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21A.

Formal Amendments
CHUA KIONG v. WHITAKER
G.R. No. L-22388

December 2, 1924

On June 7, 1922, Chua Kiong, as attorney-in-fact for Chino Chua


Yu, brought an action against Philip C. Whitaker and Venancio
Conception on the following document, alleging that of the
amount therein mentioned only the sum of P3,903.16 has been
paid leaving a balance still due from said defendants to the
plaintiff in the sum of P11,640.06:
CENTRAL PALMA
Ilog, Negros Occidental,
I. F.
WHITAKER Y. CONCEPCION,
Propietarios.
Recibi del chino Chua Yu de Ilog la cantidad de quince mil
quinientos cuarenta y tres pesos con 22/100 (P15,543.22) como
prestamo sin interes por cuenta de la "Central Palma."
Ilog, 29 de junio de 1921.
CENTRAL PALMA
(Sgd.) Por TIMOTEO LAUREANO
Cajero
(Sgd.) S. CONCEPCION
Gerente
The defendants answered by a general denial but did not appear at
the trial of the case and judgment was rendered against them and
in favor of the plaintiff for the sum of P11,640.06, with legal
interest from June 13, 1922, and with the costs. From this
judgment the defendant Philip C. Whitaker appealed.
After the case had been docketed in this court the plaintiff
presented a motion to amend his complaint by changing the title
of the case to read as follows:lawphi1.net
CHUA YU, represented by his special attorney-in-fact, CHUA
KIONG, plaintiff, vs. PHILIP C. WHITAKER and VENANCIO
CONCEPCION, defendants.
The appellant filed an opposition to the motion on technical
grounds but did not allege that he had a good defense and did not
present an affidavit of merit. The writer, then on duty as Vacation
Justice, therefore overruled the objection and granted the
appellee's motion under the provisions of section 110 of the Code
of Civil Procedure.
The defendant-appellant has now presented a motion asking that
the case be reopened for the sole purpose of receiving his
evidence. The motion is accompanied by an affidavit to the effect
that said defendant-appellant did not appear at the trial of the
case, for the reason that the action was commenced and
prosecuted and decision rendered therein in the name of "Chua
Kiong, as special attorney-in-fact for Chua Yu;" that he was
informed that an action so commenced, prosecuted, and decided,
could in no way affected his interests and that it was not
necessary for him to appear at the trial or present any defense
whatsoever and, acting on that information, he did not appear at
the trial nor present any defense; that he has a good and valid

defense consisting in this: that Severiano Concepcion had


absolutely no authority to borrow the money referred to in the
complaint and that the power of the attorney executed by
defendant-appellant in favor of said Severiano Concepcion
prohibited him from borrowing money in excess of P1,000. The
affidavit is accompanied by a copy of said power of attorney.
Counsel for the defendant-appellant intimates that the aforesaid
amendment to the complaint was improperly allowed by this
court and very confidently and rather emphatically asserts that his
court never applied the provisions of section 110 and allowed the
amendment of the pleadings. In this counsel is mistaken; in the
case ofAlonso vs. Villamor (16 Phil., 315), the complaint was
amended by substituting one party-plaintiff for another even after
the case had been-submitted to this court for decision upon the
merits. In that case the court, speaking through Mr. Justice
Moreland, says:
It is undoubted that the bishop of the diocese or the Roman
Catholic Apostolic Church itself is the real party in interest. The
plaintiff personally has no interest in the cause of action.
Section 114 of the Code of Civil Procedure requires that every
action must be prosecuted in the name of the real party in
interest. The plaintiff is not such party.
After quoting section 110 and 503 of the Code of Civil Procedure,
the court continues:
We are confident under these provisions that this court has full
power, apart from that power and authority which is inherent, to
amend the process, pleadings, proceedings, and decision in this
case by substituting, as party plaintiff, the real party in interest.
Not only are we confident that we may do so, but we are
convinced that we should do so. Such an amendment does not
constitute, really, a change in the identity of the parties. The
plaintiff asserts in his complaint, and maintains that assertion all
through the record, that he is engaged in the prosecution of this
case, not for himself, but for the bishop of the diocese not by
his own right, but by right of another. He seeks merely to do for
the bishop what the bishop might do for himself. His own
personality is not involved. His own rights are not presented. He
claims no interest whatever in the litigation. He seeks only the
welfare of the great church whose servant he is. He gladly
permits his identity to be wholly swallowed up in that of his
superior. The substitution, then, of the name of the bishop of the
diocese, or the Roman Catholic Apostolic Church, for that of
Padre Alonso, as party plaintiff, is not in reality the substitution
of one identity for another, of one party for another, but is
simply to make the form express the substance. The substance is
there. It appears all through the proceedings. No one is deceived
for an instant as to whose interests are at stake. The form of its
expression is alone defective. The substitution, then, is not
substantial but formal. Defect in mere form cannot possibly
prejudice so long as the substantial is clearly evident. Form is a
method of speech used to express substance and made it clearly
appear. It the form be faulty and still the substance shows
plainly through, no harm can come by making the form
accurately expressive of the substance.
Numerous decisions both from Federal and State courts are cited
in support of the opinion.

As a matter of fact, amendments to pleadings are frequently


allowed after the case has been entered upon the docket. It is true
that such matters are usually disposed of by minute-orders which
do not appear in the reports, but there is enough in the reports to
show that it is never safe for a party in a civil action to rely on
purely technical defenses; under our liberal Code of Civil
Procedure but scant consideration is ordinarily given such
defenses by this court. In the present case counsel for the
defendant-appellant in resisting the amendment of the complaint
gave the court no intimation that his client had any defense on the
merits nor was there anything in the record showing such defense.
In these circumstances the court was fully justified in authorizing
the amendment in question, and might well declined to entertain
the motion now under consideration. It seems evident that counsel
deliberately refrained from calling the attention of the court below
to the mistake of his adversary, apparently with the intention of
lying in ambush until the proceedings had reached a stage where
the error would be beyond correction. Such practice leads only to
delay in the administration of justice and is no longer encouraged
by the courts.
We feel, however, that under the circumstances of the present
case the client should not be made to suffer for the mistake of his
counsel and that he should be afforded another opportunity for his
day in court.
The case will therefore be remanded to the court below for the
reception of the evidence of the defendant-appellant and such
additional evidence as the plaintiff may offer and for judgment
upon all of the evidence. No costs will be allowed in this instance.
So ordered.
22A. Action or defense I s based on a written instrument or
document.
TORIBIO v. BIDIN
G.R. No. L-57821 January 17, 1985
This petition is premised on the interpretation and application of
Sections 7 and 8, Rule 8 of the Revised Rules of Court on
actionable documents, which state:
SEC. 7.Action or defense based on document. Whenever an
action or defense is based upon a written instrument or
document, the substance of such instrument or document shall
be set forth in the pleading, and the original or a copy thereof
shall be attached to the pleading as an exhibit, which shall be
deemed to be a part of the pleading, or said copy may with like
effect be set forth in the pleading.
SEC. 8.How to contest genuineness of such documents.
When an action or defense is founded upon a written
instrument, copied in or attached to the corresponding pleading
as provided in the preceding section, the genuineness and due
execution of the instrument shall be deemed admitted unless the
adverse party, under oath, specifically denies them, and sets

forth what he claims to be the facts; but this provision does not
apply when the adverse party does not appear to be a party to
the instrument or when compliance with an order for an
inspection of the original instrument is refused.
The present controversy stems from a complaint filed by the
petitioners against private respondents Dalmacio Ramos and
Juanita Camacho.
Engracio Francisco and Juliana Esteban were the registered
owners of the parcel of land Zamboanga. At the death of said
spouses, they were survived by their ten (10) children who
inherited their state in equal pro indiviso shares. Subsequently, the
property was subdivided among the heirs and a portion designated
as Lot No. 1943-B was allotted to the Justa Francisco. Justa died
and was survived among by eight (8) children namely: Dionoso,
Eufremia, Alfonso, Rafael, Petrona, Olegario, Segundino and
Eusebia, all surnamed Toribio, who eight heirs, Eufremia, Alfonso
and Petrona, sold their in the property to Ramon Ledesma. Rafael
also sold his share to Dinisio who, in turn, sold the same to
Ramon Ledesma. Thus, the latter acquired four (4) shares out of
eight (8) shares, or a pro indiviso share of Lot 1943-B.
Subsequently, Dionisio sold his own hereditary share in the
aforesaid estate of his mother to Juanito Camacho, who by said
sale acquired a 1/8 pro indiviso share of the property.
The three other heirs, petitioners Segundino Eusebia and Olegario
alleging that their shares had never been sold nor in any wise
transferred or disposed to others filed a case against herein private
respondents for recovery of hereditary rights. How Juanito
Camacho, who was entitled to only a total area of 931 square
meters, nor, how one Dalmacio Ramos, Jr., acquired share of
the property was allegedly not known to them.
In their answer, the defendants-respondents alleged that the shares
of plaintiffs-petitioners had likewise been sold to Dionisio
Toribio, their brother, who, in turn, sold the same to Juanito
Camacho and Dalmacio Ramos. The alleged sale from petitioners
to Dionisio and the sale from Dionisio to the respondents were
evidenced by deeds of sale, xerox copies of which were appended
to and made an integral part of the respondents' partition
agreement between the respondents and also a xerox copy of the
respondents' transfer certificates of title.
While testifying during the trial, Eusebia Toribio was asked
whether she executed any sale of her share in the parcel of land in
litigation. The counsel for private respondents objected, raising
the proper mode of contesting the genuineness of an actionable
document pursuant to Sections 7 and 8, Rule 8 of the Revised
Rules of Court. The trial court sustained the objection.

Petitioners, thereupon, filed a constancia with a motion for


reconsideration stating that the documents submitted by the
respondents were merely evidentiary in nature, not a cause of
action or defense, the due execution and genuineness of which
they had to prove. They alleged that the subject of litigation was
the hereditary shares of plaintiffs-petitioners, not any document.
They stated that the defense consisting mainly of transfer
certificates of titles in the respondents' names originating from the
sale from petitioners to Dionisio and from the latter to the
respondents were merely evidentiary in nature. They argued that a
simple specific denial without oath is sufficient. The court denied
the motion for reconsideration. The documents attached to the
respondents' answer and made an integral part thereof were
declared to be the very foundation or basis of the respondents'
defense and not merely evidentiary in nature. Hence, this petition
for review on certiorari.
The initial issue brought before us is whether or not the deeds of
sale allegedly executed by the petitioners in favor of their brother
Dionisio Toribio and appended to the respondents' answer are
merely evidentiary in nature or the very foundation of their
defense which must be denied under oath by the petitioner.
The records show that the deeds of sale are actionable documents.
Jurisprudence has centered mainly on a discussion of actionable
documents as basis of a plaintiff's cause of action. Little has been
said of actionable documents being the foundation of a defense.
The Rule, however, covers both an action or a defense based on
documents.
The situation obtaining in the case at bar is not a common one.
The usual case is between plaintiff and defendant where, the
latter, as his defense, would present a document to which both
parties are parties and which states that the former relinquishes
his rights to the defendant. In the case at bar, we have a situation
where the defendant presented a document in his defense, a
document to which the plaintiff is a party but to which defendant
is not. Thus, the question arises as to whether or not the document
is included as a necessary part of the defense so as to make it
actionable.

were likewise sold, transferred and conveyed, first in favor of


DIONISIO TORIBIO by virtue of two (2) deeds of sale
executed in due form on October 24, 1964 and November 2,
1964, respectively, and thereafter, by DIONISIO TORIBIO in
favor of defendants JUANITO A. CAMACHO and
DALMACIO C. RAMOS, JR., on November 11, 1964 as
adverted to in the preceding paragraph, as will be discussed
further in the specific and/or affirmative defenses hereunder; ...
As heretofore alleged, the hereditary shares of all the plaintiffs
herein in and over Lot 1943-B were all sold, transferred and
conveyed in favor of DIONISIO TORIBIO plaintiffs
OLEGARIO TORIBIO and SEGUNDINO TORIBIO on
October 24, 1964 and that of plaintiff EUSEBIA TORIBIO on
November 2, 1964, by virtue of two (2) deeds of sale all of
which were acknowledged before Notary Public for and within
the City of Zamboanga, Atty. Armando B. Torralba and entered
as Doc. No. 6, Page No. 3, Book No. IX, Series of 1964,
respectively, in his notarial register, xerox copies of which are
appended hereto to form integral part hereof as Annexes "1" &
"2", respectively.
From the foregoing, it is clear that the respondents anchor their
defense on the deeds of sale by virtue of which the hereditary
rights of all the petitioners over Lot 1943-B were sold,
transferred, and conveyed in favor of their brother, Dionisio
Toribio, who in turn sold the same to herein respondents. The
deed of sale executed by the petitioners in favor of their brother
Dionisio is an essential and indispensable part of their defense to
the allegation that the petitioners had never disposed of their
property.
The following question furnishes an absolute test as to the
essentiality of any allegation: Can it be made the subject of a
material issue? In other words, if it be denied, win the failure to
prove it decide the case in whole or in part? If it will not, the fact
is not essential. It is not one of those which constitute the cause of
action, defense, or reply (Sutherland's Code of Pleading, Practice
and Forms, p. 82). A fact is essential if it cannot be stricken out
without leaving the statement of the cause of action or defense
insufficient.

xxx xxx xxx

Apart from alleging that the documents in this case are merely
evidentiary, the petitioners also point out that the deeds of sale
purportedly executed by them were in favor of their brother,
Dionisio, who in turn executed deeds of sale in favor of the
respondents. Under this circumstance, does the genuineness and
due execution of the deeds evidencing the two transactions have
to be denied under oath?

... that the hereditary shares of plaintiffs OLEGARIO


TORIBIO, SEGUNDINO TORIBIO and EUSEBIA TORIBIO

The deed of sale executed by Dionisio Toribio in favor of the


respondents, by itself, would be insufficient to establish a defense

The petitioners alleged in their complaint that their shares in the


inheritance left by their mother were never sold nor in any wise
transferred or disposed to others.
The defendants, in their answers, declare:

against the petitioners' claims. If the petitioners deny that they


ever sold their shares in the inherited lot to their brother Dionisio,
a failure to prove the sale would be decisive. For if it can be
shown that no conveyance of the property was executed by the
petitioners, then Dionisio Toribio had no right to convey what did
not belong to him. The respondents could acquire only the rights
that Dionisio had over the disputed property. The genuineness and
due execution of the deed between the co-heirs is also elemental
to the defense of the respondents. The first deeds of sale, to which
the respondents were not parties but which they seek to enforce
against the parties are also actionable documents.
The petitioners further alleged that this case falls under the
exception to Section 8, Rule 8 which provides:
SECTION 8. ... but this provision does not apply when the
adverse party does not appear to be a party to the instrument.

As stated earlier, the reason for the rule is to enable the adverse
party to know beforehand whether he will have to meet the issue
of genuineness or due execution of the document during trial. (In
re Dick's Estate, 235 N.W. 401). While mandatory, the rule is a
discovery procedure and must be reasonably construed to attain
its purpose, and in a way as not to effect a denial of substantial
justice. The interpretation should be one which assist the parties
in obtaining a speedy, inexpensive, and most important,
a just determination of the disputed issues.
Paragraphs 11 and 13 of the petitioners' complaint reads:
xxx xxx xxx
11. That the share of herein Plaintiffs were never sold or in
any wise transferred or disposed to others;
xxx xxx xxx

As early as Lim-Chingco v. Terariray (5 Phil. 120), this Court


gave the reason for the rule on contesting actionable documents.
The purpose is:
Reasonably construed, the purpose of the enactment (sec. 103)
appears to have been to relieve a party of the trouble and
expense of proving in the first instance an alleged fact, the
existence or nonexistence of which is necessarily within the
knowledge of the adverse party, and of the necessity (to his
opponent's case) of establishing which such adverse party is
notified by his opponent's pleading.

13. That just how and by what means Defendant, JUANITO


CAMACHO was able to acquire the total area of 931 square
meters, is not known; however, the acquisition might have
been effected, the same was in fraud of herein plaintiffs; and
so with the share of Defendant, DALMACIO C. RAMOS, Jr.,
herein Plaintiffs, jointly and/or severally, do not know the
person; and, however he might have acquired the said share of
ONE FOURTH () of the property, was not from either, much
less all of the Plaintiffs;
xxx xxx xxx

This being so, the documents have to be treated in like manner.


The petitioners are themselves parties to the deeds of sale which
are sought to be enforced against them. The complaint was filed
by the petitioners. They filed suit to recover their hereditary
properties. The new owners introduced deeds of sale as their main
defense. In other words, the petitioners brought the issue upon
themselves. They should meet it properly according to the Rules
of Court.
Sections 7 and 8 of Rule 8, therefore, apply. The proper procedure
was for the petitioners to specifically deny under oath the
genuineness and due execution of the questioned deeds of sale
and to set forth what they claim to be the facts. However, the
oversight or negligence of petitioners' counsel in not properly
drafting a reply to the answer and an answer to the counter claim
is not necessarily fatal to their cause.
The facts of the case and equitable considerations constrain us to
grant the petition and to set aside the questioned order of the
respondent court.

The complaint was verified under oath by the petitioners.


The petitioners' counsel was obviously lulled into complacency
by two factors. First, the plaintiffs, now petitioners, had already
stated under oath that they never sold, transferred, or disposed of
their shares in the inheritance to others. Second, the usual
procedure is for a defendant to specifically deny under oath the
genuineness and due execution of documents set forth in and
annexed to the complaint. Somehow, it skipped counsel's
attention that the rule refers to either an action or a defense based
upon a written instrument or document. It applies to both
plaintiffs and defendants.
Under the facts of this case, the private respondents were placed
on adequate notice by Paragraph 11 of the verified complaint that
they would be caned upon during trial to prove the genuineness or
due execution of the disputed deeds of sale.
Moreover, the heirs of Olegario Toribio, his widow and minor
children represented by their mother, are among the plaintiffspetitioners. They are not parties to the deeds of sale allegedly

executed by their father, aunt, and uncle. They are not required to
deny the deeds of sale under oath. The private respondents will
still have to introduce evidence to establish that the deeds of sale
are genuine and that they were truly executed by the parties with
authority to dispose of the disputed property.
It bears repeating that rules of procedure should be liberally
construed to the end that substantial justice may be served. As
stated in Pongasi v. Court of Appeals (71 SCRA 614):
We repeat what We said in Obut v. Court of Appeals, et al.,
supra, that 'what should guide judicial action is the principle
that a party-litigant is to be given the fullest opportunity to
establish the merits of his complaint or defense rather than for
him to lose life, liberty, honor or property on technicalities.
In dispensing justice Our action must reflect a deep insight
into the failings of human nature, a capability for making
allowances for human error and/or negligence, and the ability
to maintain the scales of justice happily well-balanced
between these virtues and the application of the law.
An interpretation of a rule of procedure which would not deny to
the petitioners their rights to their inheritance is warranted by the
circumstances of this case.
WHEREFORE, the order of the respondent court dated July 20,
1981 is hereby REVERSED and SET ASIDE. The Regional Trial
Court which took over the cases of the respondent court is
ordered to receive the petitioners' evidence regarding the
genuineness and due execution of the disputed deeds of sale.
SO ORDERED.
Teehankee, Melencio-Herrera, Plana, Relova and De la Fuente,
JJ., concur.

23. Meaning of genuineness and due execution


AMPARO DEL ROSARIO v. SANTOS
G.R. No. L-46892 September 30, 1981
The Court of Appeals, 1 in accordance with Section 31 of the
Judiciary Act of 1948, as amended, certified to Us the appeal
docketed as CA-G.R. No. 56674-R entitled "Amparo del Rosario,
plaintiff-appellee, vs. Spouses Andres Santos and Aurora Santos,
defendants-appellants," as only questions of law are involved.
On January 14, 1974, Amparo del Rosario filed a complaint
against the spouses Andres F. Santos and Aurora O. Santos, for
specific performance and damages allegedly for failure of the

latter to execute the Deed of Confirmation of Sale of an undivided


20,000 square meters of land, part of Lot 1, Psu-206650, located
at Barrio Sampaloc, Tanay, Rizal, in malicious breach of a Deed
of Sale (Exhibit A or 1) dated September 28, 1964.
Amparo del Rosario died on Sept. 21, 1980 so that she is now
substituted by the heirs named in her will still undergoing probate
proceedings. Andres F. Santos also died, on Sept. 5, 1980, and he
is substituted by the following heirs: Jovita Santos Gonzales,
Arnulfo O. Santos, Archimedes O. Santos, Germelina Santos
Ravida, and Andres O. Santos, Jr.
The Deed of Sale (Exh.A or 1) is herein reproduced below:
DEED OF SALE
KNOW ALL MEN BY THESE PRESENTS:
I, ANDRES F. SANTOS, of legal age, married to Aurora 0.
Santos, Filipino and resident cf San Dionisio, Paranaque,
Rizal, Philippines, for and in consideration of the sum of
TWO THOUSAND (P 2,000.00) PESOS, Philippine
Currency, the receipt whereof is hereby acknowledged, do
hereby SELLS, CONVEYS, and TRANSFERS (sic) unto
Amparo del Rosario, of legal age, married to Fidel del Rosario
but with legal separation, Filipino and resident of San
Dionisio, Paranaque, Rizal, Philippines that certain 20,000
square meters to be segregated from Lot 1 of plan Psu-206650
along the southeastern portion of said lot, which property is
more particularly described as follows:
A parcel of land (Lot 1 as shown on plan Psu-206650,
situated in the Barrio of Sampaloc, Municipality of Tanay,
Province of Rizal. Bounded on the SW., along lines 1-2-3,
by Lot 80 of Tanay Public Land Subdivision, Pls-39; on
the NW., along lines 3-4-5, by Lot 2; and along lines 5-67-8-9-10-11, by Lot 6; on the NE., along lines 11-12-13,
by Lot 3: and along lines 13-1415, by Lot 4, all of plan
Psu-206650; and on the SE., along line 15-1, by Lot 5 of
plan Psu- 206650 ... ; containing an area of ONE
HUNDRED EIGHTY ONE THOUSAND FOUR
HUNDRED TWENTY (181,420) SQUARE METERS. All
points referred to are indicated on the plan and are marked
on the ground as follows: ...
of which above-described property, I own one-half (1/2)
interest thereof being my attorney's fee, and the said 20,000
square meters will be transferred unto the VENDEE as soon
as the title thereof has been released by the proper authority or
authorities concerned:
That the parties hereto hereby agree that the VENDOR shall
execute a Deed of Confirmation of Deed of Sale in favor of
the herein VENDEE as soon as the title has been released and
the subdivision plan of said Lot 1 has been approved by the
Land Registration Commissioner.
IN WITNESS WHEREOF, I have hereunto set my hand this
28th day of September, 1964, in the City of Manila,
Philippines.
s/ ANDRES F. SANTOS t/ ANDRES F. SANTOS
With My Marital Consent:
s/ Aurora O. Santos (Wife) t/ Aurora O. Santos (Wife)

SIGNED IN THE PRESENCE OF: s/ Felicitas C. Moro s/


Corona C. Venal
REPUBLIC OF THE PHILIPPINES) ) SS.
BEFORE ME, a Notary Public for and in Rizal, Philippines,
personally appeared Andres F. Santos, with Res. Cert. No.
4500027 issued at Paranaque, Rizal, on Jan. 9, 1964, B0935184 issued at Paranaque, Rizal on April 15, 1964, and
Aurora 0. Santos, with Res. Cert. No. A-4500028 issued at
Paranaque, Rizal, on Jan. 9, 1964, giving her marital consent
to this instrument, both of whom are known to me and to me
known to be the same persons who executed the foregoing
instruments and they acknowledged to me that the same is
their free act and voluntary deed.
IN WITNESS WHEREOF, I have hereunto signed this
instrument and affixed my notarial seal this lst day of October,
1964, in Pasig, Rizal, Philippines.
Doc. No. 1792; Page No. 85; Book No. 19; Series of 1964.
s/ FLORENCIO LANDRITO t/ FLORENCIO LANDRITO
NOTARY PUBLIC Until December 31, 1965 2
Plaintiff claimed fulfillment of the conditions for the execution of
the Deed of Confirmation of Sale, namely: the release of the title
of the lot and the approval of the subdivision plan of said lot by
the Land Registration Commission. She even enumerated the
titles with their corresponding land areas derived by defendants
from the aforesaid lot, to wit:
(a) TCT 203580 30,205 sq. meters
(b) TCT 203581 19, 790 sq. meters
(c) TCT 167568 40,775 sq. meters
In a motion to dismiss, defendants pleaded, inter alia, the defenses
of lack of jurisdiction of the court a quo over the subject of the
action and lack of cause of action allegedly because there was no
allegation as to the date of the approval of the subdivision plan,
no specific statement that the titles therein mentioned were curved
out of Lot I and no clear showing when the demands were made
on the defendants. They likewise set up the defense of
prescription allegedly because the deed of sale was dated
September 28, 1964 and supposedly ratified October 1, 1964 but
the complaint was filed only on January 14, 1974, a lapse of more
than nine years when it should have been filed within five years
from 1964 in accordance with Article 1149, New Civil Code.
Defendant also claimed that the demand set forth in the complaint
has been waived, abandoned or otherwise extinguished. It is
alleged that the deed of sale was "only an accommodation
graciously extended, out of close friendship between the
defendants and the plaintiff and her casual business partner in the
buy and sell of real estate, one Erlinda Cortez;" 3 that in order to
allay the fears of plaintiff over the non-collection of the debt of
Erlinda Cortez to plaintiff in various sums exceeding P 2,000.00,
defendants, who were in turn indebted to Erlinda Cortez in the
amount of P 2,000.00, voluntarily offered to transfer to plaintiff
their inexistent but expectant right over the lot in question, the
same to be considered as part payment of Erlinda Cortez'
indebtedness; that as Erlinda Cortez later on paid her creditor
what was then due, the deed of sale had in effect been

extinguished. Defendants thereby characterized the said deed of


sale as a mere tentative agreement which was never intended nor
meant to be ratified by and acknowledged before a notary public.
In fact, they claimed that they never appeared before Notary
Public Florencio Landrito.
Finally, defendants alleged that the claim on which the action or
suit is founded is unenforceable under the statute of frauds and
that the cause or object of the contract did not exist at the time of
the transaction.
After an opposition and a reply were filed by the respective
parties, the Court a quo resolved to deny the motion to dismiss of
defendants. Defendants filed their answer with counterclaim
interposing more or less the same defenses but expounding on
them further. In addition, they claimed that the titles allegedly
derived by them from Lot 1 of Annex A or I were cancelled
and/or different from said Lot I and that the deed of sale was
simulated and fictitious, plaintiff having paid no amount to
defendants; and that the deed was entrusted to plaintiff's care and
custody on the condition that the latter; (a) would secure the
written consent of Erlinda Cortez to Annex A or I as part payment
of what she owed to plaintiff; (b) would render to defendants true
accounting of collections made from Erlinda showing in
particular the consideration of 2,000.00 of Annex A or I duly
credited to Erlinda's account.4
Plaintiff filed a reply and answer to counterclaim and thereafter a
motion for summary judgment and/or judgment on the pleadings
on the ground that the defenses of defendants fail to tender an
issue or the same do not present issues that are serious enough to
deserve a trial on the merits, 5 submitting on a later date the
affidavit of merits. Defendants filed their corresponding
opposition to the motion for summary judgment and/or judgment
on the pleadings. Not content with the pleadings already
submitted to the Court, plaintiff filed a reply while defendants
filed a supplemental opposition.
With all these pleadings filed by the parties in support of their
respective positions, the Court a quo still held in abeyance
plaintiff's motion for summary judgment or judgment on the
pleadings pending the pre-trial of the case. At the pre-trial,
defendants offered by way of compromise to pay plaintiff the sum
of P2,000.00, the consideration stated in the deed of sale. But the
latter rejected the bid and insisted on the delivery of the land to
her. Thus, the pre-trial proceeded with the presentation by
plaintiff of Exhibits A to Q which defendants practically admitted,
adopted as their own and marked as Exhibits 1 to 17. In addition,
the latter offered Exhibit 18, which was their reply to plaintiff's
letter of demand dated December 21, 1973.
From the various pleadings filed in this case by plaintiff, together
with the annexes and affidavits as well as the exhibits offered in
evidence at the pre-trial, the Court a quo found the following facts
as having been duly established since defendant failed to meet
them with countervailing evidence:
In February, 1964, Teofilo Custodia owner of a parcel of
unregistered land with an area of approximately 220,000
square meters in Barrio Sampaloc, Tanay, Rizal, hired
Attorney Andres F. Santos "to cause the survey of the abovementioned property, to file registration proceedings in court,
to appear and represent him in all government office relative

thereto, to advance all expenses for surveys, taxes to the


government, court fees, registration fees ... up to the issuance
of title in the name" of Custodia. They agreed that after the
registration of the title in Custodio's name, and "after
deducting all expenses from the total area of the property,"
Custodio would assign and deliver to Santos "one-half (1/2)
share of the whole property as appearing in the certificate of
title so issued." Exh.B or 2).
On March 22, 1964, Custodio's land was surveyed under plan
Psu-226650 (Exh. D or 4). It was divided into six (6) lots, one
of which was a road lot. The total area of the property as
surveyed was 211,083 square meters. The respective areas of
the lots were as follows:
Lot 1

181,420 square meters

Lot 2

7,238 square meters

Lot 3

7,305 square meters

Lot 4

5,655 square meters

Lot 5

5,235 square meters

Road Lot 6

4,230 square meters

TOTAL

211,083 square meters

xxx xxx xxx


On December 27, 1965, a decree of registration No. N-108022
was issued in Land Registration Case No. N-5023, of the
Court of First Instance of Rizal, LRC Record No. N-27513, in
favor of Teofilo Custodia married to Miguela Perrando
resident of Tanay, Rizal. On March 23, 1966, Original
Certificate of Title No. 5134 (Exh. Q or 17) was issued to
Custodio for Lots 1, 2, 3, 4 and 5, Psu- 206650, with a total
area of 206,853 square meters. The areas of the five (5) lots
were as follows:
Lot 1

181,420 square meters

Lot 2

7,238 square meters

Lot 3

7,305 square meters

Lot 4

5,655 square meters

Lot 5

5,235 square meters

In April to May, 1966, a consolidation-subdivision survey


(LRC) Pcs-5273 (Exh. E or 5) was made on the above lots
converting them into six (6) new lots as follows:

xxx xxx xxx


Lot 1

20,000 square meters

Lot 2

40,775 square meters

Lot 3

50,000 square meters

Lot 4

40,775 square meters

Lot 5

50,000 square meters

Road Lot 6

5,303 square meters

TOTAL

206,853 square meters

On June 22, 1966, the consolidation-subdivision plan (LRC)


Pcs-5273 (Exh. E or 5) was approved by the Land
Registration Commission and by the Court of First Instance of
Rizal in an order dated July 2, 1966 (Entry No. 61037 T167561, Exh. Q). Upon its registration, Custodio's O.C.T. No.
5134 (Exh. Q) was cancelled and TCT Nos. 167561, 167562,
167563, 167564 (Exh. G), 167565 (Exh. H and 167566 were
issued for the six lots in the name of Custodio (Entry No.
61035, Exh. Q).
On June 23, 1966, Custodio conveyed to Santos Lots 4 and 5,
Pcs-5273 with a total area of 90,775 square meters (Exh. B or
2) described in Custodio's TCT No. 167564 (Exh. G or 7) and
TCT No. 167565 (Exh.H or 8), plus a one-half interest in the
Road Lot No. 6, as payment of Santos' attorney's fees and
advances for the registration of Custodio's land.
Upon registration of the deed of conveyance on July 5, 1966,
Custodio's TCT Nos. 167564 and 167565 (Exhs. G and H)
were cancelled. TCT No. 167568 (Exh.I or 9) for Lot 4 and
TCT No. 167585 (Exh.J or 10) for Lot 5 were issued to
Santos.
On September 2, 1967, Santos' Lot 5, with an area of 50,000
square meters was subdivided into two (2) lots, designated as
Lots 5-A and 5-B in the plan Psd-78008 (Exh. F or 6), with
the following areas:
Lot 5-A

30,205 square meters

Lot 5-B

19,795square meters

TOTAL

50,000 square meters

Upon registration of Psd-78008 on October 3, 1967, Santos'


TCT No. 167585 (Exh. J) was cancelled and TCT No. 203578
for Lot 5- A and TCT No. 203579 for Lot 5-B were supposed
to have been issued to Santos (See Entry 6311 in Exh. J or
10). Actually, TCT No. 203580 was issued for Lot 5-A (Exh.
K or 1 1), and TCT No. 203581 for Lot 5-B (Exh.L or 12),
both in the name of Andres F. Santos.
Out of Custodio's original Lot 1, Psu-206650, with an area of
181,420 square meters, Santos was given a total of 90,775
square meters, registered in his name as of October 3, 1967
under three (3) titles, namely:

"A", and that Erlinda Cortez' conformity is not required to


validate the appellants' obligation.

TCT No. 167585 for


Lot 4 Pcs-5273

40,775 sq. m.

(Exh. J or 10)

V. The lower court erred in declaring that the appellants are


co-owners of the lone registered owner Teofilo Custodia.

TCT No. 203580 for


Lot 5-A Psd-78008

30,205 sq. m.

(Exh. K or 11)
TCT No. 203581 for
Lot 5-B Psd-78008

IV. The lower court erred in holding that Exh. "l" or "A" is not
infirmed and expressed the true intent of the parties.

19,795 sq. m.

(Exh. L or 12)
90,775 sq.m.
plus one-half of the road lot, Lot 6, PCS-5273, with an area of
5,303 square meters, which is registered jointly in the name of
Santos and Custodio (Exh. B & E) 6
The court a quo thereupon concluded that there are no serious
factual issues involved so the motion for summary judgment may
be properly granted. Thereafter, it proceeded to dispose of the
legal issues raised by defendants and rendered judgment in favor
of plaintiff. The dispositive portion of the decision states as
follows:
WHEREFORE, defendants Andres F. Santos and Aurora
Santos are ordered to execute and convey to plaintiff Amparo
del Rosario, within ten (10) days from the finality of this
decision, 20,000 square meters of land to be taken from the
southeastern portion of either Lot 4, Pcs-5273, which has an
area of 40,775 square meters, described in TCT No. 167568
(Exh. I or 9) of from their LOL 5-A. with an area of 30,205
square meters, described in TCI No. 203; O (Exh. K or 11).
The expenses of segregating the 20,000 square meters portion
shall be borne fqually by the parties. rhe expenses for the
execution and registration of the sale shall be borne by the
defendants (Art. 1487, Civil Code). Since the defendants
compelled the plaintiff to litigate and they failed to heed
plainliff's just demand, they are further ordered to pay the
plaintiff the sum of P2,000.00 as attorney's fees and the costs
of this action.
SO ORDERED. 7
Aggrieved by the aforesaid decision, the defendant's filed all
appeal to the Court of Appeals submitting for resolution seven
assignments of errors, to wit:
I. The lower court erred in depriving the appellants of their
right to the procedural due process.
II. The lower court erred in holding that the appellee's claim
has not been extinguished.
III. The lower court erred in sustaining appellee's contention
that there are no other unwritten conditions between the
appellants and the appellee except those express in Exh. "1" or

VI. The lower court erred in ordering the appellants to execute


and convey to the appellee 20,000 sq. m. of land to be taken
from the southeastern portion of either their lot 4, Pcs-5273,
which has an area of 40,775 sq.m., described in T.C.T. No.
167568 (Exh. 9 or 1), or from their lot No. 5-A, with an area
of 30,205 sq.m. described in T.C.T. No. 203580 (Exh. 11 or
K), the expenses of segregation to be borne equally by the
appellants and the appellee and the expenses of execution and
registration to be borne by the appellants.
VII. Thelowercourterredinorderingtheappellantstopayto the
appellee the sum of P2,000. 00 as attorney's fee and costs. 8
The first four revolve on the issue of the propriety of the rendition
of summary judgment by the court a quo, which concededly is a
question of law. The last three assail the summary judgment itself.
Accordingly, the Court of Appeals, with whom the appeal was
filed, certified the records of the case to this Court for final
determination.
For appellants herein, the rendition of summary judgment has
deprived them of their right to procedural due process. They
claim that a trial on the merits is indispensable in this case
inasmuch as they have denied under oath all the material
allegations in appellee's complaint which is based on a written
instrument entitled "Deed of Sale", thereby putting in issue the
due execution of said deed.
Appellants in their opposition to the motion for summary
judgment and/or judgment on the pleadings, however, do not
deny the genuineness of their signatures on the deed of sale.
(Par. 3 of said Motion, p. 101, Record on Appeal). They do not
contest the words and figures in said deed except in the
acknowledgment portion thereof where certain words were
allegedly cancelled and changed without their knowledge and
consent and where, apparently, they appeared before Notary
Public Florencio Landrito when, in fact, they claimed that they
did not. In effect, there is an admission of the due execution and
genuineness of the document because by the admission of the due
execution of a document is meant that the party whose signature it
bears admits that voluntarily he signed it or that it was signed by
another for him and with his authority; and the admission of the
genuineness of the document is meant that the party whose
signature it bears admits that at the time it was signed it was in
the words and figures exactly as set out in the pleading of the
party relying upon it; and that any formal requisites required by
law, such as swearing and acknowledgment or revenue stamps
which it requires, are waived by him. 9
As correctly pointed out by the court a quo, the alleged false
notarization of the deed of sale is of no consequence. For a sale of
real property or of an interest therein to be enforceable under the
Statute of Frauds, it is enough that it be in writing. 10 It need not
be notarized. But the vendee may avail of the right under Article
1357 of the New Civil Code to compel the vendor to observe the

form required by law in order that the instrument may be


registered in the Registry of Deeds. 11 Hence, the due execution
and genuineness of the deed of sale are not really in issue in this
case. Accordingly, assigned error I is without merit.
What appellants really intended to prove through the alleged false
notarization of the deed of sale is the true import of the matter,
which according to them, is a mere tentative agreement with
appellee. As such, it was not intended to be notarized and was
merely entrusted to appellee's care and custody in order that: first,
the latter may secure the approval of one Erlinda Cortez to their
(appellants') offer to pay a debt owing to her in the amount of
P2,000.00 to appellee instead of paying directly to her as she was
indebted to appellee in various amounts exceeding P2,000.00; and
second once the approval is secured, appellee would render an
accounting of collections made from Erlinda showing in
particular the consideration of P2,000.00 of the deed of sale duly
credited to Erlinda's account.
According to appellants, they intended to prove at a full dress trial
the material facts: (1) that the aforesaid conditions were not
fulfilled; (2) that Erlinda Cortez paid her total indebtedness to
appellee in the amount of P14,160.00, the P2,000.00 intended to
be paid by appellant included; and (3) that said Erlinda decided to
forego, renounce and refrain from collecting the P2,000.00 the
appellants owed her as a countervance reciprocity of the countless
favors she also owes them.
Being conditions which alter and vary the terms of the deed of
sale, such conditions cannot, however, be proved by parol
evidence in view of the provision of Section 7, Rule 130 of the
Rules of Court which states as follows:
Sec. 7. Evidence of written agreements when the terms of an
agreement have been reduced to writing, it is to be considered
as containing all such terms, and, therefore, there can be,
between the parties and their successors in interest, no
evidence of the terms of the agreement other than the contents
of the writing, except in the following cases:
(a) Where a mistake or imperfection of the writing, or its
failure to express the true intent and agreement of the parties,
or the validity of the agreement is put in issue by the
pleadings;
(b) When there is an intrinsic ambiguity in the writing. The
term "agreement" includes wills."
The parol evidence rule forbids any addition to or contradiction of
the terms of a written instrument by testimony purporting to show
that, at or before the signing of the document, other or different
terms were orally agreed upon by the parties. 12
While it is true, as appellants argue, that Article 1306 of the New
Civil Code provides that "the contracting parties may establish
such stipulations, clauses, terms and conditions as they may deem
convenient, provided that they are not contrary to law, morals,
good customs, public order, or public policy" and that
consequently, appellants and appellee could freely enter into an
agreement imposing as conditions thereof the following: that
appellee secure the written conformity of Erlinda Cortez and that
she render an accounting of all collections from her, said
conditions may not be proved as they are not embodied in the
deed of sale.

The only conditions imposed for the execution of the Deed of


Confirmation of Sale by appellants in favor of appellee are the
release of the title and the approval of the subdivision plan. Thus,
appellants may not now introduce other conditions allegedly
agreed upon by them because when they reduced their agreement
to writing, it is presumed that "they have made the writing the
only repository and memorial of truth, and whatever is not found
in the writing must be understood to have been waived and
abandoned." 13
Neither can appellants invoke any of the exceptions to the parol
evidence rule, more particularly, the alleged failure of the writing
to express the true intent and agreement of the parties. Such an
exception obtains where the written contract is so ambiguous or
obscure in terms that the contractual intention of the parties
cannot be understood from a mere reading of the instrument. In
such a case, extrinsic evidence of the subject matter of the
contract, of the relations of the parties to each other, and of the
facts and circumstances surrounding them when they entered into
the. contract may be received to enable the court to make a proper
interpretation of the instrumental. 14 In the case at bar, the Deed of
Sale (Exh. A or 1) is clear, without any ambiguity, mistake or
imperfection, much less obscurity or doubt in the terms thereof.
We, therefore, hold and rule that assigned errors III and IV are
untenable.
According to the court a quo, "(s)ince Santos, in his Opposition to
the Motion for Summary Judgment failed to meet the plaintiff's
evidence with countervailing evidence, a circumstance indicating
that there are no serious factual issues involved, the motion for
summary judgment may properly be granted." We affirm and
sustain the action of the trial court.
Indeed, where a motion for summary judgment and/or judgment
on the pleadings has been filed, as in this case, supporting and
opposing affidavits shall be made on personal knowledge, shall
set forth such facts as may be admissible in evidence, and shall
show affirmatively that the affiant is competent to testify as to the
matters stated therein. Sworn or certified copies of all papers or
parts thereof referred to in the
affidavitshalibeattachedtheretoorservedtherewith. 15
Examining the pleadings, affidavits and exhibits in the records,
We find that appellants have not submitted any categorical proof
that Erlinda Cortez had paid the P2,000.00 to appellee, hence,
appellants failed to substantiate the claim that the cause of action
of appellee has been extinguished. And while it is true that
appellants submitted a receipt for P14,160.00 signed by appellee,
appellants, however, have stated in their answer with
counterclaim that the P2,000.00 value of the property covered by
the Deed of Sale, instead of being credited to Erlinda Cortez, was
conspicuously excluded from the accounting or receipt signed by
appellee totalling P14,160.00. The aforesaid receipt is no proof
that Erlinda Cortez subsequently paid her P2,000.00 debt to
appellee. As correctly observed by the court a quo, it is
improbable that Cortez would still pay her debt to appellee since
Santos had already paid it.
Appellants' claim that their P2,000.00 debt to Erlinda Cortez had
been waived or abandoned is not also supported by any affidavit,
document or writing submitted to the court. As to their allegation
that the appellee's claim is barred by prescription, the ruling of the
trial court that only seven years and six months of the ten-year

prescription period provided under Arts. 1144 and 155 in cases of


actions for specific performance of the written contract of sale
had elapsed and that the action had not yet prescribed, is in
accordance with law and, therefore, We affirm the same.
The action of the court a quo in rendering a summary judgment
has been taken in faithful compliance and conformity with Rule
34, Section 3, Rules of Court, which provides that "the judgment
sought shall be rendered forthwith if the pleadings, depositions,
and admissions on file together with the affidavits, show that,
except as to the amount of damages, there is no genuine issue as
to any material fact and that the moving party is entitled to a
judgment as a matter of law. "
Resolving assignments of errors, V, VI, and VII which directly
assail the summary judgment, not the propriety of the rendition
thereof which We have already resolved to be proper and correct,
it is Our considered opinion that the judgment of the court a
quo is but a logical consequence of the failure of appellants to
present any bona fidedefense to appellee's claim. Said judgment is
simply the application of the law to the undisputed facts of the
case, one of which is the finding of the court a quo, to which We
agree, that appellants are owners of one-half (1/2) interest of Lot I
and, therefore, the fifth assignment of error of appellants is
without merit.
By the terms of the Deed of Sale itself, which We find genuine
and not infirmed, appellants declared themselves to be owners of
one-half (1/2) interest thereof. But in order to avoid appellee's
claim, they now contend that Plan Psu-206650 where said Lot I
appears is in the exclusive name of Teofilo Custodio as the sole
and exclusive owner thereof and that the deed of assignment of
one-half (1/2) interest thereof executed by said Teofilo Custodio
in their favor is strictly personal between them. Notwithstanding
the lack of any title to the said lot by appellants at the time of the
execution of the deed of sale in favor of appellee, the said sale
may be valid as there can be a sale of an expected thing, in
accordance with Art. 1461, New Civil Code, which states:
Art. 1461. Things having a potential existence may be the
object of the contract of sale.
The efficacy of the sale of a mere hope or expectancy is
deemed subject to the condition that the thing will come into
existence.
The sale of a vain hope or expectancy is void.
In the case at bar, the expectant right came into existence or
materialized for the appellants actually derived titles from Lot I .
We further reject the contention of the appellants that the lower
court erred in ordering the appellants to execute and convey to the
appellee 20,000 sq.m. of land to be taken from the southeastern
portion of either their Lot 4, Pcs-5273, which has an area of
40,775 sq.m., described in T.C.T. No. 167568 (Exh. 9 or 1), or
from their Lot No. 5-A, with an area of 30,205 sq.m. described in
T.C.T. No. 203580 (Exh. 11 or K), the expenses of segregation to
be borne equally by the appellants and the appellee and the
expenses of execution and registration to be borne by the
appellants. Their argument that the southeastern portion of Lot 4
or Lot 5-A is no longer the southeastern portion of the bigger Lot
1, the latter portion belonging to the lone registered owner,

Teofilo Custodia is not impressed with merit. The subdivision of


Lot I between the appellants and Teofilo Custodio was made
between themselves alone, without the intervention, knowledge
and consent of the appellee, and therefore, not binding upon the
latter. Appellants may not violate nor escape their obligation
under the Deed of Sale they have agreed and signed with the
appellee b3 simply subdividing Lot 1, bisecting the same and
segregating portions to change their sides in relation to the
original Lot 1.
Finally, considering the trial court's finding that the appellants
compelled the appellee to litigate and they failed to heed
appellee's just demand, the order of the court awarding the sum of
P2,000.00 as attorney's fees is just and lawful, and We affirm the
same.
WHEREFORE, IN VIEW OF THE FOREGOING, the judgment
appealed from is hereby AFFIRMED in toto, with costs against
the appellants.

24A. Trial Court cannot motu propio dismiss the case on


improper venue.
DACOYCOY v. BENEDICTO
G.R. No. 74854

April 2, 1991

May the trial court motu proprio dismiss a complaint on the


ground of improper venue? This is the issue confronting the Court
in the case at bar.
On March 22, 1983, petitioner Jesus Dacoycoy, a resident of
Balanti, Cainta, Rizal, filed before the Regional Trial Court,
Branch LXXI, Antipolo, Rizal, a complaint against private
respondent Rufino de Guzman praying for the annulment of two
(2) deeds of sale involving a parcel of riceland situated in Barrio
Estanza, Lingayen, Pangasinan, the surrender of the produce
thereof and damages for private respondent's refusal to have said
deeds of sale set aside upon petitioner's demand.
On May 25, 1983, before summons could be served on private
respondent as defendant therein, the RTC Executive Judge issued
an order requiring counsel for petitioner to confer with respondent
trial judge on the matter of venue. After said conference, the trial
court dismissed the complaint on the ground of improper venue. It
found, based on the allegations of the complaint, that petitioner's
action is a real action as it sought not only the annulment of the
aforestated deeds of sale but also the recovery of ownership of the
subject parcel of riceland located in Estanza, Lingayen,
Pangasinan, which is outside the territorial jurisdiction of the trial
court.
Petitioner appealed to the Intermediate Appellate Court, now
Court of Appeals, which in its decision of April 11,
1986,1 affirmed the order of dismissal of his complaint.
In this petition for review, petitioner faults the appellate court in
affirming what he calls an equally erroneous finding of the trial
court that the venue was improperly laid when the defendant, now

private respondent, has not even answered the complaint nor


waived the venue.2
Petitioner claims that the right to question the venue of an action
belongs solely to the defendant and that the court or its magistrate
does not possess the authority to confront the plaintiff and tell
him that the venue was improperly laid, as venue is waivable. In
other words, petitioner asserts, without the defendant objecting
that the venue was improperly laid, the trial court is powerless to
dismiss the case motu proprio.
Private respondent, on the other hand, maintains that the dismissal
of petitioner's complaint is proper because the same can "readily
be assessed as (a) real action." He asserts that "every court of
justice before whom a civil case is lodged is not even obliged to
wait for the defendant to raise that venue was improperly laid.
The court can take judicial notice and motu proprio dismiss a suit
clearly denominated as real action and improperly filed before it. .
. . the location of the subject parcel of land is controlling pursuant
to Sec. 2, par. (a), Rule 4 of the New Rules of Court . . .3
We grant the petition.
The motu proprio dismissal of petitioner's complaint by
respondent trial court on the ground of improper venue is plain
error, obviously attributable to its inability to distinguish between
jurisdiction and venue.
Questions or issues relating to venue of actions are basically
governed by Rule 4 of the Revised Rules of Court. It is said that
the laying of venue is procedural rather than substantive. It relates
to the jurisdiction of the court over the person rather than the
subject matter. Provisions relating to venue establish a relation
between the plaintiff and the defendant and not between the court
and the subject matter. Venue relates to trial not to jurisdiction,
touches more of the convenience of the parties rather than the
substance of the case.4
Jurisdiction treats of the power of the court to decide a case on the
merits; while venue deals on the locality, the place where the suit
may be had.5
In Luna vs. Carandang,6 involving an action instituted before the
then Court of First Instance of Batangas for rescission of a lease
contract over a parcel of agricultural land located in Calapan,
Oriental Mindoro, which complaint said trial court dismissed for
lack of jurisdiction over the leased land, we emphasized:
(1) A Court of First Instance has jurisdiction over suits
involving title to, or possession of, real estate wherever
situated in the Philippines, subject to the rules on venue of
actions (Manila Railroad Company vs. Attorney General, etc.,
et al., 20 Phil. 523; Central Azucarera de Tarlac vs. De Leon,
et al., 56 Phil. 169; Navarro vs. Aguila, et al., 66 Phil. 604;
Lim Cay, et al. vs. Del Rosario, etc., et al., 55 Phil. 692);
(2) Rule 4, Section 2, of the Rules of Court requiring that an
action involving real property shall be brought in the Court of
First Instance of the province where the land lies is a rule on
venue of actions, which may be waived expressly or by
implication.
In the instant case, even granting for a moment that the action of
petitioner is a real action, respondent trial court would still have
jurisdiction over the case, it being a regional trial court vested

with the exclusive original jurisdiction over "all civil actions


which involve the title to, or possession of, real property, or any
interest therein . . ." in accordance with Section 19 (2) of Batas
Pambansa Blg. 129. With respect to the parties, there is no dispute
that it acquired jurisdiction over the plaintiff Jesus Dacoycoy,
now petitioner, the moment he filed his complaint for annulment
and damages. Respondent trial court could have acquired
jurisdiction over the defendant, now private respondent, either by
his voluntary appearance in court and his submission to its
authority, or by the coercive power of legal process exercised
over his person.7
Although petitioner contends that on April 28, 1963, he requested
the City Sheriff of Olongapo City or his deputy to serve the
summons on defendant Rufino de Guzman at his residence at 117
Irving St., Tapinac, Olongapo City,8 it does not appear that said
service had been properly effected or that private respondent had
appeared voluntarily in court9 or filed his answer to the
complaint.10 At this stage, respondent trial court should have
required petitioner to exhaust the various alternative modes of
service of summons under Rule 14 of the Rules of Court,i.e.,
personal service under Section 7, substituted service under
Section 8, or service by publication under Section 16 when the
address of the defendant is unknown and cannot be ascertained by
diligent inquiry.
Dismissing the complaint on the ground of improper venue is
certainly not the appropriate course of action at this stage of the
proceeding, particularly as venue, in inferior courts as well as in
the courts of first instance (now RTC), may be waived expressly
or impliedly. Where defendant fails to challenge timely the venue
in a motion to dismiss as provided by Section 4 of Rule 4 of the
Rules of Court, and allows the trial to be held and a decision to be
rendered, he cannot on appeal or in a special action be permitted
to challenge belatedly the wrong venue, which is deemed
waived.11
Thus, unless and until the defendant objects to the venue in a
motion to dismiss, the venue cannot be truly said to have been
improperly laid, as for all practical intents and purposes, the
venue, though technically wrong, may be acceptable to the parties
for whose convenience the rules on venue had been devised. The
trial court cannot pre-empt the defendant's prerogative to object to
the improper laying of the venue by motu proprio dismissing the
case.
Indeed, it was grossly erroneous for the trial court to have taken a
procedural short-cut by dismissing motu propriothe complaint on
the ground of improper venue without first allowing the
procedure outlined in the Rules of Court to take its proper course.
Although we are for the speedy and expeditious resolution of
cases, justice and fairness take primary importance. The ends of
justice require that respondent trial court faithfully adhere to the
rules of procedure to afford not only the defendant, but the
plaintiff as well, the right to be heard on his cause.
WHEREFORE, in view of the foregoing, the decision of the
Intermediate Appellate Court, now Court of Appeals, dated April
11, 1986, is hereby nullified and set aside. The complaint filed by
petitioner before the Regional Trial Court of Antipolo, Branch
LXXI is revived and reinstated. Respondent court is enjoined to
proceed therein in accordance with law.

SO ORDERED.
25A. Lis Pendens
SALACUP v. MADDELA
G.R. No. L-50471 June 29, 1979

A special civil action of certiorari with preliminary injunction


wherein the petitioner prays that this Court:
1. Issues an Order requiring the respondents to answer this
petition;
2. After hearing, nullifies the Orders of the respondent Judge
denying petitioner's Motion to Dismiss and denying the
Motion for Reconsideration;

rice thresher with the Court of First Instance of Isabela, Branch


III, docketed as Civil Case No. III-194, entitled "Julio Salacup,
plaintiff, versus Ben Tan representing Filipinos Mills
Incorporated, defendants." In the complaint, petitioner avers that
he delivered 1,058 cavans valued at P51,557. The price of the rice
thresher is only P45,000 and therefore, there is an overpayment in
the amount of P6,557.
On June 7, 1978, respondent also filed a complaint for breach of
contract and/or collection of the undelivered 442 cavans of palay
or its value, P24,310 with the Court of First Instance of Manila,
Branch XXXIV docketed as Civil Case No. 115997, entitled
"Filipinas Mills, Inc. plaintiff, versus Julio Salacup, defendant."
In that complaint, respondent asserts that petitioner delivered only
1,058 cavans out of 1,500 cavans of palay thereby, leaving a
balance of 442 cavans, under the same contract previously
adverted to.

4. Issues, before this petition can be heard, a Writ of


Preliminary Injunction forthwith restraining the respondent
Judge from proceeding or trying the case; and,

A motion to dismiss Civil Case No. 115997 was filed by


petitioner on the ground that there is another action pending
between the same parties for the same cause of action before the
Court of First Instance of Isabela, Branch III. An opposition to the
motion was filed by respondent on July 28, 1978 alleging that the
pendency of a case presupposes a valid sion, of summons and
copy of the complaint upon the defendant, and that no valid sion,
of summons and copy of the complaint have been served upon it.

5. Grants to the petitioner such other reliefs and remedies


which are just and equitable in the premises. 1

On October 3, 1978, respondent Judge issued an order which


reads:

On December 12, 1973, a contract was executed between


respondent Filipinas Mills Inc. and petitioner Julio Salacup
whereby the former agreed to sell one rice thresher with complete
accessories to petitioner in exchange of the quantity of palay. As
to the consideration, respondent claims that the purchase price is
to be paid in the form of 111,500 cavans of palay at 50 kilos per
sack at the rate of P1.10 a kilo or as computed, P82,500. On the
other hand, petitioner asserts that the prestation as to the price is
P45,000 payable in palay.

This is a Motion to Dismiss filed by the defendant thru


counsel, on the ground of lis pendens. Plaintiff filed its
opposition to said Motion.

3. Allows the petitioner his cost;

The terms of payment as agreed upon by both parties are as


follows:
a. 200 cavans of palay, upon delivery of the thresher but not
later than January 15,1974;

After a careful consideration of the foregoing, the Court finds


the opposition well taken, and on the grounds stated therein,
the Court hereby denies the Motion to Dismiss filed by the
defendant.
The defendant is hereby required to file his Answer to the
Complaint within fifteen (15) days from receipt hereof. 2
A motion for reconsideration was filed by petitioner on January 4,
1979 followed by an opposition to motion for reconsideration
filed by respondent on February 13, 1979. Respondent Judge
denied the motion for reconsideration on March 9, 1979.

b. 500 cavans of palay on February 15, 1974; and


c. 800 cavans of palay on or before March 15, 1974.
On April 5, 1976, petitioner filed a complaint against respondent
for the recovery of the overpayment paid by the petitioner for the

Unable to obtain a reconsideration, the petitioner filed this instant


petition with this Court.

On May 16, 1979, this Court issued a temporary restraining order


enjoining respondent Judge from proceeding with or trying Civil
Case No. 115997. 3
The only issue raised before Us is whether or not there is another
action pending between the same parties for the same cause in the
Court of First Instance of Isabela, Branch III, within the meaning
of Section 1, paragraph (e) of Rule 16 of the Rules of Court
enumerating grounds for a motion to dismiss.
The requisites for lis pendens as a ground for dismissal, of a
complaint are: 1) Identity of parties or at least such as
representing the same interests in both actions; 2) Identity of
rights asserted and prayed for, the relief being founded on the
same facts; and 3) The Identity in both cases is such that the
judgment that may be rendered in the pending case, regardless of
which party is successful would amount to res judicata in the
other case. 4 Clearly, all these requisites are present in the two
cases involved herein.
Firstly, in Civil Case No. III-194 and Civil Case No. 115997, the
parties are the same for they are merely suing each other.
Although in the latter case, Ben Tan is not a party therein, he was
made a party in the first case as a representative of respondent.
Secondly, in the first case, petitioner prays for the collection of
the overpayment paid for the rice thresher to the respondent,
while in the second case, respondent asks for the undelivered
cavans of palay as part of the purchase price of the rice thresher.
The Identity of rights asserted and prayed for, is thus established,
which shows that the relief is founded on the same facts.
And thirdly, with the Identity of the cases as shown above, a
judgment that may be rendered in the first case would be
determinative of the rights of the parties concerned and thus, it
would be res judicata to the second case.
Respondent contends that lis pendens does not obtain here
because pendency of a case presupposes a valid sion, of summons
and a copy of the complaint upon the defendant. In the case at
bar, respondent alleges that no valid service of summons and
copy of the complaint have been served upon it.
We find no merit in this contention. Under Section 6, Rule 2 of
the Rules of Court "a civil action is commenced by filing a
complaint with the court." And as held by this Court in the case
of Pampanga Bus Company, Inc. vs. Ocfemia: 5
The rule of lis pendens refers to another pending "action." An
action starts only upon the filing of a complaint in Court.

The fact that when appellant brought the present case it did
not know of the firing of a previous case against it by
appellees, as it received the summons and a copy of the
complaint only after it had filed its own action against them, is
immaterial. Suffice it to state that the fact is, at the time it
brought the present case, there was already another pending
action between the same parties, seeking to assert Identical
rights with Identical prayers for relief based on the same facts,
the decision in which would beres judicata herein.
It was also held in the case of Sotelo vs. Dizon, et. al.: 6
Under Section 389 of the Code of Civil Procedure, a civil
action is deemed legally commenced from the date of the
filing and docketing of the complaint with the clerk of Court
of First Instance, without taking into account the issuance and
sion, of the summons. Section 389 of the Code of Civil
Procedure is taken from section 405 of the California Code of
Civil Procedure, and the Supreme Court of said State has so
interpreted it in Tinn vs. United States District Attorney (148
Cal., 773);Dowling vs. Comerford (99 Cal., 204); Ex parte Fil
Ki (79 Cal., 584); and Nash vs. El Dorado County(24 Fed.
252; 1 C.J., Sec. 403, pp. 1155, 1156).
Patently, Civil Case No. III-194 was filed on April 5, 1976, very
much ahead of the filing of Civil Case No. 115997 on June 7,
1978. When the latter case was filed with the Court of First
Instance of Manila, the former filed with the Court of First
Instance of Isabela was already pending. It was an action between
the same parties for the same cause which should bar the later
case. The lower court, therefore, erred in not granting the motion
to dismiss.
WHEREFORE, the appealed orders of October 3, 1978 and
March 9, 1979 are set aside, and it is ordered that Civil Case No.
115997 be as it is hereby dismissed, without prejudice to such
counterclaim as private respondent may wish to interpose in Civil
Case No. III-194 of the Court of First Instance of Isabela, Branch
III.
SO ORDERED.

26A. Res Judicata


SANTOS v. GABRIEL
G.R. No. L-22996 May 31, 1972
Certified by the Court of Appeals that the issues raise purely
questions of law, this case is now before this Court on appeal
from the order of the Court of First Instance of Rizal, in its Civil

Case No. 7121, dated October 20, 1962, dismissing the case upon
the ground of res judicata, and from the order of January 9, 1963
denying the motion for reconsideration of the order of October
20, 1962.
The antecedent facts before the filing of the complaint in the
present case in the court below are, as follows:
On May 19, 1958, Rodolfo Santos, the son of plaintiff appellant
Dr. Melchor Santos, was hit and run over by a passenger truck
(bearing plate No. TPU-24605) owned and operated by
defendant-appellee Benito Francisco, Jr., and driven by
defendant-appellee Emiliano Gabriel, resulting in the
instantaneous death of Rodolfo. Consequently, a criminal
complaint, docketed as Criminal Case No. 7864, was filed in the
Court of First Instance of Rizal charging Emiliano Gabriel with
homicide through reckless imprudence.
The right to institute a separate civil action having been expressly
reserved by the private prosecution in the above mentioned
Criminal Case No. 7864, on June 4, 1958, during the pendency of
the criminal case, Melchor Santos filed before the same Court of
First Instance of Rizal a combined complaint, docketed as Civil
Case No. 5031, against Benito Francisco, Jr. alone, to recover
from him, as owner and operator of the passenger truck and the
employer of Emiliano Gabriel, damages for the death of his son.
In Criminal Case No. 7864 Emiliano Gabriel pleaded guilty to the
charge against him, and on December 10, 1958, the Court of First
Instance of Rizal sentenced him to suffer imprisonment for one
year, as the minimum, to three years, as the maximum, and to pay
the costs. On February 19, 1959, Melchor Santos, as plaintiff in
Civil Case No. 5031, filed his second amended complaint,
alleging therein the fact of Emiliano Gabriel's having been
convicted in the criminal case, but without joining said Emiliano
Gabriel as party defendant.
Defendant Benito Francisco, Jr., in Civil Case No. 5031, filed his
answer to the amended complaint, setting up affirmative and
special defenses, among which are: (1) that the complaint, as
amended, states no cause of action; (2) that Emiliano Gabriel,
alleged to be driving the passenger truck at the time of the
incident in question, was not his employee, and so he could not be
liable for Gabriel's negligence; and (3) that assuming that
Emiliano Gabriel was his employee, he had exercised due care
and diligence in selecting him and supervising over his work, and
so he (Benito Francisco) could not be held liable for the result of
his (Gabriel's) acts.
At the hearing of Civil Case No. 5031, held on March 23, 1959,
counsel for defendant Benito Francisco, Jr. asked the counsel for
plaintiff Melchor Santos to state positively and categorically the

nature of the cause of action of the complaint whether it was


one to enforce the subsidiary civil liability of an employer for the
criminal act committed by his employee under the provision of
Article 103 of the Revised Penal Code, or it was to enforce the
primary liability of the employer for a quasi-delict committed by
his employee under the provisions of Article 2180 of the Civil
Code. Counsel for plaintiff Melchor Santos asserted that the cause
of action could be gleaned from the allegations of the complaint,
but he indicated that the cause of action was not based on culpa
contractual. Plaintiff in the case then presented evidence in
support of his complaint.
When the turn of defendant Benito Francisco, Jr. to present his
evidence came up, his counsel announced that he would introduce
evidence in support of the special defense of due diligence on the
part of defendant in the selection and supervision of his
employees. At this juncture, plaintiff's counsel objected to the
presentation of such evidence and declared before the court that
plaintiff's action was based solely on the provisions of Article 103
of the Revised Penal Code. 1
Being thus apprised by plaintiff's counsel that plaintiff's
complaint was based on the provisions of Article 103 of the
Revised Penal Code, counsel for the defendant did not insist on
presenting evidence to establish diligence on the part of the
defendant. Instead counsel for defendant asked the court for time
to file a motion to dismiss, and the court granted him leave to do
so. In due time defendant's counsel filed a motion to dismiss the
complaint upon the ground that there was no cause of action
against the defendant Benito Francisco, Jr. contending that if
the action was based on the provisions of Article 103 of the
Revised Penal Code, the complaint should include the employee
Emiliano Gabriel as party defendant, the liability of defendant
Benito Francisco, Jr. being only subsidiary to that of his alleged
employee who is primarily liable to answer for the civil
responsibilities arising from his (employee's) criminal act, and the
insolvency of the employee must first be shown before the
employer can be held civilly liable.
On August 11, 1959, or after defendant's counsel had filed the
motion to dismiss, plaintiff filed a motion to admit another
amended complaint, which was then attached to the motion. In
this new amended complaint Emiliano Gabriel was included as
party defendant. In the motion to admit the new amended
complaint, plaintiff's counsel stated the "the present action is
based on the civil liability arising from the criminal imprudence
of Emiliano Gabriel who was convicted in Criminal Case No.
7864 of this Court." 2 In its order, dated September 23, 1959, the
trial court denied the admission of the amended complaint.

On January 30, 1960, the court a quo issued an order dismissing


the complaint in Civil Case No. 5031. The pertinent portions of
the order read as follows:
Defendant in his argument in support of the motion to dismiss
contends that if the action is based on the provision on Article
103 of the Revised Penal Code, plaintiff has no cause of
action against the defendant because the latter's liability is
merely subsidiary. In other words, plaintiff must have to
establish first by sufficient and competent evidence that the
employee is insolvent. In the instant case, the alleged
employee, whose alleged negligence was the immediate cause
of the death of plaintiff's son, has not been included as a codefendant. This employee, Emiliano Gabriel y Susi, is alleged
to have been charged with the crime of double homicide with
less serious physical injuries by reason of the accident and has
been found guilty and convicted by a final judgment of this
Court where he was sentenced to suffer imprisonment. No
allegation however has been made that said Gabriel was
condemned in the decision aforementioned to pay damages
resulting from the mishap and was found insolvent upon
execution.
xxx xxx xxx
As shown elsewhere in this order, there was no evidence
introduced by the plaintiff that defendant's alleged employees
Emiliano Gabriel y Susi has been condemned in a final
judgment to pay damages to the plaintiff by reason of the
death of the plaintiff's son as a result of the fact that the
passenger vehicle driven by him had hit and run over
plaintiff's son causing the latter's death. There was also no
evidence that any judgment has been enforced against the said
Gabriel but could not be satisfied because he was insolvent. It
therefore appears that no sufficient cause of action has been
established by the plaintiff against the defendant to establish
the subsidiary liability of the latter.
In his opposition to the motion to dismiss, plaintiff did not
question the facts shown in the motion to dismiss as have been
established by his evidence. He only maintained that the
allegations of his amended complaint were sufficient to
constitute a cause of action. With this contention, the Court
does not take issue. The Court, however, as has already been
stated, holds that his evidence failed to establish a cause of
action.
In his opposition, plaintiff seems to imply that he was
adhering to the theory adopted in his amended complaint, that
is, that his action is one to enforce the primary liability of the
defendant as an employer under the provision of the Civil
Code. But even assuming that this is his real theory and that

he was adhering to it, in other words, changing front, still the


Court is of the opinion that he has not by his evidence
established a sufficient cause of action. First, because he has
not established the fact that Emiliano Gabriel y Susi was an
employee of the defendant at the time of the mishap on May
19, 1958 and that he was then driving the vehicle which
caused the mishap as an employee of the defendant. But even
assuming that he has so established the relationship of
employer and employee between defendant and Emiliano
Gabriel y Susi, it is now too late for the plaintiff to change
front after he has successfully blocked defendant from
presenting evidence in support of his defense to the effect that
he had exercised due diligence in the selection and
supervision of his employees.
xxx xxx xxx
WHEREFORE, the Court hereby grants the motion to dismiss
this action for failure of the plaintiff to establish a cause of
action. Without costs.
Plaintiff Melchor Santos in that Civil Case No. 5031 of the Court
of First Instance of Rizal did not appeal from the abovementioned order dismissing his complaint, and so said order had
become final.
On May 12, 1962, or more than two years after the
abovementioned order was issued, Melchor Santos, through a
new counsel, filed a new complaint before the Court of First
Instance of Rizal, docketed as Civil Case No. 7121, naming both
Emiliano Gabriel and Benito Francisco, Jr. as parties defendants
therein. This new complaint embodied practically the same
allegations as those stated in the second amended complaint in
prior Civil Case No. 5031 regarding the fact of the death of
plaintiff's son due to the recklessness and imprudence of Emiliano
Gabriel as employee of Benito Francisco, Jr., of the damages
suffered by plaintiff by reason of the death of his son, and of the
conviction on Emiliano Gabriel in Criminal Case No. 7864 of the
Court of First Instance of Rizal. The new complaint prayed that
Emiliano Gabriel be ordered to pay plaintiff the damage sought to
be recovered therein, and in case of the insolvency of Emiliano
Gabriel that Benito Francisco, Jr. be ordered to pay the damages.
On June 13, 1962, counsel for defendant Benito Francisco, Jr.
filed a motion to dismiss the complaint with respect to said
defendant, upon the ground that the cause of action therein
alleged was already barred by a prior judgement rendered by the
Court of First Instance of Rizal in Civil Case No. 5031, pursuant
to Section 1 (e), Rule 8 of the Rules of Court. 3 On June 28, 1962,
counsel for the plaintiff filed an opposition to the motion to
dismiss.

On October 20, 1962, Judge Eulogio Mencias the same Judge


who dismissed Civil Case No. 5031 issued an order dismissing
Civil Case No. 7121. On December 6, 1962, counsel for the
plaintiff filed a motion for reconsideration of the order of October
20, 1962. On January 9, 1963, the lower court denied the motion
for reconsideration. Hence, this appeal by the plaintiff from those
orders of the lower court, dated October 20, 1962 and January 9,
1963.
The principal question to be resolved in the present case is
whether the action in Civil Case No. 7121 is barred by the prior
judgment rendered in Civil Case No. 5031 both of the Court of
First Instance of Rizal under the doctrine of res judicata.
It is the settled rule that in order that the doctrine of res
judicata may apply the following requisites must be present: (a)
the former judgment or order must be final; (b) the judgment or
order had been rendered by a court having jurisdiction over the
subject matter and over the parties; (c) there must be judgment or
order on the merits; and (d) there must be between the first case
and the second case identity of parties, identity of subject matter
and identity of cause of action. 4
It is not disputed that the order of the Court of First Instance of
Rizal of January 30, 1960, dismissing the combined complaint in
Civil Case No. 5031, was final and it constitute a final judgment
in the case; that the order was rendered by a court having
jurisdiction over the subject matter and the parties in that case;
and that the order was on the merits it having been entered
after the issues had been jointed and the court heard the pertinent
evidence.
Appellant Melchor Santos does not deny that the subject matter of
the two cases (Civil Cases Nos. 5031 and 7121 of the Court of
First Instance of Rizal) is the same the recovery of damages
for the death of his son, Rodolfo Santos, due to the recklessness
and imprudence of Emiliano Gabriel, the alleged employee of
appellee Benito Francisco, Jr. The appellant, however, maintains
that there is no identity of parties, nor is there identity of cause of
action, between the two cases, it being the contention of appellant
that the cause of action in Civil Case No. 5031 was based on
Article 2180 of the Civil Code, while the cause of action in Civil
Case No. 7121 is based on Article 103 of the Revised Penal Code.
The stand of the appellant can not be sustained.
Herein appellant Melchor Santos, who is the plaintiff in Civil
Case No. 7121 the case at bar was the plaintiff in Civil
Case No. 5031. Herein appellee Benito Francisco, Jr., who is one
of the two defendants in Civil Case No. 7121, was the only
defendant in Civil Case No. 5031. Although Emiliano Gabriel
was not a party defendant in Civil Case No. 5031, but is now

included as defendant in Civil Case No. 7121, this circumstance


does not prevent the application of the principle of res judicata,
because the rule does not require absolute, but only substantial,
identity of parties. 5 In the case of Aguilar vs. Gamboa, 6 this
Court held that "it makes no difference that Serafin Gamboa was
defendant with others in the first case; because if he had been
sued alone in the first case and he is now sued with others, the
defense of res judicata would be decisive just the same."
Reiterating that ruling, this Court, in the case ofRepublic of the
Philippines vs. Planas, et al. 7 said: .
The inclusion of the surety as party defendant in Civil Case
No. 51080, where it is not so named in Civil Case No. 49206,
cannot be invoked to nullify the effect on the former case of
the dismissal order issued in the latter proceedings. It has been
ruled that where the one who is offering a judgment as an
estoppel and the party against whom it is being offered were
both parties to the action, in which such judgment was
rendered, it is no objection that the action included some
additional parties who are joined in the second case.
Conversely, the operation of the final judgment or order in a
previous case is not altered by the fact that somebody who
was not a party in that first action has been impleaded in the
second case. Otherwise, litigants can always renew any
litigation by the mere expediency of including new parties.
The lower court dismissed the first case filed by appellant,
because appellant, as plaintiff therein, "has not established the
fact that Emiliano Gabriel y Susi was an employee of the
defendant at the time of the mishap on May 19, 1958 and that he
was then driving the vehicle which caused the mishap as an
employee of the defendant," 8 and this conclusion of the court a
quo was arrived at after it had weighed the evidence presented by
the appellant. Appellant having failed to appeal from that order of
dismissal, this finding of the trial court cannot again be litigated
in a new suit, and that finding should be considered conclusive on
that same point in the present case. The cardinal rule ofres
judicata is that parties should not be permitted to litigate the same
issue more than once; that when a right, or a fact, has been
judicially determined by a court of competent jurisdiction, or an
opportunity for hearing on the matter had been given, the
judgment of the court, when final should be conclusive and no
longer debatable between the parties in subsequent proceedings. 9
The causes of action in the two cases are the same. As shown
above, the first case, Civil Case No. 5031, was expressly based on
the provisions of Article 103 of the Revised Penal Code as per
plaintiff's counsel's expressed manifestation, and not on Article
2180 of the Civil Code, as now pretended. 10 Since the present
case, Civil Case No. 7121, is admittedly based also on Article 103
of the Revised Penal Code, the dismissal of the first case on the
ground of failure to establish the employer-employee relationship

between defendant Benito Francisco and the driver Emiliano


Gabriel now bars the present case by virtue of res judicata. 11
Access to the courts is guaranteed. But there must be a limit
thereto. Once a litigant's rights have been adjudicated in a valid
final judgment of a competent court, he should not be granted an
unbridled license to come back for another try. The prevailing
party should not be harassed. For, if endless litigations were to be
encouraged, then unscrupulous litigants will multiply in number
to the detriment of the administration of justice. This is a situation
which should not be permitted to obtain here or elsewhere where
there is an orderly form of government. Public policy demands
that judicial proceedings be upheld. The maxim non quieta
movere cannot be meaningless. (Banco Espaol-Filipino vs.
Palanca, 37 Phil. 921, 942). 12
WHEREFORE, the orders of the lower court, appealed from,
one dated October 20, 1962 dismissing the case, and the other
dated January 9, 1963 denying the motion for the reconsideration
of said order of dismissal, should be, as they are hereby,
asffirmed. No pronouncement as to costs. It is so ordered.

27A. When Intervention may not be allowed; when intervention


may be allowed even after judgment.
GIBSON v. REVILLA
G.R. No. L-41432 July 30, 1979

This is a petition for review 1 seeking to set aside the Order of the
Court of First Instance of Rizal Branch XIII, presided by
respondent Judge Pedro A. Revilla, in Civil Case No. 20046
entitled "Lepanto Consolidated Mining Company versus Malayan
Insurance Company, Inc." denying the motion of the petitioner
Ivor Robert Dayton Gibson for leave to intervene in said case,
and to order the respondent Judge to admit him as intervenor
therein.
The antecedent facts of this case are as follows:
Lepanto Consolidated Mining Company (hereinafter referred to
as Lepanto) filed on September 27, 1974 in the Court of First
Instance of Rizal, Branch XIII a complaint with a plea for
preliminary mandatory injunction against Malayan Insurance
Company, Inc., (hereinafter referred to as Malayan), docketed as
Civil Case No. 20046 seeking the following relief:t.hqw

(a) upon the firing of this complaint, a writ of preliminary


mandatory injunction be issued directing defendant to advance
to plaintiff an interest-free loan of P1,831,695.75; and
(b) upon trial on the merits t.hqw
(i) an accounting or average adjustments be made for the
liquidation of the general average losses, damages and
expenses arising from the marine accidents subject of this
action and the determination of the contributions due from
subject cargoes under the Policy;
(ii) defendant be ordered to pay plaintiff the amounts
under item (i) above, with interest thereon at the rate of
12% per annum, from February 20, 1972 as to the cargo's
contribution relative to the 'Hermonsa' and from March 27,
1972 as to the cargo's contribution relative to the 'General
Aguinaldo;'
(iii) the amount of P1,831,695.75 as interest-free loan due
plaintiff from defendant be declared repayable upon and
only to the extent of any corresponding recovery from the
owners of the 'Hermosa' and 'General Aguinaldo; ...
Lepanto also sought payment of interest on delayed loan amounts,
exemplary damages of at least P500,000.00, attorney's fees and
other litigation expenses, and other cumulative and/or alternative
reliefs as may be lawful, just or equitable in the premises.
The civil suit thus instituted by Lepanto against Malayan was
founded on the fact that on Sept. 9, 1971, Malayan issued Marine
Open Policy No. LIDC-MOP-001/71 covering an shipments of
copper, gold and silver concentrates in bulk from Poro, San
Fernando, La Union to Tacoma, Washington or to other places in
the United States which Lepanto may make on and after August
1, 1971 and until the cancellation of the policy upon thirty (30)
days' written notice. Thereafter, Malayan obtained reinsurance
abroad through Sedgwick, Collins & Co., Limited, a London
insurance brokerage. The Memorandum of Insurance issued by
Sedgwick to Malayan on September 24, 1971 listed three groups
of underwriters or re-insurers and their reinsurance interest are as
follows: t.hqw
Lloyds 62.808%
Companies (I.L.U.) 34.705%
Other Companies 2.487%
100.000%
At the top of the list of underwriting members of Lloyds is
Syndicate No. 448, assuming 2.48% of the risk assumed by the
reinsurer, which syndicate number petitioner Ivor Robert Dayton
Gibson claims to be himself.

In November, 1971, a cargo of concentrates was shipped by


Lepanto on the M/V Hermosa at Poro, San Fernando, La Union
destined for Tacoma, Washington. During the sea voyage, while
the vessel was in the Northern Pacific Ocean south of Japan on or
about Nov. 11, 1971, it encountered heavy weather and rough
seas which caused it to roll, pitch and vibrate heavily so that
certain shifting boards in the vessel broke and part of the cargo
shifted transversely, thereby causing a list. The vessel deviated to
Moji, Japan and after the shifting boards were repaired and/or
replaced, it proceeded on its trip to Tacoma, but about the end of
the month, the ship once again met with strong winds, monsoon
rains, severe winter and very rough seas and it roiled, pitched and
vibrated heavily so other shifting boards broke and part of the
cargo also shifted causing a heavier list. The captain of the boat,
fearing that the vessel might sink, sailed to Osaka and unloaded
the cargo. Expenses were incurred by Lepanto relative to the
cargo while in Japan but eventually the cargo was transhipped to
Tacoma via another vessel.
Also in November, 1971, another cargo of concentrates was
shipped by Lepanto on board the MIV General Aguinaldo at Poro,
San Fernando, La Union and destined for Tacoma, Washington.
Similarly, during the sea voyage on or about November 30, 1971
in the Northern Pacific Ocean southeast of Japan, it met with
heavy weather and rough seas, causing it to pitch, roll and vibrate
heavily so that certain shifting boards in the vessel broke and part
of the cargo shifted transversely which caused the listing of the
vessel The captain, fearing also that the vessel The captain,
fearing also that the vessel might sink, sailed for Miyako, Japan,
unloaded the cargo and expenses were incurred relative to the
cargo while in Japan. Thereafter, the cargo was transhipped to
Tacoma on board another vessel.
Lepanto notified Malayan and another insurer, Commercial Union
in London in November and December, 1971 of the accidents.
Formal claims under the open policy were also filed by Lepanto
with Malayan in March and July, 1972 upon the conclusion of the
voyages and the determination of the shortweight.
The claims were denied by Malayan tentatively at first claiming
that it needed time to determine whether or not the marine
accidents resulted from the inherent vice or nature of the cargo
and finally Malayan rejected Lepanto's insurance claim for the
reason that the cargoes were inherently vicious on loading and
such condition caused the listing of the vessel.

the real party in interest; 2. that the complaint states no cause of


action; and 3. that the claim set forth in the complaint has been
extinguished.
On December 4, 1974, Malayan's motion to dismiss was denied.
On January 17, 1975, Malayan filed its Answers incorporating as
part of its special and affirmative defenses the following
allegations: t.hqw
(5) Defendant acted in good faith in rejecting plaintiff's
insurance claims, not only because of the circumstances and
reasons set forth in the preceding sub-paragraphs (1) to (4)
which defendant had been reasonably led to believe by reports
of reputed experts and/or by legal advice as justifying
rejection, but also because, as plaintiff had been repeatedly
told, it is under constraint, on one hand, by customs of the
insurance trade to adhere to the decisions of the lead insurers,
and on another hand, by its contract with its reinsurer which
among others, prohibit settlement of the reinsured claims
without the reinsurer's assent.
On January 27, 1975, Lepanto filed its reply. On January 30,
1975, the Court denied Lepanto's motion for mandatory
preliminary injunction "without prejudice to reconsider the said
motion after the pre-trial of this case shall have been concluded."
On March 19, 1975, the first pre-trial conference was held and on
March 25, 1975, the parties filed their Stipulation of Facts and
Issues, which Stipulations was approved en toto in the trial court's
order of April 1, 1975.
Subsequently, pre-trial conferences were held on April 3, 1975,
May 21, 1975, and June 19, 1975 when Lepanto concluded its
evidence. Defendant through counsel reserved its right to make a
formal offer of its evidence at the continuation of the hearing
scheduled on July 16, 1975.
Then on June 25, 1975, petitioner Ivor Robert Dayton Gibson
filed a motion to intervene as defendant, which motion is as
follows: t.hqw
MOTION TO INTERVENE
COMES NOW Ivor Robert Dayton Gibson, Reinsurer in the
above-entitled case, through undersigned counsel, and to this
Honorable Court respectfully & Heges that:

Hence, the complaint filed by Lepanto against Malayan in Civil


Case No. 20046 for the interest-free loan to Lepanto as stipulated
in the policy computed at P1,831,695.75.

1. Movant is of legal age, a British citizen, with address at


Lloyd's Lime Street, London, EC 3;

Malayan filed a motion to dismiss the case on three grounds: 1.


that the instant case has been brought in the name of other than

2. Movant is the leading re-insurer of the risks and liabilities


assumed by defendant Malayan Insurance Co., Inc. in a
contract of marine insurance involving two (2) separate

shipments of copper' concentrates aboard the MV "Hermosa"


and the MV "General Aguinaldo" shipped by Lepanto
Consolidated Mining Co., Inc. to American Smelting &
Refining Co. from Poro Point, San Fernando, La Union, to
Tacoma, Washington for which defendant issued Policy No.
LIDC-MOP-001/71 dated September 9, 1971, in the amount
of 20% of the declared value of each shipment but not to
exceed US $2,000,000 per shipment.
3. Prior to these two shipments and after defendant Malayan
contracted with Lepanto to insure these two (2) copper
concentrates shipments against risks of loss and damage,
defendant Malayan in turn, re-insured its liabilities for losses
and damages in accordance with the terms of their reinsurance
contract.
4. After the defendant Malayan filed Answer to this suit,
movant was informed that defendant made express
reservations "to file in due time a third-party complaint
against the lead insurers and/or its reinsurers" (par. XVIII,
Answer).
5. Movant has a legal interest in the subject matter of
litigation in that he stands to be held liable to pay on its reinsurance contract should judgment be rendered requiring the
defendant to pay the claim of the plaintiff.
6. To avoid multiplicity of suits and allow all parties who have
any relation to the cause of action, whether legally or in
equity, to ventilate expeditiously every issue relevant to the
suit, it is respectfully submitted that movant be allowed to
intervene as a defendant in the interest of justice.
7. By the very nature of a contract of reinsurance and
considering that the reinsurer is obliged "to pay as may be
paid thereon" (referring to the original policies), although this
is subject to other stipulations and conditions of the reinsurance contract, it will serve better the ends of justice if a
full disclosure of all pertinent facts and issues is made with
the participation of the movant at this trial where his interests
have been and are already inevitably at stake.
Counsel for the movant submitted the foregoing motion for the
consideration and resolution of the Court on June 30, 1975. The
motion to intervene was opposed by Lepanto on the following
grounds: 1. Movant Ivor Robert Dayton Gibson has no legal
interest in the matter in litigation or in the success of either
plaintiff or defendant; 2. Movant is estopped by his laches from
intervening in this action; 3. The intervention is intended for
delay and if allowed, win unduly delay the proceedings between
plaintiff and defendant; and 4. The rights, if any, of movant are
not prejudiced by the present suit and win be fully protected in a

separate action against him and his co-insurers by defendant


herein.
Replying to Lepanto's opposition, movant Ivor Robert Dayton
Gibson contended that 1. Contrary to oppositors contention,
movant Gibson has a legal interest in the matter in litigation
because a contract of reinsurance between the defendant Malayan
Insurance Company, Inc. and the movant herein is a contract of
indemnity against liability, and not merely against damage, and
therefore, movant has a direct and immediate interest in the
success of defendant Malayan Insurance Company, Inc.; 2.
Neither estoppel nor laches applies to the movant since the
motion to intervene was filed seasonably on June 25, 1975 during
the period of introduction of evidence by defendant Malayan; 3.
The intervention is not intended for delay; movant is merely
asserting a legal right or interest in the pending case with the
request for opportunity to appear and be joined so that he could
protect or assert such right or interest; and 4. The filing of an
independent and separate suit proposed by the plaintiff is
condemned by the basic and fundamental principles against
multiplicity of suits.
On July 26, 1975, Lepanto filed a Rejoinder to the movant's
"Reply to Opposition." On July 28, 1975, Malayan made a
manifestation that it had no objection to the "Motion to Intervene"
of Ivor Robert Dayton Gibson and on July 31, 1975, movant
made a Sur-Rejoinder to Lepanto's Rejoinder.
On August 18, 1975, the Court a quo resolved to deny the Motion
for Intervention in the following: t.hqw
ORDER
Ivor Robert Dayton Gibson, thru counsel, has presented
before this Court a motion to intervene on June 25, 1975. In
his motion, he alleges that he is a British citizen with address
at Lloyd's Lime Street, London, EC3; that he is the leading reinsurer of the risks and liabilities assumed by defendant
Malayan Insurance Company, Inc. in the contract of marine
insurance involving the shipments subject of the instant suit.
He further contends that he has a legal interest in the subject
matter of litigation for he stands liable on his reinsurances
contract should judgment be rendered against the defendant
and that this intervention would avoid a multiplicity of suits.
Plaintiff vigorously opposed the motion contending that
movant Ivor Robert Dayton Gibson has no legal interest in the
matter in litigation or in the success of either parties in this
suit; that he is estopped by laches; that the intervention is
intended for delay and will unduly delay the proceedings
between plaintiff and defendant; and that movant will not be
prejudiced by the present suit and can be fully protected in

any separate action which defendant may file against him and
his co-insurers.
Considering the grounds of the opposition, the Court believes
that the third and fourth grounds raised in the opposition
appear highly meritorious. Since movant Ivor Robert Dayton
Gibson appears to be only one of several re-insurers of the
risks and liabilities assumed by Malayan Insurance Company,
Inc., it is highly probable that other re-insurers may likewise
intervene. This would definitely disrupt the trial between
plaintiff and defendant, the principal protagonists in this suit.
To allow the intervention would certainly unduly delay the
proceedings between plaintiff and defendant especially at this
stage where plaintiff had already rested its case. It would also
compound the issues as more parties and more matters will
have to be litigated. At any rate, Ivor Robert Dayton Gibson
may protect whatever interest he has in a separate action.
IN VIEW OF ALL THE FOREGOING, the Court resolves to
deny the motion for intervention.
SO ORDERED.
Pasig, Rizal, August 18, 1975. T
(SGD) PEDRO A. REVILLA
Judge
Not satisfied with the denial of his Motion to Intervene, petitioner
now comes before Us seeking to set aside the order of denial and
to order the respondent Judge to admit him as intervenor. By
resolution of this Court dated November 17, 1975, the petition
was denied due course for lack of merit, but upon petitioner's
motion for reconsideration, the petition was allowed in the
Resolution of February 18, 1976, treating it as a special civil
action.
The principal issue is whether the lower court committed
reversible error in refusing the intervention of petitioner Ivor
Robert Dayton Gibson in the suit between Lepanto and Malayan.
We lay down the law on Intervention as found in Sec. 2, Rule 12
of the Rules of Court: t.hqw
Section 2.Intervention. A person may, before or during a
trial, be permitted by the court, in its discretion, to intervene
in an action, if he has legal interest in the matter in litigation,
or in the success of either of the parties or an interest against
both, or when he is so situated as to be adversely affected by a
distribution or other disposition of property in the custody of
the court or of an officer thereof.

(a) Motion for intervention. A person desiring to intervene


shall file a motion for leave of court with notice upon all the
parties to the action.
(b) Discretion of court. In allowing or disallowing a motion
for intervention, the court, in the exercise of discretion, shall
consider whether or not the intervention will unduly delay or
prejudice the adjudication of the rights of the original parties
and whether or not the intervenor's rights may be fully
protected in a separate proceeding.
(c) Complaint or answer in intervention. The intervention
shall be made by complaint filed and served in a regular form,
and may be answered as if it were an original complaint; but
where intervenor unites with the defendant in resisting the
claims of the plaintiff, the intervention may be made in the
form of an answer to the complaint,
(d) Time. Unless a different period is fixed by the court, the
complaint or answer in intervention shall be filed within ten
(10) days from notice of the order permitting such
intervention.
According to pertinent jurisprudence, the term "intervention"
refers to the proceeding by which one not originally a party to an
action is permitted, on his own application, to appear therein and
join one of the original parties in maintaining the action or
defense, or to assert a claim or defense against some or all of the
parties to the proceeding as originally instituted. Such a third
party may, upon the discretion of the court, become a party to a
pending proceedings between others for the protection of some
rights or interest alleged by him to be affected by such
proceedings. 2
Intervention is not a matter of absolute right but may be permitted
by the court when the applicant shows facts which satisfy the
requirements of the statute authorizing intervention. 3 Under our
rules of Court, what qualifies a person to intervene is his
possession of a legal interest in the matter in litigation, or in the
success of either of the parties, or an interest against both; or
when he is so situated as to be adversely affected by a distribution
or other disposition of property in the custody of the court or an
officer thereof. 4 As regards the legal interest as qualifying factor,
tills Court has ruled that such interest must be of a direct and
immediate character so that the intervenor wig either gain or lose
by the direct legal operation of the judgment. The interest must be
actual and material, a concern which is more than mere curiosity,
or academic or sentimental desire; it must not be indirect and
contingent, indirect and remote, conjectural, consequential or
collateral. 5 However, notwithstanding the presence of a legal
interest, permission to intervene is subject to the sound discretion
of the court, the exercise of which is limited by considering I

'whether or not the intervention will unduly delay or prejudice the


adjudication of the rights of the original parties and whether or
not the intervenor's rights may be fully protected in a separate
proceeding. 6 Once judicial discretion is exercised, the action of
the court cannot be reviewed or controlled by mandamus however
erroneous it may be, except only when there is an arbitrary or
capricious exercise of discretion, in which case, the fault is
correctible by mandamus if there be no other adequate and speedy
remedy. 7
As may be noted in the questioned Order, respondent Judge
denied the Motion to Intervene on the last two grounds of
Lepanto's Opposition, namely: "3. The intervention is intended
for delay and if allowed, will unduly delay the proceedings
between plaintiff and defendant; and 4. The rights, if any, of
movant are not prejudiced by the present suit and will be fully
protected in a separate action against him and his co-insurers by
defendant herein.
Respondent Judge, reasoning out his Order, ruled that "(s)ince
movant Ivor Robert Dayton Gibson appears to be only one of
several co-insurers of the risks and liabilities assumed by
Malayan Insurance Company, Inc., it is highly probable that other
re-insurers may likewise intervene. This would definitely disrupt
the trial between plaintiff and defendant, the principal
protagonists in this suit. To allow the intervention would certainly
unduly delay the proceedings between plaintiff and defendant
especially at this stage where plaintiff had already rested its case.
It would also compound the issues as more parties and more
matters will have to be litigated. At any rate, Ivor Robert Dayton
Gibson may protect whatever interest he has in a separate action."
In his petition, petitioner submits that the respondent Judge, in
refusing to permit/allow him to intervene in Civil Case No.
20046, incorrectly interpreted and/or appreciated the
purpose/intent of the pertinent rules of procedure that govern
intervention of parties in a given action and that the respondent
Judge erred: (1) In concluding that to allow the intervention of
herein petitioner "would definitely disrupt the trial" and "would
certainly unduly delay the proceedings," when such apprehension
appears to be clearly immaterial in determining when intervention
is proper or not; (2) In viewing the alleged availability of another
recourse on the part of herein petitioner to protect his interest, i.e.
separate action, as an added justification to deny his intervention,
despite the fact that the applicable rule of procedure in this regard
(Section 2, Rule 12) does not preclude intervention even if
another separate action is appropriate and for available; and (3) In
its obvious disregard of the very rule (Section 2, Rule 12)
precisely designed to apply on cases where intervention is sought,
thereby departing from the accepted and usual procedure under
the premises.

After carefully considering the arguments of both the petitioner


and Lepanto, the facts and circumstances obtaining in the case at
bar and applying Rule 12, Sec. 2 of the Rules of Court and the
doctrines enunciated by the Supreme Court on the matter, We rule
that the respondent Judge committed no error of law in denying
petitioner's Motion to Intervene. And neither has he abused his
discretion in his denial of petitioner's Motion for Intervention.
It is quite crystal clear that the questioned Order of the respondent
Court was based strictly and squarely on Section 2(b) of Rule 12
which specifically directs the Court in allowing or disallowing a
motion for intervention in the exercise of discretion to consider
whether or not the intervention will unduly delay or prejudice the
adjudication of the rights of the original parties and whether or
not the intervenor's rights may be fully protected in a separate
proceeding. The Court a quo has specifically and correctly
complied with the Rule's mandate and We cannot fault the
respondent Judge therefore.
We reject the contention of the petitioner that the question
regarding delay in the adjudication of the rights of the original
contending parties, while recognized as factors in allowing or
disallowing intervention, should assume a secondary role to the
primary and imperative requirement that the legal interest of the
would-be intervenor in the matter under litigation must be clearly
shown and that once the legal interest of the would be intervenor
is clearly shown, the fact that his intervention may work to delay
a little the main conflict between the parties should not by itself
justify the denial of intervention.
Petitioner's contention is untenable. The first paragraph of Section
2, Rule 12 prescribes the time to intervene and also who may
intervene, that is, one who has legal interest in the matter in
litigation, or in the success of either of the parties or an interest
against both or when he is so situated as to be adversely affected
by a distribution or other disposition of property in the custody of
the court or of an officer thereof Paragraph (b) of the same section
directs what matter are to be considered in exercising discretion
to snow or disallow a motion for intervention, which are whether
or not the intervention will unduly delay or prejudice the
adjudication of the rights of the original parties and whether or
not the intervenor's rights may be fully protected in a separate
proceeding. Clearly, for the Court to permit intervention, it must
be shown that movant is possession of legal interest in the matter
in litigation or otherwise qualified under the first paragraph of
Section 2, and the Court must also consider the matters mentioned
in paragraph (b) thereof. The latter are not and should not be
taken as secondary to the former for both must concur since they
are equally important, requisite and necessary for consideration in
the exercise of discretion by the Court to allow or disallow
intervention. We cannot invest nor render primary or secondary
importance to either of these requirements for the law does not

make any distinction. Each case must be decided according to its


facts and merits, subject to the discretion of the Court.
From the particular facts and circumstances of the case at bar, We
are satisfied that the respondent Judge has not abused his
discretion in denying petitioner's Motion to Intervene. We agree
with the holding of the respondent Court that since movant Ivor
Robert Dayton Gibson appears to be only one of several reinsurers of the risks and liabilities assumed by Malayan Insurance
Company, Inc., it is highly probable that other re- insurers may
likewise intervene. The record shows that aside from the
petitioner there are sixty-three (63) other syndicate members of
Lloyds, the twenty-six (26) companies in the " I.L.U. " group
holding a 34.705 % reinsurance interest and the two (2) "Other
Companies" holding the balance of the reinsurances, as listed in
Annex "A", Sur-Rejoinder to Lepanto's Rejoinder, pp. 136-138,
Records. The high probability that these other re-insurers like the
petitioner herein may likewise intervene if the latter's motion is
granted is not an arbitrary assumption of the Court. Considering
petitioner's assertion that he will have the opportunity to show,
among others, that the losses and damages purportedly sustained
by Lepanto occurred not from the perils of the seas but from
perils of the ships; that Lepanto is not the real party in interest;
that it has no cause of action; and, neither has it complied with its
obligations under the policy which makes the filing of the
complaint premature (p. 118, Records, Reply to Opposition) if
petitioner is allowed to intervene, We hold that there is good and
sufficient basis for the Court a quoto declare that. the trial
between Lepanto and Malayan would be definitely disrupted and
would certainly unduly delay the proceedings between the parties
especially at the stage where Lepanto had already rested its case
and that the issues would also be compounded as more parties and
more matters will have to be litigated. In other words, the Court's
discretion is justified and reasonable.
We also hold that respondent Judge committed no reversible error
in further sustaining the fourth ground of Lepanto's Opposition to
the Motion to Intervene that the rights, if any, of petitioner are not
prejudiced by the present suit and win be fully protected in a
separate action against him and his co-insurers by Malayan.
Petitioner contends that this rights would not be fully protected in
a separate proceeding because "(a) decision in favor of Lepanto,
declaring Malayan liable on its insurance policies would
necessarily and injuriously affect the interests of petitioner,
(which) interest as a re-insurer of Malayan's risk is not only
inchoate but material, direct and immediate and for such interest
to be in any manner prejudiced without first giving petitioner a
chance to be heard would be violative of due process. Upon the
other hand, a decision in favor of Malayan, recognizing it as not
liable under its insurance policies, could subject petitioner to the
danger of having to admit that Malayan had not breached its

insurance contract with the entity (Lloyds) of which petitioner is


the leading syndicate member." (Petitioner's Memorandum p. 230,
Records). Petitioner also asserts that "by the very nature of a
contract of reinsurance and considering that the re-insurer is
obliged 'to pay as may be paid thereon' (referring to the original
policies), although this is subject to other stipulations and
conditions of the reinsurance contract, it will serve better the ends
of justice if a full disclosure of all pertinent facts and issues is
made with the participation of the movant at this trial where his
interests have been and are already inevitably at stake." (Petition,
p. 18, Records).
On the contrary, Lepanto insists that petitioner win have his day
in court and his rights can be fully protected in a separate
proceeding. According to Lepanto, if it loses the case against
Malayan, petitioner cannot possibly be liable to Malayan for
indemnity on the reinsurances. If Lepanto wins, then petitioner,
the sixty-three (63) other syndicate members of Lloyds, the
twenty-six (26) companies in the "I.L.U." group holding a
34.705% reinsurance interest and the two (2) "Other Companies"
holding the balance of the reinsurances are free either to pay
Malayan or to resist Malayan and thus force Malayan to sue in
whatever country most of them, qualitatively and not
quantitatively, may be served with summons.
Petitioner's contention that he has to pay once Malayan is finally
adjudged to pay Lepanto because of the very nature of a contract
of reinsurance and considering that the re-insurer is obliged 'to
pay as may be paid thereon' (referring to the original policies),
although this is subject to other stipulations and conditions of the
reinsurance contract, is without merit. The general rule in the law
of reinsurance is that the re-insurer is entitled to avail itself of
every defense which the re-insured (which is Malayan) might
urge in an action by the person originally insured (which is
Lepanto). Specifically, the rule is stated thus t.hqw
Sec. 1238. In an action on a contract of reinsurance, as a
general rule the reinsurer is entitled to avail itself of every
defense which the reinsured might urge in an action by the
person originally insured; ...
The same rule is stated otherwise in 44 An-L Jur. 2d, Sec. 1862, p.
793, as follows: t.hqw
Moreover, where an action is brought against the reinsurer by
the reinsured, the former may assert any defense that the latter
might have made in an action on the policy of original
insurance. (Eagle Ins. Co. vs. Lafayette, Ins. Co., 9 Ind. 443)
As to the effect of the clause "to pay as may be paid thereon"
contained in petitioner's re-insurance contract, Arnould, on the

Law of Marine Insurance and Average, 13th Ed., Vol. 1, Section


327, p. 315, states the rule, thus:t.hqw
It has been decided that this clause does not preclude the
reinsurer from insisting upon proper proof that a loss strictly
within the terms of the original policy has taken place.
This clause does not enable the original underwriter to recover
from his re-insurer to an extent beyond the subscription of the
latter.
It is significant and revealing that petitioner himself admits in his
Memorandum, p. 231, Records, that "(o)f course, petitioner, if
finally sued in London, (he) could avail himself of remedies
available to him." He adds that "such a procedure, if not entirely
time-consuming, would actually beg the issue on hand. Petitioner
believes that his defenses on the claims ventilated in the court a
quo can be appreciated only here; elsewhere in view of the
peculiar circumstances surrounding Lepanto's claims the basic
issue win be obfuscated and perhaps even obliterated by
arguments on procedural niceties." However, such a procedural
problem is no legal ground to compel allowance of and insist on
his intervention.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is
hereby dismiss. No costs.
SO ORDERED.
.t

27B. When Intervention may not be allowed; when intervention


may be allowed even after judgment.
DIRECTOR OF LANDS v. CA
G.R. No. L-45168 September 25, 1979

Two motions for leave of court to intervene in the above entitled


case are before Us, the first by Greenfield Development
Corporation, claiming to be the registered owner of seven (7)
parcels of land adjoining that of private respondent, situated in the
Barrio of Cupang, Municipality of Muntinlupa, Province of Rizal
(now portion of Metro Manila), with an aggregate area of 783,367
square meters with TCT Nos. 366292, S-38660, S-38661, S43229, 43230 and 93980 in the name of the movant, which land
was originally registered on September 20, 1913 in the

registration book of the Office of the Register of Deeds of Rizal,


Vol. A-7, page 84, as Original Certificate of Title No. 684,
pursuant to Decree No. 4552 issued on August 27, 1910 in the
name of the "Government of the Phil. Island" covering and
embracing the land otherwise known as the "Muntinlupa Estate."
Movant alleges that upon comparison of the technical
descriptions set forth in TCT No. 42449 sought to be
reconstituted by the private respondent Demetria Sta. Maria Vda.
de Bernal consisting of two parcels of land located in Barrio San
Dionisio, Paranaque Rizal with an aggregate area of 143 hectares,
more or less, and designated as Lots 1 and 3 of Plan 11-4374,
with those described in the certificates of title of the movant, it
appears that the land supposedly covered by the certificate sought
to be reconstituted overlapped and included substantial portions
of movant's land, the location and extent of the overlapping
having been platted on the basis of the respective technical
descriptions referred to in the plan marked Annex 8 attached to
the motion; that movant therefore claims a substantial, material,
proprietary and legal interest in the subject matter of the instant
petition which will directly and adversely affect the petition for
reconstitution of the respondent.
Movant also alleges that among those overlapped by and adjacent
to the land supposedly covered by the title to be reconstituted
aside from the movant are the residences within the Alabang Hills
Subdivision, Cielito Homes Subdivision, Tahanan Village, portion
of the South Super Highway, Meralco Substation, factories as
well as roads and infrastructures which respondent allegedly
omitted to name and to give notice of her petition for
reconstitution.
It is further contended that if re-constitution is granted, other title
holders and possessors overlapped by the land covered by the title
sought to be reconstituted stand to be deprived of their property
rights and that greater injury shall be inflicted to the Torrens
system of registration for there will be two holders of certificates
of title overlapping each other thereby negating the very purpose
of the Torrens system and imperiling the indefeasibility and
stability of the same such that when this happens "the chaos that it
will create will be unimaginable."
The second motion for intervention filed by Alabang
Development Corporation and Ramon D. Bagatsing likewise
prays for leave of court to intervene on substantially the same
grounds: I. That the Honorable Court a quo has no jurisdiction to
grant the petition for reconstitution; II. That granting arguendo,
that the title sought to be reconstituted is valid which it is not, the
same cannot prevail over the earlier title of herein intervenors or
their predecessors-in- interest; and III. That intervenors stand to
be divested of their property and thereby suffer special,

immediate, direct and irreparable injury in their proprietary rights


if reconstitution is granted.
These second movants allege that they are the registered owners
of parcels of land located at Cupang, Muntinlupa, Metro Manila
covered and evidenced by Transfer Certificates of Title issued by
the Register of Deeds of the Province of Rizal which were
transfers from Original Certificate, of Title No. 684 registered in
the name of "The Government of the Phil. Islands" originally
registered on Sept. 20, 1913, per survey in 1907 pursuant to
Decree No. 4552 issued on August 27, 1910; that being registered
owners and persons in actual possession and as adjoining owners
they were not personally notified of the petition for reconstitution
and that copies of the notices of hearing were not posted on Lots
1 and 3 of the respondent before the hearing as required by the
trial court so that if reconstitution will be carried out, they stand
to be divested of their property by the overlapping of the area of
the title sought to be reconstituted on the land owned and actually
in the possession of the movants and their successors-in-.interest,
which overlapping are shown in the certified plans, Annexes 1
and 2 of the motion.
Movants further allege that a portion of the land in dispute was
covered by TCT No. 45397 (Lot 398-B) and 45398 (Lot 398A) in
the name of movant Ramon D. Bagatsing and Toribio G. Reyes
with an area of 815,317 sq. meters and 201,591 sq. meters.
respectively, the same being transfers from TCT No. 14812 in the
name of Toribio G. Reyes which in turn was a transfer from OCT
No. 684 in the name of "The Government of the Phil. Islands"
originally registered on Sept. 20, 1913 pursuant to Decree No.
4552 issued on August 27, 1910; that subsequent transfers by
movant Ramon D. Bagatsing of portions of the land were made to
Meralco, to Alabang Development Corporation which in turn sold
to some 36 innocent purchasers for value in the Alabang Hills
Subdivision.
It is also averred that movant Alabang Development Corporation
obtained from the Court of First instance of Rizal, Branch XIII an
order dated April 19, 1969 for the issuance of certificates of title
numbering 92 titles over said parcels of land now surrounded by a
high perimeter wall on its boundaries which were sold to innocent
purchasers in good faith for valuable consideration who were not
personally notified of the pendency of the reconstitution case not
only as adjoining owners but as actual possessors thereof .
Private respondent separately opposed both motions, the, first
motion on the ground that the supposed TOTs of the intervenor
are of the 1972 vintage so that if same are true that titles are the
ones that overlap that of private respondent which was procured
as early as November 13, 1942 and that of her motherpredecessor issued on Sept. 29, 1942; that the motion to intervene
constitutes a mere annoyance tending merely to derail and delay

the proceedings; that petitioner is guilty of laches and that to grant


the motion after trial and judgment rendered comes out of time as
an abuse of judicial discretion and that whatever interest or right
movants are supposed to have may be fully protected by a
separate proceeding.
Before resolving both motions for intervention, a brief recital of
the antecedent facts is necessary.
In an amended petition filed on November 12, 1970 before the
Court of First Instance of Rizal, private respondent Demetria Sta.
Maria Vda. de Bernal sought the reconstitution of her Transfer
Certificate of Title No. 42449 of the Registry of Deeds of Rizal
alleged to have been lost or destroyed during the last war,
covering two parcels of land described as follows: (a) Lot 1 of
plan II-4374 situated in the Barrio of San Dionisio, Municipality
of Paranaque (now Muntinlupa), Province of Rizal, with an
aggregate area of 717,523 sq. m., and (b) Lot 3 of plan II-4374
situated in the Barrio of San Dionisio, Municipality of Paranaque,
Province of Rizal, with an aggregate area of 717,539 sq. m.
Presented as the basic source of the title sought to be reconstituted
was the owner's duplicate of Transfer Certificate of Title No. T42449 issued in the name of herein private respondent.
Opposition to the petition for reconstitution was filed by the
Director of Lands, Pedro de la Pena Leodegario R. Alba, Jr.,
Angel Cruz, Aurora Favila, Democrito R. Favila and Eufracia R.
Favila some of whom withdrew or never appeared or abandoned
their claims and after trial, the Court of First Instance of Rizal on
November 19, 1973 denied the petition for reconstitution of
Transfer Certificate of Title No. T-42449 for insufficiency of
evidence. Private respondent moved for reconsideration of the
Order, or in the alternative, for the vacation thereof and for a new
trial on the ground of newly discovered evidence. The motion for
new trial was granted. After the hearing on the newly discovered
evidence, the court issued on September 18, 1974 an Order again
denying reconstitution of private respondent's original Transfer
Certificate of Title No. T-42449, declaring that "(T)he Court still
entertains doubt as to the authenticity and genuineness of Transfer
Certificate of Title No. 42449 (Exhibit C) which is sought to be
reconstituted."
On appeal to the respondent Court of Appeals 1 filed by private
respondent, the same court in its decision promulgated on
October 1, 1976 reversed the appealed Orders.
On October 21, 1976, the remaining oppositor, the Director of
Lands, thru the Office of the Solicitor General, filed with the
respondent court a Motion for New Period to File Motion for
Reconsideration alleging excusable negligence on his part for his
failure to file an extension of the period within which to file a
motion for reconsideration, to which herein private respondent

filed her Opposition. On November 2, 1976, without waiting for


the resolution of the above motion, the Director of Lands filed a
Motion to Admit Motion for Reconsideration attaching thereto his
Motion for Reconsideration dated October 1, 1976. Opposition
thereto was likewise filed by herein private respondent. On
November 11, 1976, respondent Court issued its Resolution
denying herein petitioner's motions on the ground that the
decision sought to be reconsidered had become final and
executory.
Hence, the petition at bar filed by the Director of Lands which
was given due course by this Court in the Resolution dated April
22,1977.
On June 14, 1978, the case was submitted for decision.
Thereafter, the herein two motions to intervene were separately
filed on December 7, 1978 and December 29, 1978.
Rule 12, Section 2 of the Rules of Court provides the procedure
for intervention. According to Section 2 thereof, which reads:
Sec. 2.Intervention. - A person may, before or during a trial,
be permitted by the court, in its discretion, to intervene in an
action, if he has legal interest in the matter in litigation, or in
the success of either of the parties, or an interest against both,
or when he is so situated as to be adversely affected by a
distribution or other disposition of property in the custody of
the court or of an officer thereof.
It is quite clear and patent that the motions for intervention filed
by the movants at this stage of the proceedings where trial has
already been concluded, a judgment thereon had been
promulgated in favor of private respondent and on appeal by the
losing party, the Director of Lands, the same was affirmed by the
Court of Appeals and the instant petition for certiorari to review
said judgment is already submitted for decision by the Supreme
Court, are obviously and manifestly late, beyond the period
prescribed under the aforecoded Section 2, Rule 12 of the Rules
of Court.
But Rule 12 of the Rules of Court like all other Rules therein
promulgated, is simply a rule of procedure, the whole purpose
and object of which is to make the powers of the Court fully and
completely available for justice. The purpose of procedure is not
to thwart justice. Its proper aim is to facilitate the application of
justice to the rival claims of contending parties. It was created not
to hinder and delay but to facilitate and promote the
administration of justice. It does not constitute the thing itself
which courts are always striving to secure to litigants. It is
designed as the means best adopted to obtain that thing. In other
words, it is a means to an end. 2

The denial of the motions for intervention arising from the strict
application of the Rule due to alleged lack of notice to, or the
alleged failure of, movants to act seasonably will lead the Court
to commit an act of injustice to the movants, to their successorsin-interest and to all purchasers for value and in good faith and
thereby open the door to fraud, falsehood and misrepresentation
should intervenors' claims be proven to be true. For it cannot be
gainsaid that if the petition for reconstitution is finally granted,
the chaos and confusion arising from a situation where the
certificates of title of the movants covering large areas of land
overlap or incroach on properties the title to which is being
sought to be reconstituted by private respondent, who herself
indicates in her Opposition that, according to the Director of
Lands, the overlapping embraces some 87 hectares only, is certain
and inevitable. The aggregate area of the property claimed by
respondent covering Lot 1 and Lot 2 is 1,435,062 sq. meters
which is situated in a fast-growing, highly residential sector of
Metro Manila where growth and development are in rapid
progress to meet the demands of an urbanized, exploding
population. Industries, factories, warehouses, plants, and other
commercial infrastructures are rising and spreading with the area
and the owners of these lands and the valuable improvements
thereon will not simply fold their hands but certainly will seek
judicial protection of their property rights or may even take the
law into their own hands, resulting to multiplicity of suits.
This Tribunal can take judicial notice of innumerable litigations
and legal controversies spawned by overlapping and encroaching
boundaries, each party relying on certificates of titles issued
under the Torrens System or the Spanish registration laws or other
deeds and documents which prima facie show their lawful
interests or ownership therein. To the ordinary land purchaser not
fully acquainted with the intricacies of the law nor the validity
much less the authenticity of these instruments which in many
instances are found to be forged or simply reconstituted with
areas that have increased in "table surveys" with the cooperation
of unscrupulous officials, the courts by hastily stamping their
approval on reconstituted titles have wittingly and unwittinglly
aided and abetted these fraudulent transactions resulting in the
wiping out of the lifesavings of many a poor, unlettered and
inexperienced lot buyer. The court must guard against such haste
and carefully take due precautions that the public interest be
protected.
In the case at bar, the sprawling area of the property in question
where various subdivisions., residential houses and homes and
infrastructures have mushroomed and the great number of people
living or having proprietary rights and interests in such a vast
property would certainly bring about the swamping of the courts
and the clogging of their dockets with cases involving not only
the original parties and the movants but also their successors-in-

interest. This litigation will have no end, which this Court will not
allow nor tolerate.
But over and above these considerations and circumstances which
We have pointed out, there is the basic and fundamental
requirement under the Rules of Court, Section 7, Rule 3, that
"Parties in interest without whom no final determination can be
had of an action shall be joined either as plaintiffs or defendants,"
The joinder of indispensable parties is compulsory, under any and
all conditions, their presence being a sine qua non of the exercise
of judicial power. 3
The herein movants, Greenfield Development Corporation,
Alabang Development Corporation, Ramon D. Bagatsing, and all
buyers from them, at least those with ostensible proprietary
interests as the MERALCO, Alabang Hills Subdivision, Cielito
Homes Subdivision, Tahanan Village, the Ministry of Highways
insofar as the South Super Highway is affected, are indispensable
parties to these proceedings as it has been shown affirmatively
that they have such an interest in the controversy or subject matter
that a final adjudication cannot be made, in their absence, without
injuring or affecting such interest. The joinder must be ordered in
order to prevent multiplicity of suits, so that the whole matter in
dispute may be determined once and for all in one litigation. 4 The
evident aim and intent of the Rules regarding the joinder of
indispensable and necessary parties is a complete determination
of all possible issues, not only between the parties themselves but
also as regards to other persons who may be affected by the
judgment. 5 A valid judgment cannot seven be rendered where
there is want of indispensable parties. 6
We agree with the movants that the indefeasibility and stability of
the Torrens System wig be imperiled should reconstitution be
granted, resulting into two holders of certificates of title to areas
that overlap each other. And where the overlapping area embraces
87 hectares or 870,000 sq. meters as alleged, it becomes essential
and imperative to preserve the efficacy and integrity of our
registration system. This aspect of the case which commands the
joinder of indispensable parties to allow them to uphold their
interests based upon the Torrens titles they hold overrides any
question of late intervention.
The crux of the matter, however, lies in ascertaining whether there
really is overlapping of boundaries of the properties of the
movants for intervention and that of the private respondent. As
We scrutinize carefully the claim of each party based on survey
readings and plattings appearing on the plans submitted as
annexes, We find that the same have not passed the rigid test of
accuracy and authenticity as should be determined by precision
instruments duly verified by accredited surveyors. Indeed, each
claim may appear to be as good and self-serving as the other. And
since the Supreme Court is not a trier of facts, the veracity and

correctness of the alleged overlapping is better left to those


scientifically qualified, trained and experienced and whose
integrity is beyond question and dispute.
PREMISES CONSIDERED, in view of the higher and greater
interest of the public and in order to administer justice consistent
with a just, speedy and inexpensive determination of the
respective claims of the parties and their numerous successors-ininterest, the motions for intervention are hereby granted.
The Court directs the Chief of the Survey Division of the Bureau
of Lands or his duly authorized representative with due notice to
the parties and in their presence or that of their duly authorized
representatives to conduct a relocation of the respective
boundaries of the properties claimed by the movants and the
private respondent within 90 days after notice and his fees shag
be borne equally by the parties and thereafter to submit to this
Court the result of such relocation survey, indicating therein such
overlapping as he may have found and determined and the
location of such industries, factories, warehouses, plants and other
commercial infrastructures, residential buildings and other
constructions, public or private roads, and other landmarks found
within the areas concerned.
SO ORDERED.
Teehankee, Actg. C.J, (Chairman), Fernandez, De Castro and
Melencio-Herrera, JJ., concur.
Makasiar, J., is on leave.

28A. Modes off Discovery (Rule 23-29)


28B. Modes off Discovery (Rule 23-29)
29A. Demurrer to Evidence in Civil Case
QUEBRAL v. CA
G.R. No. 101941. January 25, 1996
The main question answered in this Decision is: what are the
effects of a reversal by an appellate court of a trial courts order of
dismissal based on a demurrer to evidence? Secondarily, when
and how does the Supreme Court review factual findings of the
Court of Appeals?
This is a petition for review on certiorari under Rule 45 of
the Revised Rules of Court to reverse the Decision of the Court of
Appeals1 promulgated on July 29, 1991, in CA-G.R. CV No.

24954, which ordered petitioner to pay private respondent various


sums of money.
This case was originally assigned to the First Division, but
by a resolution dated November 13, 1995, it was transferred to the
Third Division. After deliberating on the petition, comment, reply,
and memoranda of the parties - as well as the records of the case
in both the Court of Appeals and in the Regional Trial Court, this
Court assigned the writing of this Decision to the
undersigned ponente.
The Facts
A complaint for a sum of money and damages with
preliminary attachment was filed by private respondent Union
Refinery Corporation against petitioner and Higidio B. Gay-ya, Jr.
before the Regional Trial Court, Branch 172,2 Valenzuela, to
collect the amount of P102,991.54, representing the un-paid oil
products allegedly purchased by them from private respondent
(Civil Case No. 2664-V-87).
The complaint alleged that on August 6, 1984, private
respondent, a corporation engaged in refining, sale and
distribution of oil, gasoline and lubricants, approved the credit
application filed by petitioner which would allow him to sell
private respondents products in La Union, Ilocos Sur, Abra
and Baguio City. Sometime in October, 1984, petitioner and Gayya, doing business under the name Taurus Commercial,
represented to private respondent that they had closed a sale to
Susan Lo of Basic Shell Service Station in Mayumbo, Dagupan
City of ten drums of Uniplus oil products for the amount of
P34,201.54, which private respondent delivered as evidenced by
Sales Invoice No. 4106 dated October 22, 1984. Petitioner and
Gay-ya had also caused the delivery of twenty drums of Uniplus
oil products costing P68,790.00, including freight charges
allegedly to the service station of Joseph Li in Mangaldan,
Pangasinan as evidenced by Sales Invoice No. 4060
dated October 8, 1984.
The complaint further alleged that since demands for
payment of the deliveries were unheeded by petitioner and Gayya, private respondent found out, upon inquiry, that the duo had
connived and conspired with each other under the business name
Taurus Commercial in defrauding private respondent because
Susan Lo and Joseph Li never ordered any products of private
respondent; rather, the said orders were actually sold by the
petitioner and Gay-ya to third persons.
Alleging further that petitioner and Gay-ya were intending
to leave the country thereby exposing private respondent to
irreparable damages, the same complaint prayed for the issuance
of a writ of preliminary attachment. It also prayed that petitioner

and Gay-ya be held jointly and severally liable in the amounts of


P102,991.54 plus interest thereon, P100,000.00 as damages, and
P50,000.00 as attorneys fees.
After hearing, the trial court granted the prayer for a writ of
preliminary attachment upon private respondents filing of a bond
in the amount of P103,000.00. In compliance with the order of
attachment duly issued by the court on December 28, 1987, a
parcel of riceland and a house in Villa Quirino, San Esteban,
Ilocos Sur, declared by petitioner and his wife as their own for tax
purposes, were attached. Personal properties owned by Gay-ya
were also attached.
Contending that he was merely a sales agent of petitioner,
Gay-ya filed a motion to dismiss the complaint and to lift the
attachment of his proper-ties. Private respondent opposed the
motion asserting that Gay-ya x x x converted to his own use the
proceeds of the oil products amounting to P100,000.00. Annexed
to the opposition was a copy of Gay-yas letter dated July 19, 1985
addressed to the Credit and Collection Manager of private
respondent, referring to the account of Mr. EDMUNDO V.
QUEBRAL in the amount of P102,991.54 and admitting personal
liability for the following:
21 (I/200) Drums Uniplus at P3,500.00 per Drum - P73,500.00
Personal loan from E.V. Quebral - 18,404.73
Total accountability due URC &/or E.V. Quebral - P91,904.73
In the promissory note dated July 19, 1985 appended to the
aforesaid letter, Gay-ya obligated himself to pay the total amount
of P91,904.73 to private respondent under a schedule of payments
showing that the payments would be made between August 30,
1985 and May 30, 1986. Both the promissory note and the
schedule of payments bore the signature of petitioner under the
word Conforme.
On April 11, 1988, the trial court denied Gay-yas motion to
dismiss and to lift the attachment. On April 19, 1988, private
respondent moved that petitioner be declared in default but
on April 26, 1988, petitioner filed an answer with counterclaim.
In his answer, petitioner categorically denied that he was a
business partner of Gay-ya but admitted that he was Gay-yas
erstwhile co-employee at the Getty Oil Philippines. He averred
that Gay-ya transacted business with private respondent without
his knowledge and consent while using his good name and credit
standing with private respondent. He asserted that he did not
benefit from the business transactions between private respondent
and Gay-ya and denied that he was leaving the country to
abscond. He interposed a counterclaim against private respondent

for the malicious and groundless action brought against him


which allegedly caused him mental anguish. He therefore prayed
for reasonable damages plus attorneys fees aside from the
crossclaim for damages he filed against Gay-ya.

3. Declaring the writ of preliminary attachment against


the property of defendant Higidio Gay-ya, Jr.
permanent; and
4. Defendant to pay the costs of suit.

Upon motion of private respondent, Gay-ya was declared in


default in the order of June 17, 1988.
In its order of September 23, 1988, the trial court granted
petitioners motion to lift the order of attachment citing as reasons
therefor private respondents failure to substantiate its claim that
petitioner was leaving the country to abscond and to prove that
there were no sufficient securities for the enforcement of its
claims.
The possibility of an amicable settlement between petitioner
and private respondent being re-mote, the case was heard in due
course. On June 15, 1989, after the private respondent had
presented its evidence, petitioner filed a demurrer to evidence
contending that private respondent had failed to present material
and competent evidence sufficient to hold (petitioner) civilly
liable for the claims against him. Petitioner averred that private
respondents evidence failed to prove that: (a) his credit
application was duly approved; (b) granting that such application
was approved by private respondent, the deliveries, per the
invoices presented in evidence, were outside of the named areas
of coverage appearing in the application, and (c) he never signed
any purchase order in relation to the subject of the claims.
On June 26, 1989, the trial court rendered a decision holding
that there was no evidence of petitioners participation in the
transactions involved, as he had not received the goods and the
deliveries were made in places outside of La Union, Ilocos Sur,
Ilocos Norte, Abra and Baguio City. It also found that petitioners
conformity to Gay-yas promissory note and schedule of payments
did not make him liable because it merely showed his conformity
to the assumption by defendant Higidio Gay-ya, Jr. of such
liability. It disposed of the case as follows:
WHEREFORE, in view of the foregoing, the case as against
Edmundo Quebral is hereby dismissed. On the other hand,
judgment is hereby rendered in favor of plaintiff and against
defendant Higidio Gay-ya, Jr. ordering him to pay plaintiff:
1. The sum of P102,991.54 plus interest at legal rate
from October 8, 1984 until the full amount is paid;
2. To pay plaintiff the sum of P20,000.00 by way of
attorneys fees;

Gist of Appellate Courts Decision


Private respondent appealed to the Court of Appeals which,
on July 29, 1991, rendered its Decision finding that, contrary to
petitioners allegation in his demurrer to evidence, it was not
necessary for private respondent to prove the approval of
petitioners credit application because the fact of such approval
was alleged in paragraph 3 of the complaint, and petitioner had
admitted in paragraph 2 of his answer said paragraph of the
complaint. The appellate court ruled that by such judicial admission, petitioner could no longer dispute the fact of the
approval of his credit application.
On petitioners denials that he was the business partner of
Gay-ya and that he had not known about nor consented to Gayyas transactions with private respondent, the Court of Appeals
said:
Defendant Quebral, however, denied in his answer that the other
defendant Higidio Gay-ya, Jr. was his business partner. This
denial might be true, but in his credit application Exh. B or 1, he
expressly named Gay-ya together with himself as the PERSONS
AU-THORIZED TO RECEIVE GOODS/DELIVERIES from
plaintiff-appellant corporation; and in his letter to appellants
official Efren Vargas Exh. K, defendant Quebral introduced Gayya to Vargas as my representative. Hence, although Gay-ya might
not have been defendant Quebrals partner, he (Quebral), however,
expressly made known to appellant corporation that Gay-ya was
his duly authorized representative in his business, and he could
not, therefore, blame appellant for regarding Gay-ya as such.
Defendant Quebral also denied in his answer knowledge of or
consent to the transactions represented by the unpaid Sales
Invoices Exhs. C and D dated October 8, and 22, 1984,
respectively, claiming that it was only his defaulting co-defendant
Higidio B. Gay-ya, Jr. who transacted said sales with plaintiffappellant corporation. And Quebral later claimed in his demurrer,
which the lower court sustained, that plain-tiff-appellants
evidence had failed to show that he knew of and was equally
liable with Gay-ya for the value of the unpaid sales invoices. We
are of the opinion, though, that contrary to defendant Quebrals
claim and the ruling of the lower court in his favor, plaintiffappellant corporation had sufficiently established by its evidence
defendant Quebrals knowledge of and liability for the unpaid
sales invoices in question, and as said defendant opted not to
present evidence for himself and to rely solely on his demurrer to

plaintiff-appellants evidence, then the latters evidence in this case


stands uncontradicted and unrefuted and should, therefore, be
taken as true.

By the way, 1 drum delivered to Ms. Lo is leaking. It was half the


content already when I last visited her in Dagupan.
We will remit our collection soon.

The Court of Appeals noted petitioners ad-mission to the


sheriff of his liability. As reflected in the sheriffs return, upon
receiving the order of attachment, petitioner proposed an
arrangement wherein he undertook to settle his obligation with
the plaintiff corporation within reasonable time, for which reason
the sheriff, in good faith, did not effect the attachment
immediately. As regards Gay-yas promissory note bearing
petitioners conformity and signature, the Court of Appeals held
that such conforme to Gay-yas personal assumption of
responsibility for P91,904.73 out of the P102,991.54 which the
latter even referred to in his covering letter as the account of Mr.
EDMUNDO V. QUEBRAL, only binds Gay-ya and himself but
does not necessarily bind appellant corporation who does not
appear to have agreed to Gay-yas promissory note assuming
personal liability for P9 1,904.73 out of Quebrals account of
P102,991.54 and his (Gay-yas) proposal to pay said amount on
installment x x x. Therefore, the Court of Appeals concluded that
petitioner is still liable to private respondent for the amount of
P102,991.54 inspite of Gay-yas promissory note, and especially
as said promissory note also has remained unpaid. Furthermore, it
was immaterial that the transactions involved were made in areas
outside of the cover-age of the credit application for, as testified
to by the private respondents comptroller, petitioner could also
sell in nearby provinces.
The Court of Appeals considered as the most telling
documentary evidence yet against petitioner his own handwritten
letter dated January 19, 1985 to Efren Vargas, an official of
private respondent, which reads:
1-19, 1985
MR. EFREN VARGAS
UNIOIL
Dear Mr. Vargas,
Bearer is Mr. HB Gay-ya, Jr., my representative. He is
accompanying Mr. DICK COSUE, operator of SHELL SS in
Carmen, Rosales, Pang. He is the cousin of Mr. W. T. KHO. He is
interested in buying 20 drums of PROCESS OIL 150. He is
asking for 30 days term and will give you his personal check. His
present terms with SHELL is M-30. If you can accomodate him,
bill him directly at P3100.00/drum. You may send Mr. Gay-ya to
the plant to insure correctness of invoicing.
We are consolidating collection of the drums delivered to Joseph
Li & Ms. Susan Lo. Mr. Gay-ya will explain to you further.

Thanks & Regards,


Ed
On this piece of evidence, the Court of Ap-peals said:
Defendant Quebral did not deny, as he could not have denied, his
foregoing personal letter to appellants official Efren Vargas who
approved his credit application with said corporation. All he
stated in his demurrer to plaintiff-appellants evidence with respect
to said letter is that it is worthless and does not have probative
value in relation to the purpose for which it is being offered
considering that it was never duly established. The alleged
addressee of the letter was never presented to properly identify
the same. (p. 180, Rec.) We find this contention incorrect,
however, since said letter which was addressed to appellants
official Efren Vargas, was presented by appellant as its Exhs. K
and K-I and identified by its witness Milagros Po during her
direct and additional direct examination to have been received by
their office from defendant Quebral by way of reply to their
collection letter and telegram which they had sent to the latter
(pp. 2-3, tsn. Jan. 10, 1989; pp. 16-17, tsn Feb. 21, 1989). There
was no need for Efren Vargas then to identify said letter himself
since it was written to him by Quebral not in his personal capacity
but in his capacity as an officer of appellant corporation and in
connection with its business dealings with Quebral, and especially
as the very contents of said letter shows that it was personally
delivered to Vargas by defendant Quebrals representative, the
other defendant Higidio Gay-ya. In fact, appellant corporation
would not have been able to present said letter of Quebral as
evidence in this case if it did not receive the same from the latter
in the ordinary course of business. As defendant Quebral had
failed to present any contrary evidence to show that his said letter
Exh. K had not been actually received by or delivered to appellant
corporation, therefore, we believe and so hold that appellant
corporation had sufficiently proved its receipt of said letter from
Quebral.
Interpreting petitioners letter, the Court of Appeals drew the
following conclusions: petitioner had indeed ordered oil products
which he sold to Joseph Li and Susan Lo, and he himself
promised to collect from said customers and to remit the
collections to private respondent. Noting that in the letter,
petitioner was introducing Gay-ya while in-voices involved were
dated before the letter was sent, the Court of Appeals held that it
could not have been possible for Gay-ya to make the particular
orders manifested by the invoices. Thus, were it not for Gay-yas

promissory note, petitioner should be held liable for the total


amount of P102,991.54 because he acted upon the authority given
him by the petitioner. Accordingly, the Court of Appeals disposed
of the appeal as follows:
WHEREFORE, the judgment appealed from herein is
REVERSED and SET ASIDE, and another judgment is entered
herein:
On appellants complaint:
(1) Holding both defendants Edmundo Quebral and the
defaulting defendant Higidio Gay-ya, Jr. liable to
appellant corporation for the amount of
P91,904.73, plus legal interests thereon until said
amount is fully paid, with the right on the part of
appellant corporation to collect said amount from
either defendant Quebral or Gay-ya;
(2) Ordering defendant Edmundo Quebral to pay
appellant corporation the amount of P11,086.81,
which is the difference between the amount of
P91,904.73 covered by defendant Gay-yas
promissory note of Exh. J-2 and the amount of
P102,991.54, which is the aggregate value of the
Sales Invoices Exhs. C and D;
(3) Ordering defendant Quebral to pay appellant
corporation 25% attorneys fees on the amount of
P102,991.54, as stipulated in the Sales Invoices
Exhs. C and D; and
(4) Ordering both defendants Quebral and Gay-ya to
pay the costs of this suit.
On defendant Quebrals cross-claim:
(1) Ordering defendant Gay-ya to pay his co-defendant
Quebral whatever principal amount the latter would
be compelled to pay appellant corporation, up to
the amount of P91,904.73, plus legal interests
thereon until said amount is fully paid; and
(2) Ordering defendant Gay-ya to pay one-half of the
attorneys fees and costs that defendant Quebral
would likewise be compelled to pay appellant
corporation in this case.
Alleged Errors of the Court of Appeals Raised by Petitioner
Petitioner filed a motion for the reconsideration of the Court
of Appeals decision but it was denied. Hence, the instant petition

charging the Court of Appeals with patent and manifest error in:
(a) admitting and considering Exhibit K as the basis for the
finding that Gay-ya was petitioners representative; (b) finding
that there were purchase orders made by petitioner; (c) finding
that petitioner had sufficient knowledge of and liability for the
unpaid sales invoices, and (d) relying upon and giving weight to
the report/explanation of the deputy sheriff.
The foregoing alleged errors are attacks on factual findings
of the appellate court, which normally are not reviewable by this
Court in petitions under Rule 45. However, since the factual
findings of the respondent Court are at variance with those of the
trial court, we decided to go over the records of the case both in
the Court of Appeals and in the Regional Trial Court.
Petitioner asserts that he vigorously objected to the
admission of Exhibit K primarily because its original was not
produced and introduced in court nor was the supposed addressee
presented as a witness to testify and be cross-examined on said
exhibit.
The Courts Ruling
We find such assertion to be an attempt on the part of
petitioner to foist a falsehood and to mislead this Court. The same
attempt to mislead is repeated in petitioners blatant statement that
a careful scrutiny of the record of Civil Case No. 2664-V reveals
that theres no indication that said original was ever produced in
court. However, extant in the folder of Exhibits in Civil Case No.
2664-V-87, specifically page 7 thereof, is Exhibit K. It is
the original letter itself, handwritten by petitioner on a piece of
stationery the upper lefthand corner of which bears this printed
identification: From the desk of: E.V. Quebral, which was marked
as Exh. K-2.
Even if it were true that Exhibit K consisted of a mere
photocopy and not the original of the petitioners letter, petitioner
nevertheless failed to make timely objection thereto. As to when
an objection to a document must be made, the Court ruled
in Interpacific Transit, Inc. v. Aviles:3
Objection to the documentary evidence must be made at the time
it is formally offered, not earlier. The identification of the
document before it is marked as an exhibit does not constitute the
formal offer of the document as evidence for the party presenting
it. Objection to the identification and marking of the document is
not equivalent to objection to the document when it is formally
offered in evidence. What really matters is the objection to the
document at the time it is formally offered as an exhibit. (Italics
supplied)

In the case at bench, no such timely objection was ever


made. Consequently, the evidence not objected to became
property of the case, and all parties to the case are considered
amenable to any favorable or unfavorable effects resulting from
the evidence. As it was, instead of objecting to said document,
petitioner simply filed a demurrer to evidence, in the manner
described in his own words, as folIows:4
Said EXH. K was never admitted in evidence as the record
shows. When the court a quo directed defendant (herein
petitioner) Edmundo Quebral to file a written comment on the
exhibits submitted by plaintiff (respondent herein), before it could
make any ruling on their admission, defendant Quebral filed
instead a demurrer to evidence which the court sustained that led
to the dismissal of the case insofar as herein petitioner Quebral is
concerned.
Contrary to petitioners claim, however, Exhibit K was in
fact produced, introduced, and offered as evidence. This is
reflected in the transcript of stenographic notes as follows:

ATTY. QUINONES:
If the Court would only remember, during that time
that we are presenting this letter, this
representation was .
COURT: It would only prolong the whole thing. Since
the question is not the subject of crossexamination you cannot ask redirect on that. If
you want to, ask permission that you want to ask
additional direct. I just want this to be on
procedure.
ATTY. QUINONES:

COURT: Show it if it was the subject of crossexamination.

xxx xxx xxx


Q In your additional direct examination last time, you
presented a letter from Mr. Edmundo Quebral,
which was marked as Exhibit K. Kindly show it
to the Court..
A (Witness producing..)

ATTY. QUEBRAL:
Considering that we requested that we be furnished
a copy, we did not touch that on crossexamination, your Honor.
COURT: That is why I said you should ask for
additional direct.

ATTY. QUINONES:
Witness producing Exhibit K which is the letter
addressed to Mr. Efren Vargas of UNIOIL,
dated January 19, 1985 and the dorsal portion
marked as Exh. K-I. May we be allowed to have
this into the records the

subject

of

cross-

ATTY. QUEBRAL:
No, your Honor, I have not touched on that.
COURT: You cannot present that. It is not even in my
notes.
ATTY. QUINONES:

COURT: You should have done that during the direct.


Why dont you move for additional direct?

I remember it was.

ATTY. QUINONES:

COURT: Is that letter


examination?

May we have it recorded.

ATTY. QUINONES:
In that case, may we be allowed to ask additional
direct, Your Honor.
COURT: So this is additional direct..
ADDITIONAL DIRECT BY:
ATTY. QUINONES:
Q This letter that you have produced already marked as
Exhibit K and the dorsal portion as Exh. K-I,
there is a signature below the words Thanks and
regards, Ed. Tell the Honorable Court who is this
Ed mentioned in this letter?

A Mr. Ed Quebral, that is his signature, because he


suing (sic) his stationery.
Q To whom was it addressed?
A To Mr. Efren Vargas, sir.
Q Not to you?
A No, sir.
ATTY. QUINONES:
This is a stationery coming from the desk of E.V.
Quebral, which for purposes of identification, we
request to be marked as Exhibit K-2, your Honor.
COURT: Mark it.
ATTY. QUINONES:
And likewise, this portion which was identified by
the witness, Thanks and regards Ed be bracketed
and marked as Exh. K-3, your Honor.
COURT: Mark it.

A demurrer to evidence abbreviates proceedings, it being an


aid or instrument for the expeditious termination of an action,
similar to a motion to dismiss, which the court or tribunal may
either grant or deny.5 However, whoever avails of it gambles his
right to adduce evidence.6 Pursuant to the aforequoted provisions
of Rule 35, if the defendants motion for judgment on demurrer to
evidence is granted and the order of dismissal is reversed on
appeal, judgment is rendered in favor of the adverse party because
the movant loses his right to present evidence.7
Petitioners contentions before this Court are premised on the
erroneous appreciation by the Court of Appeals of private
respondents evidence in the trial court. Since such appreciation
and the appellate courts conclusions thereon, as mentioned earlier,
are contradictory to that of the trial court, the case at bench falls
under the exception to the general rule that factual findings of the
Court
of
Appeals
are
considered
final
and
conclusive.8 Accordingly, the Court closely examined the records,
only to find out that there is no reason to overturn the findings of
the Court of Appeals which are amply supported by sufficient
evidence.
WHEREFORE, the instant petition for review is DENIED
and the decision of the Court of Appeals is affirmed in toto. Costs
against petitioner.
SO ORDERED.

ATTY. QUINONES:
May I then go back to redirect examination, your
Honor.

29B. Order granting demurrer to evidence should contain facts


and law on which it is based.
NICOS INDUSTRIAL CORPORATION v. CA

Exhibit K was formally offered in evidence by private


respondent on June 8, 1989 together with other exhibits. Asked by
the lower court to comment on the exhibits offered, petitioner
instead re-quested that he be formally furnished with copies of the
documents and that he be given seven days to comment. The
court, however, gave him only five days. As earlier stated,
petitioner did not file the required comment - he opted to file a
demurrer to evidence. Such move proved to be costly error.
Section 1, Rule 35 of the Revised Rules of Court provides:
Section. 1. Effect of judgment on demurrer to evidence. - After
plaintiff has completed the presentation of his evidence, the
defendant without waiving his right to offer evidence in the event
the motion is not granted, may move for a dismissal on the
ground that upon the facts and the law the plaintiff has shown no
right to relief. However, if the motion is granted and the order of
dismissal is reversed on appeal, the movant loses his right to
present evidence in his behalf.

G.R. No. 88709 February 11, 1992


We are asked once again to interpret the constitutional provision
that no decision shall be rendered by any court without stating
therein clearly and distinctly the facts and the law on which it is
based, 1 this time in connection with an order of the trial court
sustaining demurrer to the evidence. 2 The order has been
affirmed by the respondent Court of Appeals, 3 and the appellant
has come to this Court in this petition for review
on certiorari, invoking the said provision and alleging several
reversible errors.
In the complaint filed by the petitioners before the Regional Trial
Court of Bulacan, it was alleged that on January 24, 1980, NICOS
Industrial Corporation obtained a loan of P2,000,000.00 from
private respondent United Coconut Planters Bank and to secure
payment thereof executed a real estate mortgage on two parcels of
land located at Marilao, Bulacan. The mortgage was foreclosed
for the supposed non-payment of the loan, and the sheriff's sale
was held on July 11, 1983, without re-publication of the required
notices after the original date for the auction was changed without
the knowledge or consent of the mortgagor. UCPB was the

highest and lone bidder and the mortgaged lands were sold to it
for P3,558,547.64. On August 29, 1983, UCPB sold all its rights
to the properties to private respondent Manuel Co, who on the
same day transferred them to Golden Star Industrial Corporation,
another private respondent, upon whose petition a writ of
possession was issued to it on November 4, 1983. On September
6, 1984, NICOS and the other petitioners, as chairman of its
board of directors and its executive vice-president, respectively,
filed their action for "annulment of sheriff's sale, recovery of
possession, and damages, with prayer for the issuance of a
preliminary prohibitory and mandatory injunction."
Golden Star and Victorino P. Evangelista, as ex officio sheriff of
Bulacan, moved to dismiss the complaint on the grounds of lack
of jurisdiction, prescription, estoppel, and regularity of the
sheriff's sale. Co denied the allegations of the plaintiffs and, like
the other defendants, counterclaimed for damages. In its answer
with counterclaim, UCPB defended the foreclosure of the
mortgage for failure of NICOS to pay the loan in accordance with
its promissory note and insisted that the sheriff's sale had been
conducted in accordance with the statutory requirements.
The plaintiffs presented two witnesses, including petitioner
Carlos Coquinco, who testified at three separate hearings. They
also submitted 21 exhibits. On April 30, 1986, Golden Star and
Evangelista filed a 7-page demurrer to the evidence where they
argued that the action was a derivative suit that came under the
jurisdiction of the Securities and Exchange Commission; that the
mortgage had been validly foreclosed; that the sheriff's sale had
been held in accordance with Act 3135; that the notices had been
duly published in a newspaper of general circulation; and that the
opposition to the writ of possession had not been filed on time.
No opposition to the demurrer having been submitted despite
notice thereof to the parties, Judge Nestor F. Dantes considered it
submitted for resolution and on June 6, 1986, issued the
following
ORDER
Acting on the "Demurrer to Evidence" dated April 30, 1986
filed by defendants Victorino P. Evangelista and Golden Star
Industrial Corporation to which plaintiff and other defendants
did not file their comment/opposition and it appearing from
the very evidence adduced by the plaintiff that the Sheriff's
Auction Sale conducted on July 11, 1983 was in complete
accord with the requirements of Section 3, Act 3135 under
which the auction sale was appropriately held and conducted
and it appearing from the allegations in paragraph 13 of the
plaintiff's pleading and likewise from plaintiff Carlos
Coquinco's own testimony that his cause is actually-against
the other officers and stockholders of the plaintiff Nicos
Industrial Corporation ". . . for the purpose of protecting the
corporation and its stockholders, as well as their own rights
and interests in the corporation, and the corporate assets,
against the fraudulent ants and devices of the responsible
officials of the corporation, in breach of the trust reposed upon
them by the stockholders . . ." a subject matter not within the
competent jurisdiction of the Court, the court finds the same
to be impressed with merit.
WHEREFORE, plaintiff's complaint is hereby dismissed. The
Defendants' respective counterclaims are likewise dismissed.

The Writ of Preliminary Injunction heretofore issued is


dissolved and set aside.
It is this order that is now assailed by the petitioners on the
principal ground that it violates the aforementioned constitutional
requirement. The petitioners claim that it is not a reasoned
decision and does not clearly and distinctly explain how it was
reached by the trial court. They also stress that the sheriff's sale
was irregular because the notices thereof were published in a
newspaper that did not have general circulation and that the
original date of the sheriff's sale had been changed without its
consent, the same having been allegedly given by a person not
authorized to represent NICOS. It is also contended that the
original P2 million loan had already been paid and that if there
was indeed a second P2 million loan also secured by the real
estate mortgage, it was for UCPB to prove this, as well as its
allegation that NICOS had defaulted in the payment of the first
quarterly installment on the first loan.
The petitioners complain that there was no analysis of their
testimonial evidence or of their 21 exhibits, the trial court merely
confining itself to the pronouncement that the sheriff's sale was
valid and that it had no jurisdiction over the derivative suit. There
was therefore no adequate factual or legal basis for the decision
that could justify its review and affirmance by the Court of
Appeals.
Rejecting this contention, the respondent court held:
In their first assignment of error, appellants faults the court for
its failure to state clearly and distinctly the facts and the law
on which the order of dismissal is based, as required by
Section 1, Rule 36, of the Rules of Court and the Constitution.
An order granting a demurrer to the evidence is in fact an
adjudication on the merits and consequently the requirements
of Section 1, Rule 36, is applicable. We are not however
prepared to hold that there is a reversible omission of the
requirements of the rule in the Order appealed from, it
appearing from a reading thereof that there is substantial
reference to the facts and the law on which it is based.
The Order which adverts to the Demurrer to the Evidence
expressly referred to the evidence adduced by the plaintiff as
showing that the Sheriff's auction sale conducted on July 11,
1983, was in complete accord with the requisites of Section 3,
Act 3135 under which the auction sale was apparently held
and conducted. It likewise makes reference to the allegations
in paragraph 13 of plaintiff's pleadings and plaintiff Carlos
Coquinco's own testimony that the case is actually against the
other officers and stockholders of plaintiff NICOS Industrial
Corporation and concludes, rightly or wrongly, that the
subject matter thereof is not within the competent jurisdiction
of the Court.
We hold that the order appealed from as framed by the court a
quo while leaving much to be desired, substantially complies
with the rules.
This Court does not agree. The questioned order is an oversimplification of the issues, and violates both the letter and spirit
of Article VIII, Section 14, of the Constitution.
It is a requirement of due process that the parties to a litigation be
informed of how it was decided, with an explanation of the

factual and legal reasons that led to the conclusions of the court.
The court cannot simply say that judgment is rendered in favor of
X and against Y and just leave it at that without any justification
whatsoever for its action. The losing party is entitled to know
why he lost, so he may appeal to a higher court, if permitted,
should he believe that the decision should be reversed. A decision
that does not clearly and distinctly state the facts and the law on
which it is based leaves the parties in the dark as to how it was
reached and is especially prejudicial to the losing party, who is
unable to pinpoint the possible errors of the court for review by a
higher tribunal.
It is important to observe at this point that the constitutional
provision does not apply to interlocutory orders, such as one
granting a motion for postponement or quashing a subpoena,
because it "refers only to decisions on the merits and not to orders
of the trial court resolving incidental matters." 4 As for the minute
resolutions of this Court, we have already observed in Borromeo
v. Court of Appeals 5 that
The Supreme Court disposes of the bulk of its cases by minute
resolutions and decrees them as final and executory, as where
a case is patently without merit, where the issues raised are
factual in nature, where the decision appealed from is
supported by substantial evidence and is in accord with the
facts of the case and the applicable laws, where it is clear from
the records that the petitions were filed merely to forestall the
early execution of judgment and for non-compliance with the
rules. The resolution denying due course or dismissing a
petition always gives the legal basis.
xxx xxx xxx
The Court is not duty bound to render signed decisions all the
time. It has ample discretion to formulate decisions and/or
minute resolutions, provided a legal basis is given, depending
on its evaluation of a case.
The order in the case at bar does not come under either of the
above exceptions. As it is settled that an order dismissing a case
for insufficient evidence is a judgment on the merits, 6 it is
imperative that it be a reasoned decision clearly and distinctly
stating therein the facts and the law on which it is based.
It may be argued that a dismissal based on lack of jurisdiction is
not considered a judgment on the merits and so is not covered by
the aforecited provision. There is no quarrel with this established
principle. However, the rule would be applicable only if the case
is dismissed on the sole ground of lack of jurisdiction and not
when some other additional ground is invoked.
A careful perusal of the challenged order will show that the
complaint was dismissed not only for lack of jurisdiction but also
because of the insufficiency of the evidence to prove the
invalidity of the sheriff's sale. Regarding this second ground, all
the trial court did was summarily conclude "from the very
evidence adduced by the plaintiff" that the sheriff's sale "was in
complete accord with the requirements of Section 3, Act 3135." It
did not bother to discuss what that evidence was or to explain
why it believed that the legal requirements had been observed. Its
conclusion was remarkably threadbare. Brevity is doubtless an
admirable trait, but it should not and cannot be substituted for
substance. As the ruling on this second ground was

unquestionably a judgment on the merits, the failure to state the


factual and legal basis thereof was fatal to the order.
Significantly, the respondent court found that the trial court did
have jurisdiction over the case after all. This made even more
necessary the factual and legal explanation for the dismissal of
the complaint on the ground that the plaintiff's evidence was
insufficient.
In People v. Escober, 7 the trial court in a decision that covered
only one and a half pages, single spaced found the defendant
guilty of murder and sentenced him to death. Holding that the
decision violated the constitutional requirement, the Court
observed through then Associate Justice Marcelo B. Fernan:
The above-quoted decision falls short of this standard. The
inadequacy stems primarily from the respondent judge's
tendency to generalize and to form conclusions without
detailing the facts from which such conclusions are deduced.
Thus, he concluded that the material allegations of the
Amended Information were the facts without specifying
which of the testimonies or the exhibits supported this
conclusion. He rejected the testimony of accused-appellant
Escober because it was allegedly replete with contradictions
without pointing out what these contradictions consist of or
what "vital details" Escober could have recalled as a credible
witness. He also found the crime to be attended by the
aggravating circumstances of cruelty, nighttime, superior
strength, treachery, in band, "among others" but did not
particularly state the factual basis for such findings.
While it is true that the case before us does not involve the life or
liberty of the defendant, as in Escober, there is still no reason for
the constitutional short-cut taken by the trial judge. The properties
being litigated are not of inconsequential value; they were sold
for three and a half million pesos in 1983 and doubtless have
considerably appreciated since then, after more than eight years.
These facts alone justified a more careful and thorough drafting
of the order, to fully inform the parties and the courts that might
later be called upon to review it of the reasons why the demurrer
to the evidence was sustained and the complaint dismissed.
In Romero v. Court of Appeals, 8 the Court, somewhat reluctantly,
approved a memorandum decision of the Court of Appeals
consisting of 4 pages, single-spaced, which adopted by reference
the findings of fact and conclusions of law of the Court of
Agrarian Relations. While holding that the decision could be
considered substantial compliance with PD 946, Section 18, 9 and
BP 129, Section 40, 10 Justice Jose Y. Feria nevertheless expressed
the misgiving that "the tendency would be to follow the line of
least resistance by just adopting the findings and conclusions of
the lower court without thoroughly studying the appealed case."
Obviously, the order now being challenged cannot qualify as a
memorandum decision because it was not issued by an appellate
court reviewing the findings and conclusions of a lower court. We
note that, contrary to the impression of the respondent court, there
is not even an incorporation by reference of the evidence and
arguments of the parties, assuming this is permitted. No less
importantly, again assuming arguendo that such reference is
allowed and has been made, there is no immediate accessibility to
the incorporated matters so as to insure their convenient
examination by the reviewing court. In Francisco v.

Permskul, 11 which is the latest decision of the Court on the issue


now before us, we categorically required:
. . . Although only incorporated by reference in the
memorandum decision of the regional trial court, Judge
Balita's decision was nevertheless available to the Court of
Appeals. It is this circumstance, or even happenstance, if you
will, that has validated the memorandum decision challenged
in this case and spared it from constitutional infirmity.
That same circumstance is what will move us now to lay
down the following requirement, as a condition for the proper
application of Section 40 of BP Blg. 129. The memorandum
decision, to be valid, cannot incorporate the findings of fact
and the conclusions of law of the lower court only
by remote reference, which is to say that the challenged
decision is not easily and immediately available to the person
reading the memorandum decision. For the incorporation by
reference to be allowed, it must provide for direct access to
the facts and the law being adopted, which must be contained
in a statement attached to the said decision. In other words,
the memorandum decision authorized under Section 40 of BP
Blg. 129 should actually embody the findings of fact and
conclusions of law of the lower court in an annex attached to
and made an indispensable part of the decision.
It is expected that this requirement will allay the suspicion
that no study was made of the decision of the lower court and
that its decision was merely affirmed without a proper
examination of the facts and the law on which it was based.
The proximity at least of the annexed statement should suggest
that such an examination has been undertaken. It is, of course,
also understood that the decision being adopted should, to
begin with, comply with Article VIII, Section 14 as no amount
of incorporation or adoption will rectify its violation.
In Escober, the Court observed that the flawed decision "should
have been remanded to the court a quo for the rendition of a new
judgment" but decided nevertheless to decide the case directly,
the records being already before it and in deference to the right of
the accused to a speedy trial as guaranteed by the Bill of Rights.
However, we are not so disposed in the case now before us.
It is not the normal function of this Court to rule on a demurrer to
the evidence in the first instance; our task comes later, to review
the ruling of the trial court after it is examined by the Court of
Appeals and, when proper, its decision is elevated to us. In the
present case, we find that the respondent court did not have an
adequate basis for such examination because of the insufficiency
of the challenged order. It must also be noted that we deal here
only with property rights and, although we do not mean to
minimize them, they do not require the same urgent action we
took in Escober, which involved the very life of the accused. All
things considered, we feel that the proper step is to remand this
case to the court a quo for a revision of the challenged order in
accordance with the requirements of the Constitution.
Review by the Court of the other issues raised, most of which are
factual, e.g., the allegation of default in the payment of the loan,
the existence of a second loan, the nature of the newspapers
where the notices of the sale were published, the authority of the
person consenting to the postponement of the sale, etc., is
impractical and unnecessary at this time. These matters should be

discussed in detail in the revised order to be made by the trial


court so that the higher courts will know what they are reviewing
when the case is appealed.
In one case, 12 this Court, exasperated over the inordinate length
of a decision rife with irrelevant details, castigated the trial judge
for his "extraordinary verbiage." Kilometric decisions without
much substance must be avoided, to be sure, but the other
extreme, where substance is also lost in the wish to be brief, is no
less unacceptable either. The ideal decision is that which, with
welcome economy of words, arrives at the factual findings,
reaches the legal conclusions, renders its ruling and, having done
so, ends.
WHEREFORE, the challenged decision of the Court of Appeals
is SET ASIDE for lack of basis. This case is REMANDED to the
Regional Trial Court of Bulacan, Branch 10, for revision, within
30 days from notice, of the Order of June 6, 1986, conformably to
the requirements of Article VIII, Section 14, of the Constitution,
subject to the appeal thereof, if desired, in accordance with law. It
is so ordered.

29C. Certiorari does not lie to review an order denying a


demurrer to evidence.
TADEO v. PP
G.R. No. 129774. December 29, 1998
The case before the Court is an appeal via certiorari taken
by petitioner from the decision of the Court of Appeals dismissing
the petition for certiorari to annul the trial courts order denying
his demurrer to evidence in eight (8) cases for violation of Batas
Pambansa
Bilang
22
filed
against him before the Regional Trial Court, Branch 94,
Quezon City.
Complainant Ms. Luz M. Sison was the owner of
commercial apartments at 731 Edsa corner Ermin Garcia, Cubao,
Quezon City.[1]
In 1985, petitioners wife leased from complainant one unit
of the apartment at a monthly consideration of P7,000.00, for a
period of five years. After two years, she also leased the adjacent
apartment
at
an
additional
monthly
consideration
of P4,000.00. However, in early 1988, petitioners wife incurred
rental arrears with complainant in the amount of P113,300.00. In
order to settle the account, petitioner negotiated with
complainant. He issued eight (8) postdated checks dated February
8, 1988 to August, 1988, payable to complainant covering the
unpaid rental arrears of P113,300.00. All the checks bounced
upon deposit with the drawee bank. After the last check was
returned to complainant unpaid, with the notation DAIF, meaning
drawn against insufficient funds stamped thereon, on October 13,
1988, complainants counsel wrote petitioner demanding that the

unpaid checks be redeemed within three (3) days from receipt of


the letter.[2]
On October 26, 1988, petitioner wrote complainant
expressing willingness to discuss the matter with her counsel.
However, he did not redeem the unpaid checks; indeed, he did not
even mention any intention to pay complainant or to make
arrangements for payment of the dishonored checks.[3]
On January 9, 1989, Assistant Prosecutor Jesus E. Bigornia,
Jr. of Quezon City, filed with the Regional Trial Court, Quezon
City, eight (8) Informations charging petitioner with violation of
Batas Pambansa Bilang 22, which were consolidated before
Branch 94.[4] Petitioner then moved to quash the informations on
the ground that the court lacked jurisdiction over the subject
cases.[5] On June 24, 1990, the trial court denied the motion.
[6]
After
petitioner entered a plea of not guilty
to
the
charges, on April 30, 1991, the trial court conducted a pre-trial at
which the parties marked their respective documentary evidence.
Thereafter, the trial court declared the pre-trial of the cases closed
and terminated.[7]
On March 29, 1993, at the trial of the cases, the prosecution
presented the testimony of complainant Luz Sison to prove the
charges against petitioner. After her cross-examination, the
prosecution rested its case, and formally offered the documentary
exhibits marked at the pre-trial.[8]
On May 15, 1994, without prior leave of court, petitioner
filed a demurrer to evidence on the ground that the prosecution
failed to present sufficient evidence proving all the elements of
the offense charged. The prosecution filed an opposition
thereto. On November 27, 1994, the trial court declared that there
exists a prima facie case after the prosecution has presented its
evidence and rested its case and accordingly denied the demurrer
to evidence for lack of merit. [9] On January 13, 1995, the trial
court also denied petitioners motion for reconsideration.[10]
On September 7, 1995, petitioner filed with the Court of
Appeals a special civil action for certiorari seeking to annul the
lower courts orders denying his demurrer to evidence.[11]
After due proceedings, on February 7, 1997, the Court of
Appeals rendered decision dismissing the petition, for lack of
merit.[12] The Court of Appeals ruled that certiorari does not lie to
challenge
the
trial
courts interlocutory order denying the accuseds motion to dismiss
. Appeal in due time is the proper remedy in order to have the
findings of facts of the respondent judge reviewed by a superior
court.
Hence, this petition.

We deny the petition. We agree with the Court of Appeals


that certiorari does not lie to review a trial courts interlocutory
order denying a motion to dismiss (or to acquit),
which is equivalent to a demurrer to evidence, filed after the
prosecution had presented its evidence and rested its case. An
order denying a demurrer to evidence is interlocutory. It is not
appealable. Neither can it be the subject of a petition
for certiorari. From such denial, appeal in due time is the proper
remedy, not certiorari, in the absence of grave abuse of discretion
or excess of jurisdiction, or an oppressive exercise of judicial
authority.[13]
However, petitioner submits that the trial court acted with
grave abuse of discretion when the court held that there exists
a prima facie case, disregarding the prosecutions failure to
present as witness a representative of the drawee bank to testify
on the dishonor of the questioned checks as an element of the
offense
charged. He
insists
that
the
testimony
of the banks representative is mandatory.[14]
We do not agree.
It is not required, much less indispensable, for the
prosecution to present the drawee banks representative as a
witness to testify on the dishonor of the checks because of
insufficiency of funds. The prosecution may present, as it did in
this case, only complainant as a witness to prove
all the elements of the offense charged.[15] She is a competent and
qualified witness to testify that she deposited the checks to her
account in a bank; that she subsequently received from the bank
the checks returned unpaid with a notation drawn against
insufficient funds stamped or written on the dorsal side of the
checks themselves, or in a notice attached to the dishonored
checks duly given to complainant, and that petitioner failed to pay
complainant the value of the checks or make arrangements
for their
payment
in
full
within
five
(5)
banking days after receiving notice that
such
checks
had not been paid by the drawee
bank.[16] Otherwise
stated,
complainants sole testimony suffices to identify the dishonored
checks with the drawee banks notation stamped or written on the
dorsal side drawn against insufficient funds or in a notice attached
thereto and such notice of dishonor given to the drawer. A legal
presumption arises that petitioner had knowledge of the making
of the checks, the due presentment to the drawee bank for
payment, the dishonor and the reason therefor written,
stamped or notice of dishonor attached by the drawee bank to the
returned checks.[17] Such prima facie presumption proves that
petitioner has knowledge of the insufficiency of funds. [18] Unless
rebutted, the prosecution may rely on such presumption to
establish that element of the offense charged. It is for petitioner,
as accused, to rebut the presumption, disputable as it is.

[19]

Otherwise, the presumption would be sufficient basis to


convict.

2. That for and in consideration of the sum of NINETY


THOUSAND PESOS, payable as follows:

Consequently, in the case below, the prosecution has proved


all the essential elements of the offense charged with the sole
testimony of complainant Luz Sison.

(a) Downpayment of FORTY THOUSAND PESOS


(P40,000.00) on or before February 15, 1974, receipt of which
(sic) hereby acknowledged; and the future sums covered by
postdated checks in denominations of:

We note that petitioner did not ask the trial court for leave to
file a demurrer to evidence. In such case, he loses the right to
adduce evidence in his defense.[20]
IN VIEW WHEREOF, the Court hereby AFFIRMS the
appealed decision of the Court of Appeals in CA-G. R. SP No.
37503.
We remand the records to the trial court for further
proceedings consistent with this opinion, which shall be
limited to the lower courts imposition of the proper sentence on
petitioner and its promulgation with notice to the parties.
Costs against petitioner.
SO ORDERED.

30A. Judgment on the Pleadings


DINO v. VALENCIA
G.R. No. L-43886 July 19, 1989
This is a petition for certiorari, mandamus and prohibition to
annul and set aside the judgment on the pleadings, dated 26
January 1976, rendered by the respondent Judge in Civil Case No.
Q-20350 as well as his order dated 14 April 1976 denying the
petitioner's motion for reconsideration, and to compel the said
respondent Judge to allow her to, present evidence.
The record discloses the following facts:
Petitioner Irene Dino is the registered owner of a parcel of land
together with all the improvements thereon, situated at No. 94
West Kaunlaran Street, Philamlife Homes, Quezon City, covered
by Transfer Certificate of Title No. 140987 issued by the Register
of Deeds of Quezon City.
Private respondent Francisco L. Ong is the adverse claimant of
the said parcel of land, having filed an Affidavit of Adverse Claim
with the Register of Deeds of Quezon City, as evidenced by Entry
No. 5608 on the said TCT No. 140987.
On 26 April 1974, private respondent executed a document
entitled "AFFIDAVIT AND MEMORANDUM OF
QUITCLAIM," 1 wherein he waived and renounced all his claims,
rights and credits over and against the aforesaid parcel of land,
the pertinent part of which reads as follows:

(b) TEN THOUSAND PESOS(Pl0,000.00)payable or


redeemable on or before April 15, 1974; and,
(c) EIGHT THOUSAND PESOS (Pl0,000.00) (sic) EACH
payable or redeemable on or before the 15th of June, August,
October, December of 1974 and February of 1975,
respectively, and for a total of FORTY THOUSAND PESOS
(P40,000.00),
I hereby waive and renounce forever and in a manner absolute all
my claims, rights and credits over and against the aforesaid parcel
of land covered by Transfer Certificate of Title No. 140987 and
likewise release the registered owner, IRENE DINO, her heirs,
assigns, or representatives, from all obligations including those
credits (sic) claimant;
(3) That it is the essence of this Affidavit and Memorandum of
Quitclaim that should said IRENE DINO fail or refuse to
comply with the payments stipulated about (sic) or default in
any single payment, then the full and existing balance shall
become due and demandable without further necessity of
demand, and that said IRENE DINO undertakes to pay the
further sum of TWENTY THOUSAND PESOS (P20,000.00)
by way of liquidated damages;
(4) That this Affidavit and Memorandum of Quitclaim is
executed for the sole purpose of cancelling my adverse claim
and the corresponding Entry thereof on Transfer Certificate of
Title No. 140987 and for no other purpose contrary to law; as
well as the Deed of Sale With Assumption of Mortgage dated
September 21, 1970.'
Apparently, petitioner failed to comply with her obligations under
the aforestated document, for on 20 March 1975, private
respondent filed with the Court of First Instance of Rizal, Quezon
City, Branch XXI, a complaint 2 against the petitioner for breach
of contract and damages, docketed therein as Civil Case No. Q20350, alleging inter alia:
3. That, during the period from June 21, 1974 to February 21,
1975, Defendant issued in favor of the Plaintiff herein,
Philippine Commercial and Industrial Bank (PCIB)-Greenhills
Branch-Checks Nos. 14872 to 14876, inclusive, each in the
amount of P 8,000.00, all of which were dishonored by the
drawee bank; the first two, for having been 'drawn against
insufficient funds' and the last three thereof, for 'account
closed';
4. That the aforementioned checks were drawn by the
Defendant in payment to the Plaintiff of the remaining
P40,00.00 balance on a total amount of P90,000.00 which
Defendant undertook to pay the Plaintiff in consideration on
the latter's executing the AFFIDAVIT AND
MEMORANDUM OF QUITCLAIM (contents of which are
self-explanatory) dated February 26,1974, a xerox copy of
which is hereto attached as ANNEX 'A' and made an integral
part hereof;

5. That Paragraph 3 thereof, to which Defendant conformed


and accepted, clearly states:
3. That it is the essence of this Affidavit and Memorandum of
Quitclaim that should said IRENE DINO fail or refuse to
comply with the payments stipulated above or defaulted (sic)
in any single payment, then the full and existing balance shall
become due and demandable without further necessity of
demand, and that said IRENE DINO undertakes to pay the
further sum of TWENTY THOUSAND PESOS (P20,000.00)
by way of liquidated damages;
6. That when Defendant issued the checks mentioned in Par. 3
of this Complaint, she was aware that she did not have
sufficient funds with the drawee bank and had already closed
her account with the bank when the last three checks were
presented for payment;
7. That, in view thereof, the 'full and existing balance' of
Defendant's obligation to the Plaintiff, which now stands at
P32,000.00 (one of the five dishonored checks having been
replaced with one good check), is now 'due and demandable
without further necessity of demand,' and Defendant is further
obligated to pay the Plaintiff the amount of P 20,000.00 by
way of liquidated damages;
8. That, despite repeated demands by Plaintiff on the
Defendant, the latter has failed and still continues to fail to
pay the P 52,000.00 due to the Plaintiff, in view of which
Plaintiff was constrained to file this case in Court to protect
his rights and was thus forced to engage the services of
counsel and to defray the costs of this suit."
In her answer, 3 petitioner alleged:
2. That she admits the allegations contained in paragraph 3 of
the complaint insofar only as the issuance of check Nos.
14872 to 14876 of the PCIB and that they were at P8,000.00
each are concerned, but specifically denies the rest, the truth
being that not all of the said checks were dishonored by the
bank, but only four (4) and also that the original agreement of
the parties as to the payment of the said checks had already
been novated and disregarded by the parties after the issuance
of the said checks and after the Affidavit and Memorandum of
Quitclaim dated February 26, 1974, had been signed and
executed by the parties, considering the fact that plaintiff
agreed to the request of the defendant not to deposit the said
checks but wait for sometime to pay the said amount of
P40,000.00 in one lump sum, that as a matter of fact,
defendant (sic) deposited the said checks long, long after the
supposed date of issuance of the same.
3. That she admits the allegations contained in paragraph 3 of
the complaint subject to the allegations contained in the next
preceding paragraph.
4. That she admits the reproduction of No. 3 of the Affidavit
and Memorandum of Quitclaim insofar only as they are
consistent with the contents of paragraph 3 of the said
document and also subject to the allegations contained in
paragraph 2 above.
5. That she specifically denies the allegations contained in the
paragraph 6 of the complaint, the truth of the matter being that
when said checks were issued, they were postdated and

plaintiff knew for a fact they did not have sufficient funds, but
plaintiff just the same accepted them subject to the conditions
of availability of funds by the plaintiff (sic). In other words
said checks were issued only to guarantee the payment of the
P 40,000.00 but not as payment itself, that is why plaintiff as a
matter of fact agreed not to deposit the said checks until after
further notice from the defendant, as alleged in paragraph 2
above.
6. That she admits that the outstanding balance due the
plaintiff is P 32,000.00 as alleged in paragraph 2 hereof, but
denies specifically that they are now 'due and demandable
without further necessity of demand', the truth of the matter
being that said agreement was already novated and voided as
alleged in paragraph 2 above. (Par. 7, comp)
7. That she specifically denies the allegations contained in
paragraph 8 of the complaint the truth of the matter being
those contained in paragraph 2 above."
Private respondent (as plaintiff) filed a reply, 4 alleging that
petitioner should be declared in default for having filed her
answer on 1 September 1975, or two (2) days beyond the
extended period, or in the alternative, that a judgment on the
pleadings be rendered at the pre-trial, for the reason that the
petitioner virtually admitted the material averments of the
complaint, having failed to deny under oath the genuineness and
due execution of the Affidavit and Memorandum of Quitclaim, as
required by Sec. 8 of Rule 8 of the Rules of Court, and that
petitioner admitted in par. 6 of her answer that the outstanding
balance due to him (private respondent) is P32,000.00, which
negates her gratuitous allegation that the said Affidavit and
Memorandum of Quitclaim was novated or voided.
During the pre-trial conference, petitioner through counsel,
offered to pay her obligations by monthly installments but the
same was unacceptable to the private respondent; hence, the pretrial conference was considered terminated. Thereafter, private
respondent's counsel manifested in open court, and without
objection on the part of petitioner's counsel, that he was
submitting for resolution by the court his alternative motions to
declare petitioner in default or for a judgment on the pleadings.
Likewise, in open court, respondent judge denied the private
respondent's motion to declare petitioner in default but made it
clear that he was considering the alternative motion for a
judgment on the pleadings, and gave petitioner sufficient time to
file a responsive pleading or opposition to the said
motion. 5 Petitioner filed an opposition 6 thereto, dated 22
November 1975, alleging that there is no room for a judgment on
the pleadings as her answer to the complaint tendered an issue,
and that the private respondent's reply is, in fact, a motion to
declare petitioner in default or for a judgment on the pleadings,
and since said motion does not contain a notice of hearing, the
same is nothing but a useless piece of paper.
On 26 January, 1976 respondent ... pleadings 7 the dispositive part
of which reads:
WHEREFORE, judgment on the pleadings is hereby rendered
in favor of the plaintiff, ordering the defendant to pay him the
balance of P32,000.00 plus liquidated damages of P20,000.00,
and cost of suit. 8

Petitioner moved to reconsider, 9 which the private respondent


opposed. 10 On 14 April 1976, respondent Judge issued an
order 11 denying the petitioner's motion for reconsideration.
Hence, petitioner filed the instant petition, claiming that
respondent Judge acted in excess of his jurisdiction or with grave
abuse of discretion in rendering the judgment on the pleadings
and in issuing the order denying her motion for reconsideration,
and that she has no remedy nor any other plain, speedy and
adequate remedy in the course of law except through the present
petition.
Petitioner maintains that her answer to the complaint tendered an
issue, as it did not only deny the material allegations contained
therein but it also set up special as well as affirmative defenses.
Hence, she argues, there is no room for a judgment on the
pleadings. 12
The petitioner's contention is untenable. Her defense that the
original agreement of the parties had already been novated and
disregarded after the issuance of the checks mentioned in private
respondent's complaint and after the private respondent had
executed and signed the Affidavit and Memorandum of
Quitclaim, 13 is a sham and false defense and did not tender an
issue that would require a hearing for the reception of evidence. It
is a mere device or scheme to avoid or delay the immediate
payment of petitioner's obligation to the private respondent under
the Affidavit and Memorandum of Quitclaim. Thus, as aptly
observed by the court a quoA novation under the rules of civil law, where the term has
been introduced into the modern nomenclature of our
common law jurisprudence, was a mode of extinguishing one
obligation by another; the substitution, not of a new paper or
rate but of a new obligation in lieu of an old one, the effect of
which was to pay, dissolve or otherwise discharge it (ibid).
It will be noted that the original contract (Annex "A") was not
actually altered or changed. The defendant, as a matter of fact,
and for all intents and purposes, had issued checks in payment
of her obligation as prestated by the contract but asserts that
the same were issued only to guarantee but not as a payment
in itself, but it is not denying the fact that one of the five
checks were cashed, thus making the balance of only
P32,000.00, that is without mention the liquidated damage of
P20,000.00. The ambivalent attitude of the defendant could
only mean or should be construed as a mere pretense to avoid
an immediate demand for the payment of her obligation.
In order that an obligation may be extinguished by another
which substitutes the same, it is imperative that it be so
declared in unequivocal terms, or that the old and new
obligation be on every point incompatible with each other
(Art. 1292-New Civil Code.)
In the present case the contract referred to did not expressly
extinguish the obligation existing in said affidavit and
memorandum of quitclaim. On the contrary, it expressly
recognized the obligation between the parties and expressly
provide a method by which the same shall be extinguished,
which method was expressly provided in the aforementioned
contract, by means of periodical payments.

For all the foregoing considerations, the court believes, and so


holds, that the aforementioned contract has never been altered,
changed or novated. For what the herein defendant actually
did is not absolutely incompatible with the prestation of the
existing contract but rather she expressly ratified such
obligation through the issuance of postdated checks, some of
which were cashed and others not for reason of insufficiency
of funds or 'account closed. 14
Besides, the private respondent's cause of action is based on the
"Affidavit and Memorandum of Quitclaim," the substance of
which was properly alleged in the complaint, and copies thereof,
were attached thereto. Section 8, Rule 8 of the Rules of Court
provides that when an action is founded upon a written
instrument, copied in or attached to the corresponding pleading,
the genuineness and due execution of the instrument shall be
deemed admitted unless the adverse party, under oath, specifically
denies them. In the present case, the petitioner is deemed to have
admitted the genuineness and due execution of the "Affidavit and
Memorandum of Quitclaim" for her failure to deny the same
under oath; consequently, the judgment on the pleadings rendered
by respondent Judge was proper. 15
In her memorandum, 16 petitioner further contends that the private
respondent's reply should not have been treated as a motion for a
judgment on the pleadings for non-compliance with the three-day
notice rule and for lack of a notice of hearing. 17
Again, the petitioner's contention is devoid of merit. Section 1,
Rule 19 of the Rules of Court which states that where an answer
"admits the material allegations of the adverse party's pleading,
the court may, on motion of that party, direct judgment on such
pleading", does not state whether the motion for judgment on the
pleading may be considered ex-parte or only after notice of
hearing served on the adverse party. A motion for a judgment on
the pleadings, where the answer admits all the material averments
of the complaint, as in the present case, is one that may be
considered ex-parte because, upon the particular facts thus
presented and laid before the court, the plaintiff is entitled to the
judgment. 18 Besides, the purpose of the law in requiring the filing
of motions, at least three (3) days before the hearing thereof, is to
avoid suprises upon the opposite party and to give the latter time
to study and meet the arguments of the movant. 19 This purpose
has been sufficiently complied with, the petitioner having filed an
opposition to the said motion.
At any rate, the questioned judgment on the pleadings is a final
judgment; hence, it is appealable. Petitioner therefore could have
appealed from the aforesaid judgment, but she did not. Having
failed to appeal from the said judgment, she may not avail of the
writ of certiorari to offset the adverse effect of her omission. 20
WHEREFORE, the petition is this case is DISMISSED with costs
against petitioner.
SO ORDERED.

30B. When Judgment in the Pleadings should not be rendered

ARROYO v. CALDOZA
G.R. No.L-17454. July 31, 1963.

1. PLEADING AND PRACTICE; JUDGMENT ON THE


PLEADINGS WHEN NOT PROPER. The Court can not
render a judgment on the pleadings when, as in the case at bar, the
allegations of the defendants answer are sufficient to raise the
issue of ownership and possession over the land described in the
complaint.
DECISION
Appeal taken by Wenceslao Caldoza, Calixta Balderian, Pascual
Balderian, Agaton Tolosa and Bebiano Luban from the judgment
on the pleadings rendered by the Court of First Instance of Leyte
in Civil Case No. 2477 "declaring the plaintiff the true owner and
possessor of the land described in the second paragraph of the
complaint, ordering the defendants to respect plaintiffs
ownership and possession thereof, and to pay P200.00 attorneys
fees and the costs."
Appellee Cornelio Arrojo filed an action in the Court of First
Instance of Leyte to recover from appellants a parcel of land
located in the municipality of Dagami, Leyte, and more
particularly described in the second paragraph of his complaint,
plus damages.

asserted their own claim.


WHEREFORE, the decision appealed from is set aside and the
record of this case is remanded below for further proceedings.
With costs.

30C. Bases of summary judgment


ALLIED AGRI-BUSINESS DEVELOPMENT CO. INC. v.
CA
G.R. No. 118438. December 4, 1998

ALLIED AGRI-BUSINESS DEVELOPMENT CO., INC.


assails in this petition the decision of the Court of Appeals which
affirmed the judgment of the trial court granting the motion for
summary judgment filed by Cherry Valley Farms Limited based
on the implied admissions of petitioner.

Acting on said motion, the Court rendered the judgment appealed


from. Hence, this appeal.

On 14 October 1986 respondent Cherry Valley Farms


Limited (CHERRY VALLEY), a foreign company based in
England, filed against petitioner Allied Agri-Business
Development Co. Inc. (ALLIED) a complaint with the Regional
Trial Court of Makati City for collection of sum of money
alleging, among others that: (a) CHERRY VALLEY is a foreign
corporation with principal office at Rothwell, Lincoln, England;
(b) on 1 September 1982 up to 16 February 1983, or for a period
of less than six (6) months, petitioner ALLIED purchased in ten
(10) separate orders and received from respondent CHERRY
VALLEY several duck hatching eggs and ducklings which in
value totaled 51,245.12; (c) ALLIED did not pay the total
purchase price of 51,245.12 despite repeated demands evidenced
by a letter of Solicitor Braithwaite of England in behalf of
CHERRY VALLEY; (d) instead of paying its obligation, ALLIED
through its president wrote CHERRY VALLEY on 17 July 1985
inviting the latter to be a stockholder in a new corporation to be
formed by ALLIED, which invitation however was rejected by
CHERRY VALLEY on 26 September 1985; and, (e) ALLIED's
president Ricardo Quintos expressly acknowledged through a
letter of 8 October 1985 the obligation of his corporation to
CHERRY VALLEY. The complaint also prayed that ALLIED be
made to pay the sum of 51,245.12 or its peso equivalent at the
time of payment, plus legal interest from date of filing of the
complaint until full payment, and twenty percent (20%) of the
total amount being claimed from petitioner as attorneys fees; and,
to pay the costs of suit.

The paragraphs of the answer reproduced above are sufficient, in


our opinion, to raise the issue of ownership and possession over
the land described in the complaint. In other words, it appears
clearly from the allegations thereof that the appellants denied
appellees claim of ownership and previous possession, and clearly

On 27 February 1986 ALLIED filed an answer[1] denying the


material allegations of the complaint and contended that: (a)
private respondent CHERRY VALLEY lacked the legal capacity
to sue; (b) the letter of Quintos to CHERRY VALLEY was never

Appellants answer to the complaint (paragraphs II and III


thereof) states the following:chanrob1es virtual 1aw library
II."That the defendants have no knowledge or information
sufficient to form a belief as to the truth of the allegations in
paragraphs two and three of the complaint. The truth of the matter
is that the defendants have not occupied or taken any property
belonging to the plaintiff. They took possession and ownership
only of the land belonging to them, which properties were
possessed and owned originally by their predecessors-in-interest,
who were the parents of the defendants. The plaintiff did not
make any demand mentioned in paragraph three of the complaint,
knowing that he is not the owner of the lands occupied by the
defendants."cralaw virtua1aw library
III."That the defendants have no knowledge or information
sufficient to form a belief as to the truth of the allegations in
paragraph four of the complaint, the truth of the matter is that
defendants did not occupy any land belonging to the plaintiff and
as such he has no cause of action against the defendants for actual
and/or moral damages . . ."cralaw virtua1aw library
Appellee moved for a judgment on the pleadings on the ground
that appellants answer did not tender an issue.

authorized by the board of petitioner ALLIED, thus any


admission made in that letter could not bind ALLIED; (c) the
alleged amount of 51,245.12 did not represent the true and real
obligation, if any, of petitioner; (d) to the best of the knowledge
of ALLIED, not all ducks and ducklings covered and represented
by CHERRY VALLEYs invoices were actually ordered by the
former; and, (e) private respondent had no cause of action against
petitioner.
On 19 July 1988, CHERRY VALLEY served on ALLIEDs
counsel a Request for Admission[2]dated 15 July 1988 worded as
follows:
1. That the chairman of the board of directors and president of
your corporation is Mr. Ricardo V. Quintos;
2. That out of the 3,000,000 subscribed shares of stock, 1,496,000
shares is (sic) owned by Mr. Ricardo Quintos and 1,432,000
shares is(sic) also owned by his wife, Agnes dela Torre;
3. That for a period of six (6) months starting from 1 September
1982, your corporation ordered and received from CHERRY
VALLEY duck eggs and ducklings with a total value of 51,245.12
as reflected on CHERRY VALLEY invoices issued to you;
4. That you received a letter dated 22 March 1985 from Mr.
P.R.C. Braithwaite, solicitor of CHERRY VALLEY, demanding
settlement of your unpaid account of 52,245.12 for the abovestated purchases;
5. That instead of paying your obligation to CHERRY VALLEY,
Mr. Ricardo Quintos, in his capacity as president of your
corporation, sent a letter to CHERRY VALLEY dated 17 July
1985 proposing the setting up of a new corporation with
CHERRY VALLEY refusing acceptance of your proposal;
6. That you received a letter dated 26 September 1985 from Mr. J.
Cross, Director and Secretary of CHERRY VALLEY refusing
acceptance of your proposal;

corporation was immaterial and improper for not having been


pleaded in the complaint.
In its Reply[4] to Comments/Objections to Request for
Admission, CHERRY VALLEY maintained that there was no
need on its part to produce a witness to testify on the matters
requested for admission, for these pertained to incidents personal
to and within the knowledge of petitioner alone. Thereafter, on 2
August 1998, CHERRY VALLEY filed a motion with the trial
court to resolve the objections of ALLIED to the request for
admission.
On 11 August 1988 the trial court issued an
Order[5] disregarding ALLIEDsComments/Objections to Request
for Admission in view of its non-compliance with Sec. 2, Rule 26,
of the Rules of Court and directing ALLIED to answer the request
for admission within ten (10) days from receipt of the order,
otherwise, the matters contained in the request would be deemed
admitted.ALLIED moved to reconsider the order; however, on 8
November 1988 the lower court denied [6]ALLIEDs motion for
reconsideration and directed the latter to answer the request for
admission within a nonextendible period of five (5) days from
receipt of the order.
ALLIED failed to submit a sworn answer to the request for
admission within the additional period of five (5) days granted by
the trial court. Hence, CHERRY VALLEY filed a motion for
summary judgment[7] alleging that there was already an implied
admission on the matters requested for admission pursuant to
Rule 26 of the Rules of Court.
On 23 October 1990, the trial court rendered
judgment[8] against petitioner: (a) Ordering defendant to
pay plaintiff the sum of -51,245.12 or its peso equivalent at the
time of payment plus legal interest from the date of filing of this
complaint until fully paid; and, (b) Ordering defendant to pay
plaintiff ten percent (10%) of the total amount due from defendant
by way of attorneys fees since no protracted trial was held in this
case, plus cost of suit.

It is further requested that said sworn admission be made within


10 days from receipt of this request.

ALLIED appealed to the Court of Appeals. On 6 September


1994 the Court of Appeals rendered a decision[9] affirming the
summary judgment rendered by the trial court with the
modification that ALLIED should pay the monetary award to
CHERRY VALLEY in Philippine currency and that the award of
attorneys fees and costs of suit be deleted.

ALLIED filed its Comments/Objections[3] alleging that: (a)


the admissions requested were matters which the private
respondent had the burden to prove through its own witness
during the trial and thus petitioner need not answer; and, (b) the
request for admission regarding the ownership set-up of petitioner

Hence, the instant petition by ALLIED alleging that serious


errors were committed by the Court of Appeals in affirming the
summary judgment of the trial court; that the complaint should
have been instantly dismissed on the ground of lack of personality
to sue on the part of respondent CHERRY VALLEY; that the

7. That Mr. Ricardo Quintos in a letter dated 8 October 1985


admitted your indebtedness in the sum of English Sterling Pounds
51,245.12.

summary judgment was tantamount to a denial of ALLIEDs right


to due process for not requiring CHERRY VALLEY to produce
its own witness; and, that the admission requested were matters
which CHERRY VALLEY had the burden to prove during the
trial.
The petition must fail. We cannot sustain the allegation that
respondent CHERRY VALLEY being an unlicensed foreign
corporation lacked the legal capacity to institute the suit in the
trial court for the recovery of money claims from petitioner. In
fact, petitioner is estopped from challenging or questioning the
personality of a corporation after having acknowledged the same
by entering into a contract with it. [10] The doctrine of lack of
capacity to sue or failure of a foreign corporation to acquire a
local license was never intended to favor domestic corporations
who enter into solitary transactions with unwary foreign firms and
then repudiate their obligations simply because the latter are not
licensed to do business in this country.[11]
Petitioner cannot also successfully argue that its failure to
answer the request for admission did not result in its admission of
the matters stated in the request. Section 1 of Rule 26 of the Rules
of Court provides:
SECTION 1. Request for admission. - At any time after issues
have been joined, a party may file and serve upon any other party
a written request for the admission by the latter of the
genuineness of any material and relevant document described in
and exhibited with the request or of the truth of any material and
relevant matter of fact set forth in the request. Copies of the
documents shall be delivered with the request unless copies have
already been furnished.
The purpose of the rule governing requests for admission of
facts and genuineness of documents is to expedite trial and to
relieve parties of the costs of proving facts which will not be
disputed on trial and the truth of which can be ascertained by
reasonable inquiry. Each of the matters of which an admission is
requested shall be deemed admitted unless within a period
designated in the request which shall not be less than fifteen (15)
days after service thereof, or within such further time as the court
may allow on motion, the party to whom the request is directed
files and serves upon the party requesting the admission a sworn
statement either denying specifically the matters of which an
admission is requested or setting forth in detail the reasons why
he cannot truthfully either admit or deny those matters. [12] Upon
service of request for admission, the party served may do any of
the following acts: (a) he may admit each of the matters of which
an admission is requested, in which case, he need not file an
answer; (b) he may admit the truth of the matters of which
admission is requested by serving upon the party requesting a
written admission of such matters within the period stated in the

request, which must not be less than ten (10) days after service, or
within such further time as the court may allow on motion and
notice; (c) he may file a sworn statement denying specifically the
matter of which an admission is requested; or, (d) he may file a
sworn statement setting forth in detail the reasons why he cannot
truthfully either admit or deny the matters of which an admission
is requested.[13]
The records show that although petitioner filed with the trial
court its comments and objections to the request for admission
served on it by private respondent, the trial court disregarded the
objections and directed petitioner after denying its motion for
reconsideration, to answer the request within five (5) days from
receipt of the directive; otherwise, the matters of which the
admission was requested would be deemed admitted. Petitioner
failed to submit the required answer within the period. The matter
set forth in the request were therefore deemed admitted by
petitioner, i.e., (a) that for a period of six (6) months starting from
1 September 1982, petitioner ordered and received from
respondent CHERRY VALLEY duck eggs and ducklings
amounting to 51,245.12; (b) that petitioner received a letter dated
22 March 1985 from private respondents lawyer demanding
payment of the amount of the purchases; (c) that instead of paying
the obligation to respondent CHERRY VALLEY, petitioners
president Ricardo Quintos sent a letter to the former proposing
the establishment of a new corporation with CHERRY VALLEY
as one of the stockholders; (d) that the proposal was refused by
the Director of CHERRY VALLEY; and, (e) that petitioners
president Ricardo Quintos admitted the indebtedness of his
corporation to CHERRY VALLEY in the sum of English Sterling
Pounds 51,245.12.
The burden of affirmative action is on the party upon whom
notice is served to avoid the admission rather than upon the party
seeking the admission.[14] Hence, when petitioner failed to reply to
a request to admit, it may not argue that the adverse party has the
burden of proving the facts sought to be admitted. Petitioners
silence is an admission of the facts stated in the request.[15]
This Court finds that the motion for summary judgment filed
by respondent CHERRY VALLEY on the ground that there were
no questions of fact in issue since the material allegations of the
complaint were not disputed was correctly granted by the trial
court. It is a settled rule that summary judgment may be granted if
the facts which stand admitted by reason of a partys failure to
deny statements contained in a request for admission show that no
material issue of fact exists.[16] By its failure to answer the other
partys request for admission, petitioner has admitted all the
material facts necessary for judgment against itself. [17]
WHEREFORE, the Petition is DENIED. The decision of
the Court of Appeals dated 6 September 1994 which AFFIRMED

the trial court in "ordering defendant to pay plaintiff the sum of


51,245.12 or its peso equivalent at the time of payment plus legal
interest from the date of filing of this complaint until fully paid;"
and "ordering defendant to pay plaintiff ten percent (10%) of the
total amount due from defendant by way of attorney's fees since
no protacted trial was held in this case plus cost of suit," with the
modification that "Allied shall pay the monetary award of
attorney's fees and costs of suit be deleted," is AFFIRMED. Costs
against herein petitioner Allied Agri-Business Development Co.,
Inc.
SO ORDERED.

30D. Form of Affidavits and supporting papers.


DEL ROSARIO v. SANTOS
G.R. No. L-46892 September 30, 1981
(See Case 23)

31A. Summary Judgment


VIAJAR v. LADRIDO
G.R. No. L-43882 April 30, 1979
Appeal from the summary judgment of the Court of First Instance
of Iloilo, Branch III, issued in Civil Case No. 9660 entitled
"Angelica Viajar and Celso Viajar, plaintiffs, versus Ricardo
Ladrido and Rosendo Te defendants."
On February 15, 1974, plaintiffs-petitioners filed a complaint for
the recovery of possession of property premised on the allegations
that they were the registered owners pro-indivisoof a parcel of
agricultural land at Guibuangan, Pototan, Iloilo with an area of
2.0089 hectares, more or less, identified as Lot No. 7340, Pototan
Cadastre and more particularly described as follows:
A parcel of land (Lot No. 7340 of the Cadastral Survey of
Pototan, with improvements thereon situated in the Municipality
of Pototan and bounded on the Northeast by Lot No. 7339; in the
Southeast by Lot No. 7342-1 Southwest by lots Nos. 7341 &
7470 and on the West by the Suage River.
their ownership thereof being evidenced by Transfer Certificate of
Title No. T-77367 of the Register of Deeds of Iloilo (par. 2,
Complaint); that the above-described parcel of land was acquired
through purchase by the plaintiffs on September 6, 1973
following which they caused to be undertaken by a license
Geodetic Engineer the relocation survey of the property for the
purpose of determining the exact metes and bounds thereof (par.

3, Complaint): that as a result of the said relocation survey,


plaintiffs came to know and discover that the northeastern half
portion of Lot No. 7340 has been eaten up and occupied by the
new waterbed of the Suage River as a result of the natural change
in its course, while the remaining southwestern portion of the
property is occupied and possessed by defendant Ricardo Ladrido
(par. 4, Complaint); that plaintiffs also later came to know that the
defendant has occupied and possessed for more than (2) years not
only the aforesaid Parcel 2 but also the old abandoned riverbed of
the Suage River which was the original boundary on the West of
the land in question, lot No. 7340 (par. 5, Complaint); that the
northeastern portion of their property having been occupied by
the new riverbed of the Suage River, as aforestated, plaintiffs
have become by law ipso facto the owners of the aforesaid
abandoned riverbed in proportion to the area they lost (par. 6,
Complaint); that notwithstanding demands made by the plaintiffs,
defendant without any justifiable reason has refused and until
now still refuses to vacate the aforesaid area occupied by him or
surrender the possession thereof to the plaintiffs to the latter as
great damage and prejudice in the amount of P6,000.00 per year,
P5,000.00 for moral damages and P500.00 for expenses of
litigation (pars. 7, 8 and 9,
Complaint).chanroblesvirtualawlibrary chanrobles virtual law
library
In his answer dated March 12, 1974, defendant-respondent
Ricardo Ladrido denied the substantial allegations in the
complaint and averred as special and affirmative defenses that he
is the owner of Lot No. 7511 situated at Barrio Cawayan Pototan,
Iloilo, which lot is bounded on the east by Suage River (par. 6,
Answer); that since 1926 or 1927, the Suage River gradually
deposited soil accumulations on the eastern portion of Lot 7511
which the defendant promptly took possession and worked the
same as his own as soon as said Suage River gradually, slowly
and consistently moved farther to the East (par. 7, Answer); that
Lot 7340 claimed by plaintiffs and allegedly titled in their names,
is separated from Lot 7511 of the defendant by the Suage River,
and the gradual action of the Suage River, admitted by the
plaintiffs in their complaint, had eaten up said lot 7340 (par. 8,
Answer); that the land in dispute which is indicated as parcel 2,
Lot 7340, of Annex "A" of the complaint, as wen as the old Suage
River bed, is the soil accumulation or accretion attached to Lot
7511, owned by the defendant (par. 9, Answer); that defendant
possessed the portions formed by the accumulations of soil
deposits made by the Suage River gradually from 1926-27 up to
1940, at the latest, when the Suage River remained on a more or
less stationary course up to the present (par. 10, Answer); that
defendant is owner of the soil accumulations and the dried up
riverbed now attached to his Lot 7511 (par. 11, Answer).
Defendant-respondent filed as counterclaim the amount of
P1,500.00 for attorney's fees and P5,000.00 as moral

damages.chanroblesvirtualawlibrary chanrobles virtual law


library
In a reply filed on April 4, 1974, plaintiffs-petitioners averred that
they never admitted that the change in the course of the Suage
River was through a gradual action resulting to an accumulation
of soil deposits to the eastern part of Lot No. 7511 owned by the
defendant. Plaintiffs had emphatically and continuously insisted
that the Suage River changed its course through natural action by
passing through the northeastern portion of Lot No. 7340 owned
by plaintiffs (par. 1, Reply); that said lot in question indicated as
Parcel 2 of Lot No. 7340 of Annex "B" is not the soil
accumulation or accretions attached to Lot No. 7511 owned by
defendant inasmuch as parcel 2 retains its Identity, and in fact the
old river bed of Suage River formerly running between Lot No.
7511 and Lot No. 7340 is still existing (par. 2, Reply); that the
defense of accretion interposed by defendant in the instant case
does not apply; instead it falls with the contemplation of Article
461 of the New Civil Code on change of course of rivers (par. 4,
Reply); and that by reason of the natural change of the course of
the Suage River, the abandoned river bed which is existing as
admitted by defendant himself, exclusively belongs to the
plaintiffs for reasons above stated (par. 5,
Reply).chanroblesvirtualawlibrary chanrobles virtual law library

On August 8, 1975, defendant-respondent Ricardo Ladrido filed a


Motion for Summary Judgment dismissing the action of plaintiffs
and declaring defendant Ricardo Ladrido the owner of the land in
question on the basis of the alleged admission of the plaintiffs in
their complaint as well as of the law and jurisprudence on the
matter. Quoting par. 4 of the complaint which reads:
That as a result of the said relocation survey, plaintiffs came to
know and discover that the northeastern half portion of Lot No.
7340 has been easten up and occupied by the new waterbed of the
Suage River as a result of the natural change in its course, while
the remaining southwestern portion of the property is occupied
and possess by defendant Ricardo Ladrido,
movant Ricardo Ladrido argues that said allegation of plaintiffs is
an admission on their part that the change of course of the river
was gradual and not sudden or abrupt; that it is therefore a case of
alluvion in Article 457 of the Civil Code (366 of the Old Civil
Code) and not abandoned river bed in Article 461 of the Civil
Code (370 of the Old Civil Code) as in the latter the change of
course is sudden or abrupt; that being alluvion, the land in
question is accreted land on Lot 7511 (Article 457 of the Civil
Code; Article 366 of the Old Civil
Code).chanroblesvirtualawlibrary chanrobles virtual law library

On June 14, 1974, plaintiffs-petitioners amended their complaint


by impleading Rosendo Te as defendant from whom they
purchased the land in question upon the latter's assurance that the
title is clean and the landholding is not possess nor subject to any
lien, encumbrances or claims by third persons. Plaintiffspetitioners prayed in the alternative that should possession of
defendant-respondent Ricardo Ladrido be sustained, an order be
issued annulling the contract of sale and direct the vendor
Rosendo Te to return the purchase price thereof with interest from
the date of execution of the
sale.chanroblesvirtualawlibrary chanrobles virtual law library

Defendant Rosendo Te filed his "Opposition to Motion for


Summary Judgment" on the ground that there is a clear
controversy between the parties as to how the Suage River had
changed its course, whether abruptly as contended by the
plaintiffs and defendant Rosendo Te or gradually as contended by
defendant Ricardo Ladrido. Moreover, oppositor claims that the
abandoned river bed which in reality does not form part of Lots
Nos. 7511 and 7340 is likewise involved in the case and the
question as to whom such land should now belong is also a matter
of controversy.chanroblesvirtualawlibrary chanrobles virtual law
library

Defendant-respondent Rosendo Te filed his own answer to the


amended complaint acknowledging the deed of sale but alleging
that he only sold to plaintiffs-petitioners whatever rights he had
over the property under the Torrens Title and Tax Declaration
over the land transferred to him by the original owner; that
complainants are precluded from including defendant Rosendo Te
in the case because the former had never previously demanded
from the said vendor the cancellation of the sale, but on the
contrary, plaintiffs-petitioners have always maintained that they
were entitled as a matter of right to the ownership of the
remaining portion of Lot No. 7340 and the dry riverbed which are
under the possession of defendant
Ladrido.chanroblesvirtualawlibrary chanrobles virtual law library

On August 19, 1975, respondent Judge issued the Summary


Judgment, which is quoted fully hereunder:
SUMMARY JUDGMENT
Paragraphs 5, 6 and 9 of the amended complaint read, as follows:
xxx xxx xxx
5. That as a result of the said relocation survey, plaintiffs came to
know and discover that the northeastern half portion of Lot No.
7340 has been eaten up and occupied by the new waterbed of the
Suage River as a result of the natural change in its course, while
the remaining southwestern portion of the property is occupied
and possessed by defendant Ricardo Ladrido. The portion now

occupied by the Suage River is Identified as Parcel 1 and the


portion occupied by the defendant Ricardo Ladrido is Identified
as Parcel 2 in the sketch marked as Annex "B " and is found
attached to the original complaint; chanrobles virtual law library
6. That plaintiffs also later came to know that the
defendant Ricardo Ladrido has occupied and possessed for more
than two (2) years not only the aforesaid Parcel 2 but also the old
abandoned riverbed of the Suage River which was the original
boundary on the West of the land in question, Lot No. 7340;

10. The plaintiffs are precluded by estoppel from including


Rosendo Te as a defendant in the present case because they had
never previously demanded from the latter for the cancellation of
the sale in their favor; and, on the contrary, based on the facts of
the case, they have always maintained as they have so manifested
to answering defendant that they were entitled as a matter of right
to the ownership of the remaining portion of Lot No. 7340, as
well as to the dry abandoned bed of the Suage River.
xxx xxx xxxchanrobles virtual law library

xxx xxx xxx

Then paragraph I of the reply read as follows:

9. That plaintiffs upon knowing that a portion of the landholding


in question is being possessed by defendant Ricardo Ladrido,
immediately informed and complained to the defendant t Rosendo
Te that the land sold to them is not free from any claim and
possession of third persons, as it is in fact possessed and claimed
by defendant Ricardo Ladrido, but instead defendant t Rosendo
Te when he received the information merely told the plaintiffs that
it was their own lookout and for them to fight their own legal
battle;

1. That plaintiffs never admitted that the change in the course of


the Suage River was through a gradual action resulting to an
accumulation of soil deposits to the eastern part of Lot No. 7511
owned by the defendant. Plaintiffs had emphatically and
continuously insisted that the Suage River changed its course
through natural action by passing through the northeastern portion
of Lot No. 7340 owned by plaintiffs;

xxx xxx xxxchanrobles virtual law library

The foregoing judicial admission of plaintiffs supports the motion


for summary judgment per comments of Chief Justice Moran and
Justice Martin cited by defendant
Ladrido.chanroblesvirtualawlibrary chanrobles virtual law library

Then paragraphs 2 and 10 of defendant Rosendo Te's answer


read: chanrobles virtual law library
xxx xxx xxx
2. It is admitted that on September 6, 1973 answering defendant
executed a Deed of Sale in favor of the plaintiffs herein selling to
the latter for the sum of P5,000 all his rights, title and interest
over Lot No. 7340 of the Cadastral Survey of Pototan of which he
was then the registered owner under Transfer Certificate of Title
No. T-50333; but all and each of the other allegations in Par. 3 of
the Amended Complaint, specially the assurances supposedly
given by answering defendant, are specifically denied, the truth of
the matter being as follows: that answering defendant was only
selling to the plaintiffs an and whatever rights he might have over
the said parcel of land under and by virtue of the aforesaid
Torrens title and the tax declaration covering the land; that the
plaintiffs themselves were the ones who approached and proposed
to the defendant the purchase from the latter of his registered
rights on the said land, stating that they would visit the land
before the purchase was going to be consummated; and that
answering defendant in turn acquired in good faith his rights over
said land by purchase from its former registered owners, the
spouses Francisco M. Militants and Consuelo M. Cordova, by
virtue of a document of sale executed on January 2, 1966.
xxx xxx xxx

xxx xxx xxxchanrobles virtual law library

In the opposition of defendant Rosendo Te it is contended that no


admission has been made as to the ownership of defendant
Ladrido but the foregoing paragraph 1 of the plaintiffs' reply
clearly indicated and admitted the ownership of defendant
Ladrido on Lot 7511. Then defendant Te has filed no claim
against defendant Ladrido, so it is Te who is in estoppel to oppose
Ladrido's motion for summary
judgment.chanroblesvirtualawlibrary chanrobles virtual law
library
The presence of the clause 'eaten up and occupied by the new
waterbed of the Suage River' clearly admitted a case of alluvion
referred to in Article 457 of the New Civil Code, so that the
doctrine laid down in the case of 'Payatas Estate Improvement
Co. vs. Tuason, (53 Phil. 55) is applicable to the present claim of
defendant Ladrido.chanroblesvirtualawlibrary chanrobles virtual
law library
Then plaintiff is a purchaser in bad faith as at the time of the
purchase in 1973, defendant Ladrido was already in possession of
the land for more than 2 years before the filing of the complaint
on February 15, 1974, pursuant to paragraph 5 of the original and
amended complaint pursuant to the ruling in the case of

Comspecto vs. Fruto, 31 Phil 144, found on page 316 of the


Philippine Torrens System by Ponce, to wit:
Precaution when property is in possession of another. One who
purchases real property which is in actual possession of others
should, at least, make some inquiry concerning the rights of those
in possession. The actual possession by others other than the
vendor should, at least, put the purchaser upon inquiry. He can
scarcely in the absence of such inquiry, be regarded as a bona-fide
purchaser as against such possessors. Comspecto vs. Fruto, 31
Phil. 144, 149).
WHEREFORE, summary judgment is hereby rendered against
the plaintiffs and in favor of the defendants, hereby dismissing
this case, without pronouncement as to costs chanrobles virtual
law library
SO ORDERED.
From the above judgment, plaintiffs-petitioners filed the notice of
appeal to the Court of Appeals. This was followed by the
submission of their Record on Appeal on September 25, 1975.
But before the petition for review could be filed, counsel for
petitioners moved for the certification of the case to the Supreme
Court after realizing that the appeal involves pure questions of
law. The motion was granted by the Seventh Division of the Court
of Appeals in the resolution of September 2, 1976 which certified
the case to Us for final determination pursuant to Section 31 in
relation to Section 17 of the Judiciary Act, as amended. In Our
resolution of December 17, 1976, the certified case was docketed
as G.R. No. L-45321 and consolidated with G.R. No. L-43882, a
petition for review on certiorari of the same summary judgment
filed by plaintiffs-petitioners in the meantime on July 2, 1976 and
given due course as a special civil action in Our resolution of
September 1, 1976.chanroblesvirtualawlibrary chanrobles virtual
law library
Having considered the petition as an original action, the principal
issue is whether or not the trial court gravely abused its discretion
in deciding the case by Summary Judgment dated August 19,
1975. Plaintiffs-petitioners contend that the lower court erred in
promulgating summary judgment in view of the questions of fact
disputed in the pleadings. They maintain that by invoking Article
461 of the Civil Code in relation to their allegation that there was
a natural change in the course of Suage River, they, in effect,
alleged the abrupt or sudden change in the course of the waters.
They point out that this contention was contradicted by
defendant-respondent Ricardo Ladrido in his answer when the
latter claimed that the change was instead gradual under the
contemplation of Article 457 of the same Code. On the other
hand, this defendant-respondent supports the propriety of the
summary judgment on the ground that the complaint failed to

aver categorically the sudden and abrupt change in the course of


the river, but on the contrary, the allegation therein that the land
was eaten up by the current amounts to an admission on the part
of complainants that the change was in fact
gradual.chanroblesvirtualawlibrary chanrobles virtual law library
From a careful reading of the complaint and answer, there are two
conflicting theories respecting the occurrence of a natural
phenomenon, the effects and consequences of which are governed
either by Article 461 1or Article 457 2 of the Civil Code. The
obvious task laid before the trial court is to determine whether
there actually occurred an abrupt and sudden change of the water
current, or that the river had gradually veered through the years
leaving alluvial deposit of soil now composing the portion
claimed by the parties.chanroblesvirtualawlibrary chanrobles
virtual law library
We cannot subscribe to the interpretation that the phrase "eaten up
and occupied by the new waterbed" imports an admission by
plaintiffs- petitioners of a gradual action of the water current, thus
stripping the complaint of its only contestable issue, and hence,
needs only to be disposed of in a summary judgment. We hold
that the phrase "eaten up" is a vague expression of what
complainants wanted to convey, since the phrase can either mean
gradual or sudden action of the river. This ambiguity, though,
cannot deprive the complaint of its merit because the pleader is
required to state only the ultimate facts constituting his cause of
action. At least, by the reading of the entire complaint, it is clear
enough that the pleader did not take its own expression to mean
the gradual shifting of the river current, so much so that
defendant-respondent in his answer countered with a
diametrically opposed explanation as demonstrated in his factual
allegations. Moreover, plaintiffs-petitioners in their reply alleged
that they never admitted that the change in the course of the
Suage River was through a gradual action resulting to an
accumulation of soil deposits to the eastern part of the lot owned
by defendant.chanroblesvirtualawlibrary chanrobles virtual law
library
Besides, co-defendant Rosendo Te conceded in his answer to the
amended complaint that the Suage River suddenly changed its
course by channeling its bed at the northeastern strip of Lot No.
7340 (Records, p. 28). Considering that the interests of the parties
clashed on the proprietary effect of the natural phenomenon, the
issue all the more became genuine and ripe for adjudication.
Plaintiffs-petitioners claim ownership over the abandoned river
bed in proportion to the area they lost when the river opened a
new channel within their property. On the other hand, defendantrespondent Ricardo Ladrido claims ownership to the disputed
portion because its consists of accretion attached to his land as a
result of the gradual accumulation of solid brought by the action
of the water current. With these conflicting claims, a factual

dispute certainly arises which can only be properly settled by


means of a trial on the merits. Summary judgment was therefore,
unwarranted. 3 chanrobles virtual law library

31B. Summary Judgment

Relief by summary judgment is intended to expedite or promptly


dispose of cases where the facts appear undisputed and certain
from the pleadings, depositions, admissions and affidavits. But if
there be a doubt as to such facts and there be an issue or issues of
fact joined by the parties, neither one of them can pray for a
summary judgment. Where the facts pleaded by the parties are
disputed or contested, proceedings for a summary judgment
cannot take the place of a trial. 4chanrobles virtual law library

G.R. Nos. 82282-83 November 24, 1988

An examination of the Rules will readily show that a summary


judgment is by no means a hasty one. It assumes a scrutiny of
facts in a summary hearing after the filing of a motion for
summary judgment by one party supported by affidavits,
depositions, admissions, or other documents, with notice upon the
adverse party who may file an opposition to the motion supported
also by affidavits, deposition ' or other documents (Section 3,
Rule 34). In spite of its expediting character, relief by summary
judgment can only be allowed after compliance with the
minimum requirement of vigilance by the court in a summary
hearing considering that this remedy is in derogation of a party's
right to a plenary trial of his case. At any rate, a party who moves
for summary judgment has the burden of demonstrating clearly
the absence of any genuine issue of fact, or that the issue posed in
the complaint is so patently unsubstantial as not to constitute a
genuine issue for trial, and any doubt as to the existence of such
an issue is resolved against the movant. 5 chanrobles virtual law
library
We find that in the case at bar, the aforementioned guidelines
were not observed, The mere reliance on an "admission" arrived
at by construction and dubitable by its terms, rather than a clear
and positive concession cannot be a basis for a summary
judgment. Respondent's motion is not supported by an affidavit of
merit or any document attesting the state of facts relied upon in
the motion. Neither has the court afforded the parties a hearing on
both the motion and opposition to the same. Clearly, the trial
court in cursorily issuing a summary judgment, committed a
correctible error.chanroblesvirtualawlibrary chanrobles virtual
law library
WHEREFORE, the summary judgment is set aside and the case is
hereby remanded to the trial court for further proceedings.
Without costs.chanroblesvirtualawlibrary chanrobles virtual law
library
SO ORDERED.

GARCIA v. CA

In a summary judgment rendered by the Regional Trial Court of


Makati in Civil Case No. 10398, the complaint was dismissed for
lack of merit and the petitioners were ordered to pay the private
respondent the following: (a) the unpaid principal sum of P15
million remaining unpaid out of Chemark's availment of the P20
million credit line, plus 18% interest per annum and 36% as
penalty per annum for Promissory Note No. DLS/74/540/83 from
March 23, 1984 until fully paid; and plus 24% interest per annum
and 36% as penalty per annum for Promissory Note No.
DLS/74/1358/83 from August 9, 1983 until fully paid; (b)
attorney's fees equivalent to 10% of the total amount of plaintiffs'
obligations and (c) costs of suit.
The summary judgment was affirmed by the Court of Appeals.
The appellate court's decision and the resolution denying a
motion for reconsideration are now challenged by the petitioners
in the instant petition.
The antecedent facts relevant to the instant petition are as follows:
On April 23, 1985 petitioners Dynetics, Inc., Matrix Management
and Trading Corporation and Antonio M. Garcia filed a complaint
for declaratory relief and/or injunction with damages against
respondent Security Bank and Trust Company (SBTC). The
plaintiffs sought a judicial declaration that they were not liable to
the defendant bank under certain Indemnity Agreements they
executed in favor of Chemark Electric Motors, Inc. which had
been extended a credit accommodation of about P20,000,000.00
by the defendant bank. They also prayed for payment of attorney's
fees and costs of suit. Thus, they alleged in their complaint:
xxx xxx xxx
a) There is no valid consideration for the execution of the said
instruments;
b) The said instruments had become invalid and ineffective at
the time the defendant finally extended the loan
accommodation to Chemark and that the parties to the said
instruments did not intend the said instruments to cover
Chemark's obligations to the defendant which were
subsequently granted under separate and independent
transactions;

c) Assuming, without conceding, that there is a valid


consideration for the execution of the aforesaid instruments
and that the said instruments continued to be valid and
effective when the defendant extended a credit
accommodation to Chemark, said instruments are null and
void insofar as Dynetics is concerned as it is ultra vires, being
contrary to the purposes of Dynetics, its powers, licenses and
franchise;
d) Assuming, without conceding, that the Indemnity
Agreement instruments are valid and enforceable, the
obligations of the plaintiffs thereunder have been
extinguished, either by novation or by the acts and conduct of
the defendant, who, under the circumstances, in refusing the
valid and legitimate plea of Chemark for a reasonable
restructuring plan of its obligations has practically rendered it
impossible for Chemark to pay its obligations to its creditors
and to the plaintiffs in the event plaintiffs are legally obligated
to pay Chemark's obligations to the defendant;
e) In the light of present economic conditions, in general, and
the condition of Chemark in particular, as well as the financial
condition of the plaintiffs, the demand of the defendant for the
plaintiffs to pay the Chemark obligations would constitute an
abuse of right as defined in the New Civil Code;
f) Considering the present adverse economic conditions
plaguing the entire country, the terms and conditions of the
credit accommodation and the Indemnity Agreement
instruments, assuming that the latter are valid and enforceable,
have become so manifestly difficult as to be beyond the
contemplation of the parties. Under the provisions of Human
Relations of the New Civil Code, as well as the general
principles of equity, especially the doctrine of the "rebus sic
stantibus" and "the frustration of the commercial object or
frustration of enterprise" and under Article 1267 of the New
Civil Code, when the service has become so difficult as to be
manifestly beyond the contemplation of the parties, the
obligor may be released therefrom;
g) In addition to the reasons stated in paragraphs e and f
hereof, Chemark, the principal obligor, is not liable for its
obligations under the credit accommodations extended to it by
the defendant because it has been prohibited from complying
therewith by a lawful authority. Under the law on guaranty
and surety, the guarantor or the surety, not being a principal
debtor, is not liable for the obligations unless the principal
obligor is likewise liable. (Article 2054 of the New Civil
Code; Hospicio de San Jose v. Fidelity and Surety Co., 52
Phil. 926; Uy Isabelo v. Yandoc, CA-G.R. No. 8801-R, June
20, 1956). The debtor in obligations to do shall also be
released when the prestation becomes legally impossible

without the fault of the obligor. (Article 1266 of the New Civil
Code);
h) Assuming, without conceding, that the plaintiffs are liable
under the Indemnity Agreement instruments, they are not
liable for the amounts being claimed by the defendant,
considering that the said amounts include the payment of
exorbitant interests, excessive penalties and amounts imputed
to be due which are not, in fact, due. (Rollo, pp. 106-107)
On June 11, 1985 the respondent bank filed its Answer and
Counterclaim with prayer for preliminary attachment. The
defendant alleged in its counter claim:
ALLEGATIONS COMMON TO ALL DEFENDANTS
21. Sometime in August, 1981, Chemark was granted by
plaintiff a credit line of P4.0 million consisting of an import
LC-TR line of P2.0 million and an export loan line of P2.0
million.
22. Said credit line was increased in February, 1982 from P4.0
million to P20.0 million, to wit:
Export loan linefrom P2.0 million to P15.0 million
Import LC-TRfrom P2.0 million to P5.0 million
The terms and conditions of this P20.0 million credit are
reflected in the Amended Credit Line Agreement dated
February 8, 1982 attached as Annex "1" hereof,
23. Chemark availed of said credit line and as evidence of said
availments, Chemark executed several promissory notes
covering the following amounts drawn against this credit line,
viz;
a) The sum of P6,350,750.00 drawn on March 23, 1983
with interest and penalty at the rate indicated in
promissory Note No. DLS/74/540/83 to mature on June
21, 1983, a copy is attached as Annex "3";
b) The sum of P8,649,250.00 drawn on August 9, 1983
with interest and penalty at the rate indicated in
Promissory Note No. DLS/74/1358/83 to mature on
September 8, 1983, a copy of which is hereto attached as
Annex "4".
24. Chemark defaulted in paying its obligations under the
aforesaid promissory notes when these became due. Despite
repeated demands, Chemark failed and refused to pay its valid
and just obligations to the defendant which, as of December

11, 1984, amounted to P13,130,596.93 under Promissory Note


No. DLS/74/540/83 and P17,357,117.51 under PN No.
DLS/74/1358/83.
CAUSE OF ACTION AGAINST ANTONIO M. GARCIA
25. Plaintiff Garcia personally bound himself jointly and
severally with Chemark, to pay defendant upon demand and
without benefit of excussion of whatever amount or amounts
Chemark may be indebted to defendant under and by virtue of
the aforesaid credit line accommodation, including the
substitutions, renewals, extensions, increases and other
amendments of the aforesaid credit accommodations, as well
as all other obligations that Chemark may owe the defendant.
26. Accordingly, plaintiff Garcia executed two (2) Indemnity
Agreements, one dated January 20, 1982, a copy of which is
attached hereto and made integral part hereof as Annex "E"
and the other, an Indemnity Agreement dated February 8,
1982, as Annex "B" of the Complaint;
27. Under the terms of the foregoing Indemnity Agreements
executed by plaintiff Garcia, he further bound himself
solidarily with Chemark in favor of defendant for the faithful
compliance of all the terms and conditions contained in the
Amended Credit Line Agreement (Annex "l ").
28. Defendant demanded from plaintiff Garcia the payment of
the outstanding obligation of Chemark in a letter dated
October 26, 1984, a copy of which is made Annex "5" to form
part hereof. Defendant reiterated said demand on April 15,
1985.
29. Notwithstanding said demands, plaintiff Garcia failed and
refused, as he still fails and refuses to pay his obligation
pursuant to the indemnity agreements he executed.
CAUSES OF ACTION AGAINST MATRIX
MANAGEMENT & TRADING CORPORATION
30. Plaintiff Matrix bound itself jointly and severally with
Chemark in favor of the defendant for the payment, upon
demand and without benefit of excussion, of whatever amount
or amounts Chemark may be indebted to defendant under and
by virtue of the aforesaid credit line accommodation including
the substitutions, renewals, extensions, increases and other
amendments of the aforesaid credit accommodations, as well
as of the amount of such other obligations that Chemark may
owe the defendant.
31. Accordingly, Matrix through its duly authorized officers,
executed an Indemnity Agreement dated February 8, 1982, a

copy of which is attached hereto as Annex "A" and


incorporated herein by reference.
32. Under the terms of the foregoing indemnity agreement
executed by Matrix, it further bound itself solidarily with
Chemark in favor of defendant for the faithful compliance of
all the terms and conditions contained in the Credit Line
Agreement (Annex "B").<re||an1w>
33. Defendant demanded from Matrix the payment of the
outstanding obligation of Chemark in a letter dated October
26, 1984, a copy of which is made Annex "5" to form part
hereof. Defendant reiterated said demand on April 25, 1985.
34. Notwithstanding said demands, Matrix failed and refused,
as it still fails and refuses, to pay its obligation pursuant to the
indemnity agreement it executed in plaintiffs favor.
CAUSE OF ACTION AGAINST DYNETICS, INC.
35. Plaintiff Dynetics bound itself jointly and severally with
Chemark in favor of the defendant for the payment, upon
demand and without benefit of excussion, of whatever amount
or amounts Chemark may be indebted to defendant under and
by virtue of the aforesaid credit line accommodation including
the substitutions, renewals, extensions, increases and other
amendments of the aforesaid credit accommodations, as well
as of the amount of such obligations that Chemark may owe
the defendant.
36. Dynetics executed an indemnity agreement dated February
8, 1982, copy of which is attached as annex "A" of the
Complaint.
37. Under the terms of the foregoing Indemnity Agreement
executed by Dynetics, it further bound itself solidarily with
Chemark in favor of defendant for the faithful compliance of
all the terms and conditions contained in the Amended Credit
Line Agreement (Annex "I")
38. Defendant demanded from Dynetics the payment of the
outstanding obligation of Chemark in a letter dated October
26, 1984, a copy of which is made Annex "5", to form part
hereof. Defendant reiterated said demand on April 25, 1985.
39. Notwithstanding said demands, Dynetics failed and
refused, as it still fails and refuses to pay its obligation
pursuant to the indemnity agreement it executed in defendant's
favor. (Rollo, pp. 108-111)
On August 21, 1985, the petitioners manifested that ... they are
adopting all allegations in their Complaint as their answer to the

respective counterclaim against each of them." (Original Records,


p. 229)
On September 18, 1985, the respondent bank filed a motion for
summary judgment on the ground that the answer to the
counterclaim "tenders no genuine issue as to any material fact,
and consists of mere conclusions of law and fact, and in
paragraph 4 thereof, plaintiffs expressly acknowledged their
obligation to defendant and indemnity agreements dated February
8, 1982 when they admitted "under said instruments, it was
basically provided that for and in consideration of the credit
accommodation in the total amount of Twenty Million
(20,000,000.00) Pesos, granted by defendant in favor of Chemark
Electric Motors, Inc., a corporation duly organized and existing
under the laws of the Philippines, plaintiffs agreed to indemnify
defendant in the event Chemark should fail to comply with its
obligations."' (Original Records, p. 248) In support of the motion,
the respondent bank attached the affidavit dated September 17,
1985 of Ms. Charis Marquez, Senior Assistant Manager,
corporate banking group, SBTC including its annexes.
The petitioners filed an opposition to the motion for summary
judgment but to no avail. The lower court rendered a decision
granting the motion for summary judgment. The petitioners'
complaint was dismissed and they were ordered to pay the
respondent bank under the indemnity agreements.
The petitioners then filed with the Court of Appeals: 1) an appeal
from the summary judgment and 2) a special civil action for
certiorari and prohibition with a prayer for preliminary injunction
to annul the orders of the lower, court granting motion for
summary judgment and granting motion for execution pending
appeal. The two cases were consolidated.
The appellate court sustained the summary judgment. Both
petitions were dismissed with costs against the petitioners. A
motion for reconsideration thereto was denied.
Hence, this petition.
On March 30, 1988, we issued a temporary restraining order to
enjoin the enforcement of the questioned decision of the appellate
court. In a Resolution dated June 6, 1988, we gave due course to
the petition.
The issue raised in the petition is whether or not the appellate
court committed reversible error when it sustained the trial court's
summary judgment.
The petitioners submit that the appellate court committed such an
error, to wit:

a. The rendition of Judge Mendoza's Summary Judgment was


improper because petitioners' Complaint and SBTC's Answer
with Counterclaim raise triable issues of fact. The Court of
Appeals, therefore, erred when it sustained Judge Mendoza's
Summary Judgment.
b. Assuming (the untrue) that there were no "genuine issues as
to any material fact," the awards set out in Judge Mendoza's
Summary Judgment were rendered in violation of rules of
evidence and laws and jurisprudence on interest, penalties and
attorney's fees. The appellate court, therefore, committed the
same violation when it upheld Judge Mendoza's Summary
Judgment. (Rollo, p. 325).
A Summary Judgment may be rendered by a court upon motion of
a party before trial and after submission of pleadings, admissions,
documents and/or affidavits and counter affidavits when it is clear
that "except as to the amount of damages, there is no genuine
issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law." (Rule 34, Rules of Court). By
genuine issue is meant an issue of fact which calls for the
presentation of evidence Cadirao v. Estenzo, 132 SCRA 93) as
distinguished from an issue which is sham, fictitious, contrived,
set up in bad faith, or patently unsubstantial as not to constitute a
genuine issue for trial. (Vergara, Sr. v. Suelto, et al., G.R. No.
74766 December 21, 1987, Cadirao v. Estenzo supra; Mercado, et
al. v. Court of Appeals, G.R. No. L-44001 June 10, 1988) This
can be determined by the court on the basis of the pleadings,
admissions, documents, affidavits and/or counter-affidavits
submitted by the parties to the court. (Section 3, Rule 34, Revised
Rules of Court; Vergara v. Suelto supra; Cadirao v.
Estenzo supra).
The pleadings, admissions and affidavits submitted in court in this
case reveal the following facts:
In August 1981, Chemark was granted by respondent bank a
credit line of P4.0 million which was increased in February 1982
to P20.0 million, to wit; Export loan line from P2.0 million to
P15.00 million; Import LC/TR-from P2.0 million to P5.0 million.
The terms and conditions of this P20 million credit are stated in
the Credit Line Agreement dated February 8, 1982 (p. 254,
Records). On this same day, February 8, 1982 the petitioners
executed separate, but with similar terms, indemnity agreements
whereby they bound themselves jointly and severally with
Chemark to pay respondent bank upon demand and without
excussion of whatever amount Chemark may be indebted to said
bank by virtue of said credit line accommodation including the
substitution, renewals, extensions, increases and other
amendments thereof; and that upon default of Chemark, proper
demands to pay were made on the petitioners to comply with their

obligations. The three indemnity agreements binding each of the


petitioners contain the following provisions:

(SGD.) ANTONIO M. GARCIA (SGD.) DOMINADOR


GAMEZ

INDEMNITY AGREEMENT

Signed in the Presence of.

KNOW ALL MEN BY THESE PRESENTS: That

(SGD.) JONA C. CAJUYONG (SGD.) TERESITA A. DE


GUZMAN

DYNETICS, INC., a corportion duly organized and existing


under and by virtue of the laws of the Philippines, with offices
at the FTI Complex, Taguig, Metro Manila for and in
consideration of the credit accommodation in the total amount
of TWENTY MILLION (P20,000,000.00) PESOS granted by
the SECURITY BANK & TRUST COMPANY, a commercial
banking corporation duly organized and existing under and by
virtue of the laws of the Philippines, with offices at 6778
Ayala Avenue, Makati, Metro Manila, hereinafter referred to
as the BANK, in favor of CHEMARK ELECTRIC MOTORS,
INC., ... a corporation duly organized and existing under and
by virtue of the laws of the Philippines, with offices at the 2nd
Floor, Princess Building, Esteban Street, Legaspi Village,
Makati, Metro Manila, hereinafter referred to as the CLIENT,
with the stipulated interests and charges thereon, evidenced by
that/those certain AMENDED CREDIT LINE AGREEMENT
made and executed by and between the CLIENT and the
BANK on even date hereby bind(s) himself/themselves jointly
and severally with the CLIENT in favor of the BANK for the
payment, upon demand and without benefit of excussion, of
whatever amount or amounts the CLIENT may be indebted to
the BANK under and by virtue of aforesaid credit
accommodation(s) including the substitutions, renewals,
extensions, increases, amendments, conversions and revivals
of the aforesaid credit accommodation(s), as well as of the
amount or amounts of such other obligations that the CLIENT
may owe the BANK, whether direct or indirect, principal or
secondary, as appears in the accounts, books and records of
the BANK, plus interest and expenses arising from any
agreement or agreements that may have heretofore been made,
or may hereafter be executed by and between the parties
thereto, including the substitutions, renewals, extensions,
increases, amendments, conversions and revivals of the
aforesaid credit accommodation(s), and further bind(s)
himself/themselves with the CLIENT in favor of the BANK
for the faithful compliance of all the aforesaid credit
accommodation(s), all of which are incorporated herein and
made part hereof by reference.
IN WITNESS WHEREOF, these presents are signed at
Makati, Metro Manila on this 8th day of February, 1982. ...
and/or its trust accounts funding this loan
DYNETICS, INC.

(Original Records, pp. 306-307)


Both Dynetics and Matrix were authorized by their respective
board of directors to execute the indemnity agreements. In the
case of Dynetics, Corporate Secretary Antonio Pastelero
certified that during a meeting of the Board of Directors held
on December 29, 1981 at its office address, it was
unanimously adopted that the corporation "... undertake to
jointly and severally guarantee the credit line of CHEMARK
ELECTRIC MOTORS, INC. in favor of the SECURITY
BANK & TRUST COMPANY, in an amount not to exceed
TWENTY MILLION (20,000,000.00) PESOS" (p. 264,
Original Records). In the case of MATRIX, Corporate
Secretary Rene J. Katigbak certified that at the meeting of the
Board of Directors held on December 28, 1981, a resolution
was unanimously adopted to have the corporation "... jointly
and severally guarantee the credit line of CHEMARK
ELECTRIC MOTORS, INC. in favor of the SECURITY
BANK & TRUST COMPANY, in an amount not to exceed
TWENTY MILLION (P20,000,000.00) PESOS. (Original
Records, p. 262)
Chemark then availed of the P20.0 million credit line and
executed two (2) promissory notes covering the following
amounts drawn against the Export Loan Line, to wit:
a) The sum of P6,350,750.00 drawn on March 23, 1983 with
interest and penalty at the rate indicated in Promissory Note
No. DLS/74/540/83 to mature on June 21, 1983 (p. 255,
Original Records)
b) The sum of P8,649,250.00 drawn on August 9, 1983 with
interest and penalty ac the rate indicated in Promissory Note
No. DLS/74/1358/83 to mature on September 8, 1983 (p. 256,
Original Records)
These obligations were not paid by Chemark when they became
due. Hence, the respondent bank demanded from the petitioners
under the indemnity agreements the payment of the outstanding
obligations of Chemark.
Undoubtedly, the obligations of the petitioners to the respondents
are clearly defined in the pleadings, admissions and the

unrebutted affidavit of Ms. Marquez who handles the Chemark


account.
Nevertheless, the petitioners insist that their complaint for
declaratory relief tenders genuine issues which should be threshed
out in a full-blown trial, to wit:

the latter allow Chemark to recover its liquidity until such


time that it shall have recovered its ability to pay its
obligations. An agreement in principle was reached on this
proposal and the defendant committed itself to allow Chemark
to recover from its liquidity problems and to refrain from
demanding payment of the loans of Chemark from the
plaintiffs. (Emphasis supplied). (Rollo, pp. 328-329).

xxx xxx xxx


xxx xxx xxx
11.1 First Defense: that the principal obligation has not yet
matured because SBTC, agreed to allow Chemark a grace
period within which to recover its liquidity and pay the debt.
11.1A This defense is pleaded in the following allegations of
the Complaint:
6. In the aftermath of the assassination of Senator Benigno S.
Aquino, Jr., on August 21, 1983, the Philippine economy was
plunged into a deep crisis. There was a massive flight of
capital; the country's balance of payments deteriorated;
business and industry practically stood still; and the foreign
debts of the country could not be serviced; banks collapsed,
the exchange rate between the Philippine Peso and US Dollar
tripled and there was practically no foreign exchange
available in the country. The resultant extremely adverse
economic conditions were not foreseen or contemplated by
persons or entities who became parties to a contract. None of
the parties to a contract expected nor did they intend that the
terms and conditions they agreed upon would operate under
extreme adverse economic conditions.
7. Because of the recent economic developments here and
abroad, the failure of one of the stockholders of Chemark to
comply with its commitments and Chemark's inability to
collect substantial receivables from its marketing
representatives in the United States, Chemark started to suffer
liquidity problems. As a consequence, it was unable to pay its
creditors, among whom is the defendant. However, Chemark
had more than sufficient assets to pay all its obligations
including its obligations to the defendant, except that its
liquidity problems prevented it from paying its creditors.
8. Chemark started negotiating with the defendant for the
restructuring of its obligations to the latter. For this purpose, it
submitted several proposed courses of action to the defendant
whereby in time all of its obligations to the defendant would
be paid.
9. In the meantime, the defendant demanded payment from
the plaintiffs of the obligations of Chemark. Although
plaintiffs are not legally liable for the payment of such
obligations, they nonetheless, proposed to the defendant that

11.2 Second Defense: that SBTC and the petitioners did not
intend to use petitioners' Indemnity Agreements as collateral
security for Chemark's loans and that SBTC extended the loan
solely on Chemark's viability as a business enterprise.
11.2A The Complaint pleads this defense in the following
paragraphs:
5. ... when the defendant finally extended the loan to
Chemark, it did so not because of the aforesaid instruments
(referring to the Indemnity Agreements) previously executed
by the (petitioners) which, in the meantime, were no longer
valid and effective and intended by the parties as collateral
security for future Chemark loans, but because of defendant's
assessment of the viability of Chemark's business operations
and interest income expected to be generated from the loans to
Chemark. (Emphasis supplied) (Rollo, pp. 329-330)
xxx xxx xxx
11.3 Third Defense: that Dynetic's execution of the Indemnity
Agreement is contrary to its purposes and is therefore ultra
vires and unenforceable against it.
11.3A This defense is pleaded in the Complaint as follows:
13. Plaintiffs are not liable to the defendant under the
Indemnity Agreement instruments xxx for the following
reasons:
xxx xxx xxx
(c) Assuming, without, conceding, that there is a valid
consideration for the execution of the aforesaid instruments
and that said instruments continued to be valid and effective
when the defendant extended a credit accommodation to
Chemark, said instruments are null and void insofar as
Dynetics is concerned as it is ultra vires, being contrary to the
purpose of Dynetics, its powers, licenses and franchise:
(Emphasis supplied) (Rollo, pp. 332-333)

We find no material questions of facts tendered by these defenses


as to the main issue on whether or not the petitioners can be held
liable to the respondent bank under their indemnity agreements.
The issue tendered in the first defense is "sham and fictitious" in
the light of the terms of the indemnity agreements. Thus, under
the indemnity agreements, the petitioners bound themselves
jointly and severally with Chemark in favor of the respondent
bank for the payment, upon demand and without benefit of
excussion, of whatever amount or amounts Chemark may be
indebted to the respondent bank under and by virtue of the credit
accommodations. (Emphasis supplied) The economic conditions
of the country are immaterial to the issue on the liability of the
petitioners under their indemnity agreements.

accommodation to Chemark in the sum of P20 M. Also what


is posed is a legal issue resolvable in light of the character of
Dynetics as a joint and solidary debtor. Dynetics also
asseverates that it did not intend its Indemnity Agreement as
collaterals for future Chemark loans. This is a clear pretense
considering that again under its Indemnity Agreement,
Dynetics clearly bound itself to pay whatever amount
Chemark may be indebted to Security Bank "under and by
virtue of the aforesaid credit accommodation(s) including the
substitutions, renewals, extensions, increases, amendments,
conversions and revivals of aforesaid credit
accommodation(s.)" There is nothing on record to substantiate
the pretense of mistake of Dynetics. (Rollo, p. 121)
xxx xxx xxx

The issue raised in the second defense, on whether or not the


indemnity agreements were intended as collaterals for future
Chemark loans is likewise sham and fictitious. Under the
indemnity agreements, the petitioners bound themselves to pay
whatever amount Chemark may be indebted to the bank "under
and by virtue of aforesaid credit accommodation(s) including the
substitutions, renewals, extensions, increases, amendments,
conversions and revivals of the aforesaid credit
accommodation(s) ... (Emphasis supplied)
The argument as to whether or not Dynetics' execution of the
indemnity agreement is contrary to its purposes and therefore
ultra vires and unenforceable against it does not tender a genuine
issue. The record shows that Dynetics was authorized to execute
the indemnity agreements evidenced by the Corporate Secretary's
certificate (p. 38, 264 Original Records).
This was not rebutted.
Indeed, we find no genuine issues raised in the complaint which
can not be resolved by the pleadings, admissions and the affidavit
of Charis Marquez submitted to the court. As the appellate court
said:
Dynetics, Garcia and Matrix attempted to avoid liability by
trying hard to create factual issues fit for trial. The attempt is
but a hodgepodge of legal arguments and conclusions which
can be resolved without the rituals of trial. Thus, Dynetics
urges that there is need for trial to determine whether it can be
compelled to pay considering that SEC by its Order of
September 27, 1984 has prohibited Chemark from paying its
creditors. The issue is strictly legal and can be decided by
determining the character of liability of Dynetics as joint and
solidary debtor. Dynetics also argues that it raised the issue of
lack of consideration which must be tried on the merits. The
issue deserves scant consideration for the parties' Indemnity
Agreement specifies the consideration to be the grant of credit

Then Dynetics argues that it has raised the issue of novation in


light of the new loan contracts between Security Bank and
Chemark. Again, the alleged new contracts are established
facts and need not be the subject of trial. Upon their basis, the
court can conclude whether there is novation of contract.
(Rollo, P. 125)
The petitioners also assail the awards of penalty charges at 36%
per annum and interest at 18% and 24% per annum respectively
on the loans. They contend that the interests are excessive and are
not sustained by the evidence because the rate of interest
stipulated in the promissory notes is only 11 % per annum.
The lower courts based the computation of interests and penalty
charges on the affidavit of Charis Marquez, Assistant Manager of
the Corporate Banking Group of Security Bank & Trust Co.
Marquez was the account officer who handled the account of
Chemark. The pertinent portions of the affidavit read as follows:
22. As per statements of Accounts dated June l5, 1985, under
the said promissory notes (Annexes "2" and "3" hereof)
covered by the subject Indemnity Agreements (Annexes "4",
"7" and "8" hereof), the total outstanding obligation of
Dynetics, Inc., Matrix Management & Trading Corporation
and Antonio M. Garcia to Security Bank & Trust Co. was
P38,189,038.27, including interest and charges. Attached
hereto as Annexes "9" and "l0" are copies of said Statements
of Accounts dated June 15, 1985;
23. In the said Statements of Accounts dated June 15, 1985,
we charged 18% and 25% per annum, respectively, because
the subject loans (Annexes "2" and "3" hereof) were intended
to be rediscounted at the Central Bank at 11% per annum.
However, when Chemark Electric Motors, Inc. failed to give
us the required letter of credit which was a requirement of the
Central Bank, we charged them 18% and 24% instead of 11%

interest per annum. These higher interest charges were based


on and authorized under our Credit Proposal, copies of which
are hereto attached as Annexes "11" to "11-B". (Original
Records, p. 252)
The increased interest rates are expressly provided for in the
amended credit line agreement and in the two promissory notes
executed by Chemark in favor of Security Bank & Trust Co. We
find no reversible error in the award of interests.
The penalty of 36% per annum is provided in the promissory
notes (Annexes "3", "4" Affidavit), as follows:
If this note is not fully paid when due, the undersigned shall
pay, in addition to the stipulated interest, a penalty of 3% per
month on the total outstanding principal and interest due and
unpaid. ... (Original Records, p. 256)
The affidavit and supporting documents were attached to the
respondent bank's motion for summary judgment. The petitioners
failed to oppose Marquez' affidavit in their "Oppositions" to the
motion for summary judgment. Neither did they submit counteraffidavits, as was their right, to oppose these amounts due from
them including the increased interests and penalty charges. Under
these circumstances, the respondent bank was entitled to
summary judgment (Philippine National Bank v. Phil. Leather
Co., Inc., et al. 105 Phil. 400; See also Mercado, et al. v. Court of
Appeals supra).<re||an1w> As earlier stated, the lower court
committed no reversible error in awarding the questioned
interests. We cannot, however, agree with the appellate court as
regards the award of penalty charges at 36% per annum.
Penalty interests are in the nature of liquidated damages
(Cumagun v. Philippine American Insurance Co., Inc., et al. G.R.
No. 81453 August 15, 1988; Lambert v. Fox, 26 Phil. 588) and
may be equitably reduced by the courts if they are iniquitous or
unconscionable. (See Articles 1229, 2227, New Civil Code).
The records show that on the first loan, the principal of which is
P6,350,750.00, the penalty charges as of June 15, 1986 are
already equivalent to P6,774,378.06 (p. 265, Original Records)
and that on the second loan, the principal of which is
P8,649,250.00 the penalty charges as of June 15, 1985 are
equivalent to P8,662,008.53. (p. 266, Original Records) The
P6,774,378.06 penalty charges in the first loan would have been
earned by the private respondent after only 725 days (1 year and
360 days) of delay in the payment of the loan while the
P8,662,008.53 penalty charges would have been earned by the
private respondent after only 646 days (1 year and 281 days) of
delay in the payment of the loan. The figures from 1985 to 1988
would amount to several times the principal loans.

We agree with the petitioner that the penalty charges are


excessive and unconscionable. The interest charges are enough
punishment for the petitioners' failure to comply with their
obligations.
Finally, the petitioners question the amount for attorney's fees
equivalent to 10% of their obligation.
Again, Chemark's promissory notes provide for the award of
attorney's fees in case of default to pay the loans, to wit:
xxx xxx xxx
If this note is not fully paid when due, the undersigned shall
pay, in addition to the stipulated interest, a penalty of 3% per
month on the total outstanding principal and interest due and
unpaid. The undersigned shall also pay, as and for attorney's
fee, a sum equivalent to 20% of the total amount due under
this note plus expenses and costs of collection, in case this
note is placed in the hands of an attorney for collection. (See
Annexes "2", "3", Affidavit of Charis Marquez) (Original
Records, p. 255)
The award for attorney's fees is justified and, in fact, is even
lower than that agreed upon by the parties.
WHEREFORE, the instant petition is DISMISSED. The
questioned decision and resolution of the Court of Appeals are
AFFIRMED except for the award of penalty charges which is
stricken from the judgment. The Temporary Restraining Order
issued on March 30, 1988 is LIFTED. Costs against the
petitioners.
SO ORDERED.

32A. Fraud, Accident, Mistake, or Excusable Negligence as


grounds for New Trial or Reconsideration/Petition for Relief from
Judgment.
PAN-ASIATIC TRAVEL CORP. v. CA, PURISIMA
G.R. No. L-62781 August 19, 1988
On March 21, 1980, Destinations Travel Phil., Inc. (hereafter,
DESTINATIONS) filed a complaint against Pan-Asiatic Travel
Corp. (hereafter, PAN-ASIATIC) for the refund of the price of
alleged unutilized airplane tickets issued by the latter for
passengers recruited by the former, which refund allegedly
totalled P48,742.33.

On June 4, 1980, DESTINATIONS filed a Motion to Declare


Defendant in Default. After receipt of said Motion, PANASIATIC, by way of special appearance, filed a Motion to
Dismiss for the sole purpose of objecting to the trial court's
jurisdiction over its person on the ground that it was not properly
served with summons. Two days after the filing of the Motion to
Dismiss, DESTINATIONS filed on June 25, 1980 an amended
complaint increasing its claim for reimbursement of refunds to
P103,866.35. At the hearing of said Motion to Dismiss, PANASIATIC was informed of the filing of the amended complaint;
hence, it withdrew its Motion to Dismiss.
Subsequently, a copy of the amended complaint and summons
were served on PAN-ASIATIC. PAN-ASIATIC filed several
motions for extension of time within which to file its answer.
However, instead of filing an Answer, it filed a Motion for Bill of
Particulars which was granted by the trial court.
DESTINATIONS did not file a Bill of Particulars. Instead, on
May 9, 1981, it served and filed a Motion to Admit attached
"Second Amended Complaint" which Second Amended
Complaint detailed the causes of action, to wit:
a. Claim for reimbursement of refunds
for unutilized tickets (Paragraphs 5
and 6 of the Complaint) P86,459.85
b. Claim for commissions Paragraphs
and 8 of the (Complaint). 2,077.33
c. Claim for incentives (Paragraphs 9
and 10 of the Complaint) 5,868.57
d. Claim for reimbursement Paragraphs
11-17 of the Complaint) .5,868.57
Total Claims (Paragraph 18). .P103,866.35
(Should be .P100,274.32)
Said Second Amended Complaint was admitted by the trial judge
in an Order dated May 28, 1981, which Order was served on
petitioner on June 9, 1981. However, no new summons was served
on petitioner. On July 15, 1981 DESTINATIONS filed a Motion
to Declare Defendant in Default which was granted. Then, trial
was held ex parte. On January 4, 1982 the trial court rendered

judgment by default against PAN-ASIATIC, which received a


copy of the decision on January 25, 1982.
On February 24, 1982, petitioner filed its Omnibus Motion to Lift
Order of Default and to Vacate Judgment by Default, alleging that
the trial court's decision was rendered without jurisdiction
because petitioner was never served with summons on the Second
Amended Complaint, and that it was deprived of its day in court
on account of fraud, accident, mistake and/or excusable
negligence. The motion was denied by the trial judge in an Order
dated March 31, 1982. A copy of the Order was served on
petitioner on April 2, 1982. On the same date, April 2, 1982,
PAN-ASIATIC filed a Motion for Reconsideration of the Order of
March 31. While the Motion for Reconsideration was pending,
petitioner filed on April 30, 1982 its notice of appeal, appeal bond
and record on appeal, and at the same time withdrew its Motion
for Reconsideration which withdrawal was granted by the trial
court.
On May 19, 1982, DESTINATIONS filed a Motion for Execution
which the trial court granted on June 15, 1982. Meanwhile, the
appeal of PAN-ASIATIC, was Dismissed on the ground that the
Decision of January 4, 1982 had become final and executory and
that the appeal was filed beyond the reglementary period.
On July 7, 1982, PAN-ASIATIC filed a petition for certiorari and
mandamus before the Court of Appeals, alleging that the trial
court acted without jurisdiction in dismissing the appeal and in
issuing the writ of execution. The appellate tribunal dismissed the
petition. Hence, this present action to which this Court gave due
course on November 23, 1983.
The parties present the following issues for resolution by the
Court:
I WHETHER OR NOT THE TRIAL COURT HAD
JURISDICTION OVER THE PERSON OF PETITIONER
WHEN IT RENDERED THE DECISION OF JANUARY 4,
1982.
II WHETHER OR NOT PETITIONER'S APPEAL IN CIVIL
CASE NO. 130608 WAS FILED WITHIN THE
REGLEMENTARY PERIOD.
1. Petitioner contends that the Second Amended Complaint
introduced new causes of action not alleged in the original nor in
the first amended complaint. Hence, it is argued that new
summons had to be served on petitioner, for the court to acquire
jurisdiction over its (petitioner's) person.
The Second Amended Complaint does introduce new causes of
action. For while in the first amended complaint,

DESTINATIONS prayed for reimbursement of refunds for


unutilized airplane tickets only, in the Second Amended
Complaint, there were claims for commissions and incentives,
although the total amount of the claims was the same as the
amount claimed in the first amended complaint.
But was there need to serve new summons on PAN-ASIATIC?
In the 1923 case of Atkins, Kroll and Co. v. Domingo, [44 Phil.
681 (1924)], this Court had occasion to lay down the rule that if
the defendant had appeared in the action, service of an amended
complaint (which introduces a new cause of action) in the same
manner as any other pleading or motion is sufficient, even if no
new summons is served. This ruling was reiterated in the case
of Ong Peng v. Custodio [G.R. No. L-14911, March 25, 1961, 1
SCRA 780] in more categorical terms:
If he (defendant) had not yet appeared, a new summons must
be served upon him as regards the amended complaint,
otherwise the court would have no power to try the new
causes of action alleged therein, unless he had lodged an
answer thereto. Simply sending a copy of the amended
complaint to the defendant by registered mail is not equivalent
to service of summons in such case. However, if the defendant
had already appeared in response to the first summons, so
that he was already in court when the amended complaint was
filed, then ordinary service of that pleading upon him,
personally or by mail, would be sufficient, and no new
summons need be served upon him.
In the instant case, summons on the first amended complaint was
properly served on PAN-ASIATIC. After which, the company
filed several motions for extension of time within which to file
responsive pleading, and then a Motion for Bill of Particulars, all
of which motions were granted by the trial court. With the filing
of these motions, PAN-ASIATIC had effectively appeared in the
case and voluntarily submitted itself to the jurisdiction of the
court. Hence, no new summons on the Second Amended
Complaint was necessary, ordinary service being sufficient.
In cases where a complaint is amended, the Rules of Court
provide for the period within which the defendant must answer
thus:
SEC. 3. Answer to amended complaint.If the complaint is
amended, the time fixed for the filing and service of the
answer shall, unless otherwise ordered, run from notice of the
order admitting the amended complaint. An answer filed
before the amendment shall stand as an answer to the
amended complaint, unless a new answer is filed within ten
(10) days from notice of service as herein provided.

There is no question that PAN-ASIATIC was properly served


with a copy of the Second Amended Complaint and that on June
9, 1981, it received a copy of the Order admitting said Second
Amended Complaint. Since it failed to serve and file its Answer
within fifteen (15) days from June 9, 1981, the trial court was
correct in declaring the company in default, in holding trial ex
parte, and in eventually rendering judgment by default.
2. Anent the second issue, petitioner contends that its Omnibus
Motion to Lift Order of Default and to Vacate Judgment by
Default is in the nature of a Petition for Relief under Rule 38.
Hence, the Order denying the Omnibus Motion which was
received by petitioner on April 2, 1982, is itself appealable. PANASIATIC thus argues that it had thirty (30) days from April 2,
1982 within which to appeal said Order. Since it filed its notice of
appeal, appeal bond and record on appeal on April 30, 1982, then,
it is claimed, the appeal was perfected on time.
Petitioner's premise is incorrect. The Omnibus Motion to Lift
Order of Default and to Vacate Judgment is in the nature of a
Motion for New Trial under Rule 37, and-not a Petition for Relief
under Rule 38.
Be it recalled that a copy of the Judgment by Default was
received by PAN-ASIATIC on January 25, 1982. The Omnibus
Motion was filed on February 24,1982, which was within the
period to appeal. Since the motion was filed before the decision
became final, it could not be a Petition for Relief under Rule 38,
but a Motion for New Trial.
... It is a well-known rule that (a petition for relief under Rule
38) may be filed only when the order or judgment from which
it is sought has already become final and executory (Veluz vs.
J.P. of Sariaya, 42 Phil. 557; Anuran vs. Aquino, 38 Phil. 29;
Quirino vs. PNB, 101 Phil. 705; 54 Off. Gaz. [14] 4248), so
that as long as the judgment against which relief is sought has
not yet become final, the petition aforesaid is not available as
a remedy. Instead, the aggrieved party may file a motion for
new trial, under Rule 37 in courts of first instance, and under
section 16, Rule 4, in inferior courts, in order that the court
may correct any errors, mistakes or injustices committed in its
judgment. [Punzalan v. Papica, et al., 107 Phil. 246 (1960).]
Since the Omnibus Motion is in the nature of a Motion for New
Trial, the Order denying said motion is NOT itself appealable.
However, the time during which the motion was pending must be
deducted from the thirty-day appeal period. Pursuant to section 3,
Rule 41 which reads:
SEC. 3.How appeal is taken.Appeal may be taken by
serving upon the adverse party and filing with the trial court
within thirty (30) days from notice of order or judgment, a

notice of appeal, an appeal bond, and a record on appeal. The


time during which a motion to set aside thejudgment or order
or for a new trial has been pending shall be deducted, unless
such motion fails to satisfy the requirements of Rule 37.

Court. To stay its execution, ANC filed a supersedes bond in the


amount of P2,700,000.00, which was approved by Judge
Reyes. 2 He subsequently affirmed the appealed judgment on
June 7, 1991. 3

But where such a motion has been filed during office hours of
the last day of the period herein provided, the appeal must be
perfected within the day following that in which the party
appealing received notice of the denial of said motion.

On June 10, 1991, the petitioner filed an ex parte motion for


execution on the ground that the judgment had already become
final and executory under RA 6031. Judge Reyes granted the
motion the same day 4 and at 4:00 o'clock that afternoon the writ
of execution was served on ANC.

From January 25, 1982 (the date when PAN-ASIATIC received a


copy of the Judgment by Default) to February 24, 1982 (the date
when the Omnibus Motion was filed) is twenty-nine days.
Petitioner therefore had one more day from April 2, 1982 (the day
when PAN-ASIATIC received a copy of the Order denying the
Omnibus Motion), within which to appeal. Instead of appealing,
however, petitioner filed on the same day, April 2, 1982 a motion
for reconsideration of the Order, only to withdraw it on April 30,
1982, as it filed its notice of appeal, appeal bond and record on
appeal.
Since the motion for reconsideration was withdrawn, then it is as
if no motion for reconsideration was ever filed. Thus, the one day
remaining period remained unchanged. Clearly, therefore, the
appeal interposed on April 30, 1982 was filed out of time.
WHEREFORE, the petition is hereby DISMISSED. Costs against
the petitioner.
SO ORDERED.

33A. Execution, Satisfaction and Effect of Judgment


CITY OF MANILA v. CA
G.R. No. 100626 November 29, 1991

Respondent Court of Appeals is faulted in this action


for certiorari for having set aside the order of execution dated
June 10, 1991, and the writ of execution issued by Judge Wilfredo
Reyes of the Regional Trial Court of Manila in Civil Case No.
9156335.
This was a complaint for unlawful detainer filed by the City of
Manila against private respondent Army and Navy Club for
violation of the lease agreement between them over a parcel of
land on Roxas Boulevard in the said city. A summary judgment in
favor of the petitioner was rendered by the Metropolitan Trial
Court of Manila 1 and seasonably elevated to the Regional Trial

ANC moved to quash the writ on June 11, 1991, but hours later,
sensing that the motion could not be acted upon, filed a petition
for certiorari and prohibition with the Court of Appeals.
On July 3, 1991, that court issued the questioned
decision, 5 prompting the filing of the present petition
for certiorari.
The petitioner assails the action of the respondent court and
contends that decisions of the regional trial court in cases
exclusively cognizable by inferior courts and are final and
executory under RA 6031. Thus:
Sec. 1. . . .
In cases falling under the exclusive original jurisdiction of
municipal and city courts which are appealed to the courts of
first instance, the decision of the latter shall be
final: Provided, That the findings of facts contained in said
decision are supported by substantial evidence as basis
thereof, and the conclusions are not clearly against the law
and jurisprudence; in cases falling under the concurrent
jurisdictions of the municipal and city courts with the courts
of first instance, the appeal shall be made directly to the Court
of Appeals whose decision shall be final: Provided,
however, that the Supreme Court in its direction may, in any
case involving a question of law, upon petition of the party
aggrieved by the decision and under rules and conditions that
it may prescribe, require by certiorari that the case be
certified to it for review and determination, as if the case had
been brought before it on appeal. (Emphasis supplied.)
The respondents argue on the other hand that under BP 129,
decisions of the regional trial court in cases originating from and
within the exclusive jurisdiction of the metropolitan or municipal
trial courts are not final but subject to appeal in a petition for
review to the Court of Appeals. Such decisions cannot be
executed where the period of time for the defendant to perfect his
appeal has not yet expired. Thus:

Sec. 22. (BP 129) Appellate jurisdiction. Regional Trial


Courts shall exercise appellate jurisdiction over all cases
decided by Metropolitan Trial Courts, Municipal Trial Courts
and Municipal Circuit Trial Courts in their respective
territorial jurisdiction. Such cases shall be decided on the
basis of the entire record of the proceedings had in the court
of origin and such memoranda and/or briefs as may be
submitted by the parties or required by the Regional Trial
Courts. The decision of the RTC in such cases shall be
appealable by petition for review to the Intermediate
Appellate Court which may give it due course only when the
petition shows prima facie that the lower court has committed
an error of fact or law that will warrant a reversal or
modifications of the decision or judgment sought to be
reviewed.(Emphasis supplied.)
It is useful at this point to review the distinction between a "final"
judgment and one which has become "final and executory."
In PLDT Employees Union v. PLDT Free Telephone Workers
Union, 6 the Court observed:
. . . (A)n order or judgment is deemed final when it finally
disposes of the pending action so that nothing more can be
done with it in the trial court. In other words, a final order is
that which gives an end to the litigation . . . when the order or
judgment does not dispose of the case completely but leaves
something to be done upon the merits, it is merely
interlocutory.
The case of Antonio v. Samonte 7 elaborated on this matter thus:
A final order of judgment finally disposes of, adjudicates, or
determines the rights, or some right or rights of the parties,
either on the entire controversy or on some definite and
separate branch thereof, and concludes them until it is
reversed or set aside . . .Where no issue is left for future
consideration, except the fact of compliance or noncompliance with the terms of the judgment or order, such
judgment or order is final and appealable.
By contrast, in Investments, Inc. v. Court of Appeals, 8 we
declared:
Now, a "final judgment" in the sense just described becomes
final "upon expiration of the period to appeal therefrom if no
appeal has been duly perfected" or, an appeal therefrom
having been taken, the judgment of the appellate tribunal in
turn becomes final and the records of the case are returned to
the Court of origin. The "final" judgment is then correctly
categorized as a "final and executory judgment" in respect to
which, as the law explicitly provides, "execution shall issue as

a matter of right." It bears stressing that only a final judgment


or order, i.e., "a judgment or order that finally dispose of the
action of proceeding" can become final and executory.
A judgment becomes "final and executory" by operation of law.
Finality of judgment becomes a fact upon the lapse of the
reglementary period to appeal if no appeal is perfected. In such a
situation, the prevailing party is entitled to a writ of execution,
and issuance thereof is a ministerial duty of the court.
Both RA 6031 and BP 129 provide that decisions of the regional
trial court in its appellate capacity may be elevated to the Court of
Appeals in a petition for review. In effect, both laws recognize
that such judgments are "final" in the sense that they finally
dispose of, adjudicate, or determine the rights of the parties in the
case. But such judgments are not yet "final and executory"
pending the expiration of the reglementary period for appeal.
During that period, execution of the judgment cannot yet be
demanded by the winning party as a matter of right.
In the present case, the private respondent had up to June 25,
1991, to appeal the decision of the regional trial court. The
motion for execution was filed by the petitioner on June 10, 1991,
before the expiration of the said reglementary period. As the
decision had not yet become final and executory on that date, the
motion was premature and should therefore not have been
granted. Contrary to the petitioner's contention, what the trial
court authorized was an execution pending appeal.
While it is true that execution pending appeal is allowed under
Rule 39, Sec. 2, of the Rules of Court, this provision must be
strictly construed, being an exception to the general rule. The
reason allowing this kind of execution must be of such urgency as
to outweigh the injury or damage of the losing party should it
secure a reversal of the judgment on appeal. Absent any such
justification, the order of execution must be struck down as
flawed with grave abuse of discretion. 9
We see no such justification in the case before us.
It is worth remarking that as the case was not tried under the Rule
on Summary procedure, the writ of execution did not even fall
under the following Section 18 thereof :
d) Sec. 18. Appeal. The judgment or final order, including
that rendered under Section 5 hereof, shall be appealable to
the appropriate regional trial court which shall decide the
same on the basis of the records, in accordance with Section
22 of Batas Pambansa Blg. 129. The decision of the regional
trial court in such civil cases shall be immediately executory.

To stay the execution, a supersedes bond is necessary except


where one has already been filed in the lower court. This bond
continues to be effective if the judgment of the regional trial court
is appealed. But during the pendency of the appeal, the defendantappellant must continue to depositing with the appellate court the
payments required in the appealed judgment. The rentals accruing
during the pendency of the appeal must be deposited on or before
the date stipulated, if there is one, and in the absence thereof, on
or before the dates provided for in Sec. 8 of Rule 70. Failure to
make such deposits or payments is ground for execution of the
judgment. 10
Since the private respondent in the case at bar has filed a
supersedeas bond and the stipulated rental is yearly, 11execution
may issue only when it fails to make the yearly deposit of the
rental, and after notice and hearing. Such default has not yet been
established.
The Court notes with disapproval the arbitrary manner in which
Sheriff Dominador Cacpal and Deputy Sheriff Reynaldo Cordero
acted in delivering possession of the leased premises to the
petitioner. The evidence shows that they enforced the writ of
execution on the same date they received it, forcibly taking out
movables from the said premises, including chandeliers, furniture
and furnishings, music organs, stereo components, lighting
fixtures and computers. They turned off the water, cut off the
electricity and disconnected the telephones. They also
unreasonably prevented ANC members from entering the
premises to get their personal belongings.
Cacpal and Cordero are hereby sternly reprimanded and warned
that a repetition of similar arbitrariness will be dealt with more
severely. Their conduct was a clear violation of the requirement
that:
Under the Rules of Court the immediate enforcement of a writ
of ejectment execution is carried out by giving the defendant
notice of such writ, and making a demand that defendants
comply therewith within a reasonable period, normally from
three (3) to five (5) days, and it is only after such period that
the sheriff enforces the writ by the bodily removal of the
defendant and his personal belonging. 12
On the issue of the propriety of a special civil action
for certiorari to assail an order of execution pending appeal, this
Court has held that
. . . Although Sec. 1, Rule 66 of the Rules of Court provides
that the special civil action of certiorari may only be invoked
when "there is no appeal, nor any plain, speedy and adequate
remedy in the (ordinary) course of law" this rule is not
without exception. The availability of the ordinary course of

appeal does not constitute sufficient ground to prevent a party


from making use of the extraordinary remedy
of certiorari where the appeal is not an adequate remedy or
equally beneficial, speedy and sufficient. It is the inadequacy
not the mere absence of all other legal remedies and the
danger of failure of justice without merit that usually
determines the propriety of certiorari. 13
While appeal is normally employed to question an order or writ
which varies the terms of the decision being executed, it is
nevertheless not the sole and exclusive remedy. The special civil
action of certiorari and prohibition under Rule 65 was available
to the private respondent on the allegation that the regional trial
court, in issuing the writ of execution, committed grave abuse of
discretion and acted beyond its jurisdiction and that the ordinary
remedy of appeal was inadequate.
The last question to be resolved is, assuming that the decision of
the regional trial court had already become "final and executory,"
could the said court order its execution?
The rule is that if the judgment of the metropolitan trial court is
appealed to the regional trial court and the decision of the latter is
itself elevated to the Court of Appeals, whose decision thereafter
became final, the case should be remanded through the regional
trial court to the metropolitan trial court for execution. 14 The
only exception is the execution pending appeal, which can be
issued by the regional trial court under Sec. 8 of Rule 70 or the
Court of Appeals or the Supreme Court under Sec. 10 of the same
Rule.
As previously observed, the petitioner has shown no weighty
justification for the application of the exception. Hence, the
respondent court committed no error in reversing the Regional
Trial Court of Manila and annulling the writ of execution issued
by it on June 10, 1991, pending appeal of its decision.
ACCORDINGLY, the petition is DISMISSED, and the challenged
decision of the Court of Appeals is AFFIRMED intoto. No costs.
SO ORDERED.

33B. Execution, Satisfaction and Effect of Judgment


REBURIANO v. CA
G.R. No. 102965. January 21, 1999
In Civil Case No. Q-35598, entitled Pepsi Cola Bottling
Company of the Philippines, Inc. v. Urbano (Ben) Reburiano and

James Reburiano, the Regional Trial Court, Branch 103 rendered


on June 1, 1987 a decision, the dispositive portion of which reads:

no more client in this case and so his appearance in this case was
no longer possible and tenable;

ACCORDINGLY, judgment is hereby rendered in favor of


plaintiff Pepsi Cola Bottling Co. of the Philippines, Inc.

5. That in view of the foregoing premises, therefore, the decision


rendered by this Honorable Court and by the Honorable Court of
Appeals are patent nullity, for lack of jurisdiction and lack of
capacity to sue and be sued on the part of the [private
respondent];

1. Ordering the defendants Urbano (Ben) Reburiano and James


Reburiano to pay jointly and severally the plaintiff the sum
of P55,000.00, less whatever empties (cases and bottles) may be
returned by said defendants valued at the rate of P55.00 per
empty case with bottles.
2. Costs against the defendants in case of execution.
SO ORDERED.
Private respondent Pepsi Cola Bottling Company of the
Philippines, Inc. appealed to the Court of Appeals seeking the
modification of the portion of the decision, which stated the value
of the cases with empty bottles as P55.00 per case, and obtained a
favorable decision. On June 26, 1990, judgment was rendered as
follows:
WHEREFORE, the decision appealed from is SET ASIDE and
another one is rendered, ordering the defendant-appellees to pay
jointly and severally the plaintiff-appellant the sum of P55,000.00
with interest at the legal rate from January 1982. With costs
against defendants-appellees.
After the case had been remanded to it and the judgment had
become final and executory, the trial court issued on February 5,
1991 a writ of execution.
It appears that prior to the promulgation of the decision of
the trial court, private respondent amended its articles of
incorporation to shorten its term of existence to July 8, 1983. The
amended articles of incorporation was approved by the Securities
and Exchange Commission on March 2, 1984. The trial court was
not notified of this fact.
On February 13, 1991, petitioners moved to quash the writ
of execution alleging 3. That when the trial of this case was conducted, when the
decision was rendered by this Honorable Court, when the said
decision was appealed to the Court of Appeals, and when the
Court of Appeals rendered its decision, the private respondent
was no longer in existence and had no more juridical personality
and so, as such, it no longer had the capacity to sue and be sued;
4. That after the [private respondent], as a corporation, lost its
existence and juridical personality, Atty. Romualdo M. Jubay had

6. That the above-stated change in the situation of parties,


whereby the [private respondent] ceased to exist since 8 July
1983, renders the execution of the decision inequitable or
impossible.[1]
Private respondent opposed petitioners motion. It argued
that the jurisdiction of the court as well as the respective parties
capacity to sue had already been established during the initial
stages of the case; and that when the complaint was filed in 1982,
private respondent was still an existing corporation so that the
mere fact that it was dissolved at the time the case was yet to be
resolved did not warrant the dismissal of the case or oust the trial
court of its jurisdiction. Private respondent further claimed that its
dissolution was effected in order to transfer its assets to a new
firm of almost the same name and was thus only for convenience.
[2]

On February 28, 1991, the trial court issued an


order denying petitioners motion to quash.Petitioners then filed
a notice of appeal, but private respondent moved to dismiss the
appeal on the ground that the trial courts order of February 28,
1991 denying petitioners motion to quash writ of execution was
not appealable.[4] The trial court, however, denied private
respondents motion and allowed petitioners to pursue their
appeal.
[3]

In its resolution[5] of September 3, 1991, the appellate court


dismissed petitioners appeal.Petitioners moved for a
reconsideration, but their motion was denied by the appellate
court in its resolution, dated November 26, 1991.
Hence, this petition for review on certiorari. Petitioners pray
that the resolutions, dated September 3, 1991 and November 26,
1991, of the Court of Appeals be set aside and that a new decision
be rendered declaring the order of the trial court denying the
motion to quash to be appealable and ordering the Court of
Appeals to give due course to the appeal.[6]
On the other hand, private respondent argues that petitioners
knew that it had ceased to exist during the course of the trial of
the case but did not act upon this information until the judgment
was about to be enforced against them; hence, the filing of a
Motion to Quash and the present petition are mere dilatory tactics

resorted to by petitioners. Private respondent likewise cites the


ruling of this Court in Gelano v. Court of Appeals[7] that the
counsel of a dissolved corporation is deemed a trustee of the same
for purposes of continuing such action or actions as may be
pending at the time of the dissolution to counter petitioners
contention that private respondent lost its capacity to sue and be
sued long before the trial court rendered judgment and hence
execution of such judgment could not be complied with as the
judgment creditor has ceased to exist.[8]
First. The question is whether the order of the trial court
denying petitioners Motion to Quash Writ of Execution is
appealable. As a general rule, no appeal lies from such an order,
otherwise litigation will become interminable. There are
exceptions, but this case does not fall within any of such
exceptions.
In Limpin, Jr. v. Intermediate Appellate Court, this Court
held:

[9]

Certain, it is, . . . that execution of final and executory judgments


may no longer be contested and prevented, and no appeal should
lie therefrom; otherwise, cases would be interminable, and there
would be negation of the overmastering need to end litigations.
There may, to be sure, be instances when an error may be
committed in the course of execution proceedings prejudicial to
the rights of a party. These instances, rare though they may be, do
call for correction by a superior court, as where 1) the writ of execution varies the judgment;
2) there has been a change in the situation of the parties making
execution inequitable or unjust;
3) execution is sought to be enforced against property exempt
from execution;
4) it appears that the controversy has never been submitted to the
judgment of the court;
5) the terms of the judgment are not clear enough and there
remains room for interpretation thereof; or,
6) it appears that the writ of execution has been improvidently
issued, or that it is defective in substance, or is issued against the
wrong party, or that the judgment debt has been paid or otherwise
satisfied, or the writ was issued without authority;
In these exceptional circumstances, considerations of justice and
equity dictate that there be some mode available to the party
aggrieved of elevating the question to a higher court. That mode

of elevation may be either by appeal (writ of error or certiorari)


or by a special civil action of certiorari, prohibition,
or mandamus.
In this case, petitioners anchored their Motion to Quash on
the claim that there was a change in the situation of the
parties. However, a perusal of the cases which have recognized
such a ground as an exception to the general rule shows that the
change contemplated by such exception is one which occurred
subsequent to the judgment of the trial court. Here, the change in
the status of private respondent took place in 1983, when it was
dissolved, during the pendency of its case in the trial court. The
change occurred prior to the rendition of judgment by the trial
court.
It is true that private respondent did not inform the trial
court of the approval of the amended articles of incorporation
which shortened its term of existence. However, it is incredible
that petitioners did not know about the dissolution of private
respondent considering the time it took the trial court to decide
the case and the fact that petitioner Urbano Reburiano was a
former employee of private respondent. As private respondent
says,[10] since petitioner Reburiano was a former sales manager of
the company, it could be reasonably presumed that petitioners
knew of the changes occurring in respondent company. Clearly,
the present case does not fall under the exception relied upon by
petitioners and, the Court of Appeals correctly denied due course
to the appeal. As has been noted, there are in fact cases which
hold that while parties are given a remedy from a denial of a
motion to quash or recall writ of execution, it is equally settled
that the writ will not be recalled by reason of any defense which
could have been made at the time of the trial of the case.[11]
Second. The Court of Appeals also held that in any event
petitioners cannot raise the question of capacity of a dissolved
corporation to maintain or defend actions previously filed by or
against it because the matter had not been raised by petitioners
before the trial court nor in their appeal from the decision of the
said court. The appellate court stated:
It appears that said motion to quash writ of execution is anchored
on the ground that plaintiff-appellee Pepsi Bottling Company of
the Philippines had been dissolved as a corporation in 1983, after
the filing of this case before the lower court, hence, it had lost its
capacity to sue. However, this was never raised as an issue before
the lower court and the Court of Appeals when the same was
elevated on appeal. The decision of this Court, through its Fourth
Division, dated June 26, 1990, in CA-G.R. CV No. 16070 which,
in effect, modified the appealed decision, consequently did not
touch on the issue of lack of capacity to sue, and has since
become final and executory on July 16, 1990, and has been
remanded to the court a quo for execution. It is readily apparent

that the same can no longer be made the basis for this appeal
regarding the denial of the motion to quash writ of execution. It
should have been made in the earlier appeal as the same was
already obtaining at that time.[12]
We agree with this ruling. Rules of fair play, justice, and due
process dictate that parties cannot raise for the first time on appeal
from a denial of a Motion to Quash a Writ of Execution issues
which they could have raised but never did during the trial and
even on appeal from the decision of the trial court.[13]
Third. In any event, if the question of private respondents
capacity to sue can be raised for the first time in this case, we
think petitioners are in error in contending that a dissolved and
non-existing corporation could no longer be represented by a
lawyer and concomitantly a lawyer could not appear as counsel
for a non-existing judicial person.[14]
Section 122 of the Corporation Code provides in part:
122. Corporate Liquidation. - Every Corporation whose charter
expires by its own limitation or is annulled by forfeiture or
otherwise, or whose corporate existence for other purposes is
terminated in any other manner, shall nevertheless be continued
as a body corporate for three (3) years after the time when it
would have been so dissolved, for the purpose of prosecuting and
defending suits by or against it and enabling it to settle and close
its affairs, to dispose of and convey its property and to distribute
its assets, but not for the purpose of continuing the business for
which it was established.
At any time during said three (3) years, said corporation is
authorized and empowered to convey all of its property to trustees
for the benefit of stockholders, members, creditors, and other
persons in interest. From and after any such conveyance by the
corporation of its property in trust for the benefit of its
stockholders, members, creditors and others in interests, all
interests which the corporation had in the property terminates, the
legal interest vests in the trustees, and the beneficial interest in the
stockholders, members, creditors or other persons in interest.
Petitioners argue that while private respondent Pepsi Cola
Bottling Company of the Philippines, Inc. undertook a voluntary
dissolution on July 3, 1983 and the process of liquidation for
three (3) years thereafter, there is no showing that a trustee or
receiver was ever appointed. They contend that 122 of the
Corporation Code does not authorize a corporation, after the
three-year liquidation period, to continue actions instituted by it
within said period of three years. Petitioners cite the case
of National Abaca and Other Fibers Corporation v.
Pore[15] wherein this Court stated:

It is generally held, that where a statute continues the existence of


a corporation for a certain period after its dissolution for the
purpose of prosecuting and defending suits, etc., the corporation
becomes defunct upon the expiration of such period, at least in
the absence of a provision to the contrary, so that no action can
afterwards be brought by or against it, and must be
dismissed. Actions pending by or against the corporation when
the period allowed by the statute expires, ordinarily abate.[16]
This ruling, however, has been modified by subsequent
cases. In Board of Liquidators v. Kalaw,[17] this Court stated:
. . .The legal interest became vested in the trustee the Board of
Liquidators. The beneficial interest remained with the sole
stockholder the government. At no time had the government
withdrawn the property, or the authority to continue the present
suit, from the Board of Liquidators. If for this reason alone, we
cannot stay the hand of the Board of Liquidators from prosecuting
this case to its final conclusion. The provision of Section 78 (now
Section 122) of the Corporation Law the third method of winding
up corporate affairs finds application.[18]
Indeed, in Gelano vs. Court of Appeals,[19] a case having
substantially similar facts as the instant case, this Court held:
However, a corporation that has a pending action and which
cannot be terminated within the three-year period after its
dissolution is authorized under Sec. 78 [now 122] of the
Corporation Law to convey all its property to trustees to enable it
to prosecute and defend suits by or against the corporation
beyond the three-year period. Although private respondent did not
appoint any trustee, yet the counsel who prosecuted and defended
the interest of the corporation in the instant case and who in fact
appeared in behalf of the corporation may be considered a trustee
of the corporation at least with respect to the matter in litigation
only. Said counsel had been handling the case when the same was
pending before the trial court until it was appealed before the
Court of Appeals and finally to this Court. We therefore hold that
there was substantial compliance with Sec. 78 [now 122] of the
Corporation Law and such private respondent Insular Sawmill,
Inc. could still continue prosecuting the present case even beyond
the period of three (3) years from the time of dissolution.
...[T]he trustee may commence a suit which can proceed to final
judgment even beyond the three-year period. No reason can be
conceived why a suit already commenced by the corporation itself
during its existence, not by a mere trustee who, by fiction, merely
continues the legal personality of the dissolved corporation
should not be accorded similar treatment allowed to proceed to
final judgment and execution thereof.[20]

In the Gelano case, the counsel of the dissolved corporation


was considered a trustee. In the later case of Clemente v. Court of
Appeals,[21] we held that the board of directors may be permitted
to complete the corporate liquidation by continuing as trustees by
legal implication. For, indeed, as early as 1939, in the case
of Sumera v. Valencia,[22] this Court held:

SO ORDERED.

33C. Execution, Satisfaction and Effect of Judgment


HIYAS SAVINGS AND LOAN BANK v. CA
G.R. No. 95625 October 4, 1991

It is to be noted that the time during which the corporation,


through its own officers, may conduct the liquidation of its assets
and sue and be sued as a corporation is limited to three years from
the time the period of dissolution commences; but there is no time
limit within which the trustees must complete a liquidation placed
in their hands. It is provided only (Corp. Law, Sec. 78 [now Sec.
122]) that the conveyance to the trustees must be made within the
three-year period. It may be found impossible to complete the
work of liquidation within the three-year period or to reduce
disputed claims to judgment. The authorities are to the effect that
suits by or against a corporation abate when it ceased to be an
entity capable of suing or being sued (7 R.C.L., Corps., par. 750);
but trustees to whom the corporate assets have been conveyed
pursuant to the authority of Sec. 78 [now Sec. 122] may sue and
be sued as such in all matters connected with the liquidation. . . .
[23]

Furthermore, the Corporation Law provides:


145. Amendment or repeal. - No right or remedy in favor of or
against any corporation, its stockholders, members, directors,
trustees, or officers, nor any liability incurred by any such
corporation, stockholders, members, directors, trustees, or
officers, shall be removed or impaired either by the subsequent
dissolution of said corporation or by any subsequent amendment
or repeal of this Code or of any part thereof.
This provision safeguards the rights of a corporation which is
dissolved pending litigation.
There is, therefore, no reason why the suit filed by private
respondent should not be allowed to proceed to execution. It is
conceded by petitioners that the judgment against them and in
favor of private respondent in C.A. G.R. No. 16070 had become
final and executory. The only reason for their refusal to execute
the same is that there is no existing corporation to which they are
indebted.Such argument is fallacious. As previously mentioned,
the law specifically allows a trustee to manage the affairs of the
corporation in liquidation. Consequently, any supervening fact,
such as the dissolution of the corporation, repeal of a law, or any
other fact of similar nature would not serve as an effective bar to
the enforcement of such right.
WHEREFORE, the resolutions, dated September 3, 1991
and November 26, 1991, of the Court of Appeals are AFFIRMED.

This is a petition for review on certiorari of the decision of the


Court of Appeals in CA-G.R. SP. No. 21002 dismissing the
special civil action for certiorari filed by the herein petitioner
against the order of the Regional Trial Court of Bulacan, Branch
15.
Herein petitioner Hiyas Savings and Loan Bank (Hiyas Savings)
was one of the defendants in Civil Case No. 6821-M entitled
"Delfin Mendoza, et al. v. Victoria Evangelista, et al." for
annulment of a mortgage contract with a prayer for a preliminary
injunction seeking to restrain the foreclosure sale and public
auction of the properties subject of the mortgage. After trial, a
decision was rendered in favor of the defendant Hiyas Savings
and Loan Bank, the dispositive portion of which read:
WHEREFORE, premises considered, judgment is hereby
rendered dismissing plaintiff's complaints' complaint for lack
of merit and ordering the lifting and setting aside or (sic) the
preliminary injunction previously issued in this case.
The plaintiffs are ordered, jointly and severally to pay
defendant Hiyas Savings and Loan Association, Inc., within
ninety (90) days from receipt hereof, the following sums:
1. P200.000.00 representing the principal amount of loan
payable by plaintiffs to private defendant, with 14% interest
per annum thereon from January 10, 1982 (date of maturity
until the same is fully paid by the plaintiffs or satisfied out of
the sale of the mortgage properties;
2. Ten percent (10%) of the amount due as and by way of
attorney's fees; and
3. The costs of this suit.
In default of plaintiffs to pay said money judgment, let the
mortgaged two (2) parcels of land and their improvements
covered by TCT Nos. T-8930 (M) and
T-24.7070 (M), be sold at public auction by the Provincial
Sheriff of Bulacan under Rules 39 and 68 of the Revised
Rules of Court.
SO ORDERED. (p. 16, Rollo)
No appeal was taken by the parties from the decision of the trial
court. Hence, it became final. Motion for execution was filed by
Hiyas Savings.
On June 7, 1989, private respondents deposited in court two (2)
treasury checks in the amount of P428,600.00 in satisfaction of
the judgment. Of the amount deposited, P40,735.35 was applied
by petitioner as attorney's fees. However, on August 18, 1989,
petitioner filed an amended motion for exeucution. Petitioner
claimed that the total liability of private respondents was
P448,941.92 computed as follows:
P200,000.00

- Principal

207,436.66

- Interest from 1-10-82 to 6-07-89

40,743.66

- Attorney's fees [10% of (200,000.00 +


207,436.66)]

761.60

- Cost of suit and legal expenses

..
P448,941.92

- Total

Hence, there was still an unsatisfied balance which it claimed to


be P20,250.38.
The motion was denied on September 4, 1989 and reconsideration
was likewise denied on November 16, 1989.
Petitioner filed a special civil action for certiorari with the Court
of Appeals on the lone issue:
Whether the respondent-Judge acted in excess of its
jurisdiction in stating in the assailed order that the ten (10)
percent of the amount due as and by way of attorney's fees
refers to the principal amount and in denying the motion for
reconsideration which acts are correctible by certiorari. (p. 17,
Rollo)
On September 28, 1990, the Court of Appeals dismissed the
petition. It ruled:
By and large, We believe that the respondent-Judge acted
correctly in fixing the reasonable attorney's fees to P20,000.00
the amount of ten (10) per cent from the amount due as
appearing in the agreement of the parties. Consequently, the
respondent Judge has not exceeded his jurisdiction in denying
the motion of the petitioner to amend the writ of execution,
and the subsequent motion for reconsideration. Suffice it to
state, that the petition for certiorari is devoid of merit and
therefore should be DENIED DUE COURSE.
WHEREFORE, the petition for certiorari is ordered
DISMISSED. No costs. (p. 19, Rollo)
The petitioner is now before Us submitting the same issue which
the respondent appellate court had allegedly decided in a way not
in accord with law or the applicable decisions of this Honorable
Court.
Petitioner advanced the argument that the trial court cannot
modify nor amend its judgment which had become final and
executory. By awarding attorney's fees of ten percent (10%) of
the amount due, it cannot, in the pretext of interpreting its own
decision, order that the 10% attorney's fees shall be taken only
from the principal amount of the loan and not from the principal
and interests, the latter being total amount due.
There is no question that a court may still amend a final and
executory judgment to clarify an ambiguity caused by an
omission or mistake in the disposition of the decision.
In Republic Surety and Insurance Co., Inc. v. IAC, Nos. 71131-32,
July 27, 1987, 152 SCRA 309. We allowed the clarification of the
dispositive portion of a final and executory judgment of the then
Court of First Instance declaring a Deed of Sale with Assumption
of Mortgage in favor of the defendant null and void but omitting
to order also the Register of Deeds to recall and cancel the TCT to

the defendant and to issue a new TCT in favor of the prevailing


plaintiff. Likewise, cited in the above case was the case of Locsin,
et al. v. Paredes, et al., 63 Phil. 87, where We allowed a final and
executory judgment "to be clarified by supplying a word which
had been inadvertently omitted and which, when supplied, in
effect changed the literal import of the original phraseology."
We do not agree that in the case at bar, there is an ambiguity as
regards the amount of attorney's fees awarded. It is clear that the
final and executory decision of the Regional Trial Court awarded
ten percent (10%) of the amount due as attorney's fees. Since
there was no qualification that the ten percent attorney's fees shall
be taken only from the principal, the ordinary and literal meaning
of the words should prevail, that is, from the amount due which is
the total amount due on the loan obligation (principal + interest).
Had the decision really intended that the attorney's fees shall be
ten percent (10%) of the principal only, it could have so provided.
In fact, even the promissory note and the real estate mortgage,
which was the subject of the main case between the parties
provided on attorney's fees in case of litigation of ten percent
(10%) on the total outstanding obligation which is 10% of the
unpaid principal plus interest.
The Regional Trial Court acted without jurisdiction when it
denied the amended motion for execution filed by petitioner in
Civil Case No. 6821-M which resulted in the substantial
amendment of the final and executory judgment rendered therein.
It is well settled that a court has plenary power to alter,
modify or even set aside, its own decisions, and even order a
new trial, at any time before the decision becomes final, or
before an appeal from that decision has been perfected.
However, after the decision has become final and executory, it
can no longer be amended or corrected by the court except for
clerical errors or mistakes. This principle of immutability of
judgments already final and executory has invariably been
adhered to by this Court regardless of any occasional
injustice, for the equity of a particular case must yield to the
over-mastering need' of certainty and unalterability of judicial
pronouncements. Any amendment or alteration which
substantially affects a final and executory judgment is null
and void for lack of jurisdiction, including the entire
proceedings held for that purpose. ... (Francisco v. Bautista,
G.R. No. 44167, December 19, 1990, 192 SCRA 388,
emphasis supplied)
Courts are cautioned to be careful in writing their decisions, to be
clear and precise in the use of words, especially in the dispositive
portion. Ambiguities must be avoided. And, when the dispositions
in the decision are clear, courts must avoid interpretation which
result in the substantial amendment thereof which are violative of
the rule on immutability of final and executory judgments.
ACCORDINGLY, the petition is GRANTED. The decision of the
Court of Appeals is REVERSED. Judgment is rendered granting
the amended motion for execution and declaring that the total
amount of the judgment debt unsatisfied in Civil Case No. 6821M is P20,250.38 plus 14% interest from June 7, 1987 until full
payment.
SO ORDERED.

33D. Execution, Satisfaction and Effect of Judgment


SALVA v. CA
G.R. No. 132250. March 11, 1999
Before us is a Petition for Review by Certiorari praying for
the reversal and nullification of the Resolution [1] of the respondent
Court of Appeals[2] in CA-G.R. SP No. 40430 which granted
respondent Governor Josephine R. Sato's Motion for
Reconsideration of its earlier Decision [3] which dismissed
respondent's Petition for Certiorari and Prohibition[4] assailing an
already final and executory decision for forcible entry of the
Municipal Trial Court of San Jose, Occidental Mindoro.[5]
There is no dispute as to the facts of this case. Squatters'
shacks mushroomed around the San Jose Airport in Occidental
Mindoro and resulted to its closure. As the shutdown of airport
operations severely affected the commercial life of the province,
officials of the province, led by respondent, initiated measures to
re-open the airport.
The squatters had to be relocated. Thus, the Sangguniang
Bayan of the Municipality of San Jose passed Resolution No.
5210, Series of 1994, choosing Lot No. 1626-C-2 with an area of
59, 977 square meters covered by TCT No. T-5587 in the name of
the National Food Authority (NFA), to be their relocation site.
The Department of Environment and Natural Resources
surveyed and subdivided the vacant space on the NFA lot. In the
resulting survey and subdivision, certain areas were marked off as
containing residential structures which were constructed, not by
the NFA which owned the land, but by herein petitioners.
After the implementation of the relocation program on the
NFA lot, petitioners filed with the Municipal Trial Court a
Complaint for Forcible Entry against the relocated families and
respondent.The Complaint was docketed as Civil Case No. 1425
and amended[6] on July 21, 1994.
In support of the allegations in their Complaint, petitioners
offered as evidence numerous affidavits[7] of their neighbors
attesting to their actual, physical and notorious possession of the
NFA land for more than thirty (30) years, photographs [8] of their
houses, poultry sheds and plantations on the NFA land, and
various realty tax declarations and realty tax receipts[9] in the
name of petitioners covering said land.
Respondent filed her Answer to petitioners' Complaint but
she neither submitted any affidavits of her witnesses nor
presented any other evidence during the trial.

On October 7, 1994, the Municipal Trial Court, through the


Honorable Judge Inocencio M. Jaurigue, rendered judgment
against respondent Governor Sato and the relocated families who
were found to have unlawfully entered the disputed property at
the time it was actually possessed and occupied by herein
petitioners. Thus the dispositive portion of that judgment ordered
them to:
"l. Vacate the land subject matter of the complaint and to return
the peaceful possession of the same to the plaintiffs [herein
petitioners] or their representative;
2. Jointly and severally pay to plaintiffs [herein petitioners] the
sum of twenty five thousand (P25,000.00) pesos for and as
attorney's fee;
3. Jointly and severally pay to plaintiffs the sum of five thousand
(P5,000.00) pesos a month as rental value of the premises,
starting July 1994 until the possession thereof is returned to the
plaintiffs [herein petitioners], and
4. Jointly and severally pay to plaintiffs [herein petitioners the
sum of three thousand (P3,000.00) pesos for and as litigation and
other incidental expenses and cost."[10]
Respondent appealed to the Regional Trial Court of San
Jose. The appeal was docketed as Civil Case No. R-879 and
raffled to Branch 45.
Before the Regional Trial Court, respondent claimed that the
parcel of land being occupied by petitioners was different from
that allocated as relocation site. To resolve this issue, the
Honorable Judge Fernando Z. Caunan conducted an ocular
inspection of the lot where all parties were represented. Also
present were the officers of the Municipal Planning and
Development Council and the Engineer's Office. The relocated
squatters were called and asked to confirm whether or not they
have actually entered the property in question.
The following are the pertinent findings of the Regional
Trial Court:
"In the course of the ocular inspection, it was ascertained that a
total of thirty one (31) persons named in the complaint and in the
decision of the lower court x x x did not enter the premises in
question and they were not found therein at the time of the ocular
inspections. Neither was there any showing that they introduced
any improvements thereon.
xxx

In its memorandum, appellants [among whom is herein


respondent] contend that the area being claimed by the appellees
[herein petitioners] is different from the area entered and
occupied by the appellants [i.e., the relocated families] and that
the appellees [petitioners] are not the owners of said parcel of
land. In this connection, as correctly observed by the lower court,
the plaintiffs-appellees [herein petitioners] were in the actual
physical possession of the said property until they were forcibly
dispossessed by the defendants, appellants herein [including
herein respondent] of said land on July 5, 1994. These findings
of the lower court were confirmed in the ocular inspection of
the area conducted on February 9, 1995. And, as correctly
pointed out by the lower court, the only issue in this case, is
the actual physical possession of the land subject matter of the
complaint. Such possession had been sufficiently shown to
have been with the plaintiffs at the time of the forcible entry
of the defendants."[11] [Emphasis ours.]
Accordingly, the Regional Trial Court affirmed the Judgment of
the Municipal Trial Court but voided it with respect to the thirty
one (31) defendants, who were found to have never been
relocated to the property in question.
On March 27, 1995, respondent filed a Notice of Appeal
from the foregoing Decision. It was approved by the Regional
Trial Court in an Order dated April 3, 1995. The appeal was
assigned to the Special Thirteenth Division[12] of the Court of
Appeals and docketed as CA-G.R. CV No. UDK-3880-A. For
adopting a wrong mode of appeal, however, respondent was
rebuffed. Her petition was dismissed pursuant to Section 22,
Batas Pambansa Blg. 129 and Circular No. 2-90[13] in a
Resolution[14] dated October 9, 1995.
The period for appeal lapsed on January 4, 1996 without
respondent filing a Motion for Reconsideration on the foregoing
Resolution or seeking its review by this Court through a petition
for review on certiorari under Rule 45.
Thus, on January 10, 1996, the Court of Appeals ordered
that entry of judgment be issued and that the records of that case
be returned to the Municipal Trial Court for execution. [15] Entry of
judgment was promptly made on January 24,1996.
On March 25, 1996, the Municipal Trial Court issued a Writ
of Execution for the enforcement of its Decision in Civil Case
No. 1425 as affirmed by the Regional Trial Court and the Court of
Appeals.[16]
On April 24,1998, respondent filed a Petition
for Certiorari and Prohibition with Prayer for a Writ of
Preliminary Injunction and/or Temporary Restraining Order.
[17]
She prayed that the Municipal Trial Court be enjoined from

implementing its final and executory Decision in Civil Case No.


1425 and that the same be declared null and void for having been
issued in grave abuse of discretion. The petition was docketed as
CA-G.R. SP No. 40430.
On October 22, 1996, respondent Court of Appeals rendered
a Decision[18] dismissing the Petition for Certiorari and
Prohibition for having been filed as a substitute for a lost
appeal. It held:
"The well-settled rule, buttressed and strengthened by [a] long
line of cases, is that certiorari will not lie as substitute for the lost
remedy of appeal. Having lost the right to appeal, a party cannot
be permitted to avail of the remedy of certiorari under Rule 65 of
the Rules of Court.
The only exception to this rule is when if [sic] such right is lost
through no fault of the party, which is not so in this case.
When the case was dismissed by this Court, petitioner did not
bother to file a motion for reconsideration or petition for review
to the Supreme Court. Petitioner just allowed the period to appeal
to lapse.
Consequently, this petition must fail for this petition was indeed
filed as a substitute for the lost right to appeal."[19]
Respondent Court of Appeals went further. It discussed the
untenability of respondent's rehashed argument that petitioners
did not have prior possession of that portion of the NFA land
earmarked as the relocation site. It ruled:
"The main argument of petitioner to support her petition is that
the site where [the] relocated families stayed is not the land being
occupied and possessed by private respondent. Thus, it cannot be
said that private respondents were deprived of their property.
We do not agree with petitioner.
In this case, it has been proven that the relocated families forcibly
entered the land being occupied by private respondents.
The Municipal Trial Court found that private respondents were in
actual physical possession of the land where the squatter families
were relocated. The Regional Trial Court affirmed the findings. In
fact, an ocular inspection was even conducted by the public
respondent to fully appraise himself of the situation and it was
confirmed that private respondents were in actual physical
possession of the land where the squatter families were relocated.
xxx

It is a well settled rule that the findings of fact of trial courts are
given great weight on appeal because they are in a better position
to examine the real evidence. Findings of fact of a trial court are
not to be disturbed on appeal unless the trial court has
overlooked, ignored or disregarded some facts or circumstance of
weight or significance which if considered would have altered the
case.
In this case, We find no reason to disturb the findings of the trial
court.
It cannot be argued that the municipal trial court and the appellate
court (RTC) overlooked the fact that private respondents were
claiming to have occupied Lot 1626-A while the site where the
families were relocated is Lot 1626-C-2.
Whatever may be the number of the lot is no longer important in
this case. Evidence clearly appears that the squatter families
entered and occupied the land which was then in actual physical
possession of private respondents. Whether it be Lot 1626-A or
1626-C, the fact remains that the squatter families occupied a land
then in possession of private respondents.

their favor priority in time, private respondents have the security


that entitles them to remain on the property until they are lawfully
ejected by a person having a better right by accion publiciana or
accion reivindicatoria."[20]
On November 12, 1996, respondent filed a Motion for
Reconsideration.[21] On January 12, 1998, respondent Court of
Appeals reversed itself. It granted respondent's Motion for
Reconsideration and dismissed petitioners' Complaint for Forcible
Entry in Civil Case No. 1425. It justified its volte-face in this
wise:
"The motion [for reconsideration] is principally anchored on her
contention that certiorari is the proper recourse from the assailed
decisions which are 'patently null and void' in that the lot
occupied by private respondents is different from the land set
aside by the provincial government for relocation purposes.
xxx

Moreover, petitioner in her answer before the Municipal Trial


Court categorically admitted that the squatter families entered the
land owned by NFA and that this land which is owned by NFA is
in possession of private respondents. Petitioner averred:

As a general rule, certiorari will not lie as a substitute for a lost


appeal. However, as correctly pointed out by petitioner, there are
some recognized exceptions to the rule. Thus, certiorari has been
accepted as a substitute for a lapsed appeal where the equities
warrant such recourse and dismissal was based on technicalities;
or where rigid application of the rule will result in a manifest
failure or miscarriage of justice x x x or where the orders of the
lower court were issued either in excess of [or] without
jurisdiction x x x.

"x x x

xxx

x x x [T]he act of a possessory character done by the Plaintiffs, by


virtue of mere tolerance on the part of the National
Food Authority, is not sufficient x x x.

In this connection, it is worthy to note that this case arose out of


the relocation of squatters who used to live within the vicinity of
the San Jose airport in Mindoro Occidental. Their immediate
relocation was of paramount importance to re-open the airport
and ensure their safety as well as that of airplane passengers. As
we had earlier pronounced, petitioner's act in relocating the
squatters was 'noble'. x x x

xxx

At this stage, petitioner can no longer insist that private


respondents are exercising acts of possessory character over a
land different from that land given to the squatter families.
Although admittedly, petitioner may validly claim ownership
based on the muniments of title she presented, such evidence
however does not responsively address the issue of prior actual
possession raised in a forcible entry case. It must be stated that
regardless of the actual condition of the title of the property, the
party in peaceful, quiet possession shall not be turned out by a
strong hand, violence or terror. Thus, a party who can prove prior
possession can recover such possession even against the owner
himself.
Therefore, whatever may be the character of private respondents'
prior possession, whether it be legal or illegal, since they had in

Thus the ends of justice and the greater good of the community
would be better served if the case is decided on the merits and the
petition be given due course.
Anent petitioner's second argument, we agree with her that a
determination of the lot used as a relocation site vis-a-vis that of
the area occupied by private respondents is material to the
case.Although this issue was properly raised in petitioner's
answer to the complaint, this issue was not addressed by the
municipal trial court. An ocular inspection should have been
conducted by the trial court to ascertain the said issued [sic]. And
to complicate matters, the RTC was the one which conducted the

ocular inspection. Although the RTC likewise failed to resolve the


issue, in conducting the ocular inspection however, the RTC
clearly went beyond its jurisdiction because in this case, it was
acting in its appellate jurisdiction and should have decided the
appealed case solely on the basis of the evidence submitted or
presented before the Municipal Trial Court, without anymore
receiving new or additional evidence from the parties.
xxx
A judicious scrutiny of the assailed decisions would reveal that
both courts skirted or simply brushed aside the point raised by
petitioner that the squatters were relocated on a different lot. x x x
[S]ince in ejectment cases the only issue to be determined is who
had actual prior possession of the property, it is of utmost
importance that the lot being claimed by the petitioner is first
identified, otherwise the court can not assume jurisdiction over
the case, if the lot claimed by the petitioner is different from that
occupied by the relocated squatters. This identification was not
done by the Municipal Trial Court x x x.

IN ACCEPTING THE SAME UNDER THE ALLEGED


RECOGNIZED EXCEPTIONS OF THE RULE THAT
CERTIORARI WILL NOT LIE AS A SUBSTITUTE FOR A
LOST APPEAL.
"B "THE RESPONDENT COURT ERRONEOUSLY
ASSUMED, WITHOUT PROPER AND LEGAL EVIDENCE
PROVING SUCH ASSUMPTION, THAT RESPONDENT
SATO-'S CO-DEFENDANTS ARE ACTUALLY OCCUPYING
LOT 1626-C-2 TITLED UNDER THE NAME OF THE
NATIONAL FOOD AUTHORITY (NFA).
"C "'SINCE OVERWHELMING EVIDENCES HAVE BEEN
PRESENTED PROVING PREVIOUS ACTUAL POSSESSION
OF THE LAND IN QUESTION, FORCIBLE ENTRY WAS
PERPETRATED BY RESPONDENT SATO AND HER CODEFENDANTS WHOSE STAY IN THE PREMISES IN
QUESTION CONTINUOUS [sic] TO BE AN ILLEGAL ACT
OF TRESPASS AND SPOLIATION."
We grant the petition.

Further, even granting arguendo that the lot occupied by private


respondents and the relocation site is [sic] the same, it is not
disputed that the said relocation site is titled in NFA's name. In
such a case, private respondents would then be occupying a
portion of said lot by mere tolerance of NFA. When the squatters
were then relocated to a vacant portion of said lot, it cannot be
said that private respondents were deprived of their possession or
forcibly ejected therefrom. NFA as the titled owner of the said
property had every right to allow other people to also occupy the
unused or vacant portion of its lot and private respondents have
no right, as mere squatters thereon, to allocate for themselves the
entire property and deprive its legitimate owner of its right to use
the property.
x x x"[22]
On March 17, 1998, the instant Petition for Review
by Certiorari was filed by petitioners Rosalia P. Salva and her
children, Jesus Ramon, Jose Alberto, Melchor Leon, Alfredo
Fausto, Jr., Ma. Teresita, Ma. Rosalyn and Anthony Ralfth,
against respondent Governor Josephine R. Sato.
Petitioners pray for this Court to set aside the Resolution
dated January 12, 1998 issued by the respondent Court of Appeals
and to reinstate its Decision dated October 22, 1996 on the
following grounds:
"A "THE PETITION FOR CERTIORARI FILED BY
RESPONDENT SATO WAS PROPERLY DENIED AS A
WRONG REMEDY IN THE DECISION DATED OCTOBER
22,1996 AND THE RESPONDENT COURT GRAVELY ERRED

First. The respondent Court of Appeals gravely abused its


discretion when it reversed its original decision to uphold the
validity of the Municipal Trial Court judgment which had already
become final and executory. The filing of a petition
for certiorari to nullify and set it aside was without procedural
sanction. As we have held in Amigo v. Court of Appeals:[23]
"The Court must remind the parties that the case brought up to the
Court of Appeals is an extraordinary action that has sought to
annul the writs of execution and demolition issued under and by
virtue of a final judgment that is alleged to be void for want of
jurisdiction. The petition should not thus be used as a strategem to
once again reopen the entire controversy and make a complete
force of a duly promulgated decision that has long become final
and executory x x x."[24]
It is a settled rule that a judgment which has acquired
finality becomes immutable and unalterable, hence may no longer
be modified in any respect except only to correct clerical errors or
mistakes. Once a judgment becomes final, all the issues between
the parties are deemed resolved and laid to rest. [25] Litigation must
end and terminate sometime and somewhere, and it is essential to
an effective and efficient administration of justice that, once a
judgment has become final, the winning party be not deprived of
the fruits of the verdict. Courts must therefore guard against any
scheme calculated to bring about that result. Constituted as they
are to put an end to controversies, courts should frown upon any
attempt to prolong them.[26]

Second. In granting the Motion for Reconsideration filed by


respondent Governor Sato, the respondent Court of Appeals made
the finding that she brought the airport squatters to settle on Lot
1626-C-2, not on Lot 1626-A-2 which is the one claimed by
petitioners. This important finding of fact is totally devoid of
evidentiary support for respondent Governor Sato did not present
any evidence on this issue. All the respondent appellate court had
were the bare allegations of respondent Governor Sato in her
Motion
for
Reconsideration
which
was
even unverified. Allegations can never be considered as
repositories of truth, and hence cannot serve as foundations of
decisions resolving rights of litigants.
Respondent Court of Appeals took to task the Municipal
Trial Court for having dodged the issue of identity of the subject
property. The Regional Trial Court, in exercise of its appellate
jurisdiction, squarely addressed said issue. It took decisive steps
to determine the identity of both the subject property and its
actual occupants at the time that respondent -relocated the airport
squatters. The Regional Trial Court went to the actual relocation
site to survey the area and called each of the defendants named in
petitioners' complaint for ejectment. Its findings categorically
established that the relocation site and the land occupied by
petitioners are identical. They are one and the same, and
petitioners were found to have indeed possessed the same at the
time it was taken over by respondent and the airport
squatters. Significantly, respondent never denied the holding of
this
ocular
inspection
where
all
parties
were
represented. Certainly, between these strongly substantiated and
undisputed findings of a court that obtained first hand knowledge
of the issues of the identity of the disputed lot and its prior
possessors, and the unproved allegations in an unverified motion
for reconsideration of the respondent Sato on the other, the former
instead of the latter ought to have been adopted by the Court of
Appeals.
Third. The unsubstantiated claim that respondent Sato
relocated the airport squatters to Lot 1626-C-2, not on Lot 1626A-2 which petitioners occupy, is further attenuated by her equally
unproved allegation that petitioners were occupants of the
disputed land by mere tolerance of its owner. Again in grave
abuse of discretion, respondent Court of Appeals swallowed this
stance of respondent as it even branded petitioners as "squatters".
It is self-evident that in the first place, these two claims
equally asserted by respondent are contradictory to each
other. Petitioners either occupied the disputed land or not. They
cannot be said to have simultaneously possessed and not
possessed the same. The lower courts resolved the issue in favor
of petitioners, for not only did respondent fail to proffer any
convincing proof of any of its submissions, but more importantly,
petitioners submitted overwhelming proof of their prior

possession of the subject property. Extant on the record are the


following evidentiary documents:
Exh. A - Affidavit of Rosalia P. Salva dated September 9, 1994
Exh. B - Supplemental Affidavit of Rosalia Salva dated
September 16, 1994
Exh. C - Sworn Statement of Melchor Leon Salva dated
September 9, 1994
Exh. D - Sworn Statement of Pablo Dulay dated September 9,
1994
Exh. E - Sworn Statement of Perlita Gran dated September 9,
1994
Exh. F - Joint sworn statement of Perlita Aguilar and Joel Antaran
dated September 12,1994
Exh. G - Sworn statement of Marcelo Abeleda dated September
12,1994
Exh. H - Sworn Statement of Luz Jimenez dated September 9,
1994
Exh. I - Close-up picture of the house of plaintiffs inside the area
in question, wherein the picture of the late husband Alfredo Salva
appeared
Exh. I-1 - Picture of the portion of the area, showing petitioners'
house, the fruit bearing trees and the farmland
Exh. I-2 - Picture of the area, showing some growing trees which
were destroyed and cut by the defendants
Exh. I-3 - Picture of the barb wire fence which was destroyed by
the defendants
Exh. I-4 - Another picture of the area with fence
Exh. I-5 - Another picture
Exh. I-6 - Another picture showing the poultry house
Exh. I-7 - A picture showing the banana plantation
Exh. I-8 - A picture of the area with picture of the late Alfredo
Salva

Exh. J - Receipt of payment for survey authority dated January


21, 1989 issued by Feliciano Cayayon
Exh. K - Realty Tax Receipt No. 9157617 dated April 4, 1975
Exh. L - Realty Tax Receipt No. 015703 dated April 4, 1975

xxx
We have reiterated in many cases that certiorari is not a substitute
for appeal x x x especially a lost appeal. Certiorari should not be
allowed where the petitioner has-or had--other remedies available
x x x. The remedies of appeal and certiorari are mutually
exclusive and not alternative or successive x x x.

Exh. M - Realty Tax Receipt No. 6452423 dated March 3, 1978


Exh. N - Realty Tax Receipt No. 645309 dated March 3, 1978
Exh. O - Realty Tax Receipt No. 9059517 dated September 18,
1980
Exh. P - Sketch plan prepared for Alfredo Salva by Engr. Tomas
Abella dated Nov. 15, 1969
Exh. Q - Realty Tax Declaration No. 10156 dated October 22,
1976
Exh. Q-1 - Another Realty Tax Declaration NO. 10157 dated
October 22,1976
Exh. R - Unapproved survey plan of the area occupied by the
petitioners since May 21, 1979
Exh. S - Certification issued by CENRO dated September 5, 1994
Exh. T - Official Receipt for payment of certification fee dated
September 5, 1994
Exh. U - MTC Lease Application dated September 26, 1978
As the records of this case bear out, respondent never
repudiated any of these documents. She failed not only to present
evidence to support her claims but also to cast doubt on the
veracity of petitioners' claims.
Fourth. There is no justifiable reason for the respondent
Court of Appeals to junk the entrenched rule that certiorari is not
a substitute for a party's failure to appeal. [27] While there are
exceptions to this rule, this case fails to distinguish itself as
one. We made it clear in the case of Oriental Media, Inc. v. Court
of Appeals,[28] thus:
"Oriental fell into and committed serious procedural lapses which
resulted not only in the decision of default becoming final and
executory but also in the order dismissing the petition for relief
from judgment likewise attaining the character of final and
executory order, for which reason both are now beyond the reach
and review of any appellate court.

Surely, there are cases, where certiorari was allowed although


appeal was the proper remedy. The Court has in a number of
cases given due course to a petition for certiorari although the
proper remedy is appeal especially where the equities warrant
such recourse and considering that dismissals on technicalities are
viewed with disapproval x x x. Where an appeal would not be an
adequate remedy under the circumstances, since it would not
promptly relieve the petitioner from the injurious effects of the
acts of the inferior court or tribunal, e.g., the court has authorized
execution of the judgment, a resort to the special civil action of
certiorari may exceptionally be allowed x x x, especially so if the
petition is filed while the period for appeal has not expired.
xxx
x x x [P]etitioner squandered its opportunities to question and
assail the decision dated July 8, 1986 of the trial court and the
order dated February 24, 1987 of the trial court dismissing its
petition for relief from judgment. Petitioner, as aforestated, filed a
motion for reconsideration of the decision dated February 24,
1987, which was denied by the trial court in its order dated
October 9, 1986.After receiving the denial order, petitioner did
not avail itself of the right to appeal; rather, a petition for relief
from judgment was filed and when said petition was dismissed in
the order of February 24, 1987, petitioner did not interpose an
appeal therefrom which it had every right to do so. It is now much
too late in the day to resort to the present petition to set aside said
decision and orders which have become final and executory."[29]
Fifth. Respondent insists that while it is true that a petition
for certiorari is not proper where appeal was available, the failure
to appeal was not her fault.
In her Comment dated August 6, 1998, respondent blamed
her former counsel for everything that went wrong in this
case. According to her, it was her former counsel who, in the
course of the proceedings before the Municipal Trial Court, failed
to present any evidence of petitioners' non-occupation of Lot
1626-C-2 earmarked as the relocation site. It was also her former
counsel who erroneously filed a Notice of Appeal instead of a
Petition for Review in elevating the Decision of the Regional
Trial Court to the Court of Appeals. When the Court of Appeals
dismissed the same for being a wrong mode of appeal, it was also
her former counsel who failed to file a motion for reconsideration

or to elevate such dismissal to this Court on petition for review


via certiorari.
Citing our 1991 decision in the case of Legarda v. CA,
respondent Governor Sato argued that she should not be made
to suffer for the mistakes and omissions of her former
counsel. The respondent governor claimed that the reckless and
gross negligence of her counsel was of such degree as to have
deprived her constituency, namely, the Province of Occidental
Mindoro, its rightful day in court.
[30]

Respondent's reliance on Legarda is inapropos. Notably, the


decision in said case was not yet final in 1991. The private
respondent therein then filed a timely motion for
reconsideration. In granting the motion for reconsideration, the
Court en banc held:
"Under the Gancayco ruling, the order of reconveyance was
premised on the alleged gross negligence of Legarda's counsel
which should not be allowed to bind her as she was deprived of
her property without due process of law.'
It is, however, basic that as long as a party was given the
opportunity to defend her interests in due course, she cannot be
said to have been denied due process of law, for this opportunity
to be heard is the very essence of due process. The chronology of
events shows that the case took its regular course in the trial and
appellate courts but Legarda's counsel failed to act as any
ordinary counsel should have acted, his negligence to act as an
ordinary counsel should have acted, his negligence every step of
the way amounting to 'abandonment', in the words of the
Gancayco decision. Yet, it cannot be denied that the proceedings
which led to the filing of this case were not attended by any
irregularity.The judgment by default was valid, so was the
ensuing sale at public auction. If Cabrera was adjudged highest
bidder in said auction sale, it was not through any machination on
his part. All of his actuations that led to the final registration of
the title in his name were aboveboard, untainted by any
irregularity.
xxx
Neither Cathay nor Cabrera should be made to suffer for the gross
negligence of Legarda's counsel.If she may be said to be
'innocent' because she was ignorant of the acts of negligence of
her counsel, with more reason are respondents truly 'innocent.' x x
x In this case, it was not respondents, but Legarda, who
misjudged and hired the services of the lawyer who practically
abandoned her case and who continued to retain him even after
his proven apathy and negligence."[31]

At any rate, we find that respondent Governor Sato, as well


as the Province of Occidental Mindoro which she represents,
were not denied their day in court. Responsive pleadings were
filed before the lower courts, and respondent was given all the
opportunities to prove her case. Her chosen counsel did not
diligently exhaust all legal remedies to advance respondent's
cause, yet respondent did not terminate his services. She was
aware of the repeated negligence of her counsel and cannot now
complain of counsel's errors. Hence, there is no justifiable reason
to exempt her from the general rule that clients should suffer the
consequences of the negligence, mistake or lack of competence of
the counsel whom they themselves hired and had the full
authority to fire at any time and replace with another even without
any justifiable reason.[32]
Sixth and finally. Ultimately, amidst its contradictory
arguments and dubious premises, respondent Court of Appeals
anchored its reversal of its original decision on the tardy
submission of respondent that the decisions of the Municipal Trial
Court and the Regional Trial Court were void ab initio for want of
jurisdiction.
We have carefully studied the complaint for ejectment,
however, and find the same to be in order. It is settled that
jurisdiction is conferred by law based on the facts that are alleged
in the complaint[33] since the latter comprises a concise statement
of the ultimate facts constituting the plaintiff's causes of action.
[34]
There is no question that based on the allegations in
petitioners' Amended Complaint, their cause of action is for
forcible entry and its exclusive jurisdiction is vested in the
Municipal Trial Court of San Jose, Mindoro.
We note that in the Answer of respondent to petitioners'
Amended Complaint, she never raised the issue of
jurisdiction. During the pre-trial, the issue of lack of jurisdiction
was not also raised. In respondent's appeal to the Regional Trial
Court, she also never brought to fore the issue of
jurisdiction. When petitioner's appeal was dismissed by the Court
of Appeals, she did not elevate the case to the Supreme Court on
the ground of lack of jurisdiction; in fact, she allowed the period
to appeal to lapse and the Decision of the Municipal Trial Court
to become final and executory.
In a long line of decisions, this Court has consistently held
that while an order or decision rendered without jurisdiction is a
total nullity and may be assailed at any stage, a party's active
participation in the proceedings in the tribunal which rendered the
order or decision will bar such party from attacking its
jurisdiction.[35] So we held in the leading case of Tijam v.
Sibonghanoy:[36]

"A party may be estopped or barred from raising a question in


different ways and for different reasons. Thus we speak of
estoppel in pais, or estoppel by deed or by record, and of estoppel
by laches.

WHEREFORE, the Petition for Review is hereby


GRANTED. The Resolution dated January 12, 1998 rendered by
the Court of Appeals in CA-G.R. SP No. 40430 is REVERSED
AND SET ASIDE and its Decision dated October 22, 1996 is
REINSTATED.

xxx
No pronouncement as to costs.
The doctrine of laches or of 'stale demands' is based upon grounds
of public policy which requires, for the peace of society, the
discouragement of stale claims and, unlike the statute of
limitations, is not a mere question of time but is principally a
question of the inequity or unfairness of permitting a right or
claim to be enforced or asserted.
It has been held that a party can not invoke the jurisdiction of a
court to secure affirmative relief against his opponent and, after
obtaining or failing to obtain such relief, repudiate, or question
that same jurisdiction x x x. x x x [T]he question whether the
court had jurisdiction either of the subject matter of the action or
of the parties was not important in such cases because the party is
barred from such conduct not because the judgment or order of
the court is valid and conclusive as an adjudication, but for the
reason that such a practice can not be tolerated--obviously for
reasons of public policy.

SO ORDERED.
33E. Execution, Satisfaction and Effect of Judgment
PBC v. CA, SANTIAGO
G.R. No. 126158. September 23, 1997
Assailed and sought to be set aside in the instant petition is
the decision of respondent Court of Appeals promulgated on
September 13, 1996 dismissing herein petitioner Philippine Bank
of Communications petition for certiorari impugning an order
granting the motion for the issuance of a writ of execution
pending appeal issued by the Regional Trial Court of the National
Capital Judicial Region (Branch 101, Quezon City), in Civil Case
No. Q-95-22625, entitled Falcon Garments Corporation, et al. vs.
Philippine Bank of Communications.

xxx
Upon this same principle is what We said x x x to the effect that
we frown upon the 'undesirable practice' of a party submitting his
case for decision and then accepting the judgment, only if
favorable, and attacking it for lack of jurisdiction, when adverse x
x x."[37]
Public policy dictates that this Court must strongly condemn
any double-dealing, by parties who are disposed to trifle with the
courts by taking inconsistent positions, in utter disregard of
elementary principles of right dealing and good faith.[38] This
applies not only to parties who are plaintiffs, complainants or
others who initiated the case by actually filing the action, but also
to parties who are defendants or respondents, if the latter fail to
timely raise the jurisdictional issue and instead actively
participate in the proceedings.[39]
There is no denying that in all the proceedings held in the
Municipal Trial Court, the Regional Trial Court, and the Court of
Appeals, the issue of jurisdiction was never raised by respondent
Governor Sato. Instead, she voluntarily and willingly submitted
herself to the jurisdiction of those courts. It is thus now too late in
the day for respondent to repudiate those very courts whose
jurisdiction she invoked.

The antecedent facts of the case as gathered from the record


are as follows:
Sometime in 1989, private respondent Falcon Garments
Corporation (Falcon) opened Current Account No. 25-00640-7 at
BMA Quezon City Branch of petitioner Philippine Bank of
Communications (PBCom). Subsequently, on November 27,
1992, private respondent Falcon obtained a loan from petitioner
in the principal sum of Four Million Seven Hundred Thousand
Pesos (P4,700,000.00) with interest at 17% per annum and
penalty at 12% per annum in case of default. Falcon failed to pay
its loan on due date and went in default in December, 1993.
On February 9, 1995, Falcon filed a complaint with the
Regional Trial Court of Quezon City against PBCom which was
docketed as Civil Case No. Q-95-22625 and raffled to Branch 78,
presided over by Judge Percival Mandap-Lopez. The complaint
prayed for the restoration to Falcons current account of alleged
unauthorized withdrawals totalling P12, 729,092.78 which were
made from 1990 to 1992, plus interest, damages, and attorneys
fees.
In its answer, PBCom denied liability and interposed a
compulsory counterclaim in the sum of P4,700,000.00, plus the
stipulated interest and penalty, damages, and attorneys fees.

On January 2, 1996, the trial court rendered a decision


against PBCom the dispositive portion of which reads:
WHEREFORE, defendant is ordered to restore immediately to
plaintiffs Current Account No. 25-006407 the sum of
P12,729,092.78, plus interest at the rate of 12% per annum to
commence from the date of the filing of the complaint until the
said amount is fully restored and operate the said account in
accordance with the instructions of plaintiff, acting through its
board of directors. And to pay plaintiffs the following sums:
a. P 500,000.00 as exemplary damages;

whatever damages which defendants may suffer by virtue of this


Order.
(Rollo, p. 41.)
The writ was issued on May 14, 1996, and on May 16, 1996,
the writ was served upon PBCom which sought the intercession
of the Court of Appeals (CA-G.R. SP No. 40636). On June 4,
1996, a writ of preliminary injunction was issued by the Court of
Appeals restraining its implementation.
On September 13, 1996, the Court of Appeals eventually
upheld the validity of the writ of execution pending appeal and
forthwith dissolved the writ of preliminary injunction.

b. P 500,000.00 as attorneys fees; and


c. P 200,000.00 as litigation expenses.
Plaintiff FALCON is ordered to pay defendant its loan at P
4,700,000.00 plus interest at the rate of 12% per annum to
commence from the date of filing of the complaint. All other
claims and counterclaims are dismissed for lack of merit.

On the same day, private respondent Falcon obtained an


alias writ of execution which served upon petitioner on the same
afternoon.
On September 16, 1996, the present petition was filed, with
prayer for a temporary restraining order, preliminary writ of
injunction and mandatory injunction alleging that:

(Rollo, p.34)
Petitioner PBCom seasonably filed a notice of appeal, while
private respondent Falcon filed a Motion for Execution Pending
Appeal dated February 7, 1996. However, before Branch 78 could
resolve said motion, Judge Lopez inhibited himself and the case
was re-raffled to Branch 101, presided over Judge Pedro T.
Santiago.
Private respondent Falcon filed an Ex-Parte Manifestation
and Motion dated May 7, 1996, claiming that with its strained
relations with PBCom, it was no longer practicable to bank with
petitioner, and prayed that the money judgement be not restored
to its current account but instead be directly paid to it (Rollo, p.
132).
On the very same day of the filing of the motion, Judge
Santiago granted the same and authorized the issuance of a writ of
execution pending appeal. The dispositive portion of said order
provides:
WHEREFORE, premises considered, finding merit and
justification in plaintiffs motion, the Court hereby grants its
motion for execution pending appeal hereby ordering defendant
Bank to immediately pay the plaintiff the sum of P12,729,092.78
with 12% per annum and plaintiffs obligation to defendant Bank
be likewise paid by plaintiff in the amount of P4,700,000.00 with
interest also at 12% per annum, as well as the other damages
stated in the decision of Branch 78 dated January 2, 1996, upon a
plaintiffs bond of P5,000,000.00 conditioned to answer for

THE HONORABLE COURT OF APPEALS COMMITTED


GRAVE ABUSE OF DISCRETION IN AFFIRMING THE
ORDER OF JUDGE PEDRO SANTIAGO GRANTING THE
ISSUANCE OF A WRIT OF EXECUTION PENDING APPEAL
CONSIDERING THAT GOOD REASONS DO NOT EXIST
FOR THE ISSUANCE OF A WRIT OF EXECUTION
PENDING APPEAL UNDER SECTION 2, RULE 39 OF
RULES OF COURT.
(Rollo, p. 8.)
Petitioner further avers that:
3.01 The privelege respondents in this case ILLEGALLY and
UNLAWFULLY implemented a writ of execution pending
appeal on 13 September 1996 using an expired writ, and
an Order of the Court of Appeal subject of this petition
which was promulgated only at 10 a.m. of 13 September
1996. On that day, herein petitioner has not receive copy
of said decision which is not yet final.
3.02 PBCom and counsel became aware of the questioned
Decision of the Court of Appeals when PBCom Ayala
Branch, Makati City, called up and told them that private
respondents with about 30 people, brandished the
questioned writ and decision enabling private respondents
to coerced, forced and intimidated the personnel of the
said petitioners branch resulting in the unlawful taking of
about P1.7 million

3.03 Private respondents have foisted to petitioner and counsel


that they (private respondents) will again go to PBComs
other branches to get in full balance of the money
judgement which is still on appeal.
(Rollo, pp. 92-93.)
Upon the above representation of petitioner duly verified by
its counsel, Atty. Daniel Y. Laogan, of Laogan Silva Baeza &
Llantino Law Offices, we issued a temporary restraining order at
the same time requiring private respondents to comment.
On November 11, 1996, the Court issued a resolution, which
among other things, noticed petitioner urgent manifestation and
motion dated September 17, 1996, praying that (a) counsel for
private respondent be required to explain why they claimed in
their ex partemotio for issuance of an alias writ of execution
pending appeal before respondent RTC that the Court of Appeals
had already dissolved the injunction one hour before the
promulgation of the Court of Appeals decision in CA-G.R. SP
No. 40636; (b) to require Judge Pedro T. Santiago of RTC Branch
101, Quezon City, to explain why he issued the order dated
September 13, 1993 granting the alias writ of execution pending
appeal prior to the courts receipt of its official copy of said
decision dissolving the injunction and even before the finality of
the same.
Judge Santiago submitted his explanation on December
11,1996 which the Court noted on January 17, 1997.
With the filing of the memoranda of the parties, the petition
is now ripe for resolution.
The pith of the matter before us is the existence of good
reasons which would justify execution pending appeal. In the
absence of such good reasons, it is incumbent upon the reviewing
court, such as the Court of Appeals, to issue the writ
of certiorari and failure to do so would constitute grave abuse of
discretion on its part.
It is in this regard that we find that the Court of Appeals
committed grave abuse of discretion in sustaining the trial court.
When
Judge
Santiago
resolved
the
first ex
parte manifestation and motion, the applicable provision was
Section 2, Rule 39 of the former Rules of Court which provided
Sec. 2. Execution pending appeal On motion of the
prevailing party with to notice to the adverse party, the
court may, in is discretion, order the execution to issue,
even before the expiration of the time to appeal, upon
good reasons to be stated in a special order. If a record

on appeal is filed thereafter the motion and the special


order shall be included therein.
The prevailing doctrine an principle then which continues to
be the same as provided in Paragraph 2, Section 2, of Rule 39 of
the 1997 Rules of Civil Procedure is that discretionary execution
is permissible only when good reasons exist for immediately
executing the judgment before finality or pending appeal or even
before the expiration of the time to appeal.
Good reasons consist of compelling circumstances justifying
the immediate execution lest judgment becomes illusory, or the
prevailing party may after the lapse of time become unable to
enjoy it, considering the tactics of the adverse party who may
apparently have no case except to delay. A long line of
jurisprudence indicates what constitute good reasons as
contemplated by the Rules, the following being merely
representative of the same:
1. When in an intestate proceeding which has been pending
for almost 29 years, one group of heirs has not yet received
the inheritance due them when the others have already
received theirs, or are about to do so (Borja vs. Encarnacion,
89 Phil. 239 (1951);
2. The advanced age of the prevailing party (Borja vs. Court
of Appeals, 196 SCRA 847 [1991]; De Leon vs.
Soriano, supra);
3. When the defeated party is in imminent danger of
insolvency (Hacienda Navarro vs. Sabrador, 65 Phil. 536
[1938]; Lao vs. Mencias, 21 SCRA 1021 [1967]; Santos vs.
Mojica, 26 SCRA 607 [1969]; City of Manila vs. Court of
Appeals, 72 SCRA 98 [1976]; De los Reyes vs. Capulong,
122 SCRA 631 [1983]; PVTA vs. Lucero, 125 SCRA 337
[1983]);
4. When the appeal is dilatory and the losing party intends to
encumber and/or dispose of the property subject of the case
during the pendency of the appeal in order to defraud or
deprive the plaintiff of proprietary rights an defeat the ends
of justice (Home Insurance Company vs. Court of Appeals,
184 SCRA 318 [1990]); and
5. Deterioration of commodities subject to litigation
(Federation of United Namarco Distributors, Inc. vs.
National Marketing Corp., 4 SCRA 867 [1962]).
The supposed good reasons relied upon by Judge Santiago
to justify the discretionary execution pending appeal are spelled
out in the May 7, 1996 Order, reading in relevant part as follows

This Court has given serious thoughts on the restrictive


application of Section 2, Rule 39 of the Rules of
Court. Attached to the Reply to the Opposition filed by
plaintiffs, are two public documents. As annex A, the
original carbon copies of the summons and complaint
in the case entitled Solid Bank Corporation vs. Falcon
Garment Corporation et al., in Civil Case No. 9676567, a case for collection of sum of money and
replevin (hereafter, referred to as Complaint). And as
Annex B, the original copy of a police blotter of the
Center Police District Command, Police Station No. 2,
Baler St., Quezon City (hereafter referred to as police
blotter). It is observed the complaint filed by Solidbank
against Falcon supports the material allegations of
plaintiffs in the hearing as reproduced above and as
also quoted by defendant in its opposition. The threats
of impending criminal and civil cases alleged by
plaintiffs are now proven and established to be
real. The complaint shows that Falcon is now being
sued for non-payment of its loan with Solidbank. The
checks issued by Falcon to Solidbank, forming part as
Annexes D, E, F, G, H, and I of the complaint, bounced
for being drawn against insufficient funds. Annexes J,
J-1, J-2, J-3, and J-4 also for the complaint, are written
with demands which carry the threat of criminal action
for violation of Batas Pambansa Blg. 22 against Falcon
Garment Corporation and/or its officers by Solidbank
on February 14, 1996, seized the machineries, office
and factory equipments of Falcon. The police blotter
even enumerates these machines and office
equipments. With the seizure of plaintiffs instruments
in the operation of its business, the filing of collection
cases against it, the threat of criminal prosecution
against its officers, the imminent threat to its industrial
peace, it is not remote that plaintiffs survival hangs on
the balance. There is truth therefore to plaintiffs claim
that its only hope for survival and arresting threats of
civil and criminal cases, is the immediate execution of
the judgment. This Court, also takes into consideration,
that plaintiffs ownership over the funds sought to be
reinstated to Current Account No. 25-00640-7, is not in
dispute. All the circumstances enumerated by plaintiffs
under par. 3 of its motion combined with the facts
established by the complaint of Solidbank against
Falcon and the police blotter, viewed from the above
quoted opposition of defendant, to the mind of this
Court, constitute a sufficient evidence of good reason
in support of plaintiffs subject motion. Further and
significantly taking into consideration plaintiffs
readiness to pay defendants counterclaim
of P4,700,000.00 by deducting the same from the
principal account.

(Rollo pp. 40-41.)


The above stated order quotes the following transcribed
testimony of Magin Tabuso, witness for private respondents, thus
ATTY. MAHINAY: (on direct examination)
QUESTION:
Now, as an overall effect of the unauthorized
withdrawal or transfer of account of your
corporation, can you tell what is its effect insofar
as the operation of your corporation is
concerned?
ANSWER:
It has great effect on the corporation as a whole,
because as our credit today we have an amount
of P12,000,000.00 plus and one of the prominent
creditors of PBCom and also Solid Bank.
Q Do you have complete list of those creditors which
you mentioned you have not paid as a result of
the unauthorized withdrawal or transfer of your
account?
A Yes, we were not able to pay them as a result of
those unauthorized withdrawals.
Q There are list of your creditors in paragraph 5.3 of
your complaint, are they the same creditors you
are talking about?
A Yes, sir.
Q Inasmuch as you said that these creditors were not
paid, what particular action were undertaken by
these creditors against your company?
A Our credit lines from the banks and from the other
creditors were closed, sir.
Q What else?
A And we were not able to serve orders of valued
customers because were not able to meet the
production due to financial difficulties.
Q Your claims of alleged illegal transfer of
withdrawals, does this affect also the industrial
peace of your company?

A Yes, sir. There was a growing threat in the industrial


peace of our company.
Q How many employees are holding your staff?
A We have about 200 workers, sir.
Q What particular threat are you talking about?
A Usually these workers are dependent from our
production and so they started to feel restless and
insecure sometimes and they feel demoralized, at
times which led us to attack, it paralyzes the
whole operations.
(Rollo, pp. 39-40.)
The trial court concluded that the foregoing statements
presented during the hearing of the motion for execution pending
appeal constitute good reasons for the discretionary
execution. The Court of Appeals agreed, but this Court is of a
different persuasion and view.
The reasons relied upon are not compelling and thus can not
constitute good reasons.
It is significant to stress that private respondent Falcon is a
juridical entity and not a natural person. Even assuming that it
was indeed in financial distress and on the verge of facing civil or
even criminal suits, the immediate execution of a judgment in its
favor pending appeal cannot be justified as Falcons situation may
not be likened to a case of a natural person who may be ill or may
be of advanced age. Even the danger of extinction of the
corporation will not per se justify a discretionary execution unless
there are showings of other good reasons, such as for instance,
impending insolvency of the adverse party or the appeal being
patently dilatory. But even as to the latter reason, it was noted
in Aquino vs. Santiago (161 SCRA 570 [1988]), that it is not for
the trial judge to determine the merit of a decision he rendered as
this is the role of the appellate court. Hence, it is not within
competence of the trial court, in resolving a motion for execution
pending appeal, to rule that the appeal is patently dilatory and rely
on the same as its bases for finding good reason to grant the
motion. Only an appellate court can appreciate the dilatory intent
of an appeal as an additional good reason in upholding an order
for execution pending appeal which may have been issued by the
trial court for other good reasons, or in case where the motion for
execution pending appeal is filed with the appellate court in
accordance with Section 2, paragraph (a), Rule 39 of the 1997
Rules of Court.

What is worse, only one case was actually filed against


Falcon and this is the complaint for collection filed by
Solidbank. The other case are impending, so it is said. Other than
said Solidbank case, Falcons survival as a body corporate can not
be threatened by anticipated litigation. This notwithstanding, and
even assuming that there was a serious threat to Falcons
continued corporate existence, we hold that it is not tantamount
nor even similar to an impending death of a natural person. The
material existence of a juridical person is not on the same plain as
that of human life. The survival of a juridical personality is
clearly outweighed by the long standing general policy of
enforcing only final and executory judgments.
In the recent case of David vs. Court of Appeals (G. R. No.
126556, July 28, 1997), we reiterated our pronouncement
in Roxas vs. Court of Appeals (157 SCRA 370 [1988]) that -Execution pending appeal in accordance with Section 2, of Rule
39 is, of course, the exception.Normally, execution of a judgment
should not be had until and unless it has become final and
executory -- i.e., the right to appeal has been renounced or
waived, the period for appeal has lapsed without an appeal having
been taken, or appeal having been taken, the appeal has been
resolved and the records of the case have been returned to the
court of origin -- in which case, execution shall issue as a matter
of right.
On the other hand, when the period of appeal has not
expired, execution of the judgment should not be
allowed, save only if there be good reasons therefor, in
the courts discretion.As provided in Section 2 Rule 39
of the x x Rules x x, the existence of good reasons is
what confers discretionary power on a Court x x to
issue a writ of execution must constitute superior
circumstances demanding urgency which will
outweigh the injury or damages should the losing party
secure a reversal of the judgment.
(p. 377.).
Additionally, we cannot help observing that the May 7, 1996
order of execution issued by Judge Santiago deliberately modified
and failed to conform to the dispositive portion of the January 2,
1996 decision rendered by Judge Percival Mandap-Lopez, which
is the decision Judge Santiagos order intended to execute, and that
this variance was upon express motion to Falcon (See: prayer of
Falcons Ex parte Manifestation & Motion, Annex 2-Comment,
pp. 130-132, rollo.)
The January 2, 1996 decision ordered petitioner to restore
immediately to plaintiffs Current Account No. 25-00640-7 the
sum of P12,729,092.78, plus interest at the rate of 12% per annum

to commence from the date of the filing of the complaint until the
said amount is fully restored, and to operate the said account in
accordance with the instructions of plaintiffs, acting through its
board of directors. In contrast, the May 7, 1996 order directed
petitioner to immediately pay the sum of P12,729,092.78, plus
interest and other damages.
At first glance the order to restore private respondents
current account in the aforementioned amount and the order to
immediately pay the same amount directly to private respondent
may seem to be same, for, after all, upon restoring the said
amount, what may prevent the depositor from withdrawing the
entire amount?
However, after more careful and deliberate consideration,
one will notice a whale of distinction between the two
aforementioned orders. For one thing, if petitioner PBCom were
ordered to credit the money judgment to Falcons current account
with its BMA Quezon City Branch and to operate said account in
accordance with the instructions of the board of directors of
Falcon, once credited, release of any amount from said account
may be done only upon proper resolution of private respondent
Falcons board of directors. On the other hand, the order dated
May 7, 1996 directed the immediate payment to Falcon of the
corresponding money judgment which may thus be used or
misused with or without proper instructions of Falcons board of
directors.
Besides, the harassment complained of by the petitioner
bank would not have happened had respondent trial court issued a
writ which faithfully conformed to the judgment sought to be
enforced. If Falcons current account were merely credited in
accord with the judgment, a simple and orderly banking
procedure may just have taken place. In fact, it would have been
absolutely unnecessary to deputize anybody, other that the sheriff
of the trial court concerned, to enforce the writ ordering petitioner
bank to restore the current account of private respondent.
It is well-settled general principle that a writ of execution
must conform substantially to every essential particular of he
judgment promulgated. Execution which is not in harmony with
the judgment is bereft of validity. It must conform particularly to
that ordained or decreed in the dispositive portion of the decision
(GSIS vs. Court of Appeals, 218 SCRA 233 [1993]). An order of
execution which varies the tenor of the judgment or exceeds the
terms thereof is a nullity (Foremost Farms, Inc. vs. Dept. of
Labor and Employment, 251 SCRA 123 [1995]; Gamboas Inc. vs.
Court of Appeals, 72 SCRA 131 [1976]; Villoria vs. Piccio, 95
Phil. 802 [1954]).
Falcon has ignored and has remained silent in regard to
PBComs charge of harassment and irregular resort to armed

policeman and civilians with acetylene torches in the enforcement


of the writ of execution pending appeal, thus lending credence to
PBComs complaint. However, it also appears that petitioner
PBCom does not intend to pursue the administrative aspect of
these alleged irregularities, its prayer in the petition being
completely silent on these points. Nevertheless, we find necessary
to exhort both private respondent and its counsel, as well as
public respondent sheriffs not to resort to such forms of
harassment by using the strong arms of the law to the prejudice of
any party. Barbaric acts such as those complained of have no
place in a civilized society. It is even more abhorrent when such
acts are with the participation or at the very least the acceptance
of a member of the bar who, under his oath, has sworn to uphold
the rule of law.
WHEREFORE, premises considered, the instant petition is
GRANTED. The decision of the Court of Appeals dated
September 13, 1996 in CA-G.R. SP No. 40636 is hereby
ANNULLED and SET ASIDE. The order of the Regional Trial
Court of the National Capital Judicial Region, Branch 101,
stationed at Quezon City, dated May 7, 1996 in Civil Case No. Q95-22625 is likewise ANNULLED and SET ASIDE. Accordingly,
the trial court is hereby ORDERED to determine the exact
amount taken by private respondent by virtue of the writ or writs
of execution issued pursuant to the annulled order dated May 7,
1996, which amount private respondent is hereby ORDERED to
return to petitioner Philippine Bank of Communications. No
special pronouncement is made as to costs.
SO ORDERED.

34A. Fresh Period Rule; Governing period to file an Appeal


NEYPES v. CA
G.R. No. 141524,
Petitioners Domingo Neypes, Luz Faustino, Rogelio
Faustino, Lolito Victoriano, Jacob Obania and Domingo
Cabacungan filed an action for annulment of judgment and titles
of land and/or reconveyance and/or reversion with preliminary
injunction before the Regional Trial Court, Branch 43, of Roxas,
Oriental Mindoro, against the Bureau of Forest Development,
Bureau of Lands, Land Bank of the Philippines and the heirs of
Bernardo del Mundo, namely, Fe, Corazon, Josefa, Salvador and
Carmen.
In the course of the proceedings, the parties (both
petitioners and respondents) filed various motions with the trial
court. Among these were: (1) the motion filed by petitioners to
declare the respondent heirs, the Bureau of Lands and the Bureau
of Forest Development in default and (2) the motions to dismiss

filed by the respondent heirs and the Land Bank of the


Philippines, respectively.
In an order dated May 16, 1997, the trial court, presided
by public respondent Judge Antonio N. Rosales, resolved the
foregoing motions as follows: (1) the petitioners motion to
declare respondents Bureau of Lands and Bureau of Forest
Development in default was granted for their failure to file an
answer, but denied as against the respondent heirs of del Mundo
because the substituted service of summons on them was
improper; (2) the Land Banks motion to dismiss for lack of cause
of action was denied because there were hypothetical admissions
and matters that could be determined only after trial, and (3) the
motion to dismiss filed by respondent heirs of del Mundo, based
on prescription, was also denied because there were factual
matters that could be determined only after trial.[1]
The respondent heirs filed a motion for reconsideration
of the order denying their motion to dismiss on the ground that
the trial court could very well resolve the issue of prescription
from the bare allegations of the complaint itself without waiting
for the trial proper.
In an order[2] dated February 12, 1998, the trial court
dismissed petitioners complaint on the ground that the action had
already prescribed. Petitioners allegedly received a copy of the
order of dismissal on March 3, 1998 and, on the 15 th day
thereafter or on March 18, 1998, filed a motion for
reconsideration. On July 1, 1998, the trial court issued another
order dismissing the motion for reconsideration [3] which
petitioners received on July 22, 1998. Five days later, on July 27,
1998, petitioners filed a notice of appeal [4] and paid the appeal
fees on August 3, 1998.
On August 4, 1998, the court a quo denied the notice of
appeal, holding that it was filed eight days late. [5] This was
received by petitioners on July 31, 1998. Petitioners filed a
motion for reconsideration but this too was denied in an order
dated September 3, 1998.[6]
Via a petition for certiorari and mandamus under Rule
65 of the 1997 Rules of Civil Procedure, petitioners assailed the
dismissal of the notice of appeal before the Court of Appeals.
In the appellate court, petitioners claimed that they had
seasonably filed their notice of appeal. They argued that the 15day reglementary period to appeal started to run only on July 22,
1998 since this was the day they received the final order of the
trial court denying their motion for reconsideration. When they
filed their notice of appeal on July 27, 1998, only five days had
elapsed and they were well within the reglementary period for
appeal.[7]
On September 16, 1999, the Court of Appeals (CA)
dismissed the petition. It ruled that the 15-day period to appeal
should have been reckoned from March 3, 1998 or the day they
received the February 12, 1998 order dismissing their complaint.
According to the appellate court, the order was the final order
appealable under the Rules. It held further:
Perforce the petitioners tardy appeal was correctly
dismissed for the (P)erfection of an appeal within the
reglementary period and in the manner prescribed by law is
jurisdictional and non-compliance with such legal requirement

is fatal and effectively renders the judgment final and


executory.[8]
Petitioners filed a motion for reconsideration of the
aforementioned decision. This was denied by the Court of
Appeals on January 6, 2000.
In this present petition for review under Rule 45 of the Rules,
petitioners ascribe the following errors allegedly committed by
the appellate court:

I THE HONORABLE COURT OF APPEALS


ERRED IN DISMISSING THE PETITIONERS
PETITION FOR CERTIORARI AND
MANDAMUS AND IN AFFIRMING THE
ORDER OF THE HON. JUDGE ANTONIO N.
ROSALES WHICH DISMISSED THE
PETITIONERS APPEAL IN CIVIL CASE NO.
C-36 OF THE REGIONAL TRIAL COURT,
BRANCH 43, ROXAS, ORIENTAL
MINDORO, EVEN AFTER THE
PETITIONERS HAD PAID THE APPEAL
DOCKET FEES.
II THE HONORABLE COURT OF APPEALS
LIKEWISE ERRED IN RULING AND
AFFIRMING THE DECISION OR ORDER
OF THE RESPONDENT HON. ANTONIO M.
ROSALES THAT PETITIONERS APPEAL
WAS FILED OUT OF TIME WHEN
PETITIONERS RECEIVED THE LAST OR
FINAL ORDER OF THE COURT ON JULY
22, 1998 AND FILED THEIR NOTICE OF
APPEAL ON JULY 27, 1998 AND PAID THE
APPEAL DOCKET FEE ON AUGUST 3,
1998.
III THE HONORABLE COURT OF APPEALS
FURTHER ERRED IN RULING THAT THE WORDS
FINAL ORDER IN SECTION 3, RULE 41, OF THE
1997 RULES OF CIVIL PROCEDURE WILL REFER
TO THE [FIRST] ORDER OF RESPONDENT JUDGE
HON. ANTONIO M. MORALES DATED FEBRUARY
12, 1998 INSTEAD OF THE LAST AND FINAL
ORDER DATED JULY 1, 1998 COPY OF WHICH
WAS RECEIVED BY PETITIONERS THROUGH
COUNSEL ON JULY 22, 1998.
IV.
THE HONORABLE COURT OF APPEALS
FINALLY ERRED IN FINDING THAT THE
DECISION IN THE CASE OF DENSO, INC.
V. IAC, 148 SCRA 280, IS APPLICABLE IN
THE INSTANT CASE THEREBY IGNORING
THE
PECULIAR
FACTS
AND

CIRCUMSTANCES OF THIS CASE AND


THE FACT THAT THE SAID DECISION
WAS RENDERED PRIOR TO THE
ENACTMENT OF THE 1997 RULES OF
CIVIL PROCEDURE.[9]
The foregoing issues essentially revolve around the period within
which petitioners should have filed their notice of appeal.
First and foremost, the right to appeal is neither a natural right nor
a part of due process. It is merely a statutory privilege and may be
exercised only in the manner and in accordance with the
provisions of law. Thus, one who seeks to avail of the right to
appeal must comply with the requirements of the Rules. Failure to
do so often leads to the loss of the right to appeal. [10] The period to
appeal is fixed by both statute and procedural rules. BP 129, [11] as
amended, provides:

obligations of the parties are; or it may be an order or judgment


that dismisses an action.[12]
As already mentioned, petitioners argue that the order of July 1,
1998 denying their motion for reconsideration should be
construed as the final order, not the February 12, 1998 order
which dismissed their complaint. Since they received their copy
of the denial of their motion for reconsideration only on July 22,
1998, the 15-day reglementary period to appeal had not yet lapsed
when they filed their notice of appeal on July 27, 1998.
What therefore should be deemed as the final order,
receipt of which triggers the start of the 15-day reglementary
period to appealthe February 12, 1998 order dismissing the
complaint or the July 1, 1998 order dismissing the MR?
In the recent case of Quelnan v. VHF Philippines, Inc.,
the trial court declared petitioner Quelnan non-suited and
accordingly dismissed his complaint. Upon receipt of the order of
dismissal, he filed an omnibus motion to set it aside. When the
omnibus motion was filed, 12 days of the 15-day period to appeal
the order had lapsed. He later on received another order, this time
dismissing his omnibus motion. He then filed his notice of appeal.
But this was likewise dismissed for having been filed out of
time.
[13]

Sec. 39.Appeals. The period for appeal from final orders,


resolutions, awards, judgments, or decisions of
any court in all these cases shall be fifteen (15)
days counted from the notice of the final order,
resolution, award, judgment, or decision
appealed from. Provided, however, that in
habeas corpus cases, the period for appeal shall
be (48) forty-eight hours from the notice of
judgment appealed from. x x x

Rule 41, Section 3 of the 1997 Rules of Civil Procedure states:


SEC. 3.Period of ordinary appeal. The
appeal shall be taken within fifteen (15) days
from the notice of the judgment or final
order appealed from. Where a record on
appeal is required, the appellant shall file a
notice of appeal and a record on appeal within
thirty (30) days from the notice of judgment or
final order.
The period to appeal shall be interrupted by a
timely motion for new trial or reconsideration.
No motion for extension of time to file a motion
for new trial or reconsideration shall be
allowed. (emphasis supplied)

Based on the foregoing, an appeal should be taken within 15 days


from the notice of judgment or final order appealed from. A final
judgment or order is one that finally disposes of a case, leaving
nothing more for the court to do with respect to it. It is an
adjudication on the merits which, considering the evidence
presented at the trial, declares categorically what the rights and

The court a quo ruled that petitioner should have


appealed within 15 days after the dismissal of his complaint since
this was the final order that was appealable under the Rules. We
reversed the trial court and declared that it was the denial of the
motion for reconsideration of an order of dismissal of a complaint
which constituted the final order as it was what ended the issues
raised there.
This pronouncement was reiterated in the more recent case
of Apuyan v. Haldeman et al.[14] where we again considered the
order denying petitioner Apuyans motion for reconsideration as
the final order which finally disposed of the issues involved in the
case.
Based on the aforementioned cases, we sustain petitioners view
that the order dated July 1, 1998 denying their motion for
reconsiderationwas the final order contemplated in the Rules.
We now come to the next question: if July 1, 1998 was
the start of the 15-day reglementary period to appeal, did
petitioners in fact file their notice of appeal on time?
Under Rule 41, Section 3, petitioners had 15 days
from notice of judgment or final order to appeal the decision of
the trial court. On the 15 th day of the original appeal period
(March 18, 1998), petitioners did not file a notice of appeal but
instead opted to file a motion for reconsideration. According to
the trial court, the MR only interrupted the running of the 15-day
appeal period.[15] It ruled that petitioners, having filed their MR on
the last day of the 15-day reglementary period to appeal, had only

one (1) day left to file the notice of appeal upon receipt of the
notice of denial of their MR. Petitioners, however, argue that they
were entitled under the Rules to a fresh period of 15 days from
receipt of the final order or the order dismissing their motion for
reconsideration.
In Quelnan and Apuyan, both petitioners filed a motion
for reconsideration of the decision of the trial court. We ruled
there that they only had the remaining time of the 15-day appeal
period to file the notice of appeal. We consistently applied this
rule in similar cases,[16] premised on the long-settled doctrine that
the perfection of an appeal in the manner and within the period
permitted by law is not only mandatory but also jurisdictional.
[17]
The rule is also founded on deep-seated considerations of
public policy and sound practice that, at risk of occasional error,
the judgments and awards of courts must become final at some
definite time fixed by law.[18]
Prior to the passage of BP 129, Rule 41, Section 3 of the
1964 Revised Rules of Court read:
Sec. 3. How appeal is taken. Appeal
maybe taken by serving upon the adverse
party and filing with the trial court within
thirty (30) days from notice of order or
judgment, a notice of appeal, an appeal
bond, and a record on appeal. The time
during which a motion to set aside the judgment
or order or for new trial has been pending shall
be deducted, unless such motion fails to satisfy
the requirements of Rule 37.
But where such motion has been filed
during office hours of the last day of the period
herein provided, the appeal must be perfected
within the day following that in which the party
appealing received notice of the denial of said
motion.[19] (emphasis supplied)

According to the foregoing provision, the appeal period


previously consisted of 30 days. BP 129, however, reduced this
appeal period to 15 days. In the deliberations of the Committee on
Judicial Reorganization[20] that drafted BP 129, the raison d
etre behind the amendment was to shorten the period of
appeal[21] and enhance the efficiency and dispensation of justice.
We have since required strict observance of this reglementary
period of appeal. Seldom have we condoned late filing of notices
of appeal,[22] and only in very exceptional instances to better serve
the ends of justice.
In National Waterworks and Sewerage Authority and
Authority v. Municipality of Libmanan,[23] however, we declared
that appeal is an essential part of our judicial system and the rules
of procedure should not be applied rigidly. This Court has on

occasion advised the lower courts to be cautious about not


depriving a party of the right to appeal and that every party
litigant should be afforded the amplest opportunity for the proper
and just disposition of his cause, free from the constraint of
technicalities.
In de la Rosa v. Court of Appeals,[24] we stated that, as a
rule, periods which require litigants to do certain acts must be
followed unless, under exceptional circumstances, a delay in the
filing of an appeal may be excused on grounds of substantial
justice. There, we condoned the delay incurred by the appealing
party due to strong considerations of fairness and justice.
In setting aside technical infirmities and thereby giving
due course to tardy appeals, we have not been oblivious to or
unmindful of the extraordinary situations that merit liberal
application of the Rules. In those situations where technicalities
were dispensed with, our decisions were not meant to undermine
the force and effectivity of the periods set by law. But we hasten
to add that in those rare cases where procedural rules were not
stringently applied, there always existed a clear need to prevent
the commission of a grave injustice. Our judicial system and the
courts have always tried to maintain a healthy balance between
the strict enforcement of procedural laws and the guarantee that
every litigant be given the full opportunity for the just and proper
disposition of his cause.[25]
The Supreme Court may promulgate procedural rules in
all courts.[26] It has the sole prerogative to amend, repeal or even
establish new rules for a more simplified and inexpensive
process, and the speedy disposition of cases. In the rules
governing appeals to it and to the Court of Appeals, particularly
Rules 42,[27] 43[28] and 45,[29] the Court allows extensions of time,
based on justifiable and compelling reasons, for parties to file
their appeals. These extensions may consist of 15 days or more.
To standardize the appeal periods provided in the Rules
and to afford litigants fair opportunity to appeal their cases, the
Court deems it practical to allow a fresh period of 15 days within
which to file the notice of appeal in the Regional Trial Court,
counted from receipt of the order dismissing a motion for a new
trial or motion for reconsideration. [30]
Henceforth, this fresh period rule shall also apply to
Rule 40 governing appeals from the Municipal Trial Courts to the
Regional Trial Courts; Rule 42 on petitions for review from the
Regional Trial Courts to the Court of Appeals; Rule 43 on appeals
from quasi-judicial agencies[31] to the Court of Appeals and Rule
45 governing appeals by certiorari to the Supreme Court.[32] The
new rule aims to regiment or make the appeal period uniform, to
be counted from receipt of the order denying the motion for new
trial, motion for reconsideration (whether full or partial) or any
final order or resolution.
We thus hold that petitioners seasonably filed their
notice of appeal within the fresh period of 15 days, counted from
July 22, 1998 (the date of receipt of notice denying their motion
for reconsideration). This pronouncement is not inconsistent with
Rule 41, Section 3 of the Rules which states that the appeal shall

be taken within 15 days from notice of judgment or final order


appealed from. The use of the disjunctive word or signifies
disassociation and independence of one thing from another. It
should, as a rule, be construed in the sense in which it ordinarily
implies.[33] Hence, the use of or in the above provision supposes
that the notice of appeal may be filed within 15 days from the
notice of judgment or within 15 days from notice of the final
order, which we already determined to refer to the July 1, 1998
order denying the motion for a new trial or reconsideration.

No costs.

Neither does this new rule run counter to the spirit of


Section 39 of BP 129 which shortened the appeal period from 30
days to 15 days to hasten the disposition of cases. The original
period of appeal (in this case March 3-18, 1998) remains and the
requirement for strict compliance still applies. The fresh period of
15 days becomes significant only when a party opts to file a
motion for new trial or motion for reconsideration. In this
manner, the trial court which rendered the assailed decision is
given another opportunity to review the case and, in the process,
minimize and/or rectify any error of judgment. While we aim to
resolve cases with dispatch and to have judgments of courts
become final at some definite time, we likewise aspire to deliver
justice fairly.

THE REPUBLIC OF THE PHILIPPINES, THROUGH THE


DEPARTMENT OF EDUCATION, CULTURE AND
SPORTS, represented by its Division Superintendent
Region 2, Tuguegarao, Cagayan, petitioner, vs.
COURT OF APPEALS, LUCAS TANGUILAN,
JULIANA TANGUILAN, assisted by her husband,
ROBERTO
TANGUILAN,
DOMINGO
TANGUILAN,
JUAN
TANGUILAN,
JOSE
TANGUILAN,
CATARINA
TANGUILAN,
PAULINO TANGUILAN, PEDRO TANGUILAN
and INES TANGUILAN, respondents.

SO ORDERED.
35A. Perfection of Appeal
[G.R. No. 132425. August 31, 1999]

DECISION
In this case, the new period of 15 days eradicates the
confusion as to when the 15-day appeal period should be counted
from receipt of notice of judgment (March 3, 1998) or from
receipt of notice of final order appealed from (July 22, 1998).
To recapitulate, a party litigant may either file his notice
of appeal within 15 days from receipt of the Regional Trial Courts
decision or file it within 15 days from receipt of the order (the
final order) denying his motion for new trial or motion for
reconsideration. Obviously, the new 15-day period may be
availed of only if either motion is filed; otherwise, the decision
becomes final and executory after the lapse of the original appeal
period provided in Rule 41, Section 3.
Petitioners here filed their notice of appeal on July 27,
1998 or five days from receipt of the order denying their motion
for reconsideration on July 22, 1998. Hence, the notice of appeal
was well within the fresh appeal period of 15 days, as already
discussed.[34]
We deem it unnecessary to discuss the applicability of Denso
(Philippines), Inc. v. IAC[35] since the Court of Appeals never even
referred to it in its assailed decision.
WHEREFORE, the petition is hereby GRANTED and
the
assailed
decision
of
the
Court
of
Appeals REVERSED and SET ASIDE. Accordingly, let the
records of this case be remanded to the Court of Appeals for
further proceedings.

BUENA, J.:
This is a petition for review on certiorari seeking the
reversal and setting aside of the decision of the Court of Appeals
dated January 28, 1998 in CA-G. R. SP No. 45579 entitled The
Republic of the Philippines through the Department of Education,
Culture and Sports, etc. versus Hon. Rolando V. Salacup, et al.
The antecedent facts of the case are as follows:
A complaint for recovery of possession and ownership with
damages was filed by plaintiffs Lucas Tanguilan, Juliana
Tanguilan assisted by her husband Roberto Tanguilan, Domingo
Tanguilan, Juan Tanguilan, Jose Tanguilan, Catarina Tanguilan,
Paulino Tanguilan, Pedro Tanguilan, Digna Tanguilan, and Ines
Tanguilan (herein private respondents) against the Department of
Education, Culture and Sports, represented by its Division
Superintendent of Schools of Cagayan, Region 2, Tuguegarao,
Cagayan (DECS, for brevity).[1]
The parcel of land in question is designated as Lot No. 7133
of the Cadastral Survey of Tuguegarao, Cagayan with an area of
three thousand four hundred ninety-four (3494) square meters and
covered by OCT No. 2145 issued in the name of the spouses
Domingo Tanguilan and Modesta Addun.[2]
On January 18, 1996, summons was served upon the
defendant DECS (petitioner herein).[3]Peregrino N. Alan, the
Schools Division Superintendent, filed a motion for extension of

time to file a responsive answer.[4] In the order of the trial court on


February 2, 1996 the motion was granted whereby the defendant
was given until February 17, 1996 within which to file its answer.
[5]

On February 22, 1996, defendant DECS filed a


manifestation and motion for new period to file answer to the
complaint.[6]
On February 23, 1996, the plaintiffs moved to declare
defendant DECS in default for failure of the latter to file an
answer within the period fixed by the court. [7] A hearing on the
said motion was set on March 1, 1996.[8]
On even date, in open court, an order was issued (1) finding
that there is no more legal basis to grant the motion for extension
to file an answer since the same was filed after the expiration of
the original 15-day period, (2) declaring defendant in default, and
(3) setting the reception of plaintiffs evidence that afternoon.[9]
The following motions were thereafter filed by the
defendant: a motion for reconsideration,[10] a motion to admit
attached answer[11] with the corresponding answer,[12] and a
rejoinder.[13] An
opposition
to
the
motion
for
reconsideration[14] and an opposition to the motion to admit
answer[15]were filed by plaintiffs.
On September 10, 1996, a resolution was issued denying,
for lack of merit, the motion for reconsideration.[16]

[17]

On October 29, 1996, the trial court rendered its decision,


the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, this Court renders


judgment in favor of the plaintiffs and against the defendant by:
1. Ordering the defendant to pay the amount of TWO
THOUSAND (P2,000.00) PESOS from January, 1972 up to this
date representing the monthly rentals of its occupancy or a total
amount of FIVE HUNDRED SEVENTY SIX THOUSAND
(P576,000.00) PESOS;

A copy of the decision was received by defendant on


November 5, 1996. Consequently on November 20, 1996, a
motion for reconsideration[19] was filed. An opposition thereto
was filed by plaintiffs.[20] The motion for reconsideration was
denied for lack of merit in the resolution of March 14, 1997.[21]
A motion for the issuance of a writ of execution was
thereafter filed by the plaintiffs. [22] An opposition to the said
motion was filed by defendant DECS.[23] Reply to the same was
subsequently filed.[24]
A notice of appeal dated March 31, 1997 was then filed by
defendant.[25] A motion to dismiss the notice of appeal was filed.
[26]
Comment (re: motion to dismiss the notice of appeal and reply
to the opposition to the motion for the issuance of writ of
execution)[27] and rejoinder to the comment[28]were filed.
On August 1, 1997, a resolution was issued by the trial court
dismissing the notice of appeal for being filed out of time and
ordering the issuance of a writ of execution for the enforcement
of the decision dated October 29, 1996.[29]
Subsequently a writ of execution was issued on August 21,
1997.[30]
On October 9, 1997, an Order was issued authorizing the
Sheriff to withdraw the amount garnished from the Land Bank of
the Philippines to satisfy the obligation of the defendant and to
immediately deliver the same to the plaintiffs.[31]
Accordingly a petition for certiorari and prohibition with
urgent prayer for a temporary restraining order and/or preliminary
injunction was filed with the Court of Appeals docketed as CAG.R. SP No. 45579.[32]
After the requisite pleadings had been filed, the Court of
Appeals issued its questioned decision dated January 28, 1998
dismissing the petition for lack of merit.[33]
Hence this petition.
Petitioner assigns the following lone error:

2. To vacate the land in suit;


3. To pay attorneys fee in the amount of TWENTY THOUSAND
(P20,000.00) PESOS; and

THE HONORABLE COURT OF APPEALS ERRED GRAVELY


IN RENDERING THE QUESTIONED DECISION
The petition is without merit.

4. Payment of costs of this suit.


IT IS SO ORDERED.[18]

The right to appeal is not a constitutional, natural or inherent


right. It is a statutory privilege of statutory origin and, therefore,
available only if granted or provided by statute.[34] As such it may

be exercised only in the manner and in accordance with the


provision of law.[35]
Section 39 of Batas Pambansa Blg. 129 provides:
Sec. 39. Appeals. The period for appeal from final orders,
resolutions, awards, judgments, or decisions of any court in all
cases shall be fifteen (15) days counted from the notice of the
final order, resolution, award, judgment, or decision appealed
from: x x x (Underscoring supplied)
Petitioner admits the following in the Opposition to the
Motion for the Issuance of a Writ of Execution it filed with the
trial court: (1) that it should have filed its notice of appeal on
March 26, 1997; (2) that the same was not filed until April 1,
1997 because from March 24-27, 1997, Ma. Zorayda V. TejonesZuniga, the Associate Solicitor handling the case was in General
Santos City attending the hearing in Civil Case No. 5026 entitled
Board of Liquidators v. Munsayac, et al.; (3) that it was only
around 4:00 oclock in the afternoon of March 31, 1997 that she
(Tejones-Zuniga) received the resolution denying the motion for
reconsideration of the decision dated October 29, 1996; (4) that
the notice of appeal was filed two (2) days late (excluding March
27, 28, 29 and 30, being holidays).[36]
It is well-settled that failure to perfect an appeal within the
period provided for by law has the effect of rendering the decision
or judgment final and executory.
Petitioner acknowledged that the appeal was filed two (2)
days after the expiration of the period to appeal. This being the
case the decision of the trial court dated October 29, 1996 became
final and executory upon the expiration of the period to appeal.

Petitioner cites the ruling in Dimayacyac vs. Court of


Appeals[39] to bolster its argument that the petition
for certiorari they filed before the Court of Appeals is the
appropriate remedy.
We disagree. Certiorari cannot be used as a substitute for
the lost or lapsed remedy of appeal especially if such loss or lapse
was occasioned by ones own neglect or error in the choice of
remedies.[40] And it is undisputed that the cause for the late filing
of the notice to appeal is the neglect of the counsel for petitioner
to do so.
WHEREFORE, IN VIEW OF THE FOREGOING, the
petition is hereby DISMISSED.
SO ORDERED.

36A. Grounds for Annulment of a Judgment


[G.R. No. 120587. January 20, 2004]
MILAGROS M. BARCO, as the Natural Guardian and
Guardian Ad Litem of MARY JOY ANN
GUSTILO, petitioner, vs. COURT OF APPEALS
(SPECIAL SIXTEENTH DIVISION), REGIONAL
TRIAL COURT (BR. 133-MAKATI), NCJR; THE
LOCAL CIVIL REGISTRAR OF MAKATI; and
NADINA G. MARAVILLA, respondents.
DECISION

Perfection of an appeal within the statutory or reglementary


period is not only mandatory but also jurisdictional and failure to
do so renders the questioned decision final and executory, and
deprives the appellate court or body of jurisdiction to alter the
final judgment much less to entertain the appeal. [37] (Emphasis
ours)
We can not and must not countenance the practice of asking
that a final judgment or order be set aside or be reopened every
time the counsel fails to personally receive a copy thereof because
at the time it was delivered to her office she was absent
therefrom. For to do so would mean that the end to litigations
would be speculative, if not dependent upon the will of the parties
and/or their lawyers.[38] Not to mention that it would result in
cases dragging and clogging the already congested dockets of the
court.

TINGA, J.:
The story behind the present petition is a portrait of
dysfunction. The familial situation of the parties is complicated,
to say the least. The judicial conferment of the status of
illegitimacy on a daughter who is by law legitimate has created a
tangled braid of various legal doctrines that, like the Gordian knot
of yore, is in this case ultimately unbound through one fell swoop
of the sword.
On 24 December 1970, private respondent Nadina Maravilla
(Nadina) married Francisco Maravilla (Francisco). By February
of 1977, the spouses had opted to live separately, [1] and in
February of the following year they obtained an ecclesiastical
annulment of marriage issued by the Catholic Diocese of Bacolod
City.[2] On 9 June 1978, Nadina gave birth to a daughter named
June Salvacion (June) in Makati, Metro Manila. Junes birth

certificate listed Francisco Maravilla as the father, and Maravilla


as the childs surname.[3] Nadina signed the birth certificate shortly
after it was accomplished.
Despite the notation in Junes birth certificate, Nadina
subsequently claimed that all along, the real father of her child
was Armando Gustilo (Gustilo), a former Congressman with
whom she maintained a relationship. At the time of Junes birth,
Gustilo was married to one Consuelo Caraycong, who would later
perish in the MV Don Juan naval accident of 1981. [4] On 21
August 1982, Nadina and Gustilo were married in the United
States.[5] This marriage took place two and a half years before
Nadinas marriage to Francisco was alleged to have been annulled
in the Philippines. On 12 March 1985, Nadina apparently was
able to obtain a judicial declaration annulling her marriage to
Francisco.[6]
On 17 March 1983, Nadina filed in her own name a Petition
for Correction of Entries in the Certificate of Birth of her
daughter June with the Regional Trial Court (RTC) of Makati.
[7]
Therein, she alleged that she had been living separately from
her lawful spouse Francisco since February of 1977, and that
Gustilo was the real father of June.[8] She claimed that she did not
allow Francisco to have any sexual congress with her within the
first 20 days of the three hundred days preceding the birth of
June.[9] She prayed that the Local Civil Registrar of Makati be
directed to correct the birth certificate of June to the effect that the
latters full name be made June Salvacion C. Gustilo, and that the
name of her father be changed from Francisco Maravilla to
Armando Gustilo. Notably, Francisco affixed his signature to
the Petition signifying his conformity thereto.[10]
On 20 March 1983. Gustilo filed a Constancia, wherein he
acknowledged June as his daughter with Nadina, and that he was
posing no objection to Nadinas petition.[11]
The Petition was docketed as SP Proc. No. M-130. On 26
July 1983, the RTC, in accordance with Rule 108 of the Rules of
Court, issued an Order setting the case for hearing and directing
that a copy of the order be published once a week for three
consecutive weeks in a newspaper of general circulation. On 7
September 1983, Nadina filed an Amended Petition,[12] this time
impleading
Francisco
and
Gustilo
as
respondents.
Correspondingly, the RTC amended the Order on 22 September
1983 to reflect the additional impleaded parties.[13]
The Office of the Solicitor General filed a Motion to
Dismiss the petition on the ground that the RTC had no
jurisdiction over the subject matter and/or the nature of th[e] suit.
[14]
They cited various jurisprudence holding that only innocuous
or clerical errors may be corrected under a Rule 108 petition for
correction of entries, and that the Petition seeks changes are

substantial and controversial in character which directly affect the


filiation and legitimacy of petitioners daughter.[15] On 23 February
1984, the Motion to Dismiss was denied by the RTC, which also
subsequently denied a Motion for Reconsideration thereto filed
by the Solicitor General.
On 7 January 1985, the RTC issued an Order (RTC Order)
granting the petition and ordering the requested corrections to be
effected. The RTC considered the claim of Nadina that she had
relied completely on her uncle William R. Veto [16] to facilitate the
preparation of Junes birth certificate, that it was through his
inadvertence that the mistaken entries were made, and that she
was in intense physical discomfort when she had affixed her
signature to the birth certificate containing the incorrect entries.
[17]
The RTC also noted that Francisco had signified his
conformity to the action by signing the original petition, and that
Gustilo had manifested through a Constancia dated 20 March
1983 that he was acknowledging June as his daughter and
expressing no objection to the petition.[18]
Gustilo died in 19 December 1986. [19] Two estate
proceedings arose from his death, one lodged in Makati, [20] the
other in Harris County, Texas. [21] Among the participants in both
estate proceedings was Jose Vicente Gustilo (Jose Vicente),
allegedly a biological child of Gustilo.[22] On 5 March 1993, he
filed with the Court of Appeals a Petition[23] seeking the
annulment of the RTC Order of 7 January 1985 which had
effected changes in the civil status of June. Jose Vicente amended
his Petition in July of 1993 to implead Nadina as an indispensable
party.[24] In her Comment, Nadina countered that Jose Vicente had
not sufficiently proven that he was a child of Armando, and there
was neither extrinsic fraud or lack of jurisdiction that would
justify the annulment of the RTC Order.[25] Nadina also pointed
out that the Makati intestate court had approved a compromise
agreement wherein the parties had agreed that the only heirs of
the decedent Armando are the surviving spouse, Nadina G.
Gustilo, the daughter, June Salvacion G. Gustilo, the son, Jose
Vicente Gustilo III, and another daughter, Mary Joy Ann Gustilo.
[26]
However, this compromise agreement was subsequently
voided on petition by Jose Vicente to the Court of Appeals, on the
ground that the Civil Code prohibited compromise as to the civil
status of persons.[27]
After the Court of Appeals commenced hearings on the
petition, petitioner Milagros Barco (Barco), on 11 January 1994,
filed in her capacity as the natural guardian and/or guardian ad
litem of her daughter, Mary Joy Ann Gustilo (Mary Joy),
a Motion
for
Intervention with
a Complaint-inIntervention attached thereto.[28] Barco alleged that Mary Joy had
a legal interest in the annulment of the RTC Order as she was
likewise fathered by Gustilo. In her Complaint-in-Intervention,
Barco claimed that she and Gustilo had maintained a relationship

since 1967, and to them was born Mary Joy in 1977.[29] Barco also
alleged that she actually moved in with Gustilo after the death of
the latters wife in 1980, and maintained her affair with Gustilo
until 1983, when she was purportedly supplanted by Nadina as
Gustilos common-law companion after Gustilo had become
gravely ill.[30]
After the parties had filed their respective memoranda, the
Court of Appeals rendered a Decision on 13 March 1995,
dismissing both the Petition and the Complaint-in-Intervention.
[31]
The appellate court held that neither Jose Vicente nor Barco
were able to establish the existence of lack of jurisdiction and
extrinsic fraud, the two grounds that would justify the annulment
of a final judgment.[32] It ruled that while Jose Vicente and Barco
had not been made parties in the Petition for Correction, the
subsequent notice and publication of the Order setting the case
for hearing served as constructive notice to all parties who might
have an interest to participate in the case. The publication of
the Order conferred upon the RTC the jurisdiction to try and
decide the case.[33] It also found no merit in Jose Vicentes claim
that he learned of the RTC Order only in November of 1992,
pointing out that as early as 1987, he filed a pleading with the
intestate court alleging that Junes birth certificate had been
amended to record the name of her true father.[34]
Only the intervenor Barco filed a Motion for
Reconsideration[35] of the Court of Appeals Decision, which the
appellate court denied on 16 May 1995.[36] Thus, Barco filed the
present Petition for Review on Certiorari seeking the reversal of
the Court of Appeals Decision and the annulment of the 1985
RTC Order.
Before this Court, Barco assails that RTC Order on the
ground of lack of jurisdiction.That was the same ground she
invoked in the Court of Appeals. Specifically, she raises the
following issues:

4) Nadinas petition should have been treated as a petition for


change of name, which can only be filed by the person whose
name is sought to be changed;
5) The RTC Order contravenes the legal presumption that
children born during the pendency of a marriage are legitimate
and the rule that legitimate children cannot adopt the surname of a
person who is not their father; and
6) The RTC should have excluded as hearsay
the Constancia allegedly signed by Gustilo and that the
surrounding circumstances under which it was issued gave reason
to doubt its authenticity and credibility.
Interestingly, the questions that Barco raised would tickle
the fancies of erudite civilists yearning for a challenge. However,
the ultimate resolution of this case hinges on whether the de
rigueur requirements of the extraordinary remedy of annulment
of judgment have been satisfied.
First, a brief revisit of the action to annul judgment.
The recourse is equitable in character, allowed only in
exceptional cases, as where there is no available or other adequate
remedy. Annulment of judgments is a remedy long authorized and
sanctioned in our jurisdiction.[38] As far back as 1918, this Court
in Banco Espaol-Filipino v. Palanca[39] recognized the availability
of a direct attack of a final judgment on the ground that it is void
for want of jurisdiction. In Reyes v. Datu[40] we held that the
validity of a final judgment or order of the court may be attacked
only by a direct action or proceeding or by motion in another case
on the ground of lack of jurisdiction.

1) Barco should have been made a party to the Nadinas


petition and the failure to implead her deprived the RTC of
jurisdiction;

Yet, it was only in the 1997 Rules of Civil Procedure that for
the first time the procedure for the annulment of judgments or
final orders and resolutions in civil cases of regional trial courts,
through a petition before the Court of Appeals, was formally
provided. Rule 47 thereof under which the procedure was
integrated incorporates settled jurisprudence on annulment of
judgment.

2) This RTC could not have entertained Nadinas petition,


since the Courts ruling in a long line of cases, beginning
with Republic v. Valencia,[37] that a petition for correction of
entries in the civil register is not limited to innocuous or clerical
mistakes, applies only to citizenship cases;

Statutory basis for the remedy was laid way back in 1980,
with the enactment of The Judiciary Reorganization Act of 1980.
[41]
Section 9 thereof vests in the Court of Appeals exclusive
original jurisdiction over actions for annulment of judgments of
the lower courts.

3) The petition for correction was filed out of time, as


Article 263 of the Civil Code of 1950 sets a prescriptive period
for impugning the legitimacy of a child which is one year from
the recording of birth in the Civil Registry, if the husband should
be in the same place, or in a proper case, any of his heirs;

Section 2, Rule 47 of the 1997 Rules of Civil Procedure


explicitly provides only two grounds for annulment of judgment,
namely: extrinsic fraud and lack of jurisdiction. This express
limitation is significant since previous jurisprudence recognized
other grounds as well.[42] The underlying reason is traceable to the

notion that annulling final judgments goes against the grain of


finality of judgment. Litigation must end and terminate sometime
and somewhere, and it is essential to an effective administration
of justice that once a judgment has become final the issue or
cause involved therein should be laid to rest. The basic rule of
finality of judgment is grounded on the fundamental principle of
public policy and sound practice that at the risk of occasional
error, the judgment of courts and the award of quasi-judicial
agencies must become final at some definite date fixed by law.
[43]
Even if the rule on annulment of judgment is grounded on
equity, the relief is of an extraordinary character, and not as
readily available as the remedies obtaining to a judgment that is
not yet final.
There are two aspects of jurisdiction which are vital for
disposition of this case - jurisdiction over the nature of the
action or subject matter, and jurisdiction over the parties.
[44]
Barco claims that the RTC failed to satisfy both aspects of
jurisdiction. She opines that the RTC did not acquire jurisdiction
over the parties due to the failure to implead her as a party to the
petition for correction. On the other hand, the remaining issues
that she raises as errors put into question whether the RTC had
jurisdiction over the subject matter of Nadinas petition.
We shall first tackle the question of whether the RTC had
acquired jurisdiction over Barco and all other indispensable
parties to the petition for correction.
The essential requisite for allowing substantial corrections
of entries in the civil registry is that the true facts be established
in an appropriate adversarial proceeding. This is embodied in
Section 3, Rule 108 of the Rules of Court, which states:
Section 3. Parties When cancellation or correction of an entry in
the civil register is sought, the civil registrar and all persons who
have or claim any interest which would be affected thereby shall
be made parties to the proceeding.
The Court of Appeals held that jurisdiction over the parties
was properly acquired through the notice by publication effected
in conformity with Section 4 of Rule 108. Barco assails this
holding and claims that the failure to implead her as a party to the
petition for correction deprived the RTC of jurisdiction.
Undoubtedly, Barco is among the parties referred to in
Section 3 of Rule 108. Her interest was affected by the petition
for correction, as any judicial determination that June was the
daughter of Armando would affect her wards share in the estate of
her father. It cannot be established whether Nadina knew of Mary
Joys existence at the time she filed the petition for correction.
Indeed, doubt may always be cast as to whether a petitioner under
Rule 108 would know of all the parties whose interests may be

affected by the granting of a petition. For example, a petitioner


cannot be presumed to be aware of all the legitimate or
illegitimate offsprings of his/her spouse or paramour. The fact that
Nadina amended her petition to implead Francisco and Gustilo
indicates earnest effort on her part to comply with Section 3 as
quoted above.
Yet, even though Barco was not impleaded in the petition,
the Court of Appeals correctly pointed out that the defect was
cured by compliance with Section 4, Rule 108, which requires
notice by publication, thus:
Section 4. Upon the filing of the petition, the court shall, by order,
fix the time and place for the hearing of the same, and cause
reasonable notice thereof to be given to the persons named in the
petition. The court shall also cause the order to be published once
a week for three (3) consecutive weeks in a newspaper of general
circulation in the province.
The purpose precisely of Section 4, Rule 108 is to bind the
whole world to the subsequent judgment on the petition. The
sweep of the decision would cover even parties who should have
been impleaded under Section 3, Rule 108, but were inadvertently
left out. The Court of Appeals correctly noted:
The publication being ordered was in compliance with, and borne
out by the Order of January 7, 1985. The actual publication of the
September 22, 1983 Order, conferred jurisdiction upon the
respondent court to try and decide the case. While nobody
appeared to oppose the instant petition during the December 6,
1984 hearing, that did not divest the court from its jurisdiction
over the case and of its authority to continue trying the case. For,
the rule is well-settled, that jurisdiction, once acquired continues
until termination of the case.[45]
Verily, a petition for correction is an action in rem, an action
against a thing and not against a person. [46] The decision on the
petition binds not only the parties thereto [47] but the whole world.
[48]
An in rem proceeding is validated essentially through
publication.[49]Publication is notice to the whole world that the
proceeding has for its object to bar indefinitely all who might be
minded to make an objection of any sort against the right sought
to be established.[50] It is the publication of such notice that brings
in the whole world as a party in the case and vests the court with
jurisdiction to hear and decide it.[51]
Since the RTC properly acquired jurisdiction over the
parties, what remains for determination is whether it had acquired
jurisdiction over Nadinas cause of action. It should be
emphasized that jurisdiction over the nature of the action or the
subject matter is conferred by law. This Courts recent holding

in Durisol Philippines, Inc. v. Court of Appeals [52] is instructive in


this regard:

cases have merely echoed the Ty Kong Tin doctrine without,


however, shedding light on the matter.

[I]t should be stressed that in a petition for annulment of


judgment based on lack of jurisdiction, petitioner must show not
merely an abuse of jurisdictional discretion but an absolute lack
of jurisdiction. Lack of jurisdiction means absence of or no
jurisdiction, that is, the court should not have taken cognizance of
the petition because the law does not vest it with jurisdiction over
the subject matter.[53]

The flaw in Ty Kong Tin lies in its theory that Article 412
contemplates a summary procedure.

The question of whether a court has jurisdiction over the


subject matter can be answered simply by determining if on the
basis of the complaint or petition the court has, under the law, the
power to hear and decide the case. Barcos remaining arguments
are to be tested against this standard.
One of Barcos striking assertions is that the general rule still
is that the jurisdiction of the court in the correction of entries in
the civil register is limited to innocuous or clerical mistakes, as
what she insinuates as the apparent contrary holding in Republic
v. Valencia[54] applies only to citizenship cases.
Since the promulgation of the Valencia ruling in 1986 the
Court has repeatedly ruled that even substantial errors in a civil
registry may be corrected through a petition filed under Rule 108,
with the true facts established and the parties aggrieved by the
error availing themselves of the appropriate adversarial
proceeding. Barco, by seeking to limit the application of
the Valencia doctrine to citizenship cases, is flogging a dead
horse. This argument was debunked in subsequent cases,
[55]
notably the recent case of Lee v. Court of Appeals.[56] The
exhaustive disquisition therein of Justice Sabino de Leon should
preclude any further arguments on the scope of Rule 108.

First of all, Article 412 is a substantive law that provides as


follows:
No entry in a civil register shall be changed or corrected, without
a judicial order.
It does not provide for a specific procedure of law to be followed
except to say that the corrections or changes must be effected by
judicial order. As such, it cannot be gleaned therefrom that the
procedure contemplated for obtaining such judicial order is
summary in nature.
Secondly, it is important to note that Article 412 uses both the
terms corrected and changed. In its ordinary sense, to correct
means to make or set right; to remove the faults or errors from
while to change means to replace something with something else
of the same kind or with something that serves as a substitute.
The provision neither qualifies as to the kind of entry to be
changed or corrected nor does it distinguish on the basis of the
effect that the correction or change may have.Hence, it is proper
to conclude that all entries in the civil register may be changed or
corrected under Article 412. What are the entries in the civil
register? We need not go further than Articles 407 and 408 of the
same title to find the answer.
Art. 407. Acts, events and judicial decrees concerning the civil
status of persons shall be recorded in the civil register.
Art. 408. The following shall be entered in the civil register:

The Court in Lee acknowledged that there existed a line of


decided cases, some of them decided after Valencia, stating that
Rule 108 cannot be used to effect substantial corrections in
entries of the civil register.[57] The doctrine was traced back to the
1954 case of Ty Kong Tin v. Republic,[58] the rationale of which
the Court reevaluated in Lee:
We venture to say now that the above pronouncements proceed
from a wrong premise, that is, the interpretation that Article 412
pertains only to clerical errors of a harmless or innocuous nature,
effectively excluding from its domain, and the scope of its
implementing rule, substantial changes that may affect
nationality, status, filiation and the like. Why the limited scope of
Article 412? Unfortunately, Ty Kong Tin does not satisfactorily
answer this question except to opine that the procedure
contemplated in Article 412 is summary in nature and cannot,
therefore, cover cases involving controversial issues. Subsequent

(1) Births; (2) marriages; (3) deaths; (4) legal


separations; (5) annulments of marriage; (6)
judgments declaring marriages void from the
beginning; (7) legitimations; (8) adoptions; (9)
acknowledgments of natural children; (10)
naturalization; (11) loss, or (12) recovery of
citizenship; (13) civil interdiction; (14) judicial
determination of filiation; (15) voluntary emancipation
of a minor; and (16) changes of name.
It is beyond doubt that the specific matters covered by the
preceding provisions include not only status but also
nationality. Therefore, the Ty Kong Tin pronouncement that
Article 412 does not contemplate matters that may affect civil
status, nationality or citizenship is erroneous. This interpretation
has the effect of isolating Article 412 from the rest of the articles

in Title XVI, Book I of the New Civil Code, in clear


contravention of the rule of statutory construction that a statute
must always be construed as a whole such that the particular
meaning to be attached to any word or phrase is ascertained from
the context and the nature of the subject treated.[59]
Lee also points out that Republic Act No. 9048, enacted in
2001, has effectively changed the nature of a proceeding under
Rule 108. Under this new law, clerical or typographical errors and
change of first name or nickname may now be corrected or
changed by the concerned city or municipal registrar or consul
general, without need of any judicial order. The obvious effect is
to remove from the ambit of Rule 108 the correction or changing
of such errors in entries of the civil register. Hence, what is left
for the scope of operation of Rule 108 are substantial changes and
corrections in entries of the civil register.[60]
It may be very well said that Republic Act No. 9048 is Congresss
response to the confusion wrought by the failure to delineate as to
what exactly is that so-called summary procedure for changes or
corrections of a harmless or innocuous nature as distinguished
from that appropriate adversary proceeding for changes or
corrections of a substantial kind. For we must admit that though
we have constantly referred to an appropriate adversary
proceeding, we have failed to categorically state just what that
procedure is. Republic Act No. 9048 now embodies that summary
procedure while Rule 108 is that appropriate adversary
proceeding. xxx[61]
Republic Act No. 9048 may not find application in this case,
yet it is clearly another indicium of how entrenched
the Valencia ruling is today. With the enactment of the law, the
legislature acknowledged the potency of the ruling. To repeat,
substantial corrections to the civil status of persons recorded in
the civil registry may be effected through the filing of a petition
under Rule 108. Any further attempt to limit the scope of
application of Rule 108 runs against the wall of judicial precedent
cemented by legislative affirmation.
Next, Barco argues that the petition for correction had
prescribed under the Civil Code; and that the petition for
correction should be treated as a petition for change of name
which can only be filed by the person whose name is sought to be
changed. These arguments can be decided jointly. They both are
not well taken as they cannot allude to a lack of jurisdiction that
would render the RTC Order subject to annulment.
Assuming arguendo that Nadinas petition for correction had
prescribed and/or that the action seeking the change of name can
only be filed by the party whose name is sought to be changed,
this does not alter the reality that under the law the Makati RTC
had jurisdiction over the subject matter of the petition for

correction. The Judiciary Reorganization Act of 1980, the


applicable law at the time, clearly conferred on the Makati RTC
exclusive original jurisdiction in all civil actions in which the
subject of the litigation is incapable of pecuniary estimation. [62] In
complementation of grant of jurisdiction, Section 1 of Rule 108
provides that the verified petition to the cancellation or correction
of any entry relating thereto should be filed with the Court of
First Instance (now Regional Trial Court) of the province where
the corresponding civil registry is located.
Prescription and lack of capacity to bring action cannot be
ignored by a court of law in properly resolving an action, to the
extent that a finding that any of these grounds exist will be
sufficient to cause the dismissal of the action.[63] Yet, the existence
of these grounds does not oust the court from its power to decide
the case. Jurisdiction cannot be acquired through, waived,
enlarged or diminished by any act or omission of the parties.
[64]
Contrariwise, lack of capacity to sue and prescriptions as
grounds for dismissal of an action may generally be rendered
unavailing, if not raised within the proper period.[65]
It thus follows that assuming that the petition for correction
had prescribed, or that Nadina lacked the capacity to file the
action which led to the change of her daughters name, the fact
that the RTC granted the Order despite the existence of these two
grounds only characterizes the decision as erroneous. An
erroneous judgment is one though rendered according to the
course and practice of the court is contrary to law.[66] It is not a
void judgment.[67]
As for Barcos remaining arguments, they similarly fail, as
the worst they could establish is that the RTC Order is an
erroneous judgment.
Barco correctly notes, however, that the RTC erred in
directing that the name of Nadinas daughter be changed from
June Salvacion Maravilla to June Salvacion Gustilo. Following
the trial courts determination that Gustilo was the father of June,
but prescinding from the conclusive presumption of legitimacy
for the nonce assuming it could be done, the child would
obviously be illegitimate. The applicable laws mandate that June,
as an illegitimate child, should bear the surname of her mother,
and not the father. [68] From another perspective, the RTCs error in
ordering the change of name is merely an error in the exercise of
jurisdiction which neither affects the courts jurisdiction over
Nadinas petition nor constitutes a ground for the annulment of a
final judgment. As the seminal case of Herrera v.
Barretto[69] explains:
xxx Jurisdiction should therefore be distinguished from the
exercise of jurisdiction. The authority to decide a cause at all, and
not the decision rendered therein, is what makes up jurisdiction.

Where there is jurisdiction of the person and subject matter xxx


the decision of all other questions arising in the case is but an
exercise of that jurisdiction.[70]
In the same vein, it is of no moment that the
RTC Order contravenes the legal presumption accorded June of
being the legitimate child of Francisco and Nadina. [71] A review of
the records does indicate the insufficiency of the evidence offered
to defeat the presumption, against which the only evidence
admissible is the physical impossibility of the husbands having
access to his wife within the first one hundred and twenty days of
the three hundred which preceded the birth of the child. [72] It
seems that the RTC relied primarily on the testimony of Nadina in
adjudging that Gustilo, and not Francisco, was the father of June.
Yet, Article 256 of the Civil Code renders ineffectual any
pronouncement against legitimacy made by the mother.[73] The
testimony proffered by the mother has no probative value as
regards
Junes
paternity. The
RTCs
cognizance
of
Gustilos Constanciamight likewise be subject to critical scrutiny.
[74]
But the Court is now precluded from reviewing the RTCs
appreciation of the evidence, however erroneous it may be,
because the Order is already final. The RTCs possible
misappreciation of evidence is again at most, an error in the
exercise of jurisdiction, which is different from lack of
jurisdiction. These purported errors do not extend to the
competence of the RTC to decide the matter and as such does not
constitute a valid ground to annul the final order.

Absent any convincing demonstration that the RTC Order is


patently null and void, there is no reason under law and
jurisprudence to upset it, given the reality that it has long become
final.
WHEREFORE, the above premises considered,
the Petition is hereby dismissed for lack of merit. Costs against
petitioner.
SO ORDERED

36B. Grounds for Annulment of a Judgment


THIRD DIVISION
HON. DOMINADOR F. CARILLO, Presiding
Judge, R.T.C. XI-19 Digos, Davao del Sur,
BONIFACIO J. GUYOT, Clerk of Court and
Provincial Sheriff of Davao del Sur, ALFREDO C.
SENOY, Deputy Prov. Sheriff assigned to R.T.C.
XI-19 Digos, Davao del Sur, MARCOS D.
RISONAR, JR., Registrar of Deeds of Davao del
Sur, and MARIA GONZALES, Petitioners,

G.R. No. 12
Present:

QUISUMBI
CARPIO,

CARPIO MO
The law sanctions the annulment of certain judgments
which, though final, are ultimately void. Annulment of judgment
is an equitable principle not because it allows a party-litigant
another opportunity to reopen a judgment that has long lapsed
into finality but because it enables him to be discharged from the
burden of being bound to a judgment that is an absolute nullity to
begin with. The inevitable conclusion is that the
RTC Order, despite its apparent flaws, is not null and void, and
thus cannot be annulled. Consequently, the Court of Appeals
committed no reversible error in issuing the assailed decision.
This Court has been constrained in the past to leave
erroneous decisions as they were.[75] Our fealty to justice in its
pristine form the upholding of right over wrong is equipoised
with our adherence to due process, and the rules that emanate
from that principle. The Court takes great care in drafting rules of
procedure so that the axioms that govern the legal battleground
may live up to Justice Frankfurters approximation of due process
as the embodiment of the sporting idea of fair play. [76] Due
process dictates that litigants be afforded a reasonable opportunity
to attack erroneous judgments and be shielded from the adverse
effects of void judgments. Due process likewise demands that a
party, after trekking the long road of litigation should be
permitted to enjoy the fruits of an auspicious final judgment.

- versus -

HON. COURT OF APPEALS, MARIA PAZ


DABON andROSALINA DABON, Respondents.

TINGA, and
VELASCO,

Promulgated

September 2
x-------------------------------------------- - - - - - -x
RESOLUTION
QUISUMBING, J.:
For review on certiorari is the Decision[1] dated February
22, 1995 of the Court of Appeals in CA-G.R. SP No. 23687,
which annulled and set aside the judgment and orders of the
Regional Trial Court (RTC) of Digos, Davao del Sur, Branch 19,
in Civil Case No. 2647, Maria Gonzales v. Priscilla Manio and
Jose Manio.
The facts as culled from the records are as follows:
On April 2, 1990, petitioner Maria Gonzales filed a complaint
against the spouses Priscilla and Jose Manio with the RTC of
Digos, Davao del Sur, Branch 19. Gonzales sought the execution

of the deed of sale in her favor for the property she bought from
Priscilla Manio. She also asked for damages and attorneys fees.
Gonzales alleged that on April 26, 1988, she
paid P10,000 to Priscilla as downpayment on the P400,000
purchase price of the lot with improvements, since Priscilla had a
special power of attorney from her son, Aristotle, the owner of the
land. They also agreed that the balance would be paid within
three months after the execution of the deed of sale. Yet, after the
lapse of the period and despite repeated demands, Priscilla did not
execute the deed of sale. Thus, Gonzales filed an action for
specific performance against the spouses Priscilla and Jose
Manio.
For failure to file an Answer, the Manios were declared
in default and Gonzales was allowed to present evidence ex parte.
After trial, the court rendered judgment in favor of
Gonzales, which we quote verbatim:
WHEREFORE, premises considered,
it is hereby ordered that judgment is rendered in
favor of plaintiff and against defendants,
ordering defendants:
1)

To execute the final deed of sale


and transfer of the property
mentioned in paragraph 4 above to
plaintiff, or should the defendant
refuse to execute the deed of sale,
the Clerk of Court be directed to
execute the same upon plaintiffs
depositing
of
the
sum
of P390,000.00 with the Clerk of
Court as complete and valid
payment thereof to defendant
Priscilla Manio;

2)

To pay plaintiff the sum


of P100,000.00 for moral damages
and P50,000.00 for exemplary
damages;

3)

To pay plaintiff the sum


of P50,000.00 for attorneys fees
plus P700.00 per appearances of
plaintiffs counsel before this
Honorable Court as appearance
fees;

4)

To pay plaintiff
of P5,000.00
as
expenses.

the sum
litigation

SO ORDERED.[2]
Gonzales deposited with the Clerk of Court the P390,000 balance
of the price and filed a motion for execution. [3] She later withdrew
the motion because the trial courts decision was not properly
served on the defendants. After numerous delays, the sheriff
finally personally served a copy of the decision on Priscilla
on August 4, 1990, at the ungodly hour of 12:00 midnight at Sitio
Wilderness, Barangay Mount Carmel, Bayugan, Agusan del Sur.[4]

Since there was no appeal, the trial courts decision


became final and executory.But the writ of execution was not
served upon the defendants, since according to the Sheriffs
Return, the defendants could not be located. The sheriff, likewise,
informed the trial court that the money judgment could be readily
satisfied by the petitioners cash deposit should the trial court
grant the motion to release the cash deposit filed by Gonzales.[5]
Subsequently, Gonzales filed a motion asking that the
Clerk of Court be directed to be the one to execute a deed of
conveyance. Gonzales also filed a motion to withdraw the cash
deposit for the balance of the price to offset the award of
damages. The trial court granted both motions but later modified
the amount to P207,800.
On October 29, 1990, Gonzales filed a petition for the
nullification of the Owners Duplicate Certificate of Title No.
16658 and asked that a new certificate be issued in her name to
give effect to the deed of conveyance since Priscilla refused to
relinquish the owners duplicate copy.
Consequently, the trial court declared the owners
duplicate copy of TCT No. 16658 void, and directed the City
Civil Registrar to issue a new certificate of title in favor of
Gonzales. The orders were reiterated in subsequent orders and
TCT No. T-23690 was issued under the name of Gonzales.
On December 14, 1990, herein respondents Maria Paz Dabon and
Rosalina Dabon, claiming to have bought the aforementioned lot
from Aristotle Manio filed before the Court of Appeals a petition
for annulment of judgment and orders of the RTC in Civil Case
No. 2647. The case was docketed as CA G.R. SP No. 23687,
entitled Maria Paz Dabon and Rosalina Dabon v. Hon.
Dominador F. Carillo, Presiding Judge, RTC Branch 19, Digos,
Davao del Sur; Bonifacio J. Guyot, Clerk of Court and Provincial
Sheriff of Davao del Sur; Alfredo C. Senoy, Deputy Prov. Sheriff
assigned to RTC Br. 19, Digos, Davao del Sur; Marcos D.
Risonar, Jr., Registrar of Deeds of Davao del Sur; and Maria
Gonzales. The Dabons alleged therein that the judgment of the
trial court was void ab initio because of lack of jurisdiction over
their persons, as the real parties in interest, and that they were
fraudulently deprived of their right to due process. They also
prayed for a Temporary Restraining Order and for Preliminary
Prohibitory Injunction against Gonzales. They gave the trial court
a notice of their action for the annulment of the judgment and
subsequent orders in Civil Case No. 2647.[6]
Meanwhile, Gonzales filed before the trial court a
motion for the issuance of a writ of possession. The Dabons filed
an opposition on the following grounds: (1) The writ of
possession cannot be enforced because the defendants named in
the writ, the Manios, were no longer in possession of the
property; (2) They had bought the lot with the improvements
therein and had taken possession, although they had not yet
registered their ownership with the Register of Deeds; and (3) The
court did not acquire jurisdiction over them as the real parties in
interest.
On December 17, 1990, the Court of Appeals, without giving due
course to the petition, issued a resolution restraining the trial court
from implementing its Decision dated June 19, 1990 [7] and its
subsequent orders thereto in Civil Case No. 2647 until further

notice from the Court of Appeals. It also required Gonzales to file


her Comment.[8]
The Court of Appeals in a resolution denied the
application for preliminary injunction and appointed a
commissioner to receive evidence of the parties.[9]
Following the Commissioners report, the Court of
Appeals found that (1) the contract of sale between Gonzales and
Priscilla was unenforceable because the sale was evidenced by a
handwritten note which was vague as to the amount and which
was not notarized; (2) the trial court did not acquire jurisdiction
over the indispensable parties; and (3) the proceedings were
attended with fraud. The Court of Appeals nullified the judgment
of the RTC in Civil Case No. 2647 and cancelled TCT No. T23690. The dispositive portion of said judgment reads as follows:
WHEREFORE, premises considered, the
questioned decision, dated June 19, 1990 (and
all orders arising therefrom), of the Regional
Trial Court (Branch 19) in Digos, Davao del
Sur is hereby ANNULLED and SET ASIDEand
the Transfer Certificate of Title No. T-23690
which was issued thereafter declared null and
void and ordered canceled. Costs against the
private respondent.
SO ORDERED.[10]
On July 17, 1995, Gonzales Motion for Reconsideration
was denied. Hence, the instant petition, assigning the following
errors:
I
THE HONORABLE COURT OF APPEALS
ERRED IN NOT HOLDING THAT THE
PURCHASE OF THE DISPUTED PROPERTY
BY PETITIONER MARIA GONZALES
FROM ARISTOTLE MANIO THRU THE
LATTERS MOTHER AND ATTORNEY-INFACT WAS A VALID CONTRACT AS
BETWEEN THE CONTRACTING PARTIES.
II
THE HONORABLE COURT OF APPEALS
ERRED IN NOT HOLDING THAT
PETITIONER MARIA GONZALES WAS IN
GOOD FAITH IN BUYING THE DISPUTED
PROPERTY FROM ARISTOTLE MANIO
THRU THE LATTERS MOTHER AND
ATTORNEY-IN-FACT.
III
THE HONORABLE COURT OF APPEALS
ERRED IN NOT APPLYING IN THE
INSTANT CASE THE DOCTRINE IN
DOUBLE SALE UNDER ARTICLE 1544 OF
THE CIVIL CODE OF THE PHILIPPINES.
IV
THE HONORABLE COURT OF APPEALS
GRAVELY FAILED TO APPRECIATE THE

FACT THAT PRIVATE RESPONDENTS


[PETITIONERS BELOW] CLAIM IS HIGHLY
INCREDIBLE,
IMPROBABLE,
AND
FRAUDULENT.
V
THE HONORABLE COURT OF APPEALS
ERRED IN NOT HOLDING THAT PRIVATE
RESPONDENTS MARIA PAZ DABON AND
ROSALINA DABON HAVE NO RIGHT TO
BRING THE INSTANT SUIT.
VI
COROLLARILY, THE HONORABLE COURT
OF APPEALS ERRED IN NOT SUSTAINING
PETITIONER
MARIA
GONZALES
[PRIVATE RESPONDENT BELOW] CLAIM
FOR DAMAGES AGAINST THE PRIVATE
RESPONDENTS [PETITIONERS BELOW].[11]
Simply, the threshold issues in this petition are: (1)
whether the Court of Appeals erred in declaring the sale of the
land to Gonzales by Priscilla invalid; (2) whether there was basis
to annul the judgment of the RTC; and (3) whether the Dabons
could file the action for annulment of judgment.
We shall discuss the issues jointly.
Prefatorily, we note that named as petitioners are
Presiding Judge Dominador Carillo; Bonifacio Guyot, Alfredo
Senoy, Clerk of Court and Deputy Sheriff of the same court,
respectively; Marcos D. Risonar, Registrar of Deeds of Davao
del Sur; and Maria Gonzales. In our view, petitioner Gonzales
apparently had impleaded Judge Carillo, Guyot, Senoy and
Risonar in this petition by merely reversing the designation of
said public officers among the respondents below in the Court
of Appeals, as now among the petitioners herein. Since they
are not interested parties and would not benefit from any of the
affirmative reliefs sought, only Maria Gonzales remains as the
genuine party-petitioner in the instant case.
We now come to the main issues: (1) Was there
sufficient basis to annul the judgment in Civil Case No. 2647? (2)
Are the Dabons proper parties to file the petition for annulment of
judgment?
Petitioner Gonzales contends that the respondents do not
have standing before the Court of Appeals to file a petition for
annulment of the judgment in Civil Case No. 2647 because
respondents were not parties therein. Petitioner maintains that
respondents have no right that could be adversely affected by the
judgment because they are not the owners of the
property. Petitioner claims that the Court of Appeals should have
applied the doctrine of double sale to settle the issue of ownership
and declare her the true owner of the property. Petitioner
concludes that respondents not being the owners and are not real
parties in interest in the complaint for specific performance have
no right to bring the action for annulment of the judgment.
According to petitioner Gonzales, she did not implead Aristotle as
defendant in Civil Case No. 2647 since a decision against
Priscilla, Aristotles attorney-in-fact, would bind Aristotle also.

Respondents (Maria Paz and Rosalina Dabon) now


insist that they are parties in interest as buyers, owners and
possessors of the contested land and that they had been
fraudulently deprived of their day in court during the
proceedings in the trial court in Civil Case No. 2647. They
have no remedy in law other than to file a case for the
annulment of judgment of the trial court in said case.
Petitioner Gonzales should be reminded of Section 3 of
Rule 3 of the Rules on Civil Procedure which explicitly states that
an action should be brought against the real party in interest,
[12]
and in case the action is brought against the agent, the action
must be brought against an agent acting in his own name and for
the benefit of an undisclosed principal without joining the
principal, except when the contract involves things belonging to
the principal.[13] The real party in interest is the party who would
be benefited or injured by the judgment or is the party entitled to
the avails of the suit. We have held that in such a situation, an
attorney-in-fact is not a real party in interest and that there is no
law permitting an action to be brought by and against an attorneyin-fact.[14]
Worth stressing, the action filed by Gonzales before the
RTC is for specific performance to compel Priscilla to execute a
deed of sale, involving real property which, however, does not
belong to Priscilla but to Aristotle Manio, the son of Priscilla. The
complaint only named as defendant Priscilla, joined by her
spouse, yet Priscilla had no interest on the lot and can have no
interest whatever in any judgment rendered. She was not acting in
her own name, nor was she acting for the benefit of an
undisclosed principal. The joinder of all indispensable parties is a
condition sine qua non of the exercise of judicial powers, and the
absence of indispensable party renders all subsequent actions of
the court null and void for want of authority to act, not only as to
the absent parties but even as to those present. [15] Accordingly, the
failure to implead Aristotle Manio as defendant renders all
proceedings in the Civil Case No. 2647, including the order
granting the cancellation of TCT No. 16658 and issuance of a
new title, null and void.
It is settled that a person need not be a party to the
judgment sought to be annulled. [16] What is essential is that he can
prove his allegation that the judgment was obtained by fraud or
collusion and he would be adversely affected thereby,[17]because if
fully substantiated by preponderance of evidence, those
allegations could be the basis for annulment of the assailed
judgment.
In the present case, even if respondents were not parties
to the specific performance case, any finding that there was
extrinsic fraud in the institution of the complaint, i.e. exclusion of
the real party in interest, and collusion between petitioner and
Sheriff Senoy, would adversely affect the respondents ownership
and thus, could be their basis for annulment of the judgment.
Pertinently, Section 2 of Rule 47 of the Rules on Civil
Procedure explicitly provides the two grounds for annulment of
judgment, namely: extrinsic fraud and lack of jurisdiction.[18]
There is extrinsic fraud when a party has been prevented
by fraud or deception from presenting his case. Fraud is extrinsic
where it prevents a party from having a trial or from presenting
his entire case to the court, or where it operates upon matters

pertaining not to the judgment itself but to the manner in which it


is procured. The overriding consideration when extrinsic fraud is
alleged is that the fraudulent scheme of the prevailing litigant
prevented a party from having his day in court. [19] It must be
distinguished from intrinsic fraud which refers to acts of a party at
a trial which prevented a fair and just determination of the case,
and which could have been litigated and determined at the trial or
adjudication of the case.[20]
In its Decision dated February 22, 1995, the Court of
Appeals found that indices of fraud attended the case before the
trial court: First, the plaintiff deliberately excluded the Dabons as
party to the case despite knowledge that the Dabons had alleged
that they had bought the land from Aristotle. Second, the Sheriffs
Return was suspiciously served on a Saturday, at midnight,
on August 4, 1990. Third, the trial court ordered the plaintiff to
deposit the full payment of property, but subsequently ordered its
withdrawal. Lastly, there was no notice given to the person named
in the certificate of title which Gonzales wanted to be annulled.
Of the indices of fraud cited by the Court of Appeals, the
failure to comply with the notification requirement in the petition
for the cancellation of title amounts to extrinsic fraud. Under the
Property Registration Decree, all parties in interest shall be given
notice.[21] There is nothing in the records that show Gonzales
notified the actual occupants or lessees of the property. Further,
the records show that Gonzales had known of the sale of the land
by Aristotle to the Dabons and despite her knowledge, the former
did not include the Dabons in her petition for the annulment of
title. Deliberately failing to notify a party entitled to notice also
constitutes extrinsic fraud.[22] This fact is sufficient ground to
annul the order allowing the cancellation of title in the name of
Gonzales.
Likewise, under Rule 47, a judgment is void for lack of
jurisdiction over the persons of the real parties in interest, i.e.,
Aristotle Manio and the Dabons.
Lastly, petitioner insists that the contract of sale between
her and Priscilla was valid and enforceable because under the
provision on double sale,[23] she owned the land because she
bought the lot on April 26, 1988, while the same was allegedly
sold to the Dabons on October 19, 1989. In our view, the doctrine
on double sale holds no relevance in this case. The pertinent
article of the Civil Code provides:
ART. 1544. If the same thing should
have been sold to different vendees, the
ownership shall be transferred to the person
who may have first possession thereof in good
faith, if it should be movable property.
Should it be immovable property, the
ownership shall belong to the person acquiring
it who in good faith recorded it in the Registry
of Property.
Should there be no inscription, the
ownership shall pertain to the person who in
good faith was first in possession; and in the
absence thereof; to the person who presents the
oldest title, provided there is good faith.

Otherwise stated, where it is immovable property that is


the subject of a double sale, ownership shall be transferred (1) to
the person acquiring it who in good faith first recorded it in the
Registry of Property; (2) in default thereof, to the person who in
good faith was first in possession; and (3) in default thereof, to
the person who presents the oldest title, provided there is good
faith. The requirement of the law is two-fold: acquisition in good
faith and registration in good faith.[24]
At this juncture, we must emphasize that the action for
annulment of judgment under Rule 47 of the Rules of Court does
not involve the merits of the final order of the trial court. [25] The
issue of whether before us is a case of double sale is outside the
scope of the present petition for review. The appellate court only
allowed the reception of extraneous evidence to determine extrinsic
fraud. To determine which sale was valid, review of evidence is
necessary. This we cannot do in this petition. An action for
annulment of judgment is independent of the case where the
judgment sought to be annulled is rendered [26] and is not an appeal
of the judgment therein.[27]
The extraneous evidence presented to the appellate court
cannot be used to supplant the evidence in the records of the
specific performance case because the extraneous evidence was
not part of the records on the merits of the case. Again, the
extraneous evidence was only allowed merely to prove the
allegations of extrinsic fraud. Accordingly, we hold that the issue
of ownership of the subject real property cannot be addressed in
this petition for review.
Annulment of judgment is not a relief to be granted
indiscriminately by the courts. It is a recourse equitable in
character and allowed only in exceptional cases as where there is
no available or other adequate remedy.[28] This case falls under
said exception. In this case, where it was found that the trial court
did not have jurisdiction over the real parties in interest, and that
notices were deliberately not given, amount to extrinsic
fraud. The Court of Appeals did not err in granting the annulment of the
judgment in Civil Case No. 2647 and the orders subsequent
thereto, for lack of jurisdiction and extrinsic fraud.
WHEREFORE, the petition is DENIED for lack of
merit. The assailed Decision dated February 22, 1995 of the Court
of Appeals in CA-G.R. SP No. 23687, is AFFIRMED. Costs
against petitioner Maria Gonzales.
SO ORDERED.

Failure to pay docket and other lawful fees within the prescribed
period is a ground for the dismissal of an appeal. This rule cannot
be suspended by the mere invocation of "the interest of
substantial justice." Procedural rules may be relaxed only in
exceptionally meritorious cases.
The Case
Before us is a Petition for Certiorari under Rule 65 assailing two
Resolution, dated July 31, 1998 and December 28, 1998, both
promulgated by the Court of Appeals[1] (CA) in CA-G.R. CV No.
60094. In the first Resolution, the CA ruled:
"For resolution is a motion to reconsider this
Court's Resolution dismissing the appeal for
failure of appellants [herein private
respondents] to pay the prescribed docketing
fees pursuant to Section 4, Rule 41 of the 1997
Rules on Civil Procedure.
"x x x x x x x x x
"Copy of the judgment appealed from was
received by appellants on December 16, 1997
and their notice of appeal was filed on
December 19, 1997.
"The motion for reconsideration of this Court's
Resolution was filed on time, but the attached
official receipt No. 2768290 evidencing
payment of the required docketing fees was
dated June 26, 1998, almost six (6) months after
the last day to file notice of appeal. However,
appellants prayed that this Court's June 17,
1998 resolution be set aside, lifted, and this
appeal reinstated, citing interest of substantial
justice.
"In the light of the foregoing, appellants' June
26, 1998 motion is hereby GRANTED."[2]

37A. Dismissal of an Appeal


[G.R. No. 137761. April 6, 2000]
GABRIEL LAZARO and the heirs of FLORENCIA PINEDA
and EVA VIERNES, petitioners, vs. COURT OF APPEALS
and Spouses JOSE and ANITA ALESNA, respondents. brando
DECISION
PANGANIBAN, J.:

In its second Resolution, the CA denied reconsideration in this


wise:
"For all the foregoing, there being no cogent or
compelling reason to warrant reconsideration of
this court's resolution dated July 31, 1998, the
motion of appellees is
hereby DENIED."[3]micks
The Facts

appeal,[9] the appellant shall pay to the clerk of


the court which rendered the judgment or final
order appealed from, the full amount of the
appellate court docket and other lawful fees.
Proof of payment of said fees shall be
transmitted to the appellate court together with
the original record or the record on appeal."

Before the Regional Trial Court (RTC) of Bayombong, Nueva


Vizcaya (Branch 27), Spouses Jose and Anita Alesna, private
respondents herein, filed a civil action for annulment of title,
reconveyance and damages (with prayer for preliminary
injunction)[4]against Petitioners Gabriel Lazaro and the heirs of
Florencia Pineda and Eva Viernes.
After trial, the RTC rendered judgment in favor of the petitioners.
Thereafter, the private respondents filed a Notice of Appeal
before the trial court.[5]
In a Resolution dated June 17, 1998, the CA[6] dismissed the
appeal for failure of herein private respondents to pay the
required docket fees within the prescribed period. Thereafter, it
issued its first assailed Resolution dated July 31, 1998 granting
their Motion for Reconsideration and reinstating the appeal.
Subsequently, the petitioners also filed their own Motion for
Reconsideration assailing the said Resolution. As earlier stated,
the CA denied their Motion.
Hence, this Petition.

[7]

Ruling of the Court of Appeals


In reinstating the appeal despite the failure of herein private
respondents to pay the docket fees within the prescribed period,
the Court of Appeals invoked "the interest of substantial justice."
It did not elaborate however. No specific circumstance or any
other explanation was cited in support of its ruling. nigella
Issue
In their memorandum, petitioners submit for the consideration of
the Court this lone question: "x x x [H]as the respondent appellate
court acted without or in excess of jurisdiction, and/or with grave
abuse of discretion in issuing the questioned Resolutions dated
July 31, 1998 and December 28, 1998"?[8]
This Court's Ruling
The Petition is meritorious.
Main Issue: Timely Payment of CA Docket Fees
The Rules of Court, as amended, specifically provides that
appellate court docket and other lawful fees should be paid within
the period for taking an appeal. Hence, Section 4 of Rule 41
reads:
"Section 4. Appellate court docket and other
lawful fees. -- Within the period for taking an

Contrary to the submission of private respondents that the


aforecited rule is merely directory, the payment of the docket and
other legal fees within the prescribed period is both mandatory
and jurisdictional. Section 1 (c), Rule 50 of the Rules of Court
provides: "Failure of the appellant to pay the docket and other
fees as provided in Section 4 of Rule 41" is a ground for the
dismissal of the appeal. Indeed, it has been held that failure of the
appellant to conform with the rules on appeal renders the
judgment final and executory.[10]Verily, the right to appeal is a
statutory right and one who seeks to avail of that right must
comply with the statute or the rule.[11]
In the present case, the private respondents failed to pay the
required docket fees within the reglementary period. In fact, the
Court notes that they paid the fees only after the CA had
dismissed the appeal, or six months after the filing of the Notice
of Appeal. Clearly, existing jurisprudence and the Rules mandate
that the appeal should be dismissed. Sc
The appellate court nonetheless reinstated the appeal "in the
interest of substantial justice." But as earlier observed, it did not
cite any specific circumstance or any other explanation in support
of its ruling. For their part, private respondents failed to offer a
satisfactory explanation why they paid the docket fees six months
after the prescribed period. Indeed, neither they nor the Court of
Appeals showed fraud, accident, mistake, excusable negligence,
or any other reason to justify the suspension of the aforecited rule.
[12]

We must stress that the bare invocation of "the interest of


substantial justice" is not a magic wand that will automatically
compel this Court to suspend procedural rules. "Procedural rules
are not to be belittled or dismissed simply because their nonobservance may have resulted in prejudice to a party's substantive
rights. Like all rules, they are required to be followed except only
for the most persuasive of reasons when they may be relaxed to
relieve a litigant of an injustice not commensurate with the degree
of his thoughtlessness in not complying with the procedure
prescribed."[13] The Court reiterates that rules of procedure,
especially those prescribing the time within which certain acts
must be done, "have oft been held as absolutely indispensable to
the prevention of needless delays and to the orderly and speedy
discharge of business. x x x The reason for rules of this nature is
because the dispatch of business by courts would be impossible,

and intolerable delays would result, without rules governing


practice x x x. Such rules are a necessary incident to the proper,
efficient and orderly discharge of judicial functions."[14] Indeed, in
no uncertain terms, the Court held that the said rules may be
relaxed only in "exceptionally meritorious cases."[15] In this case,
the CA and the private respondents failed to show that this case is
one such exception.
WHEREFORE, the Petition is hereby GRANTED. The Court of
Appeals' assailed Resolutions, dated July 31, 1998 and December
28, 1998, are SET ASIDE. The Decision of the Regional Trial
Court of Bayombong, Nueva Vizcaya (Branch 27) in Civil Case
No.4058 is declared FINAL and EXECUTORY. No
pronouncement as to costs.
SO ORDERED.

38A. Form of Decision rendered by the Appellate Court.


G.R. No. 166051

April 8, 2008

SOLID HOMES, INC., petitioner,


vs.
EVELINA LASERNA and GLORIA CAJIPE, represented by
PROCESO F. CRUZ, respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the
1997 Revised Rules of Civil Procedure seeking to annul, reverse
and set aside (1) the Decision1 dated 21 July 2004 of the Court of
Appeals in CA-G.R. SP No. 82153, which denied and dismissed
the Petition filed before it by the petitioner for lack of merit; and
(2) the Resolution2 dated 10 November 2004 of the same court,
which denied the petitioners Motion for Reconsideration.
The factual antecedents of this case are as follows:
On 1 April 1977, respondents Evelina Laserna and Gloria Cajipe,
represented by their attorney-in-fact, Proceso F. Cruz, as buyers,
entered into a Contract to Sell3 with petitioner Solid Homes, Inc.
(SHI), a corporation engaged in the development and sale of
subdivision lots, as seller. The subject of the said Contract to Sell
was a parcel of land located at Lot 3, Block I, Phase II, Loyola
Grand Villas, Quezon City, with a total area of 600 square meters,
more or less. The total contract price agreed upon by the parties
for the said parcel of land was P172,260.00, to be paid in the
following manner: (1) the P33,060.00 down payment should be
paid upon the signing of the contract; and (2) the remaining

balance of P166,421.884 was payable for a period of three years at


a monthly installment of P4,622.83 beginning 1 April 1977. The
respondents made the down payment and several monthly
installments. When the respondents had allegedly paid 90% of the
purchase price, they demanded the execution and delivery of the
Deed of Sale and the Transfer Certificate of Title (TCT) of the
subject property upon the final payment of the balance. But the
petitioner did not comply with the demands of the respondents.
The respondents whereupon filed against the petitioner a
Complaint for Delivery of Title and Execution of Deed of Sale
with Damages, dated 28 June 1990, before the Housing and Land
Use Regulatory Board (HLURB). The same was docketed as
HLURB Case No. REM-073090-4511. In their Complaint,
respondents alleged that as their outstanding balance was
only P5,928.18, they were already demanding the execution and
delivery of the Deed of Sale and the TCT of the subject property
upon final payment of the said amount. The petitioner filed a
Motion to Admit Answer,5 together with its Answer6 dated 17
September 1990, asserting that the respondents have no cause of
action against it because the respondents failed to show that they
had complied with their obligations under the Contract to Sell,
since the respondents had not yet paid in full the total purchase
price of the subject property. In view of the said non-payment, the
petitioner considered the Contract to Sell abandoned by the
respondents and rescinded in accordance with the provisions of
the same contract.
On 7 October 1992, HLURB Arbiter Gerardo L. Dean rendered a
Decision7 denying respondents prayer for the issuance of the
Deed of Sale and the delivery of the TCT. He, however, directed
the petitioner to execute and deliver the aforesaid Deed of Sale
and TCT the moment that the purchase price is fully settled by the
respondents. Further, he ordered the petitioner to cease and desist
from charging and/or collecting fees from the respondents other
than those authorized by Presidential Decree (P.D.) No. 9578 and
similar statutes.9
Feeling aggrieved, the petitioner appealed10 the aforesaid
Decision to the HLURB Board of Commissioners. The case was
then docketed as HLURB Case No. REM-A-1298.
On 10 August 1994, the HLURB Board of Commissioners
rendered a Decision,11 modifying the 7 October 1992 Decision of
HLURB Arbiter Dean. The decretal portion of the Boards
Decision reads:
WHEREFORE, in view of the foregoing, the [D]ecision of
[HLURB] Arbiter Gerardo Dean dated 07 October 1992 is hereby
MODIFIED to read as follows:

1. [Herein respondent]12 is hereby directed to pay the


balance of P11,585.41 within the (sic) thirty (30) days
from finality of this [D]ecision.

Petitioner moved for reconsideration of the aforesaid Decision


but, it was denied by the Court of Appeals in a Resolution dated
10 November 2004.

2. [Herein petitioner] is hereby directed to execute the


necessary deed of sale and deliver the TCT over the
subject property immediately upon full payment.

Hence, this Petition.

3. [Petitioner] is hereby directed to cease and desist from


charging and/or collecting fees other than those
authorized by P.D. 957 and other related
laws. 13 (Emphasis supplied).
Petitioner remained unsatisfied with the Decision of the HLURB
Board of Commissioners, thus, it appealed the same before the
Office of the President, wherein it was docketed as O.P. Case No.
5919.
After evaluating the established facts and pieces of evidence on
record, the Office of the President rendered a Decision14 dated 10
June 2003, affirming in toto the 10 August 1994 Decision of the
HLURB Board of Commissioners. In rendering its Decision, the
Office of the President merely adopted by reference the findings
of fact and conclusions of law contained in the Decision of the
HLURB Board of Commissioners.
Resultantly, petitioner moved for the reconsideration15 of the 10
June 2003 Decision of the Office of the President. However, in an
Order16 dated 9 December 2003, the Office of the President
denied the same.
The petitioner thereafter elevated its case to the Court of Appeals
by way of Petition for Review under Rule 4317 of the 1997
Revised Rules of Civil Procedure, docketed as CA-G.R. SP No.
82153, raising the following issues, to wit: (1) the Honorable
Office of the President seriously erred in merely adopting by
reference the findings and conclusions of the HLURB Board of
Commissioners in arriving at the questioned [D]ecision; and (2)
the Honorable Office of the President seriously erred in not
dismissing the complaint for lack of cause of action.18
On 21 July 2004, the appellate court rendered a Decision denying
due course and dismissing the petitioners Petition for Review for
lack of merit, thus affirming the Decision of the Office of the
President dated 10 June 2003, viz:
WHEREFORE, in view of the foregoing, the instant
[P]etition is hereby DENIED DUE
COURSE and DISMISSED for lack of
merit.19 (Emphasis supplied).

Petitioner raises the following issues for this Courts resolution:


I. WHETHER OR NOT THE [HONORABLE] COURT
OF APPEALS SERIOUSLY ERRED IN HOLDING
THAT THE DECISION OF THE OFFICE OF THE
PRESIDENT, WHICH MERELY ADOPTS BY
REFERENCE THE FINDINGS AND CONCLUSIONS
OF THE BOARD OF COMMISSIONERS OF THE
[HLURB], IS IN ACCORDANCE WITH THE
MANDATE OF THE CONSTITUTION THAT THE
DECISION SHOULD BE BASED ON THE FINDINGS
OF FACTS AND LAW TO ARRIVE AT A DECISION;
AND
II. WHETHER OR NOT THE [HONORABLE] COURT
OF APPEALS SERIOUSLY ERRED IN NOT
REVERSING THE DECISION OF THE OFFICE OF
THE PRESIDENT CONSIDERING THAT THE
COMPLAINT OF THE RESPONDENTS LACKS
CAUSE OF ACTION.20
In its Memorandum,21 the petitioner alleges that the Decision of
the Office of the President, as affirmed by the Court of Appeals,
which merely adopted by reference the Decision of the HLURB
Board of Commissioners, without a recitation of the facts and law
on which it was based, runs afoul of the mandate of Section 14,
Article VIII of the 1987 Philippine Constitution which provides
that: "No decision shall be rendered by any court without
expressing therein clearly and distinctly the facts and law on
which it is based." The Office of the President, being a
government agency, should have adhered to this principle.
Petitioner further avers that a full exposition of the facts and the
law upon which a decision was based goes to the very essence of
due process as it is intended to inform the parties of the factual
and legal considerations employed to support a decision. The
same was not complied with by the Office of the President when
it rendered its one-page Decision dated 10 June 2003. Without a
complete statement in the judgment of the facts proven, it is not
possible to pass upon and determine the issues in the case,
inasmuch as when the facts are not supported by evidence, it is
impossible to administer justice to apply the law to the points
argued, or to uphold the rights of the litigant who has the law on
his side.

Lastly, petitioner argues that the Complaint filed against it by the


respondents stated no cause of action because the respondents
have not yet paid in full the purchase price of the subject property.
The right of action of the respondents to file a case with the
HLURB would only accrue once they have fulfilled their
obligation to pay the balance of the purchase price for the subject
property. Hence, the respondents Complaint against the petitioner
should have been dismissed outright by the HLURB for being
prematurely filed and for lack of cause of action.
The Petition is unmeritorious.
The constitutional mandate that, "no decision shall be rendered by
any court without expressing therein clearly and distinctly the
facts and the law on which it is based,"22 does not preclude the
validity of "memorandum decisions," which adopt by reference
the findings of fact and conclusions of law contained in the
decisions of inferior tribunals.23In fact, in Yao v. Court of
Appeals,24 this Court has sanctioned the use of "memorandum
decisions," a specie of succinctly written decisions by appellate
courts in accordance with the provisions of Section 40,25 B.P. Blg.
129, as amended,26 on the grounds of expediency, practicality,
convenience and docket status of our courts. This Court likewise
declared that "memorandum decisions" comply with the
constitutional mandate.27
This Court found in Romero v. Court of Appeals28 that the Court
of Appeals substantially complied with its constitutional duty
when it adopted in its Decision the findings and disposition of the
Court of Agrarian Relations in this wise:
"We have, therefore, carefully reviewed the evidence and
made a re-assessment of the same, and We are
persuaded, nay compelled, to affirm the correctness of
the trial courts factual findings and the soundness of its
conclusion. For judicial convenience and expediency,
therefore, We hereby adopt, by way of reference, the
findings of facts and conclusions of the court a quo
spread in its decision, as integral part of this Our
decision." (Underscoring supplied)
In Francisco v. Permskul,29 this Court similarly held that the
following memorandum decision of the Regional Trial Court
(RTC) of Makati City did not transgress the requirements of
Section 14, Article VIII of the 1997 Philippine Constitution:
"MEMORANDUM DECISION
After a careful perusal, evaluation and study of the
records of this case, this Court hereby adopts by
reference the findings of fact and conclusions of law
contained in the decision of the Metropolitan Trial Court

of Makati, Metro Manila, Branch 63 and finds that there


is no cogent reason to disturb the same.
"WHEREFORE, judgment appealed from is hereby
affirmed in toto." (Underscoring supplied.)
Hence, incorporation by reference is allowed if only to avoid the
cumbersome reproduction of the decision of the lower courts, or
portions thereof, in the decision of the higher court.30
However, also in Permskul,31 this Court laid down the conditions
for the validity of memorandum decisions, to wit:
The memorandum decision, to be valid, cannot
incorporate the findings of fact and the conclusions of
law of the lower court only by remote reference,
which is to say that the challenged decision is not
easily and immediately available to the person
reading the memorandum decision. For the
incorporation by reference to be allowed, it must
provide for direct access to the facts and the law
being adopted, which must be contained in a
statement attached to the said decision. In other
words, the memorandum decision authorized under
Section 40 of B.P. Blg. 129 should actually embody the
findings of fact and conclusions of law of the lower
court in an annex attached to and made an
indispensable part of the decision.
It is expected that this requirement will allay the
suspicion that no study was made of the decision of the
lower court and that its decision was merely affirmed
without a proper examination of the facts and the law on
which it is based. The proximity at least of the
annexed statement should suggest that such an
examination has been undertaken. It is, of course, also
understood that the decision being adopted should, to
begin with, comply with Article VIII, Section 14 as no
amount of incorporation or adoption will rectify its
violation.
The Court finds necessary to emphasize that the
memorandum decision should be sparingly used lest it
become an addictive excuse for judicial sloth. It is
an additional condition for the validity that this kind
of decision may be resorted to only in cases where the
facts are in the main accepted by both parties and
easily determinable by the judge and there are no
doctrinal complications involved that will require an
extended discussion of the laws involved. The
memorandum decision may be employed in simple
litigations only, such as ordinary collection cases, where

the appeal is obviously groundless and deserves no more


than the time needed to dismiss it.

1) The right to a hearing, which includes the right to


present ones case and submit evidence in support
thereof.

xxxx
2) The tribunal must consider the evidence presented.
Henceforth, all memorandum decisions shall comply
with the requirements herein set forth both as to the
form prescribed and the occasions when they may be
rendered. Any deviation will summon the strict
enforcement of Article VIII, Section 14 of the
Constitution and strike down the flawed judgment as
a lawless disobedience.32
In the case at bar, we quote verbatim the Decision dated 10 June
2003 of the Office of the President which adopted by reference
the Decision dated 10 August 1994 of the HLURB Board of
Commissioners:
This resolves the appeal filed by [herein petitioner] Solid
Homes, Inc. from the [D]ecision of the [HLURB] dated
[10 August 1994].
After a careful study and thorough evaluation of the
records of the case, this Office is convinced by the
findings of the HLURB, thus we find no cogent reason
to depart from the assailed [D]ecision. Therefore, we
hereby adopt by reference the findings of fact and
conclusions of law contained in the aforesaid
[D]ecision, copy of which is hereto attached as "Annex
A."
WHEREFORE, premises considered, judgment
appealed from is hereby AFFIRMED in
toto.33 (Emphasis supplied).
It must be stated that Section 14, Article VIII of the 1987
Constitution need not apply to decisions rendered
in administrative proceedings, as in the case a bar. Said section
applies only to decisions rendered in judicial proceedings. In fact,
Article VIII is titled "Judiciary," and all of its provisions have
particular concern only with respect to the judicial branch of
government. Certainly, it would be error to hold or even imply
that decisions of executive departments or administrative agencies
are oblige to meet the requirements under Section 14, Article
VIII.
The rights of parties in administrative proceedings are not
violated as long as the constitutional requirement of due process
has been satisfied.34 In the landmark case of Ang Tibay v. CIR, we
laid down the cardinal rights of parties in administrative
proceedings, as follows:

3) The decision must have something to support itself.


4) The evidence must be substantial.
5) The decision must be rendered on the evidence
presented at the hearing, or at least contained in the
record and disclosed to the parties affected.
6) The tribunal or body or any of its judges must act on
its or his own independent consideration of the law and
facts of the controversy and not simply accept the views
of a subordinate in arriving at a decision.
7) The board or body should, in all controversial
question, render its decision in such a manner that the
parties to the proceeding can know the various issues
involved, and the reason for the decision rendered.35
As can be seen above, among these rights are "the decision must
be rendered on the evidence presented at the hearing, or at least
contained in the record and disclosed to the parties affected;" and
that the decision be rendered "in such a manner that the parties to
the proceedings can know the various issues involved, and the
reasons for the decisions rendered." Note that there is no
requirement in Ang Tibay that the decision must express clearly
and distinctly the facts and the law on which it is based. For as
long as the administrative decision is grounded on evidence, and
expressed in a manner that sufficiently informs the parties of the
factual and legal bases of the decision, the due process
requirement is satisfied.
At bar, the Office of the President apparently considered the
Decision of HLURB as correct and sufficient, and said so in its
own Decision. The brevity of the assailed Decision was not the
product of willing concealment of its factual and legal bases.
Such bases, the assailed Decision noted, were already contained
in the HLURB decision, and the parties adversely affected need
only refer to the HLURB Decision in order to be able to interpose
an informed appeal or action for certiorari under Rule 65.
However, it bears observation that while decisions of the Office
of the President need not comply with the constitutional
requirement imposed on courts under Section 14, Article VIII of
the Constitution, the Rules of Court may still find application,
although suppletory only in character and apply only whenever

practicable and convenient. There is no mandate that requires the


application of the Rules of Court in administrative proceedings.
Even assuming arguendo that the constitutional provision
invoked by petitioner applies in the instant case, the decision of
the OP satisfied the standards set forth in the case of Permskul.
Firstly, the Decision of the Office of the President readily made
available to the parties a copy of the Decision of the HLURB
Board of Commissioners, which it adopted and affirmed in toto,
because it was attached as an annex to its Decision.
Secondly, the findings of fact and conclusions of law of the
HLURB Board of Commissioners have been embodied in the
Decision of the Office of the President and made an indispensable
part thereof. With the attachment of a copy of the Decision of the
HLURB Board of Commissioners to the Decision of the Office of
the President, the parties reading the latter can also directly access
the factual and legal findings adopted from the former. As the
Court of Appeals ratiocinated in its Decision dated 21 July 2004,
"the facts narrated and the laws concluded in the Decision of the
HLURB Board of Commissioners should be considered as written
in the Decision of the Office of the President. It was still easy for
the parties to determine the facts and the laws on which the
decision were based. Moreover, through the attached decision, the
parties could still identify the issues that could be appealed to the
proper tribunal."36
Thirdly, it was categorically stated in the Decision of the Office of
the President that it conducted a careful study and thorough
evaluation of the records of the present case and it was fully
convinced as regards the findings of the HLURB Board of
Commissioners.
And lastly, the facts of the present case were not contested by the
parties and it can be easily determined by the hearing officer or
tribunal. Even the respondents admitted that, indeed, the total
purchase price for the subject property has not yet been fully
settled and the outstanding balance is yet to be paid by them. In
addition, this case is a simple action for specific performance with
damages, thus, there are neither doctrinal complications involved
in this case that will require an extended discussion of the laws
involved.
Accordingly, based on close scrutiny of the Decision of the Office
of the President, this Court rules that the said Decision of the
Office of the President fully complied with both administrative
due process and Section 14, Article VIII of the 1987 Philippine
Constitution.
The Office of the President did not violate petitioners right to
due process when it rendered its one-page Decision. In the case at

bar, it is safe to conclude that all the parties, including petitioner,


were well-informed as to how the Decision of the Office of the
President was arrived at, as well as the facts, the laws and the
issues involved therein because the Office of the President
attached to and made an integral part of its Decision the Decision
of the HLURB Board of Commissioners, which it adopted by
reference. If it were otherwise, the petitioner would not have been
able to lodge an appeal before the Court of Appeals and make a
presentation of its arguments before said court without knowing
the facts and the issues involved in its case.
This Court also quotes with approval the following declaration of
the Court of Appeals in its Decision on the alleged violation of
petitioners right to due process:
The contention of the [herein] petitioner that the said
[D]ecision runs afoul to the Constitutional provision on
due process cannot be given credence. The case already
had gone through the Offices of the HLURB Arbiter
and the Board of Commissioners where petitioner
was given the opportunity to be heard and present its
evidence, before the case reached the Office of the
President which rendered the assailed [D]ecision after
a thorough evaluation of the evidence presented.
What is important is that the parties were given the
opportunity to be heard before the [D]ecision was
rendered. To nullify the assailed [D]ecision would in
effect be a violation of the Constitution because it
would deny the parties of the right to speedy
disposition of cases.37
Petitioners assertion that respondents complaint filed with the
HLURB lacked a cause of action deserves scant consideration.
Section 7 of the 1987 HLURB Rules of Procedure states that:
Section 7.Dismissal of the Complaint or Opposition.
The Housing and Land Use Arbiter (HLA) to whom a
complaint or opposition is assigned may immediately
dismiss the same for lack of jurisdiction or cause of
action. (Emphasis supplied).
It is noticeable that the afore-quoted provision of the 1987
HLURB Rules of Procedure used the word "may" instead of
"shall," meaning, that the dismissal of a complaint or opposition
filed before the HLURB Arbiter on the ground of lack of
jurisdiction or cause of action is simply permissive and not
directive. The HLURB Arbiter has the discretion of whether to
dismiss immediately the complaint or opposition filed before him
for lack of jurisdiction or cause of action, or to still proceed with
the hearing of the case for presentation of evidence. HLURB
Arbiter Dean in his Decision explained thus:

This Office is well aware of instances when


complainants/petitioners fail, through excusable
negligence, to incorporate every pertinent allegations
(sic) necessary to constitute a cause of action. We will
not hesitate to go outside of the complaint/petition and
consider other available evidences if the same is
necessary to a judicious, speedy, and inexpensive
settlement of the issues laid before us or when there are
reasons to believe that the [com]plaints are meritorious.
"Administrative rules should be construed liberally in
order to PROMOTE THEIR OBJECT AND ASSIST
THE PARTIES IN OBTAINING A JUST, SPEEDY
AND INEXPENSIVE DETERMINATION OF THEIR
RESPECTIVE CLAIMS AND DEFENSES" (Mangubat
vs. de Castro, 163 SCRA 608).38 (Emphasis supplied).
Given the fact that the respondents have not yet paid in full the
purchase price of the subject property so they have yet no right to
demand the execution and delivery of the Deed of Sale and the
TCT, nevertheless, it was still within the HLURB Arbiters
discretion to proceed hearing the respondents complaint in
pursuit of a judicious, speedy and inexpensive determination of
the parties claims and defenses.
Furthermore, the Court of Appeals already sufficiently addressed
the issue of lack of cause of action in its Decision, viz:
The Offices below, instead of dismissing the complaint
because of the clear showing that there was no full
payment of the purchase price, decided to try the case
and render judgment on the basis of the evidence
presented. The complaint of the respondents does not
totally lack cause of action because of their right
against the cancellation of the contract to sell and the
forfeiture of their payments due to non-payment of
their monthly amortization.
xxxx
The HLURB Arbiter in his [D]ecision, stated that it is
undisputed that the contract price is not yet fully paid.
This was affirmed by the HLURB Board of
Commissioners and the Office of the President. No less
than the respondents admitted such fact when they
contended that they are willing to pay their unpaid
balance. Without full payment, the respondents have no
right to compel the petitioner to execute the Deed of Sale
and deliver the title to the property. xxx.
xxxx

Lastly, notwithstanding such failure to pay the


monthly amortization, the petitioner cannot consider
the contract as cancelled and the payments made as
forfeited.
Section 24, PD 957 provides:
"Section 24.Failure to pay installments. - The
rights of the buyer in the event of his failure to
pay the installments due for reasons other than
the failure of the owner or developer to develop
the project shall be governed by Republic Act
No. 6552. x x x."
Section 4, RA 6552 or the Realty Installment Buyer
Protection Act provides:
"Section 4. In case where less than two years of
installments were paid, the seller shall give the
buyer a grace period of not less than sixty days
from the date the installment became due. If the
buyer fails to pay the installments due at the
expiration of the grace period, the seller may
cancel the contract after thirty days from receipt
by the buyer of the notice of cancellation or the
demand for rescission of the contract by a
notarial act."
It is therefore clear from the above provisions that the
petitioner cannot consider the [C]ontract to [S]ell as
cancelled. The requirements above should still be
complied with.39 (Emphasis supplied).
Hence, during the hearing conducted by HLURB Arbiter Dean, it
became apparent that respondents cause of action against
petitioner is not limited to the non-execution and non-delivery by
petitioner of the Deed of Sale and TCT of the subject property,
which is dependent on their full payment of the purchase price
thereof; but also the wrongful rescission by the petitioner of the
Contract to Sell. By virtue thereof, there is ample basis for
HLURB Arbiter Dean not to dismiss respondents complaint
against petitioner and continue hearing and resolving the case.
As a final point. Based on the records of this case, respondents
have tendered payment in the amount
of P11,584.41,40 representing the balance of the purchase price of
the subject property, as determined in the 10 August 1994
Decision of the HLURB Board of Commissioners, and affirmed
by both the Office of the President and the Court of Appeals.
However, the petitioner, without any justifiable reason, refused to
accept the same. In Ramos v. Sarao,41 this Court held that tender
of payment is the manifestation by debtors of their desire to

comply with or to pay their obligation. If the creditor refuses the


tender of payment without just cause, the debtors are
discharged from the obligation by the consignation of the sum
due. Consignation is made by depositing the proper amount with
the judicial authority, before whom the tender of payment and the
announcement of the consignation shall be proved. All interested
parties are to be notified of the consignation. Compliance with
these requisites is mandatory.42 In the case at bar, after the
petitioner refused to accept the tender of payment made by the
respondents, the latter failed to make any consignation of the sum
due. Consequently, there was no valid tender of payment and the
respondents are not yet discharged from the obligation to pay the
outstanding balance of the purchase price of the subject property.
Since petitioner did not rescind the Contract to Sell it executed
with the respondents by a notarial act, the said Contract still
stands. Both parties must comply with their obligations under the
said Contract. As ruled by the HLURB Board of Commissioners,
and affirmed by the Office of the President and the Court of
Appeals, the respondents must first pay the balance of the
purchase price of the subject property, after which, the petitioner
must execute and deliver the necessary Deed of Sale and TCT of
said property.
WHEREFORE, premises considered, the instant Petition is
hereby DENIED. Costs against the petitioner.
SO ORDERED.

39A. Forcible Entry and Unlawful Detainer.


G.R. No. 169793

September 15, 2006

VICTORIANO M. ENCARNACION, petitioner,


vs.
NIEVES AMIGO, respondent.
DECISION
YNARES-SANTIAGO, J.:
This petition for review assails the June 30, 2005 Decision1 of the
Court of Appeals in CA-G.R. SP No. 73857, ordering the remand
of Civil Case No. Br. 20-1194 to the Regional Trial Court of
Cauayan, Isabela, Branch 20, for further proceedings.
The antecedent facts are as follows:
Petitioner Victoriano M. Encarnacion is the registered owner of
Lot No. 2121-B-1, consisting of 100 square meters and covered
by TCT No. T-256650; and Lot No. 2121-B-2 consisting of 607

square meters with TCT No. T-256651, located at District 1,


National Hi-way, Cauayan, Isabela. Said two lots originally form
part of Lot No. 2121, a single 707 square meter track of land
owned by Rogelio Valiente who sold the same to Nicasio
Mallapitan on January 18, 1982. On March 21, 1985, Mallapitan
sold the land to Victoriano Magpantay. After the death of the
latter in 1992, his widow, Anita N. Magpantay executed an
Affidavit of Waiver2 on April 11, 1995 waving her right over the
property in favor of her son-in-law, herein petitioner, Victoriano
Encarnacion. Thereafter, the latter caused the subdivision of the
land into two lots3 and the issuance of titles in his name on July
18, 1996.4
Respondent Nieves Amigo allegedly entered the premises and
took possession of a portion of the property sometime in 1985
without the permission of the then owner, Victoriano Magpantay.
Said occupation by respondent continued even after TCT Nos. T256650 and T-256651 were issue to petitioner.
Consequently, petitioner, through his lawyer sent a letter5 dated
Febuary 1, 2001 demanding that the respondent vacate the subject
property. As evidenced by the registry return receipt, the demand
letter was delivered by registered mail to the respondent on
February 12, 2001. Notwithstanding receipt of the demand letter,
respondent still refused to vacate the subject property. Thereafter,
on March 2, 2001, petitioner filed a complaint6 for ejectment,
damages with injunction and prayer for restraining order with the
Municipal Trial Court in Cities of Isabela which was docketed as
CV-01-030. In his Answer, respondent alleged that he has been in
actual possession and occupation of a portion of the subject land
since 1968 and that the issuance of Free Patent and titles in the
name of petitioner was tainted with irregularities.7
On October 24, 2001, the Municipal Trial Court in Cities
rendered judgment, which reads:
WHERE[FO]RE, there being a preponderance of
evidence, a JUDGMENT is hereby rendered in favor of
the plaintiff VICTORIANO M. ENCARNACION and
against the defendant NIEVES AMIGOE (sic) as
follows:
a) ORDERING the defendant to vacate the portion of the
parcels of land described in Transfer Certificates of Title
Nos. T-256650 and T-256651 he is now occupying and
surrender it to the plaintiff;
b) ORDERING the defendant to pay the plaintiff the
sum of FIVE THOUSAND PESOS (P5,000) as
attorney's fees, and

c) ORDERING the defendant to pay rentals equivalent


[to] P500.00 per month from February, 2001 until the
portion of the land occupied by him is surrendered to the
plaintiff.
COSTS against the defendant.
SO ORDERED.8
On appeal, the Regional Trial Court of Cauayan, Isabela, Branch
20, ruled as follows:
WHEREFORE, judgment is hereby rendered dismissing
the case on the ground that as the Municipal Court had
no jurisdiction over the case, this Court acquired no
appellate jurisdiction thereof. Costs against plaintiffappellee.
SO ORDERED.9
Aggrieved, petitioner filed a petition for review10 under Rule 42
of the Rules of Court before the Court of Appeals which
promulgated the assailed Decision remanding the case to the
Regional Trial Court. The dispositive portion thereof reads:
WHEREFORE, premises considered, this case is hereby
REMANDED to Branch 20, Regional Trial Court of
Cauayan, Isabela for further proceedings.
No costs.
SO ORDERED.11
Hence the present petition raising the sole issue:
[WHETHER] THE COURT OF APPEALS ERRED IN
HOLDING THAT THE PROPER ACTION IN THIS
CASE IS ACCION PUBLICIANA AND NOT
UNLAWFUL DETAINER AS DETERMINED BY THE
ALLEGATIONS IN THE COMPLAINT FILED BY
PETITIONER.12
The petition lacks merit.
In this jurisdiction, the three kinds of actions for the recovery of
possession of real property are:

1. Accion interdictal, or an ejectment proceeding which


may be either that for forcible entry (detentacion) or
unlawful detainer (desahucio), which is a summary
action for recovery of physical possession where the
dispossession has not lasted for more than one year, and
should be brought in the proper inferior court;
2. Accion publiciana or the plenary action for the
recovery of the real right of possession, which should be
brought in the proper Regional Trial Court when the
dispossession has lasted for more than one year; and
3. Accion reinvindicatoria or accion de reivindicacion,
which is an action for the recovery of ownership which
must be brought in the proper Regional Trial Court.13
Based on the foregoing distinctions, the material element that
determines the proper action to be filed for the recovery of the
possession of the property in this case is the length of time of
dispossession. Under the Rules of Court, the remedies of forcible
entry and unlawful detainer are granted to a person deprived of
the possession of any land or building by force, intimidation,
threat, strategy, or stealth, or a lessor, vendor, vendee, or other
person against whom the possession of any land or building is
unlawfully withheld after the expiration or termination of the
right to hold possession by virtue of any contract, express or
implied, or the legal representatives or assigns of any such lessor,
vendor, vendee, or other person. These remedies afford the person
deprived of the possession to file at any time within one year after
such unlawful deprivation or withholding of possession, an action
in the proper Municipal Trial Court against the person or persons
unlawfully withholding or depriving of possession, or any person
or persons claiming under them, for the restitution of such
possession, together with damages and costs.14 Thus, if the
dispossession has not lasted for more than one year, an ejectment
proceeding is proper and the inferior court acquires jurisdiction.
On the other hand, if the dispossession lasted for more than one
year, the proper action to be filed is an accion publiciana which
should be brought to the proper Regional Trial Court.
After a careful evaluation of the evidence on record of this case,
we find that the Court of Appeals committed no reversible error in
holding that the proper action in this case is accion publiciana;
and in ordering the remand of the case to the Regional Trial Court
of Cauayan, Isabela, Branch 20, for further proceedings.
Well settled is the rule that jurisdiction of the court over the
subject matter of the action is determined by the allegations of the
complaint at the time of its filing, irrespective of whether or not
the plaintiff is entitled to recover upon all or some of the claims
asserted therein. What determines the jurisdiction of the court is
the nature of the action pleaded as appearing from the allegations

in the complaint. The averments therein and the character of the


relief sought are the ones to be consulted.15 On its face, the
complaint must show enough ground for the court to assume
jurisdiction without resort to parol testimony.16
From the allegations in the complaint, it appears that the
petitioner became the owner of the property on April 11, 1995 by
virtue of the waiver of rights executed by his mother-in-law. He
filed the complaint for ejectment on March 2, 2001 after his
February 1, 2001 letter to the respondent demanding that the latter
vacate the premises remained unheeded. While it is true that the
demand letter was received by the respondent on February 12,
2001, thereby making the filing of the complaint for ejectment
fall within the requisite one year from last demand for complaints
for unlawful detainer, it is also equally true that petitioner became
the owner of the subject lot in 1995 and has been since that time
deprived possession of a portion thereof. From the date of the
petitioner's dispossession in 1995 up to his filing of his complaint
for ejectment in 2001, almost 6 years have elapsed. The length of
time that the petitioner was dispossessed of his property made his
cause of action beyond the ambit of an accion interdictal and
effectively made it one for accion publiciana. After the lapse of
the one-year period, the suit must be commenced in the Regional
Trial Court via an accion publiciana which is a suit for recovery
of the right to possess. It is an ordinary civil proceeding to
determine the better right of possession of realty independently of
title. It also refers to an ejectment suit filed after the expiration of
one year from the accrual of the cause of action or from the
unlawful withholding of possession of the realty.17
Previously, we have held that if the owner of the land knew that
another person was occupying his property way back in 1977 but
the said owner only filed the complaint for ejectment in 1995, the
proper action would be one for accion publiciana and not one
under the summary procedure on ejectment. As explained by the
Court:
We agree with the Court of Appeals that if petitioners are
indeed the owners of the subject lot and were unlawfully
deprived of their right of possession, they should present
their claim before the regional trial court in an accion
publiciana or an accion reivindicatoria, and not before
the metropolitan trial court in a summary proceeding for
unlawful detainer or forcible entry. For even if one is the
owner of the property, the possession thereof cannot be
wrested from another who had been in physical or
material possession of the same for more than one year
by resorting to a summary action for ejectment.18
Hence, we agree with the Court of Appeals when it declared that:

The respondent's actual entry on the land of the


petitioner was in 1985 but it was only on March 2, 2001
or sixteen years after, when petitioner filed his ejectment
case. The respondent should have filed an accion
publiciana case which is under the jurisdiction of the
RTC.
However, the RTC should have not dismissed the case.
Section 8, Rule 40 of the Rules of Court provides:
SECTION 8. Appeal from orders dismissing
case without trial; lack of jurisdiction. If an
appeal is taken from an order of the lower court
dismissing the case without a trial on the merits,
the Regional Trial Court may affirm or reverse
it, as the case may be. In case of affirmance and
the ground of dismissal is lack of jurisdiction
over the subject matter, the Regional Trial
Court, if it has jurisdiction thereover, shall try
the case on the merits as if the case was
originally filed with it. In case of reversal, the
case shall be remanded for further proceedings.
If the case was tried on the merits by the lower
court without jurisdiction over the subject
matter, the Regional Trial Court on appeal shall
not dismiss the case if it has original
jurisdiction thereof, but shall decide the case in
accordance with the preceding section, without
prejudice to the admission of amended
pleadings and additional evidence in the interest
of justice.
The RTC should have taken cognizance of the case. If
the case is tried on the merits by the Municipal Court
without jurisdiction over the subject matter, the RTC
on appeal may no longer dismiss the case if it has
original jurisdiction thereof. Moreover, the RTC shall
no longer try the case on the merits, but shall decide
the case on the basis of the evidence presented in the
lower court, without prejudice to the admission of the
amended pleadings and additional evidence in the
interest of justice.19
WHEREFORE, the petition is DENIED. The Decision of the
Court of Appeals dated June 30, 2005 in CA-G.R. SP No. 73857
ordering the remand of Civil Case No. Br. 20-1194 to the
Regional Trial Court of Cauayan, Isabela, Branch 20, for further
proceedings, is AFFIRMED.
No costs.

SO ORDERED.

Datumanong of the Department of Public Works and Highways


(DPWH) in contempt of court for issuing Memorandum Order
dated October 5, 2001dismissing him from the service.

40A. Contempt of Court


The facts of the case are as follows:

IN THE MATTER TO DECLARE G.R. No. 150274


IN CONTEMPT OF COURT HON.

The Ombudsman Task Force on Public Works and Highways filed


with the Office of the Ombudsman an administrative complaint
for dishonesty, falsification of official documents, grave
misconduct, gross neglect of duty, violation of office rules and
regulations, and conduct prejudicial to the service against
petitioner Tel-Equen and several others, relative to the anomalous
payment of P553,900.00 of the bailey bridge components owned
by the government. The case was docketed as OMB-ADM-0-910430.[1]

SIMEON A. DATUMANONG in the


latters capacity as Secretary of the
Department of Public Works and
Highways.
JIMMIE F. TEL-EQUEN, Present:
Petitioner,
Pangan
iban, C.J.
(Chairperson),
Ynares-Santiago,
Austria-Martinez,
Ca
llej
o,
Sr.
,
an
d
Ch
icoNazario, JJ.

On March 28, 1994, the Administrative Adjudication


Bureau of the Office of the Ombudsman found respondents guilty
of dishonesty, falsification of public documents, misconduct and
conduct prejudicial to the best interest of the service and ordered
their dismissal from the service with accessory penalties pursuant
to Section 23 of Rule XIV, Book V of Executive Order No. 292,
otherwise known as the Revised Administrative Code of 1987.[2]
After the denial of the motions for reconsideration, three petitions
were filed before this Court which were consolidated and referred
to the Court of Appeals in light of the ruling in Fabian v.
Desierto[3] where appeals from decisions of the Office of the
Ombudsman in administrative cases should be referred to the
appellate court under Rule 43 of the Rules of Court.[4]
On March 2, 2000, the Court of Appeals affirmed with
modification the decision of the Administrative Adjudication
Bureau of the Office of the Ombudsman finding petitioner and
two co-accused guilty as charged and dismissed them from the
service while the other two respondents were exonerated from
administrative liability for lack of evidence.[5]

Promulgated:
August 4, 2006
x
--------------------------------------------------------------------------------------- x
DECISION

Petitioner, together with his two co-accused, appealed from the


decision of the Court of Appeals which was docketed as G.R. No.
144694.[6] Meanwhile, while appeal was still pending, Secretary
Datumanong issued the assailed Memorandum Order,[7]which
reads:

tober
2001

YNARES-SANTIAGO, J.:

Petitioner Jimmie F. Tel-Equen, District Engineer of Mountain


Province, DPWH Cordillera Administrative Region, filed this
present petition to cite the former Secretary Simeon A.

MEMORANDUM TO:
Messrs:

Oc
5,

District Engineer

interference with the proceedings before the Court, thereby


directly or indirectly impeding, obstructing and degrading the
administration of justice, and pre-empting the Courts sole right to
make a decision in accord with the evidence and law.[8]

RUDY P. ANTONIO

Petition lacks merit.

JIMMIE F. TEL-EQUEN

Chief, Construction Section


All of Mountain Province Engineering District
This Department
This is with reference to the Order of the
Ombudsman dated December 11, 1995 in OMB
ADM. 0-91-0430 entitled OMB TASK FORCE
ON DPWH versus JIMMIE F. TEL-EQUEN,
ET AL. (Annex A), affirming the March 28,
1994 Resolution (Annex B) in the same case
finding you guilty of having committed acts of
dishonesty, falsification of public documents,
misconduct and conduct prejudicial to the best
interest of the service and recommending that
you be DISMISSED from the service together
with its accessory penalties pursuant to Sec. 23,
Rule XIV, Book V of Executive Order No. 292.
The Order was affirmed by the Court of
Appeals (Eight Division) in its Decision
(Annex C) promulgated on March 02, 2000 in
CA-G.R. SP No. 50324 entitled ROMULO H.
MABUNGA,
ET
AL.
versus
THE
OMBUDSMAND, ET AL.
Inasmuch as the Order dismissing you from the
service is not a subject of any injunction or
restraining order from the Supreme Court, the
same is immediately executory. Wherefore, you
are hereby ordered DROPPED/DISMISSED
from the service effective upon receipt hereof.

(Sgd.) SIMEON A. DATUMANONG


Secretary
Hence, the instant petition to cite Secretary Datumanong in
contempt of court.
Petitioner contends that in issuing the Memorandum Order
despite knowledge of the pendency of G.R. No. 144694,
Secretary Datumanong committed a contumacious act, a gross
and blatant display of abuse of discretion and an unlawful

The power to declare a person in contempt of court and


in dealing with him accordingly is an inherent power lodged in
courts of justice, to be used as a means to protect and preserve the
dignity of the court, the solemnity of the proceedings therein, and
the administration of justice from callous misbehavior, offensive
personalities, and contumacious refusal to comply with court
orders.[9] This contempt power, however plenary it may seem,
must be exercised judiciously and sparingly with utmost selfrestraint with the end in view of utilizing the same for correction
and preservation of the dignity of the court, not for retaliation or
vindication.[10] It should not be availed of unless necessary in the
interest of justice.[11]
After careful consideration of the facts and circumstances of the
case, we find that the issuance of the Memorandum Order by
Secretary Datumanong was not a contumacious conduct tending,
directly or indirectly, to impede, obstruct or degrade the
administration of justice. A conduct, to be contumacious, implies
willfulness, bad faith or with deliberate intent to cause injustice,
which is not so in the case at bar. If it were otherwise, petitioner
should have been dismissed immediately after the Administrative
Adjudication Bureau of the Office of the Ombudsman rendered
its decision on March 28, 1994. It was only after the Court of
Appeals rendered its decision on March 2, 2000 affirming the
dismissal that Secretary Datumanong issued the memorandum
and after ascertaining that no injunction or restraining order was
issued by the Court.
At most, it may be considered only an error of judgment
or a result of confusion considering the different rules regarding
execution of decisions pending appeal.
Decisions of the Civil Service Commission under the
Administrative Code of 1987[12] are immediately executory even
pending appeal because the pertinent laws [13] under which the
decisions were rendered mandate them to be so.[14] Thus, where
the legislature has seen fit to declare that the decision of the
quasi-judicial agency is immediately final and executory pending
appeal, the law expressly so provides.[15] Otherwise, execution of
decisions takes place only when they become final and executory,
like decisions rendered by the Office of the Ombudsman.
Thus, in Lapid v. Court of Appeals,[16] the Court held:
Petitioner
was
administratively
charged for misconduct under the provisions of
R.A. 6770, the Ombudsman Act of

1989. Section 27 of the said Act provides as


follows:
Section
27. Effectivity and Finality of
Decisions. All provisionary
orders of the Office of the
Ombudsman are immediately
effective and executory.
A
motion
for
reconsideration of any order,
directive or decision of the
Office of the Ombudsman
must be filed within five (5)
days after receipt of written
notice
and
shall
be
entertained only on the
following grounds:

Sec. 7. Finality of
Decision
where
the
respondent is absolved of the
charge and in case of
conviction where the penalty
imposed is public censure or
reprimand, suspension of not
more than one month, or a
fine not equivalent to one
month salary, the decision
shall
be
final
and
unappealable. In all other
cases, the decision shall
become final after the
expiration of ten (10) days
from receipt thereof by the
respondent, unless a motion
for reconsideration or petition
for certiorari, shall have been
filed by him as prescribed in
Section 27 of R.A. 6770.

xxxxxxxxx
Findings of fact of
the Office of the Ombudsman
when
supported
by
substantial
evidence
are
conclusive. Any
order,
directive
or
decision
imposing the penalty of
public censure or reprimand,
suspension of not more than
one months salary shall be
final and unappealable.
In all administrative
disciplinary cases, orders,
directives or decisions of the
Office of the Ombudsman
may be appealed to the
Supreme Court by filing a
petition for certiorari within
ten (10) days from receipt of
the written notice of the order,
directive or decision or denial
of
the
motion
for
reconsideration in accordance
with Rule 45 of the Rules of
Court.
The Rules of Procedure of the Office
of the Ombudsman likewise contain a similar
provision. Section 7, Rule III of the said Rules
provides as follows:

It is clear from the above provisions


that
the
punishment
imposed
upon
petitioner, i.e. suspension without pay for one
year, is not among those listed as final and
unappealable,
hence,
immediately
executory. Section
27
states
that
all
provisionary orders of the Office of the
Ombudsman are immediately effective and
executory; and that any order, directive or
decision of the said Office imposing the penalty
of censure or reprimand or suspension of not
more than one months salary is final and
unappealable.
As
such
the
legal
maxim inclusio[n]
unius
est
exclusio
alterius finds application. The express mention
of the things included excludes those that are
not included. The clear import of these
statements taken together is that all other
decisions of the Office of the Ombudsman
which impose penalties that are not
enumerated in the said Section 27 are not
final,
unappealable
and
immediately
executory. An appeal timely filed, such as the
one filed in the instant case, will stay the
immediate
implementation
of
the
decision. This finds support in the Rules of
Procedure issued by the Ombudsman itself
which states that (I)n all other cases, the
decision shall become final after the expiration
of ten (10) days from receipt thereof by the
respondent, unless a motion for reconsideration
or petition for certiorari (should now be petition
for review under Rule 43) shall have been filed
by him as prescribed in Section 27 of R.A.
6770.

xxxx
A judgment becomes final and
executory by operation of law. Section 27 of the
Ombudsman Act provides that any order,
directive or decision of the Office of the
Ombudsman imposing a penalty of public
censure or reprimand, or suspension of not
more than one months salary shall be final and
unappealable. In all other cases, the respondent
therein has the right to appeal to the Court of
Appeals within ten (10) days from receipt of the
written notice of the order, directive or
decision. In all these other cases therefore, the
judgment imposed therein will become final
after the lapse of the reglementary period of
appeal if no appeal is perfected or, an appeal
therefrom having been taken, the judgment in
the appellate tribunal becomes final. It is this
final judgment which is then correctly
categorized as a final and executory judgment
in respect to which execution shall issue as a
matter of right. In other words, the fact that
the Ombudsman Act gives parties the right
to appeal from its decisions should generally
carry with it the stay of these decisions
pending appeal.Otherwise, the essential
nature of these judgments as being
appealable
would
be
rendered
nugatory. (Emphasis supplied)

the Office of the Ombudsman was amended by Administrative


Order No. 17[18] wherein the pertinent provision on the execution
of decisions pending appeal is now essentially similar to Section
47 of the Uniform Rules on Administrative Cases in the Civil
Service and other related laws, thus:
Rule III
PROCEDURE IN ADMINISTRATIVE CASES
Section 7. Finality and execution of
decision. - Where the respondent is absolved of
the charge, and in case of conviction where the
penalty imposed is public censure or reprimand,
suspension of not more than one month, or a
fine equivalent to one month salary, the
decision shall be final, executory and
unappealable. In all other cases, the decision
may be appealed to the Court of Appeals on a
verified petition for review under the
requirements and conditions set forth in Rule 43
of the Rules of Court, within fifteen (15) days
from receipt of the written Notice of the
Decision or Order denying the Motion for
Reconsideration.
An appeal shall not stop the decision
from being executory. In case the penalty is
suspension or removal and the respondent
wins such appeal, he shall be considered as
having been under preventive suspension
and shall be paid the salary and such other
emoluments that he did not receive by reason
of the suspension or removal.

Petitioner was charged administratively before the Office


of the Ombudsman.Accordingly, the provisions of the
Ombudsman Act and its Rules of Procedure should apply in his
case. It is a principle in statutory construction that where there are
two statutes that apply to a particular case, that which was
specially designed for the said case must prevail over the other.[17]

A decision of the Office of the


Ombudsman in administrative cases shall be
executed as a matter of course. The Office of
the Ombudsman shall ensure that the decision
shall be strictly enforced and properly
implemented. The refusal or failure by any
officer without just cause to comply with an
order of the Office of the Ombudsman to
remove, suspend, demote, fine, or censure shall
be a ground for disciplinary action against said
officer.

In fine, Secretary Datumanong cannot be held in


contempt of court for issuing the Memorandum Order in the
absence of malice or wrongful conduct in issuing it.The remedy
of the petitioner is not to file a petition to cite him in contempt of
court but to elevate the error to the higher court for review and
correction.
However, two events supervened since the filing of this
petition that would support its dismissal. First, on March 28,
2005, the Court in G.R. No. 144694 affirmed the decisions of the
Court of Appeals and Administrative Adjudication Bureau of the
Office of the Ombudsman ordering petitioner dismissed from the
service for dishonesty, falsification of public documents,
misconduct, and conduct prejudicial to the best interest of the
service. Second, Section 7, Rule III of the Rules of Procedure of

Well-settled is the rule that procedural laws are


construed to be applicable to actions pending and undetermined at
the time of their passage, and are deemed retroactive in that sense
and to that extent. As a general rule, the retroactive application of
procedural laws cannot be considered violative of any personal
rights because no vested right may attach to nor arise therefrom.
[19]

In the case at bar, the Rules of Procedure of the Office of


the Ombudsman are clearly procedural and no vested right of the
petitioner is violated as he is considered preventively suspended
while his case is on appeal. Moreover, in the event he wins on
appeal, he shall be paid the salary and such other emoluments that
he did not receive by reason of the suspension or
removal. Besides, there is no such thing as a vested interest in an
office, or even an absolute right to hold office. Excepting
constitutional offices which provide for special immunity as
regards salary and tenure, no one can be said to have any vested
right in an office.[20]
WHEREFORE, in view of the foregoing, the petition to
cite former Secretary Simeon A. Datumanong of the Department
of Public Works and Highways in contempt of court for issuing
Memorandum Order dated October 5, 2001 dismissing petitioner
Jimmie F. Tel-Equen from the service is DISMISSED for lack of
merit.
SO ORDERED.
40B. Contempt of Court
[G.R. No. 112869. January 29, 1996]
KELLY

R. WICKER and ATTY. ORLANDO A.


RAYOS, petitioners, vs. HON. PAUL T. ARCANGEL,
as Presiding Judge of the RTC, Makati, Branch
134, respondent.
DECISION

MENDOZA, J.:
This is a petition for certiorari, assailing the orders
dated December 3, 1993 and December 17, 1993 of respondent
Judge Paul T. Arcangel of the Regional Trial Court, Branch 134
of Makati, finding petitioners guilty of direct contempt and
sentencing each of them to suffer imprisonment for five (5) days
and to pay a fine of P100.00.
The antecedent facts are as follows:
Kelly Wicker, with his wife Wynee Dieppe and the
Tectonics Asia Architects and Engineering Co., brought suit in the
Regional Trial Court of Makati against the LFS Enterprises, Inc.
and others, for the annulment of certain deeds by which a house
and lot at Forbes Park, which the plaintiffs claimed they had
purchased, was allegedly fraudulently titled in the name of the
defendant LFS Enterprises and later sold by the latter to
codefendant Jose Poe. The case, docketed as Civil Case No.
14048, was assigned to Branch 134 formerly presided over by

Judge Ignacio Capulong who later was replaced by respondent


Judge Paul T. Arcangel.
It appears that on November 18, 1993, Wickers counsel,
Atty. Orlando A. Rayos, filed a motion seeking the inhibition of
respondent judge from the consideration of the case. [1] The motion
alleged in pertinent part:
1. That before the Acting Presiding Judge took over, defendant
LFS Enterprises, Inc. was able to maneuver the three (3)
successive postponements for the presentation for crossexamination of Mrs. Remedios Porcuna on her 10 August 1992
Affidavit, but eventually, she was not presented;
2. Meantime, Judge [Ignacio] Capulong who had full grasp of this
case was eased out of his station. In one hearing, the Acting
Presiding Judge had not yet reported to his station and in that set
hearing, counsel for defendant LFS Enterprises, Inc. who must
have known that His Honor was not reporting did not likewise
appear while other counsels were present;
3. Plaintiffs have information that the Acting Presiding Judge was
personally recruited from the south by Atty. Benjamin Santos
and/or his wife, Atty. Ofelia Calcetas-Santos, one time member of
the Judicial and Bar Council, against whom plaintiff Kelly R.
Wicker filed Administrative Case No. 3796, and although said
case was dismissed, nevertheless, plaintiffs feel that it was the
reason for Atty. Ofelia Calcetas-Santos relief;
4. Plaintiffs have reason to doubt the partiality and integrity of
His Honor and to give a fighting chance for plaintiffs to prove
their case, since this will be the last case to recover the
partnership property, plaintiffs feel that His Honor inhibit himself
and set this case for re-raffle;
5. This move finds support in the Rules of Court and
jurisprudence that in the first instance that a litigant doubts the
partiality and integrity of the Presiding Judge, he should
immediately move for his inhibition.
The motion was verified by Kelly Wicker.
Considering the allegations to be malicious, derogatory and
contemptuous, respondent judge ordered both counsel and client
to appear before him on November 26, 1993 and to show cause
why they should not be cited for contempt of court.[2]
In a pleading entitled Opposition to and/or Comment to
Motion to Cite for Direct Contempt Directed Against Plaintiff
Kelly R. Wicker and his Counsel, Atty. Rayos claimed that the
allegations in the motion did not necessarily express his views
because he merely signed the motion in a representative capacity,

in other words, just lawyering, for Kelly Wicker, who said in a


note to him that a young man possibly employed by the Court had
advised him to have the case reraffled, when the opposing counsel
Atty. Benjamin Santos and the new judge both failed to come for
a hearing, because their absence was an indication that Atty.
Santos knew who the judge may be and when he would appear.
Wickers sense of disquiet increased when at the next two
hearings, the new judge as well as Atty. Santos and the latters
witness, Mrs. Remedios Porcuna, were all absent, while the other
counsels were present.[3]
Finding petitioners explanation unsatisfactory, respondent
judge, in an order dated December 3, 1993, held them guilty of
direct contempt and sentenced each to suffer imprisonment for
five (5) days and to pay a fine of P100.00.
Petitioners filed a motion for reconsideration, which
respondent judge denied for lack of merit in his order
of December 17, 1993. In the same order respondent judge
directed petitioners to appear before him on January 7,
1994 at 8:30 a.m. for the execution of their sentence.
In their petition[4] before this Court, Kelly Wicker and Atty.
Orlando A. Rayos contend that respondent judge committed a
grave abuse of his discretion in citing them for contempt. They
argue that when a person, impelled by justifiable apprehension
and acting in a respectful manner, asks a judge to inhibit himself
from hearing his case, he does not thereby become guilty of
contempt.
In his comment,[5] respondent judge alleges that he took over
as Acting Presiding Judge of the Regional Trial Court of Makati,
Branch 134 by virtue of Administrative Order No. 154-93 dated
September 2, 1993 of this Court and not because, as petitioners
alleged, he was personally recruited from the South by Atty.
Santos and/or his wife, Atty. Ofelia Calcetas-Santos; that he
assumed his new office on October 11, 1993 and started holding
sessions on October 18, 1993; that when all male personnel of his
court were presented to petitioner Kelly Wicker he failed to pick
out the young man who was the alleged source of the remarks
prompting the filing of the motion for inhibition; that he was not
vindictive and that he in fact refrained from implementing the
execution of his order dated December 3, 1993 to enable
petitioners to avail themselves of all possible remedies; that after
holding petitioners in contempt, he issued an order dated
December 8, 1993 inhibiting himself from trying Civil Case No.
14048; that Atty. Rayos claim that he was just lawyering and
acting as the vehicle or mouthpiece of his client is untenable
because his (Atty. Rayos) duties to the court are more important
than those which he owes to his client; and that by tendering their
profuse apologies in their motion for reconsideration of the
December 3, 1993 order, petitioners acknowledged the falsity of

their accusations against him; and that the petitioners have taken
inconsistent positions as to who should try Civil Case No. 14048
because in their Motion for Inhibition dated November 18, 1993
they asked that the case be reraffled to another sala of the RTC of
Makati, while in their petition dated November 29, 1993, which
they filed with the Office of Court Administrator, petitioners
asked that Judge Capulong be allowed to continue hearing the
case on the ground that he had a full grasp of the case.
In reply to the last allegation of respondent judge,
petitioners claim that although they wanted a reraffle of the case,
it was upon the suggestion of respondent judge himself that they
filed the petition with the Court Administrator for the retention of
Judge Capulong in the case.
What is involved in this case is an instance of direct
contempt, since it involves a pleading allegedly containing
derogatory, offensive or malicious statements submitted to the
court or judge in which the proceedings are pending, as
distinguished from a pleading filed in another case. The former
has been held to be equivalent to misbehavior committed in the
presence of or so near a court or judge as to interrupt the
proceedings before the same within the meaning of Rule 71, 1 of
the Rules of Court and, therefore, direct contempt.[6]
It is important to point out this distinction because in case of
indirect or constructive contempt, the contemnor may be punished
only [a]fter charge in writing has been filed, and an opportunity
given to the accused to be heard by himself or counsel, whereas in
case of direct contempt, the respondent may be summarily
adjudged in contempt. Moreover, the judgment in cases of
indirect contempt is appealable, whereas in cases of direct
contempt only judgments of contempt by MTCs, MCTCs and
MeTCs are appealable.[7]
Consequently, it was unnecessary in this case for respondent
judge to hold a hearing.Hence even if petitioners are right about
the nature of the case against them by contending that it involves
indirect contempt, they have no ground for complaint since they
were afforded a hearing before they were held guilty of
contempt. What is important to determine now is whether
respondent judge committed grave abuse of discretion in holding
petitioners liable for direct contempt.
We begin with the words of Justice Malcolm that the power
to punish for contempt is to be exercised on the preservative and
not on the vindictive principle. Only occasionally should it be
invoked to preserve that respect without which the administration
of justice will fail.[8] The contempt power ought not to be utilized
for the purpose of merely satisfying an inclination to strike back
at a party for showing less than full respect for the dignity of the
court.[9]

Consistent with the foregoing principles and based on the


abovementioned facts, the Court sustains Judge Arcangels finding
that petitioners are guilty of contempt. A reading of the
allegations in petitioners motion for inhibition, particularly the
following paragraphs thereof:
2. Meantime, Judge Capulong who had full grasp of this case was
eased out of his station. In one hearing, the Acting Presiding
Judge had not yet reported to his station and in that set hearing,
counsel for defendant LFS Enterprises, Inc. who must have
known that His Honor was not reporting did not likewise appear
while other counsels were present;
3. Plaintiffs have information that the Acting Presiding Judge was
personally recruited from the south by Atty. Benjamin Santos
and/or his wife, Atty. Ofelia Calcetas-Santos, one time member of
the Judicial and Bar Council, against whom plaintiff Kelly R.
Wicker filed Administrative Case No. 3796, and although said
case was dismissed, nevertheless, plaintiffs feel that it was the
reason for Atty. Ofelia Calcetas-Santos relief;
leads to no other conclusion than that respondent judge was
beholden to the opposing counsel in the case, Atty. Benjamin
Santos, to whom or to whose wife, the judge owed his transfer to
the RTC of Makati, which necessitated easing out the former
judge to make room for such transfer.
These allegations are derogatory to the integrity and honor
of respondent judge and constitute an unwarranted criticism of the
administration of justice in this country. They suggest that
lawyers, if they are well connected, can manipulate the
assignment of judges to their advantage. The truth is that the
assignments of Judges Arcangel and Capulong were made by this
Court, by virtue of Administrative Order No. 154-93, precisely in
the interest of an efficient administration of justice and pursuant
to Sec. 5 (3), Art. VIII of the Constitution. [10] This is a matter of
record which could have easily been verified by Atty. Rayos.
After all, as he claims, he deliberated for two months whether or
not to file the offending motion for inhibition as his client
allegedly asked him to do.
In extenuation of his own liability, Atty. Rayos claims he
merely did what he had been bidden to do by his client of whom
he was merely a mouthpiece. He was just lawyering and he
cannot be gagged, even if the allegations in the motion for the
inhibition which he prepared and filed were false since it was his
client who verified the same.
To be sure, what Wicker said in his note to Atty. Rayos was
that he had been told by an unidentified young man, whom he
thought to be employed in the court, that it seemed the opposing
counsel, Atty. Santos, knew who the replacement judge was,

because Atty. Santos did not show up in court on the same days
the new judge failed to come. It would, therefore, appear that the
other allegations in the motion that respondent judge had been
personally recruited by the opposing counsel to replace Judge
Capulong who had been eased out were Atty. Rayos and not
Wickers. Atty. Rayos is thus understating his part in the
preparation of the motion for inhibition.
Atty. Rayos, however, cannot evade responsibility for the
allegations in question. As a lawyer, he is not just an instrument
of his client. His client came to him for professional assistance in
the representation of a cause, and while he owed him wholesouled devotion, there were bounds set by his responsibility as a
lawyer which he could not overstep.[11]Even a hired gun cannot be
excused for what Atty. Rayos stated in the motion. Based on
Canon 11 of the Code of Professional Responsibility, Atty. Rayos
bears as much responsibility for the contemptuous allegations in
the motion for inhibition as his client.
Atty. Rayos duty to the courts is not secondary to that of his
client. The Code of Professional Responsibility enjoins him to
observe and maintain the respect due to the courts and to judicial
officers and [to] insist on similar conduct by others[12] and not
[to] attribute to a Judge motives not supported by the record or
have materiality to the case.[13]
After the respondent judge had favorably responded to
petitioners profuse apologies and indicated that he would let them
off with a fine, without any jail sentence, petitioners served on
respondent judge a copy of their instant petition which prayed in
part that Respondent Judge Paul T. Arcangel be REVERTED to
his former station. He simply cannot do in the RTC of Makati
where more complex cases are heared (sic) unlike in Davao City.
If nothing else, this personal attack on the judge only serves to
confirm the contumacious attitude, a flouting or arrogant
belligerence first evident in petitioners motion for inhibition
belying their protestations of good faith.
Petitioners cite the following statement in Austria v.
Masaquel:[14]
Numerous cages there have been where judges, and even
members of the Supreme Court, were asked to inhibit themselves
from trying, or from participating in the consideration of a case,
but scarcely were the movants punished for contempt, even if the
grounds upon which they based their motions for disqualification
are not among those provided in the rules. It is only when there
was direct imputation of bias or prejudice, or a stubborn
insistence to disqualify the judge, done in a malicious, arrogant,
belligerent and disrespectful manner, that movants were held in
contempt of court.

It is the second sentence rather than the first that applies to this
case.
Be that as it may, the Court believes that consistent with the
rule that the power to cite for contempt must be exercised for
preservative rather than vindictive principle we think that the jail
sentence on petitioners may be dispensed with while vindicating
the dignity of the court. In the case of petitioner Kelly Wicker
there is greater reason for doing so considering that the
particularly offending allegations in the motion for inhibition do
not appear to have come from him but were additions made by
Atty. Rayos. In addition, Wicker is advanced in years (80) and in
failing health (suffering from angina), a fact Judge Arcangel does
not dispute. Wicker may have indeed been the recipient of such a
remark although he could not point a court employee who was the
source of the same. At least he had the grace to admit his mistake
both as to the source and truth of said information. It is
noteworthy Judge Arcangel was also willing to waive the
imposition of the jail sentence on petitioners until he came upon
petitioners description of him in the instant petition as a judge
who cannot make the grade in the RTC of Makati, where complex
cases are being filed. In response to this, he cited the fact that the
Integrated Bar of the Philippines chose him as one of the most
outstanding City Judges and Regional Trial Court Judges in 1979
and 1988 respectively and that he is a 1963 graduate of
the U.P. College of Law.
In Ceniza v. Sebastian,[15] which likewise involved a motion
for inhibition which described the judge corrupt, the Court, while
finding counsel guilty of direct contempt, removed the jail
sentence of 10 days imposed by the trial court for the reason that

Here, while the words were contumacious, it is hard to resist the


conclusion, considering the background of this occurrence that
respondent Judge in imposing the ten-day sentence was not duly
mindful of the exacting standard [of] preservation of the dignity
of his office not indulging his sense of grievance sets the limits of
the authority he is entitled to exercise. It is the view of the Court
that under the circumstances the fine imposed should be increased
to P500.00.
The same justification also holds true in this case.
WHEREFORE, the order of December 3, 1993 is
MODIFIED by DELETING the sentence of imprisonment for
five (5) days and INCREASING the fine from P 100.00 to
P200.00 for each of the petitioners.
SO ORDERED.