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G.R. No. 153827 April 25, 2006 2.02 Prompt and faithful payment of all the foregoing promissory notes
was secured by the following deeds of assignment executed by
ASIAN CONSTRUCTION AND DEVELOPMENT ASIAKONSTRUKT in favor of PCIBANK:
CORPORATION, Petitioner,
vs. (a) Deed of Assignment of Receivables/Contract Proceeds dated
PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Respondent. 20 July 1994 where ASIAKONSTRUKT assigned its receivables
from its Contract with the National Power Corporation (NPC) in
GARCIA, J.: the amount of .P54,500,000;

In this petition for review under Rule 45 of the Rules of Court, petitioner (b) Deed of Assignment of Receivables dated 28 June 1995
Asian Construction and Development Corporation or "ASIAKONSTRUKT," where ASIAKONSTRUKT assigned its receivables from its
seeks the reversal and setting aside of the decision 1dated March 15, Contract with the NPC in the amount of P26,281,000.00;
2002 and the Resolution2 dated June 3, 2002 of the Court of Appeals
(CA) in CA-G.R. CV No. 68189. The assailed decision affirm with (c) Deed of Assignment of Receivables dated 28 August 1995
modification the Summary Judgment rendered by the Regional Trial where ASIAKONSTRUKT assigned its receivables from its Sub-
Court (RTC) of Makati City in an action for a sum of money thereat Contract with ABB Power, Inc., in the amount
commenced by the herein respondent, Philippine Commercial of P43,000,000.00;
International Bank (PCIBANK) against the petitioner, while the
challenged resolution denied petitioners motion for reconsideration. (d) Deed of Assignment of Contract Proceeds dated 27 March
1996 where ASIAKONSTRUKT assigned its receivables from its
The facts: contracts with PNOC in the aggregate amount
of P46,000,000.00; and
On February 24, 1999, in the RTC of Makati City, respondent PCIBANK
filed a complaint3 for a sum of money with prayer for a writ of (e) Deed of Assignment of Contract Proceeds dated 20
preliminary attachment against petitioner ASIAKONSTRUKT. Docketed February 1997 where ASIAKONSTRUKT assigned its
as Civil Case No. 99-432, the complaint alleged, inter alia, as follows: receivables from the Ormat Philippines, Inc., in the aggregate
amount of US$3,350,000.00;
FIRST CAUSE OF ACTION
2.03 All the foregoing deeds of assignments stipulate, among others,
2.01 On various occasions, ASIAKONSTRUKT obtained U.S. dollar the following terms and conditions:
denominated credit accommodations from PCIBANK in the amount of
Four Million Four Hundred Eighty Seven Thousand U.S. dollars a) The assignment is for the purpose of securing payment of the
(US$4,487,000.00), exclusive of interests, charges and fees thereon principal amount and the interests and bank charges accruing
and the cost of collecting the same. These credit accommodations are thereon, the costs of collecting the same and all other expenses
covered by the following promissory notes: which PCIBANK may be put in connection with or as an incident
of the assignment;
xxx xxx xxx
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b) That the assignment secures also any extension or renewal of
the credit which is the subject thereof as any and all other
obligations of ASIAKONSTRUKT of whatever kind and nature as
appear in the records of PCIBANK, which ASIAKONSTRUKT
accepts as the final and conclusive evidence of such obligations
to PCIBANK, "whether contracted before, during or after the
constitution of [the assignment agreement]";
c) That PCIBANK authorizes ASIAKONSTRUKT, at the latters
expense, to "collect and receive for [PCIBANK] all the
Receivables"; and
d) That ASIAKONSTRUKT "shall have no right, and agrees not to
use any of the proceeds of any collections, it being agreed by the
parties that [ASIAKONSTRUKT] divests itself of all the rights,
title and interest in said Receivables and the proceeds of the
collection received thereon."1avvphil.net
2.04 The promissory notes have remained not fully paid despite their
having become due and demandable. Repeated verbal and written
demands were made upon ASIAKONSTRUKT, but to no avail. It has
failed and refused, and continues to fail and refuse, to pay its
outstanding obligations to PCIBANK;
2.05 As a result of ASIAKONSTRUKTs refusal to pay its outstanding
obligations, PCIBANK was constrained to refer the matter to counsel
and thus incur attorneys fees and legal costs.
2.06 The aggregate unpaid obligation of ASIAKONSTRUKT to PCIBANK,
as of 31 December 1998, amounts to US$4,553,446.06, broken down
as follows:
Principal US$ 4,067,867.23
Interest US$ 291,263.27
Penalties US$ 194,315.56
TOTAL US$ 4,553,446.06
For its second cause of action, PCIBANK alleged in the same complaint
as follows:
SECOND CAUSE OF ACTION
4.02 as a result of the fraudulent acts of ASIAKONSTRUKT, PCIBANK
suffered the following damages, all of which ASIAKONSTRUKT must be
held to pay PCIBANK:
4.02.1 Exemplary damages, in the interest of public good and purposes
of correction, in the amount of not less than .P50,000.00;
4.02.2 Attorneys fees in the amount of not less than . P1,800,000.00;
and
4.02.3 Costs of suit.
In support of its prayer for a writ of preliminary attachment embodied in
the complaint, plaintiff PCIBANK alleges the following:
3.02 ASIAKONSTRUKT is guilty of fraud in contracting the debt, in the
performance thereof, or both, xxx;
303. PCIBANK agreed to enter into the above-mentioned credit
accommodations primarily because of the existence of the deeds of
assignment listed above. However, from telephone inquiries made with
responsible officers of the National Power Corporation, ABB Power, Inc.,
PNOC and Ormat Philippines, Inc., PCIBANK was surprised to learn that
ASIAKONSTRUKT had long ago collected the contract proceeds, or
portions thereof, which were previously assigned to PCIBANK. However,
to date, it has yet to turn over these proceeds to PCIBANK. Worse,
PCIBANK learned that the contract proceeds were used by
ASIAKONSTRUKT for its own purposes clear evidence of fraud, which
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has deprived PCIBANK of its security. ASIAKONSTRUKTs unauthorized
use of the contract proceeds for its own purposes was subsequently
confirmed by Mr. Napoleon Garcia, Vice President for Finance of
ASIAKONSTRUKT, in a telephone discussion on 12 January 1999 with
Ms. Maricel E. Salaveria of PCIBANK. xxx Needless to say,
ASIAKONSTRUKT has fraudulently collected such receivables to the
prejudice of PCIBANK.
3.04 it is evident that ASIAKONSTRUKT never had any intention of
complying with the deeds of assignment. ASIAKONSTRUKT only misled
PCIBANK into believing that it had sufficient security to ensure payment
of its loan obligations.
3.05 Alternatively, granting, in argumenti gratia, that ASIAKONSTRUKT,
at the time it executed the foregoing deeds of assignment, really
intended to abide by their terms and conditions, it nevertheless
committed manifest fraud when it collected the contract proceeds, and
instead of remitting them to PCIBANK, used them for its own purposes.
In an order4 dated April 13, 1999, the trial court, after receiving ex
parte PCIBANKs evidence in support of its prayer for preliminary
attachment, directed the issuance of the desired writ, thus:
WHEREFORE, let a writ of preliminary attachment issue against all the
property of defendant not exempt from execution or so much thereof as
may be sufficient to satisfy plaintiffs principal claim of
US$4,553,446.06, representing the alleged unpaid obligation of
defendant, inclusive of interest and penalty charges, as of December
31, 1998, which is equivalent to P174,260,380.72, upon plaintiffs filing
of a bond in an equal amount to answer for all it may sustain by reason
of the attachment if the Court shall finally adjudge that plaintiff was not
entitled thereto.
SO ORDERED.
With plaintiff PCIBANK having posted the requisite bond, a writ of
preliminary attachment was thereafter issued by the trial court. Per
records, defendant ASIAKONSTRUKT did not file any motion for the
quashal or dissolution of the writ.
Meanwhile, on August 27, 1999, defendant ASIAKONSTRUKT filed its
Answer,5 thereunder making admissions and denials. Defendant admits,
subject to its defenses, the material allegations of the Complaint as
regards its indebtedness to plaintiff PCIBANK and its execution of the
various deeds of assignment enumerated therein. It, however, denies,
for lack of knowledge sufficient to form a belief as to the truth thereof,
the averments in the Complaint that it has not paid, despite demands,
its due and demandable obligations, as well as the amounts due the
plaintiff as itemized in paragraph 2.06, supra, of the Complaint. It
likewise denies PCIBANKs allegations in the same Complaint in support
of its prayer for a writ of preliminary attachment, particularly its having
fraudulently misappropriated for its own use the contract
proceeds/receivables under the contracts mentioned in the several
deeds of assignments, claiming in this respect that it has still remaining
receivables from those contracts.
By way of defenses, defendant pleads in its Answer the alleged "severe
financial and currency crisis" which hit the Philippines in July 1997,
which adversely affected and ultimately put it out of business.
Defendant adds that the deeds of assignments it executed in favor of
PCIBANK were standard forms proposed by the bank as pre-condition
for the release of the loans and therefore partake of the nature of
contracts of adhesion, leaving the defendant to the alternative of
"taking it or leaving it." By way of counterclaim, defendant prayed for
an award of P1,000,000.00 as and for attorneys fees and P200,000.00
as litigation expenses.
On January 24, 2000, plaintiff PCIBANK filed a verified Motion for
Summary Judgment,6 therein contending that the defenses interposed
by the defendant are sham and contrived, that the alleged financial
crisis pleaded in the Answer is not a fortuitous event that would excuse
debtors from their loan obligations, nor is it an exempting circumstance
under Article 1262 of the New Civil Code where, as here, the same is
attended by bad faith. In the same motion, PCIBANK also asserts that
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the deeds of assignments executed in its favor are not contracts of
adhesion, and even if they were, the same are valid.
To the Motion for Summary Judgment, defendant interposed an
Opposition7 insisting that its Answer tendered or raised genuine and
substantial issues of material facts which require full-blown trial,
namely:
1. Whether or not defendant received all or part of the
proceeds/receivables due from the contracts mentioned in the
deeds of assignment at the time the complaint was filed;
2. Granting that defendant received those proceeds/receivables,
whether or not defendant fraudulently misappropriated the
same;
3. Whether or not defendant is virtually insolvent as a result of
the regionwide economic crisis that hit Asia, causing the
Philippine peso to depreciate drastically; and
4. Whether the parties dealt with each other on equal footing
with respect to the execution of the deeds of assignment as to
give the defendant an honest opportunity to reject the onerous
terms imposed therein.
Significantly, defendant did not append to its aforementioned Opposition
any affidavit in support of the alleged genuine issues of material facts
mentioned therein.
Before the pending incident (motion for summary judgment) could be
resolved by the trial court, plaintiff PCIBANK waived its claim for
exemplary damages and agreed to reduce its claim for attorneys fees
from P1,800,000.00 to P1,260,000.00, but made it clear that its waiver
of exemplary damages and reduction of attorneys fees are subject to
the condition that a full and final disposition of the case is obtained via
summary judgment.
On May 16, 2000, the trial court, acting favorably on PCIBANKs motion
for summary judgment, came out with its Summary Judgment, 8 the
decretal portion of which reads:
WHEREFORE, judgment is hereby rendered ordering defendant to pay
plaintiff:
1. the sum of US$4,553,446.06, or its equivalent in Philippine
currency at the time of payment, with interest thereon at the
rate of 8.27% per annum from February 24, 1999 until fully
paid;
2. P1,260,000.00 as and for attorneys fees; and
3. the costs of suit.
SO ORDERED.
Explains the trial court in rendering its Summary Judgment:
A thorough examination of the parties pleadings and their respective
stand in the foregoing motion, the court finds that indeed with
defendants admission of the first cause of action there remains no
question of facts in issue. Further, the proffered defenses are worthless,
unsubstantial, sham and contrived.
Considering that there is no more issue to be resolved, the court hereby
grants plaintiffs Motion and renders Judgment in favor of the plaintiff
against the defendant based on their respective pleadings in accordance
with Section 4, Rule 35 of the Rules of Court.
In time, petitioner went to the CA whereat its appellate recourse was
docketed as CA-G.R. CV No. 68189. As stated at the threshold hereof,
the CA, in its decision9 of May 15, 2002, affirmed with modification the
Summary Judgment rendered by the trial court, the modification being
as regards the award for attorneys fees which the CA reduced
to P1,000,000.00, to wit:
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IN THE LIGHT OF ALL THE FOREGOING, the appeal is PARTIALLY
GRANTED. The "Decision" appealed from is AFFIRMED with the
MODIFICATION THAT THE AWARD FOR ATTORNEYS FEES is reduced
to P1,000,000.00.
SO ORDERED.
With its motion for reconsideration having been denied by the CA in its
Resolution10 of June 3, 2002, petitioner is now with us via the present
recourse, raising the following issues:
I. WHETHER OR NOT THERE IS A GENUINE ISSUE AS TO A
MATERIAL FACT WHICH RULES OUT THE PROPRIETY OF A
SUMMARY JUDGMENT.
II. WHETHER OR NOT THE AWARD OF ATTORNEYS FEES IS
EXORBITANT OR UNCONSCIONABLE.
We DENY.
As in the two courts below, it is petitioners posture that summary
judgment is improper in this case because there are genuine issues of
fact which have to be threshed out during trial, to wit: (a) whether or
not petitioner was able to collect only a portion of the contract
proceeds/receivables it was bound to deliver, remit and tender to
respondent under the several deeds of assignment it executed in favor
of the latter; and (b) whether or not petitioner fraudulently
misappropriated and used for its benefit the said proceeds/receivables.
Ergo, so petitioner maintains, genuine triable issues of fact are present
in this case, which thereby precludes rendition of summary judgment.
We are not persuaded.
Under Rule 35 of the 1997 Rules of 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.11 Summary or accelerated
judgment is a procedural technique aimed at weeding out sham claims
or defenses at an early stage of litigation thereby avoiding the expense
and loss of time involved in a trial.12
Under the Rules, summary judgment is appropriate when there are no
genuine issues of fact which call for the presentation of evidence in a
full-blown trial. 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.
A "genuine issue" is an issue of fact which requires the presentation of
evidence as distinguished from a sham, fictitious, contrived or false
claim. When the facts as pleaded appear uncontested or undisputed,
then there is no real or genuine issue or question as to the facts, and
summary judgment is called for. The party who moves for summary
judgment has the burden of demonstrating clearly the absence of any
genuine issue of fact, or that the issue posed in the complaint is
patently unsubstantial so as not to constitute a genuine issue for trial.
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.13
The CA, in its challenged decision, stated and we are in full accord with
it:
In the present recourse, the [petitioner] relied not only on the judicial
admissions in its pleadings, more specifically its "Answer" to the
complaint, the testimony of Maricel Salaveria as well as Exhibits "A" to
"T-3", adduced in evidence by the [respondent], during the hearing on
its plea for the issuance, by the Court a quo, of a writ of preliminary
attachment. Significantly, the [petitioner] did not bother filing a motion
for the quashal of the "Writ" issued by the Court a quo.
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It must be borne in mind, too, that the [petitioner] admitted, in its
"Answer" the due execution and authenticity of the documents
appended to the complaint . The [petitioner] did not deny its liability
for the principal amount claimed by the [respondent] in its complaint.
The [petitioner] merely alleged, by way of defenses, that it failed to pay
its account because of the region-wide economic crisis that engulfed
Asia, in July, 1997, and the "Deeds of Assignment" executed by it in
favor of the [respondent] were contracts of adhesion:
xxx xxx xxx
The [petitioner] elaborated on and catalogued its defenses in its
"Appellants Brief" what it believed, as "genuine issues".
"(i) Whether or not [petitioner] received all or part of the
proceeds/receivables due from the construction contracts at the
time the civil action was filed;
(ii) Granting that [petitioner] received the proceeds/receivables
from the construction contracts, whether or not [petitioner]
fraudulently misappropriated the same;
(iii) Whether or not [petitioner] had become virtually insolvent as
a result of the region-wide economic crisis that hit Asia, causing
the Philippine peso to depreciate dramatically; and
(iv) Whether or not [respondent] and [petitioner] dealt with each
other on equal footing with respect to the execution of the deeds
of assignment of receivables as to give [petitioner] an honest
opportunity to reject the onerous terms imposed on it."
However, the [petitioner] failed to append, to its "Opposition" to the
"Motion for Summary Judgment", "Affidavits" showing the factual
basis for its defenses of "extraordinary deflation," including facts,
figures and data showing its financial condition before and after the
economic crisis and that the crisis was the proximate cause of its
financial distress. It bears stressing that the [petitioner] was burdened
to demonstrate, by its "Affidavits" and documentary evidence, that,
indeed, the Philippines was engulfed in an extraordinary deflation of the
Philippine Peso and that the same was the proximate cause of the
financial distress, it claimed, it suffered.
xxx xxx xxx
Where, on the basis of the records, inclusive of the pleadings of the
parties, and the testimonial and documentary evidence adduced by the
[respondent], supportive of its plea for a writ of preliminary attachment,
the [respondent] had causes of action against the [petitioner], it
behooved the [petitioner] to controvert the same with
affidavits/documentary evidence showing a prima facie genuine
defense. As the Appellate Court of Illinois so aptly declared:
The defendant must show that he has a bona fide defense to the action,
one which he may be able to establish. It must be a plausible ground of
defense, something fairly arguable and of a substantial character. This
he must show by affidavits or other proof.
The trial court, of course, must determine from the affidavits filed
whether the defendant has interposed a sufficiently good defense to
entitle it to defend, but where defendants affidavits present no
substantial triable issues of fact, the court will grant the motion for
summary judgment.
xxx xxx xxx
The failure of the [petitioner] to append to its "Opposition" any
"Affidavits" showing that its defenses were not contrived or cosmetic to
delay judgment created a presumption that the defenses of the
[petitioner] were not offered in good faith and that the same could not
be sustained (Unites States versus Fiedler, et al., Federal Reported,
2nd, 578).
If, indeed, the [petitioner] believed it that was prevented from
complying with its obligations to the [respondent], under its contracts, it
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should have interposed a counterclaims for rescission of contracts,
conformably with the pronouncement of our Supreme Court, thus:
xxx xxx xxx
The [petitioner] did not. This only exposed the barrenness of the pose
of the [petitioner].
The [petitioner] may have experienced financial difficulties because of
the "1997 economic crisis" that ensued in Asia. However, the same does
not constitute a valid justification for the [petitioner] to renege on its
obligations to the [respondent]. The [petitioner] cannot even find solace
in Articles 1266 and 1267 of the New Civil Code for, as declared by our
Supreme Court:
It is a fundamental rule that contracts, once perfected, bind both
contracting parties, and obligations arising therefrom have the force of
law between the parties and should be complied with in good faith. But
the law recognizes exceptions to the principle of the obligatory force of
contracts. One exception is laid down in Article 1266 of the Civil Code,
which reads: The debtor in obligations to do shall also be released
when the prestation becomes legally or physically impossible without
the fault of the obligor.
contract impractical and inimical to the corporate survival of the
petitioner." (Philippine National Construction Corporation versus Court
of Appeals, et al., 272 SCRA 183, at pages 191-192, supra)
The [petitioner] even failed to append any "Affidavit" to its "Opposition"
showing how much it had received from its construction contracts and
how and to whom the said collections had been appended. The
[petitioner] had personal and sole knowledge of the aforesaid
particulars while the [respondent] did not.
In fine, we rule and so hold that the CA did not commit any reversible
error in affirming the summary judgment rendered by the trial court as,
at bottom, there existed no genuine issue as to any material fact. We
also sustain the CAs reduction in the award of attorneys fees to
only P1,000,000.00, given the fact that there was no full-blown trial.
WHEREFORE, the assailed CA decision is AFFIRMED in toto and this
petition is DENIED for lack of merit.
Costs against petitioner.
SO ORDERED.

Petitioner cannot, however, successfully take refuge in the said article,

since it is applicable only to obligations "to do," and not obligations "to
give." An obligation "to do" includes all kinds of work or service; while
an obligation "to give" is a prestation which consists in the delivery of a
movable or an immovable thing in order to create a real right, or for the
use of the recipient, or for its simple possession, or in order to return it
to its owner.

xxx xxx xxx

In this case, petitioner wants this Court to believe that the abrupt
change in the political climate of the country after the EDSA Revolution
and its poor financial condition "rendered the performance of the lease
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G.R. No. 161909 April 25, 2012
PHILTRANCO SERVICE ENTERPRISES, INC., Petitioner,
vs.
FELIX PARAS AND INLAND TRAILWAYS, INC., AND HON. COURT
OF APPEALS, Respondents.
DECISION
BERSAMIN, J.:
In an action for breach of contract of carriage commenced by a
passenger against his common carrier, the plaintiff can recover
damages from a third-party defendant brought into the suit by the
common carrier upon a claim based on tort or quasi-delict. The liability
of the third-party defendant is independent from the liability of the
common carrier to the passenger.
Philtranco Service Enterprises, Inc. (Philtranco) appeals the affirmance
with modifications by the Court of Appeals (CA) of the decision of the
Regional Trial Court (RTC) awarding moral, actual and temperate
damages, as well as attorneys fees and costs of suit, to respondent
Felix Paras (Paras), and temperate damages to respondent Inland
Trailways, Inc. (Inland), respectively the plaintiff and the
defendant/third-party plaintiff in this action for breach of contract of
carriage, upon a finding that the negligence of the petitioner and its
driver had caused the serious physical injuries Paras sustained and the
material damage Inlands bus suffered in a vehicular accident.
Antecedents
The antecedent facts, as summarized by the CA, are as follows:
Plaintiff-appellant [respondent] Felix Paras (Paras for brevity), who hails
from Cainta, Rizal is engaged in the buy and sell of fish products.
Sometime on 08 February 1987, on his way home to Manila from Bicol
Region, he boarded a bus with Body No. 101 and Plate No. EVE 508,
owned and operated by Inland Trailways, Inc. (Inland for brevity) and
driven by its driver Calvin Coner (Coner for brevity).
At approximately 3:50 oclock in the morning of 09 February 1987,
while the said bus was travelling along Maharlika Highway, Tiaong,
Quezon, it was bumped at the rear by another bus with Plate No. EVB
259, owned and operated by Philtranco Service Enterprises, Inc.
(Philtranco for brevity). As a result of the strong and violent impact, the
Inland bus was pushed forward and smashed into a cargo truck parked
along the outer right portion of the highway and the shoulder thereof.
Consequently, the said accident bought considerable damage to the
vehicles involved and caused physical injuries to the passengers and
crew of the two buses, including the death of Coner who was the driver
of the Inland Bus at the time of the incident.
Paras was not spared from the pernicious effects of the accident. After
an emergency treatment at the San Pablo Medical Center, San Pablo
City, Laguna, Paras was taken to the National Orthopedic Hospital. At
the latter hospital, he was found and diagnosed by Dr. Antonio
Tanchuling, Jr. to be affected with the following injuries: a)
contusion/hematoma; b) dislocation of hip upon fracture of the fibula on
the right leg; c) fractured small bone on the right leg; and d) close
fracture on the tibial plateau of the left leg. (Exh. "A", p. 157, record)
On 04 March 1987 and 15 April 1987, Paras underwent two (2)
operations affecting the fractured portions of his body. (Exhs. "A-2" and
"A-3", pp. 159 and 160 respectively, record)
Unable to obtain sufficient financial assistance from Inland for the costs
of his operations, hospitalization, doctors fees and other miscellaneous
expenses, on 31 July 1989, Paras filed a complaint for damages based
on breach of contract of carriage against Inland.
In its answer, defendant Inland denied responsibility, by alleging,
among others, that its driver Coner had observed an utmost and
extraordinary care and diligence to ensure the safety of its passengers.
In support of its disclaimer of responsibility, Inland invoked the Police
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Investigation Report which established the fact that the Philtranco bus
driver of [sic] Apolinar Miralles was the one which violently bumped the
rear portion of the Inland bus, and therefore, the direct and proximate
cause of Paras injuries.
On 02 March 1990, upon leave of court, Inland filed a third-party
complaint against Philtranco and Apolinar Miralles (Third Party
defendants). In this third-party complaint, Inland, sought for
exoneration of its liabilities to Paras, asserting that the latters cause of
action should be directed against Philtranco considering that the
accident was caused by Miralles lack of care, negligence and reckless
imprudence. (pp. 50 to 56, records).
After trial, the RTC (Branch 71) in Antipolo, Rizal rendered its judgment
on July 18, 1997,1 viz:
WHEREFORE, third-party defendant Philtranco and Apolinar Miralles are
hereby ordered to pay plaintiff jointly and severally, the following
amounts:
1.54,000.00 as actual damages;
2.50,000.00 as moral damages;
3.20,000.00 as attorneys fees and costs.
SO ORDERED.
All the parties appealed to the CA on different grounds.
On his part, Paras ascribed the following errors to the RTC, to wit:
I. THE TRIAL COURT ERRED IN HOLDING THAT ONLY THIRD-
PARTY DEFENDANT-APPELLANT PHILTRANCO IS LIABLE FOR THE
DAMAGES SUFFERED BY APPELLANT PARAS.
II. THE TRIAL COURT ERRED IN NOT HOLDING APPELLANT
INLAND TRAILWAYS INC. TO BE JOINTLY AND SEVERALLY
LIABLE FOR THE DAMAGES SUFFERED BY PARAS.
III. THE TRIAL COURT ERRED IN NOT AWARDING UNEARNED
INCOME AS ADDITIONAL ACTUAL DAMAGES SUFFERED BY
APPELLANT PARAS AS HIS PHYSICAL DISABILITY IS PERMANENT
IN NATURE.
IV. THE TRIAL COURT ERRED IN NOT AWARDING EXEMPLARY
DAMAGES IN FAVOR OF APPELLANT PARAS.
On the other hand, Inland assigned the following errors to the RTC,
namely:
THE TRIAL COURT ERRED WHEN IT FAILED TO AWARD DAMAGES UNTO
THE THIRD PARTY PLAINTIFF NOTWITHSTANDING CLEAR FINDING
THAT:
It is clear from the evidence that the plaintiff sustained injuries because
of the reckless, negligence, and lack of precaution of third party
defendant Apolinar Miralles, an employee of Philtranco.
AND, COMPLETELY DISREGARDED THE UNCONTROVERTED ORAL AND
DOCUMENTARY EVIDENCES ESTABLISHING THE EXTENT AND DEGREE
OF DAMAGES SUSTAINED BY THE THIRD PARTY PLAINTIFF.
Lastly, Philtranco stated that the RTC erred thuswise:
I
THE COURT A QUO MISERABLY ERRED IN AWARDING ACTUAL
DAMAGES GREATER THAN WHAT WAS ALLEGED IN THE
COMPLAINT ITSELF, AND EVEN MUCH MORE GREATER THAN
WHAT WERE PROVED DURING THE TRIAL, HENCE,
PERPETUATING UNJUST ENRICHMENT.
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II
THE COURT A QUO SERIOUSLY ERRED IN AWARDING MORAL
DAMAGES TO A CAUSE OF ACTION OF CULPA-CONTRACTUAL
EVEN WITHOUT ANY EVIDENCE OF GROSS BAD FAITH; HENCE,
CONTRARY TO THE ESTABLISHED DOCTRINE IN THE CASES OF
PHIL. RABBIT BUS LINES VS. ESGUERRA; SOBERANO VS.
BENGUET AUTO LINE AND FLORES VS. MIRANDA.
III
THE COURT A QUO MISERABLY ERRED IN HOLDING THAT
MIRALLES WAS THE ONE AT FAULT MERELY ON THE STRENGHT
OF THE TESTIMONY OF THE POLICE INVESTIGATOR WHICH IS
IN TURN BASED ON THE STATEMENTS OF ALLEGED WITNESSES
WHO WERE NEVER PRESENTED ON THE WITNESS STAND.
IV
THE COURT A QUO COMMITTED A GRIEVOUS ERROR IN
DISREGARDING THE TESTIMONY OF APPELLANTS WITNESSES
WHO TESTIFIED AS TO THE DEFENSE OF EXERCISE OF DUE
DILIGENCE IN THE SELECTION AND SUPERVISION OF
EMPLOYEES PURSUANT TO ART. 2180, LAST PARAGRAPH, NEW
CIVIL CODE.
On September 25, 2002, the CA promulgated its decision, 2 disposing:
WHEREFORE, in consideration of the foregoing premises, the assailed
decision dated 18 July 19(9)7 is perforce affirmed with the following
modifications:
1. Third party defendants-appellants Philtranco and Apolinar
Miralles are ordered to pay plaintiff-appellant Felix Paras jointly
and severally the following amounts:
a) 1,397.95 as actual damages;
b) 50,000.00 as temperate damages;
c) 50,000.00 as moral damages; and
d) 20,000.00 as attorneys fees and costs of suit.
2. On the third party plaintiff-appellant Inlands claims, the third
party defendant-appellants Philtranco and Apolinar Miralles are
hereby ordered to pay the former (Inland) jointly and severally
the amount of 250,000.00 as and by way of temperate
damages.
SO ORDERED.
The CA agreed with the RTCs finding that no trace of negligence at the
time of the accident was attributable to Inlands driver, rendering Inland
not guilty of breach of contract of carriage; that faulty brakes had
caused Philtrancos bus to forcefully bump Inlands bus from behind,
making it hit the rear portion of a parked cargo truck; that the impact
had resulted in considerable material damage to the three vehicles; and
that Paras and others had sustained various physical injuries.
Accordingly, the CA: (a) sustained the award of moral damages of
50,000.00 in favor of Paras pursuant to Article 2219 of the Civil Code
based on quasi-delict committed by Philtranco and its driver; (b)
reduced the actual damages to be paid by Philtranco to Paras from
54,000.00 to 1,397.95 because only the latter amount had been duly
supported by receipts; (c) granted temperate damages of 50,000.00
(in lieu of actual damages in view of the absence of competent proof of
actual damages for his hospitalization and therapy) to be paid by
Philtranco to Paras; and (d) awarded temperate damages of
250,000.00 under the same premise to be paid by Philtranco to Inland
for the material damage caused to Inlands bus.
Philtranco moved for reconsideration,3 but the CA denied its motion for
reconsideration on January 21, 2004.4
10
11 | P a g e
Issues
Hence, this appeal, in which the petitioner submits that the CA
committed grave abuse of discretion amounting to lack of jurisdiction in
awarding moral damages to Paras despite the fact that the complaint
had been anchored on breach of contract of carriage; and that the CA
committed a reversible error in substituting its own judgment by motu
proprio awarding temperate damages of 250,000.00 to Inland and
50,000.00 to Paras despite the clear fact that temperate damages
were not raised on appeal by Paras and Inland.
Ruling
The appeal lacks merit.
The Court does not disturb the unanimous findings by the CA and the
RTC on the negligence of Philtranco and its driver being the direct cause
of the physical injuries of Paras and the material damage of Inland.
Nonetheless, we feel bound to pass upon the disparate results the CA
and the RTC reached on the liabilities of Philtranco and its driver.
1.
Paras can recover moral damages in this suit based on quasi-delict
Philtranco contends that Paras could not recover moral damages
because his suit was based on breach of contract of carriage, pursuant
to which moral damages could be recovered only if he had died, or if the
common carrier had been guilty of fraud or bad faith. It argues that
Paras had suffered only physical injuries; that he had not adduced
evidence of fraud or bad faith on the part of the common carrier; and
that, consequently, Paras could not recover moral damages directly
from it (Philtranco), considering that it was only being subrogated for
Inland.
The Court cannot uphold the petitioners contention.
As a general rule, indeed, moral damages are not recoverable in an
action predicated on a breach of contract. This is because such action is
not included in Article 2219 of the Civil Code 5 as one of the actions in
which moral damages may be recovered. By way of exception, moral
damages are recoverable in an action predicated on a breach of
contract: (a) where the mishap results in the death of a passenger, as
provided in Article 1764,6 in relation to Article 2206, (3),7 of the Civil
Code; and (b) where the common carrier has been guilty of fraud or bad
faith,8 as provided in Article 22209 of the Civil Code.
Although this action does not fall under either of the exceptions, the
award of moral damages to Paras was nonetheless proper and valid.
There is no question that Inland filed its third-party complaint against
Philtranco and its driver in order to establish in this action that they,
instead of Inland, should be directly liable to Paras for the physical
injuries he had sustained because of their negligence. To be precise,
Philtranco and its driver were brought into the action on the theory of
liability that the proximate cause of the collision between Inlands bus
and Philtrancos bus had been "the negligent, reckless and imprudent
manner defendant Apolinar Miralles drove and operated his driven unit,
the Philtranco Bus with Plate No. 259, owned and operated by third-
party defendant Philtranco Service Enterprises, Inc." 10 The apparent
objective of Inland was not to merely subrogate the third-party
defendants for itself, as Philtranco appears to suggest,11 but, rather, to
obtain a different relief whereby the third-party defendants would be
held directly, fully and solely liable to Paras and Inland for whatever
damages each had suffered from the negligence committed by
Philtranco and its driver. In other words, Philtranco and its driver were
charged here as joint tortfeasors who would be jointly and severally be
liable to Paras and Inland.
Impleading Philtranco and its driver through the third-party complaint
filed on March 2, 1990 was correct. The device of the third-party action,
also known as impleader, was in accord with Section 12, Rule 6 of the
Revised Rules of Court, the rule then applicable, viz:
Section 12. Third-party complaint. A third-party complaint is a claim
that a defending party may, with leave of court, file against a person
11
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not a party to the action, called the third-party defendant, for
contribution, indemnity, subrogation or any other relief, in respect of his
opponents claim.12
Explaining the application of Section 12, Rule 6, supra, the Court said in
Balbastro v. Court of Appeals,13 to wit:
Section 12 of Rule 6 of the Revised Rules of Court authorizes a
defendant to bring into a lawsuit any person "not a party to the action .
. . for contribution, indemnity, subrogation or any other relief in respect
of his opponent's claim." From its explicit language it does not compel
the defendant to bring the third-parties into the litigation, rather it
simply permits the inclusion of anyone who meets the standard set forth
in the rule. The secondary or derivative liability of the third-party is
central whether the basis is indemnity, subrogation, contribution,
express or implied warranty or some other theory. The impleader of
new parties under this rule is proper only when a right to relief exists
under the applicable substantive law. This rule is merely a procedural
mechanism, and cannot be utilized unless there is some substantive
basis under applicable law.
Apart from the requirement that the third-party complainant should
assert a derivative or secondary claim for relief from the third-party
defendant there are other limitations on said partys ability to implead.
The rule requires that the third-party defendant is "not a party to the
action" for otherwise the proper procedure for asserting a claim against
one who is already a party to the suit is by means of counterclaim or
cross-claim under sections 6 and 7 of Rule 6. In addition to the
aforecited requirement, the claim against the third-party defendant
must be based upon plaintiff's claim against the original defendant
(third-party claimant). The crucial characteristic of a claim under section
12 of Rule 6, is that the original "defendant is attempting to transfer to
the third-party defendant the liability asserted against him by the
original plaintiff."
Accordingly, the requisites for a third-party action are, firstly, that the
party to be impleaded must not yet be a party to the action; secondly,
that the claim against the third-party defendant must belong to the
original defendant; thirdly, the claim of the original defendant against
the third-party defendant must be based upon the plaintiffs claim
against the original defendant; and, fourthly, the defendant is
attempting to transfer to the third-party defendant the liability asserted
against him by the original plaintiff.14
As the foregoing indicates, the claim that the third-party complaint
asserts against the third-party defendant must be predicated on
substantive law. Here, the substantive law on which the right of Inland
to seek such other relief through its third-party complaint rested were
Article 2176 and Article 2180 of the Civil Code, which read:
Article 2176. Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage done.
Such fault or negligence, if there is no pre-existing contractual relation
between the parties, is called a quasi-delict and is governed by the
provisions of this chapter. (1902a)
Article 2180. The obligation imposed by article 2176 is demandable not
only for ones own acts or omissions, but also for those of persons for
whom one is responsible.
xxx
Employers shall be liable for the damages caused by their employees
and household helpers acting within the scope of their assigned tasks,
even though the former are not engaged in any business or industry.
xxx
The responsibility treated of in this article shall cease when the persons
herein mentioned prove that they observed all the diligence of a good
father of a family to prevent damage. (1903a)
Paras cause of action against Inland (breach of contract of carriage) did
not need to be the same as the cause of action of Inland against
12
13 | P a g e
Philtranco and its driver (tort or quasi-delict) in the impleader. It is
settled that a defendant in a contract action may join as third-party
defendants those who may be liable to him in tort for the plaintiffs
claim against him, or even directly to the plaintiff.15 Indeed, Prof.
Wright, et al., commenting on the provision of the Federal Rules of
Procedure of the United States from which Section 12, supra, was
derived, observed so, to wit:16
The third-party claim need not be based on the same theory as the
main claim. For example, there are cases in which the third-party claim
is based on an express indemnity contract and the original complaint is
framed in terms of negligence. Similarly, there need not be any legal
relationship between the third-party defendant and any of the other
parties to the action. Impleader also is proper even though the third
partys liability is contingent, and technically does not come into
existence until the original defendants liability has been established. In
addition, the words is or may be liable in Rule 14(a) make it clear that
impleader is proper even though the third-party defendants liability is
not automatically established once the third-party plaintiffs liability to
the original plaintiff has been determined.
Nor was it a pre-requisite for attachment of the liability to Philtranco
and its driver that Inland be first declared and found liable to Paras for
the breach of its contract of carriage with him.17 As the Court has
cogently discoursed in Samala v. Judge Victor:18
Appellants argue that since plaintiffs filed a complaint for damages
against the defendants on a breach of contract of carriage, they cannot
recover from the third-party defendants on a cause of action based on
quasi-delict. The third party defendants, they allege, are never parties
liable with respect to plaintiff s claim although they are with respect to
the defendants for indemnification, subrogation, contribution or other
reliefs. Consequently, they are not directly liable to the plaintiffs. Their
liability commences only when the defendants are adjudged liable and
not when they are absolved from liability as in the case at bar.
Quite apparent from these arguments is the misconception entertained
by appellants with respect to the nature and office of a third party
complaint.
Section 16, Rule 6 of the Revised Rules of Court defines a third party
complaint as a "claim that a defending party may, with leave of court,
file against a person not a party to the action, called the third-party
defendant, for contribution, indemnification, subrogation, or any other
relief, in respect of his opponents claim." In the case of Viluan vs. Court
of Appeals, et al., 16 SCRA 742 [1966], this Court had occasion to
elucidate on the subjects covered by this Rule, thus:
... As explained in the Atlantic Coast Line R. Co. vs. U.S. Fidelity &
Guaranty Co., 52 F. Supp. 177 (1943:)
From the sources of Rule 14 and the decisions herein cited, it is clear
that this rule, like the admiralty rule, covers two distinct subjects, the
addition of parties defendant to the main cause of action, and the
bringing in of a third party for a defendants remedy over. xxx
If the third party complaint alleges facts showing a third partys direct
liability to plaintiff on the claim set out in plaintiffs petition, then third
party shall make his defenses as provided in Rule 12 and his
counterclaims against plaintiff as provided in Rule 13. In the case of
alleged direct liability, no amendment (to the complaint) is necessary or
required. The subject-matter of the claim is contained in plaintiff's
complaint, the ground of third partys liability on that claim is alleged in
third party complaint, and third partys defense to set up in his answer
to plaintiff's complaint. At that point and without amendment, the
plaintiff and third party are at issue as to their rights respecting the
claim.
The provision in the rule that, The third-party defendant may assert
any defense which the third-party plaintiff may assert to the plaintiffs
claim, applies to the other subject, namely, the alleged liability of third
party defendant. The next sentence in the rule, The third-party
defendant is bound by the adjudication of the third party plaintiffs
13
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liability to the plaintiff, as well as of his own to the plaintiff or to the
third-party plaintiff applies to both subjects. If third party is brought in
as liable only to defendant and judgment is rendered adjudicating
plaintiff's right to recover against defendant and defendants rights to
recover against third party, he is bound by both adjudications.That part
of the sentence refers to the second subject. If third party is brought in
as liable to plaintiff, then third party is bound by the adjudication as
between him and plaintiff. That refers to the first subject. If third party
is brought in as liable to plaintiff and also over to defendant, then third
party is bound by both adjudications. xxx
Under this Rule, a person not a party to an action may be impleaded by
the defendant either (a) on an allegation of liability to the latter; (b) on
the ground of direct liability to the plaintiff-; or, (c) both (a) and (b).
The situation in (a) is covered by the phrase "for contribution, indemnity
or subrogation;" while (b) and (c) are subsumed under the catch all "or
any other relief, in respect of his opponents claim."
The case at bar is one in which the third party defendants are brought
into the action as directly liable to the plaintiffs upon the allegation that
"the primary and immediate cause as shown by the police investigation
of said vehicular collision between (sic) the above-mentioned three
vehicles was the recklessness and negligence and lack of imprudence
(sic) of the third-party defendant Virgilio (should be Leonardo) Esguerra
y Ledesma then driver of the passenger bus." The effects are that
"plaintiff and third party are at issue as to their rights respecting the
claim" and "the third party is bound by the adjudication as between him
and plaintiff." It is not indispensable in the premises that the defendant
be first adjudged liable to plaintiff before the third-party defendant may
be held liable to the plaintiff, as precisely, the theory of defendant is
that it is the third party defendant, and not he, who is directly liable to
plaintiff. The situation contemplated by appellants would properly
pertain to situation (a) above wherein the third party defendant is being
sued for contribution, indemnity or subrogation, or simply stated, for a
defendant's "remedy over".19
It is worth adding that allowing the recovery of damages by Paras based
on quasi-delict, despite his complaint being upon contractual breach,
served the judicial policy of avoiding multiplicity of suits and circuity of
actions by disposing of the entire subject matter in a single litigation. 20
2.
Award of temperate damages was in order
Philtranco assails the award of temperate damages by the CA
considering that, firstly, Paras and Inland had not raised the matter in
the trial court and in their respective appeals; secondly, the CA could
not substitute the temperate damages granted to Paras if Paras could
not properly establish his actual damages despite evidence of his actual
expenses being easily available to him; and, thirdly, the CA gravely
abused its discretion in granting motu proprio the temperate damages
of 250,000.00 to Inland although Inland had not claimed temperate
damages in its pleading or during trial and even on appeal.
The Court cannot side with Philtranco.
Actual damages, to be recoverable, must not only be capable of proof,
but must actually be proved with a reasonable degree of certainty. The
reason is that the court "cannot simply rely on speculation, conjecture
or guesswork in determining the fact and amount of damages," but
"there must be competent proof of the actual amount of loss, credence
can be given only to claims which are duly supported by receipts." 21
The receipts formally submitted and offered by Paras were limited to the
costs of medicines purchased on various times in the period from
February 1987 to July 1989 (Exhibits E to E-35, inclusive) totaling only
1,397.95.22 The receipts by no means included hospital and medical
expenses, or the costs of at least two surgeries as well as rehabilitative
therapy. Consequently, the CA fixed actual damages only at that small
sum of 1,397.95. On its part, Inland offered no definite proof on the
repairs done on its vehicle, or the extent of the material damage except
the testimony of its witness, Emerlinda Maravilla, to the effect that the
bus had been damaged beyond economic repair.23 The CA rejected
Inlands showing of unrealized income worth 3,945,858.50 for 30
14
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months (based on alleged average weekly income of 239,143.02
multiplied by its guaranteed revenue amounting to 55% thereof, then
spread over a period of 30 months, the equivalent to the remaining
40% of the vehicles un-depreciated or net book value), finding such
showing arbitrary, uncertain and speculative.24 As a result, the CA
allowed no compensation to Inland for unrealized income.
Nonetheless, the CA was convinced that Paras should not suffer from
the lack of definite proof of his actual expenses for the surgeries and
rehabilitative therapy; and that Inland should not be deprived of
recourse to recover its loss of the economic value of its damaged
vehicle. As the records indicated, Paras was first rushed for emergency
treatment to the San Pablo Medical Center in San Pablo City, Laguna,
and was later brought to the National Orthopedic Hospital in Quezon
City where he was diagnosed to have suffered a dislocated hip, fracture
of the fibula on the right leg, fracture of the small bone of the right leg,
and closed fracture on the tibial plateau of the left leg. He underwent
surgeries on March 4, 1987 and April 15, 1987 to repair the
fractures.25 Thus, the CA awarded to him temperate damages of
50,000.00 in the absence of definite proof of his actual expenses
towards that end. As to Inland, Maravillas testimony of the bus having
been damaged beyond economic repair showed a definitely substantial
pecuniary loss, for which the CA fixed temperate damages of
250,000.00. We cannot disturb the CAs determination, for we are in
no position today to judge its reasonableness on account of the lapse of
a long time from when the accident occurred.26
In awarding temperate damages in lieu of actual damages, the CA did
not err, because Paras and Inland were definitely shown to have
sustained substantial pecuniary losses. It would really be a travesty of
justice were the CA now to be held bereft of the discretion to calculate
moderate or temperate damages, and thereby leave Paras and Inland
without redress from the wrongful act of Philtranco and its driver. 27 We
are satisfied that the CA exerted effort and practiced great care to
ensure that the causal link between the physical injuries of Paras and
the material loss of Inland, on the one hand, and the negligence of
Philtranco and its driver, on the other hand, existed in fact. It also
rejected arbitrary or speculative proof of loss. Clearly, the costs of
Paras surgeries and consequential rehabilitation, as well as the fact that
repairing Inlands vehicle would no longer be economical justly
warranted the CA to calculate temperate damages of 50,000.00 and
250,000.00 respectively for Paras and Inland.
There is no question that Article 2224 of the Civil Code expressly
authorizes the courts to award temperate damages despite the lack of
certain proof of actual damages, to wit:
Article 2224. Temperate or moderate damages, which are more than
nominal but less than compensatory damages, may be recovered when
the court finds that some pecuniary loss has been suffered but its
amount cannot, from the nature of the case, be proved with certainty.
The rationale for Article 2224 has been stated in Premiere Development
Bank v. Court of Appeals28 in the following manner:
Even if not recoverable as compensatory damages, Panacor may still be
awarded damages in the concept of temperate or moderate damages.
When the court finds that some pecuniary loss has been suffered but
the amount cannot, from the nature of the case, be proved with
certainty, temperate damages may be recovered. Temperate damages
may be allowed in cases where from the nature of the case, definite
proof of pecuniary loss cannot be adduced, although the court is
convinced that the aggrieved party suffered some pecuniary loss.
The Code Commission, in explaining the concept of temperate damages
under Article 2224, makes the following comment:
In some States of the American Union, temperate damages are allowed.
There are cases where from the nature of the case, definite proof of
pecuniary loss cannot be offered, although the court is convinced that
there has been such loss. For instance, injury to ones commercial credit
or to the goodwill of a business firm is often hard to show with certainty
in terms of money. Should damages be denied for that reason? The
judge should be empowered to calculate moderate damages in such
15
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cases, rather than that the plaintiff should suffer, without redress from
the defendants wrongful act.
3.
Paras loss of earning capacity must be compensated
In the body of its decision, the CA concluded that considering that Paras
had a minimum monthly income of 8,000.00 as a trader he was
entitled to recover compensation for unearned income during the 3-
month period of his hospital confinement and the 6-month period of his
recovery and rehabilitation; and aggregated his unearned income for
those periods to 72,000.00.29 Yet, the CA omitted the unearned income
from the dispositive portion.
The omission should be rectified, for there was credible proof of Paras
loss of income during his disability. According to Article 2205, (1), of the
Civil Code, damages may be recovered for loss or impairment of earning
capacity in cases of temporary or permanent personal injury. Indeed,
indemnification for damages comprehends not only the loss suffered
(actual damages or damnum emergens) but also the claimants lost
profits (compensatory damages or lucrum cessans).30 Even so, the
formula that has gained acceptance over time has limited recovery to
net earning capacity; hence, the entire amount of 72,000.00 is not
allowable. The premise is obviously that net earning capacity is the
persons capacity to acquire money, less the necessary expense for his
own living.31 To simplify the determination, therefore, the net earning
capacity of Paras during the 9-month period of his confinement,
surgeries and consequential therapy is pegged at only half of his
unearned monthly gross income of 8,000.00 as a trader, or a total of
36,000.00 for the 9-month period, the other half being treated as the
necessary expense for his own living in that period.
It is relevant to clarify that awarding the temperate damages (for the
substantial pecuniary losses corresponding to Parass surgeries and
rehabilitation and for the irreparability of Inlands damaged bus) and the
actual damages to compensate lost earnings and costs of medicines
give rise to no incompatibility. These damages cover distinct pecuniary
losses suffered by Paras and Inland,32 and do not infringe the statutory
prohibition against recovering damages twice for the same act or
omission.33
4.
Increase in award of attorneys fees
Although it is a sound policy not to set a premium on the right to
litigate,34 we consider the grant to Paras and Inland of reasonable
attorneys fees warranted. Their entitlement to attorneys fees was by
virtue of their having been compelled to litigate or to incur expenses to
protect their interests,35 as well as by virtue of the Court now further
deeming attorneys fees to be just and equitable.36
In view of the lapse of a long time in the prosecution of the claim, 37 the
Court considers it reasonable and proper to grant attorneys fees to
each of Paras and Inland equivalent to 10% of the total amounts hereby
awarded to them, in lieu of only 20,000.00 for that purpose granted to
Paras.
5.
Legal interest on the amounts awarded
Pursuant to Eastern Shipping Lines, Inc. v. Court of Appeals, 38 legal
interest at the rate of 6% per annum accrues on the amounts adjudged
reckoned from July 18, 1997, the date when the RTC rendered its
judgment; and legal interest at the rate of 12% per annum shall be
imposed from the finality of the judgment until its full satisfaction, the
interim period being regarded as the equivalent of a forbearance of
credit.
WHEREFORE, the Court AFFIRMS WITH MODIFICATION the decision of
the Court of Appeals promulgated on September 25, 2002, by ordering
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PHILTRANCO SERVICE ENTERPRISES, INC. and APOLINAR MIRALLES to

pay, jointly and severally, as follows:

1. To Felix Paras:

(a) 1,397.95, as reimbursement for the costs of

medicines purchased between February 1987 and July
1989;

(b) 50,000.00 as temperate damages;

(c) 50,000.00 as moral damages;

(d) 36,000.00 for lost earnings;

(e) 10% of the total of items (a) to (d) hereof as

attorneys fees; and

(f) Interest of 6% per annum from July 18, 1997 on the

total of items (a) to (d) hereof until finality of this
decision, and 12% per annum thereafter until full
payment.

2. To Inland Trailways, Inc.:

(a) 250,000.00 as temperate damages;

(b) 10% of item (a) hereof; and

(c) Interest of 6% per annum on item (a) hereof from

July 18, 1997 until finality of this decision, and 12% per
annum thereafter until full payment.

3. The petitioner shall pay the costs of suit.

SO ORDERED.
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G.R. No. 150859 March 28, 2005
FLORENTINO GONZALES, EDGARDO SANTOS, LEOPOLDO
ROSETE, FELINA VICTORIA and CRISTETA DELA CRUZ, Petitioner,
vs.
BALIKATAN KILUSANG BAYAN SA PANANALAPI,
INCORPORATED,1 respondent.
RESOLUTION
QUISUMBING, J.:
For our review is the Court of Appeals Resolution,2 dated September
11, 2001, in CA-G.R. SP No. 66102 dismissing petitioners petition on
technical grounds as well as its Resolution,3 dated November 20,
2001, denying petitioners motion for reconsideration, for lack of merit.
Respondent is a cooperative doing business in Bunducan, Bocaue,
Bulacan, while petitioners are members of the cooperative. 4
Sometime in November 7, 1997, petitioner Florentino Gonzales obtained
a loan of P150,000 with the other petitioners Edgardo Santos, Leopoldo
Rosete, Felina Victoria and Cristeta dela Cruz as co-makers. Petitioners
signed a promissory note binding themselves jointly and severally to
pay the loan in monthly amortizations of P6,250 for two years starting
November 7, 1997 up to November 7, 1999. When petitioner Gonzales
failed to pay despite repeated written demands, respondent filed a case
for sum of money and damages in the Municipal Trial Court of Bocaue.
Summons were thereafter served and the case was set for hearing on
September 29, 2000. On the scheduled hearing, defendants appeared
but because they failed to file their answer to the complaint, the court
declared them in default and thereafter allowed the presentation of
respondents evidence ex-parte on October 6, 2000.5
On January 23, 2001, the court a quo rendered its decision finding for
the respondent and against the petitioners, the dispositive portion
stating:
WHEREFORE, judgment is hereby rendered in favor of the
plaintiff and against the defendants ordering the latter to pay
jointly and severally to the former the sum of P128,953.45 with
interest thereon at the rate of 11% per annum from the time
demand was made until fully paid, a fine of two percent per
month on the principal and interests due plus the amount of
25% of the amount due as and by way of attorneys fees and
expenses of collection together with the costs of this suit.
SO ORDERED.6
Petitioners appealed to the Regional Trial Court of Bulacan, contending
that the court a quo erred when it declared them in default as they were
not notified of the respondents motion to declare them in default, nor
did the respondent show proof that summons were properly issued upon
them to warrant the declaration of default.
The Regional Trial Court affirmed the decision of the MTC in this wise:
WHEREFORE, finding no cogent reason to reverse, alter or even
modify the appealed decision, the same is hereby AFFIRMED [i]n
toto.
SO ORDERED.7
Petitioners thereafter elevated the case to the Court of Appeals on a
petition for review. The CA dismissed the petition in a Resolution,
dated September 11, 2001, thus:
The instant petition for review is DISMISSED outright for the following
reasons:
1. The certification of non-forum shopping is not signed by all the
petitioners
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2. All relevant documents, particularly the parties memoranda
mentioned on page 9 of the petition, are not attached thereto, as
required by Section 2 (d), Rule 42, 1997 Rules of Civil Procedure.
SO ORDERED.8
Likewise, the Motion for Reconsideration filed by petitioners was also
dismissed, hence this appeal before us.
The issues raised by the petitioners are as follows:
A. WHETHER OR NOT THE PETITIONERS SUBSTANTIALLY
COMPLIED WITH THE CERTIFICATION ON NON-FORUM-
SHOPPING AND ON ATTACHMENT OF CERTAIN RELEVANT
DOCUMENTS.
B. WHETHER OR NOT THE JUDGMENT BY DEFAULT IS VOID FOR
LACK OF JURISDICTION OVER THE PETITIONERS WHO WERE
NOT SERVED WITH SUMMONS PROPERLY.
C. WHETHER OR NOT THE CASE SHOULD BE DISMISSED FOR
LACK OF CAUSE OF ACTION AND OF JURISDICTION.9
On the first issue, petitioners contend that even if only petitioner
Gonzales signed the Verification and Certification, the failure of others
to sign was not fatal since Gonzales had already represented the other
petitioners in the proceedings below and this was never opposed by the
respondent. Gonzales avers there is substantial compliance.
This contention is without merit. As repeatedly held by this Court, the
certificate of non-forum shopping should be signed by all the petitioners
or plaintiffs in a case, otherwise, it would be deemed insufficient. The
attestation contained in the certification of non-forum shopping requires
personal knowledge by the party executing it, and the lone signing
petitioner could not be presumed to have personal knowledge of the
filing or non-filing by his co-petitioners of any action or claim it. To
merit the courts consideration, petitioners must show reasonable cause
for failure to personally sign the certification.10 But in the present case,
the Motion for Reconsideration filed below by petitioners did not
satisfactorily explain the failure of the other petitioners to sign the
certification of non-forum shopping nor did it cure the said defect, hence
the petition was appropriately and validly dismissed by the Court of
Appeals.11
If only for the proper edification of the parties, we now resolve the
second and third issues raised herein. Petitioners contend that it is by
service of summons that a court acquires jurisdiction over the person of
a petitioner. Where there was no valid proof of service of summons on
him, he could not be declared in default, according to petitioners.
In this regard, petitioners should be reminded of the provision in the
Rules of Court that a defendants voluntary appearance in an action
shall be equivalent to service of summons.12 Further, the lack of
jurisdiction over the person of the defendant may be waived either
expressly or impliedly. When a defendant voluntarily appears, he is
deemed to have submitted himself to the jurisdiction of the court. If he
does not wish to waive this defense, he must do so seasonably by
motion, and object thereto.13
As the records would show, summons and copies of the complaint were
served on the petitioners and the case was set for hearing by the MTC
on September 29, 2000, upon the motion of the respondent. The
petitioners appeared before the court on the scheduled hearing, as
evidenced by their signatures in the minutes. Their voluntary
appearance cured the defect, if any, in the service of summons. 14
Petitioners further contend that when the respondent orally move in
open court for the declaration of default due to petitioners failure to file
an answer to the complaint despite their appearance in court, they were
not notified thereof in contravention of the Revised Rules of Civil
Procedure which states that "[i]f 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" 15
19
20 | P a g e

Petitioners ought to be guided by Rule 15, Section 2, which provides
that "[a]ll motions shall be in writing exceptthose made in open court or
in the course of a hearing or trial." Moreover, every written motion shall
be set for hearing by the applicant, with the exception of motions which
the court might act upon without prejudicing the rights of the adverse
party.16 As a general rule, a notice is required where a party has a right
to resist the relief sought by the motion. Principles of natural justice
demand that his right should not be affected without an opportunity to
be heard.17 Such, however, does not appear to be the situation here.
consequences of their own acts before the court. It would defeat the
ends of justice and fair play if their stance is sustained after judgment
had been duly rendered on the case.
WHEREFORE, the instant petition is DENIED. The assailed decisions of
the Regional Trial Court and the Municipal Trial Court of Bocaue,
Bulacan are hereby AFFIRMED.
SO ORDERED.

In this case, the motion to declare petitioners in default was, to

reiterate, made in open court and in their presence. By their presence,
notice to them is fairly constituted. What the law really eschews is not
the lack of previous notice of hearing but the lack of opportunity to be
heard.18 Petitioners were not without such opportunity to contest the
motion for and the order of default then and there at the trial court.

Besides, petitioners failure to move for the lifting of the order of default
serves as a waiver on their part to later question its propriety. The
records showed that after the court a quo issued the default order, the
petitioners did not file any pleading at all questioning its validity. As it
was, they merely waited for the decision to be rendered, and when it
was adverse to their interest, they began questioning it. 19

Finally, there was no showing at all that petitioners ever questioned the
jurisdiction of the MTC over them, except when the judgment in default
was already rendered. To properly avail of the defense of invalid service
of summons, petitioners should have questioned it and the MTCs
exercise of jurisdiction over them from the very start.20

Petitioners failure to object to the MTCs jurisdiction from the very

beginning precludes them from raising it now as a ground to set aside
the judgment by default. A defendant cannot be permitted to speculate
upon the judgment of the court by objecting to the courts jurisdiction
over its person if the judgment is adverse to it, and acceding to
jurisdiction over its person if and when the judgment sustains its
defenses.21 Nor can they claim that they are not bound by the

20
21 | P a g e

G. R. No. 164317 February 6, 2006

80 81 bundles) Calorized
ALFREDO CHING, Petitioner,
Lance Pipes
vs.
THE SECRETARY OF JUSTICE, ASST. CITY PROSECUTOR ECILYN 1824 11-28- 02-26- P707,879.71 One Lot High Fired
BURGOS-VILLAVERT, JUDGE EDGARDO SUDIAM of the Regional 80 81 Refractory Tundish
Trial Court, Manila, Branch 52; RIZAL COMMERCIAL BANKING Bricks
CORP. and THE PEOPLE OF THE PHILIPPINES, Respondents.
1798 11-21- 02-19- P835,526.25 5 cases spare
CALLEJO, SR., J.: 80 81 parts for CCM

Before the Court is a petition for review on certiorari of the Decision 1 of 1808 11-21- 02-19- P370,332.52 200 pcs. ingot
the Court of Appeals (CA) in CA-G.R. SP No. 57169 dismissing the 80 81 moulds
petition for certiorari, prohibition and mandamus filed by petitioner
Alfredo Ching, and its Resolution2 dated June 28, 2004 denying the 2042 01-30- 04-30- P469,669.29 High Fired
motion for reconsideration thereof. 81 81 Refractory Nozzle
Bricks
Petitioner was the Senior Vice-President of Philippine Blooming Mills, 1801 11-21- 02-19- P2,001,715.17 Synthetic Graphite
Inc. (PBMI). Sometime in September to October 1980, PBMI, through 80 81 Electrode [with]
petitioner, applied with the Rizal Commercial Banking Corporation tapered pitch filed
(respondent bank) for the issuance of commercial letters of credit to nipples
finance its importation of assorted goods.3
1857 12-09- 03-09- P197,843.61 3,000 pcs. (15
Respondent bank approved the application, and irrevocable letters of 80 81 bundles calorized
credit were issued in favor of petitioner. The goods were purchased and lance pipes [)]
delivered in trust to PBMI. Petitioner signed 13 trust receipts4 as surety,
acknowledging delivery of the following goods: 1895 12-17- 03-17- P67,652.04 Spare parts for
80 81 Spectrophotometer

T/R Date Maturity Principal Description of 1911 12-22- 03-20- P91,497.85 50 pcs. Ingot
Nos. Granted Date Goods 80 81 moulds

1845 12-05- 03-05- P1,596,470.05 79.9425 M/T 2041 01-30- 04-30- P91,456.97 50 pcs. Ingot
80 81 "SDK" Brand 81 81 moulds
Synthetic Graphite
Electrode 2099 02-10- 05-11- P66,162.26 8 pcs. Kubota Rolls
81 81 for rolling mills
1853 12-08- 03-06- P198,150.67 3,000 pcs. (15

21
22 | P a g e
2100 02-10- 05-12- P210,748.00 Spare parts for
81 81 Lacolaboratory
Equipment5
Under the receipts, petitioner agreed to hold the goods in trust for the
said bank, with authority to sell but not by way of conditional sale,
pledge or otherwise; and in case such goods were sold, to turn over the
proceeds thereof as soon as received, to apply against the relative
acceptances and payment of other indebtedness to respondent bank. In
case the goods remained unsold within the specified period, the goods
were to be returned to respondent bank without any need of demand.
Thus, said "goods, manufactured products or proceeds thereof, whether
in the form of money or bills, receivables, or accounts separate and
capable of identification" were respondent banks property.
When the trust receipts matured, petitioner failed to return the goods to
respondent bank, or to return their value amounting to 6,940,280.66
despite demands. Thus, the bank filed a criminal complaint for
estafa6 against petitioner in the Office of the City Prosecutor of Manila.
After the requisite preliminary investigation, the City Prosecutor found
probable cause estafa under Article 315, paragraph 1(b) of the Revised
Penal Code, in relation to Presidential Decree (P.D.) No. 115, otherwise
known as the Trust Receipts Law. Thirteen (13) Informations were filed
against the petitioner before the Regional Trial Court (RTC) of Manila.
The cases were docketed as Criminal Cases No. 86-42169 to 86-42181,
raffled to Branch 31 of said court.
Petitioner appealed the resolution of the City Prosecutor to the then
Minister of Justice. The appeal was dismissed in a Resolution7 dated
March 17, 1987, and petitioner moved for its reconsideration. On
December 23, 1987, the Minister of Justice granted the motion, thus
reversing the previous resolution finding probable cause against
petitioner.8 The City Prosecutor was ordered to move for the withdrawal
of the Informations.
This time, respondent bank filed a motion for reconsideration, which,
however, was denied on February 24, 1988.9The RTC, for its part,
granted the Motion to Quash the Informations filed by petitioner on the
ground that the material allegations therein did not amount to estafa. 10
In the meantime, the Court rendered judgment in Allied Banking
Corporation v. Ordoez,11 holding that the penal provision of P.D. No.
115 encompasses any act violative of an obligation covered by the trust
receipt; it is not limited to transactions involving goods which are to be
sold (retailed), reshipped, stored or processed as a component of a
product ultimately sold. The Court also ruled that "the non-payment of
the amount covered by a trust receipt is an act violative of the
obligation of the entrustee to pay."12
On February 27, 1995, respondent bank re-filed the criminal complaint
for estafa against petitioner before the Office of the City Prosecutor of
Manila. The case was docketed as I.S. No. 95B-07614.
Preliminary investigation ensued. On December 8, 1995, the City
Prosecutor ruled that there was no probable cause to charge petitioner
with violating P.D. No. 115, as petitioners liability was only civil, not
criminal, having signed the trust receipts as surety.13 Respondent bank
appealed the resolution to the Department of Justice (DOJ) via petition
for review, alleging that the City Prosecutor erred in ruling:
1. That there is no evidence to show that respondent participated
in the misappropriation of the goods subject of the trust receipts;
2. That the respondent is a mere surety of the trust receipts;
and
3. That the liability of the respondent is only civil in nature. 14
On July 13, 1999, the Secretary of Justice issued Resolution No.
25015 granting the petition and reversing the assailed resolution of the
City Prosecutor. According to the Justice Secretary, the petitioner, as
Senior Vice-President of PBMI, executed the 13 trust receipts and as
22
23 | P a g e
such, was the one responsible for the offense. Thus, the execution of
said receipts is enough to indict the petitioner as the official responsible
for violation of P.D. No. 115. The Justice Secretary also declared that
petitioner could not contend that P.D. No. 115 covers only goods
ultimately destined for sale, as this issue had already been settled in
Allied Banking Corporation v. Ordoez,16 where the Court ruled that P.D.
No. 115 is "not limited to transactions in goods which are to be sold
(retailed), reshipped, stored or processed as a component of a product
ultimately sold but covers failure to turn over the proceeds of the sale of
entrusted goods, or to return said goods if unsold or not otherwise
disposed of in accordance with the terms of the trust receipts."
The Justice Secretary further stated that the respondent bound himself
under the terms of the trust receipts not only as a corporate official of
PBMI but also as its surety; hence, he could be proceeded against in
two (2) ways: first, as surety as determined by the Supreme Court in its
decision in Rizal Commercial Banking Corporation v. Court of
Appeals;17 and second, as the corporate official responsible for the
offense under P.D. No. 115, via criminal prosecution. Moreover, P.D. No.
115 explicitly allows the prosecution of corporate officers "without
prejudice to the civil liabilities arising from the criminal offense." Thus,
according to the Justice Secretary, following Rizal Commercial Banking
Corporation, the civil liability imposed is clearly separate and distinct
from the criminal liability of the accused under P.D. No. 115.
Conformably with the Resolution of the Secretary of Justice, the City
Prosecutor filed 13 Informations against petitioner for violation of P.D.
No. 115 before the RTC of Manila. The cases were docketed as Criminal
Cases No. 99-178596 to 99-178608 and consolidated for trial before
Branch 52 of said court. Petitioner filed a motion for reconsideration,
which the Secretary of Justice denied in a Resolution 18 dated January
17, 2000.
Petitioner then filed a petition for certiorari, prohibition and mandamus
with the CA, assailing the resolutions of the Secretary of Justice on the
following grounds:
1. THE RESPONDENTS ARE ACTING WITH AN UNEVEN HAND
AND IN FACT, ARE ACTING OPPRESSIVELY AGAINST ALFREDO
CHING WHEN THEY ALLOWED HIS PROSECUTION DESPITE THE
FACT THAT NO EVIDENCE HAD BEEN PRESENTED TO PROVE HIS
PARTICIPATION IN THE ALLEGED TRANSACTIONS.
2. THE RESPONDENT SECRETARY OF JUSTICE COMMITTED AN
ACT IN GRAVE ABUSE OF DISCRETION AND IN EXCESS OF HIS
JURISDICTION WHEN THEY CONTINUED PROSECUTION OF THE
PETITIONER DESPITE THE LENGTH OF TIME INCURRED IN THE
TERMINATION OF THE PRELIMINARY INVESTIGATION THAT
SHOULD JUSTIFY THE DISMISSAL OF THE INSTANT CASE.
3. THE RESPONDENT SECRETARY OF JUSTICE AND ASSISTANT
CITY PROSECUTOR ACTED IN GRAVE ABUSE OF DISCRETION
AMOUNTING TO AN EXCESS OF JURISDICTION WHEN THEY
CONTINUED THE PROSECUTION OF THE PETITIONER DESPITE
LACK OF SUFFICIENT BASIS.19
In his petition, petitioner incorporated a certification stating that "as far
as this Petition is concerned, no action or proceeding in the Supreme
Court, the Court of Appeals or different divisions thereof, or any tribunal
or agency. It is finally certified that if the affiant should 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, of
any other tribunal or agency, it hereby undertakes to notify this
Honorable Court within five (5) days from such notice." 20
In its Comment on the petition, the Office of the Solicitor General
alleged that -
A.
THE HONORABLE SECRETARY OF JUSTICE CORRECTLY RULED
THAT PETITIONER ALFREDO CHING IS THE OFFICER
RESPONSIBLE FOR THE OFFENSE CHARGED AND THAT THE
ACTS OF PETITIONER FALL WITHIN THE AMBIT OF VIOLATION
23
24 | P a g e
OF P.D. [No.] 115 IN RELATION TO ARTICLE 315, PAR. 1(B) OF
THE REVISED PENAL CODE.
B.
THERE IS NO MERIT IN PETITIONERS CONTENTION THAT
EXCESSIVE DELAY HAS MARRED THE CONDUCT OF THE
PRELIMINARY INVESTIGATION OF THE CASE, JUSTIFYING ITS
DISMISSAL.
C.
THE PRESENT SPECIAL CIVIL ACTION FOR CERTIORARI,
PROHIBITION AND MANDAMUS IS NOT THE PROPER MODE OF
REVIEW FROM THE RESOLUTION OF THE DEPARTMENT OF
JUSTICE. THE PRESENT PETITION MUST THEREFORE BE
DISMISSED.21
On April 22, 2004, the CA rendered judgment dismissing the petition for
lack of merit, and on procedural grounds. On the procedural issue, it
ruled that (a) the certification of non-forum shopping executed by
petitioner and incorporated in the petition was defective for failure to
comply with the first two of the three-fold undertakings prescribed in
Rule 7, Section 5 of the Revised Rules of Civil Procedure; and (b) the
petition for certiorari, prohibition and mandamus was not the proper
remedy of the petitioner.
On the merits of the petition, the CA ruled that the assailed resolutions
of the Secretary of Justice were correctly issued for the following
reasons: (a) petitioner, being the Senior Vice-President of PBMI and the
signatory to the trust receipts, is criminally liable for violation of P.D.
No. 115; (b) the issue raised by the petitioner, on whether he violated
P.D. No. 115 by his actuations, had already been resolved and laid to
rest in Allied Bank Corporation v. Ordoez; 22 and (c) petitioner was
estopped from raising the
City Prosecutors delay in the final disposition of the preliminary
investigation because he failed to do so in the DOJ.
Thus, petitioner filed the instant petition, alleging that:
I
THE COURT OF APPEALS ERRED WHEN IT DISMISSED THE
PETITION ON THE GROUND THAT THE CERTIFICATION OF NON-
FORUM SHOPPING INCORPORATED THEREIN WAS DEFECTIVE.
II
THE COURT OF APPEALS ERRED WHEN IT RULED THAT NO
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION WAS COMMITTED BY THE
SECRETARY OF JUSTICE IN COMING OUT WITH THE ASSAILED
RESOLUTIONS.23
The Court will delve into and resolve the issues seriatim.
The petitioner avers that the CA erred in dismissing his petition on a
mere technicality. He claims that the rules of procedure should be used
to promote, not frustrate, substantial justice. He insists that the Rules
of Court should be construed liberally especially when, as in this case,
his substantial rights are adversely affected; hence, the deficiency in his
certification of non-forum shopping should not result in the dismissal of
his petition.
The Office of the Solicitor General (OSG) takes the opposite view, and
asserts that indubitably, the certificate of non-forum shopping
incorporated in the petition before the CA is defective because it failed
to disclose essential facts about pending actions concerning similar
issues and parties. It asserts that petitioners failure to comply with the
Rules of Court is fatal to his petition. The OSG cited Section 2, Rule 42,
as well as the ruling of this Court in Melo v. Court of Appeals. 24
24
25 | P a g e
We agree with the ruling of the CA that the certification of non-forum
shopping petitioner incorporated in his petition before the appellate
court is defective. The certification reads:
It is further certified that as far as this Petition is concerned, no action
or proceeding in the Supreme Court, the Court of Appeals or different
divisions thereof, or any tribunal or agency.
It is finally certified that if the affiant should 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, of any other tribunal
or agency, it hereby undertakes to notify this Honorable Court within
five (5) days from such notice.25
Under Section 1, second paragraph of Rule 65 of the Revised Rules of
Court, the petition should be accompanied by a sworn certification of
non-forum shopping, as provided in the third paragraph of Section 3,
Rule 46 of said Rules. The latter provision reads in part:
SEC. 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.
xxx
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. xxx
Compliance with the certification against forum shopping is separate
from and independent of the avoidance of forum shopping itself. The
requirement is mandatory. The failure of the petitioner to comply with
the foregoing requirement shall be sufficient ground for the dismissal of
the petition without prejudice, unless otherwise provided.26
Indubitably, the first paragraph of petitioners certification is incomplete
and unintelligible. Petitioner failed to certify that he "had not heretofore
commenced any other action involving the same issues in the Supreme
Court, the Court of Appeals or the different divisions thereof or any
other tribunal or agency" as required by paragraph 4, Section 3, Rule 46
of the Revised Rules of Court.
We agree with petitioners contention that the certification is designed
to promote and facilitate the orderly administration of justice, and
therefore, should not be interpreted with absolute literalness. In his
works on the Revised Rules of Civil Procedure, former Supreme Court
Justice Florenz Regalado states that, with respect to the contents of the
certification which the pleader may prepare, the rule of substantial
compliance may be availed of.27However, there must be a special
circumstance or compelling reason which makes the strict application of
the requirement clearly unjustified. The instant petition has not alleged
any such extraneous circumstance. Moreover, as worded, the
certification cannot even be regarded as substantial compliance with the
procedural requirement. Thus, the CA was not informed whether, aside
from the petition before it, petitioner had commenced any other action
involving the same issues in other tribunals.
On the merits of the petition, the CA ruled that the petitioner failed to
establish that the Secretary of Justice committed grave abuse of
discretion in finding probable cause against the petitioner for violation of
estafa under Article 315, paragraph 1(b) of the Revised Penal Code, in
relation to P.D. No. 115. Thus, the appellate court ratiocinated:
Be that as it may, even on the merits, the arguments advanced in
support of the petition are not persuasive enough to justify the desired
conclusion that respondent Secretary of Justice gravely abused its
25
26 | P a g e
discretion in coming out with his assailed Resolutions. Petitioner posits
that, except for his being the Senior Vice-President of the PBMI, there is
no iota of evidence that he was a participes crimines in violating the
trust receipts sued upon; and that his liability, if at all, is purely civil
because he signed the said trust receipts merely as a xxx surety and
not as the entrustee. These assertions are, however, too dull that they
cannot even just dent the findings of the respondent Secretary, viz:
"x x x it is apropos to quote section 13 of PD 115 which states in part,
viz:
xxx If the violation or offense is committed by a corporation,
partnership, association or other judicial entities, the penalty provided
for in this Decree shall be imposed upon the directors, officers,
employees or other officials or persons therein responsible for the
offense, without prejudice to the civil liabilities arising from the criminal
offense.
"There is no dispute that it was the respondent, who as senior vice-
president of PBM, executed the thirteen (13) trust receipts. As such, the
law points to him as the official responsible for the offense. Since a
corporation cannot be proceeded against criminally because it cannot
commit crime in which personal violence or malicious intent is required,
criminal action is limited to the corporate agents guilty of an act
amounting to a crime and never against the corporation itself (West
Coast Life Ins. Co. vs. Hurd, 27 Phil. 401; Times, [I]nc. v. Reyes, 39
SCRA 303). Thus, the execution by respondent of said receipts is
enough to indict him as the official responsible for violation of PD 115.
"Parenthetically, respondent is estopped to still contend that PD 115
covers only goods which are ultimately destined for sale and not goods,
like those imported by PBM, for use in manufacture. This issue has
already been settled in the Allied Banking Corporation case, supra,
where he was also a party, when the Supreme Court ruled that PD 115
is not limited to transactions in goods which are to be sold (retailed),
reshipped, stored or processed as a component or a product ultimately
sold but covers failure to turn over the proceeds of the sale of
entrusted goods, or to return said goods if unsold or disposed of in
accordance with the terms of the trust receipts.
"In regard to the other assigned errors, we note that the respondent
bound himself under the terms of the trust receipts not only as a
corporate official of PBM but also as its surety. It is evident that these
are two (2) capacities which do not exclude the other. Logically, he can
be proceeded against in two (2) ways: first, as surety as determined by
the Supreme Court in its decision in RCBC vs. Court of Appeals, 178
SCRA 739; and, secondly, as the corporate official responsible for the
offense under PD 115, the present case is an appropriate remedy under
our penal law.
"Moreover, PD 115 explicitly allows the prosecution of corporate officers
without prejudice to the civil liabilities arising from the criminal offense
thus, the civil liability imposed on respondent in RCBC vs. Court of
Appeals case is clearly separate and distinct from his criminal liability
under PD 115."28
Petitioner asserts that the appellate courts ruling is erroneous because
(a) the transaction between PBMI and respondent bank is not a trust
receipt transaction; (b) he entered into the transaction and was sued in
his capacity as PBMI Senior Vice-President; (c) he never received the
goods as an entrustee for PBMI, hence, could not have committed any
dishonesty or abused the confidence of respondent bank; and (d) PBMI
acquired the goods and used the same in operating its machineries and
equipment and not for resale.
The OSG, for its part, submits a contrary view, to wit:
34. Petitioner further claims that he is not a person responsible for the
offense allegedly because "[b]eing charged as the Senior Vice-President
of Philippine Blooming Mills (PBM), petitioner cannot be held criminally
liable as the transactions sued upon were clearly entered into in his
capacity as an officer of the corporation" and that [h]e never received
the goods as an entrustee for PBM as he never had or took possession
26
27 | P a g e
of the goods nor did he commit dishonesty nor "abuse of confidence in
transacting with RCBC." Such argument is bereft of merit.
35. Petitioners being a Senior Vice-President of the Philippine Blooming
Mills does not exculpate him from any liability. Petitioners responsibility
as the corporate official of PBM who received the goods in trust is
premised on Section 13 of P.D. No. 115, which provides:
Section 13. Penalty Clause. The failure of an entrustee to turn over the
proceeds of the sale of the goods, documents or instruments covered by
a trust receipt to the extent of the amount owing to the entruster or as
appears in the trust receipt or to return said goods, documents or
instruments if they were not sold or disposed of in accordance with the
terms of the trust receipt shall constitute the crime of estafa, punishable
under the provisions of Article Three hundred and fifteen, paragraph
one (b) of Act Numbered Three thousand eight hundred and fifteen, as
amended, otherwise known as the Revised Penal Code. If the violation
or offense is committed by a corporation, partnership, association or
other juridical entities, the penalty provided for in this Decree shall be
imposed upon the directors, officers, employees or other officials or
persons therein responsible for the offense, without prejudice to the civil
liabilities arising from the criminal offense. (Emphasis supplied)
36. Petitioner having participated in the negotiations for the trust
receipts and having received the goods for PBM, it was inevitable that
the petitioner is the proper corporate officer to be proceeded against by
virtue of the PBMs violation of P.D. No. 115.29
The ruling of the CA is correct.
In Mendoza-Arce v. Office of the Ombudsman (Visayas),30 this Court
held that the acts of a quasi-judicial officer may be assailed by the
aggrieved party via a petition for certiorari and enjoined (a) when
necessary to afford adequate protection to the constitutional rights of
the accused; (b) when necessary for the orderly administration of
justice; (c) when the acts of the officer are without or in excess of
authority; (d) where the charges are manifestly false and motivated by
the lust for vengeance; and (e) when there is clearly no prima facie
case against the accused.31 The Court also declared that, if the officer
conducting a preliminary investigation (in that case, the Office of the
Ombudsman) acts without or in excess of his authority and resolves to
file an Information despite the absence of probable cause, such act may
be nullified by a writ of certiorari.32
Indeed, under Section 4, Rule 112 of the 2000 Rules of Criminal
Procedure,33 the Information shall be prepared by the Investigating
Prosecutor against the respondent only if he or she finds probable cause
to hold such respondent for trial. The Investigating Prosecutor acts
without or in excess of his authority under the Rule if the Information is
filed against the respondent despite absence of evidence showing
probable cause therefor.34 If the Secretary of Justice reverses the
Resolution of the Investigating Prosecutor who found no probable cause
to hold the respondent for trial, and orders such prosecutor to file the
Information despite the absence of probable cause, the Secretary of
Justice acts contrary to law, without authority and/or in excess of
authority. Such resolution may likewise be nullified in a petition for
certiorari under Rule 65 of the Revised Rules of Civil Procedure. 35
A preliminary investigation, designed to secure the respondent against
hasty, malicious and oppressive prosecution, is an inquiry to determine
whether (a) a crime has been committed; and (b) whether there is
probable cause to believe that the accused is guilty thereof. It is a
means of discovering the person or persons who may be reasonably
charged with a crime. Probable cause need not be based on clear and
convincing evidence of guilt, as the investigating officer acts upon
probable cause of reasonable belief. Probable cause implies probability
of guilt and requires more than bare suspicion but less than evidence
which would justify a conviction. A finding of probable cause needs only
to rest on evidence showing that more likely than not, a crime has been
committed by the suspect.36
However, while probable cause should be determined in a summary
manner, there is a need to examine the evidence with care to prevent
material damage to a potential accuseds constitutional right to liberty
and the guarantees of freedom and fair play 37 and to protect the State
27
28 | P a g e
from the burden of unnecessary expenses in prosecuting alleged
offenses and holding trials arising from false, fraudulent or groundless
charges.38
In this case, petitioner failed to establish that the Secretary of Justice
committed grave abuse of discretion in issuing the assailed resolutions.
Indeed, he acted in accord with law and the evidence.
Section 4 of P.D. No. 115 defines a trust receipt transaction, thus:
Section 4. What constitutes a trust receipt transaction. A trust receipt
transaction, within the meaning of this Decree, is any transaction by
and between a person referred to in this Decree as the entruster, and
another person referred to in this Decree as entrustee, whereby the
entruster, who owns or holds absolute title or security interests over
certain specified goods, documents or instruments, releases the same to
the possession of the entrustee upon the latters execution and delivery
to the entruster of a signed document called a "trust receipt" wherein
the entrustee binds himself to hold the designated goods, documents or
instruments in trust for the entruster and to sell or otherwise dispose of
the goods, documents or instruments with the obligation to turn over to
the entruster the proceeds thereof to the extent of the amount owing to
the entruster or as appears in the trust receipt or the goods, documents
or instruments themselves if they are unsold or not otherwise disposed
of, in accordance with the terms and conditions specified in the trust
receipt, or for other purposes substantially equivalent to any of the
following:
1. In case of goods or documents, (a) to sell the goods or
procure their sale; or (b) to manufacture or process the goods
with the purpose of ultimate sale; Provided, That, in the case of
goods delivered under trust receipt for the purpose of
manufacturing or processing before its ultimate sale, the
entruster shall retain its title over the goods whether in its
original or processed form until the entrustee has complied fully
with his obligation under the trust receipt; or (c) to load, unload,
ship or otherwise deal with them in a manner preliminary or
necessary to their sale; or
2. In the case of instruments a) to sell or procure their sale or
exchange; or b) to deliver them to a principal; or c) to effect the
consummation of some transactions involving delivery to a
depository or register; or d) to effect their presentation,
collection or renewal.
The sale of goods, documents or instruments by a person in the
business of selling goods, documents or instruments for profit who, at
the outset of the transaction, has, as against the buyer, general
property rights in such goods, documents or instruments, or who sells
the same to the buyer on credit, retaining title or other interest as
security for the payment of the purchase price, does not constitute a
trust receipt transaction and is outside the purview and coverage of this
Decree.
An entrustee is one having or taking possession of goods, documents or
instruments under a trust receipt transaction, and any successor in
interest of such person for the purpose of payment specified in the trust
receipt agreement.39 The entrustee is obliged to: (1) hold the goods,
documents or instruments in trust for the entruster and shall dispose of
them strictly in accordance with the terms and conditions of the trust
receipt; (2) receive the proceeds in trust for the entruster and turn over
the same to the entruster to the extent of the amount owing to the
entruster or as appears on the trust receipt; (3) insure the goods for
their total value against loss from fire, theft, pilferage or other
casualties; (4) keep said goods or proceeds thereof whether in money
or whatever form, separate and capable of identification as property of
the entruster; (5) return the goods, documents or instruments in the
event of non-sale or upon demand of the entruster; and (6) observe all
other terms and conditions of the trust receipt not contrary to the
provisions of the decree.40
The entruster shall be entitled to the proceeds from the sale of the
goods, documents or instruments released under a trust receipt to the
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entrustee to the extent of the amount owing to the entruster or as
appears in the trust receipt, or to the return of the goods, documents or
instruments in case of non-sale, and to the enforcement of all other
rights conferred on him in the trust receipt; provided, such are not
contrary to the provisions of the document.41
In the case at bar, the transaction between petitioner and respondent
bank falls under the trust receipt transactions envisaged in P.D. No.
115. Respondent bank imported the goods and entrusted the same to
PBMI under the trust receipts signed by petitioner, as entrustee, with
the bank as entruster. The agreement was as follows:
And in consideration thereof, I/we hereby agree to hold said goods in
trust for the said BANK as its property with liberty to sell the same
within ____days from the date of the execution of this Trust Receipt and
for the Banks account, but without authority to make any other
disposition whatsoever of the said goods or any part thereof (or the
proceeds) either by way of conditional sale, pledge or otherwise.
I/we agree to keep the said goods insured to their full value against loss
from fire, theft, pilferage or other casualties as directed by the BANK,
the sum insured to be payable in case of loss to the BANK, with the
understanding that the BANK is, not to be chargeable with the storage
premium or insurance or any other expenses incurred on said goods.
In case of sale, I/we further agree to turn over the proceeds thereof as
soon as received to the BANK, to apply against the relative acceptances
(as described above) and for the payment of any other indebtedness of
mine/ours to the BANK. In case of non-sale within the period specified
herein, I/we agree to return the goods under this Trust Receipt to the
BANK without any need of demand.
I/we agree to keep the said goods, manufactured products or proceeds
thereof, whether in the form of money or bills, receivables, or accounts
separate and capable of identification as property of the BANK. 42
It must be stressed that P.D. No. 115 is a declaration by legislative
authority that, as a matter of public policy, the failure of person to turn
over the proceeds of the sale of the goods covered by a trust receipt or
to return said goods, if not sold, is a public nuisance to be abated by the
imposition of penal sanctions.43
The Court likewise rules that the issue of whether P.D. No. 115
encompasses transactions involving goods procured as a component of
a product ultimately sold has been resolved in the affirmative in Allied
Banking Corporation v. Ordoez.44 The law applies to goods used by the
entrustee in the operation of its machineries and equipment. The non-
payment of the amount covered by the trust receipts or the non-return
of the goods covered by the receipts, if not sold or otherwise not
disposed of, violate the entrustees obligation to pay the amount or to
return the goods to the entruster.
In Colinares v. Court of Appeals,45 the Court declared that there are two
possible situations in a trust receipt transaction. The first is covered by
the provision which refers to money received under the obligation
involving the duty to deliver it (entregarla) to the owner of the
merchandise sold. The second is covered by the provision which refers
to merchandise received under the obligation to return it (devolvera) to
the owner.46 Thus, failure of the entrustee to turn over the proceeds of
the sale of the goods covered by the trust receipts to the entruster or to
return said goods if they were not disposed of in accordance with the
terms of the trust receipt is a crime under P.D. No. 115, without need of
proving intent to defraud. The law punishes dishonesty and abuse of
confidence in the handling of money or goods to the prejudice of the
entruster, regardless of whether the latter is the owner or not. A mere
failure to deliver the proceeds of the sale of the goods, if not sold,
constitutes a criminal offense that causes prejudice, not only to another,
but more to the public interest.47
The Court rules that although petitioner signed the trust receipts merely
as Senior Vice-President of PBMI and had no physical possession of the
goods, he cannot avoid prosecution for violation of P.D. No. 115.
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The penalty clause of the law, Section 13 of P.D. No. 115 reads:
Section 13. Penalty Clause. The failure of an entrustee to turn over the
proceeds of the sale of the goods, documents or instruments covered by
a trust receipt to the extent of the amount owing to the entruster or as
appears in the trust receipt or to return said goods, documents or
instruments if they were not sold or disposed of in accordance with the
terms of the trust receipt shall constitute the crime of estafa, punishable
under the provisions of Article Three hundred and fifteen, paragraph
one (b) of Act Numbered Three thousand eight hundred and fifteen, as
amended, otherwise known as the Revised Penal Code.1wphi1 If the
violation or offense is committed by a corporation, partnership,
association or other juridical entities, the penalty provided for in this
Decree shall be imposed upon the directors, officers, employees or
other officials or persons therein responsible for the offense, without
prejudice to the civil liabilities arising from the criminal offense.
The crime defined in P.D. No. 115 is malum prohibitum but is classified
as estafa under paragraph 1(b), Article 315 of the Revised Penal Code,
or estafa with abuse of confidence. It may be committed by a
corporation or other juridical entity or by natural persons. However, the
penalty for the crime is imprisonment for the periods provided in said
Article 315, which reads:
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 does 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 reclusion
temporal, as the case may be;
2nd. The penalty of prision correccional in its minimum and
medium periods, if the amount of the fraud is over 6,000 pesos
but does not exceed 12,000 pesos;
3rd. The penalty of arresto mayor in its maximum period to
prision correccional in its minimum period, if such amount is over
200 pesos but does not exceed 6,000 pesos; and
4th. By arresto mayor in its medium and maximum periods, if such
amount does not exceed 200 pesos, provided that in the four cases
mentioned, the fraud be committed by any of the following means; xxx
Though the entrustee is a corporation, nevertheless, the law specifically
makes the officers, employees or other officers or persons responsible
for the offense, without prejudice to the civil liabilities of such
corporation and/or board of directors, officers, or other officials or
employees responsible for the offense. The rationale is that such officers
or employees are vested with the authority and responsibility to devise
means necessary to ensure compliance with the law and, if they fail to
do so, are held criminally accountable; thus, they have a responsible
share in the violations of the law.48
If the crime is committed by a corporation or other juridical entity, the
directors, officers, employees or other officers thereof responsible for
the offense shall be charged and penalized for the crime, precisely
because of the nature of the crime and the penalty therefor. A
corporation cannot be arrested and imprisoned; hence, cannot be
penalized for a crime punishable by imprisonment.49 However, a
corporation may be charged and prosecuted for a crime if the imposable
penalty is fine. Even if the statute prescribes both fine and
imprisonment as penalty, a corporation may be prosecuted and, if found
guilty, may be fined.50
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A crime is the doing of that which the penal code forbids to be done, or SO ORDERED.
omitting to do what it commands. A necessary part of the definition of
every crime is the designation of the author of the crime upon whom
the penalty is to be inflicted. When a criminal statute designates an act
of a corporation or a crime and prescribes punishment therefor, it
creates a criminal offense which, otherwise, would not exist and such
can be committed only by the corporation. But when a penal statute
does not expressly apply to corporations, it does not create an offense
for which a corporation may be punished. On the other hand, if the
State, by statute, defines a crime that may be committed by a
corporation but prescribes the penalty therefor to be suffered by the
officers, directors, or employees of such corporation or other persons
responsible for the offense, only such individuals will suffer such
penalty.51Corporate officers or employees, through whose act, default or
omission the corporation commits a crime, are themselves individually
guilty of the crime.52

The principle applies whether or not the crime requires the

consciousness of wrongdoing. It applies to those corporate agents who
themselves commit the crime and to those, who, by virtue of their
managerial positions or other similar relation to the corporation, could
be deemed responsible for its commission, if by virtue of their
relationship to the corporation, they had the power to prevent the
act.53 Moreover, all parties active in promoting a crime, whether agents
or not, are principals.54 Whether such officers or employees are
benefited by their delictual acts is not a touchstone of their criminal
liability. Benefit is not an operative fact.

In this case, petitioner signed the trust receipts in question. He cannot,

thus, hide behind the cloak of the separate corporate personality of
PBMI. In the words of Chief Justice Earl Warren, a corporate officer
cannot protect himself behind a corporation where he is the actual,
present and efficient actor.55

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of

merit. Costs against the petitioner.

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G.R. No. 170924 July 4, 2007
In the matter of the Petition for Habeas Corpus of CEZARI
GONZALES and JULIUS MESA
ROBERTO RAFAEL PULIDO, petitioner,
vs.
Gen. EFREN ABU, as Chief of Staff of the Armed Forces of the
Philippines and all persons acting in his stead and under his
authority, and GEN. ERNESTO DE LEON, in his capacity as the
Flag Officer in Command of the Philippine Navy, and all persons
acting in his stead and under his authority, respondents.
CHICO-NAZARIO, J.:
Before Us is a Petition for Review under Rule 45 of the Rules of Court
assailing the Decision1 of the Court of Appeals in CA-G.R. SP No. 90546
which dismissed the Petition for Habeas Corpus filed by petitioner
Roberto Rafael Pulido (Pulido) in behalf of Cezari Gonzales and Julius
Mesa, and imposed on petitioner the penalty of censure, and its
Resolution2 dated 6 January 2006 denying his motion for
reconsideration.
The facts are not disputed.
At around one oclock in the morning of 27 July 2003, three hundred
twenty-one (321) junior officers and enlisted personnel of the Armed
Forces of the Philippines (AFP) entered and took over the premises of
the Oakwood Premiere Luxury Apartments (Oakwood) located at the
Glorietta Complex, Ayala Avenue, Makati City. They disarmed the
security guards of said establishment and planted explosives in its
immediate surroundings.
The soldiers publicly announced that they went to Oakwood to air their
grievances against the administration of President Gloria Macapagal
Arroyo (President Arroyo). They declared their withdrawal of support
from the Commander-in-Chief of the AFP President Arroyo and
demanded her resignation and that of the members of her cabinet and
top officers of both the AFP and the Philippine National Police (PNP).
At about one oclock in the afternoon, President Arroyo issued
Proclamation No. 427 declaring the country to be under a "state of
rebellion." Consequently, she issued General Order No. 4 directing the
AFP and the PNP to carry out all reasonable measures, giving due
regard to constitutional rights, to suppress and quell the "rebellion."
After a series of negotiations between the soldiers and the government
negotiators, the former agreed to return to barracks, thus ending the
occupation of Oakwood.
Among those involved in the occupation of Oakwood were Cezari
Gonzales and Julius Mesa, both enlisted personnel of the Philippine
Navy. It is in their behalf that the Petition for Habeas Corpus was filed
before the Court of Appeals.
On 2 August 2003, then AFP Chief of Staff Narciso L. Abaya issued a
directive3 to all Major Service Commanders and to the Chief of the
Intelligence Service of the Armed Forces of the Philippines (ISAFP)
regarding the Custody of Military Personnel Involved in the 27 July 2003
Mutiny. On the strength thereof, Gonzales and Mesa were taken into
custody by their Service Commander.
Gonzales and Mesa were not charged before a court martial with
violation of the Articles of War. They were, however, among the soldiers
charged before Branch 61 of the Regional Trial Court (RTC) of Makati
City, with the crime of Coup Detat as defined under Article 134-A of the
Revised Penal Code. Said case entitled, "People v. Capt. Milo D.
Maestrecampo, et al." was docketed as Criminal Case No. 03-2784. On
18 November 2003, a Commitment Order was issued by the RTC
committing custody of the persons of Gonzales and Mesa to the
Commanding Officer of Fort San Felipe Naval Base, Cavite City.4
On 8 December 2003, Gonzales and Mesa were discharged 5 from
military service.
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On 16 December 2003, per order of the RTC, Criminal Case No. 03-
2784 was consolidated with Criminal Case No. 03-2678 entitled, "People
v. Ramon B. Cardenas" pending before Branch 148 of the RTC of Makati
City, on the ground that the cases are founded on the same facts and/or
formed part of a series of offenses of similar character. 6
In a Manifestation and Motion dated 3 March 2004, Commodore
Normando Naval, Commander of Naval Base Cavite, asked the Makati
RTC, Branch 148, to relieve him of his duty as custodian of Gonzales
and Mesa and that the latter be transferred to the Makati City Jail. 7 In
an Order dated 29 April 2004, the RTC relieved him of his duty but
ordered the transfer of Gonzales and Mesa from the Naval Base Cavite
in Sangley Point, Cavite City, to the Philippine Marine Brigade
Headquarters, Philippine Marine, Fort Bonifacio, Taguig, Metro Manila,
under the custody of the Commander of the Marine Brigade of the
Philippine Marines, Fort Bonifacio, Taguig, Metro Manila.8
In an Order dated 8 July 2004, the RTC resolved the petitions for bail
filed by the accused-soldiers. It admitted Gonzales and Mesa, and
twenty-five other co-accused to bail pegging the amount thereof
at P100,000.00 each.9
On 19 July 2004, both Gonzales and Mesa posted bail. 10 On 20 July
2004, the RTC issued orders directing the Commanding Officer of
Philippine Marine Corps, Fort Bonifacio, Makati City, to release Gonzales
and Mesa from his custody.11 Despite said orders and their service to
the marines, Gonzales and Mesa were not released.
On 21 July 2004, the People of the Philippines moved for partial
reconsideration12 of the order granting bail. Prior to the resolution of
said motion, Jovencito R. Zuo, Chief State Prosecutor, advised Brig.
Gen. Manuel F. Llena, Judge Advocate General, to defer action on the
provisional release of Gonzales and Mesa "until the Motion for
Reconsideration shall have been resolved and attained finality." 13 On 26
October 2004, the RTC denied the motion for partial reconsideration.
With the denial of the Motion for Partial Reconsideration, the People filed
with the Court of Appeals on 4 February 2005 a special civil action
for certiorari under Rule 65 of the Rules of Court with urgent prayer for
Temporary Restraining Order (TRO) and/or Writ of Preliminary
Injunction, asking for the nullification and setting aside of the orders
dated 8 July 2004 and 26 October 2004 of Judge Oscar B. Pimentel for
having been issued without jurisdiction and/or grave abuse of discretion
amounting to lack or excess of jurisdiction. The Petition for Certiorari
was raffled to the Seventh Division and was docketed as CA-G.R. SP No.
88440 entitled, "People of the Philippines v. Hon. Oscar B. Pimentel,
Presiding Judge of the Regional Trial Court of Makati City, Branch 148."
The Court of Appeals (Seventh Division) did not issue a TRO and/or
preliminary injunction.
Since Gonzales and Mesa continued to be in detention, a Petition
for Habeas Corpus14 was filed by petitioner Pulido on their behalf on 22
July 2005. The case was docketed as CA-G.R. SP No. 90546 and raffled
to the Third Division. In support thereof, it was argued that since
Gonzales and Mesa are no longer subject to Military Law as they had
been discharged from the service on 8 December 2003, and since they
are not charged before a court martial, the military authorities have no
jurisdiction to detain them, and there is no legal ground to detain them
further because a court order for their release had already been issued.
On 10 August 2005, the Court of Appeals (3rd Division) issued a Writ
of Habeas Corpus directing respondents Gen. Efren Abu, Chief of Staff
of the Armed Forces of the Philippines, and all persons acting in his
stead and under his authority, and Gen. Ernesto de Leon, Flag Officer in
Command of the Philippine Navy, and all persons acting in his stead and
under his authority, to produce the bodies of Gonzales and Mesa before
the Court and to appear and show the cause and validity of their
detention.15
On 18 August 2005, a return of the Writ of Habeas Corpus was
made.16 Respondents prayed that the Petition for Habeas Corpus be
dismissed primarily on two grounds: (1) the continued detention of
Gonzales and Mesa is justified because of the pendency of the Petition
for Certiorari questioning the order dated 8 July 2004 of the RTC
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granting bail to Gonzales and Mesa before the 7 th Division of the Court
of Appeals, docketed as CA-G.R. SP No. 88440; and (2) petitioner is
guilty of forum shopping because of his failure to state in the petition
that the order granting bail has been elevated to the Court of Appeals
and pending before its 7th Division.
On 9 September 2005, the Court of Appeals (7 th Division) rendered its
decision in CA-G.R. SP No. 88440 dismissing the petition that
questioned the propriety of the granting of bail to Gonzales, Mesa, and
twenty-five of their co-accused.17
On 12 September 2005, the Court of Appeals (3 rd Division) dismissed
the Petition for Habeas Corpus for violation of Section 5, Rule 7 of the
Rules of Court. It ratiocinated:
A reading of the parties submissions reveals a threshold issue
the charge of forum shopping and the related falsity in the
certification supporting the petition. We must initially resolve
these issues because a finding that the petitioner violated
Section 5, Rule 7 of the Rules of Court can lead to the outright
dismissal of the present petition. x x x
xxxx
The records show that the present petition contained the
following certificate of non-forum shopping:
"I, ROBERTO RAFAEL PULIDO, with office address at Unit
1601, 16th Floor 139 Corporate Center Valero Street,
Makati City, after having been duly sworn in accordance
with law, do hereby state that:
1. I am the petitioner in the above-captioned case;
2. I have read the Petition and caused it to be prepared.
All the contents thereof are true to my own personal
knowledge and the record;
3. I have not heretofore commenced any action or
proceeding involving the same issues, in the Supreme
Court, the Court of Appeals, or any other tribunal or
agency and to the best of my knowledge, no action or
proceeding is pending in the Supreme Court, the Court of
Appeals, or any other tribunal or agency; except for the
related cases of "Eugene Gonzales et al. vs. Gen. Narciso
Abaya, et al., G.R. No. 164007 and "Humabono Adaza et
al., vs. Gen. Pedro Cabuay et al., G.R. No. 160792, both
awaiting the resolution of the Supreme Court.
5. (sic, should be 4) If I should learn of any similar action
or proceeding filed or is pending in the Supreme Court,
the Court of Appeals, or any other tribunal or agency, I
undertake to report such fact within five (5) days
therefrom to this Court.
The present petition and its accompanying certification likewise
show that the petitioner never mentioned the pendency before
the Seventh Division of this Court of the certiorari case, SP
88440, for the annulment of the lower courts order granting the
soldiers-accuseds petition for bail, when this same lower court
order is cited as basis for the immediate release of Gonzales and
Mesa in the present petition. All that the certification mentioned
were the related cases pending before the Honorable Supreme
Court. Neither did the petitioner comply with his undertaking
under his certification to inform this Court within five (5) days of
the pendency of any similar action or proceeding filed or is
pending in the Supreme Court, the Court of Appeals, or any
other tribunal or agency, as in fact the certiorari case was
already pending with this Court when the present petition was
filed. The certiorari case was only brought to our attention after
the respondents filed their Return of the Writ.
To be sure, the petitioner, who is also the counsel for the
accused Gonzales and Mesa in the criminal case before Branch
148 RTC Makati City and who represents Gonzales and Mesa as
private respondents in CA-G.R. SP No. 88440, cannot feign
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ignorance of the pendency of the certiorari case. Why he
deliberately kept the pendency of the certiorari case hidden from
us, has not been sufficiently explained. We have no doubt,
however, that his deliberate act of withholding information on a
material fact directly required to be disclosed by the Rules of
Court cannot but have legal consequences.
The primary basis of the present petition is the bail granted to
and posted by Gonzales and Mesa. This is very clear from the
petitioners argument that "The continued detention of the
enlisted personnel constitutes violation of the lawful orders of the
civilian court." He cited in support of this argument the grant and
the posting of the bail, and the issuance of the release orders by
the lower court. He did not disclose, however, what subsequently
happened to the order granting bail. He deliberately omitted in
his narration the fact that the People moved to reconsider this
order. Thus, he gave the impression that the order granting bail
immediately became enforceable and that Gonzales and Mesas
continued detention is illegal because their constitutional rights
to bail, which have received judicial imprimatur, were
continuously being violated by the respondents.
The petitioner next omitted the fact that after the denial of its
motion for reconsideration of the order granting bail, the People
filed the certiorari case before this Court, seeking to annul the
lower courts order. While we are aware of the rule that the
mere pendency of a petition for certiorari will not prevent the
implementation of the assailed order unless the court where the
petition was filed issues either a temporary restraining order or a
writ or preliminary injunction the filing of a petition for habeas
corpus while the order granting bail is being questioned on a
petition for certiorari raises issues beyond the immediate
execution of the lower courts bail and release orders. They raise
questions on the propriety of filing the habeas corpus petition to
seek the release of persons under detention, at the same time
that a petition regarding their continued detention and release
are pending. Apparently, the petitioner wanted to avoid these
questions, prompting him to actively conceal the subsequent
motion for reconsideration of the bail order and the petition for
certiorari directly questioning this same order. In short, the
petitioner conveniently omitted in his narration of facts
the material factual antecedents detrimental to his cause;
he chose to narrate only the factual antecedents favorable
to his cause.
That the present petition has direct and intimate links with the
certiorari case is beyond doubt as they involve two sides of the
same coin. The certiorari case filed by the People seeks to
prevent the release of Gonzales and Mesa by annulling the lower
courts grant of bail. The present petition, on the other hand,
was filed in behalf of Gonzales and Mesa to secure their
immediate release because the order granting bail is already
executory. In effect, the petitioner seeks to implement through a
petition for habeas corpus the provisional release from detention
that the lower court has ordered. The question this immediately
raises is: can this be done through a petition for habeas corpus
when the validity of the grant of bail and the release under bail
are live questions before another Division of this Court?
We believe and so hold that his cannot and should not be done
as this is precisely the reason why the rule against forum
shopping has been put in place. The remedies sought being two
sides of the same coin (i.e., the release of Gonzales and Mesa),
they cannot be secured through separately-filed cases where
issues of jurisdiction may arise and whose rulings may conflict
with one another. To be sure, we clearly heard the petitioner say
that there can be no conflict because the effectiveness of our
ruling in this petition will depend on the nature and tenor of the
ruling in the certiorari case; there is no basis for a release on
habeas corpus if this same Court will rule in the certiorari case
that the grant of bail is improper. For this very same reason, we
should not entertain the present petition as the matter before us
is already before another co-equal body whose ruling will be
finally determinative of the issue of Gonzales and Mesas
release. The Decision of the Seventh Division of this Court,
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heretofore footnoted, ordering the release on bail of Gonzales
and Mesa drives home this point.
To be strictly accurate, the issues of detention and immediate
release that are now before the two Divisions of this Court are
likewise properly within the jurisdiction of the lower court who
has original jurisdiction over the criminal case and who has
issued the order granting bail in the exercise of this jurisdiction.
If indeed there is a question relating to the immediate release of
Gonzales and Mesa pursuant to the lower courts order pending
the determination of the certiorari issues, such question should
be brought before the lower court as the tribunal that has
ordered the release, or before the Seventh Division of this Court
in the exercise of its supervisory powers over the lower court.
The Decision recently promulgated by the Seventh Division of
this Court ordering the release on bail of the soldiers-accused
effectively demonstrates this point.
The inter-relationships among the criminal case below, the
certiorari case and the present petition, as well as among the
courts where these cases are pending, show beyond doubt that
the petitioner committed forum shopping in the strict sense of
that term i.e., the attempt by a party, after an adverse opinion
in one forum, to seek a favorable opinion in another forum other
that through an appeal or certiorari. The "adverse" aspect for the
petitioner, while not an opinion, is no less adverse as he has
failed to secure the release of Gonzales and Mesa before the
lower court and before this Court in the certiorari case (as of the
time of the filing of the present petition); thus, he came to us in
the present petition. That the Seventh Division of this Court has
ordered the release on bail of the soldiers-accused, thus
rendering the present petition moot and academic after the
finality of the 7th Division Decision, plainly demonstrates this
legal reality.18
The Court further imposed on petitioner the penalty of censure for the
aforesaid violation. The dispositive portion of the decision reads:
WHEREFORE, premises considered, we hereby DISMISS the
petition for violation of and pursuant to Section 5 Rule 7 of the
Rules of Court. The petitioner, Atty. Roberto Rafael Pulido, is
hereby CENSURED for these violations. Let a copy of this
Decision be furnished the Honorable Supreme Court, to be
attached to the petitioners record as a member of the Bar, as
a RECORD OF CENSURE that may be referred to and
considered in any future similar act.19
On 5 September 2005, petitioner filed a Motion for
Reconsideration20 which the Court of Appeals (Special Former Third
Division) denied in its resolution21 dated 6 January 2006.
Petitioner is now before us raising the following issues:
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED
IN DISMISSING THE PETITION FOR HABEAS CORPUS ON THE
GROUND OF FORUM SHOPPING.
A. WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN NOT CONSIDERING THE NATURE OF
THE ACTION AND LIMITED ITSELF TO THE ISSUE OF
FORUM SHOPPING.
B. WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN IMPOSING UPON PETITIONER THE
PENALTY OF CENSURE.
C. WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN NOT PASSING UPON THE EXISTENCE
OR ABSENCE OF VALID GROUNDS TO DETAIN JULIUS
MESA AND CEZARI GONZALES.
Petitioner prays that the assailed decision and resolution of the Court of
Appeals be reversed and set aside, and an order be issued ordering
respondents to immediately release Gonzales and Mesa. He further
prays that the censure against him be also reversed and set aside.
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Before respondents could comment on the petition, petitioner filed, with
leave of court, a Motion to Withdraw the Prayer for the Immediate
Release of Julius Mesa and Cezari Gonzales.22 Petitioner informed the
Court that the Commanding General of the Philippine Marines had
ordered the release of Gonzales and Mesa and surrendered their
persons to the RTC of Makati City, Branch 148. Thus, Mesa and
Gonzales are now enjoying temporary liberty by virtue of the release
orders dated 20 July 2004 issued by the RTC. Petitioner asks that the
prayer for the immediate release of Gonzales and Mesa be dismissed
but asks that the other prayers in the petition be granted.
In its comment, the Solicitor General stressed that the habeas
corpus petition has been rendered moot and academic by reason of the
release of Mesa and Gonzales from detention and, in the absence of an
actual case or controversy, it is impractical to consider and resolve
issues involving the validity or legality of their detention, including the
alleged refusal of the Court of Appeals to resolve said issues.
When the release of the persons in whose behalf the application for a
Writ of Habeas Corpus was filed is effected, the Petition for the issuance
of the writ becomes moot and academic.23 With the release of both
Mesa and Gonzales, the Petition for Habeas Corpus has, indeed, been
rendered moot. Courts of justice constituted to pass upon substantial
rights will not consider questions where no actual interests are involved.
Thus, the well-settled rule that courts will not determine a moot
question. Where the issues have become moot and academic, there
ceases to be any justiciable controversy, thus rendering the resolution
of the same of no practical value.24 This Court will therefore abstain
from expressing its opinion in a case where no legal relief is needed or
called for.25
The only remaining issues to be resolved are: (1) Is petitioner guilty of
forum shopping? (2) Should petitioner be penalized when he failed to
inform the 3rd Division of the Court of Appeals of the pendency of the
Petition for Certiorari filed by respondents before the 7th Division of the
same court which asked for the annulment of the RTCs order granting
Gonzales and Mesas petition for bail?
To support his contention that there was no forum shopping, petitioner
asserts that the issues in the petitions for certiorari and habeas
corpus are not similar/identical. As to his non-disclosure of respondents
filing of the motion for reconsideration and the Petition for Certiorari,
petitioner claims that the same has no legal relevance to the Petition
for Habeas Corpus because at the time he filed said petition, the order
granting bail subsisted and has not been reversed or modified; and no
TRO or injunction has been issued that would affect the efficacy or
validity of the order granting the bail and the order directing the release
of Mesa and Gonzales.
For filing a Petition for Habeas Corpus despite the pendency of the
Petition for Certiorari that questioned the validity of the order granting
bail, which order is precisely the very basis of the Petition for Habeas
Corpus, petitioner is guilty of forum shopping.
It has been held that forum shopping is the act of a party against whom
an adverse judgment has been rendered in one forum, of seeking
another (and possibly favorable) opinion in another forum (other than
by appeal or the special civil action of certiorari), or the institution of
two or more actions or proceedings grounded on the same cause on the
supposition that one or the other court would make a favorable
disposition. Thus, it has been held that there is forum shopping (1)
when, as a result of an adverse decision in one forum, a party seeks a
favorable decision (other than by appeal or certiorari) in another; OR
(2) if, after he has filed a petition before the Supreme Court, a party
files a motion before the Court of Appeals, since in such a case, he
deliberately splits appeals in the hope that even in one case in which a
particular allowable remedy sought for is dismissed, another case
(offering a similar remedy) would still be open; OR (3) where a party
attempts to obtain a preliminary injunction in another court after failing
to obtain the same from the original court.26
The Court has laid down the yardstick to determine whether a party
violated the rule against forum shopping, as where the elements of litis
pendentia are present or where a final judgment in one case will
amount to res judicata in the other. Stated differently, there must be
between the two cases: (a) identity of parties; (b) identity of rights
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asserted and reliefs prayed for, the relief being founded on the same
facts; and (c) the identity of the two preceding particulars is such that
any judgment rendered in the other action will, regardless of which
party is successful, amount to res judicata in the action under
consideration.27

As lucidly explained by the Court of Appeals, the ultimate relief sought

by petitioner in both the certiorari and habeas corpus cases is the
release of Gonzales and Mesa. Petitioner should not have filed the
Petition for Habeas Corpusbecause the relief he is seeking therein is the
same relief he is asking for in the certiorari case. Moreover, the main
issue in both cases boils down to whether Gonzales and Mesa should be
released on bail. Because of the presence of the elements of litis
pendentia -- parties, reliefs and issue are substantially the same/similar
in the two cases; and any decision in the certiorari case will be binding
on the habeas corpus case petitioner is thus guilty of forum shopping.

For his failure to inform the Court of Appeals of the pendency of the
certiorari case, petitioner clearly violated his obligation to disclose within
five days the pendency of the same or a similar action or claim as
mandated in Section 5(c), Rule 728 of the Rules of Court.

WHEREFORE, premises considered, the Decision of the Court of

Appeals in CA-G.R. SP No. 90546 dated 12 September 2005
is AFFIRMED. Costs against the petitioner.

SO ORDERED.

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G.R. No. 171219 September 3, 2012
ATTY. FE Q. PALMIANO-SALVADOR, Petitioner,
vs.
CONSTANTINO ANGELES, substituted by LUZ
ANGELES*, Respondent.
DECISION
PERALTA, J.:
This resolves the Petition for Review on Certiorari under Rule 45 of the
Rules of Court, praying that the Decision1 of the Court of Appeals (CA)
promulgated on September 16, 2005 dismissing the petition before it,
and its Resolution2dated January 13, 2006, denying petitioner's Motion
for Reconsideration, be reversed and set aside.
The records reveal the CA's narration of facts to be accurate, to wit:
xxxx
Respondent-appellee ANGELES is one of the registered owners of a
parcel of land located at 1287 Castanos Street, Sampaloc, Manila,
evidenced by Transfer Certificate of Title No. 150872. The subject parcel
of land was occupied by one Jelly Galiga (GALIGA) from 1979 up to
1993, as a lessee with a lease contract. Subsequently, Fe Salvador
(SALVADOR) alleged that she bought on September 7, 1993 the subject
parcel of land from GALIGA who represented that he was the owner,
being one in possession. Petitioner-appellant SALVADOR remained in
possession of said subject property from November 1993 up to the
present.
On November 18, 1993, the registered owner, the respondentappellee
ANGELES, sent a letter to petitioner-appellant SALVADOR demanding
that the latter vacate the subject property, which was not heeded by
petitioner-appellant SALVADOR. Respondent-appellee ANGELES, thru
one Rosauro Diaz, Jr. (DIAZ), filed a complaint for ejectment on October
12, 1994 with the Metropolitan Trial Court [MeTC] of Manila, Branch 16,
docketed as Civil Case No. 146190-CV.
The Assailed Decision of the Trial Courts
G.
The [MeTC] rendered its decision on November 29, 1999 in favor of
herein respondent-appellee ANGELES, the dispositive portion of which
reads, to wit:
WHEREFORE, judgment is hereby rendered for the plaintiff and against
the defendant ordering the latter and all persons claiming under her to:
1) vacate the parcel of land located at 1287 Castanos Street,
Sampaloc, Manila, and surrender the same to the plaintiff;
2) pay the plaintiff the sum of Php1,000.00 monthly as
reasonable compensation for her use and occupancy of the
above parcel of land beginning November 1993 up to the time
she has actually vacated the premises;
3) pay the plaintiff the sum of Php5,000.00 as attorney's fees
and the cost of suit.
SO ORDERED.
In the appeal filed by petitioner-appellant SALVADOR, she alleged,
among others, that DIAZ, who filed the complaint for ejectment, had no
authority whatsoever from respondent-appellee ANGELES at the time of
filing of the suit. Petitioner-appellant SALVADOR's appeal was denied by
the [Regional Trial Court] RTC in a Decision dated March 12, 2003. The
Motion for Reconsideration filed by SALVADOR was denied in an Order
dated March 16, 2004.3
Petitioner elevated the case to the CA via a petition for review, but in a
Decision dated September 16, 2005, said petition was dismissed for lack
of merit. The CA affirmed the factual findings of the lower courts that
Galiga, the person who supposedly sold the subject premises to
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petitioner, was a mere lessee of respondent, the registered owner of the
land in question. Such being the case, the lower court ruled that Galiga
could not have validly transferred ownership of subject property to
herein petitioner. It was ruled by the CA that there were no significant
facts or circumstances that the trial court overlooked or misinterpreted,
thus, it found no reason to overturn the factual findings of the MeTC and
the RTC. A motion for reconsideration of said Decision was denied in a
Resolution dated January 13, 2006.
Hence, the present petition, where one of the important issues for
resolution is the effect of Rosauro Diaz's (respondent's representative)
failure to present proof of his authority to represent respondent
(plaintiff before the MeTC) in filing the complaint. This basic issue has
been ignored by the MeTC and the RTC, while the CA absolutely failed to
address it, despite petitioner's insistence on it from the very
beginning, i.e., in her Answer filed with the MeTC. This is quite
unfortunate, because this threshold issue should have been resolved at
the outset as it is determinative of the court's jurisdiction over the
complaint and the plaintiff.
Note that the complaint before the MeTC was filed in the name of
respondent, but it was one Rosauro Diaz who executed the verification
and certification dated October 12, 1994, alleging therein that he was
respondent's attorney-in-fact. There was, however, no copy of any
document attached to the complaint to prove Diaz's allegation regarding
the authority supposedly granted to him. This prompted petitioner to
raise in her Answer and in her Position Paper, the issue of Diaz's
authority to file the case. On December 11, 1995, more than a year
after the complaint was filed, respondent attached to his Reply and/or
Comment to Respondent's (herein petitioner) Position Paper,4 a
document entitled Special Power of Attorney (SPA)5 supposedly
executed by respondent in favor of Rosauro Diaz. However, said SPA
was executed only on November 16, 1994, or more than a month
after the complaint was filed, appearing to have been notarized by
one Robert F. McGuire of Santa Clara County. Observe, further, that
there was no certification from the Philippine Consulate General in San
Francisco, California, U.S.A, that said person is indeed a notary public in
Santa Clara County, California. Verily, the court cannot give full faith
and credit to the official acts of said Robert McGuire, and hence, no
evidentiary weight or value can be attached to the document designated
as an SPA dated November 16, 1994. Thus, there is nothing on record
to show that Diaz had been authorized by respondent to initiate the
action against petitioner.1wphi1
What then, is the effect of a complaint filed by one who has not proven
his authority to represent a plaintiff in filing an action? In Tamondong v.
Court of Appeals,6 the Court categorically stated that "[i]f a complaint is
filed for and in behalf of the plaintiff [by one] who is not authorized to
do so, the complaint is not deemed filed. An unauthorized complaint
does not produce any legal effect. Hence, the court should dismiss the
complaint on the ground that it has no jurisdiction over the complaint
and the plaintiff."7 This ruling was reiterated in Cosco Philippines
Shipping, Inc. v. Kemper Insurance Company,8 where the Court went on
to say that "[i]n order for the court to have authority to dispose of the
case on the merits, it must acquire jurisdiction over the subject matter
and the parties. Courts acquire jurisdiction over the plaintiffs upon the
filing of the complaint, and to be bound by a decision, a party should
first be subjected to the court's jurisdiction. Clearly, since no valid
complaint was ever filed with the [MeTC], the same did not acquire
jurisdiction over the person of respondent [plaintiff before the lower
court]."9
Pursuant to the foregoing rulings, therefore, the MeTC never acquired
jurisdiction over this case and all proceedings before it were null and
void. The courts could not have delved into the very merits of the case,
because legally, there was no complaint to speak of. The court's
jurisdiction cannot be deemed to have been invoked at all.
IN VIEW OF THE FOREGOING, the Petition is GRANTED. The
Decision of the Metropolitan Trial Court in Civil Case No. 146190, dated
November 29, 1999; the Decision of the Regional Trial Court in Civil
Case No. 00-96344, dated March 12, 2003; and the Decision of the
Court of Appeals in CA-G.R. SP No. 83467, are SET ASIDE AND
NULLIFIED. The complaint filed by respondent before the Metropolitan
Trial Court is hereby DISMISSED.
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SO ORDERED.

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G.R. No. 89114 December 2, 1991
FRANCISCO S. TANTUICO, JR., petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, PRESIDENTIAL COMMISSION ON GOOD
GOVERNMENT, MATEO A. T. CAPARAS, AND THE SANDIGANBAYAN,
respondents.
PADILLA, J.:
In this petition for certiorari, mandamus and prohibition with a prayer
for the issuance of a writ of preliminary injunction and/or restraining
order, the petitioner seeks to annul and set aside the resolution of the
Sandiganbayan, dated 21 April 1989, denying his motion for a bill of
particulars as well as its resolution, dated 29 May 1989, which denied
his motion for reconsideration; to compel the respondent PCGG to
prepare and file a bill of particulars, or that said respondent be ordered
to exclude petitioner as defendant in Civil Case No. 0035 should they
fail to submit the said bill of particulars; and to enjoin the respondent
Sandiganbayan from further proceeding against petitioner until the bill
of particulars is submitted, claiming that the respondent Sandiganbayan
acted with grave abuse of discretion amounting to lack of jurisdiction in
promulgating the aforesaid resolutions and that there is no appeal, nor
any plain, speedy and adequate remedy for him in the ordinary course
of law other than the present petition.
As prayed for, this Court issued on 1 August 1989 a temporary
restraining order "effective immediately and continuing until further
orders from this Court, ordering the respondent Sandiganbayan to
CEASE and DESIST from further proceeding in Civil Case No. 0035
(PCGG 35), entitled "Republic of the Philippines vs. Benjamin (Kokoy)
Romualdez, et al." pending before it. 1
The antecedents are as follows:
On 31 July 1987, the Republic of the Philippines, represented by the
PCGG, and assisted by the Office of the Solicitor General, filed with the
Sandiganbayan Civil Case No. 0035, entitled "Republic of the Philippines
vs. Benjamin (Kokoy) Romualdez, et al." for reconveyance, reversion,
accounting, restitution and damages. 2
The principal defendants in the said Civil Case No. 0035 are Benjamin
(Kokoy) Romualdez, Ferdinand E. Marcos and Imelda R. Marcos.
Petitioner Francisco S. Tantuico, Jr. was included as defendant in Civil
Case No. 0035 on the theory that: (1) he acted in unlawful concert with
the principal defendants in the misappropriation and theft of public
funds, plunder of the nation's wealth, extortion, blackmail, bribery,
embezzlement and other acts of corruption, betrayal of public trust and
brazen abuse of power; 3 (2) he acted as dummy, nominee or agent, by
allowing himself to be incorporator, director, board member and/or
stockholder of corporations beneficially held and/or controlled by the
principal defendants; 4 (3) he acted singly or collectively, and/or in
unlawful concert with one another, in flagrant breach of public trust and
of their fiduciary obligations as public officers, with gross and
scandalous abuse of right and power and in brazen violation of the
Constitution and laws of the Philippines, embarked upon a systematic
plan to accumulate ill-gotten wealth ; 5 (4) he (petitioner) taking undue
advantage of his position as Chairman of the Commission on Audit and
with grave failure to perform his constitutional duties as such Chairman,
acting in concert with defendants Ferdinand E. Marcos and Imelda R.
Marcos, facilitated and made possible the withdrawals, disbursements
and questionable use of government funds; 6 and (5) he acted as
dummy, nominee and/or agent by allowing himself to be used as
instrument in accumulating ill-gotten wealth through government
concessions, orders and/or policies prejudicial to plaintiff, or to be
incorporator, director, or member of corporations beneficially held
and/or controlled by defendants Ferdinand E. Marcos, Imelda R. Marcos,
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Benjamin (Kokoy) Romualdez and Juliette Gomez Romualdez in order to
conceal and prevent recovery of assets illegally obtained. 7
On 11 April 1988, after his motion for production and inspection of
documents 8 was denied by respondent court in its resolution 9 dated 9
March 1988, petitioner filed a Motion for a Bill of Particulars, 10 alleging
inter alia that he is sued for acts allegedly committed by him as (a) a
public officer-Chairman of the Commission on Audit, (b) as a private
individual, and (c) in both capacities, in a complaint couched in too
general terms and shorn of particulars that would inform him of the
factual and legal basis thereof, and that to enable him to understand
and know with certainty the particular acts allegedly committed by him
and which he is now charged with culpability, it is necessary that
plaintiff furnish him the particulars sought therein relative to the
averments in paragraphs 2, 9(a), 15, 7 and 17 of the Second Amended
Complaint so that he can intelligently prepare his responsive pleading
and prepare for trial. The particulars sought for in the said motion are
as follows:
a. Relative to the averments in paragraphs 2, 9(a) and l5 of the
Second Amended Complaint:
i) What are the dates of the resolutions (if on appeal) or the acts
(if otherwise) issued or performed by herein defendant which allowed
the facilitation of, and made possible the, withdrawals, disbursements
and questionable use of government funds;
ii) What ministries or Departments, offices or agencies of the
government were involved in these questionable use of government
funds;
iii) What are the names of the auditors who had the original audit
jurisdiction over the said withdrawals, disbursements and questionable
use of government funds;
iv) How much government funds were involved in these
questionable-disbursements, individually and in totally?
v) Were the disbursements brought to herein defendant for action
on pre-audit, post-audit or otherwise or where they initiated and/or
allowed release by herein defendant alone, without them undergoing
usual governmental audit procedures, or in violation thereof.?
vi) What were herein defendant's other acts or omission or
participation in the matter of allowing such disbursements and
questionable use of government funds, if any?
b. Relative to paragraphs 7 and 17 of the Second Amended
Complaint:
i) In what particular contract, dealing, transaction and/or
relationship of any nature of Ferdinand E. Marcos, Imelda R. Marcos,
Juliette Gomez Romualdez or Benjamin T. Romualdez did herein
defendant act as dummy, nominee or agent? Please specify the
dealings, the dates, the corporations or entities involved, the
government offices involved and the private and public documents, if
any, showing herein defendant's complicity, since he is not aware of any
such instance. More basically, please specify whether the defendant is a
dummy or nominee or agent and of which corporation or transaction?
ii) What particular government concession, order and/or policy
obtained by Ferdinand E. Marcos, or Imelda R. Marcos, or Juliette
Gomez Romualdez and/or Benjamin T. Romualdez allowed them either
singly or jointly to accumulate ill-gotten wealth by using herein
defendant as instrument for their accomplishment. Likewise please
identify the nature of the transactions, the dates and the document
showing complicity on the part of herein defendant; he is not aware of
any such instance.
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iii) Please specify the name or denominate the particular
government concession, order and/or policy prejudicial to the interest of
the government which was obtained by either of the above-named four
defendants through the participation of herein defendant as a dummy,
nominee or agent of herein defendant. Please likewise identify the
government office involved, the dates and other particulars, likewise
defendant is not aware of any such instance.
iv) Please name and specify the corporation whether stock or non-
stock, whether government or private, beneficially held and/or
controlled by either of the four above defendants, where herein
defendant is an incorporator, director or member and where his
inclusion as such incorporator, director or member of the corporation
was made in order to conceal and prevent recovery of assets illegally
obtained by the aforementioned four defendants, how many shares are
involved and what are their values, how and when have they been
acquired.
The Solicitor General, for and in behalf of respondents (except the
respondent Sandiganbayan), opposed the motion. 11 After the
petitioner had filed his reply 12 thereto, the respondent Sandiganbayan
promulgated on 21 April 1990 a resolution 13 denying the petitioner's
motion for a bill of particulars on the ground that the particulars sought
by petitioner are evidentiary in nature, the pertinent part of which
resolution reads, as follows:
We are of the considered opinion that the allegations in the Expanded
Complaint are quite clear and sufficient enough for defendant-movant to
know the nature and scope of the causes of action upon which plaintiff
seeks relief. They provide the factual scenario which, coupled with other
allegations set forth in the "Common Averments" and further specified
in the "Specific Averments" of herein defendant-movant and his co-
defendants' illegal acts which are within defendant-movant's peculiar
and intimate knowledge as a government official and corporate
executive, will enable him to make the proper admission, denials or
qualifications, set out affirmative and/or special defenses and thereafter
prepare for trial. Evidentiary facts or matters are not essential in the
pleading of the cause of action, nor to details or probative value or
particulars of evidence by which these material evidence are to be
established (Remitere vs. Yulu, 6 SCRA 251). The matters which he
seeks are evidentiary in nature and, being within his intimate or
personal knowledge, may be denied or admitted by him or if deemed
necessary, be the subject of other forms of discovery. 14
Petitioner moved for reconsideration 15 but this was denied by
respondent Sandiganbayan in its resolution 16 dated 29 May 1990.
Hence, petitioner filed the present petition.
The principal issue to be resolved in the case at bar is whether or not
the respondent Sandiganbayan acted with grave abuse of discretion in
issuing the disputed resolutions.
Petitioner argues that the allegations of the Second Amended Complaint
in Civil Case No. 0035 (PCGG 35) pertaining to him state only
conclusions of fact and law, inferences of facts from facts not pleaded
and mere presumptions, not ultimate facts as required by the Rules of
Court.
On the other hand, the respondent Sandiganbayan, by and through the
Solicitor General, contends that the essential elements of an action for
recovery of ill-gotten wealth are: (1) an accumulation of assets,
properties and other possessions; (2) of former President Ferdinand E.
Marcos, Mrs. Imelda Romualdez Marcos, their close relatives,
subordinates, business associates, dummies, agents, or nominees; and
(3) whose value is out of proportion to their known lawful income, and
that the ultimate facts establishing these three (3) essential elements of
an action for recovery of ill-gotten wealth are sufficiently alleged in the
complaint. Hence, petitioner is not entitled to a bill of particulars.
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A complaint is defined as a concise statement of the ultimate facts
constituting the plaintiff's cause or causes of action. 17 Like all other
pleadings allowed by the Rules of Court, 18 the complaint shall contain
in a methodical and logical form a plain, concise and direct statement of
the ultimate facts on which the plaintiff relies for his claim, omitting the
statement of mere evidentiary
facts. 19 Its office, purpose or function is to inform the defendant
clearly and definitely of the claims made against him so that he may be
prepared to meet the issues at the trial. The complaint should inform
the defendant of all the material facts on which the plaintiff relies to
support his demand; it should state the theory of a cause of action
which forms the bases of the plaintiff's claim of liability. 20
The rules on pleading speak of two (2) kinds of facts: the first, the
"ultimate facts", and the second, the "evidentiary facts." In Remitere vs.
Vda. de Yulo, 21 the term "ultimate facts" was defined and explained as
follows:
The term "ultimate facts" as used in Sec. 3, Rule 3 of the Rules of
Court, means the essential facts constituting the plaintiffs cause of
action. A fact is essential if it cannot be stricken out without leaving the
statement of the cause of action insufficient. . . . (Moran, Rules of
Court, Vol. 1, 1963 ed., p. 213).
Ultimate facts are important and substantial facts which either directly
form the basis of the primary right and duty, or which directly make up
the wrongful acts or omissions of the defendant. The term does not
refer to the details of probative matter or particulars of evidence by
which these material elements are to be established. It refers to
principal, determinate, constitutive facts, upon the existence of which,
the entire cause of action rests.
while the term "evidentiary fact" has been defined in the following
tenor:
Those facts which are necessary for determination of the ultimate facts;
they are the premises upon which conclusions of ultimate facts are
based. Womack v. Industrial Comm., 168 Colo. 364,451 P. 2d 761, 764.
Facts which furnish evidence of existence of some other fact. 22
Where the complaint states ultimate facts that constitute the three (3)
essential elements of a cause of action, namely: (1) the legal right of
the plaintiff, (2) the correlative obligation of the defendant, and (3) the
act or omission of the defendant in violation of said legal right, the
complaint states a cause of action, otherwise, the complaint must
succumb to a motion to dismiss on that ground of failure to state a
cause of action. 23 However, where the allegations of the complaint are
vague, indefinite, or in the form of conclusions, the proper recourse
would be, not a motion to dismiss, but a motion for a bill of particulars.
24 Thus, Section 1, Rule 12 of the Rules of Court provides:
Before responding to a pleading or, if no responsive pleading is
permitted by these rules, within ten (10) days after service of the
pleading upon him, a party may move for a more definite statement or
for a bill of particulars of any matter which is not averred with sufficient
definiteness or particularity to enable him properly to prepare his
responsive pleading or to prepare for trial. Such motion shall point out
the defects complained of and the details desired.
In this connection, the following allegations have been held as mere
conclusions of law, inferences from facts not alleged or opinion of the
pleader: (a) the allegations that defendants appellees were "actuated by
ulterior motives, contrary to law and morals, with abuse of their
advantageous position as employers, in gross and evident bad faith and
without giving plaintiff . . . his due, wilfully, maliciously, unlawfully, and
in summary and arbitrary manner", are conclusions of law, inferences
from facts not alleged and expressions of opinion unsupported by
factual premises; 25 (b) an allegation of duty in terms unaccompanied
by a statement of facts showing the existence of the duty, is a mere
conclusion of law, unless there is a relation set forth from which the law
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raises the duty; 26 (c) an averment . . . that an act was "unlawful" or
"wrongful" is a mere legal conclusion or opinion of the pleader; 27 (d)
the allegation that there was a violation of trust was plainly a conclusion
of law, for "a mere allegation that it was the duty of a party to do this or
that, or that he was guilty of a breach of duty, is a statement of a
conclusion, not of a fact;" 28 (e) an allegation that a contract is valid or
void, is a mere conclusion of law; 29 (f) the averment in the complaint
that "defendant usurped the office of Senator of the Philippines" is a
conclusion of law not a statement of fact inasmuch as the
particular facts on which the alleged usurpation is predicated are not set
forth therein; 30 and (g) the averment that "with intent of
circumventing the constitutional prohibition that 'no officer or employee
in the civil service shall be removed or suspended except for cause as
provided by law', respondents maliciously and illegally for the purpose
of political persecution and political vengeance, reverted the fund of the
salary item . . . and furthermore eliminated or abolished the said
position effective 1 July 1960" is a mere conclusion of law unsupported
by factual premises. 31
Bearing in mind the foregoing rules on pleading and case law, let us
now examine the allegations of the Second Amended Complaint against
the petitioner to determine whether or no they were averred with
sufficient definiteness or particularity to enable him properly to prepare
his responsive pleading or to prepare for trial. If the allegations of the
said complaint are vague, indefinite or in the form of conclusions, then
petitioner is entitled to a bill of particulars.
The allegations in the complaint pertaining to the alleged culpable and
unlawful acts of herein petitioner are quoted hereunder as follows:
GENERAL AVERMENTS OF DEFENDANTS' ILLEGAL ACTS
9. (a) From the early years of his presidency, Defendant Ferdinand
E. Marcos took undue advantage of his powers as President. All
throughout the period from September 21, 1972 to February 25, 1986,
he gravely abused his powers under martial law and ruled as Dictator
under the 1973 Marcos-promulgated Constitution. Defendant Ferdinand
E. Marcos, together with other Defendants, acting singly or collectively,
and/or in unlawful concert with one another, in flagrant breach of public
trust and of their fiduciary obligations as public officers, with gross and
scandalous abuse of right and power and in brazen violation of the
Constitution and laws of the Philippines, embarked upon a systematic
plan to accumulate ill-gotten wealth;
(b) Upon his unfettered discretion, and sole authority, for the
purpose of implementing the plan referred to above, Defendant
Ferdinand E. Marcos ordered and caused, among others:
(b-i) the massive and unlawful withdrawal of funds, securities,
reserves and other assets and property from the National Treasury, the
Central Bank, the other financial institutions and depositories of
Plaintiff;
(b-ii) the transfer of such funds, securities, reserves and other assets
and property to payees or transferees of his choice and whether and in
what manner such transactions should be recorded in the books and
records of these institutions and other depositories of Plaintiff;
10. Among others, in furtherance of the plan and acting in the
manner referred to above, in unlawful concerted with one another and
with gross abuse of power and authority, Defendants Ferdinand E.
Marcos and Imelda R. Marcos;
xxx xxx xxx
b. Converted government-owned and controlled corporations into
private enterprises and appropriated them and/or their assets for their
own benefit and enrichment;
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c. Awarded contracts with the Government to their relatives,
business associates, dummies, nominees, agents or persons who were
beholden to said Defendants, under terms and conditions grossly and
manifestly disadvantageous to the Government;
d. Misappropriated, embezzled and/or converted to their own use
funds of Government financial institutions, particularly those allocated
to the Office of the President and other ministries and agencies of the
Government including, those conveniently denominated as intelligence
or counter-insurgency funds, as well as funds provided to Plaintiff by
foreign countries, multinationals, public and private financial
institutions;
e. Raided Government financial and banking institutions of billions
of pesos in loans, guarantees and other types of financial
accommodations to finance dubious and/or overpriced projects of
favored corporations or individuals and misused and/or converted to
their own use and benefit deposits found therein to the financial ruin of
Plaintiff and the Filipino people;
xxx xxx xxx
h. Sold, conveyed and/or transferred Government property, real
and/or personal, to corporations beneficially held and/ or controlled by
them or through third persons, under such terms and conditions grossly
and manifestly disadvantageous to the Government;
i. Engaged in other illegal and improper acts and practices
designed to defraud Plaintiff and the Filipino people, or otherwise
misappropriated and converted to their own use, benefit and enrichment
the lawful patrimony and revenues of Plaintiff and the Filipino people.
11. Among the assets acquired by Defendants in the manner above-
described and discovered by the Commission in the exercise of its
official responsibilities are funds and other property listed in Annex "A"
hereof and made an integral part of this Complaint.
12. Defendants, acting singly or collectively, and/or in unlawful
concert with one another, for the purpose of preventing disclosure and
avoiding discovery of their unmitigated plunder of the National Treasury
and of their other illegal acts, and employing the services of prominent
lawyers, accountants, financial experts, businessmen and other persons,
deposited, kept and invested funds, securities and other assets
estimated at billions of US dollars in various banks, financial institutions,
trust or investment companies and with persons here and abroad.
V: SPECIFIC AVERMENTS OF DEFENDANTS' ILLEGAL ACTS
xxx xxx xxx
14. Defendants Benjamin (Kokoy) Romualdez and Juliette Gomez
Romualdez, acting by themselves and/or in unlawful concert with
Defendants Ferdinand E. Marcos and Imelda R. Marcos, and taking
undue advantage of their relationship, influence and connection with the
latter Defendant spouses, engaged in devices, schemes and strategems
to unjustly enrich themselves at the expense of Plaintiff and the Filipino
people, among others:
(a) obtained, with the active collaboration of Defendants Senen J.
Gabaldon, Mario D. Camacho, Mamerto Nepomuceno, Carlos J. Valdes,
Delia Tantuico, Jovencio F. Cinco, Cesar C. Zalamea and Francisco
Tantuico, control of some of the biggest business enterprises in the
Philippines, such as, the Manila Electric Company (MERALCO), Benguet
Consolidated Mining Corporation (BENGUET) and the Pilipinas Shell
Corporation, by employing devious financial schemes and techniques
calculated to require the massive infusion and hemmorrhage of
government funds with minimum or negligible "cashout" from
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Defendant Benjamin Romualdez. The following are the general features
of a classic take-over bid by Defendant Benjamin Romualdez:
xxx xxx xxx
(ii) The shares were held in the name of corporations which were
organized soldely (sic) for the purpose of holding title to them. These
corporations did not have any operating history nor any financial track
record. Projected cash flow consisted almost solely of future and
contingent dividends on the shares held. In spite of these limitations,
these companies enjoyed excellent credit lines from banks and other
financial institutions, as evidenced by the millions of pesos in loan and
guarantees outstanding in their books;
(iii) The "seed money" used to wrest control came from government
and taxpayers' money in the form of millions of pesos in loans,
guarantees and standby L/C's from government financial institutions,
notably the DBP and PNB, which were in turn rediscounted with the
Central Bank;
(iv) Additional funding was provided from the related interests; and
(v) This intricate (sic) skein of inter-corporate dealings was
controlled and administered by an exclusive and closely knit group of
interlocking directorate and officership
xxx xxx xxx
(g) Secured, in a veiled attempt to justify MERALCO's anomalous
acquisition of the electric cooperatives, with the active collaborations of
Defendants Cesar E. A. Virata, Juanita R. Remulla, Isidro Rodriguez,
Jose C. Hernandez, Pedro Dumol, Ricardo C. Galing, Francisco C.
Gatmaitan, Mario D. Camacho and the rest of the Defendants, the
approval by Defendant Ferdinand E. Marcos and his cabinet of the so-
called "Three-Year Program for the Extension of MERALCO's Services to
Areas Within The 60-kilometer Radius of Manila", which required
government capital investment amounting to millions of pesos;
xxx xxx xxx
(1) Caused the National Investment and Development Corporation
(NIDC) to dispose of its interest in the oil plants located in Tanauan,
Leyte, which were owned and operated by its subsidiary, the NIDC Oil
Mills, Inc., in favor of the SOLO II, Inc., a corporation beneficially held
and controlled by Defendant Benjamin Romualdez, with the active
collaboration of Defendants Jose Sandejas, Francisco Tantuico and
Dominador G. Ingco, under terms and conditions grossly
disadvantageous to NIDC, to the grave and irreparable damage of
Plaintiff and the Filipino people.
(2) Defendant Francisco Tantuico, taking undue advantage of his
position as Chairman of the Commission on Audit and with grave failure
to perform his constitutional duties as such Chairman, acting in concert
with Defendants Ferdinand E. Marcos and Imelda R. Marcos, facilitated
and made possible the withdrawals, disbursements and questionable
use of government funds as stated in the foregoing paragraphs to the
grave and irreparable damage and injury of Plaintiff and the entire
Filipino people.
xxx xxx xxx
17. The following Defendants acted as dummies, nominees and/ or
agents by allowing themselves (i) to be used as instruments in
accumulating ill-gotten wealth through government concessions, orders
and/or policies prejudicial to Plaintiff, or (ii) to be incorporators,
directors, or members of corporations held and/or controlled by
Defendants Ferdinand E. Marcos, Imelda R. Marcos, Benjamin (Kokoy)
Romualdez, and Juliette Gomez Romualdez in order conceal (sic) and
prevent recovery of assets illegally obtained: Francisco Tantuico . . .
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17.a. THE NAMES OF SOME OF THE CORPORATIONS BENEFICALLY
HELD AND/OR CONTROLLED BY THE DEFENDANTS BENJAMIN (KOKOY)
ROMUALDEZ, FERDINAND E. MARCOS AND IMELDA R. MARCOS WHERE
THE POSITIONS/PARTICIPATIONS AND/OR INVOLVEMENTS OF SOME
OF THE DEFENDANTS AS DUMMIES, NOMINEES AND/OR AGENTS ARE
INDICATED ARE LISTED IN ANNEX "B" HEREOF AND MADE AN
INTEGRAL PART OF THIS COMPLAINT.
xxx xxx xxx
18. The acts of Defendants, singly or collectively, and/or in unlawful
concert with one another, constitute gross abuse of official position and
authority, flagrant breach of public trust and fiduciary obligations,
acquisition of unexplained wealth, brazen abuse of official position and
authority, flagrant breach of public trust and fiduciary obligations,
acquisition of unexplained wealth, brazen abuse of right and power,
unjust enrichment, violation of the Constitution and laws of the Republic
of the Philippines, to the grave and irreparable damage of Plaintiff and
the Filipino people. (Emphasis supplied)
Let us now analyze and discuss the allegations of the complaint in
relation to which the petitioner pleads for a bill of particulars.
As quoted above, paragraph 9(a) of the complaint alleges that
"Defendant Ferdinand E. Marcos, together with other Defendants, acting
singly or collectively, and/or in unlawful concert with one another, in
flagrant breach of public trust and of their fiduciary obligations as public
officers, with gross and scandalous abuse of right and power and in
brazen violation of the Constitution and laws of the Philippines,
embarked upon a systematic plan to accumulate ill-gotten wealth." In
the light of the rules on pleading and case law cited above, the
allegations that defendant Ferdinand E. Marcos, together with the other
defendants "embarked upon a systematic plan to accumulate ill-gotten
wealth" and that said defendants acted "in flagrant breach of public
trust and of their fiduciary obligations as public officers, with gross and
scandalous abuse of right and in brazen violation of the Constitution and
laws of the Philippines", are conclusions of law unsupported by factual
premises.
Nothing is said in the complaint about the petitioner's acts in execution
of the alleged "systematic plan to accumulate ill-gotten wealth", or
which are supposed to constitute "flagrant breach of public trust",
"gross and scandalous abuse of right and power", and "violations of the
Constitution and laws of the Philippines". The complaint does not even
allege what duties the petitioner failed to perform, or the particular
rights he abused.
Likewise, paragraph 15 avers that "defendant Francisco Tantuico, taking
undue advantage of his position as Chairman of the Commission on
Audit and with grave failure to perform his constitutional duties as such
Chairman, acting in concert with Defendants Ferdinand E. Marcos and
Imelda R. Marcos facilitated and made possible the withdrawals,
disbursements and questionable use of government funds as stated in
the foregoing paragraphs to the grave and irreparable damage and
injury of Plaintiff and the entire Filipino people." In like manner, the
allegation that petitioner "took undue advantage of his position as
Chairman of the Commission on Audit," that he "failed to perform his
constitutional duties as such Chairman," and acting in concert with
Ferdinand E. Marcos and Imelda R. Marcos, "facilitated and made
possible the withdrawals, disbursements, and questionable use of
government funds as stated in the foregoing paragraphs, to the grave
and irreparable damage and injury of plaintiff and the entire Filipino
people", are mere conclusions of law. Nowhere in the complaint is there
any allegation as to how such duty came about, or what petitioner's
duties were, with respect to the alleged withdrawals and disbursements
or how petitioner facilitated the alleged withdrawals, disbursements, or
conversion of public funds and properties, nor an allegation from where
the withdrawals and disbursements came from, except for a general
allegation that they came from the national treasury. On top of that, the
complaint does not even contain any factual allegation which would
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show that whatever withdrawals, disbursements, or conversions were
made, were indeed subject to audit by the COA.
In this connection, it may well be stated that the Commission on Audit
(COA) is an independent, constitutional commission, which has no
power or authority to withdraw, disburse, or use funds and property
pertaining to other government offices or agencies. This is done by the
agency or office itself, the chief or head of which is primarily and
directly responsible for the funds and property pertaining to such office
or agency. 32 The COA is merely authorized to audit, examine and
settle accounts of the various government offices or agencies, and this
task is performed not by the Chairman of the COA but by the COA
auditors assigned to the government office or agency subject to COA
audit.
Thus, in each agency of the government, there is an auditing unit
headed by an auditor, whose duty is to audit and settle the accounts,
funds, financial transactions, and resources of the agency under his
audit jurisdiction. 33 The decision of the auditor is appealable to the
Regional Director, 34 whose decision, is in turn, appealable to the COA
Manager. 35 Any party dissatisfied with the decision of the COA
Manager may bring the matter on appeal to the Commission proper, a
collegiate body exercising quasi-judicial functions, composed of three
(3) COA Commissioners, with the COA Chairman as presiding officer. 36
It is only at this stage that the COA Chairman would come to know of
the matter and be called upon to act on the same, and only if an
aggrieved party brings the matter on appeal.
In other words, the Chairman of the COA does not participate or
personally audit all disbursements and withdrawals of government
funds, as well as transactions involving government property. The
averments in the particular paragraph of the complaint merely assume
that petitioner participated in or personally audited all disbursements
and withdrawals of government funds, and all transactions involving
government property. Hence, the alleged withdrawals, disbursements
and questionable use of government funds could not have been, as held
by respondent Sandiganbayan, "within the peculiar and intimate
knowledge of petitioner as Chairman of the COA."
The complaint further avers in paragraph 17 that "(t)he following
Defendants acted as dummies, nominees and/or agents by allowing
themselves (i) to be instruments in accumulating ill-gotten wealth
through government concessions, order and/or policies prejudicial to
Plaintiff, or (ii) to be incorporators, directors, or members of
corporations beneficially held and/or controlled by Defendant Ferdinand
E. Marcos, Imelda R. Marcos, Benjamin (Kokoy) T. Romualdez and
Juliette Gomez Romualdez in order to conceal and prevent recovery of
assets illegally obtained: Francisco Tantuico . . ." 37 Again, the
allegation that petitioner acted as dummy, nominee, or agent by
allowing himself "to be used as instrument in accumulating ill-gotten
wealth through government concessions, orders and/or policies
prejudicial to Plaintiff" or "to be (an) incorporator, director, or member
of corporations beneficially held and/or controlled" by the Marcoses and
Romualdezes, is a conclusion of law without factual basis.
The complaint does not contain any allegation as to how petitioner
became, or why he is perceived to be, a dummy, nominee or agent.
Besides, there is no averment in the complaint how petitioner allowed
himself to be used as instrument in the accumulation of ill-gotten
wealth, what the concessions, orders and/or policies prejudicial to
plaintiff are, why they are prejudicial, and what petitioner had to do
with the granting, issuance, and or formulation of such concessions,
orders, and/or policies. Moreover, Annex "A" of the complaint lists down
sixty-one (61) corporations which are supposed to be beneficially owned
or controlled by the Marcoses and Romualdezes. However, the
complaint does not state which corporations petitioner is supposed to be
a stockholder, director, member, dummy, nominee and/or agent. More
significantly, the petitioner's name does not even appear in Annex "B"
of the complaint, which is a listing of the alleged "Positions and
Participations of Some Defendants".
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The allegations in the complaint, above-referred to, pertaining to
petitioner are, therefore, deficient in that they merely articulate
conclusions of law and presumptions unsupported by factual premises.
Hence, without the particulars prayed for in petitioner's motion for a bill
of particulars, it can be said the petitioner can not intelligently prepare
his responsive pleading and for trial.
Furthermore, the particulars prayed for, such as, names of persons,
names of corporations, dates, amounts involved, specification of
property for identification purposes, the particular transactions involving
withdrawals and disbursements, and a statement of other material facts
as would support the conclusions and inferences in the complaint, are
not evidentiary in nature. On the contrary, those particulars are
material facts that should be clearly and definitely averred in the
complaint in order that the defendant may, in fairness, be informed of
the claims made against him to the end that he may be prepared to
meet the issues at the trial.
Thus, it has been held that the purpose or object of a bill of particulars
is
. . . to amplify or limit a pleading, specify more minutely and
particularly a claim or defense set up and pleaded in general terms, give
information, not contained in the pleading, to the opposite party and the
court as to the precise nature, character, scope, and extent of the cause
of action or defense relied on by the pleader, and apprise the opposite
party of the case which he has to meet, to the end that the proof at the
trial may be limited to the matters specified, and in order that surprise
at, and needless preparation for, the trial may be avoided, and that the
opposite party may be aided in framing his answering pleading and
preparing for trial. It has also been stated that it is the function or
purpose of a bill of particulars to define, clarify, particularize, and limit
or circumscribe the issues in the case, to expedite the trial, and assist
the court. A general function or purpose of a bill of particulars is to
prevent injustice or do justice in the case when that cannot be
accomplished without the aid of such a bill. 38
Anent the contention of the Solicitor General that the petitioner is not
entitled to a bill of particulars because the ultimate facts constituting
the three (3) essential elements of a cause of action for recovery of ill-
gotten wealth have been sufficiently alleged in the complaint, it would
suffice to state that in a motion for a bill of particulars, the only
question to be resolved is whether or not the allegations of the
complaint are averred with sufficient definiteness or particularity to
enable the movant properly to prepare his responsive pleading and to
prepare for trial. As already discussed, the allegations of the complaint
pertaining to the herein petitioner are deficient because the averments
therein are mere conclusions of law or presumptions, unsupported by
factual premises.
In the light of the foregoing, the respondent Sandiganbayan acted with
grave abuse of discretion amounting to lack or excess of jurisdiction in
promulgating the questioned resolutions.
WHEREFORE, the petition is GRANTED and the resolutions dated 21
April 1989 and 29 May 1989 are hereby ANNULLED and SET ASIDE. The
respondents are hereby ordered to PREPARE and FILE a Bill of
Particulars containing the facts prayed for by petitioner within TWENTY
(20) DAYS from notice, and should they fail to submit the said Bill of
Particulars, respondent Sandiganbayan is ordered TO EXCLUDE the
herein petitioner as defendant in Civil Case No. 0035.
SO ORDERED.
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G.R. No. 114942 November 27, 2000
MAUNLAD SAVINGS & LOAN ASSOCIATION, INC., petitioner,
vs.
THE HON. COURT OF APPEALS and VICTOR T.
NUBLA, respondents.
DECISION
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the Decision 1 and the
Resolution2 of the Court of Appeals dated July 9, 1993 and April 4, 1994,
respectively, reversing, for having been issued with grave abuse of
discretion, the Orders of the Regional Trial Court of Binangonan, Rizal,
Branch 68 dated September 18, 19923 and February 12, 19934 in Civil
Case No. 212-B which denied private respondent Victor T. Nublas
motion to admit amended answer and motion for submission of
petitioner Maunlad Savings & Loan Association, Inc.s (hereafter,
Maunlad Savings) documents marked as defense evidence by private
respondent.
The facts are as follows:
On August 27, 1986, petitioner Maunlad Savings instituted a
complaint5 for sum of money against private respondent Victor T. Nubla
and Vicente Nubla on the basis of a promissory note 6 allegedly executed
by the Nublas on May 4, 1984 to secure a loan amounting to
P700,000.00 which, upon maturity on May 4, 1985 and despite
repeated demands, the Nublas failed to pay and continuously defaulted,
and which as of the final demand letter on July 24, 1986 amounted to
P1,290,786.00, inclusive of interests and penalties.
The Nublas filed their Answer7 admitting that they executed the
promissory note but denied any liability thereunder, alleging that they
did not receive any value out of the transaction nor did the said
document reflect the real agreement between the parties inasmuch as
the transaction sued upon was actually the obligation of Ever-Realty and
Development Corporation (hereafter, Ever-Rise). However, the said
Answer was not under oath.
Following the pre-trial conference, petitioner Maunlad Savings presented
its evidence relying on the admission by the Nublas of the genuineness
and due execution of the subject promissory note inasmuch as their
answer was not under oath as required by Section 8, Rule 8 8 of the
Rules of Court. Aurea del Rosario, petitioners Account Officer, testified
on August 19, 1987 and produced in open court the Offering Ticket
stipulating the material agreements of the loan transaction. Upon the
request of the counsel for the Nublas, the offering ticket was marked as
their Exhibit "1". Another witness, Noli T. Lipio, testified on October 19,
1987 and presented a Deed of Assignment which showed that Maunlad
applied the proceeds of the loan to another account. This deed of
assignment was marked as Exhibit "3" for the Nublas. After the
completion of the presentation of its evidence, it formally offered in
evidence its documentary exhibits on December 1, 1987 and rested its
case after the trial court admitted them on June 5, 1988.
On July 6, 1988, the Nublas commenced the presentation of their
evidence. Private respondent Victor T. Nubla testified that the loan
documents and the promissory note did not embody the real agreement
of the parties because they signed blank documents on the
understanding that they were signing as representatives of Ever-Rise,
and not in their personal capacity. When cross-examined, private
respondent Nubla maintained that he and his brother, Vicente Nubla
signed the promissory note in blank. On redirect examination, private
respondent Nubla testified that the loan documents and the promissory
note were erroneous because Maunlad Savings, in filling up the blanks,
did not include the name of Ever-Rise as principal obligor. The Nublas
finally concluded their evidence on January 23, 1991, following the
testimony of their third witness.
The Nublas then filed their Formal Offer of Documentary Exhibits dated
May 2, 1991. At the same time, they also filed a motion for the
remarking of their exhibits. The trial court granted the motion for
remarking. The petitioner, through counsel, subsequently filed its
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objections to the offer of documentary exhibits which the trial court
admitted notwithstanding the objections thereto of petitioner.
On August 8, 1991, private respondent filed his Memorandum. On
October 15, 1991, petitioner Maunlad Savings filed a motion to submit
the case for decision.
On March 24, 1992, the Nublas filed a Motion to Admit Amended
Answer9 seeking to introduced the following amendments, (1) the failure
to type the name of Ever-Rise as the real obligor in the promissory
note; (2) the failure to reflect in the loan documents that the Nublas
were mere representatives of Ever-Rise; (3) the absence of any
agreement that the Nublas made themselves personally liable for the
obligation; and (4) the fact that P477,777.78 of the loan proceeds was
not released either to Ever-Rise or the Nublas, but was applied to
another account without the conformity of Ever-Rise or the Nublas. In
seeking admission of their amended answer, the Nublas cite Section 5,
Rule 10 of the Rules of Court which allows the amendment of pleadings
to conform to the evidence.
The Nublas likewise filed a Motion for Submission of Plaintiffs (Maunlad
Savings) Documents Marked by Defendants (the Nublas) as Their
Evidence10 after realizing that they failed to include in their Offer of
Evidence the Offering Ticket and the Deed of Assignment earlier marked
for the defense as Exhibits "1" and "3". Petitioner Maunlad Savings filed
its opposition to the twin motions on May 22, 1992.
Both motions were denied by the trial court in an Omnibus Order dated
September 18, 1992,11 ratiocinating that the proposed amendment in
the amended answer will ultimately change or alter the theory of the
defense and thus cannot be allowed under Section 3, Rule 10 of the
Rules of Court. Furthermore, with respect to the motion for submission
of Maunlad Savings documents marked by the Nublas as their evidence,
the trial court held that, under Section 35, Rule 132 12 of the Rules of
Court, the court cannot consider evidence not formally offered. The
Nublas sought13 reconsideration but the same was denied in a
resolution14 dated February 12, 1993.
Petitioner Nubla interposed a petition for certiorari, prohibition and
mandamus15 before the Court of Appeals contending that the trial
courts denial of his twin motions amounted to grave abuse of
discretion. Acting on the petition, the appellate court issued on July 9,
1993 its decision16 reversing the challenged Orders, the dispositive
portion of which reads:
WHEREFORE, in view of all the foregoing, the instant petition is hereby
GRANTED and the orders dated September 18, 1992 and February 12,
1993 issued by the Regional Trial Court of Binangonan, Rizal, Branch 68
in Civil Case No. 212-B are declared NULL and VOID and set aside. The
said Court is directed to: (1) admit the amended answer dated march
24, 1992; and (2) require the respondent to submit the Offering ticket
and Deed of Assignment, earlier marked as Exhibits "1" and "3" for
remarking as evidence for the defense; and (3) allow the supplemental
formal offer of said documents as evidence for the defense.
No costs.
SO ORDERED."
Reconsideration of the above decision having been denied by the
appellate court in a Resolution17 dated April 4, 1994, petitioner Maunlad
Savings interposed the instant petition anchored on the following
assignment of errors:18
THE HONORABLE COURT OF APPEALS ERRED IN GRANTING THE
HIGH PREROGATIVE WRIT OF CERTIORARI
THE HONORABLE COURT OF APPEALS ERRED IN NOT
DECLARING THAT THE AMENDMENT OF THE PRIVATE
RESPONDENTS ANSWER TO THE COMPLAINT, AFTER HE HAD
ALREADY FORMALLY OFFERED HIS EVIDENCE, ALLEGEDLY TO
CONFORM TO THE EVIDENCE PRESENTED DURING THE TRIAL,
WILL ALTER HIS DEFENSE, MUCH TO THE PREJUDICE OF THE
PETITIONER-PLAINTIFF
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THE HONORABLE COURT OF APPEALS ERRED IN NOT
DECLARING THAT THE PRIVATE RESPONDENT SHOULD NOT BE
ALLOWED TO REMARK HIS DOCUMENTARY EXHIBITS AFTER HE
HAD ALREADY FORMALLY OFFERED THEM IN EVIDENCE
The petition, being devoid of merit, must fail.
Under Sec. 7, Rule 819 of the Rules of Court, when the cause of action is
anchored on a document, the genuineness or due execution of the
instrument shall be deemed impliedly admitted unless the defendant,
under oath, specifically denies them, and sets forth what he claims to
be the facts. Said rule should be read in conjunction with Sec. 9 of Rule
13020 of the Revised Rules of Evidence which provides, in substance,
that when the parties have reduced their agreement to writing they
have made such writing the only repository and memorial of the truth,
and whatever is not found in the writing must be understood to have
been waived or abandoned,21 unless he puts in issue that there is a
mistake or imperfection in the writing, or that it does not express the
true agreement of the parties, or that the agreement is invalid or that
there is an intrinsic ambiguity in the writing.22
In the instant case, while the specific denial in the original answer was
not under oath and thus gave rise to the implied admission of the
genuineness and due execution of the contents of the promissory note,
private respondent, thru his testimony, was able to put in issue and
present parol evidence to controvert the terms of the promissory note,
which are essentially the bedrock of his defense. The presentation of the
contrariant evidence for and against imputations of genuineness and
due execution undoubtedly cured, clarified or expanded, as the case
may be, whatever defects in the pleadings or vagueness in the issues
there might have been as presented in the original answer.23
The record shows that petitioner Maunlad Savings made no timely
objection when private respondent introduced parol evidence to explain
the circumstances behind the execution and issuance of the promissory
note. The rule is that objections to evidence must be made as soon as
the grounds therefor become reasonably apparent.24 In the case of
testimonial evidence, the objection must be made when the
objectionable question is asked or after the answer is given if the
objectionable features become apparent only by reason of such
answer,25 otherwise the objection is waived and such evidence will form
part of the records of the case as competent and complete evidence and
all parties are thus amenable to any favorable or unfavorable effects
resulting from the evidence.26 Thus, the objections of petitioner Maunlad
Savings on the hearing of October 12, 1998 and January 23,
199127 amounted to no more than a belated attempt to remedy its
neglectful act of prior implied consent to the presentation of parol
evidence on the terms of the agreement between the parties.
Hence, the amended answer should have been admitted by trial court,
pursuant to Sec. 5, Rule 10, quoted below, which allows amendments to
conform to the evidence presented, thus:
Sec. 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
affect 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.
Furthermore, it is settled that the trial court cannot just disregard
evidence which would ordinarily be incompetent under the rules but has
been rendered admissible by the failure of a party to object thereto.
Thus:
x x x The acceptance of an incompetent witness to testify in a civil suit,
as well as the allowance of improper questions that may be put to him
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while on the stand is a matter resting in the discretion of the litigant. He
may assert his right by timely objection or he may waive it, expressly or
by silence. In any case the option rests with him. Once admitted, the
testimony is in the case for what it is worth and the judge has no power
to disregard it for the sole reason that it could have been excluded, if it
had been objected to, nor to strike it out on its own motion. 28
With respect to the Motion for Submission of Maunlad Savings
documents marked by the Nublas as their evidence, this Court agrees
with the pronouncements of the appellate court that:29
On the matter of submission of the respondent associations documents
marked by the defendants as their evidence, we find that, under the
circumstances and considering their ramifications, this Court must allow
a relaxation of the stringent requirements of the rules in order that
substantial justice may be better served. The Offering Ticket and Deed
of Assignment (marked as exhibits "1" and "3", respectively) were
presented before the court by two of the respondent associations
witnesses, namely" Ms. Aurea del Rosario on August 19, 1987; and Ms.
Noli T. Lipio, on October 19, 1987. Clearly, these documents were duly
identified by the said witnesses testimonies which were duly recorded
as part of the proceedings. While it may be that there was no verbatim
recital of the contents of the two documents in the records of this case,
the respondent court cannot totally disregard the fact that the Offering
Ticket is a document which contains the material agreements between
the parties. For a thorough and fair appreciation of the merits of this
case, respondent court must study the stipulations in the Offering ticket
so that the respective rights and obligations of the opposing parties can
be determined. The respondent court cannot just pretend that the
Offering Ticket does not exist even after it had been properly presented
and identified, just because its contents were not incorporated in the
records of the proceedings. The same goes for the Deed of Assignment
which is the petitioners proof that a sizable portion of the loan proceeds
was released to a third party without the authority or consent of the
Nublas or Ever-Rise Realty. Considering the not inconsiderable amount
involved, should the stipulations in the Deed of Assignment prove to be
conclusive, it would be a grave injustice to exclude the deed of
assignment from the respondent courts consideration. Needless to say,
the petitioners defense rests on the stipulations contained in these two
documents. A proper determination of the merits of this case therefore
necessitates the admission and consideration of the two
documents.1wphi1
It may be argued that if the said documents are truly pivotal to the
defense, the petitioner must suffer the consequences of his counsels
failure to make a formal offer of said documents as evidence for the
defense. To our mind, however, the said counsels failure may be
considered excusable under the circumstances. In the first place, these
documents are in the possession of the respondent association, as these
were presented by the latters witnesses. Had they been in the
possession of the petitioner or his counsel, it would amount to gross and
inexcusable negligence to fail to formally offer the same as evidence.
Since these documents were never in the possession of the defense,
and considering the amount of time that has passed since their
presentation, it is understandable that they were overlooked when the
time came to offer evidence formally. Fortunately for the petitioner, the
omission was discovered and a move to correct the same was made
before a decision could be rendered.1wphi1
The general aim of procedural law is to facilitate the application of
justice to the rival claims of contending parties, bearing always in mind
that procedural rules are created not to hinder or delay but to facilitate
and promote the administration of justice.30 Courts in the exercise of
their functions, and in rendering decisions, must not be too dogmatic as
to restrict itself to literal interpretations of words, phrases and
sentences; a complete and holistic view must be taken in order to
render a just and equitable judgment.31 It is far better to dispose of the
case on the merits which is a primordial end rather than on a
technicality, if it be the case, that may result in injustice.32 Considering
that the instant case involves a sizable sum of money, the overriding
consideration of a judgment based on the merits should prevail over the
primordial interests of strict enforcement on matters of technicalities.
All premises considered, the Court is convinced that the respondent
appellate court committed no error in reversing the challenged orders of
the trial court.
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WHEREFORE, the petition is hereby DENIED for lack of merit and the
challenged decision and resolution dated July 9, 1993 and April 4, 1994,
respectively, of the Court of Appeals in CA-G.R. SP No. 30344 are
hereby AFFIRMED. Costs against petitioners.

SO ORDERED.

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G.R. No. 133119 August 17, 2000
FINANCIAL BUILDING CORPORATION, petitioner,
vs.
FORBES PARK ASSOCIATION, INC., respondent.
DECISION
DE LEON, JR., J.:
Before us is petition for review on certiorari of the Decision1 dated March
20, 1998 of the Court of Appeals2 in CA-GR CV No. 48194 entitled
"Forbes Park Association, Inc. vs. Financial Building Corporation",
finding Financial Building Corporation (hereafter, Financial Building)
liable for damages in favor of Forbes Park Association, Inc. (hereafter,
Forbes Park), for violating the latters deed of restrictions on the
construction of buildings within the Forbes Park Village, Makati.
The pertinent facts are as follows:
The then Union of Soviet Socialist Republic (hereafter, USSR) was the
owner of a 4,223 square meter residential lot located at No. 10, Narra
Place, Forbes Park Village in Makati City. On December 2, 1985, the
USSR engaged the services of Financial Building for the construction of
a multi-level office and staff apartment building at the said lot, which
would be used by the Trade Representative of the USSR. 3 Due to the
USSRs representation that it would be building a residence for its Trade
Representative, Forbes Park authorized its construction and work began
shortly thereafter.
On June 30, 1986, Forbes Park reminded the USSR of existing
regulations4 authorizing only the construction of a single-family
residential building in each lot within the village. It also elicited a
reassurance from the USSR that such restriction has been complied
with.5 Promptly, the USSR gave its assurance that it has been complying
with all regulations of Forbes Park.6 Despite this, Financial Building
submitted to the Makati City Government a second building plan for the
construction of a multi-level apartment building, which was different
from the first plan for the construction of a residential building
submitted to Forbes Park.
Forbes Park discovered the second plan and subsequent ocular
inspection of the USSRs subject lot confirmed the violation of the deed
of restrictions. Thus, it enjoined further construction work. On March 27,
1987, Forbes Park suspended all permits of entry for the personnel and
materials of Financial Building in the said construction site. The parties
attempted to meet to settle their differences but it did not push
through.
Instead, on April 9, 1987, Financial Building filed in the Regional Trial
Court of Makati, Metro Manila, a Complaint7for Injunction and Damages
with a prayer for Preliminary Injunction against Forbes Park docketed as
Civil Case No. 16540. The latter, in turn, filed a Motion to Dismiss on
the ground that Financial Building had no cause of action because it was
not the real party-in-interest.
On April 28, 1987, the trial court issued a writ of preliminary injunction
against Forbes Park but the Court of Appeals nullified it and dismissed
the complaint in Civil Case No. 16540 altogether. We affirmed the said
dismissal in our Resolution,8 promulgated on April 6, 1988, in G.R. No.
79319 entitled "Financial Building Corporation, et al. vs. Forbes Park
Association, et al."
After Financial Buildings case, G.R. No. 79319, was terminated with
finality, Forbes Park sought to vindicate its rights by filing on October
27, 1989 with the Regional Trial Court of Makati a Complaint9 for
Damages, against Financial Building, docketed as Civil Case No. 89-
5522, arising from the violation of its rules and regulations. The
damages claimed are in the following amounts: (a) P3,000,000.00 as
actual damages; (b) P1,000,000.00 as moral damages; (c)
P1,000,000.00 as exemplary damages; and (d) P1,000,000.00 as
attorneys fees.10 On September 26, 1994, the trial court rendered its
Decision11 in Civil Case No. 89-5522 in favor of Forbes Park and against
Financial Building, the dispositive portion of which reads, to wit:
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"WHEREFORE, in view of the foregoing, the Court hereby renders
judgment in favor of the plaintiff and against the defendant:
(1) Ordering the defendant to remove/demolish the illegal
structures within three (3) months from the time this judgment
becomes final and executory, and in case of failure of the
defendant to do so, the plaintiff is authorized to
demolish/remove the structures at the expense of the
defendant;
(2) Ordering the defendant to pay damages, to wit:
(a) P3,000,000.00 as actual damages by way of
demolition expenses;
(b) P1,000,000.00 as exemplary damages;
(c) P500,000.00 as attorneys fees;
(d) the costs of suit.
SO ORDERED."
Financial Building appealed the said Decision of the trial court in Civil
Case No. 89-5522 by way of a petition for review on certiorari12 entitled
"Financial Building Corporation vs. Forbes Park Association, Inc." to the
Court of Appeals and docketed therein as CA-GR CV No. 48194.
However, the Court of Appeals affirmed it in its Decision 13dated March
20, 1998, the dispositive portion of which reads:
"WHEREFORE, the Decision dated September 26, 1994 of the Regional
Trial Court of Makati is AFFIRMED with the modification that the award
of exemplary damages, as well as attorneys fees, is reduced to fifty
thousand pesos (P50,000.00) each."
Hence, this petition, wherein Financial Building assigns the following
errors:
I. "THE COURT OF APPEALS GRAVELY ERRED IN NOT
DISMISSING THE COMPLAINT FILED BY RESPONDENT FPA
DESPITE THE FACT THAT ITS ALLEGED CLAIMS AND CAUSES OF
ACTION THEREIN ARE BARRED BY PRIOR JUDGMENT AND/OR
ARE DEEMED WAIVED FOR ITS FAILURE TO INTERPOSE THE
SAME AS COMPULSORY COUNTERCLAIMS IN CIVIL CASE NO.
16540;
II. THE COURT OF APPEALS GRAVELY ERRED IN NOT
DISMISSING THE COMPLAINT FILED BY RESPONDENT FPA
AGAINST PETITIONER FBC SINCE RESPONDENT FPA HAS NO
CAUSE OF ACTION AGAINST PETITIONER FBC;
III. THE COURT OF APPEALS GRAVELY ERRED IN AWARDING
DAMAGES IN FAVOR OF RESPONDENT FPA DESPITE THE FACT
THAT ON THE BASIS OF THE EVIDENCE ON RECORD,
RESPONDENT FPA IS NOT ENTITLED THERETO AND PETITIONER
FBC IS NOT LIABLE THEREFOR;
IV. THE COURT OF APPEALS ERRED IN ORDERING THE
DEMOLITION OF THE ILLEGAL STRUCTURES LOCATED AT NO. 10
NARRA PLACE, FORBES PARK, MAKATI CITY, CONSIDERING
THAT THE SAME ARE LOCATED ON DIPLOMATIC PREMISES"14
We grant the petition.
First. The instant case is barred due to Forbes Parks failure to set it up
as a compulsory counterclaim in Civil Case No. 16540, the prior
injunction suit initiated by Financial Building against Forbes Park.
A compulsory counterclaim is one which arises out of or is necessarily
connected with the transaction or occurrence that is the subject matter
of the opposing partys claim.15 If it is within the jurisdiction of the court
and it does not require for its adjudication the presence of third parties
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over whom the court cannot acquire jurisdiction, such compulsory
counterclaim is barred if it is not set up in the action filed by the
opposing party.16
Thus, a compulsory counterclaim cannot be the subject of a separate
action but it should instead be asserted in the same suit involving the
same transaction or occurrence, which gave rise to it.17 To determine
whether a counterclaim is compulsory or not, we have devised the
following tests: (1) Are the issues of fact or law raised by the claim and
the counterclaim largely the same? (2) Would res judicata bar a
subsequent suit on defendants claim absent the compulsory
counterclaim rule? (3) Will substantially the same evidence support or
refute plaintiffs claim as well as the defendants counterclaim? and (4)
Is there any logical relation between the claim and the counterclaim?
Affirmative answers to the above queries indicate the existence of a
compulsory counterclaim.18
Undoubtedly, the prior Civil Case No. 16540 and the instant case arose
from the same occurrence the construction work done by Financial
Building on the USSRs lot in Forbes Park Village. The issues of fact and
law in both cases are identical. The factual issue is whether the
structures erected by Financial Building violate Forbes Parks rules and
regulations, whereas the legal issue is whether Financial Building, as an
independent contractor working for the USSR, could be enjoined from
continuing with the construction and be held liable for damages if it is
found to have violated Forbes Parks rules.
As a result of the controversy, Financial Building seized the initiative by
filing the prior injunction case, which was anchored on the contention
that Forbes Parks prohibition on the construction work in the subject
premises was improper. The instant case on the other hand was
initiated by Forbes Park to compel Financial Building to remove the
same structures it has erected in the same premises involved in the
prior case and to claim damages for undertaking the said construction.
Thus, the logical relation between the two cases is patent and it is
obvious that substantially the same evidence is involved in the said
cases.
Moreover, the two cases involve the same parties. The aggregate
amount of the claims in the instant case is within the jurisdiction of the
regional trial court, had it been set up as a counterclaim in Civil Case
No. 16540. Therefore, Forbes Parks claims in the instant case should
have been filed as a counterclaim in Civil Case No. 16540.
Second. Since Forbes Park filed a motion to dismiss in Civil Case No.
16540, its existing compulsory counterclaim at that time is now barred.
A compulsory counterclaim is auxiliary to the proceeding in the original
suit and derives its jurisdictional support therefrom.19 A counterclaim
presupposes the existence of a claim against the party filing the
counterclaim. Hence, where there is no claim against the
counterclaimant, the counterclaim is improper and it must dismissed,
more so where the complaint is dismissed at the instance of the
counterclaimant.20 In other words, if the dismissal of the main action
results in the dismissal of the counterclaim already filed, it stands to
reason that the filing of a motion to dismiss the complaint is an implied
waiver of the compulsory counterclaim because the grant of the motion
ultimately results in the dismissal of the counterclaim.
Thus, the filing of a motion to dismiss and the setting up of a
compulsory counterclaim are incompatible remedies.1wphi1In the
event that a defending party has a ground for dismissal and a
compulsory counterclaim at the same time, he must choose only one
remedy. If he decides to file a motion to dismiss, he will lose his
compulsory counterclaim. But if he opts to set up his compulsory
counterclaim, he may still plead his ground for dismissal as an
affirmative defense in his answer.21 The latter option is obviously more
favorable to the defendant although such fact was lost on Forbes Park.
The ground for dismissal invoked by Forbes Park in Civil Case No. 16540
was lack of cause of action. There was no need to plead such ground in
a motion to dismiss or in the answer since the same was not deemed
waived if it was not pleaded.22 Nonetheless, Forbes Park still filed a
motion to dismiss and thus exercised bad judgment in its choice of
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remedies. Thus, it has no one to blame but itself for the consequent loss ROSAURO/PATRICK MARQUEZ, represented by Emmanuel
of its counterclaim as a result of such choice. Marquez, MODESTA FABRIG and MAXIMINO SALCEDA, MELIA
LATOMBO, TERESITA PANGILINAN-RIVERO, ARCH. DANILO C. DE
Inasmuch as the action for damages filed by Forbes Park should be as it CASTRO, JOSE S. LEDESMA, JAIME P. ANG, VEICENTE P. ANG,
is hereby dismissed for being barred by the prior judgment in G.R. No. MAURO U. GABRIEL, ATTY. VIRGINIA GOMEZ, GIL S. BONILLA,
79319 (supra) and/or deemed waived by Forbes Park to interpose the LOURDES BLANCO, represented by Catalina Blanco, JOSEFA
same under the rule on compulsory counterclaims, there is no need to SANCHEZ and ROSALINA VILLEGAS, represented by Heidi Bobis,
discuss the other issues raised by the herein petitioner. SHIRLEY BUCAG, QUIRINA O. TUVERA, represented by Wilfredo
Orejuros, GREGORIO AVENTINO, represented by Enrico
WHEREFORE, the instant petition is hereby GRANTED and the Decision Aventino, LEONARDO L. NICOLAS, NICOMEDES PENARANDA,
dated March 20, 1998 of the Court of Appeals in CA-G.R. CV No. 48194 FRANCISCA MEDRANO, OFELIA IGNACIO, ROSENDO ABUBO,
is hereby REVERSED and SET ASIDE. represented by Santos Chavez, SOLEDAD BAUTISTA DE
COLUMNA, represented by Zenaida Valle, MARQUITA/
SEBASTIAN LOPEZ, represented by Emmanuel Marquez, DELIA
Costs against respondent Forbes Park Association, Inc. .
DORION, GERARDO L. SANTIAGO, FIDEL PANGANIBAN,
represented by Manuel dela Roca, MATEO and OFELIA INOVEJAS,
SO ORDERED. REMEDIOS C. DOVAS, represented by Josefa Capistrano,
DOMINGO ALTAMIRANO and SPOUSES ROLANDO ALTAMIRANO
G.R. No. 91486 September 10, 2003 and MINERVA FETALVERO, BEATRIZ RINGPIS, ROSARIO DE
MATA, RUFINA CRUZ, represented by JOSEFA MANABAT,
ALBERTO G. PINLAC, ATTY. ERIBERTO H. DECENA, RODOLFO F. SPOUSES ANITA SALONGA-CAPAGCUAN and MAYNARD
REYES, FELIPE BRIONES, JUANITO METILLA, JR., FELIPE A. CAPAGCUAN, DISCORA YATCO, represented by VICTORINA Y.
FLORES, HERMINIO ELEVADO, NARCISO S. SIMEROS, petitioners, FIRME, and CONSUELO YATCO, GENEROSA MEDINA VDA. DE
vs. NOGUERA, represented by ATTY. RAYMUNDO M. NOGUERA,
COURT OF APPEALS, ATTY. CORAZON A. MERRERA, ATTY. JEAN BEATRIZ SALANDANAN and LOURDES ALONTE-VASQUEZ, PEDRO
MAKASIAR-PUNO, SERGIO ACABAN, represented by Atty. Ramon COSIO and VICTORINA CARINO, RUTH C. ZARATE,
Gerona, ATTY. ROGELIO VELASCO, MARTINA S. NONA, OVIDEO PRECIOSISIMA V. YAPCHULAY, BASILISA B. YAPCHULAY,
MEJICA, ALFREDO ITALIA, MARIANO GUEVARRA, JESUS OFELIA B. YAPCHULAY, FELISA B. YAPCHULAY, FE B.
YUJUICO, DOMINADOR RIVERA, SATURNINA SALES, represented YAPCHULAY, WILMA B. YAPCHULAY, FELIX B. YAPCHULAY,
by Atty. Consolacion Sales-Demontano, FRED CHUA, SONIA SY MARIANO B. YAPCHULAY, GEN. ALFREDO LIM, and other
CHUA, LAWRENCE CHUA, CAROLINA C. RUBIO, represented by registered OWNERS OF VILAR-MALOLES (VILMA)
Tessie Sebastian, GEORGE G. GUERRERO, BEATRIZ TANTOCO, SUBDIVISION, respondents.
represented by Filomena Cervantes, ATTY. MARCELA REPUBLIC OF THE PHILIPPINES, intervenor.
CELESTINO-GARCIA, FEDERICO GARCIA, ILDEFONSO MORALES, WORLD WAR II VETERANS LEGIONARIES OF THE
LEONCIA VELASCO, OCRAVIO F. LINA, ANA MARIA JARAMILLO, PHILIPPINES, intervenor.
ESTRELLA BASA, JOSE ESTEVA, JR., CIRILO GONZALES, VILLY
TOBIAS, MIGUEL DELA PAZ, RUBEN GUILLERMO, FAUSTO RESOLUTION
YADAO, represented by Jeremias Panlilio, RICARDO YAP,
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YNARES-SANTIAGO, J.:
This resolves the Petition-In-Intervention1 filed by the Republic of the
Philippines, represented by the Land Registration Authority and the
Motion for Clarification2 filed by respondents.
The facts may be briefly restated as follows: The controversy stemmed
from a Petition for Quieting of Title filed by petitioners over 3 vast
parcels of land known as Lot Nos. 1, 2 & 3. Lot No. 1 is covered by TCT
No. 5690, while Lot Nos. 2 and 3 were originally covered by OCT No.
614 and OCT No. 333, respectively. On March 21, 1988, the trial court
rendered a Partial Decision3 in favor of petitioners and against the
defendants who were declared in default, including respondent owners
of Vilmar-Maloles (Vilma) Subdivision whose properties were within Lot
No. 2. The dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered
in favor of petitioners and against the defaulted respondents:
1) Declaring petitioners through the principal petitioners hereof,
to wit: Alberto G. Pinlac, Atty. Eriberto H. Decena, Rodolfo T.
Reyes, Felipe Briones and Juanito S. Metilla as absolute owners
in fee simple title of the aforesaid Lots 1, 2 & 3 hereof by virtue
of extra-ordinary prescription, with the exception of the lands
covered by the respective transfer certificate of title belonging to
the non-defaulted respondents;
2) Declaring Original Certificate of Title No. 614, TCT No. 5690
and TCT No. 3548 of the Register of Deeds of Quezon City, and
the subsequent TCTs issued therefrom, with the exception of
those titles belonging to the non-defaulted respondents, as null
and void ab initio;
3) Ordering the Register of Deeds of Quezon City to cancel OCT
No. 614, TCT No. 5690 and TCT No. 3548 as well as the
subsequent TCTs issued and emanating therefrom, with the
exception of those titles belonging to the non-defaulted
respondents, from its record;
4) Declaring the area of TCT No. 333 in excess of its true and
actual area of 4,574 Sq. Meters, as well as the TCTs
subsequently issued by the Register of Deeds of Quezon City,
covering the area in excess of said actual area, with the
exception of those belonging to non-defaulted respondents, as
null and void ab initio;
5) Ordering the Register of Deeds of Quezon City to cancel all
TCTs subsequently issued based on OCT No. 333 in excess of the
actual area of 4,574 Sq. Meters, with the exception of those
titles belonging to the non-defaulted respondents;
6) Declaring the writ of preliminary injunction dated August 7,
1985, in so far as those areas covered by the cancelled OCTs and
TCTs hereof are concerned, as permanent;
7) Ordering the Register of Deeds of Quezon City to issue herein
petitioners the corresponding individual transfer certificate of
titles upon proper application made thereof.
SO ORDERED.
On May 17, 1989, the defaulted title owners of Vilma filed with the
Court of Appeals a Petition to Annul the Partial Decision of the trial
court, which was granted in a decision4 dated November 15, 1989. The
appellate court ruled that the court a quo did not acquire jurisdiction
over the person of respondents because of defective service of
summons by publication. Petitioners motion for reconsideration of the
said decision was denied; hence, they filed this petition for certiorari.
On January 19, 2001, we rendered a Decision denying the petition and
affirming the Judgment of the Court of Appeals. The dispositive portion
thereof reads:
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WHEREFORE, in view of all the foregoing, the decision of the
Court of Appeals in CA-G.R. SP No. 17596 is AFFIRMED and the
instant petition is DENIED for lack of merit.
SO ORDERED.5
Petitioners filed a Motion for Reconsideration6 contending, inter alia,
that the disposition of the trial court with respect to Lot No. 3, should
not have been annulled by the Court of Appeals because the petition for
annulment of judgment filed by the respondents concerned only Lot No.
2. They prayed that the January 19, 2001 decision of the Court which
affirmed the decision of the Court of Appeals be reconsidered insofar as
Lot No. 3 is concerned.
On November 20, 2001, the Court issued a Resolution partially granting
petitioners motion for reconsideration by reinstating paragraphs 4 and
5 of the dipositive portion of the trial courts Partial Decision pertaining
to Lot No. 3, thus
WHEREFORE, the Motion for Reconsideration is PARTIALLY
GRANTED and our Decision promulgated on January 19, 2001 is
MODIFIED as follows:
(1) reinstating paragraph (4) and (5) of the Partial
Decision of the court a quo; and
(2) affirming the Decision of the Court of Appeals in CA-
G.R. No. 17596 in all other respects.
SO ORDERED.7
On July 22, 2002, the Republic of the Philippines, represented by the
Land Registration Authority (LRA), thru the Office of the Solicitor
General (OSG), filed a motion for intervention and a Petition-In-
Intervention praying that judgment be rendered declaring:
1) That OCT No. 333 is a valid and existing title in line with the
decisions this Honorable Court had already rendered;
2) That OCT No. 333 was never expanded from its original area
of 52,949,737 square meters;
3) That the land occupied by petitioners is not forest land and is
covered by OCT No. 333;
4) That the proceedings conducted in Civil Case No. Q-35673
with respect to OCT No. 333 are null and void; and
5) That the proceedings conducted in Civil Case No. Q-35672 is
null and void, no notice of the hearings/proceedings having been
sent to the Republic and other interested parties.
The Republic likewise prays for such other relief as may be just
and equitable under the circumstances.8
The rule on intervention, like all other rules of procedure is intended to
make the powers of the Court fully and completely available for justice.
It is aimed to facilitate a comprehensive adjudication of rival claims
overriding technicalities on the timeliness of the filing thereof. 9 Indeed,
in exceptional cases, the Court has allowed intervention notwithstanding
the rendition of judgment by the trial court. In one case, intervention
was allowed even when the petition for review of the assailed judgment
was already submitted for decision in the Supreme Court.10
In Mago v. Court of Appeals,11 intervention was granted even after the
decision became final and executory, thus
The permissive tenor of the provision on intervention shows the
intention of the Rules to give to the court the full measure of
discretion in permitting or disallowing the same. But needless to
say, this discretion should be exercised judiciously and only after
consideration of all the circumstances obtaining in the case.
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But it is apparent that the courts a quo only considered the
technicalities of the rules on intervention and of the petition for relief
from judgment. The denial of their motion to intervene arising from the
strict application of the rule was an injustice to petitioners whose
substantial interest in the subject property cannot be disputed. It must
be stressed that the trial court granted private respondent's petition for
prohibition with injunction without petitioners being impleaded, in total
disregard of their right to be heard, when on the face of the resolution
of the Community Relations and Information Office (CRIO) sought to be
enjoined, petitioners were the ones directly to be affected. We need not
belabor the point that petitioners are indeed indispensable parties with
such an interest in the controversy or subject matter that a final
adjudication cannot be made in their absence without affecting, nay
injuring, such interest.
In Director of Lands v. Court of Appeals where the motions for
intervention were filed when the case had already reached this Court, it
was declared:
It is quite clear and patent that the motions for intervention filed by the
movants at this stage of the proceedings where trial had already been
concluded x x x and on appeal x x x the same was affirmed by the Court
of Appeals and the instant petition for certiorari to review said judgment
is already submitted for decision by the Supreme Court, are obviously
and manifestly late, beyond the period prescribed under x x x Section 2,
Rule 12 of the Rules of Court [now Rule 19, Section 2 of the 1997 Rules
on Civil Procedure].
But Rule 12 of the Rules of Court, like all other Rules therein
promulgated, is simply a rule of procedure, the whole purpose
and object of which is to make the powers of the Court fully and
completely available for justice. The purpose of procedure is not
to thwart justice. Its proper aim is to facilitate the application of
justice to the rival claims of contending parties. It was created
not to hinder and delay but to facilitate and promote the
administration of justice. It does not constitute the thing itself
which courts are always striving to secure to litigants. It is
designed as the means best adopted to obtain that thing. In
other words, it is a means to an end.
In Tahanan Development Corp. v. Court of Appeals, this Court
allowed intervention almost at the end of the proceedings.
Accordingly, there should be no quibbling, much less hesitation
or circumvention, on the part of subordinate and inferior courts
to abide and conform to the rule enunciated by the Supreme
Court.12
The Solicitor General summarized the interest of the Republic in Lot No.
3 (originally covered by OCT No. 333), as follows:
On March 5, 1979, then President Marcos issued Proclamation
No. 1826 "reserving for national government center site a parcel
of land situated in the Constitution Hill, Quezon City, Metro
Manila, containing an area of four million for hundred forty
thousand FOUR HUNDRED SIXTY-SIX SQUARE METERS." In a
certification [Annex "F", Rollo, p. 1415] issued by the Land
Registration Authority, it attested to the fact that the National
Government Center described in Proclamation No. 1826 "is
within the area covered by GLRO Record No. 1037 (OCT-333)
and GLRO Record No. 5975 as plotted in our Municipal Index
Sheet (MIS) Nos. 2574-C, 5707-B, 5708-A, 5708-B and 3339-D."
In a letter [Annex "B-2", Rollo, p. 1330], the Housing and Urban
Development Coordinating Council certified that within the Project
site/jurisdiction of the National Government Center Housing Project
(NGCHP) and the NGC-EASTSIDE DEVELOPMENT PROJECT, the following
government buildings, offices and complexes are situated:
1) House of Representatives;
2) Civil Service Commission (CSC);
3) Department of Social Works and Development (DSWD);
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4) Sandiganbayan;
5) Commission on Audit (COA);
6) Department of Public Works and Highways (DPWH) Depot;
7) Polytechnic University of the Philippines (PUP)
Commonwealth Campus;
8) TESDA Skills Training Center;
9) Several Public Elementary and High Schools, Health Centers
and Barangay Halls.
It also certified that the NGCHP under its Peoples Housing
Alternative for Social Empowerment land Acquisition
Development Program (PHASE-LADP), has already awarded
3,975 TCTs to its beneficiaries. This program comprises the
biggest chunk of the NGCHP with about 117 hectares intended
for disposition to qualified beneficiaries. Further, in line with the
National Governments thrust of fast-tracking the implementation
of the NGCHP, the remaining 20,696 TCTs are about to be
awarded to qualified beneficiaries."13
Clearly, the intervention of the Republic is necessary to protect public
interest as well as government properties located and projects
undertaken on Lot No. 3. The Constitutional mandate that no person
shall be deprived of life, liberty, or property without due process of law
can certainly be invoked by the Republic which is an indispensable party
to the case at bar. As correctly pointed out by the Solicitor General,
while the provision is intended as a protection of individuals against
arbitrary action of the State, it may also be invoked by the Republic to
protect its properties.14
After a thorough re-examination of the case, we find that our November
20, 2001 Resolution reinstating paragraphs 4 and 5 of the trial courts
Partial Decision pertaining to Lot No. 3, overlooked certain aspects
which, if not corrected, will cause extreme and irreparable confusion
and prejudice. The reinstated portions of the decision states:
4) Declaring the area of [OCT] No. 333 in excess of its true and
actual area of 4,574 Sq. Meters, as well as the TCTs
subsequently issued by the Register of Deeds of Quezon City,
covering the area in excess of said actual area, with the
exception of those belonging to non-defaulted respondents, as
null and void ab initio;
5) Ordering the Register of Deeds of Quezon City to cancel all
TCTs subsequently issued based on OCT No. 333 in excess of the
actual area of 4,574 Sq. Meters, with the exception of those
titles belonging to the non-defaulted respondents;15
We note that paragraph 4 does not at all specify which portions are in
excess of the 4,574 square meter area of OCT No. 333 and which areas
belong to the defaulted and non-defaulted respondents. Neither did the
body of the trial courts decision state the metes and bounds that would
serve as basis in implementing the dispositive portion thereof. Verily,
this flaw goes into the very identity of the disputed land. Paragraphs 4
and 5 are therefore null and void for having been rendered in violation
of the constitutional mandate that "no decision shall be rendered by any
court without expressing therein clearly and distinctly the facts and the
law on which it is based."16 Hence, the November 20, 2001 Resolution
reinstating paragraphs 4 and 5 of the trial courts Partial Decision should
be modified.
The OSGs prayer that OCT No. 333 be held as a valid and existing title
is likewise meritorious. In Republic v. Tofemi Realty
Corporation (Tofemi),17 an action for "Cancellation of Titles & Reversion"
of TCT No. 55747 and TCT No. 55748, the validity of OCT No. 333 from
which said transfer certificates of title originated, has already been
settled. In dismissing the petition of the Republic, it was held therein
that OCT No. 333 is a valid title duly issued by the Land Registration
Court. The Republic did not appeal therefrom and the decision became
final and executory. Pertinent portion of which states
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Regarding the issue of nullity of OCT No. 333,
We find that the then Land Registration Court had the power,
authority and jurisdiction to issue it. It was issued after trial, or
presumptively in a fair and square trial with all the requisites of
the law (The Phil. British Co., Inc. vs. de los Angeles, 63 SCRA
52).
The Act of Congress of July 1, 1902, known in local history as the
"Philippine Bill of 1902", in its sections 13 to 18, mentions three (3)
classes of land, to wit, "public land" or public domain", "mineral lands",
and "timber land". (Ramos vs. Director of Lands, 39 Phil. 175). Early
decisions as regards classification of public lands, such as Mapa vs.
Insular Government, 10 Phil 175, Ramos vs. Director of Lands, supra,
and Ankron vs. Government of the Philippine Islands, 40 Phil. 10, which
were decided under the Philippine Bill of 1902 and the first Public Land
Act No. 926 enacted by the Philippine Commission on October 7, 1926,
or prior to the passage of Act No. 2874, had impliedly ruled that there
was no legal provision vesting in the chief Executive or President of the
Philippines the power to classify lands of the public domain into mineral,
timber and agricultural; so that the courts then were free to make
corresponding classifications in justiciable cases, or were invested with
implicit power in so doing, depending upon the preponderance of the
evidence. In Mapa vs. Insular Government, supra, Feb. 10, 1908, the
Court of Land Registration granted the application for registration after
finding that it was neither "timber" nor "mineral" and came within the
definition of "Agricultural land" under Act 926. The Attorney General
appealed. The Supreme Court affirmed the appealed judgment. In
G.L.R.O. No. 1037, the application for registration was granted and
consequently the issuance of a title was decreed in favor of the
applicant because the Land Registration Court found that the land
applied for is agricultural susceptible of private appropriation (Ramos
vs. Director of Lands, supra; Ankron vs. Government of the Philippine
Islands, supra). We repeat by way of emphasis, the record does not
reveal that the Government has always considered the lot in question as
forest reserve prior to the issuance of OCT 333. To declare the land now
as forest land on the authority of LC Map 639 of Rizal approved on
March 11, 1937 only, would deprive defendants of their registered
property without due process of law. It was pronounced in Ramos vs.
Director of lands, supra:
"x x x Upon the other hand, the presumption should be, in lieu of
contrary evidence, that land is agricultural in nature. One very
good reason is that it is good for the Philippine Islands to have a
large public domain come under private ownership. Such is the
natural attitude of the sagacious citizen."
OCT No. 333 being legal and valid; ergo, TCTs Nos. 55747
and 55748, being derived from the said mother title, are also
legal and valid. These TCTs were in turn derived from TCTs Nos.
45832 and 45833, covering Lots Nos. 65, 76 and 81 which
originally formed parts of Parcel C of Plan Psu-32606 approved
by the Court of First Instance of Rizal on October 21, 1924.
(Emphasis supplied)18
Stare decisis et non quieta movere. Stand by the decisions and disturb
not what is settled. It is a salutary and necessary judicial practice that
when a court has laid down a principle of law applicable to a certain
state of facts, it must adhere to such principle and apply it to all future
cases in which the facts sued upon are substantially the same. 19 It is
beyond cavil, therefore, that since the court had already ruled on the
validity OCT No. 333, said issue must be laid to rest and must no longer
be relitigated in the present case.
With respect, however, to the area covered by OCT No. 333, the
principle of stare decisis is not applicable because the decision of the
Court of Appeals did not indicate the boundaries of the lot covered by
OCT No. 333. While it was held therein that the area of OCT No. 333 is
52,949,735 square meters, the metes and bounds of the land covered
by OCT No. 333 was not specified. We cannot adopt the findings as to
the area of OCT No. 333 for it might cause deprivation of property of
adjacent land owners without due process of law.
So, also, the Court cannot nullify the entire Partial Decision of the
court a quo. The defaulted defendants whose properties are located in
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Lot No. 1 did not question the decision of the trial court. Neither was it
shown in the Petition-In-Intervention that the OSG is an indispensable
party to Lot No. 1.
In their Motion for Clarification and Manifestation, respondents seek the
clarification of paragraph 1 of the trial courts Partial Decision declaring
petitioners as owners of, among others, Lot No. 2 where respondents
properties are located. Paragraph 1, provides:
1) Declaring petitioners through the principal petitioners hereof,
to wit: Alberto G. Pinlac, Atty. Eriberto H. Decena, Rodolfo F.
Reyes, Felipe Briones and Juanito S. Metilla as absolute owners
in fee simple title of the aforesaid Lots 1, 2 & 3 hereof by virtue
of extraordinary prescription, with the exception of the lands
covered by the respective transfer certificate of title belonging to
non-defaulted respondents.20
In view of the annulment of the trial courts Partial Decision with respect
to Lot No. 2 originally covered by OCT No. 614, all portions of the
decision pertaining to Lot No. 2, including that in paragraph 1 declaring
petitioners as absolute owners in fee simple of Lot No. 2, is declared
void. Likewise, the declaration of nullity of paragraphs 4 and 5 of the
dispositive portion of the decision a quo concerning Lot No. 3, renders
the disposition in paragraph 1 insofar as it affects Lot No. 3, also void.
Under the 1997 Rules on Civil Procedure, specifically Rule 47, Section 7
thereof, a judgment of annulment shall set aside the questioned
judgment or final order or resolution and render the same null and void,
without prejudice to the original action being re-filed in the proper
court.
In the meantime, the World War II Veterans Legionaries of the
Philippines (WW II) filed a Petition-in-Intervention with prior leave of
court. It alleges that the Court of Appeals decision dated November 15,
1989 in CA-G.R. SP No. 17596, which is the subject of the instant
petition for review, ran counter to the June 22, 1989 decision of the
same court in CA-G.R. SP No. 17221, which merely amended the first
paragraph of the Partial Decision of the trial court in Civil Case No. Q-
35672. The latter decision of the appellate court was affirmed by this
Court in G.R. No. 90245 on April 8, 1990.
We find no conflict between the two decisions of the Court of Appeals. It
is true that both decisions affected the portion of the Partial Decision of
the trial court which declared petitioners, who are individual members of
the WW II, as absolute owners of Lot Nos. 1, 2 and 3. However, the
decision in CA-G.R. SP No. 17221 merely granted WW IIs prayer that it
be substituted for its individual members, who were declared the
owners of Lot Nos. 1, 2 and 3 in the Partial Decision. Aside from this,
the decision in CA-G.R. SP No. 17221 had nothing to do with the merits
of the case. As such, it did not contradict the Court of Appeals decision
of November 15, 1989 in CA-G.R. SP No. 17596 which set aside the
Partial Decision of the trial court.
WHEREFORE, in view of all the foregoing, the Petition-In-Intervention
of the Republic of the Philippines is PARTIALLY GRANTED. The
Resolution promulgated on November 20, 2001 is MODIFIED as follows:
The Decision dated March 21, 1988 of the Regional Trial Court of
Quezon City, Branch 83, in Civil Case No. Q-35762, is annulled insofar
as it concerns Lot No. 2, originally covered by OCT No. 614 and Lot No.
3 originally covered by OCT No. 333. The November 15, 1999 Decision
of the Court of Appeals in CA-G.R. No. 17596 is affirmed in all other
respects.
As clarified above, paragraph 1 of the dispositive portion of the decision
of the court a quo is void insofar as it declares petitioners as absolute
owners in fee simple of Lot Nos. 2 and 3.
The Petition-in-Intervention filed by the World War Veterans Legionaries
of the Philippines is DENIED for lack of merit.
SO ORDERED.
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G.R. No. 173559 January 7, 2013
LETICIA DIONA, represented by her Attorney-in-Fact,
MARCELINA DIONA, Petitioner,
vs.
ROMEO A. BALANGUE, SONNY A. BALANGUE, REYNALDO A.
BALANGUE, and ESTEBAN A. BALANGUE, JR., Respondents.
DECISION
DEL CASTILLO, J.:
The great of a relief neither sought by the party in whose favor it was
given not supported by the evidence presented violates the opposing
partys right to due process and may be declared void ab initio in a
proper proceeding.
This Petition for Review on Certiorari1 assails the November 24, 2005
Resolution2 of the Court of Appeals (CA) issued in G.R. SP No. 85541
which granted the Petition for Annulment of Judgment3 filed by the
respondents seeking to nullify that portion of the October 17, 2000
Decision4 of the Regional Trial Court (RTC), Branch 75, Valenzuela City
awarding petitioner 5% monthly interest rate for the principal amount of
the loan respondent obtained from her.
This Petition likewise assails the CAs June 26, 2006 Resolution 5 denying
petitioners Motion for Reconsideration.
Factual Antecedents
The facts of this case are simple and undisputed.
On March 2, 1991, respondents obtained a loan of 45,000.00 from
petitioner payable in six months and secured by a Real Estate
Mortgage6 over their 202-square meter property located in Marulas,
Valenzuela and covered by Transfer Certificate of Title (TCT) No. V-
12296.7 When the debt became due, respondents failed to pay
notwithstanding demand. Thus, on September 17, 1999, petitioner filed
with the RTC a Complaint8 praying that respondents be ordered:
(a) To pay petitioner the principal obligation of 45,000.00, with
interest thereon at the rate of 12% per annum, from 02 March
1991 until the full obligation is paid.
(b) To pay petitioner actual damages as may be proven during
the trial but shall in no case be less than 10,000.00;
25,000.00 by way of attorneys fee, plus 2,000.00 per hearing
as appearance fee.
(c) To issue a decree of foreclosure for the sale at public auction
of the aforementioned parcel of land, and for the disposition of
the proceeds thereof in accordance with law, upon failure of the
respondents to fully pay petitioner within the period set by law
the sums set forth in this complaint.
(d) Costs of this suit.
Other reliefs and remedies just and equitable under the premises are
likewise prayed for.9 (Emphasis supplied)
Respondents were served with summons thru respondent Sonny A.
Balangue (Sonny). On October 15, 1999, with the assistance of Atty.
Arthur C. Coroza (Atty. Coroza) of the Public Attorneys Office, they filed
a Motion to Extend Period to Answer. Despite the requested extension,
however, respondents failed to file any responsive pleadings. Thus,
upon motion of the petitioner, the RTC declared them in default and
allowed petitioner to present her evidence ex parte.10
Ruling of the RTC sought to be annulled.
In a Decision11 dated October 17, 2000, the RTC granted petitioners
Complaint. The dispositive portion of said Decision reads:
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WHEREFORE, judgment is hereby rendered in favor of the petitioner,
ordering the respondents to pay the petitioner as follows:
a) the sum of FORTY FIVE THOUSAND (45,000.00) PESOS,
representing the unpaid principal loan obligation plus interest at
5% per month [sic] reckoned from March 2, 1991, until the same
is fully paid;
b) 20,000.00 as attorneys fees plus cost of suit;
c) in the event the [respondents] fail to satisfy the aforesaid
obligation, an order of foreclosure shall be issued accordingly for
the sale at public auction of the subject property covered by
Transfer Certificate of Title No. V-12296 and the improvements
thereon for the satisfaction of the petitioners claim.
SO ORDERED. 12
(Emphasis supplied)
Subsequently, petitioner filed a Motion for Execution,13 alleging that
respondents did not interpose a timely appeal despite receipt by their
former counsel of the RTCs Decision on November 13, 2000. Before it
could be resolved, however, respondents filed a Motion to Set Aside
Judgment14 dated January 26, 2001, claiming that not all of them were
duly served with summons. According to the other respondents, they
had no knowledge of the case because their co-respondent Sonny did
not inform them about it. They prayed that the RTCs October 17, 2000
Decision be set aside and a new trial be conducted.
But on March 16, 2001, the RTC ordered15 the issuance of a Writ of
Execution to implement its October 17, 2000 Decision. However, since
the writ could not be satisfied, petitioner moved for the public auction of
the mortgaged property,16 which the RTC granted.17 In an auction sale
conducted on November 7, 2001, petitioner was the only bidder in the
amount of 420,000.00. Thus, a Certificate of Sale18 was issued in her
favor and accordingly annotated at the back of TCT No. V-12296.
Respondents then filed a Motion to Correct/Amend Judgment and To Set
Aside Execution Sale19 dated December 17, 2001, claiming that the
parties did not agree in writing on any rate of interest and that
petitioner merely sought for a 12% per annum interest in her
Complaint. Surprisingly, the RTC awarded 5% monthly interest (or 60%
per annum) from March 2, 1991 until full payment. Resultantly, their
indebtedness inclusive of the exorbitant interest from March 2, 1991 to
May 22, 2001 ballooned from 124,400.00 to 652,000.00.
In an Order20 dated May 7, 2002, the RTC granted respondents motion
and accordingly modified the interest rate awarded from 5% monthly to
12% per annum. Then on August 2, 2002, respondents filed a Motion
for Leave To Deposit/Consign Judgment Obligation21 in the total amount
of 126,650.00.22
Displeased with the RTCs May 7, 2002 Order, petitioner elevated the
matter to the CA via a Petition for Certiorari 23under Rule 65 of the Rules
of Court. On August 5, 2003, the CA rendered a Decision24 declaring
that the RTC exceeded its jurisdiction in awarding the 5% monthly
interest but at the same time pronouncing that the RTC gravely abused
its discretion in subsequently reducing the rate of interest to 12% per
annum. In so ruling, the CA ratiocinated:
Indeed, We are convinced that the Trial Court exceeded its jurisdiction
when it granted 5% monthly interest instead of the 12% per annum
prayed for in the complaint. However, the proper remedy is not to
amend the judgment but to declare that portion as a nullity. Void
judgment for want of jurisdiction is no judgment at all. It cannot be the
source of any right nor the creator of any obligation (Leonor vs. CA, 256
SCRA 69). No legal rights can emanate from a resolution that is null and
void (Fortich vs. Corona, 312 SCRA 751).
From the foregoing, the remedy of the respondents is to have the Court
declare the portion of the judgment providing for a higher interest than
that prayed for as null and void for want of or in excess of jurisdiction. A
void judgment never acquire[s] finality and any action to declare its
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nullity does not prescribe (Heirs of Mayor Nemencio Galvez vs. CA, 255
SCRA 672).
WHEREFORE, foregoing premises considered, the Petition having merit,
is hereby GIVEN DUE COURSE. Resultantly, the challenged May 7, 2002
and September 5, 2000 orders of Public Respondent Court are hereby
ANNULLED and SET ASIDE for having been issued with grave abuse of
discretion amounting to lack or in excess of jurisdiction. No costs.
SO ORDERED.25 (Emphases in the original; italics supplied.)
Proceedings before the Court of Appeals
Taking their cue from the Decision of the CA in the special civil action
for certiorari, respondents filed with the same court a Petition for
Annulment of Judgment and Execution Sale with Damages.26 They
contended that the portion of the RTC Decision granting petitioner 5%
monthly interest rate is in gross violation of Section 3(d) of Rule 9 of
the Rules of Court and of their right to due process. According to
respondents, the loan did not carry any interest as it was the verbal
agreement of the parties that in lieu thereof petitioners family can
continue occupying respondents residential building located in Marulas,
Valenzuela for free until said loan is fully paid.
Ruling of the Court of Appeals
Initially, the CA denied due course to the Petition.27 Upon respondents
motion, however, it reinstated and granted the Petition. In setting aside
portions of the RTCs October 17, 2000 Decision, the CA ruled that aside
from being unconscionably excessive, the monthly interest rate of 5%
was not agreed upon by the parties and that petitioners Complaint
clearly sought only the legal rate of 12% per annum. Following the
mandate of Section 3(d) of Rule 9 of the Rules of Court, the CA
concluded that the awarded rate of interest is void for being in excess of
the relief sought in the Complaint. It ruled thus:
WHEREFORE, respondents motion for reconsideration is GRANTED and
our resolution dated October 13, 2004 is, accordingly, REVERSED and
SET ASIDE. In lieu thereof, another is entered ordering the ANNULMENT
OF:
(a) public respondents impugned October 17, 2000 judgment,
insofar as it awarded 5% monthly interest in favor of petitioner;
and
(b) all proceedings relative to the sale at public auction of the
property titled in respondents names under Transfer Certificate
of Title No. V-12296 of the Valenzuela registry.
The judgment debt adjudicated in public respondents impugned
October 17, 2000 judgment is, likewise, ordered RECOMPUTED at the
rate of 12% per annum from March 2, 1991. No costs.
SO ORDERED.28 (Emphases in the original.)
Petitioner sought reconsideration, which was denied by the CA in its
June 26, 2006 Resolution.29
Issues
Hence, this Petition anchored on the following grounds:
I. THE HONORABLE COURT OF APPEALS COMMITTED
GRAVE AND SERIOUS ERROR OF LAW WHEN IT GRANTED
RESPONDENTS PETITION FOR ANNULMENT OF
JUDGMENT AS A SUBSTITUTE OR ALTERNATIVE REMEDY
OF A LOST APPEAL.
II. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
AND SERIOUS ERROR AND MISAPPREHENSION OF LAW AND THE
FACTS WHEN IT GRANTED RESPONDENTS PETITION FOR
ANNULMENT OF JUDGMENT OF THE DECISION OF THE
REGIONAL TRIAL COURT OF VALENZUELA, BRANCH 75 DATED
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OCTOBER 17, 2000 IN CIVIL CASE NO. 241-V-99, DESPITE THE
FACT THAT SAID DECISION HAS BECOME FINAL AND ALREADY
EXECUTED CONTRARY TO THE DOCTRINE OF IMMUTABILITY OF
JUDGMENT.30
Petitioners Arguments
Petitioner claims that the CA erred in partially annulling the RTCs
October 17, 2000 Decision. She contends that a Petition for Annulment
of Judgment may be availed of only when the ordinary remedies of new
trial, appeal, petition for relief or other appropriate remedies are no
longer available through no fault of the claimant. In the present case,
however, respondents had all the opportunity to question the October
17, 2000 Decision of the RTC, but because of their own inaction or
negligence they failed to avail of the remedies sanctioned by the rules.
Instead, they contented themselves with the filing of a Motion to Set
Aside Judgment and then a Motion to Correct/Amend Judgment and to
Set Aside Execution Sale.
Petitioner likewise argues that for a Rule 47 petition to prosper, the
same must either be based on extrinsic fraud or lack of jurisdiction.
However, the allegations in respondents Rule 47 petition do not
constitute extrinsic fraud because they simply pass the blame to the
negligence of their former counsel. In addition, it is too late for
respondents to pass the buck to their erstwhile counsel considering that
when they filed their Motion to Correct/Amend Judgment and To Set
Aside Execution Sale they were already assisted by their new lawyer,
Atty. Reynaldo A. Ruiz, who did not also avail of the remedies of new
trial, appeal, etc. As to the ground of lack of jurisdiction, petitioner
posits that there is no reason to doubt that the RTC had jurisdiction
over the subject matter of the case and over the persons of the
respondents.
While conceding that the RTC patently made a mistake in awarding 5%
monthly interest, petitioner nonetheless invokes the doctrine of
immutability of final judgment and contends that the RTC Decision can
no longer be corrected or modified since it had long become final and
executory. She likewise points out that respondents received a copy of
said Decision on November 13, 2000 but did nothing to correct the
same. They did not even question the award of 5% monthly interest
when they filed their Motion to Set Aside Judgment which they anchored
on the sole ground of the RTCs lack of jurisdiction over the persons of
some of the respondents.
Respondents Arguments
Respondents do not contest the existence of their obligation and the
principal amount thereof. They only seek quittance from the 5%
monthly interest or 60% per annum imposed by the RTC. Respondents
contend that Section (3)d of Rule 9 of the Rules of Court is clear that
when the defendant is declared in default, the court cannot grant a
relief more than what is being prayed for in the Complaint. A judgment
which transgresses said rule, according to the respondents, is void for
having been issued without jurisdiction and for being violative of due
process of law.
Respondents maintain that it was through no fault of their own, but
through the gross negligence of their former counsel, Atty. Coroza, that
the remedies of new trial, appeal or petition for relief from judgment
were lost. They allege that after filing a Motion to Extend Period to
Answer, Atty. Coroza did not file any pleading resulting to their being
declared in default. While the said lawyer filed on their behalf a Motion
to Set Aside Judgment dated January 26, 2001, he however took no
steps to appeal from the Decision of the RTC, thereby allowing said
judgment to lapse into finality. Citing Legarda v. Court of
Appeals,31 respondents aver that clients are not always bound by the
actions of their counsel, as in the present case where the clients are to
lose their property due to the gross negligence of their counsel.
With regard to petitioners invocation of immutability of judgment,
respondents argue that said doctrine applies only to valid and not to
void judgments.
Our Ruling
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The petition must fail.
We agree with respondents that the award of 5% monthly interest
violated their right to due process and, hence, the same may be set
aside in a Petition for Annulment of Judgment filed under Rule 47 of the
Rules of Court.
Annulment of judgment under Rule 47; an exception to the final
judgment rule; grounds therefor.
A Petition for Annulment of Judgment under Rule 47 of the Rules of
Court is a remedy granted only under exceptional circumstances where
a party, without fault on his part, has failed to avail of the ordinary
remedies of new trial, appeal, petition for relief or other appropriate
remedies. Said rule explicitly provides that it is not available as a
substitute for a remedy which was lost due to the partys own neglect in
promptly availing of the same. "The underlying reason is traceable to
the notion that annulling final judgments goes against the grain of
finality of judgment. Litigation must end and terminate sometime and
somewhere, and it is essential to an effective administration of justice
that once a judgment has become final, the issue or cause involved
therein should be laid to rest."32
While under Section 2, Rule 4733 of the Rules of Court a Petition for
Annulment of Judgment may be based only on the grounds of extrinsic
fraud and lack of jurisdiction, jurisprudence recognizes lack of due
process as additional ground to annul a judgment.34 In Arcelona v.
Court of Appeals,35 this Court declared that a final and executory
judgment may still be set aside if, upon mere inspection thereof, its
patent nullity can be shown for having been issued without jurisdiction
or for lack of due process of law.
Grant of 5% monthly interest is way beyond the 12% per annum
interest sought in the Complaint and smacks of violation of due process.
It is settled that courts cannot grant a relief not prayed for in the
pleadings or in excess of what is being sought by the party. They cannot
also grant a relief without first ascertaining the evidence presented in
support thereof. Due process considerations require that judgments
must conform to and be supported by the pleadings and evidence
presented in court. In Development Bank of the Philippines v.
Teston,36 this Court expounded that:
Due process considerations justify this requirement. It is improper to
enter an order which exceeds the scope of relief sought by the
pleadings, absent notice which affords the opposing party an
opportunity to be heard with respect to the proposed relief. The
fundamental purpose of the requirement that allegations of a complaint
must provide the measure of recovery is to prevent surprise to the
defendant.
Notably, the Rules is even more strict in safeguarding the right to due
process of a defendant who was declared in default than of a defendant
who participated in trial. For instance, amendment to conform to the
evidence presented during trial is allowed the parties under the
Rules.37 But the same is not feasible when the defendant is declared in
default because Section 3(d), Rule 9 of the Rules of Court comes into
play and limits the relief that may be granted by the courts to what has
been prayed for in the Complaint. It provides:
(d) Extent of relief to be awarded. A judgment rendered against a
party in default shall not exceed the amount or be different in kind from
that prayed for nor award unliquidated damages.
The raison dtre in limiting the extent of relief that may be granted is
that it cannot be presumed that the defendant would not file an Answer
and allow himself to be declared in default had he known that the
plaintiff will be accorded a relief greater than or different in kind from
that sought in the Complaint.38 No doubt, the reason behind Section
3(d), Rule 9 of the Rules of Court is to safeguard defendants right to
due process against unforeseen and arbitrarily issued judgment. This, to
the mind of this Court, is akin to the very essence of due process. It
embodies "the sporting idea of fair play"39 and forbids the grant of relief
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on matters where the defendant was not given the opportunity to be
heard thereon.
In the case at bench, the award of 5% monthly interest rate is not
supported both by the allegations in the pleadings and the evidence on
record. The Real Estate Mortgage40 executed by the parties does not
include any provision on interest. When petitioner filed her Complaint
before the RTC, she alleged that respondents borrowed from her "the
sum of FORTY-FIVE THOUSAND PESOS (45,000.00), with interest
thereon at the rate of 12% per annum"41 and sought payment thereof.
She did not allege or pray for the disputed 5% monthly interest. Neither
did she present evidence nor testified thereon. Clearly, the RTCs award
of 5% monthly interest or 60% per annum lacks basis and disregards
due process. It violated the due process requirement because
respondents were not informed of the possibility that the RTC may
award 5% monthly interest. They were deprived of reasonable
opportunity to refute and present controverting evidence as they were
made to believe that the complainant petitioner was seeking for what
she merely stated in her Complaint.
Neither can the grant of the 5% monthly interest be considered
subsumed by petitioners general prayer for "other reliefs and remedies
just and equitable under the premises x x x." 42 To repeat, the courts
grant of relief is limited only to what has been prayed for in the
Complaint or related thereto, supported by evidence, and covered by
the partys cause of action.43 Besides, even assuming that the awarded
5% monthly or 60% per annum interest was properly alleged and
proven during trial, the same remains unconscionably excessive and
ought to be equitably reduced in accordance with applicable
jurisprudence. In Bulos, Jr. v. Yasuma,44 this Court held:
In the case of Ruiz v. Court of Appeals, citing the cases of Medel v.
Court of Appeals, Garcia v. Court of Appeals, Spouses Bautista v. Pilar
Development Corporation and the recent case of Spouses Solangon v.
Salazar, this Court considered the 3% interest per month or 36%
interest per annum as excessive and unconscionable. Thereby, the
Court, in the said case, equitably reduced the rate of interest to 1%
interest per month or 12% interest per annum. (Citations omitted)
It is understandable for the respondents not to contest the default order
for, as alleged in their Comment, "it is not their intention to impugn or
run away from their just and valid obligation."45 Nonetheless, their
waiver to present evidence should never be construed as waiver to
contest patently erroneous award which already transgresses their right
to due process, as well as applicable jurisprudence.
Respondents former counsel was grossly negligent in handling the case
of his clients; respondents did not lose ordinary remedies of new trial,
petition for relief, etc. through their own fault.
Ordinarily, the mistake, negligence or lack of competence of counsel
binds the client.1wphi1 This is based on the rule that any act
performed by a counsel within the scope of his general or implied
authority is regarded as an act of his client. A recognized exception to
the rule is when the lawyers were grossly negligent in their duty to
maintain their clients cause and such amounted to a deprivation of their
clients property without due process of law.46 In which case, the courts
must step in and accord relief to a client who suffered thereby.47
The manifest indifference of respondents former counsel in handling the
cause of his client was already present even from the beginning. It
should be recalled that after filing in behalf of his clients a Motion to
Extend Period to Answer, said counsel allowed the requested extension
to pass without filing an Answer, which resulted to respondents being
declared in default. His negligence was aggravated by the fact that he
did not question the awarded 5% monthly interest despite receipt of the
RTC Decision on November 13, 2000.48 A simple reading of the
dispositive portion of the RTC Decision readily reveals that it awarded
exorbitant and unconscionable rate of interest. Its difference from what
is being prayed for by the petitioner in her Complaint is so blatant and
very patent. It also defies elementary jurisprudence on legal rate of
interests. Had the counsel carefully read the judgment it would have
caught his attention and compelled him to take the necessary steps to
protect the interest of his client. But he did not. Instead, he filed in
behalf of his clients a Motion to Set Aside Judgment 49 dated January 26,
2001 based on the sole ground of lack of jurisdiction, oblivious to the
fact that the erroneous award of 5% monthly interest would result to his
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clients deprivation of property without due process of law. Worse, he
even allowed the RTC Decision to become final by not perfecting an
appeal. Neither did he file a petition for relief therefrom. It was only a
year later that the patently erroneous award of 5% monthly interest
was brought to the attention of the RTC when respondents, thru their
new counsel, filed a Motion to Correct/Amend Judgment and To Set
Aside Execution Sale. Even the RTC candidly admitted that it "made a
glaring mistake in directing the defendants to pay interest on the
principal loan at 5% per month which is very different from what was
prayed for by the plaintiff."50
illegal award of 5% monthly interest, they now stand to lose their
property and still owe petitioner a large amount of money. As aptly
observed by the CA:
x x x If the impugned judgment is not, therefore, rightfully nullified,
petitioners will not only end up losing their property but will additionally
owe private respondent the sum of 232,000.00 plus the legal interest
said balance had, in the meantime, earned. As a court of justice and
equity, we cannot, in good conscience, allow this unconscionable
situation to prevail.54

"A lawyer owes entire devotion to the interest of his client, warmth and Indeed, this Court is appalled by petitioners invocation of the doctrine
zeal in the maintenance and defense of his rights and the exertion of his of immutability of judgment. Petitioner does not contest as she even
utmost learning and ability, to the end that nothing can be taken or admits that the RTC made a glaring mistake in awarding 5% monthly
withheld from his client except in accordance with the law."51 Judging interest.55 Amazingly, she wants to benefit from such erroneous award.
from how respondents former counsel handled the cause of his clients, This Court cannot allow this injustice to happen.
there is no doubt that he was grossly negligent in protecting their
rights, to the extent that they were deprived of their property without WHEREFORE, the instant Petition is hereby DENIED and the assailed
due process of law. November 24, 2005 and June 26, 2006 Resolution of the Court of
Appeals in CA-G.R. SP No. 85541 are AFFIRMED.
In fine, respondents did not lose the remedies of new trial, appeal,
petition for relief and other remedies through their own fault. It can only SO ORDERED.
be attributed to the gross negligence of their erstwhile counsel which
prevented them from pursuing such remedies. We cannot also blame
respondents for relying too much on their former counsel. Clients have
reasonable expectations that their lawyer would amply protect their
interest during the trial of the case.52 Here,

"respondents are plain and ordinary people x x x who are totally

ignorant of the intricacies and technicalities of law and legal procedures.
Being so, they completely relied upon and trusted their former counsel
to appropriately act as their interest may lawfully warrant and
require."53

As a final word, it is worth noting that respondents principal obligation

was only 45,000.00. Due to their former counsels gross negligence in
handling their cause, coupled with the RTCs erroneous, baseless, and

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