1
EN BANC
[G.R. No. L-5189. September 21, 1953.]
GAUDENCIO SERRANO, Plaintiff-Appellant, v. DONATA
CABRERA and TEODATO MAKABULOS, Defendants-
Appellees.
Jose P. Fausto for Appellant.
Besa & Besa for Appellees.
SYLLABUS
1. PLEADING AND PRACTICE; DISMISSAL OF ACTIONS;
WHEN DISMISSAL IS WITHOUT PREJUDICE. A
dismissal of the action without order of the court,
which is without prejudice, is one by the plaintiff
before the filing of an answer by the defendant. It
means that such dismissal would not preclude the
plaintiff from bringing another action against the same
defendant on the same subject matter. Such dismissal
under the rule does not bar the institution of an action
by the defendant which he could have brought in the
action against him by means of a counter-claim or
cross-claim. But where the dismissal in the first case
was upon motion of the plaintiff consented to by the
defendant on the ground that the latter had paid and
satisfied all the claims of the former as prayed for in
her complaint, section 1 of Rule 30 cannot be invoked
in the case as the dismissal was not without prejudice.
2. ID.; ID.; ID.; JUDGMENTS; COMPROMISE; "RES
JUDICATA; SOLUTIO INDEBITI." If what was received
by the plaintiff and delivered by the defendant was the
result of a compromise, the case was not one of solutio
indebiti. "A compromise shall have, with respect to the
parties, the same authority as res adjudicata . . ." (Art.
1316, Civil Code.)
DECISION
PADILLA, J.:
Gaudencio Serrano was the lessee of a parcel of land
containing an area of 24 hectares, more or less,
situated in the municipality of La Paz, Province of
Tarlac. Donata Cabrera was the lessor, having inherited
the parcel of land from her deceased father Eusebio
Cabrera, the original lessor. Teodato Makabulos is her
husband. The term of the lease was six agricultural
years beginning 1 May 1941 and the yearly rental
agreed upon was 290 cavans of palay. On 13
December 1946, the lessor brought an action (civil
case No. 141 of the Court of First Instance of Tarlac) to
recover rentals due and unpaid for the agricultural
years 1943-44, 1944-45, 1945-46 and 1946-47
2

amounting to P13,620. A writ of attachment was (Fdo.) DONATA CABRERA DE MACABULOS

issued in that case. On 18 December, the complaint
was dismissed without costs upon a motion couched in Demandante
the following terms
(Fdo.) GAUDENCIO SERRANO
MOCION DE SOBRESEIMIENTO
Demandado
Comparece la demandante por su infrascrito Abogado
y al Hon. Juzgado respetuosamente pide:chanrob1es (pp. 50-51, Amended Record on Appeal.)
virtual 1aw library
Alleging and claiming that what he had paid to her was
Que en vista de que el demandado Gaudencio Serrano in excess of what was due her for unpaid rentals the
ha pagado y satisfecho por completo las lessee brought an action (civil case No. 213 of the
reclamaciones de la demandante segn las same Court) against the lessor and her husband to
alegaciones de la demanda, la demandante ya no annul the proceedings in civil case No. 141, and to
tiene motivos de accion contra el demandado y por lo recover such excess payment of rentals. The excess
tanto procede sobreseer la causa. amounts allegedly paid and sought to be recovered
are P1,286.40 for 1945-46; P696 for 1946-47; P193 for
Por lo tanto, de acuerdo con la Regla 30, Seccion 1, la court fees in connection with the attachment issued in
demandante da por sobreseida esta causa. the first case. He also prays that the promissory note
for P1,000 executed and delivered by him to her be
Tarlac, Tarlac, Diciembre 16, 1946. cancelled or returned to him and that she together
with her husband be ordered to pay him P20,000 for
(Fdo.) TOMAS BESA damages suffered as a result of the filing of the action
against him and attachment of his property.
Abogado de la demandante
The defendants moved for the dismissal of the
Tarlac, Tarlac complaint on the ground of res judicata and failure to
state a cause of action.
CONFORMES:chanrob1es virtual 1aw library
3
The Court dismissed the complaint on the ground of
res judicata.
The plaintiff has appealed.
It is contended that the dismissal of the complaint in
the first action upon the ground that as the defendant
had paid and satisfied fully all her claims she no longer
had any action against him, before the filing of the
answer, was without prejudice, as provided for in
section 1, Rule 30. It is also claimed that a thing
received by one who has no right to it and which has
been delivered due to error must be returned, as
provided for in article 1895 of the Civil Code.
Section 1, Rule 30, cannot be invoked in this case,
because a dismissal of the action without order of the
Court, which is without prejudice, is one by the plaintiff
before the filing of an answer by the defendant. It
means that such dismissal would not preclude the
plaintiff from bringing another action against the same
defendant on the same subject matter. Such dismissal
under the rule does not bar the institution of an action
by the defendant which he could have brought in the
action against him by means of a counter-claim or
cross-claim. The dismissal in the first case was upon
motion of the plaintiff consented to by the defendant
and the ground was that the latter had paid and
satisfied all the claims of the former, as prayed for in
her complaint. Neither are the provisions of article
1895 of the Civil Code 1 on solutio indebiti applicable
to the case, because what was received by the plaintiff
and delivered by the defendant was the result of a
compromise. Article 1809 of the Civil Code 2 provides
that "Compromise is a contract by which each of the
parties in interest, by giving, promising, or retaining
something avoids the provocation of a suit or
terminates one which has already been instituted."
Article 1816 of the Civil Code provides that "A
compromise shall have, with respect to the parties, the
same authority as res adjudicata; . . ." 3 The order
appealed from is affirmed, with cost against the
Appellant.
G.R. No. 135803. March 28, 2006.*
O.B. JOVENIR CONSTRUCTION AND DEVELOPMENT
CORPORATION, OSCAR B. JOVENIR and GREGORIO
LIONGSON, petitioners, vs. MACAMIR REALTY AND
DEVELOPMENT CORPORATION, SPOUSES ROSAURO
and GLORIA MIRANDA and the HONORABLE COURT OF
APPEALS, respondents.
Civil Procedure; Actions; Section 1, Rule 17 of the 1964
Rules of Civil Procedure ordained the dismissal of the
complaint by the plaintiff as a matter of right at any
time before service of the answer, requiring no action
whatever on the part of the court except the
acceptance and recording of the causative document.
Section 1, Rule 17 of the 1964 Rules of Civil
Procedure stated: Dismissal by the plaintiffAn 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
4
judgment. Unless otherwise stated in the notice, the
dismissal is without prejudice, except that a notice
operates as an adjudication upon the
_______________
* THIRD DIVISION.
447
VOL. 485, MARCH 28, 2006
447
O.B. Jovenir Construction and Development
Corporation vs. Macamir Realty and Development
Corporation
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 the approval of the court.
Indubitably, the provision ordained the dismissal of the
complaint by the plaintiff as a matter of right at any
time before service of the answer. The plaintiff was
accorded the right to dismiss the complaint without
the necessity of alleging in the notice of dismissal any
ground nor of making any reservation. In Go v. Cruz,
172 SCRA 247 (1989), the Court, through Chief Justice
Narvasa, has recognized that 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.
Same; Same; The 1997 Rules of Civil Procedure now
requires that upon the filing of the notice of dismissal,
the court issue an order confirming the dismissal. The
new requirement is intended to qualify the right of a
party to dismiss the action before the adverse party
files an answer or asks for summary judgment.The
1997 Rules of Civil Procedure now requires that upon
the filing of such notice, the court issue an order
confirming the dismissal. The new requirement is
intended to qualify the right of a party to dismiss the
action before the adverse party files an answer or asks
for summary judgment. Still, there is no cause to apply
the 1997 Rules retroactively to this case. A plaintiffs
right to cause the dismissal of his complaint under the
old rules was unqualified.
Same; Same; Procedural rules may not be given
retroactive effect if vested rights would be disturbed,
or if their application would not be feasible or would
work injustice.Procedural rules may not be given
retroactive effect if vested rights would be disturbed,
or if their application would not be feasible or would
work injustice. Since respondents possessed an
unqualified right to cause the dismissal of their
complaint without need of confirmation by the trial
court, as enunciated in the 1964 Rules, they did not err
in asserting that their first complaint was withdrawn on
the day of the filing of their motion to withdraw, and
the lower courts were correct in agreeing with
respondents on this point.
448
5
448
SUPREME COURT REPORTS ANNOTATED
O.B. Jovenir Construction and Development
Corporation vs. Macamir Realty and Development
Corporation
PETITION for review on certiorari of a decision of the
Court of Appeals.
The facts are stated in the opinion of the Court.
Tito F. Sese for respondents.
TINGA, J.:
In denying the present petition, the Court affirms the
right of a plaintiff to cause the dismissal of the
complaint at any time before service of the answer
without need of affirmative action on the part of the
trial court. It must be qualified though that the
incidents for adjudication occurred a few months
before the effectivity of the 1997 Rules of Civil
Procedure1 which now requires that upon the filing of
such notice, the court issue an order confirming the
dismissal.2 The precedental value of this decision is
thus qualified to instances occurring prior to the 1997
Rules of Civil Procedure.
On 3 February 1997,3 a complaint was filed before the
Regional Trial Court (RTC) of Makati City, with private
respondents Macamir Realty and Development Corp.
(Macamir Realty) and spouses Rosauro and Gloria
Miranda as plaintiffs, and petitioners O.B. Jovenir
Construction and Development Corp. (Jovenir
Construction), Oscar B. Jovenir, and Gregorio Liongson
being among the defendants. The complaint, docketed
as Civil Case No. 97-256, sought the annulment of
certain agreements between private respondents and
petitioners, as well as damages.4 It was alleged that
Jovenir Construction was contracted to complete the
construction of private respondents condominium
project. Private respondents subsequently sought the
termination of their agreements with petitioners after
it was discovered that Jovenir
_______________
1 Effective 1 July 1997. See B.M. No. 803, 8 April 1997.
2 See Rules of Court, Rule 17, Sec. 1.
3 See Rollo, pp. 11, 23, 93.
4 Id., at p. 29.
449
VOL. 485, MARCH 28, 2006
449
O.B. Jovenir Construction and Development
Corporation vs. Macamir Realty and Development
Corporation
Construction had misrepresented itself as a legitimate
contractor.5 Respondents likewise prayed for the
issuance of a writ of preliminary injunction. A hearing
on the prayer appears to have been conducted on 6
February 1997.6
It was also alleged in the complaint that Gloria Miranda
was the principal stockholder and President of Macamir
Realty while her husband Rosauro was the owner of
6
the real properties on which the condominium project
was being constructed.7
Almost immediately, two of the impleaded defendants
filed their respective motions to dismiss. Defendant
Salud Madeja filed her motion on 6 February 1997,
while Cesar Mangrobang, Sr. and Cesar Mangrobang, Jr.
followed suit with their motion dated 13 February
1997. Madeja pertinently alleged that while the
spouses Miranda had initiated the complaint on behalf
of Macamir Realty, the real party-in-interest, they
failed to attach any Board Resolution authorizing them
to file suit on behalf of the corporation. Oddly enough,
Madeja was a member of the Board of Directors of
Macamir Realty, and she averred as a fact that said
Board of Directors had not authorized the spouses
Miranda to initiate the complaint against Jovenir
Realty.8
On 13 February 1997, or 10 days after the filing of the
complaint, private respondents filed a Motion to
Withdraw Complaint, alleging that during the initial
hearing on the prayer for preliminary injunction on 6
February 1997, counsel for plaintiffs discovered a
supposed technical defect in the complaint x x x that x
x x may be a ground for the dismissal of this case.9
Thus, private respondents prayed that the plaintiffs be
allowed to withdraw the complaint without prejudice.
_______________
5 Id., at pp. 25-26.
6 Id., at p. 41.
7 Id., at p. 24.
8 Id., at pp. 33-34.
9 Id., at p. 41.
450
450
SUPREME COURT REPORTS ANNOTATED
O.B. Jovenir Construction and Development
Corporation vs. Macamir Realty and Development
Corporation
Petitioners filed an opposition to the Motion to
Withdraw Complaint on 18 February 1997, wherein
they adopted Madejas arguments as to the lack of
authority on the part of the spouses Miranda to sue on
behalf of Macamir Realty. However, just one day
earlier, or on 17 February 1997, private respondents
filed another complaint against the same defendants
save for Madeja, and seeking the same reliefs as the
first complaint. This time, a Board Resolution dated 10
February 1997 authorizing the spouses Miranda to file
the Complaint on behalf of Macamir Realty was
attached to the complaint. This second complaint was
also filed with the Makati RTC and docketed as Civil
Case No. 97-379. The Verification and Certification [of]
Non-Forum Shopping in the second complaint was
accomplished by Rosauro Miranda, who averred as
follows:
3. That other than Civil Case No. 97-256 filed on
February 3, 1997 before the Regional Trial Court of
Makati City which was withdrawn on February 13,
1997, I further certify that we have not commenced
any other action or proceedings involving the same
7
issue in the Supreme Court, or Court of Appeals or any
other tribunal or agency; x x x10
On 24 February 1997, 11 days after the filing of the
Motion to Withdraw Complaint and seven days after
the filing of the second Complaint, the Makati RTC,
Branch 149, acting in Civil Case No. 97-256, granted
the Motion to Withdraw Complaint. The RTC noted in its
Order11 that an action may be dismissed by the
plaintiffs even without Order of the Court by filing a
notice of dismissal at anytime before the service of the
answer under Rule 17, Section 1 of the Rules of Court,
and accordingly considered the complaint withdrawn
without prejudice.12
_______________
10 Id., at p. 60.
11 Penned by Judge (now Court of Appeals Associate
Justice) Josefina Guevara Salonga.
12 Rollo, p. 47.
451
VOL. 485, MARCH 28, 2006
451
O.B. Jovenir Construction and Development
Corporation vs. Macamir Realty and Development
Corporation
The battle then shifted to Civil Case No. 97-379, which
had been raffled to Branch 136 of the Makati RTC. On 4
March 1997, petitioners filed a Motion to Dismiss the
second complaint on the ground of forum shopping.
They pointed out that at the time of the filing of the
second complaint on 17 February 1997, the first
complaint was still pending. The Makati RTC denied the
Motion to Dismiss in an Order13 dated 23 May 1997,
observing that at the time the Motion to Withdraw
Complaint was filed, none of the defendants had filed
any answer or any responsive pleading. Thus, it was
then within respondents right to cause the dismissal
of the complaint without having to await action of the
court on their motion.14 This Order was affirmed by
the Court of Appeals Special Sixth Division in its
Decision15 dated 23 June 1998 after petitioners had
assailed the RTCs order via a special civil action for
certiorari filed with the appellate court.16 Hence, the
present petition.
Petitioners now argue that under Section 1 of Rule 17
of the Rules of Civil Procedure in effect at the time of
these antecedents, the plaintiff may obtain the
dismissal of his own complaint before a responsive
pleading has been filed through the filing of a notice of
dismissal. However, respondents in this case did not
file a notice of dismissal, but instead lodged a Motion
to Withdraw Complaint, a motion which requires
affirmative action from the court before the complaint
may be deemed dismissed. Since the Makati RTC had
granted the motion only on 24 February 1997, the first
complaint had not yet been withdrawn as of 17
February 1997, when the second complaint was filed.
It is thus posited that the Certification of Non-Forum
Shopping attached to the second complaint was false,
in that it averred that the first complaint was with-
_______________
8
13 Penned by Judge Jose R. Bautista.
14 Rollo, p. 72.
15 Penned by Justice Roberto A. Barrios, concurred in
by Justices Artemon D. Luna and Demetrio G.
Demetria.
16 Id., at pp. 80-84.
452
452
SUPREME COURT REPORTS ANNOTATED
O.B. Jovenir Construction and Development
Corporation vs. Macamir Realty and Development
Corporation
drawn on February 13, 1997 when in fact the motion
to withdraw complaint was granted only 11 days after.
In sum, respondents had violated the procedural rules
against forum-shopping, which at that time were
incorporated in Administrative Circular No. 04-94 of
the Supreme Court.
We find no error on the part of the lower courts since
the denial of the motion to dismiss is wholly in accord
with the Rules of Civil Procedure.
Section 1, Rule 17 of the 1964 Rules of Civil Procedure
stated:
Dismissal by the plaintiffAn 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 the
approval of the court.17
Indubitably, the provision ordained the dismissal of the
complaint by the plaintiff as a matter of right at any
time before service of the answer.18 The plaintiff was
accorded the right to dismiss the complaint without
the necessity of alleging in the notice of dismissal any
ground nor of making any reservation.19
In Go v. Cruz,20 the Court, through Chief Justice
Narvasa, has recognized that where the dismissal of
an action rests exclusively on the will of a plaintiff or
claimant, to prevent
_______________
17 RULES OF COURT (1964), Rule 17, Sec. 1.
18 See Development Bank of the Philippines v. Pingol
Land Transport System Company, Inc., G.R. No.
145908, 22 January 2004, 420 SCRA 652.
19 V. Francisco, I The Revised Rules of Court (2nd ed.,
1973), at p. 975.
20 G.R. No. 58986, 17 April 1989, 172 SCRA 247.
453
VOL. 485, MARCH 28, 2006
453
O.B. Jovenir Construction and Development
Corporation vs. Macamir Realty and Development
Corporation
9
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.21 The facts in that case
are well worth considering. Therein, the notice of
dismissal was filed by the plaintiff on 12 November
1981. Respondent filed his answer three days earlier,
or on 9 November, but plaintiff was served a copy of
the answer by registered mail only on 16 November.
Notwithstanding the fact that the answer was filed
with the trial court three days prior to the filing of the
notice of dismissal, the Court still affirmed the
dismissal sought by the plaintiff. The Court declared
that the right of the plaintiff to cause the dismissal of
the complaint by mere notice is lost not by the filing of
the answer with the trial court, but upon the actual
service to the plaintiff of the answer.22
The Court further ruled that [plaintiffs] 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 [plaintiff] 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.23
It is quite clear that under Section 1, Rule 17 of the old
Rules, the dismissal contemplated therein 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. It is due to these considerations that the
petition should be denied.
_______________
21 Id., at pp. 248-249.
22 Id., at p. 251.
23 Id., at p. 252.
454
454
SUPREME COURT REPORTS ANNOTATED
O.B. Jovenir Construction and Development
Corporation vs. Macamir Realty and Development
Corporation
Evidently, respondents had the right to dismiss their
complaint by mere notice on 13 February 1997, since
as of even date, petitioners had not yet served their
answer on respondents. The Motion to Withdraw
Complaint makes clear respondents desire to
withdraw the complaint without prejudice. That
respondents resorted to a motion to effect what they
could have instead by mere notice may be indicative
of a certain degree of ignorance of procedural rules on
the part of respondents counsel. Yet such error, if it
could be called as such, should hardly be of fatal
consequence. Petitioners posit that the remedy of
filing a notice of dismissal is not exclusive,
respondents having the option of securing the
courts approval to the dismissal.24 On the contrary,
10
the trial court has no discretion or option to deny the
motion, since dismissal by the plaintiff under Section
1, Rule 17 is guaranteed as a matter of right to the
plaintiffs. Even if the motion cites the most ridiculous
of grounds for dismissal, 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 ground.
We are in accord with the Court of Appeals when it
pronounced:
While [the Motion to Withdraw Complaint] is styled as
a motion and contains a prayer, these are
innocuous errors and superfluities that do not detract
from its being a notice of dismissal made under said
Section 1 of Rule 17 and which ipso facto dismissed
the case. It is a hornbook rule that it is not the caption
of a pleading but the allegations thereat that
determines its nature.25 The court order of dismissal is
a mere surplusage under the circumstances and
emphasized by the court a quo itself when it granted
the motion [x x x] considering that an action may be
dismissed by the plaintiffs even without Order of the
Court [x x x]26
_______________
24 Rollo, p. 16.
25 Citing Ras v. Sua, 134 Phil. 131; 25 SCRA 153
(1968).
26 Rollo, pp. 83-84.
455
VOL. 485, MARCH 28, 2006
455
O.B. Jovenir Construction and Development
Corporation vs. Macamir Realty and Development
Corporation
Thus, the complaint could be properly considered as
having been dismissed or withdrawn as of 13 February
1997. Accordingly, when respondents filed their new
complaint relating to the same cause of action on 17
February 1997, the old complaint was no longer
pending. The certification against forum-shopping
attached to the new complaint correctly asseverated
that the old complaint was withdrawn on February 13,
1997.27
Petitioners are unable to propose any convincing legal
argument or any jurisprudence that would sway the
Court to their point of view. At the same time, our
present ruling must be distinguished from Ortigas &
Company Limited Partnership v. Velasco,28 wherein it
was advanced that theoretically every final
disposition of an action does not attain finality until
after fifteen (15) days therefrom, x x x the plaintiff
may move to withdraw and set aside his notice of
dismissal and revive his action, before that period
lapses.29 That statement was made in the context of
ruling that a plaintiff may move for the revival of the
complaint dismissed on his instance under Section 1 of
Rule 17 only within 15 days upon notice; otherwise the
remedy of the plaintiff would be to file a new
complaint. This observation in Ortigas does not detract
from the fact that under Section 1, Rule 17 of the
11
previous Rules, the complaint is deemed ipso facto
dismissed on the day of the filing of the notice. This
again is because dismissal at the instance of the
plaintiff under Section 1, Rule 17 is a matter of right,
and under the 1964 Rules of Civil Procedure, effective
without need of any affirmative action on the part of
the trial court.
As noted at the onset, the 1997 Rules of Civil
Procedure now requires that upon the filing of such
notice, the court issue an order confirming the
dismissal.30 The new require-
_______________
27 Id., at p. 60.
28 G.R. Nos. 109645 and 112564, 25 July 1994, 234
SCRA 455.
29 Id., at pp. 486-487.
30 Supra note 2.
456
456
SUPREME COURT REPORTS ANNOTATED
O.B. Jovenir Construction and Development
Corporation vs. Macamir Realty and Development
Corporation
ment is intended to qualify the right of a party to
dismiss the action before the adverse party files an
answer or asks for summary judgment.31 Still, there is
no cause to apply the 1997 Rules retroactively to this
case. A plaintiffs right to cause the dismissal of his
complaint under the old rules was unqualified.
Procedural rules may not be given retroactive effect if
vested rights would be disturbed,32 or if their
application would not be feasible or would work
injustice.33 Since respondents possessed an
unqualified right to cause the dismissal of their
complaint without need of confirmation by the trial
court, as enunciated in the 1964 Rules, they did not err
in asserting that their first complaint was withdrawn on
the day of the filing of their motion to withdraw, and
the lower courts were correct in agreeing with
respondents on this point.
WHEREFORE, the Petition is DENIED. Costs against
petitioners.
SO ORDERED.
Carpio (Actg. Chairperson) and Carpio-Morales, JJ.,
concur.
Quisumbing (Chairperson), J., On Official Leave.
Petition denied.
Note.When the issues, upon the plaintiffs instance, a
dismissal order that is silent as to whether it is with or
without prejudice, the presumption is, that it is without
prejudice. (Delgado vs. Court of Appeals, 447 SCRA
402 [2004])
o0o
G.R. No. 133657. May 29, 2002.*
REMINGTON INDUSTRIAL SALES CORPORATION,
petitioner, vs. THE COURT OF APPEALS and BRITISH
STEEL (ASIA), LTD., respondents.
Actions; Pleadings and Practice; Amendment of
Complaints; A complaint can still be amended as a
12
matter of right before an answer has been filed, even if
there is a pending proceeding for its dismissal before
the higher courtbefore the filing of an answer, the
plaintiff has the absolute right to amend the complaint
whether a new cause of action or change in theory is
introduced.The basic issue in this case is whether or
not the Court of Appeals, by granting the extraordinary
writ of certiorari, correctly ordered the dismissal of the
complaint for failure to state a cause of action, despite
the fact that petitioner exercised its right to amend the
defective complaint under Section 2, Rule 10 of the
Rules of Court. Stated differently, the query posed
before us is: can a complaint still be amended as a
matter of right before an answer has been filed, even if
there was a pending proceeding for its dismissal
before the higher court? Section 2, Rule 10
______________
* FIRST DIVISION.
500
500
SUPREME COURT REPORTS ANNOTATED
Remington Industrial Sales Corporation vs. Court of
Appeals
of the Revised Rules of Court explicitly states that a
pleading may be amended as a matter of right before
a responsive pleading is served. This only means that
prior to the filing of an answer, the plaintiff has the
absolute right to amend the complaint whether a new
cause of action or change in theory is introduced. The
reason for this rule is implied in the subsequent
Section 3 of Rule 10. Under this provision, substantial
amendment of the complaint is not allowed without
leave of court after an answer has been served,
because any material change in the allegations
contained in the complaint could prejudice the rights
of the defendant who has already set up his defense in
the answer.
Same; Same; Same; It cannot be said that the
defendants rights are violated by changes made in
the complaint if he has yet to file an answer thereto.
Conversely, it cannot be said that the defendants
rights have been violated by changes made in the
complaint if he has yet to file an answer thereto. In
such an event, the defendant has not presented any
defense that can be altered or affected by the
amendment of the complaint in accordance with
Section 2 of Rule 10. The defendant still retains the
unqualified opportunity to address the allegations
against him by properly setting up his defense in the
answer. Considerable leeway is thus given to the
plaintiff to amend his complaint once, as a matter of
right, prior to the filing of an answer by the defendant.
Same; Same; Same; The right granted to the plaintiff
under procedural law to amend the complaint before
an answer has been served is not precluded by the
filing of a motion to dismiss.The right granted to the
plaintiff under procedural law to amend the complaint
before an answer has been served is not precluded by
the filing of a motion to dismiss or any other
proceeding contesting its sufficiency. Were we to
13
conclude otherwise, the right to amend a pleading
under Section 2, Rule 10 will be rendered nugatory and
ineffectual, since all that a defendant has to do to
foreclose this remedial right is to challenge the
adequacy of the complaint before he files an answer.
Same; Same; Same; The Court finds no practical
advantage in ordering the dismissal of the complaint
and for the plaintiff to re-file the same, when he can
still clearly amend the complaint as a matter of right.
In this case, the remedy espoused by the appellate
court in its assailed judgment will precisely result in
multiple suits, involving the same set of facts and to
which the defendants would likely raise the same or, at
least, related defenses. Plainly stated, we find no
practical advantage in ordering the dismissal of the
complaint against respondent and for petitioner to re-
file the same, when the latter can still clearly amend
the complaint as a matter of right. The amendment of
the complaint would not prejudice respon-
501
VOL. 382, MAY 29, 2002
501
Remington Industrial Sales Corporation vs. Court of
Appeals
dents or delay the action, as this would, in fact,
simplify the case and expedite its disposition.
Same; Same; Same; Where some but not all the
defendants have answered, the plaintiff may still
amend its complaint once, as a matter of right, in
respect to claims asserted solely against the non-
answering defendant, but not as to claims asserted
against the other defendants.The fact that the other
defendants below has filed their answers to the
complaint does not bar petitioners right to amend the
complaint as against respondent. Indeed, where some
but not all the defendants have answered, the plaintiff
may still amend its complaint once, as a matter of
right, in respect to claims asserted solely against the
non-answering defendant, but not as to claims
asserted against the other defendants.
PETITION for review on certiorari of a decision of the
Court of Appeals.
The facts are stated in the opinion of the Court.
Renato H. Collado for petitioner.
Romulo, Mabanta, Buenaventura, Sayoc & Delos
Angeles for respondent British Steel (Asia) Ltd.
YNARES-SANTIAGO, J.:
Before us is a petition for review under Rule 45 of the
Rules of Court assailing the decision of the Court of
Appeals in CA-G.R. SP No. 44529 dated February 24,
1998,1 which granted the petition for certiorari filed by
respondent British Steel Asia Ltd. (British Steel) and
ordered the dismissal of petitioner Remington
Industrial Sales Corporations (Remington) complaint
for sum of money and damages. Also assailed in this
petition is the resolution2 of the Court of Appeals
denying petitioners motion for reconsideration.
The facts of the case, as culled from the records, are
as follows:
14
______________
1 Rollo, p. 21; per Special Second Division composed
of Associate Justices Corona Ibay-Somera, Ramon U.
Mabutas and Hilarion L. Aquino, ponente.
2 Ibid., at 34.
502
502
SUPREME COURT REPORTS ANNOTATED
Remington Industrial Sales Corporation vs. Court of
Appeals
On August 21, 1996, petitioner filed a complaint3 for
sum of money and damages arising from breach of
contract, docketed as Civil Case No. 96-79674, before
the sala of Judge Marino M. De la Cruz of the Regional
Trial Court of Manila, Branch 22. Impleaded as principal
defendant therein was Industrial Steels, Ltd. (ISL), with
Ferro Trading GMBH (Ferro) and respondent British
Steel as alternative defendants.
ISL and respondent British Steel separately moved for
the dismissal of the complaint on the ground that it
failed to state a cause of action against them. On April
7, 1997, the RTC denied the motions to dismiss,4 as
well as the ensuing motion for reconsideration.5 ISL
then filed its answer to the complaint.
On the other hand, respondent British Steel filed a
petition for certiorari and prohibition before the Court
of Appeals,6 docketed as CA-G.R. SP No. 44529.
Respondent claimed therein that the complaint did not
contain a single averment that respondent committed
any act or is guilty of any omission in violation of
petitioners legal rights. Apart from the allegation in
the complaints Jurisdictional Facts that:
1.05. Defendants British Steel (Asia) Ltd. and Ferro
Trading GMBH, while understood by the plaintiff as
mere suppliers of goods for defendant ISL, are
impleaded as party defendants pursuant to Section 13,
Rule 3 of the Revised Rules of Court.7
no other reference was made to respondent that would
constitute a valid cause of action against it. Since
petitioner failed to plead any cause of action against
respondent as alternative defendant under Section 13,
Rule 3,8 the trial court should have ordered the
dismissal of the complaint insofar as respondent was
concerned.
______________
3 Id., at 36.
4 Id., at 74-83.
5 Id., at 84.
6 Id., at 85-94.
7 Id., at 37.
8 SEC. 13. Alternative Defendants.Where the plaintiff
is uncertain against who of several persons he is
entitled to relief, he may join any
503
VOL. 382, MAY 29, 2002
503
Remington Industrial Sales Corporation vs. Court of
Appeals
15
Meanwhile, petitioner sought to amend its complaint
by incorporating therein additional factual allegations
constitutive of its cause of action against respondent.
Pursuant to Section 2, Rule 109 of the Rules of Court,
petitioner maintained that it can amend the complaint
as a matter of right because respondent has not yet
filed a responsive pleading thereto.10
Subsequently, petitioner filed a Manifestation and
Motion11 in CA-G.R. SP No. 44529 stating that it had
filed a Motion to Admit Amended Complaint together
with said Amended Complaint before the trial court.
Hence, petitioner prayed that the proceedings in the
special civil action be suspended.
On January 29, 1998, the trial court ruled on
petitioners Motion to Admit Amended Complaint thus:
WHEREFORE, the Amended Complaint is NOTED and
further proceedings thereon and action on the other
incidents as aforementioned are hereby held in
abeyance until final resolution by the Honorable Court
of Appeals (Special 6th Division) of the petition for
certiorari and prohibition of petitioner (defendant
British) and/or Manifestations and Motions of therein
private respondent, herein plaintiff.
SO ORDERED.12
Thereafter, on February 24, 1998, the Court of Appeals
rendered the assailed decision in CA-G.R. SP No. 44529
as follows:
WHEREFORE, this Court grants the writ of certiorari
and orders the respondent judge to dismiss without
prejudice the Complaint in Civil Case No. 96-79674
against petitioner British Steel (Asia) Ltd. Costs against
private respondent.
SO ORDERED.13
______________
or all of them as defendants in the alternative,
although a right to relief against one may be
inconsistent with a right of relief against the other.
9 SEC. 2. Amendments as a matter of right.A party
may amend his pleading once as a matter of right at
any time before a responsive pleading is served or, in
the case of a reply, at any time within ten (10) days
after it is served.
10 CA Records, p. 100.
11 Id., at 114-115.
12 Supra, Note 1 at 197-198.
13 Id., at 32.
504
504
SUPREME COURT REPORTS ANNOTATED
Remington Industrial Sales Corporation vs. Court of
Appeals
In the same decision, the Court of Appeals addressed
petitioners prayer for suspension of proceedings in
this wise:
The incident which transpired after the filing of the
instant petition for certiorari and prohibition are
immaterial in the resolution of this petition. What this
Court is called upon to resolve is whether the lower
court committed grave abuse of discretion when it
16
denied petitioners motion to dismiss the complaint
against it. The admission or rejection by the lower
court of said amended complaint will not, insofar as
this Court is concerned, impinge upon the issue of
whether or not said court gravely abused its discretion
in denying petitioners motion to dismiss.14
Petitioner filed a motion for reconsideration of the
appellate courts decision, which was denied in a
resolution dated April 28, 1998. Hence, this petition,
anchored on the following grounds:
-I-
THE HON. COURT OF APPEALS ERRED IN ORDERING
THE DISMISSAL OF THE COMPLAINT AGAINST THE
PRIVATE RESPONDENT FOR LACK OF CAUSE OF ACTION
UNDER THE ORIGINAL COMPLAINT EVEN AS SAID
COMPLAINT WAS ALREADY AMENDED AS A MATTER OF
RIGHT AND SUFFICIENT CAUSES OF ACTION ARE
AVERRED IN THE AMENDED COMPLAINT, IN GROSS
VIOLATION OF SEC. 2, RULE 10 OF THE 1997 RULES OF
CIVIL PROCEDURE.
-II-
THE HON. COURT OF APPEALS ERRED IN HOLDING
THAT IF THE PETITIONER WANTS TO PURSUE ITS CASE
AGAINST THE PRIVATE RESPONDENT, IT HAS TO REFILE
THE COMPLAINT, THUS PRE-EMPTING THE RIGHT OF
THE LOWER COURT TO RULE ON THE AMENDED
COMPLAINT AND COMPELLING THE PETITIONER TO
LITIGATE ITS CAUSES OF ACTION AGAINST THE PRIVATE
RESPONDENT AS AN ALTERNATIVE DEFENDANT IN A
SEPARATE ACTION, THEREBY ABETTING MULTIPLICITY
OF SUITS.15
The basic issue in this case is whether or not the Court
of Appeals, by granting the extraordinary writ of
certiorari, correctly
______________
14 Id., at 31-32.
15 Id., at 6.
505
VOL. 382, MAY 29, 2002
505
Remington Industrial Sales Corporation vs. Court of
Appeals
ordered the dismissal of the complaint for failure to
state a cause of action, despite the fact that petitioner
exercised its right to amend the defective complaint
under Section 2, Rule 10 of the Rules of Court. Stated
differently, the query posed before us is: can a
complaint still be amended as a matter of right before
an answer has been filed, even if there was a pending
proceeding for its dismissal before the higher court?
Section 2, Rule 1016 of the Revised Rules of Court
explicitly states that a pleading may be amended as a
matter of right before a responsive pleading is served.
This only means that prior to the filing of an answer,
the plaintiff has the absolute right to amend the
complaint whether a new cause of action or change in
theory is introduced.17 The reason for this rule is
implied in the subsequent Section 3 of Rule 10.18
17
Under this provision, substantial amendment of the
complaint is not allowed without leave of court after an
answer has been served, because any material change
in the allegations contained in the complaint could
prejudice the rights of the defendant who has already
set up his defense in the answer.
Conversely, it cannot be said that the defendants
rights have been violated by changes made in the
complaint if he has yet to file an answer thereto. In
such an event, the defendant has not presented any
defense that can be altered19 or affected by the
amendment of the complaint in accordance with
Section 2 of Rule 10. The defendant still retains the
unqualified opportunity to address the allegations
against him by properly setting up his defense in the
______________
16 Supra, Note 8.
17 See Radio Communications of the Philippines, Inc.
(RCPI) v. Court of Appeals, Daity Salvosa, and Ray
Dean Salvosa, 271 SCRA 286, 289 (1997), citing
Moran, Comments on the Rules of Court, Vol. I, 1979
ed., p. 362.
18 SEC. 3. Amendments by Leave of Court.Except as
provided in the next preceding section, substantial
amendments may be made only upon leave of court.
But such leave may be refused if it appears to the
court that the motion was made with intent to delay.
Orders of the court upon the matters provided in this
section shall be made upon motion filed in court, and
after notice to the adverse party, and an opportunity
to be heard.
19 Siasoco v. Court of Appeals, 303 SCRA 186, 195
(1999).
506
506
SUPREME COURT REPORTS ANNOTATED
Remington Industrial Sales Corporation vs. Court of
Appeals
answer. Considerable leeway is thus given to the
plaintiff to amend his complaint once, as a matter of
right, prior to the filing of an answer by the defendant.
The right granted to the plaintiff under procedural law
to amend the complaint before an answer has been
served is not precluded by the filing of a motion to
dismiss20 or any other proceeding contesting its
sufficiency. Were we to conclude otherwise, the right to
amend a pleading under Section 2, Rule 10 will be
rendered nugatory and ineffectual, since all that a
defendant has to do to foreclose this remedial right is
to challenge the adequacy of the complaint before he
files an answer.
Moreover, amendment of pleadings is favored and
should be liberally allowed in the furtherance of justice
in order to determine every case as far as possible on
its merits without regard to technicalities. This
principle is generally recognized to speed up trial and
save party litigants from incurring unnecessary
expense, so that a full hearing on the merits of every
case may be had and multiplicity of suits avoided.21
18
In this case, the remedy espoused by the appellate
court in its assailed judgment will precisely result in
multiple suits, involving the same set of facts and to
which the defendants would likely raise the same or, at
least, related defenses. Plainly stated, we find no
practical advantage in ordering the dismissal of the
complaint against respondent and for petitioner to re-
file the same, when the latter can still clearly amend
the complaint as a matter of right. The amendment of
the complaint would not prejudice respondents or
delay the action, as this would, in fact, simplify the
case and expedite its disposition.
The fact that the other defendants below has filed
their answers to the complaint does not bar
petitioners right to amend the com-
______________
20 F.D. Regalado, Remedial Law Compendium, Vol. I,
1997 ed., p. 183.
21 Heirs of Marcelino Pagobo v. Court of Appeals, et
al., 280 SCRA 870, 882 (1997), citing Sedeco v. Court
of Appeals, 115 SCRA 96, 103 (1982); Calabig v.
Villanueva, 135 SCRA 300, 307 (1985); Cabutin v.
Amacio, 170 SCRA 750, 756 (1989); Eugenio v. Velez,
185 SCRA 425, 435 (1990).
507
VOL. 382, MAY 29, 2002
507
Remington Industrial Sales Corporation vs. Court of
Appeals
plaint as against respondent. Indeed, where some but
not all the defendants have answered, the plaintiff
may still amend its complaint once, as a matter of
right, in respect to claims asserted solely against the
non-answering defendant, but not as to claims
asserted against the other defendants.22
Furthermore, we do not agree with respondents claim
that it will be prejudiced by the admission of the
Amended Complaint because it had spent time, money
and effort to file its petition before the appellate
court.23 We cannot see how the result could be any
different for respondent, if petitioner merely re-filed
the complaint instead of being allowed to amend it. As
adverted to earlier, amendment would even work to
respondents advantage since it will undoubtedly
speed up the proceedings before the trial court.
Consequently, the amendment should be allowed in
the case at bar as a matter of right in accordance with
the rules.
WHEREFORE, the petition is GRANTED. The assailed
decision and resolution of the Court of Appeals in CA-
G.R. SP No. 44529 dated February 24, 1998 and April
28, 1998, respectively, are REVERSED and SET ASIDE.
The Regional Trial Court of Manila, Branch 22 is further
ordered to ADMIT petitioners Amended Complaint in
Civil Case No. 96-79674 and to conduct further
proceedings in said case.
SO ORDERED.
Davide, Jr. (C.J.), Puno, Kapunan and Austria-
Martinez, JJ., concur.
19
Petition granted, judgment and resolution reversed
and set aside. RTC-Manila, Br. 22 ordered to admit
petitioners amended complaint.
Notes.The new Section 3 of Rule 10 of the Rules of
Court relaxes further the rule on amendment of
pleadingsrefusal to allow amendments other than
those which may be made as a matter of
______________
22 Supra, Note 19 at 194, citing Francisco, The Revised
Rules of Court, Vol. 1, p. 646 and case cited therein.
23 Supra, Note 1 at 216.
508
508
SUPREME COURT REPORTS ANNOTATED
People vs. Coca, Jr.
right under Section 2 may be based only on the ground
that the motion was made with intent to delay. (Heirs
of Marcelino Pagobo vs. Court of Appeals, 280 SCRA
870 [1997])
The filing of an amended pleading does not retroact to
the date of the filing of the original, hence, the statute
of limitations runs until the submission of the
amendment. (Republic vs. Sandiganbayan, 293 SCRA
440 [1998])
An order granting or denying a motion to amend the
complaint on substantial matters is discretionary with
the court. (Zarate vs. RTC of Kalibo, Aklan (Branch 2),
316 SCRA 594 [1999])
Where some but not all the defendants have
answered, plaintiffs may amend their Complaint once,
as a matter of right, in respect to claims asserted
solely against the non-answering defendants, but not
as to claims asserted against the other defendants.
(Siasoco vs. Court of Appeals, 303 SCRA 186 [1999])
o0o
G.R. No. 153034. September 20, 2005.*
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner,
vs. HONORABLE COURT OF APPEALS and ROSALINDA
CANADALLA-GO, represented by her Attorney-in-fact
BENITO A. CANADALLA, respondents.
Remedial Law; Pleadings and Practice; Admissions; A
party should not be compelled to admit matters of fact
already admitted by his pleading and to make a
second denial of those already denied in his answer to
the complaint.We have held in Po v. Court of Appeals
that [a] party should not be compelled to admit
matters of fact already admitted by his pleading and
to make a second denial of those already denied in his
answer to the complaint.
Same; Same; Same; Rule 26 of the Rules of Court does
not refer to a mere reiteration of what has already
been alleged in the pleadings.The Po doctrine was
brought a step further in Concrete Aggregates Co. v.
Court of Appeals, where we ruled that if the factual
allegations in the complaint are the very same
allegations set forth in the request for admission and
have already been specifically denied or otherwise
dealt with in the answer, a response to the request is
20
no longer required. It becomes, therefore, unnecessary
to dwell on the issue of the propriety of an unsworn
response to the request for admission. The reason is
obvious. A request for admission that merely reiterates
the allegations in an earlier pleading is inappropriate
under Rule 26 of the Rules of Court, which, as a mode
of discovery, contemplates of interrogatories that
would clarify and tend to shed light on the truth or
falsity of the allegations in the
_______________
* FIRST DIVISION.
318
318
SUPREME COURT REPORTS ANNOTATED
Development Bank of the Philippines vs. Court of
Appeals
pleading. Rule 26 does not refer to a mere reiteration
of what has already been alleged in the pleadings.
Same; Same; Same; That the Comment was not under
oath is not a substantive, but merely a formal, defect
which can be excused in the interest of justice
conformably to the well-entrenched doctrine that all
pleadings should be liberally construed as to do
substantial justice.Even assuming that a reply to the
request is needed, it is undisputed that the DBP filed
its Comment either admitting or specifically denying
again the matters sought to be admitted and stating
the reasons therefor. That the Comment was not under
oath is not a substantive, but merely a formal, defect
which can be excused in the interest of justice
conformably to the well-entrenched doctrine that all
pleadings should be liberally construed as to do
substantial justice. The filing of such Comment
substantially complied with Rule 26. Consequently, the
DBP cannot be deemed to have impliedly admitted the
matters set forth in the Request for Admission for the
mere reason that its Comment was not under oath.
Same; Same; Same; Scope of matters that a party may
request the adversary to admit under Section 1 of Rule
26 of the Rules of Court.Under Section 1 of Rule 26
of the Rules of Court, the scope of matters that a party
may request the adversary to admit are (1) the
genuineness of any material and relevant document
described in and exhibited with the request; and (2)
the truth of any material and relevant matter of fact
set forth in the request. The rule authorizing a party to
call on the other party to make an admission implies
the making of demands for admission of relevant and
material matters of factsand not for admission of
matters of law, conclusions, or opinions.
Same; Same; Same; If a request for admission would
only serve to delay the proceedings by abetting
redundancy in the pleadings, the intended purpose for
the rule would certainly be defeated.It must be
stressed that the rule on admission as a mode of
discovery is intended to expedite trial and to relieve
parties of the costs of proving facts which will not be
disputed on trial and the truth of which can be
ascertained by reasonable inquiry. Thus, if a request
for admission would only serve to delay the
21
proceedings by abetting redundancy in the pleadings,
the intended purpose for the rule would certainly be
defeated. After all, rules of procedures are in-
319
VOL. 470, SEPTEMBER 20, 2005
319
Development Bank of the Philippines vs. Court of
Appeals
tended to promote, not to defeat, substantial justice
and should not therefore be applied in a very rigid and
technical sense.
PETITION for review on certiorari of the decision and
resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Office of the Legal Counsel, DBP for petitioner.
Faustino S. Tugade, Jr. for private respondent.
DAVIDE, JR., C.J.:
Once again, we are confronted with the issue of
whether matters requested to be admitted under Rule
26 of the Rules of Courtwhich are mere reiterations
of the allegations in the complaint and are specifically
denied in the answermay be deemed impliedly
admitted on the ground that the response thereto is
not under oath.
The controversy stemmed in January 1977 when Irene
Canadalla obtained a loan of P100,000 from petitioner
Development Bank of the Philippines (DBP) for
purposes of financing her piggery business. As
security, Canadalla executed on 19 January 1977 a
Deed of Real Estate Mortgage over two parcels of land
covered by TCT No. T-7609 and OCT No. P-4226 of the
Registry of Deeds of Infanta, Quezon. On 10 August
1979, Canadalla procured another loan in the amount
of P150,000, which was secured by a mortgage over
the same two parcels of land and a third parcel
covered by OCT No. P-6679 of the Registry of Deeds of
the Province of Quezon.
Since the piggery business allegedly suffered strong
reverses, compounded by devastating typhoons, the
prevalence of diseases, and destruction of her store by
fire, Canadalla failed to comply with her obligations to
the DBP. Subsequently, the DBP extrajudicially
foreclosed the mortgages. On 5 September 1989, the
mortgaged properties were sold at public auction to
the DBP, which emerged as the only bidder.
320
320
SUPREME COURT REPORTS ANNOTATED
Development Bank of the Philippines vs. Court of
Appeals
The sale was evidenced by a Certificate of Sale and
registered on 17 January 1990.
Canadalla was able to redeem the foreclosed property
covered by TCT No. T-7609 within the redemption
period of one year from 17 January 1990. As to the
properties covered by OCT Nos. P-4226 and P-6679,
she had six years from 17 January 1990 to redeem the
same, they being free patent titles. On 5 October
22
1995, she offered to redeem the properties for a
redemption price of P1.5 million. But the DBP
countered that the redemption price under its 1986
Revised Chapter must be based on its total claim,
which was P1,927,729.50 as of 30 September 1995.
Subsequently, she allegedly assigned her right to
redeem her properties to her daughter, herein private
respondent Rosalinda A. Canadalla-Go.
In January 1996, Go offered to redeem the properties
for P526,882.40. In response, the DBP advised Go that
the acceptable redemption price was P1,814,700.58
representing its total claim as of 17 January 1996.
When Go failed to redeem the properties, the DBP
consolidated its titles over the subject properties and
new certificates of title were issued in its name.
On 8 July 1996, Go filed with the Regional Trial Court
(RTC) of Makati City a Supplemental Complaint1 for the
Exercise of Right of Redemption and Determination of
Redemption Price, Nullification of Consolidation,
Annulment of Titles, with Damages, Plus Injunction and
Temporary Restraining Order. The case was docketed
as Civil Case No. 96-483 in Branch 148 of said court.
After the DBP filed its Answer2 but before the parties
could proceed to trial, Go filed a Request for Admission
by Adverse Party.3 Thereafter, the DBP filed its
Comment.4
_______________
1 Rollo, pp. 37-55.
2 Id., pp. 56-58.
3 Id., pp. 69-78.
4 Id., pp. 79-81.
321
VOL. 470, SEPTEMBER 20, 2005
321
Development Bank of the Philippines vs. Court of
Appeals
During the hearing on 20 May 1997, Go objected to
the Comment reasoning that it was not under oath as
required by Section 2, Rule 26 of the Rules of Court,
and that it failed to state the reasons for the admission
or denial of matters for which an admission was
requested. For its part, the DBP manifested that, first,
the statements, allegations, and documents contained
in the Request for Admission are substantially the
same as those in the Supplemental Complaint; second,
they had already been either specifically denied or
admitted by the DBP in its Answer; and third, the
reasons for the denial or admission had already been
specifically stated therein.
On 22 May 1997, the DBP filed a manifestation5
incorporating its response to Gos objections during
the 20 May 1997 hearing, attaching therewith an
affidavit6 executed by its officer and counsel Atty.
Perla Melanie Caraan.
On 9 June 1997, the RTC issued an Order7 granting the
motion of Go to consider as impliedly admitted the
matters sought to be admitted in the Request for
Admission and all those denied by the DBP in its
Comment.
23
Its motion for reconsideration8 having been denied,9
the DBP filed with the Court of Appeals a petition for
certiorari,10 docketed as CA-G.R. SP No. 62142,
attributing to the court a quo grave abuse of discretion
in granting the Request for Admission despite the fact
that (1) some of the matters assigned in the Request
for Admission had already been specifically denied in
its Answer to the Supplemental Complaint; (2) the
sworn statement of Atty. Caraan had sufficiently cured
the alleged defect of the Comment; and (3) some of
the matters in the Request for Admission involved
questions of law,
_______________
5 Id., pp. 82-84.
6 Id., pp. 85-87.
7 Rollo, pp. 88-96. Per Judge Oscar B. Pimentel.
8 Id., pp. 97-104.
9 Id., pp. 115-124.
10 Id., pp. 125-141.
322
322
SUPREME COURT REPORTS ANNOTATED
Development Bank of the Philippines vs. Court of
Appeals
conclusions of facts, and matters of opinion which are
improper subjects of such a request.
On 6 August 2001, the Court of Appeals dismissed the
petition for lack of merit.11 It held that since DBPs
answer was not under oath, it could not be considered
as having substantially complied with the
requirements of Section 2 of Rule 26 of the Rules of
Court. The affidavit of Atty. Caraan, one of the legal
counsels of the DBP, failed to cure the defect because
it was submitted after the motion for the declaration of
implied admission had been made and the hearing of
the same had been terminated. Moreover, in the
hearing of 20 May 1997, the DBP only made a
manifestation that the matters sought for admission
had already been covered in the Answer without
objecting to the propriety of some of the matters
sought to be admitted. Thus, the DBP failed to timely
raise its objections on the ground of impropriety.
The DBPs Motion for Reconsideration12 was denied by
the Court of Appeals in a Resolution13 dated 16 April
2002. Hence, the DBP is now before this Court by way
of certiorari under Rule 45 of the Rules of Court
challenging the Decision and Resolution of the Court of
Appeals.
We find for petitioner DBP.
Indeed, as pointed out by the DBP, the matters stated
in Gos Request for Admission are the same as those
alleged in her Supplemental Complaint. Besides, they
had already been either specifically denied or admitted
in DBPs Answer to the Supplemental Complaint. To
require the DBP to admit these matters under Rule 26
of the Rules of Court would be pointless and
superfluous. Sections 1 and 2 of Rule 26, before their
amendment took effect on 1 July 1997, read:
_______________
24
11 Id., pp. 31-34. Penned by Associate Justice Alicia L.
Santos, with Associate Justices Ramon A. Barcelona
and Rodrigo V. Cosico concurring.
12 Rollo, pp. 146-152.
13 Id., p. 36.
323
VOL. 470, SEPTEMBER 20, 2005
323
Development Bank of the Philippines vs. Court of
Appeals
SECTION 1. Request for admission.At any time after
issues have been joined, a party may file and serve
upon any other party a written request for the
admission by the latter of the genuineness of any
relevant documents described in and exhibited with
the request or of the truth of any relevant matter of
fact set forth in the request. Copies of the documents
shall be delivered with the request unless copies have
already been furnished.
SEC. 2. Implied admission.Each of the matters of
which an admission is requested shall be deemed
admitted unless, within a period designated in the
request, which shall not be less than ten (10) days
after service thereof, or within such further time as the
court may allow on motion and notice, the party to
whom the request is directed serves upon the party
requesting the admission a sworn statement either
denying specifically the matters of which an admission
is requested or setting forth in detail the reasons why
he cannot truthfully either admit or deny those
matters.
Objections on the ground of irrelevancy or impropriety
of the matter requested shall be promptly submitted to
the court for resolution.
We have held in Po v. Court of Appeals14 that [a]
party should not be compelled to admit matters of fact
already admitted by his pleading and to make a
second denial of those already denied in his answer to
the complaint.
The Po doctrine was brought a step further in Concrete
Aggregates Co. v. Court of Appeals,15 where we ruled
that if the factual allegations in the complaint are the
very same allegations set forth in the request for
admission and have already been specifically denied
or otherwise dealt with in the answer, a response to
the request is no longer required. It becomes,
therefore, unnecessary to dwell on the issue of the
propriety of
_______________
14 G.R. No. L-34341, 22 August 1988, 164 SCRA 668,
670. See Briboneria v. Court of Appeals, G.R. No.
101682, 14 December 1992, 216 SCRA 607; Concrete
Aggregates Co. v. Court of Appeals, 334 Phil. 77; 266
SCRA 97 (1997); Laada v. Court of Appeals, 426 Phil.
249; 375 SCRA 543 (2002); Duque v. Court of Appeals,
433 Phil. 33; 383 SCRA 520 (2002).
15 Supra.
324
25
324
SUPREME COURT REPORTS ANNOTATED
Development Bank of the Philippines vs. Court of
Appeals
an unsworn response to the request for admission. The
reason is obvious. A request for admission that merely
reiterates the allegations in an earlier pleading is
inappropriate under Rule 26 of the Rules of Court,
which, as a mode of discovery, contemplates of
interrogatories that would clarify and tend to shed light
on the truth or falsity of the allegations in the
pleading. Rule 26 does not refer to a mere reiteration
of what has already been alleged in the pleadings.16
Hence, the DBP did not even have to file its Comment
on Gos Request for Admission, which merely
reproduced the allegations in her complaint. DBPs
Answer itself controverts the averments in the
complaint and those recopied in the request for
admission.
Even assuming that a reply to the request is needed, it
is undisputed that the DBP filed its Comment either
admitting or specifically denying again the matters
sought to be admitted and stating the reasons
therefor. That the Comment was not under oath is not
a substantive, but merely a formal, def ect which can
be excused in the interest of justice conformably to the
well-entrenched doctrine that all pleadings should be
liberally construed as to do substantial justice.17 The
filing of such Comment substantially complied with
Rule 26. Consequently, the DBP cannot be deemed to
have impliedly admitted the matters set forth in the
Request for Admission for the mere reason that its
Comment was not under oath.
At any rate, the petitioner submitted a Manifestation,
together with an affidavit incorporating its specific
denials of Gos factual allegations, immediately after it
filed its Comment on the Request for Admission and
before the RTC issued the questioned 9 June 1997
Order, with a view to avoid any technicalities on the
matter. The filing of the affidavit amounted also to a
substantial compliance with the requirements of Rule
26 of the Rules of Court.
_______________
16 Concrete Aggregates Co. v. Court of Appeals, supra
note 14.
17 Concrete Aggregates Co. v. Court of Appeals, supra
note 14.
325
VOL. 470, SEPTEMBER 20, 2005
325
Development Bank of the Philippines vs. Court of
Appeals
Moreover, some of the matters sought to be admitted
in the Request for Admission were matters of law or
opinions, to wit:
20. Section 6 of Act No. 3135, as amended, recognizes
the right of redemption, just as it provides the amount
to be paid by a redemptioner. On the other hand,
Section 30, Rule 39, Revised Rules of Court specifically
defines the amount which a redemptioner must pay.
26
21. Accordingly, plaintiffs offer to redeem two subject
properties[,] as earlier mentioned, were in accord with
the said provisions of Act No. 3135, as amended, and
Rule 39 of the Revised R[u]les of Court and such offer
to redeem should be well-placed in law and procedure.
22. Plaintiff exercised the right of redemption on
January 11, 1996, within the prescribed period of six
(6) years, two subject properties being redeemed are
covered by Free Patent titles. She made a tender of the
offer. A substantial compliance with the requisites in
law was met.
Under Section 1 of Rule 26 of the Rules of Court, the
scope of matters that a party may request the
adversary to admit are (1) the genuineness of any
material and relevant document described in and
exhibited with the request; and (2) the truth of any
material and relevant matter of fact set forth in the
request. The rule authorizing a party to call on the
other party to make an admission implies the making
of demands for admission of relevant and material
matters of facts18and not for admission of matters
of law,19 conclusions,20 or opinions.21
_______________
18 Caddo Grocery & Ice v. Carpenter, 285 S.W. 2d 470
(1955), cited in 2 RUPERTO G. MARTIN, RULES OF
COURT IN THE PHILIPPINES 98 (1973) (hereafter 2
MARTIN).
19 Gore v. Cunningham, 297 S.W. 2d 287 (1956), cited
in 2 MARTIN 98-99.
20 Dukas v. Tolmach, 153 N.Y.S. 2d 392 (1956), cited in
2 MARTIN 99.
21 Koppel Industrial Car & Equipment Co. v. Portalis &
Co., 195 N.Y.S. 24 (1922), cited in 2 MARTIN 99.
326
326
SUPREME COURT REPORTS ANNOTATED
Development Bank of the Philippines vs. Court of
Appeals
Since the afore-quoted allegations are matters of law
or opinion, they are improper matters and cannot
therefore be deemed impliedly admitted under Rule
26.
Finally, the Court of Appeals erred in ruling that the
DBP failed to timely raise its objections to the
impropriety of the matters requested for admission.
At the time Go made use of discovery proceedings
under Rule 26, the governing rule before its
amendment took effect on 1 July 1997 read:
Objections on the ground of irrelevancy or impropriety
of the matter requested shall be promptly submitted to
the court for resolution.
Petitioner DBPs objection to the impropriety of some
of the matters requested was promptly made as early
as the filing of its comment on the request for
admission. DBPs comment consistently averred that it
had already dealt with the matters in question in its
answer, either admitting or specifically denying them.
Moreover, during the 20 May 1997 hearing, the
counsel for DBP manifested the foregoing in open
27
court. In so doing, the DBP, in effect, argued that the
matters in question are redundant and, therefore,
improper subjects for admission.
It must be stressed that the rule on admission as a
mode of discovery is intended to expedite trial and to
relieve parties of the costs of proving facts which will
not be disputed on trial and the truth of which can be
ascertained by reasonable inquiry.22 Thus, if a
request for admission would only serve to delay the
proceedings by abetting redundancy in the pleadings,
the intended purpose for the rule would certainly be
defeated.23 After all, rules of procedures are intended
to pro-
_______________
22 Concrete Aggregates Co. v. Court of Appeals, supra
note 14, citing Uy Chao v. De La Rama Steamship Co.,
Inc., 116 Phil. 392; 6 SCRA 69 (1962).
23 Laada v. Court of Appeals, supra note 14.
327
VOL. 470, SEPTEMBER 20, 2005
327
Development Bank of the Philippines vs. Court of
Appeals
mote, not to defeat, substantial justice and should not
therefore be applied in a very rigid and technical
sense.24
WHEREFORE, in view of all the foregoing, the instant
petition is GRANTED and the questioned Decision of
the Court of Appeals dated 6 August 2001 and its
Resolution dated 16 April 2002 in CA-G.R. SP No.
62142 are REVERSED and SET ASIDE. The Regional
Trial Court of Makati City, Branch 148, is directed to
proceed with reasonable dispatch with the trial of Civil
Case No. 96-483.
Costs against the private respondent.
SO ORDERED.
Quisumbing, Ynares-Santiago and Carpio, JJ.,
concur.
Azcuna, J., I take no part. I was DBP Director in
1990.
Petition granted, questioned decision and resolution
reversed and set aside.
Note.A party should not be benefited by the
deleterious manipulation of the rules of procedure.
(Pioneer Insurance and Surety Corporation vs. De Dios
Transportation Co., Inc., 406 SCRA 639 [2003])
o0o
G.R. No. 102390. February 1, 2002.*
REY LAADA, petitioner, vs. COURT OF APPEALS and
SPS. ROGELIO and ELIZA HEMEDEZ, respondents.
G.R. No. 102404. February 1, 2002.*
NESTL PHILIPPINES, INC. and FRANCIS SANTOS,
petitioners, vs. COURT OF APPEALS and SPS. ROGELIO
and ELIZA HEMEDEZ, respondents.
Remedial Law; Evidence; Request for Admission; There
is no reason to strictly construe the phrase the party
to whom the request is directed to refer solely or
personally to the petitioners themselves.In the case
at bar, neither is there a showing that petitioners
28
Nestl and Santos did not authorize their respective
counsel to file in their behalf the respective answers
requested of them by private respondents in the
latters written request for admission. As this Court has
said, there is no reason to strictly construe the phrase
the party to whom the request is directed to refer
solely or personally to the petitioners themselves.
Same; Same; Same; The rule on admission as a mode
of discovery is intended to expedite trial and to
relieve parties of the costs of proving facts which will
not be disputed on trial and the truth of which can be
ascertained by reasonable inquiry.The Court
reiterated that ruling in Briboneria v. Court of Appeals
and in Concrete Aggregates Corporation v. Court of
Appeals. In the latter case, the Court emphasized that
the rule on admission as a mode of discovery is
intended to expedite trial and to relieve parties of the
costs of proving facts which will not be disputed on
trial and the truth of which can be ascertained by
reasonable inquiry. Thus, if the request for admission
only serves to delay the proceedings by abetting
redundancy in the pleadings, the intended purpose for
the rule will certainly be defeated.
Same; Same; Same; The application of the rules on
modes of discovery rests upon the sound discretion of
the court.The application of the rules on modes of
discovery rests upon the sound discretion of the court.
In the same vein, the determination of the sanction to
be imposed upon a party who fails to comply with the
modes of discovery rests on the same sound judicial
discretion. It is the duty of the courts to examine
thoroughly
_______________
* SECOND DIVISION.
544
544
SUPREME COURT REPORTS ANNOTATED
Laada vs. Court of Appeals
the circumstances of each case and to determine the
applicability of the modes of discovery, bearing always
in mind the aim to attain an expeditious administration
of justice. It need not be emphasized that upon the
courts shoulders likewise rests the burden of
determining whether the response of the requested
party is a specific denial of the matters requested for
admission.
PETITION for review on certiorari of a decision of the
Court of Appeals.
The facts are stated in the opinion of the Court.
Platon, Martinez, Flores, San Pedro and Leao for
petitioners.
Agustin C. Napeas for petitioner R. Lada.
J. Cesar S. Sangco for private respondents.
Marciano P. Brion for respondent J. Alimagno and P.
Galasao.
DE LEON, JR., J.:
29
May the counsel of a party to whom a written request
for admission is addressed under Section 1, Rule 26 of
the Rules of Court, answer such request for his client?
This is the question posed for resolution in these two
(2) consolidated petitions for review on certiorari1 of
the Decision of the Court of Appeals dated July 24,
19912 that resolved the issue in the negative.
The facts attending the tragic incident that triggered
the filing in the Regional Trial Court (RTC) of Laguna of
Civil Case No. B-2762, an action for damages, by the
spouses Rogelio Hemedez and Eliza Garcia Hemedez,
are as follows:
The Union of Filipro Employees (UFE) declared a strike
on account of alleged unfair labor practices committed
by Nestl Philippines, Inc. (Nestl) and put up a picket
line in front of the com-
_______________
1 Per the Resolution of February 5, 1992 (Rollo, G.R.
No. 102390, p. 84).
2 Associate Justice Alfredo L. Benipayo, ponente, with
Associate Justices Manuel C. Herrera and Cancio C.
Garcia, concurring.
545
VOL. 375, FEBRUARY 1, 2002
545
Laada vs. Court of Appeals
panys factory in Niugan, Cabuyao, Laguna. On
October 27, 1987, the National Labor Relations
Commission (NLRC) issued a temporary restraining
order (TRO) enjoining the UFE, its sympathizers and
agents to desist from blocking, barricading and
obstructing the points of ingress and egress from
Nestls Cabuyao plant. To enforce the TRO, Nestl
sought the assistance of both the 224th Philippine
Constabulary (PC) Company in Camp Eldridge, Los
Baos, Laguna, under the command of PC/Capt. Rey
Laada, and the members of the Cabuyao police
department under the command of P/Maj. Lorenzo T.
Malaga, as well as the fire brigade of Cabuyao. In order
that it could transfer its products from the Cabuyao
factory to its warehouse in Taguig, Metro Manila during
the strike, Nestl hired the trucks of the Alimagno
brothers, Constancio, Jr., who was then the Officer-in-
Charge of Cabuyao, and Jesus.
On October 29, 1987, Alexander Asinas of the UFE and
Francis Santos of Nestl agreed to constitute a panel
to discuss about the said trucks and the scabs allowed
to sneak into the Cabuyao plant, as the matter did not
appear to have been covered by the TRO. However, in
apparent bad faith, Santos signaled both the PC
contingent to disperse the strikers at the barricades in
front of the plant gate, and the overloaded cargo
trucks waiting inside the compound to proceed with
getting out of the plant. Thus, the PC contingent, both
in uniform and in plain clothes, and armed with
armalites, began hitting the strikers with truncheons
as water cannons from fire trucks assisted them in the
dispersal operation that resulted in the arrest of
fourteen (14) strikers and injuries to many others. With
gate cleared, the cargo trucks began leaving the
30
compound with some turning to the right and others to
the left into the national road. Although stones thrown
by some strikers broke the windshields of some trucks,
all five (5) trucks succeeded in leaving the compound.
That was the situation in the dispersal operation when
Dr. Vied Vemir Garcia Hemedez arrived in the area on
board his car, a Ford Escort 4-door sedan, model 1975,
with plate No. DOG-689, on his way home from his
masteral class at the University of the Philippines
College of Public Health. He stopped his car not
knowing that the sixth ten-wheeler truck owned by
Jesus Alimagno and
546
546
SUPREME COURT REPORTS ANNOTATED
Laada vs. Court of Appeals
driven by Pacifico Galasao, was then leaving the Nestl
compound in full speed. To avoid stones being thrown
at his direction, Galasao was driving in a crouching
position. However, considering the length of the truck
that was also overloaded, Galasao lost control of it.
After turning left to the national road, the truck
zigzagged northward until it reached the soft shoulder
on the right side of the national road where Galasao
abruptly swerved the truck to the left to avoid the
strikers. However, he was not able to swerve the truck
back to the right to stay on course on the road.
Because Galasao did not stop nor slow it down, the
truck went diagonally across to the left side of the
road, bumped the car of Dr. Hemedez, and dragged it
until the car turned upside down. In Galasaos attempt
to straighten his course, he also side-swept a house off
the road, rammed down a beauty parlor, and run over
and killed two (2) persons sitting on a bench near the
parlor facing the Iglesia ni Cristo chapel. The truck
stopped as it crashed into the chapels reinforced
concrete wall and post. Galasao rose from his seat, got
off the truck, and, apparently anticipating an attack,
proceeded to the chapel with a lead pipe in hand while
his helpers armed themselves with stones.
Pinned down by his overturned car, Dr. Hemedez
mustered strength to ask someone to inform his
parents, through a doctor friend, about the incident as
he pleaded with people around to extricate him from
under the truck. Capt. Laada and some PC soldiers
immediately rushed to the truck to prevent people
from looting it. At that moment, the brothers of Dr.
Hemedez, namely, Roel, Emeterio and Rogelio, Jr.,
followed by their mother, Mrs. Eliza Hemedez, and her
daughter, Andora, arrived. Roel and Emeterio tried to
pull Dr. Hemedez out of his car to no avail. Roel cut the
ropes holding the canvass covering the load of the
truck in preparation for its being lifted, and asked the
PC soldiers to unload or allow them to unload the
trucks cargo. The soldiers referred Roel to Capt.
Laada who, however, refused to unload the cargo of
the truck for fear that the cargo might be looted. Mrs.
Hemedez made the same plea to Capt. Laada and
Jesus Alimagno who had arrived in the area, but she
was met with the same adamant refusal to unload the
cargo for fear that there might be looting,
31
notwithstanding that Dr. Hemedez was the godson of
Constancio Ali-
547
VOL. 375, FEBRUARY 1, 2002
547
Laada vs. Court of Appeals
magno, Sr. It was two (2) hours later when the cargo
was finally unloaded to other trucks that Dr. Hemedez
was finally pulled out from under Galasaos truck, and
brought to the Perpetual Help Hospital in Bian,
Laguna where he died shortly after arrival thereat. He
died due to Intra-thoracic hemorrhage, massive, due
to severe impact (Vehicular Accident). Mrs. Hemedez
witnessed in pain the agony of her helpless son as a
consequence of the refusal of Capt. Laada and the PC
soldiers to help them save his life. The Hemedez family
tried to pay Funeraria Dionicio for the funeral services
rendered for Dr. Hemedez but its owner, Dionicio
Hemedez, refused to accept payment on the ground
that Miguela Alimagno, the mother of Jesus, undertook
to pay for it.3
On December 8, 1987, the spouses Rogelio and Eliza
Hemedez, parents of Dr. Hemedez, filed Civil Case No.
B-2762 in the RTC of Laguna against Nestl, Jesus
Alimagno, Francis Santos, Pacifico Galasao, and
PC/Capt. Rey Laada, praying for the award of Thirty
Thousand Pesos (P30,000.00) as indemnity for Dr.
Hemedez death, Eleven Million Four Hundred
Thousand Pesos (P11,400,000.00) representing loss of
earnings of the deceased, Eighty Thousand Pesos
(P80,000.00) as actual compensation for the
destruction of his car, moral and exemplary damages,
and attorneys fees.
In their answer to the complaint, Nestl and Santos
denied liability for the death of Dr. Hemedez. They
interposed as special and affirmative defenses that
Nestl and Belltown Transport Services, Inc., an
independent contractor, had a trucking and hauling
agreement whereby Belltown agreed to make
deliveries of the products of Nestl and assumed
liability for any injuries or damages to properties
that would arise from the agreement. They alleged
that the accident happened in the course of an illegal
strike and hence, the proximate cause of Dr. Hemedez
death was the violent assault by the strikers against
the truck. They averred that the complaint should be
dismissed for failure to implead UFE, its officers and
striking members, as indispensable parties. They
alleged further that the incident happened outside of
Nestls premises and that when they came to know
about it, they ordered
_______________
3 Complaint in Civil Case No. B-2762.
548
548
SUPREME COURT REPORTS ANNOTATED
Laada vs. Court of Appeals
the lifting of the truck by Nestls own forklift. The
delayed unloading of the cargo from the truck thus
32
rested upon Belltowns sole judgment. They set up a
cross-claim against Galasao in order that he could
reimburse them should they be adjudged liable, and a
counterclaim for attorneys fees for what they called
an unfounded suit.
For his part, Capt. Laada dismissed the claims for his
liability. He asserted that the unruly mobs attack on
the trucks that built up a monstrous traffic jam
caused the incident. While he and his men exerted all
efforts to save all casualties and not just Dr. Hemedez,
the plaintiffs misconstrued his acts as refusal in their
obsessive and hysterical desire to extricate their
stricken relative from the place of the accident without
regard to the welfare and well-being of the larger
throng of persons some of whom were also injured who
were just as well entitled to or deserving protection
from the contingent of PC soldiers. He interposed a
counterclaim for moral damages and attorneys fees
arising from the plaintiffs having unjustly impleaded
him in the baseless suit designed to be a speculative
monetary claim against Nestl.
Thereafter, the Hemedez spouses served the
defendants a request for admission of the truth of the
facts set forth in their complaint and the genuineness
of each of the documents appended thereto. Through
their respective counsel, Nestl and Santos, Capt.
Laada, and Alimagno and Galasao filed their verified
answer to the request for admission.
Contending that under Section 2 of Rule 26 of the
Rules of Court the parties themselves and not their
counsel should personally answer the request for
admission and hence the answer filed by their counsel
in their behalf was by nature based on hearsay, they
sought the striking out of said answers. On the other
hand, the defendants asserted that they observed the
rules in filing their answers, through their lawyers, to
the request for admission.
Hence, the trial court4 issued an Order dated April 10,
1989 denying for lack of merit the Hemedez spouses
motion to strike out the defendants answers and/or
declare the matters sought to be
_______________
4 Presided by Judge Minita Chico-Nazario.
549
VOL. 375, FEBRUARY 1, 2002
549
Laada vs. Court of Appeals
admitted as impliedly admitted. It held that the
grounds relied upon by plaintiffs counsel in his motion
were more formal than substantial for several
reasons. First, by signing and verifying the answer to
the request for admission, the counsel of a defendant
or defendants reposed upon himself the same
undertaking the defendant would have undertaken had
he been the one who verified the answer. Second,
since the purpose of verification is merely to serve as
an assurance that the allegations in the pleading are
true and correct and not the product of imagination,
and that the pleading is filed in good faith, the
absence of verification is formal and not jurisdictional.
33
Third, the defendants were bound by the acts of the
counsel of their choice. Fourth, the generalizations
made in the answer were expected because the
plaintiffs requests for admission were substantially
identical with the allegations in their complaint. The
lower court concluded:
A cursory reading of the adverted answers to the
complaint would show that defendants have
substantially complied with the requirements of the
rules by so specifically denying the matters which they
could not admit and indicating the reasons why they
could not admit or deny the specific matters sought to
be admitted, thus leaving such matter controverted.
The veracity, therefore, of their denial or uncommitted
stand, is a matter that could be determined only in a
full blown trial on the merit where parties could amply
support their respective claim.
The Hemedez spouses sought a reconsideration of that
Order through an omnibus motion (a) asserting that
the matters sought to be admitted were decisive on
the respective liabilities of all defendants; (b)
stressing the need to resolve the relevancy and
materiality of the specific matters requested to be
admitted and which were neither admitted nor denied
by the defendants; and (c) seeking permission to
amend the complaint to implead as indispensable
parties-defendants Belltown Transport Services, Inc.,
Magnolia Freight Services, and Constancio Alimagno, Jr.
Nestl, Santos and Capt. Laada opposed the omnibus
motion on the grounds that: (a) it was filed out of time,
(b) it raised no new matters not already taken up in
the questioned Order, and (c) to allow amendment of
the complaint would result in delay in the proceedings.
550
550
SUPREME COURT REPORTS ANNOTATED
Laada vs. Court of Appeals
On July 24, 1989, the lower court denied the omnibus
motion except the prayer to amend the complaint. It
stressed that in that particular stage of the
proceedings, the court could not make a categorical
ruling as to the veracity of the denials made by
defendants of certain facts based on immateriality,
irrelevancy or for lack of information until after it has
considered in a full blown trial all the evidence
presented and pertinent to the issue of the case.
Refusing to budge from their stand, the Hemedez
spouses sought the review of both Orders of the lower
court via a petition for certiorari that was filed on
August 16, 1989 and docketed in this Court as G.R. No.
89399. The First Division of this Court referred the
petition to the Court of Appeals where it was docketed
as CA-G.R. No. 18894. On July 24, 1991, the Court of
Appeals rendered the Decision annulling the lower
courts Orders of April 10, 1989 and July 24, 1989,
granting the motions to strike out the answers subject
of the requests for admission and declaring each of the
matters requested to be impliedly admitted, and
remanding the case to the court aquo for proper
proceedings.
34
Hence, the instant consolidated petitions for review on
certiorari. As earlier stated, the petitioners offer for
resolution the principal issue of whether or not an
answer to a request for admission signed and sworn to
by the counsel of the party so requested is sufficient
compliance with the provisions of Rule 26 of the Rules
of Court. In other words, should a person to whom a
request for admission is addressed personally answer
the request? Two (2) other collateral issues need
resolution: (a) whether or not each answer of the
requested party-defendant to the statements sought
to be admitted is a specific denial in accordance with
the rules, and (b) whether or not the motion for
reconsideration of the questioned Order of April 10,
1989 was timely filed.
The provision of Rule 26 of the Rules of Court, the
matrix upon which the resolution of these petitions
rests, state:
SEC. 2. Implied admission.Each of the matters of
which an admission is requested shall be deemed
admitted unless, within a period designated in the
request, which shall not be less than ten (10) days
after service thereof, or within such further time as the
court may allow on motion and notice, the party to
whom the request is directed serves upon the party
requesting the admission a sworn statement either
denying
551
VOL. 375, FEBRUARY 1, 2002
551
Laada vs. Court of Appeals
specifically or setting forth in detail the reasons why
he cannot truthfully either admit or deny those
matters.
Objections on the ground of irrelevancy or impropriety
of the matter requested shall be promptly submitted to
the court for resolution. (Italics supplied.)5
The issue for resolution thus calls for an interpretation
of the phrase the party to whom the request is
directed. This is not the first time that the Court is
faced with the issue of whether a party requested to
make admissions may reply or answer through his
counsel. In PSCFC Financial Corporation v. Court of
Appeals,6 the petitioner therein served upon the
Banco Filipino Savings and Mortgage Bank, a written
request for admission of the truth of certain factual
matters. Through Philip Sigfrid A. Fortun, who was not
yet a lawyer when Banco Filipino inaugurated its
financing plan in 1968, Banco Filipino made the
requested admissions but denied that the financing
corporation had availed of the Home Financing Plan
subject of controversy. Obviously objecting to the
reply, the petitioner therein made a second request for
admission. In resolving the issue of whether or not the
answer to the request for admission under Rule 26
should be made by the party himself
_______________
5 Under the 1997 Rules of Civil Procedure, this rule
states:
35
SEC. 2. Implied admission.Each of the matters of
which an admission is requested shall be deemed
admitted unless, within a period designated in the
request, which shall not be less than fifteen (15) days
after service thereof, or within such further time as the
court may allow on motion, the party to whom the
request is directed files and serves upon the party
requesting the admission of a sworn statement either
denying specifically the matters of which an admission
is requested or setting forth in detail the reasons why
he cannot truthfully either admit or deny those
matters.
Objections to any request for admission shall be
submitted to the court by the party requested within
the period for and prior to the filing of his sworn
statement as contemplated in the preceding
paragraph and his compliance therewith shall be
deferred until such objections are resolved, which
resolution shall be made as early as practicable.
6 216 SCRA 838 (1992).
552
552
SUPREME COURT REPORTS ANNOTATED
Laada vs. Court of Appeals
and nobody else, not even his lawyer, the Court
issued a Resolution stating as follows:
The argument is untenable. Section 21 of Rule 138
states
SEC. 21. Authority of attorney to appear.An attorney
is presumed to be properly authorized to represent any
cause in which he appears, and no written power of
attorney is required to authorize him to appear in court
for his client x x x .
Petitioner has not shown that the case at bar falls
under any of the recognized exceptions as found in
Art. 1878 of the Civil Code which enumerates the
instances when special powers of attorney are
necessary, or in Rule 20 of the Rules of Court on pre-
trial where the parties and their attorneys are both
directed to appear before the court for a conference;
so that for counsel to appear at the pre-trial in behalf
of his client, he must clothe the former with an
adequate authority in the form of a special power of
attorney or corporate resolution.
Section 23 of Rule 138 provides that (a)ttorneys have
authority to bind their clients in any case by any
agreement in relation thereto made in writing, and in
taking appeals, and in all matters of ordinary judicial
procedure x x x.
Thus, when Rule 26 states that a party shall respond to
the request for admission, it should not be restrictively
construed to mean that a party may not engage the
services of counsel to make the response in his behalf.
Indeed, the theory of petitioner must not be taken
seriously; otherwise, it will negate the principles on
agency in the Civil Code, as well as Sec. 23, Rule 138,
of the Rules of Court.
Nonetheless, even assuming arguendo that Atty. Philip
Sigfrid Fortun overstepped his authority, it is only his
client, respondent Banco Filipino, which has the
prerogative to impugn his acts and not petitioner, the
36
adverse party. Interestingly, Banco Filipino has not
objected to the response made by its counsel in its
behalf. (Italics supplied.)7
In the case at bar, neither is there a showing that
petitioners Nestl and Santos did not authorize their
respective counsel to file in their behalf the respective
answers requested of them by private respondents in
the latters written request for admission. As this Court
has said, there is no reason to strictly construe the
phrase
_______________
7 Id., p. 842.
553
VOL. 375, FEBRUARY 1, 2002
553
Laada vs. Court of Appeals
the party to whom the request is directed to refer
solely or personally to the petitioners themselves.
Moreover, as correctly observed by the lower court,
the subject matters of the request for admission are
the same as the ultimate facts alleged in the complaint
for which private respondents have filed their
respective answers. Private respondents thus desired
the petitioners to admit once again the very matters
they had dealt with in their respective answers. In Po v.
Court of Appeals, this Court said:
A party should not be compelled to admit matters of
fact already admitted by his pleading and concerning
which there is no issue (Sherr vs. East, 71 A2d, 752,
Terry 260, cited in 27 C.J.S. 91), nor should he be
required to make a second denial of those already
denied in his answer to the complaint. A request for
admission is not intended to merely reproduce or
reiterate the allegations of the requesting partys
pleading but should set forth relevant evidentiary
matters of fact, or documents described in and
exhibited with the request, whose purpose is to
establish said partys cause of action or defense.
Unless it serves that purpose, it is, as correctly
observed by the Court of Appeals, pointless, useless,
and a mere redundancy.8
The Court reiterated that ruling in Briboneria v. Court
of Appeals9 and in Concrete Aggregates Corporation v.
Court of Appeals.10 In the latter case, the Court
emphasized that the rule on admission as a mode of
discovery is intended to expedite trial and to relieve
parties of the costs of proving facts which will not be
disputed on trial and the truth of which can be
ascertained by reasonable inquiry. Thus, if the request
for admission only serves to delay the proceedings by
abetting redundancy in the pleadings, the intended
purpose for the rule will certainly be defeated.
Moreover, as the Court has observed in Briboneria,
Sec. 1 of Rule 26 requires that the request for
admission must be served directly upon the party
requested. Otherwise, that party cannot be deemed to
have admitted the genuineness of any relevant
matters
_______________
37
8 164 SCRA 668, 670 (1988).
9 216 SCRA 607 (1992).
10 334 Phil. 77; 266 SCRA 88 (1997).
554
554
SUPREME COURT REPORTS ANNOTATED
Laada vs. Court of Appeals
of fact set forth therein on account of failure to answer
the request for admission. It is thus unfair and
unreasonable for private respondents to expect the
petitioners to answer the requests for admission that
they in fact did not personally receive. Private
respondents failure to serve copies of the request for
admission directly upon the petitioners themselves
suffices to warrant denial of the motion to strike out
petitioners responses to said request.
The application of the rules on modes of discovery
rests upon the sound discretion of the court. In the
same vein, the determination of the sanction to be
imposed upon a party who fails to comply with the
modes of discovery rests on the same sound judicial
discretion.11 It is the duty of the courts to examine
thoroughly the circumstances of each case and to
determine the applicability of the modes of discovery,
bearing always in mind the aim to attain an
expeditious administration of justice.12 It need not be
emphasized that upon the courts shoulders likewise
rests the burden of determining whether the response
of the requested party is a specific denial of the
matters requested for admission.
While the Court upholds the petitioners contention on
the propriety of an answer to a request for admission
being filed by counsel, there is no merit in their
contention on the late filing of private respondents
omnibus motion. It is indeed a fact that private
respondents received a copy of the questioned Order
of April 10, 1989 on April 26, 1989 and that they filed
the omnibus motion by registered mail only on June
21, 1989 or fifty-six (56) days thereafter. Petitioners
contend that the omnibus motion should have been
filed within the 15-day reglementary period as required
by Section 39 of the Judiciary Reorganization Act of
1980. Suffice it to state that the Order sought to be
reconsidered by the lower court did not finally dispose
of the merits of the case so that it should be covered
by the reglementary period stated in Section 39. That
section speaks of final orders13 and not
interlocutory ones or those that
_______________
11 Dela Torre v. Pepsi Cola Products Phils., Inc., 298
SCRA 363 (1998).
12 Insular Life Assurance Co., Ltd. v. Court of Appeals,
238 SCRA 88, 93 (1994).
13 Sec. 39 states that (t)he period for appeal from
final orders, resolutions, awards, judgments, or
decisions of any court in all cases shall be
555
VOL. 375, FEBRUARY 1, 2002
555
38
Laada vs. Court of Appeals
leave something to be done by the court before the
case is finally decided on the merits.14 By denying
the motion to strike out the answers of private
respondents to petitioners request for admission, the
lower court did not terminate the proceedings. When it
ruled on the omnibus motion which petitioners believe
was filed out of time, the lower court simply disposed
of a matter that was, in a manner of speaking, getting
in the way of the expeditious disposition of the case.
Private respondents who should be most interested in
the speedy disposition of the case unfortunately and
unwittingly caused its delay by a request for admission
that only achieved nothing but further delay in the
proceedings.
WHEREFORE, the consolidated petitions for review on
certiorari are GRANTED. The questioned Decision of
the Court of Appeals dated July 24, 1991 is SET ASIDE,
and the Regional Trial Court of Laguna is ordered to
proceed with dispatch in the resolution of Civil Case
No. B-2762.
SO ORDERED.
Bellosillo (Chairman), Mendoza, Quisumbing and
Buena, JJ., concur.
Petitions granted, judgment set aside.
Note.Like the other modes of discovery authorized
by the Rules of Court, the purpose of written
interrogatories is to assist the parties in clarifying the
issues and in ascertaining the facts involved in a case.
(Dela Torre vs. Pepsi Cola Products Phils., Inc., 298
SCRA 363 [1998])
o0o
G.R. No. 172175. October 9, 2006.*
SPS. EXPEDITO ZEPEDA AND ALICE D. ZEPEDA,
petitioners, vs. CHINA BANKING CORPORATION,
respondent.
Remedial Law; Actions; Cause of Action; A cause of
action is a formal statement of the operative facts that
give rise to a remedial right; Question of whether the
complaint states a cause of action is determined by its
averments regarding the acts committed by the
defendant; Essential elements of a cause of action.A
cause of action is a formal statement of the operative
facts that give rise to a remedial right. The question of
whether the complaint states a cause of action is
determined by its averments regarding the acts
committed
_______________
* FIRST DIVISION.
127
VOL. 504, OCTOBER 9, 2006
127
Zepeda vs. China Banking Corporation
by the defendant. Thus it must contain a concise
statement of the ultimate or essential facts
constituting the plaintiffs cause of action. Failure to
make a sufficient allegation of a cause of action in the
complaint warrants its dismissal. As defined in
Section 2, Rule 2 of the Rules of Court, a cause of
action is the act or omission by which a party violates
39
the right of another. Its essential elements are as
follows: 1. A right in favor of the plaintiff by whatever
means and under whatever law it arises or is created;
2. An obligation on the part of the named defendant to
respect or not to violate such right; and 3. Act or
omission on the part of such defendant in violation of
the right of the plaintiff or constituting a breach of the
obligation of the defendant to the plaintiff for which
the latter may maintain an action for recovery of
damages or other appropriate relief.
Same; Same; Same; In determining whether an
initiatory pleading states a cause of action, the test is
as follows: admitting the truth of the facts alleged, can
the court render a valid judgment in accordance with
the prayer?; Only the material allegations in the
complaint are to be taken into account, extraneous
facts and circumstances or other matters aliunde are
not considered; Court may consider in addition to the
complaint the appended annexes or documents, other
pleadings of the plaintiff, or admissions in the records.
It is, thus, only upon the occurrence of the last
element that a cause of action arises, giving the
plaintiff the right to maintain an action in court for
recovery of damages or other appropriate relief. In
determining whether an initiatory pleading states a
cause of action, the test is as follows: admitting the
truth of the facts alleged, can the court render a valid
judgment in accordance with the prayer? To be taken
into account are only the material allegations in the
complaint; extraneous facts and circumstances or
other matters aliunde are not considered. The court
may consider in addition to the complaint the
appended annexes or documents, other pleadings of
the plaintiff, or admissions in the records.
Same; Same; Same; Courts finds the allegations in the
complaint sufficient to establish a cause of action for
nullifying the foreclosure of the mortgaged property.
We find the allegations in the complaint sufficient to
establish a cause of action for nullifying the foreclosure
of the mortgaged property. The fact that petitioners
admitted that they failed to redeem the property and
that the title was consolidated in respondent banks
name did not preclude them from seeking to nullify the
extrajudicial foreclosure. Precisely, peti-
128
128
SUPREME COURT REPORTS ANNOTATED
Zepeda vs. China Banking Corporation
tioners seek to nullify the proceedings based on
circumstances obtaining prior to and during the
foreclosure which render it void.
Same; Same; Interrogatories; Consequences
enumerated in Section 3(c) of Rule 29 would only
apply where the party upon whom the written
interrogatories is served, refuses to answer a
particular question in the set of written interrogatories
and despite an order compelling him to answer the
particular question, still refuses to obey the order.As
we have explained in Arellano v. Court of First Instance
of Sorsogon, 65 SCRA 46 (1975), the consequences
enumerated in Section 3(c) of Rule 29 would only
40
apply where the party upon whom the written
interrogatories is served, refuses to answer a
particular question in the set of written interrogatories
and despite an order compelling him to answer the
particular question, still refuses to obey the order. In
the instant case, petitioners refused to answer the
whole set of written interrogatories, not just a
particular question. Clearly then, respondent bank
should have filed a motion based on Section 5 and not
Section 3(c) of Rule 29.
PETITION for review on certiorari of the decision and
resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Tabalingcos & Associates Law Offices for
petitioners.
Lim, Vigilia, Alcala, Dumlao & Orencia for
respondent.
YNARES-SANTIAGO, J.:
This petition for review under Rule 45 of the Rules of
Court assails the January 24, 2006 Decision1 of the
Court of Appeals in CA-G.R. SP No. 89148 granting
respondent China Banking Corporations (Chinabank)
petition to annul the Orders dated April 1, 20042 and
October 22, 20043 of the Regional Trial
_______________
1 Rollo, pp. 26-36. Penned by Associate Justice Andres
B. Reyes, Jr. and concurred in by Associate Justices
Rosmari D. Carandang and Monina Arevalo-Zenarosa.
2 Id., at pp. 40-42.
3 Id., at pp. 43-44.
129
VOL. 504, OCTOBER 9, 2006
129
Zepeda vs. China Banking Corporation
Court of San Jose, Camarines Sur, Branch 30,4 in Civil
Case No. T-947. Also assailed is the March 31, 2006
Resolution5 denying petitioners motion for
reconsideration.
The facts are as follows.
On February 18, 2003, spouses Expedito and Alice
Zepeda filed a complaint for nullification of foreclosure
proceedings and loan documents with damages6
against respondent Chinabank before the Regional Trial
Court of San Jose, Camarines Sur, which was docketed
as Civil Case No. T-947 and raffled to Branch 30. They
alleged that on June 28, 1995, they obtained a loan in
the amount of P5,800,000.00 from respondent secured
by a Real Estate Mortgage over a parcel of land
covered by Transfer Certificate of Title (TCT) No. T-
23136.
Petitioners subsequently encountered difficulties in
paying their loan obligations hence they requested for
restructuring which was allegedly granted by
Chinabank. Hence, they were surprised when
respondent bank extrajudicially foreclosed the subject
property on October 9, 2001 where it emerged as the
highest bidder. Respondent bank was issued a
Provisional Certificate of Sale and upon petitioners
41
failure to redeem the property, ownership was
consolidated in its favor.
According to petitioners, the foreclosure proceedings
should be annulled for failure to comply with the
posting and publication requirements. They also
claimed that they signed the Real Estate Mortgage and
Promissory Note in blank and were not given a copy
and the interest rates thereon were unilaterally fixed
by the respondent.
Respondent banks motion to dismiss was denied,
hence it filed an answer with special affirmative
defenses and counterclaim. It also filed a set of written
interrogatories with 20 questions.
_______________
4 Penned by Judge Alfredo A. Cabral.
5 Rollo, p. 38.
6 Id., at pp. 63-69.
130
130
SUPREME COURT REPORTS ANNOTATED
Zepeda vs. China Banking Corporation
In an Order dated April 1, 2004, the trial court denied
Chinabanks affirmative defenses for lack of merit as
well as its motion to expunge the complaint for being
premature. The trial court reiterated its denial of
Chinabanks affirmative defenses in its Order dated
October 22, 2004 and directed the Clerk of Court to set
the pre-trial conference for the marking of the parties
documentary evidence.
Aggrieved, respondent bank filed a petition for
certiorari under Rule 65 which was granted by the
Court of Appeals. It held that the trial court gravely
abused its discretion in issuing the two assailed
Orders. It ruled that compelling reasons warrant the
dismissal of petitioners complaint because they acted
in bad faith when they ignored the hearings set by the
trial court to determine the veracity of Chinabanks
affirmative defenses; they failed to answer
Chinabanks written in-terrogatories; and the
complaint states no cause of action.
On March 31, 2006, petitioners motion for
reconsideration was denied hence, the instant petition
raising the following issues:
I. THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR WHEN IT ISSUED THE ASSAILED
DECISION DECLARING THAT THE PETITIONER[S]
COMPLAINT DATED 12 FEBRUARY 2003 HAS NO CAUSE
OF ACTION.
II. CAUSE OF ACTION HAS BEEN SUFFICIENTLY
ESTABLISHED IN THE COMPLAINT AND THE GROUND
RELIED UPON BY THE PRIVATE RESPONDENT BANK ARE
MERE EVIDENTIARY MATTERS.7
The issues for resolution are: a) whether the complaint
states a cause of action and b) whether the complaint
should be dismissed for failure of petitioners to answer
respondents written interrogatories as provided for in
Section 3(c), Rule 29 of the Rules of Court.
The petition is meritorious.
_______________
42
7 Id., at p. 12.
131
VOL. 504, OCTOBER 9, 2006
131
Zepeda vs. China Banking Corporation
Anent the first issue, the Court of Appeals ruled that
the complaint failed to state a cause of action because
petitioners admitted that they failed to redeem the
property and that ownership of the same was
consolidated in the name of Chinabank.
A cause of action is a formal statement of the
operative facts that give rise to a remedial right. The
question of whether the complaint states a cause of
action is determined by its averments regarding the
acts committed by the defendant. Thus it must
contain a concise statement of the ultimate or
essential facts constituting the plaintiffs cause of
action. Failure to make a sufficient allegation of a
cause of action in the complaint warrants its
dismissal.8
As defined in Section 2, Rule 2 of the Rules of Court, a
cause of action is the act or omission by which a party
violates the right of another. Its essential elements are
as follows:
1. A right in favor of the plaintiff by whatever means
and under whatever law it arises or is created;
2. An obligation on the part of the named defendant to
respect or not to violate such right; and
3. Act or omission on the part of such defendant in
violation of the right of the plaintiff or constituting a
breach of the obligation of the defendant to the
plaintiff for which the latter may maintain an action for
recovery of damages or other appropriate relief.
It is, thus, only upon the occurrence of the last
element that a cause of action arises, giving the
plaintiff the right to maintain an action in court for
recovery of damages or other appropriate relief.9 In
determining whether an initiatory pleading states a
cause of action, the test is as follows: admitting the
truth of the facts alleged, can the court render a
_______________
8 Goodyear Philippines, Inc. v. Sy, G.R. No. 154554,
November 9, 2005, 474 SCRA 427, 434.
9 Swagman Hotels and Travel, Inc. v. Court of Appeals,
G.R. No. 161135, April 8, 2005, 455 SCRA 175, 183.
132
132
SUPREME COURT REPORTS ANNOTATED
Zepeda vs. China Banking Corporation
valid judgment in accordance with the prayer? To be
taken into account are only the material allegations in
the complaint; extraneous facts and circumstances or
other matters aliunde are not considered. The court
may consider in addition to the complaint the
appended annexes or documents, other pleadings of
the plaintiff, or admissions in the records.10
In the instant case, petitioners specifically alleged that
respondent bank acted in bad faith when it
extrajudicially foreclosed the mortgaged property
43
notwithstanding the approval of the restructuring of
their loan obligation. They claimed that with such
approval, respondent bank made them believe that
foreclosure would be held in abeyance. They also
alleged that the proceeding was conducted without
complying with the posting and publication
requirements.
Assuming these allegations to be true, petitioners can
validly seek the nullification of the foreclosure since
the alleged restructuring of their debt would effectively
modify the terms of the original loan obligations and
accordingly supersede the original mortgage thus
making the subsequent foreclosure void. Similarly, the
allegation of lack of notice if subsequently proven
renders the foreclosure a nullity in line with prevailing
jurisprudence.11
We find the allegations in the complaint sufficient to
establish a cause of action for nullifying the foreclosure
of the mortgaged property. The fact that petitioners
admitted that they failed to redeem the property and
that the title was consolidated in respondent banks
name did not preclude them from seeking to nullify the
extrajudicial foreclosure. Precisely, petitioners seek to
nullify the proceedings based on circumstances
obtaining prior to and during the foreclosure which
render it void.
_______________
10 Goodyear Philippines, Inc. v. Sy, supra at p. 435.
11 Ardiente v. Provincial Sheriff, G.R. No. 148448,
August 17, 2004, 436 SCRA 655, 665.
133
VOL. 504, OCTOBER 9, 2006
133
Zepeda vs. China Banking Corporation
Anent the second issue, we do not agree with the
Court of Appeals ruling that the complaint should be
dismissed for failure of petitioners to answer
respondent banks written interrogatories.
It should be noted that respondent bank filed a motion
to expunge the complaint based on Section 3(c) of
Rule 29 which states:
SEC. 3. Other consequences.If any party or an
officer or managing agent of a party refuses to obey
an order made under section 112 of this Rule requiring
him to answer designated questions, or an order under
Rule 27 to produce any document or other thing for
inspection, copying, or photographing or to permit it to
be done, or to permit entry upon land or other
property, or an order made under Rule 28 requiring
him to submit to a physical or mental examination, the
court may make such orders in regard to the refusal as
are just, and among others the following:
_______________
12 SECTION 1. Refusal to answer.If a party or other
deponent refuses to answer any question upon oral
examination, the examination may be completed on
other matters or adjourned as the proponent of the
question may prefer. The proponent may thereafter
apply to the proper court of the place where the
44
deposition is being taken, for an order to compel an
answer. The same procedure may be availed of when a
party or a witness refuses to answer any interrogatory
submitted under Rules 23 or 25.
If the application is granted, the court shall require the
refusing party or deponent to answer the question or
interrogatory and if it also finds that the refusal to
answer was without substantial justification, it may
require the refusing party or deponent or the counsel
advising the refusal, or both of them, to pay the
proponent the amount of the reasonable expenses
incurred in obtaining the order including attorneys
fees.
If the application is denied and the court finds that it
was filed without substantial justification, the court
may require the proponent or the counsel advising the
filing of the application, or both of them, to pay to the
refusing party or deponent the amount of the
reasonable expenses incurred in opposing the
application, including attorneys fees.
134
134
SUPREME COURT REPORTS ANNOTATED
Zepeda vs. China Banking Corporation
xxxx
(c) An order striking out pleadings or parts thereof, or
staying further proceedings until the order is obeyed,
or dismissing the action or proceeding or any part
thereof, or rendering a judgment by default against
the disobedient party; and
x x x x.13
As we have explained in Arellano v. Court of First
Instance of Sorsogon,14 the consequences
enumerated in Section 3(c) of Rule 29 would only
apply where the party upon whom the written
interrogatories is served, refuses to answer a
particular question in the set of written interrogatories
and despite an order compelling him to answer the
particular question, still refuses to obey the order.
In the instant case, petitioners refused to answer the
whole set of written interrogatories, not just a
particular question. Clearly then, respondent bank
should have filed a motion based on Section 5 and not
Section 3(c) of Rule 29. Section 5 of Rule 29 reads:
SEC. 5. Failure of party to attend or serve answers.If
a party or an officer or managing agent of a party
willfully fails to appear before the officer who is to take
his deposition, after being served with a proper notice,
or fails to serve answers to interrogatories submitted
under Rule 25 after proper service of such
interrogatories, the court on motion and notice, may
strike out all or any part of any pleading of that party,
or dismiss the action or proceeding or any part thereof,
or enter a judgment by default against that party, and
in its discretion, order him to pay reasonable expenses
incurred by the other, including attorneys fees.
Due to respondent banks filing of an erroneous
motion, the trial court cannot be faulted for ruling that
the motion to expunge was premature for lack of a
prior application to compel compliance based on
Section 3.
45
_______________
13 See Rollo, p. 41.
14 G.R. No. L-34897, July 15, 1975, 65 SCRA 46, 63.
135
VOL. 504, OCTOBER 9, 2006
135
Zepeda vs. China Banking Corporation
This Court has long encouraged the availment of the
various modes or instruments of discovery as
embodied in Rules 24 to 29 of the Rules of Court.15 In
the case of Hyatt Industrial Manufacturing Corporation
v. Ley Construction and Development Corporation,16
we declared:
Indeed, the importance of discovery procedures is
well recognized by the Court. It approved A.M. No. 03-
1-09-SC on July 13, 2004 which provided for the
guidelines to be observed by trial court judges and
clerks of court in the conduct of pre-trial and use of
deposition-discovery measures. Under A.M. No. 03-1-
09-SC, trial courts are directed to issue orders
requiring parties to avail of interrogatories to parties
under Rule 45 and request for admission of adverse
party under Rule 26 or at their discretion make use of
depositions under Rule 23 or other measures under
Rule 27 and 28 within 5 days from the filing of the
answer. The parties are likewise required to submit, at
least 3 days before the pre-trial, pre-trial briefs,
containing among others a manifestation of the parties
of their having availed or their intention to avail
themselves of discovery procedures or referral to
commissioners.
The imposition of sanctions under Section 5 is within
the sound discretion of the trial court. Thus, in Insular
Life Assurance Co., Ltd. v. Court of Appeals,17 we held:
The matter of how, and when, the above sanctions
should be applied is one that primarily rests on the
sound discretion of the court where the case pends,
having always in mind the paramount and overriding
interest of justice. For while the modes of discovery
are intended to attain the resolution of litigations with
great expediency, they are not contemplated,
however, to be ultimate causes of injustice. It
behooves trial courts to examine well the
circumstances of each case and to make their
considered determination thereafter. x x x
_______________
15 Ong v. Mazo, G.R. No. 145542, June 4, 2004, 431
SCRA 56, 63.
16 G.R. No. 147143, March 10, 2006, 484 SCRA 286,
301-302.
17 G.R. No. 97654, November 14, 1994, 238 SCRA 88,
93.
136
136
SUPREME COURT REPORTS ANNOTATED
Zepeda vs. China Banking Corporation
WHEREFORE, the petition is GRANTED. The January 24,
2006 Decision and the March 31, 2006 Resolution of
46
the Court of Appeals in CA-G.R. SP No. 89148, which
granted respondent China Banking Corporations
petition to annul the April 1, 2004 and October 22,
2004 Orders of the Regional Trial Court of San Jose,
Camarines Sur, Branch 30 denying respondent banks
affirmative defenses without a hearing as well as its
motion to expunge the complaint because of
petitioners failure to answer the written
interrogatories are REVERSED and SET ASIDE. The
instant case is REMANDED to the Regional Trial Court
of San Jose, Camarines Sur, Branch 30, for further
proceedings.
SO ORDERED.
Panganiban (C.J., Chairperson), Austria-Martinez,
Callejo, Sr. and Chico-Nazario, JJ., concur.
Petition granted, judgment and resolution reversed
and set aside. Case remanded to trial court.
Note.In determining whether a complaint fails to
state a cause of action, only the allegations therein
may be properly considered. (Mondragon Leisure and
Resorts Corporation vs. United Coconut Planters Bank,
427 SCRA 585 [2004])
G.R. No. 76366. July 3, 1990.*
SPOUSES DONATO RAMIREZ AND MARIA RAMIREZ,
petitioners, vs. HON. COURT OF APPEALS, HON.
REGIONAL TRIAL COURT OF PINAMALAYAN, ORIENTAL
MINDORO AND IGMEDIO REYES, respondents.
Remedial Law; Civil Procedure; Judgments; Court finds
that there was a virtual lack of diligent effort on the
part of petitioners to pursue their defense; Decision
sought to be reviewed had already became final as
early as October 10, 1986 as decisions of any courts
become final after fifteen (15) days from receipt of the
copy thereof.It is notable that from the inception of
this case before the Regional Trial Court up to the time
it reached the Court of Appeals in both instances and
then this Court, there was a virtual lack of diligent
effort on the part of petitioners to pursue their
defense. First, there was failure to furnish a copy of the
answer to the plaintiff, respondent herein. Then, there
was failure to appear during pre-trial. Hence, they
were declared as in default. Then, instead of seeking
relief from the judgment rendered by default,
petitioners filed an ordinary appeal before the
Intermediate Appellate Court which was, however,
dismissed for failure to file appellants brief. A suit for
annulment of judgment was filed with the Regional
Trial Court of Oriental Mindoro but this was dismissed
for lack of jurisdiction. In spite of the dismissal,
petitioners did nothing, only to awaken when the writ
of possession was issued against them by filing
another suit for annulment. Again, after receiving a
copy of the questioned Court of Appeals decision on
September 25, 1987, petitioners filed a motion for
extension of time to file motion for reconsideration
only on October 13, 1986, or exactly eighteen (18)
days
_______________
* FIRST DIVISION.
154
47
154
SUPREME COURT REPORTS ANNOTATED
Ramirez vs. Court of Appeals
from receipt of the copy of the decision. Hence, the
decision sought to be reviewed had already became
final as early as October 10, 1986 as decisions of any
courts become final after fifteen (15) days from receipt
of the copy thereof.
Same; Same; Same; Motion for extension of time filed
out of time and barred by the mandatory injunction in
Habaluyas Enterprises, Inc. vs. Japson against the filing
of an extension of time to file a motion for
reconsideration.Not only was the motion for
extension of time filed out of time but also equally
barred by the mandatory injunction in Habaluyas
Enterprises Inc. v. Japson, et al., G.R. No. 70895,
August 5, 1985; 138 SCRA 46 against the filing of an
extension of time to file a motion for reconsideration.
The petition thereafter filed with this Court likewise
failed to comply with the formal requirements as it was
filed without a verified statement of material dates to
determine the timeliness of the filing of the petition
and of the payment of the docket and legal research
fund fees and lacks proofs of service to the Court of
Appeals and to the adverse party.
Same; Same; Same; Respondent Court of Appeals did
not commit any reversible error in dismissing
petitioners suit filed only on September 12, 1985 for
annulment of a judgment dated November 8, 1982.
Even after a judicious consideration of the arguments
and counter-arguments of the parties herein on the
merits of the case, We find that respondent Court of
Appeals did not commit any reversible error in
dismissing petitioners suit filed only on September 12,
1985 for annulment of a judgment dated November 8,
1982.
Same; Same; Same; Defeated party may not procure a
final and executory judgment to be set aside with a
view to the removal of the litigation beyond the period
for seeking relief from a final order or judgment,
exception.There is no means whereby the defeated
party may procure a final and executory judgment to
be set aside with a view to the renewal of the litigation
beyond the period for seeking relief from a final order
or judgment under Rule 38, Rules of Court, unless (a)
the judgment is void for want of jurisdiction or for lack
of due process of law, or (b) it has been obtained by
fraud.
Same; Same; Same; Due Process; Denial of due
process was not one of the grounds raised before the
respondent Court of Appeals in seeking annulment of
the judgment in Civil Case No. R-540.Petitioners now
assert as their first ground for allowance of the writ of
certiorari that they were denied due process of law
when petitioner Donato Ramirez was declared in
default not because he failed to answer but because
he
155
VOL. 187, JULY 3, 1990
155
Ramirez vs. Court of Appeals
48
had failed to furnish private respondent Igmedio Reyes
a copy thereof and because he and his lawyer had
failed to appear at the pre-trial conference. It should
be noted that denial of due process was not one of the
grounds raised before the respondent Court of Appeals
in seeking annulment of the judgment in Civil Case No.
R-540. Petitioners merely assigned three (3) errors
below, viz: (1) excess of P1,000.00 in the award of
attorneys fees; (2) doubtful genuineness of the Road
Right of Way Agreement, and (3) the strip of land is
cadastral road. Verily, none of the valid grounds
prescribed for annulment of a final judgment was
alleged.
Same; Same; Same; Same; Same; In Lianga Lumber
Co. vs. Lianga Timber Co., Inc., this Court holds that
since issues are limited to those presented in the
principal pleading, they cannot be raised on appeal,
much more in a mere incidental pleading.Petitioners,
at this late stage of the conflict, cannot validly claim
deprivation of petitioners right to be heard. As
deprivation of the right to be heard before the trial
court was never raised as an issue in the annulment
suit filed before the Court of Appeals, it cannot be
raised as an issue in this petition for review as issues
now are limited to whether the respondent Court of
Appeals committed error in rendering the questioned
judgment. In Lianga Lumber Co. v. Lianga Timber Co.,
Inc., G.R. No. 38685, March 31, 1977, this Court held
that since issues are limited to those presented in the
principal pleading, they cannot be raised on appeal,
much more in a mere incidental pleading.
Same; Same; Same; Default; Failure to furnish a copy
of the answer to the adverse party in itself is sufficient
and valid basis for petitioners default.Moreover,
there was no error in the trial courts order declaring
petitioner Donato Ramirez in default. The failure to
furnish a copy of the answer to the adverse party, in
itself, is sufficient and valid basis for petitioners
default. The non-appearance of petitioner Donato
Ramirez during the scheduled pre-trial for alleged
injury, without presenting a medical certificate or any
proof for that injury, is not justified and also a valid
ground for declaration of default. Thus, petitioners
complaint that they were deprived of their right to be
heard is stripped of legal and factual basis.
PETITION to review the decision of the Court of
Appeals.
The facts are stated in the opinion of the Court.
Luna, Sison and Manas for petitioners.
Roselino Reyes Isler for private respondents.
156
156
SUPREME COURT REPORTS ANNOTATED
Ramirez vs. Court of Appeals
MEDIALDEA, J.:
The land in question is a 1,200 meters long and 15
meters wide strip of land denominated as the
Malitbog-Naksib Narra Road and situated in
Bongabong, Oriental Mindoro. This was donated
49
sometine in 1923 by the predecessor-in-interest of
herein private respondent Igmedio Reyes to the
government for the construction and utilization thereof
as provincial-municipal road. However, the
government failed to construct a road or at least
improve the land. So on October 9, 1959, the donor in
writing, revoked the donation on the ground that the
purpose for which the donation was made was never
pursued.
In 1960, the government appropriated another strip of
land from the titled property of the private respondent
and thereupon, constructed the present and existing
Malitbog-Naksib Narra Road. Later, in government
forms, the government and private respondent
executed Road Right of Way Agreements (Petition,
Annex D and Annex F, Rollo, pp. 27-30 and 39-42) Ramirez vs. Court of Appeals
whereby the originally donated strip of land was
exchanged with the strip of land where the Malitbog-
Naksib Narra Road was constructed.
After the execution of the two (2) Road Right of Way
Agreements, private respondent tried to take
possession of the exchanged area. However,
petitioners, together with others were found in actual
possession and cultivation thereof. Thus, private
respondent instituted Civil Case No. R-184 for
Recovery of Ownership and Possession at the then
Court of First Instance of Oriental Mindoro, Branch II at
Pinamalayan. Defendants there-in, now petitioners,
interposed the defense that they are:
3. x x x in rightful possession and occupation of the
abandoned proposed road that adjoins their parcels of
land either as reparian (sic) owners or to compensate
them or a exchange for separate portions of their
parcels of land which were traversed by the Miaje
Sigagi road constructed by the government x x x.
(Answer filed in Civil Case No. R-184, Annex 3, Rollo,
p. 338)
In the course of the pre-trial proceedings in Civil Case
No. R-184, petitioners, with some of the other
defendants, manifested that they are no longer
interested in the land subject matter of this case so
that they were indeed dropped from the case. The
157
VOL. 187, JULY 3, 1990
157
decision of the court in that case stated:
That per conference with the defendants Isidoro
Amparo, Bonifacio Amparo, Marciano Casao, Donato
Ramirez, Guillermo Brigido, Marina Salcedo and the
Highway District Engineer, they are no longer
interested in the land subject matter of this case so
that he is agreeable that said defendants be dropped
from the case. (p. 3, Decision, Civil Case No. R-184,
Rollo, p. 33)
This decision dated February 9, 1976 became final as
no appeal by any of the parties thereto was ever
interposed. In fact, it had been fully executed complied
with and satisfied. It cannot, however, be enforced
against petitioner herein who were dropped as parties
as they promised to vacate. Hence, on November 8,
50
1978, private respondent filed another suit for
recovery of ownership and possession against
petitioners in Civil Case No. R-540.
After service of summons, petitioners filed their
answer in court but never furnished any copy of such
answer to private respondent. Moreover, on the
scheduled pre-trial conference, petitioner Donato
Ramirez failed to appear, although his wife, Maria
Ramirez appeared and informed the trial court that her
husband is not available. Thus, by reason of the failure
to furnish private respondent with a copy of an answer
and to appear during the pre-trial conference, private
respondent moved for the declaration of petitioners in
default. The trial court resolved to grant the motion
and declared petitioners in default. Despite receipt of a
copy of the order by petitioners on June 30, 1980, they
did not ask to set aside the order of default nor did
they seek any relief from said order.
After presentation of evidence ex parte, the trial court
rendered judgment on November 8, 1982 as follows:
(a) Ordering the defendant to surrender the
possession of the land in question in favor of Igmedio
Reyes, with a length of 1,200 meters and with a width
of 15 meters of the abandoned old Malitbog-Naksib
Road pursuant to the Road Right of Way Agreement for
National Road, Exh. A;
(b) Ordering the defendant to pay the plaintiff the
amount of P1,500 yearly from the year 1966 up to the
present;
(c) Ordering the defendant to pay the attorneys fees
in the
158
158
SUPREME COURT REPORTS ANNOTATED
Ramirez vs. Court of Appeals
amount of P3,000.00; and
(d) Ordering the defendant to pay the costs of this
suit.
SO ORDERED. (Rollo, p. 46-47)
From this judgment, petitioners filed an ordinary
appeal before the then Intermediate Appellate Court.
This appeal docketed as AC G.R. CV No. 04164,
however, was dismissed when petitioners failed to file
appellants brief. The order dismissing the appeal
became final and entry of judgment was issued on
April 2, 1985.
Upon motion of private respondent, a motion for writ
of execution was issued on May 13, 1985. To prevent
the implementation of the writ, petitioners instituted
on June 10, 1985 before the Regional Trial Court of
Oriental Mindoro, Civil Case No. 770 for annulment of
judgment. This complaint was dismissed for lack of
jurisdiction.
On July 17, 1985, the Deputy Sheriff of the trial court
levied properties of petitioners and by notice of
sheriffs sale dated August 7, 1985 published the said
notice of auction sale for September 25, 1985. The
notice of sheriffs sale was published in a newspaper of
general circulation on September 2, 9 and 16, 1985.
On September 12, 1985, petitioners filed again before
the then Intermediate Appellate Court another
51
annulment suit docketed as CA G.R. No. SP 07107. In
view of the pendency of this annulment suit,
petitioners filed before the trial court an urgent motion
for a stay of the implementation of the writ of
execution. Petitioners succeeded in securing on
September 23, 1985 an order granting the motion to
stay the writ of execution.
However, on October 1, 1985, the trial court issued an
amended order, worded as follows:
In the interest of justice considering that Notice of
Auction Sale had already been published in the
newspaper prescribed by law, the auction sale of the
levied properties of the defendant is hereby
rescheduled on October 29, 1985, at 10:00 oclock in
the morning without the necessity of republication
since it was defendant who sought the postponement
of said auction sale on September 25, 1985. (Petition,
Annex K, Rollo, p. 57)
The motion for reconsideration of the order
rescheduling auc-
159
VOL. 187, JULY 3, 1990
159
Ramirez vs. Court of Appeals
tion sale without republication was denied by the trial
court. Hence, a notice of appeal from said orders as
well as an extension of time to file petition for review
on certiorari were filed by petitioners. However, they
did not pursue further said remedies and inasmuch as
no restraining order was issued by the appellate court
in the petition for annulment of judgment suit (CA G.R.
No. SP 07107), the auction sale of the levied properties
of the petitioners was held on October 29, 1985 and
the Sheriffs Certificate of Sale was executed on
October 30, 1985 in favor of the winning bidder.
Thus, on September 23, 1986, when the decision of
the respondent appellate court in CA-G.R. SP No.
07107 was promulgated dismissing the complaint for
annulment of judgment, the auction sale implementing
the judgment sought to be annulled had already been
held. Besides, within the one-year period after the date
of the auction sale, the execution of the Sheriffs
Certificate of Sale and the registration thereof on
November 6, 1985, petitioners never attempted to
redeem the auctioned properties. On November 17,
1986, the Sheriff executed the Officers Final Deed of
Sale in favor of the successful bidder and the same
was duly registered. On March 3, 1987, the possession
of the sold properties were delivered to the private
respondent.
In dismissing the complaint for annulment of
judgment, the respondent appellate court held, to wit:
The rule is well settled. A final judgment can be set
aside only on grounds of (a) lack of jurisdiction or lack
of due process or (b) that the judgment was obtained
by means of extrinsic or collateral fraud (Gallanosa v.
Arcangel, 83 SCRA 676). The extrinsic or collateral
fraud which invalidates a final judgment must be such
as prevented the unsuccessful party from fully and
fairly presenting his case or defense; it must be such
as prevented the losing party from having an
52
adversary trial of the issue. (Laxamana v. Court of
Appeals, 87 SCRA 48)
These grounds are not present in the case at bar. The
jurisdiction of the court a quo is not assailed by the
plaintiff. The alleged errors in the Decision are mere
errors of judgment and not errors of jurisdiction.
Plaintiff cannot also claim that he was prevented from
presenting his defense in the court a quo. He did not
answer the complaint and was declared in default. On
appeal of his case, he did not file his appellants brief
and resultantly his appeal was dismissed. (Rollo, p.
72)
160
160
SUPREME COURT REPORTS ANNOTATED
Ramirez vs. Court of Appeals
The questions presented now in this petition are as
follows:
I respondent herein. Then, there was failure to appear
THE COURT OF APPEALS GRAVELY ABUSED ITS
DISCRETION IN NOT ANNULLING THE DECISION OF THE
REGIONAL TRIAL COURT AND THE DEFAULT ORDER,
BOTH HAVING BEEN ISSUED IN VIOLATION OF
PETITIONERS RIGHT TO DUE PROCESS.
II
THE REGIONAL TRIAL COURT GRAVELY ABUSED ITS
DISCRETION IN DECLARING THE ROAD RIGHT OF WAY
AGREEMENT FOR NATIONAL ROAD VALID DESPITE ITS
DEFECTS IN FORM AND SUBSTANCE.
III
THE REGIONAL TRIAL COURT GRAVELY ABUSED ITS
DISCRETION IN HOLDING THAT A PUBLIC ROAD COULD
BE AN OBJECT OF TRANSACTION.
IV
THE REGIONAL TRIAL COURT GRAVELY ABUSED ITS
DISCRETION IN RE-SCHEDULING AND HOLDING THE
AUCTION SALE WITHOUT REPUBLICATION. (Rollo, p.
262)
It is notable that from the inception of this case before
the Regional Trial Court up to the time it reached the
Court of Appeals in both instances and then this Court,
there was a virtual lack of diligent effort on the part of
petitioners to pursue their defense. First, there was
failure to furnish a copy of the answer to the plaintiff,
during pre-trial. Hence, they were declared as in
default. Then, instead of seeking relief from the
judgment rendered by default, petitioners filed an
ordinary appeal before the Intermediate Appellate
Court which was, however, dismissed for failure to file
appellants brief. A suit for annulment of judgment was
filed with the Regional Trial Court of Oriental Mindoro
but this was dismissed for lack of jurisdiction. In spite
161
VOL. 187, JULY 3, 1990
53
161
Ramirez vs. Court of Appeals
of the dismissal, petitioners did nothing, only to
awaken when the writ of possession was issued
against them by filing another suit for annulment.
Again, after receiving a copy of the questioned Court
of Appeals decision on September 25, 1987,
petitioners filed a motion for extension of time to file
motion for reconsideration only on October 13, 1986,
or exactly eighteen (18) days from receipt of the copy
of the decision. Hence, the decision sought to be
reviewed had already became final as early as October
10, 1986 as decisions of any courts become final after
fifteen (15) days from receipt of the copy thereof.
Not only was the motion for extension of time filed out
of time but also equally barred by the mandatory
injunction in Habaluyas Enterprises Inc. v. Japson, et
al., G.R. No. 70895, August 5, 1985; 138 SCRA 46
against the filing of an extension of time to file a
motion for reconsideration. The petition thereafter filed
with this Court likewise failed to comply with the
formal requirements as it was filed without a verified
statement of material dates to determine the
timeliness of the filing of the petition and of the
payment of the docket and legal research fund fees
and lacks proofs of service to the Court of Appeals and
to the adverse party.
Even after a judicious consideration of the arguments
and counter-arguments of the parties herein on the
merits of the case, We find that respondent Court of
Appeals did not commit any reversible error in
dismissing petitioners suit filed only on September 12,
1985 for annulment of a judgment dated November 8,
1982.
There is no means whereby the defeated party may
procure a final and executory judgment to be set aside
with a view to the renewal of the litigation beyond the
period for seeking relief from a final order or judgment
under Rule 38, Rules of Court, unless (a) the judgment
is void for want of jurisdiction or for lack of due
process of law, or (b) it has been obtained by fraud.
(Anuran v. Aquino, 38 Phil. 29; Banco Espaol Filipino v.
Palanca, 37 Phil. 921; Garchitorena v. Sotelo, 74 Phil.
25; Gallanoza v. Arcangel; L-29300, June 21, 1978, 83
SCRA 676; Laxamana v. Court of Appeals, L-37317,
November 24, 1978, 87 SCRA 48).
In the case at bar, petitioners do not question the
jurisdiction of the court over the parties and the
subject matter of the con-
162
162
SUPREME COURT REPORTS ANNOTATED
Ramirez vs. Court of Appeals
troversy. It is noteworthy that in petitioners answer to
the complaint in Civil Case No. 540, they never
questioned the due execution nor the genuineness of
the Road Right of Way Agreements. They merely
claimed in their answer that they were the rightful
possessors of the road that adjoins their parcels of
land, either as riparian owners or as compensation for
their land that has been taken over by the government
54
in constructing the Miaje-Sigagi Road. Such an
answer, by its nature raises no issue against the
jurisdiction of the trial court.
Petitioners now assert as their first ground for
allowance of the writ of certiorari that they were
denied due process of law when petitioner Donato
Ramirez was declared in default not because he failed
to answer but because he had failed to furnish private
respondent Igmedio Reyes a copy thereof and because
he and his lawyer had failed to appear at the pre-trial
conference. It should be noted that denial of due
process was not one of the grounds raised before the
respondent Court of Appeals in seeking annulment of
the judgment in Civil Case No. R-540. Petitioners
merely assigned three (3) errors below, viz: (1) excess
of P1,000.00 in the award of attorneys fees; (2)
doubtful genuineness of the Road Right of Way
Agreement, and (3) the strip of land is cadastral road.
Verily, none of the valid grounds prescribed for
annulment of a final judgment was alleged. Petitioners,
at this late stage of the conflict, cannot validly claim
deprivation of petitioners right to be heard. As said agreements is a cadastral road and hence a
deprivation of the right to be heard before the trial
court was never raised as an issue in the annulment
suit filed before the Court of Appeals, it cannot be
raised as an issue in this petition for review as issues
now are limited to whether the respondent Court of
Appeals committed error in rendering the questioned
judgment. In Lianga Lumber Co. v. Lianga Timber Co.,
Inc., G.R. No. 38685, March 31, 1977, this Court held
that since issues are limited to those presented in the
principal pleading, they cannot be raised on appeal,
much more in a mere incidental pleading.
Moreover, there was no error in the trial courts order
declaring petitioner Donato Ramirez in default. The
failure to furnish a copy of the answer to the adverse
party, in itself, is sufficient and valid basis for
petitioners default. The non-appearance of petitioner
Donato Ramirez during the scheduled pre-trial for
163
VOL. 187, JULY 3, 1990
163
Ramirez vs. Court of Appeals
alleged injury, without presenting a medical certificate
or any proof for that injury, is not justified and also a
valid ground for declaration of default. Thus,
petitioners complaint that they were deprived of their
right to be heard is stripped of legal and factual basis.
On the merits of the case, petitioners harped on the
alleged invalidity of the two (2) Road Right of Way
Agreements claiming that the strip of land covered by
property belonging to public domain. But the Provincial
Government and/or the Republic of the Philippines
never questioned the due execution or intrinsic validity
of the two agreements.
Petitioners not being signatories to the documents or
for whose benefits such contracts were executed have
no personality to question the validity thereof. Even
under the guise of pursuing a cause for public interest,
petitioners argument would not merit a scintilla of
55
belief as their real intent to devote the land in question
for their own use and benefit as an agricultural land is
very evident in their pleadings.
Finally, petitioners impugned the validity of the auction
sale without republication. The governing rules on
notice of sale of real property on execution explicitly
ordains publication in a newspaper of general
circulation once a week within twenty (20) days before
the sale (par. C, Sec. 15, Rule 39, Revised Rules of
Court). There is no dispute that the first scheduled
auction sale on September 25, 1985 have complied
with all the requirements imposed by the Rules. The
postponement of such sale was due to petitioners
motion for time to secure injunctive relief from the
Intermediate Appellate Court, which was granted ex
parte. Petitioners should not be allowed to impugn the
result of their initiative for several reasons. Firstly, the
questioned auction sale on October 29, 1985 without
republication was never raised as an issue in CA-G.R.
No. 07107, the annulment suit despite the pendency
thereof. The objection that the publication preceding
the auction was insufficient cannot be considered at
this stage of the proceeding inasmuch as it was not
raised in the first instance and does not affect the
jurisdiction of the court (Ramiro v. Grao, et al., 54
Phil. 744, citing Tan Machan v. Gan Aya dela Trinidad, 3
Phil. 684; United States v. Inductivo, 40 Phil. 84).
Secondly, petitioners are estopped or
164
164
SUPREME COURT REPORTS ANNOTATED
Ramirez vs. Court of Appeals
barred from impugning the validity of auction sale
without republication because they filed an extension
of time to file a petition for review with the
Intermediate Appellate Court after the denial of their
motion for reconsideration of the trial courts order
rescheduling auction sale without republication.
Despite grant of said extension, petitioners did not file
said petition. In effect, such failure to file the petition is
an acquiescence to the validity of the trial courts
orders of October 1, 1985 and of October 29, 1985.
Thirdly, they cannot attach reversible error on the said
sale after the lapse of more than one (1) year from the
date of the auction sale and after the expiration of the
redemption period; more so, because a final deed of
sale in favor of respondent had already been executed
in favor of the private respondent.
ACCORDINGLY, for the foregoing reasons, this instant
petition for review is hereby DENIED and the decision
of respondent Court of Appeals dated September 23,
1986 dismissing the complaint for annulment and its
resolution dated November 3, 1986 denying the
motion for reconsideration are hereby AFFIRMED in
toto.
SO ORDERED.
Narvasa (Chairman), Cruz, Gancayco and Grio-
Aquino, JJ., concur.
Petition denied. Decision affirmed.
Note.Party in default is entitled to notice of further
proceedings upon filing of motion to set aside order of
56
default. (Development Bank of Rizal vs. Court of
Appeals, 156 SCRA 84.)
o0o
G.R. No. L-33720 March 10, 1975
THE PHILIPPINE BRITISH CO. INC. and THE CIBELES
INSURANCE CORPORATION, petitioners,
vs.
THE HON. WALFRIDO DE LOS ANGELES in his capacity
as Presiding Judge, Branch IV of the Court of First
Instance of Quezon City, THE HON. VICENTE S. OCOL in
his capacity as Clerk of Court of First Instance of
Quezon City and Ex-Oficio Sheriff of Quezon City and
MULTIFIELD ENTERPRISES and MOISES M. TAPIA
respondents.
Alfonso Felix, Jr. for petitioners.
B.M. Grecia & Associates and D.G. Garin & Associates
for respondents.
BARREDO, J.:+.wph!1
Petition for certiorari to annul and set aside the default
proceedings, the judgments and the writs of execution
of respondent judge in Civil Cases Nos. Q-15377-8 of
the Court of First Instance of Quezon City entitled
Multifield Enterprises, et al. vs. Philippine British
Assurance Co., Inc. and Multifield Enterprises et al. vs.
Cibeles Insurance Corporation, respectively, and for
prohibition to enjoin the execution of said judgments.
Upon the filing of the petition, the Court issued the writ
of preliminary injunction prayed for. Respondents were
required to answer and after issues were joined, the
parties filed their respective memoranda in lieu of oral
argument.
On June 12, 1970, a fire broke out in the premises of
private respondents (Tapia, for short) at No. 245
Roosevelt Avenue, San Francisco del Monte, Quezon
City. Being holders of fire insurance policies from
different companies, among them the petitioners, and
having failed to secure extrajudicial settlement of their
claims, they filed corresponding civil actions in the
Court of First Instance of Quezon City. All of said cases,
dealing as they did with the same facts and issues,
were assigned to respondent judge, to whom by raffle
the first of them had fallen. Petitioner British (for short)
was served summons in Civil Case No. Q-15377 on
March 29, 1971 while petitioner Cibeles (for short) was
served theirs for Civil Case No. Q-15378 on April 2,
1971, hence their answers were due on April 13 and
17, respectively.
On April 13, 1971, counsel for British filed by mail a
motion asking for fifteen (15) days extension of its
time to answer, claiming that due to the intervening
Holy Week and pressure of other works, he would be
unable to prepare his answer within the reglementary
period. He was granted only five (5) days ending April
57
19. 1 No answer came until April 28, 1971, albeit it
was mailed by registered service on April 22, 1971.
Cibeles in turn filed its own motion for extension on
April 19, 1971, two days after due date. Obviously, the
period could not be extended anymore. Just the same,
it filed its answer on April 22, 1971, which was joint
with that of British.
In the meanwhile, on April 24, 1971, Tapia filed
separate motions in the two cases praying that
petitioners be declared in default. Not having received
by then any answer of petitioners, (Petitioners did file
a joint answer, but as will be seen later, the same was
actually received by respondent court only on April 28,
1971.) an order of default was issued, directing at the
same time that plaintiffs' evidence be received by the
clerk of court. This reception of evidence was done on
April 26 and 27, and on April 28, 1971, the judgments
complained of herein were rendered. After being duly
docketed, these judgments were released for service
by registered mail on May 17, 1971, addressed to
petitioners' counsel, Atty. Alfonso Felix, Jr. at his given
address at Room 212 Lopez Building, Aduana Street,
Intramuros, Manila.
According to the postman assigned in that area,
Alfredo E. Sugatan, the first registry notice of said mail
matter, Registered Mail No. 13648, was delivered by
him actually to counsel's secretary who was known to
him personally, a certain Miss Tuliao, in the morning of
May 19, 1971, as he similarly delivered to her
subsequently the second and third notices on May 30,
1971 and June 15, 1971.
According to Atty. Felix, Jr., on May 24, 1971, the day
he received the order of default in Q-13577 (Par. 12
and Annex C-1 of Petition) he found himself in the
respondent court and to his great surprise, in the
corresponding expedientes, he found neither (1) his
motion for extension of time to file answer in Q-13577
nor (2) the aforementioned joint answer he had filed
on behalf of petitioners and that instead he saw
therein that orders of default had been issued in both
cases and, further, that evidence of the plaintiffs had
been received ex-parte on April 26 and 27, 1971. 2 He
claims also that on said occasion, when he examined
the expedientes of the cases, he did not find therein
any copy of any decision. To be noted, however, he
does not pretend that he made any inquiry from any of
the officials and employees of the court as to what was
the exact status of his cases as of that date.
Two days later or on May 26, 1971, he filed a joint
motion, dated May 25, 1971, to lift the order of default,
unverified and unaccompanied by any affidavit of
merit, which he set for hearing on June 1, 1971.
According to him, "the motion to set aside the Order of
Default could not be heard on June 1 the day on which
it was set for hearing for the reason that that day had
been declared a public been declared a public holiday,
undersigned counsel went to respondent court the
next day, June 2, 1971, consulted the expedients and
58
seeing respondent Judge de los Angeles showed him a
copy of the Joint Motion Annex 'D' to lift the Order of
Default. Respondent Judge de los Angeles after reading
in the presence of undersigned counsel that Joint
Motion Annex 'D' asked him to set it for hearing anew
and told him that it was always his practice to give
parties a chance to present evidence." (Par. 17 of
Petition). And so, counsel did as told.
Thus, on June 10, 1971, a notice was received by Atty.
Felix, Jr. Advising him that the motion had been set for
hearing on June 30, 1971, but on June 22, 1971,
respondent judge issued an order cancelling this notice
for the reason that "for failure of defendants in the
above-entitled cases to comply with the requirement
imposed by Section 3 of Rule 18, Rules of Court and
pursuant to the decisions of the Supreme Court on the
matter, this Court can no longer set aside its order
dated April 24, 1971." (Annex H of the Petition). And
on June 28, 1971, respondent judge issued the
following order: t.hqw defendants' counsel was thus accomplished after the
Acting on the 'motion for immediate execution of
judgments' filed by the plaintiffs through counsel in the
above-entitled cases, this Court finds and the records
of these cases bear out and show that the judgment
adverted to were rendered by this Court on April 28,
1971 and copies thereof were sent and posted as
registered mail No. 13648 to the counsel for
defendants on May 17, l971 by the Clerk of this Court.
The copies of the decisions as registered mail No.
13648 were returned to this Court by the Post Office as
unclaimed by the addressee, the counsel for the
defendants, on June 23, 1971.
Both the certification (Annex "A" of the motion for
immediate execution) and the proof of service of the
notices, sent by the post master stamped on the
envelop-cover of the decisions show that the first
notice of this registered mail was sent to the counsel
for defendants at his office address on May 30, 1971,
by the postmaster. Again, on May 30, 1971, a notice
was sent to him by the postmaster on these decisions
as registered mail No. 13648. The last and third notice
by the postmaster was sent to him by the postmaster
on June 15, 1971. Still counsel for defendants did not
claim from the Post Office his copies of the decisions
for which no less than three notices were sent to him
by the postmaster.
Completeness of service of the decisions on
expiration of five days from the date of the first notice
which is May 19, 1971, pursuant to Section 8 of Rule
13, Rules of Court and the numerous decisions of the
Supreme Court on this particular matter. The period of
thirty (30) days within which to interpose an appeal
from these decisions rendered by this Court in the
above-entitled cases commenced on May 25, 1971 the
day after the fifth day from May 19, 1971 and expired
after June 23, 1971, the thirtieth day. From May 25,
1971 to June 23, 1971, no appeal from these decisions
59
was taken by the defendants. Considering that the
period of thirty (30) days has already expired and no
appeal has been taken by the defendants from the
decisions rendered by this Court on April 28, 1971,
they are by law now final, unappealable and, as matter
of right, the plaintiffs are entitled to their immediate
execution.
WHEREFORE, the immediate execution of the
judgments in the above-entitled cases are hereby
granted. Let the corresponding writs of execution be
issued.
SO ORDERED.
Pursuant to the writs issued under this order, the
Hongkong & Shanghai Banking Corporation paid to
respondent Sheriff P294,750.00 for the account of
British and the First National City Bank of New York the
sum of P75,000 for the account of Cibeles (Pars. 30
and 31, Petition), but all the amounts thus paid were
returned to the respective banks by virtue of the writ
of preliminary injunction of this Court of July 9, 1971.
On July 1, 1971, petitioners filed a joint "Petition for
Relief from Judgment." But before said petition could
be acted upon by the court, the instant petition was
filed with this Court on July 2, 1971 and summons,
together with the writ of preliminary injunction was
served on public respondents on July 10, 1971. (Annex
N ,Petition), In the meantime, on the same day that
the petition for relief was set for hearing, July 7, 1971,
respondent judge found it to be "sufficient in form and
substance" and ordered the respondents "to answer
the same within a period of fifteen (15) days from
receipt hereof." (Annex A, Respondents' Motion to
Dismiss of September 5, 1972.) Nothing else
developed in the trial court later because the
injunction of this Court which was served on
respondent judge on July 10, 1971 enjoined him from
"taking further action" in the two subject cases.
At this juncture, it becomes necessary to discuss and
resolve a point of procedure before going any further.
As may be noted, We could have refused to give due
course to the present petition when it was filed on July
2, 1971, considering that it already avers that a
petition for relief from judgment dated June 30, 1971
(Annex N of Petition) had been filed by petitioners with
the trial court on July 1, 1971, which, pursuant to the
usual practice, We could have deemed as an adequate
remedy in the ordinary course of law that constitutes a
bar to a certiorari review or any other kind of special
civil action. But the petition, on its face, presented the
situation that obtained in the trial court in such an
alarming manner, to the point of strongly hinting
possible irregularities in the actuations of the
respondent judge and the employees in his sala, which
could involve their honesty and good faith as well as
the integrity of judicial records and proceedings that
the Court felt it was in the best interest of justice for
the Court itself to inquire without further loss of time
60
into what actually happened. Indeed, even after the
parties had filed their respective memoranda and the
Court had by resolution of October 21, 1971 declared
these cases submitted for decision, when the
respondents filed their motion to dismiss of September
5, 1972, based precisely on the ground that on July 7,
1971 the trial court had given due course to
petitioners' petition for relief, We resolved to defer
determination of the dismissal motion until this
decision on the merits.
Now, having thus disregarded the existence of an
ordinary remedy in the court below at the earlier
stages of these cases, it is but proper and logical for
Us to pursue such course of action to its ultimate
conclusion, since anyway, counsel for petitioners has
himself vehemently objected to said motion to dismiss,
and, after all, as We see it, there are enough
incontrovertible facts in the record, furnished by both
parties, on the basis of which the Court can put an end
to the litigation between the parties regarding the
insurance claims of private respondents against
petitioners, the subject matter of the actions in the
court below. To now confine Ourselves to holding that
the trial court should be accorded the opportunity to
resolve the petition for relief of British and Cibeles
therein pending would serve no purpose than to
proliferate proceedings, only to end in the same
inevitable result which even here is already obvious
and unavoidable. That would be sacrificing substance
to achieve nothing more than perfection of form and
procedure, which is inconsistent with the primordial
principle that the courts must always strive for a just,
speedy and inexpensive determination of all actions
and proceedings. And so, the Court has decided to
determine here even the question of whether the
petition for relief filed by petitioners with the
respondent court should be granted or denied thereby
avoiding any possible doubt that petitioners might
entertain as to the impartiality and integrity of future
actuations of the respondents. Indeed, petitioners
have placed before Us by their petition, memorandum
and subsequent pleadings, complete with appropriate
annexes, consisting of affidavits, letters and other
documents, all the facts which they must believe are
relevant, whereas respondents have duly joined issued
with them as to all said facts in their own answer,
memorandum and other papers, complete also with
similar corresponding annexes, and there being no
serious, much less any credible indication that any of
the parties' annexes are not authentic, We deem it
unnecessary to prolong further the main controversy
between the parties. We will resolve the whole case
here.
The contention of petitioners that they were
erroneously declared in default has no merit. From the
incontrovertible facts in the record, We cannot see how
it can be justly said that respondent judge committed
a grave abuse of discretion in making such
declaration. As regards Cibeles, there can be no
question that even its motion for extension to file its
61
answer filed out of time. It was served summons on
April 2, 1971, and it is not disputed that its motion for
extension was filed on April 19th, two days late. With
respect to British, its answer admittedly due on April
13, 1971, and although it asked for an extension of
fifteen (15) days it was given only five (5) days ending
April 19,1971, 3 consequently, its answer jointly filed
with Cibeles on April 22, 1971 was undoubtedly out of
time.
Counsel suggests that he was not given enough time,
considering that there was the Holy Week to take into
account, but His Honor ruled that precisely, counsel
would have more time because of the holidays. Again,
We perceive no grave abuse of discretion in such a
pragmatic ratiocination. Besides, it is settled that
parties and counsel should not assume that courts are
bound to grant the time they ask for compliance with
the rules, and therefore, the fact that counsel received
the order of extension by mail only on April 26, 1971,
is no reason for him to complain. Likewise, that he was
not notified of the motion to declare his clients in
default is not against the rules, for he had no right to
such notice. (Pielago vs. Generosa, 73 Phil. 654.)
Anent the motion to lift the orders of default, counsel
invites attention to the alleged directive of respondent
judge to him to have the hearing of his said motion
reset because it is the judge's "practice to give parties
a chance to present evidence." We take it, however,
that seemingly what happened then must, have been
that His Honor was just trying to figure out how
counsel could be helped out of his self-imposed
predicament, but, evidently, upon further reflection, he
must have realized the legal obstacles on the way and
consequently found no alternative than to rule that the
motion to lift did not have to be reset for hearing
anymore. Upon perusing the motion when it was filed,
he must have noted that it did not comply, as he so
stated in his order, with the requirements of Section 3
of Rule 18.
As may be seen, petitioners' joint motion to lift the
order of default, Annex D of the Petition, the same is
neither under oath nor accompanied by any affidavit of
merit. And in Ong Peng vs. Custodio, 111 Phil. 382, We
held as follows: t.hqw
... Upon examination of the motion to set aside the
order of default, we find it to be lacking in the
following substantial requirements: it does not contain
an affidavit of merits, the motion to set aside the
default order is not under oath and contains only a
promise or an assurance, not an affidavit of merits,
that defendant has a good defense. The court was,
therefore, fully justified in denying the motion to set
aside the order of default.
In fact, in view of the omission of petitioners to
accompany their motion with any affidavit of merit, the
trial court had no authority to consider the same. It is
to be noted that the requirements of Section 3 of Rule
62
18 are practically identical to those of Section 3 of Rule
38 regarding the need to show the existence of fraud,
accident, mistake or excusable negligence that caused
the default and to accompany the motion to set aside
with affidavits of merit. Consequently, it is but proper
to apply to such a motion the same ruling applicable to
petitions for relief under Rule 38, which is to the effect
that:t.hqw reopen the case acquired no standing in court and,
Furthermore, it appears that appellant's petition to set
aside the judgment and reopen the case, is grounded
on his alleged excusable negligence in failing to
appear and testify during the hearing of the case on
February 3,1959, namely, his becoming ill with flu
(influenza) on said date. We find, however, that
appellant failed to accompany said petition with
affidavits of merit showing the excusable negligence
relied upon, and the facts constituting his good and
substantial cause of action or defense, as expressly
required under Section 3, Rule 38 of the Rules of Court.
We have repeatedly held that such a defect is fatal
(Abao vs. Virtucio, et al., 109 Phil., 821; Price
Stabilization Corporation vs. Court of First Instance of
Manila, et al., 97 Phil., 153) which warrants the denial
of the relief sought (Abao vs. Virtucio, et al., supra,
citing Coombs vs. Santos, 24 Phil., 446; McGrath vs.
Del Rosario, 49 Phil., 330; Villanueva, et al., vs. Alcoba,
101 Phil., 277). The reason for the rule is that it is the
affidavits of merit which serve as jurisdictional basis
for a court to entertain a petition for relief (Abao vs.
Virtucio, et al., supra; Omandam vs. Director of Lands,
95 Phil., 450; Off. Gaz., 4840). Stated differently,
where a petition to set aside a judgment or reopen a
case pursuant to Rule 38 of the Rules of Court is not
accompanied with said affidavits of merit, the court
with which it is filed is not called upon to entertain the
petition. Applied to the instant case, appellant's
petition to set aside the judgment in question and
consequently, it was rightly denied. (Fernandez vs. Tan
Tiong Tick, 111 Phil. 773 at pp. 780-781.)
Indeed, the identity of these two remedies is such that
in Ong Peng, supra, We already expressed Our "doubt
if the same issue raised in the original motion to set
aside the order of default, may again be raised in a
petition for relief under Rule 38 of the Rules of Court.
The general rule is that once a matter in issue has
been decided by the court, it may no longer be
brought again in the form of another objection, and in
the guise of a motion under another provision of the
rules" (at p. 387). True it is that as a matter of form,
under Section 3 of Rule 18 it is not essential that the
affidavit of merit be separate from the motion and may
instead be incorporated therein, but in the instant case
of petitioners' motion, even if it makes general
allegations of merit, these allegations are not
supported by oath of anyone who has knowledge of
the fact. As already stated, not even Atty. Felix Jr.
swore to the truth thereof. Accordingly, We find no
error in the subsequent action of respondent judge of
63
cancelling the notice of hearing of the joint motion to
lift the order of default.
Besides, the same section expressly provides that
motions to lift orders of default may be filed only
before judgment, and petitioners' joint motion was
filed only on May 26, 1971, whereas the judgments in
question were rendered on April 28, 1971.
But counsel would attach importance to another
aspect of his motion to lift the default orders,
regardless of its legal untenability. He contends that
having filed such a motion, he became entitled under
Section 9 of Rule 13 to notice "of all further
proceedings" and, therefore, the failure of respondents
to notify him of the motions for immediate execution of
the default judgments fatally vitiated the order
granting the same and the writs and levies pursuant
thereto.
It is quite obvious that counsel's reliance on the
provision cited by him is misplaced. Textually, the said
section reads thus: t.hqw may be duly joined and the litigation be expeditiously
SEC. 9. Service upon party in default. No service of
papers other than substantially amended or
supplemental pleadings and final orders or judgments
shall be necessary on a party in default unless he files
a motion to set aside the order of default, in which
event he shall be entitled to notice of all further
proceedings regardless of whether the order of default
is set aside or not.
We are not prepared to agree with counsel that the
right of a party in default to notice of further
proceedings which this rule revives as a result of the
filing of a motion to set aside the default order is
intended by the rule to be so easily reacquired that
just by the mere filing of any motion with a prayer to
set aside the default, the provision may be deemed as
already complied with. Logic and principle dictate that
the effects of default may not be treated as lightly as if
it were of no juridical essence. While the Court has
generally been liberal in giving a party in default a
chance to participate in the trial, We cannot sanction
any proposition that would so reduce the effect of an
order of default that to have it set aside all that has to
be done is for the party concerned to file any
perfunctory motion therefor. A party who by inaction or
negligence allows himself to be declared in default
offends the rule requiring him to answer the summons
without unnecessary delay to the end that the issues
terminated. To purge himself of the effects of such
offense, it should not be enough for him to just tell the
court he has, after all, decided to wake up and take
part in the proceedings. It is but proper that he must
justify his failure to comply with the rule before he is
relieved from the adverse consequences of his
emission. Thus, Section 9 of Rule 13 must be read in
conjunction with Section 3 of Rule 18. In other words,
64
the motion to set aside default referred to in Section 9
of Rule 13 must be one the contents of which are
precisely those provided for in Section 3 of Rule 18.
Thus, the filing of such a motion to set aside short of
the requirements of this latter provision may not as it
cannot produce the revival of the right to notice
contemplated in Section 9 of Rule 13. Any other
construction in line with the position of petitioners
would render the intent and purpose of the pertinent
provisions nugatory and ineffective. Considering,
therefore, that counsel's joint motion to lift the order of
default in the subject cases did not comply with
Section 3 of Rule 18, there is no justification at all for
his gripe that he was not notified of further
proceedings.
The next point raised by petitioners is more basic.
They maintain that the circumstances related by their
counsel should prove to Us that there were in fact no
judgments yet against them on June 2, 1971, the day
when said counsel verbally took up with respondent
judge the matter of having the orders of default lifted.
It is the emphatic charge of counsel that when he
examined the records of the subject cases on May 24,
1971 "no decision of any sort appeared" therein. (Par.
11-d Petition). He also "affirms under oath that on June
2, 1971, no decision of any sort appeared in these
expedientes nor did respondent Judge de los Angeles
ever aver that any decision had been rendered." (Par.
18, Petition). He further adds that "the clearest
evidence that we can furnish the Supreme Court that
as late as June 3, 1971, no decision had (yet) been
rendered" is that he had received on June 10, 1971 a
notice setting his motion to lift the order of default for
hearing on June 30, 1.971, "for had any decision been
rendered, clearly the deputy clerk of court who is
under the control and supervision of respondent judge
and who it doubtless familiar with the expedientes of
these cases would have not set a Motion to Lift the
Order of default for hearing had any decision been
rendered (already)" (Pars. 20 and 21, Petition).
Additionally he points out that even in the order of
June 22nd cancelling the notice of hearing issued by
the clerk of court of the motion to lift, His Honor made
no hint that he had already decided counsel's cases.
Finally, counsel surmises that it is rather strange that
respondent judge had the material time to prepare his
decisions on April 28, when the reception of the
evidence took place only on April 26 and 27.
In plain language, the accusation is that the decisions
in question must have been prepared subsequent to
June 3, 1971. Undoubtedly, the indictment is serious. It
directly implies on the part of the officials and
employees of the trial court, not excluding respondent
judge. Upon the other hand, the rotund denial of the
respondents is coupled with their own counter-
accusation that counsel is frantically but vainly trying
only to make up with his clients for his failure to act on
their behalf on time. In the face of these sharply
opposite positions. We could do no less than scrutinize
the record minutely and carefully, if only to be able to
65
pin proper responsibility on whosoever might be guilty
of violating his sacred oath as functionary of the court,
either as judge, clerk of court or mere employee
thereof or as counsel.
After a conscientious review of the pertinent facts
extant in the record, it is our considered opinion that
counsel's suspicion is unfounded. To begin with,
respondents have in their favor the presumption
heretofore invariably relied upon by the Court in
similar situations that official duty has been regularly
performed by them and that they have acted in good
faith. It has been the constant ruling of this Court that
this kind of presumption must stand, even against the
most well reasoned allegations seemingly pointing to
some possible irregularity or anomaly. "In the absence
of a showing to the contrary, a judicial proceeding is
presumed to be regular, and all steps required by law
to be taken before the Court may validly render
judgment had been so taken." (El Banco Espanol-
Filipino vs. Palanca, 37 Phil. 921; Ongsiako vs.
Natividad, L-1371, Aug. 5, 1947; People vs. Baco, L-
2633, Feb. 23, 1958; Go Chi, et al. v. Go Cho, et al., L-
5203, Feb. 23,1955; People vs. Nazario, L-7629, Sept.
29, 1955). And so far, We have not seen anything in
the record to support the charges of Atty. Felix Jr.
beyond his own allegations which, considering that
they do not necessarily belie the contrary
representations of the adverse party, do not appear to
Us to have any added weight just because counsel has
taken pains to emphasize he has made them "under
oath".
As to the disputed existence of the judgments in
question prior to June 3, 1971, or for that matter,
before May 24, 1971, We are fully convinced that said
judgments were entered in the docket on April 28,
1971. We do not feel justified under the circumstances
revealed in the record to say that such entry was made
days before the judgments were actually prepared and
signed. The vital fact of such entry is borne out by the
certification to such effect of the respondent Clerk of
Court Vicente S. Ocol, Annex 9 of the answer herein,
and the affidavit of Branch Clerk of Court Leon D.
Paradero, Annex 9-B, attesting to the rendition of said
judgments on the same date, the truth of which can
easily be checked with the regularity or irregularity of
the entries in the docket of the trial court. If the
corresponding entries in the docket do not appear to
be regular, Atty. Felix Jr. could have completely
rebutted these annexes with proof based on what
appears in said docket itself. The utter silence of
counsel in this respect is eloquent evidence against
him.
Besides, the apparent thrust of counsel's theory is that
respondents were in such hurry to make the impugned
judgments effective that they allegedly overlooked
compliance with the rules cited by him, but, to Our
mind, the incontrovertible fact that it was not until May
17, 1971, or almost three weeks after April 28, 1971,
66
that Jesus B. Marzan, the Chief of the Civil Cases
Section in the court below, released the said
judgments, according to his affidavit (Annex 9-A, id.),
belies entirely such claim. This somewhat belated
release is also proven by the evidence, to be discussed
anon as to when the postal authorities got the decision
for delivery to petitioners' counsel. If it were true that
respondents were acting in haste, such release would
have been immediate.
The reality of the existence of the judgments in
controversy prior to the dates when counsel claims he
did not see them is corroborated by evidence coming
from sources other than the office of respondent court.
Annex 11- A of the respondents' answer herein is the
certification of Mr. H. G. Guzman, Postmaster of the
Port Area Post Office, Manila, to the effect that
Registered Letter No. 13648 of sender, "CFI Branch IV,
Quezon City" was received by his office on May 19,
1971 "and the corresponding Registry Notice was
issued on said date, and sent to addressee on same
day," that "the succeeding second and third notices
was (sic) issued after about weeks' intervals (sic) the
exact date of which was noted on the envelope cover
of the said letter" and further "that the Registered
Letter was return (sic) to the sender, it being (sic)
remain(ed) unclaimed for more than thirty days, on
June 22, 1971 under our Registry Bill No. 199 for
Quezon City line 1, page 1 as shown by our records."
Annex 10 is the affidavit of Alfredo E. Sugatan, the
postman assigned to the Port Area Post Office, Manila,
entrusted specifically with the delivery of "letters,
notices of mails and other mail matters" in the area
"composed of Aduana and Arsobispo Streets,
Intramuros, City of Manila", stating in detail that in the
morning of May 19, 1971 he personally delivered at
Room 212 Lopez Building, Aduana, Intramuros, Manila,
to Miss Tuliao, known to him to be the secretary of
Atty. Alfonso Felix, Jr., also personally known to him, by
reason of the performance of his duties for a "long
period of time" in that area, "the FIRST NOTICE on (sic)
Registered Mail No. 13648" (the same number referred
to in Annex 11-A above) and that he also delivered to
her on May 31, 1971 and June 15, 1971, the second
and third notices corresponding to the same registered
letter, respectively Annex 11 is the photostat copy of
the face and the dorsal portion of the envelope
addressed to "Atty. Alfonso Felix Jr., Rm. 212 Lopez
Bldg., Intramuros, Manila", with notations such as: the
number 13648 enclosed in an oblong figure; "Q-15378-
D and Q-15377-D" (which are precisely the numbers of
the subject cases); "Reg. Mail w/ return card"; and
"Republic of the Philippines, Court of First Instance,
Branch IV - Quezon City"; and marked with rubber
stamp data as follows: "Registered, Quezon City,
Philippines, May 17, 1971", "Port Area, Manila,
Philippines received May 19, 1971" as well as "Second
Notice, 5-30-71" and "Third Notice, 6-15-71".
Considered in the light of ordinary official practice and
experience, all the foregoing prove that mail matter
related to Civil Cases Nos. Q-15377-D and Q-15378-D
67
of Branch IV of the Court of First Instance of Quezon
City duly addressed to Atty. Alfonso Felix, Jr. was
posted by registered mail, No. 13648, at the Quezon
City Post Office on May 17, 1971 and received by the
Port Area Manila Post Office on May 19, 1971 and
received back by the Quezon City Post Office on June
23, 1971, unclaimed after a second notice on May 30,
1971 and a third notice on June 15, 1971. And since it
has not been shown that any other notices referring to
the same cases had proceeded from the trial court on
or about the dates mentioned, it stands to reason that
what the envelope, Annex 10, contained were
precisely the judgments in question, as attested by the
affidavit, Annex 9-A, of the mailing clerk of the
respondent court who released the same.
This telling mass of official evidence stands unrebutted
in the record by any evidence legally worthy of
consideration. Atty. Felix, Jr. has not shown the Court
any evidence which can effectively dent the effect
thereof other than his own allegations "under oath"
and the inconclusive and general assertions in (1) the
affidavit of Miss Cleofe V. Tuliao, "in charge of the
clerical work in the office including the issuance and
receipt of the correspondence" to the effect that "She
knows in (sic) of her own knowledge that the (sic)
matter of practice which has never been deviated from
(is that) the postman gives her the notice cards for
registered mail, she then brings these cards to Atty.
Alfonso Felix, Jr., who signs them and these cards are
then given to Carlos de la Cruz, the office messenger
who collects them" and that "on no occasion did she
fail to present any of these notice cards to Atty. Alfonso
Felix, Jr. nor did she fail to deliver the cards thus signed
to Carlos de la Cruz for collection", Annex A of Annex 1
of Respondents' Petition for dissolution of Writ of
Preliminary Injunction dated July 13, 1971 4 and (2)
the affidavit of said Carlos de la Cruz stating that "he
knows that it is the practice of the office which is never
deviated from that he receives the notice cards for
registered mail from Miss Cleofe Tuliao either in hand
or by having them put on his desk and he then picks
up all such registered mail at the proper post office"
and that "on no occasion whatsoever that he failed to
collect registered mail covered by card notices."
(Annex B, id.). At a glance, anyone can see that these
assertions do not disprove the facts evidenced by the
official records just referred to. It is not an
exaggeration to say that the regularity of the
actuations of the respondents in relation to the
declaration of default and rendition and execution of
the judgment here in question has been proven by
such convincing evidence as to relieve Us from any
doubt about it.
Now, very little needs be said as regards the
contention that petitioners should have been notified
of respondents' motion for execution. Prescinding
already from the consideration discussed above that
the mere filing of petitioners' motion to set aside did
not, because of the fatal defects of the same, have the
effect of entitling them to notice of all subsequent
68
proceedings, with the regularity of the rendition of the
impugned judgments as well as the fact of their having
become final and executory on June 23, 1971 5 being
indisputably borne by the record, the action taken by
the trial court on June 28, 1971, Annex 12 of the
Answer, of granting respondents' motion for
immediate execution assumed the character of an
order of execution of a final and executory judgment,
as so stated in the order itself, and has, therefore,
become a matter of right to the prevailing party and
ministerial on the part of the court to grant. In
Pamintuan vs. Munoz, 22 SCRA 1109, the Court held:
t.hqw the part of petitioners so as to justify granting them an
Regarding the first point, it is by now axiomatic that a
judgment on a compromise like the one in the case
at bar is at once final and immediately executory.
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 be afforded prior hearing.
(Rule 39, Sec. 1, Rules of Court; Luther v. Clay, 100 Ga.
236, 28 S. E. 46.) This renders of little significance
then the fact alleged by petitioners that they received
copy of respondent's motion for execution only on the
afternoon of the day set for its hearing.
At this point, it should be noted that viewed strictly,
petitioners' fundamental pose rests exclusively on a
claim of denial of due process in that they have been
improperly declared in default and that writs of
execution were issued against them without notice.
Neither in the petition herein nor even earlier in the
motion to lift the order of default, Annex D, or the
petition for relief from judgment, Annex N filed with
the court below, is there the adequate showing
required by the rules to make the Court inquire into
the possible existence of good and valid defenses on
opportunity to prove them. To be sure, in the joint
motion, Annex D, counsel does make mention in
paragraphs 4 and 9 thereof of "good and valid reasons
for the denial of plaintiff's claim by defendant
company" (British) and "good and valid defenses" of
Cibeles. The trouble however is that to support the
same, counsel only makes reference to the joint
answer, Annex B, he had filed on behalf of the two
petitioners but, neither the motion itself nor the joint
answer is supported by any corresponding oath. The
same observations may be made with regard to the
petition for relief, Annex N. And as to the allegations
on the point in question in the petition herein, all that
is stated in paragraph 9 thereof is as follows: t.
hqw
(9) In the meantime, undersigned counsel had on
behalf of both petitioners filed a joint answer on April
69
22, 1971 which was received by the Court on April 28,
1971. This answer signed in behalf of both petitioners
alleges meritorious defenses. A copy of the Joint
Answer is annexed to the present pleading as Annex
"B" hereof.
While the petition appears to be verified by Atty. Felix
Jr., it is obvious that said verification may not be
deemed sufficient for the purpose of attesting to the
truth of the allegations of fact in the joint answer,
Annex B, not only because no direct reference is made
to them by counsel but also because said counsel
cannot pretend he has adequate personal knowledge
of said facts.
Fatal as such inadequacies are in the light of
established jurisprudence too well known to need
being cited, if only to satisfy Our curiousity which was
aroused by the alarming allegations of the petition, We
have opted to look into the purported defenses of the
petitioners, on the basis of the allegations pertinent
thereto in the memoranda of the parties, to which are
annexed, as noted earlier above, corresponding
documents supposed to evidence the truth of the facts
stated in said allegations. After careful and mature
consideration and evaluation of their respective
allegations, We are convinced that petitioners' alleged
defenses cannot stand close scrutiny.
Thus, counsel for petitioners opens his unsworn
memorandum with the following "preliminary
statement": t.hqw
In his memorandum of August 17, 1971 filed in these
certiorari proceedings, Moises Tapia avers that we
have resorted to these proceedings purely to cause
further delays for we have no real defense. This is not
true. The truth of the matter is that the evidence
clearly shows Moises Tapia to be guilty of arson and
fraud. It was because of this respondent Moises Tapia
availed himself of every means, even those frowned
upon by law, in order to secure judgment in his favor
without going to trial. The evidence against Moises
Tapia was such that he had to avoid going to trial. In
support of this averment, we now present the following
documents: t.hqw
1. A certification from Lt. Col. Jose Fernandez,
former Chief of the Philippine Constabulary Crime
Laboratory showing that there were gasoline residues
in fourteen (14) different places of the burned bodega
and that one of these places was the steel cabinet
presumably containing the company papers so that
even these papers would burn. All these places had
been saturated with gasoline. (Annex A)
2. A sketch of the bodega premises showing the
widespread distribution of the gasoline. (Annex B)
70
3. Twenty-two (22) photographs of the burned
bodega. (Annexes C, D, E, F, G, H and I)
4. Chromatographic specimens of the fourteen (14)
gasoline residues found in the fourteen (14) aforesaid
areas. (Annexes J, K, L and M)
Moises Tapia claims that on occasion of the fire
suffered by his bodega he suffered damages in the
amount of five hundred thousand (P500,000.00) pesos.
We have annexed twenty-two (22) photographs taken
of his bodega after the fire. (Annexes C, D, E, F, G, H
and I) showing that his bodega hardly contained
anything. Please note that the alleged contents of this
bodega were iron and steel spare parts which do not
burn. The conclusion to be drawn from all these
photographs, chemical analysis and chromatographic
specimens is obvious. Moises Tapia having withdrawn
his merchandise from his bodega saturated fourteen
(14) different places in his bodega with gasoline
including his steel cabinet so as to make sure that
even his papers would burn and then caused his
bodega to be burned.
Under these circumstances, it was imperative for
Moises Tapia to avoid having to go to trial. It was
imperative for him also, that we, your petitioners
herein should not be allowed to present evidence of
these acts. That is why Moises Tapia exerted every
effort to avoid trial proceeding and that is why we
submit to this Supreme Court it is in the interest of
justice for trial proceedings to be had.
The foregoing statements are addressed to the equity
of this Supreme Court. They have become particularly
necessary since Moises Tapia in his memorandum filed
on August 17, 1971, before this Supreme Court has
gone so far as to allege that your petitioners are
merely seeking to delay for they have no real defense.
This Supreme Court may now judge for itself. (Pp. 189-
191, Record.)
and closes the same with "final remarks" thus: t.
hqw
Should this Supreme Court be puzzled as to why all
these unbecoming things were done, the answer is as
we have said in our opening statement that
respondents could not afford the luxury of a trial. A
trial with a corresponding presentation of evidence,
part of which is annexed to this present memorandum
as Annexes A to M would have shown respondent
Tapia's case to he baseless so that even a decision had
been rendered in his favor in the trial court, it would
certainly have been reversed by this Supreme Court, It
was necessary to declare your petitioners in default so
that your petitioners would not be around to present
evidence, to adjudge the case in secrecy so that your
petitioners would not learn of the judgment, and to
execute in haste so that your petitioners would find
themselves deprived of their property without due
71
process of law and before they even knew what was
happening to them. Fortunately, this Supreme Court
intervened. We rely on its continued intervention (Pp.
209-210, Record.)
The foregoing allegations are traversed squarely in
respondents' Reply Memorandum as follows: t.
hqw Inc., and Civil Case No. 15379 Philippine Home
To give their cause some semblance of cogency, which
it does not possess, petitioners would want this
Honorable Supreme Court to believe that they have a
good defense. The alleged defense consists of a report
made by one ex-Lt. Col. Jose Fernandez and related
papers attached as Annexes 'A' to 'M' to petitioners'
Memorandum. Petitioners' purpose cannot prosper, for
the following reasons:
1. The said Lt. Col. Jose Fernandez is a biased and
unreliable source. He was hired and paid by petitioners
to conduct an analysis on specimens he himself did
not gather. Naturally his findings had to tally with his
employer's theory and must serve their purpose and
interest. That was what he was paid for.
2. The falsity and baselessness of said findings are
irrefutably proven by the fact that no criminal action
was instituted against respondent Tapia. Yet petitioners
have the effrontery to assert before this Honorable
Supreme Court that "the evidence clearly shows
Moises Tapia to be guilty of arson and fraud," for which
reason he allegedly wanted to avoid going to trial. If
that was his intention he would not have filed the
cases against petitioners in the lower court.
As a matter of fact, in the two other cases filed by him
against two other insurance companies (Civil Case No.
15376 Multifield, et al vs. Monarch Insurance Co.,
Insurance Corp.) for loss arising from the same
conflagration, and involving the same evidence and
proof of loss and with which petitioners have a
common adjuster and investigator, respondent Tapia
has gone to trial. There, the defendant insurance
companies were not declared in default because they
answered on time.
If petitioners herein were declared in default, it was
because their counsel failed to observe the
reglementary period for answering and could not or
failed to obtain relief from the order of default in
accordance with the Rules of Court. Now an attempt is
being made to shift the blame to respondent Tapia by
falsely attributing to him a desire to avoid going to trial
purportedly because the evidence will show he is
guilty of arson and fraud'. Such foul tactics are
beneath the dignity of the Bench and Bar.
The Worthless Findings of Mr. Jose Fernandez:
3. The said findings were not even believed and
accepted by the petitioners' commissioned and
72
employed adjustment company which, after a
thorough and careful investigation of respondent
Tapia's claim, had recommended that petitioners
better pay. The reports and findings of the petitioners'
adjuster are attached as Annexes "A" and "B" and form
integral parts of this reply. These reports completely
refute the petitioners' allegations that respondent
Tapia is guilty of arson and that he fraudulently
removed the contents from his bodega before it was
destroyed by fire.
Petitioners' commissioned and employed investigator
and adjuster, the Manila Adjustment Company, in its
report dated February 26, 1971 (Annex "A") to the four
insurance companies, is very explicit in its findings and
recommendation that there is no basis to deny
respondent Tapia's claim on the ground of fraud. The
petitioners' hired investigator had examined
respondent Tapia under the "Examination-under Oath-
Clause" of the policies and it was satisfied that no such
fraud exists.
The same Adjustment Company to which the much
vaunted report of the private chemist, Mr. Jose
Fernandez, was submitted, brushed aside the same
and concluded, in its report of March 11, 1971, that
the said findings are not sufficient basis for denying
the claim of respondent Tapia. Even this Honorable
Supreme Court, in several cases, has categorically
ruled that the existence of traces of gasoline in the
burned premises does not necessarily indicate that
there was arson (Ya Hun Co. vs. British Traders Ins. Co.,
L-5719-25, May 18, 1954; Hua Chu Gan vs. Law Union
& Rock Ins. Co., Ltd., L-4611, Dec. 17,1955.)
4. These reports conclusively prove that
petitioners' counsel told a brazen lie when he claimed
that there were no goods destroyed in the burned
bodega. As said reports clearly indicate, the items
therein inventoried after the fire had a total value of
P367,311.00. Respondent Tapia was able to prove,
through the proofs of loss he submitted in the lower
court and which proofs were the same ones he
submitted to the herein petitioners, that he suffered
loss and damage in the amount of P446,781.60.
Incidentally, both Monarch Insurance and Philippine
Home Insurance, defendants in Civil Cases Nos. 15376
and 15379, for collection of insurance proceeds in the
amounts of P100,000.00 and P50,000.00, respectively,
have just recently paid and satisfied respondent
Tapia's claim. In paying respondent Tapia, these two
defendants also acted upon the findings of the Manila
Adjustment Company that there is neither fraud nor
arson involved in the claim of respondent Tapia. Dr.
Alberto B. Guevarra, Jr., counsel for Monarch Insurance
Company and Philippine Home Insurance Company,
was in full accord with the Adjustment Company's
findings and recommendation and he did not hesitate
to recommend to his clients full settlement of the
claim of respondent Tapia. (Photostat copies of joint
motions to dismiss and corresponding orders of
73
respondent judge granting said motions are attached
as Annexes "C", "C- 1", and "D"- "D-1 " and form
integral parts of this reply).
5. Petitioners stand on quick-sand. Their counsel
himself, Mr. Felix, in his letter to his clients, marked as
Annex "7" of respondent Answer to the instant
petition, stated that their case is "far from strong."
Hence, petitioners' case is not even strong. How can
he say now that they have a good defense? And if the
evidence did show that respondent Tapia was guilty of
arson and fraud, why does Mr. Felix consider
petitioners' case as 'far from strong?' 6
6. This contention should have been interposed in
the lower court through the motion to lift the order of
default, by means of affidavits of merits. Had this been
done, respondents could have opposed the same with
counter affidavits. That would have been the proper
procedure. Apparently, petitioners' counsel does not
believe in the Rules of Court. He would instead burden
this Honorable Supreme Court with the task of hearing
and deciding a question which was not even raised in
his petition. Respondents submit that this particular
point has been raised by petitioners rather too late. In
one case, where a similar belated effort was
attempted, this Honorable Supreme Court made the
following sagacious ruling:
'We believe that this is a last minute attempt to defend
a losing case. If defendants really had any valid
defense, this, should have been brought at the first
opportunity, that is, by the first motion to set aside the
order of default.' (Ong Peng vs. Custodio, L-14911,
March 25, 1961). (Pp. 227- 232, Record.)
Anyone would see from a simple comparison of the
foregoing conflicting allegations of the parties in the
light of their respective supporting affidavits and
documents that it is rather petitioners, not Tapia, who
may have more reason to avoid a full-blown trial,
contrary to the charge made by Atty. Felix Jr. in all his
papers filed with this Tribunal and the court below. The
attorney himself must have felt the subject cases of
his clients to be weak when he advised them in his
letter, Annex 7 of respondents' answer, that the same
are "far from being strong." At the time he wrote that
letter, he was well aware of the various reports of his
clients' adjusters minimizing the significance of the
supposed expert opinion of Col. Fernandez regarding
the gasoline traces found in Tapia's premises after the
fire and referring to them as being innocuously
insufficient to indicate arson. The attorney also knew
that said adjusters, the ones trusted by insurance
companies to give them reliable advice on whether or
not insured persons making claims on their policies are
more or less guilty of fraud and other improper
schemes to collect unjustified claims, had investigated
Tapia's claims thoroughly and had found no well-
grounded reason to warrant non-payment, and that, in
fact, they had recommended out of court settlement.
There is no showing at all that Tapia has ever been,
74
criminally charged with arson On the contrary, the
record reveals that two other insurance companies
serviced by the same adjusting company as that of
petitioners have already compromised their cases with
Tapia without the latter having them declared in
default. In other words, in these cases against the
other two companies, Tapia was prepared to proceed
to trial, and if he had secured default judgments
against petitioners, the cause was none other than
counsel's omissions already discussed earlier in this
opinion.
We reiterate that these circumstances make it
unnecessary for Us to adhere to the technical
procedure of returning these cases to the trial court for
further proceedings and final determination of the
issue of whether or not petitioners' petition for relief
from judgment should be granted. We find all the
proceedings leading to the rendition of the impugned
judgments and to the issuance of all the writs of
execution thereunder to have been regular and legal.
And as to whether or not petitioners have been able to
make the requisite showing that they have good and
valid defenses, We likewise hold that they have failed
to do so. It would be idle ceremony to still require
respondent court to take further action on the petition
for relief, Annex N. The order of respondent judge of
July 7, 1971, giving due course to said petition has in
effect become functus officio. We are persuaded that
the respective situations of the parties can no longer
be possibly altered, should We prolong this judicial
battle in any way.
What has been said so far should suffice to settle once
and for all the litigation between petitioners and
private respondents. But there is another aspect of
these cases which cannot be left unresolved, since it
affects matters related to the integrity of judicial
proceedings and the attitude and conduct displayed by
counsel for petitioners in connection therewith. the
Court cannot begrudge any lawyer of his right to be
assiduous and zealous, even tenacious, in the
prosecution or defense of the cause of his client. But
when, as in these cases, counsel makes charges
against the actuations of a judge and the personnel of
his court directly assailing their personal integrity as
well as that of the proceedings by alleging
irregularities implying bad faith and outright
misfeasance, he should be prepared to substantiate
the same. This Court will be the last to overlook, much
less to tolerate the kind of misconduct alleged by
counsel in his instant petition. This is not to say,
however, that trial judges may be maligned at random
with accusations that cannot be proven. Anyone who
deliberately moves this Court to act on such kind of
representations may do so only at his peril of being
called to account therefor, should his charges turn out
to be a mere attempt to hide his own inadequacies
and omissions in order to escape criticism of his
clients.
75
We hold that Atty. Felix Jr.'s implied accusation that
respondent judge connived with his co-respondents to
make it appear that proper judgments by default had
been regularly rendered against petitioners on April
28, 1971, when in truth there was no such judgments,
has not been proven by him. On the contrary, the
official records and the affidavits of the employees of
the trial court as well as those of the Bureau of Posts
belie conclusively counsel's allegations, and the mere
fact that he did not see said judgments and other
pertinent pleadings and papers in the corresponding
expedientes on May 24, 1971, assuming the same to
be true, cannot disprove their existence, particularly,
when it is considered that counsel has never
pretended that he had actually made inquiries and
asked the proper personnel of the court about them,
which he would naturally have done, considering that
before then he had filed motions for extension followed
by the joint answer. It is particularly unfortunate that
counsel made positive allegations in his petition in the
instant cases purporting to show that his clients have
good and valid defenses and that respondent Tapia's
insurance claim was fraudulent and maliciously
exaggerated, when, as may be readily seen from the
communications of the petitioners' own adjusting
company, Annexes A and B of respondents' reply
memorandum, of which communications counsel must
have been, in the ordinary course of client and lawyer
relationship, duly informed, and from counsel's own
letter to his client, Annex 7 of respondent's answer, it
is more than obvious that he knew the truth to be
otherwise. It is indeed regrettable that on the basis of
such unjustified allegations, the Court had been
induced to issue a writ of preliminary mandatory
injunction counter-manding the writ of execution
issued by the court below, thereby causing undue
prejudice to all parties concerned. Such lack of candor
bordering on conscious misstatements of fact which
has actually misled the Court calls for at least an
appropriate explanation from counsel.
IN VIEW OF ALL THE FOREGOING, judgment is hereby
rendered dismissing the petition in these cases and
setting aside the writ of preliminary injunction issued
on July 8, 1971, with the consequence that the
executions enjoined thereby may now proceed in
accordance with law and the rules, with costs against
petitioner. And for the reasons above-stated, Atty.
Alfonso Felix, Jr. is hereby ordered to show cause
within ten (10) days from notice hereof why no
administrative action should be taken against him as a
member of the Philippine Bar.
Fernando (Chairman) and Aquino, JJ.,
concur.1wph1.t
Antonio, J., concur in the result.
Fernandez, J, concurs and states that he is not related
to Col. Jose Fernandez.
76
Footnotest.hqw the least our case is far from strong as well as that
1 Actually it should have been April 18 because March
has 31 days, but the trial court, in its order, Annex A of
the petition, expressly granted five (5)days from April
14, 1971.
2 There is no clarification as to whether counsel went
to court precisely because he had received earlier
Annex C-1 or he received this later in the day.
3 See footnote (1).
4 It may be mentioned that the known usual practice
in this respect among respectable law offices does not
include signing by the lawyer himself of the registry
cards. Arrangements are made as to this small detail
so that a subordinate may be authorized to do it.
5 As clearly shown by the record, the first registry
notice of the decisions was served on counsel's office
on May 19, 1971, hence the service became complete
on May 24, 1971 (Sec. 8, Rule 13) and the decision
became final on June 23, 1971.
6 We have examined Annex 7 of Respondent's Answer.
It reads in its pertinent portion thus:
"In this case for instance, the fact that you are willing
to compromise might be used as an argument to
reduce my fees. On the other hand, the fact that to say
adverse counsel is a former fiscal of Quezon City with
considerable acquaintance with the trial judge may be
used by me as an argument to demand a higher fee..."
Atty. Felix, Jr. has not denied the authenticity of this
document much less the truth of the representation
made by him in the statement quoted.
No. L-73039. October 9,1987.*
PERFECTA CAVILI, PRIMITIVO CAVILI and QUIRINO
CAVILI, petitioners, vs. HON. TEODORO N. FLORENDO,
Presiding Judge, Branch XXXVI, Regional Trial Court of
Negros Oriental, 7th Judicial Region, CLARITA GAVILI,
ULPIANO CAVILI, ESTRELLA CAVILI, PLACIDA CAVILI, ET
AL., respondents.
No. L-68680. October 9,1987.*
PERFECTA CAVILI, PRIMITIVO CAVILI and QUIRINO
CAVILI, petitioners, vs. HON. TEODORO N. FLORENDO,
Presiding Judge, Branch XXXVI, Regional Trial Court,
7th Judicial Region, CLARITA CAVILI, ULPIANO CAVILI,
ESTRELLA CAVILI, PLACIDA CAVILI, GREGORIA CAVILI,
FORTUNATA CAVILI. AMILITA CAVILI, APAD CAVILI,
AQUILINA CAVILI, CRESENCIO CAVILI, ALMA CAVILI, ET
AL., respondents.
No. L-57771. October 9,1987.*
QUIRINO CAVILI, PRIMITIVO, CAVILI, and PERFECTA
CAVILI, petitioners, vs. HON. CIPRIANO VAMENTA, JR.,
as Presiding Judge, Branch III, Court of First Instance of
_______________
77
* THIRD DIVISION.
611
VOL. 154, OCTOBER 9, 1987
611
Cavili vs. Florendo
Negros Oriental; ULPIANO CAVILI, CLARITA CAVILI,
ESTRELLA CAVILI, RAMONA TAKANG, COSME TAKANG,
FABIAN TAKANG, LEODEGARIO TAKANG, ET AL.,
respondents.
Remedial Law; Special Proceedings; Disqualification of
witnesses; Interpretation; Absence of provision in the
Rules disqualifying parties declared in default from
taking the witness stand for non-disqualified parties;
The specific enumeration of disqualifted witnesses
excludes the operation of causes of disability other
than those mentioned in the Rules.There is no
provision of the Rules disqualifying parties declared in
default from taking the witness stand for non-
disqualified parties. The law does not provide default
as an exception. 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.
Same; Same; Same; Same; Civil Procedure; Default;
Loss of standing in court is the consequence of an
order of default; "Loss of standing," interpreted;
Absence of provision in the Rule which contemplates a
disqualification to be a witness or a deponent in a
case; Default does not make him incompetentLoss of
standing in court is the consequence of an order of
default. Thus, a party declared in default is considered
out of court and cannot appear therein, adduce
evidence, and be heard and for that reason he is not
entitled to notice. (Rule 18, Rules of Court; Lim Toco v.
Go Fay, 80 Phil. 166) However, "loss of standing" must
be understood to mean only the forfeiture of one's
rights as a party litigant, contestant or legal adversary.
A party in default loses his right to present his
defense, control the proceedings, and examine or
cross-examine witnesses. He has no right to expect
that his pleadings would be acted upon by the court
nor may he object to or refute evidence or motions
filed against him. There is nothing in the rule,
however, which contemplates a disqualification to be a
witness or a deponent in a case. Default does not
make him an incompetent.
612
612
SUPREME COURT REPORTS ANNOTATED
Cavili vs. Florendo
78
Same; Same; Same; Same; Same; Same; As opposed
to a party litigant, a witness takes no active part in the
contest of rights between the parties; A party in
default does not take part in the trialAs opposed to a
party litigant, a witness is merely a beholder, a
spectator or onlooker, called upon to testify to what he
has seen, heard, or observed. As such, he takes no
active part in the contest of rights between the parties.
Cast in the limited role of witness, a party in default
cannot be considered as "taking part in the trial." He
remains suffering the effects of an order of default.
Same; Same; Same; Same; Same; Same; Allowing one
of the petitioners as a witness in the case at bar will
preserve the right of the other two petitioners to
secure attendance of witnesses and the production of
evidence in their behalf; To reject the presentation of
testimony of the witness is to treat the other
petitioners as in default, and deprive them of vital
evidence to support their claim.Of greater concern or
importance in allowing the presence of Perfecta Cavili
as a witness in the case at bar, is the preservation of
the right of petitioners Quirino and Primitivo Cavili to
secure the attendance of witnesses and the production
of evidence in their behalf. To reject Perfecta Cavili's
presentation of testimonial evidence would be to treat
Primitivo and Quirino as if they too were in default.
There is no reason why the latter should also be made
to bear the consequences of Perfecta's omission.
Moreover, we cannot deprive Quirino and Primitivo of
the only instrument of proof available to them, as
Perfecta alone has been in possession and
administration of the property in question and more
than anybody else she can provide vital evidence to
buttress their claim.
PETITION to review the orders of the Regional Trial
Court of Negros Oriental.
The facts are stated in the opinion of the Court.
GUTIERREZ, JR., J.:
This is a petition to review and set aside two orders of
the then Court of First Instance of Negros Oriental,
namely: (1) the order dated October 11, 1985,
disqualifying Perfecta Cavili dela Cruz as a witness in
Civil Case No. 6880 entitled "Clarita Cavili, et al. v.
Perfecta Cavili, Quirino Cavili, and Primitivo Cavili" and
(2) the order dated November 26,1985, refusing to
reconsider the previous orders of disqualif ication and
resetting
613
VOL. 154, OCTOBER 9, 1987
613
Cavili vs. Florendo
the reception of evidence for the defendants to
December 19 and 20,1985 with a warning that should
defendants' witnesses fail to appear in court on said
date, they will be deemed to have waived their right to
be witnesses in this case.
The private respondents filed Civil Case No. 6880 with
the Court of First Instance of Negros Oriental against
herein petitioners for Partition, Accounting, and
79
Damages. After the case was raffled to Branch I
presided over by Judge Augusto S. Villarin, summons
was issued to the three petitioners, all at Bayawan,
Negros Oriental which was the address indicated in the
complaint.
After trying to effect service, the process server went
back to the court with the following return of service
"served to Quirino and Primitivo Cavili not contacted,
according to Perfecta Cavili, subject persons is (sic)
staying in Kabangkalan, Negros Occidental.''
Meanwhile, Atty. Jose P. Alamillo filed a motion for
extension to answer in behalf of the defendants,
manifesting the representation of his client Perfecta
Cavili that she will inform her brothers Primitivo and
Quirino about the case.
The defendants, however, failed to file their answer
within the requested period and upon motion of the
plaintiffs, the defendants were declared in default, and
on October 5, 1979, a judgment by default was
promulgated by Judge Augusto S. Villarin.
The records of the case, however, show that a
Manifestation was filed by Atty. Jose P. Alamillo
informing the court that since he never met Primitivo
and Quirino Cavili, who are residents of another
province, he desisted from further appearing in the
case in their behalf.
On November 7, 1979, Atty. Jose R Alamillo received a
copy of the decision. On December 7, 1979, he filed a
motion for new trial in behalf of the defendants on
grounds of lack of jurisdiction over the persons of
Primitivo and Quirino Cavili who had not been legally
served with summons, and, with a meritorious defense
that the properties sought to be partitioned have
already been the subject of a written partition
agreement between the direct heirs of the late
Bernado Cavili
614
614
SUPREME COURT REPORTS ANNOTATED
Cavili vs. Florendo
who are the predecessors of the parties in this case.
In/an order dated April 23,1980, the court granted said
motion.
The plaintiffs filed a motion for reconsideration of the
order granting new trial and at the same time prayed
that a writ of execution be issued but only in so far as
defendant Perfecta Cavili was concerned.
In an order dated July 21,1981, Judge Cipriano
Vamenta of Branch III of the Court of First Instance of
Negros Oriental, to whom the case had been assigned
after a re-raffle, set aside the order of April 23, 1980
and directed the execution of the October 5, 1979
decision without qualification ruling that the
petitioners' remedy should have been appeal rather
than new trial.
Their motion for reconsideration having been denied
on August 11,1981, the defendants, now petitioners,
brought the case to this Court through a petition for
certiorari, G.R. No. 57771, entitled "Quirino Cavili, et
al., Petitioners versus Hon. Cipriano Vamenta, et al.,
Respondents."
80
On May 31, 1982, this Court rendered a decision, the
dispositive portion of which reads:
"WHEREFORE, Our resolution dismissing the petition is
hereby reconsidered; the petition is granted; and the
order dated July 21,1981, is set aside while that of
April 23,1980, is revived. No special pronouncement as
to costs." (Rollo, p, 21)
Thereafter, the pre-trial and trial of Civil Case No. 6880
was scheduled on October 9,10, and 11, 1985 before
Branch XXXVI of the Regional Trial Court, presided by
respondent Judge Teodoro N. Florendo. The
defendants, (now petitioners), presented Perfecta
Cavili dela Cruz as their first witness. The respondents,
through counsel, moved for her disqualification as a
witness on the ground that having been declared in
default, Perfecta Cavili has lost her standing in court
and she cannot be allowed to participate in all
proceedings therein, even as a witness. The court,
through the respondent judge, sustained the
respondents' contention and disqualified her from
testifying.
615
VOL. 154, OCTOBER 9, 1987
615
Cavili vs. Florendo
The petitioners, through counsel, moved for a
reconsideration of the ruling.
On November 26, 1985, the lower court issued an
order denying reconsideration of its Order dated
October 11, 1985 disqualifying Perfecta Cavili dela
Cruz as a witness in Civil Case No. 6880.
Hence, this petition.
Petitioner Perfecta Cavili's competence as a witness is
put in issue by the private respondents.
Section 18, Rule 130 of the Revised Rules of Court
states who are qualified to be witnesses. It provides:
"Section 18. Witnesses; their qualifications.Except as
provided in the next succeeding section, all persons
who. having organs of sense, can perceive, and
perceiving, can make known their perception to others,
may be witnesses. Neither parties nor other persons
interested in the outcome of a case shall be excluded;
nor those who have been convicted of crime; nor any
person on account of his opinion on matters of
religious belief."
The generosity with which the Rule allows people to
testify is apparent. Interest in the outcome of a case,
conviction of a crime unless otherwise provided by
law, and religious belief are not grounds for
disqualification.
Sections 19 and 20 of Rule 130 provide for specific
disqualifications. 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
81
it states the grounds when a witness may be
impeached by the party against whom he was called.
There is no provision of the Rules disqualifying parties
declared in default from taking the witness stand for
nondisqualified parties. The law does not provide
default as an exception. The specific enumeration of
disqualified witnesses excludes the operation of
causes of disability other than those
616
616
SUPREME COURT REPORTS ANNOTATED
Cavili vs. Florendo
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.
The respondents, however, cite Section 2, Rule 18 on
Defaults, to wit:
"Section 2. Effect of order of default.Except as
provided in section 9 of Rule 13, a party declared in
default shall not be entitled to notice of subsequent
proceedings nor to take part in the trial." "
They advance the argument that to allow Perfecta
Cavili to stand as witness would be to permit a party in
default "to take part in the trial."
An explanation of the Rule is in order.
Loss of standing in court is the consequence of an
order of default. Thus, a party declared in default is
considered out of court and cannot appear therein,
adduce evidence, and be heard and for that reason he
is not entitled to notice. (Rule 18, Rules of Court; Lim
Toco v. Go Fay, 80 Phil. 166) However, "loss of
standing" must be understood to mean only the
forfeiture of one's rights as a party litigant, contestant
or legal adversary. A party in default loses his right to
present his defense, control the proceedings, and
examine or crossexamine witnesses. He has no right to
expect that his pleadings would be acted upon by the
court nor may he object to or refute evidence or
motions filed against him. There is nothing in the rule,
however, which contemplates a disqualification to be a
witness or a deponent in a case. Default does not
make him an incompetent.
As opposed to a party litigant, a witness is merely a
beholder, a spectator or onlooker, called upon to
testify to what he has seen, heard, or observed. As
such, he takes no active part in the contest of rights
between the parties. Cast in
617
VOL. 154, OCTOBER 9, 1987
617
Cavili vs. Florendo
82
the limited role of witness, a party in default cannot be
considered as "taking part in the trial." He remains
suffering the effects of an order of default.
A party in default may thus be cited as a witness by
his codefendants who have the standing and the right
to present evidence which the former may provide.
The incidental benefit giving the party in default the
opportunity to present evidence which may eventually
redound to his advantage or bring about a desired
result, through his co-defendants. is of minor
consequence.
Of greater concern or importance in allowing the
presence of Perfecta Cavili as a witness in the case at
bar, is the preservation of the right of petitioners
Quirino and Primitivo Cavili to secure the attendance
of witnesses and the production of evidence in their
behalf. To reject Perfecta Cavili's s presentation of
testimonial evidence would be to treat Primitivo and
Quirino as if they too were in default. There is no
reason why the latter should also be made to bear the
consequences of Perfecta's omission. Moreover, we
cannot deprive Quirino and Primitivo of the only
instrument of proof available to them, as Perfecta
alone has been in possession and administration of the
property in question and more than anybody else she
can provide vital evidence to buttress their claim.
WHEREFORE, in view of the foregoing, the petition is
hereby GRANTED, The order of the respondent court
disqualifying Perfecta Cavili dela Cruz as a witness in
Civil Case No. 6880 is hereby SET ASIDE. The case is
remanded to the court a quo for further proceedings.
The temporary restraining order issued on January
6,1986 is LIFTED.
SO ORDERED,
Fernan (Chairman), Feliciano, Bidin and Corts, JJ.,
concur.
Petition granted Order set aside. Case remanded to
Court a quo for further proceedings.
Notes.Positive identification by prosecution witness
of accused is more credible than witnesses'
speculation. (People vs.
G.R. Nos. 159669 & 163521. March 12, 2007.*
UNITED OVERSEAS BANK PHILS. (formerly WESTMONT
BANK), petitioner, vs. ROSEMOORE MINING &
DEVELOPMENT CORP. and DRA. LOURDES PASCUAL,
respondents.
Actions; Pleadings and Practice; Forum Shopping;
Elements; The essence of forum shopping is the filing
of multiple suits involving the same parties for the
same cause of action, either simultaneously or
successively, for the purpose of obtaining a favorable
judgment.The essence of forum shopping is the filing
of multiple suits involv-
_______________
* SECOND DIVISION.
124
124
SUPREME COURT REPORTS ANNOTATED
83
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
ing the same parties for the same cause of action,
either simultaneously or successively, for the purpose
of obtaining a favorable judgment. The elements of
forum shopping are: (a) identity of parties, or at least
such parties as represent the same interests in both
actions; (b) identity of rights asserted and reliefs
prayed for, the reliefs being founded on the same
facts; and (c) the identity with respect to the two
preceding particulars in the two cases is such that any
judgment rendered in the pending cases, regardless of
which party is successful, amount to res judicata in the
other case.
Same; Same; Venue; The venue of real actions
affecting properties found in different provinces is
determined by the singularity or plurality of the
transactions involving said parcels of land.The rule
on venue of real actions is provided in Section 1, Rule
4 of the 1997 Rules of Civil Procedure, which reads in
part: Section1. Venue of Real Actions.Actions
affecting title to or possession of real property, or
interest therein, shall be commenced and tried in the
proper court which has jurisdiction over the area
wherein the real property involved, or a portion
thereof, is situated. x x x The venue of the action for
the nullification of the foreclosure sale is properly laid
with the Malolos RTC although two of the properties
together with the Bulacan properties are situated in
Nueva Ecija. Following the above-quoted provision of
the Rules of Court, the venue of real actions affecting
properties found in different provinces is determined
by the singularity or plurality of the transactions
involving said parcels of land. Where said parcels are
the object of one and the same transaction, the venue
is in the court of any of the provinces wherein a parcel
of land is situated.
Same; Same; Legal Ethics; Attorneys; A lawyer shall
not do any falsehood, nor consent to the doing of any
in court; nor shall he mislead, or allow the Court to be
misled by any artifice.This apparent deliberate
misrepresentation cannot simply pass without action.
The real estate mortgage form supplied to Rosemoor is
the Banks standard pre-printed form. Yet the Bank
perpetrated the misrepresentation. Blame must be
placed on its doorstep. But as the Banks pleading was
obviously prepared by its counsel, the latter should
also share the blame. A lawyer shall not do any
falsehood, nor consent to the doing of any in court; nor
shall he mislead, or allow the Court to be misled by
any artifice. Both the Banks president and counsel
should be made to explain why they should not be
sanctioned for contempt of court.
125
VOL. 518, MARCH 12, 2007
125
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
PETITIONS for review on certiorari of the decisions of
the Court of Appeals.
84
The facts are stated in the opinion of the Court.
Siguion Reyna, Montecillo and Ongsiako Law Offices
for petitioner.
Eufemio Law Offices for private respondents.
TINGA, J.:
We resolve these two consolidated cases, which
though with distinct courts of origin, pertain to issues
stemming from the same loan transaction.
The antecedent facts follow.
Respondent Rosemoor Mining and Development
Corporation (Rosemoor), a Philippine mining
corporation with offices at Quezon City, applied for and
was granted by petitioner Westmont Bank1 (Bank) a
credit facility in the total amount of P80 million
consisting of P50,000,000.00 as long term loan and
P30,000,000.00 as revolving credit line.2
To secure the credit facility, a lone real estate
mortgage agreement was executed by Rosemoor and
Dr. Lourdes Pascual (Dr. Pascual), Rosemoors
president, as mortgagors in favor of the Bank as
mortgagee in the City of Manila.3 The agreement,
however, covered six (6) parcels of land located in San
Miguel, Bulacan4 (Bulacan properties), all registered
under the name of Rosemoor,5 and two (2) parcels of
land6
_______________
1 Now United Overseas Bank Philippines.
2 Rollo, (G.R. No. 159669), p. 73.
3 Id., at pp. 159-161; Real Estate Mortgage.
4 Covered by Transfer Certificate of Title Nos. 42132,
42133, 42134, 42135, 42136 and 34569.
5 Rollo, (G.R. No. 159669), p. 73
6 Covered by Transfer Certificate of Title Nos. NT-
12627 and NT-12628.
126
126
SUPREME COURT REPORTS ANNOTATED
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
situated in Gapan, Nueva Ecija (Nueva Ecija
properties), owned and registered under the name of
Dr. Pascual.7
Rosemoor subsequently opened with the Bank four (4)
irrevocable Letters of Credit (LCs) totaling
US$1,943,508.11.8 To cover payments by the Bank
under the LCs, Rosemoor proceeded to draw against
its credit facility and thereafter executed promissory
notes amounting collectively to P49,862,682.50.9 Two
(2) other promissory notes were also executed by
Rosemoor in the amounts of P10,000,000.00 and
P3,500,000.00, respectively, to be drawn from its
revolving credit line.10
Rosemoor defaulted in the payment of its various
drawings under the LCs and promissory notes. In view
of the default, the Bank caused the extrajudicial
foreclosure of the Nueva Ecija properties on 22 May
1998 and the Bulacan properties on 10 August 1998.
The Bank was the highest bidder on both occasions.11
85
On 8 October 1999, the Bank caused the annotation of
the Notarial Certificate of Sale covering the Nueva
Ecija properties on the certificates of title concerned.
Later, on 16 March 2001, the Notarial Certificate of
Sale covering the Bulacan properties was annotated on
the certificates of title of said properties.12
The foregoing facts led to Rosemoors filing of separate
complaints against the Bank, one before the Regional
Trial Court of Manila (Manila RTC) and the other before
the Regional Trial Court of Malolos, Bulacan (Malolos
RTC).
_______________
7 Rollo, (G.R. No. 163521), p. 14.
8 Id., at p. 15 and 271.
9 Id., at pp. 15 and 273.
10 Id.
11 Rollo, (G.R. No. 159669), p. 73.
12 Rollo, (G.R. No. 163521), p. 15.
127
VOL. 518, MARCH 12, 2007
127
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
The Manila Case (G.R. No. 163521)
On 5 August 1998, Rosemoor and Dr. Pascual filed a
Complaint, originally captioned as one for Damages,
Accounting and Release of Balance of Loan and
Machinery and for Injunction before the Manila RTC.13
Impleaded as defendants were the Bank and Notary
Public Jose Sineneng, whose office was used to
foreclose the mortgage.14 The complaint was twice
amended, the caption eventually reflecting an action
for Accounting, Specific Performance and
Damages.15 Through the amendments, Pascual was
dropped as a plaintiff while several officers of the Bank
were included as defendants.16
The Bank moved for the dismissal of the original and
amended complaints on the ground that the venue
had been improperly laid.17 The motion was denied by
the trial court through an Omnibus Resolution dated 24
January 2000.18
Rosemoors prayer in the Second Amended Complaint,
which was filed in November of 1999, reads as follows:
WHEREFORE, plaintiff Rosemoor Mining &
Development Corporation respectfully prays that, after
trial of the issues, this court promulgate judgment
1. Directing Westmont to render an accounting of the
loan account of Rosemoor under the Long Term Loan
Facility and the Revolving Credit Line at least up to the
dates of foreclosure of Rosemoors mortgaged
properties on May 22, 1998 and August 18, 1998,
_______________
13 Id., at pp. 221-235.
14 Id., at p. 62.
15 Id., at pp. 266-286.
16 Impleaded as defendants in the Second Amended
Complaint were Florido Casuela, Avelina Dela Cruz,
Proserfina Cruz, and Rolando Castro. Casuela was
included as a former Vice President of the Bank while
86
Dela Cruz, Cruz, and Castro were impleaded as
incumbent Vice President, Manager, and Senior Officer,
respectively, of the Bank. See Rollo, (G.R. No. 163521),
pp. 267-268.
17 Id., at pp. 237-242; Urgent Motion to Dismiss.
18 Id., at pp. 327-328.
128
128
SUPREME COURT REPORTS ANNOTATED
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
showing among others (a) the sums of money paid by
Rosemoor or otherwise debited from its deposit
account in payment of the loans it had obtained from
Westmont to cover the cost of the machinery to be
imported under the Unpaid LCs and under LC No. 97-
058 for the tiling plant, as well as for working capital,
and (b) all interests, penalties and charges imposed on
the loans pertaining to the Unpaid LCs and LC No. 97-
058 and for which Westmont had foreclosed
Rosemoors and Dra. Pascuals real estate mortgage;
(c) the amount of import and customs duties,
demurrage, storage and other fees which Rosemoor
had paid or which was otherwise debited from
Rosemoors deposit account, in connection with the
importation of the tiling plant and as a consequence of
the non-release thereof by Westmont;
2. Ordering all the defendants jointly and severally to
pay to Rosemoor, by way of actual damages, the dollar
equivalent of the amounts in (1) (a), (b) and (c) at the
exchange rate prevailing at the time of the opening of
the LCs;
3. Ordering defendants jointly and severally to pay to
Rose-moor actual damages for operational losses
suffered by Rosemoor due to its failure to use the tiling
plaint which Westmont had refused to release to
Rosemoor, in such amount as may be proven at the
trial;
4. Directing the defendants jointly and severally to
pay, by way of correction for the public good,
exemplary damages in the amount of P 500,000.00
each;
5. Ordering defendants jointly and severally to
indemnify Rosemoor in the sum of P350,000.00,
representing attorneys fees and litigation expenses
incurred by Rosemoor for the protection and
enforcement of its rights and interests.
Plaintiff prays for further and other relief as may be
just and equitable under the circumstances.19
On 15 August 2002, the Bank filed another motion to
dismiss the Second Amended Complaint on the ground
of forum shopping since, according to it, Rosemoor had
filed another petition earlier on 11 March 2002 before
the Malolos RTC.20
_______________
19 Id., at pp. 283-284.
20 Id., at p. 63; CA Decision.
129
VOL. 518, MARCH 12, 2007
87
129
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
The Bank contended that as between the action before
the Manila RTC and the petition before the Malolos
RTC, there is identity of parties, rights asserted, and
reliefs prayed for, the relief being founded on the same
set of facts. The Bank further claimed that any
judgment that may be rendered in either case will
amount to res judicata in the other case.21 Still, the
Manila RTC denied the motion to dismiss.22 It also
denied the Banks motion for reconsideration of the
order of denial.23
The Bank challenged the Manila RTCs denial of the
Banks second motion to dismiss before the Court of
Appeals, through a petition for certiorari. The appellate
court dismissed the petition in a Decision dated 26
February 2004.24 The Bank filed a motion for
reconsideration which, however, was denied through a
Resolution dated 30 April 2004.25
_______________
21 Id., at p. 65.
22 Id., at p. 404. See also p. 65.
The pertinent portion of the Order reads:
There is no forum shopping.
There is forum shopping when in two or more cases
pending there is identity of (a) parties, (b) rights or
causes of action and (c) relief sought, (Buan v. Lopez,
145 SCRA 34). These requisites are not present in the
Bulacan case, the action is for Injunction with
damages, while the case before this Court is for
Accounting, Specific Performance and Damages. Thus,
the case of Denville Maritime, Inc. v. Commission on
Audit, 175 SCRA 701 cited[,] by the defendants does
not apply.
WHEREFORE, the Motion to Dismiss is DENIED for lack
of merit.
SO ORDERED.
23 Id., at p. 65.
24 Id., at pp. 61-68, Decision of the Court of Appeals is
dated 26 February 2004, penned by Associate Justice
Rodrigo V. Cosico with the concurrence of Associate
Justices Mariano C. Del Castillo and Vicente Q. Roxas.
25 Id., at pp. 70-71.
130
130
SUPREME COURT REPORTS ANNOTATED
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
In the Petition for Review on Certiorari in G.R. No.
163521, the Bank argues that the Court of Appeals
erred in holding that no forum shopping attended the
actions brought by Rosemoor.26
The Malolos Case (G.R. No. 159669)
After the complaint with the Manila RTC had been
lodged, on 11 March 2002, Rosemoor and Dr. Pascual
filed another action against the Bank, this time before
the Malolos RTC. Impleaded together with the Bank as
respondent was the Register of Deeds for the Province
of Bulacan in the Petition for Injunction with Damages,
88
with Urgent Prayer for Temporary Restraining Order
and/or Preliminary Injunction.27
In the Malolos case, Rosemoor and Dr. Pascual alleged
that the redemption period for the Bulacan properties
would expire on 16 March 2002. They claimed that the
threatened consolidation of titles by the Bank is illegal,
stressing that the foreclosure of the real estate
mortgage by the Bank was fraudulent and without
basis,28 as the Bank had made them sign two blank
forms of Real Estate Mortgage and several promissory
notes also in blank forms. It appeared later, according
to Rosemoor and Dr. Pascual, that the two Real Estate
Mortgage blank forms were made as security for two
loans, one for P80 million and the other for P48 million,
when the total approved loan was only for P80 million.
The Bank later released only the amount of P10 million
out of the P30 million revolving credit line, to the
prejudice of Rosemoor, they added.29
The Petitions prayer reads as follows:
_______________
26 Id., at p. 29.
27 Rollo, (G.R. No. 159669), pp. 230-238.
28 Id., at p. 74.
29 Id.
131
VOL. 518, MARCH 12, 2007
131
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
WHEREFORE, premises considered, it is most
respectfully prayed that this Honorable Court
1. Issue ex parte a temporary restraining order before
the matter could be heard on notice to restrain and
enjoin respondent BANK from proceeding with its
threatened consolidation of its titles over the subject
properties of petitioner Rosemoor in San Miguel,
Bulacan covered by TCT Nos. 42132; 42133; 42134;
42135; 42136 and RT 34569 (T-222448) on March 16,
2002 or at any time thereafter; that the respondent
Register of Deeds for the Province of Bulacan be
enjoined and restrained from registering any
document(s) submitted and/or to be submitted by
respondent BANK consolidating its titles over the
above-named properties of petitioner Rosemoor in San
Miguel, Bulacan; and likewise, that the Register of
Deeds for the province of Bulacan be restrained and
enjoined from canceling the titles of Rosemoor over its
properties, namely, TCT Nos. 42132; 42133; 42134;
42135; 42136 and RT 34569 (T-222448);
2. That after due notice, a writ of preliminary injunction
be issued upon the posting of a bond in such amount
as may be fixed by this Court;
3. That after due hearing and trial, judgment be
rendered in favor of petitioners and against
respondent BANK
a. Permanently enjoining respondent BANK from
proceeding with the consolidation of its titles to the
subject properties of Rosemoor covered by TCT Nos.
42132; 42133; 42134; 42135; 42136 and RT 34569 (T-
222448); and permanently restraining respondent
89

Register of Deeds for the Province of Bulacan from the properties registered in her name are located in
registering any document(s) submitted and/or to be Nueva Ecija. The Malolos RTC denied the motion to
submitted by respondent BANK consolidating its titles dismiss in an Order dated 13 May 2002.32 In the same
over the above-named properties of petitioner Order, the Malolos RTC directed the Bank to file its
Rosemoor in San Miguel, Bulacan; and likewise, that answer to the petition within five (5) days from
the Register of Deeds for the province of Bulacan be notice.33
restrained and enjoined from cancelling the titles of Despite receipt of the Order on 21 May 2002, the Bank
Rosemoor over its properties, namely, TCT Nos. 42132; opted not to file its answer as it filed instead a motion
42133; 42134; 42135; 42136 and RT 34569 (T- for reconsideration on 5 June 2002.34 Meanwhile,
222448); Rosemoor and Dr. Pascual moved to declare the Bank
b. Declaring the foreclosures of Real Estate Mortgages in default for its failure to timely file its answer.35 On
on the properties of petitioners Rosemoor and Dra. 10 September 2002, the Malolos RTC issued an order
Pascual to be null and void; denying the Banks motion for reconsideration for lack
c. Recognizing the ownership in fee simple of the of merit and at the same time declaring the Bank in
petitioners over their properties above-mentioned; default for failure to file its answer.36
132 Hence, the Bank filed a second petition for certiorari
before the Court of Appeals, where it assailed the
132 Orders dated 13 May 2002 and 10 September 2002 of
SUPREME COURT REPORTS ANNOTATED the Malolos RTC. During the pendency of this petition
United Overseas Bank Phils. vs. Rosemoore Mining & for certiorari, the Malolos RTC decided the Malolos case
Development Corp. on the merits in favor of Rosemoor.37
d. Awarding to petitioners the damages prayed for, _______________
including attorneys fees and costs and expenses of
litigation. 30 Id., at pp. 236-237.
Petitioners pray for such other reliefs and remedies as 31 Id., at p. 363.
may be deemed just and equitable in the premises.30 32 Id., at p. 75.
As it did before the Manila RTC, the Bank filed a motion 33 Id.
to dismiss on 26 March 2002 on the ground that 34 Id.; id., at p. 363.
Rosemoor had engaged in forum shopping, adverting 35 Id.
to the pending Manila case.31 The Bank further 36 Id.
alleged that Dr. Pascual has no cause of action since 37 Id., at p. 367; dispositive part of which reads:
90
133
VOL. 518, MARCH 12, 2007
133
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
The decision in the Malolos case was also appealed to
the Court of Appeals.38 Based on these developments,
the appellate court considered the prayer for
preliminary injunction as moot and academic and
proceeded with the resolution of the petition, by then
docketed as CA-G.R. SP No.73358, on the merits. The
appellate court dismissed the petition in a Decision
dated 20 June 2003.39 Undaunted, the Bank filed the
petition in G.R. No. 159669 before this Court.
The two petitions before this Court have been
consolidated. We find one common issue in G.R. No.
159669 and G.R. No. 163521whether Rosemoor
committed forum-shopping in
_______________
WHEREFORE, premises considered, judgment is hereby
rendered in favor of petitioners and against
respondents, to wit:
1. The Writ of Preliminary Injunction issued by this
Court on 25 March 2002 is hereby made permanent;
2. Declaring as null and void the Real Estate Mortgage
executed by petitioner corporation in favor of
respondent Bank (Exhibits D and E) and the the Malolos RTC even as regards the Nueva Ecija
subsequent foreclosures of such mortgages;
3. Ordering the respondent United Overseas Bank
Philippines to pay unto petitioners as follows:
P2,000,000.00 as moral and exemplary damages
unto Dra. Lourdes Pascual (P1,000,000.00 as moral
damages; P1,000,000.00 as exemplary damages);
P13,000,000.00 unto petitioner Rosemoor Mining and
Development Corporation as moral and exemplary
damages (P3,000,000.00 as moral damages and
P10,000,000.00 as exemplary damages); and
P100,000.00 unto petitioner as attorneys fees, plus
cost of litigation.
SO ORDERED.
38 Id., at p. 75 citing CA Rollo, pp. 463-466.
39 Id., at pp. 72-79; Penned by Associate Justice
Romeo A. Brawner with the concurrence of Associate
Justices Eliezer R. Delos Santos and Regalado E.
Maambong.
134
134
SUPREME COURT REPORTS ANNOTATED
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
filing the two cases against the Bank. The other issues
for resolution were raised in G.R. No. 159669,
pertaining as they do to the orders issued by the
Malolos RTC. These issues are whether the action to
invalidate the foreclosure sale was properly laid with
properties; whether it was proper for the Malolos RTC
to declare the Bank in default; and whether it was
91
proper for the Malolos RTC to deny the Banks motion
to dismiss through a minute resolution.40
Forum-Shopping
The central issue in these consolidated cases is
whether Rosemoor committed forum-shopping in filing
the Malolos case during the pendency of the Manila
case.
The essence of forum-shopping is the filing of multiple
suits involving the same parties for the same cause of
action, either simultaneously or successively, for the
purpose of obtaining a favorable judgment.41 The
elements of forum-shopping are: (a) identity of parties,
or at least such parties as represent the same interests
in both actions; (b) identity of rights asserted and
reliefs prayed for, the reliefs being founded on the
same facts; and (c) the identity with respect to the two
preceding particulars in the two cases is such that any
judgment rendered in the pending cases, regardless of
which party is successful, amount to res judicata in the
other case.42
As to the existence of identity of parties, several bank
officers and employees impleaded in the Amended
Complaint in the Manila case were not included in the
Malolos case. These bank officers and employees were
sued in Manila in their personal capacity. A finding of
negligence or bad faith in their
_______________
40 Rollo, (G.R. No. 163521), p. 584.
41 Mondragon Leisure and Resorts Corporation v.
United Coconut Planters Bank, G.R. No. 154187, 14
April 2004, 427 SCRA 585.
42 Id. See also Valencia v. Court of Appeals, 331 Phil.
590, 603; 263 SCRA 275, 284-285 (1996).
135
VOL. 518, MARCH 12, 2007
135
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
participation in the preparation and execution of the
loan agreement would render them personally liable.
Dr. Pascual, on the other hand, was included as
petitioner only in the Malolos case because it involved
properties registered in her name. As correctly pointed
out by the Court of Appeals, Dr. Pascual is a real party-
in-interest in the Malolos case because she stood to
benefit or suffer from the judgment in the suit. Dr.
Pascual, however, was not included as plaintiff in the
Manila case because her interest therein was not
personal but merely in her capacity as officer of
Rosemoor.
As regards the identity of rights asserted and reliefs
prayed for, the main contention of Rosemoor in the
Manila case is that the Bank had failed to deliver the
full amount of the loan, as a consequence of which
Rosemoor demanded the remittance of the unreleased
portion of the loan and payment of damages
consequent thereto.43 In contrast, the Malolos case
was filed for the purpose of restraining the Bank from
92
proceeding with the consolidation of the titles over the
foreclosed Bulacan properties because the loan
secured by the mortgage had not yet become due and
demandable.44 While the right asserted in the Manila
case is to receive the proceeds of the loan, the right
sought in the Malolos case is to restrain the foreclosure
of the properties mortgaged to secure a loan that was
not yet due.
Moreover, the Malolos case is an action to annul the
foreclosure sale that is necessarily an action affecting
the title of the property sold.45 It is therefore a real
action which should be commenced and tried in the
province where the property or part thereof lies.46 The
Manila case, on the other hand, is a
_______________
43 Rollo, (G.R. No. 163521), pp. 283-284.
44 Id., at pp. 236-237.
45 Fortune Motors (Phils.), Inc. v. Court of Appeals,
G.R. No. 76431, 16 October 1989, 178 SCRA 564, 568-
569.
46 RULES OF COURT, Rule 4, Sec. 1.
136
136
SUPREME COURT REPORTS ANNOTATED
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
personal action47 involving as it does the enforcement
of a contract between Rosemoor, whose office is in
Quezon City, and the Bank, whose principal office is in
Binondo, Manila.48 Personal actions may be
commenced and tried where the plaintiff or any of the
principal plaintiffs resides, or where the defendants or
any of the principal defendants resides, at the election
of the plaintiff.49
It was subsequent to the filing of the Manila case that
Rosemoor and Dr. Pascual saw the need to secure a
writ of injunction because the consolidation of the
titles to the mortgaged properties in favor of the Bank
was in the offing. But then, this action can only be
commenced where the properties, or a portion thereof,
is located. Otherwise, the petition for injunction would
be dismissed for improper venue. Rosemoor, therefore,
was warranted in filing the Malolos case and cannot in
turn be accused of forum shopping.
Clearly, with the foregoing premises, it cannot be said
that respondents committed forum shopping.
Action to nullify foreclosure sale of mortgaged
properties in Bulacan and Nueva Ecija before the
Malolos RTC
The Bank challenges the Malolos RTCs jurisdiction
over the action to nullify the foreclosure sale of the
Nueva Ecija properties along with the Bulacan
properties. This question is
_______________
47 A personal action is one brought for the recovery of
personal property or for the enforcement of some
contract or for the recovery of damages for its breach,
or the recovery of damages for the commission of an
injury to the person or property. See Asset Privatization
93
Trust v. Court of Appeals, 381 Phil. 530, 550; 324 SCRA
533, 551 (2000) citing The Dial Corporation v. Soriano,
G.R. No. L-82330, May 31, 1988, 161 SCRA 737, 742
citing Hernandez v. DBP, L-31095, June 18, 1976, 71
SCRA 290, 292.
48 Rollo, (G.R. No. 159669), p. 159.
49 RULES OF COURT, Rule 4, Sec. 2.
137
VOL. 518, MARCH 12, 2007
137
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
actually a question of venue and not of jurisdiction,50
which if improperly laid, could lead to the dismissal of
the case.51
The rule on venue of real actions is provided in Section
1, Rule 4 of the 1997 Rules of Civil Procedure, which
reads in part:
Section 1. Venue of Real Actions.Actions affecting
title to or possession of real property, or interest
therein, shall be commenced and tried in the proper
court which has jurisdiction over the area wherein the
real property involved, or a portion thereof, is situated.
x x x
The venue of the action for the nullification of the
foreclosure sale is properly laid with the Malolos RTC
although two of the properties together with the
Bulacan properties are situated in Nueva Ecija.
Following the above-quoted provision of the Rules of
Court, the venue of real actions affecting properties
found in different provinces is determined by the
singularity or plurality of the transactions involving
said parcels of land. Where said parcels are the object
of one and the same transaction, the venue is in the
court of any of the provinces wherein a parcel of land
is situated.52
Ironically, the Bank itself correctly summarized the
applicable jurisprudential rule in one of the pleadings
before the Court.53 Yet the Bank itself has provided
the noose on which it
_______________
50 Unimasters Conglomeration, Inc. v. Court of
Appeals, 335 Phil. 415; 267 SCRA 759 (1997).
51 RULES OF COURT, Rule 16, Sec. 1(c).
52 REGALADO, REMEDIAL LAW COMPENDIUM, Vol. 1
(1999 ed.), p. 105, citing El Hogar Filipino v. Seva, 57
Phil. 573 (1932).
53 Rollo, (G.R. No. 159669), p. 597. Vide Petitioners
Memorandum. The Bank stated:
Where the subject matter of the action involves
various parcels of land situated in different provinces,
the venue is determined by the singularity or plurality
of the transactions involving said parcels of land. Thus,
where said parcels are the
138
138
SUPREME COURT REPORTS ANNOTATED
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
94
would be hung. Resorting to deliberate
misrepresentation, the Bank stated in the same
pleading that the Bulacan and Nueva Ecija
[p]roperties were not the subject of one single real
estate mortgage contract.54
In the present case, there is only one proceeding
sought to be nullified and that is the extra-judicial
mortgage foreclosure sale. And there is only one initial
transaction which served as the basis of the
foreclosure sale and that is the mortgage contract.
Indeed, Rosemoor, through Dr. Pascual, executed a
lone mortgage contract where it undertook to
mortgage the land/real property situated in Bulacan
and Nueva Ecija, with the list of mortgaged properties
annexed thereto revealing six (6) properties in Bulacan
and two (2) properties in Nueva Ecija subject of the
mortgage.
This apparent deliberate misrepresentation cannot
simply pass without action. The real estate mortgage
form supplied to Rosemoor is the Banks standard pre-
printed form. Yet the Bank perpetrated the
misrepresentation. Blame must be placed on its
doorstep. But as the Banks pleading was obviously
prepared by its counsel, the latter should also share
the blame. A lawyer shall not do any falsehood, nor
consent to the doing of any in court; nor shall he
mislead, or allow the Court
_______________
objects of one and the same transaction, the venue
was in the then CFI of any of the provinces wherein a
parcel of land is situated (Regalado, Remedial Law
Compendium, Vol. 1, p. 105). As enunciated by the
Supreme Court in El Hogar Filipino v. Seva (G.R. No.
36627, 19 November 1932), it is only when various
parcels of land or real property situated in different
provinces, are included in one mortgage contract,
(that) the Court of First Instance of the province
wherein they are situated or a part thereof is situated,
has jurisdiction to take cognizance of an action for the
foreclosure of said mortgage, and the judgment
therein rendered may be executed in all the other
provinces wherever the mortgaged real property may
be found.
54 Id., at pp. 596-597.
139
VOL. 518, MARCH 12, 2007
139
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
to be misled by any artifice.55 Both the Banks
president and counsel should be made to explain why
they should not be sanctioned for contempt of court.
Propriety of Default Order
The Court of Appeals did not touch upon the
soundness or unsoundness of the order of default
although it is one of the orders assailed by the Bank.
However, the silence of the appellate court on the
issue does not improve the legal situation of the Bank.
To recall, the Bank filed a motion to dismiss the
Malolos case. The Malolos RTC denied the motion in an
95
Order dated 13 May 2002.56 In the same Order, the
Malolos RTC directed the Bank to file its answer to the
petition within five (5) days from the receipt of the
Order.57 The Bank received a copy of the Order on 21
May 2002. Instead of filing an answer, the Bank filed a
motion for reconsideration but only on 5 June 2002.58
The motion for reconsideration59 could not have tolled
the running of the period to answer for two reasons.
One, it was filed late, nine (9) days after the due date
of the answer. Two, it was a mere rehash of the motion
to dismiss; hence, pro forma in nature. Thus, the
Malolos RTC did not err in declaring the Bank in
default.
Deviation from the Prescribed Content of an Order
Denying a Motion to Dismiss
Finally, the Bank questions the Malolos RTCs Order
dated 13 May 2002 denying its motion to dismiss on
the ground that
_______________
55 CODE OF PROFESSIONAL RESPONSIBILITY, Chapter
III, Rule 10.01.
56 Rollo (G.R. No. 159669), p. 75.
57 Id.
58 Id., at p. 363.
59 Id., at pp. 287-291.
140
140
SUPREME COURT REPORTS ANNOTATED
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
it is contrary to law and jurisprudence because it had
failed to apprise the Bank of the legal basis for the
denial.
The Bank adverts to the content requirement of an
order denying a motion to dismiss prescribed by Sec.
3, Rule 16 of the Rules of Court. The Court in Lu Ym v.
Nabua 60 made a thorough discussion on the matter,
to quote:
Sec. 3, Rule 16 of the Rules provides:
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.
In every case, the resolution shall state clearly and
distinctly the reasons therefor.
xxxx
Further, it is now specifically required that the
resolution on the motion shall clearly and distinctly
state the reasons therefor. This proscribes the common
practice of per-functorily dismissing the motion for
lack of merit. Such cavalier dispositions can often
pose difficulty and misunderstanding on the part of the
aggrieved party in taking recourse therefrom and
likewise on the higher court called upon to resolve the
same, usually on certiorari.61
The questioned order of the trial court denying the
motion to dismiss with a mere statement that there
96
are justiciable questions which require a full blown trial
falls short of the requirement of Rule 16 set forth
above. Owing to the terseness of its expressed
justification, the challenged order ironically suffers
from undefined breadth which is a hallmark of
imprecision. With its unspecific and amorphous thrust,
the issuance is inappropriate to the grounds detailed in
the motion to dismiss.
_______________
60 G.R. No. 161309, 23 February 2005, 452 SCRA 298.
61 Pefianco v. Moral, 379 Phil. 468; 322 SCRA 439
(2000); Intramuros Administration v. Contacto, 450
Phil. 765; 402 SCRA 581 (2003).
141
VOL. 518, MARCH 12, 2007
141
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
While the requirement to state clearly and distinctly
the reasons for the trial courts resolutory order under
Sec. 3, Rule 16 of the Rules does call for a liberal
interpretation, especially since jurisprudence dictates
that it is decisions on cases submitted for decision that
are subject to the stringent requirement of specificity
of rulings under Sec. 1, Rule 3662 of the Rules, the trial
courts order in this case leaves too much to the
imagination. (Emphasis supplied.)63
The assailed order disposed of the motion to dismiss in
this wise:
x x x x
After a careful scrutiny of the grounds cited in the
Motion to Dismiss and the arguments en contra
contained in the Opposition thereto and finding the
Motion to Dismiss to be not well taken as grounds cited
are not applicable to the case at bar, the Court hereby
DENIES the instant Motion to Dismiss.
x x x x64
Clearly, the subject order falls short of the content
requirement as expounded in Lu Ym v. Nabua. Despite
the aberration, however, the Bank was not misled,
though it could have encountered difficulties or
inconvenience because of it. Comprehending, as it did,
that the Malolos RTC did not share its position that
Rosemoor had engaged in forum-shopping, it went to
great lengths to impress upon the Court of Appeals
that there was indeed forum shopping on Rose-moors
part. But the appellate court did not likewise agree
with the Bank as it soundly debunked the forum
shopping charge. In fact, the same forum-shopping
argument has been
_______________
62 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.
63 Id., at pp. 307-307.
97
64 Rollo, (G.R No. 159669), pp. 283-284; Order dated
13 May 2002; Penned by Presiding Judge Thelma R.
Pinero Cruz.
142
142
SUPREME COURT REPORTS ANNOTATED
United Overseas Bank Phils. vs. Rosemoore Mining &
Development Corp.
fully ventilated before the Court but we are utterly
unimpressed as we made short shrift of the argument
earlier on. In the ultimate analysis, therefore, the trial
courts blunder may be overlooked as it proved to be
harmless.
WHEREFORE, the decisions of the Court of Appeals
dated 26 February 2004 in CA-G.R. SP No. 76934 and
dated 20 June 2003 in CA-G.R. SP No. 73358 are
AFFIRMED. Petitioner United Overseas Bank, Phils. and
its counsel, Siguion Reyna Montecillo & Ongsiako Law
Offices, are given ten (10) days from notice to EXPLAIN
why they should not be held in contempt of court for
making a misrepresentation before the Court as
adverted to in this Decision.
Costs against petitioner.
SO ORDERED.
Quisumbing (Chairperson), Carpio, Carpio-Morales
and Velasco, Jr., JJ., concur.
Judgments affirmed.
Notes.The failure of a judge to recognize that it is not
the general provisions of the Rules of Court on Venue
of Actions but Act No. 3135 which is the law in point
dealing particularly on extrajudicial foreclosure sales of
real estate mortgages is an utter display of ignorance
of the law to which he swore to maintain professional
competence. (Supena vs. De la Rosa, 267 SCRA 1
[1997])
Where the complaint is in the nature of a personal
action, the rules on venue at the time the complaint
was filed governs. (Davao Abaca Plantation Company,
Inc. vs. Dole Philippines, Inc., 346 SCRA 682 [2000])
G.R. No. 44888. February 7, 1992.*
PILIPINAS SHELL PETROLEUM CORPORATION,
petitioner, vs. FIDEL P. DUMLAO, Judge of the COURT
OF FIRST INSTANCE of AGUSAN DEL NORTE and
BUTUAN CITY, BONIFACIO CANONOY, Judicial
Administrator of the Estate of REGINO CANONOY,
CARMEN VDA. DE CANONOY, TEODULO CANONOY,
REGINO CANONOY, JR., MARIANITA CANONOY GUINTO,
and GLORIA CANONOY BASA, respondents.
Special Proceedings; Settlement of Estate; The
allegation that a petitioner seeking letters of
administration is an interested person does not fall
within the enumeration of jurisdictional facts.The
jurisdictional facts alluded to are: the death of the
testator, his residence at the time of his death in the
province where the probate court is sitting or, if he is
an inhabitant of a foreign country, his having left his
estate in such province. These facts are amply
enumerated in the petition filed by Gonzalez. The fact
of death of the intestate and of his residence within
the country are foundation facts upon which all the
98
subsequent proceedings in the administration of the
estate rest, and that if the intestate was not an
inhabitant of the state at the time of his death, and left
no assets in the state, and none came into it
afterwards, no jurisdiction is conferred on the court to
grant letters of
_______________
* THIRD DIVISION.
41
VOL. 206, FEBRUARY 7, 1992
41
Pilipinas Shell Petroleum Corporation vs. Dumlao
administration in any county. Clearly, the allegation
that a petitioner seeking letters of administration is an
interested person, does not fall within the enumeration
of jurisdictional facts. Of course, since the opening
sentence of the section requires that the petition must
be filed by an interested person, it goes without saying
that a motion to dismiss may lie not on the basis of
lack of jurisdiction on the part of the court, but rather
on the ground of lack of legal capacity to institute the
proceedings.
Same; Same; Court defined an interested party as one
who would be benefited by the estate, such an heir or
one who has a claim against the estate such as a
creditor.This is precisely what happened in Saguinsin
vs. Lindayag, where the dismissal of a petition for
letters of administration was affirmed because the
petitioner is not an heir of her deceased sister and,
therefore, has no material and direct interest in her
estate. In the said case, this Court defined an
interested party as one who would be benefited by the
estate, such as an heir, or one who has a claim against
the estate, such as a creditor; this interest must be
material and direct, not merely indirect or contingent.
Remedial Law; Motion; If a motion to dismiss is not
filed, any of the grounds available for such a motion
except for improper venue may be pleaded as an
affirmative defense and a preliminary hearing may be
had thereon; Exceptions.However, if a motion to
dismiss is not filed, as what obtains in this case, any of
the grounds available for such a motion, except for
improper venue, may be pleaded as an affirmative
defense, and a preliminary hearing thereon may be
had as if a motion to dismiss had been filed. Excepted
from the above rules are the following grounds: (a)
failure to state a cause of action which may be alleged
in a later pleading if one is permitted, or by a motion
for judgment on the pleadings, or at the trial on the
merits, and (b) lack of jurisdiction over the subject
matter of the action, subject to the exception as
hereinafter discussed.
Same; Same; Jurisdiction; While it may be true that
jurisdiction may be raised at any stage of the
proceedings, a party who has affirmed and invoked it
in a particular matter to secure an affirmative relief
cannot be allowed to afterwards deny that same
jurisdiction to escape penalty.Clearly, therefore, not
only had the administrator and the rest of the private
respondents voluntarily submitted to the jurisdiction of
99
the trial court, they even expressly affirmed and
invoked such jurisdiction in praying for reliefs and
remedies in their favor, namely: (a) denial of Gonzalez
prayer to be appointed as administrator, (b)
appointment of Bonifacio Canonoy as administrator,
(c) denial of
42
42
SUPREME COURT REPORTS ANNOTATED
Pilipinas Shell Petroleum Corporation vs. Dumlao
petitioner Shells amended claim against the estate,
and (d) the granting of the counterclaim. Hence, they
cannot now be heard to question the jurisdiction of the
trial court. While it may be true that jurisdiction may
be raised at any stage of the proceedings, a party who
has affirmed and invoked it in a particular matter to
secure an affirmative relief cannot be allowed to
afterwards deny that same jurisdiction to escape
penalty.
PETITION for review on certiorari of the decision of the
then Court of First Instance of Agusan del Norte and
Butuan City, Br. 2. Dumlao, J.
The facts are stated in the opinion of the Court.
Dominguez & Paderna Law Offices Co. for
petitioner.
Wenceslao B. Rosales for private respondents.
DAVIDE, JR., J.:
Brought to focus in this petition are the following
issues: (a) whether the jurisdictional facts that need to
be stated in a petition for letters of administration
under Section 2(a), Rule 79 of the Rules of Court
include the specific assertion that the petitioner
therein is an interested person, and (b) whether the
administration court may properly and validly dismiss
a petition for letters of administration filed by one who
is not an interested person after having appointed an
heir of the decedent as administrator of the latters
intestate estate and set for pre-trial a claim against
the said estate.
Ricardo M. Gonzalez, District Manager of Shell
Philippines, Inc. for Mindanao (hereinafter referred to
as Shell), filed on 8 January 1973 a petition entitled In
the Matter of the Intestate Estate of the Deceased
Regino Canonoy, Petition for Letters of Administration,
Ricardo M. Gonzalez, Petitioner with the then Court of
First Instance (now Regional Trial Court) of Agusan del
Norte and Butuan City, praying therein that he be
appointed judicial administrator of the estate of the
deceased Regino Canonoy. The case was docketed as
SP PROC. No. 343 and was raffled to Branch II of the
trial court.
On 27 January 1973, Judge Vicente B. Echavez, Jr. of
Branch II issued an Order (1) setting the hearing on
the petition for 23 March 1973 at 8:30 a.m.; (2)
directing that the order be published, at petitioners
expense, once a week for three (3) con-
43
100
VOL. 206, FEBRUARY 7, 1992
43
Pilipinas Shell Petroleum Corporation vs. Dumlao
secutive weeks in a newspaper with a nationwide
circulation published regularly by a government
agency or entity, or in any newspaper published and
edited in any part of the country which is in operation
during the existence of the present national
emergency and of general circulation in the province
of Agusan del Norte and in Butuan City, if any there
be; and (3) ordering that copies of the order be sent by
registered mail or personal delivery, at the petitioners
expense, to each of all the known heirs of the
deceased Regino Canonoy, within the periods
prescribed by Section 4, Rule 76 of the Rules of Court.1
In their Opposition to the issuance of letters of
administration to Gonzalez filed on 21 March 1973,2
private respondents, who are heirs of Regino Canonoy,
allege that: Gonzalez is a complete stranger to the
intestate estate of Regino Canonoy; he is not even a
creditor of the estate; he is a resident of Davao City
and thus if appointed as administrator of the estate,
the bulk of which is located in Butuan City, he would
not be able to perform his duties efficiently; and he is
an employee of Shell Philippines, Inc., an alleged
creditor of the estate, and so he would not be able to
properly and effectively protect the interest of the
estate in case of conflicts. They, however, propose
and pray that since Bonifacio Canonoy, one of Reginos
sons, enjoys preference in appointment pursuant to
Section 6, Rule 78 of the Rules of Court, he should be
appointed administrator of the said intestate estate
and the corresponding letters of administration be
issued in his favor.
On 25 July 1973, after due hearing, the trial court
appointed Bonifacio Canonoy as administrator of the
intestate estate of Regino Canonoy,3 having found him
competent to act as such. None of the parties moved
to reconsider this Order or appealed therefrom. On 23
November 1973, herein petitioner Shell, then known as
Shell Philippines, Inc., filed its claim against the estate
of the deceased Regino Canonoy. The duly appointed
administrator, Bonifacio Canonoy, filed on 9 October
1974 a Motion to Dismiss the claim of Shell4 which the
latter contested
_______________
1 Annex B of Petition.
2 Annex C, Id.
3 Annex D of Petition.
4 Annex F, Id.
44
44
SUPREME COURT REPORTS ANNOTATED
Pilipinas Shell Petroleum Corporation vs. Dumlao
by filing an Opposition. Shell likewise filed an amended
claim against the estate.5 On 12 May 1975, the
administrator filed his Reply to the Opposition to
Motion to Dismiss.6 On 20 May 1975, he filed an
Answer to the amended claim filed by Shell.7 In the
said Answer, he interposes compulsory counterclaims
101
for the estate in the amount of P659,423.49
representing rentals for land occupied by the Shell
Service Station, lighting allowances, allowances for
salaries and wages of service attendants, sales
commission due the deceased Regino Canonoy and
reasonable attorneys fees. Petitioner filed an Answer
to the Counterclaim.
Upon joinder of the issues on Shells claim, the trial
court, this time presided over by respondent Judge
Fidel P. Dumlao, set the pre-trial for 15 August 1975.8
This was later re-set to 23 September 1975.9
On 18 August 1975, petitioner filed a motion to require
the judicial administrator to file an inventory of the
properties of the deceased.10
At the pre-trial held on 23 September 1975, counsel
for the administrator requested for time to file a
Motion to Dismiss the case. In an Order issued on that
date, the court granted him ten (10) days to file the
motion; opposing counsel was likewise given ten (10)
days from receipt of the same to file whatever
pleading he may deem proper to file, after which the
motion shall be deemed submitted for resolution.11
The motion was filed on 30 September 1975. It alleges
that the court did not acquire jurisdiction over the
subject matter and nature thereof because the
petitioner therein, Mr. Gonzalez, is not the interested
person contemplated by Section 2, Rule 79 of the
Rules of Court.12 Shell filed its Opposition to the
Motion on 16 October 197513 on the ground that the
trial court had acquired jurisdiction over the
_______________
5 Annexes G and H, Id.
6 Annex I of Petition.
7 Annex J, Id.
8 Annex L, Id., though not found in the records.
9 Annex M, Id.
10 Annex N, Id.
11 Annex P of Petition.
12 Annex Q, Id.
13 Annex R, Id.
45
VOL. 206, FEBRUARY 7, 1992
45
Pilipinas Shell Petroleum Corporation vs. Dumlao
case to issue letters of administration as the interest of
Gonzalez in the estate is not a jurisdictional fact that
needs to be alleged in the petition. If at all, Gonzalez
lack of interest in the estate of the deceased only
affected his competence to be appointed
administrator. In an Order dated 8 November 1975,
respondent Judge, finding the motion to be well-taken
and meritorious, dismissed the case.14 The motion for
its reconsideration having been denied by the trial
court on 23 January 1976,15 Shell filed the instant
petition which it denominated as a petition for review
on certiorari under Rule 45 of the Rules of Court.
In the Resolution dated 6 December 1976, this Court
required the respondents to comment on the
petition;16 the latter complied with the same on 31
January 1977.17 Thereafter, on 7 February 1977, this
102

Court resolved, inter alia, to treat the petition for 46

review as a special civil action under Rule 65 of the
Rules of Court and require the parties to submit their 46
respective Memoranda;18 petitioner filed its SUPREME COURT REPORTS ANNOTATED
Memorandum on 4 April 197719 while the respondents Pilipinas Shell Petroleum Corporation vs. Dumlao
filed theirs on 3 June 1977.20 petition for letters of administration must be filed by
The petition is impressed with merit; it must perforce an interested person and must show, so far as known
be granted. to the petitioner:
Under the peculiar circumstances of the case, the trial (a) The jurisdictional facts;
court clearly acted with grave abuse of discretion (b) The names, ages, and residences of the heirs, and
when it dismissed SP PROC. No. 343 after having set the names and residences of the creditors, of the
for pre-trial petitioners amended claim against the decedent;
estate. That said dismissal was predicated solely on (c) The probable value and character of the property of
the ground that petitioner therein, Ricardo Gonzalez, is the estate;
not an interested person, and that, since such (d) The name of the person for whom letters of
interest is a jurisdictional requirement, the trial court administration are prayed.
acquired no jurisdiction over the case, serves only to But no defect in the petition shall render void the
compound the error. issuance of letters of administration.
1. Section 2, Rule 79 of the Rules of Court provides: xxx
xxx The jurisdictional facts alluded to are: the death of the
SEC. 2. Contents of petition for letters of testator, his residence at the time of his death in the
administration.A province where the probate court is sitting or, if he is
_______________ an inhabitant of a foreign country, his having left his
estate in such province.21 These facts are amply
14 Annex S, Id. enumerated in the petition filed by Gonzalez.22 The
15 Annex V, Id. fact of death of the intestate and of his residence
16 Rollo, 116. within the country are foundation facts upon which all
17 Id., 121. the subsequent proceedings in the administration of
18 Rollo, 129. the estate rest, and that if the intestate was not an
19 Id., 135. inhabitant of the state at the time of his death, and left
20 Id., 163. no assets in the state, and none came into it
103
afterwards, no jurisdiction is conferred on the court to
grant letters of administration in any county.23 Clearly,
the allegation that a petitioner seeking letters of
administration is an interested person, does not fall
within the enumeration of jurisdictional facts. Of
course, since the opening sentence of the section
requires that the petition must be filed by an
interested person, it goes without saying that a motion
to dismiss may lie not on the basis of lack of
jurisdiction on the part of the court, but rather on the
ground of lack of legal capacity to institute the
proceedings.
_______________
21 MORAN, M., Comments on the Rules of Court, vol. 3,
1980 ed., 408-409, citing Diez vs. Serra, 51 Phil. 283;
Santos vs. Castillo, 64 Phil. 211; Fernando vs.
Crisostomo, L-2693, 27 December 1951.
22 Annex A of Petition.
23 Diez vs. Serra, supra., citing 11 R.C.L., par. 81.
47
VOL. 206, FEBRUARY 7, 1992
47
Pilipinas Shell Petroleum Corporation vs. Dumlao
This is precisely what happened in Saguinsin vs.
Lindayag,24 where the dismissal of a petition for
letters of administration was affirmed because the
petitioner is not an heir of her deceased sister and,
therefore, has no material and direct interest in her
estate.25 In the said case, this Court defined an
interested party as one who would be benefited by the
estate, such as an heir, or one who has a claim against
the estate, such as a creditor; this interest must be
material and direct, not merely indirect or
contingent.26
The Saguinsin doctrine is not, however, without
exception. An objection to a petition for letters of
administration on that ground may be barred by
waiver or estoppel.
Private respondents herein did not file a motion to
dismiss the petition filed by Gonzalez on the ground of
lack of capacity to sue;27 they instead filed an
Opposition which, unfortunately, did not ask for the
dismissal of the petition but merely opposed the
issuance of letters of administration in favor of
Gonzalez because, among other reasons, he is a
stranger to the estate. The Opposition also proposed
that Bonifacio Canonoy, one of the children of the
deceased Regino Canonoy, be appointed administrator
of the latters intestate estate. The failure to move for
a dismissal amounted to a waiver of the above-
mentioned ground. Section 8, Rule 15 of the Rules of
Court provides that:
A motion attacking a pleading or a proceeding shall
include all objections then available, and all objections
not so included shall be deemed waived.
However, if a motion to dismiss is not filed, as what
obtains in this case, any of the grounds available for
such a motion, except for improper venue, may be
pleaded as an affirmative defense,
_______________
104
24 6 SCRA 874.
25 The motion to dismiss was for lack of interest in
the estate, which this Court considered to mean lack
of legal capacity to institute the proceedings.
26 Citing Trillana vs. Crisostomo, G.R. No. L-3378, 22
August 1951; Espinosa vs. Barrios, 70 Phil. 311.
27 Section 1(d), Rule 16, Rules of Court.
48
48
SUPREME COURT REPORTS ANNOTATED
Pilipinas Shell Petroleum Corporation vs. Dumlao
and a preliminary hearing thereon may be had as if a
motion to dismiss had been filed.28 Excepted from the
above rules are the following grounds: (a) failure to
state a cause of action which may be alleged in a later
pleading if one is permitted, or by a motion for
judgment on the pleadings, or at the trial on the
merits, and (b) lack of jurisdiction over the subject
matter of the action,29 subject to the exception as
hereinafter discussed.
In Insurance Company of North America vs. C.F. Sharp
& Co., Inc.,30 this Court ruled:
Finally, appellant would contend that plaintiff has no
capacity to sue and is not the real party in interest. It
is now too late to raise these objections here. These
should have been asserted in the motion to dismiss
filed by defendant below. Not having been included
therein, they are now barred by the rule on omnibus
motion.
By proposing that Bonifacio Canonoy be appointed as
administrator instead of Mr. Gonzalez, private
respondents have in fact approved or ratified the filing
of the petition by the latter.
In Eusebio vs. Valmores,31 We held that:
xxx
The evidence submitted in the hearing does not
satisfactorily prove that the petitioner was legally
adopted; hence, he did not have any interest in the
properties of the deceased Rosalia Saquitan. Under
ordinary circumstances, such defect would authorize
the dismissal of the proceedings especially in view of
the fact that the surviving spouse of Rosalia Saquitan
had filed an affidavit of adjudication under the
provisions of Section 1 of Rule 74 of the Rules. Counsel
for Domingo Valmores, however, had not objected to
the application for the appointment of an
administrator; he only objected to the appointment of
the said stranger Eulogio Eusebio as administrator,
claiming to have the right as surviving spouse to be
appointed as such administrator. By this act of
Domingo Valmores, surviving spouse of the deceased,
therefore, the fatal defect in the petition may be
considered, as cured. In other words, the filing of the
petition for the appointment of an
_______________
28 Section 5, Rule 16, Rules of Court.
29 Section 2, Rule 9, Id.
30 18 SCRA 462.
31 97 Phil. 163.
105
49
VOL. 206, FEBRUARY 7, 1992
49
Pilipinas Shell Petroleum Corporation vs. Dumlao
administrator may be considered as having been
ratified by the surviving husband, Domingo Valmores,
and for this reason the proceedings may not be
dismissed.
2. There can be no dispute that the trial court had
acquired jurisdiction over SP PROC. No. 343.
Immediately after the filing of the case, the trial court
complied with Section 3, Rule 79 of the Rules of Court
by issuing the Order dated 27 January 1973. At the
initial hearing on 25 July 1973, petitioner Gonzalez
established the jurisdictional requirements by
submitting in evidence proof of publication and service
of notices of the petition. Thereafter, it heard the
evidence on the qualifications and competence of
Bonifacio Canonoy, then appointed him as
administrator and finally directed that letters of
administration be issued to him, and that he take his
oath of office after putting up a surety or property
bond in the amount of P5,000.00.32
It is to be presumed that Bonifacio Canonoy
immediately qualified as administrator because in that
capacity, he filed a motion to dismiss petitioners claim
against the estate,33 a Reply to the Opposition to the
motion to dismiss34 and an Answer to petitioners
amended claim against the estate wherein he
interposed a counterclaim,35 praying thus:
WHEREFORE, it is most respectfully prayed of this
Honorable Court to dismiss the above-mentioned
Amended Claim Against the Estate and to order the
claimant to pay unto the intestate estate of Regino
Canonoy the said sum of P659,423.49, together with
the interest thereon at the legal rate beginning from
the date hereof, the reasonable attorneys fees for the
prosecution of this counterclaim, and costs;
OR, IN THE ALTERNATIVE, in the event that any sum is
found due from and payable by the said intestate
estate of Regino Canonoy in favor of the said claimant,
the said amount be deducted from the above-
mentioned sum and, thereafter, to order the claimant
to pay the
_______________
32 Rollo, 51.
33 Id., 54-56.
34 Id., 65-66.
35 Id., 67-73.
50
50
SUPREME COURT REPORTS ANNOTATED
Pilipinas Shell Petroleum Corporation vs. Dumlao
balance remaining unto the said intestate estate of
Regino Canonoy, together with interest thereon at the
legal rate beginning from date hereof, the reasonable
attorneys fees for the prosecution of this
counterclaim, and costs.
106
Clearly, therefore, not only had the administrator and
the rest of the private respondents voluntarily
submitted to the jurisdiction of the trial court, they
even expressly affirmed and invoked such jurisdiction
in praying for reliefs and remedies in their favor,
namely: (a) denial of Gonzalez prayer to be appointed
as administrator, (b) appointment of Bonifacio
Canonoy as administrator, (c) denial of petitioner
Shells amended claim against the estate, and (d) the
granting of the counterclaim. Hence, they cannot now
be heard to question the jurisdiction of the trial court.
While it may be true that jurisdiction may be raised at
any stage of the proceedings, a party who has affirmed
and invoked it in a particular matter to secure an
affirmative relief cannot be allowed to afterwards deny
that same jurisdiction to escape penalty.
In Tijam, et al. vs. Sibonghanoy, et al.,36 this Court
held:
It has been held that a party can not 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 (Dean vs. Dean, 136 Or. 694, 86 A.L.R. 79).
In the case just cited, by way of explaining the rule, it
was further said that the question whether (sic) the
court had jurisdiction either of the subject-matter of
the action or of the parties was not important in such
cases because the party is barred from such conduct
not because the judgment or order of the court is valid
and conclusive as an adjudication, but for the reason
that such a practice can not be toleratedobviously
for reasons of public policy.
Furthermore, it has also been held that after
voluntarily submitting a cause and encountering an
adverse decision on the merits, it is
_______________
36 23 SCRA 29; see also Tajonera vs. Lamaroza, 110
SCRA 438; Nieva vs. Manila Banking Corp., 124 SCRA
453; Royales vs. IAC, et al., 127 SCRA 470; PNB vs.
IAC, et al., 143 SCRA 299; Tejones vs. Gironella, 159
SCRA 100; Martinez, et al. vs. dela Merced, et al., 174
SCRA 182.
51
VOL. 206, FEBRUARY 7, 1992
51
Pilipinas Shell Petroleum Corporation vs. Dumlao
too late for the loser to question the jurisdiction or
power of the court (Pease vs. Rathbun-Jones etc., 243
U.S. 273, 61 L.Ed. 715, 37 S.Ct. 283; St. Louis etc. vs.
McBride, 141 U.S. 127, 35 L.Ed. 659). And in Littleton
vs. Burgess, 16 Wyo, 58, the Court said that it is not
right for a party who has affirmed and invoked the
jurisdiction of a court in a particular matter to secure
an affirmative relief, to afterwards deny that same
jurisdiction to escape a penalty.
The respondent Judge should have lent his ears to
Tijam vs. Sibonghanoy instead of peremptorily
granting the motion to dismiss in an Order which does
not even care to expound on why the court found the
107
said motion to be meritorious. He exhibited undue
haste in removing the case from his docket and in
abdicating judicial authority and responsibility.
Howsoever viewed, he committed grave abuse of
discretion.
WHEREFORE, the instant petition is hereby GRANTED
and the Order of respondent Judge of 8 November
1975 in SP PROC. No. 343 is hereby SET ASIDE. The
court below is further ordered to hear and decide
petitioners claim against the estate in said case,
unless supervening events had occurred making it
unnecessary, and to conduct therein further
proceedings pursuant to the Rules of Court until the
case is closed and terminated.
Costs against private respondents.
IT IS SO ORDERED.
Gutierrez, Jr. (Chairman), Feliciano, Bidin and
Romero, JJ., concur.
Petition granted. Order set aside.
Note.The principal consideration in the appointment
of an administrator of the estate of a deceased person
is the interest in said estate of the one to be appointed
as administrator. (Gonzalez vs. Aguinaldo, 190 SCRA
112.)
G.R. No. L-40163 June 19, 1982
LEVITON INDUSTRIES, NENA DE LA CRUZ LIM,
DOMINGO GO, and LIM KIAT, petitioners,
vs.
HON. SERAFIN SALVADOR, Judge, Court of First
Instance of Rizal, Caloocan City, Branch XIV and
LEVITON MANUFACTURING CO., INC., respondents.
ESCOLIN, J:
Challenged in this petition for certiorari and prohibition
is the order of the respondent Judge Serafin Salvador
in Civil Case No. C-2891 of the Court of First Instance
of Rizal, sustaining the legal capacity of a foreign
corporation to maintain a suit for unfair competition
under Section 21-A of Republic Act No. 166, as
amended, otherwise known as the Trademark Law.
On April 17, 1973, private respondent Leviton
Manufacturing Co., Inc. filed a complaint for unfair
competition against petitioners Leviton Industries,
Nena de la Cruz Lim, Domingo Go and Lim Kiat before
the Court of First Instance of Rizal, Branch XXXIII,
presided by respondent Judge Serafin Salvador. The
complaint substantially alleges that plaintiff is a
foreign corporation organized and existing under the
laws of the State of New York, United States of
America, with office located at 236 Greenpoint Avenue,
Brooklyn City, State of New York, U.S.A.; that
defendant Leviton Industries is a partnership organized
and existing under the laws of the Philippines with
principal office at 382 10th Avenue, Grace Park,
Caloocan City; while defendants Nena de la Cruz Lim,
108
Domingo Go and Lim Kiat are the partners, with
defendant Domingo Go acting as General Manager of
defendant Leviton Industries; that plaintiff, founded in
1906 by Isidor Leviton, is the largest manufacturer of
electrical wiring devices in the United States under the
trademark Leviton, which various electrical wiring
devices bearing the trademark Leviton and trade name
Leviton Manufacturing Co., Inc. had been exported to
the Philippines since 1954; that due to the superior
quality and widespread use of its products by the
public, the same are well known to Filipino consumers
under the trade name Leviton Manufacturing Co., Inc.
and trademark Leviton; that long subsequent to the
use of plaintiff's trademark and trade name in the
Philippines, defendants began manufacturing and
selling electrical ballast, fuse and oval buzzer under
the trademark Leviton and trade name Leviton
Industries Co.; that Domingo Go, partner and general
manager of defendant partnership, had registered with
the Philippine Patent Office the trademarks Leviton
Label and Leviton with respect to ballast and fuse
under Certificate of Registration Nos. SR-1132 and
15517, respectively, which registration was contrary to
paragraphs (d) and (e) of Section 4 of RA 166, as
amended, and violative of plaintiff's right over the
trademark Leviton; that defendants not only used the
trademark Leviton but likewise copied the design used
by plaintiff in distinguishing its trademark; and that the
use thereof by defendants of its products would cause
confusion in the minds of the consumers and likely to
deceive them as to the source of origin, thereby
enabling defendants to pass off their products as those
of plaintiff's. Invoking the provisions of Section 21-A of
Republic Act No. 166, plaintiff prayed for damages. It
also sought the issuance of a writ of injunction to
prohibit defendants from using the trade name Leviton
Industries, Co. and the trademark Leviton.
Defendants moved to dismiss the complaint for failure
to state a cause of action, drawing attention to the
plaintiff's failure to allege therein its capacity to sue
under Section 21-A of Republic Act No. 166, as
amended. After the filing of the plaintiff's opposition
and the defendant's reply, the respondent judge
denied the motion on the ground that the same did not
appear to be indubitable. On September 21, 1973,
defendants filed their answer, reiterating the ground
supporting their motion to dismiss. Thereafter,
defendants served upon plaintiff a request for
admission under Rule 26 of the Rules of Court, of the
following matters of fact, to wit:
(1) That the plaintiff is not actually manufacturing,
selling and/or distributing ballasts generally used in
flourescent lighting;
(2) That plaintiff has no registered trademark or
trade name in the Philippine Patent Office of any of its
products; and
(3) That plaintiff has no license to do business in
the Philippines under and by virtue of the provision of
109
Act No. 1459, better known as the Philippine
Corporation Law, at the time it filed the complaint. 1
Complying with the said request, plaintiff admitted:
That it does not manufacture ballasts; that it has not
registered its trademark in the Philippine Patent Office,
but has filed with the same office an application of its
trade mark on April 16, 1971; and that it has no
license to do business in the Philippines. 2
On the basis of these admissions, defendants filed an
Urgent Supplemental Motion to Dismiss. This was
followed by the plaintiff's opposition, and the
defendant's rejoinder, after which respondent judge
issued the questioned order 3 denying the motion,
thus:
Acting on the Urgent Supplemental Motion to Dismiss,
dated July 2, 1974, filed by counsels for the
defendants, as well as the oppositions thereto, the
Court after a careful consideration of the reasons
adduced for and against said motion, is of the opinion
that the same should be, as it is hereby DENIED.
SO ORDERED.
The motion for reconsideration having likewise been
denied, defendants instituted the instant petition for
certiorari and prohibition, charging respondent judge
with grave abuse of discretion in denying their motion
to dismiss.
We agree with petitioners that respondent Leviton
Marketing Co., Inc. had failed to allege the essential
facts bearing upon its capacity to sue before Philippine
courts. Private respondent's action is squarely founded
on Section 21-A of Republic Act No. 166, as amended,
which we quote:
Sec. 21-A. Any foreign corporation or juristic person to
which a mark or tradename has been registered or
assigned under this Act may bring an action hereunder
for infringement, for unfair competition, or false
designation of origin and false description, whether or
not it has been licensed to do business in the
Philippines under Act numbered Fourteen Hundred and
Fifty-Nine, as amended, otherwise known as the
Corporation Law, at the time it brings the complaint;
Provided, That the country of which the said foreign
corporation or juristic person is a citizen, or in which it
is domiciled, by treaty, convention or law, grants a
similar privilege to corporate or juristic persons of the
Philippines. (As amended by R.A. No. 638)
Undoubtedly, the foregoing section grants to a foreign
corporation, whether or not licensed to do business in
the Philippines, the right to seek redress for unfair
competition before Philippine courts. But the said law
is not without qualifications. Its literal tenor indicates
as a condition sine qua non the registration of the
110
trade mark of the suing foreign corporation with the
Philippine Patent Office or, in the least, that it be an
asignee of such registered trademark. The said section
further requires that the country, of which the plaintiff
foreign corporation or juristic person is a citizen or
domicilliary, grants to Filipino corporations or juristic
entities the same reciprocal treatment, either thru
treaty, convention or law,
All that is alleged in private respondent's complaint is
that it is a foreign corporation. Such bare averment not
only fails to comply with the requirements imposed by
the aforesaid Section 21-A but violates as well the
directive of Section 4, Rule 8 of the Rules of Court that
"facts showing the capacity of a party to sue or be
sued or the authority of a party to sue or be sued in a
representative capacity or the legal existence of an
organized association of persons that is made a party,
must be averred "
In the case at bar, private respondent has chosen to
anchor its action under the Trademark Law of the
Philippines, a law which, as pointed out, explicitly sets
down the conditions precedent for the successful
prosecution thereof. It is therefore incumbent upon
private respondent to comply with these requirements
or aver its exemption therefrom, if such be the case. It
may be that private respondent has the right to sue
before Philippine courts, but our rules on pleadings
require that the necessary qualifying circumstances
which clothe it with such right be affirmatively
pleaded. And the reason therefor, as enunciated in
"Atlantic Mutual Insurance Co., et al. versus Cebu
Stevedoring Co., Inc." 4 is that
these are matters peculiarly within the knowledge of
appellants alone, and it would be unfair to impose
upon appellees the burden of asserting and proving
the contrary. It is enough that foreign corporations are
allowed by law to seek redress in our courts under
certain conditions: the interpretation of the law should
not go so far as to include, in effect, an inference that
those conditions had been met from the mere fact that
the party sued is a foreign corporation.
It was indeed in the light of this and other
considerations that this Court has seen fit to amend
the former rule by requiring in the revised rules
(Section 4, Rule 8) that "facts showing the capacity of
a party to sue or be sued or the authority of a party to
sue or be sued in a representative capacity or the legal
existence of an organized association of persons that
is made a party, must be averred,
IN VIEW OF THE FOREGOING, the instant petition is
hereby granted and, accordingly, the order of the
respondent judge dated September 27, 1974 denying
petitioner's motion to dismiss is hereby set aside. The
Court of First Instance of Rizal (Caloocan City), the
court of origin, is hereby restrained from conducting
111
further proceedings in Civil Case No. C-2891, except to
dismiss the same. No costs.
SO ORDERED.
Guerrero, Abad Santos and De Castro, JJ., concur.
Concepcion Jr., J., is on leave.
Separate Opinions
BARREDO, J., concurring:
I concur in the above opinion and judgment as well as
in the concurring opinion of Justice Aquino.
AQUINO, J., concurring:
I concur. Respondent Leviton Manufacturing Co., Inc.
alleged in paragraph 2 of its complaint for unfair
competition that its action "is being filed under the
provisions of section 21-A of Republic Act" No. 166, as
amended. Respondent is bound by that allegation in its
complaint.
It cannot sue under section 21-A because it has not
complied with the requirements thereof that (1) its
trademark "Leviton" has been registered with the
Patent Office and (2) that it should show that the State
of New York grants to Philippine corporations the
privilege to bring an action for unfair competition in
that state.
Respondent Leviton has to comply with those
requirements before it can be allowed to maintain an
action for unfair competition (Atlantic Mutual Ins. Co.
vs. Cebu Stevedoring Co., Inc 124 Phil. 463).
On April 16, 1971 respondent Leviton Manufacturing
Co., Inc. filed an application with the Patent Office for
the registration of its trademark. The record does not
show whether that application has been granted.
The fact that it has filed with the Patent Office two
petitions both dated June 14, 1974 for the cancellation
of the trademark "Leviton" issued to Domingo Go
shows that the dismissal of its instant action for unfair
competition does not leave it without any remedy
whatsoever.
That remedy administrative cancellation of the
trademark was resorted to in General Garments
Corporation vs. Director of Patents, L-24295,
September 30, 1971, 41 SCRA 50, cited by respondent
Leviton in its memorandum. It is provided for in section
17 of Republic Act No. 166. As held in the General
112
Garments Corporation case, section 17 does not
require that the trademark of the foreign corporation
alleged to have been infringed should have been
registered.
In this connection, it may be noted that section 133 of
the Corporation Code, Batas Blg. 68, which took effect
on May 1, 1980, provides that "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 ... ." Section 133 is more stringent than
section 69 of the Corporation Law, Act No. 1459.
Separate Opinions
BARREDO, J., concurring:
I concur in the above opinion and judgment as well as
in the concurring opinion of Justice Aquino.
AQUINO, J., concurring:
I concur. Respondent Leviton Manufacturing Co., Inc.
alleged in paragraph 2 of its complaint for unfair
competition that its action "is being filed under the
provisions of section 21-A of Republic Act" No. 166, as
amended. Respondent is bound by that allegation in its
complaint.
It cannot sue under section 21-A because it has not
complied with the requirements thereof that (1) its
trademark "Leviton" has been registered with the
Patent Office and (2) that it should show that the State
of New York grants to Philippine corporations the
privilege to bring an action for unfair competition in
that state.
Respondent Leviton has to comply with those
requirements before it can be allowed to maintain an
action for unfair competition (Atlantic Mutual Ins. Co.
vs. Cebu Stevedoring Co., Inc 124 Phil. 463).
On April 16, 1971 respondent Leviton Manufacturing
Co., Inc. filed an application with the Patent Office for
the registration of its trademark. The record does not
show whether that application has been granted.
The fact that it has filed with the Patent Office two
petitions both dated June 14, 1974 for the cancellation
of the trademark "Leviton" issued to Domingo Go
shows that the dismissal of its instant action for unfair
competition does not leave it without any remedy
whatsoever.
That remedy administrative cancellation of the
trademark was resorted to in General Garments
Corporation vs. Director of Patents, L-24295,
113
September 30, 1971, 41 SCRA 50, cited by respondent
Leviton in its memorandum. It is provided for in section
17 of Republic Act No. 166. As held in the General
Garments Corporation case, section 17 does not
require that the trademark of the foreign corporation
alleged to have been infringed should have been
registered.
In this connection, it may be noted that section 133 of
the Corporation Code, Batas Blg. 68, which took effect
on May 1, 1980, provides that "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 ... ." Section 133 is more stringent than
section 69 of the Corporation Law, Act No. 1459.
No. L-49695. April 7, 1986.*
HATHIBHAI BULAKHIDAS, petitioner, vs. THE
HONORABLE PEDRO L. NAVARRO, as Presiding Judge of
the Court of First Instance of Rizal, Seventh Judicial
District, Pasig, Metro Manila, Branch II and DIAMOND
SHIPPING CORPORATION, respondent.
Mercantile Law; Corporations; Foreign Corporations; A
foreign corporation not engaged in business in the
Philippines can file an action before Philippine courts
for isolated transactions.The issue of whether or not
a foreign corporation not engaged in business in the
Philippines can institute an action before our courts is
already well settled in this jurisdiction. Aetna Casualty
and Surety Co. vs. Pacific Star Lines, 80 SCRA 635, is a
case similar to the present one in that the action is
also one for recovery of damages sustained by cargo
shipped on defendants vessels. Defendants set up the
defense that plaintiff is a foreign corporation not duly
licensed to do business in the Philippines and,
therefore, without capacity to sue and be sued. In
overruling said defense, this Court said: It is settled
that if a foreign corporation is not engaged in business
in the Philippines, it may not be denied the right to file
an action in Philippine courts for isolated transactions.
PETITION for certiorari to review the order of the Court
of First Instance of Rizal, Br. II. Navarro, J.
The facts are stated in the opinion of the Court.
Teves, Campos, Hernandez & Lim Law Office for
private respondent.
_______________
* FIRST DIVISION.
2
2
SUPREME COURT REPORTS ANNOTATED
Bulakhidas vs. Navarro
PATAJO, J.:
This is a petition for review on certiorari of the order of
the then Court of First Instance of Rizal, Branch II
dated August 21, 1978, dismissing petitioners
complaint.
114
Petitioner, a foreign partnership, filed a complaint
against a domestic corporation, Diamond Shipping
Corporation, before the Court of First Instance of Rizal
for the recovery of damages allegedly caused by the
failure of the said shipping corporation to deliver the
goods shipped to it by petitioner to their proper
destination. Paragraph 1 of said complaint alleged that
plaintiff is a foreign partnership firm not doing
business in the Philippines and that it is suing under
an isolated transaction. Defendant filed a motion to
dismiss the complaint on the ground that plaintiff has
no capacity to sue and that the complaint does not
state a valid cause of action against defendant.
Acting on said motion to dismiss, the Court of First
Instance dismissed the complaint on the ground that
plaintiff being a foreign corporation or partnership not
doing business in the Philippines it cannot exercise the
right to maintain suits before our Courts.
Hence, this petition.
The issue of whether or not a foreign corporation not
engaged in business in the Philippines can institute an
action before our courts is already well settled in this
jurisdiction.
Aetna Casualty and Surety Co. vs. Pacific Star Lines, 80
SCRA 635, is a case similar to the present one in that
the action is also one for recovery of damages
sustained by cargo shipped on defendants vessels.
Defendants set up the defense that plaintiff is a
foreign corporation not duly licensed to do business in
the Philippines and, therefore, without capacity to sue
and be sued. In overruling said defense, this Court
said:
It is settled that if a foreign corporation is not
engaged in business in the Philippines, it may not be
denied the right to file an action in Philippine courts for
isolated transactions.
The object of Sections 68 and 69 of the Corporation
Law was not to prevent the foreign corporation from
performing single acts,
3
VOL. 142, APRIL 7, 1986
3
Bulakhidas vs. Navarro
but to prevent it from acquiring a domicile for the
purpose of business without taking the steps
necessary to render it amenable to suit in the local
courts. It was never the purpose of the Legislature to
exclude a foreign corporation which happens to obtain
an isolated order for business from the Philippines,
from securing redress in the Philippine courts.
In Mentholatum Co. Inc. et al. vs. Mangaliman, et al.,
this Court ruled that:
No general rule or governing principle can be laid
down as to what constitutes doing or engaging in or
transacting business. Indeed, each case must be
judged in the light of its peculiar environmental
circumstances. The true test, however, seems to be
whether the foreign corporation is continuing the body
or substance of the business or enterprise for which it
was organized or whether it has substantially retired
115
from it and turned it over to another. (Traction Cos. v.
Collectors of Int. Revenue [CC. A. Ohio], 223 F. 984,
987.) The term implies a continuity of commercial
dealings and arrangements, and contemplates, 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, the purpose and
object of its organization. (Griffin v. Implement Dealers
Mut. Fire Ins. Co., 241 N.W. 75, 77; Pauline Oil & Gas
Co. vs. Mutual Tank Line Co., 246 P. 851, 852, 118 Okl.
111; Automotive Material Co. vs. American Standard
Metal Products Corp., 158 N.E. 698, 703, 327 ill. 367.)
And in Eastboard Navigation, Ltd. et al. vs. Juan
Ysmael & Co., Inc., this Court held that:
(d) While plaintiff is a foreign corporation without
license to transact business in the Philippines, it does
not follow that it has no capacity to bring the present
action. Such license is not necessary because it is not
engaged in business in the Philippines. In fact, the
transaction herein involved is the first business
undertaken by plaintiff in the Philippines, although on
a previous occasion plaintiffs vessel was chartered by
the National Rice and Corn Corporation to carry rice
cargo from abroad to the Philippines. These two
isolated transactions do not constitute engaging in
business in the Philippines within the purview of
Sections 68 and 69 of the Corporation Law so as to bar
plaintiff from seeking redress in our courts. (Marshall-
4 the petitioners complaint is hereby set aside and the
4 against private respondent.
SUPREME COURT REPORTS ANNOTATED
Bulakhidas vs. Navarro
Wells Co. vs. Henry W. Elser & Co. 49 Phil., 70; Pacific
Vegetable Oil Corporation vs. Angle O. Singson, G.R.
No. L-7917, April 29, 1955.)
Again, in Facilities Management Corporation vs. De la
Osa, 89 SCRA 131, 139, following Aetna Casualty &
Surety Co. vs. Pacific Star Line, supra, held a foreign
corporation not engaged in business in the Philippines
is not barred from seeking redress from the courts of
the Philippines.
The case of Atlantic Mutual Insurance Co. vs. Cebu
Stevedoring Co., 17 SCRA 1037, cited by respondent
finds no application to the case at bar. It must be
observed in the Atlantic case that there was no
allegation in the complaint that the two foreign
corporations involved therein were not engaged in
business in the Philippines. All that was averred in the
complaint was that they were both foreign
corporations existing under the laws of the United
States. Thus, the qualifying circumstance of the said
foreign corporations capacity to sue is wanting.
Contrary to the Atlantic case, the complaint filed by
petitioner herein sufficiently alleged that it is a foreign
partnership (or corporation) not engaged in business in
the Philippines and that it was suing under an isolated
transaction.
WHEREFORE, the order of respondent Court dismissing
case remanded for further proceedings, with costs
116
SO ORDERED.
Teehankee, C.J., Melencio-Herrera, Plana and
Gutierrez, Jr., JJ., concur.
Order set aside and case remanded for further
proceedings.
Notes.Foreign corporation without license to do
business in the Philippines is not disqualified from
filing and prosecuting an action for fair competition.
(Universal Rubber Products, Inc. vs. Court of Appeals,
130 SCRA 104.)
Just as foreign corporations not doing business in the
5 the same or any other judicial tribunal of concurrent
VOL. 142, APRIL 7, 1986
5 Same; Same; Elements of Res Judicata.The elements
Bulakhidas vs. Navarro
Philippines may sue in Philippine courts so also are
they subject to be sued here. Service of summons
extraterritorially under Rule 14 may be effected. (FBA
Aircraft vs. Zosa, 110 SCRA 1.)
G.R. No. 157557. March 10, 2006.*
REPUBLIC OF THE PHILIPPINES (CIVIL AERONAUTICS
ADMINISTRATION), petitioner, vs. RAMON YU, TEOFISTA
VILLAMALA, LOURDES YU and YU SE PENG,
respondents.
Civil Procedure; Judgments; Res Judicata; Res judicata
lays the rule that an existing final judgment or decree
rendered on the merits, and without fraud or collusion,
by a court of competent jurisdiction, upon any matter
within its jurisdiction, is conclusive of the rights of the
parties or their privies, in all other actions or suits in
the same or any other judicial tribunal of concurrent
jurisdiction on the points and matters in issue in the
first suit.Res judicata literally means a matter
adjudged; a thing judicially acted upon or decided; a
thing or matter settled by judgment. Res judicata lays
the rule that an existing final judgment or decree
rendered on the merits, and without fraud or collusion,
by a court of competent jurisdiction, upon any matter
within its jurisdiction, is conclusive of the rights of the
parties or their privies, in all other actions or suits in
jurisdiction on the points and matters in issue in the
first suit.
of res judicata are: (1) the judgment sought to bar the
new action must be final; (2) the decision must have
been rendered by a court having jurisdiction over the
subject matter and the parties; (3) the disposition of
the case must be a judgment on the merits; and (4)
there
_______________
* THIRD DIVISION.
417
VOL. 484, MARCH 10, 2006
417
Republic vs. Yu
117
must be as between the first and second actions,
identity of parties, subject matter, and causes of
action.
Same; Same; Res judicata has two concepts: (1) bar
by prior judgment as enunciated in Rule 39, Section
47 (b) of the Rules of Civil Procedure; and (2)
conclusiveness of judgment in Rule 39, Section 47
(c).Res judicata has two concepts: (1) bar by prior
judgment as enunciated in Rule 39, Section 47 (b) of
the Rules of Civil Procedure; and (2) conclusiveness of
judgment in Rule 39, Section 47 (c). There is bar by
prior judgment when, as between the first case where
the judgment was rendered, and the second case that
is sought to be barred, there is identity of parties,
subject matter, and causes of action. But where there
is identity of parties and subject matter in the first and
second cases, but no identity of causes of action, the
first judgment is conclusive only as to those matters
actually and directly controverted and determined and
not as to matters merely involved therein. This is
conclusiveness of judgment. Under the doctrine of
conclusiveness of judgment, facts and issues actually
and directly resolved in a former suit cannot again be
raised in any future case between the same parties,
even if the latter suit may involve a different claim or
cause of action. The identity of causes of action is not
required but merely identity of issues.
PETITION for review on certiorari of a decision of the
Court of Appeals.
The facts are stated in the opinion of the Court.
The Solicitor General for petitioner.
Dennis R. Gascon for respondents.
QUISUMBING, J.:
For review on certiorari is the Decision1 dated
December 2, 2002 of the Court of Appeals in CA-G.R.
CV No. 53712 which set aside the dismissal by the
Regional Trial Court of Cebu,
_______________
1 Rollo, pp. 9-20. Penned by Associate Justice
Remedios A. Salazar-Fernando, with Associate Justices
Ruben T. Reyes, and Ed-gardo F. Sundiam concurring.
418
418
SUPREME COURT REPORTS ANNOTATED
Republic vs. Yu
Branch 11, of Civil Case No. CEB-12968 and remanded
the case to the lower court for further proceedings.
This petition relates to this Courts decision in
Valdehueza v. Republic2 and the final judgment of the
Court of Appeals in Yu v. Republic.3
In Valdehueza v. Republic (1966), we affirmed the
judgment of expropriation of Lot No. 939 in Lahug,
Cebu City, and ruled that therein petitioners, Francisca
Valdehueza, et al., were not entitled to recover
possession of the lot but only to demand its fair
market value.
The dispositive portion of the Courts decision reads:
118
Wherefore, finding no reversible error therein, the
judgment appealed from is hereby affirmed, without
costs in this instance. So ordered.4
In Yu v. Republic (1986), the Court of Appeals annulled
the subsequent sale of the lot by Francisca
Valdehueza, et al., to herein respondents, Ramon Yu,
et al., and held that the latter were not purchasers in
good faith. The parties did not appeal the decision and
so, judgment became final and executory.5
The dispositive portion of the Court of Appeals
decision states:
WHEREFORE, in the view of the foregoing, the
decision appealed from is hereby REVERSED. A new
one is entered dismissing the complaint. The land in
question is owned by the Republic of the Philippines.
SO ORDERED.6
_______________
2 No. L-21032, 19 May 1966, 17 SCRA 107.
3 CA-G.R. CV No. 01223, 30 October 1986; Records,
pp. 35-49.
4 Valdehueza v. Republic, supra at p. 114.
5 Rollo, p. 12.
6 Records, p. 49.
419
VOL. 484, MARCH 10, 2006
419
Republic vs. Yu
On October 1, 1992, herein respondents filed a
complaint for reversion of the expropriated property.
Herein petitioner, the Republic of the Philippines,
denied respondents right to reacquire title and
ownership over the lot on the ground of res judicata,
lack of cause of action and forum shopping.7
On November 16, 1995, the trial court dismissed the
complaint as follows:
WHEREFORE, in view of all the foregoing premises
and considerations, the Court hereby DISMISSES the
complaint filed in this case on the ground of res
judicata or bar by prior or final judgment.
SO ORDERED.8
On appeal, the Court of Appeals ruled that there was
no res judicata and remanded the case to the trial
court, thus,
WHEREFORE, in view of the foregoing, the decision
dated November 16, 1995 of the Regional Trial Court,
Branch 11, Cebu City is hereby REVERSED and SET
ASIDE. This case is hereby remanded to the lower
court for further proceedings and final determination
of the issues on the merit.
SO ORDERED.9
The decision of the Court of Appeals is now before us
in this petition for review. It raises the following issues,
to wit: Whether
I.
THE TRIAL COURT PROPERLY DISMISSED THE
COMPLAINT ON THE GROUND OF RES JUDICATA.
II.
119
THE ABANDONMENT OF LAHUG AIRPORT AND RETURN
OF OTHER EXPROPRIATED PROPERTIES DID NOT GIVE
RESPONDENTS A NEW CAUSE OF ACTION.
_______________
7 Id., at p. 26.
8 Id., at p. 141.
9 Rollo, p. 19.
420
420
SUPREME COURT REPORTS ANNOTATED
Republic vs. Yu
III.
ASSUMING A NEW CAUSE OF ACTION, RESPONDENTS
HAVE NO RIGHT TO ASSERT OWNERSHIP IN THE FIRST
PLACE.10
Simply stated, the threshold issues are: Is the action
barred by res judicata? Are respondents entitled to
reversion of the expropriated property?
Petitioner asserts that the trial court properly
dismissed the complaint on the ground of res judicata
and maintains that respondents are bereft of any right
to assert ownership as the sale in their favor was
invalidated in Yu v. Republic. Petitioner further asserts
that the expropriation of Lot No. 939 was absolute and
unconditional. Thus, no reversion could be legally
claimed despite the subsequent sale or reversion of
the other nearby lots.
Respondents counter that the action is not barred by
res judicata because the abandonment of the
government of the public purpose constitutes a new
cause of action. Further, respondents contend that the
determination of their right to reacquire or repossess
the lot necessitates a full blown trial.
Res judicata literally means a matter adjudged; a
thing judicially acted upon or decided; a thing or
matter settled by judgment.11 Res judicata lays the
rule that an existing final judgment or decree rendered
on the merits, and without fraud or collusion, by a
court of competent jurisdiction, upon any matter
within its jurisdiction, is conclusive of the rights of the
parties or their privies, in all other actions or suits in
the same or any other judicial tribunal of concurrent
jurisdiction on the points and matters in issue in the
first suit.12
_______________
10 Id., at pp. 37-38.
11 Manila Electric Company v. Philippine Consumers
Foundation, Inc., G.R. No. 101783, 23 January 2002,
374 SCRA 262, 272 citing 46 Am. Jur. 514.
12 Oropeza Marketing Corporation v. Allied Banking
Corporation, G.R. No. 129788, 3 December 2002, 393
SCRA 278, 286.
421
VOL. 484, MARCH 10, 2006
421
Republic vs. Yu
120
The elements of res judicata are: (1) the judgment
sought to bar the new action must be final; (2) the
decision must have been rendered by a court having
jurisdiction over the subject matter and the parties; (3)
the disposition of the case must be a judgment on the
merits; and (4) there must be as between the first and
second actions, identity of parties, subject matter, and
causes of action.13
In the present case, the first three elements are
present. Only the presence of the identity of causes of
action is at issue.
At this juncture, we need to stress that res judicata has
two concepts:14 (1) bar by prior judgment as
enunciated in Rule 39, Section 47 (b)15 of the Rules of
Civil Procedure; and (2) conclusiveness of judgment
in Rule 39, Section 47 (c).16
_______________
13 Republic v. Court of Appeals, G.R. No. 103412, 3
February 2000, 324 SCRA 560, 565 citing Casil v. Court
of Appeals, G.R. No. 121534, 28 January 1998, 285
SCRA 264, 276.
14 Sta. Lucia Realty and Development, Inc. v. Cabrigas,
G.R. No. 134895, 19 June 2001, 358 SCRA 715, 728.
15 RULE 39, SEC. 47. Effect of judgments or final
orders.. . .
xxx
(b) In other cases, the judgment or final order is, with
respect to the matter directly adjudged or as to any
other matter that could have been raised in relation
thereto, conclusive between the parties and their
successors in interest by title subsequent to the
commencement of the action or special proceeding,
litigating for the same thing and under the same title
and in the same capacity; . . .
16 RULE 39, SEC. 47. Effect of judgments or final
orders.. . .
xxx
(c) In any other litigation between the same parties or
their successors in interest, that only is deemed to
have been adjudged in a former judgment or final
order which appears upon its face to have been so
adjudged, or which was actually and necessarily
included therein or necessary thereto.
422
422
SUPREME COURT REPORTS ANNOTATED
Republic vs. Yu
There is bar by prior judgment when, as between the
first case where the judgment was rendered, and the
second case that is sought to be barred, there is
identity of parties, subject matter, and causes of
action. But where there is identity of parties and
subject matter in the first and second cases, but no
identity of causes of action, the first judgment is
conclusive only as to those matters actually and
directly controverted and determined and not as to
matters merely involved therein. This is
conclusiveness of judgment.17 Under the doctrine of
conclusiveness of judgment, facts and issues actually
and directly resolved in a former suit cannot again be
121
raised in any future case between the same parties,
even if the latter suit may involve a different claim or
cause of action.18 The identity of causes of action is
not required but merely identity of issues.19
Conclusiveness of judgment clearly exists in the
present case, because respondents again seek to
enforce a right based on a sale which has been
nullified by a final and executory judgment. Recall that
the question of validity of the sale had long been
settled. The same question, therefore, cannot be
raised again even in a different proceeding involving
the same parties.
The doctrine of res judicata provides that a final
judgment on the merits rendered by a court of
competent jurisdiction, is conclusive as to the rights of
the parties and their privies and constitutes an
absolute bar to subsequent actions involving
_______________
17 Padillo v. Court of Appeals, G.R. No. 119707, 29
November 2001, 371 SCRA 27, 39-40 citing Islamic
Directorate of the Phils. v. Court of Appeals, G.R. No.
117897, 14 May 1997, 272 SCRA 454, 466.
18 Rizal Surety and Insurance Company v. Court of
Appeals, G.R. No. 112360, 18 July 2000, 336 SCRA 12,
21-22 citing Smith Bell and Company (Phils.), Inc. v.
Court of Appeals, G.R. No. 56294, 20 May 1991, 197
SCRA 201, 209.
19 Tan v. Court of Appeals, G.R. No. 142401, 20 August
2001, 363 SCRA 444, 450.
423
VOL. 484, MARCH 10, 2006
423
Republic vs. Yu
the same claim, demand, or cause of action.20
Considering that the sale on which respondents based
their right to reversion has long been nullified, they
have not an iota of right over the property and thus,
have no legal personality to bring forth the action for
reversion of expropriated property. Lack of legal
personality to sue means that the respondents are not
the real parties-in-interest. This is a ground for the
dismissal of the case, related to the ground that the
complaint evidently states no cause of action.21
Consequently, the second issue is now mooted and
made academic by our determination of res judicata in
this case.
WHEREFORE, the petition is GRANTED. The Decision
dated December 2, 2002 of the Court of Appeals in CA-
G.R. CV No. 53712 is SET ASIDE and the Decision
dated November 16, 1995 of the Regional Trial Court of
Cebu, Branch 11 in Civil Case No. CEB-12968 is
AFFIRMED.
SO ORDERED.
Carpio, Carpio-Morales and Tinga, JJ., concur.
Petition granted, judgment set aside.
Note.The doctrine of res judicata provides that a final
judgment on the merits rendered by a court of
competent jurisdiction, is conclusive as to the rights of
the parties and their privies and constitutes an
absolute bar to subsequent actions involving the same
122
claim, demand, or cause of action. (Republic vs. Court
of Appeals, 324 SCRA 560 [2000])
o0o
_______________
20 Taganas v. Emuslan, G.R. No. 146980, 2 September
2003, 410 SCRA 237, 241-242 citing Allied Banking
Corporation v. Court of Appeals, G.R. No. 108089, 10
January 1994, 229 SCRA 252.
21 See Bank of America NT&SA v. Court of Appeals,
G.R. No. 120135, 31 March 2003, 400 SCRA 156, 167
citing Columbia Pictures, Inc. v. Court of Appeals, G.R.
No. 110318, 28 August 1996, 261 SCRA 144, 162.
G.R. No. 110020. September 25, 1998.*
REPUBLIC OF THE PHILIPPINES, petitioner, vs. COURT
OF APPEALS, HON. LUIS BELLO, JR., Presiding Judge of
RTC, Branch 16, Laoag City, HAROLD M. HERNANDO,
and SPOUSES ROLANDO V. ABADILLA and SUSAN
SAMONTE, respondents.
Remedial Law; Certiorari; The circumstances clearly
demonstrate the trial courts bias and arbitrariness
that should have warranted the setting aside of the
questioned order of dismissal for grave abuse of
discretion under Rule 65 of the Rules of Court.Our
careful study of the facts inevitably yields to the
conclusion that the Regional Trial Court presided by
Hon. Luis B. Bello, Jr. committed grave abuse of
discretion not only in issuing its order dismissing
petitioners complaint in Civil Case No. 9934 on a
starkly erroneous ground, but also it committed a
grossly irresponsible act of allowing respondent
Hernando who was then under suspension from the
practice of law, to represent himself and his co-
defendants in the case. Also, as appearing from the
records, after the lapse of the period to file an answer
on the part of respondents Hernando and the
Quetulios, the trial court set the case for pre-trial
without formally ruling on petitioners motion to
declare them in default. Surprisingly, the trial court
thereafter, allowed said defendants to file their answer
upon the latters verbal motion. This enabled
respondent Hernando to file his pleading
Comment/Answer/Motion to Dismiss, with certain
annexes which were considered by the trial court as
actionable documents, despite the fact that petitioner
was not a party thereto. All these circumstances
clearly demonstrate the trial courts bias and
arbitrariness that should have warranted the setting
aside of the questioned order of dismissal for grave
abuse of discretion under Rule 65 of the Rules of Court.
Consequently, petitioners original action for certiorari
filed with respondent Court of Appeals on October 8,
1992 to annul the trial courts Order dated May 5,
1992 dismissing petitioners complaint should have
been given due course.
Same; Same; Considering the broader and primordial
interests of justice, particularly when there is grave
abuse of discretion an
____________
123
* THIRD DIVISION.
172
172
SUPREME COURT REPORTS ANNOTATED
Republic vs. Court of Appeals
occasional departure from the general rule that the
extraordinary writ of certiorari cannot substitute for a
lost appeal is warranted.While as a general rule,
certiorari cannot be a substitute for a lapsed appeal,
however, where the rigid application of the rule will
result in a manifest failure, or miscarriage of justice,
the rule may be relaxed. Technicalities should be
disregarded if only to accord to the respective parties
that which is due them. Therefore, considering the
broader and primordial interests of justice, particularly
when there is grave abuse of discretion as in the case
at bar, an occasional departure from the general rule
that the extraordinary writ of certiorari cannot
substitute for a lost appeal is warranted.
Same; Compromise; It is well-settled that a judicial
compromise has the effect of res judicata and is
immediately executory and not appealable.The
Compromise Agreement entered into by the petitioner
and the Quetulio spouses in the expropriation case,
docketed as Civil Case No. 8396-XV, on January 24,
1985 was approved and adopted in toto by the
Regional Trial Court of Laoag City, Branch XV in its
decision of January 31, 1985. The compromise
agreement fixed the amount of just compensation for
the property at P1,454,859.00 which was, as the
records show, fully paid by petitioner as evidenced by
the disbursement vouchers (Annexes D-1 to D-12
to complaint). Said compromise agreement had long
become final and executory, before respondent
Hernando allegedly executed the Affidavit of
Revocation unilaterally revoking the same on
November 29, 1985. It is well-settled that a judicial
compromise has the effect of res judicata and is
immediately executory and not appealable unless a
motion to set aside the same is filed on the ground of
fraud, mistake or duress, in which event an appeal
may be filed from an order denying the same. A court
cannot set aside a judgment based on compromise
without having declared in an incidental hearing that
such a compromise is vitiated by any of the grounds
for nullity enumerated in Art. 2038 of the Civil Code.
Consequently, it was utterly erroneous for the trial
court to rule that there was such a revocation of the
judicially approved Compromise Agreement.
Same; Documents; Failure to deny the genuineness
and due execution of an actionable document does not
preclude a party from arguing against it by evidence of
fraud, mistake, compromise, payment, statute of
limitations, estoppel and want of consideration.
Nonetheless, assuming further that petitioner is a
party to the questioned instruments, still, the dismissal
of its complaint by respon-
173
VOL. 296, SEPTEMBER 25, 1998
173
124
Republic vs. Court of Appeals
dent trial court was not correct. Petitioners alleged
failure to deny under oath the genuineness and due
execution of the said instruments simply means that it
impliedly admitted their authenticity and due
execution. Failure to deny the genuineness and due
execution of an actionable document does not
preclude a party from arguing against it by evidence of
fraud, mistake, compromise, payment, statute of
limitations, estoppel and want of consideration.
Neither does it bar a party from raising the defense in
his answer or reply and prove at the trial that there is
a mistake or imperfection in the writing, or that it does
not express the true agreement of the parties, or that
the agreement is invalid or that there is an intrinsic
ambiguity in the writing.
Administrative Law; Attorneys; A suspended lawyer,
during his suspension, is certainly prohibited from
engaging in the practice of law and if he does so, he
may be disbarred.Evidently, when respondent
Hernando appeared before the trial court at the initial
hearing of the case on February 27, 1992, and when
he filed the pleading denominated as
Comment/Answer/Motion to Dismiss, he was still under
suspension from the practice of law. A suspended
lawyer, during his suspension, is certainly prohibited
from engaging in the practice of law and if he does so,
he may be disbarred. The reason is that, his continuing
to practice his profession during his suspension
constitutes a gross misconduct and a wilful disregard
of the suspension order, which should be obeyed
though how erroneous it may be until set aside.
PETITION for review on certiorari of a decision of the
Court of Appeals.
The facts are stated in the opinion of the Court.
The Solicitor General for public petitioner.
Hector P. Corpus for respondents Abadilla and
Samonte.
KAPUNAN, J.:
For our consideration is a petition for review on
certiorari impugning the Decision dated February 8,
1993 and the
174
174
125
SUPREME COURT REPORTS ANNOTATED
Republic vs. Court of Appeals
Resolution dated April 27, 1993 of respondent Court of
Appeals in CA-G.R. SP No. 29460.1
The relevant antecedents are as follows:
Sometime in December 1991, petitioner filed a
complaint for rescission (of a deed of sale),
cancellation (of transfer certificates of title),
reconveyance and damages with prayer for issuance
of a writ of preliminary injunction and of a temporary
restraining order, against the spouses Rolando Abadilla
and Susan Samonte, Harold M. Hernando, for himself
and as attorney-in-fact of Apolinario, Serafin, Dominica
and Maria, all surnamed Quetulio,** and the Register
of Deeds of Laoag City, before the Regional Trial Court
of Laoag City, Branch 16, docketed as Civil Case No.
9934-16. It is alleged in the said complaint that
sometime in 1984, the then Ministry of Public Works
and Highways, in collaboration with the then Ministry
of Transportation and Communication filed an
expropriation case against Serafin, Apolinario,
Dominica and Maria, all surnamed Quetulio, involving
two (2) parcels of land containing an aggregate area of
ninety four thousand nine hundred thirteen (94,913)
square meters, for the construction of a terminal
building for international flights of the Laoag
International Airport; that said expropriation case was
docketed as Civil Case No. 8396-XV and raffled to RTC,
Branch XV, Laoag City; that a compromise agreement
was entered into in the said case on January 24, 1985
whereby the parties agreed to fix the amount of just
compensation at One Million Four Hundred Fifty Four
Thousand Eight Hundred Fifty Nine pesos
(P1,454,859.00); that a decision was rendered on
January 31, 1985 whereby the trial court approved and
adopted in toto the said compromise agreement; that
disbursement vouchers in the amount agreed upon
were turned over to the Quetulios; that on November
29, 1985, Harold M. Hernando executed an affidavit
revoking the compromise
__________
1 CA decision penned by Justice Pacita Canizares-Nye
and concurred in by Justices Reynato S. Puno and Justo
P. Torres, Jr., Rollo, p. 600.
** Also appears as Quetolio in the records.
175
VOL. 296, SEPTEMBER 25, 1998
175
Republic vs. Court of Appeals
agreement he signed as attorney-in-fact of the
Quetulios; that sometime in 1989, the Quetulios, again
represented by Harold M. Hernando, filed a petition for
the issuance of another owners and co-owners
duplicate copy of TCT-T-1071 and OCT No. 0-145-L
before the RTC, Branch XIV of Laoag City; that said
petition was granted on April 18, 1989 and pursuant
thereto, owners duplicate copy of TCT No. T-1071 and
on April 18, 1989 and pursuant thereto, owners
duplicate copy of TCT No. T-1071 and OCT No. 0-145-L
were issued; that Harold M. Hernando, as attorney-in-
126
fact of the Quetulios, sold the property in question to
the spouses Rolando V. Abadilla and Susan Samonte
for and in consideration of the sum of One Million
Three Hundred Pesos (P1,000,300.00); that said
second sale is null and void as the lots in question are
already owned by petitioner Republic; and that the
spouses-vendees acted in bad faith as they already
had prior knowledge of the first sale.
Accordingly, petitioner prayed that (1) the deed of sale
by Harold M. Hernando in favor of the spouses Abadilla
be declared null and void; (2) TCT Nos. T-21484 and T-
21485 covering the lots in question issued in the name
of the spouses Abadilla be declared null and void; (3)
the Register of Deeds of Laoag City be directed to
cancel the TCTs and reinstate the old ones; and (4)
Harold M. Hernando and the spouses Abadilla be made
liable to pay P500,000.00 by way of actual and
punitive damages.2
The spouses Abadilla filed their Answer in due time on
January 28, 1992.
On February 14, 1992, petitioner filed a Reply to the
spouses Abadillas answer.
No answer was filed by respondents Hernando and the
Quetulios within the 15-day reglementary period to file
a responsive pleading.
Meanwhile, the initial hearing for the instant case was
set for February 27, 1992. Said hearing was, however,
postponed
__________
2 Rollo, pp. 57-69.
176
176
SUPREME COURT REPORTS ANNOTATED
Republic vs. Court of Appeals
for no apparent reason. Nonetheless, respondent
Harold M. Hernando, who was then present in court,
moved that (a) he be granted the opportunity to
formally appear as counsel for himself and his co-
defendants as he was then still serving a five-(5)
month suspension from the practice of law for
malpractice pursuant to the Resolution of this Court
dated October 17, 1991 in Administrative Case No.
1359 entitled Buted v. Hernando3 and (b) he be
allowed to file an answer despite petitioners oral
manifestation that he be declared in default for failure
to file his answer within the reglementary period. Both
motions were granted by the trial court.
On February 28, 1992, respondent Hernando filed a
pleading denominated as Comment/Answer/Motion to
Dismiss4 praying for the dismissal of the complaint on
the basis of the Affidavit of Revocation executed by
him on November 29, 1985 cancelling the Compromise
Agreement because Atty. Sixto S. Pedro allegedly
withheld ten (10) checks in the amount of P500,000.00
which were supposed to be part of the consideration
for the property expropriated; and that Atty. Sixto S.
Pedro, in his capacity as Special Attorney for the
Ministry of Public Works and Highways, Ilocos Norte,
and representing the Republic of the Philippines, had
signed a Rescission of Compromise Agreement and the
127
Deed of Conveyance dated December 2, 1985 (in favor
of the Abadilla spouses).
On May 5, 1992, the trial court issued an order
dismissing the complaint ratiocinating that:
As the plaintiff has not filed any reply/opposition or
comment to the comment/answer/motion to dismiss,
said party is deemed to have admitted the due
execution and genuiness (sic) of the instruments which
are Exhibits 3 and 4 of the motion to dismiss, Sec. 8,
Rule 8 of the Rules of Court. This is so as said
instruments which are Exhibits 3 and 4 are copied
verbatim as part of the pleading of defendants Atty.
Harold Hernando and Dominica Quetolio, Sec. 7,
__________
3 203 SCRA 1 [1991].
4 Id., at 90-98.
177
VOL. 296, SEPTEMBER 25, 1998
177
Republic vs. Court of Appeals
Rule 8 of the New Rules of Court. Plaintiff having
admitted the execution and genuiness (sic) of the
instruments, said party has already abandoned its
claim to the land in suit or the claim of said party
plaintiff has been extinguished.5
Petitioner received a copy of the above-stated order on
May 13, 1992.
On May 25, 1992, petitioner filed a Motion for
Reconsideration of the order of dismissal.
The motion was denied in an order received by
petitioner on September 14, 1992.
On October 8, 1992, twenty-four (24) days after it
received a copy of the order denying its motion for
reconsideration, petitioner filed a petition for certiorari
under Rule 65 of the Rules of Court before this Court,
docketed as G.R. No. 107229.
Per our Resolution dated October 12, 1992, G.R. No.
107229 was referred to the Court of Appeals for
appropriate action. Therein, G.R. No. 107229 was
docketed anew as CA-G.R. SP No. 29460.
On February 8, 1993, the Court of Appeals dismissed
the said petition for certiorari after treating the same
as an ordinary appeal filed out of time. According to
the appellate court:
Considering that petitioner admittedly received a copy
of the Order dated 04 September 1992 denying its
Motion For Reconsideration on 14 September 1992, the
reglementary period within which to file an appeal
therefrom expired on 29 September 1992.
The record discloses that the instant petition was filed
on 08 October 1992. Consequently, the questioned
Order had attained finality at the time the petition was
filed.6
A motion for reconsideration of said decision was
denied on April 27, 1993.
__________
5 Id., at 185.
6 Id., at 44.
178
128
178
SUPREME COURT REPORTS ANNOTATED
Republic vs. Court of Appeals
Hence, the present petition for review on certiorari
grounded on the following issues, viz.:
I No. 29460 for having been filed out of time.
Whether or not respondent Honorable Court of Appeals
has decided a question of substance, not theretofore
determined by the Honorable Supreme Court or that it
has decided it in a way not in accord with law or with
applicable decisions of this Honorable Court, in
denying due course to the petition in G.R. SP No.
29460, purportedly on the ground that the 15-day
reglementary period had already elapsed despite
patent showing on the face of the petition that it was
filed pursuant to Rule 65 of the Revised Rules of Court.
II
Whether or not respondent Honorable Court of Appeals
has patently sanctioned such departure by respondent
Hon. Luis B. Bello, Jr., from the usual and accepted
course of judicial proceeding as he (Judge Bello)
considered a mere affidavit as an actionable document
such that petitioners failure to file an opposition or
comment to herein private respondent-Harold
Hernandos pleading wherein said affidavit was
attached and copied, amounted to an admission of its
due execution and genuineness, being allegedly an
actionable document, pursuant to Sec. 8, Rule 8 of the
Revised Rules of Court.7
We grant the petition.
The threshold issue in this case is whether or not
respondent Court of Appeals committed reversible
error in denying due course and dismissing CA-GR-SP
Respondent Court of Appeals ruled that an ordinary
appeal not a petition for certiorari under Rule 65, was
the proper remedy from the trial courts Order of
dismissal dated May 5, 1992 which has attained
finality.
__________
7 Id., at 20.
179
VOL. 296, SEPTEMBER 25, 1998
179
Republic vs. Court of Appeals
Our careful study of the facts inevitably yields to the
conclusion that the Regional Trial Court presided by
Hon. Luis B. Bello, Jr. committed grave abuse of
discretion not only in issuing its order dismissing
petitioners complaint in Civil Case No. 9934 on a
starkly erroneous ground, but also it committed a
grossly irresponsible act of allowing respondent
Hernando who was then under suspension from the
practice of law, to represent himself and his co-
defendants in the case. Also, as appearing from the
records, after the lapse of the period to file an answer
129
on the part of respondents Hernando and the
Quetulios, the trial court set the case for pre-trial
without formally ruling on petitioners motion to
declare them in default. Surprisingly, the trial court
thereafter, allowed said defendants to file their answer
upon the latters verbal motion. This enabled
respondent Hernando to file his pleading
Comment/Answer/Motion to Dismiss, with certain
annexes which were considered by the trial court as
actionable documents, despite the fact that petitioner
was not a party thereto. All these circumstances
clearly demonstrate the trial courts bias and
arbitrariness that should have warranted the setting
aside of the questioned order of dismissal for grave
abuse of discretion under Rule 65 of the Rules of Court.
Consequently, petitioners original action for certiorari
filed with respondent Court of Appeals on October 8,
1992 to annul the trial courts Order dated May 5,
1992 dismissing petitioners complaint should have
been given due course.
The Compromise Agreement entered into by the
petitioner and the Quetulio spouses in the
expropriation case, docketed as Civil Case No. 8396-
XV, on January 24, 1985 was approved and adopted in
toto by the Regional Trial Court of Laoag City, Branch
XV in its decision of January 31, 1985. The compromise
agreement fixed the amount of just compensation for
the property at P1,454,859.00 which was, as the
records show, fully paid by petitioner as evidenced by
the disbursement vouchers (Annexes D-1 to D-12
to complaint).8 Said compromise agreement had long
become final and executory,
____________
8 Rollo, pp. 74-81.
180
180
SUPREME COURT REPORTS ANNOTATED
Republic vs. Court of Appeals
before respondent Hernando allegedly executed the
Affidavit of Revocation unilaterally revoking the same
on November 29, 1985. It is well-settled that a judicial
compromise has the effect of res judicata and is
immediately executory and not appealable unless a
motion to set aside the same is filed on the ground of
fraud, mistake or duress, in which event an appeal
may be filed from an order denying the same.9 A court
cannot set aside a judgment based on compromise
without having declared in an incidental hearing that
such a compromise is vitiated by any of the grounds
130
for nullity enumerated in Art. 2038 of the Civil Code.
Consequently, it was utterly erroneous for the trial
court to rule that there was such a revocation of the
judicially approved Compromise Agreement.
Moreover, considering that petitioner is not a party to
the annexes attached to the Comment/Answer/Motion
to Dismiss filed by respondent Hernando and the
Quetulios, the trial court had no legal basis in
dismissing petitioners complaint in Civil Case No.
9934-16 on the ground that petitioner had admitted
the due execution and genuineness of said annexes
consisting of the Affidavit of Revocation, and
Rescission of Compromise Agreement and Deed of
Conveyance.
Section 8 of Rule 8 of the Rules of Court provides:
Sec. 8. How to contest genuineness of such
documents.When an action or defense is founded
upon a written instrument, copied in or attached to the
corresponding pleading as provided in the preceding
section, the genuineness and due execution of the
instrument shall be deemed admitted unless the
adverse party, under oath, specifically denies them,
and sets forth what he claims to be the facts; but this
provision does not apply when the adverse party does
not appear to be a party to the instrument or when
compliance with an order for an inspection of the
original instrument is refused. (Emphasis ours.)
While the signature of Atty. Sixto S. Pedro is found in
both instruments, he could not have, in any way,
bound the peti-
__________
9 De Guzman v. Court of Appeals, 137 SCRA 730
[1985]; Hagosojos v. CA, 155 SCRA 175 [1987].
181
VOL. 296, SEPTEMBER 25, 1998
181
Republic vs. Court of Appeals
tioner thereto for total lack of authority from the latter
to enter into any agreement prejudicial to or in
diminution of the rights of the Government. It is to be
noted that the Affidavits of Revocation executed on
November 29, 1985 by respondent Hernando
repudiated the judgment by compromise on the
ground that Atty. Sixto S. Pedro, alleged Special
Attorney of the Ilocos Norte District of the Public
Works, had withheld ten (10) checks in the total
amount of P500,000.00 which were part of the
consideration for the property subject of the
Compromise Agreement. The document was signed by
Atty. Pedro with the words acknowledged and my
express conformity. Similarly, the Rescission of
Compromise Agreement and Deed of Conveyance
was executed by the Quetulios and signed by Atty.
Pedro describing himself as Special Attorney of the
MPWH I.N. Engineering District and representing the
Republic of the Philippines. Even granting
hypothetically that Atty. Pedro was duly designated as
Special Attorney of the Office of the Solicitor General,
and was authorized to represent the Solicitor General
at the hearings of the expropriation case, it is still the
131
Solicitor General who retains supervision and control of
the representation of the case and who has to approve
actions involving withdrawal, non-appeal and other
matters which appear to compromise the interest of
the Government, not to mention that only notices of
orders, resolutions and decisions served on him will
bind the Government.10 The authority to enter into
any agreement or arrangement adversely affecting the
rights and interests of the Government cannot be
assumed; it has to be established by him who asserts
its existence.
Nonetheless, assuming further that petitioner is a
party to the questioned instruments, still, the dismissal
of its complaint by respondent trial court was not
correct. Petitioners alleged failure to deny under oath
the genuineness and due execution of the said
instruments simply means that it impliedly admitted
their authenticity and due execution. Failure
__________
10 Republic v. Mendoza, 125 SCRA 539 [1983];
Republic v. Polo, 89 SCRA 33 [1979].
182
182
SUPREME COURT REPORTS ANNOTATED
Republic vs. Court of Appeals
to deny the genuineness and due execution of an
actionable document does not preclude a party from
arguing against it by evidence of fraud, mistake,
compromise, payment, statute of limitations, estoppel
and want of consideration.11 Neither does it bar a
party from raising the defense in his answer or reply
and prove at the trial that there is a mistake or
imperfection in the writing, or that it does not express
the true agreement of the parties, or that the
agreement is invalid or that there is an intrinsic
ambiguity in the writing.12
Apart from the aforestated erroneous application of
the law, the proceedings conducted by the respondent
judge were grievously tainted by the appearance of
respondent Hernando in the case despite his
suspension at the time from the practice of law.
As explicitly stated in the present petition as well as in
the petition previously filed in this case, docketed as
G.R. No. 107229 which was referred to the Court of
Appeals for disposition, respondent RTC Judge Luis B.
Bello, Jr. did not rule on petitioners oral motion to
declare the Quetulios in default for not filing their
answer within the reglementary period. Instead, after
the case was set for initial hearing on February 27,
1992, the judge admitted the formal appearance of
respondent Hernando as counsel for himself and for his
co-defendants and allowed him to file an answer to the
complaint. Evidently, when respondent Hernando
appeared before the trial court at the initial hearing of
the case on February 27, 1992, and when he filed the
pleading denominated as Comment/Answer/Motion to
Dismiss, he was still under suspension from the
practice of law. A suspended lawyer, during his
suspension, is certainly prohibited from engaging in
132
the practice of law13 and if he does so, he may be
disbarred. The
___________
11 I Regalado, REMEDIAL LAW COMPENDIUM, p. 105,
citing I Martin 301 which cited Bough and Bough v.
Cantiveros and Hanopol, 40 Phil. 209 [1919] and
Hibberd v. Rohde and McMillian, 32 Phil. 476 [1915].
12 Section 9, Rule 130 of the Rules of Court.
13 In re David, 93 Phil. 461 [1954].
183
VOL. 296, SEPTEMBER 25, 1998
183
Republic vs. Court of Appeals
reason is that, his continuing to practice his profession
during his suspension constitutes a gross misconduct
and a wilful disregard of the suspension order, which
should be obeyed though how erroneous it may be
until set aside.14
While as a general rule, certiorari cannot be a
substitute for a lapsed appeal, however, where the
rigid application of the rule will result in a manifest
failure, or miscarriage of justice, the rule may be
relaxed.15 Technicalities should be disregarded if only
to accord to the respective parties that which is due
them. Therefore, considering the broader and
primordial interests of justice, particularly when there
is grave abuse of discretion as in the case at bar, an
occasional departure from the general rule that the
extraordinary writ of certiorari cannot substitute for a
lost appeal is warranted.16 In the instant case, we rule
that respondent court erred in not entertaining the
special civil action for certiorari (CA-G.R. SP No. 29460)
before it, considering the patent irregularity and grave
abuse of discretion committed by the trial court in
dismissing petitioners complaint, such that appeal
therefrom was not an adequate remedy in the ordinary
course of law.
However, it has not escaped the attention of the Court
that the petition in G.R. No. 107229 was filed by the
Office of the Solicitor General nine (9) days beyond the
reglementary period. Rules of procedure are intended
to insure the orderly administration of justice and the
protection of the substantive rights of the parties in
judicial proceedings. Needless to state, Government
lawyers assigned to the case should have acted more
scrupulously and sedulously in seeing to it that their
clients interests are protected by observing deadlines
in filing of pleadings to avoid situations such as that
obtaining in this case which involves a valuable
property.
__________
14 De Leon v. Torres, 99 Phil. 463 [1956].
15 Mejares v. Reyes, 254 SCRA 425 [1996]; Luna v.
Court of Appeals, 216 SCRA 107 [1992]; Aranda v.
Court of Appeals, 186 SCRA 456 [1990]; Escudero v.
Dulay, 158 SCRA 69 [1988].
16 Luna v. Court of Appeals, supra.
184
133
184
SUPREME COURT REPORTS ANNOTATED
Salavarria vs. Letran College
WHEREFORE, the instant petition is hereby GRANTED.
Civil Case No. 9934-16 before the Regional Trial Court
of Laoag City, Branch 16, is hereby REINSTATED and
the court a quo is ORDERED to proceed hearing the
case and resolve the same with dispatch.
SO ORDERED.
Narvasa (C.J., Chairman) and Romero, J., concur.
Purisima, J., No part, Atty. Hector P. Corpus for
respondents Abadilla and Samonte being my first
cousin.
Petition granted, Civil Case No. 9934-16 reinstated.
Note.Although certiorari cannot be a substitute for a
lapsed appeal, where a rigid application of that rule
will result in a manifest failure or miscarriage of
justice, the rule may be relaxed. (Mejares vs. Reyes,
254 SCRA 425 [1996])
G.R. No. 121468. January 27, 1998.*
ARSENIO DELOS REYES, FELICIDAD DELOS REYES,
BENJAMIN DELOS REYES, SALVADOR DELOS REYES,
SOLEDAD DELOS REYES and PEDRO PARINAO,
TRINIDAD DELOS REYES and PEDRO GENERAL, CARLOS
DELOS REYES, JR., ROBERTO DELOS REYES, RODOLFO
DELOS REYES, RICARDO DELOS REYES, ZENAIDA
DELOS REYES, VERONICA DELOS REYES, MERCEDES
DELOS REYES, FELIPE CANTILLON, GREGORIA
CANTILLON, LUCENA CANTILLON, VIRGILIO CANTILLON
and MERCEDES CANTILLON, petitioners, vs. COURT OF
APPEALS, ZENAIDA CAIA and RODOLFO CAIA,
respondents.
Civil Law; Property; Actions; A cause of action being an
act or omission of one party in violation of the right of
another arises at the moment such right is violated.A
cause of action being an act or omission of one party
in violation of the right of another arises at the
moment such right is violated. In the instant case,
petitioners cause of action accrued on 4 June 1943
when the Pena spouses caused the registration in their
name of the entire 13,405 square meters instead of
only 10,000 square meters they actually bought from
Evarista delos Reyes. For it was on this date that the
right of ownership of Evarista over the remaining
3,405 square meters was transgressed and from that
very moment sprung the right of the owner, and hence
all her successors in interest, to file a suit for
reconveyance of the property wrongfully taken from
them.
Same; Same; Same; Prescription; Under Art. 1141 of
the Civil Code, real actions over immovables prescribe
after thirty (30) years.But, such right is not
imprescriptible. Generally, the law draws a time
corridor within which to propel a suit for recovery of
property. Section 44, par. (b), of RA No. 296 otherwise
known as the Judiciary Act of 1948 provides that
reivindicatory actions may be brought by the owner
within thirty (30) years after he has been deprived of
his property. Under Art. 1141 of the Civil Code, real
actions over immovables prescribe after thirty (30)
years. Thus, even if we apply the
134
_______________
* FIRST DIVISION.
82
82
SUPREME COURT REPORTS ANNOTATED
Delos Reyes vs. Court of Appeals
30-year prescriptive period in accordance with the
above legal provisions, petitioners right to recover has
already been effectively foreclosed by the lapse of
time having been initiated only after thirty-six (36)
years from the accrual of their cause of action.
Same; Same; Same; Same; The action for
reconveyance has now become stale, being barred as
it were, by laches.Petitioners reliance on Arts. 1409,
1410 and 1422 of the Civil Code on the
imprescriptibility of void and inexistent contracts is
misplaced. While the action to declare a contract null
and void does not prescribe, this principle is alien and
malapropos to the matter before us. Moreover, the
action for reconveyance has now become stale, being
barred as it were, by laches. It cannot be disputed that
for thirty-six (36) years petitioners and their
predecessors in interest, Evarista delos Reyes most
especially, never raised a restraining arm to the
inclusion of the remaining 3,405 square meters of the
land in the titling of the 10,000 square meters bought
by the Pena spouses. The property passed through
four (4) owners successively in a span of more than
twenty (20) years before it went into the hands of
private respondents.
Same; Land Titles; For all intents and purposes,
respondents were innocent purchasers for value
having acquired the property in due course and in
good faith under a clean title.When respondents
Rodolfo Caia and Zenaida Caia as fourth transferees
in ownership dealt with the land in question, they were
not required to go beyond what appeared in the
transfer certificate of title in the name of their
transferor. For all intents and purposes, they were
innocent purchasers for value having acquired the
property in due course and in good faith under a clean
title, i.e., there were no annotations of encumbrances
135
or notices of lis pendens at the back thereof. They had
no reason to doubt the validity of the title to the
property. Therefore it would be the height of injustice,
if not inequity, if a valid transaction transferring the
subject property to them be set aside just to
accommodate parties who heedlessly slept on their
rights for more than a third of a century. This is not
conducive but anathema to good order.
Same; Same; Remedy of an owner who was
fraudulently de prived of his land, which was
subsequently sold to an innocent purchaser for value,
is to file an action for damages against the person who
perpetrated the fraud within four (4) years after the
discovery of
83
VOL. 285, JANUARY 27, 1998
83
Delos Reyes vs. Court of Appeals
the deception.In Avecilla v. Yatco we ruled that the
only remedy of an owner who was fraudulently
deprived of his land, which was subsequently sold to
an innocent purchaser for value, is to file an action for
damages against the person who perpetrated the
fraud within four (4) years after the discovery of the
deception. Unfortunately in this case we may never
know why Evarista delos Reyes chose not to go after
the Pena spouses to recover what could be rightfully
hers, the reason having apparently been long interred
with her.
PETITION for review on certiorari of a decision of the
Court of Appeals.
The facts are stated in the opinion of the Court.
Peoples Law Office for petitioners.
Santiago de Guzman for private respondents.
BELLOSILLO, J.:
Can an action for reconveyance of real property
covered by the Torrens system filed after more than
thirty (30) years prosper against the holder for value?
On 28 July 1987 the Regional Trial Court of Valenzuela,
Metro Manila, dismissed Civil Case No. 717-V-78 for
recovery of possession of real property with damages
filed by Arsenio delos Reyes, Felicidad, Benjamin,
Salvador, Soledad (with spouse Pedro Parinao),
Trinidad (with spouse Pedro General), Carlos, Jr.,
Roberto, Rodolfo, Ricardo, Zenaida, Veronica and
Mercedes, all surnamed Delos Reyes, and Felipe,
Gregoria, Lucena, Virgilio and Mercedes, all surnamed
Cantillon, against the spouses Rodolfo Caia and
Zenaida Caia.1
On 23 January 1995 the Court of Appeals affirmed the
order of dismissal of the lower court.2
_______________
1 See Order issued by Judge Teresita Dizon Capulong,
RTC-Br. 172, Valenzuela, Metro Manila; Records, pp.
217-220.
2 Decision in CA-G.R. CV No. 26078, penned by Justice
Nathanael P. de Pano, Jr., concurred in by Justices
136
Artemon D. Luna and Ramon U. Mabutas, Jr.; Rollo, pp.
18-29.
84
84
SUPREME COURT REPORTS ANNOTATED
Delos Reyes vs. Court of Appeals
Pursuing their recourse with us, petitioners seek the
nullification of the decision of respondent Court of
Appeals which affirmed the order of the trial court
dismissing the complaint of petitioners herein by
imputing to the Court of Appeals the following errors:
(1) in reckoning the 30-year prescriptive period of real
actions as provided under Art. 1141 of the Civil Code
from the date of issuance of the questioned TCT or
annotation of the transaction in 1943 and not from 17
September 1962 when petitioners mother, original
owner of subject property, died or 17 July 1963 when
TCT No. 42753 was issued to Rodolfo Caia and
Zenaida Caia and consequently holding petitioners
guilty of laches; and, (2) in not applying Arts. 1409,
1410, and 1422 of the Civil Code.3
Subject of the controversy is a parcel of land
measuring 13,405 square meters originally owned by
the spouses Genaro and Evarista delos Reyes. On 7
July 1942 Evarista delos Reyes sold to spouses
Catalina Mercado and Eulalio Pena 10,000 square
meters of the property described as Lot No. 1210 of
the subdivision plan of the Malinta Friar Lands Estate
situated at Torres Bugallon, Valenzuela, Metro Manila.
On 4 June 1943 the vendees were able to secure
Transfer Certificate of Title No. 26184 covering not only
the 10,000 square meters of land bought by them but
also the remaining 3,405 square meters left unsold. In
turn, the Pena spouses sold the whole property to
Isaias de Guzman and Emiliana de Onon who later
conveyed the same whole area to Elpidio Concepcion,
Liwayway Serrano, Norberto Concepcion and Marta de
Guzman. Eventually, the land was acquired by private
respondents herein, Rodolfo Caia and Zenaida Caia,
on 9 July 1963 through a Deed of Exchange. Eight (8)
days later, or on 17 July 1963, Transfer Certificate of
Title No. 42753 was issued in the name of the Caia
spouses who since then exercised full ownership and
possession over the property.
On 3 October 1978 petitioners, all heirs of Evarista
delos Reyes, filed an action against respondents for
reconveyance of
_______________
3 Petitioners Brief, pp. 5 & 7; Rollo, pp. 12 & 14.
85
VOL. 285, JANUARY 27, 1998
85
Delos Reyes vs. Court of Appeals
3,405 square meters of the property covered by TCT
No. 42753 claiming that this portion was invalidly
included by the Pena spouses in the titling of their
10,000 square meters they had bought from Evarista
delos Reyes. However, the case was dismissed by the
trial court on the ground of laches. As already adverted
137
to, the order of dismissal was affirmed by the Court of
Appeals.
We likewise dismiss the petition. Petitioners argue that
their cause of action still subsists because it accrued
either on 17 September 1962 when Evarista delos
Reyes died, or on 17 July 1963 when TCT No. 42753
was issued to Rodolfo Caia and his sister Zenaida
Caia. This is incorrect. A cause of action being an act
or omission of one party in violation of the right of
another arises at the moment such right is violated. In
the instant case, petitioners cause of action accrued
on 4 June 1943 when the Pena spouses caused the
registration in their name of the entire 13,405 square
meters instead of only 10,000 square meters they
actually bought from Evarista delos Reyes. For it was
on this date that the right of ownership of Evarista
over the remaining 3,405 square meters was
transgressed and from that very moment sprung the
right of the owner, and hence all her successors in
interest, to file a suit for reconveyance of the property
wrongfully taken from them.
But, such right is not imprescriptible. Generally, the
law draws a time corridor within which to propel a suit
for recovery of property. Section 44, par. (b), of RA No.
296 otherwise known as the Judiciary Act of 1948
provides that reivindicatory actions may be brought by
the owner within thirty (30) years after he has been
deprived of his property. Under Art. 1141 of the Civil
Code, real actions over immovables prescribe after
thirty (30) years. Thus, even if we apply the 30-year
prescriptive period in accordance with the above legal
provisions, petitioners right to recover has already
been effectively foreclosed by the lapse of time having
been initiated only after thirty-six (36) years from the
accrual of their cause of action.
Be that as it may, we hold that even these laws may
not apply to the case before us in the light of PD No.
1529, the
86
86
SUPREME COURT REPORTS ANNOTATED
Delos Reyes vs. Court of Appeals
Property Registration Decree amending and codifying
the laws relative to registration of property and
updating Act No. 496, the Land Registration Act.
When respondents Rodolfo Caia and Zenaida Caia as
fourth transferees in ownership dealt with the land in
question, they were not required to go beyond what
appeared in the transfer certificate of title in the name
of their transferor. For all intents and purposes, they
were innocent purchasers for value having acquired
the property in due course and in good faith under a
clean title, i.e., there were no annotations of
encumbrances or notices of lis pendens at the back
thereof. They had no reason to doubt the validity of
the title to the property. Therefore it would be the
height of injustice, if not inequity, if a valid transaction
transferring the subject property to them be set aside
just to accommodate parties who heedlessly slept on
their rights for more than a third of a century. This is
not conducive but anathema to good order.
138
Finally, petitioners reliance on Arts. 1409, 1410 and
1422 of the Civil Code on the imprescriptibility of void
and inexistent contracts is misplaced. While the action
to declare a contract null and void does not prescribe,
this principle is alien and malapropos to the matter
before us. Moreover, the action for reconveyance has
now become stale, being barred as it were, by laches.
It cannot be disputed that for thirty-six (36) years
petitioners and their predecessors in interest, Evarista
delos Reyes most especially, never raised a restraining
arm to the inclusion of the remaining 3,405 square
meters of the land in the titling of the 10,000 square
meters bought by the Pena spouses. The property
passed through four (4) owners successively in a span
of more than twenty (20) years before it went into the
hands of private respondents. Surely, the rights of
innocent purchasers of real property such as the
Caias cannot be swamped and drowned by the
remonstrations of the inert and petulant who took no
care in seasonably asserting their rights of ownership
over the land allegedly wrested from them through
fraudulent means. In Avecilla v. Yatco4 we
_______________
4 103 Phil. 666 (1958).
87
VOL. 285, JANUARY 27, 1998
87
Delos Reyes vs. Court of Appeals
ruled that the only remedy of an owner who was
fraudulently deprived of his land, which was
subsequently sold to an innocent purchaser for value,
is to file an action for damages against the person who
perpetrated the fraud within four (4) years after the
discovery of the deception. Unfortunately in this case
we may never know why Evarista delos Reyes chose
not to go after the Pena spouses to recover what could
be rightfully hers, the reason having apparently been
long interred with her.
WHEREFORE, finding no reversible error in the decision
of the Court of Appeals sustaining the Regional Trial
Court of Valenzuela, Metro Manila, which ordered the
dismissal of the complaint of herein petitioners, the
instant petition is DENIED. Costs against petitioners.
SO ORDERED.
Davide, Jr. (Chairman), Vitug and Kapunan, JJ.,
concur.
Petition denied.
Note.A registered landowner may lose his right to
recover the possession of his registered property by
reason of laches. (Catholic Bishop of Balanga vs. Court
of Appeals, 264 SCRA 181 [1996])
G.R. No. 121468. January 27, 1998.*
ARSENIO DELOS REYES, FELICIDAD DELOS REYES,
BENJAMIN DELOS REYES, SALVADOR DELOS REYES,
SOLEDAD DELOS REYES and PEDRO PARINAO,
TRINIDAD DELOS REYES and PEDRO GENERAL, CARLOS
DELOS REYES, JR., ROBERTO DELOS REYES, RODOLFO
DELOS REYES, RICARDO DELOS REYES, ZENAIDA
DELOS REYES, VERONICA DELOS REYES, MERCEDES
139
DELOS REYES, FELIPE CANTILLON, GREGORIA
CANTILLON, LUCENA CANTILLON, VIRGILIO CANTILLON
and MERCEDES CANTILLON, petitioners, vs. COURT OF
APPEALS, ZENAIDA CAIA and RODOLFO CAIA,
respondents.
Civil Law; Property; Actions; A cause of action being an
act or omission of one party in violation of the right of
another arises at the moment such right is violated.A
cause of action being an act or omission of one party
in violation of the right of another arises at the
moment such right is violated. In the instant case,
petitioners cause of action accrued on 4 June 1943
when the Pena spouses caused the registration in their
name of the entire 13,405 square meters instead of
only 10,000 square meters they actually bought from
Evarista delos Reyes. For it was on this date that the
right of ownership of Evarista over the remaining
3,405 square meters was transgressed and from that
very moment sprung the right of the owner, and hence
all her successors in interest, to file a suit for
reconveyance of the property wrongfully taken from
them.
Same; Same; Same; Prescription; Under Art. 1141 of
the Civil Code, real actions over immovables prescribe
after thirty (30) years.But, such right is not
imprescriptible. Generally, the law draws a time
corridor within which to propel a suit for recovery of
property. Section 44, par. (b), of RA No. 296 otherwise
known as the Judiciary Act of 1948 provides that
reivindicatory actions may be brought by the owner
within thirty (30) years after he has been deprived of
his property. Under Art. 1141 of the Civil Code, real
actions over immovables prescribe after thirty (30)
years. Thus, even if we apply the
_______________
* FIRST DIVISION.
82
82
SUPREME COURT REPORTS ANNOTATED
Delos Reyes vs. Court of Appeals
30-year prescriptive period in accordance with the
above legal provisions, petitioners right to recover has
already been effectively foreclosed by the lapse of
time having been initiated only after thirty-six (36)
years from the accrual of their cause of action.
Same; Same; Same; Same; The action for
reconveyance has now become stale, being barred as
it were, by laches.Petitioners reliance on Arts. 1409,
1410 and 1422 of the Civil Code on the
imprescriptibility of void and inexistent contracts is
misplaced. While the action to declare a contract null
and void does not prescribe, this principle is alien and
malapropos to the matter before us. Moreover, the
action for reconveyance has now become stale, being
barred as it were, by laches. It cannot be disputed that
for thirty-six (36) years petitioners and their
predecessors in interest, Evarista delos Reyes most
especially, never raised a restraining arm to the
inclusion of the remaining 3,405 square meters of the
land in the titling of the 10,000 square meters bought
140
by the Pena spouses. The property passed through
four (4) owners successively in a span of more than
twenty (20) years before it went into the hands of
private respondents.
Same; Land Titles; For all intents and purposes,
respondents were innocent purchasers for value
having acquired the property in due course and in
good faith under a clean title.When respondents
Rodolfo Caia and Zenaida Caia as fourth transferees
in ownership dealt with the land in question, they were
not required to go beyond what appeared in the
transfer certificate of title in the name of their
transferor. For all intents and purposes, they were
innocent purchasers for value having acquired the
property in due course and in good faith under a clean
title, i.e., there were no annotations of encumbrances
or notices of lis pendens at the back thereof. They had
no reason to doubt the validity of the title to the
property. Therefore it would be the height of injustice,
if not inequity, if a valid transaction transferring the
subject property to them be set aside just to
accommodate parties who heedlessly slept on their
rights for more than a third of a century. This is not
conducive but anathema to good order.
Same; Same; Remedy of an owner who was
fraudulently de prived of his land, which was
subsequently sold to an innocent purchaser for value,
is to file an action for damages against the person who
perpetrated the fraud within four (4) years after the
discovery of
83
VOL. 285, JANUARY 27, 1998
83
Delos Reyes vs. Court of Appeals
the deception.In Avecilla v. Yatco we ruled that the
only remedy of an owner who was fraudulently
deprived of his land, which was subsequently sold to
an innocent purchaser for value, is to file an action for
damages against the person who perpetrated the
fraud within four (4) years after the discovery of the
deception. Unfortunately in this case we may never
know why Evarista delos Reyes chose not to go after
the Pena spouses to recover what could be rightfully
hers, the reason having apparently been long interred
with her.
PETITION for review on certiorari of a decision of the
Court of Appeals.
The facts are stated in the opinion of the Court.
Peoples Law Office for petitioners.
Santiago de Guzman for private respondents.
BELLOSILLO, J.:
Can an action for reconveyance of real property
covered by the Torrens system filed after more than
thirty (30) years prosper against the holder for value?
On 28 July 1987 the Regional Trial Court of Valenzuela,
Metro Manila, dismissed Civil Case No. 717-V-78 for
recovery of possession of real property with damages
filed by Arsenio delos Reyes, Felicidad, Benjamin,
Salvador, Soledad (with spouse Pedro Parinao),
141
Trinidad (with spouse Pedro General), Carlos, Jr.,
Roberto, Rodolfo, Ricardo, Zenaida, Veronica and
Mercedes, all surnamed Delos Reyes, and Felipe,
Gregoria, Lucena, Virgilio and Mercedes, all surnamed
Cantillon, against the spouses Rodolfo Caia and
Zenaida Caia.1
On 23 January 1995 the Court of Appeals affirmed the
order of dismissal of the lower court.2
_______________
1 See Order issued by Judge Teresita Dizon Capulong,
RTC-Br. 172, Valenzuela, Metro Manila; Records, pp.
217-220.
2 Decision in CA-G.R. CV No. 26078, penned by Justice
Nathanael P. de Pano, Jr., concurred in by Justices
Artemon D. Luna and Ramon U. Mabutas, Jr.; Rollo, pp.
18-29.
84
84
SUPREME COURT REPORTS ANNOTATED
Delos Reyes vs. Court of Appeals
Pursuing their recourse with us, petitioners seek the
nullification of the decision of respondent Court of
Appeals which affirmed the order of the trial court
dismissing the complaint of petitioners herein by
imputing to the Court of Appeals the following errors:
(1) in reckoning the 30-year prescriptive period of real
actions as provided under Art. 1141 of the Civil Code
from the date of issuance of the questioned TCT or
annotation of the transaction in 1943 and not from 17
September 1962 when petitioners mother, original
owner of subject property, died or 17 July 1963 when
TCT No. 42753 was issued to Rodolfo Caia and
Zenaida Caia and consequently holding petitioners
guilty of laches; and, (2) in not applying Arts. 1409,
1410, and 1422 of the Civil Code.3
Subject of the controversy is a parcel of land
measuring 13,405 square meters originally owned by
the spouses Genaro and Evarista delos Reyes. On 7
July 1942 Evarista delos Reyes sold to spouses
Catalina Mercado and Eulalio Pena 10,000 square
meters of the property described as Lot No. 1210 of
the subdivision plan of the Malinta Friar Lands Estate
situated at Torres Bugallon, Valenzuela, Metro Manila.
On 4 June 1943 the vendees were able to secure
Transfer Certificate of Title No. 26184 covering not only
the 10,000 square meters of land bought by them but
also the remaining 3,405 square meters left unsold. In
turn, the Pena spouses sold the whole property to
Isaias de Guzman and Emiliana de Onon who later
conveyed the same whole area to Elpidio Concepcion,
Liwayway Serrano, Norberto Concepcion and Marta de
Guzman. Eventually, the land was acquired by private
respondents herein, Rodolfo Caia and Zenaida Caia,
on 9 July 1963 through a Deed of Exchange. Eight (8)
days later, or on 17 July 1963, Transfer Certificate of
Title No. 42753 was issued in the name of the Caia
spouses who since then exercised full ownership and
possession over the property.
142
On 3 October 1978 petitioners, all heirs of Evarista
delos Reyes, filed an action against respondents for
reconveyance of
_______________
3 Petitioners Brief, pp. 5 & 7; Rollo, pp. 12 & 14.
85
VOL. 285, JANUARY 27, 1998
85
Delos Reyes vs. Court of Appeals
3,405 square meters of the property covered by TCT
No. 42753 claiming that this portion was invalidly
included by the Pena spouses in the titling of their
10,000 square meters they had bought from Evarista
delos Reyes. However, the case was dismissed by the
trial court on the ground of laches. As already adverted
to, the order of dismissal was affirmed by the Court of
Appeals.
We likewise dismiss the petition. Petitioners argue that
their cause of action still subsists because it accrued
either on 17 September 1962 when Evarista delos
Reyes died, or on 17 July 1963 when TCT No. 42753
was issued to Rodolfo Caia and his sister Zenaida
Caia. This is incorrect. A cause of action being an act
or omission of one party in violation of the right of
another arises at the moment such right is violated. In
the instant case, petitioners cause of action accrued
on 4 June 1943 when the Pena spouses caused the
registration in their name of the entire 13,405 square
meters instead of only 10,000 square meters they
actually bought from Evarista delos Reyes. For it was
on this date that the right of ownership of Evarista
over the remaining 3,405 square meters was
transgressed and from that very moment sprung the
right of the owner, and hence all her successors in
interest, to file a suit for reconveyance of the property
wrongfully taken from them.
But, such right is not imprescriptible. Generally, the
law draws a time corridor within which to propel a suit
for recovery of property. Section 44, par. (b), of RA No.
296 otherwise known as the Judiciary Act of 1948
provides that reivindicatory actions may be brought by
the owner within thirty (30) years after he has been
deprived of his property. Under Art. 1141 of the Civil
Code, real actions over immovables prescribe after
thirty (30) years. Thus, even if we apply the 30-year
prescriptive period in accordance with the above legal
provisions, petitioners right to recover has already
been effectively foreclosed by the lapse of time having
been initiated only after thirty-six (36) years from the
accrual of their cause of action.
Be that as it may, we hold that even these laws may
not apply to the case before us in the light of PD No.
1529, the
86
86
SUPREME COURT REPORTS ANNOTATED
Delos Reyes vs. Court of Appeals
143
Property Registration Decree amending and codifying
the laws relative to registration of property and
updating Act No. 496, the Land Registration Act.
When respondents Rodolfo Caia and Zenaida Caia as
fourth transferees in ownership dealt with the land in
question, they were not required to go beyond what
appeared in the transfer certificate of title in the name
of their transferor. For all intents and purposes, they
were innocent purchasers for value having acquired
the property in due course and in good faith under a
clean title, i.e., there were no annotations of
encumbrances or notices of lis pendens at the back
thereof. They had no reason to doubt the validity of
the title to the property. Therefore it would be the
height of injustice, if not inequity, if a valid transaction
transferring the subject property to them be set aside
just to accommodate parties who heedlessly slept on
their rights for more than a third of a century. This is
not conducive but anathema to good order.
Finally, petitioners reliance on Arts. 1409, 1410 and
1422 of the Civil Code on the imprescriptibility of void
and inexistent contracts is misplaced. While the action
to declare a contract null and void does not prescribe,
this principle is alien and malapropos to the matter
before us. Moreover, the action for reconveyance has
now become stale, being barred as it were, by laches.
It cannot be disputed that for thirty-six (36) years
petitioners and their predecessors in interest, Evarista
delos Reyes most especially, never raised a restraining
arm to the inclusion of the remaining 3,405 square
meters of the land in the titling of the 10,000 square
meters bought by the Pena spouses. The property
passed through four (4) owners successively in a span
of more than twenty (20) years before it went into the
hands of private respondents. Surely, the rights of
innocent purchasers of real property such as the
Caias cannot be swamped and drowned by the
remonstrations of the inert and petulant who took no
care in seasonably asserting their rights of ownership
over the land allegedly wrested from them through
fraudulent means. In Avecilla v. Yatco4 we
_______________
4 103 Phil. 666 (1958).
87
VOL. 285, JANUARY 27, 1998
87
Delos Reyes vs. Court of Appeals
ruled that the only remedy of an owner who was
fraudulently deprived of his land, which was
subsequently sold to an innocent purchaser for value,
is to file an action for damages against the person who
perpetrated the fraud within four (4) years after the
discovery of the deception. Unfortunately in this case
we may never know why Evarista delos Reyes chose
not to go after the Pena spouses to recover what could
be rightfully hers, the reason having apparently been
long interred with her.
WHEREFORE, finding no reversible error in the decision
of the Court of Appeals sustaining the Regional Trial
Court of Valenzuela, Metro Manila, which ordered the
144
dismissal of the complaint of herein petitioners, the
instant petition is DENIED. Costs against petitioners.
SO ORDERED.
Davide, Jr. (Chairman), Vitug and Kapunan, JJ.,
concur.
Petition denied.
Note.A registered landowner may lose his right to
recover the possession of his registered property by
reason of laches. (Catholic Bishop of Balanga vs. Court
of Appeals, 264 SCRA 181 [1996])
G.R. No. 62650. June 27, 1991.*
SPOUSES MARIANO CASTILLO AND PILAR CASTILLO in
their own behalf and in representation of HEIRS OF
EDUARDO CASTILLO, petitioners, vs. HEIRS OF
VICENTE MADRIGAL AND/OR SUSANA REALTY, INC.
AND THE REGISTER OF DEEDS OF THE CITY OF
MANILA, respondents.
Civil Law; Actions; Prescription; An action for the
declaration of the inexistence of the deed of sale
because of the absence of consent is imprescriptible.
It is evident in paragraphs 9, 10 and 12 of the
complaint, supra, that petitioners sought the
declaration of the inexistence of the deed of sale
because of the absence of their consent. Thus,
following the provision of Article 1410 of the Civil
Code, this kind of action is imprescriptible. The action
for reconveyance is likewise
_______________
* FIRST DIVISION.
557
VOL. 198, JUNE 27, 1991
557
Castillo vs. Heirs of Vicente Madrigal
imprescriptible because its basis is the alleged void
contract of sale.
Same; Same; Same; There should be no debate that
the action for damages against private respondents
has already prescribed.However, there should be no
debate that the action for damages against private
respondents has already prescribed. In accordance
with Article 1144 of the Civil Code, it should have been
brought within ten (10) years from the date of the sale
to Vicente Madrigal and the issuance of Transfer
Certificate of Title No. 72066 in his name on July 12,
1943, if against the heirs of Vicente Madrigal; or within
ten (10) years from the date of the issuance of Transfer
Certificate of Title No. 36280 in the name of Susana
Realty, Inc. on May 12, 1954, if against the firm.
Land Registration; Reconveyance; The rule is that only
as long as the property is still in the name of the
person who caused the wrongful registration and has
not passed to an innocent third person for value will an
action lie to compel that person to reconvey the
property to the real owner.Notwithstanding the
discussion on the imprescriptibility of petitioners
action for annulment of contract and transfer
certificate of title and/or reconveyance, the dismissal
of their complaint by the trial court and the Court of
Appeals on the ground of failure to state a cause of
action was correct. It was also Our ruling in the
145
Baranda case, supra, (and in other previous cases)
that only as long as the property is still in the name of
the person who caused the wrongful registration and
has not passed to an innocent third person for value
will an action lie to compel that person to reconvey the
property to the real owner.
PETITION for review on certiorari of a decision of the
Court of Appeals.
The facts are stated in the opinion of the Court.
D.T. Reyes & Associates and Bernardo D. Calderon
for petitioners.
Ramon A. Barcelona for private respondents.
MEDIALDEA, J.:
This is a petition for review on certiorari seeking
reversal of the decision of the Court of Appeals dated
August 5, 1982 in CA-G.R. No. 66849-R entitled
Spouses Mariano Castillo, et al., Plaintiffs-Appellants
v. Heirs of Vicente Madrigal, et al., Defendants-
Appellees.
The antecedent facts are as follows:
558
558
SUPREME COURT REPORTS ANNOTATED
Castillo vs. Heirs of Vicente Madrigal
On December 17, 1979, petitioners spouses Mariano
Castillo and Pilar Castillo, in their own behalf and in
representation of the heirs of Eduardo Castillo, filed a
verified complaint before the Court of First Instance
(now Regional Trial Court) of Manila for annulment of
contract and transfer certificate of title and/or
reconveyance with damages against private
respondents heirs of Vicente Madrigal and/or Susana
Realty, Inc. and public respondent Register of Deeds of
the City of Manila. The complaint contained the
following pertinent allegations (pp. 105-108, Rollo):
x x x.
4. That plaintiff spouses and their brother, Eduardo
Castillo (herein represented by his legal heirs Paula
Castillo and Antonio Castillo), are registered co-owners
of a parcel of land situated in Ermita, Manila, which
property is more particularly described and bounded
as follows:
Lot 20 of Block 362 of the Cadastral Survey of the City
of Manila, Cadastral Case No. 53 G.L.R.C. Cadastral
Record No. 515 with a chalet of strong materials
existing thereon, situated on the NE line of Calle M.H.
del Pilar, District of Ermita. Bounded on the NE by Lots
Nos. 18 and 8 of Block No. 12; on the SE, by Lots Nos.
3, 4 and 7 of Block No. 362; on the SW by Lots Nos. 7
and 19 of Block 362 and Calle M.H. del Pilar; and on
the NW, by Lots Nos. 19, 17 and 12 of Block No. 362
containing an area of SEVEN HUNDRED AND TWENTY
EIGHT (728) SQUARE METERS, more or less, Date of
Survey, December 18, 1925 (Full technical description
appear on tct no. 29454)
That the plaintiffs ownership over the property above-
described is evidenced by Transfer Certificate of Title
No. 623597 issued in their name and that of their
brother Eduardo Castillo on August 11, 1941, xxx;
146
5. That the immediate origin of the above property is
Transfer Certificate of Title No. 28454 in the name of
Petronila Vda. de Castillo, plaintiffs mother, and from
whom they acquired the realty by way of inheritance in
equal share with Eduardo Castillo entered in the
Registration Book in 1927 yet, x x x.
6. That plaintiffs mother aforesaid as predessor-in-
interest (sic) declared the property for taxation
purposes for the year 1940 under Tax Dec. No. 531
and paid taxes thereon in 1941 under official receipt
No. 571689, x x x;
7. That after the transfer of the property in their own
name and
559
VOL. 198, JUNE 27, 1991
559
Castillo vs. Heirs of Vicente Madrigal
their brother aforesaid, the property was mortgaged
by plaintiffs in favor of the Agricultural and Industrial
Bank and due to the existing war conditions at the
time, the possession, management and supervision of
the land was entrusted to Eduardo Castillo reposing in
him the (sic) full trust and confidence;
8. That beginning the year 1941 up to the year 1977,
plaintiff spouses left Manila and engaged in several
business ventures in the provinces and stayed for so
long a time in Cagayan Valley in northern Luzon and
often times (sic) traveled to far-away places thereby
allowing his (sic) brother Eduardo Castillo herein to
manage the same and collect the rentals due upon the
understanding that once accumulated said amount be
utilized to redeem the mortgaged property from the
Bank which their brother did;
9. That during and after the effectivity of the
mortgage with the aforesaid Bank, plaintiffs herein
never gave their brother Eduardo Castillo authority to
sell their undivided property neither were there
transactions entered into by plaintiffs with any person
or persons, natural or juridical with respect to their
undivided half portion;
10. That after plaintiffs have returned from the
provinces and upon arrival from abroad later in 1977,
they decided to get their share from their brother
Eduardo Castillo as he was entrusted but the latter
being sickly then could not give the explanation and
after conference with his wife, Paula Castillo, the latter
told the plaintiffs that she and her husband Castillo
(Eduardo) did not know the mysterious transactions
that transpired in the transfer or registration of the
above property to Vicente Madrigal (under Transfer
Certificate of Title No. 72066) and upon verification
thereof, an alleged deed of sale executed by plaintiffs
and Eduardo Castillo appears on the back of the title
but in truth and in fact, plaintiffs had never signed any
document in favor of Vicente Madrigal contrary to what
appears thereon; x x x and subsequently transferred
by Vicente Madrigal to Susana Realty Inc., under TCT
No. 36280, x x x;
11. That plaintiffs exerted serious efforts in recovering
his property (Mariano Castillo) in his capacity as a
registered co-owner peacefully but of (sic) no avail for
147
the defendant Susana Realty Inc. refused to heed to
the inquiry and hence this present action;
12.That the transfer of the property under litigation in
favor of the late Vicente Madrigal was done thru fraud,
simulation, illegality and serious irregularity equivalent
to nullity and inexistence of contract and follows that
the Transfer Certificate of Title No. 36280 under the
name of defendant Susana Realty Inc. is null and void
and without any effect whatsoever either under the
Civil Code or under the Land Registration Act
especially so that the transactions entered on the title
took place during war time and without supporting
papers or
560
560
SUPREME COURT REPORTS ANNOTATED
Castillo vs. Heirs of Vicente Madrigal
documents available up to the present time;
x x x.
14. That under the aforesaid facts and circumstances,
the remedy of reconveyance is feasible considering
that the falidity (sic) of the title from plaintiffs mother
to them is not affected and without flaw;
x x x.
16. That the plaintiffs herein suffered damages for the
reason that they were deprived of the possession,
ownership and fruits or income of the property in
question and to which they demand from the herein
defendant heirs of Vicente Madrigal and/or Susana
Realty Inc. in such amount as may be proved during
the trial. (Italics supplied)
On February 4, 1980, private respondents filed a
motion to dismiss on the ground that: (a) the
complaint states no cause of action; and (b) the cause
of action is barred by the statute of limitations.
On March 25, 1980, the trial court dismissed the
complaint (pp. 120-126, Rollo). On appeal to the Court
of Appeals, the decision was affirmed in toto on August
5, 1982 (pp. 44-52, Rollo). Hence, the present petition.
The issues raised by petitioners may be grouped into:
whether or not (1) petitioners action for annulment of
contract and transfer certificate of title and/or
reconveyance with damages is subject to prescription;
and (2) the complaint states a cause of action against
private respondents.
Petitioners allege that a reading of paragraphs 9 and
10 of their complaint reveals that they impugn the
existence and validity of the alleged deed of sale. As
contained therein, petitioners never entered into any
transaction with any person conveying the subject
property. They did not sign any document in favor of
any one neither did they give any one authorization for
that purpose. Therefore, consent and cause did not
exist in the execution of the deed of sale, invoking
Articles 13181, 13522
148
_______________
1 Art. 1318. There is no contract unless the following
requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the
contract;
(3) Cause of the obligation which is established.
2 Art. 1352. Contracts without cause, or with unlawful
cause,
561
VOL. 198, JUNE 27, 1991
561
Castillo vs. Heirs of Vicente Madrigal
and 1409 (3)3 of the Civil Code. And, pursuant to
Article 1410 of the Civil Code, an action for the
declaration of the inexistence of a contract does not
prescribe.
In dismissing petitioners complaint on the ground of
prescription, the trial court opined (p. 123, Rollo):
x x x, any action for annulment of the deed and TCT
72066 should have been instituted within ten (10)
years from the accrual of the cause of action, that,
(sic) is, ten years from 1943 when the deed was
executed at the earliest, or ten years from 1944 at the
latest. This action was filed on December 17, 1979, or
after more than 30 years from 1943 and 1944. The
action, therefore, has long prescribed. x x x.
The Court of Appeals expressed the same opinion (p.
51, Rollo):
x x x, even as We consider that there was fraud in the
registration and the issuance of title in favor of
defendant Madrigal creating thereby a constructive
trust in favor of the plaintiffs, the remedy of the
plaintiffs is an action for reconveyance within within
ten (10) years from the registration of the property in
the name of defendant Madrigal (Alzona v. Capunitan,
4 SCRA 450; Gonzales v. Jimenez 13 SCRA, 80). Again,
the filing of the complaint was way beyond the ten-
year period of limitation.
Both courts ruled incorrectly. It is evident in
paragraphs 9, 10 and 12 of the complaint, supra, that
petitioners sought the declaration of the inexistence of
the deed of sale because of the absence of their
consent. Thus, following the provision of Article 1410
of the Civil Code, this kind of action is imprescriptible.
The action for reconveyance is likewise imprescriptible
because its basis is the alleged void contract of sale.
This pronouncement is certainly far from novel. We
have encountered similar situations in the past which
We resolved in the same manner. One of these is the
case of Baranda, et al., v. Baranda, et al., G.R. No.
562
562
SUPREME COURT REPORTS ANNOTATED
Castillo vs. Heirs of Vicente Madrigal
73275, May 20, 1987, 150 SCRA 59, 73:
x x x. In the instant case, however, we are dealing not
with a voidable contract tainted with fraud, mistake,
undue influence, violence or intimidation that can
149
justify its nullification, but with a contract that is null
and void ab initio.
Paulina Baranda declared under oath in her complaint
that she signed the deeds of sale without knowing
what they were, which means that her consent was
not merely marred by the above-stated vices, so as to
make the contracts voidable, but that she had not
given her consent at all. x x x. Lack of consent x x x
made the deeds of sale void altogether [Salonga vs.
Ferrales, 105 SCRA 359] and rendered them subject to
attack at any time, conformably to the rule in Article
1410 that an action to declare the inexistence of void
contracts does not prescribe.
x x x. We have consistently ruled that when there is a
showing of such illegality, the property registered is
deemed to be simply held in trust for the real owner by
the person in whose name it is registered, and the
former then has the right to sue for the reconveyance
of the property. The action for the purpose is also
imprescriptible.
However, there should be no debate that the action for
damages against private respondents has already
prescribed. In accordance with Article 1144 of the Civil
Code,4 it should have been brought within ten (10)
years from the date of the sale to Vicente Madrigal and
the issuance of Transfer Certificate of Title No. 72066
in his name on July 12, 1943, if against the heirs of
Vicente Madrigal; or within ten (10) years from the
date of the issuance of Transfer Certificate of Title No.
36280 in the name of Susana Realty, Inc. on May 12,
1954, if against the firm.
Notwithstanding the discussion on the
imprescriptibility of petitioners action for annulment of
contract and transfer certificate of title and/or
reconveyance, the dismissal of their complaint by the
trial court and the Court of Appeals on the ground
________________
4 Art. 1144. The following actions must be brought
within ten years from the time the right of action
accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
563
VOL. 198, JUNE 27, 1991
563
Castillo vs. Heirs of Vicente Madrigal
of failure to state a cause of action was correct. It was
also Our ruling in the Baranda case, supra, (and in
other previous cases) that only as long as the property
is still in the name of the person who caused the
wrongful registration and has not passed to an
innocent third person for value will an action lie to
compel that person to reconvey the property to the
real owner. In this regard, We are in conformity with
the Court of Appeals that (p. 52, Rollo):
x x x the property subject of the alleged fraudulent
registration had already been conveyed to an innocent
party for value which is defendant Susana Realty, Inc.
The claim of plaintiffs that said defendant is not an
150
innocent purchaser for value is not borne by the
allegations of the complaint. x x x.
Where the complaint for recovery of ownership and
possession of a parcel of land alleges that some of the
defendants bought said land from their co-defendants
who had a defective title thereto but does not allege
that the purchasers were purchasers in bad faith or
with notice of the defect in the title of their vendors,
there is a failure to state a cause of action (Galvez, et
al. v. Tuazon y de la Paz, et al., 119 Phil. 612). By
reason of this failure, private respondent Susana
Realty, Inc. is presumed to be an innocent purchaser
for value and in good faith, entitled to protection under
the law (see Tiburcio, et al. v. Peoples Homesite and
Housing Corporation, et al., 106 Phil. 477).
ACCORDINGLY, the petition is hereby DENIED. The
decision of the Court of Appeals dated August 5, 1982
is AFFIRMED, subject to the modification regarding the
issue on prescription.
SO ORDERED.
Narvasa, Cruz and Grio-Aquino, JJ., concur.
Gancayco, J., No part.
Petition denied. Judgment affirmed with modification.
Note.The prescriptive period for reconveyance of
fraudulently registered real property is ten (10) years
from date of issuance of the certificate of title. (Caro
vs. Court of Appeals, 180 SCRA 401.)
G.R. No. 97816. July 24, 1992.*
MERRILL LYNCH FUTURES, INC., petitioner, vs. HON.
COURT OF APPEALS, and the SPOUSES PEDRO M. LARA
and ELISA G. LARA, respondents.
Actions; Pleadings and Practice; Test of existence of a
cause of action.As regards the second ground, i.e.,
that the complaint states no cause of action, the
settled doctrine of course is that said ground must
appear on the face of the complaint, and its existence
may be determined only by the allegations of the
complaint, consideration of other facts being
proscribed, and any attempt to prove extraneous
circumstances not being allowed. The test of the
sufficiency of the facts alleged in a complaint as
constituting a cause of action is whether or not,
admitting the facts alleged, the court might render a
valid judgment upon the same in accordance with the
prayer of the complaint. Indeed, it is error for a judge
to conduct a preliminary hearing and receive evidence
on the affirmative defense of failure of the complaint
to state a cause of action.
Same; Same; Evidence; Documents annexed to a
motion to dismiss whose genuineness are not
contested may be admitted without need of a formal
offer.Neither may ML FUTURES argue with any
degree of tenability that it had been denied due
process in the premises. As just pointed out, it was
very clear from the outset that the claim of lack of its
capacity to sue was being made to rest squarely on
the documents annexed thereto, and ML FUTURES had
more than ample opportunity to impugn those
documents and require their authentication, but did
151
not do so. To sustain its theory that there should have
been identification and authentication, and formal
offer, of those documents in the Trial Court pursuant to
the rules of evidence would be to give unwarranted
importance to technicality and make it prevail over the
substance of the issue.
Same; Corporations; Merrill Lynch Futures, Inc. a
foreign corporation is engaged in business in the
Philippines.The Court is satisfied that the facts on
record adequately establish that ML FUTURES,
operating in the United States, had indeed done
business with the Lara Spouses in the Philippines over
several years, had done so at all times through Merrill
Lynch Philippines, Inc. (MLPI), a corporation
_________________
*SECOND DIVISION.
825
VOL. 211,JULY24,1992
825
Merrill Lynch Futures, Inc. vs. Court of Appeals
organized in this country, and had executed all these
transactions without ML FUTURES being licensed to so
transact business here, and without MLPI being
authorized to operate as a commodity futures trading
advisor. These are the factual findings of both the Trial
Court and the Court of Appeals. These, too, are the
conclusions of the Securities & Exchange Commission
which denied MLPIs application to operate as a
commodity futures trading advisor, a denial
subsequently affirmed by the Court of Appeals.
Prescinding from the proposition that factual findings
of the Court of Appeals are generally conclusive this
Court has been cited to no circumstance of substance
to warrant reversal of said Appellate Courts findings or
conclusions in this case.
Same; Same; Estoppel; A foreign corporation doing
business in the Philippines may sue in Philippine courts
although not authorized to do business here against a
Philippine citizen who had contracted with and been
benefited by said corporation.There would seem to
be no question that the Laras received benefits
generated by their business relations with ML
FUTURES. Those business relations, according to the
Laras themselves, spanned a period of seven (7)
years; and they evidently found those relations to be
of such profitability as warranted their maintaining
them for that no insignificant period of time;
otherwise, it is reasonably certain that they would
have terminated their dealings with ML FUTURES
much, much earlier. In fact, even as regards their last
transaction, in which the Laras allegedly suffered a
loss in the sum of US$160,749.69, the Laras
nonetheless still received some monetary advantage,
for ML FUTURES credited them with the amount of
US$75,913.42 then due to them, thus reducing their
debt to US$84,836.27. Given these facts, and
assuming that the Lara Spouses were aware from the
outset that ML FUTURES had no license to do business
in this country and MLPI, no authority to act as broker
for it, it would appear quite inequitable for the Laras to
152
evade payment of an otherwise legitimate
indebtedness due and owing to ML FUTURES upon the
plea that it should not have done business in this
country in the first place, or that its agent in this
country, MLPI, had no license either to operate as a
commodity and/ or financial futures broker.
PETITION for review on certiorari of the decision and
resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Sycip, Salazar, Hernandez & Gatmaitan for
petitioner.
826
826
SUPREME COURT REPORTS ANNOTATED
Merrill Lynch Futures, Inc. vs. Court of Appeals
Renato T. Paguio for private respondents.
NARVASA, C.J.:
The capacity of a foreign corporation to maintain an
action in the Philippines against residents thereof, is
the principal question in the appellate proceedings at
bar. The issue arises from the undisputed facts now to
be briefly narrated.
On November 23, 1987, Merrill Lynch Futures, Inc.
(hereafter, simply ML FUTURES) filed a complaint with
the Regional Trial Court at Quezon City against the
Spouses Pedro M. Lara and Elisa G. Lara for the
recovery of a debt and interest thereon, damages, and
attorneys fees.1 In its complaint ML FUTURES
described itself as
a) a non-resident foreign corporation, not doing
business in the Philippines, duly organized and existing
under and by virtue of the laws of the state of
Delaware, U.S.A.; as well as
b) a futures commission merchant duly licensed to
act as such in the futures markets and exchanges in
the United States, x x essentially functioning as a
broker x x (executing) orders to buy and sell futures
contracts received from its customers on U.S. futures
exchanges.
It also defined a futures contract as a contractual
commitment to buy and sell a standardized quantity of
a particular item at a specified future settlement date
and at a price agreed upon, with the purchase or sale
being executed on a regulated futures exchange.
In its complaint ML FUTURES alleged the following:
1) that on September 28, 1983 it entered into a
Futures Customer Agreement with the defendant
spouses (Account No. 138-12161), in virtue of which it
agreed to act as the latters broker for the purchase
and sale of futures contracts in the U.S.;
2) that pursuant to the contract, orders to buy and sell
futures contracts were transmitted to ML FUTURES by
the Lara Spouses through the facilities of Merrill Lynch
153
Philippines, Inc., a Philippine corporation and
company servicing plain
_________________
1The case was docketed as Civil Case No. Q-52360 and
assigned to Branch 84, presided over by Hon. Teodoro
P. Regino.
827
VOL. 211,JULY24,1992
827
Merrill Lynch Futures, Inc. vs. Court of Appeals
tiffs customers;2
3) that from the outset, the Lara Spouses knew and
were duly advised that Merrill Lynch Philippines, Inc.
was not a broker in futures contracts, and that it did
not have a license from the Securities and Exchange
Commission to operate as a commodity trading
advisor (i.e., an entity which, not being a broker,
furnishes advice on commodity futures to persons who
trade in futures contracts);
4) that in line with the above mentioned agreement
and through said Merrill Lynch Philippines, Inc., the
Lara Spouses actively traded in futures contracts,
including stock index futures for four years or so,
i.e., from 1983 to October, 1987,3 there being more or
less regular accounting and corresponding remittances
of money (or crediting or debiting made between the
spouses and ML FUTURES;
5) that because of a loss amounting to US$160,749.69
incurred in respect of three (3) transactions involving
a index futures, and after setting this off against an
amount of US$75,913.42 then owing by ML FUTURES
to the Lara Spouses, said spouses became indebted to
ML FUTURES for the ensuing balance of US$84,836.27,
which the latter asked them to pay;
6) that the Lara Spouses however refused to pay this
balance, alleging that the transactions were null and
void because Merrill Lynch Philippines, Inc., the
Philippine company servicing accounts of plaintiff, x x
had no license to operate as a `commodity and/or
financial futures broker.
On the foregoing essential facts, ML FUTURES prayed
(1) for a preliminary attachment against defendant
spouses properties up to the value of at least
P2,267,139.50, and (2) for judgment, after trial,
sentencing the spouses to pay ML FUTURES:
a) the Philippine peso equivalent of $84,836.27 at the
applicable exchanged rate on date of payment, with
legal interest from date of demand until full payment;
________________
2It appears that Merrill Lynch Philippines, Inc. was
formerly registered and known as Merrill Lynch, Pierce,
Fenner & Smith Philippines, Inc.SEE footnote 5, infra.
3The Laras say the trading was carried on for seven
(7) years.
828
828
SUPREME COURT REPORTS ANNOTATED
Merrill Lynch Futures, Inc. vs. Court of Appeals
154
b) exemplary damages in the sum of at least
P500,000.00; and
c) attorneys fees and expenses of litigation as may be
proven at the trial.
Preliminary attachment issued ex parte on December
2, 1987, and the defendant spouses were duly served
with summons.
They then filed a motion to dismiss dated December
18, 1987 on the grounds that:
(1) plaintiff ML FUTURES had no legal capacity to sue
and
(2) its complaint states no cause of action since x x
(it) is not the real party in interest
In that motion to dismiss, the defendant spouses
averred that:
a) although not licensed to do so, ML FUTURES had
been doing business in the Philippines at least for the
last four (4) years, this being clear from the very
allegations of the complaint; consequently, ML
FUTURES is prohibited by law to maintain or intervene
in any action, suit or proceeding in any court or
administrative agency of the Philippines; and
b) they had never been informed that Merrill Lynch
Philippines, Inc. was not licensed to do business in this
country; and contrary to the allegations of the
complaint, all their transactions had actually been with
MERRILL LYNCH PIERCE FENNER & SMITH, INC., and not
with ML FUTURES (Merrill Lynch Futures, Inc.), in proof
of which they attached to their motion to dismiss
copies of eight (8) agreements, receipts or reminders,
etc., executed on standard printed forms of said Merrill
Lynch Pierce Fenner & Smith Inc.4
ML FUTURES filed an OPPOSITION to the defendant
spouses motion to dismiss. In that motion
a) it drew attention to paragraph 4 of its complaint,
admitted by defendants, that the latter have been
actively trading in futures contracts x x in U.S. futures
exchanges from 1983 to 1987, and ask, If the trading
x x (was) made in U.S., how could plaintiff be doing
business in the Philippines?
_________________
4Annexes A to H.
829
VOL. 211,JULY24,1992
829
Merrill Lynch Futures, Inc. vs. Court of Appeals
b) it also drew attention to a printed form of Merrill
Lynch Futures, Inc. filled out and signed by defendant
spouses when they opened an account with ML
Futures, in order to supply information about
themselves, including their banks name
155
(1) in which appear the following epigraph: Account
introduced by Merrill Lynch International, Inc., and the
following statements, to wit:
This Commodity Trading Advisor (Merrill Lynch, Pierce,
Fenner & Smith Philippines, Inc.) is prohibited by the
Philippine Securities and Exchange Commission from
accepting funds in the trading advisors name from a
client of Merrill Lynch Futures, Inc. for trading
commodity interests. All funds in this trading program
must be placed with Merrill Lynch Futures, Inc.;
and
x x It is agreed between MERRILL LYNCH, PIERCE,
FENNER & SMITH INC., and other account carrying
MERRILL LYNCH entities and their customers that all
legal relationships between them will be governed by
applicable laws in countries outside the Philippines
where sale and purchase transactions take place.
c) and it argued that
(1) it is not permitted for defendant spouses to present
evidence in connection with a motion to dismiss
based on failure of the complaint to state a cause of
action;
(2) even if the documents appended to the motion to
dismiss be considered as admissible evidence, the
same would be immaterial since the documents refer
to a different account number: 138-12136, the
defendants account number with ML FUTURES being
138-12161;
(3) it is a lie for the defendant spouses to assert that
they were never informed that Merrill Lynch
Philippines, Inc. had not been licensed to do business
in the Philippines; and
(4) defendant spouses should not be allowed to
invoke the aid of the court with unclean hands.
The defendant spouses filed a REPLY reaffirming their
lack of awareness that Merrill Lynch Philippines, Inc.
(formerly reg-
830
830
SUPREME COURT REPORTS ANNOTATED
Merrill Lynch Futures, Inc. vs. Court of Appeals
istered as Merrill Lynch, Pierce, Fenner & Smith
Philippines, Inc.)5 did not have a license, claiming that
they learned of this only from inquiries with the
Securities and Exchange Commission which elicited
the information that it had denied said corporations
application to operate as a commodity futures trading
advisora denial subsequently affirmed by the Court
of Appeals (Merrill Lynch Philippines, Inc. v. Securities
& Exchange Commission, CA-G.R. No. 10821-SP, Nov.
19, 1987). The spouses also submitted additional
documents (Annexes J to R) involving transactions with
Merrill Lynch Pierce Fenner & Smith, Inc., dating back
to 1980, stressing that all but one of the documents
refer to Account No. 138-12161 which is the very
account that is involved in the instant complaint.
ML FUTURES filed a Rejoinder alleging it had given the
spouses a disclosure statement by which the latter
were made aware that the transactions they were
agreeing on would take place outside of the
156
Philippines, and that all funds in the trading program
must be placed with Merrill Lynch Futures, Inc.
On January 12, 1988, the Trial Court promulgated an
Order sustaining the motion to dismiss, directing the
dismissal of the case and discharging the writ of
preliminary attachment. It later denied ML FUTURESs
motion for reconsideration, by Order dated February
29, 1988. ML FUTURES appealed to the Court of
Appeals.6
In its own decision promulgated on November 27,
1990,7 the Court of Appeals affirmed the Trial Courts
judgment. It declared that the Trial Court had seen
through the charade in the representation of MLPI and
the plaintiff that MLPI is only a trading advisor and in
fact it is a conduit in the plaintiffs business
transactions in the Philippines as a basis for invoking
the provisions of Section 133 of the Corporation
Code,8 viz.:
_________________
5SEE footnote 2, supra.
6The appeal was docketed as CA-G.R. CV No. 16478.
7Written for the Seventh Division by Francisco, C.J.,
with whom concurred Lombos-de la Fuente, Chairman
and Aldecoa, Jr., J.
8The counterpart provision (Sec. 69) of the prior law,
Act No. 1459, stated that No foreign corporation or
corporation formed, or-
831
VOL. 211,JULY24,1992
831
Merrill Lynch Futures, Inc. vs. Court of Appeals
SEC.133.Doing business without a 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 in 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.
It also declared that the evidence established that
plaintiff had in fact been doing business in this
country in legal contemplation, adverting to
Mentholatum v. Mangaliman, 72 Phil. 524, 528-530,
and Section 1 of Republic Act No. 5455 reading as
follows:9
SEC.1. Definition and scope of this ACT. (1) As used in
this Act, the term investment shall mean equity
participation in any enterprise formed, organized, or
existing under the laws of the Philippines; and the
phrase doing business shall INCLUDE soliciting orders,
purchases, service contracts, opening offices, whether
called liaison offices or branches; appointing
representatives or distributors who are domiciled in
the Philippines or who in any calendar year stay in the
Philippines for a period or periods totalling one
hundred eighty days or more; participating in the
management, supervision or control of any domestic
business firm, entity or corporation in the Philippines;
157
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 FUNCTIONS NORMALLY INCIDENT
TO, AND IN PROGRESSIVE PROSECUTION OF
COMMERCIAL GAIN OR OF THE PURPOSE AND OBJECT
OF THE BUSINESS ORGANIZATION.
As regards the claim that it was error for the Trial Court
to
__________________
ganized, or existing under any laws other than those of
the Philippines, shall be permitted to transact business
in the Philippines or maintain by itself or assignee any
suit for the recovery of any debt, claim, or demand
whatever, unless it shall have the license prescribed in
the section immediately preceding. x x (italics
supplied) (although, it may be added, it may be sued
[General Corporation of the Philippines v. Union
Insurance Society of Canton, Ltd., 87 Phil. 313
(1950)]).
9Emphasis supplied by Francisco, C.J., ponente.
832
832
SUPREME COURT REPORTS ANNOTATED
Merrill Lynch Futures, Inc. vs. Court of Appeals
place reliance on the decision of the Court of Appeals
in CA-G.R. No. 10821-SPsustaining the finding of the
Securities & Exchange Commission that ML FUTURES
was doing business in the Philippinessince that
judgment was not yet final and ML FUTURES was not a
party to that proceeding, the Court of Appeals ruled
that there was no need to belabor the point
considering that there was, in any event, adequate
proof of the activities of MLPI x x x which manifestly
show that the plaintiff (ML FUTURES) performed a
series of business acts, consummated contracts and
undertook transactions for the period from 1983 to
October 1987, and because ML FUTURES had done so
without license, it consequently had no legal
personality to bring suit in Philippine Courts.
Its motion for reconsideration having been denied,10
ML FUTURES has appealed to this Court on certiorari.
Here, it submits the following issues for resolution:
(a) Whether or not the annexes appended by the
Laras to their Motion to Dismiss and Reply filed with
the Regional Trial Court, but never authenticated or
offered, constitute admissible evidence.
(b) Whether or not in the proceedings below, ML
FUTURES has been accorded procedural due process.
(c) Whether or not the annexes, assuming them to be
admissible, established that ML FUTURES was doing
business in the Philippines without a license.
As just stated, the Lara Spouses motion to dismiss
was founded on two (2) grounds: (a) that the plaintiff
has no legal capacity to sue, and (b) that the
complaint states no cause of action (Sec. 1 [d], and
[g], Rule 16, Rules of Court).
As regards the second ground, i.e., that the complaint
states no cause of action, the settled doctrine of
158
course is that said ground must appear on the face of
the complaint, and its existence may be determined
only by the allegations of the complaint, consideration
of other facts being proscribed, and any attempt to
prove extraneous circumstances not being al-
_________________
10Per Resolution dated March 7, 1991, which also
directed (the Trial Court) to hear and resolve
appellees application for damages on the appellants
attachment bond.
833
VOL. 211,JULY24,1992
833
Merrill Lynch Futures, Inc. vs. Court of Appeals
lowed.11 The test of the sufficiency of the facts
alleged in a complaint as constituting a cause of action
is whether or not, admitting the facts alleged, the
court might render a valid judgment upon the same in
accordance with the prayer of the complaint.12
Indeed, it is error for a judge to conduct a preliminary
hearing and receive evidence on the affirmative
defense of failure of the complaint to state a cause of
action.13
The other ground for dismissal relied upon, i.e., that
the plaintiff has no legal capacity to suemay be
understood in two senses: one, that the plaintiff is
prohibited or otherwise incapacitated by law to
institute suit in Philippine Courts,14 or two, although
not otherwise incapacitated in the sense just stated,
that it is not a real party in interest.15 Now, the Lara
Spouses
_________________
11SEE Feria, Civil Procedure, 1969 ed., pp. 342-344,
citing Paminsan v. Costales, 28 Phil. 487, 489; De
Jesus, et al. v. Belarmino, et al., 95 Phil. 365;
Worldwide Insurance & Surety Co., Inc. vs. Manuel, 98
Phil. 47); Worldwise Insurance & Surety Co. v.
Macrohon, et al., G.R. No. L-12365, Feb. 28, 1989;
Dimayuga v. Dimayuga, 96 Phil. 859, 862; Ma-ao Sugar
Central v. Barrios, 79 Phil. 666; Uy Hoo v. Yuseco, 89
Phil. 944; Aranzanso v. Martinez, 88 Phil. 536; SEE,
also, Moran, Comments on the Rules of Court, 1979
ed., Vol. 1, pp. 490-493, with voluminous citations.
12Feria,op. cit., p. 342.
13Moran,op cit., pp. 491-492, citing Heirs or Juliana
Clavano v. Genato, G.R. No. L-45837, Oct. 28, 1977; cf.,
Aranzanso v. Martinez, 88 Phil. 536, cited in Feria, op.
cit., p. 344.
14I.e., Section 133 of the Corporation Code, supra (SEE
General Corporation of the Philippines v. Union
Insurance Society of Canton, Ltd., 87 Phil. 313); or he
does not have the necessary qualifications to appear
at the trial, such as when he is not in the full exercise
of his civil rights (Lunsod v. Ortega, 46 Phil. 664, cited
in Feria, Civil Procedure, 1969 ed., pp. 316-317)
15SEC. 2, Rule 3 of the Rules of Court provides that
Every action must be prosecuted and defended in the
name of the real party in interest. All persons having
an interest in the subject of the action and in obtaining
159
the relief demanded shall be joined as plaintiffs. All
persons who claim an interest in the controversy
adverse to the plaintiff or who are necessary to a
complete determination or settlement of the question
involved therein shall be joined as defendants. The
real party in interest is the party who would be
benefited or
834
834
SUPREME COURT REPORTS ANNOTATED
Merrill Lynch Futures, Inc. vs. Court of Appeals
contend that ML Futures has no capacity to sue them
because the transactions subject of the complaint
were had by them, not with the plaintiff ML FUTURES,
but with Merrill Lynch Pierce Fenner & Smith, Inc.
Evidence is quite obviously needed in this situation, for
it is not to be expected that said ground, or any facts
from which its existence may be inferred, will be found
in the averments of the complaint. When such a
ground is asserted in a motion to dismiss, the general
rule governing evidence on motions applies. The rule is
embodied in Section 7, Rule 133 of the Rules of Court.
SEC.7. Evidence on motion.When a motion is based
on facts not appearing of record the court may hear
the matter on affidavits or depositions presented by
the respective parties, but the court may direct that
the matter be heard wholly or partly on oral testimony
or depositions.
There was, to be sure, no affidavit or deposition
attached to the Lara Spouses motion to dismiss or
thereafter proffered in proof of the averments of their
motion. The motion itself was not verified. What the
spouses did do was to refer in their motion to
documents which purported to establish that it was not
with ML FUTURES that they had theretofore been
dealing, but another, distinct entity, Merrill Lynch,
Pierce, Fenner & Smith, Inc., copies of which
documents were attached to the motion. It is
significant that ML FUTURES raised no issue relative to
the authenticity of the documents thus annexed to the
Laras motion. In fact, its arguments subsumed the
genuineness thereof and even adverted to one or two
of them. Its objection was centered on the propriety of
taking account of those documents as evidence,
considering the established principle that no evidence
should be received in the resolution of a
_________________
injured by the judgment, or the party entitled to the
avails of the suit (1 Sutherland, Code Pleading
Practice & Forms, p. 11) (Salonga v. Warner, Barnes &
Co., Ltd., 88 Phil. 125, cited in Feria, op. cit., p. 139).
SEE, also, Moran, op. cit., p. 154; and Lunsod v.
Ortega, supra, holdinginter alia that a plaintiff has no
legal capacity to sue when he does not have the
character or representation he claims, which is a
matter of evidence.
835
VOL. 211,JULY24,1992
835
160
Merrill Lynch Futures, Inc. vs. Court of Appeals
motion to dismiss based on an alleged failure of the
complaint to state a cause of action.
There being otherwise no question respecting the
genuineness of the documents, nor of their relevance
to at least one of the grounds for dismissali.e., the
prohibition on suits in Philippine Courts by foreign
corporations doing business in the country without
licenseit would have been a superfluity for the Court
to require prior proof of their authenticity, and no error
may be ascribed to the Trial Court in taking account of
them in the determination of the motion on the
ground, not that the complaint fails to state a cause of
actionas regards which evidence is improper and
impermissiblebut that the plaintiff has no legal
capacity to suerespecting which proof may and
should be presented.
Neither may ML FUTURES argue with any degree of
tenability that it had been denied due process in the
premises. As just pointed out, it was very clear from
the outset that the claim of lack of its capacity to sue
was being made to rest squarely on the documents
annexed thereto, and ML FUTURES had more than
ample opportunity to impugn those documents and
require their authentication, but did not do so. To
sustain its theory that there should have been
identification and authentication, and formal offer, of
those documents in the Trial Court pursuant to the
rules of evidence would be to give unwarranted
importance to technicality and make it prevail over the
substance of the issue.
The first question then, is, as ML FUTURES formulates
it, whether or not the annexes, assuming them to be
admissible, establish that (a) ML FUTURES is prohibited
from suing in Philippine Courts because doing business
in the country without a license, and that (b) it is not a
real party in interest since the Lara Spouses had not
been doing business with it, but with another
corporation, Merrill Lynch, Pierce, Fenner & Smith, Inc.
The Court is satisfied that the facts on record
adequately establish that ML FUTURES, operating in
the United States, had indeed done business with the
Lara Spouses in the Philippines over several years, had
done so at all times through Merrill Lynch Philippines,
Inc. (MLPI), a corporation organized in this country,
and had executed all these transactions without ML
836
836
SUPREME COURT REPORTS ANNOTATED
Merrill Lynch Futures, Inc. vs. Court of Appeals
FUTURES being licensed to so transact business here,
and without MLPI being authorized to operate as a
commodity futures trading advisor. These are the
factual findings of both the Trial Court and the Court of
Appeals. These, too, are the conclusions of the
Securities & Exchange Commission which denied
MLPIs application to operate as a commodity futures
trading advisor, a denial subsequently affirmed by the
Court of Appeals. Prescinding from the proposition that
factual findings of the Court of Appeals are generally
conclusive this Court has been cited to no
161
circumstance of substance to warrant reversal of said
Appellate Courts findings or conclusions in this case.
The Court is satisfied, too, that the Laras did transact
business with ML FUTURES through its agent
corporation organized in the Philippines, it being
unnecessary to determine whether this domestic firm
was MLPI (Merrill Lynch Philippines, Inc.) or Merrill
Lynch Pierce Fenner & Smith (MLPIs alleged
predecessor). The fact is that ML FUTURES did deal
with futures contracts in exchanges in the United
States in behalf and for the account of the Lara
Spouses, and that on several occasions the latter
received account documents and money in connection
with those transactions.
Given these facts, if indeed the last transaction
executed by ML FUTURES in the Larass behalf had
resulted in a loss amounting to US$160,749,69; that in
relation to this loss, ML FUTURES had credited the
Laras with the amount of US$75,913.42which it (ML
FUTURES) then admittedly owed the spousesand
thereafter sought to collect the balance,
US$84,836.27, but the Laras had refused to pay (for
the reasons already above stated), the crucial question
is whether or not ML FUTURES may sue in Philippine
Courts to establish and enforce its rights against said
spouses, in light of the undeniable fact that it had
transacted business in this country without being
licensed to do so. In other words, if it be true that
during all the time that they were transacting with ML
FUTURES, the Laras were fully aware of its lack of
license to do business in the Philippines, and in
relation to those transactions had made payments to,
and received money from it for several years, the
question is whether or not the Lara Spouses are now
estopped to impugn ML FUTURES capacity to sue
them in the courts of the forum.
837
VOL. 211,JULY24,1992
837
Merrill Lynch Futures, Inc. vs. Court of Appeals
The rule is that a party is estopped to challenge the
personality of a corporation after having acknowledged
the same by entering into a contract with it.16 And the
doctrine of estoppel to deny corporate existence
applies to foreign as well as to domestic
corporations;17 one who has dealt with a corporation
of foreign origin as a corporate entity is estopped to
deny its corporate existence and capacity.18 The
principle will be applied to prevent a person
contracting with a foreign corporation from later taking
advantage of its noncompliance with the statutes,
chiefly in cases where such person has received the
benefits of the contract (Sherwood v. Alvis, 83 Ala 115,
3 So 307, limited and distinguished in Dudley v. Collier,
84 Ala 431, 6 So. 304; Spinney v. Miller, 114 Iowa 210,
86 NW 317), where such person has acted as agent for
the corporation and has violated his fiduciary
obligations as such, and where the statute does not
provide that the contract shall be void, but merely
fixes a special penalty for violation of the statute. x
x.19
162
The doctrine was adopted by this Court as early as
1924 in Asia Banking Corporation v. Standard Products
Co.,20 in which the following pronouncement was
made:21
The general rule that in the absence of fraud of
person who has contracted or otherwise dealt with an
association in such a way as to recognize and in effect
admit its legal existence as a corporate body is
thereby estopped to deny its corporate existence in
any action leading out of or involving such contract or
dealing, unless its existence is
_________________
16SEE Ohta Development Co. v. Steamship Pompey,
et al., 49 Phil. 117, 120 (1926); Asia Banking
Corporation v. Standard Products Co., 46 Phil. 144
(1924).
1714 C.J. 227.
1836 Am. Jur. 2d, pp. 296-297, although there is
authority that said doctrine does not, by analogy,
require that such person be held estopped to deny that
the corporation has complied with the local statutes
imposing conditions, restrictions, and regulations on
foreign corporations and that it has acquired thereby
the right to do business in the state.
19Ibid.
2046 Phil. 144 (1924), supra.
21Italics supplied.
838
838
SUPREME COURT REPORTS ANNOTATED
Merrill Lynch Futures, Inc. vs. Court of Appeals
attacked for causes which have arisen since making
the contract or other dealing relied on as an estoppel
and this applies to foreign as well as domestic
corporations. (14 C.J. 227; Chinese Chamber of
Commerce vs. Pua Te Ching, 14 Phil. 222).
There would seem to be no question that the Laras
received benefits generated by their business relations
with ML FUTURES. Those business relations, according
to the Laras themselves, spanned a period of seven (7)
years; and they evidently found those relations to be
of such profitability as warranted their maintaining
them for that no insignificant period of time;
otherwise, it is reasonably certain that they would
have terminated their dealings with ML FUTURES
much, much earlier. In fact, even as regards their last
transaction, in which the Laras allegedly suffered a
loss in the sum of US$160,749.69, the Laras
nonetheless still received some monetary advantage,
for ML FUTURES credited them with the amount of
US$75,913.42 then due to them, thus reducing their
debt to US$84,836.27. Given these facts, and
assuming that the Lara Spouses were aware from the
outset that ML FUTURES had no license to do business
in this country and MLPI, no authority to act as broker
for it, it would appear quite inequitable for the Laras to
evade payment of an otherwise legitimate
indebtedness due and owing to ML FUTURES upon the
plea that it should not have done business in this
country in the first place, or that its agent in this
163
country, MLPI, had no license either to operate as a
commodity and/or financial futures broker.
Considerations of equity dictate that, at the very least,
the issue of whether the Laras are in truth liable to ML
FUTURES and if so in what amount, and whether they
were so far aware of the absence of the requisite
licenses on the part of ML FUTURES and its Philippine
correspondent, MLPI, as to be es-topped from alleging
that fact as a defense to such liability, should be
ventilated and adjudicated on the merits by the proper
trial court.
WHEREFORE, the decision of the Court of Appeals in
CA-G.R. CV No. 16478 dated November 27, 1990 and
its Resolution of March 7, 1991 are REVERSED and SET
ASIDE, and the Regional Trial Court at Quezon City,
Branch 84, is ORDERED to reinstate Civil Case No. Q-
52360 and forthwith conduct a hear-
839
VOL. 211,JULY27,1992
839
Mendoza vs. Mala
ing to adjudicate the issues set out in the preceding
paragraph on the merits.
SO ORDERED.
Padilla, Regalado and Nocon, JJ., concur.
Paras, J., Retired as of July 4, 1992.
Decision and resolution reversed and set aside.
Note.A foreign corporation not licensed to do
business in the Philippines is not altogether prohibited
from giving or maintaining an action in Philippine
Courts (Hang Lung Bank, Ltd. vs. Saulog, 201 SCRA
137).
G.R. No. 87678. June 16, 1992.*
DEL BROS HOTEL CORPORATION, petitioner, vs. HON.
COURT OF APPEALS, and LEON M. TIAMSAY,
respondents.
Actions; Pleadings and Practice; Test of sufficiency of
statement of cause of action.This Court has
repeatedly emphasized that the test of the sufficiency
of the facts alleged in a complaint is whether or not,
admitting the facts alleged, the court can render a
valid judgment upon the same in accordance with the
prayer of the plaintiff. Stated otherwise, the
insufficiency of the cause of action must appear on 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. 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.
Same; Same; Elements of a cause of action.A cause
of action has three elements, namely: 1) a right in
favor of the plaintiff by whatever means and under
whatever law it arises or is created; 2) an obligation on
the part of the named defendant to respect or not to
violate such right; and 3) an act or omission on the
164
part of such defendant violative of the right of the
plaintiff or constituting a breach of the obligation of
the defendant to the plaintiff.
Same; Same; A complaint does not have to establish
the facts proving a cause of action.The plaintiff adds
that he made a request for the payment of his
commission and the defendant initially manifested its
willingness to submit the matter to arbitration. Nothing
came out of it, however, prompting him to serve
demands on the defendant, which ignored the same in
bad faith. For all this, he seeks payment not only of the
commission but also moral and exemplary damages,
attorneys fees and the costs of the suit. In the view of
this Court, these allegations sufficiently state a cause
of action. 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
________________
* FIRST DIVISION.
34
34
SUPREME COURT REPORTS ANNOTATED
Del Bros Hotel Corporation vs. Court of Appeals
of Court provides that this petition must be limited to
a concise statement of the ultimate facts constituting
the plaintiffs cause or causes of action. We find that
the amended complaint complies with this
requirement.
PETITION for review of the decision of the Court of
Appeals.
The facts are stated in the opinion of the Court.
Sycip, Salazar, Hernandez & Gatmaitan for
petitioner.
Gozon, Fernandez, Defensor & Parel for private
respondent.
CRUZ, J.:
By virtue of an Agreement concluded on or about May
9, 1984, herein petitioner Delgado Brothers Hotel
Corp. (DBHC) engaged private respondent Leon H.
Tiamsay as its consultant to negotiate: (a) the sale of
the DBC hotel building located at the corner of Maria
Orosa and UN Ave., Ermita, Manila; (b) the
management agreement between DHC and Hilton
International; and (c) the sale of the DHC shares.1
The Agreement specifically provided:
1. DHC (Delbros Hotel Corporation, petitioner herein)
hereby appoints Consultant as DHCs consultant. As
consultant of DHC, the Consultant will (a) negotiate
with the GSIS and/or other financial institutions or
corporations for the sale to the GSIS and/or other
financial institution or corporation of the entire
building owned by DHC situated at the Corner of Maria
Orosa and United Nations Avenue, Ermita, Manila,
which is presently used as a five-star hotel managed
and operated by Hilton International, under the
165
parameters to be specified in writing by the Chairman
of the Board of DHC; (b) negotiate with the said Hilton
International the existing Management Agreement
between DHC and Hilton International for the purpose
of raising the ceiling of the share of DHC in the Gross
Operating Profit from P7 million to P10 million and in
the event that Consultant is unsuccessful in this regard
then Consultant will try to work out or negotiate for the
termination of the DHC-Hilton International
Management Agreement under the parameters
specified in writing by the
________________
1 Annex C, Rollo, p. 38.
35
VOL. 210, JUNE 16, 1992
35
Del Bros Hotel Corporation vs. Court of Appeals
Chairman of the Board of DHC; and (c) negotiate with
prospective buyers for the acquisition of DHC shares.
xxx
3. Consultant shall be paid by DHC the following
compensation, fees or commission:
a) For the sale of DHC building, Consultant will be paid
a compensation/commission by DHC equal to five
percent (5%) of the purchase price for the said
building. Documentation costs will be for the account
of DHC.
b) For the amendment of the Management Agreement
between DHC and Hilton International or termination of
said agreement, Consultant will be paid by DHC a
compensation/fee equivalent to the Central Bank Peso
value of US$125,000.00 at the time of payment. It is
understood that this compensation/fee is exclusive of
the costs of negotiations to be incurred by Consultant,
such as first class transportation, hotel and other
travelling expenses and documentation costs, which
shall be for the account of DHC. The incurring of such
costs shall be subject to the prior approval of the
Chairman of the Board of DHC, which approval shall
not be unreasonably withheld.
4. The fee or commission of Consultant shall be
promptly paid by DHC to Consultant as follows:
a) Fifty percent (50%) of the amount agreed, upon
completion and signing of the basic agreement
covering any or all of the work assignments of
Consultant; and
b) The balance of fifty percent (50%) of the amount
agreed, upon completion and execution of all the
documents required to be executed covering the
transaction.
c) The fee or commission of Consultant shall be paid
by DHC to the Consultant in cash.
5. DHC shall advance to Consultant Forty Thousand
Pesos (P40,000.00) Philippine currency per month,
payable within the first five (5) days of each month,
during the effectivity of this agreement or any
extension thereof. The total amount of such advances
paid by DHC to Consultant shall be deducted from the
fee or commission payable by DHC to Consultant. In
the event of an unsuccessful implementation of all the
166
undertakings of consultant after consistent and
continuing efforts, the advances already paid to
Consultant shall not be subject to reimbursement by
the Consultant and will be treated as an expense of
DHC.
36
36
SUPREME COURT REPORTS ANNOTATED
Del Bros Hotel Corporation vs. Court of Appeals
On July 27, 1987, Tiamsay filed a complaint against
DHC. This was amended on August 19, 1987. The
plaintiff sought the recovery from the defendant of the
sum of P1,549,118.65 as his commission for the sale of
the DBC hotel building, in accordance with their
Agreement. It was alleged that DHC had continuously
refused to pay him the said amount despite demands
and thereby incurred liability not only for the said
amount but also for moral and exemplary damages,
attorneys fees and costs.2
On September 18, 1987, DHC moved to dismiss the
amended complaint for failure to state a cause of
action. The motion averred that there was no
allegation in the said complaint that the sale of the
DBC hotel building, which was the condition sine qua
non set forth in the Agreement for its obligation to pay
the commission, had been consummated.3
On November 23, 1987, the Regional Trial Court of
Makati, through Judge Consuelo Ynares Santiago,
denied the motion thus:
x x x Plaintiff has sufficiently alleged the existence of a
contract between him and the defendants, that the
said contract calls for the performance of certain acts
by the plaintiff which he allegedly was able to comply
with, and that for such performance he is entitled to
some compensation, that defendant has failed to
compensate plaintiff for the performance of such acts
despite demand for payment.
It is settled that for the purpose of determining the
sufficiency of a cause of action, trial courts do not go
beyond what is called in the pleadings. The truth of
what is alleged in the complaint is hypothetically taken
as established and on that basis the court determines
whether it can render a valid judgment and this court
believes it can.
On January 6, 1989, this order was affirmed by the
Court of Appeals, which disagreed with the petitioners
argument that the amended complaint was deficient.
In upholding the trial court, the Court of Appeals
observed inter alia that there was reason to
presumptively conclude that Tiamsay was entitled to
the payment of 50% of the commission as provided for
in Par.
________________
2 Annex D, Ibid., p. 49.
3 Annex E, Id., pp. 52-57.
37
VOL. 210, JUNE 16, 1992
37
167
Del Bros Hotel Corporation vs. Court of Appeals
4(a) even before the occurrence of the conditions
contemplated in Par. 4(b), to wit, the completion and
signing of all the documents covering the transaction
that were required to be executed.4
DHC is now before this Court to seek relief from that
decision.
In this petition, DHC contends that in finding that the
complaint stated a cause of action, the respondent
court misappreciated Secs. 4(a) and (b) of the
Agreement.
DHC argues that it is not Sec. 4(a) that governs the
case but Sec. 5 of the Agreement, which reads:
5. DHC shall advance to Consultant Forty Thousand
Pesos (P40,000.00) Philippine currency per month,
payable within the first five (5) days of each month,
during the effectivity of this agreement or any
extension thereof. The total amount of such advances
paid by DHC to Consultant shall be deducted from the
fee or commission payable by DHC to Consultant. In
the event of an unsuccessful implementation of all of
the undertakings of Consultant after consistent and
continuing efforts, the advances already paid to
Consultant, shall not be subject to reimbursement by
the Consultant and will be treated as an expense of
DHC. (Agreement of March 1984)
The petitioner maintains that, contrary to Tiamsays
claim, Secs. 4(a) and (b) apply only when there is a
consummated sale of the subject property. If such sale
is not effected, it is Sec. 5 that determines the
obligations of the parties.
Sec. 5 provides that for the private respondents effort
to negotiate with the GSIS for the sale of the Hilton
Hotel, he shall be paid an advance of P40,000.00 per
month while the agreement is in force. If the purchase
is effected, Sec. 4(a) and (b), providing for the
payment of a sale commission, shall then apply. The
commission (equal to 5% of whatever is the final price
paid) shall become due in two 50% installments. The
monthly advances already paid to the private
respondent under Sec. 5 shall be considered part of
the final commission due.
The petitioner stresses that it is impossible to
implement Sec. 4(a) without an actual sale having
been consummated
________________
4 Annex A, Id., p. 35.
38
38
SUPREME COURT REPORTS ANNOTATED
Del Bros Hotel Corporation vs. Court of Appeals
because there would be no purchase price to use as
basis for computing the stipulated 5% commission.
For his part, the private respondent maintains that as a
consultant and not as a real estate broker, his duty
was merely to negotiate with the GSIS and/or other
financial institutions for the sale of the hotel building.
There is nothing in the Agreement requiring
consummation of the sale before he can be
compensated for his efforts as consultant.
168
He points out that the basic service referred to in the
Agreement has been accomplished, as evidenced by a
GSIS Board approval of the sale. For him to be able to
recover under Par. 4(a), it is not necessary that the
final sale documents be executed since this
requirement would fall under par. 4(b).
The Court has considered the arguments of the parties
and finds that there is a necessity to define the real
issue in contention and, as it were, put the parties on
the right track.
The only issue to be resolved in this petition is whether
or not the amended complaint as worded states a
cause of action. We are not concerned at this time with
the proof of that cause of action. Our only concern now
is whether or not this cause of action has been
sufficiently stated by the allegations in the amended
complaint.
This Court has repeatedly emphasized that the test of
the sufficiency of the facts alleged in a complaint is
whether or not, admitting the facts alleged, the court
can render a valid judgment upon the same in
accordance with the prayer of the plaintiff. Stated
otherwise, the insufficiency of the cause of action must
appear on 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. 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.5
________________
5 Garcon vs. Redemptorist Fathers, 17 SCRA 341;
Zobel vs. Abreu, 98 Phil. 343.
39
VOL. 210, JUNE 16, 1992
39
Del Bros Hotel Corporation vs. Court of Appeals
In the case before us, it is necessary to read the
allegations in the complaint as hypothetically admitted
with the provisions of the Agreement concluded by the
petitioner and the private respondent.
Under Par. 3 of the Agreement, the private respondent
is to be paid the following compensation, fee or
commission:
a) For the sale of DHC building, Consultant will be paid
a compensation/commission by DHC equal to five
percent (5%) of the purchase price for the said
building. Documentation costs will be for the account
of DHC.
b) For the amendment of the Management Agreement
between DHC and Hilton International or termination of
said agreement, Consultant will be paid by DHC a
compensation/fee equivalent to the Central Bank Peso
value of US$125,000.00 at the time of payment. It is
understood that this compensation/fee is exclusive of
the costs of negotiations to be incurred by Consultant,
such as first class transportation, hotel and other
169
travelling expenses and documentation costs, which
shall be for the account of DHC. The incurring of such
costs shall be subject to the prior approval of the
Chairman of the Board of DHC, which approval shall
not be unreasonably withheld.
Under Par. 4, payment is to be made in the following
manner:
a) Fifty percent (50%) of the amount agreed, upon
completion and signing of the basic agreement
covering any or all of the work assignments of
Consultant; and
b) The balance of fifty percent (50%) of the amount
agreed, upon completion and execution of all the
documents required to be executed covering the
transaction.
c) The fee or commission of Consultant shall be paid
by DHC to the Consultant in cash.
Par. 5 of the Agreement also provides for the monthly
advances to be made to the private respondent, as
follows:
5. DHC shall advance to Consultant Forty Thousand
Pesos (P40,000.00) Philippine currency per month,
payable within the first five (5) days of each month,
during the effectivity of this agreement or any
extension thereof. The total amount of such advances
paid by
40
40
SUPREME COURT REPORTS ANNOTATED
Del Bros Hotel Corporation vs. Court of Appeals
DHC to Consultant shall be deducted from the fee or
commission payable by DHC to Consultant. In the
event of an unsuccessful implementation of all of the
undertakings of Consultant after consistent and
continuing efforts, the advances already paid to
Consultant shall not be subject to reimbursement by
the Consultant and will be treated as an expense of
DHC.
In connection with these stipulations, the following
allegations were made in the amended complaint:
5. Notwithstanding the arrival of the expiry date of the
Agreement as extended by the Board Resolution of 27
March 1985, the parties continued to honor their
contractual commitments under the Agreement with
defendant delivering the advances due plaintiff and
plaintiff performing his duties and/or services as
provided for in the Agreement.
As a result, the following were accomplished:
a) By GSIS Board Resolution No. 143 dated 7 February
1985, GSIS approved the proposal of defendant made
through plaintiff for the sale and/or lease-purchase of
the Manila Hilton International Hotel Building and
major equipment owned by defendant to the GSIS;
Copy of Board Resolution No. 143 is herewith attached
as Annex B.
b) By GSIS Board Resolution No. 446 dated 17 May
1985, the GSIS approved the request of the defendant
made through the plaintiff for the amendment of
Resolution No. 143 with respect to the yield from
rentals.
170
Copy of Board Resolution No. 446 is herewith attached
as Annex C.
5.1. From May 1985 to December 1985 and without
plaintiffs fault, defendant delayed the drafting and
execution of the agreements with the GSIS. Without
defendants delay, the agreements with the GSIS could
have been executed by the earlier part of the period
from May to December 1985 pursuant to the GSIS
Board resolutions.
5.1.2. By December of 1985, however, the drafts of the
agreements arising out of the negotiations with the
GSIS were finalized (hereinafter referred to as the
December 1985 drafts).
Copies of the December 1985 drafts of the agreements
are herewith attached as Annexes D and E. (There
is no Annex F.) Both should properly refer to the date
of January 1986, January 1985 of the other Agreement
being mere typographical
41
VOL. 210, JUNE 16, 1992
41
Del Bros Hotel Corporation vs. Court of Appeals
error.
5.2. Subsequently, the GSIS board of trustees was
recognized after February 1986 and a new set of top
officers of the said corporation reviewed the position of
their predecessors.
6. Plaintiff likewise performed his other commitments
under the Agreement. He negotiated with HI to raise
the ceiling of the share of defendant in the Gross
Operating Profit. Subsequently, he negotiated for the
amicable termination of the management agreement
by and between defendant and HI. He continued to
perform services for defendant in the court case for
the termination of the said agreement pending
between defendant and HI.
A cause of action has three elements, namely: 1) a
right in favor of the plaintiff by whatever means and
under whatever law it arises or is created; 2) an
obligation on the part of the named defendant to
respect or not to violate such right; and 3) an act or
omission on the part of such defendant violative of the
right of the plaintiff or constituting a breach of the
obligation of the defendant to the plaintiff.6
The Court has carefully examined the amended
complaint and finds that it alleges all the above-stated
elements. The plaintiff avers that he was engaged
under the Agreement to perform certain tasks, among
them the negotiation for the sale of the defendants
building, for which he was to be paid a specified
commission if he succeeded. He claims he did succeed
in these negotiations with the approval by the GSIS
board of directors of the sale as proposed by him on
behalf of the defendant. If the sale did not materialize,
it was because of the defendants delay, which
prevented the signing of the basic agreements until
the transaction fell through with the reorganization of
the GSIS board of directors. The plaintiff adds that he
made a request for the payment of his commission
and the defendant initially manifested its willingness to
submit the matter to arbitration. Nothing came out of
171
it, however, prompting him to serve demands on the
defendant, which ignored the same in bad faith. For all
this, he seeks payment not only of the commission but
also moral and exemplary damages, attorneys
________________
6 Cole vs. Gregorio, 116 SCRA 670; Nabus vs. Court of
Appeals, G.R. No. 91670, February 7, 1991.
42
42
SUPREME COURT REPORTS ANNOTATED
Del Bros Hotel Corporation vs. Court of Appeals
fees and the costs of the suit.
In the view of this Court, these allegations sufficiently
state a cause of action. 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.7 Rule 6, Section 3 of the Rules of Court
provides that this petition must be limited to a
concise statement of the ultimate facts constituting
the plaintiffs cause or causes of action. We find that
the amended complaint complies with this
requirement.
To repeat, the main contention of the petitioner in
moving to dismiss the amended complaint for failure
to state a cause of action is that no final documents of
sale had been signed because the proposal approved
by the GSIS board of directors was not in conformity to
the conditions laid down by its own board of directors.
And as no sale had been consummated, the private
respondent is not entitled to any commission, which in
fact cannot be ascertained as it is supposed to be 5%
of a nonexistent purchase price.
These are matters of defense not proper in a motion to
dismiss for failure to state a cause of action. They
should be pleaded in the answer, to be resolved after
the trial on the basis of the arguments and evidence
submitted by the parties. The only question presented
by the motion to dismiss is the sufficiency of the
allegations in the complaint which, for purposes of the
motion, are deemed hypothetically admitted. It bears
stressing that the test of the sufficiency is whether or
not, assuming them to be true, a valid judgment can
be rendered thereon by the trial court. In the
affirmative case, the motion to dismiss must be
denied. As this Court has held, 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.8
This dictum is in line with the policy that motions to
dismiss
________________
7 Rule 8, Section 1, Rules of Court.
8 Republic Bank vs. Cuaderno, 19 SCRA 677; Boncato
vs. Siason, 138 SCRA 414; Sumalinog vs. Doronio, 184
SCRA 187.
43
172
VOL. 210, JUNE 16, 1992
43
Del Bros Hotel Corporation vs. Court of Appeals
should not be lightly granted where the ground
invoked is not indubitable, as in the case before us. In
such situation, the objections to the complaint must be
embodied in the answer as denials or special and
affirmative defenses and threshed out in a full-blown
trial on the merits. As the Court of Appeals correctly
concluded:
The question of whether private respondent had in fact
performed these and the other functions incumbent on
him under the agreement is one that has no bearing
on the sufficiency of the cause of action or the lack of
it. Private respondent alleged he had and the question
has therefore become a matter of proof, and one that
cannot be determined in a motion to dismiss; it
requires full-dress proceedings.
The parties have gone to great lengths in analyzing
the provisions of the Agreement in support of their
respective positions, but there was really no need to
do so in the present petition. There will be time
enough for that in the lower court after responsive
pleadings are filed and issues are joined for eventual
trial of the case.
We are convinced that the allegations in the amended
complaint, assuming them to be true, are sufficient to
state a cause of action against the petitioner. We
therefore hold that the respondent court did not err in
affirming the order of the lower court denying the
motion to dismiss.
ACCORDINGLY, the petition is DENIED, with costs
against the petitioner. It is so ordered.
Grio-Aquino, Medialdea and Bellosillo, JJ., concur.
Petition denied.
Note.A cause of action is the delict or wrong by
which the rights of the plaintiff are violated by the
defendant (Bataan Hardwood Corp. vs. Dy Pac and Co.,
43 SCRA 450).
o0o
G.R. No. L-12602 April 25, 1961
LUIS PINEDA, plaintiff-appellee,
vs.
COURT OF FIST INSTANCE OF DAVAO, ERIBERTO
UNSON, in his capacity as Provincial Sheriff Ex-Oficio of
Davao and POTENCIANA PLANDO, defendants-
appellants.
Zuno and Catil for plaintiff-appellee.
Rodolfo A. Ta-asan for defendants-appellants.
CONCEPCION, J.:
Appeal by the defendants from a decision of the Court
of First Instance of Davao, the dispositive part of which
reads:
173
IN VIEW OF THE FOREGOING, this Court annuls that
portion of the decision of this Court in Civil Case No.
959 dated June 16, 1953, declaring the plaintiff therein
as lawful owner of the property under litigation
together with the improvements thereon, subject to
the final disposition of the same by the Bureau of
Lands and the Department of Agriculture and Natural
Resources in accordance with the provisions of law,
without special pronouncement as to costs.
Consequently, the execution of the decision insofar as
that part of the same where the plaintiff was declared
owner in that Civil Case No. 959, is hereby nullified.
It appears that on or about November 29, 1952,
Potenciana Plando filed with the Court of First Instance
of Davao a complaint (Exhibits C-4 to C-6), which was
docketed as Civil Case No. 959 of said court, against
Luis Pineda and Bruno Ramirez. Potenciana Plando
alleged in said pleading that she was the surviving
spouse and only heir of the deceased Domingo
Ramirez, who, in life, was the actual possessor of a
parcel of land situated in Lasang, formerly municipality
of Tagum, now Panabo, Province of Davao, and more
particularly described in the complaint; that said land
was covered by Homestead Application No. 166166 (E-
77371), in the name of said deceased, which had been
approved by the Director of Lands on December 18,
1930; that, by virtue of an order of this officer, dated
November 18, 1932, for the "issuance of patent", the
rights to and interests in said land became definitely
vested in Domingo Ramirez; that upon his death, such
rights and interests were transmitted, by operation of
law, to Potenciana Plando; that said land had been
jointly occupied and cultivated by her and Domingo
Ramirez, during his lifetime, since early in 1930 until
sometime in 1948, and had become improved and
productive through their common efforts; that, in
1948, Luis Pineda and Bruno Ramirez took material
possession of said land illegally and in bad faith,
thereby excluding her from the possession and
enjoyment thereof, despite her repeated demands that
they vacate said property, which they refused to do;
and that she thereby suffered the damages specified
in the complaint. Accordingly, she prayed that
judgment be rendered:
(a) Declaring the plaintiff the lawful owner and
possessor of The land and improvements described in
the complaint;
(b) Ordering the defendants to vacate the premises in
question and to restore the possession thereof to the
plaintiff;
(c) Condemning and ordering the defendants to pay
jointly and severally, the plaintiff the sum of
P5,000.00, representing the fruits of the land due the
plaintiff;
174
(d) Condemning and ordering the defendants to pay,
jointly and severally, the plaintiff the sum of
P2,000.00, in concept of damages;
(e) Condemning and ordering the defendant to pay the
costs of this suit; and
(f) Granting the plaintiff such and other relief
consonant with law, justice and equity.
Although the court had denied a motion to dismiss
filed by Luis Pineda and Bruno Ramirez, neither
answered the plaintiff because of which they were
declared in default, at the instance of Potenciana
Plando, who, thereafter, presented her evidence.
Based upon the same, decision was rendered on June
16, 1953, finding that the allegations of the complaint
had been proven and declaring Potenciana Plando "the
lawful owner and possessor of the land and
improvements described in H.A. No. 166166 (E-
77371)" and ordering Luis Pineda and Bruno Ramirez
"(1) to vacate the premises in question and restore the
possession thereof to" her; "(2) to pay, jointly and
severally", to her "the sum of P1,000 representing the
fruits of the land due" to her "and for attorney's fees;
and (3) to pay the costs". On July 16, 1953, Luis Pineda
and Bruno Ramirez moved to "set aside the judgment
by default", but the motion was denied by an order
dated August 4, 1953. A reconsideration of this order,
sought by them on August 17, 1953, was denied on
November 16, 1953.
Soon later, or on December 4, 1953, they filed with the
Court of Appeals a petition, docketed therein as CA-
G.R. No. 12164-A, for a writ of certiorari with
preliminary injunction against the Judge of First
Instance of Davao and Potenciana Plando, upon the
ground that the former had acted with grave abuse of
discretion in denying the motion to dismiss the
complaint in said Civil Case No. 959, and the motion
for relief of judgment by default therein rendered. In a
reasoned resolution, dated May 19, 1954, the Third
Division of the Court of Appeals dismissed the petition
upon the ground that no abuse of discretion had been
committed in denying the aforesaid motion to dismiss;
that the order denying relief of judgment by default
was a final order and, as such, appealable; and that,
having failed to appeal therefrom, Luis Pineda and
Bruno Ramirez were not entitled to the writ of
certiorari prayed for.
On October 4, 1954, Luis Pineda and Bruno Ramir
sought from the Supreme Court, in case G.R. No. L-
8357 thereof, a review by certiorari of said resolution
of t Court of Appeals, but their petition for review was,
minute resolution, dated November 18, 1954, dismiss
for lack of merit.
Subsequently, or on January 27, 1955, Luis Pineda
instituted the present action against the Court of First
Instance of Davao, Eriberto Unson as Provincial Sheriff
Ex-Oficio of Davao and Potenciana Plando. After
175
making pertinent averments about the filing of Civil
Case N 959 of said court, the denial of his motion to
dismiss the complaint therein, the order declaring him
in default, the decision therein rendered declaring
Potenciana Plando the lawful owner and possessor of
the land in dispute and of the improvements thereon,
and the final and executory nature of said decision,
Pineda alleged in his complaint that said declaration of
ownership of a homestead and the improvements
thereon is a function exclusively belonging to the
Bureau of Lands, before which there was a pending
controversy between the parties, which the Director o
Lands decided, on March 6, 1954, in his (Pineda's)
favor although Potenciana Plando had moved for a
reconsideration of said decision, which was still
pending determination Plaintiff prayed that judgment
be rendered "annulling partially the decision by default
in Civil Case 14o. 959, particularly the portion ...
adjudicating the ownership of the land in question and
improvements thereon and to suspend the execution
of said decision during the pendency of the case and
pending the result of the controversy between the
parties now in the Bureau of Lands."
Their motion to dismiss the complaint having been
denied the defendants filed an answer maintaining
that the decision rendered in Civil Case No. 959 is valid
and in accordance with law. After appropriate
proceedings, the lower court rendered the decision
appealed from, which appears to be based upon the
following predicates, namely: (1) that Civil Case No.
959 was merely one for the "recovery of possession
and damages" and did not involve the title to the land
in question; and (2) that "the Supreme Court has set
the doctrine ... that courts of justice have no
jurisdiction to determine the ownership and disposition
of agricultural lands."
The first predicate is false, for Potenciana Plando had,
not only alleged in her complaint in said case that she
had acquired the proprietary rights of Domingo
Ramirez on the land in dispute, but, also, prayed
specifically that she be declared "the lawful owner",
aside from "possessor of the land and the
improvements described in" said pleading.
With respect to the second predicate, relative to the
jurisdiction of the Court of First Instance of Davao to
pass upon the title to the land in dispute, it should be
noted that jurisdiction over the subject matter of a
case is determined by the pleadings therein.
According to the complaint in Civil Case No. 959, said
land was covered by a homestead application of
Domingo Ramirez, approved by the Director of Lands
way back on December 18, 1930. On November 18,
1932, said officer had ordered the issuance of the
corresponding patent in favor of Domingo Ramirez,
thus indicating that he had submitted final proof,
which was found satisfactory by the Director of Lands,
of compliance with the requirements of our laws for
the issuance of such patent. Hence, Domingo Ramirez
176
had acquired a vested property right in said land and
the equitable ownership thereof, which may be
conveyed or inherited, unaffected by the fact that the
paramount title thereto was still in the hands of the
government (Balboa v. Farrales 51 Phil., 498). Upon the
death of Domingo Ramirez, said property right and
equitable ownership passed to this surviving spouse
and only heir, Potenciana Plando, who had occupied
and cultivated said land jointly with him, during his
lifetime, from 1930 to 1948, and had improved it and
made it productive through their common efforts,
according to said pleading. Inasmuch as Luis Pineda
and Bruno Ramirez had, allegedly, taken possession of
said land in 1948, excluding her illegally and in bad
faith from such possession and from the enjoyment
thereof, Potenciana Plando sought a judicial
declaration of her title, as the basis for her right of
possession.
No answer having been filed by Luis Pineda and Bruno
Ramirez both were declared in default. Thus, the only
issue for determination by the court in Civil Case No.
959 was the truth of the allegations in said complaint,
which was established by the evidence introduction by
Potenciana Plando, so that the court had, not on the
authority, but the duty to render the disputed decision
holding that Potenciana Plando is the lawful owner of
the land in litigation.
Again, the petition for relief of judgment by default
filed by Luis Pineda and Bruno Ramirez did not
question the title of Domingo Ramirez to the land in
dispute. What is more, in such petition and in the
answer thereto attached they relied upon said title of
Domingo Ramirez, for Luis Pineda claimed to have
acquired it by purchase an they alleged that
Potenciana Plando was merely a common-law wife of
Domingo Ramirez, without any right to succeed him. In
other words, the records of Civil Case No 959, showed
that the equitable title of Domingo Ramirez in and to
the disputed land was uncontested. The only issued
raised after the rendition of the decision therein, was
"Who succeeded to such equitable property rights?
Was it Potenciana Plando or Luis Pineda?" Obviously
this question was within the competence of the Court
of First Instance of Davao to settle.
Regardless of the foregoing, it is true that, subject to
the authority of the Secretary of Agriculture and
Natural Resources, the Director of Lands has, by law,
direct control over the sale or any other form of
concession or disposition and the management of the
public domain (Commonwealth Act No. 141, sections 4
and 5) and that, accordingly, said officers are clothed
with authority to decide, inter alia, conflicts between
applicants for homestead. It is, likewise, settled that,
until such controversy has been decided by the
Director of Lands and/or the Secretary of Agriculture
and Natural Resources or, to put it differently, until
all administrative remedies have been exhausted a
judicial recourse for the settlement of said controversy
has generally been held to be "premature"
177
(Municipality of Hinabagan vs. Municipality of Wright
and Julian Abegonia L-12603, March 25, 1960). The
rule to the effect that administrative remedies must
"first" be exhausted merely implies, however, the
absence of a "cause of action" (M. Vda. de Villanueva
v. Ortiz, L-11412, May 28, 1958; Lubugan v. Castrillo, L-
10521, May 29, 1957), and does not affect the
"jurisdiction" of the court, either over the parties, if
they have been properly summoned, or over the
subject matter of the case.
Luis Pineda does not claim that he had not been
properly summoned in Civil Case No. 959. Upon the
other hand, courts of first instance are, and have been,
expressly vested with original jurisdiction "in all civil
actions which involve the title to or possession of real
property, or any interest therein ..." (Republic Act No.
296, Section 44). Accordingly, even if the issue in Civil
Case No. 959 had been who, as between the parties
therein, had a better title to a given public land, the
court would have retained its jurisdiction to hear and
decide the case, although, had its attention had been
called to the proceedings then pending in the Bureau
of Lands which were not disclosed by the record
when the decision was rendered it should have
dismissed the case, not for want of jurisdiction, but for
lack of "cause of action" on the part of Potenciana
Plando.
At most, therefore, said court erred in refusing to grant
the motion for relief of judgment by default, and, had
an appeal been taken from the order denying said
motion, it would have been proper for the appellate
court to reverse said order and set it aside. But, no
such appeal was taken, and the decision in Civil Case
No. 959 was thus allowed to become final and
executory. Inasmuch as the court had jurisdiction to
render it, said decision is valid and binding upon the
parties therein, no matter how erroneous it might have
been.
Moreover, plaintiff herein sought to annul the pertinent
portion of the aforementioned decision by applying
from the Court of Appeals for a writ of certiorari upon
the ground of nullity of said portion for alleged lack of
jurisdiction, and not only was the writ prayed for
denied by the Court of Appeals, by resolution dated
November 18, 1954, but, we, likewise, refused to
review by certiorari said resolution of the Court of
Appeals. Since the jurisdiction of the Court of First
Instance of Davao to make the disputed
pronouncement in its decision in Civil Case No. 959
was the main issue in the certiorari case
aforementioned, the aforementioned resolution of the
Court of Appeals and that of this Court refusing to
review said resolution constitute another bar to the
present action seeking to revive said issue.
It is, therefore, our considered opinion, and we so hold,
that the lower court erred in rendering the decision
appealed from, and that the same should, accordingly,
be, as it is hereby, reversed, and the complaint herein
178
dismissed, with costs against plaintiff Luis Pineda. It is
so ordered.
G.R. No. L-55048 May 27, 1981
SUGA SOTTO YUVIENCO, BRITANIA SOTTO, and
MARCELINO SOTTO, petitioners,
vs.
HON. AUXENCIO C. DACUYCUY, Judge of the CFI of
Leyte, DELY RODRIGUEZ, FELIPE ANG CRUZ,
CONSTANCIA NOGAR, MANUEL GO, INOCENTES DIME,
WILLY JULIO, JAIME YU, OSCAR DY, DY CHIU SENG,
BENITO YOUNG, FERNANDO YU, SEBASTIAN YU,
CARLOS UY, HOC CHUAN and MANUEL DY,
respondents.
BARREDO, J.:1wph1.t
Petition for certiorari and prohibition to declare void for
being in grave abuse of discretion the orders of
respondent judge dated November 2, 1978 and August
29, 1980, in Civil Case No. 5759 of the Court of First
Instance of Leyte, which denied the motion filed by
petitioners to dismiss the complaint of private
respondents for specific performance of an alleged
agreement of sale of real property, the said motion
being based on the grounds that the respondents'
complaint states no cause of action and/or that the
claim alleged therein is unenforceable under the
Statute of Frauds.
Finding initially prima facie merit in the petition, We
required respondents to answer and We issued a
temporary restraining order on October 7, 1980
enjoining the execution of the questioned orders.
In essence, the theory of petitioners is that while it is
true that they did express willingness to sell to private
respondents the subject property for P6,500,000
provided the latter made known their own decision to
buy it not later than July 31, 1978, the respondents'
reply that they were agreeable was not absolute, so
much so that when ultimately petitioners'
representative went to Cebu City with a prepared and
duly signed contract for the purpose of perfecting and
consummating the transaction, respondents and said
representative found variance between the terms of
payment stipulated in the prepared document and
what respondents had in mind, hence the bankdraft
179

which respondents were delivering to petit loners'

representative was returned and the document Thank you so much for the hospitality extended to me
remained unsigned by respondents. Hence the action during my last trip to Tacloban, and I hope to hear from
below for specific performance. you very soon. 1wph1.t

To be more specific, the parties do not dispute that on Very truly yours,
July 12, 1978, petitioners, thru a certain Pedro C.
Gamboa, sent to respondents the following letter: Pedro C. Gamboa 1

Mr. Yao King Ong (Page 9, Record.)

Life Bakery Reacting to the foregoing letter, the following telegram

was sent by "Yao King Ong & tenants" to Atty. Pedro
Tacloban City Gamboa in Cebu City:

Dear Mr. Yao: 1wph1.t Atty. Pedro Gamboa

This refers to the Sotto property (land and building) Room 314, Maria Cristina Bldg.
situated at Tacloban City. My clients are willing to sell
them at a total price of P6,500,000.00. Osmea Boulevard, Cebu City

While there are other parties who are interested to buy Reurlet dated July 12 inform Dra. Yuvienco we agree to
the property, I am giving you and the other occupants buy property proceed Tacloban to negotiate details
the preference, but such priority has to be exercised 1wph1.t
within a given number of days as I do not want to lose
the opportunity if you are not interested. I am Yao King Ong & tenants
therefore gluing you and the rest of the occupants until
July 31, 1978 within it which to decide whether you (Page 10, Record.)
want to buy the property. If I do not hear from you by
July 31, I will offer or close the deal with the other
interested buyer.
180
Likewise uncontroverted is the fact that under date of
July 27, 1978, Atty. Gamboa wired Yao King Ong in
Tacloban City as follows:
NLT
YAO KING ONG
LIFE BAKERY
TACLOBAN CITY
PROPOSAL ACCEPTED ARRIVING TUESDAY MORNING
WITH CONTRACT PREPARE PAYMENT BANK DRAFT
1wph1.t Yao King Ong, notifying them that defendants are
ATTY. GAMBOA
(Page 10, Id.)
Now, Paragraph 10 of the complaint below of
respondents alleges: 1wph1.t July 25, 1978, sent to defendants (through defendant
10. That on August 1, 1978, defendant Pedro
Gamboa arrived Tacloban City bringing with him the
prepared contract to purchase and to sell referred to in
his telegram dated July 27, 1978 (Annex 'D' hereof) for
the purpose of closing the transactions referred to in
paragraphs 8 and 9 hereof, however, to the complete
surprise of plaintiffs, the defendant (except def.
Tacloban City Ice Plant, Inc.) without giving notice to
plaintiffs, changed the mode of payment with respect
to the balance of P4,500,000.00 by imposing upon
plaintiffs to pay same amount within thirty (30) days
from execution of the contract instead of the former
term of ninety (90) days as stated in paragraph 8
hereof. (Pp. 10-11, Record.)
Additionally and to reenforce their position,
respondents alleged further in their complaint:
1wph1.t
8. That on July 12, 1978, defendants (except
defendant Tacloban City Ice Plant, Inc.) finally sent a
telegram letter to plaintiffs- tenants, through same Mr.
willing to sell the properties (lands and building) at a
total price of P6,500,000.00, which herein plaintiffs-
tenants have agreed to buy the said properties for said
price; a copy of which letter is hereto attached as
integral part hereof and marked as Annex 'C', and
plaintiffs accepted the offer through a telegram dated
Pedro C. Gamboa), a copy of which telegram is hereto
attached as integral part hereof and marked as Annex
C-1 and as a consequence hereof. plaintiffs except
plaintiff Tacloban - merchants' Realty Development
Corporation) and defendants (except defendant
Tacloban City Ice Plant. Inc.) agreed to the following
terms and conditions respecting the payment of said
purchase price, to wit: 1wph1.t
181
P2,000,000.00 to be paid in full on the date of the
execution of the contract; and the balance of
P4,500,000.00 shall be fully paid within ninety (90)
days thereafter;
9. That on July 27, 1978, defendants sent a
telegram to plaintiff- tenants, through the latter's
representative Mr. Yao King Ong, reiterating their
acceptance to the agreement referred to in the next
preceding paragraph hereof and notifying plaintiffs-
tenants to prepare payment by bank drafts; which the
latter readily complied with; a copy of which telegram
is hereto attached as integral part hereof and marked
as Annex "D"; (Pp 49-50, Record.)
It was on the basis of the foregoing facts and
allegations that herein petitioners filed their motion to
dismiss alleging as main grounds: 1wph1.t
I. That plaintiff, TACLOBAN MERCHANTS' REALTY
DEVELOPMENT CORPORATION, amended complaint,
does not state a cause of action and the claim on
which the action is founded is likewise unenforceable
under the provisions of the Statute of Frauds.
II. That as to the rest of the plaintiffs, their
amended complaint does not state a cause of action
and the claim on which the action is founded is
likewise unenforceable under the provisions of the
Statute of Frauds. (Page 81, Record.)
With commendable knowledgeability and industry,
respondent judge ruled negatively on the motion to
dismiss, discoursing at length on the personality as
real party-in-interest of respondent corporation, while
passing lightly, however, on what to Us are the more
substantial and decisive issues of whether or not the
complaint sufficiently states a cause of action and
whether or not the claim alleged therein is
unenforceable under the Statute of Frauds, by holding
thus: 1wph1.t
The second ground of the motion to dismiss is that
plaintiffs' claim is unenforceable under the Statute of
Frauds. The defendants argued against this motion and
asked the court to reject the objection for the simple
reason that the contract of sale sued upon in this case
is supported by letters and telegrams annexed to the
complaint and other papers which will be presented
during the trial. This contention of the defendants is
not well taken. The plaintiffs having alleged that the
contract is backed up by letters and telegrams, and
the same being a sufficient memorandum, the
complaint states a cause of action and they should be
given a day in court and allowed to substantiate their
allegations (Paredes vs. Espino, 22 SCRA 1000).
To take a contract for the sale of land out of the
Statute of Frauds a mere note or memorandum in
writing subscribed by the vendor or his agent
containing the name of the parties and a summary
statement of the terms of the sale either expressly or
182
by reference to something else is all that is required.
The statute does not require a formal contract drawn
up with technical exactness for the language of Par. 2
of Art. 1403 of the Philippine Civil Code is' ... an
agreement ... or some note or memorandum thereof,'
thus recognizing a difference between the contract
itself and the written evidence which the statute
requires (Berg vs. Magdalena Estate, Inc., 92 Phil. 110;
Ill Moran, Comments on the Rules of Court, 1952 ed. p.
187). See also Bautista's Monograph on the Statute of
Frauds in 21 SCRA p. 250. (Pp. 110-111, Record)
Our first task then is to dwell on the issue of whether
or not in the light of the foregoing circumstances, the
complaint in controversy states sufficiently a cause of
action. This issue necessarily entails the determination
of whether or not the plaintiffs have alleged facts
adequately showing the existence of a perfected
contract of sale between herein petitioners and the
occupant represented by respondent Yao King Ong.
In this respect, the governing legal provision is, of
course, Article 1319 of the Civil Code which
provides:1wph1.t
ART. 1319. Consent is manifested by the meeting of
the offer and the acceptance upon the thing and the
cause which are constitute the contract. The offer
must be certain the acceptance absolute. A qualified
acceptance constitute a counter-offer.
Acceptance made by letter or telegram does not bind
offerer except from the time it came to his knowledge.
The contract, in a case, is presumed to have been
entered into in the place where the offer was made.
In the instant case, We can lay aside, for the moment,
petitioners' contention that the letter of July 12, 1978
of Atty. Pedro C. Gamboa to respondents Yao King Ong
and his companions constitute an offer that is
"certain", although the petitioners claim that it was a
mere expression of willingness to sell the subject
property and not a direct offer of sale to said
respondents. What We consider as more important and
truly decisive is what is the correct juridical
significance of the telegram of respondents instructing
Atty. Gamboa to "proceed to Tacloban to negotiate
details." We underline the word "negotiate" advisedly
because to Our mind it is the key word that negates
and makes it legally impossible for Us to hold that
respondents' acceptance of petitioners' offer,
assuming that it was a "certain" offer indeed, was the
"absolute" one that Article 1319 above-quoted
requires.
Dictionally, the implication of "to negotiate" is
practically the opposite of the Idea that an agreement
has been reached. Webster's Third International
Dictionary, Vol. II (G. & C. Merriam Co., 1971 Philippine
copyright) gives the meaning of negotiate as "to
communicate or confer with another so as to arrive at
the settlement of some matter; meet with another so
183
as to arrive through discussion at some kind of
agreement or compromise about something; to
arrange for or bring about through conference or
discussion; work at or arrive at or settle upon by
meetings and agreements or compromises ".
Importantly, it must be borne in mind that Yao King
Ong's telegram simply says "we agree to buy
property". It does not necessarily connote acceptance
of the price but instead suggests that the details were
to be subject of negotiation.
Respondents now maintain that what the telegram
refers to as "details" to be "negotiated" are mere
"accidental elements", not the essential elements of
the contract. They even invite attention to the fact
that they have alleged in their complaint (Par. 6) that it
was as early as "in the month of October, 1977 (that)
negotiations between plaintiffs and defendants for the
purchase and sale (in question) were made, thus
resulting to offers of same defendants and counter-
offer of plaintiffs". But to Our mind such alleged facts
precisely indicate the failure of any meeting of the
minds of the parties, and it is only from the letter and
telegrams above-quoted that one can determine
whether or not such meeting of the minds did
materialize. As We see it, what such allegations bring
out in bold relief is that it was precisely because of
their past failure to arrive at an agreement that
petitioners had to put an end to the uncertainty by
writing the letter of July 12, 1978. On the other hand,
that respondents were all the time agreeable to buy
the property may be conceded, but what impresses Us
is that instead of "absolutely" accepting the "certain"
offer if there was one of the petitioners, they still
insisted on further negotiation of details. For anyone to
read in the telegram of Yao that they accepted the
price of P6,500,000.00 would be an inference not
necessarily warranted by the words "we agree to buy"
and "proceed Tacloban to negotiate details". If indeed
the details being left by them for further negotiations
were merely accidental or formal ones, what need was
there to say in the telegram that they had still "to
negotiate (such) details", when, being unessential per
their contention, they could have been just easily
clarified and agreed upon when Atty. Gamboa would
reach Tacloban?
Anent the telegram of Atty. Gamboa of July 27, 1978,
also quoted earlier above, We gather that it was in
answer to the telegram of Yao. Considering that Yao
was in Tacloban then while Atty. Gamboa was in Cebu,
it is difficult to surmise that there was any
communication of any kind between them during the
intervening period, and none such is alleged anyway
by respondents. Accordingly, the claim of respondents
in paragraph 8 of their complaint below that there was
an agreement of a down payment of P2 M, with the
balance of P4.5M to be paid within 90 days afterwards
is rather improbable to imagine to have actually
happened.
184
Respondents maintain that under existing
jurisprudence relative to a motion to dismiss on the
ground of failure of the complaint to state a cause of
action, the movant-defendant is deemed to admit the
factual allegations of the complaint, hence, petitioners
cannot deny, for purposes of their motion, that such
terms of payment had indeed been agreed upon.
While such is the rule, those allegations do not detract
from the fact that under Article 1319 of the Civil Code
above-quoted, and judged in the light of the telegram-
reply of Yao to Atty. Gamboa's letter of July 12, 1978,
there was not an absolute acceptance, hence from
that point of view, petitioners' contention that the
complaint of respondents state no cause of action is
correct.
Nonetheless, the alleged subsequent agreement about
the P2 M down and P4.5 M in 90 days may at best be
deemed as a distinct cause of action. And placed
against the insistence of petitioners, as demonstrated
in the two deeds of sale taken by Atty. Gamboa to
Tacloban, Annexes 9 and 10 of the answer of herein
respondents, that there was no agreement about 90
days, an issue of fact arose, which could warrant a trial
in order for the trial court to determine whether or not
there was such an agreement about the balance being
payable in 90 days instead of the 30 days stipulated in
Annexes 9 and 10 above-referred to. Our conclusion,
therefore, is that although there was no perfected
contract of sale in the light of the letter of Atty.
Gamboa of July 12, 1978 and the letter-reply thereto of
Yao; it being doubtful whether or not, under Article
1319 of the Civil Code, the said letter may be deemed
as an offer to sell that is "certain", and more, the Yao
telegram is far from being an "absolute" acceptance
under said article, still there appears to be a cause of
action alleged in Paragraphs 8 to 12 of the
respondents' complaint, considering it is alleged
therein that subsequent to the telegram of Yao, it was
agreed that the petitioners would sell the property to
respondents for P6.5 M, by paving P2 M down and the
balance in 90 days and which agreement was allegedly
violated when in the deeds prepared by Atty. Gamboa
and taken to Tacloban, only 30 days were given to
respondents.
But the foregoing conclusion is not enough to carry the
day for respondents. It only brings Us to the question
of whether or not the claim for specific performance of
respondents is enforceable under the Statute of
Frauds. In this respect, We man, view the situation at
hand from two angles, namely, (1) that the allegations
contained in paragraphs 8 to 12 of respondents'
complaint should be taken together with the
documents already aforementioned and (2) that the
said allegations constitute a separate and distinct
cause of action. We hold that either way We view the
situation, the conclusion is inescapable e that the
claim of respondents that petitioners have unjustifiably
refused to proceed with the sale to them of the
185
property v in question is unenforceable under the
Statute of Frauds.
It is nowhere alleged in said paragraphs 8 to 12 of the
complaint that there is any writing or memorandum,
much less a duly signed agreement to the effect that
the price of P6,500,000 fixed by petitioners for the real
property herein involved was agreed to be paid not in
cash but in installments as alleged by respondents.
The only documented indication of the non-wholly-cash
payment extant in the record is that stipulated in
Annexes 9 and 10 above-referred to, the deeds already
signed by the petitioners and taken to Tacloban by
Atty. Gamboa for the signatures of the respondents. In
other words, the 90-day term for the balance of P4.5 M
insisted upon by respondents choices not appear in
any note, writing or memorandum signed by either the
petitioners or any of them, not even by Atty. Gamboa.
Hence, looking at the pose of respondents that there
was a perfected agreement of purchase and sale
between them and petitioners under which they would
pay in installments of P2 M down and P4.5 M within
ninety 90) days afterwards it is evident that such oral
contract involving the "sale of real property" comes
squarely under the Statute of Frauds (Article 1403, No.
2(e), Civil Code.)
On the other score of considering the supposed
agreement of paying installments as partly supported
by the letter and t telegram earlier quoted herein, His
Honor declared with well studied ratiocination, albeit
legally inaccurate, that: 1wph1.t
The next issue relate to the State of Frauds. It is
contended that plaintiffs' action for specific
performance to compel the defendants to execute a
good and sufficient conveyance of the property in
question (Sotto land and building) is unenforceable
because there is no other note memorandum or
writing except annexes "C", "C-l" and "D", which by
themselves did not give birth to a contract to sell. The
argument is not well founded. The rules of pleading
limit the statement of the cause of action only to such
operative facts as give rise to the right of action of the
plaintiff to obtain relief against the wrongdoer. The
details of probative matter or particulars of evidence,
statements of law, inferences and arguments need not
be stated. Thus, Sec. 1 of Rule 8 provides that 'every
pleading shall contain in a methodical and logical form,
a plain concise and direct statement of the ultimate
facts on which the party pleading relies for his claim or
defense, as the case may be, omitting the statement
of mere evidentiary facts.' Exhibits need not be
attached. The contract of sale sued upon in this case is
supported by letters and telegrams annexed to the
complaint and plaintiffs have announced that they will
present additional evidences during the trial to prove
their cause of action. The plaintiffs having alleged that
186
the contract is backed up by letters and telegrams,
and the same being sufficient memorandum, the
complaint states a cause of action and they should be
given their day in court and allowed to substantiate
their allegations (Parades vs. Espino, 22 SCRA 1000).
(Pp 165-166, Record.)
The foregoing disquisition of respondent judge misses
at least two (2) juridical substantive aspects of the
Statute of Frauds insofar as sale of real property is
concerned. First, His Honor assumed that the
requirement of perfection of such kind of contract
under Article 1475 of the Civil Code which provides
that "(t)he contract of sale is perfected at the moment
there is a meeting of the minds upon the thing which is
the object of the contract and upon the price", the
Statute would no longer apply as long as the total
price or consideration is mentioned in some note or
memorandum and there is no need of any indication of
the manner in which such total price is to be paid.
We cannot agree. In the reality of the economic world
and the exacting demands of business interests
monetary in character, payment on installments or
staggered payment of the total price is entirely a
different matter from cash payment, considering the
unpredictable trends in the sudden fluctuation of the
rate of interest. In other words, it is indisputable that
the value of money - varies from day to day, hence the
indispensability of providing in any sale of the terms of
payment when not expressly or impliedly intended to
be in cash.
Thus, We hold that in any sale of real property on
installments, the Statute of Frauds read together with
the perfection requirements of Article 1475 of the Civil
Code must be understood and applied in the sense
that the idea of payment on installments must be in
the requisite of a note or memorandum therein
contemplated. Stated otherwise, the inessential
elements" mentioned in the case of Parades vs.
Espino, 22 SCRA 1000, relied upon by respondent
judge must be deemed to include the requirement just
discussed when it comes to installment sales. There is
nothing in the monograph re the Statute of Frauds
appearing in 21 SCRA 250 also cited by His Honor
indicative of any contrary view to this ruling of Ours,
for the essence and thrust of the said monograph
refers only to the form of the note or memorandum
which would comply with the Statute, and no doubt,
while such note or memorandum need not be in one
single document or writing and it can be in just
187
sufficiently implicit tenor, imperatively the separate
notes must, when put together', contain all the
requisites of a perfected contract of sale. To put it the
other way, under the Statute of Frauds, the contents of
the note or memorandum, whether in one writing or in
separate ones merely indicative for an adequate
understanding of all the essential elements of the
entire agreement, may be said to be the contract
itself, except as to the form.
Secondly, We are of the considered opinion that under
the rules on proper pleading, the ruling of the trial
court that, even if the allegation of the existence of a
sale of real property in a complaint is challenged as
barred from enforceability by the Statute of Frauds, the
plaintiff may simply say there are documents, notes or
memoranda without either quoting them in or
annexing them to the complaint, as if holding an ace in
the sleeves is not correct. To go directly to the point,
for Us to sanction such a procedure is to tolerate and
even encourage undue delay in litigation, for the
simple reason that to await the stage of trial for the
showing or presentation of the requisite documentary
proof when it already exists and is asked to be
produced by the adverse party would amount to
unnecessarily postponing, with the concomitant waste
of time and the prolongation of the proceedings,
something that can immediately be evidenced and
thereby determinable with decisiveness and precision
by the court without further delay.
In this connection, Moran observes that unlike when
the ground of dismissal alleged is failure of the
complaint to state a cause of action, a motion to
dismiss invoking the Statute of Frauds may be filed
even if the absence of compliance does not appear an
the face of the complaint. Such absence may be the
subject of proof in the motion stage of the
proceedings. (Moran, Comment on the Rules of Court,
Vol. 1, p. 494, 1979 ed.) It follows then that when such
a motion is filed and all the documents available to
movant are before the court, and they are insufficient
to comply with the Statute, it becomes incumbent
upon the plaintiff, for the reasons of policy We have
just' indicated regarding speedy administration of
justice, to bring out what note or memorandum still
exists in his possession in order to enable the court to
expeditiously determine then and there the need for
further proceedings. In other words, it would be
inimical to the public interests in speedy justice for
plaintiff to play hide and seek at his own convenience,
particularly, when, as is quite apparent as in the
instant case that chances are that there are no more
writings, notes or memoranda of the installment
agreement alleged by respondents. We cannot divine
any reason why any such document would be withheld
if they existed, except the unpermissible desire of the
respondents to force the petitioners to undergo the
ordeals, time, effort and expenses of a futile trial.
In the foregoing premises, We find no alternative than
to render judgment in favor of petitioners in this
188

certiorari and prohibition case. If at all, appeal could be

available if the petitioners subjected themselves to the
trial ruled to be held by the trial court. We foresee
even at this point, on the basis of what is both extant
and implicit in the records, that no different result can
be probable. We consider it as sufficiently a grave
abuse of discretion warranting the special civil actions
herein the failure of respondent judge to properly
apply the laws on perfection of contracts in relation to
the Statute of Frauds and the pertinent rules of
pleading and practice, as We have discussed above.

ACCORDINGLY, the impugned orders of respondent

judge of November 2, 1978 and August 29, 1980 are
hereby set aside and private respondents' amended
complaint, Annex A of the petition, is hereby ordered
dismissed and the restraining order heretofore issued
by this Court on October 7, 1980 is declared
permanent. Costs against respondents.
189
No. L-25889. January 17, 1973.
HON.GUILLERMO E. TORRES, as Presiding Judge of
the Court of First Instance of Rizal, Branch VIII, THE
PROVINCIAL SHERIFF OF THE PROVINCE OF
RIZAL, JAIME E. LAICO and LUZ LOS BANOS-
LAICO, petitioners-appellants, vs. HON.COURT OF
APPEALS,JOSE CHIVI and ANGELINA CHIVI, as
representative of the deceased MARTAB. CHIVI,
respondents-appellees.
Pleading and practice; Cross-claim; Definition of.A
cross-claim, as defined in section 7 of Rule 6, is any claim
by one party against a co-party arising out of the
transaction or occurrence that is the subject matter either
of the original action or of a counterclaim therein.
Same; Same; Where cross-claim defensive in nature,
same cannot stand after complaint in same action dismissed
with prejudice.A crossbill, strictly speaking is one
brought by a defendant in an equity suit against other
defendants in the same suit, touching the matters in
question in the original bill. It is considered as an auxiliary
suit dependent upon the original bill, and can be sustained
only on matters growing out of the original bill. There is a
well-defined distinction between a cross-bill merely
defensive in character, and one seeking affirmative relief.
The dismissal of the original bill carries with it a purely
defensive cross-bill but not one seeking affirmative relief.
68
6 SUPREME COURT REPORTS
8 ANNOTATED
Torres vs. Court of Appeals
APPEAL by certiorari to review a decision of the Court
of Appeals.
The facts are stated in the opinion of the Court.
Ernesto J. Seva for petitioners-appellants.
Ordoez, Cervo & Sanchez for respondents-
appellees.
MAKALINTAL, J.:
Appeal by certiorari to review the decision of the Court
of Appeals in CA-G.R. No. 35677-R, dated 31 August
1965.
The facts as found by the Court of Appeals are as
follows:
On 1 January 1955 the spouses Isidro Sierra and
Antonia Magtaas sold a parcel of land to Marta B.
Chivi, representing to her that the land was not
registered either under the Land Registration Act or
under the Spanish Mortgage Law and assuring her
that although the land was covered by a pre-war free
patent application, the application had not been
190
approved and nopatent had been issued. The Sierras
made that assurance because Chivi was not willing to
buy the land if it was covered by a patent, since it
would then be subject to repurchase. They agreed that
the purchase price of P10,800.00 was not to be fully
paid until the vendors could have the land registered
under Act 496.
At the instance of the Sierras, Chivi filed an
application for registration of the land in the Court of
First Instance of Rizal. While the application was
pending Chivi, on 24 May 1958, sold her rights and
interests in the land to the herein petitioners-spouses
Jaime Laico and Luz Los Baos for P25,647.00, with
the stipulation that should Chivi fail to secure and
transfer title to the Laicos she would return to them
twice the amount of the aforesaid purchase price. To
induce the Laicos to buy Chivis rights and interests,
the Sierras showed them a petition withdrawing their
free patent application. The Laicos thereupon
continued with the registration proceeding in
substitution of Chivi, who signed a deed of transfer of
her rights.
69
VOL. 49, JANUARY 17, 1973 69
Torres vs. Court of Appeals
In December, 1959 the Laicos discovered, and in
January, 1960 Chivi learned, that a free patent title
had been previously issued to Isidro Sierra as early as
26 February 1932. The Laicos went to see the Sierras,
who agreed to execute, as they did execute on January
17, 1960, an. other deed of sale in favor of the Laicos.
The Laicos then withdrew their application for
registration and filed instead a petition for the
reconstitution of the title issued to Isidro Sierra.
On 14 June 1960, however, the Sierras filed a
complaint against Marta B. Chivi, assisted by her
husband, and the Laicos in the Court of First Instance
of Rizal, docketed as Civil Case No. 6184, praying that
they (plaintiffs) be allowed to repurchase the land
under the provisions of the Public Land Act. The
Chivis and the Laicos filed their answers to the
complaint and counter-claimed for damages by reason
of the alleged bad faith, misrepresentation and
fraudulent acts of the Sierras, as hereinbefore
recounted. The Laicos filed a cross-claim against the
Chivis for collection of twice the amount of the price
paid under their sales contract for the latters failure
to deliver title to the Laicos, alleging that the
defendants Chivi are/or will be liable on these
warranties and conditions should the plaintiffs finally
obtain favorable judgment in their favor (sic).
On 12 March 1964 the Sierras and the Laicos
entered into a compromise to amicably settle Civil
191
Case No. 6184 as between themselves, stipulating
therein, among other things, that the Laicos were now
the absolute owners of the land and that the Sierras
would withdraw their objection to the reconstitution of
the patent title and that said title would be transferred
in the name of the Laicos, who would pay P10,000.00
to the Sierras; that the Sierras would ask for the
dismissal of Civil Case No. 6184 insofar as the Laicos
were concerned and would convert their action in the
case from one for repurchase to one for collection of the
balance of the sales price and of damages against the
Chivis; that the Laicos would pursue their cross-claim
against the Chivis and in the event they obtained a
favorable judgment thereon they would pay to
70
7 SUPREME COURT REPORTS
0 ANNOTATED
Torres vs. Court of Appeals
the Sierras one-half (1/2) of any amount awarded to
them in excess of the purchase price of P25,647.00.
The compromise, which was executed without the
knowledge of or notice to the Chivis, was approved by
the trial court on 12 March 1964. On the same date the
court, on joint motion of the Sierras and the Laicos,
dismissed with prejudice the complaint in Civil
Case No. 6184 insofar as the Laicos were concerned as
well as the counterclaim of the Laicos against the
Sierras. Chivi was not notified of the dismissal.
The court set the case for pre-trial on 14 July 1964.
Despite notice to the Sierras and the Chivis, only
cross-claimant Jaime Laico and his counsel appeared,
whereupon the court declared the Chivis in default
and allowed Laico to present evidence on the cross-
claim before the deputy clerk of court. Counsel for the
Chivis filed an urgent motion for reconsideration,
explaining why he failed to appear at the pre-trial, but
the motion was denied. On 5 February 1965 the court
rendered judgment for the Laicos, sentencing the
cross-defendants to pay them a total amount of
P15,000.00, plus costs, and on 1 April 1965 issued a
writ of execution. Pursuant to the writ the sheriff
levied upon the properties of the Chivis and issued a
notice that the properties would be sold at public
auction on 14 April 1965.
In due time the Chivis filed with the Court of
Appeals a petition for certiorari and prohibition with
preliminary injunction to annul; (1) the order of the
trial court authorizing the Laicos to adduce
evidence ex parte on their cross-claim against Marta B.
Chivi; (2) the decision rendered on said cross-claim;
and (3) the order directing the issuance of a writ of
execution, the levy on execution, and the notice of
192

execution sale of the properties of Chivi. Chivi prayed The principal issue in this case is: Could the cross-
further that the therein respondents be prohibited claim in this particular action stand after the
from conducting any further proceedings in said Civil complaint in the same action was dismissed with
Case No. 6184 on the ground that the trial court was prejudice?
without jurisdiction in the premises. In the resolution of this issue the following consider
Upon giving due course to the petition the Court of actions are pertinent:
Appeals issued a writ of preliminary injunction, (1) A cross-claim, as defined in Section 7 of Rule 6,
restraining is any claim by one party against a co-party arising
71 out of the transaction or occurrence that is the subject
VOL. 49, JANUARY 17, 1973 71
matter either of the original action or of a
Torres vs. Court of Appeals
counterclaim therein.
the therein respondents from proceedings with the
(2) The cross-claim of the Laicos against the Chivis
execution and with the sale at public auction set for 14
was for the recovery of the sum of P51,294.00, upon the
April 1965, until further order.
allegations that according to the contract of sale
On 31 August 1965 the Court of Appeals rendered a
between them, should the defendants Chivi fail to
decision declaring null and void all the proceedings on
transfer the title to the land in question to the
the cross-claim of the spouses Laico against Chivi, as
VENDEE (defendant Laico) then the former shall
well as the orders, decisions, writs and processes
return to the latter (the aforesaid sum) which is double
issued in connection therewith, and restraining the
the amount of the purchase price received by the
therein respondents Judge and sheriff of the Court of
defendants Chivi; and that the defendants Chivi
First Instance of Rizal from further proceeding in Civil
are/or will be liable on these warranties and conditions
Case No. 6184. The Laicos moved for reconsideration.
should the plaintiffs (Sierras) finally obtain favorable
Pending resolution of the motion for reconsideration,
judgment in their favor (sic).
Marta B. Chivi died and was substituted by Angelina
(3) When Marta B. Chivi sold her rights and
Chivi. In an order dated 16 March 1966, the motion for
interests to the land in question to the Laicos on 24
reconsideration was denied. Hence, the instant appeal
May
by certiorari brought by the Laicos.
193
72
7 SUPREME COURT REPORTS
2 ANNOTATED
Torres vs. Court of Appeals
1958 the latter knew that Chivi had yet noregistered
title, and in fact substituted her in the registration
proceeding which she had initiated.
(4) In their counterclaim for damages against the
Sierras in Civil Case No. 6184, the Laicos alleged that
the plaintiffs, in fraudulently misrepresenting to the
defendants Chivi, as well as to the defendants Laico,
that the land in question is unregistered and is not
covered by a patent, thereby inducing the latter to
purchase the land in question, which they would not
have done had they known that the land is covered by
a patent, should be adjudged to pay . . .
(5) The warranty undertaken by Marta B. Chivi,
judging by its terms and by the surrounding
circumstances, was in respect of the transfer of
ownership not of the registered title to the
Laicos. The action filed by the Sierras was not for
recovery of such ownership but for the exercise of their
alleged right of repurchase under the Public Land Act
on the ground that the land they had sold was covered
by a patent title. In other words, the filing of the action
did not militate against the warranty to transfer title,
for the very fact that the plaintiffs wished to enforce
their alleged right of repurchase was predicated on the
assumption that the title, that is, ownership, had been
effectively transferred first to Chivi and subsequently
by the latter to the Laicos.
(6) In any event, even viewing the situation in the
light most favorable to the Laicos, their cross-claim on
Chivis warranty to deliver title to them was so
inextricably linked with and so utterly dependent upon
the success of the complaint of the Sierras for the
repurchase of the land that when the complaint was
dismissed the cross-claim could not possibly survive.
For as the cross-claim-ants themselves alleged, the
cross-defendants would be liable on the warranty
should the plaintiffs finally obtain favorable judgment
in their favor (sic). The warranty became functus
oficio after the Sierras, who turned out after all to
have a free patent title to the land issued way back in
1932, agreed to transfer and did transfer said title to
the Laicos first by the deed of sale executed direct-
73
VOL. 49, JANUARY 17, 1973 73
Torres vs. Court of Appeals
ly in their favor by the Sierras on January 17, 1960,
again in the amicable settlement of the case between
them. The fact that the Laicos paid P10,000.00 to the
Sierras in that amicable settlement created noliability
on the part of the Chivis: first, because the latter
194
neither knew nor consented to such settlement; second,
because the Laicos had already acquired the land
directly, from the Sierras by virtue of the aforesaid sale
of January 17, 1960; and third because the said sum of
P10,000.00 was not the subject of the cross-claim
against them.
Apropos is the following statement of the legal
principle:
A cross-bill strictly speaking is one brought by a defendant
in an equity suit against x x x other defendants in the same
suit, touching the matters in question in the original bill. It
is considered as an auxiliary suit dependent upon the
original bill, and can be sustained only on matters growing
out of the original bill. There is a well-defined distinction
between a crossbill merely defensive in character, and one
seeking affirmative relief. The dismissal of the original bill
carries with it a purely defensive cross-bill but not one
seeking affirmative relief.
1 tiorari after the lapse of over 9 months from the time
The cross-claim in this case was purely defensive in
nature. It arose entirely out of the complaint and could
prosper only if the plaintiffs succeeded. Hence, under
the principle above enunciated, it could not be the
subject of independent adjudication once it lost the
nexus upon which its life depended.
Under the circumstances above set forth the
dismissal of the cross-claim should have followed the
dismissal of the complaint as a matter of course,
without further proceeding; and in setting the said
cross-claim for pre-trial and receiving evidence thereon
and then rendering judgment against the cross-
defendants the court committed such a grave abuse of
discretion amounting to lack of jurisdiction correctible
by certiorari.
Concerning the argument that the respondents here
were guilty of laches because they filed their petition
for cer-
_______________
Osius vs. Barton, 88 A.L.R. 394, 402.
1
74
7 SUPREME COURT REPORTS
4 ANNOTATED
Torres vs. Court of Appeals
the judgment of the Court of First Instance was
rendered, respondent Court of Appeals ruled in our
opinion correctly as follows:
x x x xxx xxx xxx
To the contention that the petitioners action is barred
by laches, we are bound to disagree. The judgment by
default was rendered on February 5, 1965. It is not known
when the petitioners received copy of this judgment, but the
fact is that on April 13, or after the lapse of only 2 months
and 7 days from the rendition of the judgment, the petition
195
for certiorari was filed with this Court. Principally, the
petition assails the decision and the writ of execution
thereof which was issued on April 1. Assuming that the
decision complained of was actually received by the
petitioners on the date it was rendered, the intervening
period to the filing of the petition is only 2 months and 7
days, which is shorter than the shortest period of 2 months
and 26 days cited in the respondents ex-parte motion for
reconsileration in support of their theory of laches. And a
mere 12 days intervened between the issuance of the writ of
execution and the filing of the petition for certiorari.
x x x xxx xxx x x x.
Parenthetically, this Court would like to state that
Judge Guillermo Torres should not have been made to
appear as active party-petitioner in this case, his
participation having become functus oficio after the
rendered judgment, and therefore his role being purely
nominal in this petition.
In view of the foregoing considerations, the
judgment of the Court of Appeals is affirmed, without
pronouncement as to costs.
Concepcion,
C.J., Zaldivar, Castro, Fernando, Teehankee, Barredo,
Makasiar, Antonio and Esguerra, JJ., concur.
Decision affirmed.
Note.Limitations on cross-claims.A cross-
claim may not be filed by a party declared in default.
(Tan vs. Dimayuga, L-15241, July 31, 1962). A cross-
claim is not proper when not shown to have arisen out
of the saint transaction
75
VOL. 49, JANUARY 17, 1973 75
American Express Company, Inc. vs.
Santiago
as that in the complaint. (Malinao vs. Luzon Surety
Company, Inc., L 16082, February 29, 1964).
G.R. No. L-27930 November 26, 1970
AURORA A. ANAYA, plaintiff-appellant,
vs.
FERNANDO O. PALAROAN, defendant-appellee.
Isabelo V. Castro for plaintiff-appellant.
Arturo A. Romero for defendant-appellee.
REYES, J.B.L., J.:
Appeal from an order of dismissal, issued motu proprio by the
Juvenile & Domestic Relations Court, Manila, of a complaint for
annulment of marriage, docketed therein as Civil Case No. E-
00431, entitled "Aurora A. Anaya, plaintiff vs. Fernando O.
Palaroan, defendant."
196
The complaint in said Civil Case No. E-00431 alleged, inter alia,
that plaintiff Aurora and defendant Fernando were married on 4
December 1953; that defendant Fernando filed an action for
annulment of the marriage on 7 January 1954 on the ground that
his consent was obtained through force and intimidation, which
action was docketed in the Court of First Instance of Manila as
Civil Case No. 21589; that judgment was rendered therein on 23
September 1959 dismissing the complaint of Fernando, upholding
the validity of the marriage and granting Aurora's counterclaim;
that (per paragraph IV) while the amount of the counterclaim was
being negotiated "to settle the judgment," Fernando had divulged
to Aurora that several months prior to their marriage he had pre-
marital relationship with a close relative of his; and that "the non-
divulgement to her of the aforementioned pre-marital secret on
the part of defendant that definitely wrecked their marriage, which
apparently doomed to fail even before it had hardly
commenced ... frank disclosure of which, certitude precisely
precluded her, the Plaintiff herein from going thru the marriage
that was solemnized between them constituted 'FRAUD', in
obtaining her consent, within the contemplation of No. 4 of Article
85 of the Civil Code" (sic) (Record on Appeal, page 3). She
prayed for the annulment of the marriage and for moral damages.
Defendant Fernando, in his answer, denied the allegation in
paragraph IV of the complaint and denied having had pre-marital
relationship with a close relative; he averred that under no
circumstance would he live with Aurora, as he had escaped from
her and from her relatives the day following their marriage on 4
December 1953; that he denied having committed any fraud
against her. He set up the defenses of lack of cause of action and
estoppel, for her having prayed in Civil Case No. 21589 for the
validity of the marriage and her having enjoyed the support that
had been granted her. He counterclaimed for damages for the
malicious filing of the suit. Defendant Fernando did not pray for
the dismissal of the complaint but for its dismissal "with respect to
the alleged moral damages."
Plaintiff Aurora filed a reply with answer to the counterclaim,
wherein she alleged:
(1) that prior to their marriage on 4 December
1953, he paid court to her, and pretended to
shower her with love and affection not because he
really felt so but because she merely happened to
be the first girl available to marry so he could
evade marrying the close relative of his whose
immediate members of her family were
threatening him to force him to marry her (the
close relative);
(2) that since he contracted the marriage for the
reason intimated by him, and not because he
loved her, he secretly intended from the very
beginning not to perform the marital duties and
obligations appurtenant thereto, and furthermore,
he covertly made up his mind not to live with her;
(3) that the foregoing clandestine intentions
intimated by him were prematurely concretized for
him, when in order to placate and appease the
immediate members of the family of the first girl
(referent being the close relative) and to convince
them of his intention not to live with plaintiff,
carried on a courtship with a third girl with whom,
after gaining the latter's love cohabited and had
several children during the whole range of nine
197
years that Civil Case No. 21589, had been
litigated between them (parties); (Record on
Appeal, pages 10-11)
Failing in its attempt to have the parties reconciled, the court set
the case for trial on 26 August 1966 but it was postponed.
Thereafter, while reviewing the expendiente, the court realized
that Aurora's allegation of the fraud was legally insufficient to
invalidate her marriage, and, on the authority of Brown vs.
Yambao, 102 Phil. 168, holding:
It is true that the wife has not interposed
prescription as a defense. Nevertheless, the
courts can take cognizance thereof, because
actions seeking a decree of legal separation, or
annulment of marriage, involve public interest,
and it is the policy of our law that no such decree
be issued if any legal obstacles thereto appear
upon the record.
the court a quo required plaintiff to show cause
why her complaint should not be dismissed.
Plaintiff Aurora submitted a memorandum in
compliance therewith, but the court found it
inadequate and thereby issued an order, dated 7
October 1966, for the dismissal of the complaint; it
also denied reconsideration.
The main issue is whether or not the non-disclosure to a wife by
her husband of his pre-marital relationship with another woman is
a ground for annulment of marriage.
We must agree with the lower court that it is not. For fraud as a
vice of consent in marriage, which may be a cause for its
annulment, comes under Article 85, No. 4, of the Civil Code,
which provides:
ART. 85. A marriage may be annulled for any of
the following causes, existing at the time of the
marriage:
xxx xxx xxx
(4) That the consent of either party was obtained
by fraud, unless such party afterwards, with full
knowledge of the facts constituting the fraud,
freely cohabited with the other as her husband or
his wife, as the case may be;
This fraud, as vice of consent, is limited
exclusively by law to those kinds or species of
fraud enumerated in Article 86, as follows:
ART. 86. Any of the following circumstances shall
constitute fraud referred to in number 4 of the
preceding article:
(1) Misrepresentation as to the
identity of one of the contracting
parties;
(2) Non-disclosure of the previous
conviction of the other party of a
crime involving moral turpitude,
and the penalty imposed was
198
imprisonment for two years or
more;
(3) Concealment by the wife of the
fact that at the time of the
marriage, she was pregnant by a
man other than her husband.
No other misrepresentation or deceit as to
character, rank, fortune or chastity shall constitute
such fraud as will give grounds for action for the
annulment of marriage.
The intention of Congress to confine the circumstances that can
constitute fraud as ground for annulment of marriage to the
foregoing three cases may be deduced from the fact that, of all
the causes of nullity enumerated in Article 85, fraud is the only
one given special treatment in a subsequent article within the
chapter on void and voidable marriages. If its intention were
otherwise, Congress would have stopped at Article 85, for,
anyway, fraud in general is already mentioned therein as a cause
for annulment. But Article 86 was also enacted, expressly and
specifically dealing with "fraud referred to in number 4 of the
preceding article," and proceeds by enumerating the specific
frauds (misrepresentation as to identity, non-disclosure of a
previous conviction, and concealment of pregnancy), making it
clear that Congress intended to exclude all other frauds or
deceits. To stress further such intention, the enumeration of the
specific frauds was followed by the interdiction: "No other
misrepresentation or deceit as to character, rank, fortune or
chastity shall constitute such fraud as will give grounds for action
for the annulment of marriage."
Non-disclosure of a husband's pre-marital relationship with
another woman is not one of the enumerated circumstances that
would constitute a ground for annulment; and it is further
excluded by the last paragraph of the article, providing that "no
other misrepresentation or deceit as to ... chastity" shall give
ground for an action to annul a marriage. While a woman may
detest such non-disclosure of premarital lewdness or feel having
been thereby cheated into giving her consent to the marriage,
nevertheless the law does not assuage her grief after her consent
was solemnly given, for upon marriage she entered into an
institution in which society, and not herself alone, is interested.
The lawmaker's intent being plain, the Court's duty is to give
effect to the same, whether it agrees with the rule or not.
But plaintiff-appellant Anaya emphasizes that not only has she
alleged "non-divulgement" (the word chosen by her) of the pre-
marital relationship of her husband with another woman as her
cause of action, but that she has, likewise, alleged in her reply
that defendant Fernando paid court to her without any intention of
complying with his marital duties and obligations and covertly
made up his mind not to live with her. Plaintiff-appellant contends
that the lower court erred in ignoring these allegations in her
reply.
This second set of averments which were made in the reply
(pretended love and absence of intention to perform duties of
consortium) is an entirely new and additional "cause of action."
According to the plaintiff herself, the second set of allegations is
"apart, distinct and separate from that earlier averred in the
Complaint ..." (Record on Appeal, page 76). Said allegations
were, therefore, improperly alleged in the reply, because if in a
reply a party-plaintiff is not permitted to amend or change the
cause of action as set forth in his complaint (Calo vs. Roldan, 76
199
Phil. 445), there is more reason not to allow such party to allege a
new and additional cause of action in the reply. Otherwise, the
series of pleadings of the parties could become interminable.
On the merits of this second fraud charge, it is enough to point
out that any secret intention on the husband's part not to perform
his marital duties must have been discovered by the wife soon
after the marriage: hence her action for annulment based on that
fraud should have been brought within four years after the
marriage. Since appellant's wedding was celebrated in December
of 1953, and this ground was only pleaded in 1966, it must be
declared already barred.
FOR THE FOREGOING REASONS, the appealed order is
hereby affirmed. No costs.
No. L-21644. May 29, 1970.
WENCESLAO PASCUAL, plaintiff, vs.PILAR
BAUTISTA, ET AL., defendants.
PILAR BAUTISTA, third party plaintiff-
appellee, vs. MARIANO R. FLORES, third party
defendant-appellant.
Civil actions; Third party complaint; When third party
complaint is not dependent upon main action, judgment
rendered on third party complaint may be enforced
independently.Where the cause of action alleged in the
third party complaint is not dependent upon the success or
failure of the claim subject matter of the main action, the
judgment rendered on the third party complaint may be
considered final and enforceable and may be executed
without waiting for the final determination of the main
case.
Same; Revival of actions; When judgment on third
party complaint should be revived.The ten year period
within which to file an action to revive a judgment, as
applied to a judgment on a third party complaint, should be
counted from the date of finality of the judgment on the
third party complaint, and not on the date of termination of
the main action, where the cause of action alleged in the
third party complaint is not dependent upon the success or
failure of the claim subject matter of the main action.
Same; Third party complaint; Claim need not arise
from or entirely be dependent upon the main action.It is
clear from the provisions of the Rules of Court that for a
claim to be properly raised in a pending action by way of
third party complaint it is not necessary that it be one
arising from or entirely dependent upon the main action; it
is enough that it be "in respect" of the claim of third party
plaintiff's opponent (Rule 6, Section 12, Rules of Court), or
that it be "connected with plaintiff's claim"
(Capayas v. Court of First Instance of Albay, 43 O.G. 2071,
2074; U.S. Commercial Co. v. Guevara, 48 O.G. 612-613).
302
30 SUPREME COURT REPORTS
2 ANNOTATED
Pascual vs. Bautista
200
Barredo, J., concurring:
Civil actions; Third-party complaint; Effect of
judgment on third party complaint.The judgment
rendered on a third party complaint does not become
executory until after the claim against the defendant has
been finally determined, because the third party defendant
is never liable to the defendant unless the latter is liable to
the plaintiff.
Same; Same; Only related claims, not related
transactions, can be the subject of third party complaints;
Reasons.There is a distinction between related
transactions and related claims, and the latter, not the
former, are the ones that can be the subject of the third
party complaints. In other words, the claims must be
related to the same transaction and not to merely related
transactions. I do not believe that the phrase "in respect of
his opponent's claim" used in Section 12 of Rule 6 of the
Rules of Court concerning third-party complaints, can be
equated with or has the same connotation as that of being
merely "connected with the plaintiff's claim." My point, is
that were it the intention of Section 12, Rule 6 to refer to
merely "connected" claims, it would have used that word
instead of the phrase "in respect of" as in Section 4, Rule 9,
and thereby avoid confusion.
Same; Fourth-party complaint; Distinguished from
thirdparty complaint.A fourth-party complaint is nothing
more nothing less than a third-party complaint, except that
it is only in respect of the claim of the third-party plaintif f
against the third-party defendant,
APPEAL from a decision of the Court of First Instance
of Manila. Arca, J.
The facts are stated in the opinion of the Court.
Sarte & Espinosa for plaintiff-appellee.
Zosimo Rivas for third-party defendant-
appellant.
DIZON, J.:
This is an appeal taken by Mariano E. Flores from the
decision of the Court of First Instance of Manila in
Civil Case No. 48819 entitled "Pilar Bautista vs.
Mariano E. Flores", the dispositive part of which. reads
as follows:
"It appearing that this motion to revive the said decision,
Exhibit A, was filed on November 21, 1961. or before the
expiration of the ten-year period provided by law, judgment
is
303
VOL. 33, MAY 29, 1970 303
Pascual vs. Bautista
hereby rendered and, under Article 1144, in connection
with Article 1152 of the Civil Code, this Court hereby
declares that the decision of the Supreme Court in G.R. No.
L-6569 and G.R. No. L-6576 is hereby REVIVED.
201
"SO ORDERED
"Manila, Philippines, March 12, 1963."
It appears that in Civil Case No. 5203 of the Court of
First Instance of Manila entitled "Wenceslao Pascual
vs. Pilar Bautista, Primitivo Lovina, Nelly Montilla de
Lovina and Leon Yambao", the first (appellee herein)
filed, with leave of court, a third-party complaint
against Mariano R. Flores (appellant herein). Having
failed to answer the third-party complaint, Flores was
declared in default (Rec. on appeal, pp. 19-20, 40-41)
and, after due trial of the whole case, the court, on
March 7, 1951, rendered judgment as follows:
"WHEREFORE, judgment is hereby rendered in favor of the
plaintiff and against the defendant Pilar Bautista, ordering
the latter to return to the plaintiff the sum of P2,000.00
representing part of the rent 'advanced by him for the
second year of the lease; to pay to the plaintiff the sum of
P13,181.86 representing one-half of the cost of the
improvements and repairs made by the plaintiff on the
fishpond; and against Pilar Bautista and the spouses
Primitivo Lovina and Nelly Montilla de Lovina, ordering
them to pay jointly and severally to the plaintiff the sum of
Twenty thousand two hundred fifty pesos (P20,250.00)
representing the value of the fish at the time the plaintiff
was dispossessed of the fishpond, and the costs. Likewise
judgment is hereby rendered in favor of the defendant Pilar
Bautista as third-party plaintiff and against Mariano R.
Flores, as third-party defendant, for the sums of Five
hundred thousand pesos (P500,000.00) as liquidated
damages and Fifty thousand pesos (P50,000.00) for
attorney's fees in accordance with her contract with him
embodied in the aforesaid Memorandum of Agreements,'
with costs against said Mariano R. Flores. Plaintiff s claim
for exemplary damages and attorney s fees, Pilar Bautista's
counterclaim and cross-claim, and the spouses Lovina s
counter cross-claim are hereby dismissed. Defendant Leon
b. Yambao is absolved from all liability under the complaint
and cross-claim."
All the parties above-mentioned, except the third-party
defendant Flores, appealed from the above decision to
the
304
30 SUPREME COURT REPORTS
4 ANNOTATED
Pascual vs. Bautista
Court of Appeals (CA-G.R. 7878-R), appellee Pilar
Bautista, from the portions thereof adverse to her and
in favor of the plaintiff. In its decision of February 16,
1953, the Court of Appeals modified the appealed
decision "by eliminating from it the award of damages
in favor of Wenceslao Pascual against Pilar Bautista
and Primitivo Lovina and Nelly Montilla de Lovina, as
solidary debtors; and substituting, in its stead, an
award in favor of Wenceslao Pascual in the total sum of
202

P15,181.86, to be paid by Pilar Bautista alone, In all the writ of execution then outstanding, on the ground
other respects the judgment of the Court below is that "more than ten years had already elapsed since
affirmed, without pronouncement as to costs". (See the judgment against third-party defendant Mariano
page 61 of the Record on Appeal), Not satisfied with R. Flores and in favor of third-party plaintiff was
the result, Pilar Bautista and Wenceslao Pascual entered, so that no writ of execution of said judgment
appealed to Us (G.R. Nos. L-6569 and L-6576), but on can now be issued (Sec. 6, Rule 39 of the Rules of
April 18, 1956, We affirmed the decision of the Court of Court)".
Appeals. On June 6, 1957, our decision was entered by 305
VOL. 33, MAY 29, 1970 305
the Clerk of Court of First Instance of Manila in the
Pascual vs. Bautista
entry book of his off ice.
On August 29, 1961 appellee Bautista filed a petition
On June 3, 1957 Pilar Bautista secured the
for relief from said order of June 24, 1961, but the
corresponding writ to execute the decision rendered in
same was denied by the court, and although on
her favor in Civil Case No. 5203 as third-party
November 15, 1961 she filed a notice of appeal from
plaintiff therein against third-party defendant Flores,
said order of denial, no appeal therefrom appears to
but the writ was later returned unsatisfied. Thereafter
have been. actually perfected.
she obtained several alias writs of execution against
On November 21, 1961, appellee Pilar Bautista filed
the same party, the latest having been issued on April
an action in the Court of First Instance of Manila
17, 1961, but they were likewise returned unsatisfied.
(Civil Case No. 48819) for the revival of the final
On May 4, 1961, she filed a petition for the
judgment heretofore mentioned rendered in Civil
examination under oath of her judgment debtor
Case No. 5203 against appellant Flores. In his answer
(Flores) alleging that the latter had fraudulently
to the complaint, the latter alleged that said judgment
disposed of his properties, and, on ,May 18 of the same
had already prescribed pursuant to Sec. 6, Rule 39,
year, the court ordered said judgment debtor to appear
Rules of Court, and Article 1144(3) of the New Civil
before it for examination under oath on June 5, 1961.
Code. After trial, the lower court rendered the
Upon petition of Flores, however, the court, on June 24,
appealed judgment.
1961, set aside its order for his examination as well as
203

In his brief appellant submits for our consideration 30 SUPREME COURT REPORTS
ten errors allegedly committed by the trial court, but 6 ANNOTATED
brushing aside all non-essential issues, We believe
Pascual vs. Bautista
decision of the Court of First Instance of Manila in
that the fate of the present appeal depends upon the
Civil Case No. 5203 rendered on March 7, 1951, all the
following question: Which judgment, that 01 the Court
of First Instance of Manila rendered in Civil Case No. parties thereto, except the third-party defendant
therein, Flores, appealed to the Court of Appeals. The
5203 on March 7, 1951, or that of this Court in G.R.
latter, therefore, was not affected at all neither by the
Nos. L-6569 and L-6576 rendered on April 18, 1956
decision rendered by the Court of Appeals nor by the
(affirming the decision of the Court of Appeals in CA-
one subsequently rendered by this Court The second is
G.R. No. L-7878 which, in turn, modified the
that the decision of the Court of First Instance of
aforementioned decision of the Court of First Instance
Manila in Civil Case No'. 5203 was, as far as Flores
of Manila) could be revived as against appellant
was concerned, a judgment by default which, under the
Flores? If it is the former, it is clear that the action to
law then in force, was not appealable and was deemed
revive it (Civil Case No. 48859) filed with the same
to be immediately executory. (Lim Toco vs. Go Fay, 89
Court came too late on November 21, 1961, bearing in
Phil. 166; Rodrigo vs. Cabrera, G.R. No. L-6074,
mind that the decision sought to be reviveda
September 16, 1954, construing the effects of a
judgment by default as far as the third party
judgment by default under Rule 35, Section 7 of the
defendant Flores was concernedwas rendered on
original Rules of Court.) Therefore, even if Flores had
March 7, 1951, On the other hand, if it was our
attempted to appeal therefrom, his appeal would have
decision in G.R. Nos. L-6569 and L-6576 promulgated
been out of order,
on April 18, 1956, the action for revival was timely
It has been argued that, as the judgment by default
filed, as held by the lower court.
against Flores was in favor of Pilar Bautista upon her
In connection with the above question, two
third party complaint, the same may not be considered
undisputed facts must be borne in mind. The first is
final or enforceable until the final determination of the
that from the
306 main casewhich took place only upon the finality of
204
our decision in G.R. No. L-6569 and G.R. No. L-
6576 promulgated on 'April 18, 18, 1956and that,
this being so, the action for revival in question was
filed on time. This argument might apply if the cause
of action alleged in Pilar Bautista's third 'party
complaint against Mariano R. Flores was dependent
upon the success or failure of the claim subject matter
of the main action instituted by Wenceslao Pascual
against Pilar Bautista, plaintiff and defendant.
therein, respectively. Such, however, is not the case
before Us, where it is clear that Bautista's cause of
action as third party plaintiff against third party
defendant Flores was based on paragraph 5 of their
agreement of January 6, 1945 which reads as follows:
"(5) The VENDOR shall, in the event that for any reason
whatsoever Nelly Montilla de Lovina shall refuse or fail
to execute in favor of the VENDOR a deed of sale
covering the said fishpond, pay unto the VENDEE the
sum of
307
VOL. 33, MAY 29, 19700 307
Pascual vs. Bautista
FIVE HUNDRED THOUSAND PESOS (P500,000.00) legal
tender at the time, as liquidated damages, plus all expenses
that VENDEE shall have incurred for the improvement of
the fishpond; and in case of non-payment of the liquidated
damages and the other expenses above stated the VENDEE
shall have the right to foreclose and levy upon the
guarantee hereinabove described, the VENDOR hereby
expressly waiving all -his rights under the provisions of
Rule 39, Section 12 of the Rules of Court;"
The above stipulation makes it crystal clear that the
vendee (Pilar Bautista) would be entitled to recover
from the vendor (Mariano Flores) the liquidated
damages and expenses agreed upon "in the event
that for any reason whatsoever Nelly Montilla de
Lovina shall refuse or fail to execute in favor of the
vendor a deed of sale covering the said fishpond"
(Italics supplied). Because Mrs. Lovina refused and/or
failed to execute the contemplated deed of sale the trial
court rendered the judgment by default against
Mariano Flores. That the cause of action or claim of
Pilar Bautista, as third party plaintiff, against
Mariano Flores, as third party defendant, did not
depend upon the outcome of the principal action
(Pascual vs. Bautista and the Lovinas) is evident from
the nature of the claims involved therein described in
our decision in G.R. No, L-6569 and G.R. No. L-
6576 as follows:
"In his complaint against Pilar Bautista, the Lovinas, and
the latter's man, Yambao, Pascual alleged his lease,
dispossession and losses and sought: (a) the rescission of
the lease with Pilar Bautista; (b) the return of the
205
P10,000.00 he paid; and (c) payment of P27,556.00,
representing the value of the fish he had in the fishpond;
P20,814.72 worth of repairs thereto and P3,000.00
attorney's fees.
"Bautista answered pleading the acquisition of the rights
of Mariano Flores; that she offered to place the fishpond in
plaintiff's possession but that the latter refused to resume
possession; and counterclaimed for the balance of the
second year's rent, amounting to P6,000.00.
"The Lovinas filed answer denying privity of contract
with Pascual; and pleaded the expiration of Flores' option
without its being exercised, and that they had repossessed
the fishpond because it was abandoned.
"Subsequently, Pilar Bautista filed a third-party
complaint
308
30 SUPREME COURT REPORTS
8 ANNOTATED
Pascual vs. Bautista
against Mariano R. Flores alleging breach of the contract
Exh. 6-Bautista, and consequent losses; and prayed for
judgment in the sum of P500,000.00 as liquidated damages
and attorney's fees, and that the mortgage in her favor be
foreclosed.
"Flores was declared in default and his properties were
attached."
Whether or not the filing of the third party complaint
was proper can not now be raised by, nor be invoked in
favor of Pilar Bautista, because it was she precisely
who filed it. Moreover, it is clear from the provisions of
the Rules of Court that for a claim to be properly
raised in a pending action by way of third party
complaint, it is not necessary that it be one arising
from or entirely dependent upon the main action; it is
enough that it be "in respect" of the claim of third
party plaintiffs opponent (Rule 6, Section 12, Rules of
Court), or that it be "connected with plaintiffs claim"
(Capayas vs. Court of First Instance of Albay 43 O.G.
2071, 2074: U.S. Commercial Company vs. Macario
Guevarra, et al., 48 O.G. pp. 612-613).
The foregoing makes unnecessary the consideration
of other issues raised by appellant in his brief.
WHEREFORE, judgment is hereby rendered setting
aside the appealed decision, without costs.
Concepcion, C.J., Reyes,
J.B.L., Fernando and Villamor, JJ., concur.
Makalintal, Zaldivar and Teehankee, JJ., took
no part.
Barredo, J., concurs in a separate opinion.
Castro, J., is on official leave.
Decision set aside.
206
BARREDO, J., concurring:
I concur in the result.
I find myself unable, however, to agree with the
proposition impliedly, if not directly, upheld in the
main opinion that even if the claim of plaintiff-appellee
Pilar Bautista
309
VOL. 33, MAY 29, 1970 309
Pascual vs. Bautista
is considered as a proper third-party complaint, the
judgment in her favor and against Flores would still
have been enforceable even before the decision of this
Court in G.R. Nos. L-6569 and L-6576 became final
and executory which, to be sure, is unnecessary and,
therefore, obiter dictum.
To start with, if it is true that the allegation of
defendant-appellant Mariano Flores under his contract
with appellee Bautista was really entirely independent
of any liability of the latter to Wenceslao Pascual who
had sued her, I cannot see how a third-party complaint
could have been filed by appellee. To say that the basis
of Bautista's claim against Flores is completely
independent of Pascual's cause of action against her
and, in the same breath, hold that such claim of
Bautista against Flores is "in respect of" Pascual's
claim strikes me as lacking in consistency. Even if this
point, as the main opinion holds, can no longer be
raised now, it is my considered view that it is better
that the true nature of the remedy in question be
determined, thereby clearing any doubt as to the rights
of the parties before Us. I maintain, therefore, that the
pleading filed by appellee Bautista against appellant
Flores was not a third-party complaint but an ordinary
complaint, mistakenly pleaded within the pending
action between Pascual and appellee. Nonetheless,
since judgment by default was actually rendered
thereon by the court, apparently without anybody
being the wiser and because there was noobjection
from anyone, the said judgment must be treated as an
ordinary one? as contradistinguished from a judgment
upon a third-party complaint. Accordingly, I concur in
the result of the main opinion. If, on the other hand,
the pleading in question were to be considered as a
genuine third-party complaint, the dispositive portion
of this decision would not be, in my opinion, correct.
I regret I have to disagree with the excessively
broad concept of a third-party complaint defined by the
main opinion. I do not believe that the phrase "in
respect of
310
31 SUPREME COURT REPORTS
0 ANNOTATED
Pascual vs. Bautista
207
his opponent's claim" used in Section 12 of Rule 6 of
the Rules of Court concerning third-party complaints,
can be equated with or has the same connotation as
that of being merely "connected with the plaintiffs
claim", as the main opinion holds. I realize that this
quotation is from Capayas vs. Court of First Instance
of Albay, 77 Phil. 181, 183, but I am afraid it can be
out of context, for, precisely in that very decision, this
Court held:
"Petitioner's claim for indemnity against Lladoc and others
does neither arise out of the same transaction or the alleged
petitioner's tortuous act on which plaintiff s action is based,
nor is it based on a different transaction but connected with
the plaintiff's claim. Plaintiffs claim against petitioner and
his co-defendants is, according to the allegations in the
complaint, (a) to recover from them damages for the palay
which have been illegally harvested from certain lands
belonging to the plaintiff, and (b) to enjoin them from
entering said lands and disturbing and molesting the
plaintiff's right of ownership and possession thereof.
Whereas the petitioner's claim against Isidora Lladoc and
others is to recover from the latter the value of the three
parcels of land and their fruits -amounting to P3,200 plus
legal interest, for having said Isidora, as administratrix of
the intestate estate of Ceferino Guanzon, sold said lands in
1927 without authority of the court to Domingo Imperial,
from whom said lands were acquired by the plaintiff. And in
the present case, it is clear that if the so-called thirdparty
complaint be allowed, Isidora Lladoc and others named
therein as third-party defendants could not assert any
defense which the petitioner has or may have to the
plaintiff's claim."
Indeed, the true nature and concept of a third-party
complaint was more comprehensively stated in that
Capayas case thus:
"Secondly, Because the respondent court would have
committed an error if it had admitted the so-called third-
party complaint filed by the petitioner against Isidora
Lladoc, Fulgencio Lladoc and Gregorio Navera, since the
facts alleged therein do not show that the petitioner is
entitled to indemnity against them 'in respect to plaintiff's
claim.' The test to determine whether the claim for
indemnity in a third-party complaint, 'in respect to
plaintiff's claim' is, whether It arises out of the same
transaction on which the plaintiff's claim is based, or the
third-party's claim, although arising out of another or
different contract or transaction, is connected with the
plaintiff's claim.
311
VOL. 33, MAY 29, 1970 311
Pascual vs. Bautista
"According to the decision in the case of Crim. vs.
Lumberman's Mutual Casualty Co. (26 Fed. Supp. 715 [1
Fed. Rules Service, 14a11, Case No. 1]), the test to
determine when a thirdparty defendant may be impleaded
208
is whether he could have been joined originally -as a
defendant by the plaintiff. But this could be applied only if
there could be asserted against the defendant as the third-
party defendant, jointly and severally or in the alternatives,
any right to relief arising out of the same transaction. For
example in an action against the surety on a bond, the
surety may bring in as a third-party defendant, the
principal who had agreed to indemnify the surety, because
the surety's claim arises out of the same transaction.
(United States vs. United States Fidelity & Guaranty Co.
vs. Kolling, U.S. Dist Ct., D. Minn., February 1, 1940, 2 Fed.
Rules Service 14a222, Case No. 1). The above test does not
cover all cases in which impleading a third-party may be
and have been allowed, which are also covered by the test
we have laid down in the previous paragraph, Under Rule
14 of Federal Rules of Civil Procedure, which corresponds to
our Rule 12, the bringing in of a third-party defendant is
proper if he would be liable to the plaintiff or to the
defendant for all or part of the plaintiff's claim against the
original defendant, although the thirdparty defendant's
liability arises out of -another transaction. So in the case of
Carbola Chemical Co., Inc. vs. Trundle Ergineering Co.
(U.S. Dist Ct, S.D.N.Y., December 26, 1942), it was held
that in an action for breach of contract to render
engineering services and to survey a plant, the defendant
was allowed to bring as a third-party defendant, the
manufacturer which sold defendant's equipment to the
plaintiff (7 Fed. Rules Service, 14a11, Case No. 1). And in a
negligence action by the purchaser of a confection in which
it is alleged that the confection contained a foreign object,
the defendant may bring in the person who supplied him
with the constituent contain-ing the foreign object, as a
third-party defendant (Saunders vs. Southern Dairies, Inc.
U.S. Dist. Ct., District of Columbia, November 6, 1939 [2
Fed. Rules Service, 14a.226, Case No. 3]).
"Another test, provided for by section 4, Rule 12, of our
Rules of Court, is whether the third-party defendant may
assert any defenses which the third-party plaintiff has or
may have to the plaintiff's claim. If he may properly assert
such defenses, then he is a proper third-party defendant;
otherwise he is not and the claim against him can not be
considered as a third-party complaint."
The way I understand the above-quoted dissertation, it
does not lay down one single test that can be utilized
or applied separately from the others. To determine
312
31 SUPREME COURT REPORTS
2 ANNOTATED
Pascual vs. Bautista
whether a third-party complaint is proper or not, all
the tests mentioned must have to be satisfied.
There is no question that the purpose of a third-
party complaint is to avoid multiplicity of suits, but
this principle cannot be so extensive as to authorize
the impleading of a party whose controversy with the
209
impleader relates to a claim with which those already
in the action have nothing to do, even if the
transactions involved in the controversy already in
court may have some connection, as when it is part of
the same series, with that to be involved in the third-
party complaint. What justifies a unity of proceedings
is community of interest and issues, except as between
parties already contending with each other, in which
all kinds of claims are permissible to be pleaded
against each other. I maintain there is a distinction
between related transactions and related claims, and
the latter, not the former, are the ones that can be the
subject of the third-party complaints. In other words,
the claims must be related to the same transaction and
not to merely related transactions.
In defining a compulsory counter-claim, Section 4 of
Rule 9 uses the phrases "necessarily connected with."
Of course the reference here is to transaction or
occurence and not to claims, My point, however, is that
were it the intention of Section 12, Rule 6 to refer to
merely "connected" claims, it would have used that
word instead of the phrase "in respect of" as in Section
4, Rule 9. and thereby avoid confusion. If it is bad to
give to the same word used in the various parte of a
single body of rules or laws different meanings, since
must be presumed that the authors thereof must have
intended a uniform meaning for it throughout,
conversely, it is just as bad to attribute the same
meaning to two different, if quite synonymous words
therein, for it is obvious that the use of a different
word, with a known somewhat different connotation,
indicates that the meaning intended to be conveyed is
also different.
It appears quite clear to me that in ordinary
parlance, to say that one thing is "connected with"
another does not convey the same import as saying
that it is "in respect
313
VOL. 33, MAY 29, 1970 313
Pascual vs. Bautista
of" it. "Connected with" comprehends a much broader
idea than "in respect of." I am sure that, at least, these
two phrases are not always interchangeable.
According to Senator Vicente Francisco, a
distinguished authority in procedural law, "The rule on
third-party complaint requires that the claim of the
defendant be 'in respect of the plaintiff's claim.' Unlike
permissive counter-claim, the third-party complaint
must be founded on the claims in the original
action" (The Revised Rules of Court in the Philippines,
Annotated and Commented by Vicente Francisco, Vol.
I, p. 351. (Italics supplied.) In this connection, he cites
United States vs. Jollimore vs. Holland Furnace Co., 5
210

Federal Rules Service 205, thus: "A thirdparty def
endant may not be impleaded if the effect would be to
introduce a new and separate controversy into the
action. The test to determine whether a third-party
may be impleaded is whether he could have been
joined originally as a defendant by the plaintiff or
object of the civil procedure rule permitting a defendant to
bring in a third-party defendant is to avoid circuity of action
and to dispose, in one litigation, of an entire subject matter
arising from a particular set of facts.Tullgreen vs. Jasper,
[1939] 27 F. Supp. 413.)
314

whether he is liable as a guarantor, surety, insurer, or 31 SUPREME COURT REPORTS

4 ANNOTATED
indemnifier of the principal defendant." Further, the
Pascual vs. Bautista,
same author opines:
"3, Nature of third-party complaint.Third party complaint
"2. Purpose of third-party complaintThe purpose of third-
is merely a device by which the defendant can bring into the
party complaint is to avoid two actions which should be
original suit a party against whom he will have a claim for
tried together to save time and cost of reduplication of
indemnity or remuneration as a result of a liability
evidence, to obtain consistent results from identical or
established against him in the original suit It is a species of
similar evidence, and to do away with the serious handicap
joinder of actions where the second action accrues only as a
to a defendant of a time difference between a judgment
result of the first action. All liabilities are determined in the
against him, and a judgment in his favor against the third-
one action and the use of third-party complaint is
party defendant. (Moore's Federal Practice, 740; Tullgreen
discretionary with the court. (Univ. of Cincinnatti Rev. Vol.
vs. Jasper, 1939, 27 F. Supp. 413.)
13, No. 1, pp. 92-93.)"
"The purpose of the rule is to avoid delay and circuity of
actions and to enable the controversy to be disposed of in I submit that a fourth-party complaint is nothing more
one suit, that is, to permit the determination in a single nothing less than a third-party complaint, except that
suit of not only the original claim, but the added party's it is only in respect of the claim of the third-party
liability therefor. (67 C.J.S. 1934; The purpose of third-
plaintiff against the third-party defendant. Now,
party procedure is to avoid circuity of action and permits
Section 13 of Rule 6 defines a fourth-party complaint
the determination in a single action of the rights and
as follows:
liabilities of parties growing out of facts that relate to the
"SEC. 13, Fourth, etc,, parties.A third-party defendant
same transaction.Carbola Chemical Co., Inc. vs. Trundle
may proceed under this rule against any person not a party
Engineering Co., 7 Federal Rules Service, 269; The primary
211
to the action who is or may be liable to him or to the third-
party plaintiff for all or part of the claim made in the action
against the third-party defendant/'
I am convinced that these simple words
applied mutatis mutandis to the definition of a third-
party complaint convey the true concept of such
pleading- I simply cannot see why a plaintiff can be
made to saddle the time, inconvenience and expenses
of attending to a third-party complaint wherein the
fate of his own claim against the def endant is
absolutely independent of the claim of the def endant
against the third-party defendant just because the
transaction involved in the third-party complaint
happens to be related somehow to the transaction
subject of his complaint, especially if the plaintiff has
not taken part nor is he mentioned or referred to in
such transaction. My fear is that such an amplification
of the concept of thirdparty complaints which the main
opinion seems to sanction will not serve the purpose of
"assisting the parties in obtaining just, speedy and
inexpensive determination of every action or
proceeding" as envisioned in Section 2 of Rule 1. On
the contrary, it is bound to create confusion,
unnecessary delay and expense for the plaintiff
without any corresponding benefit to the interests of
justice.
315
VOL. 33, MAY 29, 1970 315
Salvador vs. Frio
Applying these views to this case, I reiterate that if the
claim of Bautista were a real third-party complaint,
the effect would be that the judgment, even by the
default, against Flores did not become executory until
after the claim against Bautista had been finally
determined, for in my concept, as explained above, of a
real third-party complaint, the third-party def endant
is never liable to the defendant unless the latter is
liable to the plaintiff.
Notes.(a) Appealability of judgment by default.
Under the Revised Rules of Court, a party who has
been declared in default may appeal from the
judgment rendered against him as contrary to the
evidence or to the law, even if no petition for relief to
set aside the order of default has been presented by
him in accordance with Rule 38. (See third paragraph
of Section 2, Rule 41.)
(b) Third-party complaint; relationship of subject
matter to main case.The tests for determining
whether a claim for indemnity in a third party
complaint is "in respect to plaintiff's claim" are: (1)
whether it arises out of the same transaction on which
plaintiff's claim is based or, although arising out of a
different contract or transaction, is connected with
212

plaintiff's claim; (2) whether the third-party defendant
would be liable to plaintiff or to defendant for all or
part of plaintiff's claim, although the third-party
defendant's liability arises out of another transaction;
and (3) whether the third-party defendant may assert
any defense which. the third-party plaintiff has or may
have to plaintiff s claim (Capayas vs. Court of First
Instance of Albay, 77 Phil. 181).