G.R. No.

193169

April 6, 2015

ROGELIO ROQUE, Petitioner,

vs.
PEOPLE OF THE PIDLIPPINES, Respondent.
RESOLUTION
DEL CASTILLO, J.:
Petitioner Rogelio Roque (petitioner) was charged with the crime of frustrated homicide in an
Information that reads as follows:
That on or about the 22nd day of November, 2001, in the municipality of Pandi, province of Bulacan,
Philippines, and within the jurisdiction of this Honorable Court, the above-named accused did then
and there willfully, unlawfully, and feloniously, with intent to kill[,] attack, assault and shoot with a gun
complain[an]t Reynaldo Marquez, hitting the latter on his right ear and nape, and kick[ing] him on the
face and back, causing serious physical injuries which ordinarily would have caused the death of the
said Reynaldo Marquez, thus, performing all the acts of execution which should have produced the
crime of homicide as a consequence, but nevertheless did not produce it by reason of causes
independent of his will, that is[,] by the timely and able medical attendance rendered to said
Reynaldo Marquez which prevented his death.
CONTRARY TO LAW.

When arraigned on March 23, 2003, petitioner pleaded "not guilty." During the pre-trial conference,
the defense admitted the identity of petitioner; that he is a Kagawad of Barangay Masagana, Pandi,
Bulacan; and that the day of the incident, November 22, 2001 was the Thanksgiving Day of the said
barangay. Trial thereafter ensued where the parties presented their respective versions of the
incident.
The prosecution averred that on November 22, 2001, while brothers Reynaldo Marquez (Reynaldo)
and Rodolfo Marquez (Rodolfo) were in the house of Bella Salvador-Santos (Bella) in Pandi,
Bulacan, Rodolfo spotted Rogelio dela Cruz (dela Cruz) and shouted to him to join them. At that
instant, petitioner and his wife were passing-by on board a tricycle. Believing that Rodolfo's shout
was directed at him, petitioner stopped the vehicle and cursed the former. Reynaldo apologized for
the misunderstanding but petitioner was unyielding. Before leaving, he warned the Marquez brothers
that something bad would happen to them if they continue to perturb him.
Bothered, Rodolfo went to the house of Barangay Chairman Pablo Tayao (Tayao) to ask for
assistance in settling the misunderstanding. Because of this, Reynaldo, who had already gone
home, was fetched by dela Cruz and brought to the house of Tayao. But since Tayao was then no
longer around, Reynaldo just proceeded to petitioner's house to follow Tayao and Rodolfo who had
already gone ahead. Upon arriving at petitioner's residence, Reynaldo again apologized to petitioner
but the latter did not reply. Instead, petitioner entered the house and when he came out, he was
already holding a gun which he suddenly fired at Reynaldo who was hit in his right ear. Petitioner
then shot Reynaldo who fell to the ground after being hit in the nape. Unsatisfied, petitioner kicked
Reynaldo on the face and back. Reynaldo pleaded Tayao for help but to no avail since petitioner
warned those around not to get involved. Fortunately, Reynaldo's parents arrived and took him to a

local hospital for emergency medical treatment. He was later transferred to Jose Reyes Memorial
Hospital in Manila where he was operated on and confined for three weeks. Dr. Renato Raymundo
attended to him and issued a medical certificate stating that a bullet entered the base of Reynaldo's
skull and exited at the back of his right ear. Presenting a totally different version, the defense claimed
that on November 22, 2001, petitioner went to the house of Bella on board a tricycle to fetch his
child. While driving, he was cursed by brothers Reynaldo and Rodolfo who were visibly intoxicated.
Petitioner ignored the two and just went home. Later, however, the brothers appeared in front of his
house still shouting invectives against him. Petitioner's brother tried to pacify Rodolfo and Reynaldo
who agreed to leave but not without threatening that they would return to kill him. Petitioner thus
asked someone to call Tayao. Not long after, the brothers came back, entered petitioner's yard, and
challenged him to a gun duel. Petitioner requested Tayao to stop and pacify them but Reynaldo
refused to calm down and instead fired his gun. Hence, as an act of self-defense, petitioner fired
back twice.
On March 12, 2007, the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 84, rendered its
Decision finding petitioner guilty as charged, viz:
2

WHEREFORE, finding the accused GUILTY beyond reasonable doubt of the crime charged in the
information, he is hereby sentenced to suffer the penalty of imprisonment of six ( 6) years [of] prision
correccional, as minimum[;] to ten (10) years of prision mayor in its medium [period], as maximum.
SO ORDERED.

Petitioner filed a motion for reconsideration which was denied in an Order dated August 16, 2007.
4

Undaunted, petitioner appealed to the Court of Appeals (CA). In its Decision dated February 27,
2009, the CA affirmed in full the RTC's Decision, thus:
5

WHEREFORE, in the light of the foregoing premises, the decision appealed from is hereby
AFFIRMED in its entirety.
SO ORDERED.

Petitioner's Motion for Reconsideration thereto was likewise denied in a Resolution dated July 30,
2010.
7

Hence, this Petition for Review on Certiorari under Rule 45 of the Rules of Court where petitioner
imputes upon the CA the following errors:
9

I. THE HONORABLE COURT OF APPEALS ERRONEOUSLY APPRECIATED THE FACTS

AND EVIDENCE ON RECORD WHEN IT RULED THAT THE ELEMENT OF UNLAWFUL
AGGRESSION WAS NOT SATISFACTORILY PROVEN SINCE 1HE ACCUSEDAPPELLANT HAS NOT SATISFACTORILY SHOWN THAT THE VICTIM/PRIV A TE
COMPLAINANT WAS INDEED ARMED WITH AGUN.
II. THE HONORABLE COURT OF APPEALS ERRONEOUSLY APPRECIATED THE FACTS
AND EVIDENCE ON RECORD WHEN IT RULED THAT GRANTING FOR THE BENEFIT
OF ARGUMENT THAT THERE WAS INDEED UNLAWFUL AGGRESSION, PETITIONER

WAS NO LONGER JUSTIFIED IN FIRING AT THE VICTIM/PRIVATE COMPLAINANT FOR

THE SECOND TIME.
III. THE HONORABLE COURT OF APPEALS ERRONEOSUL Y APPRECIATED THE
FACTS AND EVIDENCE ON RECORD WHEN IT RULED THAT INTENT TO KILL ON THE
PART OF PETITIONER WAS PRESENT CONSIDERING: (A) THE PRIVATE
COMPLAINANT ALLEGEDLY RECEIVED TWO GUNSHOT WOUNDS, AND (B) THE
PETITIONER PREVENTED BARANGA Y OFFICIALS FROM INTERVENING AND
HELPING OUT THE WOUNDED PRIVATE COMPLAINANT.
10

Our Ruling
The Petition must be denied.
The errors petitioner imputes upon the CA all pertain to "appreciation of evidence" or factual errors
which are not within the province of a petition for review on certiorari under Rule 45. The Court had
already explained in Batistis v. People that:
11

Pursuant to Section 3, Rule 122, and Section 9, Rule 45, of the Rules of Court, the review on appeal
of a decision in a criminal case, wherein the CA imposes a penalty other than death, reclusion
perpetua, or life imprisonment, is by petition for review on certiorari.
A petition for review on certiorari raises only questions of law. Sec. 1, Rule 45, Rules of Court,
explicitly so provides, viz:
Section I. Filing of petition with Supreme Court. - A party desiring to appeal by certiorari from a
judgment, final order or resolution of the Court of Appeals, the Sandiganbayan, the Court of Tax
Appeals, the Regional Trial Court or other courts, whenever authorized by law, may file with the
Supreme Court a verified petition for review on certiorari. The petition may include an application for
a writ of preliminary injunction or other provisional remedies and shall raise only questions of law,
which must be distinctly set forth. The petitioner may seek the same provisional remedies by verified
motion filed in the same action or proceeding at any time during its pendency.
Petitioner's assigned errors, requiring as they do a re-appreciation and reexamination of the
evidence, are evidentiary and factual in nature. The Petition must therefore be denied on this basis
because "one, the petition for review thereby violates the limitation of the issues to only legal
questions, and, two, the Court, not being a trier of facts, will not disturb the factual findings of the CA,
unless they were mistaken, absurd, speculative, conflicting, tainted with grave abuse of discretion, or
contrary to the findings reached by the court of origin," which was not shown to be the case here.
12

13

Besides, findings of facts of the RTC, its calibration of the testimonial evidence, its assessment of
the probative weight thereof, as well as its conclusions anchored on the said findings, are accorded
high respect if not conclusive effect when affirmed by the CA, as in this case. After all, the RTC "had
the opportunity to observe the witnesses on the stand and detect if they were telling the truth." "To
[thus] accord with the established doctrine of finality and bindingness of the trial court's findings of
fact, [the Court shall] not disturb [the] findings of fact of the RTC, particularly after their affirmance by
the CA" as petitioner was not able to sufficiently establish any extraordinary circumstance which
merits a departure from the said doctrine.
14

15

16

17

In any event, the Court observes that the CA correctly affirmed the RTC 's ruling that petitioner is
guilty of frustrated homicide and not merely of less serious physical injuries as the latter insists. As
aptly stated by the CA:
In attempted or frustrated homicide, the offender must have the intent to kill the victim. If there is no
intent to kill on the part of the offender, he is liable for physical injuries only. Vice-versa, regardless of
whether the victim only suffered injuries that would have healed in nine to thirty days, if intent to kill
is sufficiently borne out, the crime committed is frustrated homicide (Arts. 263-266).
1wphi1

Usually, the intent to kill is shown by the kind of weapon used by the offender and the parts of the
victim's body at which the weapon was aimed, as shown by the wounds inflicted. Hence, when a
deadly weapon, like a bolo, is used to stab the victim in the latter's abdomen, the intent to kill can be
presumed (Reyes, The Revised Penal Code, 13TH ED., P. 431).
It is worth highlighting that the victim received two gunshot wounds in the head. Indeed the location
of the wounds plus the nature of the weapon used are ready indications that the accused-appellant's
objective is not merely to warn or incapacitate a supposed aggressor. Verily, had the accusedappellant been slightly better with his aim, any of the two bullets surely would have killed him
outright. Also, the intent to kill is further exhibited by the fact that the accused-appellant even
prevented barangay officials from intervening and helping x x x the bleeding victim. Indeed, the fact
that Reynaldo Marquez was miraculously able to live through the ordeal and sustain only modicum
injuries does not mean that the crime ought to be downgraded from frustrated homicide to less
serious physical injuries. After all, as was mentioned above, what should be determinative of the
crime is not the gravity of the resulting injury but the criminal intent that animated the hand that
pulled the trigger.
18

The Court, however, notes that while the penalty imposed upon appellant is also proper, there is a
need to modify the assailed CA Decision in that awards of damages must be made in favor of the
victim Reynaldo.
The RTC and the CA correctly held that actual damages cannot be awarded to Reynaldo due to the
absence of receipts to prove the medical expenses he incurred from the incident. "Nonetheless,
absent competent proof on the actual damages suffered, a party still has the option of claiming
temperate damages, which may be allowed in cases where, from the nature of the case, definite
proof of pecuniary loss cannot be adduced although the court is convinced that the aggrieved party
suffered some pecuniary loss." Since it was undisputed that Reynaldo was hospitalized due to the
gunshot wounds inflicted by petitioner, albeit as observed by the RTC there was no evidence offered
as to the expenses he incurred by reason thereof, Reynaldo is entitled to temperate damages in the
amount of P25,000.00. Aside from this, he is also entitled to moral damages of P25,000.00. These
awards of damages are in accordance with settled jurisprudence. An interest at the legal rate of 6%
per annum must also be imposed on the awarded damages to commence from the date of finality of
this Resolution until fully paid.
19

20

21

WHEREFORE, the Petition is DENIED. The Decision dated February 27, 2009 of the Court of
Appeals in CA-G.R. CR No. 31084 affirming in its entirety the March 12, 2007 Decision of the
Regional Trial Court of Malolos, Bulacan, Branch 84 in Criminal Case No. 3486-M-2002 convicting
petitioner Rogelio Roque of the crime of :frustrated homicide, is AFFIRMED with the MODIFICATION
that the petitioner is ordered to pay the victim Reynaldo Marquez moral damages and temperate

damages in the amount of P25,000,00 each, with interest at the legal rate 6% per annum from the
date of finality of this Resolution until fully paid.
SO ORDERED.
G.R. No. 194642, April 06, 2015
NUNELON R. MARQUEZ, Petitioner, v. ELISAN CREDIT CORPORATION, Respondents.
DECISION
BRION, J.:
We resolve the present petition for review on certiorari1 assailing the May 17, 2010 decision2 and the
November 25, 2010 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 102144.4
redarclaw

The Factual Antecedents

On December 16, 1991, Nunelon R. Marquez (petitioner) obtained a (first loan) from Elisan Credit
Corporation (respondent) for fifty-three thousand pesos (Php 53,000.00) payable in one-hundred eighty
(180) days.5
redarclaw

The petitioner signed a promissory note which provided that it is payable in weekly installments and subject
to twenty-six percent (26%) annual interest. In case of non-payment, the petitioner agreed to pay ten
percent (10%) monthly penalty based on the total amount unpaid and another twenty-five percent (25%) of
such amount for attorney's fees exclusive of costs, and judicial and extrajudicial expenses. 6
re darclaw

To further secure payment of the loan, the petitioner executed a chattel mortgage 7 over a motor vehicle. The
contract of chattel mortgage provided among others, that the motor vehicle shall stand as a security for the
first loan and "all other obligations of every kind already incurred or which may hereafter be incurred."8
re darclaw

Both the petitioner and respondent acknowledged the full payment of the first loan. 9

redarclaw

Subsequently, the petitioner obtained another loan (second loan) from the respondent for fifty-five thousand
pesos (P55,000.00) evidenced by a promissory note10 and a cash voucher11 both dated June 15, 1992.
The promissory note covering the second loan contained exactly the same terms and conditions as the first
promissory note.
When the second loan matured on December 15, 1992, the petitioner had only paid twenty-nine thousand
nine hundred sixty pesos (P29,960.00), leaving an unpaid balance of twenty five thousand forty pesos
(P25,040.00).12
re darclaw

Due to liquidity problems, the petitioner asked the respondent if he could pay in daily installments (daily
payments) until the second loan is paid. The respondent granted the petitioner's request. Thus, as of
September 1994 or twenty-one (21) months after the second loan's maturity, the petitioner had already
paid a total of fifty-six thousand four-hundred forty pesos (P56,440.00), an amount greater than the
principal.13
re darclaw

Despite the receipt of more than the amount of the principal, the respondent filed a complaint for judicial
foreclosure of the chattel mortgage because the petitioner allegedly failed to settle the balance of the second
loan despite demand.14
re darclaw

The respondent further alleged that pursuant to the terms of the promissory note, the petitioner's failure to
fully pay upon maturity triggered the imposition of the ten percent (10%) monthly penalty and twenty-five
percent (25%) attorney's fees.
The respondent prayed that the petitioner be ordered to pay the balance of the second loan plus accrued
penalties and interest.15
redarclaw

Before the petitioner could file an answer, the respondent applied for the issuance of a writ of replevin. The
MTC issued the writ and by virtue of which, the motor vehicle covered by the chattel mortgage was seized
from the petitioner and delivered to the respondent. 16
redarclaw

Trial on the merits thereafter ensued.

The MTC Ruling17
The MTC found for the petitioner and held that the second loan was fully extinguished as of September
1994.
It held that when an obligee accepts the performance or payment of an obligation, knowing its
incompleteness or irregularity and without expressing any protest or objection, the obligation is deemed
fully complied with.18 The MTC noted that the respondent accepted the daily payments made by the
petitioner without protest. The second loan having been fully extinguished, the MTC ruled that respondent's
claim for interests and penalties plus the alleged unpaid portion of the principal is without legal basis.
The MTC ordered:

LawlibraryofCR Alaw

1.

"the plaintiff Elisan Credit Corporation to return/deliver the seized motor vehicle with Plate
No. UV-TDF-193 to the possession of the defendant and in the event its delivery is no
longer possible, to pay the defendant the amount of P30,000.00 corresponding to the value
of the said vehicle;"

2.

"the bonding company People's Trans-East Asia Insurance Corporation to pay the defendant
the amounts of P20,000.00 and P5,000.00 representing the damages and attorney's fees
under P.T.E.A.LC Bond No. JCL (13)-00984;"

3.

"the plaintiff is likewise directed to surrender to the defendant the originals of the
documents evidencing indebtedness in this case so as to prevent further use of the same in
another proceeding."
The RTC Ruling19

Except for the MTC's order directed to the bonding company, the RTC initially affirmed the ruling of the MTC.
Acting on the respondent's motion for reconsideration, the RTC reversed itself. Citing Article 1253 of the Civil
Code, it held that "if the debt produces interest, payment of the principal shall not be deemed to have been
made until the interests have been covered." It also sustained the contention of the respondent that the
chattel mortgage was revived when the petitioner executed the promissory note covering the second loan.
The RTC ordered:

LawlibraryofCR Alaw

1.

"the defendant to pay the plaintiff the following: a) P25,040.00, plus interest thereon at the
rate of 26% per annum and penalties of 10% per month thereon from due date of the
second promissory note until fully paid, b) 25% of the defendant's outstanding obligation as
and for attorney's fees, c) costs of this suit;"

2.

"the foreclosure of the chattel mortgage dated December 16, 1991 and the sale of the
mortgaged property at a public auction, with the proceeds thereof to be applied as and in
payment of the amounts awarded in a and b above."
The CA Ruling20

The CA affirmed the RTC's ruling with modification.

The CA observed that the disparity in the amount loaned and the amount paid by the petitioner supports the
respondent's view that the daily payments were properly applied first for the payment of interests and not

for the principal.

According to the CA, if the respondent truly condoned the payment of interests as claimed by the petitioner,
the latter did not have to pay an amount in excess of the principal. The CA believed the petitioner knew his
payments were first applied to the interests due.
The CA held that Article 1253 of the Civil Code is clear that if debt produces interest, payment of the
principal shall not be deemed made until the interests have been covered. It ruled that even if the official
receipts issued by the respondent did not mention that the payments were for the interests, the omission is
irrelevant as it is deemed by law to be for the payment of interests first, if any, and then for the payment of
the principal amount.
The CA, however, reduced the monthly penalty from ten percent (10%) to two percent (2%) pursuant to
Article 1229 of the Civil Code which gives the courts the power to decrease the penalty when the principal
obligation has been partly or irregularly complied with by the debtor.
The dispositive portion of the CA decision provides:
"WHEREFORE, premises considered, the Petition is hereby DENIED for lack of merit. The Order dated 07
May 2007 of the Regional Trial Court, Branch 222, Quezon City is
hereby AFFIRMED with MODIFICATION that the penalty charge should only be two (2%) per month until
fully paid."
LawlibraryofCRAlaw

The CA denied the petitioner's Motion for Reconsideration dated May 17, 2010 on November 25, 2010 for
failing to raise new matters. Hence, this present petition.
The Petition
The petitioner seeks the reversal of the CA's decision and resolution. He argues that he has fully paid his
obligation. Thus, the respondent has no right to foreclose the chattel mortgage.
The petitioner insists that his daily payments should be deemed to have been credited against the principal,
as the official receipts issued by the respondent were silent with respect to the payment of interest and
penalties. He cites Article 1176 of the Civil Code which ordains that [t]he receipt of the principal by the
creditor without reservation with respect to the interest, shall give rise to the presumption that the interest
has been paid. The petitioner invokes Article 1235 of the Civil Code which states that "[w]hen the obligee
accepts the performance of an obligation, knowing its incompleteness or irregularity, and without expressing
any protest or objection, the obligation is deemed fully complied with."
The petitioner denies having stipulated upon and consented to the twenty-six per cent (26%) per annum
interest charge, ten percent (10%) monthly penalty and twenty-five percent (25%) attorney's fees.
According to the petitioner, he signed the promissory note in blank.
The petitioner likewise disclaims receiving any demand letter from the respondent for the alleged balance of
the second loan after he had paid fifty-six thousand four-hundred forty pesos (Php56,440.00) as of
September 1994, and further argues that the chattel mortgage could not cover the second loan as it was
annulled and voided upon full payment of the first loan.
The Respondent's Case21
The respondent claims that the daily payments were properly credited against the interest and not against
the principal because the petitioner incurred delay in the full payment of the second loan.
It argues that pursuant to the terms and conditions of the promissory note, the interest and penalties
became due and demandable when the petitioner failed to pay in full upon maturity. The respondent relies
on Article 1253 of the Civil Code which provides that if the debt produces interest, payment of the principal
shall not be deemed to have been made until the interests have been covered.
The respondent likewise maintains that the chattel mortgage could validly secure the second loan invoking
its provision which provided that it covers "obligations...which may hereafter be incurred."
Issues

The petitioner raises the following issues for our resolution:

LawlibraryofCR Alaw

I.

"WHETHER THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF

THE REGIONAL TRIAL COURT ORDERING THE PETITIONER TO PAY THE RESPONDENT THE
AMOUNT OF PHP24,040.00 PLUS INTEREST AND PENALTY FROM DUE DATE UNTIL FULLY
PAID; AND

II.

"WHETHER THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF

THE REGIONAL TRIAL COURT ORDERING THE FORECLOSURE AND SALE OF THE
MORTGAGED PROPERTY."22

In simpler terms, did the respondent act lawfully when it credited the daily payments against the interest
instead of the principal? Could the chattel mortgage cover the second loan?
The Court's Ruling
We find the petition partly meritorious.
We rule that: (1) the respondent acted pursuant to law and jurisprudence when it credited the daily
payments against the interest instead of the principal; and (2) the chattel mortgage could not cover the
second loan.
Rebuttable presumptions; Article 1176 vis-a-vis Article 1253
There is a need to analyze and harmonize Article 1176 and Article 1253 of the Civil Code to determine
whether the daily payments made after the second loan's maturity should be credited against the interest or
against the principal.
Article 1176 provides that:
"The receipt of the principal by the creditor, without reservation with respect to the interest,
shall give rise to the presumption that said interest has been paid.
LawlibraryofCRAlaw

xxx."
On the other hand, Article 1253 states:
"If the debt produces interest, payment of the principal shall not be deemed to have been made
until the interests have been covered."
LawlibraryofCR Alaw

The above provisions appear to be contradictory but they in fact support, and are in conformity with, each
other. Both provisions are also presumptions and, as such, lose their legal efficacy in the face of proof or
evidence to the contrary.
Thus, the settlement of the first issue depends on which of these presumptions prevails under the given
facts of the case.
There are two undisputed facts crucial in resolving the first issue: (1) the petitioner failed to pay the full
amount of the second loan upon maturity; and (2) the second loan was subject to interest, and in case of
default, to penalty and attorney's fees.
But before proceeding any further, we first tackle the petitioner's denial of the genuineness and due
execution of the second promissory note. He denies that he stipulated upon and consented to the interest,
penalty and attorney's fees because he purportedly signed the promissory note in blank. 23
redarclaw

This allegation deserves scant consideration. It is self-serving and unsupported by evidence.

As aptly observed by the RTC and the CA, the promissory notes securing the first and second loan contained
exactly the same terms and conditions. They were mirror-image of each other except for the date and
amount of principal Thus, we see sufficient basis to believe that the petitioner knew or was aware of such
terms and conditions even assuming that the entries on the interest and penalty charges were in blank when
he signed the promissory note.

Moreover, we find it significant that the petitioner does not deny the genuineness and due execution of the
first promissory note. Only when he failed to pay the second loan did he impugn the validity of the interest,
penalty and attorney's fees. The CA and the RTC also noted that the petitioner is a schooled individual, an
engineer by profession, who, because of these credentials, will not just sign a document in blank without
appreciating the import of his action.24
redarclaw

These considerations strongly militate against the petitioner's claim that he did not consent to and stipulated
on the interest and penalty charges of the second loan. Thus, he did not only fail to fully pay the second loan
upon maturity; the loan was also subject to interest, penalty and attorney's fees.
Article 1176 in relation to Article 1253
Article 1176 falls under Chapter I (Nature and Effect of Obligations) while Article 1253 falls under
Subsection I (Application of Payments), Chapter IV (Extinguishment of Obligations) of Book IV
(Obligations and Contracts) of the Civil Code.
The structuring of these provisions, properly taken into account, means that Article 1176 should be treated
as a general presumption subject to the more specific presumption under Article 1253. Article 1176 is
relevant on questions pertaining to the effects and nature of obligations in general, while Article 1253 is
specifically pertinent on questions involving application of payments and extinguishment of obligations.
A textual analysis of the above provisions yields the results we discuss at length below:

LawlibraryofCRAlaw

The presumption under Article 1176 does not resolve the question of whether the amount received by the
creditor is a payment for the principal or interest. Under this article the amount received by the creditor is
the payment for the principal, but a doubt arises on whether or not the interest is waived because the
creditor accepts the payment for the principal without reservation with respect to the interest. Article 1176
resolves this doubt by presuming that the creditor waives the payment of interest because he accepts
payment for the principal without any reservation.
On the other hand, the presumption under Article 1253 resolves doubts involving payment of interestbearing debts. It is a given under this Article that the debt produces interest. The doubt pertains to the
application of payment; the uncertainty is on whether the amount received by the creditor is payment for
the principal or the interest. Article 1253 resolves this doubt by providing a hierarchy: payments
shall first be applied to the interest; payment shall then be applied to the principal only after the interest has
been fully-paid.
Correlating the two provisions, the rule under Article 1253 that payments shall first be applied to the
interest and not to the principal shall govern if two facts exist: (1) the debt produces interest (e.g., the
payment of interest is expressly stipulated) and (2) the principal remains unpaid.
The exception is a situation covered under Article 1176, i.e., when the creditor waives payment of the
interest despite the presence of (1) and (2) above. In such case, the payments shall obviously be credited to
the principal.
Since the doubt in the present case pertains to the application of the daily payments, Article 1253 shall
apply. Only when there is a waiver of interest shall Article 1176 become relevant.
Under this analysis, we rule that the respondent properly credited the daily payments to the interest and not
to the principal because: (1) the debt produces interest, i.e., the promissory note securing the second loan
provided for payment of interest; (2) a portion of the second loan remained unpaid upon maturity; and (3)
the respondent did not waive the payment of interest.
There was no waiver of interest
The fact that the official receipts did not indicate whether the payments were made for the principal or the
interest does not prove that the respondent waived the interest.
We reiterate that the petitioner made the daily payments after the second loan had already matured and a
portion of the principal remained unpaid. As stipulated, the principal is subject to 26% annual interest.
All these show that the petitioner was already in default of the principal when he started making the daily

payments. The stipulations providing for the 10% monthly penalty and the additional 25% attorney's fees on
the unpaid amount also became effective as a result of the petitioner's failure to pay in full upon maturity.
In other words, the so-called interest for default25 (as distinguished from the stipulated monetary interest of
26% per annum) in the form of the 10% monthly penalty accrued and became due and demandable. Thus,
when the petitioner started making the daily payments, two types of interest were at the same time
accruing, the 26% stipulated monetary interest and the interest for default in the form of the 10% monthly
penalty.
Article 1253 covers both types of interest. As noted by learned civilist, Arturo M. Tolentino, no distinction
should be made because the law makes no such distinction. He explained:
"Furthermore, the interest for default arises because of non-performance by the debtor, and to allow him
to apply payment to the capital without first satisfying such interest, would be to place him in a
better position than a debtor who has not incurred in delay. The delay should worsen, not improve,
the position of a debtor."26[Emphasis supplied.]
LawlibraryofCRAlaw

The petitioner failed to specify which of the two types of interest the respondent allegedly waived. The
respondent waived neither.
In Swagman Hotels and Travel Inc. v. Court of Appeals,27 we applied Article 1253 of the Civil Code in
resolving whether the debtor has waived the payments of interest when he issued receipts describing the
payments as "capital repayment." We held that,
"Under Article 1253 of the Civil Code, if the debt produces interest, payment of the principal shall not be
deemed to have been made until the interest has been covered. In this case, the private respondent
would not have signed the receipts describing the payments made by the petitioner as "capital
repayment" if the obligation to pay the interest was still subsisting.
"There was therefore a novation of the terms of the three promissory notes in that the interest was
waived..."28 [Emphasis supplied.]
The same ruling was made in an older case29 where the creditor issued a receipt which specifically identified
the payment as referring to the principal. We held that the interest allegedly due cannot be recovered, in
conformity with Article 1110 of the Old Civil Code, a receipt from the creditor for the principal, that contains
no stipulation regarding interest, extinguishes the obligation of the debtor with regard thereto when the
receipt issued by the creditor showed that no reservation whatever was made with respect to the interest.
In both of these cases, it was clearly established that the creditors accepted the payment of the principal.
The creditors were deemed to have waived the payment of interest because they issued receipts expressly
referring to the payment of the principal without any reservation with respect to the interest. As a result, the
interests due were deemed waived. It was immaterial whether the creditors intended to waive the interest
or not. The law presumed such waiver because the creditorsaccepted the payment of the principal without
reservation with respect to the interest.
In the present case, it was not proven that the respondent accepted the payment of the principal. The
silence of the receipts on whether the daily payments were credited against the unpaid balance of the
principal or the accrued interest does not mean that the respondent waived the payment of interest. There is
no presumption of waiver of interest without any evidence showing that the respondent accepted the daily
installments as payments for the principal.
Ideally, the respondent could have been more specific by indicating on the receipts that the daily payments
were being credited against the interest. Its failure to do so, however, should not be taken against it. The
respondent had the right to credit the daily payments against the interest applying Article 1253.
It bears stressing that the petitioner was already in default. Under the promissory note, the petitioner
waived demand in case of non-payment upon due date. 30 The stipulated interest and interest for default
have both accrued. The only logical result, following Article 1253 of the Civil Code, is that the daily
payments were first applied against either or both the stipulated interest and interest for default.
Moreover, Article 1253 is viewed as having an obligatory character and not merely suppletory. It cannot be
dispensed with except by mutual agreement. The creditor may oppose an application of payment made by
the debtor contrary to this rule.31
redarclaw

In any case, the promissory note provided that "interest not paid when due shall be added to, and become

part of the principal and shall likewise bear interest at the same rate, compounded monthly." 32

re darclaw

Hence, even if we assume that the daily payments were applied against the principal, the principal had also
increased by the amount of unpaid interest and the interest on such unpaid interest. Even under this
assumption, it is doubtful whether the petitioner had indeed fully paid the second loan.
Excessive interest, penalty and attorney's fees
Notwithstanding the foregoing, we find the stipulated rates of interest, penalty and attorney's fees to be
exorbitant, iniquitous, unconscionable and excessive. The courts can and should reduce such astronomical
rates as reason and equity demand.
Article 1229 of the Civil Code provides:
"The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly
complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the
courts if it is iniquitous or unconscionable."
LawlibraryofCRAlaw

Article 2227 of the Civil Code ordains:

"Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are
iniquitous or unconscionable.
LawlibraryofCR Alaw

More importantly, Article 1306 of the Civil Code is emphatic:

"The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order, or public policy."
LawlibraryofCR Alaw

Thus, stipulations imposing excessive rates of interest and penalty are void for being contrary to morals, if
not against the law.33
redarclaw

Further, we have repeatedly held that while Central Bank Circular No. 905-82, which took effect on January
1, 1983, effectively removed the ceiling on interest rates for both secured and unsecured loans, regardless
of maturity, nothing in the said circular could possibly be read as granting carte blanche authority to lenders
to raise interest rates to levels that would be unduly burdensome, to the point of oppression on their
borrowers.34
redarclaw

In exercising this power to determine what is iniquitous and unconscionable, courts must consider the
circumstances of each case since what may be iniquitous and unconscionable in one may be totally just and
equitable in another.35
redarclaw

In the recent case of MCMP Construction Corp. v. Monark Equipment Corp.,36 we reduced the interest rate of
twenty-four percent (24%) per annum to twelve percent (12%) per annum; the penalty and collection
charge of three percent (3%) per month, or thirty-six percent (36%) per annum, to six percent (6%) per
annum; and the amount of attorney's fees from twenty-five percent (25%) of the total amount due to five
percent (5%).
Applying the foregoing principles, we hereby reduce the stipulated rates as follows: the interest of twentysix percent (26%) per annum is reduced to two percent (2%) per annum; the penalty charge of ten percent
(10%) per month, or one-hundred twenty percent (120%) per annum is reduced to two percent (2%) per
annum; and the amount of attorney's fees from twenty-five percent (25%) of the total amount due to two
percent (2%) of the total amount due.
We believe the markedly reduced rates are reasonable, equitable and just under the circumstances.
It is not entirely the petitioner's fault that he honestly, albeit wrongly, believed that the second loan had
been fully paid. The respondent is partly to blame for issuing receipts not indicating that the daily payments
were being applied against the interest.
Moreover, the reduction of the rates is justified in the context of its computation period. In Trade &
Investment Dev't Corp. of the Phil. v. Roblett Industrial Construction Corp.,37 we equitably reduced the
interest rate because the case was decided with finality sixteen years after the filing of the complaint. We
noted that the amount of the loan swelled to a considerably disproportionate sum, far exceeding the
principal debt.
It is the same in the present case where the complaint was filed almost twenty-years ago. 38

re darclaw

The Chattel Mortgage could not cover the second loan.

The chattel mortgage could not validly cover the second loan. The order for foreclosure was without legal
and factual basis.
In Acme Shoe, Rubber and Plastic Corp. v. Court of Appeals,39 the debtor executed a chattel mortgage,
which had a provision to this effect:
"In case the MORTGAGOR executes subsequent promissory note or notes either as a renewal of the former
note, as an extension thereof, or as a new loan, or is given any other kind of accommodations such as
overdrafts, letters of credit, acceptances and bills of exchange, releases of import shipments on Trust
Receipts, etc., this mortgage shall also stand as security for the payment of the said promissory note or
notes and/or accommodations without the necessity of executing a new contract and this mortgage shall
have the same force and effect as if the said promissory note or notes and/or accommodations
were existing on the date thereof."40 [Emphasis supplied.]
LawlibraryofCR Alaw

In due time, the debtor settled the loan covered by the chattel mortgage. Subsequently, the debtor again
borrowed from the creditor. Due to financial constraints, the subsequent loan was not settled at maturity.
On the issue whether the chattel mortgage could be foreclosed due to the debtor's failure to settle the
subsequent loan, we held that,
"[c]ontracts of security are either personal or real, x x x In contracts of real security, such as a pledge, a
mortgage or an antichresis, that fulfillment is secured by an encumbrance of property in pledge, the
placing of movable property in the possession of the creditor; in chattel mortgage, by the execution of the
corresponding deed substantially in the form prescribed by law; x x x upon the essential condition that if
the principal obligation becomes due and the debtor defaults, then the property encumbered can be
alienated for the payment of the obligation, but that should the obligation be duly paid, then the
contract is automatically extinguished proceeding from the accessory character of the
agreement. As the law so puts it, once the obligation is complied with, then the contract of
security becomes, ipso facto, null and void."41
re darclaw

While a pledge, real estate mortgage, or antichresis may exceptionally secure after-incurred obligations so
long as these future debts are accurately described, a chattel mortgage, however, can only cover
obligations existing at the time the mortgage is constituted. Although a promise expressed in a
chattel mortgage to include debts that are yet to be contracted can be a binding commitment
that can be compelled upon, the security itself, however, does not come into existence or arise
until after a chattel mortgage agreement covering the newly contracted debt is executed either
by concluding a fresh chattel mortgage or by amending the old contract conformably with the
form prescribed by the Chattel Mortgage Law. Refusal on the part of the borrower to execute the
agreement so as to cover the after-incurred obligation can constitute an act of default on the part of the
borrower of the financing agreement whereon the promise is written but, of course, the remedy of
foreclosure can only cover the debts extant at the time of constitution and during the life of the chattel
mortgage sought to be foreclosed."42 [Emphasis supplied.]
We noted that the Chattel Mortgage Law43 requires the parties to the contract to attach an affidavit of good
faith and execute an oath that " x x x (the) mortgage is made for the purpose of securing the obligation specified in the conditions
thereof, and for no other purposes, and that the same is a just and valid obligation, and one not entered
into for the purposes of fraud."44
It is obvious therefore that the debt referred in the law is a current, not an obligation that is yet merely
contemplated.45
"x x x in consideration of the credit accommodation granted by the MORTGAGEE to the MORTGAGOR(S) in
the amount of FIFTY-THREE THOUSAND ONLY PESOS (P53,000.00) xxx and all other obligations of every
kind already incurred or which may hereafter be incurred, for or accommodation of the
MORTGAGOR(S), as well as the faithful performance of the terms and conditions of this mortgage x x
x."46 [Emphasis supplied.]
The only obligation specified in the chattel mortgage contract was the first loan which the petitioner later
fully paid. By virtue of Section 3 of the Chattel Mortgage Law,47 the payment of the obligation automatically
rendered the chattel mortgage terminated; the chattel mortgage had ceased to exist upon full payment of
the first loan. Being merely an accessory in nature, it cannot exist independently of the principal obligation.
The parties did not execute a fresh chattel mortgage nor did they amend the chattel mortgage to comply
with the Chattel Mortgage Law which requires that the obligation must be specified in the affidavit of good

faith. Simply put, there no longer was any chattel mortgage that could cover the second loan upon full
payment of the first loan. The order to foreclose the motor vehicle therefore had no legal basis.
WHEREFORE, in view of the foregoing findings and legal premises, we PARTIALLY GRANT the petition.
We MODIFY the May 17, 2010 Decision and the November 25, 2010 Resolution of the Court of Appeals in
CA G.R. SP No. 102144.
ACCORDINGLY, petitioner Nunelon R. Marquez is ORDERED to pay:
1.

LawlibraryofCRAlaw

Twenty-five thousand forty pesos (P25,040.00) representing the amount of the unpaid balance of
the second loan;
chanRoblesvirtualLa wlibrary

2.

Interest of two percent (2%) per annum on the unpaid balance to be computed from December 15,
199248 until full payment;

3.

Penalty of two percent (2%) per annum on the unpaid balance to be computed from December 15,
1992;
chanRoblesvirtualLa wlibrary

4.

Attorney's Fees of two percent (2%) of the total amount to be recovered.

The total amount to be recovered shall further be subject to the legal interest rate of six percent (6 %) per
annum from the finality of this Decision until fully paid. 49
redarclaw

Respondent Elisan Credit Corporation, on the other hand, is ORDERED to return/deliver the seized motor
vehicle with Plate No. UV-TDF-193, subject of the chattel mortgage, to the possession of the petitioner; in
the event its delivery is no longer possible, to pay the petitioner the amount of P30,000.00 corresponding to
the value of the said vehicle.
No pronouncement as to costs.

G.R. No. 200018

April 6, 2015

CITYSTATE SAVINGS BANK, INC., Petitioner,

vs.
MAXIMIANO P. AGUINALDO, Respondent.
DECISION
REYES, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the
Decision dated June 21, 2011 and Resolution dated January 5, 2012 of the Court of Appeals (CA)
in CA-G.R. SP No. 117154, which reversed and set aside the Orders dated May 24, 2010 and
September 20, 2010 of the Regional Trial Court (RTC) of Paraaque City, Branch 274, in Civil Case
No. 02-0107. The RTC denied the Motion to Admit Amended Complaint filed by Maximiano P.
Aguinaldo (Aguinaldo).
1

The Facts
Aguinaldo claimed that he is the owner and possessor of a 590-square-meter property situated in
San Dionisio, Parafiaque City and covered by Transfer Certificate of Title (TCT) No. S-79128 of the
Register of Deeds of Paraaque City.
6

Sometime in August 2000, Aguinaldo discovered that a certain Rolando Mojica, Jr. (Mojica) had
fraudulently obtained a certificate of title, particularly TCT No. 142492, over the same property in the
latter's name. Thereupon, on March 28, 2001, Aguinaldo filed a complaint for the nullification of TCT
No. 142492 with the RTC-Branch 258, against Mojica; he likewise caused the annotation of a notice
of !is pendens in the said title. On September 28, 2001, the RTC-Branch 258, rendered judgment in
favor of Aguinaldo and declared TCT No. 142492 null and void. However, before Aguinaldo
discovered the existence of TCT No. 142492, Mojica had already executed a real estate mortgage
over the subject property in favor of Citystate Savings Bank, Inc. (Citystate) on October 25, 1991 as
security for a loan. When Mojica was unable to pay said loan, Citystate extrajudicially foreclosed the
property and was declared the highest bidder in the public auction. Consequently, Citystate
consolidated its title to the subject property; TCT No. 151051 was issued in its name on January 18,
2002. Thus, on March 8, 2002, Aguinaldo filed a Complaint for annulment of title with the RTCBranch 274, against Citystate. In its Answer, Citystate asserted that it was the real and registered
owner of the subject property, having purchased the same at public auction; that its rights over the
property have more priority since the filing of the complaint and the annotation on the title by
Aguinaldo came after the registration of the Certificate of Sale in its favor. Citystate thus alleged that
the decision rendered by the RTC-Branch 258, is without prejudice to its rights over the property.
7

10

11

12

13

After the parties have presented their respective evidence, but before the presentation of rebuttal
evidence, Aguinaldo filed a Motion to Admit Amended Complaint dated February 24, 2010 attaching
therewith the A mended Complaint.
14

15

Aguinaldo alleged that during the pendency of the case, Citystate was able to secure a writ of
possession; that Aguinaldo was thereafter evicted from the subject property. He claimed that
Citystate sold the subject property to Syndica Phil. Corporation (Syndica). TCT No. 151051 was thus
cancelled and TCT No. 178346 was issued in the name of Syndica.
16

In the Amended Complaint, Aguinaldo impleaded Syndica as Citystate's co-defendant and added the
following allegations: (a) that Citystate filed a petition for the issuance of a Writ of Possession; (b)
that a writ of possession was illegally issued which resulted in Aguinaldo's ejectment and the
demolition of the latter's house; (c) that the said ejectment and demolition resulted in actual
damages amounting to P3,500,000.00, moral damages and exemplary damages to Aguinaldo; and
(d) that Citystate sold the subject property to Syndica who acquired the same in bad
faith. Aguinaldo asserted that the amendments on the complaint were necessary to afford complete
relief to the parties.
17

On May 24, 2010, the RTC-Branch 274, issued an Order denying the motion to admit Aguinaldo's
amended complaint on the ground that the amendments substantially altered the cause of action
and will only delay the resolution of the case:
18

After due examination of the pleadings re this incident, this Court agrees with the defendant that the
amendments would substantially alter the cause of action and would result only in delay in the
resolution of the case considering the case is now in the presentation of rebuttal evidence for the
plaintiff. It is the considered opinion of this Court that to admit the Amended Complaint, this case will
again start from the very beginning as plaintiff will present new evidence to prove his new cause of
action/allegations. Accordingly, in order not to unduly delay this case, the motion is denied.
19

Aguinaldo's motion for reconsideration was also denied in the Order dated September 20, 2010.
Aggrieved, Aguinaldo filed a petition for certiorari with the CA imputing grave abuse of discretion on
the part of the RTC.
20

On June 21, 2011, the CA rendered the herein assailed Decision, the fallo of which reads:

WHEREFORE, the petition is GRANTED. The Orders dated May 24, 2010 and September 20, 2010
of the RTC are REVERSED and SET ASIDE. The Regional Trial Court, Branch 274, Paraaque City
is hereby ordered to admit herein petitioner's amended complaint in Civil Case No. 02-0107, to issue
the necessary summons to the impleaded defendant therein and to resolve the case with dispatch.
SO ORDERED.

21

On July 12, 2011, Citystate filed a Motion for Reconsideration, which was denied in the
Resolution dated January 5, 2012.
22

Hence, this petition.

Citystate raises the following issues, to wit:
1. WHETHER OR NOT A PROPOSED AMENDED COMPLAINT WHICH SUBSTANTIALLY
ALTERS THE ORIGINAL CAUSE OF ACTION AND WOULD CAUSE DELAY MAY BE
ADMITTED;
2. WHETHER OR NOT A REFUSAL BY THE TRIAL COURT TO ALLOW AMENDMENT OF
COMPLAINT AFTER IT FINDS THE SAME TO ONLY CAUSE UNDUE DELAY IN THE
DISPOSITION OF THE CASE CONSTITUTES GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION;
3. WHETHER OR NOT THE LEGALITY OR VALIDITY OF THE ISSUANCE AND
IMPLEMENTATION OF A WRIT OF POSSESSION AS UPHELD BY THE CA IN A SPECIAL
CIVIL ACTION OF CERTIORARI MAY BE QUESTIONED OR ASSAILED IN A CASE FOR
NULLIFICATION OF TITLE. OTHERWISE STATED, WHETHER OR NOT THE LEGALITY
OF A WRIT OF POSSESSION MAY BE ATTACKED IN A NULLIFICATION OF TITLE CASE
WITHOUT VIOLATING THE PRINCIPLE OF RES JUDICATA; AND
4. WHETHER OR NOT THE ADMISSION OF [AGUINALDO'S] AMENDED COMPLAINT
VIOLATES THE PRINCIPLE OF RES JUDICATA.
23

Ruling of the Court

The petition is denied.
Section 3, Rule 10 of the Rules of Court provides that:
SEC. 3. Amendments by leave of court. Except as provided in the next preceding section,
substantial amendments may be made only upon leave of court. But such leave may be refused if it
appears to the court that the motion was made with intent to delay. Orders of the court upon the
matters provided in this section shall be made upon motion filed in court, and after notice to the
adverse party, and an opportunity to be heard.
Under the 1964 Rules of Court, the said provision reads, as follows:
SEC. 3. Amendments by leave of court. - After the case is set for hearing, substantial amendments
may be made only upon leave of court. But such leave may be refused if it appears to the court that
the motion was made with intent to delay the action or that the cause of action or defense is

substantially altered. Orders of the court upon the matters provided in this section shall be made
upon motion filed in court, and after notice to the adverse party, and an opportunity to be heard.
In Spouses Valenzuela v. CA, the Court explained the wisdom behind the departure from the old
provision of Section 3 of Rule 10 under the 1964 Rules of Court, thus:
24

Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil Procedure amended the former rule in
such manner that the phrase "or that the cause of action or defense is substantially altered" was
stricken-off and not retained in the new rules. The clear import of such amendment in Section 3,
Rule 10 is that under the new rules, "the amendment may (now) substantially alter the cause of
action or defense." This should only be true, however, when despite a substantial change or
alteration in the cause of action or defense, the amendments sought to be made shall serve the
higher interests of substantial justice, and prevent delay and equally promote the laudable objective
of the rules which is to secure a "just, speedy and inexpensive disposition of every action and
proceeding."
Thus, granting arguendo that the amendment of the complaint in Civil Case No. PQ-9432-P would
substantially alter or change the cause of action or defense in said controversy, this Court
nonetheless holds that in the higher interest of substantial justice, the introduction of amendments to
the complaint is apropos at this particular instance to forestall further delay in the resolution of the
actual merits of the parties' respective claims and defenses. To reiterate, the Rules of Court seek to
eliminate undue reliance on technical rules and to make litigation as inexpensive, as practicable and
as convenient as can be done. Rules of procedure, after all, are but tools designed to facilitate the
attainment of justice, such that when rigid application of the rules tends to frustrate rather than
promote substantial justice, the Supreme Court is empowered to suspend their operation. This Court
will not hesitate to set aside technicalities in favor of what is fair and just. (Citations omitted and
emphases ours)
25

Consistent with the foregoing disquisition, the Court, in Limbauan v. Acosta, held that:
26

It is well-settled that amendment of pleadings is favored and should be liberally allowed in the
furtherance of justice in order to determine every case as far as possible on its merits without regard
to technicalities. This principle is generally recognized in order that the real controversies between
the parties are presented, their rights determined and the case decided on the merits without
unnecessary delay to prevent circuity of action and needless expense. (Citation omitted and
emphasis ours)
27

Verily, the business of the courts is not just merely to dispose of cases seen as clutters in their
dockets. Courts are in place to adjudicate controversies with the end in view of rendering a definitive
settlement, and this can only be done by going into the very core and to the full extent of the
controversy in order to afford complete relief to all the parties involved.
In this case, the CA allowed the amended complaint in order to grant complete relief to
Aguinaldo. The additional reliefs being sought in the amended complaint, i.e., nullification of TCT
No. 178346 registered in the name of Syndica and restitution of the house valued at P3,500,000.00,
does not alter Aguinaldo's cause of action or the theory of case. These are mere remedies to which
Aguinaldo became entitled to as a result of the alleged supervening events, which rendered the relief
being sought in the original complaint inadequate.
1wphi1

The Court notes that when the instant case was instituted, Aguinaldo's prayer was for the nullification
of Citystate's certificate of title. He claims that the property over which said title was issued, is owned
and possessed by him, while Citystate's certificate of title emanated from another title, which had

been adjudged a nullity for having been issued fraudulently. However, during the pendency of the
case for annulment of title against Citystate, several intervening circumstances rendered the original
relief sought by Aguinaldo inadequate.
The amended complaint effected no change in the cause of action, defense, or theory of the case
since it remained to be an action for the nullity of a title that was erroneously issued in another's
name. The CA thus explained:
A perusal of [Aguinaldo's] original complaint shows that essentially, [Aguinaldo's] cause of action is
founded on the fact that he is the true and registered owner of the property covered by TCT No.
151051 which was fraudulently registered in the name of Citystate. A reading of the additional
allegations (the application and issuance of the writ of possession in favour of Citystate, demolition
of the house and subsequent sale of the property to Syndica) in the amended complaint shows that
it merely supplements the inadequate allegations of cause of action stated in the original complaint.
It merely strengthens [Aguinaldo's] original cause of action by providing a more detailed account
thereof, which then puts in clearer perspective the second and third elements of his cause of action.
Anent the claim for damages, we hold the same to be incidental to the allegation in the original
complaint that the property had been fraudulently transferred from Mojica to Citystate and from the
latter to Syndica and was thus intended to obtain complete relief in one action.
While additional reliefs were sought in the amended complaint, (i.e.[,] nullification of subsequent title,
Syndica's TCT No. 178346, and restitution of the house valued at P3,500,000.00) the same cannot
be considered as altering the theory of the case. These are merely remedies to which [Aguinaldo] is
entitled as a result of the supervening events which rendered the relief sought in the original
complaint inadequate.
There was no change in the cause of action, defense or theory of the case, in both the original and
the amended complaints, as the action is still for the annulment of title.
xxxx
Second, the amendment of the complaint would not result in unnecessary delay. The introduction of
amendments to the complaint is proper at this particular instance to avert any further delay in the
resolution of the case.
The inclusion of Syndica as additional defendant x x x is necessary for the effective and complete
resolution of the case and in order to accord all parties the benefit of due process and fair play in just
one proceeding. [Aguinaldo], in his original complaint, sought to nullify TCT No. 151051 in the name
of Citystate. Unfortunately, during the pendency of the case, TCT No. 151051 was cancelled and
replaced by TCT No. 178346 in the name of Syndica. The non-inclusion of Syndica, who has
acquired rights or interest from the assailed title, will render the relief originally sought in Civil Case
No. 02-0107 incomplete, if not futile. Thus, the need to amend the complaint to forestall any further
need to institute other actions or proceedings.
28

In any case, a substantial alteration in the cause of action or defense is not a bar to amend the
original complaint so long as the amendment is not meant for delay. It is also quite absurd that the
party who filed the main case would himself resort to dilatory tactics to prolong the disposition of his
case. It is undoubtedly to Aguinaldo's interest that this case be decided with dispatch, more so that
they have already been evicted from the property.
WHEREFORE, the Decision dated June 21, 2011 and the Resolution dated January 5, 2012 of the
Court of Appeals in CA-G.R. SP No. 117154 are AFFIRMED.

SO ORDERED.
G.R. Nos. 173148

April 6, 2015

ELSA DEGAYO, Petitioner,

vs.
CECILIA MAGBANUA-DINGLASAN, JOHNNY DINGLASAN, ASUNCION MAGBANUA-PORRAS,
MARIANO P ASCUALITO and AMADO JR., all surnamed MAGBANUA, Respondents.
DECISION
BRION, J.:
Before us is the Petition for Review on Certiorari filed by the petitioner Elsa Degayo (Degayo) under
Rule 45 of the Rules of Court, assailing the Decision dated November 7, 2005 and the
Resolution dated May 19, 2006 of the Court of Appeals (CA) in CA-G.R. CV No. 62070.
1

The Factual Antecedents

The present case involves a property dispute, which gave rise to two civil cases for ownership and
damages between conflicting claimants over a parcel of land located on the northeastern bank of
Jalaud River. The respondents Cecilia Magbanua-Dinglasan, Johnny Dinglasan, Pascualito
Magbanua, Mariano Magbanua, Asuncion Magbanua-Porras, Amado Magbanua Jr. (respondents)
initiated the first civil case against Nicolas Jarencio, Cesar Jarencio, Myrna Olmo, Fredercio
Sumvilla, Herminio Sumvilla, Perpetuo Larano and Angelo Larano, the tenants (tenants) of Lot No.
861. Degayo, on the other hand, initiated the second civil case, which eventually reached this Court
via the present petition.
Records show that Lot No. 861 isa 36,864 sqm. parcel in the Cadastral Survey of Dingle, Iloilo,
covered by Transfer Certificate of Title (TCT) No. T-2804, registered in the name of Degayos
deceased parents, spouses Marcelo Olmo and Rosalia Labana. Lot No. 861 used to be bounded on
the southwest by the Jalaud River that serves to separate Dingle from Pototan Iloilo.
On the other side of Jalaud River, opposite Lot No. 861, lies a 153,028 square meter parcel of land,
designated as Lot No. 7328 of the Cadastre of Pototan, Iloilo, collectively owned by the respondents,
covered under TCT No. T-84829. The Jalaud River, which separates these parcels of land, thus
flows along the northeast side of Lot 861 and the southwest side of Lot No. 7328. Sometime in the
1970s the Jalauad River steadily changed its course and moved southwards towards the banks of
Pototan, where Lot No. 7328 lies, leaving its old riverbed dry. Eventually, the course of the Jalaud
River encroached on Lot No. 7328. As a result, Lot No. 7328 progressively decreased in size while
the banks adjacent to Lot No. 861 gradually increased in land area.
Degayo and the tenants believed that the area was an accretion to Lot No. 861. As a result, her
tenants, commenced cultivating and tilling that disputed area with corn and tobacco. The area
allegedly added to Lot No. 861 contains 52,528 sqm, broken down as follows:
1. 26,106 sqm. Original abandoned river bed;
2. 26,419 sqm. resurfaced area of Lot No. 7328

The respondents, on the other hand, argued that the disputed property was an abandoned riverbed,
which should rightfully belong to them to compensate for the erstwhile portion of Lot No. 7328, over
which the Jalaud River presently runs.
On October 2, 1984, the respondents filed a complaint for ownership and damages against the
tenants, with the Regional Trial Court (RTC) of Iloilo, Branch 27, entitled Cecilia Magbanua
Dinglasan, et al. v. Nicolas Jarencio, et al., docketed as Civil Case No. 16047. Degayo sought to
intervene in Civil Case No. 16047 but her motion was denied. Notably, Degayo never bothered to
question the interlocutory order denying her motion for intervention by filing a petition for certiorari.
Instead, Degayo initiated the present suit against the respondents for declaration of ownership with
damages, also with the RTC of Iloilo, Branch 22, docketed as Civil Case No. 18328, involving the
disputed parcel of land.
In her complaint, Degayo alleged to have acquired Lot No. 861 by inheritance by virtue of a
Quitclaim Deed and that she had been in possession of that land since 1954. She likewise stressed
that the area in dispute was an accretion to Lot No. 861.
Meanwhile, notwithstanding the previous denial of her motion to intervene in Civil Case No. 16047,
Degayo was able to participate in the proceedings therein as a witness for the defense. In particular,
during her direct examination, Degayo testified on the same matters and raised the same arguments
she alleged in her complaint in Civil Case No. 18328, those are: that she acquired Lot No. 861 by
inheritance by virtue of a Quitclaim Deed; that she had been in possession of that land since 1954;
and that the area in dispute was an accretion to Lot No. 861 On May 7, 1996, the RTC of Iloilo,
Branch 27, rendered its decision in Civil Case No. 16047, in favor of the respondents. The tenants
promptly filed an appeal but they failed to file an appeal brief, resulting to a dismissal of their appeal
per resolution dated June 20, 1999. The decision in Civil Case No. 16047 became final and
executory on August 6, 1999.
3

Meanwhile, in Civil Case No. 18328, the court, a quo, found in favor of Degayo and declared the
property in question as an accretion to Lot No. 861. The respondents filed a motion for
reconsideration but their motion was denied. Hence, the respondents filed an appeal with the CA.
The CA Ruling
On November 7, 2005, the CA granted the respondents appeal and reversed and set aside the
decision of the RTC Branch 22 in Civil Case No. 18328. In granting the appeal the CA noted that the
disputed properties are abandoned riverbeds. Being abandoned riverbeds, the property in question
rightfully belongs to the respondents as the owners of the land now occupied by the Jalaud
River. The CA likewise noted that the previous RTC Branch decision in Civil Case No. 16047 is
conclusive to the title of the thing, being an aspect of the rule on conclusiveness of judgment.
5

Degayo sought a reconsideration of the CA Decision but the CA denied her motion in its May 19,
2006 Resolution. Aggrieved, Degayo filed the preset petition for review on certiorari under Rule 45
with this Court.
7

The Petition and Comment

Degayos petition is based on the following grounds/arguments:

1. That the CA erred in declaring the disputed property as an abandoned riverbed and not an
accretion to Lot 861;

2. The CA erred in taking judicial notice of the RTC decision in Civil Case No. 16047, which
was not even presented during the hearing of the present case;
3. The CA erred in declaring the RTC Branch 27 decision in Civil Case No. 16047 conclusive
upon Degayo when she was not even a party in the said Civil Case.
In his Comment, the respondents assert that the petition raised questions of fact which are not
proper issues to be raised in a petition for review on certiorari. They also claim that the essential
requisites of accretion are not present. Finally, the respondents claim that the decision in Civil Case
No. 16047 constitutes res judicata.
9

10

11

12

THE COURT'S RULING

We deny the petition for lack of merit.
The Decision in Civil Case No. 16047 constitutes res judicata.
Res judicataliterally means "a matter adjudged; a thing judicially acted upon or decided; a thing or
matter settled by judgment." It also refers to the "rule that a final judgment or decree on the merits by
a court of competent jurisdiction is conclusive of the rights of the parties or their privies in all later
suits on points and matters determined in the former suit. It rests on the principle that parties should
not to be permitted to litigate the same issue more than once; that, when a right or fact has been
judicially tried and determined by a court of competent jurisdiction, or an opportunity for such trial
has been given, the judgment of the court, so long as it remains unreversed, should be conclusive
upon the parties and those in privity with them in law or estate.
13

14

This judicially created doctrine exists as an obvious rule of reason, justice, fairness, expediency,
practical necessity, and public tranquillity. Moreover, public policy, judicial orderliness, economy of
judicial time, and the interest of litigants, as well as the peace and order of society, all require that
stability should be accorded judgments, that controversies once decided on their merits shall remain
in repose, that inconsistent judicial decision shall not be made on the same set of facts, and that
there be an end to litigation which, without the doctrine of res judicata, would be endless.
15

16

This principle cannot be overemphasized in light of our clogged dockets. As this Court has aptly
observed in Salud v. Court of Appeals:
17

"The interest of the judicial system in preventing relitigation of the same dispute recognizes that
judicialresources are finite and the number of cases that can be heard by the court is limited. Every
dispute that is reheard means that another will be delayed. In modern times when court dockets are
filled to overflowing, this concern is of critical importance. Res judicata thus conserves scarce judicial
resources and promotes efficiency in the interest of the public at large. Once a final judgment has
been rendered, the prevailing party also has an interest in the stability of that judgment. Parties
come to the courts in order to resolve controversies; a judgment would be of little use in resolving
disputes if the parties were free to ignore it and to litigate the same claims again and again. Although
judicial determinations are not infallible, judicial error should be corrected through appeals
procedures, not through repeated suits on the same claim. Further, to allow relitigation creates the
risk of inconsistent results and presents the embarrassing problem of determining which of two
conflicting decisions is to be preferred. Since there is no reason to suppose that the second or third
determination of a claim necessarily is more accurate than the first, the first should be left
undisturbed.

In some cases the public at large also has an interest in seeing that rights and liabilities once
established remain fixed. If a court quiets title to land, for example, everyone should be able to rely
on the finality of that determination. Otherwise, many business transactions would be clouded by
uncertainty. Thus, the most important purpose of res judicata is to provide repose for both the party
litigants and the public. As the Supreme Court has observed, "res judicata thus encourages reliance
on judicial decision, bars vexatious litigation, and frees the courts to resolve other disputes."
The doctrine of res judicata is set forth in Section 47 of Rule 39 of the Rules of Court, which in its
relevant part reads:
Sec. 47. Effect of judgments or final orders. The effect of a judgment or final order rendered by a
court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as
follows:
xxxx
(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged
or as to any other matter that could have been raised in relation thereto, conclusive between
the parties and their successors in interest by title subsequent to the commencement of the
action or special proceeding, litigating for the same thing and under the same title and in the
same capacity; and
(c) In any other litigation between the same parties or their successors in interest, that only is
deemed to have been adjudged in a former judgment or final order which appears upon its
face to have been so adjudged, or which was actually and necessarily included therein or
necessary thereto.
This provision comprehends two distinct concepts of res judicata: (1) bar by former judgment and (2)
conclusiveness of judgment.
The first aspect is the effect of a judgment as a bar to the prosecution of a second action upon the
same claim, demand or cause of action. In traditional terminology, this aspect is known as merger
or bar; in modern terminology, it is called claim preclusion.
18

19

The second aspect precludes the relitigation of a particular fact of issue in another action between
the same parties on a different claim or cause of action. This is traditionally known as collateral
estoppel; in modern terminology, it is called issue preclusion.
20

Conclusiveness of judgment finds application when a fact or question has been squarely put in
issue, judicially passed upon, and adjudged in a former suit by a court of competent jurisdiction. The
fact or question settled by final judgment or order binds the parties to that action (and persons in
privity with them or their successors-in-interest), and continues to bind them while the judgment or
order remains standing and unreversed by proper authority on a timely motion or petition; the
conclusively settled fact or question furthermore cannot again be litigated in any future or other
action between the same parties or their privies and successors-in-interest, in the same or in any
other court of concurrent jurisdiction, either for the same or for a different cause of action. Thus,
only the identities of parties and issues are required for the operation of the principle of
conclusiveness of judgment.
21

22

While conclusiveness of judgment does not have the same barring effect as that of a bar by former
judgment that proscribes subsequent actions, the former nonetheless estops the parties from raising

in a later case the issues or points that were raised and controverted, and were determinative of the
ruling in the earlier case. In other words, the dictum laid down in the earlier final judgment or order
becomes conclusive and continues to be binding between the same parties, their privies and
successors-in-interest, as long as the facts on which that judgment was predicated continue to be
the facts of the case or incident before the court in a later case; the binding effect and enforceability
of that earlier dictum can no longer be re-litigated in a later case since the issue has already been
resolved and finally laid to rest in the earlier case.
23

24

In the present case, it is beyond dispute that the judgment in Civil Case No. 16047 has attained
finality in view of the tenants abandonment of their appeal to the CA. Moreover, records show that
that decision was adjudicated on the merits, i.e., it was rendered after a consideration of the
evidence or stipulations submitted by the parties at the trial of the case by a court which had
jurisdiction over the subject matter and the parties.
25

We likewise find that there is an identity of parties in Civil Case No. 16047 and the present case.
There is identity of parties where the parties in both actions are the same, or there is privity between
them, or they are "successors-in-interest by title subsequent to the commencement of the action,
litigating for the same thing and under the same title and in the same capacity. Absolute identity of
parties is not required, shared identity of interest is sufficient to invoke the coverage of this
principle. Thus, it is enough that there is a community of interest between a party in the first case
and a party in the second case even if the latter was not impleaded in the first case.
26

27

28

It is not disputed that respondents were the plaintiffs in Civil Case No. 16047. Degayo, however
insists that she is not bound by the decision in Civil Case No. 16047 as she was not made a party in
that case. We, however, refuse to subscribe to this technical interpretation of the Rules. In Torres v.
Caluag, we held that a real litigant may be held bound as a party even if not formally impleaded
because he had his day in court and because her substantial rights were not prejudiced. In that
case, J. M. Tuazon & Co., Inc. (Tuason) commenced Civil Case No Q-3674 in the Court of First
Instance of Quezon City against Isidro Conisido to recover from him the possession of a parcel of
land. Conisido answered the complaint alleging, that he was occupying the land in question as a
mere tenant of Dominga Torres (Torres), who owned both the land and the house thereon. Torres
was not impleaded in the said case but she nonetheless appeared as witness for Conisido and
asserted her ownership over the disputed property because she had purchased it from Eustaquio
Alquiroz on October 20, 1951 and constructed a house thereon worth P500.00, which she had
leased to Conisido for a rental of P20.00 a month. The CFI eventually decided in favor of Tuason
and that decision became final and executory. Subsequently, Torres filed a petition for certiorari with
the Court to set aside the decision of the CFI. Indismissing the petition, we ruled:
29

"x x x, it appears that DomingaTorres who, according to the defendant Conisido was the true owner
ofthe land in question, testified as his witness and asserted on the witness stand that she was really
the owner thereof because she had purchased it from Eustaquio Alquiroz on October 20, 1951 and
constructed a house thereon worthP500.00 which she had leased to Conisido for a rental of P20.00
a month. In other words, petitioner herein had really had her day in court and had laid squarely
before the latter the issue of ownership as between her, on one hand, and respondent Tuason, on
the other.
xxx
In the present case, assisted heretofore, petitioner had the fullest opportunity to lay before the court
her claim but the same was overruled. The fact that she was not formally made a party defendant in
the case would appear therefore to be a mere technicality that would not serve the interest of the

administration of justice. As we have repeatedly held, technicalities should be ignored when they do
not serve the purpose of the law.
x x x"
In the present case, Degayo had the fullest opportunity to ventilate her accretion claim Civil Case
No. 16047. In her testimony, she asserted that she inherited Lot No. 861 from her parents and that
she has been in possession of that parcel of land since 1954. She further stressed that the disputed
parcel of land has been occupied and tilled by her tenants and that it was the result of the gradual
and continuous deposit of the river. Notably, these are the same allegations that Degayo asserted in
the present case, which have been previously considered and evaluated by the RTC Branch 27 in
Civil Case No. 16047.
30

31

Likewise, there exists a community of interest between Degayo and her tenants, who were
respondents in Civil Case No. 16047. One test to determine substantial identity of interest would be
to see whether the success or failure of one party materially affects the other. In the present case,
Degayo is suing for the ownership of the disputed land. Degayos rights over the disputed land is
predicated on the same defenses that his alleged tenants interposed in Civil Case No. 16047, that is,
their perceived rights which emanated from the disputed accretion to Lot No. 861. The interests of
Degayo and the tenants in relation to the two cases are inextricably intertwined in that both their
claims emanate from a singular fundamental allegation of accretion. Moreover, Degayo and the
respondents are litigating the same properties subject of the antecedent cases inasmuch as they
claim better right of ownership. Degayo even admitted this in her petition wherein she stated that
"the land subject of Civil Case No. 16047 is the same property subject of the case at bench. "
32

33

Notably, the ownership of the disputed parcel of land has been unequivocally settled in Civil Case
No. 16047.In ruling that the subject parcels of land belong to the respondents, the RTC Branch 27 in
Civil Case No. 16047 opined that the claim of accretion has no valid basis. What really happened
was that the Jalaud River naturally changed its course and moved southward. As a result, it
abandoned its previous bed and encroached upon a portion of Lot No. 7328. It further held that the
claim of accretion could not be sustained because the 26,419 sqm. portion is ostensibly within the
metes and bounds of Lot No. 7328, owned and registered in the name of the respondents. On the
other hand, the 26,106 sqm. portion refers to an abandoned river bed, and is thus governed by
Article 461 of the Civil Code, which states that River beds which are abandoned through the natural
change in the course of the waters ipso facto belong to the owners whose lands are occupied by the
new course in proportion to the area lost.
34

35

The fact that the present cause of action is based on an accretion claim does not prevent the
application of res judicata. For, res judicata, under the concept of conclusiveness of judgment,
operates even if no absolute identity of causes of action exists. Res judicata, in its conclusiveness of
judgment concept, merely requires identity of issues. We thus agree with the uniform view of the CA
on the application of conclusiveness of judgment to the present case. The CA may take judicial
notice of
Civil Case No. 16047.
The taking of judicial notice is a matter of expediency and convenience for it fulfills the purpose that
the evidence is intended to achieve, and in this sense, it is equivalent to proof. Generally, courts are
not authorized to "take judicial notice of the contents of the records of other cases even when said
cases have been tried or are pending in the same court or before the same judge. " While the
principle invoked is considered to be the general rule, this rule is not absolute. There are exceptions
to this rule. In the case of Tiburcio v PHHC, this Court, citing Justice Moran, stated:
36

37

38

"In some instance, courts have taken judicial notice of proceedings in other causes, because of their
close connection with the matter in the controversy. Thus, in a separate civil action against the
administrator of an estate arising from an appeal against the report of the committee on claims
appointed in the administration proceedings of the said estate, to determine whether or not the
appeal was taken on time, the court took judicial notice of the record of the administration
proceedings. Courts have also taken judicial notice of previous cases to determine whether or not
the case pending is a moot one or whether or not a previous ruling is applicable in the case under
consideration."
Moreover, Degayos objection to the action of CA on this matter is merely technical because Degayo
herself repeatedly referred to the Civil Case No. 16047 in her pleadings in Civil Case No. 18328and
even in her appellees brief before the CA and her petition for review before this Court. In particular,
in her complaint, she stated that her motion to intervene in Civil Case No. 16047, which was denied
by the Court. The existence of that case was likewise jointly stipulated by that parties in Civil Case
No. 18328 and mentioned by the court a quoin its decision. In her appellees brief as well, Degayo
expressly referred to Civil Case No. 16047. In particular, she stated:
39

40

41

"The said Civil Case No. 16047 was for recovery of ownership and possession with damages over
the property subject of the instant case filed by the herein defendants-appellants against [the
tenants]"
She also referred to the decision in Civil Case No. 16047 in her appellees brief. She mentioned: "In
Civil Case No. 16047, the Court had ordered the deposit of 50% of the net produce of the disputed
portion that pertains to the owner, thus depriving the plaintiff of her share of not less than Php
4,000.00 a year starting 1986, to the damage of plaintiff."
There was thus no denial of the existence and the decision in Civil Case No. 16047. In fact, Degayo
stated on record her full knowledge of Civil Case No. 16047 and clearly and frequently referred to it
in her pleadings, and sufficiently designated it by name, parties, cause of action and docket number
from the court a quo, to the CA and even before this Court. Under the circumstances, the CA could
certainly take judicial notice of the finality of a judgment in Civil Case No. 16047. There was no
sense in relitigating issues that have already been passed upon in a previous civil case. That was all
that was done by the CA in decreeing the dismissal. Certainly such an order is not contrary to law.
As we aptly stated in Republic v. CA, citing Justice Edgardo L. Paras:
1wphi1

42

"A court will take judicial notice of its own acts and records in the same case, of facts established in
prior proceedings in the same case, of the authenticity of its own records of another case between
the same parties, of the files of related cases in the same court, and of public records on file in the
same court. In addition judicial notice will be taken of the record, pleadings or judgment of a case in
another court between the same parties or involving one of the same parties, as well as of the record
of another case between different parties in the same court. " Lastly, there is another equally
compelling consideration. Degayo undoubtedly had recourse to a remedy which under the law then
in force could be availed of, which is to file a petition for certiorari with the CA. It would have served
the cause of justice better, not to mention the avoidance of needless expense on her part and the
vexation to which the respondents were subjected if she did reflect a little more on the matter.
With the conclusion that Civil Case No. 16047 constitutes resjudicata on the present case, we see
no reason to engage in a discussion on the factual issues raised by the petitioner for they have been
passed upon and considered in Civil Case No. 16047.
WHEREFORE, premises considered, we DENY the petition for lack of merit. Costs against the
petitioner.

SO ORDERED.
G.R. No. 196592

April 6, 2015

SPOUSES JUVY MARANO and MARIA LUISA G. MARANO, Petitioners,

vs.
PRYCE GASES, INCORPORATED, Respondent.
DECISION
BRION, J.:
This is a petition for review on certiorari assailing the December 14, 2010 decision of the Court of
Appeals (CA) in CA-G.R. CEB-SP No. 02025, and its March 18, 2011 resolution in the same case
that denied the petitioners' motion for reconsideration.
1

Facts of the Case

On August 1, 1998, spouses Juvy and Maria Luisa Marao (petitioners) filed a free patent
application for a 9,074-square meter parcel of land in Damulaan, Albuera, Leyte, denominated as Lot
No. 4299. The free patent application was subsequently granted, and, on December 1 7, 1998,
Original Certificate of Title No. P-43553 was issued to the petitioners over the subject lot.
4

On December 29, 1998, the petitioners filed an ejectment complaint against Pryce Gases,
Incorporated (respondent) alleging that the latter illegally entered the subject lot and constructed a
building thereon sometime in March 1998. The Municipal Trial Court (MTC) of Albuera, Leyte
granted the petitioners complaint, but the Regional Trial Court (RTC) reversed the MTC decision on
appeal. On further appeal, the CA, in a decision dated January 11, 2002 remanded the case to the
MTC for trial as a reivindicatory action under the ordinary rules of civil procedure. The case was
docketed as Civil Case No. 158 with the MTC.
6

10

In the interim, the respondent, on April 17, 1999, filed a protest on the free patent application filed by
the petitioners in August 1998. On December 29, 2000, the Department of Environment and Natural
Resources (DENR) rendered a decision recommending the filing of reversion proceedings against
the petitioners, which decision became final and executory. However, no reversion proceedings were
instituted against the petitioners.
11

12

On October 28, 2002, the petitioners filed an action to quiet title against the respondent with the
RTC, 8th Judicial Region, Branch 14, Baybay City, Leyte. A month later, the respondent filed a
complaint for reconveyance against the petitioners before the same RTC. The petitioners moved to
dismiss the respondents complaint, but the RTC denied their motion.
13

14

15

16

The respondent later moved to amend its complaint from reconveyance to the cancellation of the
petitioners certificate of title. The petitioners again moved to dismiss the respondents amended
complaint on the ground of litis pendentia in view of the then pending reivindicatory action with the
MTC. The RTC, in a resolution dated March 6, 2006, dismissed the petitioners motion. The
petitioners moved for reconsideration but their motion was likewise denied by the RTC. The
petitioners questioned the RTCs March 6, 2006 resolution in a petition for certiorari with the CA. The
case was docketed as CA-G.R. CEB-SP No. 02025.
17

18

19

In the reivindicatory action at the MTC, the latter court rendered a decision on June 18, 2010 ruling
in the respondents favour; it declared the respondent as the owner of the subject lot and, thus,
entitled to the possession thereof. The petitioners appealed the MTCs decision to the RTC. In the
same year, the CA, acting on the petition for certiorari filed by the petitioners, rendered a
decision dated December 14, 2010 affirming the RTCs resolution that dismissed the petitioners
motion to dismiss. The CA held that no litis pendentia exists between the reivindicatory action (then
pending before the MTC) and the amended complaint for cancellation of certificate of title filed by the
respondent with the RTC. The petitioners moved to reconsider the CAs decision but their motion
was denied, hence, the filing of the present petition for review on certiorari with this Court.
20

21

22

23

The Petition
The petitioners mainly argue that the respondents complaint for cancellation of title should be
dismissed because the question of validity of the certificate of title issued in their names over the
subject lot is already being litigated in the reivindicatory action case that is pending appeal before
the RTC.
OUR RULING
We find merit in the present petition and resolve to reverse and set aside the assailed decision of the
CA.
In this jurisdiction, there are three kinds of actions to recover possession of real property, namely: (1)
actions for forcible entry or unlawful detainer, also denominated as accion interdictal, which are
summary in nature and seek to recover only physical possession (possession de facto) of the
property, (2) an accion publiciana, which is a plenary action to recover the right to possess the
property, without claim of title, and (3) an accion reivindicatoria (or accion de reivindicacion) or a
reivindicatory action, which is a plenary action to recover not only possession of, but also ownership
of the real property.
24

Since a reivindicatory action includes a claim of title or ownership, the court must necessarily inquire
into the circumstances surrounding the plaintiffs acquisition of his or her title to the real property
sought to be recovered. The petitioners point out that the MTC in the subject reivindicatory case
already conducted a full-blown trial on the issue of validity of their claim of ownership and had, in
fact, ruled that their certificate of title is inoperative and has no binding effect. They argue that for the
RTC to conduct another full-blown trial in the cancellation of title case on the same issue would, in
effect, nullify the MTCs decision in the reivindicatory case.
25

26

Instead of ordering the dismissal of the respondents complaint for cancellation of certificate of title,
we find that the consolidation of the reivindicatory action and the cancellation of certificate of title
case to be the appropriate remedy in the present situation. Consolidation is proper when two or
more actions pending, not necessarily, before the same court involve a common question of law or
fact. In such cases, the court may: order a joint hearing or trial of any or all the matters in issue in
the actions, order all the actions consolidated, and make such orders concerning the proceedings
therein for the purpose of avoiding unnecessary costs and delay.
27

28

Considering that the validity of the petitioners certificate of title is the crucial issue in both the
reivindicatory action pending appeal before the RTC and the cancellation of certificate of title case
filed by the respondent, these two cases should be consolidated in order to avoid the possibility of
rendering conflicting decisions and for the orderly administration of justice. And since the issue of
validity of the petitioners certificate of title has been subjected to a full-blown trial before the MTC
and is now the subject of appeal before the RTC, allowing the cancellation of certificate of title case
29

to proceed independently and separately would be needlessly circuitous and would necessarily
delay the resolution of the present issue.
30

Also, we note that the respondents complaint for cancellation of certificate of title cannot simply be
dismissed. Well-settled is the rule that the issue of validity of a Torrens title, whether fraudulently
issued or not, may be posed only in an action brought to impugn or annul it. Section 48 of
Presidential Decree No. 1529 clearly provides that a certificate of title can never be the subject of a
collateral attack; it cannot be altered, modified, or cancelled except in a direct proceeding instituted
in accordance with law. Thus, the present respondent has, in fact, resorted to proper procedure in
filing a direct action to attack or impugn the petitioners certificate of title. But to allow the pendency
of the reivindicatory action and the cancellation of certificate of title case in two different courts would
not subserve the orderly administration of justice as the subject cases involve a common question of
fact, i.e. the issue of validity of the petitioners' certificate of title. In this situation, consolidation is the
proper procedure to prevent confusion, avoid multiplicity of suits, and save the parties, as well as the
courts, time and from incurring unnecessary cost and expense.
1wphi1

31

32

33

WHEREFORE, premises considered, we hereby REVERSE and SET ASIDE the Decision dated
December 14, 2010 and resolution dated March 18, 2011 of the Court of Appeals in CA-G.R. CEBSP No. 02025.
In the interest of orderly dispensation of justice, we order that the action for the cancellation of the
petitioners' certificate of title in Civil Case No. B-2002-11-32 be CONSOLIDATED with the
reivindicatory action in Civil Case No. 158.
SO ORDERED.