Republic of the Philippines

Supreme Court
Manila

SECOND DIVISION

NELLIE VDA. DE FORMOSO and G.R. No. 154704

her children, namely, MA.
THERESA FORMOSO-
PESCADOR, ROGER FORMOSO,
MARY JANE FORMOSO, Present:
BERNARD FORMOSO and
PRIMITIVO MALCABA, CARPIO, J., Chairperson,
Petitioners, NACHURA,
PERALTA,
ABAD, and
- versus - MENDOZA, JJ.

PHILIPPINE NATIONAL BANK,

FRANCISCO ARCE, ATTY.
BENJAMIN BARBERO, and
ROBERTO NAVARRO,
Respondents. Promulgated:

June 1, 2011
x -----------------------------------------------------------------------------------------------------
x

DECISION

MENDOZA, J.:

Assailed in this petition are the January 25, 2002 Resolution[1] and the
August 8, 2002 Resolution[2] of the Court of Appeals (CA)which dismissed the
petition for certiorari filed by the petitioners on the ground that the verification and
certification of non-forum shopping was signed by only one of the petitioners in
CA G.R. SP No. 67183, entitled Nellie P. Vda. De Formoso, et al. v. Philippine
National Bank, et al.

The Factual and

Procedural Antecedents

Records show that on October 14, 1989, Nellie Panelo Vda. De

Formoso (Nellie) and her children namely: Ma. Theresa Formoso-Pescador, Roger
Formoso, Mary Jane Formoso, Bernard Formoso, and Benjamin Formoso,
executed a special power of attorney in favor of Primitivo
Malcaba (Malcaba) authorizing him, among others, to secure all papers and
documents including the owners copies of the titles of real properties pertaining to
the loan with real estate mortgage originally secured by Nellie and her late
husband, Benjamin S. Formoso, from Philippine National Bank, Vigan
Branch (PNB) on September 4, 1980.

On April 20, 1990, the Formosos sold the subject mortgaged real properties
to Malcaba through a Deed of Absolute Sale. Subsequently, on March 22, 1994,
Malcaba and his lawyer went to PNB to fully pay the loan obligation including
interests in the amount of 2,461,024.74.

PNB, however, allegedly refused to accept Malcabas tender of payment and

to release the mortgage or surrender the titles of the subject mortgaged real
properties.

On March 24, 1994, the petitioners filed a Complaint for Specific

Performance against PNB before the Regional Trial Court of Vigan, Ilocos
Sur (RTC) praying, among others, that PNB be ordered to accept the amount of
2,461,024.74 as full settlement of the loan obligation of the Formosos.

After an exchange of several pleadings, the RTC finally rendered its

decision[3] on October 27, 1999 favoring the petitioners. The petitioners prayer for
exemplary or corrective damages, attorneys fees, and annual interest and daily
interest, however, were denied for lack of evidence.
PNB filed a motion for reconsideration but it was denied for failure to comply with
Rule 15, Section 5 of the 1997 Rules of Civil Procedure.PNB then filed a Notice of
Appeal but it was dismissed for being filed out of time.

The petitioners received their copy of the decision on November 26, 1999,
and on January 25, 2001, they filed their Petition for Relief from
Judgment[4] questioning the RTC decision that there was no testimonial evidence
presented to warrant the award for moral and exemplary damages. They reasoned
out that they could not then file a motion for reconsideration because they could
not get hold of a copy of the transcripts of stenographic notes. In its August 6,
2001 Order, the RTC denied the petition for lack of merit.[5]

On September 7, 2001, the petitioners moved for reconsideration but it was denied
by the RTC in its Omnibus Order of September 26, 2001.[6]

Before the Court of Appeals

On November 29, 2001, the petitioners filed a petition for certiorari before the CA
challenging the RTC Order of August 6, 2001 and its Omnibus Order
dated September 26, 2001.

In its January 25, 2002 Resolution, the CA dismissed the petition stating
that:

The verification and certification of non-forum shopping

was signed by only one (Mr. Primitivo Macalba) of the many
petitioners. In Loquias v. Office of the Ombudsman, G.R. No.
139396, August 15, 2000, it was ruled that all petitioners must be
signatories to the certification of non-forum shopping unless the
one who signed it is authorized by the other petitioners. In the
case at bar, there was no showing that the one who signed was
empowered to act for the rest. Therefore, it cannot be presumed
that the one who signed knew to the best of his knowledge
whether his co-petitioners had the same or similar claims or
actions filed or pending. The ruling in Loquias further declared
that substantial compliance will not suffice in the matter involving
strict observance of the Rules. Likewise, the certification of non-
forum shopping requires personal knowledge of the party who
executed the same and that petitioners must show reasonable
cause for failure to personally sign the certification. Utter
 disregard of the Rules cannot just be rationalized by harping on
the policy of liberal construction.

Aggrieved, after the denial of their motion for reconsideration, the petitioners filed
this petition for review anchored on the following

GROUNDS

THE COURT OF APPEALS PATENTLY ERRED IN RULING THAT ALL

THE PETITIONERS MUST SIGN THE VERIFICATION AND
CERTIFICATION OF NON-FORUM SHOPPING IN A PETITION FOR
CERTIORARI WHEREIN ONLY QUESTIONS OF LAW ARE
INVOLVED.

ALTERNATIVELY, THE COURT OF APPEALS PATENTLY ERRED IN

DISMISSING THE WHOLE PETITION WHEN AT THE VERY LEAST
THE PETITION INSOFAR AS PETITIONER MALCABA IS
CONCERNED BEING THE SIGNATORY THEREOF SHOULD HAVE
BEEN GIVEN DUE COURSE.

THE COURT OF APPEALS PATENTLY ERRED IN GIVING MORE

WEIGHT ON TECHNICALITIES WHEN THE PETITION BEFORE IT
WAS CLEARLY MERITORIOUS.[7]

The petitioners basically argue that they have substantially complied with
the requirements provided under the 1997 Rules of Civil Procedure on Verification
and Certification of Non-Forum Shopping. The petitioners are of the view that the
rule on Verification and Certification of Non-Forum Shopping that all petitioners
must sign should be liberally construed, since only questions of law are raised in a
petition for certiorari and no factual issues that require personal knowledge of the
petitioners.

The petitioners further claim that they have a meritorious petition because
contrary to the ruling of the RTC, their Petition for Relief clearly showed that,
based on the transcript of stenographic notes, there was enough testimonial
evidence for the RTC to grant them damages and attorneys fees as prayed for.
 On the other hand, PNB counters that the mandatory rule on the certification
against forum shopping requires that all of the six (6) petitioners must sign,
namely: Nellie Vda. De Formoso and her children Ma. Theresa Formoso-Pescador,
Roger Formoso, Mary Jane Formoso, and Bernard Formoso, and Primitivo
Malcaba. Therefore, the signature alone of Malcaba on the certification is
insufficient.

PNB further argues that Malcaba was not even a party or signatory to the
contract of loan entered into by his co-petitioners. Neither was there evidence that
Malcaba is a relative or a co-owner of the subject properties. It likewise argues
that, contrary to the stance of the petitioners, the issue raised before the CA, as to
whether or not the petitioners were entitled to moral and exemplary damages as
well as attorneys fees, is a factual one.

Finally, PNB asserts that the body of the complaint filed by the petitioners
failed to show any allegation that Macalba alone suffered damages for which he
alone was entitled to reliefs as prayed for. PNB claims that the wordings of the
complaint were clear that all the petitioners were asking for moral and exemplary
damages and attorneys fees.

OUR RULING

The petition lacks merit.

Certiorari is an extraordinary, prerogative remedy and is never issued as a

matter of right. Accordingly, the party who seeks to avail of it must strictly observe
the rules laid down by law.[8] Section 1, Rule 65 of the 1997 Rules of Civil
Procedure provides:

SECTION 1. Petition for certiorari.- When any tribunal,

board or officer exercising judicial or quasi-judicial functions has
acted without or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction,
and there is no appeal, or any plain, speedy, and adequate remedy
in the ordinary course of law, a person aggrieved thereby may file
a verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered annulling or
modifying the proceedings of such tribunal, board or officer, and
granting such incidental reliefs as law and justice may require.
 The petition shall be accompanied by a certified true copy of
the judgment, order or resolution subject thereof, copies of all
pleadings and documents relevant and pertinent thereto, and
a sworn certification of non-forum shopping as provided in the
third paragraph of Section 3, Rule 46. [Emphasis supplied]

Under Rule 46, Section 3, paragraph 3 of the 1997 Rules of Civil Procedure,
as amended, petitions for certiorari must be verified and accompanied by a sworn
certification of non-forum shopping.

SECTION 3. Contents and filing of petition; effect of non-

compliance with requirements. The petition shall contain the full
names and actual addresses of all the petitioners and respondents,
a concise statement of the matters involved, the factual
background of the case, and the grounds relied upon for the relief
prayed for.

In actions filed under Rule 65, the petition shall further

indicate the material dates showing when notice of the judgment
or final order or resolution subject thereof was received, when a
motion for new trial or reconsideration, if any, was filed and when
notice of the denial thereof was received.

It shall be filed in seven (7) clearly legible copies together

with proof of service thereof on the respondent with the original
copy intended for the court indicated as such by the petitioner,
and shall be accompanied by a clearly legible duplicate original or
certified true copy of the judgment, order, resolution, or ruling
subject thereof, such material portions of the record as are
referred to therein, and other documents relevant or pertinent
thereto. The certification shall be accomplished by the proper
clerk of court or his duly authorized representative, or by the
proper officer of the court, tribunal, agency or office involved or by
his duly authorized representative. The other requisite number of
copies of the petition shall be accompanied by clearly legible plain
copies of all documents attached to the original.

The petitioner shall also submit together with the petition

a sworn certification that he has not theretofore commenced any
 other action involving the same issues in the Supreme Court, the
Court of Appeals or different divisions thereof, or any other
tribunal or agency; if there is such other action or proceeding, he
must state the status of the same; and if he should thereafter learn
that a similar action or proceeding has been filed or is pending
before the Supreme Court, the Court of Appeals, or different
divisions thereof, or any other tribunal or agency, he undertakes
to promptly inform the aforesaid courts and other tribunal or
agency thereof within five (5) days therefrom.

The petitioner shall pay the corresponding docket and other

lawful fees to the clerk of court and deposit the amount
of P500.00 for costs at the time of the filing of the petition.

The failure of the petitioner to comply with any of the

foregoing requirements shall be sufficient ground for the dismissal
of the petition. [Emphases supplied]
The acceptance of a petition for certiorari as well as the grant of due course
thereto is, in general, addressed to the sound discretion of the court. Although the
Court has absolute discretion to reject and dismiss a petition for certiorari, it does
so only (1) when the petition fails to demonstrate grave abuse of discretion by any
court, agency, or branch of the government; or (2) when there are procedural
errors, like violations of the Rules of Court or Supreme Court
Circulars.[9] [Emphasis supplied]

In the case at bench, the petitioners claim that the petition for certiorari that
they filed before the CA substantially complied with the requirements provided for
under the 1997 Rules of Civil Procedure on Verification and Certification of Non-
Forum Shopping.

The Court disagrees.

Sections 4 and 5 of Rule 7 of the 1997 Rules of Civil Procedure provide:

SEC. 4. Verification. Except when otherwise specifically

required by law or rule, pleadings need not be under oath, verified
or accompanied by affidavit.

A pleading is verified by an affidavit that the affiant has read

the pleadings and that the allegations therein are true and correct
of his personal knowledge or based on authentic records.
 A pleading required to be verified which contains a
verification based on information and belief or upon knowledge,
information and belief or lacks a proper verification, shall be
treated as an unsigned pleading.

SEC. 5. Certification against forum shopping. The plaintiff or

principal party shall certify under oath in the complaint or other
initiatory pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed
therewith: (a) that he has not theretofore commenced any action
or filed any claim involving the same issues in any court, tribunal
or quasi-judicial agency and, to the best of his knowledge, no such
other action or claim is pending therein; (b) if there is such other
pending action or claim, a complete statement of the present
status thereof; and (c) if he should thereafter learn that the same
or similar action or claim has been filed or is pending, he shall
report that fact within five (5) days therefrom to the court wherein
his aforesaid complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not

be curable by mere amendment of the complaint or other
initiatory pleading but shall be cause for the dismissal of the case
without prejudice, unless otherwise provided, upon motion and
after hearing. The submission of a false certification or non-
compliance with any of the undertakings therein shall constitute
indirect contempt of court, without prejudice to the corresponding
administrative and criminal actions. If the acts of the party or his
counsel clearly constitute willful and deliberate forum shopping,
the same shall be ground for summary dismissal with prejudice
and shall constitute direct contempt, as well as a cause for
administrative sanctions. x x x.

In this regard, the case of Oldarico S. Traveno v. Bobongon Banana Growers

Multi-Purpose Cooperative,[10] is enlightening:

Respecting the appellate courts dismissal of petitioners

appeal due to the failure of some of them to sign the therein
accompanying verification and certification against forum-
shopping, the Courts guidelines for the bench and bar in Altres v.
Empleo,which were culled from jurisprudential pronouncements,
are instructive:

For the guidance of the bench and bar, the Court restates in
capsule form the jurisprudential pronouncements already
reflected above respecting non-compliance with the requirements
on, or submission of defective, verification and certification
against forum shopping:

1) A distinction must be made between non-compliance

with the requirement on or submission of defective verification,
and non-compliance with the requirement on or submission of
defective certification against forum shopping.

2) As to verification, non-compliance therewith or a defect

therein does not necessarily render the pleading fatally defective.
The Court may order its submission or correction or act on the
pleading if the attending circumstances are such that strict
compliance with the Rule may be dispensed with in order that the
ends of justice may be served thereby.

3) Verification is deemed substantially complied with when

one who has ample knowledge to swear to the truth of the
allegations in the complaint or petition signs the verification, and
when matters alleged in the petition have been made in good faith
or are true and correct.

4) As to certification against forum shopping, non-

compliance therewith or a defect therein, unlike in verification, is
generally not curable by its subsequent submission or correction
thereof, unless there is a need to relax the Rule on the ground of
substantial compliance or presence of special circumstances or
compelling reasons.

5) The certification against forum shopping must be signed

by all the plaintiffs or petitioners in a case; otherwise, those who
did not sign will be dropped as parties to the case. Under
reasonable or justifiable circumstances, however, as when all the
plaintiffs or petitioners share a common interest and invoke a
common cause of action or defense, the signature of only one of
 them in the certification against forum shopping substantially
complies with the Rule.

6) Finally, the certification against forum shopping must be

executed by the party-pleader, not by his counsel. If, however, for
reasonable or justifiable reasons, the party-pleader is unable to
sign, he must execute a Special Power of Attorney designating his
counsel of record to sign on his behalf.

The petition for certiorari filed with the CA stated the following names as
petitioners: Nellie Panelo Vda. De Formoso, Ma. Theresa Formoso-Pescador,
Roger Formoso, Mary Jane Formoso, Bernard Formoso, Benjamin Formoso, and
Primitivo Malcaba.
Admittedly, among the seven (7) petitioners mentioned, only Malcaba
signed the verification and certification of non-forum shopping in the subject
petition. There was no proof that Malcaba was authorized by his co-petitioners to
sign for them. There was no special power of attorney shown by the Formosos
authorizing Malcaba as their attorney-in-fact in filing a petition for review on
certiorari. Neither could the petitioners give at least a reasonable explanation as to
why only he signed the verification and certification of non-forum
shopping. In Athena Computers, Inc. and Joselito R. Jimenez v. Wesnu A. Reyes,
the Court explained that:
The verification of the petition and certification on non-
forum shopping before the Court of Appeals were signed only by
Jimenez.There is no showing that he was authorized to sign the
same by Athena, his co-petitioner.
Section 4, Rule 7 of the Rules states that a pleading is
verified by an affidavit that the affiant has read the pleading and
that the allegations therein are true and correct of his knowledge
and belief. Consequently, the verification should have been signed
not only by Jimenez but also by Athenas duly authorized
representative.
In Docena v. Lapesura, we ruled that the certificate of non-
forum shopping should be signed by all the petitioners or plaintiffs
in a case, and that the signing by only one of them is
insufficient. The attestation on non-forum shopping
requires personal knowledge by the party executing the same, and
the lone signing petitioner cannot be presumed to have personal
knowledge of the filing or non-filing by his co-petitioners of any
action or claim the same as similar to the current petition.
 The certification against forum shopping in CA-G.R. SP No.
72284 is fatally defective, not having been duly signed by both
petitioners and thus warrants the dismissal of the petition
for certiorari. We have consistently held that the certification
against forum shopping must be signed by the principal parties.
With respect to a corporation, the certification against forum
shopping may be signed for and on its behalf, by a specifically
authorized lawyer who has personal knowledge of the facts
required to be disclosed in such document.
While the Rules of Court may be relaxed for persuasive and
weighty reasons to relieve a litigant from an injustice
commensurate with his failure to comply with the prescribed
procedures, nevertheless they must be faithfully followed. In the
instant case, petitioners have not shown any reason which justifies
relaxation of the Rules. We have held that procedural rules are not
to be belittled or dismissed simply because their non-observance
may have prejudiced a partys substantive rights. Like all rules,
they are required to be followed except for the most persuasive of
reasons when they may be relaxed. Not one of these persuasive
reasons is present here.
In fine, we hold that the Court of Appeals did not err in
dismissing the petition for certiorari in view of the procedural
lapses committed by petitioners.[11] [Emphases supplied]

Furthermore, the petitioners argue that the CA should not have dismissed the
whole petition but should have given it due course insofar as Malcaba is concerned
because he signed the certification. The petitioners also contend that the CA should
have been liberal in the application of the Rules because they have a meritorious
case against PNB.

The Court, however, is not persuaded.

The petitioners were given a chance by the CA to comply with the Rules
when they filed their motion for reconsideration, but they refused to do so. Despite
the opportunity given to them to make all of them sign the verification and
certification of non-forum shopping, they still failed to comply. Thus, the CA was
constrained to deny their motion and affirm the earlier resolution.[12]

Indeed, liberality and leniency were accorded in some cases.[13] In these cases,
however, those who did not sign were relatives of the lone signatory, so unlike in
this case, where Malcaba is not a relative who is similarly situated with the other
petitioners and who cannot speak for them. In the case of Heirs of Domingo
Hernandez, Sr. v. Plaridel Mingoa, Sr.,[14] it was written:

In the instant case, petitioners share a common interest and

defense inasmuch as they collectively claim a right not to be
dispossessed of the subject lot by virtue of their and their deceased
parents construction of a family home and occupation thereof for
more than 10 years. The commonality of their stance to defend
their alleged right over the controverted lot thus gave petitioners
xxx authority to inform the Court of Appeals in behalf of the other
petitioners that they have not commenced any action or claim
involving the same issues in another court or tribunal, and that
there is no other pending action or claim in another court or
tribunal involving the same issues.
Here, all the petitioners are immediate relatives who share a
common interest in the land sought to be reconveyed and a
common cause of action raising the same arguments in support
thereof. There was sufficient basis, therefore, for Domingo
Hernandez, Jr. to speak for and in behalf of his co-petitioners
when he certified that they had not filed any action or claim in
another court or tribunal involving the same issues. Thus, the
Verification/Certification that Hernandez, Jr. executed constitutes
substantial compliance under the Rules. [Emphasis supplied]
The same leniency was accorded to the petitioner in the case of Oldarico S.
Traveno v. Bobongon Banana Growers Multi-Purpose Cooperative,[15] where it
was stated:

The same leniency was applied by the Court in Cavile v.

Heirs of Cavile, because the lone petitioner who executed the
certification of non-forum shopping was a relative and co-owner
of the other petitioners with whom he shares a common interest. x
x x[16]

Considering the above circumstances, the Court does not see any similarity
at all in the case at bench to compel itself to relax the requirement of strict
compliance with the rule regarding the certification against forum shopping.

At any rate, the Court cannot accommodate the petitioners request to re-examine
the testimony of Malcaba in the transcript of stenographic notes of the April 25,
1999 hearing concerning his alleged testimonial proof of damages for obvious
reasons.
 Primarily, Section 1, Rule 45 of the Rules of Court categorically states that
the petition filed shall raise only questions of law, which must be distinctly set
forth. A question of law arises when there is doubt as to what the law is on a
certain state of facts, while there is a question of fact when the doubt arises as to
the truth or falsity of the alleged facts. For a question to be one of law, the same
must not involve an examination of the probative value of the evidence presented
by the litigants or any of them. The resolution of the issue must rest solely on what
the law provides on the given set of circumstances. Once it is clear that the issue
invites a review of the evidence presented, the question posed is one of fact.[17]

In this case, the petition clearly raises a factual issue. As correctly argued by
PNB, the substantive issue of whether or not the petitioners are entitled to moral
and exemplary damages as well as attorneys fees is a factual issue which is beyond
the province of a petition for review on certiorari.

Secondly, even if the Court glosses over the technical defects, the petition
for relief cannot be granted. A perusal of the Petition for Relief of Judgment
discloses that there is no fact constituting fraud, accident, mistake or excusable
negligence which are the grounds therefor.From the petition itself, it appears that
the petitioners counsel had a copy of the transcript of stenographic notes which
was in his cabinet all along and only discovered it when he was disposing old and
terminated cases.[18] If he was only attentive to his records, he could have filed a
motion for reconsideration or a notice of appeal in behalf of the petitioners.

WHEREFORE, the petition is DENIED.

SO ORDERED.

JOSE CATRAL MENDOZA

Associate Justice
Philippine Supreme Court Jurisprudence > Year 2013 > December 2013 Decisions > G.R. No. 168979, December 02, 2013 - REBECCA
PACAA-CONTRERAS AND ROSALIE PACAA, Petitioners, v. ROVILA WATER SUPPLY, INC., EARL U. KOKSENG, LILIA TORRES, DALLA
P. ROMANILLOS AND MARISA GABUYA, Respondents.:

G.R. No. 168979, December 02, 2013 - REBECCA PACAA-CONTRERAS AND ROSALIE PACAA, Petitioners, v. ROVILA
WATER SUPPLY, INC., EARL U. KOKSENG, LILIA TORRES, DALLA P. ROMANILLOS AND MARISA GABUYA, Respondents.

SECOND DIVISION

G.R. No. 168979, December 02, 2013

REBECCA PACAACONTRERAS AND ROSALIE PACAA, Petitioners, v. ROVILA WATER SUPPLY, INC., EARL U.
KOKSENG, LILIA TORRES, DALLA P. ROMANILLOS AND MARISA GABUYA, Respondents.

DECISION

BRION, J.:

Before the Court is a petition for review on certiorari1 under Rule 45 of the Rules of Court seeking the reversal of the
decision2 dated January 27, 2005 and the resolution 3 dated June 6, 2005 of the Court of Appeals (CA) in CAG.R. SP No.
71551. The CA set aside the orders dated February 28, 20024 and April 1, 20025 of the Regional Trial Court (RTC), Branch
8, Cebu City, which denied the motion to dismiss and the motion for reconsideration, respectively, of respondents Rovila
Water Supply, Inc. (Rovila Inc.), Earl U. Kokseng, Lilia Torres, Dalla P. Romanillos and Marisa Gabuya.

THE FACTUAL ANTECEDENTS

Petitioners Rebecca PacaaContreras and Rosalie Pacaa, children of Lourdes Teves Pacaa and Luciano Pacaa, filed the
present case against Rovila Inc., Earl, Lilia, Dalla and Marisa for accounting and damages. 6 The petitioners claimed that
their family has long been known in the community to be engaged in the water supply business; they operated the Rovila
Water Supply from their family residence and were engaged in the distribution of water to customers in Cebu City.

The petitioners alleged that Lilia was a former trusted employee in the family business who hid business records and
burned and ransacked the family files. Lilia also allegedly posted security guards and barred the members of the Pacaa
family from operating their business. She then claimed ownership over the family business through a corporation named
Rovila Water Supply, Inc. (Rovila Inc.) Upon inquiry with the Securities and Exchange Commission (SEC), the petitioners
claimed that Rovila Inc. was surreptitiously formed with the respondents as the majority stockholders. The respondents
did so by conspiring with one another and forming the respondent corporation to takeover and illegally usurp the family
business registered name.7 cralaw red

In forming the respondent corporation, the respondents allegedly used the name of Lourdes as one of the incorporators
and made it appear in the SEC documents that the family business was operated in a place other than the Pacaa
residence. Thereafter, the respondents used the Pacaa familys receipts and the deliveries and sales were made to
appear as those of the respondent Rovila Inc. Using this scheme, the respondents fraudulently appropriated the
collections and payments.8 cralawlawl ibra ry

The petitioners filed the complaint in their own names although Rosalie was authorized by Lourdes through a sworn
declaration and special power of attorney (SPA). The respondents filed a first motion to dismiss on the ground that the
RTC had no jurisdiction over an intracorporate controversy.9 The RTC denied the motion.

On September 26, 2000, Lourdes died10 and the petitioners amended their complaint, with leave of court, on October 2,
2000 to reflect this development.11 They still attached to their amended complaint the sworn declaration with SPA, but the
caption of the amended complaint remained the same.12 On October 10, 2000, Luciano also died.13

The respondents filed their Answer on November 16, 2000.14 The petitioners sister, Lagrimas PacaaGonzales, filed a
motion for leave to intervene and her answerinintervention was granted by the trial court. At the subsequent pretrial,
the respondents manifested to the RTC that a substitution of the parties was necessary in light of the deaths of Lourdes
and Luciano. They further stated that they would seek the dismissal of the complaint because the petitioners are not the
real parties in interest to prosecute the case. The pretrial pushed through as scheduled and the RTC directed the
respondents to put into writing their earlier manifestation. The RTC issued a pretrial order where one of the issues
submitted was whether the complaint should be dismissed for failure to comply with Section 2, Rule 3 of the Rules of
Court which requires that every action must be prosecuted in the name of the real party in interest. 15

On January 23, 2002,16 the respondents again filed a motion to dismiss on the grounds, among others, that the
petitioners are not the real parties in interest to institute and prosecute the case and that they have no valid cause of
action against the respondents.

THE RTC RULING

The RTC denied the respondents motion to dismiss. It ruled that, save for the grounds for dismissal which may be raised
at any stage of the proceedings, a motion to dismiss based on the grounds invoked by the respondents may only be filed
within the time for, but before, the filing of their answer to the amended complaint. Thus, even granting that the defenses
invoked by the respondents are meritorious, their motion was filed out of time as it was filed only after the conclusion of
the pretrial conference. Furthermore, the rule on substitution of parties only applies when the parties to the case die,
which is not what happened in the present case.17 The RTC likewise denied the respondents motion for reconsideration.18

The respondents filed a petition for certiorari under Rule 65 of the Rules of Court with the CA, invoking grave abuse of
discretion in the denial of their motion to dismiss. They argued that the deceased spouses Luciano and Lourdes, not the
petitioners, were the real parties in interest. Thus, the petitioners violated Section 16, Rule 3 of the Rules of Court on the
substitution of parties.19 Furthermore, they seasonably moved for the dismissal of the case20 and the RTC never acquired
jurisdiction over the persons of the petitioners as heirs of Lourdes and Luciano.21

THE CA RULING

The CA granted the petition and ruled that the RTC committed grave abuse of discretion as the petitioners filed the
complaint and the amended complaint as attorneysinfact of their parents. As such, they are not the real parties in
interest and cannot bring an action in their own names; thus, the complaint should be dismissed 22 pursuant to the Courts
ruling in Casimiro v. Roque and Gonzales.23

Neither are the petitioners suing as heirs of their deceased parents. Pursuant to jurisprudence, 24 the petitioners should
first be declared as heirs before they can be considered as the real parties in interest. This cannot be done in the present
ordinary civil case but in a special proceeding for that purpose.

The CA agreed with the respondents that they alleged the following issues as affirmative defenses in their answer: 1) the
petitioners are not the real parties in interest; and 2) that they had no legal right to institute the action in behalf of their
parents.25 That the motion to dismiss was filed after the period to file an answer has lapsed is of no moment. The RTC
judge entertained it and passed upon its merit. He was correct in doing so because in the pretrial order, one of the
submitted issues was whether the case must be dismissed for failure to comply with the requirements of the Rules of
Court. Furthermore, in Dabuco v. Court of Appeals,26 the Court held that the ground of lack of cause of action may be
raised in a motion to dismiss at anytime.27

The CA further ruled that, in denying the motion to dismiss, the RTC judge acted contrary to established rules and
jurisprudence which may be questioned via a petition for certiorari. The phrase grave abuse of discretion which was
traditionally confined to capricious and whimsical exercise of judgment has been expanded to include any action done
contrary to the Constitution, the law or jurisprudence[.]28

THE PARTIES ARGUMENTS

The petitioners filed the present petition and argued that, first, in annulling the interlocutory orders, the CA unjustly
allowed the motion to dismiss which did not conform to the rules.29 Specifically, the motion was not filed within the time
for, but before the filing of, the answer to the amended complaint, nor were the grounds raised in the answer. Citing
Section 1, Rule 9 of the Rules of Court, the respondents are deemed to have waived these grounds, as correctly held by
the RTC.30

Second, even if there is nonjoinder and misjoinder of parties or that the suit is not brought in the name of the real party
in interest, the remedy is not outright dismissal of the complaint, but its amendment to include the real parties in
interest.31

Third, the petitioners sued in their own right because they have actual and substantial interest in the subject matter of the
action as heirs or coowners, pursuant to Section 2, Rule 3 of the Rules of Court.32Their declaration as heirs in a special
proceeding is not necessary, pursuant to the Courts ruling in Marabilles, et al. v. Quito.33 Finally, the sworn declaration is
evidentiary in nature which remains to be appreciated after the trial is completed. 34

The respondents reiterated in their comment that the petitioners are not the real parties in interest. 35They likewise argued
that they moved for the dismissal of the case during the pretrial conference due to the petitioners procedural lapse in
refusing to comply with a condition precedent, which is, to substitute the heirs as plaintiffs. Besides, an administrator of
the estates of Luciano and Lourdes has already been appointed.36

The respondents also argued that the grounds invoked in their motion to dismiss were timely raised, pursuant to Section
2, paragraphs g and i, Rule 18 of the Rules of Court. Specifically, the nature and purposes of the pretrial include, among
others, the dismissal of the action, should a valid ground therefor be found to exist; and such other matters as may aid in
the prompt disposition of the action. Finally, the special civil action of certiorari was the proper remedy in assailing the
order of the RTC.37

THE COURTS RULING

We find the petition meritorious.

Petition for certiorari under Rule 65 is a proper remedy for a denial of a motion to dismiss attended by grave abuse of
discretion

In Barrazona v. RTC, Branch 61, Baguio City,38 the Court held that while an order denying a motion to dismiss is
interlocutory and nonappealable, certiorari and prohibition are proper remedies to address an order of denial made
without or in excess of jurisdiction. The writ of certiorari is granted to keep an inferior court within the bounds of its
jurisdiction or to prevent it from committing grave abuse of discretion amounting to lack or excess of jurisdiction.

The history and development of the ground fails to state a cause of action in the 1940, 1964 and the present 1997 Rules
of Court

Preliminarily, a suit that is not brought in the name of the real party in interest is dismissible on the ground that the
complaint fails to state a cause of action.39 Pursuant to jurisprudence,40 this is also the ground invoked when the
respondents alleged that the petitioners are not the real parties in interest because: 1) the petitioners should not have
filed the case in their own names, being merely attorneysinfact of their mother; and 2) the petitioners should first be
declared as heirs.

A review of the 1940, 1964 and the present 1997 Rules of Court shows that the fundamentals of the ground for dismissal
based on failure to state a cause of action have drastically changed over time. A historical background of this particular
ground is in order to preclude any confusion or misapplication of jurisprudence decided prior to the effectivity of the
present Rules of Court.

The 1940 Rules of Court provides under Section 10, Rule 9 that: chanRoble svi rtual Lawli bra ry

Section 10. Waiver of defenses Defenses and objections not pleaded either in a motion to dismiss or in the answer are
deemed waived; except the defense of failure to state a cause of action, which may be alleged in a later pleading, if one is
permitted, or by motion for judgment on the pleadings, or at the trial on the merits; but in the last instance, the motion
shall be disposed of as provided in section 5 of Rule 17 in the light of any evidence which may have been received.
Whenever it appears that the court has no jurisdiction over the subjectmatter, it shall dismiss the action. [underscoring
supplied]
This provision was essentially reproduced in Section 2, Rule 9 of the 1964 Rules of Court, and we quote: chanRoblesvi rtua lLawl ib rary

Section 2. Defenses and objections not pleaded deemed waived. Defenses and objections not pleaded either in a motion
to dismiss or in the answer are deemed waived; except the failure to state a cause of action which may be alleged in a
later pleading, if one is permitted, or by motion for judgment on the pleadings, or at the trial on the merits; but in the last
instance, the motion shall be disposed of as provided in section 5 of Rule 10 in the light of any evidence which may have
been received. Whenever it appears that the court has no jurisdiction over the subjectmatter, it shall dismiss the action.
[underscoring supplied]
Under the present Rules of Court, this provision was reflected in Section 1, Rule 9, and we quote:

Section 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a motion to dismiss or in
the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court
has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same
cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.
[underscoring supplied]

Notably, in the present rules, there was a deletion of the ground of failure to state a cause of action from the list of
those which may be waived if not invoked either in a motion to dismiss or in the answer.

Another novelty introduced by the present Rules, which was totally absent in its two precedents, is the addition of the
period of time within which a motion to dismiss should be filed as provided under Section 1, Rule 16 and we quote: chanRoblesv irt ual Lawlib rary

Section 1. Grounds. Within the time for but before filing the answer to the complaint or pleading asserting a claim, a
motion to dismiss may be made on any of the following grounds: xxx [underscoring supplied]
All these considerations point to the legal reality that the new Rules effectively restricted the dismissal of complaints in
general, especially when what is being invoked is the ground of failure to state a cause of action. Thus, jurisprudence
governed by the 1940 and 1964 Rules of Court to the effect that the ground for dismissal based on failure to state a cause
of action may be raised anytime during the proceedings, is already inapplicable to cases already governed by the present
Rules of Court which took effect on July 1, 1997.

As the rule now stands, the failure to invoke this ground in a motion to dismiss or in the answer would result in its waiver.
According to Oscar M. Herrera,41 the reason for the deletion is that failure to state a cause of action may be cured under
Section 5, Rule 10 and we quote: chanRoble svirtual Lawlib ra ry

Section 5. Amendment to conform to or authorize presentation of evidence. When issues not raised by the pleadings
are tried with the express or implied consent of the parties they shall be treated in all respects as if they had been raised
in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to
raise these issues may be made upon motion of any party at any time, even after judgment; but failure to amend does
not effect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the
issues made by the pleadings, the court may allow the pleadings to be amended and shall do so with liberality if the
presentation of the merits of the action and the ends of substantial justice will be subserved thereby. The court may grant
a continuance to enable the amendment to be made.
With this clarification, we now proceed to the substantial issues of the petition.

The motion to dismiss in the present case based on failure to state a cause of action was not timely filed and was thus
waived

Applying Rule 16 of the Rules of Court which provides for the grounds for the dismissal of a civil case, the respondents
grounds for dismissal fall under Section 1(g) and (j), Rule 16 of the Rules of Court, particularly, failure to state a cause of
action and failure to comply with a condition precedent (substitution of parties), respectively.

The first paragraph of Section 1,42 Rule 16 of the Rules of Court provides for the period within which to file a motion to
dismiss under the grounds enumerated. Specifically, the motion should be filed within the time for, but before the filing of,
the answer to the complaint or pleading asserting a claim. Equally important to this provision is Section 1, 43 Rule 9 of the
Rules of Court which states that defenses and objections not pleaded either in a motion to dismiss or in the answer are
deemed waived, except for the following grounds: 1) the court has no jurisdiction over the subject matter; 2) litis
pendencia; 3) res judicata; and 4) prescription.

Therefore, the grounds not falling under these four exceptions may be considered as waived in the event that they are not
timely invoked. As the respondents motion to dismiss was based on the grounds which should be timely invoked, material
to the resolution of this case is the period within which they were raised.

Both the RTC and the CA found that the motion to dismiss was only filed after the filing of the answer and after the pre
trial had been concluded. Because there was no motion to dismiss before the filing of the answer, the respondents should
then have at least raised these grounds as affirmative defenses in their answer. The RTCs assailed orders did not touch
on this particular issue but the CA ruled that the respondents did, while the petitioners insist that the respondents did not.
In the present petition, the petitioners reiterate that there was a blatant nonobservance of the rules when the
respondents did not amend their answer to invoke the grounds for dismissal which were raised only during the pretrial
and, subsequently, in the subject motion to dismiss.44

The divergent findings of the CA and the petitioners arguments are essentially factual issues. Time and again, we have
held that the jurisdiction of the Court in a petition for review on certiorari under Rule 45, such as the present case, is
limited only to questions of law, save for certain exceptions. One of these is attendant herein, which is, when the findings
are conclusions without citation of specific evidence on which they are based.45

In the petition filed with the CA, the respondents made a passing allegation that, as affirmative defenses in their answer,
they raised the issue that the petitioners are not the real parties in interest.46 On the other hand, the petitioners
consistently argued otherwise in their opposition 47 to the motion to dismiss, and in their comment48 and in their
memorandum49 on the respondents petition before the CA.

Our examination of the records shows that the CA had no basis in its finding that the respondents alleged the grounds as
affirmative defenses in their answer. The respondents merely stated in their petition for certiorari that they alleged the
subject grounds in their answer. However, nowhere in the petition did they support this allegation; they did not even
attach a copy of their answer to the petition. It is basic that the respondents had the duty to prove by substantial
evidence their positive assertions. Considering that the petition for certiorari is an original and not an appellate action, the
CA had no records of the RTCs proceedings upon which the CA could refer to in order to validate the respondents claim.
Clearly, other than the respondents bare allegations, the CA had no basis to rule, without proof, that the respondents
alleged the grounds for dismissal as affirmative defenses in the answer. The respondents, as the parties with the burden
of proving that they timely raised their grounds for dismissal, could have at least attached a copy of their answer to the
petition. This simple task they failed to do.

That the respondents did not allege in their answer the subject grounds is made more apparent through their argument,
both in their motion to dismiss50 and in their comment,51 that it was only during the pretrial stage that they verbally
manifested and invited the attention of the lower court on their grounds for dismissal. In order to justify such late
invocation, they heavily relied on Section 2(g) and (i), Rule 1852 of the Rules of Court that the nature and purpose of the
pretrial include, among others, the propriety of dismissing the action should there be a valid ground therefor and matters
which may aid in the prompt disposition of the action.
The respondents are not correct. The rules are clear and require no interpretation. Pursuant to Section 1, Rule 9 of the
Rules of Court, a motion to dismiss based on the grounds invoked by the respondents may be waived if not raised in a
motion to dismiss or alleged in their answer. On the other hand, the pretrial is primarily intended to make certain that
all issues necessary to the disposition of a case are properly raised. The purpose is to obviate the element of surprise,
hence, the parties are expected to disclose at the pretrial conference all issues of law and fact which they intend to raise
at the trial, except such as may involve privileged or impeaching matter.53 The issues submitted during the pretrial are
thus the issues that would govern the trial proper. The dismissal of the case based on the grounds invoked by the
respondents are specifically covered by Rule 16 and Rule 9 of the Rules of Court which set a period when they should be
raised; otherwise, they are deemed waived.

The Dabuco ruling is inapplicable in the present case; the ground for dismissal failure to state a cause of action
distinguished from lack of cause of action

To justify the belated filing of the motion to dismiss, the CA reasoned out that the ground for dismissal of lack of cause of
action may be raised at any time during the proceedings, pursuant to Dabuco v. Court of Appeals.54 This is an erroneous
interpretation and application of I>Dabuco as will be explained below.

First, in Dabuco, the grounds for dismissal were raised as affirmative defenses in the answer which is in stark contrast to
the present case. Second, in Dabuco, the Court distinguished between the dismissal of the complaint for failure to state a
cause of action and lack of cause of action. The Court emphasized that in a dismissal of action for lack of cause of
action, questions of fact are involved, [therefore,] courts hesitate to declare a plaintiff as lacking in cause of action. Such
declaration is postponed until the insufficiency of cause is apparent from a preponderance of evidence. Usually, this is
done only after the parties have been given the opportunity to present all relevant evidence on such questions of
fact.55 In fact, in Dabuco, the Court held that even the preliminary hearing on the propriety of lifting the restraining order
was declared insufficient for purposes of dismissing the complaint for lack of cause of action. This is so because the issues
of fact had not yet been adequately ventilated at that preliminary stage. For these reasons, the Court declared
in Dabuco that the dismissal by the trial court of the complaint was premature.

In the case of Macaslang v. Zamora,56 the Court noted that the incorrect appreciation by both the RTC and the CA of the
distinction between the dismissal of an action, based on failure to state a cause of action and lack of cause of action,
prevented it from properly deciding the case, and we quote: chanRoblesvirt ual Lawlib rary

Failure to state a cause of action and lack of cause of action are really different from each other. On the one hand, failure
to state a cause of action refers to the insufficiency of the pleading, and is a ground for dismissal under Rule 16 of
the Rules of Court. On the other hand, lack of cause [of] action refers to a situation where the evidence does not prove
the cause of action alleged in the pleading. Justice Regalado, a recognized commentator on remedial law, has explained
the distinction:
chanRoblesvi rtual Lawl ibra ry

xxx What is contemplated, therefore, is a failure to state a cause of action which is provided in Sec. 1(g) of Rule 16. This
is a matter of insufficiency of the pleading. Sec. 5 of Rule 10, which was also included as the last mode for raising the
issue to the court, refers to the situation where the evidence does not prove a cause of action. This is, therefore, a matter
of insufficiency of evidence. Failure to state a cause of action is different from failure to prove a cause of action. The
remedy in the first is to move for dismissal of the pleading, while the remedy in the second is to demur to the evidence,
hence reference to Sec. 5 of Rule 10 has been eliminated in this section. The procedure would consequently be to require
the pleading to state a cause of action, by timely objection to its deficiency; or, at the trial, to file a demurrer to evidence,
if such motion is warranted. [italics supplied]
Based on this discussion, the Court cannot uphold the dismissal of the present case based on the grounds invoked by the
respondents which they have waived for failure to invoke them within the period prescribed by the Rules. The Court
cannot also dismiss the case based on lack of cause of action as this would require at least a preponderance of evidence
which is yet to be appreciated by the trial court.

Therefore, the RTC did not commit grave abuse of discretion in issuing the assailed orders denying the respondents
motion to dismiss and motion for reconsideration. The Court shall not resolve the merits of the respondents grounds for
dismissal which are considered as waived.

Other heirs of the spouses Pacaa to be impleaded in the case

It should be emphasized that insofar as the petitioners are concerned, the respondents have waived the dismissal of the
complaint based on the ground of failure to state a cause of action because the petitioners are not the real parties in
interest.

At this juncture, a distinction between a real party in interest and an indispensable party is in order. In Carandang v. Heirs
of de Guzman, et al.,57 the Court clarified these two concepts and held that [a] real party in interest is the party who
stands to be benefited or injured by the judgment of the suit, or the party entitled to the avails of the suit. On the other
hand, an indispensable party is a party in interest without whom no final determination can be had of an action, in
contrast to a necessary party, which is one who is not indispensable but who ought to be joined as a party if complete
relief is to be accorded as to those already parties, or for a complete determination or settlement of the claim subject of
the action. xxx If a suit is not brought in the name of or against the real party in interest, a motion to dismiss may be filed
on the ground that the complaint states no cause of action. However, the dismissal on this ground entails an examination
of whether the parties presently pleaded are interested in the outcome of the litigation, and not whether all persons
interested in such outcome are actually pleaded. The latter query is relevant in discussions concerning indispensable and
necessary parties, but not in discussions concerning real parties in interest. Both indispensable and necessary parties are
considered as real parties in interest, since both classes of parties stand to be benefited or injured by the judgment of the
suit.

At the inception of the present case, both the spouses Pacaa were not impleaded as partiesplaintiffs. The Court notes,
however, that they are indispensable parties to the case as the alleged owners of Rovila Water Supply. Without their
inclusion as parties, there can be no final determination of the present case. They possess such an interest in the
controversy that a final decree would necessarily affect their rights, so that the courts cannot proceed without their
presence. Their interest in the subject matter of the suit and in the relief sought is inextricably intertwined with that of the
other parties.58

Jurisprudence on the procedural consequence of the inclusion or noninclusion of an indispensable party is divided in our
jurisdiction. Due to the noninclusion of indispensable parties, the Court dismissed the case in Lucman v. Malawi, et
al.59 and Go v. Distinction Properties Development Construction, Inc.,60while in Casals, et al. v. Tayud Golf and Country
Club et al.,61 the Court annulled the judgment which was rendered without the inclusion of the indispensable parties.

In Arcelona et al. v. Court of Appeals62 and Bulawan v. Aquende,63 and Metropolitan Bank & Trust Company v. Alejo et
al.64 the Court ruled that the burden to implead or order the impleading of an indispensable party rests on the plaintiff and
on the trial court, respectively. Thus, the noninclusion of the indispensable parties, despite notice of this infirmity,
resulted in the annulment of these cases.

In Plasabas, et al. v. Court of Appeals, et al.,65 the Court held that the trial court and the CA committed reversible error
when they summarily dismissed the case, after both parties had rested their cases following a protracted trial, on the sole
ground of failure to implead indispensable parties. Nonjoinder of indispensable parties is not a ground for the dismissal of
an action. The remedy is to implead the nonparty claimed to be indispensable.

However, in the cases of Quilatan, et al. v. Heirs of Quilatan, et al.66 and Lagunilla, et al. v. Monis, et al.,67 the Court
 remanded the case to the RTC for the impleading of indispensable parties. On the other hand, in Lotte Phil. Co., Inc. v.
Dela Cruz,68PepsiCo, Inc. v. Emerald Pizza,69 and ValdezTallorin, v. Heirs of Tarona, et al.,70 the Court directly ordered
that the indispensable parties be impleaded.

Mindful of the differing views of the Court as regards the legal effects of the noninclusion of indispensable parties, the
Court clarified in Republic of the Philippines v. Sandiganbayan, et al.71 , that the failure to implead indispensable parties is
a curable error and the foreign origin of our present rules on indispensable parties permitted this corrective measure.
This cited case held:chanRoblesvi rtual Lawli bra ry

Even in those cases where it might reasonably be argued that the failure of the Government to implead the sequestered
corporations as defendants is indeed a procedural aberration xxx, slight reflection would nevertheless lead to the
conclusion that the defect is not fatal, but one correctible under applicable adjective rules e.g., Section 10, Rule 5 of the
Rules of Court [specifying the remedy of amendment during trial to authorize or to conform to the evidence]; Section 1,
Rule 20 [governing amendments before trial], in relation to the rule respecting omission of socalled necessary or
indispensable parties, set out in Section 11, Rule 3 of the Rules of Court. It is relevant in this context to advert to the old
familiar doctrines that the omission to implead such parties is a mere technical defect which can be cured at any stage of
the proceedings even after judgment ; and that, particularly in the case of indispensable parties, since their presence and
participation is essential to the very life of the action, for without them no judgment may be rendered, amendments of the
complaint in order to implead them should be freely allowed, even on appeal, in fact even after rendition of judgment by
this Court, where it appears that the complaint otherwise indicates their identity and character as such indispensable
parties."

Although there are decided cases wherein the nonjoinder of indispensable parties in fact led to the dismissal of the suit
or the annulment of judgment, such cases do not jibe with the matter at hand. The better view is that nonjoinder is not a
ground to dismiss the suit or annul the judgment. The rule on joinder of indispensable parties is founded on equity. And
the spirit of the law is reflected in Section 11, Rule 3 of the 1997 Rules of Civil Procedure. It prohibits the dismissal of a
suit on the ground of nonjoinder or misjoinder of parties and allows the amendment of the complaint at any stage of the
proceedings, through motion or on order of the court on its own initiative.

Likewise, jurisprudence on the Federal Rules of Procedure, from which our Section 7, Rule 3 on indispensable parties was
copied, allows the joinder of indispensable parties even after judgment has been entered if such is needed to afford the
moving party full relief. Mere delay in filing the joinder motion does not necessarily result in the waiver of the right as long
as the delay is excusable.
In Galicia, et al. v. Vda. De Mindo, et al.,72 the Court ruled that in line with its policy of promoting a just and inexpensive
disposition of a case, it allowed the intervention of the indispensable parties instead of dismissing the complaint.
Furthermore, in Commissioner Domingo v. Scheer,73 the Court cited Salvador, et al. v. Court of Appeals, et al.74 and held
that the Court has full powers, apart from that power and authority which are inherent, to amend the processes,
pleadings, proceedings and decisions by substituting as partyplaintiff the real party in interest. The Court has the power
to avoid delay in the disposition of this case, and to order its amendment in order to implead an indispensable party.

With these discussions as premises, the Court is of the view that the proper remedy in the present case is to implead the
indispensable parties especially when their noninclusion is merely a technical defect. To do so would serve proper
administration of justice and prevent further delay and multiplicity of suits. Pursuant to Section 9, Rule 3 of the Rules of
Court, parties may be added by order of the court on motion of the party or on its own initiative at any stage of the
action. If the plaintiff refuses to implead an indispensable party despite the order of the court, then the court may dismiss
the complaint for the plaintiffs failure to comply with a lawful court order.75 The operative act that would lead to the
dismissal of the case would be the refusal to comply with the directive of the court for the joinder of an indispensable
party to the case.76

Obviously, in the present case, the deceased Pacaas can no longer be included in the complaint as indispensable parties
because of their death during the pendency of the case. Upon their death, however, their ownership and rights over their
properties were transmitted to their heirs, including herein petitioners, pursuant to Article 77477 in relation with Article
77778 of the Civil Code. In Orbeta, et al. v. Sendiong,79 the Court acknowledged that the heirs, whose hereditary rights are
to be affected by the case, are deemed indispensable parties who should have been impleaded by the trial court.

Therefore, to obviate further delay in the proceedings of the present case and given the Courts authority to order the
inclusion of an indispensable party at any stage of the proceedings, the heirs of the spouses Pacaa, except the
petitioners who are already parties to the case and Lagrimas PacaaGonzalez who intervened in the case, are hereby
ordered impleaded as partiesplaintiffs.

WHEREFORE, the petition is GRANTED. The decision dated January 27, 2005 and the resolution dated June 6, 2005 of
the Court of Appeals in CAG.R. SP No. 71551 are REVERSED and SET ASIDE. The heirs of the spouses Luciano and
Lourdes Pacaa, except herein petitioners and Lagrimas PacaaGonzalez, are ORDERED IMPLEADED as parties
plaintiffs and the RTC is directed to proceed with the trial of the case with DISPATCH.

SO ORDERED.

Carpio, J., (Chairperson), Del Castillo, Perez, and PerlasBernabe, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 205249 October 15, 2014

SPOUSES BENEDICT and SANDRA MANUEL, Petitioners,

vs.
RAMON ONG, Respondent.

DECISION

LEONEN, J.:
This resolves a petition1 for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, praying that the June 28, 2012 decision2 and the
December 19, 2012 resolution3 of the Court of Appeals in CA-G.R. SP No. 119270 be reversed and set aside. The assailed June 28, 2012 decision
dismissed for lack of merit the petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure filed by petitioners Benedict and Sandra Manuel
(the Spouses Manuel) and sustained the November 30, 2010 and February 16, 2011 orders of the Regional Trial Court, La Trinidad, Benguet. 4 The
assailed December 19, 2012 resolution of the Court of Appeals denied the Spouses Manuels motion for reconsideration. The Regional Trial Courts
November 30, 2010 order denied their motion to lift order of default, while its February 16, 2011 order denied their motion for reconsideration.5

On December 21, 2009, respondent Ramon Ong (Ong) filed with the Regional Trial Court, La Trinidad, Benguet, a complaint for accion
reivindicatoria.6 Ong charged the Spouses Manuel with having constructed improvements through force, intimidation, strategy, threats, and stealth
on a property he supposedly owned.7 The case was docketed as Civil Case No. 09-CV-2582.8

On January 19, 2010, Ong filed an "amended complaint."9 On February 3, 2010, summons was issued directed to the Spouses Manuel.10

On April 23, 2010, Ong filed with the Regional Trial Court a motion to declare the Spouses Manuel in default.11 Per the sheriffs return on summons, on
February 12, 2010, Sheriff Joselito Sales, along with Ongs counsel, Atty. Christopher Donaal, and a certain Federico Laureano, attempted to
personally serve summons on the Spouses Manuel at their address in Lower Bacong, Loacan, Itogon, Benguet.12 The Spouses Manuel, however,
requested that service be made at another time considering that petitioner Sandra Manuel's mother was then critically ill.13 The sheriffs return further
indicates that on March 16, 2010, another attempt at personal service was made. After Sheriff Joselito Sales had personally explained to petitioner
Sandra Manuel the content of the summons and the complaint, the latter refused to sign and receive the summons and the complaint. Sheriff Joselito
Sales was thus prompted to merely tender the summons and complaint to petitioner Sandra Manuel and to advise her to file their answer within fifteen
(15) days.14 As the Spouses Manuel failed to file their answer within this period, Ong asked that they be declared in default.15

On June 28, 2010, the Regional Trial Court issued an order granting Ong's motion to declare the Spouses Manuel in default. Following this, Ong
moved for the ex parte presentation ofevidence, which the Regional Trial Court granted.16

On September 13, 2010, the Spouses Manuel filed a motion to lift the order of default. They alleged thatit is the siblings of petitioner Sandra Manuel
who resided in Lower Bacong, Itogon, Benguet, while they resided in Ambiong, La Trinidad, Benguet. Thus, summons could not have been properly
served on them in the former address. They surmised that Ong and his companions mistook petitioner Sandra Manuels siblings as the defendants in
Civil Case No. 09-CV-2582.They further claimed that they only subsequently received via registered mail copies of (1) a compliance and manifestation
filed by Ong and (2) the Regional Trial Courts order scheduling the ex parte presentation of evidence. Attachedto the Spouses Manuels motion to lift
order of default was their answer.17

In its order dated November 30, 2010,the Regional Trial Court denied the Spouses Manuels motion to lift order of default. It noted that, first, their
motion was not sworn to, as required by the 1997 Rules of Civil Procedure, and, second, they did not showthat their failure to timely file an answer
"was due to fraud, accident, mistake or excusable negligence."18 In its order dated February16, 2011, the Regional Trial Court denied the Spouses
Manuels motion for reconsideration.19

Aggrieved, the Spouses Manuel filed a petition for certiorari before the Court of Appeals.20

As mentioned, the assailed June 28, 2012 decision of the Court of Appeals dismissed the Spouses Manuels Rule 65 petition for lack of merit. The
assailed December 19, 2012 resolution of the Court of Appeals denied their motion for reconsideration.

Hence, this petition.

For resolution is the sole issue ofwhether the Spouses Manuel may be granted relief from the Regional Trial Courts June 28, 2010 order of default.

Jurisdiction over the persons of the Spouses Manuel acquired

As a preliminary matter, we ruleon whether jurisdiction over the persons of the Spouses Manuel, as defendants in Civil Case No. 09-CV-2582, was
validly acquired. This preliminary matter is determinative of whether the fifteen-day period within which they must file their answer started to run,
thereby facilitating the context in which they could have validly been declared to be in default.

We hold that jurisdiction over the persons of both defendants in Civil Case No. 09-CV-2582 the Spouses Benedict and Sandra Manuel was
validly acquired. This is so because personal service of summons, via tender to petitioner Sandra Manuel, was made by Sheriff Joselito Sales on
March 16, 2010.

Rule 14, Section 6 of the 1997 Rules of Civil Procedure provides:

SEC. 6. Service in person on defendant. Whenever practicable, the summons shall be served by handing a copy thereof to the defendant in person,
or, if he refuses to receive and sign for it, by tendering it to him.

Tendering summons is itself a means of personal service as it is contained in Rule 14, Section 6. Personal service, as provided by Rule 14, Section 6,
is distinguished from its alternative substituted service as provided by Rule 14, Section 7:

SEC. 7. Substituted service. If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section,
service may be effected (a) by leaving copies of the summons at the defendant's residence with some person of suitable age and discretion then
residing therein, or (b) by leaving the copies at defendant's office or regular place of business with some competent person in charge thereof.
(Emphasis supplied)

In this case, the sheriffs returnon summons indicated that Sheriff Joselito Sales endeavored to personallyhand the summons and a copy of the
complaint to the Spouses Manuel on two (2) separate occasions. He relented from doing so on the first occasion in deference to the medical condition
of petitioner Sandra Manuels mother. On the second occasion, he was constrained to tender the summons and copy of the complaint as petitioner
Sandra Manuel refused to accept them.

The Spouses Manuel did not deny the occurrence of the events narrated in the sheriffs return but claimed that no valid service of summons was made.
They claimed that they did not reside in Lower Bacong, Loacan, Itogon, Benguet, where the service of summons was made. From this, they surmised
that the "Sandra Manuel" who was specifically identified in the sheriffs return was someone other than petitioner Sandra Manuel.

The Spouses Manuel cannot capitalize on the supposed variance of address. Personal service of summons has nothing to do with the location where
summons is served. A defendantsaddress is inconsequential. Rule 14, Section 6 of the 1997 Rules of Civil Procedure is clear in what it requires:
personally handing the summons to the defendant (albeit tender is sufficient should the defendant refuseto receive and sign). What is determinative of
the validity of personal service is, therefore, the person of the defendant, not the locus of service.

In any case, the Court of Appeals iscorrect in pointing out that the Spouses Manuels self-serving assertion must crumble in the face of the clear
declarations in the sheriffs return.21 Pursuant to Rule 131, Section 3(m) of the Revised Rules on Evidence,22 the acts of Sheriff Joselito Sales and the
events relating to the attempt to personally hand the summons and a copy of the complaint to the Spouses Manuel, as detailed in the sheriffs return,
enjoy the presumption of regularity.23 Moreover, Sheriff Joselito Sales must be presumed to have taken ordinary care and diligence in carrying out his
duty to make service upon the proper person(s) and not upon an impostor.24

A sheriffs return, if complete on its face, must be accorded the presumption of regularity and, hence, taken to be an accurate and exhaustive recital of
the circumstances relating to the steps undertaken by a sheriff. In this case, the Spouses Manuel have harped on their (self-serving) claim of
maintaining residence elsewhere but failed to even allege that there was anything irregular about the sheriffsreturn or that it was otherwise incomplete.

Having alleged irregularities in the service of summons, it was incumbent upon the Spouses Manuel to adduce proof of their claims. All they mustered
was their self-serving allegation of an alternative address. If at all, this claim of maintaining residence elsewhere should not even be lent an iota of
credibility considering that, as respondent Ramon Ong pointed out, the barangay clearances, which the Spouses Manuel themselves attached to one
of their pleadings (as proof of their identities), actually indicated that they were residents of Bacong Loacan, Itogon, Benguet.25 Their lie is, thus,
revealed by their own pleading.

As the Spouses Manuel not only failed in discharging the burden of proving their allegation but even succeeded in contradicting themselves, Sheriff
Joselito Sales recollection of events must be taken tobe true. Thus, valid personal service of summons, via tender to petitioner Sandra Manuel, was
made. From this, it follows that jurisdiction over the persons of petitioners Benedict and Sandra Manuel was acquired by the Regional Trial Court, La
Trinidad, Benguet, in Civil Case No. 09-CV-2582.

The Spouses Manuel are not entitled to relief from the order of default

As valid service of summons was made on them, it was incumbent upon the Spouses Manuel, pursuant to Rule 11, Section 1 of the 1997 Rules of Civil
Procedure,26 to file their answer withinfifteen (15) days from March 16, 2011. Having failed to do so, they wererightly declared to be in default.

Rule 9, Section 3 of the 1997 Rules of Civil Procedure provides for when a party to an action may be declared in default. Further, Rule 9, Section 3(b)
governs the grant of relief from orders of default:

SEC. 3. Default; declaration of. If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming
party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render
judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such
reception of evidence may be delegated to the clerk of court.

(a) Effect of order of default. A party in default shall be entitled to notice of subsequent proceedingsbut not to take part in the trial. (b)

Relief from order of default. A party declared in default may at any time after notice thereof and before judgment file a motion under oathto set aside
the order of default upon proper showing that his failure to answer was due to fraud, accident, mistake or excusable negligence and that he has a
meritorious defense. In such case, the order of default may be set aside on such terms and conditions as the judge may impose in the interest of
justice. (Emphasis supplied)

Pursuant to Rule 9, Section 3, a court may proceed to render judgment as the pleading may warrant should a defendant fail to timely file his or her
answer. However, a court may decline from immediately rendering judgment and instead require the plaintiff to present evidence. Per Rule 9, Section
3(a), a party declared to be indefault shall nevertheless be "entitled to notice of subsequent proceedings," although he or she may no longer take part
in the trial.

As explained in Spouses Delos Santos v. Carpio,27 "there are three requirements which must be complied with by the claiming party before the court
may declare the defending party in default:

(1) the claiming party must filea motion asking the court to declare the defending party in default;
 (2) the defending party must be notified of the motion to declare him in default;

(3) the claiming party must provethat the defending party has failed to answer within the period provided by the Rule." 28

All these requisites were complied with by respondent Ramon Ong.

It is not disputed that Ong filed a motion to declare the Spouses Manuel in default. It is also not disputed that the latter filed their answer after the
fifteen-day period, counted from March 16, 2010, had lapsed. The Spouses Manuel only filed their answer along with their motion to lift order of default
on September 13, 2010.

It is similarly settled that the Spouses Manuel were notified that a motion to declare them in default had been filed. They acknowledged in the present
petition for certiorari that on June 23, 2010, Ong filed a compliance to the Regional Trial Courts April 30, 2010 order that required the submission of
the registry return card evidencing the mailing to the Spouses Manuel of a copy of the motion to have them declared in default.

Not only were the requisites for declaring a party in default satisfied, the Spouses Manuels motion to lift order of default was also shown to be
procedurally infirm.

Consistent with Rule 9, Section 3(b) of the 1997 Rules of Civil Procedure, "the remedy against an order of default is a motion to set it aside on the
ground of fraud, accident, mistake, or excusable negligence."29 However, it is not only the motion to lift order of default which a defendant must file. As
this court emphasized in Agravante v. Patriarca,30 to the motion to lift order of default must "be appended an affidavit showing the invoked ground, and
another, denominated affidavit of merit, setting forth facts constituting the party's meritorious defense or defenses." 31

The need for an affidavit of merit isconsistent with Rule 8, Section 5 of the 1997 Rules of Civil Procedure,32 which requires that "[i]n all averments of
fraud or mistake, the circumstances constituting fraud or mistake must be statedwith particularity."

In Montinola, Jr. v. Republic Planters Bank,33 this court noted that the three (3) requisites that must be satisfied by a motion in order "to warrant the
setting aside of an order of default for failure to file answer, are:

(1) it must be made by motion under oath by one that has knowledge of the facts;

(2) it must be shown that the failure to file answer was due to fraud, accident, mistake or excusable negligence; and

(3) there must be a proper showing of the existence of a meritorious defense."34 (Citations omitted)

Consistent with Agravante, it is through an affidavit of merit that a defendant seeking relief from an order of default shows that "the failure to file answer
was due to fraud, accident, mistake or excusable negligence."35

In this case, the Court of Appeals noted that the Spouses Manuels motion to lift order of default was not made under oath. We add that this motion
was not accompanied by an affidavit of merit specifying the facts which would show that their non-filing of an answer within fifteen (15) days from
March 16, 2010 was due to fraud, accident, mistake, or excusable negligence.

Failing both in making their motion under oath and in attaching an affidavit of merits, the Spouses Manuels motion to lift order of default must be
deemed pro-forma. It is not even worthy of consideration.

Certainly, there is jurisprudence to the effect that an affidavit of merit is not necessary "where a motion to lift an order of default is grounded on the very
root of the proceedings [such as] where the court has not acquired jurisdiction over the defendants." 36 Similarly, there is jurisprudence stating that
"when a motion to lift an order ofdefault contains the reasons for the failure to answer as well as the facts constituting the prospective defense of the
defendant and it is sworn to by said defendant, neither a formal verification nor a separate affidavit of merit is necessary."37

However, in this case, the Spouses Manuel failed not only in attaching an affidavit of merit but alsoin making their motion under oath. They are,
therefore, left without any alternative on which to rest. Their motion is utterly ineffectual.

Apart from their failure to make their motion to lift order of default under oath and to attach to it an affidavit of merit, the Court of Appeals also noted
that the Spouses Manuel set their motion to lift order of default for hearing on the same date that they filed it(i.e., September 13, 2010). Thus, they also
violated Rule 15, Section 4 of the 1997 Rules of Civil Procedure,38 which requires that service of a motion upon an adverse party must be made in such
a manner that ensures receipt by the latter "at least three (3) days before the date of hearing. . . ."

We do not lose sight of the admonitions that have been made in jurisprudence that, as a rule, courts should be liberal in setting aside orders of default
and that default judgments are frowned upon.39 Indeed, apart from a motion to lift order of default,other remedies are available to a defaulted defendant
evenafter judgment has been rendered. Thus, if judgment had already been rendered but has not yet become final and executory, an appeal asserting
that the judgment was contrary to the law or to the evidence,40 or a motion for new trial under Rule 37, may be filed.41 In the case of the latter, the same
affidavits as are required in a motion to lift order of default must be attached.42 If judgment has become final and executory, a defaulted defendant may
file a petition for relief from judgment under Rule 38.43 Still, should the defaulted defendant fail tofile a petition for relief, a petition for annulment
ofjudgment on the ground of lack of jurisdiction or extrinsic fraud remains available.44

However, jurisprudence, too, has qualified the intent that animates this liberality. As this court stated in Acance v. Court of Appeals:45
1wphi1
The issuance of the orders of default should be the exception rather than the rule, to be allowed only in clear cases of obstinate refusal by the
defendant to comply with the orders of the trial court.46 (Emphasis supplied)

Moreover, this liberality must be tempered with a recognition that, in the first place, it is a defendant who is at fault in failing to timely file an answer.

Rule 9, Section 3(b) gives an exclusive list of only four (4) grounds that allow for relief from orders of default. Moreover, these grounds extrinsic
fraud, accident, mistake, and excusable negligence relate to factors that are extraneous to a defendant, that is, grounds that show that a defendant
was prevented, by reasons beyond his or her influence, from timely filing an answer.

The recognition that it is the defendant who is at fault and must suffer the consequences of his or her own failure is analogous to the dismissal of an
action due to the fault of a plaintiff, as provided by Rule 17, Section 3 of the 1997 Rules of Civil Procedure. Rule 17, Section 3 reads:

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

Rule 17, Section 3 is qualified by the phrase "for no justifiable cause." Thus, in cases covered by Rule 17, Section 3, should the failure to comply with
court processes be the result of the plaintiffs own fault, it is but logical that a plaintiff must suffer the consequences of his own heedlessness. Rule 9,
Section 3 on default applies the same logic to a culpable defendant. In this case, the Spouses Manuel only have themselves to blame in not
properly receiving the summons and copyof the complaint served on them. It has been shown that their claim that service of summons was made on
persons other than them deserves no credence. Quite the contrary, it is quite apparent that Sheriff Joselito Sales notonly explained the contents of the
summons and the complaint but actually told them that they must file their answer in fifteen (15) days. It was petitioner Sandra Manuel who refused to
sign and receive the summons and the complaint. This is evidently an act of obstinate refusal to submit to and to comply with court processes. Thus,
the Spouses Manuel are not deserving of any leniency.

WHEREFORE, the petition for review on certiorari is DENIED. The June 28, 2012 decision and the December 19, 2012 resolution of the Court of
Appeals in CA-G.R. SP No. 119270 are AFFIRMED.

SO ORDERED

MARVIC M.V.F. LEONEN

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

MARIANO C. DEL CASTILLO JOSE CATRAL MENDOZA

Associate Justice Associate Justice

BIENVENIDO L. REYES*
Associate Justice

ATTESTATION

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

ANTONIO T. CARPIO
Associate Justice
Chairperson

CERTIFICATION

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

MARIA LOURDES P. A. SERENO

Chief Justice
Footnotes

* Designated acting member per Special Order No. 1844 dated October 14, 2014.

1 Rollo, pp. 3-44.

2 Id. at 49-59.

3 Id. at 62-63.

4 Id. at 49 and 59.

5 Id. at 4950.

6 Id. at 50.

7 Id.

8 Id. at 79.

9 Id. at 7 and 55.

10 Id. at 7.

11 Id. at 51.

12 Id. at 8.

13 Id. at 8 and 51.

14 Id.

15 Id. at 51 and 81.

16 Id. at 51.

17 Id. at 12, 5152.

18 Id. at 53.

19 Id.

20 Id. at 49 and 53.

21 Id. at 54.

22 REVISED RULES ON EVIDENCE, Rule 131, sec. 3(m):

SEC. 3. Disputable presumptions. The following presumptions are satisfactory if uncontradicted, but may be contradicted
and overcome by other evidence:

....

(m) That official duty has been regularly performed;

....
23 Rollo, pp. 5455.

24 REVISED RULES ON EVIDENCE, Rule 131, sec. 3(d):

SEC. 3. Disputable presumptions. The following presumptions are satisfactory if uncontradicted, but may be contradicted
and overcome by other evidence:

....

(d) That a person takes ordinary care of his concerns;

....

25 Rollo, p. 82.

26 RULES OF CIVIL PROCEDURE, Rule 11, sec. 1:

SEC. 1. Answer to the complaint. The defendant shall file his answer to the complaint within fifteen (15) days after service of
summons, unless a different period is fixed by the court.

27 533 Phil. 42 (2006) [Per J. Austria-Martinez, First Division].

28 Id. at 51.

29 Agravante v. Patriarca, 262 Phil. 127, 133 (1990) [Per J. Narvasa, First Division].

30 262 Phil. 127 (1990) [Per J. Narvasa, First Division].

31 Id. at 133134.

32 RULES OF CIVIL PROCEDURE, Rule 8, sec. 5:

SEC. 5. Fraud, mistake, condition of the mind. In all averments of fraud or mistake the circumstances constituting fraud or
mistake must be stated with particularity. Malice, intent, knowledge or other condition of the mind of a person may be averred
generally.

33 244 Phil. 49 (1988) [Per J. Paras, Second Division].

34 Id. at 56.

35 Id.

36 Ponio v. Intermediate Appellate Court, 218 Phil. 548, 550 (1984) [Per J. Abad Santos, Second Division].

37 Tanhu v. Judge Ramolete, 160 Phil. 1101, 1115 (1975) [Per J. Barredo, Second Division].

38 RULES OF CIVIL PROCEDURE, Rule 15, sec. 4:

SEC. 4. Hearing of motion. Except for motions which the court may act upon without prejudicing the rights of the adverse
party, every written motion shall be set for hearing by the applicant.

Every written motion required to be heard and the notice of the hearing thereof shall be served in such a manner as to ensure
its receipt by the other party at least three (3) days before the date of hearing, unless the court for good cause sets the hearing
on shorter notice.

39 Acance v. Court of Appeals, 493 Phil. 676, 689 (2005) [Per J. Callejo, Sr., Second Division];

Montinola, Jr. v. Republic Planters Bank, 244 Phil. 49, 58 (1988) [Per J. Paras, Second Division].

40 Tanhu v. Judge Ramolete, 160 Phil. 1101, 1126 (1975) [Per J. Barredo, Second Division]:
 [A] defaulted defendant is not actually thrown out of court. While in a sense it may be said that by defaulting he leaves himself
at the mercy of the court, the rules see to it that any judgment against him must be in accordance with law. The evidence to
support the plaintiff's cause is, of course, presented in his absence, but the court is not supposed to admit that which is basically
incompetent. Although the defendant would not be in a position to object, elementary justice requires that only legal evidence
should be considered against him. If the evidence presented should not be sufficient to justify a judgment for the plaintiff, the
complaint must be dismissed. And if an unfavorable judgment should be justifiable, it cannot exceed in amount or be different in
kind from what is prayed for in the complaint.

41 RULES OF CIVIL PROCEDURE, Rule 37, sec. 1:

SEC. 1. Grounds of and period for filing motion for new trial or reconsideration. Within the period for taking an appeal, the
aggrieved party may move the trial court to set aside the judgment or final order and grant a new trial for one or more of the
following causes materially affecting the substantial rights of said party:

(a) Fraud, accident, mistake or excusable negligence which ordinary prudence could not have guarded against and by reason
of which such aggrieved party has probably been impaired in his rights; or

(b) Newly discovered evidence, which he could not with reasonable diligence, have discovered and produced at the trial, and
which if presented would probably alter the result.

Within the same period, the aggrieved party may also move for reconsideration upon the grounds that the damages awarded
are excessive, that the evidence is insufficient to justify the decision or final order, or that the decision or final order is contrary
to law.

42 Philippine Commercial and Industrial Bank v. Ortiz, 234 Phil. 376, 385386 (1987) [Per J. Narvasa, First Division].

43 RULES OF CIVIL PROCEDURE, Rule 38, sec. 1:

SEC. 1. Petition for relief from judgment, order, or other proceedings. When a judgment or final order is entered, or any other
proceeding is thereafter taken against a party in any court through fraud, accident, mistake, or excusable negligence, he may
file a petition in such court and in the same case praying that the judgment, order or proceeding be set aside.

44 RULES OF CIVIL PROCEDURE, Rule 47, secs. 1 and 2:

SEC. 1. Coverage. This Rule shall govern the annulment by the Court of Appeals of judgments or final orders and
resolutions in civil actions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief or other
appropriate remedies are no longer available through no fault of the petitioner.

SEC. 2. Grounds for annulment. The annulment may be based only on the grounds of extrinsic fraud and lack of jurisdiction.

Extrinsic fraud shall not be a valid ground if it was availed of, or could have been availed of, in a motion for new trial or petition
for relief.

45 493 Phil. 676 (2005) [Per J. Callejo, Sr., Second Division].

46 Id. at 689, citing Samartino v. Raon, 433 Phil. 173, 187 (2002) [Per J. Ynares-Santiago, First Division].

Republic of the Philippines

Supreme Court
Manila

THIRD DIVISION

ROGELIO ABERCA, RODOLFO G.R. No. 166216

BENOSA, NESTOR BODINO,
NOEL ETABAG, DANILO DELA
FUENTE, BELEN DIAZ-FLORES, Present:
MANUEL MARIO GUZMAN,
ALAN JASMINEZ, EDWIN LOPEZ, VELASCO, JR., J., Chairperson,
ALFREDO MANSOS, ALEX PERALTA,
MARCELINO, ELIZABETH ABAD,
PROTACIO-MARCELINO, MENDOZA, and
JOSEPH OLAYER, PERLAS-BERNABE, JJ.
CARLOS PALMA, MARCO PALO,
ROLANDO SALUTIN BENJAMIN
SEGUNDO, ARTURO TABARA,
EDWIN TULALIAN, and
REBECCA TULALIAN,
Petitioners,

- versus -

MAJ. GEN. FABIAN VER,

COL. FIDEL SINGSON,
COL. GERARDO B. LANTORIA,
COL. ROLANDO ABADILLA,
COL. GALILEO KINTANAR,
LT. COL. PANFILO M. LACSON,
MAJ. RODOLFO AGUINALDO,
CAPT. DANILO PIZARRO,
1LT. PEDRO TANGO,
1LT. ROMEO RICARDO,
1LT. RAUL BACALSO,
M/SGT. BIENVENIDO BALABA Promulgated:
and JOHN DOES,
March 14, 2012
Respondents.
x -----------------------------------------------------------------------------------------------------
x

DECISION
MENDOZA, J.:
Assailed in this petition is the July 31, 2003 Decision[1] of the Court of
Appeals (CA) in CA-G.R. CV No. 43763 and its November 26, 2004
Resolution[2] reversing and setting aside the February 19, 1993 Decision[3] of the
Regional Trial Court, Branch 107, Quezon City (RTC), in Civil Case No. 37487
entitled Rogelio Aberca, et al. v. Maj. Gen. Fabian Ver, et al. for sum of money
and damages.

The Facts

The factual and procedural antecedents were succinctly recited by the CA as

follows:

On 25 January 1983, several suspected subversives who

were arrested and detained by the military filed a complaint for
damages with the Regional Trial Court of Quezon City against
Gen. Fabian Ver, then AFP Chief of Staff, and the following
subordinate officers: Col. Fidel Singson, Col. Gerardo Lantoria,
Col. Rolando Abadilla, Col. Guillermo Kintanar, Lt. Col. Panfilo
Lacson, Maj. Rodolfo Aguinaldo, Capt. Danilo Pizarro, 1Lt. Pedro
Tango, 1Lt. Romeo Ricardo, 1Lt. Raul Bacalso, M/Sgt. Bienvenido
Balaba and John Does. The case was docketed as Civil Case No.
37487 and assigned to Branch 95.

In their complaint, the plaintiff-appellees alleged that they

were arrested and detained by Task Force Makabansa, a
composite group of various intelligence units of the AFP, on the
strength of defective search warrants; that while under detention
and investigation, they were subjected to physical and
psychological harm, torture and other brutalities to extort from
them confessions and other information that would incriminate
them; and that by reason thereof, they suffered actual and moral
damages.

Defendants-appellants, through their counsel, the then

Solicitor General Estelito Mendoza, filed a motion to dismiss on
the following grounds: (1) since the privilege of the writ of habeas
corpus was then suspended, the trial court cannot inquire into the
circumstances surrounding plaintiffs-appellees arrests; (2) the
defendants-appellants are immune from liability for the reason
that they were then performing their official duties; and (3) the
complaint states no cause of action.

In an order dated November 8, 1983, the trial court granted

defendants-appellants motion to dismiss and ordered the case
dismissed.

Plaintiffs-appellees filed a motion to reconsider and set

aside the order of dismissal. In an order dated May 11, 1984, the
trial court declared the order of November 8, 1983 final.

Plaintiffs-appellees again filed a motion for reconsideration

of the order dated May 11, 1984. In an order dated September 21,
1984, the trial court denied the motion for reconsideration.

On March 15, 1985, plaintiffs-appellees went to the Supreme

Court on a petition for review on certiorari, seeking to annul and
set aside the orders of the trial court dated November 8,
1983, May 11, 1984 and September 21, 1984. The case was
docketed as G.R. No. 69866.

While the case was pending in the Supreme Court, the so-
called EDSA revolution took place. As a result, the defendants-
appellants lost their official positions and were no longer in their
respective office addresses as appearing in the record. Also, in the
meantime, the case was re-raffled to Branch 107.

On April 15, 1988, the Supreme Court rendered a decision

annulling and setting aside the assailed orders and remanded the
case to the trial court for further proceedings.

However, trial could not proceed immediately because

on June 11, 1988, the record of the case was destroyed when fire
razed the City Hall of Quezon City. It was only on October 9,
1989 when plaintiffs-appellees sought a reconstitution of the
record of the case. The record shows that the petition for
reconstitution was set for hearing on October 27, 1989. However,
there is nothing in the record to show that defendants-appellants
or their counsel were notified. For lack of an opposition, the
petition for reconstitution was granted in an order dated March
12, 1990.

On August 15, 1990, plaintiffs-appellees filed a motion

praying that defendants-appellants be required to file their
answer. However, the record as reconstituted did not show who
are the lawyers of the defendants-appellants considering that
Estelito Mendoza, who had represented them in his capacity as
Solicitor General, was no longer holding that position.
Furthermore, defendants-appellants were also no longer
occupying the positions they held at the time the complaint was
filed. Thus, in an order dated August 17, 1990, plaintiffs-appellees
were directed to report to the trial court the addresses and
whereabouts of defendants-appellants so that they could be
properly notified.

Instead of complying with the order of August 17, 1990,

plaintiffs-appellees filed a motion to declare defendants-
appellants in default. The trial court deferred resolution of this
motion and instead, it issued an order on September 10, 1990
directing that a copy of the order dated August 17, 1990 be
furnished to new Solicitor General Francisco Chavez to enable him
to take action pursuant to Section 18, Rule 3 of the Rules of Court,
and to former Solicitor General Estelito Mendoza to enable him to
give notice as to whether he [would] continue to represent the
defendants-appellants in his private capacity. As it said in its
order, the trial court took this action in view of the change in
government and corresponding change in the addresses and
circumstances of the defendants-appellants who may not even be
aware of the decision of the Supreme Court in case G.R. No. L-
69866 and of the reconstitution of records in this case xxx.

On October 1, 1990, former Solicitor General Mendoza filed

a manifestation informing the trial court that his appearance as
defendants-appellants counsel terminated when he ceased to be
Solicitor General and that he was not representing them in his
private capacity. On his part, Solicitor General Chavez finally filed
on December 11, 1990 a notice of withdrawal of appearance,
citing Urbano v. Go, where the Supreme Court said that the Office
of the Solicitor General (OSG) is not authorized to represent a
public official at any stage of a criminal case or in a civil suit for
damages arising from a felony. The record does not show that
defendants-appellants were furnished a copy of this notice of
withdrawal or that they gave their conformity thereto.

In an order dated December 27, 1990, the trial court denied

plaintiffs-appellees motion to declare defendants-appellants in
default, emphatically pointing out that defendants-appellants
were not duly notified of the decision of the Supreme Court. In the
same order, the trial court directed plaintiffs-appellees to comply
with the order of August 17, 1990 within ten (10) days from notice,
with a warning that the case [would] be archived and eventually
dismissed if plaintiffs-appellees failed to furnish to the court the
addresses of defendants-appellants. Plaintiffs-appellees moved to
reconsider the order dated December 27, 1990 but in an order
dated February 1, 1991, the trial court denied the motion, stating
that without actual notice of the judgment of the Supreme Court
xxx the defendants-appellants herein would not be aware that
they should file a responsive pleading and that, therefore, to
consider the defendants-appellants in default would be
tantamount to lack of due process xxx.

For failure of the plaintiffs-appellees to comply with the

orders dated August 17, 1990 and December 27, 1990, the trial
court dismissed the case without prejudice in its order
dated March 7, 1991. Subsequently, however, in an order
dated June 4, 1991, the trial court set aside the order of dismissal
and reinstated the case. It also approved plaintiffs-appellees
request to serve the notice to file answer or responsive pleading by
publication.

In a compliance dated September 12, 1991, plaintiffs-

appellees informed the trial court that the following notice was
published in the Tagalog newspaper BALITA in its issues
of August 29, 1991 and September 5, 1991:

xxxx

No answer was filed by defendants-appellants within the

period stated in the notice. On motion of plaintiffs-appellees, the
trial court in its order dated December 5, 1991 declared
defendants-appellants in default and directed plaintiffs-appellees
to present their evidence ex-parte.[4]
Ruling of the RTC

On February 19, 1993, the RTC handed down a decision in favor of the
petitioners, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered, ordering the

following defendants:

1) Maj. General Fabian Ver

2) Col. Fidel Singson
3) Col. Rolando Abadilla
4) Col. Gerardo Lantoria
5) Col. Galileo Kintanar
6) Lt. Col. Panfilo Lacson
7) Maj. Rodolfo Aguinaldo
8) 1Lt. Pedro Tango
9) M/Sgt. Bienvenido Balaba

to pay jointly and severally to EACH of the following plaintiffs:

a) Rodolfo Benosa
b) Manuel Mario Guzman
c) Joseph Olayer
d) Marco Palo
e) Rolando Salutin

the amounts of FIFTY THOUSAND PESOS (50,000.00) as temperate or

moderate damages; ONE HUNDRED FIFTY THOUSAND PESOS
(150,000.00) as moral damages; and ONE HUNDRED FIFTY
THOUSAND PESOS (150,000.00) as exemplary damages. Likewise, they
are ordered to pay jointly and severally the sum of TWO HUNDRED
THOUSAND PESOS to the plaintiffs counsel.

The claims of the rest of the plaintiffs are denied and thereby dismissed.
Likewise, the case against the following defendants: Capt. Danilo Pizarro,
1Lt. Romeo Ricardo and 1Lt. Raul Bacalso is DISMISSED, and the said
defendants are exonerated from any liability.[5]

Subsequently, respondents Col. Fidel Singson (Col. Singson), Lt. Col.

Panfilo M. Lacson (Lt. Col. Lacson), and Col. Rolando Abadilla (Col.
Abadilla) filed their Omnibus Motion praying as follows: 1) that the order of
default dated December 5, 1991 be reversed and set aside; 2) that the decision
dated February 19, 1993 be reversed and set aside; 3) that the entire proceedings be
declared null and void; and 4) that they be given fifteen (15) days from notice to
file answer to the complaint and present their evidence. Col. Gerardo B.
Lantoria (Col. Lantoria) filed his own Motion for Reconsideration.

On his part, respondent Maj. Rodolfo Aguinaldo (Maj. Aguinaldo) failed to

file a timely notice of appeal so he filed a Petition for Relief from Judgment
praying that the RTC set aside its decision and proceed to try the case based on the
following grounds: 1) the decision was rendered without the benefit of notice in
gross violation of his right to due process; 2) the reconstitution of the records of the
case and further proceedings taken thereon were effected through fraud; and 3) his
failure to move for a new trial or to appeal was due to mistake or excusable
negligence.

The Omnibus Motion of Col. Singson, Lt. Col. Lacson and Col. Abadilla;
the Motion for Reconsideration of Col. Gerardo Lantoria; and the Petition for
Relief from Judgment of Maj. Aguinaldo were denied by the RTC.[6] Aggrieved,
the said respondents elevated their case to the CA.
Maj. Aguinaldo argued that he was deliberately deprived of the opportunity
to be heard and put up his defense, while Col. Singson, Lt. Col. Lacson and Col.
Abadilla presented the following assignment of errors:

THE TRIAL COURT ERRED IN ALLOWING THE OFFICE OF THE

SOLICITOR GENERAL (OSG) TO WITHDRAW AS COUNSEL WITHOUT
THE REQUIRED NOTICE TO, AND/OR CONSENT/CONFORMITY OF
APPELLANTS.

II

THE TRIAL COURT ERRED IN NOT SETTING ASIDE THE ORDER OF

DEFAULT AND/OR THE JUDGMENT BY DEFAULT AND GRANTING
NEW TRIAL.

III

THE TRIAL COURT ERRED IN HOLDING THAT THE OSGS MISTAKES

AND NEGLIGENCE ARE BINDING ON THE DEFENDANTS-
APPELLANTS.

IV
 THE TRIAL COURT ERRED IN HOLDING THE DEFENDANTS-
APPELLANTS SINGSON, ABADILLA AND LACSON LIABLE FOR THE
ALLEGED DAMAGES SUSTAINED BY THE PLAINTIFFS-APPELLANTS
(SIC).[7]

The Ruling of the CA

On July 31, 2003, the CA rendered a decision reversing and setting aside the RTC
decision and ordering the case remanded to the RTC for further proceedings. The
dispositive portion of the CA decision reads as follows:

WHEREFORE, premises considered, the appeal is hereby

GRANTED. The assailed decision dated February 19, 1993 is hereby
REVERSED and SET ASIDE. Let the record be REMANDED to the trial
court for further proceedings in accordance with the foregoing
disquisition.
SO ORDERED.[8]

The CA ruled, among others, that the RTC committed four (4) errors in declaring
the respondents in default and proceeding to hear the case. The RTC committed
its first error when it abandoned the proper modes of service of notices, orders,
resolutions or judgments as the petitioners failed to comply with its order dated
August 17, 1990, directing them to report the addresses and whereabouts of the
respondents so that they could be properly notified.

The second error was the failure of the RTC to avail of substituted service after
failing to effect personal service or service by mail. It perpetrated its third
error when it authorized service by publication after dismissing the case for failure
of the petitioners to furnish the current addresses of the respondents. The CA
reasoned out that there was nothing in the rules which would authorize publication
of a notice of hearing to file answer and for what was authorized to be published
were summons and final orders and judgments. The fourth error was committed
when the respondents were declared in default because they were not duly notified
and, therefore, were denied due process.

The CA stated that since the RTC failed to notify the respondents of the
proceedings undertaken, the latter were denied the chance to actively participate
therein. It explained as follows:
 Instead of observing the above precepts by according defendants-
appellants every opportunity to ventilate their side of the controversy, the
trial court failed not only to notify them of the proceedings undertaken
relative to the resolution of the case but the chance as well to actively
participate therein. It bears stressing that defendants-appellants were not
informed of the reinstatement of the case against them when the High
Tribunal set aside the orders of the trial court dated May 11,
1984, September 21, 1984 and November 8, 1983 dismissing the complaint
instituted by plaintiffs-appellees. Likewise, defendants-appellants were
not apprised of the reconstitution of the records of the case which were
destroyed by the fire that razed the City Hall of Quezon City. In the same
manner, they were not notified of the withdrawal of the OSG as their
official counsel of record, much less was their consent thereto sought.
Finally and most significantly, defendants-appellants were precluded the
chance to file their respective answer or responsive pleadings to the
complaint with the issuance of the order dated December 5, 1991 declaring
them in default notwithstanding the defective service by publication of the
courts notice requiring them to file such answer or responsive pleading.[9]

Not satisfied, the petitioners come to this Court praying for the reversal and setting
aside of the CA decision anchored on the following arguments:

I
IN REVERSING THE TRIAL COURTS RULINGS DECLARING
DEFENDANTS IN DEFAULT AND ALLOWING PLAINTIFFS TO
PRESENT THEIR EVIDENCE EX-PARTE; AND IN NULLIFYING THE
TRIAL COURTS JUDGMENT BY DEFAULT, THE COURT A QUO ACTED
CONTRARY TO LAW AND JURISPRUDENCE AND SO FAR DEPARTED
FROM THE USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO
WARRANT THE EXERCISE BY THIS COURT OF ITS POWER OF
SUPERVISION.[10]

II

IN HOLDING THAT THE TRIAL COURT ERRED IN DENYING

RESPONDENTS MOTION FOR NEW TRIAL TO SET ASIDE THE
JUDGMENT AND PETITION FOR RELIEF FROM JUDGMENT, THE
COURT A QUO ACTED CONTRARY TO LAW AND JURISPRUDENCE,
AND SO FAR DEPARTED FROM THE USUAL COURSE OF JUDICIAL
PROCEEDINGS AS TO WARRANT THE EXERCISE BY THIS COURT OF
ITS POWER OF SUPERVISION.[11]

The Petitioners Position

The petitioners claim that the RTC did not err in declaring the respondents in
default and in allowing them to present evidence ex- parte; that the respondents
were represented by the OSG from 1983 up to December 11, 1990 when the latter
withdrew its appearance from the case; that after the respondents had appeared,
thru the OSG, by filing a motion to dismiss, the petitioners were under no
obligation to track down the respondents addresses since the Rules of Court
provide that once a litigant is represented by counsel, all notices, motions and
pleadings must be sent to him as counsel of record; that it is a matter of record that
the OSG was furnished copies of all court orders and the petitioners pleadings for
the period it remained as the respondents counsel of record or from 1983 until the
OSG withdrew on December 11, 1990; that as counsel of record, the OSG was
duty-bound to file the respondents answer to the complaint within 15 days from
notice that it was reinstated by this Court and the case was remanded to the RTC
for further proceedings; and that despite having received copies of this Courts
decision in G.R. No. 69866 on or about April 20, 1988 and despite having been
duly notified of the finality of said decision by means of this Courts Entry of
Judgment, the OSG did not file any answer or seek an extension of time to do so.

The petitioners further argue that as early as May 1988, when this Courts
decision became final and executory and the respondents received notice thereof
through their counsel of record, it was incumbent upon them to have answered the
complaint within the period provided by the Rules of Court; that the RTC was not
hasty in declaring the respondents in default for they were given several chances to
file their answers even after their period to do so had already lapsed; that it was the
respondents failure to exercise ordinary prudence in monitoring the progress of this
case that placed the petitioners in a difficult situation; that the respondents in this
case cannot seize control of the proceedings or cause them to be suspended
indefinitely by the simple expedient of not filing their answers or by feigning
ignorance of the status of the proceedings; that the rule on service of summons by
means of publication applies to service of summons by publication, not to notices
to file answer by publication; that while service of summons by publication entails
acquiring jurisdiction over the person of the defendant, it was already obtained
over the respondents in this case by their voluntary appearance through counsel
and their act of filing a motion to dismiss on substantive grounds; that substituted
service was an exercise in futility because the respondents were no longer holding
the positions they were holding at the time the petition was filed and, therefore,
could not be reached at the addresses indicated on the complaint; that the only
remaining option was to notify the respondents by publication; that the RTC did
not err in holding that the respondents failed to establish the fraud, accident,
mistake and/or excusable negligence that would warrant the grant of a new trial, or
the setting aside of the judgment and/or petition for relief from judgment; that the
negligence of the OSG is binding on the respondents in the same manner that its
initial success in securing the dismissal of the case was binding on them; and that it
would be highly unfair to allow the respondents, who reaped the benefits of the
initial dismissal of the case and never complained then about the OSG, to suddenly
complain that they were not bound by their counsels handling or mishandling of
the case.

The Respondents Position

The respondents counter that the CA did not commit a reversible error in reversing
and setting aside the default judgment rendered by the RTC; that the petitioners
failed to address four (4) errors committed by the RTC cited by the CA; that the
respondents were deprived of the opportunity to file their answer or responsive
pleadings to the complaint when the RTC issued a default order against them after
a defective service of notice to file answer by publication; that the petitioners
invocation of the jurisprudence that a defaulting party has the burden of showing
that he has a meritorious defense does not apply in this case; and that what should
apply is the settled rule that once a denial or deprivation of due process is
determined, the RTC is ousted of its jurisdiction to proceed and its judgment is null
and void.

The Courts Ruling

The basic question is whether the constitutional right to procedural due

process was properly observed or was unacceptably violated in this case when the
respondents were declared in default for failing to file their answer within the
prescribed period and when the petitioners were allowed to present their
evidence ex-parte.

Section 1, Article III of the 1987 Constitution guarantees that:

No person shall be deprived of life, liberty, or property

without due process of law nor shall any person be denied the
equal protection of the law.
 Procedural due process is that which hears before it condemns, which
proceeds upon inquiry and renders judgment only after trial. It contemplates notice
and opportunity to be heard before judgment is rendered affecting one's person or
property.[12]

Moreover, pursuant to the provisions of Section 5(5) of Article VIII of the

1987 Constitution,[13] the Court adopted and promulgated the following rules
concerning, among others, the protection and enforcement of constitutional rights,
pleading, practice and procedure in all courts:

Rule 13
SEC. 5. Modes of service.Service of pleadings, motions,
notices, orders, judgments and other papers shall be made either
personally or by mail.

SEC. 6. Personal service.Service of the papers may be made

by delivering personally a copy to the party or his counsel, or by
leaving it in his office with his clerk or with a person having
charge thereof. If no person is found in his office, or his office is
not known, or he has no office, then by leaving the copy, between
the hours of eight in the morning and six in the evening, at the
partys or counsels residence, if known, with a person of sufficient
age and discretion then residing therein.
SEC. 7. Service by mail.Service by registered mail shall be
made by depositing the copy in the office, in a sealed envelope,
plainly addressed to the party or his counsel at his office, if
known, otherwise at his residence, if known, with postage fully
prepaid, and with instructions to the postmaster to return the mail
to the sender after ten (10) days if undelivered. If no registry
service is available in the locality of either the sender or the
addressee, service may be done by ordinary mail.

SEC. 8. Substituted service.If service of pleadings, motions,

notices, resolutions, orders and other papers cannot be made
under the two preceding sections, the office and place of residence
of the party or his counsel being unknown, service may be made
by delivering the copy to the clerk of court, with proof of failure of
 both personal service and service by mail. The service is complete
at the time of such delivery.

The above rules, thus, prescribe the modes of service of pleadings, motions,
notices, orders, judgments, and other papers, namely: (1) personal service; (2)
service by mail; and (3) substituted service, in case service cannot be effected
either personally or by mail.

The Rules of Court has been laid down to insure the orderly conduct of
litigation and to protect the substantive rights of all party litigants. It is for this
reason that the basic rules on the modes of service provided under Rule 13 of the
Rules of Court have been made mandatory and, hence, should be strictly followed.
In Marcelino Domingo v. Court of Appeals, [14] the Court wrote:

Section 11, Rule 13 of the Rules of Court states:

SEC. 11. Priorities in modes of service and filing. Whenever

practicable, the service and filing of pleadings and other papers
shall be done personally. Except with respect to papers emanating
from the court, a resort to other modes must be accompanied by a
written explanation why the service or filing was not done
personally. A violation of this Rule may be cause to consider the
paper as not filed.

Section 11 is mandatory. In Solar Team Entertainment, Inc.

v. Judge Ricafort, the Court held that:

Pursuant x x x to Section 11 of Rule 13, service and filing of

pleadings and other papers must, whenever practicable, be done
personally; and if made through other modes, the party concerned
must provide a written explanation as to why the service or filing
was not done personally. x x x

Personal service and filing are preferred for obvious

reasons. Plainly, such should expedite action or resolution on a
pleading, motion or other paper; and conversely, minimize, if not
eliminate, delays likely to be incurred if service or filing is done by
mail, considering the inefficiency of postal service. Likewise,
personal service will do away with the practice of some lawyers
who, wanting to appear clever, resort to the following less than
ethical practices: (1) serving or filing pleadings by mail to catch
opposing counsel off-guard, thus leaving the latter with little or no
time to prepare, for instance, responsive pleadings or an
opposition; or (2) upon receiving notice from the post office that
the registered parcel containing the pleading of or other paper
from the adverse party may be claimed, unduly procrastinating
before claiming the parcel, or, worse, not claiming it at all, thereby
causing undue delay in the disposition of such pleading or other
papers.

If only to underscore the mandatory nature of this

innovation to our set of adjective rules requiring personal service
whenever practicable, Section 11 of Rule 13 then gives the court
the discretion to consider a pleading or paper as not filed if the
other modes of service or filing were resorted to and no written
explanation was made as to why personal service was not done in
the first place. The exercise of discretion must, necessarily,
consider the practicability of personal service, for Section 11 itself
begins with the clause "whenever practicable."

We thus take this opportunity to clarify that under Section

11, Rule 13 of the 1997 Rules of Civil Procedure, personal service
and filing is the general rule, and resort to other modes of service
and filing, the exception. Henceforth, whenever personal service
or filing is practicable, in light of the circumstances of time, place
and person, personal service or filing is mandatory. Only when
personal service or filing is not practicable may resort to other
modes be had, which must then be accompanied by a written
explanation as to why personal service or filing was not
practicable to begin with. In adjudging the plausibility of an
explanation, a court shall likewise consider the importance of the
subject matter of the case or the issues involved therein, and the
prima facie merit of the pleading sought to be expunged for
violation of Section 11. This Court cannot rule otherwise, lest we
allow circumvention of the innovation introduced by the 1997
Rules in order to obviate delay in the administration of justice.

xxxx

x x x [F]or the guidance of the Bench and Bar, strictest

compliance with Section 11 of Rule 13 is mandated. [Emphasis
supplied]
 In the case at bench, the respondents were completely deprived of due
process when they were declared in default based on a defective mode of service
service of notice to file answer by publication. The rules on service of pleadings,
motions, notices, orders, judgments, and other papers were not strictly followed in
declaring the respondents in default. The Court agrees with the CA that the RTC
committed procedural lapses in declaring the respondents in default and in
allowing the petitioners to present evidence ex-parte.

A review of the records discloses that after the Court rendered its April 15,
1988 Decision in G.R. No. 69866, annulling the RTC orders dated November 8,
1983, May 11, 1984 and September 21, 1984 and ordering the remand of the case
to the RTC for further proceedings, the RTC issued an order[15] dated August 17,
1990 directing the petitioners to report the addresses and whereabouts of the
respondents so that they would be properly notified of the proceedings. This
directive was issued by the RTC considering that the respondents counsel of
record, the OSG, could no longer represent them and because the respondents were
no longer holding official government positions because of a change in
government brought about by the 1986 EDSA Revolution. This order was likewise
made in response to the motion[16] filed by the petitioners praying that the
respondents be required to file their answer.

Instead of complying with the RTCs directive to report the respondents

addresses and whereabouts, the petitioners filed a motion[17]dated September 4,
1990 to declare the respondents in default. On December 27, 1990, the RTC denied
the petitioners default motion because the respondents were not duly notified of the
April 15, 1988 Decision of this Court and the OSG no longer wanted to represent
them. The RTC likewise ordered the petitioners to comply with its August 17,
1990 Order, otherwise, the case would be archived and eventually dismissed.
On February 1, 1991, the RTC denied the petitioners motion for reconsideration
and on March 7, 1991, it issued an order dismissing the case without prejudice.

Surprisingly, on June 4, 1991, the RTC issued an order[18] setting aside

its March 7, 1991 Order and reinstating the case. It directed the petitioners, among
others, to cause the publication of a notice on the respondents to file answer or
responsive pleading. After the petitioners complied with the publication
requirements, the RTC issued the order dated December 5, 1991 declaring the
respondents in default and directing the petitioners to present evidence ex-parte.
 As correctly observed by the CA, the RTCs August 17, 1990 Order was an
attempt to serve a notice to file answer on the respondents by personal service
and/or by mail. These proper and preferred modes of service, however, were never
resorted to because the OSG abandoned them when the petitioners failed to comply
with the August 17, 1990 RTC order requiring them to report the addresses and
whereabouts of the respondents. Nevertheless, there was still another less preferred
but proper mode of service available substituted service - which is service made by
delivering the copy to the clerk of court, with proof of failure of both personal
service and service by mail. Unfortunately, this substitute mode of service was not
resorted to by the RTC after it failed to effect personal service and service by mail.
Instead, the RTC authorized an unrecognized mode of service under the Rules,
which was service of notice to file answer by publication.

Considering the fact that the OSG could no longer represent the respondents,
the RTC should have been more patient in notifying the respondents through
personal service and/or service by mail. It should not have simply abandoned the
preferred modes of service when the petitioners failed to comply with its August
17, 1990 order with the correct addresses of the respondents. More so, it should not
have skipped the substituted service prescribed under the Rules and authorized a
service of notice on the respondents to file answer by publication.

In view of the peculiar circumstances surrounding the case, the RTC should
have instead directed the petitioners to exert diligent efforts to notify the
respondents either personally or by registered mail. In case the preferred modes
were impractical, the Court should have required the petitioners to at least report in
writing why efforts exerted towards personal service or service by mail failed. In
other words, a convincing proof of an impossibility of personal service or service
by mail to the respondents should have been shown first. The RTC, thus, erred
when it ruled that the publication of a notice to file answer to the respondents
substantially cured the procedural defect equivalent to lack of due process. The
RTC cannot just abandon the basic requirement of personal service and/or service
by mail.

At any rate, the Court is of the view that personal service to the respondents
was practicable under the circumstances considering that they were well-known
persons who used to occupy high government positions.
 To stress, the only modes of service of pleadings, motions, notices, orders,
judgments and other papers allowed by the rules are personal service, service by
mail and substituted service if either personal service or service by mail cannot be
made, as stated in Sections 6, 7 and 8 of Rule 13 of the Rules of Court. Nowhere
under this rule is service of notice to file answer by publication is mentioned, much
less recognized.

Furthermore, the Court would like to point out that service by publication
only applies to service of summons stated under Rule 14 of the Rules of Court
where the methods of service of summons in civil cases are: (1) personal
service;[19] (2) substituted service;[20] and (3) service by publication.[21] Similarly,
service by publication can apply to judgments, final orders and resolutions as
provided under Section 9, Rule 13 of the Rules of Court, as follows:

SEC. 9. Service of judgments, final orders or resolutions.

Judgments, final orders or resolutions shall be served either
personally or by registered mail. When a party summoned
by publication has failed to appear in the action, judgments,
final orders or resolutionsagainst him shall be served upon him also
by publication at the expense of the prevailing party. [Emphasis
supplied]
As correctly ruled by the CA:

Its third error was when it authorized service by publication

after initially dismissing the case for failure of plaintiffs-appellees
to furnish the current address of defendants-appellants. There is,
however, nothing in the Rules that authorizes publication of a
notice of hearing to file answer. What is authorized to be
published are: (1) summons, and (2) final orders and judgments.

Xxx xxx xxx

The above-quoted provision cannot be used to justify the

trial courts action in authorizing service by publication. Firstly,
what was published was not a final order or judgment but a simple
order or notice to file answer. Secondly, even granting that the
notice to file answer can be served by publication, it is explicit in
the Rule that publication is allowed only if the defendant-
 appellant was summoned by publication. The record is clear that
defendants-appellants were not summoned by publication.

On this point, the petitioners argue that the publication was a valid and
justified procedure because following the ruling of the RTC, it was an extra step to
safeguard the interest of the defendants done pursuant to the inherent power of the
courts to control its proceedings to make them comfortable to law and justice. The
petitioners further argue that the defendants in a civil case cannot seize control of
the proceedings or cause them to be suspended indefinitely by the simple expedient
of not filing their answers or by feigning ignorance of the proceedings. All these
could have been avoided had the defendants not been so inexplicably complacent
and utterly lacking in ordinary prudence.

The Court is not convinced.

As already discussed above, the basic rules on modes of service of

pleadings, motions, notices, orders, judgments, and other papers are mandatory in
nature and, therefore, must be strictly observed. The Court is not unaware of the
inherent power of courts to control its proceedings. Nonetheless, the exercise of
such inherent power must not violate basic court procedures. More importantly, it
must not disregard ones basic constitutional right to procedural due process.

This was precisely the reason for the RTCs denial of the petitioners
default motion in its August 17, 1990 Order, and for the eventual dismissal of the
case in its December 27, 1990 Order.

It must be noted that as the RTC orders stated, the respondents were not
notified of the April 15, 1988 Decision of this Court, which ordered the re-opening
and remanding of this case to the RTC. They were neither notified of the
reconstitution proceedings that took place pertaining to the burned records of the
case. The RTC further stated that the respondents were no longer holding their
official government positions and that they were no longer represented by the OSG
on account of the change in government. In other words, the respondents had no
counsel of record and no notice of subsequent proceedings. In short, due process
was absent.

Next, the court records got burned during the June 11, 1988 fire that hit
the Quezon City Hall where the records were kept. On March 12, 1990, the RTC
granted the petitioners petition for reconstitution. Again, the records do not show
that the RTC initiated extra efforts to notify the respondents about the
reconstitution proceedings. The entire records of this case tend to show that the
respondents were completely out of the picture until after the promulgation of the
RTC decision.

On countless occasions, the Court ruled that, generally, judgments by default

are looked upon with disfavor and are frowned upon as contrary to public policy.
An example here would be the case of Regalado P. Samartino v. Leonor B.
Raon,[22] where the Court stated:

The trial court should not have been too rash in declaring
petitioner in default, considering it had actual notice of valid
reasons that prevented him from answering. Well-settled is the
rule that courts should be liberal in setting aside orders of default
for default judgments are frowned upon, unless in cases where it
clearly appears that the reopening of the case is intended for
delay. The issuance of orders of default should be the exception
rather than the rule, to be allowed only in clear cases of obstinate
refusal by the defendant to comply with the orders of the trial
court.

Suits should as much as possible be decided on the merits

and not on technicalities. In this regard, we have often
admonished courts to be liberal in setting aside orders of default
as default judgments are frowned upon and not looked upon with
favor for they may amount to a positive and considerable injustice
to the defendant and the possibility of such serious consequences
necessitates a careful examination of the grounds upon which the
defendant asks that it be set aside. Since rules of procedure are
mere tools designed to facilitate the attainment of justice, it is well
recognized that this Court is empowered to suspend its operation,
or except a particular case from its operation, when the rigid
application thereof tends to frustrate rather than promote the
ends of justice. We are not unmindful of the fact that during the
pendency of the instant petition, the trial court has rendered
judgment against petitioners. However, being the court of last
resort, we deem it in the best interest that liberality and relaxation
of the Rules be extended to petitioners by setting aside the order
of default issued by the trial court and the consequent default
judgment; otherwise, great injustice would result if petitioners are
not afforded an opportunity to prove their claims.
 Finally, the Court finds unacceptable the petitioners contention that 1) the
respondents were well represented by counsel from 1983 up to December 1990 and
that the respondents were properly notified of the entire proceedings through their
counsel; 2) the respondents counsel was negligent for failing to file an answer
within the prescribed period; and 3) the negligence of the OSG binds the
respondents.

The petitioners do not deny the fact that on May 15, 1985, they filed a
petition for certiorari before this Court questioning the RTC orders granting the
respondents motion to dismiss and denying their motion for reconsideration. They
do not question the fact that while their petition was pending in this Court, the
1986 EDSA Revolution took place which resulted in the removal of the
respondents from their respective high government offices and the replacement of
then Solicitor General Estelito Mendoza (Sol. Gen. Mendoza). There is likewise no
dispute that subsequently, on April 15, 1988, this Court rendered its decision
annulling the subject RTC orders and remanding the case to the RTC for further
proceedings. The case was then re-raffled to another branch.

Clearly from the above circumstances, there was no longer any lawyer-client
relationship between the OSG and the respondents at the time the decision of the
Court dated April 15, 1988 was promulgated because, admittedly, after the 1986
EDSA Revolution, the respondents were no longer occupying their respective
government positions and Sol. Gen. Mendoza, who represented them, was no
longer the Solicitor General.

In fact, in compliance with the RTCs order dated September 10,

1990, former Solicitor General Mendoza submitted a manifestation[24] that his
[23]

legal representation for the respondents was deemed terminated when he ceased to
be the Solicitor General and that he was not representing the respondents in his
private capacity. For his part, on December 11, 1990, the incumbent Solicitor
General at that time, Solicitor General Francisco Chavez (Sol. Gen. Chavez), filed
a notice of withdrawal of appearance for the respondents citing the case
of Urbano v. Chavez,[25] where the Court ruled that the OSG is not authorized to
represent a public official at any stage of a criminal case or in a civil suit for
damages arising from a felony. The records do not show any proof that the
respondents were furnished a copy of this notice of withdrawal or whether or not
they gave their conformity thereto.
 Contrary to the petitioners position, while it is true that Sol. Gen. Chavez
filed a notice of withdrawal only on December 11, 1990, the respondents were in
effect no longer represented by counsel as early as April 15, 1988 when the Courts
decision was rendered, or much earlier, right after the 1986 EDSA Revolution due
to the change in government. The Court cannot subscribe to the petitioners
argument that there was negligence or mistake on the part of the OSG considering
that Sol. Gen. Mendoza ceased to hold office due to the EDSA Revolution while
Sol. Gen. Chavez withdrew his representation because of the prohibition in Urbano
v. Chavez. Definitely, Sol. Gen. Mendozas cessation from holding office and Sol.
Gen. Chavezs withdrawal of representation in the unique scenario of this case are
not equivalent to professional delinquency or ignorance, incompetency or
inexperience or negligence and dereliction of duty. Hence, there is no negligence
of counsel in this case. After the 1986 EDSA Revolution, the respondents were
practically left without counsel.

As a final point, this Court commiserates with the petitioners plight and cry
for justice. They should not be denied redress of their grievances. The Court,
however, finds Itself unable to grant their plea because the fundamental law clearly
provides that no person shall be deprived of life, liberty and property without due
process of law.

WHEREFORE, the petition is DENIED.

Republic of the Philippines

Supreme Court

Baguio City

THIRD DIVISION
LISAM ENTERPRISES, INC. G.R. No. 143264
represented by LOLITA A. SORIANO,
and LOLITA A. SORIANO,

Petitioners,
Present:

- versus -
VELASCO, JR., J., Chairperson,

PERALTA,

ABAD,
BANCO DE ORO UNIBANK, INC.
(formerly PHILIPPINE COMMERCIAL MENDOZA, and
INTERNATIONAL BANK),* LILIAN S.
PERLAS-BERNABE, JJ.
SORIANO, ESTATE OF LEANDRO A.
SORIANO, JR., REGISTER OF DEEDS
OF LEGASPI CITY, and JESUS L.
SARTE,
Promulgated:
Respondents.

April 23, 2012

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

DECISION
PERALTA, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules
of Court, praying that the Resolution[1] of the Regional Trial Court of Legaspi City
(RTC), dated November 11, 1999, dismissing petitioners complaint, and its
Order[2] dated May 15, 2000, denying herein petitioners Motion for
Reconsideration and Motion to Admit Amended Complaint, be reversed and set
aside.

The records reveal the following antecedent facts.

On August 13, 1999, petitioners filed a Complaint against respondents for

Annulment of Mortgage with Prayer for Temporary Restraining Order &
Preliminary Injunction with Damages with the RTC of Legaspi City. Petitioner Lolita
A. Soriano alleged that she is a stockholder of petitioner Lisam Enterprises, Inc.
(LEI) and a member of its Board of Directors, designated as its Corporate
Secretary. The Complaint also alleged the following:

4. Sometime in 1993, plaintiff LEI, in the course of its business

operation, acquired by purchase a parcel of residential land with
improvement situated at Legaspi City, covered by Transfer Certificate of
Title No. 37866, copy attached as Annex A, which property is more
particularly described as follows:

xxxx

5. On or about 28 March 1996, defendant Lilian S. Soriano and the

late Leandro A. Soriano, Jr., as husband and wife (hereafter Spouses
Soriano), in their personal capacity and for their own use and benefit,
obtained a loan from defendant PCIB (Legaspi Branch) (now known as
Banco de Oro Unibank, Inc.) in the total amount of P20 Million;

6. That as security for the payment of the aforesaid credit

accommodation, the late Leandro A. Soriano, Jr. and defendant Lilian S.
Soriano, as president and treasurer, respectively of plaintiff LEI, but
without authority and consent of the board of said plaintiff and with the
use of a falsified board resolution, executed a real estate mortgage on
28 March 1996, over the above-described property of plaintiff LEI in
favor of defendant PCIB, and had the same registered with the Office of
the Registry of Deeds, Legaspi City, copy of the Real Estate Mortgage is
hereto attached and marked as Annex B, and made part hereof, to the
prejudice of plaintiffs;

7. That specifically, the Spouses Soriano, with intent to defraud and

prejudice plaintiff LEI and its stockholders, falsified the signatures of
plaintiff Lolita A. Soriano as corporate secretary and director of plaintiff
LEI, in a document denominated as board resolution purportedly issued
by the board of plaintiff LEI on 6 November 1995, making it appear that
plaintiff LEI's Board met and passed a board resolution on said date
authorizing the Spouses Soriano to mortgage or encumber all or
substantially all of the properties of plaintiff LEI, when in fact and in
truth, no resolution of that nature was ever issued by the board of
plaintiff LEI, nor a meeting was called to that effect, copy of the
resolution in question is hereto attached and marked as Annex C, and
made part hereof;

8. That plaintiff Lolita A. Soriano as Corporate Secretary of plaintiff

LEI, had never signed a board resolution nor issued a Secretary's
Certificate to the effect that on 6 November 1995 a resolution was
passed and approved by plaintiff LEI authorizing the Spouses Soriano as
president and treasurer, respectively, to mortgage the above-described
property of plaintiff LEI, neither did she appear personally before a
notary public on 28 March 1996 to acknowledge or attest to the
issuance of a supposed board resolution issued by plaintiff LEI on 6
November 1995;

9. That defendant PCIB, knowing fully well that the property being
mortgaged by the Spouses Soriano belongs to plaintiff LEI, a
corporation, negligently and miserably failed to exercise due care and
prudence required of a banking institution. Specifically, defendant PCIB
failed to investigate and to delve into the propriety of the issuance of or
due execution of subject board resolution, which is the very foundation
of the validity of subject real estate mortgage. Further, it failed to verify
the genuineness of the signatures appearing in said board resolution
nor to confirm the fact of its issuance with plaintiff Lolita A. Soriano, as
the corporate secretary of plaintiff LEI. Furthermore, the height of its
negligence was displayed when it disregarded or failed to notice that
the questioned board resolution with a Secretary's Certificate was
notarized only on 28 March 1996 or after the lapse of more than four
(4) months from its purported date of issue on 6 November 1995. That
these circumstances should have put defendant PCIB on notice of the
flaws and infirmities of the questioned board resolution. Unfortunately,
it negligently failed to exercise due care and prudence expected of a
banking institution;

10. That having been executed without authority of the board of

plaintiff LEI said real estate mortgage dated 28 March 1996 executed by
the Spouses Soriano, as officers of plaintiff LEI in favor of defendant
PCIB, is the null and void and has no legal effect upon said
plaintiff. Consequently, said mortgage deed cannot be used nor
resorted to by defendant PCIB against subject property of plaintiff LEI as
no right or rights whatsoever were created nor granted thereunder by
reason of its nullity;

11. Worst, sometime in August 1998, in order to remedy the defects

in the mortgage transaction entered by the Spouses Soriano and
defendant PCIB, the former, with the unlawful instigation of the latter,
signed a document denominated as Deed of Assumption of Loans and
Mortgage Obligations and Amendment of Mortgage; wherein in said
document, plaintiff LEI was made to assume the P20 Million personal
indebtedness of the Spouses Soriano with defendant PCIB, when in fact
and in truth it never so assumed the same as no board resolution duly
certified to by plaintiff Lolita A. Soriano as corporate secretary was ever
issued to that effect, copy of said Deed is hereto attached and marked
as Annex D, and made part hereof;

12. Moreover, to make it appear that plaintiff LEI had consented to

the execution of said deed of assumption of mortgage, the Spouses
Soriano again, through the unlawful instigation and connivance of
defendant PCIB, falsified the signature of plaintiff Lolita A. Soriano as
corporate secretary of plaintiff LEI in a document denominated as
Corporate Resolution to Borrow, to make it appear that plaintiff LEI so
authorized the Spouses Soriano to perform said acts for the
corporation, when in fact and in truth no such authority or resolution
was ever issued nor granted by plaintiff LEI, nor a meeting called and
held for said purpose in accordance with its By-laws; copy of which is
hereto attached and marked as Annex E and made part hereof;

13. That said irregular transactions of defendant Lilian S. Soriano

and her husband Leandro A. Soriano, Jr., on one hand, and defendant
PCIB, on the other, were discovered by plaintiff Lolita A. Soriano
sometime in April 1999. That immediately upon discovery, said plaintiff,
for herself and on behalf and for the benefit of plaintiff LEI, made
demands upon defendants Lilian S. Soriano and the Estate of Leandro A.
Soriano, Jr., to free subject property of plaintiff LEI from such mortgage
lien, by paying in full their personal indebtedness to defendant PCIB in
the principal sum of P20 Million. However, said defendants, for reason
only known to them, continued and still continue to ignore said
demands, to the damage and prejudice of plaintiffs;

14. Hence, on 25 June 1999, plaintiffs commenced a derivative suit

against defendants Lilian S. Soriano and the Estate of Leandro A.
Soriano, Jr., before the Securities and Exchange Commission, docketed
as SEC Case No. 06-99-6339 for Fraudulent Scheme and Unlawful
Machination with Damages in order to protect and preserve the rights
of plaintiffs, copy of said complaint is hereto attached as AnnexF;

15. That plaintiffs, in order to seek complete relief from the

unauthorized mortgage transaction between the Spouses Soriano and
defendant PCIB, were further compelled to institute this instant case to
seek the nullification of the real estate mortgage dated 28 March
1999. Consequently, plaintiffs were forced to retain the services of a
lawyer with whom they contracted to pay P100,000.00 as and for
attorney's fee;

16. That unfortunately, the plaintiffs learned that on 30 July 1999,

defendant Sarte, in his capacity as Notary Public of Daraga, Albay and
upon application of defendant PCIB, issued a notice of
Auction/Foreclosure Sale of the property subject of the mortgage in
question and has set the auction sale on 7 September 1999 x x x;
 17. That by reason of the fraudulent and surreptitious schemes
perpetrated by defendant Lilian S. Soriano and her husband, the late
Leandro A. Soriano, Jr., in unlawful connivance and through the gross
negligence of defendant PCIB, plaintiff Lolita A. Soriano, as stockholder,
suffered sleepless nights, moral shock, wounded feeling, hurt pride and
similar injuries, hence, should be awarded moral damages in the
amount of P200,000.00.

After service of summons on all defendants, the RTC issued a temporary

restraining order on August 25, 1990 and, after hearing, went on to issue a writ of
preliminary injunction enjoining respondent PCIB (now known as Banco de Oro
Unibank, Inc.) from proceeding with the auction sale of the subject property.
Respondents Lilian S. Soriano and the Estate of Leandro A. Soriano, Jr. filed
an Answer dated September 25, 1999, stating that the Spouses Lilian and Leandro
Soriano, Jr. were duly authorized by LEI to mortgage the subject property; that
proceeds of the loan from respondent PCIB were for the use and benefit of LEI;
that all notarized documents submitted to PCIB by the Spouses Soriano bore the
genuine signature of Lolita Soriano; and that although the Spouses Soriano indeed
received demands from petitioner Lolita Soriano for them to pay the loan, they
gave satisfactory explanations to the latter why her demands could not be
honored. It was, likewise, alleged in said Answer that it was respondent Lilian
Soriano who should be entitled to moral damages and attorney's fees.

On September 28, 1999, respondent PCIB filed a Motion to Dismiss the Complaint
on grounds of lack of legal capacity to sue, failure to state cause of action, and litis
pendencia. Petitioners filed an Opposition thereto, while PCIB's co-defendants
filed a Motion to Suspend Action.

On November 11, 1999, the RTC issued the first assailed Resolution dismissing
petitioners' Complaint. Petitioners then filed a Motion for Reconsideration of said
Resolution. While awaiting resolution of the motion for reconsideration,
petitioners also filed, on January 4, 2000, a Motion to Admit Amended Complaint,
amending paragraph 13 of the original complaint to read as follows:
 13. That said irregular transactions of defendant Lilian S. Soriano and
her husband Leandro A. Soriano, Jr., on one hand, and defendant PCIB,
on the other, were discovered by plaintiff Lolita A. Soriano sometime in
April 1999. That immediately upon discovery, said plaintiff, for herself
and on behalf and for the benefit of plaintiff LEI, made demands upon
defendant Lilian S. Soriano and the Estate of Leandro A. Soriano, Jr., to
free subject property of plaintiff LEI from such mortgage lien, by paying
in full their personal indebtedness to defendant PCIB in the principal
sum of P20 Million. However, said defendants, for reason only known to
them, continued and still continue to ignore said demands, to the
damage and prejudice of plaintiffs; that plaintiff Lolita A. Soriano
likewise made demands upon the Board of Directors of Lisam
Enterprises, Inc., to make legal steps to protect the interest of the
corporation from said fraudulent transaction, but unfortunately, until
now, no such legal step was ever taken by the Board, hence, this action
for the benefit and in behalf of the corporation;

On May 15, 2000, the trial court issued the questioned Order denying both the
Motion for Reconsideration and the Motion to Admit Amended Complaint. The
trial court held that no new argument had been raised by petitioners in their
motion for reconsideration to address the fact of plaintiffs' failure to allege in the
complaint that petitioner Lolita A. Soriano made demands upon the Board of
Directors of Lisam Enterprises, Inc. to take steps to protect the interest of the
corporation against the fraudulent acts of the Spouses Soriano and PCIB. The trial
court further ruled that the Amended Complaint can no longer be admitted,
because the same absolutely changed petitioners' cause of action.

Petitioners filed the present petition with this Court, alleging that what are
involved are pure questions of law, to wit:
FIRST, WHETHER OR NOT THE COURT COMMITTED A REVERSIBLE ERROR
WHEN IT DISMISSED THE ACTION ON THE GROUND THAT PETITIONER
LOLITA A. SORIANO HAS NO LEGAL CAPACITY TO SUE AS SHE IS NOT A
REAL PARTY-IN-INTEREST;

SECOND, WHETHER OR NOT THE COURT COMMITTED A REVERSIBLE

ERROR WHEN IT DISMISSED THE ACTION ON THE GROUND THAT THERE
IS ANOTHER ACTION PENDING BETWEEN THE SAME PARTIES FOR THE
SAME CAUSE;

THIRD, WHETHER OR NOT THE COURT COMMITTED A REVERSIBLE ERROR

WHEN IT DISMISSED THE ACTION ON THE GROUND THAT THE
COMPLAINT STATES NO CAUSE OF ACTION;

FOURTH, WHETHER OR NOT THE COURT COMMITTED A REVERSIBLE

ERROR WHEN IT DENIED THE ADMISSION OF PETITIONERS' AMENDED
COMPLAINT FILED AS A MATTER OF RIGHT, AFTER THE ORDER OF
DISMISSAL WAS ISSUED BUT BEFORE ITS FINALITY.

FIFTH, WHETHER OR NOT THE COURT ERRED IN DISMISSING THE ACTION,

INSTEAD OF MERELY SUSPENDING THE SAME FOLLOWING THE DOCTRINE
LAID DOWN IN UNION GLASS. [3]

The petition is impressed with merit.

The Court shall first delve into the matter of the propriety of the denial of the
motion to admit amended complaint. Pertinent provisions of Rule 10 of the Rules
of Court provide as follows:

Sec. 2. Amendments as a matter of right. A party may amend his

pleadings once as a matter of right at any time before a responsive
pleading is served x x x.

Sec. 3. Amendments by leave of court. Except as provided in the next

preceding section, substantial amendments may be made only upon
leave of court. But such leave may be refused if it appears to the court
that the motion was made with intent to delay. x x x

It should be noted that respondents Lilian S. Soriano and the Estate of Leandro A.
Soriano, Jr. already filed their Answer, to petitioners' complaint, and the claims
being asserted were made against said parties. A responsive pleading having been
filed, amendments to the complaint may, therefore, be made only by leave of
court and no longer as a matter of right. However, in Tiu v. Philippine Bank of
Communications,[4] the Court discussed this rule at length, to wit:

x x x [A]fter petitioners have filed their answer, Section 3, Rule 10 of the

Rules of Court specifically allows amendment by leave of court. The said
Section states:

SECTION 3. Amendments by leave of court. - Except as

provided in the next preceding section, substantial
amendments may be made only upon leave of court. But
such leave may be refused if it appears to the court that the
motion was made with intent to delay. Orders of the court
upon the matters provided in this section shall be made
 upon motion filed in court, and after notice to the adverse
party, and an opportunity to be heard.

This Court has emphasized the import of Section 3, Rule 10 of the 1997
Rules of Civil Procedure in Valenzuela v. Court of Appeals, thus:

Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil

Procedure amended the former rule in such manner that the
phrase "or that the cause of action or defense is
substantially altered" was stricken-off and not retained in
the new rules. The clear import of such amendment in
Section 3, Rule 10 is that under the new rules, "the
amendment may (now) substantially alter the cause of
action or defense." This should only be true, however,
when despite a substantial change or alteration in the cause
of action or defense, the amendments sought to be made
shall serve the higher interests of substantial justice, and
prevent delay and equally promote the laudable objective of
the rules which is to secure a "just, speedy and inexpensive
disposition of every action and proceeding.

The granting of leave to file amended pleading is a matter particularly

addressed to the sound discretion of the trial court; and that discretion is
broad, subject only to the limitations that the amendments should not
substantially change the cause of action or alter the theory of the case, or
that it was not made to delay the action. Nevertheless, as enunciated
in Valenzuela, even if the amendment substantially alters the cause of
action or defense, such amendment could still be allowed when it is
sought to serve the higher interest of substantial justice, prevent delay,
and secure a just, speedy and inexpensive disposition of actions and
proceedings.

The courts should be liberal in allowing amendments to pleadings to

avoid a multiplicity of suits and in order that the real controversies
between the parties are presented, their rights determined, and the
case decided on the merits without unnecessary delay. This liberality
is greatest in the early stages of a lawsuit, especially in this case
where the amendment was made before the trial of the case, thereby
giving the petitioners all the time allowed by law to answer and to
prepare for trial.
 Furthermore, amendments to pleadings are generally favored and should
be liberally allowed in furtherance of justice in order that every case,
may so far as possible, be determined on its real facts and in order to
speed up the trial of the case or prevent the circuitry of action and
unnecessary expense. That is, unless there are circumstances such as
inexcusable delay or the taking of the adverse party by surprise or the
like, which might justify a refusal of permission to amend.[5]

Since, as explained above, amendments are generally favored, it would have been
more fitting for the trial court to extend such liberality towards petitioners by
admitting the amended complaint which was filed before the order dismissing the
original complaint became final and executory. It is quite apparent that since trial
proper had not yet even begun, allowing the amendment would not have caused
any delay.Moreover, doing

so would have served the higher interest of justice as this would provide the best
opportunity for the issues among all parties to be thoroughly threshed out and
the rights of all parties finally determined. Hence, the Court overrules the trial
court's denial of the motion to admit the amended complaint, and orders the
admission of the same.

With the amendment stating that plaintiff Lolita A. Soriano likewise made
demands upon the Board of Directors of Lisam Enterprises, Inc., to make legal
steps to protect the interest of the corporation from said fraudulent transaction,
but unfortunately, until now, no such legal step was ever taken by the Board,
hence, this action for the benefit and in behalf of the corporation, does the
amended complaint now sufficiently state a cause of action? In Hi-Yield Realty,
Incorporated v. Court of Appeals,[6] the Court enumerated the requisites for filing
a derivative suit, as follows:

a) the party bringing the suit should be a shareholder as of the time of

the act or transaction complained of, the number of his shares not
being material;
 b) he has tried to exhaust intra-corporate remedies, i.e., has made a
demand on the board of directors for the appropriate relief but the
latter has failed or refused to heed his plea; and

c) the cause of action actually devolves on the corporation, the

wrongdoing or harm having been, or being caused to the corporation
and not to the particular stockholder bringing the suit.[7]

A reading of the amended complaint will reveal that all the foregoing requisites
had been alleged therein. Hence, the amended complaint remedied the defect in
the original complaint and now sufficiently states a cause of action.

Respondent PCIB should not complain that admitting the amended complaint
after they pointed out a defect in the original complaint would be unfair to
them. They should have been well aware that due to the changes made by the
1997 Rules of Civil Procedure, amendments may now substantially alter the cause
of action or defense. It should not have been a surprise to them that petitioners
would redress the defect in the original complaint by substantially amending the
same, which course of action is now allowed under the new rules.

The next question then is, upon admission of the amended complaint, would it
still be proper for the trial court to dismiss the complaint? The Court answers in
the negative.

Saura v. Saura, Jr.[8] is closely analogous to the present case. In Saura,[9] the
petitioners therein, stockholders of a corporation, sold a disputed real property
owned by the corporation, despite the existence of a case in the Securities and
Exchange Commission (SEC) between stockholders for annulment of subscription,
recovery of corporate assets and funds, etc. The sale was done without the
knowledge of the other stockholders, thus, said stockholders filed a separate case
for annulment of sale, declaration of nullity of deed of exchange, recovery of
possession, etc., against the stockholders who took part in the sale, and the buyer
of the property, filing said case with the regular court (RTC). Petitioners therein
also filed a motion to dismiss the complaint for annulment of sale filed with the
RTC, on the ground of forum shopping, lack of jurisdiction, lack of cause of action,
and litis pendentia among others. The Court held that the complaint for
annulment of sale was properly filed with the regular court, because the buyer of
the property had no intra-corporate relationship with the stockholders, hence,
the buyer could not be joined as party-defendant in the SEC case. To include said
buyer as a party-defendant in the case pending with the SEC would violate the
then existing rule on jurisdiction over intra-corporate disputes. The Court also
struck down the argument that there was forum shopping, ruling that the issue of
recovery of corporate assets and funds pending with the SEC is a totally different
issue from the issue of the validity of the sale, so a decision in the SEC case would
not amount to res judicata in the case before the regular court. Thus, the Court
merely ordered the suspension of the proceedings before the RTC until the final
outcome of the SEC case.

The foregoing pronouncements of the Court are exactly in point with the issues in
the present case. Here, the complaint is for annulment of mortgage with the
mortgagee bank as one of the defendants, thus, as held in Saura,[10] jurisdiction
over said complaint is lodged with the regular courts because the mortgagee bank
has no intra-corporate relationship with the stockholders. There can also be no
forum shopping, because there is no identity of issues. The issue being threshed
out in the SEC case is the due execution, authenticity or validity of board
resolutions and other documents used to facilitate the execution of the mortgage,
while the issue in the case filed by petitioners with the RTC is the validity of the
mortgage itself executed between the bank and the corporation, purportedly
represented by the spouses Leandro and Lilian Soriano, the President and
Treasurer of petitioner LEI, respectively. Thus, there is no reason to dismiss the
complaint in this case.

IN VIEW OF THE FOREGOING, the Resolution of the Regional Trial Court of

Legaspi City, Branch 4, dated November 11, 1999, dismissing petitioners
complaint in Civil Case No. 9729, and its Order dated May 15, 2000, denying
herein petitioners Motion for Reconsideration and Motion to Admit Amended
Complaint, are hereby REVERSED and SET
ASIDE. The Regional Trial Court of LegaspiCity, Branch 4, is
hereby DIRECTED to ADMIT the Amended Complaint.

Considering further, that this case has been pending for some time and, under
R.A. No. 8799, it is now the regular courts which have jurisdiction over intra-
corporate disputes, the Regional Trial Court of Legaspi City, Branch 4 is
hereby DIRECTED to PROCEED with dispatch in trying Civil Case No. 9729.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 163286 August 22, 2012

MINDANAO TERMINAL AND BROKERAGE SERVICE, INC., Petitioner,

vs.
COURT OF APPEALS AND PHILIPPINE PORTS AUTHORITY, Respondents.

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

G.R. No. 166025

PHILIPPINE PORTS AUTHORITY, Petitioner,

vs.
HON. CESAR M. SOLIS, PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH 14, MANILA AND MINDANAO TERMINAL AND
BROKERAGE SERVICE, INC., Respondents.

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

G.R. No. 170269

PHILIPPINE PORTS AUTHORITY, Petitioner,

vs.
HON. CESAR M. SOLIS, PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH 14, MANILA AND MINDANAO TERMINAL AND
BROKERAGE SERVICE, INC., Respondents.

DE CASTRO,*

DECISION

PEREZ, J.:

Before us are the consolidated petitions which the Philippine Ports Authority (PPA), a government owned and controlled corporation, tasked with the
management and control of all government and privately-owned ports in the country 1 filed against the Mindanao Terminal and Brokerage Services, Inc.
(MINTERBRO), a private domestic corporation and grantee of a PPA-issued special permit for stevedoring services at the Davao City's government
and privately-owned wharves.2

The Facts
On 28 August 1990, the Regional Trial Court (RTC), Br. 14, Manila rendered a decision in Philippine Ports Authority v. Mindanao Terminal amd
Brokerage Service, Inc.,3 ordering MINTERBRO to pay PPA the sum of Thirty Six Million Five Hundred Eighty Five Thousand Nine Hundred One
Pesos and Eighteen Centavos (P 36,585,901.18), as governments ten percent (10%) share in MINTERBROs gross income from its port-related
services,4 viz:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff [PPA] and against the defendant [MINTERBRO], ordering the
latter to pay the former the sum of THIRTY SIX MILLION FIVE HUNDRED EIGHTY FIVE THOUSAND NINE HUNDRED ONE PESOS and EIGHTEEN
CENTAVOS (P 36,585,901.18) and the costs of suit.5

Aggrieved, MINTERBRO assailed the RTC decision before the Court of Appeals. The Court of Appeals in a Decision 6 dated 21 November 2002,
affirmed in toto the RTC decision:

WHEREFORE, premises considered and pursuant to applicable law and jurisprudence on the matter, the appealed Decision (dated August 28, 1990)
of the Regional Trial Court (Branch XIV) in Manila in Civil Case No. 87-42747, is hereby AFFIRMED in toto. Costs against the appellant.7

On even date, copies of the said Decision were sent via registered mail to the parties respective counsels along with the Notice of the Decision stating
that:

Please take notice that on November 21, 2002, a DECISION, copy hereto attached, was rendered by the TENTH DIVISION of the Court of Appeals in
the above-entitled case, the original copy of which is on file with this Office.

You are hereby required to inform this Court, within five (5) days from receipt hereof, of the date when you received this notice and a copy of the
DECISION.8

While the PPA filed "Compliance" on 17 January 2003 manifesting its receipt of the decision, MINTERBRO failed to do the same, constraining the
Court of Appeals Division Clerk of Court to send a letter-tracer to the Postmaster of Pasig City with the following directive:

Upon instruction of the Court, you are HEREBY REQUIRED to INFORM this Office within ten (10) days from receipt hereof, of the exact date when
Registered Letter No. 6270-B mailed at Manila on November 27, 2002 and addressed to Atty. Rafael S. Dizon of 6/F, Padilla Bldg., Emerald Ave.,
Ortigas Commercial Center, Pasig City, was delivered to and received by the addressee.

If the said registered letter, however, is still in your possession, unclaimed by the addressee notwithstanding the required notices, sent to and received
by him/her, you are directed to return and mail to this Court within the same period indicated above together with your certification of the date the first
notice was sent to and received by the said addressee, the person receiving the same and how delivery thereof was made. 9 (Underscoring and
emphasis supplied)

In reply, the Postmaster of Pasig City - Central Post Office advised the Court of Appeals that registered letter No. 6270-B was received by Virgie
Cabrera (Cabrera) at the stated address on 4 December 2002. 10

Counted from that date, 4 December 2002, the Court of Appeals Decision became final and executory on 20 December 2002 or 15 days after
Cabreras receipt of the decision. The decision was, thus, recorded in the Book of Entries of Judgments. 11 Copies of the Entry of Judgment were sent
on 1 August 2003 to the parties counsels, with MINTERBROs copy having been addressed to Atty. Rafael Dizon (Atty. Dizon), 6/F Padilla
Building, Emerald Avenue, Ortigas Commercial Center, Pasig City. 12

On 29 August 2003, Atty. Dizon, filed a Motion for Reconsideration of the Declaration of Finality and to Set Aside Entry of Judgment. Atty. Dizon
argued that he did not receive the 21 November 2002 Court of Appeals Decision, and, hence, "considering the fact that the Decision rendered by this
Honorable Court Court of Appeals has not been served on the defendant-appellant, it is without doubt that the reglementary period to appeal has not
commenced and therefore, the aforesaid decision has not become final." 13 Atty. Dizon added that since the Court of Appeals decision has not yet
become final, the issuance by the Division Clerk of Court of the Entry of Judgment was premature. 14

The Court of Appeals, however, in a Resolution dated 21 April 2004, denied Atty. Dizons motion and re-affirmed the finality of the questioned
decision.15

MINTERBRO assailed the 21 April 2004 Resolution via petition for review on certiorari16 before this Court which was docketed as G.R. No. 163286.

Meanwhile, the PPA, by virtue of the Entry of Judgment, filed a Motion for the Issuance of a Writ of Execution 17which was granted by the RTC of
Manila, Br. 14. This not withstanding, the RTC later held in abeyance the execution of judgment, per motion of MINTERBRO. 18 The RTC Order, penned
by Judge Cesar M. Solis, dated 26 February 2004, ratiocinated that:

Admittedly, the case now pending before the Court of Appeals questioning the finality of judgment before the Court of Appeals (sic) in this case
warrants the stay of the execution. Indeed, to execute the judgment at this stage would certainly result in grave injustice if and when the Court of
Appeals would grant the defendants Motion for Reconsideration of the Declaration of Finality and to Set Aside Entry of Judgment.

Besides, to implement the Decision at this juncture, pending the resolution of the incident before the appellate court would render the adjudication of
issue therein, moot and academic. While the Court of Appeals did not issue any restraining order to prevent this Court from taking any action
with regard to its Order granting plaintiffs Motion for Execution, it is deemed proper upon this Court to refrain from enforcing the
Decision. Due respect to the latter court and practical and ethical considerations should prompt this court to wait for the final determination of the
Motion now pending with the Court of Appeals.19 (Underscoring and emphasis supplied)

The PPAs Motion for Reconsideration of the above Order was denied,20 constraining PPA to file a second motion for reconsideration, which the RTC
again denied in an Order dated 17 September 2004.21 Noticeably, though, this order purportedly reiterating its earlier resolution, held the execution in
abeyance "until after the Petition for Review of the defendant shall have been resolved by the Supreme Court," in stark contrast with the tone of the
Order dated 26 February 2004 holding in abeyance only "until after the Petition for Review of the defendant shall have been resolved by the Court of
Appeals."

The original Resolution dated 26 February 2004 stated: WHEREFORE, and in view of the foregoing considerations, the Motion for Reconsideration of
the defendant is hereby GRANTED. The execution of the Decision rendered in this case is hereby held in abeyance until the Motion for
Reconsideration of the Declaration of Finality and to Set Aside Entry of Judgment shall have been resolved by the Court of Appeals.22 (Underscoring
and emphasis supplied)

While the Order dated 17 September 2004 said:

WHEREFORE, and in view of the foregoing considerations, the instant Motion for Reconsideration of the plaintiff is DENIED. Accordingly, this Court
hereby REITERATES its February 26, 2004 and May 28, 200423 Orders holding in abeyance the execution of the Decision in this Case until after the
Petition for Review of the defendant shall have been resolved by the Supreme Court with Finality.24(Underscoring and emphasis supplied)

Hence, PPA filed a petition for certiorari, via Rule 65, assailing the RTC Orders, holding in abeyance the execution of judgment, which was docketed
as G.R. No. 166025.

While G.R. Nos. 163286 and 166025 were pending before this Court, MINTERBRO filed with the RTC, again, with the sala of Judge Cesar M. Solis,
a Motion for Issuance of Status Quo Ante Order to compel the PPA to renew its port operators permit, 25 which Judge Cesar M. Solis granted in an
Order dated 20 June 2005 despite PPAs opposition:

WHEREFORE, let a Status Quo Ante Order be issued against plaintiff Philippine Ports Authority (PPA) to (1) CEASE and DESIST from imposing
certain requirements in consideration of defendant Mindanao Terminal and Brokerage Service, Inc.s application for renewal/issuance of its COR/PTO
permits, and to (2) Act Immediately upon the said defendants pending application without necessarily considering the existence of such disputed
account, should it be warranted by the other circumstances, subject to the satisfaction of the monetary requirement as determined finally by the
competent authority.26

This prompted the PPA to seek this Courts direct intervention through a petition for certiorari under Rule 65, now docketed as G.R. No. 170269.

ISSUES:

G.R. No. 163286

a. Whether the Court of Appeals Decision dated 21 November 2002 had become final and executory; and

b. Whether the decision was properly served on MINTERBROs counsel.27

G.R. No. 166025

Whether or not the RTC committed grave abuse of discretion amounting to lack or in excess of jurisdiction when it refused to
implement/execute its 28 August 1990 Decision which had already become final and executory, in the absence of an injunction or
temporary restraining order from higher courts?28

G.R. No. 170269

Whether the RTC committed grave abuse of discretion when:

a. it resolved issues alien to the main case; and

b. it supplanted PPAs constitutionally protected right to contract. 29

Our Ruling

The service of judgment serves

as the reckoning point to
determine whether a decision
had been appealed within the
reglementary period or has
already become final.
The threshold issue that must be resolved first is whether the Court of Appeals Decision dated 21 November 2002 was properly served on
MINTERBROs counsel in accordance with service of judgment under Sections 9 and 10, Rule 13 of the Rules of Court, which require that:

Section 9. Service of judgments, final orders, or resolutions. Judgments, final orders or resolutions shall be served either personally or by registered
mail. When a party summoned by publication has failed to appear in the action, judgments, final orders or resolutions against him shall be served upon
him also by publication at the expense of the prevailing party.

Section 10. Completeness of service. Personal service is complete upon actual delivery. Service by ordinary mail is complete upon the expiration of
ten (10) days after mailing, unless the court otherwise provides. Service by registered mail is complete upon actual receipt by the addressee, or after
five (5) days from the date he received the first notice of the postmaster, whichever date is earlier.

The first point is crucial for the service of judgment serves as the reckoning point to determine whether a decision was appealed within the
reglementary period, because otherwise, i.e., in the absence of an appeal or if the appeal was made beyond the reglementary period, the decision
would, as a consequence, become final.

Atty. Dizon contends that he was not properly served with the Court of Appeals decision since Cabrera who received the decision was not connected
with his office. She was a front desk receptionist at the Prestige Tower Condominium, where Atty. Dizon was holding his office,30 as shown by the
affidavits executed by Cabrera and the Prestige Towers management. Atty. Dizon rhetorically argued: "Who is this Virgie Cabrera? Is she an
employee of the counsel of record of the petitioner? Is she authorized to receive a copy of a judgment ordering the petitioner to pay PPA the amount
of P 36,585,901.18?"

To him, the decision, as the rules dictate, if served by way of registered mail, must be actually received by the addressee or any person in his office,
otherwise, service cannot be considered complete.31 Because no valid service was made, the period to appeal did not prescribe and the decision has
not yet attained finality.32

There is no dispute that as dictated by the Rules on Civil Procedure, Rule 13, Section 10 thereof, service by registered mail is complete upon actual
receipt by the addressee, or five (5) days from the date he received the first notice of the postmaster, whichever date is earlier.

The purpose of the afore-quoted rule on service is to make sure that the party being served with the pleading, order or judgment is duly informed of the
same so that such party can take steps to protect the interests, i.e., enable to file an appeal or apply for other appropriate reliefs before the decision
becomes final.33

Atty. Dizon, however, has forgotten that it was his elementary responsibility to have informed the Court of Appeals of his change of address from 6/F
Padilla Building, Emerald Avenue, Ortigas Commercial Center, Pasig City, to Suite 402, Prestige Tower, Emerald Avenue, Ortigas Center, Pasig City.
The records show that Atty. Dizon only informed the Court of Appeals of his change of address on 12 November 2003.34 This was almost one year after
the entry of judgment was made on 20 December 2002.

It did not escape us that Atty. Dizon filed on 29 August 2003 a Motion for Reconsideration of the Declaration of Finality and to Set Aside Entry of
Judgment, months prior to his filing of change of address. The said motion conspicuously bore his old address at Padilla Building, the same address
where the postmaster delivered the Court of Appeals decision where it was received by Cabrera. Atty. Dizons reason therefore, that Cabrera is not his
employee but that of Prestige Tower Condominium does not persuade us, because, as certified by the postmaster, Cabrera received the letter on 4
December 2002 or a year before Atty. Dizons change of address, and while his office address was at the Padilla Building. On that particular date,
therefore, his office at the Prestige Tower Condominium was yet nonexistent. At the very least, if it were true that he already moved to his new
address, he should have indicated his new address in his motion for reconsideration. But even then, still, the responsibility was with Atty. Dizon to
inform the Court of Appeals of such change.

As between the claim of non-receipt of notices of registered mail by a party and the assertion of an official whose duty is to send notices, which
assertion is fortified by the presumption that the official duty has been regularly performed, the choice is not difficult to make. 35 As shown in the records,
the postmaster included in his certification the manner, date and the recipient of the delivery, a criterion for the proper service of judgment which this
Court enunciated in Santos v. Court of Appeals, viz:

Clearly then, proof should always be available to the post office not only of whether or not the notices of registered mail have been reported delivered
by the letter carrier but also of how or to whom and when such delivery has been made. Consequently, it cannot be too much to expect that when the
post office makes a certification regarding delivery of registered mail, such certification should include the data not only as to whether or not the
corresponding notices were issued or sent but also as to how, when and to whom the delivery thereof was made.36

An examination of the postmasters certification shows that:

x x x registered letter No. 6270-B was received by Virgie Cabrera on 4 December 2002.37(Emphasis supplied)

This certification, the form of which came from the Supreme Court, and which only needs to be filled-up by the postmaster, to the mind of this Court,
satisfies the requirement stated in Santos.

Atty. Dizon has no one to blame but himself for allowing his client to lose the multi-million case because of his negligence to appeal the same within the
reglementary period. Losing a case on account of a counsels negligence is a bitter pill to swallow for the litigant.38 But then, the Court is duty-bound to
observe its rules and procedures. And, in the observance thereof, for the orderly administration of justice, it cannot countenance the negligence and
ineptitude of lawyers who wantonly jeopardize the interests of their clients. On his part, a lawyer shall observe the rules of procedure and shall not
misuse them to defeat the ends of justice.39
Once a judgment becomes
final, the prevailing party is
entitled as a matter of right to
a writ of execution.

As a matter of law, once a judgment becomes final, the prevailing party is entitled as a matter of right to a Writ of Execution40 as mandated by Section
1, Rule 39 of the 1997 Rules of Civil Procedure, which states that:

Section 1. Execution upon judgments or final orders. Execution shall issue as a matter of right, on motion, upon a judgment or order that
disposes of the action or proceeding upon the expiration of the period to appeal therefrom if no appeal has been duly perfected. (Emphasis
supplied)

The rule is clear that it becomes mandatory or ministerial duty of the court to issue a writ of execution to enforce the judgment which has become
executory.

Hence, this Court holds that the RTC abused its discretion when it held in abeyance the issuance of the writ of execution of the judgment in Civil Case
No. 87-42747 entitled Philippine Ports Authority v. Mindanao Terminal and Brokerage Services, Inc., notwithstanding the fact that the same had
already become final and executory this notwithstanding that MINTERBRO filed before this Court a petition for certiorari under Rule 65 of the Rules
of Court. It did not escape this Court that the RTC Order dated 26 February 2004, holding in abeyance the writ of execution was only "until after the
Petition for Review of the defendant shall have been resolved by the Court of Appeals."41After the Court of Appeals, however, decided and held that
its decision was already final and executory, the RTC issued another Order dated 17 September 2004, which in the guise of reiterating the 24 February
2004 order, changed its tone to the effect of holding in abeyance "until after the Petition for Review of the defendants hall have been resolved by the
Supreme Court with Finality."42 It is a basic rule that a petition for certiorari under Rule 65 does not by itself interrupt the course of the proceedings. It is
necessary to avail of either a temporary restraining order or a writ of preliminary injunction to be issued by a higher court against a public respondent
so that it may, during the pendency of the petition, refrain from further proceedings.43

This was the Courts ruling in Peza v. Hon. Alikpala,44 where this Court ruled that:

It is elementary that the mere pendency of a special civil action for certiorari, commenced in relation to a case pending before a lower Court, does not
interrupt the course of the latter when there is no writ of injunction restraining it.45

In Balintawak Construction Supply Corp. v. Valenzuela,46 this Court held that:

It is basic that once a judgment becomes final, the prevailing party is entitled as a matter of right to a Writ of Execution, and the issuance thereof is the
Court's ministerial duty, compellable by Mandamus. In fact, it has been fittingly said that "an execution is the fruit and end of the suit, and is very aptly
called the life of the law." Petitioner, therefore, as the prevailing party was entitled as a matter of right to the execution of the judgment x x x in its favor
that had become final and executory.47

To this day, these rules remain the same.

This Court, likewise, rules that Judge Cesar M. Solis, the presiding judge of the cases in controversy, gravely abused his discretion when he ordered
the PPA to act immediately on MINTERBROs application for renewal of the latters Certificate of Registration/Permit to Operate (COR/PTO) when its
prior registration expired, and for PPA to cease and desist from imposing certain requirements in consideration of MINTERBROs application for
renewal of said COR/PTO.48

It is noteworthy that Civil Case No. 87-42747, the principal case in controversy was already appealed to and decided by the Court of Appeals, which
decision, in fact, had, by the records, already become final and executory, and has been consequently entered in the book of judgments. The only
issue that remained in litigation was whether or not the decision of the Court of Appeals affirming the trial courts decision in favor of PPA is no longer
appealable. On that issue, we did not grant any temporary restraining order.

Notably, the trial court lost its jurisdiction over the case from the time MINTERBRO perfected its appeal of the RTC decision to the Court of
Appeals.49 From that time on, the RTC was divested of any authority over the substantive issues of the case. This is clear from the reading of Section
8, Rule 42 of the Rules of Court, thus:

Sec. 8. Perfection of appeal: effect thereof.

(a) Upon the timely filing of a petition for review and the payment of the corresponding docket and other lawful fees, the appeal is deemed perfected as
to the petitioner.

The Regional Trial Court loses jurisdiction over the case upon the perfection of the appeals filed in due time and the expiration of the time to
appeal of the other parties.

However, before the Court of Appeals gives due course to the petition, the Regional Trial Court may issue orders for the protection and preservation of
the rights of the parties which do not involve any matter litigated by the appeal, approve compromises, permit appeals of indigent litigants, order
execution pending appeal in accordance with Section 2 of Rule 39, and allow withdrawal of the appeal. (Emphasis supplied)
While Judge Cesar M. Solis anchors his action in citing the same afore-quoted provision "that the RTC may issue orders for the protection and
preservation of the rights of the parties which do not involve any matter litigated by the appeal,"50 the same is applicable only "before the Court of
Appeals gives due course to the petition," as mandated by the very same provision cited by Judge Cesar M. Solis. This was the Courts
pronouncement in Atty. Fernandez v. Court of Appeals,51 where this Court held that "this residual jurisdiction of the trial court (referring to Section 8[a]
par. 3, Rule 42, 1997 Rules on Civil Procedure) is available at a stage in which the court is normally deemed to have lost jurisdiction over the case or
the subject matter involved in the appeal. This stage is reached upon the perfection of the appeals by the parties or upon the approval of the records
on appeal, but prior to the transmittal of the original records or the records on appeal."52 At the time that Judge Cesar M. Solis issued his Status Quo
Ante Order of 20 June 2005, even the Court of Appeals has lost jurisdiction over the issue of finality of decision. This Court has by then taken over.

WHEREFORE, premises considered, this Court HOLDS that:

(A) There was proper service of judgment on MINTERBROs counsel; and

(B) The Court of Appeals Decision dated 2 I November 2002 in CA G.R. CV No. 35884 had become final and executory.

This Court further RESOLVES TO:

(A) DIRECT the Regional Trial Court, Manila, Br. 14, to ISSUE THE WRIT OF EXECUTION in Civil Case No. 87-42747, and to implement
and execute the same without delay; and

(B) NULLIFY the Orders of the RTC dated 10 June 2005,20 June 2005, and 6 September 2005, granting MINTERBRO's Motion for
Issuance of Status Quo Ante Order, issuing the Status Quo Ante Order, and, denying PPA's Motion to lift the Status Quo Ante Order,
respectively.

SO ORDERED.

FIRST DIVISION

G.R. No. 197380, October 08, 2014

ELIZA ZUIGA-SANTOS,* REPRESENTED BY HER ATTORNEY-IN FACT, NYMPHA Z. SALES, Petitioners, v. MARIA DIVINA GRACIA SANTOS-GRAN** AND
REGISTER OF DEEDS OF MARIKINA CITY, Respondents.

DECISION

PERLAS-BERNABE, J.:

Before the Court is a petition for review on certiorari1 assailing the Decision2 dated January 10, 2011 and the Resolution3 dated June 22, 2011 of the Court of Appeals
(CA) in CA-G.R. CV No. 87849 which affirmed the Order4 dated July 6, 2006 of the Regional Trial Court of San Mateo, Rizal, Branch 76 (RTC) in Civil Case No. 2018-06,
dismissing the Amended Complaint for annulment of sale and revocation of title on the ground of insufficiency of factual basis.

The Facts

On January 9, 2006, petitioner Eliza Zuiga-Santos (petitioner), through her authorized representative, Nympha Z. Sales,5 filed a Complaint6 for annulment of sale and
revocation of title against respondents Maria Divina Gracia Santos-Gran (Gran) and the Register of Deeds of Marikina City before the RTC, docketed as Civil Case No.
2018-06. The said complaint was later amended7 on March 10, 2006 (Amended Complaint).

In her Amended Complaint,8 petitioner alleged, among others, that: (a) she was the registered owner of three (3) parcels of land located in the Municipality of
Montalban, Province of Rizal, covered by Transfer Certificate of Title (TCT) Nos. N-5500,9 224174,10 and N-423411 (subject properties) prior to their transfer in the
name of private respondent Gran; (b) she has a second husband by the name of Lamberto C. Santos (Lamberto), with whom she did not have any children; (c) she
was forced to take care of Lambertos alleged daughter, Gran, whose birth certificate was forged to make it appear that the latter was petitioners daughter; (d)
pursuant to void and voidable documents, i.e., a Deed of Sale, Lamberto succeeded in transferring the subject properties in favor of and in the name of Gran; (e)
despite diligent efforts, said Deed of Sale could not be located; and (f) she discovered that the subject properties were transferred to Gran sometime in November
2005. Accordingly, petitioner prayed, inter alia, that Gran surrender to her the subject properties and pay damages, including costs of suit. 12 cra lawlawlib rary

For her part, Gran filed a Motion to Dismiss,13 contending, inter alia, that (a) the action filed by petitioner had prescribed since an action upon a written contract must
be brought within ten (10) years from the time the cause of action accrues, or in this case, from the time of registration of the questioned documents before the
Registry of Deeds;14 and (b) the Amended Complaint failed to state a cause of action as the void and voidable documents sought to be nullified were not properly
identified nor the substance thereof set forth, thus, precluding the RTC from rendering a valid judgment in accordance with the prayer to surrender the subject
properties.15
c ralawlawl ibra ry

The RTC Ruling

In an Order dated July 6, 2006, the RTC granted Grans motion and dismissed the Amended Complaint for its failure to state a cause of action, considering that the
16

deed of sale sought to be nullified an essential and indispensable part of [petitioners] cause of action17 was not attached. It likewise held that the certificates of
title covering the subject properties cannot be collaterally attacked and that since the action was based on a written contract, the same had already prescribed under
Article 1144 of the Civil Code.18 c ralawlawl ib rary

Dissatisfied, petitioner elevated the matter to the CA.

The CA Ruling

In a Decision19 dated January 10, 2011, the CA sustained the dismissal of petitioners Amended Complaint but on the ground of insufficiency of factual basis.

It disagreed with the RTCs finding that the said pleading failed to state a cause of action since it had averred that: (a) petitioner has a right over the subject properties
being the registered owner thereof prior to their transfer in the name of Gran; (b) Lamberto succeeded in transferring the subject properties to his daughter, Gran,
through void and voidable documents; and (c) the latters refusal and failure to surrender to her the subject properties despite demands violated petitioners rights over
them.20 The CA likewise ruled that the action has not yet prescribed since an action for nullity of void deeds of conveyance is imprescriptible.21 Nonetheless, it held that
since the Deed of Sale sought to be annulled was not attached to the Amended Complaint, it was impossible for the court to determine whether petitioners signature
therein was a forgery and thus, would have no basis to order the surrender or reconveyance of the subject properties. 22 c ralawlawl ibra ry

Aggrieved, petitioner moved for reconsideration23 and attached, for the first time, a copy of the questioned Deed of Sale24 which she claimed to have recently
recovered, praying that the order of dismissal be set aside and the case be remanded to the RTC for further proceedings.

In a Resolution25 dated June 22, 2011, the CA denied petitioners motion and held that the admission of the contested Deed of Sale at this late stage would be contrary
to Grans right to due process.

Hence, the instant petition.

The Issue Before the Court

The primordial issue for the Courts resolution is whether or not the dismissal of petitioners Amended Complaint should be sustained.

The Courts Ruling

Failure to state a cause of action and lack of cause of action are distinct grounds to dismiss a particular action. The former refers to the insufficiency of the allegations
in the pleading, while the latter to the insufficiency of the factual basis for the action. Dismissal for failure to state a cause of action may be raised at the earliest stages
of the proceedings through a motion to dismiss under Rule 16 of the Rules of Court, while dismissal for lack of cause of action may be raised any time after the
questions of fact have been resolved on the basis of stipulations, admissions or evidence presented by the plaintiff. 26 In Macaslang v. Zamora,27 the Court, citing the
commentary of Justice Florenz D. Regalado, explained: chanRob lesvi rtua lLawl ibra ry

Justice Regalado, a recognized commentator on remedial law, has explained the distinction: chan roble svirtuallaw lib rary

x x x What is contemplated, therefore, is a failure to state a cause of action which is provided in Sec. 1(g) of Rule 16. This is a matter of insufficiency of the pleading.
Sec. 5 of Rule 10, which was also included as the last mode for raising the issue to the court, refers to the situation where the evidence does not prove a cause of
action. This is, therefore, a matter of insufficiency of evidence. Failure to state a cause of action is different from failure to prove a cause of action. The remedy in the
first is to move for dismissal of the pleading, while the remedy in the second is to demur to the evidence, hence reference to Sec. 5 of Rule 10 has been eliminated in
this section. The procedure would consequently be to require the pleading to state a cause of action, by timely objection to its deficiency; or, at the trial, to file a
demurrer to evidence, if such motion is warranted.28

In the case at bar, both the RTC and the CA were one in dismissing petitioners Amended Complaint, but varied on the grounds thereof that is, the RTC held that
there was failure to state a cause of action while the CA ruled that there was insufficiency of factual basis.

At once, it is apparent that the CA based its dismissal on an incorrect ground. From the preceding discussion, it is clear that insufficiency of factual basis is not a
ground for a motion to dismiss. Rather, it is a ground which becomes available only after the questions of fact have been resolved on the basis of stipulations,
admissions or evidence presented by the plaintiff. The procedural recourse to raise such ground is a demurrer to evidence taken only after the plaintiffs presentation of
evidence. This parameter is clear under Rule 33 of the Rules of Court: chanRob lesvi rtua lLawl ibra ry

RULE 33
Demurrer to Evidence

Section 1. Demurrer to evidence. After the plaintiff has completed the presentation of his evidence, the defendant may move for dismissal on the ground that upon
the facts and the law the plaintiff has shown no right to relief. If his motion is denied he shall have the right to present evidence. If the motion is granted but on appeal
the order of dismissal is reversed he shall be deemed to have waived the right to present evidence.

At the preliminary stages of the proceedings, without any presentation of evidence even conducted, it is perceptibly impossible to assess the insufficiency of the factual
basis on which the plaintiff asserts his cause of action, as in this case. Therefore, that ground could not be the basis for the dismissal of the action.

However, the Amended Complaint is still dismissible but on the ground of failure to state a cause of action, as correctly held by the RTC. Said ground was properly
raised by Gran in a motion to dismiss pursuant to Section 1, Rule 16 of the Rules of Court: chanRoblesvi rtua lLawl ibra ry

RULE 16
Motion to Dismiss

Section 1. Grounds. Within the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made on any of the
following grounds: chanRoblesvirt ual Lawlib rary

xxxx

(g) That the pleading asserting the claim states no cause of action;

xxxx

A complaint states a cause of action if it sufficiently avers the existence of the three (3) essential elements of a cause of action, namely: (a) a right in favor of the
plaintiff by whatever means and under whatever law it arises or is created; (b) an obligation on the part of the named defendant to respect or not to violate such right;
and (c) an act or omission on the part of the named defendant violative of the right of the plaintiff or constituting a breach of the obligation of defendant to the plaintiff
for which the latter may maintain an action for recovery of damages.29 If the allegations of the complaint do not state the concurrence of these elements, the complaint
becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of action.30 c ralawlawli bra ry

It is well to point out that the plaintiffs cause of action should not merely be stated but, importantly, the statement thereof should be sufficient. This is why the
elementary test in a motion to dismiss on such ground is whether or not the complaint alleges facts which if true would justify the relief demanded. 31 As a corollary, it
has been held that only ultimate facts and not legal conclusions or evidentiary facts are considered for purposes of applying the test. 32 This is consistent with Section
1, Rule 8 of the Rules of Court which states that the complaint need only allege the ultimate facts or the essential facts constituting the plaintiffs cause of action. A fact
is essential if they cannot be stricken out without leaving the statement of the cause of action inadequate.33 Since the inquiry is into the sufficiency, not the veracity, of
the material allegations, it follows that the analysis should be confined to the four corners of the complaint, and no other.34 cra lawlawlib rary

A judicious examination of petitioners Amended Complaint readily shows its failure to sufficiently state a cause of action. Contrary to the findings of the CA, the
allegations therein do not proffer ultimate facts which would warrant an action for nullification of the sale and recovery of the properties in controversy, hence,
rendering the same dismissible.

While the Amended Complaint does allege that petitioner was the registered owner of the subject properties in dispute, nothing in the said pleading or its annexes
would show the basis of that assertion, either through statements/documents tracing the root of petitioners title or copies of previous certificates of title registered in
her name. Instead, the certificates of title covering the said properties that were attached to the Amended Complaint are in the name of Gran. At best, the attached
copies of TCT Nos. N-5500 and N-4234 only mention petitioner as the representative of Gran at the time of the covered propertys registration when she was a minor.
Nothing in the pleading, however, indicates that the former had become any of the properties owner. This leads to the logical conclusion that her right to the properties
in question at least through the manner in which it was alleged in the Amended Complaint remains ostensibly unfounded. Indeed, while the facts alleged in the
complaint are hypothetically admitted for purposes of the motion, it must, nevertheless, be remembered that the hypothetical admission extends only to the relevant
and material facts well pleaded in the complaint as well as to inferences fairly deductible therefrom.35 Verily, the filing of the motion to dismiss assailing the
sufficiency of the complaint does not hypothetically admit allegations of which the court will take judicial notice of to be not true, nor does the rule of hypothetical
admission apply to legally impossible facts, or to facts inadmissible in evidence, or to facts that appear to be unfounded by record or document included in the
pleadings.36 cralawlawl ibra ry

Aside from the insufficiency of petitioners allegations with respect to her right to the subject properties sought to be recovered, the ultimate facts supposedly justifying
the annulment of sale, by which the reconveyance of the subject properties is sought, were also insufficiently pleaded. The following averments in the Amended
Complaint betray no more than an insufficient narration of facts: chanRoblesvi rtual Lawli bra ry

6. That pursuant to a voidable [sic] and void documents, the second husband of the plaintiff succeed [sic] in transferring the above TITLES in the name of
MARIA DIVINAGRACIA SANTOS, who is (sic) alleged daughter of LAMBERTO C. SANTOS in violation of Article 1409, Par. 2 of the Civil Code;

7. That the said properties [were] transferred to the said defendant by a Deed of Sale (DOS) to the said MARIA DIVINAGRACIA SANTOS through a void
documents [sic] considering that the seller is the alleged mother of defendant is also the buyer of the said properties in favor of defendant;

8. x x x.

9. That the alleged sale and transfer of the said properties in favor of defendant was only discovered by [plaintiffs] daughter CYNTHIA BELTRAN-LASMARIAS
when [plaintiff] has been requesting for financial assistance, considering that the said mother of plaintiff [sic] has so many properties which is now the
subject of this complaint;

10. That plaintiff then return on [to] the Philippines sometime [in] November, 2005 and discovered that all [plaintiffs] properties [had] been transferred to
defendant MARIA DIVINAGRACIA SANTOS who is not a daughter either by consanguinity or affinity to the plaintiff mother [sic];

11. That the titles that [were] issued in the name of MARIA DIVINAGRACIA SANTOS by virtue of the said alleged voidable and void documents, should be
annulled and cancelled as the basis of the transfer is through void and voidable documents;

x x x x37

Clearly, the claim that the sale was effected through voidable and void documents partakes merely of a conclusion of law that is not supported by any averment of
circumstances that will show why or how such conclusion was arrived at. In fact, what these voidable and void documents are were not properly stated and/or
identified. In Abad v. Court of First Instance of Pangasinan,38 the Court pronounced that: chanRoblesv irt ual Lawlib rary

A pleading should state the ultimate facts essential to the rights of action or defense asserted, as distinguished from mere conclusions of fact, or
conclusions of law. General allegations that a contract is valid or legal, or is just, fair, and reasonable, are mere conclusions of law. Likewise, allegations that a
contract is void, voidable, invalid, illegal, ultra vires, or against public policy, without stating facts showing its invalidity, are mere conclusions of
law.39 (Emphases supplied)

Hence, by merely stating a legal conclusion, the Amended Complaint presented no sufficient allegation upon which the Court could grant the relief petitioner prayed for.
Thus, said pleading should be dismissed on the ground of failure to state cause of action, as correctly held by the RTC.

That a copy of the Deed of Sale adverted to in the Amended Complaint was subsequently submitted by petitioner does not warrant a different course of action. The
submission of that document was made, as it was purportedly recently recovered, only on reconsideration before the CA which, nonetheless, ruled against the
remand of the case. An examination of the present petition, however, reveals no counter-argument against the foregoing actions; hence, the Court considers any
objection thereto as waived.

In any event, the Court finds the Amended Complaints dismissal to be in order considering that petitioners cause of action had already prescribed.

It is evident that petitioner ultimately seeks for the reconveyance to her of the subject properties through the nullification of their supposed sale to Gran. An action for
reconveyance is one that seeks to transfer property, wrongfully registered by another, to its rightful and legal owner. 40 Having alleged the commission of fraud by Gran
in the transfer and registration of the subject properties in her name, there was, in effect, an implied trust created by operation of law pursuant to Article 1456 of the
Civil Code which provides: chanRoble svirtual Lawlib ra ry

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

To determine when the prescriptive period commenced in an action for reconveyance, the plaintiffs possession of the disputed property is material. If there is an
actual need to reconvey the property as when the plaintiff is not in possession, the action for reconveyance based on implied trust prescribes in ten
(10) years, the reference point being the date of registration of the deed or the issuance of the title. On the other hand, if the real owner of the property
remains in possession of the property, the prescriptive period to recover title and possession of the property does not run against him and in such case, the action for
reconveyance would be in the nature of a suit for quieting of title which is imprescriptible. 41 c ralawlawli bra ry

In the case at bar, a reading of the allegations of the Amended Complaint failed to show that petitioner remained in possession of the subject properties in dispute. On
the contrary, it can be reasonably deduced that it was Gran who was in possession of the subject properties, there being an admission by the petitioner that the
property covered by TCT No. 224174 was being used by Grans mother-in-law.42 In fact, petitioners relief in the Amended Complaint for the surrender of three (3)
properties to her bolsters such stance.43 And since the new titles to the subject properties in the name of Gran were issued by the Registry of Deeds of Marikina on the
following dates: TCT No. 224174 on July 27, 1992,44TCT No. N-5500 on January 29, 1976,45 and TCT No. N-4234 on November 26, 1975,46 the filing of the petitioners
complaint before the RTC on January 9, 2006 was obviously beyond the ten-year prescriptive period, warranting the Amended Complaints dismissal all the same.

WHEREFORE, the petition is DENIED. The Decision dated January 10, 2011 and the Resolution dated June 22, 2011 of the Court of Appeals in CA-G.R. CV No. 87849
are hereby AFFIRMED with MODIFICATION in that the Amended Complaint be dismissed on the grounds of (a) failure to state a cause of action, and (b) prescription
as herein discussed.

SO ORDERED. cralawred

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION
G.R. No. 130314 September 22, 1998

ANNIE TAN, petitioner,

vs.
COURT OF APPEALS and BLOOMBERRY EXPORT MANUFACTURING, INC., respondents.

PANGANIBAN, J.:

Before a trial court, a motion for reconsideration that does not contain the requisite notice of hearing does not toll the running of the period of
appeals. It is a mere scrap of paper which the trial court and the opposite party may ignore.

The Case

Petitioner seeks to set aside the August 22, 1997 Decision of the Court of Appeals 1 in CA-GR SP No. 43293, the dispositive
portion of which reads: 2

WHEREFORE, [i]n view of all the foregoing considerations, the petition for certiorari and prohibition is granted. The Order dated
October 4, 1996, of public respondent is hereby SET ASIDE and public respondent is ordered to desist from further proceeding
with the hearing of the Motion for Reconsideration. The Decision dated July 18, 1996, of public respondent is declared final and
executory.

The Facts

Petitioner Annie Tan, doing business under the name and style "AJ & T Trading," leased a portion of the ground floor of her building, more specifically
described as Stall No. 623, Carvajal Street, Binondo, Manila, in favor of Bloomberry Export Manufacturing, Inc. The lease was for a period of five years
For several alleged
starting on February 17, 1995 and ending on February 17, 2000, at a monthly rental of P20,000 for the first three years. 3
violations of the lease contract, petitioner filed against private respondent a complaint for ejectment,
docketed as Civil Case No. 148798-CV. As its rental payment was refused by petitioner, private
4

respondent instituted on July 13, 1995 a case for consignation, docketed as Civil Case No. 148814-CV. 5

The two cases were consolidated. In due course, the Metropolitan Trial Court (MTC) of Manila, Branch I,
rendered on February 1, 1996 a Decision which disposed as follows:
6 7

WHEREFORE, in Civil Case No. 148798-CV for [b]reach of [c]ontract, failure to pay rentals on time, encroachment on the
adjacent premises without the consent of [petitioner], [she] failed to substantiate her case with that degree of proof required by
law. For this reason, except for the costs of suit, this Court hereby orders the dismissal of the complaint of [petitioner]. The
counterclaim and damages sought by [private respondent are] likewise ordered dismissed. The case for consignation in Civil
Case No. 148814-CV has become moot and academic for failure of [petitioner] to appeal the decision of the Metropolitan [Trial]
court, Branch 15, Manila, allowing the [private respondent] to consign rental payments to the Court of Manila. Besides, the
[c]omplaint for consignation being in conformity with law, [private respondent] is allowed to continue consigning with this Court
all rentals that [may be] due.

On appeal, the Regional Trial Court (RTC) of Manila, Branch 2, in its Decision dated July 18, 1996, affirmed the aforementioned MTC Decision thus:

WHEREFORE, finding no cogent reasons to disturb the joint decision dated February 1, 1996 of the Metropolitan Trial Court of
Manila, Branch 1, the Court sustains and affirms in toto the said decision.

Respondent Court related the incidents that ensued, as follows: 8

. . . [F]rom the Decision of the [RTC] dated July 18, 1996, [petitioner] filed a Motion for Reconsideration of the aforesaid
decision. The Motion for Reconsideration did not contain any notice of hearing as required under Section 5, Rule 15 of the
Revised Rule of Court.

On August 23, 1996, [private respondent] filed an ex-parte Motion for Entry of Judgment upon the ground that said motion for
reconsideration is a mere scrap of paper which should not merit the attention of the [RTC] and in support thereof, cited the case
of Traders Royal Bank vs. Court of Appeals, 208 SCRA 199. [Private respondent] contends that since the Motion for
Reconsideration is a mere scrap of paper aside from being pro forma, said Motion for Reconsideration did not toll the period of
appeal[;] hence, the Decision dated July 18, 1996, had become final and executory.

On September 3, 1996, [petitioner] filed a Motion to Set for Hearing the Motion for Reconsideration which was vehemently
opposed by [private respondent] on September 23, 1996.
 On October 4, 1996, [the RTC] issued an Order granting the motion to set for hearing [petitioner's] Motion for Reconsideration
and set[ting] the hearing [for] October 21, 1996, at 8:30 o'clock in the morning. On October 20, 1996, [private respondent] filed a
Motion for Reconsideration of the Order dated October 4, 1996, which was set for hearing on October 25, 1996.

On November 11, 1996, [the RTC] issued an Order denying [private respondent's] Motion for Reconsideration. Hence, the
Petition for Certiorari and Prohibition. . . . .

In the assailed Decision, Respondent Court of Appeals reversed the trial court's setting for hearing petitioner's Motion for Reconsideration.

The Ruling of the Court of Appeals

Respondent Court held that the trial court acted with grave abuse of discretion in setting for hearing petitioner's Motion for Reconsideration,
notwithstanding the fact that said Motion contained no notice of hearing.

Citing a litany of cases, it ruled that petitioner's failure to comply with the mandatory provisions of Sections 4 and 5, Rule 15 of the Rules of Court,
reduced her motion to a mere scrap of paper which did not merit the attention of the court. Respondent Court also held that those cases in which the
Court allowed a motion for reconsideration that had not been set for hearing Galvez v. Court of Appeals, 9 Tamargo v. Court of
Appeals 10
and Que v. Intermediate Appellate Court 11
were inapplicable.

Respondent Court held that the facts in Galvez drastically differ from those in the present case. Galvez involved a motion to withdraw the information
not a motion for reconsideration that was filed ex parte before the arraignment of the accused. In that case, the Court held that there was no
imperative need of notice and hearing because, first, the withdrawal of an information rests on the discretion of the trial court; and, second, the accused
was not placed in jeopardy. On the other hand, the subject of the present controversy is a motion for reconsideration directed against the Decision of
the RTC; thus, the motion affects the period to perfect an appeal.

Que is not applicable either. In said case, the trial court, set the Motion for Reconsideration (MR) for hearing, which was actually attended by the
counsel for the adverse party. This was not so in the case at bar; petitioner's MR was set for hearing, because she belatedly moved for it upon the filing
of private respondent's Motion for Entry of Judgment. Likewise, the present case differs from Tamargo, wherein the application of the aforesaid
mandatory provisions was suspended. The Court did so in order to give substantial justice to the petitioner and in view of the nature of the issues
raised which were found to be highly meritorious.

Hence, this petition. 12

The Issue

In her Memorandum, 13 petitioner presents a fairly accurate statement of the main issue to be resolved: 14

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

The Court's Ruling

The petition is devoid of merit.

Sole Issue:
Omission of Notice of Hearing Fatal

15
Petitioner admits the categorical and mandatory character of the directives in Sections 4 and 5 of Rule 15 of the Rules of Court, which read:

Sec. 4. Hearing of motion. Except for motions which the court may act upon without prejudicing the rights of the adverse
party, every written motion shall be set for hearing by the applicant.

Every written motion required to be heard and the notice of the hearing thereof shall be served in such a manner as to ensure
its receipt by the other party at least three (3) days before the date of hearing, unless the court for good cause sets the hearing
on shorter notice. (4a)

Sec. 5. Notice of hearing. The notice of hearing shall be addressed to all parties concerned, and shall specify the time and
date of the hearing which must not be later than ten (10) days after the filing of the motion. (5a)

the Court presented a resume of earlier decisions regarding the necessity of the
In De la Pea v. De la Pea, 16
notice of hearing in motions for reconsideration:
In Pojas v. Gozo-Dadole, 17
we had occasion to rule on the issue of whether a motion for reconsideration without any
notice of hearing tolls the running of the prescriptive period. In Pojas, petitioner received copy of the decision in Civil
Case No. 3430 of the Regional Trial Court of Tagbilaran on 15 April 1986. The decision being adverse to him petitioner
filed a motion for reconsideration. For failing to mention the date when the motion was to be resolved as required in
Sec. 5, Rule 15, of the Rules of Court, the motion for reconsideration was denied. A second motion for reconsideration
met the same fate. On 2 July 1986 petitioner filed a notice of appeal but the same was denied for being filed out of time
as "the motion for reconsideration which the Court ruled as pro forma did not stop the running of the 15-day period to
appeal." 18

In resolving the issue of whether there was grave abuse of discretion in denying petitioner's notice of appeal, this Court ruled

Sec. 4 of Rule 15 of the Rules of Court requires that notice of motion be served by the movant on all
parties concerned at least three (3) days before its hearing. Section 5 of the same Rule provides that the
notice shall be directed to the parties concerned, and shall state the time and place for the hearing of the
motion. A motion which does not meet the requirements of Section 4 and 5 of Rule 15 of the Rules of
Court is considered a worthless piece of paper which the clerk has no right to receive and the court has
no authority to act upon. Service of copy of a motion containing notice of the time and place of hearing of
said motion is a mandatory requirement and the failure of the movant to comply with said requirements
renders his motion fatally defective. 19

In New Japan Motors, Inc. v. Perucho, 20 defendant filed a motion for reconsideration which did not contain any notice of
hearing. In a petition for certiorari, we affirmed the lower court in ruling that a motion for reconsideration that did not
contain a notice of hearing was a useless scrap of paper. We held further

Under Sections 4 and 5 of Rule 15 of the Rules of Court, . . . a motion is required to be accompanied by
a notice of hearing which must be served by the applicant on all parties concerned at least three (3)
days before the hearing thereof Section 6 of the same rule commands that "(n)o motion shall be acted
upon by the Court, without proof of service of the notice thereof . . . ." It is therefore patent that the
motion for reconsideration in question is fatally defective for it did not contain any notice of hearing. We
have already consistently held in a number of cases that the requirements of Sections 4, 5 and 6 of
Rules 15 of the Rules of Court are mandatory and that failure to comply with the same is fatal to
movant's cause.

In Sembrano v. Ramirez, 22 we declared that

(A) motion without notice of hearing is a mere scrap of paper. It does not toll the running of the period of
appeal. This requirement of notice of hearing equally applies to a motion for reconsideration. Without
such notice, the motion is pro forma. And a pro forma motion for reconsideration does not suspend the
running of the period to appeal.

In In re Almacen, 23 defendant lost his case in the lower court. His counsel then filed a motion for reconsideration but did
not notify the adverse counsel of the time and place of hearing of said motion. The Court of Appeals dismissed the
motion for the reason that "the motion for reconsideration dated July 5, 1966 does not contain a notice of time and
place of hearing thereof and is, therefore a useless piece of paper which did not interrupt the running of the period to
appeal, and, consequently, the appeal was perfected out of time." When the case was brought to us, we reminded
counsel for the defendant that

As a law practitioner who was admitted to the bar as far back as 1941, Atty. Almacen knew or ought
to have known that [for] a motion for reconsideration to stay the running of the period of appeal, the
movant must not only serve a copy of the motion upon the adverse party . . . but also notify the adverse
party of the time and place of hearing . . . .

Also, in Manila Surety and Fidelity Co., Inc. v. Bath Construction and Company, 24 we ruled

The written notice referred to evidently is that prescribed for motions in general by Rule 15, Sections 4
and 5 (formerly Rule 26), which provide that such notice shall state the time and place of hearing and
shall be served upon all the parties concerned at least three days in advance. And according to Section
6 of the same Rule no motion shall be acted upon by the court without proof of such notice. Indeed, it
has been held that in such a case the motion is nothing but a useless piece of paper. The reason is
obvious; unless the movant sets the time and place of hearing the court would have no way to determine
whether that party agrees to or objects to the motion, and if he objects, to hear him on his objection,
since the Rules themselves do not fix any period within [which] he may file his reply or opposition. 25

In fine, the abovecited cases confirm that the requirements laid down in Sec. 5 of Rule 15 of the Rules of Court that the notice
shall be directed to the parties concerned, and shall state the time and place for the hearing of the motion, are mandatory. If not
religiously complied with, they render the motion pro forma. As such the motion is a useless piece of paper that will not toll the
running of the prescriptive period.
For failing to attach a notice of hearing to the Motion for Reconsideration, petitioner proffers the following excuses: (1) her former counsel's messenger,
due to an honest mistake, inadvertently omitted the fourth page of the motion containing the crucial Notice of Hearing; and (2) because of the pressure
of work, her former counsel was unable to follow up such motion until the day said counsel requested the setting of a hearing. 26

We are not in the least convinced. First, it is unfair to place the blame for such omission on the
messenger. The burden of preparing a complete pleading falls on counsel's shoulders, not on the
messenger's. The counsel is ultimately responsible for the acts or omissions of his agents. Hence, the
messenger's conduct can neither justify the counsel's mistake nor warrant a departure from the mandate
of the aforesaid procedural rules.

Second, it is incredible that the fourth page containing the Notice of Hearing was left behind due to honest mistake. In fact, there was no such page.
Petitioner's claim is belied by the following pertinent, portions of the subject Motion for Reconsideration: 27

WHEREFORE, premises considered, it is respectfully prayed that the Honorable Court cause a further REVIEW and
RECONSIDERATION of its decision on the above-captioned consolidated cases.

Quezon City for Manila, August 12, 1996.

(Sgd.) ANGELINA ARANDIA-VILLANUEVA

Counsel for Plaintiff-Appellant

39-L T. Morato Avenue, Quezon City

IBP No. 407450 6-26-96

PTR No. 227013 1-5-96 Manila

Copy furnished:

Atty. Arnel Zaragoza Dolendo

Counsel for Defendant

Rm. 408, 413 First United Bldg.

Escolta, Manila

The normal practice is to note, at the end of the pleading, that a copy was furnished to the adverse party. Thus, petitioner's motion ended exactly at the
bottom of the third page as evidenced by the "copy-furnished" notation. It is safe to conclude that there was no accidental or excusable neglect in not
including a fourth page in this case. In other words, petitioner's counsel simply failed to include a notice of hearing.

belies the excuse that an

Finally, the fact that petitioner's former counsel calendared the motion for hearing for August 23, 1996 28

alleged fourth page had been left behind. In the first place, if a notice of hearing had been included in the
Motion for Reconsideration, there would have been no need for petitioner to file the Motion to set the time
and date of hearing. What is clear is that said counsel filed the latter Motion, only after private respondent
had submitted its Motion for Entry of Judgment with copy furnished petitioner's counsel on the
29 30

ground that petitioner's Motion for Reconsideration was a mere scrap of paper that did not stop the period
for appeal.

Petitioner pleads for liberal construction of the rule on notice of hearing, citing Tamargo, Galvez and Que. In rebuttal, we adopt by reference the CA's
excellent disquisition, cited earlier, on why these cases are inapplicable.

Petitioner further alleges that, first, the nonadmission of her Motion for Reconsideration would result in a miscarriage of justice, as the main case
(ejectment), which was tried under summary procedure, had been unnecessarily prolonged; and, second, the tenant lessee would be occupying the
premises without paying rentals. She also relies on People v. Leviste, 31 in which the Court held:

While it is true that any motion that does not comply with the requirements of Rule 15, Rules of Court should not be accepted
for filing and, if filed, is not entitled to judicial cognizance, the Supreme Court has likewise held that where rigid application of
the rule will result in manifest failure or miscarriage of justice, technicalities may be disregarded in order to resolve the case.
Liberal construction of this rule has been allowed by this Court in the following cases: (1) where a rigid application will result in a manifest failure or
especially if a party successfully shows that the alleged defect in the questioned final
miscarriage of justice, 32
and executory judgment is not apparent on its face or from the recitals contained therein; (2) where the 33

interest of substantial justice will be served; (3) where the resolution of the motion is addressed solely to
34

the sound and judicious discretion of the court; and (4) where the injustice to the adverse party is not
35

commensurate with the degree of his thoughtlessness in not complying with the procedure
prescribed. Petitioner has failed to demonstrate that the case at bar falls under any of these exceptions.
36

Finally, petitioner claims that she will be deprived of property without due process, as private respondent has accumulated P348,800 in unpaid rentals
and accrued interests.

We disagree. Petitioner can obtain proper payment of rentals through a motion for execution in the case below. The MTC may have dismissed her
ejectment case, but it did not exculpate private respondent from its liabilities. Petitioner is, therefore, not being deprived of her property without due
process.

Indeed, there is no miscarriage of justice to speak of. Having failed to observe very elementary rules of procedure which are mandatory, petitioner
caused her own predicament. To exculpate her from the compulsory coverage of such rules is to undermine the stability of the judicial process, as the
bench and bar will be confounded by such irritating uncertainties as when to obey and when to ignore the Rules. We have to draw the line
somewhere. 37

WHEREFORE, the petition is hereby DENIED and the assailed Decision is AFFIRMED. Costs against the
petitioner.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 201601 March 12, 2014

MARYLOU CABRERA, Petitioner,

vs.
FELIX NG, Respondent.

DECISION

REYES, J.:

Before this Court is a petition for review on certiorari1 under Rule 45 of the Rules of Court seeking to annul and set aside the Decision2 dated October
21, 2009 and the Resolution3 dated March 26, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 03392. The CA denied the petition for certiorari
filed by Marylou Cabrera (petitioner), which assailed the Order4 dated December 19, 2007 of the Regional Trial Court (RTC) of Mandaue City, Branch
56, in Civil Case No. MAN-4773.

The Facts

On February 14, 2004, Felix Ng (respondent) filed a complaint for sum of money with the RTC against the petitioner and her husband Marionilo
Cabrera (spouses Cabrera), alleging that the latter issued to him the following: (1) Metrobank Check No. 0244694 dated June 30, 2002 for the amount
of Thirty-One Thousand Pesos (P31,000.00); (2) Metrobank Check No. 0244674 dated August 9, 2002 for the amount of Thirty-Eight Thousand
Seventy-Four Pesos and Seventy-Six Centavos (P38,074.76); and (3) Metrobank Check No. 0244745 dated August 15, 2005 for Two Million Five
Hundred Thousand Pesos (P2,500,000.00). That when presented for payment, the said checks were all dishonored as the accounts from which they
had been drawn were already closed.

The spouses Cabrera admitted that they issued Metrobank Check No. 0244694 and Metrobank Check No. 0244674 to the respondent and that the
same were dishonored when presented for payment. However, they claimed that they paid the respondent the amount represented by the said checks
through the latters son Richard Ng. Further, they deny having issued Metrobank Check No. 0244745 to the respondent, alleging that the said check
was forcibly taken from them by Richard Ng.

On August 7, 2007, the RTC rendered a Decision,5 which ordered the spouses Cabrera to pay the respondent the following: (1) Two Million Five
Hundred Sixty-Nine Thousand Seventy-Four Pesos (P2,569,074.00) plus legal interest from inception of the obligation until fully paid; (2) moral
damages in the amount of Fifty Thousand Pesos (P50,000.00); (3) attorneys fees of Twenty Thousand Pesos (P20,000.00); and (4) litigation expenses
in the amount of Ten Thousand Pesos (P10,000.00).
On August 8, 2007, the spouses Cabrera received a copy of the RTC Decision dated August 7, 2007. On August 14, 2007, the spouses Cabrera filed
with the RTC a motion for reconsideration,6 which they set for hearing on August 17, 2007. On even date, the spouses Cabrera sent a copy of their
motion for reconsideration to the respondent thru registered mail; it was actually received by the respondent on August 21, 2007.

The said motion for reconsideration, however, was not heard on August 17, 2007 as the new acting presiding judge of the said court had just assumed
office. On August 28, 2007, the RTC issued a notice,7 which set the said motion for reconsideration for hearing on September 25, 2007.

On September 20, 2007, the respondent filed an opposition8 to the motion for reconsideration filed by the spouses Cabrera. The respondent alleged
that the said motion for reconsideration is a mere scrap of paper since it violated the three-day notice requirement. The respondent pointed out that the
spouses Cabrera sent to him a copy of their motion for reconsideration, which was set for hearing on August 17, 2007, via registered mail on August
14, 2007; that he actually received a copy thereof only on August 21, 2007 four days after the scheduled hearing thereon.

It appears that the scheduled hearing of the spouses Cabreras motion for reconsideration on September 25, 2007 did not push through. Consequently,
on September 26, 2007, the RTC issued another notice,9 which set the said motion for reconsideration for hearing on October 26, 2007.

On October 26, 2007, the RTC issued an Order,10 which directed the parties to file their additional pleadings, after which the motion for reconsideration
filed by the spouses Cabrera would be deemed submitted for resolution.

On December 19, 2007, the RTC issued an Order11 which denied the motion for reconsideration filed by the spouses Cabrera. The RTC pointed out
that the spouses Cabrera violated Section 4, Rule 15 of the Rules of Court, which mandates that every motion required to be heard should be served
by the movant in such a manner as to ensure its receipt by the other party at least three days before the date of hearing. Thus:

After a meticulous scrutiny of the records of this case, the court opines that the motion was filed beyond the reglementary three (3)[-]day period.

As the records bear out, the instant motion was mailed to the plaintiffs counsel on August 14[, 2007] and was set for hearing on August 17, 2007.
However, the copy of said motion had reached plaintiffs side and a copy of which was received by plaintiffs counsel only on August 17, 2007[,] four (4)
days late after it was supposed to be heard. Hence, a clear blatant violations [sic] of the rule on notice and hearing.12

The RTC further opined that a motion, which fails to comply with the three-day notice requirement is a mere scrap of paper; it is not entitled to judicial
cognizance and would not toll the running of the reglementary period for filing the requisite pleadings. Accordingly, the RTC held, its Decision dated
August 7, 2007 had already become final for failure of the spouses Cabrera to comply with the three-day notice requirement.

The petitioner then filed a petition for certiorari13 with the CA, alleging that the RTC gravely abused its discretion in denying her motion for
reconsideration. The petitioner pointed out that the RTC did not actually conduct a hearing on her motion for reconsideration on August 17, 2007;

that her motion for reconsideration was actually heard on October 26, 2007, after the respondent had already filed his opposition thereto. Thus, the
petitioner claimed, the issue of her failure to comply with the three-day notice requirement had already been rendered moot. In any case, the petitioner
asserted, the RTC should have resolved her motion for reconsideration on its merits rather than simply denying it on mere technicality.

On October 21, 2009, the CA, by way of the assailed Decision,14 denied the petition for certiorari filed by the petitioner. The CA opined that the RTC did
not abuse its discretion in denying the motion for reconsideration filed by the spouses Cabrera since it merely applied the three-day notice requirement
under Section 4, Rule 15 of the Rules of Court. Thus:

It appears that petitioners Motion for Reconsideration was set for hearing on 17 August 2007. A copy thereof was mailed to private respondent on 14
August 2007, and private respondent actually received his copy only on 21 August 2007 or four (4) days after the set date of hearing; and thus,
depriving him of the opportunity to oppose the motion. Respondent court, therefore, correctly held that such motion violated the three (3)-day notice
rule; the essence of due process. Respondent court had applied said rule to the given situation, and of no doubt, mere adherence to the rules cannot
be considered grave abuse of discretion on the part of the respondent court. x x x.15(Citation omitted)

The petitioner sought a reconsideration of the Decision dated October 21, 2009 but it was denied by the CA in its Resolution 16 dated March 26, 2012.

Hence, the instant petition.

The Issue

The sole issue to be resolved by the Court is whether the CA erred in affirming the RTC Order dated December 19, 2007, which denied the motion for
reconsideration filed by the spouses Cabrera.

The Courts Ruling

The petition is meritorious.

Sections 4 and 5, Rule 15 of the Rules of Court provide that:

Sec. 4. Hearing of motion. Except for motions which the court may act upon without prejudicing the rights of the adverse party, every written motion
shall be set for hearing by the applicant.

Every written motion required to be heard and the notice of the hearing thereof shall be served in such a manner as to ensure its receipt by the other
party at least three (3) days before the date of hearing, unless the court for good cause sets the hearing on shorter notice.

Sec. 5. Notice of hearing. The notice of hearing shall be addressed to all parties concerned, and shall specify the time and date of the hearing which
must not be later than ten (10) days after the filing of the motion. (Emphasis ours)

The general rule is that the three-day notice requirement in motions under Sections 4 and 5 of the Rules of Court is mandatory. It is an integral
component of procedural due process.17 "The purpose of the three-day notice requirement, which was established not for the benefit of the movant but
rather for the adverse party, is to avoid surprises upon the latter and to grant it sufficient time to study the motion and to enable it to meet the
arguments interposed therein."18

"A motion that does not comply with the requirements of Sections 4 and 5 of Rule 15 of the Rules of Court is a worthless piece of paper which the clerk
of court has no right to receive and which the court has no authority to act upon."19 "Being a fatal defect, in cases of motions to reconsider a decision,
the running of the period to appeal is not tolled by their filing or pendency."20

Nevertheless, the three-day notice requirement is not a hard and fast rule. When the adverse party had been afforded the opportunity to be heard, and
has been indeed heard through the pleadings filed in opposition to the motion, the purpose behind the three-day notice requirement is deemed
realized. In such case, the requirements of procedural due process are substantially complied with. Thus, in Preysler, Jr. v. Manila Southcoast
Development Corporation,21 the Court ruled that:

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

In Somera Vda. De Navarro v. Navarro, the Court held that there was substantial compliance of the rule on notice of motions even if the first notice was
irregular because no prejudice was caused the adverse party since the motion was not considered and resolved until after several postponements of
which the parties were duly notified.

Likewise, in Jehan Shipping Corporation v. National Food Authority, the Court held that despite the lack of notice of hearing in a Motion for
Reconsideration, there was substantial compliance with the requirements of due process where the adverse party actually had the opportunity to be
heard and had filed pleadings in opposition to the motion. The Court held:

This Court has indeed held time and again, that under Sections 4 and 5 of Rule 15 of the Rules of Court, mandatory is the requirement in a motion,
which is rendered defective by failure to comply with the requirement. As a rule, a motion without a notice of hearing is considered pro forma and does
not affect the reglementary period for the appeal or the filing of the requisite pleading.

As an integral component of the procedural due process, the three-day notice required by the Rules is not intended for the benefit of the movant.
Rather, the requirement is for the purpose of avoiding surprises that may be sprung upon the adverse party, who must be given time to study and meet
the arguments in the motion before a resolution of the court. Principles of natural justice demand that the right of a party should not be affected
1wphi1

without giving it an opportunity to be heard.

The test is the presence of opportunity to be heard, as well as to have time to study the motion and meaningfully oppose or controvert the grounds
upon which it is based. x x x22

(Emphasis supplied and citations omitted)

It is undisputed that the hearing on the motion for reconsideration filed by the spouses Cabrera was reset by the RTC twice with due notice to the
parties; it was only on October 26, 2007 that the motion was actually heard by the RTC. At that time, more than two months had passed since the
respondent received a copy of the said motion for reconsideration on August 21, 2007. The respondent was thus given sufficient time to study the
motion and to enable him to meet the arguments interposed therein. Indeed, the respondent was able to file his opposition thereto on September 20,
2007.

Notwithstanding that the respondent received a copy of the said motion for reconsideration four days after the date set by the spouses Cabrera for the
hearing thereof, his right to due process was not impinged as he was afforded the chance to argue his position. Thus, the R TC erred in denying the
spouses Cabrera's motion for reconsideration based merely on their failure to comply with the three-day notice requirement.

WHEREFORE, in consideration of the foregoing disquisitions, the instant petition is GRANTED. The Decision dated October 21, 2009 and the
Resolution dated March 26, 2012 of the Court of Appeals in CA-G.R. SP No. 03392, are hereby REVERSED and SET ASIDE. The case is hereby
REMANDED to the Regional Trial Court of Mandaue City, Branch 56, to resolve the Motion for Reconsideration filed by the spouses Cabrera on the
merits within five (5) days from the finality of this Decision.

SO ORDERED.
BIENVENIDO L. REYES
Associate Justice

WE CONCUR:

MARIA LOURDES P. A. SERENO

Chief Justice
Chairperson

TERESITA J. LEONARDO-DE CASTRO LUCAS P. BERSAMIN

Associate Justice Associate Justice

MARTIN S. VILLARAMA, JR.

Associate Justice

CERTIFICATION

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

MARIA LOURDES P. A. SERENO

Chief Justice

SECOND DIVISION

FAUSTO R. PREYSLER, JR., G.R. No. 171872

Petitioner,
Present:

CARPIO, J., Chairperson,

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

MANILA SOUTHCOAST
DEVELOPMENT CORPORATION, Promulgated:
Respondent.
June 28, 2010

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

DECISION
CARPIO, J.:
The Case

This petition for review[1] assails the 22 November 2005 Decision[2] and the 3
March 2006 Resolution[3] of the Court of Appeals in CA-G.R. SP No. 89621.

The Facts

On 15 January 2002, petitioner Fausto R. Preysler, Jr. (petitioner) filed with the
Municipal Trial Court (MTC) of Batangas a complaint for forcible entry against
respondent Manila Southcoast Development Corporation (respondent). The subject
matter of the complaint is a parcel of land with an area of 21,922 square
meters located in Sitio Kutad, Barangay Papaya, Nasugbu, Batangas. The disputed
land, covered by Transfer Certificate of Title (TCT) No. TF-1217[4] in the name of
petitioner, is also within the property covered by TCT No. T-72097[5] in the name
of respondent.[6] TCT No. T-72097 covers three contiguous parcels of land with an
aggregate area of 86,507,778 square meters.

On 13 December 2002, the MTC ruled in favor of petitioner and ordered

respondent to vacate the disputed land covered by TCT No. TF-1217 in the name
of petitioner and to return the possession of the land to petitioner.[7] Respondent
appealed to the Regional Trial Court (RTC). In its Decision dated 22 January 2004,
the RTC, Branch 14, Nasugbu, Batangas reversed the MTC decision and dismissed
petitioners complaint.
Petitioner received the RTC Decision on 9 February 2004 and thereafter filed a
Motion for Reconsideration, which was set for hearing on 26 February 2004.
Petitioner sent a copy of the Motion for Reconsideration to respondents counsel by
registered mail on 23 February 2004.During the 26 February 2004 scheduled
hearing of the motion, the RTC judge reset the hearing to 2 April 2004 because the
courts calendar could not accommodate the hearing of the motion. All the parties
were notified of the schedule for the next hearing.

Meanwhile, it was only on 3 March 2004, or 6 days after the scheduled hearing on
26 February 2004, that respondents counsel received a copy of petitioners Motion
for Reconsideration.

The rescheduled hearing on 2 April 2004 was again reset on 7 May 2004 because
the RTC judge was on official leave. The 7 May 2004 hearing was further reset to
6 August 2004. After the hearing, respondent filed its Motion to Dismiss dated 9
August 2004,[8] claiming that non-compliance with the three-day notice rule did not
toll the running of the period of appeal, which rendered the decision final.

On 4 October 2004, the RTC issued an Order, denying petitioners Motion for
Reconsideration for failure to appeal within the 15 days reglementary period and
declaring the 22 January 2004 Decision as final and executory. The RTC ruled that
petitioners Motion for Reconsideration was fatally flawed for failure to observe the
three-day notice rule. Petitioner filed an Omnibus Motion for Reconsideration of
the Order dated 4 October 2004. In its Order dated 22 February 2005, the RTC
dismissed the Omnibus Motion. Petitioner then filed a petition for certiorari with
the Court of Appeals, alleging that the RTC committed grave abuse of discretion in
dismissing the Motion for Reconsideration and Omnibus Motion for petitioners
alleged failure to observe the three-day notice rule.

The Ruling of the Court of Appeals

In its Decision dated 22 November 2005, the Court of Appeals dismissed the
petition. The Court of Appeals held that the three-day notice rule under Sections 4,
5, and 6 of Rule 15 of the Rules of Court is mandatory and non-compliance
therewith is fatal and renders the motionpro forma. As found by the RTC,
petitioners Motion for Reconsideration dated 12 February 2004 was received by
respondent only on 3 March 2004, or six days after the scheduled hearing on 26
February 2004. Furthermore, the Court of Appeals held that all violations of
Sections 4, 5, and 6 of Rule 15 which render the purpose of the notice of hearing of
the motion nugatory are deemed fatal.

Petitioner moved for reconsideration, which the Court of Appeals denied in

its Resolution dated 3 March 2006. Hence, this petition for review.

The Issues

In his petition for review, petitioner submits that:

I
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN
AFFIRMING THE RULING OF THE PUBLIC RESPONDENT THAT
PETITIONER HAD VIOLATED THE THREE-DAY NOTICE RULE
DESPITE THE FACTS THAT:
 A) PRIVATE RESPONDENT WAS DULY HEARD ON
THE MOTION FOR RECONSIDERATION, HAD
OPPORTUNITY TO OPPOSE, AND ACTUALLY
OPPOSED SAID MOTION.
B) PRIVATE RESPONDENT WAS NOT PREJUDICED
BY THE ALLEGED DEFECT OF THE MOTION.
C) THE PURPOSE OF THE THREE-DAY NOTICE
RULE WAS SUFFICIENTLY ACHIEVED.
D) THE ALLEGED FAILURE OF PETITIONER TO
COMPLY WITH SECTION 4, RULE 15 WAS CURED
BY THE FACT THAT THE PUBLIC RESPONDENT
RESET SEVERAL TIMES THE HEARING OF
THE MOTION, AND THE PRIVATE RESPONDENT
WAS PROPERLY NOTIFIED THEREOF AND
OPPOSED SAID MOTION.
E) PETITIONER HAD AN EXTREMELY
MERITORIOUS CASE.

II
THE COURT OF APPEALS SERIOUSLY ERRED IN NOT RULING
ON THE ISSUE OF THE ALLEGED DEFECT OF THE
PETITIONERS OMNIBUS MOTION, THEREBY AFFIRMING THE
ERRONEOUS COMPUTATION OF THE THREE-DAY NOTICE BY
THE RESPONDENT TRIAL JUDGE.

III
THE COURT OF APPEALS ERRED IN NOT RESOLVING THE
MERITS OF THE PETITIONERS MOTION FOR
RECONSIDERATION FILED BEFORE THE PUBLIC
[9]
RESPONDENT.
The Ruling of the Court

We find the petition meritorious.

In upholding the RTC Order denying petitioners Motion for Reconsideration, the
Court of Appeals relied mainly on petitioners alleged violation of the notice
requirements under Sections 4, 5, and 6, Rule 15 of the Rules of Court which read:
SECTION 4. Hearing of motion. Except for motions which the court
may act upon without prejudicing the rights of the adverse party, every
written motion shall be set for hearing by the applicant.
 Every written motion required to be heard and the notice of the hearing
thereof shall be served in such a manner as to ensure its receipt by the
other party at least three (3) days before the date of hearing, unless the
court for good cause sets the hearing on shorter notice.

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

to all parties concerned, and shall specify the time and date of the
hearing which must not be later than ten (10) days after the filing of the
motion.

SECTION 6. Proof of service necessary. No written motion set for

hearing shall be acted upon by the court without proof of service thereof.

The three-day notice rule is not absolute. A liberal construction of the procedural
rules is proper where the lapse in the literal observance of a rule of procedure has
not prejudiced the adverse party and has not deprived the court of its
authority.[10] Indeed, Section 6, Rule 1 of the Rules of Court provides that the Rules
should be liberally construed in order to promote their objective of securing a just,
speedy and inexpensive disposition of every action and proceeding. Rules of
procedure are tools designed to facilitate the attainment of justice, and courts must
avoid their strict and rigid application which would result in technicalities that tend
to frustrate rather than promote substantial justice.[11]

In Somera Vda. De Navarro v. Navarro,[12] the Court held that there was
substantial compliance of the rule on notice of motions even if the first notice was
irregular because no prejudice was caused the adverse party since the motion was
not considered and resolved until after several postponements of which the parties
were duly notified.[13]

Likewise, in Jehan Shipping Corporation v. National Food Authority,[14] the Court

held that despite the lack of notice of hearing in a Motion for Reconsideration,
there was substantial compliance with the requirements of due process where the
adverse party actually had the opportunity to be heard and had filed pleadings in
opposition to the motion. The Court held:
This Court has indeed held time and again, that under Sections 4 and 5
of Rule 15 of the Rules of Court, mandatory is the requirement in a
motion, which is rendered defective by failure to comply with the
requirement. As a rule, a motion without a notice of hearing is
considered pro forma and does not affect the reglementary period for the
appeal or the filing of the requisite pleading.
 As an integral component of the procedural due process, the three-
day notice required by the Rules is not intended for the benefit of
the movant. Rather, the requirement is for the purpose of avoiding
surprises that may be sprung upon the adverse party, who must be
given time to study and meet the arguments in the motion before a
resolution of the court. Principles of natural justice demand that the
right of a party should not be affected without giving it an
opportunity to be heard.

The test is the presence of opportunity to be heard, as well as to have

time to study the motion and meaningfully oppose or controvert the
grounds upon which it is based. x x x

A close perusal of the records reveal that the trial court gave petitioner
ten days within which to comment on respondents Motion for
Reconsideration. Petitioner filed its Opposition to the Motion on
November 26, 2001. In its 14-page Opposition, it not only pointed out
that the Motion was defective for not containing a notice of hearing and
should then be dismissed outright by the court; it also ventilated its
substantial arguments against the merits of the Motion and of the
Supplemental Motion for Reconsideration. Notably, its arguments were
recited at length in the trial courts January 8, 2002 Joint Resolution.
Nevertheless, the court proceeded to deny the Motions on the sole
ground that they did not contain any notice of hearing.

The requirement of notice of time and hearing in the pleading filed by a

party is necessary only to apprise the other of the actions of the former.
Under the circumstances of the present case, the purpose of a notice of
hearing was served.[15] (Emphasis supplied)
In this case, the Court of Appeals ruled that petitioner failed to comply with the
three-day notice rule. However, the Court of Appeals overlooked the fact that
although respondent received petitioners Motion for Reconsideration six days after
the scheduled hearing on 26 February 2004, the said hearing was reset three (3)
times with due notice to the parties. Thus, it was only on 6 August 2004, or more
than five months after respondent received a copy of petitioners Motion for
Reconsideration, that the motion was heard by the RTC. Clearly, respondent had
more than sufficient time to oppose petitioners Motion for Reconsideration. In fact,
respondent did oppose the motion when it filed its Motion to Dismiss dated 9
August 2004. In view of the circumstances of this case, we find that there was
substantial compliance with procedural due process. Instead of dismissing
petitioners Motion for Reconsideration based merely on the alleged procedural
lapses, the RTC should have resolved the motion based on the merits.

Furthermore, the RTC likewise erred in dismissing petitioners Omnibus Motion for
allegedly failing to comply with the three-day notice requirement. The RTC found
that the notice of hearing of petitioners Omnibus Motion which was set to be heard
on 12 November 2004 was received by respondent on 9 November 2004. The RTC
held that the service of the notice of hearing was one day short of the prescribed
minimum three days notice.

We disagree. Section 4 of Rule 15 provides that [e]very written motion required to

be heard and the notice of the hearing thereof shall be served in such a manner
as to ensure its receipt by the other party at least three (3) days before the
date of the hearing, unless the court for good cause sets the hearing on shorter
notice. Thus, the date of the hearing should be at least three days after receipt of
the notice of hearing by the other parties. In this case, the petitioners Omnibus
Motion was set for hearing on 12 November 2004. Thus, to comply with the notice
requirement, respondent should have received the notice of the hearing at least
three days before 12 November 2004, which is 9 November 2004. Clearly,
respondents receipt on 9 November 2004 (Tuesday) of the notice of hearing of the
Omnibus Motion which was set to be heard on 12 November 2004 (Friday), was
within the required minimum three-days notice. As explained by Retired Justice
Jose Y. Feria in his book, Civil Procedure Annotated, when the notice of hearing
should be given:
The ordinary motion day is Friday. Hence, the notice should be
served by Tuesday at the latest, in order that the requirement of the
three days may be complied with.

If notice be given by ordinary mail, it should be actually received by

Tuesday, or if not claimed from the post office, the date of the first
notice of the postmaster should be at least five (5) days before
Tuesday.[16] (Emphasis supplied)

WHEREFORE, we GRANT the petition. We SET ASIDE the Decision dated 22

November 2005 and the Resolution dated 3 March 2006 of the Court of Appeals in
CA-G.R. SP No. 89621. We REMAND the case to the Regional Trial Court,
Branch 14, Nasugbu, Batangas to resolve petitioners Motion for Reconsideration
and Omnibus Motion on the merits.
 Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

CITY OF DUMAGUETE, herein G.R. No. 168973

Represented by City Mayor,
Agustin R. Perdices, Present:
Petitioner,
CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,
- versus - BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.

PHILIPPINE PORTS Promulgated:

AUTHORITY,
Respondent. August 24, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

LEONARDO-DE CASTRO, J.:

Before Us is a Petition for Review under Rule 45 of the Rules of Court

assailing the Decision[1] dated March 4, 2005 and Resolution[2] dated June 6, 2005
of the Court Appeals in CA-G.R. SP No. 64379, which granted the Petition
for Certiorari and Prohibition of respondent Philippine Ports Authority and set
aside the Orders dated December 7, 2000 and February 20, 2001 of the Regional
Trial Court (RTC), Branch 44 of the City of Dumaguete in LRC Case No. N-201.

The antecedent facts are as follows:

 On October 14, 1998, petitioner City of Dumaguete, through Mayor Felipe
Antonio B. Remollo (Remollo), filed before the RTC an Application for Original
Registration of Title over a parcel of land with improvements, located at Barangay
Looc, City of Dumaguete (subject property), under the Property Registration
Decree. The application was docketed as LRC Case No. N-201.

Petitioner alleged in support of its application:

1. That the applicant, City of Dumaguete through its

Honorable Mayor Felipe Antonio B. Remollo, is the owner of the land
subject of this application with all improvements and buildings
comprising the Engineers Compound where it is now situated and has
been in continuous occupation and possession of the same for more than
30 years or from the year 1960 (Affidavit of Ownership executed by
Felipe Antonio G. Remollo, the City Mayor, dated August 21, 1998
herein attached as ANNEX A). The said land consist of 5,410 square
meters and is situated and bounded and described as shown on the plan
(true and photostatic copies of the original plan marked Psu-07-006805
approved by the Regional Technical Director of the [Department of
Environment and Natural Resources] DENR, Regional Office, Cebu City
herein attached as ANNEX B) and technical descriptions attached hereto
(technical description attached as ANNEX C) and made a part hereof;

2. That said land at the last assessment for taxation was

assessed at P676,250, Philippine currency, with market value
of P1,352,500.00, Philippine currency. (Declaration of Real Property
with the assessed and market values attached as ANNEX D);

3. That to the best of my knowledge and belief, there is no

mortgage or encumbrance of any kind whatsoever affecting said land,
nor another person having any estate or interest therein, legal or
equitable, in possession, remainder, reversion or expectancy;

4. That the land was acquired by possessory title in open,

continuous, adverse occupation and possession in the concept of owner
for more than thirty years since 1960 (please refer to ANNEX A);

5. That the land is adjoined by the following:

NorthWest
 NorthEast
SouthEast

All along line 1-2-3-4-5-6-7-8-9-10 by Flores Avenue, City Road

and the Dumaguete Port Road
SouthWest along line 10-1 by Plan Msi-V-20453

xxxx

8. That the land included is bounded on the West by Flores

Avenue and on the North by the City Road, all public highways and on
the East by the Dumaguete Port Road, a private road made part of the
Port Zone.[3]

In an Order[4] dated October 23, 1998, the RTC noted that:

A perusal of the records of the case shows that the annexes lack
the following copies:

a) two blue print copies of the approved plan;

b) two copies of the technical description of the lot sought to

be registered;

c) two copies of the Surveyors certificate;

d) a certificate in quadruplicate of the City Assessor of the

assessed value of the land;

e) all original muniments of title in the possession of the

applicant which prove ownership of the land;

f) two copies of the petition/application.

Further, the application did not state the number of the lot sought
to be registered, the number of parcels applied for, the improvements
found thereon, and indicate whether it claims a portion of the road which
serves as a boundary line.
 All these must be alleged in the petition so that the Court will
know the nature of the property.

The RTC explained that the extra copies submitted by petitioner shall be
forwarded by the RTC Clerk of Court to the Land Registration Commission (LRC)
in Manila for comment. Only thereafter would the RTC set the application for
hearing.

Petitioner filed its Compliance[5] with the above-mentioned Order,

submitting additional copies of the required documents and clarifying thus:

1. The approved plan does not state the number of lot sought to be
registered because it is a public land, thus, only PSU-07-006805
appears on the plan which is being applied for registration;
2. Only one (1) parcel of land is applied for by petitioners which
consist of five thousand four hundred ten (5,410) square meters,
more or less;
3. The City Engineers Building within the City Engineers
compound are the only improvement found thereon; and
4. Petitioners do not claim any portion of the road which serves as a
boundary line.

The RTC accordingly set the initial hearing of LRC Case No. N-201
on April 12, 1999, and sent notices to the parties.

The Republic of the Philippines, represented by the Director of Lands, and

respondent, represented by the Office of the Government Corporate Counsel, filed
separate Oppositions [6] to the application for registration of petitioner. Both the
Republic and respondent averred that petitioner may not register the subject
property in its name since petitioner had never been in open, continuous, exclusive,
and notorious possession of the said property for at least 30 years immediately
preceding the filing of the application; and the subject property remains to be a
portion of the public domain which belongs to the Republic.

After several postponements of the scheduled hearings, petitioner presented

the testimony of its first witness, Engineer Rilthe P. Dorado (Engr. Dorado),
on January 14, 2000. Engr. Dorados examination on the witness stand was
terminated on April 7, 2000. The presentation of the other witnesses of petitioner
was then scheduled to continue on June 2, 2000.[7]

However, before the next hearing, respondent filed a Motion to

Dismiss,[8] seeking the dismissal of LRC Case No. N-201 on the ground that the
RTC lacked jurisdiction to hear and decide the case. Respondent argued that
Section 14(1) of Presidential Decree No. 1529, otherwise known as the Property
Registration Decree, refers only to alienable and disposable lands of the public
domain under a bona fideclaim of ownership. The subject property in LRC Case
No. N-201 is not alienable and disposable, since it is a foreshore land, as explicitly
testified to by petitioners own witness, Engr. Dorado. A foreshore land is not
registerable. This was precisely the reason why, respondent points out, that the
subject property was included in Presidential Proclamation No. 1232 (delineating
the territorial boundaries of the Dumaguete Port Zone), so that the same would be
administered and managed by the State, through respondent, for the benefit of the
people.

In its Terse Opposition to Oppositors Motion to Dismiss, petitioner claimed

that the subject property was a swamp reclaimed about 40 years ago, which it
occupied openly, continuously, exclusively, and notoriously under a bona
fide claim of ownership. The technical description and approved plan of the subject
property showed that the said property was not bounded by any part of the
sea. Petitioner invoked Republic Act No. 1899,[9] which authorizes chartered cities
and municipalities to undertake and carry out, at their own expense, the
reclamation of foreshore lands bordering them; and grants said chartered cities and
municipalities ownership over the reclaimed lands. Presidential Proclamation No.
1232 is immaterial to the present application for registration because it merely
authorizes respondent to administer and manage the Dumaguete Port Zone and
does not confer upon respondent ownership of the subject property.[10]

Respondent filed a Reply/Rejoinder (To Applicants Opposition to

Oppositors Motion to Dismiss), [11] asserting that there are no factual or legal basis
for the claim of petitioner that the subject property is reclaimed land. Petitioner
sought the original registration of its title over the subject property acquired
through alleged continuous possession for 30 years under Section 14(1) of the
Property Registration Decree, and not through the reclamation of the said property
at its own expense under Republic Act No. 1899. The present claim of petitioner
that the subject property is reclaimed land should not be allowed for it would
improperly change the earlier theory in support of the application for
registration. Respondent reiterated that the subject property is foreshore land which
cannot be registered; and that Presidential Proclamation No. 1232 is very material
to LRC Case No. N-201 because it confirms that areas within the Dumaguete Port
Zone, including the subject property, are not alienable and disposable lands of the
public domain.

On September 7, 2000, the RTC issued an Order[12] granting the Motion to

Dismiss of respondent based on the following ratiocination:

The Court agrees with [herein respondent] Philippine Ports

Authority that the basis of the [herein petitioners] application for original
registration of the subject lot is Section 14 of the Presidential Decree No.
1529, otherwise known as the Property Registration Decree. A
circumspect scrutiny of said Section readily shows that it refers to
alienable and disposable lands of the public domain as proper subjects of
registration, provided the applicant has met the other requirements such
as open, continuous, exclusive and notorious possession for at least thirty
(30) years under a bona fide claim of ownership.

It having been shown by [petitioners] own evidence that the lot

subject of the application for original registration is a foreshore land, and
therefore not registerable (Dizon, et al. vs. Bayona, et al., 98 SCRA 942,
944), the application must be denied.

Again as correctly argued by [respondent], [petitioners] reliance

on Republic Act 1899 which authorizes all municipalities and chartered
cities to undertake and carry out the reclamation by dredging, filling or
other means of any foreshore lands bordering them and which confers
ownership on them of the lands so reclaimed, is misplaced, as such has
never been alleged in the application. It is fundamental that a party
cannot prove what it has not alleged in his complaint or application, as in
this case.

The admission by Engr. Dorado that there is no formal declaration

from the executive branch of government or law passed by Congress that
the land in question is no longer needed for public use or special
industries x x x further militates against the application.

Moreover, the authority granted to municipalities and chartered

cities to undertake and carry out at their own expense the reclamation by
dredging, filling, or other means, of any foreshore lands bordering them
 is for the purpose of establishing, providing, constructing, maintaining,
and repairing proper and adequate docking and harbor facilities as such
municipalities and chartered cities may determine in consultation with
the Secretary of Finance and the Secretary of Public Works and
Communications.

By its own evidence, [petitioner] has utilized the subject property

allegedly reclaimed by it as Office of the City Engineer and not as
docking and harboring facilities. [Petitioner] has failed to show that such
reclamation was undertaken by it in consultation with the Secretary of
Finance and the Secretary of Public Works and Communications.[13]

The RTC decreed in the end that the instant application for original
registration is dismissed for lack of merit.[14]

In its Motion for Reconsideration[15] and Supplemental Motion for

Reconsideration,[16] petitioner contended that the dismissal of its application was
premature and tantamount to a denial of its right to due process. It has yet to
present evidence to prove factual matters in support of its application, such as the
subject property already being alienable and disposable at the time it was occupied
and possessed by petitioner.

Petitioner also pointed out that its witness, Engr. Dorado, testified only as to
the physical status of the land in question at the time when the cadastral survey of
Dumaguete was made sometime in 1916.[17] In fact, Engr. Dorado expressly
testified that the subject property was part of the shore or foreshore a long time
ago[;][18] and he did not testify at all that the subject property was a foreshore lot at
the time petitioner occupied and possessed the same. The physical state of the
subject property had already changed since 1916. It is now within the alienable and
disposable area as per the Land Classification Map No. 674, Project No. 1-D, BL
C-6, certified on July 3, 1927, of the Bureau of Lands, now Land Management
Sector of the Department of Environment and Natural Resources[,][19] as verified
and certified by the Chief of the Map Projection Section, Land Management
Sector, DENR Regional Office in Cebu City, who has yet to take the witness stand
before the RTC.

Petitioner insisted that the RTC should continue with the hearing of LRC
Case No. N-201 and allow petitioner to present evidence that the subject property
is reclaimed land. Petitioner sufficiently alleged in its application for registration
that it has been in open, continuous, exclusive, and notorious possession of the
[subject property] for more than thirty (30) years under a bona fide claim of
ownership.[20] In support of such allegation, petitioner must necessarily prove that
the subject property was previously a swampy area, which had to be filled or
reclaimed before the construction of the City Engineers Office building thereon.

Respondent based its Opposition (To Applicants Motion for Reconsideration

dated September 28, 2000)[21] and Opposition (To Applicants Supplemental
Motion for Reconsideration)[22] on technical and substantive grounds.

According to respondent, the Motion for Reconsideration of petitioner

violated Sections 4 (Hearing of motion), 5 (Notice of hearing), and 6 (Proof of
service necessary), Rule 15 of the Rules of Court. Petitioner did not set its Motion
for Reconsideration for hearing even when the said Motion could not be
considered as non-litigable. The RTC could not hear the motion for
reconsideration ex parte as they are prejudicial to the rights of
respondent. Petitioner also failed to comply with Section 11, Rule 13 of the Rules
of Court when it did not attach to the Motion for Reconsideration a written
explanation why it did not resort to personal service of the said Motion. Thus,
respondent averred that the Motion for Reconsideration of petitioner should be
treated as a mere scrap of paper with no legal effect. It did not interrupt the
reglementary period to appeal and the RTC Order dated September 7, 2000,
dismissing LRC Case No. N-201, had already attained finality.Respondent also
pointed out that the Supplemental Motion for Reconsideration of petitioner
suffered from the same fatal defects as the original Motion for Reconsideration.
Respondent again posited that the subject property was foreshore land
belonging to the State and not subject to private appropriation, unless the same had
already been declared by the executive or legislative department of the national
government as no longer needed for coast guard service, public use, or special
industries, and classified as alienable and disposable. Full- blown trial in LRC
Case No. N-201 was no longer necessary as the evidence so far presented by
petitioner had already established that the RTC lacked jurisdiction over the subject
matter of the case.

In its Order[23] dated November 16, 2000, the RTC initially agreed with
respondent that the Motion for Reconsideration of petitioner violated Sections 4, 5,
and 6, Rule 15 and Section 11, Rule 13 of the Rules of Court. Resultantly, the
Motion for Reconsideration of petitioner was considered as not filed and did not
toll the running of the period to file an appeal, rendering final and executory the
order of dismissal of LRC Case No. N-201.
 However, after taking into consideration the Supplemental Motion for
Reconsideration of petitioner, the RTC issued another Order[24]dated December 7,
2000, setting aside its Order dated September 7, 2000 in the interest of justice and
resolving to have a full-blown proceeding to determine factual issues in LRC Case
No. N-201.

It was then the turn of respondent to file with the RTC a Motion for
Reconsideration[25] of the Order dated December 7, 2000. In an
[26]
Order dated February 20, 2001, the RTC denied the motion of respondent and
admitted the following:

A thorough review and perusal of the disputed order

dated September 7, 2000 and December 7, 2000, whereby this Court
dismissed [petitioners] petition for registration of Lot No. 1, Dumaguete
Cadastre, and later set aside the Order of September 7, 2000, shows that
there was honest mistake in declaring said lot 1, as a shoreline. Indeed,
the adjoining lots are already titled and bounded by a City Road. It is not
bounded by a sea. The Court wants to correct this error in its findings on
the September 7, 2000 Order, that Lot No. 1 is situated on the shoreline
of DumagueteCity. The Court simply committed an oversight on the
petitioners evidence that the lot in question is a foreshore land x x x
when in fact it is not. And it is for this reason that the court reconsidered
and set aside said September 7, 2000 Order, to correct the same while it
is true that said September 7, 2000 Order had attained its finality, yet this
Court cannot in conscience allow injustice to perpetuate in this case and
that hearing on the merits must proceed to determine the legality and
truthfulness of its application for registration of title.

Respondent sought recourse from the Court of Appeals by filing a Petition

for Certiorari and Prohibition under Rule 65 of the Rules of Court, docketed as
CA-G.R. SP No. 64379. Respondent challenged the RTC Orders dated December
7, 2000 and February 20, 2001 for having been issued by the RTC in grave abuse
of discretion amounting to lack or excess of jurisdiction. Respondent reiterated that
the RTC Order dated September 7, 2000, dismissing LRC Case No. N-201 had
already attained finality. The defects of the Motion for Reconsideration of
petitioner rendered the same as a mere scrap of paper, which did not toll the
running of the prescriptive period to appeal the RTC Order dated September 7,
2000.
 The Court of Appeals, in its Decision dated March 4, 2005, found merit in
the Petition of respondent and set aside the RTC Orders dated December 7, 2000
and February 20, 2001. The appellate court, in its Resolution dated June 6, 2005,
denied the Motion for Reconsideration of petitioner.

Hence, petitioner comes before us via the instant Petition for Review with
the following assignment of error:

GROUND FOR THE APPEAL

Error of law: The March 4, 2005 decision of the Court of Appeals

and its June 6, 2005 Resolution, erred on question of law in setting aside
the Orders of the Regional Trial Court, Branch 44, dated December 7,
2000 and February 20, 2001. The said Orders of the trial court were
made in order to determine factual issues and to correct its error in its
findings on the September 7, 2000 Order. Thus, the Court of Appeals
decision is contrary to law, justice, equity and existing jurisprudence.[27]

Respondent insists on the strict application of Sections 4, 5, and 6, Rule 15

and Section 11, Rule 13 of the Rules of Court. Violations of the said rules were
fatal to the Motion for Reconsideration and Supplemental Motion for
Reconsideration of the petitioner, and as a result, the RTC Order dated September
7, 2000, dismissing LRC Case No. N-201, had already become final and executory
and, thus, beyond the jurisdiction of the RTC to set aside. Respondent urges us to
reject the plea of petitioner for a liberal application of the rules in the absence of a
compelling reason to do so.

We grant the Petition.

The grant of a petition for certiorari under Rule 65 of the Rules of Court
requires grave abuse of discretion amounting to lack or excess of
jurisdiction. Grave abuse of discretion exists where an act is performed with a
capricious or whimsical exercise of judgment equivalent to lack of
jurisdiction. The abuse of discretion must be patent and gross as to amount to an
evasion of positive duty or to a virtual refusal to perform a duty enjoined by law, or
to act at all in contemplation of law, as where the power is exercised in an arbitrary
and despotic manner by reason of passion or personal hostility.[28]

The Court of Appeals erred in granting the writ of certiorari in favor of

respondent. The RTC did not commit grave abuse of discretion when, in its Orders
dated December 7, 2000 and February 20, 2001, it set aside the order of dismissal
of LRC Case No. N-201 and resolved to have a full-blown proceeding to determine
factual issues in said case.

Procedural rules were conceived to aid the attainment of justice. If a

stringent application of the rules would hinder rather than serve the demands of
substantial justice, the former must yield to the latter.[29] In Basco v. Court of
Appeals,[30] we allowed a liberal application of technical rules of procedure,
pertaining to the requisites of a proper notice of hearing, upon consideration of the
importance of the subject matter of the controversy, as illustrated in well-settled
cases, to wit:

The liberal construction of the rules on notice of hearing is exemplified

in Goldloop Properties, Inc. v. CA:

Admittedly, the filing of respondent-spouses' motion for

reconsideration did not stop the running of the period of appeal because
of the absence of a notice of hearing required in Secs. 3, 4 and 5, Rule
15, of the Rules of Court. As we have repeatedly held, a motion that does
not contain a notice of hearing is a mere scrap of paper; it presents no
question which merits the attention of the court. Being a mere scrap of
paper, the trial court had no alternative but to disregard it. Such being the
case, it was as if no motion for reconsideration was filed and, therefore,
the reglementary period within which respondent-spouses should have
filed an appeal expired on 23 November 1989.

But, where a rigid application of that rule will result in a

manifest failure or miscarriage of justice, then the rule may be relaxed,
especially if a party successfully shows that the alleged defect in the
questioned final and executory judgment is not apparent on its face or
from the recitals contained therein. Technicalities may thus be
disregarded in order to resolve the case. After all, no party can even
claim a vested right in technicalities. Litigations should, as much as
possible, be decided on the merits and not on technicalities.

Hence, this Court should not easily allow a party to lose title and
ownership over a party worth P4,000,000.00 for a measly P650,000.00
without affording him ample opportunity to prove his claim that the
transaction entered into was not in fact an absolute sale but one of
mortgage. Such grave injustice must not be permitted to prevail on the
anvil of technicalities.
 Likewise, in Samoso v. CA, the Court ruled:

But time and again, the Court has stressed that the rules of
procedure are not to be applied in a very strict and technical sense. The
rules of procedure are used only to help secure not override substantial
justice (National Waterworks & Sewerage System vs. Municipality of
Libmanan, 97 SCRA 138 [1980]; Gregorio v. Court of Appeals, 72
SCRA 120 [1976]). The right to appeal should not be lightly
disregarded by a stringent application of rules of procedure
especially where the appeal is on its face meritorious and the
interests of substantial justice would be served by permitting the
appeal (Siguenza v. Court of Appeals, 137 SCRA 570 [1985]; Pacific
Asia Overseas Shipping Corporation v. National Labor Relations
Commission, et al., G.R. No. 76595, May 6, 1998). . . .

In the instant case, it is petitioner's life and liberty that is at stake.

The trial court has sentenced him to suffer the penalty of reclusion
perpetuaand his conviction attained finality on the basis of mere
technicality. It is but just, therefore, that petitioner be given the
opportunity to defend himself and pursue his appeal. To do otherwise
would be tantamount to grave injustice. A relaxation of the procedural
rules, considering the particular circumstances herein, is
justified.[31] (Emphasis ours.)

In the case at bar, the Motion for Reconsideration and Supplemental Motion
for Reconsideration of petitioner, which sought the reversal of RTC Order dated
September 7, 2000 dismissing LRC Case No. N-201, cite meritorious grounds that
justify a liberal application of procedural rules.

The dismissal by the RTC of LRC Case No. N-201 for lack of jurisdiction is
patently erroneous.

Basic as a hornbook principle is that jurisdiction over the subject matter of a

case is conferred by law and determined by the allegations in the complaint which
comprise a concise statement of the ultimate facts constituting the plaintiff's cause
of action. The nature of an action, as well as which court or body has jurisdiction
over it, is determined based on the allegations contained in the complaint of the
plaintiff, irrespective of whether or not the plaintiff is entitled to recover upon all
or some of the claims asserted therein. The averments in the complaint and the
character of the relief sought are the ones to be consulted. Once vested by the
allegations in the complaint, jurisdiction also remains vested irrespective of
whether or not the plaintiff is entitled to recover upon all or some of the claims
asserted therein.[32]

As a necessary consequence, the jurisdiction of the court cannot be made to

depend upon the defenses set up in the answer or upon the motion to dismiss; for
otherwise, the question of jurisdiction would almost entirely depend upon the
defendant. 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.[33]

Under Act No. 496, otherwise known as the Land Registration Act, as
amended by Act No. 2347, jurisdiction over all applications for registration of title
to land was conferred upon the Courts of First Instance (CFI) of the respective
provinces in which the land sought to be registered was situated. Jurisdiction over
land registration cases, as in ordinary actions, is acquired upon the filing in court of
the application for registration, and is retained up to the end of the litigation.[34]

The land registration laws were updated and codified by the Property
Registration Decree, and under Section 17 thereof, jurisdiction over an application
for land registration was still vested on the CFI of the province or city where the
land was situated, viz:

SEC. 17. What and where to file. The application for land
registration shall be filed with the Court of First Instance of the province
or city where the land is situated. The applicant shall file together with
the application all original muniments of titles or copies thereof and a
survey plan of the land approved by the Bureau of Lands.

The Clerk of Court shall not accept any application unless it is

shown that the applicant has furnished the Director of Lands with a copy
of the application and all annexes.

Batas Pambansa Blg. 129, otherwise known as The Judiciary

Reorganization Act of 1980, created the RTC[35] in place of the CFI.Presently,
jurisdiction over an application for land registration remains with the RTC where
the land is situated, except when such jurisdiction is delegated by the Supreme
Court to the Metropolitan Trial Court, Municipal Trial Courts, and Municipal
Circuit Trial Courts under certain circumstances.[36]
 It is not disputed that the Application for Original Registration of Title filed
by petitioner before the RTC of the City of Dumagueteconformed to Section 15 of
the Property Registration Decree, which prescribes the form and contents of such
applications. In its Application, petitioner prayed that its title to the subject
property, which it repeatedly alleged to have acquired through continuous and
adverse possession and occupation of the said property for more than 30 years or
since 1960, be placed under the land registration laws. The allegations and prayer
in the Application of petitioner were sufficient to vest jurisdiction on the RTC over
the said Application upon the filing thereof.

Respondent sought the dismissal of LRC Case No. N-201 on the ground of
lack of jurisdiction, not because of the insufficiency of the allegations and prayer
therein, but because the evidence presented by petitioner itself during the trial
supposedly showed that the subject property is a foreshore land, which is not
alienable and disposable. The RTC granted the Motion to Dismiss of respondent in
its Order dated September 7, 2000. The RTC went beyond the allegations and
prayer for relief in the Application for Original Registration of petitioner, and
already scrutinized and weighed the testimony of Engr. Dorado, the only witness
petitioner was able to present.

As to whether or not the subject property is indeed foreshore land is a factual

issue which the RTC should resolve in the exercise of its jurisdiction, after giving
both parties the opportunity to present their respective evidence at a full-blown
trial. As we have explained in the Estate of the Late Jesus S. Yujuico v.
Republic[37]:

The plain import of Municipality of Antipolo is that a land

registration court, the RTC at present, has no jurisdiction over the
subject matter of the application which respondent Republic claims is
public land. This ruling needs elucidation.

Firmly entrenched is the principle that jurisdiction over the

subject matter is conferred by law. Consequently, the proper CFI (now
the RTC) under Section 14 of PD 1529 (Property Registration Decree)
has jurisdiction over applications for registration of title to land.

xxxx

Conformably, the Pasig-Rizal CFI, Branch XXII has jurisdiction

over the subject matter of the land registration case filed by Fermina
 Castro, petitioners predecessor-in-interest, since jurisdiction over the
subject matter is determined by the allegations of the initiatory pleading
the application.Settled is the rule that the authority to decide a case and
not the decision rendered therein is what makes up jurisdiction. When
there is jurisdiction, the decision of all questions arising in the case is but
an exercise of jurisdiction.

In our view, it was imprecise to state in Municipality of

Antipolo that the Land Registration Court [has] no jurisdiction to
entertain the application for registration of public property x x x for such
court precisely has the jurisdiction to entertain land registration
applications since that is conferred by PD 1529. The applicant in a land
registration case usually claims the land subject matter of the application
as his/her private property, as in the case of the application of
Castro. Thus, the conclusion of the CA that the Pasig-Rizal CFI has no
jurisdiction over the subject matter of the application of Castro has no
mooring. The land registration court initially has jurisdiction over
the land applied for at the time of the filing of the application. After
trial, the court, in the exercise of its jurisdiction, can determine
whether the title to the land applied for is registerable and can be
confirmed. In the event that the subject matter of the application
turns out to be inalienable public land, then it has no jurisdiction to
order the registration of the land and perforce must dismiss the
application. [38] (Emphasis ours.)

It is true that petitioner, as the applicant, has the burden of proving that the
subject property is alienable and disposable and its title to the same is capable of
registration. However, we stress that the RTC, when it issued its Order
dated September 7, 2000, had so far heard only the testimony of Engr. Dorado, the
first witness for the petitioner. Petitioner was no longer afforded the opportunity to
present other witnesses and pieces of evidence in support of its Application. The
RTC Order dated September 7, 2000 already declaring the subject property as
inalienable public land, over which the RTC has no jurisdiction to order
registration was evidently premature.

The RTC Order dated September 7, 2000 has not yet become final and
executory as petitioner was able to duly file a Motion for Reconsideration and
Supplemental Motion for Reconsideration of the same, which the RTC eventually
granted in its Order dated December 7, 2000. Admittedly, said motions filed by
petitioner did not comply with certain rules of procedure. Ordinarily, such non-
compliance would have rendered said motions as mere scraps of paper, considered
as not having been filed at all, and unable to toll the reglementary period for an
appeal. However, we find that the exceptional circumstances extant in the present
case warrant the liberal application of the rules.

Also, the Motion for Reconsideration and Supplemental Motion for

Reconsideration of the Order dated September 7, 2000 filed by petitioner did not
comply with Section 11, Rule 13 of the Rules of Court, for these did not include a
written explanation why service or filing thereof was not done
personally. Nonetheless, in Maceda v. Encarnacion de Guzman Vda. de
Magpantay,[39] citing Solar Team Entertainment, Inc. v. Ricafort,[40] and Musa v.
Amor,[41] we explained the rationale behind said rule and the mandatory nature of
the same, vis--vis the exercise of discretion by the court in case of non-compliance
therewith:

In Solar Team Entertainment, Inc. v. Ricafort, this Court, passing

upon Section 11 of Rule 13 of the Rules of Court, held that a court has
the discretion to consider a pleading or paper as not filed if said rule is
not complied with.

Personal service and filing are preferred for obvious

reasons. Plainly, such should expedite action or resolution
on a pleading, motion or other paper; and conversely,
minimize, if not eliminate, delays likely to be incurred if
service or filing is done by mail, considering the
inefficiency of the postal service. Likewise, personal
service will do away with the practice of some lawyers
who, wanting to appear clever, resort to the following less
than ethical practices: (1) serving or filing pleadings by
mail to catch opposing counsel off-guard, thus leaving the
latter with little or no time to prepare, for instance,
responsive pleadings or an opposition; or (2) upon
receiving notice from the post office that the registered
containing the pleading of or other paper from the adverse
party may be claimed, unduly procrastinating before
claiming the parcel, or, worse, not claiming it at all, thereby
causing undue delay in the disposition of such pleading or
other papers.

If only to underscore the mandatory nature of this

innovation to our set of adjective rules requiring personal
 service whenever practicable, Section 11 of Rule 13 then
gives the court the discretion to consider a pleading or
paper as not filed if the other modes of service or filing
were not resorted to and no written explanation was made
as to why personal service was not done in the first
place. The exercise of discretion must, necessarily
consider the practicability of personal service, for
Section 11 itself begins with the clause whenever
practicable.

We thus take this opportunity to clarify that under

Section 11, Rule 13 of the 1997 Rules of Civil Procedure,
personal service and filing is the general rule, and resort to
other modes of service and filing, the exception.
Henceforth, whenever personal service or filing is
practicable, in the light of the circumstances of time, place
and person, personal service or filing is mandatory. Only
when personal service or filing is not practicable may resort
to other modes be had, which must then be accompanied by
a written explanation as to why personal service or filing
was not practicable to begin with. In adjudging the
plausibility of an explanation, a court shall likewise
consider the importance of the subject matter of the case or
the issues involved therein, and the prima facie merit of the
pleading sought to be expunged for violation of Section 11.
In Musa v. Amor, this Court, on noting the impracticality of
personal service, exercised its discretion and liberally applied Section 11
of Rule 13:

As [Section 11, Rule 13 of the Rules of Court]

requires, service and filing of pleadings must be done
personally whenever practicable. The court notes that in
the present case, personal service would not be
practicable. Considering the distance between the Court
of Appeals and Donsol, Sorsogon where the petition was
posted, clearly, service by registered mail [sic] would have
entailed considerable time, effort and expense. A written
explanation why service was not done personally might
have been superfluous. In any case, as the rule is so
worded with the use of may, signifying permissiveness,
a violation thereof gives the court discretion whether or
 not to consider the paper as not filed. While it is true
that procedural rules are necessary to secure an orderly and
speedy administration of justice, rigid application of
Section 11, Rule 13 may be relaxed in this case in the
interest of substantial justice.

In the case at bar, the address of respondents counsel is Lopez,

Quezon, while petitioner Sonias counsels is Lucena City. Lopez,
Quezon is 83 kilometers away from Lucena City. Such distance makes
personal service impracticable. As in Musa v. Amor, a written
explanation why service was not done personally might have been
superfluous.[42] (Emphases supplied and citations omitted.)

Our ruling in the above-cited cases is relevant to the instant case. Counsel
for petitioner holds office in Dumaguete City, Negros Oriental, in the Visayas;
while counsel for respondent holds office in Quezon City, Metro Manila,
in Luzon. Given the considerable distance between the offices of these two
counsels, personal service of pleadings and motions by one upon the other was
clearly not practicable and a written explanation as to why personal service was not
done would only be superfluous.[43] In addition, we refer once more to the merits of
the Motion for Reconsideration and Supplemental Motion for Reconsideration of
the RTC Order dated September 7, 2000 filed by petitioner, which justify the
liberal interpretation of Section 11, Rule 13 of the Rules of Court in this case.

Jurisprudence confirms that the requirements laid down in Sections 4, 5, and

6, Rule 15 of the Rules of Court that the notice of hearing shall be directed to the
parties concerned, and shall state the time and place for the hearing of the motion,
are mandatory. If not religiously complied with, they render the motion pro
forma. As such, the motion is a useless piece of paper that will not toll the running
of the prescriptive period.[44]

Yet, again, there were previous cases with peculiar circumstances that had
compelled us to liberally apply the rules on notice of hearing and recognize
substantial compliance with the same. Once such case is Philippine National Bank
v. Paneda,[45] where we adjudged:
Thus, even if the Motion may be defective for failure to address the
notice of hearing of said motion to the parties concerned, the defect was
cured by the court's taking cognizance thereof and the fact that the
adverse party was otherwise notified of the existence of said pleading.
 There is substantial compliance with the foregoing rules if a copy of the
said motion for reconsideration was furnished to the counsel of herein
private respondents.

In the present case, records reveal that the notices in the Motion
were addressed to the respective counsels of the private respondents and
they were duly furnished with copies of the same as shown by the
receipts signed by their staff or agents.

Consequently, the Court finds that the petitioner substantially

complied with the pertinent provisions of the Rules of Court and
existing jurisprudence on the requirements of motions and
pleadings.[46] (Emphasis supplied.)

It was not refuted that petitioner furnished respondent and respondent

actually received copies of the Motion for Reconsideration, as well as the
Supplemental Motion for Reconsideration of the RTC Order dated September 7,
2000 filed by petitioner. As a result, respondent was able to file its Oppositions to
the said Motions. The RTC, in issuing its Order dated December 7, 2000, was able
to consider the arguments presented by both sides. Hence, there was substantial
compliance by petitioner with the rules on notice of hearing for its Motion for
Reconsideration and Supplemental Motion for Reconsideration of the RTC Order
dated September 7, 2000. Respondent cannot claim that it was deprived of the
opportunity to be heard on its opposition to said Motions.

In view of the foregoing circumstances, the RTC judiciously, rather than

abusively or arbitrarily, exercised its discretion when it subsequently issued the
Order dated December 7, 2000, setting aside its Order dated September 7, 2000
and proceeding with the trial in LRC Case No. N-201.

WHEREFORE, the instant Petition for Review of petitioner City of

Dumaguete is hereby GRANTED. The Decision dated March 4, 2005 and
Resolution dated June 6, 2005 of the Court Appeals in CA-G.R. SP No. 64379
are SET ASIDE, and the Orders dated December 7, 2000 and February 20, 2001
of Branch 44 of the Regional Trial Court of the City of Dumaguete in LRC Case
No. N-201 are REINSTATED.The said trial court is DIRECTED to proceed with
the hearing of LRC Case No. N-201 with dispatch.

SO ORDERED
 HIRD DIVISION

G.R. No. 209324, December 09, 2015

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE BUREAU OF CUSTOMS, Petitioner, v.PILIPINAS SHELL PETROLEUM CORPORATION, Respondent.

DECISION

VILLARAMA, JR., J.:

Assailed in this petition for review under Rule 45 are the Decision 1 dated February 13, 2013 and Resolution2 dated June 3, 2013 of the Court of Appeals (CA) in CA-G.R.
CV No. 95436 which affirmed the Orders3 dated April 28, 2010 and July 2, 2010 of the Regional Trial Court (RTC) of Manila, Branch 49 in Civil Case No. 02-103191.

Factual Antecedents

Pilipinas Shell Petroleum Corporation (PSPC), a domestic corporation registered with the Board of Investments (BOI), is engaged in the importation, refining and sale of
petroleum products in the country. For its importations, PSPC was assessed and required to pay customs duties and internal revenue taxes.

Under Deed of Assignment4 dated May 7, 1997, Filipino Way Industries (FWI) assigned the following Tax Credit Certificates 5 (TCCs) to PSPC:

TCC# 006889 P 2,542,918.00

TCC # 006977 2,573,422.00
TCC# 006978 2,559,493.00
TCC # 006979 2,413,079.00
TOTAL P10,088,912.006
On the belief that the TCCs were actually good and valid, the Bureau of Customs (BOC) accepted and allowed PSPC to use the above TCCs to pay the customs duties
and taxes due on its oil importations.

The One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center7 ("center") undertakes the processing of TCCs and approval of their transfers. It is composed of
a representative from the Department of Finance (DOF) as its chairperson; and the members thereof are representatives of the BOI, BOC and Bureau of Internal
Revenue (BIR).

On November 3, 1999 the Center, through then Finance Secretary Edgardo B. Espiritu, informed BIR Commissioner Beethoven L. Rualo that pursuant to EXCOM
Resolution No. 03-05-99, it has cancelled various Tax Debit Memos (TDMs) issued to PSPC and Petron Corporation against their TCCs which were found to have been
fraudulently issued and transferred. These include the subject TCCs sold by FWI to PSPC. The Center thus advised that it will be demanding from the said oil companies
payment corresponding to the amount of the TCCs as evidenced by the TDMs, and accordingly directed the BIR to collect the amount utilized on the TCCs, including the
related penalties, surcharges and interests.8 A similar letter was sent to Customs Commissioner Nelson Tan regarding the cancellation of TDMs issued to PSPC based on
the Center's finding that the TCCs utilized by PSPC have been fraudulently issued and transferred. 9

On April 3, 2002, the Republic of the Philippines represented by the BOC filed the present collection suit in the RTC (Civil Case No. 02-103191) for the payment of
P10,088,912.00 still owed by PSPC after the invalidation of the subject TCCs.

Meanwhile, PSPC filed with the Court of Tax Appeals (CTA Case No. 6484) a petition for review questioning the factual and legal bases of BOC's collection efforts.

Subsequently, PSPC moved to dismiss Civil Case No. 02-103191 on the ground that the RTC had no jurisdiction over the subject matter and that the complaint for
collection was prematurely filed in view of its pending petition for review in the CTA. The RTC denied the motion to dismiss and PSPC eventually filed its answer
questioning the RTC's jurisdiction. When the RTC issued a notice of pre-trial, PSPC moved for reconsideration of the order denying its motion to dismiss. The RTC
denied the motion for reconsideration, prompting PSPC to elevate the matter to the CA via a petition for certiorari (CA-G.R. SP No. 71756). On October 23, 2003, the
CA rendered decision denying PSPC's petition. With the denial of its motion for reconsideration, PSPC sought recourse from this Court in a petition for review on
certiorari (G.R. No. 161953). In a Decision 10 dated March 6, 2008, this Court denied PSPC's petition, viz.:
Inasmuch as the present case did not involve a decision of the Commissioner of Customs in any of the instances enumerated in Section 7(2) of RA 1125, the CTA had
no jurisdiction over the subject matter. It was the RTC that had jurisdiction under Section 19(6) of the Judiciary Reorganization Act of 1980, as
amended: chanRoblesvirtua lLawl ib rary

xxxx

In view of the foregoing, the RFC should forthwith proceed with Civil Case No. 02-103191 and determine the extent of petitioner's liability.

We are not unmindful of petitioner's pending petition for review in the CTA where it is questioning the validity of the cancellation of the TCCs. However, respondent
cannot and should not await the resolution of that case before it collects petitioner's outstanding customs duties and taxes for such delay will unduly restrain the
performance of its functions. Moreover, if the ultimate outcome of the CTA case turns out to be favorable to petitioner, the law affords it the adequate remedy of
seeking a refund.

WHEREFORE, this petition is hereby DENIED. The Regional Trial Court of Manila, Branch 19 is ordered to proceed expeditiously with the pre-trial conference and trial
of Civil Case No. 02-103191.

Costs against petitioner.

SO ORDERED.11 (Emphasis supplied)

As to CTA Case No. 6484, the CTA denied BOC's motion to dismiss on the ground of prescription. When the CTA denied the BOC's motion for reconsideration, the BOC
appealed to the CA, which reversed the questioned CTA resolutions. PSPC again sought recourse from this Court via a petition for review on certiorari (G.R. No.
176380). By Decision12 dated June 18, 2009, we denied the petition and held that the present case does not involve a tax protest case within the jurisdiction of the CTA
to resolve. Citing our previous ruling in Pilipinas Shell Petroleum Corporation v. Republic13 we ruled that the appropriate forum to resolve the issues raised by PSPC
before the CTA, which were all related to the fact and efficacy of the payments made, should be the collection case before the RTC where PSPC can put up the fact of
its payment as a defense.

With the resumption of proceedings in the RTC, the BOC filed an Amended Complaint, to which PSPC filed a Second Amended Answer. Pre-trial was terminated and the
RTC summarized the issues in its Pre-Trial Order14 dated September 9, 2009, to wit:
The following issues raised by the plaintiffs:

a. Whether or not plaintiff Republic has cause of action against defendants;

b. Whether or not defendant Pilipinas Shell is [a] transferee in good faith [of] Tax Credit Certificates;

c. Whether or not defendants are liable to pay the Republic the amount of Phpl0,088,912.00 represents unpaid taxes;

d. Whether or not the Tax Credit Certificate was spurious and fraudulent.

The following issues raised by the defendant Pilipinas Shell:

a. Whether the defendants PSPC is liable for the amount of Php10,088,912.00 in customs duties and taxes covered by cancelled subject Tax Credit
Certificates, However, there are sub-issues. These are include[d] in our pre-trial brief;

b. Whether or not plaintiff is liable for moral and exemplary and Attorney's fees; and

c. Whether or not defendant Filipino Way is liable to defendant PSPC in case of successful collection of customs taxes against PSPC.15

On November 16, 2009, PSPC filed a motion for summary judgment arguing that there is no basis for the Republic's claims considering that the subject TCCs were
already fully utilized for the payment of PSPC's customs duties and taxes, and that EXCOM Resolution No. 03-05-99, the basis of the cancellation of the TCCs, was
declared void and invalid in Pilipinas Shell Petroleum Corporation v. CIR,16 where this Court likewise ruled that the subject TCCs cannot be cancelled on the basis of
post-audit since a post-audit is not allowed and not a suspensive condition. PSPC further contended that the Republic's cause of action had already prescribed when it
attempted to collect PSPC's customs duties and taxes only four years later, beyond the one-year prescriptive period to file a collection case. Lastly, PSPC asserted that
even assuming the TCCs were fraudulently obtained by FWI, an innocent purchaser for value like PSPC cannot be prejudiced as held in the aforementioned case.

In its Comment/Opposition, BOC argued that rendition of summary judgment is inappropriate in this case in view of disputed facts that necessitate a full-blown trial
where both parties can present evidence on their respective claims. BOC pointed out that PSPC cannot rely on the Deed of Assignment as proof that it had no
participation in the issuance of the TCCs. PSPC should prove at the trial that there was a valid transfer in good faith and for value of the subject TCCs. As to the rulings
in the case of Pilipinas Shell Petroleum Corporation v. CIR,17 these are inapplicable here because first, what is involved therein are taxes owed to the BIR and there was
no finding of fraud against PSPC whereas in the present case the BOC can readily prove during trial that PSPC committed fraud.

On February 22, 2010, the RTC denied the motion for summary judgment in view of factual disputes which can only be resolved by trial on the merits. Specifically, it
stated that presentation of evidence is necessary to determine if PSPC is a mere transferee in good faith and for value of the subject TCCs and that there was a valid
transfer/assignment between PSPC and FWI.18

However, on motion for reconsideration by PSPC, the RTC reversed its earlier ruling and granted the motion for summary judgment under its Order19 dated April 28,
2010. The RTC cited Pilipinas Shell Corporation v. Republic20 which supposedly settled factual and legal issues raised by BOC in its pleadings and arguments, specifically
PSPC's not having committed fraud. As there are no more disputed matters, the RTC held that there is no more need for a trial to prove that the subject TCCs have
been fully utilized by PSPC and that they were cancelled due to an invalid post-audit under the authority of EXCOM Resolution No. 03-05-99.

The RTC thus decreed:

WHEREFORE, premises considered, the Order dated February 22, 2010 is hereby REVERSED and SET ASIDE. The instant case against defendant PSPC is DISMISSED.
However, the case against defendant Filipino Way still SUBSISTS.

Let the trial of this case continue against the other Defendant namely, Filipino Way Industries, as previously scheduled on May 19, 2010 at 1:00 o'clock in the
afternoon.

SO ORDERED.21 ChanRoble sVirtualawl ibra ry

With the denial of its motion for reconsideration, BOC appealed to the CA. By Decision dated February 13, 2013, the CA denied the appeal and affirmed the questioned
orders of the RTC. BOC's motion for reconsideration was likewise denied by the CA.

According to the CA, BOC adopted a wrong mode of appeal because whether the RTC erred in rendering summary judgment is purely a legal issue, jurisdiction over
which is vested only in this Court. Even assuming that the CA can entertain BOC's appeal, the CA said it found no genuine issues raised by the parties' pleadings and
arguments that necessitate a fullblown trial. The CA further held that the rule on stare decisis applies in the present case considering that the legal and factual issues
have been previously discussed and resolved by this Court in Pilipinas Shell Petroleum Corporation v. CIR.22

Issues

The following issues clearly emerge from the present controversy: (1) Does the Republic's (petitioner) appeal involve purely questions of law and hence a wrong
remedy from the assailed RTC orders?; (2) Wliether or not summary judgment is proper; (3) Does the ruling in Pilipinas Shell Petroleum Corporation v. CIR23 apply to
this case under the doctrine of stare decisis; and (4) Whether or not petitioner's claim is barred by prescription.

Petitioner's Arguments

Citing the cases of Nocom v. Camerino24 and Heirs of Baldomero Roxas v. Garcia25 petitioner argues that since a summary judgment has the effect of adjudication on
the merits, appeal under Rule 41 of the Rules of Court is the proper remedy.

As to the propriety of summary judgment rendered by the RTC, petitioner underscores that the collection case it filed against PSPC is founded on the fact that the latter
utilized the fraudulently-secured TCCs for payment of customs duties and taxes that arose from its various oil importations, and their cancellation did not extinguish its
liability to the government. The matter of whether or not PSPC is a transferee in good faith and for value is a genuine issue to be resolved, and must be ventilated in a
full trial. The issue of whether or not PSPC is guilty of fraud likewise calls for the presentation of evidence at the trial.

Petitioner mentions other factual inquiries which it said arose in this case, such as the manner by which FWI acquired the subject TCCs; the legality of their transfer to
PSPC; the results of the post-audit conducted on the subject TCCs; whether PSPC claimed a return of the consideration from FWI upon the cancellation of the TCCs; the
veracity of the letter from Equitable Banking Corporation stating that the credit memos, supposedly used by FWI in securing the TCCs, do not conform to the bank's
records; and what are the company papers and export documents submitted for the claim of tax credits.

Petitioner also argues that Pilipinas Shell Petroleum Corporation v. CIR26 is not applicable as said case involves the assessment of deficiency taxes which was filed
before the CTA, hence a tax case, whereas here it is a civil case for collection of sum of money which was filed in a regular court. More important, the facts in the
aforesaid case did not clearly establish the fraudulent acts committed by the original grantees of tax credits in the procurement of TCCs from the Center, whereas in the
present case, petitioner can sufficiently prove that the documents submitted by the original grantee (FWI) for the claim of tax credits were forgeries and the TCCs
subsequently issued had absolutely no monetary value to back up their issuance. Thus, where the facts in the two cases under consideration are different, stare
decisis finds no application.
On other legal issues that were previously settled in Pilipinas Shell Petroleum Corporation v. CIR,27petitioner submits there is an extreme urgency to revisit this Court's
ruling
x x x because of the great danger and prejudice it had caused to the several collection cases filed by the government which are pending before several regular courts
involving TCCs in the hundreds of millions of pesos. Most defendants in these cases assert to be "buyers or transferees in good faith" and capitalize on the ruling of this
Honorable Court in the Shell case. However, if the only basis for finding good faith on the part of the transferee of TCCs is the mere approval of the transfer by the DOF
One Stop Shop Center, then all these pending cases, as above-mentioned, must be dismissed, since all the transfers of the TCCs were approved by the Center. This is
precisely the very reason why the government filed several cases before the Office of the Ombudsman against the personnel and officers of the One Stop Shop Center,
including private individuals, because of the collusion and conspiracy they contrived in order to defraud the government of several billions of pesos involving the
issuance and transfers of TCCs. This is now infamously known as the "tax credit scam" because it was committed in grandiose style by a crime syndicate.

In the final analysis, the ultimate victim in this scheme is not the Republic but the Filipino people who did not commit mistake or wrongdoing, but rather, its agents.
Hence, the State cannot be made to bear the loss of revenues on account of scheming individuals or entities that are out to defraud the government or evade the
payment of tax liabilities.28
ChanRoble sVirtualawl ibra ry

Respondent's Arguments

PSPC contends that the assailed orders of the RTC granting summary judgment has already attained finality since petitioner availed of the wrong remedy before the CA.
It asserts that the CA did not err in upholding the RTC's ruling that there exists no genuine issues of fact in the present case.

On the alleged fraudulent issuance of the subject TCCs, PSPC maintains that it cannot be prejudiced by such fraud which, by petitioner's own admission, was committed
by FWI. Being a transferee in good faith and for value of the subject TCCs, these matters raised by petitioner are thus irrelevant. That PSPC is a transferee in good faith
and for value was admitted by petitioner during the pre-trial hearing held on September 9, 2009.

PSPC argues that, contrary to petitioner's claims, the CA correctly applied this Court's rulings in Pilipinas Shell Petroleum Corporation v. CIR29 under the doctrine
of stare decisis. In any event, it asserts that petitioner's cause of action had already prescribed since the subject TCCs were already fully utilized as payment for PSPC's
customs duties and taxes on November 17, 1997, while petitioner attempted to collect only on February 15, 2002 or four years later, beyond the one year period to file
the present case.

Our Ruling

The petition is meritorious.

Propriety of Summary Judgment a Question of Law, hence, the Remedy is a Petition for Review Under Rule 45

Section 2, Rule 41 of the 1997 Rules of Civil Procedure, as amended, provides for two remedies from the final orders or judgments of the RTC in the exercise of its
original jurisdiction, viz.:
Section 2. Modes of appeal. -

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

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

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

(Emphasis supplied)
Thus, when an appeal raises only pure questions of law, it is this Court that has the sole jurisdiction to entertain the same. On the other hand, appeals involving both
questions of law and fact fall within the exclusive appellate jurisdiction of the CA. 30

A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises as to the truth or
falsity of the alleged facts. For a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants
or any of them. The resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review
of the evidence presented, the question posed is one of fact. Thus, the test of whether a question is one of law or of fact is not the appellation given to such question
by the party raising the same; rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is
a question of law; otherwise it is a question of fact.31

We have held that the question of whether the RTC erred in rendering summary judgment is one of law, thus:
Any review by the appellate court of the propriety of the summary judgment rendered by the trial court based on these pleadings would not involve an evaluation of
the probative value of any evidence, but would only limit itself to the inquiry of whether the law was properly applied given the facts and these supporting documents.
Therefore, what would inevitably arise from such a review are pure questions of law, and not questions of fact, which are not proper in an ordinary appeal under Rule
41, but should be raised by way of a petition for review on certiorari under Rule 45.32 Cha nRobles Virtua lawlib rary

Petitioner raised as sole issue in its brief filed with the CA the RTC's erroneous grant of summary judgment in favor of PSPC based on its finding that there exists no
genuine factual issue. Obviously, it availed of the wrong mode of appeal when it filed a notice of appeal in the RTC under Section 2(a), Rule 41, instead of a petition for
review on certiorari in this Court under Rule 45.

Relaxation of the Rule on Appeal

However, despite such lapse, a relaxation of the rule on appeal is justified under the circumstances. The CA found no reversible error in the grant of summary judgment
in favor of PSPC. Accordingly, it affirmed the assailed orders of the RTC.

Considering the Republic's stake in the outcome of the proceedings in Civil Case No. 02-103191, among the several collection suits it has instituted in the drive to
recover huge revenue losses from spurious tax credit certificates that proliferated in the 1990s, we cannot accede to PSPC's contention that petitioner's erroneous
appeal has rendered the Orders dated April 28, 2010 and July 2, 2010 of the RTC final and executory.

In Barangay Sangalang v. Barangay Maguihan33 we ratiocinated:

In any case, as in the past, this Court has recognized the emerging trend towards a liberal construction of the Rules of Court. In Ong him Sing, Jr. v. FEB Leasing and
Finance Corporation, this Court stated:
Courts have the prerogative to relax procedural rules of even the most mandatory character, mindful of the duty to reconcile both the need to speedily put an end to
litigation and the parties' right to due process. In numerous cases, this Court has allowed liberal construction of the rules when to do so would serve the demands of
substantial justice and equity. In Aguam v. Court of Appeals, the Court explained:
The court has the discretion to dismiss or not to dismiss an appellant's appeal. It is a power conferred on the court, not a duty. The "discretion must be a sound one, to
be exercised in accordance with the tenets of justice and fair play, having in mind the circumstances obtaining in each case." Technicalities, however, must be avoided.
The law abhors technicalities that impede the cause of justice. The court's primary duty is to render or dispense justice. "A litigation is not a game of technicalities."
"Lawsuits, unlike duels, are not to be won by a rapier's thrust. Technicality, when it deserts its proper office as an aid to justice and becomes its great hindrance and
chief enemy, deserves scant consideration from courts." Litigations must be decided on their merits and not on technicality. Every party-litigant must be afforded the
amplest opportunity for the proper and just determination of his cause, free from the unacceptable plea of technicalities. Thus, dismissal of appeals purely on technical
grounds is frowned upon where the policy of the court is to encourage hearings of appeals on their merits and the rules of procedure ought not to be applied in a very
rigid, technical sense; rules of procedure are used only to help secure, not override substantial justice. It is a far better and more prudent course of action for the court
to excuse a technical lapse and afford the parties a review of the case on appeal to attain the ends ol" justice rather than dispose of the case on technicality and cause
a grave injustice to the parties, giving a false impression of speedy disposal of cases while actually resulting in more delay, if not a miscarriage of justice.
Thus, notwithstanding petitioner's wrong mode of appeal, the CA should not have so easily dismissed the petition, considering that the parties involved are local
government units and that what is involved is the determination of their respective territorial jurisdictions. x x x34 ChanRob les Virtualawl ibra ry
Summary Judgment Not Proper

Under Rule 35 of the 1997 Rules of Civil Procedure, as amended, except as to the amount of damages, when there is no genuine issue as to any material fact and the
moving party is entitled to a judgment as a matter of law, summary judgment may be allowed:
Section 1. Summary Judgment for claimant. - A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at any time
after the pleading in answer thereto has been served, move with supporting affidavits, depositions or admissions for a summary judgment in his favor upon all or any
part thereof.
Summary judgment is a procedural device resorted to in order to avoid long drawn out litigations and useless delays. When the pleadings on file show that there are no
genuine issues of fact to be tried, the Rules allow a party to obtain immediate relief by way of summary judgment, that is, when the facts are not in dispute, the court
is allowed to decide the case summarily by applying the law to the material facts.35 Even if on their face the pleadings appear to raise issues, when the affidavits,
depositions and admissions show that such issues are not genuine, then summary judgment as prescribed by the Rules must ensue as a matter of law. The
determinative factor, therefore, in a motion for summary judgment, is the presence or absence of a genuine issue as to any material fact.36

For a full-blown trial to be dispensed with, the party who moves for summary judgment has the burden of demonstrating clearly the absence of genuine issues of fact,
or that the issue posed is patently insubstantial as to constitute a genuine issue. Genuine issue means an issue of fact which calls for the presentation of evidence as
distinguished from an issue which is fictitious or contrived.37

Petitioner's complaint is premised mainly on the alleged fraudulent issuance and transfer of the subject TCCs. As stated in the pre-trial order, petitioner submitted for
trial the issue of whether or not PSPC is a transferee in good faith.

In Pilipinas Shell Petroleum Corporation v. CIR,38 we ruled that "[t]he transferee in good faith and for value may not be unjustly prejudiced by the fraud committed by
the claimant or transferor in the procurement or issuance of the TCC from the Center."
A transferee in good faith and for value of a TCC who has relied on the Center's representation of the genuineness and validity of the TCC transferred to it may not be
legally required to pay again the tax covered by the TCC which has been belatedly declared null and void, that is, after the TCCs have been fully utilized through
settlement of internal revenue tax liabilities. Conversely, when the transferee is party to the fraud as when it did not obtain the TCC for value or was a party to or has
knowledge of its fraudulent issuance, said transferee is liable for the taxes and for the fraud committed as provided for by law.39ChanRobles Vi rtua lawli brary

The RTC found no genuine factual issue as far as PSPC's status as innocent purchaser in good faith and for value, relying on the following underlined portion of this
Court's decision in Pilipinas Shell Petroleum Corporation v. Republic40 (March 6, 2008):
THE FILING OF THE COLLECTION CASE WAS A PROPER REMEDY

Assessments inform taxpayers of their tax liabilities. Under the TCCP, the assessment is in the form of a liquidation made on the face of the import entry return and
approved by the Collector of Customs. Liquidation is the final computation and ascertainment by the Collector of Customs of the duties due on imported
merchandise based on official reports as to the quantity, character and value thereof, and the Collector of Customs' own finding as to the applicable rate of duty. A
liquidation is considered to have been made when the entry is officially stamped "liquidated."

Petitioner claims that it paid the duties due on its importations. Section 1603 of the old TCCP stated:
Section 1603. Finality of Liquidation. When articles have been entered and passed free of duty or final adjustments of duties made, with subsequent delivery, such
entry and passage free of duty or settlement of duties will, after the expiration of one year from the date of the final payment of duties, in the absence of fraud or
protest, be final and conclusive upon all parties, unless the liquidation of the import entry was merely tentative.
An assessment or liquidation by the BoC attains finality and conclusiveness one year from the date of the final payment of duties except when:
(a) there was fraud;

(b) there is a pending protest or

(c) the liquidation of import entry was merely tentative.

None of the foregoing exceptions is present in this case. There was no fraud as petitioner claimed (and was presumed) to be in good faith. Respondent does not,
dispute this. Moreover, records show that petitioner paid those duties without protest using its TCCs. Finally, the liquidation was not a tentative one as the assessment
had long become final and incontestable. Consequently, pursuant to Yabes and because of the cancellation of the TCCs, respondent had the right to file a collection
case. (Underscoring supplied)
Upon reading the entire text of the above decision, it can be gleaned that PSPC (petitioner therein) had questioned the jurisdiction of the RTC, arguing that said court
has no jurisdiction over Civil Case No. 02-103191 (collection case) in view of the pendency of PSPC's petition for review in the CTA challenging the BOC's assessment of
the customs duties and taxes covered by the same TCCs involved in this case. Citing Yabes v. Flojo,41 PSPC contended that the RTC acquires jurisdiction over a
collection case only if an assessment made by the CIRhas become final and incontestable.

Addressing the issue of prematurity of BOC's collection case in the RTC, we cited three exceptions from the rule that an assessment becomes final and conclusive one
year from the date of final payment of duties: among which is when there is fraud. The decision then declares that none of the cited exceptions are present, specifically
stating that there was no fraud as petitioner claimed (and was presumed) to be in good faith, and the BOC does not dispute it. It is this statement which the RTC
deemed as establishing PSPC's status as transferee in good faith and for value of the subject TCCs. However, we find the RTC's reliance on this statement in the earlier
case involving the issue of jurisdiction of the RTC as misplaced and erroneous. Such statement pertained to fraud in the computation or accuracy of the customs duties
and taxes due on the subject importations, which concerns the correctness of the quantity and class of goods declared by the importer PSPC as basis for the
assessment by the BOC. There may have been preconceived courses of action purposely adopted by importers to evade the payment of the correct customs duties.
Clearly, the fraud mentioned in the said decision does not refer to the fraud in the issuance and transfer of TCCs for which the petitioner seeks to recover unpaid
customs duties and taxes, subject matter of the present controversy. The latter has to do with presentation of spurious documents that would render the TCCs
worthless, resulting in non-payment of the assessed customs duties and taxes.

It bears stressing also that the collection case is not based on any revised or new assessment of customs duties and taxes on PSPC's oil importations. As we noted
in Pilipinas Shell Petroleum Corporation v. Commissioner of Customs42 BOC's demand letters to PSPC merely reissued the original assessments that were previously
settled by it with the use of the TCCs. But since the TCCs were cancelled, the tax liabilities of PSPC under the original assessments were considered unpaid; hence, the
demand letters and actions for collection.

Moreover, it would be absurd to interpret such statement in our decision in Pilipinas Shell Petroleum Corporation v. Republic43 (March 6, 2008) as a judicial declaration
of PSPC's status as a transferee in good faith and for value of the subject TCCs when in the same decision we ordered the case remanded to the RTC for proceeding
with the pre-trial where issues for trial still have to be determined by the parties. Neither should such statement be regarded as an admission by petitioner because the
latter's complaint was anchored chiefly on the alleged fraud and irregularity in the issuance and transfer of the TCCs, with both the transferee (PSPC) and transferor
(FWI) impleaded as defendants.

In its Comment, PSPC claims that during the pre-trial hearing, the Solicitor General's representative admitted that PSPC had no participation in the issuance of the
subject TCCs. However, perusal of the transcript of stenographic notes (TSN) reveals that what was admitted by petitioner was only the fact of issuance and eventual
transfer/assignment to PSPC of the TCCs. The succeeding portions of the TSN, omitted in the Comment, clearly showed that Sr. State Solicitor Bustria repeatedly
denied Atty. Lopez's (PSPC's counsel) proposed stipulations on the valuable consideration for the TCCs, the approval by the concerned agencies of the deed of the said
assignment/transfer and related matters.44

Fraud, in its general sense, is deemed to comprise anything calculated to deceive, including all acts, omissions, and concealment involving a breach of legal or equitable
duty, trust or confidence justly reposed, resulting in the damage to another, or by which an undue and unconscionable advantage is taken of another. It is a question of
fact and the circumstances constituting it must be alleged and proved in the court below.45 Petitioner's allegations of fraud and irregularity in the issuance to FWI and
eventual transfer to PSPC of the subject TCCs require presentation of evidence in a full-blown trial. PSPC, in turn, can present its own evidence to prove the status of a
purchaser or transferee in good faith and for value. The solidary liability of PSPC and FWI for the amount covered by the TCCs depends on the good faith or lack of it on
the part of PSPC.

In ascertaining good faith, or the lack of it, which is a question of intention, courts are necessarily controlled by the evidence as to the conduct and outward acts by
which alone the inward motive may, with safety, be determined.46 Good faith connotes an honest intention to abstain from taking undue advantage of another, even
though the forms and technicalities of law, together with the absence of all information or belief of facts, would render the transaction unconscientious.47 The
ascertainment of good faith, or lack of it, and the determination of whether due diligence and prudence were exercised or not, are questions of fact.48

Trial courts have limited authority to render summary judgments and may do so only when there is clearly no genuine issue as to any material fact. When the facts as
pleaded by the parties are disputed or contested, proceedings for summary judgment cannot take the place of trial. 49 As certain facts pleaded are contested by the
parties in this case, rendition of summary judgment is not proper.

Prescription

As already mentioned, BOC's collection suit is not based on any new or revised assessment because the original assessments which had long become final and
uncontestable, were already settled by PSPC with the use of the subject TCCs.

With the cancellation of the TCCs, the tax liabilities of PSPC under the original assessments were considered unpaid, hence BOC's demand letters and the action for
collection in the RTC. To repeat, these assessed customs duties and taxes were previously assessed and paid by the taxpayer, only that the TCCs turned out to be
spurious and hence worthless certificates that did not extinguish PSPC's tax liabilities.

The applicable provision is Section 1204 of the Tariff and Customs Code, which states:
Section 1204. Liability of Importer for Duties. Unless relieved by laws or regulations, the liability for duties, taxes, fees and other charges attaching on
importation constitutes a personal debt due from the importer to the government which can be discharged only by payment in full of all duties, taxes, fees
and other charges legally accruing. It also constitutes a lien upon the articles imported which may be enforced while such articles are in the custody or subject to the
control of the government. (Emphasis supplied)
As we held in Pilipinas Shell Petroleum Corporation v. Republic50:
Under this provision, import duties constitute a personal debt of the importer that must be paid in full. The importer's liability therefore constitutes a lien on the article
which the government may choose to enforce while the imported articles are either in its custody or under its control.

When respondent released petitioner's goods, its (respondent's) lien over the imported goods was extinguished. Consequently, respondent could only enforce the
payment of petitioner's import duties in full by filing a case for collection against petitioner.51
ChanRoble sVirt ualawli bra ry

Stare Decisis

The doctrine of stare decisis is based on the principle that once a question of law has been examined and decided, it should be deemed settled and closed to further
argument.52 Accordingly, when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future
cases in which the facts are substantially the same. Thus, where the same questions relating to the same event have been put forward by the parties similarly situated
as in a previous case litigated and decided by a competent court, the rule of stare decisis is a bar to any attempt to relitigate the same issue.53

The RTC and CA both ruled that Pilipinas Shell Petroleum Corporation v. CIR54 applies to the present case, stating that the legal issues have already been settled by this
Court such as the ineffective cancellation by the Center of TCCs which have been fully utilized by the importer/taxpayer and the sole responsibility under the Liability
Clause in the TCC of the original grantee for its fraudulent issuance by the Center.

We disagree.

Pilipinas Shell Petroleum Corporation v. CIR55 involved TCCs used by PSPC that were also cancelled for alleged fraud in their issuance and transfer. However, in the said
case, there was a finding, on the basis of evidence presented before the CTA, that PSPC is a transferee in good faith and for value and that no evidence was adduced
that it participated in any way in the issuance of the TCCs to the corporations who in turn conveyed the same to PSPC.

PSPC's status as transferee in good faith of the TCCs assigned to it by FWI is yet to be established or proven at the trial. In fact, this Court in upholding the jurisdiction
of the RTC directed it to proceed with the pre-trial and trial proper. Petitioner should be given the opportunity to substantiate its allegations of fraud in the issuance and
transfer of the TCCs which PSPC used to pay for the customs duties and taxes due on its oil importations. Whether Pilipinas Shell Petroleum Corporation v. CIR56 applies
squarely to the present case may be determined only after such trial. If it is shown that PSPC was a party to the fraud as when it did not obtain the TCC for value or
has knowledge of its fraudulent issuance, it will be liable for the taxes and for the fraud committed as provided for by law.

As to the full utilization of the TCCs being claimed by PSPC, our ruling in Pilipinas Shell Petroleum Corporation v. CIR is clear that the taxpayer must have no
participation in the fraud, viz.:
Sec. 3, letter 1. of AO 266, in relation to letters a. and g., does give ample authority to the Center to cancel the TCCs it issued. Evidently, the Center cannot carry out
its mandate if it cannot cancel the TCCs it may have erroneously issued or those that were fraudulently issued. It is axiomatic that when the law and its implementing
rules are silent on the matter of cancellation while granting explicit authority to issue, an inherent and incidental power resides on the issuing authority to cancel that
which was issued. A caveat however is required in that while the Center has authority to do so, it must bear in mind the nature of the TCCs immediate effectiveness
and validity for which cancellation may only be exercised before a transferred TCC has been fully utilized or cancelled by the BIR after due application of the
available tax credit to the internal revenue tax liabilities of an innocent transferee for value, unless of course the claimant or transferee was involved in the
perpetration of the fraud in the TCCs issuance, transfer, or utilization. The utilization of the TCC will not shield a guilty party from the consequences of
the fraud committed.57 (Emphasis supplied)
In sum, the CA erred in affirming the RTC orders granting summary judgment in favor of PSPC considering that there exists a genuine issue of fact and that stare
decisis finds no application in this case.

WHEREFORE, the petition is GRANTED. The Decision dated February 13, 2013 and Resolution dated June 3, 2013 of the Court of Appeals in CA-G.R. CV No. 95436
are REVERSED and SET ASIDE.

The case is hereby REMANDED to the Regional Trial Court of Manila, Branch 49 for the conduct of trial proceedings in Civil Case No. 02-103191 with
utmost DELIBERATE DISPATCH.

No pronouncement as to costs.

SO ORDERED. chanroblesv irtuallawl ib rary

EN BANC

G.R. Nos. 216007-09, December 08, 2015

PEOPLE OF THE PHILIPPINES, Petitioner, v. LUZVIMINDA S. VALDEZ AND THE SANDIGANBAYAN (FIFTH DIVISION), Respondent.

DECISION

PERALTA, J.:

This special civil action for certiorari under Rule 65 of the Rules of Court (Rules) seeks to nullify and set aside the October 10, 2014 Resolution 1 of public respondent
Sandiganbayan Fifth Division, the dispositive portion of which states:

WHEREFORE, the (i) Motion to Set Aside No Bail Recommendation and to Fix the Amount of Bail and the (ii) Urgent Supplemental Motion to the Motion to Set Aside No
Bail Recommendation and to Fix the Amount of Bail with Additional Prayer to Recall/List Warrant of Arrest filed by accused Luzviminda S. Valdez, are GRANTED.

Let the Order of Arrest issued in Criminal Case Nos. SB-14-CRM-0321, 0322 and 0324 adopting the "no bail" recommendation of the Office of the Ombudsman
be RECALLED. Instead, let an Order of arrest in said cases be issued anew, this time, fixing the bail for each offense charged in the amount of Two Hundred Thousand
Pesos (P200,000.00).

SO ORDERED.2 Cha nRobles Vi rtua lawlib rary

The case stemmed from the Joint Affidavit3 executed by Sheila S. Velmonte-Portal and Mylene T. Romero, both State Auditors of the Commission on Audit Region VI in
Pavia, Iloilo, who conducted a post-audit of the disbursement vouchers (D.V.) of the Bacolod City Government. Among the subjects thereof were the reimbursements of
expenses of private respondent Luzviminda S. Valdez (Valdez), a former mayor of Bacolod City, particularly:

1. D.V. No. 6 dated January 8, 2004 amounting to P80,000.00;

2. D.V. No. 220 dated March 24, 2004 amounting to P68,000.00;

3. D.V. No. 278 dated April 13, 2004 amounting to P19,350.00; and

4. D.V. No. 325 dated April 30, 2004 amounting to P111,800.00 for Cash Slip No. 193402. 4

Based on the verification conducted in the establishments that issued the official receipts, it was alleged that the cash slips were altered/falsified to enable Valdez to
claim/receive reimbursement from the Government the total amount of P279,150.00 instead of only P4,843.25; thus, an aggregate overclaim of P274,306.75.

The Public Assistance and Corruption Prevention Office (PACPO), Office of the Ombudsman - Visayas received the joint affidavit, which was thereafter resolved adverse
to Valdez.

Consequently, Valdez was charged with eight cases four of which (SB-14-CRM-0317 to 0320) were for Violation of Section 3 (e) of Republic Act No. 3019, while the
remaining half (SB-14-CRM-0321 to 0324) were for the complex crime of Malversation of Public Funds thru Falsification of Official/Public Documents under Articles
2175 and 171,6 in relation to Article 487 of the Revised Penal Code (RPC). All the cases were raffled before public respondent.

Since the Ombudsman recommended "no bail" in SB-14-CRM-0321, 0322, and 0324, Valdez, who is still at-large, caused the filing of a Motion to Set Aside No Bail
Recommendation and to Fix the Amount of Bail.8 She argued that the three cases are bailable as a matter of right because no aggravating or modifying circumstance
was alleged; the maximum of the indeterminate sentence shall be taken from the medium period that ranged from 18 years, 8 months and 1 day to 20 years; and
applying Article 48 of the RPC, the imposable penalty is 20 years, which is the maximum of the medium period.

Petitioner countered in its Comment/Opposition9 that the Indeterminate Sentence Law (ISL) is inapplicable as the attending circumstances are immaterial because the
charge constituting the complex crime have the corresponding penalty of reclusion perpetua. Since the offense is punishable by reclusion perpetua, bail is discretionary.
Instead of a motion to fix bail, a summary hearing to determine if the evidence of guilt is strong is, therefore, necessary conformably with Section 13, Article III of the
1987 Constitution and Section 4, Rule 114 of the Rules.

Due to the issuance and release of a warrant of arrest, Valdez subsequently filed an Urgent Supplemental Motion to the Motion to Set Aside No Bail Recommendation
and to Fix the Amount of Bail with Additional Prayer to Recall/Lift Warrant of Arrest.10 Petitioner filed a Comment/Opposition thereto.11Later, the parties filed their
respective Memorandum of Authorities.12

As aforesaid, on October 10, 2014, public respondent granted the motions of Valdez. It recalled the arrest order issued in Criminal Case Nos. SB-14-CRM-0321, 0322
and 0324. In lieu thereof, a new arrest order was issued, fixing the bail for each offense charged in said cases in the amount of Two Hundred Thousand Pesos
(P200,000.00). Without filing a motion for reconsideration, petitioner elevated the matter before Us to resolve the lone issue of whether an accused indicted for the
complex crime of Malversation of Public Funds thru Falsification of Official/Public Documents involving an amount that exceeds P22,000.00 is entitled to bail as a matter
of right.

The Court shall first tackle Valdez's procedural objection. She avers that the petition must be dismissed outright on the ground that it was filed without first filing a
motion for reconsideration before public respondent, and that, even if there are exceptions to the general rule, this case does not fall under any of them.

We disagree.

The general rule is that a motion for reconsideration is a condition sine qua non before a petition for certiorari may lie, its purpose being to grant an opportunity for the
court a quo to correct any error attributed to it by a re-examination of the legal and factual circumstances of the case.

However, the rule is not absolute and jurisprudence has laid down the following exceptions when the filing of a petition for certiorari is proper notwithstanding the
failure to file a motion for reconsideration:
(a) where the order is a patent nullity, as where the court a quo has no jurisdiction;

(b) where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court, or are the same as those raised and passed
upon in the lower court;

(c) where there is an urgent necessity for the resolution of the question and any further delay would prejudice the interests of the Government or of the petitioner or
the subject matter of the petition is perishable;

(d) where, under the circumstances, a motion for reconsideration would be useless;

(e) where petitioner was deprived of due process and there is extreme urgency for relief;

(f) where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial court is improbable;

(g) where the proceedings in the lower court are a nullity for lack of due process;

(h) where the proceeding was ex parte or in which the petitioner had no opportunity to object; and,

(i) where the issue raised is one purely of law or public interest is involved.13
ChanRoble sVirtualawl ibra ry

The issue being raised here is one purely of law and all the argument, pros and cons were already raised in and passed upon by public respondent; thus, filing a motion
for reconsideration would be an exercise in futility. Likewise, as petitioner claims, the resolution of the question raised in this case is of urgent necessity considering its
implications on similar cases filed and pending before the Sandiganbayan. As it appears, there have been conflicting views on the matter such that the different
divisions of the anti-graft court issue varying resolutions. Undeniably, the issue is of extreme importance affecting public interest. It involves not just the right of the
State to prosecute criminal offenders but, more importantly, the constitutional right of the accused to bail.

Now, on the main issue: chanRoble svirtual Lawli bra ry

The controversy is, in fact, not one of first impression. Maalac, Jr. v. People14 already resolved that an accused charged with Malversation of Public Funds thru
Falsification of Official/Public Documents where the amount involved exceeds P22,000.00 is not entitled to bail as a matter of right because it has an actual imposable
penalty of reclusion perpetua.

In Maalac, Jr., the defendants argued that they should be allowed to post bail since reclusion perpetua is not the prescribed penalty for the offense but merely
describes the penalty actually imposed on account of the fraud involved. It was also posited that Article 48 of the RPC applies "only after the accused has been
convicted in a full-blown trial such that the court is mandated to impose the penalty of the most serious crime," and that the reason for the imposition of the penalty of
the most serious offense is "only for the purpose of determining the correct penalty upon the application of the Indeterminate Sentence Law." This Court, through the
Third Division, however, denied the petition and resolved in the affirmative the issue of whether the constitutional right to bail of an accused is restricted in cases
whose imposable penalty ranges from reclusion temporal maximum to reclusion perpetua. Citing People v. Pantaleon, Jr., et al.,15 in relation to Section 13, Article III of
the Constitution and Section 7, Rule 114 of the Rules, it was held that Maalac, Jr. is not entitled to bail as a matter of right since he is charged with a crime whose
penalty is reclusion perpetua.
To recall, the amounts involved in Pantaleon, Jr. were manifestly in excess of P22,000.00. We opined that the Sandiganbayan correctly imposed the penalty of reclusion
perpetua and that the ISL is inapplicable since it is an indivisible penalty. The Court's pronouncement is consistent with the earlier cases of People v. Conwi, Jr.,16People
v. Enfermo,17 and People v. Pajaro, et al.18 as well as with the fairly recent case of Zafra v. People.19

The rulings in Pantaleon, Jr. and analogous cases are in keeping with the provisions of the RPC. Specifically, Article 48 of which states that in complex crimes, "the
penalty for the most serious crime shall be imposed, the same to be applied in its maximum period." Thus, in Malversation of Public Funds thru Falsification of
Official/Public Documents, the prescribed penalties for malversation and falsification should be taken into account. Under the RPC, the penalty for malversation of public
funds or property if the amount involved exceeds P22,000.00 shall be reclusion temporal in its maximum period to reclusion perpetua, aside from perpetual special
disqualification and a fine equal to the amount of the funds malversed or equal to the total value of the property embezzled. 20 On the other hand, the penalty ofprision
mayor and a fine not to exceed P5,000.00 shall be imposed for falsification committed by a public officer. 21 Considering that malversation is the more serious offense,
the imposable penalty for Malversation of Public Funds thru Falsification of Official/Public Documents if the amount involved exceeds P22,000.00 is reclusion
perpetua, it being the maximum period of the prescribed penalty of reclusion temporal in its maximum period to reclusion perpetua.

For purposes of bail application, however, the ruling in Maalac, Jr. should be revisited on the ground that Pantaleon, Jr. (as well as Conwi, Jr., Enfermo, Pajaro, et al.,
and Zafra) was disposed in the context of a judgment of conviction rendered by the lower court and affirmed on appeal by this Court. As will be shown below, the
appropriate rule is to grant bail as a matter of right to an accused who is charged with a complex crime of Malversation of Public Funds thru Falsification of
Official/Public Documents involving an amount that exceeds P22,000.00.

Section 13, Article III of the 1987 Constitution states:

SECTION 13. All persons, except those charged with offenses punishable by reclusion perpetua when evidence of guilt is strong, shall, before conviction, be bailable
by sufficient sureties, or be released on recognizance as may be provided by law. The right to bail shall not be impaired even when the privilege of the writ of habeas
corpus is suspended. Excessive bail shall not be required.22 ChanRobles Vi rtua lawlib rary

Pursuant thereto, Sections 4 and 7, Rule 114 of the Revised Rules of Criminal Procedure provide:
SEC. 4. Bail, a matter of right; exception. - All persons in custody shall be admitted to bail as a matter of right, with sufficient sureties, or released on recognizance
as prescribed by law or this Rule (a) before or after conviction by the Metropolitan Trial Court, Municipal Trial Court, Municipal Trial Court in Cities, or Municipal Circuit
Trial Court, and (b) before conviction by the Regional Trial Court of an offense not punishable by death, reclusion perpetua, or life imprisonment. (4a)

SEC. 7. Capital offense of an offense punishable by reclusion perpetua or life imprisonment, not bailable. - No person charged with a capital offense, or an
offense punishable by reclusion perpetua or life imprisonment, shall be admitted to bail when evidence of guilt is strong, regardless of the stage of the criminal
prosecution. (7a)23ChanRoblesVirt ualawli bra ry

The pivotal question is: How should We construe the term "punishable" under the provisions above-quoted?

In Our mind, the term "punishable" should refer to prescribed, not imposable, penalty. People v. Temporada,24 which was even cited by petitioner, perceptibly
distinguished these two concepts:
The RPC provides for an initial penalty as a general prescription for the felonies defined therein which consists of a range of period of time. This is what is referred to as
the "prescribed penalty." For instance, under Article 249 of the RPC, the prescribed penalty for homicide is reclusion temporal which ranges from 12 years and 1 day
to 20 years of imprisonment. Further, the Code provides for attending or modifying circumstances which when present in the commission of a felony affects the
computation of the penalty to be imposed on a convict. This penalty, as thus modified, is referred to as the "imposable penalty." In the case of homicide which is
committed with one ordinary aggravating circumstance and no mitigating circumstances, the imposable penalty under the RPC shall be the prescribed penalty in its
maximum period. From this imposable penalty, the court chooses a single fixed penalty (also called a straight penalty) which is the "penalty actually imposed" on a
convict, i.e., the prison term he has to serve.25 ChanRob les Vi rtualaw lib rary

Petitioner contends that the imposable penalty is the one provided by the RPC before conviction to determine whether the charge is bailable or not, while the penalty
actually imposed pertains to the prison sentence upon conviction.26 Hence, it is maintained that the penalty imposable for the offense charged against private
respondent is reclusion perpetua, which makes Criminal Case Nos. SB-14-CRM-0321, 0322 and 0324 non-bailable.

The argument is erroneous.

Following Temporada, for the complex crime of Malversation of Public Funds thru Falsification of Official/Public Documents involving an amount that exceeds
P22,000.00, the "prescribed penalty" is reclusion temporal in its maximum period to reclusion perpetua. After trial, should the commission of such crime be proven
by the prosecution beyond reasonable doubt, the "imposable penalty" is reclusion perpetua in view of the RPC mandate that the prescribed penalty of reclusion
temporal maximum to reclusion perpetua shall be applied in its maximum.27 The falsification, which is the means used to commit the crime of malversation, is in the
nature of a generic aggravating circumstance that effectively directs the imposition of the prescribed penalty in its maximum period.28 The phrases "shall be applied"
and "shall impose," found in Articles 63 and 64, respectively, of the RPC, are of similar import as the phrase "shall be imposed" found in Article 48. Both Articles 63 and
64 refer to the penalty to be imposed after considering the aggravating or mitigating circumstance/s. Finally, the "penalty actually imposed" is still reclusion
perpetua, considering that the ISL finds no application as the penalty is indivisible.29

The October 10, 2014 Resolution of public respondent is spot on had it not confused imposable penalty with prescribed penalty. Nonetheless, reading through the
text of the assailed Resolution reveals that the anti-graft court actually meant prescribed penalty whenever it referred to imposable penalty. Therefore, in essence,
the ruling is correct. Respondent court held:
If the complex crime of Malversation thru Falsification be imposed in its maximum period, there is no doubt that, in case of conviction, the penalty to be imposed
is reclusion perpetua. The cases, however, are still at their inception. Criminal proceedings are yet to ensue. This is not the proper time, therefore, to call for the
application of the penalty contemplated under Article 48 by imposing the same in its maximum period.

For purposes of determining whether a person can be admitted to bail as a matter of right, it is the imposable penalty prescribed by law for the crime charged which
should be considered and, not the penalty to be actually imposed. Illustrative cases such as Catiis v. Court of Appeals, et al. and People v. Hu Ruey Chun evidently
confirm this to be so.

xxxx

In both cases, therefore, it is the penalty imposable for the offense charged that was considered for purposes of bail.

A circumspect reading of substantive law validates this view. Section 13, Article III of the Constitution provides that: x x x x

On the other hand, Section 4, Rule 114 of the Revised Rules of Court, as amended, provides: chanRoble svi rtual Lawli bra ry

xxxx

Notably, the word used is ["punishable,"] which practically bears the same meaning as "imposable." It is only logical that the reference has a direct correlation with the
time frame "before conviction" since trial is yet to begin; hence, it can only be the penalty imposable of the offense charged that can be considered for purposes of bail.

In these cases, the offenses charged are the complex crimes of Malversation of Public Funds thru Falsification of Official/Public Documents. In determining the penalty
imposable, it is the penalty for the most serious crime which is considered. Between Malversation and Falsification, it is Malversation which provides the graver penalty.
As thus provided under Article 217 of the Revised Penal Code, "[i]f the amount exceeds the latter, the penalty shall be reclusion temporal in its maximum period to
reclusion perpetua."

The penalty, however, cannot be immediately applied in its maximum period, or reclusion perpetua, since this will already consider the application of the penalty in the
event of a conviction.

A clear perusal of Article 48 of the Revised Penal Code states: chanRoblesvi rtua lLawl ibra ry

xxxx

The word used is "imposed," not imposable. Thus, the reference can only point to the time when a judgment of conviction is impending. If and when "the penalty for
the most serious crime shall be imposed, the same to be applied in its maximum period," is thus applied in the proper application of the penalty to be imposed on the
accused. Certainly, this cannot be considered for purposes of bail.30 ChanRob les Vi rtualaw lib rary
Indeed, the trial is yet to proceed and the prosecution must still prove the guilt of the accused beyond reasonable doubt. It is not amiss to point that in charging a
complex crime, the information should allege each element of the complex offense with the same precision as if the two (2) constituent offenses were the subject of
separate prosecutions.31 Where a complex crime is charged and the evidence fails to support the charge as to one of the component offenses, the defendant can be
convicted of the offense proven.32

At this point, there is no certainty that Valdez would be found guilty of Malversation of Public Funds thru Falsification of Official/Public Documents involving an amount
that exceeds P22,000.00. Falsification, like an aggravating circumstance, must be alleged and proved during the trial. For purposes of bail proceedings, it would be
premature to rule that the supposed crime committed is a complex crime since it is only when the trial has terminated that falsification could be appreciated as a
means of committing malversation. Further, it is possible that only the elements of one of the constituent offenses, i.e., either malversation or falsification, or worse,
none of them, would be proven after full-blown trial.

It would be the height of absurdity to deny Valdez the right to bail and grant her the same only after trial if it turns out that there is no complex crime committed.
Likewise, it is unjust for Us to give a stamp of approval in depriving the accused person's constitutional right to bail for allegedly committing a complex crime that is not
even considered as inherently grievous, odious and hateful. To note, Article 48 of the RPC on complex crimes does not change the nature of the constituent offenses; it
only requires the imposition of the maximum period of the penalty prescribed by law. When committed through falsification of official/public documents, the RPC does
not intend to classify malversation as a capital offense. Otherwise, the complex crime of Malversation of Public Funds thru Falsification of Official/Public Documents
involving an amount that exceeds P22,000.00 should have been expressly included in Republic Act No. 7659. 33 If truly a non-bailable offense, the law should have
already considered it as a special complex crime like robbery with rape, robbery with homicide, rape with homicide, and kidnapping with murder or homicide, which
have prescribed penalty of reclusion perpetua.

Just to stress, the inequity of denying bail as a matter of right to an accused charged with Malversation of Public Funds thru Falsification of Official/Public Documents
involving an amount that exceeds P22,000.00 is palpable when compared with an accused indicted for plunder, which is a heinous crime punishable under R.A. No.
7080,34 as amended by R.A. No. 765935 and R.A. No. 9346.36 Observe that bail is not a matter of right in plunder committed through malversation of public funds, but
the aggregate amount or total value of ill-gotten wealth amassed, accumulated or acquired must be at least Fifty Million Pesos (P50,000,000.00). In contrast, an
accused who is alleged to have committed malversation of public funds thru falsification of official/public documents, which is not a capital offense, is no longer entitled
to bail as a matter of right if the amount exceeds P22,000.00, or as low as P22,000.01. Such distinction is glaringly unfair and could not have been contemplated by
the law.

The foregoing interpretation is more favorable to Valdez as an accused following the rule of lenity:
Intimately related to the in dubio pro reo principle is the rule of lenity. The rule applies when the court is faced with two possible interpretations of a penal statute, one
that is prejudicial to the accused and another that is favorable to him. The rule calls for the adoption of an interpretation which is more lenient to the accused.37 ChanRoble sVirt ualawli bra ry

The time-honored principle is that penal statutes are construed strictly against the State and liberally in favor of the accused. 38 When there is doubt on the
interpretation of criminal laws, all must be resolved in favor of the accused.39 Since penal laws should not be applied mechanically, the Court must determine whether
their application is consistent with the purpose and reason of the law.40

For having ruled that an accused charged with the complex crime of Malversation of Public Funds thru Falsification of Official/Public Documents that involves an amount
in excess of P22,000.00 is entitled to bail as a matter of right, a summary hearing on bail application is, therefore, unnecessary. Consistent with Miranda v. Tuliao,41 an
affirmative relief may be obtained from the court despite the accused being still at-large. Except in petition for bail, custody of the law is not required for the
adjudication of reliefs sought by the defendant (such as a motion to set aside no bail recommendation and to fix the amount of bail in this case) where the mere
application therefor constitutes a waiver of the defense of lack of jurisdiction over the person of the accused. 42

WHEREFORE, premises considered, the petition is DENIED for lack of merit. Private respondent Luzviminda S. Valdez is entitled to bail, as a matter of right, in
Criminal Case Nos. SB-14-CRM-0321, 0322 and 0324. Public respondent Sandiganbayan Fifth Division should be guided by the latest Bailbond Guide. In any case, the
amount should correspond to the medium penalty multiplied by Ten Thousand Pesos (P10,000.00) for every year of imprisonment.

SO ORDERED.

Sereno, C. J., I join the Dissent of J. Villarama.

Carpio,Velasco, Jr., Leonardo-De Castro, Bersamin, Del Castillo, Perez, Mendoza, Reyes, and Jardeleza, JJ., concur.
Brion, J., on official leave.
Villarama, Jr., J., pls. see Dissenting Opinion.
Perlas-Bernabe, J., I join the Dissent of J. Villarama.
Leonen, J., see separate Dissenting opinion.

Endnotes:

1
Penned by Associate Justice Ma. Theresa Dolores C. Gomez-Estoesta, with Associate Justices Roland B. Jurado and Alexander G. Gesmundo, concurring; rollo, pp. 30-
40.

Id. at 40.
2

Id. at 41-43.
3

Id. at 41.
4

5
Art. 217. Malversation of Public Funds or Property; Presumption of Malversation. - Any public officer who, by reason of the duties of his office, is accountable for public
funds or property, shall appropriate the same or shall take or misappropriate or shall consent, through abandonment or negligence, shall permit any other person to
take such public funds, or property, wholly or partially, or shall otherwise be guilty of the misappropriation or malversation of such funds or property, shall suffer: chanRoble svirtual Lawli bra ry

1. The penalty of prision correccional in its medium and maximum periods, if the amount involved in the misappropriation or malversation does not exceed two hundred
pesos.

2. The penalty of prision mayor in its minimum and medium periods, if the amount involved is more than two hundred pesos but does not exceed six thousand pesos.

3. The penalty of prision mayor in its maximum period to reclusion temporal in its minimum period, if the amount involved is more than six thousand pesos but is less
than twelve thousand pesos.

4. The penalty of reclusion temporal, in its medium and maximum periods, if the amount involved is more than twelve thousand pesos but is less than twenty-two
thousand pesos. If the amount exceeds the latter, the penalty shall be reclusion temporal in its maximum period to reclusion perpetua.

In all cases, persons guilty of malversation shall also suffer the penalty of perpetual special disqualification and a fine equal to the amount of the funds malversed or
equal to the total value of the property embezzled.

The failure of a public officer to have duly forthcoming any public funds or property with which he is chargeable, upon demand by any duly authorized officer, shall be
prima facie evidence that he has put such missing funds or property to personal use. (As amended by RA 1060)

6
Art. 171. Falsification by Public Officer, Employee or Notary or Ecclesiastic Minister. The penalty of prision mayor and a fine not to exceed 5,000 pesos shall be
imposed upon any public officer, employee, or notary who, taking advantage of his official position, shall falsify a document by committing any of the following acts:

1. Counterfeiting or imitating any handwriting, signature or rubric;

 2. Causing it to appear that persons have participated in any act or proceeding when they did not in fact so participate;

3. Attributing to persons who have participated in any act or proceeding statements other than those in fact made by them;

4. Making untruthful statements in a narration of facts;

5. Altering true dates;

6. Making any alteration or intercalation in a genuine document which changes its meaning;

7. Issuing in an authenticated form a document purporting to be a copy of an original document when no such original exists, or
including in such a copy a statement contrary to, or different from, that of the genuine original; or

8. Intercalating any instrument or note relative to the issuance thereof in a protocol, registry, or official book.

The same penalty shall be imposed upon any ecclesiastical minister who shall commit any of the offenses enumerated in the preceding paragraphs of this article, with
respect to any record or document of such character that its falsification may affect the civil status of persons.

7
Art. 48. Penalty for complex crimes. - When a single act constitutes two or more grave or less grave felonies, or when an offense is a necessary means for committing
the other, the penalty for the most serious crime shall be imposed, the same to be applied in its maximum period.

8
Rollo, pp. 44-51.

Id. at 52-56.
9

10
Id. at 57-59.

11
Id. at 60-63.

12
Id. at 64-74.

13
Republic v. Lazo, G.R. No. 195594, September 29, 2014, 737 SCRA 1, 18-19.

14
G.R. Nos. 206194-206207, July 3, 2013, Third Division Resolution.

15
600 Phil. 186 (2009).

16
223 Phil. 23 (1985).

17
513 Phil. 1 (2005).

18
577 Phil. 441 (2008).

19
G.R. No. 176317, July 23, 2014, 730 SCRA 438.

20
REVISED PENAL CODE, Art. 217.

21
REVISED PENAL CODE, Art. 171.

22
Emphasis supplied.

23
Emphasis supplied.

24
594 Phil. 680, 717-718 (2008).

25
Id.

26
Rollo, p.19.

27
The duration of reclusion temporal in its maximum period to reclusion perpetua is 17 years, 4 months and 1 day to reclusion perpetua: The minimum period is 17
years, 4 months and 1 day to 18 years and 8 months; the medium period is 18 years, 8 months and 1 day to 20 years; and the maximum period is reclusion perpetua.
(See Zafra v. People, supra note 19, at 456).

28
See REVISED PENAL CODE, Art. 64 (3).

29
The ISL is not applicable since the proper imposable penalty to be imposed upon the accused is already reclusion perpetua. (See Zafra v. People, supra note 19, at
458).

30
Rollo, pp. 34-37.

31
See People v. Bulalayao, G.R. No. 103497, February 23, 1994, 230 SCRA 232, 240.

32
People v. Bulalayao, supra.

33
AN ACT TO IMPOSE THE DEATH PENALTY ON CERTAIN HEINOUS CRIMES, AMENDING FOR THAT PURPOSE THE REVISED PENAL CODE, AS AMENDED, OTHER
SPECIAL PENAL LAWS, AND FOR OTHER PURPOSES, dated December 13, 1993.

34
AN ACT DEFINING AND PENALIZING THE CRIME OF PLUNDER, dated July 12, 1991.

35
ACT TO IMPOSE THE DEATH PENALTY ON CERTAIN HEINOUS CRIMES, AMENDING FOR THAT PURPOSE THE REVISED PENAL CODE, AS AMENDED, OTHER SPECIAL
PENAL LAWS, AND FOR OTHER PURPOSES, dated December 13, 1993.

36
AN ACT PROHIBITING THE IMPOSITION OF DEATH PENALTY IN THE PHILIPPINES, dated June 24, 2006.

37
Intestate Estate of Manolita Gonzales Vda. de Carungcong v. People et al., 626 Phil. 177 200 (2010).

Tan v. Philippine Commercial International Bank, 575 Phil. 485, 497 (2008); People v. Temporada, supra note 24, at 735; Maj. Gen. Garcia (Ret.) v. The Executive
38

Secretary, et al., 692 Phil. 114, 142 (2012); and Renato M. David v. Editha A. Agbay, G.R. No. 199113, March 18, 2015.

39
Villareal v. People, 680 Phil. 527, 600 (2012).
 Tan v. Philippine Commercial International Bank, supra note 38, at 497.
40

41
520 Phil. 907 (2006).

42
See Renato M. David v. Editha A. Agbay, G.R. No. 199113, March 18, 2015, citing Miranda v. Tuliao, 520 Phil. 907, 919 (2006). cra lawlawlibra ry

DISSENTING OPINION

VILLARAMA, JR., J.:

Before us is a petition for certiorari under Rule 65 filed by the People of the Philippines, represented by the Office of the Special Prosecutor, Office of the Ombudsman
(OMB), assailing the Resolution1 dated October 10, 2014 of the Sandiganbayan's Fifth Division in Criminal Case Nos. SB-14-CRM-0321, SB-14-CRM-0322 and SB-14-
CRM-0324 entitled "People of the Philippines, plaintiff, versus Luzviminda S. Valdez, accused."

Respondent Luzviminda S. Valdez (Valdez) is a former Mayor of Bacolod City. During a post-audit of disbursement vouchers of the City Government of Bacolod, the
Commission on Audit found that the Cash Slips used for the reimbursement of expenses of Valdez under Disbursement Voucher Nos. 6, 220, 278 and 325 totalling
P279,150.00 were falsified and that the actual amount due to her was only P4,843.25.2

Subsequently, Valdez was indicted for three (3) counts of Malversation of Public Funds thru Falsification of Public Documents under Article 217, in relation to Article
171, paragraph 6, of the Revised Penal Code, as amended. An Order of Arrest was issued by the Sandiganbayan. However, Valdez remains at large and yet caused the
filing of a Motion to Set Aside No Bail Recommendation and To Fix the Amount of Bail,3 arguing that since there are no aggravating or mitigating circumstances alleged
in the Informations, the maximum of the indeterminate sentence shall be taken from the medium period, or from 18 years, 8 months and 1 day to 20 years, an
imposable penalty which is bailable. She further emphasized that it is oppressive especially for the woman accused, to be jailed at this stage while she is presumed
innocent.

In its Comment/Opposition,4 the Office of the Special Prosecutor argued that the Indeterminate Sentence Law cannot be invoked by Valdez because reclusion
perpetua is an indivisible penalty. It further asserted that since bail is discretionary in this case, the court cannot dispense with the requirement of a hearing.

Valdez also filed an Urgent Supplemental Motion5 with the additional prayer for the recall/lifting of the warrants of arrest pending resolution of her motion to set aside
the "No Bail" recommendation of the OMB and to fix the amount of bail.

On October 10, 2014, the Sandiganbayan issued the assailed Resolution granting Valdez's motion, as follows:
WHEREFORE, the (i) Motion to Set Aside No Bail Recommendation and to Fix the Amount of Bail and the (ii) Urgent Supplemental Motion to the Motion to Set Aside No
Bail Recommendation and to Fix the Amount of Bail with Additional Prayer to Recall/Li[f]t Warrant of Arrest filed by accused Luzvimi[n]da S. Valdez, are GRANTED.

Let the Order of Arrest issued in Criminal Case Nos. SB-14-CRM-0321, 0322 and 0324 adopting the "no bail" recommendation of the Office of the Ombudsman
be RECALLED. Instead, let an Order of arrest in said cases be issued anew, this time, fixing the bail for each offense charged in the amount of Two Hundred Thousand
Pesos (P200,000.00).

SO ORDERED.6 Cha nRobles Vi rtua lawlib rary

In ruling that Valdez is entitled to bail, the Sandiganbayan explained that in determining whether a person can be admitted to bail as a matter of right, it is
the imposable penalty prescribed by law for the crime charged which should be considered and not the penalty to be actually imposed. Thus, it held that the penalty
imposable for malversation cannot be immediately applied in its maximum period (reclusion perpetua) when the case is still at its inception since this will already
consider the application of the penalty in the event of conviction.

Hence, this petition raising the sole issue of whether malversation thru falsification of public documents is a bailable offense.

First, we address the procedural flaw pointed out by Valdez as to the failure of the Office of the Special Prosecutor to comply with the requirement of a motion for
reconsideration prior to the filing of the present petition.

The well-established rule is that a motion for reconsideration is an indispensable condition before an aggrieved party can resort to the special civil action for certiorari
under Rule 65 of the 1997 Rules of Civil Procedure, as amended.7 However, the rule is not absolute and admits of exceptions entrenched in our jurisprudence:
The general rule is that a motion for reconsideration is a condition sine qua non before a petition for certiorari may lie, its purpose being to grant an opportunity for the
court a quo to correct any error attributed to it by re-examination of the legal and factual circumstances of the case. There are, however, recognized exceptions
permitting a resort to the special civil action for certiorari without first filing a motion for reconsideration. In the case of Domdom v. Sandiganbayan, it was written:
The rule is, however, circumscribed by well-defined exceptions, such as where the order is a patent nullity because the court a quo had no jurisdiction; where the
questions raised in the certiorari proceeding have been duly raised and passed upon by the lower court, or are the same as those raised and passed
upon in the lower court; where there is an urgent necessity for the resolution of the question, and any further delay would prejudice the interests of the Government
or of the petitioner, or the subject matter of the action is perishable; where, under the circumstances, a motion for reconsideration would be useless; where the
petitioner was deprived of due process and there is extreme urgency of relief; where, in a criminal case, relief from an order of arrest is urgent and the grant of such
relief by the trial court is improbable; where the proceedings in the lower court are a nullity for lack of due process; where the proceedings were ex parte or in which
the petitioner had no opportunity to object; and where the issue raised is one purely of law or where public interest is involved. x x x8 (Emphasis supplied; emphasis in
the original omitted)
Here, we recognize the presence of two exceptions, as underscored above. Records confirm that the Sandiganbayan has categorically ruled that Valdez is entitled to
bail as a matter of right and forthwith recalled the order of arrest it had issued. Also, the petition undeniably raised a lone question of law: whether an accused charged
with malversation thru falsification of public documents may apply for bail. Petitioner is thus allowed by the Rules to file the present certiorari petition even if it had not
first moved for reconsideration of the assailed resolution.

The Sandiganbayan set aside the "No Bail" recommendation under the informations filed by the OMB based on its own interpretation of Article 48 that the "maximum
period" of the most serious crime, which is reclusion perpetua for the more serious charge of Malversation, cannot be considered for purpose of bail because the law
speaks of "penalty imposable" and not penalty actually imposed. Acknowledging a contrary position to the 2000 Bail Bond Guide issued by the Department of Justice
where no bail is indicated for the complex crime of Malversation thru Falsification of Public Documents when the amount malversed is P22,000.00 or higher as alleged
in the informations, the Sandiganbayan opined that this interpretation is more favorable to the accused.

We disagree.

Section 13, paragraph 4, Article III of the 1987 Constitution provides that all persons, except those charged with offenses punishable by reclusion perpetua when
evidence of guilt is strong, shall, before conviction, be bailable by sufficient sureties, or be released from recognizance as may be provided by law. Likewise, Rule 114,
Section 7 of the Revised Rules of Criminal Procedure, as amended, provides that no person charged with a capital offense or an offense punishable by reclusion
perpetua or life imprisonment when evidence of guilt is strong shall be admitted to bail regardless of the stage of the prosecution.

We find no legal basis for making a distinction between imposable or prescribed penalty and penalty actually imposed and concluding that the maximum period
mentioned in Article 48 cannot be considered for bail purposes before conviction. The term "punishable" in the Constitution and the Rules clearly refers only to the
prescribed penalty. Ubi lex non distinguit nee nos distinguire debemus. When the law does not distinguish, we must not distinguish.9 Further, it is a cardinal rule in
statutory construction that when the law is clear and free from any doubt or ambiguity, there is no room for construction or interpretation. There is only room for
application.10
The question of actual imposable penalty of malversation thru falsification of public documents has been settled by this Court in People v. Pantaleon, Jr.,11 where we
ruled:
Article 217, paragraph 4 of the Revised Penal Code imposes the penalty of reclusion temporal in its maximum period to reclusion perpetua when the amount malversed
is greater than P22,000.00. This Article also imposes the penalty of perpetual special disqualification and a fine equal to the amount of the funds malversed or equal to
the total value of the property embezzled. Falsification by a public officer or employee under Article 171, on the other hand, is punished by prision mayor and a fine not
to exceed P5,000.00.

Since appellant committed a complex crime, the penalty for the most serious crime shall be imposed in its maximum period, pursuant to Article 48 of the Revised Penal
Code. This provision states:
ART. 48. Penalty for complex crimes. - When a single act constitutes two or more grave or less grave felonies, or when an offense is a necessary means for committing
the other, the penalty for the most serious crime shall be imposed, the same to be applied in its maximum period.
The Sandiganbayan, therefore, correctly imposed on the appellants the penalties of reclusion perpetua and perpetual special disqualification for each count of
malversation of public funds through falsification of public documents, and the payment of fines of P166,242.72, P154,634.27, and P90,464.21, respectively,
representing the amounts malversed. The Indeterminate Sentence Law finds no application since reclusion perpetua is an indivisible penalty to which the
Indeterminate Sentence Law does not apply. 12 (Additional Emphasis supplied)
In the light of all the foregoing, we hold that Valdez is not entitled to bail as a matter of right since she is charged with a crime whose penalty is reclusion perpetua. The
DOJ's 2000 Bail Bond Guide likewise sets no bail for the said offense where the amount involved exceeds P22,000.00. While not controlling, in view of the constitutional
prohibition against excessive bail, the said guidelines should have been considered by the Sandiganbayan.13

The Sandiganbayan thus gravely erred in setting aside the "No Bail" recommendation of the Special Prosecutor and fixing the amount of bail as prayed for by Valdez. It
is settled that the grant of bail to an accused charged with an offense that carries with it the penalty of reclusion perpetua is discretionary on the part of the trial
court, i.e., accused is still entitled to bail but no longer as a matter of right.14 Indeed, the determination of whether or not the evidence of guilt is strong is a matter of
judicial discretion. This discretion, by the nature of things, may rightly be exercised only after the evidence is submitted to the court at the hearing.15 The Prosecution
must be given a chance to show strength of its evidence; otherwise, a violation of due process occurs.16 As the rule now stands, a hearing upon notice is mandatory
before the grant of bail, whether bail is a matter of right or discretion.17

I therefore VOTE: c hanRoblesv irt ual Lawlib rary

1. To GRANT the petition; and

2. To ANNUL and SET ASIDE the Resolution dated October 10, 2014 of the Sandiganbayan's Fifth Division in Criminal Case Nos. SB-14- CRM-0321, SB-14-CRM-0322
and SB-14-CRM-0324.

Endnotes:

1
Rollo, pp. 30-40. Penned by Associate Justice Ma. Theresa Dolores C. Gomez-Estoesta with Associate Justices Roland B. Jurado and Alexander G. Gesmundo
concurring.

2
Id. at 41-43.

3
Id. at 44-51.

4
Id. at 52-56.

5
Id. at 57-59.

6
Id. at 40.

Republic of the Philippines v. Pantranco North Express, Inc., 682 Phil. 186, 193 (2012), citing Ag v. Mejia, 555 Phil. 348, 353 (2007).
7

8
Pineda v. Court of Appeals (Former Ninth Division), G.R. No. 181643, November 17, 2010, 635 SCRA 274, 281-282, cited in Medado v. Heirs of the Late Antonio
Consing, 681 Phil. 536, 548-549 (2012).

Amores v. House of Representatives Electoral Tribunal, 636 Phil. 600, 609 (2010).
9

10
Id. at 608, citing Twin Ace Holdings Corporation v. Rufina and Company, 523 Phil. 766, 777 (2006).

11
600 Phil. 186 (2009). See also Maalac, Jr. People of the Philippines, G.R. Nos. 206194-206207, July 3, 2013 (Unsigned Resolution).

12
Id. at 228.

13
See A.M. No. 12-11-2-SC promulgated on March 18, 2014.

14
Andres v. Beltran, 415 Phil. 598, 603 (2001).

15
Ocampo v. Bernabe, 77 Phil. 55, 58 (1946).

16
Gacal v. Infante, 674 Phil. 324, 340 (2011).

17
Id. at 338. c ralawlawli bra ry

DISSENTING OPINION

LEONEN, J.:

I concur with the opinion of Justice Martin S. Villarama, Jr. and, in addition to the points raised, add a few more of my own.

Respondent Luzviminda S. Valdez was charged with four (4) counts of Malversation of Public Funds through Falsification of Public Documents. 1Malversation of Public
Funds is punished under Article 2172 of the Revised Penal Code while Falsification of Public Documents is punished under Article 1713 of the Revised Penal Code. The
penalty for falsification under the law is prision mayor and a fine not to exceed P5,000. Since the amount allegedly malversed exceeds P22,000.00, 4 the appropriate
penalty under the law for malversation is reclusion temporal in its maximum period to reclusion perpetua.
Malversation of Public Funds through Falsification of Public Documents, however, is considered-an ordinary complex crime under Article 48 of the Revised Penal
Code.5 Article 48 states:
ARTICLE 48. Penalty for Complex Crimes. When a single act constitutes two or more crimes, or when an offense is a necessary means for committing the other, the
penalty for the most serious crime shall be imposed, the same to be applied in its maximum period.
Justice Villarama is of the opinion that the crime is bailable as a matter of discretion, considering that Article 48 raises the imposable penalty to that of the most serious
crime in its maximum period.6 The ponencia, however, disagrees and argues that Article 48 states the penalty to be actually imposed, or the penalty after a trial on the
merits is conducted.7 In the ponente's view, the crime should be bailable as a matter of right. 8

Respondent was charged with Malversation of Public Funds through Falsification of Public Documents, not Malversation of Public Funds and Falsification of Public
Documents. While it is true that "the information should charge each element of the complex offense with the same precision as if the two (2) constituent offenses were
the subject of separate prosecutions[,]"9 the singularity of the criminal intent must be taken into account in order to determine its penalty. Respondent was charged
with a single complex crime, not two separate crimes. The crime carries only one imposable penalty.

The determination of an accused's liability in a complex crime is not new. In Intestate Estate of Manolita Gonzales Vda. De Carungcong v. People, et al.,10 this court has
stated that the complex crime of Estafa through Falsification of Public Documents is treated as one crime subject to a single criminal liability:
In considering whether the accused is liable for the complex crime of estafa through falsification of public documents, it would be wrong to consider the component
crimes separately from each other. While there may be two component crimes (estafa and falsification of documents), both felonies are animated by and result
from one and the same criminal intent for which there is only one criminal liability. That is the concept of a complex crime. In other words, while there are two
crimes, they are treated only as one, subject to a single criminal liability.

As opposed to a simple crime where only one juridical right or interest is violated (e.g., homicide which violates the right to life, theft which violates the right to
property), a complex crime constitutes a violation of diverse juridical rights or interests by means of diverse acts, each of which is a simple crime in itself. Since only a
single criminal intent underlies the diverse acts, however, the component crimes are considered as elements of a single crime, the complex crime. This is the correct
interpretation of a complex crime as treated under Article 48 of the Revised Penal Code.

In the case of a complex crime, therefore, there, is a formal (or ideal) plurality of crimes where the same criminal intent results in two or more component crimes
constituting a complex crime for which there is only one criminal liability. (The complex crime of estafa through falsification of public document-falls under this
category.) This is different from a material (or real) plurality of crimes where different criminal intents result in two or more crimes, for each of which the accused
incurs criminal liability. The latter category is covered neither by the concept of complex crimes nor by Article 48.

Under Article 48 of the Revised Penal Code, the formal plurality of crimes (concursus delictuorum or concurso de delitos) gives rise to a single criminal liability and
requires the imposition of a single penalty:
Although [a] complex crime quantitatively consists of two or more crimes, it is only one crime in law on which a single penalty is imposed and the two or more
crimes constituting the same are more conveniently termed as component crimes.

xxx xxx xxx

In [a] complex crime, although two or more crimes are actually committed, they constitute only one crime in the eyes of the law as well as in the conscience of the
offender. The offender has only one criminal intent. Even in the case where an offense is a necessary means for committing the other, the evil intent of the offender is
only one.
For this reason, while a conviction for estafa through falsification of public document requires that the elements of both estafa and falsification exist, it does not mean
that the criminal liability for estafa may be determined and considered independently of that for falsification. The two crimes of estafa and falsification of public
documents are not separate crimes but component crimes of the single complex crime of estafa and falsification of public documents.

Therefore, it would be incorrect to claim that, to be criminally liable for the complex crime of estafa through falsification of public document, the liability for estafa
should be considered separately from the liability for falsification of public document. Such approach would disregard the nature of a complex crime and contradict the
letter and spirit of Article 48 of the Revised Penal Code. It would wrongly disregard the distinction between formal plurality and material plurality, as it improperly treats
the plurality of crimes in the complex crime of estafa through falsification of public document as a mere material plurality where the felonies are considered as separate
crimes to be punished individually.11 (Emphasis in the original)
Thus, while a complex crime constitutes two or more offenses whose elements must be pleaded and proved, it is considered by law as a single crime committed
through a single criminal intent and punishable by a single penalty. In determining whether a complex crime is bailable as a matter of right or of discretion, what is
considered is not the penalties of the two or more separate offenses that compose the complex crime, but the single penalty imposed by law for the complex crime.

II

Our esteemed colleague Justice Diosdado M. Peralta now proposes that it is time to digress from settled canonical interpretations of the classification of the availability
of bail for public officers charged with Malversation through Falsification. He now proposes that we change the long-standing interpretation of Article III, Section 13 12 of
the Constitution in relation to Article 48 of the Revised Penal Code. I regret that I could not bring myself to agree with the proposed approach.

III

The ponencia starts with creating a distinction between the concept of "prescribed" and "imposable" penalty. In the ponente's view, "prescribed" penalty is the penalty
provided by law for the crime charged. The "imposable" penalty is the penalty that will be declared after trial.13Prescribed penalty refers to the crime as charged, the
statute that punishes the offense, and the penalty in the statute. Imposable penalty considers in addition the totality of the evidence presented.

Prescribed penalty, not imposable penalty, is what is considered for bail.

To this extent, I agree with both Justice Villarama and the ponencia.

This is precisely what the Constitution provides. When the prescribed penalty is reclusion perpetua, bail is granted only after a showing that evidence of guilt is not
strong.

Thus in Article III, Section 13 of the Constitution:

SECTION 13. All persons, except those charged with offenses punishable by reclusion perpetua when evidence of guilt is strong, shall, before conviction, be bailable by
sufficient sureties, or be released on recognizance as may be provided by law. The right to bail shall not be impaired even when the privilege of the writ of habeas
corpus is suspended. Excessive bail shall not be required.
The purpose of bail is to ensure the accused's presence at trial.14 The underlying theory of denying bail irt capital offenses is not only to prevent the risk of flight by the
accused, but also to protect the community from potential danger due to the heinousness of the crime charged and to avoid delays in the service of
punishment.15 Regardless of these presumptions, determination of bail by the sovereign has already been fixed by the text of the Constitution. It is conclusive on
courts. It cannot be reconsidered. The test of the Constitution reduces judicial discretion to a single variable: whether the evidence of guilt is strong.

IV

The ponencia posits that the penalty for the complex crime of Malversation through Falsification is reclusion temporal in its maximum period to reclusion perpetua. It
then concludes that because it starts with reclusion temporal, necessarily, bail automatically is a matter of right.16

This would have been accurate except that Article 48 is as much a part of the Revised Penal Code as any other provision. The better interpretative approach is to allow
all provisions to work together. Parsing pieces of legislation while backgrounding relevant provisions invites too much judicial discretion at the cost of undermining the
results of legitimate constitutional processes in our political departments.

Article 48 provides:
ARTICLE 48. Penalty for Complex Crimes. When a single act constitutes two or more crimes, or when an offense is a necessary means for committing the other, the
penalty for the most serious crime shall be imposed, the same to be applied in its maximum period.
There is no doubt as to the prescribed penalty. It is "the penalty for the most serious crime" and "the same to be applied in its maximum period."

What may understandably cause the apparent ambiguity is the phrase "shall be imposed" in this provision.

The ponencia interprets this to mean that the penalty mentioned in Article 48 is post hoc, i.e., after trial.17 Justice Villarama reads this as ex ante, i.e., it is the penalty
for the crime as charged.18

The trial court, in determining whether a complex crime is bailable-as a matter of right or a matter of discretion, examines the penalty to be imposed in the complex
crime charged. The court does not have the luxury of deciding which among the two component crimes the accused would be most guilty of. It considers the complex
crime as two separate component crimes punishable by a single penalty. Respondent was charged with one complex crime of Malversation of Public Funds through
Falsification of Public Documents. It is illogical to'determine bail on the basis only of the single simple crime of Malversation or on the single simple crime of
Falsification.

Article 48 is not only the penal provision that provides the penalty that "shall be imposed." Several offenses containing this phrase are listed in the Revised Penal Code,
among them being: Violation of Domicile, Inciting to Sedition, Falsification, Perjury, Grave Scandal, Indirect Bribery, Infanticide, and Estafa:
ARTICLE 128. Violation of Domicile. The penalty of prision correccional in its minimum period shall be imposed upon any public officer or employee who, not being
authorized by judicial order, shall enter any dwelling against the will of the owner thereof, search papers or other effects found therein without the previous consent of
such owner, or, having surreptitiously entered said dwelling, and being required to leave the premises, shall refuse to do so.

....

ARTICLE 142. Inciting to Sedition. The penalty of prision correccional in its maximum period and a fine not exceeding 2,000 pesos shall be imposed upon any person
who, without taking any direct part in the crime of sedition, should incite others to the accomplishment of any of the acts which constitute sedition, by means of
speeches, proclamations, writings, emblems, cartoons, banners, or other representations tending to the same end.

....

ARTICLE 171. Falsification by Public Officer, Employee or Notary or Ecclesiastic Minister. The penalty of prision mayor and a fine not to exceed 5,000 pesos shall be
imposed upon any public officer, employee, or notary who, taking advantage of his official position, shall falsify a document by committing any of the following
acts:chanRoblesvirtual Lawli bra ry

....

ARTICLE 183. False Testimony in Other Cases and Perjury in Solemn Affirmation. The penalty of arresto mayor in its maximum period to prision correccional in its
minimum period shall be imposed upon any person who, knowingly making untruthful statements and not being included in the provisions of the next preceding
articles, shall testify under oath, or make an affidavit, upon any material matter before a competent person authorized to administer an oath in cases in which the law
so requires.

Any person who, in case of a solemn affirmation made in lieu of an oath, shall commit any of the falsehoods mentioned in this and the three preceding articles of this
section, shall suffer the respective penalties provided therein.

....

ARTICLE 200. Grave Scandal. The penalties of arresto mayor and public censure shall be imposed upon any person who shall offend against decency or good
customs by any highly scandalous conduct not expressly falling within any other article of this Code.

....

ARTICLE 211. Indirect Bribery. The penalties of arresto mayor, suspension in its minimum and medium periods, and public censure shall be imposed upon any public
officer who shall accept gifts offered to him by reason of his office.

....

ARTICLE 255. Infanticide. The penalty provided for parricide in Article 246 and for murder in Article 248 shall be imposed upon any person who shall kill any child
less than three days of age.

....

ARTICLE 315. Swindling (Estafa). Any person who shall defraud another by any of the means mentioned hereinbelow shall be punished by:
1st. The penalty of prision correccional in its maximum period to prision mayor in its minimum period, if the amount of the fraud is over 12,000 pesos but doe's not
exceed 22,000 pesos, and if such amount exceeds the latter sum, the penalty provided in this paragraph shall be imposed in its maximum period, adding one year for
each additional 10,000 pesos; but the total penalty which may be imposed shall not exceed twenty years. In such cases, and in connection with the accessory penalties
which may be imposed and for the purpose of the other provisions of this Code, the penalty shall be termed prision mayor or rcclusion temporal, as the case may be.
Even if these offenses state the penalty that "shall be imposed," there is no confusion as to what the prescribed penalties of these offenses are: the prescribed penalty
is what is stated in the law.

Bail under the Constitution considers the offense charged in the information, not the offense of which the accused will eventually be convicted. "Punishable" within the
context of the Constitution means the penalty prescribed by law for the offense charged. When an accused is charged with a complex crime, the penalty is what is
stated in the Revised Penal Code or in special penal laws in relation to Article 48 of the Revised Penal Code. A complex crime is a single offense comprised of two or
more offenses but with a single penalty. While the prosecution must prove all the elements charged, it must only prove a single criminal intent. The splitting of the
penalties according to its separate component crimes undermines the singularity of the criminal intent, which makes it a complex crime.

Finally, we must remember that there are two (2) aspects in criminal trial. First, there is the determination by the judge as to whether all the elements of the offense
as well as the accused's alleged participation can be inferred or proven beyond reasonable doubt by the admissible evidence presented. This is the objective part of
trial. Thereafter, and second, the judge determines the proper penalty from a range provided by law. This sentencing part involves a higher degree of discretion. The
first part looks at the acts. The second looks at the. offender and his or her circumstances.

The only allowable range for Malversation through Falsification as charged in the Information is reclusion perpetua.

There is nothing inequitable in considering Malversation through Falsification of Public Documents of public funds exceeding P22,000.00 as an offense bailable only as a
matter of discretion.

Malversation of Public Funds, by itself, may be bailable as a matter of right since the prescribed penalty under the law is reclusion temporal in its maximum period
to reclusion perpetua. However, the law raises the prescribed penalty to that of the more serious crime in its maximum period if it is committed through Falsification.
The conversion of the offense to a complex crime serves to underscore the gravity of the offense.

Like Plunder under Republic Act No. 708019 and Graft and Corruption under Republic Act No. 3019,20 it is generally committed by public officers.21 "Public office is a
public trust."22 Public officers are sworn to perform their duties with the highest fidelity. Malversation through Falsification, therefore, is a crime at par with Plunder and
Graft and Corruption since it involves a public officer's betrayal of public trust. As an offense considered a violation of a constitutionally enshrined policy, it should be
imposable with the highest penalty provided by law.

ACCORDINGLY, I join the opinion of Justice Martin S. Villarama, Jr. and vote to GRANT the Petition.
Endnotes:

FIRST DIVISION

G.R. No. 182375, December 02, 2015

HADJA RAWIYA SUIB, Petitioner, v. EMONG EBBAH AND THE HONORABLE COURT OF APPEALS, 22ND DIVISION, MINDANAO STATION, CAGAYAN DE
ORO CITY, Respondents.

DECISION

PEREZ, J.:

Before us is a Petition for Certiorari under Rule 65 of the Rules of Court assailing the Court of Appeals Resolutions1 dated 9 October 2007 and 26 February 2008, in CA-
G.R. SP No. 00985-MIN, for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction.

The facts as culled from the records are as follows: chanRoble svirtual Lawlib ra ry

Petitioner Hadja Rawiya Suib's (Suib) husband, Saab Hadji Suib (deceased), was the owner of a parcel of land with a total area of 12.6220 hectares, located in Sapu
Masla, Malapatan, Sarangani Province, covered by OCT No. P-19714, which he acquired through a duly notarized Deed of Absolute Sale from Sagap Hadji Taib on 14
December 1981.

Due to alleged illegal harvesting of coconuts from the subject property, Suib, in March 1990, filed a criminal case of qualified theft against respondent Emong Ebbah
(Ebbah) before the Regional Trial Court (RTC), Branch 22 of General Santos City, docketed as Criminal Case No. 6385, which was re-raffled to the RTC, Branch 38 of
Alabel, Sarangani Province.

As defense, Ebbah claimed that he has a right to harvest coconuts from the subject property because he was instituted as a tenant by Suib's deceased husband and
has been such tenant since 1963. On the other hand, Suib claimed that it was impossible for her husband to institute tenancy in favor of Ebbah in 1963 because her
husband acquired the subject property only in 1981.

The RTC dismissed the case on the ground of res judicata or bar by former judgment.2 It turned out that it was not the first time that Suib filed a criminal case of
qualified theft against Ebbah. Suib previously filed a criminal case of qualified theft against Ebbah before the Municipal Trial Court (MTC) of Malapatan, docketed as
Criminal Case No. 1793-M, which the MTC dismissed.3

Ebbah then filed the present case against Suib before the Provincial Agrarian Reform Adjudication Board (PARAB) in Region XI, docketed as Case No. XI-0330-SC-90,
on 31 January 1990. The case is for Immediate Reinstatement and Damages.

Finding the absence of a tenancy relationship between Suib and Ebbah, the PARAB, in a Decision4 dated 10 September 1993, dismissed the case for lack of merit.

On appeal to the Department of Agrarian Reform Adjudication Board Central Office (DARAB), the DARAB 5 reversed the PARAB Decision. According to the DARAB, "[in]
Republic Act No. 3844, [it] provides that in case there is doubt in the interpretation and enforcement of laws or acts relative to tenancy, it should be resolved in favor
of the latter to protect him from unjust exploitation and arbitrary ejectment by unscrupulous landowners."6 The DARAB also ruled that:

An examination of the records reveal (sic) that Plaintiff-Appellant was on the land of Respondent-Appellee since 1963. It must be remembered that at the time
Respondent-Appellee rejected Plaintiff-Appellant on 30 March 1990, the latter had already harvested thousands of coconuts and had already converted twenty-five (25)
sacks of copra. There was also a sharing of the produce of the land between the parties. Undoubtedly, the requisites for the establishment of tenancy relation are
present in this case. Moreover, the fact that they did not at all question his tenancy over the land in question for quite several years, there is an implied recognition or
consent to the establishment of a tenancy relationship between the parties.7 ChanRobles Vi rtua lawlib rary

The dispositive portion of the DARAB Decision dated 5 June 1998 reads:
WHEREFORE, the decision appealed from is SET ASIDE and an (sic) new one entered: chanRoble svi rtual Lawli bra ry

1. Declaring Emong Ebbah a tenant of Hadji Rawiya Suib who is hereby ordered to respect and maintain Ebbah in the peaceful possession and cultivation of the subject
landholding.

SO ORDERED.8 Cha nRobles Vi rtua lawlib rary

The motion for reconsideration was likewise denied in a Resolution9 dated 21 December 1998.

To appeal the adverse Decision, Suib filed a Petition for Review under Rule 43 of the 1997 Rules of Civil Procedure before the Court of Appeals on 7 April
2006.10 Without giving due course to the petition, the Court of Appeals issued a Resolution11 dated 10 May 2006, with the following directives:

A) REQUIRE petitioner to SUBMIT a written explanation why copies of the

petition were not personally served to the agency a quo and the adverse
parties;
B) REQUIRE petitioner to SUBMIT a legible copy of the subject DARAB
decision duly certified by the proper authority and therein clearly
indicated the designation of office of the person certifying to its
authenticity;
C) REQUIRE petitioner's counsel to MANIFEST in writing to this Court the
place of issue of his IBP number;
D) REQUIRE petitioner to REMIT, within a non-extendible period of five
 (5) days from notice, the amount of P1,180.00 representing the balance
in the payment of the docket fees for petitions with prayer for TRO
and/or WPI;
E) REQUIRE DARAB to show proof that copy of its Resolution dated
December 21, 1998 denying petitioner's Motion for Reconsideration in
DARAB Case No. 5402 was sent to petitioner and/or counsel of record;
F) REQUIRE DARAB to INFORM this Court if any motion to withdraw as
counsel has been filed by Atty. Marcelino Valdez, and if any
corresponding entry of appearance has been filed by Atty. Jose Jerry
Fulgar, both as counsels for petitioner in DARAB Case No. 5402;
G) Without necessarily giving due course to the
petition, DIRECT respondent to file a comment thereon (not a motion to
dismiss), within ten (10) days from notice, and to SHOW
CAUSE therein why the prayer for the issuance of a temporary
restraining order and/or preliminary injunction should not
be GRANTED. Petitioner may file a Reply within five (5) days from
receipt of the Comment. Said Comment may be treated as Answer of
respondent in the event the petition is given due course.12
In partial compliance with the Resolution, Suib filed a Compliance13 and Supplement to Compliance14dated 25 May 2006 and 29 May 2006, respectively, sans the
DARAB Decision. Meanwhile, Suib sent a letter to DARAB-Koronadal City, requesting for a copy of the DARAB Decision.

Upon receipt of the DARAB Decision, Suib filed a 2nd Supplement to Compliance15 dated 2 June 2006 with the DARAB Decision finally attached.

Acting on the various supplements filed by Suib, the Court of Appeals, in a Resolution 16 dated 9 October 2007, dismissed the petition for failure of Suib to submit the
DARAB Decision pursuant to Section 7, Rule 43 in relation to Section 1(g) of Rule 50 of the Rules of Court.

Suib's Motion for Reconsideration with Compliance17 was likewise denied in a Resolution18 dated 26 February 2008. The dispositive portion of the Resolution reads:
On November 26, 2007, this Court issued a Resolution directing the private respondent to file a comment on the Motion for Reconsideration with Compliance filed by
petitioner within a period often (10) days from receipt of notice of the said resolution. The same was received by the private respondent on November 8, 2007. On
January 24, 2008, private respondent filed with this Court his Comment thru registered mail and a copy thereof was received by this Court on January 31, 2008.

A perusal of petitioner's Motion for Reconsideration with Compliance reveals that the directive of this Court May 10, 2006 requiring her to submit the DARAB decision
was not complied with.

Accordingly, the Motion for Reconsideration with compliance is hereby denied.

SO ORDERED.19 (Citations omitted).

Hence, this petition accusing the Court of Appeals of grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing Suib's appeal for failure to timely
file a copy of the appealed DARAB Decision together with her petition.

The petition is devoid of merit.

Before proceeding to resolve the question on jurisdiction, the Court deems it proper to address the penultimate issue of procedural error which Suib committed.

Suib availed of the wrong remedy by filing the present special civil action for certiorari under Rule 65 of the Rules of Court to assail a final judgment of the Court of
Appeals. Suib should have filed a petition for review under Rule 45 of the Rules of Court.

A special civil action for certiorari under Rule 65 is an original or independent action based on grave abuse of discretion amounting to lack or excess of jurisdiction and
it will lie only if there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law; it cannot be a substitute for a lost appeal.20 In the
case at bar, Suib is not without any plain, speedy, and adequate remedy as the remedy of an appeal is still available. Hence, the present petition for certiorari will not
prosper even if the ground is grave abuse of discretion.21

In cases where the petitioner availed of the wrong remedy, the Court, in the spirit of liberality and in the interest of substantial justice, has the right to treat the
petition as a petition for review: (1) if the petition for certiorari was filed within the reglementary period within which to file a petition for review on certiorari; (2) when
errors of judgment are averred; and (3) when there is sufficient reason to justify the relaxation of the rules. 22

Consulting the records, we find that the present petition was filed within the reglementary period within which to file a petition for review under Rule 45, which also
raised errors of judgment. In detail, after receipt of the assailed Resolution dated 26 February 2008, Suib filed a Motion for Extension of Time to File Petition (with
Motion for Leave) on 3 April 2008, requesting for an additional thirty (30) days or until 3 May 2008 within which to file a petition for review under Rule 45 of the Rules
of Court. However, on 2 May 2008, Suib filed a Petition for Certiorari under Rule 65, well within the reglementary period within which to file a petition for review under
Rule 45, which was until 3 May 2008.

Therefore, the Court deems it proper and justified to relax the rules and, thus, treat the instant petition for certiorari as a petition for review.23

Suib averred that the Court of Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction when it dismissed the petition due to Suib's
failure to attach a copy of the DARAB Decision with the petition within a reasonable period.

We rule in the negative.

On 10 May 2006, the Court of Appeals ordered Suib, among others, to submit a legible copy of the DARAB Decision pursuant to Section 7, Rule 43 in relation to Section
1(g), Rule 50 of the Rules of Court. However, Suib was able to submit a copy of the DARAB Decision to the Court of Appeals only after filing two (2) Compliances or
only after almost two (2) months since Suib filed the petition. The pertinent Rules read: chanRoblesvi rt ualLaw lib rary

Section 1(g), Rule 50:

Section 1. Grounds for dismissal of appeal. An appeal may be dismissed by the Court of Appeals, on its own motion or on that of the appellee, on the following
grounds: x x x x
(g) Failure of the appellant to take the necessary steps for the correction or completion of the record within the time limited by the court in its order; x x x x
Section 7, Rule 43:
Section 7. Effect of failure to comply with requirements. The failure of the petitioner to comply with any of the foregoing requirements regarding the payment of the
docket and other lawful fees, the deposit for costs, proof of service of the petition, and the contents of and the documents which should accompany the petition shall
be sufficient ground for the dismissal thereof. (n) (Emphases supplied)
A reading of the aforesaid provisions reveals that the requirement in Section 1, Rule 50 in relation to Section 7, Rule 43 of the Rules of Court is mandatory and
jurisdictional. Thus, Suib's failure to attach the required copy of the appealed DARAB Decision is a sufficient ground for the dismissal of her appeal.

A litigant, before filing a pleading to the courts, must first prepare all the necessary attachments to his/her pleading. As it stands, suitors do not have the luxury of
filing a pleading without the necessary attachments; otherwise, the court shall consider the same as a mere scrap of paper and may dismiss the same outright.

One glaring fact that cannot escape us is that the petition for review filed before the Court of Appeals, which assailed the Decision and Resolution of the DARAB, was
filed beyond the reglementary period. As borne by the records, Suib received a copy of the DARAB Decision and Resolution on 5 June 1998 and 21 December 1998,
respectively, and it was only after eight (8) long years since the assailed DARAB Decision and Resolution were received when Suib filed an appeal to the Court of
Appeals on 7 April 2006. Without doubt, eight (8) years is beyond the reglementary period within which to file an appeal from a decision of the DARAB to the Court of
Appeals as provided in Rule 43, Section 4 of the Rules of Court, which mandates that appeals should be filed within fifteen (15) days from notice of the judgment:
Section 4. Period of appeal. The appeal shall be taken within fifteen (15) days from notice of the award, judgment, final order or resolution, or from the date of its
last publication, if publication is required by law for its effectivity, or of the denial of petitioner's motion for new trial or reconsideration duly filed in accordance with the
governing law of the court or agency a quo. Only one (1) motion for reconsideration shall be allowed. Upon proper motion and the payment of the full amount of the
docket fee before the expiration of the reglementary period, the Court of Appeals may grant an additional period of fifteen (15) days only within which to file the
petition for review. No further extension shall be granted except for the most compelling reason and in no case to exceed fifteen (15) days. (n)
Considering the period of eight (8) years between the receipt of the questioned Decision and the filing of the appeal with the Court of Appeals, it cannot be said that
Suib was not given an ample time to prepare and request for a copy of the assailed Decision from the DARAB. Indeed, Suib was given more than enough time to secure
a copy of the Decision.

Upon receipt of the adverse DARAB Decision in 1998, it was incumbent upon Suib to exercise due diligence to keep or in case of loss, to secure another copy of the
Decision from the DARAB. Time and again, this Court has reminded suitors to be diligent in record keeping. Thus, the DARAB cannot be faulted for Suib's negligence.
For its part, DARAB served Suib a copy of its Decision long before Suib filed an appeal. As soon as a litigant receives a copy of an adverse decision, it is incumbent upon
the losing litigant to request a copy from the court or tribunal should he/she lose a copy of the same. After all, losing litigants should be mindful of the legal remedies
available to them.

Furthermore, the right to appeal is not a natural right and is not part of due process. It is merely a statutory privilege and must be exercised in accordance with the
law. This doctrine has been reiterated in Spouses Ortiz v. Court of Appeals,24 where the Court held that:
x x x [T]he right to appeal is not a natural right or a part of due process; it is merely a statutory priv[i]lege, and may be exercised only in the manner and in
accordance with the provisions of the law. The party who seeks to avail of the same must comply with the requirements of the Rules, Failing [sic] to do so,
the right to appeal is lost. Rules of Procedure are required to be followed. xxx.25 (Emphases and underscoring supplied)
As the appeal is procedurally infirm, it is within the discretion of the appellate court to dismiss the same. As long as the lower court acts judiciously and within the
bounds of the law, the Court has no discretion to question the lower court's judgment in dismissing the appeal.

Once more we find occasion to reiterate this Court's pronouncement in De Liano v. Court of Appeals,26where we held:
Some may argue that adherence to these formal requirements serves but a meaningless purpose, that these may be ignored with little risk in the
smug certainty that liberality in the application of procedural rules can always be relied upon to remedy the infirmities. This misses the point. We are
not martinets; in appropriate instances, we are prepared to listen to reason, and to give relief as the circumstances may warrant. However, when the
error relates to something so elementary as to be inexcusable, our discretion becomes nothing more than an exercise in frustration. It comes as an
unpleasant shock to us that the contents of an appellant's brief should still be raised as an issue now. There is nothing arcane or novel about the provisions of Section
13, Rule 44. The rule governing the contents of appellants' briefs has existed since the old Rules of Court, which took effect on July 1, 1940, as well as the Revised
Rules of Court, which took effect on January 1, 1964, until they were superseded by the present 1997 Rules of Civil Procedure. The provisions were substantially
preserved, with few revisions.27 (Emphases and underscoring supplied)
And, even if we consider this petition as rightfully one under Rule 65, we say that is should likewise be dismissed as no grave abuse of discretion was shown.

A petition for certiorari under Rule 65 of the Rules of Court is limited to correction of errors of jurisdiction or grave abuse of discretion amounting to lack or excess of
jurisdiction. In order to constitute grave abuse of discretion, Suib must prove that the lower court acted in a capricious and whimsical exercise of judgment tantamount
to lack of jurisdiction. "Mere abuse of discretion is not enough. It must be grave abuse of discretion as when the power is exercised in an arbitrary or despotic manner
by reason of passion or personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty
enjoined or to act at all in contemplation of law."28 Evidently, the Court of Appeals acted within the bounds of law as the dismissal of the appeal was based on Section
1(g), Rule 50 in relation to Section 7, Rule 43 of the Rules of Court. Although the decision of the Court of Appeals, which dismissed the petition, did not mention Suib's
failure to file the present petition within the reglementary period pursuant to Rule 43, Section 4 of the Rules of Court, still, the Court of Appeals was correct in
dismissing the same based on Section 1(g), Rule 50 in relation to Section 7, Rule 43 of the same Rule. Far from it, the dismissal of Suib's appeal was neither arbitrary
nor despotic.

The rules of procedure serve a noble purpose of orderly and speedy administration of justice. Suib's attempt to persuade this Court to liberally interpret the technical
rules must fail. This Court shall not depart from rules of procedure only in the guise of liberal construction, which would render such noble purpose nugatory. 29

WHEREFORE, the Petition is hereby DENIED.

SO ORDERED. chanroblesv irtuallawl ib rary

FIRST DIVISION

G.R. No. 212081, February 23, 2015

DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR), Petitioner, v. UNITED PLANNERS CONSULTANTS, INC. (UPCI), Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 is the Decision2 dated March 26, 2014 of the Court of Appeals (CA) in CA-G.R. SP No. 126458 which dismissed the
petition for certiorari filed by petitioner the Department of Environment and Natural Resources (petitioner). chanrob lesvi rtua llawlib ra ry

The Facts

On July 26, 1993, petitioner, through the Land Management Bureau (LMB), entered into an Agreement for Consultancy Services3 (Consultancy Agreement) with
respondent United Planners Consultants, Inc. (respondent) in connection with the LMBs Land Resource Management Master Plan Project (LRMMP).4Under the
Consultancy Agreement, petitioner committed to pay a total contract price of P4,337,141.00, based on a predetermined percentage corresponding to the particular
stage of work accomplished.5 In December 1994, respondent completed the work required, which petitioner formally accepted on December 27, 1994.6 However,
petitioner was able to pay only 47% of the total contract price in the amount of P2,038,456.30. 7 cra lawred

On October 25, 1994, the Commission on Audit (COA) released the Technical Services Office Report8(TSO) finding the contract price of the Agreement to be 84.14%
excessive.9 This notwithstanding, petitioner, in a letter dated December 10, 1998, acknowledged its liability to respondent in the amount of P2,239,479.60 and assured
payment at the soonest possible time.10 c ralaw red

For failure to pay its obligation under the Consultancy Agreement despite repeated demands, respondent instituted a Complaint 11 against petitioner before the Regional
Trial Court of Quezon City, Branch 222 (RTC), docketed as Case No. Q-07-60321.12 c ralaw red

Upon motion of respondent, the case was subsequently referred to arbitration pursuant to the arbitration clause of the Consultancy Agreement,13 which petitioner did
not oppose.14 As a result, Atty. Alfredo F. Tadiar, Architect Armando N. Alli, and Construction Industry Arbitration Commission (CIAC) Accredited Arbitrator Engr.
Ricardo B. San Juan were appointed as members of the Arbitral Tribunal. The court-referred arbitration was then docketed as Arbitration Case No. A-001.15 c ralawred

During the preliminary conference, the parties agreed to adopt the CIAC Revised Rules Governing Construction Arbitration (CIAC Rules) to govern the arbitration 16

proceedings.17 They further agreed to submit their respective draft decisions in lieu of memoranda of arguments on or before April 21, 2010, among others.18 cra lawred

On the due date for submission of the draft decisions, however, only respondent complied with the given deadline, while petitioner moved for the deferment of the 19

deadline which it followed with another motion for extension of time, asking that it be given until May 11, 2010 to submit its draft decision. 20 c ralawre d

In an Order dated April 30, 2010, the Arbitral Tribunal denied petitioners motions and deemed its non-submission as a waiver, but declared that it would still consider
21

petitioners draft decision if submitted before May 7, 2010, or the expected date of the final awards promulgation. 22 Petitioner filed its draft decision23 only on May 7,
2010.

The Arbitral Tribunal rendered its Award24 dated May 7, 2010 (Arbitral Award) in favor of respondent, directing petitioner to pay the latter the amount of (a)
P2,285,089.89 representing the unpaid progress billings, with interest at the rate of 12% per annum from the date of finality of the Arbitral Award upon confirmation
by the RTC until fully paid; (b) P2,033,034.59 as accrued interest thereon; (c) ?500,000.00 as exemplary damages; and (d) P150,000.00 as attorneys fees.25 It also
ordered petitioner to reimburse respondent its proportionate share in the arbitration costs as agreed upon in the amount of P182,119.44.26 c ralawre d

Unconvinced, petitioner filed a motion for reconsideration, which the Arbitral Tribunal merely noted without any action, claiming that it had already lost jurisdiction
27

over the case after it had submitted to the RTC its Report together with a copy of the Arbitral Award. 28 cralawre d

Consequently, petitioner filed before the RTC a Motion for Reconsideration dated May 19, 2010 (May 19, 2010 Motion for Reconsideration) and a Manifestation
29

and Motion30 dated June 1, 2010 (June 1, 2010 Manifestation and Motion), asserting that it was denied the opportunity to be heard when the Arbitral Tribunal
failed to consider its draft decision and merely noted its motion for reconsideration.31 It also denied receiving a copy of the Arbitral Award by either electronic or
registered mail.32 For its part, respondent filed an opposition thereto and moved for the confirmation33 of the Arbitral Award in accordance with the Special Rules of
Court on Alternative Dispute Resolution (Special ADR Rules).34 c ralawre d

In an Order dated March 30, 2011, the RTC merely noted petitioners aforesaid motions, finding that copies of the Arbitral Award appear to have been sent to the
35

parties by the Arbitral Tribunal, including the OSG, contrary to petitioners claim. On the other hand, the RTC confirmed the Arbitral Award pursuant to Rule 11.2
(A)36 of the Special ADR Rules and ordered petitioner to pay respondent the costs of confirming the award, as prayed for, in the total amount of P50,000.00. From this
order, petitioner did not file a motion for reconsideration.

Thus, on June 15, 2011, respondent moved for the issuance of a writ of execution, to which no comment/opposition was filed by petitioner despite the RTCs directive
therefor. In an Order37 dated September 12, 2011, the RTC granted respondents motion. 38 c ralawred

Petitioner moved to quash39 the writ of execution, positing that respondent was not entitled to its monetary claims. It also claimed that the issuance of said writ was
premature since the RTC should have first resolved its May 19, 2010 Motion for Reconsideration and June 1, 2010 Manifestation and Motion, and not merely noted
them, thereby violating its right to due process.40 c ralawre d

The RTC Ruling

In an Order41 dated July 9, 2012, the RTC denied petitioners motion to quash.

It found no merit in petitioners contention that it was denied due process, ruling that its May 19, 2010 Motion for Reconsideration was a prohibited pleading under
Section 17.2,42 Rule 17 of the CIAC Rules. It explained that the available remedy to assail an arbitral award was to file a motion for correction of final award pursuant
to Section 17.143 of the CIAC Rules, and not a motion for reconsideration of the said award itself.44 On the other hand, the RTC found petitioners June 1, 2010
Manifestation and Motion seeking the resolution of its May 19, 2010 Motion for Reconsideration to be defective for petitioners failure to observe the three-day notice
rule.45 Having then failed to avail of the remedies attendant to an order of confirmation, the Arbitral Award had become final and executory. 46 cra lawred

On July 12, 2012, petitioner received the RTCs Order dated July 9, 2012 denying its motion to quash. 47
cralawred

Dissatisfied, it filed on September 10, 2012 a petition for certiorari48 before the CA, docketed as CA-G.R. SP No. 126458, averring in the main that the RTC acted with
grave abuse of discretion in confirming and ordering the execution of the Arbitral Award. chanrob lesvi rtua llawlib ra ry

The CA Ruling

In a Decision49 dated March 26, 2014, the CA dismissed the certiorari petition on two (2) grounds, namely: (a) the petition essentially assailed the merits of the
Arbitral Award which is prohibited under Rule 19.7 50 of the Special ADR Rules;51 and (b) the petition was filed out of time, having been filed way beyond 15 days from
notice of the RTCs July 9, 2012 Order, in violation of Rule 19.2852 in relation to Rule 19.853 of said Rules which provide that a special civil action for certiorari must be
filed before the CA within 15 days from notice of the judgment, order, or resolution sought to be annulled or set aside (or until July 27, 2012).

Aggrieved, petitioner filed the instant petition. chanroble svi rtual lawlib rary

The Issue Before the Court

The core issue for the Courts resolution is whether or not the CA erred in applying the provisions of the Special ADR Rules, resulting in the dismissal of petitioners
special civil action for certiorari.

The Courts Ruling

The petition lacks merit. cha nrob lesvi rtua llawlib ra ry

I.

Republic Act No. (RA) 9285,54 otherwise known as the Alternative Dispute Resolution Act of 2004, institutionalized the use of an Alternative Dispute Resolution System
(ADR System)55 in the Philippines. The Act, however, was without prejudice to the adoption by the Supreme Court of any ADR system as a means of achieving speedy
and efficient means of resolving cases pending before all courts in the Philippines.56 c ralawre d

Accordingly, A.M. No. 07-11-08-SC was created setting forth the Special Rules of Court on Alternative Dispute Resolution (referred herein as Special ADR Rules) that
shall govern the procedure to be followed by the courts whenever judicial intervention is sought in ADR proceedings in the specific cases where it is allowed.57 cralawred

Rule 1.1 of the Special ADR Rules lists down the instances when the said rules shall apply, namely: (a) Relief on the issue of Existence, Validity, or Enforceability of the
Arbitration Agreement; (b) Referral to Alternative Dispute Resolution (ADR); (c) Interim Measures of Protection; (d) Appointment of Arbitrator; (e) Challenge
to Appointment of Arbitrator; (f) Termination of Mandate of Arbitrator; (g) Assistance in Taking Evidence; (h) Confirmation, Correction or Vacation of Award in
Domestic Arbitration; (i) Recognition and Enforcement or Setting Aside of an Award in International Commercial Arbitration; (j) Recognition and Enforcement of a
Foreign Arbitral Award; (k) Confidentiality/Protective Orders; and (l) Deposit and Enforcement of Mediated Settlement Agreements.58 c ralaw red

Notably, the Special ADR Rules do not automatically govern the arbitration proceedings itself. A pivotal feature of arbitration as an alternative mode of dispute
resolution is that it is a product of party autonomy or the freedom of the parties to make their own arrangements to resolve their own disputes.59 Thus, Rule 2.3
of the Special ADR Rules explicitly provides that parties are free to agree on the procedure to be followed in the conduct of arbitral proceedings. Failing
such agreement, the arbitral tribunal may conduct arbitration in the manner it considers appropriate. 60 cra lawred

In the case at bar, the Consultancy Agreement contained an arbitration clause. Hence, respondent, after it filed its complaint, moved for its referral to 61

arbitration62 which was not objected to by petitioner.63 By its referral to arbitration, the case fell within the coverage of the Special ADR Rules. However, with respect to
the arbitration proceedings itself, the parties had agreed to adopt the CIAC Rules before the Arbitral Tribunal in accordance with Rule 2.3 of the Special ADR Rules.

On May 7, 2010, the Arbitral Tribunal rendered the Arbitral Award in favor of respondent. Under Section 17.2, Rule 17 of the CIAC Rules, no motion for reconsideration
or new trial may be sought, but any of the parties may file a motion for correction64 of the final award, which shall interrupt the running of the period for
appeal,65 based on any of the following grounds, to wit: chanRoblesvi rtual Lawli bra ry

a. an evident miscalculation of figures, a typographical or arithmetical error; ChanRoblesVi rtua lawlib rary

b. an evident mistake in the description of any party, person, date, amount, thing or property referred to in the award; ChanRoblesVi rtua lawlib rary

c. where the arbitrators have awarded upon a matter not submitted to them, not affecting the merits of the decision upon the matter submitted; ChanRoblesVi rt ualawlib ra ry

d. where the arbitrators have failed or omitted to resolve certain issue/s formulated by the parties in the Terms of Reference (TOR) and submitted to them
for resolution, and

e. where the award is imperfect in a matter of form not affecting the merits of the controversy.

The motion shall be acted upon by the Arbitral Tribunal or the surviving/remaining members. 66 cralawlawli bra ry

Moreover, the parties may appeal the final award to the CA through a petition for review under Rule 43 of the Rules of Court. 67 c ralaw red

Records do not show that any of the foregoing remedies were availed of by petitioner. Instead, it filed the May 19, 2010 Motion for Reconsideration of the Arbitral
Award, which was a prohibited pleading under the Section 17.2,68 Rule 17 of the CIAC Rules, thus rendering the same final and executory.

Accordingly, the case was remanded to the RTC for confirmation proceedings pursuant to Rule 11 of the Special ADR Rules which requires confirmation by the court of
the final arbitral award. This is consistent with Section 40, Chapter 7 (A) of RA 9285 which similarly requires a judicial confirmation of a domestic award to make the
same enforceable: chanRoble svi rtual Lawli bra ry

SEC. 40. Confirmation of Award. The confirmation of a domestic arbitral award shall be governed by Section 2369 of R.A. 876. 70 c ralaw red

A domestic arbitral award when confirmed shall be enforced in the same manner as final and executory decisions of the regional trial court.

The confirmation of a domestic award shall be made by the regional trial court in accordance with the Rules of Procedure to be promulgated by the
Supreme Court.

A CIAC arbitral award need not be confirmed by the regional trial court to be executory as provided under E.O. No. 1008. (Emphases supplied) cralawlaw lib rary

During the confirmation proceedings, petitioners did not oppose the RTCs confirmation by filing a petition to vacate the Arbitral Award under Rule 11.2 (D)71 of the
Special ADR Rules. Neither did it seek reconsideration of the confirmation order in accordance with Rule 19.1 (h) thereof. Instead, petitioner filed only on September
10, 2012 a special civil action for certiorari before the CA questioning the propriety of (a) the RTC Order dated September 12, 2011 granting respondents motion for
issuance of a writ of execution, and (b) Order dated July 9, 2012 denying its motion to quash. Under Rule 19.26 of the Special ADR Rules, [w]hen the Regional Trial
Court, in making a ruling under the Special ADR Rules, has acted without or in excess of its jurisdiction, or with grave abuse of discretion amounting to lack or excess
of jurisdiction, and there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law, a party may file a special civil action
for certiorari to annul or set aside a ruling of the Regional Trial Court. Thus, for failing to avail of the foregoing remedies before resorting to certiorari, the CA correctly
dismissed its petition. chan roblesv irtuallaw lib rary

II.

Note that the special civil action for certiorari described in Rule 19.26 above may be filed to annul or set aside the following orders of the Regional Trial Court.

a. Holding that the arbitration agreement is inexistent, invalid or unenforceable; ChanRoblesVi rt ualawlib ra ry

b. Reversing the arbitral tribunals preliminary determination upholding its jurisdiction; ChanRoble sVirt ualawli b rary

c. Denying the request to refer the dispute to arbitration; ChanRoblesVirt ualawli bra ry

d. Granting or refusing an interim relief; Cha nRobles Vi rtua lawlib rary

e. Denying a petition for the appointment of an arbitrator; ChanRoblesVirtualawl ibra ry

f. Confirming, vacating or correcting a domestic arbitral award; ChanRoblesVi rtua lawlib rary

g. Suspending the proceedings to set aside an international commercial arbitral award and referring the case back to the arbitral tribunal; ChanRobles Virtualawl ibra ry

h. Allowing a party to enforce an international commercial arbitral award pending appeal; ChanRobles Virtualawl ibra ry

i. Adjourning or deferring a ruling on whether to set aside, recognize and or enforce an international commercial arbitral award; ChanRoblesVi rtualaw lib rary
 j. Allowing a party to enforce a foreign arbitral award pending appeal; and

k. Denying a petition for assistance in taking evidence. (Emphasis supplied)

cralawlawl ibra ry

Further, Rule 19.772 of the Special ADR Rules precludes a party to an arbitration from filing a petition for certiorari questioning the merits of an arbitral award.

If so falling under the above-stated enumeration, Rule 19.28 of the Special ADR Rules provide that said certiorari petition should be filed with the [CA] within fifteen
(15) days from notice of the judgment, order or resolution sought to be annulled or set aside. No extension of time to file the petition shall be allowed.

In this case, petitioner asserts that its petition is not covered by the Special ADR Rules (particularly, Rule 19.28 on the 15-day reglementary period to file a petition
for certiorari) but by Rule 65 of the Rules of Court (particularly, Section 4 thereof on the 60-day reglementary period to file a petition for certiorari), which it claimed to
have suppletory application in arbitration proceedings since the Special ADR Rules do not explicitly provide for a procedure on execution.

The position is untenable.

Execution is fittingly called the fruit and end of suit and the life of the law. A judgment, if left unexecuted, would be nothing but an empty victory for the prevailing
party.73 cralawred

While it appears that the Special ADR Rules remain silent on the procedure for the execution of a confirmed arbitral award, it is the Courts considered view that the
Rules procedural mechanisms cover not only aspects of confirmation but necessarily extend to a confirmed awards execution in light of the doctrine of necessary
implication which states that every statutory grant of power, right or privilege is deemed to include all incidental power, right or privilege. In Atienza v. Villarosa,74 the
doctrine was explained, thus: chanRoblesvirtual Lawlib ra ry

No statute can be enacted that can provide all the details involved in its application. There is always an omission that may not meet a particular situation. What is
thought, at the time of enactment, to be an all-embracing legislation may be inadequate to provide for the unfolding of events of the future. So-called gaps in the law
develop as the law is enforced. One of the rules of statutory construction used to fill in the gap is the doctrine of necessary implication. The doctrine states that what is
implied in a statute is as much a part thereof as that which is expressed. Every statute is understood, by implication, to contain all such provisions as may be
necessary to effectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction which it grants, including all such
collateral and subsidiary consequences as may be fairly and logically inferred from its terms. Ex necessitate legis. And every statutory grant of power,
right or privilege is deemed to include all incidental power, right or privilege. This is so because the greater includes the lesser, expressed in the maxim, in eo
plus sit, simper inest et minus.75 (Emphases supplied) cralawlawl ibra ry

As the Court sees it, execution is but a necessary incident to the Courts confirmation of an arbitral award. To construe it otherwise would result in an absurd situation
whereby the confirming court previously applying the Special ADR Rules in its confirmation of the arbitral award would later shift to the regular Rules of Procedure come
execution. Irrefragably, a courts power to confirm a judgment award under the Special ADR Rules should be deemed to include the power to order its execution for
such is but a collateral and subsidiary consequence that may be fairly and logically inferred from the statutory grant to regional trial courts of the power to confirm
domestic arbitral awards.

All the more is such interpretation warranted under the principle of ratio legis est anima which provides that a statute must be read according to its spirit or intent, 76 for
what is within the spirit is within the statute although it is not within its letter, and that which is within the letter but not within the spirit is not within the
statute.77 Accordingly, since the Special ADR Rules are intended to achieve speedy and efficient resolution of disputes and curb a litigious culture,78 every interpretation
thereof should be made consistent with these objectives.

Thus, with these principles in mind, the Court so concludes that the Special ADR Rules, as far as practicable, should be made to apply not only to the proceedings on
confirmation but also to the confirmed awards execution.

Further, let it be clarified that contrary to petitioners stance resort to the Rules of Court even in a suppletory capacity is not allowed. Rule 22.1 of the Special ADR
Rules explicitly provides that [t]he provisions of the Rules of Court that are applicable to the proceedings enumerated in Rule 1.1 of these Special ADR Rules have
either been included and incorporated in these Special ADR Rules or specifically referred to herein.79 Besides, Rule 1.13 thereof provides that [i]n situations
where no specific rule is provided under the Special ADR Rules, the court shall resolve such matter summarily and be guided by the spirit and intent of the Special ADR
Rules and the ADR Laws.

As above-mentioned, the petition for certiorari permitted under the Special ADR Rules must be filed within a period of fifteen (15) days from notice of the judgment,
order or resolution sought to be annulled or set aside.80 Hence, since petitioners filing of its certiorari petition in CA-G.R. SP No. 126458 was made nearly two months
after its receipt of the RTCs Order dated July 9, 2012, or on September 10, 2012, 81 said petition was clearly dismissible. 82 cralaw red

III.

Discounting the above-discussed procedural considerations, the Court still finds that the certiorari petition had no merit.

Indeed, petitioner cannot be said to have been denied due process as the records undeniably show that it was accorded ample opportunity to ventilate its position.
There was clearly nothing out of line when the Arbitral Tribunal denied petitioners motions for extension to file its submissions having failed to show a valid reason to
justify the same or in rendering the Arbitral Award sans petitioners draft decision which was filed only on the day of the scheduled promulgation of final award on May
7, 2010.83 The touchstone of due process is basically the opportunity to be heard. Having been given such opportunity, petitioner should only blame itself for its own
procedural blunder.

On this score, the petition for certiorari in CA-G.R. SP No. 126458 was likewise properly dismissed. chanrob lesvi rtua llawlib ra ry

IV.

Nevertheless, while the Court sanctions the dismissal by the CA of the petition for certiorari due to procedural infirmities, there is a need to explicate the matter of
execution of the confirmed Arbitral Award against the petitioner, a government agency, in the light of Presidential Decree No. (PD) 144584otherwise known as the
Government Auditing Code of the Philippines.

Section 26 of PD 1445 expressly provides that execution of money judgment against the Government or any of its subdivisions, agencies and instrumentalities is within
the primary jurisdiction of the COA, to wit: chanRo blesvi rtual Lawli bra ry

SEC. 26. General jurisdiction. The authority and powers of the Commission shall extend to and comprehend all matters relating to auditing procedures,
systems and controls, the keeping of the general accounts of the Government, the preservation of vouchers pertaining thereto for a period of ten years, the
examination and inspection of the books, records, and papers relating to those accounts; and the audit and settlement of the accounts of all persons
respecting funds or property received or held by them in an accountable capacity, as well as the examination, audit, and settlement of all debts and
claims of any sort due from or owing to the Government or any of its subdivisions, agencies and instrumentalities. The said jurisdiction extends to all
government-owned or controlled corporations, including their subsidiaries, and other self-governing boards, commissions, or agencies of the Government, and as
herein prescribed, including non-governmental entities subsidized by the government, those funded by donation through the government, those required to pay levies
or government share, and those for which the government has put up a counterpart fund or those partly funded by the government. (Emphases supplied)
cralawlawl ibra ry

From the foregoing, the settlement of respondents money claim is still subject to the primary jurisdiction of the COA despite finality of the confirmed arbitral award by
the RTC pursuant to the Special ADR Rules. 85 Hence, the respondent has to first seek the approval of the COA of their monetary claim. This appears to have been
complied with by the latter when it filed a Petition for Enforcement and Payment of Final and Executory Arbitral Award 86 before the COA. Accordingly, it is now the
COA which has the authority to rule on this latter petition.
WHEREFORE, the petition is DENIED. The Decision dated March 26, 2014 of the Court of Appeals in CA-G.R. SP No. 126458 which dismissed the petition
for certiorari filed by petitioner the Department of Environment and Natural Resources is hereby AFFIRMED.

SO ORDERED. cralawlawlib rary

SECOND DIVISION

G.R. No. 178343, July 14, 2014

THE OFFICE OF THE OMBUDSMAN, Petitioner, v. ALEX M. VALENCERINA, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for certiorari1 are the Resolutions dated June 15, 20062 and April 24, 20073of the Court of Appeals (CA) in CA-G.R. SP No. 91977 which enjoined
the execution of the Order4 dated June 8, 2005 of Ombudsman Simeon V. Marcelo in OMB-ADM-0-00-0547, pending appeal.

The Facts

Sometime in October 1997, Ecobel Land, Inc. (Ecobel) through its Chairman, Josephine Boright (Boright), applied for a medium term loan financial facility with the
Government Service Insurance System (GSIS) Investment Management Group (or Finance Group) to finance the construction of its condominium project in Ermita,
Manila (project).5 The loan application was denied due to the following grounds: (a) the collateral was insufficient; (b) Ecobel did not have the needed track record in
property development; and (c) the loan was sought during the Asian financial crisis.6

Intent on pursuing the project, Ecobel, this time, applied for asurety bond with the GSIS to guarantee the re-payment of the principal loan obligation to be procured
with the Philippine Veterans Bank (PVB).7Ecobels application was APPROVED in principle subject to analysis/evaluation of the project and the offered collaterals.8

In a Memorandum9 dated January 27, 1998, respondent Alex M. Valencerina (Valencerina), then Vice-President for Marketing and Support Services of the GSIS General
Insurance Group (GIG), submitted Ecobels Guarantee Payment Bond application for evaluation and endorsement of the GSIS Investment Committee (INCOM). In the
said Memorandum, Valencerina made it appear that Ecobels application was fully secured by reinsurance and real estate collaterals,10 and that its approval was urgent
considering Ecobels limited time to avail of the loan from the funder.11 Such memorandum was coursed through GIG Senior Vice-President, Amalio A. Mallari (Mallari),
who scribbled thereon his own endorsement, stating Strongly reco. based on info and collaterals herein stated.12

On March 10, 1998, the INCOM approved Ecobels application13 and GSIS Surety Bond G(16) GIF Bond 02913214 dated March 11, 1998 (subject bond) was
correspondingly issued indicating the following parties: Ecobel, represented by its Chairman, Boright, as principal (obligor), PVB as obligee, and Mallari, in
representation of the GSIS General Insurance Fund, the purpose of which was to guarantee the repayment of the principal and interest on the loan granted to the
principal through the obligee to be used for the construction of the project.15

Later, however, or on November 19, 1998, GSIS President and General Manager Federico Pascual issued a memorandum suspending the processing and issuance of
guaranty payment bonds.16 Accordingly, Valencerina prepared a cancellation notice to Ecobel for Mallaris signature, but was told that the subject bond could no longer
be cancelled because it was already a done deal.17 Thus, upon the request of Mallari, Valencerina signed a Certification dated January 14, 1999, stating that the
subject bond: (a) was genuine and authentic; (b) constituted a valid and binding obligation on the part of GSIS; and (c) may eventually be transferred to Bear,
Stearns International, Ltd. (BSIL), Aon Financial Products, Inc. or any of their assignees, subject to the prior written or fascsimile notification to the GSIS by the current
obligee, PVB, and that confirmation or approval from GSIS is not required.18 Said certification further stated that GSIS had no counterclaim, defense or right of set-off
with respect to the subject bond, provided that drawing conditions (covered in a separate certification) 19 have been satisfied.20

Not withstanding the issuance of the subject bond on March 11, 1998, Ecobel paid its yearly premium only on February 9, 1999 through a postdated check dated
February 26, 1999, and thereon submitted the certificates of title for the collaterals required therefor. However, the certificate of title of the major collateral (situated in
Lipa City, Batangas), i.e., Transfer Certificate of Title No. 66289, was eventually found to be spurious.21

Consequently, Valencerina, in the letters22 dated February 12 and 24, 1999 informed Borightthat the subject bond was invalid and unenforceable and that Ecobels
check payment was disregarded by the GSIS. Despite the bond cancellation notices, Ecobel was still able to secure a US$10,000,000.00 loan from BSIL using the
subject bond.23 Thereafter, it offered to pay the bond premiums to the GSIS London Representative Office, which was accepted by Vice-President for International
Operations of the GIG, Fernando U. Campaa24 (Campaa), who was neither furnished copies nor informed of the cancellation of the subject bond.25

Ecobel defaulted in the payment of its loan, prompting BSIL to serve upon it a notice of default and its intention to recover the repayment amount under the terms of
their loan agreement and the subject bond. The GSIS was similarly advised.26

In a Certification dated March 20, 2000, PVB Executive President and Chief Operating Officer Florencio Z. Sioson declared that PVB did not accept the proposal for it to
be named obligee under the subject bond and that there was no contract between Ecobel and PVB.27

In view of the foregoing events, the GSIS conducted an investigation on the circumstances surrounding the processing and issuance of the subject bond28 and
forwarded its report to the Fact-Finding and Intelligence Bureau (FFIB) of the Office of the Ombudsman (OMB),which then conducted its own fact-finding
investigation.29] On May 31, 2000, the FFIB issued a Fact Finding Report,30 recommending the filing of appropriate criminal and administrative charges against the
concerned GSIS officials31including Valencerina. Accordingly, an administrative case was filed against the said officials for Gross Neglect of Duty, and Inefficiency and
Incompetence in the Performance of Official Duties before the OMB, docketed as OMB-ADM-0-00-0547.

The OMB Proceedings

In a Decision32 dated January 27, 2005, the OMB Preliminary Investigation and Administrative Adjudication Bureau-B (PIAB-B) found Valencerina, among others, guilty
of gross neglect of duty, and inefficiency and incompetence in the performance of official duties,and ordered his dismissal from service with the accessory penalties
provided for under Sections 57 and 58 of the Uniform Rules on Administrative Cases.33

In an Order34 dated June 8, 2005 (June 8, 2005 Order), Ombudsman Simeon V. Marcelo modified the PIAB-B decision, among others, finding Valencerina guilty,
instead, of grave misconduct, but imposing the same penalties.

Valencerina moved for reconsideration but was, however, denied in an Order 35 dated September 1, 2005. Dissatisfied, he filed before the CA a petition for
review36 under Rule 43 of the Rules of Court (Rules), with prayer for the issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction against
the execution of the June 8, 2005 Order.

The CA Proceedings

On November 22, 2005,37 the CA issued a 60-day TRO which expired on January 21, 2006.38
Subsequently, in an Order39 dated April 25, 2006, Ombudsman Ma. Merceditas N. Gutierrez directed GSIS President and General Manager Winston F. Garciato execute
the June 8, 2005 Order. Thus, in a Memorandum40 dated June 8, 2006, the GSIS informed Valencerina that he is deemed dismissed from the service as of the close of
office hours that day.

Aggrieved, Valencerina filed an Urgent Motion for Issuance of Writ of Preliminary Mandatory Injunction41with the CA, which, finding the necessity to preserve the
status quo between the parties,42 granted the same in a Resolution 43 dated June 15, 2006 (June 15, 2006 Resolution). Consequently, the corresponding writ of
preliminary injunction44 was issued on June 20, 2006, and in a Memorandum45dated June 21, 2006, the GSIS directed Valencerina to return to work.

At odds with the return directive, the OMB filed a motion for reconsideration46 of the June 15, 2006 Resolution which was denied in a Resolution47 dated April 24, 2007.
The CA pointed out that [u]nder Rule 43 of the [Rules], an appeal shall not stay the judgment to be reviewed unless the [CA] shall direct otherwise,48 and that it has
resolved to stay the assailed judgment and orders during the pendency of the case.

Unperturbed, the OMB filed the instant petition for certiorari.

The Issue Before the Court

The essential issue in this case is whether or not the CA committed grave abuse of discretion in issuing the writ of preliminary injunction.

The Courts Ruling

There is merit in the petition.

Section 7, Rule III of the Rules of Procedure of the Office of the Ombudsman49 (Section 7, Rule III), as amended by Administrative Order No. 17 dated September 15,
2003, provides that the offices decision imposing the penalty of removal, among others, shall be executed as a matter of course and shall not be stopped by an appeal
thereto, viz.:
chanroblesv irt uallawl ibrary

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.

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. (Emphases and underscoring supplied)

Based on the afore-quoted provision, it is clear that the OMBsJune 8, 2005 Order imposing the penalty of removal on Valencerina was immediately executory,
notwithstanding the pendency of his appeal.The general rule on appeals from quasi-judicial bodies stated under Section 12, Rule 43 of the Rules which provides that
[t]he appeal shall not stay the award, judgment, final order or resolution sought to be reviewed unless the Court of Appeals shall direct otherwise upon such terms as
it may deem just would not apply in this case for the following reasons:

First, Section 3,50 Rule V of the OMB Rules of Procedure provides that the Rules may apply suppletorily or by analogy only when the procedural matter is not governed
by any specific provision in the said rules.Here,and as earlier conveyed, Section 7, Rule III categorically provides that an appeal shall not stop the offices decision
imposing the penalty of removal, among others, from being executory.

Second, it is a fundamental legal principle that when two rules apply to a particular case, that which was specially designed for the said case must prevail over the
other. Evidently, the aforesaid Section 7, Rule III is a special rule applicable to administrative complaints cognizable by the OMB, 51 while Section 12, Rule 43 of the
Rules applies to appeals from quasi-judicial bodies52 in general, including the OMB. Thus, as between the two rules, Section 7, Rule III should prevail over the
application of Section 12, Rule 43 of the Rules in appeals from a decision of the OMB in an administrative case. As held in the case of OMB v. Samaniego:53

Section 7, Rule III of the Rules of Procedure of the Office of the Ombudsman supersedes the discretion given to the CA in Section 12, Rule 43 of the Rules of Court
when a decision of the Ombudsman in an administrative case is appealed to the CA. The provision in the Rules of Procedure of the Office of the Ombudsman that a
decision is immediately executory is a special rule that prevails over the provisions of the Rules of Court. Specialis derogat generali. When two rules apply to a
particular case, that which was specially designed for the said case must prevail over the other.54

Third, the OMB is constitutionally authorized to promulgate its own rules of procedure.55 This is fleshed out in Sections 18 and 27 of Republic Act No. (RA)
6770,56 otherwise known as The Ombudsman Act of 1989, which empower the OMB to promulgate its rules of procedure for the effective exercise or performance of
its powers, functions, and duties and to accordingly amend or modify its rules as the interest of justice may require. As such, the CA cannot stay the execution of
decisions rendered by the said office when the rules the latter so promulgates categorically and specifically warrant their enforcement, else the OMBs rule-making
authority be unduly encroached and the constitutional and statutory provisions providing the same be disregarded.57

Fourth, the previous ruling in Lapid v. CA58 (as quoted in Lopez v. CA59 and OMB v. Laja60) wherein the Court, relying on the old OMB Rules of Procedure, i.e.,
Administrative Order No. 7 dated April 10, 1990, had opined that the fact that the [Ombudsman Act] gives parties the right to appeal from [the OMBs] decisions
should generally carry with it the stay of these decisions pending appeal,61 cannot be successfully invoked by Valencerina in this case for the reason that the said
pronouncement had already been superseded by the more recent ruling in Buencamino v. CA62(Buencamino). In Buencamino, the Court applied the current OMB Rules
of Procedure, i.e., Administrative Order No. 17 dated September 15, 2003, which were already in effect at the time the CA assailed Resolutions dated June 15, 2006
and April 24, 2007 were issued, and, hence, governing. The pertinent portions of the Buencamino ruling are hereunder quoted for ready reference: chanrob lesvi rtua llawli bra ry

In interpreting the above provision, this Court held in Laja, citing Lopez that only orders, directives or decisions of the Office of the Ombudsman in administrative
cases imposing the penalties of public censure, reprimand or suspension of not more than one month or a fine not equivalent to one month salary shall be final and
unappealable hence, immediately executory. In all other disciplinary cases where the penalty imposed is other than public censure, reprimand, or suspension of not
more than one month, or a fine not equivalent to one month salary, the law gives the respondent the right to appeal. In these cases, the order, directive or decision
becomes final and executory only after the lapse of the period to appeal if no appeal is perfected, or after the denial of the appeal from the said order, directive or
decision. It is only then that execution shall perforce issue as a matter of right. 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.

However, as aptly stated by the Office of the Ombudsman in its comment, Section 7, Rule III of Administrative Order No. 07 has been amended by
Administrative Order No. 17, thus:
Sec. 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 not 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.
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.

Clearly, considering that an appeal under Administrative Order No. 17, the amendatory rule, shall not stop the Decision of the Office of the
Ombudsman from being executory, we hold that the Court of Appeals did not commit grave abuse of discretion in denying petitioners application for
injunctive relief.63(Emphases and underscoring supplied, with those in the original omitted)

Lastly, it must be emphasized that the OMB Rules of Procedure are only procedural. Hence,Valencerina had no vested right that would be violated with the execution of
the OMBs removal order pending appeal. In fact, the rules themselves obviate any substantial prejudice to the employeeas he would merely be considered under
preventive suspension, and entitled to the salary and emoluments he did not receive in the event he wins his appeal. As aptly pronounced in In the Matter to Declare in
Contempt of Court Hon. Simeon A. Datumanong, in the latters capacity as Sec. of DPWH:64

[T]he 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.65

Based on the foregoing reasons, the CAs Resolutions granting Valencerinas prayer for a writ of preliminary injunction staying the execution of the Ombudsmans June
8, 2005 Order are therefore patently erroneous and, thus, tainted with grave abuse of discretion.As jurisprudence dictates, grave abuse of discretion arises when a
lower court or tribunal patently violates the Constitution, the law or existing jurisprudence, 66 as in this case.

WHEREFORE, the petition is GRANTED. The Resolutions dated June 15, 2006 and April 24, 2007 of the Court of Appeals in CA-G.R. SP No. 91977 are
hereby REVERSED and SET ASIDE. The Writ of Preliminary Injunction dated June 20, 2006 issued in the said case is LIFTED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 166944 August 18, 2014

JUANITO MAGSINO, Petitioner,

vs.
ELENA DE OCAMPO and RAMON GUICO, Respondents.

DECISION

BERSAMIN, J.:

Section 2 (d), Rule 42 of the Rules of Court requires the petition for review to be accompanied by clearly legible duplicate originals or true copies of the
judgments or final orders of both lower courts, certified correct by the clerk of court of the Regional Trial Court, and the requisite number of plain copies
thereof and of the pleadings and other material portions of the record as would support the allegations of the petition. The failure of the petitioner to
comply with the requirement shall be a sufficient ground for the dismissal of the petition for review.

The Case

Under review are the resolution promulgated on January 8, 2004 in CA-G.R. SP No. 81103,1 whereby the Court of Appeals (CA) dismissed the petition
for review of the petitioner on the ground of his failure to comply with Section 2 (d), Rule 42 of the Rules of Court; and the resolution promulgated on
January 28, 2005,2 whereby the CA denied his motion for reconsideration.

Antecedents

The petitioner filed against the respondents a complaint for forcible entry with prayer for preliminary mandatory injunction and/or temporary restraining
order in the Metropolitan Trial Court in Antipolo City (MeTC). In his complaint, docketed as Civil Case No. 4141, he alleged that he was the owner in
fee simple of a parcel ofagricultural land containing an area of 10 hectares situated in Sapinit, San Juan, Antipolo City; that he had been in physical
possession of the land for more than 30 years; and that on February 5, 2000, the respondents, through force, intimidation, threats and strategy and
with the aid of armed men, had unlawfully bulldozed the eastern and northern portions of his land, cutting lengthwise through the land, destroying
ornamental plants and fruit-bearing treesthat he had himself planted several years before, thereby illegally depriving him of the possession of the land. 3

The petitioner filed a motion for preliminary mandatory injunction but the Municipal Trial Court in Taytay, Rizal (MTC) issued only a writ of preliminary
injunction.

Respondent Elena De Ocampo countered that she had held a registered title in the land by virtue of the original certificate of title issued to her mother,
Cecilia De Ocampo; and that the petitioner was a squatter on the land with no possessory rights.4 Her co-respondent Ramon Guico, Jr., then a
Municipal Mayor in the Province of Pangasinan, had allegedly owned the titled land being occupied and possessed by De Ocampo.
On May 5, 2003, the MTC rendered its judgment in favor of the respondents, disposing: WHEREFORE, having failed to substantiate his allegations,
the Complaint is hereby ordered DISMISSED.

The writ of preliminary injunction dated November 10, 2000, is hereby ordered recalled, set aside and with no further force and effect. Consequently,
the plaintiff is ordered to leave and vacate that parcel of agricultural land with an area of 10 hectares more or less, located at Sapinit, San, Juan,
Antipolo City covered by Transfer Certificate of Title Nos. 328090, 328091, 328092, 328093 and 328094 in the name of defendant Elena De Ocampo
which iscurrently being occupied by said plaintiff by virtue of such writ of injunction.

But finding no malice in instituting this Complaint against the defendants, as it was only natural for anybody who is similarly situated to search for
remedies in protecting his rights, the Court shall not pronounce any moral or actual damages against the plaintiff.

However, as the defendants incurred litigation expenses, plaintiff is hereby ordered to reimburse to the defendants the grand total amount
of P100,000.00 representing attorney's fees and litigation expenses ("Honorarium") and to pay costs of suit.

SO ORDERED.5

On September 17, 2003, the Regional Trial Court, Branch 74, in Antipolo City (RTC) rendered its decision affirming the judgment of the MTC,6 viz:

WHEREFORE, the Decision appealed from is hereby affirmed-intoto with costs against the plaintiff-appellant.

SO ORDERED.7

The petitioner moved for reconsideration, but the RTC denied his motion on November 6, 2003.8

Dissatisfied, the petitioner appealedto the CA by petition for review.

On January 8, 2004, however, the CApromulgated its first assailed resolution dismissing the petition for review,9holding thusly:

The petition for review is procedurally flawed in view of the following:

The petition is not accompanied by copies of the pleadings and other material portions as would support the allegations of the petition, such as:

1) Copy of the complaint filed withthe Municipal Trial Court of Taytay, Rizal, Answer, and Motion to Dismiss;

2) Copies of the appeal memoranda filed by the parties.

WHEREFORE, in view of the foregoing premises, the instant petition is hereby DISMISSED.

SO ORDERED.

The petitioner moved for the reconsideration of the first assailed resolution,10 arguing therein that the decisions of the MTC and the RTC submitted with
the petition for review were sufficient for the CA to resolve the issues "without resort to[the] record" 11 because the issues involved are questions of law
such as "[w]ill the possession in law of defendants (now respondents), have it (sic) over the prior physical, actual or de facto possession of the Plaintiff-
appellant (now herein Petitioner);"12 that, at any rate, should the CA have really desired to inform itself more, all that it needed to do was simply to order
the elevation of the records; and that "all rules of procedure should bow to the greater imperative ofdoing substantial justice."13

On January 28, 2005, the CA denied the petitioners motion for reconsideration "for evident want of merit." 14

Issues

Hence, in his appeal, the petitioner submits the following for our consideration, namely:

I.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS HAD THE POWER AND DISCRETION TO FOREGO WITH THE APPLICATION OF
SAID SECTIONS OF RULE 43 (SIC) IN THE INTEREST OF SUBSTANTIAL JUSTICE, CONSIDERING THAT NO LESS THAN IGNORANCE OF THE
LAW WAS EXHIBITED BY JUDGE QUERUBIN IN HOLDING THAT RESPONDENTS, THEN DEFENDANTS, HAD THE BETTERPOSSESSORY
RIGHT OVER THE PROPERTY BY REASON OF THEIR TITLE, OBLIVIOUS OF THE FACT THAN (SIC) IN FORCIBLE ENTRY, IT IS PRIOR,
PHYSICAL AND ACTUAL POSSESSION THAT IS MATERIAL.

II.
WHETHER OR NOT, CONSIDERING OUR SUBMISSION TO THIS HONORABLE COURT THE DOCUMENTS THE COURT OF APPEALS WAS
AITATING (SIC) FOR IT WOULD BE PROPER FOR THIS CASE TO BE REFERRED BACK TO IT FOR ADJUDICATION ON THE MERITS.

III.

WHETHER OR NOT TECHNICALITY (SIC) WHICH THE HONORABLE COURT OF APPEALS STRICTLY AHERED (SIC) TO BEDAME (SIC), HERE,
AN INSTRUMENT IN OBSTRUCTIN (SIC) THE SEARCH FOR TRUTH AND IN DEFEATING THE ENDS OF JUSTICE. 15

Ruling of the Court

The decisive question is whether or not the CA erred in dismissing the petition for review on the ground that the petitioner did not comply with Section
2, Rule 42 of the Rules of Court, to wit: Section 2. Form and contents. The petition shall be filed in seven (7) legible copies, with the originalcopy
intended for the court being indicated as such by the petitioner, and shall (a) state the full names of the parties to the case, without impleading the
lower courts or judges thereof either as petitioners or respondents; (b) indicate the specific material dates showing that it was filed on time; (c) set forth
concisely a statement of the matters involved, the issues raised, the specification of errors of fact or law, or both, allegedly committed by the Regional
Trial Court, and the reasons or arguments relied upon for the allowance of the appeal; (d) be accompanied by clearly legible duplicate originals or true
copies of the judgments or final orders of both lower courts, certified correct by the clerk of court of the Regional Trial Court, the requisite number of
plain copies thereof and of the pleadings and other material portions of the record as would support the allegations of the petition.

xxxx

As earlier mentioned, the CA issued the first assailed resolution dismissing the petition for review becausethe petitioner did not attach to his petition the
complaint, the answer, and the motion to dismiss, all filed in the MTC; and the copies of the parties memoranda on appeal presented in the RTC. Such
dismissal was pursuant to Section 3, Rule 42 of the Rules of Court, which provides:

Section 3. Effect of failure to comply with requirements. The failure of the petitioner to comply with any of the foregoing requirements regardingthe
payment of the docket and other lawful fees, the deposit for costs, proof of service of the petition, and the contents of and the documents which should
accompany the petition shall be sufficient ground for the dismissal thereof.

The appeal of the petitioner absolutely lacks merit.

We begin by reminding the petitioner that the right to appeal is not a natural right and is not part of due process, but merely a statutory privilege to be
exercised only in accordance with the law. Being the party who sought to appeal, he must comply with the requirements of the relevant rules;
otherwise, he would lose the statutory right to appeal.16It cannot be overemphasized, indeed, that the proceduresregulating appeals as laid down in the
Rules of Courtmust be followed because strict compliance with them was indispensable for the orderly and speedy disposition of justice.17

Whether or not the dismissal of the petition for review was warranted depended on whether or not there remained sufficient materials in the records to
still enable the CA to acton the appeal despite the omissions.

In Galvez v. Court of Appeals,18 a case that involved the dismissal of a petition for certiorarito assail an unfavorable ruling brought about by the failure to
attach copies of all pleadings submitted and other material portions of the record in the trial court (like the complaint, answer and position paper) as
would support the allegations of the petition, the Court recognized three guideposts for the CA to considerin determining whether or not the rules of
procedures should be relaxed, as follows:

First, not all pleadings and parts of case records are required to be attached to the petition. Only those which are relevant and pertinent must
accompany it. The test of relevancy is whether the document in question will support the material allegations in the petition, whether said document will
make out a prima faciecase of grave abuse of discretion as to convince the court to give due course to the petition.

Second, even if a document is relevant and pertinent to the petition, it need not be appended if it is shown that the contents thereof can also (sic) found
in another document already attached to the petition. Thus, if the material allegations in a position paper are summarized in a questioned judgment, it
will suffice that only a certified true copy of the judgment is attached.

Third, a petition lacking an essential pleading or part of the case record may still be given due course or reinstated (if earlier dismissed) upon showing
that petitioner later submitted the documents required, or that it will serve the higher interest of justice that the case be decided on the merits.

The guideposts, which equally apply to a petition for review filed in the CA under Rule 42, reflect thatthe significant determinant of the sufficiency of the
attached documents is whether the accompanying documents support the allegations of the petition.19

Did the petitioner follow the guideposts recognized in Galvez?

Under the first guidepost recognized in Galvez, only the relevant pleadings and parts of the case records needed to be attached to the petition for
review. Hence, not every pleading or document filed or submitted in the lower courts had to be attached to the petition. The test of relevancy is whether
the document in question would support the material allegations of the petition. Accordingly, we turn towhat were omitted by the petitioner.

The first omitted document was the complaint in Civil Case No. 4141. Being the initiatory pleading, the complaint included all the material facts and
dates necessary to support the petitioners cause of action for forcible entry, specifically: (1) his prior physical possession of the property; (2) his being
deprived of the physical possession either by force, intimidation, threat, strategy, or stealth; and (3) his filing of the action within one year from the time
he or his representative learned of the deprivation of physical possession of the land or building.20 The direct relevance of the complaint in the appeal
could neither be denied nor diminished, for only from its allegations could the true nature of the action as one for forcible entry and, consequently,
whether the trial court oranother court had jurisdiction over the action be fully determined. Such determination was indifferent to the defenses set up by
the defendants intheir answer or other responsive pleadings.21

The next omitted pleading was the answer of the respondents. As with the complaint, the answer was relevantin the appeal in the CA, for the
respondents as the defendants had set forth their defenses therein. The omission of the answer from the petition deprived the CA of the means to
know the factual averments of the complaint that were admitted and those that were denied.

The third omitted document was the motion to dismiss. Although the motion to dismiss would appear to be less relevant in view of the filing of the
answer by the respondents, the CA could have had good reasons for noting its omission as a ground to dismiss the petition for review.

The memoranda on appeal the parties respectively filed in the RTC were the fourth kind of omitted documents. In respect of the petitioner, his
memorandum, which was due to be filed within 15 days from the filing of his notice of appeal as required by Section 7, Rule 40 of the Rules of
Court,22 would have specified and supported the errors he imputed to the MTC. Such filing in the RTC could not be dispensed with, for the RTC would
consider only the errors specifically assigned and argued in his memorandum, except errors affecting jurisdiction over the subject matter as well as
plain and clerical errors.23 If the memorandum was not filed, the appeal could be dismissed.24 Unless his memorandum was part of his petition for
review, therefore, the CA would likely find his appeal frivolous, or even consider it dismissible pursuant to Section 3, Rule 42, supra. On their part, the
respondents were required to file their own memorandum on appeal within a similar period of 15 days from receipt of the petitioners memorandum of
appeal. For the petitioner to omit the respondents memorandum from his petition for review was inherently unfair because they had therein submitted
matters precisely to sustain the judgment of the MTC in their favor. Indeed, the memoranda on appeal of the parties were relevant in the proper
consideration and resolution of the merits of the appeal of the petitioner.

Based on the foregoing considerations, the petitioner entirely bypassed the first guidepost recognized in Galvez.

The second guidepost which stipulates that a document, although relevant to the petition for review, need not be appended if it is shown that its
contents could be found in or could be drawn from another document already attached to the petition refersto a process whereby the CA derives the
contents of the omitted relevant document from another attached to the petition for review filed in the CA.

A perusal of the records indicates that the documents actually attached to the petition for review were limited to the following, namely: (1) illegible
certified xerox copy of the May 5, 2003 judgment of the MTC in Civil Case No. 4141 (Annex 1);25 (2) duplicate original copy of the September 17, 2003
order issued by the RTC in SP Civil Case No. 03-266 affirming the judgment of the MTC (Annex 2);26 (3) certified xerox copy of the November 6, 2003
order of the RTC denying the motion for reconsideration of the petitioner (Annex 3);27 and (4) original copy ofthe September 30, 2003 motion for
reconsideration filed by the petitioner in the RTC (Annex 4).28

The petitioner posited in his motion for reconsideration that the copy of the MTC decision was a sufficient basis to resolve the issues he was raising in
his petition for review.29 Even with the copy of the MTC judgment being actually attached to the petition for review, however, the second guidepost
could not be complied with because the copy was hopelessly illegible. Moreover, the MTC judgment did not contain the statement of the issues relied
upon by the petitioner inhis appeal in the CA, for such statement was made only in his memorandum on appeal.

It is worth mentioning that pursuant to the third guidepost recognized in Galvezthe petitioner could still have submitted the omitted documents at the
time he filed his motion for reconsideration vis--vis the first assailed resolution of the CA. Yet, he did not do so. Instead, he boldly proposed in his
motion for reconsideration30 vis--vis the first assailed resolution that the CA should have bowed to the "greater imperative of doing substantial justice"
by not hampering the appeal "sticking unflaggingly to such rules," to wit:

If this Honorable Court would reallywant to inform itself more, it is submitted that all that it has to dois to order the elevation of all the records to it. The
Rules of Court, and for that matter all rules of procedure should bow to the greater imperative ofdoing substantial justice. Rather, routinely applying a
rule of procedure when the same is not necessary in order to arrive at an intelligent resolution of the issues, it is submitted, would hamper or repress
rather thanpromote the search for truth.

xxxx

It may be clich, but it is still true today as when it first found its way into the human mind, that when technical rules of procedure already serve to
hamper justice they must be left to the dustbin of the legally forgettable, and at the cost of setting them aside, should unobtrusively pursue the ends of
justice and the search for truth.

xxxx

Now must this Honorable Court sacrifice the law for technical rules of procedure? Must it countenance mediocrity, nay, ignorance, by sticking
unflaggingly to such rules? Can this honorable Court afford to pass up the rare opportunity to decide a constitutional issue with right of a party to due
process of law on the line?

xxxx

ONCE AGAIN, we ask: Is it necessary for this Honorable Court to still pursue those pleadings when the issues confronting them are legal issues which
even lesser legal intellects can resolve?

This Honorable Court is respectfully reminded the law is made for man, not man for the law.31
We cannot agree with the petitioners arrogant but unworthy proposition. The CA was only just in denying his motion for reconsideration through the
second assailed resolution on the following terms, viz:

A careful perusal of the said provision would reveal that the documents or annexes therein mentioned are required to be appended to the petition and
the mandatory character of such requirement may be inferred from Section 3 of Ruled 42 x x x. The petitioners further argument that it is the Court
which should get all the records from the court a quo if it really wants to be more informed of the issues, is not well-taken. Precisely, the annexes
mentioned in Section 2(d) of Rule 42 are required to be appended to the petition in order to enable this Court to determine even without consulting the
record if the petition is patently without merit or the issues raised therein are too insubstantial to require consideration, in which case the petition should
be dismissed outright, or whether there isa need to require the respondent to comment on the petition. In short, the mere fact that a petition for review
is filed does not call for the elevation of the record, which means that until this Court finds that the elevation of the record is necessary, such record
should remain with the trial court during the pendency of the appeal in accordance with Section 2 of Rule 39, let alone the fact that in ejectment cases
the decision of the RTC is immediately executory pursuant to Section 21 of the Revised Rule on Summary Procedure. Thus, more often than not, this
Court has resolved petitions for review under Rule 42 without unnecessary movement of the original record of the case which could entail not only
undue delay but also the possibility of the record being lost in transit.

The petitioner urged us to rely on the documents and pleadings he appended in his petition which merelyconsisted of the MTC Judgment, the assailed
RTC Order, the Motion for Reconsideration, and the questioned Order dated November 6, 2003 denying his Motion for Reconsideration. None of the
aforementioned documents set out the factual milieu of his claims. Instead of manifesting that he would submit the additional documentary evidence,
the petitioner remained obstinate in his stand not to submit the additional pleadings and other material portions of the record. He maintained that what
he has submitted based on his discretion, are all that are necessary to support his allegations in his petition. As we have already mentioned, the
accompanying documents were insufficient to support the petition. Also, the petitioner could have easily ended his debacle by merely attaching the
supplemental documents in his Motion for Reconsideration. Instead, the petitioner stubbornly chose to insist that this Court direct the elevation of the
records of the case if we deem that the relevant documents were not appended to the petition.

It is not disputed that it is petitioner who knows best what pleadings or material portions of the record of the case would support the allegations in the
petition. The petitioner's discretion in choosing the documents to be attached to the petition is however not unbridled. The Court has the duty to check
the exercise of this discretion, to see to it that the submission of supporting documents is not merely perfunctory. The practical aspect of this duty is to
enable us to determine at the earliest possible time the existence of prima facie merit in the petition. Moreover, Section 3 of Rule 42 of the Revised
Rules of Court provides that if petitioner fails to comply with the submission of "documents which should accompany the petition", it "shall be sufficient
ground for the dismissal thereof."

In this case, the insufficiency of the supporting documents coupled with the unjustified refusal of the petitioner to even attempt to substantially comply
with the attachment requirement justified the dismissal of his petition.32

The petitioner is further reminded that any "resort to a liberal application or suspension of the application of procedural rules, must remain as the
exception to the well-settled principle that rules must be complied with for the orderly administration of justice."33 It cannot be otherwise for him, for, as
the Court aptly put it in Republic v. Kenrick Development Corporation:34 Procedural requirements which have often been disparagingly labeled as mere
technicalities have their own valid d etrein the orderly administration of justice. To summarily brush them aside may result in arbitrariness and
injustice.35

The Courts pronouncement in Garbo v. Court of Appeals36 is relevant:

Procedural rules are tools designed to facilitate the adjudication of cases. Courts and litigants alike are thus enjoined to abide strictly by the rules. And
while the Court, in some instances, allows a relaxation in the application of the rules, this, we stress, was never intended to forge a bastion for erring
litigants to violate the rules with impunity. The liberality in the interpretation and application of the rules applies only in proper cases and under
justifiable causes and circumstances. While it is true that litigation isnot a game of technicalities, it is equally true that every case must be prosecuted in
accordance with the prescribed procedure to insure an orderly and speedy administration of justice.

Like all rules, procedural rules should be followed except only when, for the most persuasive of reasons, they may be relaxed to relieve a litigant of an
injustice not commensurate with the degree of his thoughtlessness in not complying with the prescribed procedure.37

The rules were instituted to be faithfully complied with,38 and allowing them to be ignored or lightlydismissed to suit the convenience of a party like the
petitioner was impermissible.39 Such rules, often derided as merely technical, are to be relaxed only in the furtherance of justice and to benefit the
deserving. Their liberal construction in exceptional situations should then rest on a showing of justifiable reasons and of at least a reasonable attempt
at compliance with them.40 We have repeatedly emphasized this standard. In Bergonia v. Court of Appeals, (4th Division),41 for instance, we declared:

The petitioners plea for the application of the principles of substantial justice in their favor deserves scant consideration. The petitioners should be
1w phi 1

reminded that technical rules may be relaxed only for the furtherance of justice and to benefit the deserving. While the petitioners adverted to several
jurisprudential rulings of this Court which set aside procedural rules, it isnoted that there were underlying considerations in those cases which
warranted a disregard of procedural technicalities to favor substantial justice. Here, there exists no such consideration.

The petitioners ought to be reminded 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 partys substantive rights. Like all rules, they are required to be followed except only for the most persuasive of reasons when they may
berelaxed to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed.

Nor should the rules of procedure be held to be for the benefit of only one side of the litigation, for they havebeen instituted for the sake of all.42

The petitioner did not deserve the liberal application of the rules of procedure that he was seeking. Indeed, the dismissal of his petition for review was
in full accord with the following pronouncement upon a similar provision in the Rules of Courtmade in Atillo v. Bombay,43 as follows:
The mandatory tenor of Section 2(d), Rule 42 with respect to the requirement of attaching clearly legible duplicate originals or true copies of the
judgments or final orders of both lower courts is discernible and well settled. In this case, the mandatory or directory nature of the requirement with
respect to the attachment of pleadings and other material portions of the record is put in question.

The phrase "of the pleadings and other material portions of the record" in Section 2(d), Rule 42 is followed by the phrase "as would support the
allegations of the petition" clearly contemplates the exercise of discretion on the part of the petitioner in the selection of documents that are deemed to
be relevant to the petition. xxx. The crucial issue to consider then is whether or not the documents accompanying the petition before the CA sufficiently
supported the allegations therein.44 (Emphasis supplied)

WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the resolutions the Court of Appeals promulgated on January 8, 2004
and January 28, 2005 in CA-G.R. SP No. 81103; and ORDERS the petitioners to pay the costs of suit.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 204689 January 21, 2015

STRONGHOLD INSURANCE COMPANY, INC., Petitioner,

vs.
SPOUSES RUNE and LEA STROEM, Respondents.

DECISION

LEONEN, J.:

For resolution is a Petition for Review1 under Rule 45 of the Rules of Court assailing the Decision2 dated November 20, 2012 of the Court of Appeals in
CA-G.R. CV No. 96017. The Court of Appeals ;iffirmed the Decision3 of the Regional Trial Court of Makati, Branch 133 in Civil Case No. 02-1108 for
collection of a sum of money.

This case involves the proper invocation of the Construction Industry Arbitration Committee's (CIAC) jurisdiction through an arbitration clause in a
construction contract. The main issue here is whether the dispute liability of a surety under a performance bond is connected to a construction
contract and, therefore, falls under the exclusive jurisdiction of the CIAC.

Spouses Rune and Lea Stroem (Spouses Stroem) entered into an Owners-Contractor Agreement4 with Asis-Leif & Company, Inc. (Asis-Leif) for the
construction of a two-storey house on the lot owned by Spouses Stroem. The lot was located at Lot 4A, Block 24, Don Celso Tuason Street, Valley
Golf Subdivision, Barangay Mayamot, Antipolo, Rizal.5

On November 15, 1999, pursuant to the agreement, Asis-Leif secured Performance Bond No. LP/G(13)83056 in the amount of P4,500,000.00 from
Stronghold Insurance Company, Inc. (Stronghold).6 Stronghold and Asis-Leif, through Ms. Ma. Cynthia Asis-Leif, bound themselves jointly and
severally to pay the Spouses Stroem the agreed amount in the event that the construction project is not completed.7

Asis-Leif failed to finish the projecton time despite repeated demands of the Spouses Stroem.8

Spouses Stroem subsequently rescinded the agreement.9 They then hired an independent appraiser to evaluate the progress of the construction
project.10

Appraiser Asian Appraisal Company, Inc.s evaluation resulted in the following percentage of completion: 47.53% of the residential building, 65.62% of
the garage, and 13.32% of the swimming pool, fence, gate, and land development.11

On April 5, 2001, Stronghold sent a letter to Asis-Leif requesting that the company settle its obligations withthe Spouses Stroem. No response was
received from Asis-Leif.12

On September 12, 2002, the Spouses Stroem filed a Complaint (with Prayer for Preliminary Attachment)13 for breach of contract and for sum of money
with a claim for damages against Asis-Leif, Ms. Cynthia Asis-Leif, and Stronghold.14 Only Stronghold was served summons. Ms. Cynthia Asis-Leif
allegedly absconded and moved out of the country.15
On July 13, 2010, the Regional Trial Court rendered a judgment in favor of the Spouses Stroem. The trial court ordered Stronghold to pay the Spouses
Stroem P4,500,000.00 with 6% legal interest from the time of first demand.16The dispositive portion of the trial court Decision reads:

WHEREFORE, finding plaintiffs cause of action to be sufficiently established being supported by evidence on records, judgement is hereby rendered
in favor of the plaintiff spouses Rune and Lea Stroem and against the defendant Stronghold Insurance Company Incorporated ordering the latter topay
the plaintiff the sums of:

1) Php4,500,000.00 with six (6%) percent legal interest from the time of first demand and interest due shall earn legal interest from the time
of judicial demand until fully paid.

2) Php35,000.00 by way of attorneys fees and other litigation expenses.

Defendant is further ordered topay the costs of this suit.

SO ORDERED.17

Both Stronghold and the Spouses Stroem appealed to the Court of Appeals.18

The Court of Appeals affirmed with modification the trial courts Decision. It increased the amount of attorneys fees to P50,000.00.19

The dispositive portion of the Court of Appeals Decision reads:

WHEREFORE,the appeal of Stronghold Company, Inc[.] is DISMISSED, while the appeal of spouses Rune and Lea Stroem is PARTLY GRANTED.
The November 27, 2009 Decision of the Regional Trial Court of Makati City is AFFIRMED with MODIFICATION that the award of attorneys fees is
increased to P50,000.00

SO ORDERED.20

On March 20, 2013, this court required the Spouses Stroem to submit their Comment on the Petition.21 We noted the Spouses Stroems Comment on
July 31, 2013.22 We also required Stronghold to file its Reply to the Comment,23which was noted on December 9, 2013.24

Stronghold argues that the trial court did not acquire jurisdiction over the case and, therefore, the Court of Appeals committed reversible error when it
upheld the Decision of the Regional Trial Court.25 The lower courts should have dismissed the case in viewof the arbitration clause in the agreement
and considering that "[Republic Act No. 876] explicitly confines the courts authority only to pass upon the issue of whether there is [an] agreement . . .
providing for arbitration. In the affirmative, the statute ordains that the court shall issue an order summarily directing the parties to proceed with the
arbitration in accordance with the terms thereof."26 Moreover, "the stipulations in said Agreement are part and parcel of the conditions in the bond.
Were it not for such stipulations in said agreement, [Stronghold] would not have agreed to issue a bond in favor of the Spouses Stroem. The parties
tothe bond are ALB/Ms. Asis-[L]eif, Spouses Stroem and [Stronghold] suchthat ALB/Ms. Asis-[L]eif never ceased to be a party to the surety
agreement."27

In any case, Strongholds liability under the performance bond is limited only to additional costs for the completion of the project.28 In addition, the Court
of Appeals erred inholding that Stronghold changed its theory with regard to the notice requirement29 and in modifying the trial courts award of
attorneys fees.30

On the other hand, the Spouses Stroem argue that Stronghold committed forum shopping warranting dismissal of the case.31 According to the Spouses
Stroem, Stronghold deliberately committed forum shopping when it filed the present petition despite the pendency of the Spouses Stroems Motion for
Partial Reconsideration of the Court of Appeals Decision dated November 20, 2012.32

More importantly, the Owners-Contractor Agreement is "separate and distinct from the Bond. The parties to the Agreement are ALB/Ms. Asis-Leif and
Spouses Stroem, while the parties to the Bond are Spouses Stroem and Stronghold. The considerations for the two contracts are likewise distinct.
Thus, the arbitration clause in the Agreement is binding only on the parties thereto, specifically ALB/Ms. Asis-Leif and Spouses Stroem[.]"33

Contrary to Strongholds argument, Spouses Stroem argues that stronghold is liable for the full amountof the performance bond. The terms of the bond
clearly show that Stronghold is liable as surety.34 Verily, notice to Stronghold is not required for its liability to attach.35

The issues for consideration are:

(1) Whether the dispute involves a construction contract;

(2) Whether the CIAC has exclusive jurisdiction over the controversy between the parties;

(3) Whether the Regional Trial Court should have dismissed the petition outright as required by law and jurisprudence and referred the
matter to the CIAC; and
 (4) Whether petitioner Stronghold Insurance Company, Inc. is liable under Performance Bond No. LP/G(13)83056.

(a) Whether petitioner Stronghold Insurance Company, Inc. is only liable as to the extent of any additional cost for the completion of the
project due toany increase in prices for labor and materials.

(b) Whether the case involves ordinary suretyship or corporate suretyship.

After considering the parties arguments and the records of this case, this court resolves to deny the Petition.

On forum-shopping

Respondents argue that petitioner committed forum shopping; hence, the case should have been dismissed outright.

Records show that petitioner received a copy of the Decision of the Court of Appeals on December 5, 2012.36Petitioner did not file a Motion for
Reconsideration of the assailed Decision. It filed before this court a Motion for Extension of Time To File Petition for Review requesting an additional
period of 30 days from December 20, 2012 or until January 19, 2013 to file the Petition.37

Respondents filed their Motion for Partial Reconsideration of the Court of Appeals Decision on December 11, 2012.38 They sought the modification of
the Decision as to the amounts of moral damages, exemplary damages, attorneys fees, and costs of the suit.39

Respondents alleged in their Comment that as early as January 9, 2013, petitioner received a copy of the Court of Appeals Resolution requiring
Comment on the Motion for Partial Reconsideration.40 Still, petitioner did not disclose in its Verification and Certification Against Forum Shopping the
pendency of respondents Motion for Partial Reconsideration.41

For its part, petitioner claims that it did not commit forum shopping. It fully disclosed in its Petition that what it sought to be reviewed was the Decision
dated November 20, 2012 of the Court of Appeals. "Petitioner merely exercised its available remedy with respect to the Decision of the Court of
Appeals by filing [the] Petition."42 What the rules mandate to be stated in the Certification Against Forum Shopping is the status of "any other action."
This other action involves the same issues and parties but is an entirely different case.

Indeed, petitioner is guilty of forum shopping.

There is forum shopping when:

as a result of an adverse opinion in one forum, a party seeks a favorable opinion (other than by appeal or certiorari) in another. The principle applies
not only with respect to suits filed in the courts but also in connection with litigations commenced in the courts while an administrative proceeding is
pending[.]43 (Citation omitted)

This court has enumerated the elements of forum-shopping: "(a) identity of parties, or at least such parties as represent the same interests in both
actions; (b) identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and (c) the identity with respect to the two
preceding particulars in the two cases issuch that any judgment rendered in the pending cases, regardless of which party is successful, amount to res
judicatain the other case."44 Rule 42, Section 245 in relation to Rule 45, Section 4 of the Rules of Court mandates petitioner to submit a Certification
Against Forum Shopping and promptly inform this court about the pendency of any similar action or proceeding before other courts or tribunals. The
rules purpose is to deter the unethical practice of pursuing simultaneous remedies in different forums, which "wreaks havoc upon orderly judicial
procedure."46 Failure to comply with the rule is a sufficient ground for the dismissal of the petition.47

Records show that petitioners duly authorized officer certified the following on January 21, 2013: 4. I further certify that: (a) I have not commenced any
other action or proceeding involving the same issues in the Supreme Court, Court of Appeals, or any other tribunal or agency; (b) to the best of my
knowledge, no such action or proceeding is pending in the Supreme Court, the Court of Appeals or different Divisions thereof, or any tribunal or
agency; (c) if I should thereafter learn that a similar action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals,
or different Divisions thereof, or any other tribunal or agency, I undertake to promptly inform the aforesaid courts and such tribunal or agency of the fact
within five (5) days therefrom.48

Petitioner failed to carry out its duty of promptly informing this court of any pending action or proceeding before this court,the Court of Appeals, or any
other tribunal or agency. This court cannot countenance petitioners disregard of the rules.

This court has held before that:

[u]ltimately, what is truly important to consider in determining whether forum-shopping exists or not is the vexation caused the courts and parties-litigant
by a party who asks different courts and/or administrative agencies to rule on the same or related causes and/or to grant the same or substantially the
same reliefs, in the process creating the possibility of conflicting decisions being rendered by the different fora upon the same issue.49 (Emphasis
supplied)

On this basis, this case should be dismissed.

On arbitration and the CIACs jurisdiction

Petitioner changed the theory of its case since its participation in the trial court proceedings. It raised the issue of lack of jurisdiction in view of an
arbitration agreement for the first time. Generally, parties may not raise issues for the first time on appeal.50 Such practice is violative of the rules and
due process and is frowned upon by the courts. However, it is also well-settled that jurisdiction can never be waived or acquired by
estoppel.51 Jurisdiction is conferred by the Constitution or by law.52 "Lack of jurisdiction of the court over an action or the subject matter of an action
cannot be cured by the silence, by acquiescence, or even by express consent of the parties."53

Section 4 of Executive Order No. 100854 is clear in defining the exclusive jurisdiction of the CIAC:

SECTION 4. Jurisdiction The CIAC shall have original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into
by parties involved in construction in the Philippines, whether the dispute arises before or after the completion of the contract, or after the abandonment
or breach thereof. These disputes may involve government or private contracts. For the Board to acquire jurisdiction, the parties to a dispute must
agree to submit the same to voluntary arbitration.

The jurisdiction of the CIAC may include but is not limited to violation of specifications for materials and workmanship; violation of the terms of
agreement; interpretation and/or application of contractual timeand delays; maintenance and defects; payment, default of employer or contractor and
changes in contract cost.

Excluded from the coverage of thislaw are disputes arising from employer-employee relationships which shall continue to be covered by the Labor
Code of the Philippines. (Emphasis supplied)

Similarly, Section 35 of RepublicAct No. 9285 or the Alternative Dispute Resolution Act of 2004 states:

SEC. 35. Coverage of the Law. - Construction disputes which fall within the original and exclusive jurisdiction of the Construction Industry Arbitration
Commission (the "Commission") shall include those between or among parties to, or who are otherwise bound by, an arbitration agreement, directly or
by reference whether such parties are project owner, contractor, subcontractor, quantity surveyor, bondsman or issuer of an insurance policy in a
construction project.

The Commission shall continue to exercise original and exclusive jurisdiction over construction disputes although the arbitration is "commercial"
pursuant to Section 21 of this Act. (Emphasis supplied)

In Heunghwa Industry Co., Ltd., v. DJ Builders Corporation,55 this court held that "there are two acts which may vest the CIAC with jurisdiction over a
construction dispute. One is the presence of an arbitration clause in a construction contract, and the other is the agreement by the parties to submit the
dispute to the CIAC."56

This court has ruled that when a dispute arises from a construction contract, the CIAC has exclusive and original jurisdiction.57 Construction has been
defined as referring to "all on-site works on buildings or altering structures, from land clearance through completion including excavation, erection and
assembly and installation of components and equipment."58

In this case, there is no dispute asto whether the Owners-Contractor Agreement between Asis-Leif and respondents is a construction contract.
Petitioner and respondents recognize that CIAC has jurisdiction over disputes arising from the agreement.

What is at issue in this case is the parties agreement, or lack thereof, to submit the case to arbitration. Respondents argue that petitioner is not a party
to the arbitration agreement. Petitioner did not consent to arbitration. It is only respondent and Asis-Leif thatmay invoke the arbitration clause in the
contract.

This court has previously held that a performance bond, which is meant "to guarantee the supply of labor,materials, tools, equipment, and necessary
supervision to complete the project[,]"59 is significantly and substantially connected to the construction contract and, therefore, falls under the jurisdiction
of the CIAC.60

Prudential Guarantee and Assurance Inc. v. Anscor Land, Inc.61 involved circumstances similar to the present case. In Prudential, property owner
Anscor Land, Inc. (ALI) entered into a contract for the construction of an eight-unit townhouse located inCapitol Hills, Quezon City with contractor Kraft
Realty and Development Corporation (KRDC).62KRDC secured the completion of the construction project through a surety and performance bond
issued by Prudential Guarantee and Assurance Inc. (PGAI).63

The delay in the construction project resulted in ALIs termination of the contract and claim against the performance bond.64 "ALI [subsequently]
commenced arbitration proceedings against KRDC and PGAI in the CIAC."65 PGAI, however, argued that it was not a party to the construction
contract.66

The CIAC ruled that PGAI was not liable under the performance bond.67 Upon review, the Court of Appeals held that PGAI was jointly and severally
liable with KRDC under the performance bond.68

PGAI appealed the Court of Appeals Decision and claimed that CIAC did not have jurisdiction over the performance bond. 69 This court ruled:

A guarantee or a surety contract under Article 2047 of the Civil Code of the Philippines is an accessory contract because it is dependent for its
existence upon the principal obligation guaranteed by it.
In fact, the primary and only reason behind the acquisition of the performance bond by KRDC was to guarantee to ALI that the construction project
would proceed in accordance with the contract terms and conditions. In effect, the performance bond becomes liable for the completion of the
construction project in the event KRDC fails in its contractual undertaking. Because of the performance bond, the construction contract between ALI
and KRDC is guaranteed to be performed even if KRDC fails in its obligation. In practice, a performance bond is usually a condition or a necessary
component of construction contracts. In the case at bar, the performance bond was so connected with the construction contract that the former was
agreed by the parties to be a condition for the latter to push through and at the same time, the former is reliant on the latter for its existence as an
accessory contract.

Although not the construction contract itself, the performance bond is deemed as an associate of the main construction contract that it cannot be
separated or severed from its principal. The Performance Bond is significantly and substantially connected to the construction contract that there can
be no doubt it is the CIAC, under Section 4 of EO No. 1008, which has jurisdiction over any dispute arising from or connected with it. 70 (Emphasis
supplied, citations omitted)

At first look, the Owners-Contractor Agreement and the performance bond reference each other; the performance bond was issued pursuant to the
construction agreement.

A performance bond is a kind of suretyship agreement. A suretyship agreement is an agreement "whereby a party, called the surety, guarantees the
performance by another party, called the principal or obligor, of an obligation or undertaking in favor of another party, called the obligee."71 In the same
vein, a performance bond is "designed to afford the project owner security that the . . . contractor, will faithfully comply with the requirements of the
contract . . . and make good [on the] damages sustained by the project owner in case of the contractors failure to so perform."72

It is settled that the suretys solidary obligation for the performance of the principal debtors obligation is indirect and merely secondary.73 Nevertheless,
the suretys liability tothe "creditor or promisee of the principal is said to be direct, primary and absolute; in other words, he is directly and equally bound
with the principal."74

Verily, "[i]n enforcing a surety contract, the complementary contracts-construed-together doctrine finds application. According to this principle, an
accessory contract must beread in its entirety and together with the principal agreement." 75 Article 1374 of the Civil Code provides:

ART. 1374. The various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of
them taken jointly.

Applying the "complementary-contracts-construed-together" doctrine, this court in Prudential held that the surety willingly acceded to the terms of the
construction contract despite the silence of the performance bond as to arbitration:

In the case at bar, the performance bond was silent with regard to arbitration. On the other hand, the construction contract was clear as to arbitration in
the event of disputes. Applying the said doctrine, we rule that the silence of the accessory contract in this case could only be construed as
acquiescence to the main contract. The construction contract breathes life into the performance bond. We are not ready to assume that the
performance bond contains reservations with regard to some of the terms and conditions in the construction contract where in fact it is silent. On the
other hand, it is more reasonable to assume that the party who issued the performance bond carefully and meticulously studied the construction
contract that it guaranteed, and if it had reservations, it would have and should have mentioned them in the surety contract.76 (Emphasis supplied)

This court, however, cannot apply the ruling in Prudential to the present case. Several factors militate against petitioners claim.

The contractual stipulations in this case and in Prudential are different. The relevant provisions of the Owners-Contractor Agreement in this case state:

ARTICLE 5. THE CONTRACT DOCUMENTS

The following documents prepared by the CONTRACTOR shall constitute an integral part of this contract as fully as if hereto attached or herein stated,
except asotherwise modified by mutual agreement of parties, and attached to this agreement.

Attachment 5.1 Working Drawings

Attachment 5.2 Outline Specifications

Attachment 5.3 Bill of Quantities

Attachment 5.4 CONTRACTOR Business License

....

ARTICLE 7. PERFORMANCE (SURETY) BOND

7.1 Within 30 days of the signing of this agreement, CONTRACTOR shall provide to OWNERS a performance bond, issued by a duly
licensed authority acceptable to the OWNERS, and equal to the amount of PHP 4,500,000.00 (Four Million and Five Hundred Thousand
Philippine Pesos),with the OWNERS as beneficiary.
 7.2 The performance bond will guarantee the satisfactory and faithful performance by the CONTRACTOR of all provisions stated within this
contract.

ARTICLE 8. ARBITRATION

8.1 Any dispute between the parties hereto which cannot be amicably settled shall be finally settled by arbitration in accordance with the provision of
Republic Act 876, of The Philippines, as amended by the Executive Order 1008 dated February 4, 1985.77 (Emphasis in the original)

In contrast, the provisions of the construction contract in Prudential provide:

Article 1

CONTRACT DOCUMENTS

1.1 The following shall form part of this Contractand together with this Contract, are known as the "Contract Documents":

a. Bid Proposal

....

d. Notice to proceed

....

j. Appendices A & B (respectively, Surety Bond for Performance and, Supply of Materials by the Developer)78(Emphasis supplied)

This court in Prudential held that the construction contract expressly incorporated the performance bond into the contract.79 In the present case, Article
7 of the Owners-Contractor Agreement merely stated that a performance bond shall be issued in favor of respondents, in which case petitioner and
Asis-Leif Builders and/or Ms. Ma. Cynthia Asis-Leif shall pay P4,500,000.00 in the event that Asis-Leif fails to perform its duty under the Owners-
Contractor Agreement.80 Consequently, the performance bond merely referenced the contract entered into by respondents and Asis-Leif, which
pertained to Asis-Leifs duty toconstruct a two-storey residence building with attic, pool, and landscaping over respondents property. 81

To be clear, it is in the Owners-Contractor Agreement that the arbitration clause is found. The construction agreement was signed only by
1w phi1

respondents and the contractor, Asis-Leif, as represented by Ms. Ma. Cynthia Asis-Leif. It is basic that "[c]ontracts take effect only between the parties,
their assigns and heirs[.]"82 Not being a party to the construction agreement, petitioner cannot invoke the arbitration clause. Petitioner, thus, cannot
invoke the jurisdiction of the CIAC.

Moreover, petitioners invocation of the arbitration clause defeats the purpose of arbitration in relation to the construction business. The state has
continuously encouraged the use of dispute resolution mechanisms to promote party autonomy.83 In LICOMCEN, Incorporated v. Foundation
Specialists, Inc.,84 this court upheld the CIAC's jurisdiction in line with the state's policy to promote arbitration:

The CIAC was created through Executive Order No. 1008 (E. 0. 1008), in recognition of the need to establish an arbitral machinery that would
expeditiously settle construction industry disputes. The prompt resolution of problems arising from or connected with the construction industry was
considered of necessary and vital for the fulfillment of national development goals, as the construction industry provides employment to a large
segment of the national labor force and is a leading contributor to the gross national product.85 (Citation omitted)

However, where a surety in a. construction contract actively participates in a collection suit, it is estopped from raising jurisdiction later. Assuming that
petitioner is privy to the construction agreement, we cannot allow petitioner to invoke arbitration at this late stage of the proceedings since to do so
would go against the law's goal of prompt resolution of cases in the construction industry.

WHEREFORE, the petition is DENIED. The case is DISMISSED. Petitioner's counsel is STERNLY WARNED that a repetition or similar violation of the
rule on Certification Against Forum Shopping will be dealt with more severely.

SO ORDERED.