SECOND DIVISION
Declaring herein plaintiffs the owners of one-half share of this property
G.R. No. 155193 November 26, 2004
ELEUTERIO OLAVE, LUCIANO OLAVE, THELMA C. LAPENA, IDONNAH C. LOPEZ and
HEIDI C. DE JESUS,petitioners,
vs.
TEODULO MISTAS, PACITA MISTAS, ANTONINA MISTAS, LUCITA MISTAS, MIGUELA
MISTAS, FELIX MISTAS, AURELIO MISTAS, LUDEGARIO MISTAS, TOMASA OLAVE,
FELISA MISTAS, ESTANISLAO MISTAS, BASILIA MISTAS and IRENEO
MISTAS, respondents.
DECISION
CALLEJO, SR., J.:
On May 23, 1996, respondents Teodulo Mistas and Pacita Mistas filed a Complaint in the
Regional Trial Court (RTC) of Lipa City, Branch 12, against petitioners Eleuterio Olave, Luciano
Olave, Thelma C. Lapena, Idonnah C. Lopez, Heidi de Jesus and the Register of Deeds of Lipa
City, for the nullification of the "Affidavit of Adjudication By The Heirs of the Estate of Deceased
Persons With Sale" dated December 15, 1995 over a parcel of land with an area of 27,509
square meters, located in San Benito, Lipa, covered by Original Certificate of Title (OCT) No.
8756 (27936). The respondents alleged, inter alia, that Basilio Mistas and his sisters Ceferina
Mistas Olave, married to Ignacio, and Maria Mistas Sumadsad, married to Bonifacio, were the
previous owners of the said property. When they died intestate during the Japanese
occupation, Ceferina was survived by Estanislao and Luciano Olave, while Basilio was survived
by Teodulo Mistas and Pacita Mistas. Maria died intestate without any issue, and was
succeeded by her nephews and nieces. On December 15, 1995, Eleuterio and Luciano Olave,
as vendees, sold the entire property to petitioners Thelma Lapena, Idonnah Lopez and Heidi
C. de Jesus for P825,270.00 and executed an "Affidavit of Adjudication By Heirs of the Estate
of Deceased Person with Sale." The vendees then filed a petition for the issuance of a new
owner's duplicate of OCT No. 8756 (27936) in the RTC of Lipa City, docketed as LRC No. 96-
004. Teodulo Mistas and Pacita Mistas, the children of Basilio Mistas, opposed the petition,
alleging that they were co-owners of the property, and prayed that the resolution of the petition
be held in abeyance until after the final adjudication of the ownership of the property.
Thus, in their complaint for the annulment of the affidavit of adjudication with sale, redemption
and reconveyance with damages, the respondents prayed that after due proceedings,
judgment be rendered in their favor, as follows:
WHEREFORE, it is respectfully prayed that after due notice and hearing an order be
issued by this Honorable Court –
1. Declaring the Affidavit of Adjudication by Heirs of the Estate of Deceased
Person with Sale null and void and no effect as to the one-half share of herein
plaintiffs to this property subject matter of this complaint;
2.
described in paragraph 2 of the complaint as the heirs of their parents, Sps.
Basilio Mistas and Agatona Arellano and their aunt Maria Mistas;
3. Allowing herein plaintiffs to exercise the right of legal redemption to the
remaining half as co-owners of defendants Eleuterio and Luciano Olave;
4. Ordering the Register of Deeds of Lipa City to cancel Original Certificate of
Title No. 8756 (27936) and new Transfer Certificate of Title be issued in the
name of the Plaintiffs;
5. Ordering defendants Thelma Lapena, Idonnah Lopez and Heidi de Jesus to
reconvey and surrender the possession of said land to herein plaintiffs;
6. Ordering defendants, jointly and severally, to pay plaintiffs attorneys fees
and expenses for litigation in the amount stated in this paragraph;
PLAINTIFFS further pray for such other relief just and equitable under the premises. 1
On October 14, 1996, the petitioners filed a "Twin Motion" alleging that, aside from the
respondents, the deceased co-owners of the property were survived by the following:
a. Antonina Mistas, a sister to both Pacita and Teodulo, on the alleged share of their
father Basilio and aunt Maria;
b. Generoso Mistas, plaintiffs' brother who upon his demise was survived by his
children, who are plaintiffs' nephews and nieces on the alleged share of Basilio and
that of Maria, namely: Lucila, Miguela, Felix, Aurelio and Ludegario, all surnamed
Mistas, and Tomasa Olave, Generoso's spouse;
c. Plaintiffs' cousins by their deceased uncle Leon Mistas, Basilio's brother, namely:
Felisa, Alfredo, Basilia and Ireneo, all surnamed Mistas, on the alleged share of Maria. 2
The petitioners alleged that all other heirs of the deceased co-owners were indispensable
parties and, as such, should be impleaded by respondents Teodulo and Pacita Mistas in an
amended complaint. The respondents agreed to do so and filed an Amended Complaint3 on
November 12, 1996, without, however, impleading the other heirs of the deceased co-owners.
This prompted the trial court to issue an Order4 on December 4, 1996, requiring the
respondents to include the other heirs as parties-plaintiffs in their complaint. The respondents
filed a motion for reconsideration of the said order, which was denied by the trial court on
February 10, 1997.
On March 7, 1997, respondents Teodulo and Pacita Mistas filed their second amended
complaint, impleading the other heirs5 as parties-plaintiffs. However, the respondents failed to
comply with SC Circular No. 04-94,6 impelling the petitioners to file a motion praying for the
court to direct the respondents and their counsel to comply therewith.
The respondents filed their Compliance on May 8, 1997. Respondent Pacita Mistas executed
the certificate on non-forum shopping for and in behalf of her sister, Antonina Mistas, but failed
to submit a Special Power of Attorney for such purpose. The petitioners then filed an "Urgent
Ex-Parte Motion" to require respondent Antonina Mistas to submit the "proper documentary
authority with the formalities required by law" authorizing her to execute the said certificate for
and in behalf of her sister Pacita. The respondents complied and filed the required Special
Power of Attorney on June 25, 1997.
On July 16, 1997, the petitioners thereafter filed their Answer with Counterclaim alleging, inter
alia, that Nicasia Saludo was a vendee-owner of the property subject matter of the case, and
that she caused the property to be registered under the names of her children Basilio, Ceferina
and Maria; that Nicasia partitioned all of her properties in the presence of all her children in
February 1945; and that the property subject of the complaint was adjudicated to the Spouses
Ignacio and Ceferina Olave, who forthwith took possession thereof to the exclusion of the
petitioners. The petitioners interposed counterclaims for damages and prayed that judgment
be rendered in their favor.
The respondents received a copy of the said Answer on July 21, 1997 and opted not to file any
reply. However, they failed to file any motion to set the case for pre-trial as mandated by Section
1, Rule 18 of the Rules of Court.
Unable to wait any longer, the petitioners filed, on September 12, 1997, a motion to require the
respondents to show cause, in writing, why their amended complaint should not be dismissed
with prejudice for their failure to move that the court set the case for pre-trial as mandated by
Section 1, Rule 18 of the Rules of Court, as amended. The petitioners prayed that the court
dismiss the said complaint with prejudice in case the respondents failed to justify such failure.
Upon receipt of the said motion, the respondents filed, on September 16, 1997, a motion to set
the case for pre-trial at 9:00 a.m. of October 22, 1997. They, likewise, opposed the petitioners'
motion for the dismissal of the complaint, alleging that the delay in filing their motion to set the
case for pre-trial was only for a short period of time, and that such delay was not a ground for
the dismissal of their complaint.
On September 18, 1997, the trial court issued an Order requiring the respondents to show
cause, in writing, why their amended complaint should not be dismissed with prejudice for their
non-compliance with Section 1, Rule 18 of the Rules of Court, as amended.
In their compliance, the respondents averred that Section 1, Rule 18 of the Rules of Court does
not provide that the failure to comply with the said provision would result in the dismissal of the
amended complaint with prejudice. They asserted that the Supreme Court has not ruled on the
precise period of time envisaged in paragraph 1, Rule 18 of the Rules of Court. It was further
alleged that:
5. That it maybe (sic) added that due to the pressure of work of this counsel aggravated
by almost daily appearance in court and his function as a public official[,] this may
mitigate the phrase "promptly move" mentioned under Section 1 of Rule 18 of the Rules
of Court.7
On October 20, 1997, the trial court issued an Order8 dismissingthe amended complaint with
prejudice, and ordering the respondents to pay costs to the petitioners. The court considered
the respondents' failure to move for pre-trial for more than three (3) months as unreasonable
and inexcusable.
The respondents appealed the said Order to the Court of Appeals (CA), contending that:
I. The trial court erred and/or abused its discretion in dismissing the complaint for failure
on the part of the appellants to set the case for pre-trial for a period of less than two
months;
II. The trial court erred or abused its discretion in not considering appellants'
explanation as justificable (sic) causes for not dismissing the complaint pursuant to
Sec. 3, Rule 17, Rules of Court;
III. The Honorable Court erred in agreeing and adopting in toto the arguments of
defendants-appellees;
IV. The trial court failed to consider some of the Decisions of the Supreme Court
interpreting what are (sic) unreasonable length of time which are (sic) sufficient to
dismiss the case under Sec. 3, Rule 17 of the Rules of Court.9
The petitioners filed a motion to dismiss the appeal on the ground that the issues raised by the
respondents were legal and not factual; hence, the remedy of the latter was to file a petition for
review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure. The petitioners also
alleged that there was no statement in the notice of appeal of the respondents to which court
the appeal was directed, and that there was no explanation why service by registered mail of
a copy of such notice on the appellees was resorted to.10
The CA denied the motion and rendered a Decision on July 31, 2001, setting aside the assailed
Orders and reinstating the case in its docket. The appellate court ruled that there was no
evidence on record that the respondents deliberately failed to prosecute their complaint for an
unreasonable period of time. It also held that the Rules of Court should be liberally applied.
Upon the denial of the petitioners' motion for reconsideration, they filed the instant petition for
review on certiorari. They maintain that the remedy of the respondents from the assailed Order
of the trial court was to file a petition for review on certiorari under Rule 45 of the Rules of Court,
considering that the issues raised by them in the CA were legal in nature. The petitioners also
assert that even if appeal was the proper remedy of the respondents, the trial court
nevertheless did not err in dismissing the amended complaint with prejudice, considering the
respondents' failure to comply with Section 1, Rule 18 of the Rules of Court, as amended.
The focal issues for resolution are the following: (a) whether appeal to the CA under Rule 41
of the Rules of Court, as amended, is the proper remedy of the respondents from the assailed
Orders of the trial court; (b) whether the respondents failed to comply with Section 1, Rule 18
of the Rules of Court; and (c) if in the affirmative, whether the dismissal of the amended
complaint with prejudice is justified.
The petition is denied for lack of merit.
On the first issue, the petitioners aver that the issue raised by the respondents in their appeal
in the appellate court is legal in nature, that is, whether the respondents promptly moved for
the trial court to set the case for pre-trial, considering that they did so fifty-seven (57) days from
receipt of the petitioners' answer to their amended complaint. The petitioners assert that the
remedy of the respondents from the dismissal order of the trial court was to appeal via a petition
for review on certiorari under Rule 45 of the Rules of Court, instead of appealing the said order
by writ of error. The petitioners posit that it behooved the CA to dismiss the respondents'
appeal, conformably to Section 2, Rule 50 of the Rules of Court, which reads:
Sec. 2 Dismissal of improper appeal to the Court of Appeals. –An appeal under Rule
41 taken from the Regional Trial Court to the Court of Appeals raising only questions
of law shall be dismissed, issues purely of law not being reviewable by said court.
Similarly, an appeal by notice of appeal instead of by petition for review from the
appellate judgment of a Regional Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be transferred to the
appropriate court but shall be dismissed outright.
In their comment, the respondents contend that they raised both legal and factual issues in the
CA, namely:
1. Is the trial court correct in its finding that respondents moved to set the case for pre-
trial for more than three (3) months after the issues were joined?
2. Were the respondents failed (sic) to exercise due diligence and reasonable
promptitude in filing the motion to set the case for pre-trial?
3. Was there unwillingness on the part of the respondents to prosecute this case?
4. Was the dismissal of this case by the trial court warranted considering the
circumstances surrounding this case?
5. Was there a manifest intention on the part of the respondents to delay the
proceeding of this case?
6. Was the substantial rights of the respondents violated when the trial court dismissed
this case with prejudice?11
The respondents maintain that their appeal by writ of error was proper.
In their reply, the petitioners insist that the issues catalogued by the respondents and their
counsel are not factual but legal issues, thus:
1- The date when the motion to set pre-trial was filed and pre-trial date requested
therein pose no factual issue. They are fixed and stated with specificity in the motion
itself;
2- Whether respondents acted with promptitude in moving to set the pre-trial calls for
a conclusion drawn from the dates of filing of the last pleading and the filing of the
motion to set said pre-trial, which is a legal issue;
3- By the same token, the willingness or unwillingness of respondents to prosecute the
case calls for another conclusion based on the unquestioned dates of the actions they
took in the premises towards that end;
4- Again whether the dismissal was warranted in light of the admitted circumstances
on record calls for a conclusion, hence, legal and not factual;
5- Whether there was manifest intention to delay the proceedings, which is a state of
the mind not susceptible of direct evidence, calls for a mere opinion to be derived from
the admitted circumstances of the case and involves no factual finding, but a legal
conclusion; and
6- Similarly, whether the substantial rights of respondents were violated is also a matter
of legal conclusion.
…
In fine, all the so-called question[s] posed by the same should be applied with due care. 12
We agree with the respondents that the proper remedy is appeal by writ of error under Rule 41
of the Rules of Court, as amended.
It is axiomatic that there is a question of fact when the doubt or difference arises as to the truth
or falsehood of the alleged facts. On the other hand, a question of law exists when there is a
doubt or controversy as to what the law is on a certain state of facts. 13 As pointed out by the
respondents, they raised factual issues in the CA, such as (a) whether there was a delay on
their part to move that the case be set for pre-trial, whether three (3) months as declared by
the trial court, or only fifty-seven (57) days as claimed by them; (b) whether there was factual
basis for the dismissal of the amended complaint, or, more specifically, whether there was a
manifest intention on their part to delay the proceedings and not to prosecute their action,
considering that they moved that the case be set for pre-trial only on September 16, 1997; and
(c) whether there were special and compelling reasons for the dismissal of the amended
complaint, with or without prejudice.
In resolving the issue of whether the respondents complied with Section 1, Rule 18 of the Rules
of Court, the appellate court had to ascertain the lapse of time between the respondents' receipt
of a copy of the petitioners' answer to their amended complaint up to the time they (the
respondents) filed their motion to set the case for pre-trial. This is because while the trial court
declared that there was a delay of three months, the respondents claimed that the delay was
only fifty-seven (57) days. Also, the appellate court had to ascertain, based on the records,
whether the failure of the respondents to comply with the Rules of Court was because of the
ineptitude or negligence of their counsel, or because of a deliberate intention not to comply with
the Rules of Court; and, in any case, whether the substantial rights of the petitioners would be
prejudiced by the reinstatement of the case in the docket of the trial court. The parties frontally
had opposite views on these issues.
The respondents, through counsel, asserted that their failure to move for pre-trial immediately
or soon after service of a copy of petitioners' answer was due to their counsel's busy schedule,
due to heavy pressure of work, coupled with daily court appearances, and his functions as a
public official. The trial court disbelieved such reason. In contrast, the petitioners averred that
the respondents' non-compliance with Section 1, Rule 18 of the Rules of Court was deliberate
and was not the first, but the last of a series of failures to comply with the Rules: a) the
respondents' failure to implead all the indispensable parties in the original complaint, which
impelled the petitioners to move that they (the respondents) be ordered to amend their
complaint, and b) while the respondents amended their complaint, they still failed to submit the
required special power of attorney evidencing the authority of the respondent Antonina Mistas
to execute the required certificate against forum shopping in behalf of her sister, respondent
Pacita Mistas. The petitioners averred that since the respondents had to submit the requisite
special power of attorney, the disposition of the case was delayed anew. As against the plea
of the respondents for a liberal application of the Rules of Court, in light of the fact that no
substantial right of the petitioners would be prejudiced thereby in the event that the case would
be reinstated in the court dockets, the petitioners asserted that due to the delay of fifty-seven
(57) days, coupled with their deliberate and repeated non-compliance with the Rules of Court,
they (the petitioners) had and will continue to suffer gross prejudice.14
In fine then, the respondents' mode of appeal to the Court of Appeals, via Rule 41 of the Rules
of Court, is the proper remedy.
On the second issue, the petitioners aver that the respondents failed to comply with Section 1,
Rule 18 of the Rules of Court, as amended, because they filed their motion to set the case for
pre-trial only on September 16, 1997, despite the fact that the respondents received their copy
of the petitioners' Answer to the amended complaint much earlier, or on July 21, 1997. The
petitioners contend that the delay of almost three (3) months is not the time-frame envisaged
in Section 1, Rule 18 of the Rules of Court. They posit that the CA misconstrued their motion
to dismiss as one based on the respondents' failure to prosecute the case for an unreasonable
lapse of time, which is a ground for dismissal under Section 3, Rule 17 of the Rules of Court.
They contend that this is distinct and separate from the dismissal of a complaint grounded on
the failure of the respondents, as plaintiffs, to promptly move for the setting of the case, as
mandated by Section 1, Rule 18 of the Rules of Court, which was precisely the ground invoked
by them in their motion to dismiss. The petitioners assert that the copious disquisition of the
CA on the requisites for a justifiable dismissal based on failure to prosecute for an unreasonable
period of time is utterly misplaced.
We agree with the petitioners that their motion to dismiss the amended complaint of the
respondent was not based on the respondents' failure to prosecute the case before the RTC
for an unreasonable period of time, but was anchored on the alleged failure of the respondents
to comply with Section 1, Rule 18 of the Rules which reads:
SECTION 1. When conducted. – After the last pleading has been served and filed, it
shall be the duty of the plaintiff to promptly move ex parte that the case be set for pre-
trial.
We also agree with the petitioners' submission that they prayed that the trial court dismiss the
respondents' amended complaint for the latter's failure to comply with the said rule,
conformably to Section 3, Rule 17 of the Rules of Court which reads:
SEC. 3. Dismissal due to fault of plaintiff. – If, for no justifiable cause, the plaintiff fails
to appear on the date of the presentation of his evidence in chief on the complaint, or
to prosecute his action for an unreasonable length of time, or to comply with these
Rules or any order of the court, the complaint may be dismissed upon motion of the
defendant or upon the court's own motion, without prejudice to the right of the
defendant to prosecute his counterclaim in the same or in a separate action. This
dismissal shall have the effect of an adjudication upon the merits, unless otherwise
declared by the court.
However, we agree with the CA that the dismissal of the respondents' amended complaint is
too severe a sanction for their delayed filing of their motion to set the case for pre-trial.
The dismissal of an action by the court, on its own motion, or upon motion of the defendant
under Section 3, Rule 17 of the Rules of Court applies where, due to the fault of the plaintiff (1)
he fails to appear on the date of the prosecution of his evidence-in-chief on the complaint; (2)
he fails to prosecute his case for an unreasonable length of time; or (3) he fails to comply with
the Rules of Court or any order of the court.
In every action, the plaintiff is duty-bound to prosecute the same with utmost diligence and with
reasonable dispatch to enable him to obtain the relief prayed for by him and, at the same time,
minimize the clogging of the court dockets. The expeditious disposition of cases is as much the
duty of the plaintiff as the court. The defendant has also the right to the speedy disposition of
the case filed against him, considering that the pre-trial and trial are delayed, the defense of
the defendants might be impaired.
The bare and unjustifiable failure of the plaintiff to comply with the Rules of Court may result in
the trial court's dismissal of the complaint, motu proprio, or on motion of the defendant. The
sanction in this case may be imposed on the plaintiff even absent any allegation and proof of
his lack of interest to prosecute his action, or of any prejudice to the defendants resulting from
the failure of the plaintiff to comply with the Rules of Court. It must be stressed that every litigant
is mandated to abide by and comply with the Rules of Court.
There may be instances, however, where the court may dismiss the complaint for the failure of
the plaintiff to prosecute his action and for his failure to comply with the Rules of Court within a
reasonable period of time that may give rise to the inference that the plaintiff has lost interest
to prosecute his action. Indeed, the speedy disposition of cases will spare litigants and their
witnesses the anxieties, tribulations and expenses of a protracted or prolonged litigation. The
failure of the plaintiff to prosecute the action without any justifiable cause within a reasonable
period of time will give rise to the presumption that he is no longer interested to obtain, from
the court, the relief prayed for in his complaint; hence, the court is authorized to order the
dismissal of the complaint on its own motion or on motion of the defendants. The presumption
is not, by any means, conclusive because the plaintiff, on a motion for reconsideration of the
order of dismissal, may allege and establish a justifiable cause for such failure.
The concept of promptness of a motion of the plaintiff for the setting of the pre-trial is a relative
term and must necessarily be a flexible one. Promptness connotes an action without hesitation
and loss of time. However, promptness is consistent with delays depending upon
circumstances. As to what constitutes the "prompt" filing of a motion to set a case for pre-trial
is addressed to the sound discretion of the trial court, depending upon the circumstances of
each case. While actions must be disposed of with dispatch, the essential ingredient in the
administration of justice is orderly, expeditious, and not mere speed.15
Thus, the plaintiff's counsel might need time to communicate with his client and inquire when
the latter will be available for pre-trial before filing a motion therefor. If the plaintiff is a
corporation, the said counsel might want to secure a board resolution authorizing its
representative or attorney-in-fact to represent it at pre-trial. Said counsel must, likewise, be
given time to study the feasibility of filing a motion for summary judgment on the pleadings
instead of filing a motion to set the case for pre-trial. Thus, there are variant justifications for
the delayed filing of a motion to set the case for pre-trial.
It must be stressed that even if the plaintiff fails to promptly move for pre-trial without any
justifiable cause for such delay, the extreme sanction of dismissal of the complaint might not
be warranted if no substantial prejudice would be caused to the defendant, and there are
special and compelling reasons which would make the strict application of the rule clearly
unjustified.16 In the absence of patent abuse, the burden of showing in the Court of Appeals
that the trial court abused its discretion in dismissing a case, with or without prejudice, for failure
of the plaintiff to promptly move for pre-trial is lodged on the plaintiff-appellant.
In this case, we agree with the trial court that there was an appreciable interregnum of time
from the time the respondents filed their motion to set the case for pre-trial on September 16,
1997, to the time they received a copy of petitioners' Answer to the amended complaint on July
21, 1997. Since the respondents opted not to file any reply to the petitioners' Answer, the
respondents had to promptly file their motion to set the case for pre-trial as mandated by Rule
18, Section 1 of the Rules of Court. The respondents failed to do so. It bears stressing that
Branch 12 of the RTC where the case was pending is located in Lipa City where the
respondents reside, and is also the place where the office and residence of their counsel are
located. The respondents' pretext for their failure to promptly move for a pre-trial hearing,
namely, heavy pressure work of their counsel consisting in the preparation and filing of
pleadings in other courts and daily court appearances, is not only self-serving but also flimsy.
In fact, the respondents' counsel even failed to specify the cases in which he had to appear in
court. Parenthetically, a lawyer should arrange his court appearances and adopt a system that
takes into account the pleadings to be filed within the period therefor. His failure to do so
constitutes negligence.17 Even if a practicing lawyer has to make daily court appearances, he
can very well prepare a simple ex parte motion in a few minutes and have it filed by his clerk-
messenger without much ado. Thus, the respondents must bear the consequence of their
counsel's negligence.
We note that before the petitioners filed their motion on September 12, 1997 praying that the
court require the respondents to explain in writing their failure to file their motion to set the case
for pre-trial, fifty-seven (57) days had already elapsed. It was only on September 16, 1997 that
the respondents filed their motion to set the case for pre-trial. Instead of justifying their failure
to promptly file their motion, they merely alleged in their opposition that the delay was only for
a short period of time and that they failed to file their motion much earlier because of the heavy
pressure of work of their counsel; and, in the same breath, the respondents even ascribed ill-
motives on the petitioners by alleging that, in filing their motion to dismiss the complaint in case
of the respondents' failure to justify their delay in moving for pre-trial, the petitioners resorted
to technicalities to prevent the case from being tried because they had no defense to their
action. What is so nettlesome is that, as claimed by the petitioners, the respondents failed to
comply with the Rules of Court not only once but three times, thereby delaying the pre-trial,
and, ultimately, the entire proceedings in the court a quo. To add insult, the respondents even
blamed the petitioners for calling the attention of the respondents for their repeated failure to
comply with the Rules of Court. Were it not for the vigilance and fastidiousness of the
petitioners, the proceedings in the trial court would have been a waste of the court's precious
time, as well as that of the parties', for failure of the respondents to implead indispensable
parties.18
On the last issue, the petitioners assert that the Court of Appeals erred when it set aside and
reversed the assailed Orders of the RTC dismissing the amended complaint, with prejudice.
They posit that as held by this Court in Limpot v. Court of Appeals, 19 and in Santos v. Court of
Appeals,20 procedural rules are not to be belittled or ignored simply because the non-
observance thereof may have resulted in the loss of their substantial right. Like all rules, the
petitioners posit, they are required to be followed except only when, for the most persuasive of
reasons, they may be relaxed to relieve a litigant of an injustice most commensurate to the
degree of his thoughtlessness in not complying with the procedure prescribed.
For their part, the respondents aver that, conformably with our ruling in Ramos v. Court of
Appeals,21 where a rigid application of the rules tend to frustrate rather than provide substantial
justice, the Court is empowered to suspend their operation. They assert that, considering the
factual milieu in this case, the dismissal of their complaint, with or without prejudice, is
unwarranted.
On the other hand, the Court of Appeals held as follows:
Plaintiffs-Appellants Have A
Meritorious Case Which Calls For
A Liberal Interpretation Of The Rules
The property subject of the case covered by O.C.T. No. 8756 is registered in the names
of Ceferina, Basilio and Maria, all surnamed Mistas, who are brother and sisters.
Plaintiffs-appellants alleged in their complaint that these registered owners died
intestate. Defendants-appellees are the surviving heirs of spouses Ceferina Mistas and
Ignacio Olave, while plaintiffs-appellants are the surviving heirs of the late spouses
Basilio Mistas and Agatona Arellano. If these allegations are established during the
trial, defendants-appellees Eleuterio and Luciano Olave cannot adjudicate for
themselves the entire property and sold the same to co-defendants Thelma Lapen (sic)
Idonah (sic) Lopez and Haide (sic) de Jesus.
It has been held that when the complaint is meritorious, plaintiff should be given the
chance to vindicate his right. It bears stressing that the rules of procedure are not to
be applied in a very rigid and technical manner, as rules of procedure are used only to
help secure substantial justice. They cannot be blindly adhered to if they would serve
no other purpose than to put into oblivion the very lis mota of the controversy under
scrutiny.
Moreover, when no substantial rights are affected and the intention to delay is not
manifest, it would be a sound exercise of judicial discretion that the trial court allow the
setting of the pre-trial, instead of precipitately dismissing the case.22
Indeed, while there was no intention on the part of the respondents and their counsel to
deliberately or intentionally refuse to comply with the Rules of Court precisely to delay the early
disposition of the case in the trial court, we are convinced that because of the incompetence
and negligence of the respondents and their counsel, the proceedings in the court a quo was
unduly prolonged, to the prejudice of the petitioners. Unchastened, the respondents even
blamed the petitioners for the said delay and ascribed ill-motives on them. All the attendant
circumstances considered, a dismissal of the amended complaint of the respondents,
WITHOUT PREJUDICE, will serve the ends of substantial justice.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed Order of the
Court of Appeals is REVERSED and SET ASIDE. The October 20, 1997 Order of the Regional
Trial Court, Lipa City, Branch 12, is REINSTATED, with the sole modification that the dismissal
of the respondents' amended complaint is without prejudice. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 179999 March 17, 2009
ANSON TRADE CENTER, INC., ANSON EMPORIUM CORPORATION and TEDDY KENG
SE CHEN, Petitioners,
vs.
PACIFIC BANKING CORPORATION, Represented by Its Liquidator, the President of the
Philippine Deposit Insurance Corporation, Respondent.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari1 under Rule 45 of the Revised Rules of Court
filed by petitioners Anson Trade Center, Inc., (ATCI), Anson Emporium Corporation (AEC), and
Teddy Keng Se Chen (Chen), seeking the reversal and the setting aside of the Decision2 dated
31 May 2007 and Resolution3 dated 16 October 2007 of the Court of Appeals in CA-G.R. SP
No. 93734. In its assailed Decision, the Court of Appeals annulled the Order 4dated 10 October
2005 of the Regional Trial Court (RTC) of Manila, Branch 52, dismissing Civil Case No. 01-
102198 for failure of respondent Pacific Banking Corporation (PBC) 5 to appear during the pre-
trial. In its assailed Resolution, the Court of Appeals refused to reconsider its earlier Decision.
The following are the undisputed facts:
Petitioners ATCI and AEC are corporations engaged in retail and/or wholesale general
merchandising.6 Petitioner Chen is the Vice Head of said commercial entities. Respondent is a
closed banking institution undergoing liquidation by the Philippine Deposit Insurance
Corporation (PDIC).
On different dates, petitioner ATCI obtained several loans 7 from respondent, amounting to
₱4,350,000.00. On 26 October 1984, petitioner AEC also received the amount of
₱1,000,000.00 as a loan from respondent. As security for the said loan obligations, petitioner
Chen, with the late Keng Giok,8 executed, on behalf of petitioners ATCI and AEC, two
Continuing Suretyship Agreements on 16 September 1981 and 1 March 1982. The Continuing
Suretyship Agreements provided that, as security for any and all the indebtedness or obligation
of petitioners ATCI and AEC, the respondent had the right to retain a lien upon any and all
moneys or other properties and/or the proceeds thereof in the name or for the account or credit
of petitioners ATCI and AEC deposited or left with respondent. Subsequently, petitioners
defaulted in the payment of their loans. Respondent made several demands for payment upon
petitioners, to no avail.
This prompted respondent to file before the RTC a collection case against petitioners, docketed
as Civil Case No. 01-102198.
On 14 January 2002, petitioner Chen, instead of filing an Answer to the Complaint of
respondent in Civil Case No. 01-102198, filed a Motion to Dismiss. Petitioners ATCI and AEC,
together with the Estate of Keng Giok, also jointly filed a Motion to Dismiss. Respondent filed
its Comment/Opposition to the Motions to Dismiss Civil Case No. 01-102198, to which
petitioners Chen, ATCI, and AEC, with the Estate of Keng Giok, filed their Replies. Due to the
inaction of the RTC on the Motions to Dismiss, respondent filed Motions to Resolve on 14
January 2003 and on 29 October 2003. In an Order dated 4 November 2004, the RTC denied
the Motions to Dismiss but granted the prayer to drop Keng Giok as defendant since he was
long dead prior to the institution of Civil Case No. 01-102198.
After petitioners filed their joint Answer to the Complaint, a pre-trial conference was set by the
RTC on 4 April 2005. All the parties were present at the scheduled pre-trial where the RTC first
explored the possibility of an amicable settlement among the parties by referring the case to
the Philippine Mediation Center for arbitration. The arbitration proceedings were, however,
unsuccessful. Thus, the case was referred back to the RTC for a full-blown trial.
In order to simplify the issues to be threshed out in the trial, another pre-trial conference was
scheduled by the RTC on 10 October 2005, which respondent failed to attend.
Petitioners moved for the dismissal of Civil Case No. 01-102198 on the ground of the non-
appearance of respondent at the pre-trial of 10 October 2005, which was granted, without
prejudice, by the RTC in an Order issued on even date. Respondent filed with the RTC a Motion
for Reconsideration of the court’s order of dismissal, in which respondent prayed for the
relaxation of the rule on non-appearance in the pre-trial, citing excusable negligence on its part
and in the interest of justice and equity. The RTC denied the Motion for Reconsideration of
respondent in another Order dated 17 January 2006.
The above precipitated respondent to file with the Court of Appeals a Petition
for Certiorari under Rule 65 of the Revised Rules of Court, which was docketed as CA-G.R. SP
No. 93734. Respondent prayed for the reversal of the RTC Orders dated 10 October 2005 and
17 January 2006, arguing that the RTC committed grave abuse of discretion amounting to lack
or excess of jurisdiction when it dismissed Civil Case No. 01-102198 due to the non-
appearance of respondent at the pre-trial held on 10 October 2005. Respondent asserted that
its absence was not deliberate or intentional. Its liquidator, PDIC, was undergoing a
reorganization resulting in, among other things, the trimming down of the departments handling
litigation work from four to one; and the lack of manpower to handle more than 400 banks
ordered closed by the Monetary Board. Respondent pleaded for the relaxation of the rules to
avert irreparable damage to it.
The Court of Appeals rendered a Decision on 31 May 2007, granting the Petition of respondent
and reversing the assailed RTC Orders which dismissed Civil Case No. 01-102198. According
to the appellate court, the RTC lost sight of the fact that even the Rules of Court mandate a
liberal construction of the rules and the pleadings in order to effect substantial justice; and that
overriding all the foregoing technical considerations is the trend in the rulings of the court to
afford every party-litigant the amplest opportunity for the proper and just determination of his
cause, freed from the constraints of technicalities.9
In a Resolution dated 16 October 2007, the Court of Appeals refused to reconsider its earlier
Decision.
Petitioners now come before us via this instant Petition for Review on Certiorari raising the
following issues:
I There is no question that herein respondent received notice of the pre-trial conference
WHETHER OR NOT THE REVERSAL OF THE TRIAL COURT’S ORDER DATED OCTOBER
10, 2005 DISMISSING [herein respondent]’S COMPLAINT FOR ITS FAILURE TO APPEAR
AT THE PRE-TRIAL WAS IN ACCORDANCE WITH THE 1997 RULES ON CIVIL
PROCEDURE AND APPLICABLE JURISPRUDENCE.
II
WHETHER OR NOT THE TRIAL COURT ABUSED ITS DISCRETION IN DISMISSING
RESPONDENT’S COMPLAINT BECAUSE OF ITS NON-APPEARANCE AT PRE-TRIAL.10
At the core of this controversy is a question of procedure.
The petitioners, on one hand, argue that the appearance of the parties during pre-trial is
mandatory, and the absence of respondent therefrom constitutes a serious procedural blunder
that merits the dismissal of its case.
On the other hand, respondent claims that the Rules must be relaxed if it will cause irreparable
damage to a party-litigant and to promote the ends of justice. Respondent urges us to brush
aside technicalities and to excuse its non-appearance during the pre-trial conference.
We find the Petition unmeritorious.
Pre-trial, by definition, is a procedural device intended to clarify and limit the basic issues raised
by the parties11 and to take the trial of cases out of the realm of surprise and maneuvering. 12 It
is an answer to the clarion call for the speedy disposition of cases. Hailed as the most important
procedural innovation in Anglo-Saxon justice in the nineteenth century,13 it thus paves the way
for a less cluttered trial and resolution of the case.14
Pertinent provisions of Rule 18 of the Revised Rules of Court on Pre-Trial read:
SEC. 4. Appearance of parties. – It shall be the duty of the parties and their counsel to appear
at the pre-trial. The non-appearance of a party may be excused only if a valid cause is shown
therefor or if a representative shall appear in his behalf fully authorized in writing to enter into
an amicable settlement, to submit to alternative modes of dispute resolution, and to enter into
stipulations or admissions of facts and of documents.
SEC. 5. Effect of failure to appear. – The failure of the plaintiff to appear when so required
pursuant to the next preceding section shall be cause for dismissal of the action. The dismissal
shall be with prejudice, unless otherwise ordered by the court. A similar failure on the part of
the defendant shall be cause to allow the plaintiff to present his evidence ex parte and the court
to render judgment on the basis thereof.
Pursuant to the afore-quoted provisions, non-appearance by the plaintiff in the pre-trial shall be
cause for dismissal of the action. However, every rule is not without an exception. In fact,
Section 4, Rule 18 of the Revised Rules of Court explicitly provides that the non-appearance
of a party may be excused if a valid cause is shown therefor. We find such a valid cause extant
in the case at bar.
scheduled on 10 October 2005, but it failed to attend the same. Such non-appearance
notwithstanding, the Court Of Appeals annulled the 10 October 2005 Order of the RTC
dismissing Civil Case No. 01-102198 after finding that respondent did not intentionally snub
the pre-trial conference. There is no reason for us to disturb such finding.
The Monetary Board ordered the closure of respondent by reason of insolvency on 5 July 1985,
and it has since been represented by its liquidator PDIC in all its undertakings. Still in the course
of the liquidation of respondent, its liquidator PDIC was reorganized in the late 2004 to early
2005. The four departments in the PDIC handling litigation were reduced to one, with the new
Litigation Department having only four in-house counsels who assumed thousands of cases
arising from the closure by the Monetary Board of more than 400 banks. It is understandable
how the notice for the pre-trial conference in Civil Case No. 01-102198 scheduled on 10
October 2005 could be lost or overlooked, as the PDIC was still coping and adjusting with the
changes resulting from its reorganization.
It is important to note that the respondent was not remiss in its duties to prosecute its case.
Except for the lone instance of the pre-trial conference on 10 October 2005, respondent
promptly and religiously attended the hearings set by the RTC. In fact, it appears on the records
that a pre-trial conference in Civil Case No. 01-102198 was first held on 4 April 2005, during
which respondent was present. When the RTC did not immediately act on the Motions to
Dismiss of petitioners, it was respondent which filed two Motions to Resolve. The actuations of
respondent reveal its interest in prosecuting the case, instead of any intention to delay the
proceedings.
In Bank of the Philippine Islands v. Court of Appeals,15 we ruled that in the absence of a pattern
or scheme to delay the disposition of the case or a wanton failure to observe the mandatory
requirement of the rules, courts should decide to dispense rather than wield their authority to
dismiss.
If Civil Case No. 01-102198 is allowed to proceed to trial, it will not clog the dockets of the RTC
or run counter to the purposes for holding a pre- trial. Inconsiderate dismissals, even without
prejudice, do not constitute a panacea or a solution to the congestion of court dockets; while
they lend a deceptive aura of efficiency to records of individual judges, they merely postpone
the ultimate reckoning between the parties. In the absence of clear lack of merit or intention to
delay, justice is better served by a brief continuance, trial on the merits, and final disposition of
cases before the court.16
Moreover, respondent is already insolvent and undergoing liquidation. It instituted Civil Case
No. 01-102198 precisely to recover from petitioners the unpaid loans. Even if the dismissal of
Civil Case No. 01-102198 by the RTC was without prejudice, the re-filing of the case would be
injurious to respondent. Respondent already paid ₱344,878.23 as docket fees for Civil Case
No. 01-102198 and with the dismissal of said case, the amount would be forfeited. Respondent
would have to pay docket fees once more when it re-files its Complaint, a substantial amount
considering that respondent is already financially shaped. As the Court of Appeals noted, for
respondent to again pay docket fees for the re-filing of its Complaint against petitioners would
truly be detrimental to the creditors of respondent.
Given the foregoing, the Court of Appeals did not err in pronouncing that the RTC committed
grave abuse of discretion when it dismissed Civil Case No. 01-102198 for the failure of
respondent to attend the pre-trial conference on 10 October 2005. As the appellate court so
astutely stated:
In refusing to resuscitate Civil Case No. 01-102 198 despite a showing that there was an
excusable ground for the [herein respondent]’s absence during the pre-trial, the respondent
judge manifested a dire fixation towards procedural perfection. Indeed, the extraordinary writ
of certiorari would lie when a trier’s obsession with the stringent tenets of technicality would
occasion an injustice against a party litigant.
Litigation is not a game of technicality, in which one more deeply schooled and skilled in the
subtle art of movement and position entraps and destroys the other. It is rather a contest in
which each contending party fully and fairly lays before the court the facts in issue and then,
brushing aside as wholly trivial and indecisive all imperfection of forms and technicalities of
procedure, asks that justice be done upon the merits. Lawsuits, unlike duels, are not to be won
by a rapier’s thrust. Technicality, when it deserts its proper office as an aid to justice and
becomes its great hindrance and chief enemy, deserves scant consideration from courts.17
As we have stressed emphatically on previous occasions, the rules of procedure may not be
misused and abused as instruments for the denial of substantial justice. Here is another
demonstrative instance of how some members of the bar, availing themselves of their
proficiency in invoking the letter of the rules without regard to their real spirit and intent, succeed
in inducing courts to act contrary to the dictates of justice and equity, and, in some instances,
to wittingly or unwittingly abet unfair advantage by ironically camouflaging their actuations as
earnest efforts to satisfy the public clamor for speedy disposition of litigations, forgetting all the
while that the plain injunction of Section 2 of Rule 1 is that the "rules shall be liberally construed
in order to promote their object and to assist the parties in obtaining" not only "speedy" but
more imperatively, "just ... and inexpensive determination of every action and proceeding."18
WHEREFORE, premises considered, the instant Petition for Review on Certiorari is hereby
DENIED. The Decision dated 31 May 2007 and Resolution dated 16 October 2007 of the Court
of Appeals are AFFIRMED. Costs against the petitioners.
SO ORDERED.
EN BANC
A.M. No. 01-12-01-SC January 16, 2003
IN THE MATTER OF THE ALLEGED IMPROPER CONDUCT OF SANDIGANBAYAN
ASSOCIATE JUSTICE ANACLETO D. BADOY, JR., TAKING AN AMBULANCE BUT
PROCEEDING TO THE GMA TV STATION FOR AN INTERVIEW INSTEAD OF
PROCEEDING FORTHWITH TO THE HOSPITAL.
x---------------------------------------------------------x
A.M. No. SB-02-10-J January 16, 2003
JOSEPH E. ESTRADA, JOSE "JINGGOY" ESTRADA, SERAFIN R. CUEVAS, RENE A.V.
SAGUISAG, JOSE B. FLAMINIANO, PACIFICO A. AGABIN, FELIX D. CARAO, JR.,
CLEOFE V. VERZOLA, DELIA H. HERMOSO AND RAYMUND P. FORTUN, complainants,
vs.
ASSOCIATE JUSTICES ANACLETO D. BADOY, JR., AND TERESITA LEONARDO-DE
CASTRO, respondents.
SANDOVAL-GUTIERREZ, J.:
Judges, like ordinary mortals, are subject to human limitations. At times, the great tides of
perturbing and overwhelming emotions engulf them. Notwithstanding so, they are expected to
be "cerebral men" 1 who can control their confounding emotions and idiosyncratic inclinations.
Otherwise, they will be held answerable for their conduct.
Haled in these two consolidated administrative cases, AM No. 01-12-01-SC and A.M No. SB-
02-10-J, are Sandiganbayan Justices Anacleto D. Badoy, Jr. (Ret.) and Teresita Leonardo-De
Castro.
The facts of A.M. No. 01-12-01-SC may be synthesized as follows:
On November 29, 2001, Justice Badoy, aboard an ambulance, "whisked himself" to the GMA
Broadcast Station in Quezon City for a live interview in the news program Saksi. There, he
announced the loss of a Resolution he penned in connection with the plunder case against
former President Joseph Ejercito Estrada and others.
The media sarcastically referred to the event as a "staged comedy" 2 or a "television
tryst." 3 Leading newspapers contained facetious headlines, such as "Ambulance rushes
Badoy — to TV Station," 4 "What's with Justice Badoy?," 5 and "Unorthodox Behavior —
Analyze Badoy, Erap Lawyers ask SC." 6
Acting on the media reports, this Court directed Justice Badoy to show cause why he should
not be administratively charged with conduct unbecoming a Justice of the Sandiganbayan. 7
In his compliance, 8 Justice Badoy alleged that three days prior to the incident, he could not
find his Resolution ordering that former President Estrada be detained at Fort Sto. Domingo.
So he requested the National Bureau of Investigation to conduct an investigation, but to no
avail. Thus, on November 29, 2001, agitated that someone might have stolen the Resolution
and claimed that he (Justice Badoy) sold it for a fee, he decided to go to the GMA-7 Broadcast
Station and report its loss, in order that the public may know he is honest. In going there, he
chose to ride in an ambulance because he felt very sick and cold, intending to proceed to a
hospital after the interview.
A.M No. SB-02-10-J is set on a different factual milieu, to wit:
Subsequent to the descent of former President Estrada from power, the Office of the
Ombudsman filed several criminal cases against him, his family, and friends. One of them is
Criminal Case No. 26558 wherein he, his son Jose "Jinggoy" and Atty. Edward Serapio stand
accused for violation of Republic Act No. 7080, the Anti-Plunder Law. The case was raffled to
the Third Division of the Sandiganbayan composed of Justice Badoy, as Chairman, and
Justices Teresita Leonardo-De Castro and Ricardo M. Ilarde, now retired, as members.
On September 13, 2001, after the termination of a series of pre-trial conference between the
parties, the Sandiganbayan furnished them and their counsel with a copy of the Pre-trial Order
for their signatures. The defense panel composed of Atty. Rene A.V. Saguisag (lead counsel),
Justice Serafin R. Cuevas, Attys. Jose B. Flaminiano, Felix D. Carao, Jr., Cleofe V. Verzola,
and Delia H. Hermoso, refused to sign it on the grounds that: 1) there is no provision in the
Revised Rules of Criminal Procedure requiring them to sign a Pre-trial Order; 9 2) they were
not given ample time to read it; 10 and 3) it incorporates a statement that they admitted the
existence of certain exhibits although there was no such admission. 11
In the course of an argument between Sandiganbayan Justice De Castro and Justice Cuevas,
Atty. Saguisag intervened. In the process, he argued simultaneously with Justice
Cuevas. 12 Despite Justice De Castro's request to wait for his turn, Atty. Saguisag persisted,
prompting her to bang the gavel twice and order him to stop arguing. 13This led Justice Badoy
to order four Sheriffs to take Atty. Saguisag out of the courtroom. 14
Thereafter, Justice De Castro ruled in open court that the assailed portion of the Pre-trial Order
could be deleted. 15The prosecution manifested its acquiescence. However, Atty. Flaminiano
objected, insisting that the defense needs more time to study the Pre-trial
Order. 16 Notwithstanding the objection, Justice Badoy terminated the pre-trial and set the trial
proper on October 1, 3 and 4, 2001 and thereafter, every Monday, Wednesday and Thursday
of the week, all at 1:00 o'clock in the afternoon. 17
On October 1, 2001, the defense lawyers did not appear. Determined to proceed with the trial,
Justice Badoy appointed Atty. Sabino Acut, Jr. and Atty. Martin Pison, counsel for accused
Atty. Serapio, to represent the Estradas. Former President Estrada objected, insisting that he
has the right to choose his counsel. Atty. Acut and Atty. Pison declined because of a possible
conflict between their client's interest and that of the Estradas. As a last recourse, Justice
Badoy appointed lawyers from the Public Attorneys Office (PAO) as counsel de officio for the
Estradas. 18
Feeling aggrieved, former President Estrada, "Jinggoy" Estrada and all their counsel of record
in Criminal Case No. 26558 filed the instant administrative complaint charging Justices Badoy
and De Castro with:
1) dishonesty and misrepresentation for incorporating in the Pre-trial Order a statement that
"the defense admitted Plaintiff's Exhibit A up to Exhibit C-45 and its submarkings as to its
existence" notwithstanding the fact that they did not admit the same; 19
2) oppression and gross misconduct for "throwing" Atty. Saguisag out of the courtroom; 20
3) violation of Supreme Court rules, directives and circulars for setting the hearing of the
plunder case three times a week, at one o'clock in the afternoon, without prior consultation with
the defense counsel; 21
4) denial of the accused's right to counsel for appointing PAO lawyers as counsel de officio of
the Estradas during the hearing of October 1, 2001; 22 and
5) penchant for late rulings 23 as shown in the following instances:
1. The release of the Resolution denying complainant Jinggoy Estrada's Motion to
Quash (filed as early as April 2001) after office hours and on the eve of the July 10,
2001 arraignment.
2. The release of the Resolution denying complainant Estradas' Petition to Recuse on
the scheduled date of the pre-trial or on September 3, 2001.
3. Respondents' failure to resolve complainants' Motion to Cancel the October 1, 2001
hearing filed as early as September 19, 2001.
4. The release of the Resolution denying complainant Jinggoy Estrada's Motion to be
Allowed to Administer the Oath of Office to Senator Luisa "Loi" Estrada, on June 29,
2001, past beyond the scheduled hour of oath-taking, thus, prompting Justice Ricardo
M. Ilarde (Ret.) to write the following annotations on the Resolution: "What is there to
deny? This resolution was brought to us only at 4:45 p.m. The matter has been
rendered moot and academic."
Respondents filed their separate comments.
Justice De Castro explains as follows:
First, in issuing the Pre-trial Order, the court merely relied on the parties' Joint Stipulations of
Facts and on the notes of the five (5) stenographers recording the pre-trial conferences held
before the Division Clerk of Court. Nonetheless, when complainants called the court's attention
regarding the assailed statement in the Pre-trial Order, she ordered its deletion. 24 Second, it
was Atty. Saguisag's contumacious conduct of "loudly speaking simultaneously with Atty.
Cuevas" that prompted respondent Justices to order him to leave the courtroom. 25 Third, they
consulted the complainants before they set the hearing of the plunder case three times a week,
resulting in the revision of the trial settings embodied in the court's Order dated September 14,
2001. 26 Fourth, the appointment of three (3) PAO lawyers was intended to provide the accused
with adequate legal assistance during the hearing. And fifth, they resolved the accused's three
motions to quash only on July 9, 2001 because the parties' last pleading was filed only on July
5, 2001. 27
For his part, Justice Badoy maintains that the Pre-trial Order has not prejudiced the accused
since they were not obliged to sign it and that they are free to object to the presentation of any
evidence during trial. 28 He ordered Atty. Saguisag to leave the courtroom because he ignored
Justice De Castro's repeated order to stop arguing. 29 On the setting of the hearing of the
plunder case three times a week, he stressed that the court was merely complying with the
Speedy Trial Act. 30 And lastly, on the alleged late rulings, he explains:
"Regarding the release of the Resolution of the undersigned on the Motion for
Recusation of the Estradas on the recusation issue. At the time, the undersigned had
no intention of releasing it yet in order to fine-tune the same further. However, he was
informed just before going out for the hearing that the Estradas were going to use the
pendency of their Motion for Recusation as a reason, again, to ask for the
postponement of the setting for that day, one of their several motions for
postponement.
As regards the delay in the Resolution of the undersigned on the permission to have
Mayor Jose "Jinggoy" Estrada go to San Juan City to administer the oath to both his
mother as Senator and his brother as the new Mayor of San Juan City, the reason was
because the undersigned was looking hard for a justification to grant the request since
the undersigned sympathized with the same. The undersigned went to the extent of
requesting a copy of the Rules and Regulations from both the Bureau of Jail
Management and Penology (BJMP) as well as the Bureau of Corrections (BOC).
Hence, the delay in the Resolution of the ponencia. But, even late, there was still a
chance for then Mayor Jose "Jinggoy" Estrada to administer the oaths of office."
xxx xxx xxx
The undersigned stated that, with every Justice having 100% load and 100% staff, with
the plunder case (equivalent easily to 500%), the undersigned now had a load of 600%
but with his support staff remaining in the same level. That is why he asked for
additional staff." 31 (Emphasis supplied)
At the outset, it must be stressed that the retirement 32 of Justice Badoy from the Judiciary does
not divest this Court of its jurisdiction over these cases. In Perez vs. Abiera, 33 this Court ruled:
"x x x In other words, the jurisdiction that was Ours at the time of the filing of the
administrative complaint was not lost by the mere fact that the respondent public official
had ceased to be in office during the pendency of his case. The Court retains its
jurisdiction either to pronounce the respondent official innocent of the charges or
declare him guilty thereof. A contrary rule would be fraught with injustices and pregnant
with dreadful and dangerous implications. For what remedy would the people have
against a judge or any other public official who resorts to wrongful and illegal conduct
during his last days in office? What would prevent some corrupt and unscrupulous
magistrate from committing abuses and other condemnable acts knowing fully well that
he would soon be beyond the pale of the law and immune to all administrative
penalties? If only for reasons of public policy, this Court must assert and maintain its
jurisdiction over members of the judiciary and other officials under its supervision and
control for acts performed in office which are inimical to the service and prejudicial to
 the interests of litigants and the general public. If innocent, respondent official merits
vindication of his name and integrity as he leaves the government which he served well
and faithfully; if guilty, he deserves to receive the corresponding censure and a penalty
proper and imposable under the situation."
We shall resolve A.M No. 01-12-01-SC first.
An introspective appraisal of the "ambulance incident" yields reasons for this Court to adjudge
Justice Badoy guilty of conduct unbecoming a Justice.
Canon 2 of the Code of Judicial Conduct provides that "a judge should avoid impropriety and
the appearance of impropriety in all activities." He should so behave at all times as to promote
public confidence in the integrity of the Judiciary. 34 Concomitant with this is the express
mandate of the Canons of Judicial Ethics that "justice should not be bounded by the individual
idiosyncrasies of those who administer it." A judge should adopt the usual and expected
method of doing justice, and not seek to be spectacular or sensational in the conduct of his
court.
Justice Badoy tramples upon the foregoing judicial norms. We see no reason why he should
rush to the GMA-7 Broadcast Station just to inform the public about the loss of a Resolution.
This is an internal office incident which should not be reported to the whole nation. His claim
that the Resolution might have been stolen and sold by someone (using his name) for a fee is
a wild conjecture. Not only did his conduct give an image that he could not manage his work
effectively, but it also indicated that he had corrupt personnel. Moreover, it dragged innocent
parties as possible culprits.
Justice Badoy's aberrant behavior deserves administrative sanction. As the Chairman of the
Division hearing the plunder case against the former President of the Philippines, he should
have been more circumspect in his actuation. A short pause for reflection might have yielded
a better judgment. The loss of the Resolution, being an internal matter, could have been
addressed inside his own chamber. That he brought it to the arena of public opinion is pure
vanity. It cannot be countenanced. If lawyers are prohibited from making public statements in
the media regarding a pending case to arouse public opinion for or against a party, 35 with more
reason should judges be prohibited from seeking publicity. Judges are not actors or politicians
who thrive by publicity. Publicity undermines the dignity and impartiality of a judge. 36 Thus, at
no time should he be moved by a desire to cater to public opinion to the detriment of the
administration of justice." 37
The fact that Justice Badoy, just three (3) weeks prior to the "ambulance incident," was strictly
ordered by Chief Justice Hilario G. Davide, Jr., "to cease and desist from holding press
conferences, issuing press statements, or giving interviews to the media on any matter or
incident related to the issues subject of the controversy" 38 all the more punctuates his
indiscretion.
As we mentioned earlier, judges are subject to human limitations. Imbedded in their
consciousness is the complex of emotions, habits and convictions. Aware of this actuality, it
behooves them to regulate these deflecting forces and not to let them loose, either to their own
detriment or to that of the courts they serve. This is the high price they have to pay as occupants
of their exalted positions.
We now resolve AM No. SB-02-10-J.
At this juncture, let it be stressed that the administration of justice is primarily a joint
responsibility of the judge and the lawyer. The judge expects a lawyer to properly perform his
role in this task in the same manner that the lawyer expects a judge to do his part. 39 Their
relation should be based on mutual respect and on a deep appreciation by one of the duties of
the other. Only in this manner can each minimize occasions for delinquency and help attain
effectively the ends of justice. 40
The conflict between the herein parties could have been avoided if only they heeded the
foregoing clarion call.
I
Respondents are not guilty of the charges of dishonesty and misrepresentation. Dishonesty
connotes a disposition to deceive, 41 while misrepresentation means a statement made to
deceive or mislead. 42 Obviously, both imply an "intention" to deceive. Complainants failed to
prove that respondents acted with deceit or with malice or bad faith in stating in the Pre-trial
Order that the defense admitted the existence of certain exhibits. Other than their bare
allegation, no sufficient evidence was adduced to support the charge. 43 That respondents did
not intend to deceive complainants is clear from the fact that the Pre-trial Order
states verbatim the Joint Stipulations of Facts submitted by both parties. Furthermore, when
complainants expressed their objection to the inclusion of the assailed statement, respondents
immediately ordered its deletion. The transcript of stenographic notes is revealing, thus:
"AJ BADOY:
The Court would appreciate if you can point out some grammatical errors.
Atty. Flaminiano:
Yes, Your Honor. I am going to do that.
On page 20, the last paragraph states: "The defense admitted exhibit "A" up
to exhibit "C-45" and its sub markings as to its existence but not as to the truth
of the content." In the very first place there never was any admission made by
the defense as even to the existence of the document. And the sentence also
we believe not grammatically appropriate. It should be their sub markings or
as to their existence because this involved several documents, Your Honors.
AJ DE CASTRO:
That portion may be deleted.
Atty. Flaminiano:
Well, I'm not sure about it. Your Honor. I only pointed that there is a need for
us to go over page by page because we got a copy only after there was an
incident —
xxx xxx xxx
 OMB Desierto:
We can have this deleted.
Atty. Flaminiano:
But there are several others.
AJ DE CASTRO:
What are those?
OMB Desierto:
After on (1) hour they should be able to determine that. After all Your Honor, I
would like to emphasize the fact that the Joint Stipulation of Facts were signed
— stipulations which we had a week ago were signed by the parties, by the
counsels for the accused. And now, the things that are reflected here, are
found in this Pre-trial Order. If there is any delineation from what stipulated
then and were signed by the counsels for the defense and also the
prosecution, then we can correct that, but it cannot be possible major changes
will have to be made in the Pre-trial Order since this is only copied anyway
from the Joint Stipulation of Facts. If there are such thing as that particular
sentence which should be objectionable to the defense, the prosecution is
ready to agree to its deletion.
xxx xxx xxx
AJ DE CASTRO:
You know what we did here is simply copy verbatim every document that we
found on record pertaining to the Pre-trial conference. We did not add. We did
not subtract. So, anything that you will state now will simply be corrections of
some clerical errors, that is all. Giving you enough time to go
over." 44(Emphasis supplied)
On complainants' refusal to sign the Pre-trial Order, Section 2, Rule 118 of the Revised Rules
of Criminal Procedure provides that "All agreements or admissions made or entered during the
pre-trial conference shall be reduced in writing and signed by the accused and counsel,
otherwise, they cannot be used against the accused." Considering that the Pre-trial Order
contains the recital of the actions taken by the parties, agreements and admissions, the facts
stipulated, and the evidence marked, 45 the parties must sign it. A party who participates in the
pre-trial conference and who signs the Joint Stipulation of Facts is expected to sign the Pre-
trial Order. If a party believes that the Pre-trial Order is not an honest representation of what
transpired in the pre-trial conference, then he must specify his objections thereto and the court
may modify it to prevent injustice. This was what respondents exactly did when complainants
pointed out the assailed statement in the Pre-trial Order.
II
We now come to complainants' allegation of oppression and gross misconduct. Oppression is
a "misdemeanor committed by a public officer, who under color of his office, wrongfully inflict
upon any person any bodily harm, imprisonment or other injury." It is an "act of cruelty, severity,
or excessive use of authority. 46 Upon the other hand, the word "misconduct" implies wrongful
intention. For gross misconduct to exist, the judicial act complained of should be corrupt or
inspired by an intention to violate the law or a persistent disregard of well-known legal
rules. 47We find no evidence to prove complainants' charges of oppression and misconduct.
Records show that Atty. Saguisag was asking the court for a copy of the Pre-trial Order so that
he could follow up the court's discussion He did not utter any disrespectful remark against
respondents nor attack their integrity or authority. However, he kept on speaking
simultaneously with Justice Cuevas and refused to yield to the court's repeated order to stop.
Such actuation must have constrained respondents to lose their cool and order the sheriffs to
take him out of the courtroom. At that point, what respondents should have done was to cite
him in direct contempt of court pursuant to Rule 71 of the 1997 Rules of Civil Procedure, as
amended. 48 In Romero vs. Valle, Jr., 49 this Court ruled:
"Precisely, judicial officers are given contempt powers in order that without being
arbitrary, unreasonable or unjust, they may endeavor to hold counsel to a proper
appreciation of their duties to the court. Respondent judge could very well have cited
complainant in contempt of court instead of indulging in tantrums by banging his gavel
in a very forceful manner and unceremoniously walking out of the courtroom."
It has been consistently stressed that the role of a judge in relation to those who appear before
his court must be one of temperance, patience and courtesy. In this regard, Rule 3.04 of the
Code of Judicial Conduct states: "A judge should be patient, attentive and courteous to all
lawyers, especially the inexperienced, to litigants, witnesses, and others appearing before the
court. A judge should avoid unconsciously falling into the attitude of mind that the litigants are
made for the courts instead of the courts for the litigants."
In Echano vs. Sunga, 50 respondent judge, during the course of an argument in his sala, lost
his cool and called the sheriff to take away the arguing attorney. And when the attorney kept
on talking, respondent judge countered, "Submitted, Buntalin kita dian." This Court admonished
him to be more prudent and restrained in his behavior.
For his part, pursuant to Canon 11 of the Code of Professional Responsibility, Atty. Saguisag
should have observed the respect due to respondent magistrates for the maintenance of the
court's supreme importance. Upon being ordered to stop arguing simultaneously with Justice
Cuevas, he should have complied and behaved accordingly. Had he done so, he would not
have been ordered to leave the courtroom. Indeed, he failed to comport himself in a manner
required of an officer of the court.
III
The setting of the hearing of the plunder case three times a week is in order, not only because
the case is of national concern, but more importantly, because the accused are presently
detained. 51 Contrary to complainants' assertions, the continuous trial is in accordance with the
mandate of the law. This Court, in Administrative Circular No. 3-90 dated January 31, 1990,
ordered all trial courts to adopt the mandatory continuous trial system in accordance with
Administrative Circular No. 4 dated September 22, 1988 and Circular No. 1-89 dated January
19, 1989. It was adopted precisely to minimize delay in the processing of cases. This delay
was attributed to the common practice of piecemeal trial wherein cases are set for trial one day
at a time and thereafter the hearing is postponed to another date or dates until all the parties
have finished their presentation of evidence. 52 Section 2 of Rule 119 of the Revised Rules on
Criminal Procedure provides:
"SEC. 2. Continuous trial until terminated; postponements. — Trial once commenced
shall continue from day to day as far as practicable until terminated. It may be
postponed for a reasonable period of time for good cause.
The court shall, after consultations with the prosecutor and defense counsel, set the
case for continuous trial on weekly or other short-term trial calendar at the earliest
possible time so as to ensure speedy trial. In no case shall the entire period exceed
one hundred eighty (180) days from the first day of trial, except as otherwise authorized
by the Supreme Court." (Emphasis supplied)
Corolarilly, the "consultations" referred to in the foregoing provisions does not necessarily mean
that the court has to secure first from the prosecution and defense their approval before it can
set the date of hearing. To rule otherwise is to subject our trial system to the control of the
parties and their counsel.
Complainants also assail respondents' act of setting the hearing at one o'clock in the afternoon.
Again, there is nothing irregular in it. The schedule of hearing is regarded as a matter
necessarily at the discretion of the trial judge. As a matter of fact, a court may even hold night
sessions, and a court of review will not interfere unless it clearly appears that there has been
an abuse of the power of the judge and that injustice has been done. 53 This is because the
good of the service demands more toil and less idleness, and the limitations imposed by law
are aimed to cut indolence and not the other way around. 54
IV
Our minds cannot sit easy with regard to the charge of violation of the accuseds' right to
counsel. A PAO lawyer is considered as independent counsel within the contemplation of the
Constitution considering that he is not a special counsel, public or private prosecutor, counsel
of the police, or a municipal attorney whose interest is admittedly adverse to that of the
accused. In People vs. Bacor, 55 we ruled that the assistance of a PAO lawyer satisfies the
constitutional requirement of a competent and independent counsel for the accused.
V Let a copy of this Decision be attached to respondents' records with this Court.
Finally, we find that Justice Badoy incurred delay in resolving Jinggoy Estrada's motion to be
allowed to administer the oath of his mother, a newly elected Senator. Every judge is required,
at all times, to be alert in his rulings and in the conduct of the business of the court, so far as
he can make it useful to litigants and to the community. Rule 3.05, Canon 3 of the Code of
Judicial Conduct provides that "A judge shall dispose of the court's business promptly and
decide cases within the required periods." A judge must cultivate a capacity for quick decision
and habits of indecision must be sedulously overcome.
While we commend Justice Badoy's persistence in searching for precedents that would help
him resolve Jinggoy Estradas' motion to be allowed to administer the oath of office of his
mother, nonetheless, he should not have delayed resolving the same. As a result, the members
of his Division failed to vote on his Resolution. He knew very well that the oath taking was to
be held at 2:00 P.M. of June 29, 2001. Even if he had to deny the motion, he should have
consulted his members before 2:00 P.M. so as to give them the opportunity to consider Jinggoy
Estrada's arguments. When he submitted the Resolution to his members at 4:45 P.M., he
rendered their votes inconsequential. Even Justices De Castro and Ilarde made notes in the
same Resolution to the effect that the matter subject of the Resolution had become moot before
it reached them. Justice De Castro stated: "The matter is now moot and academic;" while
Justice Ilarde wrote: "What is there to deny? This resolution was brought to us only on 4:45
P.M. The matter has been rendered moot and academic." Clearly, Justice Badoy should be
held liable for such delay.
In sum, we find Justice Badoy guilty of the following administrative offenses:
1) conduct unbecoming a Justice for going to GMA-7 Broadcast Station aboard an ambulance
and reporting the loss of a Resolution, classified as a light charge under Section 10 of Rule 140
of the Revised Rules of Court, as amended; 56 and
2) undue delay in resolving Jinggoy Estrada's motion to be allowed to administer his mother's
oath of office, a less serious charge under Section 9 of the same Rule. 57
Likewise, we find that both Justice Badoy and Justice De Castro failed to exhibit judicial
temperament. Such conduct deserves admonition.
One last word. The members of the bench and the bar ought to be reminded that the people
expect from them a sense of shared responsibility in the administration of justice — a crucial
factor in the speedy and fair disposition of cases. Each of them must do his share for in the last
analysis the quality of justice meted out by the courts cannot be higher than the quality of the
lawyers practicing in the courts and of the judges who have been selected from among them.
WHEREFORE, respondent Justice Anacleto D. Badoy, Jr. (Retired), is hereby FINED in the
sum of P13,000.00 for conduct unbecoming a Justice and for delay in issuing an Order, to be
deducted from his retirement benefits.
Justice Teresita Leonardo-De Castro is hereby ADMONISHED to be more tolerant of counsel's
demeanors which do not detract from the dignity and solemnity of the court proceedings.
SO ORDERED.
SECOND DIVISION On December 23, 1981, Delta executed a Continuing Deed of Assignment of
Receivables[7] in favor of SIHI as security for the payment of its obligations to SIHI per the credit
[G.R. No. 147950. December 11, 2003] agreements. In view of Deltas failure to pay, the loan agreements were restructured under a
CALIFORNIA BUS LINES, INC., petitioner, vs. STATE INVESTMENT HOUSE, Memorandum of Agreement dated March 31, 1982.[8] Delta obligated itself to pay a fixed
INC., respondent. monthly amortization of P400,000 to SIHI and to discount with SIHI P8,000,000 worth of
receivables with the understanding that SIHI shall apply the proceeds against Deltas overdue
accounts.

DECISION CBLI continued having trouble meeting its obligations to Delta. This prompted Delta to
threaten CBLI with the enforcement of the management takeover clause. To pre-empt the take-
QUISUMBING, J.: over, CBLI filed on May 3, 1982, a complaint for injunction[9], docketed as Civil Case No. 0023-
P, with the Court of First Instance of Rizal, Pasay City,
In this petition for review, California Bus Lines, Inc., assails the decision,[1] dated April 17,
(now Regional Trial Courtof Pasay City). In due time, Delta filed its amended answer with
2001, of the Court of Appeals in CA-G.R. CV No. 52667, reversing the judgment[2], dated June
applications for the issuance of a writ of preliminary mandatory injunction to enforce the
3, 1993, of the Regional Trial Court of Manila, Branch 13, in Civil Case No. 84-28505
management takeover clause and a writ of preliminary attachment over the buses it sold to
entitled State Investment House, Inc. v. California Bus Lines, Inc., for collection of a sum of
CBLI.[10] On December 27, 1982,[11] the trial court granted Deltas prayer for issuance of a writ
money. The Court of Appeals held petitioner California Bus Lines, Inc., liable for the value of
of preliminary mandatory injunction and preliminary attachment on account of the fraudulent
five promissory notes assigned to respondent State Investment House, Inc.
disposition by CBLI of its assets.
The facts, as culled from the records, are as follows:
On September 15, 1983, pursuant to the Memorandum of Agreement, Delta executed a
Sometime in 1979, Delta Motors CorporationM.A.N. Division (Delta) applied for financial Deed of Sale[12] assigning to SIHI five (5) of the sixteen (16) promissory notes[13] from California
assistance from respondent State Investment House, Inc. (hereafter SIHI), a domestic Bus Lines, Inc. At the time of assignment, these five promissory notes, identified and numbered
corporation engaged in the business of quasi-banking. SIHI agreed to extend a credit line to as 80-53, 80-54, 80-55, 80-56, and 80-57, had a total value of P16,152,819.80 inclusive of
Delta for P25,000,000.00 in three separate credit agreements dated May 11, June 19, interest at 14% per annum.
and August 22, 1979.[3] On several occasions, Delta availed of the credit line by discounting
SIHI subsequently sent a demand letter dated December 13, 1983,[14] to CBLI requiring
with SIHI some of its receivables, which evidence actual sales of Deltas vehicles. Delta
CBLI to remit the payments due on the five promissory notes directly to it. CBLI replied
eventually became indebted to SIHI to the tune of P24,010,269.32.[4]
informing SIHI of Civil Case No. 0023-P and of the fact that Delta had taken over its
Meanwhile, from April 1979 to May 1980, petitioner California Bus Lines, Inc. (hereafter management and operations.[15]
CBLI), purchased on installment basis 35 units of M.A.N. Diesel Buses and two (2) units of
As regards Deltas remaining obligation to SIHI, Delta offered its available bus units, valued
M.A.N. Diesel Conversion Engines from Delta. To secure the payment of the purchase price of
at P27,067,162.22, as payment in kind.[16] On December 29, 1983, SIHI accepted Deltas offer,
the 35 buses, CBLI and its president, Mr. Dionisio O. Llamas, executed sixteen (16) promissory
and Delta transferred the ownership of its available buses to SIHI, which in turn acknowledged
notes in favor of Delta on January 23 and April 25, 1980.[5] In each promissory note, CBLI
full payment of Deltas remaining obligation.[17] When SIHI was unable to take possession of the
promised to pay Delta or order, P2,314,000 payable in 60 monthly installments starting August
buses, SIHI filed a petition for recovery of possession with prayer for issuance of a writ
31, 1980, with interest at 14% per annum. CBLI further promised to pay the holder of the said
of replevin before the RTC of Manila, Branch 6, docketed as Civil Case No. 84-23019. The
notes 25% of the amount due on the same as attorneys fees and expenses of collection,
Manila RTC issued a writ of replevin and SIHI was able to take possession of 17 bus units
whether actually incurred or not, in case of judicial proceedings to enforce collection. In addition
belonging to Delta. SIHI applied the proceeds from the sale of the said 17 buses amounting
to the notes, CBLI executed chattel mortgages over the 35 buses in Deltas favor.
to P12,870,526.98 to Deltas outstanding obligation.Deltas obligation to SIHI was thus reduced
When CBLI defaulted on all payments due, it entered into a restructuring agreement with to P20,061,898.97. On December 5, 1984, Branch 6 of the RTC of Manila rendered judgment
Delta on October 7, 1981, to cover its overdue obligations under the promissory notes. [6] The in Civil Case No. 84-23019 ordering Delta to pay SIHI this amount.
restructuring agreement provided for a new schedule of payments of CBLIspast due
Thereafter, Delta and CBLI entered into a compromise agreement on July 24, 1984,[18]in
installments, extending the period to pay, and stipulating daily remittance instead of the
Civil Case No. 0023-P, the injunction case before the RTC of Pasay. CBLI agreed that Delta
previously agreed monthly remittance of payments. In case of default, Delta would have the
would exercise its right to extrajudicially foreclose on the chattel mortgages over the 35 bus
authority to take over the management and operations of CBLI until CBLI and/or its president,
units. The RTC of Pasay approved this compromise agreement the following day, July 25,
Mr. Dionisio Llamas, remitted and/or updated CBLIs past due account. CBLI and Delta also
1984.[19] Following this, CBLI vehemently refused to pay SIHI the value of the five promissory
increased the interest rate to 16% p.a. and added a documentation fee of 2% p.a. and a 4%
p.a. restructuring fee.
notes, contending that the compromise agreement was in full settlement of all its obligations to
Delta including its obligations under the promissory notes.
On December 26, 1984, SIHI filed a complaint, docketed as Civil Case No. 84-28505,
against CBLI in the Regional Trial Court of Manila, Branch 34, to collect on the five (5)
promissory notes with interest at 14% p.a. SIHI also prayed for the issuance of a writ of
preliminary attachment against the properties of CBLI.[20]
On December 28, 1984, Delta filed a petition for extrajudicial foreclosure of chattel
mortgages pursuant to its compromise agreement with CBLI. On January 2, 1985, Delta filed
in the RTC of Pasay a motion for execution of the judgment based on the compromise
agreement.[21] The RTC of Pasay granted this motion the following day.[22]
In view of Deltas petition and motion for execution per the judgment of compromise, the
RTC of Manila granted in Civil Case No. 84-28505 SIHIs application for preliminary attachment
on January 4, 1985.[23] Consequently, SIHI was able to attach and physically take possession
of thirty-two (32) buses belonging to CBLI.[24] However, acting on CBLIsmotion to quash the
writ of preliminary attachment, the same court resolved on January 15, 1986,[25] to discharge
the writ of preliminary attachment. SIHI assailed the discharge of the writ before the
Intermediate Appellate Court (now Court of Appeals) in a petition for certiorari and prohibition,
docketed as CA-G.R. SP No. 08378. On July 31, 1987, the Court of Appeals
granted SIHIs petition in CA-GR SP No. 08378 and ruled that the writ of preliminary attachment
issued by Branch 34 of the RTC Manila in Civil Case No. 84-28505 should stay.[26] The decision
of the Court of Appeals attained finality on August 22, 1987.[27]
Meanwhile, pursuant to the January 3, 1985 Order of the RTC of Pasay, the sheriff
of Pasay City conducted a public auction and issued a certificate of sheriffs sale to Delta on
April 2, 1987, attesting to the fact that Delta bought 14 of the 35 buses
for P3,920,000.[28]On April 7, 1987, the sheriff of Manila, by virtue of the writ of execution
dated March 27, 1987, issued by Branch 6 of the RTC of Manila in Civil Case No. 84-23019,
sold the same 14 buses at public auction in partial satisfaction of the judgment SIHI obtained
against Delta in Civil Case No. 84-23019.
Sometime in May 1987, Civil Case No. 84-28505 was raffled to Branch 13 of the RTC of
Manila in view of the retirement of the presiding judge of Branch 34. Subsequently, SIHI moved
to sell the sixteen (16) buses of CBLI which had previously been attached by the sheriff in Civil
Case No. 84-28505 pursuant to the January 4, 1985, Order of the RTC of
Manila.[29] SIHIs motion was granted on December 16, 1987.[30] On November 29, 1988,
however, SIHI filed an urgent ex-parte motion to amend this order claiming that through
inadvertence and excusable negligence of its new counsel, it made a mistake in the list of
buses in the Motion to Sell Attached Properties it had earlier filed.[31] SIHI explained that 14 of
the buses listed had already been sold to Delta on April 2, 1987, by virtue of the January 3,
1985 Order of the RTC of Pasay, and that two of the buses listed had been released to third
party, claimant Pilipinas Bank, by Order dated September 16, 1987[32] of Branch 13 of the RTC
of Manila.
CBLI opposed SIHIs motion to allow the sale of the 16 buses. On May 3, 1989,[33]Branch
13 of the RTC of Manila denied SIHIs urgent motion to allow the sale of the 16 buses listed in
its motion to amend. The trial court ruled that the best interest of the parties might be better
served by denying further sales of the buses and to go direct to the trial of the case on the
merits.[34]
After trial, judgment was rendered in Civil Case No. 84-28505 on June 3, 1993,
discharging CBLI from liability on the five promissory notes. The trial court likewise favorably
ruled on CBLIs compulsory counterclaim. The trial court directed SIHI to return the 16 buses
or to pay CBLI P4,000,000 representing the value of the seized buses, with interest at 12% p.a.
to begin from January 11, 1985, the date SIHI seized the buses, until payment is made. In
ruling against SIHI, the trial court held that the restructuring agreement dated October 7, 1981,
between Delta and CBLI novated the five promissory notes; hence, at the time Delta assigned
the five promissory notes to SIHI, the notes were already merged in the restructuring
agreement and cannot be enforced against CBLI.
SIHI appealed the decision to the Court of Appeals. The case was docketed as CA-G.R.
CV No. 52667. On April 17, 2001, the Court of Appeals decided CA-G.R. CV No. 52667 in this
manner:
WHEREFORE, based on the foregoing premises and finding the appeal to be meritorious, We
find defendant-appellee CBLI liable for the value of the five (5) promissory notes subject of the
complaint a quo less the proceeds from the attached sixteen (16) buses. The award of
attorneys fees and costs is eliminated. The appealed decision is hereby REVERSED. No costs.
SO ORDERED.[35]
Hence, this appeal where CBLI contends that
I. THE COURT OF APPEALS ERRED IN DECLARING THAT THE
RESTRUCTURING AGREEMENT BETWEEN DELTA AND THE PETITIONER
DID NOT SUBSTANTIALLY NOVATE THE TERMS OF THE FIVE
PROMISSORY NOTES.
II. THE COURT OF APPEALS ERRED IN HOLDING THAT THE COMPROMISE
AGREEMENT BETWEEN DELTA AND THE PETITIONER IN THE PASAY CITY
CASE DID NOT SUPERSEDE AND DISCHARGE THE PROMISSORY NOTES.
III. THE COURT OF APPEALS ERRED IN UPHOLDING THE CONTINUING
VALIDITY OF THE PRELIMINARY ATTACHMENT AND EXONERATING THE
RESPONDENT OF MALEFACTIONS IN PRESERVING AND ASSERTING ITS
RIGHTS THEREUNDER.[36]
Essentially, the issues are (1) whether the Restructuring Agreement dated October 7,
1981, between petitioner CBLI and Delta Motors, Corp. novated the five promissory notes Delta
Motors, Corp. assigned to respondent SIHI, and (2) whether the compromise agreement in Civil
Case No. 0023-P superseded and/or discharged the subject five promissory notes. The issues
being interrelated, they shall be jointly discussed.
CBLI first contends that the Restructuring Agreement did not merely change the incidental
elements of the obligation under all sixteen (16) promissory notes, but it also increased the
obligations of CBLI with the addition of new obligations that were incompatible with the old
obligations in the said notes.[37] CBLI adds that even if the restructuring agreement did not
totally extinguish the obligations under the sixteen (16) promissory notes, the July 24, 1984,
compromise agreement executed in Civil Case No. 0023-P did.[38] CBLI cites paragraph 5 of
the compromise agreement which states that the agreement between it and CBLI was in full
and final settlement, adjudication and termination of all their rights and obligations as of the
date of (the) agreement, and of the issues in (the) case. According to CBLI, inasmuch as the
five promissory notes were subject matters of the Civil Case No. 0023-P, the decision
approving the compromise agreement operated as res judicata in the present case.[39]
Novation has been defined as the extinguishment of an obligation by the substitution or
change of the obligation by a subsequent one which terminates the first, either by changing the
object or principal conditions, or by substituting the person of the debtor, or subrogating a third
person in the rights of the creditor.[40]
Novation, in its broad concept, may either be extinctive or modificatory.[41] It is extinctive
when an old obligation is terminated by the creation of a new obligation that takes the place of
the former; it is merely modificatory when the old obligation subsists to the extent it remains
compatible with the amendatory agreement.[42] An extinctive novationresults either by changing
the object or principal conditions (objective or real), or by substituting the person of the debtor
or subrogating a third person in the rights of the creditor (subjective or
personal).[43] Novation has two functions: one to extinguish an existing obligation, the other to
substitute a new one in its place.[44] For novation to take place, four essential requisites have
to be met, namely, (1) a previous valid obligation; (2) an agreement of all parties concerned to
a new contract; (3) the extinguishment of the old obligation; and (4) the birth of a valid new
obligation.[45]
Novation is never presumed,[46] and the animus novandi, whether totally or partially, must
appear by express agreement of the parties, or by their acts that are too clear and unequivocal
to be mistaken.[47]
The extinguishment of the old obligation by the new one is a necessary element
of novation which may be effected either expressly or impliedly.[48] The term "expressly" means
that the contracting parties incontrovertibly disclose that their object in executing the new
contract is to extinguish the old one.[49] Upon the other hand, no specific form is required for an
implied novation, and all that is prescribed by law would be an incompatibility between the two
contracts.[50] While there is really no hard and fast rule to determine what might constitute to be
a sufficient change that can bring about novation, the touchstone for contrariety, however,
would be an irreconcilable incompatibility between the old and the new obligations.
There are two ways which could indicate, in fine, the presence of novation and thereby
produce the effect of extinguishing an obligation by another which substitutes the
same. The first is when novation has been explicitly stated and declared in unequivocal
terms. The second is when the old and the new obligations are incompatible on every
point. The test of incompatibility is whether the two obligations can stand together, each one
having its independent existence.[51] If they cannot, they are incompatible and the latter
obligation novates the first.[52] Corollarily, changes that breed incompatibility must be essential
in nature and not merely accidental. The incompatibility must take place in any of the essential
elements of the obligation, such as its object, cause or principal conditions thereof; otherwise,
the change would be merely modificatory in nature and insufficient to extinguish the original
obligation.[53]
The necessity to prove the foregoing by clear and convincing evidence is accentuated
where the obligation of the debtor invoking the defense of novation has already matured.[54]
With respect to obligations to pay a sum of money, this Court has consistently applied the
well-settled rule that the obligation is not novated by an instrument that expressly recognizes
the old, changes only the terms of payment, and adds other obligations not incompatible with
the old ones, or where the new contract merely supplements the old one.[55]
In Inchausti & Co. v. Yulo[56] this Court held that an obligation to pay a sum of money is
not novated in a new instrument wherein the old is ratified, by changing only the term of
payment and adding other obligations not incompatible with the old
one. In Tible v. Aquino[57] and Pascual v. Lacsamana[58] this Court declared that it is well
settled that a mere extension of payment and the addition of another obligation not incompatible
with the old one is not a novation thereof.
In this case, the attendant facts do not make out a case of novation. The restructuring
agreement between Delta and CBLI executed on October 7, 1981, shows that the parties did
not expressly stipulate that the restructuring agreement novated the promissory notes.Absent
an unequivocal declaration of extinguishment of the pre-existing obligation, only a showing of
complete incompatibility between the old and the new obligation would sustain a finding
of novation by implication.[59] However, our review of its terms yields no incompatibility between
the promissory notes and the restructuring agreement.
The five promissory notes, which Delta assigned to SIHI on September 13, 1983,
contained the following common stipulations:
1. They were payable in 60 monthly installments up to July 31, 1985;
2. Interest: 14% per annum;
3. Failure to pay any of the installments would render the entire remaining balance
due and payable at the option of the holder of the notes;
4. In case of judicial collection on the notes, the maker (CBLI) and co-maker (its
president, Mr. Dionisio O. Llamas, Jr) were solidarily liable of attorneys fees
and expenses of 25% of the amount due in addition to the costs of suit.
The restructuring agreement, for its part, had the following provisions:
WHEREAS, CBL and LLAMAS admit their past due installment on the following promissory
notes:
a. PN Nos. 16 to 26 (11 units)
Past Due as of September 30, 1981 P1,411,434.00
b. PN Nos. 52 to 57 (24 units)
 Past Due as of September 30, 1981 P1,105,353.00 collector to receive the amount due at CBLs premises. All delayed remittances shall be
charged additional 2% penalty interest per month.
WHEREAS, the parties agreed to restructure the above-mentioned past due installments under
the following terms and conditions: 3. All payments shall be applied to amortizations and penalties due in accordance with
paragraph of the restructured past due installments above mentioned and PN Nos. 16 to 26
a. PN Nos. 16 to 26 (11 units) 37 months and 52 to 57.
PN Nos. 52 to 57 (24 units) 46 months 4. DMC may at anytime assign and/or send its representatives to monitor the operations of
b. Interest Rate: 16% per annum CBL pertaining to the financial and field operations and service and maintenance matters of
M.A.N. units. Records needed by the DMC representatives in monitoring said operations shall
c. Documentation Fee: 2% per annum be made available by CBL and LLAMAS.

d. Penalty previously incurred and Restructuring fee: 4% p.a. 5. Within thirty (30) days after the end of the terms of the PN Nos. 16 to 26 and 52 to 57, CBL
or LLAMAS shall remit in lump sum whatever balance is left after deducting all payments made
e. Mode of Payment: Daily Remittance from what is due and payable to DMC in accordance with paragraph 1 of this agreement and
PN Nos. 16 to 26 and 52 to 57.
NOW, THEREFORE, for and in consideration of the foregoing premises, the parties hereby
agree and covenant as follows: 6. In the event that CBL and LLAMAS fail to remit the daily remittance agreed upon and the
total accumulated unremitted amount has reached and (sic) equivalent of Sixty (60) days, DMC
1. That the past due installment referred to above plus the current and/or falling due
and Silverio shall exercise any or all of the following options:
amortization as of October 1, 1981 for Promissory Notes Nos. 16 to 26 and 52 to 57 shall be
paid by CBL and/or LLAMAS in accordance with the following schedule of payments: (a) The whole sum remaining then unpaid plus 2% penalty per month and 16%
interest per annum on total past due installments will immediately become
Daily payments of P11,000.00 from
due and payable. In the event of judicial proceedings to enforce collection,
October 1 to December 31, 1981 CBL and LLAMAS will pay to DMC an additional sum equivalent to 25% of
the amount due for attorneys fees and expenses of collection, whether
Daily payments of P12,000.00 from actually incurred or not, in addition to the cost of suit;
January 1, 1982 to March 31, 1982 (b) To enforce in accordance with law, their rights under the Chattel Mortgage over
various M.A.N. Diesel bus with Nos. CU 80-39, 80-40, 80-41, 80-42, 80-43,
Daily payments of P13,000.00 from
80-44 and 80-15, and/or
April 1, 1982 to June 30, 1982 (c) To take over management and operations of CBL until such time that CBL and/or
Daily payments of P14,000.00 from LLAMAS have remitted and/or updated their past due account with DMC.

July 1, 1982 to September 30, 1982 7. DMC and SILVERIO shall insure to CBL continuous supply of spare parts for the M.A.N.
Diesel Buses and shall make available to CBL at the price prevailing at the time of purchase,
Daily payments of P15,000.00 from an inventory of spare parts consisting of at least ninety (90%) percent of the needs of CBL
based on a moving 6-month requirement to be prepared and submitted by CBL, and acceptable
October 1, 1982 to December 31, 1982 to DMC, within the first week of each month.
Daily payments of P16,000.00 from 8. Except as otherwise modified in this Agreement, the terms and conditions stipulated in PN
January 1, 1983 to June 30, 1983 Nos. 16 to 26 and 52 to 57 shall continue to govern the relationship between the parties and
that the Chattel Mortgage over various M.A.N. Diesel Buses with Nos. CM No. 80-39, 80-40,
Daily payments of P17,000.00 from 80-41, 80-42, 80-43, 80-44 and CM No. 80-15 as well as the Deed of Pledge executed by Mr.
Llamas shall continue to secure the obligation until full payment.
July 1, 1983
9. DMC and SILVERIO undertake to recall or withdraw its previous request to Notary Public
2. CBL or LLAMAS shall remit to DMC on or before 11:00 a.m. everyday the daily cash Alberto G. Doller and to instruct him not to proceed with the public auction sale of the shares
payments due to DMC in accordance with the schedule in paragraph 1. DMC may send a of stock of CBL subject-matter of the Deed of Pledge of Shares. LLAMAS, on the other hand,
undertakes to move for the immediate dismissal of Civil Case No. 9460-P entitled Dionisio O.
Llamas vs. Alberto G. Doller, et al., Court of First Instance of Pasay, Branch XXIX.[60]
It is clear from the foregoing that the restructuring agreement, instead of containing
provisions absolutely incompatible with the obligations of the judgment, expressly ratifies such
obligations in paragraph 8 and contains provisions for satisfying them. There was no change
in the object of the prior obligations. The restructuring agreement merely provided for a new
schedule of payments and additional security in paragraph 6 (c) giving Delta authority to take
over the management and operations of CBLI in case CBLI fails to pay installments equivalent
to 60 days. Where the parties to the new obligation expressly recognize the continuing
existence and validity of the old one, there can be no novation.[61]Moreover, this Court has ruled
that an agreement subsequently executed between a seller and a buyer that provided for a
different schedule and manner of payment, to restructure the mode of payments by the buyer
so that it could settle its outstanding obligation in spite of its delinquency in payment, is not
tantamount to novation. [62]
The addition of other obligations likewise did not extinguish the promissory
notes. In Young v. CA[63], this Court ruled that a change in the incidental elements of, or an
addition of such element to, an obligation, unless otherwise expressed by the parties will not
result in its extinguishment.
In fine, the restructuring agreement can stand together with the promissory notes.
Neither is there merit in CBLIs argument that the compromise agreement dated July 24,
1984, in Civil Case No. 0023-P superseded and/or discharged the five promissory notes. Both
Delta and CBLI cannot deny that the five promissory notes were no longer subject of Civil Case
No. 0023-P when they entered into the compromise agreement on July 24, 1984.
Having previously assigned the five promissory notes to SIHI, Delta had no more right to
compromise the same. Deltas limited authority to collect for SIHI stipulated in the September
13, 1985, Deed of Sale cannot be construed to include the power to
compromise CBLIs obligations in the said promissory notes. An authority to compromise, by
express provision of Article 1878[64] of the Civil Code, requires a special power of attorney,
which is not present in this case. Incidentally, Deltas authority to collect in behalf of SIHI was,
by express provision of the Continuing Deed of Assignment,[65] automatically revoked when
SIHI opted to collect directly from CBLI.
As regards CBLI, SIHIs demand letter dated December 13, 1983, requiring CBLI to remit
the payments directly to SIHI effectively revoked Deltas limited right to collect in behalf of
SIHI. This should have dispelled CBLIs erroneous notion that Delta was acting in behalf of
SIHI, with authority to compromise the five promissory notes.
But more importantly, the compromise agreement itself provided that it covered the rights
and obligations only of Delta and CBLI and that it did not refer to, nor cover the rights of, SIHI
as the new creditor of CBLI in the subject promissory notes. CBLI and Delta stipulated in
paragraph 5 of the agreement that:
5. This COMPROMISE AGREEMENT constitutes the entire understanding by and between
the plaintiffs and the defendants as well as their lawyers, and operates as full and final
settlement, adjudication and termination of all their rights and obligations as of the date of this
agreement, and of the issues in this case.[66]
Even in the absence of such a provision, the compromise agreement still cannot bind SIHI
under the settled rule that a compromise agreement determines the rights and obligations of
only the parties to it.[67] Therefore, we hold that the compromise agreement covered the rights
and obligations only of Delta and CBLI and only with respect to the eleven (11) other promissory
notes that remained with Delta.
CBLI next maintains that SIHI is estopped from questioning the compromise agreement
because SIHI failed to intervene in Civil Case No. 0023-P after CBLI informed it of the takeover
by Delta of CBLIs management and operations and the resultant impossibility for CBLI to
comply with its obligations in the subject promissory notes. CBLI also adds that SIHIs failure to
intervene in Civil Case No. 0023-P is proof that Delta continued to act in SIHIs behalf in
effecting collection under the notes.
The contention is untenable. As a result of the assignment, Delta relinquished all its rights
to the subject promissory notes in favor of SIHI. This had the effect of separating the five
promissory notes from the 16 promissory notes subject of Civil Case No. 0023-P.From that
time, CBLIs obligations to SIHI embodied in the five promissory notes became separate and
distinct from CBLIs obligations in eleven (11) other promissory notes that remained with
Delta. Thus, any breach of these independent obligations gives rise to a separate cause of
action in favor of SIHI against CBLI. Considering that Deltas assignment to SIHI of these five
promissory notes had the effect of removing the said notes from Civil Case No. 0023-P, there
was no reason for SIHI to intervene in the said case. SIHI did not have any interest to protect
in Civil Case No. 0023-P.
Moreover, intervention is not mandatory, but only optional and permissive. [68] Notably,
Section 2,[69] Rule 12 of the then 1988 Revised Rules of Procedure uses the word may in
defining the right to intervene. The present rules maintain the permissive nature of intervention
in Section 1, Rule 19 of the 1997 Rules of Civil Procedure, which provides as follows:
SEC. 1. Who may intervene.A person who has a legal interest in the matter in litigation, or in
the success of either of the parties, or an interest against both, or is so situated as to be
adversely affected by a distribution or other disposition of property in the custody of the court
or of an officer thereof may, with leave of court, be allowed to intervene in the action. The court
shall consider whether or not the intervention will unduly delay or prejudice the adjudication of
the rights of the original parties, and whether or not the intervenor's rights may be fully
protected in a separate proceeding.[70]
Also, recall that Delta transferred the five promissory notes to SIHI on September 13,
1983 while Civil Case No. 0023-P was pending. Then as now, the rule in case of transfer of
interest pendente lite is that the action may be continued by or against the original party unless
the court, upon motion, directs the person to whom the interest is transferred to be substituted
in the action or joined with the original party.[71] The non-inclusion of a necessary party does
not prevent the court from proceeding in the action, and the judgment rendered therein shall
be without prejudice to the rights of such necessary party.[72]
 In light of the foregoing, SIHIs refusal to intervene in Civil Case No. 0023-P in another
court does not amount to an estoppel that may prevent SIHI from instituting a separate and
independent action of its own.[73] This is especially so since it does not appear that a separate
proceeding would be inadequate to protect fully SIHIs rights.[74] Indeed, SIHIsrefusal to
intervene is precisely because it considered that its rights would be better protected in a
separate and independent suit.
The judgment on compromise in Civil Case No. 0023-P did not operate as res judicatato
prevent SIHI from prosecuting its claims in the present case. As previously discussed, the
compromise agreement and the judgment on compromise in Civil Case No. 0023-P covered
only Delta and CBLI and their respective rights under the 11 promissory notes not assigned to
SIHI. In contrast, the instant case involves SIHI and CBLI and the five promissory notes. There
being no identity of parties and subject matter, there is no resjudicata.
CBLI maintains, however, that in any event, recovery under the subject promissory notes
is no longer allowed by Article 1484(3)[75] of the Civil Code, which prohibits a creditor from suing
for the deficiency after it has foreclosed on the chattel mortgages.SIHI, being the successor-in-
interest of Delta, is no longer allowed to recover on the promissory notes given as security for
the purchase price of the 35 buses because Delta had already extrajudicially foreclosed on the
chattel mortgages over the said buses on April 2, 1987.
This claim is likewise untenable.
Article 1484(3) finds no application in the present case. The extrajudicial foreclosure of
the chattel mortgages Delta effected cannot prejudice SIHIs rights. As stated earlier, the
assignment of the five notes operated to create a separate and independent obligation on the
part of CBLI to SIHI, distinct and separate from CBLIs obligations to Delta. And since there was
a previous revocation of Deltas authority to collect for SIHI, Delta was no longer SIHIs collecting
agent. CBLI, in turn, knew of the assignment and Deltas lack of authority to compromise the
subject notes, yet it readily agreed to the foreclosure. To sanction CBLIs argument and to apply
Article 1484 (3) to this case would work injustice to SIHI by depriving it of its right to collect
against CBLI who has not paid its obligations.
That SIHI later on levied on execution and acquired in the ensuing public sale in Civil Case
No. 84-23019 the buses Delta earlier extrajudicially foreclosed on April 2, 1987, in Civil Case
No. 0023-P, did not operate to render the compromise agreement and the foreclosure binding
on SIHI. At the time SIHI effected the levy on execution to satisfy its judgment credit against
Delta in Civil Case No. 84-23019, the said buses already pertained to Delta by virtue of the April
2, 1987 auction sale. CBLI no longer had any interest in the said buses. Under the
circumstances, we cannot see how SIHIs belated acquisition of the foreclosed buses operates
to hold the compromise agreementand consequently Article 1484(3)applicable to SIHI as CBLI
contends. CBLIs last contention must, therefore, fail. We hold that the writ of execution to
enforce the judgment of compromise in Civil Case No. 0023-P and the foreclosure sale of April
2, 1987, done pursuant to the said writ of execution affected only the eleven (11) other
promissory notes covered by the compromise agreement and the judgment on compromise in
Civil Case No. 0023-P.
In support of its third assignment of error, CBLI maintains that there was no basis
for SIHIs application for a writ of preliminary attachment.[76] According to CBLI, it committed no
fraud in contracting its obligation under the five promissory notes because it was financially
sound when it issued the said notes on April 25, 1980.[77] CBLI also asserts that at no time did
it falsely represent to SIHI that it would be able to pay its obligations under the five promissory
notes.[78] According to CBLI, it was not guilty of fraudulent concealment, removal, or disposal,
or of fraudulent intent to conceal, remove, or dispose of its properties to defraud its
creditors;[79] and that SIHIs bare allegations on this matter were insufficient for the preliminary
attachment of CBLIs properties.[80]
The question whether the attachment of the sixteen (16) buses was valid and in
accordance with law, however, has already been resolved with finality by the Court of Appeals
in CA-G.R. SP No. 08376. In its July 31, 1987, decision, the Court of Appeals upheld the legality
of the writ of preliminary attachment SIHI obtained and ruled that the trial court judge acted with
grave abuse of discretion in discharging the writ of attachment despite the clear presence of a
determined scheme on the part of CBLI to dispose of its property. Considering that the said
Court of Appeals decision has already attained finality on August 22, 1987, there exists no
reason to resolve this question anew. Reasons of public policy, judicial orderliness, economy
and judicial time and the interests of litigants as well as the peace and order of society, all
require that stability be accorded the solemn and final judgments of courts or tribunals of
competent jurisdiction.[81]
Finally, in the light of the justness of SIHIs claim against CBLI, we cannot
sustain CBLIs contention that the Court of Appeals erred in dismissing its counterclaim for lost
income and the value of the 16 buses over which SIHI obtained a writ of preliminary
attachment. Where the party who requested the attachment acted in good faith and without
malice, the claim for damages resulting from the attachment of property cannot be sustained.[82]
WHEREFORE, the decision dated April 17, 2001, of the Court of Appeals in CA-G.R. CV
No. 52667 is AFFIRMED. Petitioner California Bus Lines, Inc., is ORDERED to pay respondent
State Investment House, Inc., the value of the five (5) promissory notes subject of the complaint
in Civil Case No. 84-28505 less the proceeds from the sale of the attached sixteen (16)
buses. No pronouncement as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
A.M. No. RTJ-99-1467 August 5, 1999
ATTY. SAMUEL D. PAGDILAO, JR., Chief of Police, Caloocan City, complainant,
vs.
JUDGE ADORACION G. ANGELES, RTC, Branch 121, Caloocan City, respondent.
RESOLUTION
MENDOZA, J.:
This is a complaint for grave abuse of discretion filed against respondent Judge Adoracion G.
Angeles of the Regional Trial Court, Branch 121, Caloocan City. Complainant is the Chief of
Police of Caloocan City, Samuel D. Pagdilao, Jr. The complaint stemmed from several orders
of arrest issued by respondent against Caloocan City policemen for their failure to attend
hearings in criminal cases and testify as state witnesses, which respondent wanted
complainant to personally enforce.1âwphi1.nêt
The record shows that on August 10, 1998, respondent issued an order of arrest which reads
as follows:1
In today's initial trial in Criminal Case Nos. C-53625 (98), 53626 (98), 53622 and 53623
(98), accused Manuel Mendoza and Romeo Cendaño appeared and assisted by Atty.
Ojer Pacis of the Public Attorney's Office (PAO). However, there was no appearance
on the part of PO2 Alexander Buan. The records will show however that he was duly
notified of today's hearing but despite notice he did not appear thereby delaying the
early termination of these cases.
Consequently, and on motion of the public prosecutor, let a warrant of arrest be issued
against PO2 ALEXANDER BUAN and the Chief of Police, Caloocan City, Police
Superintendent Samuel Pagdilao is hereby directed to effect the service of the warrant
of arrest and to bring the body of the witness not later then 8:30 o'clock in the morning
tomorrow, August 11, 1998 for him to testify in these cases.
The accused is likewise directed to appear tomorrow, August 11, 1998.
WHEREFORE, let the scheduled hearing for today be cancelled and have it reset
tomorrow, August 11, 1998 at 8:30 o'clock in the morning.
SO ORDERED.
On August 11, 1998, respondent issued another order in another case (Criminal Case No. C-
53081(97)), the pertinent portion of which reads:2
After the pre-trial in this case has been waived by the accused through counsel, the
Public Prosecutor failed to present its evidence on the ground that his witnesses,
mostly police officers, did not appear despite notices.
Consequently, on motion of the Public Prosecutor, let a warrant of arrest be issued
against SPO1 Edgardo Fernandez and PO3 Eduardo S. Avila.
Let the service of the warrant of arrest upon SPO1 Edgardo Fernandez and PO3
Eduardo S. Avila be effected by no less than the Chief of Police of Caloocan City, Supt.
Samuel Pagdilao and the latter is directed to make a return on or before September 1,
1998.
On August 12, 1998, in Criminal Case No. C-53796(98), respondent issued an order reading:3
A cursory examination of the records will readily show that on June 23, 1998 P/Insp.
Emmanuel R. Bravo appeared and signed for the scheduled hearing today, August 12,
1998 at 8:30 o'clock in the morning, but he did not appear despite notice thereby
delaying the early termination of this case.
Let it be noted that the accused is a detention prisoner who is entitled to a speedy trial
and the trial could not proceed in view of the non-appearance of the aforesaid witness.
Consequently, and on motion of the public prosecutor, let a warrant of arrest be issued
against P/Insp. Emmanuel R. Bravo of the Caloocan City Police Force and let the
warrant be served personally by the Chief of Police of Caloocan City, Police
Superintendent Samuel Pagdilao and the latter is directed to make a return of the
warrant not later than 8:30 o'clock in the morning tomorrow, August 13, 1998.
Apparently, resenting the tenor of the orders directed personally at him, complainant wrote
respondent on August 14, 1998 asking for the reconsideration of the foregoing orders: 4
14 August 1998
Honorable Adoracion G. Angeles
Acting Presiding Judge
RTC Branch 125, Caloocan City
Your Honor:
This is with regards to orders lately coming from that (sic) Honorable Court directing the
undersigned topersonally serve and return subpoenas and warrants of arrests against PNP
personnel assigned within and/or outside the Caloocan City Police Station.
As Chief of Police of one of the three biggest Police Departments in the National Capital Region
(next only to Manila and Quezon City), I have to attend to many matters which would prevent
my personally performing the task of service on (sic) subpoena and warrants.
May I, therefore, respectfully request the Honorable Court to reconsider such orders and
instead allow the undersigned to delegate to subordinate officers particularly, the Chief,
Warrant and Subpoena Section and Sub-Station Commanders, the performance of this task.
This will allow the undersigned to personally attend to the many operational activities of law second in an acting capacity and the third as the pairing judge for the presiding judge
enforcement as well as the various administrative functions as Head of the City's Police thereat who has been on leave for quite some time already.1âwphi1.nêt
Department.
Notwithstanding the incessant pressure inherent in the job, this court takes pride in the
The order of the Honorable Judge to the undersigned Chief of Police disregards the time fact that it has never lost its clear vision that it exists primarily for the proper and
honored tradition and system of Command and Control practiced in our organization and expeditious administration of justice.
reduces the level of the Chief of Police into a subpoena server and arresting officer. A job which
can be readily accomplished by the Chief of Warrant and Subpoena Section and by other Indeed, this court has always been very zealous in the discharge of its bounder duties.
officers whom the Commander may direct under this system. Nonetheless, its earnest efforts to promote a speedy administration of justice has many
times been unduly hampered by the frequent non-appearances of police officers in
Records show that service of warrants and subpoena to PNP personnel have all been duly court hearings despite sufficient notice. It has always been a big disappointment to the
accomplished by our warrant and Subpoena Section. court that its dedication to duty is sometimes not matched by some law-enforcement
officers.
I hope that this request will merit your favorable consideration.
Hence, in order to solve this dilemma, the Court directed the Chief of Police to
Very respectfully yours, personally ensure the attendance of his men in court hearings so much so that (sic)
(signed) their testimonies are very vital to the outcome of the criminal cases herein. The Orders
of the court were never meant to disregard the system of Command and Control being
ATTY. SAMUEL D. PAGDILAO JR. employed in the Police Force. Its only concern was that such system of Command and
Police Superintendent (DSC) Control must be effectively used to address the lukewarm attitude of the Chief of
Chief of Police Police's subordinate relative to their duty to appear in court.

Copy Furnished: It is noteworthy to mention that since the issuance of the assailed Orders, the
concerned law enforcement officers have shown an impressive attendance in court
The Honorable Chief Justice, Supreme Court hearings which confirms that it makes a lot of difference when the Chief of Police
The Honorable Court Administrator, Supreme Court himself acts to ensure the compliance of his subordinates to a lawful court Order.
The Chief of the Philippine National Police
Needless to state, the court was able to solve a perennial problem with the renewed
Respondent's reaction was just as acerbic. In an order, dated August 21, 1998, denying cooperation of the City's police force.
complainant's request for reconsideration, she said:5
The court should not therefore be taken to task for its issuance of the questioned
Before this court for consideration is a Letter-Request dated August 14, 1998 filed by Orders because the same was done in the interest of justice.
P/Supt. Samuel D. Pagdilao, Jr., Chief of Police of the Caloocan City Police
Department. On the other hand, the Chief of Police must be reminded that this is not the time to be
onion-skinned and regard the said Orders as a personal insult to his dignity.
He assails the orders coming from this court directing him to personally serve and
return subpoenas and warrants of arrest against PNP personnel assigned within and/or During this time when criminality is on the rise, would it not be more prudent for the
outside the Caloocan City Police Station. He further contends that such orders Chief of Police to lay aside his egotistical concerns and instead work with the courts of
disregard the time-honored tradition and system of Command and Control practiced in justice in addressing the more pressing problems of criminally, violence and injustice?
their organization and reduces the level of the Chief of Police into a subpoena server
and arresting officer. WHEREFORE, premises considered, the Letter-Request of the Chief of Police of
Caloocan City is duly noted but the court reiterates its stand that its foremost concern
Apparently, P/Supt. Samuel D. Pagdilao, Jr. perceives the assailed orders as an affront is the administration of justice and with this consideration indelibly etched in its mind,
to the eminence of his position as Chief of Police above all else. it will issue such Orders which are geared towards the achievement of its noble
purpose.
Nonetheless, this court has never entertained thoughts of debasing the Chief of Police
or anybody else for that matter. Nor was it ever enticed to employ dictatorial schemes Let copies of this Order be furnished upon the Honorable Chief Justice and Honorable
to abbreviate its proceedings despite the fact that the Presiding Judge is practically Court Administrator of the Supreme Court as well as to the Chief of the Philippine
handling three (3) salas at the moment — the first as the duly appointed judge, the National Police (PNP).
 SO ORDERED.
In his complaint, dated October 28, 1998, complainant avers that respondent's orders betray
her ignorance of the rulings of this Court in several cases that non-attendance at a trial does
not constitute direct but indirect contempt punishable only after written charge and hearing
under Rule 71 of the Rules of Court. He states that the action of respondent not only seriously
affects the service records of the concerned policemen but also jeopardizes their promotions.
Complainant likewise assails the orders of respondent requiring him personally to arrest the
policemen concerned, make a return of the orders, and in the case of PO2 Alexander Buan, to
bring the latter to respondent's court not later than 8:30 in the morning of August 11, 1998.
Complainant claims that the order is capricious and whimsical because the time given to him
for serving the warrant was short and disregarded the "system of command and control, and
the doctrine of qualified political agency in the administration of public offices." According to
complainant, when he asked respondent to reconsider her order and allow his subordinates,
particularly the Chief of the Warrant and Subpoena Section and the Sub-Station Commanders,
to serve the orders in question, respondent "arrogantly dismissed [the principle complainant
was raising] as nothing but a display of egotistical concerns."
In her comment on the complaint, respondent contended that the warrants of arrest against the
Caloocan City policemen were issued merely for the purpose of compelling the attendance of
the policemen at the court hearings as state witnesses as it had been her experience that the
policemen ignored her orders. She stated that in issuing the orders in question she was never
motivated by ill will but that her concern was solely to expedite the proceedings in two salas of
the court over which she was presiding since justice delayed is justice denied. She reiterated
what she said in her order denying complainant's request to be relieved from serving the orders.
Respondent contends that a prior charge or hearing is not required before a warrant of arrest
may be issued under Rule 21, §8 of the Rules of Court. She argues that this provision only
requires proof of service of subpoena on a witness and the fact that the witness failed to attend
the scheduled hearing before a court can exercise its power of compulsion.
On the allegation that complainant was given a very short period of time for serving the warrant
of arrest against witness PO2 Buan, respondent points out that the policeman was right in the
Caloocan City Police Station were complainant held office. As for her statement that
complainant's letter was "nothing but a display of egotistical concerns," respondent said that
obviously complainant took offense because of what he considered his "exalted position as
chief of police."
Replying to respondent's comment, complainant argues that Rule 21, §8 invoked by
respondent to justify her orders is not applicable. He points out that the orders were intended
not only to compel the attendance of policemen in court but also to punish them for contempt
of court. He also alleges that, contrary to respondent's statement in her order dated March 10,
1999, in Criminal Case Nos. C-55145(98) and 55146(98), that he did not make a return of the
warrant of arrest against PO3 Nestor Aquino, complainant says he made a return which, in
fact, was received in respondent's court on March 10, 1999 at 10:22 a.m. 6
Respondent's order reads as follows:7
In an order of the court dated March 8, 1999, a warrant for the arrest of PO3 Nestor
Aquino, prosecution's witness in these cases were issued by the Court directing the
Chief of Police of Caloocan City or the duly authorized representative of the latter to
produce the body of the aforesaid police officer not later than March 10, 1999 at 8:30
o'clock in the morning.
A cursory examination of the records will show that the order was received by the Chief
of Police of Caloocan City on the same date, March 8, 1999 but despite receipt thereof,
the Chief of Police of Caloocan City did not bother to make a return of the warrant of
arrest thereby delaying the early disposition of these cases.
Let it be stressed that this is a joint trial of Crim. Case No. 55145 (98) and Crim. Case
No. C-55146 (98) for the violation of the drugs law.
This indeed does not speak well of the Chief of Police of Caloocan City.
WHEREFORE, the Chief of Police of Caloocan City is hereby given a period of three
(3) days from receipt of a copy of this order to explain and to show cause why he should
not be cited in contempt of court for failure to produce today, March 10, 1999, the body
of the afore-said witness.
Let copies of this order be furnished upon the Director of the Philippine National Police
(PNP) National Capital Judicial Region (NCJR), Bicutan, Metro Manila as well as to the
Director General of the PNP, Roberto Lastimosa for them to know the actuation of the
Chief of Police of Caloocan City in the discharged of its official function.
Complainant's return, bearing the stamp "RTC, Branch 121, Caloocan, City, received, 3/10/99,
10:22 a.m.," reads:8
Date 10 March 1999
Respectfully returned to the Branch Clerk of Court RTC BR 121 Cal City the attached
Warrant/Order of Arrest in Crim. Case No. 55145-55146 (98) against PO3 NESTER
AQUINO with address at DDEU, NPDC, Tanigue St., Kaunlaran Vill. Caloocan City for the
crime of Non-appearance (at the scheduled hearing held on 8 March 1999.
REASONS: UNSERVED. Subject PNP personnel was already dismissed from the
service effective 16 February 1999. Attached herewith is the xerox copy of Spl Order
No. 366 relative to his dismissal.
Complainant adds that, in Caloocan City, only respondent issues orders to policemen to serve
court processes on short notice, and orders their arrest without hearing in case they fail to
comply without taking into account that they also have other work to do. He states that he filed
the instant complaint against respondent not to cause her dishonor but to promote respect for
the law and to correct the misimpression that Caloocan City policemen are "inefficient or
defying court orders."
The Office of the Court Administration (OCA) recommends the dismissal of the complaint
against respondent for lack of merit. In its report, it states among other things:
 A cursory reading of the records of this case shows the utter lack of merit of It was this unfortunate incident which provoked the exchanges between complainant and
complainant's cause. respondent: respondent acting on the erroneous belief that complainant had ignored her order
and, consequently, requiring complainant to personally arrest his own men and take them to
First, a perusal of the questioned orders issued by the respondent reveals that the her court, and complainant taking umbrage at the orders. The observance of restraint was
subject policemen were not punished for contempt of court hence the contempt never more demanded on the part of both parties.
provisions under the Revised Rules of Court is not applicable. Prior written charge and
hearing therefore is not necessary before Judge Angeles can issue warrant of arrest Respondent acted a bit rashly while complainant reacted too strongly. The courts and the law
to compel their attendance in court hearings; enforcers are two of the five pillars of the criminal justice system, the other three being the
prosecution, the correctional subsystem, and the community.10 Cooperation among, and
Second, a judge is not prohibited to issue orders directing heads of police stations to coordination between, the five pillars are needed in order to make the system work effectively.
personally serve and return processes from the court; Indeed, complainant and respondent, both avow a common objective of dispensing justice.
Third, it cannot be considered as unreasonable the period given to complainant within More than that, the parties should observe mutual respect and forbearance.
which to effect the service of the warrants of arrest issued by the court considering that WHEREFORE, respondent Judge Adoracion G. Angeles of the Regional Trial Court, Branch
the police officers to be served by said warrants are working right at the Station headed 121, Caloocan City is ADMONISHED to be more circumspect in the discharge of her judicial
by the complainant himself; and function with WARNING that repetition of the same or similar acts will be dealt with more
Lastly, on the charge that respondent arrogantly regarded the letter of complainant as severely. The instant complaint is DISMISSED.1âwphi1.nêt
"nothing but a display of egotistical concerns" we are inclined to believe that the SO ORDERED.
respondent's remarks were not tainted with malice and that her only concern is for the
"speedy and efficient administration of justice."
Rule 21, §8, pursuant to which respondent issued her orders, states that "in case of failure of
a witness to attend, the court or judge issuing the subpoena, upon proof of the service thereof
and of the failure of the witness, may issue a warrant to the sheriff of the province, or his deputy,
to arrest the witness and bring him before the court or officer where his attendance is required."
Respondent is thus correct in contending that a judge may issue a warrant of arrest against a
witness simply upon proof that the subpoena had been served upon him but he failed to attend
the hearing. The purpose is to bring the witness before the court where his attendance is
required, not to punish him for contempt which requires a previous hearing. 9 However,
unnecessary tension and asperity could have been avoided had respondent simply called the
attention of complainant to the failure of the latter's men to comply with her orders instead of
directing complainant to personally serve the orders and bring the policemen himself to her
sala. Moreover, as is clear from Rule 21, §8, the orders of arrest should have been addressed
to the sheriff or the latter's deputy. Respondent could have done this while calling complainant's
attention to the alleged disregard by policemen of her orders so that appropriate disciplinary
action could be taken if necessary.
It would appear that respondent's order of August 10, 1998 in Criminal Case Nos. C-53625(98),
53626(98), 53622, and 53623(98), which provoked this incident and gave rise to the "word war"
between the parties, was made because respondent thought that in the other cases (Criminal
Case Nos. 55145(98) and 55146(98)) heard that morning, complainant ignored her order to
produce a policeman whom she had ordered arrested. However, as already noted, the
policeman could no longer be presented in court as he had already been dismissed from the
service, and complainant did make a return informing the court of this fact, although his return
did reach the court a few hours after the hearing in which the policeman's testimony was
required.
THIRD DIVISION
G.R. No. 155010 August 16, 2004
JONATHAN LANDOIL INTERNATIONAL CO., INC., petitioner,
vs.
Spouses SUHARTO MANGUDADATU and MIRIAM SANGKI
MANGUDADATU, respondents.
DECISION
PANGANIBAN, J.:
Lawyers must be careful in handling cases, because their negligence in the performance of
their duties binds their clients. The issues in the instant case stem from the failure of the
counsels and their client to attend the pretrial. Their non-appearance was compounded by their
subsequent inaction, which resulted in the eventual finality and execution of the default
judgment.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the June 6,
2002 Decision2 and the September 2, 2002 Resolution3 of the Court of Appeals (CA) in CA-GR
SP No. 69556. The assailed Decision disposed as follows:
"WHEREFORE, PREMISES CONSIDERED, this petition is DISMISSED for lack of
merit."4
The challenged Resolution denied reconsideration.
The Facts
Respondent-Spouses Suharto and Miriam Sangki Mangudadatu filed with the Regional Trial
Court (RTC) of the 12thJudicial Region in Tacurong City, Sultan Kudarat, a Complaint for
damages against Petitioner Jonathan Landoil International Co., Inc. ("JLI"). The Complaint was
docketed as Civil Case No. 537 and raffled to Branch 20. 5 Initially, petitioner had countered
with a Motion to Dismiss; but when this was denied, it filed its Answer dated November 23,
1999.6
Thereafter, the parties submitted their respective Pretrial Briefs. 7 Trial proceeded without the
participation of petitioner, whose absence during the pretrial on August 8, 2000, had led the
trial court to declare it in default.8
On July 3, 2001, petitioner received a copy of the RTC’s Decision dated June 19, 2001. 9 On
July 18, 2001, it filed an Omnibus Motion for New Trial and Change of Venue. 10 This Motion
was deemed submitted for resolution on August 7, 2001, 11 but was eventually denied by the
trial court in an Order dated September 12, 2001.12
On December 12, 2001, petitioner received a copy of a Writ of Execution dated December 4,
2001. Alleging that it had yet to receive a copy of an Order resolving the Omnibus Motion for
New Trial, petitioner filed a Motion to Quash/Recall Writ of Execution on December 14, 2001.13
On January 7, 2002, its counsels -- Attys. Jaime L. Mario Jr. and Dioscoro G. Peligro --
submitted separate withdrawals of appearance.14 On the same date, the law firm Ong Abad
Santos & Meneses filed an Entry of Appearance with Supplement to Motion to Quash/Recall
Writ of Execution.15 To its Supplement, petitioner attached the Affidavits of Attys. Mario and
Peligro attesting that they had not yet received a copy of the Order resolving the Omnibus
Motion for New Trial.16
On the same day, January 7, 2002, petitioner received a Sheriff’s Notice dated December 26,
2001, regarding the public auction sale of its properties.17 By reason of the immediate threat to
implement the Writ of Execution, it filed with the CA on January 14, 2002, a Petition for
Prohibition seeking to enjoin the enforcement of the Writ until the resolution of the Motion to
Quash.18 The Petition was docketed as CA-GR SP No. 68483.19
On January 9, 2002, the RTC issued an Order directing respondents to file their written
comment on the Motion to Quash and scheduled the hearing thereon for February 1, 2002. 20
On January 23, 2002, petitioner received a copy of respondents’ Vigorous Opposition (Re:
Motion to Quash/Recall Writ of Execution, and its Supplement) dated January 16, 2001.
Attached to this pleading were two separate Certifications supposedly issued by the postmaster
of Tacurong City, affirming that the Order denying the Motion for New Trial had been received
by petitioner’s two previous counsels of record. 21 The Certification pertaining to Atty. Peligro
alleged that a certain Michelle Viquira had received on October 19, 2001, a copy of the Order
intended for him.22 The Certification as regards Atty. Mario stated that he had personally
received his copy on December 21, 2001.23
On January 24, 2002, petitioner personally served counsel for respondents a Notice to Take
Deposition Upon Oral Examination of Attys. Mario and Peligro.24 The Deposition was intended
to prove that petitioner had not received a copy of the Order denying the Omnibus Motion for
New Trial. 25
At 9:30 a.m. on January 28, 2002, the deposition-taking proceeded as scheduled -- at the
Business Center Conference Room of the Mandarin Oriental Hotel in Makati City -- before Atty.
Ana Peralta-Nazareno, a notary public acting as deposition officer.26 At 12:00 noon of the same
day, respondents sent petitioner a fax message via JRS Express, advising it that they had filed
a Motion to Strike Off from the records the Notice to Take Deposition; and asking it not to
proceed until the RTC would have resolved the Motion, 27 a copy of which it eventually received
later in the day, at 3:10 p.m.
On January 29, 2002, separate Notices were sent by Atty. Nazareno to Attys. Mario and
Peligro, as witnesses, for them to examine the transcript of their testimonies. 28 On the same
date, Atty. Nazareno filed via registered mail a Submission to the RTC attaching (1) a
Certification that the witnesses had been present and duly sworn to by her; (2) a transcript
bearing their signatures, attesting that it was a true record of their testimonies; (3) a copy of the
Notice to Take Deposition delivered to her; and (4) a copy of the Notice signed by respondents’
counsel.29
During the February 1, 2002 hearing on the Motion to Quash, petitioner submitted its (1) Formal
Offer of Exhibits, together with the documentary exhibits marked during the deposition-taking;
(2) Reply to respondents’ Vigorous Opposition to the Motion to Quash; and (3) Opposition ad
Cautelam to respondents’ Motion to Strike Off the Notice to Take Deposition.30
Meanwhile, on February 26, 2002, the CA issued a Resolution denying the Petition for
Prohibition in CA-GR SP No. 68483.
On March 6, 2002, petitioner received a copy of the RTC’s Resolution dated February 21, 2002,
denying the Motion to Quash.31 On March 8, 2002, it received a copy of respondents’ Motion to
Set Auction Sale of Defendant’s Levied Properties.
On March 11, 2002, petitioner filed with the CA a Petition for Certiorari and
Prohibition,32 seeking to hold in abeyance the February 21, 2002 RTC Resolution and the
December 4, 2001 Writ of Execution. Petitioner alleged that since it had not received the Order
denying its Motion for New Trial, the period to appeal had not yet lapsed. 33 It thus concluded
that the judgment, not being final, could not be the subject of a writ of execution.
Ruling of the Court of Appeals
On June 6, 2002, the CA issued the assailed Decision denying JLI’s Petition. It ruled that
petitioner could no longer avail itself of a deposition under Rule 23 of Rules of Court, since trial
had already been terminated.34 The appellate court also opined that the alleged error committed
by the trial court -- when the latter disregarded two witnesses’ oral depositions -- was an error
of judgment not reviewable by certiorari or prohibition.35 Finally, it ruled that between the denial
of a lawyer and the certification of a postmaster, the latter would prevail.36
Hence, this Petition.37
The Issues
Petitioner raises the following issues for our consideration:
"I.
Whether or not the trial court judge has so far departed from the accepted and usual
course of judicial proceedings, and the Court of Appeals has sanctioned such
departure by the trial court judge, when he denied petitioner’s Motion to Quash/Recall
Writ of Execution despite clear and convincing evidence showing that petitioner and/or
its counsel has yet to receive an order resolving petitioner’s timely filed Motion for New
Trial, which warrants the exercise by this Honorable Court of its power of supervision.
"II.
Whether or not the Court of Appeals gravely erred and decided a question of substance
in a way not in accord with law and applicable decisions of this Honorable Court, when
it ruled that petitioner can no longer avail of the taking of oral depositions under Rule
23 of the 1997 Rules of Civil Procedure.
"III.
Whether or not the Court of Appeals gravely erred and decided a question of substance
in a way not in accord with law and applicable decisions of this Honorable Court, when
it ruled that the trial court judge committed a mere error of judgment and not an error
of jurisdiction.
"IV.
Whether or not the Court of Appeals gravely erred and decided a question of substance
in a way not in accord with law and applicable decisions of this Honorable Court, when
it considered the manner by which the trial court judge gave evidentiary weight to
witnesses presented before him during trial on the merits when what is being
questioned before the Court of Appeals is the propriety of presenting deposition
evidence (wherein the trial court judge could not have been present) in support of
the Motion to Quash.
"V.
Whether or not the Court of Appeals gravely erred and decided a question of substance
in a way not in accord with law and applicable decisions of this Honorable Court, when
it applied the ruling of this Honorable Court in Aportader[a] v. Court of Appeals (158
SCRA 695) and Philippine National Bank v. CFI of Rizal (209 SCRA 294) on the
evidentiary value of a postmaster’s certification vis-à-vis a denial of receipt by
counsel."38
In the main, the issues boil down to two: (1) whether petitioner received the Order denying its
timely filed Motion for New Trial; and (2) whether the taking of oral depositions was proper
under the circumstances.
The Court’s Ruling
The Petition has no merit.
First Issue:
Appreciation of Facts
It is readily apparent that petitioner is raising factual issues that this Court does not review.
While the rule admits of exceptions,39 petitioner has not satisfactorily shown any. Given the
circumstances surrounding the filing of its Motion for New Trial and the allegations therein, we
find no compelling reason to disturb the CA’s factual findings. It may therefore not insist,
contrary to the finding of the CA, that it did not receive the Order denying its timely filed Motion
for New Trial.
Motion for New Trial Improper
A motion for new trial may be filed on the grounds of (1) fraud, accident, mistake or excusable
negligence that could not have been guarded against by ordinary prudence, and by reason of
which the aggrieved party’s rights have probably been impaired; or (2) newly discovered
evidence that, with reasonable diligence, the aggrieved party could not have discovered and
produced at the trial; and that, if presented, would probably alter the result. 40 In its Omnibus
Motion for New Trial,41 petitioner argued that its counsel Atty. Mario was sick, a fact that
allegedly constituted excusable negligence for his failure to appear at the August 8, 2000
pretrial.42 With regard to Atty. Rogelio Fernandez, the collaborating counsel, it alleged that the
Board of Directors had terminated his legal services on August 4, 2000.43
These grounds relied upon by petitioner cannot properly secure a new trial. Counsels are not
the only ones required to attend the pretrial. The appearance of the plaintiff and the defendant
is also mandatory. The pertinent rule states:
Section 4. Appearance of parties. -- It shall be the duty of the parties and their
counsel to appear at the pre-trial. The non-appearance of a party may be excused only
if a valid cause is shown therefor or if a representative shall appear in his behalf fully
authorized in writing to enter into an amicable settlement, to submit to alternative
modes of dispute resolution, and to enter into stipulations or admissions of facts and
of documents.44
The rationale for this requirement of compelling the parties to appear personally before the
court is to exhaust the possibility of reaching a compromise.45 While notice of the pretrial is
served on counsels, it is their duty to notify the party they represent. 46
The explanation offered by petitioner as regards the absence of its counsel from the pretrial is
therefore unacceptable. It should have also justified its own absence therefrom. Having failed
to do so, it had no valid ground to request a new trial.
Petitioner also failed to justify the absence of both its counsels. Until their formal withdrawal is
granted, lawyers are deemed to be the representatives of their clients.47
Atty. Fernandez may have been notified of the termination of his services on August 7,
2004.48 But as far as the trial court was concerned, he continued to be petitioner’s counsel of
record, since no withdrawal of appearance had yet been granted. Hence, his absence from the
pretrial was still not excusable. While he could no longer represent petitioner, his presence
would have afforded him an opportunity to make a formal withdrawal of appearance. An
improvident termination of legal services is not an excuse to justify non-appearance at a
pretrial. Otherwise, the rules of procedure would be rendered meaningless, as they would be
subject to the counsel’s will.
The Proper Remedy
Under the new Rules, the consequence of non-appearance without cause at the pretrial is not
for the petitioner to be considered "as in default,"49 but "to allow the plaintiff to present evidence
ex parte and [for] the court to render judgment on the basis thereof." 50 This procedure was
followed in the instant case.
To the trial court’s order allowing the ex parte presentation of evidence by the plaintiff, the
defendant’s remedy is a motion for reconsideration.51 An affidavit of merit is not required to be
attached to such motion, because the defense has already been laid down in the answer. 52
Liberality is the rule in considering a motion for reconsideration. 53 It is best for the trial court to
give both the plaintiff and the defendant a chance to litigate their causes fairly and openly,
without resort to technicality.54 Unless the reopening of the case is clearly intended for delay,
courts should be liberal in setting aside orders barring defendants from presenting evidence.
Judgments based on an ex parte presentation of evidence are generally frowned upon. 55
In the present case, petitioner did not file a motion for reconsideration after the trial court had
allowed respondents’ ex parte presentation of evidence. The Rules of Court does not prohibit
the filing of a motion for a new trial despite the availability of a motion for reconsideration. But
the failure to file the latter motion -- without due cause -- is a factor in determining whether to
apply the liberality rule in lifting an order that allowed the ex parte presentation of evidence. In
its motions and petitions filed with this Court and the lower courts, petitioner did not explain
why it had failed to file a motion for reconsideration.
The lapse of time -- from the August 8, 2000 pretrial to the September 5, 2000 ex parte
presentation of evidence, and until the June 19, 2001 promulgation of the Decision 56 -- shows
the negligence of petitioner and its counsels. Prior to the trial court’s resolution of the case, it
had ample opportunity to challenge the Order allowing the ex parte presentation of evidence.
Too late was the challenge that it made after the Decision had already been rendered.
Non-Receipt of the Order
In addition to the foregoing facts, petitioner fails to convince us that it has not received the trial
court’s Order denying its Motion for New Trial.
There is a disputable presumption that official duties have been regularly performed. 57 On this
basis, we have ruled that the postmaster’s certification prevails over the mere denial of a
lawyer.58 This rule is applicable here. Petitioner has failed to establish its non-receipt of the trial
court’s Order denying its Motion for New Trial.
This Court notes the trial court’s finding that petitioner received a copy of respondents’
September 24, 2001 Motion for Execution and November 21, 2001 Motion for Early Resolution,
as well as the trial court’s September 28, 2001 Order submitting the Motion for Execution for
resolution.59 Given these unrebutted facts, it is unbelievable that petitioner did not know that a
ruling on the Motion for New Trial had already been issued. At the very least, the Motions filed
by respondents should have alerted it of such issuance. Otherwise, it could have opposed their
Motion for Execution by requesting the RTC to resolve the Motion for New Trial; or the trial
court could have been informed by petitioner of the latter’s non-receipt of the Order resolving
respondents’ Motion.
Second Issue:
The Taking of Depositions
The appellate court supposedly erred, too, in declaring that the taking of the depositions of
petitioner’s witnesses was improper. We agree with this contention.
Deposition Pending Action
A deposition may be taken with leave of court after jurisdiction has been obtained over any
defendant or over property that is the subject of the action; or, without such leave, after an
answer has been served.60 Deposition is chiefly a mode of discovery, the primary function of
which is to supplement the pleadings for the purpose of disclosing the real points of dispute
between the parties and affording an adequate factual basis during the preparation for
trial.61 The liberty of a party to avail itself of this procedure, as an attribute of discovery, is "well-
nigh unrestricted if the matters inquired into are otherwise relevant and not privileged, and the
inquiry is made in good faith and within the bounds of the law."62
Limitations would arise, though, if the examination is conducted in bad faith; or in such a
manner as to annoy, embarrass, or oppress the person who is the subject of the inquiry; or
when the inquiry touches upon the irrelevant or encroaches upon the recognized domains of
privilege.63
As a mode of discovery resorted to before trial, deposition has advantages, as follows:
"1. It is of great assistance in ascertaining the truth and in checking and preventing
perjury. x x x
"2. It is an effective means of detecting and exposing false, fraudulent, and sham
claims and defenses.
"3. It makes available in a simple, convenient, and often inexpensive way facts which
otherwise could not have been proved, except with great difficulty and sometimes not
at all.
"4. It educates the parties in advance of trial as to the real value of their claims and
defenses, thereby encouraging settlements out of court.
"5. It expedites the disposal of litigation, saves the time of the courts, and clears the
docket of many cases by settlements and dismissals which otherwise would have to
be tried.
"6. It safeguards against surprise at the trial, prevents delays, and narrows and
simplifies the issues to be tried, thereby expediting the trial.
"7. It facilitates both the preparation and the trial of cases."64
The Rules of Court65 and jurisprudence, however, do not restrict a deposition to the sole
function of being a mode of discovery before trial. Under certain conditions and for certain
limited purposes, it may be taken even after trial has commenced and may be used without the
deponent being actually called to the witness stand. In Dasmariñas Garments v. Reyes,66 we
allowed the taking of the witnesses’ testimonies through deposition, in lieu of their actual
presence at the trial.
Thus, "[d]epositions may be taken at any time after the institution of any action, whenever
necessary or convenient. There is no rule that limits deposition-taking only to the period of pre-
trial or before it; no prohibition against the taking of depositions after pre-trial."67 There can be
no valid objection to allowing them during the process of executing final and executory
judgments, when the material issues of fact have become numerous or complicated. 68
In keeping with the principle of promoting the just, speedy and inexpensive disposition of every
action and proceeding,69 depositions are allowed as a "departure from the accepted and usual
judicial proceedings of examining witnesses in open court where their demeanor could be
observed by the trial judge."70 Depositions are allowed, provided they are taken in accordance
with the provisions of the Rules of Court (that is, with leave of court if the summons have been
served, without leave of court if an answer has been submitted); and provided, further, that a
circumstance for their admissibility exists (Section 4, Rule 23, Rules of Court).
The Rules of Court vests in the trial court the discretion to order whether a deposition may be
taken or not under specified circumstances that may even differ from those the proponents
have intended.71 However, it is well-settled that this discretion is not unlimited. It must be
exercised -- not arbitrarily, capriciously or oppressively -- but in a reasonable manner and in
consonance with the spirit of the law, to the end that its purpose may be attained. 72
When a deposition does not conform to the essential requirements of law and may reasonably
cause material injury to the adverse party, its taking should not be allowed. This was the primary
concern in Northwest Airlines v. Cruz.73In that case, the ends of justice would be better served
if the witness was to be brought to the trial court to testify. The locus of the oral deposition
therein was not within the reach of ordinary citizens, as there were time constraints; and the
trip required a travel visa, bookings, and a substantial travel fare. 74 In People v. Webb,75 the
taking of depositions was unnecessary, since the trial court had already admitted the Exhibits
on which the witnesses would have testified.76
Safeguards Available
The Rules of Court provides adequate safeguards to ensure the reliability of depositions. 77 The
right to object to their admissibility is retained by the parties, for the same reasons as those for
excluding evidence if the witness were present and had testified in court; 78 and for errors and
irregularities in the deposition.79 As a rule, depositions should be allowed, absent any showing
that taking them would prejudice any party.
Use of Depositions
Depositions may be used for the trial or for the hearing of a motion or an interlocutory
proceeding, under the circumstances specified hereunder:
Section 4. Use of Depositions. -- At the trial or upon the hearing of a motion or an
interlocutory proceeding, any part or all of a deposition, so far as admissible under the
rules of evidence, may be used against any party who was present or represented at
the taking of the deposition or who had due notice thereof, in accordance with any one
of the following provisions:
(a) Any deposition may be used by any party for the purpose of contradicting or
impeaching the testimony of deponent as a witness;
(b) The deposition of a party or of anyone who at the time of taking the deposition was
an officer, director, or managing agent of a public or private corporation, partnership,
or association which is a party may be used by an adverse party for any purpose;
(c) The deposition of a witness, whether or not a party, may be used by any party for
any purpose if the court finds: (1) that the witness is dead; or (2) that the witness
resides at a distance more than one hundred (100) kilometers from the place of trial or
hearing, or is out of the Philippines, unless it appears that his absence was procured
by the party offering the deposition; or (3) that the witness is unable to attend or testify
 because of age, sickness, infirmity, or imprisonment; or (4) that the party offering the
deposition has been unable to procure the attendance of the witness by subpoena; or
(5) upon application and notice, that such exceptional circumstances exist as to make
it desirable, in the interest of justice and with due regard to the importance of presenting
the testimony of witnesses orally in open court, to allow the deposition to be used; and
(d) If only part of a deposition is offered in evidence by a party, the adverse party may
require him to introduce all of it which is relevant to the part introduced, and any party
may introduce any other parts.80
The present case involved a circumstance that fell under the above-cited Section 4(c)(2) of
Rule 23 -- the witnesses of petitioner in Metro Manila resided beyond 100 kilometers from
Sultan Kudarat, the place of hearing. Petitioner offered the depositions in support of its Motion
to Quash (the Writ of Execution) and for the purpose of proving that the trial court’s Decision
was not yet final. As previously explained, despite the fact that trial has already been
terminated, a deposition can still be properly taken.
We note, however, that the RTC did not totally disregard petitioner’s depositions. In its February
21, 2001 Resolution, the trial court considered and weighed -- against all other evidence -- that
its Order denying the Motion for New Trial filed by petitioner had not been received by the
latter’s counsels. Despite their depositions, petitioner failed to prove convincingly its denial of
receipt.
WHEREFORE, the Petition is DENIED, and the assailed Decision and Resolution AFFIRMED.
Costs against petitioner.
SO ORDERED.
FIRST DIVISION
[G.R. No. 122629. December 2, 1998]
PEPSI COLA PRODUCTS PHILS., INC., petitioner, vs. COURT OF APPEALS, HON. SIXTO
MARELLA, JR., SPS. EDGARDO DE VERA and SALVACION LOCSIN DE VERA
and ANNA A. LOCSIN,respondents.
RESOLUTION
QUISUMBING, J.:
Subject of the present petition for review on certiorari under Rule 45 is the decision of the
Court of Appeals in CA-G.R. SP. No. 37701[1] which affirmed the order of the Regional Trial
Court of Makati, Branch 138[2] denying petitioners oral Motion for Postponement of a scheduled
hearing due to unavailability of witnesses and declaring that petitioner has waived the right to
present evidence in support of its defenses, and further denying petitioners Motion for
Reconsideration of the aforesaid order.
The instant case arose out of the Pepsi Number Fever Promotion sponsored by petitioner
Pepsi Cola Products Philippines, Inc. (PCPPI), wherein numerous holders of the supposedly
winning 349 crowns were not honored and paid by petitioner due to an alleged mistake in the
security codes in the crowns.[3] Private respondents Edgardo De Vera, Salvacion Locsin De
Vera, and Anna A. Locsin are unpaid holders of 349 Pepsi Crowns who instituted in the
Regional Trial Court of Makati a civil case for collection of sum of money and damages against
petitioner herein.
From its inception, the case was fraught with cancellations of scheduled hearings by
reasons of the absence and/ or illness of the presiding Judge and the postponements sought
by the petitioner herein. While private respondents commendably finished the presentation of
evidence on the scheduled dates of hearings, petitioner, however, has repeatedly sought and
was granted postponements due to unavailability of its witnesses.
The presentation of petitioners evidence was initially scheduled on May 28, 1993, July 15,
1993, August 6, 1993, and August 23, 1993. On May 28, 1993, petitioner presented its first
witness Mr. Luisito V. Gutierrez. However, the other scheduled hearings were cancelled due to
the absenceof then presiding Judge Hon. Fernando Agdamag. The further hearing for
presentation of petitioners evidence was reset to October 14, 1993, but on the day of the
hearing, petitioner orally moved for cancellation of hearing due to the absence of its witnesses,
which was granted by the trial court with a warning that the failure to present its witnesses on
the next scheduled hearing would be deemed a waiver of its right to present evidence. Hence,
the hearing was reset to December 10, 1993, wherein petitioner presented its second witness
Mr. Rafael Eladio Battung, Jr.. The scheduled hearings on January 20, 1994 and February 9,
1994 were also cancelled because the Presiding Judge was then on leave. In the intervening
period, the Presiding Judge retired and was replaced by public respondent Hon. Sixto Marella,
Jr., and petitioners counsel[4] was substituted by its in-house counsel, De Jesus and
Associates.
The hearing for the presentation of petitioners evidence was reset to November 18, 1994,
but on said date, petitioner once more orally moved for postponement due to the inability of
petitioners witnesses to appear. The hearing was reset to January 20, 1995 and February 9,
1995, with the directive to petitioners counsel to finish with the presentation of its evidence, and
that should the allocated time in the morning be insufficient, the parties should be ready for
continuance in the afternoon of the same dates. The court also issued a warning that the
scheduled hearings are intransferrable in character.
On January 20, 1995, heedless of the trial courts previous warnings, petitioners counsel
appeared and orally moved for cancellation of the hearing on the ground that its witnesses
were all preoccupied with other commitments. Finding no merit in the verbal motion, the trial
court denied the motion and issued the questioned Order dated January 20, 1995 [5] which
reads:
ORDER
The Court finds no merit in the motion of the defendant for cancellation of todays hearing
considering that these settings have been agreed upon as early as November 18, 1994 at
which time an order was issued setting this case for today and on February 9, 1995 for the
presentation of evidence for the defendant. In said Order the Court directed that the settings
shall be intransferrable in character.
On motion of the plaintiff, and it appearing that the defendant had been given ample opportunity
to present its evidence but still failed, the defendant is hereby declared to have waived its right
to present further evidence in support of its defenses.
Let this case be deemed submitted for decision after thirty (30) days during which period parties
are directed to file their respective memoranda in support of their respective claims and
defenses.
The hearing scheduled on February 9, 1995 is hereby cancelled.
SO ORDERED.
On February 8, 1995, petitioner filed a Motion for Reconsideration[6] of the aforesaid Order.
Petitioner explained that its intended witness, Ms. Rosemarie Valera, was also the witness on
the same day (January 20, 1995) in Civil Case No. Ir-2486 entitled Silvino Amoroso vs. PCPPI,
pending with the Regional Trial Court of Iriga City, Branch 37, and that substitute witnesses in
the persons of Atty. Juan Cruz Madarieta and Atty. Edgardo L. de Jesus were also not available
since Atty. Madarieta was the handling lawyer of Silvino Amoroso vs. PCPPI and was also in
Iriga City, while Atty. Edgardo L. de Jesus was counsel for petitioner in Civil Case No. 62726
entitled Pepe Pagdanganan vs. PCPPI at the Regional Trial Court of Pasig, Branch 163, on
the same day.
In an Order dated May 12, 1995,[7] the trial court denied the Motion for Reconsideration
stating that:
The Court does not find merit on the ground cited by the defendant, for reasons (a) the Court
has directed that the setting on January 20, 1995 shall be intransferable in character;
Defendant was therefore forewarned that it should be ready to present its evidence on said
date; Assuming that the witnesses were in fact, attending to the other cases there was no
showing on record which was earlier set hence would warrant priority attention. In addition, the
setting on January 20, 1995 was by agreement of the parties, made as aearly (sic) as
November 18, 1994 or about two (2) months, which is sufficient to allow defendant to make
reasonable arrangement with other courts; (b) fairness dictates that given the predicament of
the defendant, assuming the same to be true, it should have filed the corresponding written
Motion for Cancellation of the hearing long before the scheduled date, instead of a mere verbal
motion presented on the day of the hearing itself; (c) the Motion for Reconsideration does not
state the nature of the testimony of the intended witnesses, hence, the Court does not have
basis to determine whether they would merely be corroborative or simply cumulative to the
evidence already presented; (d) the case has been pending for quite sometime; and (e)
defendant has been given ample opportunity to present its evidence but it opted not to exercise
its right.
IN VIEW THEREOF, defendants Motion for Reconsideration is hereby DENIED.
SO ORDERED.
On July 6, 1995, petitioner filed with the Court of Appeals a petition for certiorari[8] under
Rule 65 with a prayer for the issuance of a temporary restraining order and writ of preliminary
injunction alleging that respondent Judge acted with grave abuse of discretion amounting to
lack or excess of jurisdiction in issuing the questioned orders denying both petitioners Motion
for Postponement and Motion for Reconsideration.
On November 9, 1995, the Court of Appeals denied due course to the petition holding
that:[9]
Counsel for petitioner knows as early as November 18, 1994 or thereabout of the date
scheduled for continuation of reception of petitioners evidence on January 20, 1995 since the
November 18th hearing was cancelled upon motion of counsel. Counsel therefore has more
than two months within which to prepare for the January 20th scheduled trial. He has to
schedule and prepare the witnesses that he intends to present. He is expected to manage and
budget his time fairly, equally, and allot the same to avoid conflict of schedule of trials before
respondent court and before the other courts where he has to present the same set of
witnesses. He should also be conscious of the fact that private respondents had formally rests
(sic) their case as early as February 5, 1992, and that on January 20, 1995, the case has been
pending for about three years. Most importantly, there is the courts directive for him to finish
with the presentation of his witnesses, and the court was prepared to hear petitioners witnesses
morning and afternoon. There is also the courts warning that the hearing as scheduled is
intransferrable in character. Obviously, petitioners counsel preferred to present his witness
before other courts.
The comment of counsel for private respondents that those numerous cases involving the
crowns bearing number 349 against petitioner, as well as the fact that they have the same set
of witnesses that they presented or intended to present on those cases, can not be considered
as legal justifications for giving preference to the other cases to the detriment and the resulting
delay of the disposition of the case at bar.
On the whole, We find that the reasons stated in respondent courts Order of May 12th is in
order, in line with the rules that motions for continuance or postponement of hearing are
addressed to the sound discretion of the court and its action thereon will not be disturbed by
appellate courts in the absence of a patent and manifest abuse of discretion.
WHEREFORE, the petition for certiorari is hereby DENIED DUE COURSE and is DISMISSED.
Hence, the present recourse to this Court by way of petition for review on certiorari under
Rule 45. Petitioner contends that, first, the decision of the Court of Appeals contravenes the
due process clause and is not in accord with law and jurisprudence. Second, the trial courts
departure from accepted and usual course of judicial proceedings call for the exercise of the
Supreme Court of its supervisory powers. And third, the Court of Appeals committed grave
abuse of discretion in upholding the orders of the trial court denying the oral motion for
postponement and motion for reconsideration.
We find the petition devoid of merit.
A motion for continuance or postponement is not a matter of right, [10] but is addressed to
the sound discretion of the court,[11] and its action thereon will not be disturbed by appellate
courts in the absence of clear and manifest abuse of discretion resulting in a denial of
substantial justice.[12]Section 4 of Rule 22 of the Revised Rules of Court[13] specifically requires
that [a] motion to postpone a trial on the ground of absence of evidence can be granted only
upon affidavit showing the materiality of evidence expected to be obtained, and that due
diligence has been used to procure it. x x x In considering motions for postponement of trials
or for new trials, two circumstances should be taken into account by the court, namely, (1) the
merit of the case of the movant, and (2) the reasonableness of the postponement or new
trials.[14] The records would show that petitioner not only failed to allege and prove the
materiality of the testimonies of its witnesses, it even refused to make such an averment
contending that the materiality of testimonies of its witnesses can only be appreciated after
they are presented in court.[15] Neither did petitioner present a meritorious claim or defense.
Instead petitioner simply cited cases of different factual milieu wherein postponements were
allowed for valid cause. Thus, in De Guzman v. Elbinias, 172 SCRA 240, 245 (1989),
postponement of the first hearing for the defense was justified by the following circumstances:
(1) counsel for petitioner had a previous intransferable hearing in a criminal case scheduled on
the same day; (2) counsel only received the notice of hearing two days prior to the said hearing;
(3) the distance of some 65 kilometers from the residence of counsel and the Regional Trial
Court of Bulacan, Branch 5. None of the aforementioned circumstances are availing in the
instant case. In Philippine Long Distance Telephone Co. v. Genovea, 116 SCRA 395, 400, 405
(1982), counsel for defendant (PLDT) moved for another postponement of a scheduled hearing
for presentation of evidence on the ground of sudden illness of its witness. The trial court, upon
objection of defendants counsel, denied the motion and plaintiff was deemed to have waived
its right to present its evidence and the case deemed submitted for decision. While we later on
ordered the reopening of the case for the reception of defendants evidence in the interest of
substantial justice, we admonished defendant to present its evidence with the
least possible delay, limiting requests for postponement to the minimum. We do not find
petitioner herein similarly situated as the grounds relied upon for postponement are different.
In Sayson v. People, 166 SCRA 680, 689-690 (1988), also cited by petitioner, we ruled that
there was no grave abuse of discretion in the trial courts denial of a motion for postponement
due to illness of counsel considering that petitioners motion was not seasonably filed as the
three-day notice required under Rule 15, Section 4 of the Revised Rules of Court was not
complied with, and that said motion was not accompanied by an affidavit or medical certificate
to support the alleged illness of counsel, contrary to Rule 22, Section 5 of the Revised Rules
of Court.
It would not be amiss to point out that the case below was instituted in the trial court on or
about June 11, 1992, and private respondents formally rested their case on February 5, 1993.
Petitioner had already been allowed several postponements due to unavailability of its
witnesses and the case dragged on for a period of almost two (2) years. Yet on the next
scheduled hearing on January 20, 1995, petitioner brazenly sought another postponement due
to the absence of its witnesses who were then allegedly testifying in similar cases elsewhere -
a contingency which counsel could have easily foreseen and avoided by a careful scheduling
of the hearings of its witnesses. Petitioner blithely explained that it did not file a written Motion
for Postponement because it was hoping that even at the last hour, a witness would be
available for that days hearing.[16] How can petitioner make this preposterous claim when it
knew fully well that its intended witness, Ms. Valera was already in Iriga City even two (2) days
before the hearing, and that Atty. Madarieta was likewise in Iriga City on the day of the hearing
itself, while Atty. de Jesus had a hearing on the same day in Pasig City? The granting of a
motion to postpone, especially one made on the day of the hearing itself, is discretionary upon
the courts and a litigant should not act on the assumption that it would be automatically
granted.[17] We also note that counsel for petitioner has shown a reprehensible propensity for
dilatory schemes which we have always viewed with grave concern and utmost disfavor.
As officers of the court, lawyers have a responsibility to assist in the proper administration
of justice. They do not discharge this duty by filing pointless petitions that only add to the
workload of the judiciary, especially this Court, which is burdened enough as it is. A judicious
study of the facts and the law should advise them when a case, such as this, should not be
permitted to be filed to merely clutter the already congested judicial dockets. They do not
advance the cause of law or their clients by commencing litigations that for sheer lack of merit
do not deserve the attention of the courts.[18]
WHEREFORE, the instant petition is hereby dismissed for lack of merit. Double costs
against petitioner.
SO ORDERED.
SECOND DIVISION
[G.R. No. 122346. February 18, 2000]
PHILIPPINE TRANSMARINE CARRIERS, INC., HERNANDO S. EUSEBIO, ROSENDO
GALLARDO, and AUGUSTO ARREZA, JR., petitioners, vs. COURT OF APPEALS and
JULIE P. SONG, respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari of the decision,[1] dated October 13, 1995, of the Court
of Appeals, affirming the decision of the Regional Trial Court, Branch 135, Makati, which
ordered petitioners to pay private respondent damages and attorneys fees in the total amount
of P160,776.00, plus costs of suit.
The facts are as follows:
In 1985, private respondent Julie P. Song filed a complaint for attempted parricide against her
husband, Hernane Song, in the Regional Trial Court, Branch 18, Manila, where the case was
docketed as Crim. Case No. 85-34865. On August 5, 1988, private respondent and her
husband entered into a compromise agreement[2] with respect to the civil aspect of the case,
and on the same day, judgment[3] was rendered by the trial court as follows:
In the conference this morning, the accused, Hernane B. Song, assisted by his
counsel, Atty. Romeo R. Robiso, and the private complainant, Julie Parcon
Song, assisted by her counsel, Atty. Dante Garin, and Trial Fiscal Leonardo L.
Lacalda, filed the following compromise agreement, dated August 5, 1988:
The accused, assisted by his counsel, and the private
complainant, Julie Parcon-Song, assisted by the Trial Fiscal,
respectfully submit the following compromise agreement:
1. Whereas, the accused and the private complainant are
husband and wife, although they have been estranged and
living apart from each other since 1984;
2. Whereas, they have a daughter, Gladeslie P. Song, who is
five years old and living with the private complainant;
3. Whereas the accused is a licensed seaman third mate, and
his employment with the Prometheus Maritime Company was
recently terminated.
4. Wherefore, for and consideration of their mutual premises
hereunder specified, the accused and the private complainant
have agreed to settle amicably the civil aspect of this case
under the following terms and conditions;
(a) Whenever the accused is employed as seaman third mate
or marine officer, his basic salary shall be distributed as
follows:
(1) Forty (40%) percent shall be allocated, remitted or paid to
the private complainant;
(2) Forty (40%) percent shall be retained by the accused;
(3) The remaining twenty (20%) percent shall be deposited in
a trust account in the name and for the support and education
of their daughter Gladys P. Song;
(4) At the start of his employment as a seaman third mate or
marine officer, the accused shall, in addition, pay the sum of
P1,800.00 per month to the private complainant for a period
of ten (10) months, or a total of P18,000.00;
(5) The accused shall have the right to visit their daughter,
Gladys P. Song, as often as necessary or possible.
WHEREFORE, it is respectfully prayed that the foregoing
Compromise Agreement be approved.
Finding the Compromise Agreement not contrary to law, morals, good
customs, public order, or public policy, the same is hereby approved.
WHEREFORE, judgment is hereby rendered on the basis of the compromise
agreement and the parties are hereby enjoined to comply with the terms and
conditions thereof.
SO ORDERED.
It appears, however, that Hernane Song failed to comply with his obligation under the decision
for which reason, on December 1, 1992, a Notice of Garnishment[4] was issued by the trial court
to petitioner Philippine Transmarine Carriers, Inc., as Hernane Songs employer. The Notice of
Garnishment reads:
YOU ARE HEREBY NOTIFIED by these presents that by virtue of the 2nd
Alias Writ of Execution issued by the Honorable Perfecto A.S. Laguio, Jr., copy
of which is hereto attached and served upon you, for the recovery by the
private complainant against the accused is the amount as breakdown
hereunder:
(a) US $420.00 - representing the 10% difference in allotment
due to private complainant which was only 50% when it should
have been 60% pursuant to the compromise agreement.
(b) US $1,457.40 - representing unpaid monthly allotment of
US $466.20 for March 1991 and US $495.60 for January 1992
 which were not remitted to the private complainant since the
accused collected the same by way of cash advance and pay-
on-board.
(c) US $1,877.40 - representing allotment of 60% of the basic
salary of Hernane B. Song for the months of November 1992,
December 1992, January 1993 and February 1993 or total of
US $3,745.80 and
(d) P16,000.00 - balance of arrears in support remaining
unpaid, due to said complainant in connection with this 2nd
alias Writ of Execution, Garnishment is hereby made upon all
the moneys, interests, receivables and other personal
properties by the accused, Hernane B. Song under your
control as of the date of service hereof, sufficient to cover the
above-mentioned claim, attached hereof are the judgment
and order dated August 28, 1989 of this Court and the
breakdown prepared by the private complainant, Julie Song.
You are further notified that you should not deliver, transfer or otherwise
dispose such properties in your possession or under your control belonging to
said accused or to any person or entity except to the undersigned, deputy
Sheriff, under Penalty Prescribed by Law.
You are requested to make a reply to this Garnishment as to such properties
to the accused in your possession or under your control of any debt and
receivables owned by you to said accused and forward the same to the
undersigned within five (5) days from your receipt hereof, under warning that
if no reply is made, you may be examined under oath before this Court.
The notice was served on petitioner-company on December 3, 1992. But, according to the
Sheriffs Return,[5] on May 24, 1993, petitioner-company released only two checks, with the total
amount of P31,000.00, representing the allotment for May 1993 only. The rest of the amounts
indicated in the Notice of Garnishment was unsatisfied.
On July 20, 1993, private respondent filed a complaint for damages against petitioner-company
and its officers, petitioners Hernando S. Eusebio, Rosendo Gallardo and Augusto Arreza, Jr.
The complaint, which was filed in the Regional Trial Court, Branch 135, Makati, alleged in
pertinent parts:[6]
6. That despite the said Notice of Garnishment, the salaries of the accused for
the remaining contract months of December 1992, January 1993 and February
1993 which were in the possession and under the control of defendants, were
not being duly garnished; that instead, the allotments of herein plaintiff for the
said months were withheld, so that during those months and the months that
followed, plaintiff and her minor child greatly suffered financial problems as
their support by way of allotment has been oppressively withheld by
defendants; that it was only on 24 May 1993 that the allotments for plaintiff and
that of the minor child representing only a total of 60% of the total salaries of
the accused, were finally released and turned over by defendants thru the
Deputy Sheriff, as evidenced by the Sheriffs Return, machine copy of which is
hereto attached as Annex "C" forming integral part thereof;
7. That herein defendants, in total disregard of the Notice of Garnishment in a
manner that is wanton, oppressive, reckless and fraudulent, and in
contravention of the said Notice that defendants should not deliver, transfer or
otherwise dispose such properties in their possession or under their control
belonging to the accused to any person or entity except to the Deputy Sheriff,
have caused the release of the remaining 40% of the accuseds salaries
together with his Leave Pay for two (2) months, to the accused, to the great
prejudice and damage of herein plaintiff;
8. That the said willful, wanton and oppressive omission of defendants in not
garnishing the total and entire salaries of the accused, has caused actual
damages to plaintiff in the amount representing the remaining 40% or
P20,776.00 plus the Leave Pay of P50,000.00 or a total of P70,776.00;
9. That the act of omission on the part of herein defendants has caused plaintiff
to suffer several sleepless nights, mental anguish, serious anxieties,
besmirched reputation, wounded feelings, morals hock and social humiliation,
for which under the law, defendants individually are civilly liable to plaintiff for
moral damages in the amount not less than P200,000.00; that the wrongful
omission being done in a wanton manner, reckless, and oppressive, herein
defendants are likewise individually liable to plaintiff for exemplary damages in
the amount not less than P200,000.00;
10. That in order to protect the rights and interests of herein plaintiff, the latter
sought legal services of counsel for an agreed attorneys fees of P30,000.00.
In their answer,[7] petitioners denied private respondents allegations. They alleged that -
8. After the notice of garnishment was received by defendant Company, the
latter stopped the remittance of the allotments of Hernane Song to the bank of
his designated allottees in compliance with the garnishment.
9. Subsequent to its receipt of the notice of garnishment, defendant Company
before any further action on the matter, made its own verification with the court
on the actual existence of the case filed against Hernane Song and the actual
issuance of the notice of garnishment.
10. Contrary to plaintiffs claim that defendants withheld the amounts due her,
plaintiff was the one who failed to come and get her share in the garnished
salaries of Hernane Song. All the while defendant Company was waiting in
good faith for her to claim her share and that of her minor child in the monthly
allotments of her estranged husband.
11. In accordance with the compromise agreement approved by the court
under which plaintiffs estranged husband is entitled to retain 40% of his basic
 salary, defendant allowed in good faith the release to Hernane Song for his
subsistence an amount equivalent only to 20% of his basic salaries remitted
to the Philippines.
Petitioners claimed that the P50,000.00 leave pay released to Hernane Song was not "basic
salary" and, thus, private respondent was not entitled thereto. By way of counterclaim,
petitioners prayed for moral damages of P500,000.00, exemplary damages of P200,000.00
and attorneys fees/litigation costs of P200,000.00.
After private respondent filed her reply and answer to petitioners counterclaim, the trial court
required the parties to submit their pre-trial briefs and scheduled the pre-trial conference on
October 12, 1993.
On October 7, 1993, Atty. Mylene T. Marcia, on behalf of petitioners counsel, Atty. Albert Q.
Daquigan, filed an "Urgent Motion for Re-Setting" of the pre-trial conference on the ground that
Atty. Daquigan was on sick leave and petitioners themselves were unavailable on the
scheduled date. However, her motion was denied by the trial court in its order dated October
12, 1993 and petitioners were declared "as in default," on the ground that no medical certificate
had been attached to the motion. Private respondent was then allowed to present her
evidence ex parte.
On October 19, 1993, petitioners asked the court to set aside its order of default, attaching to
their motion a duly notarized medical certificate as well as an affidavit of merit signed by Atty.
Daquigan. Petitioners motion was denied for lack of merit in an order dated December 1, 1993
and the case was considered submitted for decision on the basis of private respondents
evidence.
On December 8, 1993, the trial court rendered its decision, [8] the dispositive portion of which
states:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and
against the defendants:
1. Ordering the defendants to pay plaintiff the sum of P70,776.00 as actual
damages;
2. Ordering the defendants to pay plaintiff the sum of P50,000.00 by way of
moral damages;
3. Ordering defendants to pay P20,000.00 by way of exemplary damages;
4. Ordering defendants to pay plaintiff the sum of P20,000.00 for attorneys
fees; and,
5. To pay the costs of suit.
SO ORDERED.
Petitioners filed a motion for reconsideration but this was denied by the trial court on February
23, 1994.[9] They then brought the matter to the Court of Appeals which, on October 13, 1995,
rendered a decision affirming the trial courts decision in toto.
Hence, this petition for review. Petitioners assign the following errors:
I. THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE
ORDERS OF THE TRIAL COURT DECLARING PETITIONERS AS IN
DEFAULT AND DENYING THEIR MOTION TO LIFT SAID ORDER OF
DEFAULT.
A. ATTY. DAQUIGANS ILLNESS WAS CONCLUSIVELY ESTABLISHED
AND, THEREFORE, THE DEFAULT ORDER HAS NO FACTUAL AND
LEGAL BASIS.
B. THE ABSENCE OF ATTY. DAQUIGAN SHOULD NOT HAVE
AUTOMATICALLY WARRANTED THE ISSUANCE OF THE DEFAULT
ORDER SINCE ATTY. MARCIA WHO BELONGED TO THE SAME LAW
OFFICE AS THE FORMER WAS PRESENT IN COURT DURING THE PRE-
TRIAL.
C. PETITIONERS URGENT MOTION TO RESET THE PRE-TRIAL
CONFERENCE WAS GROUNDED NOT ONLY ON ATTY. DAQUIGANS
ILLNESS BUT ALSO ON THE UNAVAILABILITY OF INDIVIDUAL
PETITIONERS WHO WANTED TO BE PRESENT DURING THE PRE-TRIAL.
D. PETITIONERS FAILURE TO SUBMIT ON TIME THEIR PRE-TRIAL BRIEF
WAS DUE TO JUSTIFIABLE REASONS.
E. PETITIONERS HAVE VALID AND MERITORIOUS DEFENSES.
II. THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE TRIAL
COURTS AWARD OF ACTUAL, MORAL, AND EXEMPLARY DAMAGES,
AND ATTORNEYS FEES TO JULIE SONG.
A. THERE IS NO SHOWING THAT JULIE SONG SUFFERED ACTUAL LOSS
IN THE AMOUNT OF P70,776.00.
B. THERE IS NO EVIDENCE THAT PETITIONERS ACTED IN BAD FAITH
SO AS TO ENTITLE JULIE SONG TO MORAL AND EXEMPLARY
DAMAGES.
The petition is meritorious.
It is true that under the 1964 Rules of Court, the trial judge has authority to declare "as in
default" parties who fail to appear at the pre-trial conference.[10] They may also be declared "as
in default" for their failure to file their pre-trial briefs at least three days before the pre-trial
conference.[11]
In deciding whether to grant or deny a motion for postponement of pre-trial, the court must take
into account the following factors: (a) the reason for the postponement, and (b) the merits of
the case of movant.[12]
In this case, there is no showing that petitioners, in asking for the re-setting of the pre-trial
conference, sought merely to cause unjustifiable delay in the proceedings. It is noteworthy that
the motion to reset pre-trial, filed five days before the scheduled conference, was the first of
such nature filed by petitioners. It was made on the ground that the lawyer handling the case,
Atty. Daquigan, was indisposed and petitioners were unavailable due to "previously scheduled
professional engagements." While it may be true that petitioners counsel failed to attach to said
motion a medical certificate attesting to the fact of his illness, the court should have lifted its
default order after a duly notarized certificate signed by the attending physician was annexed
to the motion to set aside the order of default.[13]As this Court held in Sarmiento v. Juan:[14]
The denial by Judge Juan of the petitioners motion to postpone the pre-trial
scheduled on February 5, 1980 may have appeared valid at the outset,
considering that it was filed at the last minute and was not accompanied by a
medical certificate although the ground alleged was illness on the part of the
petitioner. Nonetheless, a different appraisal of the petitioners plea should
have been made after the petitioner filed a motion for reconsideration which
was made under oath. Due regard should have been given to the repeated
pronouncements by this Court against default judgments and proceedings that
lay more emphasis on procedural niceties to the sacrifice of substantial justice.
After all, the ex-parte presentation of evidence had not yet been conducted nor
had a decision been rendered in the case. It appeared to be a simple matter
of giving the petitioner a chance to have his day in court in order to defend
himself against the claim filed by the private respondent.
Moreover, the presence of another lawyer from counsels law firm during the scheduled pre-trial
conference negates any suggestion of bad faith or wanton disregard of the rules on the part of
petitioners.[15] As we noted in Tejero v. Rosete,[16] in those cases where we sustained the
orders declaring parties nonsuited for failure to appear at the pre-trial, the pattern and scheme
to delay the disposition of the case was evident. But in the case at bar, no such pattern to delay
or wanton attitude on the part of petitioner is disclosed by the records.
Above all, petitioners present valid and meritorious defenses - a fact which should have
persuaded the trial court to reconsider its order of default. The allegations in petitioners answer
cannot simply be dismissed or ignored.
In Villareal v. Court of Appeals,[17] we held:
[The term meritorious defense] may imply that the applicant has the burden of
proving such a defense in order to have the judgment set aside. The cases
usually do not require such a strong showing. The test employed appears to
be essentially the same as used in considering summary judgment, i.e.,
whether there is enough evidence to present an issue for submission to the
trier of fact, or a showing that on the undisputed facts it is not clear the
judgment is warranted as a matter of law.
. . . The defendant must show that she has a meritorious
defense otherwise the grant of her motion will prove to be a useless exercise.
Thus, her motion must be accompanied by a statement of the evidence which
she intends to present if the motion is granted and which is such as to warrant
a reasonable belief that the result of the case would probably be otherwise if a
new trial is granted.
In the case at bar, private respondent relies, in her complaint, on the Notice of Garnishment
issued in Crim. Case No. 85-34865 and the sheriffs return indicating that the writ of execution
was "unsatisfied." It is curious to note, however, that while the total amount indicated in the
Notice of Garnishment and testified to by private respondent is $3,754.80 and
P16,000.00,[18] she is claiming actual damages in the amount of P70,776.00 only which is
alleged to be equivalent to the remaining 40% of the monthly salary (P20,776.00) and the
P50,000.00 leave pay released to Hernane Song.
For their part, petitioners claim that they have already paid 40% of Hernane Songs monthly
salary, as evidenced by the checks issued to private respondent who admits receipt of the
checks but claims to be entitled to something more. Petitioners also allege that private
respondent is not entitled to the P50,000.00 leave pay since such benefits are not considered
part of Hernane Songs "basic salary."
To be sure, private respondent cannot validly seek to obtain satisfaction of the writ of execution
in this case. Precisely, garnishment proceedings are the means by which the judgment creditor
seeks to subject to his claim the property of the judgment debtor in the hands of a third person;
such proceedings must be had in the trial court which has jurisdiction over the suit in which the
judgment creditor prevailed.[19] Rule 39 of the 1964 Rules of Court provides the procedure in
cases wherein the writ of execution is returned unsatisfied, viz.:
SEC. 38. Examination of judgment debtor when execution returned
unsatisfied. When an execution issued in accordance with law against property
of a judgment debtor, or anyone of several debtors in the same judgment, is
returned unsatisfied, in whole or in part, the judgment creditor, at any time after
such return is made, shall be entitled to an order from the judge of the Court
of First Instance of the province in which the judgment was rendered or of the
province from which the execution was returned, requiring such judgment
debtor to appear and answer concerning his property and income before such
judge of the Court of First Instance, or before a commissioner appointed by
him, at a specified time and place; and proceedings may thereupon be had for
the application of the property and income of the judgment debtor toward the
satisfaction of the judgment. But no judgment debtor shall be so required to
appear before a judge of first instance or commissioner outside the province
in which such debtor resides or is found.
SEC. 39. Examination of debtor of judgment debtor. After an execution against
the property of a judgment debtor has been returned unsatisfied in whole or in
part, and upon proof, by affidavit of a party or otherwise, to the satisfaction of
the judge, that a person, corporation, or other legal entity has property of such
judgment debtor, or is indebted to him, the judge may, by an order, require
 such person, corporation, or other legal entity, or any officer or member
thereof, to appear before the judge, or a commissioner appointed by him, at a
time and place within the province in which the order is served, to answer
concerning the same. The service of the order shall bind all credits due the
judgment debtor and all money and property of the judgment debtor in the
possession or in the control of such person, corporation, or legal entity from
the time of service; and the judge may also require notice of such proceedings
to be given to any party to the action in such manner as he may deem proper.
Moreover, it is well-settled that actual damages must be proved by the best evidence available
to the injured party. The Court cannot rely on the uncorroborated testimony of a witness,
particularly if he was not cross-examined.[20]
Anent private respondents claim of moral and exemplary damages on the ground that
petitioners wanton refusal to surrender to her the amounts indicated in the Notice of
Garnishment caused her sleepless nights, serious anxiety and the like,[21] petitioners allege that
it was in fact private respondent who failed to collect the monthly allotments due her and her
child. If this is true, there will be no basis for the award of moral and exemplary damages to
private respondent.
Petitioners, however, cannot now question the validity of the Notice of Garnishment since it
was not an issue raised in the courts below.[22]
WHEREFORE, the decision of the Court of Appeals is REVERSED. The order of default, dated
October 12, 1993, and the decision, dated December 8, 1993, both issued by the Regional
Trial Court, Branch 135, Makati are SET ASIDE, and the case is REMANDED to said court for
further proceedings according to law.
SO ORDERED.
THIRD DIVISION
G.R. No. G.R. No. 150936 August 18, 2004
NATIONAL POWER CORPORATION, petitioner,
vs.
MANUBAY AGRO-INDUSTRIAL DEVELOPMENT CORPORATION, respondents.
DECISION
PANGANIBAN, J.:
How much just compensation should be paid for an easement of a right of way over a parcel
of land that will be traversed by high-powered transmission lines? Should such compensation
be a simple easement fee or the full value of the property? This is the question to be answered
in this case.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to reverse and
set aside the November 23, 2001 Decision2 of the Court of Appeals (CA) in CA-GR CV No.
60515. The CA affirmed the June 24, 1998 Decision3 of the Regional Trial Court4 (RTC) of Naga
City (Branch 26), directing the National Power Corporation (NPC) to pay the value of the land
expropriated from respondent for the use thereof in NPC’s Leyte-Luzon HVDC Power
Transmission Project.
The Facts
The CA summarized the antecedents of the case as follows:
"In 1996, [Petitioner] NATIONAL POWER CORPORATION, a government-owned and
controlled corporation created for the purpose of undertaking the development and
generation of hydroelectric power, commenced its 350 KV Leyte-Luzon HVDC Power
Transmission Project. The project aims to transmit the excess electrical generating
capacity coming from Leyte Geothermal Plant to Luzon and various load centers in its
vision to interconnect the entire country into a single power grid. Apparently, the project
is for a public purpose.
"In order to carry out this project, it is imperative for the [petitioner’s] transmission lines
to cross over certain lands owned by private individuals and entities. One of these
lands, [where] only a portion will be traversed by the transmission lines, is owned by
[respondent] MANUBAY AGRO-INDUSTRIAL DEVELOPMENT CORPORATION.
"Hence, on 03 December 1996, [petitioner] filed a complaint for expropriation before
the Regional Trial Court of Naga City against [respondent] in order to acquire an
easement of right of way over the land which the latter owns. The said land is situated
at Km. 8, Barangay Pacol, Naga City, Camarines Sur and described with more
particularity, as follows:
TCT/OCT NO. TOTAL AREA AREA CLASS.
IN SQ.M. AFFECTED IN OF LAND
SQ. M.
17795 490,232 21,386.16 Agri.
17797 40,848 1,358.17 Agri.
17798 5,279 217.38 Agri.
TOTAL 22,961.71
"On 02 January 1997, [respondent] filed its answer. Thereafter, the court a quo issued
an order dated 20 January 1997 authorizing the immediate issuance of a writ of
possession and directing Ex-Officio Provincial Sheriff to immediately place [petitioner]
in possession of the subject land.
"Subsequently, the court a quo directed the issuance of a writ of condemnation in favor
of [petitioner] through an order dated 14 February 1997. Likewise, for the purpose of
determining the fair and just compensation due to [respondent], the court appointed
three commissioners composed of one representative of the petitioner, one for the
respondent and the other from the court, namely: OIC-Branch Clerk of Court Minda B.
Teoxon as Chairperson and Philippine National Bank-Naga City Loan Appraiser Mr.
Isidro Virgilio Bulao, Jr. and City Assessor Ramon R. Albeus as members.
"On 03 and 06 March 1997, respectively, Commissioners Ramon Albeus and Isidro
Bulao, Jr. took their oath of office before OIC Branch Clerk of Court and Chairperson
Minda B. Teoxon.
"Accordingly, the commissioners submitted their individual appraisal/valuation reports.
The commissioner for the [petitioner], Commissioner Albeus, finding the subject land
irregular and sloppy, classified the same as low density residential zone and
recommended the price of P115.00 per square meter. On the other hand,
Commissioner Bulao, commissioner for the [respondent], recommended the price
of P550.00 per square meter. The court’s Commissioner and Chairperson of the Board
Minda Teoxon, on the other hand, found Commissioner Albeus’ appraisal low as
compared to the BIR Zonal Valuation and opted to adopt the price recommended by
Commissioner Bulao. On the assumption that the subject land will be developed into a
first class subdivision, she recommended the amount of P550.00 per square meter as
just compensation for the subject property, or the total amount of P12,628,940.50 for
the entire area affected."5
Taking into consideration the condition, the surroundings and the potentials of respondent’s
expropriated property, the RTC approved Chairperson Minda B. Teoxon’s recommended
amount of P550 per square meter as just compensation for the property. The trial court opined
that the installation thereon of the 350 KV Leyte-Luzon HVDC Power Transmission Project
would impose a limitation on the use of the land for an indefinite period of time, thereby justifying
the payment of the full value of the property.
Further, the RTC held that it was not bound by the provision cited by petitioner -- Section 3-
A6 of Republic Act 63957, as amended by Presidential Decree 938. This law prescribes as just
compensation for the acquired easement of a right of way over an expropriated property an
easement fee in an amount not exceeding 10 percent of the market value of such property.
The trial court relied on the earlier pronouncements of this Court that the determination of just
compensation in eminent domain cases is a judicial function. Thus, valuations made by the
executive branch or the legislature are at best initial or preliminary only.
Ruling of the Court of Appeals
Affirming the RTC, the CA held that RA 6395, as amended by PD No. 938, did not preclude
expropriation. Section 3-A thereof allowed the power company to acquire not just an easement
of a right of way, but even the land itself. Such easement was deemed by the appellate court
to be a "taking" under the power of eminent domain.
The CA observed that, given their nature, high-powered electric lines traversing respondent’s
property would necessarily diminish -- if not damage entirely -- the value and the use of the
affected property; as well as endanger lives and limbs because of the high-tension current
conveyed through the lines. Respondent was therefore deemed entitled to a just compensation,
which should be neither more nor less than the monetary equivalent of the property taken.
Accordingly, the appellate found the award of P550 per square meter to be proper and
reasonable.
Hence, this Petition.8
Issues
In its Memorandum, petitioner submits this lone issue for our consideration:
"Whether or not the Honorable Court of Appeals gravely erred in affirming the Decision
dated June 24, 1998 of the Regional Trial Court, Branch 26, Naga City considering that
its Decision dated November 23, 2001 is not in accord with law and the applicable
decisions of this Honorable Court."9
The Court’s Ruling
The Petition is devoid of merit.
Sole Issue:
Just Compensation
Petitioner contends that the valuation of the expropriated property -- fixed by the trial court and
affirmed by the CA -- was too high a price for the acquisition of an easement of a mere aerial
right of way, because respondent would continue to own and use the subject land anyway.
Petitioner argues that in a strict sense, there is no "taking" of property, but merely an imposition
of an encumbrance or a personal easement/servitude under Article 61410 of the Civil Code.
Such encumbrance will not result in ousting or depriving respondent of the beneficial enjoyment
of the property. And even if there was a "taking," petitioner points out that the loss is limited
only to a portion of the aerial domain above the property of respondent. Hence, the latter should
be compensated only for what it would actually lose.
We are not persuaded.
Petitioner averred in its Complaint in Civil Case No. RTC 96-3675 that it had sought to acquire
an easement of a right of way over portions of respondent’s land -- a total area of 22,961.71
square meters.11 In its prayer, however, it also sought authority to enter the property and
demolish all improvements existing thereon, in order to commence and undertake the
construction of its Power Transmission Project.
In other words, the expropriation was not to be limited to an easement of a right of way. In its
Answer, respondent alleged that it had already authorized petitioner to take possession of the
affected portions of the property and to install electric towers thereon. 12 The latter did not
controvert this material allegation.
Granting arguendo that what petitioner acquired over respondent’s property was purely an
easement of a right of way, still, we cannot sustain its view that it should pay only an easement
fee, and not the full value of the property. The acquisition of such an easement falls within the
purview of the power of eminent domain. This conclusion finds support in similar cases in which
the Supreme Court sustained the award of just compensation for private property condemned
for public use.13 Republic v. PLDT14 held thus:
"x x x. Normally, of course, the power of eminent domain results in the taking or
appropriation of title to, and possession of, the expropriated property; but no cogent
reason appears why the said power may not be availed of to impose only a burden
upon the owner of condemned property, without loss of title and possession. It is
unquestionable that real property may, through expropriation, be subjected to an
easement of right of way."15
True, an easement of a right of way transmits no rights except the easement itself, and
respondent retains full ownership of the property. The acquisition of such easement is,
nevertheless, not gratis. As correctly observed by the CA, considering the nature and the effect
of the installation power lines, the limitations on the use of the land for an indefinite period
would deprive respondent of normal use of the property. For this reason, the latter is entitled to
payment of a just compensation, which must be neither more nor less than the monetary
equivalent of the land.16
Just compensation is defined as the full and fair equivalent of the property taken from its owner
by the expropriator. The measure is not the taker’s gain, but the owner’s loss. The word "just"
is used to intensify the meaning of the word "compensation" and to convey thereby the idea
that the equivalent to be rendered for the property to be taken shall be real, substantial, full and
ample.17
In eminent domain or expropriation proceedings, the just compensation to which the owner of
a condemned property is entitled is generally the market value. Market value is "that sum of
money which a person desirous but not compelled to buy, and an owner willing but not
compelled to sell, would agree on as a price to be given and received therefor."18 Such amount
is not limited to the assessed value of the property or to the schedule of market values
determined by the provincial or city appraisal committee. However, these values may serve as
factors to be considered in the judicial valuation of the property.19
The parcels of land sought to be expropriated are undeniably undeveloped, raw agricultural
land. But a dominant portion thereof has been reclassified by the Sangguniang Panlungsod ng
Naga -- per Zoning Ordinance No. 94-076 dated August 10, 1994 -- as residential, per the
August 8, 1996 certification of Zoning Administrator Juan O. Villegas Jr. 20 The property is also
covered by Naga City Mayor Jesse M. Robredo’s favorable endorsement of the issuance of a
certification for land use conversion by the Department of Agrarian Reform (DAR) on the
ground that the locality where the property was located had become highly urbanized and
would have greater economic value for residential or commercial use.21
The nature and character of the land at the time of its taking is the principal criterion for
determining how much just compensation should be given to the landowner.22 All the facts as
to the condition of the property and its surroundings, as well as its improvements and
capabilities, should be considered.23
In fixing the valuation at P550 per square meter, the trial court had considered the Report of
the commissioners and the proofs submitted by the parties. These documents included the
following: (1) the established fact that the property of respondent was located along the Naga-
Carolina provincial road; (2) the fact that it was about 500 meters from the Kayumanggi Resort
and 8 kilometers from the Naga City Central Business District; and a half kilometer from the
main entrance of the fully developed Naga City Sports Complex -- used as the site of the
Palarong Pambansa -- and the San Francisco Village Subdivision, a first class subdivision
where lots were priced at P2,500 per square meter; (3) the fair market value of P650 per square
meter proffered by respondent, citing its recently concluded sale of a portion of the same
property to Metro Naga Water District at a fixed price of P800 per square meter; (4) the BIR
zonal valuation of residential lots in Barangay Pacol, Naga City, fixed at a price of P220 per
square meter as of 1997; and (5) the fact that the price of P430 per square meter had been
determined by the RTC of Naga City (Branch 21)24 as just compensation for the Mercados’
adjoining property, which had been expropriated by NPC for the same power transmission
project.
The chairperson of the Board of Commissioners, in adopting the recommendation of
Commissioner Bulaos, made a careful study of the property. Factors considered in arriving at
a reasonable estimate of just compensation for respondent were the location; the most
profitable likely use of the remaining area; and the size, shape, accessibility as well as listings
of other properties within the vicinity. Averments pertaining to these factors were supported by
documentary evidence.
On the other hand, the commissioner for petitioner -- City Assessor Albeus -- recommended a
price of P115 per square meter in his Report dated June 30, 1997. No documentary evidence,
however, was attached to substantiate the opinions of the banks and the realtors, indicated in
the commissioner’s Report and computation of the market value of the property.
The price of P550 per square meter appears to be the closest approximation of the market
value of the lots in the adjoining, fully developed San Francisco Village Subdivision.
Considering that the parcels of land in question are still undeveloped raw land, it appears to
the Court that the just compensation of P550 per square meter is justified.
Inasmuch as the determination of just compensation in eminent domain cases is a judicial
function,25 and the trial court apparently did not act capriciously or arbitrarily in setting the price
at P550 per square meter -- an award affirmed by the CA -- we see no reason to disturb the
factual findings as to the valuation of the property. Both the Report of Commissioner Bulao and
the commissioners’ majority Report were based on uncontroverted facts supported by
documentary evidence and confirmed by their ocular inspection of the property. As can be
gleaned from the records, they did not abuse their authority in evaluating the evidence
submitted to them; neither did they misappreciate the clear preponderance of evidence. The
amount fixed and agreed to by the trial court and respondent appellate court has not been
grossly exorbitant or otherwise unjustified.26
Majority Report of
Commissioners Sufficient
Deserving scant consideration is petitioner’s contention that the Report adopted by the RTC
and affirmed by the CA was not the same one submitted by the board of commissioners, but
was only that of its chairperson. As correctly pointed out by the trial court, the commissioner’s
Report was actually a decision of the majority of the board. Note that after reviewing the Reports
of the other commissioners, Chairperson Teoxon opted to adopt the recommendation of
Commissioner Bulao. There has been no claim that fraud or prejudice tainted the majority
Report. In fact, on December 19, 1997, the trial court admitted the commissioner’s Report
without objection from any of the parties.27
Under Section 8 of Rule 67 of the Rules of Court, the court may "accept the report and render
judgment in accordance therewith; or for cause shown, it may recommit the same to the
commissioners for further report of facts, or it may set aside the report and appoint new
commissioners, or it may accept the report in part and reject it in part; x x x." In other words,
the reports of commissioners are merely advisory and recommendatory in character, as far as
the courts are concerned.28
Thus, it hardly matters whether the commissioners have unanimously agreed on their
recommended valuation of the property. It has been held that the report of only two
commissioners may suffice, even if the third commissioner dissents.29 As a court is not bound
by commissioners’ reports it may make such order or render such judgment as shall secure for
the plaintiff the property essential to the exercise of the latter’s right of condemnation; and for
the defendant, just compensation for the property expropriated. For that matter, the court may
even substitute its own estimate of the value as gathered from the evidence on record.30
WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED. No
pronouncement as to costs. SO ORDERED.