THIRD DIVISION

January 13, 2016

G.R. No. 198752

ARTURO C. ALBA, JR., duly represented by his attorneys-in-fact, ARNULFO B. ALBA and
ALEXANDER C. ALBA, Petitioner,
vs.
RAYMUND D. MALAPAJO, RAMIL D. MALAPAJO and the Register of Deeds for the City of
Roxas, Respondents.

DECISION

PERALTA, J.:

Assailed in this petition for review on certiorari are the Resolution1 dated February 28, 2011 and the
Resolution2 dated August 31, 2011 issued by the Court of Appeals (CA) Cebu City, in CA-G.R. SP
No. 05594.

The antecedents are as follows:

On October 19, 2009, petitioner Arturo C. Alba, Jr., duly represented by his attorneys-in-fact, Arnulfo
B. Alba and Alexander C. Alba, filed with the Regional Trial Court (RTC) of Roxas City, Branch 15, a
Complaint3 against respondents Raymund D. Malapajo, Ramil D. Malapajo and the Register of
Deeds of Roxas City for recovery of ownership and/or declaration of nullity or cancellation of title and
damages alleging, among others, that he was the previous registered owner of a parcel of land
consisting of 98,146 square meters situated in Bolo, Roxas City, covered by TCT No. T-22345; that
his title was subsequently canceled by virtue of a deed of sale he allegedly executed in favor of
respondents Malapajo for a consideration of Five Hundred Thousand Pesos (P500,000.00); that new
TCT No. T-56840 was issued in the name of respondents Malapajo; that the deed of sale was a
forged document which respondents Malapajo were the co-authors of.

Respondents Malapajo filed their Answer with Counterclaim4 contending that they were innocent
purchasers for value and that the deed was a unilateral document which was presented to them
already prepared and notarized; that before the sale, petitioner had, on separate occasions,
obtained loans from them and their mother which were secured by separate real estate mortgages
covering the subject property; that the two real estate mortgages had never been discharged.
Respondents counterclaimed for damages and for reimbursement of petitioner's loan from them plus
the agreed monthly interest in the event that the deed of sale is declared null and void on the ground
of forgery.
Petitioner filed a Reply to Answer and Answer to (Permissive) Counterclaim5 stating, among others,
that the court had not acquired jurisdiction over the nature of respondents' permissive counterclaim;
and, that assuming without admitting that the two real estate mortgages are valid, the rate of five
percent (5%) per month uniformly stated therein is unconscionable and must be reduced.
Respondents filed their Rejoinder6 thereto.

Petitioner filed a Motion to Set the Case for Preliminary Hearing as if a Motion to Dismiss had been
Filed7 alleging that respondents’ counterclaims are in the nature of a permissive counterclaim, thus,
there must be payment of docket fees and filing of a certification against forum shopping; and, that
the supposed loan extended by respondents’ mother to petitioner, must also be dismissed as
respondents are not the real parties-in-interest. Respondents filed their Opposition8 thereto.

On June 4, 2010, the RTC issued an Order9 denying petitioner's motion finding that respondents’
counterclaims are compulsory. Petitioner’s motion for reconsideration was denied in an Order10 dated
September 30, 2010.

Petitioner filed a petition for certiorari with the CA which sought the annulment of the RTC Orders
dated June 4, 2010 and September 30, 2010.

In a Resolution dated February 28, 2011, the CA dismissed the petition for certiorari saying that
there was no proper proof of service of the petition to the respondents, and that only the last page of
the attached copy of the RTC Order was signed and certified as a true copy of the original while the
rest of the pages were mere machine copies.

Petitioner filed a motion for reconsideration which the CA denied in a Resolution dated August 31,
2011 based on the following findings:

Nevertheless, while petitioner filed with the Petition his Affidavit of Service and incorporated the
registry receipts, petitioner still failed to comply with the requirement on proper proof of service. Post
office receipt is not the required proof of service by registered mail. Section 10, Rule 13 of the 1997
Rules of Civil Procedure specifically stated that service by registered mail is complete upon actual
receipt by the addressee, or after five (5) days from the date he received the first notice of the
postmaster, whichever is earlier. Verily, registry receipts cannot be considered sufficient proof of
service; they are merely evidence of the mail matter with the post office of the sender, not the
delivery of said mail matter by the post office to the addressee. Moreover, Section 13, Rule 13 of the
1997 Rules of Civil Procedure specifically stated that the proof of personal service in the form of an
affidavit of the party serving shall contain a full statement of the date, place and manner of service,
which was not true in the instant petition.11

Petitioner filed the instant petition for review raising the following assignment of errors:

I. CONTRARY TO THE ERRONEOUS RULING OF THE COURT A QUO, THE COUNTERCLAIMS

INTERPOSED BY RESPONDENTS MALAPAJO IN THEIR ANSWER WITH COUNTERCLAIM ARE,
BASED ON APPLICABLE LAW AND JURISPRUDENCE, PERMISSIVE IN NATURE, NOT
COMPULSORY, AND THEREFORE, SUCH ANSWER WITH RESPECT TO SUCH
COUNTERCLAIMS IS IN REALITY AN INITIATORY PLEADING WHICH SHOULD HAVE BEEN
ACCOMPANIED BY A CERTIFICATION AGAINST FORUM SHOPPING AND CORRESPONDING
DOCKET FEES, THEREFORE, SHOULD HAVE BEEN PAID, FAILING IN WHICH THE
COUNTERCLAIMS SHOULD HAVE BEEN ORDERED DISMISSED. MOREOVER, AS REGARDS
THE LOAN ALLEGEDLY EXTENDED BY THEIR MOTHER TO PETITIONER, WHICH UP TO NOW
IS SUPPOSEDLY STILL UNPAID, RESPONDENTS MALAPAJO ARE NOT THE REAL PARTIES-
IN-INTEREST AND IS, THEREFORE, DISMISSIBLE ON THIS ADDITIONAL GROUND; and
II. THE HONORABLE COURT OF APPEALS COMMITTED A VERY SERIOUS ERROR WHEN IT
DISMISSED THE PETITION FOR CERTIORARI BASED ON PURE TECHNICALITY, THEREBY
GIVING MORE PREMIUM AND MORE WEIGHT ON TECHNICALITIES RATHER THAN
SUBSTANCE AND DISREGARDING THE MERITS OF THE PETITION.12

We find that the CA erred in denying petitioner's petition for certiorari after the latter had clearly
shown compliance with the proof of service of the petition as required under Section 13 of Rule 13 of
the 1997 Rules of Civil Procedure, which provides:

Sec.13. Proof of service.

Proof of personal service shall consist of a written admission of the party served, or the official return
of the server, or the affidavit of the party serving, containing a full statement of the date, place and
manner of service. If the service is by ordinary mail, proof thereof shall consist of an affidavit of the
person mailing of facts showing compliance with section 7 of this Rule. If service is made by
registered mail, proof shall be made by such affidavit and the registry receipt issued by the mailing
office. The registry return card shall be filed immediately upon its receipt by the sender, or in lieu
thereof the unclaimed letter together with the certified or sworn copy of the notice given by the
postmaster to the addressee.

Clearly, service made through registered mail is proved by the registry receipt issued by the mailing
office and an affidavit of the person mailing of facts showing compliance with the rule. In this case,
Nerissa Apuyo, the secretary of petitioner’s counsel, had executed an affidavit13 of personal service
and service by registered mail which she attached to the petition marked as original filed with the
CA. She stated under oath that she personally served a copy of the petition to the RTC of Roxas
City on December 6, 2010, as evidenced by a stamp mark of the RTC on the corresponding page of
the petition; that she also served copies of the petition by registered mail to respondents' counsels
on December 6, 2010 as evidenced by registry receipts numbers "PST 188" and "PST 189", both
issued by the Roxas City Post Office. The registry receipts issued by the

post office were attached to the petition filed with the CA. Petitioner had indeed complied with the
rule on proof of service.

Since the case was dismissed outright on technicality, the arguments raised in the petition
for certiorari were not at all considered. However, we will now resolve the issue on the merits so as
not to delay further the disposition of the case instead of remanding it to the CA.

The issue for resolution is whether respondents’ counterclaim, i.e., reimbursement of the loan
obtained from them in case the deed of absolute sale is declared null and void on the ground of
forgery, is permissive in nature which requires the payment of docket fees and a certification against
forum shopping for the trial court to acquire jurisdiction over the same.

A counterclaim is any claim which a defending party may have against an opposing party.14 A
compulsory counterclaim is one which, being cognizable by the regular courts of justice, arises out of
or is connected with the transaction or occurrence constituting the subject matter of the opposing
party's claim and does not require for its adjudication the presence of third parties of whom the court
cannot acquire jurisdiction. Such a counterclaim must be within the jurisdiction of the court both as to
the amount and the nature thereof, except that in an original action before the Regional Trial Court,
necessarily connected with the subject matter of the opposing party's claim or even where there is
such a connection, the Court has no jurisdiction to entertain the claim or it requires for adjudication
the presence of third persons over whom the court acquire jurisdiction.15 A compulsory counterclaim
is barred if not set up in the same action.
A counterclaim is permissive if it does not arise out of or is not necessarily connected with the
subject matter of the opposing party's claim.16 It is essentially an independent claim that may be filed
separately in another case.

To determine whether a counterclaim is compulsory or permissive, we have devised the following

tests: (a) Are the issues of fact and law raised by the claim and by the counterclaim largely the
same? (b) Would res judicata bar a subsequent suit on defendants’ claims, absent the compulsory
counterclaim rule? (c) Will substantially the same evidence support or refute plaintiffs’ claim as well
as the defendants’ counterclaim? and (d) Is there any logical relation between the claim and the
counterclaim?17 A positive answer to all four questions would indicate that the counterclaim is
compulsory.18

Based on the above-mentioned tests, we shall determine the nature of respondents’ counterclaim.
Respondents anchored their assailed counterclaim on the following allegations in their affirmative
defenses in their Answer with Counterclaim, thus:

xxxx

10. The plaintiff's cause of action is based on his allegation that his signature on the Deed of
Absolute Sale was forged.

The Deed of Absolute Sale is a unilateral instrument, i.e., it was signed only by the vendor, who is
the plaintiff in this case and his instrumental witnesses, who are his parents in this case. It was
presented to defendants already completely prepared, accomplished and notarized. Defendants had
no hand in its preparation, accomplishment and notarization.

While the plaintiff claims that his signature on the instrument is forged, he never questioned the
genuineness of the signatures of his instrumental witnesses, his parents Arturo P. Alba, Sr. and
Norma C. Alba, who signed the said instrument below the words "SIGNED IN THE PRESENCE OF"
and above the words "Father" and "Mother," respectively.

Furthermore, plaintiff acknowledged in par. 7 of his Complaint that the stated consideration in the
Deed of Absolute Sale is P500,000.00 and he never categorically denied having received the same.

11. Before the plaintiff sold the property to the defendants, he secured a loan from them in the sum
of Six Hundred Thousand Pesos (P600,000.00) payable on or before November 10, 2008. The loan
is evidenced by a Promissory Note and secured by a Real Estate Mortgage dated September 11,
2008, both executed by him, covering the parcel of land subject of this case, Lot 2332-D, Psd 06-
000738. Like the Deed of Absolute Sale, the Real Estate Mortgage is a unilateral instrument, was
signed solely by the plaintiff, and furthermore, his parents affixed their signatures thereon under the
heading "WITH MY PARENTAL CONSENT", and above the words, "Father" and "Mother,"
respectively.

Prior to this, or as early as July 25, 2008, the plaintiff also obtained a loan payable on or before
September 6, 2008 from defendants' mother, Alma D. David, and already mortgaged to her Lot
2332-D, Psd 06-000738. The loan is evidenced by a Promissory Note and a Real Estate Mortgage,
both of which were executed by plaintiff. Again, the Real Estate Mortgage is an unilateral instrument,
was signed solely by the plaintiff and furthermore, his parents also affixed their signatures thereon
under the heading, "WITH MY PARENTAL CONSENT " and above the words, "Father" and
"Mother," respectively.
In both instances, the plaintiff was always represented by his parents, who always manifested their
authority to transact in behalf of their son the plaintiff.
1âw phi 1

As in the case with the Deed of Absolute Sale, the defendants or their mother did not have any hand
in the preparation, accomplishment or notarization of the two Promissory Notes with accompanying
Real Estate Mortgages, x x x.

Neither of the two Real Estate Mortgages have been discharged or extinguished.

12. Considering the foregoing, the plaintiff's allegation that his signature on the Deed of Absolute
Sale was forged, and that the defendants are the "co-authors" of the said forgery, are absolutely
false and baseless.

13. If the Deed of Absolute Sale is declared null and void on the ground of forgery, then the plaintiff
should reimburse the defendants the loan he obtained from them, which he did not deny having
obtained, plus the agreed monthly interest.19

Petitioner seeks to recover the subject property by assailing the validity of the deed of sale on the
subject property which he allegedly executed in favor of respondents Malapajo on the ground of
forgery. Respondents counterclaimed that, in case the deed of sale is declared null and void, they be
paid the loan petitioner obtained from them plus the agreed monthly interest which was covered by a
real estate mortgage on the subject property executed by petitioner in favor of respondents. There is
a logical relationship between the claim and the counterclaim, as the counterclaim is connected with
the transaction or occurrence constituting the subject matter of the opposing party's claim. Notably,
the same evidence to sustain respondents' counterclaim would disprove petitioner's case. In the
event that respondents could convincingly establish that petitioner actually executed the promissory
note and the real estate mortgage over the subject property in their favor then petitioner's complaint
might fail. Petitioner's claim is so related logically to respondents' counterclaim, such that conducting
separate trials for the claim and the counterclaim would result in the substantial duplication of the
time and effort of the court and the parties.20

Since respondents' counterclaim is compulsory, it must be set up in the same action; otherwise, it
would be barred forever.21 If it is filed concurrently with the main action but in a different proceeding,
it would be abated on the ground of litis pendentia; if filed subsequently, it would meet the same fate
on the ground of res judicata.22 There is, therefore, no need for respondents to pay docket fees and
to file a certification against forum shopping for the court to acquire jurisdiction over the said
counterclaim.

We agree with the RTC’s disquisition in finding that respondents’ counterclaim is compulsory, to wit:

The arguments of the plaintiffs that this transaction is a permissive counterclaim do not convince.

By the manner in which the answer pertaining to this transaction was phrased, the real estate
mortgage was the origin of the Deed of Absolute Sale after the loan of P600,000.00 using the same
property as security for the payment thereof was not settled. In short, it is one of defendants'
defenses and controverting evidence against plaintiffs' allegations of falsification of the Deed of
Absolute Sale, the property subject of the Deed of Sale being one and the same property subject of
the mortgage.23

xxxx
Can the Court adjudicate upon the issues [of whether or not the plaintiff could recover ownership
and or whether or not the title to the property in question may be canceled or declared null and void,
and damages] without the presence of the mother of defendants in whose favor the Real Estate
Mortgage of the property subject of this action was executed?

Definitely, this Court can. That there was an allegation pertaining to the mortgage of the property in
question to defendants’ mother is only some sort of a backgrounder on why a deed of sale was
executed by plaintiff in defendants’ favor, the truth or falsity of which will have to be evidentiary on
the part of the parties hereto. In short, the Court does not need the presence of defendants’ mother
before it can adjudicate on whether or not the deed of absolute sale was genuine or falsified and
whether or not the title to the property may be cancelled.24

WHEREFORE, premises considered, the instant petition is PARTIALLY GRANTED. The

Resolutions dated February 28, 2011 and August 31, 2011 issued by the Court of Appeals in CA-
G.R. SP No. 05594 dismissing the petition for certiorari and denying reconsideration thereof,
respectively, for failure to show proper proof of service of the petition to respondents, are SET
ASIDE. Acting on the petition for certiorari, we resolve to DENY the same and AFFIRM the Order
dated June 4, 2010 of the Regional Trial Court of Roxas City, Branch 15, denying petitioner's motion
to set the case for hearing as if a motion to dismiss had been filed, and the Order dated September
30, 2010 denying reconsideration thereof.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson

MARTIN S. VILLARAMA, JR. BIENVENIDO L. REYES

Associate Justice Associate Justice

FRANCIS H. JARDELEZA
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 Court's Division.

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson, Third Division

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's 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 Court's Division.

MARIA LOURDES P.A. SERENO

Chief Justice

CERTIFIED TRUE COPY

WILFREDO V. LAPITAN
Division Clerk of Court
Third Division
February 16, 2016

Footnotes

1
Penned by Associate Justice Eduardo B. Peralta, Jr., with Associate Justices Edgardo L.
delos Santos and Agnes Reyes-Carpio concurring; rollo, pp. 140-142.

2
Penned by Associate Justice Eduardo B. Peralta, Jr., with Associate Justices Edgardo L.
delos Santos and Gabriel T. Ingles concurring; id. at 162-164.

3
Docketed as Civil Case No. V-49-09; id. at 45-50.

4
Id. at 55-A-62.

5
Id. at 67-74.

6
Id. at 76-85.

7
Id. at 86-90.

8
Id. at 91-93.

9
Id. at 94-97; Per Judge Juliana C. Azarraga.

10
Id. at 116.

11
Id. at 163-164. (Italics omitted)

12
Id at 18.

13
Id at 150.

14
Rules of Court, Rule 6, Sec. 6.

15
Rules of Court, Rule 6, Sec. 7.
 See Lafarge Cement Philippines, Inc. v. Continental Cement Corporation, 486 Phil. 123,
16

134 (2004), citing Lopez v. Gloria, 40 Phil. 26 (1919), per Torres, J.

17
Valencia v. Court of Appeals, 331 Phil. 590, 606 (1996).

18
Id.

19
Rollo, pp. 56-58.

20
Tan v. Kaakbay Finance Corporation, 452 Phil. 637, 647 (2003).

21
See Lafarge Cement Philippines, Inc. v. Continental Cement Corporation, supra note 16.

22
Id. at 137

23
Rollo, pp. 125-126.

24
Id. at 126-127.
 THIRD DIVISION

March 11, 2015

G.R. No. 155701

LIM TECK CHUAN, Petitioner,

vs.
SERAFIN UY and LEOPOLDA CECILIO, LIM SING CHAN @ HENRY LIM, Respondents.

DECISION

REYES, J.:

Before this Court is a petition for review on certiorari1 under Rule 45 filed by Lim Teck Chuan
(petitioner) assailing the Orders dated April 25, 20022 and October 21, 20023 of the Regional Trial
Court (RTC) of Lapu-lapu City, Branch 27, in Civil Case No. 4786-L, which dismissed the case
uponjointa motion of respondents Serafin Uy (Serafin) and Leopolda Cecilio (Leopolda) despite an
opposition and manifestation of the petitioner to have his counterclaim prosecuted in the same
action, and denied the petitioner's motion for reconsideration for being barren of merit, respectively.

The antecedent facts are as follows:

The subject matter of the present controversy is a piece of land known as Lot 5357 with an area of
33,610 square meters, covered by Transfer Certificate of Title (TCT) No. T-0500, situated in Barrio
Agus, Lapu-lapu City, Cebu, owned and registered under the name of Antonio Lim Tanhu (Antonio),
married to Dy Ochay.

Lot 5357 was sold by Antonio to the spouses Francisco Cabansag (Francisco) and Estrella
Cabansag (Spouses Cabansag) as evidenced by a Deed of Sale executed on January 8, 1966.
Apparently, Francisco failed to transfer the title of the property to their names because of his work
and frequent travels abroad.4

In 1988, Spouses Cabansag sold the lot to Serafin, as evidenced by a Deed of Sale dated April 8,
1988. To pave the way for the transfer of title to Serafin’s name, Spouses Cabansag attempted to
have the same transferred under their names first. However, Francisco failed to do so as he lost the
owner’s copy of TCT No. T-0500 together with other documents pertaining to the sale of the subject
lot. This prompted Serafin to exert efforts to secure copies of the lost documents himself. On May
15, 1996, Serafin filed a petition before the RTC, docketed as Cadastral Case No. 21 praying for the
issuance of a new owner’s duplicate TCT in his name, thereby cancelling TCT No. T-0500 in the
name of Antonio.5
Serafin’s petition for the issuance of a new owner’s copy of TCT No. T-0500 was raffled to the RTC
of Lapu-lapu City, Branch 27, then sitting as a cadastral court (Cadastral Court). After due notice and
hearing, the Cadastral Court issued an Order6 on June 14, 1996 directing the Register of Deeds of
Lapu-lapu City to issue a new owner’s duplicate copy of TCT No. T-0500.

However, the aforesaid order was recalled and nullified on September 3, 19967 on the ground that
the petitioner filed an Opposition and/or Motion for Reconsideration with Manifestation for Special
Appearance8 dated August 22, 1996 alleging that he is one of the six legitimate descendants of
Antonio; and that the original owner’s copy of TCT No. T-0500 was not lost and has always been in
his custody. The court further directed the petitioner to deposit the said owner’s copy of TCT No. T-
0500 with said court.

In the meantime, on August 2, 1996, Lim Sing Chan alias Henry Lim (Henry) executed an Affidavit of
Sole Adjudication/Settlement of the Estate of Antonio Lim Tanhu with Deed of Sale9 (Affidavit of Self-
Adjudication) claiming that he is the only surviving heir of Antonio. In the same document, Henry
sold Lot 5357 to Leopolda in the amount of 500,000.00.

With this turn of events, Serafin filed on July 25, 1997 a Complaint10 for quieting of title, surrender of
owner’s copy of certificate of title, declaration of nullity of affidavit of adjudication and sale,
annulment of tax declaration, and other reliefs with a prayer for preliminary injunction before the
RTC, docketed as Civil Case No. 4786-L. Impleaded as defendants were Leopolda, Henry, and the
herein petitioner.

Leopolda filed her Answer11 (with counterclaim, and cross-claim against Henry), asserting that she
was the buyer in good faith and for value of Lot 5357. She alleged that the said property was never
encumbered to any person during the lifetime of Antonio; that the deed of sale in favor of Spouses
Cabansag was simulated and spurious; and that the said document was never registered with the
proper government agency, nor was it ever annotated on the certificate of title covering the said
property. She claimed that the lot in question was sold to her as evidenced by the Affidavit of Self-
Adjudication executed by Henry; that she caused the issuance of a new tax declaration over the said
property in her name; that since then, she has been in open, actual and material possession of the
subject lot in the concept of an owner.

For his part, the petitioner averred in his Answer12 (with counterclaim, and cross-claims against
Leopolda and Henry), that Lot 5357 was never transferred nor encumbered to any person during
Antonio’s lifetime. The deed of sale in favor of Spouses Cabansag was simulated and spurious, and
was intended to defraud the estate of Antonio. Furthermore, the petitioner questioned Henry’s claim
that he was an heir of Antonio, much less the only surviving heir of the latter. Corollarily, the
petitioner questioned the validity of Henry’s Affidavit of Self-Adjudication and Leopolda’s claim of title
to the subject property.

On November 11, 1997, Leopolda filed her Answer13 to the petitioner’s cross-claim. She basically
reiterated her allegations raised in her Answer to Serafin’s complaint.

Henry did not file an answer to any of the claims against him.

On December 22, 1998, the pre-trial conference14 was conducted where the parties agreed to the
following stipulation of facts:

[T]hat Antonio Lim Tanhu was the registered owner of Lot 5357 of the Cadastral Survey of Opon
located in Lapu-lapu City[;] that Antonio Lim Tanhu died on April 13, 1991[;] that Antonio Lim Tanhu
was succeeded upon his death by his six children, namely, the defendant Lim Teck Chuan, Lim Sing
Tai, Helen Lim, Lenesita Lim, Warlito Lim and Michael Lim Tan Ho[;] that the defendant Lim Sing
Chan is actually a fictitious person[;] that there exists an ancient document denominated as Deed of
Absolute Sale of Lot 5357 executed on January 8, 1966 by Antonio Lim Tanhu in favor of the
spouses Francisco Cabansag and Estrella M. Cabansag (Exhibit A)[;] that there also exists a
document denominated as Deed of Absolute Sale (Exhibit B) of Lot 5357 executed on April 8, 1988
by the spouses Francisco Cabansag and Estrella M. Cabansag in favor of the plaintiff[;] and that
there exists, too, a document denominated as Affidavit of [Sale] Adjudication/Settlement of Estate of
Antonio Lim Tanhu with Deed of Sale executed on May 2, 1996 by a certain Lim Sing Chan (Exhibit
1-Cecilio). x x x.15

The parties also agreed to the following issues:

1.Whether or not the plaintiff has valid causes of action for quieting of title, declaration of
nullity of documents of sale and tax declarations, reconveyance of title and damages against
the defendants[;]

2.Whether or not the defendants Leopolda Cecilio and Lim Teck Chuan have valid
counterclaims against the plaintiff; and

3.Whether or not the defendant Lim Teck Chuan has a valid cross-claim against the
defendant Leopolda Cecilio.16

Thereafter, the pre-trial order was amended such that it should not be considered as established and
stipulated facts that Henry is a fictitious person and that the Deed of Sale of Lot 5357 purportedly
executed by Antonio on January 8, 1966 is genuine and authentic since there were actually no
admissions made on these circumstances.17

In the same Order18 dated July 17, 1999, the RTC denied Serafin’s motion for summary
judgment19 because under the circumstances, there were actually genuine issues of fact to be
resolved and passed upon by the court.

Eventually, the RTC set the initial trial of the case on March 28, 2001.20 However, it was postponed
upon motion of Leopolda’s counsel and upon the manifestation of Serafin’s counsel that there was
an on-going negotiation for an amicable settlement. For his part, the petitioner’s counsel manifested
that the petitioner was not involved in any negotiation for amicable settlement. The scheduled
hearing was reset to July 11, 200121 and later to November 12, 2001.22

On September 20, 2001, Serafin and Leopolda submitted a Joint Motion to Dismiss.23 They averred
that:

1.That the case at [bench] is filed by the Plaintiff Serafin Uy against the defendants for
"quieting of title, surrender of owner of certificate of title, declaration of nullity of affidavit of
adjudication and sale annulment of tax declaration, and other reliefs consistent with law,
justice and equity[ ];

2.That in the case at bench, Plaintiff Serafin Uy seeks the quieting of title on his right over
Lot 5357 of the Cadastral Survey of Opon situated at Barangay Agus, Lapu-lapu City, in view
of the affidavit of adjudication and Sale dated August 2, 1996 (Annex "F") of the Complaint,
and Tax Decl. No. 01532 issued in the name of Leopolda Cecilio both of which documents
affected Lot 5357 (Annex G to the Complaint);
 3.That Plaintiff Serafin Uy and Defendant Leopolda Cecilio have amicably settled their
differences in the case at bench and Def. Leopolda Cecilio has agreed to waive her
counterclaim for damages in the instant case;

4.That Plaintiff Serafin Uy has already secured a certificate of title to Lot No. 5357 in his
name dated July 26, 2001, and has also agreed for the cancellation of the same, and for
issuance of a new one, over said Lot 5357, in their common names;

5.That whatever claim defendant Lim Teck Chuan may have on said Lot No. 5357, the same
may be ventilated by said defendant in an appropriate independent action that he may
initiate and file[.]

PRAYER

WHEREFORE, this Honorable Court is most respectfully prayed and humbly implored to dismiss the
Complaint and the respective counterclaims of the defendants in the case at bench.24

On October 4, 2001, the petitioner filed his Opposition/Comment25 praying for the denial of the Joint
Motion to Dismiss on the ground of bad faith, and to prohibit Serafin and Leopolda from undertaking
any further transaction involving the subject lot. The pertinent portion of his opposition reads as
follows:

1. That the [petitioner] opposes the ‘Joint Motion to Dismiss’ filed by [Serafin] and [Leopolda]
on the grounds:

1.1that there [is] BAD FAITH on the part of [Serafin] and [Leopolda];

1.2.That the [petitioner] was not involved in any amicable settlements between
[Serafin] and [Leopolda] because both [Serafin] and [Leopolda] connived to
MISLEAD this Honorable Court and to DEFRAUD the estate of [Antonio];

1.3.That the [petitioner] has valid counterclaims against [Serafin] for moral damages
of P 5,000,000[.00]; exemplary damages of P 1,200,000[.00]; and Attorney’s fees of
P 50,000[.00]; on the ground that [Serafin] maliciously and deliberately presented to
this Honorable Court the FALSIFIED AND FICTITIOUS ‘deed of sale’
PURPORTEDLY executed by [Antonio] in favor of [Francisco];

1.4.That the [petitioner] has valid cross[-]claims against Cross-defendants Lim Sing
Chan alias Henry Lim whose real name is Henry Lim Ormoc, and [Leopolda] for
moral damages of P 5,000,000[.00] each, attorney’s fees of P 50,000[.00] each, and
exemplary damages of P 1,000,000[.00] for [Henry] and P 1,600,000[.00] for
[Leopolda] because [Henry] and [Leopolda] connived with each other to defraud the
estate of [Antonio] on the ground that [Henry] MISREPRESENTED himself as an heir
of [Antonio] while [Leopolda] has KNOWLEDGE of such MISREPRESENTATION;

1.5.That the [petitioner] manifest[s] to this Honorable Court of his preference

that the above-counterclaims and cross-claims be resolved in the present
case[.]26
The petitioner further averred that the transfer of Antonio’s title under TCT No. T-0500 in the name of
Serafin is irregular and illegal since the true owner’s copy of TCT No. T-0500 remained in his
possession.

Henry continued to remain silent.

On October 10, 2001, Serafin filed his Reply27 to the comment/opposition of the petitioner. He
substantially averred that:

1.With the end in view of registering Lot 5357 in his name, he instituted the instant case due
to the existence of certain documents affecting his title thereto, namely: Henry’s Affidavit of
Self-Adjudication with Deed of Sale dated August 2, 1996 naming Leopolda as the buyer,
and Tax Declaration No. 01532 issued in the name of the latter;

2.Under his Affidavit of Self-Adjudication, Henry already transferred whatever right and
interest he had on the subject lot to Leopolda. On the other hand, by reason of the amicable
settlement between him (Serafin) and Leopolda, the latter waived and abandoned all her
rights to Lot 5357. Ergo, as far as Leopolda is concerned, her waiver negated all the legal
consequences of Tax Declaration No. 01532 and Henry’s Affidavit of Self-Adjudication. Since
the same were the very documents that cast clouds on his (Serafin) title over Lot 5357, his
main causes of action in the case at bench had become moot and academic as his title to
the said lot had been quieted;

3.The petitioner was impleaded because of the following points: a) he alleged that he is one
of the heirs of the late Antonio; b) he contested the claim of Henry that the latter is the only
surviving heir of said decedent, and prayed upon the court to declare Henry as an impostor;
and c) he challenged the genuineness and due execution of the deed of absolute sale
between Antonio and Spouses Cabansag;

4.Aside from his claim for damages, the petitioner’s counterclaim sought the nullification of
the Deed of Absolute Sale dated January 8, 1966 between Antonio and Spouses Cabansag
which required the impleading of persons who were not parties in the case. These persons
included Spouses Cabansag who was indispensable party to any action for the annulment of
the deed which was executed in their favor. However, to implead the said persons, there was
a need to summon them so that the court can acquire jurisdiction over them - and in order
that they can be summoned, there was a need for the petitioner to file a formal complaint
against them;

5.Moreover, the cross-claim of the petitioner against Henry can also be resolved in a
separate action for the declaration of the true heirs of Antonio wherein all the heirs of the
latter will be impleaded, and where the petitioner can prove that he was indeed one of the
heirs of said decedent – especially so that there is yet no judicial or extra-judicial declaration
as to who were Antonio’s heirs;

6.The dismissal of the case will not affect the rights of the petitioner because whatever claim
he had on the subject lot and against any party may be ventilated in an appropriate and
separate action.

On November 6, 2001, the petitioner, through counsel, filed his

Motion to Implead Indispensable Parties and Supplemental Opposition to Joint Motion to

Dismiss.28 Invoking Section 1129 of Rule 3 of the Rules of Court, the petitioner averred that there is a
need to implead Spouses Cabansag in order that a final determination of all the issues could be had
in the case.

Acting on the Joint Motion to Dismiss, the RTC issued the assailed Order30 dated April 25, 2002
granting the same and denying the petitioner’s motion to implead Spouses Cabansag. The order is
quoted as follows:

Going over the arguments of the parties, the Court finds the arguments of the movants as tenable.
For what is the use of so continuously litigating this case when [Serafin] admits and confirms that the
principal reliefs he prayed for have already been met or satisfied as his title to the property in
question has already been quieted with him having "already secured a certificate of title to Lot No.
5357 in his name dated July 26, 2001, and has also agreed for the cancellation of the same, and for
the issuance of a new one, over said Lot 5357, in their common names." In fact, even without said
reliefs having been met or satisfied, nobody, not even the courts of justice, can compel a party-
litigant in a civil action like [Serafin] to so continuously litigate his case if he does not want to
anymore.

Finding therefore, the subject motion to dismiss to be proper and in order, this case is ordered
dismissed so with the respective counterclaims of the defendants. Considering however, that [the
petitioner] is not a party and even opposed the subject motion to dismiss, the dismissal of his
counterclaims and cross-claim is without prejudice to give him his day in court. And with this
pronouncement of dismissal, the motion to implead indispensable parties of [the petitioner] becomes
moot and academic and therefore is denied.31

On May 30, 2002, the petitioner filed a Motion for Reconsideration32 which was denied in the
Order33 dated October 21, 2002.

Aggrieved, the petitioner went up to this Court via a petition for review on certiorari under Rule 45
raising the lone assignment of error that:

THE LOWER COURT ERRED IN DISMISSING CIVIL CASE 4786-L UPON A JOINT MOTION TO
DISMISS FILED BY THE RESPONDENTS WHO ARE PLAINTIFF AND ONE OF THE
DEFENDANTS, RESPECTIVELY, IN THE AFOREMENTIONED CASE DESPITE THE
OPPOSITION BY HEREIN PETITIONER AND THE MANIFESTATION OF THE LATTER OF HIS
PREFERENCE MADE WITHIN FIFTEEN (15) DAYS FROM THE JOINT MOTION TO DISMISS, TO
HAVE HIS COUNTERCLAIM, AS WELL AS HIS CROSS-CLAIM, PROSECUTED IN THE SAME
ACTION, IN ACCORDANCE WITH SECTION 2, RULE 17 OF THE 1997 RULES OF CIVIL
PROCEDURE.34

The petitioner faults the RTC for dismissing the case in its entirety in spite of his counterclaim and
cross-claim. He asserts that within 15 days from notice of the filing of the joint motion to dismiss, he
filed his opposition thereto and expressed his preference to have his counterclaim and cross-claim
be resolved in the same action. Therefore, pursuant to the provisions of Section 2, Rule 17 of the
Rules of Court, his timely expression of such preference should be enough for the trial court not to
dismiss the case in its entirety, and to limit its action to the dismissal of the complaint.

Preliminarily, the respondents question the petitioner’s recourse to this Court in filing the instant
petition alleging that no appeal may be taken from an order of the RTC dismissing an action without
prejudice.35 Nonetheless, the Rules of Court do not prohibit any of the parties from filing a Rule 45
petition with this Court in case only questions of law are raised or involved.36 In Bukidnon Doctors’
Hospital, Inc. v. Metropolitan Bank & Trust Co.,37 the Court explained that:
Section 2(c), Rule 41 of the Rules of Court categorically provides that in all cases where only
questions of law are raised, the appeal from a decision or order of the Regional Trial Court shall be
to the Supreme Court by petition for review on certiorari in accordance with Rule 45. Section 2(c) of
Rule 41 of the Rules of Court reads:

SEC. 2. Modes of appeal. –

(a)Ordinary appeal. – The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a
notice of appeal with the court which rendered the judgment or final order appealed
from and serving a copy thereof upon the adverse party. No record on appeal shall
be required except in special proceedings and other cases of multiple or separate
appeals where the law or these Rules so require. In such cases, the record on
appeal shall be filed and served in like manner.

(b)Petition for review. – The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition for
review in accordance with Rule 42.

(c)Appeal by certiorari. – In all cases where only questions of law are raised or
involved, the appeal shall be to the Supreme Court by petition for review on certiorari
in accordance with Rule 45.

Section 1 of Rule 45 provides:

SECTION 1. Filing of petition with Supreme Court.

– A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of
Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise
only questions of law which must be distinctly set forth.

A question of law exists when the doubt or controversy concerns the correct application of law or
jurisprudence to a certain set of facts; or when the issue does not call for an examination of the
probative value of the evidence presented, the truth or falsehood of facts being admitted. A question
of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the
query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the
existence and relevancy of specific surrounding circumstances, as well as their relation to each other
and to the whole, and the probability of the situation.38 (Citation omitted)

Considering that the issue in the instant case is clearly one of law as it calls for the correct
application of the Rules of Court, the petitioner’s direct resort to this Court is proper.

The Court now looks into the propriety of the order of the RTC in dismissing the case. Needless to
state, the Court is again confronted with the issue of whether the dismissal of the complaint,
specifically upon motion of the plaintiff under Section 2 of Rule 17 of the Rules of Court also calls for
the dismissal of the defendant’s counterclaim, as in the case at bar.

Rule 17 of the Rules of Civil Procedure provides the following:

SECTION 1. Dismissal upon notice by plaintiff. – A complaint may be dismissed by the plaintiff by
filing a notice of dismissal at any time before service of the answer or of a motion for summary
judgment. Upon such notice being filed, the court shall issue an order confirming the dismissal.
Unless otherwise stated in the notice, the dismissal is without prejudice, except that a notice
operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in a
competent court an action based on or including the same claim.

SECTION 2. Dismissal upon motion of plaintiff. – Except as provided in the preceding section, a
complaint shall not be dismissed at the plaintiff’s instance save upon approval of the court and upon
such terms and conditions as the court deems proper. If a counterclaim has been pleaded by a
defendant prior to the service upon him of the plaintiff’s motion for dismissal, the dismissal shall be
limited to the complaint. The dismissal shall be without prejudice to the right of the defendant to
prosecute his counterclaim in a separate action unless within fifteen (15) days from notice of the
motion he manifests his preference to have his counterclaim resolved in the same action. Unless
otherwise specified in the order, a dismissal under this paragraph shall be without prejudice. A class
suit shall not be dismissed or compromised without the approval of the court.

SECTION 3. Dismissal due to fault of plaintiff. – If, for no justifiable cause, the plaintiff fails to appear
on the date of the presentation of his evidence in chief on the complaint, or to prosecute his action
for an unreasonable length of time, or to comply with these Rules or any order of the court, the
complaint may be dismissed upon motion of the defendant or upon the court’s own motion, without
prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate
action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise
declared by the court.

SECTION 4. Dismissal of counterclaim, cross-claim, or third- party complaint. – The provisions of

this Rule shall apply to the dismissal of any counterclaim, cross-claim, or third-party complaint. A
voluntary dismissal by the claimant by notice as in Section 1 of this Rule, shall be made before a
responsive pleading or a motion for summary judgment is served or, if there is none, before the
introduction of evidence at the trial or hearing.

The RTC granted the Joint Motion to Dismiss upon the behest of Serafin, the plaintiff therein on the
main ground that the case had become moot and academic since his title to Lot 5357 had been
allegedly quieted and the reliefs prayed for were obtained. In the Order dated October 21, 2002
denying the motion for reconsideration, the RTC elucidated that:

The Court in issuing the dismissal order dated April 25, 2002 had already made its position on the
matter very clearly such that it finds no reason to disturb the subject order. As clarified, a party-
litigant in a civil action like the plaintiff herein, cannot be compelled to so continuously litigate his
case if he does not want to anymore as was obtaining in this case. More so that the principal reliefs
prayed for in the complaint had already been served as was so admitted by the plaintiff. Being so,
this Court finds it repugnant to go on with the hearing of movant’s-defendant’s counterclaim for what
is to be countered by the movant when the claim of the plaintiff, at his own instance, had already
been dismissed it having been served and satisfied as aforestated. And this is so because what is
contemplated under the Rules authorizing the hearing of defendant’s counterclaim is when the
dismissal is not at the instance of the plaintiff.39

As can be gleaned from the assailed orders, the RTC erred when it dismissed the case when the
present rules state that the dismissal shall be limited only to the complaint. A dismissal of an action
1âw phi 1

is different from a mere dismissal of the complaint. For this reason, since only the complaint and not
the action is dismissed, the defendant in spite of said dismissal may still prosecute his counterclaim
in the same action.40 The case of Pinga v. Heirs of German Santiago41 is quite instructive which this
Court finds worth reiterating. In Pinga, the Court clearly stated that the dismissal of the complaint
does not necessarily result to the dismissal of the counterclaim, abandoning the rulings in Metals
Engineering Resources Corporation v. Court of Appeals,42 International Container Terminal Services,
Inc. v. Court of Appeals,43 and BA Finance Corporation v. Co.44 The Court held that:

At present, even Section 2, concerning dismissals on motion of the plaintiff, now recognizes the right
of the defendant to prosecute the counterclaim either in the same or separate action notwithstanding
the dismissal of the complaint, and without regard as to the permissive or compulsory nature of the
counterclaim.

In his commentaries on the 1997 Rules of Civil Procedure, Justice Regalado expounds on the
effects of the amendments to Section 2 and 3 of Rule 17:

2. Under this revised section [2], where the plaintiff moves for the dismissal of his complaint
to which a counterclaim has been interposed, the dismissal shall be limited to the complaint.
Such dismissal shall be without prejudice to the right of the defendant to either prosecute his
counterclaim in a separate action or to have the same resolved in the same action. Should
he opt for the first alternative, the court should render the corresponding order granting and
reserving his right to prosecute his claim in a separate complaint. Should he choose to have
his counterclaim disposed of in the same action wherein the complaint had been dismissed,
he must manifest such preference to the trial court within 15 days from notice to him of
plaintiff’s motion to dismiss. These alternative remedies of the defendant are available to him
regardless of whether his counterclaim is compulsory or permissive. x x x.45 (Italics in the
original)

In the instant case, the petitioner’s preference to have his counterclaim (and cross-claims) be
prosecuted in the same action was timely manifested. The records show that Serafin and Leopolda
furnished the petitioner’s counsel with a copy of their Joint Motion to Dismiss by posting it (via
registered mail) on September 19, 2001.46 Said motion was filed in court the following day.47 On
October 4, 2001, the petitioner filed his Opposition/Comment thereto.48 Copies of the said opposition
were personally served upon the opposing parties on the same date.49 In paragraph 1.550 of said
opposition, the petitioner expressed his preference to have his counterclaim and cross-claim
prosecuted in the same case, as he thus stated:

1.5 That the undersigned defendant manifest to this Honorable Court of his preference that
the above[ ]counterclaims and cross-claims be resolved in the present case.51

There are valid reasons why the petitioner vehemently objected to the dismissal of the case upon
the joint motion of Serafin and Leopolda and insisted to have his counterclaim prosecuted in the
same action.

Serafin instituted the instant case due to the existence of certain documents affecting his title,
namely: Henry’s Affidavit of Self-Adjudication with Deed of Sale which names Leopolda as the
buyer; and Tax Declaration No. 01532 which was issued in the name of the latter. In his Affidavit of
Self-Adjudication, Henry transferred whatever right and interest he had on the subject lot to
Leopolda. Subsequently, by reason of the amicable settlement between Serafin and Leopolda, the
latter waived and abandoned all her rights to Lot 5357.

On the other hand, the petitioner asserts that the subject property was never transferred nor
encumbered to any person during Antonio’s lifetime. He insists that the deed of sale in favor of
Spouses Cabansag is simulated and spurious, and was intended to defraud the estate of Antonio.
Further, he asserts that said Spouses Cabansag are mere creations of Serafin.
Forthwith, the foregoing contentions touch on the very merits of the case which this Court is not
prepared to rule upon for want of sufficient factual basis since this case was dismissed by the RTC
even before the parties were able to present their evidence on the merits. Nonetheless, the records
show that Serafin had been aware of the petitioner’s claim over the property as descendants of
Antonio and Dy Ochay even before the institution of this case, which was why he impleaded the
petitioner in this case. Then, the Joint Motion to Dismiss was filed by Serafin and Leopolda on the
ground that both parties were able to settle their differences. It is rather intriguing that in said joint
motion, it was alleged that Serafin was already able to secure a certificate of title in his name dated
July 26, 2001 and that both parties agreed for its cancellation and have a title over said property
issued in their common names.52 Clearly, the petitioner was peremptorily left out of the picture. From
the case’s inception, the petitioner’s interests and that of his siblings over the subject property were
vigilantly defended as evidenced by the numerous and exchange of pleadings made by the parties.
It can not therefore be denied that the petitioner has certainly valid defenses and enforceable claims
against the respondents for being dragged into this case. Thus, the petitioner’s manifestation of his
preference to have his counterclaim prosecuted in the same action is valid and in accordance with
Section 2, Rule 17 of the Rules of Court.

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The Orders dated April
25, 2002 and October 21, 2002 of the Regional Trial Court ofLapu-lapu City, Branch 27 in Civil Case
No. 4786-L are MODIFIEDthatin the counterclaim of Lim Teck Chuan as defendant in Civil Case No.
4786-L is REINSTATED. The Regional Trial Court is ORDERED to hear and decide Lim Teck
Chuan's counterclaim with dispatch.

SO ORDERED.

BIENVENIDO L. REYES
Associate Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson

DIOSDADO M. PERALTA MARTIN S. VILLARAMA

Associate Justice Associate Justice

FRANCIS H. JARDELEZA
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 Court's Division.

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, 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 Court's Division.

MARIA LOURDES P.A. SERENO

Chief Justice

Footnotes

1
Rollo, pp. 3-32.

2
Issued by Presiding Judge Leopoldo V. Caflete; id. at 235.

3
Id. at 286.

4
Id. at 35-36.

5
Id. at 287-289.

6
Id. at 302.

7
Id. at 307.

8
Id. at 303-305.

9
Id. at 135-136.

10
Id. at 34-44.

11
Id. at 55-64.

12
Id. at 65-81.

13
Id. at 114-116.

14
Id. at 117-118.

15
Id. at 117.

16
Id.

17
Id. at 142.

18
Id.

19
Id. at 119-131.
20
Id. at 154.

21
Id. at 155.

22
Id. at 156.

23
Id. at 166-167.

24
Id. at 166.

25
Id. at 168-173.

26
Id. at 168-169.

27
Id. at 187-192.

28
Id. at 231-234.

29
Sec. 11. Misjoinder and non-joinder of parties. – Neither misjoinder nor non-joinder of
parties is ground for dismissal of an action. Parties may be dropped or added by order of the
court on motion of any party or on its own initiative at any stage of the action and on such
terms as are just. Any claim against a misjoined party may be severed and proceeded with
separately.

30
Rollo, p. 235.

31
Id.

32
Id. at 236-243.

33
Id. at 286.

34
Id. at 15.

35
RULES OF COURT, Rule 41, Section 1(g).

Republic v. Sunvar Realty Development Corporation, G.R. No. 194880, June 20, 2012, 674
36

SCRA 320, 332.

37
501 Phil. 516 (2005).

38
Id. at 525-526.

39
Rollo, p. 286.

40
Herrera, Remedial Law, Volume I, 2007 Edition, p. 1058.

41
526 Phil. 868 (2006).

42
G.R. No. 95631, October 28, 1991, 203 SCRA 273.
43
G.R. No. 90530, October 7, 1992, 214 SCRA 456.

44
G.R. No. 105751, June 30, 1993, 224 SCRA 163.

45
Supra note 41, at 885-886.

46
Rollo, p. 167.

47
Id. at 166.

48
Id. at 168-173.

49
Id. at 173.

50
Id. at 169.

51
Id.

52
Id. at 166.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 200567 June 22, 2015

METOROPLITAN BANK AND TRUST COMPANY, Petitioner,

vs.
CPR PROMOTIONS AND MARKETING, INC. and SPOUSES CORNELIO P. REYNOSO, JR. and
LEONIZA* F. REYSONO, Respondents.

DECISION

VELASCO, JR., J.:

The Case

Before Us is a petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the
September 28, 2011 Decision1 and February 13, 2012 Resolution2 of the Court of Appeals (CA)
rendered in CA-G.R. CV No. 91424. Said ruling dismissed petitioner Metropolitan Banking and Trust
Company’s (MBTC’s) claim for deficiency payment upon foreclosing respondents’ mortgaged
properties and ordered the bank, instead, to return to respondent mortgagors the excess amount of
PhP 722,602.22.

The Facts

The facts of the case, as culled from the records, are as follows:

From February to October 1997, respondent CPR Promotions and Marketing, Inc. (CPR Promotions)
obtained loans from petitioner MBTC. These loans were covered by fifteen (15) promissory note
(PNs) all signed by respondents, spouses Leoniza F. Reynoso and Cornelio P. Reynoso, Jr.
(spouses Reynoso), as Treasurer and President of CPR Promotions, respectively. The issued PNs
are as follows:

PN No. Date Amount

1. 277894 (BDS-143/97) February 7, 1997 P 6,500,000.00
2. 281728 (BD-216/97) July 21, 1997 P 959,034.20
3. 281735 (BD-222/97) July 31, 1997 P 508,580.83
4. 281736 (BD-225/97) August 12, 1997 P 291,732.50
5. 281737 (BD-226/97) August 12 , 1997 P 157,173.12
6. 281745 (BD-229/97) August 22, 1997 P 449,812.25
7. 281747 (BDS-94854.696.00.999) September 3, 1997 P 105,000.00
8. 281749 (BD-236/97) September 11, 1997 P 525,233.93
 9. 281750 (BD-238/97) September 12, 1997 P 1,313,099.36
10. 473410 (BD-239/97) September 19, 1997 P 251,725.00
11. 473414 (BD-240/97) September 19, 1997 P 288,975.66
12. 473412 (BD-244/97) September 26, 1997 P 62,982.53
13. 473411 (BD-245/97) September 26, 1997 P 156,038.85
14. 473413 (BD-251/97) October 3, 1997 P 767,512.30
15. 473431 (BD-252/97) October 6, 1997 P 557,497.45
TOTAL PRINCIPAL AMOUNT 12,891,397.78

To secure the loans, the spouses Reynoso executed two deeds of real estate mortgage on separate
dates. The first mortgage, securing the amount of PhP 6,500,000, was executed on February 2,
1996 over real estate covered by Transfer Certificate of Title (TCT) No. 624835;3 the other was
executed on July 18, 1996 over properties covered by TCT Nos. 565381,4 263421,5 and 2746826 to
secure the amount of PhP 2,500,000. All of the mortgaged properties are registered under the
spouses Reynoso’s names, except for TCT No. 565381, which is registered under CPR Promotions.7

Thereafter, on December 8, 1997, the spouses Reynoso executed a continuing surety

agreement8 binding themselves solidarily with CPR Promotions to pay any and all loans CPR
Promotions may have obtained from petitioner MBTC, including those covered by the said PNs, but
not to exceed PhP 13,000,000.

Upon maturity of the loans, respondents defaulted, prompting MBTC to file a petition for extra-
judicial foreclosure of the real estate mortgages, pursuant to Act No. 3135,9 as amended. MBTC’s
request for foreclosure,10 dated March 6, 1998, pertinently reads:

We have the honor to request your good Office to conduct/undertake extra-judicial foreclosure sale
proceedings under Act No. 3135, as amended, and other applicable laws on the properties covered
by two Real Estate Mortgages executed by CPR PROMOTIONS & MARKETING INC., represented
by its President Mr. Cornelio P. Reynoso and Treasurer Leoniza F. Reynoso and SPOUSES
CORNELIO P. REYNOSO, JR., AND LEONIZA F. REYNOSO in favour of the mortgagee,
METROPLITAN BANK AND TRUST COMPANY, to secure fifteen (15) loans with a total principal
amount of TWELVE MILLION EIGHT HUNDRED NINETY ONE THOUSAND THREE HUNDRED
NINETY SEVEN PESOS AND SEVENTY EIGHT CENTAVOS (₱12,891,397.78), for breach of the
terms of said mortgage.11

As Annex "R", a copy of the Statement of Account, showing that the total amount due on the loans of
the borrowers/mortgagers which remains unpaid and outstanding as a February 10, 1998 was
ELEVEN MILLION TWO HUNDRED SIXTEEN THOUSAND SEVEN HUNDRED EIGHTY THREE
PESOS AND NINETY NIN CENTAVOR (₱11,216,783.99)

Subsequently, on May 5, 1998, the mortgaged covered by TCT Nos. 624835 and 565381 were sold
at a public auction sale. MBTC participated therein and submitted the highest bid in the amount of
PhP 10,374,000. The day after, on May 6, 1998, petitioner again participated and won in the public
auction sake of the remaining mortgaged properties, having submitted the highest bid amounting to
PhP 3,240,000. As a result petitioner was issued the corresponding Certificates of Sale on July 15
and 16, 1998, covering the properties subjected to the first and second public auctions, respectively.
Notwithstanding the foreclosure of the mortgaged properties for the total amount of PhP 13,
614,000, petitioner MBTC alleged that there remained a deficiency balance of PhP 2,628,520.73,
plus interest and charges as stipulated and agreed upon in the PNs and deeds of real estate
mortgages. Despite petitioner’s repeated demands, however, respondents failed to settle the alleged
deficiency. Thus, petitioner filed an action for collection of sum of money against respondents,
docketed as Civil Case No. 99-230, entitled Metropolitan Bank and Trust Company v. CPR
Promotions and Marketing, Inc. and Spouses Cornelio Reynoso, Jr. and Leoniza F. Reynoso.

Ruling of the Regional Trial Court

In its Decision13 dated October 11, 2007, the Regional Trial Court, Branch 59 in Makati City (RTC)
ruled in favor of petitioner that there, indeed, was a balance of Php 2,628,520.73, plus interest and
charges, as of September 18, 1998, and that respondents are liable for the said amount, as part of
their contractual obligation.14 The court disposed of the case in this wise:

WHEREFORE, premises considered, judgment is hereby rendered ordering [respondents], jointly

and severally, to pay [petitioner] Metrobank, as follows:

a] the amount of PhP 2,628,520.73 plus stipulated interest and penalty charges stipulated in
the Promissory Notes marked as Exhibits A to O until full payment thereof; and

b] the costs of the suit.

SO ORDERED.

Respondents timely moved for reconsideration of the RTC’s Decision, which was denied through the
trial court’s February 7, 2008 Order. Aggrieved, respondents elevated the case to the CA.

Ruling of the Court of Appeals

The appellate court, through the assailed Decision, reversed the court a quo and ruled in favor of
respondents. The fallo of the said Decision reads:

Wherefore, in view of the foregoing, the decision appealed from is reversed, and the plaintiff-
appallee Metrobank is ordered to refund or return to the defendants-appellants Cornelio and Leoniza
Reynoso the amount of Ph₱722,602.22 representing the remainder of the proceeds of the
foreclosure sale, with legal interest of six percent per annum from the date of filing the answer with
counterclaim on March 26, 1999, until paid.

SO ORDERED.15

Supporting the reversal is the CA’s finding that there was a sudden change in the terminology used,
from "total amount due" to "principal amount."16 According to the CA, from February to May 1998, the
amount sought to be collected ballooned from PhP 11,216,783.99 to PhP 12,891,397.78. From this
apparently unexplained increase, the CA deduced that the increased amount must mean the
principal and interest and other charges. Furthermore, the appellate court found that petitioner failed
to prove that there was a deficiency, since the records failed to corroborate the claimed amount. As
noted by the CA, "[Petitioner] did not even introduce the continuing surety agreement on which the
trial court gratuitously based its decision."
On October 24, 2011, petitioner filed a motion for reconsideration of the assailed Decision, which the
appellate court denied in its assailed February 13, 2012 Resolution.

The Issues

Hence this recourse, on the following issues:

Whether or not the CA gravely abused its discretion when it failed to consider the continuing surety
agreement presented in evidence and in ruling that petitioner MBTC failed to prove that the spouses
Reynoso are solidarily liable with respondent CPR Promotions.

Whether or not the CA gravely abused its discretion when it grossly misappreciated the promissory
notes, real estate mortgages, petition for extrajudicial foreclosure of mortgage, certificates of sale
and statement of account marked in evidence and ruled that petitioner MBTC failed to prove that a
deficiency balance resulted after conducting the extrajudicial foreclosure sales of the mortgaged
properties.

The Arguments

Anent the first issue, MBTC faults the appellate court for finding that it did not introduce the
continuing surety agreement on which the RTC based its ruling that respondent spouses are
solidarily liable with respondent CPR Promotions.17

As regards the second issue, petitioner asserts that the CA’s grant of a refund valued at PhP
722,602.22 plus legal interest of six percent (6%) in favor of respondents is erroneous for two
reasons: first, respondents never set up a counterclaim for refund of any amount18 and second, the
total outstanding obligation as of February 10, 1998, to which the full amount of the bid prices was
applied, is PhP 11,216,783.99 and not Ph₱12,891,397.78, which was used by the CA in its
computation.19

Lastly, petitioner claims that respondents should be made to answer for certain specific expenses
connected with the foreclosure, i.e., filing fees, publication expense, Sheriff’s Commission on Sale,
stipulated attorney’s fee, registration fee for the Certificate of Sale, insurance premium and other
miscellaneous expenses, in the amounts of PhP 1,373,238.04 and PhP 419,166.67 for the first and
second foreclosure sales, respectively.20

In their Comment,21 respondents maintained the propriety of the CA’s grant of a refund, arguing that
in their Answer with Compulsory Counterclaim, they laid-down in detail the excess of the prices of
the foreclosed properties over their obligation.22 Respondents then went on and argued that "from the
beginning of the instant case in the trial court, [they] have already raised in issue the fact of
[petitioner’s] taking-over of [their] lands with values over and above the latter’s financial
liabilities."23 Thus, they postulate that the CA did right when it touched on the issue and ruled
thereon.24

Furthermore, respondents insist that there is actually no difference between the PhP 12,891,397.78
and the PhP 11,261,783.99 amounts except for the accumulated interest, penalties, and other
charges.25 Too, according to them, this is the reason why what respondent CPR owed petitioner at
that time increased substantially from that on February 10, 1998, when the amount was just PhP
11,216,783.99.26

The Court's Ruling

We partially grant the petition. While We fully agree with the CA that MBTC was not able to prove
the amount claimed, We however, find that neither were respondents able to timely setup their claim
for refund.

Respondents belatedly raised their compulsory counterclaim

Rule 6 of the Rules of Court denies a compulsory counterclaim as follows:

Section 7. Compulsory counterclaim. – A compulsory counterclaim is one which, being cognizable

by the regular courts of justice, arises out of or is connected with the transaction or occurrence
constituting the subject matter of the opposing party’s claim and does not require for its adjudication
the presence of third parties of whom the court cannot acquire jurisdiction. Such a counterclaim must
be within the jurisdiction of the court both as to the amount and the nature thereof. Except that in an
original action before the Regional Trial Court, the counterclaim may be considered compulsory
regardless of the amount.

Accordingly, a counterclaim is compulsory if: (a) it arises out of or is necessarily connected with the
transaction or occurrence which is the subject matter of the opposing party’s claim; (b) it does not
require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction;
and (c) the court has jurisdiction to entertain the claim both as to its amount and nature, except that
in an original action before the RTC, the counterclaim may be considered compulsory regardless of
the amount.27

In determining whether a counterclaim is compulsory or permissive, We have, in several cases,

utilized the following tests:28

(1) Are the issues of fact or law raised by the claim and the counterclaim largely the same?

(2) Would res judicata bar a subsequent suit on defendant’s claims, absent the compulsory
counterclaim rule?

(3) Will substantially the same evidence support or refute plaintiff’s claim as well as the
defendant’s counterclaim?

(4) Is there any logical relation between the claim and the counterclaim, such that the
conduct of separate trials of the respective claims of the parties would entail a substantial
duplication of effort and time by the parties and the court? This test is the "compelling test of
compulsoriness."29

Based on the above tests, it is evident that a claim for recovery of the excess in the bid price vis-à-
vis the amount due should be interposed as a compulsory counterclaim in an action for recovery of a
deficiency filed by the mortgagee against the debtor-mortgagor. First, in both cases, substantially the
same evidence is needed in order to prove their respective claim. Second, adjudication in favor of
one will necessarily bar the other since these two actions are absolutely incompatible with each
other; a debt cannot be fully paid and partially unpaid at the same time. Third, these two opposing
claims arose from the same set of transactions. And finally, if these two claims were to be the
subject of separate trials, it would definitely entail a substantial and needless duplication of effort and
time by the parties and the court, for said actions would involve the same parties, the same
transaction, and the same evidence. The only difference here would be in the findings of the courts
based on the evidence presented with regard to the issue of whether or not the bid prices
substantially cover the amounts due.
Having determined that a claim for recovery of an excess in the bid price should be set up in the
action for payment of a deficiency as a compulsory counterclaim, We rule that respondents failed to
timely raise the same.

It is elementary that a defending party’s compulsory counterclaim should be interposed at the time
he files his Answer,30 and that failure to do so shall effectively bar such claim.31 As it appears from the
records, what respondents initially claimed herein were moral and exemplary damages, as well as
attorney’s fees.32 Then, realizing, based on its computation, that it should have sought the recovery
of the excess bid price, respondents set up another counterclaim, this time in their Appellant’s Brief
filed before the CA.33 Unfortunately, respondents’ belated assertion proved fatal to their cause as it
did not cure their failure to timely raise such claim in their Answer. Consequently, respondents’ claim
for the excess, if any, is already barred. With this, we now resolve the substantive issues of this
case.

The CA erred in ruling that the total amount due was PhP 12,891,397.78

Basic is the rule that a Petition for Review on Certiorari under Rule 45 of the Rules of Court should
only cover questions of law.34 Moreover, findings of fact of the CA are generally final and conclusive
and this Court will not review them on appeal.35 This rule, however, admits of several
exceptions36 such as when the findings of fact are conflicting, manifestly mistaken, unsupported by
evidence or the result of a misapprehension of acts, or when the findings are contrary to that of the
trial court, as in this case.

To recall, the CA, in its assailed Decision, made the following findings as regards the amount due on
the loan against which the proceeds from the auction sales are to be applied:

In the application for extrajudicial foreclosure sale dated March 6, 1998, the total amount due as of
February 10, 1998 was stated to be ₱11,216,783.99. The plaintiff categorically declared that
₱11,216,783.99 was the total amount due on February 10, 1998. By the time the auction sales were
conducted, in May 1998, as reflected in the certificate of Sale, the principal amount was said to be
₱12,891,397.78. What is the meaning of the change from total amount due to principal amount? If
from February to May 1998, a matter of three months, the amount sought to be collected ballooned
to ₱12,891,397.78, the increase could have resulted from no other source that the interest and other
charges under the promissory notes after the defendants incurred in default. Thus, the amount of
₱12,891,397.78 as of May 1998, must mean the principal and interest and other charges. The
statement in the certificates of sale that it is the principal amount is a subtle change in language, a
legerdemain to suggest that thte amount does not include the interest and other charges.37

In short, the CA concluded that the amount of PhP 12,891,397.78 is actually comprised of the PhP
11,216,783.99 due as of February 10, 1998, plus additional interest and other charges that became
due from February 10, 1998 until the date of foreclosure on May 5, 1998.

The appellate court is mistaken.

By simply adding the figures stated in the PNs as the principal sum, it can readily be seen that the
amount of PhP 12,891,397.78 actually pertains to the aggregate value of the fifteen (15) PNs, viz:

PN No. Amount
1. 277894 (BDS-143/97)38 P 6,500,000.00
2. 281728 (BD-216/97)39 P 959,034.20
 3. 281735 (BD-222/97)40 P 508,580.83
4. 281736 (BD-225/97)41 P 291,732.50
5. 281737 (BD-226/97)42 P 157,173.12
6. 281745 (BD-229/97)43 P 449,812.25
7. 281747 (BDS-94854.696.00.999)44 P 105,000.00
8. 281746 (BD-236/97)45 P 525,233.93
9. 281750 (BD-238/97)46 P 1,31,099.36
10. 473410 (BD-239/97)47 P 251,725.00
11. 473414 (BD-240/97)48 P 288,975.66
12. 473412 (BD-244/97)49 P 62,982.53
13. 473411 (BD-245/97)50 P 156,038.85
14. 473413 (BD-251/97)51 P 767,512.30
15. 473431 (BD-252/97)52 P 557,497.45
TOTAL PRINCIPAL AMOUNT 12,897,397.78

This belies the findings of the CA that PhP 12, 891,397.78 is the resulting value of PhP
11,216,783.99 plus interest and other charges. Consequently, the CA’s conclusion that there is an
excess of PhP 722,602.22, after deducting the amount of PhP 12,891,397.78 from the total bid price
of PhP 13,614,000, is erroneous.

Nevertheless, while the CA’s factual finding as to the amount due is flawed, petitioner, as discussed
below, is still not entitled to the alleged deficiency balance of PhP 2,628,520.73.

MBTC failed to prove that there is a deficiency balance of PhP 2,628,520.73

To support its deficiency claim, petitioner presented a Statement of Account,53 which referes to the
amounts due as of May 5, 1998, the date of the first foreclosure sale, to wit:

Statement of Account as of May 05, 1998

PN No. Principal Amt Outs. PDI Penalty
1 BD#216/97 489,219.20 54,808.77 49,166.53
2 BD#222/97 167,289.35 18,613.61 16,310.71
3 BD#225/97 291,732.50 32,683.72 27,422.86
4 BD#226/97 44,694.50 5,007.24 4,201.28
5 BD#229/97 435,229.25 48,760.10 44,393.38
6 BD#238/97 365,238.55 40,918.83 33,236.71
7 BD#233/97 105,000.00 11,763.50 9,082.50
 8 BD#244/97 62,982.53 7,056.13 5,290.53
9 BD#236/97 497,649.70 56,135.10 38,070.20
10 BD#240/97 145,950.00 16,463.20 11,165.18
11 BD#245/97 156,038.85 17,481.55 11,897.43
12 BD#239/97 210,421.50 22,605.52 15,360.77
13 BD#251/97 572,470.15 64,574.86 38,232.57
14 BD#252/97 557,497.45 47,896.46 31,110.63
16 BDS#143/97 6,500,000.00 573,681.89 336,818.28
17 BDS#218/97 1,800,000.00 93,536.05 74,401.15
18 Fire Insurance 49,238.69 0.00 1,698.73
TOTAL 12,450,652.22 1,111,986.53 747,859.44
GRAND TOTAL 14,310,498.19

Applying the proceeds from the auction sales to the foregoing amount, according to petitioner, would
result in a deficiency balance of PhP 2,443,143.43. Afterwards, the amount allegedly earned interest
for four (4) months in the amount of PhP 185,337.30,54 bringing petitioner’s claim for deficiency
judgment to a total of PhP 2,628,520.73.55

We are not convinced.

We have already ruled in several cases56 that in extrajudicial foreclosure of mortgage, where the
proceeds of the sale are insufficient to pay the debt, the mortgagee has the right to recover the
deficiency from the debtor.57 In ascertaining the deficit amount, Sec. 4, Rule 68 of the Rules of Court
is elucidating, to wit:

Section 4. Disposition of proceeds of sale. – The amount realized from the foreclosure sale of the
mortgaged property shall, after deducting the costs of the sale, be paid to the person foreclosing the
mortgage, and when there shall be any balance or residue, after paying off the mortgage debt due,
the same shall be paid to junior encumbrancers in the order of their priority, to be ascertained by the
court, or if there be no such encumbrancers or there be a balance or residue after payment to them,
then to the mortgagor or his duly authorized agent, or to the person entitled to it.

Verily, there can only be a deficit when the proceeds of the sale is not sufficient to cover (1) the
costs of foreclosure proceedings; and (2) the amount due to the creditor, inclusive of interests and
penalties, if any, at the time of foreclosure.

a. Petitioner failed to prove the amount due at the time of foreclosure

Having alleged the existence of a deficiency balance, it behooved petitioner to prove, at the very
least, the amount due at the date of foreclosure against which the proceeds from the auction sale
would be applied. Otherwise, there can be no basis for awarding the claimed deficiency balance.
Unfortunately for petitioner, it failed to substantiate the amount due as of May 5, 1998 as appearing
in its Statement of Account.
To recall, MBTC admitted that the amount due as of February 10, 1998 is PhP 11,216,783.99,
inclusive of interests and charges. As alleged in the petition:

57. Firstly, it should be noted that respondents’ total unpaid obligations inclusive of interest and
penalties as of 10 February 1998 amounted to Php 11,216,783.99. This amount was the subject of
1âwphi 1

petitioner Metrobank’s Petitioners for Extrajudicial Foreclosure of Mortgage and NOT Php
12,891,397.78 which is the total principal amount of respondents’ loan obligations at the time when
they obtained said loans as shown in the Promissory Notes and the Certificates of Sale. After the
execution of the Promissory Notes, payments were made, although insufficient, which resulted
in the balance of PhP 11,216,783.99 as of February 1998 inclusive of interest and penalties.58

If the total amount due as of February 10, 1998 is PhpP 11,216,783.99 is already inclusive of
interests and penalties, the principal amount, exclusive of interests and charges, would naturally be
lower than the PhP 11,216,783.99 threshold. How petitioner made the determination in its Statement
of Account that the principal amount due on the date of the auction sale is PhP 12,450,652.22 is
then questionable, nay impossible, unless respondents contracted another loan anew.

Moreover, the amounts petitioner itself supplied would result in the following computation:

PhP
Total outstanding obligation as of February 10, 1998
11,216,783.99

1,373,238.04 Add: Alleged May 5, 1998 public auction sale expenses

(no consistent Add: Additional interests and charges earned

data) between February 10, 1998 to May 5, 1998

(no consistent
Subtotal: Amount due as of May 5, 1998
data)

10,374,000.00 Less: May 5 Bid Price to be applied to the amount due

419,166.67 Add: Alleged May 6, 1998 public auction sale expenses

(no consisted Add: Interests and charges earned from May 5 to 6,
data) 1998
3,240,000.00 Less: May 6 Bid Price to be applied to the amount due

Total: Deficiency reflected in the Statement of Account

PhP 2,443,143.43
from May 5 to September 18, 1998

As can be gleaned, petitioner failed to sufficiently explain during the proceedings how it came up
with the alleged "deficiency" in the amount of PhP 2,443,143.43, as per the Statement of Account.
Reversing the formula, petitioner’s claim would only be mathematically possible if the missing
interest and penalties for the three-month period-from February 10, 1998 to May 6, 1998-
amounted to PhP 3,047,954,73,59 which is inconsistent with MBTC’s declaration in its Statement of
Account as of May 5, 1998.60 Needless to say, this amount is not only unconscionable, it also finds
no support from any of the statement of accounts and loan stipulations agreed upon by the parties.

Given MBTC’s conflicting, if not irreconcilable, allegations as to the amount due as of the date of
foreclosure-as noted in the statement of accounts, the petition for foreclosure, and the promissory
notes-the computation offered by MBTC cannot be accepted at face value. Consequently, there can
then be no basis for determining the value of the additional interests and penalty charges that
became due, and, more importantly, whether or not there was indeed a deficiency balance at the
time the mortgaged properties were foreclosed.

In addition, it is noticeable that petitioner’s presentation of the computation is circuitous and

needlessly lengthened. As a matter of fact, nowhere in the petition, in its complaint,61 reply.62 pre-trial
1âwphi1

brief,63 among others, did it make a simple computation of respondents’ obligation as well as the
amounts to be applied to it, or even a summary thereof, when it could have easily done so.

b. Petitioner failed to prove the amount of expenses incurred in foreclosing the mortgaged
properties

another obstacle against petitioner’s claim for deficiency balance is the burden of proving the
amount of expenses incurred during the foreclosure sales. To recall, petitioner alleged that it
incurred expenses totaling PhP 1,373,238.04 and PhP 419,166.67 for the first and second public
auction sales, respectively. However, in claiming that there is a deficiency, petitioner only submitted
the following pieces of evidence, to wit:

1. The fifteen (15) promissory notes (Exhibits A to O);

2. Continuing Surety Agreement (Exhibit P);

3. Real Estate Mortgage (Exhibits Q & R);

4. Petition for Sale under Act. No. 3135, as amended (Exhibit S);

5. Notices of Sheriff’s Sale (Exhibits T & U);

6. Affidavit of Publication (Exhibits V & W);

7. Certificates of Posting and a Xerox copy thereof (exhibits X & Y);

8. Certificates of Sale (Exhibits Z & AA);

9. Demand Letters (Exhibits BB & CC); and

10. Statement of Account (Exhibit DD).

Curiously, petitioner never offered as evidence receipts proving payment of filing fees, publication
expenses, Sheriff’s Commission on Sale, attorney’s fee, registration fee for the Certificate of Sale,
insurance premium and other miscellaneous expenses, all of which MBTC claims that it incurred.
Instead, petitioner urges the Court to take judicial notice of the following expenses:64

May 5, 1998 auction sale expenses

Filing Fee PhP 52,084.00
Publication Expenses 24,267.75
Sheriff’s Commission on Sale 207,560.00
Registration fee and other Miscellaneous Expenses 32,644.50
Attorney’s Fees (10% of total amount claimed) 1,005,744.37
 Fire Insurance 50,937.42
Sub-total PhP 1,373,238.04
May 6, 1998 auction sale expenses
Publication Expenses 24,267.75
Sheriff’s Commission on Sale 64,880.00
Registration fee and other Miscellaneous Expenses 16,593.00
Attorney’s Fees (10% of total amount claimed) 313,425.92
Sub-total 419,166.67

Petitioner’s argument is untenable.

First, the Court cannot take judicial notice of the attorney’s fees being claimed by petitioner because
although 10% was the rate agreed upon by the parties, We have, in a line of cases, held that the
percentage to be charged can still be fixed by the Court. For instance, in Mambulao Lumber
Company v. Philippine National Bank,65 the Court held:

In determining the compensation of an attorney, the following circumstances should be considered:

the amount and character of the services rendered; the responsibility imposed; the amount of money
or the value of the property affected by the controversy, or involved in the employment; the skill and
experience called for in the performance of the service; the professional standing of the attorney; the
results secured; and whether or not the fee is contingent or absolute, it being a recognized rule that
an attorney may properly charge a much larger fee when it is to be contingent that when it is not.
From the stipulation in the mortgage contract earlier quoted, it appears that the agreed fee is 10% of
the total mortgage is to be effected. The agreement is perhaps fair enough in case the foreclosure
proceedings is prosecuted judicially but, surely, it is unreasonable when, as in this case, the
mortgage was foreclosed extra-judicially, and all that the attorney did was to file a petition for
foreclosure with the sheriff concerned.

Similarly, in Bank of the Philippine Islands, Inc. v. Spouses Norman and Angelina Yu,66 the Court
reduced the claim for attorney’s fees from 10% to 1% based on the following reasons: (1) attorney’s
fee is not essential to the cost of borrowing, but a mere incident of collection; (2) 1% is just and
adequate because the mortgagee bank had already charged foreclosure expenses; (3) attorney’s
fee of 10% of the total amount due is onerous considering the rote effort that goes into extrajudicial
foreclosures.

Second, the Court cannot also take judicial notice of the expenses incurred by petitioner in causing
the publication of the notice of foreclosure and the cost of insurance. This is so because there are no
standard rates cited or mentioned by petitioner that would allow Us to take judicial notice of such
expenses. It is not unthinkable that the cost of publication would vay from publisher to publisher, and
would depend on several factors, including the size of the publication space. Insurance companies
also have their own computations on the insurance premiums to be paid by the insurer, which the
courts cannot be expected to be knowledgeable of. To be sure, in arguing the Court to take judicial
notice of the alleged expenses, MBTC merely cited Sec. 3 of Act 3135 requiring publication and the
mortgage agreement provision on the insurance requirement, without more.67 Said provisions never
expressly provided for the actual cost of publication and insurance, nor any formulae for determining
the same. Thus, the claims for publication and insurance expenses ought to be disallowed.

Third, the claims for registration fees and miscellaneous expenses were also never substantiated by
receipts.
 Conclusion

In demanding payment of a deficiency in an extrajudicial foreclosure of mortgage, proving that there

is indeed one and what its exact amount is, is naturally a precondition thereto. The same goes with a
claim for reimbursement of foreclosure expenses, as here. In this regard, it is elementary that the
burden to prove a claim rests on the party asserting such. Ei incumbit probation qui dicit, non qui
negat. He who asserts, not he who denies, must prove.68 For having failed to adequately substantiate
its claims, We cannot sustain the finding of the trial court that respondents are liable for the claimed
deficiency, inclusive of foreclosure expenses. Neither can We sustain the CA’s finding that
respondents are entitled to the recovery of the alleged excess payment.

In light of the foregoing, the Court need not belabor the other assigned errors.

WHEREFORE, premises considered, the instant petition is hereby PARTIALLY GRANTED.

Accordingly, the Decision of the Court of Appeals dated September 28, 2011 in CA-G.R. CV No.
91424 and its February 13, 2012 Resolution are hereby AFFIRMED with MODIFICATION. The
award of refund in favor of respondents in the amount of ₱722,602.22 with legal interest of six
percent (6%) per annum is hereby DELETED.

No pronouncement as to costs.

SO ORDERED.

PRESBITERO J. VELASCO, JR.

Associate Justice

WE CONCUR:

DIOSDADO M. PERALTA
Associate Justice

MARTIN S. VILLARAMA, JR. BIENVENIDO L. REYES

Associate Justice Associate Justice

FRANCIS H. JARDELEZA
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 Court’s Division.

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s 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 Court’s Division.

MARIA LOURDES P.A. SERENO

Chief Justice

Footnotes

*
Leoriza in some parts of the records.

1
Rollo, pp. 37-44. Penned by Associate Justice Mario L. Guarina III and concurred in by
Associate Justices Apolinario D. Bruselas, Jr. and Manuel M. Barrios.

2
Id. at 45-46.

3
Records, p. 116.

4
Id. at 131.

5
Id.

6
Id.

7
Id. at 220.

8
Id. at 214.

9
An Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to
Real- Estate Mortgages.

10
Rollo, p. 221.

11
Id. at 73.

12
Id. at 76.

13
Penned by Judge Winlove M. Dumayas.

14
CA rollo, p. 20.

15
Rollo, p. 43.

16
Id. at 42.

17
Id. at 23.

18
Id. at 24.

19
Id. at 25.
20
Id. at 25-26.

21
Id. at 116-126.

22
Id. at 124.

23
Id.

24
Id.

25
Id. at 120.

26
Id.

27
Sps. Mendiola v. CA, G.R. No. 159746, July 18, 2012, 677 SCRA 27.

Calibre Traders, Inc. v. Bayer Philippines, Inc., G.R. No. 161431, October 13, 2010, 663
28

SCRA 34; citing Sandejas v. Ignacio, Jr., G.R. No. 155033, December 19, 2007, 541 SCRA
61, 77 citing Tan v. Kaaybay Finance Corporation, 452 Phil. 637, 646-647 (2003), Intestate
Estate of Dalisay v. Hon. Marasigan, 327 Phil. 298, 301 (1996) and Quintanilla v. Court of
Appeals, 344 Phil. 811, 819 (1997).

29
Id,; citing Alday v. FGU Insurance Corporation, 402 Phil. 962, 972 (2001).

30
Section 8, Rule 11 of the Rules of Court on the filing of compulsory counterclaims provides
that "[a] compulsory counterclaim or a cross-claim that a defending party has at the time he
files his answer shall be contained therein." See Sps. Mendiola v. CA, supra note 27.

31
Section 2, Rule 9 of the Rules of Court provides that: "A compulsory counterclaim, or a
cross claim, not set up shall be barred."

32
COMPULSORY COUNTERCLAIM

17. By instituting such a harassment (sic), baseless and unfounded complaint, your
defendants spouses Cornelio P. Reynoso, Jr. and Leoniza F. Reynoso and their
three (3) children suffered and continuously suffer mental anguish, fright, serious
anxiety, wounded feelings, moral shock, shame and humiliation, compensable in
terms of moral damages in the sum of no less than ₱500,000.00.

18 To give an example to society, particularly to a giant and very powerful bank like
the plaintiff Metrobank, an (sic) exemplary (sic) damages shall be assessed of (sic)
not less than ₱250,000.00, so that in future transactions, small businessmen shall
not be at the mercy of said universal banking entity.

19. To protect the rights and interests of defendants, they engaged the services of
the undersigned counsel and have (sic) obligated to pay the sum of ₱200,000.00 by
way of attorney’s fee (sic) plus ₱2,000.00 for every hearing. [Records, p. 68]

33
Relief or Prayer
 WHEREFORE, all premises considered, it is most respectfully prayed of this
Honorable Court of Appeals that it REVERSE,ANNUL, AND SET ASIDE the
"Decision" dated 11 October 2007, of the Regional Trial Court of Makati City, Branch
59, in Civil Case No. 99-239, as well as its "Order" dated 7 February 2008 in the
same case, for being in contravention of the admitted and established facts, and for
failure of the "Complaint" to state a cause of action as against the [respondents].

IN ITS STEAD, it is humbly prayed of this Honorable Court of Appeals that it issue a
ruling in favor of the [respondents] and adversely against the [petitioner], under
following terms and undertakings:

xxxx

B. Ordering the [petitioner] to return to the [respondents] the sum of Seven Hundred
Twenty-Two Thousand Six Hundred Two Pesos & Twenty-Two Centavos (Php
722,602,22.), representing the excess of the bid prices of the foreclosed real
properties over the liability of the [respondent] to the former, with interest until the
same is fully-paid. [CA rollo, p. 61]

34
Section 1. Filing of petition with Supreme Court. – A party desiring to appeal by certiorari
from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the
Regional Court or other courts whenever authorized by law, may file with the Supreme Trial
Court a verified petition for review on certiorari. The petition shall raise only questions of law
which must be distinctly set forth.

Fernando Co v. Lina Vargas, G.R. No. 195167, November 16, 2011, 660 SCRA 451; citing
35

Sps. Andrada v. Pilhino Sales Corporation, G.R. No. 156448, February 23, 2011, 644 SRA 1;
Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal
Revenue, G.R. No. 159490, February 18, 2008, 546 SCRA 150; Microsoft Corporation v.
Maxicorp, Inc., 481 Phil. 550 (2004).

More explicitly, the findings of fact of the Court of Appeals, which are as a general rule
36

deemed conclusive, may be reviewed by this Court in the following instances:

(1) when the findings are grounded entirely on speculations, surmises or conjectures;
(2) when the inference made is manifestly mistaken, absurd or impossible; (3) when
there is grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of fact are conflicting; (6) when in
making its findings the Court of Appeals went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the appellee; (7)
when the finding are contrary to that of the trial court; (8) when the findings are
conclusions without citation of specific evidence on which they are based; (9) when
the facts set forth in the petition as well as in the petitioner’s main and reply briefs are
not disputed by the respondent; (10) when the findings of fact are premised on the
supposed absence of evidence and contradicted by the evidence on record; or (11)
when the Court of Appeals manifestly overlooked certain relevant facts not disputed
by the parties, which, if properly considered, would justify a different conclusion.
(Fernando Co v. Lina Vargas, id.; citing Development Bank of the Philippines v.
Traders Royal Bank, G.R. No. 171982, August 18, 2010)

37
Rollo, p. 42.
38
Id. at 52. Annex "E"

39
Id. at 53. Annex "F"

40
Id. at 54. Annex "G"

41
Id. at 55. Annex "H"

42
Id. at 56. Annex "I"

43
Id. at 57. Annex "J"

44
Id. at 58. Annex "K"

45
Id. at 59. Annex "L"

46
Id. at 60. Annex "M"

47
Id. at 61. Annex "N"

48
Id. at 63. Annex "O"

49
Id. at 65. Annex "P"

50
Id. at 67. Annex "Q"

51
Id. at 69. Annex "R"

52
Id. at 71. Annex "S"

53
Records, p. 325.

54
Id. at 51.

Statement of Account – CPR Marketing

From May 05 to Sept. 18, 98"

Deficiency ₱2,443,143.43
Interest
(May 05 to May 19 @ 22.151%ER/14D) P 21,045.92
(May 19 to May 25 @ 21,115%ER/6D) 8,597.83
(May 25 to May 26 @ 21.081%ER/1D) 1,362.80
(May 26 to June 16 @ 19,821ER/21D) 28,248.24
(June 16 to July 01 @ 20.340%ER/15D) 20,705.64
(July 01 to July 09 @ 21.115%ER/8D) 11,463.77
(July 09 to July 13 @ 20.598%ER/4D) 5,591.54
(July 13 to July 14 @ 20.340%ER/1D) 1,380.38
(July 15 to Aug. 11 @ 19.563%ER/27D) 35,846.41
 (Aug. 11 to Aug. 12 @ 19.821%ER/1D) 1,345.15
(Aug. 12 to Aug. 18 @ 20.469%ER/6D) 8,334.78
(Aug. 18 to Aug. 24 @ 21.115%ER/6D) 8,597.83
(Aug. 24 to Aug. 25 @ 19.583%ER/1D) 1,327.64
(Aug. 25 to Sept. 18 @ 18.532%ER/24D) 31,184.22

TOTAL P 185,377.30

P 2,628,520.73
GRAND TOTAL
=============

55
Id.

See DPB v. Tomeldan, G.R. No/ 51269, November 17, 1980, 101 SCRA 171;
56

Development Bank of the Philippines v. Zaragoza, No. L-23493, August 23, 1978, 84 SCRA
668; Development Bank of the Philippines v. Murang, No. L-29130, August 8, 1975, 66
SCRA 141; Development Bank of the Philippines v. Vda. de Moll, No. L-25802, January 31,
1972, 43 SCRA 82; Philippines Bank of Commerce v. De Vera, No. L-18816, December 29,
1962, 6 SCRA 1026.

57
Prudential Bank v. Martinez, No. L-51768, September 14, 1990, 189 SCRA 612.

58
Rollo, p. 25.

59
PhP 2,443,143.43 + PhP 3,240,000.00 – PhP 419,166.67 + PhP 10,374,000.00 – PhP
1,373,238.04 – 11,216,783.99 = PhP 3,047,954.73

60
PhP 1,111,986.53 + PhP 747,859.44 = PhP 1,859,845.97

61
Records, pp. 1-6.

62
Id. at 75-77.

63
Id. at 87-96.

64
Rollo, pp. 30-31.

65
No. L-22973, January 30, 1968, 22 SCRA 359.

66
G.R. No. 184122, January 20, 2010, 610 SCRA 412.

67
Rollo, pp. 27-28.

Resort Hotels Corporation v. Development Bank of the Philippines, G.R. No. 180439,
68

December 23, 2009 609 SCRA 16; citing Homeownvers Savings and Loan Bank v. Dailo,
G.R. No. 153802, March 11, 2005.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 208290 December 11, 2013

PEOPLE OF THE PHILIPPINES, Petitioner,

vs.
THE HONORABLE JUANITO C. CASTANEDA, JR., HONORABLE CAESAR A. CASANOVA,
HONORABLE CIELITO N. MINDARO-GRULLA, AS ASSOCIATE JUSTICES OF THE SPECIAL
SECOND DIVISION, COURT OF TAX APPEALS; and MYRNA M. GARCIA AND CUSTODIO
MENDOZA VESTIDAS, JR., Respondents.

RESOLUTION

PER CURIAM:

This is a petition for certiorari under Rule 65 of the Rules of Court seeking to review the March 26,
20131 and May 15, 20132 Resolutions of the Court of Tax Appeals (CTA) in CTA Crim. Case No. 0-
285, ordering the dismissal of the case against the private respondents for violation of Section
36023 in relation to Sections 2503 and 2530 (f) (i) and 1, (3) (4) and (5) of the Tariff and Customs
Codeof the Philippines, as amended, on the ground of insufficiency of evidence.

The antecedentsas culled from the records:

Private respondents Myrna M. Garcia (Garcia) and Custodio Mendoza Vestidas,

Jr.(VestidasJr.)were charged before the CTA under an Information which reads:

That on or about November 5, 2011, or prior or subsequent thereto, in the City of Manila,
Philippines, and within the jurisdiction of this Honorable Court, the above-named accused Myrna M.
Garcia and Custodio Mendoza Vestidas, Jr. as owner/proprietress and broker of Plinth Enterprise
respectively, conspiring and confederating with each other, with intent to defraud the government,
did then and there willfully, unlawfully and fraudulently import into the Port of Manila, 858 cartons of
17,160 pieces of Anti-Virus Software Kaspersky Internet Security Premium 2012, subject to customs
duties,by misdeclaration under Import Entry No. C-181011 and Bill of Lading No. PFCMAN1715,
filed with the Bureau of Customs (BOC),covering One Forty Footer (1x40) container van shipment
bearing No. KKFU7195683 which was falsely declared to contain 40 pallets/1,690 cartons of CD kit
cleaner and plastic CD case, said imported items having customs duties amounting to Three Million
Three Hundred Forty One Thousand Two Hundred Forty Five Pesos (Php 3,341,245) of which only
the amount of One Hundred Thousand Three Hundred Sixty Two Pesos (Php100,362) was paid, in
violation of the above-captioned law, and to the prejudice and damage of the Government in the
amount of Three Million Two Hundred Forty Thousand Eight Hundred Eighty Three Pesos
(Php3,240,883).4

In a hearing held on August 1, 2012, Garcia and VestidasJr.pleaded "Not Guilty" to the
aforementioned charge. Thereafter, a preliminary conference was held on September 5, 2012
followed by thepre-trial on September 13, 2012. Both the prosecution and the defense agreed to
adopt the joint stipulations of facts and issues entered in the course of the preliminary conference.
Thereafter, trial ensued.

The prosecution presented a number of witnesses whoessentially observed5 the physical

examination of Container Van No. KKFU 7195638 conducted6 by the Bureau of Customs (BOC) and
explained7 the process of electronic filing under the Electronic to Mobile (E2M) Customs Systems of
the BOC and the alleged misdeclared goods therein.

Subsequent to the presentation of witnesses, the prosecution filed its Formal Offer of Evidence on
December 10, 2012.

On January 15, 2013, Garcia and Vestidas, Jr. filed their Omnibus Motion to File Demurrer to
Evidence with Leave of Court to Cancel Hearing Scheduled on January 21, 2013,whichwas
grantedby the CTA. Thereafter, they filed theDemurrer to Evidence, dated January 13, 2012,
claimingthat the prosecution failed to prove their guilt beyond reasonable doubt for the following
reasons:

a)The pieces of documentary evidence submitted by the prosecution were inadmissible

incourt;

b)The object evidence consisting of the allegedly misdeclared goods were not presented as
evidence; and

c)None of the witnesses for the prosecution made a positive identification of the two accused
as the ones responsible for the supposed misdeclaration.

Despite opposition, the CTA dismissed the caseagainst Garcia and Vestidas Jr.in its March 26, 2013
Resolution, for failure of the prosecution to establish theirguilt beyond reasonable doubt.

According to the CTA, "no proof whatsoever was presented by the prosecution showing that the
certified true copies of the public documents offered in evidence against both accused were in fact
issued by thelegal custodians."8 It cited Section 26, Rule 132 of the Revised Rules of Court,
whichprovidesthat"when the original of a document is a public record, it should not generally be
removed from the office or place in which it is kept."9 As stated in Section 7, Rule 130,10 its contents
may be proven using secondary evidence and such evidence may pertain to the certified true copy
of the original document issued by the public officer in custody thereof.Hence, the CTA wrotethat the
certified true copiesof the public documents offered in evidence should have been presented in
court.

Anent its offer of private documents,11 the prosecution likewise failed to comply with Section 27, Rule
132 of the Rules of Court, which reads, "[a]n authorized public record of a private document may be
proved by the original record, or by a copy thereof, attested by the legal custodian of the record, with
an appropriate certificate that such officer has the custody." Considering that the private documents
were submitted and filed with the BOC, the same became part of public records. Again, the records
show that the prosecution failed to present the certified true copies of thedocuments.

The CTA noted that,in its Opposition to the Demurrer,the prosecution even admitted that none of
their witnesses ever positively identified the accused in open court and that the alleged misdeclared
goods were not competently and properly identified in court by any of the prosecution witnesses.

The prosecution filed its motion for reconsideration, but it was deniedby the CTAin its May 15, 2013
Resolution, stressing, among others, that to grant it would place the accused in double jeopardy.12
On July 24, 2013, the Run After the Smugglers (RATS) Group, Revenue Collection Monitoring
Group (RCMG), as counsel for the BOC, received a copy of the July 15, 2013 Resolution of the CTA
ordering the entry of judgment in the case.

Hence,this petition for certiorari, ascribing grave abuse of discretion on the part of theCTA when in
ruled that: 1) the pieces of documentary evidence submitted by the prosecution were inadmissible in
evidence; 2) the object evidence consisting of the alleged misdeclared goods were not presented as
evidence; and 3) the witnesses failed to positively identifythe accused as responsible forthe
misdeclaration of goods.

The Court agrees with the disposition of the CTA.

At the outset, it should be noted that the petition was filed beyond the reglementary periodfor the
filingthereof under Rule 65. The petition itself statedthat a copy of the May 15, 2013 Resolution was
received by the BOC two (2) days after its promulgation, or on May 17, 2013. Nonetheless, the
RATS was only alerted by the developments in the case on July 24, 2013, when Atty. Danilo M.
Campos Jr. (Atty. Campos) received the July 15, 2013 Resolution of the CTA ordering the entry of
judgment in the case, considering that no appeal was taken by any of the parties. According toAtty.
Campos, it was only on that occasion when he discovered the May 15, 2013 Resolution of the
CTA.Thus, it was prayed that the petitionbe given due course despite its late filing.

This belated filing cannot be countenanced by the Court.

Section 4, Rule 65 of the 1997 Rules of Civil Procedureis explicit in stating thatcertiorarishould be
instituted within a period of 60 days from notice of the judgment, orderor resolution sought to be
assailed. The 60-day period is inextendible to avoid any unreasonable delay that would violate the
constitutional rights of parties to a speedy disposition of their case.13 While there are recognized
exceptions14 to such strict observance, there should be an effort on the part of the party invoking
liberality to advance a reasonable or meritorious explanation for his/her failure to comply with the
rules.15

In the case at bench, no convincing justification for the belated filing of the petition was advanced to
warrant the relaxation of the Rules.Notably, the records show that the petition was filedonly on
August 12, 2013, or almost a month late from the due date which fell on July 16, 2013. To excuse
this grave procedural lapse will not only be unfairto the other party, but it will also sanction a
seeming rudimentary attempt to circumvent standing rules of procedure. Suffice it to say, the
reasons proffered by the petitioner do not carry even a tinge of merit that would deserve leniency.

The late filing of the petition was borne out of the petitioner’s failure to monitor incoming court
processes that neededto be addressed by the office. Clearly, this is an admission of inefficiency, if
not lack of zeal, on the part of an office tasked toeffectively curb smuggling activities which rob the
government of millions of revenue every year.

The display of patent violations of even the elementary rules leads the Court to suspectthat the case
against Garcia and Vestidas Jr. was doomed by designfrom the start. The failure to present the
certified true copies of documentary evidence; the failure to competently and properly identify the
misdeclared goods; the failure to identify the accused in court; and,worse, the failure to file this
petition on time challenging a judgment of acquittal, are tell-tale signs ofa reluctantand
subduedattitude in pursuing the case. This stance taken by the lawyers in government service
rouses the Court’s vigilance against inefficiency in the administration of justice. Verily, the
lawyersrepresenting the offices under the executive branchshould be reminded that theystill remain
as officers of the courtfrom whom a high sense of competence and fervor is expected. The Courtwill
not close its eyes to this sense of apathy in RATS lawyers, lest the government’s goal of revenue
enhancement continues to suffer the blows of smuggling and similar activities.

Even the error committed by the RATS in filing a motion for reconsideration with the CTA displays
gross ignorance as to the effects of an acquittal in a criminal case and the constitutional proscription
on double jeopardy. Had the RATS been eager and keen in prosecuting the respondents, it would
have, in the first place, presented its evidence with the CTA in strict compliance with the Rules.

In any case, even if the Court decides to suspend the rules and permit this recourse, the end result
would remain the same. While a judgment of acquittal in a criminal case may be assailed in a
petition for certiorari under Rule 65 of the Rules of Court,it must be shown that there was grave
abuse of discretion amounting to lack or excess of jurisdiction or a denial of due process.In this
case, a perusal of the challenged resolutions ofthe CTAdoes not disclose any indication of grave
abuse of discretion on its partor denial of due process.The records are replete with indicators that
the petitioner actively participated during the trial and, in fact, presented its offer of evidence and
opposed the demurrer. 1âwphi1

Grave abuse of discretion is defined as capricious or whimsical exercise of judgment as is equivalent

to lack of jurisdiction. The abuse of discretion must be patent and gross as to amount to an evasion
of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in
contemplation of law, as where the power is exercised in an arbitrary and despotic manner by
reason of passion and hostility.16 Here, the subject resolutions of the CTA have been issued in
accordance with the rules on evidence and existing jurisprudence.

On a final note, the Court deems it proper to remind the lawyers in the Bureau of Customs that the
canons embodied in the Code of Professional Responsibility equally apply to lawyers in government
service in the discharge of their official tasks. 17 Thus, RA TS lawyers should exert every effort and
consider it their duty to assist in the speedy and efficient administration of justice.18

WHEREFORE, the petition is DISMISSED and the assailed March 26, 2013 and May 15, 2013
Resolutions of the Court of Tax Appeals are AFFIRMED.

The Office of the Ombudsman is hereby ordered to conduct an investigation for possible criminal or
administrative offenses committed by the Run After the Smugglers (RA TS) Group, Revenue
Collection Monitoring Group (RCMG), Bureau of Customs, relative to the filing and handling of the
subject complaint for violations of the Tariff and Customs Code of the Philippines.

Let copies of this resolution be furnished the Office of the President, the Secretary of Finance, the
Collector of Customs, and the Office of the Ombudsman for their guidance and appropriate action.

SO ORDERED.

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson

DIOSDADO M. PERALTA ROBERTO A. ABAD

Associate Justice Associate Justice
 JOSE CATRAL MENDOZA MARVIC MARIO VICTOR F. LEONEN
Associate Justice Associate Justice

ATTESTATION

I attest that the conclusions in the above Resolution had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I
certify that the conclusions in the above Resolution had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.

MARIA LOURDES P.A. SERENO

Chief Justice

Footnotes

1
Rollo, pp. 30-45.

2
Id. at 62-64.

3
Various Fraudulent Practices Against Customs Revenue. -Any person who makes or
attempts to make any entry of imported or exported article by means of any false or
fraudulent invoice, declaration, affidavit, letter, paper or by any means of any false
statement, written or verbal, or by any means of any false or fraudulent practice whatsoever,
or knowingly effects any entry of goods, wares or merchandise, at less than true weight or
measures thereof or upona false classification as to quality or value, or by the payment of
less than the amount legally due, or knowingly and willfully files any false or fraudulent entry
or claim for the payment of drawback or refund of duties upon the exportation of
merchandise, or makes or files any affidavit abstract, record, certificate or other document,
with a view to securing the payment to himself or others of any drawback, allowance, or
refund of duties on the exportation of merchandise, greater than that legally due thereon, or
who shall be guilty of any willful act or omission shall, for each offence, be punished in
accordance with the penalties prescribed in the preceding section.

4
Rollo, p. 31.

5
Rhoderick L. Yuchongco, X-Ray Inspector Bureau of Customs.

6
Jose A. Saromo, Customs Operations Officer III, Bureau of Customs.
7
Nomie V. Gonzales, Chief of the Systems Management Division, Bureau of Customs.

8
Rollo, p. 41.

9
Id.

10
When the original of document is in the custody of public officer or is recorded in a public
office, its contents may be proved by a certified copy issued by the public officer in custody
thereof.

Certified True Copy of Import Entry No. C-181011, Certified True Copy of Bill of Lading
11

PFCFMAN1715 and Certified True Copy of Invoice No. 309213.

12
Rollo,pp. 62-64.

Republicv. St. Vincent de Paul Colleges, Inc., G.R. No. 192908, August 22, 2012,678
13

SCRA 738,citing Labao v. Flores, G.R. No. 187984, November 15, 2010, 634 SCRA 723.

14
(1) most persuasive and weighty reasons; (2) to relieve a litigant from an injustice not
commensurate with his failure to comply with the prescribed procedure; (3) good faith of the
defaulting party by immediately paying within a reasonable time from the time of the default;
(4) the existence of special or compelling circumstances; (5) the merits of the case; (6) a
cause not entirely attributable to the fault or negligence of the party favored by the
suspension of the rules; (7) a lack of any showing that the review sought is merely frivolous
and dilatory;(8) the other party will not be unjustly prejudiced thereby; (9) fraud, accident,
mistake or excusable negligence without appellant’s fault; (10) peculiar legal and equitable
circumstances attendant to each case; (11) in the name of substantial justice and fair play;
(12) importance of the issues involved; and (13) exercise of sound discretion by the judge
guided by all the attendant circumstances.

15
Supranote 13.

16
De Vera v. De Vera, G.R. No. 172832, April 7, 2009, 584 SCRA 506. 515.

17
Canon 6, Chapter I, Code of Professional Responsibility.

18
Canon 12, Chapter III, Code of Professional Responsibility.