a valid and
meritorious defense including that the subject real properties were acquired by their
parents, Jesus and Angela, with both their earnings during the period that they lived
together. They denied that these were paraphernal properties of Angela or conjugal
properties of Angela and Vernier. The petitioners further claimed that the extrajudicial settlement was duly executed by them and Angelas waiver of her rights
over the subject properties in their favor was validly made. To prove that Angela

really intended to transfer the properties to them, the petitioners presented her Last
Will and Testament executed in the United States on December 6, 1996 in which she
bequeathed to them all her properties, real and personal, wherever situated.
In its Order dated June 27, 2002, the court a quo denied the motion to lift the
order of default. It explained that the petitioners are all residing abroad but the real
properties subject of the complaint are situated in Muntinlupa City. Accordingly,
upon motion, they were deemed served with the summons and the amended
complaint through publication thereof in a newspaper of general circulation in
Muntinlupa City, where the properties are located, and nationwide on October 20,
2001. The petitioners had sixty (60) days from the last publication or until
December 2, 2001 within which to file their answer. However, they failed to do so.
More than a month later, or on January 25, 2002, petitioner Rosalino filed the
motion to represent the petitioners and asked for sixty (60) days to file an answer.
According to the court a quo, since the motion was not an adversarial pleading it
was no longer included in the court calendar. It stressed that at the time said
counsel entered his appearance, the period to file an answer had long expired.
Further, the 60 days extension prayed for was not denied. However, the petitioners
still failed to file their answer within the extension period prayed for.
The court a quo faulted petitioner Rosalino, as counsel, for erroneously
assuming that since it failed to rule on his entry of appearance, the period to file an
answer was suspended. It pointed out that the fact that the counsel may be
allowed to represent a party-litigant or not does not toll the running of the period to
file the responsive pleading to the complaint.
Forthwith, the petitioners filed with the Court of Appeals a petition
for certiorari alleging grave abuse of discretion on the part of the court a quo in
denying their motion to lift the default order. Preliminarily, they averred that they
dispensed with the filing of a motion for reconsideration with the court a
quo because of the urgency of the matter as well as the fact that they raised
jurisdictional issues in their motion to lift the default order.
They contended that, in denying their motion to lift the order of default, the
court a quo adopted a rigid, strict and technical stance. Further, petitioner Rosalino,
as their counsel, was of the honest belief that when the court a quo did not act on
his motion to represent the petitioners, it was still determining whether all the
requirements for a valid extraterritorial service was made on them. They, likewise,
harped on the fact that the court a quos order denying their motion to lift order of
default had been promulgated before they even filed their reply to the respondents
opposition. They maintained that the court a quo did not acquire jurisdiction over
the petitioners because no valid extraterritorial service of summons was made on
them.
On November 29, 2002, the appellate court rendered the assailed Resolution
dismissing outright the petition for certiorari for failure of the petitioners to file a
motion for reconsideration with the court a quo. In so doing, it applied the general
rule that the filing of a motion for reconsideration of the disputed order is a
condition sine qua non in order that certiorari will lie. The petitioners moved for the
reconsideration of the said resolution but it was denied in the assailed Resolution
dated August 27, 2003. Hence, the recourse to this Court by the petitioners.

It is contended by the petitioners that the appellate court committed reversible

error in dismissing their petition for certiorari for failure to file a motion for
reconsideration with the court a quo. They posit that such omission is not fatal.
They maintain that they have a meritorious defense in Civil Case No. 01-122 and
that grave injuries and injustice would be inflicted on them unless they are afforded
the full opportunity to protect their interests. On the other hand, no undue
prejudice would be caused the respondents in the event that the order of default is
lifted and the action in the court a quo is heard on the merits.
According to the petitioners, the non-filing of a motion for reconsideration was
justified because the need for relief was extremely urgent and a motion for
reconsideration was not a plain and adequate remedy under the circumstances of
the case. Moreover, the questions raised before the appellate court were the same
as those which have been raised in the motion to lift order of default and already
passed upon by the court a quo. Finally, the failure to file a responsive pleading to
the respondents amended complaint was due to the excusable negligence of the
petitioners counsel.
For their part, the respondents urge the Court to deny the petition for review.
They are of the view that the appellate court correctly applied the general rule that
the filing of a motion for reconsideration is a condition sine qua non in order
that certiorari will lie.
The threshold issue that needs to be resolved is whether the CA committed
reversible error in dismissing the petition for certiorari for failure of the petitioners
to file a motion for reconsideration with the court a quo.
The Court rules in the affirmative.
The rule is well settled that the filing of a motion for reconsideration is an
indispensable condition to the filing of a special civil action forcertiorari.[2] However,
this rule admits of exceptions including:
(a) where the order is a patent nullity, as where the court a quo has no jurisdiction;
(b) where the questions raised in the certiorari proceedings have been duly raised
and passed upon by the lower court, or are the same as those raised and passed
upon in the lower court;
(c) where there is an urgent necessity for the resolution of the question and any
further delay would prejudice the interests of the Government or of the petitioner or
the subject matter of the action is perishable;
(d) where, under the circumstances, a motion for reconsideration would be useless;
(e) where petitioner was deprived of due process and there is extreme urgency for
relief;
(f) where, in a criminal case, relief from an order of arrest is urgent and the granting
of such relief by the trial court is improbable;
(g) where the proceedings in the lower court are a nullity for lack of due process;

(h) where the proceedings was ex parte or in which the petitioner had no
opportunity to object; and
(i) where the issue raised is one purely of law or public interest is involved. [3]
A perusal of the petition for certiorari filed with the CA shows that the
petitioners expressly stated therein that they dispensed with the filing of a motion
for reconsideration with the court a quo because they raised questions of
jurisdiction in the motion to set aside the default order filed therewith. It was
further averred that there was an urgent necessity for relief as the court a
quo seemed to act with precipitate haste. It was, likewise, pointed out that the
court a quo allowed the respondents to present their evidence ex parte on April 30,
2002 (a Tuesday), just two office days after the default order was issued on April 26,
2002 (a Friday).
It appears that the CA committed reversible error in dismissing outright the
petition for certiorari for failure of the petitioners to move for a reconsideration of
the default order when it had been sufficiently shown that the need for relief was
extremely urgent. The procedural requirement that a motion for reconsideration
must first be filed before resorting to the special civil action of certiorari may be
glossed over to prevent a miscarriage of justice and, among other recognized
instances, when the need for relief is extremely urgent and certiorari is the only
adequate and speedy remedy available. [4] Among other remedies, a petition
for certiorari to declare the nullity of a judgment by default is available if the trial
court improperly declared a party in default, or even if the trial court properly
declared a party in default, if grave abuse of discretion attended such declaration. [5]
In this case, the court a quo acted with grave abuse of discretion in declaring
the petitioners in default without showing that there was full compliance with the
requirements for extraterritorial service of summons under Section 15, Rule 14 of
the Rules of Court. The said provision reads:
Sec. 15. Extraterritorial service. When the defendant does not reside and is not
found in the Philippines, and the action affects the personal status of the plaintiff or
relates to, or the subject of which is, property within the Philippines, in which the
defendant has or claims a lien or interest, actual or contingent, or in which the relief
demanded consists, wholly or in part, in excluding the defendant from any interest
therein, or the property of the defendant has been attached within the Philippines,
service may, by leave of court, be effected out of the Philippines by personal service
as under Section 6; or by publication in a newspaper of general circulation in such
places and for such time as the court may order, in which case a copy of the
summons and order of the court shall be sent by registered mail to the last known
address of the defendant, or in any other manner the court may deem sufficient.
Any order granting such leave shall specify a reasonable time, which shall not be
less than sixty (60) days after notice, within which the defendant must answer.
The petitioners are citizens of the United States and residents thereof. Further,
the suit against them involves real property wherein the petitioners, as defendants
therein, have an interest. These facts clearly warranted extraterritorial service of
summons in accordance with Section 15, Rule 14 of the Rules of Court. The
rationale for service of summons on a nonresident defendant is explained, thus:

We repeat, service of summons on a nonresident defendant who is not found in the

country is required, not for purposes of physically acquiring jurisdiction over his
person but simply in pursuance of the requirements of fair play, so that he may be
informed of the pendency of the action against him and the possibility that the
property in the Philippines belonging to him or in which he has an interest may be
subjected to a judgment in favor of a resident, and that he may thereby be
accorded an opportunity to defend in the action, if he be so minded. The only relief
that may be granted in such an action against such a nonresident defendant, who
does not choose to submit himself to the jurisdiction of the Philippine court, is
limited to the res.[6]
In its Order dated April 26, 2002, the court a quo declared the petitioners in
default in this wise:
Since the last publication of this case more than 60 days ago, no answer has been
filed by any of the Defendants, the MOTION TO DECLARE THE DEFENDANTS IN
DEFAULT is, therefore, granted; hence Defendants, SPS. JESULITO P. ACANCE &
VILMA ACANCE, SPS. MANUEL P. ACANCE & GUIA ACANCE, and SPS. NESTOR P.
ACANCE & LYNNE ACANCE are defaulted.
Evidence for Plaintiffs may be received ex-parte before the Clerk of Court.[7]
However, as will be shown shortly, the service of summons in this case is
defective. There was no showing that copies of the summons and the amended
complaint were duly served at the petitioners last known correct address by
registered mail, as a complement to the publication pursuant to Section 15, Rule 14
of the Rules of Court[8] and in compliance with the court a quos Order dated July 1,
2001 granting the respondents motion for leave to serve summons by publication.
The respondents alleged that they had caused copies of the Amended
Complaint and Summons and the 1 July 2001 Order to be sent on November 13,
2001 by registered mail to the Acances known addresses in the United States. In
their Compliance dated January 31, 2002 filed with the court a quo, the respondents
averred that a copy of the summons and order of the court together with a copy of
the amended complaint had been sent to each of the three (3) defendants in their
respective addresses by registered mail, as evidenced by Registry Receipt No.
26832 for Nestor P. Acance dated November 13, 2001; Registry receipt No. 26833
for Jesulito P. Acance dated November 13, 2001 and Registry Receipt No. 26834 for
Manuel P. Acance dated November 13, 2001, all sent from the Makati City Branch
Post Office.[9] However, except for this bare allegation, the corresponding registry
receipts or copies thereof were not presented to show compliance with the rules.
Further, there was likewise non-compliance with Section 19, Rule 15 of the Rules
of Court relating to the proof of service by publication. The said provision reads:
Sec. 19. Proof of service by publication. If the service has been made by
publication, service may be proved by the affidavit of the printer, his foreman, or
principal clerk, or of the editor, business or advertising manager, to which affidavit a
copy of the publication shall be attached, and by an affidavit showing the deposit of
a copy of the summons and order for publication in the post office, postage prepaid,
directed to the defendant by registered mail to his last known address.

While the respondents claimed that they had complied with the service of
summons by publication in a newspaper of general circulation, [10] it does not appear
that they had presented to the court a quo the affidavit of the printer, his foreman,
or principal clerk, or of the editor, business or advertising manager of the
Remate, where the publication was allegedly made, to prove such service by
publication. Neither did they present an affidavit showing the deposit of a copy of
the summons and order of publication in the post office, postage prepaid, directed
to the petitioners by registered mail to their last known addresses.
The failure to strictly comply correctly with the requirements of the rules
regarding the mailing of copies of the summons and the order for its publication is a
fatal defect in the service of summons.[11] As held by this Court:
It is the duty of the court to require the fullest compliance with all the requirements
of the statute permitting service by publication. Where service is obtained by
publication, the entire proceeding should be closely scrutinized by the courts and a
strict compliance with every condition of law should be exacted. Otherwise great
abuses may occur, and the rights of persons and property may be made to depend
upon the elastic conscience of interested parties rather than the enlightened
judgment of the court or judge.[12]
Even granting arguendo that the respondents had fully complied with the
requirements for extraterritorial service of summons and the court a quo correctly
declared them in default; still, it should not have been too rash in dismissing the
petitioners motion to lift the default order. Well-settled is the rule that courts
should be liberal in setting aside orders of default for default judgments are frowned
upon, unless in cases where it clearly appears that the reopening of the case is
intended for delay. The issuance of the orders of default should be the exception
rather than the rule, to be allowed only in clear cases of obstinate refusal by the
defendant to comply with the orders of the trial court. [13] In this case, there is no
showing that the petitioners failure to file an answer was due to an apparent
scheme to delay the proceedings or to flagrantly transgress the rules.
Under the circumstances, the setting aside of the order of default is in order.
The petitioners should be afforded the opportunity to present evidence on their
behalf in order that substantial justice is achieved. After all, court litigations are
primarily for the search of truth, and a liberal interpretation of the rules by which
both parties are given the fullest opportunity to adduce proofs is the best way to
ferret out such truth.[14] By conducting a full-blown trial, both parties will be able to
present their evidence, thus, affording them the opportunity to enforce and protect
their respective rights.
WHEREFORE, the petition is GRANTED. The assailed Resolutions dated
November 29, 2002 and August 27, 2003 of the Court of Appeals in CA-G.R. SP No.
71658 are REVERSED AND SET ASIDE. The case is REMANDED to the court a quo,
which is DIRECTED to allow the petitioners to file their answer to the amended
complaint, and thereafter to conduct the proper proceedings in Civil Case No. 01122.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

Spouses Jose v. Spouses Boyon, G.R. No. 147369, October 23, 2003
THIRD DIVISION

[G.R. No. 147369. October 23, 2003]

Spouses PATRICK JOSE and RAFAELA JOSE, petitioners, vs. Spouses HELEN
BOYON and ROMEO BOYON,respondents.
DECISION
PANGANIBAN, J.:
In general, substituted service can be availed of only after a clear showing that
personal service of summons was not legally possible. Also, service by publication is
applicable in actions in rem and quasi in rem, but not in personal suits such as the
present one which is for specific performance.

The Case
Before the Court is a Petition for Review on Certiorari[1] under Rule 45 of the
Rules of Court, assailing the February 26, 2001 Decision [2]of the Court of Appeals
(CA) in CA-GR SP No. 60888. The dispositive portion of the CA Decision is worded as
follows:
WHEREFORE, on the basis of what prescinds, the assailed resolution and orders
issued by the public respondent are perforce ANNULLED and SET ASIDE. This
pronouncement is nonetheless rendered without prejudice to the refiling of the
same case by the private respondents with the court a quo.[3]

The Facts
The factual antecedents of the case are narrated by the CA in this wise:
On July 2, 1998, [petitioners] Patrick and Rafaela Jose lodged a complaint for
specific performance against [respondents] Helen and Romeo Boyon to compel
them to facilitate the transfer of ownership of a parcel of land subject of
a controverted sale. The action was lodged before the Regional Trial Court
of Muntinlupa which is presided by herein public respondent Judge
N.C. Perello. On July 21, 1998, respondent judge, through the acting Branch Clerk of
Court of Branch 276 of the RTC of Muntinlupa City, issued summons to the
[respondents]. As per return of the summons, substituted service was resorted to
by the process server allegedly because efforts to serve the summons personally to

the [respondents] failed. On December 9, 1998, [petitioners] filed before the trial
court an Ex-parte Motion for Leave of Court to Effect Summons by
Publication. On December 28, 1998, public respondent issued an Order granting
the Ex-parte Motion for Leave of Court to Effect Summons by Publication. On July
30, 1999, the respondent judge, sans a written motion, issued an Order declaring
herein [respondents] in default for failure to file their respective answers. As a
consequence of the declaration of default, [petitioners] were allowed to submit their
evidence ex-parte. Ultimately, on December 7, 1999, respondent judge issued the
assailed resolution, the dispositive portion of which reads as follows:
x x x Therefore, Spouses Helen and Romeo Boyon are directed to execute the
necessary document with the effect of withdrawing the Affidavit of Loss they filed
and annotated with the Register of Deeds of Makati City so that title to the parcel of
land subject of the Deed of Absolute Sale in favor of the Plaintiffs be transferred in
their names. Thereafter the Register of Deeds of Makati City
or Muntinlupa City may cancel Transfer of Certificate of Title No. 149635 of the
Defendants and issue another to Plaintiff under the deed of sale, clean and free of
any reported encumbrance.
Defendants are also directed to pay Plaintiffs actual expenses in the amount
of P20,000 and attorneys fees of P20,000 including costs of this suit.
xxx

xxx
xxx

On January 5, 2000, [respondent] Helen Boyon, who was then residing in

the United States of America, was surprised to learn from her sister ElizabethBoyon,
of the resolution issued by the respondent court. On January 18, 2000,
[respondents] filed an Ad Cautelam motion questioning, among others, the validity
of the service of summons effected by the court a quo. On March 17, 2000, the
public respondent issued an Order denying the said motion on the basis of the
defaulted [respondents] supposed loss of standing in court. On March 29, 2000,
the [respondents] once again raised the issue of jurisdiction of the trial court via a
motion for reconsideration. On June 22, 2000, however, an Order was issued by the
public respondent denying the said motion. The [petitioners] moved for the
execution of the controverted judgment which the respondent judge ultimately
granted.[4]
Thereafter, respondents filed before the CA a Petition for certiorari under Rule
65 of the Revised Rules of Civil Procedure, questioning the jurisdiction of the
regional trial court (RTC).

Ruling of the Court of Appeals

The CA held that the trial court had no authority to issue the questioned
Resolution and Orders. According to the appellate court, the RTC never acquired
jurisdiction over respondents because of the invalid service of summons upon
them. First, the sheriff failed to comply with the requirements of substituted service
of summons, because he did not specify in the Return of Summons the prior efforts
he had made to locate them and the impossibility of promptly serving the summons

upon them by personal service. Second, the subsequent summons by publication

was equally infirm, because the Complaint was a suit for specific performance and
therefore an action inpersonam. Consequently, the Resolution and the Orders were
null and void, since the RTC had never acquired jurisdiction over respondents.
Hence, this Petition.[5]

Issues
In their Memorandum,
consideration:

petitioners

raise

the

following

issues

for

our

A. The Honorable Court of Appeals erred in not holding that the assailed Resolution
dated December 7, 1999 was already final and executory
B. The Honorable Court of Appeals erred in giving due course to the Petition for
Certiorari of private respondents despite the pendency of an appeal earlier filed
C. The Honorable Court erred in not holding that the Petition for Certiorari was time
barred
D. The Honorable Court of Appeals erred in holding that the proceedings in the
lower court are null and void due to invalid and defective service of summons and
the court did not acquire jurisdiction over the person of the respondents. [6]
In sum, the main issue revolves around the validity of the service of summons
on respondents.

The Courts Ruling

The Petition has no merit.

Main Issue:
Validity of the Service of Summons
Petitioners aver that the CA erred in ruling that the service of summons on
respondents was invalid. They submit that although the case filed before the trial
court was denominated as an action for specific performance, it was actually an
action quasi in rem, because it involved a piece of real property located in the
Philippines. They further argue that in actions quasi in rem involving ownership of a
parcel of land, it is sufficient that the trial court acquire jurisdiction over
the res. Thus, the summons by publication, which they effected subsequent to the
substituted service of summons, was allegedly sufficient.
On the other hand, respondents maintain that the proceedings in the trial court
were null and void because of the invalid and defective service of
summons. According to them, the Return of Summons issued by the process server

of the RTC failed to state that he had exerted earnest efforts to effect the service of
summons. He allegedly tried to serve it personally on them on July 22, 1998 at No.
32 ArizaDrive, Camella Homes, Alabang. He, however, resorted to substituted
service on that same day, supposedly because he could not find respondents in the
above address. They further allege that the person to whom he gave the summons
was not even a resident of that address.
Respondents contend that when summons is served by substituted service, the
return must show that it was impossible to serve the summons personally, and that
efforts had been exerted toward that end. They add that noncompliance with the
rule on substituted service renders invalid all proceedings relative thereto.
As to the summons by publication subsequently effected by petitioners,
respondents argue that the case filed before the trial court was an action for
specific performance and, therefore, an action in personam. As such, the summons
by publication was insufficient to enable the trial court to acquire jurisdiction over
the persons of respondents.
Respondents conclude that even granting that the service of summons by
publication was permissible under the circumstances, it would still be defective and
invalid because of the failure of petitioners to observe the requirements of law, like
an Affidavit attesting that the latter deposited in the post office a copy of the
summons and of the order of publication, paid the postage, and sent the documents
by registered mail to the formers last known address.
We agree with respondents. In general, trial courts acquire jurisdiction over the
person of the defendant by the service of summons. Where the action
is in personam and the defendant is in the Philippines, such service may be done by
personal or substituted service, following the procedures laid out in Sections 6 and 7
of Rule 14 of the Revised Rules of Court, which read:
Section 6. Service in person on defendant. - Whenever practicable, the summons
shall be served by handing a copy thereof to the defendant in person, or, if he
refuses to receive and sign for it, by tendering it to him.
Section 7. Substituted service. - If, for justifiable causes, the defendant cannot be
served within a reasonable time as provided in the preceding section, service may
be effected (a) by leaving copies of the summons at the defendant's residence with
some person of suitable age and discretion then residing therein, or (b) by leaving
the copies at defendants office or regular place of business with some competent
person in charge thereof.
As can be gleaned from the above-quoted Sections, personal service of
summons is preferred to substituted service. Only if the former cannot be made
promptly can the process server resort to the latter. Moreover, the proof of service
of summons must (a) indicate the impossibility of service of summons within a
reasonable time; (b) specify the efforts exerted to locate the defendant; and (c)
state that the summons was served upon a person of sufficient age and discretion
who is residing in the address, or who is in charge of the office or regular place of
business, of the defendant.[7] It is likewise required that the pertinent facts proving
these circumstances be stated in the proof of service or in the officers return. The

failure to comply faithfully, strictly and fully with all the foregoing requirements of
substituted service renders the service of summons ineffective. [8]

Defective Personal
Service of Summons
In the instant case, it appears that the process server hastily and capriciously
resorted to substituted service of summons without actually exerting any genuine
effort to locate respondents. A review of the records[9] reveals that the only effort
he exerted was to go to No. 32 Ariza Drive, Camella Homes, Alabang on July 22,
1998, to try to serve the summons personally on respondents. While the Return of
Summons states that efforts to do so were ineffectual and unavailing because
Helen Boyon was in the United States and Romeo Boyonwas in Bicol, it did not
mention exactly what efforts -- if any -- were undertaken to find
respondents. Furthermore, it did not specify where or from whom the process
server obtained the information on their whereabouts. The pertinent portion of the
Return of Summons is reproduced as follows:
That efforts to serve the said Summons personally upon defendants Sps. Helen and
Romeo Boyon were made but the same were ineffectual and unavailing for the
reason that defendant Helen Boyon is somewhere in the United States of America
and defendant Romeo Boyon is in Bicol thus substituted service was made in
accordance with Section 7, Rule 14, of the Revised Rules of Court. [10]
The Return of Summons shows that no effort was actually exerted and no
positive step taken by either the process server or petitioners to locate and serve
the summons personally on respondents. At best, the Return merely states the
alleged whereabouts of respondents without indicating that such information was
verified from a person who had knowledge thereof. Certainly, without specifying the
details of the attendant circumstances or of the efforts exerted to serve the
summons, a general statement that such efforts were made will not suffice for
purposes of complying with the rules of substituted service of summons.
The necessity of stating in the process servers Return or Proof of Service the
material facts and circumstances sustaining the validity of substituted service was
explained by this Court in Hamilton v. Levy,[11] from which we quote:
x x x The pertinent facts and circumstances attendant to the service of summons
must be stated in the proof of service or Officers Return; otherwise, any substituted
service made in lieu of personal service cannot be upheld. This is necessary
because substituted service is in derogation of the usual method of service. It is a
method extraordinary in character and hence may be used only as prescribed and
in the circumstances authorized by statute. Here, no such explanation was
made. Failure to faithfully, strictly, and fully comply with the requirements of
substituted service renders said service ineffective.[12]
Moreover, the requirements of substituted service of summons and the effect of
noncompliance
with
the
subsequent
proceedingstherefor were
discussed
[13]
in Madrigal v. Court of Appeals
as follows:

In a long line of cases, this Court held that the impossibility of personal service
justifying availment of substituted service should be explained in the proof of
service; why efforts exerted towards personal service failed. The pertinent facts
and circumstances attendant to the service of summons must be stated in the proof
of service or Officers Return; otherwise, the substituted service cannot be
upheld. It bears stressing that since service of summons, especially for
actions in personam, is essential for the acquisition of jurisdiction over the person of
the defendant, the resort to a substituted service must be duly justified. Failure to
do so would invalidate all subsequent proceedings on jurisdictional grounds. [14]

Summons by
Publication Improper
It must be noted that extraterritorial service of summons or summons by
publication applies only when the action is in rem or quasi inrem. The first is an
action against the thing itself instead of against the defendants person; in the
latter, an individual is named as defendant, and the purpose is to subject that
individuals interest in a piece of property to the obligation or loan burdening it. [15]
In the instant case, what was filed before the trial court was an action for
specific performance directed against respondents. While the suit incidentally
involved a piece of land, the ownership or possession thereof was not put in issue,
since they did not assert any interest or right over it. Moreover, this Court has
consistently declared that an action for specific performance is an action
in personam.[16]
Having failed to serve the summons on respondents properly, the RTC did not
validly acquire jurisdiction over their persons. Consequently, due process demands
that all the proceedings conducted subsequent thereto should be deemed null and
void.[17]
WHEREFORE, the Petition is DENIED and
Resolution AFFIRMED. Costs against petitioners.

the

assailed

Decision

and

SO ORDERED.
Puno, (Chairman), Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.

Sec. 16. Residents temporarily out of the Philippines

Leah Palma v. Hon. Galvez, G.R. No. 165273, March 10, 2010
(Supra.)
Montefalcon v. Vasquez, G.R. No. 165016, June 17, 2008
Belen v. Belen, G.R. No. 175334, March 26, 2008

Sec. 17. Leave of court

Sec. 18. Proof of service

Sec. 19. Proof of service by publication

Acance v. Court of Appeals, G.R. No. 159699, March 16, 2005 supra

Sec. 20. Voluntary appearance

Note: The following cases were already assigned on page 5 of the syllabus.
Herrera-Felix v. Court of Appeals, G.R. No. 143736, August 11, 2004
SECOND DIVISION

[G.R. No. 143736. August 11, 2004]

OFELIA
HERRERA-FELIX,
Represented
by
JOVITA
HERRERASEA, petitioner, vs. COURT OF APPEALS, andST. JOSEPH RESOURCES
DEVELOPMENT, INC., respondents.
RESOLUTION
CALLEJO, SR., J.:
This is a petition for review on certiorari assailing the Decision[1]of the Court of
Appeals which dismissed the petition to annul the Decision [2] of the Regional Trial
Court of Malabon, Metro Manila, Branch 73, in Civil Case No. 1967, on the ground of
lack of jurisdiction over the person of herein petitioner Ofelia Herrera-Felix.

The Antecedents
On March 11, 1993, respondent St. Joseph Resource Development, Inc. filed a
complaint for sum of money against the Spouses Restituto and Ofelia Felix with a

prayer for a writ of preliminary attachment. It was alleged therein that, during the
period from November 16, 1992 to December 14, 1992, the Felix Spouses
purchased from the respondent tubs of assorted fish, as follows:
Date of Purchase
Amount of Fish Purchased
November
November
November
November
December
December
December
December
December
December
December
December
December

16, 1992
17, 1992
19, 1992
20, 1992
2, 1992
3, 1992
5, 1992
8, 1992
9, 1992
11, 1992
12, 1992
13, 1992
14, 1992

Total

.....

P 183,360.00
114,380.00
56,014.00
183,400.00
70,000.00
159,100.00
73,500.00
79,025.50
275,190.00
102,840.00
78,300.00
108,692.00
32,379.50
----------------P 1,516,181.00

It was also alleged that the Felix Spouses still had an outstanding obligation
amounting to P1,132,065.50, after deducting their total payment of P438,615.50
from their aggregate purchases. The respondent prayed that, after due
proceedings, judgment be rendered in its favor, thus:
WHEREFORE, it is respectfully prayed that judgment be rendered in favor of plaintiff
and against defendants, ordering the latter to pay the former the following:
1. P1,132,065.50, representing their unpaid obligation, including unpaid tubs, plus
legal interest from the date of filing of the complaint;
2. Attorneys fees equivalent to 25% of the foregoing amount; and
3. Costs of suit.
Plaintiff likewise prays that a writ of preliminary attachment be issued ex
parte against the properties of defendants as security for the satisfaction of any
judgment that may be recovered.
Other just and equitable relief is also prayed for. [3]
The case was docketed as Civil Case No. 1967.
The trial court granted the respondents prayer for a writ of preliminary
attachment on a bond of P1,132,065.50 which was posted onMarch 26, 1993. The
Sheriff levied and took custody of some of the personal properties of the Felix
Spouses. On March 26, 1993, a copy of the writ of preliminary attachment,
summons and complaint were served on them at their residence, through the sister
of Ofelia Herrera-Felix, Ma. Luisa Herrera. [4] According to the Sheriffs Return, Ofelia
Herrera-Felix was out of the country, as per the information relayed to him by Ma.

Luisa Herrera. On April 5, 1993, the Felix Spouses, through Atty. Celestino C. Juan,
filed a motion praying for an extension of time to file their answer to the complaint.
[5]
On April 6, 1993, the trial court issued an Order granting the motion. However,
the Felix Spouses failed to file their answer to the complaint. The respondent then
filed a Motion dated April 23, 1993 to declare the said spouses in default, [6] which
motion was granted by the court in its Resolution [7] dated May 13, 1993. A copy of
the said resolution was sent to and received by the counsel of the Felix Spouses
through registered mail.
On August 11, 1993, the court a quo rendered a decision in favor of the
respondent, the decretal portion of which reads:
WHEREFORE, judgment is hereby rendered ordering:
1.
The defendants to pay, jointly and severally, the plaintiffs the amount of ONE
MILLION SEVENTY-SEVEN THOUSAND FIVE HUNDRED SIXTY-FIVE PESOS
AND FIFTY CENTAVOS (P1,077,565.50) plus legal rate of interest from the date of
the filing of the complaint;
2.
The defendants to pay, jointly and severally, the amount of TWENTY-FIVE
THOUSAND PESOS (P25,000.00) as/for reasonable Attorneys fees;
3.

The defendants to pay the costs of this suit.

SO ORDERED.[8]
Copies of the said decision were mailed to the Felix Spouses and their counsel,
Atty. Celestino C. Juan, by registered mail. The copy of the decision addressed to
the spouses was returned to the court after two notices for having been
Unclaimed. However, then counsel for the Felix Spouses received his copy of the
decision.
The decision of the trial court became final and executory after the Felix
Spouses failed to appeal the same. The respondent filed a motion for a writ of
execution. A copy thereof was served on the said spouses by registered mail, but
they failed to oppose the motion. The court thereafter issued an order granting the
motion and directing the issuance of a writ of execution. The counsel for the Felix
Spouses received a copy of the said order. Thereafter, the following personal
properties of the latter were levied upon and sold by the sheriff at public auction
for P83,200.00 to the respondent as the winning bidder:
(1) unit Jeep-semi stainless
(1) unit Jeep-stainless
(1) Victor-Radio/TV/Cassette Recorder
(1) Sony 17 TV w/ remote control
(1) Kawai Electric Organ
(3) Hitachi Stand Fan
(1) Standard Desk Fan
(1) 6 pieces Sala Set.[9]
On August 14, 1995, the Sheriff executed a Certificate of Sale of personal
properties.[10]

On September 13, 1996, petitioner Ofelia Herrera-Felix, represented by another

sister, Jovita Herrera-Sea, filed a petition with the Court of Appeals under Rule 47
of the Rules of Court for the nullification of the trial courts judgment by default, the
writ of execution issued by the said court, and the sale of her properties at public
auction. The petitioner alleged, inter alia, that the complaint and summons were
handed over to her sister, Ma. Luisa Herrera, who was merely a visitor in her house
and, as such, was not a valid substituted service under Rule 14, Section 7 of the
Rules of Court. She also alleged that her husband Restituto Felix had died as early
as April 23, 1988, as evidenced by his Certificate of Death. [11]
In its comment on the petition, the respondent alleged that the substituted
service of the complaint and summons on the petitioner, who was then temporarily
outside the Philippines, through her sister Ma. Luisa Herrera, was valid and
effective. The respondent, likewise, averred that even if such substituted service on
the petitioner was defective, the defect was cured when the latter, through her
counsel, Atty. Celestino C. Juan, appeared in court and moved for an extension of
time to file her responsive pleading. The respondent also maintained that the
petitioner and her counsel were served with copies of the decision of the court a
quo, but that the petitioner failed to appeal the decision.
In her reply to the comment of the respondent, the petitioner alleged that since
she failed to file a responsive pleading to the complaint, the appearance of Atty.
Celestino C. Juan, as her counsel, did not constitute as a voluntary submission to the
jurisdiction of the court.
On June 7, 2000, the CA rendered a decision, the dispositive portion of which
reads:
WHEREFORE, premises considered, finding that the court a quo validly acquired
jurisdiction over the action and absent any ground warranting the annulment of its
judgment, this petition is hereby DISMISSED for lack of merit
SO ORDERED.[12]
The petitioner, through her sister, Jovita Herrera-Sea, now comes to this
Court via a petition for review on certiorari praying for the reversal of the decision of
the Court of Appeals. She alleges that the trial court did not acquire jurisdiction
over her person through the service of the complaint and summons on her sister,
Ma. Luisa Herrera. She maintains that the latter was a mere visitor in her house,
not a resident therein; hence, the decision of the trial court is null and void. She
further alleges that even assuming the validity of the trial courts decision, such
decision never became final and executory since she was not served a copy of the
same. As such, the writ of execution issued by the trial court, the sale of her
personal properties at public auction, as well as the issuance of the Certificate of
Sale, are null and void. She asserts that the actuations of both the trial court and
the Sheriff deprived her of her right to due process.
The contentions of the petitioner have no merit.
The court acquires jurisdiction over the person of the defendant by service of
the complaint and summons on him, either by personal service or by substituted
service or by extra-territorial service thereof or by his voluntary personal
appearance before the court or through counsel. In this case, the petitioner

appeared before the court, through counsel, and filed a motion for extension of
time to file her answer to the complaint which the trial court granted. She even
admitted in the said motion that she was served with a copy of the complaint as
well as the summons. The admissions made in a motion are judicial admissions
which are binding on the party who made them. Such party is precluded from
denying the same unless there is proof of palpable mistake or that no such
admission was made.[13]
By filing the said motion, through counsel, the petitioner thereby submitted
herself to the jurisdiction of the trial court. Indeed, inBusuego vs. Court of Appeals,
[14]
we ruled that:
A voluntary appearance is a waiver of the necessity of a formal notice. An
appearance in whatever form, without explicitly objecting to the jurisdiction of the
court over the person, is a submission to the jurisdiction of the court over the
person. While the formal method of entering an appearance in a cause pending in
the courts is to deliver to the clerk a written direction ordering him to enter the
appearance of the person who subscribes it, an appearance may be made by simply
filing a formal motion, or plea or answer. This formal method of appearance is not
necessary. He may appear without such formal appearance and thus submit himself
to the jurisdiction of the court. He may appear by presenting a motion, for example,
and unless by such appearance he specifically objects to the jurisdiction of the
court, he thereby gives his assent to the jurisdiction of the court over his
person. When the appearance is by motion objecting to the jurisdiction of the court
over his person, it must be for the sole and separate purpose of objecting to the
jurisdiction of the court. If his motion is for any other purpose than to object to the
jurisdiction of the court over his person, he thereby submits himself to the
jurisdiction of the court.[15]
Equally barren of factual basis is the claim of the petitioner that she was not
served with a copy of the decision of the trial court. The records show that aside
from the copy of the decision sent to her by the Branch Clerk of Court by registered
mail, another copy of the decision was served on her through her counsel, Atty.
Celestino C. Juan, who received the same. The service of the decision on the
petitioner, through counsel, is binding on her, conformably to Rule 13, Section 2 of
the Rules of Court.[16]
We reject the petitioners plaint of having been deprived of her right to due
process.
The essence of due process is a reasonable opportunity to be heard and submit
evidence in support of ones defense. What the law proscribes, therefore, is the
lack of opportunity to be heard. [17] A party who opts not to avail of the opportunity
to answer cannot complain of procedural due process. There can be no denial of due
process where a party had the opportunity to participate in the proceedings but
failed to do so through his own fault.
WHEREFORE, the petition is DENIED DUE COURSE. The assailed decision of
the Court of Appeals dated June 7, 2000 is hereby AFFIRMED. Costs against the
petitioner.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

JAPRIL Dev. Corp. v. Security Bank, G.R. No. 190107, June 6, 2011
Republic of the Philippines
Supreme Court
Manila
THIRD DIVISION
JAPRL DEVELOPMENT CORP.,
PETER RAFAEL C. LIMSON and
JOSE UY AROLLADO,
Petitioners,

- versus -

G.R. No. 190107

Present:
CARPIO MORALES, J.,
Chairperson,
BRION,
BERSAMIN,
ABAD,* and
VILLARAMA, JR., JJ.

SECURITY BANK CORPORATION,

Respondent.
Promulgated:
June 6, 2011
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CARPIO MORALES, J.,
JAPRL Development Corporation (JAPRL), a domestic corporation engaged in
fabrication, manufacture and distribution of steel products, applied for a credit
facility (Letter of Credit/Trust Receipt) in the amount of Fifty Million (P50,000,000)
Pesos with Security Bank Corporation (SBC). The application was approved and the
Credit Agreement took effect on July 15, 1996.[1]
On November 5, 2001, petitioners Peter Rafael C. Limson (Limson) and Jose
Uy Arollado (Arollado), JAPRL Chairman and President, respectively, executed a
Continuing Suretyship Agreement (CSA)[2] in favor of SBC wherein they guaranteed
the due and full payment and performance of JAPRLs guaranteed obligations under
the credit facility.[3]
In 2002, on JAPRLs proposal, SBC extended the period of settlement of his
obligations.
In 2003, JAPRLs financial adviser, MRM Management Incorporated (MRM),
convened JAPRLs creditors, SBC included, for the purpose of restructuring JAPRLs

existing loan obligations. Copies of JAPRLs financial statements from 1998 to 2001
were given for the creditors to study.
SBC soon discovered material inconsistencies in the financial statements
given by MRM vis--vis those submitted by JAPRL when it applied for a credit facility,
drawing SBC to conclude that JAPRL committed misrepresentation.
As paragraph 10 (c) of the Credit Agreement [4] provided, if any
representation or warranty, covenant or undertaking embodied [therein] and [in]
the Credit Instrument or in any certificate, statement or document submitted to SBC
turns out to be untrue or ceases to be true in any material respect, or is violated or
not complied with, such will constitute an event of default committed by JAPRL and
its sureties.

On the basis of Item 2 of the CSA,[5] SBC sent a formal letter of

demand[6] dated August 20, 2003 to petitioners JAPRL, Limson and Arollado for the
immediate payment of Forty Three Million Nine Hundred Twenty Six Thousand and
Twenty One Pesos and 41/100 (P43,926,021.41) representing JAPRLs outstanding
obligations.
Petitioners failed to comply with SBCs demand, hence, SBC filed on
September 1, 2003 a complaint for sum of money with application for issuance of
writ of preliminary attachment[7] before the Regional Trial Court (RTC)
of Makati City against JAPRL, Limson and Arollado.
During the hearing on the prayer for the issuance of writ of preliminary
attachment on September 16, 2003, SBCs counsel manifested that it received a
copy of a Stay Order dated September 8, 2003 issued by the RTC of Quezon City,
Branch 90 wherein JAPRLs petition for rehabilitation was lodged. The Makati RTC at
once ordered in open court the archiving of SBCs complaint for sum of money until
disposition by the Quezon City RTC of JAPRLs petition for rehabilitation. [8]
When the Makati RTC reduced to writing its open court Order of September
16, 2003, however, it instead declared the dismissal of SBCs complaint without
prejudice:
When this case was called for hearing, plaintiffs counsel
manifested that they received a Stay Order from Regional Trial Court,
Br. 190, Quezon City, relative to the approval of the Rehabilitation Plan
filed by defendant JAPRL Dev. Corp. and in view thereof heprayed that
the present case be archived instead. However, the Court is of the view
to have the case dismissed without prejudice so that a disposition be
made on the case.
WHEREFORE, let the present case be ordered DISMISSED without
prejudice to a refiling or having a claim filed with the appropriate
forum.

SO ORDERED.[9] (underscoring supplied)

On SBCs motion for reconsideration, however, the Makati RTC, by Order of
January 9, 2004,[10] reverted to its oral order of archiving SBCs complaint.
SBC moved to clarify the Makati RTC January 9, 2004 Order, positing that the
suspension of the proceedings should only be with respect to JAPRL but not with
respect to Limson and Arollado.[11] The Makati RTC, by Order of February 25, 2004,
mantained its order archiving the complaint against all petitioners herein, however.
SBC filed a motion for reconsideration [12] of the February 25, 2004 Order, to
which
Limson
and
Arollado
separately
filed
an
Opposition
(Ad
[13]
Cautelam)
wherein they claimed that summons were not served on them, hence,
the Makati RTC failed to acquire jurisdiction over their person. At any rate, they
raised defenses against SBCs claim that they acted as sureties of JAPRL.

Meanwhile, the proposed rehabilitation plan before the Quezon City RTC was
disapproved by Order of May 9, 2005.[14] On SBCs motion, theMakati RTC thus
reinstated SBCs complaint to its docket, by Order of February 27, 2006. [15]
Petitioners later filed before the Makati RTC a Manifestation (Ad Cautelam)
informing that a Stay Order dated March 13, 2006 [17] was issued, this time by the
Calamba RTC, Branch 34, in a new petition for rehabilitation filed by JAPRL and its
subsidiary, RAPID Forming Corporation, and praying for the archiving of SBCs
complaint.
[16]

By Order of June 30, 2006,[18] the Makati RTC again archived SBCs complaint
against petitioners. SBC, by Consolidated Motion, moved for the reconsideration of
the June 30, 2006 Order, averring that its complaint should not have been archived
with respect to sureties Limson and Arollado; and that since the two failed to file
their respective Answers within the reglementary period, they should be declared in
default.
The Makati RTC denied, by Order of October 2, 2006, [19] the Consolidated
Motion of SBC, prompting SBC to file a petition for certiorari before the Court of
Appeals.
By Decision of September 25, 2008,[20] the appellate court held that Limson
and Arollado voluntarily submitted themselves to the jurisdiction of the Makati RTC,
despite the qualification that the filing of their respective Opposition[s] Ad
Cautelam and Manifestation[s] Ad Cautelam, was by way of special
appearance they having sought affirmative relief by praying for the archiving of
SBCs complaint.
The Manifestations and Oppositions filed by the individual
private respondents to the court a quo have the purpose of asking the
court to archive the case until the final resolution of either the Petition
for Rehabilitation filed by private respondent corporation JAPRL
inQuezon City or the subsisting Petition for Rehabilitation filed
in Calamba City, Laguna. Clearly, the purpose of those pleadings is to
seek for affirmative relief, (i.e. Suspending the proceedings in Civil
Case No. 03-1036) from the said court. By those pleadings asking for
affirmative relief, the individual private respondents had voluntarily
appeared in court. As expressly stated in Rule 14, Section 20, of the
Rules of Court, the defendants voluntary appearance in the action
shall be equivalent to service of summons. It is well settled that any
form of appearance in court, by the defendant, by his agent authorized
to do so, or by attorney, is equivalent to service except where such
appearance is precisely to object to the jurisdiction of the court over
the person of the defendant. x x x [21] (italics in the original;
underscoring supplied)

To the appellate court, SBCs claim against Limson and Arollado in their
capacity as sureties could proceed independently of JAPRLs petition for
rehabilitation:
x x x [T]he property of the surety cannot be taken into custody
by the rehabilitation receiver (SEC) and said surety can be sued
separately to enforce his liability as surety for the debts or obligations
of the debtor. The debts or obligations for which a surety may be liable
include future debts, an amount which may not be known at the time
the surety is given.
Aside from that, it is specifically stated under Rule 4, Section 6
(b) of the Interim Rules of Procedure on Corporate Rehabilitation, that
the issuance of a Stay order will have an effect of:
(b) staying enforcement of all claims whether for money or
otherwise and whether such enforcement is by court action otherwise,
against the debtor, its guarantors and sureties not solidarily
liable with the debtor.[22] (emphasis and italics in the original;
underscoring supplied)
The appellate court denied petitioners motion for reconsideration by
Resolution of October 29, 2009,[23] hence, the present petition for review on
certiorari.[24]
The petition fails.
A reading of the separate Oppositions Ad Cautelam by Limson and Arollado to
SBCs Motion for Reconsideration [25] shows that they did not challenge the trial
courts jurisdiction. Albeit both pleadings contained prefatory statements that the
two did not receive summons, they pleaded defenses in their favor, viz:
Limsons Opposition Ad Cautelam
6. First of all, there is no gainsaying that herein defendant
LIMSON as well as defendant AROLLADO are being sued in their
alleged capacities as SURETIES, with defendant JAPRL being the
DEBTOR. As SURETIES, they are covered by the Stay Order issued by
the court hearing the petition for corporate rehabilitation filed by Rapid
Forming Corp. and defendant JAPRL. The Stay Order directed, among
others, the stay of enforcement of ALL CLAIMS, WHETHER FOR
MONEY OR OTHERWISE, AND WHETHER SUCH ENFORCEMENT IS BY
COURT ACTION OR OTHERWISE, against the petitioner/s, and its/their
guarantors and SURETIES not solidarily liable with petitioner/s, [26] x x x
(all caps in the original)
Arollados Opposition (Ad Cautelam)
11. Certainly, the plaintiff cannot unjustly enrich itself and be
allowed to recover from both the DEBTOR JAPRL in accordance with the

rehabilitation plan, and at the same time from the alleged

SURETIES LIMSON and AROLLADO through the present complaint.

12. Moreover, defendant AROLLADO, as surety, can set up

against the plaintiff all the defenses which pertain to the principal
DEBTOR JAPRL and even those defenses that are inherent in the debt.
Likewise, defendant AROLLADO would, in any case, have a right of
action for reimbursement against JAPRL, the principal DEBTOR.
Additionally, defendant AROLLADO is given the right, under Article
1222 of the New Civil Code, to avail himself of all the
defenses which are derived from the nature of the obligation. Since the
plaintiff, and even defendants LIMSON and AROLLADO, are temporarily
barred from enforcing a claim against JAPRL, there is, therefore, every
reason tosuspend the proceedings against defendants LIMSON and
AROLLADO while the complaint is archived and cannot be prosecuted
against the DEBTOR JAPRL.[27] (capitalization and emphasis in the
original; underscoring supplied)
When a defendants appearance is made precisely to object to the jurisdiction
of the court over his person, it cannot be considered as appearance in court.
[28]
Limson and Arollado glossed over the alleged lack of service of summons,
however, and proceeded to exhaustively discuss why SBCs complaint could not
prosper against them as sureties. They thereby voluntarily submitted themselves to
the jurisdiction of the Makati RTC .
On a trial courts suspension of proceedings against a surety of a corporation
in the process of rehabilitation, Banco de Oro-EPCI, Inc. v. JAPRL Development
Corporation[29] holds that a creditor can demand payment from the surety solidarily
liablewith the corporation seeking rehabilitation, it being not included in the list of
stayed claims:
Indeed, Section 6(b) of the Interim Rules of Procedure of Corporate
Rehabilitation which the appellate court cited in the earlier-quoted portion of its
decision, provides that a stay order does not apply to sureties who are solidarily
liable with the debtor. In Limson and Arollados case, their solidary liability with
JAPRL is documented.
3. Liability of the Surety The liability of the Surety
is solidary and not contingent upon the pursuit by the Bank of
whatever remedies it may have against the Debtor or the
collaterals/liens it may possess. If any of the Guaranteed
Obligation is not paid or performed on due date (at stated maturity or
by acceleration), the Surety shall, without need for any notice, demand
or any other act or deed, immediately become liable therefor and the
Surety shall pay and perform the same. [30] (emphasis and underscoring
supplied)
Limson and Arollado, as sureties, whose liability is solidary cannot, therefore,
claim protection from the rehabilitation court, they not being the financiallydistressed corporation that may be restored, not to mention that the rehabilitation
court has no jurisdiction over them. Article 1216 of the Civil Code clearly is not on
their side:

ART. 1216. The creditor may proceed against any one of the
solidary debtors or some or all of them simultaneously. The demand
made against any one of them shall not be an obstacle to those which
may subsequently be directed against the others, so long as the debt
has not been fully collected. (underscoring supplied)
IN FINE, SBC can pursue its claim against Limson and Arollado despite the
pendency of JAPRLs petition for rehabilitation. For, by the CSA in favor of SBC, it is
the obligation of the sureties, who are therein stated to be solidary with JAPRL, to
see to it that JAPRLs debt is fully paid.[31]
Finally, contrary to petitioners position, the appellate courts decision only
nullified the suspension of proceedings against Limson and Arollado. [32] The
suspension with respect to JAPRL remains, in line with Philippine Blooming Mills v.
Court of Appeals.[33]
WHEREFORE, the petition is DENIED.
SO ORDERED.
CONCHITA CARPIO MORALES
Associate Justice

Rapid City Realty v. Villa, G.R. No. 184197, February 11, 2010
RAPID
CITY
REALTY
DEVELOPMENT CORPORATION,
Petitioner,

AND

G.R. No. 184197

Present:
PUNO, C.J., Chairperson,
CARPIO MORALES,
NACHURA,*
CASTRO,
BERSAMIN, and
VILLARAMA, JR., JJ.

- versus -

ORLANDO VILLA and LOURDES PAEZVILLA,[1]

Respondents.

Promulgated:
February 11, 2010
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION

CARPIO MORALES, J.:

Sometime in 2004, Rapid City Realty and Development Corporation
(petitioner) filed a complaint for declaration of nullity of subdivision
plans . . . mandamus and damages against several defendants including Spouses
Orlando and Lourdes Villa (respondents). The complaint, which was docketed at the
Regional Trial Court of Antipolo City as Civil Case No. 04-7350, was lodged at Branch
71 thereof.
After one failed attempt at personal service of summons, Gregorio Zapanta
(Zapanta), court process server, resorted to substituted service by serving
summons upon respondents househelp who did not acknowledge receipt thereof
and refused to divulge their names. Thus Zapanta stated in the Return of
Summons:
THIS IS TO CERTIFY that on September 24, 2004, the
undersigned caused the service of summons together with a copy of
the complaint with its annexes to defendant Spouses Lourdes Estudillo
Paez-Cline and Orlando Villa at their given address at 905 Padre Faura
Street, Ermita Manila, as per information given by two lady househelps
who are also residing at the said address, the defendant spouses
are not around at that time. On the 27th of September, 2004, I
returned to the same place to serve the summons. I served the
summons and the copy of the complaint with its annexes to the two
ladies (The same lady househelp I met on Sept. 24, 2004) but
they refused to sign to acknowledge receipt and they refused
to tell their name as per instruction of the defendants. With me
who can attest to the said incident is Mr. Jun Llanes, who was with me
at that time.[2] x x x (emphasis and underscoring supplied)
Despite substituted service, respondents failed to file their Answer, prompting
petitioner to file a Motion to Declare Defendants[-herein respondents] in Default
which the trial court granted by Order of May 3, 2005.
More than eight months thereafter or on January 30, 2006, respondents filed
a Motion to Lift Order of Default,[3] claiming that on January 27, 2006 they
officially received all pertinent papers such as Complaint and Annexes. Motion to
Dismiss of the Solicitor General and the ORDER dated May 3, 2005 granting the
Motion to Declare [them] in Default.
And they denied the existence of two
women helpers who allegedly refused to sign and acknowledge receipt of the
summons. In any event, they contended that assuming that the allegation were
true, the helpers had no authority to receive the documents. [4]
By Order of July 17, 2006, the trial court set aside the Order of Default and
gave herein respondents five days to file their Answer. Respondents just the same
did not file an Answer, drawing petitioner to again file a Motion to declare them in
default, which the trial court again granted by Order of February 21, 2007.
On April 18, 2007, respondents filed an Omnibus Motion for reconsideration of
the second order declaring them in default and to vacate proceedings, this time

claiming that the trial court did not acquire jurisdiction over their persons due to
invalid service of summons.
The trial court denied respondents Omnibus Motion by Order of May 22,
2007 and proceeded to receive ex-parte evidence for petitioner.
Respondents, via certiorari, challenged the trial courts February 21, 2007 and
April 18, 2007 Orders before the Court of Appeals.
In the meantime, the trial court, by Decision of September 4, 2007,
rendered judgment in favor of petitioner.
By Decision of April 29, 2008,[5] the appellate court annulled the trial courts
Orders declaring respondents in default for the second time in this wise:
In assailing the orders of the trial court through their Motion to Lift
and later their Omnibus Motion the petitioners [herein-respondents]
never raised any other defense in avoidance of the respondents
[herein petitioners] claim, and instead focused all their energies on
questioning the said courts jurisdiction. The latter motion clearly
stated prefatorily their counsels reservation or special appearance to
question jurisdiction over the persons of the petitioners. A party who
makes a special appearance in court challenging the jurisdiction of said
court based on the ground of invalid service of summons is not
deemed to have submitted himself to the jurisdiction of the
court.[6] (citation omitted; italics, emphasis and underscoring
supplied)
Petitioners motion for reconsideration having been denied by the appellate
court by Resolution of August 12, 2008, it comes to the Court via petition for review
on certiorari, arguing in the main that respondents, in filing the first Motion to Lift
the Order of Default, voluntarily submitted themselves to the jurisdiction of the
court.
The petition is impressed with merit.
It is settled that if there is no valid service of summons, the court can still
acquire jurisdiction over the person of the defendant by virtue of the latters
voluntary appearance. Thus Section 20 of Rule 14 of the Rules of Court provides:
Sec. 20. Voluntary appearance. The defendants voluntary
appearance in the action shall be equivalent to service of summons.
The inclusion in a motion to dismiss of other grounds aside from lack of
jurisdiction over the person shall not be deemed a voluntary
appearance.
And Philippine Commercial International Bank v. Spouses Wilson Dy Hong Pi and
Lolita Dy, et al. enlightens:

Preliminarily, jurisdiction over the defendant in a civil case is acquired

either by the coercive power of legal processes exerted over his
person, or his voluntary appearance in court. As a general proposition,
one who seeks an affirmative relief is deemed to have submitted to the
jurisdiction of the court. It is by reason of this rule that we have had
occasion to declare that the filing of motions to admit answer, for
additional time to file answer, for reconsideration of a default
judgment, and to lift order of default with motion for reconsideration,
isconsidered
voluntary
submission
to
the
courts
jurisdiction. This, however, is tempered by the concept of conditional
appearance, such that a party who makes a special appearance to
challenge, among others, the courts jurisdiction over his person
cannot be considered to have submitted to its authority.
Prescinding from the foregoing, it is thus clear that:
(1) Special appearance operates as an exception to the general rule
on voluntary appearance;
(2) Accordingly, objections to the jurisdiction of the court over the
person of the defendant must be explicitly made, i.e., set forth in
an unequivocal manner; and
(3) Failure to do so constitutes voluntary submission to the
jurisdiction of the court, especially in instances where a pleading or
motion seeking affirmative relief is filed and submitted to the court for
resolution.[7] (italics and underscoring supplied)
In their first Motion to Lift the Order of Default [8] dated January 30, 2006,
respondents alleged:
4.

xxxx
In the case of respondents, there is no reason why they should
not receive the Orders of this Honorable Court since the subject of
the case is their multi-million real estate property and naturally
they would not want to be declared in default or lose the same
outright without the benefit of a trial on the merits;

5.

It would be the height of injustice if the respondents is [sic]

denied the equal protection of the laws[;]

6.

Respondents must be afforded Due process of Law as

enshrined in the New Constitution, which is a basic right of every
Filipino, since they were not furnished copies of pleadings by the
plaintiff and the Order dated May 3, 2005;
x x x x[9]

and accordingly prayed as follows:

WHEREFORE, . . . it is most respectfully prayed . . . that the
Order dated May 5, 2005 declaring [them] in default be LIFTED. [10]
Respondents did not, in said motion, allege that their filing thereof was a special
appearance for the purpose only to question the jurisdiction over their
persons. Clearly, they had acquiesced to the jurisdiction of the court.
WHEREFORE, the petition is GRANTED. The assailed Court of Appeals
Decision of April 29, 2008 is REVERSED andSET ASIDE.
Let the original records of Civil Case No. 04-7350 be remanded to the court of
origin, Regional Trial Court of Antipolo City, Branch 71.
SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

Allan Co v. Cordero, G.R. No. 164703, May 4, 2010

FIRST DIVISION
ALLAN C. GO, doing business
under the name and style ACG
Express Liner,
Petitioner,

G.R. No. 164703

- versus MORTIMER F. CORDERO,

Respondent.
x-----------------------------------------x
MORTIMER F. CORDERO,
Petitioner,

G.R. No. 164747

Present:
- versus -

ALLAN C. GO, doing business

under the name and style
ACG Express Liner, FELIPE M.
LANDICHO and VINCENT D. TECSON,
Respondents.

PUNO, C.J., Chairperson,

CARPIO MORALES,
LEONARDO-DE CASTRO,
BERSAMIN, and
VILLARAMA, JR., JJ.
Promulgated:
May 4, 2010

x-----------------------------------------------------------------------------------------x
DECISION
VILLARAMA, JR., J.:
For review is the Decision[1] dated March 16, 2004 as modified by the
Resolution[2] dated July 22, 2004 of the Court of Appeals (CA) in CA-G.R. CV No.
69113, which affirmed with modifications the Decision [3] dated May 31, 2000 of the
Regional Trial Court (RTC) of Quezon City, Branch 85 in Civil Case No. 98-35332.
The factual antecedents:
Sometime in 1996, Mortimer F. Cordero, Vice-President of Pamana Marketing
Corporation (Pamana), ventured into the business of marketing inter-island
passenger vessels. After contacting various overseas fast ferry manufacturers from
all over the world, he came to meet Tony Robinson, an Australian national based
in Brisbane, Australia, who is the Managing Director of Aluminium Fast Ferries
Australia (AFFA).
Between June and August 1997, Robinson signed documents appointing
Cordero as the exclusive distributor of AFFA catamaran and other fast ferry vessels
in the Philippines. As such exclusive distributor, Cordero offered for sale to
prospective buyers the 25-meter Aluminium Passenger catamaran known as the
SEACAT 25.[4]
After negotiations with Felipe Landicho and Vincent Tecson, lawyers of Allan C.
Go who is the owner/operator of ACG Express Liner of Cebu City, a single
proprietorship, Cordero was able to close a deal for the purchase of two (2) SEACAT
25 as evidenced by the Memorandum of Agreement dated August 7, 1997.
[5]
Accordingly, the parties executed Shipbuilding Contract No. 7825 for one (1) highspeed catamaran (SEACAT 25) for the price of US$1,465,512.00. [6] Per agreement
between Robinson and Cordero, the latter shall receive commissions totalling
US$328,742.00, or 22.43% of the purchase price, from the sale of each vessel. [7]

Cordero made two (2) trips to the AFFA Shipyard in Brisbane, Australia, and
on one (1) occasion even accompanied Go and his family and Landicho, to monitor
the progress of the building of the vessel. He shouldered all the expenses for
airfare, food, hotel accommodations, transportation and entertainment during these
trips. He also spent for long distance telephone calls to communicate regularly with
Robinson, Go, Tecson and Landicho.
However, Cordero later discovered that Go was dealing directly with Robinson
when he was informed by Dennis Padua of Wartsila Philippines that Go was
canvassing for a second catamaran engine from their company which provided the
ship engine for the first SEACAT 25. Padua told Cordero that Go instructed him to
fax the requested quotation of the second engine to the Park Royal Hotel
in Brisbane where Go was then staying. Cordero tried to contact Go and Landicho
to confirm the matter but they were nowhere to be found, while Robinson refused to
answer his calls. Cordero immediately flew to Brisbane to clarify matters with
Robinson, only to find out that Go and Landicho were already there
in Brisbane negotiating for the sale of the second SEACAT 25. Despite repeated
follow-up calls, no explanation was given by Robinson, Go, Landicho and Tecson who
even made Cordero believe there would be no further sale between AFFA and ACG
Express Liner.
In a handwritten letter dated June 24, 1998, Cordero informed Go that such
act of dealing directly with Robinson violated his exclusive distributorship and
demanded that they respect the same, without prejudice to legal action against him
and Robinson should they fail to heed the same. [8] Corderos lawyer, Atty. Ernesto A.
Tabujara, Jr. of ACCRA law firm, also wrote ACG Express Liner assailing the
fraudulent actuations and misrepresentations committed by Go in connivance with
his lawyers (Landicho and Tecson) in breach of Corderos exclusive distributorship
appointment.[9]
Having been apprised of Corderos demand letter, Thyne & Macartney, the
lawyer of AFFA and Robinson, faxed a letter toACCRA law firm asserting that the
appointment of Cordero as AFFAs distributor was for the purpose of one (1)
transaction only, that is, the purchase of a high-speed catamaran vessel by ACG
Express Liner in August 1997. The letter further stated that Cordero was offered the
exclusive distributorship, the terms of which were contained in a draft agreement
which Cordero allegedly failed to return to AFFA within a reasonable time, and which
offer is already being revoked by AFFA. [10]
As to the response of Go, Landicho and Tecson to his demand letter, Cordero
testified before the trial court that on the same day, Landicho, acting on behalf of
Go, talked to him over the telephone and offered to amicably settle their
dispute. Tecson and Landicho offered to convince Go to honor his exclusive
distributorship with AFFA and to purchase all vessels for ACG Express Liner through
him for the next three (3) years. In an effort to amicably settle the matter,
Landicho, acting in behalf of Go, set up a meeting with Cordero on June 29, 1998
between 9:30 p.m. to 10:30 p.m. at the Mactan Island Resort Hotel lobby. On said
date, however, only Landicho and Tecson came and no reason was given for Gos
absence. Tecson and Landicho proposed that they will convince Go to pay him

US$1,500,000.00 on the condition that they will get a cut of 20%. And so it was
agreed between him, Landicho and Tecson that the latter would give him a weekly
status report and that the matter will be settled in three (3) to four (4) weeks and
neither party will file an action against each other until a final report on the
proposed settlement. No such report was made by either Tecson or Landicho who, it
turned out, had no intention to do so and were just buying time as the catamaran
vessel was due to arrive from Australia. Cordero then filed a complaint with the
Bureau of Customs (BOC) to prohibit the entry of SEACAT 25 from Australia based on
misdeclaration and undervaluation. Consequently, an Alert Order was issued by
Acting BOC Commissioner Nelson Tan for the vessel which in fact arrived on July 17,
1998. Cordero claimed that Go and Robinson had conspired to undervalue the
vessel by around US$500,000.00.[11]
On August 21, 1998, Cordero instituted Civil Case No. 98-35332 seeking to
hold Robinson, Go, Tecson and Landicho liable jointly and solidarily for conniving
and conspiring together in violating his exclusive distributorship in bad faith and
wanton disregard of his rights, thus depriving him of his due commissions (balance
of unpaid commission from the sale of the first vessel in the amount of
US$31,522.01 and unpaid commission for the sale of the second vessel in the
amount of US$328,742.00) and causing him actual, moral and exemplary damages,
including P800,000.00 representing expenses for airplane travel to Australia,
telecommunications bills and entertainment, on account of AFFAs untimely
cancellation of the exclusive distributorship agreement. Cordero also prayed for the
award of moral and exemplary damages, as well as attorneys fees and litigation
expenses.[12]
Robinson filed a motion to dismiss grounded on lack of jurisdiction over his
person and failure to state a cause of action, asserting that there was no act
committed in violation of the distributorship agreement. Said motion was denied by
the trial court on December 20, 1999. Robinson was likewise declared in default for
failure to file his answer within the period granted by the trial court. [13] As for Go
and Tecson, their motion to dismiss based on failure to state a cause of action was
likewise denied by the trial court on February 26, 1999.[14] Subsequently, they filed
their Answer denying that they have anything to do with the termination by AFFA of
Corderos authority as exclusive distributor in the Philippines. On the contrary, they
averred it was Cordero who stopped communicating with Go in connection with the
purchase of the first vessel from AFFA and was not doing his part in making progress
status reports and airing the clients grievances to his principal, AFFA, such that Go
engaged the services of Landicho to fly to Australia and attend to the documents
needed for shipment of the vessel to the Philippines. As to the inquiry for the
Philippine price for a Wartsila ship engine for AFFAs other on-going vessel
construction, this was merely requested by Robinson but which Cordero
misinterpreted as indication that Go was buying a second vessel. Moreover,
Landicho and Tecson had no transaction whatsoever with Cordero who had no
document to show any such shipbuilding contract. As to the supposed meeting to
settle their dispute, this was due to the malicious demand of Cordero to be given
US$3,000,000 as otherwise he will expose in the media the alleged undervaluation
of the vessel with the BOC. In any case, Cordero no longer had cause of action for
his commission for the sale of the second vessel under the memorandum of

agreement dated August 7, 1997 considering the termination of his authority by

AFFAs lawyers on June 26, 1998.[15]
Pre-trial was reset twice to afford the parties opportunity to reach a
settlement. However, on motion filed by Cordero through counsel, the trial court
reconsidered the resetting of the pre-trial to another date for the third time as
requested by Go, Tecson and Landicho, in view of the latters failure to appear at the
pre-trial conference on January 7, 2000 despite due notice. The trial court further
confirmed that said defendants misled the trial court in moving for continuance
during the pre-trial conference held onDecember 10, 1999, purportedly to go
abroad for the holiday season when in truth a Hold-Departure Order had been
issued against them.[16] Accordingly, plaintiff Cordero was allowed to present his
evidence ex parte.
Corderos testimony regarding his transaction with defendants Go, Landicho
and Tecson, and the latters offer of settlement, was corroborated by his counsel
who also took the witness stand. Further, documentary evidence including
photographs taken of the June 29, 1998 meeting with Landicho, Tecson and Atty.
Tabujara at Shangri-las Mactan Island Resort, photographs taken in Brisbane
showing Cordero, Go with his family, Robinson and Landicho, and also various
documents, communications, vouchers and bank transmittals were presented to
prove that: (1) Cordero was properly authorized and actually transacted in behalf of
AFFA as exclusive distributor in the Philippines; (2) Cordero spent considerable sums
of money in pursuance of the contract with Go and ACG Express Liner; and (3) AFFA
through Robinson paid Cordero his commissions from each scheduled payment
made by Go for the first SEACAT 25 purchased from AFFA pursuant to Shipbuilding
Contract No. 7825.[17]
On May 31, 2000, the trial court rendered its decision, the dispositive portion
of which reads as follows:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby
rendered in favor of Plaintiff and against defendants Allan C. Go, Tony
Robinson, Felipe Landicho, and Vincent Tecson. As prayed for,
defendants are hereby ordered to pay Plaintiff jointly and solidarily, the
following:
1. On the First Cause of Action, the sum total of SIXTEEN MILLION
TWO HUNDRED NINETY ONE THOUSAND THREE HUNDRED
FIFTY TWO AND FORTY THREE CENTAVOS (P16,291,352.43) as
actual damages with legal interest from 25 June 1998 until
fully paid;
2. On the Second Cause of Action, the sum of ONE MILLION
PESOS (P1,000,000.00) as moral damages;
3. On the Third Cause of Action, the sum of ONE MILLION PESOS
(P1,000,000.00) as exemplary damages; and

4. On the Fourth Cause of Action, the sum of ONE MILLION PESOS

(P1,000,000.00) as attorneys fees;
Costs against the defendants.
SO ORDERED.[18]
Go, Robinson, Landicho and Tecson filed a motion for new trial, claiming that
they have been unduly prejudiced by the negligence of their counsel who was
allegedly unaware that the pre-trial conference on January 28, 2000 did not push
through for the reason that Cordero was then allowed to present his evidence exparte, as he had assumed that the said ex-parte hearing was being conducted only
against Robinson who was earlier declared in default. [19] In its Order dated July 28,
2000, the trial court denied the motion for new trial. [20] In the same order, Corderos
motion for execution pending appeal was granted. Defendants moved to reconsider
the said order insofar as it granted the motion for execution pending appeal.
[21]
On August 8, 2000, they filed a notice of appeal. [22]
On August 18, 2000, the trial court denied the motion for reconsideration and
on August 21, 2000, the writ of execution pending appeal was issued.
[23]
Meanwhile, the notice of appeal was denied for failure to pay the appellate
court docket fee within the prescribed period. [24] Defendants filed a motion for
reconsideration and to transmit the case records to the CA. [25]
On September 29, 2000, the CA issued a temporary restraining order at the
instance of defendants in the certiorari case they filed with said court docketed as
CA-G.R. SP No. 60354 questioning the execution orders issued by the trial
court. Consequently, as requested by the defendants, the trial court recalled and
set aside its November 6, 2000 Order granting the ex-parte motion for release of
garnished funds, cancelled the scheduled public auction sale of levied real
properties, and denied the ex-parte Motion for Break-Open Order and ExParte Motion for Encashment of Check filed by Cordero. [26] On November 29, 2000,
the trial court reconsidered its Order dated August 21, 2000 denying due course to
the notice of appeal and forthwith directed the transmittal of the records to the CA.
[27]

On January 29, 2001, the CA rendered judgment granting the petition for
certiorari in CA-G.R. SP No. 60354 and setting aside the trial courts orders of
execution pending appeal. Cordero appealed the said judgment in a petition for
review filed with this Court which was eventually denied under our Decision
dated September 17, 2002.[28]
On March 16, 2004, the CA in CA-G.R. CV No. 69113 affirmed the trial court
(1) in allowing Cordero to present his evidence ex-parte after the unjustified failure
of appellants (Go, Tecson and Landicho) to appear at the pre-trial conference
despite due notice; (2) in finding that it was Cordero and not Pamana who was
appointed by AFFA as the exclusive distributor in the Philippines of its SEACAT 25
and other fast ferry vessels, which is not limited to the sale of one (1) such

catamaran to Go on August 7, 1997; and (3) in finding that Cordero is entitled to a

commission per vessel sold for AFFA through his efforts in the amount equivalent to
22.43% of the price of each vessel or US$328,742.00, and with payments of
US$297,219.91 having been made to Cordero, there remained a balance of
US$31,522.09 still due to him. The CA sustained the trial court in ruling that Cordero
is entitled to damages for the breach of his exclusive distributorship agreement with
AFFA. However, it held that Cordero is entitled only to commission for the sale of
the first catamaran obtained through his efforts with the remaining unpaid sum of
US$31,522.09 or P1,355,449.90 (on the basis of US$1.00=P43.00 rate) with interest
at 6% per annum from the time of the filing of the complaint until the same is fully
paid. As to the P800,000.00 representing expenses incurred by Cordero for
transportation, phone bills, entertainment, food and lodging, the CA declared there
was no basis for such award, the same being the logical and necessary
consequences of the exclusive distributorship agreement which are normal in the
field of sales and distribution, and the expenditures having redounded to the benefit
of the distributor (Cordero).
On the amounts awarded by the trial court as moral and exemplary damages,
as well as attorneys fees, the CA reduced the same to P500,000.00, P300,000.00
and P50,000.00, respectively. Appellants were held solidarily liable pursuant to the
provisions of Article 1207 in relation to Articles 19, 20, 21 and 22 of the New Civil
Code. The CA further ruled that no error was committed by the trial court in
denying their motion for new trial, which said court found to be pro forma and did
not raise any substantial matter as to warrant the conduct of another trial.
By Resolution dated July 22, 2004, the CA denied the motions for
reconsideration respectively filed by the appellants and appellee, and affirmed the
Decision dated March 16, 2004 with the sole modification that the legal interest of
6% per annum shall start to run from June 24, 1998 until the finality of the decision,
and the rate of 12% interest per annum shall apply once the decision becomes final
and executory until the judgment has been satisfied.
The case before us is a consolidation of the petitions for review under Rule
45 separately filed by Go (G.R. No. 164703) and Cordero (G.R. No. 164747) in which
petitioners raised the following arguments:
G.R. No. 164703
(Petitioner Go)
I.

THE HONORABLE COURT OF APPEALS DISREGARDED THE RULES

OF COURT AND PERTINENT JURISPRUDENCE AND ACTED WITH
GRAVE ABUSE OF DISCRETION IN NOT RULING THAT THE
RESPONDENT IS NOT THE REAL PARTY-IN-INTEREST AND IN NOT
DISMISSING THE INSTANT CASE ON THE GROUND OF LACK OF
CAUSE OF ACTION;

II.

THE HONORABLE COURT OF APPEALS IGNORED THE LAW AND

JURISPRUDENCE AND ACTED WITH GRAVE ABUSE OF DISCRETION
IN HOLDING HEREIN PETITIONER RESPONSIBLE FOR THE BREACH

IN THE ALLEGED EXCLUSIVE DISTRIBUTORSHIP AGREEMENT WITH

ALUMINIUM FAST FERRIES AUSTRALIA;
III.

THE HONORABLE APPELLATE COURT MISAPPLIED THE LAW AND

ACTED WITH GRAVE ABUSE OF DISCRETION IN FINDING
PETITIONER LIABLE IN SOLIDUM WITH THE CO-DEFENDANTS WITH
RESPECT TO THE CLAIMS OF RESPONDENT;

IV.

THE HONORABLE COURT OF APPEALS MISAPPLIED LAW AND

JURISPRUDENCE AND GRAVELY ABUSED ITS DISCRETION WHEN IT
FOUND PETITIONER LIABLE FOR UNPAID COMMISSIONS, DAMAGES,
ATTORNEYS FEES, AND LITIGATION EXPENSES; and

V.

THE HONORABLE APPELLATE COURT ACTED CONTRARY TO LAW

AND JURISPRUDENCE AND GRAVELY ABUSED ITS DISCRETION
WHEN IT EFFECTIVELY DEPRIVED HEREIN PETITIONER OF HIS
RIGHT TO DUE PROCESS BY AFFIRMING THE LOWER COURTS
DENIAL OF PETITIONERS MOTION FOR NEW TRIAL.[29]

G.R. No. 164747

(Petitioner Cordero)
I.
THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE JUDGMENT OF
THE TRIAL COURT AWARDING PETITIONER ACTUAL DAMAGES FOR HIS
COMMISSION FOR THE SALE OF THE SECOND VESSEL, SINCE THERE IS
SUFFICIENT EVIDENCE ON RECORD WHICH PROVES THAT THERE WAS A
SECOND SALE OF A VESSEL.
A. THE MEMORANDUM OF AGREEMENT DATED 7 AUGUST
1997 PROVIDES
THAT
RESPONDENT
GO
WAS
CONTRACTUALLY BOUND TO BUY TWO (2) VESSELS FROM
AFFA.
B. RESPONDENT GOS POSITION PAPER AND COUNTERAFFIDAVIT/POSITION PAPER THAT WERE FILED BEFORE THE
BUREAU OF CUSTOMS, ADMITS UNDER OATH THAT HE HAD
INDEED PURCHASED A SECOND VESSEL FROM AFFA.
C. RESPONDENTS ADMITTED IN THEIR PRE-TRIAL BRIEF THAT
THEY HAD PURCHASED A SECOND VESSEL.
II.
THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER IS NOT
ENTITLED TO HIS COMMISSIONS FOR THE PURCHASE OF A SECOND
VESSEL, SINCE IT WAS PETITIONERS EFFORTS WHICH ACTUALLY
FACILITATED AND SET-UP THE TRANSACTION FOR RESPONDENTS.

III.
THE COURT OF APPEALS ERRED IN NOT IMPOSING THE PROPER LEGAL
INTEREST RATE ON RESPONDENTS UNPAID OBLIGATION WHICH
SHOULD BE TWELVE PERCENT (12%) FROM THE TIME OF THE BREACH
OF THE OBLIGATION.

IV.
THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE ORIGINAL
AMOUNT OF CONSEQUENTIAL DAMAGES AWARDED TO PETITIONER BY
THE TRIAL COURT CONSIDERING THE BAD FAITH AND FRAUDULENT
CONDUCT OF RESPONDENTS IN MISAPPROPRIATING THE MONEY OF
PETITIONER.[30]
The controversy boils down to two (2) main issues: (1) whether petitioner
Cordero has the legal personality to sue the respondents for breach of contract; and
(2) whether the respondents may be held liable for damages to Cordero for his
unpaid commissions and termination of his exclusive distributorship appointment by
the principal, AFFA.
I. Real Party-in-Interest
First, on the issue of whether the case had been filed by the real party-ininterest as required by Section 2, Rule 3 of the Rules of Court, which defines such
party as the one (1) to be benefited or injured by the judgment in the suit, or the
party entitled to the avails of the suit. The purposes of this provision are: 1) to
prevent the prosecution of actions by persons without any right, title or interest in
the case; 2) to require that the actual party entitled to legal relief be the one to
prosecute the action; 3) to avoid a multiplicity of suits; and 4) to discourage
litigation and keep it within certain bounds, pursuant to sound public policy. [31] A
case is dismissible for lack of personality to sue upon proof that the plaintiff is not
the real party-in-interest, hence grounded on failure to state a cause of action. [32]
On this issue, we agree with the CA in ruling that it was Cordero and not
Pamana who is the exclusive distributor of AFFA in the Philippines as shown by the
Certification dated June 1, 1997 issued by Tony Robinson. [33] Petitioner Go mentions
the following documents also signed by respondent Robinson which state that
Pamana Marketing Corporation represented by Mr. Mortimer F. Cordero was
actually the exclusive distributor: (1) letter dated 1 June 1997 [34]; (2) certification
dated 5 August 1997[35]; and (3) letter dated 5 August 1997 addressed to petitioner
Cordero
concerning commissions
to
be
paid
to
Pamana
Marketing
Corporation.[36] Such apparent inconsistency in naming AFFAs exclusive distributor
in the Philippines is of no moment. For all intents and purposes, Robinson and AFFA
dealt only with Cordero who alone made decisions in the performance of the
exclusive distributorship, as with other clients to whom he had similarly offered
AFFAs fast ferry vessels. Moreover, the stipulated commissions from each progress
payments made by Go were directly paid by Robinson to Cordero. [37] Respondents
Landicho and Tecson were only too aware of Corderos authority as the person who
was appointed and acted as exclusive distributor of AFFA, which can be gleaned
from their act of immediately furnishing him with copies of bank transmittals
everytime Go remits payment to Robinson, who in turn transfers a portion of funds
received to the bank account of Cordero in the Philippines as his commission. Out of
these partial payments of his commission, Cordero would still give Landicho and

Tecson
their
respective
commission,
or
cuts
from
his
own
commission. Respondents Landicho and Tecson failed to refute the evidence
submitted by Cordero consisting of receipts signed by them. Said amounts were
apart from the earlier expenses shouldered by Cordero for Landichos airline tickets,
transportation, food and hotel accommodations for the trip to Australia.[38]
Moreover, petitioner Go, Landicho and Tecson never raised petitioner
Corderos lack of personality to sue on behalf of Pamana, [39] and did so only before
the CA when they contended that it is Pamana and not Cordero, who was appointed
and acted as exclusive distributor for AFFA. [40] It was Robinson who argued in
support of his motion to dismiss that as far as said defendant is concerned, the real
party plaintiff appears to be Pamana, against the real party defendant which is
AFFA.[41] As already mentioned, the trial court denied the motion to dismiss filed by
Robinson.
We find no error committed by the trial court in overruling Robinsons
objection over the improper resort to summons by publication upon a foreign
national like him and in an action in personam, notwithstanding that he raised it in a
special appearance specifically raising the issue of lack of jurisdiction over his
person. Courts acquire jurisdiction over the plaintiffs upon the filing of the
complaint, while jurisdiction over the defendants in a civil case is acquired either
through the service of summons upon them in the manner required by
law or through their voluntary appearance in court and their submission to its
authority.[42] A party who makes a special appearance in court challenging the
jurisdiction of said court based on the ground of invalid service of summons is not
deemed to have submitted himself to the jurisdiction of the court. [43]
In this case, however, although the Motion to Dismiss filed by Robinson
specifically stated as one (1) of the grounds the lack of personal jurisdiction, it
must be noted that he had earlier filed a Motion for Time to file an appropriate
responsive pleading even beyond the time provided in the summons by publication.
[44]
Such motion did not state that it was a conditional appearance entered to
question the regularity of the service of summons, but an appearance submitting to
the jurisdiction of the court by acknowledging the summons by publication issued
by the court and praying for additional time to file a responsive
pleading. Consequently, Robinson having acknowledged the summons by
publication and also having invoked the jurisdiction of the trial court to secure
affirmative relief in his motion for additional time, he effectively submitted
voluntarily to the trial courts jurisdiction. He is now estopped from asserting
otherwise, even before this Court.[45]
II. Breach of Exclusive Distributorship,
Contractual Interference and
Respondents Liability for Damages
In Yu v. Court of Appeals,[46] this Court ruled that the right to perform an
exclusive distributorship agreement and to reap the profits resulting from such
performance are proprietary rights which a party may protect. Thus, injunction is

the appropriate remedy to prevent a wrongful interference with contracts

by strangers to such contracts where the legal remedy is insufficient and the
resulting injury is irreparable. In that case, the former dealer of the same goods
purchased the merchandise from the manufacturer in England through a trading
firm in West Germany and sold these in the Philippines. We held that the rights
granted to the petitioner under the exclusive distributorship agreement may not be
diminished nor rendered illusory by the expedient act of utilizing or interposing a
person or firm to obtain goods for which the exclusive distributorship was
conceptualized, at the expense of the sole authorized distributor. [47]
In the case at bar, it was established that petitioner Cordero was not paid the
balance of his commission by respondent Robinson. From the time petitioner Go
and respondent Landicho directly dealt with respondent Robinson in Brisbane, and
ceased communicating through petitioner Cordero as the exclusive distributor of
AFFA in the Philippines, Cordero was no longer informed of payments remitted to
AFFA in Brisbane. In other words, Cordero had clearly been cut off from the
transaction until the arrival of the first SEACAT 25 which was sold through his
efforts. When Cordero complained to Go, Robinson, Landicho and Tecson about
their acts prejudicial to his rights and demanded that they respect his exclusive
distributorship, Go simply let his lawyers led by Landicho and Tecson handle the
matter and tried to settle it by promising to pay a certain amount and to purchase
high-speed catamarans through Cordero. However, Cordero was not paid anything
and worse, AFFA through its lawyer in Australia even terminated his exclusive
dealership insisting that his services were engaged for only one (1) transaction, that
is, the purchase of the first SEACAT 25 in August 1997.
Petitioner Go argues that unlike in Yu v. Court of Appeals[48] there is no
conclusive proof adduced by petitioner Cordero that they actually purchased a
second SEACAT 25 directly from AFFA and hence there was no violation of the
exclusive distributorship agreement. Further, he contends that the CA gravely
abused its discretion in holding them solidarily liable to Cordero, relying on Articles
1207, 19 and 21 of the Civil Code despite absence of evidence, documentary or
testimonial, showing that they conspired to defeat the very purpose of the exclusive
distributorship agreement.[49]
We find that contrary to the claims of petitioner Cordero, there was indeed no
sufficient evidence that respondents actually purchased a second SEACAT 25
directly from AFFA. But this circumstance will not absolve respondents from liability
for invading Corderos rights under the exclusive distributorship. Respondents
clearly acted in bad faith in bypassing Cordero as they completed the remaining
payments to AFFA without advising him and furnishing him with copies of the bank
transmittals as they previously did, and directly dealt with AFFA through Robinson
regarding arrangements for the arrival of the first SEACAT 25 in Manila and
negotiations for the purchase of the second vessel pursuant to the Memorandum of
Agreement which Cordero signed in behalf of AFFA. As a result of respondents
actuations, Cordero incurred losses as he was not paid the balance of his
commission from the sale of the first vessel and his exclusive distributorship
revoked by AFFA.

Petitioner Go contends that the trial and appellate courts erred in holding
them solidarily liable for Corderos unpaid commission, which is the sole obligation
of the principal AFFA. It was Robinson on behalf of AFFA who, in the letter
datedAugust 5, 1997 addressed to Cordero, undertook to pay commission payments
to Pamana on a staggered progress payment plan in the form of percentage of the
commission per payment. AFFA explicitly committed that it will, upon receipt of
progress payments, pay to Pamana their full commission by telegraphic transfer to
an account nominated by Pamana within one to two days of [AFFA] receiving such
payments.[50] Petitioner Go further maintains that he had not in any way violated
or caused the termination of the exclusive distributorship agreement between
Cordero and AFFA; he had also paid in full the first and only vessel he purchased
from AFFA.[51]
While it is true that a third person cannot possibly be sued for breach of
contract because only parties can breach contractual provisions, a contracting party
may sue a third person not for breach but for inducing another to commit such
breach.
Article 1314 of the Civil Code provides:
Art. 1314. Any third person who induces another to violate his
contract shall be liable for damages to the other contracting party.
The elements of tort interference are: (1) existence of a valid contract; (2)
knowledge on the part of the third person of the existence of a contract; and (3)
interference of the third person is without legal justification. [52]
The presence of the first and second elements is not disputed. Through the
letters issued by Robinson attesting that Cordero is the exclusive distributor of AFFA
in the Philippines, respondents were clearly aware of the contract between Cordero
and AFFA represented by Robinson. In fact, evidence on record showed that
respondents initially dealt with and recognized Cordero as such exclusive dealer of
AFFA high-speed catamaran vessels in the Philippines. In that capacity as exclusive
distributor, petitioner Go entered into the Memorandum of Agreement and
Shipbuilding Contract No. 7825 with Cordero in behalf of AFFA.
As to the third element, our ruling in the case of So Ping Bun v. Court of
Appeals[53] is instructive, to wit:
A duty which the law of torts is concerned with is respect for the
property of others, and a cause of action ex delicto may be predicated
upon an unlawful interference by one person of the enjoyment by the
other of his private property. This may pertain to a situation where a
third person induces a party to renege on or violate his undertaking
under a contract. In the case before us, petitioners Trendsetter
Marketing asked DCCSI to execute lease contracts in its favor, and as a
result petitioner deprived respondent corporation of the latters
property right. Clearly, and as correctly viewed by the appellate court,

the three elements of tort interference above-mentioned are present in

the instant case.
Authorities debate on whether interference may be justified where
the defendant acts for the sole purpose of furthering his own financial
or economic interest. One view is that, as a general rule, justification
for interfering with the business relations of another exists where the
actors motive is to benefit himself. Such justification does not exist
where his sole motive is to cause harm to the other. Added to this,
some authorities believe that it is not necessary that the interferers
interest outweigh that of the party whose rights are invaded, and that
an individual acts under an economic interest that is substantial, not
merely de minimis, such that wrongful and malicious motives are
negatived, for he acts in self-protection. Moreover, justification for
protecting ones financial position should not be made to depend on a
comparison of his economic interest in the subject matter with that of
others. It is sufficient if the impetus of his conduct lies in a proper
business interest rather than in wrongful motives.
As early as Gilchrist vs. Cuddy, we held that where there
was no malice in the interference of a contract, and the
impulse behind ones conduct lies in a proper business interest
rather than in wrongful motives, a party cannot be a malicious
interferer. Where the alleged interferer is financially interested, and
such interest motivates his conduct, it cannot be said that he is an
officious or malicious intermeddler.
In the instant case, it is clear that petitioner So Ping Bun prevailed
upon DCCSI to lease the warehouse to his enterprise at the expense of
respondent corporation. Though petitioner took interest in the
property of respondent corporation and benefited from it,
nothing on record imputes deliberate wrongful motives or
malice in him.
x

While we do not encourage tort interferers seeking their economic

interest to intrude into existing contracts at the expense of others,
however, we find that the conduct herein complained of did not
transcend the limits forbidding an obligatory award for damages in the
absence of any malice. The business desire is there to make some gain
to the detriment of the contracting parties. Lack of malice,
however, precludes damages. But it does not relieve petitioner
of the legal liability for entering into contracts and causing
breach of existing ones. The respondent appellate court correctly
confirmed the permanent injunction and nullification of the lease
contracts between DCCSI and Trendsetter Marketing, without awarding
damages. The injunction saved the respondents from further damage
or injury caused by petitioners interference. [54] [EMPHASIS SUPPLIED.]

Malice connotes ill will or spite, and speaks not in response to duty. It implies
an intention to do ulterior and unjustifiable harm. Malice is bad faith or bad motive.
[55]
In the case of Lagon v. Court of Appeals,[56] we held that to sustain a case for
tortuous interference, the defendant must have acted with malice or must have
been driven by purely impure reasons to injure the plaintiff; in other words, his act
of interference cannot be justified. We further explained that the word induce
refers to situations where a person causes another to choose one course of conduct
by persuasion or intimidation. As to the allegation of private respondent in said
case that petitioner induced the heirs of the late Bai Tonina Sepi to sell the property
to petitioner despite an alleged renewal of the original lease contract with the
deceased landowner, we ruled as follows:
Assuming ex gratia argumenti that petitioner knew of the
contract, such knowledge alone was not sufficient to make him liable
for tortuous interference. x x x
Furthermore, the records do not support the allegation of private
respondent that petitioner induced the heirs of Bai Tonina Sepi to sell
the property to him. The word induce refers to situations where a
person causes another to choose one course of conduct by persuasion
or intimidation. The records show that the decision of the heirs of the
late Bai Tonina Sepi to sell the property was completely of their own
volition and that petitioner did absolutely nothing to influence their
judgment. Private respondent himself did not proffer any evidence to
support his claim. In short, even assuming that private respondent
was able to prove the renewal of his lease contract with Bai Tonina
Sepi, the fact was that he was unable to prove malice or bad faith on
the part of petitioner in purchasing the property. Therefore, the claim
of tortuous interference was never established. [57]
In their Answer, respondents denied having anything to do with the unpaid
balance of the commission due to Cordero and the eventual termination of his
exclusive distributorship by AFFA. They gave a different version of the events that
transpired following the signing of Shipbuilding Contract No. 7825. According to
them, several builder-competitors still entered the picture after the said contract
for the purchase of one (1) SEACAT 25 was sent to Brisbane in July 1997 for
authentication, adding that the contract was to be effective on August 7, 1997, the
time when their funds was to become available. Go admitted he called the
attention of AFFA if it can compete with the prices of other builders, and upon mutual
agreement, AFFA agreed to give them a discounted price under the following terms
and conditions: (1) that the contract price be lowered; (2) that Go will obtain
another vessel; (3) that to secure compliance of such conditions, Go must make an
advance payment for the building of the second vessel; and (4) that the payment
scheme formerly agreed upon as stipulated in the first contract shall still be the
basis and used as the guiding factor in remitting money for the building of the first
vessel. This led to the signing of another contract superseding the first one (1),
still to be dated 07 August 1997. Attached to the answer were photocopies of the
second contract stating a lower purchase price (US$1,150,000.00) and facsimile
transmission of AFFA to Go confirming the transaction.[58]

As to the cessation of communication with Cordero, Go averred it was

Cordero who was nowhere to be contacted at the time the shipbuilding progress
did not turn good as promised, and it was always Landicho and Tecson who, after
several attempts, were able to locate him only to obtain unsatisfactory reports
such that it was Go who would still call up Robinson regarding any progress status
report, lacking documents for MARINA, etc., and go to Australia for ocular
inspection. Hence, in May 1998 on the scheduled launching of the ship in
Australia, Go engaged the services of Landicho who went to Australia to see to it
that all documents needed for the shipment of the vessel to the Philippines would
be in order. It was also during this time that Robinsons request for inquiry on the
Philippine price of a Wartsila engine for AFFAs then on-going vessel construction,
was misinterpreted by Cordero as indicating that Go was buying a second vessel. [59]
We find these allegations unconvincing and a mere afterthought as these
were the very same averments contained in the Position Paper for the Importer
dated October 9, 1998, which was submitted by Go on behalf of ACG Express Liner
in connection with the complaint-affidavit filed by Cordero before the BOC-SGS
Appeals Committee relative to the shipment valuation of the first SEACAT 25
purchased from AFFA.[60] It appears that the purported second contract
superseding the original Shipbuilding Contract No. 7825 and stating a lower price
of US$1,150,000.00 (not US$1,465,512.00) was only presented before the BOC to
show that the vessel imported into the Philippines was not undervalued by almost
US$500,000.00. Cordero vehemently denied there was such modification of the
contract and accused respondents of resorting to falsified documents, including the
facsimile transmission of AFFA supposedly confirming the said sale for only
US$1,150,000.00. Incidentally, another document filed in said BOC case, the
Counter-Affidavit/Position Paper for the Importer dated November 16, 1998,
[61]
states in paragraph 8 under the Antecedent facts thereof, that -8.

As elsewhere stated, the total remittances made by

herein Importer to AFFA does not alone represent the
purchase price for Seacat 25. It includes advance
payment for the acquisition of another vessel as
part of the deal due to the discounted price.[62]

which even gives credence to the claim of Cordero that respondents negotiated
the sale of the second vessel and that the nonpayment of the remaining two
instalments of his commission for the sale of the first SEACAT 25 was a result of
and Landichos directly dealing with Robinson, obviously to obtain a lower price
the second vessel at the expense of Cordero.

for
(2)
Go
for

The act of Go, Landicho and Tecson in inducing Robinson and AFFA to enter
into another contract directly with ACG Express Liner to obtain a lower price for the
second vessel resulted in AFFAs breach of its contractual obligation to pay in full
the commission due to Cordero and unceremonious termination of Corderos
appointment as exclusive distributor. Following our pronouncement in Gilchrist v.
Cuddy (supra), such act may not be deemed malicious if impelled by a proper
business interest rather than in wrongful motives. The attendant circumstances,
however, demonstrated that respondents transgressed the bounds of permissible

financial interest to benefit themselves at the expense of Cordero. Respondents

furtively went directly to Robinsonafter Cordero had worked hard to close the deal
for them to purchase from AFFA two (2) SEACAT 25, closely monitored the progress
of building the first vessel sold, attended to their concerns and spent no measly
sum for the trip to Australia with Go, Landicho and Gos family members. But what
is appalling is the fact that even as Go, Landicho and Tecson secretly negotiated
with Robinson for the purchase of a second vessel, Landicho and Tecson continued
to demand and receive from Cordero their commission or cut
from Corderos earned commission from the sale of the first SEACAT 25.
Cordero was practically excluded from the transaction when Go, Robinson,
Tecson and Landicho suddenly ceased communicating with him, without giving him
any explanation. While there was nothing objectionable in negotiating for a lower
price in the second purchase of SEACAT 25, which is not prohibited by the
Memorandum of Agreement, Go, Robinson, Tecson and Landicho clearly connived
not only in ensuring that Cordero would have no participation in the contract for
sale of the second SEACAT 25, but also that Cordero would not be paid the balance
of his commission from the sale of the first SEACAT 25. This, despite their
knowledge that it was commission already earned by and due to Cordero. Thus,
the trial and appellate courts correctly ruled that the actuations of Go, Robinson,
Tecson and Landicho were without legal justification and intended solely to
prejudice Cordero.
The existence of malice, ill will or bad faith is a factual matter. As a rule,
findings of fact of the trial court, when affirmed by the appellate court, are
conclusive on this Court.[63] We see no compelling reason to reverse the findings of
the RTC and the CA that respondents acted in bad faith and in utter disregard of
the rights of Cordero under the exclusive distributorship agreement.
The failure of Robinson, Go, Tecson and Landico to act with fairness, honesty
and good faith in securing better terms for the purchase of high-speed catamarans
from AFFA, to the prejudice of Cordero as the duly appointed exclusive distributor,
is further proscribed by Article 19 of the Civil Code:
Art. 19. Every person must, in the exercise of his rights and in
the performance of his duties, act with justice, give everyone his due,
and observe honesty and good faith.
As we have expounded in another case:
Elsewhere, we explained that when a right is exercised in a manner
which does not conform with the norms enshrined in Article 19 and
results in damage to another, a legal wrong is thereby committed for
which the wrongdoer must be responsible. The object of this article,
therefore, is to set certain standards which must be observed not only
in the exercise of ones rights but also in the performance of ones
duties. These standards are the following: act with justice, give
everyone his due and observe honesty and good faith. Its antithesis,

necessarily, is any act evincing bad faith or intent to injure. Its

elements are the following: (1) There is a legal right or duty; (2) which
is exercised in bad faith; (3) for the sole intent of prejudicing or injuring
another. When Article 19 is violated, an action for damages is proper
under Articles 20 or 21 of the Civil Code. Article 20 pertains to
damages arising from a violation of law x x x. Article 21, on the other
hand, states:
Art. 21. Any person who willfully causes loss or injury to
another in a manner that is contrary to morals, good customs
or public policy shall compensate the latter for the damage.
Article 21 refers to acts contra bonus mores and has the following
elements: (1) There is an act which is legal; (2) but which is contrary to
morals, good custom, public order, or public policy; and (3) it is done
with intent to injure.
A common theme runs through Articles 19 and 21, and that is, the
act complained of must be intentional.[64]
Petitioner Gos argument that he, Landicho and Tecson cannot be held liable
solidarily with Robinson for actual, moral and exemplary damages, as well as
attorneys fees awarded to Cordero since no law or contract provided for solidary
obligation in these cases, is equally bereft of merit. Conformably with Article 2194
of the Civil Code, the responsibility of two or more persons who are liable for the
quasi-delict is solidary.[65] In Lafarge Cement Philippines, Inc. v. Continental Cement
Corporation,[66] we held:
[O]bligations arising from tort are, by their nature,
always solidary. We have assiduously maintained this legal
principle as early as 1912 in Worcester v. Ocampo, in which we
held:
x x x The difficulty in the contention of the appellants
is that they fail to recognize that the basis of the present
action is tort. They fail to recognize the universal doctrine
that each joint tort feasor is not only individually liable for
the tort in which he participates, but is also jointly liable
with his tort feasors. x x x
It may be stated as a general rule that joint tort
feasors are all the persons who command, instigate,
promote, encourage, advise, countenance, cooperate in,
aid or abet the commission of a tort, or who approve of it
after it is done, if done for their benefit. They are each
liable as principals, to the same extent and in the
same manner as if they had performed the wrongful
act themselves. x x x
Joint tort feasors are jointly and severally liable for the
tort which they commit. The persons injured may sue all of

them or any number less than all. Each is liable for the
whole damages caused by all, and all together are jointly
liable for the whole damage. It is no defense for one sued
alone, that the others who participated in the wrongful act
are not joined with him as defendants; nor is it any excuse
for him that his participation in the tort was insignificant as
compared to that of the others. x x x
Joint tort feasors are not liable pro rata. The damages
can not be apportioned among them, except among
themselves. They cannot insist upon an apportionment, for
the purpose of each paying an aliquot part. They are jointly
and severally liable for the whole amount. x x x
A payment in full for the damage done, by one of the
joint tort feasors, of course satisfies any claim which might
exist against the others. There can be but satisfaction. The
release of one of the joint tort feasors by agreement
generally operates to discharge all. x x x
Of course, the court during trial may find that some of
the alleged tort feasors are liable and that others are not
liable. The courts may release some for lack of evidence
while condemning others of the alleged tort feasors. And
this is true even though they are charged jointly and
severally.[67] [EMPHASIS SUPPLIED.]
The rule is that the defendant found guilty of interference with contractual
relations cannot be held liable for more than the amount for which the party who
was inducted to break the contract can be held liable. [68] Respondents Go,
Landicho and Tecson were therefore correctly held liable for the balance of
petitioner Corderos commission from the sale of the first SEACAT 25, in the
amount of US$31,522.09 or its peso equivalent, which AFFA/Robinson did not pay in
violation of the exclusive distributorship agreement, with interest at the rate of 6%
per annum from June 24, 1998 until the same is fully paid.
Respondents having acted in bad faith, moral damages may be recovered
under Article 2219 of the Civil Code.[69] On the other hand, the requirements of an
award of exemplary damages are: (1) they may be imposed by way of example in
addition to compensatory damages, and only after the claimants right to them has
been established; (2) that they cannot be recovered as a matter of right, their
determination depending upon the amount of compensatory damages that may be
awarded to the claimant; and (3) the act must be accompanied by bad faith or
done in a wanton, fraudulent, oppressive or malevolent manner. [70] The award of
exemplary damages is thus in order. However, we find the sums awarded by the
trial court as moral and exemplary damages as reduced by the CA, still excessive
under the circumstances.

Moral damages are meant to compensate and alleviate the physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injuries unjustly
caused. Although incapable of pecuniary estimation, the amount must somehow be
proportional to and in approximation of the suffering inflicted. Moral damages are
not punitive in nature and were never intended to enrich the claimant at the
expense of the defendant. There is no hard-and-fast rule in determining what would
be a fair and reasonable amount of moral damages, since each case must be
governed by its own peculiar facts. Trial courts are given discretion in determining
the amount, with the limitation that it should not be palpably and scandalously
excessive. Indeed, it must be commensurate to the loss or injury suffered. [71]
We believe that the amounts of P300,000.00 and P200,000.00 as moral and
exemplary damages, respectively, would be sufficient and reasonable. Because
exemplary damages are awarded, attorneys fees may also be awarded in
consonance with Article 2208 (1).[72] We affirm the appellate courts award of
attorneys fees in the amount of P50,000.00.
WHEREFORE, the petitions are DENIED. The Decision dated March 16,
2004 as modified by the Resolution dated July 22, 2004 of the Court of Appeals in
CA-G.R. CV No. 69113 are hereby AFFIRMED with MODIFICATION in that the
awards of moral and exemplary damages are hereby reduced to P300,000.00
and P200,000.00, respectively.
With costs against the petitioner in G.R. No. 164703.
SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice

Lhuillier v. British Airways, G.R. No. 171092, March 15, 2010

G.R. No. 171092

March 15, 2010

EDNA DIAGO LHUILLIER, Petitioner,

vs.
BRITISH AIRWAYS, Respondent.
DECISION
DEL CASTILLO, J.:

Jurisdictio est potestas de publico introducta cum necessitate juris dicendi.

Jurisdiction is a power introduced for the public good, on account of the necessity of
dispensing justice.1
Factual Antecedents
On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint 2 for damages
against respondent British Airways before the Regional Trial Court (RTC) of Makati
City. She alleged that on February 28, 2005, she took respondents flight 548 from
London, United Kingdom to Rome, Italy. Once on board, she allegedly requested
Julian Halliday (Halliday), one of the respondents flight attendants, to assist her in
placing her hand-carried luggage in the overhead bin. However, Halliday allegedly
refused to help and assist her, and even sarcastically remarked that "If I were to
help all 300 passengers in this flight, I would have a broken back!"
Petitioner further alleged that when the plane was about to land in Rome, Italy,
another flight attendant, Nickolas Kerrigan (Kerrigan), singled her out from among
all the passengers in the business class section to lecture on plane safety. Allegedly,
Kerrigan made her appear to the other passengers to be ignorant, uneducated,
stupid, and in need of lecturing on the safety rules and regulations of the plane.
Affronted, petitioner assured Kerrigan that she knew the planes safety regulations
being a frequent traveler. Thereupon, Kerrigan allegedly thrust his face a mere few
centimeters away from that of the petitioner and menacingly told her that "We dont
like your attitude."
Upon arrival in Rome, petitioner complained to respondents ground manager and
demanded an apology. However, the latter declared that the flight stewards were
"only doing their job."
Thus, petitioner filed the complaint for damages, praying that respondent be
ordered to pay P5 million as moral damages, P2 million as nominal damages, P1
million as exemplary damages, P300,000.00 as attorneys fees,P200,000.00 as
litigation expenses, and cost of the suit.
On May 16, 2005, summons, together with a copy of the complaint, was served on
the respondent through Violeta Echevarria, General Manager of Euro-Philippine
Airline Services, Inc.3
On May 30, 2005, respondent, by way of special appearance through counsel, filed
a Motion to Dismiss4 on grounds of lack of jurisdiction over the case and over the
person of the respondent. Respondent alleged that only the courts of London,
United Kingdom or Rome, Italy, have jurisdiction over the complaint for damages
pursuant to the Warsaw Convention,5 Article 28(1) of which provides:
An action for damages must be brought at the option of the plaintiff, either before
the court of domicile of the carrier or his principal place of business, or where he
has a place of business through which the contract has been made, or before the
court of the place of destination.

Thus, since a) respondent is domiciled in London; b) respondents principal place of

business is in London; c) petitioner bought her ticket in Italy (through Jeepney Travel
S.A.S, in Rome);6 and d) Rome, Italy is petitioners place of destination, then it
follows that the complaint should only be filed in the proper courts of London,
United Kingdom or Rome, Italy.
Likewise, it was alleged that the case must be dismissed for lack of jurisdiction over
the person of the respondent because the summons was erroneously served on
Euro-Philippine Airline Services, Inc. which is not its resident agent in the
Philippines.
On June 3, 2005, the trial court issued an Order requiring herein petitioner to file her
Comment/Opposition on the Motion to Dismiss within 10 days from notice thereof,
and for respondent to file a Reply thereon. 7 Instead of filing a Comment/Opposition,
petitioner filed on June 27, 2005, an Urgent Ex-Parte Motion to Admit Formal
Amendment to the Complaint and Issuance of Alias Summons. 8 Petitioner alleged
that upon verification with the Securities and Exchange Commission, she found out
that the resident agent of respondent in the Philippines is Alonzo Q. Ancheta.
Subsequently, on September 9, 2005, petitioner filed a Motion to Resolve Pending
Incident and Opposition to Motion to Dismiss.9
Ruling of the Regional Trial Court
On October 14, 2005, the RTC of Makati City, Branch 132, issued an Order 10 granting
respondents Motion to Dismiss. It ruled that:
The Court sympathizes with the alleged ill-treatment suffered by the plaintiff.
However, our Courts have to apply the principles of international law, and are bound
by treaty stipulations entered into by the Philippines which form part of the law of
the land. One of this is the Warsaw Convention. Being a signatory thereto, the
Philippines adheres to its stipulations and is bound by its provisions including the
place where actions involving damages to plaintiff is to be instituted, as provided for
under Article 28(1) thereof. The Court finds no justifiable reason to deviate from the
indicated limitations as it will only run counter to the provisions of the Warsaw
Convention. Said adherence is in consonance with the comity of nations and
deviation from it can only be effected through proper denunciation as enunciated in
the Santos case (ibid). Since the Philippines is not the place of domicile of the
defendant nor is it the principal place of business, our courts are thus divested of
jurisdiction over cases for damages. Neither was plaintiffs ticket issued in this
country nor was her destination Manila but Rome in Italy. It bears stressing however,
that referral to the court of proper jurisdiction does not constitute constructive
denial of plaintiffs right to have access to our courts since the Warsaw Convention
itself provided for jurisdiction over cases arising from international transportation.
Said treaty stipulations must be complied with in good faith following the time
honored principle of pacta sunt servanda.
The resolution of the propriety of service of summons is rendered moot by the
Courts want of jurisdiction over the instant case.

WHEREFORE, premises considered, the present Motion to Dismiss is hereby

GRANTED and this case is hereby ordered DISMISSED.
Petitioner filed a Motion for Reconsideration but the motion was denied in an
Order11 dated January 4, 2006.
Petitioner now comes directly before us on a Petition for Review on Certiorari on
pure questions of law, raising the following issues:
Issues
I. WHETHER X X X PHILIPPINE COURTs HAVE JURISDICTION OVER A TORTIOUS
CONDUCT COMMITTED AGAINST A FILIPINO CITIZEN AND RESIDENT BY AIRLINE
PERSONNEL OF A FOREIGN CARRIER TRAVELLING BEYOND THE TERRITORIAL LIMIT
OF ANY FOREIGN COUNTRY; AND THUS IS OUTSIDE THE AMBIT OF THE WARSAW
CONVENTION.
II. WHETHER x x x RESPONDENT AIR CARRIER OF PASSENGERS, IN FILING ITS
MOTION TO DISMISS BASED ON LACK OF JURISDICTION OVER THE SUBJECT MATTER
OF THE CASE AND OVER ITS PERSON MAY BE DEEMED AS HAVING IN FACT AND IN
LAW SUBMITTED ITSELF TO THE JURISDICTION OF THE LOWER COURT, ESPECIALLY
SO, WHEN THE VERY LAWYER ARGUING FOR IT IS HIMSELF THE RESIDENT AGENT OF
THE CARRIER.
Petitioners Arguments
Petitioner argues that her cause of action arose not from the contract of carriage,
but from the tortious conduct committed by airline personnel of respondent in
violation of the provisions of the Civil Code on Human Relations. Since her cause of
action was not predicated on the contract of carriage, petitioner asserts that she
has the option to pursue this case in this jurisdiction pursuant to Philippine laws.
Respondents Arguments
In contrast, respondent maintains that petitioners claim for damages fell within the
ambit of Article 28(1) of the Warsaw Convention. As such, the same can only be
filed before the courts of London, United Kingdom or Rome, Italy.
Our Ruling
The petition is without merit.
The Warsaw Convention has the force and effect of law in this country.
It is settled that the Warsaw Convention has the force and effect of law in this
country. In Santos III v. Northwest Orient Airlines,12 we held that:
The Republic of the Philippines is a party to the Convention for the Unification of
Certain Rules Relating to International Transportation by Air, otherwise known as the

Warsaw Convention. It took effect on February 13, 1933. The Convention was
concurred in by the Senate, through its Resolution No. 19, on May 16, 1950. The
Philippine instrument of accession was signed by President Elpidio Quirino on
October 13, 1950, and was deposited with the Polish government on November 9,
1950. The Convention became applicable to the Philippines on February 9, 1951. On
September 23, 1955, President Ramon Magsaysay issued Proclamation No. 201,
declaring our formal adherence thereto, "to the end that the same and every article
and clause thereof may be observed and fulfilled in good faith by the Republic of
the Philippines and the citizens thereof."
The Convention is thus a treaty commitment voluntarily assumed by the Philippine
government and, as such, has the force and effect of law in this country. 13
The Warsaw Convention applies because the air travel, where the alleged tortious
conduct occurred, was between the United Kingdom and Italy, which are both
signatories to the Warsaw Convention.
Article 1 of the Warsaw Convention provides:
1. This Convention applies to all international carriage of persons, luggage or
goods performed by aircraft for reward. It applies equally to gratuitous
carriage by aircraft performed by an air transport undertaking.
2. For the purposes of this Convention the expression "international carriage"
means any carriage in which, according to the contract made by the
parties, the place of departure and the place of destination, whether or not
there be a break in the carriage or a transhipment, are situated either within
the territories of two High Contracting Parties, or within the territory of a
single High Contracting Party, if there is an agreed stopping place within a
territory subject to the sovereignty, suzerainty, mandate or authority of
another Power, even though that Power is not a party to this Convention. A
carriage without such an agreed stopping place between territories subject to
the sovereignty, suzerainty, mandate or authority of the same High
Contracting Party is not deemed to be international for the purposes of this
Convention. (Emphasis supplied)
Thus, when the place of departure and the place of destination in a contract of
carriage are situated within the territories of two High Contracting Parties, said
carriage is deemed an "international carriage". The High Contracting Parties referred
to herein were the signatories to the Warsaw Convention and those which
subsequently adhered to it.14
In the case at bench, petitioners place of departure was London, United Kingdom
while her place of destination was Rome, Italy.15 Both the United Kingdom16 and
Italy17 signed and ratified the Warsaw Convention. As such, the transport of the
petitioner is deemed to be an "international carriage" within the contemplation of
the Warsaw Convention.

Since the Warsaw Convention applies in the instant case, then the jurisdiction over
the subject matter of the action is governed by the provisions of the Warsaw
Convention.
Under Article 28(1) of the Warsaw Convention, the plaintiff may bring the action for
damages before
1. the court where the carrier is domiciled;
2. the court where the carrier has its principal place of business;
3. the court where the carrier has an establishment by which the contract has
been made; or
4. the court of the place of destination.
In this case, it is not disputed that respondent is a British corporation domiciled in
London, United Kingdom with London as its principal place of business. Hence,
under the first and second jurisdictional rules, the petitioner may bring her case
before the courts of London in the United Kingdom. In the passenger ticket and
baggage check presented by both the petitioner and respondent, it appears that the
ticket was issued in Rome, Italy. Consequently, under the third jurisdictional rule,
the petitioner has the option to bring her case before the courts of Rome in Italy.
Finally, both the petitioner and respondent aver that the place of destination is
Rome, Italy, which is properly designated given the routing presented in the said
passenger ticket and baggage check. Accordingly, petitioner may bring her action
before the courts of Rome, Italy. We thus find that the RTC of Makati correctly ruled
that it does not have jurisdiction over the case filed by the petitioner.
Santos III v. Northwest Orient Airlines 18 applies in this case.
Petitioner contends that Santos III v. Northwest Orient Airlines 19 cited by the trial
court is inapplicable to the present controversy since the facts thereof are not
similar with the instant case.
We are not persuaded.
In Santos III v. Northwest Orient Airlines, 20 Augusto Santos III, a resident of the
Philippines, purchased a ticket from Northwest Orient Airlines in San Francisco, for
transport between San Francisco and Manila via Tokyo and back to San Francisco.
He was wait-listed in the Tokyo to Manila segment of his ticket, despite his prior
reservation. Contending that Northwest Orient Airlines acted in bad faith and
discriminated against him when it canceled his confirmed reservation and gave his
seat to someone who had no better right to it, Augusto Santos III sued the carrier for
damages before the RTC. Northwest Orient Airlines moved to dismiss the complaint
on ground of lack of jurisdiction citing Article 28(1) of the Warsaw Convention. The
trial court granted the motion which ruling was affirmed by the Court of Appeals.
When the case was brought before us, we denied the petition holding that under
Article 28(1) of the Warsaw Convention, Augusto Santos III must prosecute his claim

in the United States, that place being the (1) domicile of the Northwest Orient
Airlines; (2) principal office of the carrier; (3) place where contract had been made
(San Francisco); and (4) place of destination (San Francisco). 21
We further held that Article 28(1) of the Warsaw Convention is jurisdictional in
character. Thus:
A number of reasons tends to support the characterization of Article 28(1) as a
jurisdiction and not a venue provision. First, the wording of Article 32, which
indicates the places where the action for damages "must" be brought, underscores
the mandatory nature of Article 28(1). Second, this characterization is consistent
with one of the objectives of the Convention, which is to "regulate in a uniform
manner the conditions of international transportation by air." Third, the Convention
does not contain any provision prescribing rules of jurisdiction other than Article
28(1), which means that the phrase "rules as to jurisdiction" used in Article 32 must
refer only to Article 28(1). In fact, the last sentence of Article 32 specifically deals
with the exclusive enumeration in Article 28(1) as "jurisdictions," which, as such,
cannot be left to the will of the parties regardless of the time when the damage
occurred.
xxxx
In other words, where the matter is governed by the Warsaw Convention,
jurisdiction takes on a dual concept. Jurisdiction in the international sense must be
established in accordance with Article 28(1) of the Warsaw Convention, following
which the jurisdiction of a particular court must be established pursuant to the
applicable domestic law. Only after the question of which court has jurisdiction is
determined will the issue of venue be taken up. This second question shall be
governed by the law of the court to which the case is submitted. 22
Contrary to the contention of petitioner, Santos III v. Northwest Orient Airlines 23 is
analogous to the instant case because (1) the domicile of respondent is London,
United Kingdom;24 (2) the principal office of respondent airline is likewise in London,
United Kingdom;25 (3) the ticket was purchased in Rome, Italy; 26 and (4) the place of
destination is Rome, Italy.27 In addition, petitioner based her complaint on Article
217628 of the Civil Code onquasi-delict and Articles 1929 and 2130 of the Civil Code on
Human Relations. In Santos III v. Northwest Orient Airlines, 31 Augusto Santos III
similarly posited that Article 28 (1) of the Warsaw Convention did not apply if the
action is based on tort. Hence, contrary to the contention of the petitioner, the
factual setting of Santos III v. Northwest Orient Airlines 32 and the instant case are
parallel on the material points.
Tortious conduct as ground for the petitioners complaint is within the purview of the
Warsaw Convention.
Petitioner contends that in Santos III v. Northwest Orient Airlines, 33 the cause of
action was based on a breach of contract while her cause of action arose from the
tortious conduct of the airline personnel and violation of the Civil Code provisions on
Human Relations.34 In addition, she claims that our pronouncement in Santos III v.

Northwest Orient Airlines35 that "the allegation of willful misconduct resulting in a

tort is insufficient to exclude the case from the comprehension of the Warsaw
Convention," is more of an obiter dictum rather than the ratio decidendi. 36 She
maintains that the fact that said acts occurred aboard a plane is merely incidental, if
not irrelevant.37
We disagree with the position taken by the petitioner. Black defines obiter dictum as
"an opinion entirely unnecessary for the decision of the case" and thus "are not
binding as precedent."38 In Santos III v. Northwest Orient Airlines, 39 Augusto Santos
III categorically put in issue the applicability of Article 28(1) of the Warsaw
Convention if the action is based on tort.
In the said case, we held that the allegation of willful misconduct resulting in a tort
is insufficient to exclude the case from the realm of the Warsaw Convention. In fact,
our ruling that a cause of action based on tort did not bring the case outside the
sphere of the Warsaw Convention was our ratio decidendi in disposing of the
specific issue presented by Augusto Santos III. Clearly, the contention of the herein
petitioner that the said ruling is an obiter dictum is without basis.
Relevant to this particular issue is the case of Carey v. United Airlines, 40 where the
passenger filed an action against the airline arising from an incident involving the
former and the airlines flight attendant during an international flight resulting to a
heated exchange which included insults and profanity. The United States Court of
Appeals (9th Circuit) held that the "passenger's action against the airline carrier
arising from alleged confrontational incident between passenger and flight
attendant on international flight was governed exclusively by the Warsaw
Convention, even though the incident allegedly involved intentional misconduct by
the flight attendant."41
In Bloom v. Alaska Airlines,42 the passenger brought nine causes of action against
the airline in the state court, arising from a confrontation with the flight attendant
during an international flight to Mexico. The United States Court of Appeals (9th
Circuit) held that the "Warsaw Convention governs actions arising from international
air travel and provides the exclusive remedy for conduct which falls within its
provisions." It further held that the said Convention "created no exception for an
injury suffered as a result of intentional conduct" 43 which in that case involved a
claim for intentional infliction of emotional distress.
It is thus settled that allegations of tortious conduct committed against an airline
passenger during the course of the international carriage do not bring the case
outside the ambit of the Warsaw Convention.
Respondent, in seeking remedies from the trial court through special appearance of
counsel, is not deemed to have voluntarily submitted itself to the jurisdiction of the
trial court.
Petitioner argues that respondent has effectively submitted itself to the jurisdiction
of the trial court when the latter stated in its Comment/Opposition to the Motion for
Reconsideration that "Defendant [is at a loss] x x x how the plaintiff arrived at her

erroneous impression that it is/was Euro-Philippines Airlines Services, Inc. that has
been making a special appearance since x x x British Airways x x x has been clearly
specifying in all the pleadings that it has filed with this Honorable Court that it is the
one making a special appearance."44
In refuting the contention of petitioner, respondent cited La Naval Drug Corporation
v. Court of Appeals45 where we held that even if a party "challenges the jurisdiction
of the court over his person, as by reason of absence or defective service of
summons, and he also invokes other grounds for the dismissal of the action under
Rule 16, he is not deemed to be in estoppel or to have waived his objection to the
jurisdiction over his person."46
This issue has been squarely passed upon in the recent case of Garcia v.
Sandiganbayan,47 where we reiterated our ruling in La Naval Drug Corporation v.
Court of Appeals48 and elucidated thus:
Special Appearance to Question a Courts Jurisdiction Is Not
Voluntary Appearance
The second sentence of Sec. 20, Rule 14 of the Revised Rules of Civil Procedure
clearly provides:
Sec. 20. Voluntary appearance. The defendants voluntary appearance in the
action shall be equivalent to service of summons. The inclusion in a motion to
dismiss of other grounds aside from lack of jurisdiction over the person of the
defendant shall not be deemed a voluntary appearance.
Thus, a defendant who files a motion to dismiss, assailing the jurisdiction of the
court over his person, together with other grounds raised therein, is not deemed to
have appeared voluntarily before the court. What the rule on voluntary appearance
the first sentence of the above-quoted rule means is that the voluntary
appearance of the defendant in court is without qualification, in which case he is
deemed to have waived his defense of lack of jurisdiction over his person due to
improper service of summons.
The pleadings filed by petitioner in the subject forfeiture cases, however, do not
show that she voluntarily appeared without qualification. Petitioner filed the
following pleadings in Forfeiture I: (a) motion to dismiss; (b) motion for
reconsideration and/or to admit answer; (c) second motion for reconsideration; (d)
motion to consolidate forfeiture case with plunder case; and (e) motion to dismiss
and/or to quash Forfeiture I. And in Forfeiture II: (a) motion to dismiss and/or to
quash Forfeiture II; and (b) motion for partial reconsideration.
The foregoing pleadings, particularly the motions to dismiss, were filed by petitioner
solely for special appearance with the purpose of challenging the jurisdiction of the
SB over her person and that of her three children. Petitioner asserts therein that SB
did not acquire jurisdiction over her person and of her three children for lack of valid
service of summons through improvident substituted service of summons in both

Forfeiture I and Forfeiture II. This stance the petitioner never abandoned when she
filed her motions for reconsideration, even with a prayer to admit their attached
Answer Ex Abundante Ad Cautelam dated January 22, 2005 setting forth affirmative
defenses with a claim for damages. And the other subsequent pleadings, likewise,
did not abandon her stance and defense of lack of jurisdiction due to improper
substituted services of summons in the forfeiture cases. Evidently, from the
foregoing Sec. 20, Rule 14 of the 1997 Revised Rules on Civil Procedure, petitioner
and her sons did not voluntarily appear before the SB constitutive of or equivalent
to service of summons.
Moreover, the leading La Naval Drug Corp. v. Court of Appeals applies to the instant
case. Said case elucidates the current view in our jurisdiction that a special
appearance before the courtchallenging its jurisdiction over the person through a
motion to dismiss even if the movant invokes other groundsis not tantamount to
estoppel or a waiver by the movant of his objection to jurisdiction over his person;
and such is not constitutive of a voluntary submission to the jurisdiction of the
court.1avvphi1
Thus, it cannot be said that petitioner and her three children voluntarily appeared
before the SB to cure the defective substituted services of summons. They are,
therefore, not estopped from questioning the jurisdiction of the SB over their
persons nor are they deemed to have waived such defense of lack of jurisdiction.
Consequently, there being no valid substituted services of summons made, the SB
did not acquire jurisdiction over the persons of petitioner and her children. And
perforce, the proceedings in the subject forfeiture cases, insofar as petitioner and
her three children are concerned, are null and void for lack of jurisdiction. (Emphasis
supplied)
In this case, the special appearance of the counsel of respondent in filing the Motion
to Dismiss and other pleadings before the trial court cannot be deemed to be
voluntary submission to the jurisdiction of the said trial court. We hence disagree
with the contention of the petitioner and rule that there was no voluntary
appearance before the trial court that could constitute estoppel or a waiver of
respondents objection to jurisdiction over its person.
WHEREFORE, the petition is DENIED. The October 14, 2005 Order of the Regional
Trial Court of Makati City, Branch 132, dismissing the complaint for lack of
jurisdiction, is AFFIRMED.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice

Rodriguez vs. Alikpala, G.R. No. L-38314, June 25, 1974

G.R. No. L-38314 June 25, 1974

BELEN S. RODRIGUEZ and JOSE S. SANTOS, JR., petitioners,

vs.
HON. FEDERICO ALIKPALA (Presiding Judge, Branch XXII, Court of First
Instance of Manila), FEDERICO TOLENTINO and FELISA
TOLENTINO, respondents.
Santos, Santos & Cunanan Law Office for petitioners.
Prospero A. Crescini & Associates for respondents.

CASTRO, J.:p
Failing to levy on the properties of the respondents Federico and Felisa Tolentino
because of a prohibitory judgment rendered by the respondent Court of First
Instance of Manila in civil case 85998, the petitioners Belen S. Rodriguez and Jose S.
Santos, Jr., have come to this Court on appeal by certiorari.
On August 19, 1971 the petitioner Rodriguez, assisted by her counsel, the petitioner
Santos, filed an action, docketed as civil case 204601, with the city court of Manila
against the spouses Manuel and Fe Rebollado for recovery of the sum of P5,320 plus
interest, attorney's fees and costs. A writ of preliminary attachment was issued and
served on the Rebollados at their store in Divisoria market. Fe Rebollado
immediately communicated with the petitioner Santos, and later with the latter's
client, the petitioner Rodriguez, to plead for time before the attachment was to be
effectively enforced. Rodriguez agreed to cause the suspension of the attachment
writ on condition that Fe Rebollado's parents, the now respondents Federico and
Felisa Tolentino, would bind themselves, jointly and severally with the Rebollado's,
to pay the entire obligation subject of the suit. Felisa Tolentino who was then
present agreed to this proposal, and so the petitioner Santos, at the request of the
petitioner Rodriguez, drew up a motion for judgment on a compromise embodying
the terms of the agreement of the parties. On the basis of the said motion, the city
court, on August 14, 1971, rendered judgment, as follows:
Parties herein submitted the following compromise agreement and prayed that
judgment be rendered in accordance there with:
COMPROMISE AGREEMENT
xxx xxx xxx
1. That the defendants admit all the material allegations in the
plaintiff's complaint and acknowledged their indebtedness to the
plaintiff in the total amount of P5,980.00, which amount includes
expenses of litigation;
2. That in consideration of defendants acknowledging their said
indebtedness and confessing judgment therefor, plaintiff has allowed

defendants some consideration by allowing them to pay their abovestated account in the following manner, to wit:
a) the sum of P200.00 shall be paid upon the signing of
this compromise agreement;
b) the remaining balance shall be paid in installment basis
at the rate of P100.00 a week, payable every Saturday
beginning August 28, 1971 and every Saturday of the
week thereafter until fully paid.
3. That in order to secure the prompt payment of the said obligations
of the defendants, Federico Tolentino and Felisa Tolentino hereby bind
themselves to pay jointly and severally with the defendants the said
obligations, and in the event of default on the part of the defendants to
pay any of the said installments when the same is already due, the
judgment which may be rendered by virtue hereof as to full amount
remaining unpaid, may likewise be executed as against the properties
of Federico Tolentino and Felisa Tolentino;
4. That failure on the part of the defendants to pay any one of the
installments as above-scheduled shall render the remaining balance
unpaid immediately due and demandable and the plaintiff shall then
be entitled to the execution of the judgment which may be rendered by
virtue hereof;
WHEREFORE, judgment by COMPROMISE is hereby rendered pursuant
to the foregoing agreement, enjoining strict compliance thereto by the
parties.
The Rebollado's subsequently failed to comply with the terms of the compromise,
thus prompting the petitioner Rodriguez to ask the city court for a writ of execution
not only against the Rebollados but as well against the Tolentino's. When this was
granted; and later affirmed over the opposition of the Tolentino's, the latter brought
an action for certiorari in the respondent Court of First Instance of Manila, docketed
as civil case 85998, to enjoin the city court from enforcing any writ of execution
against them. On December 20, 1973, after hearing duly had, the respondent court
rendered judgment excluding the Tolentinos from the effects of the writ of execution
granted by the city court in civil case 204601. It is this judgment that is the subject
of the present appeal.
In excluding the Tolentino's from the effects of the judgment on a compromise
rendered by the city court, the respondent court invokes two reasons: first, the
dispositive portion of the judgment quoted above cannot be executed because it
does not explicitly enjoin the Tolentino's to pay, jointly and severally with the
Rebollado's, the amount due to the plaintiff; and second, the city court never
acquired jurisdiction over the persons of the Tolentino's and, therefore, the latter
cannot be bound by the judgment rendered in civil cue 204601.

The respondent court is in error on both counts.

1. The dispositive portion of the judgment in civil case 204601 of the city court
approving the compromise and"enjoining strict compliance thereto by the parties" is
adequate for purposes of execution. It is not unusual for the body of a judgment on
a compromise to merely quote the words of the agreement that spell out the
respective rights and obligations of the parties, since it is both unnecessary and
improper for the court to still make preliminary adjudication of the facts and the law
involved in the case. 1 These rights and obligations, although not reproduced in the
dispositive portion of the judgment in obvious avoidance of repetition, are
understood to constitute the terms under which execution may issue. Decisions of
similar tenor, import and form have in the past been given effect by this Court. 2
2. There is no question in the mind of the respondent court that the Rebollado's and
the Tolentinos freely and voluntarily entered into the compromise agreement which
became the basis of the judgment of the city court. Be it remembered that neither
the Rebollado's nor the Tolentino's question the existence of the indebtedness of the
Rebollados or the amount thereof. The respondent court heard the testimonies of
the witnesses first hand and accorded no credence to the version of the Rebollado's
and the Tolentino's that Manuel and Fe Rebollado and Felisa Tolentino were made to
sign the motion for a judgment on a compromise without being permitted to read its
contents and, further, that Felisa Tolentino was induced to sign, too, the name of her
husband without any authority from the latter. The respondent court analyzed the
evidence at length and found that the involvement of the Tolentino's in the
compromise agreement arose out of their natural filial concern for their daughter Fe
whose inventories at Divisoria market were under imminent threat of levy and
seizure. The respondent court, moreover, brooks no doubt, and we concur with it,
that both the Rebollado's and the Tolentino's understood the plain unequivocal
terms of the compromise agreement. And by assuming the roles of co-movants in
the motion for a judgment on a compromise, the Tolentino's actively instigated the
city court into giving its judicial imprimatur to the said agreement as well as their
participation therein. Under the circumstances, the Tolentino's are estopped from
denying the very authority they have invoked. 3
Moreover, because they signed and executed the compromise agreement willingly
and voluntarily, and, in a manner of speaking, with their eyes wide open, they
should be bound by its terms. A person cannot, to paraphrase Justice Alejo
Labrador, repudiate the effects of his voluntary acts simply because they do not suit
him. In the very words of Justice Labrador, "in a regime of law and order, repudiation
of an agreement validly entered into can not be made without any ground or reason
in law or in fact for such repudiation." 4
And even if we assume that estoppel does not apply in this case, we nonetheless
cannot shunt aside the principle of equity that jurisdiction over a person not
formally or originally a party to a litigation may nevertheless be acquired, under
proper conditions, thru the voluntary appearance of that person before the court.
Thus, judgment may be directed against one who, although not a formal party in the
case, has assumed or participated in the defense. 5 By coming forward with the
original litigants in moving for a judgment on a compromise and, furthermore, by
assuming such interest in the final adjudication of the case as would place them in

unequivocal liability, together with the Rebollado's, to the plaintiff therein, the
Tolentino's effectively submitted themselves to the jurisdiction of the city court.
They were and are thus subject to its judgment.
ACCORDINGLY, the judgment a quo of December 20, 1973 is reversed, and the order
of the city court of November 26, 1971 in civil case 264601, directing the release of
the writ of execution against the Rebollado spouses and the Tolentino spouses, is
hereby affirmed, with costs against the respondents Federico and Felisa Tolentino.
Makalintal, C.J., Teehankee, Makasiar, Esguerra and Muoz Palma, JJ., concur.

RULE 15- MOTIONS

Sec. 1. Motion defined

Sec. 2. Motions must be in writing

Sec. 3.Contents

Sec. 4. Hearing of motion

Anama v. Phil. Savings Bank, G.R. No. 187021, January 25, 2012
(Supra.)

Republic of the Philippines

Supreme Court
Manila
THIRD DIVISION

G.R. No. 187021

DOUGLAS F. ANAMA,
Petitioner,

Present:

VELASCO, JR., J.,Chairperson,

- versus -

PERALTA,
ABAD,
COURT OF APPEALS,
PHILIPPINE SAVINGS BANK,
SPOUSES SATURNINA BARIA
&TOMAS CO and THE REGISTER OF
DEEDS, METRO MANILA,
DISTRICT II,
Respondents.

MENDOZA, and
PERLAS-BERNABE, JJ.

Promulgated:

January 25, 2012

X ----------------------------------------------------------------------------------------------------- X
DECISION
MENDOZA, J.:
This is a petition for review under Rule 45 assailing the March 31, 2008
Decision[1] of the Court of Appeals (CA) and itsFebruary 27, 2009 Resolution,[2] in CA
G.R. No. SP-94771, which affirmed the November 25, 2005 Order of the Regional
Trial Court, Branch 167, Pasig City (RTC), granting the motion for issuance of a writ
of execution of respondents.

The Facts
The factual and procedural backgrounds of this case were succinctly recited
by the CA in its decision as follows:

Sometime in 1973, the Petitioner, Douglas F. Anama (Anama),

and the Respondent, Philippine Savings Bank (PSB), entered into a
Contract to Buy, on installment basis, the real property owned and
covered by Transfer Certificate of Title (TCT) No. 301276 in the latters
name. However, Anama defaulted in paying his obligations thereunder,
thus, PSB rescinded the said contract and title to the property
remained with the latter. Subsequently, the property was sold by PSB
to the Spouses Saturnina Baria and Tomas Co (Co Spouses) who, after
paying the purchase price in full, caused the registration of the same in
their names and were, thus, issued TCT No. 14239.

Resultantly, Anama filed before the Respondent Court a

complaint for declaration of nullity of the deed of sale, cancellation of
transfer certificate of title, and specific performance with damages
against PSB, the Co Spouses, and the Register of Deeds of Metro
Manila, District II.

On August 21, 1991 and after trial on the merits,

the Respondent Court dismissed Anamas complaint and upheld the
validity of the sale between PSB and the Co Spouses. Undaunted,
Anama appealed, at first, to this Court, and after failing to obtain a
favorable decision, to the Supreme Court.

On January 29, 2004, the Supreme Court rendered judgment

denying Anamas petition and sustaining the validity of the sale
between PSB and the Co Spouses. Its decision became final and
executory on July 12, 2004. Pursuant thereto, the Co Spouses moved

for execution, which was granted by the Respondent Court per its
Order, dated November 25, 2005.

Aggrieved, Anama twice moved for the reconsideration of

the Respondent Courts November 25, 2005 Order arguing that the Co
Spouses motion for execution is fatally defective. He averred that the
Spouses motion was pro forma because it lacked the required affidavit
of service and has a defective notice of hearing, hence, a mere scrap
of paper. The Respondent Court, however, denied Anamas motion(s)
for reconsideration.

Dissatisfied, the petitioner questioned the RTC Order before the CA for taking
judicial cognizance of the motion for execution filed by spouses Tomas Co and
Saturnina Baria (Spouses Co) which was (1) not in accord with Section 4 and Section
15 of the Rules of Court because it was without a notice of hearing addressed to the
parties; and (2) not in accord with Section 6, Rule 15 in conjunction with Section 13,
Rule 13 of the Rules of Court because it lacks the mandatory affidavit of service.

On March 31, 2008, the CA rendered a decision dismissing the petition. It

reasoned out, among others, that the issue on the validity of the deed of sale
between respondents, Philippine Savings Bank (PSB) and the Spouses Co, had long
been laid to rest considering that the January 29, 2004 Decision of this Court
became final and executory on July 12, 2004. Hence, execution was already a
matter of right on the part of the respondents and the RTC had the ministerial duty
to issue a writ of execution enforcing a final and executory decision.

The CA also stated that although a notice of hearing and affidavit of service in
a motion are mandatory requirements, the Spouses Cos motion for execution of a
final and executory judgment could be acted upon by the RTC ex parte, and
therefore, excused from the mandatory requirements of Sections 4, 5 and 6 of Rule
15 of the Rules of Court.

The CA was of the view that petitioner was not denied due process because
he was properly notified of the motion for execution of the Spouses Co. It stated
that the act of the Spouses Co in resorting to personal delivery in serving their
motion for execution did not render the motion pro forma. It refused to apply a rigid
application of the rules because it would result in a manifest failure of justice
considering that petitioners position was nothing but an obvious dilatory tactic
designed to prevent the final disposition of Civil Case No. 44940.

Not satisfied with the CAs unfavorable disposition, petitioner filed this
petition praying for the reversal thereof presenting the following

ARGUMENTS:

THE RESPONDENT APPELLATE COURT DID NOT TAKE INTO

CONSIDERATION THE CLEAR TEACHING OF THE HONORABLE
COURT WITH REGARD TO THE REQUISITE NOTICE OF HEARING
IT SHOULD BE ADDRESSED TO THE PARTIES NOT TO THE CLERK
OF
COURT,
THE
LATEST
(THEN)
BEING
GARCIA
V.
SANDIGANBAYAN, G.R. NO. 167103, AUGUST 31, 2006, 500
SCRA 361; DE JESUS V. JUDGE DILAG, A.M. NO. RTJ-051921, SEPTEMBER 30, 2005, 471 SCRA 176; LAND BANK OF
THE PHILIPPINES V. NATIVIDAD, G.R. NO. 127198, MAY 16,
2005, 458 SCRA 441; ATTY.JULIUS NERI V. JUDGE JESUS S. DE LA
PEA, A.M NO. RTJ-05-1896, APRIL 29, 2005, 457 SCRA 538;
AND ALVAREZ V. DIAZ, A.M. NO. MTJ-00-1283, MARCH 3, 2004,
424 SCRA 213;

THE RESPONDENT APPELLATE COURT DID NOT TAKE INTO

CONSIDERATION THE CLEAR TEACHING OF THE HONORABLE
COURT WITH REGARD TO THE REQUISITE AFFIDAVIT OF
SERVICE IT SHOULD BE IN THE PROPER FORM AS PRESCRIBED
IN THE RULES AND IT SHOULD BE ATTACHED TO THE MOTION,
THE LATEST (THEN) BEING ELLO V. COURT OF APPEALS, G.R.
NO. 141255, JUNE 21, 2005, 460 SCRA 406; LOPEZ DELA ROSA
DEVELOPMENT CORPORATION V. COURT OF APPEALS, G.R. NO.
148470, APRIL 29, 2005, 457 SCRA 614; ALVAREZ V. DIAZ, A.M.
NO. MTJ-00-1283, MARCH 3, 2004, 424 SCRA 213; EL REYNO
HOMES, INC. V. ERNESTO ONG, 397 SCRA 563; CRUZ V. COURT
OF APPEALS, 388 SCRA 72, 80-81; AND MERIS V. OFILADA, 293
SCRA 606;

THE RESPONDENT APPELLATE COURT DID NOT TAKE

APPROPRIATE ACTION ON THE FRAUD PERPETRATED UPON
THE COURT BY RESPONDENT-SPOUSES AND THEIR LEAD
COUNSEL.

SINCE THE RESPONDENT APPELLATE COURT REFUSED

TO TAKE INTO CONSIDERATION THE RESPONDENT
BANKS ACTION THAT OF:

ENGAGING
IN
A
DAGDAG-BAWAS
(LEGALLY
INTERCALATION) OPERATION OF A PORTION OF
THE TRANSCRIPT OF STENOGRAPHIC NOTES (TSN),
OCTOBER 12, 1984, OF THE REGIONAL TRIAL COURT,
BRANCH 167, PASIG CITY, IN CIVIL CASE NO. 44940,
PAGES 54-55, AND

PRESENTING IT IN ITS APPELLEES BRIEF (IN THE

OWNERSHIP CASE, CA-G.R. NO. CV-42663, LIKEWISE,
BEFORE THE RESPONDENT APPELLATE COURT) BY
CITING IT ON PAGE 14 OF SAID BRIEF, AS IMPLIEDLY
COMING FROM THE TSN OF THE TRIAL COURT.

THINKING THAT THEIR FALSIFIED APPELLEES BRIEF

WAS MATERIAL IN SAID CA-G.R. NO. CV-42663.

IT COULD NOT RULE THAT THE SAME HAS BROUGHT

ABOUT A CRUCIAL MATERIAL CHANGE IN THE SITUATION OF
THE PARTIES WHICH MAKES EXECUTION INEQUITABLE (PUNCIA
V. GERONA, 252 SCRA 424, 430-431), OR, IN THE WORDS OF
DEVELOPMENT
BANK
OF
RIZAL
V.
CA,
G.R.
NO.
75964, DECEMBER 1, 1987, 156 SCRA 84, 90, THERE EXISTS A
COMPELLING REASON FOR STAYING THE EXECUTION OF
JUDGMENT.

Basically, petitioner argues that the respondents failed to substantially

comply with the rule on notice and hearing when they filed their motion for the

issuance of a writ of execution with the RTC. He claims that the notice of hearing in
the motion for execution filed by the Spouses Co was a mere scrap of paper
because it was addressed to the Clerk of Court and not to the parties. Thus, the
motion for execution did not contain the required proof of service to the adverse
party. He adds that the Spouses Co and their counsel deliberately misserved the
copy of their motion for execution, thus, committing fraud upon the trial court.

Additionally, he claims that PSB falsified its appellees brief by engaging in a

dagdag-bawas (intercalation) operation in pages 54 to 55 of the TSN,
dated October 12, 1984.

Position of the Spouses Co

The Spouses Co counter that the petition should be dismissed outright for
raising both questions of facts and law in violation of Section 1, Rule 45 of the Rules
of Court. The Spouses Co aver that petitioner attempts to resurrect the issue that
PSB cheated him in their transaction and that the RTC committed a dagdagbawas. According to the Spouses Co, these issues had long been threshed out by
this Court.

At any rate, they assert that they have substantially complied with the
requirements of notice and hearing provided under Sections 4 and 5 of Rule 15 and
Section 13, Rule 13 of the Rules of Court. Contrary to petitioners allegations, a copy
of the motion for the issuance of a writ of execution was given to petitioner through
his principal counsel, the Quasha Law Offices. At that time, the said law office had
not formally withdrawn its appearance as counsel for petitioner. Spouses Co argue
that what they sought to be executed was the final judgment of the RTC duly
affirmed by the CA and this Court, thus, putting the issues on the merits to
rest. The issuance of a writ of execution then becomes a matter of right and the
courts duty to issue the writ becomes ministerial.

Position of respondent PSB

PSB argues that the decision rendered by the RTC in Civil Case No. 44940
entitled Douglas F. Anama v. Philippine Savings Bank, et. al. [3] had long become
final and executory as shown by the Entry of Judgment made by the Court on July
12, 2004. The finality of the said decision entitles the respondents, by law, to the
issuance of a writ of execution. PSB laments that petitioner relies more on
technicalities to frustrate the ends of justice and to delay the enforcement of a final
and executory decision.

As to the principal issue, PSB points out that the notice of hearing appended
to the motion for execution filed by the Spouses Co substantially complied with the
requirements of the Rules since petitioners then counsel of record was duly notified
and furnished a copy of the questioned motion for execution. Also, the motion for
execution filed by the Spouses Co was served upon and personally received by said
counsel.

The Courts Ruling

The Court agrees with the Spouses Co that petitioners allegations on the
dagdag-bawas operation of the Transcript of Stenographic Notes, the fraud
perpetuated upon the Court by said spouses and their lead counsel, the
ownership, and falsification had long been laid to rest in the case of Douglas F.
Anama v. Philippine Savings Bank, et. al. [4] For said reason, the Court cannot review
those final pronouncements. To do so would violate the rules as it would open a final
judgment to another reconsideration which is a prohibited procedure.
On the subject procedural question, the Court finds no compelling reason to
stay the execution of the judgment because the Spouses Co complied with the
notice and hearing requirements under Sections 4, 5 and 6 of Rule 15. Said sections,
as amended, provide:
SECTION 4. Hearing of motion. Except for motions which the
court may act upon without prejudicing the rights of the adverse party,
every written motion shall be set for hearing by the applicant.
Every written motion required to be heard and the notice of the
hearing thereof shall be served in such a manner as to ensure its
receipt by the other party at least three (3) days before the date of
hearing, unless the court for good cause sets the hearing on shorter
notice.

SECTION 5. Notice of hearing. The notice of hearing shall be

addressed to all parties concerned, and shall specify the time and date
of the hearing which must not be later than ten (10) days after the
filing of the motion.
SECTION 6. Proof of service necessary. No written motion set
for hearing shall be acted upon by the court without proof of service
thereof.
Pertinently, Section 13 of Rule 13 of the 1997 Rules of Civil Procedure, as
amended, provides:
SEC. 13. Proof of service. Proof of personal service shall
consist of a written admission of the party served, or the official return
of the server, or the affidavit of the party serving, containing a full
statement of the date, place, and manner of service. If the service is
by ordinary mail, proof thereof shall consist of an affidavit of the
person mailing of facts showing compliance with section 7 of this Rule.
If service is made by registered mail, proof shall be made by such
affidavit and the registry receipt issued by the mailing office. The
registry return card shall be filed immediately upon its receipt by the
sender, or in lieu thereof the unclaimed letter together with the
certified or sworn copy of the notice given by the postmaster to the
addressee.
Elementary is the rule that every motion must contain the mandatory
requirements of notice and hearing and that there must be proof of service thereof.
The Court has consistently held that a motion that fails to comply with the above
requirements is considered a worthless piece of paper which should not be acted
upon. The rule, however, is not absolute. There are motions that can be acted upon
by the court ex parte if these would not cause prejudice to the other party. They are
not strictly covered by the rigid requirement of the rules on notice and hearing of
motions.
The motion for execution of the Spouses Co is such kind of motion. It cannot
be denied that the judgment sought to be executed in this case had already become
final and executory. As such, the Spouses Co have every right to the issuance of a
writ of execution and the RTC has the ministerial duty to enforce the same. This
right on the part of the Spouses Co and duty on the part of the RTC are based on
Section 1 and Section 2 of Rule 39 of the 1997 Revised Rules of Civil Procedure
provides, as follows:
Section 1. Execution upon judgments or final orders.
Execution shall issue as a matter of right, on motion, upon a judgment
or order that disposes of the action or proceeding upon the expiration
of the period to appeal therefrom if no appeal has been duly perfected.

If the appeal has been duly perfected and finally resolved, the
execution may forthwith be applied for in the court of origin, on motion
of the judgment obligee, submitting therewith certified true copies of
the judgment or judgments or final order or orders sought to be
enforced and of the entry thereof, with notice to the adverse party.

The appellate court may, on motion in the same case, when the
interest of justice so requires, direct the court of origin to issue the writ
of execution.
SEC. 2. Discretionary execution.
(a) Execution of a judgment or final order pending appeal. On
motion of the prevailing party with notice to the adverse party filed
in the trial court while it has jurisdiction over the case and is in
possession of either the original record or the record on appeal, as the
case may be, at the time of the filing of such motion, said court may, in
its discretion, order execution of a judgment or final order even before
the expiration of the period to appeal.
After the trial court has lost jurisdiction, the motion for execution
pending appeal may be filed in the appellate court.
Discretionary execution may only issue upon good reasons to be
stated in a special order after due hearing.
(b) Execution of several, separate or partial judgments.A
several, separate or partial judgment may be executed under the same
terms and conditions as execution of a judgment or final order pending
appeal. (2a) [Emphases and underscoring supplied]

As can be gleaned therefrom, under Paragraph 1 of Section 1 of Rule 39 of

the 1997 Revised Rules of Civil Procedure, the Spouses Co can have their motion for
execution executed as a matter of right without the needed notice and hearing
requirement to petitioner. This is in contrast to the provision of Paragraph 2 of
Section 1 and Section 2 where there must be notice to the adverse party. In the
case of Far Eastern Surety and Insurance Company, Inc. v. Virginia D. Vda. De
Hernandez,[5] it was written:
It is evident that Section 1 of Rule 39 of the Revised
Rules of Court does not prescribe that a copy of the motion for
the execution of a final and executory judgment be served on
the defeated party, like litigated motions such as a motion to dismiss
(Section 3, Rule 16), or motion for new trial (Section 2, Rule 37), or a
motion for execution of judgment pending appeal (Section 2, Rule 39),
in all of which instances a written notice thereof is required to be
served by the movant on the adverse party in order to afford the latter
an opportunity to resist the application.

It is not disputed that the judgment sought to be executed in the

case at bar had already become final and executory. It is fundamental
that the prevailing party in a litigation may, at any time within five (5)
years after the entry thereof, have a writ of execution issued for its
enforcement and the court not only has the power and authority to
order its execution but it is its ministerial duty to do so. It has also
been held that the court cannot refuse to issue a writ of execution
upon a final and executory judgment, or quash it, or order its stay, for,
as a general rule, the parties will not be allowed, after final judgment,
to object to the execution by raising new issues of fact or of law,
except when there had been a change in the situation of the parties
which makes such execution inequitable or when it appears that the
controversy has ever been submitted to the judgment of the court; or
when it appears that the writ of execution has been improvidently
issued, or that it is defective in substance, or is issued against the
wrong party, or that judgment debt has been paid or otherwise
satisfied;
or
when
the
writ
has
been
issued
without
authority. Defendant-appellant has not shown that she falls in any of
the situations afore-mentioned.Ordinarily, an order of execution of a
final judgment is not appealable. Otherwise, as was said by this Court
in Molina v. de la Riva,a case could never end. Once a court renders a
final judgment, all the issues between or among the parties before it
are deemed resolved and its judicial function as regards any matter
related to the controversy litigated comes to an end. The execution
of its judgment is purely a ministerial phase of adjudication.
The nature of its duty to see to it that the claim of the prevailing party
is fully satisfied from the properties of the loser is generally
ministerial.
In Pamintuan v. Muoz, We ruled that once a judgment becomes
final and executory, the prevailing party can have it executed as
a matter of right, and the judgment debtor need not be given
advance notice of the application for execution.
Also of the same stature is the rule that once a judgment
becomes final and executory, the prevailing party can have it executed
as a matter of right and the granting of execution becomes
a ministerial duty of the court. Otherwise stated, once sought by the
prevailing party, execution of a final judgment will just follow as a
matter of course. Hence, the judgment debtor need not be given
advance notice of the application for execution nor he afforded
prior hearing.
Absence of such advance notice to the judgment debtor does
not constitute an infringement of the constitutional guarantee of due
process.
However, the established rules of our system of jurisprudence
do not require that a defendant who has been granted an opportunity
to be heard and has had his day in court should, after a judgment has

been rendered against him, have a further notice and hearing before
supplemental proceedings are taken to reach his property in
satisfaction of the judgment. Thus, in the absence of a statutory
requirement, it is not essential that he be given notice before the
issuance of an execution against his tangible property; after the
rendition of the judgment he must take "notice of what will follow," no
further notice being "necessary to advance justice." [Emphases and
underscoring supplied]
Likewise, in the case of Leonardo Lim De Mesa v. Hon. Court of Appeals, [6] it
was stated:
In the present case, the decision ordering partition and the
rendition of accounting had already become final and executory. The
execution thereof thus became a matter of right on the part of the
plaintiffs, herein private respondents, and is a mandatory and
ministerial duty on the part of the court. Once a judgment becomes
final and executory, the prevailing party can have it executed
as a matter of right, and the judgment debtor need not be
given advance notice of the application for execution nor be
afforded prior hearings thereon.
On the bases of the foregoing considerations, therefore, the
Court of Appeals acted correctly in holding that the failure to serve a
copy of the motion for execution on petitioner is not a fatal defect. In
fact, there was no necessity for such service. [Emphases and
underscoring supplied]
At any rate, it is not true that the petitioner was not notified of the motion for
execution of the Spouses Co. The records clearly show that the motion for
execution was duly served upon, and received by, petitioners counsel-of-record, the
Quasha Ancheta Pena Nolasco Law Offices, as evidenced by a signed stamped
received mark appearing on said pleading. [7] The records are bereft of proof
showing any written denial from petitioners counsel of its valid receipt on behalf of
its client. Neither is there proof that the Quasha Ancheta Pena Nolasco Law Offices
has formally withdrawn its appearance as petitioners counsel-of-record.
Considering that there is enough proof shown on record of personal delivery in
serving the subject motion for execution, there was a valid compliance with the
Rules, thus, no persuasive reason to stay the execution of the subject final and
executory judgment.
Moreover, this Court takes note that petitioner was particularly silent on the
ruling of the CA that he was notified, through his counsel, of the motion for
execution of the Spouses Co when he filed a motion for reconsideration of the RTCs
order dated June 28, 2005, holding in abeyance said motion pending the resolution
of petitioners pleading filed before this Court. He did not dispute the ruling of the
CA either that the alleged defect in the Spouses Cos motion was cured when his
new counsel was served a copy of said motion for reconsideration of the RTCs June
28, 2005 Order.[8]

The three-day notice rule is not absolute. A liberal

construction of the procedural rules is proper where the lapse in the
literal observance of a rule of procedure has not prejudiced the
adverse party and has not deprived the court of its authority. Indeed,
Section 6, Rule 1 of the Rules of Court provides that the Rules should
be liberally construed in order to promote their objective of securing a
just, speedy and inexpensive disposition of every action and
proceeding. Rules of procedure are tools designed to facilitate the
attainment of justice, and courts must avoid their strict and rigid
application which would result in technicalities that tend to frustrate
rather than promote substantial justice.

In Somera Vda. De Navarro v. Navarro, the Court held that there

was substantial compliance of the rule on notice of motions even if the
first notice was irregular because no prejudice was caused the adverse
party since the motion was not considered and resolved until after
several postponements of which the parties were duly notified.
Likewise, in Jehan Shipping Corporation v. National Food
Authority, the Court held that despite the lack of notice of hearing in a
Motion for Reconsideration, there was substantial compliance with the
requirements of due process where the adverse party actually had the
opportunity to be heard and had filed pleadings in opposition to the
motion. The Court held:
This Court has indeed held time and again, that under Sections 4
and 5 of Rule 15 of the Rules of Court, mandatory is the requirement in
a motion, which is rendered defective by failure to comply with the
requirement. As a rule, a motion without a notice of hearing is
considered pro forma and does not affect the reglementary period for
the appeal or the filing of the requisite pleading.
As an integral component of the procedural due process, the
three-day notice required by the Rules is not intended for the benefit of
the movant. Rather, the requirement is for the purpose of avoiding
surprises that may be sprung upon the adverse party, who must be
given time to study and meet the arguments in the motion before a
resolution of the court. Principles of natural justice demand that the
right of a party should not be affected without giving it an opportunity
to be heard.
The test is the presence of opportunity to be heard, as
well as to have time to study the motion and meaningfully
oppose or controvert the grounds upon which it is based.
[9]
[Emphases and underscoring supplied]

[10]

Likewise, in the case of KKK Foundation, Inc. v. Hon. Adelina Calderon-Bargas,

this Court stated:
Anent the second issue, we have consistently held that a motion
which does not meet the requirements of Sections 4 and 5 of Rule 15 of
the Rules of Court is considered a worthless piece of paper, which the
Clerk of Court has no right to receive and the trial court has no authority
to act upon. Service of a copy of a motion containing a notice of the time
and the place of hearing of that motion is a mandatory requirement, and
the failure of movants to comply with these requirements renders their
motions fatally defective. However, there are exceptions to the
strict application of this rule. These exceptions are: (1) where a rigid
application will result in a manifest failure or miscarriage of justice
especially if a party successfully shows that the alleged defect in the
questioned final and executory judgment is not apparent on its face or
from the recitals contained therein; (2) where the interest of substantial
justice will be served; (3) where the resolution of the motion is
addressed solely to the sound and judicious discretion of the court; and
(4) where the injustice to the adverse party is not commensurate with
the degree of his thoughtlessness in not complying with the procedure
prescribed.
A notice of hearing is an integral component of procedural due
process to afford the adverse parties a chance to be heard before a
motion is resolved by the court. Through such notice, the adverse party
is given time to study and answer the arguments in the motion. Records
show that while Angeless Motion for Issuance of Writ of Execution
contained a notice of hearing, it did not particularly state the date and
time of the hearing. However, we still find that petitioner was not denied
procedural due process. Upon receiving the Motion for Issuance of Writ
of Execution, the trial court issued an Order dated September 9,
2002giving petitioner ten (10) days to file its comment. The trial court
ruled on the motion only after the reglementary period to file comment
lapsed. Clearly, petitioner was given time to study and comment
on the motion for which reason, the very purpose of a notice of
hearing had been achieved.
The notice requirement is not a ritual to be followed
blindly. Procedural due process is not based solely on a mechanical and
literal application that renders any deviation inexorably fatal. Instead,
procedural rules are liberally construed to promote their objective and to
assist in obtaining a just, speedy and inexpensive determination of any
action and proceeding. [Emphases supplied]

At any rate, it is undisputed that the August 21, 1991 RTC Decision[11] in Civil
Case No. 44940 is already final and executory. Once a judgment becomes final and
executory, all the issues between the parties are deemed resolved and laid to rest.
All that remains is the execution of the decision which is a matter of right. The

prevailing party is entitled to a writ of execution, the issuance of which is the trial
courts ministerial duty.[12]
The Court agrees with the respondents that petitioner mainly relies on mere
technicalities to frustrate the ends of justice and further delay the execution process
and enforcement of the RTC Decision that has been affirmed by the CA and this
Court. The record shows that the case has been dragging on for almost 30 years
since petitioner filed an action for annulment of sale in 1982. From the time the
Spouses Co bought the house from PSB in 1978, they have yet to set foot on the
subject house and lot.
To remand the case back to the lower court would further prolong the agony
of the Spouses Co. The Court should not allow this to happen. The Spouses Co
should not be prevented from enjoying the fruits of the final judgment in their favor.
In another protracted case, the Court wrote:

As a final note, it bears to point out that this case has been
dragging for more than 15 years and the execution of this Courts
judgment in PEA v. CA has been delayed for almost ten years now
simply because De Leon filed a frivolous appeal against the RTCs order
of execution based on arguments that cannot hold water. As a
consequence, PEA is prevented from enjoying the fruits of the final
judgment in its favor. The Court agrees with the Office of the Solicitor
General in its contention that every litigation must come to an end
once a judgment becomes final, executory and unappealable. Just as a
losing party has the right to file an appeal within the prescribed period,
the winning party also has the correlative right to enjoy the finality of
the resolution of his case by the execution and satisfaction of the
judgment, which is the "life of the law." To frustrate it by dilatory
schemes on the part of the losing party is to frustrate all the efforts,
time and expenditure of the courts. It is in the interest of justice that
this Court should write finis to this litigation. [13]

WHEREFORE, the petition is DENIED.

SO ORDERED.

JOSE CATRAL MENDOZA

Associate Justice

Sec. 5. Notice of hearing

Anama v. Phil. Savings Bank, G.R. No. 187021, January 25, 2012
(Supra.)
Tan v. Court of Appeals, G.R. No. 130314, September 22, 1998
(Supra.)
FIRST DIVISION

[G.R. No. 130314. September 22, 1998]

ANNIE TAN, petitioner, vs. COURT OF APPEALS and BLOOMBERRY EXPORT
MANUFACTURING, INC.,respondents.
DECISION
PANGANIBAN, J.:
Before a trial court, a motion for reconsideration that does not contain the
requisite notice of hearing does not toll the running of the period of appeal. It is a
mere scrap of paper which the trial court and the opposite party may ignore.

The Case

Petitioner seeks to set aside the August 22, 1997 Decision of the Court of
Appeals[1] in CA-GR SP No. 43293, the dispositive portion of which reads: [2]
WHEREFORE, [i]n view of all the foregoing considerations, the petition for certiorari
and prohibition is granted. The Order dated October 4, 1996, of public respondent
is hereby SET ASIDE and public respondent is ordered to desist from further
proceeding with the hearing of the Motion for Reconsideration. The Decision dated
July 18, 1996, of public respondent is declared final and executory.

The Facts

Petitioner Annie Tan, doing business under the name and style AJ & T Trading,
leased a portion of the ground floor of her building, more specifically described as
Stall No. 623, Carvajal Street, Binondo, Manila, in favor of Bloomberry Export
Manufacturing, Inc. The lease was for a period of five years starting on February 17,
1995 and ending on February 17, 2000, at a monthly rental of P20,000 for the first

three years.[3] For several alleged violations of the lease contract, petitioners filed
against private respondent a complaint for ejectment, docketed as Civil Case No.
148798-CV.[4]As its rental payment was refused by petitioner, private respondent
instituted on July 13, 1995 a case for consignation, docketed as Civil Case No.
148814-CV.[5]
The two cases were consolidated. In due course, the Metropolitan Trial Court
(MTC) of Manila, Branch I, rendered on February 1, 1996 a Decision [6] which disposed
as follows:[7]
WHEREFORE, in Civil Case No. 148798-CV for [b]reach of [c]ontract, failure to pay
rentals on time, encroachment on the adjacent premises without the consent of
[petitioner], [she] failed to substantiate her case with that degree of proof required
by law. For this reason, except for the costs of suit, this Court hereby orders the
dismissal of the complaint of [petitioner]. The counterclaim and damages sought by
[private respondent are] likewise ordered dismissed. The case for consignation in
Civil Case No. 148814-CV has become moot and academic for failure of [petitioner]
to appeal the decision of the Metropolitan [Trial] Court, Branch 15, Manila, allowing
the [private respondent] to consign rental payments to the Court of
Manila. Besides, the [c]omplaint for consignation being in conformity with law,
[private respondent] is allowed to continue consigning with this Court all rentals
that [may be] due.
On appeal, the Regional Trial Court (RTC) of Manila, Branch 2, in its Decision
dated July 18, 1996, affirmed the aforementioned MTC Decision thus:
WHEREFORE, finding no cogent reasons to disturb the joint decision dated
February 1, 1996 of the Metropolitan Trial Court of Manila, Branch 1, the Court
sustains and affirms in toto the said decision.
Respondent Court related the incidents that ensued, as follows: [8]
xxx [F]rom the Decision of the [RTC] dated July 18, 1996, [petitioner] filed a Motion
for Reconsideration of the aforesaid decision. The Motion for Reconsideration did
not contain any notice of hearing as required under Section 5, Rule 15 of the
Revised Rules of Court.
On August 23, 1996, [private respondent] filed an ex-parte Motion for Entry of
Judgment upon the ground that said motion for reconsideration is a mere scrap of
paper which should not merit the attention of the [RTC] and in support thereof, cited
the case of Traders Royal Bank vs. Court of Appeals, 208 SCRA 199. [Private
respondent] contends that since the Motion for Reconsideration is a mere scrap of
paper aside from being pro forma, said Motion for Reconsideration did not toll the
period of appeal[;] hence, the Decision dated July 18, 1996, had become final and
executory.
"On September 3, 1996, [petitioner] filed a Motion to Set for Hearing the Motion for
Reconsideration which was vehemently opposed by [private respondent] on
September 23, 1996.

On October 4, 1996, [the RTC] issued an Order granting the motion to set for
hearing [petitioners] Motion for Reconsideration and set[ting] the hearing [for]
October 21, 1996, at 8:30 oclock in the morning. On October 20, 1996, [private
respondent] filed a Motion for Reconsideration of the Order dated October 4, 1996,
which was set for hearing on October 25, 1996.
On November 11, 1996, [the RTC] issued an Order denying [private respondents]
Motion for Reconsideration. Hence, the Petition for Certiorari and Prohibition. xxx.
In the assailed Decision, Respondent Court of Appeals reversed the trial courts
Order setting for hearing petitioners Motion for Reconsideration.

The Ruling of the Court of Appeals

Respondent Court held that the trial court acted with grave abuse of discretion
in setting for hearing petitioners Motion for Reconsideration, notwithstanding the
fact that said Motion contained no notice of hearing.
Citing a litany of cases, it ruled that petitioners failure to comply with the
mandatory provisions of Sections 4 and 5, Rule 15 of the Rules of Court, reduced her
motion to a mere scrap of paper which did not merit the attention of the
court. Respondent Court also held that those cases in which the Court allowed a
motion for reconsideration that had not been set for hearing -- Galvez v. Court of
Appeals,[9] Tamargo v. Court of Appeals[10] and Que v. Intermediate Appellate
Court[11]-- were inapplicable.
Respondent Court held that the facts in Galvez drastically differ from those in
the present case. Galvez involved a motion to withdraw the information -- not a
motion for reconsideration -- that was filed ex parte before the arraignment of the
accused. In that case, the Court held that there was no imperative need of notice
and hearing because, first, the withdrawal of an information rests on the discretion
of the trial court; and, second, the accused was not placed in jeopardy. On the
other hand, the subject of the present controversy is a motion for reconsideration
directed against the Decision of the RTC; thus, the motion affects the period to
perfect an appeal.
Que is not applicable, either. In said case, the trial court set the Motion for
Reconsideration (MR) for hearing, which was actually attended by the counsel for
the adverse party. This was not so in the case at bar; petitioners MR was set for
hearing, because she belatedly moved for it upon the filing of private respondents
Motion for Entry of Judgment. Likewise, the present case differs from Tamargo,
wherein the application of the aforesaid mandatory provisions was suspended. The
Court did so in order to give substantial justice to the petitioner and in view of the
nature of the issues raised which were found to be highly meritorious.
Hence, this petition.[12]

The Issue

In her Memorandum,[13] petitioner presents a fairly accurate statement of the

main issue to be resolved:[14]

Whether xxx the omission [through] inadvertence of a notice of hearing of

a motion for reconsideration filed with the trial court xxx is a fatal defect
which did not stop the running of the period to appeal[,] thus rendering the
assailed decision final [and] executory.

The Courts Ruling

The petition is devoid of merit.

Sole Issue:
Omission of Notice of Hearing Fatal

Petitioner admits the categorical and mandatory character of the directives in

Sections 4 and 5 of Rule 15 of the Rules of Court, which read: [15]
SEC. 4. Hearing of motion.Except for motions which the court may act upon
without prejudicing the rights of the adverse party, every written motion shall be set
for hearing by the applicant.
Every written motion required to be heard and the notice of the hearing thereof
shall be served in such a manner as to ensure its receipt by the other party at least
three (3) days before the date of hearing, unless the court for good cause sets the
hearing on shorter notice.(4a)
SEC. 5. Notice of hearing.The notice of hearing shall be addressed to all parties
concerned, and shall specify the time and date of the hearing which must not be
later than ten (10) days after the filing of the motion.(5a)
In De la Pea v. De la Pea, [16] the Court presented a resume of earlier decisions
regarding the necessity of the notice of hearing in motions for reconsideration:
In Pojas v. Gozo-Dadole,[17] we had occasion to rule on the issue of whether a
motion for reconsideration without any notice of hearing tolls the running of the
prescriptive period. In Pojas, petitioner received copy of the decision in Civil Case
No. 3430 of the Regional Trial Court of Tagbilaran on 15 April 1986. The decision
being adverse to him petitioner filed a motion for reconsideration. For failing to
mention the date when the motion was to be resolved as required in Sec. 5, Rule 15,
of the Rules of Court, the motion for reconsideration was denied. A second motion
for reconsideration met the same fate. On 2 July 1986 petitioner filed a notice of
appeal but the same was denied for being filed out of time as the motion for
reconsideration which the Court ruled as pro forma did not stop the running of the
15-day period to appeal.[18]
In resolving the issue of whether there was grave abuse of discretion in denying
petitioners notice of appeal, this Court ruled
Section 4 of Rule 15 of the Rules of Court requires that notice of motion be served
by the movant on all parties concerned at least three (3) days before its

hearing. Section 5 of the same Rule provides that the notice shall be directed to the
parties concerned, and shall state the time and place for the hearing of the
motion. A motion which does not meet the requirements of Section 4 and 5 of Rule
15 of the Rules of Court is considered a worthless piece of paper which the clerk has
no right to receive and the court has no authority to act upon. Service of copy of a
motion containing notice of the time and place of hearing of said motion is a
mandatory requirement and the failure of the movant to comply with said
requirements renders his motion fatally defective. [19]
In New Japan Motors, Inc. v. Perucho,[20] defendant filed a motion for
reconsideration which did not contain any notice of hearing. In a petition for
certiorari, we affirmed the lower court in ruling that a motion for reconsideration
that did not contain a notice of hearing was a useless scrap of paper. We held
further
Under Sections 4 and 5 of Rule 15 of the Rules of Court, xxx a motion is required to
be accompanied by a notice of hearing which must be served by the applicant on all
parties concerned at least three (3) days before the hearing thereof. Section 6 of
the same rule commands that (n)o motion shall be acted upon by the Court,
without proof of service of the notice thereof xxx. It is therefore patent that the
motion for reconsideration in question is fatally defective for it did not contain any
notice of hearing. We have already consistently held in a number of cases that the
requirements of Sections 4, 5 and 6 of Rules 15 of the Rules of Court are mandatory
and that failure to comply with the same is fatal to movants cause. [21]
In Sembrano v. Ramirez,[22] we declared that
(A) motion without notice of hearing is a mere scrap of paper. It does not toll the
running of the period of appeal. This requirement of notice of hearing equally
applies to a motion for reconsideration. Without such notice, the motion is pro
forma. And a pro forma motion for reconsideration does not suspend the running
of the period to appeal.
In In re Almacen,[23] defendant lost his case in the lower court. His counsel then
filed a motion for reconsideration but did not notify the adverse counsel of the time
and place of hearing of said motion. The Court of Appeals dismissed the motion for
the reason that the motion for reconsideration dated July 5, 1966 does not contain
a notice of time and place of hearing thereof and is, therefore a useless piece of
paper which did not interrupt the running of the period to appeal, and,
consequently, the appeal was perfected out of time. When the case was brought to
us, we reminded counsel for the defendant that
As a law practitioner who was admitted to the bar as far back as 1941, Atty.
Almacen knew or ought to have known that [for] a motion for reconsideration to
stay the running of the period of appeal, the movant must not only serve a copy of
the motion upon the adverse party x x x but also notify the adverse party of the
time and place of hearing x x x.

Also, in Manila Surety and Fidelity Co., Inc. v. Bath Construction and Company,
[24]
we ruled-The written notice referred to evidently is that prescribed for motions in general by
Rule 15, Sections 4 and 5 (formerly Rule 26), which provide that such notice shall
state the time and place of hearing and shall be served upon all the parties
concerned at least three days in advance. And according to Section 6 of the same
Rule no motion shall be acted upon by the court without proof of such
notice. Indeed, it has been held that in such a case the motion is nothing but a
useless piece of paper. The reason is obvious; unless the movant sets the time and
place of hearing the court would have no way to determine whether that party
agrees to or objects to the motion, and if he objects, to hear him on his objection,
since the Rules themselves do not fix any period within [which] he may file his reply
or opposition.'[25]
In fine, the abovecited cases confirm that the requirements laid down in Sec. 5 of
Rule 15 of the Rules of Court that the notice shall be directed to the parties
concerned, and shall state the time and place for the hearing of the motion, are
mandatory. If not religiously complied with, they render the motion pro forma. As
such the motion is a useless piece of paper that will not toll the running of the
prescriptive period.
For failing to attach a notice of hearing to the Motion for Reconsideration,
petitioner proffers the following excuses: (1) her former counsels messenger, due
to an honest mistake, inadvertently omitted the fourth page of the motion
containing the crucial Notice of Hearing; and (2) because of the pressure of work,
her former counsel was unable to follow up such motion until the day said counsel
requested the setting of a hearing.[26]
We are not in the least convinced. First, it is unfair to place the blame for such
omission on the messenger. The burden of preparing a complete pleading falls on
counsels shoulders, not on the messengers. The counsel is ultimately responsible
for the acts or omissions of his agents. Hence, the messengers conduct can neither
justify the counsels mistake nor warrant a departure from the mandate of the
aforesaid procedural rules.
Second, it is incredible that the fourth page containing the Notice of Hearing
was left behind due to honest mistake. In fact, there was no such
page. Petitioners claim is belied by the following pertinent portions of the subject
Motion for Reconsideration:[27]
WHEREFORE, premises considered, it is respectfully prayed that the Honorable
Court cause a further REVIEW and RECONSIDERATION of its decision on the abovecaptioned consolidated cases.
Quezon City for Manila, August 12, 1996.
(Sgd.)ANGELINA ARANDIA-VILLANUEVA
Counsel for Plaintiff-Appellant
39-L T. Morato Avenue, Quezon City
IBP No. 407450 6-26-96

PTR No. 227013 1-5-96 Manila

Copy furnished:
Atty. Arnel Zaragoza Dolendo
Counsel for Defendant
Rm 408, 413 First United Bldg.
Escolta, Manila
The normal practice is to note, at the end of the pleading, that a copy was
furnished to the adverse party. Thus, petitioners motion ended exactly at the
bottom of the third page as evidenced by the copy-furnished notation. It is safe to
conclude that there was no accidental or excusable neglect in not including a fourth
page in this case. In other words, petitioners counsel simply failed to include a
notice of hearing.
Finally, the fact that petitioners former counsel calendared the motion for
hearing for August 23, 1996[28] belies the excuse that an alleged fourth page had
been left behind. In the first place, if a notice of hearing had been included in the
Motion for Reconsideration, there would have been no need for petitioner to file the
Motion to set the time and date of hearing. What is clear is that said counsel filed
the latter Motion, only after private respondent had submitted its Motion for Entry of
Judgment[29] -- with copy furnished petitioners counsel [30]-- on the ground that
petitioners Motion for Reconsideration was a mere scrap of paper that did not stop
the period for appeal.
Petitioner pleads for liberal construction of the rule on notice of hearing,
citing Tamargo, Galvez and Que. In rebuttal, we adopt by reference the CAs
excellent disquisition, cited earlier, on why these cases are inapplicable.
Petitioner further alleges that, first, the nonadmission of her Motion for
Reconsideration would result in a miscarriage of justice, as the main case
(ejectment), which was tried under summary procedure, had been unnecessarily
prolonged; and, second, the tenant lessee would be occupying the premises without
paying rentals. She also relies on People v. Leviste,[31] in which the Court held:
While it is true that any motion that does not comply with the requirements of Rule
15, Rules of Court should not be accepted for filing and, if filed, is not entitled to
judicial cognizance, the Supreme Court has likewise held that where rigid
application of the rule will result in manifest failure or miscarriage of justice,
technicalities may be disregarded in order to resolve the case.
Liberal construction of this rule has been allowed by this Court in the following
cases: (1) where a rigid application will result in a manifest failure or miscarriage of
justice,[32] especially if a party successfully shows that the alleged defect in the
questioned final and executory judgment is not apparent on its face or from the
recitals contained therein;[33] (2) where the interest of substantial justice will be
served;[34] (3) where the resolution of the motion is addressed solely to the sound
and judicious discretion of the court; [35] and (4) where the injustice to the adverse
party is not commensurate with the degree of his thoughtlessness in not complying
with the procedure prescribed.[36] Petitioner has failed to demonstrate that the case
at bar falls under any of these exceptions.

Finally, petitioner claims that she will be deprived of property without due
process, as private respondent has accumulated P348,800 in unpaid rentals and
accrued interests.
We disagree. Petitioner can obtain proper payment of rentals through a motion
for execution in the case below. The MTC may have dismissed her ejectment case,
but it did not exculpate private respondent from its liabilities. Petitioner is,
therefore, not being deprived of her property without due process.
Indeed, there is no miscarriage of justice to speak of. Having failed to observe
very elementary rules of procedure which are mandatory, petitioner caused her own
predicament. To exculpate her from the compulsory coverage of such rules is to
undermine the stability of the judicial process, as the bench and bar will be
confounded by such irritating uncertainties as when to obey and when to ignore the
Rules. We have to draw the line somewhere.[37]
WHEREFORE, the petition is hereby DENIED and the assailed Decision is
AFFIRMED. Costs against the petitioner.
SO ORDERED.
Davide, Jr. (Chairman), Bellosillo, Vitug and Quisumbing, JJ., concur.

Sec. 6. Proof of service necessary

Sec. 7. Motion day

Sec. 8. Omnibus motion

Tung Ho Steel v. Ting Guan, G.R. No. 182153, April 7, 2014 (Supra.)

Sec. 9. Motion for leave

Sec. 10. Form

RULE 16- MOTION TO DISMISS

Sec. 1. Grounds.

See: Sec. 1, Rule 9

Obando v. Figueras, G.R. No. 134854, January 18, 2000
Spped
THIRD DIVISION
[G.R. No. 134854. January 18, 2000]
FELIZARDO S. OBANDO and the ESTATES of JOSE FIGUERAS and DOA
ALEGRIA STREBEL VDA. DE FIGUERAS,petitioners, vs. EDUARDO F.
FIGUERAS and AMIGO REALTY CORPORATION as represented by ANTONIO
A. KAW,respondents.
DECISION
PANGANIBAN, J.:
In resolving this appeal, the Court invokes the following principles: (1) a lawyers
standing in a case remains, until a substitute takes over pursuant to Section 26,
Rule 138 of the Rules of Court; (2) a trial court may act upon a motion to dismiss at
any time a ground therefor becomes available, even after a responsive pleading to
the complaint has already been filed; (3) a civil case initiated by an estate
administrator may be dismissed upon a showing that the said administrators
appointment as such has been revoked by the probate court; and (4) the dismissal
of an action may be made after the ground therefor becomes known, even if the
trial court has refused to do so earlier when that ground was not yet available.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking to
annul the July 30, 1998 Decision of the Court of Appeals [1] in CA-GR SP No. 47594,
which affirmed the dismissal, without prejudice, of Petitioner Felizardo Obandos
action for annulment of contract and reconveyance earlier ordered by the Regional
Trial Court (RTC) of Quezon City,[2] Branch 218. Mis spped
The Facts
In 1964, Alegria Strebel Figueras, together with her stepsons, Eduardo and
Francisco, filed a Petition for settlement of the intestate estate of her deceased
husband Jose Figueras.[3] While settlement of the estate was pending, she died and
Eduardo assumed administration of the joint estates of Don Jose and Doa Alegria.
Hardly had the proceedings in both intestacies begun when Eduardo was served a

Petition for Probate of what purported to be Doa Alegrias Last Will and Testament,
filed by Felizardo S. Obando (herein petitioner), a nephew of Doa Alegria. [4]
The alleged Will bequeathed to Petitioner Obando and several other members of the
Obando clan properties left by the Figueras couple, including two parcels of land in
Gilmore Avenue, New Manila, Quezon City, covered by TCT Nos. 13741 and 17679.
[5]
When the probate case was consolidated with the intestate proceedings,
Petitioner Obando was appointed as Eduardos co-administrator of the joint estates.
[6]

As Eduardo insisted that the alleged Will was a forgery, the document was
submitted to the National Bureau of Investigation (NBI) for examination and
comparison of Doa Alegrias alleged signature therein with samples which both
parties accepted as authentic. The NBI found that the questioned and the standard
signatures were not made by the same person. [7] This led to the indictment and the
conviction of Petitioner Obando in Criminal Case 90-85819 [8]for estafa through
falsification of a public document.
On February 20, 1990, the probate court denied Eduardos Motion for authority to
sell the aforementioned two parcels of land in New Manila. [9] Despite such denial,
Eduardo sold the lots to Amigo Realty Corporation on the strength of an Order
issued by the probate court on May 15, 1991. New titles were issued for these lots
in the name of Amigo Realty.[10]
On June 4, 1992, Petitioner Obando, in his capacity as co-administrator and
universal heir of Doa Alegria, filed a Complaint against Eduardo and Amigo Realty
(collectively referred to as the respondents) for the nullification of the sale. The
proceedings were docketed as Civil Case No. Q-92-12384 and raffled to the Regional
Trial Court of Quezon City, Branch 79.
However, in Special Proceeding Nos. 61567 and 123948, the probate court, in its
Order dated December 17, 1997, removed Petitioner Obando from his office as coadministrator of the joint estate of the Figueras spouses. [11] Consequently, in the
civil case, respondents filed a Joint Motion to Dismiss dated January 27, 1998, after
Obando had rested his case. The respondents built their evidence around the loss of
his legal standing to pursue the case. [12] In its Order dated February 11, 1993, the
trial court granted the Motion and dismissed the civil case without prejudice.
[13]
Jo spped
Petitioner Obando filed a Motion for Reconsideration to no avail. As earlier stated,
the Court of Appeals likewise dismissed his Petition for Certiorari and Mandamus
and affirmed the dismissal Order of the RTC. [14]
Ruling of the Court of Appeals
The Court of Appeals rejected the contention of Obando that he did not lose his
legal personality to prosecute the civil case since there was no categorical
statement that the purported will was a forgery and its probate was still pending.

The CA affirmed the dismissal of the action for reconveyance because the probate
courts Order dated February 5, 1998 "alluded" to the fact that the alleged Will was
a forgery. That the probate of the alleged Will had not yet been decided on the
merits did not change the fact that the probate court had removed Petitioner
Obando as co-administrator. The dismissal of the civil case was without prejudice,
because the trial judge anticipated that Obando could regain co-administration of
the estates on appeal.
Hence, this Petition.[15]
Assignment of Errors
In their Memorandum, petitioners raise the following issues: [16]
"A........WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN
SANCTIONING THE TRIAL COURTS ALLOWANCE OF RESPONDENTS
JOINT MOTION TO DISMISS, DESPITE THE FACT THAT ONE OF THE
LAWYER-MOVANTS THEREIN WAS NO LONGER THE COUNSEL OF
RECORD FOR RESPONDENT FIGUERAS AT THE TIME THE MOTION WAS
FILED.
"B........WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN
SANCTIONING THE TRIAL COURTS RADICAL DEPARTURE FROM THE
LAW WHEN IT GRANTED A MOTION TO DISMISS ON LACK OF CAPACITY
TO SUE/LEGAL STANDING AT THE TIME WHEN THE [PETITIONERS] HAVE
ALREADY RESTED THEIR CASE AND THE [RESPONDENTS] HAVE BEGUN
PRESENTATION OF THEIR EVIDENCE.
"C........WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED
WHEN IT SANCTIONED THE TRIAL COURTS DISMISSAL OF THE CASE
BASED ON ORDERS OF OTHER COURTS THAT HAVE NOT YET ATTAINED
FINALITY. Sppedjo
"D........WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED
WHEN IT UPHELD THE TRIAL COURTS WHIMSICAL AND CAPRICIOUS
DEPARTURE FROM ITS PREVIOUS RULINGS DENYING RESPONDENTS
MOTION TO DISMISS AND MOTION TO SUSPEND PROCEEDINGS.
"E........WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED
WHEN IT RENDERED ITS 30 JULY 1998 DECISION IN CA-G.R. 47594
UPHOLDING THE TRIAL COURTS ORDERS DATED 11 FEBRUARY 1998
AND 12 MARCH 1998."
Simply stated, the following issues are raised by the petitioners: (1) whether the
trial court could act on a motion filed by a lawyer who was allegedly no longer
Eduardos counsel of record; (2) whether a motion to dismiss filed after the
responsive pleadings were already made can still be granted; (3) whether the
conviction of Petitioner Obando for estafa through falsification and the revocation of
his appointment as administrator, both of which are on appeal, constitute sufficient

grounds to dismiss the civil case; and (4) whether there was a conflict between the
Order dismissing the civil case and the previous actions of the trial court.
The Courts Ruling
The Petition is devoid of merit.
First Issue:
Counsel of Record
Petitioners claim that when Atty. Joaquin Yuseco filed the Motion to Dismiss, he no
longer represented the respondents, as shown by Eduardos Manifestation and
Motion dated January 8, 1998, dispensing with said counsels services in the
proceedings in view of a Compromise Agreement with Petitioner Obando. [17]
We disagree. Representation continues until the court dispenses with the services of
counsel in accordance with Section 26, Rule 138 of the Rules of Court. [18] Counsel
may be validly substituted only if the following requisites are complied with: (1) new
counsel files a written application for substitution; (2) the clients written consent is
obtained; and (3) the written consent of the lawyer to be substituted is secured, if it
can still be; if the written consent can no longer be obtained, then the application
for substitution must carry proof that notice of the motion has been served on the
attorney to be substituted in the manner required by the Rules. [19] Miso
In this case, we are convinced that Eduardo did not dismiss Attorney Yuseco. In fact,
the former manifested that he had been tricked by Petitioner Obando into signing
the aforesaid Manifestation and Motion and Compromise Agreement. Besides, the
filing of the Motion to Dismiss was not prejudicial but beneficial to the said
respondent; hence, he had no reason to complain. At the discretion of the court, an
attorney who has already been dismissed by the client is allowed to intervene in a
case in order to protect the clients rights. In the present case, had there been any
irregularity, it should have been raised by the respondents, not the petitioners.
Second Issue:
Timeliness of the Motion to Dismiss
The Rules provide that a motion to dismiss may be submitted only before the filing
of a responsive pleading.[20] Thus, petitioners complain that it was already too late
for Respondent Eduardo Figueras to file a Motion to Dismiss after Obando had
finished presenting his evidence.
This is not so. The period to file a motion to dismiss depends upon the
circumstances of the case. Section 1 of Rule 16 of the Rules of Court requires that,
in general, a motion to dismiss should be filed within the reglementary period for
filing a responsive pleading. Thus, a motion to dismiss alleging improper venue
cannot be entertained unless made within that period. [21] Nex old

However, even after an answer has been filed, the Court has allowed a defendant to
file a motion to dismiss on the following grounds: (1) lack of jurisdiction, [22] (2) litis
pendentia,[23] (3) lack of cause of action,[24] and (4) discovery during trial of evidence
that would constitute a ground for dismissal. [25] Except for lack of cause of action or
lack of jurisdiction, the grounds under Section 1 of Rule 16 may be waived. If a
particular ground for dismissal is not raised or if no motion to dismiss is filed at all
within the reglementary period, it is generally considered waived under Section 1,
Rule 9 of the Rules.[26] Mani kx
Applying this principle to the case at bar, the respondents did not waive their right
to move for the dismissal of the civil case based on Petitioner Obandos lack of legal
capacity. It must be pointed out that it was only after he had been convicted of
estafa through falsification that the probate court divested him of his representation
of the Figueras estates. It was only then that this ground became available to the
respondents. Hence, it could not be said that they waived it by raising it in a Motion
to Dismiss filed after their Answer was submitted. Verily, if the plaintiff loses his
capacity to sue during the pendency of the case, as in the present controversy, the
defendant should be allowed to file a motion to dismiss, even after the lapse of the
reglementary period for filing a responsive pleading.
Third Issue:
Removal from Administration
Petitioners aver that it was premature for the trial court to dismiss the civil case
because Obandos conviction for estafa through falsification was still on appeal.
We disagree. This argument has no bearing at all on the dismissal of the civil case.
Petitioner Obando derived his power to represent the estate of the deceased couple
from his appointment as co-administrator. [27] When the probate court removed him
from office, he lost that authority. Since he lacked the legal capacity to sue on
behalf of the Figueras estates, he could not continue prosecuting the civil case.
[28]
Thus the trial court properly granted the Motion to Dismiss on this ground.
[29]
Whether a final conviction for a crime involving moral turpitude is necessary to
remove him from his administration is not a proper issue in this Petition. He should
raise the matter in his appeal of the Decision removing him from administration of
the Figueras estates. Maniks
The fact that the conviction of Obando and his removal from administration are on
appeal only means that his legal standing could be restored; thus, the civil case was
correctly dismissed without prejudice. If his conviction is reversed and his
appointment restored by the probate court, the case may continue without being
barred by res judicata. The lower courts Decision showed that it was careful in its
action. On the other hand, Obando has yet to show that he has regained
administration of the Figueras estates. Noteworthy also is the fact that his removal
from office was predicated not only on his conviction for a crime, but also on his
failure to render an accounting of the rentals of a property leased to the Community
of Learners.

Fourth Issue:
No Conflicting Rulings
Respondent Eduardo Figueras earlier Motion to Dismiss was denied in the trial
courts March 4, 1993 Order which reads:
"x x x [I]t is pertinent to note that the criminal case of Estafa through
Falsification of Public Document filed against [petitioner] and the
Petition to Remove him as co-administrator are still pending
determination. Thus, suffice it to state that while herein [petitioner]
remains as the co-administrator of the estates of the deceased
Figueras the Court will continue to recognize his right to institute the
instant case in his capacity as judicial administrator, unless he be
removed as such by the probate Court pursuant to Rule 82 of the
Revised Rules of Court."[30]
Thus, petitioners allege that the trial court whimsically and capriciously departed
from its previous rulings when, in its Resolution dated February 11, 1993, it granted
Eduardos later Motion to Dismiss.[31]
We cannot see any conflict between these trial court rulings. Obviously, they were
based on different grounds. The first Motion to Dismiss was denied because, at the
time, Petitioner Obando still had legal capacity to sue as co-administrator of the
Figueras estates. On the other hand, the second Motion was granted because the
probate court had already removed him from his office as co-administrator. The
change in his legal capacity accounts for the difference in the adjudication of the
trial court. We see no reversible error in the appellate courts affirmance of the trial
court.
WHEREFORE,
the
Petition
is
hereby DENIED and
Resolution AFFIRMED. Costs against petitioners.
SO ORDERED.2/29/00 10:57 AM
Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.

No jurisdiction over defendant

See: Sec. 20, Rule 14

the

assailed

Planters Development Bank v. Chandumal, G.R. No. 195619,

September 5, 2012 (Supra.)
Carandang v. Heirs of de Guzman, G.R. No. 160347, November 29,
2006 (Supra.)

No jurisdiction over the subject matter

Allied Domecq Phil. v. Hon. Villon, G.R. No. 156264, September 30,
2004 (Supra.)
Republic v. Bantigue Point Development, G.R. No. 162322, March 14,
2012 (Supra.)
Tijam v. Sibonghanoy, L-21450, April 15, 1968 (Supra.)

Improper Venue
See: Rule 4
Sec. 4, A.M. No. 02-11-10-SC, March 4, 2003
A.M. No. 02-11-10-SC

March 4, 2003

RE: PROPOSED RULE ON DECLARATION OF ABSOLUTE NULLITY OF VOID

MARRIAGES AND ANNULMENT OF VOIDABLE MARRIAGES
RESOLUTION
Acting on the letter of the Chairman of the Committee on Revision of the
Rules of Court submitting for this Court's consideration and approval the Proposed
Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable
Marriages, the Court Resolved to APPROVE the same.
The Rule shall take effect on March 15, 2003 following its publication in a
newspaper of general circulation not later than March 7, 2003
March 4, 2003
Davide, C.J. Bellosillo, Puno, Vitug Mendoza, Panganiban, Quisumbing, SandovalGutierrez, Carpio, Austria-Martinez, Carpio Morales, Callejo, Sr. and Azcuna
Ynares-Santiago,
on
leave
Corona, on official leave
RULE ON DECLARATION OF ABSOLUTE NULLITY OF VOID MARIAGES AND
ANNULMENT OF VOIDABLE MARRIAGES

Section 1. Scope - This Rule shall govern petitions for declaration of absolute
nullity of void marriages and annulment of voidable marriages under the Family
Code of te Philippines.
The Rules of Court shall apply suppletorily.
Section 2. Petition for declaration of absolute nullity of void marriages.
(a) Who may file. - A petition for declaration of absolute nullity of void
marriage may be filed solely by the husband or the wife. (n)
(b) Where to file. - The petition shal be filed in the Family Court.
(c) Imprecriptibility ofaction or defense. - An Action or defense for the
declaration of absolute nullity of void marriage shall not prescribe.
(d) What to allege. - A petition under Article 36 of Family Code shall specially
allege te complete facts showing the either or both parties were
psychologically incapacitated from complying with the essential marital
obligations of marriages at the time of the celebration of marriage even if
such incapacity becomes manifest only after its celebration.
The complete facts should allege the physical manifestations, if any, as are
indicative of psychological incapacity at the time of the celebration of the marriage
but expert opinion need not be alleged.
Section 3. Petition for annulment of voidable marriages. (a) Who may file. - The following persons may file a petition for annulment of
voidable marriage based on any of the grounds under article 45 of the Family
Code and within the period herein indicated:
(1) The contracting party whose parent, or guardian, or person
exercising substitute parental authority did not give his or her consent,
within five years after attaining the age of twenty-one unless, after
attaining the age of twenty-one, such party freely cohabitated with the
other as husband or wife; or the parent, guardian or person having
legal charge of the contracting party , at any time before such party
has reached the age of twenty-one;
(2) The sane spouse who had no knowledge of the other's insanity; or
by any relative, guardian, or person having legal charge of the insane,
at any time before the death of either party; or by the insane spouse
during the a lucid interval or after regaining sanity, provided that the
petitioner , after coming to reason, has not freely cohabited with the
other as husband or wife;
(3) The injured party whose consent was obtained by fraud, within five
years after the discovery of the fraud, provided that said party, with

full knowledge of the facts constituting the fraud, has not freely
cohabited with the other as husband or wife;
(4) The injured party whose consent was obtained by force,
intimidation, or undue influence, within five years from the time the
force intimidation, or undue influence disappeared or ceased, provided
that the force, intimidation, or undue influence having disappeared or
ceased, said party has not thereafter freely cohabited with the other as
husband or wife;
(5) The injured party where the other spouse is physically incapable of
consummating the marriage with the other and such incapability
continues and appears to be incurable, within five years after the
celebration of marriage; and
(6) Te injured party where the other party was afflicted with a sexuallytransmissible disease found to be serious and appears to be incurable,
within five years after the celebration of marriage.
(b) Where to file. - The petition shall be filed in the Family Court.
Section 4. Venue. - The Petition shall be filed in the Family Court of the province or
city where the petitioner or the respondent has been residing for at least six months
prior to the date of filing. Or in the case of non-resident respondent, where he may
be found in the Philippines, at the election of the petitioner.
Section 5. Contents and form of petition. - (1) The petition shall allege the
complete facts constituting the cause of action.
(2) It shall state the names and ages of the common children of the parties
and specify the regime governing their property relations, as well as the
properties involved.
If there is no adequate provision in a written agreement between the
parties, the petitioner may apply for a provisional order for spousal support,
the custody and support of common children, visitation rights, administration
of community or conjugal property, and other matters similarly
requiringurgent action.
(3) It must be verified and accompanied celebration of marriage. (b) Where to
file.-The petition shall be filed in the Family Court.
Section 4. Venue. - The petition shall be filed in the Family Court of the province or
city where the petitioner or the respondent has been residing for at least six months
prior to the date of filing, or in the case of a non-resident respondent, where he may
be found in the Philippines at the election of the petitioner.
Section 5. Contents and form of petition. - (1) The petition shall allege the
complete facts constituting the cause of action.

(2) it shall state the names and ages of the common children of the parties
and specify the regime governing their property relations, as well as the
properties involved.
If there is no adequate provision in a written agreement between the
parties, the petitioner may apply for a provisional order for spousal support,
custody and support of common children, visitation rights, administration of
community or conjugal property, and other matters similarly requiring urgent
action.
(3) it must be verified and accompanied by a certification against forum
shopping. The verification and certification must be signed personally by me
petitioner. No petition may be filed solely by counsel or through an attorneyin-fact.
If the petitioner is in a foreign country, the verification and certification
against forum shopping shall be authenticated by the duly authorized officer
of the Philippine embassy or legation, consul general, consul or vice-consul or
consular agent in said country.
(4) it shall be filed in six copies. The petitioner shall serve a copy of the
petition on the Office of the Solicitor General and the Office of the City or
Provincial Prosecutor, within five days from the date of its filing and submit to
the court proof of such service within the same period.
Failure to comply with any of the preceding requirements may be a
ground for immediate dismissal of the petition.
Section 6. Summons. - The service of summons shall be governed by Rule 14 of
the Rules of Court and by the following rules:
(1) Where the respondent cannot be located at his given address or his
whereabouts are unknown and cannot be ascertained by diligent inquiry,
service of summons may, by leave of court, be effected upon him by
publication once a week for two consecutive weeks in a newspaper of general
circulation in the Philippines and in such places as the court may order In
addition, a copy of the summons shall be served on the respondent at his last
known address by registered mail or any other means the court may deem
sufficient.
(2) The summons to be published shall be contained in an order of the court
with the following data: (a) title of the case; (b) docket number; (c) nature of
the petition; (d) principal grounds of the petition and the reliefs prayed for;
and (e) a directive for the respondent to answer within thirty days from the
last issue of publication.
Section 7. Motion to dismiss. - No motion to dismiss the petition shall be allowed
except on the ground of lack of jurisdiction over the subject matter or over the

parties; provided, however, that any other ground that might warrant a dismissal of
the case may be raised as an affirmative defense in an answer.
Section 8. Answer. - (1) The respondent shall file his answer within fifteen days
from service of summons, or within thirty days from the last issue of publication in
case of service of summons by publication. The answer must be verified by the
respondent himself and not by counsel or attorney-in-fact.
(2) If the respondent fails to file an answer, the court shall not declare him or
her in default.
(3) Where no answer is filed or if the answer does not tender an issue, the
court shall order the public prosecutor to investigate whether collusion exists
between the parties.
Section 9. Investigation report of public prosecutor. - (1) Within one month after
receipt of the court order mentioned in paragraph (3) of Section 8 above, the public
prosecutor shall submit a report to the court stating whether the parties are in
collusion and serve copies thereof on the parties and their respective counsels, if
any.
(2) If the public prosecutor finds that collusion exists, he shall state the on the
finding of collusion within ten days from receipt of a copy of a report The
court shall set the report for hearing and If convinced that the parties are in
collusion, it shall dismiss the petition.
(3) If the public prosecutor reports that no collusion exists, the court shall set
the case for pre-trial. It shall be the duty of the public prosecutor to appear
for the State at the pre-trial.
Section 10. Social worker. - The court may require a social worker to conduct a
case study and submit the corresponding report at least three days before the pretrial. The court may also require a case study at any stage of the case whenever
necessary.
Section 11. Pre-trial. (1) Pre-trial mandatory. - A pre-trial is mandatory. On motion or motu
proprio, the court shall set the pre-trial after the last pleading has been
served and filed, or upon receipt of the report of the public prosecutor that no
collusion exists between the parties.
(2) Notice of pre-trial. - (a) The notice of pre-trial shall contain:
(1) the date of pre-trial conference; and
(2) an order directing the parties to file and serve their
respective pre-trial briefs in such manner as shall ensure the

receipt thereof by the adverse party at least three days before

the date of pre-trial.
(b) The notice shall be served separately on the parties and their
respective counsels as well as on the public prosecutor. It shall be their
duty to appear personally at the pre-trial.
(c) Notice of pre-trial shall be sent to the respondent even if he fails to
file an answer. In case of summons by publication and the respondent
failed to file his answer, notice of pre-trial shall be sent to respondent
at his last known address.
Section 12. Contents of pre-trial brief. - The pre-trial brief shall contain the
following:
(a) A statement of the willingness of the parties to enter into agreements as
may be allowed by law, indicating the desired terms thereof;
(b) A concise statement of their respective claims together with the
applicable laws and authorities;
(c) Admitted facts and proposed stipulations of facts, as well as the disputed
factual and legal issues;
(d) All the evidence to be presented, including expert opinion, if any, briefly
stating or describing the nature and purpose thereof;
(e) The number and names of the witnesses and their respective affidavits;
and
(f) Such other matters as the court may require.
Failure to file the pre-trial brief or to comply with its required contents shall
have the same effect as failure to appear at the pre-trial under the succeeding
paragraphs.
Section 13. Effect of failure to appear at the pre-trial. - {a) If the petitioner fails to
appear personally, the case shall be dismissed unless his counsel or a duly
authorized representative appears in court and proves a valid excuse for the nonappearance of the petitioner.
(b) If the respondent has filed his answer but fails to appear, the court shall
proceed with the pre-trial and require the public prosecutor to investigate the
non-appearance of the respondent and submit within fifteen days thereafter a
report to the court stating whether his non-appearance is due to any collusion
between the parties. If there Is no collusion, the court shall require the public
prosecutor to intervene for the State during the trial on the merits to prevent
suppression or fabrication of evidence.

Section 14. Pre-trial conference. -At the pre-trial conference, the court:
(a) May refer the issues to a mediator who shall assist the parties in reaching
an agreement on matters not prohibited by law.
The mediator shall render a report within one month from referral
which, for good reasons, the court may extend for a period not exceeding one
month.
(b) In case mediation is not availed of or where it fails, the court shall proceed
with the pre-trial conference, on which occasion it shall consider the
advisability of receiving expert testimony and such other makers as may aid
in the prompt disposition of the petition.
Section 15. Pre-trial order. - {a) The proceedings in the pre-trial shall be recorded.
Upon termination of the pre-trial, the court shall Issue a pre-trial order which shall
recite in detail the matters taken up In the conference, the action taken thereon, the
amendments allowed on the pleadings, and except as to the ground of declaration
of nullity or annulment, the agreements or admissions made by the parties on any
of the matters considered, including any provisional order that may be necessary or
agreed upon by the parties.
(b) Should the action proceed to trial, the order shall contain a recital of the
following;
(1) Facts undisputed, admitted, and those which need not be proved
subject to Section 16 of this Rule;
(2) Factual and legal issues to be litigated;
(3) Evidence, including objects and documents, that have been marked
and will be presented;
(4) Names of witnesses who will be presented and their testimonies in
the form of affidavits; and
(5) Schedule of the presentation of evidence.
(c) The pre-trial order shall also contain a directive to the public prosecutor to
appear for the State and take steps to prevent collusion between the parties
at any stage of the proceedings and fabrication or suppression of evidence
during the trial on the merits.
(d) The parlies shall not be allowed to raise issues or present witnesses and
evidence other than those stated in the pre-trial order.
The order shall control the trial of the case, unless modified by the court to
prevent manifest injustice.

(e) The parties shall have five days from receipt of the pre-trial order to
propose corrections or modifications.
Section 16. Prohibited compromise. - The court-shall not allow compromise on
prohibited matters, such as the following:
(a) The civil status of persons;
(b) The validity of a marriage or of a legal separation;
(c) Any ground for legal separation;
(d) Future support;
(e) The jurisdiction of courts; and
(f) Future legitime.
Section 17. Trial. - (1) The presiding judge shall personally conduct the trial of the
case. No delegation of the reception of evidence to a commissioner shall be allowed
except as to matters involving property relations of the spouses.
(2) The grounds for declaration of absolute nullity or annulment of marriage
must be proved. No judgment on the pleadings, summary judgment, or
confession of judgment shall be allowed.
(3) The court may order the exclusion from the courtroom of all persons,
including members of the press, who do not have a direct interest in the case.
Such an order may be made if the court determines on the record that
requiring a party to testify in open court would not enhance the
ascertainment of truth; would cause to the party psychological harm or
inability to effectively communicate due to embarrassment, fear, or timidity;
would violate the right of a party to privacy; or would be offensive to decency
or public morals.
(4) No copy shall be taken nor any examination or perusal of the records of
the case or parts thereof be made by any person other than a party or
counsel of a party, except by order of the court.
Section 18. Memoranda. - The court may require the parties and the public
prosecutor, in consultation with the Office of the Solicitor General, to file their
respective memoranda support of their claims within fifteen days from the date the
trial is terminated. It may require the Office of the Solicitor General to file its own
memorandum if the case is of significant interest to the State. No other pleadings or
papers may be submitted without leave of court. After the lapse of the period herein
provided, the case will be considered submitted for decision, with or without the
memoranda.

Section 19. Decision. - (1) If the court renders a decision granting the petition, it
shall declare therein that the decree of absolute nullity or decree of annulment shall
be issued by the court only after compliance with Article 50 and 51 of the Family
Code as implemented under the Rule on Liquidation, Partition and Distribution of
Properties.
(2) The parties, including the Solicitor General and the public prosecutor,
shall be served with copies of the decision personally or by registered mail. If
the respondent summoned by publication failed to appear in the action, the
dispositive part of the decision shall be published once in a newspaper of
general circulation.
(3) The decision becomes final upon the expiration of fifteen days from notice
to the parties. Entry of judgment shall be made if no motion for
reconsideration or new trial, or appeal Is filed by any of the parties the public
prosecutor, or the Solicitor General.
(4) Upon the finality of the decision, the court shall forthwith issue the
corresponding decree if the parties have no properties.
If the parties have properties, the court shall observe the procedure
prescribed in Section 21 of this Rule.
The entry of judgment shall be registered in the Civil Registry where the
marriage was recorded and In the Civil Registry where the Family Court'granting the
petition for declaration of absolute nullity or annulment of marriage is located.
Section 20. Appeal. (1) Pre-condition. - No appeal from the decision shall be allowed unless the
appellant has filed a motion for reconsideration or new trial within fifteen
days from notice of judgment.
(2) Notice of appeal. - An aggrieved party or the Solicitor General may appeal
from the decision by filing a Notice of Appeal within fifteen days from notice
of denial of the motion for reconsideration or new trial. The appellant shall
serve a copy of the notice of appeal on the adverse parties.
Section 21. Liquidation, partition and distribution, custody, support of common
children and delivery of their presumptive iegltimes. - Upon entry of the judgment
granting the petition, or, in case of appeal, upon receipt of the entry of judgment of
the appellate court granting the petition, the Family Court, on motion of either
party, shall proceed with the liquidation, partition and distribution of the properties
of the spouses, including custody, support of common children and delivery of their
presumptive legitimes pursuant to Articles 50 and 51 of the Family Code unless
such matters had been adjudicated in previous judicial proceedings.
Section 22. Issuance of Decree of Declaration of Absolute Nullity or Annulment of
Marriage." (a) The court shall issue the Decree after;

(1) Registration of the entry of judgment granting the petition for

declaration of nullity or annulment of marriage in the Civil Registry
where the marriage was celebrated and in the Civil Registry of the
place where the Family Court is located;
(2) Registration of the approved partition and distribution of the
properties of the spouses, in the proper Register of Deeds where the
real properties are located; and
(3) The delivery of the children's presumptive legitimes in cash,
property, or sound securities.
(b) The court shall quote in the Decree the dispositive portion of the
judgment entered and attach to the Decree the approved deed of partition.
Except in the case of children under Articles 36 and 53 of the Family Code,
the court shall order the Local Civil Registrar to issue an amended birth certificate
indicating the new civil status of the children affected.
Section 23. Registration and publication of the decree; decree as best evidence. (a) The prevailing party shall cause the registration of the Decree in the Civil
Registry where the marriage was registered, the Civil Registry of the place where
the Family Court is situated, and in the National Census and Statistics Office. He
shall report td the court compliance with this requirement within thirty days from
receipt of the copy of the Decree.
(b) In case service of summons was made by publication, the parties shall
cause the publication of the Decree once in a newspaper of general
circulation.
(c) The registered Decree shall be the best evidence to prove the declaration
of absolute nullity or annulment of marriage and shall serve as notice to third
persons concerning the properties of petitioner and respondent as well as the
properties or presumptive legitimes delivered to their common children.
Section 24. Effect of death of a party; duty of the Family Court or Appellate Court. (a) In case a party dies at any stage of the proceedings before the entry of
judgment, the court shall order the case closed and terminated, without prejudice to
the settlement of the estate in proper proceedings in the regular courts.
(b) If the party dies after the entry of judgment of nullity or annulment, the
judgment shall be binding upon the parties and their successors in interest in
the settlement of the estate in the regular courts.
Section 25. Effectlvity. - This Rule shall take effect on March 15, 2003 following its
publication in a newspaper of general circulation not later than March 7, 2003.

Universal Robina v. Lim, G.R. No. 154338, October 5, 2007

UNIVERSAL
CORPORATION,

ROBINA
Petitioner,

-versus-

G.R. No. 154338

Present:
PUNO, C.J., Chairperson,
SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.

ALBERT LIM, doing business

under
the
name
and
style
New
H-R Grocery,
Respondent.
Promulgated:
October 5, 2007
x-----------------------------------------------------------------------------------------x
DECISION

SANDOVAL-GUTIERREZ, J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the 1997
Rules of Civil Procedure, as amended, assailing the Resolutions dated January 16,
2002 and July 1, 2002 of the Court of Appeals in CA-G.R. SP No. 67368.

The
present
controversy
stemmed
from
a
contract
of
sale between Universal Robina
Corporation,
petitioner,
and
Albert
Lim,
respondent. Pursuant to the contract, petitioner sold to respondent grocery
products in the total amount of P808,059.88. After tendering partial payments,
respondent refused to settle his obligation despite petitioners repeated demands.
Thus, on May 31, 1999, petitioner filed with the Regional Trial Court, Branch
227, Quezon City, a complaint against respondent for a sum of money, docketed as
Civil Case No. Q-99-37791.[1]
On June 22, 1999, the trial court issued an Order dismissing the
complaint motu proprio on grounds of lack of jurisdiction and improper venue, thus:
The case is misplaced with respect to jurisdiction and
venue. There is not even a remote connection by the parties
to Quezon City, where this Regional Trial Court sits, the plaintiff
corporation has principal office at Pasig City and the defendant is, as
provided in the complaint, from Laoag City.
Wherefore, premises considered, this case is hereby DISMISSED
without prejudice for improper venue and for lack of jurisdiction. [2]
Accordingly, petitioner filed a motion for reconsideration together with an
amended complaint alleging that the parties agreed that the proper venue for any
dispute relative to the transaction is Quezon City.
In an Order dated October 11, 1999, the trial court granted the motion and
admitted petitioners amended complaint.
On December 6, 1999, summons was served upon respondent. For his failure
to file an answer seasonably and upon motion of petitioner, the trial court issued an
Order
dated September
12,
2000 declaring
him
[3]
in default and allowing petitioner to present its evidence ex parte.
However, on April 17, 2001, the trial court, still unsure whether venue was
properly laid, issued an Order directing petitioner to file a memorandum of
authorities on whether it can file a complaint in Quezon City.[4] Subsequently,
on May 11, 2001, the trial court again issued an Order dismissing the complaint on
the ground of improper venue, thus:
It appears that there is no connection whatsoever
between Quezon City and the parties. Plaintiffs official place of
business is inPasig whereas the defendants residence is stated to be
in Laoag City both stipulated in the Complaint. The filing is based on
the stipulation at the back of the delivery receipt that venue shall be in
Quezon City --- which is not even stated in the Complaint nor admitted
to have been signed by the defendant.

WHEREFORE, premises considered, venue is hereby declared to

have been improperly laid. This case is hereby dismissed without
prejudice to filing in the proper venue. [5]

Petitioner filed a motion for reconsideration but it was denied by the trial
court in its Resolution dated August 15, 2001.[6]
Petitioner then filed with the Court of Appeals a petition for review. But it
was dismissed due to petitioners failure to attach thereto an explanation
why copies of the petition were not served by personal service but by registered
mail, in violation of Section 11, Rule 14 of the 1997 Rules of Civil Procedure, as
amended.[7] Petitioner filed a motion for reconsideration but it was likewise denied
by the appellate court in a Resolution dated July 1, 2002, thus:
After a careful assessment of the petitioners motion for
reconsideration of the Resolution dated March 21, 2002 dismissing the
instant case for failure to comply with Section 11, Rule 14, this Court
finds the reasons therein alleged to be not well-taken.
Moreover, Supreme Court Circular No. 1-88 and Administrative
Circular No. 3-96, provide that subsequent compliance with the
requirements of a petition for review/certiorari shall not warrant
reconsideration of the order of dismissal unless the court is fully
satisfied that the non-compliance with the said requirements was not
in any way attributable to the party, despite due negligence on his
part, and that there are highly justifiable and compelling reasons for
the court to make such other disposition as it may deem just and
equitable.
We find such reasons wanting in the present case.
Besides, after a restudy of the facts, law and jurisprudence, as
well as the dispositions already contained in the assailed Resolutions of
public respondent, we find the present petition for certiorari to
be patently without merit, and the questions raised therein are
too unsubstantial to require consideration.
WHEREFORE, the motion for reconsideration is hereby DENIED
for utter lack of merit.[8]
Hence, this petition.
The fundamental issue being raised is whether the trial court may
dismiss motu proprio petitioners complaint on the ground of improper venue.
Sections 2 and 4, Rule 4 of the same Rules provide:

Sec. 2. Venue of personal actions. All other actions may be

commenced and tried where the plaintiff or any of the principal
plaintiffs resides, or where the defendant or any of the principal
defendants resides, or in the case of a non-resident defendant where
he may be found, at the election of the plaintiff.
Sec. 4. When Rule not applicable. This Rule shall not apply
(a)
In those cases where a specific rule or law provides
otherwise; or
(b)
Where the parties have validly agreed in writing
before the filing of the action on the exclusive venue thereof.
Clearly, in personal actions, the plaintiff may commence an action either in
the place of his or her residence or the place where the defendant resides. However,
the parties may agree to a specific venue which could be in a place where neither of
them resides.
Corollarily, Section 1, Rule 9 of the same Rules provides for the instances
when the trial court may motu proprio dismiss a claim, thus:
Section
1. Defenses
and
objections
not
pleaded.

Defenses and objections not pleaded either in a motion to dismiss or in

the answer are deemed waived. However, when it appears from the
pleadings or the evidence on record that the court has no jurisdiction
over the subject matter, that there is another action pending between
the same parties for the same cause, or that the action is barred by a
prior judgment or by statute of limitations, the court shall dismiss the
claim.
Implicit from the above provision is that improper venue not impleaded in the
motion to dismiss or in the answer is deemed waived. Thus, a court may not
dismiss an action motu proprio on the ground of improper venue as it is not one of
the grounds wherein the court may dismiss an action motu proprio on the basis of
the pleadings.
In Dacoycoy v. Intermediate Appellate Court,[9] this Court held that a trial
court may not motu proprio dismiss a complaint on the ground of improper venue,
thus:
Dismissing the complaint on the ground of improper venue is
certainly not the appropriate course of action at this stage of the
proceedings, particularly as venue, in inferior courts as well as in the
courts of first instance (now RTC), may be waived expressly or
impliedly. Where the defendant fails to challenge timely the venue in a
motion to dismiss as provided by Section 4 of Rule 4 of the Rules of
Court, and allows the trial to be held and a decision to be rendered, he

cannot on appeal or in a special action be permitted to belatedly

challenge the wrong venue, which is deemed waived.
Indeed, it was grossly erroneous for the trial court to have
taken a procedural short-cut by dismissing motu proprio the complaint
on the ground of improper venue without first allowing the procedure
outlined in the rules of court to take its proper course. Although we are
for the speedy and expeditious resolution of cases, justice and fairness
take primary importance. The ends of justice require that respondent
trial court faithfully adhere to the rules of procedure to afford not only
the defendant, but the plaintiff as well, the right to be heard on his
cause.
In Rudolf Lietz Holdings Inc. v. Registry of Deeds of Paraaque,[10] the Court
likewise held that a trial court may not motu proprio dismiss a complaint on the
ground of improper venue, thus:
Rule 9, Section 1 of the 1997 Rules of Civil Procedure states that
defenses and objections not pleaded either in a motion to dismiss or in
the answer are deemed waived. The court may only dismiss an
action motu proprio in case of lack of jurisdiction over the
subject
matter, litis
pendentia,
res
judicata and
prescription. Therefore, the trial court in this case erred when
it dismissed the petition motu proprio. It should have waited
for a motion to dismiss or a responsive pleading from
respondent, raising the objection or affirmative defense of
improper venue, before dismissing the petition.
In the instant case, respondent, despite proper service of summons, failed to
file an answer and was thus declared in default by the trial court. Verily, having
been declared in default, he lost his standing in court and his right to adduce
evidence and present his defense,[11] including his right to question the propriety of
the venue of the action.
WHEREFORE, the Petition for Review is GRANTED. The assailed Resolutions
of the Court of Appeals in CA-G.R. SP No. 67368 are REVERSED. The Regional Trial
Court, Branch 227, Quezon City is ordered to REINSTATE Civil Case No. Q-9937791 and conduct an ex parte hearing for the reception of petitioners evidence
and dispose of the case with dispatch.
SO ORDERED.

ANGELINA SANDOVAL-GUTIERREZ
Associate Justice

No legal capacity to sue

Evangelista v. Santiago, G.R. No. 157447, April 29, 2005
SECOND DIVISION

[G.R. No. 157447. April 29, 2005]

NEMENCIO C. EVANGELISTA, PASCUAL G. QUINTO, LUIS B. BUENA, EUSEBIA
V. TABLADA, CANUTO G. TISBE, DAVID R. CARULLO, SOFONIAS E.
COLEGADO, FELIX B. BUENA, TORIBIO C. EVANGELISTA, LEBRADA A.
NICOLAS, ALECIA J. RAMOS, MILA G. DE LOS REYES, SALVADOR I. DE
LA TORRE, MOISES CRUZ, RUFINO INFANTE, ALICIA ASTROLOGO,
TRINIDAD LUMIQUED, LUZMINIDA QUINIQUINI, & TEODORA C.
TEMERAS, petitioners, vs. CARMELINO M. SANTIAGO, respondent.
DECISION
CHICO-NAZARIO, J.:
In this Petition for Review under Rule 45 of the Rules of Court, petitioners pray
for the reversal of the Decision of the Court of Appeals in CA-G.R. CV No. 64957,
[1]
affirming the Order of the Regional Trial Court (RTC) of San Mateo, Rizal, Branch
77, in Civil Case No. 1220,[2]dismissing petitioners Complaint for declaration of
nullity of Original Certificate of Title (OCT) No. 670 and all other titles emanating
therefrom.
In their Complaint, petitioners alleged that they occupied and possessed parcels
of land, located in Sitio Panayawan, Barangay San Rafael, Montalban (now
Rodriquez), Province of Rizal (Subject Property), by virtue of several Deeds of
Assignment, dated 15 April 1994 and 02 June 1994, executed by a certain Ismael
Favila y Rodriguez.[3]
According to the Deeds of Assignment, the Subject Property was part of a vast
tract of land called Hacienda Quibiga, which extended to Paraaque, Las Pias,
Muntinlupa, Cavite, Batangas, Pasay, Taguig, Makati, Pasig, Mandaluyong, Quezon
City, Caloocan, Bulacan, and Rizal; awarded to Don Hermogenes Rodriguez by the
Queen of Spain and evidenced by a Spanish title. Ismael Favila claimed to be one of
the heirs and successors-in-interest of Don Hermogenes Rodriguez. Acting as
Attorney-in-Fact pursuant to a Special Power of Attorney executed by his mga
kapatid on 25 February 1965, Ismael Favila signed the aforementioned Deeds of
Assignment, assigning portions of the Subject Property to the petitioners, each
portion measuring around 500 to 1,000 square meters, in exchange for the labor
and work done on the Subject Property by the petitioners and their predecessors. [4]
Petitioners came by information that respondent was planning to evict them
from the Subject Property. Two of the petitioners had actually received notices to

vacate. Their investigations revealed that the Subject Property was included in
Transfer Certificates of Titles (TCTs) No. 53028, No. 281660, No. N-39258 and No.
205270, all originating from OCT No. 670, and now in the name of respondent. [5]
OCT No. 670 was issued in the name of respondents mother, Isabel Manahan y
Francisco, and three other individuals, pursuant to Decree No. 10248, dated 13
February 1913, in Case No. 8502 of the Court of Land Registration of the Philippine
Islands. The whole property covered by OCT No. 670 was subsequently adjudicated
in favor of Isabel Manahan Santiago (formerly Isabel Manahan y Francisco).
Consequently, OCT No. 670 was cancelled and TCT No. T-53028 was issued
exclusively in the name of Isabel Manahan Santiago. On 28 December 1968, Isabel
Manahan Santiago executed a Deed of Donation transferring the property to her
son, respondent herein, who subsequently secured TCTs No. 281660, No. N-39258
and No. 205270 in his own name.[6]
Petitioners filed with the trial court, on 29 April 1996, an action for declaration of
nullity of respondents certificates of title on the basis that OCT No. 670 was fake
and spurious. Among the defects of OCT No. 670 pointed out by petitioners were
that: (1) OCT No. 670 was not signed by a duly authorized officer; (2) Material data
therein were merely handwritten and in different penmanships; (3) OCT No. 670 was
not printed on the Official Form used in 1913, the year it was issued; (4) It failed to
indicate the Survey Plan which was the basis of the Technical Description of the
property covered by the title; (5) Decree No. 10248 referred to in OCT No. 670 was
issued only on 11 April 1913, while OCT No. 670 was issued earlier, on 13 February
1913; and (6) Decree No. 10248 was issued over a property other than the one
described in OCT No. 670, although also located in the Province of Rizal. [7]
Respondent filed his Answer with Prayer for Preliminary Hearing on the
Affirmative Defenses on 03 July 1996. According to respondent, [t]he allegations in
the Complaint would readily and patently show that the same are flimsy, fabricated,
malicious, without basis in law and in fact [8]
As an affirmative defense, respondent claimed that the petitioners had no legal
capacity to file the Complaint, and thus, the Complaint stated no cause of action.
Since OCT No. 670 was genuine and authentic on its face, then OCT No. 670 and all
of respondents land titles derived therefrom, are incontrovertible, indefeasible and
conclusive against the petitioners and the whole world. [9]
Citing the consolidated cases of Director of Forestry, et al. v. Hon. Emmanuel M.
Muoz, et al. and Pinagcamaligan Indo-Agro Development Corporation v. Hon.
Macario Peralta, Jr., et al., [10] respondent argued that the Spanish title, on which
petitioners based their claim, was neither indefeasible nor imprescriptible.
Moreover, Presidential Decree (P.D.) No. 892, which took effect on 16 February 1976,
required all holders of Spanish titles or grants to apply for registration of their lands
under Republic Act No. 496, otherwise known as the Land Registration Act, [11] within
six months from effectivity of the decree. After the given period, Spanish titles
could no longer be used as evidence of land ownership in any registration
proceedings under the Torrens System. [12]
Respondent also raised the affirmative defense of prescription. He pointed out
that any action against his certificates of title already prescribed, especially with
regard to OCT No. 670, which was issued in 1913 or more than 83 years prior to the
filing of the Complaint by the petitioners. At the very least, respondent contended,

it must be presumed that the questioned land titles were issued by the public
officials concerned in the performance of their regular duties and functions pursuant
to the law.[13]
Even assuming arguendo that the petitioners entered and occupied the Subject
Property, they did so as mere intruders, squatters and illegal occupants, bereft of
any right or interest, since the Subject Property was already covered by Torrens
certificates of title in the name of respondent and his predecessors-in-interest. [14]
Lastly, respondent denied knowing the petitioners, much less, threatening to
evict them. In fact, petitioners were not included as defendants in Civil Case No.
783 entitled, Carmelino M. Santiago v. Remigio San Pascual, et al., which
respondent instituted before the same trial court against squatters occupying the
Subject Property. In its decision, dated 01 July 1992, the trial court held that there
is no doubt that the plaintiff (respondent herein) is the owner of the land involved in
this case on which the defendants have built their houses and shanties Although
the decision in Civil Case No. 783 was appealed to the Court of Appeals, it had
become final and executory for failure of the defendants-appellants therein to file
their appellants brief.[15]
In the instant case, the trial court held a preliminary hearing on the affirmative
defenses as prayed for by the respondent. During said hearing, petitioners
presented their lone witness, Engineer Placido Naval, a supposed expert on land
registration laws. In response to questions from Honorable Judge Francisco C.
Rodriguez of the trial court, Engineer Naval answered that a parcel of land titled
illegally would revert to the State if the Torrens title was cancelled, and that it was
the State, through the Office of the Solicitor General, that should file for the
annulment or cancellation of the title. Respondent, on the other hand, did not
present any evidence but relied on all the pleadings and documents he had so far
submitted to the trial court.[16]
After the preliminary hearing, the trial court issued the questioned Order, dated
05 February 1999, dismissing petitioners Complaint. Pertinent portions of the
Order of the trial court read:
After considering the testimonial and documentary evidence presented, this Court is
inclined not to grant plaintiffs (sic) prayer. Finding credence and giving weight to
plaintiffs (sic) lone but expert witness, it is crystal clear that, to quote:
1.

a parcel of land titled illegally will revert to the State

2.

it is the State who must file the corresponding case of annulment

of title through the Office of the Solicitor General, and

3.

a land illegally titled in the name of private individual, the State

through the Office of the Solicitor General should file the
corresponding case for cancellation of title. (TSN August 26,
1997).

The above quoted testimony is straight from horse (sic) mouth so to speak as this
was the testimony of the plaintiffs (sic) expert witness. And judging from the said

testimony alone aforecited, plaintiffs (sic) cause [of action] is bound to fail.
Plaintiffs (sic) own testimony wrote finis to their case. From the record, this
case was initiated and filed by private individuals, Nemencio Evangelista, et. al.,
contradicting their witness (sic) testimony. To reiterate, this Court finds credence to
the testimony of the plaintiffs (sic) witness, i.e., is (sic) the State through the Office
of the Solicitor General who must initiate and file a case of this nature when title to
a land is being claimed to be obtained through fraud and allegedly spurious.
The opinion of this Court anent the testimony of the witness is not without basis.
Explicit is the pronouncement of the Supreme Court in the recent case of Heirs of
Marciano Nagano v. Court of Appeals, to wit:
An action for reversion has to be instituted by the Solicitor General pursuant to
Section 101, Commonwealth Act No. 141. (282 SCRA 43).
As to the documentary evidence, having gone through with the Deed of
Assignment/s purportedly executed by and between a certain Ismael Favila y
Rodriguez and the plaintiffs, which is the principal if not the only basis of plaintiffs
claim ownership and possession of the subject parcel of land, the same does not
hold water in a manner of speaking, for being self-serving. Assignor Ismael Favila y
Rodriguez claimed in said Deed that he is the Attorney-in-Fact by virtue of an
alleged Special Power of Attorney executed in his favor by his mga kapatid on
February 23, 1965, but said Special Power of Attorney was not presented before this
Court, thus there arises a doubt as to its existence and execution not to mention
doubt on the existence of his mga kapatid who as alleged executed said Special
Power Attorney (sic) in his favor.
Even if this Court granting arguendo would admit the authenticity of said Deeds of
Assignment/s, that will not alter the outcome of the pending incident/s before this
Court. Why? Because the said Deed of Assignment/s which were based on
Spanish title have lost their evidentiary value pursuant to the Presidential Decree
No. 892 i.e. DISCONTINUANCE OF THE SPANISH MORTGAGE SYSTEM OF
REGISTRATION AND OF THE USE OF SPANISH TITLES AS EVIDENCE IN LAND
REGISTRATION PROCEEDINGS.

There is no need to elaborate on the above-cited provisions of PD 892 as they are

self-explanatory. Suffice it to say that there is no showing, that plaintiffs complied
with the said law i.e. to apply for registration of their lands under Act No. 496,
otherwise known as the Land Registration Act, within six (6) months from the
effectivity of this decree (February 16, 1976). Thereafter, Spanish titles cannot be
used as evidence of land ownership in any registration proceedings under the
Torrens System.
This being the case and likewise being clear that plaintiffs were not the lawful
owners of the land subject of this case, for they did not comply with PD 892, the
said plaintiffs do not have the legal standing to bring before this Court the instant
complaint

Moreover, the principal issue in this case is for the declaration of nullity of
defendants title, which has nothing to do with plaintiffs (sic) claim of ownership and
possession even if we set aside, albeit momentarily, the truth that plaintiffs (sic)
claim were based on barred Spanish Title/s, and thus plaintiffs were never the
owners of the parcel of land subject of this case.
Further, defendants (sic) title especially so with the mother title OCT 670 was
entered and issued in 1913 or more than Eighty Three (83) years ago, the same not
having been questioned by any party. Only now that it is being questioned, but sad
to say, plaintiffs who are on the offensive and relying on their lone expert witness,
instead of bolstering their case, unwittingly sealed their fate [17]
After the trial court denied petitioners Motion for Reconsideration in its Order,
dated 20 July 1999,[18] petitioners appealed both Orders of the trial court to the
Court of Appeals.
The Court of Appeals, in its Decision, dated 29 July 2002, [19] affirmed the Order
of the trial court, dated 05 February 1999, dismissing petitioners Complaint. The
Court of Appeals denied petitioners Motion for Reconsideration in its Resolution,
dated 14 February 2003.[20]
Thus, petitioners filed this Petition for Review [21] under Rule 45 of the Rules of
Court, raising the following issues and praying for the reversal of the
aforementioned Decision of the Court of Appeals affirming the Order of dismissal of
the trial court:
I.

Whether the lower courts dismissal of the petitioners complaint should be

proscribed by the rules of evidence it being based inter alia on Engr. Navals
testimony, which was indisputably not based on facts but conclusion of law.

II.

Whether the lower courts dismissal of petitioners complaint should be

proscribed by the rules of evidence it being done sans ample evidence
except bare allegations of respondent.

III.

Whether the provision of P.D. 892, i.e., Spanish titles cannot be used as
evidence of land ownership in any registration proceedings under the
Torrens system, holds of an exception.

IV. Whether an action for quieting of title, specifically where petitioners are in
possession of subject land, can be subject of prescription.
In his Comment,[22] the respondent, for the most part, reiterated the findings of
the trial court and the Court of Appeals.
The Court believes that the trial court rightfully dismissed petitioners
Complaint, but for reasons different from those relied upon by the trial court and the
Court of Appeals.
According to the respondent, petitioners had no legal capacity to file the
Complaint, and thus, the Complaint filed before the trial court stated no cause of
action.

Before anything else, it should be clarified that the plaintiff has no legal
capacity to sue[23] and the pleading asserting the claim states no cause of
action[24] are two different grounds for a motion to dismiss or are two different
affirmative defenses. Failure to distinguish between the lack of legal capacity to
sue from the lack of personality to sue is a fairly common mistake. The
difference between the two is explained by this Court in Columbia Pictures, Inc. v.
Court of Appeals:[25]
Among the grounds for a motion to dismiss under the Rules of Court are lack of
legal capacity to sue and that the complaint states no cause of action. Lack of legal
capacity to sue means that the plaintiff is not in the exercise of his civil rights, or
does not have the necessary qualification to appear in the case, or does not have
the character or representation he claims. On the other hand, a case is dismissible
for lack of personality to sue upon proof that the plaintiff is not the real party-ininterest, hence grounded on failure to state a cause of action. The term "lack of
capacity to sue" should not be confused with the term "lack of personality to sue."
While the former refers to a plaintiffs general disability to sue, such as on account
of minority, insanity, incompetence, lack of juridical personality or any other general
disqualifications of a party, the latter refers to the fact that the plaintiff is not the
real party- in-interest. Correspondingly, the first can be a ground for a motion to
dismiss based on the ground of lack of legal capacity to sue; whereas the second
can be used as a ground for a motion to dismiss based on the fact that the
complaint, on the face thereof, evidently states no cause of action.
In the present case, this Court may assume that the respondent is raising the
affirmative defense that the Complaint filed by the petitioners before the trial court
stated no cause of action because the petitioners lacked the personality to sue, not
being the real party-in-interest. It is the respondents contention that only the State
can file an action for annulment of his certificates of title, since such an action will
result in the reversion of the ownership of the Subject Property to the State.
The affirmative defense that the Complaint stated no cause of action, similar to
a motion to dismiss based on the same ground, requires a hypothetical
admission of the facts alleged in the Complaint. In the case of Garcon v.
Redemptorist Fathers,[26] this Court laid down the rules as far as this ground for
dismissal of an action or affirmative defense is concerned:
It is already well-settled by now that, in a motion to dismiss a complaint based on
lack of cause of action, the question submitted to the court for determination is the
sufficiency of the allegations of fact made in the complaint to constitute a cause of
action, and not on whether these allegations of fact are true, for said motion must
hypothetically admit the truth of the facts alleged in the complaint; that the test of
the sufficiency of the facts alleged in the complaint is whether or not, admitting the
facts alleged, the court could render a valid judgment upon the same in accordance
with the prayer of said complaint. Stated otherwise, the insufficiency of the cause
of action must appear in the face of the complaint in order to sustain a dismissal on
this ground, for in the determination of whether or not a complaint states a cause of
action, only the facts alleged therein and no other matter may be considered, and
the court may not inquire into the truth of the allegations, and find them to be false
before a hearing is had on the merits of the case; and it is improper to inject in the

allegations of the complaint facts not alleged or proved, and use these as basis for
said motion.
In resolving whether or not the Complaint in the present case stated a cause of
action, the trial court should have limited itself to examining the sufficiency of the
allegations in the Complaint. It was proscribed from inquiring into the truth of the
allegations in the Complaint or the authenticity of any of the documents referred or
attached to the Complaint, since these are deemed hypothetically admitted by the
respondent. The trial court evidently erred in making findings as to the authenticity
of the Deeds of Assignment executed by Ismael Favila in favor of petitioners on 15
April 1994 and 02 June 1994; and questioning the existence and execution of the
Special Power of Attorney in favor of said Ismael Favila by his siblings on 25
February 1965. These matters may only be resolved after a proper trial on the
merits.
Petitioners alleged in their Complaint, and respondent hypothetically admitted
that: (1) Petitioners predecessors-in-interest, in the concept of owners, had been in
actual, physical, open, continuous and adverse possession of the Subject Property
against the whole world since time immemorial; (2) The Subject Property was part
of the vast tract of land called Hacienda Quibiga awarded to Don Hermogenes
Rodriguez by the Queen of Spain by virtue of a Spanish title; (3) Ismael Favila, an
heir and successor-in-interest of Don Hermogenes Rodriguez, acting as Attorney-inFact pursuant to a Special Power of Attorney executed by his mga kapatid on 25
February 1965, executed Deeds of Assignment covering the Subject Property in
favor of petitioners; (4) Petitioners still occupied and possessed the Subject
Property, on which their houses were erected, when they discovered that the
Subject Property was already covered by Torrens certificates of title in the name of
respondent; and (5) That petitioners filed the Complaint to prevent their eviction by
the respondent. To determine whether these allegations are sufficient to constitute
a cause of action, it is important for this Court to establish first the nature of
petitioners action.
Indeed, petitioners Complaint filed before the trial court was captioned as an
action for declaration of nullity of respondents certificates of title. However, the
caption of the pleading should not be the governing factor, but rather the
allegations therein should determine the nature of the action, because even without
the prayer for a specific remedy, the courts may nevertheless grant the proper relief
as may be warranted by the facts alleged in the Complaint and the evidence
introduced.[27]
The trial court believed that petitioners action was ultimately one for reversion
of the Subject Property to the public domain. Based on the testimony of Engineer
Naval and the case of Nagao v. Court of Appeals,[28] it declared that the State,
represented by the Office of the Solicitor General, is the party-in-interest in an
action for cancellation of a certificate of title illegally issued in the name of a private
individual, because the eventual effect of such cancellation is the reversion of the
property to the State.
The Court disagrees in this pronouncement of the trial court, and calls for a far
closer review of its decision in Nagao v. Court of Appeals,[29] wherein the Court held
that

It is then clear from the allegations in the complaint that private respondents claim
ownership of the 2,250 square meter portion for having possessed it in the concept
of an owner, openly, peacefully, publicly, continuously and adversely since 1920.
This claim is an assertion that the lot is private land, or that even assuming it was
part of the public domain, private respondents had already acquired imperfect title
thereto under Section 48(b) of C.A. No. 141, otherwise known as the Public Land
Act, as amended by R.A. No. 1942
Under Section 48, a subject lot is, for all legal intents and purposes, segregated
from the public domain, because the beneficiary is conclusively presumed to have
performed all the conditions essential to a Government grant and shall be entitled
to a certificate of title under the provisions of this chapter.
Consequently, merely on the basis of the allegations in the complaint, the lot in
question is apparently beyond the jurisdiction of the Director of the Bureau of Lands
and could not be the subject of a Free Patent. Hence, dismissal of private
respondents complaint was premature and trial on the merits should have been
conducted to thresh out evidentiary matters.
It would have been entirely different if the action were clearly for reversion, in which
case, it would have to be instituted by the Solicitor General pursuant to Section 101
of C.A. No. 141, which provides:
Sec. 101. All actions for the reversion to the Government of lands of the public
domain or improvements thereon shall be instituted by the Solicitor General or the
officer acting in his stead, in the proper courts, in the name of the [Republic] of the
Philippines.
In the more recent case of Heirs of Ambrocio Kionisala v. Heirs of Honorio Dacut,
the difference between an action for declaration of nullity of land titles from an
action for reversion was more thoroughly discussed as follows:
[30]

An ordinary civil action for declaration of nullity of free patents and certificates of
title is not the same as an action for reversion. The difference between them lies in
the allegations as to the character of ownership of the realty whose title is sought to
be nullified. In an action for reversion, the pertinent allegations in the complaint
would admit State ownership of the disputed land. Hence, in Gabila vs. Barriga [41
SCRA 131], where the plaintiff in his complaint admits that he has no right to
demand the cancellation or amendment of the defendants title because even if the
title were canceled or amended the ownership of the land embraced therein or of
the portion affected by the amendment would revert to the public domain, we ruled
that the action was for reversion and that the only person or entity entitled to relief
would be the Director of Lands.
On the other hand, a cause of action for declaration of nullity of free patent and
certificate of title would require allegations of the plaintiffs ownership of the
contested lot prior to the issuance of such free patent and certificate of title as well
as the defendants fraud or mistake, as the case may be, in successfully obtaining
these documents of title over the parcel of land claimed by plaintiff. In such a case,
the nullity arises strictly not from the fraud or deceit but from the fact that the land

is beyond the jurisdiction of the Bureau of Lands to bestow and whatever patent or
certificate of title obtained therefore is consequently void ab initio. The real partyin-interest is not the State but the plaintiff who alleges a pre-existing right of
ownership over the parcel of land in question even before the grant of title to the
defendant
In their Complaint, petitioners never alleged that the Subject Property was part
of the public domain. On the contrary, petitioners asserted title over the Subject
Property by virtue of their actual, physical, open, continuous and adverse
possession thereof, in the concept of owners, by themselves and through their
predecessors-in-interest, since time immemorial. The Deeds of Assignment
executed in their favor and attached to their Complaint referred to a Spanish title
granted by the Queen of Spain to their predecessor-in-interest, Don Hermogenes
Rodriguez. Clearly, petitioners are asserting private title over the Subject Property,
and consequently, their action could not be one for reversion.
In their instant Petition, petitioners further averred that rather than an action for
nullity of respondents certificates of title, theirs was more appropriately an action
to remove a cloud on or to quiet their title over the Subject Property.
Article 476 of the Civil Code, on removal of a cloud on or quieting of title,
provides that:
Art. 476. Whenever there is a cloud on title to real property or any interest therein,
by reason of any instrument, record, claim, encumbrance or proceeding which is
apparently valid or effective but is in truth and in fact invalid, ineffective, voidable,
or unenforceable, and may be prejudicial to said title, an action may be brought to
remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real
property or any interest therein.
Respondents certificates of title over the Subject Property appeared valid or
effective; but according to the petitioners, they were fake, spurious and/or
fraudulent, and a cloud on their title to the same property that needed to be
removed. A cloud on title has been defined as follows:
Cloud on Title. A cloud on title is an outstanding instrument, record, claim,
encumbrance or proceeding which is actually invalid or inoperative, but which may
nevertheless impair or affect injuriously the title to property. The matter
complained of must have a prima facie appearance of validity or legal efficacy. The
cloud on title is a semblance of title which appears in some legal form but which is
in fact unfounded. The invalidity or inoperativeness of the instrument is not
apparent on the face of such instrument, and it has to be proved by extrinsic
evidence[31]
Even as this Court agrees with the petitioners that their action was one for
removal of a cloud on or quieting of title, it does arrive at the same conclusion as
the trial court and the Court of Appeals that petitioners had no personality to file the
said action, not being the parties-in-interest, and their Complaint should be
dismissed for not stating a cause of action.

According to Article 477 of the Civil Code, the plaintiff, in an action to remove a
cloud on or to quiet title, must have legal or equitable title to, or interest in, the real
property which is the subject matter of the action. [32] Petitioners failed to establish in
their Complaint that they had any legal or equitable title to, or legitimate interest in,
the Subject Property so as to justify their right to file an action to remove a cloud on
or to quiet title.
Title to real property refers to that upon which ownership is based. It is the
evidence of the right of the owner or the extent of his interest, by which means he
can maintain control and, as a rule, assert right to exclusive possession and
enjoyment of the property.[33]
In their Complaint, petitioners claimed title to the Subject Property by virtue of
their actual and continuous possession of the same since time immemorial, by
themselves and through their predecessors-in-interest. Yet, the Deeds of
Assignment executed by Ismael Favila in their favor, attached to and an integral
part of their Complaint, revealed that petitioners predecessors-in-interest based
their right to the Subject Property on the Spanish title awarded to Don Hermogenes
Rodriguez.
There existed a contradiction when petitioners based their claim of title to the
Subject Property on their possession thereof since time immemorial, and at the
same time, on the Spanish title granted to Don Hermogenes Rodriguez. Possession
since time immemorial carried the presumption that the land had never been part
of the public domain or that it had been private property even before the
Spanish conquest.[34] If the Subject Property was already private property before
the Spanish conquest, then it would have been beyond the power of the Queen of
Spain to award or grant to anyone.
The title to and possession of the Subject Property by petitioners predecessorsin-interest could be traced only as far back as the Spanish title of Don Hermogenes
Rodriguez. Petitioners, having acquired portions of the Subject Property by
assignment, could acquire no better title to the said portions than their
predecessors-in-interest, and hence, their title can only be based on the same
Spanish title.
Respondent maintained that P.D. No. 892 prevents petitioners from invoking the
Spanish title as basis of their ownership of the Subject Property. P.D. No. 892
strengthens the Torrens system by discontinuing the system of registration under
the Spanish Mortgage Law, and by categorically declaring all lands recorded under
the latter system, not yet covered by Torrens title, unregistered lands. It further
provides that within six months from its effectivity, all holders of Spanish titles or
grants should apply for registration of their land under what is now P.D. No. 1529,
otherwise known as the Land Registration Decree. Thereafter, Spanish titles can no
longer be used as evidence of land ownership in any registration proceedings under
the Torrens system. [35] Indubitably, P.D. No. 892 divests the Spanish titles of any
legal force and effect in establishing ownership over real property.
P.D. No. 892 became effective on 16 February 1976. The successors of Don
Hermogenes Rodriguez had only until 14 August 1976 to apply for a Torrens title in
their name covering the Subject Property. In the absence of an allegation in
petitioners Complaint that petitioners predecessors-in-interest complied with P.D.
No. 892, then it could be assumed that they failed to do so. Since they failed to

comply with P.D. No. 892, then the successors of Don Hermogenes Rodriguez were
already enjoined from presenting the Spanish title as proof of their ownership of the
Subject Property in registration proceedings.
Registration proceedings under the Torrens system do not create or vest title,
but only confirm and record title already created and vested. [36] By virtue of P.D. No.
892, the courts, in registration proceedings under the Torrens system, are precluded
from accepting, confirming and recording a Spanish title. Reason therefore dictates
that courts, likewise, are prevented from accepting and indirectly confirming such
Spanish title in some other form of action brought before them (i.e., removal of
cloud on or quieting of title), only short of ordering its recording or registration. To
rule otherwise would open the doors to the circumvention of P.D. No. 892, and give
rise to the existence of land titles, recognized and affirmed by the courts, but would
never be recorded under the Torrens system of registration. This would definitely
undermine the Torrens system and cause confusion and instability in property
ownership that P.D. No. 892 intended to eliminate.
Petitioners argued that the Spanish title may still be presented as proof of
ownership on the basis of the exception provided in the fourth whereas clause of
P.D. No. 892, which reads:
WHEREAS, Spanish titles to lands which have not yet been brought under the
operation of the Torrens system, being subject to prescription, are now ineffective to
prove ownership unless accompanied by proof of actual possession; . . .
Since Petitioners alleged that they were in actual possession of the Subject
Property, then they could still present the Spanish title as evidence of their
ownership of the Subject Property. [37]
This Court cannot sustain petitioners argument. Actual proof of possession only
becomes necessary because, as the same whereas clause points out, Spanish titles
are subject to prescription. A holder of a Spanish title may still lose his ownership of
the real property to the occupant who actually possesses the same for the required
prescriptive period.[38] Because of this inherent weakness of a Spanish title, the
applicant for registration of his Spanish title under the Torrens system must also
submit proof that he is in actual possession of the real property, so as to discount
the possibility that someone else has acquired a better title to the same property by
virtue of prescription.
Moreover, legislative intent must be ascertained from a consideration of the
statute as a whole, and not just a particular provision alone. A word or phrase taken
in the abstract may easily convey a meaning quite different from the one actually
intended and evident when the word or phrase is considered with those with which
it is associated. An apparently general provision may have a limited application if
read together with other provisions of the statute. [39]
The fourth whereas clause of P.D. No. 892 should be interpreted and harmonized
with the other provisions of the whole statute. [40] Note that the tenor of the whole
presidential decree is to discontinue the use of Spanish titles and to strip them of
any probative value as evidence of ownership. It had clearly set a deadline for the
filing of applications for registration of all Spanish titles under the Torrens system
(i.e., six months from its effectivity or on 14 August 1976), after which, the Spanish
titles may no longer be presented to prove ownership.

All holders of Spanish titles should have filed applications for registration of their
title on or before 14 August 1976. In a land registration proceeding, the applicant
should present to the court his Spanish title plus proof of actual possession of the
real property. However, if such land registration proceeding was filed and initiated
after 14 August 1976, the applicant could no longer present his Spanish title to the
court to evidence his ownership of the real property, regardless of whether the real
property was in his actual possession.
Therefore, the fact that petitioners were in actual possession of the Subject
Property when they filed the Complaint with the trial court on 29 April 1996 does
not exclude them from the application of P.D. No. 892, and their Spanish title remain
inadmissible as evidence of their ownership of the Subject Property, whether in a
land registration proceeding or in an action to remove a cloud on or to quiet title.
The preceding discussion does not bar holders of Spanish titles from claiming
ownership of the real property on some other basis, such as those provided in either
the Land Registration Decree [41] or the Public Land Act.[42] Petitioners though failed to
allege any other basis for their titles in their Complaint aside from possession of the
Subject Property from time immemorial, which this Court has already controverted;
and the Spanish title, which is already ineffective to prove ownership over the
Subject Property.
Therefore, without legal or equitable title to the Subject Property, the petitioners
lacked the personality to file an action for removal of a cloud on, or quieting of, title
and their Complaint was properly dismissed for failing to state a cause of action. In
view of the dismissal of the case on this ground, it is already unnecessary for this
Court to address the issue of prescription of the action.
Wherefore, this Court DENIES the instant petition and AFFIRMS the Decision of
the Court of Appeals, dated 29 July 2002, and the Order of the Regional Trial Court
of San Mateo, Rizal, Branch 77, dated 05 February 1999, dismissing petitioners
Complaint for failure to state a cause of action.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.

B. Van Zuiden v. GTVL Manufacturing, G.R. No. 147905, May 28,

2007

SECOND DIVISION

B. VAN ZUIDEN BROS., LTD.,

Petitioner,

G.R. No. 147905

Present:
QUISUMBING, J.,
Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

-versus-

GTVL MANUFACTURING
Promulgated:
INDUSTRIES, INC.,
Respondent.
May 28, 2007
x-----------------------------------------------------------------------------------------x
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review [1] of the 18 April 2001 Decision[2] of
the Court of Appeals in CA-G.R. CV No. 66236. The Court of Appeals affirmed the
Order[3] of the Regional Trial Court, Branch 258, Paraaque City (trial court)
dismissing the complaint for sum of money filed by B. Van Zuiden Bros., Ltd.
(petitioner) against GTVL Manufacturing Industries, Inc. (respondent).
The Facts
On 13 July 1999, petitioner filed a complaint for sum of money against
respondent, docketed as Civil Case No. 99-0249. The pertinent portions of the
complaint read:
1.
Plaintiff, ZUIDEN, is a corporation, incorporated under the laws
of Hong Kong. x x x ZUIDEN is not engaged in business in
thePhilippines, but is suing before the Philippine Courts, for the reasons
hereinafter stated.
xxxx
3. ZUIDEN is engaged in the importation and exportation of several
products, including lace products.

4.
On several occasions, GTVL purchased lace products from
[ZUIDEN].
5.
The procedure for these purchases, as per the instructions of
GTVL, was that ZUIDEN delivers the products purchased by GTVL, to a
certain Hong Kong corporation, known as Kenzar Ltd. (KENZAR),
x x x and the products are then considered as sold, upon receipt by
KENZAR of the goods purchased by GTVL.
KENZAR had the obligation to deliver the products to
the Philippines and/or to follow whatever instructions GTVL had on the
matter.
Insofar as ZUIDEN is concerned, upon delivery of the goods to
KENZAR in Hong Kong, the transaction is concluded; and GTVL became
obligated to pay the agreed purchase price.
xxxx
7.
However, commencing October 31, 1994 up to the present,
GTVL has failed and refused to pay the agreed purchase price for
several deliveries ordered by it and delivered by ZUIDEN, as abovementioned.
xxxx
9.
In spite [sic] of said demands and in spite [sic] of promises to
pay and/or admissions of liability, GTVL has failed and refused, and
continues to fail and refuse, to pay the overdue amount of U.S.
$32,088.02 [inclusive of interest]. [4]
Instead of filing an answer, respondent filed a Motion to Dismiss[5] on the
ground that petitioner has no legal capacity to sue. Respondent alleged that
petitioner is doing business in the Philippines without securing the required license.
Accordingly, petitioner cannot sue before Philippine courts.
After an exchange of several pleadings [6] between the parties, the trial court
issued an Order on 10 November 1999 dismissing the complaint.
On appeal, the Court of Appeals sustained the trial courts dismissal of the
complaint.
Hence, this petition.
The Court of Appeals Ruling
In affirming the dismissal of the complaint, the Court of Appeals relied
on Eriks Pte., Ltd. v. Court of Appeals. [7] In that case,Eriks, an unlicensed foreign
corporation, sought to collect US$41,939.63 from a Filipino businessman for goods

which he purchased and received on several occasions from January to May 1989.
The transfers of goods took place in Singapore, for the Filipinos account, F.O.B.
Singapore, with a 90-day credit term. Since the transactions involved were not
isolated, this Court foundEriks to be doing business in the Philippines. Hence, this
Court upheld the dismissal of the complaint on the ground that Eriks has no
capacity to sue.
The Court of Appeals noted that in Eriks, while the deliveries of the goods
were perfected in Singapore, this Court still foundEriks to be engaged in business in
the Philippines. Thus, the Court of Appeals concluded that the place of delivery of
the goods (or the place where the transaction took place) is not material in
determining whether a foreign corporation is doing business in the Philippines. The
Court of Appeals held that what is material are the proponents to the transaction, as
well as the parties to be benefited and obligated by the transaction.
In this case, the Court of Appeals found that the parties entered into a
contract of sale whereby petitioner sold lace products to respondent in a series of
transactions. While petitioner delivered the goods in Hong Kong to Kenzar, Ltd.
(Kenzar), another Hong Kong company, the party with whom petitioner transacted
was actually respondent, a Philippine corporation, and not Kenzar. The Court of
Appeals believed Kenzar is merely a shipping company. The Court of Appeals
concluded that the delivery of the goods in Hong Kong did not exempt petitioner
from being considered as doing business in the Philippines.
The Issue
The sole issue in this case is whether petitioner, an unlicensed foreign
corporation, has legal capacity to sue before Philippine courts. The resolution of this
issue depends on whether petitioner is doing business in the Philippines.
The Ruling of the Court
The petition is meritorious.
Section 133 of the Corporation Code provides:
Doing business without license. No foreign corporation
transacting business in the Philippines without a license, or its
successors or assigns, shall be permitted to maintain or intervene in
any action, suit or proceeding in any court or administrative agency of
the Philippines; but such corporation may be sued or proceeded
against before Philippine courts or administrative tribunals on any valid
cause of action recognized under Philippine laws.
The law is clear. An unlicensed foreign corporation doing business in the
Philippines cannot sue before Philippine courts. On the other hand, an unlicensed

foreign corporation not doing business in the Philippines can sue before Philippine
courts.
In the present controversy, petitioner is a foreign corporation which claims
that it is not doing business in the Philippines. As such, it needs no license to
institute a collection suit against respondent before Philippine courts.
Respondent argues otherwise. Respondent insists that petitioner is doing
business in the Philippines without the required license. Hence, petitioner has no
legal capacity to sue before Philippine courts.
Under Section 3(d) of Republic Act No. 7042 (RA 7042) or The Foreign
Investments Act of 1991, the phrase doing business includes:
x x x soliciting orders, service contracts, opening offices, whether
called liaison offices or branches; appointing representatives or
distributors domiciled in the Philippines or who in any calendar year
stay in the country for a period or periods totalling one hundred eighty
(180) days or more; participating in the management, supervision or
control of any domestic business, firm, entity or corporation in the
Philippines; and any other act or acts that imply a continuity of
commercial dealings or arrangements, and contemplate to that extent
the performance of acts or works, or the exercise of some of the
functions normally incident to, and in progressive prosecution of,
commercial gain or of the purpose and object of the business
organization: Provided, however, That the phrase doing business
shall not be deemed to include mere investment as a shareholder by a
foreign entity in domestic corporations duly registered to do business,
and/or the exercise of rights as such investor; nor having a nominee
director or officer to represent its interests in such corporation; nor
appointing a representative or distributor domiciled in the Philippines
which transacts business in its own name and for its own account.
The series of transactions between petitioner and respondent cannot be
classified as doing business in the Philippines under Section 3(d) of RA 7042. An
essential condition to be considered as doing business in the Philippines is the
actual performance of specific commercial acts within the territory of the Philippines
for the plain reason that the Philippines has no jurisdiction over commercial acts
performed in foreign territories. Here, there is no showing that petitioner performed
within the Philippine territory the specific acts of doing business mentioned in
Section 3(d) of RA 7042. Petitioner did not also open an office here in the
Philippines, appoint a representative or distributor, or manage, supervise or control
a local business. While petitioner and respondent entered into a series of
transactions implying a continuity of commercial dealings, the perfection and
consummation of these transactions were done outside the Philippines. [8]
In its complaint, petitioner alleged that it is engaged in the importation and
exportation of several products, including lace products. Petitioner asserted that on
several occasions, respondent purchased lace products from it. Petitioner also
claimed that respondent instructed it to deliver the purchased goods to Kenzar,
which is a Hong Kong company based in Hong Kong. UponKenzars receipt of the

goods, the products were considered sold. Kenzar, in turn, had the obligation to
deliver the lace products to the Philippines. In other words, the sale of lace
products was consummated in Hong Kong.
As earlier stated, the series of transactions between petitioner and respondent
transpired and were consummated in Hong Kong.[9] We also find no single activity
which petitioner performed here in the Philippines pursuant to its purpose and
object as a business organization. [10] Moreover, petitioners desire to do business
within the Philippines is not discernible from the allegations of the complaint or from
its attachments. Therefore, there is no basis for ruling that petitioner is doing
business in the Philippines.
In Eriks, respondent therein alleged the existence of a distributorship
agreement between him and the foreign corporation. If duly established, such
distributorship agreement could support respondents claim that petitioner was
indeed doing business in the Philippines. Here, there is no such or similar
agreement between petitioner and respondent.
We disagree with the Court of Appeals ruling that the proponents to the
transaction determine whether a foreign corporation is doing business in the
Philippines, regardless of the place of delivery or place where the transaction took
place. To accede to such theory makes it possible to classify, for instance, a series of
transactions between a Filipino in the United States and an American company
based in the United States as doing business in the Philippines, even when these
transactions are negotiated and consummated only within the United States.
An exporter in one country may export its products to many foreign importing
countries without performing in the importing countries specific commercial acts
that would constitute doing business in the importing countries. The mere act of
exporting from ones own country, without doing any specific commercial act within
the territory of the importing country, cannot be deemed as doing business in the
importing country. The importing country does not acquire jurisdiction over the
foreign exporter who has not performed any specific commercial act within the
territory of the importing country. Without jurisdiction over the foreign exporter, the
importing country cannot compel the foreign exporter to secure a license to do
business in the importing country.
Otherwise, Philippine exporters, by the mere act alone of exporting their
products, could be considered by the importing countries to be doing business in
those countries. This will require Philippine exporters to secure a business license in
every foreign country where they usually export their products, even if they do not
perform any specific commercial act within the territory of such importing
countries. Such a legal concept will have a deleterious effect not only on Philippine
exports, but also on global trade.
To be doing or transacting business in the Philippines for purposes of Section
133 of the Corporation Code, the foreign corporation must actually transact
business in the Philippines, that is, perform specific business transactions within the
Philippine territory on a continuing basis in its own name and for its own
account. Actual transaction of business within the Philippine territory is an essential

requisite for the Philippines to acquire jurisdiction over a foreign corporation and
thus require the foreign corporation to secure a Philippine business license. If a
foreign corporation does not transact such kind of business in the Philippines, even
if it exports its products to the Philippines, the Philippines has no jurisdiction to
require such foreign corporation to secure a Philippine business license.
Considering that petitioner is not doing business in the Philippines, it does not
need a license in order to initiate and maintain a collection suit against respondent
for the unpaid balance of respondents purchases.

WHEREFORE, we GRANT the petition. We REVERSE the Decision dated 18

April 2001 of the Court of Appeals in CA-G.R. CV
No. 66236. No costs.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice

Litis Pendentia
Spouses Marasigan v. Chevron, G.R. No. 184015, February 8, 2012
(Supra.)
Quito v. Stop & Save Corp., G.R. No. 186657, June 11, 2014 (Supra.)
Benavidez v. Salvador, G.R. No. 173331, December 11, 2013 (Supra.)

Res Judicata
Heirs of Sotto v. Palicte, G.R. No. 159691, June 13, 2013 (Supra.)
Spouses Antonio v. Sayman, G.R. No. 149624, September 29, 2010
(Supra.)

Prescription/Statute of Limitations

Marquez v. Baldoz, G.R. No. 143779, April 4, 2003

SECOND DIVISION

[G.R. No. 143779. April 4, 2003]

FRANCISCA L. MARQUEZ and GASPAR
vs. SIMEON BALDOZ, respondent.

M.

MARQUEZ, petitioners,

RESOLUTION
QUISUMBING, J.:
This petition for review seeks to reverse the decision [1] dated April 24, 2000, of
the Court of Appeals in CA-G.R. SP No. 55068, affirming the orders in Civil Case No.
9-97, dated April 6, 1999 and August 4, 1999, of the Regional Trial Court of Taal,
Batangas City, Branch 86. The trial court denied herein petitioners motion to
dismiss in Civil Case No. 9-97, based on alleged prescription and failure to state a
cause of action, as well as their motion for reconsideration.
The facts of this case are culled from the records.
Respondent Simeon Baldoz is the son of Spouses Dionisia Leonor and Aurelio
Baldoz. They died intestate, leaving behind a parcel of land with an area of 33,675
square meters in Halang, Taal, Batangas. The lot was purchased by them from
Emiliano Baldoz on January 17, 1937, as evidenced by a deed of sale issued on the
same date.[2] The second paragraph of the deed of sale bears the following
statement:
Said property is owned in common by the herein vendor (Emiliano Baldoz) and by
Gregorio Leonor (father of petitioners) of Taal, Batangas. [3]
On March 24, 1997, Simeons co-heirs waived their rights over the lot in his
favor by virtue of a Deed of Extrajudicial Settlement with Waiver of Rights. [4] Later,
however, Simeon discovered that Francisca Leonor and Candelaria Orlina declared
certain portions of the same land in their name, as evidenced by Tax Declaration
Nos. 0056 to 0058.[5]
Simeon made several demands upon Francisca, Gaspar and Candelaria urging
them to vacate the premises and to surrender possession thereof, but his demands
remained unheeded. On September 3, 1997, Simeon filed Civil Case No. 9-97,
entitled Simeon Baldoz v. Spouses Francisca Leonor and Gaspar Marquez, and
Candelaria Orlina, for accion reivindicatoria and quieting of title, with preliminary
writ of injunction and damages.
On October 27, 1997, Francisca, Gaspar and Candelaria filed a motion to dismiss
on the ground of prescription and failure to state a cause of action. In an order
dated April 6, 1999, the RTC denied the motion to dismiss. It ruled that the
complaint has sufficiently alleged a cause of action. On the issue of prescription, the
RTC stated that it involves evidentiary matters which should be threshed out in a
full-blown trial on the merits and cannot be determined in a motion to dismiss as

the question has become a matter of proof. [6] The motion for reconsideration filed
with the RTC was likewise denied.
Seasonably, petitioners Francisca and Gaspar Marquez filed a petition for
certiorari with the Court of Appeals ascribing grave abuse of discretion to the RTC
for denying their motion to dismiss. On April 24, 2000, the appellate court dismissed
the petition for lack of merit. Petitioners then moved to reconsider the order of the
Court of Appeals, but it was denied in a resolution dated June 20, 2000.
In this petition for review, petitioners seek the reversal of the CA decision on
two grounds:
A. THE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION
WHEN IT COMPLETELY DISREGARDED THE EVIDENCE PRESENTED BY THE PARTIES
AND MERELY BASED ITS RULING THAT RESPONDENTS RIGHT OF ACTION HAS NOT
PRESCRIBED ON THE ALLEGATIONS IN THE COMPLAINT IN CONTRAVENTION OF
SECTIONS 2 AND 3, RULE 16 OF THE 1997 RULES OF CIVIL PROCEDURE; AND
B. THE COURT OF APPEALS ERRED WHEN IT RULED THAT THE TRIAL COURT DID NOT
COMMIT GRAVE ABUSE OF DISCRETION DESPITE ITS FAILURE TO LIKEWISE
CONSIDER THE EVIDENCE ON RECORD AND TO RULE CATEGORICALLY ON THE ISSUE
OF PRESCRIPTION IN FLAGRANT DISREGARD OF THE EXPRESS PROVISION OF
SECTIONS 2 AND 3, RULE 16 OF THE 1997 RULES OF CIVIL PROCEDURE. [7]
The issue in this petition is whether the Court of Appeals committed grave
abuse of discretion as well as a reversible error in affirming the trial courts
orders. Resolution of this issue depends on whether the trial court had violated
Sections 2 and 3 of Rule 16, of the Rules of Court, in denying petitioners motion to
dismiss the complaint as well as their motion for reconsideration.
In Sections 2 and 3 of Rule 16, the Rules of Court provides:
SEC. 2. Hearing of motion. At the hearing of the motion, the parties shall submit
their arguments on the questions of law and their evidence on the questions of fact
involved except those not available at that time. Should the case go to trial, the
evidence presented during the hearing shall automatically be part of the evidence
of the party presenting the same.
SEC. 3. Resolution of motion. After the hearing, the court may dismiss the action
or claim, deny the motion, or order the amendment of the pleading.
The court shall not defer the resolution of the motion for the reason that the ground
relied upon is not indubitable. (Stress supplied.)
In every case, the resolution shall state clearly and distinctly the reasons therefore.
Petitioners insist that the appellate court erred when it held that no grave abuse
of discretion was committed by the trial court when it deferred the resolution of the
issue of prescription raised in their motion to dismiss. According to petitioners,
deferring the resolution of this issue violates the abovecited provisions of the Rules
which provide that the court must either grant, deny or order the amendment of the
pleadings, but must not defer the resolution of the motion.

Considering the submissions of the parties on record, we find that the instant
petition lacks merit. In its Order dated April 6, 1999, the trial court did not violate
Sections 2 and 3 of Rule 16.
First. Section 2 of Rule 16 requires hearing in resolving the motion to
dismiss. From the records, it is clear that the trial judge conducted a hearing to
resolve petitioners motion to dismiss. In compliance with this requirement, both
testimonial and documentary evidence were submitted by the parties to resolve the
issues raised in the motion to dismiss. However, the summary hearing on the
motion to dismiss did not persuade the trial court that petitioners had proved the
respondents claim had already prescribed. Hence, the trial court resolved to require
a more in-depth and thorough determination of this issue, which could be done only
in a full-blown trial of the case.
Neither was there a circumvention of Section 3 of Rule 16. The trial court did
not defer the resolution of the motion to dismiss; in fact, the motion was expressly
denied. Said the Order dated April 6, 1999:
The above allegations in the complaint sufficiently state a cause of action against
the defendants. The complaint does not have to establish or allege the facts
proving the existence of a cause of action at the outset, this will have to be done at
the trial on the merits of the case. In fact, the complaint is not supposed to contain
evidentiary matters. Rule 6, section 3 of the Rules of Court provides that the
complaint must be limited to a concise statement of the plaintiffs cause of
action. Consequently, the motion to dismiss must be denied.
The above conclusion finds support in the cases of Republic Bank vs. Cuaderno, 19
SCRA 677; Boncato vs. Siasan, 138 SCRA 414 and Sumalinong vs. Doronio, 184
SCRA 187 where the Supreme Court has repeatedly held that so rigid is the norm
prescribed that if the Court should doubt the truth of the facts averred, it must not
dismiss the complaint but require an answer and proceed to hear the case on the
merits.
On the issue of prescription raised in the said motion, the Court finds the same
evidentiary matters which should be threshed out in a full-blown trial on the merits
and cannot be determined in a motion to dismiss as the question has become a
matter of proof. [8]
Petitioners palpably misinterpreted the trial courts Order, particularly in regard
to the matter of prescription. It ruled that the prescription issue is one involving
evidentiary matters which must be threshed out in a full-blown trial on the merits
and cannot be determined in a motion to dismiss as the question has become a
matter of proof. Petitioners misconstrued the trial courts ruling as one tantamount
todeferring the resolution of the motion to dismiss itself. This reading of the Order
is flawed. By denying the motion expressly, the Order resolved the motion to
dismiss as required by Section 3 of Rule 16.
It must be pointed that under the new Rules, deferment of the resolution of the
motion to dismiss is no longer permitted. The court must either grant the motion to
dismiss, deny it, or order the amendment of the pleadings. The purpose for the
above rule is to avoid and end the common practice of perfunctorily denying
motions to dismiss for lack of merit. Such cavalier disposition often creates

difficulty on the part of the aggrieved party in taking recourse therefrom and
likewise on the part of the higher court called upon to resolve the issue, usually
on certiorari.[9]
However, what is prohibited by the rules is the deferment until trial of the
resolution of the motion to dismiss itself. Here, the trial court did not defer
resolution of the motion itself but, in fact, categorically resolved to deny it based on
its finding that: (1) the complaint showed a sufficient cause of action, and (2) the
pleadings did not ipso facto establish prescription.
As required by Section 3, Rule 16, the trial courts Order also explains at length
the basis for its finding that in his complaint, plaintiff has shown a sufficient cause
of action. Corollary to its discussion on this issue, the trial court also touched on the
issue on prescription with a pronouncement that such issue is better threshed after
a full-blown trial on the merits. The trial courts reasoning, in our view, sufficiently
explained the reason for dismissing the motion to dismiss. It satisfactorily served
the purpose behind the new Rules of Court as earlier explained.
Moreover, the trial courts ruling requiring a full-blown trial on the merits to
resolve the issue of prescription, finds jurisprudential basis in our ruling in National
Irrigation Administration (NIA) v. Court of Appeals,[10] reiterating Francisco v. Robles.
[11]
In the NIA case, we stated that:
[A]n allegation of prescription can effectively be used in a motion to dismiss only
when the complaint on its face shows that indeed the action has already prescribed.
[12]

This precedent finds application in the present case. Nothing shows on the face of
the complaint filed by herein respondent as plaintiff in Civil Case No. 9-97 that the
action already prescribed at the time it was filed. The complaint merely averred that
Gregorio Leonor, father of herein petitioners, was a tenant of respondents
predecessor-in-interest. As observed by the Court of Appeals:
Notwithstanding the jurisprudence which states that prescription may be effectively
pleaded in a motion to dismiss if the complaint shows on its face that the action had
already prescribed at the time it was filed, We believe, however, that there is no
sufficient and convincing showing that prescription as regards the subject property
has set in already. The reason is simple: the court a quo noted on the face of the
complaint in Civil Case No. 9-97 that Gregorio Leonor, father of herein petitioners,
was the tenant of the parents of private respondent over the subject
property. Obviously, perusing the complaint with an allegation that the subject
property was a tenanted property, the contention of petitioners in establishing an
uninterrupted adverse possession for more than thirty (30) years seems
implausible. Besides, possession is not a definitive proof of ownership, nor is nonpossession inconsistent therewith. [13]
Based on the pleadings, the issue of prescription was not clearly
established. On this point, it is but logical and proper for the trial court to deny
petitioners motion to dismiss and, additionally, to require a full-blown trial on the
issue of prescription.
Accordingly, the Court of Appeals committed no grave abuse of discretion, much
less any reversible error, in affirming the Orders of the trial court.

WHEREFORE, the instant petition is DENIED for lack of merit. The challenged
decision of the Court of Appeals of April 24, 2000, in CA-G.R. SP No. 55068, and its
resolution dated June 20, 2000, are hereby AFFIRMED. Costs against the
petitioners.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Austria-Martinez, and Callejo, Sr., JJ., concur.

States no cause of action

Lucas v. Lucas, G.R. No. 190710, June 6, 2011 (Supra.)
SECOND DIVISION
JESSE U. LUCAS,
Petitioner,

G.R. No. 190710

Present:
CARPIO, J.,
Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.

- versus -

Promulgated:
JESUS S. LUCAS,
Respondent.

June 6, 2011

x----------------------------------------------------------------------------------------------x

DECISION
NACHURA, J.:
Is a prima facie showing necessary before a court can issue a DNA testing
order? In this petition for review on certiorari, we address this question to guide the
Bench and the Bar in dealing with a relatively new evidentiary tool. Assailed in this
petition are the Court of Appeals (CA) Decision [1] dated September 25, 2009 and
Resolution dated December 17, 2009.

The antecedents of the case are, as follows:

On July 26, 2007, petitioner, Jesse U. Lucas, filed a Petition to Establish
Illegitimate Filiation (with Motion for the Submission of Parties to DNA Testing)
[2]
before the Regional Trial Court (RTC), Branch 72, Valenzuela City. Petitioner
narrated that, sometime in 1967, his mother, Elsie Uy (Elsie), migrated
to Manila from Davao and stayed with a certain Ate Belen (Belen) who worked in a
prominent nightspot in Manila. Elsie would oftentimes accompany Belen to work. On
one occasion, Elsie got acquainted with respondent, Jesus S. Lucas, at Belens
workplace, and an intimate relationship developed between the two. Elsie
eventually got pregnant and, on March 11, 1969, she gave birth to petitioner, Jesse
U. Lucas. The name of petitioners father was not stated in petitioners certificate of
live birth. However, Elsie later on told petitioner that his father is respondent. On
August 1, 1969, petitioner was baptized at San Isidro Parish, Taft Avenue, Pasay City.
Respondent allegedly extended financial support to Elsie and petitioner for a period
of about two years. When the relationship of Elsie and respondent ended, Elsie
refused to accept respondents offer of support and decided to raise petitioner on
her own. While petitioner was growing up, Elsie made several attempts to introduce
petitioner to respondent, but all attempts were in vain.
Attached to the petition were the following: (a) petitioners certificate of live
birth; (b) petitioners baptismal certificate; (c) petitioners college diploma, showing
that he graduated from Saint Louis University in Baguio City with a degree in
Psychology; (d) his Certificate of Graduation from the same school; (e) Certificate of
Recognition from the University of the Philippines, College of Music; and (f) clippings
of several articles from different newspapers about petitioner, as a musical prodigy.
Respondent was not served with a copy of the petition. Nonetheless,
respondent learned of the petition to establish filiation. His counsel therefore went
to the trial court on August 29, 2007 and obtained a copy of the petition.
Petitioner filed with the RTC a Very Urgent Motion to Try and Hear the Case.
Hence, on September 3, 2007, the RTC, finding the petition to be sufficient in form
and substance, issued the Order [3] setting the case for hearing and urging anyone
who has any objection to the petition to file his opposition. The court also directed
that the Order be published once a week for three consecutive weeks in any
newspaper of general circulation in the Philippines, and that the Solicitor General be
furnished with copies of the Order and the petition in order that he may appear and
represent the State in the case.
On September 4, 2007, unaware of the issuance of the September 3, 2007
Order, respondent filed a Special Appearance and Comment. He manifested inter
alia that: (1) he did not receive the summons and a copy of the petition; (2) the
petition was adversarial in nature and therefore summons should be served on him
as respondent; (3) should the court agree that summons was required, he was
waiving service of summons and making a voluntary appearance; and (4) notice by
publication of the petition and the hearing was improper because of the
confidentiality of the subject matter.[4]

On September 14, 2007, respondent also filed a Manifestation and Comment

on Petitioners Very Urgent Motion to Try and Hear the Case. Respondent reiterated
that the petition for recognition is adversarial in nature; hence, he should be served
with summons.
After learning of the September 3, 2007 Order, respondent filed a motion for
reconsideration.[5] Respondent averred that the petition was not in due form and
substance because petitioner could not have personally known the matters that
were alleged therein. He argued that DNA testing cannot be had on the basis of a
mere allegation pointing to respondent as petitioners father. Moreover,
jurisprudence is still unsettled on the acceptability of DNA evidence.
On July 30, 2008, the RTC, acting on respondents motion for reconsideration,
issued an Order[6] dismissing the case. The court remarked that, based on the case
of Herrera v. Alba,[7] there are four significant procedural aspects of a traditional
paternity action which the parties have to face: a prima facie case, affirmative
defenses, presumption of legitimacy, and physical resemblance between the
putative father and the child. The court opined that petitioner must first establish
these four procedural aspects before he can present evidence of paternity and
filiation, which may include incriminating acts or scientific evidence like blood group
test and DNA test results. The court observed that the petition did not show that
these procedural aspects were present. Petitioner failed to establish a prima
facie case considering that (a) his mother did not personally declare that she had
sexual relations with respondent, and petitioners statement as to what his mother
told him about his father was clearly hearsay; (b) the certificate of live birth was not
signed by respondent; and (c) although petitioner used the surname of respondent,
there was no allegation that he was treated as the child of respondent by the latter
or his family. The court opined that, having failed to establish a prima facie case,
respondent had no obligation to present any affirmative defenses. The dispositive
portion of the said Order therefore reads:
WHEREFORE, for failure of the petitioner to establish compliance
with the four procedural aspects of a traditional paternity action in his
petition, his motion for the submission of parties to DNA testing to
establish paternity and filiation is hereby DENIED. This case is
DISMISSED without prejudice.
SO ORDERED.[8]
Petitioner seasonably filed a motion for reconsideration to the Order dated
July 30, 2008, which the RTC resolved in his favor. Thus, on October 20, 2008, it
issued the Order[9] setting aside the courts previous order, thus:
WHEREFORE, in view of the foregoing, the Order dated July 30,
2008 is hereby reconsidered and set aside.
Let the Petition (with Motion for the Submission of Parties to DNA
Testing) be set for hearing on January 22, 2009 at 8:30 in the
morning.
xxxx

SO ORDERED.[10]
This time, the RTC held that the ruling on the grounds relied upon by
petitioner for filing the petition is premature considering that a full-blown trial has
not yet taken place. The court stressed that the petition was sufficient in form and
substance. It was verified, it included a certification against forum shopping, and it
contained a plain, concise, and direct statement of the ultimate facts on which
petitioner relies on for his claim, in accordance with Section 1, Rule 8 of the Rules of
Court. The court remarked that the allegation that the statements in the petition
were not of petitioners personal knowledge is a matter of evidence. The court also
dismissed respondents arguments that there is no basis for the taking of DNA test,
and that jurisprudence is still unsettled on the acceptability of DNA evidence. It
noted that the new Rule on DNA Evidence [11] allows the conduct of DNA testing,
whether at the courts instance or upon application of any person who has legal
interest in the matter in litigation.
Respondent filed a Motion for Reconsideration of Order dated October 20,
2008 and for Dismissal of Petition, [12] reiterating that (a) the petition was not in due
form and substance as no defendant was named in the title, and all the basic
allegations were hearsay; and (b) there was no prima facie case, which made the
petition susceptible to dismissal.
The RTC denied the motion in the Order dated January 19, 2009, and
rescheduled the hearing.[13]
Aggrieved, respondent filed a petition for certiorari with the CA, questioning
the Orders dated October 20, 2008 and January 19, 2009.
On September 25, 2009, the CA decided the petition for certiorari in favor of
respondent, thus:
WHEREFORE, the instant petition for certiorari is hereby
GRANTED for being meritorious. The assailed Orders dated October 20,
2008 and January 19, 2009 both issued by the Regional Trial Court,
Branch 172 of Valenzuela City in SP. Proceeding Case No. 30-V-07 are
REVERSED and SET ASIDE. Accordingly, the case docketed as SP.
Proceeding Case No. 30-V-07 is DISMISSED.[14]
The CA held that the RTC did not acquire jurisdiction over the person of
respondent, as no summons had been served on him. Respondents special
appearance could not be considered as voluntary appearance because it was filed
only for the purpose of questioning the jurisdiction of the court over respondent.
Although respondent likewise questioned the courts jurisdiction over the subject
matter of the petition, the same is not equivalent to a waiver of his right to object to
the jurisdiction of the court over his person.
The CA remarked that petitioner filed the petition to establish illegitimate
filiation, specifically seeking a DNA testing order to abbreviate the proceedings. It

noted that petitioner failed to show that the four significant procedural aspects of a
traditional paternity action had been met. The CA further held that a DNA testing
should not be allowed when the petitioner has failed to establish a prima facie case,
thus:
While the tenor [of Section 4, Rule on DNA Evidence] appears to be absolute,
the rule could not really have been intended to trample on the substantive
rights of the parties. It could have not meant to be an instrument to promote
disorder, harassment, or extortion. It could have not been intended to
legalize unwarranted expedition to fish for evidence. Such will be the
situation in this particular case if a court may at any time order the taking of
a DNA test. If the DNA test in compulsory recognition cases is immediately
available to the petitioner/complainant without requiring first the
presentation of corroborative proof, then a dire and absurd rule would result.
Such will encourage and promote harassment and extortion.
xxxx
At the risk of being repetitious, the Court would like to stress that it
sees the danger of allowing an absolute DNA testing to a compulsory
recognition test even if the plaintiff/petitioner failed to establish prima
facie proof. x x x If at anytime, motu proprio and without pre-conditions, the
court can indeed order the taking of DNA test in compulsory recognition
cases, then the prominent and well-to-do members of our society will be easy
prey for opportunists and extortionists. For no cause at all, or even for [sic]
casual sexual indiscretions in their younger years could be used as a means
to harass them. Unscrupulous women, unsure of the paternity of their
children may just be taking the chances-just in case-by pointing to a sexual
partner in a long past one-time encounter. Indeed an absolute and
unconditional taking of DNA test for compulsory recognition case opens wide
the opportunities for extortionist to prey on victims who have no stomach for
scandal.[15]
Petitioner moved for reconsideration. On December 17, 2009, the CA denied
the motion for lack of merit.[16]
In this petition for review on certiorari, petitioner raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT RESOLVED
THE ISSUE OF LACK OF JURISDICTION OVER THE PERSON OF HEREIN
RESPONDENT ALBEIT THE SAME WAS NEVER RAISED IN THE PETITION
FOR CERTIORARI.
I.A
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN
IT RULED THAT JURISDICTION WAS NOT ACQUIRED OVER
THE PERSON OF THE RESPONDENT.
I.B
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN
IT FAILED TO REALIZE THAT THE RESPONDENT HAD

ALREADY SUBMITTED VOLUNTARILY TO THE JURISDICTION

OF THE COURT A QUO.
I.C
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN
IT ESSENTIALLY RULED THAT THE TITLE OF A PLEADING,
RATHER THAN ITS BODY, IS CONTROLLING.
II.
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT ORDERED
THE DISMISSAL OF THE PETITION BY REASON OF THE MOTION (FILED
BY THE PETITIONER BEFORE THE COURT A QUO) FOR THE CONDUCT OF
DNA TESTING.
II.A
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN
IT ESSENTIALLY RULED THAT DNA TESTING CAN ONLY BE
ORDERED AFTER THE PETITIONER ESTABLISHES PRIMA
FACIE PROOF OF FILIATION.
III.
WHETHER OR NOT THE COURT OF APPEALS ERRED WITH ITS
MISPLACED RELIANCE ON THE CASE OF HERRERA VS. ALBA,
ESPECIALLY AS REGARDS THE FOUR SIGNIFICANT PROCEDURAL
ASPECTS OF A TRADITIONAL PATERNITY ACTION.[17]
Petitioner contends that respondent never raised as issue in his petition
for certiorari the courts lack of jurisdiction over his person. Hence, the CA had no
legal basis to discuss the same, because issues not raised are deemed waived or
abandoned. At any rate, respondent had already voluntarily submitted to the
jurisdiction of the trial court by his filing of several motions asking for affirmative
relief, such as the (a) Motion for Reconsideration of the Order dated September 3,
2007; (b) Ex Parte Motion to Resolve Motion for Reconsideration of the Order dated
November 6, 2007; and (c) Motion for Reconsideration of the Order dated October
20, 2008 and for Dismissal of Petition. Petitioner points out that respondent even
expressly admitted that he has waived his right to summons in his Manifestation
and Comment on Petitioners Very Urgent Motion to Try and Hear the Case. Hence,
the issue is already moot and academic.
Petitioner argues that the case was adversarial in nature. Although the
caption of the petition does not state respondents name, the body of the petition
clearly indicates his name and his known address. He maintains that the body of the
petition is controlling and not the caption.
Finally, petitioner asserts that the motion for DNA testing should not be a
reason for the dismissal of the petition since it is not a legal ground for the dismissal
of cases. If the CA entertained any doubt as to the propriety of DNA testing, it
should have simply denied the motion. [18] Petitioner points out that Section 4 of the
Rule on DNA Evidence does not require that there must be a prior proof of filiation

before DNA testing can be ordered. He adds that the CA erroneously relied on the
four significant procedural aspects of a paternity case, as enunciated in Herrera v.
Alba.[19] Petitioner avers that these procedural aspects are not applicable at this
point of the proceedings because they are matters of evidence that should be taken
up during the trial.[20]
In his Comment, respondent supports the CAs ruling on most issues raised in
the petition for certiorari and merely reiterates his previous arguments. However, on
the issue of lack of jurisdiction, respondent counters that, contrary to petitioners
assertion, he raised the issue before the CA in relation to his claim that the petition
was not in due form and substance. Respondent denies that he waived his right to
the service of summons. He insists that the alleged waiver and voluntary
appearance was conditional upon a finding by the court that summons is indeed
required. He avers that the assertion of affirmative defenses, aside from lack of
jurisdiction over the person of the defendant, cannot be considered as waiver of the
defense of lack of jurisdiction over such person.
The petition is meritorious.
Primarily, we emphasize that the assailed Orders of the trial court were
orders denying respondents motion to dismiss the petition for illegitimate filiation.
An order denying a motion to dismiss is an interlocutory order which neither
terminates nor finally disposes of a case, as it leaves something to be done by the
court before the case is finally decided on the merits. As such, the general rule is
that the denial of a motion to dismiss cannot be questioned in a special civil action
for certiorari, which is a remedy designed to correct errors of jurisdiction and not
errors of judgment. Neither can a denial of a motion to dismiss be the subject of an
appeal unless and until a final judgment or order is rendered. In a number of cases,
the court has granted the extraordinary remedy of certiorari on the denial of the
motion to dismiss but only when it has been tainted with grave abuse of discretion
amounting to lack or excess of jurisdiction. [21] In the present case, we discern no
grave abuse of discretion on the part of the trial court in denying the motion to
dismiss.
The grounds for dismissal relied upon by respondent were (a) the courts lack
of jurisdiction over his person due to the absence of summons, and (b) defect in the
form and substance of the petition to establish illegitimate filiation, which is
equivalent to failure to state a cause of action.
We need not belabor the issues on whether lack of jurisdiction was raised
before the CA, whether the court acquired jurisdiction over the person of
respondent, or whether respondent waived his right to the service of summons. We
find that the primordial issue here is actually whether it was necessary, in the first
place, to serve summons on respondent for the court to acquire jurisdiction over the
case. In other words, was the service of summons jurisdictional? The answer to this
question depends on the nature of petitioners action, that is, whether it is an
action in personam, in rem, or quasi in rem.
An action in personam is lodged against a person based on personal liability;
an action in rem is directed against the thing itself instead of the person; while an

action quasi in rem names a person as defendant, but its object is to subject that
person's interest in a property to a corresponding lien or obligation. A petition
directed against the "thing" itself or the res, which concerns the status of a person,
like a petition for adoption, annulment of marriage, or correction of entries in the
birth certificate, is an action in rem.[22]

In an action in personam, jurisdiction over the person of the defendant is

necessary for the court to validly try and decide the case. In a proceeding in
rem or quasi in rem, jurisdiction over the person of the defendant is not a
prerequisite to confer jurisdiction on the court, provided that the latter has
jurisdiction over the res. Jurisdiction over the res is acquired either (a) by the
seizure of the property under legal process, whereby it is brought into actual
custody of the law, or (b) as a result of the institution of legal proceedings, in which
the power of the court is recognized and made effective. [23]
The herein petition to establish illegitimate filiation is an action in rem. By the
simple filing of the petition to establish illegitimate filiation before the RTC, which
undoubtedly had jurisdiction over the subject matter of the petition, the latter
thereby acquired jurisdiction over the case. An in rem proceeding is validated
essentially through publication. Publication is notice to the whole world that the
proceeding has for its object to bar indefinitely all who might be minded to make an
objection of any sort to the right sought to be established. [24] Through publication,
all interested parties are deemed notified of the petition.
If at all, service of summons or notice is made to the defendant, it is not for
the purpose of vesting the court with jurisdiction, but merely for satisfying the due
process requirements.[25] This is but proper in order to afford the person concerned
the opportunity to protect his interest if he so chooses. [26] Hence, failure to serve
summons will not deprive the court of its jurisdiction to try and decide the case. In
such a case, the lack of summons may be excused where it is determined that the
adverse party had, in fact, the opportunity to file his opposition, as in this case. We
find that the due process requirement with respect to respondent has been
satisfied, considering that he has participated in the proceedings in this case and he
has the opportunity to file his opposition to the petition to establish filiation.
To address respondents contention that the petition should have been
adversarial in form, we further hold that the herein petition to establish filiation was
sufficient in form. It was indeed adversarial in nature despite its caption which
lacked the name of a defendant, the failure to implead respondent as defendant,
and
the
non-service
of
summons
upon
respondent.
A
proceeding
isadversarial where the party seeking relief has given legal warning to the other
party and afforded the latter an opportunity to contest it. [27] In this petition
classified as an action in remthe notice requirement for an adversarial proceeding
was likewise satisfied by the publication of the petition and the giving of notice to
the Solicitor General, as directed by the trial court.
The petition to establish filiation is sufficient in substance. It satisfies Section
1, Rule 8 of the Rules of Court, which requires the complaint to contain a plain,
concise, and direct statement of the ultimate facts upon which the plaintiff bases his
claim. A fact is essential if it cannot be stricken out without leaving the statement
of the cause of action inadequate. [28] A complaint states a cause of action when it
contains the following elements: (1) the legal right of plaintiff, (2) the correlative
obligation of the defendant, and (3) the act or omission of the defendant in violation
of said legal right.[29]

The petition sufficiently states the ultimate facts relied upon by petitioner to
establish his filiation to respondent. Respondent, however, contends that the
allegations in the petition were hearsay as they were not of petitioners personal
knowledge. Such matter is clearly a matter of evidence that cannot be determined
at this point but only during the trial when petitioner presents his evidence.
In a motion to dismiss a complaint based on lack of cause of action, the
question submitted to the court for determination is the sufficiency of the
allegations made in the complaint to constitute a cause of action and not whether
those allegations of fact are true, for said motion must hypothetically admit the
truth
of
the
facts
alleged
in
the
complaint. [30]
The inquiry is confined to the four corners of the complaint, and no other. [31] The test
of the sufficiency of the facts alleged in the complaint is whether or not, admitting
the facts alleged, the court could render a valid judgment upon the same in
accordance with the prayer of the complaint. [32]
If the allegations of the complaint are sufficient in form and substance but
their veracity and correctness are assailed, it is incumbent upon the court to deny
the motion to dismiss and require the defendant to answer and go to trial to prove
his defense. The veracity of the assertions of the parties can be ascertained at the
trial of the case on the merits. [33]
The statement in Herrera v. Alba[34] that there are four significant procedural
aspects in a traditional paternity case which parties have to face has been widely
misunderstood and misapplied in this case. A party is confronted by these so-called
procedural aspects during trial, when the parties have presented their respective
evidence. They are matters of evidence that cannot be determined at this initial
stage of the proceedings, when only the petition to establish filiation has been filed.
The CAs observation that petitioner failed to establish a prima facie casethe first
procedural aspect in a paternity caseis therefore misplaced. Aprima facie case is
built by a partys evidence and not by mere allegations in the initiatory pleading.
Clearly then, it was also not the opportune time to discuss the lack of a prima
facie case vis--vis the motion for DNA testing since no evidence has, as yet, been
presented by petitioner. More essentially, it is premature to discuss whether, under
the circumstances, a DNA testing order is warranted considering that no such order
has yet been issued by the trial court. In fact, the latter has just set the said case for
hearing.
At any rate, the CAs view that it would be dangerous to allow a DNA testing
without corroborative proof is well taken and deserves the Courts attention. In light
of this observation, we find that there is a need to supplement the Rule on DNA
Evidence to aid the courts in resolving motions for DNA testing order, particularly in
paternity and other filiation cases. We, thus, address the question of whether
a prima facie showing is necessary before a court can issue a DNA testing order.
The Rule on DNA Evidence was enacted to guide the Bench and the Bar for
the introduction and use of DNA evidence in the judicial system. It provides the
prescribed parameters on the requisite elements for reliability and validity ( i.e., the
proper procedures, protocols, necessary laboratory reports, etc.), the possible

sources of error, the available objections to the admission of DNA test results as
evidence as well as the probative value of DNA evidence. It seeks to ensure that
the evidence gathered, using various methods of DNA analysis, is utilized effectively
and properly, [and] shall not be misused and/or abused and, more importantly, shall
continue to ensure that DNA analysis serves justice and protects, rather than
prejudice the public.[35]
Not surprisingly, Section 4 of the Rule on DNA Evidence merely provides for
conditions that are aimed to safeguard the accuracy and integrity of the DNA
testing. Section 4 states:
SEC. 4. Application for DNA Testing Order. The appropriate
court may, at any time, either motu proprio or on application of any
person who has a legal interest in the matter in litigation, order a DNA
testing. Such order shall issue after due hearing and notice to the
parties upon a showing of the following:
(a) A biological sample exists that is relevant to the case;
(b) The biological sample: (i) was not previously subjected to the
type of DNA testing now requested; or (ii) was previously
subjected to DNA testing, but the results may require
confirmation for good reasons;
(c) The DNA testing uses a scientifically valid technique;
(d) The DNA testing has the scientific potential to produce new
information that is relevant to the proper resolution of the
case; and
(e) The existence of other factors, if any, which the court may
consider as potentially affecting the accuracy or integrity of
the DNA testing.
This Rule shall not preclude a DNA testing, without need of a
prior court order, at the behest of any party, including law enforcement
agencies, before a suit or proceeding is commenced.
This does not mean, however, that a DNA testing order will be issued as a
matter of right if, during the hearing, the said conditions are established.
In some states, to warrant the issuance of the DNA testing order, there must
be a show cause hearing wherein the applicant must first present sufficient
evidence to establish a prima facie case or a reasonable possibility of paternity or
good cause for the holding of the test. [36] In these states, a court order for blood
testing is considered a search, which, under their Constitutions (as in ours), must
be preceded by a finding of probable cause in order to be valid. Hence, the
requirement of a prima facie case, or reasonable possibility, was imposed in civil
actions as a counterpart of a finding of probable cause. The Supreme Court of
Louisiana eloquently explained
Although a paternity action is civil, not criminal, the constitutional
prohibition against unreasonable searches and seizures is still
applicable, and a proper showing of sufficient justification under the
particular factual circumstances of the case must be made before a
court may order a compulsory blood test. Courts in various jurisdictions

have differed regarding the kind of procedures which are required, but
those jurisdictions have almost universally found that a preliminary
showing must be made before a court can constitutionally order
compulsory blood testing in paternity cases. We agree, and find that,
as a preliminary matter, before the court may issue an order for
compulsory blood testing, the moving party must show that there is a
reasonable possibility of paternity. As explained hereafter, in cases in
which paternity is contested and a party to the action refuses to
voluntarily undergo a blood test, a show cause hearing must be held in
which the court can determine whether there is sufficient evidence to
establish a prima facie case which warrants issuance of a court order
for blood testing.[37]
The same condition precedent should be applied in our jurisdiction to protect
the putative father from mere harassment suits. Thus, during the hearing on the
motion for DNA testing, the petitioner must present prima facie evidence or
establish a reasonable possibility of paternity.

Notwithstanding these, it should be stressed that the issuance of a DNA

testing order remains discretionary upon the court. The court may, for example,
consider whether there is absolute necessity for the DNA testing. If there is already
preponderance of evidence to establish paternity and the DNA test result would only
be corroborative, the court may, in its discretion, disallow a DNA testing.
WHEREFORE, premises considered, the petition is GRANTED. The Court of
Appeals Decision dated September 25, 2009 and Resolution dated December 17,
2009 are REVERSED and SET ASIDE. The Orders dated October 20, 2008 and
January 19, 2009 of the Regional Trial Court of Valenzuela City are AFFIRMED.
SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

Lazaro v. Brewmaster, G.R. No. 182779, August 23, 2010

Republic of the Philippines

Supreme Court
Manila

SECOND DIVISION
VICTORINA (VICTORIA) ALICE LIM
LAZARO,
Petitioner,

- versus -

BREWMASTER INTERNATIONAL, INC.,

G.R. No. 182779

Present:
CARPIO, J.,
Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.
Promulgated:

Respondent.
August 23, 2010
x------------------------------------------------------------------------------------x

RESOLUTION
NACHURA, J.:

Before the Court is a petition for review on certiorari of the Court of Appeals
(CA) Decision[1] dated September 4, 2007 and Resolution dated January 31, 2008,
which awarded the amount sought by respondent in its Complaint. As held by the
CA, to grant the relief prayed for by respondent is, in the words of Section 6 of the
Revised Rule on Summary Procedure, the judgment warranted by the facts alleged
in the complaint.

Respondent, Brewmaster International, Inc., is a marketing company engaged

in selling and distributing beer and other products of Asia Brewery, Inc. On
November 9, 2005, it filed a Complaint for Sum of Money against Prescillo G. Lazaro
(Prescillo) and petitioner, Victorina (also known as Victoria) Alice Lazaro, with the
Metropolitan Trial Court (MeTC) of MakatiCity. The complaint alleged as follows:
6. During the period from February 2002 to May 2002,
defendants obtained on credit from plaintiff beer and other products in
the total amount of ONE HUNDRED THIRTY EIGHT THOUSAND FIVE
HUNDRED TWO PESOS AND NINETY TWO CENTAVOS (Php 138,502.92),
evidenced by sales invoices photocopies of which are hereto attached
as Annexes A, A-1 to A-11,
7. Despite repeated demands, defendants have failed and
refused, and up to now, still fail and refuse to pay their aforesaid
obligation to plaintiff in the amount of ONE HUNDRED THIRTY EIGHT
THOUSAND FIVE HUNDRED TWO PESOS AND NINETY TWO CENTAVOS
(Php 138,502.92) as evidenced by the demand letters dated 21 April
2003, 12 May 2003, 5 August 2003 and 17 August 2005, photocopies
of which are hereto attached as Annexes B, C, C-1, D, D-1,
D-2, and E, E-1,
8. Under the terms of the sales invoices, defendants agreed
that in case of litigation, the venue shall only be at the proper courts
ofMakati City and to pay 24% interest on all overdue accounts.
WHEREFORE, it is respectfully prayed that judgment be
rendered in favor of plaintiff and against the defendants, ordering the
latter to pay the sum of Php138,502.92 representing plaintiffs claim
and the sum of Php33,240.00 as interest.
Plaintiff prays for such other or further relief and remedies that
are just and equitable in the premises.[2]

Annexes A, A-1 to A-11 are photocopies of sales invoices [3] indicating the
amount of the goods purchased and showing that they were sold to TOTAL and
received by a certain Daniel Limuco.

Prescillo filed an answer with counterclaim, denying any knowledge of the

obligation sued upon. According to Prescillo, he and petitioner had lived separately
since January 15, 2002 and he never authorized petitioner to purchase anything
from respondent. He pointed out that the purchaser of the items, as borne out by

the sales invoices attached to the complaint, was Total, which should have been the
one sued by respondent.[4]
Petitioner, in her own answer with counterclaims, likewise denied having
transacted with respondent, and averred that the documents attached to the
complaint showed that it was Total which purchased goods from respondent. [5]
On June 14, 2006, during the scheduled preliminary conference, petitioner
and her co-defendant did not appear. Hence, the MeTC declared the case submitted
for decision.[6]
On August 22, 2006, the MeTC dismissed the complaint, ratiocinating that
respondent, as plaintiff, failed to meet the burden of proof required to establish its
claim by preponderance of evidence. The court a quo noted that the sales invoices
attached to the complaint showed that the beer and the other products were sold to
Total and were received by a certain Daniel Limuco; they did not indicate, in any
way, that the goods were received by petitioner or her husband. [7]

Respondent elevated the case to the Regional Trial Court (RTC) through a
notice of appeal. Attached to its Memorandum was additional evidence, showing
that it transacted with petitioner and her husband, who were then the operators and
franchisees of the Total gasoline station and convenience store where the subject
goods were delivered, and that Daniel Limuco was their employee. [8]
Unmoved, the RTC found no reversible error in the assailed decision. It agreed
with the MeTC that respondent failed to submit any evidence proving that petitioner
and her husband were liable for the obligation. The RTC disregarded the documents
attached to the memorandum on the ground that admission of such additional
evidence would be offensive to the basic rule of fair play and would violate the
other partys right to due process. Thus, the RTC affirmed the assailed decision in
toto.[9]
Respondent then went to the CA through a petition for review. There, it
succeeded in obtaining a judgment in its favor. Applying Section 7 [10] of the Revised

Rule on Summary Procedure, in conjunction with Section 6 [11] thereof, the CA held
that judgment should have been rendered as may be warranted by the facts
alleged in the complaint considering that both defendants failed to appear during
the preliminary conference. The appellate court said that by instead referring to
the sales invoices and bypassing [the] ultimate facts [alleged in the complaint], the
MeTC contravened the evident purposes of the [Revised] Rule on Summary
Procedure directing that the judgment be based on the allegations of the complaint,
which were, firstly, to avoid delay and, secondly, to consider the non-appearance at
the preliminary conference as an admission of the ultimate facts. The CA
judiciously pronounced that:
In fact, evidentiary matters (like the sales invoices attached to
the complaint) were not yet to be considered as of that early stage of
the proceedings known under the Rule on Summary Procedure as the
preliminary conference. The evidentiary matters and facts are to be
required only upon the termination of the preliminary conference and
only if further proceedings become necessary to establish factual
issues defined in the order issued by the court. (citing Section 9, Rule
on Summary Procedure)

Thus, finding the amount claimed to be warranted by the allegations in the

complaint, the CA, in its September 4, 2007 Decision, reversed the trial courts
decision and ordered petitioner and her husband to pay the said amount plus
interests, thus:
WHEREFORE, the DECISION
2007 is REVERSED AND SET ASIDE.

DATED

MARCH

12,

The respondents are ORDERED to pay, jointly and severally, to

the petitioner the amount of P138,502.92, plus interest of 6% per
annum from the filing of the complaint until this judgment becomes
final and executory, and 12% per annum upon finality of this judgment
until full payment.
The respondents are also ORDERED to pay the costs of suit.
SO ORDERED.[12]

Petitioner filed a motion for reconsideration of the said Decision but the same
was denied by the CA in its January 31, 2008 Resolution. [13]

Petitioner submits the following issues to this Court for resolution:

Petitioner respectfully submits that the Honorable Court of Appeals
erred in the interpretation of Section 6 of the Revised Rules of
Summary Procedure when it reversed the Decision of the RTC, Branch
162 of Makati in Civil Case [N]o. 06-944.
Petitioner further submits that the Court of Appeals erred in giving
relief to the private respondent despite the lack of cause of action in its
complaint against the petitioner herein.[14]

Petitioner contends that the Revised Rule on Summary Procedure does not
warrant the automatic grant of relief in favor of the plaintiff when the complaint fails
to state a cause of action. She avers that respondents complaint fails to state a
cause of action; hence, no relief can be given to respondent. Petitioner points out
that the sales invoices formed part of the complaint and should be considered in
determining whether respondent has a cause of action against her. Consideration of
the said sales invoices, she avers, would show that there is no contractual
relationship between her and respondent; the invoices did not indicate in any way
that petitioner was liable for the amount stated therein.
Petitioner is correct in saying that no relief can be awarded to respondent if
its complaint does not state a cause of action. Indeed, if the complaint does not
state a cause of action, then no relief can be granted to the plaintiff and it would
necessarily follow that the allegations in the complaint would not warrant a
judgment favorable to the plaintiff.
The basic requirement under the rules of procedure is that a complaint must
make a plain, concise, and direct statement of the ultimate facts on which the
plaintiff relies for his claim.[15] Ultimate facts mean the important and substantial
facts which either directly form the basis of the plaintiffs primary right and duty or
directly make up the wrongful acts or omissions of the defendant. [16] They refer to
the principal, determinative, constitutive facts upon the existence of which the
cause of action rests. The term does not refer to details of probative matter or
particulars of evidence which establish the material elements. [17]

The test of sufficiency of the facts alleged in a complaint to constitute a

cause of action is whether, admitting the facts alleged, the court could render a
valid judgment upon the same in accordance with the prayer of the petition or
complaint.[18] To determine whether the complaint states a cause of action, all
documents attached thereto may, in fact, be considered, particularly when referred
to in the complaint.[19] We emphasize, however, that the inquiry is into the
sufficiency, not the veracity of the material allegations in the complaint. [20] Thus,
consideration of the annexed documents should only be taken in the context of
ascertaining the sufficiency of the allegations in the complaint.
Petitioner argues that the complaint fails to state a cause of action since
reference to the sales invoices attached to and cited in paragraph six of
the Complaint shows that it was not her who purchased and received the goods
from respondent.
Contrary to petitioners stance, we find that the Complaint sufficiently states
a cause of action. The following allegations in the complaint adequately make up a
cause of action for collection of sum of money against petitioner: (1) that petitioner
and her husband obtained beer and other products worth a total of P138,502.92 on
credit from respondent; and (2) that they refused to pay the said amount despite
demand.
As correctly held by the CA, the sales invoices are not actionable documents.
They were not the bases of respondents action for sum of money but were attached
to the Complaint only to provide details on the alleged transactions. They were
evidentiary in nature and not even necessary to be stated or cited in the Complaint.
At any rate, consideration of the attached sales invoices would not change
our conclusion. The sales invoices, naming Total as the purchaser of the goods, do
not absolutely foreclose the probability of petitioner being liable for the amounts
reflected thereon. An invoice is nothing more than a detailed statement of the
nature, quantity, and cost of the thing sold and has been considered not a bill of
sale.[21] Had the case proceeded further, respondent could have presented
evidence linking these sales invoices to petitioner.

In Pea v. Court of Appeals,[22] petitioners therein likewise argued that the

sales invoices did not show that they had any involvement in the transactions
covered by the same. What the Court said in reply to this argument bolsters our
view in this petition:
Although it appears in the other sales invoices that the
petitioners were the salespersons who brokered the sales of the
products covered by the said sales invoices to the vendees therein
named, the said entries are not conclusive of the extent and the
nature of the involvement of the petitioners in the sales of the products
under the said sales invoices which are not absolutely binding. They
may be explained and put to silence by all the facts and circumstances
characterizing the true import of the dealings to which they refer. The
facts contained in the said sales invoices may be contradicted by oral
testimony.[23]

WHEREFORE, premises considered, the Court of Appeals Decision dated

September 4, 2007 and Resolution dated January 31, 2008 are AFFIRMED.
SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

NM Rothschild v. Lepanto, G.R. No. 175799, November 28, 2011

(Supra.)
Evangelista v. Santiago, G.R. No. 157447, April 29, 2005 (Supra.)

Paid, Waived, Abandoned, Extinguished

Star Two v. Ko, G.R. No. 185454, March 23, 2011
G.R. No. 185454

March 23, 2011

STAR
TWO
vs.
HOWARD KO, MIN MIN
ONG, Respondents.

(SPV-AMC),
SEE

KO,

JIMMY

INC., Petitioner,
ONG,

and

GRACE

NG

RESOLUTION
NACHURA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
seeking to reverse and set aside the Court of Appeals (CA) Decision 1 dated October
15, 2008 and Resolution2 dated November 13, 2008 in CA-G.R. SP No. 101417.
The facts of the case, as found by the CA, are as follows:
Jianshe Motorcycle Industries Philippines Corporation (Jianshe) obtained various
credit facilities or loan accommodations from Rizal Commercial Banking Corporation
(RCBC) from 2003-2004 to finance its importation of motorcycles, motorcycle parts,
motorcycle accessories, and other related goods. To secure the goods imported by
Jianshe, RCBC required it to execute trust receipts over these goods. Moreover, to
secure payment of all existing and future obligations of Jianshe to RCBC,
respondents Howard Ko, Jimmy Ong, Min Min See Ko, and Grace Ng Ong executed a
Comprehensive Surety Agreement3 dated September 3, 2002, with a limited liability
ofP50 M.4
Despite demand, Jianshe failed to pay its obligations. RCBC thus filed a
Complaint5 for Specific Perfomance with Prayer for a Writ of Preliminary Attachment
against Jianshe as principal and respondents as sureties, before the Regional Trial
Court (RTC) of Makati City on December 27, 2005. The case was raffled to Branch
132 and docketed as Civil Case No. 05-1146.6
In an Order7 dated January 11, 2006, the RTC directed the issuance of a writ of
preliminary attachment against all the properties of Jianshe and respondents as
may be sufficient to satisfy RCBCs principal claim ofP25,636,339.40 conditioned
upon the filing of the required bond. The corresponding writ of preliminary
attachment was thereafter issued.
On February 6, 2006, Howard Ko and Min Min See Ko filed a Motion to Discharge
Preliminary Attachment8 for having been improperly or irregularly issued. RCBC,
however, opposed the motion. 9 On March 17, 2006, Howard Ko filed a Motion to
Dismiss10 on the ground that RCBCs claim had already been paid, waived,
abandoned, or otherwise extinguished. Min Min See Ko adopted Howard Kos
motion.
On June 15, 2006, the RTC ordered the immediate discharge of the attachment
issued against Howard Ko and Min Min See Ko, but denied Howard Kos Motion to
Dismiss.11
Unsatisfied, Howard Ko and RCBC filed their respective Motions for Reconsideration.
Howard Ko likewise filed a Motion to Set Case for Hearing for Reception of
Evidence.12
In an Order13 dated December 13, 2006, the RTC granted Howard Kos motion and
accordingly dismissed the case against respondents, leaving Jianshe as the only

defendant. In dismissing the case, the trial court stated that there was sufficient
evidence to prove that Howard Ko paid an amount more than the limit provided
under the Comprehensive Surety Agreement.14
Aggrieved by the dismissal of the case against respondents, RCBC filed a Motion for
Partial Reconsideration.15 It likewise filed a Manifestation/Substitution of
Parties,16 considering that it had sold, transferred, and assigned all its rights and
interests in the present case to petitioner Star Two (SPV-AMC), Inc.
On August 31, 2007, the RTC denied RCBCs motion for reconsideration, but granted
the inclusion of petitioner as plaintiff in substitution of RCBC. 17
Petitioner thus elevated the matter to the CA through a petition for certiorari under
Rule 65 of the Rules of Court. 18 On October 15, 2008, the CA rendered the assailed
Decision19 denying petitioners petition. The CA also denied its motion for
reconsideration on November 13, 2008. Hence, this petition raising the following
errors:
THE HONORABLE COURT [OF] APPEALS GRAVELY ERRED IN DISMISSING THE
PETITION AND AFFIRMING THE DECISION OF THE TRIAL COURT, CONSIDERING THAT:
1) THE TRIAL COURT ARBITRARILY AND WHIMSICALLY CONSIDERED AND
RELIED ON DOCUMENTS WHICH WERE NOT DULY IDENTIFIED BY TESTIMONY
OR OFFERED IN EVIDENCE;
2) IT HAS NOT BEEN ESTABLISHED THAT RESPONDENT HOWARD KO, AS
SURETY OF JIANSHE, HAS PAID AMOUNTS OVER THE P50 MILLION CAP UNDER
THE COMPREHENSIVE SURETY AGREEMENT; AND
3) SUPPOSED PAYMENTS OF HOWARD KO, AS STATED IN THE DECISION OF
THE TRIAL COURT, ONLY AMOUNT TO P46,539,134.42, WHICH IS STILL BELOW
THE P50 MILLION CAP UNDER THE COMPREHENSIVE SURETY AGREEMENT. 20
The petition is without merit.
At the outset, we settle the procedural question raised by petitioner on the
admissibility of the documentary evidence presented by respondents in support of
the dismissal of the case against them. It is petitioners postulation that the trial
court should not have relied on the documents presented by respondents as they
were not formally offered in evidence.
We do not agree.
Indeed, courts cannot consider evidence which has not been formally offered
because parties are required to inform the courts of the purpose of introducing their
respective exhibits to assist the latter in ruling on their admissibility in case an
objection thereto is made. Without a formal offer of evidence, courts are
constrained to take no notice of the evidence even if it has been marked and
identified.21

This rule, however, admits of an exception, provided that the evidence has been
identified by testimony duly recorded and that it has been incorporated in the
records of the case.22
In this case, the subject pieces of evidence were presented in support of
respondents motion for reconsideration of the denial of their motion to dismiss. A
hearing was set for the reception of their evidence, but petitioner failed to attend
the same. The pieces of evidence were thus identified, marked in evidence, and
incorporated in the records of the case. Clearly, the trial court correctly admitted
and considered the evidence of respondents warranting the dismissal of their case.
Now on the substantive aspect.
Respondents acted as sureties under the Comprehensive Surety Agreement to
secure the obligations of Jianshe to RCBC. A contract of suretyship is an agreement
whereby a party, called the surety, guarantees the performance by another party,
called the principal or obligor, of an obligation or undertaking in favor of another
party, called the obligee.23 The surety agreement is an accessory contract; and the
surety becomes directly, primarily, and equally bound with the principal as the
original promissor although the former possesses no direct or personal interest over
the latters obligations and does not receive any benefit therefrom. 24
Pursuant to Article 2054 of the Civil Code that "a guarantor [or surety] may bind
himself for less, but not for more than the principal debtor, both as regards the
amount and the onerous nature of the conditions," respondents limited their liability
to P50 M, which is less than Jianshes liability to RCBC. Howard Ko complied with his
obligations and made payments to RCBC through the following modes:
First mode of payment: certificates of time deposit of Howard Ko and Howard Ko
and/or Harry Ko which were admitted by RCBC as applied for the payment of
Jianshes obligation.
Second mode of payment: official receipts and trust receipt debit advices which
were debited from Howard Kos current account (1-155-13110-1) and savings
account (1-155-30805-9) and applied as payment to Jianshes obligation.
Third mode of payment: certificates of time deposit of Howard Ko which were
withdrawn upon maturity and deposited to Jianshes RCBC Savings Account No. 1166-30810-6. Thereafter, the said amounts were debited by RCBC as payment to
several trust receipts issued to [Jianshe].
Fourth mode of payment: certificates of time deposit of Harry Ko and Liu Guo Xuan
which were admitted as payment by RCBC. The proceeds of these CTDs were
borrowed by Howard Ko from Harry Ko and Liu Guo Xuan to be applied as payment
for Jianshes obligations.25
These modes of payment were adequately explained by respondents and supported
by documentary evidence. We quote with approval the CAs observations in this
wise:

The evidence in favor of the [respondents] consisted of no less than RCBC

documents showing that said bank debited from their various accounts the amounts
which Jianshe owed RCBC under the trust receipts. In the subject petition, the
petitioner has not claimed that these evidence were fabricated. It cannot say that, if
present at the hearing or, if there would be another hearing, it could prove that the
RCBC documents were false.1awphi1 It cannot because those were genuine RCBC
documents.
All it can say is that these were payments for "a different credit line" or different
"trust receipts" secured by the Comprehensive Surety Agreement which remains
unpaid.
Petitioner, however, could not even allege the specific "different credit line" or other
trust receipt. In the absence thereof, it could only mean that the payments were for
the Jianshe accounts.
Granting arguendo that the receipts and trust debit advices were for "a different
credit line" or different "trust receipts," it is immaterial as the [respondents], as
sureties, have already exceeded their liability cap of P50 M.
Petitioner further argues that [respondent] Howard Kos claim of overpayment is
incredible because he would not have paid the alleged amount of P89,656,002.67
as surety when his liability as such was only P50 M. In this regard, suffice it to state
that not all payments were direct as some were debited by RCBC from the accounts
of [Howard Ko]. So, he would not have known of the amounts he had paid in favor of
Jianshe at the time they were debited by RCBC. 26
The Court notes that the pieces of evidence presented by respondents were
documents, such as official receipts, trust debit advices, and passbooks, issued by
no less than petitioner itself. Payments were made by respondents through the
active participation of RCBC, primarily by debiting the subject amounts from
respondents accounts with the bank. Admittedly, it was Jianshe, as the principal,
which owed RCBC. Nowhere in petitioners pleadings was it claimed that
respondents also owed the bank aside from their obligation as surety to secure the
principal obligation of Jianshe. Undoubtedly, the debited amounts from Howard Kos
accounts were made to satisfy his obligation as surety. Petitioner cannot now claim
that the payments were made by Jianshe as principal and not by respondents as
sureties simply because the receipts were issued in the name of Jianshe. As aptly
observed by the CA, the issuance of the receipts in the name of Jianshe was done
only to indicate that it was the principal obligor. The issuance of the receipts does
not erase the fact that various amounts were debited from the accounts of Howard
Ko, and certificates of time deposit in the name of Howard Ko were applied as
payment for Jianshes obligations.
In view of the foregoing, the CA did not err in sustaining the dismissal of the case
against respondents as the claim or demand set forth in the complaint has been
paid or otherwise extinguished.

WHEREFORE, premises considered, the petition is hereby DENIED for lack of merit.
The Court of Appeals Decision dated October 15, 2008 and Resolution dated
November 13, 2008 in CA-G.R. SP No. 101417 are AFFIRMED.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice

Urethane v. Ong, G.R. No. 164632, October 29, 2008

THIRD DIVISION

URETHANE TRADING SPECIALIST, INC.,

Petitioner,

G.R. No. 164632

Present:

- versus -

EDWIN ONG and LETICIA ONG,

Respondents.

YNARES-SANTIAGO, J.,
Chairperson,
CARPIO,*
AZCUNA,**
CHICO-NAZARIO, and
NACHURA, JJ.
Promulgated:
October 29, 2008

x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court assailing the February 12, 2004 [1]and the July 26, 2004 [2] Resolutions
of the Court of Appeals (CA) in CA-G.R. SP No 79251.
The dispute between the parties started in June 2000 when petitioner filed a
Complaint[3] for sum of money against the respondents (docketed as Civil Case No.
8142) before the Metropolitan Trial Court (MeTC) of Pasig City. In the proceedings,
respondents were declared in default, and petitioner presented evidence ex parte.
[4]
On October 30, 2001, the MeTC rendered its Decision [5] ordering respondents,

jointly and severally, to pay the petitioner P295,026.01 with legal interest as actual
damages, and 25% thereof as attorneys fees.
Following the finality of the said decision, petitioner moved for execution
on January 10, 2002.[6] No opposition having been filed, the MeTC, on March 18,
2002, ordered the issuance of a writ of execution. [7]
On July 9, 2002, respondents filed a petition for annulment of judgment with
damages and prayer for injunctive relief before the Regional Trial Court (RTC)
of Pasig City. This was docketed as Civil Case No. 69034. [8] In their petition, they
claimed that they did not receive the summons issued by the MeTC; that the
sheriffs return of summons was manufactured; and that they were not furnished
copies of the order of default. Thus, they prayed that the MeTC decision be annulled
on grounds of extrinsic fraud and lack of jurisdiction over their persons. [9]
Petitioner moved for the dismissal of the petition on the following grounds:
(1) that the cause of action is barred by the statute of limitation; and (2) that the
claim or demand set forth in the petition has been waived, abandoned or otherwise
extinguished. It contended that the summons was in fact served on respondents;
that the MeTC Sheriff initially went to the business address of respondent Leticia
Ong at Nos. 777-779 Rizal Avenue, Manila, but as the hardware store therein had
already ceased its operation, he could not serve the summons at that given
address; that he then proceeded to respondents residence, but that on account of
the absence of respondents and of their domestic helpers refusal to receive the
summons, the Sheriff effected substituted service. [10] Petitioner further contended
that respondent Edwin Ong, in the hearing on their application for an injunctive
relief, admitted that he had attended one hearing in the proceedings before the
MeTC.[11]
Petitioner argued that in light of these facts, respondents cannot validly
invoke lack of jurisdiction over their persons as a ground in their petition; that only
extrinsic fraud could be raised by them; and as they did not file a petition for relief,
they were already barred by the statute of limitations and they could now be
considered as having waived or abandoned their claims. [12]
Unconvinced by petitioners arguments, the RTC denied the motion to dismiss
in its April 4, 2003 Omnibus Order.[13] OnAugust 8, 2003, it further denied
petitioners motion for reconsideration.[14]
Discontented, petitioner timely petitioned for the issuance of a writ
of certiorari before the CA (docketed as CA-G.R. SP No. 79251). The appellate court,
however, in the assailed February 12, 2004 Resolution,[15] dismissed the petition on
the ground that an interlocutory order is not the proper subject of the special civil
action of certiorari. In the further assailed July 26, 2004Resolution,[16] it denied
petitioners motion for reconsideration.
Aggrieved, petitioner raised the following issues for the Courts resolution in
the instant petition for review on certiorari:
I.

Whether or not, under existing laws, the Petition for Annulment of

Judgment filed by Respondents should be dismissed on two (2)
grounds, namely: (1) That the cause of action is barred by the statutes
of limitation or by laches; and (2) The claim or demand set forth in the
plaintiffs petition has been waived, abandoned, or otherwise
extinguished.
II.
Whether or not the Petition for Review [should be petition
for certiorari] filed by the Petitioner should be dismissed on the
ground that an order denying a motion to dismiss is an interlocutory
order which cannot be the subject of a petition for certiorari.[17]
The Court denies the petition and affirms the ruling of the CA.
Well-entrenched in our jurisdiction is the rule that the trial courts denial of
a motion to dismiss cannot be questioned in acertiorari proceeding under Rule 65 of
the Rules of Court. This is because a certiorari writ is a remedy designed to correct
errors of jurisdiction and not errors of judgment. [18] The appropriate course of action
of the movant in such event is to file an answer [19]and interpose as affirmative
defenses the objections raised in the motion to dismiss.[20] If, later, the decision of
the trial judge is adverse, the movant may then elevate on appeal the same issues
raised in the motion.[21]
The only exception to this rule is when the trial court gravely abused its
discretion in denying the motion. [22] This exception is, nevertheless, applied
sparingly, and only in instances when there is a clear showing that the trial court
exercised its judicial power in an arbitrary or despotic manner by reason of passion
or personal hostility.[23] Further, the abuse of the courts discretion must be
so patent and gross as to amount to an evasion of a positive duty or a virtual refusal
to perform the duty enjoined by, or to act at all in contemplation of, law. [24]
Here, the denial by the RTC of petitioners motion to dismiss is not tainted
with grave abuse of discretion. The CA is, therefore, correct in dismissing the
petition for certiorari.
To elucidate, the grounds raised in the motion are: (1) bar by the statute of
limitations or by laches; and (2) waiver, abandonment or extinguishment of claim.
These grounds are, however, based on petitioners assertion that respondents
cannot invoke lack of jurisdiction over their persons as a ground in the petition for
annulment of judgment. This is a conclusion of law that cannot be used as the
foundation of the motion to dismiss. The assertion still needs to be proven or
disproven by the parties and resolved by the trial court. Indeed, petitioners
allegations in the motion that respondents actually received the summons and that
one of them even voluntarily submitted to the jurisdiction of the MeTC, are matters
of evidence that need to be threshed out in the trial. True or not, respondents must

be given ample opportunity to prove their claim, and the petitioner to debunk the
same.[25]
The same principle holds true on the issues of laches, abandonment and
prescription alleged in the motion. These involve evidentiary matters requiring a
full-blown trial on the merits and cannot be resolved in a mere motion to dismiss.
[26]
Furthermore, prescription will warrant the dismissal of the case only when the
complaint on its face shows that indeed the action has already prescribed. [27]
WHEREFORE, the petition for review on certiorari is DENIED.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice

Fernando v. Acuna, G.R. No. 161030, September 14, 2011

Republic of the Philippines

Supreme Court
Manila

FIRST DIVISION

JOSE FERNANDO, JR., ZOILO

FERNANDO, NORMA FERNANDO
BANARES, ROSARIO FERNANDO
TANGKENCGO, HEIRS OF TOMAS
FERNANDO, represented by
ALFREDO V. FERNANDO, HEIRS
OF GUILLERMO FERNANDO,
represented by Ronnie H.

G.R. No. 161030

Present:
CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,

Fernando, HEIRS OF ILUMINADA

FERNANDO, represented by
Benjamin Estrella and HEIRS OF
GERMOGENA FERNANDO,
Petitioners,

BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.

- versus LEON ACUNA, HERMOGENES

FERNANDO, HEIRS OF SPOUSES
ANTONIO FERNANDO AND FELISA
CAMACHO, represented by
HERMOGENES FERNANDO,
Respondents.
Promulgated:
September 14, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION
LEONARDO-DE CASTRO, J.:

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure seeking to reverse and set aside the Decision [1] dated November 24,
2003 of the Court of Appeals in CA-G.R. CV No. 75773, entitled Jose Fernando, Jr.,
et al. v. Heirs of Germogena Fernando, et al., which reversed and set aside the
Decision[2] dated May 16, 2002 of Branch 84, Regional Trial Court (RTC) of Malolos,
Bulacan in Civil Case No. 256-M-97.
At the heart of this controversy is a parcel of land covered by Original
Certificate of Title (OCT) No. RO-487 (997) [3]registered in the names of Jose A.
Fernando, married to Lucila Tinio, and Antonia A. Fernando, married to Felipe
Galvez, and located in San Jose, Baliuag, Bulacan. When they died intestate, the
property remained undivided. Petitioners herein namely, Jose Fernando, Jr., Zoilo
Fernando, Norma Fernando Banares, Rosario Fernando Tangkencgo, the heirs of
Tomas Fernando, the heirs of Guillermo Fernando, the heirs of Iluminada Fernando
and the heirs of Germogena Fernando are the heirs and successors-in-interest of
the deceased registered owners. However, petitioners failed to agree on the
division of the subject property amongst themselves, even after compulsory
conciliation before the Barangay Lupon.

Thus, petitioners, except for the heirs of Germogena Fernando, filed a

Complaint[4] for partition on April 17, 1997 against the heirs of Germogena
Fernando. In the Complaint, plaintiffs alleged, among others, that they and
defendants are common descendants and compulsory heirs of the late spouses Jose
A. Fernando and Lucila Tinio, and the late spouses Antonia A. Fernando and Felipe
Galvez. They further claimed that their predecessors-in-interest died intestate and
without instructions as to the disposition of the property left by them covered by
OCT No. RO-487 (997). There being no settlement, the heirs are asking for their
rightful and lawful share because they wish to build up their homes or set up their
business in the respective portions that will be allotted to them. In sum, they
prayed that the subject property be partitioned into eight equal parts,
corresponding to the hereditary interest of each group of heirs.
In their Answer[5] filed on May 20, 1997, defendants essentially admitted all
of the allegations in the complaint. They alleged further that they are not opposing
the partition and even offered to share in the expenses that will be incurred in the
course of the proceedings.
In his Complaint in Intervention[6] filed on January 12, 1998, respondent Leon
Acuna (Acuna) averred that in the Decision[7] dated November 29, 1929 of the
Cadastral Court of Baliuag, Bulacan, the portion of the property identified as Lot
1303 was already adjudicated to: (a) Antonio Fernando, married to Felisa Camacho;
(b) spouses Jose Martinez and Gregoria Sison; (c) spouses Ignacio de la Cruz and
Salud Wisco; and (d) Jose Fernando, married to Lucila Tinio, the petitioners
predecessor-in-interest. He likewise claimed that in a 1930 Decision of the
Cadastral Court, the portion identified as Lot 1302 was also already adjudicated to
other people as well.
Respondent Acuna further alleged that Salud Wisco, through her authorized
attorney-in-fact, Amador W. Cruz, sold her lawful share denominated as Lot 1303-D
with an area of 3,818 square meters to Simeon P. Cunanan, [8] who in turn sold the
same piece of land to him as evidenced by a Deed of Sale. [9] He also belied
petitioners assertion that the subject property has not been settled by the parties
after the death of the original owners in view of the Decision [10] dated July 30, 1980
of the Court of First Instance (CFI) of Baliuag, Bulacan, in LRC Case No. 80-389 which
ordered the Register of Deeds of Bulacan to issue the corresponding certificates of
title to the claimants of the portion of the subject property designated as Lot 1302.
[11]
Norma Fernando, one of the petitioners in the instant case, even testified in LRC
Case No. 80-389. According to respondent Acuna, this circumstance betrayed bad
faith on the part of petitioners in filing the present case for partition.

Respondent Acuna likewise averred that the action for partition cannot
prosper since the heirs of the original owners of the subject property, namely
Rosario, Jose Jr., Norma, Tomas, Guillermo, Leopoldo, Hermogena, Illuminada and
Zoilo, all surnamed Fernando, and Lucila Tinio, purportedly had already sold their
respective one-tenth (1/10) share each in the subject property to Ruperta Sto.
Domingo Villasenor for the amount of P35,000.00 on January 25, 1978 as evidenced
by a Kasulatan sa Bilihang Patuluyan.[12] He added that he was in possession of
the original copy of OCT No. RO-487 (997) and that he had not commenced the
issuance of new titles to the subdivided lots because he was waiting for the owners
of the other portions of the subject property to bear their respective shares in the
cost of titling.
Subsequently, a Motion for Intervention [13] was filed on June 23, 1998 by
respondent Hermogenes Fernando (Hermogenes), for himself and on behalf of the
heirs of the late spouses, Antonio A. Fernando and Felisa Camacho. According to
him, in the July 30, 1980 Decision of the CFI of Bulacan, their predecessors-ininterest had already been adjudged owners of Lots 1302-A, 1302-F, 1302-G,
[14]
1302-H and 1302-J of OCT No. RO-487 (997) and any adverse distribution of the
properties would cause respondents damage and prejudice. He would also later
claim, in his Answer-in-Intervention,[15] that the instant case is already barred by res
judicata and, should be dismissed.
In the interest of substantial justice, the trial court allowed the respondents to
intervene in the case.
The plaintiffs and defendants jointly moved to have the case submitted for
judgment on the pleadings on May 7, 1999.[16] However, the trial court denied said
motion in a Resolution[17] dated August 23, 1999 primarily due to the question
regarding the ownership of the property to be partitioned, in light of the intervention
of respondents Acuna and Hermogenes who were claiming legal right thereto.
In their Manifestation[18] filed on April 12, 2000, petitioners affirmed their
execution of a Deed of Sale in favor of Ruperta Sto. Domingo Villasenor in 1978,
wherein they sold to her 1,000 square meters from Lot 1303 for the sum of
35,000.00.
After the pre-trial conference, trial ensued. On September 19, 2000,
petitioner Elizabeth Alarcon testified that they (plaintiffs) are not claiming the entire
property covered by OCT No. RO-487 (997) but only the area referred to as Lot 1303
andSapang Bayan. She also admitted that Lot 1302 had already been divided into
ten (10) sublots and allocated to various owners pursuant to the July 30, 1980
Decision of the CFI of Baliuag, Bulacan and these owners already have their own
titles. She likewise claimed that the entire area consisting of Lot 1303 and Sapang

Bayan is based on the subdivision plan of Lot 1303. She admitted that plaintiffs
predecessor-in-interest was only allocated a portion of Lot 1303 based on the said
plan. However, she claimed that the November 29, 1929 Decision subdividing Lot
1303 was never implemented nor executed by the parties. [19]
Petitioner Norma Fernando testified on October 3, 2000 that she is one of the
children of Jose A. Fernando and Lucila Tinio. She affirmed that plaintiffs were only
claiming Lot 1303 and Sapang Bayan. She also testified that Sapang Bayan was
supposedly included in Lot 1302 and was previously a river until it dried up. Unlike
Lot 1302, the rest of the property was purportedly not distributed. She likewise
averred that she is aware of a November 29, 1929 Decision concerning the
distribution of Lot 1303 issued by the cadastral court but insisted that the basis of
the claims of the petitioners over Lot 1303 is the title in the name of her ascendants
and not said Decision.[20]
On November 16, 2000, as previously directed by the trial court and agreed
to by the parties, counsel for respondent Hermogenes prepared and submitted an
English translation of the November 29, 1929 Decision. The same was admitted
and marked in evidence as Exhibit X [21] as a common exhibit of the parties. The
petitioners also presented Alfredo Borja, the Geodetic Engineer who conducted a
relocation survey of the subject property.
After plaintiffs rested their case, respondent Hermogenes testified on
December 7, 2000. In his testimony, he claimed to know the plaintiffs and
defendants as they were allegedly his relatives and neighbors. He confirmed that
according to the November 29, 1929 Decision, portions of Lot 1303 was designated
as Lots 1303-A, 1303-B, 1303-C and 1303-D which were adjudicated to certain
persons, including Jose Fernando, while the rest of Lot 1303 was adjudicated to his
parents, Antonio A. Fernando married to Felisa Camacho. According to respondent
Hermogenes, his familys tenant and the latters children occupied the portion of Lot
1303 allotted to his (Hermogenes) parents while the rest of Lot 1303 was occupied
by the persons named in the said November 29, 1929 Decision. He admitted,
however, that nobody among the purported possessors of Lot 1303 registered the
lots assigned to them in the Decision.[22]
On January 18, 2001, respondent Hermogenes presented a witness, Engineer
Camilo Vergara who testified that the subject land is divided into Lots 1302 and
1303 with a creek dividing the two lots known as Sapang Bayan. He also identified
a Sketch Plan numbered as PSD-45657 and approved on November 11, 1955.
[23]
During the hearing on January 30, 2001, respondent Hermogenes made an oral
offer of his evidence and rested his case. On the same date, respondent Acuna, in
lieu of his testimony, offered for the parties to simply stipulate on the due execution
and authenticity of the Deeds of Sale dated April 6, 1979 and December 28,

1980, showing the transfer of Lot 1303-D from Salud Wisco to Simeon Cunanan
and subsequently to respondent Acuna. When counsel for plaintiffs and defendants
agreed to the stipulation, albeit objecting to the purpose for which the deeds of sale
were offered, the trial court admitted Acunas exhibits and Acuna rested his case. [24]
On February 15, 2001, plaintiffs recalled Norma Fernando as a rebuttal
witness. In her rebuttal testimony, she identified the tax declaration [25] over the
said property in the name of Jose A. Fernando; an official receipt [26] dated October 3,
1997 issued by the Office of the Treasurer of the Municipality of Baliuag, Bulacan for
payment of real property taxes from 1991 to 1997; and a real property tax
clearance[27] dated October 6, 1997, to show that plaintiffs have allegedly been
paying the real property taxes on the entire property covered by OCT No. RO-487
(997). However, she further testified that they were now willing to pay taxes only
over the portion with an area of 44,234 square meters, which is included in their
claim.[28]
In a Decision dated May 16, 2002, the trial court ruled that plaintiffs and
defendants (petitioners herein) were indeed the descendants and successors-ininterest of the registered owners, Jose A. Fernando (married to Lucila Tinio) and
Antonia Fernando (married to Felipe Galvez), of the property covered by OCT No.
RO-487 (997). After finding that the parties admitted that Lot 1302 was already
distributed and titled in the names of third persons per the July 30, 1980 Decision of
the CFI of Baliuag, Bulacan the trial court proceeded to rule on the allocation of Lot
1303 and Sapang Bayan.
With respect to Lot 1303, the trial court found that the November 29, 1929
Decision of the Cadastral Court, adjudicating said lot to different persons and
limiting Jose Fernandos share to Lot 1303-C, was never implemented nor executed
despite the lapse of more than thirty years. Thus, the said decision has already
prescribed and can no longer be executed. The trial court ordered the reversion of
Lot 1303 to the ownership of spouses Jose A. Fernando and Lucila Tinio and spouses
Antonia A. Fernando and Felipe Galvez under OCT No. RO-487 (997) and allowed the
partition of Lot 1303 among petitioners as successors-in-interest of said registered
owners. Excluded from the partition, however, were the portions of the property
which petitioners admitted had been sold or transferred to Ruperta Sto. Domingo
Villasenor and respondent Acuna.
As for the ownership of Sapang Bayan, the trial court found that the same
had not been alleged in the pleadings nor raised as an issue during the pre-trial
conference. Also, according to the trial court, the parties failed to clearly show
whether Sapang Bayanwas previously a dry portion of either Lot 1302 or Lot
1303. Neither was there any proof that Sapang Bayan was a river that just dried up
or that it was an accretion which the adjoining lots gradually received from the

effects of the current of water. It was likewise not established who were the owners
of the lots adjoining Sapang Bayan. The trial court concluded that none of the
parties had clearly and sufficiently established their claims over Sapang Bayan.
The dispositive portion of the May 16, 2002 Decision of the trial court reads:
WHEREFORE, all the foregoing considered, judgment is hereby
rendered ordering the reversion of Lot 1303, except the portions
allotted to Acuna and Ruperta Sto. Domingo Villasenor, to the
ownership of Jose Fernando and Lucia Tinio and Antonia Fernando and
Felipe Galvez under OCT No. 997 and thereafter allowing the partition
of said Lot 1303 among the plaintiffs and the defendants as
successors-in-interest of Jose and Lucia as well as Antonia and Felipe
after the settlement of any inheritance tax, fees, dues and/or
obligation chargeable against their estate. [29]

All the parties, with the exception of respondent Acuna, elevated this case to
the Court of Appeals which rendered the assailed November 24, 2003 Decision, the
dispositive portion of which reads:
WHEREFORE, premises considered, the decision dated May 16,
2002, of the Regional Trial Court of Malolos, Bulacan, Third Judicial
Region, Branch 84, in Civil Case No. 256-M-97, is hereby REVERSED
and SET ASIDE and the complaint dated April 17, 1997 filed by
plaintiffs-appellants is dismissed. Costs against plaintiffs-appellants. [30]

Hence, plaintiffs and defendants in the court a quo elevated the matter for
our review through the instant petition.
Petitioner raises the following issues for consideration:
1.

Whether or not the ownership of Lot 1303 and the Sapang Bayan
portion of the piece of land covered by O.C.T. No. RO-487 (997) or Plan
Psu-39080 should revert to the descendants and heirs of the late spouses
Jose Fernando and Lucila Tinio and Antonia Fernando, married to Felipe
Galvez;

2.

Whether or not a title registered under the Torrens system, as the

subject original certificate of title is the best evidence of ownership of land
and is a notice against the world.[31]

The petition is without merit.

Petitioners based their claims to the disputed areas designated as Lot 1303
and Sapang Bayan on their ascendants title, OCT No. RO-487 (997), which was
issued on February 26, 1927 in the name of Jose A. Fernando married to Lucila Tinio
and Antonia A. Fernando married to Felipe Galvez. The Court now rules on these
claims in seriatim.
Petitioners claim with respect to Lot 1303
As the records show, in the November 29, 1929 Decision of the Cadastral
Court of Baliuag, Bulacan (in Cadastral Record No. 14, GLRO Cad. Record No. 781)
which was written in Spanish, Lot 1303 had already been divided and adjudicated to
spouses Jose A. Fernando and Lucila Tinio; spouses Antonia A. Fernando and Felipe
Galvez; spouses Antonio A. Fernando and Felisa Camacho; spouses Jose Martinez
and Gregoria Sison; and spouses Ignacio de la Cruz and Salud Wisco from whom
respondent Acuna derived his title. The English translation of the said November
29, 1929 Decision was provided by respondent Hermogenes and was adopted by all
the parties as a common exhibit designated as Exhibit X. The agreed English
translation of said Decision reads:
Lot No. 1303 This lot is decreed in record No. 448, G.L.R.O.
Record No. 25414 and actually with Original Certificate No. 997
(exhibited today) in the name of Jose A. Fernando and Antonia A.
Fernando, who now pray that said lot be subdivided in accordance with
the answers recorded in the instant cadastral record, and the sketch,
Exh. A, which is attached to the records.
A part or portion of the lot has been claimed by Antonio A.
Fernando, of legal age, married to Felisa Camacho; another portion by
the spouses Jose Martinez and Gregoria Sison; another portion by
Antonia A. Fernando, of legal age, married to Felipe Galvez; another
portion by Jose A. Fernando, of legal age, married to Lucila Tinio; and
another portion by the spouses Ignacio de la Cruz and Salud Wisco,
both of legal age. The part claimed by the spouses Jose A. Martinez and
Gregoria Sison is Lot 1303-A of Exh. A; the part claimed by Antonia A.
Fernando is Lot 1303-B of said exhibit; the part claimed by Jose A.
Fernando is Lot 1303-C of said exhibit, and the part claimed by the
spouses Ignacio de la Cruz and Salud Wisco is Lot 1303-D of the
aforementioned Exhibit.
The subdivision of said lot is hereby ordered, separating from
the same the portions that correspond to each of the claimants, which
portions are known as Lots 1303-A, 1303-B, 1303-C, and 1303-D in the
sketch, Exh. A, and once subdivided, are adjudicated in favor of the
spouses, Jose Martinez and Gregoria Sison, of legal age, Lot No. 1303A, in favor of Antonia A. Fernando, of legal age, married to Felipe
Galvez, Lot No. 1303-B; in favor of Jose A. Fernando, of legal age,
married to Lucila Tinio, Lot 1303-C; in favor of the spouses Ignacio de

la Cruz and Salud Wisco, of legal age, Lot 1303-D; and the rest of Lot
1303 is adjudged in favor of Antonio A. Fernando married to Felisa
Camacho. It is likewise ordered that once the subdivision plan is
approved, the same be forwarded by the Director of Lands to this Court
for its final decision.
It is ordered that the expense for mentioned subdivision, shall be
for the account of the spouses Jose Martinez and Gregoria Sison,
Antonia A. Fernando, Jose A. Fernando, the spouses Ignacio de la Cruz
and Salud Wisco, and Antonio A. Fernando. [32]

From the foregoing, it would appear that petitioners ascendants themselves

petitioned for the cadastral court to divide Lot 1303 among the parties to the 1929
case and they were only allocated Lots 1303-B and 1303-C. Still, as the trial court
noted, the November 29, 1929 Decision was never fully implemented in the sense
that the persons named therein merely proceeded to occupy the lots assigned to
them without having complied with the other directives of the cadastral court which
would have led to the titling of the properties in their names. Nonetheless, it is
undisputed that the persons named in the said November 29, 1929 Decision and,
subsequently, their heirs and assigns have since been in peaceful and uncontested
possession of their respective lots for more than seventy (70) years until the filing of
the suit for partition on April 17, 1997 by petitioners which is the subject matter of
this case. Respondent Hermogenes, who testified that petitioners were his relatives
and neighbors, further affirmed before the trial court that the persons named in the
November 29, 1929 Decision took possession of their respective lots:

ATTY. VENERACION:
Q

This Jose A. Fernando married to Lucila Tinio, you testified

earlier are the parents of the plaintiffs. Did they take possession
of lot 1303-C?

Yes, sir. They took possession.

Did they take possession of the other lots?

No. Yes, the portion

The other lots in the name of the other persons. Did they take
possession of that?

Yes, they took took possession of the other No, sir.

I am asking you whether they took possession, the children

ATTY. SANTIAGO:

The questions are already answered, your Honor.

ATTY. VENERACION:
What is the answer?
ATTY. SANTIAGO:
Its in the record.
COURT:
The persons named in the Decision already took possession of
the lots allotted to them as per that Decision. So that was
already answered. Anything else?
ATTY. VENERACION;
No more question, Your Honor.[33]

It is noteworthy that petitioners do not dispute that the November 29, 1929
Decision of the cadastral court already adjudicated the ownership of Lot 1303 to
persons other than the registered owners thereof. Petitioners would, nonetheless,
claim that respondents purported failure to execute the November 29, 1929
Decision over Lot 1303 (i.e., their failure to secure their own titles) meant that the
entire Lot 1303 being still registered in the name of their ascendants rightfully
belongs to them. This is on the theory that respondents right to have the said
property titled in their names have long prescribed.
On this point, we agree with the appellate court.
Section 47 of Presidential Decree No. 1529, otherwise known as the Property
Registration Decree, states that [n]o title to registered land in derogation of the
title of the registered owner shall be acquired by prescription or adverse
possession. Thus, the Court has held that the right to recover possession of
registered land is imprescriptible because possession is a mere consequence of
ownership.[34]
However, in Heirs of Anacleto B. Nieto v. Municipality of Meycauayan,
Bulacan,[35] the Court had recognized the jurisprudential thread regarding the
exception to the foregoing doctrine that while it is true that a Torrens title is
indefeasible and imprescriptible, the registered landowner may lose his right to
recover possession of his registered property by reason of laches.

Thus, in Heirs of Batiog Lacamen v. Heirs of Laruan,[36] the Court had held that
while a person may not acquire title to the registered property through continuous
adverse possession, in derogation of the title of the original registered owner, the
heir of the latter, however, may lose his right to recover back the possession of such
property and the title thereto, by reason of laches.
In the more recent case of Bartola M. Vda. De Tirona v. Encarnacion,[37] we
similarly held that while jurisprudence is settled on the imprescriptibility and
indefeasibility of a Torrens title, there is equally an abundance of cases where we
unequivocally ruled that registered owners may lose their right to recover
possession of property through the equitable principle of laches.
Laches means the failure or neglect for an unreasonable and unexplained
length of time to do that which, by observance of due diligence, could or should
have been done earlier. It is negligence or omission to assert a right within a
reasonable time, warranting the presumption that the party entitled to assert his
right either has abandoned or declined to assert it. Laches thus operates as a bar in
equity.[38] The essential elements of laches are: (a) conduct on the part of the
defendant, or of one under whom he claims, giving rise to the situation complained
of; (b) delay in asserting complainants rights after he had knowledge of
defendants acts and after he has had the opportunity to sue; (c) lack of knowledge
or notice by defendant that the complainant will assert the right on which he bases
his suit; and (d) injury or prejudice to the defendant in the event the relief is
accorded to the complainant.[39]
In view of respondents decades long possession and/or ownership of their
respective lots by virtue of a court judgment and the erstwhile registered owners
inaction and neglect for an unreasonable and unexplained length of time in
pursuing the recovery of the land, assuming they retained any right to recover the
same, it is clear that respondents possession may no longer be disturbed. The
right of the registered owners as well as their successors-in-interest to recover
possession of the property is already a stale demand and, thus, is barred by
laches.
In the same vein, we uphold the finding of the Court of Appeals that the title
of petitioners ascendants wrongfully included lots belonging to third persons.
[40]
Indeed, petitioners ascendants appeared to have acknowledged this fact as
they were even the ones that prayed for the cadastral court to subdivide Lot 1303
as evident in the November 29, 1929 Decision. We concur with the Court of Appeals
that petitioners ascendants held the property erroneously titled in their names
under an implied trust for the benefit of the true owners. Article 1456 of the Civil
Code provides:

ART. 1456.
If property is acquired through mistake or fraud,
the person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property
comes.

As aptly observed by the appellate court, the party thus aggrieved has the
right to recover his or their title over the property by way of reconveyance while the
same has not yet passed to an innocent purchaser for value. [41] As we held
in Medizabel v. Apao,[42] the essence of an action for reconveyance is that the
certificate of title is respected as incontrovertible. What is sought is the transfer of
the property, in this case its title, which has been wrongfully or erroneously
registered in another person's name, to its rightful owner or to one with a better
right. It is settled in jurisprudence that mere issuance of the certificate of title in
the name of any person does not foreclose the possibility that the real property may
be under co-ownership with persons not named in the certificate or that the
registrant may only be a trustee or that other parties may have acquired interest
subsequent to the issuance of the certificate of title. [43]
We cannot subscribe to petitioners argument that whatever rights or claims
respondents may have under the November 29, 1929 Decision has prescribed for
their purported failure to fully execute the same. We again concur with the Court of
Appeals in this regard. An action for reconveyance of registered land based on
implied trust prescribes in ten (10) years, the point of reference being the date of
registration of the deed or the date of the issuance of the certificate of title over the
property. However, this Court has ruled that the ten-year prescriptive period applies
only when the person enforcing the trust is not in possession of the property. If a
person claiming to be its owner is in actual possession of the property, the right to
seek reconveyance, which in effect seeks to quiet title to the property, does not
prescribe. The reason is that the one who is in actual possession of the land
claiming to be its owner may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right. [44]
Petitioners claim with respect to Sapang Bayan
As for the issue of the ownership of Sapang Bayan, we sustain the appellate
court insofar as it ruled that petitioners failed to substantiate their ownership over
said area. However, we find that the Court of Appeals erred in ruling that the
principle of accretion is applicable. The said principle is embodied in Article 457 of
the Civil Code which states that [t]o the owners of lands adjoining the banks of
rivers belong the accretion which they gradually receive from the effects of the
current of the waters. We have held that for Article 457 to apply the following
requisites must concur: (1) that the deposit be gradual and imperceptible; (2) that it

be made through the effects of the current of the water; and (3) that the land where
accretion takes place is adjacent to the banks of rivers. [45] The character of
the Sapang Bayan property was not shown to be of the nature that is being referred
to in the provision which is an accretion known as alluvion as no evidence had been
presented to support this assertion.
In fact from the transcripts of the proceedings, the parties could not agree
how Sapang Bayan came about. Whether it was a gradual deposit received from
the river current or a dried-up creek bed connected to the main river could not be
ascertained.
Even assuming that Sapang Bayan was a dried-up creek bed, under Article
420, paragraph 1[46] and Article 502, paragraph 1[47] of the Civil Code, rivers and
their natural beds are property of public dominion. In the absence of any provision
of law vesting ownership of the dried-up river bed in some other person, it must
continue to belong to the State.
We ruled on this issue in Republic v. Court of Appeals,[48] to wit:

The lower court cannot validly order the registration of Lots 1

and 2 in the names of the private respondents. These lots were
portions of the bed of the Meycauayan river and are therefore
classified as property of the public domain under Article 420 paragraph
1 and Article 502, paragraph 1 of the Civil Code of the Philippines. They
are not open to registration under the Land Registration act. The
adjudication of the lands in question as private property in the names
of the private respondents is null and void. [49]

Furthermore, in Celestial v. Cachopero,[50] we similarly ruled that a dried-up

creek bed is property of public dominion:

A creek, like the Salunayan Creek, is a recess or arm extending

from a river and participating in the ebb and flow of the sea. As such,
under Articles 420(1) and 502(1) of the Civil Code, the Salunayan
Creek, including its natural bed, is property of the public domain which
is not susceptible to private appropriation and acquisitive prescription.
And, absent any declaration by the government, that a portion of the
creek has dried-up does not, by itself, alter its inalienable character. [51]

Therefore, on the basis of the law and jurisprudence on the matter, Sapang
Bayan cannot be adjudged to any of the parties in this case.
WHEREFORE, premises considered, the petition is hereby DENIED. The
assailed Decision dated November 24, 2003 of the Court of Appeals in CA-G.R. CV
No. 75773 is hereby AFFIRMED. Costs against petitioners.
SO ORDERED.

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

Unenforceable
See: Art. 1403, Civil Code

Failure to comply with condition precedent

Exhaustion of Administrative Remedies
Earnest Efforts toward amicable settlement- Art. 151, Family Code
Certification of Non-Forum Shopping
Payment of Docket Fee
Demand to vacate/payment of rental- Sec. 2, Rule 70
Alternative Dispute Resolution
Referral to Katarungang Pambarangay
Secs. 399-422, 15, Local Government Code
SC Admin. Circular 1493
Morata v. Go, 125 SCRA 444 (1983)
G.R. No. L-62339 October 27, 1983

SPOUSES MARIA LUISA P. MORATA AND JULIUS MORATA, petitioners,

vs.
SPOUSES VICTOR GO and FLORA C. GO and HON. VALERIANO P. TOMOL, JR.,
Judge, Court of First Instance of Cebu, Branch XI, respondents.

Amado G. Olis for petitioners.

Paul G. Gorres for private respondents.

ESCOLIN., J.:
In this petition for certiorari and prohibition with prayer for writ of preliminary
injunction, the Court is called upon to determine the classes of actions which fall
within the coverage of Presidential Decree No. 1508, 1 otherwise known as
Katarungang Pambarangay Law. This law requires the compulsory process of
arbitration at the Barangay level as a pre-condition for filing a complaint in court,
Petitioners contend that said legislation is so broad and all-embracing as to apply to
actions cognizable not only by the city and municipal courts, now known as the
metropolitan trial courts and municipal trial courts, but also by the courts of first
instance, now the regional trial courts. Upon the other hand, respondents would
limit its coverage only to those cases falling within the exclusive jurisdiction of the
metropolitan trial courts and municipal trial courts.
The antecedent facts are not disputed. On August 5, 1982, respondents Victor Go
and Flora D. Go filed in the defunct Court of First Instance of Cebu, presided by
respondent Judge Valeriano P. Tomol, Jr., a complaint against petitioners Julius
Morata and Ma. Luisa Morata for recovery of a sum of money plus damages
amounting to P49,400.00. The case was docketed as Civil Case No. R-22154.
On the basis of the allegation in the complaint that the parties-litigants are all
residents of Cebu City, petitioners filed a motion to dismiss, citing as grounds
therefor, the failure of the complaint to allege prior availment by the plaintiffs of the
barangay conciliation process required by P.D. 1508, as well as the absence of a
certification by the Lupon or Pangkat Secretary that no conciliation or settlement
had been reached by the parties. The motion was opposed by private respondents.
On September 2, 1982, respondent judge issued an order denying the motion to
dismiss.
Petitioners filed a motion for reconsideration, but the same was denied in an order
dated October 3, 1982, as follows:
Considering the specific reference to City or Municipal Courts in the
provisions of Sections 11 and 12 of P.D. No. 1508, as the Courts to
which the dispute settled or arbitrated by the Lupon Chairman or the
Pangkat, shall be elevated for nullification of the award or for execution
of the same, and considering that from the provision of Section 14 of
the same law, the pre- condition to the filing of a complaint as provided
for in Section 6 thereof, is specifically referred to, it is the considered
opinion of this Court that the provision of Section 6 of the law applies
only to cases cognizable by the inferior courts mentioned in Sections
11 and 12 of the law.

In view of the foregoing, the motion for reconsideration filed by the

defendants, of the order of September 2. 1982, denying their motion to
dismiss, is hereby denied. [Annex 'G', p. 36, Rollo].
From this order, petitioners came to Us thru this petition. In a resolution dated
December 2, 1982, We required respondents to file an answer, and likewise granted
a temporary restraining order enjoining respondent judge from requiring petitioners
to file their answer and enter into trial in Civil Case No. R-22154.
We find the petition impressed with merit. Section 6 of P.D. 1508 reads as follows:
SECTION 6. Conciliation pre-condition to filing of complaint. No
complaint, petition, action for proceeding involving any matter within
the authority of the Lupon as provided in Section 2 hereof shall be filed
or instituted in court or any other government office for adjudication
unless there has been a confrontation of the parties before the Lupon
Chairman or the Pangkat and no conciliation or settlement has been
reached as certified by the Lupon Secretary or the Pangkat Secretary
attested by the Lupon or Pangkat Chairman, or unless the settlement
has been repudiated. However, the parties may go directly to court in
the following cases:
[1] Where the accused is under detention;
[2] Where a person has otherwise been deprived of
personal liberty calling for habeas corpus proceedings;
[3] Actions coupled with provisional remedies such as
preliminary injunction, attachment, delivery of personal
property and support pendente lite; and
[4] Where the action may otherwise be barred by the
Statute of Limitations
Section 2 of the law defines the scope of authority of the Lupon thus:
SECTION 2. Subject matters for amicable settlement.The Lupon of
each barangay shall have authority to bring together the parties
actually residing in the same city or municipality for amicable
settlement of all disputes except:
[1] Where one party is the government ,or any subdivision or
instrumentality thereof;
[2] Where one party is a public officer or employee, and the dispute
relates to the performance of his official functions;
[3] Offenses punishable by imprisonment exceeding 30 days, or a fine
exceeding P200.00;

[4] Offenses where there is no private offended party;

[5] Such other classes of disputes which the Prime Minister may in the
interest of justice determine upon recommendation of the Minister of
Justice and the Minister of Local Government.
Thus, except in the instances enumerated in sections 2 and 6 of the law, the Lupon
has the authority to settle amicably all types of disputes involving parties who
actually reside in the same city or municipality. The law, as written, makes no
distinction whatsoever with respect to the classes of civil disputes that should be
compromised at the barangay level, in contradistinction to the limitation imposed
upon the Lupon by paragraph (3), section 2 thereof as regards its authority over
criminal cases. In fact, in defining the Lupon's authority, Section 2 of said law
employed the universal and comprehensive term "all", to which usage We should
neither add nor subtract in consonance with the rudimentary precept in statutory
construction that "where the law does not distinguish, We should not
distinguish. 2 By compelling the disputants to settle their differences through the
intervention of the barangay leader and other respected members of the barangay,
the animosity generated by protracted court litigations between members of the
same political unit, a disruptive factor toward unity and cooperation, is avoided. It
must be borne in mind that the conciliation process at the barangay level is likewise
designed to discourage indiscriminate filing of cases in court in order to decongest
its clogged dockets and, in the process, enhance the quality of justice dispensed by
it. Thus, to say that the authority of the Lupon is limited to cases exclusively
cognizable by the inferior courts is to lose sight of this objective. Worse, it would
make the law a self-defeating one. For what would stop a party, say in an action for
a sum of money or damages, as in the instant case, from bloating up his claim in
order to place his case beyond the jurisdiction of the inferior court and thereby
avoid the mandatory requirement of P.D. 1508? And why, indeed, should the law
seek to ease the congestion of dockets only in inferior courts and not in the regional
trial courts where the log-jam of cases is much more serious? Indeed, the
lawmakers could not have intended such half-measure and self-defeating
legislation.
The objectives of the law are set forth in its preamble thus:
WHEREAS, the perpetuation and official recognition of the timehonored tradition of amicably settling disputes among family and
barangay level without judicial resources would promote the speedy
administration of justice and implement the constitutional mandate to
preserve and develop Filipino culture and to strengthen the family as a
basic social institution;
WHEREAS, the indiscriminate filing of cases in the courts of justice
contributes heavily and unjustifiably to the congestion of court
dockets, thus causing a deterioration in the quality of justice;
WHEREAS, in order to help relieve the courts of such docket congestion
and thereby enhance the quality of justice dispensed by the courts, it

is deemed desirable to formally organize and institutionalize a system

of amicably settling disputes at the barangay level.
There can be no question that when the law conferred upon the Lupon "the
authority to bring together the parties actually residing in the same city or
municipality for amicable settlement of all disputes, ... ," its obvious intendment
was to grant to the Lupon as broad and comprehensive an authority as possible as
would bring about the optimum realization of the aforesaid objectives. These
objectives would only be half-met and easily thwarted if the Lupon's authority is
exercised only in cases falling within the exclusive jurisdiction of inferior courts.
Moreover, if it is the intention of the law to restrict its coverage only to cases
cognizable by the inferior courts, then it would not have provided in Section 3
thereof the following rule on Venue, to wit:
Section 3. Venue. ... However, all disputes which involve real property
or any interest therein shall be brought in the Barangay where the real
property or and part thereof is situated.
for it should be noted that, traditionally and historically, jurisdiction over cases
involving real property or any interest therein, except forcible entry and detainer
cases, has always been vested in the courts of first instance [now regional trial
court].
But it is pointed out by the respondent judge that Sections 11, 3 12, 4 and 14, 5 of
the law speak of the city and/or municipal courts as the forum for the nullification or
execution of the settlement or arbitration award issued by the Lupon. We hold that
this circumstance cannot be construed as a limitation of the scope of authority of
the Lupon. As heretofore stated, the authority of the Lupon is clearly established in
Section 2 of the law; whereas Sections 11, 12 and 14, relied upon by respondent
judge, deal with the nullification or execution of the settlement or arbitration awards
obtained at the barangay level. These sections conferred upon the city and
municipal courts the jurisdiction to pass upon and resolve petitions or actions for
nullification or enforcement of settlement/arbitration awards issued by the Lupon,
regardless of the amount involved or the nature of the original dispute. But there is
nothing in the context of said sections to justify the thesis that the mandated
conciliation process in other types of cases applies exclusively to said inferior
courts.
Any doubt on the issue before Us should be dispelled by Circular No. 22 issued by
Chief Justice Enrique M. Fernando, 6 the full text of which is quoted as follows:
TO: ALL JUDGES OF THE COURTS OF FIRST INSTANCE, CIRCUIT
CRIMINAL COURTS, JUVENILE AND DOMESTIC RELATIONS COURTS,
COURTS OF AGRARIAN RELATIONS, CITY COURTS, MUNICIPAL COURTS
AND THEIR CLERKS OF COURT
SUBJECT: Implementation of the Katarungang Pambarangay Law.

Effective upon your receipt of the certification by the Minister of Local

Government and Community Development that all the barangays
within your respective jurisdictions have organized their Lupons
provided for in Presidential Decree No. 1508, otherwise known as
the Katarungang Pambarangay Law, in implementation of the
barangay system of settlement of disputes, you are hereby directed to
desist from receiving complaints, petitions, actions or proceedings in
cases falling within the authority of said Lupons.
Circular No. 12 dated October 20, 1978, issued by the late Chief Justice
Fred Ruiz Castro is to that extent modified.
This Circular takes effect immediately.
It is significant that the above-quoted circular embodying the directive "to desist
from receiving complaints, petitions, actions and proceedings in cases falling within
the authority of said Lupons," has been addressed not only to judges of city and
municipal courts, but also to all the judges of the courts of first instance, circuit
criminal courts, juvenile and domestic courts and courts of agrarian relations, now
known as regional trial courts under B.P. No. 129. The said circular was noted by
president Ferdinand E. Marcos in a Letter of Implementation, dated November 12,
1979, the first paragraph of which reads as follows: "with the view to easing up the
log-jam of cases and solving the backlogs in the case of dockets of all government
offices involved in the investigation, trial and adjudication of cases, it is hereby
ordered that immediate implementation be made by all government officials and
offices concerned of the system of amicably settling disputes at the barangay level
as provided for in the Katarungang Pambarangay Law [Presidential Decree No.
1508]."
Therefore, for the guidance of the bench and the bar, We now declare that the
conciliation process at the barangay level, prescribed by P.D. 1508 as a precondition for filing a complaint in court, is compulsory not only for cases falling
under the exclusive competence of the metropolitan and municipal trial courts, but
for actions cognizable by the regional trial courts as well.
ACCORDINGLY, the petition is granted, and the order of respondent judge denying
petitioners' motion to dismiss is hereby set aside. Respondent judge is restrained
from conducting further proceedings in Civil Case No. R-22154, except to dismiss
the case. No costs.
SO ORDERED.
Fernando, CJ Concepcion, Jr., Guerrero, Abad Santos, Melencio-Herrera, Plana,
Relova and Gutierrez, Jr., JJ concur.
Makasiar and Teehankee, JJ., reserves his vote.
De Castro, J., is on leave.

Uy v. Contreras, 237 SCRA 167 (1994)

G.R. No. 111416 September 26, 1994

FELICIDAD
UY, petitioner,
vs.
HON. MAXIMO C. CONTRERAS, Presiding Judge, Metropolitan Trial Court,
Branch 61, Makati, Metro Manila; HON. MAURO M. CASTRO, Provincial
Prosecutor of Pasig, Metro Manila; SUSANNA ATAYDE and WINNIE
JAVIER, respondents.
Albon & Serrano Law Office for petitioner.
Ramon M. Velez for private respondents.

DAVIDE, JR., J.:

Assailed in this petition for certiorari under Rule 65 of the Rules of Court is the order
dated 2 July 1993 of public respondent Judge Maximo C. Contreras of Branch 61 of
the Metropolitan Trial Court (MTC) of Makati, Metro Manila, denying the petitioner's
motion to dismiss Criminal Cases Nos. 145233 and 145234 for slight physical
injuries. The motion to dismiss is based on the failure of the private respondents, as
the offended parties therein, to comply with Section 6 of P.D. No. 1508 and Section
18 of the 1991 Revised Rule on Summary Procedure requiring prior referral of
disputes to the Lupong Tagapamayapa of the proper barangay.
At the outset, it must be stated that were it not for the importance of the issue to be
resolved in the light of the revised law on katarungang pambarangay provided for in
the Local Government Code of 1991 (R.A. No. 7160) which took effect on 1 January
1992, 1 this Court would have declined to accept the invocation of its original
jurisdiction to issue the extraordinary writ prayed for. We have already ruled that
while it is true that this Court, the Court of Appeals, and the Regional Trial Courts
have
concurrent
original
jurisdiction
to
issue
writs
of certiorari,
prohibition, mandamus, quo warranto, and habeas corpus, such concurrence does
not accord litigants unrestrained freedom of choice of the court to which application
therefor may be directed. There is a hierarchy of courts determinative of the venue
of appeals which should also serve as a general determinant of the proper forum for
the application for the extraordinary writs. A becoming regard for this judicial
hierarchy by the petitioner and her lawyers ought to have led them to file the
petition with the proper Regional Trial Court. 2
The antecedent facts as disclosed by the pleadings of the parties are not
complicated.

Petitioner subleased from respondent Susanna Atayde (hereinafter Atayde) the

other half of the second floor of a building located at corner Reposo and Oliman
Streets, Makati, Metro Manila. She operated and maintained therein a beauty
parlor. 3
The sublease contract expired on 15 April 1993. However, the petitioner was not
able to remove all her movable properties.
On 17 April 1993, an argument arose between the petitioner and Atayde when the
former sought to withdraw from the subleased premises her remaining movable
properties such as cabinets, shelves, frames, a mirror, a shampoo bowl, and an
airconditioning casing. 4 The argument degenerated into a scuffle between the
petitioner, on the one hand, and Atayde and several of Atayde's employees,
including private respondent Winnie Javier (hereinafter Javier), on the other.
On 21 April 1993, the private respondent had themselves medically examined for
the alleged injuries inflicted on them by the petitioner. 5
On 23 April 1993, the private respondents filed a complaint with the barangay
captain of Valenzuela, Makati, which was docketed as Barangay Cases Nos.
1023 6 and 1024. 7
The confrontation of the parties was scheduled by the barangay captain for 28 April
1993. On the said date, only the petitioner appeared. The barangay captain then
reset the confrontation to 26 May 1993. 8
On 11 May 1993, the Office of the Provincial Prosecutor of Rizal filed two
informations for slight physical injuries against the petitioner with the MTC of
Makati, which were docketed as Criminal Cases Nos. 145233 and 145234 and
assigned to Branch 61 thereof.
On 21 May 1993, public respondent Judge Contreras of Branch 61 ordered the
petitioner to submit her counter-affidavit and those of her witnesses.
On 14 June 1993, the petitioner submitted the required counteraffidavits. 9 In her own counter-affidavit, the petitioner specifically alleged the
prematurity of the filing of the criminal cases for failure to undergo conciliation
proceedings as she and the private respondents are residents of Manila. 10 She also
attached to it a certification by the barangay captain of Valenzuela, Makati, dated
18 May 1993, that there was an ongoing conciliation between Atayde and the
petitioner in Barangay Case No. 1023. 11
On 18 June 1993, the petitioner filed a motion to dismiss Criminal Cases Nos.
145233 and 145234 for non-compliance with the requirement of P.D. No. 1508 on
prior referral to the Lupong Tagapamayapa and pursuant to Section 18 of the 1991
Revised Rule on Summary Procedure.
On 2 July 1993, public respondent Judge Contreras handed down an order denying
the motion to dismiss, pertinent portions of which read:

The court finds the motion to be without sufficient merit. In the first
place, the offense subject of these cases accussed in Makati, Metro
Manila on April 17, 1993; that Barangay Valenzuela of the Municipality
of Makati had started the conciliation proceedings between the parties
but as of May 18, 1993 nothing has been achieved by the barangay
(Annex "2" of the Counter-Affidavit of the accused); that the aboveentitled cases were filed directly with this court by the public
prosecutor on May 11, 1993; and the accused and her witnesses had
already filed their counter-affidavits and documents. At this stage of
the proceedings, the court believes that the accused had already
waived the right to a reconciliation proceedings before the barangay of
Valenzuela, Makati considering that accused and complainant are
residents of different barangays; that the offense charged occurred in
the Municipality of Makati; and finally, this offense is about to
prescribe.
Under the foregoing circumstances, the court believes, and so holds,
that the complainants may go directly to the court where their
complaint is about to prescribe or barred by statute of limitations
pursuant to Section 6 of PD 1508." 12
A motion to reconsider the above order was denied on 5 August 1993.
Hence this special civil action for certiorari. The petitioner contends that the
respondent judge committed grave abuse of discretion amounting to lack of
jurisdiction when he denied the motion to dismiss considering that the private
respondents failed to comply with the mandatory requirement of P.D. No. 1508, now
embodied in Section 412 of the Local Government Code of 1991 and further
required under the 1991 Revised Rule on Summary Procedure.
In their Comment, the private respondents contend that the denial of the motion to
dismiss is proper because prior referral of the dispute to the lupon is not applicable
in the case of private respondent Javier since she and the petitioner are not
residents of barangays in the same city or municipality or of adjoining barangays in
different cities or municipalities and that referral to the lupon is not likewise
required if the case may otherwise be barred by the statute of limitations. Moreover,
even assuming arguendo that prior referral to the lupon applies to the case of
private respondent Atayde, the latter had, nevertheless, substantially complied with
the requirement.
In its Comment, the Office of the Solicitor General agrees with the petitioner that
Criminal Cases Nos. 145233 and 145234 should be dismissed for non-compliance
with Sections 408, 409, 410, and 412 of the Local Government Code of 1991 in
relation to Section 7, Rule VI of the Rules Implementing P.D. No. 1508.
The petitioner replied to the comments of the private respondents and of the Office
of the Solicitor General. The private respondents filed a rejoinder to the petitioner's
reply to their comment and a reply to the comment of the Office of the Solicitor
General.

In the Resolution of 16 May 1994, this Court gave due course to the petition and
required the parties to submit their respective memoranda, which the petitioner and
the private respondents complied with. The Office of the Solicitor General, in view of
its prior submission, moved that it be excused from filing a memorandum.
The petition is impressed with merit.
The law on the katarungang pambarangay was originally governed by P.D. No. 1508
which was enacted on 11 June 1978. However, the Local Government Code of 1991,
specifically Chapter 7, Title I, Book III thereof, 13revised the law on the katarungang
pambarangay. As a consequence of this revision, P.D. No. 1508 was expressly
repealed pursuant to Section 534(b) of the Code. Pertinent portions of Chapter 7,
Title I, Book III thereof read as follows:
Sec. 408. Subject Matter for Amicable Settlement; Exception
Thereto. The luppon of each barangay shall have authority to bring
together the parties actually residing in the same city or municipality
for amicable settlement of all disputes except:
(a) Where one party is the government or any subdivision or
instrumentality thereof;
(b) Where one party is a public officer or employee, and the dispute
relates to the performance of his official functions;
(c) Offenses punishable by imprisonment exceeding one (1) year or a
fine exceeding Five thousand pesos (P5,000.00);
(d) Offenses where there is no private offended party;
(e) Where the dispute involves real properties located in different cities
or municipalities unless the parties thereto agree to submit their
differences to amicable settlement by an appropriate lupon;
(f) Disputes involving parties who actually reside in barangays of
different cities or municipalities, except where such barangay units
adjoin each other and the parties thereto agree to submit their
differences to amicable settlement by appropriate lupon;
(g) Such other classes of disputes which the President may determine
in the interest of justice or upon the recommendation of the Secretary
of Justice.
The court in which non-criminal cases not falling within the authority of
the lupon under this Code are filed may, at anytime before trial, motu
proprio refer the case to the lupon concerned for amicable settlement.

Sec. 409. Venue. (a) Disputes between persons actually residing in

the same barangay shall be brought for amicable settlement before
the lupon of said barangay.
(b) Those involving actual residents of different barangays within the
same city or municipality shall be brought in the barangay where the
respondent or any of the respondents actually resides, at the election
of the complainant.
(c) All disputes involving real property or any interest therein shall be
brought in the barangay where the real property or the larger portion
thereof is situated.
(d) Those arising at the workplace where the contending parties are
employed or at the institution where such parties are enrolled for study
shall be brought in the barangay where such workplace or institution is
located.
Objections to venue shall be raised in the mediation proceedings
before the punong barangay; otherwise, the same shall be deemed
waived. Any legal question which may confront the punong barangay
in resolving objections to venue herein referred to may be submitted to
the Secretary of Justice or his duly designated representative whose
ruling thereon shall be binding.
Sec. 410. Procedure for Amicable Settlement. . . .
xxx xxx xxx
(c) Suspension of prescriptive period of offenses. While the dispute
is under mediation, conciliation, or arbitration, the prescriptive periods
for offenses and cause of action under existing laws shall be
interrupted upon filing of the complaint with the punong barangay. The
prescriptive periods shall resume upon receipt by the complainant of
the complaint or the certificate of repudiation or of the certification to
file action issued by the lupon or pangkat secretary: Provided,
however, That such interruption shall not exceed sixty (60) days from
the filing of the complaint with the punong barangay.
xxx xxx xxx
Sec. 412. Conciliation. (a) Pre-condition to filing of complaint in
court. No complaint, petition, action, or proceeding involving any
matter within the authority of the lupon shall be filed or instituted
directly in court or any other government office for adjudication, unless
there has been a confrontation between the parties before
the lupon chairman or the pangkat, and that no conciliation or
settlement has been reached as certified by the lupon secretary or
pangkat secretary as attested to by the lupon chairman or pangkat

chairman or unless the settlement has been repudiated by the parties

thereto.
(b) Where parties may go directly to court. The parties may go
directly to court in the following instances:
(1) Where the accused is under detention;
(2) Where a person has otherwise been deprived of
personal liberty calling for habeas corpus proceedings;
(3) Where actions are coupled with provisional remedies
such as preliminary injunction, attachment, delivery of
personal property, and support pendente lite; and
(4) Where the action may otherwise be barred by the
statute of limitations.
xxx xxx xxx
Sec. 415. Appearance of Parties in Person. In all katarungang
pambarangay proceedings, the parties must appear in person without
the assistance of counsel or representative, except for minors and
incompetents who may be assisted by their next-of-kin who are not
lawyers.
Pursuant to the authority vested in him under Section 421 of the Code, the
Secretary of Justice promulgated theKatarungang Pambarangay Rules to implement
the revised law on katarungang pambarangay. Sections 8 and 11 of Rule VI
(Amicable Settlement of Disputes) thereof provide in part as follows:
SECTION 8. Failure to appear.
a. Sanctions
The complaint may be dismissed when complainant, after
due notice, refuses or willfully fails to appear without
justifiable reason on the date set for mediation,
conciliation or arbitration. Such dismissal ordered by the
Punong Barangay/Pangkat Chairman after giving the
complainant an opportunity to explain his non-appearance
shall be certified to by the Lupon or Pangkat Secretary as
the case may be, and shall bar the complainant from
seeking judicial recourse for the same cause of action as
that dismissed.
xxx xxx xxx

Sec. 11. Suspension of prescriptive period of offenses and cause of

action. The prescriptive periods for offenses and causes of action
under existing laws shall be interrupted upon filing of the complaint
with the Punong Barangay. The running of the prescriptive periods shall
resume upon receipts by the complainant of the certificate of
repudiation or of the certification to file action issued by the Lupon or
Pangkat Secretary: Provided, however, that such interruption shall not
exceed sixty (60) days from the filing of the complaint with the Punong
Barangay. After the expiration of the aforesaid period of sixty days, the
filing of the case in court or government office for adjudication shall be
subject to the provision of paragraph (b) (4) of Rule VIII of these Rules.
It may thus be observed that the revised katarungang pambarangay law has at
least three new significant features, to wit:
1. It increased the authority of the lupon in criminal offenses from
those punishable by imprisonment not exceeding thirty days or a fine
not exceeding P200.00 in P.D. No. 1508 to those offenses punishable
by imprisonment not exceeding one year or a fine not exceeding
P5,000.00.
2. As to venue, it provides that disputes arising at the workplace where
the contending parties are employed or at the institution where such
parties are enrolled for study, shall be brought in the barangay where
such workplace or institution is located.
3. It provides for the suspension of the prescriptive periods of offenses
during the pendency of the mediation, conciliation, or arbitration
process. Paragraph (c) of Section 410 of the law, however, suffers from
some ambiguity when it provides that the prescriptive periods "shall
resume upon receipt by the complainant of the complaint or the
certificate of repudiation or of the certification to file action issued by
the lupon or pangkat secretary." What is referred to as receipt by
the complainant of the complaint is unclear; obviously, it could have
been a drafting oversight. Accordingly, in the above quoted Section 11
of the Rules and Regulations issued by the Secretary of Justice, the
phrase "the complaint or" is not found, such that the resumption of the
running of the prescriptive period shall, properly, be from receipt by
the complainant of the certificate of repudiation or the certification to
file action issued by the lupon or the pangkat secretary. Such
suspension, however, shall not exceed sixty days.
The first feature has necessarily broadened the jurisdiction of the lupon and if the
mediation and conciliation process at that level would be effectively pursued, few
cases would reach the regular courts, justice would be achieved at less expense to
the litigants, cordial relationships among protagonists in a small community would
be restored, and peace and order therein enhanced.
The second feature, which is covered by paragraph (d), Section 409 of the Local
Government code, also broadens the authority of the lupon in the sense that

appropriate civil and criminal cases arising from incidents occurring in workplaces or
institutions of learning shall be brought in the barangay where such workplace or
institution is located. That barangay may not be the appropriate venue in either
paragraph (a) or paragraph (b) of the said section. This rule provides convenience to
the parties. Procedural rules including those relating to venue are designed to
insure a fair and convenient hearing to the parties with complete justice between
them as a result. 14 Elsewise stated, convenience is the raison d'etre of the rule on
venue.
The third feature is aimed at maximizing the effectiveness of the mediation,
conciliation, or arbitration process. It discourages any intentional delay of the
referral to a date close to the expiration of the prescriptive period and then invoking
the proximity of such expiration as the reason for immediate recourse to the courts.
It also affords the parties sufficient time to cool off and face each other with less
emotionalism and more objectivity which are essential ingredients in the resolution
of their dispute. The sixty-day suspension of the prescriptive period could spell the
difference between peace and a full-blown, wearisome, and expensive litigation
between the parties.
While P.D. No. 1508 has been repealed by the Local Government Code of 1991, the
jurisprudence built thereon regarding prior referral to the lupon as a pre-condition to
the filing of an action in court remains applicable because its provisions on prior
referral were substantially reproduced in the Code.
In Peregrina vs. Panis, 15 this Court stated:
Thus, Morata vs. Go, 125 SCRA 444 (1983), and Vda. de Borromeo vs.
Pogoy, 126 SCRA 217 (1983) have held that P.D. No. 1508 makes the
conciliation process at the Barangay level a condition precedent for the
filing of a complaint in Court. Non-compliance with that condition
precedent could affect the sufficiency of the plaintiff's cause of action
and make his complaint vulnerable to dismissal on the ground of lack
of cause of action or prematurity. The condition is analogous to
exhaustion of administrative remedies, or the lack of earnest efforts to
compromise suits between family members, lacking which the case
can be dismissed.
The parties herein fall squarely within the ambit of P.D. No. 1508. They
are actual residents in the same barangay and their disputes does not
fall under any of the excepted cases." (Emphasis omitted)
Such non-compliance is not, however, jurisdictional. This Court said so in Garces vs.
Court of Appeals: 16
In fine, we have held in the past that prior recourse to the conciliation
procedure required under P.D. 1508 is not a jurisdictional requirement,
non-compliance with which would deprive a court of its jurisdiction
either over the subject matter or over the person of the defendant.
Where, however, the fact of non-compliance with and non-observance

of such procedure has been seasonably raised as an issue before the

court first taking cognizance of the complaint, dismissal of the action is
proper.
xxx xxx xxx
The precise technical effect of failure to comply with the requirement
of P.D. 1508 where applicable is much the same effect produced by
non-exhaustion of administrative remedies; the complaint becomes
afflicted with the vice of pre-maturity; the controversy there alleged is
not ripe for judicial determination. The complaint becomes vulnerable
to a motion to dismiss. (emphasis omitted)
There were, of course, cases where this Court ruled that the failure of the defendant
to seasonably invoke non-referral to the appropriate lupon operated as a waiver
thereof. 17 Furthermore, when such defect was initially present when the case was
first filed in the trial court, the subsequent issuance of the certification to file action
by the barangay, which constituted substantial compliance with the said
requirement, cured the defect. 18
On 15 October 1991, this Court promulgated the Revised Rule on Summary
Procedure. 19 Section 18 thereof provides:
Sec. 18. Referral to Lupon. Cases requiring referral to the Lupon for
conciliation under the provisions of Presidential Decree No. 1508 where
there is no showing of compliance with such requirement, shall be
dismissed without prejudice, and may be revived only after such
requirement shall have been complied with. This provision shall not
apply to criminal cases where the accused was arrested without a
warrant.
In the proceeding before the court a quo, the petitioner and the respondent had in
mind only P.D. No. 1508. The petitioner further invoked the aforequoted Section 18.
None knew of the repeal of the decree by the Local Government Code of 1991. Even
in her instant petition, the petitioner invokes the decree and Section 18 of the
Revised Rule on Summary Procedure. However, the private respondents, realizing
the weakness of their position under P.D. No. 1508 since they did refer their
grievances to what might be a wrong forum under the decree, changed tack. In
their Comment, they assert that on 20 April 1993 Atayde "filed a complaint against
petitioner before the barangay council of Barangay Valenzuela, Makati, in
compliance with the requirement of the Katarungang Pambarangay Law under the
Local Government Code." 20 Yet, in a deliberate effort to be cunning or shrewd,
which is condemnable for it disregards the virtue of candor, they assert that the
said law is not applicable to their cases before the court a quo because (a) the
petitioner and respondent Atayde are not residents of barangays in the same city or
municipality; (b) the law does not apply when the action, as in the said cases, may
otherwise be barred by the statute of limitations; and (c) even assuming that the
law applies insofar as Atayde is concerned, she has substantially complied with it.

The Office of the Provincial Prosecutor of Rizal should have exerted enough
diligence to inquire from the private respondents if prior referral to the lupon was
necessary before filing the informations.
Respondent judge did not do any better. His total unawareness of the Local
Government Code of 1991, more specifically on the provisions on the Katarungang
pambarangay, is distressing. He should have taken judicial notice thereof, ever
mindful that under Section 1, Rule 129 of the Rules of Court, courts are mandatorily
required to take judicial notice of "the official acts of the legislative, executive and
judicial departments of the Philippines." We have ruled that a judge is called upon to
exhibit more than just a cursory acquaintance with the statutes and procedural
rules. 21 He should have applied the revised katarungang pambarangay law under
the Local Government Code of 1991. Had he done so, this petition would not have
reached us and taken valuable attention and time which could have been devoted
to more important cases.
In view of the private respondents' failure to appear at the first scheduled mediation
on 28 April 1993 for which the mediation was reset to 26 May 1993, no complaint
for slight physical injuries could be validly filed with the MTC of Makati at any time
before such date. The filing then of Criminal Cases Nos. 145233 and 145234 with
the said court on 11 May 1993 was premature and, pursuant to paragraph (a),
Section 412 of the Local Government Code, respondent Judge Contreras should
have granted the motion to dismiss the criminal cases. He cannot justify its denial
by taking refuge under Section 6 of P.D. No. 1508 (more properly, Section 412(b)(4)
of the Local Government Code of 1991) which states that the parties may go
directly to court where the action is about to prescribe. This is because, as earlier
stated, pursuant to paragraph (c), Section 410 of the Code, the prescriptive period
was automatically suspended for a maximum period of sixty days from 23 April
1993 when the private respondents filed their complaints with the lupon of
Valenzuela Makati.
Moreover, having brought the dispute before the lupon of barangay Valenzuela,
Makati, the private respondents are estopped from disavowing the authority of the
body which they themselves had sought. Their act of trifling with the authority of
the lupon by unjustifiably failing to attend the scheduled mediation hearings and
instead filing the complaint right away with the trial court cannot be countenanced
for to do so would wreak havoc on the barangay conciliation system.
Granting arguendo that the petitioner did inflict the alleged physical injuries, the
offense for which she may be liable would only be slight physical injuries under
paragraph (2), Article 266 of the Revised Penal Code, considering that per the
medical certificates 22 the injuries sustained by the private respondents would
"heal" in nine days "in the absence of complication" and there is no showing that
the said injuries incapacitated them for labor or would require medical attendance
for such period. The penalty therefor would only be "arresto menor or a fine not
exceeding 200 pesos and censure." These penalties are light under Article 25 of the
Revised Penal Code and would prescribe in two months pursuant to Article 90.
Accordingly, since the slight physical injuries charged in Criminal Cases Nos. 145233
and 145234 were allegedly inflicted on 17 April 1993, the prescriptive period

therefor would have expired two months thereafter. Nevertheless, its running was
tolled by the filing of the private respondents' complaints with the lupon of
Valenzuela, Makati, on 23 April 1993 and automatically suspended for a period of
sixty days, or until 22 June 1993. If no mediation or conciliation could be reached
within the said period of suspension and, accordingly, a certification to file action is
issued, the private respondents would still have fifty-six days within which to file
their separate criminal complaints for such offense. Evidently, there was no basis for
the invocation by the respondent judge of the exception provided for in paragraph
(b), Section 412 of the Local Government Code.
Neither are we persuaded by the reasoning of the respondent Judge that the
petitioner "had already waived the right to a reconciliation proceedings before the
barangay of Valenzuela, Makati, considering that the accused and the complainant
are residents of different barangays." The petitioner did not waive the reconciliation
proceedings before the lupon of Valenzuela, Makati; she submitted to it and
attended the scheduled conciliation on 28 April 1993 and invoked the pre-condition
of referral to the lupon in her counter-affidavit. 23
Nor would this Court accept the contention of the private respondent that the
parties could not agree on a compromise and that they had to request the barangay
captain to issue a certification to file action. 24 The request is dated 23 June
1993, 25 or nearly one and a half months after Criminal Cases Nos. 145233 and
145234 were filed with the court a quo. Evidently, this was done to support their
contention in the said court that, in any event, there was substantial compliance
with the requirement of referral to the lupon. It must be stressed that the private
respondents, after failing to appear at the initial confrontation and long after the
criminal cases were filed, had no right to demand the issuance of a certification to
file action.
The respondent judge thus acted with grave abuse of discretion in refusing to
dismiss Criminal Cases Nos. 145233 and 145234.
Before closing these cases, this Court wishes to emphasize the vital role which the
revised katarungang pambarangay law plays in the delivery of justice at the
barangay level, in promoting peace, stability, and progress therein, and in
effectively preventing or reducing expensive and wearisome litigation. Parties to
disputes cognizable by the lupon should, with sincerity, exhaust the remedies
provided by that law, government prosecutors should exercise due diligence in
ascertaining compliance with it, and trial courts should not hesitate to impose the
appropriate sanctions for non-compliance thereof.
WHEREFORE, the instant petition is GRANTED. The Orders of respondent Judge of 2
July 1993 and 5 August 1993 in Criminal Cases Nos. 145233 and 1452334, both
entitled "People of the Philippines vs. Felicidad Uy" are hereby SET ASIDE and the
respondent Judge is hereby DIRECTED to DISMISS said cases within ten (10) days
from receipt of a copy of this decision.
Costs against the private respondents.

SO ORDERED.
Cruz, Bellosillo, Quiason and Kapunan, JJ., concur.

Wingarts v. Mejia, 242 SCRA 436 (1995)

A.M. No. MTJ-94-1012 March 20, 1995

JOHAN L.H. WINGARTS * and OFELIA

vs.
JUDGE SERVILLANO M. MEJIA, respondent.

A.

WINGARTS, complainants,

REGALADO, J.:
For resolution by the Court are three letter-complaints, two of which were filed by
complainant Johan L. H. Wingarts, 1 and the other filed jointly by him with
complainant Ophelia A. Wingarts, 2 against Judge Servillano M. Mejia of the
Municipal Trial Court of Santa Maria, Pangasinan.
These administrative complaints were an offshoot of three criminal cases decided
by respondent judge and involving the Wingarts and Col. Rodulfo Munar.
Complainant Johan L.H. Wingarts was the accused in Criminal Cases Nos. 2663 and
2664 filed in the aforesaid municipal trial court for malicious mischief and grave
threats. The first two criminal cases were initiated by Col. Munar as the private
complainant therein. Thereafter, the Wingarts made a counter-charge against Col.
Munar resulting in the third criminal case for usurpation of authority docketed in the
same court as Criminal Case No. 2696 with Col. Munar as the accused.
In the administrative complaint relative to Criminal Case No. 2663 for malicious
mischief, respondent judge is charged with malicious delay in the administration of
justice. The case allegedly dragged for one year and four months 3 in respondent's
sala and was ultimately dismissed in a decision dated June 8, 1994 after an ocular
inspection of the burned premises was conducted by the court personnel. 4
Herein complainants also charge respondent judge in their second complaint here
with incompetence, ignorance of the law and abuse of authority for taking
cognizance of Criminal Case No. 2664, entitled "People vs. Leo Wingarts," for grave
threats and for issuing a warrant of arrest against him despite lack of
prior barangayconciliation. The said case was later dismissed and indorsed to
the barangay official concerned. 5
Their third complaint charges respondent judge with rendering an unjust decision in
Criminal Case No. 2696, entitled "People vs. Capt. Manuel, et al." for usurpation of
authority. Complainants insist that in the said criminal case, the two accused
therein, Capt. Dominador Manuel and Col. Rodulfo Munar who are both military

lawyers, violated the prohibition against their appearing in civil courts without the
necessary authorization. 6 However, in a decision dated May 12, 1994, respondent
judge acquitted both accused, holding that "accused Col. Rodulfo Munar is the
complainant in criminal cases no(s). 2662 and 2664 for malicious mischief and
grave oral defamation respectively and what the accused have performed or
exercise(d) was not that of the fiscal or public prosecutor's duties but in their
capacity as the offended party and private counsel respectively . . . ." 7
Required to comment on these administrative charges, respondent judge explained
that he took cognizance of Criminal Case No. 2664 in the belief that there had been
substantial compliance with the requirements of theKatarungang Pambarangay
Law since a certification of the barangay captain regarding a confrontation of the
parties, the fact that no amicable settlement was reached by them, and that he was
endorsing the filing of the case in court, had been duly submitted to respondent
judge. 8
With regard to the complaint for malicious delay in the administration of justice,
respondent judge contended that "(t)he proceedings were continuous
until the complainant was acquitted of the crime charged against him. The case was
decided one (1) month and three (3) days after it was submitted for
decision . . . ." 9
Anent the third complaint, respondent judge submits that his judgment of acquittal
in the criminal case against the aforenamed military lawyers for usurpation of
authority was the result of his honest findings and conclusion based on the evidence
and the law in the hearing of the case. He denied having rendered an unjust
judgment and reiterated that due process was observed and the case was
prosecuted to the fullest extent, giving the prosecution all the time and opportunity
to present their evidence. 10
The Office of the Court Administrator, in a memorandum dated December 27, 1994,
made the following findings:
The first charge is meritorious. Had respondent Judge exercised greater
prudence, he could have known at the outset that under Art. 408 (c),
Chapter 7, Title One, Book III, R.A. 7160, otherwise known as the Local
Government Code of 1991 (The Revised Katarungang Pambarangay
Law), offenses punishable by imprisonment not exceeding one (1) year
or a fine not exceeding Five Thousand Pesos (P5,000.00) require prior
barangay conciliation. The crime of grave threats punishable under Art.
282 of the Revised Penal Code falls within the (p)urview of that section.
Furthermore, Sec. 412 (a) of the same law likewise provides:
Sec. 412. CONCILIATION (a) Precondition to filing of
Complaint in Court No complaint, petition, action or
proceeding involving any matter within the authority of
the lupon shall be filled (SIC) or instituted directly in court
or any other government office for adjudication unless
there has been a confrontation between the parties before
the lupon chairman or the pangkat, and that no

conciliation or settlement has been reached as certified

by the lupon secretary or pangkat secretary as attested to
by the lupon or pangkat chairman or unless the
settlement has been repudiated by the parties thereto.
Had respondent Judge observed the mandate of the aforequoted
provision of law he could have remanded the case to the lupon instead
of taking cognizance thereof and prematurely issuing the warrant of
arrest against the accused. Such an actuation, however, does not
appear to be tainted with malice or evil intent. As can be gleaned from
the records, respondent Judge dismissed Criminal Case No. 2664 in his
Order of April 16, 1993 (Rollo, pp. 42-43) upon motion of the defense
counsel. This notwithstanding, administrative sanction is warranted
against respondent Judge.
In his Supplemental Comment dated November 9, 1994 respondent
Judge avers that his decision in the case convicting the accused was
affirmed by the Regional Trial Court with modification as to the fine
imposed. A copy of the said Decision dated October 10, 1994 is
attached to the said letter.
xxx xxx xxx
A perusal of the records reveal that while there was a delay in hearing
the case, such a delay does not appear to be malicious nor deliberate.
Firstly, while the case appears to have been filed only on February 1,
1993, it was remanded back to respondent's sala sometime in June
1993 and was set for hearing on July 9, 1993. Secondly, the
postponements were all on account of the absence or unavailability of
the fiscal and/or the defense counsel and not of the Judge's own
making. While Judges should not allow the parties to control the
proceedings in their Court, in the case of respondent, he had no
alternative but to grant the postponements if only to better serve the
ends of justice. On January 10, 1994, he had to reset the hearing as the
assigned fiscal was still in the USA. On April 21, 1994 (Rollo, p. 52),
respondent Judge issued an Order giving the prosecution fifteen days
within which to file its position paper and thereafter, the case is
deemed submitted for decision. Counting fifteen (15) days from April
21, 1994, the case was deemed submitted for decision last May 6,
1994. It was decided on June 8, 1994 or barely a month after it was
deemed submitted for decision. Obviously, therefore there was no
delay in deciding the case. If at all, the delay was in the hearing of the
case and for apparently excusable grounds.
xxx xxx xxx
The prosecution contends that the two (2) accused, who are military
lawyers, appeared in the hearing of Crim. Case No. 2696 on March 19,
1993 without the required authority, thus they violated Art. 177 of the
Revised Penal Code which penalizes usurpation of authority.

Respondent Judge acquitted the accused for the following reasons: 1)

the accused were authorized by Circular No. 2 of the Dept. of National
Defense (Rollo, pp. 16 to 17) to appear as such. Thus, they were able
to secure their permit to appear as private prosecutors on April 12,
1993; 2) that their lack of permit does not strip them of their
qualifications as military lawyers and such failure merely calls for an
administrative sanction, there being no penal sanction imposed under
DND Adm. Circular No. 3; 3) that the accused submitted a written
manifestation from Asst. Provincial Prosecutor Trece R. Mapili (ibid, p.
12) authorizing them to act as private prosecutors when he is not
available, but such authority ceases upon his actual intervention; and
4) that the prosecution is one for an offense penalized under the
Revised Penal Code where criminal intent must be present and that the
prosecution failed to prove such a criminal intent on the part of the
accused. Respondent Judge likewise took judicial notice of the fact that
accused Col. Munar is also the complainant in Criminal Cases Nos.
2662 and 2664 and that what he performed was not that of the public
prosecutor's duty but that of an offended party and private counsel
and cited jurisprudence to that effect. . . .
Respondent Judge is being charged with knowingly rendering an unjust
judgment which is penalized under Art. 204 of the Revised Penal Code.
For a judge to be held liable therefor, it must be established that the
judgment is unjust and that the judge knew it to be unjust. A judgment
may be said to be unjust when it is manifestly against the law and
contrary to the weight of evidence (Rule 37, sec. 1, par. c). It is,
therefore, necessary that the judgment was rendered with conscious
and deliberate intent to perpetuate an injustice. A judicial officer, when
required to exercise his judgment or discretion, is not criminally liable
for any error he commits, provided that he acts in good faith. (In re
Climaco, Adm. Case No. 134-J, January 21, 1974, 55 SCRA 107)
From a review of the questioned decision and without ruling on its
propriety,
we
do
not
find
that
respondent
Judge
has knowingly rendered an unjust judgment. He does not appear to
have been motivated by an evil or corrupt motive to deliberately
perpetuate an injustice. 11
After a careful examination of the records of this case, and although we disagree
with the punitory sanction recommended by the Office of the Court Administrator,
we find no reason to depart from its conclusion that respondent judge is indeed
liable for incompetence and ignorance of the law for taking cognizance of Criminal
Case No. 2664 despite the legal obstacles thereto.
A judge should be the embodiment of competence, integrity and independence and
should administer justice impartially and without delay. 12 He should be faithful to
the law and maintain professional competence, dispose of the court's business
promptly and decide cases within the required periods.

A judge owes it to the public and to the legal profession to know the factual bases of
the complaint and the very law he is supposed to apply to a given controversy. He is
called upon to exhibit more than just cursory acquaintance with the statutes and
procedural rules. Party litigants will have greater faith in the administration of
justice if judges cannot just be accused of apparent deficiency in the analysis of the
facts of the case and in their grasp of the legal principles. For, service in the
judiciary means a continuous study and research on the law from beginning to
end. 13
Although there is no clear proof of malice, bad faith, bias or partiality on his part,
respondent judge should have exercised the requisite prudence, especially under
the environmental circumstances of the aforesaid criminal case where personal
liberty was involved. He should have carefully examined all relevant facts and
issues and avoided the improvident issuance of the warrant of arrest without a
circumspect review of the case which, after all, did not exhibit abstruse factual
matters or complicated legal questions. The present controversy could have been
avoided had he kept faith with the injunction that a member of the bench must
continuously keep himself abreast of legal and jurisprudential developments
because the learning process in law never ceases. 14
In the present case, assuming that he did not act with malice or bad faith and that
he subsequently issued an order to recall the warrant or prevent the arrest of
complainant, such considerations can mitigate but will not altogether exculpate him
from the charge of incompetence and ignorance of the law, which accordingly
warrants the imposition of an appropriate penalty on him. If judges wantonly misuse
the powers vested in them by law, there will not only be confusion in the
administration of justice but even oppressive disregard of the basic requirements of
due process.
Moreover, judges are directed to desist from improvidently receiving and desultorily
acting on complaints, petitions, actions or proceedings in cases falling within the
authority of the Lupon Tagapamayapa. 15 We have repeatedly ruled that the
proceedings before the lupon are a precondition to the filing of any action or
proceeding in court or other government office. Such an initiatory pleading, if filed
without compliance with the precondition, may be dismissed on motion of any
interested party on the ground that it fails to state a cause of action. 16
As to the charge of malicious delay in the administration of justice, we agree with
the observation of the Office of the Court Administrator that while there was some
delay in hearing the case, the same does not appear to be malicious nor deliberate.
Respondent
judge
should
not
be
unfairly
subjected
to
liabilities
for contretemps which were brought about by the parties and their lawyers.
Complainants could not have been unaware that the delay of the hearing was due
to postponements sought and obtained by the parties and their respective counsel.
Litigants should not blame a judge for the delay which was not of his own making.
However, the Court finds this as an appropriate occasion to once again remind the
members of the judiciary to adopt measures to prevent unnecessary delays in the
disposition of their cases. A judge should administer justice not only impartially but
also without delay. As expressly mandated by the Code of Judicial Conduct, he shall

dispose of the court's business promptly and decide cases within the required
periods. 17
In connection with his decision in Criminal Case No. 2696, after a careful analysis of
the assailed decision, we find no showing that respondent judge was motivated by
bad faith, fraud, dishonesty or corruption in rendering the same. As held in De La
Cruz, et al, vs. Judge Concepcion, etc.: 18
Knowingly rendering an unjust judgment is both a criminal and an
administrative charge. As a crime, it is punished under Article 204 of
the Revised Penal Code the elements of which are: (a) the offender is a
judge; (b) he renders a judgment in a case submitted to him for
decision; (c) the judgment is unjust, and (d) the judge knows that his
judgment is unjust. The gist of the offense therefore is that an unjust
judgment be rendered maliciously or in bad faith, that is, knowing it to
be unjust.
An unjust judgment is one which is contrary to law or is not supported
by the evidence, or both. The source of an unjust judgment may be
error or ill will. There is no liability at all for a mere error. It is wellsettled that a judicial officer, when required to exercise his judgment or
discretion, is not liable criminally for any error which he commits,
provided he acts in good faith. Bad faith is therefore the ground of
liability. If in rendering judgment the judge fully knew that the same
was unjust in the sense aforesaid, then he acted maliciously and must
have been actuated and prevailed upon by hatred, envy, revenge,
greed, or some other similar motive. As interpreted by Spanish Courts,
the term "knowingly" means sure knowledge, conscious and deliberate
intention to do an injustice. Mere error therefore in the interpretation or
application of the law does not constitute the crime.
The nature of the administrative charge of knowingly rendering an
unjust judgment is the same as the criminal charge. Thus, in this
particular administrative charge, it must be established that
respondent Judge rendered a judgment or decision not supported by
law and/or evidence and that he must be actuated by hatred, envy,
revenge, greed, or some other similar motive. . . .
In a recent administrative case decided by this Court, it was reiterated that in order
to hold a judge liable, it must be shown beyond reasonable doubt that the judgment
is unjust and that it was made with conscious and deliberate intent to do an
injustice. 19 The complainants in the present case have dismally failed to convince
us that respondent judge knew that his challenged judgment is unjust, even
assuming it to be so.
In any event, respondent judge deserves to be appropriately penalized for his
regrettably erroneous action in connection with Criminal Case No. 2664 of his court.
We have repeatedly stressed that a municipal trial judge occupies the forefront of
the judicial arm that is closest in reach to the public he serves, and he must
accordingly act at all times with great constancy and utmost probity. 20 Any kind of

failure in the discharge of this grave responsibility cannot be countenanced in order

to maintain the faith of the public in the judiciary, especially on the level of courts to
which most of them resort for redress.
WHEREFORE respondent Judge Servillano M. Mejia is ORDERED to pay a fine of Two
Thousand Pesos (P2,000.00), with a STERN WARNING that the commission of the
same or similar offense will be dealt with more severely.
SO ORDERED.
Narvasa, C.J., Bidin, Puno and Mendoza, JJ., concur.

Mendova v. Afable, 393 SCRA 390 (2002)

THIRD DIVISION

[A.M. NO. MTJ-02-1402. December 4, 2002]

ABRAHAM L. MENDOVA, complainant, vs. CRISANTO B. AFABLE, Presiding

Judge, Municipal Circuit Trial Court, San Julian-Sulat, Eastern
Samar, respondent.
DECISION
SANDOVAL-GUTIERREZ, J.
In an affidavit-complaint dated July 1, 1999, Abraham L. Mendova charged Judge
Crisanto B. Afable of the Municipal Circuit Trial Court of San JulianSulat, Eastern
Samar, with ignorance of the law relative to Criminal Case No. 2198-98, People of
the Philippines, Plaintiff,vs. Roberto Q. Palada, Accused, for slight physical injuries.
Complainant Mendova alleged in his affidavit-complaint that on February 18,
1998 he filed with the Office of the Barangay Chairman of Poblacion San Julian,
Eastern Samar a complaint for slight physical injuries against Robert
Palada. Barangay Chairman Ronie D. Quintua, in his Certification dated April 19,
1999,[1] confirmed such fact. Pangkat Chairman Eufemia L. Cabago also certified in
an undated Minutes In Settling Disputes [2] that the case was set for hearing on
March 16, 22 and 29, 1998, but the parties failed to reach an amicable settlement.
On May 4, 1998, complainant filed with the Municipal Circuit Trial Court of San
JulianSulat, Eastern Samar a complaint for slight physical injuries against Palada,
docketed as Criminal Case No. 2198-98. On November 3, 1998, respondent judge
rendered his Decision[3] dismissing the case on the ground of prescription, thus:

"Complaint in this case dated April 20, 1998 was filed with this Court on May
4, 1998. The affidavits of complainant as well as prosecution witness Melvin C.
Quiloa were subscribed and sworn to before the undersigned also on May 4, 1998.
The alleged offense took place on February 15, 1998. From the date of
the commission of the alleged offense, more than two months have
elapsed.
This is for slight physical injuries and is therefore a light offense.
Under Art. 89 of the Revised Penal Code, criminal liability is totally extinguished by
presciption of the crime.
Article 90 of the same Code provides that light offenses prescribe in two
months. This being a light offense, the same should be considered as
already having prescribed because the case against the accused was filed
after two months.
LET, THEREFORE, this case be DISMISSED, the crime having already prescribed.
SO ORDERED. (emphasis added)
On July 7, 1999, complainant filed with the Office of the Court Administrator an
administrative complaint against respondent judge. He alleged that in dismissing
the case, respondent judge showed his ignorance of the law when he did not apply
the provisions of Section 410(c) of Republic Act No. 7160 (The Local Government
Code of 1991), which state:
"Section 410. Procedure for Amicable Settlement.
xxx

xxx

xxx

(c) Suspension of prescriptive period of offenses. While the dispute is under

mediation, conciliation or arbitration, the prescriptive periods for offenses and
causes of action under existing laws shall be interrupted upon filing of the
complaint
with
the
Punong
Barangay. The
prescriptive
periods
shall resume upon receipt
by
the
complainant of
the
complaint
or
the certificate of repudiation or of the certification to file action issued by
the Lupon or Pangkat Secretary: Provided, however, That such interruption shall not
exceed sixty (60) days from the filing of the complaint with the punong
barangay." (emphasis added)
Complainant further alleged that respondent's conduct caused him injury and
grave injustice.
In his comment dated September 13, 1999, respondent admitted that his
Decision being assailed by complainant was wrong. According to him, (w)hen I
rendered the questioned decision, what entered my mind was the rule on
prescription as provided under the Revised Penal Code. There was a mental lapse
on my part caused by heavy workload, as he was likewise designated the Acting

Presiding Judge of MCTC Llorente-Hernani, Eastern Samar. [4] He begged for kindness
and understanding, stating that he has been a trial judge for 10 years and that this
is the first kind of mistake he has ever committed.
In its Evaluation and Recommendation,[5] the Office of the Court Administrator,
through Deputy Court Administrator Zenaida N. Elepao, found respondent guilty as
charged and recommended that he be fined P3,000.00 with a warning that a
commission of similar acts will be dealt with more severely, thus:
EVALUATION: It cannot be denied that respondent has been remiss in the
dispensation of his adjudicatory functions. The court has not been wanting in its
warnings that judges should endeavor to maintain at all times the confidence and
high respect accorded to those who wield the gavel of justice. Judges are required
to observe due care in the performance of their official duties. They are likewise
charged with the knowledge of internal rules and procedures, especially those which
relate to the scope of their authority (Cuaresma vs. Aguilar, 226 SCRA 73). Further,
a judge owes it to the public and the administration of justice to know the law he is
supposed to apply to a given controversy. He is called upon to exhibit more than
just a cursory acquaintance with the statutes and procedural rules. There will be
faith in the administration of justice only if there be a belief on the part of litigants
that occupants of the bench can not justly be accused of a deficiency in their grasp
of legal principles (Libarios vs. Dabalos, 199 SCRA 48).
In a Resolution dated February 13, 2002, this Court ordered that this case be
docketed as an administrative matter and required the parties to manifest, within
20 days from notice, whether they are submitting the case for decision on the basis
of the pleadings/records already filed.
Both parties filed their respective manifestations that they are willing to have
the case so decided. In his manifestation, respondent judge made the additional
comment that the complainant did not allege bad faith or malice on his
(respondents) part in rendering the questioned decision.
The sole issue for our resolution is whether respondent judge is liable
administratively for dismissing Criminal Case No. 2198-98 on the ground of
prescription.
It is axiomatic, as this Court has repeatedly stressed, that an administrative
complaint is not the appropriate remedy for every irregular or erroneous order or
decision issued by a judge where a judicial remedy is available, such as a motion for
reconsideration, or an appeal. For, obviously, if subsequent developments prove the
judges challenged act to be correct, there would be no occasion to proceed against
him at all. Besides, to hold a judge administratively accountable for every
erroneous ruling or decision he renders, assuming he has erred, would be nothing
short of harassment and would make his position doubly unbearable. To hold
otherwise would be to render judicial office untenable, for no one called upon to try
the facts or interpret the law in the process of administering justice can be infallible
in his judgment. It is only where the error is so gross, deliberate and malicious, or
incurred with evident bad faith that administrative sanctions may be imposed
against the erring judge.[6]
What we said in Flores vs. Abesamis

[7]

is illuminating:

As everyone knows, the law provides ample judicial remedies against errors or
irregularities being committed by a Trial Court in the exercise of its
jurisdiction. The ordinary remedies against errors or irregularities which may be
regarded as normal in nature (i.e., error in appreciation or admission of evidence, or
in construction or application of procedural or substantive law or legal
principle) include a motion for reconsideration (or after rendition of a judgment
or final order, a motion for new trial), and appeal. The extraordinary
remedies against error or irregularities which may be deemed extraordinary in
character (i.e., whimsical, capricious, despotic exercise of power or neglect of duty,
etc.) are inter alia the special civil actions ofcertiorari, prohibition or mandamus, or
a motion for inhibition, a petition for change of venue, as the case may be.
Now, the established doctrine and policy is that disciplinary
proceedings and criminal actions against Judges are not complementary or
suppletory of, nor a substitute for, these judicial remedies, whether
ordinary or extraordinary. Resort to and exhaustion of these judicial
remedies, as well as the entry of judgment in the corresponding action or
proceeding, are pre-requisites for the taking of other measures against the
persons of the judges concerned, whether of civil, administrative, or criminal
nature. It is only after the available judicial remedies have been exhausted
and the appellate tribunals have spoken with finality, that the door to an
inquiry into his criminal, civil or administrative liability may be said to have
opened, or closed.
Flores (complainant) resorted to administrative prosecution (or
institution of criminal actions) as a substitute for or supplement to the
specific modes of appeals or review provided by law from court judgments
or orders, on the theory that the Judges orders had caused him undue
injury. This is impermissible, as this Court has already more than once
ruled. Law and logic decree that administrative or criminal remedies are
neither alternative nor cumulative to judicial review where such review is
available, and must wait on the result thereof (See In Re: Wenceslao
Laureta, 148 SCRA 382, 417-418 [1987]; In Re: Joaquin T. Borromeo, 241 SCRA 405
[1995]. Indeed, since judges must be free to judge, without pressure or
influence from external forces or factors, they should not be subject to
intimidation, the fear of civil, criminal or administrative sanctions for acts
they may do and dispositions they may make in the performance of their
duties and functions; and it is sound rule, which must be recognized
independently of statute, that judges are not generally liable for acts done
within the scope of their jurisdiction and in good faith; and that
exceptionally, prosecution of a judge can be had only if there be a final
declaration by a competent court in some appropriate proceeding of the
manifestly unjust character of the challenged judgment or order, and x x x
also evidence of malice or bad faith, ignorance or inexcusable negligence,
on the part of the judge in rendering said judgment or order or under the
stringent circumstances set out in Article 32 of the Civil Code (see In Re: Joaquin T.
Borromeo, at pp. 464-465).

x
x
x. In
fine,
Flores
filed
his administrative and
criminal
complaints prematurely, before ascertainment of the existence of foundation
therefor; x x x. (emphasis added)
In the present case, we noticed from the records before us that the complainant
did not bother at all to file a motion for reconsideration of respondent judges
decision dismissing the criminal case. No reason was advanced by complainant
why he failed to do so. Thus, following our settled pronouncements cited above, his
instant administrative complaint is premature.
According to complainant, Robert Palada committed the crime of slight physical
injuries on February 15, 1998. On February 18, 1998, complainant filed his
complaint with the Office of the Barangay Chairman at Poblacion, San Julian, Eastern
Samar. Pursuant to the provisions of Section 410(c) of The Local Government Code
of 1991, quoted earlier, such filing interrupted the prescriptive period [8] and started
to run again upon receipt by the complainant of the Certification to File
Action issued by the Pangkat Secretary. Here, records fail to show when
complainant received the Barangay Certification to File Action. The undated
certification he submitted merely states that the case was set for hearing before the
barangay on March 16, 22 and 29, 1998, but the parties failed to reach an amicable
settlement. When he filed on May 4, 1998 Criminal Case No. 2198-98 for slight
physical injuries with respondent's court, until the dismissal of the case on
November 3, 1998, he still failed to present proof of his receipt of the Barangay
Certification to File Action. Clearly, he cannot now fault respondent judge for
dismissing the case on the ground of prescription.
While respondent admitted his mistake, the same may not be considered
ignorance of the law. If at all, it can only be an error of judgment.
Finally, we noted that the complaint does not allege any bad faith or malice on
the part of respondent judge when he dismissed the criminal case.
WHEREFORE, the present administrative complaint against Judge Crisanto B.
Afable is DISMISSED. He is reminded, however, that henceforth, he should be
more assiduous and circumspect in his judicial calling.
SO ORDERED.
Panganiban, (Acting Chairman), Corona, and Carpio Morales, JJ., concur.
Puno, (Chairman), J., on official leave.

Aquino v. Aure, 546 SCRA 71 (2008)

G.R. No. 153567

February 18, 2008

LIBRADA
vs.
ERNEST S. AURE1, respondent.

M.

AQUINO, petitioner,

DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari2 under Rule 45 of the Revised
Rules of Court filed by petitioner Librada M. Aquino (Aquino), seeking the reversal
and the setting aside of the Decision 3 dated 17 October 2001 and the
Resolution4 dated 8 May 2002 of the Court of Appeals in CA-G.R. SP No. 63733. The
appellate court, in its assailed Decision and Resolution, reversed the Decision 5 of the
Regional Trial Court (RTC) of Quezon City, Branch 88, affirming the Decision 6 of the
Metropolitan Trial Court (MeTC) of Quezon City, Branch 32, which dismissed
respondent Ernesto Aures (Aure) complaint for ejectment on the ground, inter alia,
of failure to comply with barangay conciliation proceedings.
The subject of the present controversy is a parcel of land situated in Roxas District,
Quezon City, with an area of 449 square meters and covered by Transfer Certificate
of Title (TCT) No. 205447 registered with the Registry of Deeds of Quezon City
(subject property).7
Aure and E.S. Aure Lending Investors, Inc. (Aure Lending) filed a Complaint for
ejectment against Aquino before the MeTC docketed as Civil Case No. 17450. In
their Complaint, Aure and Aure Lending alleged that they acquired the subject
property from Aquino and her husband Manuel (spouses Aquino) by virtue of a Deed
of Sale8 executed on 4 June 1996. Aure claimed that after the spouses Aquino
received substantial consideration for the sale of the subject property, they refused
to vacate the same.9
In her Answer,10 Aquino countered that the Complaint in Civil Case No. 17450 lacks
cause of action for Aure and Aure Lending do not have any legal right over the
subject property. Aquino admitted that there was a sale but such was governed by
the Memorandum of Agreement11 (MOA) signed by Aure. As stated in the MOA, Aure
shall secure a loan from a bank or financial institution in his own name using the
subject property as collateral and turn over the proceeds thereof to the spouses
Aquino. However, even after Aure successfully secured a loan, the spouses Aquino
did not receive the proceeds thereon or benefited therefrom.
On 20 April 1999, the MeTC rendered a Decision in Civil Case No. 17450 in favor of
Aquino and dismissed the Complaint for ejectment of Aure and Aure Lending for
non-compliance with the barangay conciliation process, among other grounds. The
MeTC observed that Aure and Aquino are residents of the same barangay but there
is no showing that any attempt has been made to settle the case amicably at
the barangay level. The MeTC further observed that Aure Lending was improperly
included as plaintiff in Civil Case No. 17450 for it did not stand to be injured or
benefited by the suit. Finally, the MeTC ruled that since the question of ownership
was put in issue, the action was converted from a mere detainer suit to one
"incapable of pecuniary estimation" which properly rests within the original
exclusive jurisdiction of the RTC. The dispositive portion of the MeTC Decision reads:

WHEREFORE, premises considered, let this case be, as it is, hereby ordered
DISMISSED. [Aquinos] counterclaim is likewise dismissed. 12
On appeal, the RTC affirmed the dismissal of the Complaint on the same ground that
the dispute was not brought before the Barangay Council for conciliation before it
was filed in court. In a Decision dated 14 December 2000, the RTC stressed that
the barangay conciliation process is a conditio sine qua non for the filing of an
ejectment complaint involving residents of the same barangay, and failure to
comply therewith constitutes sufficient cause for the dismissal of the action. The
RTC likewise validated the ruling of the MeTC that the main issue involved in Civil
Case No. 17450 is incapable of pecuniary estimation and cognizable by the RTC.
Hence, the RTC ruled:
WHEREFORE, finding no reversible error in the appealed judgment, it is
hereby affirmed in its entirety.13
Aures Motion for Reconsideration was denied by the RTC in an Order 14 dated 27
February 2001.
Undaunted, Aure appealed the adverse RTC Decision with the Court of Appeals
arguing that the lower court erred in dismissing his Complaint for lack of cause of
action. Aure asserted that misjoinder of parties was not a proper ground for
dismissal of his Complaint and that the MeTC should have only ordered the
exclusion of Aure Lending as plaintiff without prejudice to the continuation of the
proceedings in Civil Case No. 17450 until the final determination thereof. Aure
further asseverated that mere allegation of ownership should not divest the MeTC of
jurisdiction over the ejectment suit since jurisdiction over the subject matter is
conferred by law and should not depend on the defenses and objections raised by
the parties. Finally, Aure contended that the MeTC erred in dismissing his Complaint
with prejudice on the ground of non-compliance with barangay conciliation process.
He was not given the opportunity to rectify the procedural defect by going through
the barangay mediation proceedings and, thereafter, refile the Complaint. 15
On 17 October 2001, the Court of Appeals rendered a Decision, reversing the MeTC
and RTC Decisions and remanding the case to the MeTC for further proceedings and
final determination of the substantive rights of the parties. The appellate court
declared that the failure of Aure to subject the matter to barangay conciliation is not
a jurisdictional flaw and it will not affect the sufficiency of Aures Complaint since
Aquino failed to seasonably raise such issue in her Answer. The Court of Appeals
further ruled that mere allegation of ownership does not deprive the MeTC of
jurisdiction over the ejectment case for jurisdiction over the subject matter is
conferred by law and is determined by the allegations advanced by the plaintiff in
his complaint. Hence, mere assertion of ownership by the defendant in an
ejectment case will not oust the MeTC of its summary jurisdiction over the same.
The decretal part of the Court of Appeals Decision reads:
WHEREFORE, premises considered, the petition is hereby GRANTED - and the
decisions of the trial courts below REVERSED and SET ASIDE. Let the records be
remanded back to the court a quo for further proceedings for an eventual decision
of the substantive rights of the disputants. 16

In a Resolution dated 8 May 2002, the Court of Appeals denied the Motion for
Reconsideration interposed by Aquino for it was merely a rehash of the arguments
set forth in her previous pleadings which were already considered and passed upon
by the appellate court in its assailed Decision.
Aquino is now before this Court via the Petition at bar raising the following issues:
I.
WHETHER OR NOT NON-COMPLIANCE WITH THE BARANGAY CONCILIATION
PROCEEDINGS IS A JURISDICTIONAL DEFECT THAT WARRANTS THE DISMISSAL
OF THE COMPLAINT.
II.
WHETHER OR NOT ALLEGATION OF OWNERSHIP OUSTS THE MeTC OF ITS
JURISDICTION OVER AN EJECTMENT CASE.
The barangay justice system was established primarily as a means of easing up the
congestion of cases in the judicial courts. This could be accomplished through a
proceeding before the barangay courts which, according to the conceptor of the
system, the late Chief Justice Fred Ruiz Castro, is essentially arbitration in character,
and to make it truly effective, it should also be compulsory. With this primary
objective of the barangay justice system in mind, it would be wholly in keeping with
the underlying philosophy of Presidential Decree No. 1508, otherwise known as the
Katarungang Pambarangay Law, and the policy behind it would be better served if
an out-of-court settlement of the case is reached voluntarily by the parties. 17
The primordial objective of Presidential Decree No. 1508 is to reduce the number of
court litigations and prevent the deterioration of the quality of justice which has
been brought by the indiscriminate filing of cases in the courts. 18 To ensure this
objective, Section 6 of Presidential Decree No. 1508 19 requires the parties to
undergo a conciliation process before the Lupon Chairman or the Pangkat ng
Tagapagkasundo as a precondition to filing a complaint in court subject to certain
exceptions20 which are inapplicable to this case. The said section has been declared
compulsory in nature.21
Presidential Decree No. 1508 is now incorporated in Republic Act No. 7160,
otherwise known as The Local Government Code, which took effect on 1 January
1992.
The pertinent provisions of the Local Government Code making conciliation a
precondition to filing of complaints in court, read:
SEC. 412. Conciliation.- (a) Pre-condition to filing of complaint in court. No
complaint, petition, action, or proceeding involving any matter within the
authority of the lupon shall be filed or instituted directly in court or any other
government office for adjudication, unless there has been a confrontation
between the parties before the lupon chairman or the pangkat, and that no

conciliation or settlement has been reached as certified by the lupon

secretary or pangkat secretary as attested to by the lupon chairman or
pangkat chairman or unless the settlement has been repudiated by the
parties thereto.
(b) Where parties may go directly to court. The parties may go directly to
court in the following instances:
(1) Where the accused is under detention;
(2) Where a person has otherwise been deprived of personal liberty calling
for habeas corpus proceedings;
(3) Where actions are coupled with provisional remedies such as preliminary
injunction, attachment, delivery of personal property, and support pendente
lite; and
(4) Where the action may otherwise be barred by the statute of limitations.
(c) Conciliation among members of indigenous cultural communities. The
customs and traditions of indigenous cultural communities shall be applied in
settling disputes between members of the cultural communities.
SEC. 408. Subject Matter for Amicable Settlement; Exception Therein. The
lupon of each barangay shall have authority to bring together the parties
actually residing in the same city or municipality for amicable settlement of
all disputes except:
(a) Where one party is the government or any subdivision or instrumentality
thereof;
(b) Where one party is a public officer or employee, and the dispute relates to
the performance of his official functions;
(c) Offenses punishable by imprisonment exceeding one (1) year or a fine
exceeding Five thousand pesos (P5,000.00);
(d) Offenses where there is no private offended party;
(e) Where the dispute involves real properties located in different cities or
municipalities unless the parties thereto agree to submit their differences to
amicable settlement by an appropriate lupon;
(f) Disputes involving parties who actually reside in barangays of different
cities or municipalities, except where such barangay units adjoin each other
and the parties thereto agree to submit their differences to amicable
settlement by an appropriate lupon;

(g) Such other classes of disputes which the President may determine in the
interest of justice or upon the recommendation of the Secretary of Justice.
There is no dispute herein that the present case was never referred to the Barangay
Lupon for conciliation before Aure and Aure Lending instituted Civil Case No. 17450.
In fact, no allegation of such barangay conciliation proceedings was made in Aure
and Aure Lendings Complaint before the MeTC. The only issue to be resolved is
whether non-recourse to the barangay conciliation process is a jurisdictional flaw
that warrants the dismissal of the ejectment suit filed with the MeTC.
Aquino posits that failure to resort to barangay conciliation makes the action for
ejectment premature and, hence, dismissible. She likewise avers that this objection
was timely raised during the pre-trial and even subsequently in her Position Paper
submitted to the MeTC.
We do not agree.
It is true that the precise technical effect of failure to comply with the requirement
of Section 412 of the Local Government Code on barangay conciliation (previously
contained in Section 5 of Presidential Decree No. 1508) is much the same effect
produced by non-exhaustion of administrative remedies -- the complaint becomes
afflicted with the vice of pre-maturity; and the controversy there alleged is not ripe
for judicial determination. The complaint becomes vulnerable to a motion to
dismiss.22 Nevertheless, the conciliation process is not a jurisdictional
requirement, so that non-compliance therewith cannot affect the
jurisdiction which the court has otherwise acquired over the subject
matter or over the person of the defendant.23
As enunciated in the landmark case of Royales v. Intermediate Appellate Court 24:
Ordinarily, non-compliance with the condition precedent prescribed by P.D.
1508 could affect the sufficiency of the plaintiff's cause of action and make
his complaint vulnerable to dismissal on ground of lack of cause of action or
prematurity; but the same would not prevent a court of competent
jurisdiction from exercising its power of adjudication over the case
before it, where the defendants, as in this case, failed to object to
such exercise of jurisdiction in their answer and even during the
entire proceedings a quo.
While petitioners could have prevented the trial court from exercising
jurisdiction over the case by seasonably taking exception thereto, they
instead invoked the very same jurisdiction by filing an answer and seeking
affirmative relief from it. What is more, they participated in the trial of the
case by cross-examining respondent Planas. Upon this premise,
petitioners cannot now be allowed belatedly to adopt an
inconsistent posture by attacking the jurisdiction of the court to
which they had submitted themselves voluntarily. x x x (Emphasis
supplied.)

In the case at bar, we similarly find that Aquino cannot be allowed to attack the
jurisdiction of the MeTC over Civil Case No. 17450 after having submitted herself
voluntarily thereto. We have scrupulously examined Aquinos Answer before the
MeTC in Civil Case No. 17450 and there is utter lack of any objection on her part to
any deficiency in the complaint which could oust the MeTC of its jurisdcition.
We thus quote with approval the disquisition of the Court of Appeals:
Moreover, the Court takes note that the defendant [Aquino] herself did not
raise in defense the aforesaid lack of conciliation proceedings in her answer,
which raises the exclusive affirmative defense of simulation. By this
acquiescence, defendant [Aquino] is deemed to have waived such objection.
As held in a case of similar circumstances, the failure of a defendant [Aquino]
in an ejectment suit to specifically allege the fact that there was no
compliance with the barangay conciliation procedure constitutes a waiver of
that defense. x x x.25
By Aquinos failure to seasonably object to the deficiency in the Complaint, she is
deemed to have already acquiesced or waived any defect attendant thereto.
Consequently, Aquino cannot thereafter move for the dismissal of the ejectment suit
for Aure and Aure Lendings failure to resort to the barangay conciliation process,
since she is already precluded from doing so. The fact that Aquino raised such
objection during the pre-trial and in her Position Paper is of no moment, for the issue
of non-recourse to barangay mediation proceedings should be impleaded in
her Answer.
As provided under Section 1, Rule 9 of the 1997 Rules of Civil Procedure:
Sec. 1. Defenses and objections not pleaded. Defenses and objections
not pleaded either in a motion to dismiss or in the answer are
deemed waived. However, when it appears from the pleadings or the
evidence on record that the court has no jurisdiction over the subject matter,
that there is another action pending between the same parties for the same
cause, or that the action is barred by a prior judgment or by statute of
limitations, the court shall dismiss the claim. (Emphasis supplied.)
While the aforequoted provision applies to a pleading (specifically, an Answer) or a
motion to dismiss, a similar or identical rule is provided for all other motions in
Section 8 of Rule 15 of the same Rule which states:
Sec. 8. Omnibus Motion. - Subject to the provisions of Section 1 of Rule 9, a
motion attacking a pleading, order, judgment, or proceeding shall include all
objections then available, and all objections not so included shall be deemed
waived.
The spirit that surrounds the foregoing statutory norm is to require the party filing a
pleading or motion to raise all available exceptions for relief during the single
opportunity so that single or multiple objections may be avoided. 26It is clear and
categorical in Section 1, Rule 9 of the Revised Rules of Court that failure to raise

defenses and objections in a motion to dismiss or in an answer is deemed a waiver

thereof; and basic is the rule in statutory construction that when the law is clear and
free from any doubt or ambiguity, there is no room for construction or
interpretation.27 As has been our consistent ruling, where the law speaks in clear
and categorical language, there is no occasion for interpretation; there is only room
for application.28 Thus, although Aquinos defense of non-compliance with
Presidential Decree No. 1508 is meritorious, procedurally, such defense is no longer
available for failure to plead the same in the Answer as required by
the omnibus motion rule.
Neither could the MeTC dismiss Civil Case No. 17450 motu proprio. The 1997 Rules
of Civil Procedure provide only three instances when the court may motu
proprio dismiss the claim, and that is when the pleadings or evidence on the record
show that (1) the court has no jurisdiction over the subject matter; (2) there is
another cause of action pending between the same parties for the same cause; or
(3) where the action is barred by a prior judgment or by a statute of limitations.
Thus, it is clear that a court may not motu proprio dismiss a case on the ground of
failure to comply with the requirement for barangay conciliation, this ground not
being among those mentioned for the dismissal by the trial court of a case on its
own initiative.
Aquino further argues that the issue of possession in the instant case cannot be
resolved by the MeTC without first adjudicating the question of ownership, since the
Deed of Sale vesting Aure with the legal right over the subject property is
simulated.
Again, we do not agree. Jurisdiction in ejectment cases is determined by the
allegations pleaded in the complaint. As long as these allegations demonstrate a
cause of action either for forcible entry or for unlawful detainer, the court acquires
jurisdiction over the subject matter. This principle holds, even if the facts proved
during the trial do not support the cause of action thus alleged, in which instance
the court -- after acquiring jurisdiction -- may resolve to dismiss the action for
insufficiency of evidence.
The necessary allegations in a Complaint for ejectment are set forth in Section 1,
Rule 70 of the Rules of Court, which reads:
SECTION 1. Who may institute proceedings, and when. Subject to the
provisions of the next succeeding section, a person deprived of the
possession of any land or building by force, intimidation, threat, strategy, or
stealth, or a lessor, vendor, vendee, or other person against whom the
possession of any land or building is unlawfully withheld after the expiration
or termination of the right to hold possession, by virtue of any contract,
express or implied, or the legal representatives or assigns of any such lessor,
vendor, vendee, or other person may at any time within one (1) year after
such unlawful deprivation or withholding of possession, bring an action in the
proper Municipal Trial Court against the person or persons unlawfully
withholding or depriving of possession, or any person or persons claiming
under them, for the restitution of such possession, together with damages
and costs.

In the case at bar, the Complaint filed by Aure and Aure Lending on 2 April 1997,
alleged as follows:
2. [Aure and Aure Lending] became the owners of a house and lot located at
No. 37 Salazar Street corner Encarnacion Street, B.F. Homes, Quezon City by
virtue of a deed of absolute sale executed by [the spouses Aquino] in favor of
[Aure and Aure Lending] although registered in the name of x x x Ernesto S.
Aure; title to the said property had already been issued in the name of [Aure]
as shown by a transfer Certificate of Title , a copy of which is hereto attached
and made an integral part hereof as Annex A;
3. However, despite the sale thus transferring ownership of the subject
premises to [Aure and Aure Lending] as above-stated and consequently
terminating [Aquinos] right of possession over the subject property, [Aquino]
together with her family, is continuously occupying the subject premises
notwithstanding several demands made by [Aure and Aure Lending] against
[Aquino] and all persons claiming right under her to vacate the subject
premises and surrender possession thereof to [Aure and Aure Lending]
causing damage and prejudice to [Aure and Aure Lending] and making
[Aquinos] occupancy together with those actually occupying the subject
premises claiming right under her, illegal. 29
It can be inferred from the foregoing that Aure, together with Aure Lending, sought
the possession of the subject property which was never surrendered by Aquino after
the perfection of the Deed of Sale, which gives rise to a cause of action for an
ejectment suit cognizable by the MeTC. Aures assertion of possession over the
subject property is based on his ownership thereof as evidenced by TCT No. 156802
bearing his name. That Aquino impugned the validity of Aures title over the subject
property and claimed that the Deed of Sale was simulated should not divest the
MeTC of jurisdiction over the ejectment case. 30
As extensively discussed by the eminent jurist Florenz D. Regalado in Refugia v.
Court of Appeals31:
As the law on forcible entry and unlawful detainer cases now stands, even
where the defendant raises the question of ownership in his pleadings and
the question of possession cannot be resolved without deciding the issue of
ownership, the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts nevertheless have the undoubted competence to resolve
the issue of ownership albeit only to determine the issue of possession.
x x x. The law, as revised, now provides instead that when the
question of possession cannot be resolved without deciding the
issue of ownership, the issue of ownership shall be resolved only to
determine the issue of possession. On its face, the new Rule on
Summary Procedure was extended to include within the jurisdiction of the
inferior courts ejectment cases which likewise involve the issue of ownership.
This does not mean, however, that blanket authority to adjudicate the issue
of ownership in ejectment suits has been thus conferred on the inferior
courts.

At the outset, it must here be stressed that the resolution of this particular
issue concerns and applies only to forcible entry and unlawful detainer cases
where the issue of possession is intimately intertwined with the issue of
ownership. It finds no proper application where it is otherwise, that is, where
ownership is not in issue, or where the principal and main issue raised in the
allegations of the complaint as well as the relief prayed for make out not a
case for ejectment but one for recovery of ownership.
Apropos thereto, this Court ruled in Hilario v. Court of Appeals32:
Thus, an adjudication made therein regarding the issue of ownership should
be regarded as merely provisional and, therefore, would not bar or prejudice
an action between the same parties involving title to the land. The foregoing
doctrine is a necessary consequence of the nature of forcible entry and
unlawful detainer cases where the only issue to be settled is the physical or
material possession over the real property, that is, possession de facto and
not possession de jure."
In other words, inferior courts are now "conditionally vested with adjudicatory power
over the issue of title or ownership raised by the parties in an ejectment suit."
These courts shall resolve the question of ownership raised as an incident in an
ejectment case where a determination thereof is necessary for a proper and
complete adjudication of the issue of possession. 33
WHEREFORE, premises considered, the instant Petition is DENIED. The Court of
Appeals Decision dated 17 October 2001 and its Resolution dated 8 May 2002 in CAG.R. SP No. 63733 are hereby AFFIRMED. Costs against the petitioner.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice

Pang-et v. Manacnes-dao-as, G.R. No. 167261, March 2, 2007

THIRD DIVISION

ROSARIA LUPITAN PANG-ET,

G.R. No. 167261

Petitioner,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus -

AUSTRIA-MARTINEZ,
CALLEJO, SR.,*
CHICO-NAZARIO, and
NACHURA, JJ.

Promulgated:
CATHERINE
MANACNES-DAO-AS,
Heir of LEONCIO MANACNES and
March 2, 2007
FLORENTINA MANACNES,
Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION

CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of
Civil Procedure, assailing the Decision [1] of the Court of Appeals in CA-G.R. SP No.
78019, dated 9 February 2005, which reversed and set aside the Judgment [2] of the
Regional Trial Court (RTC), Branch 36, Bontoc, Mountain Province, and reinstated the
Resolution[3] of the Municipal Circuit Trial Court (MCTC) of Besao-Sagada, Mountain
Province dismissing herein petitioners action for Enforcement of Arbitration Award
and Damages.
The instant petition draws its origin from an Action [4] for recovery of
possession of real property situated in Sitio Abatan, Barrio Dagdag, Sagada filed by
herein petitioner before the MCTC of Besao-Sagada, Mountain Province on 9
November 1994, against the spouses Leoncio and Florentina Manacnes, the
predecessors-in-interest of herein respondent.
On 23 February 1995, during the course of the pre-trial, the parties, through
their respective counsels, agreed to refer the matter to the Barangay Lupon (Lupon)
of Dagdag, Sagada for arbitration in accordance with the provisions of
the KatarungangPambarangay Law.[5] Consequently, the proceedings before the
MCTC were suspended, and the case was remanded to the Lupon for resolution. [6]
Thereafter, the Lupon issued a Certification to File Action on 26 February
1995 due to the refusal of the Manacnes spouses to enter into an Agreement for

Arbitration and their insistence that the case should go to court. On 8 March 1995,
the Certification, as well as the records of the case, were forwarded to the MCTC.
An Order was issued by the MCTC on 7 April 1995, once more remanding the
matter for conciliation by the Lupon and ordering the Lupon to render an Arbitration
Award thereon. According to the MCTC, based on the records of the case, an
Agreement for Arbitration was executed by the parties concerned; however,
the Lupon failed
to
issue
an
Arbitration
Award
as
provided
under
the Katarungang Pambarangay Law, so that, the case must be returned to
the Lupon until an Arbitration Award is rendered.
In compliance with the MCTC Order, the Lupon rendered an Arbitration Award
on 10 May 1995 ordering herein petitioner to retrieve the land upon payment to the
spouses Manacnes of the amount of P8,000.00 for the improvements on the
land. Aggrieved, Leoncios widow,[7] Florentina Manacnes, repudiated the Arbitration
Award but her repudiation was rejected by the Lupon. Thereafter, the MCTC was
furnished with copies of the Arbitration Award.
On 1 June 1995, herein petitioner filed with the Lupon a Motion for Execution
of the Arbitration Award. On the other hand,Florentina Manacnes filed a Motion with
the MCTC for the resumption of the proceedings in the original case for recovery of
possession and praying that the MCTC consider her repudiation of the Arbitration
Award issued by the Lupon.
Subsequently,
the
MCTC
heard
the
Motion
of Florentina Manacnes notwithstanding the latters failure to appear before the
court despite notice. The MCTC denied Florentina Manacnes Motion to repudiate
the Arbitration Award elucidating that since themovant failed to take any action
within
the
10-day
reglementary
period
provided
for
under
the Katarungang Pambarangay Law, the arbitration award has become final
and executory. Furthermore, upon motion of herein petitioner Pang-et, the MCTC
issued an Order remanding the records of the case to the Lupon for the execution of
the
Arbitration
Award. On 31
August
1995,
the
then
incumbent Punong Barangay of Dagdag issued a Notice of Execution of the Award.
Said Notice of Execution was never implemented. Thus, on 16 October 2001,
herein petitioner Pang-et filed with the MCTC an action for enforcement of the
Arbitration Award which was sought to be dismissed by the heir of
the Manacnes spouses.[8] The heir of the Manacnes spouses argues that the
Agreement for Arbitration and the Arbitration Award are void, the Agreement for
Arbitration not having been personally signed by the spouses Manacnes, and the
Arbitration Award having been written in English a language not understood by
the parties.
In its Resolution dated 20 August 2002, the MCTC dismissed the Petition for
Enforcement of Arbitration Award in this wise:
x x x Are
defendants estopped from
questioning
proceedings before the Lupon Tagapamayapa concerned?

the

The defendants having put in issue the validity of the

proceedings before the lupon concerned and the products thereof, they
are notestopped. It is a hornbook rule that a null and void act could
always be questioned at any time as the action or defense based upon
it isimprescriptible.
The second issue: Is the agreement to Arbitrate null and
void? Let us peruse the pertinent law dealing on this matter which is
Section 413 of the Local Government Code of 1991 (RA 7160), to wit:
Section 413 (a) The parties may, at any stage of the
proceedings, agree in writing that they shall abide by the
arbitration award of the lupon chairman or the pangkat.
x x x
The foregoing should be taken together with Section 415 of the same
code which provides:
Section 415. Appearance of parties in person. In
all katarungang pambarangay proceedings, the parties
must appear in person without the assistance of counsel
or representative, except for minors and incompetents
who may be assisted by their next-of-kin who are not
lawyers.
It is very clear from the foregoing that personal appearance of
the parties in conciliation proceedings before a Lupon Tagapamayapa is
mandatory. Likewise, the execution of the agreement to arbitrate must
be done personally by the parties themselves so that they themselves
are mandated to sign the agreement.
Unfortunately, in this case, it was not respondents-spouses
[Manacnis] who signed the agreement to arbitrate as plaintiff herself
admitted but another person. Thus, it is very clear that the mandatory
provisos
of
Section
413
and
415
of
RA
7160
are
violated. Grantingarguendo that it was Catherine who signed the
agreement per instruction of her parents, will it cure the violation? The
answer must still be in the negative. As provided for by the cited
provisos of RA 7160, if ever a party is entitled to an assistance, it shall
be done only when the party concerned is a minor or
incompetent. Here, there is no showing that the spouses [Manacnis]
were incompetent. Perhaps very old but not incompetent. Likewise,
what the law provides is assistance, not signing of agreements or
settlements.
Just suppose the spouses [Manacnis] executed a special power
of attorney in favor of their daughter Catherine to attend the
proceedings and to sign the agreement to arbitrate? The more that it
is proscribed by the Katarungang Pambarangay Law specifically

Section 415 of RA 7160 which mandates the personal appearance of

the parties before the lupon and likewise prohibits the appearance of
representatives.
In view of the foregoing, it could now be safely concluded that
the questioned agreement to arbitrate is inefficacious for
beingviolative of the mandatory provisions of RA 7160 particularly
sections 413 and 415 thereof as it was not the respondents-spouses
[Manacnis] who signed it.
The third issue: Is the Arbitration Award now sought to be
enforced effective? Much to be desired, the natural flow of events
must follow as a consequence. Considering that the agreement to
arbitrate is inefficacious as earlier declared, it follows that the
arbitration award which emanated from it is also inefficacious. Further,
the Arbitration Award by itself, granting arguendo that the agreement
to arbitrate is valid, will readily show that it does not also conform with
the mandate of the Katarungang Pambarangay Law particularly
Section 411 thereto which provides:
Sec. 411. Form of Settlement All amicable settlements
shall be in writing in a language or dialect known to the
parties xx x. When the parties to the dispute do not use
the same language or dialect, the settlement shall be
written in the language known to them.
Likewise, the implementing rules thereof, particularly Section 13
provides:
Sec. 13 Form of Settlement and Award. All
settlements, whether by mediation, conciliation or
arbitration, shall be in writing, in a language or dialect
known to the parties. x x x
It is of no dispute that the parties concerned belong to and are
natives
of
the
scenic
and
serene
community
of Sagada, Mt. Provincewho speak the Kankanaey language. Thus, the
Arbitration
Award
should
have
been
written
in
the Kankanaey language. However, as shown by the Arbitration
Award, it is written in English language which the parties do not speak
and therefore a further violation of theKatarungang Pambarangay Law.
IN THE LIGHT of all the foregoing considerations, the aboveentitled case is hereby dismissed.[9]
Petitioner Pang-ets Motion for Reconsideration having been denied, she filed
an Appeal before the RTC which reversed and set aside the Resolution of the MCTC
and remanded the case to the MCTC for further proceedings. According to the RTC:

As it appears on its face, the Agreement for Arbitration in point

found on page 51 of the expediente, dated Feb. 6, 1995, and attested
by the Pangkat Chairman of the Office of the Barangay Lupon
of Dagdag, Sagada was signed by the respondents/defendants
spouses Manacnis. The representative of the Appellee in the instant
case assails such Agreement claiming that the signatures of her
aforesaid predecessors-in-interest therein were not personally affixed
by the latter or are falsified-which in effect is an attack on the validity
of the document on the ground that the consent of the defendants
spouses Manacnis is vitiated by fraud. Indulging the AppelleeHeirs
of Manacnis its contention that such indeed is the truth of the matter,
the fact still remains as borne out by the circumstances, that neither
did said original defendants nor did any of such heirs effectively
repudiate the Agreement in question in accordance with the procedure
outlined by the law, within five (5) days from Feb. 6, 1995, on the
ground as above-stated (Secs. 413 (a), 418, RA 7160; Secs. 7, 13, KP
Law; Sec. 12, Rule IV, KP Rules). As mandated, such failure is deemed
a waiver on the part of the defendants spousesManacnis to challenge
the Agreement for Arbitration on the ground that their consent thereto
is obtained and vitiated by fraud (Sec. 12, Par. 3, KP Rules). Corollarily,
the Appellee Heirs being privy to the now deceased original defendants
should have not been permitted by the court a quo under the equitable
principle of estoppel, to raise the matter in issue for the first time in
the present case (Lopez vs. Ochoa, 103 Phil. 94).
The Arbitration Award relative to Civil Case 83 (B.C. No. 07)
dated
May
10,
1995,
written
in
English,
attested
by
the PunongBarangay of Dagdag and found on page 4 of the record is
likewise assailed by the Appellee as void on the ground that the
English
language
is
not
known
by
the
defendants
spouses Manacnis who are Igorots. Said Appellee contends that the
document should have been written in Kankana-ey, the dialect known
to the party (Sec. 413 (b), RA 7160; Sec. 7, Par. 2, KP law, Sec. 11, KP
Rules). On this score, the court a quo presumptuously concluded on
the basis of the self-serving mere say-so of the representative of
the Appellee that her predecessors did not speak or understand
English. As a matter of judicial notice, American Episcopalian
Missionaries had been in Sagada,Mountain Province as early as 1902
and continuously stayed in the place by turns, co-mingling with the
indigenous people thereat, instructing and educating them, and
converting most to the Christian faith, among other things, until the
former left about twenty years ago. By constant association with the
white folks, the natives too old to go to school somehow learned the
Kings English by ear and can effectively speak and communicate in
that language. Any which way, even granting arguendo that the
defendants spouses Manacnis were the exceptions and indeed totally
ignorant of English, no petition to nullify the Arbitration award in issue
on such ground as advanced was filed by the party or any of
the Appellee Heirs with the MCTC of Besao-Sagada, within ten (10)
days from May 10, 1995, the date of the document. Thus, upon the

expiration thereof, the Arbitration Award acquired the force and effect
of a final judgment of a court (Sec. 416, RA 7160; Sec. 11, KP Law; Sec.
13, KP Rules); conclusive upon the original defendants in Civil Case 83
(B.C. No. 07) and the AppelleeHeirs herein privy to said defendants.
In the light thereof, the collateral attack of the Appellee on the
Agreement for Arbitration and Arbitration Award re Civil Case 83 (B.C.
No. 07) should not have in the first place been given due course by the
court a quo. In which case, it would not have in the logical flow of
things declared both documents inefficacious; without which
pronouncements, said court would not have dismissed the case at bar.
Wherefore, Judgment is hereby rendered Reversing and Setting
Aside the Resolution appealed from, and ordering the record of the
case subject thereof remanded to the court of origin for further
proceedings.[10]
Aggrieved by the reversal of the RTC, herein respondent filed a petition
before the Court of Appeals seeking to set aside the RTC Judgment. On 9 February
2005, the appellate court rendered the herein assailed Decision, to wit:
After thoroughly reviewing through the record, We find nothing
that would show that the spouses Manacnes were ever amenable to
any compromise with respondent Pang-et. Thus, We are at a loss as to
the basis of the Arbitration Award sought to be enforced by respondent
Pang-ets subsequent action before the MCTC.
There is no dispute that the proceeding in Civil Case No. 83 was
suspended and the same remanded to the Lupon on account of the
Agreement to Arbitrate which was allegedly not signed by the parties
but agreed upon by their respective counsels during the pre-trial
conference. In the meeting before the Lupon, it would seem that the
agreement to arbitrate was not signed by the spouses Manacnes. More
importantly,
when
the pangkat chairman
asked
the
spouses Manacnes to sign or affix their thumbmarks in the agreement,
they refused and insisted that the case should instead go to
court. Thus, the Lupon had no other recourse but to issue a certificate
to file action. Unfortunately, the case was again remanded to the
Lupon to render an arbitration award. This time, the Lupon heard the
voice tape of the late Beket Padonay affirming respondent Pangets right to the disputed property. While Pang-et offered to
pay P8,000.00 for the improvements made by the spouses Manacnes,
the latter refused to accept the same and insisted on their right to the
subject property. Despite this, the Lupon on May 10, 1995 issued an
Arbitration award which favored respondent Pang-et.
From the time the case was first referred to the Lupon to the
time
the
same
was
again
remanded
to
it,
the
Spouses Manacnesremained firm in not entering into any compromise

with respondent Pang-et. This was made clear in both the minutes of
the Arbitration Hearing on 26 February 1995 and on 9 April 1995. With
the foregoing, We find it evident that the spouses Manacnes never
intended to submit the case for arbitration.
Moreover, the award itself is riddled with flaws. First of all there
is no showing that the Pangkat ng Tagapagkasundo was duly
constituted
in
accordance
with
Rule
V
of
the Katarungan Pambarangay Rules. And
after
constituting
of
the Pangkat,
Rule
VI,
thereof
thePunong Barangay and
the Pangkat must proceed to hear the case. However, according to the
minutes of the hearing before the lupon on 9 April 1995,
the pangkat Chairman and another pangkat member were absent for
the hearing.
Finally, Section 13 of the same Rule requires that
the Punong Barangay or the Pangkat Chairman should attest that
parties freely and voluntarily agreed to the settlement arrived at. But
how can this be possible when the minutes of the two hearings show
that the spouses Manacnes neither freely nor voluntarily agreed to
anything.
While RA 7160 and the Katarungan Pambarangay rules provide
for a period to repudiate the Arbitration Award, the same is neither
applicable nor necessary since the Agreement to Arbitrate or the
Arbitration Award were never freely nor voluntarily entered into by one
of the parties to the dispute. In short, there is no agreement validly
concluded that needs to be repudiated.
With all the foregoing, estoppel may not be applied against
petitioners for an action or defense against a null and void act does not
prescribe. With this, We cannot but agree with the MCTC that the very
agreement to arbitrate is null and void. Similarly, the arbitration award
which was but the off shoot of the agreement is also void.
WHEREFORE, the RTC judgment of 2 June 2003 is REVERSED and
SET ASIDE, the MCTC Resolution DISMISSING the Civil Case No. 118 for
enforcement of Arbitration Award is REINSTATED.[11]
Vehemently disagreeing with the Decision of the Court of Appeals, petitioner
Pang-et filed the instant petition. Petitioner maintains that the appellate court
overlooked material facts that resulted in reversible errors in the assailed
Decision. According to petitioner, the Court of Appeals overlooked the fact that the
original parties, as represented by their respective counsels in Civil Case No. 83,
mutually agreed to submit the case for arbitration by the Lupon ng Tagapamayapa
of Barangay Dagdag. Petitioner insists that the parties must be bound by the initial
agreement by their counsels during pre-trial to an amicable settlement as any
representation made by the lawyers are deemed made with the conformity of their
clients. Furthermore, petitioner maintains that if indeed the spouses Manacnes did

not want to enter into an amicable settlement, then they should have raised their
opposition at the first instance, which was at the pre-trial on Civil Case No. 83 when
the MCTC ordered that the case be remanded to the Lupon ng Tagapamayapa for
arbitration.
We do not agree with the petitioner.
First and foremost, in order to resolve the case before us, it is pivotal to
stress that, during the initial hearing before theLupon ng Tagapamayapa, the
spouses Manacnes declined to sign the Agreement for Arbitration and were
adamant that the proceedings before the MCTC in Civil Case No. 83 must
continue. As reflected in the Minutes[12] of the Arbitration Hearing held on 26
February 1995, the legality of the signature of Catherine Manacnes, daughter of
the Manacnes spouses, who signed the Agreement for Arbitration on behalf of her
parents,
was
assailed
on
the
ground
that
it
should
be
the
spouses Manacnes themselves who should have signed such agreement. To resolve
the issue, the Pangkat Chairman then asked the spouses Manacnes that if they
wanted the arbitration proceedings to continue, they must signify their intention in
the
Agreement
for
Arbitration
form. However,
as
stated
earlier,
the Manacnes spouses did not want to sign such agreement and instead insisted
that the case go to court.
Consequently, the Lupon issued a Certification to File Action on 26 February
1995 due to the refusal of the Manacnesspouses. Indicated in said Certification are
the following: 1) that there was personal confrontation between the parties before
thePunong Barangay but
conciliation
failed
and
2) that
the Pangkat ng Tagapagkasundo was
constituted
but
the
personal
confrontation before the Pangkat failed likewise because respondents do
not want to submit this case for arbitration and insist that said case will
go to court.[13] Nevertheless, upon receipt of said certification and the records of
the case, the MCTC ordered that the case be remanded to the Lupon ng
Tagapamayapa and for the latter to render an arbitration award, explaining that:
Going over the documents submitted to the court by the office
of the Lupon Tagapamayapa of Dagdag, Sagada, MountainProvince, the
court observed that an Agreement for Arbitration was executed by
the parties anent the above-entitled case. However, said Lupon did
not
make
any
arbitration
award
as
mandated
by
the Katarungang Pambarangay Law but instead made a finding that
the case may now be brought to the court. This is violative of the KP
Law, which cannot be sanctioned by the court. [14]
At
this
juncture,
it
must
be
stressed
that
the
object
of
the Katarungang Pambarangay Law is the amicable settlement of disputes through
conciliation proceedings voluntarily and freely entered into by the parties.
[15]
Through this mechanism, the parties are encouraged to settle their disputes
without enduring the rigors of court litigation. Nonetheless, the disputing parties
are not compelled to settle their controversy during the barangay proceedings

before the Lupon or the Pangkat, as they are free to instead find recourse in the
courts[16] in the event that no true compromise is reached.
The key in achieving the objectives of an effective amicable settlement under
the Katarungang Pambarangay Law is the free and voluntary agreement of the
parties to submit the dispute for adjudication either by the Lupon or the Pangkat,
whose award or decision shall be binding upon them with the force and effect of a
final judgment of a court. [17] Absent this voluntary submission by the parties to
submit their dispute to arbitration under the Katarungang Pambarangay Law, there
cannot be a binding settlement arrived at effectively resolving the case. Hence, we
fail to see why the MCTC further remanded the case to the Lupon ng
Tagapamayapa and insisted that the arbitration proceedings continue, despite the
clear showing that the spouses Manacnes refused to submit the controversy for
arbitration.
It would seem from the Order of the MCTC, which again remanded the case
for arbitration to the Lupon ng Tagapamayapa, that it is compulsory on the part of
the parties to submit the case for arbitration until an arbitration award is rendered
by the Lupon. This, to our minds, is contrary to the very nature of the proceedings
under the Katarungang Pambarangay Law which espouses the principle of voluntary
acquiescence of the disputing parties to amicable settlement.
What is compulsory under the Katarungang Pambarangay Law is that there
be a confrontation between the parties before theLupon Chairman or
the Pangkat and that a certification be issued that no conciliation or settlement has
been reached, as attested to by the Lupon or Pangkat Chairman, before a case
falling within the authority of the Lupon may be instituted in court or any other
government office for adjudication. [18] In other words, the only necessary precondition before any case falling within the authority of the Lupon or
the Pangkat may be filed before a court is that there has been personal
confrontation between the parties but despite earnest efforts to conciliate, there
was a failure to amicably settle the dispute. It should be emphasized that while the
spouses Manacnes appeared before the Lupon during the initial hearing for the
conciliation proceedings, they refused to sign the Agreement for Arbitration form,
which would have signified their consent to submit the case for
arbitration. Therefore,
upon
certification
by
the Lupon
ng
Tagapamayapa that the confrontation before the Pangkat failed because
the spouses Manacnesrefused to submit the case for arbitration and
insisted that the case should go to court, the MCTC should have continued
with the proceedings in the case for recovery of possession which it
suspended in order to give way for the possible amicable resolution of the
case through arbitration before the Lupon ng Tagapamayapa.
Petitioners assertion that the parties must be bound by their respective
counsels agreement to submit the case for arbitration and thereafter enter into an
amicable settlement is imprecise. What was agreed to by the parties respective
counsels was the remand of the case to the Lupon ng Tagapamayapa for
conciliation proceedings and not the actual amicable settlement of the case. As
stated earlier, the parties may only be compelled to appear before the Lupon ng
Tagapamayapa for the necessary confrontation, but not to enter into any amicable

settlement, or in the case at bar, to sign the Agreement for Arbitration. Thus, when
the Manacnesspouses personally appeared during the initial hearing before
the Lupon ng Tagapamayapa, they had already complied with the agreement during
the pre-trial to submit the case for conciliation proceedings. Their presence during
said hearing is already their acquiescence to the order of the MCTC remanding the
case to the Lupon for conciliation proceedings, as there has been an actual
confrontation between the parties despite the fact that no amicable settlement was
reached due to the spouses Manacnes refusal to sign the Agreement for
Arbitration.
Furthermore, the MCTC should not have persisted in ordering the Lupon ng
Tagapamayapa to render an arbitration award upon the refusal of the
spouses Manacnes to submit the case for arbitration since such arbitration award
will
not
bind
the
spouses. As
reflected
in
Section
413
of
the
Revised Katarungang Pambarangay Law, in order that a party may be bound by an
arbitration award, said party must have agreed in writing that they shall abide by
the arbitration award of the Lupon or the Pangkat. Like in any other contract,
parties who have not signed an agreement to arbitrate will not be bound by said
agreement since it is axiomatic that a contract cannot be binding upon and cannot
be enforced against one who is not a party to it. [19] In view of the fact that upon
verification by the Pangkat Chairman, in order to settle the issue of whether or not
they intend to submit the matter for arbitration, the spouses Manacnes refused to
affix their signature or thumb mark on the Agreement for Arbitration Form,
the Manacnes spouses cannot be bound by the Agreement for Arbitration and the
ensuing arbitration award since they never became privy to any agreement
submitting the case for arbitration by the Pangkat.
WHEREFORE,
premises
considered,
the
instant
petition
is
hereby DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 78019 is
hereby AFFIRMED. The
Municipal
Circuit
Trial
Court
of BesaoSagada, Mountain Province, is herebyORDERED to proceed with the trial of Civil
Case No. 83 for Recovery of Possession of Real Property, and the immediate
resolution of the same with deliberate dispatch. No costs.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice

Agbayani v. Court of Appeals, G.R. No. 183623, June 25, 2012

Republic of the Philippines
Supreme Court
Manila
SECOND DIVISION

LETICIA B. AGBAYANI,

G.R. No. 183623

Petitioner,
Present:

- versus -

CARPIO, J.,
Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.

COURT OF APPEALS, DEPARTMENT OF Promulgated:

JUSTICE and LOIDA MARCELINA J. GENABE,
Respondents.
June 25, 2012
x----------------------------------------------------------------------------------------x
DECISION
REYES, J.:
On petition for review under Rule 45 of the 1997 Rules of Court is the
Decision[1] dated March 27, 2008 of the Court of Appeals (CA) dismissing the petition
for certiorari and the Resolution[2] dated July 3, 2008 denying the motion for
reconsideration thereof in CA-G.R. SP No. 99626. Petitioner Leticia B. Agbayani
(Agbayani) assails the resolution of the Department of Justice (DOJ) which directed
the withdrawal of her complaint for grave oral defamation filed against respondent
Loida Marcelina J. Genabe (Genabe).
Antecedent Facts
Agbayani and Genabe were both employees of the Regional Trial Court (RTC),
Branch 275 of Las Pias City, working as Court Stenographer and Legal Researcher
II, respectively. On December 29, 2006, Agbayani filed a criminal complaint for
grave oral defamation against Genabe before the Office of the City Prosecutor of Las
Pias City, docketed as I.S. No. 07-0013, for allegedly uttering against her, in the
presence of their fellow court employees and while she was going about her usual
duties at work, the following statements, to wit:
ANG GALING MO LETY, SINABI MO NA TINAPOS MO
YUNG MARVILLA CASE, ANG GALING MO. FEELING LAWYER KA KASI,
BAKIT DI KA MAGDUTY NA LANG, STENOGRAPHER KA MAGSTENO KA
NA
LANG,
ANG
GALING
MO,
FEELING
LAWYER
KA
TALAGA. NAGBEBENTA KA NG KASO, TIRADOR KA NG JUDGE. SIGE
HIGH BLOOD DIN KA, MAMATAY KA SANA SA HIGH BLOOD MO.[3]

In a Resolution[4] rendered on February 12, 2007, the Office of the City

Prosecutor of Las Pias City[5] found probable cause for the filing of the Information
for grave oral defamation against Genabe.
However, upon a petition for review filed by Genabe, the DOJ Undersecretary
Ernesto L. Pineda (Pineda) found that:
After careful evaluation and consideration of the evidence on
record, we find merit in the instant petition.
Contrary to the findings in the assailed resolution, we find that
the subject utterances of respondent constitute only slight oral
defamation.
As alleged by the [petitioner] in paragraphs 2, 3 and 4 of her
complaint-affidavit, respondent uttered the remarks subject matter of
the instant case in the heat of anger. This was also the tenor of the
sworn statements of the witnesses for complainant. The Supreme
Court, in the case of Cruz vs. Court of Appeals, G.R. Nos. L-56224-26,
November 25, 1982, x x x held that although abusive remarks may
ordinarily be considered as serious defamation, under the
environmental circumstances of the case, there having been
provocation on complainants part, and the utterances complained of
having been made in the heat of unrestrained anger and
obfuscation, such utterances constitute only the crime of slight oral
defamation.
Notwithstanding the foregoing, we believe that the instant case
should nonetheless be dismissed for non-compliance with the
provisions of Book III, Title I, Chapter 7 (Katarungang Pambarangay), of
Republic Act No. 7160 (The Local Government Code of 1991). As shown
by the records, the parties herein are residents of Las Pias City. x x x
The complaint-affidavit, however, failed to show that the instant
case was previously referred to the barangay for conciliation in
compliance with Sections 408 and 409, paragraph (d), of the Local
Government Code, which provides:
Section 408. Subject Matter for Amicable Settlement; Exception
Thereto. The lupon of each barangay shall have authority to bring
together the parties actually residing in the same city or municipality
for amicable settlement of all disputes except: xxx
Section 409. Venue. x x x (d) Those arising at the workplace
where the contending parties are employed or xxx shall be brought in
the barangay where such workplace or institution is located.
The records of the case likewise show that the instant case is not
one of the exceptions enumerated under Section 408 of the Local

Government Code. Hence, the dismissal of the instant petition is

proper.
It is well-noted that the Supreme Court held that where the case
is covered by P.D. 1508 (Katarungang Pambarangay Law), the
compulsory process of arbitration required therein is a pre-condition for
filing a complaint in court. Where the complaint (a) did not state that it
is one of the excepted cases, or (b) it did not allege prior availment of
said conciliation process, or (c) did not have a certification that no
conciliation or settlement had been reached by the parties, the case
should be dismissed x x x. While the foregoing doctrine is handed
down in civil cases, it is submitted that the same should apply to
criminal cases covered by, but filed without complying with, the
provisions of P.D. 1508 x x x.[6]
Thus, in a Resolution[7] dated May 17, 2007, the DOJ disposed, to wit:
WHEREFORE, premises considered, the assailed resolution is
hereby REVERSED and SET ASIDE. Accordingly, the City Prosecutor
of Las Pias City is directed to move for the withdrawal of the
information for grave oral defamation filed against respondent Loida
Marcelina J. Genabe, and report the action taken thereon within ten
(10) days from receipt hereof.
SO ORDERED.[8]
The petitioner filed a motion for reconsideration, which was denied in a
Resolution[9] dated June 25, 2007.
Consequently, Agbayani filed a petition for certiorari with the CA alleging
that the DOJ committed grave abuse of discretion in setting aside the Resolution
dated February 12, 2007 of the City Prosecutor of Las Pias City in I.S. Case No. 070013. She averred that the respondents petition for review filed with the DOJ did
not comply with Sections 5 and 6 of DOJ Circular No. 70, or the 2000 National
Prosecution Service (NPS) Rules on Appeal, and maintained that her evidence
supported a finding of probable cause for grave oral defamation against respondent
Genabe.
On March 27, 2008, the CA dismissed the petition after finding no grave
abuse of discretion on the part of the DOJ. CitingPunzalan v. Dela Pea,[10] the CA
stated that for grave abuse of discretion to exist, the complained act must
constitute a capricious and whimsical exercise of judgment as it is equivalent to lack
of jurisdiction, or when the power is exercised in an arbitrary or despotic manner by
reason of passion or personal hostility, and it must be so patent and gross as to
amount to an evasion of positive duty enjoined or to act at all in contemplation of
law. It is not sufficient that a tribunal, in the exercise of its power, abused its
discretion; such abuse must be grave.

On motion for reconsideration by the petitioner, the CA denied the same in its
Resolution[11] dated July 3, 2008. Hence, the instant petition.

Assignment of Errors
Maintaining her stance, Agbayani raised the following, to wit:
I.

RESPONDENT COURT GRAVELY ERRED IN HOLDING THAT THE

RESPONDENT DOJ DID NOT ABUSE ITS DISCRETION WHEN THE
LATTER REVERSED AND SET ASIDE THE RESOLUTION OF THE CITY
PROSECUTOR OF LAS PIAS CITY.

II.

RESPONDENT COURT GRAVELY ERRED IN AFFIRMING RESPONDENT

DOJ'S FINDING THAT WHAT PRIVATE RESPONDENT COMMITTED WAS
ONLY SLIGHT ORAL DEFAMATION.

III. RESPONDENT COURT GRAVELY ERRED IN AFFIRMING RESPONDENT

DOJ'S DISMISSAL OF THE COMPLAINT DUE TO NON-COMPLIANCE
WITH THE PROVISIONS OF THE LOCAL GOVERNMENT CODE OF
1991.
IV. RESPONDENT COURT GRAVELY ERRED WHEN IT HELD THAT THE
REQUIREMENTS UNDER DOJ CIRCULAR NO. 70 (2000 NPS Rule on
Appeal) ARE NOT MANDATORY.[12]
Ruling and Discussions
The petition is bereft of merit.
We shall first tackle Agbayani's arguments on the first two issues raised in the
instant petition.
1. Petitioner Agbayani alleged that Undersecretary Pineda unfairly heeded
only to the arguments interposed by respondent Genabe in her comment; and
the CA, in turn, took his findings and reasoning as gospel truth. Agbayanis
comment was completely disregarded and suppressed in the records of the
DOJ. Agbayani discovered this when she went to the DOJ to examine the records, as
soon as she received a copy of the DOJ Resolution of her motion for reconsideration.
2. Further, petitioner Agbayani maintained that respondent Genabes Petition
for Review[13] should have been dismissed outright, since it failed to state the name
and address of the petitioner, nor did it show proof of service to her, pursuant to
Sections 5 and 6 of DOJ Circular No. 70. Also, the petition was not accompanied
with the required attachments, i.e. certified copies of the complaint, affidavits of
witnesses, petitioner's reply to respondent's counter-affidavit, and documentary
evidences of petitioner. Thus, a grave irregularity was committed by the DOJ in

allowing the surreptitious insertion of these and many other documents in the
records of the case, after the petition had been filed.
In particular, petitioner Agbayani alleged that when the petition was filed on
March 22, 2007, only five (5) documents were attached thereto, namely: (a) the
Resolution of the City Prosecutor; (b) the respondent's Counter-affidavit; (c) Letter of
the staff dated January 2, 2005; (d) her Answer; and (e) the Information filed against
respondent Genabe with the Office of the City Prosecutor of Las Pias
City. However, at the time the Resolution of the DOJ was issued, a total of forty-one
(41) documents[14] formed part of the records of the petition. Besides, respondent
Genabe's Motion to Defer Arraignment (Document No. 40) and the court order
relative to the granting of the same (Document No. 41) were both dated March 23,
2007, or a day after the petition was filed. Agbayani asserted that these thirty-six
(36) documents were surreptitiously and illegally attached to the records of the
case, an act constituting extrinsic fraud and grave misconduct. [15] At the very least,
the DOJ should have required respondent Genabe to formalize the insertion of the
said documents.
Petitioner Agbayani reiterated that her version of the incident was
corroborated by several witnesses (officemates of Agbayani and Genabe), while that
of Genabe was not. And since the crime committed by respondent Genabe
consisted of her exact utterances, the DOJ erred in downgrading the same to slight
oral defamation, completely disregarding the finding by the Investigating Prosecutor
of probable cause for the greater offense of grave oral defamation. She denied that
she gave provocation to respondent Genabe, insisting that the latter committed the
offense with malice aforethought and not in the heat of anger.
We find no merit in the above arguments.
It is well to be reminded, first of all, that the rules of procedure should be
viewed as mere instruments designed to facilitate the attainment of justice. They
are not to be applied with severity and rigidity when such application would clearly
defeat the very rationale for their conception and existence. Even the Rules of
Court reflects this principle.[16]
Anent the charge of non-compliance with the rules on appeal, Sections 5 and
6 of the aforesaid DOJ Circular provide:
SECTION 5. Contents of petition. - The petition shall contain or
state: (a) the names and addresses of the parties; (b) the Investigation
Slip number (I.S. No.) and criminal case number, if any, and title of the
case, including the offense charged in the complaint; (c) the venue of
the preliminary investigation; (d) the specific material dates showing
that it was filed on time; (e) a clear and concise statement of the facts,
the assignment of errors, and the reasons or arguments relied upon for
the allowance of the appeal; and (f) proof of service of a copy of the
petition to the adverse party and the Prosecution Office concerned.
The petition shall be accompanied by legible duplicate original
or certified true copy of the resolution appealed from together with

legible true copies of the complaint, affidavits/sworn statements and

other evidence submitted by the parties during the preliminary
investigation/ reinvestigation.
If an information has been filed in court pursuant to the
appealed resolution, a copy of the motion to defer proceedings filed in
court must also accompany the petition.
The investigating/reviewing/approving prosecutor shall not be
impleaded as party respondent in the petition. The party taking the
appeal shall be referred to in the petition as either "ComplainantAppellant" or "Respondent-Appellant."
SECTION 6. Effect of failure to comply with the requirements.
The failure of petitioner to comply WITH ANY of the foregoing
requirements shall constitute sufficient ground for the dismissal of the
petition.
Contrary to petitioner Agbayani's claim, there was substantial compliance
with the rules. Respondent Genabe actually mentioned on page 2 of her petition for
review to the DOJ the name of the petitioner as the private complainant, as well as
indicated the latters address on the last page thereof as RTC Branch 275, Las
Pias City. The CA also noted that there was proper service of the petition as
required by the rules since the petitioner was able to file her comment thereon. A
copy thereof, attached as Annex L in the instant petition, bears a mark that the
comment was duly received by the Prosecution Staff, Docket Section of the
DOJ. Moreover, a computer verification requested by the petitioner showed that the
prosecutor assigned to the case had received a copy of the petitioners comment. [17]
As to the charge of extrinsic fraud, which consists of the alleged suppression
of Agbayani's Comment and the unauthorized insertion of documents in the records
of the case with the DOJ, we agree with the CA that this is a serious charge,
especially if made against the Undersecretary of Justice; and in order for it to
prosper, it must be supported by clear and convincing evidence. However,
petitioner Agbayani's only proof is her bare claim that she personally checked the
records and found that her Comment was missing and 36 new documents had been
inserted. This matter was readily brought to the attention of Undersecretary Pineda
by petitioner Agbayani in her motion for reconsideration, who however must surely
have found such contention without merit, and thus denied the motion. [18]
Section 5 of the 2000 NPS Rules on Appeal also provides that the petition for
review must be accompanied by a legible duplicate original or certified true copy of
the resolution appealed from, together with legible true copies of the complaint,
affidavits or sworn statements and other evidence submitted by the parties during
the preliminary investigation or reinvestigation. Petitioner Agbayani does not claim
that she was never furnished, during the preliminary investigation, with copies of
the alleged inserted documents, or that any of these documents were fabricated. In
fact, at least seven (7) of these documents were copies of her own submissions to
the investigating prosecutor.[19] Presumably, the DOJ required respondent Genabe to

submit additional documents produced at the preliminary investigation, along with

Document Nos. 40 and 41, for a fuller consideration of her petition for review.
As for Document Nos. 40 and 41, which were dated a day after the filing of
the petition, Section 5 of the 2000 NPS Rules on Appeal provides that if an
Information has been filed in court pursuant to the appealed resolution, a copy of
the Motion to Defer Proceedings must also accompany the petition. Section 3 of the
above Rules states that an appeal to the DOJ must be taken within fifteen (15) days
from receipt of the resolution or of the denial of the motion for
reconsideration. While it may be presumed that the motion to defer arraignment
accompanying the petition should also be filed within the appeal period, respondent
Genabe can not actually be faulted if the resolution thereof was made after the
lapse of the period to appeal.
In Guy vs. Asia United Bank,[20] a motion for reconsideration from the
resolution of the Secretary of Justice, which was filed four (4) days beyond the nonextendible period of ten (10) days, was allowed under Section 13 of the 2000 NPS
Rules on Appeal. The Supreme Court held that the authority of the Secretary of
Justice to review and order the withdrawal of an Information in instances where he
finds the absence of a prima facie case is not time-barred, albeit subject to the
approval of the court, if its jurisdiction over the accused has meanwhile attached.
[21]
We further explained:
[I]t is not prudent or even permissible for a court to compel the
Secretary of Justice or the fiscal, as the case may be, to prosecute a
proceeding originally initiated by him on an information, if he finds that
the evidence relied upon by him is insufficient for conviction. Now,
then, if the Secretary of Justice possesses sufficient latitude of
discretion in his determination of what constitutes probable cause and
can legally order a reinvestigation even in those extreme instances
where an information has already been filed in court, is it not
just logical and valid to assume that he can take cognizance of and
competently act on a motion for reconsideration, belatedly filed it
might have been, dealing with probable cause? And is it not a grievous
error on the part of the CA if it virtually orders the filing of an
information, as here, despite a categorical statement from the
Secretary of Justice about the lack of evidence to proceed with the
prosecution of the petitioner? The answer to both posers should be in
the affirmative. As we said in Santos v. Go:
[C]ourts cannot interfere with the discretion of the
public prosecutor in evaluating the offense charged. He
may dismiss the complaint forthwith, if he finds the
charge insufficient in form or substance, or without any
ground. Or, he may proceed with the investigation if the
complaint in his view is sufficient and in proper form. The
decision whether to dismiss a complaint or not, is
dependent upon the sound discretion of the prosecuting
fiscal and, ultimately, that of the Secretary of

Justice. Findings of the Secretary of Justice are not subject

to review unless made with grave abuse of discretion.
xxx
[T]o strike down the April 20, 2006 DOJ Secretary's Resolution as
absolutely void and without effect whatsoever, as the assailed CA
decision did, for having been issued after the Secretary had
supposedly lost jurisdiction over the motion for reconsideration subject
of the resolution may be reading into the aforequoted provision a
sense not intended. For, the irresistible thrust of the assailed CA
decision is that the DOJ Secretary is peremptorily barred from taking a
second hard look at his decision and, in appropriate cases, reverse or
modify the same unless and until a motion for reconsideration is timely
interposed and pursued. The Court cannot accord cogency to the
posture assumed by the CA under the premises which, needless to
stress, would deny the DOJ the authority to motu proprio undertake a
review of his own decision with the end in view of protecting, in line
with his oath of office, innocent persons from groundless, false or
malicious prosecution. As the Court pointed out in Torres, Jr. v.
Aguinaldo, the Secretary of Justice would be committing a serious
dereliction of duty if he orders or sanctions the filing of an information
based upon a complaint where he is not convinced that the evidence
warrants the filing of the action in court.[22] (Citations omitted and
underscoring supplied)
The Court further stated in Guy that when the DOJ Secretary took cognizance
of the petitioner's motion for reconsideration, he effectively excepted such motion
from the operation of the aforequoted Section 13 of DOJ Circular No. 70, s.
2000. This show of liberality is, to us, within the competence of the DOJ Secretary
to make. The Court is not inclined to disturb the same absent compelling proof, that
he acted out of whim and that petitioner was out to delay the proceedings to the
prejudice of respondent in filing the motion for reconsideration. [23]
The case of First Women's Credit Corporation v. Perez,[24] succinctly
summarizes the general rules relative to criminal prosecution: that criminal
prosecution may not be restrained or stayed by injunction, preliminary or final,
albeit in extreme cases, exceptional circumstances have been recognized; that
courts follow the policy of non-interference in the conduct of preliminary
investigations by the DOJ, and of leaving to the investigating prosecutor sufficient
latitude of discretion in the determination of what constitutes sufficient evidence as
will establish probable cause for the filing of an information against a supposed
offender; and, that the court's duty in an appropriate case is confined to a
determination of whether the assailed executive or judicial determination of
probable cause was done without or in excess of jurisdiction or with grave abuse of
discretion amounting to want of jurisdiction.
But while prosecutors are given sufficient latitude of discretion in the
determination of probable cause, their findings are still subject to review by the

Secretary of Justice. Surely, this power of the Secretary of Justice to review includes
the discretion to accept additional evidence from the investigating prosecutor or
from herein respondent Genabe, evidence which nonetheless appears to have
already been submitted to the investigating prosecutor but inadvertently omitted by
her when she filed her petition.
3. Coming now to the DOJ's finding that the complaint fails to state a cause of
action, the CA held that the DOJ committed no grave abuse of discretion in causing
the dismissal thereof on the ground of non-compliance with the provisions of the
Local Government Code of 1991, on the Katarungang Pambarangay conciliation
procedure.
Undeniably, both petitioner Agbayani and respondent Genabe are residents
of Las Pias City and both work at the RTC, and the incident which is the subject
matter of the case happened in their workplace. [25] Agbayanis complaint should
have undergone the mandatory barangay conciliation for possible amicable
settlement with respondent Genabe, pursuant to Sections 408 and 409 of Republic
Act No. 7160 or the Local Government Code of 1991 which provide:
Sec. 408. Subject Matter for Amicable Settlement; Exception
thereto. The lupon of each barangay shall have authority to bring
together the parties actually residing in the same city or municipality
for amicable settlement of all disputes, except: x x x
Sec. 409. Venue. x x x (d) Those arising at the workplace where
the contending parties are employed or x x x shall be brought in
the barangay where such workplace or institution is located.
Administrative Circular No. 14-93,[26] issued by the Supreme Court on July 15,
1993 states that:
xxx
I. All disputes are subject to Barangay conciliation pursuant to the
Revised Katarungang Pambarangay Law [formerly P.D. 1508, repealed
and now replaced by Secs. 399-422, Chapter VII, Title I, Book III, and
Sec. 515, Title I, Book IV, R.A. 7160, otherwise known as the Local
Government Code of 1991], and prior recourse thereto is a precondition before filing a complaint in court or any government
offices, except in the following disputes:
[1] Where one party is the government, or any subdivision
or instrumentality thereof;
[2] Where one party is a public officer or employee and the
dispute relates to the performance of his official functions;

[3] Where the dispute involves real properties located in

different cities and municipalities, unless the parties thereto
agree to submit their difference to amicable settlement by an
appropriate Lupon;
[4] Any complaint by or against corporations, partnerships or
juridical entities, since only individuals shall be parties to
Barangay conciliation proceedings either as complainants or
respondents [Sec. 1, Rule VI, Katarungang Pambarangay Rules];
[5] Disputes involving parties who actually reside in barangays
of different cities or municipalities, except where such barangay
units adjoin each other and the parties thereto agree to submit
their differences to amicable settlement by an appropriate
Lupon;
[6] Offenses for which the law prescribes a maximum penalty of
imprisonment exceeding one [1] year or a fine of over five
thousand pesos ([P]5,000.00);
[7] Offenses where there is no private offended party;
[8] Disputes where urgent legal action is necessary to prevent
injustice from being committed or further continued, specifically
the following:
[a] Criminal cases where accused is under police custody
or detention [See Sec. 412(b)(1), Revised Katarungang
Pambarangay Law];
[b] Petitions for habeas corpus by a person illegally
deprived of his rightful custody over another or a person
illegally deprived of or on acting in his behalf;
[c] Actions coupled with provisional remedies such as
preliminary injunction, attachment, delivery of personal
property and support during the pendency of the action;
and
[d] Actions which may be barred by the Statute of
Limitations.
[9] Any class of disputes which the President may determine in
the interest of justice or upon the recommendation of the
Secretary of Justice;
[10] Where the dispute arises from the Comprehensive Agrarian
Reform Law (CARL) [Secs. 46 & 47, R. A. 6657];

[11] Labor disputes or controversies arising from employeremployee relations [Montoya vs. Escayo, 171 SCRA 442; Art.
226, Labor Code, as amended, which grants original and
exclusive jurisdiction over conciliation and mediation of
disputes, grievances or problems to certain offices of the
Department of Labor and Employment];
[12] Actions to annul judgment upon a compromise which may
be filed directly in court [See Sanchez vs. [Judge] Tupaz, 158
SCRA 459].
xxx
The compulsory process of arbitration is a pre-condition for the filing of the
complaint in court. Where the complaint (a) did not state that it is one of excepted
cases, or (b) it did not allege prior availment of said conciliation process, or (c) did
not have a certification that no conciliation had been reached by the parties, the
case should be dismissed.[27]
Here, petitioner Agbayani failed to show that the instant case is not one of
the exceptions enumerated above. Neither has she shown that the oral defamation
caused on her was so grave as to merit a penalty of more than one year. Oral
defamation under Article 358 of the Revised Penal Code, as amended, is penalized
as follows:
Article 358. Slander. Oral defamation shall be punished
by arresto mayor in its maximum period to prision correccional in its
minimum period if it is of a serious and insulting nature; otherwise,
the penalty shall be arresto menor or a fine not exceeding 200 pesos.
Apparently, the DOJ found probable cause only for slight oral defamation. As
defined in Villanueva v. People,[28] oral defamation or slander is the speaking of base
and defamatory words which tend to prejudice another in his reputation, office,
trade, business or means of livelihood. It is grave slander when it is of a serious and
insulting nature. The gravity depends upon: (1) the expressions used; (2) the
personal relations of the accused and the offended party; and (3) the special
circumstances of the case, the antecedents or relationship between the offended
party and the offender, which may tend to prove the intention of the offender at the
time. In particular, it is a rule that uttering defamatory words in the heat of anger,
with some provocation on the part of the offended party constitutes only a light
felony.[29]
We recall that in the morning of December 27, 2006 when the alleged
utterances were made, Genabe was about to punch in her time in her card when
she was informed that she had been suspended for failing to meet her deadline in a
case, and that it was Agbayani who informed the presiding judge that she had
missed her deadline when she left to attend a convention in Baguio City, leaving
Agbayani to finish the task herself. According to Undersecretary Pineda, the

confluence of these circumstances was the immediate cause of respondent

Genabe's emotional and psychological distress. We rule that his determination that
the defamation was uttered while the respondent was in extreme excitement or in a
state of passion and obfuscation, rendering her offense of lessergravity than if it
had been made with cold and calculating deliberation, is beyond the ambit of our
review.[30] The CA concurred that the complained utterances constituted only slight
oral defamation, having been said in the heat of anger and with perceived
provocation from Agbayani. Respondent Genabe was of a highly volatile personality
prone to throw fits (sumpongs), who thus shared a hostile working environment with
her co-employees, particularly with her superiors, Agbayani and Hon. Bonifacio Sanz
Maceda, the Presiding Judge of Branch 275, whom she claimed had committed
against her grievous acts that outrage moral and social conduct. That there had
been a long-standing animosity between Agbayani and Genabe is not denied.
4. Lastly, petitioner Agbayani insists that the DOJ should have dismissed
respondent Genabe's petition for review outright pursuant to Sections 5 and 6 of
DOJ Circular No. 70. It is true that the general rule in statutory construction is that
the words shall, must, ought, or should are words of mandatory character in
common parlance and in their in ordinary signification, [31] yet, it is also wellrecognized in law and equity as a not absolute and inflexible criterion. [32] Moreover,
it is well to be reminded that DOJ Circular No. 70 is a mere tool designed to
facilitate, not obstruct, the attainment of justice through appeals taken with the
National Prosecution Service. Thus, technical rules of procedure like those under
Sections 5 and 6 thereof should be interpreted in such a way to promote, not
frustrate, justice.
Besides, Sections 7 and 10 of DOJ Circular No. 70 clearly give the Secretary of
Justice, or the Undersecretary in his place, wide latitude of discretion whether or not
to dismiss a petition. Section 6 of DOJ Circular No. 70, invoked by petitioner
Agbayani, is clearly encompassed within this authority, as shown by a cursory
reading of Sections 7 and 10, to wit:
SECTION 7. Action on the petition. The Secretary of
Justice may dismiss the petition outright if he finds the same to be
patently without merit or manifestly intended for delay, or when the
issues raised therein are too unsubstantial to require consideration.
SECTION
12. Disposition
of
the
appeal. The
Secretary may reverse, affirm or modify the appealed resolution. He
may, motu proprio or upon motion, dismiss the petition for review on
any of the following grounds:

That the petition was filed beyond the period

prescribed in Section 3 hereof;
That the procedure or any of the requirements
herein provided has not been complied with;
That there is no showing of any reversible error;
That the appealed resolution is interlocutory in
nature, except when it suspends the proceedings

based on the alleged existence of a prejudicial

question;
That the accused had already been arraigned when
the appeal was taken;
That the offense has already prescribed; and
That other legal or factual grounds exist to warrant
a dismissal.

We reiterate what we have stated in Yao v. Court of Appeals[33] that:

In the interest of substantial justice, procedural rules of the most
mandatory character in terms of compliance, may be relaxed. In other
words, if strict adherence to the letter of the law would result in
absurdity and manifest injustice, or where the merit of a party's cause
is apparent and outweighs consideration of non-compliance with
certain formal requirements, procedural rules should definitely be
liberally construed. A party-litigant is to be given the fullest
opportunity to establish the merits of his complaint or defense rather
than for him to lose life, liberty, honor or property on mere
technicalities.[34] (Citations omitted)
All told, we find that the CA did not commit reversible error in upholding the
Resolution dated May 17, 2007 of the DOJ as we, likewise, find the same to be in
accordance with law and jurisprudence.
WHEREFORE,
premises
considered,
the
petition
for
review
is
hereby DENIED. Accordingly, the Decision dated March 27, 2008 and the
Resolution dated July 3, 2008 of the Court of Appeals in CA-G.R. SP No. 99626
are AFFIRMED in toto.
SO ORDERED.

BIENVENIDO L. REYES
Associate Justice

Sec. 2. Hearing of motion.

Sec. 3. Resolution of the motion.

Sec. 4. Time to plead.

Sec. 5. Effect of dismissal

NM Rothschild v. Lepanto, G.R. No. 175799, November 28, 2011
(Supra.)

Sec. 6. Pleading grounds as affirmative defenses

RULE 17- DISMISSAL OF ACTIONS

Sec. 1. Dismissal upon notice by plaintiff
Dael v. Spouses Beltran, G.R. No. 156470, April 30, 2008

FREDERICK DAEL,

G.R. No. 156470

Petitioner,
Present:

- versus -

SPOUSES BENEDICTO and

VILMA BELTRAN,
Respondents.

QUISUMBING, J., Chairperson,

CARPIO MORALES,
TINGA,
VELASCO, JR.,and
BRION, JJ.
Promulgated:

April 30, 2008

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION

QUISUMBING, J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules
of Civil Procedure raising pure questions of law, and seeking a reversal of the
Resolution[1] dated May 28, 2002 of the Regional Trial Court (RTC), Branch 34,
Negros Oriental, Dumaguete City, in Civil Case No. 13072, which dismissed with
prejudice, petitioners complaint for breach of contract and damages against the
respondents. Also assailed is the trial courts Resolution [2] dated December 5, 2002,
denying petitioners motion for reconsideration.
The facts are as follows:
On November 23, 2001, petitioner Frederick Dael filed before the RTC, Branch
34, Negros Oriental, a Complaint [3] for breach of contract and damages against
respondent-spouses Benedicto and Vilma Beltran. In his complaint, petitioner
alleged that respondents sold him a parcel of land covering three hectares located
at Palayuhan, Siaton, Negros Oriental. Petitioner alleged that respondents did not
disclose that the land was previously mortgaged. Petitioner further alleged that it
was only on August 6, 2001when he discovered that an extrajudicial foreclosure
over the property had already been instituted, and that he was constrained to bid in
the extrajudicial sale of the land conducted on August 29, 2001. Possession and
ownership of the property was delivered to him when he paid the bid price
of P775,100. Petitioner argued that respondents non-disclosure of the extrajudicial
foreclosure constituted breach of contract on the implied warranties in a sale of
property as provided under Article 1547 [4] of the New Civil Code. He likewise
claimed that he was entitled to damages because he had to pay for the property
twice.
On January 10, 2002, respondents filed a Motion to Dismiss [5] on the ground
that petitioner had no cause of action since the contract to sell stated that the
vendor was Benedicto Beltran and the vendee was Frederick George Ghent Dael,
not the petitioner.
On February 12, 2002, in a hearing on the motion, Atty. Dirkie Y. Palma,
petitioners counsel, disclosed that petitioner is the father of Frederick George
Ghent Dael whose name appears as the contracting party in the Contract to Sell
dated July 28, 2000. Atty. Palma moved to reset the hearing to enable the petitioner
to withdraw and have the complaint dismissed, amended, or to enter into a
compromise agreement with respondents.
The RTC on the same day ordered petitioner to clarify whether or not he and
Frederick George Ghent Dael were one and the same person; whether or not they
were Filipinos and residents of Dumaguete City; and whether or not Frederick

George Ghent Dael was of legal age, and married, as stated in the Contract to Sell.
[6]
Petitioner did not comply. Instead, he filed a Notice of Dismissal on February 20,
2002. The Notice of Dismissal states:
Plaintiff, through counsel, unto this Honorable Court, respectfully
files this notice of dismissal of the above-captioned case without
prejudice by virtue of Rule 17, Section 1 of the 1997 Rules of Civil
Procedure. By this notice, defendants[] Motion to Dismiss is then
rendered moot and academic.
WHEREFORE, plaintiff Frederick Dael respectfully prays that
this Honorable Court dismiss the above-captioned case without
prejudice.
RESPECTFULLY SUBMITTED.[7]
On May 28, 2002, the RTC dismissed the complaint with prejudice. The
dispositive portion of the Resolution reads thus:
WHEREFORE, finding merit to defendants contention that
plaintiff Frederick Dael has no cause of action against them since said
plaintiff is not one of the contracting parties in the Contract to Sell,
which is allegedly breached, the Motion to Dismiss filed by defendants
is granted. Consequently, the case at bar is DISMISSED, with
prejudice.
SO ORDERED.[8] [Emphasis supplied.]
Arguing that the RTC erred in dismissing the complaint with prejudice based
on respondents Motion to Dismiss, and notwithout prejudice based on his Notice of
Dismissal, petitioner filed a Motion for Reconsideration [9] but it was denied by the
RTC in a Resolution dated December 5, 2002.
Hence, this petition.
Petitioner raises the following issues for our resolution:
I.
WHETHER [OR] NOT THE REGIONAL TRIAL COURT ERRED IN
DISMISSING THE COMPLAINT FOR BREACH OF CONTRACT AND
DAMAGES BASED ON THE MOTION TO DISMISS FILED BY HEREIN
RESPONDENTS AND NOT ON THE NOTICE OF DISMISSAL PROMPTLY

[FILED] BY HEREIN PETITIONER BEFORE RESPONDENTS COULD FILE A

RESPONSIVE PLEADING, UNDER RULE 17, SECTION 1 OF THE 1997
RULES O[F] CIVIL PROCEDURE.
II.
WHETHER OR NOT THE REGIONAL TRIAL COURT ERRED IN DISMISSING
THE COMPLAINT FOR BREACH OF CONTRACT AND DAMAGES WITH
PREJUDICE.[10]
On the other hand, respondents raise the following issues:
I.
WHETHER OR NOT THE REGIONAL TRIAL COURT ERRED IN DISMISSING
THE ACTION FOR BREACH OF CONTRACT AND DAMAGES ON THE BASIS
OF THE MOTION TO DISMISS FILED BY THE DEFENDANT AND NOT ON
THE BASIS OF THE NOTICE OF DISMISSAL FILED BY THE PLAINTIFF.
II.
WHETHER OR NOT THE REGIONAL TRIAL COURT IS CORRECT IN
DISMISSING THE CASE WITH PREJUDICE.
III.
WHETHER OR NOT PETITIONERS RECOURSE UNTO THIS HONORABLE
COURT BY WAY OF PETITION FOR REVIEW ONCERTIORARI IS PROPER.[11]
Essentially, the issues are (1) Did the RTC err in dismissing the complaint with
prejudice? and (2) Was petitioners recourse to this Court by way of a petition for
review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure proper?
Petitioner, citing Serrano v. Cabrera and Makabulo[12] in his Memorandum,
[13]
argues that the 1997 Rules of Civil Procedure expressly states that before the
defendant has served his answer or moved for a summary judgment, he has, as a
matter of right, the prerogative to cause the dismissal of a civil action filed, and
such dismissal may be effected by a mere notice of dismissal. He further argues
that such dismissal is without prejudice, except (a) where the notice of dismissal so
provides; (b) where the plaintiff has previously dismissed the same case in a court
of competent jurisdiction; or (c) where the dismissal is premised on payment by the
defendant of the claim involved. He asserts it is the prerogative of the plaintiff to

indicate if the Notice of Dismissal filed is with or without prejudice and the RTC
cannot exercise its own discretion and dismiss the case with prejudice.
On the other hand, respondents in their Memorandum, [14] counter that the
RTC is correct in dismissing the case with prejudice based on their Motion to Dismiss
because they filed their motion on January 10, 2002, ahead of petitioner who filed
his Notice of Dismissal only on February 20, 2002. They further argue that although
it is correct that under the 1997 Rules of Civil Procedure a complaint may be
dismissed by the plaintiff by filing a notice of dismissal before service of the answer
or of a motion for summary judgment, the petitioner filed the Notice of Dismissal
only as an afterthought after he realized that the Motion to Dismiss was
meritorious.
Further, they point out that petitioner deceived the court when he filed the
action knowing fully well that he was not the real party-in-interest representing
himself as Frederick George Ghent Dael.
Respondents also argue that petitioners recourse to this Court by way of a
petition for review on certiorari was not proper since the proper remedy should have
been to file an appeal of the order granting the Motion to Dismiss. He contends that
the petitioner should have appealed to the Court of Appeals under Rule
41[15] instead of assailing the ruling of the RTC by way of a petition for review on
certiorari before the Supreme Court.
As to the propriety of dismissal of the complaint with prejudice, Section 1,
Rule 17 of the 1997 Rules of Civil Procedure provides:
SECTION 1. Dismissal upon notice by plaintiff. A complaint
may be dismissed by the plaintiff by filing a notice of dismissal at any
time before service of the answer or of a motion for summary
judgment. Upon such notice being filed, the court shall issue an order
confirming the dismissal. Unless otherwise stated in the notice,
the dismissal is without prejudice, except that a notice operates as
an adjudication upon the merits when filed by a plaintiff who has once
dismissed in a competent court an action based on or including the
same claim. [Emphasis supplied.]
Under this provision, it is mandatory that the trial court issue an order
confirming such dismissal and, unless otherwise stated in the notice, the dismissal
is without prejudice and could be accomplished by the plaintiff through mere notice
of dismissal, and not through motion subject to approval by the court. Dismissal
is ipso facto upon notice, and without prejudice unless otherwise stated in the

notice.[16] The trial court has no choice but to consider the complaint as dismissed,
since the plaintiff may opt for such dismissal as a matter of right, regardless of the
ground.[17]
Respondents argue that the Motion to Dismiss they filed precedes the Notice
of Dismissal filed by petitioner and hence, the trial court correctly gave it
precedence and ruled based on the motion.
This argument is erroneous. Section 1 of Rule 17 does not encompass a
Motion to Dismiss. The provision specifically provides that a plaintiff may file a
notice of dismissal before service of the answer or a motion for summary
judgment. Thus, upon the filing of the Notice of Dismissal by the plaintiff, the
Motion to Dismiss filed by respondents became moot and academic and the trial
court should have dismissed the case without prejudice based on the Notice of
Dismissal filed by the petitioner.
Moreover, to allow the case to be dismissed with prejudice would erroneously
result in res judicata[18] and imply that petitioner can no longer file a case against
respondents without giving him a chance to present evidence to prove otherwise.
As to the second issue, petitioners recourse to this Court by way of a petition
for review on certiorari under Rule 45 is proper. An order of dismissal, whether correct
or not, is a final order. It is not interlocutory because the proceedings were
terminated; it leaves nothing more to be done by the lower court. Therefore, the
remedy of the plaintiff is to appeal the order. [19] Under the Rules of Court, a party
may directly appeal to the Supreme Court from a decision of the trial court only on
pure questions of law.[20]
WHEREFORE, the petition is GRANTED. The assailed Resolutions dated May
28, 2002 and December 5, 2002 of the Regional Trial Court, Branch 34, Negros
Oriental are AFFIRMED with MODIFICATION such that the case is dismissed
without prejudice. No pronouncement as to costs.
SO ORDERED.

LEONARDO A. QUISUMBING
Associate Justice

Go v. Cruz, G.R. No. L-58986, April 17, 1989

G.R. No. L-58986 April 17, 1989

DANTE
Y.
GO, petitioner,
vs.
HON. FERNANDO CRUZ, Judge, etc., CITY SHERIFF OF CALOOCAN CITY, and
CALIFORNIA MANUFACTURING CO., INC., respondents.
De Santos, Balgos & Perez for petitioner.
Francisco N. Carreon, Jr. for respondents.

NARVASA, J.:
The dismissal of civil actions is always addressed to the sound judgment and
discretion of the court; this, whether the dismissal is sought after a trial has been
completed or otherwise, 1 or whether it is prayed for by a defending party 2 or by a
plaintiff or claimant. 3 There is one instance however where the dismissal of an
action rests exclusively on the will of a plaintiff or claimant, to prevent which the
defending party and even the court itself is powerless, requiring in fact no action
whatever on the part of the court except the acceptance and recording of the
causative document. This is dealt with in Section 1, Rule 17 of the Rules of Court,
which reads as follows:
SECTION 1. Dismissal by the plaintiff. An action may be dismissed by
the plaintiff without order of court by filing a notice of dismissal at any
time before service of the answer or of a motion for summary
judgment. Unless otherwise stated in the notice, the dismissal is
without prejudice, except that a notice operates as an adjudication
upon the merits when filed by a plaintiff who has once dismissed in a
competent court an action based on or including the same claim. A
class suit shall not be dismissed or compromised without approval of
the court.
It is this provision with which the proceedings at bar are chiefly concerned.
On October 26, 1981, California Manufacturing Co., Inc. (hereinafter, simply,
California) brought an action in the Court of First Instance of Manila against Dante
Go, accusing him of unfair competition. 4 The gravamen of California's complaint
was that Dante Go, doing business under the name and style of "Sugarland
International Products," and engaged like California in the manufacture of spaghetti,
macaroni, and other pasta was selling his products in the open market under the
brand name, "Great Italian," in packages which were in colorable and deceitful
limitation of California's containers bearing its own brand, "Royal." Its complaint
contained an application for preliminary injunction commanding Dante Go to
immediately cease and desist from the further manufacture, sale and distribution of
said products, and to retrieve those already being offered for sale. 5

About two weeks later, however, or on November 12, 1981, California filed a notice
of dismissal with the Court reading as follows: 6
COMES NOW the plaintiff in the above-entitled case, through
undersigned counsel, and unto this Honorable Court most respectfully
gives notice of dismissal without prejudice pursuant to Sec. 1, Rule 17
of the Rules of Court.
WHEREFORE, it is respectfully prayed that the above-entitled case be
considered dismissed without prejudice conformably with Sec. 1, Rule
17 of the Rules of Court.
Four days afterwards, or on November 16, 1981, California received by registered
mail a copy of Dante Go's answer with counterclaim dated November 6, 1981, which
had been filed with the Court on November 9, 1981. 7
On November 19, 1981 a fire broke out at the Manila City Hall destroying among
others the sala of Judge Tengco and the records of cases therein kept, including that
filed by California against Dante Go. 8
On December 1, 1981, California filed another complaint asserting the same cause
of action against Dante Go, this time with the Court of First Instance at Caloocan
City. 9 This second suit was docketed as Civil Case No. C-9702 and was assigned to
the branch presided over by Judge Fernando A. Cruz.
On December 3, 1981, Judge Cruz issued an ex parte restraining order directing "the
defendant ... to immediately cease and desist from the further manufacture, sale,
promotion and distribution of spaghetti, macaroni and other pasta products
contained in packaging boxes and labels under the name 'GREAT ITALIAN,' which are
similar to or copies of those of the plaintiff, and ... recall ... all his spaghetti,
macaroni and other pasta products using the brand, 'GREAT ITALIAN.'" 10
On the day following the rendition of the restraining order, Dante Go filed the
present petition for certiorari, etc. with this Court praying for its nullification and
perpetual inhibition. On December 11, 1981, this Court, in turn issued a writ of
preliminary injunction restraining California, Judge Cruz and the City Sheriff from
enforcing or implementing the restraining order of December 3, 1981, and from
continuing with the hearing on the application for preliminary injunction in said Civil
Case No. C-9702. The scope of the injunction was subsequently enlarged by this
Court's Resolution of April 14,1982 to include the City Fiscal of Manila, who was
thereby restrained from proceeding with the case of unfair competition filed in his
office by California against Dante Go. 11
Dante Go's thesis is that the case filed against him by California in the Manila Court
remained pending despite California's notice of dismissal. According to him, since
he had already filed his answer to the complaint before California sought dismissal
of the action three (3) days afterwards, such dismissal was no longer a matter of
right and could no longer be effected by mere notice in accordance with Section 1,
Rule 17 of the Rules of Court, but only on plaintiff s motion, and by order of the

Court; hence, the Caloocan Court acted without jurisdiction over the second action
based on the same cause. He also accused California of forum shopping, of
selecting a sympathetic court for a relief which it had failed to obtain from
another. 12
The petitioner is in error. What marks the loss by a plaintiff of the right to cause
dismissal of the action by mere notice is not the filing of the defendant's answer
with the Court (either personally or by mail) but the service on the plaintiff of said
answer or of a motion for summary judgment. This is the plain and explicit message
of the Rules.13 "The filing of pleadings, appearances, motions, notices, orders and
other papers with the court," according to Section 1, Rule 13 of the Rules of Court,
means the delivery thereof to the clerk of the court either personally or by
registered mail. Service, on the other hand, signifies delivery of the pleading or
other paper to the parties affected thereby through their counsel of record, unless
delivery to the party himself is ordered by the court, 14 by any of the modes set
forth in the Rules, i.e., by personal service, 15 service by mail, 16 or substituted
service. 17
Here, California filed its notice of dismissal of its action in the Manila Court after the
filing of Dante Go's answer but before service thereof. Thus having acted well within
the letter and contemplation of the afore-quoted Section 1 of Rule 17 of the Rules of
Court, its notice ipso facto brought about the dismissal of the action then pending in
the Manila Court, without need of any order or other action by the Presiding Judge.
The dismissal was effected without regard to whatever reasons or motives California
might have had for bringing it about, and was, as the same Section 1, Rule 17
points out, "without prejudice," the contrary not being otherwise "stated in the
notice" and it being the first time the action was being so dismissed.
There was therefore no legal obstacle to the institution of the second action in the
Caloocan Court of First Instance based on the same claim. The filing of the
complaint invested it with jurisdiction of the subject matter or nature of the action.
In truth, and contrary to what petitioner Dante Go obviously believes, even if the
first action were still pending in the Manila Court, this circumstance would not affect
the jurisdiction of the Caloocan Court over the second suit. The pendency of the first
action would merely give the defendant the right to move to dismiss the second
action on the ground of auter action pendant or litis pendentia. 18
WHEREFORE, the petition is DISMISSED, with costs against petitioner. The
temporary restraining order of December 11, 1981, and the amendatory Resolution
of April 14, 1982 are SET ASIDE.
Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

Sec. 2. Dismissal upon motion of plaintiff

Sec. 3. Dismissal due to fault of plaintiff

AFPRSBS v. Republic, G.R. No. 188956, March 20, 2013
G.R. No. 188956

March 20, 2013

ARMED FORCES OF THE PHILIPPINES RETIREMENT AND SEPARATION

BENEFITS
SYSTEM, Petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.
DECISION
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari under Rule 45 assailing the Orders
dated February 17, 20091 and July 9, 20092 of the Regional Trial Court (RTC) of Pasig
City, Branch 68, in Land Registration Case No. N-11517.
The first Order reconsidered and recalled the Decision 3 of the RTC dated April 21,
2008, which granted the- application for land registration of petitioner Armed Forces
of the Philippines Retirement and Separation Benefits System. The second Order
denied the Motion for Reconsideration filed by the petitioner.
Petitioner was "created under Presidential Decree (P.D.) No. 361, 4 as amended, and
was designed to establish a separate fund to guarantee continuous financial support
to the Armed Forces of the Philippines military retirement system as provided for in
Republic Act No. 340."5
Petitioner filed an Application for Registration of Title 6 over three parcels of land
located in West Bicutan, Taguig City, before the RTC of Pasig City. The said
application was later docketed as LRC Case No. N-11517 and raffled to Branch 68 of
the court a quo.
These three parcels of land constitute a land grant by virtue of Presidential
Proclamation No. 1218, issued by former President Fidel V. Ramos on May 8, 1998. 7
The application was filed by Mr. Honorio S. Azcueta (Mr. Azcueta), the then
Executive Vice President and Chief Operating Officer of the petitioner, who was duly
authorized to do so by the Board of Trustees of the petitioner, as evidenced by a
notarized Secretarys Certificate8 dated August 18, 2003.
After due posting and publication of the requisite notices, and since no oppositor
registered any oppositions after the petitioner met the jurisdictional requirements,

the court a quo issued an order of general default against the whole world, and the
petitioner was allowed to present evidence ex-parte. 9
The petitioner then presented as its witness, Ms. Alma P. Aban (Ms. Aban), its Vice
President and Head of its Asset Enhancement Office. She testified, inter alia, that:
among her main duties is to ensure that the properties and assets of petitioner,
especially real property, are legally titled and freed of liens and encumbrances; the
subject properties were acquired by the petitioner through a land grant under
Presidential Proclamation No. 1218; prior to Presidential Proclamation No. 1218, the
Republic of the Philippines was in open, continuous, exclusive, notorious, and
peaceful possession and occupation of the subject properties in the concept of an
owner to the exclusion of the world since time immemorial; petitioner, after the
Republic of the Philippines transferred ownership of the subject properties to it,
assumed open, continuous, exclusive, notorious, and peaceful possession and
occupation, and exercised control over them in the concept of owner, and likewise
assumed the obligations of an owner; petitioner has been paying the real estate
taxes on the subject properties; and the subject properties are not mortgaged,
encumbered, or tenanted.10
Subsequently, petitioner submitted its Formal Offer of Evidence, 11 following which,
the court a quo granted the application in a Decision dated April 21, 2008. The
dispositive portion of the said decision reads:
WHEREFORE, finding the Petition meritorious, the Court DECLARES, CONFIRMS AND
ORDERS the registration of AFPRSBS title thereto.
As soon as this Decision shall have become final and after payment of the required
fees, let the corresponding Decree be issued in the name of Armed Forces of the
Philippines Retirement and Separation Benefits System.
Let copies of this Decision be furnished the Office of the Solicitor General, Land
Registration Authority, Land Management Bureau and the Registry of Deeds, Taguig
City, Metro Manila.
SO ORDERED.12
In response, the Office of the Solicitor General (OSG) filed a Motion for
Reconsideration13 dated May 12, 2008, wherein it argued that the petitioner failed to
prove that it has personality to own property in its name and the petitioner failed to
show that the witness it presented was duly authorized to appear for and in its
behalf.
On June 2, 2008, petitioner filed its Comment/Opposition. 14
On February 17, 2009, the court a quo issued the assailed Order granting the Motion
for Reconsideration of the OSG on the ground that the petitioner failed to prosecute
its case. The dispositive portion of the assailed Order reads:

WHEREFORE, premises considered, the OSGs motion for reconsideration is

GRANTED. The Courts Decision of April 21, 2008 is hereby RECONSIDERED and
RECALLED, and a new one issued DISMISSING this Application for Registration of
Title for failure to prosecute.
SO ORDERED.15
The Motion for Reconsideration16 of petitioner was denied by the court a quo in the
other assailed Order17 dated July 9, 2009. Hence, this petition.
The issue to be resolved in the present case is whether the court a quo acted
contrary to law and jurisprudence when it dismissed petitioners application for land
registration on the ground that petitioner failed to prosecute the subject case.
We answer in the affirmative.
The reason of the court a quo in dismissing petitioners application for land
registration on the ground of failure to prosecute was the lack of authority on the
part of Ms. Aban to testify on behalf of the petitioner.
However, Section 3, Rule 17 of the 1997 Rules of Civil Procedure, as amended,
provides only three instances wherein the Court may dismiss a case for failure to
prosecute:
Sec. 3. Dismissal due to fault of plaintiff.If, for no justifiable cause, the plaintiff fails
to appear on the date of the presentation of his evidence in chief on the complaint,
or to prosecute his action for an unreasonable length of time, or to comply with
these Rules or any order of the court, the complaint may be dismissed upon motion
of the defendant or upon the courts own motion, without prejudice to the right of
the defendant to prosecute his counterclaim in the same or in a separate action.
This dismissal shall have the effect of an adjudication upon the merits, unless
otherwise declared by the court.
Jurisprudence has elucidated on this matter in De Knecht v. CA: 18
An action may be dismissed for failure to prosecute in any of the following
instances: (1) if the plaintiff fails to appear at the time of trial; or (2) if he fails to
prosecute the action for an unreasonable length of time; or (3) if he fails to comply
with the Rules of Court or any order of the court. Once a case is dismissed for failure
to prosecute, this has the effect of an adjudication on the merits and is understood
to be with prejudice to the filing of another action unless otherwise provided in the
order of dismissal. In other words, unless there be a qualification in the order of
dismissal that it is without prejudice, the dismissal should be regarded as an
adjudication on the merits and is with prejudice. (Emphasis supplied.)
Clearly, the court a quos basis for pronouncing that the petitioner failed to
prosecute its case is not among those grounds provided by the Rules. It had no
reason to conclude that the petitioner failed to prosecute its case. First, the
petitioner did not fail to appear at the time of the trial. In fact, the Decision of the

RTC dated April 21, 2008 ordering the registration of petitioners title to the subject
lots shows that the petitioner appeared before the Court and was represented by
counsel. Records would also reveal that the petitioner was able to present its
evidence, and as a result, the RTC rendered judgment in its favor.
Second, the petitioner did not fail to prosecute the subject case considering that it
appeared during trial, presented Ms. Aban, who gave competent testimony as
regards the titling of the subject lots, and the court a quo never held petitioner
liable for any delay in prosecuting the subject case.
Third, a perusal of the records would demonstrate that the petitioner did not fail to
comply with the Rules or any order of the court a quo, as there is no ruling on the
part of the latter to this effect.
Indeed, there was no basis for the court a quos ruling that the petitioner failed to
prosecute the subject case, because none of the grounds provided in the Rules for
dismissing a case due to failure to prosecute is present. That the RTC dismissed the
application for land registration of the petitioner for failure to prosecute after the
petitioner presented all its evidence and after said court has rendered a decision in
its favor, is highly irregular.
At this juncture, it would be appropriate to discuss the basis of the court a quo in
dismissing the petitioners application for land registration for failure to prosecute
the alleged lack of authority of the witness, Ms. Aban, to testify on behalf of the
petitioner.
The assailed Order held as follows:
With things now stand, the Court believes that OSG was correct in observing that
indeed the AFPRSBS did not present its duly authorized representative to prosecute
this case. And the records support the observation since AFPRSBS presented only
one witness Mrs. Aban. In view of the foregoing the Court is left without choice
than to grant OSGs motion for reconsideration.19
However, there is no substantive or procedural rule which requires a witness for a
party to present some form of authorization to testify as a witness for the party
presenting him or her. No law or jurisprudence would support the conclusion that
such omission can be considered as a failure to prosecute on the part of the party
presenting such witness. All that the Rules require of a witness is that the witness
possesses all the qualifications and none of the disqualifications provided therein.
Rule 130 of the Rules on Evidence provides:
SEC. 20. Witnesses; their qualifications.Except as provided in the next succeeding
section, all persons who can perceive, and perceiving, can make known their
perception to others, may be witnesses.
xxxx
Cavili v. Judge Florendo20 speaks of the disqualifications:

Sections 19 and 20 of Rule 130 provide for specific disqualifications.1wphi1 Section

19 disqualifies those who are mentally incapacitated and children whose tender age
or immaturity renders them incapable of being witnesses. Section 20 provides for
disqualification based on conflicts of interest or on relationship. Section 21 provides
for disqualifications based on privileged communications. Section 15 of Rule 132
may not be a rule on disqualification of witnesses but it states the grounds when a
witness may be impeached by the party against whom he was called.
x x x The specific enumeration of disqualified witnesses excludes the operation of
causes of disability other than those mentioned in the Rules. It is a maxim of
recognized utility and merit in the construction of statutes that an express
exception, exemption, or saving clause excludes other exceptions. (In Re Estate of
Enriquez, 29 Phil. 167) As a general rule, where there are express exceptions these
comprise the only limitations on the operation of a statute and no other exception
will be implied. (Sutherland on Statutory Construction, Fourth Edition, Vol. 2A, p. 90)
The Rules should not be interpreted to include an exception not embodied therein.
(Emphasis supplied.)
A reading of the pertinent law and jurisprudence would show that Ms. Aban is
qualified to testify as a witness for the petitioner since she possesses the
qualifications of being able to perceive and being able to make her perceptions
known to others. Furthermore, she possesses none of the disqualifications described
above.
The RTC clearly erred in ordering the dismissal of the subject application for land
registration for failure to prosecute because petitioners witness did not possess an
authorization to testify on behalf of petitioner. The court a quo also erred when it
concluded that the subject case was not prosecuted by a duly authorized
representative of the petitioner. The OSG and the court a quo did not question the
Verification/Certification21 of the application, and neither did they question the
authority of Mr. Azcueta to file the subject application on behalf of the petitioner.
Case records would reveal that the application was signed and filed by Mr. Azcueta
in his capacity as the Executive Vice President and Chief Operating Officer of the
petitioner, as authorized by petitioners Board of Trustees. 22 The authority of Mr.
Azcueta to file the subject application was established by a Secretarys
Certificate23 attached to the said application. The asseveration that the subject case
was not prosecuted by a duly authorized representative of the petitioner is thus
unfounded.
Interestingly enough, the respondent itself agrees with the petitioner that the
dismissal of the subject application by the court a quo on the ground of failure to
prosecute due to lack of authority of the sole witness of the petitioner is unfounded
and without legal basis.24
WHEREFORE, the petition for review on certiorari is GRANTED. The Orders of the
Regional Trial Court dated February 17, 2009 and July 9, 2009 are REVERSED AND
SET ASIDE. The Decision of the Regional Trial Court dated April 21, 2008, granting
the Application for Registration of Title of the petitioner is hereby REINSTATED and
UPHELD.

No pronouncement as to costs.
SO ORDERED.
MARTIN S. VILLARAMA, JR.
Associate Justice

Phil. Charter v. Explorer Machine, G.R. No. 175409, September 7,

2011
Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

PHILIPPINE CHARTER INSURANCE

CORPORATION,
Petitioner,

G.R. No. 175409

- versus EXPLORER MARITIME CO., LTD.,

OWNER OF THE VESSEL M/V
EXPLORER,
WALLEM
PHILS.
SHIPPING,
INC.,
ASIAN
TERMINALS, INC. AND FOREMOST
INTERNATIONAL PORT SERVICES,
INC.,
Respondents.

Present:

CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.
Promulgated:
September 7, 2011

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
LEONARDO-DE CASTRO, J.:
This is a Petition for Review on Certiorari assailing the Decision[1] of the Court
of Appeals dated July 20, 2006 in CA-G.R. CV No. 78834, which affirmed the
Order[2] of Branch 37, Regional Trial Court (RTC) of Manila dated February 14, 2001
dismissing the Complaint for failure of the plaintiff to prosecute the same for an
unreasonable length of time.
On March 22, 1995, petitioner Philippine Charter Insurance Corporation
(PCIC), as insurer-subrogee, filed with the RTC of Manila a Complaint against
respondents, to wit: the unknown owner of the vessel M/V Explorer (common
carrier), Wallem Philippines Shipping, Inc. (ship agent), Asian Terminals, Inc.
(arrastre), and Foremost International Port Services, Inc. (broker). PCIC sought to
recover from the respondents the sum of P342,605.50, allegedly representing the
value of lost or damaged shipment paid to the insured, interest and attorneys
fees. The case was docketed as Civil Case No. 95-73340 and was raffled to
Branch 37. On the same date, PCIC filed a similar case against respondents Wallem
Philippines Shipping, Inc., Asian Terminals, Inc., and Foremost International Port
Services, Inc., but, this time, the fourth defendant is the unknown owner of the
vessel M/V Taygetus. This second case was docketed as Civil Case No. 9573341 and was raffled to Branch 38.
Respondents filed their respective answers with counterclaims in Civil Case
No. 95-73340, pending before Branch 37. PCIC later filed its answer to the
counterclaims. On September 18, 1995, PCIC filed an ex parte motion to set the
case for pre-trial conference, which was granted by the trial court in its Order dated
September 26, 1995. However, before the scheduled date of the pre-trial
conference, PCIC filed on September 19, 1996 its Amended Complaint. The
Unknown Owner of the vessel M/V Explorer and Asian Terminals, Inc. filed anew
their respective answers with counterclaims.
Foremost International Port Services, Inc. filed a Motion to Dismiss, which was
later denied by the trial court in an Order dated December 4, 1996.
On December 5, 2000, respondent common carrier, the Unknown Owner of
the vessel M/V Explorer, and Wallem Philippines Shipping, Inc. filed a Motion to
Dismiss on the ground that PCIC failed to prosecute its action for an unreasonable
length of time. PCIC allegedly filed its Opposition, claiming that the trial court has
not yet acted on its Motion to Disclose which it purportedly filed on November 19,
1997. In said motion, PCIC supposedly prayed for the trial court to order respondent
Wallem Philippines Shipping, Inc. to disclose the true identity and whereabouts of
defendant Unknown Owner of the Vessel M/V Explorer.

On February 14, 2001, the trial court issued an Order dismissing Civil Case
No. 95-73340 for failure of petitioner to prosecute for an unreasonable length of
time. Upon receipt of the order of dismissal on March 20, 2001, PCIC allegedly
realized that its Motion to Disclose was inadvertently filed with Branch 38 of the RTC
of Manila, where the similar case involving the vessel M/V Taygetus (Civil Case No.
95-73341) was raffled to, and not with Branch 37, where the present case (Civil
Case No. 95-73340) was pending.
Thus, PCIC filed a Motion for Reconsideration of the February 14, 2001 Order,
explaining that its Motion to Disclose was erroneously filed with Branch 38. PCIC
claimed that the mistake stemmed from the confusion created by an error of the
docket section of the RTC of Manila in stamping the same docket number to the
simultaneously filed cases. According to PCIC, it believed that it was still premature
to move for the setting of the pre-trial conference with the Motion to Disclose still
pending resolution. On May 6, 2003, the trial court issued the Order denying PCICs
Motion for Reconsideration.
On May 21, 2003, PCIC, through new counsel, appealed to the Court of
Appeals. On July 20, 2006, the Court of Appeals rendered the assailed Decision
affirming the February 14, 2001 Order of the RTC. On November 6, 2006, the Court
of Appeals issued its Resolution[3] denying PCICs Motion for Reconsideration.
Hence, this Petition for Review on Certiorari. On June 27, 2007, this Court
required the counsel of the Unknown Owner of the vessel M/V Explorer and
Wallem Philippines Shipping, Inc. to submit proof of identification of the owner of
said vessel.[4] On September 17, 2007, this Court, pursuant to the information
provided by Wallem Philippines Shipping, Inc., directed its Division Clerk of Court to
change Unknown Owner to Explorer Maritime Co., Ltd. in the title of this case. [5]
In affirming the dismissal of Civil Case No. 95-73340, the Court of Appeals
held that PCIC should have filed a motion to resolve the Motion to Disclose after a
reasonable time from its alleged erroneous filing. PCIC could have also followed up
the status of the case by making inquiries on the courts action on their motion,
instead of just waiting for any resolution from the court for more than three
years. The appellate court likewise noted that the Motion to Disclose was not the
only erroneous filing done by PCICs former counsel, the Linsangan Law Office. The
records of the case at bar show that on November 16, 1997, said law office filed with
Branch 37 a Pre-trial Brief for the case captioned as Philippine Charter Insurance
Corporation v. Unknown Owners of the Vessel MV Taygetus, et al., Civil Case No.
95-73340. The firm later filed a Manifestation and Motion stating that the same
was intended for Civil Case No. 95-73341 which was pending before Branch 38. All
these considered, the Court of Appeals ruled that PCIC must bear the consequences
of its counsels inaction and negligence, as well as its own. [6]
PCIC claims that the merits of its case warrant that it not be decided on
technicalities. Furthermore, PCIC claims that its former counsel merely committed
excusable negligence when it erroneously filed the Motion to Disclose with the
wrong branch of the court where the case is pending.

The basis for the dismissal by the trial court of Civil Case No. 95-73340 is
Section 3, Rule 17 and Section 1, Rule 18 of the Rules of Court, which respectively
provide:
Section 3. Dismissal due to the fault of the plaintiff. If, for no
justifiable cause, the plaintiff fails to appear on the date of the
presentation of his evidence in chief on the complaint, or to prosecute
his action for an unreasonable length of time, or to comply with these
Rules or any order of the court, the complaint may be dismissed upon
motion of the defendant or upon the courts own motion, without
prejudice to the right of the defendant to prosecute his counterclaim in
the same or in a separate action. This dismissal shall have the effect
of adjudication upon the merits, unless otherwise declared by the
court.
xxxx
Section 1. When conducted. After the last pleading has been
served and filed, it shall be the duty of the plaintiff to promptly
move ex parte that the case be set for pre-trial.
In the fairly recent case of Espiritu v. Lazaro,[7] this Court, in affirming the
dismissal of a case for failure to prosecute on account of the omission of the plaintiff
therein to move to set the case for pre-trial for almost one year from their receipt of
the Answer, issued several guidelines in effecting such dismissal:
Respondents Lazaro filed the Cautionary Answer with
Manifestation and Motion to File a Supplemental/Amended Answer on
July 19, 2002, a copy of which was received by petitioners on August 5,
2002. Believing that the pending motion had to be resolved first,
petitioners waited for the court to act on the motion to file a
supplemental answer. Despite the lapse of almost one year,
[8]
petitioners kept on waiting, without doing anything to stir the court
into action.
In any case, petitioners should not have waited for the court to
act on the motion to file a supplemental answer or for the defendants
to file a supplemental answer. As previously stated, the rule clearly
states that the case must be set for pre-trial after the last pleading is
served and filed. Since respondents already filed a cautionary answer
and [petitioners did not file any reply to it] the case was already ripe
for pre-trial.
It bears stressing that the sanction of dismissal may be
imposed even absent any allegation and proof of the plaintiff's
lack of interest to prosecute the action, or of any prejudice to
the defendant resulting from the failure of the plaintiff to
comply with the rules. The failure of the plaintiff to prosecute
the action without any justifiable cause within a reasonable

period of time will give rise to the presumption that he is no

longer interested in obtaining the relief prayed for.
In this case, there was no justifiable reason for petitioners'
failure to file a motion to set the case for pre-trial. Petitioners' stubborn
insistence that the case was not yet ripe for pre-trial is erroneous.
Although petitioners state that there are strong and compelling
reasons justifying a liberal application of the rule, the Court finds none
in this case. The burden to show that there are compelling
reasons that would make a dismissal of the case unjustified is
on petitioners, and they have not adduced any such compelling
reason.[9] (Emphases supplied.)
In the case at bar, the alleged Motion to Disclose was filed on November 19,
1997. Respondents filed the Motion to Dismiss on December 5, 2000. By that time,
PCICs inaction was thus already almost three years. There is therefore no question
that the failure to prosecute in the case at bar was for an unreasonable length of
time. Consequently, the Complaint may be dismissed even absent any allegation
and proof of the plaintiff's lack of interest to prosecute the action, or of any
prejudice to the defendant resulting from the failure of the plaintiff to comply with
the rules. The burden is now on PCIC to show that there are compelling reasons that
would render the dismissal of the case unjustified.
The only explanation that the PCIC can offer for its omission is that it was
waiting for the resolution of its Motion to Disclose, which it allegedly filed with
another branch of the court. According to PCIC, it was premature for it to move for
the setting of the pre-trial conference before the resolution of the Motion to Disclose.
We disagree. Respondent Explorer Maritime Co., Ltd., which was then
referred to as the Unknown Owner of the vessel M/V Explorer, had already been
properly impleaded pursuant to Section 14, Rule 3 of the Rules of Court, which
provides:
Section 14. Unknown identity or name of defendant Whenever
the identity or name of a defendant is unknown, he may be sued as the
unknown owner, heir, devisee, or by such other designation as the
case may require; when his identity or true name is discovered, the
pleading must be amended accordingly.
In the Amended Complaint, PCIC alleged that defendant Unknown Owner of
the vessel M/V Explorer is a foreign corporation whose identity or name or office
address are unknown to PCIC but is doing business in the Philippines through its
local agent, co-defendant Wallem Philippines Shipping, Inc., a domestic corporation.
[10]
PCIC then added that both defendants may be served with summons and other
court processes in the address of Wallem Philippines Shipping, Inc., [11] which was
correctly done[12] pursuant to Section 12, Rule 14 of the Rules of Court, which
provides:

Sec. 12. Service upon foreign private juridical entity. When the
defendant is a foreign private juridical entity which has transacted
business in the Philippines, service may be made on its resident agent
designated in accordance with law for that purpose, or, if there be no
such agent, on the government official designated by law to that
effect, or on any of its officers or agents within the Philippines.
As all the parties have been properly impleaded, the resolution of the Motion to
Disclose was unnecessary for the purpose of setting the case for pre-trial.
Furthermore, Section 3, Rule 3 of the Rules of Court likewise provides that an
agent acting in his own name and for the benefit of an undisclosed principal may
sue or be sued without joining the principal except when the contract involves
things belonging to the principal. Since Civil Case No. 95-73340 was an action for
damages, the agent may be properly sued without impleading the principal. Thus,
even assuming that petitioner had filed its Motion to Disclose with the proper court,
its pendency did not bar PCIC from moving for the setting of the case for pre-trial as
required under Rule 18, Section 1 of the Rules of Court. [13]
Indeed, we find no error on the part of the lower courts in not giving credit to
the purportedly erroneously filed Motion to Disclose. The only document presented
by PCIC to prove the same, a photocopy thereof attached to their Motion for
Reconsideration with the RTC, is highly suspicious. Said photocopy[14] of the Motion
to Disclose contains an explanation why the same was filed through registered
mail. However, it was also stamped as RECEIVED by the RTC on November 19,
1997,[15]indicating that said attachment was a receiving copy. The receiving copy
was not signed by any court personnel [16] and does not contain any proof of service
on the parties. The Motion sets the hearing thereon on the same date of its filing,
November 19, 1997.[17]
Likewise, PCICs attempt to shift the blame to the docket section of the RTC of
Manila, which allegedly stamped the same docket number to Civil Case No. 9573340 (involving M/V Explorer) and Civil Case No. 95-73341 (involving M/V
Taygetus), is completely unfounded. A perusal of the Complaint in the case at bar
shows that it was correctly stamped Civil Case No. 95-73340, and the branch
number was correctly written as 37.[18] PCIC did not bother to attach the alleged
complaint filed in Branch 38 involving M/V Taygetus. However, it does not escape
our attention that PCIC in its own pleadings repeatedly refer to the case pending in
Branch 38 as Civil Case No. 95-73341, contrary to its claim that the two cases were
docketed with the same number. In all, PCIC failed to adequately account how its
counsel could have mistakenly filed the Motion intended for Branch 37 in Branch 38.
Worse, said counsel also allegedly only discovered the error after three years from
the filing of the Motion to Disclose. Such a circumstance could have only occurred
if both PCIC and its counsel had indeed been uninterested and lax in prosecuting
the case.
We therefore hold that the RTC was correct in dismissing Civil Case No. 9573340 for failure of the plaintiff to prosecute the same for an unreasonable length of
time. As discussed by the Court of Appeals, PCIC could have filed a motion for the
early resolution of their Motion to Disclose after the apparent failure of the court to

do so. If PCIC had done so, it would possibly have discovered the error in the filing
of said motion much earlier. Finally, it is worth noting that the defendants also have
the right to the speedy disposition of the case; the delay of the pre-trial and the trial
might cause the impairment of their defenses. [19]
WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals
dated July 20, 2006 in CA-G.R. CV No. 78834 is hereby AFFIRMED.
Costs against petitioner Philippine Charter Insurance Corporation.
SO ORDERED.

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

Republic v. Enriquez, G.R. No. 181458, March 20, 2013

G.R. No. 181458

March 20, 2013

REPUBLIC OF THE PHILIPPINES, represented by the PRESIDENTIAL

COMMISSION
ON
GOOD
GOVERNMENT
(PCGG), Petitioner,
vs.
TRINIDAD DIAZ-ENRIQUEZ, LEANDRO ENRIQUEZ, ERLINDA ENRIQUEZPANLILIO, ALLAN E. PANLILIO, JOSE MARCEL E. PANLILIO, KATRINA E.
PANLILIO, NICOLE P. MORRIS, IMELDA R. MARCOS, MA. IMELDA MARCOSMANOTOC, FERDINAND R. MARCOS, JR., MA. VICTORIA IRENE MARCOSARANETA, EMILIA T. CRUZ, RAFAEL ROMAN T. CRUZ, MA. RONA ROMANA T.
CRUZ, ANA CRISTINA CRUZ GA YLO, GINO R. CRUZ, ISAIAH PAVIA CRUZ, and
DON M. FERRY. Respondents.
DECISION
SERENO, CJ.:
Before this Court is the 11 March 2008 Petition for Review on Certiorari filed by
petitioner under Rule 45 of the Rules of Court, which assails the 1 October 2007
Order and 25 January 2008 Resolution of the Sandiganbayan (Second Division). 1
The facts in this case are not disputed.
On 23 July 1987, the Republic of the Philippines (Republic), represented by the
Presidential Commission on Good Government (PCGG) and the Office of the Solicitor
General (OSG), filed a Complaint against respondents. Docketed as Civil Case No.
0014, this civil action sought the recovery of ill-gotten wealth from respondents for

the benefit of the Republic. Allegedly, these properties were illegally obtained
during the reign of former President Ferdinand E. Marcos and, hence, were the
subject of sequestration orders.
Thereafter, Civil Case No. 0014 went through a series of inclusions of individual
defendants and defendant corporations. As a result, respondents finished filing their
separate Answers eight years later, or in 1995.
In May 1996, some of the defendant corporations filed motions for dismissal. Six
years thereafter, the Sandiganbayan resolved the motions. It ruled in favor of
defendant corporations and lifted the sequestration orders against them. 2
Aggrieved, the Republic filed a Petition for Certiorari 3 before this
Court on 23 August 2002. Docketed as G.R. No. 154560, 4 the Rule 65 petition
questioned the lifting of the sequestration orders against defendant corporations.
With these two cases at bay, the counsels for the Republic divided their
responsibilities as follows: Special PCGG Counsel Maria Flora A. Falcon (Falcon)
attended to Civil Case No. 0014, while OSG Senior State Solicitor Derek R.
Puertollano (Puertollano) handled G.R. No. 154560.
After receiving the Answers, the Sandiganbayan scheduled pretrial dates for Civil
Case No. 0014. However, the court failed to conduct pretrial hearings from 2002 to
2007. For five years, it reset the hearings in view of the pending incidents, which
included G.R. No. 154560, and because the case "was not yet ripe for a pretrial
conference."5
On 28 June 2007, Civil Case No. 0014 was called for the initial presentation of
plaintiff's evidence, but the proceedings did not push through. Finally, two decades
after the inception of the case, both parties moved to set the pretrial and trial
hearings on 1, 2, 29, and 30 October 2007. The Sandiganbayan granted their
motions in this wise:6
When this case was called for initial presentation of plaintiff's evidence, both parties
moved for postponement, and considering some issues still pending with the
Supreme Court, but considering also on the other hand, that this case has been
pending for quite a long time, the Court orders parties to submit Joint Stipulation of
Facts, as well as substitution of parties, and by the next hearing, the Court shall
proceed to hear this case.
Accordingly, the hearing set for tomorrow is cancelled, and reset to October 1, 2, 29
& 30, 2007, all at 1:30 o'clock in the afternoon.
SO ORDERED.
Following this Resolution, the defendants moved for the extension of the submission
of these requirements. Nevertheless, none of them fully complied, except petitioner

who submitted an "unofficial proposal for stipulation, for defendants to comment on

the same."7
In the interim, the contract of Falcon with the PCGG terminated on 1 July
2007.8 Through a letter dated 21 September 2007, she informed Puertollano that
she was no longer connected with the PCGG. She also turned over to him the
records of Civil Case No. 0014. 9 However, Puertollano belatedly received the letter
on 8 October 2007. For all he knew, Falcon had attended the hearings prior to that
date, while he was pursuing G.R. No. 154560.
Thus, on 1 October 2007, no representative appeared on behalf of petitioner.
Consequently, the Sandiganbayan issued its 1 October 2007 Order dismissing the
case without prejudice. The court ruled thus: 10
On motion of Atty. Nini Priscilla D. Sison-Ledesma for the dismissal of this case,
since plaintiff's counsel failed to appear despite due notice and there was no
representative from the plaintiff, this case is ordered DISMISSED without prejudice.
The issue of whether the pending incident before the Supreme Court would affect
this case is off tangent.
Accordingly, the hearings set tomorrow, October 2, 2007, and also on October 29
and 30, 2007 are cancelled.
SO ORDERED.
On 5 October 2007, Atty. Mary Charlene Hernandez took over the case from PCGG's
previous special counsel11and only after a while did she learn of the trial dates. She
also knew nothing about the dismissal of the case. Hence, she proceeded to file an
Urgent Motion for Postponement12 of the 30 October 2007 hearing.
The OSG came to know of the dismissal of Civil Case No. 0014 only when it received
the assailed Order on 15 November 2007. On 29 November 2007, it filed a Motion
for Reconsideration13 with a notice for hearing on 7 December 2007. This motion
was served on the Sandiganbayan and respondents on 29 November 2007 via
registered mail.14 Unfortunately, the court received the motion only on 10 December
2007.15
Considering the late receipt of the motion, the Sandiganbayan issued its 25 January
2008 Resolution denying it on the ground of failure to observe the three-day notice
requirement.16 In effect, it considered the motion as a worthless piece of paper. With
this instant dismissal, the Sandiganbayan no longer considered the reasons
adduced by petitioner to explain the latter's absence in court.
Specifically, petitioner brought to the Sandiganbayan's attention the fact that
Falcon, who was assigned to Civil Case No. 0014, had diligently attended to the civil
action. But since she was no longer connected to the PCGG, and given that the OSG
only learned of this circumstance seven days after the hearing on 1 October 2007,
counsels for petitioner failed to appear during the hearing. 17

Hence, petitioner comes before this Court to seek the reinstatement of the 26-yearold case, which has already reached the start of the trial stage.
Petitioner argues that its single incidence of absence after Falcon resigned on 1
October 2007 does not amount to failure to prosecute under Rule 17, Section 3 of
the Rules of Court, which states:
Sec. 3. Dismissal due to fault of plaintiff.
If, for no justifiable cause, the plaintiff fails to appear on the date of the
presentation of his evidence in chief on the complaint, or to prosecute his action for
an unreasonable length of time, or to comply with these Rules or any order of the
court, the complaint may be dismissed upon motion of the defendant or upon the
court's own motion, without prejudice to the right of the defendant to prosecute his
counterclaim in the same or in a separate action. This dismissal shall have the
effect of an adjudication upon the merits, unless otherwise declared by the court.
Petitioner further avers that the Motion for Reconsideration questioning the
dismissal of Civil Case No. 0014 should not have been denied for supposedly
violating the three-day notice requirement. Rule 15, Section 4 of the Rules of Court,
reads:
Sec. 4. Hearing of motion.
Except for motions which the court may act upon without prejudicing the rights of
the adverse party, every written motion shall be set for hearing by the applicant.
Every written motion required to be heard and the notice of the hearing thereof
shall be served in such a manner as to ensure its receipt by the other party at least
three (3) days before the date of hearing, unless the court for good cause sets the
hearing on shorter notice.
Therefore, this Court is tasked to resolve the two issues raised by petitioner as
follows:
I. Whether the Sandiganbayan gravely erred in dismissing Civil Case No. 0014
for the failure of petitioner to appear during the 1 October 2007 hearing.
II. Whether the Sandiganbayan committed reversible error in denying the
Motion for Reconsideration on the ground that it failed to comply with the
three-day notice rule.
RULING OF THE COURT
Dismissal of Civil Case No. 0014 for Petitioner's Failure to Appear
Petitioner asserts that, save for the absence of Falcon due to the termination of her
contract with the PCGG, she was diligent in attending the hearings and in
submitting the requirements of the Sandiganbayan. Likewise, Puertollano was

responsible in pursuing G.R. No. 154560. Thus, their inability to send

representatives for the Republic in the 1 October 2007 hearing can only be
appreciated as mere inadvertence and excusable negligence, which cannot amount
to failure to prosecute.
Petitioner also advances the argument that this Court disfavors judgments based on
non-suits and prefers those based on the merits - especially in Civil Case No. 0014,
which contains allegations of ill-gotten wealth. Moreover, petitioner claims that
reasonable deferments may be tolerated if they would not cause substantial
prejudice to any party.
Lastly, petitioner manifests good reasons to expect the cancellation of the 1
October 2007 hearing, as in the past resetting. At that time, the same
circumstances for postponement were present: (1) G.R. No. 154560 was still
pending before this Court; (2) several incidents 18 were also still pending; and (3) no
pretrial order has yet been issued by the Sandiganbayan.
On the other hand, in their Comments,19 respondents stress the letter of the law.
Indeed, Rule 17, Section 3 of the Rules of Court, provides that complaints may be
dismissed if a petitioner fails to be present on the date of presentation of its
evidence in chief.
Additionally, respondents contend that no justifiable cause exists to warrant
petitioner's absence. To support their contention, they cite the following: (1) Falcon
agreed to set the hearing on 1 October 2007; and (2) Puertollano should have
attended the pretrial even if Falcon failed to appear considering that, as counsels for
petitioner, both of them had been notified of the orders and resolutions of the
Sandiganbayan.
Respondents also highlight the fact that the PCGG and the OSG failed to monitor the
proceedings when they filed a Motion for Reconsideration only after 14 days from
the OSG's receipt of the assailed Order of dismissal. Worse, the counsels of the
Republic did not even inform the court beforehand of the reason for their absence.
Because of these circumstances, respondents posit that the Sandiganbayan did not
gravely err in dismissing Civil Case No. 0014.
This Court rules in favor of the Republic.
As worded, Rule 17, Section 3 of the Rules of Court, provides that the court may
dismiss a complaint in case there are no justifiable reasons that explain the
plaintiff's absence during the presentation of the evidence in chief. Generally
speaking, the use of "may" denotes its directory nature, 20 especially if used in
remedial statutes that are known to be construed liberally. Thus, the word "may" in
Rule 17, Section 3 of the Rules of Court, operates to confer on
the court the discretion21 to decide between the dismissal of the case on technicality
vis--vis the progressive prosecution thereof.

Given the connotation of this procedural rule, it would have been expected that the
Sandiganbayan would look into the body of cases that interpret the provision. From
jurisprudence, it is inevitable to see that the real test of the exercise of discretion is
whether, under the circumstances, the plaintiff is charged with want of due
diligence in failing to proceed with reasonable promptitude. 22 In fact, we have ruled
that there is an abuse of that discretion when a judge dismisses a case without any
showing that the party's conduct "is so indifferent, irresponsible, contumacious or
slothful."23
Here, the Sandiganbayan appears to have limited itself to a rigid application of
technical rules without applying the real test explained above. The 1 October 2007
Order was bereft of any explanation alluding to the indifference and irresponsibility
of petitioner. The Order was also silent on any previous act of petitioner that can be
characterized as contumacious or slothful.
Verily, the circumstances in Civil Case No. 0014 should have readily convinced the
Sandiganbayan that it would be farfetched to conclude that petitioner lacked
interest in prosecuting the latter's claims.
Firstly, based on the records, petitioner's counsels have actively participated in the
case for two decades. The Sandiganbayan has not made any remark regarding the
attendance of petitioner, save for this single instance. Secondly, after the latter
received the assailed Order, it duly filed a Motion for Reconsideration. These
circumstances should have easily persuaded the Sandiganbayan that the Republic
intended to advance the ill-gotten wealth case.
More importantly, respondents' imputation of lack of interest to prosecute on the
part of petitioner becomes a hyperbole in the face of its explanation, albeit belated.
Respondents harp on the fact that since Falcon agreed to set the hearing on 1
October 2007 and Puertollano, being a counsel of record, may have also known of
the schedule, petitioner has no excuse to be absent. But even if we concede to
respondents' arguments, the most that they can say is that petitioner had an
instance of absence without an excuse. Juxtaposing this lapse against its long
history of actively prosecuting the case, it would be the height of rigidity to require
from petitioner complete attendance, at all times.
Similarly, in Perez v. Perez, we held thus: 24
The records show that every time the case was set for hearing, the plaintiffs and
their counsel had always been present; however, the scheduled hearings were
either cancelled by the court motu propio and/or postponed by agreement of the
parties, until the case was eventually set for trial on the merits on February 15,
1967. It was only at this hearing where the plaintiffs and their counsel failed to
appear, prompting the court to issue its controversial order of dismissal.
Considering that it was the first time that the plaintiffs failed to appear and the
added fact that the trial on the merits had not as yet commenced, We believe that it
would have been more in consonance with the essence of justice and fairness for
the court to have postponed the hearing on February 15, 1967.

We are not unmindful of the fact that the matter of adjournment and postponement
of trials is within the sound discretion of the court; but such discretion should always
be predicated on the consideration that more than the mere convenience of the
courts or of the parties in the case, the ends of justice and fairness should be served
thereby. Postponements and continuances are part and parcel of our procedural
system of dispensing justice, and when - as in the present case - no substantial
rights are affected and the intention to delay is not manifest, it is sound judicial
discretion to allow them.
This Court further considers that based on the records, the contract of the handling
lawyer, Falcon, with the PCGG terminated without the knowledge of Puertollano.
After Falcon's resignation, it was only on 5 October 2007 that the case was
transferred to the new lawyer. These facts then explain the nonattendance of
petitioner on 1 October 2007, and why it failed to keep abreast with the succeeding
2, 29, and 30 October 2007 hearings.
Moreover, this Court understands the absence of Puertollano in Civil Case No. 0014.
The OSG has explained that he attends to G.R. 154560, as the main case has been
delegated to the PCGG. We find this arrangement sensible, given that case
management is needed to tackle this sensitive case involving a number of highprofile parties, sensitive issues and, of course, numerous offshoots and incidents.
Respondents are correct in saying that courts have a right to dismiss a case for
failure of the plaintiff to prosecute. Still, we remind justices, judges and litigants
alike that rules "should be interpreted and applied not in a vacuum or in isolated
abstraction, but in light of surrounding circumstances and attendant facts in order
to afford justice to all."25
We underscore that there are specific rules that are liberally construed, and among
them is the Rules of Court. In fact, no less than Rule 1, Section 6 of the Rules of
Court echoes that the rationale behind this construction is to promote the objective
of securing a just, speedy and inexpensive disposition of every action and
proceeding. Surprisingly, the Sandiganbayan obviated the speedy disposition of the
case when it chose to dismiss the case spanning two decades over a technicality
and, in the same breath, rationalized its cavalier attitude by saying that a complaint
for ill-gotten wealth should be reinstituted all over again.
Here, we find it incongruous to tip the balance of the scale in favor of a technicality
that would result in a complete restart of the 26-year-old civil case back to square
one. Surely, this Court cannot waste the progress of the civil case from the
institution of the complaint to the point of reaching the trial stage. Not only would
this stance dry up the resources of the government and the private parties, but it
would also compromise the preservation of the evidence needed by them to move
forward with their respective cases. Thus, to prevent a miscarriage of justice in its
truest sense, and considering the exceptional and special history of Civil Case No.
0014, this Court applies a liberal construction of the Rules of Court.1wphi1
Every party-litigant must be afforded the amplest opportunity for the proper and
just determination of its cause.26"Adventitious resort to technicality resulting in the
dismissal of cases is disfavored because litigations must as much as possible be

decided on the merits and not on technicalities." 27 Inconsiderate dismissals, even if

without prejudice to its refiling as in this case, merely postpone the ultimate
reckoning between the parties. In the absence of a clear intention to delay, justice is
better served by a brief continuance, trial on the merits, and final disposition of the
case before the court.28
Denial of Petitioner's Motion for Reconsideration due to Petitioner's Failure to
Observe the Three-day Notice Rule
In its assailed 25 January 2008 Resolution, the Sandiganbayan held that petitioners
failed to comply with the three-day notice rule. It faulted petitioner for its belated
receipt on 1 0 December 2007 of the Motion for Reconsideration set for hearing on 7
December 2007.
The Sandiganbayan is incorrect. By the very words of Rule 15, Section 4 of the Rules
of Court, the moving party is required to serve motions in such a manner as to
ensure the receipt thereof by the other party at least three days before the date of
hearing. The purpose of the rule is to prevent a surprise and to afford the adverse
party a chance to be heard before the motion is resolved by the trial court. 29 Plainly,
the rule does not require that the court receive the notice three days prior to the
hearing date.
Likewise, petitioner mailed the motion to the Sandiganbayan on 29 November 2007.
Since Rule 13, Section 3 of the Rules of Court, states that the date of the mailing of
motions through registered mail shall be considered the date of their filing in court,
it follows that petitioner filed the motion to the court 10 days in advance of the
hearing date. In so doing, it observed the 10-day requirement under Rule 15,
Section 5 of the Rules of Court, which provides that the time and date of the hearing
must not be later than ten days after the filing of the motion.
Considering that the Motion for Reconsideration containing a timely notice of
hearing was duly served in compliance with Rule 15, Sections 4 and 5 of the Rules
of Court, the fact that the Sandiganbayan received the notice on 10 December 2007
becomes trivial. The court cannot also blame petitioner for this belated receipt of
the registered mail since it followed the rules.
Therefore, the Sandiganbayan should have given due course to the Motion for
Reconsideration filed by petitioner. If it had done so, Civil Case No. 0014 would have
progressed at the trial court level.
IN VIEW THEREOF, the 11 March 2008 Petition for Review on Certiorari filed by
petitioner is GRANTED. The 1 October 2007 Order and 25 January 2008 Resolution
of the Sandiganbayan (Second Division) are REVERSED. Consequently, Civil Case
No. 0014 is hereby REINSTATED.
SO ORDERED.
MARIA LOURDES P. A. SERENO
Chief Justice, Chairperson

Shimizu Philippines v. Magasalin, G.R. No. 170026, June 2012

Republic of the Philippines

Supreme Court
Manila
SECOND DIVISION
SHIMIZU PHILIPPINES
CONTRACTORS, INC.,

G.R. No. 170026

Petitioner,

- versus -

Present:
CARPIO, J., Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.

MRS. LETICIA B. MAGSALIN,

doing business under the trade name
Promulgated:
KARENS TRADING, FGU
INSURANCE CORPORATION,
GODOFREDO GARCIA,
June 20, 2012
CONCORDIA GARCIA, and
REYNALDO BAETIONG,
Respondents.
x--------------------------------------------------------------------------------------x
DECISION
BRION, J.:
We resolve the petition for review on certiorari[1] filed by Shimizu Philippines
Contractors, Inc. (petitioner) to challenge the twin resolutions of the Court of
Appeals (CA)[2] in CA-G.R. CV No. 83096 which dismissed the appeal of the petitioner
on the ground of lack of jurisdiction[3] and denied the petitioners subsequent motion
for reconsideration.[4] The appeal in CA-G.R. CV No. 83096 had sought to nullify the

December 16, 2003 order[5] of the Regional Trial Court (RTC) dismissing the
petitioners complaint for sum of money and damages on the ground of non
prosequitur.
THE ANTECEDENTS
The antecedent facts of the petition before us are not disputed.
An alleged breach of contract was the initial event that led to the present
petition. The petitioner claims that one Leticia Magsalin, doing business as
Karens Trading, had breached their subcontract agreement for the supply,
delivery, installation, and finishing of parquet tiles for certain floors in the
petitioners Makati City condominium project called The Regency at Salcedo.
The breach triggered the agreements termination. When Magsalin also refused
to return the petitioners unliquidated advance payment and to account for other
monetary liabilities despite demand, the petitioner sent a notice to respondent
FGU Insurance Corporation (FGU Insurance) demanding damages pursuant to
the surety and performance bonds the former had issued for the subcontract.
On April 30, 2002, the petitioner filed a complaint docketed as Civil Case
No. 02-488 against both Magsalin and FGU Insurance. It was raffled to Branch 61
of the RTC of Makati City. The complaint sought Two Million Three Hundred
Twenty-Nine Thousand One Hundred Twenty Four Pesos and Sixty Centavos
(P2,329,124.60) as actual damages for the breach of contract.
FGU Insurance was duly served with summons. With respect to Magsalin,
however, the corresponding officers return declared that both she and Karens
Trading could not be located at their given addresses, and that despite further
efforts, their new addresses could not be determined.
In August 2002, FGU Insurance filed a motion to dismiss the complaint.
The petitioner filed its opposition to the motion. The motion to dismiss was
denied as well as the ensuing motion for reconsideration, and FGU Insurance was
obliged to file an answer.
In October 2002, in an effort to assist the RTC in acquiring jurisdiction over
Magsalin, the petitioner filed a motion for leave to serve summons on
respondent Magsalin by way of publication. In January 2003, the petitioner filed
its reply to FGU Insurances answer.
In February 2003, FGU Insurance filed a motion for leave of court to file a
third-party complaint. Attached to the motion was the subject complaint, [6] with
Reynaldo Baetiong, Godofredo Garcia and Concordia Garcia named as third-party
defendants. FGU Insurance claims that the three had executed counterguaranties over the surety and performance bonds it executed for the
subcontract with Magsalin and, hence, should be held jointly and severally liable
in the event it is held liable in Civil Case No. 02-488.

The RTC admitted the third-party complaint and denied the motion to
serve summons by publication on the ground that the action against respondent
Magsalin was in personam.
In May 2003, the RTC issued a notice setting the case for hearing on June
20, 2003. FGU Insurance filed a motion to cancel the hearing on the ground that
the third-party defendants had not yet filed their answer. The motion was
granted.
In June 2003, Baetiong filed his answer to the third-party complaint. He
denied any personal knowledge about the surety and performance bonds for the
subcontract with Magsalin.[7] Of the three (3) persons named as third-party
defendants, only Baetiong filed an answer to the third-party complaint; the
officers returns on the summons to the Garcias state that both could not be
located at their given addresses. Incidentally, the petitioner claims, and Baetiong
does not dispute, that it was not served with a copy of Baetiongs answer. The
petitioner now argues before us that FGU Insurance, which is the plaintiff in the
third-party complaint, had failed to exert efforts to serve summons on the
Garcias. It suggests that a motion to serve summons by publication should have
been filed for this purpose. The petitioner also asserts that the RTC should have
scheduled a hearing to determine the status of the summons to the third-party
defendants.[8]
THE ORDER OF DISMISSAL
With the above procedural events presented by both parties as the only
backdrop,
on
December
16,
2003
the
RTC
issued
a
tersely
worded order[9] dismissing Civil Case No. 02-488. For clarity, we quote the
dismissal order in full:
ORDER
For failure of [petitioner] to prosecute, the case is hereby
DISMISSED.
SO ORDERED.
The RTC denied the petitioners motion for reconsideration, [10] prompting
the latter to elevate its case to the CA via a Rule 41 petition for review.[11]
The Ruling of the Appellate Court
FGU Insurance moved for the dismissal of the appeal on the ground of lack
of jurisdiction. It argued that the appeal raised a pure question of law as it did
not dispute the proceedings before the issuance of the December 16, 2003
dismissal order.
The petitioner, on the other hand, insisted that it had raised questions of
fact in the appeal.[12] Thus -

While, the instant appeal does not involve the merits of the
case, the same involves questions of fact based on the records of
the case. It must be emphasized that the lower courts dismissal of
the case based on alleged failure to prosecute on the part of plaintiffappellant was too sudden and precipitate. This being the case, the
facts [sic] to be determined is whether based on the records of the
case, was there a definite inaction on the part of plaintiff-appellant? A
careful examination of all pleadings filed as well as the orders of the
lower court vis--vis the rules should now be made in order to
determine whether there was indeed a failure to prosecute on the
part of plaintiff-appellant[.][13] (emphases supplied)
The CA agreed with FGU Insurance and dismissed the appeal, and denied
as well the subsequent motion for reconsideration.[14] The petitioner thus filed
the present petition for review on certiorari.
The Present Petition
The petitioner pleads five (5) grounds to reverse the CAs resolutions and
to reinstate Civil Case No. 02-488. In an effort perhaps to make sense of the
dismissal of the case (considering that the trial court had not stated the facts
that justify it), the petitioner draws this Courts attention to certain facts and
issues that we find to be of little materiality to the disposition of this petition:
GROUNDS/ STATEMENT OF MATTERS INVOLVED
I.

THE APPELLATE COURT HAS JURISDICTION TO

DETERMINE THE MERITS OF THE APPEAL AS THE MATTERS
THEREIN INVOLVE BOTH QUESTIONS OF LAW AND FACT.

II.

THE LOWER COURT ERRED IN DECLARING THAT

PETITIONER FAILED TO PROSECUTE THE CASE DESPITE
THE FACT THAT PETITIONER NEVER RECEIVED A COPY OF
THE ANSWER OF THIRD-PARTY DEFENDANT-RESPONDENT
REYNALDO BAETIONG.

III.

THE LOWER COURT ERRED IN DECLARING THAT

PETITIONER FAILED TO PROSECUTE THE CASE DESPITE
THE FACT THAT THERE IS NO JOINDER OF INDISPENSABLE
PARTIES AND ISSUES YET BECAUSE DEFENDANTRESPONDENT LETICIA B. MAGSALIN AS WELL AS THIRDPARTY DEFENDANT-RESPONDENTS GODOFREDO AND
CONCORDIA GARCIAS WHEREABOUTS WERE UNKNOWN,
HENCE NO SERVICE YET ON THEM OF THE COPY OF THE
SUMMONS AND COMPLAINT WITH ANNEXES[.]

IV.

THE LOWER COURT ERRED IN DECLARING THAT

PETITIONER FAILED TO PROSECUTE THE CASE DESPITE

THE FACT THAT IT WAS PARTY RESPONDENT FGU WHICH

CAUSED THE CANCELLATION OF THE HEARING.
V.

IT IS EVIDENT THAT THE LOWER COURTS DISMISSAL

OF THE CASE IS A CLEAR DENIAL OF DUE PROCESS. [15]

In our Resolution dated February 13, 2006,[16] we required the respondents

to comment. FGU Insurances comment[17]alleges that the present petition is
fatally defective for being unaccompanied by material portions of the record. It
reiterates that the appeal in CA-G.R. CV No. 83096 was improperly filed under
Rule 41 and should have been filed directly with this Court under Rule 45 of the
Rules of Court. Baetiong, in his comment,[18] asserts that the dismissal of the
appeal was in accord with existing laws and applicable jurisprudence.
THE RULING OF THE COURT
Preliminarily, we resolve the claim that the petition violates Rule 45 of the
Rules of Court on the attachment of material portions of the record. We note that
FGU Insurance fails to discharge its burden of proving this claim by not
specifying the material portions of the record the petitioner should have
attached to the petition. At any rate, after a careful perusal of the petition and its
attachments, the Court finds the petition to be sufficient. In other words, we can
judiciously assess and resolve the present petition on the basis of its allegations
and attachments.
After due consideration, we resolve to grant the petition on the ground
that the December 16, 2003 dismissal order is null and void for violation of due
process. We are also convinced that the appeal to challenge the dismissal order
was properly filed under Rule 41 of the Rules of Court. We further find that the
dismissal of Civil Case No. 02-488 for failure to prosecute is not supported by
facts, as shown by the records of the case.
The Dismissal Order is Void
The nullity of the dismissal order is patent on its face. It simply states its
conclusion that the case should be dismissed for non prosequitur, a legal
conclusion, but does not state the facts on which this conclusion is based.
Dismissals of actions for failure of the plaintiff to prosecute is authorized
under Section 3, Rule 17 of the Rules of Court. A plain examination of
the December 16, 2003 dismissal order shows that it is an unqualified order and,
as such, is deemed to be a dismissal with prejudice. Dismissals of actions
(under Section 3) which do not expressly state whether they are with or without
prejudice are held to be with prejudice[.] [19] As a prejudicial dismissal,
the December 16, 2003 dismissal order is also deemed to be a judgment on the
merits so that the petitioners complaint in Civil Case No. 02-488 can no longer
be refiled on the principle ofres judicata. Procedurally, when a complaint is
dismissed for failure to prosecute and the dismissal is unqualified, the dismissal
has the effect of an adjudication on the merits. [20]

As an adjudication on the merits, it is imperative that the dismissal order

conform with Section 1, Rule 36 of the Rules of Court on the writing of valid
judgments and final orders. The rule states:
RULE 36
Judgments, Final Orders and Entry Thereof
Section 1. Rendition of judgments and final orders. A
judgment or final order determining the merits of the case shall be in
writing personally and directly prepared by the judge, stating clearly
and distinctly the facts and the law on which it is based, signed by him,
and filed with the clerk of the court.
The December 16, 2003 dismissal order clearly violates this rule for its
failure to disclose how and why the petitioner failed to prosecute its complaint.
Thus, neither the petitioner nor the reviewing court is able to know the particular
facts that had prompted the prejudicial dismissal. Had the petitioner perhaps
failed to appear at a scheduled trial date? Had it failed to take appropriate
actions for the active prosecution of its complaint for an unreasonable length of
time? Had it failed to comply with the rules or any order of the trial court? The
December 16, 2003 dismissal order does not say.
We have in the past admonished trial courts against issuing dismissal
orders similar to that appealed in CA-G.R. CV No. 83096. A trial court should
always specify the reasons for a complaints dismissal so that on appeal, the
reviewing court can readily determine the prima facie justification for the
dismissal.[21] A decision that does not clearly and distinctly state the facts and
the law on which it is based leaves the parties in the dark and is especially
prejudicial to the losing party who is unable to point the assigned error in
seeking a review by a higher tribunal. [22]
We thus agree with the petitioner that the dismissal of Civil Case No. 02488 constituted a denial of due process. Elementary due process demands that
the parties to a litigation be given information on how the case was decided, as
well as an explanation of the factual and legal reasons that led to the
conclusions of the court.[23] Where the reasons are absent, a decision (such as
theDecember 16, 2003 dismissal order) has absolutely nothing to support it and
is thus a nullity.[24]
For this same reason, we are not moved by respondent FGU Insurances
statement that the disposition of the present petition must be limited to the
issue of whether the CA had correctly dismissed the appeal in CA-G.R. CV No.
83096.[25] This statement implies that we cannot properly look into the validity
of the December 16, 2003 dismissal order in this Rule 45 petition. A void
decision, however, is open to collateral attack. While we note that the validity of
the dismissal order with respect to Section 1, Rule 36 of the Rules of Court was
never raised by the petitioner as an issue in the present petition, the Supreme
Court is vested with ample authority to review an unassigned error if it finds that
consideration and resolution are indispensable or necessary in arriving at a just

decision in an appeal.[26] In this case, the interests of substantial justice warrant

the review of an obviously void dismissal order.

The appeal was properly filed

under Rule 41 of the Rules of Court
While the nullity of the December 16, 2003 dismissal order constitutes
the ratio decidendi for this petition, we nevertheless rule on the contention that
the appeal was erroneously filed.[27]
In dismissing the appeal, the CA relied on the premise that since the facts
presented in the petitioners appeal were admitted and not disputed, the appeal
must thereby raise a pure question of law proscribed in an ordinary appeal. This
premise was effectively the legal principle articulated in the case of Joaquin v.
Navarro,[28] cited by the CA in its April 8, 2005 resolution.Respondent FGU
Insurance thus contends that the proper remedy to assail the dismissal of Civil
Case No. 02-488 was an appeal filed under Rule 45 of the Rules of Court.

The reliance on Joaquin is misplaced as it is based on the conclusion the

appellate court made in its April 8, 2005 resolution i.e., that the pleading of
undisputed facts is equivalent to a prohibited appeal. The reliance is inattentive
to both the averments of the subject appeal and to the text of the cited
case. The operative legal principle in Joaquin is this: [W]here a case is
submitted upon an agreement of facts, or where all the facts are stated in the
judgment and the issue is the correctness of the conclusions drawn therefrom,
the question is one of law which [is properly subject to the review of this
Court.][29] In this case, as already pointed out above, the facts supposedly
supporting the trial courts conclusion of non prosequitur were not stated in the
judgment. This defeats the application of Joaquin.
At any rate, we believe that the filing of the appeal in CA-G.R. CV No.
83096 under Rule 41 of the Rules of Court was proper as it necessarily involved
questions of fact.
An authority material to this case is the case of Olave v. Mistas.[30] Directly
addressed in Olave was the CAs jurisdiction over an ordinary appeal supported
by undisputed facts and seeking the review of a prejudicial order of dismissal. In
this case, a complaint was filed before the RTC in Lipa City to nullify an
instrument titled Affidavit of Adjudication By The Heirs of the Estate of
Deceased Persons With Sale. The RTC dismissed the complaint, with prejudice,
after the plaintiffs had moved to set the case for pre-trial only after more than
three (3) months had lapsed from the service and filing of the last pleading in
the case. The plaintiffs thereafter went to the CA on a Rule 41 petition,
contending, among others, that the trial court had erred and abused its
discretion. As in the present case, the defendants moved to dismiss the appeal
on the ground that the issues therein were legal; they pointed out that the
circumstances on record were admitted.[31] They argued that the proper remedy
was a petition for review oncertiorari under Rule 45 of the Rules of Court.
The CA denied the motion and entertained the appeal. It rendered a
decision reinstating the complaint on the ground that there was no evidence on
record that the plaintiffs had deliberately failed to prosecute their complaint.
When the case was elevated to this court on a Rule 45 petition, we
squarely addressed the propriety of the plaintiffs appeal. Though mindful that
the circumstances pleaded in the appeal were all admitted, we categorically held
in Olave that the appeal was correctly filed. We observed that despite
undisputed records, the CA, in its review, still had to respond to factual questions
such as the length of time between the plaintiffs receipt of the last pleading
filed up to the time they moved to set the case for pre-trial, whether there had
been any manifest intention on the plaintiffs part not to comply with the Rules
of Court, and whether the plaintiffs counsel was negligent.
Significantly, in Olave, we agreed with the plaintiffs that among the critical
factual questions was whether, based on the records, there had been factual
basis for the dismissal of the subject complaint. This same question is
particularly significant in the present case given that the order appealed from in
CA-G.R. CV No. 83096 does not even indicate the factual basis for the dismissal

of Civil Case No. 02-488. Due to the absence of any stated factual basis, and
despite the admissions of the parties, the CA, in CA-G.R. CV No. 83096, still had
to delve into the records to check whether facts to justify the prejudicial
dismissal even exist. Since the dismissal of Civil Case No. 02-488 appears to
have been rendered motu proprio (as the December 16, 2003 dismissal order
does not state if it was issued upon the respondents or the trial courts motion),
the facts to be determined by the CA should include the grounds specified under
Section 3, Rule 17 of the Rules of Court. A court could only issue a motu
propriodismissal pursuant to the grounds mentioned in this rule and for lack of
jurisdiction over the subject matter. [32] These grounds are matters of facts. Thus,
given that the dismissal order does not disclose its factual basis, we are thus
persuaded that the petitioner had properly filed its appeal from the dismissal
order under Rule 41 of the Rules of Court.
The Dismissal of Civil Case No. 02-488 is
not Supported by the Facts of the Case
We also find that the dismissal of Civil Case No. 02-488 is not warranted.
Based on available records and on the averments of the parties, the following
events were chronologically proximate to the dismissal of Civil Case No. 02-488:
(a) on March 24, 2003, the court admitted FGU Insurances third-party complaint;
(b) the trial court cancelled the June 20, 2003 hearing upon FGU Insurances
motion; and (c) on June 16, 2003, Baetiong filed his Answer to the thirdparty complaint but did not serve it upon the petitioner.
None of these events square with the grounds specified by Section 3, Rule
17 of the Rules of Court for the motu propriodismissal of a case for failure to
prosecute. These grounds are as follows:
(a)

Failure of the plaintiff, without justifiable reasons, to appear on

the date of the presentation of his evidence in chief;

(b)

Failure of the plaintiff to prosecute his action for an unreasonable

length of time;

(c)

Failure of the plaintiff to comply with the Rules of Court; or

(d)

Failure of the plaintiff to obey any order of the court.

In our view, the developments in the present case do not satisfy the
stringent standards set in law and jurisprudence for a non prosequitur.[33] The
fundamental test for non prosequitur is whether, under the circumstances, the
plaintiff is chargeable with want of due diligence in failing to proceed
with reasonable promptitude.[34] There must be unwillingness on the part of the
plaintiff to prosecute.[35]
In this case, the parties own narrations of facts demonstrate the
petitioners willingness to prosecute its complaint. Indeed, neither respondents
FGU Insurance nor Baetiong was able to point to any specific act committed by
the petitioner to justify the dismissal of their case.

While it is discretionary on the trial court to dismiss cases, dismissals of

actions should be made with care. The repressive or restraining effect of the rule
amounting to adjudication upon the merits may cut short a case even before it is
fully litigated; a ruling of dismissal may forever bar a litigant from pursuing
judicial relief under the same cause of action. Hence, sound discretion demands
vigilance in duly recognizing the circumstances surrounding the case to the end
that technicality shall not prevail over substantial justice. [36]
This court is thus of the opinion that the dismissal of Civil Case No. 02-488
is not warranted. Neither facts, law or jurisprudence supports the RTCs finding of
failure to prosecute on the part of the petitioner.
WHEREFORE,
premises
considered,
the
instant
petition
is GRANTED. The resolutions of the Court of Appeals dated April 8, 2005 and
October 4, 2005 are REVERSED and SET ASIDE. The order dated December
16, 2003 of the Regional Trial Court, Branch 61, Makati City, in Civil Case No. 02488 is declared NULL and VOID, and the petitioners complaint therein is
ordered REINSTATED for further proceedings. No costs.
SO ORDERED.

ARTURO D. BRION
Associate Justice

Quintos v. Nicolas, G.R. No. 210252, June 16, 2014

G.R. No. 210252

June 16, 2014

VILMA QUINTOS, represented by her Attorney-in-Fact FIDEL I. QUINTOS,

JR.; FLORENCIA I. DANCEL, represented by her Attorney-in-Fact FLOVY I.
DANCEL;
and
CATALINO
L.
IBARRA, Petitioners,
vs.
PELAGIA I. NICOLAS, NOLI L. IBARRA, SANTIAGO L. IBARRA, PEDRO L.
IBARRA, DAVID L. IBARRA, GILBERTO L. IBARRA, HEIRS OF AUGUSTO L.
IBARRA, namely CONCHITA R., IBARRA, APOLONIO IBARRA, and NARCISO
IBARRA, and the spouses RECTO CANDELARIO and ROSEMARIE
CANDELARIO,Respondents.
DECISION
VELASCO, JR., J.:
The Case

Before the Court is a Petition for Review on Certiorari filed under Rule 45 challenging
the Decision1 and Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No. 98919
dated July 8, 2013 and November 22, 2013, respectively. The challenged rulings
affirmed the May 7, 2012 Decision3 of the Regional Trial Court (RTC), Branch 68 in
Camiling, Tarlac that petitioners and respondents are co-owners of the subject
property, which should be partitioned as per the subdivision plan submitted by
respondent spouses Recto and Rosemarie Candelario.
The Facts
As culled from the records, the facts of the case are as follows:
Petitioners Vilma Quintos, Florencia Dancel, and Catalino Ibarra, and respondents
Pelagia Nicolas, Noli Ibarra, Santiago Ibarra, Pedro Ibarra, David Ibarra, Gilberto
Ibarra, and the late Augusto Ibarra are siblings. Their parents, Bienvenido and
Escolastica Ibarra, were the owners of the subject property, a 281 sqm. parcel of
land situated along Quezon Ave., Poblacion C, Camiling, Tarlac, covered by Transfer
Certificate Title (TCT) No. 318717.
By 1999, both Bienvenido and Escolastica had already passed away, leaving to their
ten (10) children ownership over the subject property. Subsequently, sometime in
2002, respondent siblings brought an action for partition against petitioners. The
case was docketed as Civil Case No. 02-52 and was raffled to the RTC, Branch 68,
Camiling, Tarlac. However, in an Order 4 dated March 22, 2004, the trial court
dismissed the case disposing as follows:
For failure of the parties, as well as their counsels, to appear despite due notice, this
case is hereby DISMISSED.
SO ORDERED.
As neither set of parties appealed, the ruling of the trial court became final, as
evidenced by a Certificate of Finality5 it eventually issued on August 22, 2008.
Having failed to secure a favorable decision for partition, respondent siblings
instead resorted to executing a Deed of Adjudication 6 on September 21, 2004 to
transfer the property in favor of the ten (10) siblings. As a result, TCT No. 318717
was canceled and in lieu thereof, TCT No. 390484 was issued in its place by the
Registry of Deeds of Tarlac in the names of the ten (10) heirs of the Ibarra spouses.
Subsequently, respondent siblings sold their 7/10 undivided share over the property
in favor of their co-respondents, the spouses Recto and Rosemarie Candelario. By
virtue of a Deed of Absolute Sale 7 dated April 17, 2007 executed in favor of the
spouses Candelario and an Agreement of Subdivision 8 purportedly executed by
them and petitioners, TCT No. 390484 was partially canceled and TCT No. 434304
was issued in the name of the Candelarios, covering the 7/10portion.
On June 1, 2009, petitioners filed a complaint for Quieting of Title and Damages
against respondents wherein they alleged that during their parents lifetime, the

couple distributed their real and personal properties in favor of their ten (10)
children. Upon distribution, petitioners alleged that they received the subject
property and the house constructed thereon as their share. They likewise averred
that they have been in adverse, open, continuous, and uninterrupted possession of
the property for over four (4) decades and are, thus, entitled to equitable title
thereto. They also deny any participation in the execution of the aforementioned
Deed of Adjudication dated September 21, 2004 and the Agreement of Subdivision.
Respondents countered that petitioners cause of action was already barred by
estoppel when sometime in 2006, one of petitioners offered to buy the 7/10
undivided share of the respondent siblings. They point out that this is an admission
on the part of petitioners that the property is not entirely theirs. In addition, they
claimed that Bienvenido and Escolastica Ibarra mortgaged the property but because
of financial constraints, respondent spouses Candelario had to redeem the property
in their behalf. Not having been repaid by Bienvenido and Escolastica, the
Candelarios accepted from their co-respondents their share in the subject property
as payment. Lastly, respondents sought, by way of counterclaim, the partition of the
property.
Docketed as Civil Case No. 09-15 of the RTC of Camiling, Tarlac, the quieting of title
case was eventually raffled to Branch 68 of the court, the same trial court that
dismissed Civil Case No. 02-52. During pre-trial, respondents, or defendants a quo,
admitted having filed an action for partition, that petitioners did not participate in
the Deed of Adjudication that served as the basis for the issuance of TCT No.
390484, and that the Agreement of Subdivision that led to the issuance of TCT No.
434304 in favor of respondent spouses Candelario was falsified. 9 Despite the
admissions of respondents, however, the RTC, through its May 27, 2012 Decision,
dismissed petitioners complaint. The court did not find merit in petitioners
asseverations that they have acquired title over the property through acquisitive
prescription and noted that there was no document evidencing that their parents
bequeathed to them the subject property. Finding that respondent siblings were
entitled to their respective shares in the property as descendants of Bienvenido and
Escolastica Ibarra and as co-heirs of petitioners, the subsequent transfer of their
interest in favor of respondent spouses Candelario was then upheld by the trial
court. The dispositive portion of the Decision reads:
WHEREFORE, premises considered, the above-entitled case is hereby Dismissed.
Also, defendants-spouses Rosemarie Candelario and Recto Candelario are hereby
declared as the absolute owners of the 7/10 portion of the subject lot.
Likewise, the court hereby orders the partition of the subject lots between the
herein plaintiffs and the defendants-spouses Candelarios.
SO ORDERED.
Aggrieved, petitioners appealed the trial courts Decision to the CA, pleading the
same allegations they averred in their underlying complaint for quieting of title.
However, they added that the partition should no longer be allowed since it is
already barred by res judicata, respondent siblings having already filed a case for

partition that was dismissed with finality, as admitted by respondents themselves

during pre-trial.
On July 8, 2013, the CA issued the assailed Decision denying the appeal. The fallo
reads: WHEREFORE, premises considered, the Decision dated May 7, 2012 of the
Regional Trial Court of Camiling, Tarlac, Branch 68, in Civil Case No. 09-15, is hereby
AFFIRMED.
SO ORDERED.
Similar to the trial court, the court a quo found no evidence on record to support
petitioners claim that the subject property was specifically bequeathed by
Bienvenido and Escolastica Ibarra in their favor as their share in their parents
estate. It also did not consider petitioners possession of the property as one that is
in the concept of an owner. Ultimately, the appellate court upheld the finding that
petitioners and respondent spouses Candelario co-own the property, 30-70 in favor
of the respondent spouses.
As regards the issue of partition, the CA added:
x x x Since it was conceded that the subject lot is now co-owned by the plaintiffsappellants, (with 3/10 undivided interest) and defendants-appellees Spouses
Candelarios (with 7/10 undivided interest) and considering that plaintiffs-appellants
had already constructed a 3-storey building at the back portion of the property, then
partition, in accordance with the subdivision plan (records, p. 378) undertaken by
defendants-appellants [sic] spouses, is in order. 10
On November 22, 2013, petitioners Motion for Reconsideration was denied. Hence,
the instant petition.
Issues
In the present petition, the following errors were raised:
I. THE COURT OF APPEALS MANIFESTLY OVERLOOKED RELEVANT AND
UNDISPUTED FACTS WHICH, IF PROPERLY CONSIDERED, WOULD JUSTIFY
PETITIONERS CLAIM OF EQUITABLE TITLE.
II. THE COURT OF APPEALS ERRED WHEN IT AFFIRMED THE ORDER OF
PARTITION DESPITE THE FACT THAT THE COUNTERCLAIM FOR PARTITION,
BASED ON THE DEED OF ABSOLUTE SALE EXECUTED IN 2007, IS BARRED BY
LACHES.
III. THE COURT OF APPEALS RENDERED A SUBSTANTIALLY FLAWED JUDGMENT
WHEN IT NEGLECTED TO RULE ON PETITIONERS CONTENTION THAT THE
COUNTERCLAIM FOR PARTITION IS ALSO BARRED BY PRIOR JUDGMENT,
DESPITE ITS HAVING BEEN SPECIFICALLY ASSIGNED AS ERROR AND PROPERLY
ARGUED IN THEIR BRIEF, AND WHICH, IF PROPERLY CONSIDERED, WOULD
JUSTIFY THE DISMISSAL OF THE COUNTERCLAIM.

IV. THE COURT OF APPEALS ERRED WHEN IT ORDERED PARTITION IN

ACCORDANCE WITH THE SUBDIVISION PLAN MENTIONED IN ITS DECISION, IN
CONTRAVENTION OF THE PROCEDURE ESTABLISHED IN RULE 69 OF THE
RULES OF CIVIL PROCEDURE.11
To simplify, the pertinent issues in this case are as follows:
1. Whether or not the petitioners were able to prove ownership over the
property;
2. Whether or not the respondents counterclaim for partition is already
barred by laches or res judicata; and
3. Whether or not the CA was correct in approving the subdivision agreement
as basis for the partition of the property.
The Courts Ruling
The petition is meritorious in part.
Petitioners were not able to prove equitable title or ownership over the property
Quieting of title is a common law remedy for the removal of any cloud, doubt, or
uncertainty affecting title to real property. 12 For an action to quiet title to prosper,
two indispensable requisites must concur, namely: (1) the plaintiff or complainant
has a legal or equitable title to or interest in the real property subject of the action;
and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on
the title must be shown to be in fact invalid or inoperative despite its prima facie
appearance of validity or efficacy. 13 In the case at bar, the CA correctly observed
that petitioners cause of action must necessarily fail mainly in view of the absence
of the first requisite.
At the outset, it must be emphasized that the determination of whether or not
petitioners sufficiently proved their claim of ownership or equitable title is
substantially a factual issue that is generally improper for Us to delve into. Section
1, Rule 45 of the Rules of Court explicitly states that the petition for review on
certiorari "shall raise only questions of law, which must be distinctly set forth." In
appeals by certiorari, therefore, only questions of law may be raised, because this
Court is not a trier of facts and does not normally undertake the re-examination of
the evidence presented by the contending parties during the trial. 14 Although there
are exceptions15 to this general rule as eloquently enunciated in jurisprudence, none
of the circumstances calling for their application obtains in the case at bar. Thus, We
are constrained to respect and uphold the findings of fact arrived at by both the RTC
and the CA.
In any event, a perusal of the records would readily show that petitioners, as aptly
observed by the courts below, indeed, failed to substantiate their claim. Their
alleged open, continuous, exclusive, and uninterrupted possession of the subject
property is belied by the fact that respondent siblings, in 2005, entered into a

Contract of Lease with the Avico Lending Investor Co. over the subject lot without
any objection from the petitioners.16 Petitioners inability to offer evidence tending
to prove that Bienvenido and Escolastica Ibarra transferred the ownership over the
property in favor of petitioners is likewise fatal to the latters claim. On the contrary,
on May 28, 1998, Escolastica Ibarra executed a Deed of Sale covering half of the
subject property in favor of all her 10 children, not in favor of petitioners alone. 17
The cardinal rule is that bare allegation of title does not suffice. The burden of proof
is on the plaintiff to establish his or her case by preponderance of
evidence.18 Regrettably, petitioners, as such plaintiff, in this case failed to discharge
the said burden imposed upon them in proving legal or equitable title over the
parcel of land in issue. As such, there is no reason to disturb the finding of the RTC
that all 10 siblings inherited the subject property from Bienvenido and Escolastica
Ibarra, and after the respondent siblings sold their aliquot share to the spouses
Candelario, petitioners and respondent spouses became co-owners of the same.
The counterclaim for partition is not barred by prior judgment
This brings us to the issue of partition as raised by respondents in their
counterclaim. In their answer to the counterclaim, petitioners countered that the
action for partition has already been barred by res judicata.
The doctrine of res judicata provides that the judgment in a first case is final as to
the claim or demand in controversy, between the parties and those privy with them,
not only as to every matter which was offered and received to sustain or defeat the
claim or demand, but as to any other admissible matter which must have been
offered for that purpose and all matters that could have been adjudged in that
case.19 It precludes parties from relitigating issues actually litigated and determined
by a prior and final judgment.20 As held in Yusingco v. Ong Hing Lian:21
It is a rule pervading every well-regulated system of jurisprudence, and is put upon
two grounds embodied in various maxims of the common law; the one, public policy
and necessity, which makes it to the interest of the state that there should be an
end to litigation republicae ut sit finis litium; the other, the hardship on the
individual that he should be vexed twice for the same cause nemo debet bis
vexari et eadem causa. A contrary doctrine would subject the public peace and
quiet to the will and neglect of individuals and prefer the gratitude identification of a
litigious disposition on the part of suitors to the preservation of the public tranquility
and happiness.22
The rationale for this principle is that a party should not be vexed twice concerning
the same cause. Indeed, res judicata is a fundamental concept in the organization of
every jural society, for not only does it ward off endless litigation, it ensures the
stability of judgment and guards against inconsistent decisions on the same set of
facts.23
There is res judicata when the following requisites are present: (1) the formal
judgment or order must be final; (2) it must be a judgment or order on the merits,
that is, it was rendered after a consideration of the evidence or stipulations

submitted by the parties at the trial of the case; (3) it must have been rendered by
a court having jurisdiction over the subject matter and the parties; and (4) there
must be, between the first and second actions, identity of parties, of subject matter
and of cause of action.24
In the case at bar, respondent siblings admit that they filed an action for partition
docketed as Civil Case No. 02-52, which the RTC dismissed through an Order dated
March 22, 2004 for the failure of the parties to attend the scheduled hearings.
Respondents likewise admitted that since they no longer appealed the dismissal,
the ruling attained finality. Moreover, it cannot be disputed that the subject property
in Civil Case No. 02-52 and in the present controversy are one and the same, and
that in both cases, respondents raise the same action for partition. And lastly,
although respondent spouses Candelario were not party-litigants in the earlier case
for partition, there is identity of parties not only when the parties in the case are the
same, but also between those in privity with them, such as between their
successors-in-interest.25
With all the other elements present, what is left to be determined now is whether or
not the dismissal of Civil case No. 02-52 operated as a dismissal on the merits that
would complete the requirements of res judicata.
In advancing their claim, petitioners cite Rule 17, Sec. 3 of the Rules of Court, to wit:
Section 3. Dismissal due to fault of plaintiff. If, for no justifiable cause, the
plaintiff fails to appear on the date of the presentation of his evidence in chief on
the complaint, or to prosecute his action for an unreasonable length of time, or to
comply with these Rules or any order of the court, the complaint may be dismissed
upon motion of the defendant or upon the courts own motion, without prejudice to
the right of the defendant to prosecute his counterclaim in the same or in a
separate action. This dismissal shall have the effect of an adjudication upon the
merits, unless otherwise declared by the court.
The afore-quoted provision enumerates the instances when a complaint may be
dismissed due to the plaintiff's fault: (1) if he fails to appear on the date for the
presentation of his evidence in chief on the complaint; (2) if he fails to prosecute his
action for an unreasonable length of time; or (3) if he fails to comply with the Rules
or any order of the court. The dismissal of a case for failure to prosecute has the
effect of adjudication on the merits, and is necessarily understood to be with
prejudice to the filing of another action, unless otherwise provided in the order of
dismissal. Stated differently, the general rule is that dismissal of a case for failure to
prosecute is to be regarded as an adjudication on the merits and with prejudice to
the filing of another action, and the only exception is when the order of dismissal
expressly contains a qualification that the dismissal is without prejudice. 26 In the
case at bar, petitioners claim that the Order does not in any language say that the
dismissal is without prejudice and, thus, the requirement that the dismissal be on
the merits is present.
Truly, We have had the occasion to rule that dismissal with prejudice under the
above-cited rule amply satisfies one of the elements of res judicata. 27 It is, thus,
understandable why petitioners would allege res judicata to bolster their claim.

However, dismissal with prejudice under Rule 17, Sec. 3 of the Rules of Court cannot
defeat the right of a co-owner to ask for partition at any time, provided that there is
no actual adjudication of ownership of shares yet. Pertinent hereto is Article 494 of
the Civil Code, which reads:
Article 494. No co-owner shall be obliged to remain in the co-ownership. Each coowner may demand at any time the partition of the thing owned in common, insofar
as his share is concerned.
Nevertheless, an agreement to keep the thing undivided for a certain period of time,
not exceeding ten years, shall be valid. This term may be extended by a new
agreement.
A donor or testator may prohibit partition for a period which shall not exceed twenty
years. Neither shall there be any partition when it is prohibited by law. No
prescription shall run in favor of a co-owner or co-heir against his co-owners or coheirs so long as he expressly or impliedly recognizes the co-ownership. (emphasis
supplied)
From the above-quoted provision, it can be gleaned that the law generally does not
favor the retention of co-ownership as a property relation, and is interested instead
in ascertaining the co-owners specific shares so as to prevent the allocation of
portions to remain perpetually in limbo. Thus, the law provides that each co-owner
may demand at any time the partition of the thing owned in common.
Between dismissal with prejudice under Rule 17, Sec. 3 and the right granted to coowners under Art. 494 of the Civil Code, the latter must prevail. To construe
otherwise would diminish the substantive right of a co-owner through the
promulgation of procedural rules. Such a construction is not sanctioned by the
principle, which is too well settled to require citation, that a substantive law cannot
be amended by a procedural rule. 28 This further finds support in Art. 496 of the New
Civil Code, viz:
Article 496.Partition may be made by agreement between the parties or by judicial
proceedings.1wphi1 Partition shall be governed by the Rules of Court insofar as
they are consistent with this Code.
Thus, for the Rules to be consistent with statutory provisions, We hold that Art. 494,
as cited, is an exception to Rule 17, Sec. 3 of the Rules of Court to the effect that
even if the order of dismissal for failure to prosecute is silent on whether or not it is
with prejudice, it shall be deemed to be without prejudice.
This is not to say, however, that the action for partition will never be barred by res
judicata. There can still be res judicata in partition cases concerning the same
parties and the same subject matter once the respective shares of the co-owners
have been determined with finality by a competent court with jurisdiction or if the
court determines that partition is improper for co-ownership does not or no longer
exists.

So it was that in Rizal v. Naredo,29 We ruled in the following wise:

Article 484 of the New Civil Code provides that there is co-ownership whenever the
ownership of an undivided thing or right belongs to different persons. Thus, on the
one hand, a co-owner of an undivided parcel of land is an owner of the whole, and
over the whole he exercises the right of dominion, but he is at the same time the
owner of a portion which is truly abstract. On the other hand, there is no coownership when the different portions owned by different people are already
concretely determined and separately identifiable, even if not yet technically
described.
Pursuant to Article 494 of the Civil Code, no co-owner is obliged to remain in the coownership, and his proper remedy is an action for partition under Rule 69 of the
Rules of Court, which he may bring at anytime in so far as his share is concerned.
Article 1079 of the Civil Code defines partition as the separation, division and
assignment of a thing held in common among those to whom it may belong. It has
been held that the fact that the agreement of partition lacks the technical
description of the parties respective portions or that the subject property was then
still embraced by the same certificate of title could not legally prevent a partition,
where the different portions allotted to each were determined and became
separately identifiable.
The partition of Lot No. 252 was the result of the approved Compromise Agreement
in Civil Case No. 36-C, which was immediately final and executory. Absent any
showing that said Compromise Agreement was vitiated by fraud, mistake or duress,
the court cannot set aside a judgment based on compromise. It is axiomatic that a
compromise agreement once approved by the court settles the rights of the parties
and has the force of res judicata. It cannot be disturbed except on the ground of
vice of consent or forgery.
Of equal significance is the fact that the compromise judgment in Civil Case No. 36C settled as well the question of which specific portions of Lot No. 252 accrued to
the parties separately as their proportionate shares therein. Through their
subdivision survey plan, marked as Annex "A" of the Compromise Agreement and
made an integral part thereof, the parties segregated and separately assigned to
themselves distinct portions of Lot No. 252. The partition was immediately
executory, having been accomplished and completed on December 1, 1971 when
judgment was rendered approving the same. The CA was correct when it stated that
no co-ownership exist when the different portions owned by different people are
already concretely determined and separately identifiable, even if not yet
technically described. (emphasis supplied)
In the quoted case, We have held that res judicata applied because after the parties
executed a compromise agreement that was duly approved by the court, the
different portions of the owners have already been ascertained. Thus, there was no
longer a co-ownership and there was nothing left to partition. This is in contrast with
the case at bar wherein the co-ownership, as determined by the trial court, is still
subsisting 30-70 in favor of respondent spouses Candelario. Consequently, there is
no legal bar preventing herein respondents from praying for the partition of the
property through counterclaim.

The counterclaim for partition is not barred by laches

We now proceed to petitioners second line of attack. According to petitioners, the
claim for partition is already barred by laches since by 1999, both Bienvenido and
Escolastica Ibarra had already died and yet the respondent siblings only belatedly
filed the action for partition, Civil Case No. 02-52, in 2002. And since laches has
allegedly already set in against respondent siblings, so too should respondent
spouses Candelario be barred from claiming the same for they could not have
acquired a better right than their predecessors-in-interest.
The argument fails to persuade.
Laches is the failure or neglect, for an unreasonable and unexplained length of time,
to do that whichby the exercise of due diligencecould or should have been done
earlier. It is the negligence or omission to assert a right within a reasonable period,
warranting the presumption that the party entitled to assert it has either abandoned
or declined to assert it.30 The principle is a creation of equity which, as such, is
applied not really to penalize neglect or sleeping upon ones right, but rather to
avoid recognizing a right when to do so would result in a clearly inequitable
situation. As an equitable defense, laches does not concern itself with the character
of the petitioners title, but only with whether or not by reason of the respondents
long inaction or inexcusable neglect, they should be barred from asserting this claim
at all, because to allow them to do so would be inequitable and unjust to
petitioners.31
As correctly appreciated by the lower courts, respondents cannot be said to have
neglected to assert their right over the subject property. They cannot be considered
to have abandoned their right given that they filed an action for partition sometime
in 2002, even though it was later dismissed. Furthermore, the fact that respondent
siblings entered into a Contract of Lease with Avico Lending Investor Co. over the
subject property is evidence that they are exercising rights of ownership over the
same.
The CA erred in approving the Agreement for Subdivision
There is merit, however, in petitioners contention that the CA erred in approving
the proposal for partition submitted by respondent spouses. Art. 496, as earlier
cited, provides that partition shall either be by agreement of the parties or in
accordance with the Rules of Court. In this case, the Agreement of Subdivision
allegedly executed by respondent spouses Candelario and petitioners cannot serve
as basis for partition, for, as stated in the pre-trial order, herein respondents
admitted that the agreement was a falsity and that petitioners never took part in
preparing the same. The "agreement" was crafted without any consultation
whatsoever or any attempt to arrive at mutually acceptable terms with petitioners.
It, therefore, lacked the essential requisite of consent. Thus, to approve the
agreement in spite of this fact would be tantamount to allowing respondent spouses
to divide unilaterally the property among the co-owners based on their own whims
and caprices. Such a result could not be countenanced.

To rectify this with dispatch, the case must be remanded to the court of origin,
which shall proceed to partition the property in accordance with the procedure
outlined in Rule 69 of the Rules of Court.
WHEREFORE, premises considered, the petition is hereby PARTLY GRANTED. The
assailed Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 98919
dated July 8, 2013 and November 22, 2013, respectively, are hereby AFFIRMED with
MODIFICATION. The case is hereby REMANDED to the RTC, Branch 68 in Camiling,
Tarlac for purposes of partitioning the subject property in accordance with Rule 69 of
the Rules of Court.
SO ORDERED.
PRESBITERO J. VELASCO, JR.
Associate Justice

Sec. 4. Dismissal of counterclaim, cross-claim, or third-party

complainant

RULE 18- PRE-TRIAL

Sec. 1. When conducted
See: A.M. No. 03-1-09-SC
Sarmiento v. Juan, G.R. No. 56605, January 28, 1983
G.R. No. L-56605 January 28, 1983

ANDRES
C.
SARMIENTO, petitioner,
vs.
THE HON. CELESTINO C. JUAN, PRESIDING JUDGE, BRANCH X, COURT OF
FIRST INSTANCE OF MANILA and BELFAST SURETY & INSURANCE CO.,
INC., respondents.
Andres C. Sarmiento in his own behalf.
Federico T. Castillo, Jr., for respondents.

VASQUEZ, J.:
In this petition for review on certiorari, petitioner Andres C. Sarmiento seeks to set
aside a decision rendered by the respondent Court of Appeals in CA G.R. No. SP10649 which denied due course to a petition for certiorari filed therein by the herein
petitioner to annul two orders issued by the Court of First Instance of Manila in Civil
Case No. 126113. The instant petition was given due course in the Resolution of
September 14, 1981 and the parties ordered to submit their respective memoranda.
The petitioner flied a memorandum in his behalf but the private respondent merely
adopted its comment on the petition as its memorandum.
Civil Case No. 126113 was an action filed by private respondent Belfast Surety &
Insurance Co., Inc. against herein petitioner and his father Benjamin R. Sarmiento,
Sr. for indemnification under an Indemnity Agreement executed by them in
connection with a bail bond. The case was assigned to Branch X of the Court of First
Instance of Manila presided over by respondent Judge Celestino C. Juan who had
since retired.
After the petitioner filed an answer with compulsory counterclaim, private
respondent filed a motion to dismiss the case against defendant Benjamin R.
Sarmiento, Sr., and to schedule the case for pre-trial. This motion was granted by
Judge Juan and the pre-trial was set on February 5, 1980, at 8:30 a.m.
At the said pre-trial, nobody appeared except Atty. Federico T. Castillo, Jr., counsel
for the private respondent. However, the petitioner sent to the Court on the same
date an urgent motion for postponement stating therein that when he was
preparing to go to the Court, he felt severe stomach pain followed by loose bowel
movements, and he accordingly prayed that the pre-trial be postponed to another
date.
The urgent motion for postponement filed by the petitioner was denied in the order
of Judge Juan dated February 5, 1980. On motion of Atty. Castillo, the petitioner was
"declared non-suited" (should have been "as in default") and the private respondent
allowed to present its evidence ex-parte on February 26, 1980, at 8:30 a.m.
On February 25, 1980, the petitioner filed a motion for reconsideration of the order
of February 5, 1980. In his order of February 26, 1980, Judge Juan denied the said
motion for reconsideration "for lack of merit," and reiterated the permission for the
private respondent to present its evidence ex-parte.
It does not appear whether the ex-parte presentation of evidence by the private
respondent had already been accomplished, nor that a derision thereon had been
rendered. That such proceedings had not taken place could, however, be gathered
from the fact that on March 19, 1980, the petitioner filed a petition for certiorari
with the Supreme Court docketed as G.R. No. 53399 to annul the aforementioned
orders of Judge Juan dated February 5, 1980 and February 26, 1980. The said
petition was remanded to the Court of Appeals pursuant to the Resolution of the
First Division of this Court dated March 28, 1980. It was docketed in the Court of
Appeals as CA-G.R. No. SP-14649. In a decision promulgated on August 29, 1980 by

the Special First Division of the Court of Appeals, the petition was denied due course
and ordered dismissed for lack of meet. Said decision is the subject of the present
appeal by certiorari.
The petitioner assails the refusal of the respondent Court of Appeals to disturb the
questioned orders of Judge Juan which petitioner claims to have been issued in
excess of jurisdiction and with grave abuse of discretion. He contends that (a) the
pre-trial was premature inasmuch as, there having been no answer filed by the
private respondent to the petitioner's counterclaim alleged in his answer, the "last
pleading" has not yet been filed so as to authorize a pre-trial to be conducted in
accordance with Section 1, Rule 20, of the Rules of Court; (b) there being no valid
pre-trial, the trial court had no authority to declare him as "non-suited", or more
correctly, as in default, for his failure to appear at the said pre-trial; (b) assuming
that there was a valid pre-trial, the trial court could not legally declare the petitioner
as in default due to his failure to be present threat inasmuch as the private
respondent itself made no valid appearance at said pre-trial because only its
counsel appeared without any special authority to represent his client at the said
pre-trial; and (c) it was a grave abuse of discretion on the part of the trial court to
deny the petitioner's urgent motion for postponement despite the merit of the
ground alleged therein, and the same thing is true with the denial of his motion to
set aside or lift the order declaring him in default.
We see no merit in the petitioner's contention that the pre-trial was prematurely
scheduled on the supposed ground that the last pleading had not been filed. In the
petition for certiorari docketed as G.R. No. 53399, the petitioner has alleged that he
filed his answer to the complaint containing a compulsory counterclaim on
December 21, 1979 which was served on the counsel for the private respondent on
the same date. (Rollo, p. 19.) The pre-trial was scheduled to be held on February 5,
1980 or a month and a half after the petitioner had flied his answer to the complaint
in Civil Case No. 126113 and private respondent served with a copy of the same.
While it may be true that the private respondent had not filed any answer to the
counterclaim contained in the petitioner's answer, such circumstance does not
prevent the trial court from conducting the pre-trial. As was observed by the
respondent Court of Appeals in its questioned decision: "If no answer (to the
counterclaim) is timely filed the pre-trial order may issue. Otherwise, an
unscrupulous party litigant can hold court processes by the simple expedient of
failing to answer."
The requirement that the pre-trial shall be scheduled "after the last pleading has
been filed" ( Section 1, Rule 20, Rules of Court) is intended to fully apprise the court
and the parties of all the issues in the case before the pre-trial is conducted. It must
be remembered that the issues may only be ascertained from the allegations
contained in the pleadings filed by the parties. The last permissible pleading that a
party may file would be the reply to the answer to the last pleading of claim that
had been filed in the case, which may either be the complaint, a cross-claim, a
counterclaim or a third party complaint, etc. (Secs. 2 and 11, Rule 6, Rules of Court.)
Any pleading asserting a claim must be answered, and the failure to do so by the
party against whom the claim is asserted renders him liable to be declared in
default in respect of such claim. (See. 10, Ibid) There are, however, recognized
exceptions to the rule, making the failure to answer a pleading of claim as a ground

for a default declaration, such as the failure to answer a complaint in intervention

(Sec. 2(c) Rule 12, Rules of Court), or a compulsory counterclaim so intimately
related to the complaint such that to answer to same would merely require a
repetition of the allegations contained in the complaint (Zamboanga Colleges, Inc.
vs. Court of Appeals, 1 SCRA 870; Ballecer vs. Bernardo, 18 SCRA 291; Agaton vs.
Perez, 18 SCRA 1165.)
In the case presently considered, the nature of the counterclaim in the petitioner's
answer has not been made clear, except to categorize it as a compulsory
counterclaim. Such being the case, it is likely to be one where the answering thereof
is not necessary, and the failure to do so would not be a ground to be declared in
default. In any event, the private respondent's failure to answer the petitioner's
counterclaim after the period to file the answer had lapsed is no obstacle to holding
a pre-trial.1wph1.t The requirement that the last pleading must have been filed
before a pre-trial may be scheduled should more appropriately be construed to
mean not only if the last pleading had been actually filed, but also if the period for
filing the same had expired.
We, however, find merit in the petitioner's two other contentions. The denial by
Judge Juan of the petitioner's motion to postpone the pre-trial scheduled on
February 5, 1980 may have appeared valid at the outset, considering that it was
filed at the last minute and was not accompanied by a medical certificate although
the ground alleged was illness on the part of the petitioner. Nonetheless, a different
appraisal of the petitioner's plea should have been made after the petitioner filed a
motion for reconsideration which was made under oath. Due regard should have
been given to the repeated pronouncements by this Court against default
judgments and proceedings that lay more emphasis on procedural niceties to the
sacrifice of substantial justice. After all, the ex-parte presentation of evidence had
not yet been conducted nor had a decision been rendered in the case. It appeared
to be a simple matter of giving the petitioner a chance to have his day in court in
order to defend himself against the claim filed by the private respondent. As it
turned out, the procedure adopted by the trial court proved unprofitable and
disadvantageous to all parties concerned, including the courts. The case would have
been disposed of in a much easier and more expeditious manner if the trial court
had heeded the petitioner's simple plea for a chance to be heard. Thereby, all the
proceedings taken subsequent to the disputed orders of the trial court could have
been avoided, and the Court of Appeals and the Supreme Court spared from the
trouble of resolving the petitions filed before them.
The petitioner also has valid reason to complain about the apparent
overanxiousness of the trial court to finish the case in summary fashion. The
petitioner had manifested to the Court that his inability to appear before the pretrial was due to a sudden ailment that befell him while he was preparing to go to
Court. While it is true that the motion for postponement was not accompanied by a
medical certificate, it must be considered that not every ailment is attended to by a
physician, or if so, a medical certificate under oath as required by the Rules could
be secured within the limited time available. There has been no refutation of the
cause of the non-appearance of the petitioner as claimed by the latter. Said cause
had been reiterated under oath in the petitioner's motion for reconsideration to
which the trial court turned a deaf ear. Any suspicion that the petitioner was merely

suing for delay is readily dispelled by the fact that the pre-trial was being set for the
first time, and that the petitioner took immediate steps against the refusal of the
trial court to set aside the default declaration and to pursue remedies steadfastly
against the same in the higher tribunals.
The declaration default on the part of the petitioner may not be considered as
entirely proper under the circumstances surrounding the same. It is undenied that
nobody appeared at the pre-trial except the counsel for the private respondent.
Under settled doctrines, not even the private respondent may be considered as
having appeared at the said pre-trial, it not having made appearance thereat
through a duly authorized representative. In such a situation, the trial court would
have acted more properly if it dismissed the case, or declared the private
respondent as plaintiff therein as non-suited instead of declaring the petitioner as in
default (erroneously stated by it as "non-suited.") This is because while the court
may declare the plaintiff non- suited for non-appearance at the pre-trial or dismiss
the case for his non- appearance at the trial without motion on the part of the
defendant (Sec. 3, Rule 17), the latter may not be declared in default without such
motion on the part of the plaintiff. (Sec. 1. Rule 18; Trajano vs. Cruz, 80 SCRA 712.)
A plaintiff who makes no valid appearance at pre-trial may not ask that the
defendant be punished for the same shortcoming it was equally guilty of.
WHEREFORE, the judgment of the Court of Appeals rendered in CA-G.R. No. 10649
promulgated on August 29, 1980, and the Resolution issued in said case dated
March 29, 1981 which denied a motion for the reconsideration of the said judgment
are hereby REVERSED and SET ASIDE. The orders of the Court of First Instance of
Manila in Civil Case No. 126113 dated February 5, 1980 and February 26, 1980 are
ordered ANNULLED and SET ASIDE. Let the said case be rescheduled for pre-trial
and for subsequent proceedings thereafter. Costs against the private respondent.
SO ORDERED.
Teehankee (Chairman), Melencio-Herrera, Plana, Relova and Gutierrez, Jr., JJ.,
concur.

Eloisa Merchandising v. Banco de Oro, G.R. No. 192716, June 13,

2012
FIRST DIVISION
ELOISA
MERCHANDISING,
INC. and
TREBEL
INTERNATIONAL,
INC.,
Petitioners,
- versus -

G.R. No. 192716

Present:
LEONARDO-DE CASTRO,J.,*
Acting Chairperson,
BERSAMIN,

DEL CASTILLO,
VILLARAMA
, JR., and
PERLAS-BERNABE,** JJ.
BANCO
DE
ORO
UNIVERSAL
BANK and ENGRACIO M.
Promulgated:
ESCASINAS, JR., in his capacity as
Ex-Officio Sheriff of the RTC of
June 13, 2012
Makati City,
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
VILLARAMA, JR., J.:
Assailed in this petition for review on certiorari under Rule 45 are the
Decision[1] dated March 30, 2010 and Resolution [2]dated June 15, 2010 of the Court
of Appeals (CA) in CA-G.R. CV No. 89779. The CA affirmed the trial courts dismissal
of petitioners complaint on the ground of failure to prosecute.
On November 11, 1993, petitioner Eloisa Merchandising, Inc. (EMI) executed
in favor of respondent Banco de Oro Universal Bank (BDO) a real estate mortgage
(REM) over its properties located at No. 129 Neptune St., Bel-Air Village II, Makati
City, Metro Manila and covered by Transfer Certificate of Title Nos. 157092 and
157093. The REM was further amended on May 16, 1996, December 23, 1996,
September 16, 1998 and July 2, 1999 to secure the principal obligation totalling
Twenty-Nine Million Nine Hundred Thousand Pesos (P29,900,000.00) drawn from the
Credit Line Agreement of EMI and Term Loan Agreement of Trebel International, Inc.
(Trebel). EMI likewise executed a Continuing Suretyship in favor of BDO to secure
the credit accommodation extended by BDO to petitioners affiliate, Trebel. [3]
On January 10, 2002, BDO initiated foreclosure proceedings by filing an
application for extrajudicial foreclosure before the Office of the Ex-Officio Sheriff of
the Regional Trial Court (RTC) of Makati City. [4] Accordingly, respondent Engracio M.
Escasinas, Jr. issued a notice setting the auction sale of the mortgaged property on
March 7, 2002.
On March 1, 2002, petitioners filed a Complaint[5] for Annulment of Real
Estate Mortgage, Injunction & Damages With Prayer for Issuance of a Writ of
Preliminary Injunction and/or Temporary Restraining Order, docketed as Civil Case
No. 02-245 of the RTC of Makati City, Branch 59. Petitioners alleged the following as
grounds for nullity of the REM: (1) the contract is in the nature of a third-party

mortgage to secure the loans of Trebel despite the fact that EMI is not in the
suretyship business; (2) after maturity of the loans, BDO granted Trebel extensions
of time to pay without notice to EMI, thus extinguishing the corporate guaranty or
suretyship and REM, pursuant to Art. 2079 of the Civil Code; (3) under the
promissory notes, BDO unilaterally fixed an adjustable, floating interest rate on
each interest period as may be favorable to it, a potestative condition which is null
and void under Art. 1308 of the Civil Code; and (4) the penalty of 3% per month or
36% per annum is exorbitant and excessive. Petitioners further claimed that BDO
acted with malice and evident bad faith in initiating the extrajudicial foreclosure
proceedings.
BDO filed a motion to dismiss[6] on the ground of lack of cause of action which
can be determined from the facts alleged in the complaint and considering all
annexes, motions and evidence on record.
On May 7, 2002, petitioners filed an amended complaint [7] which impleaded
the Register of Deeds and alleged that the mortgaged property was sold at a public
auction on March 7, 2002.
On July 18, 2002, petitioners filed a Motion for Leave to File and to Admit
Second Amended Complaint,[8] which averred that the Register of Deeds of Makati
City has consolidated the titles over the foreclosed properties and issued new titles
in the name of BDO.
On November 28, 2002, the trial court issued an order [9] granting the motion
to admit second amended complaint and denying the motion to dismiss. BDO was
directed to file a responsive pleading.
On January 17, 2003, BDO filed its Answer [10] traversing the allegations of the
complaint and asserting that: (1) there was only forbearance on BDOs part before
filing the extrajudicial foreclosure due to insistent request of petitioners who
repeatedly promised to settle their obligations, and for humanitarian reasons; (2)
the loan documents clearly stated that no prior demand is necessary before the
entire obligation becomes due and demandable; (3) on June 22, 1999, Trebel
obtained a Term Loan Agreement in addition to the previously
granted P5,000,000.00 Credit/Trust Receipts Line granted by BDO, from which Trebel
availed of P19,900,000.00, part of which was used to pay off EMIs loans; in
consideration thereof, EMI executed a Continuing Suretyship and the Fourth

Amended REM to the extent of P29,900,000.00 in favor of BDO; (4) Trebel

subsequently made several drawings from its own credit lines in the total amount
of P29,880,000.00 under Promissory Notes (PNs) executed on various dates; (5)
because Trebel failed to satisfy its loan obligations under the aforesaid PNs, BDO
was compelled to file an application for extrajudicial foreclosure of the REM on
January 10, 2002, and BDO won as the highest bidder during the public auction sale;
(6) EMI was not a third-party mortgagor considering that it secured its own
obligations and Trebel has assumed its obligations in full; the veil of corporate
fiction maybe pierced in this case, and EMI is already estopped from raising the
issue of ultra vires act after Trebel had defaulted on its obligations; (7) with the
execution of the Continuing Suretyship, EMI bound itself solidarily with the principal
debtor, Trebel, and the right of BDO to proceed against EMI as surety exists
independently of its right to proceed against Trebel; EMI as surety is not even
entitled to a notice of the principals default; (8) the Conforme Letter dated June 14,
1999 sent by BDO to EMI showed the consent of Mr. Roberto L. Del Rosario
(President) and Ms. Emma M. Del Rosario (Finance Manager) who both signed the
said letter which provides for a floating interest rate based on the 364-day Treasury
Bill Rates plus 4% or the BDO Reference Rate plus 7.5%; T-Bill Rates are one of the
most objective and generally used standard for interest rates; and (9) the liquidated
penalty was part of the parties agreement, which will not accrue until Trebel
defaults on its obligations with BDO.
In the Notice of Pre-Trial[11] dated January 22, 2003, the trial court set the pretrial conference on February 27, 2003. In compliance with the trial courts directive,
the parties submitted their respective pre-trial briefs.
On March 13, 2003, petitioners filed a Motion to Admit Supplemental
Complaint which further alleged that BDOs petition for issuance of a writ of
possession was granted by the RTC of Makati City, Branch 143 in a Decision dated
February 18, 2003. EMI reiterated that its rights as surety-mortgagor were violated
in the railroaded ex parte proceedings implementing the writ of possession even as
EMIs pending motion for reconsideration was still unresolved by Branch 143. [12]
In its Order[13] dated June 19, 2003, the trial court denied the motion to admit
supplemental complaint on the ground that the matters raised in the supplemental
complaint were improper as they pertain to issuances by another branch in a
separate petition for writ of possession.

At the scheduled pre-trial conference on June 26, 2003, on motion of

petitioners, they were allowed to present evidenceexparte in view of the absence of
BDO which was non-suited. In its motion for reconsideration, BDOs counsel cited
extraordinary and non-moving traffic as reason for his failure to arrive on time for
the pre-trial conference. The trial court, in an Order dated August 27, 2003,
granted the said motion, reinstated the case and set the case again for pre-trial
conference on September 26, 2003, later moved to November 10, 2003, and finally
rescheduled to January 12, 2004 by agreement of the parties. [14]
On July 16, 2003, petitioners filed a motion for reconsideration of the June 19,
2003 Order denying their motion to admit supplemental complaint; BDO filed its
opposition to the said motion.
For failure of the petitioners to appear despite due notice at the scheduled
pre-trial conference on January 12, 2004, the case was ordered dismissed. [15] In
their motion for reconsideration, petitioners counsel claimed that his failure to
attend was due to his accidental falling on the stairs of his house in the morning of
January 12, 2004, due to which he had to be attended by a hilot. In an Order
dated May 7, 2004, the trial court reconsidered the dismissal and scheduled anew
the pre-trial conference on June 29, 2004, which date was subsequently reset to
August 3, 2004 for lack of proof of service upon petitioners counsel. [16]
Since petitioners again failed to appear on the re-scheduled pre-trial
conference on August 3, 2004, the trial court issued the following Order:
When this case was called for pre-trial conference, only counsel
for the defendants appeared. There was no appearance on the part of
the plaintiffs, despite the fact that as early as June 29, 2004, they were
notified for todays hearing. The Court, however, is in receipt of a
Motion to Reset filed by counsel for the plaintiff, alleging among others,
that he is to appear at the MTC of San Jose, Batangas, which was set
earlier than the hearing of this case. The Court finds the ground not
meritorious because counsel of plaintiffs in open Court on June 29,
2004 signed the notification for the hearing of this case. Counsel could
have objected to the chosen date if indeed he was not
available. Likewise, the records will show that on January 12, 2004,
this case was also dismissed for failure of the plaintiffs to appear for
pre-trial conference. This should have served as a warning to herein
plaintiffs.
In view hereof, upon motion of the herein defendants, the
above-entitled case is hereby ordered dismissed pursuant to Section 5,
Rule 18 of the Rules of Court.

SO ORDERED.[17] (Italics supplied.)

Petitioners moved to reconsider the above order, their counsel alleging that
he had misplaced or lost his calendar book and could not have ascertained the
availability of his schedule. Stressing that he had no intention to ignore the hearing
as in fact he filed a motion to reset the same six days prior to the scheduled
hearing, petitioners counsel pleaded for the kind indulgence of the court.
On December 29, 2004, the trial court issued an Order [18] granting
petitioners motion for reconsideration in the interest of justice and reinstating the
case. The trial court, however directed petitioners to be more circumspect in
attending to this case.
In its Order[19] dated September 20, 2005, the trial court dismissed the case
for failure of petitioners to prosecute their case. Citing the two previous dismissals
on account of petitioners non-appearance at the pre-trial conference, the trial
court said that [f]rom the date of its second reconsideration of the order of
dismissal on December 29, 2004 until today, plaintiffs did not do anything to
prosecute the instant case.
Petitioners filed a motion for reconsideration in which they averred that:
1. After the reconsideration of the Order of dismissal on
December 29, 2004, the plaintiffs counsel, Atty. Anselmo A. Marqueda,
on several occasion, passed by the court and diligently followed-up the
hearing of this case. He was assured by an officer of the court to just
wait for the notice of hearing that they will issue in the instant case.
2. While waiting for the notice of hearing from this court, the
respective counsels of the parties negotiated in earnest for an
amicable settlement of the case. During the last telephone
conversation with Atty. Roy P.R. Talao, the defendants bank counsel,
and the undersigned agree on some proposals for settlement which are
however subject to final confirmation of their respective clients. The
plaintiff believe that the parties are very close to agree and enter into
an amicable settlement of this case.
3. Apart from the reliance of the undersigned counsel on the
statement of the court officer to just wait for the notice of hearing, the
undersigned counsel suffered a handicap in making a personal followup of this case because of his numerous travels and lengthy sojourn in
the province due to family conflict and death of a member of the
family.

x x x x[20]

In its Order[21] dated April 10, 2006, the trial court denied petitioners motion
for reconsideration, as follows:
x x x Records show that this case has been dismissed thrice
(January 12, 2004; August 3, 2004 and September 20, 2005). The first
two dismissals were due to the failure of the plaintiffs to appear during
the pre-trial conference despite notice. In both cases plaintiffs were
admonished to be more circumspect in attending to this case. This
time the instant case was dismissed due to inaction of herein plaintiffs
for unreasonable length of time.
The Court has been lenient for quite sometime however,
plaintiffs seemed inclined to abuse the Courts leniency. Finding no
compelling reason to reconsider the assailed order, motion is hereby
DENIED.
SO ORDERED.

Aggrieved, petitioners appealed to the CA arguing that the trial court erred in
dismissing the case for failure to prosecute considering that (1) the trial court has
not yet resolved petitioners motion for reconsideration of the order denying their
motion to admit supplemental complaint; (2) petitioners are very much
interested to prosecute this case to protect their rights in the premises; (3)
petitioners have valid and meritorious causes of action; (4) petitioners may not be
deprived of their day in court by the negligence of their counsel; and (5) non-suit or
default judgment is not encouraged as it violates due process. [22]
By Decision dated March 30, 2010, the CA affirmed the trial courts dismissal
of the case. The CA said that petitioners cannot justify their prolonged inaction by
belatedly raising as issue the pending motion for reconsideration from the trial
courts denial of their motion to admit the supplemental complaint, when all along
they were aware that the case was at the pre-trial stage as in fact the case was
twice dismissed for their failure to attend the pre-trial conference. Under the
circumstances stated in its September 20, 2005 Order, the CA held that the trial
court cannot be faulted for dismissing the case on the ground of petitioners failure
to prosecute their action, citing this Courts ruling in Olave v. Mistas.[23]
The CA also denied the motion for reconsideration filed by the petitioners.

Petitioners contend that the only reason for the trial courts dismissal of the
case was the failure of their counsel to move to set the case for pre-trial. However,
Section 1, Rule 18 of the 1997 Rules of Civil Procedure, as amended, imposing upon
the plaintiff the duty to promptly move to set the case for pre-trial, had been
repealed and amended by A.M. No. 03-1-09-SC which took effect on August 16,
2004. This amendment to the rule on pre-trial now imposes on the clerk of court
the duty to issue a notice of pre-trial if the plaintiff fails to file a motion to set the
case for pre-trial conference.
Petitioners point out that the case was not yet ripe for pre-trial because of the
unresolved pending motion for reconsideration of the trial courts denial of the
motion to admit supplemental complaint. In any event, petitioners assert that they
are very much interested to prosecute the case as they have presented evidence in
their application for the issuance of TRO and writ of preliminary injunction, amended
the complaint several times, their representatives have always been attending as
notified by their lawyers, and their counsel was following up the case but the Clerk
of Court could not set the case for pre-trial because of the pending motion. As to the
prior dismissals of the case, these should not be taken as badges of failure to
prosecute because these had been set aside on meritorious grounds. The
circumstances that respondent BDO itself had been declared in default for failure to
appear at the pre-trial on June 26, 2003 and has asked repeatedly for extensions of
time from the court, the ongoing negotiations with BDO for amicable settlement
even at the appeal stage, and petitioners meritorious causes of action, justify a
liberal application of the rules so that petitioners will be given their day in court.
Respondent BDO, on the other hand, asserts that the failure of petitioners to
move for the setting of the case for pre-trial conference, coupled with their repeated
violations of the Rules which prompted the trial court to dismiss their complaint
twice, are sufficient grounds for the trial court to finally dismiss the complaint. A.M.
No. 03-1-09-SC did not remove plaintiffs obligation to set the case for pretrial. Petitioners claim that they relied on a supposed assurance by a court
personnel to set the case for pre-trial is doubtful, aside from being contradictory to
the admission of petitioners counsel that he suffered a handicap in making a
personal follow-up of this case because of [his] numerous travels and lengthy
sojourn in the province due to family conflict and death of a member of the family.
As to the alleged negotiations for an amicable settlement, respondent
admitted there were talks during court hearings and telephone calls but these were
casual and at best, exploratory. No serious offer was made by petitioners, much

less concretized. At any rate, even if true, such talks is not a ground to tarry and
delay the prosecution of the case which had been pending with the trial court for
more than three years and had not even left the pre-trial stage. If indeed
petitioners were sincere in their desire to settle, they should have promptly moved
for the setting of pre-trial so that the case can be referred for mandatory mediation
proceedings.
The petition has no merit.
Under Section 3,[24] Rule 17 of the 1997 Rules of Civil Procedure, as amended,
the failure on the part of the plaintiff, without any justifiable cause, to comply with
any order of the court or the Rules, or to prosecute his action for an unreasonable
length of time, may result in the dismissal of the complaint either motu proprio or
on motion by the defendant. The failure of a plaintiff to prosecute the action without
any justifiable cause within a reasonable period of time will give rise to the
presumption that he is no longer interested to obtain from the court the relief
prayed for in his complaint; hence, the court is authorized to order the dismissal of
the complaint on its own motion or on motion of the defendants. The presumption is
not, by any means, conclusive because the plaintiff, on a motion for reconsideration
of the order of dismissal, may allege and establish a justifiable cause for such
failure.[25] The burden to show that there are compelling reasons that would make a
dismissal of the case unjustified is on the petitioners. [26]
Under Section 1, Rule 18 of the 1997 Rules of Civil Procedure, as amended, it
is the duty of the plaintiff, after the last pleading has been served and filed, to
promptly move ex parte that the case be set for pre-trial. On August 16, 2004, A.M.
No. 03-1-09-SC (Re: Proposed Rule on Guidelines to be Observed by Trial Court
Judges and Clerks of Court in the Conduct of Pre-Trial and Use of DepositionDiscovery Measures) took effect, which provides that:
Within five (5) days from date of filing of the reply, the plaintiff
must promptly move ex parte that the case be set for pre-trial
conference. If the plaintiff fails to file said motion within the given
period, the Branch COC shall issue a notice of pre-trial.

We note that when the above guidelines took effect, the case was already at
the pre-trial stage and it was the failure of petitioners to set the case anew for pretrial conference which prompted the trial court to dismiss their complaint.

In Olave v. Mistas,[27] this Court said that even if the plaintiff fails to promptly
move for pre-trial without any justifiable cause for such delay, the extreme sanction
of dismissal of the complaint might not be warranted if no substantial prejudice
would be caused to the defendant, and there are special and compelling reasons
which would make the strict application of the rule clearly unjustified. In the more
recent case of Espiritu v. Lazaro,[28] this Court affirmed the dismissal of a case for
failure to prosecute, the plaintiff having failed to take the initiative to set the case
for pre-trial for almost one year from their receipt of the Answer. Although said case
was decided prior to the effectivity of A.M. No. 03-1-09-SC, the Court considered the
circumstances showing petitioners and their counsels lack of interest and laxity in
prosecuting their case.
In this case, while there was no substantial prejudice caused to herein
respondent, who has already consolidated the ownership of petitioners properties,
secured new titles in its name and successfully implemented a writ of possession
issued by another branch, there was neither patent abuse in the trial courts
dismissal of the complaint for the third time, the earlier two dismissals having been
precipitated by petitioners non-appearance at the pre-trial conference. Contrary to
petitioners assertion, the trial court did not find their offered excuses as meritorious
or justifiable; the trial court in the exercise of discretion simply reinstated the case
in the interest of justice but explicitly warned petitioners to be more circumspect
in attending to the case.
However, despite the trial courts leniency and admonition, petitioners
continued to exhibit laxity and inattention in attending to their case. Assuming
domestic problems had beset petitioners counsel in the interregnum, with greater
reason should he make proper coordination with the trial court to ensure his
availability on the date to be chosen by the trial court for the long-delayed conduct
of a pre-trial conference. Petitioners themselves did nothing to get the case moving
for nine months and set the case anew for pre-trial even as BDO was already
seeking their judicial ejectment with the implementation of the writ of possession
issued by Branch 143. Such circumstance also belies their pretense that the parties
were then still negotiating for a settlement. We have held that a party cannot
blame his counsel when he himself was guilty of neglect; and that the laws aid the
vigilant, not those who slumber on their rights. Vigilantibus sed non dormientibus
jura subveniunt.[29]
We also agree with the CA that petitioners are belatedly raising as issue the
unresolved motion for reconsideration of the denial of petitioners motion to admit

supplemental complaint. Petitioners did not even file a motion to resolve the said
pending incident which, in any event, could have been brought to the trial courts
attention had petitioners acted promptly to have the case set anew for pre-trial
conference soon after or within a reasonable time from the reinstatement of the
case on December 29, 2004.
While under the present Rules, it is now the duty of the clerk of court to set
the case for pre-trial if the plaintiff fails to do so within the prescribed period, this
does not relieve the plaintiff of his own duty to prosecute the case diligently. This
case had been at the pre-trial stage for more than two years and petitioners have
not shown special circumstances or compelling reasons to convince us that the
dismissal of their complaint for failure to prosecute was unjustified.
WHEREFORE, the petition for review on certiorari is DENIED. The Decision
dated March 30, 2010 and Resolution dated June 15, 2010 of the Court of Appeals in
CA-G.R. CV No. 89779 are hereby AFFIRMED and UPHELD.
Costs against the petitioners.
SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice

Espiritu v. Lazaro, G.R. No. 181020, November 25, 2009

THIRD DIVISION

JAZMIN L. ESPIRITU and PORFIRIO

LAZARO, JR.,
Petitioners,
- versus VLADIMIR G. LAZARO, MA.CORAZON S.
LAZARO, MA. ESPERENZA S. LAZARO,
VLADI MIGUEL S. LAZARO, CHINA
BANKING CORPORATION, and WINIFRIDA

G.R. No. 181020

Present:
CORONA, J.,
Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.

B. SISON,
Respondents.

Promulgated:
November 25, 2009

x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
This petition for review on certiorari assails the June 29, 2007 Decision [1] of
the Court of Appeals (CA), which affirmed the dismissal of the case for failure to
prosecute. Likewise assailed in this petition is its Resolution dated December 19,
2007, which denied the motion for reconsideration of the said decision.
On June 29, 1998, petitioners Jazmin L. Espiritu and Porfirio Lazaro, Jr.,
together with a certain Mariquit Lazaro, filed a complaint for recovery of personal
property with damages and preliminary attachment against respondents, Vladimir
G. Lazaro, Ma. Corazon S. Lazaro, Ma. Esperanza S. Lazaro, Vladi Miguel S. Lazaro,
China Banking Corporation, and Winifrida B. Sison. Petitioners, Mariquit Lazaro and
respondent Vladimir Lazaro are the legitimate children and only surviving heirs of
the late Porfirio Lazaro, Sr. who died on March 13, 1998. Respondent Ma. Corazon
Lazaro is the wife of Vladimir Lazaro, while respondents Ma. Esperanza Lazaro and
Vladi Miguel Lazaro are their children.
The complaint alleged that (1) the deceased had two dollar time deposit
accounts with respondent China Banking Corporation in the amounts of
US$117,859.99 and US$163,492.32; (2) petitioners demanded from respondents
Vladimir and Ma. Corazon Lazaro their share in the said amounts but the latter told
them that the deposits had already been transferred to their children; (3) they
requested respondent Winifrida Sison, branch manager of the bank, to freeze the
time deposit accounts in the names of said children; (4) respondent Sison
subsequently replied that there were no existing accounts under the childrens
names; (5) petitioners then requested respondent Sison to apprise them of the
status of the two dollar time deposit accounts; and (6) respondent Sison refused to
comply, saying that, unless there is a court order, she may not give out the details
of the time deposit accounts because of the Bank Secrecy Law. Petitioners prayed
that respondents be ordered to pay them their three-fourths share in the time
deposit accounts or US$211,014.23, with interest, P1,000,000.00 as moral
damages, P1,000,000.00 as exemplary damages, P300,000.00 as attorneys fees
and costs of the suit.[2]
The trial court granted the prayer for preliminary attachment and the
corresponding writ was subsequently issued after petitioners posted a bond. Five
real properties were levied upon. [3] Respondents Lazaro filed an urgent motion to
set aside and discharge the attachment, [4] which was opposed by petitioners. They,
likewise, filed a motion to dismiss [5] the complaint for failure to state a cause of
action. Respondent Sison also filed a motion to dismiss [6] on the same ground.

On February 12, 1999, the trial court denied the motion to discharge the
attachment and the two motions to dismiss and directed respondents to file their
answer. Respondents Lazaro and Sison filed their respective motions for
reconsideration,[7] which were again opposed by petitioners. [8] In an Omnibus Order
dated January 20, 2000, the trial court partially granted respondents Lazaros prayer
for a partial discharge of their attached properties.
On March 31, 2000, respondent Sison filed her Answer with Counterclaim
and Crossclaim.[9]
Respondents Lazaro questioned the February 12, 1999 Order in a petition
for certiorari filed with the CA. When the latter did not rule favorably, they elevated
the case to this Court. In a Resolution dated January 21, 2002, this Court denied the
petition. The Resolution became final and executory on July 17, 2002. [10]
On July 19, 2002, respondents Lazaro filed a Cautionary Answer with
Manifestation and a Motion to File a Supplemental/Amended Answer. On August 5,
2002, petitioners received a copy of the cautionary answer, pertinent portions of
which are quoted as follows
3. Undersigned counsel, on account of his heavy workload in
equally important cases, would be needing more time to file herein
defendants Answer. In the meantime however, by way of a
Cautionary Answer, herein defendants hereby manifest that they are
adopting subject to further qualification part of co-defendant
Sisons
Answer
dated
March
29,
2000,
more
particularly, portions of sub-headings I. Denials and Admissions,
II. Special and Affirmative Defenses and III. Counterclaim which
are personal, relevant and pertinent to their defense.
4. Nonetheless, herein defendants reserve their right to file a
Supplemental/Amended Answer in due time;
WHEREFORE, in view of the foregoing, it is respectfully prayed
that the instant Cautionary Answer with Manifestation be admitted and
herein defendants given a twenty (20)-day period within which to file a
Supplemental/Amended Answer. [11]
On July 24, 2003, the trial court dismissed the complaint due to petitioners
failure to prosecute for an unreasonable length of time. The court noted that
despite the lapse of time since respondents filed a cautionary answer, petitioners
failed to file a motion to set the case for pre-trial, which under Section 1, Rule 18 of
the 1997 Rules of Civil Procedure is petitioners duty as plaintiffs. [12] The trial court
denied petitioners Motion for Reconsideration of the said order. [13]
On June 29, 2007, the CA affirmed the dismissal of the case. [14] Citing Olave
v. Mistas,[15] the CA stressed that it is plaintiffs duty to promptly set the case for
pre-trial, and that failure to do so may result in the dismissal of the case. According
to the CA, petitioners should not have waited for a supplemental answer or an order

by the trial court and done nothing for more than 11 months from the receipt of the
last pleading.
The CA also denied petitioners motion for reconsideration of the said
decision;[16] hence, this petition.
Petitioners assign the following errors to the CA:
A.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

APPLYING THE RULING OF THE SUPREME COURT IN OLAVE vs.
MISTAS [TO THE] CASE.

B.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT

RULING THAT THE CASE WAS NOT YET RIPE FOR PRE-TRIAL.

C.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

DISMISSING THE APPEAL BASED ON SECTION 3, RULE 17 OF THE
RULES OF COURT.

D.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT

TAKING COGNIZANCE OF SECTION 1.2 OF A.M. NO. 03-1-09-SC, IN
EFFECT SINCE AUGUST 16, 2004.[17]

On the grounds of equity, due process and fair play, petitioners urge the
Court to set aside technicalities and to allow the case to proceed and be resolved on
the merits. They, likewise, point out that, in accordance with the Courts
pronouncement in Olave v. Mistas,[18] dismissal of their case is not warranted since
no substantial prejudice was caused to respondents, and strong and compelling
reasons justify a liberal application of the rule. They explain that the reason why
they did not move to set the case for pre-trial was that the case was not yet ripe for
it. They point out that the trial court had not yet resolved respondents motion for
extension to file a supplemental answer and respondents had not yet filed their
supplemental answer. Petitioners stress that the delay was, therefore, not due to
their inaction; hence, the dismissal of their case was not justified.
Further, petitioners cite A.M. No. 03-1-09-SC (Guidelines to be Observed by
Trial Court Judges and Clerks of Court in the Conduct of Pre-Trial and Use of
Deposition-Discovery Measures) which allegedly provides that it is not solely the
duty of the plaintiff to set the case for pre-trial as the Clerk of Court is likewise
directed to issue the notice of pre-trial should the plaintiff fail to do so.
The petition has no merit.
In every action, the plaintiffs are duty-bound to prosecute their case with
utmost diligence and with reasonable dispatch to enable them to obtain the relief
prayed for and, at the same time, to minimize the clogging of the court dockets.
[19]
Parallel to this is the defendants right to have a speedy disposition of the case
filed against them, essentially, to prevent their defenses from being impaired.

Since the incidents occurred prior to the effectivity of A.M. No. 03-1-09-SC on
August 16, 2004, the guidelines stated therein should not be made applicable to
this case. Instead, the prevailing rule and jurisprudence at that time should be
utilized in resolving the case.
Section 1 of Rule 18 of the Rules of Court imposes upon the plaintiff the duty
to set the case for pre-trial after the last pleading is served and filed. Under Section
3 of Rule 17, failure to comply with the said duty makes the case susceptible to
dismissal for failure to prosecute for an unreasonable length of time or failure to
comply with the rules.
Respondents Lazaro filed the Cautionary Answer with Manifestation and
Motion to File a Supplemental/Amended Answeron July 19, 2002, a copy of which
was received by petitioners on August 5, 2002. Believing that the pending motion
had to be resolved first, petitioners waited for the court to act on the motion to file a
supplemental answer. Despite the lapse of almost one year, petitioners kept on
waiting, without doing anything to stir the court into action.
In any case, petitioners should not have waited for the court to act on the
motion to file a supplemental answer or for the defendants to file a supplemental
answer. As previously stated, the rule clearly states that the case must be set for
pre-trial after the last pleading is served and filed. Since respondents already filed
a cautionary answer and [petitioners did not file any reply to it] the case was
already ripe for pre-trial.
It bears stressing that the sanction of dismissal may be imposed even absent
any allegation and proof of the plaintiffs lack of interest to prosecute the action, or
of any prejudice to the defendant resulting from the failure of the plaintiff to comply
with the rules.[20] The failure of the plaintiff to prosecute the action without any
justifiable cause within a reasonable period of time will give rise to the presumption
that he is no longer interested in obtaining the relief prayed for. [21]
In this case, there was no justifiable reason for petitioners failure to file a
motion to set the case for pre-trial. Petitioners stubborn insistence that the case
was not yet ripe for pre-trial is erroneous. Although petitioners state that there are
strong and compelling reasons justifying a liberal application of the rule, the Court
finds none in this case. The burden to show that there are compelling reasons that
would make a dismissal of the case unjustified is on petitioners, and they have not
adduced any such compelling reason.
WHEREFORE, the petition is DENIED DUE COURSE. The Court of Appeals
Decision dated June 29, 2007 and Resolution dated December 19, 2007
are AFFIRMED.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice

Paranque Kings v. Santos, G.R. No. 194638, July 2, 2014

G.R. No. 194638

July 2, 2014

PARAAQUE KINGS ENTERPRISES, INC., Petitioner,

vs.
CATALINA L. SANTOS, represented by her Attorney-in-Fact, LUZ B.
PROTACIO, and DAVID R. RAYMUNDO, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari 1 are the Decision2 dated September
22, 2010 and the Resolution 3dated November 23, 2010 of the Court of Appeals (CA)
in CA-G.R. CV No. 92522, which affirmed the following Orders of the Regional Trial
Court of Makati City, Branch 57 (RTC), rendered in Civil Case No. 91-786 for breach
of contract with damages: (a) First Order 4 dated July 7, 1998 denying petitioner
Paraaque Kings Enterprises, Inc. 's (petitioner) motion to cancel pre-trial and
ordering the parties "to go into pre-trial"; (b) Second Order 5 dated July 7, 1998
declaring petitioner non-suited for refusing "to go into pre-trial despite the Order of
the [c]ourt to do so," and dismissing the complaint; and (c) Order dated September
21, 19986 denying petitioner's motion for reconsideration of the First and Second
Orders.7
The Facts
Respondent Catalina L. Santos (Santos) entered into a Contract of Lease 8 with
Frederick O. Chua (Chua) over eight (8) parcels of land 9 located in Paraaque City
(leased premises), specifically giving the latter the "first option or priority to buy"
the same in case of sale. 10 Chua then caused the construction of a 6-door
commercial complex11 on the leased premises but, by reason of business reverses,
he was constrained to assign12 his rights thereon to Lee Ching Bing (Lee), who
likewise assumed all obligations under the lease contract with Santos. Lee, in turn,
executed a Deed of Assignment13 over the leased premises, including all
improvements thereon, in favor of petitioner.
On March 19, 1991, petitioner filed a Complaint 14 before the RTC (docketed as Civil
Case No. 91-786) against Santos and respondent David A. Raymundo (Raymundo)
to whom Santos allegedly sold the leased premises on September 21, 1988 for a
consideration of P5,000,000.00,15 without giving petitioner the opportunity to
exercise its priority to buy the same. Petitioner claimed that, when it objected to the
sale, Santos repurchased the subject properties for the same price, 16 and offered
them to petitioner for P15,000,000.00. The latter made a counter-offer
of P5,000,000.00 but, before replying. thereto, Santos sold the subject properties
again to Raymundo on May 15, 1989 for P9,000,000.00.17 Petitioner argued that the
sale was simulated and that there was collusion between Santos and Raymundo
(respondents).

Respondents respectively moved18 for the dismissal of the Complaint on the main
ground that it stated no cause of action. Raymundo alleged that there were, in fact,
previous offers made to petitioner that the latter simply ignored. 19 Santos, on the
other hand, maintained that petitioner had already recognized and respected
Raymundo's status as the new owner-lessor of the subject properties due to its
payment of lease rentals to Raymundo, and, as such, is now estopped from
challenging Raymundo's title.20 In addition, Santos claimed that the deed of
assignment executed in favor of petitioner did not include the "first option" clause
provided in the lease contract. 21
On September 2, 1991, the RTC dismissed 22 petitioner's Complaint on the ground
that it "does not contain any valid cause of action." 23 Petitioner then filed a motion
for reconsideration24 which was, however, denied by the RTC in an Order 25 dated
October 11, 1991.
Aggrieved, petitioner elevated the case on appeal before the CA (docketed as CAG.R. CV No. 34987) which rendered a Decision 26 dated March 29, 1993 affirming the
dismissal of the Complaint.
Eventually, the foregoing CA Decision was reversed 27 on petition for review before
the Court (docketed as G.R. No. 111538) in a Decision dated February 26, 1997
(February 26, 1997 Decision), upon a finding that the Complaint "sufficiently alleges
an actionable contractual breach" 28 on the part of respondents. The Court explained
that the trial and appellate courts based their decision. on the allegation that Santos
had actually offered the subject properties for sale to petitioner prior to the final
sale in favor of Raymundo, but that the offer was rejected. However, the Court held
that in order to have full compliance with the contractual right granting petitioner
the first option to purchase, the sale of the subject properties for the amount
of P9,000,000.00, the price for which it was finally sold to Raymundo, should have'
likewise been first offered to petitioner. 29 Necessarily, the Court remanded the case
to the trial court for further proceedings.
When respondents filed their Answer with Compulsory Counterclaims 30 (Answer),
they claimed that the first offer of P5,000,000.00 was declined by petitioner
"because it could not afford the price." 31 After Raymundo reconveyed the subject
properties to Santos, the latter offered it again to petitioner at the price
of P15,000,000.00, which it found to be "ridiculous," insisting that P5,000,000.00 is
the "true and reasonable value" of the subject properties and that it is willing to buy
the same only for said amount.32 Nevertheless, the reduced price of P9,000,000.00
was allegedly33 offered to petitioner, but the latter refused and maintained its
stance on the value of the said properties.
Protesting that certain allegations in the Answer tended to vary, contradict, and
falsify the findings of the Court in the February 26, 1997 Decision, petitioner filed a
Motion to Strike out from the Answer with Compulsory Counterclaims Certain
Allegations or Matters34 (Motion to Strike Out), arguing that respondents are bound
by the following conclusive findings of the Court and, hence, may no longer detract
therefrom:

A careful examination of the complaint reveals that it sufficiently alleges an

actionable contractual breach on the part of private respondents. Under paragraph
9 of the contract of lease between respondent Santos and petitioner, the latter was
granted the "first option or priority" to purchase the leased properties in case
Santos decided to sell. If Santos never decided to sell at all, there. can never be a
breach, much less an enforcement of such "right." But on September 21, 1988,
Santos sold said properties to Respondent Raymundo without first offering these to
petitioner. Santos indeed realized her error, since she repurchased the properties
after petitioner complained. Thereafter, she offered to sell the properties to
petitioner for P15 million, which petitioner, however, rejected because of the
"ridiculous" price. But Santos again appeared to have violated the same provision of
the lease contract when she finally resold title properties to respondent Raymundo
for only P9 million without first offering them to petitioner at such price: Whether
there was actual breach which entitled petitioner to damages and/or other just or
equitable relief, is a question which can better be resolved after trial on the merits
where each party can present evidence to prove their respective allegations and
defenses.35
Petitioner wanted to strike out, in particular, the allegations in the Answer that the
subject properties were offered to it first at P5,000,000.00, and subsequently
at P9,000,000.00.36
However, petitioner's Motion to Strike Out was denied by the RTC in an
Order37 dated May 18, 1998, emphasizing the inapplicability of the principle of res
judicata with respect to the afore-quoted February 26, 1997 Decision. As indicated
in the dispositive portion of the said Decision, the trial court was to conduct "further
proceedings" which meant that respondents could not be deprived of the right to
submit their own case and to proffer evidence to rebut the allegations in the
Complaint.38
Petitioner moved39 for the reconsideration of the said Order, as well as the voluntary
inhibition of the presiding judge for alleged acts of "undue deference for and haste
in granting all the motions and wishes of [respondents] and his consistent denial of
the motions of [petitioner]."40
The motion was, however, denied by the RTC, in an Order 41 dated June 11, 1998,
and the case was set for pre-trial on July 7, 1998.
On July 2, 1998, petitioner filed a Motion to cancel Pre-Trial, 42 claiming that it was
preparing a petition for certiorari and prohibition which (a) was to be filed with the
CA before the scheduled pre-trial on July 7, 1998, and (b) was intended to challenge
the validity of the RTC's Orders dated May 18, 1998 and June 11, 1998 by raising
alleged prejudicial questions that must be resolved first before the pre-trial and trial
on the merits of the case could proceed.
Incidentally, the petition for certiorari and prohibition 43 (docketed as CA-G.R. SP No.
48214) that was actually filed at 2:17 44 in the afternoon of July 7, 1998, (contrary to
petitioner's assertion in its Motion to Cancel Pre-Trial that it was to be .filed before
the July 7, 1998 pre-trial) was resolved by the CA in favor of petitioner in a
Decision45dated December 6, 1999 (December 6, 1999 CA Decision), where it was

determined that the Motion to Strike Out was denied prematurely. On the other
hand, the CA declared the petition for voluntary inhibition moot and academic with
the appointment of a regular judge for Branch 57. Thus, the Motion to Strike Out
was ordered to be resolved by the regular judge .. Subsequently, the petitioner for
review on certiorari46 filed by _respondents before the Court (docketed as G.R. No.
143562) to question the December 6, 1999 CA Decision was dismissed by the Court
in a Decision47 dated October 23, 2006.
Meanwhile, on July 7, 1998, the day of the pre-trial sought to be cancelled, the RTC
denied petitioner's Motion to Cancel Pre-Trial in its First Order 48 of even date.
Accordingly, the RTC directed the parties to proceed to pre-trial as scheduled.
The trial court then required petitioner to start the pre-trial with the statement of its
cause. However, counsel for petitioner, Atty. Nelson Santos, refused to do so saying
he would just furnish the court the following day with a copy of the petition for
certiorari and prohibition filed with the CA. 49 Consequently, upon motion of the
opposing counsel, the RTC (a) declared petitioner non-suited, and (b) dismissed the
Complaint in its Second Order50 of the same day.
Again, petitioner filed a motion for reconsideration, 51 which was denied by the RTC
in an Order52 dated September 21, 1998, holding that the dismissal of the Complaint
was due to petitioner's defiance of the order to proceed with the pre-trial. Section 3,
Rule 17 of the Rules of Court authorizes the court to dismiss the complaint, upon
motion or motu propio, for failure of the plaintiff to comply with any of its orders.
Petitioner then filed a Notice of Appeal 53 with the RTC from the First and Second
Orders both dated July 7, 1998 and the Order dated September 21, 1998. The same
was, however, denied due course for being filed out of time in an Order 54 dated
November 27; 1998. The trial court held that the motion for reconsideration filed by
petitioner on August 12, 1998 was pro forma and did not toll the running of the
period to appeal. Petitioner had 15 days from July 29, 1998, the date of receipt of
copies of the First and Second Orders both dated July 7, 199 8, or until August 13,
199 8, to perfect its appeal but it failed to do so. Petitioner filed its Notice of Appeal
only on September 30, 1998, which was about 48 days late. 55
Unperturbed, petitioner went up to the .CA, for the third time, on a petition for
certiorari, mandamus, and prohibition56 (docketed as CA-G.R. SP No. 50570),
insisting that its motion for reconsideration substantially complied with the rules
and, thus, effectively tolled the reglementary period to appeal. Nearly a decade
after, or on May 23, 2008, the appellate court granted the petition, annulled the
questioned orders of the trial court, and directed the lower court to give due course
to petitioner's appeal.57 Upon motion for execution58 of petitioner, the trial court
issued an Order59 dated November 11, 2008 elevating the entire records of the case
to the CA. The appeal, which was the fourth time petitioner was before the CA, was
docketed as CA-G.R. CV No. 92522.
On September 22, 2010, the appellate court rendered the assailed
Decision60 affirming the First and Second Orders both dated July 7, 1998, as well as
the Order dated September 21, 1998. The same court further denied 61petitioner's
motion for reconsideration62 of said Decision, hence, the instant petition.

The Issue Before the Court

The threshold issue for the Court's resolution is whether or not the CA correctly
upheld (a) the RTC's denial of petitioner's Motion to Cancel Pre-Trial, and (b) the
dismissal of the Complaint for failure of petitioner to proceed to pre-trial as directed
by the trial court.
The Court's Ruling
At the outset, it should be emphasized that the trial court has the discretion on
whether to grant or deny a motion to postpone and/or reschedule the pre-trial
conference in accordance with the circumstances obtaining in the case. This must
be so as it is the trial court which is able to witness firsthand the events as they
unfold during the trial of a case.
Postponements, while permissible, must not be countenanced except for clearly
meritorious grounds and in light of the attendant circumstances. 63
In this case, the RTC was able to explain to the satisfaction of the Court that the
postponement of the pre-trial scheduled on July 7, 1998 was not warranted under
the circumstances detailed below, viz.:
As far as the Court could gather, the sought postponement of the pre-trial on 1uly 7
was dilatory, if movant was not trifling with this court, because at the pre-trial
scheduled on March 26, 1998 it was plaintiff-movant through counsel, Justice Emilio
Gangcayco, who asked for time and was given 10 days to file motion for contempt
and to strike out averments in defendants answer. Thus, pre-trial was reset to May
21, 1998.
But on May 21, 1998 the pre-trial was again reset to June 11, 1998 to enable
movant's counsel, Atty. Nelson Santos, to prepare for pretrial as he was not ready
for pre-trial.
The scheduled pre-trial on June 11, 1998 was blocked by plaintiffs Motion for
Inhibition and to vacate and/or reconsider the order of May 18, 1998. Both counsel
submitted the matter for resolution and agreed that the pre-trial likewise be
scheduled in that resolution, considering that Atty. Tomacruz (counsel for
defendants) may oppose the postponement of the pre-trial of the June 11 pre-trial if
no date is fixed therein. (Order dated June 11, 1998) The June 11 pre-trial was
accordingly reset to July 7, 1998 as the court denied the motion for inhibition and
reconsideration.64 (Emphases and underscoring supplied)
The pattern to delay the pre-trial of the instant case is quite evident from the
foregoing.1a\^/phi1 Petitioner clearly trifled with the mandatory character of a pretrial, which is a procedural device intended to clarify and limit the basic issues
raised by the parties and to take the trial of cases out of the realm of surprise and
maneuvering. More significantly, a pre-trial has been institutionalized as the answer
to the clarion call for the speedy disposition of cases. Hailed as the most important
procedural innovation in Anglo Saxon justice in the nineteenth century, it paves the

way for a less cluttered trial and resolution of the case. 65 It is, thus, mandatory for
the trial court to conduct pre-trial in civil cases in order to realize the paramount
objective of simplifying; abbreviating, and expediting trial. 66
Far from showing bias or prejudice, the RTC judge was merely complying with his
sworn duty to administer justice without delay. It should be recalled that the
Complaint was filed by petitioner on March 19, 1991. Seven (7) years later, or in
1998, no pre-trial had been conducted as yet. Hence, the cancellation of the pretrial on 'the ground of the impending filing of a petition for certiorari and prohibition,
as there was no proof at the time of the hearing that said petition was in fact filed,
was obviously a dilatory tactic designed for petitioner to control the proceedings of
the court. The Court finds nothing improper, irregular or jaundiced with the trial
court's course of action. As the latter aptly pointed out, since petitioner presented
no copy of the petition for _certiorari and prohibition duly received by the appellate
court, there was nothing with which it could evaluate the "merits and demerits of
the proposed postponement."67 More importantly, even with the actual filing of the
petition for certiorari at 2:1768 in the afternoon of July 7, 1998, no restraining order
was issued by the CA enjoining the trial court from proceeding with the pretrial.69 The appellate court correctly emphasized, in the assailed Decision dated
September 22, 2010, that the mere elevation of an interlocutory matter through a
petition for certiorari does not by itself merit a suspension of the proceedings before
the trial court, unless a temporary restraining order or a writ of preliminary
injunction has been issued.70 This pronouncement is squarely consistent with
Section 7, Rule 65 of the Rules of Court which was instructively applied in Republic
of the Phils. v. Sandiganbayan (First Div.) 71 as follows:
The mere elevation of an interlocutory matter to this Court through a petition for
Certiorari under Rule 65 of the Rules of Court, like in the present case, does not by
itself merit a suspension of the proceedings before a public respondent, unless a
temporary restraining order or a writ of preliminary injunction has been issued
against the public respondent. Rule 65, Section 7 of the Rules of Court so provides:
SEC. 7. Expediting proceedings; injunctive relief. The court. in which the petition
[for Certiorari, Prohibition and Mandamus] is filed may issue orders expediting the
proceedings, and it may also grant a temporary restraining order or a writ of
preliminary injunction for the preservation of the rights of the parties pending such
proceedings. The petiti9n shall not interrupt the. course of the principal case unless
a temporary restraining order or a writ of preliminary injunction has beer! issued,
enjoining the public respondent from further proceeding in the case. The .burden is
thus on the petitioner in a petition for Certiorari, Prohibition and Mandamus to show
that there is a meritorious ground for the issuance of a temporary restraining order
or writ of preliminary injunction for the purpose of suspending the proceedings
before the public respondent. Essential for granting injunctive relief is the existence
of an urgent necessity for the writ in order to prevent serious damage. 72 (Italics,
emphasis and underscoring in the original) Thus, in light of the foregoing,
petitioner's refusal to proceed with the pre-trial could not be justified by the filing of
the petition for certiorari and prohibition. Petitioner's assertion that the alleged
"sham, contemptuous lies contained in respondents' Answer should be stricken off
from the records"73 first before the pre-trial could proceed is, at best, speculative as
it was palpably anchored on the mere supposition that its petition would be granted.

It bears stressing that the rules of procedure do not exist for the convenience of the
litigants. These rules are established to provide order to and enhance the efficiency
of the judicial system. By trifling with the rules and the court processes, and openly
defying the order of the trial court to proceed to pre-trial, petitioner only has itself to
blame for the dismissal of its Complaint. The dismissal is a matter within the trial
court's sound discretion, which, as authorized by Section 3, Rule 17 of the Rules of
Court hereunder quoted, must stand absent any justifiable reason to the contrary,
as in this case:
SEC. 3. Dismissal due to fault of plaintiff - If, for no justifiable cause, the plaintiff
fails to appear on the date of the presentation of his evidence in chief on the
complaint, or to prosecute his action for an unreasonable length of time, or to
comply with these Rules or any order of the court, the complaint may be dismissed
upon motion of the defendant or upon the court's own motion, without prejudice to
the right of the defendant to prosecute his counterclaim in the same or in a
separate action. This dismissal shall have the effect of an adjudication. upon the
merits, unless otherwise declared by the court. (Emphases supplied)
Verily, as the Court sees it, petitioner had the opportunity to present its case, yet
chose to unduly forego the same. The appellate court in CA-G.R. CV No. 92522
pointed out the crucial fact that petitioner had already submitted its pre-trial brief
and its counsel was armed with a special power of attorney for the pre-trial. 74 There
was nothing that could have stopped petitioner from proceeding to pre-trial when its
motion for postponement was denied. The trial court correctly opined that it would
have been entirely different if petitioner simply objected to the proceeding and
made of record its objection. But petitioner's refusal to even start with the
statement of its cause is a "clear, firm and open defiance" 'of the directive of the
court,75 which justified the dismissal of its Complaint pursuant to Section 3, Rule 17
of the Rules of Court as above-cited. The Court finally considers that this case was
elevated to the CA for four ( 4) times, and this is the third time that the Court has to
resolve issues between the' parties, at the instance of petitioner. If this case has
dragged on for more than two (2) decades, surely petitioner cannot wash its hands
of any responsibility therefor. The expedition us disposition of cases is as much the
duty of petitioner, being the plaintiff, as the court's. Indeed, respondents, as the
defendants, cannot be wearingly denied of their right to the speedy disposition of
the case filed against them. After more than two (2) decades, respondents certainly
do not deserve the agony of going through the same issues all over again with
petitioner, which could have been settled had the latter simply proceeded to pretrial and had given the trial court the opportunity to evaluate the evidence, apply
the law, and decree the proper judgment. At the end of the day, the unfortunate
fault can fall on no one's hands but on petitioner's. Indeed, there is a price to pay
when one trifles with the rules.
WHEREFORE, the petition is DENIED. The Decision dated September 22, 2010 and
the Resolution dated November 23, 2010 of the Court of Appeals in CA-G.R. CV No.
92522 are hereby AFFIRMED.
SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice

Corpus v. Hon. Ochotorena, A.M. No. RTJ-04-1861, July 30, 2004

SECOND DIVISION

[A.M. No. RTJ- 04-1861. July 30, 2004]

MARGIE
MACIAS
CORPUS, complainant,
vs. JUDGE
WILFREDO
G.
OCHOTORENA, RTC BR. 11, SINDANGAN, ZAMBOANGA DEL
NORTE, respondent.
DECISION
TINGA, J.,
On May 22, 2001, the Office of the Court Administrator (OCA) received the
verified Complaint[1] of Margie Corpus-Macias (Mrs. Macias) dated May 11, 2001,
accusing Judge Wilfredo G. Ochotorena, then Presiding Judge, Regional Trial Court
(RTC), Branch 11, Sindangan, Zamboanga Del Norte, of bias, partiality and violation
of judicial conduct in connection with his disposition of Civil Case No. S-695 for
declaration of nullity of marriage, entitled Mariano Joaquin S. Macias v. Margie
Corpus-Macias.
The antecedents follow.
On February 6, 2001, a verified Complaint for declaration of nullity of marriage
was filed against Mrs. Macias by Mariano Joaquin S. Macias (Mr. Macias), her
husband and incumbent presiding judge of RTC, Branch 11, Liloy, Zamboanga Del
Norte. The case was raffled to the respondents court. [2] On the same day
the Complaint was filed, the respondent immediately issued Summons to Mrs.
Macias.[3]However, the Summons was not served on Mrs. Macias for the reason that
her whereabouts were allegedly unknown. [4] Consequently, Mr. Macias filed a motion
to serve summons by publication. The respondent granted the motion in
his Order[5] dated March 7, 2001, with the directive that Mrs. Macias should file her
answer within 30 days after notice. Thereafter, Mr. Macias caused the publication of
theSummons in the local weekly newspaper, Tingog Peninsula, based in Dipolog
City in its March 11-17, 2001 issue.[6]
Mrs. Macias claims she learned of the aforesaid publication of Summons during
the first week of April 2001. Without delay, on April 10, 2001 or within the 30-day
period to file an answer, she filed a Motion to Dismiss, which she set for hearing on
April 20, 2001.[7] However, instead of first acting upon the motion, the respondent
judge set the hearing on the merits of the subject case on April 19, 2001, or one day
before.

On April 19, 2001, respondent judge denied the Motion to Dismiss and re-set the
hearing on the merits to April 30, May 2 and 3, 2001. [8] After the scheduled
hearings, the respondent judge terminated the proceedings and declared the case
submitted for decision.[9]
In the interim, from April 10, 2001 up to April 30, 2001, various motions and
manifestations, one after the other but interrelated, were filed by the counsel of
Mrs. Macias opposing the hearing on the merits of the case before the respondent
judge.[10] One was denied while the rest were ignored. As previously stated, the
respondent proceeded with the hearing on April 30, 2001 without resolving the
other motions and manifestations.
It is in the light of the foregoing that Mrs. Macias believes that the respondent
judge deprived her of the fundamental right to due process with utmost bias and
partiality for Mr. Macias; hence, she filed the instant Complaint containing the
above-cited facts before the Office of the Court Administrator (OCA). [11] Also in
the Complaint is her prayer that an order be issued ex-parte directing the
respondent judge to desist from taking any further action in the subject case and
imposing an administrative sanction against him.
Without waiting for the OCAs Indorsement, the respondent judge submitted
his Comment/Answer[12] on May 25, 2001.[13]
The respondent judge claims that the instant Complaint is fatally defective
because it is not supported by the affidavits of persons who have knowledge of the
facts and documents needed to substantiate the allegations therein. Also, he
asserts that malice, bad faith, and the intention to harass, embarrass and humiliate
him had motivated Mrs. Macias to file the said Complaint.
The respondent judge disputes violating Mrs. Macias right to due process. He
argues that Mrs. Macias was given the opportunity to be heard but chose not to give
her side, as shown by her failure to appear during the trial despite prior
notice. Furthermore, he points out that the records of the case would show that the
proceedings was done in good faith and based on law and jurisprudence.
Furthermore, the respondent judge posits that even if he may have committed
an error, such should be corrected by availing of judicial remedies and not by
resorting to the filing of an administrative action. He argues that it is only after the
Supreme Court finds that a judge had committed malice or gross ignorance that he
should be administratively sanctioned. Moreover, respondent claims that
a Petition[14]dated May 11, 2001, containing similar allegations as the instant
complaint, was filed before the Court of Appeals, a copy of which he received on
May 21, 2001.
Finally, respondent judge insists that his Decision[15] is valid and prays for the
dismissal of the instant Complaint for lack of merit.
In her Reply[16] which she filed on July 19, 2001, Mrs. Macias admits having filed
a petition for certiorari[17] under Rule 65 of the 1997 Rules of Civil Procedure with the
Court of Appeals, docketed as CA-G.R. SP No. 64733 entitled Margie Corpus Macias
v. Judge Wilfredo G. Ochotorena on May 18, 2001.[18]
In addition, Mrs. Macias claims that the Court of Appeals decided the Petition
for Certiorari and Prohibition with Application for Prayer for Temporary Restraining

Order (TRO) and/or Writ of Preliminary Injunction in her favor on July 13, 2001,
finding respondent judge blatantly transgressing her right to due process and
ignorant of the basic rudiments of Civil Procedure. She notes that the
Decision[19]nullified the assailed proceedings and the Decision [20] rendered by the
respondent judge on May 15, 2001 in Civil Case No. S-695. [21] And finally, Mrs.
Macias stresses that the instant charge against respondent judge may simply be
verified by checking the records of the case.
On June 4, 2001, the respondent judge retired from the service. However,
pursuant to the Resolution of the Court in A.M. No. 10597-Ret. dated 22 October
2001, the Court retained the amount of Forty Thousand Pesos (P40,000.00) from his
retirement benefits, to answer for whatever administrative sanction the Court may
impose in relation to the instant case.[22]
In summary, Mrs. Macias now asserts before the Court that the respondent
judges actuations constitute bias, partiality and conduct unbecoming a judge.
Moreover, according to her, what is more glaring and conclusive from the records is
that the respondent is grossly ignorant of the law and procedure. For these
administrative lapses, Mrs. Macias concludes that the Court should sanction him.
The conclusion is amply supported by the Court of Appeals Decision which
states that the respondent judge totally disregarded Mrs. Macias right to due
process when he proceeded with the trial on the merits of the case completely
ignoring the fact that her Motion to Dismiss, which was filed within the 30-day
reglementary period, was still pending resolution.
The respondent judge disregarded the provisions of Section 1, Rule 18 of the
1997 Rules on Civil Procedure, which states that: After the last pleading has been
served and filed, it shall be the duty of the plaintiff to promptly move ex-parte that
the case be set for pre-trial. Considering that the last pleading was Mrs. Macias
Motion to Dismiss, the respondent judge should have first resolved the motion and
then waited for Mr. Macias motion to set the case for pre-trial.
What happened in the case is a classic example of railroading or procedural
short-cut. Instead of resolving the Motion to Dismiss, the respondent judge
completely ignored it and proceeded with the trial on the merits of the case by
receiving Mr. Macias evidence ex-parte.
The respondent judge compounded his blunder when, after denying Mrs.
Macias Motion to Dismiss, he continued with the reception of Mr. Macias
evidence ex-parte, ordered the termination of the trial and thereafter, considered
the case submitted for decision despite Mrs. Macias filing of a Motion for
Reconsideration of the order denying her Motion to Dismiss. In holding the trial of
the case up to its completion, the respondent judge had acted utterly oblivious to
the pending Motion for Reconsideration.
It is also worth mentioning that, as correctly found by the appellate court, even
if Mrs. Macias failed to file her answer to the complaint after the period therefor had
elapsed, the respondent judge was not authorized to conduct a hearing of the case
on its merits. The Rules of Court prohibits default proceedings in cases involving
declaration of nullity of marriage.[23]

In that regard, Mrs. Macias had already filed her Motion to Dismiss where she
indicated her address and, hence, can be notified by the Public Prosecutor of his
investigation.[24]
Section 3, Rule 9 of the 1997 Rules of Civil Procedure states: If the defending
party in an action for annulment or declaration of nullity of marriage or for legal
separation fails to answer, the court shall order the prosecuting attorney to
investigate whether or not a collusion between the parties exists, and if there is no
collusion, to intervene for the State in order to see to it that the evidence submitted
is not fabricated. Thus, the report of the Public Prosecutor is a condition sine qua
non for further proceedings to go on in the case. Respondent judge ignored this
procedural rule.
While the record shows that Public Prosecutor Arturo M. Paculanag had filed
a Certification dated May 04, 2001[25] with the respondent judges court, stating,
among others, that he appeared in behalf of the Solicitor General during the exparte presentation of plaintiffs evidence, even cross-examining the plaintiff and his
witness, the psychiatrist Dr. Cheryl T. Zalsos, and that he had no objection to the
granting of the petition for declaration of nullity of marriage, such Certification does
not suffice to comply with the mandatory requirement that the court should order
the investigating public prosecutor whether a collusion exists between the
parties. Such directive must be made by the court before trial could proceed, not
after the trial on the merits of the case had already been had. Notably,
said Certification was filed after the respondent judge had ordered the termination
of the case.
Considering the foregoing, the Court rules that the respondent judge violated
Mrs. Macias right to due process when he completely ignored the pertinent rules. A
judge is called upon to exhibit more than just a modicum of acquaintance with
statutes and procedural rules, it is his duty to keep always abreast with law and
jurisprudence.[26] When the law or procedure is so elementary, for him not to know it
or to act as if he does not know it constitutes gross ignorance. [27]
Under Section 3 in relation to Section 10 of Rule 140 of the Rules of Court, gross
ignorance of the law is considered a serious offense, for which a penalty of either
dismissal from the service with forfeiture of benefits, suspension from office for
more than three (3) months but not exceeding six (6) months or a fine of more than
Twenty Thousand Pesos (P20,000.00) but not exceeding Forty Thousand Pesos
(P40,000.00) may be imposed.
Respondent compulsorily retired from the service on June 04, 2001, thus,
dismissal or suspension from the service is no longer possible. Nonetheless, a
penalty of fine may still be imposed upon him considering that under the Resolution
of the First Division in A.M. No. 10597-Ret. dated October 22, 2001, [28] the Court
retained the amount of Forty Thousand Pesos (P40,000.00) from his retirement
benefits to answer for whatever administrative sanction the Court may impose upon
him with regard to this case. Considering that this is the first time the respondent
judge will be meted a penalty, [29] the Court finds a fine of Twenty Thousand Pesos
(P20,000.00) appropriate.
WHEREFORE, Judge Wilfredo G. Ochotorena is found GUILTY of gross ignorance
of the law and incompetence and is hereby FINED the amount of Twenty Thousand
Pesos (P20,000.00) to be taken from the amount earlier withheld from his

retirement benefits. The Fiscal Management Office of the OCA is DIRECTED to

immediately release to the respondent judge the remaining balance of Twenty
Thousand Pesos (P20,000.00) from the aforesaid retained amount, unless there are
other valid reasons for its further retention.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

Sec. 2. Nature and Purpose

Suico Industrial Corp., v. Hon. Yap, G.R. No. 177711, September 5,
2012
G.R. No. 177711

September 5, 2012

SUICO INDUSTRIAL CORP., and SPOUSES ESMERALDO and ELIZABETH

SUICO, Petitioners,
vs.
HON. MARILYN LAGURA-YAP, Presiding Judge of Regional Trial Court of
Mandaue City, Branch 28; PRIVATE DEVELOPMENT CORP. OF THE PHILIS.
(PDCP
now
First
E-Bank); and
ANTONIO
AGRO
DEVELOPMENT
CORPORATION, Respondents.
DECISION
REYES, J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court,
which assails the Decision1dated January 16, 2006 and Resolution2 dated April 11,
2007 of the Court of Appeals (CA) in CA-G.R. SP No. 78676 entitled Suico Industrial
Corporation and Spouses Esmeralda and Elizabeth Suico v. Hon. Marilyn Lagura-Yap,
Presiding Judge of
Mandaue City Regional Trial Court, Branch 28; Private Development Corporation of
the Phils. (PDCP Bank); and Antonio Agro Development Corporation.
The Factual Antecedents
In 1993, respondent Private Development Corporation of the Philippines (PDCP
Bank), later renamed as First E-Bank and now Prime Media Holdings, Inc., foreclosed
the mortgage constituted on two real estate properties in Mandaue City then owned
by petitioners and mortgagor-spouses Esmeraldo and Elizabeth Suico, following
petitioner Suico Industrial Corporations failure to pay the balance of two secured
loans it obtained from the bank in 1987 and 1991. PDCP Bank emerged as the
highest bidder in the foreclosure sale of the properties, as evidenced by a
Certificate of Sale dated February 29, 1993 issued by the Sheriff of Mandaue City.

The mortgagors failure to redeem the foreclosed properties within the period
allowed by law resulted in the consolidation of ownership in favor of PDCP Bank and
the issuance of Transfer Certificate of Title Nos. 34987 and 34988 in the banks
name. The enforcement of a writ of possession obtained by PDCP Bank from the
Regional Trial Court (RTC), Mandaue City, Branch
28, was however enjoined by an injunctive writ obtained by the petitioners on
January 17, 1995 from the RTC, Mandaue City, Branch 56, where they filed on
December 9, 1994 an action for specific performance, injunction and damages to
prevent PDCP Bank from selling and taking possession of the foreclosed properties.
Petitioners alleged in said action for specific performance that they had an
agreement with PDCP Bank to intentionally default in their payments so that the
mortgaged properties could be foreclosed and purchased during public auction by
the bank. After consolidation of title in the banks name, PDCP Bank, allegedly, was
to allow the petitioners to purchase the properties for P 5,000,000.00 through a
recommended buyer. Petitioners then claimed that PDCP Bank increased the
properties selling price, thereby preventing their recommended buyers from
purchasing them.
When PDCP Bank questioned before the CA the issuance of the injunctive writ by
the RTC Branch 56, the appellate court declared the trial court to have exceeded its
jurisdiction in issuing the assailed writ, as it interfered with the proceedings of a
court of concurrent jurisdiction, the RTC Branch 28. Said CA decision was affirmed in
1999 by this Court in G.R. No. 123050, entitled Suico Industrial Corporation v.
CA,3 wherein we declared:
When petitioners failed to pay the balance of the loan and thereafter failed to
redeem the properties, title to the property had already been transferred to
respondent PDCP Bank. Respondent PDCP Banks right to possess the property is
clear and is based on its right of ownership as a purchaser of the properties in the
foreclosure sale to whom title has been conveyed. Under Section 7 of Act No. 3135
and Section 35 of Rule
39, the purchaser in a foreclosure sale is entitled to possession of the property.
Respondent PDCP Bank has a better right to possess the subject property because
of its title over the same.
Furthermore, petitioners undertook a procedural misstep when it filed a suit for
specific performance, injunction and damages before the RTC Branch 56 instead of a
petition to set aside the sale and cancellation of the writ of possession as provided
under Section 8 of Act 3135 x x x.4 (Citations omitted and emphasis ours)
Notwithstanding the afore-quoted portions in this Courts Suico decision, the
proceedings in Civil Case No. MAN-2321 for specific performance, injunction and
damages before RTC Branch 56 continued. Herein respondent Antonio Agro
Development Corporation (AADC), which in the meantime had purchased the
foreclosed properties from PDCP Bank, filed with the trial court a motion to
intervene and an answer-in-intervention.

RTC Branch 56s Presiding Judge Augustine Vestil later voluntarily inhibited himself
from further hearing the case, resulting in the re-raffle of the case to RTC Branch 55.
When PDCP Bank failed to file its answer within the period allowed by the rules, the
petitioners moved that the bank be declared in default and the answer-inintervention of AADC be stricken off the records. In an Order 5 dated August 3, 2001,
Judge Ulric R. Caete (Judge Caete) of RTC Branch 55 still gave therein defendants
the time to file their written oppositions on the motions after noting the following
antecedents:
Record shows that this case was filed in 1994 yet and until this point in time there is
no answer by the defendant. Likewise, the Motion for Intervention, filed by Antonio
Agro Development Corporation was denied per record by the Court. However, in
spite of the denial, an answer in intervention was filed. Hence, plaintiff now, per
their motion and manifestation are praying for a default order against PDCP Bank,
and for the striking off from the records of Intervenors Answer in Intervention.
In todays hearing of the incidents, Atty. Cavada entered his appearance and
manifested that he will [sic] just filed a notice of appearance as counsel for the
defendant, Private Development Corporation of the Philippines. Atty. Go appeared
for the Intervenor. Both counsels pray for a period of ten (10) days from today to file
their written opposition in these incidents subject for todays hearing.
Plaintiff failed to appear for the hearing of this incident. 6
On October 23, 2001, the RTC issued an order denying the petitioners motion to
declare PDCP Bank in default. PDCP Banks answer filed on August 24, 2001 and
AADCs answer-in-intervention were also admitted. When Judge Caete also
inhibited from further hearing the case, the case was transferred to Judge Marilyn
Lagura-Yap (Judge Yap) of RTC Branch 28.
During the cases scheduled pre-trial conference on September 6, 2002, the
petitioners counsel asked for a resetting to allow him more time to prepare the
required pre-trial brief. This was opposed by PDCP Bank and AADC, which filed a
motion for the cases dismissal later granted by Judge Yap in its order that reads in
part:
Although the Court notes that plaintiff Elizabeth Suico is in court, the fact that there
is no pre-trial brief submitted by plaintiffs militates against their cause this morning.
Under Section 6 of Rule 18 of the Revised Rules of Court, in the penultimate
paragraph thereof, it is quite expressly provided that failure to file pre-trial brief has
the same effect as failure to appear in the pre-trial.
FINDING the joint motion of defendant PDCP, now 1st e-Bank, and defendantintervenor Antonio Agro Development Corporation to be meritorious, the Court
hereby orders the DISMISSAL of this case.
IT IS SO ORDERED.7

Petitioners motion for reconsideration, with pre-trial brief attached, was denied by
the trial court in its Order8dated February 21, 2003, the dispositive portion of which
reads:
Applying these rulings to the environmental circumstances in this case, the Court
finds no basis to reconsider its Order dated September 6, 2002.
The Motion for Reconsideration is hereby DENIED.
IT IS SO ORDERED.9
A copy of the order was received by the petitioners counsel on March 21, 2003.
Unsatisfied with the trial courts rulings, the petitioners filed on April 4, 2003 their
notice of appeal. The RTC, however, refused to give due course to the appeal via its
Order10 dated May 15, 2003 given the following findings:
A review of the records of the case shows that the Order dismissing the Complaint
was received by plaintiffs through counsel on September 17, 2002. On that date,
the 15-day prescriptive period within which to file an appeal began to run. Plaintiffs
filed their Motion for Reconsideration on October 1, 2002, and their filing of the
motion interrupted the reglementary period to appeal. By that time however, 14
days had already elapsed; thus, from their receipt of the order denying the Motion
for Reconsideration, they had only one (1) day left within which to file a notice of
appeal. On March 21, 2003, plaintiff received the Order denying their Motion for
Reconsideration. Accordingly, they had only one (1) day left, or until March 22, 2003
to file a notice of appeal. However, they were able to do so only on April 4, 2003, or
thirteen (13) days late.11 (Emphasis ours)
Petitioners deemed it useless to still file a motion for reconsideration of the Order
dated May 15, 2003, and thus went straight to the CA to question the RTCs orders
via a petition for certiorari.
The Ruling of the CA
On January 16, 2006, the CA rendered its Decision 12 dismissing the petition for lack
of merit, taking note of the following circumstances:
The September 6, 2002 order dismissing the case pointed out that as early as July
29, 2002, the court had already issued the notice of pre-trial conference and the
return of the notice showed that plaintiffs counsel was furnished a copy on August
21, 2002 but despite the notice, Atty. Manuel Ong, plaintiffs counsel, did not file the
appropriate motion to the [sic] have the conference reset. The order further ruled
that in the notice of pre-trial, it was expressly stated that failure to file pre-trial brief
may be given the same effect as failure to appear in the pre-trial conference. 13
(Citation omitted)

As regards to the petitioners late filing of their notice of appeal, the CA cited the
provisions of Section 13, Rule 41 of the Rules of Court, which provides that the court
may dismiss an appeal filed out of time, motu proprio or on motion, prior to the
transmittal of the original records or the record on appeal to the appellate court. 14
Feeling aggrieved, the petitioners filed a motion for reconsideration, which was
however denied by the CA in its Resolution 15 dated April 11, 2007. Hence, the
present petition for review on certiorari.
The Present Petition
Petitioners cite the following grounds to support their petition:
I.
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR
IN NOT RULING THAT RESPONDENT JUDGE OF THE REGIONAL TRIAL COURT,
BRANCH 28 OF MANDAUE CITY COMMITTED GRAVE ABUSE OF DISCRETION IN
DECLARING THE PETITIONER[S] NON-SUITED AND DISMISSING THE CASE ON
THE GROUND OF FAILURE TO FILE A PRE-TRIAL BRIEF.
II.
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR
IN RULING THAT PETITIONERS NOTICE OF APPEAL FILED ON THE 14TH DAY
AFTER RECEIPT OF THE ORDER DENYING THEIR MOTION FOR
RECONSIDERATION WAS FILED OUT OF TIME.16
In their prayer, the petitioners specifically ask this Court to, among other things,
reverse the CAs rulings and annul and set aside the RTCs Order 17 dated September
6, 2002 which dismissed their action for specific performance, injunction and
damages, and the Order dated February 21, 2003 which denied their motion for
reconsideration.
The petitioners were represented in this petition by the same counsel who assisted
them during the pre-trial and filing of the notice of appeal before the RTC. A new
counsel entered his appearance for the petitioners only upon the filing of a reply.
This Courts Ruling
This Court finds the petition dismissible.
Given the antecedents that led to the filing of this petition, and the fact that the
timeliness of an appeal from the RTCs dismissal of the action for specific
performance is a crucial issue that will determine whether or not the other issues
resolved by the RTC can still be validly questioned at this time, we find it proper to
first resolve the question on the RTCs ruling that the petitioners notice of appeal
was filed out of time.

A
party
is
given
a
"fresh
fifteen
(15)
days
from
receipt
courts
resolution
on
a
reconsideration
within
which
a notice of appeal.

period"
of
motion
to

of
the
for
file

Section 3, Rule 41 of the Rules of Court prescribes the period to appeal from
judgments or final orders of RTCs, as follows:
Sec. 3. Period of ordinary appeal. The appeal shall be taken within fifteen (15)
days from notice of the judgment or final order appealed from. Where a record on
appeal is required, the appellant shall file a notice of appeal and a record on appeal
within thirty (30) days from notice of the judgment or final order. x x x.
The period of appeal shall be interrupted by a timely motion for new trial or
reconsideration. No motion for extension of time to file a motion for new trial or
reconsideration shall be allowed.
In Neypes v. Court of Appeals 18 decided by this Court on September 14, 2005, we
ruled that to standardize the appeal periods provided in the Rules of Court and to
afford litigants a fair opportunity to appeal their cases, the Court deems it practical
to allow a fresh period of fifteen (15) days within which to file the notice of appeal in
the RTC, counted from receipt of the order dismissing a motion for new trial or
motion for reconsideration. Said "fresh period rule" also aims to regiment or make
the appeal period uniform.19 It eradicates the confusion as to when the fifteen (15)day appeal period should be counted from receipt of notice of judgment or from
receipt of notice of final order appealed from. 20
Thus, in similar cases decided by this Court after Neypes, the fresh period rule was
applied, thereby allowing appellants who had filed with the trial court a motion for
reconsideration the full fifteen (15)-day period from receipt of the resolution
resolving the motion within which to file a notice of appeal. Among these cases is
Sumiran v. Damaso,21 wherein we reiterated our ruling in Makati Insurance Co., Inc.
v. Reyes22 and De Los Santos v. Vda. de Mangubat 23 to explain that the rule can be
applied to actions pending upon its effectivity:
As early as 2005, the Court categorically declared in Neypes v. Court of Appeals that
by virtue of the power of the Supreme Court to amend, repeal and create new
procedural rules in all courts, the Court is allowing a fresh period of 15 days within
which to file a notice of appeal in the RTC, counted from receipt of the order
dismissing or denying a motion for new trial or motion for reconsideration. This
would standardize the appeal periods provided in the Rules and do away with the
confusion as to when the 15-day appeal period should be counted. x x x
xxxx
The foregoing ruling of the Court was reiterated in Makati Insurance Co., Inc. v.
Reyes, to wit:

"Propitious to petitioner is Neypes v. Court of Appeals, promulgated on 14

September 2005 while the present Petition was already before us. x x x
xxxx
With the advent of the "fresh period rule," parties who availed themselves of the
remedy of motion for reconsideration are now allowed to file a notice of appeal
within fifteen days from the denial of that motion.
xxxx
In De los Santos v. Vda. de Mangubat, we applied the same principle of "fresh period
rule", expostulating that procedural law refers to the adjective law which prescribes
rules and forms of procedure in order that courts may be able to administer justice.
Procedural laws do not come within the legal conception of a retroactive law, or the
general rule against the retroactive application of statutes. The "fresh period rule" is
irrefragably procedural, prescribing the manner in which the appropriate period for
appeal is to be computed or determined and, therefore, can be made applicable to
actions pending upon its effectivity, such as the present case, without danger of
violating anyone elses rights."24 (Citations omitted)
The retroactivity of the Neypes ruling was further explained in our Resolution dated
June 25, 2008 in Fil-Estate Properties, Inc. v. Homena-Valencia, 25 wherein we held:
The determinative issue is whether the "fresh period" rule announced in Neypes
could retroactively apply in cases where the period for appeal had lapsed prior to 14
September 2005 when Neypes was promulgated. That question may be answered
with the guidance of the general rule that procedural laws may be given retroactive
effect to actions pending and undetermined at the time of their passage, there
being no vested rights in the rules of procedure. Amendments to procedural rules
are procedural or remedial in character as they do not create new or remove vested
rights, but only operate in furtherance of the remedy or confirmation of rights
already existing.
Sps. De los Santos reaffirms these principles and categorically warrants that Neypes
bears the quested retroactive effect, x x x.26 (Citations omitted)
Given the foregoing rules, the petitioners notice of appeal was timely filed on April
4, 2003, since it was filed within the fifteen (15)-day period from their receipt on
March 21, 2003 of the RTCs order denying their motion for reconsideration of the
cases dismissal.
In any case, instead of remanding the case to the trial court with the order to take
due course on the appeal made by the petitioners, this Court finds it more proper
and appropriate to already resolve the issue on the legality of the courts dismissal
of the main action filed before it on the basis of the counsel for the petitioners
failure to file a pre-trial brief. This, considering that the issue has already been
extensively argued by the parties in their pleadings. The prayer in this petition even
specifically seeks the annulment of the RTCs Order of dismissal dated September 6,

2002, and the order denying the motion for reconsideration thereof. The CA decision
being appealed from and the RTC orders subject thereof have likewise decided on
the issue, with in-depth discussion of the facts pertaining to the issue and the
rationale for the courts rulings.
Failure
to
file
within
the
time
Rules
of
Court
ground for dismissal of an action.

a
pre-trial
prescribed
by
constitutes

brief
the
sufficient

Section 4, Rule 18 of the Rules of Court provides that it is the duty of the parties and
their counsel to appear at the pre-trial. The effect of their failure to do so is provided
in Section 5 of Rule 18, particularly:
Sec. 5. Effect of failure to appear. The failure of the plaintiff to appear when so
required pursuant to the next preceding section shall be cause for dismissal of the
action. The dismissal shall be with prejudice, unless otherwise ordered by the court.
A similar failure on the part of the defendant shall be cause to allow the plaintiff to
present his evidence ex parte and the court to render judgment on the basis
thereof. (Emphasis ours)
Under Section 6, Rule 18, the failure to file a pre-trial brief when required by law
produces the same effect as failure to attend the pre-trial, to wit:
Sec. 6. Pre-trial brief. The parties shall file with the court and serve on the adverse
party, in such manner as shall ensure their receipt thereof at least three (3) days
before the date of the pre-trial, their respective pre-trial briefs which shall contain,
among others:
xxxx
Failure to file the pre-trial brief shall have the same effect as failure to appear at the
pre-trial. (Emphasis ours)
On the basis of the foregoing, the trial court clearly had a valid basis when it
ordered the dismissal of the petitioners action. Still, petitioners assail the trial
courts dismissal of their case, invoking a liberal interpretation of the rules.
Instructive on this point are the guidelines we applied in Bank of the Philippine
Islands v. Dando,27 wherein we cited the reasons that may provide a justification for
a court to suspend a strict adherence to procedural rules, namely: (a) matters of
life, liberty, honor or property; (b) the existence of special or compelling
circumstances; (c) the merits of the case; (d) a cause not entirely attributable to the
fault or negligence of the party favored by the suspension of the rules; (e) a lack of
any showing that the review sought is merely frivolous and dilatory; and (f) the fact
that the other party will not be unjustly prejudiced thereby. 28 Upon review, we have
determined that these grounds do not concur in this action.

A review of the factual antecedents indicate that the dismissal of the action for
specific performance has not caused any injustice to the petitioners, barring any
special or compelling circumstances that would warrant a relaxation of the rules.
The alleged agreement between PDCP Bank and the petitioners on the purchase by
the latters recommended buyers of the foreclosed properties at a specified amount
deserves scant consideration for being unsupported by sufficient proof especially
since said supposed agreement was vehemently denied by the bank. What the
records merely adequately establish is the petitioners failure to satisfy their
obligation to the bank, leading to the foreclosure of the mortgage constituted to
secure it, the sale of the foreclosed properties and the failure of the petitioners to
make a timely redemption thereof. In the 1999 case of Suico which also involves
herein parties, we have thus declared that when the petitioners failed to pay the
balance of the secured loan and thereafter failed to redeem the mortgaged
properties, title to the property had already been transferred to PDCP Bank, which
had the right to possess the property based on its right of ownership as purchaser
of the properties in the foreclosure sale. These even led us to declare that the
petitioners undertook a procedural misstep when they filed a suit for specific
performance, injunction and damages instead of a petition to set aside the sale and
cancellation of the writ of possession as provided under Section 8 of Act No. 3135.
The petitioners allegations on their desire and efforts to negotiate during the pretrial conference, and the argument that the case should have just been suspended
instead of dismissed for said reason by the trial court, were only first raised by the
petitioners through their new counsel in their reply, and merit no consideration at
this point. Furthermore, nowhere in the records is it indicated or supported that such
antecedents transpired or were made known by the parties to the courts below.
In affirming the dismissal of petitioners case for their disregard of the rules on pretrial, we emphasize this Courts ruling in Durban Apartments Corporation v. Pioneer
Insurance and Surety Corporation29 on the importance and the nature of a pre-trial,
to wit:
Everyone knows that a pre-trial in civil actions is mandatory, and has been so since
January 1, 1964.1wphi1 Yet to this day its place in the scheme of things is not fully
appreciated, and it receives but perfunctory treatment in many courts. Some courts
consider it a mere technicality, serving no useful purpose save perhaps,
occasionally to furnish ground for non-suiting the plaintiff, or declaring a defendant
in default, or, wistfully, to bring about a compromise. The pre-trial is not thus put to
full use. Hence, it has failed in the main to accomplish the chief objective for it: the
simplification, abbreviation and expedition of the trial, if not indeed its dispensation.
This is a great pity, because the objective is attainable, and with not much difficulty,
if the device were more intelligently and extensively handled.
xxxx
Consistently with the mandatory character of the pre-trial, the Rules oblige not only
the lawyers but the parties as well to appear for this purpose before the Court, and
when a party "fails to appear at a pre-trial conference, (he) may be non-suited or
considered as in default." The obligation "to appear" denotes not simply the
personal appearance, or the mere physical presentation by a party of ones self, but

connotes as importantly, preparedness to go into the different subjects assigned by

law to a pre-trial x x x.30 (Emphasis ours)
In addition to the foregoing, this Court finds no cogent reason to liberally apply the
rules considering that the petitioners and their counsel had not offered sufficient
justification for their failure to file the required pre-trial brief. As held by this Court in
Lapid v. Judge Laurea,31 concomitant to a liberal application of the rules of
procedure should be an effort on the part of the party invoking liberality to at least
explain its failure to comply with the rules. 32 Members of the bar are reminded that
their first duty is to comply with the rules of procedure, rather than seek exceptions
as loopholes. Technical rules of procedure are not designed to frustrate the ends of
justice. These are provided to effect the prompt, proper and orderly disposition of
cases and thus effectively prevent the clogging of court dockets. Utter disregard of
these rules cannot justly be rationalized by harking on the policy of liberal
construction.33
The failure to file the pre-trial brief is then attributable to the fault or negligence of
petitioners counsel. The settled rule is that the negligence of a counsel binds his
clients. Neither counsel nor his clients can now evade the effects thereof by
invoking that the failure amounts to an inexcusable negligence which, by
jurisprudence, should not bind the parties. It is absurd for a counsel to emphasize
on the gravity of his own inaction and then invoke the same misfeasance to evade
the consequences of his act. Furthermore, the claim of petitioners counsel that his
failure to file a pre-trial brief may be regarded as an inexcusable negligence is
inconsistent with his plea for the court to consider the fact that he attended the
scheduled pre-trial conference but only needed more time to file the pre-trial brief.
As in the case of Air Phils. Corp. v. Intl. Business Aviation Services Phils.,
Inc.,34 there was in this case a simple, not gross, negligence. There was only a plain
"disregard of some duty imposed by law," a slight want of care that "circumstances
reasonably impose," and a mere failure to exercise that degree of care that an
ordinarily prudent person would take under the circumstances. There was neither a
total abandonment or disregard of the petitioners case nor a showing of conscious
indifference to or utter disregard of consequences. Again, axiomatic is the rule that
negligence of counsel binds the client.
Petitioners attempt to confuse the issues by citing the respondents own prior delay
in the filing of pleadings and the leniency accorded to them by the trial court in still
later admitting their pleadings. Significantly, however, such matter on the courts
admission of the respondents pleadings, though belatedly filed, depended on the
sound discretion of the court, the circumstances then attending the case and the
particular consequences provided by law for the non-filing of the pleadings.
Petitioners could not expect the trial court to rule similarly in all incidents, Cj
considering that factual circumstances and results of the parties' actions vary in
each issue. In addition, if the petitioners believed that the trial court gravely abused
its discretion in admitting the respondents' pleadings, then they should have availed
of the remedies available to them to question the trial court's orders, rather than
wrongfully including the said matters at the first instance in the appeal from the
case's dismissal.

WHEREFORE, premises considered, the instant petition is hereby DENIED. The

Decision dated January 16, 2006 and Resolution dated April 11, 2007 of the Court of
Appeals in CA-G.R. SP No. 78676 upholding the Regional Trial Court, Mandaue City,
Branch 28's dismissal of petitioners' action for specific performance, injunction and
damages are hereby
AFFIRMED.
SO ORDERED.
BIENVENIDO L. REYES
Associate Justice

Sec. 3. Notice of pre-trial

Sec. 4. Appearance of parties

Fiesta World Mall Corp. v. Lindberg, G.R. No. 152471, August 18,
2006

FIESTA WORLD MALL

CORPORATION,
Petitioner,
- versus -

LINBERG PHILIPPINES, INC.,

Respondent.

G.R. NO. 152471

Present:
PUNO, J., Chairperson,
SANDOVAL-GUTIERREZ,
CORONA,
*
AZCUNA, and
GARCIA, JJ.
Promulgated:
August 18, 2006

x---------------------------------------------------------------------------------------------x

DECISION
SANDOVAL-GUTIERREZ, J.:
For our resolution is the instant Petition for Review on Certiorari[1] assailing
the Decision[2] dated December 12, 2001 and Resolution[3] dated February 28, 2002
rendered by the Court of Appeals in CA-G.R. SP
No. 63671, entitled Fiesta
World Mall Corporation, petitioner, versus Hon. Florito S. Macalino, Presiding Judge
of the Regional Trial Court (RTC), Branch 267,Pasig
City,
and Linberg Philippines,
Inc., respondents.

The facts of this case are:

Fiesta World Mall Corporation, petitioner, owns and operates Fiesta World Mall
located
at
Barangay Maraouy, Lipa City;
while Linberg Philippines,
Inc., respondent, is a corporation that builds and operates power plants.

On January 19, 2000, respondent filed with the Regional Trial Court (RTC),
Branch 267, Pasig City, a Complaint for Sum ofMoney against petitioner, docketed
as Civil Case No. 67755. The complaint alleges that on November 12,
1997, petitioner and respondent executed a build-own-operate agreement, entitled
Contract Agreement for Power Supply Services, 3.8 MW Base Load Power
Plant[4] (the Contract). Under this Contract, respondent will construct, at its own
cost, and
operate
as
owner
a
power
plant, and
to
supply petitioner power/electricity at its shopping mall in Lipa City. Petitioner, on
the other hand, will pay respondent energy fees to be computed in accordance
with the Seventh Schedule of the Contract, the pertinent portions of which provide:

2.1

E1

xxx

988,888 kw-hr x BER

E2

(ED-988,888) x BER

Where:

E1

&

E2

Energy fees in pesos for the billing

period. Where E1 is based on the minimum energy
off-take of 988,888 kw-hrs.per month and E2 is
based on the actual meter reading less the
minimum off-take.

BER

Base energy rate at Ps 2.30/Kw-Hr billing rate

based on the exchange rate of Ps 26.20 to the US
dollar, and with fuel oil to be supplied by
LINBERG at its own cost. The base energy rate is
subject to exchange rate adjustment accordingly to
the formula as follows:

BER

0.6426 + 0.3224 Pn + 1.345 Fn

26.40

4.00

WHERE:

Pn

is
defined
as
the
average
of
the Bangko Sentral ng
Pilipinas published
dealing rates
for
thirty
(30)
trading
days
immediately prior to the new billing rate.

Fn

ED

3.

Weighted average of fuel price per liter based on

the average of the last three (3) purchases made by
LINBERG as evidenced by purchase invoices.

Energy delivered in kw-hrs per meter reading.

Minimum Energy Off-Take

The energy fees payable to LINBERG shall be on the basis of

actual KWH generated by the plant. However, if the actual KWH
generated is less than the minimum energy off-take level, the
calculation of the energy fees shall be made as if LINBERG has
generated the minimum energy off-take level of 988,888 KW-HR
per month.

The complaint further alleges that respondent constructed the power plant
in Lipa City at a cost of about P130,000,000.00. In November 1997, the power plant
became operational and started supplying power/electricity to petitioners shopping
mall inLipa City. In December 1997, respondent started billing petitioner. As of May
21, 1999, petitioners unpaid obligation amounted to P15,241,747.58, exclusive of
interest. However, petitioner questioned the said amount and refused to pay
despite respondents repeated demands.

In its Answer with Compulsory Counterclaim, petitioner specifically denied the

allegations in the complaint, claiming that respondent failed to fulfill its obligations
under the Contract by failing to supply all its power/fuel needs. From November 10,
1998 until May
21,
1999,
petitioner personally shouldered
the
cost
of
fuel. Petitioner
also
disputed
the amount
of
energy
feesspecified
in the billings made by respondent because the latter failed to monitor,

measure, and record the quantities of electricity delivered by taking

photographs of the electricity meter reading prior to the issuance of its
invoices
and
billings,also in
violation
of the
Contract.[5] Moreover,
in the computation of the electrical billings, the minimum off-take of energy
(E2)was based solely on
the projected
consumption as computed
by
respondent. However, based on petitioners actual experience, itcould not consu
me the energy pursuant to the minimum off-take even if it kept open all its
lights and operated all its machinery and equipment for twenty-four hours
a day for a month. This fact was admitted by respondent. While both
parties had discussions on the questioned billings, however, there were no earnest
efforts to resolve the differences in accordance with the arbitration clause provided
for in the Contract.

Finally, as a special affirmative defense in its answer, petitioner alleged that

respondents filing of the complaint ispremature and should be dismissed on the
ground of non-compliance with paragraph 7.4 of the Contract which provides:

7.4

Disputes

If FIESTA WORLD disputes the amount specified by any invoice, it

shall pay the undisputed amount on or before such date(s), and the
disputed amount shall be resolved by arbitration of three (3)
persons, one (1) by mutual choice, while the other two (2) to
be each chosen by the parties themselves, within fourteen (14)
days after the due date for such invoice and all or any part of the
disputed amount paid to LINBERG shall be paid together with interest
pursuant to Article XXV from the due date of the invoice. It is agreed,
however, that both parties must resolve the disputes within thirty (30)
days, otherwise any delay in payment resulting to loss to LINBERG
when converted to $US as a result of depreciation of the Pesos shall be
for the account of FIESTA WORLD. Corollarily, in case of erroneous
billings, however, LINBERG shall be liable to pay FIESTA WORLD for the
cost of such deterioration, plus interest computed pursuant to Art. XXV
from
the
date
FIESTA
WORLD
paid
for
the
erroneous
billing. (Underscoring supplied)

Thereafter, petitioner filed a Motion to Set Case for Preliminary Hearing on the
ground that respondent violated thearbitration clause provided in the Contract,
thereby rendering its cause of action premature.

This was opposed by respondent, claiming that paragraph 7.4 of the

Contract on arbitration is not the provision applicable to this case; and that since the
parties failed to settle their dispute, then respondent may resort to court action
pursuant to paragraph17.2 of the same Contract which provides:

17.2

Amicable Settlement

The parties hereto agree that in the event there is any dispute or
difference between them arising out of this Agreement or in
the interpretation of any of the provisions hereto, they shall
endeavor to meet together in an effort to resolve such dispute
by discussion between them but failing such resolution the
Chief Executives of LINBERG and FIESTA WORLD shall meet to
resolve such dispute or difference and the joint decision of such
shall be binding upon the parties hereto, and in the event that a
settlement of any such dispute or difference is not reached,
then the provisions of Article XXI shall apply.

Article XXI, referred to in paragraph 17.2 above, reads:

ARTICLE XXI

JURISDICTION

The parties hereto submit to the exclusive jurisdiction of the proper

courts of Pasig City, Republic of the Philippines for the hearing and
determination of any action or proceeding arising out of or in
connection with this Agreement.

In
its
Order
dated October
court denied petitioners motion for lack of merit.

3,

2000,

the

trial

Petitioner then filed a Motion for Reconsideration but it was denied in an

Order dated January 11, 2001.

Dissatisfied, petitioner elevated the matter to the Court of Appeals via a

Petition for Certiorari, docketed as CA-G.R. SP No. 63671. On December 12,
2001, the appellate court rendered its Decision dismissing the petition and
affirming the challenged Orders of the trial court.

Petitioners Motion for Reconsideration of the above Decision was likewise

denied by the appellate court in itsResolution[6] dated February 28, 2002.

Hence, the instant Petition for Review on Certiorari.

The sole issue for our resolution is whether the filing with the trial court
of respondents complaint is premature.

Paragraph
7.4
of
the Contract,
quoted
earlier, mandates
that should petitioner dispute
any
amount of
energy
fees in
theinvoice
and billings made by respondent, the same shall be resolved by arbitration of
three (3) persons, one (1) by mutual choice, while the other two (2) to be
each chosen by the parties themselves. The parties, in incorporating
such agreement in their Contract, expressly intended that the said matter in
dispute must first be resolved by an arbitration panel before it reaches the
court. They made such arbitration mandatory.

It is clear from the records that petitioner disputed the amount of energy fees
demanded by respondent. However,respondent, without prior recourse to
arbitration as required in the Contract, filed directly with the trial court its complaint,
thus violating the arbitration clause in the Contract.

It bears stressing that such arbitration agreement is the law between the
parties. Since that agreement is binding between them, they are expected to abide
by it in good faith.[7] And because it covers the dispute between them in the
present case, either of them may compel the other to arbitrate. [8] Thus, it is well
within petitioners right to demand recourse to arbitration.

We cannot agree with respondent that it can directly seek judicial recourse by
filing an action against petitioner simply because both failed to settle their
differences amicably. Suffice it to state that there is nothing in the
Contract providing that theparties may dispense with the arbitration
clause. Article XXI on jurisdiction cited by respondent, i.e., that the parties
hereto submit to the exclusive jurisdiction of the proper courts
of Pasig City merely provides for the venue of any action arising out of or in
connection with the stipulations of the parties in the Contract.

Moreover, we note that the computation of the energy fees disputed by

petitioner also involves technical matters that arebetter left to an arbitration
panel who has expertise in those areas. Alternative dispute resolution methods
or ADRs like arbitration, mediation, negotiation and conciliation are encouraged

by this Court. By enabling the parties to resolve their disputes amicably, they
provide solutions that are less time-consuming, less tedious, less confrontational,
and more productive of goodwill and lasting relationships. [9] To brush aside such
agreement providing for arbitration in case of disputes between the parties would
be a step backward. As we held in BF Corporation v. Court of Appeals,[10]

It should be noted that in this jurisdiction, arbitration has been

held valid and constitutional. Even before the approval on June 19,
1953 of Republic Act No. 876 (The Arbitration Law), this Court has
countenanced the settlement of disputes through arbitration
(Puromines, Inc. v. Court of Appeals, G.R. No. 91228, March 22, 1993,
220 SCRA 281-290). Republic Act No. 876 was adopted to supplement
the New Civil Codes provisions on arbitration (Chung Fu Industries
Phils., Inc. v. Court of Appeals, G.R. No. 92683, February 25, 1992, 206
SCRA 545, 551). Its potentials as one of the alternative
dispute resolution methods that are now rightfully vaunted as the
wave of the future in international relations, is recognized
worldwide. To brush aside a contractual agreement calling for
arbitration in case of disagreement between the parties would
therefore be a step backward.

In this connection, since respondent has already filed a complaint with the
trial court without prior recourse to arbitration, the proper procedure to enable an
arbitration panel to resolve the parties dispute pursuant to their Contract is for the
trial court to staythe proceedings.[11] After the arbitration proceeding has been
pursued and completed, then the trial court may confirm the award made by the
arbitration panel.[12]

In sum, we hold that the Court of Appeals erred in disregarding the arbitration
clause in the parties Contract.

WHEREFORE, we GRANT the instant petition. The assailed Decision and

Resolution of the Court of Appeals in CA-G.R. SP No. 63671 are REVERSED. The
parties are ordered to submit their controversy to the arbitration panel pursuant to
paragraph 7.4 of the Contract. The Regional Trial Court, Branch 267, Pasig City is
directed to suspend the proceedings in Civil Case No. 67755 until after the
Arbitration Panel shall have resolved the controversy and submitted its report to the
trial court. Costs against respondent.

SO ORDERED.

ANGELINA SANDOVAL-GUTIERREZ
Associate Justice

Sec. 5. Effect of failure to appear

Chingkoe v. Republic, G.R. No. 183608, July 31, 2013
G.R. No. 183608

July 31, 2013

FAUSTINO
T.
CHINGKOE
and
GLORIA
vs.
REPUBLIC OF THE PHILIPPINES, represented
CUSTOMS, Respondent.

CHINGKOE, Petitioners,
by

the

BUREAU

OF

DECISION
VELASCO, JR., J.:
Before Us is a Petition for Review on Certiorari under Rule 45, seeking the reversal
of the April 30, 2008 Decision1 of the Court of the Appeals (CA) and its subsequent
June 27, 2008 Resolution2 in CA-G.R. SP No. 101394. The assailed CA issuances
granted the Petition for Certiorari filed by respondent Bureau of Customs, thereby
revoking the July 14, 2006 and August 31, 2007 Orders 3 of the Regional Trial Court
(RTC), Branch 34 in Manila and denying the Motion for Reconsideration, respectively.
The Facts

This petition stemmed from two collection cases filed by the Republic of the
Philippines (Republic), represented by the Bureau of Customs (BOC) before the
Regional Trial Court (RTC) of Manila. In the first Complaint 4 for collection of money
and damages, entitled Republic of the Philippines, represented by the Bureau of
Customs v. Chiat Sing Cardboard Inc. (defendant and third party plaintiff) v. Filstar
Textile Industrial Corporation, Faustino T Chingkoe (third party defendants) and
docketed as Civil Case No. 02-102612, the Republic alleged that Chiat Sing
Cardboard Inc. (Chiat Sing), a corporation that imports goods to the Philippines,
secured in 1997 fake and spurious tax credit certificates from Filstar Textile
Industrial Corporation (Filstar), amounting to six million seventy-six thousand two
hundred forty-six pesos (PhP 6,076,246). It claimed that Chiat Sing utilized the
fraudulently-acquired tax credit certificates to settle its customs duties and taxes on
its importations. BOC initially allowed the use of the said tax credit certificates, but
after investigation, discovered that the same were fake and spurious. Despite due
demand, Chiat Sing failed and refused to pay the BOC the amount of the tax credit
certificates, exclusive of penalties, charges, and interest.
Along with its Answer,5 Chiat Sing, with leave of court, 6 filed a Third-Party Complaint
against Filstar. It claimed that it acquired the tax credit certificates from Filstar for
valuable consideration, and that Filstar represented to it that the subject tax credit
certificates are good, valid, and genuine.
Meanwhile, in the second Complaint, entitled Republic of the Philippines,
represented by the Bureau of Customs v. Filstar Textile Industrial Corporation and
docketed as Civil Case No. 02-102634, the Republic alleged that in the years 19921998, defendant Filstar fraudulently secured 20 tax credit certificates amounting to
fifty-three million six hundred fifty-four thousand six hundred seventy-seven pesos
(PhP 53,654,677). Thereafter, Filstar made various importations, using the tax credit
certificates to pay the corresponding customs duties and taxes. Later, BOC
discovered the fact that they were fraudulently secured; thus, the Republic claimed,
the customs duties and tax liability of Filstar remained unpaid. 7
The Complaint was amended to include Dominador S. Garcia, Amalia Anunciacion,
Jose G. Pena, Grace T. Chingkoe, Napoleon Viray, Felix T. Chingkoe, Faustino
Chingkoe, and Gloria Chingkoe as party defendants. Later, however, pursuant to an
Order of the trial court, the case against Felix Chingkoe was dismissed. 8
After an Order9 of consolidation was issued on June 23, 2003, the two cases were
jointly heard before the RTC, initially by Branch 40, Manila RTC, 10 but after the
presiding judge there inhibited from the case, they were re-raffled to Branch 34,
Manila RTC.
Pursuant to a Notice of Mediation Hearing sent to the parties on October 17,
2005,11 the cases were referred to the Philippine Mediation Center (PMC) for
mandatory mediation.12 The pre-trial for the consolidated cases was initially set on
January 9, 2006, but come said date, the report of the mediation has yet to be
submitted; hence, on the motion of the counsel of defendant Chiat Sing, the pretrial was canceled and rescheduled to February 15, 2006. 13

On February 15, 2006, the PMC reported that the proceedings are still continuing;
thus, the trial court, on motion of the same counsel for Chiat Sing, moved for the resetting of the pre-trial to March 17, 2006. 14 Unfortunately, the mediation
proceedings proved to be uneventful, as no settlement or compromise was agreed
upon by the parties.
During the March 17, 2006 pre-trial setting, the Office of the Solicitor General (OSG),
representing the Republic, failed to appear. The counsel for defendant Filstar prayed
for a period of 10 days within which to submit his motion or manifestation regarding
the plaintiffs pre-trial brief. The trial court granted the motion, and again ordered a
postponement of the pre-trial to April 19, 2006. 15
Come the April 19, 2006 hearing, despite having received a copy of the March 17,
2006 Order, the OSG again failed to appear. It also failed to submit its comment.
Thus, counsels for the defendants Filstar, Chiat Sing, and Chingkoe moved that
plaintiff be declared non-suited. Meanwhile, the counsel for BOC requested for an
update of their case. In its Order 16 on the same date, the trial court warned the
plaintiffs Republic and BOC that if no comment is submitted and if they fail to
appear during the pre-trial set on May 25, 2006, the court will be constrained to go
along with the motion for the dismissal of the case.
The scheduled May 25, 2006 hearing, however, did not push through, since the trial
court judge went on official leave. The pre-trial was again reset to June 30, 2006.
During the June 30, 2006 pre-trial conference, the OSG again failed to attend. A
certain Atty. Bautista Corpin, Jr. (Atty. Corpin Jr.), appearing on behalf of BOC, was
present, but was not prepared for pre-trial. He merely manifested that the BOC
failed to receive the notice on time, and moved for another re-setting of the pretrial, on the condition that if either or both lawyers from the BOC and OSG fail to
appear, the court may be constrained to dismiss the abovementioned cases of the
BOC for failure to prosecute.17 Meanwhile, counsels for defendants Chiat Sing,
Filstar, and third-party defendants Faustino T. Chingkoe and Gloria C. Chingkoe, who
were all present during the pre-trial, moved for the dismissal of the case on the
ground of respondents failure to prosecute. The trial court judge issued an
Order18 resetting the pre-trial to July 14, 2006.
At the hearing conducted on July 14, 2006, the respective counsels of the
defendants were present. Notwithstanding the warning of the judge given during
the previous hearing, that their failure to appear will result in the dismissal of the
cases, neither the OSG nor the BOC attended the hearing. Thus, as moved anew by
the respective counsels of the three defendants, the trial court issued an
Order19 dismissing the case, which reads:
As prayed for, the charge of the Republic of the Philippines against Chiat Sing
Cardboard Incorporation and the Third Party complaint of Chiat Sing Cardboard Inc.,
against Textile Industrial Corporation, Faustino Chingkoe and Gloria Chingkoe in Civil
Case No. 02-102612 and the charge of the Republic of the Philippines against Filstar
Industrial Corporation, Faustino Chingkoe and Gloria Chingkoe in Civil Case No. 02102634 are hereby dismissed.20

The motion for reconsideration of the July 14, 2006 Order was likewise denied by the
RTC on August 31, 2007.21As recourse, respondents filed a Petition for Certiorari
under Rule 65 before the CA, alleging that the trial court judge acted with grave
abuse of discretion in dismissing the two cases.
In its Decision dated April 30, 2008, the CA granted the petition and remanded the
case to the RTC for further proceedings. In reversing the RTC Order, the CA ruled
that the case, being a collection case involving a huge amount of tax collectibles,
should not be taken lightly. It also stated that it would be the height of injustice if
the Republic is deprived of due process and fair play. Finally, it took "judicial notice
of the fact that the collection of customs duties and taxes is a matter imbued with
public interest, taxes being the lifeblood of the government and what we pay for
civilized society."22 The CA said:
We view that the swiftness employed by the Court a quo in dismissing the case
without first taking a thoughtful and judicious look into whether or not there is good
reason to delve into the merits of the instant case by giving the parties an equal
opportunity to be hard and submit evidence in support of their respective claims,
was a display of grave abuse of discretion in a manner that is capricious, arbitrary
and in a whimsical exercise of power the very antithesis of the judicial prerogative
in accordance with centuries of both civil law and common law traditions, thus
certiorari is necessarily warranted under the premises. 23
The CA, thus, disposed of the case in this manner:
WHEREFORE, premises considered, the instant petition is GRANTED. The Court a
quos Orders dated 14 July 2006 and 31 August 2007, are hereby REVOKED and SET
ASIDE and a new one rendered ordering the REMAND of this case to the Court a quo
for further proceedings. The Bureau of Customs, through the Office of the Solicitor
General (OSG), is hereby directed to give this case its utmost and preferential
attention.24
In a Resolution dated June 27, 2008, the CA denied the separate motions for
reconsideration filed by private respondents Faustino T. Chingkoe and Gloria
Chingkoe as well as Filstar Textile Industrial Corporation.
Thus, the present recourse.
Issues
Petitioners posit:
Whether the Honorable Court of Appeals committed a reversible error when it
granted the petition for certiorari and revoked and set aside the order of dismissal
of the RTC considering that:
1. The extraordinary writ of certiorari is not available in the instant case as an
appeal from the order of dismissal as a plain, speedy and adequate remedy
available to the respondent;

2. The dismissal of the complaints below for the repeated failure of the
respondent to appear during the pre-trial and for its failure to prosecute for
an unreasonable length of time despite the stern warning of the RTC is not a
dismissal on mere technical grounds; and
3. The dismissal of the cases with prejudice was not attended with grave
abuse of discretion on the part of the RTC.
Petitioners argue that the CA committed reversible error in granting the Petition for
Certiorari, because such extraordinary writ is unavailing in this case. They posit that
contrary to the position of respondent, an ordinary appeal from the order of
dismissal is the proper remedy that it should have taken. Since the dismissal is due
to the failure of respondent to appear at the pre-trial hearing, petitioners add, the
dismissal should be deemed an adjudication on the merits, unless otherwise stated
in the order.25
Second, petitioner argue that the trial court properly dismissed the cases for the
failure of the plaintiff a quo, respondent herein, to attend the pre-trial.
The Courts Ruling
The petition is meritorious.
The
remedy
of
certiorari
to question the RTC Order of dismissal

does

not

lie

Respondents Petition for Certiorari filed before the CA was not the proper remedy
against the assailed Order of the RTC. Pursuant to Rule 65 of the Rules of Court, a
special civil action for certiorari could only be availed of when a tribunal "acts in a
capricious, whimsical, arbitrary or despotic manner in the exercise of its judgment
as to be said to be equivalent to lack of jurisdiction" 26 or when it acted without or in
excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack
or excess of jurisdiction; and if there is no appeal or other plain, speedy, and
adequate remedy in the ordinary course of law. 27
It is settled that the Rules precludes recourse to the special civil action of certiorari
if appeal by way of a Petition for Review is available, as the remedies of appeal and
certiorari are mutually exclusive and not alternative or successive. 28
Here, respondent cannot plausibly claim that there is no plain, speedy, and
adequate remedy available to it to question the dismissal Order of the trial court.
The RTC Order does not fall into any of the exceptions under Section 1, Rule 41,
where appeal is not available as a remedy. It is clear from the tenor of the RTCs July
14, 2006 Order that it partakes of the nature of a final adjudication, as it fully
disposed of the cases by dismissing them. In fine, there remains no other issue for
the trial court to decide anent the said cases. The proper remedy, therefore, would
have been the filing of a Notice of Appeal under Rule 41 of the Rules of Court. Such
remedy is the plain, speedy, and adequate recourse under the law, and not a
Petition for Certiorari under Rule 65, as respondent here filed before the CA.

A petition for certiorari is not and cannot be a substitute for an appeal, especially if
ones own negligence or error in ones choice of remedy occasioned such loss or
lapse. When an appeal is available, certiorari will not prosper, even if the basis is
grave abuse of discretion.29 The RTC Order subject of the petition was a final
judgment which disposed of the case on the merits; hence, an ordinary appeal was
the proper remedy.
In any case, the rule is settled in Mondonedo v. Court of Appeals, 30 where We said:
The Court finds no reversible error in the said Resolutions of the Court of Appeals.
Well-settled is the rule that a dismissal for failure to appear at the pre-trial hearing
is deemed an adjudication on the merits, unless otherwise stated in the order.
For nonappearance at the pre-trial, a plaintiff may be non-suited and a dismissal of
the complaint for failure to prosecute has the effect of an adjudication upon the
merits unless otherwise provided by the trial court.
And the remedy of a plaintiff declared non-suited is to appeal from the order of
dismissal, the same being a final resolution of the case (Regalado, Remedial Law
Compendium, 1988 ed., p. 185). Further, if a motion for reconsideration had been
filed by the plaintiff but was denied, appeal lies from both orders (ibid.). And where
appeal is the proper remedy, certiorari will not lie. (Citations omitted.)
Respondent laments that the questioned RTC Order did not specify whether the
dismissal is with prejudice or not, putting it in a precarious situation of what legal
actions to take upon its receipt. This misgiving, however, stems from a misreading
of the Rules. Rule 18, Sec. 5 of the Rules of Court clearly states:
Sec. 5. Effect of failure to appear. The failure of the plaintiff to appear when so
required pursuant to the next preceding section shall be cause for dismissal of the
action. The dismissal shall be with prejudice, unless otherwise ordered by the court.
x x x (Emphasis supplied.)
The rule is clear enough that an order of dismissal based on failure to appear at pretrial is with prejudice, unless the order itself states otherwise. The questioned Order
of the trial court did not specify that the dismissal is without prejudice. There should
be no cause for confusion, and the trial court is not required to explicitly state that
the dismissal is with prejudice. The respondent is not then left without a remedy,
since the Rules itself construes the dismissal to be with prejudice. It should be
considered as adjudication on the merits of the case, where the proper remedy is an
appeal under Rule 41. Regrettably, the respondent chose the wrong mode of judicial
review. In not dismissing the petition for certiorari outright, and in not ruling that
such remedy is the wrong mode of judicial review, the CA committed grave and
reversible error.
Neither is this issue a novel one. In Corpuz v. Citibank, N.A., 31 this Court had already
ruled that the proper remedy for an order of dismissal under the aforequoted Sec. 5,
Rule 18 of the Rules of Court is to file an appeal. As in the case at bar, the plaintiffs

in that case filed a petition for certiorari assailing the order of dismissal. Ruling that
it is not the proper remedy, this Court said:
Section 5, of Rule 18 provides that the dismissal of an action due to the plaintiffs
failure to appear at the pre-trial shall be with prejudice, unless otherwise ordered by
the court. In this case, the trial court deemed the plaintiffs-herein spouses as nonsuited and ordered the dismissal of their Complaint. As the dismissal was a final
order, the proper remedy was to file an ordinary appeal and not a petition for
certiorari. The spouses petition for certiorari was thus properly dismissed by the
appellate court.
The OSG should have known better, and filed a Notice of Appeal under Rule 41,
instead of a petition for certiorari under Rule 65. Its failure to file the proper
recourse renders its petition dismissible, as it fails to allege sufficient grounds for
the granting of a writ of certiorari. The fact that the CA overlooked this constitutes a
reversible error on its part.
That the case involves the issuance of allegedly fraudulently secured tax credit
certificates, and not an ordinary action for collection of money, is of no moment.
This fact alone does not exempt respondent from complying with the rules of
procedure, including the rules on appeal. Neither can respondent invoke the rule on
technicalities yielding to the paramount interest of the nation, as the facts and
circumstances of this case do not warrant such relaxation.
Dismissal due to the fault of respondent
Even going into the merits of the case, however, We find the trial courts dismissal
of the case to be in order. As it were, the trial court amply gave respondent
sufficient notice and opportunity to attend the pre-trial conference, but despite this,
it neglected its duty to prosecute its case and attend the scheduled pre-trial
hearings. Hence, the trial court cannot be faulted for dismissing the case.
This Court finds that the dismissal of the case by the trial court was due to the fault
and negligence of respondent. There is clear negligence and laxity on the part of
both the BOC and OSG in handling this case on behalf of the Republic. Despite
several re-settings of the hearing, either or both counsels failed to attend the pretrial conference, without giving a justifiably acceptable explanation of their absence.
This utter neglect of its duty to attend the scheduled hearings is what led the trial
court to ultimately dismiss the cases. In finding that the dismissal by the trial court
is tainted with grave abuse of discretion, the CA committed reversible error.
The records bear out that the pre-trial conference has been reset for six times, for
various reasons. It was initially set on February 16, 2006, but due to the PMC Report
that the mediation proceedings are still continuing, the hearing was canceled. 32 In
this first setting, neither BOC nor the OSG was present. The case was then set for
hearing on March 17, 2006. However, the scheduled pre-trial conference again did
not push through, due to the motion of the counsel for Filstar praying for time to
submit his motion/manifestation regarding the Republics pre-trial brief. 33 Again,
during this setting, neither the BOC nor the OSG was present.

The pre-trial conference was reset for a third time to April 19, 2006. During this
setting, pre-trial again did not push through, because of a pending Motion to
Dismiss due to failure to prosecute filed by Filstar. 34 For the third time, there was no
appearance on behalf of the Republic. The pre-trial conference was then reset to
May 9, 2006. The hearing did not push through, however, because the presiding
judge was on leave at the time. 35 Hence, the setting was transferred to June 30,
2006.
Come June 30, 2006, an unprepared Atty. Corpin, Jr. appeared on behalf of the BOC,
and he had no necessary authority from BOC to represent it as its counsel. He
manifested that they failed to receive the notice of hearing on time, and moved for
another chance, "on the condition that if they will not be appearing, either or both
lawyers from the Bureau of Customs or Office of the Solicitor General, the court may
be constrained to dismiss all the above cases of the Bureau of Customs for failure to
prosecute for an unreasonable length of time." 36 On the other hand, the BOC again
failed to send a representative. The court again had to cancel the hearing and reset
it, this time to July 14, 2006.
During the July 14, 2006 hearing, the counsels for the defendants were present.
They were asked by the court to wait for the OSG until 9:45 a.m., considering that
the OSG had already received the notice of hearing. However, neither the BOC nor
the OSG arrived. The counsels for the defendants reiterated their motion, citing the
warning of the trial court during the June 30, 2006 hearing that if no representative
will appear on behalf of the Republic, all the cases will be dismissed. It was due to
this repeated absence on the part of the BOC and the OSG that the trial court issued
the Order dated July 14, 2006 dismissing the cases filed by the Republic.
It is fairly obvious that the trial court gave the Republic, through the OSG and the
BOC, every opportunity to be present during the pre-trial conference. The hearings
had to be reset six times due to various reasons, but not once was the OSG and
BOC properly represented. Too, not once did the OSG and BOC offer a reasonable
explanation for their absence during the hearings. Despite the express warning by
the trial court during the penultimate setting on June 30, 2006, the OSG and BOC
still failed to attend the next scheduled setting.
Despite the leeway and opportunity given by the trial court, it seemed that the OSG
and BOC did not accord proper importance to the pre-trial conference. Pre-trial, to
stress, is way more than simple marking of evidence. Hence, it should not be
ignored or neglected, as the counsels for respondent had. In Tolentino v.
Laurel,37 this Court has this to say on the matter of importance of pre-trial:
In The Philippine American Life & General Insurance Company v. Enario, the Court
held that pre-trial cannot be taken for granted. It is not a mere technicality in court
proceedings for it serves a vital objective: the simplification, abbreviation and
expedition of the trial, if not indeed its dispensation. The Court said that:
The importance of pre-trial in civil actions cannot be overemphasized. In Balatico v.
Rodriguez, the Court, citing Tiu v. Middleton, delved on the significance of pre-trial,
thus:

Pre-trial is an answer to the clarion call for the speedy disposition of

cases.1wphi1 Although it was discretionary under the 1940 Rules of Court, it was
made mandatory under the 1964 Rules and the subsequent amendments in 1997.
Hailed as "the most important procedural innovation in Anglo-Saxon justice in the
nineteenth century," pre-trial seeks to achieve the following:
(a) The possibility of an amicable settlement or of a submission to alternative
modes of dispute resolution;
(b) The simplification of the issues;
(c) The necessity or desirability of amendments to the pleadings;
(d) The possibility of obtaining stipulations or admissions of facts and of
documents to avoid unnecessary proof;
(e) The limitation of the number of witnesses;
(f) The advisability of a preliminary reference of issues to a commissioner;
(g) The propriety of rendering judgment on the pleadings, or summary
judgment, or of dismissing the action should a valid ground therefor be found
to exist;
(h) The advisability or necessity of suspending the proceedings; and
(i) Such other matters as may aid in the prompt disposition of the action.
Petitioners repeated failure to appear at the pre-trial amounted to a failure to
comply with the Rules and their non-presentation of evidence before the trial court
was essentially due to their fault. (Citations omitted.)
The inevitable conclusion in this case is that the trial court was merely following the
letter of Sec. 5, Rule I 8 of the Rules of Court in dismissing the case. Thus, the CA
committed grave and reversible error in nullifying the Order of dismissal. The trial
court had every reason to dismiss the case, not only due to the Motion to Dismiss
filed by the defendants, but because the Rules of Court itself says so.
In view, however, of the huge amount of tax collectibles involved, and considering
that taxes are the "lifeblood of the government," the dismissal of the case should be
without prejudice.
WHEREFORE, premises considered, the instant petition is hereby GRANTED. The
April 30, 2008 Decision and June 27, 2008 Resolution of the Court of Appeals in CAG.R. SP No. 101394 are hereby REVERSED and SET ASIDE. The July 14, 2006 Order
of the RTC, Branch 34 in Manila, in Civil Case Nos. 02-102612 and 02-102634, is
hereby REINSTATED with the MODIFICATION that the dismissal of the two civil cases
shall be WITHOUT PREJUDICE.

SO ORDERED.
PRESBITERO J. VELASCO, JR.
Associate Justice

Durban Apartments v. Pioneer, G.R. No. 179419, January 12, 2011

Republic of the Philippines

Supreme Court
Manila
SECOND DIVISION
DURBAN APARTMENTS CORPORATION,
doing business under the name and
style of City Garden Hotel,
Petitioner,

- versus -

PIONEER INSURANCE AND SURETY

CORPORATION,
Respondent.

G.R. No. 179419

Present:
CARPIO, J.,
Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.

Promulgated:
January 12, 2011

x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:

For review is the Decision [1] of the Court of Appeals (CA) in CA-G.R. CV No.
86869, which affirmed the decision [2] of the Regional Trial Court (RTC), Branch 66,
Makati City, in Civil Case No. 03-857, holding petitioner Durban Apartments
Corporation solely liable to respondent Pioneer Insurance and Surety Corporation for
the loss of Jeffrey Sees (Sees) vehicle.
The facts, as found by the CA, are simple.
On July 22, 2003, [respondent] Pioneer Insurance and Surety
Corporation x x x, by right of subrogation, filed [with the RTC of Makati
City] a Complaint for Recovery of Damages against [petitioner] Durban
Apartments Corporation, doing business under the name and style of
City Garden Hotel, and [defendant before the RTC] Vicente Justimbaste
x x x. [Respondent averred] that: it is the insurer for loss and damage
of Jeffrey S. Sees [the insureds] 2001 Suzuki Grand Vitara x x x with
Plate No. XBH-510 under Policy No. MC-CV-HO-01-0003846-00-D in the
amount of P1,175,000.00; on April 30, 2002, See arrived and checked
in at the City Garden Hotel in Makati corner Kalayaan Avenues, Makati
City before midnight, and its parking attendant, defendant x x x
Justimbaste got the key to said Vitara from See to park it[. O]n May 1,
2002, at about 1:00 oclock in the morning, See was awakened in his
room by [a] telephone call from the Hotel Chief Security Officer who
informed him that his Vitara was carnapped while it was parked
unattended at the parking area of Equitable PCI Bank along Makati
Avenue between the hours of 12:00 [a.m.] and 1:00 [a.m.]; See went to
see the Hotel Chief Security Officer, thereafter reported the incident to
the Operations Division of the Makati City Police Anti-Carnapping Unit,
and a flash alarm was issued; the Makati City Police Anti-Carnapping
Unit investigated Hotel Security Officer, Ernesto T. Horlador, Jr. x x x
and defendant x x x Justimbaste; See gave his Sinumpaang Salaysay to
the police investigator, and filed a Complaint Sheet with the PNP Traffic
Management Group in Camp Crame, Quezon City; the Vitara has not
yet been recovered since July 23, 2002 as evidenced by a Certification
of Non- Recovery issued by the PNP TMG; it paid the P1,163,250.00
money claim of See and mortgagee ABN AMRO Savings Bank, Inc. as
indemnity for the loss of the Vitara; the Vitara was lost due to the
negligence of [petitioner] Durban Apartments and [defendant]
Justimbaste because it was discovered during the investigation that
this was the second time that a similar incident of carnapping
happened in the valet parking service of [petitioner] Durban
Apartments and no necessary precautions were taken to prevent its
repetition; [petitioner] Durban Apartments was wanting in due
diligence in the selection and supervision of its employees particularly
defendant x x x Justimbaste; and defendant x x x Justimbaste and
[petitioner] Durban Apartments failed and refused to pay its valid, just,
and lawful claim despite written demands.

Upon service of Summons, [petitioner] Durban Apartments and

[defendant] Justimbaste filed their Answer with Compulsory
Counterclaim alleging that: See did not check in at its hotel, on the
contrary, he was a guest of a certain Ching Montero x x x; defendant x
x x Justimbaste did not get the ignition key of Sees Vitara, on the
contrary, it was See who requested a parking attendant to park the
Vitara at any available parking space, and it was parked at the
Equitable Bank parking area, which was within Sees view, while he
and Montero were waiting in front of the hotel; they made a written
denial of the demand of [respondent] Pioneer Insurance for want of
legal basis; valet parking services are provided by the hotel for the
convenience of its customers looking for a parking space near the hotel
premises; it is a special privilege that it gave to Montero and See; it
does not include responsibility for any losses or damages to motor
vehicles and its accessories in the parking area; and the same holds
true even if it was See himself who parked his Vitara within the
premises of the hotel as evidenced by the valet parking customers
claim stub issued to him; the carnapper was able to open the Vitara
without using the key given earlier to the parking attendant and
subsequently turned over to See after the Vitara was stolen; defendant
x x x Justimbaste saw the Vitara speeding away from the place where it
was parked; he tried to run after it, and blocked its possible path but to
no avail; and See was duly and immediately informed of the
carnapping of his Vitara; the matter was reported to the nearest police
precinct; and defendant x x x Justimbaste, and Horlador submitted
themselves to police investigation.
During the pre-trial conference on November 28, 2003, counsel
for [respondent] Pioneer Insurance was present. Atty. Monina Lee x x x,
counsel of record of [petitioner] Durban Apartments and Justimbaste
was absent, instead, a certain Atty. Nestor Mejia appeared for
[petitioner] Durban Apartments and Justimbaste, but did not file their
pre-trial brief.
On November 5, 2004, the lower court granted the motion of
[respondent] Pioneer Insurance, despite the opposition of [petitioner]
Durban Apartments and Justimbaste, and allowed [respondent] Pioneer
Insurance to present its evidence ex parte before the Branch Clerk of
Court.
See testified that: on April 30, 2002, at about 11:30 in the
evening, he drove his Vitara and stopped in front of City Garden Hotel
in Makati Avenue, Makati City; a parking attendant, whom he had later
known to be defendant x x x Justimbaste, approached and asked for his
ignition key, told him that the latter would park the Vitara for him in
front of the hotel, and issued him a valet parking customers claim
stub; he and Montero, thereafter, checked in at the said hotel; on May
1, 2002, at around 1:00 in the morning, the Hotel Security Officer
whom he later knew to be Horlador called his attention to the fact that
his Vitara was carnapped while it was parked at the parking lot of

Equitable PCI Bank which is in front of the hotel; his Vitara was insured
with [respondent] Pioneer Insurance; he together with Horlador and
defendant x x x Justimbaste went to Precinct 19 of the Makati City
Police to report the carnapping incident, and a police officer came
accompanied them to the Anti-Carnapping Unit of the said station for
investigation, taking of their sworn statements, and flashing of a voice
alarm; he likewise reported the said incident in PNP TMG in Camp
Crame where another alarm was issued; he filed his claim with
[respondent] Pioneer Insurance, and a representative of the latter, who
is also an adjuster of Vesper Insurance Adjusters-Appraisers [Vesper],
investigated the incident; and [respondent] Pioneer Insurance required
him to sign a Release of Claim and Subrogation Receipt, and finally
paid him the sum of P1,163,250.00 for his claim.
Ricardo F. Red testified that: he is a claims evaluator of
[petitioner] Pioneer Insurance tasked, among others, with the receipt of
claims and documents from the insured, investigation of the said claim,
inspection of damages, taking of pictures of insured unit, and
monitoring of the processing of the claim until its payment; he
monitored the processing of Sees claim when the latter reported the
incident to [respondent] Pioneer Insurance; [respondent] Pioneer
Insurance assigned the case to Vesper who verified Sees report,
conducted an investigation, obtained the necessary documents for the
processing of the claim, and tendered a settlement check to See; they
evaluated the case upon receipt of the subrogation documents and the
adjusters report, and eventually recommended for its settlement for
the sum of P1,163,250.00 which was accepted by See; the matter was
referred and forwarded to their counsel, R.B. Sarajan & Associates, who
prepared and sent demand letters to [petitioner] Durban Apartments
and [defendant] Justimbaste, who did not pay [respondent] Pioneer
Insurance notwithstanding their receipt of the demand letters; and the
services of R.B. Sarajan & Associates were engaged, forP100,000.00 as
attorneys fees plus P3,000.00 per court appearance, to prosecute the
claims of [respondent] Pioneer Insurance against [petitioner] Durban
Apartments and Justimbaste before the lower court.
Ferdinand Cacnio testified that: he is an adjuster of Vesper;
[respondent] Pioneer Insurance assigned to Vesper the investigation of
Sees case, and he was the one actually assigned to investigate it; he
conducted his investigation of the matter by interviewing See, going to
the City Garden Hotel, required subrogation documents from See, and
verified the authenticity of the same; he learned that it is the standard
procedure of the said hotel as regards its valet parking service to assist
their guests as soon as they get to the lobby entrance, park the cars
for their guests, and place the ignition keys in their safety key box;
considering that the hotel has only twelve (12) available parking slots,
it has an agreement with Equitable PCI Bank permitting the hotel to
use the parking space of the bank at night; he also learned that a
Hyundai Starex van was carnapped at the said place barely a month
before the occurrence of this incident because Liberty Insurance

assigned the said incident to Vespers, and Horlador and defendant x x

x Justimbaste admitted the occurrence of the same in their sworn
statements before the Anti-Carnapping Unit of the Makati City Police;
upon verification with the PNP TMG [Unit] in Camp Crame, he learned
that Sees Vitara has not yet been recovered; upon evaluation, Vesper
recommended to [respondent] Pioneer Insurance to settle Sees claim
for P1,045,750.00; See contested the recommendation of Vesper by
reasoning out that the 10% depreciation should not be applied in this
case considering the fact that the Vitara was used for barely eight (8)
months prior to its loss; and [respondent] Pioneer Insurance acceded to
Sees contention, tendered the sum of P1,163,250.00 as settlement,
the former accepted it, and signed a release of claim and subrogation
receipt.
The lower court denied the Motion to Admit Pre-Trial Brief and
Motion for Reconsideration field by [petitioner] Durban Apartments and
Justimbaste in its Orders dated May 4, 2005 and October 20, 2005,
respectively, for being devoid of merit. [3]
Thereafter, on January 27, 2006, the RTC rendered a decision, disposing, as
follows:
WHEREFORE, judgment is hereby rendered ordering [petitioner
Durban Apartments Corporation] to pay [respondent Pioneer Insurance
and Surety Corporation] the sum of P1,163,250.00 with legal interest
thereon from July 22, 2003 until the obligation is fully paid and
attorneys fees and litigation expenses amounting to P120,000.00.
SO ORDERED.[4]
On appeal, the appellate court affirmed the decision of the trial court, viz.:
WHEREFORE, premises considered, the Decision dated January
27, 2006 of the RTC, Branch 66, Makati City in Civil Case No. 03-857 is
hereby AFFIRMED insofar as it holds [petitioner] Durban Apartments
Corporation solely liable to [respondent] Pioneer Insurance and Surety
Corporation for the loss of Jeffrey Sees Suzuki Grand Vitara.
SO ORDERED.[5]
Hence, this recourse by petitioner.
The issues for our resolution are:
1.
Whether the lower courts erred in declaring petitioner as in default for
failure to appear at the pre-trial conference and to file a pre-trial brief;

2.
Corollary thereto, whether the trial court correctly allowed respondent
to present evidence ex-parte;
3.
Whether petitioner is liable to respondent for attorneys fees in the
amount of P120,000.00; and
4.
Ultimately, whether petitioner is liable to respondent for the loss of
Sees vehicle.
The petition must fail.
We are in complete accord with the common ruling of the lower courts that
petitioner was in default for failure to appear at the pre-trial conference and to file a
pre-trial brief, and thus, correctly allowed respondent to present evidence ex-parte.
Likewise, the lower courts did not err in holding petitioner liable for the loss of Sees
vehicle.
Well-entrenched in jurisprudence is the rule that factual findings of the trial
court, especially when affirmed by the appellate court, are accorded the highest
degree of respect and are considered conclusive between the parties. [6] A review of
such findings by this Court is not warranted except upon a showing of highly
meritorious circumstances, such as: (1) when the findings of a trial court are
grounded entirely on speculation, surmises, or conjectures; (2) when a lower courts
inference from its factual findings is manifestly mistaken, absurd, or impossible; (3)
when there is grave abuse of discretion in the appreciation of facts; (4) when the
findings of the appellate court go beyond the issues of the case, or fail to notice
certain relevant facts which, if properly considered, will justify a different
conclusion; (5) when there is a misappreciation of facts; (6) when the findings of
fact are conclusions without mention of the specific evidence on which they are
based, are premised on the absence of evidence, or are contradicted by evidence
on record.[7] None of the foregoing exceptions permitting a reversal of the assailed
decision exists in this instance.
Petitioner urges us, however, that strong [and] compelling reason[s] such
as the prevention of miscarriage of justice warrant a suspension of the rules and
excuse its and its counsels non-appearance during the pre-trial conference and
their failure to file a pre-trial brief.
We are not persuaded.
Rule 18 of the Rules of Court leaves no room for equivocation; appearance of
parties and their counsel at the pre-trial conference, along with the filing of a
corresponding pre-trial brief, is mandatory, nay, their duty. Thus, Section 4 and
Section 6 thereof provide:
SEC. 4. Appearance of parties.It shall be the duty of the
parties and their counsel to appear at the pre-trial. The nonappearance of a party may be excused only if a valid cause is shown
therefor or if a representative shall appear in his behalf fully authorized
in writing to enter into an amicable settlement, to submit to alternative

modes of dispute resolution, and to enter into stipulations or

admissions of facts and documents.
SEC. 6. Pre-trial brief.The parties shall file with the court and
serve on the adverse party, in such manner as shall ensure their
receipt thereof at least three (3) days before the date of the pre-trial,
their respective pre-trial briefs which shall contain, among others:
xxxx
Failure to file the pre-trial brief shall have the same effect as
failure to appear at the pre-trial.
Contrary to the foregoing rules, petitioner and its counsel of record were not
present at the scheduled pre-trial conference. Worse, they did not file a pre-trial
brief. Their non-appearance cannot be excused as Section 4, in relation to Section 6,
allows only two exceptions: (1) a valid excuse; and (2) appearance of a
representative on behalf of a party who is fully authorized in writing to enter into an
amicable settlement, to submit to alternative modes of dispute resolution, and to
enter into stipulations or admissions of facts and documents.
Petitioner is adamant and harps on the fact that November 28, 2003 was
merely the first scheduled date for the pre-trial conference, and a certain Atty. Mejia
appeared on its behalf. However, its assertion is belied by its own admission that, on
said date, this Atty. Mejia did not have in his possession the Special Power of
Attorney issued by petitioners Board of Directors.
As pointed out by the CA, petitioner, through Atty. Lee, received the notice of
pre-trial on October 27, 2003, thirty-two (32) days prior to the scheduled
conference. In that span of time, Atty. Lee, who was charged with the duty of
notifying petitioner of the scheduled pre-trial conference, [8] petitioner, and Atty.
Mejia should have discussed which lawyer would appear at the pre-trial conference
with petitioner, armed with the appropriate authority therefor. Sadly, petitioner
failed to comply with not just one rule; it also did not proffer a reason why it likewise
failed to file a pre-trial brief. In all, petitioner has not shown any persuasive reason
why it should be exempt from abiding by the rules.
The appearance of Atty. Mejia at the pre-trial conference, without a pre-trial
brief and with only his bare allegation that he is counsel for petitioner, was correctly
rejected by the trial court. Accordingly, the trial court, as affirmed by the appellate
court, did not err in allowing respondent to present evidence ex-parte.
Former Chief Justice Andres R. Narvasas words continue to resonate, thus:
Everyone knows that a pre-trial in civil actions is mandatory,
and has been so since January 1, 1964. Yet to this day its place in the
scheme of things is not fully appreciated, and it receives but
perfunctory treatment in many courts. Some courts consider it a mere
technicality, serving no useful purpose save perhaps, occasionally to
furnish ground for non-suiting the plaintiff, or declaring a defendant in

default, or, wistfully, to bring about a compromise. The pre-trial device

is not thus put to full use. Hence, it has failed in the main to
accomplish the chief objective for it: the simplification, abbreviation
and expedition of the trial, if not indeed its dispensation. This is a great
pity, because the objective is attainable, and with not much difficulty, if
the device were more intelligently and extensively handled.
xxxx
Consistently with the mandatory character of the pre-trial, the
Rules oblige not only the lawyers but the parties as well to appear for
this purpose before the Court, and when a party fails to appear at a
pre-trial conference (he) may be non-suited or considered as in
default. The obligation to appear denotes not simply the personal
appearance, or the mere physical presentation by a party of ones self,
but connotes as importantly, preparedness to go into the different
subject assigned by law to a pre-trial. And in those instances where a
party may not himself be present at the pre-trial, and another person
substitutes for him, or his lawyer undertakes to appear not only as an
attorney but in substitution of the clients person, it is imperative for
that representative of the lawyer to have special authority to make
such substantive agreements as only the client otherwise has capacity
to make. That special authority should ordinarily be in writing or at
the very least be duly established by evidence other than the selfserving assertion of counsel (or the proclaimed representative)
himself. Without that special authority, the lawyer or representative
cannot be deemed capacitated to appear in place of the party; hence,
it will be considered that the latter has failed to put in an appearance
at all, and he [must] therefore be non-suited or considered as in
default, notwithstanding his lawyers or delegates presence. [9]
We are not unmindful that defendants (petitioners) preclusion from
presenting evidence during trial does not automatically result in a judgment in favor
of plaintiff (respondent). The plaintiff must still substantiate the allegations in its
complaint.[10]Otherwise, it would be inutile to continue with the plaintiffs
presentation of evidence each time the defendant is declared in default.
In this case, respondent substantiated the allegations in its complaint, i.e., a
contract of necessary deposit existed between the insured See and petitioner. On
this score, we find no error in the following disquisition of the appellate court:
[The] records also reveal that upon arrival at the City Garden Hotel,
See gave notice to the doorman and parking attendant of the said
hotel, x x x Justimbaste, about his Vitara when he entrusted its ignition
key to the latter. x x x Justimbaste issued a valet parking customer
claim stub to See, parked the Vitara at the Equitable PCI Bank parking
area, and placed the ignition key inside a safety key box while See
proceeded to the hotel lobby to check in. The Equitable PCI Bank
parking area became an annex of City Garden Hotel when the

management of the said bank allowed the parking of the vehicles of

hotel guests thereat in the evening after banking hours. [11]
Article 1962, in relation to Article 1998, of the Civil Code defines a contract of
deposit and a necessary deposit made by persons in hotels or inns:
Art. 1962. A deposit is constituted from the moment a person
receives a thing belonging to another, with the obligation of safely
keeping it and returning the same. If the safekeeping of the thing
delivered is not the principal purpose of the contract, there is no
deposit but some other contract.
Art. 1998. The deposit of effects made by travelers in hotels or
inns shall also be regarded as necessary. The keepers of hotels or inns
shall be responsible for them as depositaries, provided that notice was
given to them, or to their employees, of the effects brought by the
guests and that, on the part of the latter, they take the precautions
which said hotel-keepers or their substitutes advised relative to the
care and vigilance of their effects.
Plainly, from the facts found by the lower courts, the insured See deposited
his vehicle for safekeeping with petitioner, through the latters employee,
Justimbaste. In turn, Justimbaste issued a claim stub to See. Thus, the contract of
deposit was perfected from Sees delivery, when he handed over to Justimbaste the
keys to his vehicle, which Justimbaste received with the obligation of safely keeping
and returning it. Ultimately, petitioner is liable for the loss of Sees vehicle.
Lastly, petitioner assails the lower courts award of attorneys fees to
respondent in the amount of P120,000.00. Petitioner claims that the award is not
substantiated by the evidence on record.
We disagree.
While it is a sound policy not to set a premium on the right to litigate, [12] we
find that respondent is entitled to reasonable attorneys fees. Attorneys fees may
be awarded when a party is compelled to litigate or incur expenses to protect its
interest,[13] or when the court deems it just and equitable. [14] In this case, petitioner
refused to answer for the loss of Sees vehicle, which was deposited with it for
safekeeping. This refusal constrained respondent, the insurer of See, and
subrogated to the latters right, to litigate and incur expenses. However, we reduce
the award of P120,000.00 to P60,000.00 in view of the simplicity of the issues
involved in this case.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals
in CA-G.R. CV No. 86869 is AFFIRMEDwith the MODIFICATION that the award of
attorneys fees is reduced to P60,000.00. Costs against petitioner.
SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

Sec. 6. Pre-trial brief

BPI v. Dando, G.R. No. 177456, September 4, 2009

THIRD DIVISION

BANK
OF
PHILIPPINEISLANDS,
Petitioner,

THE
G.R. No. 177456

Present:
- versus YNARES-SANTIAGO, J.,
DOMINGO R. DANDO,
Respondent.

Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.
Promulgated:

September 4, 2009
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review under Rule 45 of the Rules of Court,
filed by petitioner Bank of the Philippine Islands (BPI), assailing (1) the
Decision[1] dated 20 November 2006 of the Court of Appeals in CA-G.R. SP No.
82881, which granted the Petition for Certiorari under Rule 65 of the Rules of Court
filed by herein respondent Domingo R. Dando (Dando); and (2) the Resolution dated
4 April 2007 of the appellate court in the same case denying the Motion for
Reconsideration of BPI. The Court of Appeals, in its assailed Decision, annulled the
Orders dated 13 January 2004 and 3 March 2004 of the Regional Trial Court (RTC)
of Makati City, Branch 149, setting Civil Case No. 03-281 for pre-trial conference;
and reinstated the earlier Order dated 10 October 2003 of the RTC dismissing Civil
Case No. 03-281 for failure of BPI to file its pre-trial brief.
The instant Petition stemmed from a Complaint for Sum of Money and
Damages[2] filed on 13 March 2003 by BPI against Dando before the RTC, docketed
as Civil Case No. 03-281. The Complaint alleged that on or about 12 August 1994,
Dando availed of a loan in the amount of P750,000.00 from Far East Bank and Trust
Company (FEBTC), under a Privilege Cheque Credit Line Agreement.[3] The parties
agreed that Dando would pay FEBTC the principal amount of the loan, in lump sum,
at the end of 90 days; and interest thereon every 30 days, the periods reckoned
from the time of availment of the loan. Dando defaulted in the payment of the
principal amount of the loan, as well as the interest and penalties thereon. Despite
repeated demands, Dando refused and/or failed to pay his just and valid obligation.
[4]
In 2000, BPI and FEBTC merged, with the former as the surviving entity, [5] thus,
absorbing the rights and obligations of the latter. [6]
After Dando filed with the RTC his Answer with Counterclaim, [7] BPI filed its
Motion to Set Case for Pre-Trial. Acting on the said Motion, the RTC, through Acting
Presiding Judge Oscar B. Pimentel (Judge Pimentel), issued an Order [8] on 11 June
2003setting Civil Case No. 03-281 for pre-trial conference on 18 August 2003. Judge
Pimentel subsequently issued, on 16 June 2003, a Notice of Pre-Trial Conference,
[9]
which directed the parties to submit their respective pre-trial briefs at least three
days before the scheduled date of pre-trial. Dando submitted his Pre-trial Brief[10] to
the RTC on 11 August 2003. BPI, on the other hand, filed its Pre-trial Brief [11] with
the RTC, and furnished Dando with a copy thereof, only on 18 August 2003, the very
day of the scheduled Pre-Trial Conference.
When the parties appeared before the RTC on 18 August 2003 for the
scheduled Pre-Trial Conference, Dando orally moved for the dismissal of Civil Case
No. 03-281, citing Sections 5 and 6, Rule 18 of the Rules of Court. The RTC, through

an Order issued on the same day, required Dando to file a written motion within five
days from the receipt of the said Order and BPI to file its comment and/or opposition
thereto. The RTC order reads:
On calling this case for the pre-trial conference, counsel for
both parties appeared and even [respondent] Domingo R. Dando
appeared. The attention of the Court was called by the counsel for the
[respondent Dando] that the counsel for the [petitioner BPI] only filed
her Pre-Trial Brief today at 9:00 oclock in the morning instead of at
least three days before the pre-trial conference, as required by the
Rules. This prompted the counsel for the [respondent Dando] to ask
for the dismissal of the case for violation of Rule 18 of the Rules of Civil
Procedure.
Counsel for the [respondent Dando] even claims that he has
not received a copy of the pre-trial brief, but then according to the
counsel for the [petitioner BPI], a copy thereof was sent by registered
mail to counsel for the [respondent Dando] since (sic) August 18, 2003,
and considering the nature of the motion of the counsel for the
[respondent Dando], it is best that the [respondent Dandos] counsel
reduce the same in writing within five days from today, furnishing
personally a copy thereof the counsel for the [petitioner BPI] who is
hereby given five days from receipt thereof within which to file her
comment and/or opposition thereto, thereafter, the incident shall be
considered submitted for Resolution.
Meanwhile, no pre-trial conference shall be held until the
motion is resolved.[12]

On 25 August 2003, Dando filed with the RTC his written Motion to Dismiss
Civil Case No. 03-281, for violation of the mandatory rule on filing of pre-trial briefs.
[13]
BPI filed an Opposition[14] to Dandos Motion, arguing that its filing with the RTC
of the Pre-Trial Brief on 18 August 2003 should be considered as compliance with
the rules of procedure given that the Pre-Trial Conference did not proceed as
scheduled on said date.
In an Order dated 10 October 2003, the RTC granted Dandos Motion to
Dismiss Civil Case No. 03-281, for the following reasons:
In resolving this motion, this Court should be guided by the
mandatory character of Section 6, Rule 18 of the Revised Rules of
Court which: strictly mandates the parties to the case to file with the
Court and serve on the adverse party and SHALL ensure their receipt
thereof at least three (3) days before the date of the pre-trial, their
respective pre-trial briefs but likewise imposed upon the parties the
mandatory duty to seasonably file and serve on the adverse party their
respective pre-trial briefs. The aforesaid rule does not merely sanction

the non-filing thereof of the parties respective pre-trial briefs but

likewise imposed upon the parties the mandatory duty to seasonably
file and serve on the adverse party their respective pre-trial
briefs. Pre-trial briefs are meant to serve as a device to clarify and
narrow down the basic issues between the parties so that at pre-trial,
the proper parties may be able to obtain the fullest possible knowledge
of the issues and the facts before civil trials and this prevent said trials
from being carried in the dark. [15]
Consequently, the RTC decreed:
WHEREFORE, premises considered, finding the [herein
respondent Dandos] motion to dismiss to be impressed with merit the
same is hereby GRANTED. Accordingly, the instant case is hereby
dismissed with prejudice.[16]

BPI filed a Motion for Reconsideration [17] of the 10 October 2003 Order of the
RTC, praying for the liberal interpretation of the rules. Expectedly, Dando filed his
Comment/Opposition thereto.[18]
On 13 January 2004, the RTC, now presided by Judge Cesar O. Untalan (Judge
Untalan), issued an Order resolving the Motion for Reconsideration of BPI as follows:
The Court finds merit in plaintiffs motion.
Considering that although reglementary periods under the
Rules of Court are to be strictly observed to prevent needless delays,
jurisprudence nevertheless allows the relaxation of procedural
rules. Since technicalities are not ends in themselves but exist to
protect and promote substantive rights of litigants [Sy vs. CA, et al.,
G.R. No. 127263, April 12, 2000; Adamo vs. IAC, 191 SCRA 195 (1990);
Far East Marble (Phils.), Inc. vs. CA, 225 SCRA 249, 258 (1993)], in the
interest of substantial justice, and without giving premium to
technicalities, the motion for reconsideration is hereby granted. [19]
At the end of its 13 January 2004 Order, the RTC disposed:
Wherefore, the Order
reconsidered and set aside.

dated October

10,

2003 is

hereby

Let this case be set for pre-trial anew on February 13,

2004 at 8:30 in the morning. Notify both parties and their respective
counsel of this setting.[20]

It was then Dandos turn to file a Motion for Reconsideration, [21] which the RTC
addressed in its Order dated 3 March 2004, thus:
Finding no new issue raised in defendants motion, as to
warrant a reconsideration of the assailed Order dated January 13,
2004, the instant motion is hereby denied.
The Pre-trial set on March 19, 2004 at 8:30 in the morning shall
proceed accordingly.[22]

Dando sought recourse from the Court of Appeals by filing a Petition

for Certiorari under Rule 65 of the Rules of Court, docketed as CA-G.R. SP No. 82881.
[23]
Dando averred that RTC Judge Untalan committed grave abuse of discretion,
amounting to lack or excess of jurisdiction, in issuing its Order dated 13 January
2004. The Court of Appeals rendered a Decision on 20 November 2006 where it
held that:
In this case, the BPI stated in its motion for reconsideration of
the order dismissing its action that the delay in the filing of the pre-trial
brief was solely due to the heavy load of paper work of its counsel, not
to mention the daily hearings the latter had to attend. We find this
excuse too flimsy to justify the reversal of an earlier order dismissing
the action. The BPI did not come forward with the most convincing
reason for the relaxation of the rules, or has not shown any persuasive
reason why it should be exempt from abiding by the rules. We
therefore find the public respondent to have gravely abused his
discretion in considering and granting the BPIs motion for
reconsideration. The BPI failed to even try to come up with a good
reason for its failure to file its pre-trial brief on time in order to relax
the application of the procedural rules. Heavy work load and court
hearings cannot even be considered an excuse. The trial court cannot
just set aside the rules of procedure and simply rely on the liberal
interpretation of the rules. Clearly, public respondent ignored the
mandatory wordings of Sections 5 and 6 of Rule 18. Under Section 6,
the plaintiffs failure to file the pre-trial brief at least three days before
the pre-trial shall have the same effect as failure to appear at the pretrial. Under Section 5 of the same Rule, failure by plaintiff to appear at
the pre-trial shall be cause for dismissal of the action. There is grave
abuse of discretion when a lower court or tribunal violates or
contravenes the Constitution, the law or existing jurisprudence. [24]

The fallo of the Decision of the Court of Appeals reads:

WHEREFORE,
premises
considered,
the
petition
is
GRANTED. The Orders dated January 13, 2004 and March 3, 2004, of

theRegional Trial Court of Makati City, Branch 149, in Civil Case No. 03281 are hereby ANNULLED and SET ASIDE. The October 10, 2003
Order is hereby REINSTATED.[25]

The Court of Appeals, in a Resolution dated 4 April 2007,[26] denied the Motion
for Reconsideration of BPI for lack of merit.
Hence, this Petition where BPI raises the following issues:
A.

IS THE HONORABLE COURT OF APPEALS, IN ISSUING THE

DECISION AND RESOLUTION, CORRECT WHEN IT STRICTLY
APPLIED THE RULES OF PROCEDURE.

B.

IS THE HONORABLE COURT OF APPEALS CORRECT WHEN IT

DECLARED THAT THE HONORABLE TRIAL COURT COMMITTED A
GRAVE
ABUSE
OF
DISCRETION
WHEN
THE
LATTER
RECONSIDERED AND SET ASIDE THE ORDER (ANNEX H TO THE
PETITION) DISMISSING THE CASE, DESPITE THE HONORABLE
TRIAL COURTS DISCRETION OR POWER TO RELAX COMPLIANCE
WITH THE RULES OF PROCEDURE.[27]

Relevant herein are the following provisions of the Rules of Court on pre-trial:
Rule 18
PRE-TRIAL
SEC. 6. Pre-trial brief. The parties shall file with the court
and serve on the adverse party, in such manner as shall ensure
their receipt thereof at least three (3) days before the date of the
pre-trial, their respective pre-trial briefs which shall contain, among
others:
xxxx
Failure to file the pre-trial brief shall have the same
effect as failure to appear at the pre-trial.
SEC. 5. Effect of failure to appear. The failure of the plaintiff
to appear when so required pursuant to the next preceding section
shall be cause for dismissal of the action. The dismissal shall
be with prejudice, unless otherwise ordered by the court. A similar
failure on the part of the defendant shall be cause to allow the plaintiff
to present his evidence ex parte and the court to render judgment on
the basis thereof. (Emphases ours.)

It is a basic legal construction that where words of command such as shall,

must, or ought are employed, they are generally and ordinarily regarded as
mandatory. Thus, where, as in Rule 18, Sections 5 and 6 of the Rules of Court, the
word shall is used, a mandatory duty is imposed, which the courts ought to
enforce.[28]
The Court is fully aware that procedural rules are not to be belittled or simply
disregarded for these prescribed procedures insure an orderly and speedy
administration of justice. However, it is equally true that litigation is not merely a
game of technicalities. Law and jurisprudence grant to courts the prerogative to
relax compliance with procedural rules of even the most mandatory character,
mindful of the duty to reconcile both the need to put an end to litigation speedily
and the parties right to an opportunity to be heard. [29]
This is not to say that adherence to the Rules could be dispensed with.
However, exigencies and situations might occasionally demand flexibility in their
application.[30] In not a few instances, the Court relaxed the rigid application of the
rules of procedure to afford the parties the opportunity to fully ventilate their cases
on the merit. This is in line with the time-honored principle that cases should be
decided only after giving all parties the chance to argue their causes and
defenses. Technicality and procedural imperfection should, thus, not serve as basis
of decisions. In that way, the ends of justice would be better served. For, indeed,
the general objective of procedure is to facilitate the application of justice to the
rival claims of contending parties, bearing always in mind that procedure is not to
hinder but to promote the administration of justice. [31]
In Sanchez v. Court of Appeals, [32] the Court restated the reasons that may
provide justification for a court to suspend a strict adherence to procedural rules,
such as: (a) matters of life, liberty, honor or property; (b) the existence of special or
compelling circumstances; (c) the merits of the case; (d) a cause not entirely
attributable to the fault or negligence of the party favored by the suspension of the
rules; (e) a lack of any showing that the review sought is merely frivolous and
dilatory; and (f) the fact that the other party will not be unjustly prejudiced thereby.
[33]

Herein, BPI instituted Civil Case No. 03-281 before the RTC to recover the
amount it had lent to Dando, plus interest and penalties thereon, clearly, a matter
of property. The substantive right of BPI to recover a due and demandable
obligation cannot be denied or diminished by a rule of procedure, [34] more so, since
Dando admits that he did avail himself of the credit line extended by FEBTC, the
predecessor-in-interest of BPI, and disputes only the amount of his outstanding
liability to BPI.[35] To dismissCivil Case No. 03-281 with prejudice and, thus, bar BPI

from recovering the amount it had lent to Dando would be to unjustly enrich Dando
at the expense of BPI.
The counsel of BPI invokes heavy pressures of work to explain his failure to
file the Pre-Trial Brief with the RTC and to serve a copy thereof to Dando at least
three days prior to the scheduled Pre-Trial Conference. [36] True, in Olave v. Mistas,
[37]
we did not find heavy pressures of work as sufficient justification for the failure
of therein respondents counsel to timely move for pre-trial. However, unlike the
respondents in Olave,[38] the failure of BPI to file its Pre-Trial Brief with the RTC and
provide Dando with a copy thereof within the prescribed period under Section 1,
Rule 18 of the Rules of Court, was the first and, so far, only procedural lapse
committed by the bank in Civil Case No. 03-281. BPI did not manifest an evident
pattern or scheme to delay the disposition of the case or a wanton failure to
observe a mandatory requirement of the Rules. In fact, BPI, for the most part,
exhibited diligence and reasonable dispatch in prosecuting its claim against Dando
by immediately moving to set Civil Case No. 03-281 for Pre-Trial Conference after its
receipt of Dandos Answer to the Complaint; and in instantaneously filing a Motion
for Reconsideration of the 10 October 2003 Order of the RTC dismissing Civil Case
No. 03-281.
Accordingly, the ends of justice and fairness would be best served if the
parties to Civil Case No. 03-281 are given the full opportunity to thresh out the real
issues and litigate their claims in a full-blown trial. Besides, Dando would not be
prejudiced should the RTC proceed with the hearing of Civil Case No. 03-281, as he
is not stripped of any affirmative defenses nor deprived of due process of law. [39]
WHEREFORE, premises considered, the instant Petition is GRANTED. The
Decision dated 20 November 2006 and Resolution dated 4 April 2007 of the Court of
Appeals in CA-G.R. SP No. 82881 are REVERSED and SET ASIDE. The Orders
dated 13 January 2004 and 3 March 2004 in Civil Case No. 03-281, insofar as they
set aside the prior Order dated 10 October 2003 of the same trial court dismissing
the Complaint of petitioner Bank of the Philippine Islands for failure of the latter to
timely file its Pre-Trial Brief, is REINSTATED. The Regional Trial Court of Makati City,
Branch 149, is DIRECTED to continue with the hearing of Civil Case No. 03-281 with
utmost dispatch, until its termination. No costs.
SO ORDERED.

MINITA V. CHICO-NAZARIO

Associate Justice

Benavidez v. Salvador, G.R. No. 173331, December 11, 2013

G.R. No. 173331

December 11, 2013

FLORPINA
vs.
NESTOR SALVADOR, Respondent.

BENAVIDEZ, Petitioner,

DECISION
MENDOZA, J.:
This is a petition for review on certiorari assailing the November 22, 2005
Decision1 and the June 8, 2006 Amended Decision 2 of the Court of Appeals (CA). in
CA-G.R. CV No. 73487, which affirmed and modified the June 1, 2001 Decision 3 of
the Regional Trial Court. Branch 74, Anti polo City (RTC-Antipolo) in Civil Case No.
00-5660.
The Facts:
Sometime
in
February
1998,
pet1t1oner
Florpina
Benavidez (Benavidez) approached
and
asked
respondent
Nestor
Salvador (Salvador) for a loan that she would use to repurchase her property in
Tanay, Rizal which was foreclosed by the Farmers Savings and Loan Bank,
Inc. (Farmers Savings). After inspecting the said property, Salvador agreed to lend
the money subject to certain conditions. To secure the loan, Benavidez was required
to execute a real estate mortgage, a promissory note and a deed of sale. She was
also required to submit a special power of attorney (SPA) executed and signed by
Benavidezs daughter, Florence B. Baning (Baning), whom she named as the vendee
in the deed of absolute sale of the repurchased property. In the SPA, Baning would
authorize her mother to obtain a loan and to constitute the said property as security
of her indebtedness to Salvador.
Pursuant to the agreement, Salvador issued a managers check in favor of
Benavidez in the amount of One Million Pesos (P1,000,000.00) and released Five
Hundred Thousand Pesos (P500,000.00) in cash. For the loan obtained, Benavidez
executed a promissory note, dated March 11, 1998.
Benavidez, however, failed to deliver the required SPA. She also defaulted in her
obligation under the promissory note. All the postdated checks which she had
issued to pay for the interests were dishonored. This development prompted
Salvador to send a demand letter with a corresponding statement of account, dated
January 11, 2000. Unfortunately, the demand fell on deaf ears which constrained
Salvador to file a complaint for sum of money with damages with prayer for
issuance of preliminary attachment.

On May 4, 2000, Benavidez filed a motion to dismiss on the ground of litis

pendentia. She averred that prior to the filing of the case before the RTC-Antipolo,
she had filed a Complaint for Collection for Sum of Money, Annulment of Contract
and Checks with Prayer for Preliminary Injunction and Temporary Restraining
Order against Salvador; his counsel, Atty. Nepthalie Segarra; Almar Danguilan; and
Cris Marcelino, before the Regional Trial Court, Branch 80, Morong, Rizal (RTCMorong). The motion to dismiss, however, was denied by RTC-Antipolo on July 31,
2000. On September 15, 2000, Benavidez filed her answer with counterclaim. A pretrial conference was scheduled on May 2, 2001 but she and her counsel failed to
appear despite due notice. Resultantly, upon motion, Salvador was allowed by the
trial court to present evidence ex parte.
On June 1, 2001, RTC-Antipolo decided the subject case for Salvador. It found that
indeed Benavidez obtained a loan from Salvador in the amount of P1,500,000.00. It
also noted that up to the time of the rendition of the judgment, she had failed to
settle her obligation despite having received oral and written demands from
Salvador. Also, the trial court pointed out that the evidence had shown that as of
January 11, 2000, Benavidezs obligation had already reached the total amount
of P4,810,703.21.4 Thus, the fallo of the said decision reads:
WHEREFORE, in view of the foregoing premises, defendant is hereby directed to pay
plaintiff the following:
1. The amount of P4,810,703.21, covering the period from June 11, 1998 to
January 11, 2000, exclusive of interest and penalty charges until the said
amount is fully paid;
2. The amount of P50,000.00 as exemplary damages;
3. The sum of 25% of the total obligation as and by way of attorneys fees;
and,
4. Cost of suit.
SO ORDERED.5
Benavidez filed a motion for reconsideration but unfortunately for her, RTC-Antipolo,
in its August 10, 2001 Order,6 denied her motion for lack of merit.
Frustrated, Benavidez appealed the June 1, 2001 Decision and the August 10, 2001
Order of RTC-Antipolo to the CA. She argued, in chief, that early on, the trial court
should have dismissed the complaint for collection of sum of money filed by
Salvador on grounds of litis pendentia and erroneous certification against forum
shopping. She claimed that prior to the filing of the said complaint against her, she
had already filed a complaint for the annulment of the promissory note evidencing
her obligation against Salvador. According to her, there was substantial identity in
the causes of action and any result of her complaint for annulment would
necessarily affect the complaint for collection of sum of money filed against her. She

added that Salvador never informed RTC-Antipolo about the pending case before
RTC-Morong, rendering his certification on forum shopping erroneous. 7
Benavidez also argued that RTC-Antipolo erred in refusing to re-open the case for
pre-trial conference and disallowing her to present evidence. She added that the
absence of her counsel on the scheduled pre-trial conference caused her substantial
prejudice. Though she was not unmindful of the general rule that a client was bound
by the mistake or negligence of her counsel, she insisted that since the
incompetence or ignorance of her counsel was so great and the error committed
was so serious as it prejudiced her and denied her day in court, the litigation should
have been reopened to give her the opportunity to present her case. 8
The CA was not moved.
The CA reasoned out that RTC-Antipolo did not err in allowing Salvador to present
his evidence ex-parte in accordance with Section 5, Rule 18 of the 1997 Rules of
Court.9 Benavidez and her counsel failed to show a valid reason for their nonappearance at the pre-trial and so their absence was not excusable. Her counsels
negligence, as Benavidez cited, was not among the grounds for new trial or
reconsideration as required under Section 1, Rule 37 of the Rules of Civil Procedure.
The CA emphasized that well-entrenched was the rule that negligence of counsel
bound his client. She was bound by the action of his counsel in the conduct of the
trial. The appellate court also took note that she herself was guilty of negligence
because she was also absent during the pre-trial despite due notice. Thus,
Benavidezs position that the trial court should have reopened the case was
untenable.10
With regards to the grounds of litis pendentia and forum shopping cited by
Benavidez, the CA wrote that there was no identity of the rights asserted in the
cases filed before RTC-Morong and RTC-Antipolo. The reliefs prayed for in those
cases were different. One case was for the annulment of the promissory note while
the other one was a complaint for sum of money. There could be identity of the
parties, but all the other requisites to warrant the dismissal of the case on the
ground of litis pendentia were wanting.11 Thus, on November 22, 2005, the CA
affirmed in toto the decision of RTC-Antipolo.12
Feeling aggrieved by the affirmance, Benavidez filed a motion for reconsideration on
the ground that the same was contrary to law and jurisprudence; that litis
pendentia existed which resultantly made his certification on non-forum shopping
untruthful; and, that her absence during the pre-trial was justified.
On June 08, 2006, the CA issued the Amended Decision, holding that the motion
was partly meritorious. Accordingly, it modified its earlier decision by deleting the
award of exemplary damages and attorneys fees because the award thereof was
not supported by any factual, legal and equitable justification. Thus, the decretal
portion of the Amended Decision reads:

WHEREFORE, the motion for reconsideration is PARTIALLY GRANTED. The

Decision dated November 22, 2005 is MODIFIED by DELETING the award of
exemplary damages and attorneys fees.
SO ORDERED.

13

Still unsatisfied, Benavidez comes before the Court via a petition for review under
Rule 45 of the Rules of Court, raising the following issues: 14
1. Whether or not the present case is barred by Civil Case No. 0005660 which is pending before the RTC-Morong, Rizal.
2. Whether or not the case is dismissible because the certification
against forum shopping was defective.
3. Whether or not the executed promissory note is void for being
unconscionable and shocking to the conscience.
4. Whether or not the CA erred in holding that the order allowing
respondent to present evidence ex-parte and submitting the case for
decision is valid despite the fact that default judgment is looked
upon with disfavor by this Court.
In fine, the core issue is whether or not the present case should have been
dismissed on the ground of litis pendentia.
Benavidez argues that the outcome of the case, before RTC-Morong, where the
annulment of the promissory note was sought, would have been determinative of
the subject case before RTC-Antipolo where the enforcement of the promissory note
was sought. If RTC-Morong would rule that the promissory note was null and void,
then the case with RTC-Antipolo would have no more leg to stand on. He concludes
that the requisites of litis pendentia were indeed present: first, both Benavidez and
Salvador were parties to both complaints; second, both complaints were concerned
with the promissory note; and third, the judgment in either of the said complaints
would have been determinative of the other. 15
Benavidez further claims that the case should have been dismissed because the
certification on forum shopping which accompanied Salvadors complaint was
defective. He declared therein that he was not aware of any pending case before
any court similar to the one he was filing, when in truth and in fact, there was one.
This fact could not be denied because summons in the case before RTC-Morong was
served on him and he even filed his answer to the said complaint. 16
Benavidez also pushes the argument that RTC-Antipolo committed an error of law
when it allowed Salvador to present evidence ex-parte and eventually decided the
case without waiting to hear her side. The trial court should have been more lenient.
If there was any one to be blamed for her predicament, it should have been his
counsel, Atty. Rogelio Jakosalem (Jakosalem). His counsel was negligent in his duties
when he did not bother to file the necessary pre-trial brief and did not even appear

at the pre-trial conference. He did not assist her either in filing a motion for
reconsideration. Benavidez explains that Atty. Jakosalem did not appear on the
scheduled pre-trial conference because he got mad at her when she refused to heed
his advice to settle when the trial court granted Salvadors motion for issuance of
preliminary attachment. Under the circumstances, she should have been exempted
from the rule that the negligence of counsel binds the client. 17
For her part, she failed to appear because she was then suffering from illness.
Contrary to the finding of the CA, her medical certificate was not belatedly
submitted. She submitted it within a reasonable period after she received the order
allowing Salvador to present evidence ex-parte and considering the case for
resolution thereafter.18
The
Courts
In
litis
pendentia,
hard
and
fast
determining
which
of
actions should be abated

there

is
rule
the

Ruling
no
in
two

Litis pendentia is a Latin term, which literally means "a pending suit" and is
variously referred to in some decisions as lis pendens and auter action pendant. As
a ground for the dismissal of a civil action, it refers to the situation where two
actions are pending between the same parties for the same cause of action, so that
one of them becomes unnecessary and vexatious. It is based on the policy against
multiplicity of suits.19
Litis pendentia exists when the following requisites are present: identity of the
parties in the two actions; substantial identity in the causes of action and in the
reliefs sought by the parties; and the identity between the two actions should be
such that any judgment that may be rendered in one case, regardless of which
party is successful, would amount to res judicata in the other.20
On the other hand, forum shopping exists when, as a result of an adverse decision
in one forum, or in anticipation thereof, a party seeks a favorable opinion in another
forum through means other than appeal or certiorari.21
There is forum shopping when the elements of litis pendentia are present or where
a final judgment in one case will amount to res judicata in another.22
In the present controversy, the Court is of the view that litis pendentia exists. All the
elements are present: first,both Benavidez and Salvador are parties in both
cases; second, both complaints are concerned with the same promissory note;
and third, the judgment in either case would be determinative of the other.
With the foregoing, which case then should be dismissed? At first glance, it would
seem that Civil Case No. 00-5660 or the complaint filed with RTC-Antipolo should
have been dismissed applying the "priority-in-time rule." This rule, however, is not
ironclad. The rule is not applied if the first case was filed merely to pre-empt the
later action or to anticipate its filing and lay the basis for its dismissal. A crucial

consideration is the good faith of the parties. In recent rulings, the more appropriate
case is preferred and survives. In Spouses Abines v. BPI,23 it was written:
There is no hard and fast rule in determining which of the actions should be abated
on the ground of litis pendentia, but through time, the Supreme Court has
endeavored to lay down certain criteria to guide lower courts faced with this legal
dilemma. As a rule, preference is given to the first action filed to be retained. This is
in accordance with the maxim Qui prior est tempore, potior est jure. There are,
however, limitations to this rule. Hence, the first action may be abated if it was filed
merely to pre-empt the later action or to anticipate its filing and lay the basis for its
dismissal. Thus, the bona fides or good faith of the parties is a crucial element. A
later case shall not be abated if not brought to harass or vex; and the first case can
be abated if it is merely an anticipatory action or, more appropriately, an
anticipatory defense against an expected suit a clever move to steal the march
from the aggrieved party.
Another exception to the priority in time rule is the criterion of the more appropriate
action. Thus, an action, although filed later, shall not be dismissed if it is the more
appropriate vehicle for litigating the issues between the parties. [Underscoring
supplied]
In the relatively recent case of Dotmatrix Trading v. Legaspi,24 the Court had the
occasion to extensively discuss the various rules and consideration in determining
which case to dismiss in such situations. It included its analysis of Abines. Thus:
Early on, we applied the principle of Qui prior est tempore, potior est
jure (literally, he who is before in time is better in right) in dismissing a case on the
ground of litis pendentia. This was exemplified in the relatively early case of Del
Rosario v. Jacinto where two complaints for reconveyance and/or recovery of the
same parcel of land were filed by substantially the same parties, with the second
case only impleading more party-plaintiffs. The Court held that "parties who base
their contention upon the same rights as the litigants in a previous suit are bound
by the judgment in the latter case." Without expressly saying so in litis
pendentia terms, the Court gave priority to the suit filed earlier.
In Pampanga Bus Company, Inc. v. Ocfemia, complaints for damages arising from a
collision of a cargo truck and a bus were separately filed by the owners of the
colliding vehicles. The complaint of the owners of the cargo truck prevailed and the
complaint of the owners of the bus had to yield, as the cargo truck owners first filed
their complaint. Notably, the first and prevailing case was far advanced in
development, with an answer with counterclaim and an answer to the counterclaim
having been already filed, thus fully joining the issues.
In Lamis Ents. v. Lagamon, the first case was a complaint for specific performance
of obligations under a Memorandum of Agreement, while the second case was a
complaint for sums of money arising from obligations under a promissory note and a
chattel mortgage, and damages. We dismissed the second case because the claims
for sums of money therein arose from the Memorandum of Agreement sued upon in
the first case.

Ago Timber Corporation v. Ruiz offered an insightful reason after both parties had
each pleaded the pendency of another action between the same parties for the
same cause. The Court ruled that the second action should be dismissed, "not only
as a matter of comity with a coordinate and co-equal court (Laureta & Nolledo,
Commentaries & Jurisprudence on Injunction, p. 79, citing Harrison v. Littlefield, 57
Tex. Div. A. 617, 619, 124 SW 212), but also to prevent confusion that might
seriously hinder the administration of justice. (Cabigao, et al. v. Del Rosario, et al.,
44 Phil. 182)."
In all these cases, we gave preference to the first action filed to be retained.
The "priority-in-time rule,"however, is not absolute.
In the 1956 case of Teodoro v. Mirasol, we deviated from the "priority-in-time rule"
and applied the "more appropriate action test" and the "anticipatory test."
The "more appropriate action test" considers the real issue raised by the
pleadings and the ultimate objective of the parties; the more appropriate
action is the one where the real issues raised can be fully and completely
settled. In Teodoro, the lessee filed an action for declaratory relief to fix the period
of the lease, but the lessor moved for its dismissal because he had subsequently
filed an action for ejectment against the lessee. We noted that the unlawful detainer
suit was the more appropriate action to resolve the real issue between the parties whether or not the lessee should be allowed to continue occupying the land under
the terms of the lease contract; this was the subject matter of the second suit for
unlawful detainer, and was also the main or principal purpose of the first suit for
declaratory relief.
In the "anticipatory test," the bona fides or good faith of the parties is the critical
element.1wphi1 If the first suit is filed merely to preempt the later action
or to anticipate its filing and lay the basis for its dismissal, then the first
suit should be dismissed. In Teodoro, we noted that the first action, declaratory
relief, was filed by the lessee to anticipate the filing of the second action, unlawful
detainer, considering the lessor's letter informing the lessee that the lease contract
had expired.
We also applied the "more appropriate action test" in Ramos v. Peralta. In this case,
the lessee filed an action for consignation of lease rentals against the new owner of
the property, but the new owner moved to dismiss the consignation case because of
the quieting of title case he had also filed against the lessee. Finding that the real
issue between the parties involved the right to occupy/possess the subject property,
we ordered the dismissal of the consignation case, noting that the quieting of title
case is the more appropriate vehicle for the ventilation of the issues between them;
the consignation case raised the issue of the right to possession of the lessee under
the lease contract, an issue that was effectively covered by the quieting of title case
which raised the issue of the validity and effectivity of the same lease contract.
In University Physician Services, Inc. v. Court of Appeals, we applied both the "more
appropriate action test" and "anticipatory test." In this case, the new owner of an
apartment sent a demand letter to the lessee to vacate the leased apartment unit.
When the lessee filed an action for damages and injunction against the new owner,

the new owner moved for the dismissal of the action for damages on account of the
action for ejectment it had also filed. We noted that ejectment suit is the more
appropriate action to resolve the issue of whether the lessee had the right to occupy
the apartment unit, where the question of possession is likewise the primary issue
for resolution. We also noted that the lessee, after her unjustified refusal to vacate
the premises, was aware that an ejectment case against her was forthcoming; the
lessee's filing of the complaint for damages and injunction was but a canny and
preemptive maneuver intended to block the new owner's action for ejectment.
We also applied the "more appropriate action test" in the 2003 case Panganiban v.
Pilipinas Shell Petroleum Corp., where the lessee filed a petition for declaratory
relief on the issue of renewal of the lease of a gasoline service station, while the
lessor filed an unlawful detainer case against the lessee. On the question of which
action should be dismissed, we noted that the interpretation of a provision in the
lease contract as to when the lease would expire is the key issue that would
determine the lessee's right to possess the gasoline service station. The primary
issue the physical possession of the gasoline station - is best settled in the
ejectment suit that directly confronted the physical possession issue, and not in any
other case such as an action for declaratory relief.
A more recent case - Abines v. Bank of the Philippine Islands in 2006 - saw the
application of both the "priority-in-time rule" and the "more appropriate action test."
In this case, the respondent filed a complaint for collection of sum of money against
the petitioners to enforce its rights under the promissory notes and real estate
mortgages, while the petitioners subsequently filed a complaint for reformation of
the promissory notes and real estate mortgages. We held that the first case, the
collection case, should subsist because it is the first action filed and the more
appropriate vehicle for litigating all the issues in the controversy. We noted that in
the second case, the reformation case, the petitioners acknowledged their
indebtedness to the respondent; they merely contested the amounts of the
principal, interest and the remaining balance. We observed, too, that the
petitioners' claims in the reformation case were in the nature of defenses to the
collection case and should be asserted in this latter case.
Under this established jurisprudence on litis pendentia, the following considerations
predominate in the ascending order of importance in determining which action
should prevail: (1) the date of filing, with preference generally given to the first
action filed to be retained; (2) whether the action sought to be dismissed was filed
merely to preempt the later action or to anticipate its filing and lay the basis for its
dismissal; and (3) whether the action is the appropriate vehicle for litigating the
issues between the parties.25 [Underscoring supplied]
In the complaint filed before RTC-Morong, Benavidez alleged, among others, that it
was defendant Atty. Nepthalie Segarra (Atty. Segarra) who arranged the loan in the
amount of P1,500,000.00 for her at his own initiative; that he was the one who
received the amount for her on or about March 10, 1998 from defendant Salvador;
that he paid Farmers Bank the amount of P1,049,266.12 leaving a balance of more
than P450,000.00 in his possession; and that he made her sign a promissory note.
Benavidez prayed, among others, that Atty. Segarra be ordered to give her the
balance of the amount loaned and that the promissory note that Salvador allegedly

executed be declared null and void because she was just duped into signing the
said document through machinations and that the stipulated interest therein was
shocking to the conscience. Salvador, on the other hand, filed the subject case for
the collection of a sum of money before RTC-Antipolo to enforce his rights under the
promissory note.
Considering the nature of the transaction between the parties, the Court believes
that the case for collection of sum of money filed before RTC-Antipolo should be
upheld as the more appropriate case because the judgment therein would
eventually settle the issue in the controversy - whether or not Benavidez should be
made accountable for the subject loan. In the complaint that she filed with RTCMorong, Benavidez never denied that she contracted a loan with Salvador. Under
her second cause of action, she alleged:
SECOND CAUSE OF ACTION
11. Defendant Atty. Nepthalie Segarra arranged a loan in the amount of ONE
MILLION AND FIVE HUNDRED THOUSAND (P1,500,000.00) PESOS for plaintiff
at his own initiative;
12. Defendant Atty. Nepthalie Segarra received the P1,500,000.00 on or
about March 10, 1998 from defendant Nestor Salvador in behalf of and for
delivery to plaintiff;
13. Defendant Atty. Nepthalie Segarra paid Farmers Bank the amount
of P1,049,266.12 leaving a balance of more than P450,000.00 in his
possession. A copy of the receipt evidencing payment is herewith attached as
Annex "A" and made an integral part hereof;
14. Defendant Atty. Nepthalie Segarra made plaintiff sign a Promissory Note
evidencing the loan ofP1,500,000.00. A copy of said Promissory Note is
herewith attached as Annex "B" and made an integral part
hereof; 26 [Underscoring supplied]
From the foregoing, it is clear that there was an amount of money borrowed from
Salvador which was used in the repurchase of her foreclosed property. Whether or
not it was Atty. Segarra who arranged the loan is immaterial. The fact stands that
she borrowed from Salvador and she benefited from it. Her insistence that the
remaining balance of P450,000.00 of the money loaned was never handed to her by
Atty. Segarra is a matter between the two of them. As far as she and Salvador are
concerned, there is admittedly an obligation. Whether the promissory note was void
or not could have been proven by her during the trial but she forfeited her right to
do so when she and her lawyer failed to submit a pre-trial brief and to appear at the
pre-trial as will be discussed hereafter.
At this point, to dismiss Civil Case No. 00-5660 would only result in needless delay
in the resolution of the parties' dispute and bring them back to square one. This
consequence will defeat the public policy reasons behind litis pendentia which, like
the rule on forum shopping, aim to prevent the unnecessary burdening of our courts

and undue taxing of the manpower and financial resources of the Judiciary; to avoid
the situation where co-equal courts issue conflicting decisions over the same cause;
and to preclude one party from harassing the other party through the filing of an
unnecessary or vexatious suit.27
The
failure
of
a
pre-trial
brief
or
pre-trial
conference
cause
to
allow
to present evidence ex parte.

party
to
the

to
appear
shall
other

file
at

a
a
be
party

Benavidez basically contends that she should not be made to suffer the
irresponsibility of her former counsel, Atty. Jakosalem, and that the trial court should
have relaxed the application of the Rules of Court, reopened the case and allowed
her to present evidence in her favor.
The Court is not moved.
Section 4, Rule 18 of the Rules of Court provides that it is the duty of the parties and
their counsel to appear at the pre-trial conference. The effect of their failure to
appear is provided by Section 5 of the same rule where it states:
Sec. 5. Effect of failure to appear.- The failure of the plaintiff to appear when so
required pursuant to the next preceding section shall be cause for dismissal of the
action. The dismissal shall be with prejudice, unless otherwise ordered by the
court. A similar failure on the part of the defendant shall be cause to allow
the plaintiff to present his evidence ex parte and the court to render
judgment on the basis thereof.[Emphasis supplied]
Furthermore, Section 6 thereof provides:
Sec. 6. Pre-trial brief.-The parties shall file with the court and serve on the adverse
party, in such manner as shall ensure their receipt thereof at least three (3) days
before the date of the pre-trial, their respective pre-trial briefs which shall contain,
among others:
xxx
Failure to file the pre-trial brief shall have the same effect as failure to appear at the
pre-trial.
From the foregoing, it is clear that the failure of a party to appear at the pre-trial has
adverse consequences. If the absent party is the plaintiff, then his case shall be
dismissed. If it is the defendant who fails to appear, then the plaintiff is allowed to
present his evidence ex parte and the court shall render judgment on the basis
thereof. Thus, the plaintiff is given the privilege to present his evidence without
objection from the defendant, the likelihood being that the court will decide in favor
of the plaintiff, the defendant having forfeited the opportunity to rebut or present its
own evidence.28

RTC-Antipolo then had the legal basis to allow Salvador to present evidence ex
parte upon motion. Benavidez and her counsel were not present at the scheduled
pre-trial conference despite due notice. They did not file the required pre-trial brief
despite receipt of the Order. The rule explicitly provides that both parties and their
counsel are mandated to appear thereat except for: (1) a valid excuse; and (2)
appearance of a representative on behalf of a party who is fully authorized in
writing to enter into an amicable settlement, to submit to alternative modes of
dispute resolution, and to enter into stipulations or admissions of facts and
documents.29 In this case, Benavidezs lawyer was already negligent, but she
compounded this by being negligent herself. She was aware of the scheduled pretrial conference, but she did not make any move to prevent the prejudicial
consequences of her absence or that of her counsel. If she knew that her lawyer
would not appear and could not because she was ill, she should have sent a
representative in court to inform the judge of her predicament.
Also, her failure to file the pre-trial brief warranted the same effect because the
rules dictate that failure to file a pre-trial brief shall have the same effect as failure
to appear at the pre-trial. Settled is the rule that the negligence of a counsel binds
his clients.30 Neither Benavidez nor her counsel can now evade the effects of their
misfeasance.
Stipulated
reduced
and unconscionable.

interest
for

should
being

be
iniquitous

This Court is not unmindful of the fact that parties to a loan contract have wide
latitude to stipulate on any interest rate in view of the Central Bank Circular No. 905
s. 1982 which suspended the Usury Law ceiling on interest effective January I, 1983.
It is, however, worth stressing that interest rates whenever unconscionable may still
be declared illegal. There is nothing in said circular which grants lenders carte
blanche authority to raise interest rates to levels which will either enslave their
borrowers or lead to a hemorrhaging of their assets. 31 In Menchavez v.
Bermudez,32 the interest rate of 5% per month, which when summed up would
reach 60% per annum, is null and void for being excessive, iniquitous,
unconscionable and exorbitant, contrary to morals, and the law. 33
Accordingly, in this case, the Court considers the compounded interest rate of 5%
per month as iniquitous and unconscionable and void and inexistent from the
beginning. The debt is to be considered without the stipulation of the iniquitous and
unconscionable interest rate.34 In line with the ruling in the recent case of Nacar v.
Gallery Frames,35 the legal interest of 6% per annum must be imposed in lieu of the
excessive interest stipulated in the agreement.
WHEREFORE, the petition is DENIED. The November 22, 2005 Decision and the
June
8,
2006
Amended
Decision
of
the
Court
of
Appeals
are AFFIRMED with MODIFICATION. The interest rate of 5% per month which was
the basis in computing Benavidez's obligation is reduced to 6% per annum.
SO ORDERED.

JOSE CATRAL MENDOZA

Associate Justice

Sec. 7. Record of pre-trial

See: Rule 10, Sec. 5, Rules of Court
Rule 18, Sec. 7, Rules of Court
Lazo v. Republic Surety, G.R. No. L-27365, January 30, 1970 (Supra.)
G.R. No. L-27365 January 30, 1970
FELIX L. LAZO, MERCEDES CASTRO DE LAZO, and JOSE ROBLES, plaintiffsappellees,
vs.
REPUBLIC SURETY & INSURANCE CO., INC. represented by ANTONIO M.
KOH, General Manager and as Attorney-in-Fact of plaintiffs, FELIX and
MERCEDES LAZO defendants-appellants.
Felix L. Lazo for himself and his co-plaintiffs-appellees.
Jose S. Sarte for other plaintiff-appellee.
Koh Law Offices for defendants-appellants.

MAKALINTAL, J.:
This case is before us on appeal by the defendants from the decision of the Court of
First Instance of Manila (Branch I, Judge Francisco Arca, presiding) rendered on
December 7, 1966, in its Civil Case No. 55734.
The original complaint was filed on December 12, 1963, and subsequently amended
on November 9, 1964. The plaintiffs are the spouse Felix L. Lazo and Mercedes
Castro de Lazo, and Jose Robles; the defendants are Republic Surety & Insurance
Co., Inc. its general manager Antonio M. Koh, the sheriff of Manila and the Register
of Deeds, also of Manila. The pertinent allegations which make up the plaintiffs'
cause of action are: that the spouses Lazo, acting as guarantors for Jose Robles in
connection with a loan of P12,000.00 obtained by the latter from the Philippine Bank
of Commerce, executed on August 18, 1953 a real estate mortgage in favor of the
defendant Republic Surety & Insurance Co., Inc. in consideration of its having
consented to act as principal co-debtor for the loan aforesaid; that the mortgage

was foreclosed extra-judicially on July 1, 1958 and sold to the mortgagee, as

purchaser at such sale, for P18,627.00, the corresponding sheriff's certificate of sale
being formalized on August 2, 1958; that defendant Antonio M. Koh, pursuant to the
power granted to him in the instrument of mortgage, executed on March 20, 1963
(for purposes of registration) a deed of absolute sale of the foreclosed property of
the mortgagee purchaser which sale was registered on March 28, 1963; that by
virtue of such registration the certificate of title in the name of the spouses Lazo
was cancelled and a new one issued in the name of the defendant company; that
the foreclosure of the mortgage was invalid because plaintiff Jose Robles had paid
on the mortgage loan the sum of P13,466.36 from August 20, 1953 to May 24,
1958; and that thereafter, from July 8, 1958 to August 23, 1963, he continued to
make other payments, aggregating P17,250.00.
The principal prayer of the plaintiffs was for the defendant company to render an
accounting of the payments thus made, so that if it should appear that the original
loan of P12,000.00, together with the stipulated interest, had been paid in full then
the real estate mortgage should be cancelled; otherwise the plaintiffs should be
allowed to pay, by way of legal redemption, whatever Balance still remained. An
additional prayer was for compensatory and moral damages as well as for
attorney's fees.
In a motion to dismiss filed by all the defendants with respect to the original
complaint, they raised two issues, namely: that the complaint did not state a cause
of action and that the claim or demand set forth therein had already prescribed. On
this second point the defendants pointed out that under the Rules of Court (Rule 39,
Section 34) an accounting such as that prayed for by the plaintiffs could be
demanded only in cases where real property is sold on execution by virtue of a final
judgment and not where it is sold on extrajudicial foreclosure of mortgage; and if
the rule is applicable at all in the latter case, it is available only to a mortgage
debtor who exercises his right of redemption within the period provided therefor. In
the present case, the defendants maintained, the redemption period had already
expired when the action was commenced.
The trial court did not resolve the motion to dismiss categorically, but in an order
dated September 22, 1964, set the case for trial, with the advertence that
"evidence on whether or not the action has prescribed shall first be presented ...
(and) then the court will consider the same ... as part of the evidence on the
merits."
After the plaintiffs filed their amended complaint on November 9, 1964 the
defendants answered the same, alleging inter alia that all the payments made by
the plaintiffs after the foreclosure sale on July 1, 1958 were made in the concept of
rents, for which the defendant company was under no obligation to render an
accounting.
The issue thus made out by the pleadings was whether or not the plaintiffs were
entitled to the accounting sought by them. A corollary issue indeed the one on
which the first depends was whether or not the right of redemption With respect
to the force losed property was still available. These issues were spelled out before

the court a quo by the plaintiffs themselves in their answer to the defendants'
memorandum below, where it was stated:
... The complaint at bar for accounting and liquidation is fully
sanctioned ... by section 34, of Rule 39, of the Rules of Court ... .
It is not disputed by the parties, that the mortgage was executed by
the plaintiffs, the spouses Felix L. Lazo and Mrs. Mercedes C Castro de
Lazo, to secure a loan of P12,000.00 which plaintiff Jose Robles
obtained from the defendant Republic Surety & Insurance Co., Inc. (sic)
and neither is it disputed, that the mortgage was extrajudicially
foreclosed. Two vital issues or causes of action, therefore, are
presented before this Hon. Court by the case at bar, with:
a) Can the plaintiffs demand an accounting and liquidation of
accounts from the defendant Republic Surety & Insurance Co., Inc. in
the legal capacity of said plaintiffs as redemptioners; and,
b) Is the legal right of redemption of said plaintiffs still subsisting, in
the light of their indubitable causes of action in the case at bar.
The trial court, however, went entirely out of the issues submitted to it and chose to
decide the case on a point which was not at all litigated. It said: "The key, as it
appears to this Court, lies in the validity or invalidity of the extrajudicial foreclosure
over the real estate mortgage, Exh.-A. If valid, then in the ordinary course of things,
all subsequent transactions by defendants dependent thereon can be taken to be
valid also. If not, then they of necessity must fall as a nullity."
In this connection it should be stated that the loan with the Philippine Bank of
Commerce was on a sixty-day note, which was renewed several times, until the said
bank refused to grant any further renewal. To accommodate the plaintiffs, on August
14, 1954 the loan was transferred to the Republic Investment Co., The. as the new
creditor, on a note payable on December 12, 1954; and when after three renewals
the plaintiffs, again defaulted the defendant Republic Surety & Insurance Co., Inc.
paid the account, and thereafter foreclosed the mortgage in its favor on July 1,
1958. The trial court, after having stated what it believed to be the "key" to the
problem, ruled that the transfer of the loan to the Republic Investment Co., Inc.
constituted a novation of the obligation, and that the defendant company was
released from its liability as co-debtor because it does not appear to have signed
the new promissory note executed by the plaintiffs. Consequently, the court
concluded, the real estate mortgage in favor of said defendant was extinguished,
and the foreclosure thereof was a nullity.
The actuation of the trial court was not legally permissible especially because the
theory on which it proceeded involved factual considerations neither touched upon
the pleadings nor made the subject of evidence at the trial. Rule 6, Section 1, is
quite explicit in providing that "pleadings are the written allegations of the parties of
their respective claims and defenses submitted to the court for trial and judgment."
This rule has been consistently applied and adhered to by the courts.

The subject matter of any given case is determined ... by the nature
and character of the pleadings submitted by the parties to the court for
trial and judgment. Belandres vs. Lopez Sugar Central Mill Co., Inc., 97
Phil. 100, 103.
It is a fundamental principle that judgments must conform to both the
pleadings and the proof, and must be in accordance with the theory of
the action upon which the pleadings were framed and the case was
tried; that a party can no more succeed upon a case proved. but not
alleged, than upon one alleged but not proved." (Ramon v. Ortuzar, 89
Phil. 730, 742)
It is a well-known principle in procedure that courts of justice have no
jurisdiction or power to decide a question not in issue." (Lim Toco vs.
Go Pay, 80 Phil. 166)
A judgment going outside the issues and purporting to adjudicate
something upon which the parties were not heard, is not merely
irregular, but extrajudicial and invalid." (Salvante v. Cruz, 88 Phil. 236,
244.)
The parties here went to court and presented their respective sides on the premise,
admitted by both, that the mortgage was valid and subsisting. Evidence, therefore,
to establish such premise was unnecessary and uncalled for. Indeed, it was for that
reason and because in any event the record of this case, particularly with respect to
the actuations of the parties after the mortgage was foreclosed, shows with
overwhelming preponderance that the said mortgage had not been extinguished,
that this Court did not consider favorably the defendant company's petitions to
submit a photostat of the first promissory note, and signed duplicates of the three
renewal notes, executed by the plaintiffs in favor of Republic Investment Co., Inc.
bearing not only their signatures as debtors but also the signatures of the
defendants company as solidary co-debtor all these being evidence which the
said defendant could have submitted at the trial if the validity and existence of the
mortgage had been a contentious issue raised in the pleadings. That the copy of the
note in the hands of the plaintiffs does not bear the signature of the defendant
company is not decisive of the latter's liability, the primary evidence thereof being
the original of the said note in the hands of the creditor, to whom, after all, the right
to recover exclusively belonged.
With particular reference to the first promissory note above mentioned, dated
August 14, 1954, the trial courts conclusion that defendant company never became
obligated thereunder in favor of the Republic Investment Co., Inc. is belied by the
plaintiffs' own Exhibit N, which is the indemnity agreement, also dated August 14,
1954, executed by the plaintiffs in favor of the defendant company precisely to
indemnify the latter for acting as solidary co-debtor said indemnity agreement
being identical in terms with the one previously executed when the loan was
originally contracted with the Philippine Bank of Commerce (Exh. G). And it was
precisely because the plaintiffs defaulted on the note of August 14, 1954 and on the
renewals thereof that the defendant company had to pay the Republic Investment
Co., Inc. and to foreclosed, in turn, the mortgage on the plaintiffs' property. It would

have been absurd for the plaintiffs to execute the indemnity agreement, and to
agree to pay the premium thereunder as well as interest in the contingencies
envisaged, if it were true that the said company has assumed no liability at all in
favor of the creditor.
We now come to the real issues as defined by the parties. The plaintiffs rely on Rule
39, Section 34.1 In this connection Section 9 of Act No. 3135, as amended, may also
be cited.2
Implicit in the application of these provisions is the premise that the period for
redemption of the property sold on execution (on extrajudicial foreclosure of
mortgage in the present case) has not yet expired. For if the right to redeem has
been lost it stands to reason that there is no redemption price to speak of, to which
the rents received by the purchasers are to be applied or credited. 3
The plaintiffs' position is that since the sheriff's certificate of sale was recorded in
the office of the Register of Deeds for Manila on March 28, 1963, the one-year
period of legal redemption had not yet expired when the action was commenced on
December 12 of the same year.
There are, however, certain circumstances peculiar to this case which take it out of
the operation of the rule concerning registration in this regard. There is, to begin
with, the categorical statement in the certificate of sale that "the period of
redemption of the said property sold will expire on the 2nd day of July, 1959." Then
there is the fact that no lien or encumbrance, right or claim of any person, other
than the mortgage in question, appeared on the transfer certificate of title of the
plaintiff spouses covering the mortgaged property, such that when the defendant
company obtained a new transfer certificate in its name on March 28, 1963, the
same was entirely clean. In other words, no third parties who might have an interest
in the property, either as possible redemptioners or otherwise, had to be protected
by due notice of the sale through its registration. 4 As far as the plaintiffs themselves
were concerned, not only were they duly notified of the sale but the same was
postponed twice, first upon their request and then upon written agreement of both
parties. These circumstances, in our opinion, have relevance in the consideration of
the equities, as distinguished from the purely legal technicalities, of this case.
But the more decisive developments ensued later: Beginning July 1958,
immediately after the foreclosure sale, the plaintiffs in some instances in the joint
names of Jose Robles and Felix Lazo and in other instances in the name of Jose
Robles alone started paying rents on the property to the defendant company,
indicating that the former owners, while remaining in occupancy, did so in the
concept of tenants. The receipts for such payments, until May 1961, invariably
referred to "rents" on the "foreclosed property of Felix Lazo, et al." Thereafter the
receipts merely stated "rents for the Nadelco property." The receipt dated June 30,
1959 (presented by the plaintiffs as their Exhibit J-16) is significantly worded as
follows:
At the insistent request of Messrs. Felix Lazo and Jose Robles, we
acknowledge receipt of the sum of FIVE HUNDRED (P500.00) PESOS,
Philippine Currency, as rental corresponding to the months of July and

August, 1959 for premises No. 32A/B Callejon Nadelco, Manila, with the
condition that the redemption period provided by law for the property
of the spouses Felix L. Lazo and Mercedes Castro is thereby extended
to the last time up to August 31, 1959.
It is further provided that on or before August 31, 1959, the full
redemption price of P18,627, ... together with unpaid post insurance
premium must be fully paid as promised.
The foregoing was the first extension of the redemption period granted at the
request of the plaintiffs. It was an acknowledgment that the original period was
expiring and a conventional stipulation on a new period. This new period passed,
but the defendant company did not consolidate its title. Instead it sent a letter to
the Lazo spouses on March 30, 1960, as follows (Exh. 1):
On July 1, 1959, this company purchased the property ... at an auction
sale conducted by the Sheriff of Manila for the amount of P18,627.00.
The redemption period of said sale has expired on the 2nd day of July
1959.
However ... we have deferred the consolidation of title to our name.
This is last call for you to act before it is too late. If you wish to redeem
the property above described, kindly call at this office on or before
April 30, 1960 to arrange for a settlement of your obligation.
The foregoing letter elicited a reply from plaintiff Felix L. Lazo on April 8, 1960,
wherein he said (Exh. 2):
We wish to acknowledge receipt, with thanks, of your letter of March
30, 1960, regarding our property involved in the transaction of Mr. Jose
Robles. I feel really grateful to you and your old manfor having given
us time to redeem it. It is really unfortunate that Mr. Jose Robles, to
whom we loaned the property as security for his mortgage, has kept
the matter dragging along for so many years. I have urged him to
settle the matter before April 30, 1960 and he promised earnestly to
do so. He says he is trying to raise the necessary funds, and will see
you before the target date.
We are very much worried about this matter.
Thus was a second extension granted up to April 30, 1960. Still no payment was
tendered.
On May 30, 1960 it was plaintiff Jose Robles who wrote another letter to the
defendant company, making reference to the plaintiffs' "commitment to pay the
redemption price of the foreclosed property at the end of this month, May 1960,"
and pleading for a last extension of the redemption period. The letter continued
(Exh. 7):

In spite of our several failures to secure the expected fund for payment
to your goodselves, we assure you that we have not overlooked, nor
forgotten, our said obligation. However, this time, considering the fact
that our said loan application only requires the necessary inspection by
our Bank before it is finally approved, we are again constrained to
request your kindselves to grant us another period of one month
(June) within which to remit to you the amount of redemption for the
said foreclosed property of Mr. Lazo, and this would he the last
extension that we will beg of you to consider. Please be assured that
should we be able to get our funds much earlier than expected during
the period of extension herein requested, we shall tender to you our
payment without further delay. At the moment, we are tendering you
the amount of P250.00 as rental corresponding to the month of June,
1960.
Trusting for your usual kind consideration on the above request, we
are.
Felix L. Lazo himself confirmed the above request for extension by another letter
dated May 31, 1960 (Exh. 8), thus:
I am lawfully embarrassed for the failure of Mr. Jose Robles to settle the
amount ...
Out of equity, I am forced to consent to his extension for another 30
days by paying the advanced rental. He expects the loan to be
released in 15 days from now, and he promised to settle our case.
May I ask again your kind indulgence on the matter.
The extension asked for was once more granted, this time up to June 30, 1960, with
the same negative result. Then again, on August 31, 1962 Felix L. Lazo wrote still
another letter (Exh. 9) as follows:
Here we come again about the house. I am really feeling ashamed to
you. But Mr. Robles said he failed to obtain the amount of about P6,000
he was going to pay as down payment for the repurchase even
without a contract yet. He expected to get the sum in a week time or
until the 10th of September.
If you could still hold the property until that time, kindly give your
consideration. May be this is the last chance.
The plaintiffs having reneged on all their repeated promises, the defendant
company finally consolidated its title to the property as purchaser at the foreclosure
sale on March 28, 1963, and obtained the corresponding transfer certificate of title.
That was almost five years after the said sale.

It is clear, in the light of the facts and circumstances above set forth, that the
parties had abandoned entirely the concept of legal redemption in this case and
converted it into one of conventional redemption, in which the only governing factor
was the agreement between them. The registration of the certificate of sale on
March 28, 1963 was entirely unnecessary and irrelevant to the question of when the
period of redemption agreed upon expired. The record shows that the last request
for extension approved by the defendant is that contained in the letter of Jose
Robles dated May 30, 1960 (Exh. 7), at the bottom of which appears the
handwrittten notation: "Ok for last extension one month. Please attach note of Mr.
Lazo," this last evidently referring to the latter's confirmatory letter of May 31, 1960
(Exh. 8). Consequently, the period to redeem expired on June 30, 1960.
There is no evidence that Felix L. Lazo next "last" request for extension, until
September 10, 1962, contained in his letter of August 31, 1962 (Exh. 9), was acted
upon or approved by the defendant company; but even if it was, then after
September 10, 1962 the right to redeem had Become irretrievably lost.
The plaintiffs' repeated requests for time within which to redeem, each with a
definite date of expiration, generated binding contracts when approved by the
defendant company. A contract, needles to say, has the force of law between the
parties. In any event, the principle of estoppel would step in to prevent the plaintiffs
from going back upon their own acts and representations to the prejudice of the
other party who relied upon them. This is a principle of equity and natural justice,
expressly adopted in our Civil Code (Arts. 1431 et seq.) and articulated as one of
the conclusive presumptions in Rule 31, Sec. 3(a), of our Rules of Court as follows:
(a) Whenever a party has, by his own declaration, act, or omission,
intentionally and deliberately led another to believe a particular thing
true, and to act upon such belief, he cannot, in any litigation arising
out of such declaration, act, or omission, be permitted to falsify it.
In considering the equities of the case it may be pertinent to note that the property
in question consists of a small lot of 270 square meters and the house situated
thereon, yielding a monthly rent, of only P250.00, and that its fair value therefore,
especially in 1958, could not be widely disparate from the sale price of P8,627.00.
In the defendants' answer there is a counterclaim for attorney's fees in the amount
of P6,000, aside from moral damages. We do not find this second item sufficiently
justified, but with respect to attorney's fees there is a stipulation in the mortgage
contract, Exh. A, for "15% of the total indebtedness then unpaid." Under this
stipulation the sum of P2,700.00 is recoverable.
IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, the decision appealed from is
reversed and the complaint dismissed; and on the counterclaim the plaintiffs
appellees are sentenced to pay, jointly and severally, defendant company the sum
of P2,700.00 by way of attorney's fees plus costs.
Reyes, J.B.L., Dizon, Zaldivar, Sanchez, Fernando and Barredo JJ., concur.

Castro, J., took no part.

Buce v. Court of Appeals, G.R. No. 136913, May 12, 2000 (Supra.)

FIRST DIVISION
[G.R. No. 136913. May 12, 2000]
ANITA C. BUCE, petitioner, vs. THE HONORABLE COURT OF APPEALS, SPS.
BERNARDO C. TIONGCO and ARACELI TIONGCO, SPS. DIONISIO TIONGCO
and LUCILA TIONGCO, and JOSE M. TIONGCO, respondents.
DECISION
DAVIDE, JR., C.J.: Ncm
The basic issue in this petition is whether the parties intended an automatic renewal
of the lease contract[1] when they agreed that the lease shall be for a period of
fifteen years "subject to renewal for another ten (10) years."
Petitioner leased a 56-square meter parcel of land located at 2068 Quirino Avenue,
Pandacan, Manila. The lease contract was for a period of fifteen years to commence
on 1 June 1979 and to end on 1 June 1994 "subject to renewal for another ten (10)
years, under the same terms and conditions." Petitioner then constructed a building
and paid the required monthly rental of P200. Private respondents, through their
administrator Jose Tiongco, later demanded a gradual increase in the rental until it
reached P400 in 1985. For July and August 1991, petitioner paid private
respondents P1,000 as monthly rental.[2]
On 6 December 1991, private respondents counsel wrote petitioner informing her
of the increase in the rent to P1,576.58 effective January 1992 pursuant to the
provisions of the Rent Control Law. [3] Petitioner, however, tendered checks dated 5
October 1991,[4] 5 November 1991,[5] 5 December 1991,[6] 5 January 1992,[7] 31 May
1992,[8] and 2 January 1993[9] for only P400 each, payable to Jose Tiongco as
administrator. As might be expected, private respondents refused to accept the
same.
On 9 August 1993, petitioner filed with the Regional Trial Court of Manila a
complaint for specific performance with prayer for consignation, which was
docketed as Civil Case No. 93-67135. She prayed that private respondents be
ordered to accept the rentals in accordance with the lease contract and to respect
the lease of fifteen years, which was renewable for another ten years, at the rate
of P200 a month.

In their Answer, private respondents countered that petitioner had already paid the
monthly rent of P1,000 for July and August 1991. Under Republic Act No. 877, as
amended, rental payments should already be P1,576.58[10] per month; hence, they
were justified in refusing the checks for P400 that petitioner tendered. Moreover,
the phrase in the lease contract authorizing renewal for another ten years does not
mean automatic renewal; rather, it contemplates a mutual agreement between the
parties. Ncmmis
During the pendency of the controversy, counsel for private respondents wrote
petitioner reminding her that the contract expired on 1 June 1994 and demanding
that she pay the rentals in arrears, which then amounted to P33,000.
On 29 August 1995, the RTC declared the lease contract automatically renewed for
ten years and considered as evidence thereof (a) the stipulations in the contract
giving the lessee the right to construct buildings and improvements and (b) the
filing by petitioner of the complaint almost one year before the expiration of the
initial term of fifteen years. It then fixed the monthly rent at P400 from 1 June 1990
to 1 June 1994; P1,000 from 1 June 1994 until 1 June 1999; and P1,500 for the rest
of the period or from 1 June 2000 to 1 June 2004, reasoning that the continuous
increase of rent from P200 to P250 then P300, P400 and finally P1,000 caused "an
inevitable novation of their contract."[11]
On appeal, the Court of Appeals reversed the decision of the RTC, and ordered
petitioner to immediately vacate the leased premises on the ground that the
contract expired on 1 June 1994 without being renewed and to pay the rental
arrearages at the rate of P1,000 monthly.[12]
According to the Court of Appeals, the phrase in the contract "this lease shall be for
a period of fifteen (15) years effective June 1, 1979, subject to renewal for another
ten (10) years, under the same terms and conditions" is unclear as to who may
exercise the option to renew. The stipulation allowing the construction of a building
and other improvements and the fact that the complaint was filed a year before the
expiration of the contract are not indicative of automatic renewal. It applied the
ruling in Fernandez v. Court of Appeals[13] that without a stipulation that the option
to renew the lease is solely for the benefit of one party any renewal of a lease
contract must be upon the agreement of the parties. Since private respondents
were not agreeable to an extension, the original term of the lease ended on 1 June
1994. Private respondents refusal to accept petitioners checks for P400 was
justified because although the original contract specified a monthly rental of P200,
the tender and acceptance of the increased rental of P1,000 novated the contract of
lease; thus, petitioner was estopped from claiming that the monthly rental is
otherwise.
The Court of Appeals denied petitioners motion for reconsideration. Hence this
petition. Scncm
Petitioner contends that by ordering her to vacate the premises, the Appellate Court
went beyond the bounds of its authority because the case she filed before the RTC
was for "Specific Performance" not unlawful detainer. The power to order the lessee
to vacate the leased premises is lodged in another forum. Additionally, private

respondents did not pray for the ejectment of petitioners from the leased premises
in their Answer with Counterclaim; well-settled is the rule that a court cannot award
relief not prayed for in the complaint or compulsory counterclaim.
Petitioner further maintains that the phrase "renewable for another ten years at the
option of both parties" in the Fernandez case clearly indicated the intention of the
parties to renew the contract only upon mutual agreement. Whereas in this case the
contract states, "[T]his lease shall be for a period of fifteen (15) years effective June
1, 1979, subject to renewal for another ten (10) years, under the same terms and
conditions," making this stipulation subject to interpretation with due regard to the
contemporaneous and subsequent acts of the parties. The stipulation in the
contract allowing the lessee to construct buildings and improvements; her filing of
the complaint a year before the expiration of the initial 15-year term; and private
respondents acceptance of the increased rental are contemporaneous and
subsequent acts that signify the intention of the parties to renew the contract.
On the other hand, private respondents aver that even if the original petition filed
before the RTC was not for unlawful detainer, the order of the Court of Appeals
requiring petitioner to vacate the premises is but a logical consequence of its
finding that the lease contract had expired. To require another litigation would
constitute multiplicity of suits; besides, petitioner has no other reason to stay in the
premises. There is no basis why Fernandez should not be applied to the case at bar.
Absent contrary stipulation in reciprocal contracts, the period of lease is deemed to
be for the benefit of both parties. Sdaamiso
Private respondents argue that the alleged contemporaneous and subsequent acts
do not determine the real intention of the parties as regards renewal of the lease
contract. Had they intended an automatic renewal of the lease contract they would
have agreed on a 25-year period instead. Correlatively, private respondents letter
reminding petitioner of the expiration of the contract on 1 June 1994 and
demanding payment of the rentals in arrears signifies that they are no longer
interested in renewing the contract. Also petitioners refusal to pay the increased
rental of P1,000 as early as 1991 and private respondents refusal to accept
the P400 tendered constituted a disagreement on the rate of rental; hence, any
renewal is out of the question.
The basic issue, as agreed upon by the parties, is the correct interpretation of the
contract provision "this lease shall be for a period of fifteen (15) years effective June
1, 1979, subject to renewal for another ten (10) years, under the same terms and
conditions."
The literal meaning of the stipulations shall control if the terms of the contract are
clear and leave no doubt upon the intention of the contracting parties. [14] However,
if the terms of the agreement are ambiguous resort is made to contract
interpretation which is the determination of the meaning attached to written or
spoken words that make the contract. [15] Also, to ascertain the true intention of the
parties, their actions, subsequent or contemporaneous, must be principally
considered.[16]

The phrase "subject to renewal for another ten (10) years" is unclear on whether
the parties contemplated an automatic renewal or extension of the term, or just an
option to renew the contract; and if what exists is the latter, who may exercise the
same or for whose benefit it was stipulated.
In this jurisdiction, a fine delineation exists between renewal of the contract and
extension of its period. Generally, the renewal of a contract connotes the death of
the old contract and the birth or emergence of a new one. A clause in a lease
providing for an extension operates of its own force to create an additional term, but
a clause providing for a renewal merely creates an obligation to execute a new
lease contract for the additional term. As renewal of the contract contemplates the
cessation of the old contract, then it is necessary that a new one be executed
between the parties.[17] Sdaad
There is nothing in the stipulations in the contract and the parties actuation that
shows that the parties intended an automatic renewal or extension of the term of
the contract. Even the RTC conceded that the issue of automatic renewal is
debatable. The fact that the lessee was allowed to introduce improvements on the
property is not indicative of the intention of the lessors to automatically extend the
contract. Considering the original 15-year duration of the contract, structures would
have necessarily been constructed, added, or built on the property, which in its
previous state was an idle 56-square meter lot in the heart of Manila. Petitioner
leased the property for the purpose of turning it into a commercial establishment
and to which it has been transformed as Anitas Grocery and Store. Neither the filing
of the complaint a year before the expiration of the 15-year term nor private
respondents acceptance of the increased rentals has any bearing on the intention
of the parties regarding renewal. It must be recalled that the filing of the complaint
was even spawned by private respondents refusal to accept the payment of
monthly rental in the amount of only P400.
Now on the applicability of Fernandez v. Court of Appeals to the case at bar.
Although the factual scenario in that case with regard to the renewal option is
slightly off-tangent to the case under consideration because the intention of the
parties therein for future mutualagreement was clearly discernible in their contract,
we cannot completely disregard the pronouncement of this Court in that case; thus:
[I]n a reciprocal contract like a lease, the period must be deemed to
have been agreed upon for the benefit of both parties,absent language
showing that the term was deliberately set for the benefit of the lessee
or lessor alone.[18] We are not aware of any presumption in law that the
term was deliberately set for the benefit of the lessee
alone. Koh and Cruz in effect rested upon such a presumption. But that
presumption cannot reasonably be indulged in casually in an era of
rapid economic change, marked by, among other things, volatile costs
of living and fluctuations in the value of domestic currency. The longer
the period the more clearly unreasonable such a presumption would
be. In an age like that we live in, very specific language is necessary to
show an intent to grant a unilateral faculty to extend or renew a
contract of lease to the lessee alone or to the lessor alone for that
matter.[19] Scsdaad

In the case at bar, it was not specifically indicated who may exercise the option to
renew, neither was it stated that the option was given for the benefit of herein
petitioner. Thus, pursuant to the Fernandez ruling and Article 1196 of the Civil Code,
the period of the lease contract is deemed to have been set for the benefit of both
parties. Renewal of the contract may be had only upon their mutual agreement or at
the will of both of them. Since the private respondents were not amenable to a
renewal, they cannot be compelled to execute a new contract when the old contract
terminated on 1 June 1994. It is the owner-lessors prerogative to terminate the
lease at its expiration.[20] The continuance, effectivity and fulfillment of a contract of
lease cannot be made to depend exclusively upon the free and uncontrolled choice
of the lessee between continuing the payment of the rentals or not, completely
depriving the owner of any say in the matter. Mutuality does not obtain in such a
contract of lease and no equality exists between the lessor and the lessee since the
life of the contract would be dictated solely by the lessee. [21]
After the lease terminated on 1 June 1994 without any agreement for renewal being
reached, petitioner became subject to ejectment from the premises. [22] It must be
noted, however, that private respondents did not include in their Answer with
Counterclaim a prayer for the restoration of possession of the leased premises.
Neither did they file with the proper Metropolitan Trial Court an unlawful detainer
suit[23]against petitioner after the expiration of the lease contact. Moreover, the
issues agreed upon by the parties to be resolved during the pre-trial were the
correct interpretation of the contract and the validity of private respondents refusal
to accept petitioners payment of P400 as monthly rental.[24] They later limited the
issue to the first, i.e., the correct interpretation of the contract. [25] The issue of
possession of the leased premises was not among the issues agreed upon by the
parties or threshed out before the court a quo. Neither was it raised by private
respondents on appeal.
Accordingly, as correctly contended by the petitioner, the Court of Appeals went
beyond the bounds of its authority [26] when after interpreting the questioned
provision of the lease contract in favor of the private respondents it proceeded to
order petitioner to vacate the subject premises.
WHEREFORE, the instant petition is partly GRANTED. The assailed decision of the
Court of Appeals is REVERSED insofar as it ordered the petitioner to immediately
vacate the leased premises, without prejudice, however, to the filing by the private
respondents of an action for the recovery of possession of the subject property.
No costs.
SO ORDERED. DAVIDE, JR.
Puno, Kapunan, and Pardo, JJ., concur.
Ynares-Santiago, J., no part.

Mercader v. DBP, G.R. No. 130699, May 12, 2000 (Supra.)

FIRST DIVISION
[G.R. No. 130699. May 12, 2000]
SPOUSES BERNARDO MERCADER and FLORINA M. MERCADER, and DR.
JUAN Y. MADERAZO, petitioners, vs.DEVELOPMENT BANK OF THE
PHILIPPINES (CEBU BRANCH), GELACIO, FELIPE, OSMUNDO all surnamed
MANREAL, and RUFINA MANREAL VDA. DE ABALO, respondents.
DECISION
DAVIDE, JR., C.J.:
In this petition for review, petitioners spouses Florina Maderazo-Mercader and
Bernardo Mercader (hereafter MERCADERs) and Juan Y. Mederazo impugn the Court
of Appeals 5 February 1997 decision in CA-GR-CV No. 21846 [1] ordering them to
deliver the possession of Lot No. 2985 to the Development Bank of the Philippines,
Cebu Branch (hereafter DBP) without right of reimbursements for the improvements
introduced thereon, and the 13 August 1997 resolution denying the motion for
reconsideration. Said decision and resolution reversed and set aside the 6
September 1988 decision[2] of the Regional Trial Court of Cebu, Branch 15, in Civil
Case No. R-18521.[3]
Civil Case No. R-18521 was for specific performance filed on 28 September 1979. In
their complaint,[4] the MERCADERs alleged that: Scedp
(1) In 1966, Juan Maderazo applied for a loan at the DBP secured by
interior Lots Nos. 2993 and 2994 (Talisay-Minglanilla estate); Calrspped
(2) The DPB required Maderazo to construct a five (5) -meter wide road
right of way over the adjoining Lot No. 2985;
(3) The DBP approved Maderazos loan application upon his submission
of a copy of the lease contract for a right of way over the adjoining Lot
No. 2985;
(4) The lease contract for the right of way was for a twenty-year period
commencing on 20 October 1966 which Maderazo executed with the
spouses Gelacio and Vicenta Manreal, then the registered owners of
Lot No. 2985;

(5) Maderazo expended P10,000 for the construction of the five (5) meter right of way;
(6) This lease contract was however not registered for Gelacio
Manreals failure, "for one reason or another," to deliver the Certificate
of Title (TCT) of Lot No. 2985 to Maderazo;
(7) About nine years later or on 6 January 1976, Maderazo's children,
the spouses Florina Maderazo-Mercader and Bernardo Mercader
executed a contract of lease with the Manreals for a period of twenty
years and four months over the remaining portion of Lot No. 2985;
(8) Despite repeated requests for the delivery of the TCT of Lot No.
2985 for the purpose of annotating the lease contract, the Manreals,
"for one reason or another," failed to do so; however, the Manreals
assured the Mercaders "not to worry since nothing will go wrong";
(9) Believing in the Manreals assurances, Bernardo Mercader
intensively cultivated Lot No. 2985, "planted in good faith 600
calamansi fruit trees, fenced the lot with barbed wires, constructed
canals and drainages, spent wages for several farm workers and
introduced several improvements including a vegetable garden - all in
the sum of not less that P25,000";
(10) The MERCADERs subsequently discovered that the reason why the
Manreals failed to deliver the TCT of Lot No. 2985 [now registered in
the names of spouses Felipe and Florentina Manreal, children of
Gelacio and Vicenta Manreal] was because they offered said lot
including the improvements introduced by the former thereon as
"collateral" for a P150,000 deep-sea fishing loan with the DBP;
(11) That despite the lack of registration and/or annotation of the
respective interests of the MERCADERs on the TCT over Lot No. 2985,
the DBP knew and should know of their existence considering the
several ocular inspection and investigation conducted over the
property; the DBP's actual knowledge of these unregistered interests
has the effect of registration.[5]
Since the Manreals defaulted in the payment of their obligation to the DBP, and that
the latter had taken steps to foreclose Lot No. 2985 including all the improvements
thereon, the MERCADERs prayed among others, for the DBP to "respect their
interests by excluding these from the foreclosure proceedings, or if the foreclosure
takes place, declare the same null and void or in the alternative, order the DBP to
reimburse them the cost of the improvements and loss of expected income
amounting to P210,000 for the duration of the unexpired term of their respective
contracts." The MERCADERs also prayed for the annotation of their interests in the
TCT of Lot No. 2985. Sccalr

In their answer, the Manreals only admitted the existence of the two unregistered
contracts of lease and the calamansi trees planted on Lot No. 2985. They then
denied any knowledge or information sufficient to form a belief on the other
allegations of the MERCADERs. They then claimed that Felipe Manreal informed Juan
Maderazo of the intention to offer as security Lot No. 2985 for the deep sea-fishing
loan with the DBP. They also justified their inability to present to the MERCADERs
the TCT over Lot No. 2985 on the fact that at the time the latter were soliciting the
titles delivery, it was still in the hands of the lawyer who was preparing the
Extrajudicial Settlement and Partition of the Estate left by the deceased Vicenta
Manreal. The Manreals then prayed for the dismissal of the complaint for being
utterly groundless.[6]
In its answer, the DBP admitted:
(1) the loan of spouses Juan and Juana Maderazo; and
(2) the deep-sea fishing loan of spouses Felipe and Florentina Manreal
which was secured among others, by a first mortgage over Lot No.
2985 evidenced by a TCT already registered in their names, free from
any lien or encumbrance.
It denied any knowledge or information of: (1) any flaw or infirmity in the TCT over
Lot No. 2985; (2) any interest in Lot No. 2985 other than and adverse to the spouses
Felipe and Florentina Manreal as registered owners and mortgagors; and (3) the
existence of the lease contract for right of way over a portion of Lot No. 2985
because it was not registered and that the spouses Gelacio and Vicenta Manreal
were not the ones who mortgaged said Lot No. 2985 to the DBP but their children,
the spouses Felipe and Florentina Manreal. Calrsc
The DBP maintained that the alleged unregistered interests of the MERCADERs did
not and could not bind the DBP per Art. 1648 of the Civil Code [7] and Section 64 of
Act 496.[8] It then prayed for the dismissal of the complaint for being premature and
for lack of cause of action as it never dealt with Gelacio Manreal and there was as
yet no foreclosure. Besides, the DBP was a mortgagee in good faith. [9]
In the meantime or on 26 November 1979, Lot No. 2985 was sold, among the other
mortgaged lots, on public auction to the DBP as the highest bidder. [10]
During the pre-trial stage, the trial court acknowledged the possibility of a
compromise agreement, gave time to the parties to study their proposals and
counterproposals and ordered the documents pertinent thereto deemed parts of the
record of the case.[11] Orders were further issued "giving the parties more time to
continue with their negotiations and re-setting the hearing of the case." [12] Several
communications were thereafter exchanged, to wit:
(1) a letter dated 24 June 1981 wherein the MERCADERs proposed that
Maderazos contract of lease for right of way be registered, and respect
be accorded to the contract of lease the MERCADERs executed with the

Manreals, or as an alternative allow the MERCADERs to purchase Lot

No. 2985 on installment basis at the price of P6.00 per square meter;[13]
(2) a letter dated 22 July 1982 wherein the DBP through its Manager
(Mr. Manuel Roa) offered the MERCADERs three options by which they
could amicably settle subject to the approval of the Board of Governors
of the Bank to wit:[14]
a. First Option - Sale
P96,200.00 - Purchase price
19,200.00 - Down payment
77,000.00 - Balance payable in 10 years at 15%
interest per annum
1, 242.28 - Monthly amortization
b. Second Option - Lease-Purchase
P132,598.84 - Consideration
1,105.00 - Monthly lease-purchase for 10 years
c. Third Option - Lease
P14,430.00 - Equivalent to 15% annual interest
of P96,200
1,202.50 - Monthly lease
(3) a letter dated 18 November 1982 whereby the MERCADERs chose
option 2 (lease-purchase);[15]
(4) a letter dated 23 November 1982 whereby the MERCADERs
informed the DBPs Manager that they were "depositingP3,315.00 with
the bank" pursuant to said Managers proposal that a three-month
advance payment should be deposited while the MERCADERs await the
final decision of the bank on the proposed settlement. [16]
The DBP issued an official receipt for the payment of P3,315 as "earnest money,
deposit to purchase lot 2985."[17]
With this development, on 9 December 1982, the trial court directed the parties to
submit "their compromise agreement which required the approval of the Board of
Governors."[18]

The DBP and the MERCADERs thereafter again exchanged a series of

correspondences. In his 13 January 1983 letter to the DBP (through Mr. Ruben
Carpio), Bernardo Mercader requested for a grace period in the payment of the
amortization for the lease-purchase option. [19] In response, the DBP wrote a letter
dated 19 January 1983 informing Bernardo Mercader that it had already "prepared
[its] recommendation to the head office, xxx rejected the request for a grace period
but informed [him] to respond soon or visit the bank for a possible
conference."[20] Bernardo Mercader replied through a letter dated 5 October 1983
reiterating his accord to the lease-purchase option but suggesting this time that the
amortization be paid on a quarterly basis. [21] In its 29 February 1984 letter, the DBP
"noted" Mercaders suggestion as "counter-proposals or counter-offers which [it find
un]acceptable and made dimmer the realization of [their] mutual desire for an early
amicable settlement." The DBP reasoned that "the original conditions packaged in
[its] proposal [were] no longer applicable" considering that the market value of the
property increased.[22]
With this, the trial court ordered the termination of the pre-trial and set the case for
hearing in its 18 September 1995 order, thus:
As manifested by the plaintiffs, they have alread[y] agreed with the
defendant bank that they will pay the property at P132, 598 payable in
ten (10) years in quarterly basis. However, the counsel of defendant
manifested that it was only a proposal. The plaintiff spouses requested
for a longer period of fifteen (15) years which the bank did not agree.
The only issue[s] to be resolved in this case are as follows:
1. Whether the plaintiff [are] entitled to specific performance of said
agreement;
2. Whether the defendant bank can be compelled to recognize the
lease contract entered into between the spouses plaintiff Bernardo
Mercader and Gelacio Manreal; and
3. Whether the foreclosure proceedings of the contract between the
defendant bank is null and void.
The pre-trial in this case is already closed and terminated. [23]
On 7 November 1985, the MERCADERs filed a Supplemental Pleading insisting the
consummation of the lease-purchase option with the payment of the earnest money.
[24]
The DBP filed its Opposition to the Supplemental Pleading. [25]
Trial proceeded with the parties presenting evidence tending to establish their
respective allegations. On 29 May 1987, the trial court ordered the Manreals
dropped from the case. The MERCADERs offered no objection. Sppedsc
In its decision of 6 September 1988, the trial court reiterated the three issues
ascertained in the pre-trial order and resolved all of them in favor of the

MERCADERs. On the first issue, the trial court found that the "DBP had
unnecessarily and unjustifiably made xxx [Bernardo] Mercader understand that his
second option [lease-purchase] would be more or less approved, except that the
approval will come from Manila." [26] Anent the second issue, the trial court also
believed "quite firmly" that the "DBP could not have escaped having a
foreknowledge of the existence of the prior unrecorded lease" as the "possession
and cultivation of Bernardo Mercader xxx [was] a matter of open, notorious and
public knowledge in the area." In resolving the third issue, the court first
acknowledged that it is a "court of equity and not merely a court of law" and the
"DBP is not authorized to keep real propert[y] longer than ten years or so;" then the
court "required [the] DBP to set aside the area affected by the prior unregistered
lease, known to [it], when [it] accepted the mortgage." [27] It then decreed as follows:
WHEREFORE, finding the preponderance of evidence to be in favor of
plaintiffs, judgment is hereby rendered as follows:
1) ordering the defendant DBP and its successors-in-interest to respect
and preserve the Contracts of Lease between the Manreals and the
Mercaders until December 31, 1994;
2) ordering the DBP to exclude from the foreclosure proceedings the
rights of the plaintiffs as covered by the Contract of Lease;
3) requiring the defendant DBP to cause the annotation of the
Contracts of Lease of plaintiffs on TCT No. T-40396 of xxx Lot No. 2985
xxx and amend Entry No. 4980-V-14-D-B, by excluding the
improvements of Mercader as guarantee or collateral for defendant
Felipe Manreal's deep-sea fishing loan;
4) ordering the DBP to execute the deed of sale subject to the approval
of the Manila Office of the DBP as to the mode of payment, there being
no agreement thereon;
5) requiring the defendant DBP to pay attorney's fees of P5,000, for
making it necessary for the plaintiffs to litigate, in order to protect their
rights to the Lease Contract with the Manreals and to compel DBP to
act on the proposals of Mercader as promised by DBP. [28]
On appeal, the Court of Appeals found that the trial court erred in treating the leasepurchase option as a controversial issue considering that it was "outside the parties'
pleadings." But invoking the Supreme Court's decision in Castro v. Court of
Appeals[29] in that "the improvements introduced [into the mortgaged property] are
to be considered so incorporated [in the mortgage] only if so owned by the
mortgagor," the Court of Appeals declared that the improvements introduced on Lot
No. 2985 had been improperly included in the foreclosure sale since they were not
owned by the mortgagors. But since the improvements were already included in the
foreclosure sale and the MERCADERs continued the possession and collection of
income from the lot, the Court of Appeals, as already earlier adverted to, reversed
and set aside the appealed judgment. It entered a new one declaring that the

MERCADERs were not entitled to any compensation from the DBP. It also ordered the
MERCADERs to immediately turn over the possession of Lot No. 2985 to the DBP. [30]
In this petition for review, the MERCADERs assert that in issuing the challenged
decision, the Court of Appeals contravened Section 4, Rule 20 and Section 5, Rule
10 of the Rules of Court by holding that the trial court should not have taken
cognizance of the lease-purchase option as a controversial issue since it was not
raised in the pleadings. They maintain that the trial court correctly took cognizance
of the lease-purchase option because it was part and parcel of the pre-trial stages,
the determination of which will prevent future litigation thereon. They also pray that
in the event of a favorable judgment, this Court should refer the case back to the
Court of Appeals for a determination of whether the trial court erred in finding that
the lease-purchase option was already consummated. Sdjad
For its part, the DBP contends that the MERCADERs raise questions of facts which
are not reviewable on appeal and that it had opposed and objected to in and at all
stages of the trial, all attempts by the MERCADERs to introduce evidence on the
lease-purchase option.
This Court agrees with the MERCADERs and finds that the Court of Appeals erred in
disregarding as material the lease-purchase option on the ground that it was not
raised in the pleadings. If the Court of Appeals adverts to the lack of reference to
the lease-purchase option in the initiatory pleadings, this can be simply explained
by the fact that the trial court only took cognizance thereof when it became an
integral component of the pre-trial proceedings. That is why the lease-purchase
option was included firstly, in the pre-trial order as one of the issues to be resolved
at trial and secondly, in the supplemental pleading subsequently filed by the
MERCADERs on 7 November 1985.[31] As a supplemental pleading, it served to aver
supervening facts which were then not ripe for judicial relief when the original
pleading was filed. As such, it was meant to supply deficiencies in aid of the original
pleading, and not to dispense with the latter. [32] Hence, it was patently erroneous for
the Court of Appeals to pronounce that the lease-purchase option was not raised in
the pleadings. The DBP was even quite aware and knowledgeable of the
supplemental pleading because it filed an opposition thereto. [33]
The records however reveal that the trial court did not promptly rule on the motion
to admit the supplemental pleading. And during trial, the trial court also failed to
rule on the prompt objection interposed by the DBPs counsel to the MERCADERs
introduction of evidence relative to said lease-purchase option. But undisputed is
the trial court's eventual admission in open court of the MERCADERs supplemental
pleading, thus:
ATTY. GARLITOS
Probably, I did not make myself quite clear, Your honor. What I mean is
during the pre-trial stage the parties were encourage to negotiate for a
settlement. So they made an offer to DBP and DBP gave them an
option.

COURT
Those three options and chose the second one.
ATTY. GARLITOSMisact
We interposed an objection on this option, Your Honor, because any
evidence which will be presented or which transpired during the pretrial is objectionable. So we interposed an objection to prevent the
witness from testifying on transactions which were referred to while
the parties were negotiating during the pre-trial stage.
ATTY. MERCADER
I wish to correct counsel. Records will show that there was no objection
on what transpired during the pre-trial. As a matter of fact the pre-trial
order is very material to the case. There is a pre-trial that such an offer
and three options made by DBP, and that plaintiff selected the second
option and that he deposited earnest money with the bank.
COURT
In other words there is no supplemental complaint.
ATTY. GARLITOS
It is good that they brought that out because we had an opposition and
this is what I am referring to.
COURT
What is your opposition, the price agreed upon?
ATTY. GARLITOS
We objected to the filing of the supplemental complaint and to all
evidence presented in regard to that supplemental complaint.
COURT
Its too late now for you to make an objection. This supplemental
pleading has been admitted by the court. That has become final.
ATTY. GARLITOS.
There is no showing that it has been admitted by the court.
COURT

It has been admitted by the court. [34] (Emphasis supplied)

The records also show that not only did the DBPs counsel began to rigorously crossexamine Bernardo Mercader on the lease-purchase option, he also subjected his
witness Mr. Ruben Carpio, then Chief of the Collection Department, DBP to an
intensive direct examination covering said subject matter. [35] He also offered as
evidence the DBPs letter indicating the three options to the MERCADERs as Exhibit
"1" and the lease-purchase option contained therein as Exhibit "1-A." [36]
The DBP is undoubtedly estopped from questioning the trial courts inclusion of the
lease-purchase option as a controversial issue. This action of the trial court finds
anchor on Section 4, Rule 20 of the Rules of Court which reads: Acctmis
Section 4. Record of pre-trial results. -- After the pre-trial the court shall
make an order which recites the action taken at the conference, the
amendments allowed to the pleadings, and the agreements made by
the parties as to any of the matters considered. Such order shall limit
the issues for trial to those not disposed of by admissions or
agreements of counsel and when entered controls the subsequent
course of the action, unless modified before trial to prevent manifest
injustice.
Indeed, the pre-trial is primarily intended to make certain that all issues necessary
to the disposition of a case are properly raised. The purpose is to obviate the
element of surprise, hence, the parties are expected to disclose at the pre-trial
conference all issues of law and fact which they intend to raise at the trial, except
such as may involve privileged or impeaching matter. [37] In the case at bar, the pretrial order included as integral to the complete adjudication of the case the issue of
whether the MERCADERs can demand specific performance from the DBP relative to
the lease-purchase option. Thus, the element of surprise that the provision on pretrial attempts to preclude was satisfied. The surprise factor was further eliminated,
as already earlier mentioned and merely to reiterate here, with the DBP's (1) motion
to oppose the supplemental pleading, (2) objection to the introduction of evidence
connected thereto, (3) later information from the trial court of its definitive ruling
admitting the supplemental pleading, (4) own introduction of evidence related
thereto, and finally, by its (5) intensive participation in the direct and crossexamination of witnesses whose testimonies included said topic. In any case, the
filing and consequent admission of the supplemental pleading by the trial court
validated the issues embraced in the pre-trial order. Newmiso
Assuming arguendo that the MERCADERs failed to file the supplemental pleading,
evidence relative to the lease-purchase option may be legitimately admitted by the
trial court in conformity with Section 5, Rule 10 of the Rules of Court which
states: Jjlex
Section 5. Amendment to conform to or authorize presentation of
evidence. -- When issues not raised by the pleadings are tried by
express or implied consent of the parties, they shall be treated in all
respects, as if they had been raised in the pleadings. Such amendment
of the pleadings as may be necessary to cause them to conform to the

evidence and to raise these issues may be made upon motion of any
party at any time, even after judgment; but failure so to amend does
not affect the result of the trial of these issues. If evidence is
objected to at the trial on the ground that it is not within the
issues made by the pleadings, the court may allow the
pleadings to be amended and shall do so freely when the
presentation of the merits of the action will be subserved
thereby and the objecting party fails to satisfy the court that
the admission of such evidence would prejudice him in
maintaining his action or defense upon the merits. The court
may grant a continuance to enable the objecting party to meet
such evidence. (emphasis supplied)
This provision envisions two scenarios -- first, when evidence is introduced on an
issue not alleged in the pleadings and no objection was interjected and second,
when evidence is offered again, on an issue not alleged in the pleadings but this
time an objection was interpolated. We are concerned with the second scenario.
In Co Tiamco v. Diaz, the Court held that "when evidence is offered on a matter not
alleged in the pleadings, the court may admit it even against the objection of the
adverse party, where the latter fails to satisfy the court that the admission of the
evidence would prejudice him in maintaining his defense upon the merits, and the
court may grant him a continuance to enable him to meet the new situation created
by the evidence. Of course, the court, before allowing the evidence, as a matter of
formality, should allow an amendment of the pleading, xxx And, furthermore, where
the failure to order an amendment does not appear to have caused surprise or
prejudice to the objecting party, it may be allowed as a harmless error. Well-known
is the rule that departures from procedure may be forgiven where they do not
appear to have impaired the substantial rights of the parties." [38]
More recently, in Bank of America v. American Realty Corporation [39] citing TalisaySilay Milling Co., Inc. v. Asociacion de Agricultores de Talisay-Silay, Inc.,[40] the Court
reinforces the Co Tiamco ruling on the application of Section 5, Rule 10 of the Rules
of Court in this wise:Misjuris
The failure of a party to amend a pleading to conform to the evidence
adduced during trial does not preclude adjudication by the court on the
basis of such evidence which may embody new issues not raised in the
pleadings. x x x Although, the pleading may not have been amended
to conform to the evidence submitted during trial, judgment may
nonetheless be rendered, not simply on the basis of the issues alleged
but also on the issues discussed and the assertions of fact proved in
the course of the trial. The court may treat the pleading as if it had
been amended to conform to the evidence, although it had not been
actually amended. xxx Clearly, a court may rule and render judgment
on the basis of the evidence before it even though the relevant
pleading had not been previously amended, so long as no surprise or
prejudice is thereby caused to the adverse party. Put a little differently,
so long as the basic requirements of fair play had been met, as where
the litigants were given full opportunity to support their respective
contentions and to object to or refute each other's evidence, the court

may validly treat the pleadings as if they had been amended to

conform to the evidence and proceed to adjudicate on the basis of all
the evidence before it.
As already enunciated, the DBP was not and would not be prejudiced by the
incorporation of the lease-purchase option as one of the controverted issues.
Moreover, it had been afforded ample opportunity to refute and object to the
evidence germane thereto, thus, the rudiments of fair play had been properly
observed. Jurissc
Since we agree with the MERCADERs contention that the Court of Appeals
contravened Section 4, Rule 20 and Section 5, Rule 10 of the Rules of Court in
promulgating the questioned decision, we have to grant their prayer to refer the
matter back to said court for a determination of the question of whether the leasepurchase option was already consummated and for a complete ascertainment of the
rights and obligations of the parties.
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the instant petition is GRANTED
DUE COURSE and the 5 February 1997 judgment and 13 August 1995 resolution of
the Court of Appeals in CA-GR-CV No. 21846 are hereby SET ASIDE. The case is
REFERRED BACK to the Court of Appeals for a determination of whether the leasepurchase option was consummated with the end view of ascertaining the rights and
obligations of the parties. Scjuris
SO ORDERED.
Puno, Kapunan, Pardo, and Ynares-Santiago, JJ., concur.

RULE 19- INTERVENTION

Sec. 1. Who may intervene
Ongco v. Dalisay, G.R. No. 190810, July 18, 2012
G.R. No. 190810

July 18, 2012

LORENZA
C.
vs.
VALERIANA UNGCO DALISAY, RESPONDENT.
DECISION

ONGCO, PETITIONER,

SERENO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of
Civil Procedure asking the Court to rule whether petitioner may intervene in a land
registration case.
The Petition seeks to annul and set aside the Court of Appeals (CA)
Resolutions1 dated 30 September 2009 and 11 November 2009 (assailed
Resolutions), which denied petitioner's Motion for Leave to Intervene dated 23 June
2009.
FACTUAL ANTECEDENTS
On 15 October 2007, respondent Valeriana Ungco Dalisay (Dalisay) applied for
registration of a parcel of land designated as Lot 1792, Cad-609-D, by filing an
Application for Land Registration before the Municipal Trial Court (MTC) of
Binangonan, Branch 2.2 At the hearings, no oppositor aside from the Republic of the
Philippines (the Republic) came. Neither was there any written opposition filed in
court. Thus, an Order of General Default was issued against the whole world except
the Republic. Consequently, on 15 October 2008, the court found respondent
Dalisay to have clearly shown a registrable right over the subject property and
ordered that a decree of registration be issued by the Land Registration Authority
once the Decision had become final. 3 Herein petitioner Lorenza C. Ongco (Ongco)
never intervened in the proceedings in the trial court.
The Republic filed an appeal with the CA docketed as CA-G.R. CV No. 92046. 4 While
the case was pending appeal, petitioner Ongco filed a "Motion for Leave to
Intervene" dated 23 June 2009 with an attached Answer-in-Intervention. 5
The Answer-in-Intervention sought the dismissal of respondent Dalisay's Application
for Land Registration on the ground that, contrary to the allegations of Dalisay, the
subject property was not free from any adverse claim. In fact, petitioner Ongco had
allegedly been previously found to be in actual possession of the subject land in an
earlier case filed before the Department of Environment and Natural Resources
(DENR) when she applied for a free patent on the land. 6
In her Comment/Objection to the Motion for Leave to Intervene, Dalisay contended
that Ongco did not have a legal interest over the property. 7 Moreover, the
intervention would unduly delay the registration proceeding, which was now on
appeal. Besides, petitioner's interest, if any, may be fully protected in a separate
and direct proceeding. Additionally, Dalisay pointed out that Section 2, Rule 19 of
the Rules of Court was clear that intervention may be filed at any time before
rendition of judgment by the trial court, but not at any other time. The Republic, on
the other hand, said that it was interposing no objection to the Motion for Leave to
Intervene.8
On 30 September 2009, the CA issued its first assailed Resolution 9 denying the
Motion for Intervention for having been filed beyond the period allowed by law. It
said:

Lorenza C. Ongco's prayer to be allowed to intervene in the instant "MOTION FOR

LEAVE TO INTERVENE XXX" is DENIED[,] said motion having been filed beyond the
period allowed by law.
Manalo vs. Court of Appeals is emphatic:
Intervention is not a matter of right but may be permitted by the courts only when
the statutory conditions for the right to intervene [are] shown. Thus, the allowance
or disallowance of a motion to intervene is addressed to the sound discretion of the
court. In determining the propriety of letting a party intervene in a case, the tribunal
should not limit itself to inquiring whether "a person (1) has a legal interest in the
matter in litigation; (2) or in the success of either of the parties; (3) or an interest
against both; (4) or when is so situated as to be adversely affected by a distribution
or other disposition of property in the custody of the court or of an officer thereof."
Just as important, as (the Supreme Court had) stated in Big Country Ranch
Corporation v. Court of Appeals [227 SCRA 161{1993}], is the function to consider
whether or not the intervention will unduly delay or prejudice the adjudication of the
rights of the original parties, and whether or not the intervenor's rights may be fully
protected in a separate proceeding.
The period within which a person may intervene is also restricted. Section 2, Rule 19
of the 1997 Rules of Civil Procedure requires:
"SECTION 2. Time to intervene. The motion to intervene may be filed at any time
before the rendition of judgment by the trial court, x x x."
After the lapse of this period, it will not be warranted anymore. This is because,
basically, intervention is not an independent action but is ancillary and
supplemental to an existing litigation.
Here, the subject motion was filed only on June 23, 2009, way beyond the rendition
of the Decision dated October 15, 2008 (subject of the instant appeal by the Office
of the Solicitor General) by the Regional Trial Court of Binangonan, Branch 2. As a
necessary consequence, the prayed for admission of the instant "ANSWER-ININTERVENTION could only be denied, x x x. (Emphases in the original)
Petitioner filed a Motion for Reconsideration, 10 which was also denied in a Resolution
dated 11 November 2009.
Hence, the instant Petition for Review under Rule 45.
In her three-page Comment11 on the Petition, respondent Dalisay briefly argues that
the CA did not commit any error, because it properly applied the technical rules of
procedure in denying the Motion for Intervention. She also argues that the issues
being presented are factual and, as such, not reviewable in a Petition for Review
under Rule 45.
In her Reply,12 petitioner asserts that the issues to be resolved in her Petition are
questions of law: whether the requisites for intervention are present, and whether

the intervention she is seeking is an exception to the general rule that intervention
must be filed before judgment is rendered by the trial court.
Issue for Resolution and the Ruling of the Court
The issue for resolution in the instant case is whether the CA committed reversible
error in denying the Motion for Intervention of petitioner.
We rule to deny the Petition.
DISCUSSION
Intervention is a remedy by which a third party, not originally impleaded in the
proceedings, becomes a litigant therein for a certain purpose: to enable the third
party to protect or preserve a right or interest that may be affected by those
proceedings.13 This remedy, however, is not a right. The rules on intervention are
set forth clearly in Rule 19 of the Rules of Court, which reads:
Sec. 1. Who may intervene. - A person who has a legal interest in the matter in
litigation, or in the success of either of the parties, or an interest against both, or is
so situated as to be adversely affected by a distribution or other disposition of
property in the custody of the court or of an officer thereof may, with leave of court,
be allowed to intervene in the action. The court shall consider whether or not the
intervention will unduly delay or prejudice the adjudication of the rights of the
original parties, and whether or not the intervenor's rights may be fully protected in
a separate proceeding.
Sec. 2. Time to intervene. - The motion to intervene may be filed at any time before
rendition of judgment by the trial court. A copy of the pleading-in-intervention shall
be attached to the motion and served on the original parties. (Emphasis supplied)
It can be readily seen that intervention is not a matter of right, but is left to the trial
court's sound discretion. The trial court must not only determine if the requisite
legal interest is present, but also take into consideration the delay and the
consequent prejudice to the original parties that the intervention will cause. Both
requirements must concur, as the first requirement on legal interest is not more
important than the second requirement that no delay and prejudice should
result.14 To help ensure that delay does not result from the granting of a motion to
intervene, the Rules also explicitly say that intervention may be allowed only before
rendition of judgment by the trial court.
In Executive Secretary v. Northeast Freight, 15 this Court explained intervention in
this wise:
Intervention is not a matter of absolute right but may be permitted by the court
when the applicant shows facts which satisfy the requirements of the statute
authorizing intervention. Under our Rules of Court, what qualifies a person to
intervene is his possession of a legal interest in the matter in litigation or in the
success of either of the parties, or an interest against both; or when he is so

situated as to be adversely affected by a distribution or other disposition of property

in the custody of the court or an officer thereof. As regards the legal interest as
qualifying factor, this Court has ruled that such interest must be of a direct and
immediate character so that the intervenor will either gain or lose by the direct
legal operation of the judgment. The interest must be actual and material, a
concern which is more than mere curiosity, or academic or sentimental desire; it
must not be indirect and contingent, indirect and remote, conjectural, consequential
or collateral. However, notwithstanding the presence of a legal interest, permission
to intervene is subject to the sound discretion of the court, the exercise of which is
limited by considering "whether or not the intervention will unduly delay or
prejudice the adjudication of the rights of the original parties and whether or not the
intervenor's rights may be fully protected in a separate proceeding." (Emphasis
supplied)
Applying the foregoing points to the case at bar, Ongco may not be allowed to
intervene.
Petitioner has not shown any legal interest of such nature that she "will either gain
or lose by the direct legal operation of the judgment." On the contrary, her interest
is indirect and contingent. She has not been granted a free patent over the subject
land, as she in fact admits being only in the process of applying for one. 16 Her
interest is at best inchoate. In Firestone Ceramics v. CA, 17 the Court held that the
petitioner who anchored his motion to intervene on his legal interest arising from his
pending application for a free patent over a portion of the subject land merely had a
collateral interest in the subject matter of the litigation. His collateral interest could
not have justified intervention.
In any event, the Motion for Intervention was filed only with the CA after the MTC
had rendered judgment. By itself, this inexcusable delay is a sufficient ground for
denying the motion. To recall, the motion should be filed "any time before rendition
of judgment." The history and rationale of this rule has been explained thusly:
1. The former rule as to when intervention may be allowed was expressed in
Sec. 2, Rule 12 as "before or during a trial," and this ambiguity also gave rise
to indecisive doctrines. Thus, inceptively it was held that a motion for leave
to intervene may be filed "before or during a trial" even on the day when the
case is submitted for decision (Falcasantos vs. Falcasantos, L-4627, May 13,
1952) as long as it will not unduly delay the disposition of the case. The term
"trial" was used in its restricted sense, i.e., the period for the introduction for
intervention was filed after the case had already been submitted for decision,
the denial thereof is proper (Vigan Electric Light Co., Inc. vs. Arciaga, L-29207
and L-29222, July 31, 1974). However, it has also been held that intervention
may be allowed at any time before the rendition of final judgment (Linchauco
vs. CA, et al, L-23842, Mar. 13, 1975). Further, in the exceptional case of
Director of Lands vs. CA, et al. (L-45168, Sept. 25, 1979), the Supreme Court
permitted intervention in a case pending before it on appeal in order to avoid
injustice and in consideration of the number of parties who may be affected
by the dispute involving overlapping of numerous land titles.

2. The uncertainty in these ruling has been eliminated by the present Sec. 2
of this amended Rule which permits the filing of the motion to intervene at
any time before the rendition of the judgment in the case, in line with the
doctrine in Lichauco above cited. The justification advanced for this is that
before judgment is rendered, the court, for good cause shown, may still allow
the introduction of additional evidence and that is still within a liberal
interpretation of the period for trial. Also, since no judgment has yet been
rendered, the matter subject of the intervention may still be readily resolved
and integrated in the judgment disposing of all claims in the case, and would
not require an overall reassessment of said claims as would be the case if the
judgment had already been rendered. 18 (Emphases supplied)
Indeed, in Manalo v. CA,19 the Court said:
The period within which a person may intervene is also restricted. Section 2, Rule 19
of the 1997 Rules of Civil Procedure requires:
"SECTION 2. Time to intervene. The motion to intervene may be filed at any time
before the rendition of judgment by the trial court x x x."
After the lapse of this period, it will not be warranted anymore. This is because,
basically, intervention is not an independent action but is ancillary and
supplemental to an existing litigation. (Emphases supplied)
There is wisdom in strictly enforcing the period set by Rule 19 of the Rules of Court
for the filing of a motion for intervention. Otherwise, undue delay would result from
many belated filings of motions for intervention after judgment has already been
rendered, because a reassessment of claims would have to be done. Thus, those
who slept on their lawfully granted privilege to intervene will be rewarded, while the
original parties will be unduly prejudiced. This rule should apply more strictly to land
registration cases, in which there is a possibility that a great number of claimantoppositors may cause a delay in the proceedings by filing motions to intervene after
the trial court sitting as a land registration court has rendered judgment.
Also, it must be noted that a land registration proceeding is an action in
rem.1wphi1 Thus, only a general notice to the public is required, and not a
personal one. Its publication already binds the whole world, including those who will
be adversely affected. This, according to this Court, is the only way to give meaning
to the finality and indefeasibility of the Torrens title to be issued as against the
argument that the said rule could result in actual injustice. 20 In the present case, the
MTC found that the required publication was made by respondent Dalisay when she
applied for land registration. That publication was sufficient notice to petitioner
Ongco. Thus, petitioner only had herself to blame when she failed to intervene as
soon as she could before the rendition of judgment.
We also note that, had petitioner learned of the trial court proceedings in time, and
had she wanted to oppose the application, the proper procedure would have been
to ask for the lifting of the order of default and then to file the opposition. 21 It would

be an error of procedure to file a motion to intervene. This is because, as discussed

above, proceedings in land registration are in rem and not in personam. 22
Aware of her fatal shortcoming, petitioner Ongco would now like the Court to
exceptionally allow intervention even after judgment has been rendered by the MTC
in the land registration case. She cites instances in which this Court allowed
intervention on appeal. However, the cases she cited are inapplicable to the present
case, because the movants therein who wanted to intervene were found by the
Court to be indispensable parties. Thus, under Section 7, Rule 3 of the Rules of
Court, they had to be joined because, without them, there could be no final
determination of the actions. Indeed, if indispensable parties are not impleaded, any
judgment would have no effect.
In Galicia v. Manliquez,23 the first case cited by petitioner, the Court found that the
defendant-intervenors were indispensable parties, being the indisputable
compulsory co-heirs of the original defendants in the case for recovery of
possession and ownership, and annulment of title. Thus, without them, there could
be no final determination of the action. Moreover, they certainly stood to be
affected by any judgment in the case, considering their "ostensible ownership of the
property."
In Mago v. CA,24 the intervenor was the rightful awardee of a piece of land that was
mistakenly awarded by the NHA to another awardee. Thus, the latter was given title
to land with an area that was more than that intended to be awarded to him. The
NHA then cancelled the title mistakenly awarded and ordered the subdivision of the
lot into two. The recipient of the mistakenly awarded title filed a Petition for
injunction to enjoin the NHA from cancelling the title awarded. The Petition was
granted and the judgment became final. The other awardee filed a Motion to
Intervene, as well as a Petition for Relief from Judgment, which were both denied by
the trial court. The CA affirmed the Decision of the court a quo. This Court, however,
found that the intervention should have been granted, considering the indisputable
admission of the NHA, the grantor-agency itself, that the intervenor was the rightful
awardee of half of the lot mistakenly awarded. Thus, the intervenor stood to be
deprived of his rightful award when the trial court enjoined the cancellation of the
mistakenly awarded title and the subdivision of the lot covered by the title. The
intervenor's legal interest, in other words, was directly affected.
In the present case, petitioner Ongco is not an indispensable party. As already
noted, her interests are inchoate and merely collateral, as she is only in the process
of applying for a free patent. Also, the action for land registration may proceed and
be carried to judgment without joining her. This is because the issues to be threshed
out in a land registration proceeding such as whether the subject land is alienable
and disposable land of the public domain; and whether the applicant or her
predecessors-in-interest have been in open, continuous, exclusive and notorious
possession of the said land under a bona fide claim of ownership since 12 June
1945, or earlier can be threshed out without joining petitioner.
True, the evidence to be adduced by petitioner Ongco - to prove that she, not
Dalisay, has been in possession of the land subject of the application for registration
of respondent has a bearing on the determination of the latter's right to register

her title to the land. In particular, this evidence will help debunk the claim of
respondent that she has been in open, continuous, exclusive and notorious
possession of the subject parcel of land. In fact, this same evidence must have been
the reason why the Republic did not interpose any objection to the Motion for
Intervention. None of these facts, however, makes petitioner an indispensable
party; for there are many other ways of establishing the fact of open, continuous,
exclusive and notorious possession of the subject parcel of land or the lack thereof.
If any, the only indispensable party to a land registration case is the Republic.
Against it, no order of default would be effective, because the Regalian doctrine
presumes that all lands not otherwise appearing to be clearly under private
ownership are presumed to belong to the State. 25
In any case, we note that petitioner is not left without any remedy in case
respondent succeeds in getting a decree of registration. Under Section 32 of
Presidential Decree No. 1529, or the Property Registration Decree, there is a remedy
available to any person deprived of land or of any estate or interest therein through an adjudication or a confirmation of title obtained by actual fraud. The
person may file, in the proper court, a petition for reopening and reviewing the
decree of registration within one year from the date of entry thereof. This Court has
ruled that actual fraud is committed by a registration applicant's failure or
intentional omission to disclose the fact of actual physical possession of the
premises by the party seeking a review of the decree. It is fraud to knowingly omit
or conceal a fact from which benefit is obtained, to the prejudice of a third
person.26 Thus, if he is so minded, petitioner can still file for a petition to review the
decree of registration.
WHEREFORE, premises considered, the instant Petition is DENIED. The Court of
Appeals Resolutions dated 30 September 2009 and 11 November 2009, which
denied petitioner's Motion for Leave to Intervene in CA-G.R. CV No. 92046, are
hereby AFFIRMED.
SO ORDERED.
Carpio, (Chairperson), Brion, Perez, and Reyes, JJ., concur.

Sec. 2. Time to intervene

Quinto v. Comelec, G.R. No. 189698, February 22, 2010
EN BANC
ELEAZAR P. QUINTO and
GERINO A. TOLENTINO, JR.,
Petitioners,

G.R. No. 189698

Present:

versus -

COMMISSION ON
ELECTIONS,

PUNO, C.J.,
CARPIO,
CORONA,
CARPIO MORALES,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ, and
MENDOZA, JJ.
Promulgated:

Respondent.
February 22, 2010
x ----------------------------------------------------------------------------------------x
RESOLUTION
PUNO, C.J.:
Upon a careful review of the case at bar, this Court resolves to grant the
respondent Commission on Elections (COMELEC) motion for reconsideration, and
the movants-intervenors motions for reconsideration-in-intervention, of this Courts
December 1, 2009 Decision (Decision).[1]
The assailed Decision granted the Petition for Certiorari and Prohibition filed
by Eleazar P. Quinto and Gerino A. Tolentino, Jr. and declared as unconstitutional the
second proviso in the third paragraph of Section 13 of Republic Act No. 9369,
[2]
Section 66 of the Omnibus Election Code [3] and Section 4(a) of COMELEC
Resolution No. 8678,[4] mainly on the ground that they violate the equal protection
clause of the Constitution and suffer from overbreadth. The assailed Decision thus
paved the way for public appointive officials to continue discharging the powers,
prerogatives and functions of their office notwithstanding their entry into the
political arena.
In support of their respective motions for reconsideration, respondent
COMELEC and movants-intervenors submit the following arguments:
(1) The assailed Decision is contrary to, and/or violative of, the constitutional
proscription against the participation of public appointive officials and
members of the military in partisan political activity;
(2) The assailed provisions do not violate the equal protection clause when
they accord differential treatment to elective and appointive officials,

because such differential treatment rests on material and substantial

distinctions and is germane to the purposes of the law;
(3) The assailed provisions do not suffer from the infirmity of overbreadth;
and
(4) There is a compelling need to reverse the assailed Decision, as public
safety and interest demand such reversal.
We find the foregoing arguments meritorious.
I.
Procedural Issues
First, we shall resolve the procedural issues on the timeliness of the
COMELECs motion for reconsideration which was filed on December 15, 2009, as
well as the propriety of the motions for reconsideration-in-intervention which were
filed after the Court had rendered its December 1, 2009 Decision.
i.

Timeliness of COMELECs Motion for Reconsideration

Pursuant to Section 2, Rule 56-A of the 1997 Rules of Court, [5] in relation
to Section 1, Rule 52 of the same rules, [6]COMELEC had a period of fifteen days
from receipt of notice of the assailed Decision within which to move for its
reconsideration. COMELEC received notice of the assailed Decision on December 2,
2009, hence, had until December 17, 2009 to file a Motion for Reconsideration.
The Motion for Reconsideration of COMELEC was timely filed. It was filed on
December 14, 2009. The corresponding Affidavit of Service (in substitution of the
one originally submitted on December 14, 2009) was subsequently filed on
December 17, 2009 still within the reglementary period.
ii.

Propriety of the Motions for Reconsideration-in-Intervention

Section 1, Rule 19 of the Rules of Court provides:
A person who has legal interest in the matter in litigation or in the
success of either of the parties, or an interest against both, or is so
situated as to be adversely affected by a distribution or other
disposition of property in the custody of the court or of an officer
thereof may, with leave of court, be allowed to intervene in the action.
The court shall consider whether or not the intervention will unduly
delay or prejudice the adjudication of the rights of the original parties,
and whether or not the intervenors rights may be fully protected in a
separate proceeding.

Pursuant to the foregoing rule, this Court has held that a motion for
intervention shall be entertained when the following requisites are satisfied: (1) the
would-be intervenor shows that he has a substantial right or interest in the case;
and (2) such right or interest cannot be adequately pursued and protected in
another proceeding.[7]

Upon the other hand, Section 2, Rule 19 of the Rules of Court provides the
time within which a motion for intervention may be filed, viz.:
SECTION 2. Time to intervene. The motion for intervention may be
filed at any time before rendition of judgment by the trial court. A
copy of the pleading-in-intervention shall be attached to the motion
and served on the original parties. (italics supplied)
This rule, however, is not inflexible. Interventions have been allowed even
beyond the period prescribed in the Rule, when demanded by the higher interest of
justice. Interventions have also been granted to afford indispensable parties, who
have not been impleaded, the right to be heard even after a decision has been
rendered by the trial court,[8] when the petition for review of the judgment has
already been submitted for decision before the Supreme Court, [9] and even where
the assailed order has already become final and executory. [10] In Lim v. Pacquing,
[11]
the motion for intervention filed by the Republic of the Philippines was allowed
by this Court to avoid grave injustice and injury and to settle once and for all the
substantive issues raised by the parties.
In fine, the allowance or disallowance of a motion for intervention rests on the
sound discretion of the court [12] after consideration of the appropriate
circumstances.[13] We stress again that Rule 19 of the Rules of Court is a rule of
procedure whose object is to make the powers of the court fully and completely
available for justice.[14] Its purpose is not to hinder or delay, but to facilitate and
promote the administration of justice.[15]
We rule that, with the exception of the IBP Cebu City Chapter, all the
movants-intervenors may properly intervene in the case at bar.
First, the movants-intervenors have each sufficiently established a substantial
right or interest in the case.
As a Senator of the Republic, Senator Manuel A. Roxas has a right to
challenge the December 1, 2009 Decision, which nullifies a long established law; as
a voter, he has a right to intervene in a matter that involves the electoral process;
and as a public officer, he has a personal interest in maintaining the trust and
confidence of the public in its system of government.
On the other hand, former Senator Franklin M. Drilon and Tom V. Apacible are
candidates in the May 2010 elections running against appointive officials who, in
view of the December 1, 2009 Decision, have not yet resigned from their posts and
are not likely to resign from their posts. They stand to be directly injured by the
assailed Decision, unless it is reversed.
Moreover, the rights or interests of said movants-intervenors cannot be
adequately pursued and protected in another proceeding. Clearly, their rights will
be foreclosed if this Courts Decision attains finality and forms part of the laws of
the land.

With regard to the IBP Cebu City Chapter, it anchors its standing on the
assertion that this case involves the constitutionality of elections laws for this
coming 2010 National Elections, and that there is a need for it to be allowed to
intervene xxx so that the voice of its members in the legal profession would also be
heard before this Highest Tribunal as it resolves issues of transcendental
importance.[16]
Prescinding from our rule and ruling case law, we find that the IBP-Cebu City
Chapter has failed to present a specific and substantial interest sufficient to clothe it
with standing to intervene in the case at bar. Its invoked interest is, in character, too
indistinguishable to justify its intervention.
We now turn to the substantive issues.
II.
Substantive Issues
The assailed Decision struck down Section 4(a) of Resolution 8678, the
second proviso in the third paragraph of Section 13 of Republic Act (RA) 9369,
and Section 66 of the Omnibus Election Code, on the following grounds:
(1) They violate the equal protection clause of the Constitution because of
the differential treatment of persons holding appointive offices and those
holding elective positions;
(2) They are overbroad insofar as they prohibit the candidacy of all civil
servants holding appointive posts: (a) without distinction as to whether or
not they occupy high/influential positions in the government, and (b) they
limit these civil servants activity regardless of whether they be partisan
or nonpartisan in character, or whether they be in the national, municipal
or barangay level; and
(3) Congress has not shown a compelling state interest to restrict the
fundamental right of these public appointive officials.
We grant the motions for reconsideration. We now rule that Section 4(a) of
Resolution 8678, Section 66 of the Omnibus Election Code, and the second proviso
in the third paragraph of Section 13 of RA 9369 are not unconstitutional, and
accordinglyreverse our December 1, 2009 Decision.
III.
Section 4(a) of COMELEC Resolution 8678 Compliant with Law
Section 4(a) of COMELEC Resolution 8678 is a faithful reflection of the present
state of the law and jurisprudence on the matter, viz.:
Incumbent Appointive Official. - Under Section 13 of RA 9369, which
reiterates Section 66 of the Omnibus Election Code, any person holding a
public appointive office or position, including active members of the Armed
Forces of the Philippines, and officers and employees in government-owned
or -controlled corporations, shall be considered ipso facto resigned from his
office upon the filing of his certificate of candidacy.

Incumbent Elected Official. Upon the other hand, pursuant to Section 14

of RA 9006 or the Fair Election Act,[17] which repealed Section 67 of the
Omnibus Election Code[18] and rendered ineffective Section 11 of R.A. 8436
insofar as it considered an elected official as resigned only upon the start of
the campaign period corresponding to the positions for which they are
running,[19] an elected official is not deemed to have resigned from his office
upon the filing of his certificate of candidacy for the same or any other
elected office or position. In fine, an elected official may run for another
position without forfeiting his seat.
These laws and regulations implement Section 2(4), Article IX-B of the 1987
Constitution, which prohibits civil service officers and employees from engaging in
any electioneering or partisan political campaign.
The intention to impose a strict limitation on the participation of civil service
officers and employees in partisan political campaigns is unmistakable. The
exchange between Commissioner Quesada and Commissioner Foz during the
deliberations of the Constitutional Commission is instructive:
MS. QUESADA.
xxxx
Secondly, I would like to address the issue here as provided in Section
1 (4), line 12, and I quote: "No officer or employee in the civil service
shall engage, directly or indirectly, in any partisan political activity."
This is almost the same provision as in the 1973 Constitution.
However, we in the government service have actually experienced how
this provision has been violated by the direct or indirect partisan
political activities of many government officials.
So, is the Committee willing to include certain clauses that would make
this provision more strict, and which would deter its violation?
MR. FOZ. Madam President, the existing Civil Service Law and the
implementing rules on the matter are more than exhaustive enough to
really prevent officers and employees in the public service from
engaging in any form of partisan political activity. But the problem
really lies in implementation because, if the head of a ministry, and
even the superior officers of offices and agencies of government will
themselves violate the constitutional injunction against partisan
political activity, then no string of words that we may add to what is
now here in this draft will really implement the constitutional intent
against partisan political activity. x x x[20] (italics supplied)
To emphasize its importance, this constitutional ban on civil service officers
and employees is presently reflected and implemented by a number of statutes.
Section 46(b)(26), Chapter 7 and Section 55, Chapter 8 both of Subtitle A, Title I,
Book V of the Administrative Code of 1987 respectively provide in relevant part:

Section 44. Discipline: General Provisions:

xxxx
(b)

The following shall be grounds for disciplinary action:

xxxx
(26)
Engaging directly or indirectly in partisan political
activities by one holding a non-political office.
xxxx
Section 55. Political Activity. No officer or employee in the Civil
Service including members of the Armed Forces, shall engage directly
or indirectly in any partisan political activity or take part in any election
except to vote nor shall he use his official authority or influence to
coerce the political activity of any other person or body. Nothing herein
provided shall be understood to prevent any officer or employee from
expressing his views on current political problems or issues, or from
mentioning the names of his candidates for public office whom he
supports: Provided, That public officers and employees holding political
offices may take part in political and electoral activities but it shall be
unlawful for them to solicit contributions from their subordinates or
subject them to any of the acts involving subordinates prohibited in the
Election Code.
Section 261(i) of Batas Pambansa Blg. 881 (the Omnibus Election Code) further
makes intervention by civil service officers and employees in partisan political
activities an election offense, viz.:
SECTION 261. Prohibited Acts. The following shall be guilty of an
election offense:
xxxx
(i) Intervention of public officers and employees. Any officer or
employee in the civil service, except those holding political offices; any
officer, employee, or member of the Armed Forces of the Philippines, or
any police force, special forces, home defense forces, barangay selfdefense units and all other para-military units that now exist or which
may hereafter be organized who, directly or indirectly, intervenes in
any election campaign or engages in any partisan political activity,
except to vote or to preserve public order, if he is a peace officer.
The intent of both Congress and the framers of our Constitution to limit the
participation of civil service officers and employees in partisan political activities is
too plain to be mistaken.

But Section 2(4), Article IX-B of the 1987 Constitution and the implementing
statutes apply
only
to
civil
servants holdingapolitical offices.
Stated
differently, the constitutional ban does not cover elected officials,
notwithstanding the fact that [t]he civil service embraces all branches,
subdivisions, instrumentalities, and agencies of the Government, including
government-owned or controlled corporations with original charters. [21] This is
because elected public officials, by the very nature of their office, engage in
partisan political activities almost all year round, even outside of the campaign
period.[22] Political partisanship is the inevitable essence of a political office, elective
positions included.[23]
The prohibition notwithstanding, civil service officers and employees are
allowed to vote, as well as express their views on political issues, or mention the
names of certain candidates for public office whom they support. This is crystal
clear from the deliberations of the Constitutional Commission, viz.:
MS. AQUINO: Mr. Presiding Officer, my proposed amendment is on
page 2, Section 1, subparagraph 4, lines 13 and 14. On line 13,
between the words "any" and "partisan," add the phrase
ELECTIONEERING AND OTHER; and on line 14, delete the word
"activity" and in lieu thereof substitute the word CAMPAIGN.
May I be allowed to explain my proposed amendment?
THE PRESIDING OFFICER (Mr. Treas): Commissioner Aquino may
proceed.
MS. AQUINO: The draft as presented by the Committee deleted the
phrase "except to vote" which was adopted in both the 1935 and 1973
Constitutions. The phrase "except to vote" was not intended as a
guarantee to the right to vote but as a qualification of the general
prohibition against taking part in elections.
Voting is a partisan political activity. Unless it is explicitly provided for
as an exception to this prohibition, it will amount to
disenfranchisement. We know that suffrage, although plenary, is not an
unconditional right. In other words, the Legislature can always pass a
statute which can withhold from any class the right to vote in an
election, if public interest so required. I would only like to reinstate the
qualification by specifying the prohibited acts so that those who may
want to vote but who are likewise prohibited from participating in
partisan political campaigns or electioneering may vote.
MR. FOZ:
There is really no quarrel over this point, but please
understand that there was no intention on the part of the Committee
to disenfranchise any government official or employee. The elimination
of the last clause of this provision was precisely intended to protect
the members of the civil service in the sense that they are not being
deprived of the freedom of expression in a political contest. The last
phrase or clause might have given the impression that a government

employee or worker has no right whatsoever in an election campaign

except to vote, which is not the case. They are still free to express
their views although the intention is not really to allow them to take
part actively in a political campaign.[24]
IV.
Section 4(a) of Resolution 8678, Section 13 of RA 9369, and
Section 66 of the Omnibus Election Code Do Not Violate the
Equal Protection Clause
We now hold that Section 4(a) of Resolution 8678, Section 66 of the Omnibus
Election Code, and the second proviso in the third paragraph of Section 13 of RA
9369 are not violative of the equal protection clause of the Constitution.
i.

Farias, et al. v. Executive Secretary, et al. is Controlling

In truth, this Court has already ruled squarely on whether these deemedresigned provisions challenged in the case at bar violate the equal protection clause
of the Constitution in Farias, et al. v. Executive Secretary, et al.[25]
In Farias, the constitutionality of Section 14 of the Fair Election Act, in
relation to Sections 66 and 67 of the Omnibus Election Code, was assailed on the
ground, among others, that it unduly discriminates against appointive officials. As
Section 14 repealed Section 67 (i.e., the deemed-resigned provision in respect of
elected officials) of the Omnibus Election Code, elected officials are no longer
considered ipso facto resigned from their respective offices upon their filing of
certificates of candidacy. In contrast, since Section 66 was not repealed, the
limitation on appointive officials continues to be operative they are deemed
resigned when they file their certificates of candidacy.
The petitioners in Farias thus brought an equal protection challenge against
Section 14, with the end in view of having the deemed-resigned provisions apply
equally to both elected and appointive officials. We held, however, that the legal
dichotomy created by the Legislature is a reasonable classification, as there are
material and significant distinctions between the two classes of officials.
Consequently, the contention that Section 14 of the Fair Election Act, in relation to
Sections 66 and 67 of the Omnibus Election Code, infringed on the equal protection
clause of the Constitution, failed muster. We ruled:
The petitioners' contention, that the repeal of Section 67 of the
Omnibus Election Code pertaining to elective officials gives undue
benefit to such officials as against the appointive ones and violates the
equal protection clause of the constitution, is tenuous.
The equal protection of the law clause in the Constitution is not
absolute, but is subject to reasonable classification. If the groupings
are characterized by substantial distinctions that make real
differences, one class may be treated and regulated differently from
the other. The Court has explained the nature of the equal protection
guarantee in this manner:

The equal protection of the law clause is against undue

favor and individual or class privilege, as well as hostile
discrimination or the oppression of inequality. It is not
intended to prohibit legislation which is limited either in
the object to which it is directed or by territory within
which it is to operate. It does not demand absolute
equality among residents; it merely requires that all
persons shall be treated alike, under like circumstances
and conditions both as to privileges conferred and
liabilities enforced. The equal protection clause is not
infringed by legislation which applies only to those
persons falling within a specified class, if it applies alike to
all persons within such class, and reasonable grounds
exist for making a distinction between those who fall
within such class and those who do not.
Substantial distinctions clearly exist between elective officials
and appointive officials. The former occupy their office by virtue of the
mandate of the electorate. They are elected to an office for a definite
term and may be removed therefrom only upon stringent conditions.
On the other hand, appointive officials hold their office by virtue of
their designation thereto by an appointing authority. Some appointive
officials hold their office in a permanent capacity and are entitled to
security of tenure while others serve at the pleasure of the appointing
authority.
Another substantial distinction between the two sets of officials
is that under Section 55, Chapter 8, Title I, Subsection A. Civil Service
Commission, Book V of the Administrative Code of 1987 (Executive
Order No. 292), appointive officials, as officers and employees in the
civil service, are strictly prohibited from engaging in any partisan
political activity or take (sic) part in any election except to vote. Under
the same provision, elective officials, or officers or employees holding
political offices, are obviously expressly allowed to take part in political
and electoral activities.
By repealing Section 67 but retaining Section 66 of the Omnibus
Election Code, the legislators deemed it proper to treat these two
classes of officials differently with respect to the effect on their tenure
in the office of the filing of the certificates of candidacy for any position
other than those occupied by them. Again, it is not within the power of
the Court to pass upon or look into the wisdom of this classification.
Since the classification justifying Section 14 of Rep. Act No.
9006, i.e., elected officials vis--vis appointive officials, is anchored
upon material and significant distinctions and all the persons belonging
under the same classification are similarly treated, the equal protection
clause of the Constitution is, thus, not infringed. [26]

The case at bar is a crass attempt to resurrect a dead issue. The miracle is
that our assailed Decision gave it new life. We ought to be guided by the doctrine
of stare decisis et non quieta movere. This doctrine, which is really adherence to
precedents, mandates that once a case has been decided one way, then another
case involving exactly the same point at issue should be decided in the same
manner.[27] This doctrine is one of policy grounded on the necessity for securing
certainty and stability of judicial decisions. As the renowned jurist Benjamin Cardozo
stated in his treatise The Nature of the Judicial Process:
It will not do to decide the same question one way between one set of
litigants and the opposite way between another. If a group of cases
involves the same point, the parties expect the same decision. It would
be a gross injustice to decide alternate cases on opposite principles. If
a case was decided against me yesterday when I was a defendant, I
shall look for the same judgment today if I am plaintiff. To decide
differently would raise a feeling of resentment and wrong in my breast;
it would be an infringement, material and moral, of my rights."
Adherence to precedent must then be the rule rather than the
exception if litigants are to have faith in the even-handed
administration of justice in the courts.[28]
Our Farias ruling on the equal protection implications of the deemedresigned provisions cannot be minimalized as mereobiter dictum. It is trite to state
that an adjudication on any point within the issues presented by the case cannot be
considered asobiter dictum.[29] This rule applies to all pertinent questions that are
presented and resolved in the regular course of the consideration of the case and
lead up to the final conclusion, and to any statement as to the matter on which the
decision is predicated.[30] For that reason, a point expressly decided does not lose its
value as a precedent because the disposition of the case is, or might have been,
made on some other ground; or even though, by reason of other points in the case,
the result reached might have been the same if the court had held, on the particular
point, otherwise than it did. [31] As we held in Villanueva, Jr. v. Court of
Appeals, et al.:[32]
A decision which the case could have turned on is not regarded as
obiter dictum merely because, owing to the disposal of the contention,
it was necessary to consider another question, nor can an additional
reason in a decision, brought forward after the case has been disposed
of on one ground, be regarded as dicta. So, also, where a case presents
two (2) or more points, any one of which is sufficient to determine the
ultimate issue, but the court actually decides all such points, the case
as an authoritative precedent as to every point decided, and none of
such points can be regarded as having the status of a dictum, and one
point should not be denied authority merely because another point
was more dwelt on and more fully argued and considered, nor does a
decision on one proposition make statements of the court regarding
other propositions dicta.[33] (italics supplied)
ii.

Classification Germane to the Purposes of the Law

The Farias ruling on the equal protection challenge stands on solid ground
even if reexamined.
To start with, the equal protection clause does not require the universal
application of the laws to all persons or things without distinction. [34] What it simply
requires is equality among equals as determined according to a valid classification.
[35]
The test developed by jurisprudence here and yonder is that of reasonableness,
[36]
which has four requisites:
(1)
(2)
(3)
(4)

The classification rests on substantial distinctions;

It is germane to the purposes of the law;
It is not limited to existing conditions only; and
It applies equally to all members of the same class. [37]

Our assailed Decision readily acknowledged that these deemed-resigned

provisions satisfy the first, third and fourth requisites of reasonableness. It,
however, proffers the dubious conclusion that the differential treatment of
appointive officials vis--vis elected officials is not germane to the purpose of the
law, because whether one holds an appointive office or an elective one, the evils
sought to be prevented by the measure remain, viz.:
For example, the Executive Secretary, or any Member of the Cabinet
for that matter, could wield the same influence as the Vice-President
who at the same time is appointed to a Cabinet post (in the recent
past, elected Vice-Presidents were appointed to take charge of national
housing, social welfare development, interior and local government,
and foreign affairs). With the fact that they both head executive
offices, there is no valid justification to treat them differently when
both file their [Certificates of Candidacy] for the elections. Under the
present state of our law, the Vice-President, in the example, running
this time, let us say, for President, retains his position during the entire
election period and can still use the resources of his office to support
his campaign.[38]
Sad to state, this conclusion conveniently ignores the long-standing rule that
to remedy an injustice, the Legislature need not address every manifestation of the
evil at once; it may proceed one step at a time. [39] In addressing a societal
concern, it must invariably draw lines and make choices, thereby creating some
inequity as to those included or excluded. [40] Nevertheless, as long as the bounds of
reasonable choice are not exceeded, the courts must defer to the legislative
judgment.[41] We may not strike down a law merely because the legislative aim
would have been more fully achieved by expanding the class. [42] Stated differently,
the fact that a legislative classification, by itself, is underinclusive will not render it
unconstitutionally arbitrary or invidious. [43]There is no constitutional requirement
that regulation must reach each and every class to which it might be applied; [44] that
the Legislature must be held rigidly to the choice of regulating all or none.

Thus, any person who poses an equal protection challenge must convincingly
show that the law creates a classification that is palpably arbitrary or
capricious.[45] He must refute all possible rational bases for the differing treatment,
whether or not the Legislature cited those bases as reasons for the enactment,
[46]
such that the constitutionality of the law must be sustained even if the
reasonableness of the classification is fairly debatable. [47] In the case at bar, the
petitioners failed and in fact did not even attempt to discharge this heavy
burden. Our assailed Decision was likewise silent as a sphinx on this point even
while we submitted the following thesis:
... [I]t is not sufficient grounds for invalidation that we may find
that the statutes distinction is unfair, underinclusive, unwise, or not
the best solution from a public-policy standpoint; rather, we must find
that there is no reasonably rational reason for the differing treatment.
[48]

In the instant case, is there a rational justification for excluding

elected officials from the operation of the deemed resigned provisions?
I submit that there is.
An election is the embodiment of the popular will, perhaps the
purest expression of the sovereign power of the people. [49] It involves
the choice or selection of candidates to public office by popular vote.
[50]
Considering that elected officials are put in office by their
constituents for a definite term, it may justifiably be said that they
were excluded from the ambit of the deemed resigned provisions in
utmost respect for the mandate of the sovereign will. In other words,
complete deference is accorded to the will of the electorate that they
be served by such officials until the end of the term for which they
were elected. In contrast, there is no such expectation insofar as
appointed officials are concerned.
The dichotomized treatment of appointive and elective
officials is therefore germane to the purposes of the law. For
the law was made not merely to preserve the integrity,
efficiency, and discipline of the public service; the Legislature,
whose wisdom is outside the rubric of judicial scrutiny, also
thought it wise to balance this with the competing, yet equally
compelling, interest of deferring to the sovereign will.
[51]
(emphasis in the original)
In fine, the assailed Decision would have us equalize the playing field by
invalidating provisions of law that seek to restrain the evils from running riot. Under
the pretext of equal protection, it would favor a situation in which the evils are
unconfined and vagrant, existing at the behest of both appointive and elected
officials, over another in which a significant portion thereof is contained. The
absurdity of that position is self-evident, to say the least.
The concern, voiced by our esteemed colleague, Mr. Justice Nachura, in his
dissent, that elected officials (vis--vis appointive officials) have greater political

clout over the electorate, is indeed a matter worth exploring but not by this Court.
Suffice it to say that the remedy lies with the Legislature. It is the Legislature that is
given the authority, under our constitutional system, to balance competing interests
and thereafter make policy choices responsive to the exigencies of the times. It is
certainly within the Legislatures power to make the deemed-resigned provisions
applicable to elected officials, should it later decide that the evils sought to be
prevented are of such frequency and magnitude as to tilt the balance in favor of
expanding the class. This Court cannot and should not arrogate unto itself the
power to ascertain and impose on the people the best state of affairs from a public
policy standpoint.
iii.

Mancuso v. Taft Has Been Overruled

Finding no Philippine jurisprudence to prop up its equal protection ruling, our

assailed Decision adverted to, and extensively cited, Mancuso v. Taft.[52] This was
a decision of the First Circuit of the United States Court of Appeals promulgated in
March 1973, which struck down as unconstitutional a similar statutory provision.
Pathetically, our assailed Decision, relying on Mancuso, claimed:
(1) The right to run for public office is inextricably linked with two
fundamental freedoms freedom of expression and association;
(2) Any legislative classification that significantly burdens this fundamental
right must be subjected to strict equal protection review; and
(3) While the state has a compelling interest in maintaining the honesty and
impartiality of its public work force, the deemed-resigned provisions
pursue their objective in a far too heavy-handed manner as to render
them unconstitutional.
It then concluded with the exhortation that since the Americans, from whom we
copied the provision in question, had already stricken down a similar measure for
being unconstitutional[,] it is high-time that we, too, should follow suit.
Our assailed Decisions reliance on Mancuso is completely misplaced. We
cannot blink away the fact that the United States Supreme Court effectively
overruled Mancuso three months after its promulgation by the United States
Court of Appeals. InUnited States Civil Service Commission, et al. v. National
Association of Letter Carriers AFL-CIO, et al.[53] and Broadrick,et al. v. State
of Oklahoma, et al.,[54] the United States Supreme Court was faced with the issue
of whether statutory provisionsprohibiting federal [55] and state[56] employees
from taking an
active
part
in
political
management
or
in
political
campaigns wereunconstitutional as to warrant facial invalidation. Violation of these
provisions results in dismissal from employment and possible criminal sanctions.
The Court declared these provisions compliant with the equal protection
clause. It held that (i) in regulating the speech of its employees, the state as
employer has interests that differ significantly from those it possesses in regulating
the speech of the citizenry in general; (ii) the courts must therefore balance the
legitimate interest of employee free expression against the interests of the
employer in promoting efficiency of public services; (iii) if the employees
expression interferes with the maintenance of efficient and regularly functioning

services, the limitation on speech is not unconstitutional; and (iv) the Legislature is
to be given some flexibility or latitude in ascertaining which positions are to be
covered by any statutory restrictions. [57] Therefore, insofar as government
employees are concerned, the correct standard of review is an interest-balancing
approach, a means-end scrutiny that examines the closeness of fit between the
governmental interests and the prohibitions in question. [58]
Letter Carriers elucidated on these principles, as follows:
Until now, the judgment of Congress, the Executive, and the
country appears to have been that partisan political activities by
federal employees must be limited if the Government is to operate
effectively and fairly, elections are to play their proper part in
representative government, and employees themselves are to be
sufficiently free from improper influences. The restrictions so far
imposed on federal employees are not aimed at particular parties,
groups, or points of view, but apply equally to all partisan activities of
the type described. They discriminate against no racial, ethnic, or
religious minorities. Nor do they seek to control political opinions or
beliefs, or to interfere with or influence anyone's vote at the polls.
But, as the Court held in Pickering v. Board of Education, [59] the
government has an interest in regulating the conduct and the speech
of its employees that differ(s) significantly from those it possesses in
connection with regulation of the speech of the citizenry in general.
The problem in any case is to arrive at a balance between the interests
of the (employee), as a citizen, in commenting upon matters of public
concern and the interest of the (government), as an employer, in
promoting the efficiency of the public services it performs through its
employees. Although Congress is free to strike a different balance
than it has, if it so chooses, we think the balance it has so far struck is
sustainable by the obviously important interests sought to be served
by the limitations on partisan political activities now contained in the
Hatch Act.
It seems fundamental in the first place that employees in the
Executive Branch of the Government, or those working for any of its
agencies, should administer the law in accordance with the will of
Congress, rather than in accordance with their own or the will of a
political party. They are expected to enforce the law and execute the
programs of the Government without bias or favoritism for or against
any political party or group or the members thereof. A major thesis of
the Hatch Act is that to serve this great end of Government-the
impartial execution of the laws-it is essential that federal employees,
for example, not take formal positions in political parties, not
undertake to play substantial roles in partisan political campaigns, and
not run for office on partisan political tickets. Forbidding activities like
these will reduce the hazards to fair and effective government.

There is another consideration in this judgment: it is not only

important that the Government and its employees in fact avoid
practicing political justice, but it is also critical that they appear to the
public to be avoiding it, if confidence in the system of representative
Government is not to be eroded to a disastrous extent.
Another major concern of the restriction against partisan
activities by federal employees was perhaps the immediate occasion
for enactment of the Hatch Act in 1939. That was the conviction that
the rapidly expanding Government work force should not be employed
to build a powerful, invincible, and perhaps corrupt political
machine. The experience of the 1936 and 1938 campaigns convinced
Congress that these dangers were sufficiently real that substantial
barriers should be raised against the party in power-or the party out of
power, for that matter-using the thousands or hundreds of thousands
of federal employees, paid for at public expense, to man its political
structure and political campaigns.
A related concern, and this remains as important as any other,
was to further serve the goal that employment and advancement in
the Government service not depend on political performance, and at
the same time to make sure that Government employees would
be free from pressure and from express or tacit invitation to vote in a
certain way or perform political chores in order to curry favor with their
superiors rather than to act out their own beliefs. It may be urged that
prohibitions against coercion are sufficient protection; but for many
years the joint judgment of the Executive and Congress has been that
to protect the rights of federal employees with respect to their jobs and
their political acts and beliefs it is not enough merely to forbid one
employee to attempt to influence or coerce another. For example, at
the hearings in 1972 on proposed legislation for liberalizing the
prohibition against political activity, the Chairman of the Civil Service
Commission stated that the prohibitions against active participation in
partisan political management and partisan political campaigns
constitute the most significant safeguards against coercion . . ..
Perhaps Congress at some time will come to a different view of the
realities of political life and Government service; but that is its current
view of the matter, and we are not now in any position to dispute it.
Nor, in our view, does the Constitution forbid it.
Neither the right to associate nor the right to participate in
political activities is absolute in any event.[60] x x x
xxxx
As we see it, our task is not to destroy the Act if we can, but to
construe it, if consistent with the will of Congress, so as to comport
with constitutional limitations. (italics supplied)

Broadrick likewise definitively stated that the assailed statutory provision is

constitutionally permissible, viz.:
Appellants do not question Oklahoma's right to place evenhanded restrictions on the partisan political conduct of state
employees.Appellants freely concede that such restrictions serve valid
and important state interests, particularly with respect to attracting
greater numbers of qualified people by insuring their job security, free
from the vicissitudes of the elective process, and by protecting them
from political extortion. Rather, appellants maintain that however
permissible, even commendable, the goals of s 818 may be, its
language is unconstitutionally vague and its prohibitions too broad in
their sweep, failing to distinguish between conduct that may be
proscribed and conduct that must be permitted. For these and other
reasons, appellants assert that the sixth and seventh paragraphs of s
818 are void in toto and cannot be enforced against them or anyone
else.
We have held today that the Hatch Act is not impermissibly
vague.[61] We have little doubt that s 818 is similarly not so vague that
men of common intelligence must necessarily guess at its
meaning.[62] Whatever other problems there are with s 818, it is all but
frivolous to suggest that the section fails to give adequate warning of
what activities it proscribes or fails to set out explicit standards' for
those who must apply it. In the plainest language, it prohibits any state
classified employee from being an officer or member of a partisan
political club or a candidate for any paid public office. It forbids
solicitation of contributions for any political organization, candidacy or
other political purpose and taking part in the management or affairs
of any political party or in any political campaign. Words inevitably
contain germs of uncertainty and, as with the Hatch Act, there may be
disputes over the meaning of such terms in s 818 as partisan, or take
part in, or affairs of political parties. But what was said in Letter
Carriers, is applicable here: there are limitations in the English
language with respect to being both specific and manageably brief,
and it seems to us that although the prohibitions may not satisfy those
intent on finding fault at any cost, they are set out in terms that the
ordinary person exercising ordinary common sense can sufficiently
understand and comply with, without sacrifice to the public interest.' x
xx
xxxx
[Appellants] nevertheless maintain that the statute is
overbroad and purports to reach protected, as well as unprotected
conduct, and must therefore be struck down on its face and held to be
incapable of any constitutional application. We do not believe that the
overbreadth doctrine may appropriately be invoked in this manner
here.

xxxx
The consequence of our departure from traditional rules of
standing in the First Amendment area is that any enforcement of a
statute thus placed at issue is totally forbidden until and unless a
limiting construction or partial invalidation so narrows it as to remove
the seeming threat or deterrence to constitutionally protected
expression. Application of the overbreadth doctrine in this manner is,
manifestly, strong medicine. It has been employed by the Court
sparingly and only as a last resort. x x x
x x x But the plain import of our cases is, at the very least, that
facial over-breadth adjudication is an exception to our traditional rules
of practice and that its function, a limited one at the outset, attenuates
as the otherwise unprotected behavior that it forbids the State to
sanction moves from pure speech toward conduct and that conducteven if expressive-falls within the scope of otherwise valid criminal
laws that reflect legitimate state interests in maintaining
comprehensive controls over harmful, constitutionally unprotected
conduct. Although such laws, if too broadly worded, may deter
protected speech to some unknown extent, there comes a point where
that effect-at best a prediction-cannot, with confidence, justify
invalidating a statute on its face and so prohibiting a State from
enforcing the statute against conduct that is admittedly within its
power to proscribe. To put the matter another way, particularly where
conduct and not merely speech is involved, we believe that the
overbreadth of a statute must not only be real, but substantial as well,
judged in relation to the statute's plainly legitimate sweep. It is our
view that s 818 is not substantially overbroad and that whatever
overbreadth may exist should be cured through case-by-case analysis
of the fact situations to which its sanctions, assertedly, may not be
applied.
Unlike ordinary breach-of-the peace statutes or other broad
regulatory acts, s 818 is directed, by its terms, at political expression
which if engaged in by private persons would plainly be protected by
the First and Fourteenth Amendments. But at the same time, s 818 is
not a censorial statute, directed at particular groups or viewpoints. The
statute, rather, seeks to regulate political activity in an even-handed
and neutral manner. As indicted, such statutes have in the past been
subject to a less exacting overbreadth scrutiny. Moreover, the fact
remains that s 818 regulates a substantial spectrum of conduct that is
as manifestly subject to state regulation as the public peace or
criminal trespass. This much was established in United Public Workers
v. Mitchell, and has been unhesitatingly reaffirmed today in Letter
Carriers. Under the decision in Letter Carriers, there is no question that
s 818 is valid at least insofar as it forbids classified employees from:
soliciting contributions for partisan candidates, political parties, or
other partisan political purposes; becoming members of national,
state, or local committees of political parties, or officers or committee

members in partisan political clubs, or candidates for any paid public

office; taking part in the management or affairs of any political party's
partisan political campaign; serving as delegates or alternates to
caucuses or conventions of political parties; addressing or taking an
active part in partisan political rallies or meetings; soliciting votes or
assisting voters at the polls or helping in a partisan effort to get voters
to the polls; participating in the distribution of partisan campaign
literature; initiating or circulating partisan nominating petitions; or
riding in caravans for any political party or partisan political candidate.
x x x It may be that such restrictions are impermissible and that
s 818 may be susceptible of some other improper applications. But, as
presently construed, we do not believe that s 818 must be discarded in
toto because some persons arguably protected conduct may or may
not be caught or chilled by the statute. Section 818 is not substantially
overbroad and it not, therefore, unconstitutional on its face. (italics
supplied)
It bears stressing that, in his Dissenting Opinion, Mr. Justice Nachura does
not deny the principles enunciated in Letter Carriers and Broadrick. He would
hold, nonetheless, that these cases cannot be interpreted to mean a reversal
of Mancuso, since they pertain to different types of laws and were decided based
on a different set of facts, viz.:
In Letter Carriers, the plaintiffs alleged that the Civil Service
Commission was enforcing, or threatening to enforce, the Hatch Acts
prohibition against active participation in political management or
political campaigns. The plaintiffs desired to campaign for candidates
for public office, to encourage and get federal employees to run for
state and local offices, to participate as delegates in party conventions,
and to hold office in a political club.
In Broadrick, the appellants sought the invalidation for being
vague and overbroad a provision in the (sic) Oklahomas Merit System
of Personnel Administration Act restricting the political activities of the
States classified civil servants, in much the same manner as the Hatch
Act proscribed partisan political activities of federal employees. Prior to
the commencement of the action, the appellants actively participated
in the 1970 reelection campaign of their superior, and were
administratively charged for asking other Corporation Commission
employees to do campaign work or to give referrals to persons who
might help in the campaign, for soliciting money for the campaign, and
for receiving and distributing campaign posters in bulk.
Mancuso, on the other hand, involves, as aforesaid, an
automatic resignation provision. Kenneth Mancuso, a full time police
officer and classified civil service employee of the City of Cranston,
filed as a candidate for nomination as representative to the Rhode
Island General Assembly. The Mayor of Cranston then began the

process of enforcing the resign-to-run provision of the City Home Rule

Charter.
Clearly, as the above-cited US cases pertain to different types of
laws and were decided based on a different set of facts, Letter
Carriers and Broadrick cannot be interpreted to mean a reversal
of Mancuso. x x x (italics in the original)
We hold, however, that his position is belied by a plain reading of these
cases.
Contrary
to
his
claim, Letter
Carriers,
Broadrick and Mancuso all concerned the constitutionality of resign-to-run
laws, viz.:
(1) Mancuso involved a civil service employee who filed as a candidate for
nomination as representative to the Rhode Island General Assembly. He
assailed the constitutionality of 14.09(c) of the City Home Rule Charter,
which prohibits continuing in the classified service of the city after
becoming a candidate for nomination or election to any public office.
(2) Letter Carriers involved plaintiffs who alleged that the Civil Service
Commission was enforcing, or threatening to enforce, the Hatch Acts
prohibition against active participation in political management or
political campaigns[63]with respect to certain defined activities in which
they desired to engage. The plaintiffs relevant to this discussion are:
(a) The National Association of Letter Carriers, which alleged
that its members were desirous of, among others, running in
local elections for offices such as school board member, city
council member or mayor;
(b) Plaintiff Gee, who alleged that he desired to, but did not, file
as a candidate for the office of Borough Councilman in his
local community for fear that his participation in a partisan
election would endanger his job; and
(c) Plaintiff Myers, who alleged that he desired to run as a
Republican candidate in the 1971 partisan election for the
mayor of West Lafayette, Indiana, and that he would do so
except for fear of losing his job by reason of violation of the
Hatch Act.
The Hatch Act defines active participation in political management or
political campaigns by cross-referring to the rules made by the Civil
Service Commission. The rule pertinent to our inquiry states:
30. Candidacy for local office: Candidacy for a nomination
or for election to any National, State, county, or municipal
office is not permissible. The prohibition against political
activity extends not merely to formal announcement of
candidacy but also to the preliminaries leading to such
announcement and to canvassing or soliciting support or
doing or permitting to be done any act in furtherance of

candidacy. The fact that candidacy, is merely passive is

immaterial; if an employee acquiesces in the efforts of
friends in furtherance of such candidacy such
acquiescence constitutes an infraction of the prohibitions
against political activity. (italics supplied)
Section 9(b) requires the immediate removal of violators and forbids the
use of appropriated funds thereafter to pay compensation to these
persons.[64]
(3) Broadrick was a class action brought by certain Oklahoma state
employees seeking a declaration of unconstitutionality of two subparagraphs of Section 818 of Oklahomas Merit System of Personnel
Administration Act. Section 818 (7), the paragraph relevant to this
discussion, states that [n]o employee in the classified service shall be
a candidate for nomination or election to any paid public office
Violation of Section 818 results in dismissal from employment, possible
criminal sanctions and limited state employment ineligibility.
Consequently,
it
cannot
be
denied
that Letter
Carriers and Broadrick effectively overruled Mancuso. By no stretch of the
imagination
could Mancuso still
be
held
operative,
as Letter
Carriers and Broadrick (i) concerned virtually identical resign-to-run laws, and (ii)
were decided by a superior court, the United States Supreme Court. It was thus not
surprising for the First Circuit Court of Appeals the same court that
decided Mancuso to hold categorically and emphatically in Magill v.
Lynch[65] thatMancuso is no longer good law. As we priorly explained:
Magill involved Pawtucket, Rhode Island firemen who ran for
city office in 1975. Pawtuckets Little Hatch Act prohibits city
employees from engaging in a broad range of political activities.
Becoming a candidate for any city office is specifically proscribed, [66]the
violation being punished by removal from office or immediate
dismissal. The firemen brought an action against the city officials on
the ground that that the provision of the city charter was
unconstitutional. However, the court, fully cognizant of Letter
Carriers andBroadrick, took the position that Mancuso had
since lost considerable vitality. It observed that the view that
political candidacy was a fundamental interest which could be
infringed upon only if less restrictive alternatives were not
available, was a position which was no longer viable, since the
Supreme Court (finding that the governments interest in
regulating both the conduct and speech of its employees
differed significantly from its interest in regulating those of
the citizenry in general) had given little weight to the
argument that prohibitions against the coercion of government
employees were a less drastic means to the same end,
deferring to the judgment of Congress, and applying a
balancing test to determine whether limits on political
activity by public employees substantially served government

interests which were important enough to outweigh the

employees First Amendment rights.[67]
It must be noted that the Court of Appeals ruled in this manner
even though the election in Magill was characterized asnonpartisan,
as it was reasonable for the city to fear, under the circumstances of
that case, that politically active bureaucrats might use their official
power to help political friends and hurt political foes. Ruled the court:
The question before us is whether Pawtucket's
charter provision, which bars a city employee's candidacy
in even a nonpartisan city election, is constitutional. The
issue compels us to extrapolate two recent Supreme
Court decisions, Civil Service Comm'n v. Nat'l Ass'n of
Letter Carriers and Broadrick v. Oklahoma. Both dealt with
laws barring civil servants from partisan political
activity. Letter Carriers reaffirmed United Public Workers
v. Mitchell, upholding the constitutionality of the Hatch Act
as to federal employees. Broadrick sustained Oklahoma's
Little Hatch Act against constitutional attack, limiting its
holding to Oklahoma's construction that the Act barred
only activity in partisan politics. In Mancuso v. Taft, we
assumed that proscriptions of candidacy in nonpartisan
elections would not be constitutional. Letter Carriers and
Broadrick compel new analysis.
xxxx
What we are obligated to do in this case, as the
district court recognized, is to apply the Courts interest
balancing approach to the kind of nonpartisan
election revealed in this record. We believe that the
district court found more residual vigor in our opinion in
Mancuso v. Taft than remains after Letter Carriers. We
have particular reference to our view that political
candidacy was a fundamental interest which could be
trenched upon only if less restrictive alternatives were not
available. While this approach may still be viable for
citizens who are not government employees, the Court in
Letter Carriers recognized that the government's interest
in regulating both the conduct and speech of its
employees differs significantly from its interest in
regulating those of the citizenry in general. Not only was
United Public Workers v. Mitchell "unhesitatingly"
reaffirmed, but the Court gave little weight to the
argument that prohibitions against the coercion of
government employees were a less drastic means to the
same end, deferring to the judgment of the Congress. We
cannot be more precise than the Third Circuit in
characterizing the Court's approach as "some sort of

'balancing' process".[68] It appears that the government

may place limits on campaigning by public employees if
the limits substantially serve government interests that
are "important" enough to outweigh the employees' First
Amendment rights. x x x (italics supplied)
Upholding thus the constitutionality of the law in question,
the Magill court detailed the major governmental interests discussed
inLetter Carriers and applied them to the Pawtucket provision as
follows:
In Letter Carriers[,] the first interest identified by
the Court was that of an efficient government, faithful to
the Congress rather than to party. The district court
discounted this interest, reasoning that candidates in a
local election would not likely be committed to a state or
national platform. This observation undoubtedly has
substance insofar as allegiance to broad policy positions is
concerned. But a different kind of possible political
intrusion into efficient administration could be thought to
threaten municipal government: not into broad policy
decisions, but into the particulars of administration
favoritism in minute decisions affecting welfare, tax
assessments, municipal contracts and purchasing, hiring,
zoning, licensing, and inspections. Just as the Court
in Letter Carriers identified a second governmental
interest in the avoidance of the appearance of "political
justice" as to policy, so there is an equivalent interest in
avoiding the appearance of political preferment in
privileges, concessions, and benefits. The appearance (or
reality) of favoritism that the charter's authors evidently
feared is not exorcised by the nonpartisan character of
the formal election process. Where, as here, party support
is a key to successful campaigning, and party rivalry is
the norm, the city might reasonably fear that politically
active bureaucrats would use their official power to help
political friends and hurt political foes. This is not to say
that the city's interest in visibly fair and effective
administration necessarily justifies a blanket prohibition of
all employee campaigning; if parties are not heavily
involved in a campaign, the danger of favoritism is less,
for neither friend nor foe is as easily identified.
A second major governmental interest identified
in Letter Carriers was avoiding the danger of a powerful
political machine. The Court had in mind the large and
growing federal bureaucracy and its partisan potential.
The district court felt this was only a minor threat since
parties had no control over nominations. But in fact
candidates sought party endorsements, and party

endorsements proved to be highly effective both in

determining who would emerge from the primary election
and who would be elected in the final election. Under the
prevailing customs, known party affiliation and support
were highly significant factors in Pawtucket elections. The
charter's authors might reasonably have feared that a
politically active public work force would give the
incumbent party, and the incumbent workers, an
unbreakable grasp on the reins of power. In municipal
elections especially, the small size of the electorate and
the limited powers of local government may inhibit the
growth of interest groups powerful enough to outbalance
the weight of a partisan work force. Even when
nonpartisan issues and candidacies are at stake, isolated
government employees may seek to influence voters or
their co-workers improperly; but a more real danger is
that a central party structure will mass the scattered
powers of government workers behind a single party
platform or slate. Occasional misuse of the public trust to
pursue private political ends is tolerable, especially
because the political views of individual employees may
balance each other out. But party discipline eliminates
this diversity and tends to make abuse systematic.
Instead of a handful of employees pressured into
advancing their immediate superior's political ambitions,
the entire government work force may be expected to
turn out for many candidates in every election.
In Pawtucket, where parties are a continuing presence in
political campaigns, a carefully orchestrated use of city
employees in support of the incumbent party's candidates
is possible. The danger is scarcely lessened by the
openness of Pawtucket's nominating procedure or the lack
of party labels on its ballots.
The third area of proper governmental interest
in Letter Carriers was ensuring that employees achieve
advancement on their merits and that they be free from
both coercion and the prospect of favor from political
activity. The district court did not address this factor, but
looked only to the possibility of a civil servant using his
position to influence voters, and held this to be no more of
a threat than in the most nonpartisan of elections. But we
think that the possibility of coercion of employees by
superiors remains as strong a factor in municipal elections
as it was in Letter Carriers. Once again, it is the
systematic and coordinated exploitation of public servants
for political ends that a legislature is most likely to see as
the primary threat of employees' rights. Political
oppression of public employees will be rare in an entirely
nonpartisan system. Some superiors may be inclined to

ride herd on the politics of their employees even in a

nonpartisan context, but without party officials looking
over their shoulders most supervisors will prefer to let
employees go their own ways.
In short, the government may constitutionally
restrict its employees' participation in nominally
nonpartisan elections if political parties play a large role in
the campaigns. In the absence of substantial party
involvement, on the other hand, the interests identified by
the Letter Carriers Court lose much of their force. While
the employees' First Amendment rights would normally
outbalance these diminished interests, we do not suggest
that they would always do so. Even when parties are
absent, many employee campaigns might be thought to
endanger at least one strong public interest, an interest
that looms larger in the context of municipal elections
than it does in the national elections considered in Letter
Carriers. The city could reasonably fear the prospect of a
subordinate running directly against his superior or
running for a position that confers great power over his
superior. An employee of a federal agency who seeks a
Congressional seat poses less of a direct challenge to the
command and discipline of his agency than a fireman or
policeman who runs for mayor or city council. The
possibilities of internal discussion, cliques, and political
bargaining, should an employee gather substantial
political support, are considerable. (citations omitted)
The court, however, remanded the case to the district court for
further proceedings in respect of the petitioners overbreadth charge.
Noting that invalidating a statute for being overbroad is not to be
taken lightly, much less to be taken in the dark, the court held:
The governing case is Broadrick, which introduced
the doctrine of "substantial" overbreadth in a closely
analogous case. Under Broadrick, when one who
challenges a law has engaged in constitutionally
unprotected conduct (rather than unprotected speech)
and when the challenged law is aimed at unprotected
conduct, "the overbreadth of a statute must not only be
real, but substantial as well, judged in relation to the
statute's
plainly
legitimate
sweep."
Two
major
uncertainties attend the doctrine: how to distinguish
speech from conduct, and how to define "substantial"
overbreadth.
We
are
spared
the
first
inquiry
by Broadrick itself. The plaintiffs in that case had solicited
support for a candidate, and they were subject to
discipline under a law proscribing a wide range of
activities, including soliciting contributions for political

candidates and becoming a candidate. The Court found

that this combination required a substantial overbreadth
approach. The facts of this case are so similar that we
may reach the same result without worrying unduly about
the sometimes opaque distinction between speech and
conduct.
The second difficulty is not so easily disposed
of. Broadrick found no substantial overbreadth in a statute
restricting partisan campaigning. Pawtucket has gone
further, banning participation in nonpartisan campaigns
as well. Measuring the substantiality of a statute's
overbreadth apparently requires, inter alia, a rough
balancing of the number of valid applications compared
to the number of potentially invalid applications. Some
sensitivity to reality is needed; an invalid application that
is far-fetched does not deserve as much weight as one
that is probable. The question is a matter of degree; it will
never be possible to say that a ratio of one invalid to nine
valid applications makes a law substantially overbroad.
Still, an overbreadth challenger has a duty to provide the
court with some idea of the number of potentially invalid
applications the statute permits. Often, simply reading the
statute in the light of common experience or litigated
cases will suggest a number of probable invalid
applications. But this case is different. Whether the
statute is overbroad depends in large part on the number
of elections that are insulated from party rivalry yet
closed to Pawtucket employees. For all the record shows,
every one of the city, state, or federal elections
in Pawtucket is actively contested by political parties.
Certainly the record suggests that parties play a major
role even in campaigns that often are entirely nonpartisan
in other cities. School committee candidates, for example,
are endorsed by the local Democratic committee.
The state of the record does not permit us to find
overbreadth; indeed such a step is not to be taken lightly,
much less to be taken in the dark. On the other hand, the
entire focus below, in the short period before the election
was held, was on the constitutionality of the statute as
applied. Plaintiffs may very well feel that further efforts
are not justified, but they should be afforded the
opportunity to demonstrate that the charter forecloses
access to a significant number of offices, the candidacy
for which by municipal employees would not pose the
possible threats to government efficiency and integrity
which Letter Carriers, as we have interpreted it, deems
significant. Accordingly, we remand for consideration of

plaintiffs' overbreadth claim. (italics supplied, citations

omitted)
Clearly, Letter
Carriers,
Broadrick, and Magill demonstrate beyond doubt that Mancuso
v. Taft, heavily relied upon by theponencia, has effectively
been
overruled.[69] As
it
is
no
longer
good
law,
the ponencias exhortation that [since] the Americans, from whom we
copied the provision in question, had already stricken down a similar
measure for being unconstitutional[,] it is high-time that we, too,
should follow suit is misplaced and unwarranted. [70]
Accordingly, our assailed Decisions submission that the right to run for public
office is inextricably linked with two fundamental freedoms those of expression
and association lies on barren ground. American case law has in fact never
recognized a fundamental right to express ones political views through
candidacy,[71] as to invoke a rigorous standard of review. [72] Bart v.
Telford[73] pointedly stated that [t]he First Amendment does not in terms confer a
right to run for public office, and this court has held that it does not do so by
implication either. Thus, ones interest in seeking office, by itself, is notentitled to
constitutional protection.[74] Moreover, one cannot bring ones action under the
rubric of freedom of association, absent any allegation that, by running for an
elective position, one is advancing the political ideas of a particular set of voters. [75]
Prescinding from these premises, it is crystal clear that the provisions
challenged in the case at bar, are not violative of the equal protection clause. The
deemed-resigned provisions substantially serve governmental interests (i.e., (i)
efficient civil service faithful to the government and the people rather than to party;
(ii) avoidance of the appearance of political justice as to policy; (iii) avoidance of
the danger of a powerful political machine; and (iv) ensuring that employees
achieve advancement on their merits and that they be free from both coercion and
the prospect of favor from political activity). These are interests that are important
enough to outweigh the non-fundamental right of appointive officials and
employees to seek elective office.
En passant, we find it quite ironic that Mr. Justice Nachura cites Clements v.
Fashing[76] and Morial, et al. v. Judiciary Commission of the State
of Louisiana, et al.[77] to buttress his dissent. Maintaining that resign-to-run
provisions are valid only when made applicable to specified officials, he explains:
U.S. courts, in subsequent cases, sustained the constitutionality of
resign-to-run provisions when applied to specified or particular
officials, as distinguished from all others,[78] under a
classification that is germane to the purposes of the law. These
resign-to-run legislations were not expressed in a general and
sweeping provision, and thus did not violate the test of being
germane to the purpose of the law, the second requisite for a valid
classification. Directed, as they were, to particular officials, they were
not overly encompassing as to be overbroad. (emphasis in the original)

This reading is a regrettable misrepresentation of Clements and Morial. The

resign-to-run provisions in these cases were upheld not because they referred to
specified or particular officials (vis--vis a general class); the questioned provisions
were found valid precisely because the Court deferred to legislative
judgment and found that a regulation is not devoid of a rational predicate
simply because it happens to be incomplete. In fact, the equal protection
challenge in Clements revolved around the claim that the State of Texas failed to
explain why some public officials are subject to the resign-to-run provisions, while
others are not. Ruled the United States Supreme Court:
Article XVI, 65, of the Texas Constitution provides that the
holders of certain offices automatically resign their positions if they
become candidates for any other elected office, unless the unexpired
portion of the current term is one year or less. The burdens that 65
imposes on candidacy are even less substantial than those imposed by
19. The two provisions, of course, serve essentially the same state
interests. The District Court found 65 deficient, however, not because
of the nature or extent of the provision's restriction on candidacy, but
because of the manner in which the offices are classified. According to
the District Court, the classification system cannot survive equal
protection scrutiny, because Texas has failed to explain sufficiently
why some elected public officials are subject to 65 and why others
are not. As with the case of 19, we conclude that 65 survives a
challenge under the Equal Protection Clause unless appellees can
show that there is no rational predicate to the classification scheme.
The history behind 65 shows that it may be upheld consistent
with the "one step at a time" approach that this Court has undertaken
with regard to state regulation not subject to more vigorous scrutiny
than that sanctioned by the traditional principles. Section 65 was
enacted in 1954 as a transitional provision applying only to the 1954
election. Section 65 extended the terms of those offices enumerated in
the provision from two to four years. The provision also staggered the
terms of other offices so that at least some county and local offices
would be contested at each election. The automatic resignation proviso
to 65 was not added until 1958. In that year, a similar automatic
resignation provision was added in Art. XI, 11, which applies to
officeholders in home rule cities who serve terms longer than two
years. Section 11 allows home rule cities the option of extending the
terms of municipal offices from two to up to four years.
Thus, the automatic resignation provision in Texas is a creature
of the State's electoral reforms of 1958. That the State did not go
further in applying the automatic resignation provision to those
officeholders whose terms were not extended by 11 or 65, absent
an invidious purpose, is not the sort of malfunctioning of the State's
lawmaking process forbidden by the Equal Protection Clause. A
regulation is not devoid of a rational predicate simply because it
happens to be incomplete. The Equal Protection Clause does not
forbidTexas to restrict one elected officeholder's candidacy for another

elected office unless and until it places similar restrictions on other

officeholders. The provision's language and its history belie any notion
that 65 serves the invidious purpose of denying access to the political
process to identifiable classes of potential candidates. (citations
omitted and italics supplied)
Furthermore, it is unfortunate that the dissenters took the Morial line that
there is no blanket approval of restrictions on the right of public employees to
become candidates for public office out of context. A correct reading of that line
readily shows that the Court only meant to confine its ruling to the facts of that
case, as each equal protection challenge would necessarily have to involve
weighing governmental interests vis--vis the specific prohibition assailed. The
Court held:
The interests of public employees in free expression and political
association are unquestionably entitled to the protection of the first
and fourteenth amendments. Nothing in today's decision should be
taken to imply that public employees may be prohibited from
expressing their private views on controversial topics in a manner that
does not interfere with the proper performance of their public duties. In
today's decision, there is no blanket approval of restrictions on the
right of public employees to become candidates for public office. Nor
do we approve any general restrictions on the political and civil rights
of judges in particular. Our holding is necessarily narrowed by the
methodology employed to reach it. A requirement that a state judge
resign his office prior to becoming a candidate for non-judicial office
bears a reasonably necessary relation to the achievement of the
state's interest in preventing the actuality or appearance of judicial
impropriety. Such a requirement offends neither the first amendment's
guarantees of free expression and association nor the fourteenth
amendment's guarantee of equal protection of the laws. (italics
supplied)
Indeed, the Morial court even quoted Broadrick and stated that:
In any event, the legislature must have some leeway in determining
which of its employment positions require restrictions on partisan
political activities and which may be left unregulated. And a State can
hardly be faulted for attempting to limit the positions upon which such
restrictions are placed. (citations omitted)
V.
Section 4(a) of Resolution 8678, Section 13 of RA 9369,
and Section 66 of the Omnibus Election Code
Do Not Suffer from Overbreadth
Apart from nullifying Section 4(a) of Resolution 8678, Section 13 of RA 9369,
and Section 66 of the Omnibus Election Code on equal protection ground, our
assailed Decision struck them down for being overbroad in two respects, viz.:

(1) The assailed provisions limit the candidacy of all civil servants holding
appointive posts without due regard for the type of position being held by
the employee seeking an elective post and the degree of influence that
may be attendant thereto;[79] and
(2) The assailed provisions limit the candidacy of any and all civil servants
holding appointive positions without due regard for the type of office
being sought, whether it be partisan or nonpartisan in character, or in the
national, municipal orbarangay level.
Again, on second look, we have to revise our assailed Decision.
i.
Limitation on Candidacy Regardless of
Incumbent Appointive Officials Position, Valid
According to the assailed Decision, the challenged provisions of law are
overly broad because they apply indiscriminately to all civil servants holding
appointive posts, without due regard for the type of position being held by the
employee running for elective office and the degree of influence that may be
attendant thereto.
Its underlying assumption appears to be that the evils sought to be prevented
are extant only when the incumbent appointive official running for elective office
holds an influential post.
Such a myopic view obviously fails to consider a different, yet equally
plausible, threat to the government posed by the partisan potential of a large and
growing bureaucracy: the danger of systematic abuse perpetuated by a powerful
political machine that has amassed the scattered powers of government workers
so as to give itself and its incumbent workers an unbreakable grasp on the reins of
power.[80] As elucidated in our prior exposition:[81]
Attempts by government employees to wield influence over
others or to make use of their respective positions (apparently) to
promote their own candidacy may seem tolerable even innocuous
particularly when viewed in isolation from other similar attempts by
other government employees. Yet it would be decidedly foolhardy to
discount the equally (if not more) realistic and dangerous possibility
that such seemingly disjointed attempts, when taken together,
constitute a veiled effort on the part of an emerging central party
structure to advance its own agenda through a carefully orchestrated
use of [appointive and/or elective] officials coming from various levels
of the bureaucracy.
[T]he avoidance of such a politically active public work force
which could give an emerging political machine an unbreakable grasp
on the reins of power is reason enough to impose a restriction on the
candidacies of all appointive public officials without further distinction

as to the type of positions being held by such employees or the degree

of influence that may be attendant thereto. (citations omitted)
ii.
Limitation on Candidacy
Regardless of Type of Office Sought, Valid
The assailed Decision also held that the challenged provisions of law are
overly broad because they are made to apply indiscriminately to all civil servants
holding appointive offices, without due regard for the type of elective office being
sought, whether it be partisan or nonpartisan in character, or in the national,
municipal or barangay level.
This erroneous ruling is premised on the assumption that the concerns of a
truly partisan office and the temptations it fosters are sufficiently different from
those involved in an office removed from regular party politics [so as] to warrant
distinctive treatment,[82] so that restrictions on candidacy akin to those imposed by
the challenged provisions can validly apply only to situations in which the elective
office sought is partisan in character. To the extent, therefore, that such restrictions
are said to preclude even candidacies for nonpartisan elective offices, the
challenged restrictions are to be considered as overbroad.
Again, a careful study of the challenged provisions and related laws on the
matter will show that the alleged overbreadth is more apparent than real. Our
exposition on this issue has not been repudiated, viz.:
A perusal of Resolution 8678 will immediately disclose that the
rules and guidelines set forth therein refer to the filing of certificates of
candidacy and nomination of official candidates of registered political
parties, in connection with the May 10, 2010 National and
Local Elections.[83] Obviously, these rules and guidelines, including
the restriction in Section 4(a) of Resolution 8678, were issued
specifically for purposes of the May 10, 2010 National and Local
Elections, which, it must be noted, are decidedly partisan in character.
Thus, it is clear that the restriction in Section 4(a) of RA 8678 applies
only to the candidacies of appointive officials vying forpartisan elective
posts in the May 10, 2010 National and Local Elections. On this score,
the overbreadth challenge leveled against Section 4(a) is clearly
unsustainable.
Similarly, a considered review of Section 13 of RA 9369 and
Section 66 of the Omnibus Election Code, in conjunction with other
related laws on the matter, will confirm that these provisions are
likewise not intended to apply to elections for nonpartisan public
offices.
The only elections which are relevant to the present inquiry are
the elections for barangay offices, since these are the only elections in
this country which involve nonpartisan public offices.[84]

In this regard, it is well to note that from as far back as the

enactment of the Omnibus Election Code in 1985, Congress has
intended that these nonpartisan barangay elections be governed by
special rules, including a separate rule on deemed resignations which
is found in Section 39 of the Omnibus Election Code. Said provision
states:
Section 39. Certificate of Candidacy. No person shall be
elected punong barangay or kagawad ng sangguniang
barangayunless he files a sworn certificate of candidacy in
triplicate on any day from the commencement of the
election period but not later than the day before the
beginning of the campaign period in a form to be
prescribed by the Commission. The candidate shall state
the barangay office for which he is a candidate.
xxxx
Any elective or appointive municipal, city, provincial or
national official or employee, or those in the civil or
military service, including those in government-owned orcontrolled corporations, shall be considered automatically
resigned upon the filing of certificate of candidacy for a
barangay office.
Since barangay elections are governed by a separate deemed
resignation rule, under the present state of law, there would be no
occasion to apply the restriction on candidacy found in Section 66 of
the Omnibus Election Code, and later reiterated in the proviso of
Section 13 of RA 9369, to any election other than a partisan one. For
this reason, the overbreadth challenge raised against Section 66 of the
Omnibus Election Code and the pertinent proviso in Section 13 of RA
9369 must also fail. [85]
In any event, even if we were to assume, for the sake of argument, that
Section 66 of the Omnibus Election Code and the corresponding provision in Section
13 of RA 9369 are general rules that apply also to elections for nonpartisan public
offices, the overbreadth challenge would still be futile. Again, we explained:
In the first place, the view that Congress is limited to controlling
only partisan behavior has not received judicial imprimatur, because
the general proposition of the relevant US cases on the matter is
simply that the government has an interest in regulating the conduct
and speech of its employees that differs significantly from those it
possesses in connection with regulation of the speech of the citizenry
in general.[86]
Moreover, in order to have a statute declared as unconstitutional
or void on its face for being overly broad, particularly where, as in this
case, conduct and not pure speech is involved, the overbreadth

must not only be real, but substantial as well, judged in relation to the
statutes plainly legitimate sweep.[87]
In operational terms, measuring the substantiality of a statutes
overbreadth would entail, among other things, a rough balancing of the
number of valid applications compared to the number of potentially
invalid applications.[88] In this regard, some sensitivity to reality is
needed; an invalid application that is far-fetched does not deserve as
much weight as one that is probable. [89] The question is a matter of
degree.[90] Thus, assuming for the sake of argument that the partisannonpartisan distinction is valid and necessary such that a statute which
fails to make this distinction is susceptible to an overbreadth attack,
the overbreadth challenge presently mounted must demonstrate or
provide this Court with some idea of the number of potentially invalid
elections (i.e. the number of elections that were insulated from party
rivalry but were nevertheless closed to appointive employees) that
may in all probability result from the enforcement of the statute. [91]
The state of the record, however, does not permit us to find
overbreadth. Borrowing from the words of Magill v. Lynch, indeed, such
a step is not to be taken lightly, much less to be taken in the dark,
[92]
especially since an overbreadth finding in this case would
effectively prohibit the State from enforcing an otherwise valid
measure against conduct that is admittedly within its power to
proscribe.[93]
This Court would do well to proceed with tiptoe caution, particularly when it
comes to the application of the overbreadth doctrine in the analysis of statutes that
purportedly attempt to restrict or burden the exercise of the right to freedom of
speech, for such approach is manifestly strong medicine that must be used
sparingly, and only as a last resort. [94]
In the United States, claims of facial overbreadth have been entertained only
where, in the judgment of the court, the possibility that protected speech of others
may be muted and perceived grievances left to fester (due to the possible inhibitory
effects of overly broad statutes) outweighs the possible harm to society in allowing
some unprotected speech or conduct to go unpunished. [95] Facial overbreadth has
likewise not been invoked where a limiting construction could be placed on the
challenged statute, and where there are readily apparent constructions that would
cure, or at least substantially reduce, the alleged overbreadth of the statute. [96]
In the case at bar, the probable harm to society in permitting incumbent
appointive officials to remain in office, even as they actively pursue elective posts,
far outweighs the less likely evil of having arguably protected candidacies blocked
by the possible inhibitory effect of a potentially overly broad statute.
In this light, the conceivably impermissible applications of the challenged
statutes which are, at best, bold predictions cannot justify invalidating these
statutes in toto and prohibiting the State from enforcing them against conduct that

is, and has for more than 100 years been, unquestionably within its power and
interest to proscribe.[97] Instead, the more prudent approach would be to deal with
these conceivably impermissible applications through case-by-case adjudication
rather than through a total invalidation of the statute itself. [98]
Indeed, the anomalies spawned by our assailed Decision have taken place. In
his Motion for Reconsideration, intervenor Drilon stated that a number of highranking Cabinet members had already filed their Certificates of Candidacy without
relinquishing their posts.[99] Several COMELEC election officers had likewise filed
their Certificates of Candidacy in their respective provinces. [100] Even the Secretary
of Justice had filed her certificate of substitution for representative of the first
district of Quezon province last December 14, 2009 [101] even as her position as
Justice Secretary includes supervision over the City and Provincial Prosecutors,
[102]
who, in turn, act as Vice-Chairmen of the respective Boards of Canvassers.
[103]
The Judiciary has not been spared, for a Regional Trial Court Judge in the South
has thrown his hat into the political arena. We cannot allow the tilting of our
electoral playing field in their favor.
For the foregoing reasons, we now rule that Section 4(a) of Resolution 8678
and Section 13 of RA 9369, which merely reiterate Section 66 of the Omnibus
Election Code, are not unconstitutionally overbroad.
IN VIEW WHEREOF, the Court RESOLVES to GRANT the respondents and
the intervenors Motions for Reconsideration; REVERSE and SET ASIDE this Courts
December 1, 2009 Decision; DISMISS the Petition; and ISSUE this Resolution
declaring as not UNCONSTITUTIONAL (1) Section 4(a) of COMELEC Resolution No.
8678, (2) the second proviso in the third paragraph of Section 13 of Republic Act No.
9369, and (3) Section 66 of the Omnibus Election Code.
SO ORDERED.

REYNATO S. PUNO
Chief Justice

Sec. 3. Pleadings-in-intervention

Sec. 4. Answer to complaint-in-intervention

Lim v. Napocor, G.R. No. 178789, November 14, 2012
G.R. No. 178789

November 14, 2012

NATIVIDAD
LIM, Petitioner,
vs.
NATIONAL POWER CORPORATION, SPOUSES ROBERTO LL. ARCINUE and
ARABELA ARCINUE,Respondents.
DECISION
ABAD, J.:
This case is about the consequence of a party's failure to explain in his motion why
he served a copy of it on the adverse party by registered mail rather than by
personal service.
The Facts and the Case
On February 8, 1995 respondent National Power Corporation (NPC) filed an
expropriation suit1 against petitioner Natividad B. Lim (Lim) before the Regional Trial
Court (RTC) of Lingayen, Pangasinan, Branch 37 in Civil Case 17352 covering Lots
2373 and 2374 that the NPC needed for its Sual Coal-Fired Thermal Power Project.
Since Lim was residing in the United States, the court caused the service of
summons on her on February 20, 1995 through her tenant, a certain Wilfredo
Tabongbong.2 On March 1, 1995, upon notice to Lim and the deposit of the
provisional value of the property, the RTC ordered the issued writ of possession in
NPCs favor that would enable it to cause the removal of Lim from the land. 3
On April 24, 1995, however, Lim, represented by her husband Delfin, filed an
omnibus motion to dismiss the action and to suspend the writ of
possession,4 questioning the RTCs jurisdiction over Lims person and the nature of
the action. She also assailed the failure of the complaint to state a cause of action.
The RTC denied the motions.5
On December 6, 1996 respondent spouses Roberto and Arabela Arcinue (the
Arcinues) filed a motion for leave to admit complaint in intervention, 6 alleging that
they owned and were in possession of Lot 2374, one of the two lots subject of the
expropriation. On January 7, 1997 the RTC granted the Arcinues motion and
required both the NPC and Lim to answer the complaint-in-intervention within 10
days from receipt of its order.7
When Lim and the NPC still did not file their answers to the complaint-inintervention after 10 months, on December 7, 1998 the Arcinues filed a motion for
judgment by default.8 Lim sought to expunge the motion on the ground that it
lacked the requisite explanation why the Arcinues resorted to service by registered
mail rather than to personal service. At the scheduled hearing of the motion, Lims
counsel did not appear. The NPC for its part manifested that it did not file an answer
since its interest lay in determining who was entitled to just compensation.
On March 1, 1999 the RTC issued an order of default9 against both Lim and the NPC.
The RTC pointed out that the Arcinues failure to explain their resort to service by
registered mail had already been cured by the manifestation of Lims counsel that

he received a copy of the Arcinues motion on December 7, 1998 or 10 days before

its scheduled hearing. Lim filed a motion for reconsideration 10 to lift the default
order but the Court denied the motion, 11 prompting Lim to file a petition for
certiorari12 before the Court of Appeals (CA) in CA-G.R. SP 52842.
On March 23, 2007 the CA rendered a decision 13 that affirmed the RTCs order of
default. Lim filed a motion for reconsideration 14 but the CA denied it, 15 prompting
her to file the present petition for review. 16 On September 24, 2007 the Court
initially denied Lims petition17 but on motion for reconsideration, the Court
reinstated the same.18
Issue Presented
The only issue presented in this case is whether or not the CA gravely abused its
discretion in affirming the order of default that the RTC entered against Lim.
Ruling of the Court
Lim points out that an answer-in-intervention cannot give rise to default since the
filing of such an answer is only permissive. But Section 4, Rule 19 19 of the 1997
Rules of Civil Procedure requires the original parties to file an answer to the
complaint-in-intervention within 15 days from notice of the order admitting the
same, unless a different period is fixed by the court. This changes the procedure
under the former rule where such an answer was regarded as optional. 20 Thus, Lims
failure to file the required answer can give rise to default.
The trial court had been liberal with Lim. It considered her motion for
reconsideration as a motion to lift the order of default and gave her an opportunity
to explain her side. The court set her motion for hearing but Lims counsel did not
show up in court. She remained unable to show that her failure to file the required
answer was due to fraud, accident, mistake, or excusable negligence. And, although
she claimed that she had a meritorious defense, she was unable to specify what
constituted such defense.21
Lim points out that the RTC should have ordered the Arcinues motion for judgment
by default expunged from the records since it lacked the requisite explanation as to
why they resorted to service by registered mail in place of personal service.
There is no question that the Arcinues motion failed to comply with the requirement
of Section 11, Rule 13 of the 1997 Rules of Civil Procedure which provides:
SECTION 11. Priorities in modes of service and filing. Whenever practicable, the
service and filing of pleadings and other papers shall be done personally. Except
with respect to papers emanating from the court, a resort to other modes must be
accompanied by a written explanation, why the service or filing was not done
personally. A violation of this Rule may be cause to consider the paper as not filed.
But the above does not provide for automatic sanction should a party fail to submit
the required explanation. It merely provides for that possibility considering its use of

the term "may." The question is whether or not the RTC gravely abused its discretion
in not going for the sanction of striking out the erring motion.1wphi1
The Court finds no such grave abuse of discretion here. As the RTC pointed out,
notwithstanding that the Arcinues' failed to explain their resort to service by
registered mail rather than by personal service, the fact is that Lim's counsel
expressly admitted having received a copy of the Arcinues' motion for judgment by
default on December 7, 1998 or I 0 days before its scheduled hearing. This means
that the Arcinues were diligent enough to file their motion by registered mail long
before the scheduled hearing.
Personal service is required precisely because it often happens that hearings do not
push through because, while a copy of the motion may have been served by
registered mail before the date of the hearing, such is received by the adverse party
already after the hearing. Thus, the rules prefer personal service. But it does not
altogether prohibit service by registered mail when such service, when adopted,
ensures as in this case receipt by the adverse party.
WHEREFORE, the Court DENIES the petition and AFFIRMS the Court of Appeals
Decision in CA-G.R. SP 52842 dated March 23, 2007 and Resolution dated July 5,
2007 that upheld the orders of the Regional Trial Court in Civil Case 17352. The
Court DIRECTS the RTC to proceed with its hearing and adjudication of the case.
SO ORDERED.
REOBERTO A. ABAD
Associate Justice

RULE 20- CALENDAR OF CASES

Sec. 1. Calendar of cases
Sec. 2.Assignment of cases

RULE 21- SUBPOENA

Sec. 1.Subpoena and subpoena ducestecum
Sec. 2.By whom issued
Sec. 3.Form and contents

Sec. 4.Quashing of subpoena

Lee v. Court of Appeals, G.R. No. 177861, July 13, 2010

SECOND DIVISION
IN RE: PETITION FOR CANCELLATION G.R. No. 177861
AND CORRECTION OF ENTRIES IN THE
RECORD OF BIRTH,
EMMA K. LEE,
Petitioner,
- versus -

COURT OF APPEALS, RITA K. LEE,

LEONCIO K. LEE, LUCIA K. LEE-ONG,
JULIAN K. LEE, MARTIN K. LEE,
ROSA LEE-VANDERLEK, MELODY
LEE-CHIN, HENRY K. LEE, NATIVIDAD
LEE-MIGUEL, VICTORIANO K. LEE,
and THOMAS K. LEE, represented by
RITA K. LEE, as Attorney-in-Fact,
Respondents.

Present:
CARPIO, J., Chairperson,
ABAD,
VILLARAMA, JR.,*
PEREZ,** and
MENDOZA, JJ.

Promulgated:
July 13, 2010

x --------------------------------------------------------------------------------------- x
ABAD, J.:
This case is about the grounds for quashing a subpoena ad testificandum and
a parents right not to testify in a case against his children.
The Facts and the Case
Spouses Lee Tek Sheng (Lee) and Keh Shiok Cheng (Keh) entered
the Philippines in the 1930s as immigrants from China. They had 11 children, namely,
Rita K. Lee, Leoncio K. Lee, Lucia K. Lee-Ong, Julian K. Lee, Martin K. Lee, Rosa LeeVanderlek, Melody Lee-Chin, Henry K. Lee, Natividad Lee-Miguel, Victoriano K. Lee, and
Thomas K. Lee (collectively, the Lee-Keh children).

In 1948, Lee brought from China a young woman named Tiu Chuan (Tiu),
supposedly to serve as housemaid. The respondent Lee-Keh children believe that
Tiu left the Lee-Keh household, moved into another property of Lee nearby, and had
a relation with him.
Shortly after Keh died in 1989, the Lee-Keh children learned that Tius
children with Lee (collectively, the Lees other children) claimed that they, too, were
children of Lee and Keh. This prompted the Lee-Keh children to request the National
Bureau of Investigation (NBI) to investigate the matter. After conducting such an
investigation, the NBI concluded in its report:
[I]t is very obvious that the mother of these 8 children is
certainly not KEH SHIOK CHENG, but a much younger woman,
most probably TIU CHUAN. Upon further evaluation and
analysis by these Agents, LEE TEK SHENG is in a quandary in
fixing the age of KEH SHIOK CHENG possibly to conform with
his grand design of making his 8 children as their own
legitimate children, consequently elevating the status of his
second family and secure their future. The doctor lamented
that this complaint would not have been necessary had not the
father and his second family kept on insisting that the 8
children are the legitimate children of KEH SHIOK CHENG. [1]
The NBI found, for example, that in the hospital records, the eldest of the
Lees other children, Marcelo Lee (who was recorded as the 12th child of Lee and
Keh), was born of a 17-year-old mother, when Keh was already 38 years old at the
time. Another of the Lees other children, Mariano Lee, was born of a 23-year-old
mother, when Keh was then already 40 years old, and so forth. In other words, by
the hospital records of the Lees other children, Kehs declared age did not coincide
with her actualage when she supposedly gave birth to such other children,
numbering eight.
On the basis of this report, the respondent Lee-Keh children filed two
separate petitions, one of them before the Regional Trial Court (RTC) of Caloocan
City[2] in Special Proceeding C-1674 for the deletion from the certificate of live birth
of the petitioner Emma Lee, one of Lees other children, the name Keh and replace
the same with the name Tiu to indicate her true mothers name.
In April 2005 the Lee-Keh children filed with the RTC an ex parte request for
the issuance of a subpoena ad testificandum to compel Tiu, Emma Lees presumed
mother, to testify in the case. The RTC granted the motion but Tiu moved to quash
the subpoena, claiming that it was oppressive and violated Section 25, Rule 130 of
the Rules of Court, the rule on parental privilege, she being Emma Lees
stepmother.[3] On August 5, 2005 the RTC quashed the subpoena it issued for being
unreasonable and oppressive considering that Tiu was already very old and that the
obvious object of the subpoena was to badger her into admitting that she was
Emma Lees mother.
Because the RTC denied the Lee-Keh childrens motion for reconsideration,
they filed a special civil action of certioraribefore the Court of Appeals (CA) in CA-

G.R. SP 92555. On December 29, 2006 the CA rendered a decision, [4] setting aside
the RTCs August 5, 2005 Order. The CA ruled that only a subpoena duces tecum,
not a subpoena ad testificandum, may be quashed for being oppressive or
unreasonable under Section 4, Rule 21 of the Rules of Civil Procedure. The CA also
held that Tius advanced age alone does not render her incapable of testifying. The
party seeking to quash the subpoena for that reason must prove that she would be
unable to withstand the rigors of trial, something that petitioner Emma Lee failed to
do.
Since the CA denied Emma Lees motion for reconsideration by resolution of
May 8, 2007,[5] she filed the present petition with this Court.
The Question Presented
The only question presented in this case is whether or not the CA erred in
ruling that the trial court may compel Tiu to testify in the correction of entry case
that respondent Lee-Keh children filed for the correction of the certificate of birth of
petitioner Emma Lee to show that she is not Kehs daughter.
The Ruling of the Court
Petitioner Emma Lee claims that the RTC correctly quashed the subpoena ad
testificandum it issued against Tiu on the ground that it was unreasonable and
oppressive, given the likelihood that the latter would be badgered on oral
examination concerning the Lee-Keh childrens theory that she had illicit relation
with Lee and gave birth to the other Lee children.
But, as the CA correctly ruled, the grounds citedunreasonable and
oppressiveare proper for subpoena ad duces tecum or for the production of
documents and things in the possession of the witness, a command that has a
tendency to infringe on the right against invasion of privacy. Section 4, Rule 21 of
the Rules of Civil Procedure, thus provides:
SECTION 4. Quashing a subpoena. The court may
quash a subpoena duces tecum upon motion promptly made
and, in any event, at or before the time specified therein if it is
unreasonable and oppressive, or the relevancy of the books,
documents or things does not appear, or if the person in whose
behalf the subpoena is issued fails to advance the reasonable
cost of the production thereof.
Notably, the Court previously decided in the related case of Lee v. Court of
Appeals[6] that the Lee-Keh children have the right to file the action for correction of
entries in the certificates of birth of Lees other children, Emma Lee included. The
Court recognized that the ultimate object of the suit was to establish the fact that
Lees other children were not children of Keh. Thus:
It is precisely the province of a special proceeding such
as the one outlined under Rule 108 of the Revised Rules of
Court to establish the status or right of a party, or a particular

fact. The petitions filed by private respondents for the

correction of entries in the petitioners' records of birth were
intended to establish that for physical and/or biological
reasons it was impossible for Keh Shiok Cheng to have
conceived and given birth to the petitioners as shown in their
birth records. Contrary to petitioners' contention that the
petitions before the lower courts were actually actions to
impugn legitimacy, the prayer therein is not to declare that
petitioners are illegitimate children of Keh Shiok Cheng, but to
establish that the former are not the latter's children. There is
nothing to impugn as there is no blood relation at all between
Keh Shiok Cheng and petitioners.[7] (Underscoring supplied)
Taking in mind the ultimate purpose of the Lee-Keh childrens action,
obviously, they would want Tiu to testify or admit that she is the mother of Lees
other children, including petitioner Emma Lee. Keh had died and so could not give
testimony that Lees other children were not hers. The Lee-Keh children have,
therefore, a legitimate reason for seeking Tius testimony and, normally, the RTC
cannot deprive them of their right to compel the attendance of such a material
witness.
But petitioner Emma Lee raises two other objections to requiring Tiu to come
to court and testify: a) considering her advance age, testifying in court would
subject her to harsh physical and emotional stresses; and b) it would violate her
parental right not to be compelled to testify against her stepdaughter.
1.
Regarding the physical and emotional punishment that would be
inflicted on Tiu if she were compelled at her age and condition to come to court to
testify, petitioner Emma Lee must establish this claim to the satisfaction of the trial
court. About five years have passed from the time the Lee-Keh children sought the
issuance of a subpoena for Tiu to appear before the trial court. The RTC would have
to update itself and determine if Tius current physical condition makes her fit to
undergo the ordeal of coming to court and being questioned. If she is fit, she must
obey the subpoena issued to her.
Tiu has no need to worry that the oral examination might subject her to
badgering by adverse counsel. The trial courts duty is to protect every witness
against oppressive behavior of an examiner and this is especially true where the
witness is of advanced age.[8]
2.
Tiu claimed before the trial court the right not to testify against her
stepdaughter, petitioner Emma Lee, invoking Section 25, Rule 130 of the Rules of
Evidence, which reads:
SECTION 25. Parental and filial privilege.- No person may
be compelled to testify against his parents, other direct
ascendants, children or other direct descendants.
The above is an adaptation from a similar provision in Article 315 of the Civil
Code that applies only in criminal cases. But those who revised the Rules of Civil

Procedure chose to extend the prohibition to all kinds of actions, whether civil,
criminal, or administrative, filed against parents and other direct ascendants or
descendants.
But here Tiu, who invokes the filial privilege, claims that she is the
stepmother of petitioner Emma Lee. The privilege cannot apply to them because
the rule applies only to direct ascendants and descendants, a family tie connected
by a common ancestry. A stepdaughter has no common ancestry by her
stepmother. Article 965 thus provides:
Art. 965. The direct line is either descending or
ascending. The former unites the head of the family with
those who descend from him. The latter binds a person with
those from whom he descends.
Consequently, Tiu can be compelled to testify against petitioner Emma Lee.
WHEREFORE, the Court DENIES the petition and AFFIRMS the decision and
resolution of the Court of Appeals in CA-G.R. SP 92555.
SO ORDERED.
ROBERTO A. ABAD
Associate Justice

Sec. 5.Subpoena for depositions

Sec. 6.Service
Sec. 7.Personal appearance in court
Sec. 8.Compelling attendance
Sec. 9.Contempt
Sec. 10.Exceptions