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SECOND DIVISION

[G.R. No. 139325. April 12, 2005]

PRISCILLA C. MIJARES, LORETTA ANN P. ROSALES, HILDA B.


NARCISO, SR. MARIANI DIMARANAN, SFIC, and JOEL C.
LAMANGAN in their behalf and on behalf of the Class Plaintiffs in
Class Action No. MDL 840, United States District Court of
Hawaii, petitioners, vs. HON. SANTIAGO JAVIER RANADA, in his
capacity as Presiding Judge of Branch 137, Regional Trial Court,
Makati City, and the ESTATE OF FERDINAND E. MARCOS,
through its court appointed legal representatives in Class Action
MDL 840, United States District Court of Hawaii, namely: Imelda
R. Marcos and Ferdinand Marcos, Jr., respondents.

DECISION
TINGA, J.:

Our martial law experience bore strange unwanted fruits, and we have yet to finish
weeding out its bitter crop. While the restoration of freedom and the fundamental
structures and processes of democracy have been much lauded, according to a
significant number, the changes, however, have not sufficiently healed the colossal
damage wrought under the oppressive conditions of the martial law period. The cries of
justice for the tortured, the murdered, and the desaparecidos arouse outrage and
sympathy in the hearts of the fair-minded, yet the dispensation of the appropriate relief
due them cannot be extended through the same caprice or whim that characterized the
ill-wind of martial rule. The damage done was not merely personal but institutional, and
the proper rebuke to the iniquitous past has to involve the award of reparations due within
the confines of the restored rule of law.
The petitioners in this case are prominent victims of human rights violations [1] who,
deprived of the opportunity to directly confront the man who once held absolute rule over
this country, have chosen to do battle instead with the earthly representative, his estate.
The clash has been for now interrupted by a trial court ruling, seemingly comported to
legal logic, that required the petitioners to pay a whopping filing fee of over Four Hundred
Seventy-Two Million Pesos (P472,000,000.00) in order that they be able to enforce a
judgment awarded them by a foreign court. There is an understandable temptation to cast
the struggle within the simplistic confines of a morality tale, and to employ short-cuts to
arrive at what might seem the desirable solution. But easy, reflexive resort to the equity
principle all too often leads to a result that may be morally correct, but legally wrong.
Nonetheless, the application of the legal principles involved in this case will comfort
those who maintain that our substantive and procedural laws, for all their perceived
ambiguity and susceptibility to myriad interpretations, are inherently fair and just. The
relief sought by the petitioners is expressly mandated by our laws and conforms to
established legal principles. The granting of this petition for certiorari is warranted in order
to correct the legally infirm and unabashedly unjust ruling of the respondent judge.
The essential facts bear little elaboration. On 9 May 1991, a complaint was filed with
the United States District Court (US District Court), District of Hawaii, against the Estate
of former Philippine President Ferdinand E. Marcos (Marcos Estate). The action was
brought forth by ten Filipino citizens[2] who each alleged having suffered human rights
abuses such as arbitrary detention, torture and rape in the hands of police or military
forces during the Marcos regime.[3] The Alien Tort Act was invoked as basis for the US
District Courts jurisdiction over the complaint, as it involved a suit by aliens for tortious
violations of international law.[4] These plaintiffs brought the action on their own behalf and
on behalf of a class of similarly situated individuals, particularly consisting of all current
civilian citizens of the Philippines, their heirs and beneficiaries, who between 1972 and
1987 were tortured, summarily executed or had disappeared while in the custody of
military or paramilitary groups. Plaintiffs alleged that the class consisted of approximately
ten thousand (10,000) members; hence, joinder of all these persons was impracticable.
The institution of a class action suit was warranted under Rule 23(a) and (b)(1)(B) of
the US Federal Rules of Civil Procedure, the provisions of which were invoked by the
plaintiffs. Subsequently, the US District Court certified the case as a class action and
created three (3) sub-classes of torture, summary execution and disappearance
victims.[5] Trial ensued, and subsequently a jury rendered a verdict and an award of
compensatory and exemplary damages in favor of the plaintiff class. Then, on 3 February
1995, the US District Court, presided by Judge Manuel L. Real, rendered a Final
Judgment (Final Judgment) awarding the plaintiff class a total of One Billion Nine
Hundred Sixty Four Million Five Thousand Eight Hundred Fifty Nine Dollars and Ninety
Cents ($1,964,005,859.90). The Final Judgment was eventually affirmed by the US Court
of Appeals for the Ninth Circuit, in a decision rendered on 17 December 1996.[6]
On 20 May 1997, the present petitioners filed Complaint with the Regional Trial Court,
City of Makati (Makati RTC) for the enforcement of the Final Judgment. They alleged that
they are members of the plaintiff class in whose favor the US District Court awarded
damages.[7] They argued that since the Marcos Estate failed to file a petition for certiorari
with the US Supreme Court after the Ninth Circuit Court of Appeals had affirmed the Final
Judgment, the decision of the US District Court had become final and executory, and
hence should be recognized and enforced in the Philippines, pursuant to Section 50, Rule
39 of the Rules of Court then in force.[8]
On 5 February 1998, the Marcos Estate filed a motion to dismiss, raising, among
others, the non-payment of the correct filing fees. It alleged that petitioners had only paid
Four Hundred Ten Pesos (P410.00) as docket and filing fees, notwithstanding the fact
that they sought to enforce a monetary amount of damages in the amount of over Two
and a Quarter Billion US Dollars (US$2.25 Billion). The Marcos Estate cited Supreme
Court Circular No. 7, pertaining to the proper computation and payment of docket fees.
In response, the petitioners claimed that an action for the enforcement of a foreign
judgment is not capable of pecuniary estimation; hence, a filing fee of only Four Hundred
Ten Pesos (P410.00) was proper, pursuant to Section 7(c) of Rule 141.[9]
On 9 September 1998, respondent Judge Santiago Javier Ranada[10] of the Makati
RTC issued the subject Order dismissing the complaint without prejudice. Respondent
judge opined that contrary to the petitioners submission, the subject matter of the
complaint was indeed capable of pecuniary estimation, as it involved a judgment rendered
by a foreign court ordering the payment of definite sums of money, allowing for easy
determination of the value of the foreign judgment. On that score, Section 7(a) of Rule
141 of the Rules of Civil Procedure would find application, and the RTC estimated the
proper amount of filing fees was approximately Four Hundred Seventy Two Million Pesos,
which obviously had not been paid.
Not surprisingly, petitioners filed a Motion for Reconsideration, which Judge Ranada
denied in an Order dated 28 July 1999. From this denial, petitioners filed a Petition for
Certiorari under Rule 65 assailing the twin orders of respondent judge.[11] They prayed for
the annulment of the questioned orders, and an order directing the reinstatement of Civil
Case No. 97-1052 and the conduct of appropriate proceedings thereon.
Petitioners submit that their action is incapable of pecuniary estimation as the subject
matter of the suit is the enforcement of a foreign judgment, and not an action for the
collection of a sum of money or recovery of damages. They also point out that to require
the class plaintiffs to pay Four Hundred Seventy Two Million Pesos (P472,000,000.00) in
filing fees would negate and render inutile the liberal construction ordained by the Rules
of Court, as required by Section 6, Rule 1 of the Rules of Civil Procedure, particularly the
inexpensive disposition of every action.
Petitioners invoke Section 11, Article III of the Bill of Rights of the Constitution, which
provides that Free access to the courts and quasi-judicial bodies and adequate legal
assistance shall not be denied to any person by reason of poverty, a mandate which is
essentially defeated by the required exorbitant filing fee. The adjudicated amount of the
filing fee, as arrived at by the RTC, was characterized as indisputably unfair, inequitable,
and unjust.
The Commission on Human Rights (CHR) was permitted to intervene in this case.[12] It
urged that the petition be granted and a judgment rendered, ordering the enforcement
and execution of the District Court judgment in accordance with Section 48, Rule 39 of
the 1997 Rules of Civil Procedure. For the CHR, the Makati RTC erred in interpreting the
action for the execution of a foreign judgment as a new case, in violation of the principle
that once a case has been decided between the same parties in one country on the same
issue with finality, it can no longer be relitigated again in another country. [13] The CHR
likewise invokes the principle of comity, and of vested rights.
The Courts disposition on the issue of filing fees will prove a useful jurisprudential
guidepost for courts confronted with actions enforcing foreign judgments, particularly
those lodged against an estate. There is no basis for the issuance a limited pro hac
vice ruling based on the special circumstances of the petitioners as victims of martial law,
or on the emotionally-charged allegation of human rights abuses.
An examination of Rule 141 of the Rules of Court readily evinces that the respondent
judge ignored the clear letter of the law when he concluded that the filing fee be computed
based on the total sum claimed or the stated value of the property in litigation.
In dismissing the complaint, the respondent judge relied on Section 7(a), Rule 141 as
basis for the computation of the filing fee of over P472 Million. The provision states:

SEC. 7. Clerk of Regional Trial Court.-

(a) For filing an action or a permissive counterclaim or money claim against an


estate not based on judgment, or for filing with leave of court a third-party, fourth-party,
etc., complaint, or a complaint in intervention, and for all clerical services in the same time,
if the total sum claimed, exclusive of interest, or the started value of the property in
litigation, is:

1. Less than P 100,00.00 P 500.00


2. P 100,000.00 or more - P 800.00
but less than P 150,000.00
3. P 150,000.00 or more but - P 1,000.00
less than P 200,000.00
4. P 200,000.00 or more but
less than P 250,000.00 - P 1,500.00
5. P 250,000.00 or more but
less than P 300,00.00 - P 1,750.00
6. P 300,000.00 or more but
not more than P 400,000.00 - P 2,000.00
7. P 350,000.00 or more but not
more than P400,000.00 - P 2,250.00
8. For each P 1,000.00 in excess of
P 400,000.00 - P 10.00

...

(Emphasis supplied)

Obviously, the above-quoted provision covers, on one hand, ordinary actions,


permissive counterclaims, third-party, etc. complaints and complaints-in-interventions,
and on the other, money claims against estates which are not based on judgment. Thus,
the relevant question for purposes of the present petition is whether the action filed with
the lower court is a money claim against an estate not based on judgment.
Petitioners complaint may have been lodged against an estate, but it is clearly based
on a judgment, the Final Judgment of the US District Court. The provision does not make
any distinction between a local judgment and a foreign judgment, and where the law does
not distinguish, we shall not distinguish.
A reading of Section 7 in its entirety reveals several instances wherein the filing fee
is computed on the basis of the amount of the relief sought, or on the value of the property
in litigation. The filing fee for requests for extrajudicial foreclosure of mortgage is based
on the amount of indebtedness or the mortgagees claim. [14] In special proceedings
involving properties such as for the allowance of wills, the filing fee is again based on the
value of the property.[15] The aforecited rules evidently have no application to petitioners
complaint.
Petitioners rely on Section 7(b), particularly the proviso on actions where the value of
the subject matter cannot be estimated. The provision reads in full:

SEC. 7. Clerk of Regional Trial Court.-

(b) For filing

1. Actions where the value


of the subject matter
cannot be estimated --- P 600.00

2. Special civil actions except


judicial foreclosure which
shall be governed by
paragraph (a) above --- P 600.00

3. All other actions not


involving property --- P 600.00

In a real action, the assessed value of the property, or if there is none, the estimated value, thereof
shall be alleged by the claimant and shall be the basis in computing the fees.

It is worth noting that the provision also provides that in real actions, the assessed
value or estimated value of the property shall be alleged by the claimant and shall be the
basis in computing the fees. Yet again, this provision does not apply in the case at bar. A
real action is one where the plaintiff seeks the recovery of real property or an action
affecting title to or recovery of possession of real property.[16] Neither the complaint nor the
award of damages adjudicated by the US District Court involves any real property of the
Marcos Estate.
Thus, respondent judge was in clear and serious error when he concluded that the
filing fees should be computed on the basis of the schematic table of Section 7(a), as the
action involved pertains to a claim against an estate based on judgment. What provision,
if any, then should apply in determining the filing fees for an action to enforce a foreign
judgment?
To resolve this question, a proper understanding is required on the nature and effects
of a foreign judgment in this jurisdiction.
The rules of comity, utility and convenience of nations have established a usage
among civilized states by which final judgments of foreign courts of competent jurisdiction
are reciprocally respected and rendered efficacious under certain conditions that may
vary in different countries.[17] This principle was prominently affirmed in the leading
American case of Hilton v. Guyot[18] and expressly recognized in our jurisprudence
beginning with Ingenholl v. Walter E. Olsen & Co.[19] The conditions required by the
Philippines for recognition and enforcement of a foreign judgment were originally
contained in Section 311 of the Code of Civil Procedure, which was taken from the
California Code of Civil Procedure which, in turn, was derived from the California Act of
March 11, 1872.[20] Remarkably, the procedural rule now outlined in Section 48, Rule 39
of the Rules of Civil Procedure has remained unchanged down to the last word in nearly
a century. Section 48 states:

SEC. 48. Effect of foreign judgments. The effect of a judgment of a tribunal of a foreign country,
having jurisdiction to pronounce the judgment is as follows:

(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to the
thing;

(b) In case of a judgment against a person, the judgment is presumptive evidence of a right as
between the parties and their successors in interest by a subsequent title;

In either case, the judgment or final order may be repelled by evidence of a want of jurisdiction,
want of notice to the party, collusion, fraud, or clear mistake of law or fact.

There is an evident distinction between a foreign judgment in an action in rem and


one in personam. For an action in rem, the foreign judgment is deemed conclusive upon
the title to the thing, while in an action in personam, the foreign judgment is presumptive,
and not conclusive, of a right as between the parties and their successors in interest by
a subsequent title.[21] However, in both cases, the foreign judgment is susceptible to
impeachment in our local courts on the grounds of want of jurisdiction or notice to the
party,[22] collusion, fraud,[23] or clear mistake of law or fact.[24] Thus, the party aggrieved by
the foreign judgment is entitled to defend against the enforcement of such decision in the
local forum. It is essential that there should be an opportunity to challenge the foreign
judgment, in order for the court in this jurisdiction to properly determine its efficacy.[25]
It is clear then that it is usually necessary for an action to be filed in order to enforce
a foreign judgment[26], even if such judgment has conclusive effect as in the case of in
rem actions, if only for the purpose of allowing the losing party an opportunity to challenge
the foreign judgment, and in order for the court to properly determine its
efficacy.[27] Consequently, the party attacking a foreign judgment has the burden of
overcoming the presumption of its validity.[28]
The rules are silent as to what initiatory procedure must be undertaken in order to
enforce a foreign judgment in the Philippines. But there is no question that the filing of a
civil complaint is an appropriate measure for such purpose. A civil action is one by which
a party sues another for the enforcement or protection of a right, [29] and clearly an action
to enforce a foreign judgment is in essence a vindication of a right prescinding either from
a conclusive judgment upon title or the presumptive evidence of a right.[30] Absent perhaps
a statutory grant of jurisdiction to a quasi-judicial body, the claim for enforcement of
judgment must be brought before the regular courts.[31]
There are distinctions, nuanced but discernible, between the cause of action arising
from the enforcement of a foreign judgment, and that arising from the facts or allegations
that occasioned the foreign judgment. They may pertain to the same set of facts, but there
is an essential difference in the right-duty correlatives that are sought to be vindicated.
For example, in a complaint for damages against a tortfeasor, the cause of action
emanates from the violation of the right of the complainant through the act or omission of
the respondent. On the other hand, in a complaint for the enforcement of a foreign
judgment awarding damages from the same tortfeasor, for the violation of the same right
through the same manner of action, the cause of action derives not from the tortious act
but from the foreign judgment itself.
More importantly, the matters for proof are different. Using the above example, the
complainant will have to establish before the court the tortious act or omission committed
by the tortfeasor, who in turn is allowed to rebut these factual allegations or prove
extenuating circumstances. Extensive litigation is thus conducted on the facts, and from
there the right to and amount of damages are assessed. On the other hand, in an action
to enforce a foreign judgment, the matter left for proof is the foreign judgment itself, and
not the facts from which it prescinds.
As stated in Section 48, Rule 39, the actionable issues are generally restricted to a
review of jurisdiction of the foreign court, the service of personal notice, collusion, fraud,
or mistake of fact or law. The limitations on review is in consonance with a strong and
pervasive policy in all legal systems to limit repetitive litigation on claims and
issues.[32] Otherwise known as the policy of preclusion, it seeks to protect party
expectations resulting from previous litigation, to safeguard against the harassment of
defendants, to insure that the task of courts not be increased by never-ending litigation of
the same disputes, and in a larger sense to promote what Lord Coke in the Ferrers
Case of 1599 stated to be the goal of all law: rest and quietness.[33] If every judgment of a
foreign court were reviewable on the merits, the plaintiff would be forced back on his/her
original cause of action, rendering immaterial the previously concluded litigation. [34]
Petitioners appreciate this distinction, and rely upon it to support the proposition that
the subject matter of the complaintthe enforcement of a foreign judgmentis incapable of
pecuniary estimation. Admittedly the proposition, as it applies in this case, is counter-
intuitive, and thus deserves strict scrutiny. For in all practical intents and purposes, the
matter at hand is capable of pecuniary estimation, down to the last cent. In the
assailed Order, the respondent judge pounced upon this point without equivocation:

The Rules use the term where the value of the subject matter cannot be estimated. The subject
matter of the present case is the judgment rendered by the foreign court ordering defendant to pay
plaintiffs definite sums of money, as and for compensatory damages. The Court finds that the value
of the foreign judgment can be estimated; indeed, it can even be easily determined. The Court is
not minded to distinguish between the enforcement of a judgment and the amount of said judgment,
and separate the two, for purposes of determining the correct filing fees. Similarly, a plaintiff suing
on promissory note for P1 million cannot be allowed to pay only P400 filing fees (sic), on the
reasoning that the subject matter of his suit is not the P1 million, but the enforcement of the
promissory note, and that the value of such enforcement cannot be estimated.[35]

The jurisprudential standard in gauging whether the subject matter of an action is


capable of pecuniary estimation is well-entrenched. The Marcos Estate cites Singsong v.
Isabela Sawmill and Raymundo v. Court of Appeals, which ruled:

[I]n determining whether an action is one the subject matter of which is not capable of pecuniary
estimation this Court has adopted the criterion of first ascertaining the nature of the principal action
or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered
capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts
of first instance would depend on the amount of the claim. However, where the basic issue is
something other than the right to recover a sum of money, where the money claim is purely
incidental to, or a consequence of, the principal relief sought, this Court has considered such
actions as cases where the subject of the litigation may not be estimated in terms of money, and
are cognizable exclusively by courts of first instance (now Regional Trial Courts).

On the other hand, petitioners cite the ponencia of Justice JBL Reyes in Lapitan v.
Scandia,[36] from which the rule in Singsong and Raymundo actually derives, but which
incorporates this additional nuance omitted in the latter cases:

xxx However, where the basic issue is something other than the right to recover a sum of money,
where the money claim is purely incidental to, or a consequence of, the principal relief sought, like
in suits to have the defendant perform his part of the contract (specific performance) and in
actions for support, or for annulment of judgment or to foreclose a mortgage, this Court has
considered such actions as cases where the subject of the litigation may not be estimated in terms
of money, and are cognizable exclusively by courts of first instance.[37]

Petitioners go on to add that among the actions the Court has recognized as being
incapable of pecuniary estimation include legality of conveyances and money
deposits,[38] validity of a mortgage,[39] the right to support,[40] validity of
documents,[41] rescission of contracts,[42] specific performance,[43] and validity or annulment
of judgments.[44] It is urged that an action for enforcement of a foreign judgment belongs
to the same class.
This is an intriguing argument, but ultimately it is self-evident that while the subject
matter of the action is undoubtedly the enforcement of a foreign judgment, the effect of a
providential award would be the adjudication of a sum of money. Perhaps in theory, such
an action is primarily for the enforcement of the foreign judgment, but there is a certain
obtuseness to that sort of argument since there is no denying that the enforcement of the
foreign judgment will necessarily result in the award of a definite sum of money.
But before we insist upon this conclusion past beyond the point of reckoning, we must
examine its possible ramifications. Petitioners raise the point that a declaration that an
action for enforcement of foreign judgment may be capable of pecuniary estimation might
lead to an instance wherein a first level court such as the Municipal Trial Court would
have jurisdiction to enforce a foreign judgment. But under the statute defining the
jurisdiction of first level courts, B.P. 129, such courts are not vested with jurisdiction over
actions for the enforcement of foreign judgments.

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit
Trial Courts in civil cases. Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts shall exercise:

(1) Exclusive original jurisdiction over civil actions and probate proceedings, testate and
intestate, including the grant of provisional remedies in proper cases, where the value of
the personal property, estate, or amount of the demand does not exceed One hundred
thousand pesos (P100,000.00) or, in Metro Manila where such personal property, estate,
or amount of the demand does not exceed Two hundred thousand pesos (P200,000.00)
exclusive of interest damages of whatever kind, attorney's fees, litigation expenses, and
costs, the amount of which must be specifically alleged: Provided, That where there are
several claims or causes of action between the same or different parties, embodied in
the same complaint, the amount of the demand shall be the totality of the claims in all
the causes of action, irrespective of whether the causes of action arose out of the same
or different transactions;
(2) Exclusive original jurisdiction over cases of forcible entry and unlawful
detainer: Provided, That when, in such cases, the defendant raises the question of
ownership in his pleadings and the question of possession cannot be resolved without
deciding the issue of ownership, the issue of ownership shall be resolved only to
determine the issue of possession.
(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession
of, real property, or any interest therein where the assessed value of the property or
interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions
in Metro Manila, where such assessed value does not exceed Fifty thousand pesos
(P50,000.00) exclusive of interest, damages of whatever kind, attorney's fees, litigation
expenses and costs: Provided, That value of such property shall be determined by the
assessed value of the adjacent lots.[45]
Section 33 of B.P. 129 refers to instances wherein the cause of action or subject
matter pertains to an assertion of rights and interests over property or a sum of money.
But as earlier pointed out, the subject matter of an action to enforce a foreign judgment
is the foreign judgment itself, and the cause of action arising from the adjudication of such
judgment.
An examination of Section 19(6), B.P. 129 reveals that the instant complaint for
enforcement of a foreign judgment, even if capable of pecuniary estimation, would fall
under the jurisdiction of the Regional Trial Courts, thus negating the fears of the
petitioners. Indeed, an examination of the provision indicates that it can be relied upon as
jurisdictional basis with respect to actions for enforcement of foreign judgments, provided
that no other court or office is vested jurisdiction over such complaint:

Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original
jurisdiction:

xxx
(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body
exercising jurisdiction or any court, tribunal, person or body exercising judicial or quasi-judicial
functions.

Thus, we are comfortable in asserting the obvious, that the complaint to enforce the
US District Court judgment is one capable of pecuniary estimation. But at the same time,
it is also an action based on judgment against an estate, thus placing it beyond the ambit
of Section 7(a) of Rule 141. What provision then governs the proper computation of the
filing fees over the instant complaint? For this case and other similarly situated instances,
we find that it is covered by Section 7(b)(3), involving as it does, other actions not involving
property.
Notably, the amount paid as docket fees by the petitioners on the premise that it was
an action incapable of pecuniary estimation corresponds to the same amount required for
other actions not involving property. The petitioners thus paid the correct amount of filing
fees, and it was a grave abuse of discretion for respondent judge to have applied instead
a clearly inapplicable rule and dismissed the complaint.
There is another consideration of supreme relevance in this case, one which should
disabuse the notion that the doctrine affirmed in this decision is grounded solely on the
letter of the procedural rule. We earlier adverted to the the internationally recognized
policy of preclusion,[46] as well as the principles of comity, utility and convenience of
nations[47] as the basis for the evolution of the rule calling for the recognition and
enforcement of foreign judgments. The US Supreme Court in Hilton v. Guyot[48] relied
heavily on the concept of comity, as especially derived from the landmark treatise of
Justice Story in his Commentaries on the Conflict of Laws of 1834. [49] Yet the notion of
comity has since been criticized as one of dim contours[50] or suffering from a number of
fallacies.[51] Other conceptual bases for the recognition of foreign judgments have evolved
such as the vested rights theory or the modern doctrine of obligation.[52]
There have been attempts to codify through treaties or multilateral agreements the
standards for the recognition and enforcement of foreign judgments, but these have not
borne fruition. The members of the European Common Market accede to the Judgments
Convention, signed in 1978, which eliminates as to participating countries all of such
obstacles to recognition such as reciprocity and rvision au fond.[53] The most ambitious of
these attempts is the Convention on the Recognition and Enforcement of Foreign
Judgments in Civil and Commercial Matters, prepared in 1966 by the Hague Conference
of International Law.[54] While it has not received the ratifications needed to have it take
effect,[55] it is recognized as representing current scholarly thought on the topic.[56] Neither
the Philippines nor the United States are signatories to the Convention.
Yet even if there is no unanimity as to the applicable theory behind the recognition
and enforcement of foreign judgments or a universal treaty rendering it obligatory force,
there is consensus that the viability of such recognition and enforcement is essential.
Steiner and Vagts note:

. . . The notion of unconnected bodies of national law on private international law, each following
a quite separate path, is not one conducive to the growth of a transnational community encouraging
travel and commerce among its members. There is a contemporary resurgence of writing stressing
the identity or similarity of the values that systems of public and private international law seek to
further a community interest in common, or at least reasonable, rules on these matters in national
legal systems. And such generic principles as reciprocity play an important role in both fields.[57]

Salonga, whose treatise on private international law is of worldwide renown, points


out:

Whatever be the theory as to the basis for recognizing foreign judgments, there can be little dispute
that the end is to protect the reasonable expectations and demands of the parties. Where the parties
have submitted a matter for adjudication in the court of one state, and proceedings there are not
tainted with irregularity, they may fairly be expected to submit, within the state or elsewhere, to
the enforcement of the judgment issued by the court.[58]

There is also consensus as to the requisites for recognition of a foreign judgment and
the defenses against the enforcement thereof. As earlier discussed, the exceptions
enumerated in Section 48, Rule 39 have remain unchanged since the time they were
adapted in this jurisdiction from long standing American rules. The requisites and
exceptions as delineated under Section 48 are but a restatement of generally accepted
principles of international law. Section 98 of The Restatement, Second, Conflict of Laws,
states that a valid judgment rendered in a foreign nation after a fair trial in a contested
proceeding will be recognized in the United States, and on its face, the term valid brings
into play requirements such notions as valid jurisdiction over the subject matter and
parties.[59] Similarly, the notion that fraud or collusion may preclude the enforcement of a
foreign judgment finds affirmation with foreign jurisprudence and commentators, [60] as well
as the doctrine that the foreign judgment must not constitute a clear mistake of law or
fact.[61] And finally, it has been recognized that public policy as a defense to the recognition
of judgments serves as an umbrella for a variety of concerns in international practice
which may lead to a denial of recognition.[62]
The viability of the public policy defense against the enforcement of a foreign
judgment has been recognized in this jurisdiction.[63] This defense allows for the
application of local standards in reviewing the foreign judgment, especially when such
judgment creates only a presumptive right, as it does in cases wherein the judgment is
against a person.[64] The defense is also recognized within the international sphere, as
many civil law nations adhere to a broad public policy exception which may result in a
denial of recognition when the foreign court, in the light of the choice-of-law rules of the
recognizing court, applied the wrong law to the case.[65] The public policy defense can
safeguard against possible abuses to the easy resort to offshore litigation if it can be
demonstrated that the original claim is noxious to our constitutional values.
There is no obligatory rule derived from treaties or conventions that requires the
Philippines to recognize foreign judgments, or allow a procedure for the enforcement
thereof. However, generally accepted principles of international law, by virtue of the
incorporation clause of the Constitution, form part of the laws of the land even if they do
not derive from treaty obligations.[66] The classical formulation in international law sees
those customary rules accepted as binding result from the combination two elements: the
established, widespread, and consistent practice on the part of States; and a
psychological element known as the opinion juris sive necessitates (opinion as to law or
necessity). Implicit in the latter element is a belief that the practice in question is rendered
obligatory by the existence of a rule of law requiring it.[67]
While the definite conceptual parameters of the recognition and enforcement of
foreign judgments have not been authoritatively established, the Court can assert with
certainty that such an undertaking is among those generally accepted principles of
international law.[68] As earlier demonstrated, there is a widespread practice among states
accepting in principle the need for such recognition and enforcement, albeit subject to
limitations of varying degrees. The fact that there is no binding universal treaty governing
the practice is not indicative of a widespread rejection of the principle, but only a
disagreement as to the imposable specific rules governing the procedure for recognition
and enforcement.
Aside from the widespread practice, it is indubitable that the procedure for recognition
and enforcement is embodied in the rules of law, whether statutory or jurisprudential,
adopted in various foreign jurisdictions. In the Philippines, this is evidenced primarily by
Section 48, Rule 39 of the Rules of Court which has existed in its current form since the
early 1900s. Certainly, the Philippine legal system has long ago accepted into its
jurisprudence and procedural rules the viability of an action for enforcement of foreign
judgment, as well as the requisites for such valid enforcement, as derived from
internationally accepted doctrines. Again, there may be distinctions as to the rules
adopted by each particular state,[69] but they all prescind from the premise that there is a
rule of law obliging states to allow for, however generally, the recognition and
enforcement of a foreign judgment. The bare principle, to our mind, has attained the status
of opinio juris in international practice.
This is a significant proposition, as it acknowledges that the procedure and requisites
outlined in Section 48, Rule 39 derive their efficacy not merely from the procedural rule,
but by virtue of the incorporation clause of the Constitution. Rules of procedure are
promulgated by the Supreme Court,[70] and could very well be abrogated or revised by the
high court itself. Yet the Supreme Court is obliged, as are all State components, to obey
the laws of the land, including generally accepted principles of international law which
form part thereof, such as those ensuring the qualified recognition and enforcement of
foreign judgments.[71]
Thus, relative to the enforcement of foreign judgments in the Philippines, it emerges
that there is a general right recognized within our body of laws, and affirmed by the
Constitution, to seek recognition and enforcement of foreign judgments, as well as a right
to defend against such enforcement on the grounds of want of jurisdiction, want of notice
to the party, collusion, fraud, or clear mistake of law or fact.
The preclusion of an action for enforcement of a foreign judgment in this country
merely due to an exhorbitant assessment of docket fees is alien to generally accepted
practices and principles in international law. Indeed, there are grave concerns in
conditioning the amount of the filing fee on the pecuniary award or the value of the
property subject of the foreign decision. Such pecuniary award will almost certainly be in
foreign denomination, computed in accordance with the applicable laws and standards of
the forum.[72] The vagaries of inflation, as well as the relative low-income capacity of the
Filipino, to date may very well translate into an award virtually unenforceable in this
country, despite its integral validity, if the docket fees for the enforcement thereof were
predicated on the amount of the award sought to be enforced. The theory adopted by
respondent judge and the Marcos Estate may even lead to absurdities, such as if applied
to an award involving real property situated in places such as the United States or
Scandinavia where real property values are inexorably high. We cannot very well require
that the filing fee be computed based on the value of the foreign property as determined
by the standards of the country where it is located.
As crafted, Rule 141 of the Rules of Civil Procedure avoids unreasonableness, as it
recognizes that the subject matter of an action for enforcement of a foreign judgment is
the foreign judgment itself, and not the right-duty correlatives that resulted in the foreign
judgment. In this particular circumstance, given that the complaint is lodged against an
estate and is based on the US District Courts Final Judgment, this foreign judgment may,
for purposes of classification under the governing procedural rule, be deemed as
subsumed under Section 7(b)(3) of Rule 141, i.e., within the class of all other actions not
involving property. Thus, only the blanket filing fee of minimal amount is required.
Finally, petitioners also invoke Section 11, Article III of the Constitution, which states
that [F]ree access to the courts and quasi-judicial bodies and adequate legal assistance
shall not be denied to any person by reason of poverty. Since the provision is among the
guarantees ensured by the Bill of Rights, it certainly gives rise to a demandable right.
However, now is not the occasion to elaborate on the parameters of this constitutional
right. Given our preceding discussion, it is not necessary to utilize this provision in order
to grant the relief sought by the petitioners. It is axiomatic that the constitutionality of an
act will not be resolved by the courts if the controversy can be settled on other
grounds[73] or unless the resolution thereof is indispensable for the determination of the
case.[74]
One more word. It bears noting that Section 48, Rule 39 acknowledges that the Final
Judgment is not conclusive yet, but presumptive evidence of a right of the petitioners
against the Marcos Estate. Moreover, the Marcos Estate is not precluded to present
evidence, if any, of want of jurisdiction, want of notice to the party, collusion, fraud, or
clear mistake of law or fact. This ruling, decisive as it is on the question of filing fees and
no other, does not render verdict on the enforceability of the Final Judgment before the
courts under the jurisdiction of the Philippines, or for that matter any other issue which
may legitimately be presented before the trial court. Such issues are to be litigated before
the trial court, but within the confines of the matters for proof as laid down in Section 48,
Rule 39. On the other hand, the speedy resolution of this claim by the trial court is
encouraged, and contumacious delay of the decision on the merits will not be brooked by
this Court.
WHEREFORE, the petition is GRANTED. The assailed orders are NULLIFIED and
SET ASIDE, and a new order REINSTATING Civil Case No. 97-1052 is hereby issued.
No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

[1]
Priscilla Mijares is a judge of the Regional Trial Court of Pasay, Loretta Ann P. Rosales an incumbent
member of the House of Representatives, and Joel Lamangan a noted film director.
[2]
Namely Celsa Hilao, Josefina Hilao Forcadilla, Arturo P. Revilla, Jr., Rodolfo G. Benosa, Danila M.
Fuente, Renato Pineda, Domiciano Amparo, Chistopher Sorio, Jose Duran, and Adora Faye De
Vera. Rollo, pp. 42-47.
[3]
Except for Celsa Hilao, who instead alleged that her daughter, Liliosa Hilao, had been tortured then
executed by military personnel during martial law. Id. at 42-43.
[4]
Id. at 42.
[5]
Id. at 35.
[6]
The Opinion was authored by Circuit Judge Betty B. Fletcher and concurred in by Circuit Judge Harry
Pragerson. Circuit Judge Pamela Ann Rymer filed an opinion concurring and dissenting in part, her
dissent centering on the methodology used for computing compensatory damages. Rollo, pp. 84-
132.
[7]
Under Section 58 of the US Federal Rules of Civil Procedure, the judgment for compensatory damages
in a class suit is awarded to a randomly selected. Petitioner Joel Lamangan was among the
randomly selected claimants of the Torture subclass awarded damages by the US District
Court. See Rollo, p. 71.
[8]
Now Section 48, Rule 39, 1997 Rules of Civil Procedure.
[9]
Since increased to P600.00.
[10]
Now an Associate Justice of the Court of Appeals.
[11]
Petitioners correctly note that they are precluded from filing an appeal on certiorari under Section 1, Rule
41 of the Rules of Civil Procedure, which bars an appeal taken from an order dismissing an action
without prejudice and dictates the aggrieved party to file an appropriate civil action under Rule 65
instead. See Rollo, p. 9
[12]
In a Resolution dated 4 December 2000. Rollo, p. 282.
[13]
Id. at 205.
[14]
See Section 7(c), Rule 141.
[15]
See Section 7(d), id.
[16]
Gochan v. Gochan, 423 Phil. 491, 502 (2001).
[17]
Philippine Aluminum Wheels v. Fasgi Enterprises, Inc., G.R. No. 137378, 12 October 2000, 342 SCRA
722, 734; citing Jovito R Salonga, Rex Bookstore, Manila, Philippines, 1995 Edition, p. 543.
[18]
159 U.S. 113 (1895)
[19]
47 Phil. 189 (1925). While the Philippine Supreme Court in this case refused to enforce the judgment of
the Hongkong Court on the ground of mistake of law or fact, it was reversed on appeal to the US
Supreme Court.
[20]
Id. JJ. Malcolm and Avancea, dissenting.
[21]
See also Borthwick v. Hon. Castro-Bartolome, G.R. No. L-57338, 23 July 1987, 152 SCRA 129, 235;
Philippine International Shipping Corp. v. Court of Appeals, G.R. No. 77085, 26 April 1989, 172
SCRA 810, 819.
[22]
Ultimately, matters of remedy and procedure such as those relating to the service of summons or court
process upon the defendant, the authority of counsel to appear and represent a defendant and the
formal requirements in a decision are governed by the lex fori or the internal law of the forum.
Asiavest Merchant Bankers (M) Berhad v. Court of Appeals, 414 Phil. 13, 29 (1991).
[23]
Fraud, to hinder the enforcement within this jurisdiction of a foreign judgment, must be extrinsic, i.e.,
fraud based on facts not controverted or resolved in the case where judgment is rendered, or that
which would go to the jurisdiction of the court or would deprive the party against whom judgment is
rendered a chance to defend the action to which he has a meritorious case or defense. In fine,
intrinsic fraud, that is, fraud which goes to the very existence of the cause of action such as fraud
in obtaining the consent to a contract is deemed already adjudged, and it, therefore, cannot militate
against the recognition or enforcement of the foreign judgment. Philippine Aluminum
Wheels v. Fasgi Enterprises, Inc., supra note 17.
[24]
See, e.g., Nagarmull v. Binalbagan-Isabela Sugar Co., 144 Phil. 72, 77 (1970); Ingenholl v. Walter E.
Olsen and Company, Inc., supra note 20.
[25]
Roeher v. Rodriguez, G.R. No. 142820, 20 June 2003, 404 SCRA 495, 503.
[26]
An action must be brought in the second state upon the judgment recovered in the first. J. Salonga,
Private International Law (3rd ed., 1967), at 500; citing Goodrich, 600, 601; Chesire, 628; II Beale,
1377. But see E. Scoles and P. Hay, Conflict of Laws (2nd ed., 1982), at 969, which recognizes
that civil law countries provide a procedure to give executory force to the foreign judgment, as
distinguished from the Anglo-American common law (but not statutory) practice of requiring an
action on the judgment.
[27]
See Philsec Investment Corp. v. Court of Appeals, G.R. No. 103493, 19 June 1997, 274 SCRA 102, 110.
[28]
Northwest Orient Airlines v. Court of Appeals, G.R. No. 112573, 9 February 1995, 241 SCRA 192, 199.
[29]
See Section 3(a), Rule 1, Rules of Civil Procedure.
[30]
Every ordinary civil action must be based on a cause of action. Section 1, Rule 2, Rules of Civil
Procedure. A cause of action is the act or omission by which a party violates a right of another.
Section 2, Rule 2, Rules of Civil Procedure.
[31]
See Pacific Asia Overseas Shipping Corp. v. NLRC, G.R. No. 76595. 6 May 1988, 161 SCRA 122, 133.
[32]
Soles & Hay, supra note 27, at 916.
[33]
Ibid.
[34]
Salonga, supra note 27, at 514; citing Cheshire, 803.
[35]
Rollo, p. 30. Emphasis omitted.
[36]
133 Phil. 526 (1968).
[37]
Id. at 528.
[38]
Rollo, at 326, citing Arroz v. Alojado, 19 SCRA 711 (1967).
[39]
Ibid citing Bunayog v. Tunas, 106 Phil. 715 (1959)
[40]
Id. citing Baito v. Sarmiento, 109 Phil. 148 (1960).
[41]
Id. citing De Rivera v. Halili, 9 SCRA 59 (1963).
[42]
Id. citing Bautista v. Lim, 88 SCRA 479 (1979) and De Leon v. Court of Appeals, 287 SCRA 94 (1998).
[43]
Id. citing Amorganda v. Court of Appeals, 166 SCRA 203 (1988); Ortigas & Company v. Herrera, 120
SCRA 89 (1983).
[44]
Id. citing Mercado v. Ubay, 187 SCRA 719 (1990) and Filipino Pipe Workers Union v. Batario, Jr., 163
SCRA 789 (1988).
[45]
As amended by Rep. Act No. 7691.
[46]
Supra note 32.
[47]
Supra note 17.
[48]
Supra note 18.
[49]
H. Steiner & D. Vagts, Transnational Legal Problems: Materials and Text (2nd ed., 1976), at 775.
[50]
Ibid.
[51]
See Salonga, supra note 27, at 66.
[52]
Id. at 502-503.
[53]
Scoles & Hays, supra note 27, at 970.
[54]
Steiner & Vagts, supra note 51, at 808. A decision rendered in one of the Contracting States shall be
entitled to recognition and enforcement in another Contracting State under the terms of this
Convention (1) if the decision was given by a court considered to have jurisdiction within the
meaning of this Convention, and (2) if it is no longer subject to ordinary forms of review in the State
of origin. Convention on the Recognition and Enforcement of Foreign Judgments in Civil and
Commercial Matters, Chapter II, Article 4.
[55]
To date, only Cyprus, the Netherlands, Portugal and Kuwait have either ratified or acceded to the
Convention.
[56]
Steiner & Vagts, supra note 51.
[57]
Steiner & Vagts, supra note 51,at 776.
[58]
Salonga, supra note 51, at 502.
[59]
Steiner & Vagts, supra note 27, at 779. A policy common to all legal systems is to provide for the final
resolution of disputes. The policy is furthered by each nations adoption of a view of jurisdiction in
the international sense which recognizes the foreign courts assertion of jurisdiction as satisfying its
own notions of due process in circumstances in which it itself would have asserted jurisdiction.
Soles & Hay, supra note 27, at 976; citing Hay, International versus Interstate Conflicts Law in the
United States, 35 Rabels Zeitschrift 429,450 n. 101 (1971) and Cherun v. Frishman, 236 F. Supp.
292 (D.D.C. 1964). Salonga, in affirming the rule of want of jurisdiction, cites the commentaries of
Cheshire, Wolff, Goodrich and Nussbaum.
[60]
See, e.g., Salonga, supra note 27 at 513.
[61]
Ibid; citing Henderson v. Henderson, 6 Q.B. (1844) 288; Vanquelin v. Bouard, 15 C.B. (N.S. 1863) 341;
Godard v. Gray, L.R. 6 Q.B. 139 (1870); Vadala v. Lawes 25 Q.B.D. (1890) 319, 316; cf.
Chandlerv. Peketz, 297 U.S. 609, 56 S.Ct., 80 L.Ed. 881 (1936); Cheshire, 661-664; Wolff, 268;
Goodrich, 603.
[62]
Soles & Hay, supra note 27, at 978.
[63]
Thus, when the foreign law, judgment or contract is contrary to a sound and established public policy of
the forum, the said foreign law, judgment or order shall not be applied. Bank of America v.American
Realty Corp., 378 Phil. 1279, 1296 (1999); citing Philippine Conflict of Laws, Eight Edition, 1996,
Paras, page 46. Las sentencias de tribunals extranjeros no pueden ponerse en vigor en Filipinas
si son contrarias a las leyes, costumbres y orden pblico. Si dichas decisiones, por la simple teora
de reciprocidad, cortesa judicial y urbanidad internacional son base suficiente para que nuestros
tribunales decidan a tenor de las mismas, entonces nuestros juzgados estaran en la pobre tessitura
de tener que dictar sentencias contrarias a nuestras leyes, costumbres y orden pblico. Esto es
absurdo. Querubin v. Querubin, 87 Phil. 124, 133. (1950).
[64]
See Section 48, Rule 39, Rules of Civil Procedure.
[65]
Soles & Hays, supra note 27, at 979.
[66]
[It] is generally recognized that, subject to [exceptions], a rule of general customary international law is
binding on all States, whether or not they have participated in the practice from which it sprang. H.
Thirlway, The Sources of International Law, International Law (ed. by M.Evans, 1st ed., 2003), at
124.
[67]
Not only must the acts concerned amount to a settled practice, but they must also be such, or be carried
out in such a way, as to be evidence of a belief that this practice is rendered obligatory by the
existence of a rule of law requiring it. The need for such a belief, i.e., the existence of a subjective
element, is implicit in the very notion of the opinion juris sive necessitatis. North Sea Continental
Shelf, Judgment, ICJ Reports 1969, p. 3, para. 77; cited in H. Thirlway, ibid.
[68]
The problems that arise in the enforcement of foreign judgments are generally to be solved by the
principles of international law. The Philippines by its Constitution, adopts the generally accepted
principles of international law. F. Gupit, Enforcement of Foreign Judgments and Arbitral Awards,
XXIII J. Integ. Bar. Phil. 3, at 69.
[69]
Divergent practices do not necessarily preclude recognition of a customary norm. In reviewing the
question of the existence of customary rules forbidding the use of force or intervention, the
International Court of Justice pertinently held: It is not to be expected that in the practice of States
the application of the rules in question should have been perfect, in the sense that States should
have refrained, with complete consistency, from the use of force or from intervention in each others
internal affairs. The Court does not consider that, for a rule to be established as customary,
the corresponding practice must be in absolutely rigorous conformity with the rule. In order
to deduce the existence of customary rules, the Court deems it sufficient that the conduct of States,
should, in general, be consistent with such rules, and that instances of State conduct inconsistent
with a given rule should generally have been treated as breaches of that rule, not as indications of
recognition of a new rule. (emphasis supplied) Military and Paramilitary Activities in and against
Nicaragua (Nicaragua v. United States of America), Merits, Judgment, ICJ Reports 1986, p. 14,
para. 186; citing in H. Thirlway, supra note 66.
[70]
And other inferior courts, relative to their jurisdictions.
[71]
Sec. 2, Art. II, 1987 Const., which states The Philippines renounces war as an instrument of national
policy, adopts the generally accepted principles of international law as part of the law of the land
and adheres to the policy of peace, equality, justice, freedom, cooperation and amity with all
nations.
[72]
Indeed, the valuation of foreign money judgments remains a matter of debate in international law. In the
United States, Section 144 of the Restatement, Second, Conflicts of Laws (1971) adopts the rule
that the forum would convert the currency into local currency as of the date of the award. However,
this rule has been criticized. In England, the judgment debtor may now effect payment either in the
foreign currency in the amount due or in local currency equivalent to the foreign currency on the
date of payment. French and German law similarly permit the expression of a judgment in foreign
currency. Soles & Hays, supra note 27, at 973.
[73]
Ty v. Trampe, 321 Phil. 81 (1995).
[74]
Tarrosa v. Singson, G.R. No. 111243, 25 May 1994, 232 SCRA 553, 557.
THIRD DIVISION
LIGAYA S. ORBETA, represent- G.R. No. 166837
ted by her Atty.-In-Fact, RUBEN
S. ORBETA, JR., Present:
Petitioner,
QUISUMBING, J.,
Chairperson,
CARPIO,
- versus - CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
RUBEN P. ORBETA and ANITA
B. WOLCOTT,
Respondents. Promulgated:
November 27, 2006

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

DECISION
TINGA, J.:

In this Petition for Review on Writ of Certiorari[1] dated February 9,


2005, Ligaya Orbeta assails the Order[2] dated January 21, 2005 of the Regional
Trial Court (RTC), Branch 255, Las Pias City, which dismissed her Complaint for
Annulment of Deed of Mortgage with Damages on the ground that the venue was
improperly laid.

The records disclose the following facts:

Petitioner and respondent Ruben Orbeta are lawfully married and are co-
owners of a 455-square meter parcel of land located in Pililla, Rizal and covered by
Transfer Certificate of Title No. (236938) M-26683.[3] The couple later became
estranged and in 1994, petitioner left for the United States. When petitioner came
back to the Philippines on January 29, 2003, she learned that her estranged husband
obtained a loan in the amount of P200,000.00 from respondent Anita B. Wolcott
(Wolcott) and used the subject property as collateral.

She then filed a Complaint for Annulment of Deed of Mortgage with


Damages[4] in the RTC of Las Pias City, claiming that she never consented to the
execution of the deed and that her signature thereon was forged. According to
petitioner, she was not in the Philippines on the date the deed was executed
onJanuary 6, 2003.

Respondents filed a Motion to Dismiss,[5] alleging that the complaint involved


a real action and should have been filed in the court which has jurisdiction over the
area where the real property is situated. Moreover, the complaint was allegedly filed
in violation of Article (Art.) 222 of the Civil Code which mandates that earnest
efforts toward a compromise should have been made and failed before a suit can be
filed or maintained between members of the same family.

Petitioner filed an Opposition,[6] arguing that the nullification of the Deed of


Mortgage partakes of the nature of a personal action. Moreover, Art. 222 of the Civil
Code is inapplicable because respondent Wolcott is not a member of the family.

The parties filed their Reply to Opposition[7] and Rejoinder[8] to bolster their
respective positions. Thereafter, the trial court dismissed the Complaint on the
ground that venue was improperly laid.

In this petition, Ligaya Orbeta insists that her Complaint does not affect title
to or possession of the subject property but is hinged on respondents liability for
damages for having made it appear that she consented to the execution of the Deed
of Mortgage when she did not.

In their Comment dated April 18, 2005, respondents assert that the prayer in
petitioners Complaint seeks the annulment of the Deed of
[9]
Mortgage. CitingCarandang v. CA, they claim that an action for nullification of
mortgage documents is a real action as it affects title to property. They also point out
that as co-owner of the subject property, respondent Ruben Orbeta has the right to
dispose of the portion belonging to him. To this extent, respondent Wolcotts interest
as mortgagee cannot be discounted because Sec. 1, Rule 4 of the 1997 Rules of Civil
Procedure (Rules of Court) defines real actions as those affecting title to or
possession of real property, or an interest therein.

Petitioner filed a Reply[10] dated May 3, 2005, averring that Carandang v.


CA does not apply because there is as yet no foreclosure of the mortgage in this
case. In contrast, the subject property in Carandang v. CA was already
foreclosed extrajudicially. According to petitioner, the applicable case is Hernandez
v. Rural Bank of Lucena, Inc.[11] wherein no foreclosure of the mortgage was made
and the property remained in the possession of the mortgagor. Petitioner also asserts
that Wolcotts interest in the property is at best inchoate because the property has not
yet been foreclosed.

The sole issue presented for our review is the proper characterization of the
nature of the action filed by petitioner, i.e., whether her Complaint for Annulment
of Deed of Mortgage with Damages is a real action or a personal action.

A real action, under Sec. 1, Rule 4 of the Rules of Court, is one that affects
title to or possession of real property, or an interest therein. Such actions should 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. All other actions are
personal and may be commenced and tried where the plaintiff or any of the principal
plaintiffs resides, or where the defendant or any of the principal defendants resides,
or in the case of a non-resident defendant where he may be found, at the election of
the plaintiff.[12]

We agree with petitioner that the case of Hernandez v. Rural Bank


of Lucena is applicable. That case was primarily an action to compel the mortgagee
bank to accept payment of the mortgage debt and to release the mortgage. No
foreclosure of mortgage took place and the plaintiffs remained in possession of the
mortgaged lot. The Court ruled that an action for cancellation of a real estate
mortgage is a personal action since it is not expressly included in the enumeration
found in Sec. 2(a), Rule 4 of the Revised Rules of Court.[13]

Similarly, the property subject of the Deed of Mortgage in this case has not
been foreclosed. There is no indication that respondent Ruben Orbeta has defaulted
in the payment of the loan secured by the mortgage on the subject
property. Petitioner even asserts, without objection from respondents, that the title
to the property is still in her and respondent Ruben Orbetas names and that they are
still in possession of the property.

The recent case of Chua v. Total Office Products and Services (Topros),
[14]
Inc., penned by Associate Justice Leonardo A. Quisumbing, also provides a
proper precedent. In that case, respondent filed a complaint for the declaration of
nullity of a loan contract for lack of consent and consideration. It contended that the
purported loan and real estate mortgage contracts were fictitious since it never
authorized anybody to enter into said transactions and that the complaint remained
a personal action even if it will necessarily affect the accessory real estate mortgage.

The allegations of respondent in that case strikingly resemble petitioners


arguments in this case. Notably, petitioner herein also seeks the annulment of the
Deed of Mortgage executed by the respondents on the grounds that she never gave
her consent to the execution of the deed and that her signature thereon was forged.

Given this similarity in factual milieu, we cannot but apply the Courts ruling
in Chua v. Total Office Products and Services (Topros), Inc. that an action to annul
a contract of loan and its accessory real estate mortgage is a personal action. In
accordance with Sec. 2, Rule 4 of the Rules of Court, Las Pias City, where
respondent Wolcott resides, is the proper venue of the Complaint for Annulment of
Deed of Mortgage with Damages.

WHEREFORE, the instant petition is GRANTED. The Order dated January


21, 2005 of the Regional Trial Court, Branch 255, Las Pias City is hereby SET
ASIDE. The case is REMANDED to the trial court for further proceedings. No
pronouncement as to costs.

SO ORDERED.

DANTE O. TINGA Associate


Justice
WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

ANTONIO T. CARPIO CONCHITA CARPIO MORALES


Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR.


Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Courts Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, it is hereby certified that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN
Chief Justice

[1]
Rollo, pp. 3-8.
[2]
Id. at 12-13; Penned by Judge Raul Bautista-Villanueva.
[3]
Records, p. 7.
[4]
Id. at 2-5.
[5]
Id. at 28-29.
[6]
Id. at 41-43.
[7]
Id. at 50-52.
[8]
Id. at 54-57.
[9]
G.R. No. L-44932, April 15, 1988, 160 SCRA 266.
[10]
Rollo, pp. 19-22.
[11]
G.R. No. L-29791, January 10, 1978, 81 SCRA 75.
[12]
RULES OF COURT, Rule 4, Sec. 2.
[13]
The cited rule provided that real actions are actions affecting title to, or for recovery of possession, or for
partition or condemnation of, or foreclosure of mortgage on, real property.
[14]
G.R. No. 152808, September 30, 2005, 471 SCRA 500.
SECOND DIVISION

[G.R. No. 156187. November 11, 2004]

JIMMY T. GO, petitioner, vs. UNITED COCONUT PLANTERS BANK,


ANGELO V. MANAHAN, FRANCISCO C. ZARATE, PERLITA A.
URBANO and ATTY. EDWARD MARTIN, respondents.

DECISION
CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari[1] assailing the Decision[2] dated 31


July 2002 of the Court of Appeals in CA-G.R. SP No. 62625, the decretal portion of which
reads:

WHEREFORE, the petition is GRANTED and the assailed orders dated June 7, 2000,
August 9, 2000 and November 8, 2000 are SET ASIDE.

Respondent judge is directed to DISMISS Civil Case No. 67878 on the ground of
improper venue.[3]

Petitioner Jimmy T. Go and Alberto T. Looyuko are co-owners of Noahs Ark


International, Noahs Ark Sugar Carriers, Noahs Ark Sugar Truckers, Noahs Ark Sugar
Repacker, Noahs Ark Sugar Insurers, Noahs Ark Sugar Terminal, Noahs Ark Sugar
Building, and Noahs Ark Sugar Refinery.[4]
Sometime in August 1996, petitioner Jimmy T. Go and Alberto T. Looyuko applied for
an Omnibus Line accommodation with respondent United Coconut Planters Bank (UCPB)
in the amount of Nine Hundred Million (P900,000,000) Pesos,[5] and was favorably acted
upon by the latter.
The transaction was secured by Real Estate Mortgages over parcels of land, covered
by Transfer Certificate of Title (TCT) No. 64070, located at Mandaluyong City with an area
of 24,837 square meters, and registered in the name of Mr. Looyuko; and TCT No. 3325,
also located at Mandaluyong City with an area of 14,271 square meters, registered in the
name of Noahs Ark Sugar Refinery.
On 21 July 1997, the approved Omnibus Line accommodation granted to petitioner
was subsequently cancelled[6] by respondent UCPB. As a consequence, petitioner Jimmy
T. Go demanded from UCPB the return of the two (2) TCTs (No. 64070 and No. 3325)
covered by Real Estate Mortgages earlier executed. UCPB refused to return the same
and proceeded to have the two (2) pre-signed Real Estate Mortgages notarized on 22
July 1997 and caused the registration thereof before the Registry of Deeds of
Mandaluyong City on 02 September 1997.
On 15 June 1999, respondent UCPB filed with the Office of the Clerk of Court and
Ex-Officio Sheriff of Mandaluyong City an extrajudicial foreclosure of real estate
mortgage[7] covered by TCT No. 64070, for nonpayment of the obligation secured by said
mortgage. As a result, the public auction sale of the mortgaged property was set on 11
April 2000 and 03 May 2000.
To protect his interest, petitioner Jimmy T. Go filed a complaint for Cancellation of
Real Estate Mortgage and damages, with prayer for temporary restraining order and/or
writ of preliminary injunction, against respondent bank and its officers, namely, Angelo V.
Manahan, Francisco C. Zarate, Perlita A. Urbano and Atty. Edward E. Martin, together
with Ex-Officio Sheriff Lydia G. San Juan and Sheriff IV Helder A. Dyangco, with the
Regional Trial Court of Pasig City, Branch 266, docketed as Civil Case No. 67878. The
complaint was subsequently amended[8] on 22 May 2000. The amended complaint
alleged, among other things, the following: that petitioner Jimmy T. Go is a co-owner of
the property covered by TCT No. 64070, although the title is registered only in the name
of Looyuko; that respondent bank was aware that he is a co-owner as he was asked to
sign two deeds of real estate mortgage covering the subject property; that the approved
omnibus credit line applied for by him and Looyuko did not materialize and was cancelled
by respondent bank on 21 July 1997, so that the pre-signed real estate mortgages were
likewise cancelled; that he demanded from respondent bank that TCTs No. 64070 and
No. 3325 be returned to him, but respondent bank refused to do so; that despite the
cancellation of the omnibus credit line on 21 July 1997, respondent bank had the two
deeds of real estate mortgage dated and notarized on 22 July 1997 and caused the
extrajudicial foreclosure of mortgage constituted on TCT No. 64070; that the auction sale
scheduled on 11 April 2000 and 03 May 2000 be enjoined; that the two real estate
mortgages be cancelled and TCTs No. 64070 and No. 3325 be returned to him; and that
respondent bank and its officers be ordered to pay him moral and exemplary damages
and attorneys fees.
On 07 June 2000, respondent bank, instead of filing an answer, filed a motion to
dismiss[9] based on the following grounds: 1) that the court has no jurisdiction over the
case due to nonpayment of the proper filing and docket fees; 2) that the complaint was
filed in the wrong venue; 3) an indispensable party/real party in interest was not impleaded
and, therefore, the complaint states no cause of action; 4) that the complaint was
improperly verified; and 5) that petitioner is guilty of forum shopping and submitted an
insufficient and false certification of non-forum shopping.
On 07 June 2000, the trial court issued an order[10] granting petitioners application for
a writ of preliminary injunction. Correspondingly, the auction sale, scheduled on 11 April
2000 and 03 May 2000, was enjoined.
On 09 August 2000, the trial court denied[11] respondent banks motion to dismiss Civil
Case No. 67878. A motion for reconsideration[12] was filed, but the same was likewise
denied in an Order[13] dated 08 November 2000.
Respondent bank questioned said orders before the Court of Appeals via a petition
for certiorari[14] dated 03 January 2001, alleging that the trial court acted without or in
excess of jurisdiction or with grave abuse of discretion in issuing an order denying the
motion to dismiss and the motion for reconsideration thereof.
On 31 July 2002, the Court of Appeals[15] set aside the Orders dated 07 June 2000,
09 August 2000 and 08 November 2000 issued by the trial court and directed the trial
court to dismiss Civil Case No. 67878 on the ground of improper venue.
A motion for reconsideration was filed by petitioner,[16] which was denied in an order
dated 14 November 2002.[17]
Hence, this petition for review on certiorari.[18]
On 16 June 2003, the Court gave due course to the petition, and required [19] the
parties to file their respective memoranda. Respondents filed their Joint Memorandum on
27 August 2003, while petitioner filed his on 25 September 2003 upon prior leave of court
for extension. With leave of this Court, private respondents filed their reply to petitioners
memorandum.
In his memorandum, petitioner raised a lone issue:

WHETHER OR NOT THE COURT OF APPEALS COMMITTED


REVERSIBLE ERROR WHEN IT FAILED TO APPLY THE LAW AND
ESTABLISHED JURISPRUDENCE ON THE MATTER BY ISSUING THE
QUESTIONED RESOLUTIONS FINDING THAT THE CASE A QUO IS A
REAL ACTION.

Simply put, the issue to be resolved in this case is whether petitioners complaint for
cancellation of real estate mortgage is a personal or real action for the purpose of
determining venue.
In a real action, the plaintiff seeks the recovery of real property, or as provided for in
Section 1, Rule 4,[20] a real action is an action affecting title to or possession of real
property, or interest therein. These include partition or condemnation of, or foreclosure of
mortgage on, real property. The venue for real actions is the same for regional trial courts
and municipal trial courts -- the court which has territorial jurisdiction over the area where
the real property or any part thereof lies.[21]
Personal action is one brought for the recovery of personal property, for the
enforcement of some contract or recovery of damages for its breach, or for the recovery
of damages for the commission of an injury to the person or property. [22] The venue for
personal actions is likewise the same for the regional and municipal trial courts -- the court
of the place where the plaintiff or any of the principal plaintiffs resides, or where the
defendant or any of the principal defendants resides, at the election of the plaintiff, as
indicated in Section 2 of Rule 4.[23]
It is quite clear then that the controlling factor in determining venue for cases of the
above nature is the primary objective for which said cases are filed. Thus:
1. In Commodities Storage & Ice Plant Corp. v. Court of Appeals,[24] this Court ruled that
an action to redeem by the mortgage debtor affects his title to the foreclosed property.
If the action is seasonably made, it seeks to erase from the title of the judgment or
mortgage debtor the lien created by registration of the mortgage and sale. If not made
seasonably, it may seek to recover ownership to the land since the purchasers
inchoate title to the property becomes consolidated after [the] expiration of the
redemption period. Either way, redemption involves the title to the foreclosed
property. It is a real action.
2. In Fortune Motors, (Phils.), Inc., v. Court of Appeals,[25] this Court quoting the decision
of the Court of Appeals ruled that since an extrajudicial foreclosure of real property
results in a conveyance of the title of the property sold to the highest bidder at the
sale, an action to annul the foreclosure sale is necessarily an action affecting the title
of the property sold. It is therefore a real action which should be commenced and tried
in the province where the property or part thereof lies.
3. In Punsalan, Jr. v. Vda. de Lacsamana,[26] this court ruled that while it is true that
petitioner does not directly seek the recovery . . . of the property in question, his action
for annulment of sale and his claim for damages are closely intertwined with the issue
of ownership of the building which, under the law, is considered immovable property,
the recovery of which is petitioners primary objective. The prevalent doctrine is that
an action for the annulment or rescission of a sale of real property does not operate
to efface the fundamental and prime objective and nature of the case, which is to
recover said real property. It is a real action. Respondent Court, therefore, did not err
in dismissing the case on the ground of improper venue which was timely raised.
4. In Ruiz v. J. M. Tuason Co., Inc., et al.,[27] the court ruled that although [a] complaint
is entitled to be one for specific performance, yet the fact that [complainant] asked
that a deed of sale of a parcel of land . . . be issued in his favor and that a transfer
certificate of title covering said land be issued to him, shows that the primary objective
and nature of the action is to recover the parcel of land itself because to execute in
favor of complainant the conveyance requested there is need to make a finding that
he is the owner of the land which in the last analysis resolves itself into an issue of
ownership. Hence, the action must be commenced in the province where the property
is situated . . . ."
5. In Dr. Antonio A. Lizares, Inc. v. Hon. Hermogenes Caluag,[28] this Court ruled that an
action praying that defendant be ordered `to accept the payment being made by
plaintiff for the lot which the latter contracted to buy on installment basis from the
former, to pay plaintiff compensatory damages and attorneys fees and to enjoin
defendant and his agents from repossessing the lot in question, is one that affects
title to the land under Section 3 of Rule 5, of the Rules of Court, and shall be
commenced and tried in the province where the property or any part thereof lies,
because, although the immediate remedy is to compel the defendant to accept the
tender of payment allegedly made, it is obvious that this relief is merely the first step
to establish plaintiffs title to [the] real property.
6. In Land Tenure Administration, et al. v. The Honorable Higinio B. Macadaeg and
Alejandro T. Lim,[29] this Court ruled that where the lessee seeks to establish an
interest in an hacienda that runs with the land and one that must be respected by the
purchaser of the land even if the latter is not a party to the original lease contract, the
question of whether or not the standing crop is immovable property become[s]
irrelevant, for venue is determined by the nature of the principal claim. Since the
lessee is primarily interested in establishing his right to recover possession of the land
for the purpose of enabling him to gather his share of the crops, his action is real and
must be brought in the locality where the land is situated.
7. In Espineli & Mojica v. Hon. Santiago and Vda. de Ramirez,[30] the court ruled that
although the main relief sought in the case at bar was the delivery of the certificate of
title, said relief, in turn, entirely depended upon who, between the parties, has a better
right to the lot in question. As it is not possible for the court to decide the main relief,
without passing upon the claim of the parties with respect to the title to and possession
of the lot in question, the claim shall be determined x x x in the province where [the]
said property or any part thereof lies.
The case of Carandang v. Court of Appeals,[31] is more particularly instructive. There,
we held that an action for nullification of the mortgage documents and foreclosure of the
mortgaged property is a real action that affects the title to the property. Thus, venue of
the real action is before the court having jurisdiction over the territory in which the property
lies, which is the Court of First Instance of Laguna.
Petitioner in this case contends that a case for cancellation of mortgage is a personal
action and since he resides at Pasig City, venue was properly laid therein. He tries to
make a point by alluding to the case of Francisco S. Hernandez v. Rural Bank of
Lucena.[32]
Petitioners reliance in the case of Francisco S. Hernandez v. Rural Bank of
Lucena[33] is misplaced. Firstly, said case was primarily an action to compel the
mortgagee bank to accept payment of the mortgage debt and to release the mortgage.
That action, which is not expressly included in the enumeration found in Section 2(a) of
Rule 4 of the Old Civil Procedure and now under Section 1, Rule 4 of the 1997 Rules of
Civil Procedure, does not involve titles to the mortgaged lots. It is a personal action and
not a real action. The mortgagee has not foreclosed the mortgage. The plaintiffs title is
not in question. They are in possession of the mortgaged lots. Hence, the venue of the
plaintiffs personal action is the place where the defendant or any of the defendants
resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the
election of the plaintiff. In the case at bar, the action for cancellation of real estate
mortgage filed by herein petitioner was primarily an action to compel private respondent
bank to return to him the properties covered by TCTs No. 64070 and No. 3325 over which
the bank had already initiated foreclosure proceedings because of the cancellation by the
said respondent bank of the omnibus credit line on 21 July 1997. The prime objective is
to recover said real properties. Secondly, Carandang distinctly articulated that the ruling
in Hernandez does not apply where the mortgaged property had already been foreclosed.
Here, and as correctly pointed out by the appellate court, respondent bank had already
initiated extrajudicial foreclosure proceedings, and were it not for the timely issuance of a
restraining order secured by petitioner Go in the lower court, the same would have already
been sold at a public auction.
In a relatively recent case, Asset Privatization Trust v. Court of Appeals,[34] it was
succinctly stated that the prayer for the nullification of the mortgage is a prayer affecting
real property, hence, is a real action.
In sum, the cancellation of the real estate mortgage, subject of the instant petition, is
a real action, considering that a real estate mortgage is a real right and a real property by
itself.[35] An action for cancellation of real estate mortgage is necessarily an action
affecting the title to the property. It is, therefore, a real action which should be commenced
and tried in Mandaluyong City, the place where the subject property lies.
WHEREFORE, the instant petition is DENIED for lack of merit. The assailed decision
dated 31 July 2002 and the Order dated 14 November 2002 denying the motion for
reconsideration are hereby AFFIRMED. With costs.
SO ORDERED.
Austria-Martinez, (Acting Chairman), and Callejo, JJ., concur.
Puno, (Chairman), J., on official leave.
Tinga, J., on leave.

[1] Rollo, pp. 9-37.


[2] Records, pp. 704-714; penned by Justice Marina L. Buzon, with Acting Presiding Justice Cancio C.
Garcia and Justice Eliezer R. de los Santos, concurring.
[3] Rollo, p. 714.
[4] Records, pp.177-179, Agreement dated 10 October 1986.
[5] Rollo, p. 19.
[6] Records, p. 161.
[7] Records, pp. 101-109.
[8] Records, pp. 110-122.
[9] Records, pp. 189-208.
[10] Records, pp. 82-84.
[11] Records, pp. 76-80.
[12] Records, pp. 426-451.
[13] Records, p. 81.
[14] Records, pp. 2-75.
[15] Records, pp. 704-714.
[16] Records, pp. 721-731.
[17] Records, p. 746.
[18] Rollo, pp. 9-37.
[19] Rollo, p. 440.
[20] 1997 Revised Rules of Court.
[21] Emergency Loan Pawnshop Incorporated v. Court of Appeals, G.R. No. 129184, 28 February 2001, 353
SCRA 89.
[22] Philippine Law Dictionary, Second Edition, p. 456, citing Hernandez v. Development Bank of the
Philippines, G.R. No. L-31095, 18 June 1976, 71 SCRA 290.
[23] 1997 Revised Rules of Court.
[24] G.R. No. 125008, 19 June 1997, 274 SCRA 439, 450.
[25] G.R. No. 76431, 16 October 1989, 178 SCRA 564, 568-569.
[26] G.R. No. L-55729, 28 March 1983, 121 SCRA 331, 336.
[27] G.R. No. L-18692, 31 January 1963, 7 SCRA 202, cited in Torres v. M. Tuason & Co., Inc., G.R. No. L-
19668, 22 October 1964, 12 SCRA 174, 177.
[28] G.R. No. L-17699, 30 March 1962, 4 SCRA 746.
[29] 107 Phil 83 (1960).
[30] 107 Phil 830 (1960).
[31] G.R. No. L-44932, 15 April 1988, 160 SCRA 266.
[32] G.R. No. L-29791, 10 January 1978, 81 SCRA 75.
[33] Ibid.
[34] G.R. No. 81024, 03 February 2000, 324 SCRA 533.
[35] Metropolitan Bank & Trust Company v. Alejo, G.R. No. 141930, 10 September 2001, 364 SCRA 812.

Republic of the Philippines


Supreme Court
Manila

SECOND DIVISION

WALLEM PHILIPPINES SHIPPING, G.R. No. 161849


INC.,
Petitioner, Present:

CARPIO, J., Chairperson,


NACHURA,
- versus - PERALTA,
ABAD, and
MENDOZA, JJ.

Promulgated:
S.R. FARMS, INC.,
Respondent. July 9, 2010
x--------------------------------------------------x

DECISION

PERALTA, J.:

Assailed in the present petition for review on certiorari are the Decision[1] and
Resolution[2] of the Court of Appeals (CA) dated June 2, 2003 and January 15, 2004,
respectively, in CA-G.R. CV No. 65857. The CA Decision reversed and set aside
the Decision[3] dated October 8, 1999 of the Regional Trial Court (RTC) of Manila,
Branch 11, in Civil Case No. 93-65021, while the CA Resolution denied petitioners
Motion for Reconsideration.

The facts of the case, as found by the RTC and affirmed by the CA, are as follows:

x x x On March 25, 1992, Continental Enterprises, Ltd. loaded on board the


vessel M/V Hui Yang, at Bedi Bunder, India, a shipment of Indian Soya Bean Meal,
for transportation and delivery to Manila, with plaintiff [herein respondent] as
consignee/notify party. The said shipment is said to weigh 1,100 metric tons and
covered by Bill of Lading No. BEDI 4 dated March 25, 1992 (Exhibit A; also
Exhibit I). The vessel is owned and operated by defendant Conti-Feed, with
defendant [herein petitioner] Wallem as its ship agent.

The subject cargo is part of the entire shipment of Indian Soya Bean
Meal/India Rapeseed Meal loaded in bulk on board the said vessel for delivery to
several consignees. Among the consignees were San Miguel Corporation and
Vitarich Corporation, including the herein plaintiff (Exhibit A; Exhibits 1 to 6;
TSN, p. 13, June 28, 1996).

On April 11, 1992, the said vessel, M/V Hui Yang arrived at
the port of Manila, Pier 7 South Harbor. Thereafter, the shipment was discharged
and transferred into the custody of the receiving barges, the NorthFront-333 and
NorthFront-444. The offloading of the shipment went on until April 15, 1992 and
was handled by [Ocean Terminal Services, Inc.] OTSI using its own manpower and
equipment and without the participation of the crew members of the vessel. All
throughout the entire period of unloading operation, good and fair weather
condition prevailed.

At the instance of the plaintiff, a cargo check of the subject shipment was
made by one Lorenzo Bituin of Erne Maritime and Allied Services, Co. Inc., who
noted a shortage in the shipment which was placed at 80.467 metric tons based on
draft survey made on the NorthFront-33 and NorthFront-444 showing that the
quantity of cargo unloaded from the vessel was only 1019.53 metric tons. Thus, per
the bill of lading, there was an estimated shortage of 80.467.

Upon discovery thereof, the vessel chief officer was immediately notified
of the said short shipment by the cargo surveyor, who accordingly issued the
corresponding Certificate of Discharge dated April 15, 1992 (Exhibit D). The
survey conducted and the resultant findings thereon are embodied in the Report of
Superintendence dated April 21, 1992 (Exhibits C to C-2) and in the Barge Survey
Report both submitted by Lorenzo Bituin (Exhibits C-3 and C-4). As testified to by
Lorenzo Bituin, this alleged shortage of 80.467 metric tons was arrived at using the
draft survey method which calls for the measurement of the light and loaded
condition of the barge in relation to the weight of the water supposedly displaced.[4]

Petitioner then filed a Complaint for damages against Conti-Feed & Maritime Pvt.
Ltd., a foreign corporation doing business in the Philippines and the owner
of M/V Hui Yang; RCS Shipping Agencies, Inc., the ship agent of Conti-Feed;
Ocean Terminal Services, Inc. (OTSI), the arrastre operator at Anchorage No. 7,
South Harbor, Manila; and Cargo Trade, the customs broker.[5]

On June 7, 1993, respondent filed an Amended Complaint impleading herein


petitioner as defendant alleging that the latter, and not RCS, was the one which, in
fact, acted as Conti-Feeds ship agent.[6]

On June 22, 1993, the complaint against Cargo Trade was dismissed at the instance
of respondent on the ground that it has no cause of action against the former. [7]

Subsequently, upon motion of RCS, the case against it was likewise dismissed for
lack of cause of action.[8]

Meanwhile, defendant OTSI filed its Answer with Counterclaim and


Crossclaim[9] denying the material allegations of the Complaint and alleging that it
exercised due care and diligence in the handling of the shipment from the carrying
vessel unto the lighters; no damage or loss whatsoever was sustained by the cargo in
question while being discharged by OTSI; petitioners claim had been waived,
abandoned or barred by laches or estoppels; liability, if any, is attributable to its co-
defendants.

For its part, petitioner denied the allegations of respondent claiming, among
others, that it is not accountable nor responsible for any alleged shortage sustained
by the shipment while in the possession of its co-defendants; the alleged shortage
was due to negligent or faulty loading or unloading of the cargo by the
stevedores/shipper/consignee; the shortage, if any, was due to pre-shipment damage,
inherent nature, vice or defect of the cargo for which herein petitioner is not liable;
respondents claim is already barred by laches and/or prescription.[10]

Conti-Feed did not file an Answer.

Pre-Trial Conference was conducted, after which trial ensued.

On October 8, 1999, the RTC rendered its Decision[11] dismissing respondents


complaint, as well as the opposing parties counterclaims and crossclaims.

Aggrieved by the RTC Decision, respondent filed an appeal with the CA.

On June 2, 2003, the CA rendered its presently assailed Decision disposing as


follows:

WHEREFORE, the decision appealed from is hereby REVERSED and SET


ASIDE and another one entered ordering defendants-appellees Conti-Feed and
Maritime Pvt. Ltd. and Wallem Philippines Shipping, Inc., to pay the sum
representing the value of the 80.467 metric tons of Indian Soya Beans
shortdelivered, with legal interest from the time the judgment becomes final until
full payment, plus attorneys fees and expenses of litigation of P10,000.00, as well
as the cost of suit.

SO ORDERED.[12]

Petitioner filed a Motion for Reconsideration.


On July 8, 2003, respondent filed a Motion for a More Definite Dispositive
Portion[13] praying that the value of the 80.467 metric tons of Indian Soya Beans,
which petitioner and Conti-Feed were ordered to pay, be specified in the dispositive
portion of the CA Decision.

Petitioner filed its Comment/Opposition[14] to private respondents Motion.

On January 15, 2004, the CA issued a Resolution denying petitioners Motion for
Reconsideration and modifying the dispositive portion of its Decision, thus:

WHEREFORE, the decision appealed from is hereby REVERSED and SET


ASIDE and another one entered ordering defendants-appellees Conti-Feed and
Maritime Pvt. Ltd. and Wallem Shipping, Inc., to pay the sum of $19,070.06
representing the value of the 80.467 metric tons of Indian Soya Beans
shortdelivered, with legal interest from the time the judgment becomes final until
full payment, plus attorneys fees and expenses of litigation of P10,000.00, as well
as the costs of suit.

SO ORDERED.[15]

Hence, the instant petition based on the following Assignment of Errors:

THE COURT OF APPEALS ERRED IN APPLYING THE PRESUMPTION OF


NEGLIGENCE UNDER ARTICLE 1735 OF THE CIVIL CODE. THIS
PROVISION DOES NOT APPLY IN THIS CASE BECAUSE THERE WAS NO
LOSS OR SHORTAGE OR SHORTDELIVERY.

II

THE COURT OF APPEALS ERRED IN GIVING DUE COURSE TO THE CASE


CONSIDERING THAT:

A. THE CLAIM WAS ALREADY TIME-BARRED WHEN


THE CASE WAS FILED AGAINST HEREIN PETITIONER ON
8 MAY 1993, AS PROVIDED IN SECTION 3 (6) OF THE
COGSA. THE ONE-YEAR PRESCRIPTIVE PERIOD
COMMENCED ON 15 APRIL 1992 WHEN THE SUBJECT
SHIPMENT WAS DELIVERED TO PRIVATE RESPONDENT
AND LAPSED ON 15 APRIL 1993; AND
B. [RESPONDENT] WAIVED ITS RIGHT OF ACTION
WHEN IT DID NOT GIVE A WRITTEN NOTICE OF LOSS TO
THE PETITIONER WITHIN THREE (3) DAYS FROM
DISCHARGE OF THE SUBJECT SHIPMENT AS PROVIDED IN
SECTION 3 (6) OF THE COGSA.

III

IN THE REMOTE POSSIBILITY OF LOSS OR SHORTAGE OR


SHORTDELIVERY, THE COURT OF APPEALS ERRED IN IMPUTING
NEGLIGENCE AGAINST THE PETITIONER WHICH WAS NOT
RESPONSIBLE IN LOADING AND/OR DISCHARGING THE SUBJECT
SHIPMENT.

IV

THE COURT OF APPEALS ERRED IN GRANTING [RESPONDENTS]


MOTION FOR A MORE DEFINITE DISPOSITIVE PORTION WITHOUT
STATING IN THE DECISION, THE LEGAL BASES FOR DOING SO.

THE COURT OF APPEALS ERRED IN GRANTING THE MOTION FOR A


MORE DEFINITE DISPOSITIVE PORTION BECAUSE [RESPONDENT]
FILED SAID MOTION MORE THAN FIFTEEN (15) DAYS AFTER
[RESPONDENT] RECEIVED THE DECISION OF THE COURT OF APPEALS.
THE COURT OF APPEALS FURTHER ERRED IN INSERTING A DEFINITE
MONETARY VALUE OF THE ALLEGED SHORTAGE BECAUSE THERE
WAS NO FACTUAL FINDING, BOTH IN THE TRIAL COURT AND IN THE
COURT OF APPEALS, AS TO THE SPECIFIC AMOUNT OF THE ALLEGED
SHORTDELIVERED CARGO.[16]

The Court finds it proper to resolve first the question of whether the claim
against petitioner was timely filed.

With respect to the prescriptive period involving claims arising from shortage,
loss of or damage to cargoes sustained during transit, the law that governs the instant
case is the Carriage of Goods by Sea Act[17] (COGSA), Section 3 (6) of which
provides:
Unless notice of loss or damage and the general nature of such loss or
damage be given in writing to the carrier or his agent at the port of discharge or at
the time of the removal of the goods into the custody of the person entitled to
delivery thereof under the contract of carriage, such removal shall be prima
facie evidence of the delivery by the carrier of the goods as described in the bill of
lading. If the loss or damage is not apparent, the notice must be given within three
days of delivery.

Said notice of loss or damage may be endorsed upon the receipt for the
goods given by the person taking delivery thereof.

The notice in writing need not be given if the state of the goods has at the time of
their receipt been the subject of joint survey or inspection.

In any event, the carrier and the ship shall be discharged from all liability in respect
of loss or damage unless suit is brought within one year after delivery of the goods
or the date when the goods should have been delivered; Provided, That, if a notice
of loss or damage, either apparent or concealed, is not given as provided for in this
section, that fact shall not affect or prejudice the right of the shipper to bring suit
within one year after the delivery of the goods or the date when the goods should
have been delivered.

In the case of any actual or apprehended loss or damage, the carrier and the receiver
shall give all reasonable facilities to each other for inspecting and tallying the
goods.

Petitioner claims that pursuant to the above-cited provision, respondent


should have filed its Notice of Loss within three days from delivery. It asserts that
the cargo was fully discharged from the vessel on April 15, 1992, but that respondent
failed to file any written notice of claim. Petitioner also avers that, pursuant to the
same provision of the COGSA, respondents claim had already prescribed because
the complaint for damages was filed more than one year after the shipment was
discharged.

The Court agrees.

Under Section 3 (6) of the COGSA, notice of loss or damages must be filed
within three days of delivery. Admittedly, respondent did not comply with this
provision.

Under the same provision, however, a failure to file a notice of claim within
three days will not bar recovery if a suit is nonetheless filed within one year from
delivery of the goods or from the date when the goods should have been delivered.[18]
In Loadstar Shipping Co., Inc. v. Court of Appeals,[19] the Court ruled that a
claim is not barred by prescription as long as the one-year period has not
lapsed. Thus, in the words of the ponente, Chief Justice Hilario G. Davide Jr.:
Inasmuch as neither the Civil Code nor the Code of Commerce states a
specific prescriptive period on the matter, the Carriage of Goods by Sea Act
(COGSA) -- which provides for a one-year period of limitation on claims for loss
of, or damage to, cargoes sustained during transit -- may be applied suppletorily to
the case at bar.[20]

In the instant case, the Court is not persuaded by respondents claim that the
complaint against petitioner was timely filed. Respondent argues that the suit for
damages was filed on March 11, 1993, which is within one year from the time the
vessel carrying the subject cargo arrived at the Port of Manila on April 11, 1993, or
from the time the shipment was completely discharged from the vessel on April 15,
1992.

There is no dispute that the vessel carrying the shipment arrived at


the Port of Manila on April 11, 1992 and that the cargo was completely discharged
therefrom on April 15, 1992. However, respondent erred in arguing that the
complaint for damages, insofar as the petitioner is concerned, was filed on March
11, 1993.

As the records would show, petitioner was not impleaded as a defendant in


the original complaint filed on March 11, 1993.[21] It was only on June 7, 1993 that
the Amended Complaint, impleading petitioner as defendant, was filed.

Respondent cannot argue that the filing of the Amended Complaint against
petitioner should retroact to the date of the filing of the original complaint.

The settled rule is that the filing of an amended pleading does not retroact to
the date of the filing of the original; hence, the statute of limitation runs until the
submission of the amendment.[22] It is true that, as an exception, this Court has held
that an amendment which merely supplements and amplifies facts originally
alleged in the complaint relates back to the date of the commencement of the action
and is not barred by the statute of limitations which expired afterthe service of the
original complaint.[23] The exception, however, would not apply to the
party impleaded for the first time in the amended complaint.[24]

The rule on the non-applicability of the curative and retroactive effect of an


amended complaint, insofar as newly impleaded defendants are concerned, has been
established as early as in the case of Aetna Insurance Co. v. Luzon Stevedoring
Corporation.[25] In the said case, the defendant Barber Lines Far East
Service was impleaded for the first time in the amended complaint which was filed
after the one-year period of prescription. The order of the lower court dismissing the
amended complaint against the said defendant on ground of prescription was
affirmed by this Court.

In the instant case, petitioner was only impleaded in the amended Complaint
of June 7, 1993, or one (1) year, one (1) month and twenty-three (23) days from
April 15, 1992, the date when the subject cargo was fully unloaded from the vessel.
Hence, reckoned from April 15, 1992, the one-year prescriptive period had already
lapsed.

Having ruled that the action against petitioner had already prescribed, the Court no
longer finds it necessary to address the other issues raised in the present petition.

WHEREFORE, the petition is PARTLY GRANTED. The Decision of the


Court of Appeals dated June 2, 2003 and its Resolution dated January 15, 2004 in
CA-G.R. CV No. 65857 are MODIFIED by dismissing the complaint against
petitioner. In all other respects, the challenged Decision and Resolution of the CA
are AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

ANTONIO EDUARDO B. NACHURA ROBERTO A. ABAD


Associate Justice Associate Justice

JOSE CATRAL MENDOZA


Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO
Associate Justice
Second Division, Chairperson

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairpersons Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the opinion
of the Courts Division.

RENATO C. CORONA
Chief Justice

[1]
Penned by Associate Justice Jose L. Sabio, Jr., with Associate Justices B.A. Adefuin-de la Cruz and Hakim S.
Abdulwahid, concurring; rollo, pp. 110-123.
[2]
Rollo, pp. 157-158.
[3]
Records, pp. 533-538.
[4]
Id. at 534-535.
[5]
Id. at 1.
[6]
Id. at 37.
[7]
Id. at 50.
[8]
Id. at 164.
[9]
Id. at 18-20.
[10]
Id. at 67-73.
[11]
Rollo, pp. 66-71.
[12]
Id. at 122.
[13]
CA rollo, pp. 185-194.
[14]
Id. at 217-223.
[15]
Id. at 231-232.
[16]
Rollo, pp. 13-14.
[17]
Loadstar Shipping Co., Inc. v. Court of Appeals, 373 Phil. 976, 989 (1999).
[18]
Belgian Overseas Chartering and Shipping N.V. v. Philippine First Insurance Co., Inc., 432 Phil. 567, 585 (2002).
[19]
Supra note 17.
[20]
Id.
[21]
See Complaint, records, p. 1.
[22]
Republic v. Sandiganbayan, G.R. No. 119292, July 31, 1998, 293 SCRA 440, 466.
[23]
Verzosa v. Court of Appeals, G.R. Nos. 119511-13, November 24, 1998, 299 SCRA 100, 111; Sunga v.
Commission on Elections, G.R. No. 125629, March 25, 1998, 288 SCRA 76, 85.
[24]
Seno v. Mangubat, G.R. No. L-44339, December 2, 1987, 156 SCRA 113, 122; Republic v. Sandiganbayan, G.R.
Nos. 112708-09, March 29, 1996, 255 SCRA 438, 490.
[25]
G.R. No. L-25266, January 15, 1975, 62 SCRA 11.
SECOND DIVISION

[G.R. No. 131175. August 28, 2001]

SPOUSES JOVITO VALENZUELA and NORMA VALENZUELA,


SPOUSES ALFREDO QUIAZON and BELLA GONZALES QUIAZON,
SPOUSES EDUARDO DE GUZMAN and JULIETA DE GUZMAN, DE
GUZMAN DEVELOPMENT CORPORATION, SKYFREIGHT
BROKERAGE, INC., ATTY. ROMULO R. BOBADILA and WEB-
HEGG CONSTRUCTION RESOURCES,
INCORPORATED, petitioners, vs.HONORABLE COURT OF
APPEALS and SPOUSES MANUEL T. DE GUIA and LETICIA
MARIANO DE GUIA and the REGISTER OF DEEDS OF PARAAQUE
CITY, METRO MANILA, respondents.

DECISION
BUENA, J.:

In resolving the propriety of the amendment of the complaint in the present case, which motion
to amend was filed after the lapse of fifteen years from the filing of the initiatory pleading sought
to be amended, this Court painstakingly considered not only the peculiar circumstances obtaining,
but also accorded premium to the legal truism that adjective law is not the counterfoil of
substantive law and that the rules of procedure must not be perverted into engines of injustice.[1]
Sought to be reversed in the instant petition for review on certiorari is the decision[2] of the
Court of Appeals dated 15 August 1997 in C.A. G.R. SP. No. 44185, which nullified and set aside
the orders dated 11 November 1996[3] and 06 February 1997 of the Regional Trial Court (RTC) of
Pasay City, Branch 231, in Civil Case No. PQ-9412-P. The subject orders of the RTC denied
private respondents motion to admit amended complaint dated 18 March 1997.
Similarly impugned is the resolution[4] of the Court of Appeals dated 24 October 1997, denying
private respondents motion for reconsideration.
The factual antecedents and proceedings unfold.
On 10 September 1981, herein private respondents spouses Manuel and Leticia De Guia filed
a complaint for specific performance and damages docketed as Civil Case No. PQ-9412-
P[5] against herein petitioners spouses Jovito and Norma Valenzuela before the then Court of First
Instance of Rizal in Pasay City. The complaint prayed, among others, that the Spouses Valenzuela
be ordered to execute in favor of private respondents the necessary deed of sale covering the two
(2) parcels of land allegedly subject of a contract to sell between said parties.
On 16 September 1981, private respondents spouses De Guia, upon discovering that the
subject real properties were sold and transferred by the spouses Valenzuela to herein co-petitioners
spouses Alfredo and Bella Gonzales Quiazon, filed Civil Case No. PQ- 9432-P[6] for annulment of
sale, cancellation of title and damages, against spouses Valenzuela, spouses Quiazon, and the
Register of Deeds of Pasay City. In the complaint, private respondents spouses De Guia prayed
specifically for the annulment of the deed of sale executed by the spouses Valenzuela in favor of
the spouses Quiazon, cancellation of TCT Nos. 39396 and 39397 in the name of spouses Quiazon,
and the reinstatement of TCT No. 39142 in the name of the spouses Valenzuela, or in the
alternative, the reconveyance of the subject properties by the spouses Quiazon to spouses
Valenzuela.
On 13 October 1981, private respondents spouses De Guia amended their complaint in Civil
Case No. PQ-9432-P impleading Webb-Hegg Construction Resources, Inc. as additional
defendant.
On 19 January 1983, spouses De Guia filed in Civil Case No. PQ-9432-P a Motion to Admit
Second Amended Complaint impleading as additional defendant Gerardo Villacorta. Prior to the
resolution of such pending motion, Civil Case No. PQ-9432-P was transferred to the Regional
Trial Court of Makati, Branch 133 pursuant to the Judiciary Reorganization Law (B.P. Blg. 129).
As a result of the transfer of the case, Civil Case No. PQ-9432-P was redocketed as Civil Case No.
2723.
On 20 May 1983, the RTC of Makati, Branch 133 issued an order admitting the second
amended complaint. Upon motion of the defendants therein, however, Civil Case No. 2723 was
returned to RTC-Pasay, where herein private respondents spouses De Guia filed a motion to admit
third amended complaint seeking to implead spouses De Guzman, De Guzman Development
Corporation, Skyfreight Brokerage, Inc. and Lawyer Romeo Bobadilla, as additional defendants.
On 30 May 1984, the RTC-Pasay issued an omnibus order[7] denying the motion to admit the
third amended complaint and declaring as automatically vacated the order of RTC-Makati, Branch
133, which admitted the second amended complaint. Upon denial of their motion for
reconsideration, private respondents spouses De Guia then filed a petition for certiorari and
prohibition before the appellate court, docketed as CA G.R. SP. No. 04518.
On 27 March 1990, after a preliminary hearing on the affirmative defenses of pendency of
another action and splitting a cause of action, the lower court issued an order dismissing the
complaint in Civil Case No. PQ-9432-P. Private respondents spouses De Guia appealed the
dismissal of said case before the Court of Appeals which on 30 March 1994, affirmed the dismissal
order of the lower court. Aggrieved, private respondents spouses De Guia filed a petition before
the Supreme Court assailing the decision of the Court of Appeals.
In a Resolution dated 24 July 1995, the High Court dismissed the petition for having been
filed beyond the reglementary period. Private respondents moved to reconsider, which motion the
Supreme Court denied via a resolution dated 30 September 1995.
Upon motion of spouses Quiazon in Civil Case Nos. PQ-9412-P and PQ-9432-P, the lower
court issued an order dated 17 January 1996 directing the cancellation of the Notice of Lis
Pendens under Entry No. 81-11596 and Entry No. 81-12186 and the Adverse Claim under Entry
No. 81-11601 on TCT Nos. 39386 and 39397 in the name of spouses Quiazon. On 02 February
1996, private respondents sought to reconsider the trial courts order.
On 18 March 1996, private respondents filed a motion to admit amended complaint in Civil
Case No. PQ-9412-P. Prior to the resolution of the two pending motions, private respondents filed
a motion for the inhibition of the presiding judge of Branch 117, RTC-Pasay. In an order dated 17
April 1996, the court granted the motion for inhibition resulting in the re-raffle of Civil Case No.
PQ-9412-P to Branch 231, presided by Judge Cesar Z. Ylagan.
In an order dated 11 November 1996, Judge Ylagan denied the motion to admit amended
complaint prompting herein private respondents spouses De Guia to file a motion for
reconsideration which the lower court denied.
Private respondents elevated the lower courts order denying the motion to admit amended
complaint to the Court of Appeals.
On 15 August 1997, the Court of Appeals rendered the assailed decision the decretal portion
of which declares:

WHEREFORE, the instant petition for certiorari and mandamus is hereby


GRANTED. Consequently, the orders dated November 11, 1996 and February 6,
1997 are SET ASIDE and respondent is ordered to admit petitioners amended
complaint dated March 18, 1997.

On 05 November 1997, the RTC-Pasay, Branch 231 issued an order[8] admitting the amended
complaint, pursuant to the decision of the Court of Appeals dated 15 August 1997. Herein
petitioners filed with the lower court a manifestation with motion to reconsider[9] to the effect that
they would file a petition for review on certiorari before the Supreme Court, to which manifestation
private respondents filed an opposition. Petitioners then filed a reply to the opposition after which
the lower court, in an order dated 23 January, decreed that the admission of the amended complaint
and service of summons are hereby held in abeyance until after the Supreme Court has resolved
the case before it which has effectively placed this court on notice.
On 17 December 1997, herein petitioners filed the instant petition where this Court is tasked
in the main to resolve the propriety of the amendment of the complaint in Civil Case No. PQ-9412-
P. Petitioners argue, among others, that the amendment should not be allowed inasmuch as the
introduction of amendments to the complaint in Civil Case No. PQ-9412-P would, in
effect, radically and substantially change the cause of action and theory of the case.
The Court sanctions the amendment of the complaint and resolves to strike down the petition.
At this point, a review of the pertinent provisions regarding amendments is in order. Section 1,
Rule 10 of the 1997 Rules of Civil Procedure explicitly provides:

Section 1. Amendment in general. Pleadings may be amended by adding or striking


out an allegation or the name of any party, or by correcting a mistake in the name of a
party or a mistaken or inadequate allegation or description in any other respect, so
that the actual merits of the controversy may speedily be determined, without
regard to technicalities, and in the most expeditious and inexpensive
manner. (emphasis ours)

Equally important is Section 3, Rule 10 of the Rules:


Section 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.

Petitioners contend that the foregoing provisions of the 1997 Rules of Civil Procedure cannot
be applied in the case at bar. We do not agree. Elementary is the rule in this jurisdiction that one
does not have a vested right in procedural rules, thus:

Statutes regulating the procedure of courts will be considered as applicable to actions


pending and undetermined at the time of their passage. Procedural laws are
retroactive in that sense and to that extent. The fact that procedural statutes may
somehow affect the litigants rights may not preclude their retroactive application to
pending actions. The retroactive application of procedural laws is not violative of
any right of a person who may feel that he is adversely affected. Nor is the
retroactive application of procedural statutes constitutionally objectionable. The
reason is that as a general rule, no vested right may attach to, nor arise from
procedural laws. It has been held that a person has no vested right in any particular
remedy, and a litigant cannot insist on the application to the trial of his case, whether
civil or criminal, of any other than the existing rules of procedure. (emphasis ours)
[10]

Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil Procedure[11] amended the former
rule[12] in such manner that the phrase or that the cause of action or defense is substantially
altered was stricken-off and not retained in the new rules. The clear import of such amendment in
Section 3, Rule 10 is that under the new rules, the amendment may (now) substantially alter the
cause of action or defense.[13] This should only be true, however, when despite a substantial change
or alteration in the cause of action or defense, the amendments sought to be made shall serve the
higher interests of substantial justice, and prevent delay and equally promote the laudable objective
of the rules which is to secure a just, speedy and inexpensive disposition of every action and
proceeding.
Thus, granting arguendo that the amendment of the complaint in Civil Case No. PQ-9432-P
would substantially alter or change the cause of action or defense in said controversy, this Court
nonetheless holds that in the higher interest of substantial justice, the introduction of amendments
to the complaint is apropos at this particular instance to forestall further delay in the resolution of
the actual merits of the parties respective claims and defenses. To reiterate, the Rules of Court seek
to eliminate undue reliance on technical rules and to make litigation as inexpensive, as practicable
and as convenient as can be done.[14] Rules of procedure, after all, are but tools designed to facilitate
the attainment of justice, such that when rigid application of the rules tends to frustrate rather than
promote substantial justice, the Supreme Court is empowered to suspend their operation.[15] This
Court will not hesitate to set aside technicalities in favor of what is fair and just.[16]
As the records would readily reveal, the instant case Civil Case No. PQ-9412-P has already
dragged and suffered protracted delay for a span of twenty years, borne by countless legal
skirmishes between the party litigants involving principally entanglement on technical niceties and
procedural rules. In fact, the procedural incidents and interlocutory matters relating to this
controversy, to wit, Civil Case No. PQ-9412-P and its related case Civil Case No. PQ-9432-P,
have reached no less than the portals of this Court at least twice first, as to the specific issue of the
propriety of admission of a third amended complaint in Civil Case No. PQ-9432 and second, as to
the particular query on the validity of the dismissal of Civil Case No. PQ-9432-P, on the ground
of litis pendentia.
By and large, due to the multifarious procedural incidents involving these two suits, albeit
issues concededly not to be outrightly dismissed as less important, the actual merits of the
controversy have yet to reach their full adjudication, resolution and determination. Under these
circumstances, particularly considering the dismissal of Civil Case No. PQ-9432-P on ground
of litis pendentia, the disallowance of the amendment of the complaint in Civil Case No. PQ-9412-
P would, to our mind, necessarily result in an even greater delay in the disposition and adjudication
of the actual merits of the case, which run counter to the hallowed office and cardinal objective of
the Rules to provide, at each possible instance, an expeditious and full resolution of issues
involving the respective rights and liabilities of the parties under substantive law.
True enough, the delay that has so characterized the adjudication of the merits of this case--
which original complaint was filed practically two decades ago-- has not escaped the attention of
this Court. Thus, in the interest of substantial justice, this Court allows the introduction of
amendments to the complaint in Civil Case No. PQ-9412-P so as to afford the party-litigants the
full and genuine opportunity to substantiate their respective claims and defenses and for the trial
court to finally resolve the matters relating to the merits of the case.
Besides, the defendants sought to be impleaded in Civil Case No. PQ-9412-P are not left
without justifiable recourse. To this end, the law in no uncertain terms provide for the necessary
legal implements and the adoption of effective means and defenses sanctioned by the Rules,
wherein both parties in the controversy may very well advance and protect their respective legal
interests. By sanctioning the introduction of amendments to the complaint, the issues shall at last
be viewed, so to speak, in the clear light of day and substantial matters therein shall not anymore
be lost in the abyss of technicalities and procedural jargon.
On this matter, the discourse of the Court of Appeals is elucidating:

With the dismissal of Civil Case No. PQ-9432-P in which petitioners (herein private
respondents spouses De Guia) seek the annulment of the sale made by spouses
Valenzuela in favor of spouses Quiazon, complete relief could be obtained by
petitioners only by the admission of the amended complaint. Without the amendment,
a favorable judgment for petitioners would be meaningless, if not futile, as the
properties covered by the contract to sell which they seek to enforce had already been
sold to spouses Quiazon, who are among those sought to be impleaded as additional
defendants in the amended complaint.
X X X The inquiry should be as to whether or not the amendment is necessary to
enable the parties, particularly petitioners, to obtain complete relief in just one
proceeding. As above stated, the non-inclusion of spouses Quiazon and others who
may have acquired rights or interest in the properties in question will render the relief
originally sought in Civil Case No. PQ-9412-P incomplete without the sale or transfer
to spouses Quiazon being nullified; hence, the need for the amendment. X X X

X X X Needless to state, the court is of the considered opinion that admission of the
amended complaint is not only necessary to afford complete relief to the parties; it
will also forestall any further need to institute other actions or proceedings arising
from the transaction subject matter of Civil Case No. PQ-9412-P. X X X

Inasmuch as herein private respondents, in its amended complaint, likewise pray for
reconveyance of the real property, considering that the subject parcels of land were transferred in
the name of spouses Quiazon who notably were not impleaded in the original complaint in Civil
Case No. PQ-9412-P, it bears to stress that owners of property over which reconveyance is asserted
are indispensable parties without whom no relief is available and without whom the court can
render no valid judgment.[17]
Additionally, petitioners stubbornly maintain that the principle of res judicata, specifically
the doctrine of conclusiveness of judgment, should find application in the instant case so as to
preclude the court from resolving anew the propriety of the amendment in Civil Case No. PQ-
9412-P, which issue, according to petitioner, was previously passed upon and determined in Civil
Case No. PQ-9432-P.
The contention is without basis. Res judicata, either in the concept of bar by former judgment
or conclusiveness of judgment, cannot be applied to the present case.
In Vda. De Cruzo vs. Carriaga, Jr.,[18] this Court speaking through Mr. Justice Florenz
Regalado, inked an enlightening discourse on the subject:

The doctrine of res judicata thus lays down two main rules which may be stated as
follows: 1) The judgment or decree of a court of competent jurisdiction on the
merits concludes the parties and their privies to the litigation and constitutes a bar to a
new action or suit involving the same cause of action either before the same or any
other tribunal; and 2) Any right, fact, or matter in issue directly adjudicated or
necessarily involved in the determination of an action before a competent court in
which a judgment or decree is rendered on the merits is conclusively settled by the
judgment therein and cannot again be litigated between the parties and their privies
whether or not the claim or demand, purpose or subject matter of the two suits is the
same. These two main rules mark the distinction between the principles governing the
two typical cases in which a judgment may operate as evidence. In speaking of these
cases, the first general rule above stated, and which corresponds to the aforequoted
paragraph (b) of Section 49, is referred to as bar by former judgment while the second
general rule, which is embodied in paragraph (c) of the same section, is known as
conclusiveness of judgment.

Stated otherwise, when we speak of res judicata in its concept as a bar by former
judgment. the judgment rendered in the first case is an absolute bar to the subsequent
action since said judgment is conclusive not only as to the matters offered and
received to sustain that judgment but also as to any other matter which might have
been offered for that purpose and which could have been adjudged therein. This is the
concept in which the term res judicata is more commonly and generally used and in
which it is understood as the bar by prior judgment constituting a ground for a motion
to dismiss in civil cases.

On the other hand, the less familiar concept or less terminological usage of res
judicata as a rule on conclusiveness of judgment refers to the situation where the
judgment in the prior action operates as an estoppel only as to the matters actually
determined therein or which were necessarily included therein. Consequently, since
other admissible and relevant matters which the parties in the second action could
properly offer are not concluded by the said judgment, the same is not a bar to or a
ground for dismissal of the second action.

At bottom, the other elements being virtually the same, the fundamental
difference between the rule of res judicata as a bar by former judgment and as
merely a rule on the conclusiveness of judgment is that, in the first, there is an
identity in the cause of action in both cases involved whereas, in the second, the
cause of action in the first case is different from that in the second case. (emphasis
ours)

Proceeding from the foregoing disquisition, the principle of res judicata, requires the
concurrence of the following requisites:[19]

a) The former judgment or order must be final;

b) It must be a judgment or order on the merits, that is, it was rendered after a
consideration of the evidence or stipulations submitted by the parties at the trial of
the case;

c) It must have been rendered by a court having jurisdiction over the subject
matter and the parties; and

d) There must be, between the first and second actions, identity of parties, of
subject matter and of cause of action. This requisite is satisfied if the two actions
are substantially between the same parties. (emphasis ours)
For want of the second requisite, to wit, that the judgment must be rendered on the merits, the
instant case is thus removed from the operation of the principle of res judicata. Stated differently,
if the judgment is not on the merits, it cannot be considered as a conclusive adjudication of the
controversy. Consequently, a judgment dismissing an action for want of jurisdiction, or because
of the pendency of another action between the same parties and for the same cause, or a
judgment absolving a defendant because he was not served with summons, or a dismissal on the
ground of misjoinder cannot operate as res adjudicata on the merits.[20]
To this end, it must be noted that the dismissal of Civil Case No. PQ-9432-P was due to litis
pendentia or the pendency of another action, obviously referring to Civil Case No. PQ-9412-P.
Applying the foregoing doctrines, the judgment dismissing Civil Case No. PQ-9432-P, on the
ground of litis pendentia, cannot be considered an adjudication on the merits.[21]Clearly then, res
judicata cannot apply.
WHEREFORE, premises considered, the assailed decision of the Court of Appeals in C.A.
G.R. SP. No. 44185 is AFFIRMED and the instant petition is DENIED for lack of merit.
Accordingly, the Regional Trial Court of Pasay City-Branch 231, is hereby ordered to admit herein
private respondents amended complaint in Civil Case No. PQ-9412-P, to issue the necessary
summons to all impleaded defendants therein and to resolve the case with dispatch.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and De Leon, Jr., JJ., concur.

[1]
De Dios vs. Court of Appeals, 212 SCRA 519 [1992] per Justice Isagani Cruz.
[2]
Rollo, pp. 208-213. Tuquero J., ponente, concurred in by J. Elbinias and J. Bacelona.
[3]
Records, pp. 38-40.
[4]
Rollo, p. 231.
[5]
Annex A, Rollo, pp. 30-36.
[6]
Annex B, Rollo, pp. 37-45.
[7]
C.A. Records, pp. 108-110.
[8]
Original Records, p. 1185.
[9]
Original Records, p. 1186.
[10]
Agpalo, Statutory Construction, 1995 ed., p. 294.
[11]
The 1997 Rules of Civil Procedure became effective on 01 July 1997.
Section 3, Rule 10 of the former rule provides, Amendments by leave of court. After the case is set for hearing,
[12]

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 the action or that the cause of action or defense is substantially
altered. 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. (emphasis ours)
Feria, Jose Y., 1997 Rules of Civil Procedure, Annotations, 1997 ed., p.34; Associate Justice Jose Y. Feria (Ret.)
[13]

is the Co-Chairman of the Revision of the Rules of Court Committee of the Supreme Court, which drafted the 1997
Rules of Civil Procedure.
[14]
Casil vs. Court of Appeals 285 SCRA 264 [1998].
[15]
Ramos vs. Court of Appeals, 269 SCRA 34 [1997].
[16]
Ysmael vs. Court of Appeals, 273 SCRA 165 [1997].
Acting Registrars of Land Titles and Deeds of Pasay City, Pasig and Makati, 184 SCRA 622 [1990]; Director of
[17]

Lands vs. Court of Appeals, 93 SCRA 238 [1979].


[18]
174 SCRA 330 [1989].
[19]
Regalado, Remedial Law Compendium, Vol. 1, Sixth Revised Edition, pp. 472-473.
[20]
Municipality of Hagonoy vs. Secretary of Agriculture and Natural Resources, 73 SCRA 507 [1976].
[21]
Roa vs. PH Credit Corporation, 223 SCRA 371 [1993].