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SECOND DIVISION

[A.M. No. MTJ-99-1226. January 31, 2000]


GLORIA LUCAS, complainant, vs. JUDGE AMELIA A. FABROS, MeTC,
Branch 9, Manila, respondent.
RESOLUTION
QUISUMBING, J.:

In a verified complaint[1] dated May 20, 1997, complainant Gloria


Lucas charged respondent, Judge Amelia A. Fabros of the
Metropolitan Trial Court, Branch 9, Manila, with Gross Ignorance of
the Law and Grave Abuse of Discretion relative to Civil Case No.
151248 entitled "Editha F. Gacad, represented by Elenita F. Castelo
vs. Gloria Lucas, for Ejectment". Jksm
Complainant, who was the defendant in the aforecited case,
alleged that Judge Amelia A. Fabros issued an Order [2] dated
February 26, 1997 granting the plaintiffs motion for
reconsideration of the Order [3]dated January 13, 1997, which
dismissed the case for failure of plaintiff and her counsel to appear
at the Preliminary Conference.
Complainant averred that it is elementary, under Section 19 (c) of
the Rules of Summary Procedure, that a motion for reconsideration
is prohibited, but respondent judge, in violation of the rule,
granted the motion for reconsideration. She added that,
notwithstanding the fact that the respondent herself had pointed
out in open court that the case is governed by the Rules on
Summary Procedure,[4] the judge ordered the revival of the case
out of malice, partiality and with intent to cause an injury to
complainant.
Further, complainant alleged that the actuations of the respondent
is in blatant disregard of the established rules on procedure, and it
is an instance where the doctrine of IPSA LOQUITOR may once
again may be applied by the Court to discipline judges.
On June 18, 1997, respondent judge was required to comment on
the administrative complaint. In her Comment [5] dated September
16, 1997, she admitted that she granted the motion for
reconsideration even if the same is a prohibited motion in an
ejectment case. She explained, however, that it was granted in the
interest of justice.
In her Comment, respondent stated:

"The Order subject of this complaint is the Order dated


January 13, 1997 dismissing the complaint for ejectment
for failure of the plaintiff to appear for preliminary
conference and more importantly her lawyer, Atty. Jose
Suing, who was duly empowered to appear for preliminary
conference by virtue of a Special Power of Attorney. Chief
Immediately upon learning the said order of dismissal and
awarding of attorneys fees, Atty. Suing filed a Motion for
Reconsideration on January 17, 1997 (Annex "A") stating
that he failed to appear due to a sudden excruciating
stomach pain. He further stated that his Secretary called
the Court but to no avail until finally the call came through
and she was informed that the case was dismissed. Over
the objection of the defendant that the Motion for
Reconsideration was a prohibited pleading which this
Presiding Judge is fully aware of under the Rule on
Summary Procedure, the Motion for Reconsideration was
nonetheless granted in the interest of justice. The question
is poised. Are the actuations of judges to be governed
strictly by the Rule on Summary Procedure despite their
belief in good faith that in special cases, its observance
would result in a miscarriage of justice? This Presiding
Judge does not think so. Judges are supposed to
responsible Public Officials and should be able to perceive
and discern circumstances which might lead to miscarriage
of justice, thus, negating the very purpose and essence of
the Rule on Summary Procedure. The Rule on Summary
Procedure is not a straight jacket and it is believed it was
never meant to be that. This is the reason why we have in
the Rules of Court Section 5 (g) of Rule 135 which is one of
the inherent powers of the Court, that is, to amend and
control its process and orders so as to make them
conformable to law and justice. Ignorance of the law, to the
mind of the undersigned, is the act of a judge in taking
legal steps or adopting procedure unknowingly aware that
they are contrary to established Rules which should be
known to the judge. This Presiding Judge in this particular
case was fully aware of the Rule on Summary Procedure.
She fully knew that the Motion for Reconsideration was a
prohibited pleading but she still considered it because to
deny it would result in a miscarriage of justice. It was not a

capricious, whimsical and despotic act when viewed in the


light of this circumstance.
With respect to the allegation that the charge of ignorance
of the law was compounded by the failure to issue a writ of
execution, it bears stressing that the Order dated January
13, 1997 never gained finality because the plaintiff was able
to file the Motion for Reconsideration within the fifteen (15)
day period, that is, on January 17, 1997. But even if it is
argued validly that the Motion for Reconsideration being a
prohibited pleading did not interrupt the running of the
period of appeal, still the said Order did not gain finality as
far as defendant Gloria Lucas is concerned because as the
record shows, it was she who received the Order, not her
lawyer, Atty. Sulit." Esm
The complaint and the Comment were referred to the Office of the
Court Administrator for evaluation, report and recommendation
after the case was docketed as an administrative matter. On
August 25, 1997, OCA in a Memorandum, submitted the following
findings:
"After a careful perusal of the records of the case,
we find that respondent Judge Fabros abused her
discretion
in
granting
the
Motion
for
Reconsideration.
Respondent Judge Fabros maintained that she
could not be guilty of gross ignorance of the law as
she knows that a motion for reconsideration of
judgment is a prohibited motion in an ejectment
case. She explained that although there is already
a judgment dismissing the case, she granted the
plaintiffs motion for reconsideration in the interest
of justice since the reasons stated in the motion
for reconsideration are meritorious.
Respondent failed to realize that the first duty of
the court is to apply the law and that when the law
is clear and unambiguous, there is no room for
interpretation. Although her intention was good,
this could not free her from liability.

Respondent should have denied the motion since


the plaintiff had other judicial remedies like
appeal."[6]
The Office of the Court Administrator recommended that
respondent judge be fined in the amount of P2,000.00 for grave
abuse
of
discretion.
The
Court,
however,
finds
this
recommendation without factual and legal basis.
As a rule, a motion for reconsideration is a prohibited pleading
under Section 19 of the Revised Rule on Summary Procedure.
Thus,
"SEC. 19. Prohibited pleadings and motions. The
following pleadings, motions, or petitions shall not
be allowed in the cases covered by this Rule.
xxx
(c) Motion for new trial, or for reconsideration of a
judgment, or for reopening of trial;
xxx"
This rule, however, applies only where the judgment sought to be
reconsidered is one rendered on the merits. As held by the Court
in an earlier case involving Sec. 15 (c) of the Rules on Summary
Procedure, later Sec. 19 (c) of the Revised Rules on Summary
Procedure effective November 15, 1991: "The motion prohibited by
this Section is that which seeks reconsideration of the judgment
rendered by the courtafter trial on the merits of the case."[7] Here,
the order of dismissal issued by respondent judge due to failure of
a party to appear during the preliminary conference is obviously
not a judgment on the merits after trial of the case. Hence, a
motion for the reconsideration of such order is not the prohibited
pleading contemplated under Section 19 (c) of the present Rule on
Summary Procedure. Thus, respondent judge committed no grave
abuse of discretion, nor is she guilty of ignorance of the law, in
giving due course to the motion for reconsideration subject of the
present complaint. Esmsc
ACCORDINGLY, the complaint filed against respondent Judge
Amelia A. Fabros is DISMISSED.
SO ORDERED.

SECOND DIVISION
MANUEL C. BUNGCAYAO, SR., G.R. No. 170483
represented in this case by his
Attorney-in-fact ROMEL R. Present:
BUNGCAYAO,
Petitioner, CARPIO, J., Chairperson,
BRION,
DEL CASTILLO,
- versus - ABAD, and
PEREZ, JJ.
FORT ILOCANDIA
PROPERTY HOLDINGS,
AND DEVELOPMENT Promulgated:
CORPORATION,
Respondent. April 19, 2010
x - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
CARPIO, J.:

The Case
Before the Court is a petition for review [1] assailing the 21
November 2005 Decision[2] of the Court of Appeals in CAG.R. CV No. 82415.
The Antecedent Facts
Manuel C. Bungcayao, Sr. (petitioner) claimed to be one of
the two entrepreneurs who introduced improvements on the
foreshore area of Calayab Beach in 1978 when Fort
Ilocandia
Hotel
started
its
construction
in
the
area. Thereafter, other entrepreneurs began setting up their
own stalls in the foreshore area. They later formed
themselves into the DSierto Beach Resort Owners
Association, Inc. (DSierto).
In July 1980, six parcels of land in Barrio Balacad (now
Calayad) were transferred, ceded, and conveyed to the
Philippine Tourism Authority (PTA) pursuant to Presidential
Decree No. 1704. Fort Ilocandia Resort Hotel was erected on
the area. In 1992, petitioner and other DSierto members
applied for a foreshore lease with the Community
Environment and Natural Resources Office (CENRO) and was

granted a provisional permit. On 31 January 2002, Fort


Ilocandia Property Holdings and Development Corporation
(respondent) filed a foreshore application over a 14-hectare
area abutting the Fort Ilocandia Property, including the 5hectare portion applied for by DSierto members. The
foreshore applications became the subject matter of a
conflict case, docketed Department of Environment and
Natural Resources (DENR) Case No. 5473, between
respondent and DSierto members. In an undated Order,
[3]
DENR Regional Executive Director Victor J. Ancheta
denied the foreshore lease applications of the DSierto
members, including petitioner, on the ground that the
subject area applied for fell either within the titled property
or within the foreshore areas applied for by respondent. The
DSierto
members
appealed
the
denial
of
their
applications. In a Resolution[4] dated 21 August 2003, then
DENR Secretary Elisea G. Gozun denied the appeal on the
ground that the area applied for encroached on the titled
property of respondent based on the final verification plan.
In a letter dated 18 September 2003,[5] respondent, through
its Public Relations Manager Arlene de Guzman, invited the
DSierto members to a luncheon meeting to discuss common
details beneficial to all parties concerned. Atty. Liza Marcos
(Atty. Marcos), wife of Governor Bongbong Marcos, was
present as she was asked by Fort Ilocandia hotel officials to
mediate over the conflict among the parties. Atty. Marcos
offered P300,000 as financial settlement per claimant in
consideration of the improvements introduced, on the
condition that they would vacate the area identified as
respondents property. A DSierto member made a counteroffer of P400,000, to which the other DSierto members
agreed.
Petitioner alleged that his son, Manuel Bungcayao, Jr., who
attended the meeting, manifested that he still had to
consult his parents about the offer but upon the undue
pressure exerted by Atty. Marcos, he accepted the payment

and signed the Deed of Assignment, Release, Waiver and


Quitclaim[6] in favor of respondent.

submitting the case for resolution. Respondent filed a


Motion for Summary Judgment.

Petitioner then filed an action for declaration of nullity of


contract before the Regional Trial Court of Laoag, City,
Branch 13 (trial court), docketed as Civil Case Nos. 1289113, against respondent. Petitioner alleged that his son had
no authority to represent him and that the deed was void
and not binding upon him.

The trial court rendered a Summary Judgment[9] dated 13


February 2004.

Respondent countered that the area upon which petitioner


and the other DSierto members constructed their
improvements was part of its titled property under Transfer
Certificate of Title No. T-31182. Respondent alleged that
petitioners sons, Manuel, Jr. and Romel, attended the
luncheon meeting on their own volition and they were able
to talk to their parents through a cellular phone before they
accepted respondents offer. As a counterclaim, respondent
prayed that petitioner be required to return the amount
of P400,000 from respondent, to vacate the portion of the
respondents property he was occupying, and to pay
damages because his continued refusal to vacate the
property caused tremendous delay in the planned
implementation of Fort Ilocandias expansion projects.
In an Order[7] dated 6 November 2003, the trial court
confirmed the agreement of the parties to cancel the Deed
of Assignment, Release, Waiver and Quitclaim and the
return ofP400,000 to respondent. Petitioners counsel,
however, manifested that petitioner was still maintaining its
claim for damages against respondent.
Petitioner and respondent agreed to consider the case
submitted for resolution on summary judgment. Thus, in its
Order[8] dated 28 November 2003, the trial court considered
the case submitted for resolution. Petitioner filed a motion
for reconsideration, alleging that he manifested in open
court that he was withdrawing his earlier manifestation

The Decision of the Trial Court


The trial court ruled that the only issue raised by petitioner
was his claim for damages while respondents issue was only
his claim for possession of the property occupied by
petitioner and damages. The trial court noted that the
parties already stipulated on the issues and admissions had
been made by both parties. The trial court ruled that
summary judgment could be rendered on the case.
The trial court ruled that the alleged pressure on petitioners
sons could not constitute force, violence or intimidation that
could vitiate consent. As regards respondents counterclaim,
the trial court ruled that based on the pleadings and
admissions made, it was established that the property
occupied by petitioner was within the titled property of
respondent. The dispositive portion of the trial courts
decision reads:
WHEREFORE, the Court hereby renders
judgment DISMISSING the claim of plaintiff
for damages as it is found to be without legal
basis, and finding the counterclaim of the
defendant for recovery of possession of the lot
occupied by the plaintiff to be meritorious as
it is hereby GRANTED. Consequently, the
plaintiff is hereby directed to immediately
vacate
the
premises
administratively
adjudicated by the executive department of
the government in favor of the defendant and
yield its possession unto the defendant. No
pronouncement is here made as yet of the
damages claimed by the defendant.

SO ORDERED.[10]
Petitioner appealed from the trial courts decision.
The Decision of the Court of Appeals
In its 21 November 2005 Decision, the Court of Appeals
affirmed the trial courts decision in toto.
The Court of Appeals sustained the trial court in resorting to
summary judgment as a valid procedural device for the
prompt disposition of actions in which the pleadings raise
only a legal issue and not a genuine issue as to any material
fact. The Court of Appeals ruled that in this case, the facts
are not in dispute and the only issue to be resolved is
whether the subject property was within the titled property
of respondent. Hence, summary judgment was properly
rendered by the trial court.
The Court of Appeals ruled that the counterclaims raised by
respondent were compulsory in nature, as they arose out of
or were connected with the transaction or occurrence
constituting the subject matter of the opposing partys claim
and did not require for its adjudication the presence of third
parties of whom the court could not acquire jurisdiction.The
Court of Appeals ruled that respondent was the rightful
owner of the subject property and as such, it had the right
to recover its possession from any other person to whom
the owner has not transmitted the property, including
petitioner.
The dispositive portion of the Court of Appeals decision
reads:
WHEREFORE, the assailed decision dated
February 13, 2004 of the Regional Trial Court
of Laoag City, Branch 13 is hereby
AFFIRMED in toto.

SO ORDERED.[11]
Thus, the petition before this Court.
The Issues
Petitioner raises the following issues in his Memorandum:
[12]

1.
Whether
respondents
counterclaim is compulsory; and
2.
Whether summary judgment is
appropriate in this case.
The Ruling of this Court
The petition has merit.
Compulsory Counterclaim
A compulsory counterclaim is any claim for money or any
relief, which a defending party may have against an
opposing party, which at the time of suit arises out of, or is
necessarily connected with, the same transaction or
occurrence that is the subject matter of the plaintiffs
complaint.[13] It is compulsory in the sense that it is within
the jurisdiction of the court, does not require for its
adjudication the presence of third parties over whom the
court cannot acquire jurisdiction, and will be barred in the
future if not set up in the answer to the complaint in the
same case.[14] Any other counterclaim is permissive.[15]
The Court has ruled that the compelling test of
compulsoriness characterizes a counterclaim as compulsory
if there should exist a logical relationship between the main
claim and the counterclaim.[16] The Court further ruled that
there exists such a relationship when conducting separate
trials of the respective claims of the parties would entail
substantial duplication of time and effort by the parties and
the court; when the multiple claims involve the same

factual and legal issues; or when the claims are offshoots of


the same basic controversy between the parties.[17]
The criteria to determine whether the counterclaim is
compulsory or permissive are as follows:
(a) Are issues of fact and law raised by the
claim and by the counterclaim largely the
same?
(b) Would res judicata bar a subsequent suit
on defendants claim, absent the compulsory
rule?
(c)
Will
substantially
the
same
evidence support or refute plaintiffs claim as
well as defendants counterclaim?
(d)
Is there any logical relations
between the claim and the counterclaim?
A positive answer to all four questions would indicate that
the counterclaim is compulsory.[18]
In this case, the only issue in the complaint is whether
Manuel, Jr. is authorized to sign the Deed of Assignment,
Release, Waiver and Quitclaim in favor of respondent
without petitioners express approval and authority. In an
Order dated 6 November 2003, the trial court confirmed the
agreement of the parties to cancel the Deed of Assignment,
Release, Waiver and Quitclaim and the return of P400,000
to respondent. The only claim that remained was the claim
for damages against respondent. The trial court resolved
this issue by holding that any damage suffered by Manuel,
Jr. was personal to him. The trial court ruled that petitioner
could not have suffered any damage even if Manuel, Jr.
entered into an agreement with respondent since the
agreement was null and void.

Respondent filed three counterclaims. The first was for


recovery of the P400,000 given to Manuel, Jr.; the second
was for recovery of possession of the subject property; and
the third was for damages. The first counterclaim was
rendered moot with the issuance of the 6 November 2003
Order confirming the agreement of the parties to cancel the
Deed of Assignment, Release, Waiver and Quitclaim and to
return the P400,000 to respondent. Respondent waived and
renounced the third counterclaim for damages.[19] The only
counterclaim that remained was for the recovery of
possession of the subject property. While this counterclaim
was an offshoot of the same basic controversy between the
parties, it is very clear that it will not be barred if not set up
in the answer to the complaint in the same
case. Respondents second counterclaim, contrary to the
findings of the trial court and the Court of Appeals, is only a
permissive
counterclaim. It
is
not
a
compulsory
counterclaim. It is capable of proceeding independently of
the main case.
The rule in permissive counterclaim is that for the trial court
to acquire jurisdiction, the counterclaimant is bound to pay
the prescribed docket fees.[20] Any decision rendered
without jurisdiction is a total nullity and may be struck down
at any time, even on appeal before this Court. [21] In this
case, respondent did not dispute the non-payment of docket
fees. Respondent only insisted that its claims were all
compulsory counterclaims. As such, the judgment by the
trial court in relation to the second counterclaim is
considered null and void[22] without prejudice to a separate
action which respondent may file against petitioner.
Summary Judgment
Section 1, Rule 35 of the 1997 Rules of Civil Procedure
provides:

Section 1. Summary Judgment for claimant. A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a
declaratory relief may, at any time after the
pleading in answer thereto has been served,
move with supporting affidavits, depositions
or admissions for a summary judgment in his
favor upon all or any part thereof.
Summary judgment has been explained as follows:
Summary judgment is a procedural device
resorted to in order to avoid long drawn out
litigations and useless delays. When the
pleadings on file show that there are no
genuine issues of fact to be tried, the Rules
allow a party to obtain immediate relief by
way of summary judgment, that is, when the
facts are not in dispute, the court is allowed
to decide the case summarily by applying the
law to the material facts. Conversely, where
the pleadings tender a genuine issue,
summary judgment is not proper. A genuine
issue is such issue of fact which requires the
presentation of evidence as distinguished
from a sham, fictitious, contrived or false
claim. Section 3 of the said rule provides two
(2) requisites for summary judgment to be
proper: (1) there must be no genuine issue
as to any material fact, except for the amount
of damages; and (2) the party presenting the
motion for summary judgment must be
entitled to a judgment as a matter of law. A
summary judgment is permitted only if there
is no genuine issue as to any material fact
and a moving party is entitled to a judgment
as a matter of law. A summary judgment is
proper if, while the pleadings on their face

appear to raise issues, the affidavits,


depositions, and admissions presented by the
moving party show that such issues are not
genuine.[23]
Since we have limited the issues to the damages claimed by
the parties, summary judgment has been properly rendered
in this case.
WHEREFORE, we MODIFY the 21 November 2005
Decision of the Court of Appeals in CA-G.R. CV No. 82415
which affirmed the 13 February 2004 Decision of the
Regional Trial Court of Laoag City, Branch 13, insofar as it
ruled that respondents counterclaim for recovery of
possession of the subject property is compulsory in
nature. WeDISMISS respondents permissive counterclaim
without prejudice to filing a separate action against
petitioner.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 167181

December 23, 2008

SPS. CARLOS MUNSALUD and WINNIE MUNSALUD, petitioners,


vs.
NATIONAL HOUSING AUTHORITY, respondent.

Petitioner Winnie Munsalud is the daughter and one


of the compulsory heirs of the late Lourdes Bulado (Bulado)
who died on December 8, 1985. During the lifetime of
Bulado, respondent National Housing Authority (NHA)
awarded her a lot located at 942 R. Higgins St., CAA
Compound, Bgy. 185, Pasay City. The award was made
pursuant to the "Land for the Landless" program of
respondent. She resided at the said property until her
death.

DECISION
REYES, R.T., J.:

INSUFFICIENCY in form and substance, as a ground for


dismissal of the complaint, should not be based on the title
or caption, especially when the allegations of the pleading
support an action.

In pursuit of a reversal of the Decision 1 of the Court of


Appeals (CA) affirming the order of dismissal 2 of the
Regional
Trial
Court
(RTC)
in
a
complaint
for
3
mandamus, petitioners-spouses Carlos Munsalud and
Winnie Munsalud lodged before this Court a petition for
review on certiorari.
The Facts
Laid bare from the records are the following facts:

When Bulado died, petitioner Winnie assumed the obligation


to pay the monthly amortizations. Respondent NHA
recognized petitioner spouses assumption of obligations as
their names were reflected in the receipts. They were
allowed to occupy the lot up to the present. To prove their
occupancy over the lot, petitioners offered as evidence the
following documents, viz.:
1. Tag Card No. 77-02830-03 issued by then Pasay
City Mayor Pablo Cuneta and then NHA General
Manager Gaudencio Tobias;
2. Application and Contract for Water Services No.
295319 in the name of Bulado but the same was
signed by petitioner Winnie;
3. Tax Declaration No. B-007-27566 over the land
issued by the Assessors Office of Pasay City in the
name of defendant recognizing its beneficial use in
favor of petitioners;

4. Tax Declaration No. B-007-27667 over the


residential structure erected on the land and issued
by the Assessors Office of Pasay City in the names of
petitioners;

her mother, the late Lourdes Bulado. Respondent did not


respond to the reply.
Left with no recourse, petitioners instituted a complaint for
mandamus before the court a quo.

5. Pagpapatunay dated September 5, 1989 signed


by neighbors and acquaintances of petitioners
attesting to their long time residence in the property;
RTC Order
6. Deposit Receipt No. 286444 dated September 27,
1989 issued by the Manila Electric Company
attesting to the installation of electric service in the
name of petitioner Winnie on the property.4

On September 14, 1989, petitioners completed the


payments of the amortizations due on the property.
Reflected on the left side portion of the official receipt
evidencing full payment is the annotation "full payment."
Consequently, petitioners demanded that respondent NHA
issue in their favor a deed of sale and a title over the
property. Respondent, however, refused.

On April 22, 2003, the RTC dismissed the complaint


for mandamus, disposing thus:
Considering that the petition is insufficient in form
and substance, there being no reference to any law
which the respondent by reason of its office, trust or
station is especially enjoined as a duty to perform or
any allegation that respondent is unlawfully
excluding petitioners from using or enjoying any
right or office which said petitioners are entitled to,
the above-entitled petition is hereby DISMISSED,
pursuant to Section 3 Rule 65 of the 1997 Rules of
Civil Procedure.
SO ORDERED.5

On January 28, 2003, petitioners, by counsel, sent


respondent a letter to issue a deed of sale and title. Despite
receipt, respondent did not issue the requested documents.
On March 6, 2003, respondent wrote petitioners informing
them that petitioner Winnies name does not appear as
beneficiary. Petitioners replied that Winnie was representing

Petitioners moved for reconsideration but they did not


succeed. Thus, petitioners seasonably appealed to the CA.
CA Disposition

On August 23, 2004, the CA affirmed the RTC dismissal of


the mandamus petition.
WHEREFORE,
the
instant
appeal
is
hereby DISMISSED. Accordingly, the assailed Order
of Dismissal isAFFIRMED.
SO ORDERED.6

which defendant is duty bound to perform the act


sought to be performed, as well as the law which
would grant them the clear legal right to the
issuance of the writ of mandamus.

Foregoing discussed, we find no error on the part of


the court a quo in dismissing the petition for
mandamus filed by plaintiffs-appellants.

In agreeing with the court a quo, the appellate court


rationalized as follows:
It is essential to the issuance of the writ of
mandamus that the petitioner should have a clear
legal right to the thing demanded and it must be the
imperative duty of the respondent to perform the act
required. It is a command to exercise a power
already possessed and to perform a duty already
imposed.

On
September
20,
2004,
petitioners moved
for
reconsideration but it was denied by the CA on February 22,
2005. Hence, the present recourse.

Issues
I.

It well settled that the legal right of petitioner to the


performance of the particular act which is sought to
be compelled must be clear and complete. A clear
legal right within the meaning of the rule means a
right which is clearly founded in, or granted by law;
a right which is inferable as a matter of law.
Likewise, mandamus refers only to acts enjoined by
law to be done. The duties to be enforced must be
such as are clearly peremptorily enjoined by law or
by reason of official station. However, appellants
failed to point out in their petition the specific law by

WHETHER OR NOT THE HONORABLE COURT OF


APPEALS ERRED IN AFFIRMING THE ORDERS OF THE
HONORABLE REGIONAL TRIAL COURT OF QUEZON
CITY DATED APRIL 22, 2003 AND SEPTEMBER 25,
2003 WHERE THE LATTER COURT RELYING UPON
THE
APPELLATION
AND/OR
LABEL
THAT
PETITIONERS GAVE THEIR COMPLAINT (I.E.,
MANDAMUS) IN CIVIL CASE NO. Q-03-492
DISMISSED
THE
COMPLAINT
THEREIN
PURPORTEDLY BECAUSE THE SAID COMPLAINT

FAILED TO COMPLY WITH SECTION 3, RULE 65 OF


THE 1997 RULES OF CIVIL PROCEDURE.
II.
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN DENYING PETITIONERS MOTION
FOR RECONSIDERATION OF ITS DECISION DATED
AUGUST 23, 2004.7 (Underscoring supplied)

Poring over the arguments presented, the focal issue is


whether in giving due course to an action, the court is
fenced within the parameters of the title given by plaintiff to
the case without regard to the averments of the pleading.

Elsewise stated, does the trial court have absolute discretion


to dismiss an action on the ground that it is insufficient in
form and substance based alone on its designation when,
from the body and the relief prayed for, it could stand as an
action sufficient in form and substance?

To begin with, form is the methodology used to express


rules of practice and procedure.8 It is the order or method of
legal proceedings.9 It relates to technical details.10 It is
ordinarily the antithesis of substance.11 It is an established
method of expression or practice. It is a fixed or formal way
of proceeding.12

A pleading is sufficient in form when it contains the


following:
1. A Caption, setting forth the name of the court, the
title of the action indicating the names of the parties,
and the docket number which is usually left in blank,
as the Clerk of Court has to assign yet a docket
number;
2. The Body, reflecting the designation, the
allegations of the partys claims or defenses, the
relief prayed for, and the date of the pleading;
3. The Signature
counsel;13

Our Ruling
Petitioners action designated as mandamus was dismissed
by the trial court on the ground that it is insufficient in form
and substance. This begs the question: when is an action
sufficient in form and when is it sufficient in substance?

and

Address of

the

party

or

4. Verification. This is required to secure an


assurance that the allegations have been made in
good faith, or are true and correct and not merely
speculative;14

5. A Certificate of Non-forum Shopping, which


although not jurisdictional, the same is obligatory;15
6. An Explanation in case the pleading is not filed
personally to the Court. Likewise, for pleading
subsequent to the complaint, if the same is not
served personally to the parties affected, there must
also be an explanation why service was not done
personally.16

Likewise, for all other pleadings, not initiatory in nature,


there must be:
A Proof of Service, which consists in the written
admission of the party served, or the official return
of the server, or the affidavit of the party serving,
containing a full statement of the date, place and
manner of service. If the service is by ordinary mail,
proof thereof shall consist of an affidavit of the
person mailing. If service is by registered mail, proof
shall be made by such affidavit and the registry
receipt issued by the mailing office.17

2. The Current Professional Tax Receipt Number; and


3. The IBP Official Receipt No. or IBP Lifetime
Membership Number.18
4. MCLE Compliance or Exemption Certificate
Number and Date of Issue (effective January 1,
2009).19

In the case at bench, a naked perusal of the complaint


docketed as Civil Case No. Q03- 49278 designated by
petitioners as mandamus reveals that it is sufficient in form.
It has the caption with the name of the court, the name of
the parties, and the docket number. The complaint contains
allegations of petitioners claims. It has a prayer and the
date when it was prepared. The signature page shows the
signature and name of petitioners counsel, the counsels
IBP, PTR and Roll of Attorneys Numbers. The complaint was
also verified and accompanied by a certificate of non-forum
shopping and signed by petitioners as plaintiffs. It was filed
personally with the office of the clerk of court.

Now, is the petition insufficient in substance?


In case a party is represented by counsel de parte,
additional requirements that go into the form of the
pleading should be incorporated, viz.:
1. The Roll of Attorneys Number;

Substance is that which is essential and is used in


opposition to form.20 It is the most important element in any
existence, the characteristic and essential components of

anything, the main part, the essential import, and the


purport.21 It means not merely subject of act, but an
intelligible abstract or synopsis of its material and
substantial elements, though it may be stated without
recital of any details.22 It goes into matters which do not
sufficiently appear or prejudicially affect the substantial
rights of parties who may be interested therein and not to
mere informalities.23

As used in reference to substance of common-law actions,


substance comprehends all of the essential or material
elements necessary to sufficiently state a good cause of
action invulnerable to attack by general demurrer.24

Substance is one which relates to the material allegations in


the pleading. It is determinative of whether or not a cause
of action exists. It is the central piece, the core, and the
heart constituting the controversy addressed to the court for
its consideration. It is the embodiment of the essential facts
necessary to confer jurisdiction upon the court.
The court a quo anchored the dismissal of petitioners
complaint on the basis of Rule 65, Section 3 25 of the 1997
Rules of Civil Procedure. It found that there was no
reference to any law which respondent NHA, by reason of its
office, trust or station, is specifically enjoined as a duty to
perform. It declared that there was no allegation in the
petition below that respondent is unlawfully excluding

petitioners from using or enjoying any right or office which


said petitioners are entitled to.

Although the complaint was captioned as Mandamus,


petitioners averments, as well as the relief sought, called
for an action for specific performance. Pertinent portions of
the complaint for mandamus provide:
3. Plaintiff Winnie Munsalud is the daughter of the
late Lourdes Bulado, and as such is one of Bulados
compulsory heirs. x x x;
4. During the lifetime of Bulado, she was awarded a
parcel of land at a "land for the landless" program of
the defendant;
xxxx
6. When Bulado died in 1985, Plaintiffs assumed her
obligations over the aforesaid property, particularly
the payment of the amortizations therein;
7. Defendant recognized this assumption of
Bulados
obligations
by
the
Plaintiffs
considering that in the receipts covering the
amortizations, the names of the Plaintiffs as
the ones paying the Defendant were indicated
therein;
8. In fact, Defendant also allowed Plaintiffs to
move into, and occupy, as they continue to

occupy up
premises;

to

now,

the

above

described

despite receipt thereof, Defendant again


refused and failed [to] act favorably thereon;

xxxx

xxxx

10. On
September
14,
1989, Plaintiffs
completed the payment of the amortizations
due over the property in question, and this is
evidenced by an official receipt, numbered
19492, which Defendants cashier, Yasmin D.
Aquino, issued to the Plaintiffs themselves,
although the official name of the payor
indicated therein was still that of the deceased
Lourdes Bulado;

20. At this point that the lot in question had


already been fully paid for by the Plaintiffs,
there is now a need to compel the Defendant to
comply with its duty to issue a deed of sale in
favor of the heirs of the deceased Lourdes
Bulado, particularly Plaintiffs Carlos and
Winnie Munsalud, as well to issue a title over
the same property in favor of the same heirs.

xxxx
12. Significantly, that receipt contained the
annotation
appearing on
the
left
side
thereof, that
the
amount
paid
thereon
constituted "full payment";
13. Since then, Plaintiffs have been demanding
from the Defendant the issuance of the deed of
sale and the title over the property in question,
but, inexplicably, and without any legal
justification
whatsoever,
Defendant
has
refused to issue that deed of sale and title;
14. On January 28, 2003, Plaintiffs, through
counsel, sent a letter to the Defendant seeking
the issuance of that deed of sale and title but,

WHEREFORE, it is most respectfully prayed that


judgment be rendered commanding the Defendant,
after due notice and hearing, to issue a deed of sale
and/or a title, in favor of the heirs of the deceased
Lourdes Bulado, particularly Plaintiffs Carlos and
Winnie Munsalud, over the property subject of this
action.26(Underscoring supplied)

A plain reading of the allegations of the complaint reveals


that petitioner Winnie Munsalud assumed the obligations of
her deceased mother, the original awardee of respondents
"Land for the Landless Program." One of the obligations of
an awardee is to pay the monthly amortizations. Petitioners
complied with said obligation and religiously paid the
amortizations until these were fully paid.

the name
supplied)

of

Lourdes

Bulado.29 (Underscoring

Indeed, petitioners have complied with what is incumbent


upon them under the program. Hence, it is now the turn of
respondent to comply with what is incumbent upon it.

In a letter dated February 21, 2003, 27 respondent informed


petitioners counsel that per its records, the name of
petitioner Winnie Munsalud does not appear as a
beneficiary. For the guidance of respondent, Winnie
Munsalud is not actually a beneficiary. The beneficiary of its
program is Lourdes Bulado, her deceased mother. This fact
was made known to respondent when another letter dated
March 6, 200328 was sent by the counsel of the heirs of
Lourdes Bulado. In the same letter, respondent was
informed that petitioner Winnie is representing her
deceased mother, Lourdes Bulado, viz.:
In view of the contents of that letter, we would like
to notify you that Ms. Munsalud is actually
representing her deceased mother, Lourdes Bulado,
who,
on
September
14,
1989
completed
her payment for Lot 12, Block 79 of the Maricaban
Estate. A copy of the receipt evidencing that
completed is attached hereto asAnnex B for your
easy reference.

In view thereof, may we reiterate our request for the


issuance of the title over the aforesaid property in

The letter was received by respondent on March 12, 2003.


On account of this second letter, respondent could have
easily verified if the name of Lourdes Bulado appears as a
beneficiary and awardee of its "Land for the Landless
Program." However, respondent never responded to the
second letter. This left petitioners with no recourse but to
bring the action to the trial court.

Evidently, the action commenced by petitioners before the


trial court, although designated as mandamus, is in reality
an action to perform a specific act. The averments of the
complaint are clear. The essential facts are sufficiently
alleged as to apprise the court of the nature of the case.
The relief sought to be obtained aims to compel respondent
to issue a deed of sale and the corresponding title over the
property awarded to Bulado. Thus, the Court finds the
complaint sufficient in substance.

The designation or caption is not controlling, more


than the allegations in the complaint, for it is not
even an indispensable part of the complaint.

Instead of focusing on what an action for mandamus should


contain, the court a quo should have proceeded to examine
the essential facts alleged in petitioners complaint. For
what determines the nature of the action and which court
has jurisdiction over it are the allegations in the complaint
and the character of the relief sought.30

The cause of action in a complaint is not determined by the


designation given to it by the parties. The allegations in the
body of the complaint define or describe it. The designation
or caption is not controlling more than the allegations in the
complaint. It is not even an indispensable part of the
complaint.31

There is no need to make reference to any law which


respondent by reason of its office is enjoined as a duty to
perform. Respondents duty arose from its contractual
obligation under the "Land for the Landless Program."

All told, whether or not petitioner Winnie, in her capacity as


a compulsory heir of the awardee, becomes a beneficiary of
the program is a question best ventilated during trial on the
merits. The conditions, terms, and provisions of the
program in case an awardee dies are evidentiary and should
be presented for determination of the court. Even the effect
and the consequence of the assumption of obligation of the
awardee as well as the presence of other compulsory heirs
are issues that should be addressed for the courts
evaluation on the basis of the evidence to be laid down
before its eyes.

WHEREFORE, the appealed Decision is REVERSED AND


SET ASIDE. The case is REMANDED to the Regional Trial
Court which is ORDERED to reinstate the case and to
conduct trial on the merits with dispatch.
No costs.
SO ORDERED.

The trial court is reminded that the caption of the complaint


is not determinative of the nature of the action.32 The
caption of the pleading should not be the governing factor,
but rather the allegations in it should determine the nature
of the action, because even without the prayer for a specific
remedy, the courts may nevertheless grant the proper relief
as may be warranted by the facts alleged in the complaint
and the evidence introduced.33

FIRST DIVISION
[G.R. No. 139018. April 11, 2005]
ESTHERLITA CRUZ-AGANA, petitioner, vs. HON. JUDGE AURORA
SANTIAGO-LAGMAN (In her capacity as Presiding Judge of
Regional Trial Court, Branch 77, Malolos, Bulacan) and B.
SERRANO ENTERPRISES, INC., respondents.

CARPIO, J.:

DECISION

The Case
This petition for certiorari[1] seeks to reverse the Order
of the Regional Trial Court, Branch 77, Malolos, Bulacan
(trial court), dated 4 June 1999, recalling its previous Order
dated 25 May 1999 dismissing B. Serrano Enterprises, Inc.s
(respondent) counterclaim upon a motion to dismiss filed by
petitioner Estherlita Cruz-Agana (petitioner).
Antecedent Facts
On 18 March 1996, petitioner filed a Complaint for
annulment of title with prayer for preliminary mandatory
injunction against respondent. Petitioner claims that as the
sole heir of one Teodorico Cruz, she is the sole owner of a
lot covered by Transfer Certificate of Title No. T-3907.
Petitioner further claims that the lot was fraudulently sold to
Eugenio Lopez, Jr. who later on transferred the lot to
respondent. The case was raffled to the Regional Trial Court,
Branch 77, Malolos, Bulacan presided by Judge Aurora
Santiago-Lagman and docketed as Civil Case No. 210-M-96.
Respondent seasonably filed its Answer with compulsory
counterclaim. Petitioner moved to dismiss respondents
counterclaim for lack of a certificate of non-forum shopping.
In an Order dated 11 March 1999, the trial court denied
petitioners motion to dismiss respondents counterclaim. The
trial court reasoned that respondents counterclaim is
compulsory and therefore excluded from the coverage of
Section 5, Rule 7 of the Rules of Court. Petitioner moved
that the trial court reconsider its Order invoking the
mandatory nature of a certificate of non-forum shopping
under Supreme Court Administrative Circular No. 04-94.
[2]
On 25 May 1999, the trial court reversed its 11 March
1999 Order and dismissed respondents counterclaim for
lack of a certificate of non-forum shopping.

Respondent
seasonably
filed
a
motion
for
reconsideration arguing that Administrative Circular No. 0494 does not apply to compulsory counterclaims following the
ruling in Santo Tomas University Hospital v. Surla.3 On
4 June 1999, the trial court again reversed itself and
recalled its Order dismissing respondents counterclaim.
Petitioner now comes before this Court through Rule 65
of the 1997 Rules of Civil Procedure.
The Trial Courts Ruling
The trial court found that respondents counterclaim is
compulsory in nature. The trial court ruled that the filing of
a compulsory counterclaim does not require a certificate of
non-forum shopping. On the effect of Santo Tomas on
Administrative Circular No. 04-94, the trial court explained:
It is settled rule that it is one of the inherent powers of
the court to amend and control its processes and orders so
as to make them conformable to law and justice. This power
includes the right to reverse itself, specially when in its
honest opinion, it has committed an error or mistake in
judgment, and that to adhere to its decision will cause
injustice to a party litigant.
The Issue
Petitioner raises the following issue:
WHETHER THE TRIAL COURT COMMITTED
GRAVE ABUSE OF DISCRETION IN REFUSING
TO DISMISS RESPONDENTS COUNTERCLAIM.
The Ruling of the Court
The petition lacks merit.
The issue presented is not novel. This Court has
squarely settled this issue in Santo Tomas University
Hospital v. Surla.[3] Writing for the Court, Justice Jose C.
Vitug began hisponencia thus:

Can a compulsory counterclaim pleaded in an Answer


be dismissed on the ground of a failure to accompany it with
a certificate of non-forum shopping? This question is the
core issue presented for resolution in the instant petition.
Santo Tomas clarified the scope of Administrative
Circular No. 04-94 with respect to counterclaims. The Court
pointed out that this circular is intended primarily to
cover an initiatory pleading or an incipient application
of a party asserting a claim for relief. The distinction
between a compulsory and a permissive counterclaim is
vital in the application of the circular. The Court explained:
It should not be too difficult, the foregoing rationale of
the circular aptly taken, to sustain the view that the circular
in question has not, in fact, been contemplated to include a
kind of claim which, by its very nature as being auxiliary to
the proceedings in the suit and as deriving its substantive
and jurisdictional support therefrom, can only be
appropriately pleaded in the answer and not remain
outstanding for independent resolution except by the court
where the main case pends. Prescinding from the foregoing,
the proviso in the second paragraph of Section 5, Rule 8 of
the 1997 Rules of Civil Procedure, i.e., that the violation of
the anti-forum shopping rule shall not be curable by mere
amendment xxx but shall be cause for the dismissal of the
case without prejudice, being predicated on the applicability
of the need for a certification against forum-shopping,
obviously does not include a claim which cannot be
independently set up.
The Court reiterated this ruling in Ponciano v. Judge
Parentela, Jr.[4]
Administrative Circular No. 04-94 does not apply to
compulsory counterclaims. The circular applies to initiatory
and similar pleadings. A compulsory counterclaim set up in
the answer is not an initiatory or similar pleading. The

initiatory pleading is the plaintiffs complaint. A respondent


has no choice but to raise a compulsory counterclaim the
moment the plaintiff files the complaint. Otherwise,
respondent waives the compulsory counterclaim. [5] In short,
the compulsory counterclaim is a reaction or response,
mandatory upon pain of waiver, to an initiatory pleading
which is the complaint.
Petitioner argues, however, that the Courts rulings
in Santo Tomas and Ponciano are contrary to the
mandate of Administrative Circular No. 04-94 and other
procedural laws.[6]
Petitioner is mistaken.
The Constitution expressly bestows on this Court the
power to promulgate rules concerning the pleading, practice
and procedure in all courts.[7] Procedural matters are within
the sole jurisdiction of this Court to prescribe.
Administrative Circular No. 04-94 is an issuance of this
Court. It covers a matter of procedure. Administrative
Circular No. 04-94 is not an enactment of the Legislature.
This Court has the exclusive jurisdiction to interpret, amend
or revise the rules it promulgates, as long as the rules do
not diminish, increase, or modify substantive rights. This is
precisely the purpose of Santo Tomas as far as
Administrative Circular No. 04-94 is concerned.
Petitioners counsel fails or simply refuses to accept the
distinction between a permissive counterclaim and a
compulsory counterclaim. This distinction was the basis for
the ruling inSanto Tomas and Ponciano. The sole issue for
resolution in the present case is whether respondents
counterclaim is compulsory or permissive. If it is a
permissive counterclaim, the lack of a certificate of nonforum shopping is fatal. If it is a compulsory counterclaim,
the lack of a certificate of non-forum shopping is
immaterial.

A compulsory counterclaim is any claim for money or


other relief, which a defending party may have against an
opposing party, which at the time of suit arises out of, or is
necessarily connected with, the same transaction or
occurrence that is the subject matter of plaintiffs complaint.
[8]
It is compulsory in the sense that it is within the
jurisdiction of the court, does not require for its adjudication
the presence of third parties over whom the court cannot
acquire jurisdiction, and will be barred in the future if not
set up in the answer to the complaint in the same case. Any
other counterclaim is permissive.

Order dated 25 May 1999 which dismissed the compulsory


counterclaim of respondent B. Serrano Enterprises, Inc.
SO ORDERED.

Respondents counterclaim as set up in its answer


states:
3. That because of the unwarranted, baseless, and
unjustified acts of the plaintiff, herein defendant has
suffered and continue to suffer actual damages in the sum
of at leastP400,000,000.00 which the law, equity, and
justice require that to be paid by the plaintiff and further to
reimburse the attorneys fees of P2,000,000.00;[9]
It is clear that the counterclaim set up by respondent
arises from the filing of plaintiffs complaint. The
counterclaim is so intertwined with the main case that it is
incapable of proceeding independently. The counterclaim
will require a re-litigation of the same evidence if the
counterclaim is allowed to proceed in a separate action.
Even petitioner recognizes that respondents counterclaim is
compulsory.[10] A compulsory counterclaim does not require
a certificate of non-forum shopping because a compulsory
counterclaim is not an initiatory pleading.
WHEREFORE, the instant petition is DENIED for lack of
merit. We AFFIRM the Order of the Regional Trial Court,
Branch 77, Malolos Bulacan, dated 4 June 1999 recalling the

FIRST DIVISION
[G.R. No. 161135. April 8, 2005]
SWAGMAN HOTELS AND TRAVEL, INC., petitioner, vs. HON. COURT
OF APPEALS, and NEAL B. CHRISTIAN, respondents.
DECISION
DAVIDE, JR., C.J.:

May a complaint that lacks a cause of action at the time it was


filed be cured by the accrual of a cause of action during the

pendency of the case? This is the basic issue raised in this petition
for the Courts consideration.
Sometime in 1996 and 1997, petitioner Swagman Hotels and
Travel, Inc., through Atty. Leonor L. Infante and Rodney David
Hegerty, its president and vice-president, respectively, obtained
from private respondent Neal B. Christian loans evidenced by three
promissory notes dated 7 August 1996, 14 March 1997, and 14
July 1997. Each of the promissory notes is in the amount of
US$50,000 payable after three years from its date with an interest
of 15% per annum payable every three months. [1] In a letter dated
16 December 1998, Christian informed the petitioner corporation
that he was terminating the loans and demanded from the latter
payment in the total amount of US$150,000 plus unpaid interests
in the total amount of US$13,500.[2]
On 2 February 1999, private respondent Christian filed with
the Regional Trial Court of Baguio City, Branch 59, a complaint for
a sum of money and damages against the petitioner corporation,
Hegerty, and Atty. Infante. The complaint alleged as follows: On 7
August 1996, 14 March 1997, and 14 July 1997, the petitioner, as
well as its president and vice-president obtained loans from him in
the total amount of US$150,000 payable after three years, with an
interest of 15% per annum payable quarterly or every three
months. For a while, they paid an interest of 15% per annum
every three months in accordance with the three promissory notes.
However, starting January 1998 until December 1998, they paid
him only an interest of 6% per annum, instead of 15% per annum,
in violation of the terms of the three promissory notes. Thus,
Christian prayed that the trial court order them to pay him jointly
and solidarily the amount of US$150,000 representing the total
amount of the loans; US$13,500 representing unpaid interests
from January 1998 until December 1998; P100,000 for moral
damages;P50,000 for attorneys fees; and the cost of the suit. [3]
The petitioner corporation, together with its president and
vice-president, filed an Answer raising as defenses lack of cause of
action and novation of the principal obligations. According to them,
Christian had no cause of action because the three promissory
notes were not yet due and demandable. In December 1997, since
the petitioner corporation was experiencing huge losses due to the
Asian financial crisis, Christian agreed (a) to waive the interest of

15% per annum, and (b) accept payments of the principal loans in
installment basis, the amount and period of which would depend
on the state of business of the petitioner corporation. Thus, the
petitioner paid Christian capital repayment in the amount of
US$750 per month from January 1998 until the time the complaint
was filed in February 1999. The petitioner and its co-defendants
then prayed that the complaint be dismissed and that Christian be
ordered to pay P1 million as moral damages; P500,000 as
exemplary damages; and P100,000 as attorneys fees.[4]
In due course and after hearing, the trial court rendered a
decision[5] on 5 May 2000 declaring the first two promissory notes
dated 7 August 1996 and 14 March 1997 as already due and
demandable and that the interest on the loans had been reduced
by the parties from 15% to 6% per annum. It then ordered the
petitioner corporation to pay Christian the amount of $100,000
representing the principal obligation covered by the promissory
notes dated 7 August 1996 and 14 March 1997, plus interest of
6% per month thereon until fully paid, with all interest payments
already paid by the defendant to the plaintiff to be deducted
therefrom.
The trial court ratiocinated in this wise:
(1) There was no novation of defendants obligation to the plaintiff.
Under Article 1292 of the Civil Code, there is an implied novation
only if the old and the new obligation be on every point
incompatible with one another.
The test of incompatibility between the two obligations or
contracts, according to an imminent author, is whether they can
stand together, each one having an independent existence. If they
cannot, they are incompatible, and the subsequent obligation
novates the first (Tolentino, Civil Code of the Philippines, Vol. IV,
1991 ed., p. 384). Otherwise, the old obligation will continue to
subsist subject to the modifications agreed upon by the parties.
Thus, it has been written that accidental modifications in an
existing obligation do not extinguish it by novation. Mere
modifications of the debt agreed upon between the parties do not
constitute novation. When the changes refer to secondary
agreement and not to the object or principal conditions of the
contract, there is no novation; such changes will produce
modifications of incidental facts, but will not extinguish the original

obligation. Thus, the acceptance of partial


remission does not involve novation (id., p.
reduction of the amount of an obligation
because it only means a partial remission
same debt.

payments or a partial
387). Neither does the
amount to a novation
or condonation of the

In the instant case, the Court is of the view that the parties merely
intended to change the rate of interest from 15% per annum to
6% per annum when the defendant started paying $750 per
month which payments were all accepted by the plaintiff from
January 1998 onward. The payment of the principal obligation,
however, remains unaffected which means that the defendant
should still pay the plaintiff $50,000 on August 9, 1999, March 14,
2000 and July 14, 2000.
(2) When the instant case was filed on February 2, 1999, none of
the promissory notes was due and demandable. As of this date
however, the first and the second promissory notes have already
matured. Hence, payment is already due.
Under Section 5 of Rule 10 of the 1997 Rules of Civil Procedure, a
complaint which states no cause of action may be cured by
evidence presented without objection. Thus, even if the plaintiff
had no cause of action at the time he filed the instant complaint,
as defendants obligation are not yet due and demandable then, he
may nevertheless recover on the first two promissory notes in view
of the introduction of evidence showing that the obligations
covered by the two promissory notes are now due and
demandable.
(3) Individual defendants Rodney Hegerty and Atty. Leonor L.
Infante can not be held personally liable for the obligations
contracted by the defendant corporation it being clear that they
merely acted in representation of the defendant corporation in
their capacity as General Manager and President, respectively,
when they signed the promissory notes as evidenced by Board
Resolution No. 1(94) passed by the Board of Directors of the
defendant corporation (Exhibit 4).[6]
In its decision[7] of 5 September 2003, the Court of Appeals
denied petitioners appeal and affirmed in toto the decision of the
trial court, holding as follows:

In the case at bench, there is no incompatibility because the


changes referred to by appellant Swagman consist only in the
manner of payment. . . .
Appellant Swagmans interpretation that the three (3) promissory
notes have been novated by reason of appellee Christians
acceptance of the monthly payments of US$750.00 as capital
repayments continuously even after the filing of the instant case is
a little bit strained considering the stiff requirements of the law on
novation that the intention to novate must appear by express
agreement of the parties, or by their acts that are too clear and
unequivocal to be mistaken. Under the circumstances, the more
reasonable interpretation of the act of the appellee Christian in
receiving the monthly payments of US$750.00 is that appellee
Christian merely allowed appellant Swagman to pay whatever
amount the latter is capable of. This interpretation is supported by
the letter of demand dated December 16, 1998 wherein appellee
Christian demanded from appellant Swagman to return the
principal loan in the amount of US$150,000 plus unpaid interest in
the amount of US$13,500.00
...
Appellant Swagman, likewise, contends that, at the time of the
filing of the complaint, appellee Christian ha[d] no cause of action
because none of the promissory notes was due and demandable.
Again, We are not persuaded.
...
In the case at bench, while it is true that appellant Swagman
raised in its Answer the issue of prematurity in the filing of the
complaint, appellant Swagman nonetheless failed to object to
appellee Christians presentation of evidence to the effect that the
promissory notes have become due and demandable.
The afore-quoted rule allows a complaint which states no cause of
action to be cured either by evidence presented without objection
or, in the event of an objection sustained by the court, by an
amendment of the complaint with leave of court (Herrera,
Remedial Law, Vol. VII, 1997 ed., p. 108).[8]
Its motion for reconsideration having been denied by the
Court of Appeals in its Resolution of 4 December 2003, [9] the
petitioner came to this Court raising the following issues:

I. WHERE THE DECISION OF THE TRIAL COURT DROPPING TWO


DEFENDANTS HAS BECOME FINAL AND EXECUTORY, MAY THE
RESPONDENT COURT OF APPEALS STILL STUBBORNLY CONSIDER
THEM AS APPELLANTS WHEN THEY DID NOT APPEAL?
II. WHERE THERE IS NO CAUSE OF ACTION, IS THE DECISION OF
THE LOWER COURT VALID?

2. An obligation on the part of the named defendant to


respect or not to violate such right; and
3. Act or omission on the part of such defendant in
violation of the right of the plaintiff or constituting a
breach of the obligation of the defendant to the
plaintiff for which the latter may maintain an action
for recovery of damages or other appropriate relief.[11]

III. MAY THE RESPONDENT COURT OF APPEALS VALIDLY AFFIRM A


DECISION OF THE LOWER COURT WHICH IS INVALID DUE TO
LACK OF CAUSE OF ACTION?

It is, thus, only upon the occurrence of the last element that a
cause of action arises, giving the plaintiff the right to maintain an
action in court for recovery of damages or other appropriate relief.

IV. WHERE THERE IS A VALID NOVATION, MAY THE ORIGINAL


TERMS OF CONTRACT WHICH HAS BEEN NOVATED STILL
PREVAIL?[10]

It is undisputed that the three promissory notes were for the


amount of P50,000 each and uniformly provided for (1) a term of
three years; (2) an interest of 15 % per annum, payable quarterly;
and (3) the repayment of the principal loans after three years from
their respective dates. However, both the Court of Appeals and the
trial court found that a renegotiation of the three promissory notes
indeed happened in December 1997 between the private
respondent and the petitioner resulting in the reduction not waiver
of the interest from 15% to 6% per annum, which from then on
was payable monthly, instead of quarterly. The term of the
principal loans remained unchanged in that they were still due
three years from the respective dates of the promissory notes.
Thus, at the time the complaint was filed with the trial court on 2
February 1999, none of the three promissory notes was due yet;
although, two of the promissory notes with the due dates of 7
August 1999 and 14 March 2000 matured during the pendency of
the case with the trial court. Both courts also found that the
petitioner had been religiously paying the private respondent
US$750 per month from January 1998 and even during the
pendency of the case before the trial court and that the private
respondent had accepted all these monthly payments.

The petitioner harps on the absence of a cause of action at


the time the private respondents complaint was filed with the trial
court. In connection with this, the petitioner raises the issue of
novation by arguing that its obligations under the three promissory
notes were novated by the renegotiation that happened in
December 1997 wherein the private respondent agreed to waive
the interest in each of the three promissory notes and to accept
US$750 per month as installment payment for the principal loans
in the total amount of US$150,000. Lastly, the petitioner questions
the act of the Court of Appeals in considering Hegerty and Infante
as appellants when they no longer appealed because the trial court
had already absolved them of the liability of the petitioner
corporation.
On the other hand, the private respondent asserts that this
petition is a mere ploy to continue delaying the payment of a just
obligation. Anent the fact that Hegerty and Atty. Infante were
considered by the Court of Appeals as appellants, the private
respondent finds it immaterial because they are not affected by
the assailed decision anyway.
Cause of action, as defined in Section 2, Rule 2 of the 1997
Rules of Civil Procedure, is the act or omission by which a party
violates the right of another. Its essential elements are as follows:
1. A right in favor of the plaintiff by whatever means and
under whatever law it arises or is created;

With these findings of facts, it has become glaringly obvious


that when the complaint for a sum of money and damages was
filed with the trial court on 2 February 1999, no cause of action
has as yet existed because the petitioner had not committed any
act in violation of the terms of the three promissory notes as
modified by the renegotiation in December 1997. Without a cause
of action, the private respondent had no right to maintain an

action in court, and the trial court should have therefore dismissed
his complaint.
Despite its finding that the petitioner corporation did not
violate the modified terms of the three promissory notes and that
the payment of the principal loans were not yet due when the
complaint was filed, the trial court did not dismiss the complaint,
citing Section 5, Rule 10 of the 1997 Rules of Civil Procedure,
which reads:
Section 5. Amendment to conform to or authorize presentation of
evidence. When issues not raised by the pleadings are tried with
the express or implied consent of the parties, they shall be treated
in all respects as if they had been raised in the pleadings. Such
amendment of the pleadings as may be necessary to cause them
to conform to the evidence and to raise these issues may be made
upon motion of any party at any time, even after judgment; but
failure to amend does not affect the result of the trial of these
issues. If evidence is objected to at the trial on the ground that it
is not within the issues made by the pleadings, the court may
allow the pleadings to be amended and shall do so with liberality if
the presentation of the merits of the action and the ends of
substantial justice will be subserved thereby. The court may grant
a continuance to enable the amendment to be made.
According to the trial court, and sustained by the Court of
Appeals, this Section allows a complaint that does not state a
cause of action to be cured by evidence presented without
objection during the trial. Thus, it ruled that even if the private
respondent had no cause of action when he filed the complaint for
a sum of money and damages because none of the three
promissory notes was due yet, he could nevertheless recover on
the first two promissory notes dated 7 August 1996 and 14 March
1997, which became due during the pendency of the case in view
of the introduction of evidence of their maturity during the trial.
Such interpretation of Section 5, Rule 10 of the 1997 Rules of
Civil Procedure is erroneous.
Amendments of pleadings are allowed under Rule 10 of the
1997 Rules of Civil Procedure in order that the actual merits of a
case may be determined in the most expeditious and inexpensive

manner without regard to technicalities, and that all other matters


included in the case may be determined in a single proceeding,
thereby avoiding multiplicity of suits. [12]Section 5 thereof applies to
situations wherein evidence not within the issues raised in the
pleadings is presented by the parties during the trial, and to
conform to such evidence the pleadings are subsequently amended
on motion of a party. Thus, a complaint which fails to state a cause
of action may be cured by evidence presented during the trial.
However, the curing effect under Section 5 is applicable only if
a cause of action in fact exists at the time the complaint is filed,
but the complaint is defective for failure to allege the essential
facts. For example, if a complaint failed to allege the fulfillment of
a condition precedent upon which the cause of action depends,
evidence showing that such condition had already been fulfilled
when the complaint was filed may be presented during the trial,
and the complaint may accordingly be amended thereafter.
[13]
Thus, in Roces v. Jalandoni,[14] this Court upheld the trial court
in taking cognizance of an otherwise defective complaint which
was later cured by the testimony of the plaintiff during the trial. In
that case, there was in fact a cause of action and the only problem
was the insufficiency of the allegations in the complaint. This ruling
was reiterated in Pascua v. Court of Appeals.[15]
It thus follows that a complaint whose cause of action has not
yet accrued cannot be cured or remedied by an amended or
supplemental pleading alleging the existence or accrual of a cause
of action while the case is pending.[16] Such an action is
prematurely brought and is, therefore, a groundless suit, which
should be dismissed by the court upon proper motion seasonably
filed by the defendant. The underlying reason for this rule is that a
person should not be summoned before the public tribunals to
answer for complaints which are immature. As this Court
eloquently said in Surigao Mine Exploration Co., Inc. v. Harris:[17]
It is a rule of law to which there is, perhaps, no exception, either
at law or in equity, that to recover at all there must be some
cause of action at the commencement of the suit. As
observed by counsel for appellees, there are reasons of public
policy why there should be no needless haste in bringing up
litigation, and why people who are in no default and against whom
there is yet no cause of action should not be summoned before the

public tribunals to answer complaints which are groundless. We


say groundless because if the action is immature, it should not be
entertained, and an action prematurely brought is a groundless
suit.
It is true that an amended complaint and the answer thereto take
the place of the originals which are thereby regarded as
abandoned (Reynes vs. Compaa General de Tabacos [1912], 21
Phil. 416; Ruyman and Farris vs. Director of Lands [1916], 34
Phil., 428) and that the complaint and answer having been
superseded by the amended complaint and answer thereto, and
the answer to the original complaint not having been presented in
evidence as an exhibit, the trial court was not authorized to take it
into account. (Bastida vs. Menzi & Co. [1933], 58 Phil., 188.) But
in none of these cases or in any other case have we held that if a
right of action did not exist when the original complaint was filed,
one could be created by filing an amended complaint. In some
jurisdictions in the United States what was termed an imperfect
cause of action could be perfected by suitable amendment (Brown
vs. Galena Mining & Smelting Co., 32 Kan., 528; Hooper vs. City of
Atlanta, 26 Ga. App., 221) and this is virtually permitted in Banzon
and Rosauro vs. Sellner ([1933], 58 Phil., 453); Asiatic Potroleum
[sic] Co. vs. Veloso ([1935], 62 Phil., 683); and recently in Ramos
vs. Gibbon (38 Off. Gaz., 241). That, however, which is no
cause of action whatsoever cannot by amendment or
supplemental pleading be converted into a cause of action: Nihil
de re accrescit ei qui nihil in re quando jus accresceret habet.
We are therefore of the opinion, and so hold, that unless the
plaintiff has a valid and subsisting cause of action at the
time his action is commenced, the defect cannot be cured or
remedied by the acquisition or accrual of one while the
action is pending, and a supplemental complaint or an
amendment setting up such after-accrued cause of action is
not permissible. (Emphasis ours).
Hence, contrary to the holding of the trial court and the Court
of Appeals, the defect of lack of cause of action at the
commencement of this suit cannot be cured by the accrual of a
cause of action during the pendency of this case arising from the
alleged maturity of two of the promissory notes on 7 August 1999
and 14 March 2000.

Anent the issue of novation, this Court observes that the


petitioner corporation argues the existence of novation based on
its own version of what transpired during the renegotiation of the
three promissory notes in December 1997. By using its own
version of facts, the petitioner is, in a way, questioning the findings
of facts of the trial court and the Court of Appeals.
As a rule, the findings of fact of the trial court and the Court
of Appeals are final and conclusive and cannot be reviewed on
appeal to the Supreme Court[18] as long as they are borne out by
the record or are based on substantial evidence. [19] The Supreme
Court is not a trier of facts, its jurisdiction being limited to
reviewing only errors of law that may have been committed by the
lower courts. Among the exceptions is when the finding of fact of
the trial court or the Court of Appeals is not supported by the
evidence on record or is based on a misapprehension of facts.
Such exception obtains in the present case. [20]
This Court finds to be contrary to the evidence on record the
finding of both the trial court and the Court of Appeals that the
renegotiation in December 1997 resulted in the reduction of the
interest from 15% to 6% per annum and that the monthly
payments of US$750 made by the petitioner were for the reduced
interests.
It is worthy to note that the cash voucher dated January
1998[21] states that the payment of US$750 represents
INVESTMENT PAYMENT. All the succeeding cash vouchers describe
the payments from February 1998 to September 1999 as CAPITAL
REPAYMENT.[22] All these cash vouchers served as receipts
evidencing private respondents acknowledgment of the payments
made by the petitioner: two of which were signed by the private
respondent himself and all the others were signed by his
representatives. The private respondent even identified and
confirmed the existence of these receipts during the
hearing. [23] Significantly, cognizant of these receipts, the private
respondent applied these payments to the three consolidated
principal loans in the summary of payments he submitted to the
court.[24]
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. The receipts, as
well as private respondents summary of payments, lend credence
to petitioners claim that the payments were for the principal loans
and that the interests on the three consolidated loans were waived
by the private respondent during the undisputed renegotiation of
the loans on account of the business reverses suffered by the
petitioner at the time.
There was therefore a novation of the terms of the three
promissory notes in that the interest was waived and the principal
was payable in monthly installments of US$750. Alterations of the
terms and conditions of the obligation would generally result only
in modificatory novation unless such terms and conditions are
considered to be the essence of the obligation itself. [25] The
resulting novation in this case was, therefore, of the modificatory
type, not the extinctive type, since the obligation to pay a sum of
money remains in force.

In sum, based on our disquisition on the lack of cause of


action when the complaint for sum of money and damages was
filed by the private respondent, the petition in the case at bar is
impressed with merit.
WHEREFORE, the petition is hereby GRANTED. The Decision
of 5 September 2003 of the Court of Appeals in CA-G.R. CV No.
68109, which affirmed the Decision of 5 May 2000 of the Regional
Trial Court of Baguio, Branch 59, granting in part private
respondents complaint for sum of money and damages, and its
Resolution of 4 December 2003, which denied petitioners motion
for reconsideration are hereby REVERSED and SET ASIDE. The
complaint docketed as Civil Case No. 4282-R is hereby DISMISSED
for lack of cause of action.
No costs.
SO ORDERED.

Thus, since the petitioner did not renege on its obligation to


pay the monthly installments conformably with their new
agreement and even continued paying during the pendency of the
case, the private respondent had no cause of action to file the
complaint. It is only upon petitioners default in the payment of the
monthly amortizations that a cause of action would arise and give
the private respondent a right to maintain an action against the
petitioner.
Lastly, the petitioner contends that the Court of Appeals
obstinately included its President Infante and Vice-President
Hegerty as appellants even if they did not appeal the trial courts
decision since they were found to be not personally liable for the
obligation of the petitioner. Indeed, the Court of Appeals erred in
referring to them as defendants-appellants; nevertheless, that
error is no cause for alarm because its ruling was clear that the
petitioner corporation was the one solely liable for its obligation. In
fact, the Court of Appeals affirmed in toto the decision of the trial
court, which means that it also upheld the latters ruling that
Hegerty and Infante were not personally liable for the pecuniary
obligations of the petitioner to the private respondent.

THIRD DIVISION
[G.R. No. 132753. February 15, 1999]
MARIO SIASOCO, ANGELITA E. SIASOCO, MA. BELLA SIASOCO,
ESTER SIASOCO-LAMUG, MA. LOURDES SIASOCO LAMUGBARRIOS, MA. RAMONA SIASOCO LAMUG, MA. VICTORIA
SIASOCO LAMUG-DOMINGUEZ, BELEN SIASOCO-JOSE,
RAFAEL
SIASOCO
JOSE,
CYNTHIA
SIASOCO
JOSE,
CRISTINA SIASOCO JOSE, ROBERTO SIASOCO JOSE,
CARIDAD SIASOCO JOSE, RAMON SIASOCO JOSE, OSCAR
SIASOCO, RUBEN
SIASOCO, SALOME SIASOCO-PAZ,

MEDARDO PAZ SIASOCO, ROLANDO PAZ SIASOCO, JESUS


PAZ SIASOCO, NELLY STO. DOMINGO NARIO, MARY GRACE,
STO. DOMINGO NARIO and MARY ANNE STO. DOMINGO
NARIO, petitioners,
vs. COURT
OF
APPEALS;
HON.
MARCELINO F. BAUTISTA, JR., Presiding Judge, Branch
215, Regional Trial Court, Quezon City; and the IGLESIA NI
CRISTO, respondents.

SYNOPSIS
On January 14, 1997, private respondent Iglesia ni Cristo filed
civil suit for specific performance and damages against petitioners
Mario
Siasoco,
et
al.
and
Carissa
Homes
and
Development Properties, Inc. Petitioners filed a Motion to Dismiss
on the ground of improper venue and lack of capacity to sue. On
the other hand, Carissa Homes filed its answer. Pending resolution
of petitioners Motion to Dismiss, private respondent negotiated
with Carissa Homes which culminated in the purchase of the
subject properties of Carissa Homes by private respondent. On
April 24, 1997, private respondent filed an Amended Complaint,
dropping Carissa Homes as one of the defendants and changing
their cause of action to damages only. Petitioners filed a Motion to
Strike Out Amended Complaint, contending that the complaint
cannot be amended without leave of court, since a responsive
pleading had been filed. On August 11, 1997, the trial court
denied the said motion. On August 31, 1997, petitioners filed a
Motion for Suspension of Proceeding pending the resolution of the
Motion to Dismiss earlier filed. Again, the trial court denied the
second motion and it ordered the petitioners to file their respective
answers within fifteen days from receipt of the order. Thus, the
petitioners questioned the orders of denial of their two motions
before the Court of Appeals. The appellate court affirmed the two
aforementioned orders of the trial court.
Hence, this petition.
The Court ruled that indeed, where some but not all the
defendants have answered, plaintiff may amend their Complaint
once, as a matter of right, in respect to claims asserted solely
against the non-answering defendants, but not as to claims
asserted the other defendants.
Further, the RTC had jurisdiction over the original Complaint
because the said original Complaint involved specific performance
with damages. In La Tondea Distillers v. Ponferrada, this Court
ruled that a complaint for specific performance with damages is a

personal action and may be filed in the proper court where any of
the parties reside.
The petition is DENIED.
SYLLABUS
1. REMEDIAL LAW; SPECIAL CIVIL ACTION; CERTIORARI;
NOT BE USED AS A SUBSTITUTE FOR APPEAL. -- For the
writ of certiorari under Rule 65 to issue, the petitioner must
show not only that the lower court acted with grave abuse of
discretion, but also that there is no appeal, or any other plain,
speedy, and adequate remedy in the ordinary course of law.
Since the questioned CA Decision was a disposition on the
merits, and since said Court has no remaining issue to
resolve, the proper remedy available to petitioners was a
petition for review under Rule 45, not Rule 65. Furthermore,
as a general rule, certiorari under Rule 65 cannot issue unless
the lower court, through a motion for reconsideration, has
been given an opportunity to correct the imputed error.
Although there are recognized exceptions to this rule,
petitioners do not claim that this case is one of them. For this
procedural lapse, the instant petition should be dismissed
outright.
2. ID.; CIVIL PROCEDURE; COMPLAINT; AMENDMENT; AS A
MATTER OF RIGHT TO NON-ANSWERING DEFENDANTS.
-- Indeed, where some but not all the defendants have
answered, plaintiffs may amend their Complaint once, as a
matter of right, in respect to claims asserted solely against
the non-answering defendants, but not as to claims asserted
against the other defendants.
3. ID.; ID.; ID.; ID.; ID.; RATIONALE. -- The rationale for the
aforementioned rule is in Section 3, Rule 10 of the Rules of
Court, which provides that after responsive pleading has been
filed, an amendment may be rejected when the defense is
substantially altered. Such amendment does not only
prejudice the rights of the defendant; it also delays the
action. In the first place, where a party has not yet filed a
responsive pleadings, there are no defenses that can be
altered. Furthermore, the Court has held that [a]mendments
to pleadings are generally favored and should be liberally
allowed in furtherance of justice in order that every case may
so far as possible be determined on its real facts and in order
to speed the trial of cases or prevent the circuity of action and

unnecessary expense, unless there are circumstances such as


inexcusable delay or the taking of the adverse party by
surprise or the like, which might justify a refusal of permission
to amend.
4. ID.; ID.; ID.; ID.; ID.; CASE AT BAR. -- In the present case,
petitioners failed to prove that they were prejudiced by
private respondent's Amended Complaint. True, Carissa had
already filed its own Answer. Petitioners, however, have not
yet filed any. Moreover, they do not allege that their defense
is similar to that of Carissa. On the contrary, private
respondent's claims against the latter and against petitioners
are different. Against petitioners, whose offer to sell the
subject parcels of land had allegedly been accepted by private
respondent, the latter is suing for specific performance and
damages for breach of contract. Although private respondent
could no longer amend, as a matter of right, its Complaint
against Carissa, it could do so against petitioners who, at the
time, had not yet filed an answer.
5. ID.; ID.; ID.; ID.; APPLICABLE IN CASES WHERE THE
COURT HAS JURISDICTION OVER THE ORIGINAL CASE;
CASE AT BAR. -- True, an amendment cannot be allowed
when the court has no jurisdiction over the original Complaint
and the purpose of the amendment is to confer jurisdiction on
the court. In the present case, however, the RTC had
jurisdiction because the original Complaint involved specific
performance with damages. In La Tondena Distillers v.
Ponferrada, this Court ruled that a complaint for specific
performance with damages is a personal action and may be
filed in the proper court where any of the parties reside.
PANGANIBAN, J.:

DECISION

Notwithstanding the filing of a responsive pleading by


one defendant, the complaint may still be amended once, as
a matter of right, by the plaintiff in respect to claims against
the non-answering defendant(s). The Court also reiterates
that certiorari is not the proper remedy to contest a lower
courts final adjudication, since appeal is available as a
recourse.
Statement of the Case

Petitioners assail the February 25, 1998 Decision [1] of


the Court of Appeals[2] in CA-GR SP No. 45451, the
dispositive portion of which reads:
WHEREFORE, [the] foregoing considered, the present
petition for certiorari is hereby DENIED for lack of merit.
The Temporary Restraining Order issued by this Court on
December 17, 1997 is hereby lifted. Petitioners are given six
(6) days from receipt of this decision within which to file
their answer. The motion for oral argument filed by
respondent is rendered moot.Respondent court is ordered to
proceed and resolve the case with deliberate speed.[3]
The foregoing disposition affirmed two Orders of the
Regional Trial Court (RTC) of Quezon City, Branch 215,
dated August 11, 1997 and September 11, 1997 in Civil
Case No. Q-97-29960.[4] The first Order (1) admitted the
Amended Complaint; (2) dropped Defendant Carissa Homes
Development and Properties, Inc. (hereafter referred to as
Carissa) from the Complaint; and (3) denied the Motion to
Declare Defendants Siasoco et al. (herein petitioners) in
Default. The second Order denied the Motion for Suspension
filed by defendants and directed them to file their answer to
plaintiffs Amended Complaint.
Undaunted, petitioners seek recourse in this Court.[5]
The Facts
Petitioners were the registered owners of nine parcels
of land located in Montalban, Rizal. In December 1994, they
began to offer the subject properties for sale. Subsequently,
Iglesia ni Cristo (INC) negotiated with the petitioners, but
the parties failed to agree on the terms of the
purchase. More than a year later, both parties revived their
discussions. In a letter dated December 16, 1996,
petitioners made a final offer to the INC. The latters counsel
sent a reply received by Petitioner Mario Siasoco on
December 24, 1996, stating that the offer was accepted,
but that the INC was not amenable to your proposal to an
undervaluation of the total consideration. In their letter

dated January 8, 1997, petitioners claimed that the INC had


not really accepted the offer, adding that, prior to their
receipt of the aforementioned reply on December 24, 1996,
they had already contracted with Carissa for the sale of the
said properties due to the absence of any response to their
offer from INC.
Maintaining that a sale had been consummated, INC
demanded that the corresponding deed be executed in its
favor. Petitioners refused. The ensuing events were narrated
by the Court of Appeals, as follows:
On January 14, 1997, private respondent filed a civil suit for
[s]pecific [p]erformance and [d]amages against petitioners
and Carissa Homes and Development & Properties, Inc.
docketed as Civil Case No. Q-97-29960.
Petitioners filed therein a Motion to Dismiss on the ground
of improper venue and lack of capacity to sue.
Carissa Homes filed its answer to the complaint on February
24, 1997.
Pending resolution of petitioners Motion to Dismiss, private
respondent
negotiated
with
Carissa
Homes
which
culminated in the purchase of the subject properties of
Carissa Homes by private respondent.
On April 24, 1997, private respondent filed an [A]mended
[C]omplaint, dropping Carissa Homes as one of the
defendants and changing the nature of the case to a mere
case for damages.
Petitioners filed a Motion to Strike Out Amended Complaint,
contending that the complaint cannot be amended without
leave of court, since a responsive pleading has been filed.

On August 11, 1997, the first assailed order denying


petitioners Motion to Strike Out Amended Complaint was
rendered.
On August 31, 1997, petitioners filed a Motion for
Suspension of Proceeding pending the resolution [by] the
respondent court of the Motion to Dismiss earlier filed.
On September 11, 1997, the second assailed order denying
petitioners Motion to Suspend Proceeding was rendered[;]
the Order reads:
Filed also last September 1, 1997 [was] a Motion for
Suspension by the defendant Siasoco thru their counsel
Atty. Clara Dumandang-Singh. Although the court could not
consider the motion filed because it violates the new rules
on personal service, in the interest of justice, the court will
resolve the motion. In the resolution of this court dated
August 11, 1997, it state[d] that defendants [were being]
given a period of five (5) days within which to file [an]
answer to the Amended Complaint. The defendants here
obviously refer to the defendants Mario Siasoco, et. al. In
the Motion for Suspension filed by the defendants Siasoco,
et al., the latter insist on the court resolving the motion to
dismiss. As stated in the resolution, the motion to dismiss is
now moot and academic because of the Amended Complaint
from Specific Performance with Damages to just Damages.
For this court to resolve the Motion to Dismiss xxx the first
complaint, would be an exercise in futility. The main
complaint now is damages and no longer Specific
Performance with damages which [was] actually what the
Resolution dated August 11, 1997 [was] all about. Be that
as it may, the court gives defendants Siasoco, et al. fifteen
(15) days from receipt of this Order to file their respective
Answers to the Amended Complaint, not from the receipt of
the resolution of the Motion to Dismiss which will not be
forthcoming.
Ruling of the Court of Appeals

The Court of Appeals (CA) ruled that although private


respondent could no longer amend its original Complaint as
a matter of right, it was not precluded from doing so with
leave of court. Thus, the CA concluded that the RTC had not
acted with grave abuse of discretion in admitting private
respondents Amended Complaint.
Petitioners argued that the trial court where the original
Complaint for specific performance had been filed was not
the proper venue. Debunking petitioners argument, the CA
explained that the RTC nevertheless had jurisdiction over
the said Complaint. The CA also held that the Amended
Complaint did not substantially alter private respondents
cause of action, since petitioners were not being asked to
answer a legal obligation different from that stated in the
original Complaint.
Assignment of Errors
In their Memorandum, petitioners submit, for the
consideration of this Court, the following issues:[6]
A.
Whether or not the respondent Court of Appeals gravely
erred in holding that the respondent Judges admission
of INCs Amended Complaint was proper.
B.
Whether or not the respondent Court of Appeals gravely
erred in affirming respondent Judges denial of
petitioners Motion for Suspension.
C.
Whether or not the respondent Court of Appeals gravely
erred in refusing to hear petitioners application for a
temporary restraining order and writ of preliminary
injunction.
Simply stated, the question is: did the CA err in
affirming the two Orders of the RTC which had allowed the
Amended Complaint?

The Courts Ruling


The petition is devoid of merit. We sustain the Court of
Appeals, but for reasons different from those given in the
assailed Decision.
Preliminary Issue: Propriety of Certiorari
In their Petition and Memorandum, Mario Siasoco et
al. emphasize that the instant suit was commenced
pursuant to Rule 65 of the 1997 Rules of Procedure and
allege that Respondent Court of Appeals committed grave
abuse of discretion in issuing the challenged Decision dated
February 25, 1998 xxx. This is a procedural error. For the
writ of certiorari under Rule 65 to issue, the petitioner must
show not only that the lower court acted with grave abuse
of discretion, but also that there is no appeal, or any other
plain, speedy, and adequate remedy in the ordinary course
of law.[7] Since the questioned CA Decision was a disposition
on the merits, and since said Court has no remaining issue
to resolve, the proper remedy available to petitioners was a
petition for review under Rule 45, not Rule 65. Furthermore,
as a general rule, certiorari under Rule 65 cannot issue
unless
the
lower
court,
through
a
motion
for
reconsideration, has been given an opportunity to correct
the imputed error.[8] Although there are recognized
exceptions to this rule, petitioners do not claim that this
case is one of them. For this procedural lapse, the instant
petition should be dismissed outright.
Nonetheless, inasmuch as the Petition was filed within
the 15-day period provided under Rule 45, and considering
the importance of the issue raised and the fact that private
respondent did not question the propriety of the instant
Petition, the Court treated the action as a petition for review
(not certiorari) under Rule 45 in order to accord substantial
justice to the parties. We will thus proceed to discuss the
substantive issue.
Main Issue: Admission of Amended Complaint

Petitioners argue that the lower courts erred in


admitting the Amended Complaint. Under the Rules, a party
may amend his pleading once as a matter of right at any
time before a responsive pleading is served xxx. [9] When
private
respondent
filed
its
Amended
Complaint,
Carissa, the other party-defendant in the original Complaint,
had already filed its Answer. Because a responsive pleading
had been submitted, petitioners contend that private
respondent should have first obtained leave of court before
filing its Amended Complaint. This it failed to do. In any
event, such leave could not have been granted, allegedly
because the amendment had substantially altered the cause
of action.
This argument is not persuasive. It is clear that plaintiff
(herein private respondent) can amend its complaint once,
as a matter of right, before a responsive pleading is filed.
[10]
Contrary to the petitioners contention, the fact that
Carissa had already filed its Answer did not bar private
respondent from amending its original Complaint once, as a
matter of right, against herein petitioners. Indeed, where
some but not all the defendants have answered, plaintiffs
may amend their Complaint once, as a matter of right, in
respect to claims asserted solely against the non-answering
defendants, but not as to claims asserted against the other
defendants.[11]
The rationale for the aforementioned rule is in Section
3, Rule 10 of the Rules of Court, which provides that after a
responsive pleading has been filed, an amendment may be
rejected when the defense is substantially altered. [12] Such
amendment does not only prejudice the rights of the
defendant; it also delays the action. In the first place, where
a party has not yet filed a responsive pleading, there are no
defenses that can be altered. Furthermore, the Court has
held that [a]mendments to pleadings are generally favored
and should be liberally allowed in furtherance of justice in
order that every case may so far as possible be determined

on its real facts and in order to speed the trial of cases or


prevent the circuity of action and unnecessary expense,
unless there are circumstances such as inexcusable delay or
the taking of the adverse party by surprise or the like,
which might justify a refusal of permission to amend.[13]
In the present case, petitioners failed to prove that they
were prejudiced by private respondents Amended
Complaint. True, Carissa had already filed its own
Answer. Petitioners,
however,
have
not
yet
filed
any. Moreover, they do not allege that their defense is
similar to that of Carissa. On the contrary, private
respondents claims against the latter and against petitioners
are different. Against petitioners, whose offer to sell the
subject parcels of land had allegedly been accepted by
private respondent, the latter is suing for specific
performance and damages for breach of contract. Although
private respondent could no longer amend, as a matter of
right, its Complaint against Carissa, it could do so against
petitioners who, at the time, had not yet filed an answer.
The amendment did not prejudice the petitioners or
delay
the
action. Au contraire, it simplified the case and tended
to
expedite its disposition. The Amended Complaint became
simply an action for damages, since the claims for specific
performance and declaration of nullity of the sale have been
deleted.
RTC Had Jurisdiction
Petitioners also insist that the RTC of Quezon City did
not have jurisdiction over the original Complaint; hence, it
did not have any authority to allow the amendment. They
maintain that the original action for specific performance
involving parcels of land in Montalban, Rizal should have
been filed in the RTC of that area. Thus, they chide the CA
for
allegedly
misunderstanding
the
distinction
betweenterritorial jurisdiction and venue,
thereby

erroneously holding that the RTC had jurisdiction over the


original Complaint, although the venue was improperly laid.
We disagree. True, an amendment cannot be allowed
when the court has no jurisdiction over the original
Complaint and the purpose of the amendment is to confer
jurisdiction on the court.[14] In the present case, however,
the RTC had jurisdiction because the original Complaint
involved specific performance with damages. In La Tondea
Distillers v. Ponferrada,[15] this Court ruled that a complaint
for specific performance with damages is a personal action
and may be filed in the proper court where any of the
parties reside, viz.:
Finally, [w]e are not also persuaded by petitioners
argument that venue should be lodged in Bago City where
the lot is situated. The complaint is one for specific
performance with damages. Private respondents do not
claim ownership of the lot but in fact [recognize the] title of
defendants by annotating a notice of lis pendens. In one
case, a similar complaint for specific performance with
damages involving real property, was held to be a personal
action, which may be filed in the proper court where the
party resides. Not being an action involving title to or
ownership of real property, venue, in this case, was not
improperly laid before the RTC of Bacolod City.[16]
WHEREFORE, the Petition is hereby DENIED. Costs
against petitioners.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-32475 April 30, 1980
JESUS DAYAO, petitioner,
vs.
SHELL COMPANY OF THE PHILIPPINES, LTD. and HON. WALFRIDO
DE LOS ANGELES, as Presiding Judge of the Court of First Instance
of Rizal, Branch IV, Quezon City, respondents.

Jose W. Diokno for petitioner.


Lichauco & Associates for respondent.
MELENCIO-HERRERA, J.:

This special civil action for certiorari and Prohibition with


Preliminary Injunction seeks to nullify the Orders of respondent
Judge dated March 30, 1968, admitting private respondent's
Amended Complaint, and that of April 1, 1968, granting the
issuance of a Writ of Preliminary Mandatory Injunction.
In its original Complaint for Ejectment filed against petitioner
(defendant in the case below) before the City Court of Quezon City,
Branch IV, on October 10, 1966, SHELL Company of the
Philippines, as plaintiff therein, alleged that it is a foreign
corporation duly licensed to do business in the Philippines; that it
is a lessee of a parcel of land situated at the corner of Aurora
Boulevard Extension and Illinois Street, Quezon City; that it had
sub-leased the same to petitioner together with the gasoline
service station building, equipments and other improvements
thereon for an indefinite period until terminated by either party
upon written ninety days notice; that on June 20, 1966, it notified
petitioner in writing of the termination of the sub-lease agreement
but that notwithstanding the lapse of the 90-day period on
September 20, 1966 and despite repeated demands, petitioner
failed and refused to vacate. No copy of the sub-lease contract is
attached to the rollo.
In his Amended Answer, petitioner (as defendant in the Ejectment
suit) contended that under their Sub-lease and Dealership
Agreement, termination would occur only should any of the parties
violate any of the terms and conditions thereof; that the Complaint
does not allege that he had violated any of the terms and
conditions of their agreement, hence, SHELL had no cause of
action against him; that he has been up-to-date in the payment of
his obligations; that the true reason behind the action for
Ejectment was his failure to meet his quota for the purchase of
gasoline; that he had invested no less than P25,000.00 in the
gasoline station, and if ejected, he would suffer great damage. He
then prayed for moral damages of P5,000.00, P1,000.00 for
attorney's fees and costs.
At the trial before the City Court, SHELL introduced testimony to
the effect that petitioner had violated the terms of their contract in

that he bought gasoline and other gasoline products from sources


other than SHELL's; that he used the service station for storage of
cement and other cement products; and that he failed to maintain
the station premises according to the standards called for under
the dealership agreement.
Notwithstanding petitioner's vigorous objection to the admission of
the foregoing testimony, he presented counter evidence to show
that SHELL had never charged him with violation of any of the
provisions of the contract such as the keeping of the premises in a
dilapidated condition and the usage of the gasoline station for
storage purposes; that petitioner's notice of termination was less
than one month, in violation of the 90-day period stipulated in the
contract; and that the cancellation of the contract was really
motivated by his unsatisfactory sales.
After trial on the merits, the City Court rendered a Decision on
November 7, 1967 dismissing SHELL's Complaint. The dispositive
portion of said judgment reads:
In view, hereof, there being no justifiable cause to
eject the defendant within the cause of action put
up by the plaintiff in its complaint, this case is
hereby ordered dismissed and the plaintiff is
hereby ordered to pay attorney's fees to the
defendant in the amount of P300.00. The Court
finds no cause for rendering judgment for moral
damages.
Dissatisfied, SHELL appealed to the Court of First Instance of Rizal,
Quezon City, Branch IV (CC No. Q-11921) on January 16, 1968.
Before said Court, SHELL filed a Motion to Admit Amended
Complaint for the purpose of "tendering the real issues in the
case" 1 SHELL also filed a Motion for Issuance of Writ of
Preliminary Mandatory Injunction to Restore Plaintiff (SHELL) in
Possession. 2 Petitioner opposed both Motions. 3
On March 30, respondent Judge issued the challenged Order
admitting the Amended Complaint and granting petitioner ten (10)
days, if he so elects, to file an Answer. On April 1, 1968, he also
authorized the turn-over of possession to SHELL through the
issuance of a Writ of Preliminary Mandatory Injunction upon

SHELL's filing of a bond in the amount of P5,000.00 to answer for


damages which may be suffered by petitioner. This is the other
Order impugned herein.
On
April
15,
1968,
petitioner
filed
a
Motion
for
Reconsideration, 4 and on April 18, 1968, a motion to Dissolve Writ
of Preliminary Mandatory Injunction. 5 SHELL claimed that it had
not been furnished with copies of these Motions and, apparently,
the Court of First Instance had not acted on them. On September
19, 1969, or approximately a year and a half after the issuance of
the challenged Orders, petitioner, through another counsel, filed an
Urgent Motion for Reconsideration of both the aforesaid Orders,
upon the allegation that the transfer of possession to SHELL was
working to petitioner's great prejudice. 6 Reconsideration was
denied by respondent Judge on December 18, 1969. 7
Hence, this Petition for certiorari and Prohibition filed on August
31, 1970, which this Court required SHELL to answer. 8 On
September 29, 1970, upon petitioner's motion, we enjoined
respondent Judge from proceeding with the hearing of the case
below. 9 The prayer for a Writ of Preliminary Mandatory Injunction
to restore to petitioner possession of the service station was set
for hearing, together with the main case, which hearing, however,
did not materialize a the parties opted to submit Memoranda in
lieu of oral argument. 10
In this Petition, it is alleged that respondent Judge acted without
or in excess of jurisdiction or with grave abuse of discretion in
admitting SHELL's Amended Complaint and in issuing a Writ of
Preliminary Mandatory Injunction placing SHELL in possession of
the litigated premises. The following queries have been posed:
1. Can the respondent Shell company of the
Philippines Ltd. whose complaint for ejectment
(unlawful detainer) was dismissed by the City
Court of Quezon City amend its complaint on
appeal to the Court of First Instance of Rizal?
2. Can the respondent Hon. Judge Malfrido de los
Angeles issue a writ of preliminary mandatory
injunction in the unlawful detainer case so as to
deprive petitioner of his possession of the Shell
Service Station'?

Petitioner contend that ttie Ammended Complaint was based on


new causes of action as shown by the following amendments to
the original Complaint.
3. On March 15, 1965, plaintiff as lessee of a
parcel of land situated at the corner of Aurora
Boulevard Extension and Illinois Streets, Quezon
City, sub-leased the same to the defendant
together with the gasoline service station building,
equipments and other improvements thereon for
an indefinite period until terminated by either party
upon written ninety days notice of termination, or
until terminated by the plaintiff without such
ninety (90) days notice in the event of violation of
the terms and conditions of the sublease
agreement;
4. defendant, in violation of the sub-lease
agreement, kept the gasoline service station under
dilapidated
conditions,
purchased
petroleum
products from sources other than plaintiff and
used the premises for the storage of cement and
hollow blocks.
xxx xxx xxx
6. Notwithstanding the lapse of the ninety (90) day
period on September 20, 1966 or lapse of a
shorter period in view of the violation of the terms
and conditions of the Sublease Agreement and
despite repeated demands, defendant failed and
refused to vacate the premises.
7. Under the terms of the Sublease Agreement,
the fair rental value of the property covered by the
sublease is P580.73 per month. In the event of
failure of the sublessee to surrender possession of
the premises despite the lapse of the ninety (90)
day period or shorter period in case of violation of
the terms and conditions of the Sublease
Agreement, he is bound to pay monthly rental in
the amount of P580.73 from the expiration of
aforesaid period until the surrender of premises to
the plaintiff. 11

These causes of action, petitioner claims, were not pleaded at all in


the original Complaint, so that SHELL had changed its theory on
appeal, which is impermissible. In refutation, SHELL countered
that at the trial it presented proof of violation by petitioner of their
agreement, and that the latter, in turn, refuted such evidence.
The original Complaint in the City Court does show that SHELL's
cause of action was predicated on petitioner's failure to vacate the
premises after the lapse of the ninety day notice of termination. In
the Amended Complaint, SHELL added petitioner's failure to
comply with the terms and conditions of the Sublease and Dealer
Agreement. However, the Decision of the City Court discloses that
even during the trial thereat SHELL introduced evidence
substantiating the alleged violation by petitioner of the terms of
their agreement. Petitioner objected to its presentation, but
nonetheless introduced proof in contra. On this score, the City
Court had this to say:
Defendant through counsel vigorously objected to
the admission of any evidence regarding the
matter of having illegally purchased gasoline and
gasoline products from other sources, the matter
of utilizing the Shell station for storage of cement
and other cement products and keeping it in
substandard condition because these matters are
not alleged in the complaint. ...
The Court is aware that the presentation of the
evidence on these issues objected to by the
defendant during the actual hearing somehow
prejudiced the defendant in maintaining his
defense upon the merits. But these issues were
met ably by the defendant when he presented his
defense. 12
Under the foregoing circumstances, it cannot be successfully
argued that respondent Judge gravely abused his discretion when
he admitted the Amended Complaint during the pendency of the
appeal. Section 5, Rule 10 of the Rules of Court allows
amendments of pleadings to conform to the evidence presented, to
be treated in all respects as if they had been raised in the
pleadings, at any time, even after judgment. Thus:

SEC. 5. Amendment to conform to or authorize


presentation of evidence.
When issues not raised by the pleadings are tried
by express or implied consent of the parties, they
shall be treated in all respects, as if they had been
raised in the pleadings. Such amendment of the
pleadings as may be necessary to cause them to
conform to the evidence and to raise these issues
may be made upon motion of any party at any
time, even after judgment; but failure so to amend
does not affect the result of these issues. If
evidence is objected to at the trial on the ground
that it is not within the issues made by the
pleadings, the court may allow the pleadings to be
amended and shall do so freely when the
presentation of the merits of the action will be
subserved thereby and the objecting party fails to
satisfy the court that the admission of such
evidence would prejudice him in maintaining his
action or defense upon the merits. The court may
grant a continuance to enable the objecting party
to meet such evidence.
Pursuant to the foregoing provision and in view of the
evidence pro and contra submitted by the parties, the issue of
violation of the terms and conditions of the Agreement may be
said to have been tried with the express consent of the parties. In
fact, the City Court could have required the amendment of the
pleadings even while the case was pending before it.
And although SHELL filed its Motion to Admit Amended Complaint
only when the case was already on appeal in the Court of First
Instance, the amendments introduced did not raise questions for
the first time on appeal so that no unfairness has resulted to
petitioner. 13 The purpose behind the submittal of the amendments
was in order to make the pleadings conform to the evidence
presented before the City Court. Amendments to conform to the
proofs may be made on or after trial, after entry of judgment, and
even while the case is pending on appeal. 14 The questions on
appeal would not have been essentially distinct from those litigated
upon by the parties before the Court of origin. 15 Besides, it should
be recalled that since the appeal herein was interposed before the

City Court became a Court of record, appeal had to proceed by


trial de novo before the Court of First Instance.

writ of preliminary mandatory injunction to restore


him in his possession. ...

Furthermore, under Article 1673 of the Civil Code, a lessor may


judicially eject a lessee for violation of any of the conditions agreed
upon on the contract. A lessor is not in law required to bring first
an action for rescission but could ask the Court to do so and
simultaneously seek the ejection of the lessee in a single action for
illegal detainer. 16 When SHELL, therefore, added instances of
violation of the contract in its Amended Complaint, it did so merely
in amplication of its action for ejectment.

Petitioner then concludes that the statute does not confer


jurisdiction on the Court to grant a preliminary injunction in an
Unlawful Detainer case, citing principally Piit vs. de Lara and Velez,
58 Phil. 765, 766-767 (1933), andSevilla vs. de los Santos, et
al., 83 Phil. 686 (1949).

II
We come now to the issue of propriety of the issuance of the Writ
of Preliminary Mandatory Injunction.
Petitioner argues that such a Writ can only be issued in cases of
Forcible Entry, whereas the case below is actually one for Unlawful
Detainer. Petitioner relies on section 3, Rule 70 of the Rules of
Court taken from Article 539 of the Civil Code. To quote:
Sec. 3. Preliminary injunction. The Court may
grant preliminary injunction, in accordance with
the provisions of Rule 58 hereof, to prevent the
defendant from committing further acts of
dispossession against the plaintiff.
A
possessor
deprived
of
his
possession
through forcible entry may within ten (10) days
from the filing of the complaint present a motion to
secure from the competent court, in the action
for frcible entry, a writ of preliminary mandatory
injunction to restore him in his possession. The
court shall decide the motion within thirty (30)
days from the filing thereof. (Emphasis supplied by
petitioner).
Art. 539.
xxx xxx xxx
A possessor deprived of his possession through
forcible entry may within ten days from the filing of
the complaint present a motion to secure from the
competent court, in the action for forcible entry, a

On the other hand SHELL, avers that the Writ of Preliminary


Mandatory Injunction is based not on the aforequoted section 3,
Rule 70, but on section 9 of the same Rule and on Article 1674 of
the Civil Code, providing thus:
Sec.
9. Mandatory
injunction
in
case
of
appeal Upon motion of the lessor, within ten
(10) days from the perfection of the appeal to the
Court of First Instance, the latter may issue a writ
of preliminary mandatory injunction to restore the
lessor in possession if the court is satisfied that the
lessee's appeal is frivolous or dilatory, or that the
appeal of the lessor is prima facie meritorious.
(Emphasis by SHELL)
Art. 1674. In ejectment cases where an appeal is
taken, the remedy granted in Article 539, second
paragraph, shall also apply, if the higher court is
satisfied that the lessee's appeal is frivolous or
dilatory, or that the lessor's appeal is prima
facie meritorious. The period of ten days referred
to in said article shall be counted from the time the
appeal is perfected. (Emphasis by SHELL).
We agree with SHELL that it is the foregoing provisions which are
applicable to the case at bar there being a pre-existing relationship
of lessor and lessee between the parties. Article 539, paragraph 2
of the Civil Code refers to the issuance of the Writ of Preliminary
Mandatory Injunction in Forcible Entry cases in the original Court
while Article 1674 applies the same remedy in unlawful detainer or
ejectment cases in the appellate Court, 17 Which is precisely the
situation that confronts us here. The ruling laid down in Piit vs. De
Lara & Velez (which held that a Justice of the Peace Court cannot
issue a Writ of Preliminary Injunction in Unlawful Detainer cases)

has not been superseded. In fact, said ruling was also upheld
in Dikit vs. Ycasiano, 89 Phil. 45 (1951). The case of Sevilla vs. de
los Santos (holding that when the action is one for Unlawful
Detainer originating from a Justice of the Peace Court and
retaining the same nature during the pendency of the appeal in the
Court of First Instance, the issuance of preliminary injunction by
the latter Court is improper) appears to be contrary to Article 1674
and Section 9 of Rule 70.
Article 1674 of the Civil Code was designed "to put, an end to the
present state of the law which unjustly allows the lessee to
continue in possession during an appeal". 18 It provides for an
additional ground for execution before final judgment. It
authorizes the issuance of a Writ of Preliminary Mandatory
Injunction where a lessor's appeal is prima faciemeritorious.
In his assessment of SHELL's appeal before him, respondent Judge
found it prima facie meritorious and issued the Writ of Preliminary
Mandatory Injunction. He acted well within the purview of Article
1674 of the Civil Code,supra, and cannot be said to have
committed grave abuse of discretion. If at all, he committed an
error of judgment, which may be offset by the bond posted by
SHELL to answer for damages that may be suffered by petitioner
should it be finally decided that SHELL was not entitled thereto.
WHEREFORE, the Writ of certiorari prayed for is denied, and this
case hereby remanded to respondent Court for the determination
of the appeal in the merits and rendition of the corresponding
judgment.
SO ORDERED.

G.R. No. L-14911

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
March 25, 1961

ONG PENG, plaintiff-appellee,


vs.
JOSE CUSTODIO, defendant-appellant.
Almacen and Almacen for plaintiff-appellee.
D.J. Garin and B.M. Moreno for defendant-appellant.
LABRADOR, J.:
Appeal against various order of the Court of First Instance of Iloilo,
especially against that declaring defendant in default.
The present suit was instituted by Ong Peng against Jose Custodio to
recover the sum of P2,527.30, with interest, representing the value of
goods and materials obtained by defendant from plaintiff, plus the amount
of P500 as attorney's fees. The complaint was filed on April 15, 1958, and
on April 30 defendant moved to dismiss the complaint on the ground that
plaintiff's cause of action had already prescribed. Plaintiff answered
defendant's motion and attached to his answer an amended complaint,
which set forth the promissory note supporting the claim. No answer to the
amended complaint was presented and no objection to its admission was
also interposed. On May 21, 1958, the court admitted the amended
complaint on the ground that no objection thereto had been filed, and on
May 28, it denied the motion to dismiss. Copy of the order of the court
admitting the amended complaint was furnished attorney for the defendant
by ordinary mail on May 31, 1958, and copy of the order denying the
motion to dismiss was sent by registered mail and received by the
defendant on June 16, 1958.
On June 27, 1958, as the defendant had not filed an answer to the
amended complaint, which had already been admitted in an order dated
May 21, 1958, plaintiff moved that the defendant be declared in default.
On June 28, the court granted the motion, declaring defendant in default,
and set the case for hearing on July 17, for the reception of the plaintiff's
evidence. Prior to this hearing, that is, on July 5, 1958, defendant
presented a motion to set aside the order of default and to allow him to file
his answer. This was set for hearing on July 12, 1958. Objection to this
motion was filed by the plaintiff. On the date of the hearing the

court denied the motion to lift the order of default.


On July 17, 1958, after presentation of plaintiff's evidence, the
court entered judgment ordering defendant to pay plaintiff the
sum of P2,527.30, with legal interest, and costs. Upon receipt of
this judgment the defendant filed a motion for reconsideration
under oath, alleging that defendant has a strong and valid
defense, that the promissory note is false and spurious, and that
the defendant is an intelligent and respectable member of the
community. Attached to the motion is an affidavit of the defendant

stating that he has a good defense and that if only allowed to


present his evidence he would prove that the said document is
forged. Objection to this motion was presented by the plaintiff, and
attached to the objection is the affidavit of Ong Peng stating that
the promissory was delivered to him by his clerk Ah Chiao. Another
affidavit by Marcos Gotera is also attached to the objection, stating
that he was present at the time that defendant Jose Custodio
signed the promissory note in the presence of Ong Peng and Wong
Tap, another Chinese clerk. The court denied the petition and after
the denial of another motion for reconsideration, the present
appeal was presented.
In his brief the defendant-appellant argues that defendant never
came under the jurisdiction of the court for the purposes of the
amended complaint because the same was not served upon him
with summons and in accordance with Section 10, Rule 27 of the
Rules of Court, invoking the case of Atkins, Kroll and Co. vs.
Domingo, 44 Phil. 680. We have examined this case and we find
that the ruling contained therein is not applicable to the case at
bar. In that case summons under the original complaint was
properly served the defendant. Before defendant appeared another
amended complaint was served by registered mail. Of course we
held that "the service of the amended complaint upon his sixteenyear old son by the attorney for the plaintiff was not sufficient to
give the court jurisdiction over the defendant as to any new matter
alleged in the amended complaint. "In the case at bar, the
amended complaint contained no new matter; it only sets forth the
promissory note upon which the cause of action is based. In the
case at bar also the defendant had already appeared when the
amended complaint was served-defendant had, in fact, presented
a motion to dismiss. We rule that after the defendant has appeared
by virtue of a summons, as in this case, and presented a motion to
dismiss, he may be served with the amended complaint, without
need of another summons, and in the same form and manner
ordinary motions or papers are served, thus:
If he (defendant) had not yet appeared, a new summons
must be served upon him as regards the amended
complaint, otherwise the court would have no power to try
the new causes of action alleged therein, unless be had
lodged an answer thereto. Simply sending a copy of the
amended complaint to the defendant by registered mail is
not equivalent to service of summons in such

case. However, if the defendant had already appeared in


response to the first summons, so that he was already in
court when the amended complaint was filed, then
ordinary service of that pleading upon him, personally or
by mail, would be sufficient, and no new summons need be
served upon him. (I Moran, 1957 ed., p. 116, citing the
case Atkins v. Domingo, 44 Phil. 680.) (Emphasis
Supplied.)
We note that the defendant never claimed that he did not receive
the amended complaint in the ordinary course of mail and his only
objection thereto was the fact that no summons was served upon
him with regard thereto. The opposition to the motion to dismiss
and the amended complaint were served attorney for the
defendant on May 12, 1958 by registered mail. Said counsel was
also furnished copy of the court's order admitting the amended
complaint on May 31, 1958. Assuming that the defendant received
the copy of the amended complaint five days after May 12, or on
May 17, and a copy of the order of the court about June 6, the
court's order declaring him in default on June 28, is justifiable, for
the reason that the time for filing an answer to the amended
complaint commenced from the date of service of such amended
complaint (Villegas vs. Roldan, 76 Phil. 349.)
The second point raised by appellant in his brief is the validity of
the action of the lower court in allowing plaintiff to amend his
original complaint even after a motion to dismiss has been filed.
Appellant argues that Section I of Rule 17, giving plaintiff the right
to amend his complaint once as a matter of course at any time
before a responsive pleading is filed, does not apply where a
motion to dismiss is filed by the adverse party, on which the court
should conduct a hearing before allowing the amendment. This
claim merits no consideration. Under Section 3, Rule 8 of the Rules
of Court, the court is not obliged to immediately hold a hearing on
the motion to dismiss; it is granted the discretion to defer the
hearing and determination thereof until the trial if the ground
alleged therein does not appear to be indubitable. (Nico vs. Blanco,
81 Phil. 213.) On the other hand, the right of a plaintiff under
Section 1 of Rule 17 to amend his pleading once as a matter of
course before a responsive pleading (which a motion to dismiss is
not one) is served, has been held to be one which the court should
always grant, otherwise mandamus will lie against it. (Breslin, et

al. vs. Luzon Stevedoring Co., et al., 47 O.G. [371 1170.) Besides,
the amendment was merely one of form; it did not change the
cause of action, but only set forth the promissory note on which
the action was based.
We find that the points being raised on this appeal are supposed
failures to follow formal proceedings, not substantial requirements
of procedure. Upon examination of the motion to set aside the
order of default, we find it to be lacking in the following substantial
requirements: it does not contain an affidavit of merits, the motion
to set aside the order of default.
We next come to the denial of the motion to set aside the
judgment and grant relief under Rule 38 of the Rules of Court. The
motion, it is true, contains an affidavit of merits, but this affidavit
is merely a denial of the supposed authenticity of defendant's
signature to the promissory note which is transcribed in the
amended complaint. And in counter-affidavits plaintiff has
presented witnesses declaring that defendant's signature to the
promissory note is authentic. We believe that this is a last minute
attempt to defend a losing case. If the defendant really had any
valid defense, this should have been brought at the first
opportunity, that is, by the first motion to set aside the order of
default. Besides, we doubt if the same issue raised in the original
motion to set aside the order of default, may again be raised in a
petition for relief under Rule 38 of the Rules of Court. The general
rule is that once a matter in issue has been decided by the court, it
may no longer be brought again in the form of another objection,
and in the guise of a motion under another provision of the rules.
But even laying this objection aside, we find that the court did not
abuse its discretion in refusing to grant a reconsideration of the
order of default and to set aside the consequent judgment
ordering the defendant to pay the sum demanded in the
complaint.
WHEREFORE, the appeal is hereby dismissed, with cost against
defendant-appellant.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-62781 August 19, 1988

PAN-ASIATIC TRAVEL CORP., petitioner,


vs.
COURT OF APPEALS, HON. AMANTE S. PURISIMA, as Presiding
Judge, Court of First Instance of Manila, Branch VII, CITY SHERIFF
OF MANILA, and DESTINATIONS TRAVEL PHIL., INC., respondents.
Bengzon, Zarraga, Narciso, Cudala, Pecson, Azcuna and Bengson Law
Offices for petitioner.
Carmelo, Guerrero, De Silva & Associates for private respondent.

a. Claim for reimbursement of refunds


for unutilized tickets (Paragraphs 5
and 6 of the Complaint) P86,459.85

CORTES, J.:

c. Claim for incentives (Paragraphs 9


and 10 of the Complaint) 5,868.57

On March 21, 1980, Destinations Travel Phil., Inc.


(hereafter, DESTINATIONS) filed a complaint against PanAsiatic Travel Corp. (hereafter, PAN-ASIATIC) for the refund
of the price of alleged unutilized airplane tickets issued by
the latter for passengers recruited by the former, which
refund allegedly totalled P48,742.33.
On June 4, 1980, DESTINATIONS filed a Motion to Declare
Defendant in Default. After receipt of said Motion, PANASIATIC, by way of special appearance, filed a Motion to
Dismiss for the sole purpose of objecting to the trial court's
jurisdiction over its person on the ground that it was not
properly served with summons. Two days after the filing of
the Motion to Dismiss, DESTINATIONS filed on June 25,
1980 an amended complaint increasing its claim for
reimbursement of refunds to P103,866.35. At the hearing of
said Motion to Dismiss, PAN-ASIATIC was informed of the
filing of the amended complaint; hence, it withdrew its
Motion to Dismiss.
Subsequently, a copy of the amended complaint and
summons were served on PAN-ASIATIC. PAN-ASIATIC filed
several motions for extension of time within which to file its
answer. However, instead of filing an Answer, it filed a
Motion for Bill of Particulars which was granted by the trial
court.
DESTINATIONS did not file a Bill of Particulars. Instead, on
May 9, 1981, it served and filed a Motion to Admit attached
"Second Amended Complaint" which Second Amended
Complaint detailed the causes of action, to wit:

b. Claim for commissions Paragraphs


and 8 of the (Complaint). 2,077.33

d. Claim for reimbursement Paragraphs


11-17 of the Complaint) .5,868.57
Total Claims (Paragraph 18). .P103,866.35
(Should be .P100,274.32)
Said Second Amended Complaint was admitted by the trial
judge in an Order dated May 28, 1981, which Order was
served on petitioner on June 9, 1981. However, no new
summons was served on petitioner. On July 15, 1981
DESTINATIONS filed a Motion to Declare Defendant in
Default which was granted. Then, trial was held ex
parte. On January 4, 1982 the trial court rendered judgment
by default against PAN-ASIATIC, which received a copy of
the decision on January 25, 1982.
On February 24, 1982, petitioner filed its Omnibus Motion to
Lift Order of Default and to Vacate Judgment by Default,
alleging that the trial court's decision was rendered without
jurisdiction because petitioner was never served with
summons on the Second Amended Complaint, and that it
was deprived of its day in court on account of fraud,
accident, mistake and/or excusable negligence. The motion
was denied by the trial judge in an Order dated March 31,
1982. A copy of the Order was served on petitioner on April
2, 1982. On the same date, April 2, 1982, PAN-ASIATIC
filed a Motion for Reconsideration of the Order of March 31.
While the Motion for Reconsideration was pending,
petitioner filed on April 30, 1982 its notice of appeal, appeal

bond and record on appeal, and at the same time withdrew


its Motion for Reconsideration which withdrawal was granted
by the trial court.
On May 19, 1982, DESTINATIONS filed a Motion for
Execution which the trial court granted on June 15, 1982.
Meanwhile, the appeal of PAN-ASIATIC, was Dismissed on
the ground that the Decision of January 4, 1982 had
become final and executory and that the appeal was filed
beyond the reglementary period.

DESTINATIONS prayed for reimbursement of refunds for


unutilized airplane tickets only, in the Second Amended
Complaint, there were claims for commissions and
incentives, although the total amount of the claims was the
same as the amount claimed in the first amended
complaint.
But was there need to serve new summons on PANASIATIC?

1. Petitioner contends that the Second Amended Complaint


introduced new causes of action not alleged in the original
nor in the first amended complaint. Hence, it is argued that
new summons had to be served on petitioner, for the court
to acquire jurisdiction over its (petitioner's) person.

In the 1923 case of Atkins, Kroll and Co. v. Domingo, [44


Phil. 681 (1924)], this Court had occasion to lay down the
rule that if the defendant had appeared in the action,
service of an amended complaint (which introduces a new
cause of action) in the same manner as any other pleading
or motion is sufficient, even if no new summons is served.
This ruling was reiterated in the case of Ong Peng v.
Custodio [G.R. No. L-14911, March 25, 1961, 1 SCRA 780]
in more categorical terms:
If he (defendant) had not yet appeared, a
new summons must be served upon him as
regards the amended complaint, otherwise
the court would have no power to try the new
causes of action alleged therein, unless he
had lodged an answer thereto. Simply
sending a copy of the amended complaint to
the defendant by registered mail is not
equivalent to service of summons in such
case. However, if the defendant had already
appeared in response to the first summons,
so that he was already in court when the
amended complaint was filed, then ordinary
service of that pleading upon him, personally
or by mail, would be sufficient, and no new
summons need be served upon him.

The Second Amended Complaint does introduce new causes


of action. For while in the first amended complaint,

In the instant case, summons on the first amended


complaint was properly served on PAN-ASIATIC. After

On July 7, 1982, PAN-ASIATIC filed a petition for certiorari


and mandamus before the Court of Appeals, alleging that
the trial court acted without jurisdiction in dismissing the
appeal and in issuing the writ of execution. The appellate
tribunal dismissed the petition. Hence, this present action to
which this Court gave due course on November 23, 1983.
The parties present the following issues for resolution by the
Court:
I
WHETHER OR NOT THE TRIAL COURT HAD JURISDICTION
OVER THE PERSON OF PETITIONER WHEN IT RENDERED
THE DECISION OF JANUARY 4, 1982.
II
WHETHER OR NOT PETITIONER'S APPEAL IN CIVIL CASE
NO. 130608 WAS FILED WITHIN THE REGLEMENTARY
PERIOD.

which, the company filed several motions for extension of


time within which to file responsive pleading, and then a
Motion for Bill of Particulars, all of which motions were
granted by the trial court. With the filing of these motions,
PAN-ASIATIC had effectively appeared in the case and
voluntarily submitted itself to the jurisdiction of the court.
Hence, no new summons on the Second Amended
Complaint was necessary, ordinary service being sufficient.
In cases where a complaint is amended, the Rules of Court
provide for the period within which the defendant must
answer thus:
SEC. 3. Answer to amended complaint.If
the complaint is amended, the time fixed for
the filing and service of the answer shall,
unless otherwise ordered, run from notice of
the order admitting the amended complaint.
An answer filed before the amendment shall
stand as an answer to the amended
complaint, unless a new answer is filed within
ten (10) days from notice of service as herein
provided.
There is no question that PAN-ASIATIC was properly served
with a copy of the Second Amended Complaint and that on
June 9, 1981, it received a copy of the Order admitting said
Second Amended Complaint. Since it failed to serve and file
its Answer within fifteen (15) days from June 9, 1981, the
trial court was correct in declaring the company in default,
in holding trial ex parte, and in eventually rendering
judgment by default.
2. Anent the second issue, petitioner contends that its
Omnibus Motion to Lift Order of Default and to Vacate
Judgment by Default is in the nature of a Petition for Relief
under Rule 38. Hence, the Order denying the Omnibus
Motion which was received by petitioner on April 2, 1982, is
itself appealable. PAN-ASIATIC thus argues that it had thirty

(30) days from April 2, 1982 within which to appeal said


Order. Since it filed its notice of appeal, appeal bond and
record on appeal on April 30, 1982, then, it is claimed, the
appeal was perfected on time.
Petitioner's premise is incorrect. The Omnibus Motion to Lift
Order of Default and to Vacate Judgment is in the nature of
a Motion for New Trial under Rule 37, and-not a Petition for
Relief under Rule 38.
Be it recalled that a copy of the Judgment by Default was
received by PAN-ASIATIC on January 25, 1982. The
Omnibus Motion was filed on February 24,1982, which was
within the period to appeal. Since the motion was filed
before the decision became final, it could not be a Petition
for Relief under Rule 38, but a Motion for New Trial.
... It is a well-known rule that (a petition for
relief under Rule 38) may be filed only when
the order or judgment from which it is sought
has already become final and executory
(Veluz vs. J.P. of Sariaya, 42 Phil. 557;
Anuran vs. Aquino, 38 Phil. 29; Quirino vs.
PNB, 101 Phil. 705; 54 Off. Gaz. [14] 4248),
so that as long as the judgment against which
relief is sought has not yet become final, the
petition aforesaid is not available as a
remedy. Instead, the aggrieved party may file
a motion for new trial, under Rule 37 in courts
of first instance, and under section 16, Rule
4, in inferior courts, in order that the court
may correct any errors, mistakes or injustices
committed in its judgment. [Punzalan v.
Papica, et al., 107 Phil. 246 (1960).]
Since the Omnibus Motion is in the nature of a Motion for
New Trial, the Order denying said motion is NOT itself
appealable. However, the time during which the motion was

pending must be deducted from the thirty-day appeal


period. Pursuant to section 3, Rule 41 which reads:
SEC. 3. How appeal is taken.Appeal may be
taken by serving upon the adverse party and
filing with the trial court within thirty (30)
days from notice of order or judgment, a
notice of appeal, an appeal bond, and a
record on appeal. The time during which a
motion to set aside thejudgment or order or
for a new trial has been pending shall be
deducted, unless such motion fails to satisfy
the requirements of Rule 37.

WHEREFORE, the petition is hereby DISMISSED. Costs


against the petitioner.
SO ORDERED.

But where such a motion has been filed


during office hours of the last day of the
period herein provided, the appeal must be
perfected within the day following that in
which the party appealing received notice of
the denial of said motion.
From January 25, 1982 (the date when PAN-ASIATIC
received a copy of the Judgment by Default) to February 24,
1982 (the date when the Omnibus Motion was filed) is
twenty-nine days. Petitioner therefore had one more day
from April 2, 1982 (the day when PAN-ASIATIC received a
copy of the Order denying the Omnibus Motion), within
which to appeal. Instead of appealing, however, petitioner
filed on the same day, April 2, 1982 a motion for
reconsideration of the Order, only to withdraw it on April 30,
1982, as it filed its notice of appeal, appeal bond and record
on appeal.
Since the motion for reconsideration was withdrawn, then it
is as if no motion for reconsideration was ever filed. Thus,
the one day remaining period remained unchanged. Clearly,
therefore, the appeal interposed on April 30, 1982 was filed
out of time.

SECOND DIVISION
[G.R. No. 147937. November 11, 2004]

THE

PHILIPPINE AMERICAN LIFE & GENERAL INSURANCE


COMPANY, petitioner, vs. HON. AUGUSTO V. BREVA, in his
capacity as Presiding Judge, Regional Trial Court, Davao
City, Branch 10, and MILAGROS P. MORALES, respondents.

DECISION
CALLEJO, SR., J.:

Before us is a petition for review of the Decision [1] of the


Court of Appeals (CA), dated October 24, 2000, dismissing
the special civil action for certiorari and prohibition filed by
the petitioner, The Philippine American Life & General
Insurance Company, and the Resolution dated April 25,
2001, denying the petitioner's motion for reconsideration.

The petitioner is a domestic corporation duly organized


under Philippine laws with principal address at the Philamlife
Building, United Nations Avenue, Ermita, Manila, and with a
regional office in Davao City.

The Antecedents
On September 22, 1999, respondent Milagros P. Morales
filed a Complaint[2] for damages and reimbursement of
insurance premiums against the petitioner with the Regional
Trial Court (RTC) of Davao City, Branch 10, docketed as Civil
Case No. 27554-99. The complaint specifically stated that
the petitioner could be served with summons and other

court processes through its Manager at its branch office


located at Rizal St., Davao City.

Thereafter, Summons[3] dated September 29, 1999,


together with the complaint, was served upon the
petitioner's Davao regional office, and was received by its
Insurance Service Officer, Ruthie Babael, on November 19,
1999.[4]

On December 8, 1999, the petitioner filed a Motion to


Dismiss[5] the complaint on the ground of lack of jurisdiction
over its person due to improper service of summons. It
contended that summons was improperly served upon its
employee in its regional office at Davao City, and that the
said employee was not among those named in Section 11,
[6]
Rule 14 of the 1997 Rules of Civil Procedure upon whom
service of summons may be properly made.

On December 9, 1999, the respondent filed an


Amended Complaint,[7] alleging that summons and other
court processes could also be served at its principal office at
the Philamlife Building, U.N. Avenue, Ermita, Manila,
through the president or any of its officers authorized to
receive summons.

On December 10, 1999, the RTC issued an


Order[8] denying the petitioner's motion to dismiss and
directing the issuance of an alias summons to be served at
its main office in Manila.[9]

The RTC held that the improper service of summons on


the petitioner is not a ground for dismissal of the complaint
considering that the case was still in its initial stage. It ruled
that the remedy was to issue an alias summons to be
served at the principal office of the petitioner. It also held
that the jurisprudence cited by the petitioner was
inapplicable, as it involved a case already decided by a court
which did not have jurisdiction over the defendant therein
due to improper service of summons.

On January 12, 2000, the petitioner filed a Motion for


Reconsideration[10] of the said order. In the meantime, on
December 14, 1999, the petitioner received an Alias
Summons[11]together with a copy of the amended complaint.

On
January
14,
2000,
the
RTC issued
an
Order[12] denying the petitioner's motion for reconsideration
and supplemental oral motion to strike out the amended
complaint. The RTC reiterated that it would be improper to
dismiss the case at its early stage because the remedy
would be to issue an alias summons. Anent the motion to
strike out the amended complaint, the RTC held that the

complaint may be amended without leave of court


considering that the respondent had not yet filed an answer
thereto.

On March 2, 2000, the petitioner filed with the CA a


special action for certiorari and prohibition under Rule 65,
with application for a writ of preliminary injunction and/or
temporary restraining order, assailing the Orders dated
December 10, 1999 and January 14, 2000.

On October 24, 2000, the CA dismissed the petition and


affirmed the assailed orders of the RTC. The CA held that
the service of the alias summons on the amended complaint
upon the authorized officers of the petitioner at its principal
office in Manila vested the RTC with jurisdiction over its
person. The CA, likewise, denied the petitioner's motion for
reconsideration of the said decision on April 25, 2001.
Hence, this petition for review.

The petitioner avers that the trial court committed


grave abuse of discretion when it denied the motion to
dismiss on the ground of lack of jurisdiction over its person
because the service of the summons at its regional office
through an insurance service officer was improper. Sec. 11,
Rule 14 of the 1997 Revised Rules of Civil Procedure is strict
as to the persons upon whom valid service of summons on a

corporation can be made. The petitioner argues that where


summons is improperly served, it becomes ministerial upon
the trial court, on motion of the defendant, to dismiss the
complaint pursuant to Sec. 1(a),[13] Rule 16 of the 1997
Revised Rules of Civil Procedure.

The petitioner further avers that the trial court did not
acquire jurisdiction over it upon the service of alias
summons on the amended complaint because such alias
summons was improperly issued. Sec. 5,[14] Rule 14 of the
1997 Revised Rules of Civil Procedure explicitly provides
that the previous summons must have been lost or
unserved to warrant the issuance of alias summons. The
petitioner opines that the issuance of an alias summons
presupposes the existence of a previous valid summons
which, however, has not been served or has been lost. It
maintains that considering that there are specific
circumstances that need to exist to warrant its issuance, the
alias summons cannot be treated as a matter of
nomenclature.[15]

The respondent, for her part, avers that the receipt of


the amended complaint together with the alias summons by
the petitioner cured the defects in the first service of
summons. She argues that any procedural defect on the
service of alias summons is not sufficient to warrant the
dismissal of the case.[16]

The Courts Ruling


The core issues in this case are (1) whether the trial
court committed grave abuse of discretion in denying the
motion to dismiss on the ground of lack of jurisdiction over
the person of the petitioner due to improper service of
summons, and (2) whether the trial court acquired
jurisdiction over the person of the petitioner as the
defendant therein.
The petition is without merit.

The trial court did not commit grave abuse of discretion


when it denied the motion to dismiss filed by the petitioner
due to lack of jurisdiction over its person. In denying the
motion to dismiss, the CA correctly relied on the ruling
in Lingner & Fisher GMBH vs. Intermediate Appellate Court,
[17]
thus:
A case should not be dismissed simply because an
original summons was wrongfully served. It should be
difficult to conceive, for example, that when a defendant
personally appears before a Court complaining that he had
not been validly summoned, that the case filed against him
should be dismissed. An alias summons can be actually
served on said defendant.[18]

In the recent case of Teh vs. Court of Appeals,[19] the


petitioner therein also filed a motion to dismiss before filing

his answer as defendant in the trial court on the ground of


failure to serve the summons on him. In that case, the
Court agreed with the appellate court's ruling that there was
no abuse of discretion on the part of the trial court when the
latter denied the petitioner's motion to dismiss the
complaint and ordered the issuance of an alias summons.[20]

We note, however, that in this case, the complaint was


amended after the petitioner filed the motion to dismiss.
The trial court even acknowledged this when it rendered its
order denying the motion to dismiss and ordered the
issuance of an alias summons. The Rules on Civil Procedure
provide that the amended complaint supersedes the
complaint that it amends.[21] Contrary to the petitioners
claim, the summons issued on the amended complaint does
not become invalid. In fact, summons on the original
complaint which has already been served continues to have
its legal effect. Thus, where the defendant has already been
served summons on the original complaint, the amended
complaint may be served upon him without need of another
summons. Conversely, when no summons has yet been
validly served on the defendant, new summons for the
amended complaint must be served on him.[22]

In the instant case, since at the time the complaint was


amended no summons had been properly served on the
petitioner and it had not yet appeared in court, new
summons should have been issued on the amended
complaint.[23] Hence, the CA was correct when it held that,

technically, the trial court should have ordered the issuance


of an original summons, not an alias summons. [24] After all,
an alias summons is merely a continuation of the original
summons. In this case, however, there was no sense in
issuing an alias summons on the original complaint since
the complaint had already been amended. The trial court
should have instead issued a new summons on the
amended complaint.

Nonetheless, the CA deemed it necessary to treat the


alias summons as a matter of nomenclature, considering
that the rationale behind the service of summons to make
certain that the corporation would promptly and properly
receive notice of the filing of an action against it has been
served in this case. The CA held that it would be a great
injustice to the respondent if the complaint would be
dismissed just because what was issued and served was an
alias summons; that she would be made to file a new
complaint and thus, incur further monetary burden.[25]

We agree with the CA. It is not pertinent whether the


summons is designated as an original or an alias summons
as long as it has adequately served its purpose. What is
essential is that the summons complies with the
requirements under the Rules of Court and it has been duly
served on the defendant together with the prevailing
complaint. In this case, the alias summons satisfies the
requirements under the Rules, both as to its content and
the manner of service. It contains all the information

required under the rules, and it was served on the persons


authorized to receive the summons on behalf of the
petitioner at its principal office in Manila. Moreover, the
second summons was technically not an alias summons but
more of a new summons on the amended complaint. It was
not a continuation of the first summons considering that it
particularly referred to the amended complaint and not to
the original complaint.
WHEREFORE, the petition is DENIED for lack of merit.
The October 24, 2000 Decision and the April 25, 2001
Resolution of the Court of Appeals are hereby AFFIRMED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-82330 May 31, 1988
THE DIAL CORPORATION, C & T REFINERY INC., NALIN Sdn. Bhb.
BERISFORD COMMODITIES, LTD., and PACIFIC MOLASSES
COMPANY, petitioners,
vs.
THE HON. CLEMENTE M. SORIANO, Presiding Judge, Regional Trial
Court, Branch 3, MANILA PUBLIC RESPONDENT and IMPERIAL
VEGETABLE OIL COMPANY, INC., respondents.
Guerrero & Torres Law Office for petitioners.
Abad & Associates for respondents.
GRIO-AQUINO, J.:

The petitioners are foreign corporations organized and existing


under the laws of the United States, the United Kingdom, and
Malaysia, are not domiciled in the Philippines, nor do they have
officers or agents, place of business, or property in the Philippines;
they are not licensed to engage, and are not engaged, in business
here. The respondent Imperial Vegetable Oil Company, Inc. (or
"IVO" for brevity) is a Philippine corporation which through its
president, Dominador Monteverde, had entered into several
contracts for the delivery of coconut oil to the petitioners. Those
contracts stipulate that any dispute between the parties will be
settled through arbitration under the rules of either the Federation

of Oils Seeds and Fats Association (FOSFA) or the National


Institute of Oil Seed Products (NIOP). Because IVO defaulted
under the contracts, the petitioners and 15 others, initiated
arbitration proceedings abroad, and some have already obtained
arbitration awards against IVO.
On April 8, 1987, IVO filed a complaint for injunction and damages
against nineteen (19) foreign coconut oil buyers including the
petitioners, with whom its president, Dominador Monteverde, had
entered into contracts for the delivery of coconut oil (Civil Case No.
87-40166, RTC Manila entitled "Imperial Vegetable Oil Co., Inc. vs.
Dial Corporation et al."). IVO repudiated Monteverde's contracts on
the grounds that they were mere "paper trading in futures" as no
actual delivery of the coconut oil was allegedly intended by the
parties; that the Board of Directors of IVO convened in a special
meeting on March 21, 1987 and removed Dominador Monteverde
from his position as president of the corporation, named in his
place, Rodrigo Monteverde, and disowned Dominador Monteverde's
allegedly illegal and unauthorized acts; that the defendants have
allegedly "harassed" IVO to comply with Dominador's contracts
and to come to a settlement with them. IVO prayed for the
issuance of a temporary restraining order or writ of preliminary
injunction to stop the defendants from harassing IVO with their
insistent demands to recognize the contracts entered into by
Dominador Monteverde and from portraying the IVO as one that
defaults on its contracts and obligations and has fallen into bad
times and from interfering with IVO's normal conduct of business.
IVO also prayed that the defendants pay it moral damages of P5
million, actual damages of P10 million, exemplary damages of P5
million, attorney's fees of P1 million, P3,000 per appearance of
counsel, and litigation expenses.
On motion of IVO, respondent Judge authorized it to effect
extraterritorial service of summons to all the defendants through
DHL Philippines corporation (Annex B). Pursuant to that order, the
petitioners were served with summons and copy of the complaint
by DHL courier service.
On April 25, 1987, without submitting
and only for the purpose of objecting to
persons, the petitioners filed motions
against them on the ground that the

to the court's jurisdiction


said jurisdiction over their
to dismiss the complaint
extraterritorial service of

summons to them was improper and that hence the court did not
acquire jurisdiction over them. On December 15, 1987, the court
denied their motions to dismiss and upheld the validity of the
extraterritorial service of summons to them on the ground that
"the present action relates to property rights which lie in contracts
within the Philippines, or which defendants claim liens or interests,
actual or inchoate, legal or equitable (par. 2, complaint). And one
of the reliefs demanded consists, wholly or in part, in excluding the
defendants from any interest in such property for the reason that
their transactions with plaintiff's former president are ultra vires."
Furthermore, "as foreign corporations doing business in the
Philippines without a license, they opened themselves to suit
before Philippine courts, pursuant to Sec. 133 of the Corporation
Code of the Philippines." (Annex H) The petitioners' motions for
reconsideration of that order were also denied by the court (Annex
M), hence this petition for certiorari with a prayer for the issuance
of a temporary retraining order which We granted.
The petition is meritorious.
Section 17, Rule 14 of the Rules of Court provides:
Section 17. Extraterritorial service. When the
defendant does not reside and is not found in the
Philippines and the action affects the personal
status of the plaintiff or relates to, or the subject of
which is, property within the Philippines, in which
the defendant has or claims a lien or interest,
actual or contingent, or in which the relief
demanded consists, wholly or in part, in excluding
the defendant from any interest therein, or the
property of the defendant has been attached within
the Philippines, service may, by leave of court, be
effected out of the Philippines by personal service
as under section 7; or by publication in a
newspaper of general circulation in such places and
for such time as the court may order, in which case
a copy of the summons and order of the court shall
be sent by registered mail to the last known
address of the defendant, or in any other manner
the court may deem sufficient. Any order granting
such leave shall specify a reasonable time, which

shag not be less than sixty (60) days after notice,


within which the defendant must answer.
Only in four (4) instances is extraterritorial service of summons
proper, namely: "(1) when the action affects the personal status of
the plaintiffs; (2) when the action relates to, or the subject of
which is, property within the Philippines, in which the defendant
has or claims a lien or interest, actual or contingent; (3) when the
relief demanded in such action consists, wholly or in part, in
excluding the defendant from any interest in property located in
the Philippines; and (4) when the defendant non-resident's
property has been attached within the Philippines" (De Midgely vs.
Fernandos, 64 SCRA 23).
The complaint in this case does not involve the personal status of
the plaintiff, nor any property in the Philippines in which the
defendants have or claim an interest, or which the plaintiff has
attached. The action is purely an action for injunction to restrain
the defendants from enforcing against IVO ("abusing and
harassing") its contracts for the delivery of coconut oil to the
defendants, and to recover from the defendants P21 million in
damages for such "harassment." It is clearly a personal action as
well as an action in personam, not an action in rem or quasi in
rem. "An action in personam is an action against a person on the
basis of his personal liability, while an action in remedies is an
action against the thing itself, instead of against the
person." (Hernandez vs. Rural Bank of Lucena, Inc., 76 SCRA 85).
A personal action is one brought for the recovery of personal
property, for the enforcement of some contract or recovery of
damages for its breach, or for the recovery of damages for the
commission of an injury to the person or property (Hernandez vs.
Development Bank of the Philippines, 71 SCRA 292).<re||
an1w>
As Civil Case No. 87-40166 is a personal action, personal or
substituted service of summons on the defendants, not
extraterritorial service, is necessary to confer jurisdiction on the
court. The rule is explained in Moran's Comments on the Rules of
Court thus:
As a general rule, when the defendant is not
residing and is not found in the Philippines, the
Philippine courts cannot try any case against him

because
of
the
impossibility
of
acquiring
jurisdiction over his person unless he voluntarily
appears in court. But, when the action affects the
personal status of the plaintiff residing in the
Philippines, or is intended to seize or dispose of
any property, real or personal, of the defendant
located in the Philippines, it may be validly tried by
the Philippine courts, for then, they have
jurisdiction over the res, i.e., the personal status of
the plaintiff or the property of the defendant and
their jurisdiction over the person of the nonresident defendant is not essential. Venue in such
cases may be laid in the province where the
property of the defendant or a part thereof
involved in the litigation is located. (5 Moran's
Comments on the Rules of Court, 2nd Ed., p. 105.)
In an action for injunction, extraterritorial service of summons and
complaint upon the non-resident defendants cannot subject them
to the processes of the regional trial courts which are powerless to
reach them outside the region over which they exercise their
authority (Sec. 3-a, Interim Rules of Court; Sec. 21, subpar. 1, B.P.
Blg. 129). Extraterritorial service of summons will not confer on
the court jurisdiction or power to compel them to obey its orders.
Neither may the court by extraterritorial service of summons
acquire jurisdiction to render and enforce a money judgment
against a non-resident defendant who has no property in the
Philippines for "the fundamental rule is that jurisdiction in
personam over non-residents, so as to sustain a money judgment,
must be based uponpersonal service within the state which
renders the judgment "(Boudard vs. Tait, 67 Phil. 170, 174).
Respondents' contention that "the action below is related to
property within the Philippines, specifically contractual rights that
petitioners are enforcing against IVO" is specious for the
"contractual rights" of the petitioners are not property found in the
Philippines for the petitioners have not filed an action in the local
courts to enforce said rights. They have not submitted to the
jurisdiction of our courts.

The lower court invoked Section 33 of the Corporation Code which


provides that a "foreign corporation transacting business in the
Philippines without a license may be sued or proceeded against
before Philippine courts or administrative tribunal on any valid
cause of action recognized under Philippine laws." It assumed that
the defendants (herein petitioners) are doing business in the
Philippines, which allegation the latter denied. Even if they can be
considered as such, the Corporation Code did not repeal the rules
requiring proper service of summons to such corporations as
provided in Rule 14 of the Rules of Court and Section 128 of the
Corporation Code.
The respondent court's finding that, by filing motions to dismiss,
the petitioners hypothetically admitted the allegations of the
complaint that they are doing business in the Philippines without
any license, and that they may be served with summons and other
court processes through their agents or representatives
enumerated in paragraph 2 of the complaint, is contradicted by its
order authorizing IVO to summon them by extraterritorial service,
a mode of service which is resorted to when the defendant is not
found in the Philippines, does not transact business here, and has
no resident agent on whom the summons may be served.
WHEREFORE, We hold that the extraterritorial service of summons
on the petitioners was improper, hence null and void. The petition
for certiorari is granted.
The orders dated April 24, 1987 (Annex B) and December 15,
1987 (Annex H) of the respondent Judge are hereby set aside. The
complaint in Civil Case No. 87-40166 is hereby dismissed as
against the petitioners for failure of the court to acquire
jurisdiction over them.
SO ORDERED.

The antecedents of this case are as follows:

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-58340 July 16, 1991
KAWASAKI PORT SERVICE CORPORATION, NAIKAI SHIPPING CO.
LTD., NAIKAI TUG BOAT SERVICE CO., THE PORT SERVICE
CORPORATION, LICENSED LAND SEA PILOTS ASSOCIATION,
HAYAKOMA UNYU K.K., TOKYO KISEN COMPANY, LTD., OMORI
KAISOTEN, LTD., TOHOKU UNYU CO., LTD. AND SEITETSU UNYU
CO., LTD., petitioners,
vs.
THE HON. AUGUSTO M. AMORES, Judge of Br. XXIV, Court of First
Instance of Manila, and C.F. SHARP & CO., INC., respondents.
Quasha, Asperilla, Ancheta, Pea & Nolasco for petitioners.
Chuidian Law Office for private respondent.
BIDIN, J.:p

This is a petition for certiorari seeking to set aside the orders of


the then Court of First Instance of Manila, *Branch XXIV in Civil
Case No. 132077: (a) dated July 13, 1981 denying the special
appearances of petitioners as defendants in said case to question
the court's jurisdiction over the persons of the defendants and (b)
dated September 22, 1981, denying the motion for reconsideration
of said order.

On May 7, 1980, the private respondent C.F. Sharp & Co., Inc. filed
a complaint for injunction and/or declaratory relief in the then
Court of First Instance of Manila against seventy-nine (79)
Japanese corporations as defendants, among which are the
petitioners herein. Said complaint was docketed as Civil Case No.
132077. The complaint alleges, among others, that the plaintiff is
a corporation organized and existing under the laws of the
Philippines; that there is another corporation organized under the
law of Japan with the corporate name C.F. Sharp Kabushiki Kaisha;
that the plaintiff and C.F. Sharp Kabushiki Kaisha are in all respects
separate and distinct from each other; that C.F. Sharp Kabushiki
Kaisha appears to have incurred obligations to several creditors
amongst which are defendants, also foreign corporations organized
and existing under the laws of Japan; that due to financial
difficulties, C.F. Sharp Kabushiki Kaisha failed and/or refused to
pay its creditors; and that in view of the failure and/or refusal of
said C.F. Sharp Kabushiki Kaisha to pay its alleged obligations to
defendants, the latter have been demanding or have been
attempting to demand from C.F. Sharp & Co., Inc., the payment of
the alleged obligations to them of C.F. Sharp Kabushiki Kaisha,
notwithstanding that C.F. Sharp & Co., Inc. is a corporation
separate and distinct from that of C.F. Sharp Kabushiki Kaisha and
that the former had no participation whatsoever or liability in
connection with the transactions between the latter and the
defendants.
As alleged in the complaint, the private respondent prayed for
injunctive relief against the petitioners' demand from the private
respondent for the payment of C.F. Sharp Kabushiki Kaisha's
liabilities to the petitioners.
As an alternative to injunction, the private respondent prayed that
a judicial declaration be made that, as a separate and independent
corporation, it is not liable for the obligations and liabilities of C.F.
Sharp Kabushiki Kaisha.
Since the defendants are non-residents, without business
addresses in the Philippines but in Japan, the private respondent
prayed for leave of court to effect extraterritorial service of
summons.

On June 11, 1980, the respondent judge issued an order


authorizing the private respondent to effect extraterritorial service
of summons on defendants therein.
Subsequently, private respondent filed an urgent ex-parte motion
dated June 23, 1980 for Extraterritorial Service of Summons Upon
Defendants by registered mail with return cards pursuant to
Section 17 of Rule 14 of the Rules of Court.
Acting on said motion, the respondent judge issued an order dated
June 30, 1980 granting the motion and authorizing extraterritorial
service of summons upon defendants to be effected by registered
mail with return cards.
On March 11, 1981, five of the petitioners, Kawasaki Port Service
Corporation, Naikai Shipping Co., Ltd., Naikai Tug Boat Service Co.,
Ltd., The Port Service Corporation and Licensed Land Sea Pilots
Association filed their "Special Appearance to Question Jurisdiction
of This Honorable Court Over Persons of Defendants" contending
that the lower court does not and cannot acquire jurisdiction over
the persons of defendants on the grounds that private
respondent's action does not refer to its personal status; that the
action does not have for subject matter property contemplated in
Section 17 of Rule 14 of the Rules of Court, that the action does
not pray that defendants be excluded from any interest or property
in the Philippines; that no property of the defendants has been
attached; that the action is in personam; and that the action does
not fall within any of the four cases mentioned in Section 17, Rule
14 of the Rules of Court.
On March 17, 1981, another three of herein petitioners, Hayakoma
Unyu K.K., Tokyo Kisen Company, Ltd. and Omori Kaisoten, Ltd.
also filed their special appearance adopting the same arguments
as that of the first five.
On April 28, 1981, the two other petitioners, Tohoku Unyu Co., Ltd.
and Seitetsu Unyu Co., Ltd., filed their "Special Appearance to
Question the Jurisdiction of the Honorable Court" over their
persons adopting in toto as theirs the "Special Appearance" dated
March 11, 1981 of Kawasaki Port Service.

On July 13, 1981, the respondent Court issued its order denying
said special appearances. The motion for reconsideration of said
order filed by the petitioners was also denied on September 22,
1981.
Hence, the present petition.
After the required pleadings were filed, the First Division of this
Court, in the resolution of April 14, 1982, gave due course to the
petition and required both parties to submit simultaneous
memoranda within thirty (30) days from notice. Both parties
complied by submitting the required memoranda.
The main issue in this case is whether or not private respondent's
complaint for injunction and/or declaratory relief is within the
purview of the provisions of Section 17, Rule 14 of the Rules of
Court.
The petitioners contend that the respondent judge acted contrary
to the provisions of Section 17 of Rule 14 for the following
reasons: (1) private respondent's prayer for injunction, as a
consequence of its alleged non-liability to the petitioners for debts
of C.F. Sharp Kabushiki Kaisha of Japan, conclusively establishes
that private respondent's cause of action does not affect its status;
(2) the respondent court cannot take jurisdiction of actions against
the petitioners as they are non-residents and own no property
within the state; (3) the petitioners have not as yet claimed a lien
or interest in the property within the Philippines at the time the
action was filed which is a requirement under Section 17 of Rule
14; (4) extra-territorial service on a non-resident defendant is
authorized, among others, when the subject of the action is
property within the Philippines in which the relief demanded
consists in excluding defendant from any interest therein; and (5)
inasmuch as the reliefs prayed for by the private respondent in the
complaint are in personam, service by registered mail cannot be
availed of because Section 17 of Rule 14 authorized this mode of
service only in actions in rem or quasi in rem.
For its part, the private respondent countered that (1) the action
refers to its status because the basic issue presented to the lower
court for determination is its status as a corporation which has a
personality that is separate, distinct and independent from the
personality of another corporation, i.e., C.F. Sharp Kabushiki

Kaisha of Japan; (2) under Section 17 of Rule 14, the subject


matter or property involved in the action does not have to belong
to the defendants. The provisions of said section contemplate of a
situation where the property belongs to the plaintiff but the
defendant has a claim over said property, whether that claim be
actual or contingent; (3) the prayer of the plaintiff that the
defendants be excluded from any interest in the properties of the
plaintiff within the Philippines has the effect of excluding the
defendants from the properties of the plaintiff in the Philippines for
the purpose of answering for the debts of C.F. Sharp Kabushiki
Kaisha of Japan to the defendants in accordance with Section 17 of
Rule 14; and (4) the action before the lower court is an
action quasi in rem as the remedies raised in the complaint affect
the personal status of the plaintiff as a separate, distinct and
independent corporation and relates to the properties of the
plaintiff in the Philippines over which the petitioners have or claim
an interest, actual or contingent.
The petition is impressed with merit.
Section 17, Rule 14 of the Rules of Court provides:
Section 17. Extraterritorial service. When the
defendant does not reside and is not found in the
Philippines and the action affects the personal
status of the plaintiff or relates to, or the subject of
which is, property within the Philippines, in which
the defendant has or claims a lien or interest,
actual or contingent, or in which the relief
demanded consists, wholly or in part, in excluding
the defendant from any interest therein, or the
property of the defendant has been attached within
the Philippines, service may, by leave of court, be
effected out of the Philippines by personal service
as under section 7; or by publication in a
newspaper of general circulation in such places and
for such times as the court may order, in which
case a copy of the summons and order of the court
shall be sent by registered mail to the last known
address of the defendant, or in any other manner
the court may deem sufficient. Any order granting
such leave shall specify a reasonable time, which
shall not be less than sixty (60) days after notice,
within which the defendant must answer.

This Court had ruled that extraterritorial service of summons is


proper only in four (4) instances, namely: "(1) when the action
affects the personal status of the plaintiffs: (2) when the action
relates to, or the subject of which is, property within the
Philippines, in which the defendant has or claims a lien or interest,
actual or contingent; (3) when the relief demanded in such action
consists, wholly or in part, in excluding the defendant from any
interest in property located in the Philippines; and (4) when the
defendant non-resident's property has been attached within the
Philippines." (De Midgely v. Ferandos, 64 SCRA 23 [1975]; The
Dial Corporation v. Soriano, 161 SCRA 737 [1988]).
In the case at bar, private respondent has two (2) alternative
principal causes of action, to wit: either for declaratory relief or for
injunction. Allegedly, in both cases, the status of the plaintiff is not
only affected but is the main issue at hand.
As defined, "Status means a legal personal relationship, not
temporary in nature nor terminable at the mere will of the parties,
with which third persons and the state are concerned" (Holzer v.
Deutsche Reichsbahn Gesellschaft, 290 NYS 181; cited in 40 Words
and Phrases, 129, Permanent Edition).
It is easy to see in the instant case, that what is sought is a
declaration not only that private respondent is a corporation for
there is no dispute on that matter but also that it is separate and
distinct from C.F. Sharp Kabushiki Kaisha and therefore, not liable
for the latter's indebtedness. It is evident that monetary
obligations does not, in any way, refer to status, lights and
obligations. Obligations are more or less temporary, but status is
relatively permanent. But more importantly, as cited in the case of
(Dy Poco v. Commissioner of Immigration, et al., 16 SCRA 618
[1966]), the prevailing rule is that "where a declaratory judgment
as to a disputed fact would be determinative of issues rather than
a construction of definite stated rights, status and other relations,
commonly expressed in written instrument, the case is not one for
declaratory judgment." Thus, considering the nature of a
proceeding for declaratory judgment, wherein relief may be sought
only to declare rights and not to determine or try issues, there is
more valid reason to adhere to the principle that a declaratory
relief proceeding is unavailable where judgment would have to be
made, only after a judicial investigation of disputed issues (ibid).

In fact, private respondent itself perceives that petitioners may


even seek to pierce the veil of corporate identity (Rollo, p. 63).
Private respondent alleges that most if not all, of the petitioners
have merely demanded or have attempted to demand from the
former the payment of the obligations of C.F. Sharp K.K., (Rollo, p.
63). Otherwise stated, there is no action relating to or the subject
of which are the properties of the defendants in the Philippines for
it is beyond dispute that they have none in this jurisdiction nor can
it be said that they have claimed any lien or interest, actual or
contingent over any property herein, for as above stated, they
merely demanded or attempted to demand from private
respondent payment of the monetary obligations of C.F. Sharp
K.K., No action in court has as yet ensued. Verily, the fact that C.F.
Sharp Philippines is an entity separate and distinct from C.F. Sharp
K.K., is a matter of defense that can be raised by the former at the
proper time.
Finally, the alternative relief sought is injunction, that is to enjoin
petitioners from demanding from private respondent the payment
of the obligations of C.F. Sharp K.K., It was not prayed that
petitioners be excluded from any property located in the
Philippines, nor was it alleged, much less shown, that the
properties of the defendants, if any, have been attached.
Hence, as ruled by this Court, where the complaint does not
involve the personal status of plaintiff, nor any property in the
Philippines in which defendants have or claim an interest, or which
the plaintiff has attached, but purely an action for injunction, it is a
personal action as well as an action in personam, not an action in
rem orquasi in rem. As a personal action, personal or substituted
service of summons on the defendants, not extraterritorial service,
is necessary to confer jurisdiction on the court. In an action for
injunction, extra-territorial service of summons and complaint
upon the non-resident defendants cannot subject them to the
processes of the regional trial courts which are powerless to reach
them outside the region over which they exercise their authority.
Extra-territorial service of summons will not confer on the court
jurisdiction or Power to compel them to obey its orders (Dial
Corporation v. Soriano, 161 SCRA 738 [1988] citing Section 3-a
Interim Rules of Court, Section 21, subpar. 1, BP Blg. 129).

Considering that extra-territorial service of summons on the


petitioners was improper, the same was null and void.
WHEREFORE, the petition is Granted and the questioned orders
dated July 13, 1981 and September 22, 1981 of the respondent
Judge, are Reversed and Set Aside.
SO ORDERED.

SECOND DIVISION
[G.R. Nos. 121576-78. June 16, 2000]
BANCO DO BRASIL, petitioner, vs. THE COURT OF APPEALS, HON.
ARSENIO M. GONONG, and CESAR S. URBINO, SR., respondents.
DECISION
DE LEON, JR., J.:

Before us is a petition for review on certiorari of the


Decision[1] and
the
Resolution[2] of
the
Court
of
[3]
Appeals dated July 19, 1993 and August 15, 1995,
respectively, which reinstated the entire Decision [4] dated
February 18, 1991 of the Regional Trial Court of Manila,
Branch 8, holding, among others, petitioner Banco do Brasil
liable to private respondent Cesar Urbino, Sr. for damages
amounting to $300,000.00.[5]
At the outset, let us state that this case should have been
consolidated with the recently decided case of Vlason
Enterprises Corporation v. Court of Appeals and Duraproof
Services, represented by its General Manager, Cesar Urbino
Sr.[6], for these two (2) cases involved the same material
antecedents, though the main issue proffered in the present
petition vary with the Vlason case.

The
material
antecedents,
as
quoted
from
the Vlason[7] case, are:
Poro Point Shipping Services, then acting as
the local agent of Omega Sea Transport
Company of Honduras & Panama, a
Panamanian Company (hereafter referred to
as Omega), requested permission for its
vessel M/V Star Ace, which had engine
trouble, to unload its cargo and to store it at
the Philippine Ports Authority (PPA) compound
in San Fernando, La Union while awaiting
transhipment to Hongkong. The request was
approved by the Bureau of Customs.
[8]
Despite
the
approval,
the
customs
personnel boarded the vessel when it docked
on January 7, 1989, on suspicion that it was
the hijacked M/V Silver Med owned by Med
Line Philippines Co., and that its cargo would
be smuggled into the country.[9] The district
customs collector seized said vessel and its
cargo pursuant to Section 2301, Tariff and
Customs Code. A notice of hearing of SFLU
Seizure Identification No. 3-89 was served on
its consignee, Singkong Trading Co. of
Hongkong, and its shipper, Dusit International
Co., Ltd. of Thailand.
While seizure proceedings were ongoing, La
Union was hit by three typhoons, and the
vessel ran aground and was abandoned. On
June 8, 1989, its authorized representative,
Frank
Cadacio,
entered
into
salvage
agreement with private respondent to secure
and repair the vessel at the agreed
consideration of $1 million and "fifty percent
(50%) [of] the cargo after all expenses, cost
and taxes."[10]

Finding that no fraud was committed, the


District Collector of Customs, Aurelio M.
Quiray, lifted the warrant of seizure on July
1989.[11] However, in a Second Indorsement
dated November 11, 1989, then Customs
Commissioner Salvador M. Mison declined to
issue a clearance for Quirays Decision;
instead, he forfeited the vessel and its cargo
in accordance with Section 2530 of the Tariff
and Customs Code.[12] Accordingly, acting
District Collector of Customs John S. Sy
issued a Decision decreeing the forfeiture and
the sale of the cargo in favor of the
government.[13]
To enforce its preferred salvors lien, herein
Private Respondent Duraproof Services filed
with the Regional Trial Court of Manila a
Petition
for Certiorari,
Prohibition
andMandamus[14] assailing the actions of
Commissioner Mison and District Collector Sy.
Also impleaded as respondents were PPA
Representative Silverio Mangaoang and Med
Line Philippines, Inc.
On January 10, 1989, private respondent
amended its Petition[15] to include former
District Collector Quiray; PPA Port Manager
Adolfo Ll. Amor, Jr.; x Vlason Enterprises as
represented
by
its
president,
Vicente
Angliongto; Singkong Trading Company as
represented by Atty. Eddie Tamondong; Banco
Du Brasil; Dusit International Co.; Thai-Nan
Enterprises Ltd., and Thai-United Trading Co.,
Ltd.[16] x x x
Summonses for the amended Petition were
served on Atty. Joseph Capuyan for Med Line

Philippines: Anglionto (through his secretary,


Betty
Bebero),
Atty.
Tamondong
and
Commissioner Mison.[17] Upon motion of the
private respondent, the trial court allowed
summons by publication to be served upon
defendants who were not residents and had
no direct representative in the country.[18]
On January 29, 1990, private respondent
moved to declare respondents in default, but
the trial court denied the motion in its
February
23,
1990
Order[19],
because
Mangaoang and Amor had jointly filed a
Motion to Dismiss, while Mison and Med Line
had moved separately for an extension to file
a similar motion.[20] Later it rendered an Order
dated July 2, 1990, giving due course to the
motions to dismiss filed by Mangaoang and
Amor on the ground of litis pendentia, and by
the commissioner and district collector of
customs on the ground of lack of jurisdiction.
[21]
In another Order, the trial court dismissed
the action against Med Line Philippines on the
ground of litis pendentia.[22]
On two other occasions, private respondent
again moved to declare the following in
default: [Vlason], Quiray, Sy and Mison on
March 26, 1990;[23] and Banco [do] Bra[s]il,
Dusit International Co., Inc., Thai-Nan
Enterprises Ltd. and Thai-United Trading Co.,
Ltd. on August 24, 1990.[24] There is no
record, however, that the trial court acted
upon the motions. On September 18, 1990,
[private respondent] filed another Motion for
leave to amend the petition,[25] alleging that
its counsel failed to include "necessary and/or
indispensable parties": Omega represented by

Cadacio; and M/V Star Ace represented by


Capt. Nahon Rada, relief captain. Aside from
impleading these additional respondents,
private respondent also alleged in the Second
(actually, third) Amended Petition[26] that the
owners of the vessel intended to transfer and
alienate their rights and interest over the
vessel and its cargo, to the detriment of the
private respondent.
The trial court granted leave to private
respondent to amend its Petition, but only to
exclude the customs commissioner and the
district
collector.[27] Instead,
private
respondent filed the "Second Amended
Petition with Supplemental Petition" against
Singkong Trading Company; and Omega and
M/V Star Ace,[28] to which Cadacio and Rada
filed a Joint Answer.[29]
Declared in default in an Order issued by the
trial court on January 23, 1991, were the
following:
Singkong
Trading
Co.,
Commissioner Mison, M/V Star Ace and
Omega.[30]Private respondent filed, and the
trial court granted, an ex parte Motion to
present evidence against the defaulting
respondents.[31] Only private respondent, Atty.
Tamondong, Commissioner Mison, Omega and
M/V Star Ace appeared in the next pretrial
hearing; thus, the trial court declared the
other respondents in default and allowed
private respondent to present evidence
against
them.[32] Cesar
Urbino,
general
manager of private respondent, testified and
adduced
evidence
against
the
other
respondents, x x x.[33]

On December 29, 1990, private respondent


and Rada, representing Omega, entered into
a Memorandum of Agreement stipulating that
Rada would write and notify Omega regarding
the demand for salvage fees of private
respondent; and that if Rada did not receive
any instruction from his principal, he would
assign the vessel in favor of the salvor.[34]
On February 18, 1991, the trial court
disposed as follows:
"WHEREFORE, IN VIEW OF THE
FOREGOING, based on the allegations,
prayer and evidence adduced, both
testimonial and documentary, the
Court is convinced, that, indeed,
defendants/respondents are liable to
[private respondent] in the amount as
prayed for in the petition for which it
renders judgment as follows:
1. Respondent M/V Star Ace, represented by
Capt. Nahum Rada, [r]elief [c]aptain of the
vessel and Omega Sea Transport Company,
Inc., represented by Frank Cadacio[,] is
ordered to refrain from alienating or
[transferring] the vessel M/V Star Ace to any
third parties;
2. Singkong Trading Company to pay the
following:
a. Taxes due the government;
b. Salvage fees on the vessel in the amount
of $1,000,000.00 based on xxx Lloyds
Standard Form of Salvage Agreement;
c. Preservation, securing and guarding fees
on the vessel in the amount of $225,000.00;
d. Maintenance fees in the amount of
P2,685,000.00;

e. Salaries of the crew from August 16, 1989


to December 1989 in the amount of
$43,000.00 and unpaid salaries from January
1990 up to the present;
f. Attorneys fees in the amount of
P656,000.00;
3. [Vlason] Enterprises to pay [private
respondent] in the amount of P3,000,000.00
for damages;
4. Banco [Du] Brasil to pay [private
respondent] in the amount of $300,000.00 in
damages;[35] and finally,
5. Costs of [s]uit."
Subsequently, upon the motion of Omega,
Singkong
Trading
Co.,
and
private
respondent, the trial court approved a
Compromise
Agreement[36] among
the
movants, reducing by 20 percent the amounts
adjudged. For their part, respondentsmovants agreed not to appeal the Decision.
[37]
On March 8, 1991, private respondent
moved for the execution of judgment,
claiming that the trial court Decision had
already become final and executory. The
Motion was granted and a Writ of Execution
was issued. To satisfy the Decision, Sheriffs
Jorge Victorino, Amado Sevilla and Dionisio
Camagon were deputized on March 13, 1991
to levy and to sell on execution the
defendants vessel and personal property.x x x
On March 18, 1991, the Bureau of Customs
also filed an ex parte Motion to recall the
execution, and to quash the notice of levy and
the sale on execution. Despite this Motion,

the auction sale was conducted on March 21,


1991 by Sheriff Camagon, with private
respondent submitting the winning bid. The
trial court ordered the deputy sheriffs to
cease and desist from implementing the Writ
of Execution and from levying on the personal
property of the defendants. Nevertheless,
Sheriff Camagon issued the corresponding
Certificate of Sale on March 27, 1991.
On April 10, 1991, petitioner Banco do Brasil filed, by
special appearance, an Urgent Motion to Vacate Judgement
and to Dismiss Case[38] on the ground that the February 18,
1991 Decision of the trial court is void with respect to it for
having been rendered without validly acquiring jurisdiction
over the person of Banco do Brasil. Petitioner subsequently
amended its petition[39] to specifically aver that its special
appearance is solely for the purpose of questioning the
Courts exercise of personal jurisdiction.
On May 20, 1991, the trial court issued an Order [40] acting
favorably on petitioners motion and set aside as against
petitioner the decision dated February 18, 1991 for having
been rendered without jurisdiction over Banco do Brasils
person. Private respondent sought reconsideration [41] of the
Order dated May 20, 1991. However, the trial court in an
Order[42] dated June 21, 1991 denied said motion.
Meanwhile, a certiorari petition[43] was filed by private
respondent before public respondent Court of Appeals
seeking to nullify the cease and desist Order dated April 5,
1991 issued by Judge Arsenio M. Gonong. Two (2) more
separate petitions for certiorari were subsequently filed by
private respondent. The second petition[44] sought to nullify
the Order[45] dated June 26, 1992 setting aside the Deputy
Sheriffs return dated April 1, 1991 as well as the certificate
of sale issued by Deputy Sheriff Camagon. The third
petition[46] sought to nullify the Order dated October 5, 1992

of the Court of Tax Appeals directing the Commissioner of


Customs to place Bureau of Customs and PNP officers and
guards to secure the M/V Star Ace and its cargoes, make
inventory of the goods stored in the premises as indicated
to belong to the private respondent. Likewise challenged
was the Order dated August 17, 1992 authorizing the sale
of M/V Star Ace and its cargoes.
These three (3) petitions were consolidated and on July 19,
1993, the appellate court rendered its Decision [47] granting
private respondents petitions, thereby nullifying and setting
aside the disputed orders and effectively "giving way to
the entire [decision dated February 18, 1991 of the x x x
Regional Trial Court of Manila, Branch 8, in Civil Case No.
89-51451 which remainsvalid, final and executory, if not yet
wholly executed."[48]
Private respondent Urbino, Vlason Enterprises and petitioner
Banco do Brasil filed separate motions for reconsideration.
For its part, petitioner Banco do Brasil sought
reconsideration, insofar as its liability for damages, on the
ground that there was no valid service of summons as
service was on the wrong party the ambassador of Brazil.
Hence, it argued, the trial court did not acquire jurisdiction
over petitioner Banco do Brasil.[49] Nonetheless, the
appellate court denied the motions for reconsideration in its
Resolution[50] dated August 15, 1995.
Hence, the instant petition.
Petitioner Banco do Brasil takes exception to the appellate
courts declaration that the suit below is in rem, not in
personam,[51] thus, service of summons by publication was
sufficient for the court to acquire jurisdiction over the
person of petitioner Banco do Brasil, and thereby liable to
private respondent Cesar Urbino for damages claimed,
amounting to $300,000.00. Petitioner further challenges the
finding that the February 18, 1991 decision of the trial court
was already final and thus, cannot be modified or assailed.
[52]

Petitioner avers that the action filed against it is an action


for damages, as such it is an action in personam which
requires personal service of summons be made upon it for
the court to acquire jurisdiction over it. However, inasmuch
as petitioner Banco do Brasil is a non-resident foreign
corporation, not engaged in business in the Philippines,
unless it has property located in the Philippines which may
be attached to convert the action into an action in rem, the
court cannot acquire jurisdiction over it in respect of an
action in personam.
The petition bears merit, thus the same should be as it is
hereby granted.
First. When the defendant is a nonresident and he is not
found in the country, summons may be served
extraterritorially in accordance with Rule 14, Section
17[53] of the Rules of Court.Under this provision, there are
only four (4) instances when extraterritorial service of
summons is proper, namely: "(1) when the action affects
the personal status of the plaintiffs; (2) when the action
relates to, or the subject of which is property, within the
Philippines, in which the defendant claims a lien or interest,
actual or contingent; (3) when the relief demanded in such
action consists, wholly or in part, in excluding the defendant
from any interest in property located in the Philippines; and
(4) when the defendant non-residents property has been
attached within the Philippines."[54] In these instances,
service of summons may be effected by (a) personal service
out of the country, with leave of court; (b) publication, also
with leave of court; or (c) any other manner the court may
deem sufficient.[55]
Clear from the foregoing, extrajudicial service of summons
apply only where the action is in rem, an action against the
thing itself instead of against the person, or in an
action quasi in rem, where an individual is named as

defendant and the purpose of the proceeding is to subject


his interest therein to the obligation or loan burdening the
property. This is so inasmuch as, in in rem and quasi in
rem actions, jurisdiction over the person of the defendant is
not a prerequisite to confer jurisdiction on the court
provided that the court acquires jurisdiction over the res.[56]
However, where the action is in personam, one brought
against a person on the basis of his personal liability,
jurisdiction over the person of the defendant is necessary
for the court to validly try and decide the case. When the
defendant is a non-resident, personal service of summons
within the state is essential to the acquisition of jurisdiction
over the person.[57] This cannot be done, however, if the
defendant is not physically present in the country, and thus,
the court cannot acquire jurisdiction over his person and
therefore cannot validly try and decide the case against
him.[58]
In the instant case, private respondents suit against
petitioner is premised on petitioners being one of the
claimants of the subject vessel M/V Star Ace. [59] Thus, it can
be said that private respondent initially sought only to
exclude petitioner from claiming interest over the subject
vessel M/V Star Ace. However, private respondent testified
during the presentation of evidence that, for being a
nuisance defendant, petitioner caused irreparable damage
to private respondent in the amount of $300,000.00.
[60]
Therefore, while the action is in rem, by claiming
damages, the relief demanded went beyond the res and
sought a relief totally alien to the action.
It must be stressed that any relief granted in rem or quasi
in rem actions must be confined to the res, and the court
cannot lawfully render a personal judgment against the
defendant.[61]Clearly, the publication of summons effected
by private respondent is invalid and ineffective for the trial
court to acquire jurisdiction over the person of petitioner,
since by seeking to recover damages from petitioner for the

alleged commission of an injury to his person or


property[62] caused by petitioners being a nuisance
defendant, private respondents action became in personam.
Bearing in mind the in personam nature of the action,
personal or, if not possible, substituted service of summons
on petitioner, and not extraterritorial service, is necessary to
confer jurisdiction over the person of petitioner and validly
hold it liable to private respondent for damages. Thus, the
trial court had no jurisdiction to award damages amounting
to $300,000.00 in favor of private respondent and as
against herein petitioner.
Second. We settled the issue of finality of the trial courts
decision dated February 18, 1991 in the Vlason case,
wherein we stated that, considering the admiralty case
involved multiple defendants, "each defendant had a
different period within which to appeal, depending on the
date of receipt of decision."[63] Only upon the lapse of the
reglementary period to appeal, with no appeal perfected
within such period, does the decision become final and
executory.[64]
In the case of petitioner, its Motion to Vacate Judgment and
to Dismiss Case was filed on April 10, 1991, only six (6)
days after it learned of the existence of the case upon being
informed by the Embassy of the Federative Republic of
Brazil in the Philippines, on April 4, 1991, of the February
18, 1991 decision.[65] Thus, in the absence of any evidence
on the date of receipt of decision, other than the alleged
April 4, 1991 date when petitioner learned of the decision,
the February 18, 1991 decision of the trial court cannot be
said to have attained finality as regards the petitioner.
WHEREFORE, the subject petition is hereby GRANTED. The
Decision and the Resolution of the Court of Appeals dated
July 19, 1993 and August 15, 1995, respectively, in CA-G.R.
SP Nos. 24669, 28387 and 29317 are hereby
REVERSED and SET ASIDE insofar as they affect petitioner

Banco do Brasil. The Order dated May 20, 1991 of the


Regional Trial Court of Manila, Branch 8 in Civil Case No. 8951451 is REINSTATED.
SO ORDERED.

SECOND DIVISION
[G.R. No. 158002. February 28, 2005]
SPOUSES
AURORA
N.
DE
PEDRO
and
ELPIDIO
DE
PEDRO, petitioners,
vs.
ROMASAN
DEVELOPMENT
CORPORATION and MANUEL KO,respondents.
DECISION
CALLEJO, SR., J.:

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


Appeals Decision[1] in CA-G.R. CV No. 68424 dated November 29,
2002, as well as its Resolution dated April 11, 2003 denying the
motion for reconsideration thereof. The assailed decision affirmed
the trial courts order dismissing the petitioners complaint for
damages.
This case proceeded from the following antecedents:
On December 1, 1997, petitioner spouses Aurora and Elpidio
de Pedro filed a Complaint for Damages with Prayer for Preliminary
Injunction against respondents Romasan Development Corporation
and Manuel Ko. The complaint stated, inter alia, that the spouses
De Pedro were the registered owners of a parcel of land in
Barangay San Isidro, now Barangay Inarawan, Antipolo, Rizal, with
an area of 50,000 square meters, covered and described in
Original Certificate of Title (OCT) No. P-691, issued by the Register
of Deeds of Marikina City, Metro Manila on March 26, 1992; that
they had been continuously paying the real estate taxes on the
said property; that sometime in January 1997, the respondents
started putting up a barbed-wire fence on the perimeter of the
adjacent property; and that in the course of such construction, the
petitioners farm house was destroyed and bamboos and other
trees were cut.[2]

The complaint further alleged that the respondents made


claims that the petitioners farm house and the trees were built and
planted on a portion of the adjacent property owned by the
respondents. The respondents then prevented and refused to allow
the petitioners and their families to enter the property, through
security guards. The respondents, likewise, threatened to clear the
trees and scrape the area owned by the petitioners with the use of
a bulldozer. The petitioners also alleged that as a consequence of
the illegal and wrongful acts of the respondents, they suffered
actual damages and incurred expenses; as such, they were
entitled to moral and exemplary damages, and expenses of
litigation and attorneys fees.[3]
On June 16, 1998, the respondents filed their Answer to the
complaint, alleging therein that the respondent corporation was
the owner of the land as evidenced by Transfer Certificate of Title
(TCT) No. 236044 which was issued by the Register of Deeds on
March 5, 1993. By fencing the property in order to determine its
metes and bounds, the respondent corporation merely exercised
its rights of ownership over the property. The respondents further
maintained that the petitioners failed to establish the metes and
bounds of the property which was claimed to have been usurped
by them. A counterclaim for damages was, likewise, interposed
against the petitioners.
On September 18, 1998, the trial court issued an Order
granting the joint motion of the parties to have a relocation survey
on the property in order to verify its location. [4] The survey team
consisted of Robert Pangyarihan, Chief of the Department of
Environment and Natural Resources (DENR), Region IV, Surveys
Division as Chairman of the Survey Team; [5] Engr. Avelino L. San
Buenaventura, representing the petitioners; and Engr. Patricio
Cabalo, representing the respondents.
On January 30, 1999, the survey team issued a Report on the
relocation survey with the following recommendation:
WHEREFORE, this Commission finds that OCT No. P-691 of the
plaintiff overlaps TCT No. 236044 of parcel H-162341 of the
defendant but finds on the contrary that this land is not the actual
area that is being claimed and occupied by the plaintiff but another
parcel instead, namely H-164008. The overlapping of titles was

brought about by the double issuance of title for H-162341 but the
technical descriptions of OCT No. P-691 describing a land different
from the actual occupation of the plaintiff was a result of the
defective survey.[6]
The survey team made the following findings: (1) TCT No.
236044 originated from OCT No. 438 in the name of Marcelino
Santos, which was based on a Homestead Patent. The said OCT
was, in turn, based on Plan H-162341 surveyed on March 8, 1935
and approved on June 30, 1937; (2) under the Cadastral Map
Sheet of the Lungsod Silangan Cadastre or CM 14-38 N., 121-12 E
on file with the Records Division of the DENR, Region IV, H162341, the land covered by the said OCT was reflected as Lot
10455; (3) OCT No. P-691, under the name of petitioner Aurora de
Pedro, was based on Plan Cad. 04-0097-63-D which was a
subdivision survey of Lot 10455 of the Lungsod Silangan Cadastre;
(4) Lot 10455 was subdivided into Lots 10455-A to 10455-G; (5)
Lot 10455-G was the subject of the petitioners application for a
Free Patent; and (6) the land occupied by petitioner Aurora de
Pedro is actually a portion of Lot 10454/H-164008 originally
registered on July 2, 1965 under OCT No. 468 based on
Homestead Patent No. 99480 under the name of Isidro Benitez.
[7]
The survey team further declared that:
The nature of this case, however, is one of overlapping titles
even if the erroneous technical descriptions rectified because even
while it may not fall inside the titled H-162341, the lot of Mrs. de
Pedro, et al. given the correct description of the boundary, falls
inside another titled parcel under H-164008. Both H-162341 and
H-164008 are presently registered in the name of Romasan
Development Corporation, the defendant.
The granting of Free Patent to Mrs. de Pedro, et al. over a
previously titled property is unwarranted or can be unwittingly an
act resulting in double titling by the CENRO, DENR in Antipolo City.
[8]

Based
on
the
report,
the
respondents
filed
a
Manifestation/Motion to Dismiss, averring that there was no legal
or factual basis for the complaint as shown by the findings of the
survey team; hence, the petitioners had no cause of action against
them.[9] The petitioners did not file any opposition to the motion.

Thus, on December 22, 1999, the trial court issued an Order


granting the motion and ordering the dismissal of the complaint on
the ground that the petitioners had no cause of action. [10]
The petitioners filed a motion for reconsideration of the order,
contending that (1) the findings and conclusions of the survey
team were unreliable; (2) the chairman of the team was facing
criminal and administrative charges in connection with the
performance of his duties; (3) the technical description of the
property contained in OCT No. P-691 was conclusive and should
prevail over the findings of the team; and (4) the petitioners had a
cause of action for damages against the respondents. According to
the petitioners, it was premature for the court to dismiss the
complaint without affording them the right to adduce their
evidence on their claim for damages.[11]
The petitioners appended to their motion the counter-affidavit
of Jesus Pampellona, Deputy Land Inspector, Office of the
Community Environment and Natural Resources Office in Antipolo
City. Pampellona alleged that subsequent to the application for a
free patent filed by petitioner Aurora de Pedro over Lots 10455-F
and 10455-G, he conducted the required ocular inspections to
determine the truth of her claim of actual possession over the
properties subject of her application. He found out that she was in
actual, public, adverse and continuous possession of the lots
applied for by her, and that they were with several improvements,
like petitioner Aurora de Pedros house and several fruit-bearing
trees with an average age of 20 to 25 years. He averred that, as
evidence of her ownership and possession over the lots, petitioner
Aurora de Pedro also submitted an Extrajudicial Partition with
Waiver of Rights dated May 10, 1991, executed by the heirs of
Marcelino Santos, and an Affidavit of Waiver of Rights dated June
6, 1991, which she herself executed. Pampellona declared that
there was no overlapping of claims or rights over the subject lot
based on a certification from the Lands Management Bureau of the
DENR in Manila, and that there was no existing record of a
previous Homestead Application applied for by Marcelino Santos.
He asserted that he secured another Certification dated January
17, 1991 to the effect that Lot No. 10455, Mcad-585 located in
San Isidro, Antipolo, Rizal, was not covered by any public land
application and there was no record of the alleged Homestead
Application 162341 under the name of Marcelino Santos.

Pampellona, likewise, alleged that respondent corporation was the


ninth (9th) transferee from the alleged original registered owner,
Marcelino Santos, in whose favor OCT No. 438 Homestead Patent
was issued on August 30, 1937.[12]
Also appended to the said motion for reconsideration were
Certifications from the Lands Management Bureau, stating that
Plan H-164008 was not available on file despite diligent efforts in
locating the same, and that H-164008 was not listed in the EDP
listing; and Certifications from the Register of Deeds of Rizal and
Marikina City that OCT No. 468 issued on July 2, 1965 was not
among the records on file with them.[13]
The respondents opposed the petitioners motion, claiming
that the petitioners failed to oppose the appointment of the
chairman of the team before the relocation survey. Moreover, since
according to the report, the land claimed by the petitioners was
covered by the title under the name of respondent corporation, the
petitioners claim for damages had no leg to stand on. [14]
On July 11, 2000, the trial court issued an Order denying the
petitioners motion for reconsideration, without prejudice to the
filing of an appropriate action for the correction or alteration of the
technical description of the property covered by OCT No. P-691. [15]
The petitioners appealed the order to the Court of Appeals
(CA). On November 29, 2002, the CA rendered a Decision
affirming the assailed orders. The CA ruled that the result of the
relocation survey has the presumption of regularity, such that it
must be respected absent any clear showing that it had been
irregularly conducted by the survey team. The CA held that the
petitioners had every opportunity to question and object to the
composition of the survey team before the trial court; since they
failed to do so, they cannot now be allowed to do the same on
appeal. According to the CA, it could not take judicial notice of the
alleged cases filed against the chairman of the survey team since
this was not one of the matters which the courts could take judicial
notice of, whether mandatory or directory.[16]
Finally, the CA ruled that the respondents could not be
adjudged liable for the damages allegedly sustained by the
petitioners as a consequence of a valid and justified exercise of
ownership over the disputed property. The CA reiterated the trial

courts holding that the petitioners were not barred from filing the
appropriate action where they may seek to correct whatever
mistake or irregularity that their title had.[17]
On April 11, 2003, the CA issued a Resolution denying the
motion for reconsideration filed by the petitioners; hence, this
petition for review.
The petitioners rely upon the following grounds in support of
their petition:
I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED
AND DECIDED THE ISSUES IN THE INSTANT CASE IN
A MANNER CONTRARY TO ESTABLISHED LAW AND
JURISPRUDENCE BY HOLDING THAT THE INSTANT
CASE IS A SIMPLE CASE FOR DAMAGES.
II. THE HONORABLE COURT OF APPEALS GRAVELY
ERRED AND DECIDED THE ISSUES IN THE INSTANT
CASE IN A MANNER CONTRARY TO ESTABLISHED LAW
AND JURISPRUDENCE BY HOLDING THAT THE
RESULTS OF THE PRIOR RELOCATION SURVEY
ENJOYS THE PRESUMPTION OF REGULARITY THEREBY
DISPOSSESSING
PETITIONERS
OF
THEIR
OWNERSHIP
OVER
THE
DISPUTED
PROPERTY
DESPITE CLEAR AND CONVINCING EVIDENCE THAT:
A. THE TITLE OF PETITIONER AURORA N. DE PEDRO
IS VALID AND INDEFEASIBLE; AND
B.
THE
TITLE
OF
RESPONDENT
ROMASAN
DEVELOPMENT CORPORATION IS DEFECTIVE.
III. THE HONORABLE COURT OF APPEALS GRAVELY
ERRED AND DECIDED THE ISSUES IN THE INSTANT
CASE IN A MANNER CONTRARY TO ESTABLISHED LAW
AND JURISPRUDENCE IN NOT RULING THAT
PETITIONERS HAD BEEN DEPRIVED OF THEIR
CONSTITUTIONAL RIGHT TO COUNSEL.[18]
The petitioners maintain that petitioner Aurora de Pedro is the
registered owner of the subject property as evidenced by OCT No.
P-961, and that this title is conclusive of their ownership over the
same.[19] They aver that their title cannot be the subject of a
collateral attack.[20]

The petitioners contend that in contrast to their title, the title


of the respondents is defective. This can be gleaned from the
certifications issued by the Lands Management Bureau attesting to
the fact that Survey Plan H-164008, under the name of the
respondents does not exist and that its verification is not listed in
the EDP listing, as well as the certifications from the Register of
Deeds of Rizal and Marikina that OCT No. 468, upon which the
respondents title was allegedly based, does not exist. [21]
The petitioners further posit that the relocation survey report
cannot prevail over the technical description of the property in
their title. They likewise assail the relocation survey report by
alleging that Pangyarihan, the chairman of the survey team, is the
respondent in a number of criminal and administrative cases
relating to the performance of his duties.[22]
The petitioners also claim that the CA mischaracterized their
complaint as a complaint for damages. They submit that their
complaint is not a simple case for damages but one for the
recovery of possession over the disputed property on the strength
of their ownership over the same. They blame the ambiguity of the
complaint on the inadequacies of their former counsel. [23]
Finally, the petitioners assert that they were deprived of their
right to due process because their previous counsel did not
adequately defend them. They aver that their rights were
prejudiced by their former counsels negligence; hence, such
negligent acts should not be binding on them. [24]
On the other hand, the respondents submit that the
petitioners are now in estoppel to assail the veracity and validity of
the relocation survey report since they actively participated in its
preparation.[25] They assert that the survey report is entitled to full
faith and credence as it was prepared and made by competent
persons who were appointed by the trial court, represented the
parties, and were qualified to exact a report based on their
expertise.[26] They maintain that the petitioners objection to the
appointment of Pangyarihan as chairman of the survey team is a
mere afterthought and they should have objected to it from the
very start.[27]

The respondents aver that since the survey report revealed


that there was error in the technical description of the petitioners
property and that it was the petitioners who usurped the
respondents property, the claim for damages can no longer be
sustained.[28] The private respondents also assert that the fact that
the plan and the verification of the survey plan of H-164008 do not
exist in the records of the Register of Deeds is not sufficient proof
that their title is defective.[29]
Further, the respondents submit that the dismissal of the
complaint was not due to the negligence of the petitioners former
counsel but was based on the result of the survey, the conduct of
which was agreed upon by the parties. Even if the former counsel
of the petitioners made a mistake on how to proceed with the
case, such mistake is not so gross and is still binding on the client.
[30]
The respondents added that the failure to oppose the
Manifestation/Motion to Dismiss was not solely the former counsels
fault, since at the time the new counsel entered his appearance,
such motion had not yet been resolved by the trial court and the
new counsel had still ample time to oppose it. [31]
The pivotal issue between the parties in the trial court is
whether or not, as claimed by the petitioners in their complaint,
the subject property is a portion of the property covered by OCT
No. P-691; or, as claimed by the respondents in their answer to
the complaint, whether the subject property is a portion of the
property covered by TCT No. 236044, which appears to be a
portion of that property originally registered in 1937 as gleaned
from TCT No. 236044.
In contrast to the apposite claims of the parties, the Survey
Team found that the subject property, which is part of the lot
actually occupied by the petitioners, is a portion of Lot 10454/H164008 which was originally covered by OCT No. 468 issued to
Isidro Benitez, whereas the technical description of Lot 10455-G
covered by OCT No. P-691 was erroneous for being the result of a
defective survey.
The resolution of the issue will involve the alteration,
correction or modification either of OCT No. P-691 under the name
of petitioner Aurora de Pedro, or TCT No. 236044 under the name
of respondent corporation. If the subject property is found to be a

portion of the property covered by OCT No. P-691 but is included


in the technical description of the property covered by TCT No.
236044, the latter would have to be corrected. On the other hand,
if the subject property is found to be a portion of the property
covered by TCT No. 236044 but is included in the property covered
by OCT No. P-691, then the latter title must be rectified. However,
the rectification of either title may be made only via an action filed
for the said purpose,[32]conformably with Section 48 of Act No.
496, which provides:
SEC. 48. Certificate not subject to collateral attack. A certificate of
title shall not be subject to collateral attack. It cannot be altered,
modified, or cancelled except in a direct proceeding in accordance
with law.
It has been held that a certificate of title, once registered,
should not thereafter be impugned, altered, changed, modified,
enlarged or diminished except in a direct proceeding permitted by
law.[33] The resolution of the issue is, thus, not dependent on the
report of the survey team filed in the trial court.
The action of the petitioners against the respondents, based
on the material allegations of the complaint, is one for recovery of
possession of the subject property and damages. However, such
action is not a direct, but a collateral attack of TCT No. 236044.
[34]
Neither did the respondents directly attack OCT No. P-691 in
their answer to the complaint. Although the respondents averred in
said answer, by way of special and affirmative defenses, that the
subject property is covered by TCT No. 236044 issued in the name
of the respondent corporation, and as such the said respondent is
entitled to the possession thereof to the exclusion of the
petitioners, such allegation does not constitute a direct attack on
OCT No. P-691, but is likewise a collateral attack thereon. Indeed,
in Ybanez v. Intermediate Appellate Court,[35] we held that:
It was erroneous for petitioners to question the Torrens Original
Certificate of Title issued to private respondent over Lot No. 986 in
Civil Case No. 671, an ordinary civil action for recovery of
possession filed by the registered owner of the said lot, by
invoking as affirmative defense in their answer the Order of the
Bureau of Lands, dated July 19, 1978, issued pursuant to the
investigatory power of the Director of Lands under Section 91 of

Public Land Law (C.A. 141 as amended). Such a defense partakes


of the nature of a collateral attack against a certificate of title
brought under the operation of the Torrens system of registration
pursuant to Section 122 of the Land Registration Act, now Section
103 of P.D. 1259. The case law on the matter does not allow a
collateral attack on the Torrens certificate of title on the ground of
actual fraud. The rule now finds expression in Section 48 of P.D.
1529 otherwise known as the Property Registration Decree. [36]
Thus, the court a quo had no jurisdiction to resolve the
decisive issue raised by the parties in the trial court; hence, it
behooved the trial court to order the dismissal of the complaint on
that ground.
The petitioners anchor their claim of lawful possession of the
subject property on their allegation that said property is a portion
of the property covered by OCT No. P-691 in the name of
petitioner Aurora de Pedro. The petitioners were burdened to prove
not only their ownership over the property covered by OCT No. P691 but also that the subject property is a portion of the property
covered by the said title and, if they fail to do so, the complaint
must be dismissed.
We agree with the petitioners that, generally, a certificate of
title shall be conclusive as to all matters contained therein and
conclusive evidence of the ownership of the land referred to
therein. However, it bears stressing that while certificates of title
are indefeasible, unassailable and binding against the whole world,
including the government itself, they do not create or vest title.
[37]
They merely confirm or record title already existing and vested.
They cannot be used to protect a usurper from the true owner, nor
can they be used as a shield for the commission of fraud; neither
do they permit one to enrich himself at the expense of others.[38]
As we had the occasion to state in Metropolitan Waterworks
and Sewerage System v. Court of Appeals:[39]
It must be observed that the title of petitioner MWSS was a
transfer from TCT No. 36957 which was derived from OCT No. 994
registered on May 3, 1917. Upon the other hand, private
respondents title was derived from the same OCT No. 994 but
dated April 19, 1917. Where two certificates (of title) purport to

include the same land, the earlier in date prevails. x x x. In


successive registrations, where more than one certificate is issued
in respect of a particular estate or interest in land, the person
claiming under the prior certificate is entitled to the estate or
interest; and the person is deemed to hold under the prior
certificate who is the holder of, or whose claim is derived, directly
or indirectly, from the person who was the holder of the earliest
certificate issued in respect thereof. Hence, in point of priority
issuance, private respondents title prevails over that of petitioner
MWSS.
Lastly, a certificate is not conclusive evidence of title if it is shown
that the same land had already been registered and an earlier
certificate for the same is in existence. Since the land in question
has already been registered under OCT No. 994 dated April 19,
1917, the subsequent registration of the same land on May 3,
1917 is null and void.[40]
While it is true that the petitioners claimed damages against
the respondents on account of the latters alleged trespass on the
subject property and the alleged destruction of the petitioners
property, the resolution by the court a quo of the claim for
damages against the petitioners is riveted to its resolution of the
issue of whether the subject property is a portion of the petitioners
property covered by OCT No. P-691 or the respondents property
covered by TCT No. 236044.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED
for lack of merit. The Decision of the Court of Appeals in CA-G.R.
CV No. 68424 affirming the assailed Orders of the Regional Trial
Court is AFFIRMED. The complaint is DISMISSED without
prejudice. No costs.
SO ORDERED.

alleged that CTC, through Consulta and Sarayba, bought certain


merchandise from it but refused to pay for them.
Before summons could be served, the RTC issued a writ of
preliminary attachment[2] against the defendants after GSP filed
the required bond.[3] Afterwards, the RTC issued summons against
the defendants.
On October 11, 2005 as the sheriff failed to serve the
summons and copies of the complaint on any of CTCs authorized
officers as well as on Consulta and Sarayba, he left copies of such
documents with Agnes Canave (Canave) who, according to the
sheriffs return,[4] was Saraybas secretary and an authorized
representative of both Sarayba and Consulta.

SECOND DIVISION
GENTLE SUPREME G.R. No. 183182
PHILIPPINES, INC.,
Petitioner, Present:
CARPIO, J., Chairperson,
- versus - NACHURA,

BERSAMIN,*
ABAD, and
MENDOZA, J

J.
RICARDO F. CONSULTA,
Respondent. Promulgated:
September 1, 2010
x -------------------------------------------------------------------------------- x
DECISION
ABAD, J.:

This case is about the service of summons on a corporation and


its officers, allegedly done improperly, resulting in the failure of the
trial court to acquire jurisdiction over the persons of the
defendants and in the nullity of its proceedings.

The Facts and the Case


On September 29, 2005 petitioner Gentle Supreme Philippines,
Inc. (GSP) filed a collection case with application for a writ of
preliminary attachment[1] against Consar Trading Corporation
(CTC), its president, respondent Ricardo Consulta (Consulta), and
its vice-president, Norberto Sarayba (Sarayba) before the Regional
Trial Court (RTC) of Pasig City, Branch 68, in Civil Case 70544. GSP

None of the defendants filed an answer to the


complaint. Thus, upon motion,[5] on November 18, 2005 the RTC
declared them in default[6] and proceeded to hear GSPs
evidence ex parte. Meanwhile, the sheriff attached a registered
land[7] belonging to Consulta.[8] After trial, the RTC ruled that
having defrauded GSP, defendants CTC, Consulta, and Sarayba
were solidarily liable for the value of the supplied goods plus
attorneys fees and costs of the suit. [9] And upon motion, on
January 25, 2006 the RTC issued a writ of execution against the
defendants.[10]
On June 9, 2006 respondent Consulta filed a petition for
annulment of the RTC decision before the Court of Appeals (CA) in
CA-G.R. SP 94817.[11] He alleged 1) that he found out about the
case against him only on May 19, 2006 when he received a notice
of sale on execution of his house and lot in Marikina City; and 2)
that he was not properly served with summons because, although
his address stated in the complaint was his regular place of
business, Canave, who received the summons, was not in charge
of the matter.
Consulta invoked the Courts ruling in Keister v. Judge
Navarro,[12] that the rule (on substituted service) presupposes that
such relation of confidence exists between the person with whom
the copy is left and the defendant and, therefore, assumes that
such person will deliver the process to defendant or in some way
give him notice thereof.Consulta claimed that Canave was only

Saraybas secretary. Thus, neither the sheriff nor the RTC had basis
for assuming that Canave would find a way to let Consulta know of
the pending case against him. Consulta concluded that the RTC did
not acquire jurisdiction over his person.
In its answer to the petition,[13] GSP insisted on the validity
of the service of summons on Consulta. Also, assuming that
summons was not properly served, Consultas ignorance was
contrived. His knowledge of the case against him may be proved
by the following circumstances:
1. On February 25, 2006 CTC faxed GSP a letter proposing
a schedule of payment for the adjudged amounts in the RTC
decision. Admittedly, it was only Sarayba who signed the letter. By
the rules of evidence, however, the act and declaration of a joint
debtor is binding upon a party.[14] This means that Saraybas
knowledge and admission of the case and the defendants
corresponding liability to GSP was binding on Consulta. Besides,
Consulta, together with Sarayba, signed the postdated checks as
partial payment of CTCs obligation to GSP;
2. The RTCs sheriff garnished CTCs bank accounts on the
day the summons was served. As company president, it was
incredulous that Consulta was unaware of the garnishment and the
reason for it;
3. Consulta admitted that CTC was properly served with
summons through Canave. By that statement, it can be deduced
that Canave was in charge of the office, Consultas regular place of
business, signifying proper service of the summons on him.
On March 18, 2008 the CA rendered a decision, holding
that the RTC sheriff did not properly serve summons on all the
defendants. It ordered the remand of the case to the trial court,
enjoining it to take steps to insure the valid service of summons on
them.[15]
Respondent Consulta filed a motion for partial reconsideration of
the decision but the CA denied it for being late. Petitioner GSP also
filed a motion for reconsideration [16]which the CA denied on May
29, 2008 for lack of merit,[17] hence, this petition.
The Issue Presented

The sole issue presented in this case is whether the CA


correctly ruled that summons had not been properly served on
respondent Consulta with the result that the RTC did not acquire
jurisdiction over his person and that the judgment against him was
void.
The Ruling of the Court
First of all, only Consulta brought an action for the annulment of
the RTC decision. CTC and Sarayba did not. Consequently, the CA
had no business deciding whether or not the latter two were
properly served with summons. The right to due process must be
personally invoked and its circumstances specifically alleged by the
party claiming to have been denied such. [18]
Second, there is valid substituted service of summons on
Consulta at his place of business with some competent person in
charge thereof. According to the sheriffs return, which is prima
facie evidence of the facts it states, [19] he served a copy of the
complaint on Canave, an authorized representative of both
Consulta and Sarayba.[20] Besides Consultas bare allegations, he
did not present evidence to rebut the presumption of regularity on
the manner that the sheriff performed his official duty. [21] Nor did
Consulta present clear and convincing evidence that Canave was
not competent to receive the summons and the attached
documents for him.
In fact, in his petition for annulment of judgment, Consulta
said that CTC had been apprised of the civil action through
Canave.[22] In other words, Canave was a person charged with
authority to receive court documents for the company as well as
its officers who held office in that company. Absent contrary
evidence, the veracity of the returns content and its effectiveness
stand.
Further, this Court has ruled that it is not necessary that
the person in charge of the defendants regular place of business
be specifically authorized to receive the summons.It is enough that
he appears to be in charge.[23] In this case, Canave, a secretary
whose job description necessarily includes receiving documents
and other correspondence, would have the semblance of authority
to accept the court documents.
It is true that this Court emphasized the importance of
strict and faithful compliance in effecting substituted service. [24] It
must, however, be reiterated that when the rigid application of

rules becomes a conduit for escaping ones responsibility, the Court


will intervene to set things right according to the rules. [25]
Further, Consulta does not deny a) that summons had
been properly served on Sarayba, his vice-president, through
Canave at the companys office; b) that the summons on him was
served on the same occasion also through Canave; c) that the
sheriff had succeeded in garnishing his companys bank deposits;
and d) that his company subsequently made an offer to settle the
judgment against it. The Court is not dumb as to believe that
Consulta became aware of the suit only when the sheriff served a
notice of execution sale covering his house and lot.
WHEREFORE, premises
considered,
the
Court REVERSES the Court of Appeals Decision in CA-G.R. SP
94817 dated March 17, 2008 and REINSTATES the Regional Trial
Courts Decision in Civil Case 70544 dated December 14, 2005.
SO ORDERED.
SECOND DIVISION
G.R. No. 206653, February 25, 2015
YUK LING ONG, Petitioner, v. BENJAMIN T. CO, Respondent.
DECISION
MENDOZA, J.:
In court proceedings, there is no right more cherished than the right of
every litigant to be given an opportunity to be heard. This right begins
at the very moment that summons is served on the defendant. The
Rules of Court places utmost importance in ensuring that the
defendant personally grasp the weight of responsibility that will befall
him. Thus, it is only in exceptional circumstances that constructive
notification, or substituted service of summons, is allowed. If the
server falls short of the rigorous requirements for substituted service
of summons, then the Court has no other option but to strike down a
void
judgment,
regardless
of
the
consequences.
This is a petition for review on certiorari seeking to reverse and set
aside the June 27, 2012 Decision 1and the March 26, 2013
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 106271,
which denied the petition for annulment of judgment.

before the said agency because her permanent residence visa was
being subjected to cancellation proceedings. Reportedly, her marriage
with
respondent
was
nullified
by
the
court.
When petitioner appeared before the BID, she was furnished with the
copies of the following documents: (1) petition for declaration of nullity
of marriage filed as Civil Case No. CV-01-0177; (2) petition for
declaration of nullity of marriage docketed as Civil Case No. 02-0306;
(3) Decision,4 dated December 11, 2002, in Civil Case No. 02-0306 of
the Regional Trial Court, Branch 260 (RTC), Paraaque City, declaring
the marriage between petitioner and respondent as void ab initio; and
(4) their marriage contract5 with the subject decision annotated
thereon. Petitioner was perplexed that her marriage with respondent
had
been
declared
void ab
initio.
The above documents showed that on April 26, 2001, respondent filed
a petition for declaration of nullity6 on the ground of psychological
incapacity before the RTC, which was docketed as Civil Case No. CV01-0177. Respondent stated that petitioners address was 600 Elcano
St., Binondo, Manila. There was no showing of its status, whether
pending,
withdrawn
or
terminated.
On July 19, 2002, respondent filed another petition for declaration of
nullity7 on the ground of psychological incapacity before the RTC,
docketed as Civil Case No. 02-0306. Respondent indicated that
petitioners address was 23 Sta. Rosa Street, Unit B-2 Manresa Garden
Homes, Quezon City. On July 29, 2002, the RTC issued summons. 8 In
his Servers Return,9 process server Rodolfo Torres, Jr. stated that, on
August 1, 2002, substituted service of summons with the copy of the
petition was effected after several futile attempts to serve the same
personally on petitioner. The said documents were received by Mr. Roly
Espinosa,
a
security
officer.

The Facts
Petitioner Yuk Ling Ong (petitioner), a British-Hong Kong national, and
respondent Benjamin Co (respondent), a Filipino citizen, were married
on October 3, 1982 at Ellinwood-Malate Church. 3cralawlawlibrary

On December 11, 2002, the RTC rendered a decision 10 in Civil Case No.
02-0306 finding respondents marriage with petitioner as void ab
initio on the ground of psychological incapacity under Article 36 of the
Family Code. It stated that summons was served on petitioner on
August 1, 2002, but she failed to file her responsive pleading within
the reglementary period. The public prosecutor also stated that there
were no indicative facts to manifest collusion. Thus, the RTC concluded
that petitioner was psychologically incapacitated to perform her
essential
marital
obligations.

Sometime in November 2008, petitioner received a subpoena from the


Bureau of Immigration and Deportation (BID) directing her to appear

Consequently, petitioner filed a petition for annulment of


judgment11 under Rule 47 of the Rules of Court before the CA on

November 24, 2008, claiming that she was never notified of the cases
filed against her. She prayed that the RTC decision, dated December
11, 2002, in Civil Case No. 02-0306, be nullified on the grounds of
extrinsic
fraud
and
lack
of
jurisdiction.
Petitioner alleged that first, respondent committed extrinsic fraud
because, as seen in Civil Case No. CV-01-0177, he deliberately
indicated a wrong address to prevent her from participating in the
trial;second, jurisdiction over her person was not acquired in Civil Case
No. 02-0306 because of an invalid substituted service of summons as
no sufficient explanation, showing impossibility of personal service,
was stated before resorting to substituted service of summons; third,
the alleged substituted service was made on a security guard of their
townhouse and not on a member of her household; and fourth, she
was not psychologically incapacitated to perform her marital
obligations.12cralawlawlibrary
Ruling of the Court of Appeals
On June 27, 2012, the CA rendered the assailed decision finding the
petition for annulment of judgment to be devoid of merit. It held that
there was no sufficient proof to establish that respondent employed
fraud to insure petitioners non-participation in the trial of Civil Case
No.
CV-01-0177.
Relying on Robinson v. Miralles,13the CA further ruled that the
substituted service of summons in Civil Case No. 02-0306 was valid. It
found that there was a customary practice in petitioners townhouse
that the security guard would first entertain any visitors and receive
any communication in behalf of the homeowners. With this set-up, it
was obviously impossible for the process server to personally serve the
summons upon petitioner. It also declared that the process servers
return carries with it the presumption of regularity in the discharge of
a
public
officers
duties
and
functions.
Petitioner moved for reconsideration, but her motion was denied by
the
CA
in
its
Resolution,14 dated
March
26,
2013.
Hence, this petition, anchored on the following
1.

ISSUES
Whether or not the Trial Court in Civil Case No. 020306 validly acquired jurisdiction over the person of
the petitioner.

2.

Whether or not the facts proven by the petitioner


constitute extrinsic fraud within the purview of Rule
47 of the Rules of Court.15

Petitioner argues that there was an invalid substituted service of


summons. The process servers return only contained a general
statement that substituted service was resorted to after several futile
attempts to serve the same personally,16 without stating the dates and
reasons of the failed attempts. Petitioner also reiterates her argument
that
extrinsic
fraud
was
employed.
In his Comment,17 filed on July 9, 2014, respondent contended that
the servers return satisfactorily stated the reason for the resort to a
substituted service of summons on August 1, 2002; and it was
improbable that petitioner failed to receive the summons because it
was sent to the same address which she declared in this present
petition.
Petitioner filed her Reply18 on October 8, 2014 reiterating her previous
arguments.
The

Court

The Courts Ruling


finds
merit
in

the

petition.

Annulment of judgment is a recourse equitable in character, allowed


only in exceptional cases as where there is no available or other
adequate remedy. Rule 47 of the 1997 Rules of Civil Procedure, as
amended, governs actions for annulment of judgments or final orders
and resolutions, and Section 2 thereof explicitly provides only two
grounds for annulment of judgment, that is, extrinsic fraud and lack of
jurisdiction.19 Annulment of judgment is an equitable principle not
because it allows a party-litigant another opportunity to reopen a
judgment that has long lapsed into finality but because it enables him
to be discharged from the burden of being bound to a judgment that is
an
absolute
nullity
to
begin
with. 20cralawlawlibrary
Petitioner raises two grounds to support her claim for annulment of
judgment: (1) extrinsic fraud and (2) lack of jurisdiction. Her
contention on the existence of extrinsic fraud, however, is too
unsubstantial to warrant consideration. The discussion shall then focus
on
the
ground
of
lack
of
jurisdiction.
Lack of jurisdiction on the part of the trial court in rendering the
judgment or final order is either lack of jurisdiction over the subject
matter or nature of the action, or lack of jurisdiction over the person of

the petitioner. The former is a matter of substantive law because


statutory law defines the jurisdiction of the courts over the subject
matter or nature of the action. The latter is a matter of procedural law,
for it involves the service of summons or other processes on the
petitioner.21cralawlawlibrary
In the present case, petitioner contends that there was lack of
jurisdiction over her person because there was an invalid substituted
service of summons. Jurisdiction over the defendant is acquired either
upon a valid service of summons or the defendant's voluntary
appearance in court.22 If the defendant does not voluntarily appear in
court, jurisdiction can be acquired by personal or substituted service of
summons as laid out under Sections 6 and 7 of Rule 14 of the Rules of
Court, which state:chanRoblesvirtualLawlibrary
Sec. 6. Service in person on defendant. - Whenever practicable, the
summons shall be served by handing a copy thereof to the defendant
in person, or, if he refuses to receive and sign for it, by tendering it to
him.
Sec. 7. Substituted Service. - If, for justifiable causes, the defendant
cannot be served within a reasonable time as provided in the
preceding section, service may be effected (a) by leaving copies of the
summons at the defendant's residence with some person of suitable
age and discretion then residing therein, or (b) by leaving the copies
at defendant's office or regular place of business with some competent
person in charge thereof.
The landmark case of Manotoc v. CA (Manotoc)23 thoroughly discussed
the rigorous requirements of a substituted service of summons, to wit:
xxx
(1) Impossibility of Prompt Personal Service
xxx
For substituted service of summons to be available, there must be
several attempts by the sheriff to personally serve the summons within
a reasonable period of one month which eventually resulted in failure
to prove impossibility of prompt service. "Several attempts" means
at least three (3) tries, preferably on at least two different
dates. In addition, the sheriff must cite why such efforts were
unsuccessful. It is only then that impossibility of service can be
confirmed
or
accepted.

circumstances surrounding the attempted personal service. The efforts


made to find the defendant and the reasons behind the failure must be
clearly narrated in detail in the Return. The date and time of the
attempts on personal service, the inquiries made to locate the
defendant, the name/s of the occupants of the alleged
residence or house of defendant and all other acts done,
though futile, to serve the summons on defendant must be
specified in the Return to justify substituted service.
(3) A Person of Suitable Age and Discretion
xxx
The sheriff must thereforedetermine if the person found in the alleged
dwelling or residence of defendant is of legal age, what the recipient's
relationship with the defendant is, and whether said person
comprehends the significance of the receipt of the summons and his
duty to immediately deliver it to the defendant or at least notify the
defendant of said receipt of summons. These matters must be
clearly and specifically described in the Return of Summons.
(Emphases and underscoring supplied)
The pronouncements of the Court in Manotoc have been applied to
several succeeding cases. InPascual v. Pascual,24 the return of
summons did not show or indicate the actual exertion or positive steps
taken by the officer or process server in serving the summons
personally to the defendant. Similarly, in Spouses Afdal v. Carlos,25 the
process servers indorsements therein failed to state that the personal
service on the defendants was rendered impossible and that efforts
were made to find them personally. In both those cases, the Court
ruled that the meticulous requirements for substituted service of
summons
were
not
met.

Return

There are cases, however, in which Manotoc was applied, but,


nevertheless, it was ruled that there was no lack of jurisdiction over
the person of the defendant. In Sagana v. Francisco,26 the diligent
efforts exerted by the sheriff to locate the respondent were
determined, not only based on the sheriff's return, but also on the
process server's notation and case records. In the case of Wong v.
Factor-Koyama,27 on the other hand, even if the sheriff performed an
invalid substituted service of summons, jurisdiction over the person of
defendant was obtained because the latter had actively participated in
trial, amounting to a voluntary appearance under Section 20 of Rule
14.28cralawlawlibrary

The sheriff must describe in the Return of Summons the facts and

In the case at bench, the summons in Civil Case No. 02-0306 29 was

(2)

Specific

Details

in

the

issued on July 29, 2002. In his servers return, 30 the process server
resorted to substituted service of summons on August 1, 2002.
Surprisingly, the process server immediately opted for substituted
service of summons after only two (2) days from the issuance of the
summons.
The
servers
return
stated
the
following:chanRoblesvirtualLawlibrary
SERVERS RETURN
THIS IS TO CERTIFY THAT on August 1, 2002, substituted service of
summons with copy of petition, were effected to respondent, Yuk Ling
H. Ong, at the Unit B-2, No. 23 Sta. Rosa St., Manresa Garden Homes,
Manresa Garden City, Quezon City, after several futile attempts to
serve the same personally. The said documents were received by
Mr. Roly Espinosa of sufficient age and discretion, the Security Officer
thereat.
Therefore, respectfully returning to Court, original copy of summons,
Duly Served, this 2nd day of August, 2002.
RODOLFO
P.
TORRES,
JR.
Process
Server
(Emphasis supplied)
The servers return utterly lacks sufficient detail of the attempts
undertaken by the process server to personally serve the summons on
petitioner. The server simply made a general statement that summons
was effected after several futile attempts to serve the same personally.
The server did not state the specific number of attempts made to
perform the personal service of summons; the dates and the
corresponding time the attempts were made; and the underlying
reason for each unsuccessful service. He did not explain either if there
were inquiries made to locate the petitioner, who was the defendant in
the case. These important acts to serve the summons on petitioner,
though futile, must be specified in the return to justify substituted
service.
The servers return did not describe in detail the person who received
the summons, on behalf of petitioner. It simply stated that the
summons was received by Mr. Roly Espinosa of sufficient age and
discretion, the Security Officer thereat. It did not expound on the
competence of the security officer to receive the summons.
Also, aside from the servers return, respondent failed to indicate any
portion of the records which would describe the specific attempts to
personally serve the summons. Respondent did not even claim that

petitioner made any voluntary appearance and actively participated in


Civil
Case
No.
02-0306.
The case of Robinson v. Miralles, cited by the CA, is not applicable. In
that case, the return described in thorough detail how the security
guard refused the sheriffs entry despite several attempts. The
defendant in the said case specifically instructed the guard to prevent
anybody to proceed to her residence. In the present case, the
attempts made by the process server were stated in a broad and
ambiguous
statement.
The CA likewise erred in ruling that the presumption of regularity in
the performance of official duty could be applied in the case at bench.
This presumption of regularity, however, was never intended to be
applied even in cases where there are no showing of substantial
compliance with the requirements of the rules of procedure. Such
presumption does not apply where it is patent that the sheriffs or
servers return is defective. 31 As earlier explained, the servers return
did not comply with the stringent requirements of substituted service
of
summons.
Given that the meticulous requirements in Manotoc were not met, the
Court is not inclined to uphold the CAs denial of the petition for
annulment of judgment for lack of jurisdiction over the person of
petitioner because there was an invalid substituted service of
summons. Accordingly, the decision in Civil Case No. 02-0306 must be
declared
null
and
void.
The stricter rule in substituted service of summons was meant to
address [t]he numerous claims of irregularities in substituted service
which have spawned the filing of a great number of unnecessary
special civil actions of certiorari and appeals to higher courts, resulting
in prolonged litigation and wasteful legal expenses.32cralawlawlibrary
Although the decision in Civil Case No. 02-0306 was promulgated as
early as December 11, 2002, the Court must strike it down for lack of
jurisdiction over the person of petitioner. The favorable judgment
enjoyed by respondent cannot be categorized as a genuine victory
because it was fought against an adversary, who was ignorant of the
existing dispute. Whatever prize bestowed upon the victor in such a
void decision must also be undone. Respondent, if he wishes to
pursue, must start from scratch and institute his action for declaration
of nullity again; this time with petitioner fully aware and ready for
litigation.

WHEREFORE, the petition is GRANTED. The June 27, 2012 Decision


and the March 26, 2013 Resolution of the Court of Appeals in CA-G.R.
SP No. 106271 are hereby REVERSED and SET ASIDE. The
December 11, 2002 Decision of the Regional Trial Court, Branch 260,
Paraaque
City
is
hereby
declared
VOID.
SO ORDERED.chanroblesvirtuallawlibrary

THIRD DIVISION
G.R. NO. 184333 : April 1, 2013
SIXTO N. CHU, Petitioner, v. MACH ASIA TRADING
CORPORATION, Respondent.
DECISION
PERALTA, J.:

This is a petition for review on certiorari assailing the


Decision1 dated July 25, 2007 of the Court of Appeals (CA)
in CA-G.R. CV No. 70666, and the Resolution 2 dated August
28, 2008 denying petitioner's Motion for Reconsideration.

The
factual
and
procedural
follows:chanroblesvirtualawlibrary

antecedents

are

as

Respondent Mach Asia Trading Corporation is a corporation


engaged in importing dump trucks and heavy equipments.
On December 8, 1998, petitioner Sixto N. Chu purchased on
installment one (1) Hitachi Excavator worth P900,000.00
from the respondent. Petitioner initially paid P180,000.00
with the balance of P720,000.00 to be paid in 12 monthly
installments through Prime Bank postdated checks. On
March 29, 1999, petitioner again purchased two (2) heavy
equipments from the respondent on installment basis in the
sum of P1,000,000.00, namely: one (1) motorgrader and
one (1) payloader. Petitioner made a down payment
of P200,000.00 with the balance of P800,000.00 payable in
12 monthly installments through Land Bank postdated
checks.3chanroblesvirtualawlibrary

However, upon presentment of the checks for encashment,


they were dishonored by the bank either by reason of
"closed account," "drawn against insufficient funds," or
"payment stopped." Respondent informed petitioner that
the checks were dishonored and invited him to its office to
replace the checks. On September 16, 1999, respondent
sent petitioner a formal demand letter urging the latter to
settle his accounts within five days from receipt of the letter.
In response, petitioner sent respondent a letter explaining
that his business was badly hit by the Asian economic crisis
and that he shall endeavor to pay his obligation by giving
partial payments. He said that he shall also voluntarily
surrender the subject units should he fail to do
so.4chanroblesvirtualawlibrary

On November 11, 1999, respondent filed a complaint before


the Regional Trial Court (RTC) of Cebu City for sum of
money, replevin, attorney's fees and damages against the
petitioner. Respondent prayed for the payment of the unpaid
balance of P1,661,947.27 at 21% per annum until full
payment, 25% of the total amount to be recovered as
attorney's
fees,
litigation
expenses
and
costs.5chanroblesvirtualawlibrary

On November 29, 1999, the RTC issued an Order 6 allowing


the issuance of a writ of replevin on the subject heavy
equipments.

On December 9, 1999, Sheriff Doroteo P. Cortes proceeded


at petitioner's given address for the purpose of serving the
summons, together with the complaint, writ of replevin and
bond. However, the Sheriff failed to serve the summons
personally upon the petitioner, since the latter was not
there. The Sheriff then resorted to substituted service by
having the summons and the complaint received by a
certain Rolando Bonayon, a security guard of the
petitioner.7chanroblesvirtualawlibrary

Petitioner failed to file any responsive pleading, which


prompted respondent to move for the declaration of

defendant in default. On January 12, 2000, the RTC issued


an Order declaring defendant in default and, thereafter,
allowed respondent to present its evidence ex parte.

On December 15, 2000, after respondent presented its


evidence, the RTC rendered a Decision against the
petitioner, thus:chanroblesvirtualawlibrary
1. By adjudicating and adjudging plaintiff's right of
ownership and possession over the subject units mentioned
and described in the complaint, and which were already
seized and turned over to the plaintiff by virtue of the writ
of replevin.

2. Ordering defendants to pay to plaintiff the sum of (sic)


equivalent to 25% of the total amount recovered or value of
the heavy equipments possessed as attorney's fees, and to
reimburse no less than P15,000.00 as expenses for
litigation, plus the cost of the premium of replevin bond in
the amount of P11,333.50.8chanroblesvirtualawlibrary

Aggrieved, petitioner sought recourse before the CA,


docketed as CA-G.R. CV No. 70666. Petitioner argued that
the RTC erred in concluding that the substituted service of
summons was valid, and that, consequently, there was error
on the part of the RTC when it declared him in default, in

proceeding with the trial of the case, and rendering an


unfavorable judgment against him.

On July 25, 2007, the CA rendered a Decision 9 affirming the


Decision of the RTC, the decretal portion of which
reads:chanroblesvirtualawlibrary
WHEREFORE, IN LIGHT OF THE FOREGOING, the
Decision of the Regional Trial Court of Cebu, Branch 17, in
Civil Case No. CEB-24551, rendered on December 15, 2000,
is hereby AFFIRMED with the sole modification as to award
of attorney's fees, which is hereby reduced to 10% of the
value of the heavy equipments recovered.

The CA also noted that petitioner failed to set up a


meritorious defense aside from his contention that
summons was not properly served. It went further and
decided the case on the merits and ruled that petitioner has
an unpaid obligation due to respondent for the heavy
machineries he purchased from the latter. It, however,
reduced the amount of attorney's fees awarded to 10% of
the value of the heavy equipments recovered.

Petitioner filed a Motion for Reconsideration, but it was


denied in the Resolution11 dated August 28, 2008.

SO ORDERED.10chanroblesvirtualawlibrary
Hence,
the
petition
assigning
errors:chanroblesvirtualawlibrary
Ruling in favor of the respondent, the CA opined, among
others, that the requirement of due process was complied
with, considering that petitioner actually received the
summons through his security guard. It held that where the
summons was in fact received by the defendant, his
argument that the Sheriff should have first tried to serve
summons on him personally before resorting to substituted
service of summons deserves scant consideration. Thus, in
the interest of fairness, the CA said that the process
server's neglect or inadvertence in the service of summons
should not unduly prejudice the respondent's right to
speedy justice.

the

following

I
THE HONORABLE COURT OF APPEALS COMMITTED A
SERIOUS
ERROR
IN
DEFIANCE
OF
LAW
AND
JURISPRUDENCE IN FINDING THAT THE TRIAL COURT
ACQUIRED JURISDICTION OVER THE PERSON OF THE
DEFENDANT EVEN WHEN THE SUBSTITUTED SERVICE OF
SUMMONS WAS IMPROPER.12chanroblesvirtualawlibrary
II

THE HONORABLE COURT OF APPEALS COMMITTED A


SERIOUS
ERROR
IN
DEFIANCE
OF
LAW
AND
JURISPRUDENCE IN HOLDING THAT HEREIN PETITIONER
SHOULD HAVE SET UP A MERITORIOUS DEFENSE EVEN
WHEN
THE
SUMMONS
WAS
IMPROPERLY
SERVED.13chanroblesvirtualawlibrary

Petitioner argues that there was no valid substituted service


of summons in the present case. He maintains that
jurisdiction over the person of the defendant is acquired
only through a valid service of summons or the voluntary
appearance of the defendant in court. Hence, when there is
no valid service of summons and no voluntary appearance
by the defendant, any judgment of a court, which acquired
no jurisdiction over the defendant, is null and void.

On its part, respondent posits that the RTC acquired


jurisdiction over the person of the petitioner and the
judgment by default of the RTC was based on facts, law,
and jurisprudence and, therefore, should be enforced
against the petitioner.
The petition is meritorious.

Courts acquire jurisdiction over the plaintiffs upon the filing


of the complaint. On the other hand, jurisdiction over the
defendants in a civil case is acquired either through the

service of summons upon them or through their voluntary


appearance in court and their submission to its
authority.14chanroblesvirtualawlibrary

As a rule, summons should be personally served on the


defendant. It is only when summons cannot be served
personally within a reasonable period of time that
substituted service may be resorted to.15 Section 7, Rule 14
of the Rules of Court provides:chanroblesvirtualawlibrary

SEC. 7. Substituted service. If, for justifiable causes, the


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

It is to be noted that in case of substituted service, there


should be a report indicating that the person who received
the summons in the defendant's behalf was one with whom
the defendant had a relation of confidence, ensuring that
the
latter
would
actually
receive
the
16
summons. chanroblesvirtualawlibrary

Also, impossibility of prompt personal service must be


shown by stating that efforts have been made to find the
defendant personally and that such efforts have failed. This
is necessary because substituted service is in derogation of
the usual method of service. It is a method extraordinary in
character, hence, may be used only as prescribed and in the
circumstances authorized by statute. The statutory
requirements of substituted service must be followed
strictly, faithfully and fully, and any substituted service other
than
that
authorized
by
statute
is
considered
17
ineffective. chanroblesvirtualawlibrary

In
the
case
at
bar,
the
provides:chanroblesvirtualawlibrary

Sheriff's

Return

Respectfully returned to the Honorable Regional Trial


Court, Branch 17, Cebu City, the Summons and writ issued
in the above-entitled case with the following information, to
wit:chanroblesvirtualawlibrary

1. That the Summons, together with the complaint, writ of


replevin and bond was received on December 7, 1999, by
Rolando Bonayon, a security guard on defendant Sixto Chu
at his given address who received and signed receipt
thereof.

2. That the writ of replevin was duly executed on the same


date, December 7, 1999, Tacloban City and San Jorge,
Samar of the following properties subject of the writ.
a) Excavator Hitachi with Serial No. WHO44-116-0743
b) Motorgrader with Serial No. N525PS-1014
c) Payloader with Serial No. KLD70-54224

After the issuance of the Sheriff's inventory receipt, the


units were turned over to Al Caballero and companion,
representatives of plaintiff, who shipped the same to Cebu
to be deposited with MACH ASIA TRADING CORPORATION,
Block 26 MacArthur Highway, Reclamation Area, Cebu City,
for safekeeping, subject to the provision of Sec. 6, Rule 60
of the Rules of Court.18chanroblesvirtualawlibrary

Clearly, it was not shown that the security guard who


received the summons in behalf of the petitioner was
authorized and possessed a relation of confidence that
petitioner would definitely receive the summons. This is not
the kind of service contemplated by law. Thus, service on
the security guard could not be considered as substantial
compliance with the requirements of substituted service.

Moreover, the reasoning advanced by the CA in ruling


against the petitioner was based merely on conjectures and
surmises. The CA even went as far as to conclude that the
process server's neglect should not have unduly prejudiced
the respondent, thus:chanroblesvirtualawlibrary

Hence, if Chu had actually received the summons through


his security guard, the requirement of due process would
have nevertheless been complied with. x x x. Based on the
presumption that a person takes ordinary care of his
concerns, the security guard would not have allowed the
sheriff to take possession of the equipments without the
prior permission of Chu; otherwise he would be accountable
to Chu for the said units. Chu, for his part, would not have
given his permission without being informed of the fact of
the summons and the writ of replevin issued by the lower
court, which permission includes the authority to receive the
summons and the writ of replevin.

Thus, where summons was in fact received by defendant,


his argument that the sheriff should have tried first to serve
summons on him personally before resorting to substituted
service of summons is not meritorious.
x x x.
Evidently, plaintiff-appellee cannot be penalized, through no
fault of its own, for an irregular or defective return on
service of summons. x x x.

x x x.
In the interest of fairness, the process server's neglect or
inadvertence in the service of summons should not, thus,
unduly prejudice plaintiff-appellee's right to speedy justice.
x x x 19chanroblesvirtualawlibrary

The service of summons is a vital and indispensable


ingredient of due process. As a rule, if defendants have not
been validly summoned, the court acquires no jurisdiction
over their person, and a judgment rendered against them is
null and void.20 Since the RTC never acquired jurisdiction
over the person of the petitioner, the judgment rendered by
the court could not be considered binding upon him for
being null and void.

WHEREFORE, premises considered, the petition is


GRANTED. The Decision of the Court of Appeals, dated July
25, 2007, as well as its Resolution dated August 28, 2008,
in CA-G.R. CV No. 70666 is hereby REVERSED and SET
ASIDE. The Decision of the Regional Trial Court dated
December 15, 2000 is declared NULL and VOID. The
Regional Trial Court is hereby ORDERED to validly serve
summons upon Sixto N. Chu and, thereafter, proceed with
the trial of the main action with dispatch.
SO ORDERED.

On February 9, 1998, the petitioners filed their answer [4] with


special and affirmative defenses and counterclaim while their codefendants, Simeon Roxas-Cu and Daniel Cario, filed their answer
with affirmative defenses and cross-claim.

THIRD DIVISION
[G.R. No. 143440. February 11, 2003]
SERENA T. BACELONIA, GRACIANO BACELONIA, SR. and GRACIANO
T. BACELONIA, JR., petitioners, vs. THE COURT OF APPEALS
and SPS. VICTORINO S. BOLOS, JR. and OLIVIA P.
BOLOS, respondents.
DECISION

CORONA, J.:

This is a petition for review on certiorari under Rule 45 of the


Revised Rules of Court of the resolution[1] of the Court of Appeals
promulgated on March 6, 2000 in CA.G.R. SP No. 57455 dismissing
the petition for certiorari filed by the petitioners and its
resolution[2] promulgated on May 19, 2000 denying the motion for
reconsideration.
The facts show that, on January 12, 1998, private
respondents Victorino and Olivia Bolos filed a complaint [3] for
damages against herein petitioners including Simeon Roxas-Cu
and Daniel Cario before the Regional Trial Court of Quezon City
which was docketed as Civil Case No. Q-98-33149. The case
stemmed from a vehicular accident, involving a tamaraw-type
school shuttle service vehicle and a 6 x 6 Isuzu cargo truck, that
occurred along Aurora Blvd. in Quezon City on February 3, 1993
resulting in the untimely demise of private respondents daughter,
Jemelee Bolos. Jemelee was on board the school shuttle service
vehicle that used to transport her from Marikina City to St. Bridget
School in Quezon City.
Petitioners-spouses Graciano, Sr. and Serena Bacelonia were
named defendants in the said complaint for damages as
owners/operators of the school shuttle service that figured in the
accident. Graciano Bacelonia, Jr. was the driver thereof. The other
defendants therein, Simeon Roxas-Cu and Daniel Cario were the
owner and the driver of the cargo truck, respectively.

Meanwhile, it appears that, prior to the filing of the complaint


for damages by the private respondents, herein petitioners filed on
March 1, 1995 a complaint[5] for damages arising from the said
accident against their co-defendants with the Regional Trial Court
of Quezon City which was docketed as Civil Case No. Q-9523169. On April 27, 1995, herein petitioners and their codefendants entered into a compromise agreement [6] that led to the
dismissal[7] of the complaint in Civil Case No. Q-95-23169 on April
28, 1995 by the trial court.
On September 24, 1999, and upon termination of the
testimony of the second witness for the complainants (herein
private respondents) in Civil Case No.Q-98-33149, petitioners filed
a motion[8] to be dropped as defendants therefrom on the ground
that a compromise agreement had already been entered into by
the parties in Civil Case No. 95-23169. The petitioners opined in
essence that their co-defendants, Simeon Roxas-Cu and Daniel
Cario, had explicitly admitted sole responsibility for the vehicular
accident by entering into the compromise agreement. Thus, they
(the Bacelonias) should be excluded as defendants in Civil Case
No. 98-33149. However, their co-defendants, Simeon Roxas-Cu
and Daniel Cario, filed an opposition[9] thereto substantially
contending that res-judicata does not obtain insofar as the present
case is concerned, and that, on the contrary, they never admitted
any responsibility for the accident on February 3, 1993.
The trial court resolved to deny the motion of the petitioners
to be dropped as defendants from Civil Case No. Q-98-33149 on
January 10, 2000 for lack of merit and scheduled the reception of
evidence of the defense on February 3, 2000.
On January 31, 2000, the petitioners filed a motion for
reconsideration[10] of the trial courts order denying their motion to
be dropped as defendants from Civil Case No. Q-98-33149 and set
the date of hearing[11] thereof on February 15, 2000 at 8:30 oclock
in the morning. On the same day, January 31, 2000, the
petitioners also filed a separate motion to cancel [12] the hearing for

the presentation of evidence for the defense earlier scheduled on


February 3, 2000 so that their motion for reconsideration,
scheduled for hearing on February 15, 2000, may not be rendered
moot and academic. The motion to cancel hearing was itself
scheduled to be heard on February 3, 2000. Private respondents
opposed the twin motions of the petitioners for lack of merit and
argued that the scheduled hearing on February 3, 2000 for the
initial presentation of evidence of the defense may be availed of by
said petitioners for oral argument in support of their motion for
reconsideration.
During the scheduled hearing for the initial presentation of
evidence of the defense on February 3, 2000, the trial court denied
the motion for reconsideration of the petitioners for lack of merit.
[13]
The petitioners elevated the matter to the Court of Appeals
through a petition for certiorari[14] maintaining that they were not
accorded their right to due process when their motion for
reconsideration was denied by the trial court prior to its scheduled
hearing on February 15, 2000. However, the petition was
dismissed by the Court of Appeals in the questioned Resolution
promulgated on March 6, 2000 for being premature and for lack of
merit. The appellate court explained that the questioned order of
the trial court was interlocutory and could not be assailed in a
petition for certiorari and that, moreover, res judicata did not apply
insofar as the claim in Civil Case No. Q-98-33149 was concerned.
The subsequent motion for reconsideration was denied by the
appellate court on May 19, 2000. Hence, the instant
petition[15] raising the sole issue of whether or not the Court of
Appeals exceeded its jurisdiction when it dismissed the petition in
CA-G.R. SP No. 57455.
The private respondents filed their Comment [16] on October 9,
2000 which elicited a Reply[17] from the petitioners on May 15,
2001. Both parties filed their respective memoranda[18] on
December 18, 2001 in compliance with our resolution dated
October 8, 2001 after which the case was deemed submitted for
decision.
It should be noted at the outset that, while the instant
petition is ostensibly denominated as a petition for review on
certiorari under Rule 45 of the Revised Rules of Court seeking a
review of the questioned resolutions of the Court of Appeals, the

discussion therein exclusively dwells on the sole issue of whether


or not the appellate court committed grave abuse of discretion, a
question which may be appropriately addressed through a petition
for certiorari under Rule 65. Specifically, petitioners claim that the
Court of Appeals exceeded its jurisdiction when it dismissed their
petition in CA G.R. S.P. No. 57455 allegedly for being premature
and for lack of merit, thereby totally ignoring the basic issue on
the alleged violation by the trial court of their basic right to due
process. It must be emphasized that a petition for review under
Rule 45 of the Revised Rules of Court is generally limited only to
questions of law or errors of judgment. [19] On the other hand, the
petition for certiorari under Rule 65 may be availed of to correct
errors of jurisdiction including the commission of grave abuse of
discretion amounting to lack or excess of jurisdiction.
[20]
Consequently, the instant petition for review may be denied for
being an erroneous legal recourse.
At any rate, and to finally dispose of the instant controversy,
we rule that the Court of Appeals correctly dismissed the petition
in CA G.R. S.P. No. 57455 for the reason that the trial court did not
abuse its discretion in denying the petitioners motion for
reconsideration on February 3, 2000. By grave abuse of discretion
is meant such capricious and whimsical exercise of judgment as
would be equivalent to lack of jurisdiction. The abuse of discretion
must be patent and gross as to amount to an evasion of positive
duty or a virtual refusal to perform a duty enjoined by law, or to
act at all in contemplation of law as where the power is exercised
in an arbitrary and despotic manner by reason of passion and
hostility.[21]
It should be noted that the motion for reconsideration of the
trial courts resolution on January 10, 2000 was filed by the
petitioners on January 31, 2000. The date and time of hearing
thereof was set by the petitioners on February 15, 2000 at 8:30
oclock in the morning. In this connection, Rule 15, Section 5 of the
Revised Rules of Court on motions provides:
Section 5. Notice of hearing.- The notice of hearing shall be
addressed to all parties concerned, and shall specify the time and
date of the hearing which must not be later than ten (10) days
after the filing of the motion. (Emphasis ours)

It is clear then that the scheduled hearing of the said motion


for reconsideration was beyond the period specified by the Revised
Rules of Court which was not later than ten (10) days after the
filing of the motion, or no later than February 10, 2000.
Significantly, the above provision of Rule 15, Section 5 uses the
mandatory term must in fixing the period within which the motion
shall be scheduled for hearing. A motion that fails to religiously
comply with the mandatory provision of Rule 15, Section 5 is pro
forma and presents no question which merits the attention and
consideration of the court.[22]
The mandatory character of Rule 15, Section 5 of the Revised
Rules of Court becomes specially significant in this case,
considering the claim of the private respondents that the
petitioners have been engaging in dilatory tactics, an imputation
not without factual basis. As borne by the records, herein
petitioners and their co-defendants, Simeon Roxas-Cu and Daniel
Cario, entered into a compromise agreement on April 27, 1995
that led to the dismissal by the trial court of the complaint in Civil
Case No. Q-95-23169 on April 28, 1995.
This compromise agreement was already interposed by the
petitioners as one of the special and affirmative defenses in their
answer to the complaint for damages in Civil Case No. Q-9833149. Thus it was no longer legally possible for the petitioners to
file the Motion to Exclude on September 24, 1999 in Civil Case No.
Q-98-33149 (actually a motion to dismiss the case against them),
based on a compromise agreement that did not even bind the
complainants (herein private respondents) who were not parties
thereto.[23] At such stage, the private respondents were already
winding up the presentation of their evidence in Civil Case No. Q98-33149.
Upon the denial of their Motion to Exclude on January 10,
2000, the petitioners filed the subject motion for reconsideration
on January 31, 2000. In addition, they moved to cancel the
scheduled hearing for the initial presentation of their evidence
already scheduled on February 3, 2000 ostensibly to give way to
oral arguments in support of their motion for reconsideration
which, as above discussed, was pro forma. By their actuations, it
can be conclusively presumed that the petitioners had no other

intention but to delay the proceedings in Civil Case No. Q-9833149.


Besides, the petitioners cannot validly invoke violation of due
process to question the trial courts denial of their motion for
reconsideration. It should be pointed out that the motion to cancel
the scheduled hearing on February 3, 2000 filed on January 31,
2000 by the petitioners was itself scheduled to be heard on
February 3, 2000[24] which latter date, incidentally, was previously
set
by
the
trial
court
for
reception
of
defendants
evidence. Admittedly, the petitioners were present during the
hearing on said date to argue on the merits of their motion to
cancel.[25] On the same occasion, the private respondents objected
to the motion to cancel the hearing on February 3, 2000, arguing
that no compelling reason existed to grant the said pending
motion; they proposed instead that petitioners avail of the said
setting to argue their motion for reconsideration. [26]
Despite the denial by the trial court of their motion to cancel,
and a subsequent directive for them to argue their motion for
reconsideration on February 3, 2000, the petitioners chose to
ignore the same. The petitioners thus had only themselves to
blame for not having been heard on their motion for
reconsideration. Under the Constitution, what is violative of due
process is the denial of the opportunity to be heard. In the case at
bar, no grave abuse of discretion can be ascribed to the trial court
inasmuch as it afforded the petitioners more than ample
opportunity to explain their side.[27]
WHEREFORE, the instant petition for review on certiorari is
hereby DENIED.
SO ORDERED.

the Court of Appeals (CA) in CA-GR SP No. 69209. The


assailed CA Decision disposed as follows:

THIRD DIVISION
JEHAN SHIPPING CORPORATION, G.R. No. 159750
Petitioner,
Present:
Panganiban, J.,
Chairman,
- versus - Sandoval-Gutierrez,
Corona,
Carpio Morales, and

Garcia, JJ
NATIONAL FOOD AUTHORITY, Promulgated:
Respondent.
December 14, 2005
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --x
DECISION
PANGANIBAN, J.:

The general rule is that the three-day notice requirement in


motions under Sections 4 and 5 of the Rules of Court is
mandatory. It is an integral component of procedural due
process. But when the adverse party has actually had the
opportunity to be heard, and has indeed been heard
through pleadings filed in opposition to the motion, the
purpose behind the rule is deemed duly served. The
requirements of due process are substantially complied
with.
The Case
Before us is a Petition for Review,[1] filed by Jehan
Shipping Corporation under Rule 45 of the Rules of Court.
The Petition seeks to reverse and set aside the January 31,
2003 Decision[2] and the September 9, 2003 Resolution[3] of

WHEREFORE, in the light of the foregoing,


the Petition is hereby GRANTED. The questioned
Joint Resolution dated 08 January 2002, the Writ of
Execution dated 16 January 2002, and the Order
dated 25 January 2002 are hereby SET ASIDE. Public
respondent is ordered to rule on the substantive
merits of petitioner [herein respondent] NFAs Motion
for Reconsideration and Supplemental Motion For
Reconsideration and, thereafter, to proceed in
accordance with the rules of procedure. The
injunction prayed for is hereby GRANTED and made
permanent.[4]
The CA denied reconsideration in its September 9, 2003
Resolution.
The Facts
The relevant procedural and factual antecedents of
this case are summarized in the challenged Decision, as
follows:
On 02 August 1997, [petitioner] Jehan Shipping
Corporation (Jehan, for short) filed a complaint
against NFA [National Food Authority] before the
Regional Trial Court of Cebu City, Branch 5 for
collection of a sum of money with a prayer for
injunction. The complaint alleged, among others,
that NFA failed and refused to pay the sum of One
Hundred Thirty Nine Thousand and Thirty Pesos
(P139,030.00) representing earned freight for the
services
of Jehans vessel,
the
M/V
Phannie,
which NFA hired
on
30
April
1996
to
transport NFAs nineteen thousand three hundred
(19,300) bags of imported rice from the M/V Altabith
berthed at the Cebu anchorage area to the pier of

Cebu City. The complaint further alleged that the M/V


Phannie capsized and sank on 01 May 1996 due to
big waves generated by fast crafts for which reason,
thus, Jehan incurred expenses in salvaging and
subsequently rehabilitating the vessel in the amount
of Thirteen Million Six Hundred Twelve Thousand
Seven Hundred Sixty Seven Pesos and Forty Seven
Centavos (P13,612,767.47); and that the sinking of
the vessel was due toNFAs fault and negligence as
an NFA representative who was on the vessel did not
allow it to leave because there was no berthing
space at the pier though the vessel would have
immediately left after the bags of rice were unloaded
on it. On 18 September 1997, NFA filed its Answer
with
Counterclaims
which
specifically
denied Jehans allegations,
and
alleged
that Jehan had no cause of action; that the
proximate cause of the sinking of the M/V Phannie
was the fault, negligence, and lack of care and
foresight of the vessels crew which was under the
employ of Jehan; that Jehan was grossly negligent in
the performance of its duties in the loading of the
bags of rice; that the vessels sinking was entirely
due to its unseaworthiness; and that the NFA was
not liable for the salvaging and rehabilitation of the
vessel as it was not the vessels owner. NFA alleged in
its counterclaim that it incurred losses equivalent to
the value of the 19,300 bags of rice, and that it
incurred transportation expenses, expenses to
contract the services of a legal counsel, and other
expenses x x x.
On 28 August 2001, a Decision was rendered
which ordered NFA, among others, to pay Jehan the
amounts the latter claimed as earned freight for the
services of, and as expenses in salvaging and
rehabilitating, the M/V Phannie as well as interest

therefor; and attorneys fees, litigation expenses, and


the cost of the suit x x x.
On 01 October 2001, NFA received a copy of
the Decision x x x.

On 02 October 2001, Jehan filed a Motion For


Execution Pending Appeal to which an Opposition
was filed by NFA on 25 October 2001. Jehan filed on
26 November 2001 a Reply to the Opposition to
which NFA filed on 06 December 2001 a Rejoinder
with addendum to the Opposition x x x.

On 16 October 2001, NFA filed a Motion For


Reconsideration of the Decision. On 12 November
2001, it filed a Supplemental Motion For
Reconsideration x x x.

On 09 November 2001, the court a quo issued


in open court at the hearing on said date an Order
that
it
shall
hold
in
abeyance
resolution
of Jehans Motion For Execution Pending Appeal
pending
resolution
of NFAs Motion
For
Reconsideration x x x.

On 15 November 2001, Jehan filed an


Opposition to NFAs Motion For Reconsideration which
Opposition was received by NFA on 22 November
2001.
On
03
December
2001, NFA filed
a
Reply/Comment to the Opposition x x x.

On 06 December 2001, Jehan filed an


Opposition
to
Supplemental
Motion
For
Reconsideration with Counter-Omnibus Motion: 1.
For Leave to Withdraw Motion For Execution Pending
Appeal; and, 2. For the Issuance of a Writ of
Execution x x x.

On 07 December 2001, public respondent


called
for
a
hearing
on NFAs Motion
For
Reconsideration and Supplemental Motion For
Reconsideration
as
well
as Jehans motion
to
withdraw the Motion For Execution Pending Appeal
and motion for the issuance of a writ of execution
with notice to both counsel of [NFA] and [Jehan].
[Jehans] counsel appeared while NFAs counsel failed
to appear. Public respondent issued an Order on said
date which, among others, directed [NFAs] counsel
to comment on Jehans motion to withdraw the
Motion For Execution Pending Appeal and motion for
the issuance of a writ of execution within ten (10)
days from receipt of a copy of said Order x x x.

On 04 January 2002, NFA received the Order


dated December 7, 2001 x x x.

On 14 January 2002, NFA filed a Motion To


Defer Resolution of the Plaintiffs Motion For
Execution Pending Resolution of Defendants Motion
For Reconsideration and Supplemental Motion For
Reconsideration x x x.

On 08 January 2002, public respondent


issued the x x x Joint Resolution [dated January 8,
2002] denying NFAs Motion For Reconsideration and
Supplemental Motion For Reconsideration on the
ground that it did not contain any notice of hearing
directed to the parties, stating the time and place of
hearing contrary to the mandate of Sections 4 and 5,
Rule 15 of the Rules of Court. Consequently, public
respondent granted Jehans motion for the issuance
of a writ of execution. Moreover, public respondent
ruled that Jehans Motion For Execution Pending
Appeal
has
become
moot
and
academic
because Jehan already decided to withdraw it x x x.

On 16 January 2002, the x x x Writ of


Execution [dated 16 January 2002] was issued x x x.

On 18 January 2002, NFA filed a Notice of


Appeal x x x.

On 25 January 2002, public respondent


issued the x x x Resolution which denied NFAs Notice
of Appeal on the ground that the Decision has
already become final x x x.[5]

for Reconsideration and the Supplemental Motion for


Reconsideration filed by the NFA. Moreover, he was present
during the hearing of the Motions. Hence, the CA concluded
that the requirement of the Rules on notice of hearing in
motions had sufficiently been met, and the trial court erred
in denying the Motions and in declaring them pro forma.
Consequently, it held that NFAs period to appeal had not yet
lapsed.
Furthermore, the appellate court held that there was
a denial of due process when the trial court ruled upon
Jehans Motion for the Issuance of a Writ of Execution even
before NFA had the opportunity to file a comment within the
period given.
Hence, this Petition.[6]

Issue
Respondent National Food Authority (NFA) assailed before
the Court of Appeals, via a Petition for Certiorari and
Prohibition with Application for Preliminary Injunction and
Temporary Restraining Order, the trial courts January 8,
2002 Joint Resolution, January 16, 2002 Writ of Execution,
and January 25, 2002 Order.

Ruling of the Court of Appeals


The CA found that, despite lack of notice of the date
and time of hearing, Jehans counsel -- in his Oppositions -was able to refute the substantial issues raised in the Motion

In its Memorandum, petitioner submits this lone issue for


our consideration:

Whether or not the Court of Appeals may still


disturb, much less review and set aside on
certiorari under Rule 65, a Writ of Execution
issued by the trial court to implement its
Decision which is already final and executory
by operation of law.[7]

Stated otherwise, the issue for our resolution is whether the


CA committed a reversible error of law in granting the writ
of certiorari. Corollary to this question is whether the lack of
notice of hearing in the Motion for Reconsideration is fatal,
such that the filing of the Motion did not toll the period to
appeal, and the August 28, 2001 RTC Decision consequently
became final and executory.

The Courts Ruling

The Petition is devoid of merit.

Main Issue:
Lack of Notice of Hearing
in a Motion for Reconsideration
Admittedly, respondent committed a procedural lapse
in failing to include a notice of hearing in its Motion for
Reconsideration,[8] filed on the very last day of its appeal
period or on October 16, 2001. Again, it committed the
same lapse in its Supplemental Motion for Reconsideration,
[9]
which it filed on November 12, 2001.[10] It postulates,
though, that the procedural lapse should not defeat its
Motions for the following reasons: (1) petitioner was able to
oppose squarely the issues raised in the Motion for
Reconsideration filed by respondent; and, (2) in deciding
against the latter, the trial court manifestly committed a
grave error, which resulted in huge losses for the
government. Respondent adds that the procedural rule,
which is intended to secure substantial justice, may be

relaxed when its rigid application would defeat the ends of


justice.
Citing various decisions of this Court, however,
petitioner avers that, because of the failure of respondent to
include a notice of hearing, the latters Motions are worthless
pieces of paper with no legal effect.
Purpose Behind the
Notice Requirement
This Court has indeed held time and time again that,
under Sections 4[11] and 5[12] of Rule 15 of the Rules of
Court, mandatory is the notice requirement in a motion,
which is rendered defective by failure to comply with the
requirement.[13] As a rule, a motion without a notice of
hearing is considered pro forma and does not affect the
reglementary period for the appeal or the filing of the
requisite pleading.[14]
As an integral component of procedural due process,
the three-day notice required by the Rules is not intended
for the benefit of the movant. Rather, the requirement is for
the purpose of avoiding surprises that may be sprung upon
the adverse party, who must be given time to study and
meet the arguments in the motion before a resolution by
the court.[15] Principles of natural justice demand that the
right of a party should not be affected without giving it an
opportunity to be heard.[16]
The test is the presence of the opportunity to be
heard, as well as to have time to study the motion and
meaningfully oppose or controvert the grounds upon which
it is based. Considering the circumstances of the present
case, we believe that the requirements of procedural due
process were substantially complied with, and that the
compliance justified a departure from a literal application of
the rule on notice of hearing.[17]

Petitioners Opportunity
To Be Heard
A close perusal of the records reveals that the trial
court gave petitioner ten days within which to comment on
respondents Motion for Reconsideration. Petitioner filed its
Opposition to the Motion on November 26, 2001. In its 14page Opposition,[18] it not only pointed out that the Motion
was defective for not containing a notice of hearing and
should then be dismissed outright by the court; it also
ventilated its substantial arguments against the merits of
the Motion and of the Supplemental Motion for
Reconsideration. Notably, its arguments[19] were recited at
length in the trial courts January 8, 2002 Joint Resolution.
Nevertheless, the court proceeded to deny the Motions on
the sole ground that they did not contain any notice of
hearing.
The requirement of notice of time and hearing in the
pleading filed by a party is necessary only to apprise the
other of the actions of the former.[20] Under the
circumstances of the present case, the purpose of a notice
of hearing was served.
Equally important is the fact that the trial court set
the Motion for Reconsideration and the Supplemental Motion
for Reconsideration for hearing on December 7, 2001,
during which petitioners counsel appeared. [21] In other
cases,[22] the Court has held that lack of notice is cured
when, after learning that a motion has that defect, the trial
court promptly resets a hearing with due notice to all the
parties. Hence, we find no reversible error committed by the
CA in ruling that the Motion for Reconsideration was not pro
forma and in setting aside the subject Orders of the trial
court.
Counsels Duty
Indeed, in this particular case, the purpose of the
notice requirement in motions has been duly served. But

even as we rule in this manner, we emphasize that NFAs


lawyer was supposed to be inbued with a knowledge of rules
and procedures, especially elementary ones like those
involved in this case. The counsel was duty-bound to
observe and abide by those rules and procedures, which
were
designed
primarily
to
ensure
the
orderly
administration of justice. Unnecessary delays can be
avoided when lawyers are diligent and faithful in performing
their duties.
Additional Arguments
of the Parties
In addition to its arguments on the main issue,
petitioner avers that the RTC was nonetheless correct in
finding that the sinking of M/V Phannie was attributable to
respondent, which should therefore be made liable for the
resulting damages. Respondent contends, though, that the
trial court (1) should have applied the setoff or
compensation principle in the instant case; and (2) should
not have relied merely upon the findings and
recommendations of the Special Board of Marine Inquiry
(SBMI) for holding the NFA liable for the sinking of M/V
Phannie.
The above arguments, however, refer to the merits
of the August 28, 2001 RTC Decision. They had not been
raised in the Petition before the CA and were consequently
not taken up in its assailed Decision. Neither have they been
included as issues in the Petition before us. In fact, the
arguments of respondent are the very grounds for its
Motion for Reconsideration and Supplemental Motion for
Reconsideration before the trial court. Hence, we deem it
improper to resolve them at this time.
WHEREFORE, the Petition is DENIED and the
Decision AFFIRMED. Costs against petitioner.

assailed

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 151170

Victory Liner, Inc. and an Isuzu Truck used by respondent Michael


Malinias.1 Nobody died, but both vehicles were damaged from the
accident. A complaint for sum of money and damages was
instituted by respondent against petitioner and the bus driver,
Leoncio Bulaong, alleging pecuniary damage to the truck in the
amount of P47,180.00, representing lost income for the non-use of
the truck as it underwent repairs in the amount of P15,000.00.
Claims for exemplary damages and attorneys fees were also
lodged in the complaint,2which was filed with the Municipal Trial
Court (MTC) of La Trinidad, Benguet. After pre-trial, the bus driver
was dropped as defendant in the case after summons could not be
served on him and respondent agreed to waive his cause of action
against said driver.3

May 29, 2007

VICTORY LINER, INC., Petitioner,


vs.
MICHAEL MALINIAS, Respondent.

DECISION
TINGA, J.:

The matter began as a simple civil suit for damages arising from
an unremarkable traffic accident. However, the procedural aspect
of the case has since taken on a life of its own, transforming what
should be a molehill into a mountain built on sediments of
compounded errors.

This case finds its origin from a vehicular collision that occurred in
La Union on 19 March 1996 between a bus owned by petitioner

In the course of trial, respondent finished presenting his evidence


and rested his case. In the meantime, counsel for petitioner filed a
motion to withdraw as counsel, but the same was denied by the
MTC in an Order dated 15 September 1997 as the motion did not
bear any signature of conformity from the petitioner. When the
case was called for the reception of petitioners evidence on the
previously scheduled date of 27 October 1997, no appearance was
made for the bus company. Respondent thus immediately moved
that petitioner be declared to have waived its right to adduce
evidence in its favor and that the case be deemed submitted for
judgment. The MTC found merit in respondents contention, and
ordered the case be deemed submitted for decision as of 27
October 1997. On 13 January 1998, the MTC rendered judgment in
favor of respondent, awarding him the sum ofP82,180.00.

Through its new counsel, petitioner filed a Motion for


Reconsideration. The Notice of Hearing therein stated: "Please
submit the foregoing Motion for Reconsideration for hearing before

the Honorable Court at a schedule and time convenient to this


Honorable Court and the parties." 4 The MTC ruled in an
Order5 dated 23 February 1998 that the notice did not conform
with the mandatory requirements of Section 5, Rule 15 of the 1997
Rules of Civil Procedure, and that the motion was thus a mere
scrap of paper which did not suspend the period to appeal.
Accordingly, the MTC declared that its earlier judgment dated 13
January 1998 had become final and executory. In the same order
and upon the same predicates, the MTC also granted the Motion
for Issuance of Writ of Execution filed by respondent.

Petitioner responded to the foregoing developments by filing a


Notice of Appeal, as well as a motion for the inhibition by the MTC
judge which motion was immediately granted. The case was
assigned to a new MTC judge, who was then tasked with ruling on
the Notice of Appeal. It was only on 28 September 1999, or
eighteen (18) months after the Notice of Appeal was filed, that the
MTC acted on the same and ruled that it had been filed beyond the
reglementary period. Again, the MTC reiterated that the Judgment
dated 13 January 1998 had long become final and executory since
the fatally defective Motion for Reconsideration did not toll the
reglementary period for appeal.6

What then followed was a series of unsuccessful attempts by


petitioner to have the lower courts set aside or stay the now-final
judgment against it. First, petitioner filed a Petition for Relief from
Judgment with the MTC on 25 October 1999. 7 This was denied by
the MTC in an Order8 dated 13 March 2000 on the ground that it
had been filed out of time. The MTC explained that the petition for
relief from judgment must have been filed either within sixty (60)
days from the date petitioners new counsel learned of the
judgment, or sixty (60) days after learning that the Motion for

Reconsideration had been denied for having been filed out of time.
Neither circumstance was met by petitioner. Subsequently, the
MTC likewise denied a Motion for Reconsideration filed by
petitioner.9

Second, petitioner filed on 26 June 2000 a petition for


certiorari10 under Rule 65 with the Regional Trial Court (RTC) of La
Trinidad, Benguet, imputing grave abuse of discretion to the MTC,
and seeking to annul four (4) of the MTCs rulings, namely: the
original 1998 judgment against petitioner; the 1999 order which
declared that the Notice of Appeal was filed out of time; and the
two orders dismissing the Petition for Relief from Judgment. The
petition for certiorari was dismissed by the RTC in an Order 11 dated
21 November 2000. The RTC agreed with the MTC that the Petition
for Relief from Judgment had been belatedly filed. The RTC also
reiterated the consistent ruling that the judgment in question had
already become final in February of 1998. Thus, the RTC could not
ascribe grave abuse of discretion to the MTC.12

Petitioner filed a motion for reconsideration of the RTC ruling, while


respondent filed with the same court a motion for execution. On 3
July 2001, at a point when petitioner had allegedly not yet
received any order acting on its motion for reconsideration,
petitioner received instead an Order dated 21 June 2001 13 where
the RTC directed the issuance of a writ of execution in favor of
respondent, the MTC judgment having already become final and
executory.1vvphi1.nt

Third, petitioner filed on 17 July 2001 with the Court of Appeals a


"Petition for Certiorari to Annul Judgment" under the aegis of Rule

47 of the 1997 Rules of Civil Procedure. Interestingly, based on the


first paragraph and the express relief prayed for in this petition,
the "judgment" sought to be annulled was not the final and
executory judgment of the MTC, but rather, the two orders of the
RTC which successively dismissed the special civil action for
certiorari, and directed the issuance of a writ of execution in favor
of respondent.14 However, in explaining the "nature of the
petition," petitioner claimed that it was seeking to annul the
judgment and orders of both the RTC and the MTC, 15 although the
issues identified in the petition pertain only to "serious errors" and
"grave abuse of discretion" on the part of the RTC. 16 There is a
general allegation that the acts of the RTC in granting the motion
for execution even before petitioners motion for reconsideration
was acted upon constituted an extrinsic fraud, 17but no particular
arguments were offered to explain why that was so.

The petition for annulment of judgment was accompanied by a


Verification and Certification Against Forum Shopping which was
signed by counsel for petitioner. On that basis, the Court of
Appeals dismissed the petition outright in a Resolution 18 dated 26
July 2001, stressing the rule that it should be the petitioner, not its
counsel, which should execute the verification and certification
against forum shopping.1awphi1.nt

Petitioner filed a Motion for Reconsideration19 where it pointed out


that it had simultaneously filed with its petition for annulment of
judgment a Motion for Extension 20 to submit the certificate of
authority to file the petition. The day after the petition was filed, or
on 18 July 2001, petitioner filed with the Court of Appeals the said
Certificate of Authority.21 The Certificate of Authority prepared by
petitioners corporate secretary, dated 17 July 2001, certified that
on 10 July 2001, petitioners board of directors authorized counsel

for petitioner to file "the necessary action, petition or any other


pleadings necessary in any and all hierarchy of courts" with
respect to the instant case.22

Nonetheless, the Court of Appeals, on 5 December 2001, issued a


Resolution23 denying the Motion for Reconsideration. The appellate
court observed that in petitioners Motion for Extension to submit
the certification of authority, it was explained that petitioners
counsel was constrained to sign the verification and certification
against forum shopping because "the certificate of authority
granted to the petitioners station manager in Baguio City has been
misplaced."24 The Court of Appeals thus concluded that "the one
really authorized to represent the petitioner is Operations Manager
Rogelio Ortega stationed in Baguio City, but whose authority has
been misplaced or lost, as in fact, the latter signed the certification
on non-forum shopping in the petition filed before the
[RTC]."25 The Court of Appeals also reiterated that subsequent
compliance such as petitioners counsels subsequent submission of
her authority to represent the petitioner, would not excuse
petitioners failure to comply with the required certification against
forum-shopping in the first instance.

The Court of Appeals further held that upon a "judicious reading of


the instant petition for the annulment of judgment and its
annexes," it was clear that the ground of extrinsic fraud raised by
petitioner had already been availed of in its earlier petition for
relief from judgment before the MTC. Such circumstance
contradicted Section 2 of Rule 47, which provides that "extrinsic
fraud shall not be a valid ground (for annulment of judgment) if it
was availed of, or could have been availed of, in a motion for new
trial or petition for relief."26

Hence this petition for review under Rule 45, seeking that the
Court "annul and set aside the questioned Resolutions of the Court
of Appeals x x x as well as the twin Orders of [the RTC] x x x and
remand the case [to] the court of origin for further proceedings
and give petitioner its right to present its case in the interest of
due process and substantial errors." 27

Two sets of arguments are raised. The first concerns the errors
ascribed to the Court of Appeals in dismissing outright the petition
for annulment of judgment. The second concerns the alleged grave
abuse of discretion on the part of the RTC in directing the issuance
of the writ of execution even without resolving petitioners motion
for reconsideration.

The reasoning employed by the Court of Appeals in dismissing the


petition for annulment of judgment is fraught with error and thus
cannot be sustained. At the same time, however, the petition now
before the Court cannot be granted.l^vvphi1.net

As indicated in the 5 December 2001 Resolution of the Court of


Appeals, the two main grounds relied upon for dismissing the
petition for annulment of judgment were petitioners failure to
comply with the requirements in the execution of the verification
and certification against forum-shopping, and the petitions
reliance on the ground of extrinsic fraud which could have been
raised or availed of in a motion for new trial or petition for relief.
We turn our attention to the first ground.

It is of importance that, as borne by the Certificate of Authority


executed by petitioners Corporate Secretary, counsel for petitioner
had been authorized by petitioners Board of Directors to prepare
and file with the Court of Appeals the petition herself as of 10 July
2001, or seven (7) days before the petition was indeed filed. We
fail to understand the significance attached by the Court of Appeals
on the prior authority of the Baguio station manager to perform
the same acts. The impression left by the disquisition of the
appellate court is that such prior authority was beyond recall by
petitioners Board of Directors, and that no new person could be
similarly authorized by the corporation to perform such acts.

The fact that the previous authority may have been misplaced or
lost, thus causing petitioner to authorize a new person to file the
necessary pleadings or petitions in the case involving the
respondent, is of no consequence if the new authority is issued
before the filing of the pleading that requires verification or
certification against forum-shopping. The circumstance is similar to
a situation where the previously authorized person had died or
severed his or her connection with the corporate litigant. Juridical
persons appearing before the courts are not perpetually bound to
maintain the same authorized representatives in the preparation
and certification of pleadings.

The appellate court cited the rule that substantial compliance could
not cure the defect in the verification or certification requirements.
Yet the bare fact remains that counsel for petitioner was
authorized to prepare the petition and to execute the verification
and certification requirements at the time the petition was filed
with the Court of Appeals, a fact borne out by the Certificate of

Authority itself. The error consisted in petitioner counsels failure to


attach such certificate to the petition, but she did submit said
certificate to the Court of Appeals the very next day. Petitioner
emphasizes that the certificate of authority submitted on 18 July
2001 was filed "on the 15th day of the 60-day reglementary period
to file appeal," perhaps to stress the point that if the petition itself
was filed on the same day as the certificate of authority, the
petition would have still been timely. However, petitioner seems to
forget that under Rule 47, its petition for annulment of judgment
based on extrinsic fraud28 actually had a term of four (4) years 29as
"reglementary period."

In any event, the observation of the Court of Appeals that


substantial compliance "will not suffice in the matter involving
strict observance" of the certification requirement on non-forum
shopping contradicts our recent jurisprudence which holds that
"[t]he rule of substantial compliance may be availed of with
respect to the contents of the certification [against forum
shopping]."30 While the lack of certification against forum shopping
is generally not cured by its submission after the filing of the
petition, and the submission of a certificate against forum
shopping is deemed obligatory, the requirement has been relaxed
under justifiable circumstances under the rule on substantial
compliance.31 The same characteristics hold true as to the
verification requirement.32

We hold and so rule that the appellate courts utilization on


petitioners belated submission of the complete verification and
certification requirements as anchor for the dismissal of the
petition for annulment of judgment does not merit affirmance.

The Court of Appeals did rely on another ground for the dismissal
of the petition for annulment of judgment, the reliance on the
ground of extrinsic fraud which could have been availed of in a
motion for new trial or petition for relief. The formulation by the
appellate court on that score cannot be fully adopted by the Court.
However, to demonstrate why the Court of Appeals erred in that
regard, it is necessary to discuss the more fundamental errors that
have attended the facts of this case, errors for which petitioner is
mostly to blame, errors which militate against the grant of this
petition.
From the timeline, it appears that petitioners woes began after the
motion to withdraw as counsel filed by its former lawyer was not
allowed by the MTC due to the absence of the written conformity
thereto of the petitioner.33 At the next hearing date, when
petitioner was to commence its presentation of evidence, nobody
appeared in its behalf, causing the MTC, upon motion, to consider
as waived petitioners right to present its evidence. The
subsequent rendition of the MTC Judgment without considering the
evidence of petitioner would form its initial cause of distress.

But what proved to be the most crucial failure on the part of


petitioner was to file a Motion for Reconsideration of the MTC
Judgment which contained a defective Notice of Hearing, failing as
it did to set a date for hearing. Under Sections 5 and 6 of Rule 15,
the notice of hearing shall be addressed to the parties concerned
and shall specify the time and date of the hearing of the motion;
no motion shall be acted upon by the court without proof of service
of the notice thereof, except when the court is satisfied that the
rights of the adverse party are not affected.34

Not only did the defect render the motion for reconsideration itself
unworthy of consideration, it more crucially failed to toll the period
to appeal. A motion without a notice of hearing is pro forma, a
mere scrap of paper that does not toll the period to appeal, and
upon the expiration of the 15-day period, the questioned order or
decision becomes final and executory. The rationale behind this
rule is plain: unless the movant sets the time and place of hearing,
the court will be unable to determine whether the adverse party
agrees or objects to the motion, and if he objects, to hear him on
his objection, since the rules themselves do not fix any period
within which he may file his reply or opposition.35

Thus, the MTC judgment became final and executory despite the
filing of the Motion for Reconsideration thereto, as said motion did
not toll the period for filing an appeal therefrom. Yet that did not
mean that petitioner was left bereft of further remedies under our
Rules. For one, petitioner could have assailed the MTCs denial of
the Motion for Reconsideration through a special civil action for
certiorari under Rule 65 alleging grave abuse of discretion
amounting to lack of jurisdiction on the part of the MTC in denying
the motion. If that remedy were successful, the effect would have
been to void the MTCs denial of the Motion for Reconsideration,
thus allowing petitioner to again pursue such motion as a means
towards the filing of a timely appeal.

Another remedy for the petitioner is found under Rule 38 of the


1997 Rules of Civil Procedure, which governs petitions for relief
from judgment. Indeed, Section 2, Rule 38 finds specific
application in this case, as it provides that "[w]hen a judgment or
final order is rendered by any court in a case, and a party thereto,
by fraud, accident, mistake, or excusable negligence, has been
prevented from taking an appeal, he may file a petition [for relief

from denial of appeal] in such court and in the same case praying
that the appeal be given due course." 36 Such petition should be
filed within sixty (60) days after the petitioner learns of the
judgment or final order, and not more than six (6) months after
such judgment or final order was entered. The facts of this case
indicate that petitioner could have timely resorted to this remedy.

What the petitioner undertook instead was to pursue the notice of


appeal, despite the unequivocal statement in the MTC Order of 23
February 1998 that "the Judgment [sought to be reconsidered] has
now become final and executory." 37 The Rules mandate that an
appeal by notice of appeal is deemed perfected upon the filing of
the notice of appeal in due time, 38 due time being within fifteen
(15) days after notice to the appellant of the judgment or final
order appealed from.39 While the period of appeal shall be
interrupted by a timely motion for reconsideration, 40 the MTC
deemed, with legal basis, that the motion interposed by petitioner
could not have been deemed filed and should instead be treated as
"a mere scrap of paper."

The apposite reaction on the part of petitioner would have been to


seek the reversal of the MTC Order which disregarded its motion
for reconsideration, through either of the remedies we explained
above. Certiorari has as its object the nullification of the MTC
Order on the basis that it was rendered with grave abuse of
discretion, while a petition for relief seeks that the MTC allow the
appeal despite the finality of judgment on the ground that
petitioner was prevented from taking an appeal due to fraud,
accident, mistake, or excusable negligence. Either remedy would
have had the benefit of intellectual honesty, as they recognized the
MTC declaration that the judgment had become final. At the same
time, either remedy provides the appropriate recourse to the

petitioner in the face of such declaration, since both petitions for


certiorari and for relief from judgment would be aimed at setting
aside the adverse ill-effects of the MTCs pronouncement.

On the other hand, a notice of appeal pursued even with a prior


pronouncement by the trial court that the judgment sought to be
appealed was already final is either misconceived or downright
obtuse. It may have been a different matter if the notice of appeal
was undertaken without there being any prior express ruling from
the trial court that the appealed judgment was already final and
that statement was instead expressed at the time the trial court
denies the notice of appeal, for at least in that case, the appellant
proceeded with the appeal with the comfort that the trial court had
not yet said that the appeal was barred. However, as in this case,
where the trial court already notified the would-be appellant that
the judgment was already final, executory and thus beyond
appeal, appellant should suffer the consequences if the notice of
appeal is nonetheless stubbornly pursued.

Within this context, it does not even really matter whether


petitioners legal rights were unduly impaired by the MTCs abject
refusal to recognize its motion for reconsideration, thus giving rise
to the finality of the judgment in question. Even if the petitioner
has the right to feel aggrieved over the MTCs action in this case, it
should not have pretended that its right to appeal remained
undiminished and viable by filing the notice of appeal. It should
have instead undertook first to remove the cloud that hovered on
its right to appeal. As earlier explained, our procedural rules give
ample guidance and method as to how petitioner could have
removed such cloud. A notice of appeal under these circumstances
is unresponsive to the main impediment to petitioners cause the
prevailing finality of the MTC judgment.

Truth be told, the fact that the MTC had taken more than eighteen
(18) months before it acted on the Notice of Appeal is close to
scandalous, even if such delay was caused in part by the inhibition
of the original judge who heard the case. Still, the delay could not
have extenuated the defunctness of appeal as a remedy available
to petitioner. A notice of appeal presupposes that appeal still exists
as a right to the appellant, hence the use of the term "notice,"
since the function of the submission is merely to notify the trial
court that the appellant was availing of the right to appeal, and not
to seek the courts permission that it be allowed to pose an appeal.
In the same vein, the "denial" or refusal to take cognizance of a
notice of appeal is predicated on a finding that the right to appeal
did not or no longer existed, and not on the refusal of the trial
court to allow the appellant to pursue the appeal.

Hence, petitioner could not, by way of notice of appeal, seek the


restoration of its extinct right to appeal. Despite the egregious
delay by the MTC in acting on the Notice of Appeal, the fact
remains that the MTC could not have given due course to the
appeal whether it had acted the day after the notice of appeal was
filed, or more than eighteen (18) months later.

Notably, it was only after the Notice of Appeal was denied that the
petitioner had pursued the two remedies it could have undertaken
from the MTC Order declaring its motion for reconsideration as a
mere scrap of paper. First, petitioner filed a Petition for Relief from
Judgment with the MTC. The problem with this remedy was the
utter belatedness in the resort thereto. Section 3 of Rule 38
requires that said petition must be filed within sixty (60) days after
petitioner learns of the judgment, final order or other proceeding

to be set aside, and not more than six (6) months after such
judgment or final order was entered. Neither benchmark was met
by the petitioner, since the petition was filed only on 25 October
1999, or some sixteen (16) months after the rendition of the
judgment sought to be set aside, and around fourteen (14)
months after such judgment was declared final and executory.
Petitioner had opportunely learned of both the rendition of the
judgment and the Order refusing to give cognizance to the motion
for reconsideration. Had it simply consulted the rulebook, it should
have realized that a petition for relief from judgment was a
remedy available to it, and certainly one more appropriate than
the Notice of Appeal it ultimately resorted to.

Following the denial of the Petition for Relief from Judgment,


petitioner then filed a petition for certiorari under Rule 65 with the
RTC. Said petition was designed to be omnibus in nature, as it
sought to assail all the adverse rulings handed down by the MTC,
including the original Judgment which had been promulgated over
two (2) years earlier. It is extremely dubious to propose that
certiorari still avails to set aside a two (2) year old decision, and
indeed Section 4 of Rule 65 requires that the special civil action be
filed not later than sixty days from notice of the judgment, order
or resolution sought to be assailed.41

On those MTC rulings that still fell within the timely scope of
certiorari, particularly the rulings denying the petition for relief
from judgment,42 we agree with the RTC that there could have
been no grave abuse of discretion on the part of the MTC in
denying the petitions since the latter was merely enforcing the
reglementary period under Section 3, Rule 38.

At this juncture, petitioner filed a petition for annulment of


judgment with the Court of Appeals. One might presume that the
judgment sought for annulment would have been that rendered by
the MTC. Yet what petitioner expressly sought to be nullified were
mainly the RTC rulings dismissing the petition for certiorari. The
sense of this remedial action is lost on the Court.

Admittedly, there appears to have been a half-hearted or


incomplete attempt to have the MTC rulings annulled as
well.43 Disregarding for the nonce the merits of the annulment of
the MTC decisions, Section 10 of Rule 48 of the 1997 Rules of Civil
Procedure makes it clear that "[a]n action to annul a judgment or
final order of a Municipal Trial Court shall be filed in the Regional
Trial Court having jurisdiction over the former," 44 and not with the
Court of Appeals. Considering the periods prescribed under Rule 47
for the filing of an action for annulment of judgment are quite
broad or capable of discretionary appreciation, 45 the petitioner
could have filed such action for annulment of the MTCs judgment
with the RTC which would not have been lightly disregarded with
timeliness as premise.

Still, it was the RTC rulings which were subject of the petition for
annulment filed with the Court of Appeals which had jurisdiction
over such actions.46 This recourse was ill-advised, to say the least,
for varied reasons. For one, the RTC rulings dismissing petitioners
special civil action for certiorari could have been the subject of an
ordinary appeal to the Court of Appeals under Section 1, Rule 41
of the 1997 Rules of Civil Procedure, since such dismissals partake
of a final order that completely disposed of the original petition
filed with the RTC. It may have been that petitioner was
threatened by the impending execution of the adverse MTC
decision, despite the fact that it had a pending motion for

reconsideration of the RTCs dismissal of its certiorari petition. That


notwithstanding, annulment of judgment still stands as a most
incongruous remedy if such impending execution did impel an
active recourse on the part of the petitioner.

More fundamentally, the annulment of the RTC decision dismissing


the special civil action for certiorari would not properly engender
the annulment of the adverse MTC judgment. In fact, the
annulment of such RTC decision would not give rise to any viable
or useful right or benefit to the petitioner, since it would not stay in
any way the MTC judgment or its execution. At most, the only
possible implication of the annulment of the RTC decision is that
relief still existed to extenuate the MTC rulings dismissing the
petition for relief from judgment, the same rulings which were
timely assailed in the petition for certiorari.

We do have to offer some clarification regarding the citation by the


Court of Appeals as ground for dismissing the petition for
annulment the fact that "the ground raised by petitioner is
extrinsic fraud, which ground petitioner has already availed of in
its petition for relief from judgment in the Municipal Trial
Court."47 Section 2 of Rule 47 does disqualify extrinsic fraud as a
valid ground "if it was availed of, or could have been availed of, in
a motion for new trial or petition for relief," 48 and such provision
would have found incontestable relevance had the clear object of
the petition for annulment been the MTC judgment. 49 But
petitioners action for annulment of judgment did not provide
clarity in that regard, and in fact does devote considerable effort in
imputing errors on the part of the RTC with the objective of
annulling, in particular, the RTC decision. If that were so, reliance
on Section 2 of Rule 47 would have been misplaced, since the
judgment subject of the petition for relief was different from the

decision subject of the action for annulment of judgment. Still,


given the confused nature of the petition for annulment of
judgment, blame could hardly be attributed to the RTC.

All told, even if we were to hold that the Court of Appeals erred in
dismissing the petition on the perceived defect in the verification
and certification requirements, the appellate court would have
been left with an action stigmatized by error upon error
interminably. Most frustratingly, for every procedural misstep
committed by petitioner, there existed a corresponding viable
alternative which would have necessitated a ruling on the merits,
and which petitioner could have chosen with ease. Instead of filing
a Notice of Appeal, it could have instead filed a special civil action
for certiorari or a petition for relief from judgment. Instead of filing
the no longer timely petition for relief from judgment, it could have
instead by then filed a petition for annulment of judgment. When it
did file a petition for annulment with the Court of Appeals, it could
have instead filed a more feasible petition for annulment with the
RTC.

If the consequences for pursuing the wrong remedial tack in this


case seem harsh, it should be remembered that there is no innate
right to appeal. Appeal is a statutory right which may be exercised
within the prescribed limits. The 1997 Rules of Civil Procedure
provides for a rational and orderly method by which appeal can be
pursued, and even contingency remedial measures if appeal could
no longer be timely pursued. The failure of petitioner to undertake
a timely appeal, or to engage in the available modes of relief even
if appeal was no longer possible, simply has to bear consequence.
The lower court rulings germane to this case were, consistently
cognizant of this fact, transformed to legal conclusion, and we are
hard-pressed to find any cause for annulment of any of those

judgments. The dismissal of the petition by the Court of Appeals is


ultimately correct.
All the errors could have been avoided had petitioner, at the onset,
recognized that the judicial system deemed the original MTC
Judgment dated 13 January 1998 as having become final and
executory after no valid motion for reconsideration was filed
thereto. On many levels, there existed ample remedies to undo
such deleterious consequence, yet petitioner ended up each time
selecting the wrong answer among the varied options. In the end,
all petitioner accomplished was to persistently water a dead plant.

WHEREFORE, the petition is DENIED. Costs against petitioner.


SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 181132

June 5, 2009

HEIRS OF LORETO C. MARAMAG, represented by surviving spouse


VICENTA PANGILINAN MARAMAG,Petitioners,
vs.
EVA VERNA DE GUZMAN MARAMAG, ODESSA DE GUZMAN
MARAMAG, KARL BRIAN DE GUZMAN MARAMAG, TRISHA ANGELIE
MARAMAG, THE INSULAR LIFE ASSURANCE COMPANY, LTD., and
GREAT PACIFIC LIFE ASSURANCE CORPORATION, Respondents.
DECISION
NACHURA, J.:

This is a petition1 for review on certiorari under Rule 45 of the


Rules, seeking to reverse and set aside the Resolution 2 dated
January 8, 2008 of the Court of Appeals (CA), in CA-G.R. CV No.
85948, dismissing petitioners appeal for lack of jurisdiction.

The case stems from a petition3 filed against respondents with the
Regional Trial Court, Branch 29, for revocation and/or reduction of
insurance proceeds for being void and/or inofficious, with prayer
for a temporary restraining order (TRO) and a writ of preliminary
injunction.

The petition alleged that: (1) petitioners were the legitimate wife
and children of Loreto Maramag (Loreto), while respondents were
Loretos illegitimate family; (2) Eva de Guzman Maramag (Eva)
was a concubine of Loreto and a suspect in the killing of the latter,
thus, she is disqualified to receive any proceeds from his insurance
policies from Insular Life Assurance Company, Ltd. (Insular) 4 and
Great Pacific Life Assurance Corporation (Grepalife);5(3) the
illegitimate children of LoretoOdessa, Karl Brian, and Trisha
Angeliewere entitled only to one-half of the legitime of the
legitimate children, thus, the proceeds released to Odessa and
those to be released to Karl Brian and Trisha Angelie were
inofficious and should be reduced; and (4) petitioners could not be
deprived of their legitimes, which should be satisfied first.

In support of the prayer for TRO and writ of preliminary injunction,


petitioners alleged, among others, that part of the insurance
proceeds had already been released in favor of Odessa, while the
rest of the proceeds are to be released in favor of Karl Brian and
Trisha Angelie, both minors, upon the appointment of their legal
guardian. Petitioners also prayed for the total amount
of P320,000.00 as actual litigation expenses and attorneys fees.

In answer,6 Insular admitted that Loreto misrepresented Eva as his


legitimate wife and Odessa, Karl Brian, and Trisha Angelie as his
legitimate children, and that they filed their claims for the
insurance proceeds of the insurance policies; that when it
ascertained that Eva was not the legal wife of Loreto, it disqualified
her as a beneficiary and divided the proceeds among Odessa, Karl
Brian, and Trisha Angelie, as the remaining designated
beneficiaries; and that it released Odessas share as she was of

age, but withheld the release of the shares of minors Karl Brian
and Trisha Angelie pending submission of letters of guardianship.
Insular alleged that the complaint or petition failed to state a
cause of action insofar as it sought to declare as void the
designation of Eva as beneficiary, because Loreto revoked her
designation as such in Policy No. A001544070 and it disqualified
her in Policy No. A001693029; and insofar as it sought to declare
as inofficious the shares of Odessa, Karl Brian, and Trisha Angelie,
considering that no settlement of Loretos estate had been filed nor
had the respective shares of the heirs been determined. Insular
further claimed that it was bound to honor the insurance policies
designating the children of Loreto with Eva as beneficiaries
pursuant to Section 53 of the Insurance Code.

In its own answer7 with compulsory counterclaim, Grepalife alleged


that Eva was not designated as an insurance policy beneficiary;
that the claims filed by Odessa, Karl Brian, and Trisha Angelie were
denied because Loreto was ineligible for insurance due to a
misrepresentation in his application form that he was born on
December 10, 1936 and, thus, not more than 65 years old when
he signed it in September 2001; that the case was premature,
there being no claim filed by the legitimate family of Loreto; and
that the law on succession does not apply where the designation of
insurance beneficiaries is clear.

As the whereabouts of Eva, Odessa, Karl Brian, and Trisha Angelie


were not known to petitioners, summons by publication was
resorted to. Still, the illegitimate family of Loreto failed to file their
answer. Hence, the trial court, upon motion of petitioners, declared
them in default in its Order dated May 7, 2004.

During the pre-trial on July 28, 2004, both Insular and Grepalife
moved that the issues raised in their respective answers be
resolved first. The trial court ordered petitioners to comment
within 15 days.

In their comment, petitioners alleged that the issue raised by


Insular and Grepalife was purely legal whether the complaint
itself was proper or not and that the designation of a beneficiary
is an act of liberality or a donation and, therefore, subject to the
provisions of Articles 7528 and 7729 of the Civil Code.

In reply, both Insular and Grepalife countered that the insurance


proceeds belong exclusively to the designated beneficiaries in the
policies, not to the estate or to the heirs of the insured. Grepalife
also reiterated that it had disqualified Eva as a beneficiary when it
ascertained that Loreto was legally married to Vicenta Pangilinan
Maramag.
On September 21, 2004, the trial court issued a Resolution, the
dispositive portion of which reads
WHEREFORE, the motion to dismiss incorporated in the
answer of defendants Insular Life and Grepalife is granted with
respect to defendants Odessa, Karl Brian and Trisha Maramag. The
action shall proceed with respect to the other defendants Eva
Verna de Guzman, Insular Life and Grepalife.
SO ORDERED.10

In so ruling, the trial court ratiocinated thus

Art. 2011 of the Civil Code provides that the contract of


insurance is governed by the (sic) special laws. Matters not
expressly provided for in such special laws shall be regulated by
this Code. The principal law on insurance is the Insurance Code, as
amended. Only in case of deficiency in the Insurance Code that the
Civil Code may be resorted to. (Enriquez v. Sun Life Assurance Co.,
41 Phil. 269.)

The Insurance Code, as amended, contains a provision regarding


to whom the insurance proceeds shall be paid. It is very clear
under Sec. 53 thereof that the insurance proceeds shall be applied
exclusively to the proper interest of the person in whose name or
for whose benefit it is made, unless otherwise specified in the
policy. Since the defendants are the ones named as the primary
beneficiary (sic) in the insurances (sic) taken by the deceased
Loreto C. Maramag and there is no showing that herein plaintiffs
were also included as beneficiary (sic) therein the insurance
proceeds shall exclusively be paid to them. This is because the
beneficiary has a vested right to the indemnity, unless the insured
reserves the right to change the beneficiary. (Grecio v. Sunlife
Assurance Co. of Canada, 48 Phil. [sic] 63).

Neither could the plaintiffs invoked (sic) the law on donations or


the rules on testamentary succession in order to defeat the right of
herein defendants to collect the insurance indemnity. The
beneficiary in a contract of insurance is not the donee spoken in
the law of donation. The rules on testamentary succession cannot
apply here, for the insurance indemnity does not partake of a
donation. As such, the insurance indemnity cannot be considered
as an advance of the inheritance which can be subject to collation
(Del Val v. Del Val, 29 Phil. 534). In the case of Southern Luzon

Employees Association v. Juanita Golpeo, et al., the Honorable


Supreme Court made the following pronouncements[:]
"With the finding of the trial court that the proceeds to the
Life Insurance Policy belongs exclusively to the defendant as his
individual and separate property, we agree that the proceeds of an
insurance policy belong exclusively to the beneficiary and not to
the estate of the person whose life was insured, and that such
proceeds are the separate and individual property of the
beneficiary and not of the heirs of the person whose life was
insured, is the doctrine in America. We believe that the same
doctrine obtains in these Islands by virtue of Section 428 of the
Code of Commerce x x x."
In [the] light of the above pronouncements, it is very clear
that the plaintiffs has (sic) no sufficient cause of action against
defendants Odessa, Karl Brian and Trisha Angelie Maramag for the
reduction and/or declaration of inofficiousness of donation as
primary beneficiary (sic) in the insurances (sic) of the late Loreto
C. Maramag.

However, herein plaintiffs are not totally bereft of any cause of


action. One of the named beneficiary (sic) in the insurances (sic)
taken by the late Loreto C. Maramag is his concubine Eva Verna De
Guzman. Any person who is forbidden from receiving any donation
under Article 739 cannot be named beneficiary of a life insurance
policy of the person who cannot make any donation to him,
according to said article (Art. 2012, Civil Code). If a concubine is
made the beneficiary, it is believed that the insurance contract will
still remain valid, but the indemnity must go to the legal heirs and
not to the concubine, for evidently, what is prohibited under Art.
2012 is the naming of the improper beneficiary. In such case, the
action for the declaration of nullity may be brought by the spouse
of the donor or donee, and the guilt of the donor and donee may

be proved by preponderance of evidence in the same action


(Comment of Edgardo L. Paras, Civil Code of the Philippines, page
897). Since the designation of defendant Eva Verna de Guzman as
one of the primary beneficiary (sic) in the insurances (sic) taken
by the late Loreto C. Maramag is void under Art. 739 of the Civil
Code, the insurance indemnity that should be paid to her must go
to the legal heirs of the deceased which this court may properly
take cognizance as the action for the declaration for the nullity of a
void donation falls within the general jurisdiction of this Court. 11

Insular12 and Grepalife13 filed their respective motions for


reconsideration, arguing, in the main, that the petition failed to
state a cause of action. Insular further averred that the proceeds
were divided among the three children as the remaining named
beneficiaries. Grepalife, for its part, also alleged that the premiums
paid had already been refunded.
Petitioners, in their comment, reiterated their earlier arguments
and posited that whether the complaint may be dismissed for
failure to state a cause of action must be determined solely on the
basis of the allegations in the complaint, such that the defenses of
Insular and Grepalife would be better threshed out during
trial.1avvphi1

On June 16, 2005, the trial court issued a Resolution, disposing, as


follows:
WHEREFORE, in view of the foregoing disquisitions, the
Motions for Reconsideration filed by defendants Grepalife and
Insular Life are hereby GRANTED. Accordingly, the portion of the
Resolution of this Court dated 21 September 2004 which ordered
the prosecution of the case against defendant Eva Verna De

Guzman, Grepalife and Insular Life is hereby SET ASIDE, and the
case against them is hereby ordered DISMISSED.
SO ORDERED.14

In granting the motions for reconsideration of Insular and


Grepalife, the trial court considered the allegations of Insular that
Loreto revoked the designation of Eva in one policy and that
Insular disqualified her as a beneficiary in the other policy such
that the entire proceeds would be paid to the illegitimate children
of Loreto with Eva pursuant to Section 53 of the Insurance Code. It
ruled that it is only in cases where there are no beneficiaries
designated, or when the only designated beneficiary is disqualified,
that the proceeds should be paid to the estate of the insured. As to
the claim that the proceeds to be paid to Loretos illegitimate
children should be reduced based on the rules on legitime, the trial
court held that the distribution of the insurance proceeds is
governed primarily by the Insurance Code, and the provisions of
the Civil Code are irrelevant and inapplicable. With respect to the
Grepalife policy, the trial court noted that Eva was never
designated as a beneficiary, but only Odessa, Karl Brian, and
Trisha Angelie; thus, it upheld the dismissal of the case as to the
illegitimate children. It further held that the matter of Loretos
misrepresentation was premature; the appropriate action may be
filed only upon denial of the claim of the named beneficiaries for
the insurance proceeds by Grepalife.

Petitioners appealed the June 16, 2005 Resolution to the CA, but it
dismissed the appeal for lack of jurisdiction, holding that the
decision of the trial court dismissing the complaint for failure to
state a cause of action involved a pure question of law. The
appellate court also noted that petitioners did not file within the

reglementary period a motion for reconsideration of the trial


courts Resolution, dated September 21, 2004, dismissing the
complaint as against Odessa, Karl Brian, and Trisha Angelie; thus,
the said Resolution had already attained finality.

Hence, this petition raising the following issues:


a. In determining the merits of a motion to dismiss for
failure to state a cause of action, may the Court consider
matters which were not alleged in the Complaint,
particularly the defenses put up by the defendants in their
Answer?
b. In granting a motion for reconsideration of a motion to
dismiss for failure to state a cause of action, did not the
Regional Trial Court engage in the examination and
determination of what were the facts and their probative
value, or the truth thereof, when it premised the dismissal
on allegations of the defendants in their answer which
had not been proven?
c. x x x (A)re the members of the legitimate family entitled
to the proceeds of the insurance for the concubine? 15

In essence, petitioners posit that their petition before the trial


court should not have been dismissed for failure to state a cause of
action because the finding that Eva was either disqualified as a
beneficiary by the insurance companies or that her designation
was revoked by Loreto, hypothetically admitted as true, was raised
only in the answers and motions for reconsideration of both Insular
and Grepalife. They argue that for a motion to dismiss to prosper
on that ground, only the allegations in the complaint should be

considered. They further contend that, even assuming Insular


disqualified Eva as a beneficiary, her share should not have been
distributed to her children with Loreto but, instead, awarded to
them, being the legitimate heirs of the insured deceased, in
accordance with law and jurisprudence.

When a motion to dismiss is premised on this ground, the ruling


thereon should be based only on the facts alleged in the complaint.
The court must resolve the issue on the strength of such
allegations, assuming them to be true. The test of sufficiency of a
cause of action rests on whether, hypothetically admitting the facts
alleged in the complaint to be true, the court can render a valid
judgment upon the same, in accordance with the prayer in the
complaint. This is the general rule.

The petition should be denied.


The grant of the motion to dismiss was based on the trial courts
finding that the petition failed to state a cause of action, as
provided in Rule 16, Section 1(g), of the Rules of Court, which
reads

However, this rule is subject to well-recognized exceptions, such


that there is no hypothetical admission of the veracity of the
allegations if:

SECTION 1. Grounds. Within the time for but before


filing the answer to the complaint or pleading asserting a claim, a
motion to dismiss may be made on any of the following grounds:

1. the falsity of the allegations is subject to judicial notice;

xxxx

3. the allegations refer to facts which are inadmissible in


evidence;

2. such allegations are legally impossible;

(g) That the pleading asserting the claim states no cause of action.
4. by the record or document in the pleading, the
allegations appear unfounded; or
A cause of action is the act or omission by which a party violates a
right of another.16 A complaint states a cause of action when it
contains the three (3) elements of a cause of action(1) the legal
right of the plaintiff; (2) the correlative obligation of the
defendant; and (3) the act or omission of the defendant in
violation of the legal right. If any of these elements is absent, the
complaint becomes vulnerable to a motion to dismiss on the
ground of failure to state a cause of action.17

5. there is evidence which has been presented to the court


by stipulation of the parties or in the course of the
hearings related to the case.18

In this case, it is clear from the petition filed before the trial court
that, although petitioners are the legitimate heirs of Loreto, they
were not named as beneficiaries in the insurance policies issued by
Insular and Grepalife. The basis of petitioners claim is that Eva,
being a concubine of Loreto and a suspect in his murder, is

disqualified from being designated as beneficiary of the insurance


policies, and that Evas children with Loreto, being illegitimate
children, are entitled to a lesser share of the proceeds of the
policies. They also argued that pursuant to Section 12 of the
Insurance Code,19 Evas share in the proceeds should be forfeited
in their favor, the former having brought about the death of Loreto.
Thus, they prayed that the share of Eva and portions of the shares
of Loretos illegitimate children should be awarded to them, being
the legitimate heirs of Loreto entitled to their respective legitimes.

It is evident from the face of the complaint that petitioners are not
entitled to a favorable judgment in light of Article 2011 of the Civil
Code which expressly provides that insurance contracts shall be
governed by special laws, i.e., the Insurance Code. Section 53 of
the Insurance Code states
SECTION 53. The insurance proceeds shall be applied
exclusively to the proper interest of the person in whose name or
for whose benefit it is made unless otherwise specified in the
policy.

Pursuant thereto, it is obvious that the only persons entitled to


claim the insurance proceeds are either the insured, if still alive; or
the beneficiary, if the insured is already deceased, upon the
maturation of the policy.20The exception to this rule is a situation
where the insurance contract was intended to benefit third persons
who are not parties to the same in the form of favorable
stipulations or indemnity. In such a case, third parties may directly
sue and claim from the insurer.21

Petitioners are third parties to the insurance contracts with Insular


and Grepalife and, thus, are not entitled to the proceeds thereof.
Accordingly, respondents Insular and Grepalife have no legal
obligation to turn over the insurance proceeds to petitioners. The
revocation of Eva as a beneficiary in one policy and her
disqualification as such in another are of no moment considering
that the designation of the illegitimate children as beneficiaries in
Loretos insurance policies remains valid. Because no legal
proscription exists in naming as beneficiaries the children of illicit
relationships by the insured,22 the shares of Eva in the insurance
proceeds, whether forfeited by the court in view of the prohibition
on donations under Article 739 of the Civil Code or by the insurers
themselves for reasons based on the insurance contracts, must be
awarded to the said illegitimate children, the designated
beneficiaries, to the exclusion of petitioners. It is only in cases
where the insured has not designated any beneficiary,23 or when
the designated beneficiary is disqualified by law to receive the
proceeds,24 that the insurance policy proceeds shall redound to the
benefit of the estate of the insured.

In this regard, the assailed June 16, 2005 Resolution of the trial
court should be upheld. In the same light, the Decision of the CA
dated January 8, 2008 should be sustained. Indeed, the appellate
court had no jurisdiction to take cognizance of the appeal; the
issue of failure to state a cause of action is a question of law and
not of fact, there being no findings of fact in the first place. 25
WHEREFORE, the petition is DENIED for lack of merit. Costs
against petitioners.
SO ORDERED.

KOPPEL, INC. (FORMERLY KNOWN AS KPL AIRCON,


INC.), Petitioner, v. MAKATI ROTARY CLUB FOUNDATION,
INC., Respondent.
PEREZ, J.:

DECISION

This case is an appeal1 from the Decision2 dated 19 August 2011 of


the
Court of
Appeals
in C.A.-G.R.
SP No. 116865.
The facts:
The Donation
Fedders Koppel, Incorporated (FKI), a manufacturer of airconditioning products, was the registered owner of a parcel of land
located at Km. 16, South Superhighway, Paraaque City (subject
land).3Within the subject land are buildings and other
improvements dedicated to the business of FKI. 4cralaw virtualaw
library
In 1975, FKI5 bequeathed the subject land (exclusive of the
improvements thereon) in favor of herein respondent Makati
Rotary
Club
Foundation,
Incorporated
by
way
of
a conditional donation.6The respondent accepted the donation with
all of its conditions.7 On 26 May 1975, FKI and the respondent
executed a Deed of Donation8 evidencing their consensus.
The Lease and the Amended Deed of Donation
One of the conditions of the donation required the respondent to
lease the subject land back to FKI under terms specified in
their Deed of Donation.9 With the respondents acceptance of the
donation, a lease agreement between FKI and the respondent was,
therefore, effectively incorporated in theDeed of Donation.
Pertinent terms of such lease agreement, as provided in the Deed
of Donation, were as follows:
1 The period of the lease is for twenty-five (25) years, 10 or
until the 25th of May 2000;
2 The amount of rent to be paid by FKI for the first twentyfive (25) years is P40,126.00 perannum.11

SECOND DIVISION
G.R. No. 198075, September 04, 2013

The Deed of Donation also stipulated that the lease over the
subject property is renewable for another period of twenty-five
(25) years upon mutual agreement of FKI and the
respondent.12 In which case, the amount of rent shall be

determined in accordance with item 2(g) of the Deed of


Donation, viz:chanrobles virtua1aw 1ibrary
g. The rental for the second 25 years shall be the subject
of mutual agreement and in case of disagreement the matter shall
be referred to a Board of three Arbitrators appointed and with
powers in accordance with the Arbitration Law of the Philippines,
Republic Act 878, whose function shall be to decide the current fair
market value of the land excluding the improvements, provided,
that, any increase in the fair market value of the land shall not
exceed twenty five percent (25%) of the original value of the land
donated as stated in paragraph 2(c) of this Deed. The rental for
the second 25 years shall not exceed three percent (3%) of the
fair market value of the land excluding the improvements as
determined by the Board of Arbitrators. 13
In October 1976, FKI and the respondent executed an Amended
Deed of Donation14 that reiterated the provisions of the Deed of
Donation, including those relating to the lease of the subject land.
Verily, by virtue of the lease agreement contained in the Deed of
Donation and Amended Deed of Donation, FKI was able to
continue in its possession and use of the subject land.
2000 Lease Contract
Two (2) days before the lease incorporated in the Deed of
Donation and Amended Deed of Donationwas set to expire, or on
23 May 2000, FKI and respondent executed another contract of
lease (2000 Lease Contract)15 covering the subject land. In
this 2000 Lease Contract, FKI and respondent agreed on a new
five-year lease to take effect on the 26 th of May 2000, with annual
rents ranging from P4,000,000 for the first year up to P4,900,000
for
the
fifth
year.16cralaw
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library
The 2000 Lease Contract also contained an arbitration clause
enforceable in the event the parties come to disagreement about
the
interpretation,
application
and
execution
of
the
lease, viz:chanrobles virtua1aw 1ibrary
19. Governing Law The provisions of this [2000 Lease
Contract] shall be governed, interpreted and construed in all
aspects in accordance with the laws of the Republic of the
Philippines.

Any disagreement as to the interpretation, application or


execution of this [2000 Lease Contract] shall be submitted
to a board of three (3) arbitrators constituted in accordance
with the arbitration law of the Philippines. The decision of
the majority of the arbitrators shall be binding upon [FKI
and respondent].17 (Emphasis supplied)
2005 Lease Contract
After the 2000 Lease Contract expired, FKI and respondent agreed
to renew their lease for another five (5) years. This new lease
(2005 Lease Contract)18 required FKI to pay a fixed annual rent of
P4,200,000.19 In addition to paying the fixed rent, however,
the 2005 Lease Contract also obligated FKI to make a yearly
donation of money to the respondent.20 Such donations ranged
from P3,000,000 for the first year up to P3,900,000 for the fifth
year.21cralaw
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library
Notably, the 2005 Lease Contract contained an arbitration clause
similar to that in the 2000 Lease Contract, to wit:chanrobles
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19. Governing Law The provisions of this [2005 Lease
Contract] shall be governed, interpreted and construed in all
aspects in accordance with the laws of the Republic of the
Philippines.
Any disagreement as to the interpretation, application or
execution of this [2005 Lease Contract] shall be submitted
to a board of three (3) arbitrators constituted in accordance
with the arbitration law of the Philippines. The decision of
the majority of the arbitrators shall be binding upon [FKI
and respondent].22 (Emphasis supplied)
The Assignment and Petitioners Refusal to Pay
From 2005 to 2008, FKI faithfully paid the rentals and donations
due it per the 2005 Lease Contract.23 But in June of 2008, FKI sold
all its rights and properties relative to its business in favor of
herein petitioner Koppel, Incorporated. 24 On 29 August 2008, FKI
and petitioner executed anAssignment and Assumption of Lease
and Donation25wherein FKI, with the conformity of the
respondent, formally assigned all of its interests and obligations
under the Amended Deed of Donation and the 2005 Lease
Contract in
favor
of
petitioner.

The following year, petitioner discontinued the payment of the rent


and
donation
under
the
2005Lease
Contract.
Petitioners refusal to pay such rent and donation emanated from
its belief that the rental stipulations of the 2005 Lease Contract,
and even of the 2000 Lease Contract, cannot be given effect
because they violated one of the material conditions of the
donation of the subject land, as stated in the Deed of
Donation and Amended Deed of Donation.26cralaw virtualaw library
According to petitioner, the Deed of Donation and Amended Deed
of Donation actually established not only one but two (2) lease
agreements between FKI and respondent, i.e., one lease for the
first twenty-five (25) years or from 1975 to 2000, and another
lease for the next twenty-five (25) years thereafter or from 2000
to 2025.27 Both leases are material conditions of the donation of
the
subject
land.
Petitioner points out that while a definite amount of rent for the
second twenty-five (25) year lease was not fixed in the Deed of
Donation and Amended Deed of Donation, both deeds nevertheless
prescribed rules and limitations by which the same may be
determined. Such rules and limitations ought to be observed in
any succeeding lease agreements between petitioner and
respondent for they are, in themselves, material conditions of the
donation
of
the
subject
land. 28cralaw
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library
In this connection, petitioner cites item 2(g) of the Deed of
Donation and Amended Deed of Donationthat supposedly limits the
amount of rent for the lease over the second twenty-five (25)
years to only three percent (3%) of the fair market value of the
[subject] land excluding the improvements.29cralaw virtualaw
library
For petitioner then, the rental stipulations of both the 2000 Lease
Contract and 2005 Lease Contractcannot be enforced as they are
clearly, in view of their exorbitant exactions, in violation of the
aforementioned threshold in item 2(g) of the Deed of
Donation and Amended Deed of Donation. Consequently, petitioner
insists that the amount of rent it has to pay thereon is and must
still be governed by the limitations prescribed in the Deed of
Donation and Amended Deed of Donation.30cralaw virtualaw library

The Demand Letters


On 1 June 2009, respondent sent a letter (First Demand
Letter)31 to petitioner notifying the latter of its default per Section
12 of the [2005 Lease Contract] and demanding for the
settlement of the rent and donation due for the year 2009.
Respondent, in the same letter, further intimated of cancelling
the 2005 Lease Contract should petitioner fail to settle the said
obligations.32 Petitioner received theFirst Demand Letter on 2 June
2009.33cralaw
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library
On 22 September 2009, petitioner sent a reply 34 to respondent
expressing its disagreement over the rental stipulations of
the 2005
Lease
Contractcalling
them
severely
disproportionate, unconscionable and in clear violation to the
nominal rentals mandated by the Amended Deed of Donation. In
lieu of the amount demanded by the respondent, which
purportedly totaled to P8,394,000.00, exclusive of interests,
petitioner offered to pay only P80,502.79, 35 in accordance with the
rental provisions of the Deed of Donation and Amended Deed of
Donation.36 Respondent refused this offer.37cralaw virtualaw library
On 25 September 2009, respondent sent another letter (Second
Demand Letter)38 to petitioner, reiterating its demand for the
payment of the obligations already due under the 2005 Lease
Contract. The Second Demand Letter also contained a demand for
petitioner to immediately vacate the leased premises should it
fail to pay such obligations within seven (7) days from its receipt
of the letter.39The respondent warned of taking legal steps in the
event that petitioner failed to comply with any of the said
demands.40 Petitioner received the Second Demand Letter on 26
September
2009.41cralaw
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library
Petitioner refused to comply with the demands of the respondent.
Instead, on 30 September 2009, petitioner filed with the Regional
Trial Court (RTC) of Paraaque City a complaint42 for the rescission
or cancellation of the Deed of Donation and Amended Deed of
Donation against the respondent. This case is currently pending
before Branch 257 of the RTC, docketed as Civil Case No. CV 090346.
The Ejectment Suit

On 5 October 2009, respondent filed an unlawful detainer


case43 against the petitioner before the Metropolitan Trial Court
(MeTC) of Paraaque City. The ejectment case was raffled to
Branch 77 and was docketed as Civil Case No. 2009-307.
On 4 November 2009, petitioner filed an Answer with Compulsory
Counterclaim.44 In it, petitioner reiterated its objection over the
rental stipulations of the 2005 Lease Contract for being violative of
the material conditions of the Deed of Donation and Amended
Deed of Donation.45 In addition to the foregoing, however,
petitioner also interposed the following defenses:
1 The MeTC was not able to validly acquire jurisdiction over
the instant unlawful detainer case in view of the
insufficiency of respondents demand. 46 The First Demand
Letter did not contain an actual demand to vacate the
premises and, therefore, the refusal to comply therewith
does not give rise to an action for unlawful
detainer.47cralaw virtualaw library
2 Assuming that the MeTC was able to acquire jurisdiction, it
may not exercise the same until the disagreement between
the parties is first referred to arbitration pursuant to the
arbitration clause of the 2005 Lease Contract.48cralaw
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3 Assuming further that the MeTC has jurisdiction that it can
exercise, ejectment still would not lie as the 2005 Lease
Contract is void ab initio.49 The stipulation in the 2005
Lease Contractrequiring petitioner to give yearly
donations to respondent is a simulation, for they are, in
fact, parts of the rent.50 Such grants were only
denominated as donations in the contract so that the
respondenta non-stock and non-profit corporationcould
evade payment of the taxes otherwise due thereon. 51
In due course, petitioner and respondent both submitted their
position papers, together with their other documentary
evidence.52 Remarkably, however, respondent failed to submit
the Second Demand Letter as part of its documentary evidence.
Rulings of the MeTC, RTC and Court of Appeals
On 27 April 2010, the MeTC rendered judgment 53 in favor of the
petitioner. While the MeTC refused to dismiss the action on the
ground that the dispute is subject to arbitration, it nonetheless

sided with the petitioner with respect to the issues regarding the
insufficiency of the respondents demand and the nullity of
the 2005 Lease Contract.54 The MeTC thus disposed:chanrobles
virtua1aw 1ibrary
WHEREFORE, judgment is hereby rendered dismissing the
case
x
x
x,
without
pronouncement
as
to
costs.
SO ORDERED.55
The respondent appealed to the Regional Trial Court (RTC). This
appeal was assigned to Branch 274 of the RTC of Paraaque City
and
was
docketed
as
Civil
Case
No.
10-0255.
On 29 October 2010, the RTC reversed56 the MeTC and ordered the
eviction of the petitioner from the subject land:chanrobles
virtua1aw 1ibrary
WHEREFORE, all the foregoing duly considered, the
appealed Decision of the Metropolitan Trial Court, Branch 77,
Paraaque City, is hereby reversed, judgment is thus rendered in
favor of the plaintiff-appellant and against the defendant-appellee,
and ordering the latter
(1) to vacate the lease[d] premises made subject of the case and
to restore the possession thereof to the plaintiff-appellant;
(2) to pay to the plaintiff-appellant the amount of Nine Million
Three Hundred Sixty Two Thousand Four Hundred Thirty Six
Pesos (P9,362,436.00), penalties and net of 5% withholding
tax, for the lease period from May 25, 2009 to May 25, 2010
and such monthly rental as will accrue during the pendency of
this case;
(3) to pay attorneys fees in the sum of P100,000.00 plus
appearance fee of P3,000.00;
(4) and costs of suit.
As to the existing improvements belonging to the
defendant-appellee, as these were built in good faith, the
provisions of Art. 1678 of the Civil Code shall apply.
SO ORDERED.57
The ruling of the RTC is premised on the following ratiocinations:
1 The respondent had adequately complied with the
requirement of demand as a jurisdictional precursor to an
unlawful detainer action.58 The First Demand Letter, in
substance, contains a demand for petitioner to vacate

when it mentioned that it was a notice per Section 12 of


the [2005 Lease Contract].59 Moreover, the issue of
sufficiency of the respondents demand ought to have been
laid to rest by the Second Demand Letter which, though
not submitted in evidence, was nonetheless admitted by
petitioner as containing a demand to eject in itsAnswer
with Compulsory Counterclaim.60cralaw virtualaw library
The petitioner cannot validly invoke the arbitration clause
of the 2005 Lease Contract while, at the same time,
impugn such contracts validity.61 Even assuming that it
can, petitioner still did not file a formal application before
the MeTC so as to render such arbitration clause
operational.62 At any rate, the MeTC would not be
precluded from exercising its jurisdiction over an action for
unlawful detainer, over which, it has exclusive original
jurisdiction.63cralaw virtualaw library
The 2005 Lease Contract must be sustained as a valid
contract since petitioner was not able to adduce any
evidence to support its allegation that the same is
void.64 There was, in this case, no evidence that
respondent is guilty of any tax evasion.65

Aggrieved, the petitioner appealed to the Court of Appeals.


On 19 August 2011, the Court of Appeals affirmed 66 the decision of
the RTC:chanrobles virtua1aw 1ibrary
WHEREFORE, the petition is DENIED. The assailed
Decision of the Regional Trial Court of Paraaque City, Branch 274,
in Civil Case No. 10-0255 is AFFIRMED.
xxxx
SO ORDERED. 67
Hence,

this

appeal.

On 5 September 2011, this Court granted petitioners prayer for


the issuance of a Temporary Restraining Order 68 staying the
immediate implementation of the decisions adverse to it.
OUR RULING
Independently of the merits of the case, the MeTC, RTC and Court
of Appeals all erred in overlooking the significance of the
arbitration clause incorporated in the 2005 Lease Contract. As the

Court
For

sees
this

it,
reason,

that
We

is

fatal

mistake.

grant

the

petition.

Present Dispute is Arbitrable Under the Arbitration Clause


of
the
2005
Lease
Agreement
Contract
Going back to the records of this case, it is discernable that the
dispute between the petitioner and respondent emanates from the
rental stipulations of the 2005 Lease Contract. The respondent
insists upon the enforceability and validity of such stipulations,
whereas, petitioner, in substance, repudiates them. It is from
petitioners apparent breach of the 2005 Lease Contract that
respondent
filed
the
instant
unlawful
detainer
action.
One cannot escape the conclusion that, under the foregoing
premises, the dispute between the petitioner and respondent arose
from the application or execution of the 2005 Lease Contract.
Undoubtedly, such kinds of dispute are covered by the arbitration
clause of the 2005 Lease Contractto wit:chanrobles virtua1aw
1ibrary
19. Governing Law The provisions of this [2005 Lease Contract]
shall be governed, interpreted and construed in all aspects in
accordance with the laws of the Republic of the Philippines.
Any disagreement as to the interpretation, application or
execution of this [2005 Lease Contract] shall be submitted
to a board of three (3) arbitrators constituted in accordance
with the arbitration law of the Philippines. The decision of
the majority of the arbitrators shall be binding upon [FKI
and respondent].69 (Emphasis supplied)
The arbitration clause of the 2005 Lease Contract stipulates that
any disagreement as to the interpretation, application or
execution of the 2005 Lease Contract ought to be submitted to
arbitration.70 To the mind of this Court, such stipulation is clear and
is comprehensive enough so as to include virtually any kind of
conflict or dispute that may arise from the 2005 Lease
Contractincluding the one that presently besets petitioner and
respondent.
The application of the arbitration clause of the 2005 Lease
Contract in this case carries with it certain legal effects. However,

before discussing what these legal effects are, We shall first deal
with the challenges posed against the application of such
arbitration
clause.
Challenges Against the Application of the Arbitration Clause
of
the
2005
Lease
Contract
Curiously, despite the lucidity of the arbitration clause of the 2005
Lease Contract, the petitioner, as well as the MeTC, RTC and the
Court of Appeals, vouched for the non-application of the same in
the instant case. A plethora of arguments was hurled in favor of
bypassing
arbitration.
We
now
address
them.
At different points in the proceedings of this case, the following
arguments were offered against the application of the arbitration
clause of the 2005 Lease Contract:
1 The disagreement between the petitioner and respondent
is non-arbitrable as it will inevitably touch upon the issue
of the validity of the 2005 Lease Contract.71 It was
submitted that one of the reasons offered by the petitioner
in justifying its failure to pay under the 2005 Lease
Contract was the nullity of such contract for being contrary
to law and public policy.72 The Supreme Court,
in Gonzales v. Climax Mining, Ltd.,73 held that the
validity of contract cannot be subject of arbitration
proceedings as such questions are legal in nature and
require the application and interpretation of laws and
jurisprudence
which
is
necessarily
a
judicial
function.74cralaw virtualaw library
2 The petitioner cannot validly invoke the arbitration clause
of the 2005 Lease Contract while, at the same time,
impugn such contracts validity.75cralaw virtualaw library
3 Even assuming that it can invoke the arbitration clause
whilst denying the validity of the 2005 Lease Contract,
petitioner still did not file a formal application before the
MeTC so as to render such arbitration clause
operational.76 Section 24 of Republic Act No. 9285 requires
the party seeking arbitration to first file a request or an
application therefor with the court not later than the
preliminary conference.77cralaw virtualaw library
4 Petitioner and respondent already underwent Judicial
Dispute Resolution (JDR) proceedings before the

None

RTC.78 Hence, a further referral of the dispute to arbitration


would only be circuitous. 79 Moreover, an ejectment case, in
view of its summary nature, already fulfills the prime
purpose of arbitration, i.e., to provide parties in conflict
with an expedient method for the resolution of their
dispute.80 Arbitration then would no longer be necessary in
this case.81
of
the
arguments
have
any
merit.

First. As highlighted in the previous discussion, the disagreement


between the petitioner and respondent falls within the allencompassing terms of the arbitration clause of the 2005 Lease
Contract. While it may be conceded that in the arbitration of such
disagreement, the validity of the2005 Lease Contract, or at least,
of such contracts rental stipulations would have to be determined,
the same would not render such disagreement non-arbitrable. The
quotation from Gonzales that was used to justify the contrary
position was taken out of context. A rereading of Gonzales would
fix
its
relevance
to
this
case.
In Gonzales, a complaint for arbitration was filed before the Panel
of Arbitrators of the Mines and Geosciences Bureau (PA-MGB)
seeking the nullification of a Financial Technical Assistance
Agreement and other mining related agreements entered into by
private parties.82 Grounds invoked for the nullification of such
agreements include fraud and unconstitutionality.83 The pivotal
issue that confronted the Court then was whether the PA-MGB has
jurisdiction over that particular arbitration complaint. Stated
otherwise, the question was whether the complaint for arbitration
raises arbitrable issues that the PA-MGB can take cognizance of.
Gonzales decided the issue in the negative. In holding that the
PA-MGB was devoid of any jurisdiction to take cognizance of the
complaint for arbitration, this Court pointed out to the provisions
of R.A. No. 7942, or the Mining Act of 1995, which granted the PAMGB with exclusive original jurisdiction only over mining disputes,
i.e., disputes involving rights to mining areas, mineral
agreements or permits, and surface owners, occupants,
claimholders or concessionaires requiring the technical knowledge
and experience of mining authorities in order to be
resolved.84 Accordingly, since the complaint for arbitration
in Gonzales did not raise mining disputes as contemplated under

R.A. No. 7942 but only issues relating to the validity of certain
mining related agreements, this Court held that such complaint
could not be arbitrated before the PA-MGB. 85 It is in this context
that we made the pronouncement now in discussion:chanrobles
virtua1aw 1ibrary
Arbitration before the Panel of Arbitrators is proper only when
there is a disagreement between the parties as to some provisions
of the contract between them, which needs the interpretation and
the application of that particular knowledge and expertise
possessed by members of that Panel. It is not proper when one of
the parties repudiates the existence or validity of such contract or
agreement on the ground of fraud or oppression as in this
case. The validity of the contract cannot be subject of
arbitration proceedings. Allegations of fraud and duress in the
execution of a contract are matters within the jurisdiction of the
ordinary courts of law. These questions are legal in nature and
require the application and interpretation of laws and
jurisprudence
which
is
necessarily
a
judicial
function.86 (Emphasis supplied)
The Court in Gonzales did not simply base its rejection of the
complaint for arbitration on the ground that the issue raised
therein, i.e., the validity of contracts, is per se non-arbitrable. The
real consideration behind the ruling was the limitation that was
placed by R.A. No. 7942 upon the jurisdiction of the PA-MGB
as an arbitral body. Gonzales rejected the complaint for
arbitration because the issue raised therein is not a mining
dispute per R.A. No. 7942 and it is for this reason, and only for
this reason, that such issue is rendered non-arbitrable before the
PA-MGB. As stated beforehand, R.A. No. 7942 clearly limited the
jurisdiction of the PA-MGB only to mining disputes.87cralaw
virtualaw
library
Much more instructive for our purposes, on the other hand, is the
recent case of Cargill Philippines, Inc. v. San Fernando Regal
Trading, Inc.88 In Cargill, this Court answered the question of
whether issues involving the rescission of a contract are arbitrable.
The respondent in Cargill argued against arbitrability, also citing
therein Gonzales. After dissecting Gonzales, this Court ruled in
favor of arbitrability.89 Thus, We held:chanrobles virtua1aw 1ibrary
Respondent contends that assuming that the existence of the
contract and the arbitration clause is conceded, the CA's decision

declining referral of the parties' dispute to arbitration is still


correct. It claims that its complaint in the RTC presents the issue
of whether under the facts alleged, it is entitled to rescind the
contract with damages; and that issue constitutes a judicial
question or one that requires the exercise of judicial function and
cannot be the subject of an arbitration proceeding. Respondent
cites our ruling in Gonzales, wherein we held that a panel of
arbitrator is bereft of jurisdiction over the complaint for declaration
of nullity/or termination of the subject contracts on the grounds of
fraud and oppression attendant to the execution of the addendum
contract and the other contracts emanating from it, and that the
complaint should have been filed with the regular courts as it
involved
issues
which
are
judicial
in
nature.
Such argument is misplaced and respondent cannot rely on
the Gonzales case to support its argument.90 (Emphasis ours)
Second. Petitioner may still invoke the arbitration clause of
the 2005 Lease Contract notwithstanding the fact that it assails the
validity of such contract. This is due to the doctrine of
separability.91cralaw
virtualaw
library
Under the doctrine of separability, an arbitration agreement is
considered as independent of the main contract. 92 Being a separate
contract in itself, the arbitration agreement may thus be invoked
regardless of the possible nullity or invalidity of the main
contract.93cralaw
virtualaw
library
Once again instructive is Cargill, wherein this Court held that, as a
further consequence of the doctrine of separability, even the very
party who repudiates the main contract may invoke its arbitration
clause.94cralaw
virtualaw
library
Third. The operation of the arbitration clause in this case is not at
all defeated by the failure of the petitioner to file a formal
request or application therefor with the MeTC. We find that the
filing of a request pursuant to Section 24 of R.A. No. 9285
is not the sole means by which an arbitration clause may be validly
invoked
in
a
pending
suit.
Section 24 of R.A. No. 9285 reads:chanrobles virtua1aw ary
SEC. 24. Referral to Arbitration. - A court before which an
action is brought in a matter which is the subject matter of an
arbitration agreement shall, if at least one party so requests not

later that the pre-trial conference, or upon the request of both


parties thereafter, refer the parties to arbitration unless it finds
that the arbitration agreement is null and void, inoperative or
incapable of being performed. [Emphasis ours; italics original]
The request referred to in the above provision is, in turn,
implemented by Rules 4.1 to 4.3 of A.M. No. 07-11-08-SC or
the Special
Rules
of
Court
on
Alternative
Dispute
Resolution (Special ADR Rules):
RULE 4: REFERRAL TO ADR
Rule 4.1. Who makes the request. - A party to a pending action
filed in violation of the arbitration agreement, whether contained in
an arbitration clause or in a submission agreement, may request
the court to refer the parties to arbitration in accordance with such
agreement.

provided in the immediately succeeding Rule before the hearing.


[Emphasis ours; italics original]
Attention must be paid, however, to the salient wordings of Rule
4.1. It reads: [a] party to a pending action filed in violation of the
arbitration agreement x x x may request the court to refer the
parties to arbitration in accordance with such agreement.
In using the word may to qualify the act of filing a request
under Section 24 of R.A. No. 9285, the Special ADR Rules clearly
did not intend to limit the invocation of an arbitration agreement in
a pending suit solely via such request. After all, non-compliance
with an arbitration agreement is a valid defense to any offending
suit and, as such, may even be raised in an answer as provided in
our ordinary rules of procedure.95cralaw virtualaw library

Rule 4.2. When to make request. - (A) Where the arbitration


agreement exists before the action is filed. - The request for
referral shall be made not later than the pre-trial conference. After
the pre-trial conference, the court will only act upon the request
for referral if it is made with the agreement of all parties to the
case.

In this case, it is conceded that petitioner was not able to file a


separate request of arbitration before the MeTC. However, it is
equally conceded that the petitioner, as early as in its Answer with
Counterclaim, had already apprised the MeTC of the existence of
the arbitration clause in the 2005 Lease Contract96 and, more
significantly, of its desire to have the same enforced in this
case.97 This act of petitioner is enough valid invocation of his right
to
arbitrate.

(B) Submission agreement. - If there is no existing arbitration


agreement at the time the case is filed but the parties
subsequently enter into an arbitration agreement, they may
request the court to refer their dispute to arbitration at any time
during
the
proceedings.

Fourth. The fact that the petitioner and respondent already


underwent through JDR proceedings before the RTC, will not make
the subsequent conduct of arbitration between the parties
unnecessary or circuitous. The JDR system is substantially
different
from
arbitration
proceedings.

Rule 4.3. Contents of request. - The request for referral shall be


in the form of a motion, which shall state that the dispute is
covered
by
an
arbitration
agreement.

The JDR framework is based on the processes of mediation,


conciliation or early neutral evaluationwhich entails the submission
of a dispute before a JDR judge who shall merely facilitate
settlement between the parties in conflict or make a non-binding
evaluation or assessment of the chances of each partys
case.98 Thus in JDR, the JDR judge lacks the authority to render a
resolution of the dispute that is binding upon the parties in conflict.
In arbitration, on the other hand, the dispute is submitted to
an arbitrator/sa neutral third person or a group of thereofwho
shall have the authority to render a resolution binding upon the
parties.99cralaw
virtualaw
library

Apart from other submissions, the movant shall attach to his


motion an authentic copy of the arbitration agreement.
The request shall contain
parties specifying the date
party making the request
give him the opportunity

a notice of hearing addressed to all


and time when it would be heard. The
shall serve it upon the respondent to
to file a comment or opposition as

Clearly, the mere submission of a dispute to JDR proceedings


would not necessarily render the subsequent conduct of arbitration
a mere surplusage. The failure of the parties in conflict to reach an
amicable settlement before the JDR may, in fact, be supplemented
by their resort to arbitration where a binding resolution to the
dispute could finally be achieved. This situation precisely finds
application
to
the
case
at
bench.

is pending, upon being satisfied that the issue involved in such suit
or proceeding is referable to arbitration, shall stay the action or
proceeding until an arbitration has been had in accordance
with the terms of the agreement: Provided, That the applicant
for the stay is not in default in proceeding with such arbitration.
[Emphasis supplied]
R.A. No. 9285

Neither would the summary nature of ejectment cases be a valid


reason to disregard the enforcement of the arbitration clause of
the 2005 Lease Contract. Notwithstanding the summary nature of
ejectment cases, arbitration still remains relevant as it aims not
only to afford the parties an expeditious method of resolving their
dispute.

Section 24. Referral to Arbitration. - A court before which an


action is brought in a matter which is the subject matter of an
arbitration agreement shall, if at least one party so requests not
later that the pre-trial conference, or upon the request of both
parties thereafter, refer the parties to arbitration unless it finds
that the arbitration agreement is null and void, inoperative or
incapable of being performed. [Emphasis supplied]
It is clear that under the law, the instant unlawful detainer action
should have been stayed;101 the petitioner and the respondent
should have been referred to arbitration pursuant to the arbitration
clause of the 2005 Lease Contract. The MeTC, however, did not do
so in violation of the lawwhich violation was, in turn, affirmed by
the
RTC
and
Court
of
Appeals
on
appeal.

A pivotal feature of arbitration as an alternative mode of dispute


resolution is that it is, first and foremost, a product of party
autonomy or the freedom of the parties to make their own
arrangements to resolve their own disputes.100 Arbitration
agreements manifest not only the desire of the parties in conflict
for an expeditious resolution of their dispute. They also represent,
if not more so, the parties mutual aspiration to achieve such
resolution outside of judicial auspices, in a more informal and less
antagonistic environment under the terms of their choosing.
Needless to state, this critical feature can never be satisfied in an
ejectment case no matter how summary it may be.
Having hurdled all the challenges against the application of the
arbitration clause of the 2005 Lease Agreement in this case, We
shall now proceed with the discussion of its legal effects.
Legal Effect of the Application of the Arbitration Clause
Since there really are no legal impediments to the application of
the arbitration clause of the 2005 Contract of Lease in this case,
We find that the instant unlawful detainer action was instituted in
violation of such clause. The Law, therefore, should have governed
the fate of the parties and this suit:chanrobles virtua1aw 1ibrary
R.A. No. 876
Section 7. Stay of civil action. - If any suit or proceeding be
brought upon an issue arising out of an agreement providing for
the arbitration thereof, the court in which such suit or proceeding

The violation by the MeTC of the clear directives under R.A. Nos.
876 and 9285 renders invalid all proceedings it undertook in the
ejectment case after the filing by petitioner of its Answer with
Counterclaimthe point when the petitioner and the respondent
should have been referred to arbitration. This case must,
therefore, be remanded to the MeTC and be suspended at said
point. Inevitably, the decisions of the MeTC, RTC and the Court of
Appeals
must
all
be
vacated
and
set
aside.
The petitioner and the respondent must then be referred to
arbitration pursuant to the arbitration clause of the 2005 Lease
Contract.
This Court is not unaware of the apparent harshness of the
Decision that it is about to make. Nonetheless, this Court must
make the same if only to stress the point that, in our
jurisdiction, bona fide arbitration agreements are recognized as
valid;102 and that laws,103 rules and regulations104 do exist
protecting and ensuring their enforcement as a matter of state
policy. Gone should be the days when courts treat otherwise valid

arbitration agreements with disdain and hostility, if not outright


jealousy,105 and then get away with it. Courts should instead
learn to treat alternative means of dispute resolution as effective
partners in the administration of justice and, in the case of
arbitration agreements, to afford them judicial restraint.106 Today,
this Court only performs its part in upholding a once disregarded
state
policy.
Civil

Case

No.

CV

b
c

09-0346

This Court notes that, on 30 September 2009, petitioner filed with


the RTC of Paraaque City, a complaint107 for the rescission or
cancellation of the Deed of Donation and Amended Deed of
Donation against the respondent. The case is currently pending
before Branch 257 of the RTC, docketed as Civil Case No. CV 090346.
This Court recognizes the great possibility that issues raised in Civil
Case No. CV 09-0346 may involve matters that are rightfully
arbitrable per the arbitration clause of the 2005 Lease Contract.
However, since the records of Civil Case No. CV 09-0346 are not
before this Court, We can never know with true certainty and only
speculate.
In this light, let a copy of this Decision be also served to Branch
257 of the RTC of Paraaque for its consideration and, possible,
application
to
Civil
Case
No.
CV
09-0346.
WHEREFORE,
premises
considered,
the
petition
is
hereby GRANTED. Accordingly, We hereby render a Decision:
1 SETTING ASIDE all the proceedings undertaken by the
Metropolitan Trial Court, Branch 77, of Paraaque City in
relation to Civil Case No. 2009-307 after the filing by
petitioner of itsAnswer with Counterclaim;
2 REMANDING the
instant
case
to
the
MeTC, SUSPENDED at the point after the filing by
petitioner of its Answer with Counterclaim;
3 SETTING ASIDE the following:
a Decision dated 19 August 2011 of the Court of
Appeals in C.A.-G.R. SP No. 116865,

Decision dated 29 October 2010 of the Regional


Trial Court, Branch 274, of Paraaque City in Civil
Case No. 10-0255,
Decision dated 27 April 2010 of the Metropolitan
Trial Court, Branch 77, of Paraaque City in Civil
Case No. 2009-307; and

REFERRING the petitioner and the respondent to


arbitration pursuant to the arbitration clause of the 2005
Lease Contract, repeatedly included in the 2000 Lease
Contract and in the 1976 Amended Deed of Donation.

Let a copy of this Decision be served to Branch 257 of the RTC of


Paraaque for its consideration and, possible, application to Civil
Case
No.
CV
09-0346.
No
SO ORDERED.

costs.chanroblesvirtualawlibrary

FIRST DIVISION
STRONGWORLD
CONSTRUCTION
CORPORATION, LEO CLETO A. GAMOLO, and
REYNOLD P. MOLO,
Petitioners,

G.R. No. 148026

- versus HON. N.C. PERELLO in her capacity as Presiding


Judge of Branch 276 of the Regional Trial Court
of Muntinlupa City, FIRST PEOPLES BANK,
BANK OF COMMERCE, ORLANDO O. FRANCISCO,
and EDITHA LIZARDA,
Respondents.

Present:

PANGANIBAN, C.J.
Chairperson,
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.

Promulgated:
July 27, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

CHICO-NAZARIO, J.:

DECISION

Before Us is a Petition for Review on Certiorari, seeking to set


aside the Decision[1] and Resolution[2] of the Court of Appeals in
CA-G.R. SP. No. 49462, dated 24 May 2000and 2 April 2001,
respectively.
The Antecedents

Petitioner
Strongworld
Construction
Corporation
(Strongworld) is a domestic corporation engaged in the business of
construction. Petitioners Leo Cleto A. Gamolo (Gamolo) and
Reynold P. Molo (Molo) are members of the Board of Directors of
petitioner Strongworld. On 31 October 1997, petitioners filed a
Complaint[3] for Sum of Money and Damages with the Regional
Trial Court (RTC) of Muntinlupa City, Branch 276, presided over by
the Hon. N. C. Perello, and docketed as Civil Case No. 97-222,
against private respondents First Peoples Bank (formerly known as
Rural Bank of San Teodoro), Bank of Commerce, Orlando O.
Francisco (Francisco), and Editha Lizarda (Lizarda).
In their Complaint, petitioners alleged, inter alia, that: in
1996, Rizal Cement Company, Inc. delivered to petitioner
Strongworld four (4) checks [4] as payment for the construction of
housing units;[5] at the time of the issuance of the aforesaid
checks, petitioner Strongworld maintained a single account with
private respondent Bank of Commerce, San Pedro Branch, [6] with
private respondents Francisco, former president of petitioner
Strongworld, and its incumbent president, petitioner Gamolo as
authorized signatories; the subject checks were not deposited to
the account of petitioner Strongworld; instead, private respondents
Francisco and Lizarda, conspiring and confederating between
themselves and with the employees of private respondent First
Peoples Bank, maliciously and fraudulently diverted the checks to
their personal accounts, specifically First Peoples Bank Savings
Account No. 51-03025-5, without the knowledge and consent of
petitioners Gamolo and Molo, and without authority from the Board
of Directors of petitioner Strongworld; [7] and that repeated
demands against the private respondents were not heeded
resulting in the damage and prejudice of petitioners.
The petitioners prayed for the following reliefs:
WHEREFORE, it is respectfully prayed that judgment be
rendered as follows:
1. Ordering the defendants to pay plaintiff
Strongworld,
jointly
and
severally,
the
amount
of P5,085,615.22 constituting the value of plaintiff
corporations checks, and P3,000,000.00, constituting lost

profits, interest and other expenses which resulted by


reason of the illegal acts of defendants.
2. Ordering defendants to pay plaintiffs, jointly and
severally, a) P3,000,000.00 by way of moral damages
divided as follows: i) plaintiff Gamolo P1,500,000.00, ii)
plaintiff
MoloP750,000.00,
and
iii)
plaintiff
Strongworld P750,000.00;
b) P100,000.00
exemplary
damages; and c) P200,000.00 attorneys fees.
Other reliefs just and equitable under the premises
are likewise prayed for.[8]
On 2 December 1997, private respondent Bank of
Commerce filed an Answer with Cross-Claim, [9] praying for the
dismissal
of
the
Complaint. Subsequent
thereto,
private
respondent Lizarda filed an Answer with Counterclaim and CrossClaim,[10] dated 12 December 1997. On 11 December 1997, private
respondent First Peoples Bank filed a Motion to Dismiss [11] on the
grounds that petitioners Gamolo and Molo had no legal capacity to
sue, and that the Complaint stated no cause of action. On 9
January 1998, petitioners filed an Opposition to Motion to Dismiss.
[12]

On 9 January 1998, the court a quo rendered an


Order[13] dismissing the Complaint. We quote the pertinent portion
hereunder:
From the allegations of the COMPLAINT, it appears
that money sought to be recovered belongs to the
Corporation and who allegedly was damaged due to the
unauthorized expenditure of this sum. Therefore, Plaintiff
Leo Cleto A. Gamolo and Reynaldo P. Molo, although,
admittedly are officers of the corporation appear to have
instituted this action for and in behalf of the corporation,
yet their authority to sue or defend the corporation has not
been shown in this COMPLAINT. No Board Resolution for
this purpose has been attached or recited in it. Thus this
complaint is not prosecuted by the proper property in
interest.[14]

On 30 January 1998, petitioners filed a Motion for


Reconsideration[15] which was opposed by private respondent First
Peoples Bank.[16]
On 30 March 1998, the trial court granted petitioners
Motion for Reconsideration, and consequently, ordered the case
reinstated.[17] According to the court a quo, the board resolution
authorizing petitioner Gamolo to prosecute the case in behalf of
petitioner Strongworld was defective for not having been
authenticated by the proper officer.[18]However, notwithstanding
the defect in the resolution, the court a quo held that the intention
of petitioner Strongworld to authorize Gamolo to prosecute the
case against private respondents is clear.[19] On 30 April 1998,
private respondent First Peoples Bank filed a Motion for
Reconsideration[20] of the 30 March 1998 Order, praying for the
dismissal of the Complaint. On 25 May 1998, petitioners belatedly
filed an Opposition[21] thereto.
In the interim, on 7 May 1998, the court a quo issued an
Order,[22] recalling its Order of 30 March 1998. The trial court
declared that the case should remain dismissed on the ground that
petitioners Motion for Reconsideration of the Order dated 9
January 1998, dismissing the Complaint, was not served on private
respondents Bank of Commerce, Francisco and Lizarda.
[23]
Moreover, the trial court opined that it was in error when it
considered petitioners Motion for Reconsideration, as no proof of
service to private respondents was shown therein, and the same
lacked a notice of hearing, which defects rendered the aforesaid
Motion for Reconsideration, a mere scrap of paper.[24]

1998. In the alternative, they prayed that the 7 May 1998 Order
be reconsidered and set aside, that the Complaint be reinstated,
and that private respondents First Peoples Bank and Francisco be
declared in default.[27]
Resolving petitioners Motion for Clarification, the trial court issued
an Order[28] in open court, dated 17 July 1998, reiterating that the
case should remain dismissed as petitioners Motion for
Reconsideration was defective, and hence, unbinding against the
Order of 7 May 1998. Similarly, the trial court corrected the Order
of 29 May 1998 to refer to the Order of 7 May 1998, which
sustained the dismissal of the case. [29] The court a quo reasoned,
thus:
Even as the MOTION FOR RECONSIDERATION by
the Plaintiff was not assailed by the other Defendant, but
due to lack of notification, this Motion should not have
been received by the Court at all, therefore [it] is a mere
scrap of paper which requires no ruling.
1. A motion that does not contain a notice of
hearing is a mere scrap of paper, it represents no question
which merits the attention of the Court. (Goldloop
Properties, Inc. vs. Court of Appeals, 212 SCRA 498).
2. Rule 15, Sec. 4. Hearing of motion- Except for
motions which the Court may act upon without prejudicing
the rights of the adverse party, every written motion shall
be set for hearing by the applicant.

Subsequently, petitioners apparently filed a Motion for


Reconsideration of the 7 May 1998 Order, a copy of which cannot
be found on the records. On 29 May 1998, the court a
quo rendered an Order,[25] denying the motion and finding no
reason to reconsider its Order of 7 May 1998.

3. Every written motion required to be heard and


the notice of the hearing thereof shall be served in such a
manner to ensure its receipt by the other party at least
three (3) days before the date of hearing unless the Court
for good cause sets the hearing on shorter notice.

On 15 June 1998, petitioners filed a Motion for Clarification and/or


Reconsideration
and
for
Declaration
of
Default. [26] They
sought, inter alia, for clarification of the Order dated 7 May 1998,
positing that the dismissal should only pertain to private
respondent First Peoples Bank. They also prayed that the 7 May
1998 Order be declared as superseded by the Order of 29 May

4. Sec. 5, Notice of hearing The notice of hearing


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

5. Sec. 6, Proof of service necessary No written


motion set for hearing shall be acted upon by the Court
without proof of service thereof.

Petitioners moved for Reconsideration[34] thereon, but the same


was denied by the Court of Appeals in the assailed Order
promulgated on 2 April 2001.

6. Any motion that does not contain proof of


service of notice to the other party is not entitled to
judicial cognizance. (Cui vs. Madayag, 245 SCRA 1). [30]

Assignment of Errors
Hence, petitioners come to us via the instant Petition for Review,
submitting that the Court of Appeals erred, viz:

Aggrieved, petitioners filed a Petition for Certiorari with the Court


of Appeals, assailing the Orders of the RTC dated 7 May
1998 and 17 July 1998. The Petition likewise sought to annul the
Order of the RTC dated 9 January 1998, dismissing the Complaint,
which was later revived by the Order of 7 May 1998.

I.

The Ruling of the Court of Appeals


The
Court
of
Appeals
dismissed
petitioners
Petition
for Certiorari for utilizing the wrong recourse of certiorari, instead
of an ordinary appeal. The appellate court said that the Complaint
was finally dismissed on 17 July 1998. Thus, citing Denso (Phils.),
Inc. v. Intermediate Appellate Court,[31] it held that the dismissal of
the Complaint is a final order which disposed of the action, and the
remedy of a party aggrieved of a final order or judgment is appeal
under Section 1, Rule 41 of the 1997 Revised Rules of Civil
Procedure, and not a special civil action of certiorari under Rule 65
thereof.[32]

IN NOT FINDING THAT APPEAL IS NOT THE REMEDY WITH


RESPECT TO PETITIONERS (sic) MOTION FOR CLARIFICATION;

In dismissing the Petition, the Court of Appeals, in part, declared:


As earlier said, however Our Supreme Court has held that
if a party essays a course by the wrong procedure, the
only recourse of action open is to dismiss the case (Murillo
vs. Rodolfo Consul, UDK 9748, 182 SCRA XI (sic)). The
remedy of appeal being available to the petitioners, it
cannot resort to Certiorari (Felizardo vs. Court of Appeals,
233 SCRA 220).
It is settled that a special civil action for certiorari will not
lie as a substitute for the last (sic) remedy of appeal (Dela
Paz v. Panis, 245 SCRA 242) and we find no special nor
compelling reasons why we should make out this case as
an exception.[33]

IN RULING THAT APPEAL IS THE PROPER REMEDY


AND
PETITION
FOR CERTIORARI IS
NOT
AVAILABLE IN THE PRESENT CASE;

II.

III.
IN NOT FINDING THAT THE TRIAL COURT ABUSED ITS
DISCRETION IN NOT REINSTATING THE COMPLAINTS (sic) AND IN
FAILING TO CONSIDER THAT THE TRIAL COURT GRAVELY ERRED
IN: 1) DISMISSING THE COMPLAINT ON THE GROUND THAT A
BOARD RESOLUTION WAS NOT RECITED IN OR ATTACHED TO THE
COMPLAINT; 2) IN DISMISSING THE COMPLAINT EVEN AGAINST
THE RESPONDENTS WHO DID NOT FILE A MOTION TO DISMISS
AND WHO DID NOT RAISE THE SAME GROUNDS RELIED UPON BY
THE TRIAL COURT IN DISMISSING THE COMPLAINT; 3) IN
REINSTATING ITS JANUARY 9, 1998 ORDER AND IN NOT
RECALLING THE JANUARY 9, 1998.[35]
Issue
For our resolution is whether the appellate court was in error when
it dismissed petitioners Petition for Certiorari on the ground that
appeal was the appropriate remedy under Rule 41 of the 1997
Revised Rules of Civil Procedure, and not a Petition for Certiorari,
under Rule 65 thereof.
The Courts Ruling
At the outset, attention must be called to Section 1, Rule 41 of the
1997 Revised Rules of Civil Procedure, to wit:

SECTION 1. Subject of appeal. An appeal may be taken


from a judgment or final order that completely disposes of
the case, or of a particular matter therein when declared
by these Rules to be appealable:
No appeal may be taken from:
(a)

An order denying a motion for new


trial or reconsideration;
(b) An order denying a petition
for relief or any similar motion
seeking relief from judgment;
(c) An interlocutory order;
(d) An order disallowing or dismissing an
appeal;
(e) An order denying a motion to set
aside a judgment by consent, confession or
compromise on the ground of fraud,
mistake or duress, or any other ground
vitiating consent;
(f)
An order of execution;
(g) A judgment or final order for or
against one or more of several parties or in
separate claims, counterclaims, crossclaims and third-party complaints, while
the main case is pending, unless the court
allows an appeal therefrom; and
(h) An order dismissing an action
without prejudice;
In all the above instances where the
judgment or final order is not appealable, the
aggrieved party may file an appropriate special
civil action under Rule 65.
From the foregoing, it is evident that under Section 1(h),
Rule 41, no appeal may be taken from an order dismissing an
action without prejudice. In such a case, the 1997 Revised Rules of
Civil Procedure states that the remedy available to the aggrieved
party is to file an appropriate special civil action under Rule 65.

Jurisprudence has similarly underscored that with the


advent of the 1997 Revised Rules of Civil Procedure, an order of
dismissal without prejudice is no longer appealable, as expressly
provided by Section 1(h), Rule 41 thereof. In Philippine Export and
Foreign Loan Guarantee Corporation v. Philippine Infrastructures,
Inc.,[36] this Court had the opportunity to resolve whether an order
dismissing a petition without prejudice should be appealed by way
of ordinary appeal, petition for review on certiorari or a petition
forcertiorari. The Court said that, indeed, prior to the 1997 Revised
Rules of Civil Procedure, an order dismissing an action may be
appealed by ordinary appeal.[37] Verily, Section 1, Rule 41 of the
1997 Revised Rules of Civil Procedure recites the instances when
appeal may not be taken, specifically, in case of an order
dismissing an action withoutprejudice, in which case, the remedy
available to the aggrieved party is Rule 65.
Thus, the question is: was the Order of the RTC, dated 7
May 1998, reviving the 9 January 1998 Order, which dismissed the
Complaint, an order dismissing an action without prejudice?
We distinguish a dismissal with prejudice from a
dismissal without prejudice. The former disallows and bars the
refiling of the complaint; whereas, the same cannot be said of a
dismissal without prejudice.[38] Likewise, where the law permits, a
dismissal with prejudice is subject to the right of appeal. [39]
To resolve the issue before us, it is critical to examine the
Order of dismissal rendered by the court a quo. It can be recalled
that on 9 January 1998, the trial court issued an Order dismissing
petitioners Complaint, on the ground that petitioners Gamolo and
Molo had not shown their authority to sue for and in behalf of
petitioner Strongworld. Subsequently, on petitioners Motion for
Reconsideration, the RTC reconsidered its 9 January 1998 Order of
dismissal. Hence, on 30 March 1998, the RTC ordered the case
reinstated. However, on 7
May
1998,
upon
Motion
for
Reconsideration of private respondent First Peoples Bank, the
court a quo recalled the Order of 30 March 1998. The recall by the
court a quo of the Order dated 30 March 1998 reinstated the Order
dated 9 January 1998, which dismissed the Complaint. Finally,
on 17 July 1998, the court a quo, upon petitioners Motion for
Clarification, enunciated that the Order of 7 May 1998, dismissing
the case, is sustained.

As can be gleaned therefrom, the trial courts order of


dismissal of 9 January 1998, was founded on the ground that the
action was not instituted by the proper party in interest. [40] The
trial court held that petitioners Gamolo and Molo, although
admittedly officers of petitioner Strongworld, appear to have
instituted the action for and in behalf of petitioner Strongworld,
yet, their authority to sue or defend the corporation had not been
shown in the Complaint.[41] No board resolution for the purpose
had been attached or recited in the Complaint.[42]
Jurisprudence states that if the suit is not brought in the
name of, or against, the real party in interest, a Motion to Dismiss
may be filed on the ground that the Complaint states no cause of
action.[43] Section 1(g), Rule 16 of the 1997 Revised Rules of Civil
Procedure allows the filing of a Motion to Dismiss on the ground
that the Complaint states no cause of action. Thus, in Aguila, Jr. v.
Court of Appeals,[44] we pronounced:
A real party in interest is one who would be
benefited or injured by the judgment, or who is entitled to
the avails of the suit. This ruling is now embodied in Rule
3, Section 2 of the 1997 Revised Rules of Civil
Procedure. Any decision rendered against a person who is
not a real party in interest in the case cannot be
executed. Hence, a complaint filed against such a person
should be dismissed for failure to state a cause of action.
[45]

Section 1, Rule 16 of the 1997 Revised Rules of Civil Procedure


enumerates the grounds for which a Motion to Dismiss may be
filed, viz.:
SECTION 1. Grounds. Within the time for but
before filing the answer to the complaint or pleading
asserting a claim, a motion to dismiss may be made on any
of the following grounds:
(a)

That the court has no jurisdiction over the


person of the defending party;

(b)

That the court has no jurisdiction over the


subject matter of the claim;

(c)

That venue is improperly laid;

(d)

That the plaintiff has no legal capacity to sue;

(e)

That there is another action pending


between the same parties for the same cause;

(f)

That the cause of action is barred by a prior


judgment or by the statute of limitations;

(g)

That the pleading asserting the claim states


no cause of action;

(h)

That the claim or demand set forth in the


plaintiffs pleading has been paid, waived,
abandoned, or otherwise extinguished;

(i)

That the claim on which the action is


founded is unenforceable under the provisions of
the statute of frauds; and

(j) That a condition precedent for filing the claim has not
been complied with.
Section 5 of the same Rule, recites the effect of a dismissal
under Sections 1(f),[46] (h),[47] and (i),[48] thereof, thus:
SEC. 5. Effect of dismissal. Subject to the
right of appeal, an order granting a motion to
dismiss based on paragraphs (f), (h), and (i) of
section 1 hereof shall bar the refiling of the same
action or claim.
Briefly stated, dismissals that are based on the following
grounds, to wit: (1) that the cause of action is barred by a prior
judgment or by the statute of limitations; (2) that the claim or
demand set forth in the plaintiffs pleading has been paid, waived,
abandoned or otherwise extinguished; and (3) that the claim on
which the action is founded is unenforceable under the provisions
of the statute of frauds, bar the refiling of the same action or

claim. Logically, the nature of the dismissal founded on any of the


preceding grounds is with prejudice because the dismissal
prevents the refiling of the same action or claim. Ergo, dismissals
based on the rest of the grounds enumerated are without prejudice
because they do not preclude the refiling of the same action.
Verily, the dismissal of petitioners Complaint by the
court a quo was not based on any of the grounds specified in
Section 5, Rule 16 of the 1997 Revised Rules of Civil Procedure;
rather, it was grounded on what was encapsulated in Section 1(g),
Rule 16 of the 1997 Revised Rules of Civil Procedure. As the trial
court ratiocinated in its 9 January 1998 Order, the Complaint is not
prosecuted by the proper party in interest. [49] Considering the
heretofore discussion, we can say that the order of dismissal was
based on the ground that the Complaint states no cause of
action. For this reason, the dismissal of petitioners Complaint
cannot be said to be a dismissal with prejudice which bars the
refiling of the same action.

WHEREFORE, the petition is GRANTED. The Decision and


Resolution of the Court of Appeals in CA-G.R. SP. No. 49462,
dated 24
May
2000 and 2
April
2001 are
hereby REVERSED and SET ASIDE. This case is REMANDED to
the Court of Appeals which is directed to hear and decide
petitioners Petition for Certiorari with utmost dispatch. No costs
against petitioners.
SO ORDERED.

As has been earlier quoted, Section 1(h), Rule 41 of the


1997 Revised Rules of Civil Procedure mandates that no appeal
may be taken from an order dismissing an action without
prejudice. The same section provides that in such an instant where
the final order is not appealable, the aggrieved party may file an
appropriate special civil action under Rule 65.
The appellate court erred, thus, when it pronounced in its
Decision of 24 May 2000 that petitioners remedy is appeal under
Section 1, Rule 41 of the 1997 Revised Rules of Civil Procedure.
A Petition for Certiorari under Rule 65 is available in cases
when there is no appeal, nor any plain, speedy, and adequate
remedy in the ordinary course of law. In the case at bar, appeal of
the 7 May 1998 Order, reviving the Order of 9 January 1998, which
dismissed petitioners Complaint, and as reiterated in the 17 July
1998 Order is not a remedy available to petitioners as aggrieved
parties.
In sum, the appellate court erred when it ruled that
petitioners Petition for Certiorari filed before it was not the proper
remedy. The dismissal of the Complaint being without prejudice,
the remedy available to the aggrieved party is Rule 65.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 170354

June 30, 2006

EDGARDO
PINGA, Petitioner,
vs.
THE HEIRS OF GERMAN, SANTIAGO represented by FERNANDO
SANTIAGO, Respondents.
DECISION
TINGA, J.:

The constitutional faculty of the Court to promulgate rules of


practice and procedure1 necessarily carries the power to overturn
judicial precedents on points of remedial law through the

amendment of the Rules of Court. One of the notable changes


introduced in the 1997 Rules of Civil Procedure is the explicit
proviso that if a complaint is dismissed due to fault of the plaintiff,
such dismissal is "without prejudice to the right of the defendant
to prosecute his counterclaim in the same or in a separate
action."2 The innovation was instituted in spite of previous
jurisprudence holding that the fact of the dismissal of the
complaint was sufficient to justify the dismissal as well of the
compulsory counterclaim.3

In granting this petition, the Court recognizes that the former


jurisprudential rule can no longer stand in light of Section 3, Rule
17 of the 1997 Rules of Civil Procedure.

The relevant facts are simple enough. Petitioner Eduardo Pinga


was named as one of two defendants in a complaint for
injunction4 filed with Branch 29 of the Regional Trial Court
(RTC)5 of San Miguel, Zamboanga del Sur, by respondent Heirs of
German Santiago, represented by Fernando Santiago. The
Complaint6 dated 28 May 1998 alleged in essence that petitioner
and co-defendant Vicente Saavedra had been unlawfully entering
the coco lands of the respondent, cutting wood and bamboos and
harvesting the fruits of the coconut trees therein. Respondents
prayed that petitioner and Saavedra be enjoined from committing
"acts of depredation" on their properties, and ordered to pay
damages.

In their Amended Answer with Counterclaim, 7 petitioner and his


co-defendant disputed respondents ownership of the properties in
question, asserting that petitioners father, Edmundo Pinga, from

whom defendants derived their interest in the properties, had been


in possession thereof since the 1930s.8 They alleged that as far
back as 1968, respondents had already been ordered ejected from
the properties after a complaint for forcible entry was filed by the
heirs of Edmundo Pinga. It was further claimed that respondents
application for free patent over the properties was rejected by the
Office of the President in 1971. Defendants in turn prayed that
owing to respondents forcible re-entry in the properties and the
irresponsible and reckless filing of the case, they be awarded
various types of damages instead in amounts totaling P2,100,000
plus costs of suit.9

By July of 2005, the trial of the case had not yet been completed.
Moreover, respondents, as plaintiffs, had failed to present their
evidence. It appears that on 25 October 2004, the RTC already
ordered the dismissal of the complaint after respondents counsel
had sought the postponement of the hearing scheduled
then.10 However, the order of dismissal was subsequently
reconsidered by the RTC in an Order dated 9 June 2005, which
took into account the assurance of respondents counsel that he
would give priority to that case.11

At the hearing of 27 July 2005, plaintiffs counsel on record failed


to appear, sending in his stead a representative who sought the
postponement of the hearing. Counsel for defendants (who include
herein petitioner) opposed the move for postponement and moved
instead for the dismissal of the case. The RTC noted that it was
obvious that respondents had failed to prosecute the case for an
unreasonable length of time, in fact not having presented their
evidence yet. On that ground, the complaint was dismissed. At the
same time, the RTC allowed defendants "to present their evidence
ex-parte."12

Respondents filed a Motion for Reconsideration 13 of the order


issued in open court on 27 July 2005, opting however not to seek
that their complaint be reinstated, but praying instead that the
entire action be dismissed and petitioner be disallowed from
presenting evidence ex-parte. Respondents claimed that the order
of the RTC allowing petitioner to present evidence ex-parte was
not in accord with established jurisprudence. They cited cases,
particularly City of Manila v. Ruymann 14 and Domingo v.
Santos,15 which noted those instances in which a counterclaim
could not remain pending for independent adjudication.

On 9 August 2005, the RTC promulgated an order granting


respondents Motion for Reconsideration and dismissing the
counterclaim, citing as the only ground therefor that "there is no
opposition
to
the
Motion
for
Reconsideration
of
the
[respondents]."16 Petitioner filed a Motion for Reconsideration, but
the same was denied by the RTC in an Order dated 10 October
2005.17 Notably, respondents filed an Opposition to Defendants
Urgent Motion for Reconsideration, wherein they argued that the
prevailing jurisprudential rule 18 is that "compulsory counterclaims
cannot be adjudicated independently of plaintiffs cause of action,"
and "a conversu, the dismissal of the complaint carries with it the
dismissal of the compulsory counterclaims." 19

The matter was elevated to this Court directly by way of a Petition


for Review under Rule 45 on a pure question of law, the most
relevant being whether the dismissal of the complaint necessarily
carries the dismissal of the compulsory counterclaim.

We hold that under Section 3, Rule 17 of the 1997 Rules of Civil


Procedure, the dismissal of the complaint due to the fault of
plaintiff does not necessarily carry with it the dismissal of the
counterclaim, compulsory or otherwise. In fact, the dismissal of
the complaint is without prejudice to the right of defendants to
prosecute the counterclaim.

On a prefatory note, the RTC, in dismissing the counterclaim, did


not expressly adopt respondents argument that the dismissal of
their complaint extended as well to the counterclaim. Instead, the
RTC justified the dismissal of the counterclaim on the ground that
"there is no opposition to [plaintiffs] Motion for Reconsideration
[seeking the dismissal of the counterclaim]." 20 This explanation is
hollow, considering that there is no mandatory rule requiring that
an opposition be filed to a motion for reconsideration without need
for a court order to that effect; and, as posited by petitioner, the
"failure to file an opposition to the Plaintiffs Motion for
Reconsideration is definitely not one among the established
grounds for dismissal [of the counterclaim]." 21 Still, the dismissal
of the counterclaim by the RTC betrays at very least a tacit
recognition of respondents argument that the counterclaim did not
survive the dismissal of the complaint. At most, the dismissal of
the counterclaim over the objection of the defendant (herein
petitioner) on grounds other than the merits of the counterclaim,
despite the provisions under Rule 17 of the 1997 Rules of Civil
Procedure, constitutes a debatable question of law, presently
meriting justiciability through the instant action. Indeed, in
reviewing the assailed orders of the RTC, it is inevitable that the
Court consider whether the dismissal of the complaint, upon
motion of the defendant, on the ground of the failure to prosecute
on plaintiffs part precipitates or carries with it the dismissal of the
pending counterclaims.

Our core discussion begins with Section 3, Rule 17 of the 1997


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

The express qualification in the provision that the dismissal of the


complaint due to the plaintiffs fault, as in the case for failure to
prosecute, is without prejudice to the right of the defendant to
prosecute his counterclaim in the same or separate action. This
stands in marked contrast to the provisions under Rule 17 of the
1964 Rules of Court which were superseded by the 1997
amendments. In the 1964 Rules, dismissals due to failure to
prosecute were governed by Section 3, Rule 17, to wit:
SEC. 3. Failure to prosecute. If plaintiff fails to appear at
the time of the trial, or to prosecute his action for an unreasonable
length of time, or to comply with these rules or any order of the
court, the action may be dismissed upon motion of the defendant
or upon the courts own motion. This dismissal shall have the
effect of an adjudication upon the merits, unless otherwise
provided by court.

Evidently, the old rule was silent on the effect of such dismissal
due to failure to prosecute on the pending counterclaims. As a
result, there arose what one authority on remedial law
characterized as "the nagging question of whether or not the
dismissal of the complaint carries with it the dismissal of the
counterclaim."22 Jurisprudence construing the previous Rules was
hardly silent on the matter.
In their arguments before the RTC on the dismissal of the
counterclaim, respondents cited in support City of Manila v.
Ruymann,23 Domingo
v.
Santos,24 Belleza
v.
25
Huntington, and Froilan v. Pan Oriental Shipping Co.,26 all of
which were decided more than five decades ago. Notably though,
none of the complaints in these four cases were dismissed either
due to the fault of the plaintiff or upon the instance of the
defendant.27

The distinction is relevant, for under the previous and current


incarnations of the Rules of Civil Procedure, it is Section 3, Rule 17
that governs the dismissals due to the failure of the plaintiff to
prosecute the complaint, as had happened in the case at bar.
Otherwise, it is Section 2, Rule 17, which then, and still is now,
covered dismissals ordered by the trial court upon the instance of
the plaintiff.28 Yet, as will be seen in the foregoing discussion, a
discussion of Section 2 cannot be avoided as the postulate behind
that provision was eventually extended as well in cases that should
have properly been governed by Section 3.

Even though the cases cited by respondents involved different


factual antecedents, there exists more appropriate precedents
which they could have cited in support of their claim that the

counterclaim should have been dismissed even if the dismissal of


the complaint was upon the defendants motion and was
predicated on the plaintiffs fault. BA Finance Corp. v.
Co29 particularly stands out in that regard, although that ruling is
itself grounded on other precedents as well. Elucidation of these
cases is in order.

On the general effect of the dismissal of a complaint, regardless of


cause, on the pending counterclaims, previous jurisprudence laid
emphasis on whether the counterclaim was compulsory or
permissive in character. The necessity of such distinction was
provided in the 1964 Rules itself, particularly Section 2, Rule 17,
which stated that in instances wherein the plaintiff seeks the
dismissal of the complaint, "if a counterclaim has been pleaded by
a defendant prior to the service upon him of the plaintiffs motion
to dismiss, the action shall not be dismissed against the
defendants objection unless the counterclaim can remain pending
for independent adjudication by the court." 30 The vaunted
commentaries of Chief Justice Moran, remarking on Section 2, Rule
17, noted that "[t]here are instances in which a counterclaim
cannot remain pending for independent adjudication, as, where it
arises out of, or is necessarily connected with, the transaction or
occurrence which is the subject matter of the opposing partys
claim."31

This view expressed in Morans Commentaries was adopted by the


Court in cases where the application of Section 2, Rule 17 of the
1964 Rules of Court was called for, such as in Lim Tanhu v.
Ramolete,32 and Dalman v. City Court of Dipolog City.33 The latter
case warrants brief elaboration. Therein, the plaintiff in a civil case
for damages moved for the withdrawal of her own case on the
ground that the dispute had not been referred to the barangay

council as required by law. Over the objection of the defendant,


who feared that her own counterclaim would be prejudiced by the
dismissal, plaintiffs motion was granted, the complaint and the
counterclaim accordingly dismissed by the trial court. The Court
refused to reinstate the counterclaim, opining without elaboration,
"[i]f the civil case is dismissed, so also is the counterclaim filed
therein."34 The broad nature of that statement gave rise to the
notion that the mandatory dismissal of the counterclaim upon
dismissal of the complaint applied regardless of the cause of the
complaints dismissal.35

Notably, the qualification concerning compulsory counterclaims


was provided in Section 2, Rule 17 of the 1964 Rules, the provision
governing dismissals by order of the court, and not Section 3, Rule
17. As stated earlier, Section 3, which covered dismissals for
failure to prosecute upon motion of the defendant or upon motu
proprioaction of the trial court, was silent on the effect on the
counterclaim of dismissals of such nature.

Spouses Sta. Maria, Jr. v. Court of Appeals,36 decided in 1972,


ostensibly supplied the gap on the effect on the counterclaim of
complaints dismissed under Section 3. The defendants therein
successfully moved before the trial court for the dismissal of the
complaint without prejudice and their declaration in default on the
counterclaim after plaintiffs therein failed to attend the pre-trial.
After favorable judgment was rendered on the counterclaim,
plaintiffs interposed an appeal, citing among other grounds, that
the counterclaim could no longer have been heard after the
dismissal of the complaint. While the Court noted that the
adjudication of the counterclaim in question "does not depend
upon the adjudication of the claims made in the complaint since
they were virtually abandoned by the non-appearance of the

plaintiffs themselves," it was also added that "[t]he doctrine


invoked is not available to plaintiffs like the petitioners, who
prevent or delay the hearing of their own claims and
allegations."37 The Court, through Justice JBL Reyes, noted:
The doctrine that the complaint may not be
dismissed if the counterclaim cannot be independently
adjudicated is not available to, and was not intended for the
benefit of, a plaintiff who prevents or delays the
prosecution of his own complaint. Otherwise, the trial of
counterclaims would be made to depend upon the maneuvers of
the plaintiff, and the rule would offer a premium to vexing or
delaying tactics to the prejudice of the counterclaimants. It is in
the same spirit that we have ruled that a complaint may not be
withdrawn over the opposition of the defendant where the
counterclaim is one that arises from, or is necessarily connected
with, the plaintiffs action and cannot remain pending for
independent adjudication.38

There is no doubt that under the 1964 Rules, the dismissal of a


complaint due to the failure of the plaintiff to appear during pretrial, as what had happened in Sta. Maria, fell within the coverage
of Section 3, Rule 17. On the other hand, Section 2 was clearly
limited in scope to those dismissals sustained at the instance of
the plaintiff.39Nonetheless, by the early 1990s, jurisprudence was
settling on a rule that compulsory counterclaims were necessarily
terminated upon the dismissal of the complaint not only if such
dismissal was upon motion of the plaintiff, but at the instance of
the defendant as well. Two decisions from that period stand out in
this regard,Metals Engineering Resources Corp. v. Court of
Appeals40 and International Container Terminal Services v. Court
of Appeals.41

In Metals, the complaint was expunged from the record after the
defendant had filed a motion for reconsideration of a trial court
order allowing the filing of an amended complaint that corrected a
jurisdictional error in the original complaint pertaining to the
specification of the amount of damages sought. When the
defendant was nonetheless allowed to present evidence on the
counterclaim, the plaintiff assailed such allowance on the ground
that the counterclaim was compulsory and could no longer remain
pending for independent adjudication. The Court, in finding for the
plaintiff, noted that the counterclaim was indeed compulsory in
nature, and as such, was auxiliary to the proceeding in the original
suit and derived its jurisdictional support therefrom. 42 It was
further explained that the doctrine was in consonance with the
primary objective of a counterclaim, which was to avoid and
prevent circuitry of action by allowing the entire controversy
between the parties to be litigated and finally determined in one
action, and to discourage multiplicity of suits. 43 Also, the Court
noted that since the complaint was dismissed for lack of
jurisdiction, it was as if no claim was filed against the defendant,
and there was thus no more leg for the complaint to stand on. 44
In International Container, the defendant filed a motion to dismiss
which was granted by the trial court. The defendants counterclaim
was dismissed as well. The Court summarized the key question as
"what is the effect of the dismissal of a complaint ordered at the
instance of the defendant upon a compulsory counterclaim duly
raised in its answer."45 Then it ruled that the counterclaim did not
survive such dismissal. After classifying the counterclaim therein
as compulsory, the Court noted that "[i]t is obvious from the very
nature of the counterclaim that it could not remain pending for
independent adjudication, that is, without adjudication by the court
of the complaint itself on which the counterclaim was based." 46

Then in 1993, a divided Court ruled in BA Finance that the


dismissal of the complaint for nonappearance of plaintiff at the

pre-trial, upon motion of the defendants, carried with it the


dismissal of their compulsory counterclaim. 47 The Court reiterated
the rule that "a compulsory counterclaim cannot remain pending
for independent adjudication by the court as it is auxiliary to the
proceeding in the original suit and merely derives its jurisdictional
support therefrom."48 Express reliance was made on Metals,
International Container, and evenDalman in support of the
majoritys thesis. BA Finance likewise advised that the proper
remedy for defendants desirous that their counterclaims not be
dismissed along with the main complaint was for them to move to
declare the plaintiffs to be "non-suited" on their complaint and "as
in default" on their compulsory counterclaim, instead of moving for
the dismissal of the complaint.49

Justice Regalado, joined by Chief Justice Narvasa, registered a


strong objection to the theory of the majority. They agreed that
the trial court could no longer hear the counterclaim, but only on
the ground that defendants motion to be allowed to present
evidence on the counterclaim was filed after the order dismissing
the complaint had already become final. They disagreed however
that the compulsory counterclaim was necessarily dismissed along
with the main complaint, pointing out that a situation wherein the
dismissal of the complaint was occasioned by plaintiffs failure to
appear during pre-trial was governed under Section 3, Rule 17,
and not Section 2 of the same rule. Justice Regalado, who
ironically penned the decision in Metals cited by the majority,
explained:

Turning back to Rule 17, it is readily apparent that Sections 2 and


3 thereof envisage different factual and adjective situations. The
dismissal of the complaint under Section 2 is at the instance of
plaintiff, for whatever reason he is minded to move for such

dismissal, and, as a matter of procedure, is without prejudice


unless otherwise stated in the order of the court or, for that
matter, in plaintiff's motion to dismiss his own complaint. By
reason thereof, to curb any dubious or frivolous strategy of plaintiff
for his benefit or to obviate possible prejudice to defendant, the
former may not dismiss his complaint over the defendant's
objection if the latter has a compulsory counterclaim since said
counterclaim would necessarily be divested of juridical basis and
defendant would be deprived of possible recovery thereon in that
same judicial proceeding.

Section 3, on the other hand, contemplates a dismissal not


procured by plaintiff, albeit justified by causes imputable to him
and which, in the present case, was petitioner's failure to appear
at the pre-trial. This situation is also covered by Section 3, as
extended by judicial interpretation, and is ordered upon motion of
defendant or motu proprio by the court. Here, the issue of whether
defendant has a pending counterclaim, permissive or compulsory,
is not of determinative significance. The dismissal of plaintiff's
complaint is evidently a confirmation of the failure of evidence to
prove his cause of action outlined therein, hence the dismissal is
considered, as a matter of evidence, an adjudication on the merits.
This does not, however, mean that there is likewise such absence
of evidence to prove defendant's counterclaim although the same
arises out of the subject matter of the complaint which was merely
terminated for lack of proof. To hold otherwise would not only work
injustice to defendant but would be reading a further provision into
Section 3 and wresting a meaning therefrom although neither
exists even by mere implication. Thus understood, the complaint
can accordingly be dismissed, but relief can nevertheless be
granted as a matter of course to defendant on his counterclaim as
alleged and proved, with or without any reservation therefor on his
part, unless from his conduct, express or implied, he has virtually
consented to the concomitant dismissal of his counterclaim. 50

Justice Regalado also adverted to Sta. Maria and noted that the
objections raised and rejected by the Court therein were the same
as those now relied upon by the plaintiff. He pointed out
that Dalman and International Container, both relied upon by the
majority, involved the application of Section 2, Rule 17 and not
Section 3, which he insisted as the applicable provision in the case
at bar.51

The partial dissent of Justice Regalado in BA Finance proved


opportune, as he happened then to be a member of the Rules of
Court Revision Committee tasked with the revision of the 1964
Rules of Court. Just a few months after BA Finance was decided,
Justice Regalado proposed before the Committee an amendment
to Section 3, Rule 17 that would explicitly provide that the
dismissal of the complaint due to the fault of the plaintiff shall be
"without prejudice to the right of the defendant to prosecute his
counterclaim in the same or in a separate action." The
amendment, which was approved by the Committee, is reflected in
the minutes of the meeting of the Committee held on 12 October
1993:

Justice Herrera observed that under Secs. 1 to 3 of Rule 17, it is


not the action that is dismissed but the complaint. He asked
whether there is any distinction between "complaint" and "action."
Justice Regalado opined that the action of the plaintiff is initiated
by his complaint.

Justice Feria then suggested that the dismissal be limited to


the complaint[.] Thus, in the 1st line of Sec. 1, the words
"An action" will be changed to "a complaint"; in the 2nd line
of Sec. 2, the words "an action" will be changed to "a
complaint" and in Sec. 3, the word "action" on the 5th line
of the draft will be changed to "complaint." The Committee
agreed with Justice Ferias suggested amendments.

CA Pao believed that there is a need to clarify the


counterclaim that the defendant will prosecute, whether it
is permissive or compulsory or all kinds of counterclaims.

Justice Regalado opined that there is no need of making a


clarification because it is already understood that it covers
both counterclaims.52
[Justice Regalado] then proposed that after the words "upon the
courts own motion" in the 6th line of the draft in Sec. 3 of Rule
17, the following provision be inserted: "without prejudice to
the right of the defendant to prosecute his counterclaim in
the same or in a separate action." The Committee agreed
with the proposed amendment of Justice Regalado.

It is apparent from these minutes that the survival of the


counterclaim despite the dismissal of the complaint under Section
3 stood irrespective of whether the counterclaim was permissive or
compulsory. Moreover, when the Court itself approved the revisions
now contained in the 1997 Rules of Civil Procedure, not only did
Justice Regalados amendment to Section 3, Rule 17 remain intact,

but the final version likewise eliminated the qualification formerly


offered under Section 2 on "counterclaims that can remain pending
for independent adjudication by the court." 53 At present, even
Section 2, concerning dismissals on motion of the plaintiff, now
recognizes the right of the defendant to prosecute the
counterclaim either in the same or separate action notwithstanding
the dismissal of the complaint, and without regard as to the
permissive or compulsory nature of the counterclaim.

In his commentaries on the 1997 Rules of Civil Procedure, Justice


Regalado expounds on the effects of the amendments to Section 2
and 3 of Rule 17:
2. Under this revised section [2], where the plaintiff moves
for the dismissal of his complaint to which a counterclaim has been
interposed, the dismissal shall be limited to the complaint. Such
dismissal shall be without prejudice to the right of the defendant to
either prosecute his counterclaim in a separate action or to have
the same resolved in the same action. Should he opt for the first
alternative, the court should render the corresponding order
granting and reserving his right to prosecute his claim in a
separate complaint. Should he choose to have his counterclaim
disposed of in the same action wherein the complaint had been
dismissed, he must manifest such preference to the trial court
within 15 days from notice to him of plaintiffs motion to
dismiss.These alternative remedies of the defendant are
available to him regardless of whether his counterclaim is
compulsory or permissive. A similar alternative procedure, with
the same underlying reason therefor, is adopted in Sec. 6, Rule 16
and Sec. 3 of this Rule, wherein the complaint is dismissed on the
motion of thedefendant or, in the latter instance, also by the
court motu proprio.
xxxx

2. The second substantial amendment to [Section 3] is with


respect to the disposition of the defendants counterclaim in the
event the plaintiffs complaint is dismissed. As already observed,
he is here granted the choice to prosecute that counterclaim in
either the same or a separate action. x x x x

3. With the aforestated amendments in Secs. 2 and 3 laying


down specific rules on the disposition of counterclaims
involved in the dismissal actions, the controversial doctrine
in BA Finance Corporation vs. Co, et al., (G.R. No. 105751,
June 30, 1993) has been abandoned, together with the
apparent confusion on the proper application of said Secs. 2
and 3. Said sections were distinguished and discussed in the
authors separate opinion in that case, even before they were
clarified by the present amendments x x x.54

Similarly, Justice Feria notes that "the present rule reaffirms the
right of the defendant to move for the dismissal of the complaint
and to prosecute his counterclaim, as stated in the separate
opinion [of Justice Regalado in BA Finance.]"55 Retired Court of
Appeals Justice Herrera pronounces that the amendment to
Section 3, Rule 17 settles that "nagging question" whether the
dismissal of the complaint carries with it the dismissal of the
counterclaim, and opines that by reason of the amendments, the
rulings in Metals Engineering, International Container, and BA
Finance "may be deemed abandoned."56 On the effect of
amendment to Section 3, Rule 17, the commentators are in
general agreement,57 although there is less unanimity of views
insofar as Section 2, Rule 17 is concerned.58

To be certain, when the Court promulgated the 1997 Rules of Civil


Procedure, including the amended Rule 17, those previous jural
doctrines that were inconsistent with the new rules incorporated in
the 1997 Rules of Civil Procedure were implicitly abandoned insofar
as incidents arising after the effectivity of the new procedural rules
on 1 July 1997. BA Finance, or even the doctrine that a
counterclaim may be necessarily dismissed along with the
complaint, clearly conflicts with the 1997 Rules of Civil Procedure.
The abandonment of BA Finance as doctrine extends as far back as
1997, when the Court adopted the new Rules of Civil Procedure. If,
since then, such abandonment has not been affirmed in
jurisprudence, it is only because no proper case has arisen that
would warrant express confirmation of the new rule. That
opportunity is here and now, and we thus rule that the dismissal of
a complaint due to fault of the plaintiff is without prejudice to the
right of the defendant to prosecute any pending counterclaims of
whatever nature in the same or separate action. We confirm
that BA Finance and all previous rulings of the Court that are
inconsistent with this present holding are now abandoned.

Accordingly, the RTC clearly erred when it ordered the dismissal of


the counterclaim, since Section 3, Rule 17 mandates that the
dismissal of the complaint is without prejudice to the right of the
defendant to prosecute the counterclaim in the same or separate
action. If the RTC were to dismiss the counterclaim, it should be on
the merits of such counterclaim. Reversal of the RTC is in order,
and a remand is necessary for trial on the merits of the
counterclaim.

It would be perfectly satisfactory for the Court to leave this matter


at that. Still, an explanation of the reason behind the new rule is
called for, considering that the rationale behind the previous rule
was frequently elaborated upon.

Under Act No. 190, or the Code of Procedure in Civil Actions


promulgated in 1901, it was recognized in Section 127(1) that the
plaintiff had the right to seek the dismissal of the complaint at any
time before trial, "provided a counterclaim has not been made, or
affirmative relief sought by the cross-complaint or answer of the
defendant."59 Note that no qualification was made then as to the
nature of the counterclaim, whether it be compulsory or
permissive. The protection of the defendants right to prosecute
the counterclaim was indeed unqualified. In City of Manila, decided
in 1918, the Court explained:
By paragraph 1 [of Section 127], it will be seen that,
where the defendant has interposed a counterclaim, or is seeking
affirmative relief by a cross-complaint, that then, and in that case,
the plaintiff cannot dismiss the action so as to affect the right of
the defendant in his counterclaim or prayer for affirmative relief.
The reason for that exception is clear. When the answer sets up
an independent action against the plaintiff, it then becomes
an action by the defendant against the plaintiff, and, of
course, the plaintiff has no right to ask for a dismissal of
the defendants action.60

Nonetheless, a new rule was introduced when Act No. 190 was
replaced by the 1940 Rules of Court. Section 2, Rule 30 of the
1940 Rules specified that if a counterclaim is pleaded by a
defendant prior to the service of the plaintiffs motion to dismiss,
the action shall not be dismissed against the defendants objection

unless the counterclaim can remain pending for independent


adjudication by the court. This qualification remained intact when
the 1964 Rules of Court was introduced. 61 The rule referred only to
compulsory counterclaims, or counterclaims which arise out of or
are necessarily connected with the transaction or occurrence that
is the subject matter of the plaintiffs claim, since the rights of the
parties arising out of the same transaction should be settled at the
same
time.62 As
was
evident
in Metals, International
Container and BA Finance, the rule was eventually extended to
instances wherein it was the defendant with the pending
counterclaim, and not the plaintiff, that moved for the dismissal of
the complaint.

We should not ignore the theoretical bases of the rule


distinguishing
compulsory
counterclaims
from
permissive
counterclaims insofar as the dismissal of the action is concerned.
There is a particular school of thought that informs the broad
proposition in Dalman that "if the civil case is dismissed, so also is
the counterclaim filed therein,"63 or the more nuanced discussions
offered in Metals, International Container, and BA Finance. The
most potent statement of the theory may be found
in Metals,64 which proceeds from the following fundamental
premisesa compulsory counterclaim must be set up in the same
proceeding or would otherwise be abated or barred in a separate
or subsequent litigation on the ground of auter action
pendant, litis pendentia or res judicata; a compulsory counterclaim
is auxiliary to the main suit and derives its jurisdictional support
therefrom as it arises out of or is necessarily connected with the
transaction or occurrence that is the subject matter of the
complaint;65and that if the court dismisses the complaint on the
ground of lack of jurisdiction, the compulsory counterclaim must
also be dismissed as it is merely ancilliary to the main action and
no jurisdiction remained for any grant of relief under the
counterclaim.

The first point is derived from Section 4, Rule 9, of the 1964 Rules
of Court, while the two latter points are sourced from American
jurisprudence. There is no disputing the theoretical viability of
these three points. In fact, the requirement that the compulsory
counterclaim must be set up in the same proceeding remains
extant under the 1997 Rules of Civil Procedure. 66 At the same
time, other considerations rooted in actual practice provide a
counterbalance to the above-cited rationales.

Whatever the nature of the counterclaim, it bears the same


integral characteristics as a complaint; namely a cause (or causes)
of action constituting an act or omission by which a party violates
the right of another. The main difference lies in that the cause of
action in the counterclaim is maintained by the defendant against
the plaintiff, while the converse holds true with the complaint. Yet,
as with a complaint, a counterclaim without a cause of action
cannot survive.
It would then seemingly follow that if the dismissal of the
complaint somehow eliminates the cause(s) of the counterclaim,
then the counterclaim cannot survive. Yet that hardly is the case,
especially as a general rule. More often than not, the
allegations that form the counterclaim are rooted in an act
or omission of the plaintiff other than the plaintiffs very act
of filing the complaint. Moreover, such acts or omissions
imputed to the plaintiff are often claimed to have occurred
prior to the filing of the complaint itself. The only apparent
exception to this circumstance is if it is alleged in the
counterclaim that the very act of the plaintiff in filing the
complaint precisely causes the violation of the defendants
rights. Yet even in such an instance, it remains debatable
whether the dismissal or withdrawal of the complaint is

sufficient to obviate the pending cause of action maintained


by the defendant against the plaintiff.67

These considerations persist whether the counterclaim in question


is permissive or compulsory. A compulsory counterclaim arises out
of or is connected with the transaction or occurrence constituting
the subject matter of the opposing partys claim, does not require
for its adjudication the presence of third parties, and stands within
the jurisdiction of the court both as to the amount involved and
the nature of the claim. 68 The fact that the culpable acts on which
the counterclaim is based are founded within the same transaction
or occurrence as the complaint, is insufficient causation to negate
the counterclaim together with the complaint. The dismissal or
withdrawal of the complaint does not traverse the boundaries of
time to undo the act or omission of the plaintiff against the
defendant, or vice versa. While such dismissal or withdrawal
precludes the pursuit of litigation by the plaintiff, either through
his/her own initiative or fault, it would be iniquitous to similarly
encumber the defendant who maintained no such initiative or fault.
If the defendant similarly moves for the dismissal of the
counterclaim or neglects to timely pursue such action, let the
dismissal of the counterclaim be premised on those grounds
imputable to the defendant, and not on the actuations of the
plaintiff.

The other considerations supplied in Metals are anchored on the


premise that the jurisdictional foundation of the counterclaim is
the complaint itself. The theory is correct, but there are other
facets to this subject that should be taken into account as well. On
the established premise that a counterclaim involves separate
causes of action than the complaint even if derived from the same
transaction or series of transactions, the counterclaim could have

very well been lodged as a complaint had the defendant filed the
action ahead of the complainant.69 The terms "ancillary" or
"auxiliary" may mislead in signifying that a complaint innately
possesses more credence than a counterclaim, yet there are many
instances wherein the complaint is trivial but the counterclaim is
meritorious. In truth, the notion that a counterclaim is, or better
still, appears to be merely "ancillary" or "auxiliary" is chiefly the
offshoot of an accident of chronology, more than anything else.

The formalistic distinction between a complaint and a counterclaim


does not detract from the fact that both of them embody causes of
action that have in their end the vindication of rights. While the
distinction is necessary as a means to facilitate order and clarity in
the rules of procedure, it should be remembered that the
primordial purpose of procedural rules is to provide the means for
the vindication of rights. A party with a valid cause of action
against another party cannot be denied the right to relief simply
because the opposing side had the good fortune of filing the case
first. Yet this in effect was what had happened under the previous
procedural rule and correspondent doctrine, which under their final
permutation, prescribed the automatic dismissal of the compulsory
counterclaim upon the dismissal of the complaint, whether upon
the initiative of the plaintiff or of the defendant.

Thus, the present rule embodied in Sections 2 and 3 of Rule 17


ordains a more equitable disposition of the counterclaims by
ensuring that any judgment thereon is based on the merit of the
counterclaim itself and not on the survival of the main complaint.
Certainly, if the counterclaim is palpably without merit or suffers
jurisdictional flaws which stand independent of the complaint, the
trial court is not precluded from dismissing it under the amended
rules, provided that the judgment or order dismissing the

counterclaim is premised on those defects. At the same time, if the


counterclaim is justified, the amended rules now unequivocally
protect such counterclaim from peremptory dismissal by reason of
the dismissal of the complaint.

WHEREFORE, the petition is GRANTED. The Orders dated 9 August


2005 and 10 October 2005 of Branch 29, Regional Trial Court of
San Miguel, Zamboanga del Sur in Civil Case No. 98-012 are SET
ASIDE. Petitioners counterclaim as defendant in Civil Case. No.
98-012 is REINSTATED. The Regional Trial Court is ORDERED to
hear and decide the counterclaim with deliberate dispatch.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 164375

October 12, 2006

RODOLFO PAREDES, TITO ALAGO AND AGRIPINO BAYBAY,


SR., petitioners,
vs.
ERNESTO VERANO and COSME HINUNANGAN, respondent.
DECISION
TINGA, J.:

The central issue in this case is whether the absence of the counsel
for defendants at the pre-trial, with all defendants themselves
present, is a ground to declare defendants in default and to
authorize plaintiffs to present evidence ex parte.

The relevant facts are uncomplicated.

The protracted legal battle between the parties began with a


complaint for the establishment of a right of way filed by
petitioners
herein
as
plaintiffs
against
respondents
as
defendants.1 The complaint, docketed as Civil Case No. 2767 of the
Regional Trial Court (RTC) of Maasin City, Southern Leyte, Branch
24, culminated in a judgment by compromise dated 26 April
1994.2 In the Compromise Agreement, respondent Cosme
Hinunangan granted a two (2) meter-wide right of way in favor of
petitioners in consideration of the amount of P6,000.00 which
petitioners agreed to pay.3

Alleging that petitioners had blocked the passage way in violation


of the Compromise Agreement, on 28 September 1999,
respondents filed a complaint for specific performance with
damages against petitioners. It was docketed as Civil Case No. R3111 also of the RTC of Maasin City, Southern Leyte, Branch 24. 4

In their answer, petitioners denied having violated the Compromise


Agreement. They alleged that like them, respondents were not
actual residents of Barangay Tagnipa where the "road right of way"
was established and that respondent Cosme Hinunangan had
already sold his only remaining lot in the vicinity to petitioner
Rodolfo Paderes.5

Subsequent to the answer, petitioners filed a motion to dismiss on


the ground of lack of cause of action. 6 The trial court, presided by

Judge Bethany G. Kapili, denied the motion to dismiss. 7 Petitioners


elevated the order of denial to the Court of Appeals and thereafter
to this Court, both to no avail.8

Petitioners asked Judge Kapili to inhibit himself from the case. The
judge denied the motion.9

Pre-trial was initially set for 24 April 2003, but this was reset to 3
June 2003 on motion of respondents' counsel. But the pre-trial set
on 3 June 2003 did not push through either because none of the
parties appeared.

So, pre-trial was reset to 11 November 2003. Petitioner Baybay's


counsel moved to reset it to another date on account of a
conflicting hearing. However, petitioner Baybay, who is the father
of the counsel for petitioners, was present in court along with the
other defendants, when the case was called on 11 November
2003. The RTC was informed then of a proposed settlement
between the parties, although respondent Baybay qualified his
reaction by telling the court that he would first have to inform his
lawyer and the co-defendants of the said proposal. The RTC then
commented unfavorably on the absence of petitioners' counsel,
expressing disappointment towards his attitude, even making note
of the fact that not once had the counsel appeared before the RTC,
even though the case had already reached the Supreme Court over
the denial of the motion to dismiss. 10 At the same time, the RTC
acceded and reset the pre-trial for 23 January 2004. 11
Shortly before the new pre-trial date, counsel for petitioners filed a
Manifestation of Willingness to Settle With Request for Cancellation

dated 5 January 2004.12 Apart from manifesting his willingness to


settle the complaint, petitioners' counsel through the Manifestation
suggested to the opposing counsel that he be informed of the
terms of the proposed settlement. Correspondingly, petitioners'
counsel requested the cancellation of the 23 January 2004 hearing.

However, the hearing did push through on 23 January 2004. The


private respondents and their counsel were present. So were
petitioners Baybay and Paderes, and co-defendant Alago, but not
their counsel.

An order of even date formalized what had transpired during the


hearing. The RTC allowed respondents to present their evidence ex
parte, "for failure of the defendants['] counsel to appear before
[the RTC]".13 Petitioners filed a motion for reconsideration, but this
was denied by the RTC.14

Thus, petitioners filed a petition for certiorari with the Court of


Appeals, assailing the orders of the RTC. However, on 28 April
2004, the Court of Appeals dismissed the petition outright, 15 for
failure to attach duplicate original copies of the annexes to the
petition other than the RTC Orders dated 23 January 2004 and 17
February 2004 (attaching photocopies instead), as well as for
failure to submit such other pleadings relevant and pertinent to the
petition. Petitioners filed a Motion for Reconsideration with Motion
to Admit Additional Exhibits, adverting to the documents
previously missing from the petition but attached to the motion.

On 13 July 2004, the Court of Appeals issued a Resolution denying


the motion for reconsideration. In doing so, the Court of Appeals
resolved the petition on its merits, as it ruled that "even with the
submission by petitioners of the required pleadings and
documents, the instant petition must nevertheless fail." 16 The
appellate court quoted extensively from the transcripts of the
hearings of 11 November 2003 and 23 January 2004. It conceded
that under Section 5, Rule 18 of the 1997 Rules of Civil Procedure,
it is the failure of the defendant, and not defendant's counsel, to
appear at the pre-trial that would serve cause to allow plaintiff to
present evidence ex parte. Nevertheless, the Court of Appeals
noted that petitioner Baybay had made it clear that he would
never enter into any amicable settlement without the advice of his
counsel. Thus, the Court of Appeals concluded that Judge Kapili's
"hands were tied," explaining, thus: "He was held hostage by the
blatant display of arrogance exhibited by petitioner's counsel in
assiduously failing to appear before the trial court. Were he to
close his eyes to the reprehensible scheme of Atty. Baybay in
delaying the disposition of the main case, the resulting impass
would only strain further the meager resources of the court and
prejudice the rights of private respondents." 17

The Court of Appeals then cited Sps. Ampeloquio, Sr. v. Court of


Appeals,18 wherein the Court held that if every error committed by
the trial court were to be a proper object of review by certiorari,
then trial would never come to an end and the appellate court
dockets would be clogged with petitions challenging every
interlocutory order of the trial court. It concluded that the acts of
Judge Kapili did not constitute grave abuse of discretion equivalent
to lack of jurisdiction.

Finally, the trial court admonished petitioners' counsel to "bear in


mind that as an officer of the court, he is tasked to observe the
rules of procedure, not to unduly delay a case and defeat the ends
of justice but to promote respect for the law and legal
processes."19

We reverse the trial court and the Court of Appeals.


A preliminary observation. The Court of Appeals had initially
dismissed the petition lodged by petitioners on account of their
failure to attach several relevant pleadings, citing Section 3, Rule
46 of the 1997 Rules of Civil Procedure. Before this Court,
petitioners devote some effort in arguing that the Court of Appeals
erred in dismissing the petition on that procedural ground, while
respondents in their comment similarly undertook to defend the
appellate court's action on that point. We do not doubt that under
Section 3, Rule 46 of the 1997 Rules of Civil Procedure, the Court
of Appeals has sufficient discretion to dismiss the petition for
failure of petitioner to comply with the requirements enumerated
in the section, including "such material portions of the record as
are referred to [in the petition], and other documents relevant or
pertinent thereto."20 At the same time, "[d]ismissal of appeals
purely on technical grounds is frowned upon and the rules of
procedure ought not to be applied in a very rigid, technical sense,
for they are adopted to help secure, not override, substantial
justice, and thereby defeat their very aims." 21 Thus, the Court has
not hesitated to view Section 3 of Rule 46 with a liberal outlook,
ruling for example that it was not necessary to attach certified true
copies of such material portions of the record as referred to
therein.22

The situation in this case bears similarity to that which transpired


in Cortez-Estrada v. Heirs of Samut.23 Therein, the petitioner had
failed to attach material documents to her petition before the
Court of Appeals. The Court of Appeals held the petition was
dismissible for such procedural infirmities, yet it nonetheless
proceeded to rule against the petitioner on the merits. The
Supreme Court agreed with the appellate court that the petition
was procedurally infirm, yet found partial merit in its arguments
and consequently granted partial relief in favor of the petitioner. In
this case, the Court of Appeals, in resolving the motion for
reconsideration, proceeded to make a judgment on the merits.
Similarly, this Court finds ample basis to review the decision of the
trial court as affirmed by the appellate court, notwithstanding the
procedural flaw that originally accompanied the petitiona flaw
which petitioners did seek to remedy when they belatedly attached
the relevant documents to their motion for reconsideration.

Ultimately, there are important reasons to consider the case on the


merits. This case affords the Court the opportunity to clarify the
authority granted to a trial judge in relation to pre-trial
proceedings.

The order of the RTC allowing respondents to present evidence ex


parte was undoubtedly to the detriment of petitioners. Since the
RTC would only consider the evidence presented by respondents,
and not that of petitioners, the order strikes at the heart of the
case, disallowing as it does any meaningful defense petitioners
could have posed. A judgment of default against a defendant who
failed to attend pre-trial, or even any defendant who failed to file
an answer, implies a waiver only of their right to be heard and to
present evidence to support their allegations but not all their other
rights.24

end, a person who is condemned to suffer loss of property without


justifying legal basis is denied due process of law.
The Constitution guarantees that no person shall be deprived of
property without due process of law. One manner by which due
process is assured is through the faithful adherence to the
procedural rules that govern the behavior of the party-litigants.
The Rules of Court do sanction, on several instances, penalties for
violation of the Rules that causes the termination of an action
without a ruling on the merits, or bars one party from litigating the
same while permitting the other to do so. We noted earlier that
Section 3, Rule 46 authorizes the dismissal of an original petition
before the Court of Appeals for failure to append material portions
of the record. Pursuant to Section 5, Rule 17, the failure of the
plaintiff to appear on the date of the presentation of his/her
evidence in chief on the complaint is ground for the court to
dismiss the complaint, without prejudice to the right of the
defendant to prosecute the counterclaim in the same or in a
separate action. And under Section 5, Rule 18, the failure of the
plaintiff or defendant to appear during pre-trial authorizes the
court to either dismiss the complaint, if the plaintiff were absent;
or to allow the plaintiff to present evidence ex parte, if the
defendant were absent.

The operation of the above-cited provisions may defeat the cause


of action or the defense of the party who violated the procedural
rule. Yet it could not be said that any resultant adverse judgment
would contravene the due process clause, as the parties are
presumed to have known the governing rules and the
consequences for the violation of such rules. In contrast, the same
presumption could not attach if a party were condemned to the
same outcome even if the party did not violate a prescribed rule of
procedure. Any ruling that disposes of an action or precludes a
party from presenting evidence in support or against thereof must
have basis in law,25 and any ruling so intentioned without legal
basis is deemed as issued with grave abuse of discretion. 26 In the

Simply put, nothing in the Rules of Court authorizes a trial judge to


allow the plaintiff to present evidence ex parteon account of the
absence during pre-trial of the counsel for defendant.

Sections 4 and 5 of Rule 18 warrant examination:


SEC. 4. Appearance of Parties. It shall be the duty of the
parties and their counsel to appear at the pre-trial. The
non-appearance of a party may be excused only if a valid
cause is shown therefor or if a representative shall appear
in his behalf fully authorized in writing to enter into an
amicable settlement, to submit to alternative modes of
dispute resolution, and to enter into stipulations or
admissions of facts and of documents.

SEC. 5. Effect of failure to appear. The failure of the


plaintiff to appear when so required pursuant to the next
preceding section shall be cause for dismissal of the action.
The dismissal shall be with prejudice, unless otherwise
ordered by the court. A similar failure on the part of the
defendant shall be cause to allow the plaintiff to present
his evidence ex parte and the court to render judgment on
the basis thereof.

Section 4 imposes the duty on litigating parties and their


respective counsel during pre-trial. The provision also provides for
the instances where the non-appearance of a party may be
excused. Nothing, however, in Section 4 provides for a sanction
should the parties or their respective counsel be absent during
pre-trial. Instead, the penalty is provided for in Section 5. Notably,
what Section 5 penalizes is the failure to appear of either the
plaintiff or the defendant, and not their respective counsel.

Indeed, the Court has not hesitated to affirm the dismissals of


complaints or the allowance of plaintiffs to present evidence ex
parte on account of the absence of a party during pre-trial.
In United Coconut Planters Bank v. Magpayo,27 the complaint was
dismissed because although the counsel for complainant was
present during the pre-trial hearing, the Court affirmed such
dismissal on account of said counsel's failure to present any special
power of attorney authorizing him to represent the complainant
during pre-trial.28 In Jonathan Landoil International Co. v.
Mangudadatu,29 the defendant and its counsel failed to appear
during pre-trial, and the complainants were allowed to present
evidence ex parte. After an adverse decision was rendered against
the defendant, it filed a motion for new trial in which it cited the
illness of defendant's counsel as the reason for his non-appearance
during pre-trial. While the Court acknowledged that such argument
was not a proper ground for a motion for new trial, it also noted
that the appearance of the defendant during pre-trial was also
mandatory, and that the defendant failed to justify its own absence
during pre-trial.30

There are two cases which, at first blush, may seem to affirm the
action of the RTC. In the disbarment case ofMiwa v. Medina,31 a
lawyer was suspended from the practice for one (1) month for,

among others, failing to appear during pre-trial, thus leading to


the declaration of his client, the defendant, in default. At the same
time, the Court in Miwa did take the defendant herself to task for
also failing to appear during pre-trial, observing that "the failure of
a party to appear at pre-trial, given its mandatory character, may
cause her to be non-suited or considered as in default." 32

In Social Security System v. Chaves,33 the Social Security System


(SSS) itself was named as the defendant in a complaint filed with
the RTC of Cagayan de Oro City. The pre-trial brief was filed by the
acting assistant branch manager of the SSS in Cagayan de Oro
City, who happened to be a lawyer and who also entered his
appearance as counsel for the SSS. However, said lawyer was not
present during pre-trial, and the SSS was declared in default and
the complainants allowed to present their evidence ex parte. The
Court affirmed such order of default, noting other procedural
violations on the part of SSS, such as the fact that the motion for
reconsideration to lift the order of default lacked verification,
notice of hearing and affidavit of merit.

Notwithstanding, the Court is not convinced that SSS is ample


precedent to affirm an order of default where even though the
defendant was present during pre-trial, defendant's counsel failed
to appear for the same hearing. The Court in SSS did not make
any categorical declaration to this effect. Moreover, it can be
observed that inSSS, the counsel himself, the acting assistant
branch manager of the SSS, would have been in addition, the
representative of the SSS itself, a juridical person which can only
make an appearance during pre-trial through a natural person as
its duly authorized representative. The Court of Appeals decision
upheld in SSS, cited extensively in our decision therein, expressly
affirmed the order of default on the ground that "it is the discretion

of the trial judge to declare a party-defendant as in default for


failure to appear at a pre-trial conference." However, in SSS,
neither the Court of Appeals nor this Court expressly laid relevance
to the fact that the counsel himself, as opposed to the defendant,
had not attended the pre-trial.

Upon the other hand, Africa v. Intermediate Appellate


Court34 illuminates the proper standard within which to view the
instant petition. It appeared therein that on the day of the pretrial, counsel for the defendant (therein petitioner) had arrived ten
minutes after the case was called. Within that ten-minute span,
the trial court had issued an order in open court declaring the
defendant in default and authorizing the plaintiff to present its
evidence ex parte. A mere two days later, the trial court rendered
judgment in favor of plaintiff. The Court reversed the trial court,
holding that the order of default was issued with grave abuse of
discretion. The reasoning of the Court was grounded primarily on
the doctrinal rule that frowned against "the injudicious and often
impetuous issuance of default orders," 35 which led in that case to
"a deni[al of the defendant's] basic right to be heard, even after
his counsel had promptly explained the reason for his tardiness at
the pre-trial."36

Still, it would not be proper to consider Africa as the governing


precedent herein, influential as it may be to our disposition. It was
not clear from the narration in Africa whether the defendant
himself was absent during the pre-trial, a circumstance which is
determinative to this petition. Moreover, the Court's tone
in Africa indicated that it was animated by a liberal philosophy
towards the procedural rule, implying that the trial court's reversed
action was nonetheless adherent to the strict letter of the rule.
Whether or not the trial court in Africa acted conformably with the

rules depends upon the presence or absence of the defendant


therein during pre-trial. It can no longer be discerned whether the
Court so ruled in Africa notwithstanding the presence or absence of
the defendant therein. It would be disingenuous though to
assume, as a means of applying that case as precedent herein,
that the defendant was actually present during the pre-trial
in Africa.

Hence, we pronounce that the absence of counsel for defendants


at pre-trial does not ipso facto authorize the judge to declare the
defendant as in default and order the presentation of evidence ex
parte. It bears stressing that nothing in the Rules of Court
sanctions the presentation of evidence ex parte upon instances
when counsel for defendant is absent during pre-trial. The Rules do
not countenance stringent construction at the expense of justice
and equity.37 As the Court has previously enunciated:
We cannot look with favor on a course of action which
would place the administration of justice in a straightjacket
for then the result would be a poor kind of justice if there
would be justice at all. Verily, judicial orders, such as the
one subject of this petition, are issued to be obeyed,
nonetheless a non-compliance is to be dealt with as the
circumstances attending the case may warrant. What
should guide judicial action is the principle that a
party-litigant is to be given the fullest opportunity to
establish the merits of his complaint or defense
rather than for him to lose life, liberty or properties
on technicalities.38

Due process dictates that petitioners be deprived of their right to


be heard and to present evidence to support their allegations if,

and only if, there exists sufficient basis in fact and in law to do
so.39 There being a manifest lack of such basis in this case,
petitioners would be unjustly denied of the opportunity to fully
defend themselves should the Court affirm the questioned orders
which were evidently issued by the RTC with grave abuse of
discretion. The better and certainly more prudent course of action
in every judicial proceeding is to hear both sides and decide on the
merits rather than dispose of a case on technicalities. 40

While counsel is somewhat to blame for his non-attendance at pretrial, incidentally the operative act which gave birth to the
controversy at bar, it would be most unfair to penalize petitioners
for what may be the deficiency of their lawyer when the
consequent penalty has no basis in law. Particularly mitigating in
the instant case is the fact that the counsel for private respondents
intimated, at an earlier hearing, a possibility of an amicable
settlement to the case. Then, counsel for petitioners submitted a
manifestation41 requesting therein that the parties be given ample
time to respectively discuss their proposals and counter-proposals
and that the hearing for 23 January 2004 be moved to a later date
as may be agreed upon by the parties for submission of their
possible compromise agreement. It may well have been that
counsel for petitioners labored under the false understanding that
a compromise agreement was an imminent possibility. The Court
nonetheless notes that counsel was remiss in assuming that his
motion to reset the scheduled hearing would necessarily be
granted by the court a quo.

dilatory, it cannot be said that the court was powerless and


virtually without recourse but to order the ex parte presentation of
evidence by therein plaintiffs. We are in some sympathy with the
judge who was obviously aggrieved that the case was dragging on
for an undue length of time. But even so, there were other
remedies available to the court.

Among the inherent powers of the courts expressly recognized by


the Rules include the authority to enforce order in proceedings
before it,42 to compel obedience to its judgments, orders and
processes,43 and to amend and control its process and orders so as
to make them conformable to law and justice. 44 Moreover, the
Code of Judicial Conduct empowers the courts to judiciously take
or initiate disciplinary measures against lawyers for unprofessional
conduct.45 A show cause order to counsel would have been the
more cautious and reasonable course of action to take under the
circumstances then prevailing. In failing to do so, the trial court
impetuously deprived petitioners of the opportunity to
meaningfully present an effective defense and to adequately
adduce evidence in support of their contentions.

WHEREFORE, the instant petition is hereby GRANTED and the


resolutions of the Court of Appeals affirming the Orders of the
Regional Trial Court in Civil Case No. R-3111 dated 23 January
2004 and 17 February 2004 are REVERSED. No costs.
SO ORDERED.

Be that as it may, there is no clear demonstration that the acts of


the counsel of petitioners were intended to perpetuate delay in the
litigation of the case. Assuming arguendo that the trial court
correctly construed the actions of the counsel of petitioners to be

SECOND DIVISION
G.R. No. 209605, January 12, 2015
NEIL
B.
AGUILAR
CALIMBAS, Petitioners, v. LIGHTBRINGERS
COOPERATIVE, Respondent.
DECISION
MENDOZA, J.:

AND

RUBEN
CREDIT

This is a petition for review on certiorari filed by petitioners


Neil B. Aguilar (Aguilar) and Ruben Calimbas (Calimbas),
seeking to reverse and set aside the April 5, 2013 1 and
October 9, 20132Resolutions of the Court of Appeals (CA) in
CA-G.R. SP No. 128914, which denied the petition for
review outright, assailing the January 2, 2013 Decision 3 of
the Regional Trial Court, Branch 5, Dinalupihan, Bataan
(RTC) and the May 9, 2012 Decision4 of the First Municipal
Circuit
Trial
Court,
Dinalupihan,
Bataan (MCTC).
In the lower courts, one of the issues involved was the
proper application of the rules when a party does not
appear in the scheduled pre-trial conference despite due
notice. In this petition, the dismissal by the CA of the
petition filed under Rule 42 for failure to attach the entire

records has also been put to question, aside from the


veracity
of
indebtedness
issue.
The
Facts
This case stemmed from the three (3) complaints for sum of
money separately filed by respondent Lightbringers Credit
Cooperative (respondent) on
July
14,
2008
against
petitioners Aguilar and Calimbas, and one Perlita
Tantiangco (Tantiangco) which were consolidated before the
First
Municipal
Circuit
Trial
Court,
Dinalupihan,
Bataan (MCTC). The complaints alleged that Tantiangco,
Aguilar and Calimbas were members of the cooperative
who
borrowed
the
following
funds:chanroblesvirtuallawlibrary
1 In Civil Case No. 1428, Tantiangco allegedly
borrowed P206,315.71 as evidenced by Cash
Disbursement Voucher No. 4010 but the net loan
was only P45,862.00 as supported by PNB Check No.
0000005133.5chanRoblesvirtualLawlibrary
2 In Civil Case No. 1429, petitioner Calimbas allegedly
borrowed P202,800.18 as evidenced by Cash
Disbursement Voucher No. 3962 but the net loan
was only P60,024.00 as supported by PNB Check No.
0000005088;6chanRoblesvirtualLawlibrary
3 In Civil Case No. 1430, petitioner Aguilar allegedly
borrowed P126,849.00 as evidenced by Cash
Disbursement Voucher No. 3902 but the net loan
was only P76,152.00 as supported by PNB Check No.
0000005026;7
Tantiangco, Aguilar and Calimbas filed their respective
answers. They uniformly claimed that the discrepancy
between the principal amount of the loan evidenced by the
cash disbursement voucher and the net amount of loan
reflected in the PNB checks showed that they never
borrowed the amounts being collected. They also asserted
that no interest could be claimed because there was no
written
agreement
as
to
its
imposition.

On the scheduled pre-trial conference, only respondent and


its counsel appeared. The MCTC then issued the
Order,8 dated August 25, 2009, allowing respondent to
present evidence ex parte.Respondent later presented
Fernando Manalili (Manalili), its incumbent General Manager,
as its sole witness. In his testimony, Manalili explained that
the discrepancy between the amounts of the loan reflected
in the checks and those in the cash disbursement vouchers
were due to the accumulated interests from previous
outstanding obligations, withheld share capital, as well as
the service and miscellaneous fees. He stated, however,
that it was their bookkeeper who could best explain the
details.
Aguilar and Calimbas insisted that they should have the
right to cross-examine the witness of respondent,
notwithstanding the fact that these cases were being
heard ex parte. In the interest of justice, the MCTC directed
the counsels of the parties to submit their respective
position papers on the issue of whether or not a party who
had been declared as in default might still participate in
the trial of the case. Only respondent, however, complied
with the directive. In its Order,9 dated April 27, 2011, the
MCTC held that since the proceedings were being heard ex
parte, the petitioners who had been declared as in default
had no right to participate therein and to cross-examine the
witnesses. Thereafter, respondent filed its formal offer of
evidence.10chanRoblesvirtualLawlibrary
MCTC
Ruling
On May 9, 2012, the MCTC resolved the consolidated cases
in three separate decisions. In Civil Case No. 1428, 11 the
MCTC dismissed the complaint against Tantiangco because
there was no showing that she received the amount being
claimed. Moreover, the PNB check was made payable to
cash and was encashed by a certain Violeta Aguilar. There
was, however, no evidence that she gave the proceeds to

Tantiangco. Further, the dates indicated in the


disbursement voucher and the PNB check varied from
other and suggested that the voucher could refer
different

cash
each
to a
loan.

Defendant is further directed to pay attorneys fees


equivalent
to
25%
of
the
adjudged
amount.
Costs
against
the
defendant.
SO ORDERED.15

The decisions in Civil Case No. 1429 12 and 1430,13 however,


found both Calimbas and Aguilar liable to respondent for
their respective debts. The PNB checks issued to the
petitioners proved the existence of the loan transactions.
Their receipts of the loan were proven by their signatures
appearing on the dorsal portions of the checks as well as on
the cash disbursement vouchers. As a matter of practice,
banks would allow the encashment of checks only by the
named payee and subject to the presentation of proper
identification. Nonetheless, the MCTC ruled that only the
amount shown in the PNB check must be awarded because
respondent failed to present its bookkeeper to justify the
higher amounts being claimed. The court also awarded
attorneys fees in favor of respondent. The dispositive
portion of the decision in Civil Case No. 1429
reads:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, judgment is
hereby rendered in plaintiffs favor and against the
defendant, ordering the latter to pay plaintiff the amount of
P60,024.00 with interest at the rate of 12% per annum
from April 4, 2007 until fully paid, plus P15,000.00 as
attorneys
fees.
Costs
against
the
defendant.
SO ORDERED.14

On July 12, 2012, a notice of appeal16 was filed by the


petitioners, and on August 15, 2012, they filed their joint
memorandum for appeal17 before the Regional Trial Court,
Branch 5, Bataan (RTC). Aguilar and Calimbas argued out
that had they been allowed to present evidence, they would
have established that the loan documents were bogus.
Respondent produced documents to appear that it had new
borrowers but did not lend any amount to them. Attached to
the joint memorandum were photocopies of the dorsal
portions of the PNB checks which showed that these checks
were to be deposited back to respondents bank account.

And in Civil Case No. 1430, the dispositive portion


states:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, judgment is hereby
rendered in plaintiffs favor and against the defendant,
ordering the latter to pay the plaintiff the amount of ?
76,152.00 with interest at the rate of 12% per annum from
February
28,
2007
until
fully
paid.

RTC
Ruling
On January 2, 2013, the RTC rendered separate decisions in
Civil Case No. DH-1300-1218 and Civil Case No. DH-12991219 which affirmed the MCTC decisions. It held that the PNB
checks were concrete evidence of the indebtedness of the
petitioners to respondent. The RTC relied on the findings of
the MCTC that the checks bore no endorsement to another
person or entity. The checks were issued in the name of the
petitioners and, thus, they had the right to encash the same
and appropriate the proceeds. The decretal portions of the
RTC
decision
in
both
cases
similarly
read:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, the appeal is
hereby DENIED. The Decision dated May 9, 2012 of the First
Municipal Circuit Trial Court (1st MCTC), DinalupihanHermosa,
Bataan
is
hereby
affirmed in
toto.
SO ORDERED.
On January 18, 2013, the petitioners filed their joint motion
for reconsideration/new trial20 before the RTC. Aguilar and
Calimbas reiterated their position that they did not receive

the proceeds of the checks. As an alternative prayer,


petitioners moved that the RTC remand the case to the
MCTC for a new trial on account of the Sinumpaang
Salaysay of Arcenit Dela Torre, the bookkeeper of
respondent.
On February 11, 2013, the RTC issued separate
orders21 denying the motion of the petitioners. It explained
that all the issues were already passed upon and the
supposed newly discovered evidence was already available
during appeal, but the petitioners failed to present the same
in
time.
CA

Ruling

Aggrieved, Aguilar and Calimbas filed a petition for


review22 before the CA on March 11, 2013. It was dismissed,
however, in the questioned resolution,23 dated April 5, 2013,
stating that the petition was formally defective because the
verification and disclaimer of forum shopping and the
affidavit of service had a defective jurat for failure of the
notary public to indicate his notarial commission number
and office address. Moreover, the entire records of the case,
inclusive of the oral and documents evidence, were not
attached to the petition in contravention of Section 2, Rule
42
of
the
Rules
of
Court.
A motion for reconsideration24 was filed by the petitioners
which sought the leniency of the CA. They attached a
corrected verification and disclaimer of forum shopping and
affidavit of service. They asked the CA to simply order the
RTC to elevate the records of the case pursuant to Section
7, Rule 42 of the Rules of Court. Moreover, the petitioners
could not attach the records of the case because the
flooding caused by Habagat in August 2012 soaked the
said
records
in
water.
In the other questioned resolution, dated October 9, 2013,

the CA denied the motion because the petitioners still failed


to attach the entire records of the case which was a
mandatory requirement under Section 2, Rule 42.
Hence, this petition.
SOLE ASSIGNMENT OF ERROR
THE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR IN EXCESS
OF JURISDICTION WHEN IT DISMISSED THE
PETITION FOR REVIEW FILED BEFORE IT BY THE
PETITIONERS UNDER RULE 42 OF THE RULES OF
COURT CITING THAT THE SAID PETITION IS
FORMALLY DEFECTIVE FOR FAILURE OF THE
PETITIONERS TO SUBMIT WITH THE SAID PETITION
THE ENTIRE RECORDS OF THE APPEALED CIVIL CASE
NOS. DH-1300-12 AND DH-1299-12.25
The petitioners argue that contrary to the findings of the
CA, they substantially complied with the required form and
contents of a petition for review under Section 2, Rule 42 of
the Rules of Court. There is nothing in the provision which
requires that the entire records of the appealed case should
be endorsed to the CA. Such requirement would definitely
be
cumbersome
to
poor
litigants
like
them.
They assert that they submitted the following pleadings and
material portions of the court records in their petition for
review: (1) certified copies of the decisions, orders or
resolutions of the RTC and the MCTC; (2) complaints against
the petitioners attached with documents used by
respondent in its formal offer of evidence; (3) answer of the
petitioners; (4) order of the MCTC declaring the petitioners
in default; (5) respondents formal offer of evidence; (6)
notice of appeal; (7) joint memorandum of appeal; and (8)
joint motion for reconsideration/new trial. According to the
petitioners, these pleadings and records were sufficient to
support
their
petition
for
review.

Assuming that there was a reason to dismiss the petition on


account of technicalities, the petitioners argue that the CA
should not have strictly applied the rules of procedure and
provided leniency to the petitioners. They also ask the Court
to give a glance on the merits of their case brought before
the
CA.
On
February
7,
2014,
respondent
filed
its
comment26 contending that the petitioners had no excuse in
their non-compliance with Section 2, Rule 42. They claim
that the court records were not attached because these
were soaked in flood water in August 2012, but the RTC
rendered its decision in January 2013. The petitioners failed
to secure a certification from the RTC that these records
were
indeed
unavailable.
On May 21, 2014, the petitioners filed their reply before this
Court,27 adding that the elevation of the entire records of
the case was not a mandatory requirement, and the CA
could exercise its discretion that it furnished with the entire
records of the case by invoking Section 7, Rule 42 of the
Rules of Court.cralawred
The Courts Ruling
First
Procedural
Issue
On the sole assignment of error, the Court agrees with the
petitioners that Section 2, Rule 42 does not require that the
entire records of the case be attached to the petition for
review. The provision states:chanroblesvirtuallawlibrary
Sec. 2. Form and contents. - The petition shall be
filed in seven (7) legible copies, with the original copy
intended for the court being indicated as such by the
petitioner, and shall (a) state the full names of the parties to
the case, without impleading the lower courts or judges
thereof either as petitioners or respondents; (b) indicate the
specific material dates showing that it was filed on time; (c)
set forth concisely a statement of the matters involved, the
issues raised, the specification of errors of fact or law, or

both, allegedly committed by the Regional Trial Court, and


the reasons or arguments relied upon for the allowance of
the appeal; (d) be accompanied by clearly legible
duplicate originals or true copies of the judgments or
final orders of both lower courts, certified correct by
the clerk of court of the Regional Trial Court, the
requisite number of plain copies thereof and of the
pleadings and other material portions of the record as
would support the allegations of the petition.
[Emphasis and underscoring supplied]
The abovequoted provision enumerates the required
documents that must be attached to a petition for review, to
wit: (1) clearly legible duplicate originals or true copies of
the judgments or final orders of both lower courts, certified
correct by the clerk of court of the Regional Trial Court; (2)
the requisite number of plain copies thereof; and (3) of the
pleadings and other material portions of the record as would
support the allegations of the petition. Clearly, the Rules do
not require that the entire records of the case be attached
to the petition for review. Only when these specified
documents are not attached in the petition will it suffer
infirmities
under
Section
3,
Rule
42,
which
states:chanroblesvirtuallawlibrary
Sec. 3. Effect of failure to comply with requirements.
- The failure of the petitioner to comply with any of the
foregoing requirements regarding the payment of the
docket and other lawful fees, the deposit for costs, proof of
service of the petition, and the contents of and the
documents which should accompany the petition shall be
sufficient ground for the dismissal thereof.
In Canton v. City of Cebu,28 the Court discussed the
importance of attaching the pleadings or material portions
of the records to the petition for review. [P]etitioners
discretion in choosing the documents to be attached to the
petition is however not unbridled. The CA has the duty to
check the exercise of this discretion, to see to it that the

submission of supporting documents is not merely


perfunctory. The practical aspect of this duty is to enable
the CA to determine at the earliest possible time the
existence of prima facie merit in the petition.29 In that case,
the petition was denied because the petitioner failed to
attach the complaint, answer and appeal memorandum to
support
their
allegation.

respondent, the copies of the cash disbursement vouchers


and the PNB checks presented by respondent in the MCTC.
In the petition for review, the petitioners attached
respondents complaints before the MCTC which contained
the photocopies of the cash disbursement vouchers and PNB
checks. These should be considered as ample compliance
with Section 2, Rule 42 of the Rules of Court.

In Cusi-Hernandez v. Diaz,30 a case where the petitioner did


not attach to her petition for review a copy of the contract
to sell that was at the center of controversy, the Court
nonetheless found that there was a substantial compliance
with the rule, considering that the petitioner had appended
to the petition for review a certified copy of the decision of
the MTC that contained a verbatim reproduction of the
omitted
contract.

Second
Procedural
Issue
Nevertheless, instead of remanding the case to the CA, this
Court deems it fit to rule on the merits of the case to once
and for all settle the dispute of the parties.

Recently, in Galvez, v. CA,31 it was held that attaching the


other records of the MTC and the RTC were not necessary
based on the circumstances of the case. The petitioner
therein was not assailing the propriety of the findings of fact
by the MTC and the RTC, but only the conclusions reached
by the said lower courts after their appreciation of the facts.
In dealing with the questions of law, the CA could simply
refer to the attached decisions of the MTC and the RTC.
Thus, the question in the case at bench is whether or not
the petitioners attached the sufficient pleadings and
material portions of the records in their petition for review.
The Court rules that the petition was in substantial
compliance
with
the
requirements.
The assignment of error32 in the petition for review clearly
raises questions of fact as the petitioners assail the
appreciation of evidence by the MCTC and the RTC. Thus,
aside from the decisions and orders of the MCTC and the
RTC, the petitioners should attach pertinent portions of the
records such as the testimony of the sole witness of

The rule is that a court can only consider the evidence


presented by respondent in the MCTC because the
petitioners failed to attend the pre-trial conference on
August 25, 2009 pursuant to Section 5, Rule 18 of the Rules
of Court.33 The Court, however, clarifies that failure to
attend the pre-trial does not result in the default of the
defendant. Instead, the failure of the defendant to attend
shall be cause to allow the plaintiff to present his evidence
ex parte and the court to render judgment on the basis
thereof.
The case of Philippine American Life & General Insurance
Company v. Joseph Enario34 discussed the difference
between non-appearance of a defendant in a pre-trial
conference and the declaration of a defendant in default in
the present Rules of Civil Procedure. The decision
states:chanroblesvirtuallawlibrary
Prior to the 1997 Revised Rules of Civil Procedure,
the phrase "as in default" was initially included in Rule 20 of
the
old
rules,
and
which
read
as
follows:ChanRoblesVirtualawlibrary
Sec. 2. A party who fails to appear at a pre-trial
conference may be non-suited or considered as in default.
It was however amended in the 1997 Revised Rules of Civil
Procedure. Justice Regalado, in his book REMEDIAL LAW

COMPENDIUM, explained the rationale for the deletion of


the phrase "as in default" in the amended provision, to
wit:ChanRoblesVirtualawlibrary
1. This is a substantial reproduction of Section 2 of
the former Rule 20 with the change that, instead of
defendant being declared "as in default" by reason of his
non-appearance, this section now spells out that the
procedure will be to allow the ex parte presentation of
plaintiffs evidence and the rendition of judgment on the
basis thereof. While actually the procedure remains the
same, the purpose is one of semantical propriety or
terminological accuracy as there were criticisms on the use
of the word "default" in the former provision since that term
is identified with the failure to file a required answer, not
appearance in court.
If the absent party is the plaintiff, then his case shall be
dismissed. If it is the defendant who fails to appear, then
the plaintiff is allowed to present his evidence ex parte and
the court shall render judgment on the basis thereof. Thus,
the plaintiff is given the privilege to present his evidence
without objection from the defendant, the likelihood being
that the court will decide in favor of the plaintiff, the
defendant having forfeited the opportunity to rebut or
present his own evidence.35chanRoblesvirtualLawlibrary
The pre-trial cannot be taken for granted. It is not a mere
technicality in court proceedings for it serves a vital
objective: the simplification, abbreviation and expedition of
the trial, if not indeed its dispensation. 36 More significantly,
the pre-trial has been institutionalized as the answer to the
clarion call for the speedy disposition of cases. Hailed as the
most important procedural innovation in Anglo-Saxon justice
in the nineteenth century, it paved the way for a less
cluttered trial and resolution of the case. It is, thus,
mandatory for the trial court to conduct pre-trial in civil
cases in order to realize the paramount objective of
simplifying,
abbreviating
and
expediting

trial.37chanRoblesvirtualLawlibrary
In the case at bench, the petitioners failed to attend the
pre-trial conference set on August 25, 2009. They did not
even give any excuse for their non-appearance, manifestly
ignoring the importance of the pre-trial stage. Thus, the
MCTC properly issued the August 25, 2009 Order,38 allowing
respondent
to
present
evidence ex
parte.
The MCTC even showed leniency when it directed the
counsels of the parties to submit their respective position
papers on whether or not Aguilar and Calimbas could still
participate in the trial of the case despite their absence in
the pre-trial conference. This gave Aguilar and Calimbas a
second chance to explain their non-attendance and, yet,
only respondent complied with the directive to file a position
paper. The MCTC, in its Order,39 dated April 27, 2011,
properly held that since the proceedings were being
heard ex parte, Aguilar and Calimbas had no right to
participate therein and to cross-examine the witness.
Thus, as it stands, the Court can only consider the evidence
on record offered by respondent. The petitioners lost their
right to present their evidence during the trial and, a
fortiori, on appeal due to their disregard of the mandatory
attendance
in
the
pre-trial
conference.
Substantive
Issue
And on the merits of the case, the Court holds that there
was indeed a contract of loan between the petitioners and
respondent. The Court agrees with the findings of fact of the
MCTC and the RTC that a check was a sufficient evidence of
a loan transaction. The findings of fact of the trial court, its
calibration of the testimonies of the witnesses and its
assessment of the probative weight thereof, as well as its
conclusions anchored on the findings are accorded high
respect,
if
not
conclusive
effect.40chanRoblesvirtualLawlibrary

The case of Pua v. Spouses Lo Bun Tiong41 discussed the


weight
of
a
check
as
an
evidence
of
a
loan:chanroblesvirtuallawlibrary
In Pacheco v. Court of Appeals, this Court has
expressly recognized that a check constitutes an evidence of
indebtedness and is a veritable proof of an obligation.
Hence, it can be used in lieu of and for the same purpose as
a promissory note. In fact, in the seminal case of Lozano v.
Martinez, We pointed out that a check functions more than a
promissory note since it not only contains an undertaking to
pay an amount of money but is an "order addressed to a
bank and partakes of a representation that the drawer has
funds on deposit against which the check is drawn, sufficient
to ensure payment upon its presentation to the bank." This
Court reiterated this rule in the relatively recentLim v.
Mindanao Wines and Liquour Galleria stating that a check,
the entries of which are in writing, could prove a loan
transaction.42
There is no dispute that the signatures of the petitioners
were present on both the PNB checks and the cash
disbursement vouchers. The checks were also made payable
to the order of the petitioners. Hence, respondent can
properly demand that they pay the amounts borrowed. If
the petitioners believe that there is some other bogus
scheme afoot, then they must institute a separate action
against the responsible personalities. Otherwise, the Court
can only rule on the evidence on record in the case at
bench, applying the appropriate laws and jurisprudence.
As to the award of attorneys fees, the Court is of the view
that the same must be removed. Attorney's fees are in the
concept of actual or compensatory damages allowed under
the circumstances provided for in Article 2208 of the Civil
Code, and absent any evidence supporting its grant, the
same must be deleted for lack of factual basis.43 In this
case, the MCTC merely stated that respondent was

constrained to file the present suit on account of the


petitioners obstinate failure to settle their obligation.
Without any other basis on record to support the award,
such cannot be upheld in favor of respondent. The settled
rule is that no premium should be placed on the right to
litigate and that not every winning party is entitled to an
automatic
grant
of
attorneys
fees.44chanRoblesvirtualLawlibrarychanrobleslaw
WHEREFORE,

the

petition

is PARTIALLY

GRANTED.

In accord with the discourse on the substantive issue, the


January 2, 2013 decision of the Regional Trial Court, Branch
5, Dinalupihan, Bataan, is AFFIRMED. The award of
attorney's
fees
is,
however,DELETED.
SO ORDERED.cralawlawlibrary
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 185758

March 9, 2011

LINDA
M.
CHAN
KENT,
represented
by
ROSITA
MANALANG, Petitioner,
vs.
DIONESIO C. MICAREZ, SPOUSES ALVARO E. MICAREZ & PAZ
MICAREZ,
and
THE
REGISTRY
OF
DEEDS,
DAVAO
DEL
NORTE, Respondents.
DECISION
MENDOZA, J.:

This is a petition for review on certiorari seeking to reverse and set


aside the July 17, 2008 Order 1 of the Regional Trial Court of
Panabo City, Branch 34 (RTC), dismissing the complaint for
recovery of property filed by petitioner Linda M. Chan
Kent (petitioner), docketed as Civil Case No. 13-2007, and its
November
21,
2008,
Order2 denying
her
motion
for
reconsideration.

Thus, on October 20, 1982, a deed of absolute sale was executed


between Spouses Micarez and the owner, Abundio Panganiban, for
the 328 square meter residential lot covered by Transfer Certificate
of Title (TCT) No. T-25833. Petitioner sent the money which was
used for the payment of the lot. TCT No. T-25833 was cancelled
upon the registration of the deed of sale before the Registry of
Deeds of Davao del Norte. In lieu thereof, TCT No. T-38635 was
issued in the names of Spouses Micarez on January 31, 1983.

The Facts
This petition draws its origin from a complaint for recovery of real
property and annulment of title filed by petitioner, through her
younger sister and authorized representative, Rosita MicarezManalang (Manalang),before the RTC. Petitioner is of Filipino
descent who became a naturalized American citizen after marrying
an American national in 1981. She is now a permanent resident of
the United States of America (USA).

In her complaint, petitioner claimed that the residential lot in


Panabo City, which she purchased in 1982, was clandestinely and
fraudulently conveyed and transferred by her parents, respondent
spouses Alvaro and Paz Micarez (Spouses Micarez), in favor of her
youngest brother, respondent Dionesio Micarez (Dionesio), to her
prejudice and detriment. She alleged that sometime in 1982, she
asked her parents to look for a residential lot somewhere in
Poblacion Panabo where the Spouses Micarez would build their new
home. Aware that there would be difficulty in registering a real
property in her name, she being married to an American citizen,
she arranged to pay for the purchase price of the residential lot
and register it, in the meantime, in the names of Spouses Micarez
under an implied trust. The title thereto shall be transferred in her
name in due time.

Sometime in 2005, she learned from Manalang that Spouses


Micarez sold the subject lot to Dionesio on November 22, 2001 and
that consequently, TCT T-172286 was issued in her brothers name
on January 21, 2002.

At the end, petitioner prayed that she be declared as the true and
real owner of the subject lot; that TCT No. T-172286 be cancelled;
and that a new one be issued in her name. 3

Considering that all the respondents are now also permanent


residents of the USA, summons was served upon them by
publication per RTC Order4 dated May 17, 2007. Meanwhile, the
respondents executed two special powers of attorney 5 both dated
August 3, 2007 before the Consulate General of the Philippines in
Los Angeles, California, U.S.A., authorizing their counsel, Atty.
Richard C. Miguel (Atty. Miguel), to file their answer in Civil Case
No. 13-2007 and to represent them during the pre-trial conference
and all subsequent hearings with power to enter into a
compromise agreement. By virtue thereof, Atty. Miguel timely filed
his principals answer denying the material allegations in the
complaint.

After the parties had filed their respective pre-trial briefs, and the
issues in the case had been joined, the RTC explored the possibility
of an amicable settlement among the parties by ordering the
referral of the case to the Philippine Mediation Center (PMC). On
March 1, 2008, Mediator Esmeraldo O. Padao, Sr. (Padao) issued a
Mediators Report6 and returned Civil Case No. 13-2007 to the RTC
allegedly due to the non-appearance of the respondents on the
scheduled conferences before him. Acting on said Report, the RTC
issued an order on May 29, 2009 allowing petitioner to present her
evidence ex parte.7

Petitioner,
through
her
counsel,
filed
a
motion
for
reconsideration10 to set aside the order of dismissal, invoking the
relaxation of the rule on non-appearance in the mediation
proceedings in the interest of justice and equity. Petitioner urged
the trial court not to dismiss the case based merely on
technicalities contending that litigations should as much as
possible be decided on the merits. Resolving the motion in its
second assailed Order11 dated November 21, 2008, the RTC ruled
that it was not proper for the petitioner to invoke liberality
inasmuch as the dismissal of the civil action was due to her own
fault. The dispositive portion of said order reads:
WHEREFORE, there being no cogent reason to depart from
our earlier Order, this instant motion for reconsideration is hereby
ordered DENIED.

Later, Padao clarified, through a Manifestation, 8 dated July 15,


2008, that it was petitioner, represented by Atty. Benjamin
Utulle (Atty. Utulle), who did not attend the mediation proceedings
set on March 1, 2008, and not Atty. Miguel, counsel for the
respondents and their authorized representative. Padao explained
that Atty. Miguel inadvertently affixed his signature for attendance
purposes on the column provided for the plaintiffs counsel in the
mediators report. In light of this development, the RTC issued the
assailed Order9 dated July 17, 2008 dismissing Civil Case No. 132007. The pertinent portion of said order reads:
Being so, the Order dated May 29, 2008 is hereby
corrected. For plaintiffs and her counsels failure to appear during
the mediation proceeding, this instant case is hereby ordered
DISMISSED.
SO ORDERED.

SO ORDERED.12

The denial prompted the petitioner to file this petition directly with
this Court claiming that the dismissal of the case was not in
accordance with applicable law and jurisprudence.

ISSUES
1. WITH ALL DUE RESPECT, THE HONORABLE
COURT A QUO GRAVELY ERRED IN DISMISSING THE
CASE SIMPLY ON THE REASON THAT PLAINTIFF
FAILED TO APPEAR DURING THE MEDIATION
PROCEEDING, ALTHOUGH PRESENT FOR TWO (2)
TIMES.

2. IS THE EXCUSABLE AND EXPLAINED FAILURE TO


ATTEND THE MEDIATION PROCEEDING FOR TWO (2)
TIMES OR SETTINGS, OUT OF THE FOUR (4)
SCHEDULED SETTINGS, BY THE PLAINTIFF A
GROUND TO DISMISS THE CASE UNDER THE
SUPREME COURTS ADMINISTRATIVE CIRCULAR NO.
20-2002?

The pivotal issue in this case is whether the RTC erred in


dismissing Civil Case No. 13-2007 due to the failure of petitioners
duly authorized representative, Manalang, and her counsel to
attend the mediation proceedings under the provisions of A.M. No.
01-10-5-SC-PHILJA and 1997 Rules on Civil Procedure.

In the interest of justice, the Court grants the petition.


A.M. No. 01-10-5-SC-PHILJA dated October 16, 2001, otherwise
known as the Second Revised Guidelines for the Implementation of
Mediation Proceedings, was issued pursuant to par. (5), Section 5,
Article VII of the 1987 Constitution mandating this Court to
promulgate rules providing for a simplified and inexpensive
procedure for the speedy disposition of cases. Also, Section 2(a),
Rule 18 of the 1997 Rules of Civil Procedure, as amended, requires
the courts to consider the possibility of an amicable settlement or
of submission to alternative modes of resolution for the early
settlement of disputes so as to put an end to litigations. The
provisions of A.M. No. 01-10-5-SC-PHILJA pertinent to the case at
bench are as follows:
9. Personal appearance/Proper authorizations

Petitioner claims that the dismissal of the case was unjust because
her representative, Manalang, and her counsel, Atty. Etulle, did not
deliberately snub the mediation proceedings. In fact, Manalang
and Atty. Etulle twice attended the mediation conferences on
January 19, 2008 and on February 9, 2008. On both occasions,
Manalang was present but was not made to sign the attendance
sheet and was merely at the lobby waiting to be called by Atty.
Etulle upon arrival of Atty. Miguel. Manalang and Atty. Etulle only
left PMC at 11:00 oclock in the morning when Atty. Miguel had not
yet arrived.13

Individual parties are encouraged to personally appear for


mediation. In the event they cannot attend, their representatives
must be fully authorized to appear, negotiate and enter into a
compromise by a Special Power of Attorney. A corporation shall, by
board resolution, fully authorize its representative to appear,
negotiate and enter into a compromise agreement.

12. Sanctions

Petitioner, however, admits that her representative and counsel


indeed failed to attend the last scheduled conference on March 1,
2008, when they had to attend some urgent matters caused by
the sudden increase in prices of commodities. 14

Since mediation is part of Pre-Trial, the trial court shall impose the
appropriate sanction including but not limited tocensure,
reprimand, contempt and such other sanctions as are provided
under the Rules of Court for failure to appear for pre-trial, in case
any or both of the parties absent himself/themselves, or for

abusive conduct during mediation proceedings. [Underscoring


supplied]

To reiterate, A.M. No. 01-10-5-SC-PHILJA regards mediation as


part of pre-trial where parties are encouraged to personally attend
the proceedings. The personal non-appearance, however, of a
party may be excused only when the representative, who appears
in his behalf, has been duly authorized to enter into possible
amicable settlement or to submit to alternative modes of dispute
resolution. To ensure the attendance of the parties, A.M. No. 0110-5-SC-PHILJA specifically enumerates the sanctions that the
court can impose upon a party who fails to appear in the
proceedings which includes censure, reprimand, contempt, and
even dismissal of the action in relation to Section 5, Rule 18 of the
Rules of Court.15 The respective lawyers of the parties may attend
the proceedings and, if they do so, they are enjoined to cooperate
with the mediator for the successful amicable settlement of
disputes16 so as to effectively reduce docket congestion.

Although the RTC has legal basis to order the dismissal of Civil
Case No. 13-2007, the Court finds this sanction too severe to be
imposed on the petitioner where the records of the case is devoid
of evidence of willful or flagrant disregard of the rules on mediation
proceedings. There is no clear demonstration that the absence of
petitioners representative during mediation proceedings on March
1, 2008 was intended to perpetuate delay in the litigation of the
case. Neither is it indicative of lack of interest on the part of
petitioner to enter into a possible amicable settlement of the case.

The Court notes that Manalang was not entirely at fault for
the cancellation and resettings of the conferences. Let it be
underscored that respondents representative and counsel,
Atty. Miguel, came late during the January 19 and February
9, 2008 conferences which resulted in their cancellation and
the final resetting of the mediation proceedings to March 1,
2008. Considering the circumstances, it would be most
unfair to penalize petitioner for the neglect of her
lawyer.1avvphi1

Assuming arguendo that the trial court correctly construed


the absence of Manalang on March 1, 2008 as a deliberate
refusal to comply with its Order or to be dilatory, it cannot
be said that the court was powerless and virtually without
recourse. Indeed, there are other available remedies to the
court a quounder A.M. No. 01-10-5-SC-PHILJA, apart from
immediately ordering the dismissal of the case. If
Manalangs absence upset the intention of the court a
quo to promptly dispose the case, a mere censure or
reprimand would have been sufficient for petitioners
representative and her counsel so as to be informed of the
courts intolerance of tardiness and laxity in the
observation of its order. By failing to do so and refusing to
resuscitate the case, the RTC impetuously deprived
petitioner of the opportunity to recover the land which she
allegedly paid for.

Unless the conduct of the party is so negligent,


irresponsible, contumacious, or dilatory as for nonappearance to provide substantial grounds for dismissal,
the courts should consider lesser sanctions which would
still achieve the desired end. The Court has written

"inconsiderate dismissals, even if without prejudice, do not


constitute a panacea nor a solution to the congestion of
court dockets, while they lend a deceptive aura of efficiency
to records of the individual judges, they merely postpone
the ultimate reckoning between the parties. In the absence
of clear lack of merit or intention to delay, justice is better
served by a brief continuance, trial on the merits, and final
disposition of the cases before the court. 17

It bears emphasis that the subject matter of the complaint


is a valuable parcel of land measuring 328 square meters
and that petitioner had allegedly spent a lot of money not
only for the payment of the docket and other filing fees but
also for the extra-territorial service of the summons to the
respondents who are now permanent residents of the U.S.A.
Certainly, petitioner stands to lose heavily on account of
technicality. Even if the dismissal is without prejudice, the
refiling of the case would still be injurious to petitioner
because she would have to pay again all the litigation
expenses which she previously paid for. The Court should
afford party-litigants the amplest opportunity to enable
them to have their cases justly determined, free from
constraints of technicalities. 18 Technicalities should take a
backseat against substantive rights and should give way to
the realities of the situation. Besides, the petitioner has
manifested her interest to pursue the case through the
present petition. At any rate, it has not been shown that a
remand of the case for trial would cause undue prejudice to
respondents.

In the light of the foregoing, the Court finds it just and proper that
petitioner be allowed to present her cause of action during trial on

the merits to obviate jeopardizing substantive justice. Verily, the


better and more prudent course of action in a judicial proceeding is
to hear both sides and decide the case on the merits instead of
disposing the case by technicalities. What should guide judicial
action is the principle that a party-litigant is to be given the fullest
opportunity to establish the merits of his complaint or defense
rather than for him to lose life, liberty or property on
technicalities.19 The ends of justice and fairness would best be
served if the issues involved in the case are threshed out in a fullblown trial. Trial courts are reminded to exert efforts to resolve the
matters before them on the merits and to adjudge them
accordingly to the satisfaction of the parties, lest in hastening the
proceedings, they further delay the resolution of the cases.

WHEREFORE, the petition is GRANTED. Civil Case No. 13-2007 is


hereby REINSTATED and REMANDED to the Regional Trial Court
of Panobo City, Branch 34 for referral back to the Philippine
Mediation Center for possible amicable settlement or for other
proceedings.
SO ORDERED.

SPECIAL FIRST DIVISION


[G.R. No. 91486. September 10, 2003]
ALBERTO G. PINLAC, ATTY. ERIBERTO H. DECENA, RODOLFO F.
REYES, FELIPE BRIONES, JUANITO METILLA, JR., FELIPE A.
FLORES,
HERMINIO
ELEVADO,
NARCISO
S.
SIMEROS, petitioners, vs. COURT OF APPEALS, ATTY.
CORAZON A. MERRERA, ATTY. JEAN MAKASIAR-PUNO,
SERGIO ACABAN, represented by Atty. Ramon Gerona,
ATTY. ROGELIO VELASCO, MARTINA S. NONA, OVIDEO
MEJICA, ALFREDO ITALIA, MARIANO GUEVARRA, JESUS
YUJUICO, DOMINADOR RIVERA, SATURNINA SALES,
represented by Atty. Consolacion Sales-Demontano, FRED
CHUA, SONIA SY CHUA, LAWRENCE CHUA, CAROLINA C.
RUBIO, represented by Tessie Sebastian, GEORGE G.
GUERRERO, BEATRIZ TANTOCO, represented by Filomena
Cervantes, ATTY. MARCELA CELESTINO-GARCIA, FEDERICO
GARCIA,
ILDEFONSO MORALES,
LEONCIA
VELASCO,
OCRAVIO F. LINA, ANA MARIA JARAMILLO, ESTRELLA
BASA, JOSE ESTEVA, JR., CIRILO GONZALES, VILLY
TOBIAS, MIGUEL DELA PAZ, RUBEN GUILLERMO, FAUSTO
YADAO, represented by Jeremias Panlilio, RICARDO YAP,
ROSAURO/PATRICK MARQUEZ, represented by Emmanuel
Marquez, MODESTA FABRIG and MAXIMINO SALCEDA,

MELIA LATOMBO, TERESITA PANGILINAN-RIVERO, ARCH.


DANILO C. DE CASTRO, JOSE S. LEDESMA, JAIME P. ANG,
VEICENTE P. ANG, MAURO U. GABRIEL, ATTY. VIRGINIA
GOMEZ, GIL S. BONILLA, LOURDES BLANCO, represented by
Catalina
Blanco,
JOSEFA
SANCHEZ
and
ROSALINA
VILLEGAS, represented by Heidi Bobis, SHIRLEY BUCAG,
QUIRINA O. TUVERA, represented by Wilfredo Orejuros,
GREGORIO AVENTINO, represented by Enrico Aventino,
LEONARDO
L.
NICOLAS,
NICOMEDES
PENARANDA,
FRANCISCA MEDRANO, OFELIA IGNACIO, ROSENDO
ABUBO,
represented
by
Santos
Chavez,
SOLEDAD
BAUTISTA DE COLUMNA, represented by Zenaida Valle,
MARQUITA/ SEBASTIAN LOPEZ, represented by Emmanuel
Marquez, DELIA DORION, GERARDO L. SANTIAGO, FIDEL
PANGANIBAN, represented by Manuel dela Roca, MATEO
and OFELIA INOVEJAS, REMEDIOS C. DOVAS, represented
by Josefa Capistrano, DOMINGO ALTAMIRANO and
SPOUSES
ROLANDO
ALTAMIRANO
and
MINERVA
FETALVERO, BEATRIZ RINGPIS, ROSARIO DE MATA,
RUFINA CRUZ, represented by JOSEFA MANABAT, SPOUSES
ANITA SALONGA-CAPAGCUAN and MAYNARD CAPAGCUAN,
DISCORA YATCO, represented by VICTORINA Y. FIRME, and
CONSUELO YATCO, GENEROSA MEDINA VDA. DE NOGUERA,
represented by ATTY. RAYMUNDO M. NOGUERA, BEATRIZ
SALANDANAN and LOURDES ALONTE-VASQUEZ, PEDRO
COSIO and VICTORINA CARINO, RUTH C. ZARATE,
PRECIOSISIMA V. YAPCHULAY, BASILISA B. YAPCHULAY,
OFELIA B. YAPCHULAY, FELISA B. YAPCHULAY, FE B.
YAPCHULAY, WILMA B. YAPCHULAY, FELIX B. YAPCHULAY,
MARIANO B. YAPCHULAY, GEN. ALFREDO LIM, and other
registered
OWNERS
OF
VILAR-MALOLES
(VILMA) SUBDIVISION, respondents.
REPUBLIC OF THE PHILIPPINES, intervenor.
WORLD
WAR
II
VETERANS LEGIONARIES
OF
THE PHILIPPINES, intervenor.
YNARES-SANTIAGO, J.:

RESOLUTION

This resolves the Petition-In-Intervention[1] filed by the


Republic of the Philippines, represented by the Land
Registration Authority and the Motion for Clarification [2] filed
by respondents.
The facts may be briefly restated as follows: The
controversy stemmed from a Petition for Quieting of Title
filed by petitioners over 3 vast parcels of land known as Lot

Nos. 1, 2 & 3. Lot No. 1 is covered by TCT No. 5690, while


Lot Nos. 2 and 3 were originally covered by OCT No. 614
and OCT No. 333, respectively. On March 21, 1988, the trial
court rendered a Partial Decision[3] in favor of petitioners
and against the defendants who were declared in default,
including respondent owners of Vilmar-Maloles (Vilma)
Subdivision whose properties were within Lot No. 2. The
dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of petitioners and against the defaulted
respondents:
1) Declaring petitioners through the principal petitioners
hereof, to wit: Alberto G. Pinlac, Atty. Eriberto H. Decena,
Rodolfo T. Reyes, Felipe Briones and Juanito S. Metilla as
absolute owners in fee simple title of the aforesaid Lots 1, 2
& 3 hereof by virtue of extra-ordinary prescription, with the
exception of the lands covered by the respective transfer
certificate of title belonging to the non-defaulted
respondents;
2) Declaring Original Certificate of Title No. 614, TCT No.
5690 and TCT No. 3548 of the Register of Deeds of Quezon
City, and the subsequent TCTs issued therefrom, with the
exception of those titles belonging to the non-defaulted
respondents, as null and void ab initio;

5) Ordering the Register of Deeds of Quezon City to cancel


all TCTs subsequently issued based on OCT No. 333 in
excess of the actual area of 4,574 Sq. Meters, with the
exception of those titles belonging to the non-defaulted
respondents;

3) Ordering the Register of Deeds of Quezon City to cancel


OCT No. 614, TCT No. 5690 and TCT No. 3548 as well as
the subsequent TCTs issued and emanating therefrom, with
the exception of those titles belonging to the non-defaulted
respondents, from its record;

On January 19, 2001, we rendered a Decision denying


the petition and affirming the Judgment of the Court of
Appeals. The dispositive portion thereof reads:
WHEREFORE, in view of all the foregoing, the decision of the
Court of Appeals in CA-G.R. SP No. 17596 is AFFIRMED and
the instant petition is DENIED for lack of merit.
SO ORDERED.[5]

4) Declaring the area of TCT No. 333 in excess of its true


and actual area of 4,574 Sq. Meters, as well as the
TCTs subsequently issued by the Register of Deeds of
Quezon City, covering the area in excess of said actual area,
with the exception of those belonging to non-defaulted
respondents, as null and void ab initio;

6) Declaring the writ of preliminary injunction dated August


7, 1985, in so far as those areas covered by the cancelled
OCTs and TCTs hereof are concerned, as permanent;
7) Ordering the Register of Deeds of Quezon City to issue
herein petitioners the corresponding individual transfer
certificate of titles upon proper application made thereof.
SO ORDERED.
On May 17, 1989, the defaulted title owners of Vilma
filed with the Court of Appeals a Petition to Annul the Partial
Decision of the trial court, which was granted in a
decision[4] dated November 15, 1989. The appellate court
ruled that the court a quo did not acquire jurisdiction over
the person of respondents because of defective service of
summons
by
publication.Petitioners
motion
for
reconsideration of the said decision was denied; hence, they
filed this petition for certiorari.

Petitioners
filed
a
Motion
for
Reconsideration[6] contending, inter alia, that the disposition
of the trial court with respect to Lot No. 3, should not have
been annulled by the Court of Appeals because the petition
for annulment of judgment filed by the respondents

concerned only Lot No. 2. They prayed that the January 19,
2001 decision of the Court which affirmed the decision of
the Court of Appeals be reconsidered insofar as Lot No. 3 is
concerned.
On November 20, 2001, the Court issued a Resolution
partially granting petitioners motion for reconsideration by
reinstating paragraphs 4 and 5 of the dipositive portion of
the trial courts Partial Decision pertaining to Lot No. 3, thus
WHEREFORE, the Motion for Reconsideration is PARTIALLY
GRANTED and our Decision promulgated on January 19,
2001 is MODIFIED as follows:
(1) reinstating paragraph (4) and (5) of the
Partial Decision of the court a quo; and
(2) affirming the Decision of the Court of
Appeals in CA-G.R. No. 17596 in all
other respects.
SO ORDERED.[7]
On July 22, 2002, the Republic of the Philippines,
represented by the Land Registration Authority (LRA), thru
the Office of the Solicitor General (OSG), filed a motion for
intervention and a Petition-In-Intervention praying that
judgment be rendered declaring:
1) That OCT No. 333 is a valid and existing title in
line with the decisions this Honorable Court
had already rendered;
2) That OCT No. 333 was never expanded from its
original area of 52,949,737 square meters;
3) That the land occupied by petitioners is not
forest land and is covered by OCT No. 333;
4) That the proceedings conducted in Civil Case No.
Q-35673 with respect to OCT No. 333 are null
and void; and
5) That the proceedings conducted in Civil Case No.
Q-35672 is null and void, no notice of the
hearings/proceedings having been sent to the
Republic and other interested parties.

The Republic likewise prays for such other relief as may be


just and equitable under the circumstances.[8]
The rule on intervention, like all other rules of
procedure is intended to make the powers of the Court fully
and completely available for justice. It is aimed to facilitate
a comprehensive adjudication of rival claims overriding
technicalities on the timeliness of the filing thereof.
[9]
Indeed, in exceptional cases, the Court has allowed
intervention notwithstanding the rendition of judgment by
the trial court. In one case, intervention was allowed even
when the petition for review of the assailed judgment was
already submitted for decision in the Supreme Court.[10]
In Mago v. Court of Appeals,[11] intervention was
granted even after the decision became final and executory,
thus
The permissive tenor of the provision on intervention shows
the intention of the Rules to give to the court the full
measure of discretion in permitting or disallowing the
same. But needless to say, this discretion should be
exercised judiciously and only after consideration of all the
circumstances obtaining in the case.
But it is apparent that the courts a quo only considered the
technicalities of the rules on intervention and of the petition
for relief from judgment. The denial of their motion to
intervene arising from the strict application of the rule was
an injustice to petitioners whose substantial interest in the
subject property cannot be disputed. It must be stressed
that the trial court granted private respondent's petition for
prohibition with injunction without petitioners being
impleaded, in total disregard of their right to be heard,
when on the face of the resolution of the Community
Relations and Information Office (CRIO) sought to be
enjoined, petitioners were the ones directly to be
affected. We need not belabor the point that petitioners are
indeed indispensable parties with such an interest in the

controversy or subject matter that a final adjudication


cannot be made in their absence without affecting, nay
injuring, such interest.

The Solicitor General summarized the interest of the


Republic in Lot No. 3 (originally covered by OCT No. 333),
as follows:

In Director of Lands v. Court of Appeals where the motions


for intervention were filed when the case had already
reached this Court, it was declared:

On March 5, 1979, then President Marcos issued


Proclamation No. 1826 reserving for national government
center site a parcel of land situated in the Constitution Hill,
Quezon City, Metro Manila, containing an area of four million
for hundred forty thousand FOUR HUNDRED SIXTY-SIX
SQUARE METERS. In a certification [Annex F, Rollo, p. 1415]
issued by the Land Registration Authority, it attested to the
fact that the National Government Center described in
Proclamation No. 1826 is within the area covered by GLRO
Record No. 1037 (OCT-333) and GLRO Record No. 5975 as
plotted in our Municipal Index Sheet (MIS) Nos. 2574-C,
5707-B, 5708-A, 5708-B and 3339-D.

It is quite clear and patent that the motions for intervention


filed by the movants at this stage of the proceedings where
trial had already been concluded x x x and on appeal x x x
the same was affirmed by the Court of Appeals and the
instant petition for certiorari to review said judgment is
already submitted for decision by the Supreme Court, are
obviously and manifestly late, beyond the period prescribed
under x x x Section 2, Rule 12 of the Rules of Court [now
Rule 19, Section 2 of the 1997 Rules on Civil Procedure].
But Rule 12 of the Rules of Court, like all other Rules therein
promulgated, is simply a rule of procedure, the whole
purpose and object of which is to make the powers of the
Court fully and completely available for justice. The purpose
of procedure is not to thwart justice. Its proper aim is to
facilitate the application of justice to the rival claims of
contending parties. It was created not to hinder and delay
but to facilitate and promote the administration of justice. It
does not constitute the thing itself which courts are always
striving to secure to litigants. It is designed as the means
best adopted to obtain that thing. In other words, it is a
means to an end.
In Tahanan Development Corp. v. Court of Appeals, this
Court allowed intervention almost at the end of the
proceedings. Accordingly, there should be no quibbling,
much less hesitation or circumvention, on the part of
subordinate and inferior courts to abide and conform to the
rule enunciated by the Supreme Court.[12]

In a letter [Annex B-2, Rollo, p. 1330], the Housing and


Urban Development Coordinating Council certified that
within the Project site/jurisdiction of the National
Government Center Housing Project (NGCHP) and the NGCEASTSIDE
DEVELOPMENT
PROJECT,
the
following
government buildings, offices and complexes are situated:
1) House of Representatives;
2) Civil Service Commission (CSC);
3) Department of Social Works and Development
(DSWD);
4) Sandiganbayan;
5) Commission on Audit (COA);
6) Department of Public Works and Highways
(DPWH) Depot;
7) Polytechnic University of the Philippines (PUP)
Commonwealth Campus;
8) TESDA Skills Training Center;
9) Several Public Elementary and High Schools,
Health Centers and Barangay Halls.

It also certified that the NGCHP under its Peoples Housing


Alternative for Social Empowerment land Acquisition
Development Program (PHASE-LADP), has already awarded
3,975 TCTs to its beneficiaries. This program comprises the
biggest chunk of the NGCHP with about 117 hectares
intended for disposition to qualified beneficiaries. Further, in
line with the National Governments thrust of fast-tracking
the implementation of the NGCHP, the remaining 20,696
TCTs are about to be awarded to qualified beneficiaries.[13]
Clearly, the intervention of the Republic is necessary to
protect public interest as well as government properties
located and projects undertaken on Lot No. 3. The
Constitutional mandate that no person shall be deprived of
life, liberty, or property without due process of law can
certainly be invoked by the Republic which is an
indispensable party to the case at bar.As correctly pointed
out by the Solicitor General, while the provision is intended
as a protection of individuals against arbitrary action of the
State, it may also be invoked by the Republic to protect its
properties.[14]
After a thorough re-examination of the case, we find
that our November 20, 2001 Resolution reinstating
paragraphs 4 and 5 of the trial courts Partial Decision
pertaining to Lot No. 3, overlooked certain aspects which, if
not corrected, will cause extreme and irreparable confusion
and prejudice. The reinstated portions of the decision
states:
4) Declaring the area of [OCT] No. 333 in excess of its true
and actual area of 4,574 Sq. Meters, as well as the TCTs
subsequently issued by the Register of Deeds of Quezon
City, covering the area in excess of said actual area, with
the exception of those belonging to non-defaulted
respondents, as null and void ab initio;
5) Ordering the Register of Deeds of Quezon City to cancel
all TCTs subsequently issued based on OCT No. 333 in

excess of the actual area of 4,574 Sq. Meters, with the


exception of those titles belonging to the non-defaulted
respondents;[15]
We note that paragraph 4 does not at all specify which
portions are in excess of the 4,574 square meter area of
OCT No. 333 and which areas belong to the defaulted and
non-defaulted respondents. Neither did the body of the trial
courts decision state the metes and bounds that would
serve as basis in implementing the dispositive portion
thereof. Verily, this flaw goes into the very identity of the
disputed land. Paragraphs 4 and 5 are therefore null and
void for having been rendered in violation of the
constitutional mandate that no decision shall be rendered by
any court without expressing therein clearly and distinctly
the facts and the law on which it is based.[16] Hence, the
November 20, 2001 Resolution reinstating paragraphs 4 and
5 of the trial courts Partial Decision should be modified.
The OSGs prayer that OCT No. 333 be held as a valid
and existing title is likewise meritorious. In Republic v.
Tofemi Realty Corporation (Tofemi),[17] an action for
Cancellation of Titles & Reversion of TCT No. 55747 and TCT
No. 55748, the validity of OCT No. 333 from which said
transfer certificates of title originated, has already been
settled. In dismissing the petition of the Republic, it was
held therein that OCT No. 333 is a valid title duly issued by
the Land Registration Court. The Republic did not appeal
therefrom
and
the
decision
became
final
and
executory. Pertinent portion of which states
Regarding the issue of nullity of OCT No. 333,
We find that the then Land Registration Court had the
power, authority and jurisdiction to issue it. It was issued
after trial, or presumptively in a fair and square trial with all
the requisites of the law (The Phil. British Co., Inc. vs. de
los Angeles, 63 SCRA 52).

The Act of Congress of July 1, 1902, known in local history


as the Philippine Bill of 1902, in its sections 13 to 18,
mentions three (3) classes of land, to wit, public land or
public domain, mineral lands, and timber land. (Ramos vs.
Director of Lands, 39 Phil. 175). Early decisions as regards
classification of public lands, such as Mapa vs. Insular
Government, 10 Phil 175, Ramos vs. Director of
Lands, supra, and Ankron vs. Government of the Philippine
Islands, 40 Phil. 10, which were decided under the
Philippine Bill of 1902 and the first Public Land Act No. 926
enacted by the Philippine Commission on October 7, 1926,
or prior to the passage of Act No. 2874, had impliedly ruled
that there was no legal provision vesting in the chief
Executive or President of the Philippines the power to
classify lands of the public domain into mineral, timber and
agricultural; so that the courts then were free to make
corresponding classifications in justiciable cases, or were
invested with implicit power in so doing, depending upon
the preponderance of the evidence. In Mapa vs. Insular
Government, supra, Feb. 10, 1908, the Court of Land
Registration granted the application for registration after
finding that it was neither timber nor mineral and came
within the definition of Agricultural land under Act 926. The
Attorney General appealed. The Supreme Court affirmed the
appealed judgment. In G.L.R.O. No. 1037, the application
for registration was granted and consequently the issuance
of a title was decreed in favor of the applicant because the
Land Registration Court found that the land applied for is
agricultural susceptible of private appropriation (Ramos vs.
Director of Lands,supra; Ankron vs. Government of the
Philippine Islands, supra). We repeat by way of emphasis,
the record does not reveal that the Government has always
considered the lot in question as forest reserve prior to the
issuance of OCT 333. To declare the land now as forest land
on the authority of LC Map 639 of Rizal approved on March
11, 1937 only, would deprive defendants of their registered
property without due process of law. It was pronounced in
Ramos vs. Director of lands, supra:

x x x Upon the other hand, the presumption should be, in


lieu of contrary evidence, that land is agricultural in
nature. One very good reason is that it is good for the
Philippine Islands to have a large public domain come under
private ownership. Such is the natural attitude of the
sagacious citizen.
OCT No. 333 being legal and valid; ergo, TCTs Nos.
55747 and 55748, being derived from the said mother title,
are also legal and valid. These TCTs were in turn derived
from TCTs Nos. 45832 and 45833, covering Lots Nos. 65, 76
and 81 which originally formed parts of Parcel C of Plan Psu32606 approved by the Court of First Instance of Rizal on
October 21, 1924. (Emphasis supplied)[18]
Stare decisis et non quieta movere. Stand by the
decisions and disturb not what is settled. It is a salutary and
necessary judicial practice that when a court has laid down
a principle of law applicable to a certain state of facts, it
must adhere to such principle and apply it to all future cases
in which the facts sued upon are substantially the same.
[19]
It is beyond cavil, therefore, that since the court had
already ruled on the validity OCT No. 333, said issue must
be laid to rest and must no longer be relitigated in the
present case.
With respect, however, to the area covered by OCT No.
333, the principle of stare decisis is not applicable because
the decision of the Court of Appeals did not indicate the
boundaries of the lot covered by OCT No. 333. While it was
held therein that the area of OCT No. 333 is 52,949,735
square meters, the metes and bounds of the land covered
by OCT No. 333 was not specified. We cannot adopt the
findings as to the area of OCT No. 333 for it might cause
deprivation of property of adjacent land owners without due
process of law.

So, also, the Court cannot nullify the entire Partial


Decision of the court a quo. The defaulted defendants
whose properties are located in Lot No. 1 did not question
the decision of the trial court. Neither was it shown in the
Petition-In-Intervention that the OSG is an indispensable
party to Lot No. 1.
In their Motion for Clarification and Manifestation,
respondents seek the clarification of paragraph 1 of the trial
courts Partial Decision declaring petitioners as owners of,
among others, Lot No. 2 where respondents properties are
located. Paragraph 1, provides:
1) Declaring petitioners through the principal petitioners
hereof, to wit: Alberto G. Pinlac, Atty. Eriberto H. Decena,
Rodolfo F. Reyes, Felipe Briones and Juanito S. Metilla as
absolute owners in fee simple title of the aforesaid Lots 1, 2
& 3 hereof by virtue of extraordinary prescription, with the
exception of the lands covered by the respective transfer
certificate of title belonging to non-defaulted respondents.
[20]

In view of the annulment of the trial courts Partial


Decision with respect to Lot No. 2 originally covered by OCT
No. 614, all portions of the decision pertaining to Lot No. 2,
including that in paragraph 1 declaring petitioners as
absolute owners in fee simple of Lot No. 2, is declared
void. Likewise, the declaration of nullity of paragraphs 4 and
5 of the dispositive portion of the decision a quo concerning
Lot No. 3, renders the disposition in paragraph 1 insofar as
it affects Lot No. 3, also void. Under the 1997 Rules on Civil
Procedure, specifically Rule 47, Section 7 thereof, a
judgment of annulment shall set aside the questioned
judgment or final order or resolution and render the same
null and void, without prejudice to the original action being
re-filed in the proper court.
In the meantime, the World War II Veterans Legionaries
of the Philippines (WW II) filed a Petition-in-Intervention

with prior leave of court. It alleges that the Court of Appeals


decision dated November 15, 1989 in CA-G.R. SP No.
17596, which is the subject of the instant petition for
review, ran counter to the June 22, 1989 decision of the
same court in CA-G.R. SP No. 17221, which merely
amended the first paragraph of the Partial Decision of the
trial court in Civil Case No. Q-35672. The latter decision of
the appellate court was affirmed by this Court in G.R. No.
90245 on April 8, 1990.
We find no conflict between the two decisions of the
Court of Appeals. It is true that both decisions affected the
portion of the Partial Decision of the trial court which
declared petitioners, who are individual members of the WW
II, as absolute owners of Lot Nos. 1, 2 and 3. However, the
decision in CA-G.R. SP No. 17221 merely granted WW IIs
prayer that it be substituted for its individual members, who
were declared the owners of Lot Nos. 1, 2 and 3 in the
Partial Decision. Aside from this, the decision in CA-G.R. SP
No. 17221 had nothing to do with the merits of the case. As
such, it did not contradict the Court of Appeals decision of
November 15, 1989 in CA-G.R. SP No. 17596 which set
aside the Partial Decision of the trial court.
WHEREFORE, in view of all the foregoing, the PetitionIn-Intervention of the Republic of the Philippines is
PARTIALLY GRANTED. The Resolution promulgated on
November 20, 2001 is MODIFIED as follows: The Decision
dated March 21, 1988 of the Regional Trial Court of Quezon
City, Branch 83, in Civil Case No. Q-35762, is annulled
insofar as it concerns Lot No. 2, originally covered by OCT
No. 614 and Lot No. 3 originally covered by OCT No.
333. The November 15, 1999 Decision of the Court of
Appeals in CA-G.R. No. 17596 is affirmed in all other
respects.
As clarified above, paragraph 1 of the dispositive
portion of the decision of the court a quo is void insofar as it

declares petitioners as absolute owners in fee simple of Lot


Nos. 2 and 3.

and answers of the several respondents, with the corresponding


exhibits.

The Petition-in-Intervention filed by the World War


Veterans Legionaries of the Philippines is DENIED for lack of
merit.
SO ORDERED.

The facts are fully stated in the dissenting opinion; and the cases
involve in the main the simple question of the right of a person
who has acquired the subject of litigation prior to the rendition of
the judgment to intervene for the purpose of being heard in the
supplemental proceedings for fixing the fees of the attorneys for
the successful plaintiffs. The pertinent facts are briefly these: After
Lim Cuan Sy & Co. had taken out several policies of insurance on a
certain stock of goods in different insurance companies, a fire
occurred which destroyed the insured merchandise. The insurance
companies concerned refused to pay the policies on the ground of
fraud on the part of the insured in submitting its claims of loss,
whereupon the insured instituted six separate actions to recover
upon as many different policies, and inasmuch as the issues in all
the actions were identical, only one of the cases was tried, while
the others were left pending under a stipulation that these actions
should be disposed of in the end in conformity with the final
judgment entered in the litigated case. The case thus tried was
fought to a finish in the Supreme Court, where the judgment of
the Court of First Instance favorable to the plaintiff was finally
affirmed on November 13, 1930. 1 At the conclusion of this
litigation the attorney for the plaintiff filed a motion in the
Supreme Court, asking that his fees as attorney in the case be
noted as a lien of record. This motion was granted. When the
record was finally returned to the lower court, the money due to
the insured under all of the policies was paid into court by the
insurers; and in natural course it became incumbent upon the
court to fix the fees of the attorney for the successful plaintiff. At
this stage the present petitioners sought to intervene, and the
respondent judge having refused to accede to the motion of
intervention,
the
present
applications
for
the
writ
ofmandamus were filed in this court. The only other fact of
importance pertinent to the case is that Lim Cuan Sy & Co. had, in
the meanwhile, been forced into insolvency. Trinidad Jurado Te Kim
Juan having been appointed assignee.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. L-34782
February 13, 1931
OTTO GMUR, INC., petitioner,
vs.
EULOGIO P. REVILLA, Judge of First Instance of Manila, ET
AL., respondents.
Harvey & O'Brien for petitioners.
Jose P. Laurel in his behalf and for respondent judge.
John R. McFie, Jr., and Marcelo Nubla for respondent.
Trinidad Jurado Te Kim Juan.
STREET, J.:

We have before us in these cases two separate applications for the


writ of mandamus to compel the respondent judge of the Court of
First Instance of Manila to permit the petitioners, Otto Gmur, Inc.,
and F. E. Zuellig, Inc., to intervene in certain cases now in their
final stages in the Court of First Instance of Manila, for the purpose
of being heard upon the question of the fees earned by the
respondent Jose P. Laurel, as attorney, in said cases. The two
applications are now before us for resolution upon the petitions

In the light of these facts certain propositions present themselves


to the mind which do not permit of the slightest doubt. The first is
that one who renders service as an attorney in a litigated
controversy is entitled to be paid for his services, in conformity

with the stipulations of any reasonable written contract which he


may make with his client. The second is that, where several
actions are brought involving identical questions, and one case is
litigated as a test case while the others are left pending under a
stipulation making the issue in those actions dependent upon the
issue in the test case, the value in controversy in such actions
should bear its appropriate proportion of the amount due as fees
to the attorney. It is a matter of common observation that where
large sums in litigation are made to depend upon the result of a
test case, such case is contested with an energy and diligence
proportionate to the total interests involved. In such case it would
be highly unjust to compel the parties interested in the test case to
bear the entire expense of the professional talent engaged in the
contest; and it would be no less unjust to the attorneys conducting
the litigation to limit their compensation to a reasonable proportion
of the amount involved in the test case. A tax case or an insurance
case based upon a single policy of insurance may involve
enormous value to the person or persons interested in the
litigation, and the professional labor expended upon it may, as in
the test case lately before us in this insurance controversy, be out
of all proportion to the amount technically involved.
Upon the point whether the petitioners should be permitted to
intervene in the matter of the determination of the fee to be paid
to the attorney who successfully prosecuted the insurance claims
in this case, it is clear upon fundamental principles governing
procedure that such intervention should be permitted. In this
connection it is enough to point out that when the insurance
policies now held by these petitioners were assigned to them, they
became the real parties in interest, and it is a statutory rule of
procedure in this jurisdiction that litigation must be conducted in
the name of the real party in interest. At common law, when an
interest in litigation was transferred to a stranger, the action
abated upon proof of this fact; and now certainly the assignee in
such case has a right to be substituted in the place of the original
plaintiff. In such a case as this, the assignee, upon making his
rights known and applying to the court to be allowed to intervene
or to be substituted, is not in the position of an intervenor as he
usually presents himself in litigation between others. The true
intervenor is a stranger to the litigation, and he usually asserts
rights adverse to the actual litigants; while a person substituted in
the place of the original parties by assignment to him of the

interest in litigation is not adverse to his predecessor. He is a true


successor in interest and as such has a right to be substituted in
the record in place of the original party from whom or from which
his interest is derived. Where such an assignment is asserted in
court, there can be no question as to the right of intervention or
substitution.
But even if the rights of the petitioners in this case should be
considered in relation to the ordinary rules governing intervention
by adverse parties, their right of intervention would be no less
evident; for intervention is here absolutely necessary to protection
of their supposed rights. It is true, that, as a general rule, the right
of a stranger to intervene in an action as an active litigant is
dependent upon the discretion of the court, but it is an abuse of
judicial discretion to refuse to allow the intervention when the
intervenor shows an interest in the subject matter of the litigation
of such character that intervention is necessary for the reasonable
protection thereof. (Joaquin vs.Herrera, 37 Phil., 705.) In the case
before us, if the fee of the attorney representing the insured were
to be fixed at an excessive amount, the petitioners, if not
permitted to controvert the right to such fee in the proceeding to
determine the amount due to the attorney, would have no remedy
whatever. But they are entitled to their day in court, and they have
a right to be heard upon the question of the amount of the fee.
And what could be more reasonable than to declare, as we now do,
that the person who must pay a fee has a right to be heard upon
the question of its amount?
It is suggested that the right to intervene should be denied to the
petitioners because their motion to intervene was not presented
until after the test case was decided and the money recovered
upon the insurance policies had been paid into court. This
suggestion loses its force when it is considered that an attorney's
fee cannot be determined until after the main litigation has been
decided and the subject of the recovery is at the disposition of the
court. The issue over the attorney's fee only arises when
something has been recovered from which the fee is to be paid.
For the reasons stated the writs of mandamus will be granted and
the respondent judge is directed to permit the petitioners, as
assignees of the insurance policies held by them, to intervene, with
leave to the assignee and Jose P. Laurel, as interested party, to
answer the complainants in intervention.2

CRUZ, J.:

A collection suit with preliminary attachment was filed by Equitable


Banking Corporation against Freeman, Inc. and Saw Chiao Lian, its
President and General Manager. The petitioners moved to
intervene, alleging that (1) the loan transactions between Saw
Chiao Lian and Equitable Banking Corp. were not approved by the
stockholders representing at least 2/3 of corporate capital; (2)
Saw Chiao Lian had no authority to contract such loans; and (3)
there was collusion between the officials of Freeman, Inc. and
Equitable Banking Corp. in securing the loans. The motion to
intervene was denied, and the petitioners appealed to the Court of
Appeals.

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 90580

April 8, 1991

RUBEN SAW, DIONISIO SAW, LINA S. CHUA, LUCILA S. RUSTE AND


EVELYN SAW, petitioners,
vs.
HON. COURT OF APPEALS, HON. BERNARDO P. PARDO, Presiding
Judge of Branch 43, (Regional Trial Court of Manila), FREEMAN
MANAGEMENT AND DEVELOPMENT CORPORATION, EQUITABLE
BANKING CORPORATION, FREEMAN INCORPORATED, SAW CHIAO
LIAN, THE REGISTER OF DEEDS OF CALOOCAN CITY, and DEPUTY
SHERIFF ROSALIO G. SIGUA, respondents.
Benito O. Ching, Jr. for petitioners.
William R. Vetor for Equitable Banking Corp.
Pineda, Uy & Janolo for Freeman, Inc. and Saw Chiao.

Meanwhile, Equitable and Saw Chiao Lian entered into a


compromise agreement which they submitted to and was approved
by the lower court. But because it was not complied with,
Equitable secured a writ of execution, and two lots owned by
Freeman, Inc. were levied upon and sold at public auction to
Freeman Management and Development Corp.

The Court of Appeals1 sustained the denial of the petitioners'


motion for intervention, holding that "the compromise agreement
between Freeman, Inc., through its President, and Equitable
Banking Corp. will not necessarily prejudice petitioners whose
rights to corporate assets are at most inchoate, prior to the
dissolution of Freeman, Inc. . . . And intervention under Sec. 2,
Rule 12 of the Revised Rules of Court is proper only when one's
right is actual, material, direct and immediate and not simply
contingent or expectant."

same effectively would have been useless, and the law


does not require litigants to perform useless acts.
It also ruled against the petitioners' argument that because they
had already filed a notice of appeal, the trial judge had lost
jurisdiction over the case and could no longer issue the writ of
execution.

The petitioners are now before this Court, contending that:


1. The Honorable Court of Appeals erred in holding that the
petitioners cannot intervene in Civil Case No. 88-44404
because their rights as stockholders of Freeman are merely
inchoate and not actual, material, direct and immediate
prior to the dissolution of the corporation;
2. The Honorable Court of Appeals erred in holding that the
appeal of the petitioners in said Civil Case No. 88-44404
was confined only to the order denying their motion to
intervene and did not divest the trial court of its
jurisdiction over the whole case.

The petitioners base their right to intervene for the protection of


their interests as stockholders on Everett v. Asia Banking
Corp.2 where it was held:
The well-known rule that shareholders cannot ordinarily
sue in equity to redress wrongs done to the corporation,
but that the action must be brought by the Board of
Directors, . . . has its exceptions. (If the corporation
[were] under the complete control of the principal
defendants, . . . it is obvious that a demand upon the
Board of Directors to institute action and prosecute the

Equitable demurs, contending that the collection suit against


Freeman, Inc, and Saw Chiao Lian is essentially in personam and,
as an action against defendants in their personal capacities, will
not prejudice the petitioners as stockholders of the corporation.
The Everett case is not applicable because it involved an action
filed by the minority stockholders where the board of directors
refused to bring an action in behalf of the corporation. In the case
at bar, it was Freeman, Inc. that was being sued by the creditor
bank.

Equitable also argues that the subject matter of the intervention


falls properly within the original and exclusive jurisdiction of the
Securities and Exchange Commission under P.D. No. 902-A. In
fact, at the time the motion for intervention was filed, there was
pending between Freeman, Inc. and the petitioners SEC Case No.
03577 entitled "Dissolution, Accounting, Cancellation of Certificate
of Registration with Restraining Order or Preliminary Injunction
and Appointment of Receiver." It also avers in its Comment that
the intervention of the petitioners could have only caused delay
and prejudice to the principal parties.
On the second assignment of
petitioners' appeal could only
for intervention and not to the
as party litigants had not been

error, Equitable maintains that the


apply to the denial of their motion
main case because their personality
recognized by the trial court.

After examining the issues and arguments of the parties, the Court
finds that the respondent court committed no reversible error in
sustaining the denial by the trial court of the petitioners' motion
for intervention.

In the case of Magsaysay-Labrador v. Court of Appeals, 3 we ruled


as follows:
Viewed in the light of Section 2, Rule 12 of the Revised
Rules of Court, this Court affirms the respondent court's
holding that petitioners herein have no legal interest in the
subject matter in litigation so as to entitle them to
intervene in the proceedings below. In the case of Batama
Farmers' Cooperative Marketing Association, Inc. v. Rosal,
we held: "As clearly stated in Section 2 of Rule 12 of the
Rules of Court, to be permitted to intervene in a pending
action, the party must have a legal interest in the matter
in litigation, or in the success of either of the parties or an
interest against both, or he must be so situated as to be
adversely affected by a distribution or other disposition of
the property in the custody of the court or an officer
thereof."

To allow intervention, [a] it must be shown that the


movant has legal interest in the matter in litigation, or
otherwise qualified; and [b] consideration must be given
as to whether the adjudication of the rights of the original
parties may be delayed or prejudiced, or whether the
intervenor's rights may be protected in a separate
proceeding or not. Both requirements must concur as the
first is not more important than the second.

The interest which entitles a person to intervene in a suit


between other parties must be in the matter in litigation
and of such direct and immediate character that the
intervenor will either gain or lose by the direct legal
operation and effect of the judgment. Otherwise, if persons
not parties of the action could be allowed to intervene,
proceedings will become unnecessarily complicated,
expensive and interminable. And this is not the policy of
the law.

The words "an interest in the subject" mean a direct


interest in the cause of action as pleaded, and which would
put the intervenor in a legal position to litigate a fact
alleged in the complaint, without the establishment of
which plaintiff could not recover.

Here, the interest, if it exists at all, of petitioners-movants


is indirect, contingent, remote, conjectural, consequential
and collateral. At the very least, their interest is purely
inchoate, or in sheer expectancy of a right in the
management of the corporation and to share in the profits
thereof and in the properties and assets thereof on
dissolution, after payment of the corporate debts and
obligations.

While a share of stock represents a proportionate or


aliquot interest in the property of the corporation, it does
not vest the owner thereof with any legal right or title to

any of the property, his interest in the corporate property


being equitable or beneficial in nature. Shareholders are in
no legal sense the owners of corporate property, which is
owned by the corporation as a distinct legal person.

On the second assignment of error, the respondent court correctly


noted that the notice of appeal was filed by the petitioners on
October 24, 1988, upon the denial of their motion to intervene,
and the writ of execution was issued by the lower court on January
30, 1989. The petitioners' appeal could not have concerned the
"whole" case (referring to the decision) because the petitioners
"did not appeal the decision as indeed they cannot because they
are not parties to the case despite their being stockholders of
respondent Freeman, Inc." They could only appeal the denial of
their motion for intervention as they were never recognized by the
trial court as party litigants in the main case.

Intervention is "an act or proceeding by which a third person is


permitted to become a party to an action or proceeding between
other persons, and which results merely in the addition of a new
party or parties to an original action, for the purpose of hearing
and determining at the same time all conflicting claims which may
be made to the subject matter in litigation.4

It is not an independent proceeding, but an ancillary and


supplemental one which, in the nature of things, unless otherwise
provided for by the statute or Rules of Court, must be in
subordination to the main proceeding.5 It may be laid down as a
general rule that an intervenor is limited to the field of litigation
open to the original parties.6

In the case at bar, there is no more principal action to be resolved


as a writ of execution had already been issued by the lower court
and the claim of Equitable had already been satisfied. The decision
of the lower court had already become final and in fact had already
been enforced. There is therefore no more principal proceeding in
which the petitioners may intervene.

As we held in the case of Barangay Matictic v. Elbinias:7


An intervention has been regarded, as merely "collateral or
accessory or ancillary to the principal action and not an
independent proceedings; and interlocutory proceeding
dependent on and subsidiary to, the case between the
original parties." (Fransisco, Rules of Court, Vol. 1, p. 721).
With the final dismissal of the original action, the complaint
in intervention can no longer be acted upon. In the case of
Clareza v. Resales, 2 SCRA 455, 457-458, it was stated
that:
That right of the intervenor should merely be in aid
of the right of the original party, like the plaintiffs
in this case. As this right of the plaintiffs had
ceased to exist, there is nothing to aid or fight for.
So the right of intervention has ceased to exist.
Consequently, it will be illogical and of no useful purpose to
grant or even consider further herein petitioner's prayer for
the issuance of a writ of mandamus to compel the lower
court to allow and admit the petitioner's complaint in
intervention. The dismissal of the expropriation case has
no less the inherent effect of also dismissing the motion for
intervention which is but the unavoidable consequence.

THIRD DIVISION

The Court observes that even with the denial of the petitioners'
motion to intervene, nothing is really lost to them.1wphi1The
denial did not necessarily prejudice them as their rights are being
litigated in the case now before the Securities and Exchange
Commission and may be fully asserted and protected in that
separate proceeding.

G.R. No. 179786

July 24, 2013

JOSIELENE LARA CHAN, Petitioner,


vs.
JOHNNY T. CHAN, Respondent.
DECISION
ABAD, J.:

WHEREFORE, the petition is DENIED, with costs against the


petitioners. It is so ordered.

This case is about the propriety of issuing a subpoena duces tecum


for the production and submission in court of the respondent
husband's hospital record in a case for declaration of nullity of
marriage where one of the issues is his mental fitness as a
husband.

The Facts and the Case


On February 6, 2006 petitioner Josielene Lara Chan (Josielene)
filed before the Regional Trial Court (RTC) of Makati City, Branch
144 a petition for the declaration of nullity of her marriage to
respondent Johnny Chan (Johnny), the dissolution of their conjugal
partnership of gains, and the award of custody of their children to
her. Josielene claimed that Johnny failed to care for and support
his family and that a psychiatrist diagnosed him as mentally
deficient due to incessant drinking and excessive use of prohibited
drugs. Indeed, she had convinced him to undergo hospital
confinement for detoxification and rehabilitation.
Republic of the Philippines
SUPREME COURT
Manila

Johnny resisted the action, claiming that it was Josielene who


failed in her wifely duties. To save their marriage, he agreed to

marriage counseling but when he and Josielene got to the hospital,


two men forcibly held him by both arms while another gave him an
injection. The marriage relations got worse when the police
temporarily detained Josielene for an unrelated crime and released
her only after the case against her ended. By then, their marriage
relationship could no longer be repaired.

physicians would be kept confidential. The prohibition covers not


only testimonies, but also affidavits, certificates, and pertinent
hospital records. The CA added that, although Johnny can waive
the privilege, he did not do so in this case. He attached the
Philhealth form to his answer for the limited purpose of showing
his alleged forcible confinement.

During the pre-trial conference, Josielene pre-marked the


Philhealth Claim Form1 that Johnny attached to his answer as proof
that he was forcibly confined at the rehabilitation unit of a hospital.
The form carried a physicians handwritten note that Johnny
suffered from "methamphetamine and alcohol abuse." Following up
on this point, on August 22, 2006 Josielene filed with the RTC a
request for the issuance of a subpoena duces tecum addressed to
Medical City, covering Johnnys medical records when he was there
confined. The request was accompanied by a motion to "be
allowed to submit in evidence" the records sought by subpoena
duces tecum.2

Question Presented

Johnny opposed the motion, arguing that the medical records were
covered by physician-patient privilege. On September 13, 2006 the
RTC sustained the opposition and denied Josielenes motion. It also
denied her motion for reconsideration, prompting her to file a
special civil action of certiorari before the Court of Appeals (CA) in
CA-G.R. SP 97913, imputing grave abuse of discretion to the RTC.

On September 17, 2007 the CA 3 denied Josielenes petition. It


ruled that, if courts were to allow the production of medical
records, then patients would be left with no assurance that
whatever relevant disclosures they may have made to their

The central question presented in this case is:


Whether or not the CA erred in ruling that the trial court correctly
denied the issuance of a subpoena duces tecum covering Johnnys
hospital records on the ground that these are covered by the
privileged character of the physician-patient communication.

The Ruling of the Court


Josielene requested the issuance of a subpoena duces tecum
covering the hospital records of Johnnys confinement, which
records she wanted to present in court as evidence in support of
her action to have their marriage declared a nullity. Respondent
Johnny resisted her request for subpoena, however, invoking the
privileged character of those records. He cites Section 24(c), Rule
130 of the Rules of Evidence which reads:
SEC. 24. Disqualification by reason of privileged
communication. The following persons cannot testify as to
matters learned in confidence in the following cases:

xxxx
(c) A person authorized to practice medicine, surgery or obstetrics
cannot in a civil case, without the consent of the patient, be
examined as to any advice or treatment given by him or any
information which he may have acquired in attending such patient
in a professional capacity, which information was necessary to
enable him to act in that capacity, and which would blacken the
reputation of the patient.

The physician-patient privileged communication rule essentially


means that a physician who gets information while professionally
attending a patient cannot in a civil case be examined without the
patients consent as to any facts which would blacken the latters
reputation. This rule is intended to encourage the patient to open
up to the physician, relate to him the history of his ailment, and
give him access to his body, enabling the physician to make a
correct diagnosis of that ailment and provide the appropriate cure.
Any fear that a physician could be compelled in the future to come
to court and narrate all that had transpired between him and the
patient might prompt the latter to clam up, thus putting his own
health at great risk.4

1. The case presents a procedural issue, given that the time to


object to the admission of evidence, such as the hospital records,
would be at the time they are offered. The offer could be made
part of the physicians testimony or as independent evidence that
he had made entries in those records that concern the patients
health problems.

Section 36, Rule 132, states that objections to evidence must be


made after the offer of such evidence for admission in court. Thus:
SEC. 36. Objection. Objection to evidence offered orally
must be made immediately after the offer is made.
Objection to a question propounded in the course of the oral
examination of a witness shall be made as soon as the grounds
therefor shall become reasonably apparent.

An offer of evidence in writing shall be objected to within three (3)


days after notice of the offer unless a different period is allowed by
the court.

In any case, the grounds for the objections must be specified.

Since the offer of evidence is made at the trial, Josielenes request


for subpoena duces tecum is premature. She will have to wait for
trial to begin before making a request for the issuance of a
subpoena duces tecum covering Johnnys hospital records. It is
when those records are produced for examination at the trial, that
Johnny may opt to object, not just to their admission in evidence,
but more so to their disclosure. Section 24(c), Rule 130 of the
Rules of Evidence quoted above is about non-disclosure of
privileged matters.

2. It is of course possible to treat Josielenes motion for the


issuance of a subpoena duces tecum covering the hospital records

as a motion for production of documents, a discovery procedure


available to a litigant prior to trial. Section 1, Rule 27 of the Rules
of Civil Procedure provides:
SEC. 1. Motion for production or inspection; order. Upon
motion of any party showing good cause therefor, the court in
which an action is pending may (a) order any party to produce and
permit the inspection and copying or photographing, by or on
behalf of the moving party, of any designated documents, papers,
books, accounts, letters, photographs, objects or tangible things,
not privileged, which constitute or contain evidence material to any
matter involved in the action and which are in his possession,
custody or control; or (b) order any party to permit entry upon
designated land or other property in his possession or control for
the purpose of inspecting, measuring, surveying, or photographing
the property or any designated relevant object or operation
thereon. The order shall specify the time, place and manner of
making the inspection and taking copies and photographs, and
may prescribe such terms and conditions as are just. (Emphasis
supplied)

But the above right to compel the production of documents has a


limitation: the documents to be disclosed are "not privileged."

Josielene of course claims that the hospital records subject of this


case are not privileged since it is the "testimonial" evidence of the
physician that may be regarded as privileged. Section 24(c) of
Rule 130 states that the physician "cannot in a civil case, without
the consent of the patient, be examined" regarding their
professional conversation. The privilege, says Josielene, does not
cover the hospital records, but only the examination of the
physician at the trial.

To allow, however, the disclosure during discovery procedure of the


hospital recordsthe results of tests that the physician ordered,
the diagnosis of the patients illness, and the advice or treatment
he gave himwould be to allow access to evidence that is
inadmissible without the patients consent. Physician memorializes
all these information in the patients records. Disclosing them
would be the equivalent of compelling the physician to testify on
privileged matters he gained while dealing with the patient,
without the latters prior consent.

3. Josielene argues that since Johnny admitted in his answer to the


petition before the RTC that he had been confined in a hospital
against his will and in fact attached to his answer a Philhealth
claim form covering that confinement, he should be deemed to
have waived the privileged character of its records. Josielene
invokes Section 17, Rule 132 of the Rules of Evidence that
provides:
SEC. 17. When part of transaction, writing or record given
in evidence, the remainder admissible. When part of an act,
declaration, conversation, writing or record is given in evidence by
one party, the whole of the same subject may be inquired into by
the other, and when a detached act, declaration, conversation,
writing or record is given in evidence, any other act, declaration,
conversation, writing or record necessary to its understanding may
also be given in evidence.1wphi1

But, trial in the case had not yet begun. Consequently, it cannot be
said that Johnny had already presented the Philhealth claim form
in evidence, the act contemplated above which would justify

Josielene into requesting an inquiry into the details of his hospital


confinement. Johnny was not yet bound to adduce evidence in the
case when he filed his answer. Any request for disclosure of his
hospital records would again be premature.

For all of the above reasons, the CA and the RTC were justified in
denying Josielene her request for the production in court of
Johnnys hospital records.
ACCORDINGLY, the Court DENIES the petition and AFFIRMS the
Decision of the Court of Appeals in CA-G.R. SP 97913 dated
September 17, 2007.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. L-24154
October 31, 1967
PEOPLE OF THE PHILIPPINES, petitioner,
vs.
HON. GREGORIO D. MONTEJO, Judge of the Court of First Instance
of Zamboanga City, and FELIX WEE SIT, respondentst.
Pascual S. Atilano for petitioner.
City Fiscal of Zamboanga City for respondents.

In
this
petition
for certiorari and mandamus with
preliminary injunction, the novel question presented is
whether respondent Judge, in denying a motion for the
arrest of a material witness, in a criminal case, or in the
alternative, to cite him for contempt, relying on Section 9 of
Rule 23 of the Rules of Court to the effect that a witness is
not bound to attend as such before any court, judge or
other officer out of the province in which he resides unless
the distance be less than 50 kilometers from his place of
residence to the place of trial by the usual course, acted
with grave abuse of discretion.
In a petition dated February 4, 1965, it was alleged by the
City Fiscal of Zamboanga, as counsel for the People of the
Philippines, that on September 23, 1963, Criminal Case No.
3225 was filed in the Court of First Instance of Zamboanga
City against a certain Felix Wee Sit for double homicide and

serious physical injuries thru reckless imprudence, the trial


of the case having commenced on November 7, 1963, and
thereafter continued subsequently.1 After which, it was
stated that a certain Ernesto Uaje y Salvador, "a permanent
resident of Montalban, Rizal," then a patrolman in the
Montalban Police Department, "is a material and important
witness in the case" his affidavit having served as the basis
for filing the information as he "happened to be an eyewitness during the traffic incident wherein a Private Jeep
bearing Plate No. J-6172 driven recklessly by the accused
Felix Wee Sit on August 15, 1963, turned turtle in the public
highway in Zamboanga City causing the death of two (2)
prominent young girls and serious physical injuries to four
(4) equally prominent young girls, who are all students of a
local religious institution."2
It was then alleged that at the time the case against the
accused was called for trial in the Court of First Instance of
Zamboanga City, then presided by respondent Judge, the
witness had returned to Montalban, Rizal; that pursuant to a
formal request of the City Fiscal, respondent Judge issued a
subpoena to patrolman Uaje addressed at his known
address at Montalban, Rizal, for him to appear at the trial of
the case set for continuation on February 1, 1965; that such
subpoena was served on Uaje the return showing that he
had received it on January 19, 1965, at Montalban, Rizal;
that when the case was called for continuation on February
1, 1965, he did not appear "and forthwith the undersigned
City Fiscal formally moved for an order of arrest" or in the
alternative "to cite him for contempt for willful failure to
appear at the trial of the case as a material
witness. . . ."3Such a motion was formally presented on
February 3, 1965 and denied on the same day by the
respondent Judge in the Order sought to be annulled in this
petition. Then came a motion for reconsideration which was
likewise denied for not being "well-founded". In addition to
the plea to declare void such order refusing to have the
witness either arrested or cited for contempt, there was the

further prayer that respondent Judge be required to grant


the aforesaid motion.
The petition was given due course, with preliminary
injunction issued. Respondent Judge and the other
respondent, the accused in Criminal Case No. 3225, were
required to answer. In their answer filed on March 4, 1965,
there was a denial of the allegation that Uaje was "a
material, much less an important, witness," such denial
being based on the very affidavit executed by him which as
noted in the answer admitted "that the said witness did not
see how the accident had occurred and was, therefore, not
an eye-witness. . . . "There was an admission that
respondent Judge was "poised to order the immediate
continuation of the trial of the case upon the insistence of
the accused who relies upon his constitutional right to a
speedy trial but denied that the prosecution is entitled to
compulsory process" for under the Rules of Court it is the
defendant, not the prosecution, that is conferred such a
right, alleging further that the issuance of compulsory
process is, under the Constitution, a right granted to the
accused "only and exclusively", no corresponding provision
being made for the prosecution. As a First and Special
Affirmative Defense, they relied on the aforesaid Section 9
of Rule 23 contending that if a witness was not bound by a
subpoena since his residence was admittedly not less than
50 kilometers from the place of trial, the failure to obey the
same or to comply with it could not in any manner
whatsoever constitute contempt of court. Respondent Judge
therefore did not commit any error; nor did he abuse his
discretion in refusing to issue an order of arrest or to cite
said witness for contempt. There are other special and
affirmative defenses but they are not decisive of the
question presented. The prayer was for the lifting of the
preliminary injunction and the denial of the petition.

Thus was the issue joined. Instead of relying on an oral


argument, the parties preferred to file memoranda, and the
petition was submitted for decision.
That the question is novel admits of no doubt. It is true in
two
(2)
cases, Cruz
v.
Sison,4 and Cruz
v.
5
Rabanera, decided jointly, one of the errors assigned was
that the lower court erred in holding that the above
provision of the Rules of Court applies to both civil and
criminal cases. This Court, however, speaking through
Justice Makalintal, did not deem it necessary to pass on the
above question as "the petitions for contempt were
prematurely filed and hence their dismissal was in order."
Moreover, this Court further noted "that the subpoenas were
issued so that they could give evidence in Criminal Case No.
47152, 'People of the Philippines v. Secretary of Jaime
Hernandez,' which was then already pending trial before a
branch of the Court of First Instance of Manila. The power of
the City Fiscal of Manila to issue subpoenas extends to
cases pending investigation before him, but not where the
complaint or information has been filed in court, in which
case it is the court that should issue the necessary
processes (Concepcion v. Gonzales, L-15638, April 26,
1962)."
How did petitioner sustain its stand that respondent Judge
was called upon to compel the attendance of a witness
living in Montalban, Rizal, to testify at a trial in Zamboanga
City, or in the alternative to cite him for contempt? Its
counsel, the City Fiscal of Zamboanga City, cited, without
incorporating the terms thereof, the following legal
provisions: Section 1687 of the Revised Administrative Code
and Republic Act No. 1799, Section 19 (g) of
Commonwealth Act 39, the City Charter of Zamboanga, and
Section 3, Rule 135 of the Rules of Court. A perusal of each
of the above legal prescriptions yields no support for
petitioner's theory.

Section 1687 of the Revised Administrative Code as


amended by Republic Act No. 1799, 6 which was approved
and took effect on June 21, 1957, speaks of the authority of
a Provincial Fiscal and Assistant Fiscal and Special Counsel
to conduct investigation in criminal matters. All that the City
Charter of Zamboanga7 provides is that its Fiscal "may
conduct investigations in respect to crimes, misdemeanors,
and violations of ordinances by taking oral evidence of
reputable witnesses, and for this purpose may, by
subpoena, summon witnesses to appear and testify under
oath before him, and the attendance of an absent or
recalcitrant witness may be enforced by application to the
Municipal Court or the Court of First Instance of the
Province of Zamboanga." The particular rule cited provides
process issued from a superior court "in which a case is
pending to bring in a defendant, or for the arrest of any
accused person, or to execute any order or judgment of the
court, may be enforced in any part of the Philippines." 8 It is
obvious then that the argument of counsel for the City of
Zamboanga based on the above legal provision is, to put it
at its mildest, far from persuasive.
Counsel for respondent, Atty. Rosauro Alvarez, did, in his
thorough and exhaustive memorandum, stress anew that
the first and decisive question is whether a Court of First
Instance possesses authority in a criminal case "to compel
by subpoena the attendance of the witness who, as in this
case, resides hundreds of miles away from the place of
trial." According to him, "an examination of the placement
on Section 9 of Rule 23 discloses to us that it is found under
the topic Procedure in Courts of First Instance which
unquestionably would include both criminal and civil cases.
It will be noted further that the provision of Section 9, Rule
23 above quoted makes no distinction between a criminal or
civil case and it is a fundamental rule or statutory
construction that where the law makes no distinction it is
not proper for the interpreter to make any such distinction."
After which counsel invoked the Constitution as well as the

Rules of Court,9 particularly the provisions contained therein


granting to the accused in a criminal case the right to have
compulsory process issued to secure the attendance of
witnesses in his behalf, which right was not conferred on the
prosecution. Thus, he would sustain the actuations of
respondent Judge not only as free from error but as correct
and proper.
While not lacking in plausibility, this contention of
respondents failed to enlist the assent of a majority of the
Court. It is loathe to clip what undoubtedly is the inherent
power of the Court to compel the attendance of persons to
testify in a case pending therein. 10 Section 9 of Rule 23 is
thus interpreted to apply solely to civil cases. A recognition
of such power in a court of first instance conducting the trial
of an accused may be gleaned from principle that justifies it
when satisfied "by proof or oath, that there is reason to
believe that a material witness for the prosecution will not
appear and testify when required," to order that he "give
bail in sum as [it] may deem proper for such appearance.
Upon refusal to give bail, the court must commit him to
prison until he complies or is legally discharged."11
Under the circumstances, in view of the serious handicap to
which the prosecution would thus be subjected in proving its
case, the order of respondent judge denying the motion for
an order of arrest or a citation for contempt in the
alternative, based on a clear misapprehension of the Rules
of Court, could be viewed as amounting to grave abuse of
discretion. It would follow then that respondent Judge
should decide said motion without taking into consideration
Section 9 of Rule 23.
WHEREFORE, the preliminary injunction is lifted, the orders
of February 3, 1961 set aside, and respondent Judge
ordered to pass upon the aforesaid motion of petitioner.
Without costs.

THIRD DIVISION
[G.R. No. 162571. June 15, 2005]
ARNEL L. AGUSTIN, petitioner, vs. HON. COURT OF APPEALS AND
MINOR MARTIN JOSE PROLLAMANTE, REPRESENTED BY
HIS
MOTHER/GUARDIAN FE
ANGELA
PROLLAMANTE, respondents.
DECISION
CORONA, J.:

At issue in this petition for certiorari [1] is whether or not


the Court of Appeals (CA) gravely erred in exercising its
discretion, amounting to lack or excess of jurisdiction, in
issuing
a
decision[2] and
resolution[3] upholding
the
[4]
resolution and order of the trial court, which denied
petitioners motion to dismiss private respondents complaint
for support and directed the parties to submit themselves to
deoxyribonucleic acid (DNA) paternity testing.

Respondents Fe Angela and her son Martin Prollamante


sued Martins alleged biological father, petitioner Arnel L.
Agustin, for support and support pendente lite before the
Regional Trial Court (RTC) of Quezon City, Branch 106.[5]

In their complaint, respondents alleged that Arnel


courted Fe in 1992, after which they entered into an
intimate relationship. Arnel supposedly impregnated Fe on
her 34th birthday on November 10, 1999. Despite Arnels
insistence on abortion, Fe decided otherwise and gave birth
to their child out of wedlock, Martin, on August 11, 2000 at
the Capitol Medical Hospital in Quezon City. The babys birth
certificate was purportedly signed by Arnel as the father.
Arnel shouldered the pre-natal and hospital expenses but
later refused Fes repeated requests for Martins support
despite his adequate financial capacity and even suggested
to have the child committed for adoption. Arnel also denied
having fathered the child.

On January 19, 2001, while Fe was carrying five-month


old Martin at the Capitol Hills Golf and Country Club parking
lot, Arnel sped off in his van, with the open car door hitting
Fes leg. This incident was reported to the police. In July
2001, Fe was diagnosed with leukemia and has, since then,
been undergoing chemotherapy. On March 5, 2002, Fe and
Martin sued Arnel for support.[6]

In his amended answer, Arnel denied having sired


Martin because his affair and intimacy with Fe had allegedly
ended in 1998, long before Martins conception. He claimed
that Fe had at least one other secret lover. Arnel admitted
that their relationship started in 1993 but he never really
fell in love with (Fe) not only because (she) had at least one
secret lover, a certain Jun, but also because she proved to
be scheming and overly demanding and possessive. As a
result, theirs was a stormy on-and-off affair. What started
as a romantic liaison between two consenting adults
eventually turned out to be a case of fatal attraction where
(Fe) became so obsessed with (Arnel), to the point of even
entertaining the idea of marrying him, that she resorted to
various devious ways and means to alienate (him) from his
wife and family. Unable to bear the prospect of losing his
wife and children, Arnel terminated the affair although he
still treated her as a friend such as by referring potential
customers to the car aircon repair shop [7] where she
worked. Later on, Arnel found out that Fe had another
erstwhile secret lover. In May 2000, Arnel and his entire
family went to the United States for a vacation. Upon their
return in June 2000, Arnel learned that Fe was telling people
that he had impregnated her. Arnel refused to acknowledge
the child as his because their last intimacy was sometime in
1998.[8] Exasperated, Fe started calling Arnels wife and
family. On January 19, 2001, Fe followed Arnel to the
Capitol Hills Golf and Country Club parking lot to demand
that he acknowledge Martin as his child. According to Arnel,
he could not get through Fe and the discussion became so
heated that he had no alternative but to move on but
without bumping or hitting any part of her body.[9] Finally,

Arnel claimed that the signature and the community tax


certificate (CTC) attributed to him in the acknowledgment of
Martins birth certificate were falsified. The CTC erroneously
reflected his marital status as single when he was actually
married and that his birth year was 1965 when it should
have been 1964.[10]

In his pre-trial brief filed on May 17, 2002, Arnel


vehemently denied having sired Martin but expressed
willingness to consider any proposal to settle the case.[11]

On July 23, 2002, Fe and Martin moved for the issuance


of an order directing all the parties to submit themselves to
DNA paternity testing pursuant to Rule 28 of the Rules of
Court.[12]

Philippine National Police Crime Laboratory


signature in the birth certificate was forged.

that

his

The trial court denied the motion to dismiss the


complaint and ordered the parties to submit themselves to
DNA paternity testing at the expense of the applicants. The
Court of Appeals affirmed the trial court.
Thus, this petition.

In a nutshell, petitioner raises two issues: (1) whether


a complaint for support can be converted to a petition for
recognition and (2) whether DNA paternity testing can be
ordered in a proceeding for support without violating
petitioners constitutional right to privacy and right against
self-incrimination.[15]
The petition is without merit.

Arnel opposed said motion by invoking his constitutional


right against self-incrimination.[13] He also moved to dismiss
the complaint for lack of cause of action, considering that
his signature on the birth certificate was a forgery and that,
under the law, an illegitimate child is not entitled to support
if not recognized by the putative father.[14] In his motion,
Arnel manifested that he had filed criminal charges for
falsification of documents against Fe (I.S. Nos. 02-5723 and
02-7192) and a petition for cancellation of his name
appearing in Martins birth certificate (docketed as Civil Case
No. Q-02-46669). He attached the certification of the

First of all, the trial court properly denied the


petitioners motion to dismiss because the private
respondents complaint on its face showed that they had a
cause of action against the petitioner. The elements of a
cause of action are: (1) the plaintiffs primary right and the
defendants corresponding primary duty, and (2) the delict
or wrongful act or omission of the defendant, by which the
primary right and duty have been violated. The cause of

action is determined not by the prayer of the complaint but


by the facts alleged.[16]

filiation in a separate suit under Article 283 [17] in relation to


Article 265[18] of the Civil Code and Section 1, Rule 105 [19] of
the Rules of Court.
The petitioners contentions are without merit.

In the complaint, private respondents alleged that Fe


had amorous relations with the petitioner, as a result of
which she gave birth to Martin out of wedlock. In his
answer, petitioner admitted that he had sexual relations
with Fe but denied that he fathered Martin, claiming that he
had ended the relationship long before the childs conception
and birth. It is undisputed and even admitted by the parties
that there existed a sexual relationship between Arnel and
Fe. The only remaining question is whether such sexual
relationship produced the child, Martin. If it did, as
respondents have alleged, then Martin should be supported
by his father Arnel. If not, petitioner and Martin are
strangers to each other and Martin has no right to demand
and petitioner has no obligation to give support.

The assailed resolution and order did not convert the


action for support into one for recognition but merely
allowed the respondents to prove their cause of action
against petitioner who had been denying the authenticity of
the documentary evidence of acknowledgement. But even if
the assailed resolution and order effectively integrated an
action to compel recognition with an action for support,
such was valid and in accordance with jurisprudence.
In Tayag v. Court of Appeals,[20] we allowed the integration
of an action to compel recognition with an action to claim
ones inheritance:

Preliminaries aside, we now tackle the main issues.

Petitioner refuses to recognize Martin as his own child


and denies the genuineness and authenticity of the childs
birth certificate which he purportedly signed as the father.
He also claims that the order and resolution of the trial
court, as affirmed by the Court of Appeals, effectively
converted the complaint for support to a petition for
recognition, which is supposedly proscribed by law.
According to petitioner, Martin, as an unrecognized child,
has no right to ask for support and must first establish his

In Paulino, we held that an illegitimate child, to be entitled


to support and successional rights from the putative or
presumed parent, must prove his filiation to the latter. We
also said that it is necessary to allege in the complaint that
the putative father had acknowledged and recognized the
illegitimate child because such acknowledgment is essential
to and is the basis of the right to inherit. There being no
allegation of such acknowledgment, the action becomes one
to compel recognition which cannot be brought after the
death of the putative father. Theratio decidendi in Paulino,
therefore, is not the absence of a cause of action for failure

of the petitioner to allege the fact of acknowledgment in the


complaint, but the prescription of the action.

Applying the foregoing principles to the case at bar,


although petitioner contends that the complaint filed by
herein private respondent merely alleges that the minor
Chad Cuyugan is an illegitimate child of the deceased and is
actually a claim for inheritance, from the allegations therein
the same may be considered as one to compel recognition.
Further, that the two causes of action, one to compel
recognition and the other to claim inheritance, may
be joined in one complaint is not new in our
jurisprudence.

As early as [1922] we had occasion to rule thereon in Briz


vs. Briz, et al. (43 Phil. 763 [1922]) wherein we said:
The question whether a person in the position of the present
plaintiff can in any event maintain a complex action to
compel recognition as a natural child and at the same time
to obtain ulterior relief in the character of heir, is one which
in the opinion of this court must be answered in the
affirmative, provided always that the conditions justifying
the joinder of the two distinct causes of action are present
in the particular case. In other words, there is no
absolute necessity requiring that the action to compel
acknowledgment should have been instituted and
prosecuted to a successful conclusion prior to the
action in which that same plaintiff seeks additional

relief in the character of heir. Certainly, there is nothing


so peculiar to the action to compel acknowledgment as to
require that a rule should be here applied different from
that generally applicable in other cases. x x x

The conclusion above stated, though not heretofore


explicitly formulated by this court, is undoubtedly to some
extent supported by our prior decisions. Thus, we have
held in numerous cases, and the doctrine must be
considered well settled, that a natural child having a
right to compel acknowledgment, but who has not
been in fact legally acknowledged, may maintain
partition proceedings for the division of the
inheritance against his coheirs x x x; and the same
person may intervene in proceedings for the distribution of
the estate of his deceased natural father, or mother x x x.
In neither of these situations has it been thought necessary
for the plaintiff to show a prior decree compelling
acknowledgment. The obvious reason is that in partition
suits and distribution proceedings the other persons who
might take by inheritance are before the court; and the
declaration of heirship is appropriate to such proceedings.
(Underscoring supplied)

Although the instant case deals with support rather


than inheritance, as in Tayag, the basis or rationale for
integrating them remains the same. Whether or not
respondent Martin is entitled to support depends completely
on the determination of filiation. A separate action will only

result in a multiplicity of suits, given how intimately related


the main issues in both cases are. To paraphrase Tayag, the
declaration of filiation is entirely appropriate to these
proceedings.

On the second issue, petitioner posits that DNA is not


recognized by this Court as a conclusive means of proving
paternity. He also contends that compulsory testing violates
his right to privacy and right against self-incrimination as
guaranteed under the 1987 Constitution. These contentions
have no merit.

Given that this is the very first time that the


admissibility of DNA testing as a means for determining
paternity has actually been the focal issue in a controversy,
a brief historical sketch of our past decisions featuring or
mentioning DNA testing is called for.

In the 1995 case of People v. Teehankee[21] where the


appellant was convicted of murder on the testimony of three
eyewitnesses, we stated as an obiter dictum that while
eyewitness identification is significant, it is not as accurate
and authoritative as the scientific forms of identification
evidence such as the fingerprint or the DNA test
result (emphasis supplied).

Our faith in DNA testing, however, was not quite so


steadfast in the previous decade. In Pe Lim v. Court of
Appeals,[22] promulgated in 1997, we cautioned against the
use of DNA because DNA, being a relatively new science,
(had) not as yet been accorded official recognition by our
courts. Paternity (would) still have to be resolved by such
conventional evidence as the relevant incriminating acts,
verbal and written, by the putative father.

In 2001, however, we opened the possibility of


admitting DNA as evidence of parentage, as enunciated
in Tijing v. Court of Appeals:[23]

A final note. Parentage will still be resolved using


conventional methods unless we adopt the modern and
scientific ways available. Fortunately, we have now the
facility and expertise in using DNA test for identification and
parentage testing. The University of the Philippines Natural
Science Research Institute (UP-NSRI) DNA Analysis
Laboratory has now the capability to conduct DNA typing
using short tandem repeat (STR) analysis. The analysis is
based on the fact that the DNA of a child/person has two
(2) copies, one copy from the mother and the other from
the father. The DNA from the mother, the alleged father and
child are analyzed to establish parentage. Of course, being a
novel scientific technique, the use of DNA test as evidence is
still open to challenge. Eventually, as the appropriate case
comes, courts should not hesitate to rule on the
admissibility of DNA evidence. For it was said, that courts

should apply the results of science when competently


obtained in aid of situations presented, since to reject said
result is to deny progress.

The first real breakthrough of DNA as admissible and


authoritative evidence in Philippine jurisprudence came in
2002 with our en banc decision in People v. Vallejo[24] where
the rape and murder victims DNA samples from the
bloodstained clothes of the accused were admitted in
evidence. We reasoned that the purpose of DNA testing
(was) to ascertain whether an association exist(ed) between
the evidence sample and the reference sample. The samples
collected (were) subjected to various chemical processes to
establish their profile.

A year later, in People v. Janson,[25] we acquitted the


accused charged with rape for lack of evidence because
doubts persist(ed) in our mind as to who (were) the real
malefactors. Yes, a complex offense (had) been perpetrated
but who (were) the perpetrators? How we wish we had DNA
or other scientific evidence to still our doubts!

In 2004, in Tecson, et al. v. COMELEC[26] where the


Court en banc was faced with the issue of filiation of then
presidential candidate Fernando Poe Jr., we stated:

In case proof of filiation or paternity would be unlikely to


satisfactorily establish or would be difficult to obtain, DNA
testing, which examines genetic codes obtained from body
cells of the illegitimate child and any physical residue of the
long dead parent could be resorted to. A positive match
would clear up filiation or paternity. In Tijing vs. Court of
Appeals, this Court has acknowledged the strong weight of
DNA testing

Moreover, in our en banc decision in People v. Yatar,


we affirmed the conviction of the accused for rape with
homicide, the principal evidence for which included DNA test
results. We did a lengthy discussion of DNA, the process of
DNA testing and the reasons for its admissibility in the
context of our own Rules of Evidence:
[27]

Deoxyribonucleic Acid, or DNA, is a molecule that encodes


the genetic information in all living organisms. A persons
DNA is the same in each cell and it does not change
throughout a persons lifetime; the DNA in a persons blood is
the same as the DNA found in his saliva, sweat, bone, the
root and shaft of hair, earwax, mucus, urine, skin tissue,
and vaginal and rectal cells. Most importantly, because of
polymorphisms in human genetic structure, no two
individuals have the same DNA, with the notable exception
of identical twins.
xxx xxx xxx

In assessing the probative value of DNA evidence, courts


should consider, inter alia, the following factors: how the
samples were collected, how they were handled, the
possibility of contamination of the samples, the procedure
followed in analyzing the samples, whether proper
standards and procedures were followed in conducting the
tests, and the qualification of the analyst who conducted the
tests.

In the case at bar, Dr. Maria Corazon Abogado de Ungria


was duly qualified by the prosecution as an expert witness
on DNA print or identification techniques. Based on Dr. de
Ungrias testimony, it was determined that the gene type
and DNA profile of appellant are identical to that of the
extracts subject of examination. The blood sample taken
from the appellant showed that he was of the following gene
types: vWA 15/19, TH01 7/8, DHFRP29/10 and CSF1PO
10/11, which are identical with semen taken from the
victims vaginal canal. Verily, a DNA match exists between
the semen found in the victim and the blood sample given
by the appellant in open court during the course of the trial.
Admittedly, we are just beginning to integrate these
advances in science and technology in the Philippine
criminal justice system, so we must be cautious as we
traverse these relatively uncharted waters. Fortunately, we
can benefit from the wealth of persuasive jurisprudence that
has developed in other jurisdictions. Specifically, the
prevailing doctrine in the U.S. has proven instructive.

In Daubert v. Merrell Dow (509 U.S. 579 (1993); 125 L. Ed.


2d 469) it was ruled that pertinent evidence based on
scientifically valid principles could be used as long as it was
relevant and reliable. Judges, under Daubert, were allowed
greater discretion over which testimony they would allow at
trial, including the introduction of new kinds of scientific
techniques. DNA typing is one such novel procedure.

Under Philippine law, evidence is relevant when it relates


directly to a fact in issue as to induce belief in its existence
or non-existence. Applying the Daubert test to the case at
bar, the DNA evidence obtained through PCR testing and
utilizing STR analysis, and which was appreciated by the
court a quo is relevant and reliable since it is reasonably
based on scientifically valid principles of human genetics
and molecular biology.

Significantly, we upheld the constitutionality of


compulsory DNA testing and the admissibility of the results
thereof as evidence. In that case, DNA samples from semen
recovered from a rape victims vagina were used to
positively identify the accused Joel Kawit Yatar as the rapist.
Yatar claimed that the compulsory extraction of his blood
sample for DNA testing, as well as the testing itself, violated
his right against self-incrimination, as embodied in both
Sections 12 and 17 of Article III of the Constitution. We
addressed this as follows:

The contention is untenable. The kernel of the right is not


against all compulsion, but against testimonial compulsion.
The right against self-incrimination is simply against the
legal process of extracting from the lips of the accused an
admission of guilt. It does not apply where the evidence
sought to be excluded is not an incrimination but as part of
object evidence.

Over the years, we have expressly excluded several


kinds of object evidence taken from the person of the
accused from the realm of self-incrimination. These include
photographs,[28]hair,[29] and other bodily substances.[30] We
have also declared as constitutional several procedures
performed on the accused such as pregnancy tests for
women accused of adultery,[31]expulsion of morphine from
ones mouth[32] and the tracing of ones foot to determine its
identity with bloody footprints.[33] In Jimenez v. Caizares,
[34]
we even authorized the examination of a womans
genitalia, in an action for annulment filed by her husband,
to verify his claim that she was impotent, her orifice being
too small for his penis. Some of these procedures were, to
be sure, rather invasive and involuntary, but all of them
were constitutionally sound. DNA testing and its results, per
our ruling in Yatar,[35] are now similarly acceptable.

Nor does petitioners invocation of his right to privacy


persuade us. In Ople v. Torres,[36] where we struck down
the proposed national computerized identification system
embodied in Administrative Order No. 308, we said:

In no uncertain terms, we also underscore that the right to


privacy does not bar all incursions into individual privacy.
The right is not intended to stifle scientific and technological
advancements that enhance public service and the common
good... Intrusions into the right must be accompanied by
proper safeguards that enhance public service and the
common good.

Historically, it has mostly been in the areas of legality of


searches and seizures,[37] and the infringement of privacy of
communication[38] where the constitutional right to privacy
has been critically at issue. Petitioners case involves neither
and, as already stated, his argument that his right against
self-incrimination is in jeopardy holds no water. His hollow
invocation of his constitutional rights elicits no sympathy
here for the simple reason that they are not in any way
being violated. If, in a criminal case, an accused whose very
life is at stake can be compelled to submit to DNA testing,
we see no reason why, in this civil case, petitioner herein
who does not face such dire consequences cannot be
ordered to do the same.
DNA paternity testing first came to prominence in the
United States, where it yielded its first official results
sometime in 1985. In the decade that followed, DNA rapidly
found widespread general acceptance.[39] Several cases
decided by various State Supreme Courts reflect the total
assimilation of DNA testing into their rules of procedure and
evidence.

The case of Wilson v. Lumb[40] shows that DNA testing is


so commonly accepted that, in some instances, ordering the
procedure has become a ministerial act. The Supreme Court
of St. Lawrence County, New York allowed a party who had
already acknowledged paternity to subsequently challenge
his prior acknowledgment. The Court pointed out that,
under the law, specifically Section 516 of the New York
Family Court Act, the Family Court examiner had the duty,
upon receipt of the challenge, to order DNA tests:[41]

516-a.
Acknowledgment
of
paternity.
(a)
An
acknowledgment of paternity executed pursuant to section
one hundred eleven-k of the social services law or section
four thousand one hundred thirty-five-b of the public health
law shall establish the paternity of and liability for the
support of a child pursuant to this act. Such
acknowledgment must be reduced to writing and filed
pursuant to section four thousand one hundred thirty-five-b
of the public health law with the registrar of the district in
which the birth occurred and in which the birth certificate
has been filed. No further judicial or administrative
proceedings are required to ratify an unchallenged
acknowledgment of paternity.

(b) An acknowledgment of paternity executed pursuant to


section one hundred eleven-k of the social services law or
section four thousand one hundred thirty-five-b of the public

health law may be rescinded by either signators filing of a


petition with the court to vacate the acknowledgment within
the earlier of sixty days of the date of signing the
acknowledgment or the date of an administrative or a
judicial proceeding (including a proceeding to establish a
support order) relating to the child in which either signator
is a party. For purposes of this section, the "date of an
administrative or a judicial proceeding" shall be the date by
which the respondent is required to answer the petition.
After the expiration of sixty days of the execution of the
acknowledgment, either signator may challenge the
acknowledgment of paternity in court only on the basis of
fraud, duress, or material mistake of fact, with the burden
of proof on the party challenging the voluntary
acknowledgment. Upon receiving a partys challenge to
an acknowledgment, the court shall order genetic
marker tests or DNA tests for the determination of
the childs paternity and shall make a finding of
paternity, if appropriate, in accordance with this
article. Neither signators legal obligations, including the
obligation
for
child
support
arising
from
the
acknowledgment, may be suspended during the challenge
to the acknowledgment except for good cause as the court
may find. If a party petitions to rescind an acknowledgment
and if the court determines that the alleged father is not the
father of the child, or if the court finds that an
acknowledgment is invalid because it was executed on the
basis of fraud, duress, or material mistake of fact, the court
shall vacate the acknowledgment of paternity and shall
immediately provide a copy of the order to the registrar of
the district in which the childs birth certificate is filed and
also to the putative father registry operated by the
department of social services pursuant to section three

hundred seventy-two-c of the social services law. In


addition, if the mother of the child who is the subject of the
acknowledgment is in receipt of child support services
pursuant to title six-A of article three of the social services
law, the court shall immediately provide a copy of the order
to the child support enforcement unit of the social services
district that provides the mother with such services.
(c) A determination of paternity made by any other state,
whether established through the parents acknowledgment
of paternity or through an administrative or judicial process,
must be accorded full faith and credit, if and only if such
acknowledgment meets the requirements set forth in
section 452(a)(7) of the social security act.
(emphasis supplied)

DNA testing also appears elsewhere in the New York


Family Court Act:[42]
532. Genetic marker and DNA tests; admissibility of records
or reports of test results; costs of tests.

a) The court shall advise the parties of their right to one or


more genetic marker tests or DNA tests and, on the courts
own motion or the motion of any party, shall order the
mother, her child and the alleged father to submit to one or
more genetic marker or DNA tests of a type generally
acknowledged as reliable by an accreditation body

designated by the secretary of the federal department of


health and human services and performed by a laboratory
approved by such an accreditation body and by the
commissioner of health or by a duly qualified physician to
aid in the determination of whether the alleged father is or
is not the father of the child. No such test shall be
ordered, however, upon a written finding by the court
that it is not in the best interests of the child on the
basis of res judicata, equitable estoppel, or the
presumption of legitimacy of a child born to a married
woman. The record or report of the results of any such
genetic marker or DNA test ordered pursuant to this section
or pursuant to section one hundred eleven-k of the social
services law shall be received in evidence by the court
pursuant to subdivision (e) of rule forty-five hundred
eighteen of the civil practice law and rules where no timely
objection in writing has been made thereto and that if such
timely objections are not made, they shall be deemed
waived and shall not be heard by the court. If the record
or report of the results of any such genetic marker
or DNAtest or tests indicate at least a ninety-five
percent probability of paternity, the admission of
such record or report shall create a rebuttable
presumption of paternity,and shall establish, if
unrebutted, the paternity of and liability for the
support of a child pursuant to this article and article
four of this act.

(b) Whenever the court directs a genetic marker or DNA


test pursuant to this section, a report made as provided in
subdivision (a) of this section may be received in evidence

pursuant to rule forty-five hundred eighteen of the civil


practice law and rules if offered by any party.

(c) The cost of any test ordered pursuant to subdivision (a)


of this section shall be, in the first instance, paid by the
moving party. If the moving party is financially unable to
pay such cost, the court may direct any qualified public
health officer to conduct such test, if practicable; otherwise,
the court may direct payment from the funds of the
appropriate local social services district. In its order of
disposition, however, the court may direct that the cost of
any such test be apportioned between the parties according
to their respective abilities to pay or be assessed against
the party who does not prevail on the issue of paternity,
unless such party is financially unable to pay. (emphasis
supplied)

In R.E. v. C.E.W.,[43] a decision of the Mississippi


Supreme Court, DNA tests were used to prove that H.W.,
previously thought to be an offspring of the marriage
between A.C.W. and C.E.W., was actually the child of R.E.
with whom C.E.W. had, at the time of conception,
maintained an adulterous relationship.

In Erie County Department of Social Services on behalf


of Tiffany M.H. v. Greg G.,[44] the 4th Department of the New
York Supreme Courts Appellate Division allowed G.G., who

had been adjudicated as T.M.H.s father by default, to have


the said judgment vacated, even after six years, once he
had shown through a genetic marker test that he was not
the childs father. In this case, G.G. only requested the tests
after the Department of Social Services, six years after G.G.
had been adjudicated as T.M.H.s father, sought an increase
in his support obligation to her.

In Greco v. Coleman,[45] the Michigan Supreme Court


while ruling on the constitutionality of a provision of law
allowing non-modifiable support agreements pointed out
that it was because of the difficulty of determining paternity
before the advent of DNA testing that such support
agreements were necessary:

As a result of DNA testing, the accuracy with which


paternity can be proven has increased significantly since the
parties in this lawsuit entered into their support
agreement(current testing methods can determine the
probability of paternity to 99.999999% accuracy). However,
at the time the parties before us entered into the disputed
agreement, proving paternity was a very significant obstacle
to an illegitimate child's access to child support. The first
reported results of modern DNA paternity testing did not
occur until 1985. ("In fact, since its first reported results in
1985, DNA matching has progressed to 'general acceptance
in less than a decade'"). Of course, while prior blood-testing
methods could exclude some males from being the possible
father of a child, those methods could not affirmatively

pinpoint a particular male as being the father. Thus, when


the settlement agreement between the present parties was
entered in 1980, establishing paternity was a far more
difficult ordeal than at present. Contested paternity actions
at that time were often no more than credibility contests.
Consequently, in every contested paternity action, obtaining
child support depended not merely on whether the putative
father was, in fact, the child's biological father, but rather on
whether the mother could prove to a court of law that she
was only sexually involved with one man--the putative
father. Allowing parties the option of entering into private
agreements in lieu of proving paternity eliminated the risk
that the mother would be unable meet her burden of proof.

(1) In a proceeding under this act before trial, the


court, upon application made by or on behalf of either
party, or on its own motion, shall order that the
mother, child, and alleged father submit to blood or
tissue typing determinations, which may include, but
are not limited to, determinations of red cell antigens,
red cell isoenzymes, human leukocyte antigens,
serum proteins, or DNA identification profiling, to
determine whether the alleged father is likely to be,
or is not, the father of the child. If the court orders a
blood or tissue typing or DNA identification profiling
to be conducted and a party refuses to submit to the
typing or DNA identification profiling, in addition to
any other remedies available, the court may do either
of the following:

It is worth noting that amendments to Michigans


Paternity law have included the use of DNA testing:[46]

(a) Enter a default judgment at the request of the


appropriate party.

722.716 Pretrial proceedings; blood or tissue typing


determinations as to mother, child, and alleged father; court
order; refusal to submit to typing or identification profiling;
qualifications of person conducting typing or identification
profiling; compensation of expert; result of typing or
identification profiling; filing summary report; objection;
admissibility; presumption; burden of proof; summary
disposition.

(b) If a trial is held, allow the disclosure of the fact of


the refusal unless good cause is shown for not
disclosing the fact of refusal.
(2) A blood or tissue typing or DNA identification profiling
shall be conducted by a person accredited for paternity
determinations by a nationally recognized scientific
organization, including, but not limited to, the American
association of blood banks.
xxx xxx xxx

Sec. 6.
(5) If the probability of paternity determined by the
qualified
person described
in subsection (2)

conducting
the
blood
or
tissue
typing
or DNA identification profiling is 99% or higher, and
the DNA identification profile and summary report are
admissible as provided in subsection (4), paternity is
presumed. If the results of the analysis of genetic
testing material from 2 or more persons indicate a
probability of paternity greater than 99%, the
contracting laboratory shall conduct additional
genetic paternity testing until all but 1 of the putative
fathers is eliminated, unless the dispute involves 2 or
more putative fathers who have identical DNA.

(6) Upon the establishment of the presumption of paternity


as provided in subsection (5), either party may move for
summary disposition under the court rules. this section does
not abrogate the right of either party to child support from
the date of birth of the child if applicable under section 7.
(emphasis supplied)

In Rafferty v. Perkins,[47] the Supreme Court of


Mississippi ruled that DNA test results showing paternity
were sufficient to overthrow the presumption of legitimacy
of a child born during the course of a marriage:
The presumption of legitimacy having been rebutted by the
results of the blood test eliminating Perkins as Justin's
father, even considering the evidence in the light most
favorable to Perkins, we find that no reasonable jury could
find that Easter is not Justin's father based upon the

99.94% probability of paternity concluded by the DNA


testing.
In S.J.F. and J.C.F. v. R.C.W.,[48] the North Dakota
Supreme Court upheld an order for genetic testing given by
the Court of Appeals, even after trial on the merits had
concluded without such order being given. Significantly,
when J.C.F., the mother, first filed the case for paternity and
support with the District Court, neither party requested
genetic testing. It was only upon appeal from dismissal of
the case that the appellate court remanded the case and
ordered the testing, which the North Dakota Supreme Court
upheld.

The case of Kohl v. Amundson,[49] decided by the


Supreme Court of South Dakota, demonstrated that even
default judgments of paternity could be vacated after the
adjudicated father had, through DNA testing, established
non-paternity. In this case, Kohl, having excluded himself as
the father of Amundsons child through DNA testing, was
able to have the default judgment against him vacated. He
then obtained a ruling ordering Amundson to reimburse him
for the amounts withheld from his wages for child support.
The Court said (w)hile Amundson may have a remedy
against the father of the child, she submit(ted) no authority
that require(d) Kohl to support her child. Contrary to
Amundson's position, the fact that a default judgment was
entered, but subsequently vacated, (did) not foreclose Kohl
from obtaining a money judgment for the amount withheld
from his wages.

In M.A.S. v. Mississippi Dept. of Human Services,


another case decided by the Supreme Court of
Mississippi, it was held that even if paternity was
established through an earlier agreed order of filiation, child
support and visitation orders could still be vacated once
DNA testing established someone other than the named
individual to be the biological father. The Mississippi High
Court reiterated this doctrine in Williams v. Williams.[51]
[50]

The foregoing considered, we find no grave abuse of


discretion on the part of the public respondent for upholding
the orders of the trial court which both denied the
petitioners motion to dismiss and ordered him to submit
himself for DNA testing. Under Rule 65 of the 1997 Rules of
Civil Procedure, the remedy of certiorari is only available
when any tribunal, board or officer has acted without or in
excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and
there is no appeal, nor any plain, speedy and adequate
remedy in the ordinary course of law.[52] In Land Bank of the
Philippines v. the Court of Appeals [53] where we dismissed a
special civil action for certiorari under Rule 65, we discussed
at length the nature of such a petition and just what was
meant by grave abuse of discretion:

Grave abuse of discretion implies such capricious and


whimsical exercise of judgment as is equivalent to lack of

jurisdiction or, in other words, where the power is


exercised in an arbitrary manner by reason of
passion, prejudice, or personal hostility, and it must
be so patent or gross as to amount to an evasion of a
positive duty or to a virtual refusal to perform the
duty enjoined or to act at all in contemplation of law.

The special civil action for certiorari is a remedy designed


for the correction of errors of jurisdiction and not errors of
judgment. The raison detre for the rule is when a court
exercises its jurisdiction, an error committed while so
engaged does not deprive it of the jurisdiction being
exercised when the error is committed. If it did, every error
committed by a court would deprive it of its jurisdiction and
every erroneous judgment would be a void judgment. In
such a scenario, the administration of justice would not
survive. Hence, where the issue or question involved affects
the wisdom or legal soundness of the decisionnot the
jurisdiction of the court to render said decisionthe same is
beyond the province of a special civil action for certiorari.
The proper recourse of the aggrieved party from a decision
of the CA is a petition for review on certiorari under Rule 45
of the Revised Rules of Court. On the other hand, if the
error subject of the recourse is one of jurisdiction, or the act
complained of was perpetrated by a quasi-judicial officer or
agency with grave abuse of discretion amounting to lack or
excess of jurisdiction, the proper remedy available to the
aggrieved party is a petition for certiorari under Rule 65 of
the said Rules. (emphasis supplied)

January 28, 2004 in CA-G.R. SP No. 80961 is hereby


AFFIRMED in toto.
In the instant case, the petitioner has in no way shown
any arbitrariness, passion, prejudice or personal hostility
that would amount to grave abuse of discretion on the part
of the Court of Appeals. The respondent court acted entirely
within its jurisdiction in promulgating its decision and
resolution, and any error made would have only been an
error in judgment. As we have discussed, however, the
decision of the respondent court, being firmly anchored in
law and jurisprudence, was correct.

Costs against petitioner.


FIRST DIVISION
[G.R. No. 148220. June 15, 2005]
ROSENDO
HERRERA, petitioner, vs.
ROSENDO
ALBA,
minor,
represented by his mother ARMI A. ALBA, and HON. NIMFA
CUESTA-VILCHES, Presiding Judge, Branch 48, Regional
Trial Court, Manila, respondents.

Epilogue

DECISION
CARPIO, J.:

For too long, illegitimate children have been


marginalized by fathers who choose to deny their existence.
The growing sophistication of DNA testing technology finally
provides a much needed equalizer for such ostracized and
abandoned progeny. We have long believed in the merits of
DNA testing and have repeatedly expressed as much in the
past. This case comes at a perfect time when DNA testing
has finally evolved into a dependable and authoritative form
of evidence gathering. We therefore take this opportunity to
forcefully reiterate our stand that DNA testing is a valid
means of determining paternity.

WHEREFORE, in view of the foregoing, the petition is


hereby DENIED. The Court of Appeals decision dated

The Case
This is a petition for review[1] to set aside the
Decision[2] dated 29 November 2000 of the Court of Appeals
(appellate court) in CA-G.R. SP No. 59766. The appellate
court affirmed two Orders[3] issued by Branch 48 of the
Regional Trial Court of Manila (trial court) in SP No. 9888759. The Order dated 3 February 2000 directed Rosendo
Herrera (petitioner) to submit to deoxyribonucleic acid
(DNA) paternity testing, while the Order dated 8 June 2000
denied petitioners motion for reconsideration.

The Facts

On 14 May 1998, then thirteen-year-old Rosendo Alba


(respondent), represented by his mother Armi Alba, filed
before the trial court a petition for compulsory recognition,
support and damages against petitioner. On 7 August 1998,
petitioner filed his answer with counterclaim where he
denied that he is the biological father of respondent.
Petitioner also denied physical contact with respondents
mother.

Respondent filed a motion to direct the taking of DNA


paternity testing to abbreviate the proceedings. To support
the motion, respondent presented the testimony of
Saturnina C. Halos, Ph.D. When she testified, Dr. Halos was
an Associate Professor at De La Salle University where she
taught Cell Biology. She was also head of the University of
the Philippines Natural Sciences Research Institute (UPNSRI), a DNA analysis laboratory. She was a former
professor at the University of the Philippines in Diliman,
Quezon City, where she developed the Molecular Biology
Program and taught Molecular Biology. In her testimony, Dr.
Halos described the process for DNA paternity testing and
asserted that the test had an accuracy rate of 99.9999% in
establishing paternity.[4]

Petitioner opposed DNA paternity testing and contended


that it has not gained acceptability. Petitioner further argued
that DNA paternity testing violates his right against selfincrimination.

The Ruling of the Trial Court


In an Order dated 3 February 2000, the trial court
granted respondents motion to conduct DNA paternity
testing on petitioner, respondent and Armi Alba. Thus:

In view of the foregoing, the motion of the petitioner


is GRANTED and the relevant individuals, namely: the
petitioner, the minor child, and respondent are
directed to undergo DNA paternity testing in a
laboratory of their common choice within a period of
thirty (30) days from receipt of the Order, and to
submit the results thereof within a period of ninety
(90) days from completion. The parties are further
reminded of the hearing set on 24 February 2000 for
the reception of other evidence in support of the
petition.
IT IS SO ORDERED.[5] (Emphasis in the original)

Petitioner filed a motion for reconsideration of the 3


February 2000 Order. He asserted that under the present
circumstances, the DNA test [he] is compelled to take would
be inconclusive, irrelevant and the coercive process to
obtain the requisite specimen, unconstitutional.

In an Order dated 8 June 2000, the trial court denied


petitioners motion for reconsideration.[6]

On 18 July 2000, petitioner filed before the appellate


court a petition for certiorari under Rule 65 of the 1997
Rules of Civil Procedure. He asserted that the trial court
rendered the Orders dated 3 February 2000 and 8 June
2000 in excess of, or without jurisdiction and/or with grave
abuse of discretion amounting to lack or excess of
jurisdiction. Petitioner further contended that there is no
appeal nor any [other] plain, adequate and speedy remedy
in the ordinary course of law. Petitioner maintained his
previous objections to the taking of DNA paternity testing.
He submitted the following grounds to support his
objection:
1. Public respondent misread and misapplied the
ruling in Lim vs. Court of Appeals (270 SCRA
2).
2. Public respondent ruled to accept DNA test
without considering the limitations on, and
conditions precedent for the admissibility of
DNA testing and ignoring the serious
constraints affecting the reliability of the test
as admitted by private respondents expert
witness.
3. Subject Orders lack legal and factual support,
with public respondent relying on scientific
findings and conclusions unfit for judicial

notice and unsupported by experts in the field


and scientific treatises.
4. Under the present circumstances the DNA
testing petitioner [is] compelled to take will
be inconclusive, irrelevant and the coercive
process to obtain the requisite specimen from
the petitioner, unconstitutional.[7]

The Ruling of the Court of Appeals


On 29 November 2000, the appellate court issued a
decision denying the petition and affirming the questioned
Orders of the trial court. The appellate court stated that
petitioner merely desires to correct the trial courts
evaluation of evidence. Thus, appeal is an available remedy
for an error of judgment that the court may commit in the
exercise of its jurisdiction. The appellate court also stated
that the proposed DNA paternity testing does not violate his
right against self-incrimination because the right applies
only to testimonial compulsion. Finally, the appellate court
pointed out that petitioner can still refute a possible adverse
result of the DNA paternity testing. The dispositive portion
of the appellate courts decision reads:
WHEREFORE, foregoing premises considered, the
Petition is hereby DENIED DUE COURSE, and ordered
dismissed, and the challenged orders of the Trial
Court AFFIRMED, with costs to Petitioner.
SO ORDERED.[8]

The petition has no merit.


Petitioner moved for reconsideration, which the
appellate court denied in its Resolution dated 23 May 2001.
[9]

Before discussing the issues on DNA paternity testing,


we deem it appropriate to give an overview of a paternity
suit and apply it to the facts of this case. We shall consider
the requirements of the Family Code and of the Rules of
Evidence to establish paternity and filiation.

Issues
Petitioner raises the issue of whether a DNA test is a
valid probative tool in this jurisdiction to determine filiation.
Petitioner asks for the conditions under which DNA
technology may be integrated into our judicial system and
the prerequisites for the admissibility of DNA test results in
a paternity suit.[10]

Petitioner further submits that the appellate court


gravely abused its discretion when it authorized the trial
court to embark in [sic] a new procedure xxx to determine
filiation despite the absence of legislation to ensure its
reliability and integrity, want of official recognition as made
clear in Lim vs. Court of Appeals and the presence of
technical and legal constraints in respect of [sic] its
implementation.[11] Petitioner maintains that the proposed
DNA paternity testing violates his right against selfincrimination.[12]

The Ruling of the Court

An Overview of the Paternity and Filiation Suit


Filiation proceedings are usually filed not just to
adjudicate paternity but also to secure a legal right
associated with paternity, such as citizenship,[13] support (as
in the present case), or inheritance. The burden of proving
paternity is on the person who alleges that the putative
father is the biological father of the child. There are four
significant procedural aspects of a traditional paternity
action which parties have to face: a prima facie case,
affirmative defenses, presumption of legitimacy, and
physical resemblance between the putative father and child.
[14]

A prima facie case exists if a woman declares that she


had sexual relations with the putative father. In our
jurisdiction, corroborative proof is required to carry the
burden forward and shift it to the putative father.[15]

There are two affirmative defenses available to the


putative father. The putative father may show incapability of
sexual relations with the mother, because of either physical
absence or impotency.[16] The putative father may also show
that the mother had sexual relations with other men at the
time of conception.

pictures. Petitioner, on the other hand, denied Armi Albas


assertion. He denied ever having sexual relations with Armi
Alba and stated that respondent is Armi Albas child with
another man. Armi Alba countered petitioners denial by
submitting pictures of respondent and petitioner side by
side, to show how much they resemble each other.

A child born to a husband and wife during a valid


marriage is presumed legitimate. [17] The childs legitimacy
may be impugned only under the strict standards provided
by law.[18]

Paternity and filiation disputes can easily become


credibility contests. We now look to the law, rules, and
governing jurisprudence to help us determine what evidence
of incriminating acts on paternity and filiation are allowed in
this jurisdiction.

Finally, physical resemblance between the putative


father and child may be offered as part of evidence of
paternity. Resemblance is a trial technique unique to a
paternity proceeding. However, although likeness is a
function of heredity, there is no mathematical formula that
could quantify how much a child must or must not look like
his biological father.[19] This kind of evidence appeals to the
emotions of the trier of fact.

Laws, Rules, and Jurisprudence


Establishing Filiation
The relevant provisions of the Family Code provide as
follows:
ART. 175. Illegitimate children may establish their
illegitimate filiation in the same way and on the same
evidence as legitimate children.

In the present case, the trial court encountered three of


the four aspects. Armi Alba, respondents mother, put
forward a prima facie case when she asserted that
petitioner is respondents biological father. Aware that her
assertion is not enough to convince the trial court, she
offered corroborative proof in the form of letters and

xxx
ART. 172. The filiation of legitimate children is
established by any of the following:

(1) The record of birth appearing in the civil


register or a final judgment; or
(2) An admission of legitimate filiation in a
public document or a private handwritten
instrument and signed by the parent
concerned.

In the absence of the foregoing evidence,


legitimate filiation shall be proved by:

the

(1) The open and continuous possession of


the status of a legitimate child; or

and the places where these facts occurred, and the


names of the relatives. It embraces also facts of
family history intimately connected with pedigree.

SEC. 40. Family reputation or tradition regarding


pedigree.The reputation or tradition existing in a
family previous to the controversy, in respect to the
pedigree of any one of its members, may be received
in evidence if the witness testifying thereon be also a
member of the family, either by consanguinity or
affinity. Entries in family bibles or other family books
or charts, engraving on rings, family portraits and the
like, may be received as evidence of pedigree.

(2) Any other means allowed by the Rules of


Court and special laws.

The Rules on Evidence include provisions on pedigree.


The relevant sections of Rule 130 provide:
SEC. 39. Act or declaration about pedigree.The act or
declaration of a person deceased, or unable to testify,
in respect to the pedigree of another person related
to him by birth or marriage, may be received in
evidence where it occurred before the controversy,
and the relationship between the two persons is
shown by evidence other than such act or declaration.
The word pedigree includes relationship, family
genealogy, birth, marriage, death, the dates when

This Courts rulings further specify what incriminating


acts are acceptable as evidence to establish filiation. In Pe
Lim v. CA,[20] a case petitioner often cites, we stated that
the issue of paternity still has to be resolved by such
conventional evidence as the relevant incriminating verbal
and written acts by the putative father. Under Article 278 of
the New Civil Code, voluntary recognition by a parent shall
be made in the record of birth, a will, a statement before a
court of record, or in any authentic writing. To be effective,
the claim of filiation must be made by the putative father
himself and the writing must be the writing of the putative
father.[21] A notarial agreement to support a child whose
filiation is admitted by the putative father was considered
acceptable evidence.[22] Letters to the mother vowing to be
a good father to the child and pictures of the putative father

cuddling the child on various occasions, together with the


certificate of live birth, proved filiation. [23] However, a
student permanent record, a written consent to a fathers
operation, or a marriage contract where the putative father
gave consent, cannot be taken as authentic writing.
[24]
Standing alone, neither a certificate of baptism [25] nor
family pictures[26] are sufficient to establish filiation.

So far, the laws, rules, and jurisprudence seemingly


limit evidence of paternity and filiation to incriminating acts
alone. However, advances in science show that sources of
evidence of paternity and filiation need not be limited to
incriminating acts. There is now almost universal scientific
agreement that blood grouping tests are conclusive on nonpaternity, although inconclusive on paternity.[27]

In Co Tao v. Court of Appeals,[28] the result of the


blood grouping test showed that the putative father was a
possible father of the child. Paternity was imputed to the
putative father after the possibility of paternity was proven
on presentation during trial of facts and circumstances other
than the results of the blood grouping test.
In Jao v. Court of Appeals,[29] the child, the mother,
and the putative father agreed to submit themselves to a
blood grouping test. The National Bureau of Investigation
(NBI) conducted the test, which indicated that the child
could not have been the possible offspring of the mother
and the putative father. We held that the result of the blood

grouping test was conclusive on the non-paternity of the


putative father.

The present case asks us to go one step further. We are


now asked whether DNA analysis may be admitted as
evidence to prove paternity.

DNA Analysis as Evidence


DNA is the fundamental building block of a persons
entire genetic make-up. DNA is found in all human cells and
is the same in every cell of the same person. Genetic
identity is unique. Hence, a persons DNA profile can
determine his identity.[30]

DNA analysis is a procedure in which DNA extracted


from a biological sample obtained from an individual is
examined. The DNA is processed to generate a pattern, or a
DNA profile, for the individual from whom the sample is
taken. This DNA profile is unique for each person, except for
identical twins.[31] We quote relevant portions of the trial
courts 3 February 2000 Order with approval:

Everyone is born with a distinct genetic blueprint


called DNA (deoxyribonucleic acid). It is exclusive to

an individual (except in the rare occurrence of


identical twins that share a single, fertilized egg), and
DNA is unchanging throughout life. Being a
component of every cell in the human body, the DNA
of an individuals blood is the very DNA in his or her
skin cells, hair follicles, muscles, semen, samples
from buccal swabs, saliva, or other body parts.
The chemical structure of DNA has four bases. They
are known as A (adenine), G (guanine), C (cystosine)
and T (thymine). The order in which the four bases
appear in an individuals DNA determines his or her
physical makeup. And since DNA is a double-stranded
molecule, it is composed of two specific paired
bases, A-T or T-A and G-C or C-G.
These
are
called genes.

Every gene has a certain number of the above base


pairs distributed in a particular sequence. This gives a
person his or her genetic code. Somewhere in the
DNA framework, nonetheless, are sections that differ.
They are known aspolymorphic loci, which are the
areas analyzed in DNA typing (profiling, tests,
fingerprinting,
or
analysis/DNA
fingerprinting/genetic tests or fingerprinting). In
other words, DNA typing simply means determining
the polymorphic loci.

How is DNA typing performed? From a DNA sample


obtained or extracted, a molecular biologist may
proceed to analyze it in several ways. There are five
(5) techniques to conduct DNA typing. They are:
the RFLP (restriction fragment length polymorphism);
reverse dot blot or HLA DQ a/Pm loci which was used
in 287 cases that were admitted as evidence by 37
courts in the U.S. as of November 1994; mtDNA
process; VNTR (variable number tandem repeats);
and the most recent which is known as the PCR([polymerase] chain reaction) based STR (short
tandem repeats) method which, as of 1996, was
availed of by most forensic laboratories in the world.
PCR is the process of replicating or copying DNA in an
evidence sample a million times through repeated
cycling of a reaction involving the so-called DNA
polymerize enzyme. STR, on the other hand, takes
measurements in 13 separate places and can match
two (2) samples with a reported theoretical error rate
of less than one (1) in a trillion.

Just
like
in
fingerprint
analysis,
in DNA
typing, matches are determined. To illustrate, when
DNA or fingerprint tests are done to identify a suspect
in a criminal case, the evidence collected from the
crime scene is compared with theknown print. If a
substantial amount of the identifying features are the
same, the DNA or fingerprint is deemed to be
a match. But then, even if only one feature of the DNA
or fingerprint is different, it is deemed not to have
come from the suspect.

As earlier stated, certain regions of human DNA show


variations between people. In each of these regions,
a
person
possesses
two
genetic
types
called allele, one inherited from each parent. In [a]
paternity test, the forensic scientist looks at a
number of these variable regions in an individual to
produce a DNA profile. Comparing next the DNA
profiles of the mother and child, it is possible to
determine which half of the childs DNA was inherited
from the mother. The other half must have been
inherited from the biological father. The alleged
fathers profile is then examined to ascertain whether
he has the DNA types in his profile, which match the
paternal types in the child. If the mans DNA types do
not match that of the child, the man is excluded as
the father. If the DNA types match, then he
is not excluded as the father.[32] (Emphasis in the
original)

Parentage will still be resolved using conventional


methods unless we adopt the modern and scientific
ways available. Fortunately, we have now the facility
and expertise in using DNA test for identification and
parentage testing. The University of the Philippines
Natural Science Research Institute (UP-NSRI) DNA
Analysis Laboratory has now the capability to conduct
DNA typing using short tandem repeat (STR) analysis.
xxx For it was said, that courts should apply the
results of science when completely obtained in aid of
situations presented, since to reject said result is to
deny progress. Though it is not necessary in this case
to resort to DNA testing, in [the] future it would be
useful to all concerned in the prompt resolution of
parentage and identity issues.
Admissibility of

DNA Analysis as Evidence


Although the term DNA testing was mentioned in the
1995 case of People v. Teehankee, Jr.,[33] it was only in
the 2001 case of Tijing v. Court of Appeals [34] that more
than a passing mention was given to DNA analysis.
In Tijing, we issued a writ of habeas corpus against
respondent who abducted petitioners youngest son.
Testimonial and documentary evidence and physical
resemblance were used to establish parentage. However, we
observed that:

The 2002 case of People v. Vallejo[35] discussed DNA


analysis as evidence. This may be considered a 180 degree
turn from the Courts wary attitude towards DNA testing in
the 1997Pe Lim case,[36] where we stated that DNA, being a
relatively new science, xxx has not yet been accorded
official recognition by our courts. In Vallejo, the DNA profile
from the vaginal swabs taken from the rape victim matched
the accuseds DNA profile. We affirmed the accuseds

conviction of rape with homicide and sentenced him to


death. We declared:

In assessing the probative value of DNA evidence,


therefore, courts should consider, among other
things, the following data: how the samples were
collected, how they were handled, the possibility of
contamination of the samples, the procedure followed
in analyzing the samples, whether the proper
standards
and
procedures
were
followed
in
conducting the tests, and the qualification of the
analyst who conducted the tests.[37]

Vallejo discussed the probative value, not admissibility,


of DNA evidence. By 2002, there was no longer any
question on the validity of the use of DNA analysis as
evidence. The Court moved from the issue of according
official recognition to DNA analysis as evidence to the issue
of observance of procedures in conducting DNA analysis.

In 2004, there were two other cases that had a


significant impact on jurisprudence on DNA testing: People
v. Yatar[38] and In re: The Writ of Habeas Corpus for
Reynaldo de Villa.[39]In Yatar, a match existed between
the DNA profile of the semen found in the victim and the
DNA profile of the blood sample given by appellant in open
court. The Court, following Vallejosfootsteps, affirmed the

conviction of appellant because the physical evidence,


corroborated by circumstantial evidence, showed appellant
guilty of rape with homicide. In De Villa, the convictpetitioner presented DNA test results to prove that he is not
the father of the child conceived at the time of commission
of the rape. The Court ruled that a difference between the
DNA profile of the convict-petitioner and the DNA profile of
the victims child does not preclude the convict-petitioners
commission of rape.

In the present case, the various pleadings filed by


petitioner and respondent refer to two United States cases
to support their respective positions on the admissibility
of DNA analysis as evidence: Frye v. U.S.[40] and Daubert
v. Merrell Dow Pharmaceuticals.[41] In Frye v. U.S., the
trial court convicted Frye of murder. Frye appealed his
conviction to the Supreme Court of the District of Columbia.
During trial, Fryes counsel offered an expert witness to
testify on the result of a systolic blood pressure deception
test[42] made on defendant. The state Supreme Court
affirmed Fryes conviction and ruled that the systolic blood
pressure deception test has not yet gained such standing
and scientific recognition among physiological and
psychological authorities as would justify the courts in
admitting expert testimony deduced from the discovery,
development,
and
experiments
thus
far
made.
The Frye standard of general acceptance states as follows:

Just when a scientific principle or discovery crosses


the line between the experimental and demonstrable
stages is difficult to define. Somewhere in this
twilight zone the evidential force of the principle must
be recognized, and while courts will go a long way in
admitting expert testimony deduced from a well
recognized scientific principle or discovery, the thing
from which the deduction is made must be sufficiently
established to have gained general acceptance in the
particular field in which it belongs.

In
1989, State
v.
[43]
Schwartz
modified the Frye standard.
Schwartz
was
charged with stabbing and murder. Bloodstained articles and
blood samples of the accused and the victim were submitted
for DNA testing to a government facility and a private
facility. The prosecution introduced the private testing
facilitys results over Schwartzs objection. One of the issues
brought before the state Supreme Court included the
admissibility of DNA test results in a criminal proceeding.
The state Supreme Court concluded that:

While we agree with the trial court that forensic DNA


typing has gained general acceptance in the scientific
community, we hold that admissibility of specific test
results in a particular case hinges on the laboratorys
compliance with appropriate standards and controls,
and the availability of their testing data and results.
[44]

In 1993, Daubert v. Merrell Dow Pharmaceuticals,


Inc.[45] further
modified
the FryeSchwartz standard. Daubert was a product liability case
where both the trial and appellate courts denied the
admissibility of an experts testimony because it failed to
meet the Frye standard of general acceptance. The United
States Supreme Court ruled that in federal trials, the
Federal
Rules
of
Evidence
have
superseded
the Frye standard. Rule 401 defines relevant evidence,
while Rule 402 provides the foundation for admissibility of
evidence. Thus:
Rule 401. Relevant evidence is defined as that which
has any tendency to make the existence of any fact
that is of consequence to the determination of the
action more probable or less probable than it would
be without the evidence.

Rule 402. All relevant evidence is admissible, except


as otherwise provided by the Constitution of the
United States, by Act of Congress, by these rules, or
by other rules prescribed by the Supreme Court
pursuant to statutory authority. Evidence which is not
relevant is not admissible.

Rule 702 of the Federal Rules of Evidence governing


expert testimony provides:

If scientific, technical, or other specialized knowledge


will assist the trier of fact to understand the evidence
or to determine a fact in issue, a witness qualified as
an expert by knowledge, skill, experience, training, or
education, may testify thereto in the form of an
opinion or otherwise.

Daubert cautions
that
departure
from
the Frye standard of general acceptance does not mean
that the Federal Rules do not place limits on the
admissibility of scientific evidence. Rather, the judge must
ensure that the testimonys reasoning or method is
scientifically valid and is relevant to the issue. Admissibility
would depend on factors such as (1) whether the theory or
technique can be or has been tested; (2) whether the
theory or technique has been subjected to peer review and
publication; (3) the known or potential rate of error; (4) the
existence and maintenance of standards controlling the
techniques operation; and (5) whether the theory or
technique is generally accepted in the scientific community.

Another product liability case, Kumho Tires Co. v.


Carmichael,[46] further modified the Daubert standard.
This led to the amendment of Rule 702 in 2000 and which
now reads as follows:

If scientific, technical or other specialized knowledge


will assist the trier of fact to understand the evidence
or to determine a fact in issue, a witness qualified as
an expert by knowledge, skill, experience, training, or
education, may testify thereto in the form of an
opinion or otherwise, if (1) the testimony is based
upon sufficient facts or data, (2) the testimony is the
product of reliable principles and methods, and (3)
the witness has applied the principles and methods
reliably to the facts of the case.

We now determine the applicability in this jurisdiction of


these American cases. Obviously, neither the FryeSchwartz standard nor the Daubert-Kumho standard is
controlling in the Philippines.[47] At best, American
jurisprudence merely has a persuasive effect on our
decisions. Here, evidence is admissible when it is relevant to
the fact in issue and is not otherwise excluded by statute or
the Rules of Court.[48] Evidence is relevant when it has such
a relation to the fact in issue as to induce belief in its
existence or non-existence.[49] Section 49 of Rule 130, which
governs the admissibility of expert testimony, provides as
follows:

The opinion of a witness on a matter requiring special


knowledge, skill, experience or training which he is
shown to possess may be received in evidence.

This Rule does not pose any legal obstacle to the


admissibility of DNA analysis as evidence. Indeed, even
evidence on collateral matters is allowed when it tends in
any reasonable degree to establish the probability or
improbability of the fact in issue.[50]

Indeed, it would have been convenient to merely refer


petitioner to our decisions in Tijing, Vallejo and Yatar to
illustrate that DNA analysis is admissible as evidence. In our
jurisdiction, the restrictive tests for admissibility established
by Frye-Schwartz and Daubert-Kumho go
into
the
weight of the evidence.

Probative Value of
DNA Analysis as Evidence
Despite our relatively liberal rules on admissibility, trial
courts should be cautious in giving credence to DNA analysis
as evidence. We reiterate our statement in Vallejo:

In assessing the probative value of DNA evidence,


therefore, courts should consider, among other
things, the following data: how the samples were
collected, how they were handled, the possibility of
contamination of the samples, the procedure followed
in analyzing the samples, whether the proper

standards
and
procedures
were
followed
in
conducting the tests, and the qualification of the
analyst who conducted the tests.[51]
We also repeat the trial courts explanation of DNA
analysis used in paternity cases:

In [a] paternity test, the forensic scientist looks at a


number of these variable regions in an individual to
produce a DNA profile. Comparing next the DNA
profiles of the mother and child, it is possible to
determine which half of the childs DNA was inherited
from the mother. The other half must have been
inherited from the biological father. The alleged
fathers profile is then examined to ascertain whether
he has the DNA types in his profile, which match the
paternal types in the child. If the mans DNA types do
not match that of the child, the man is excluded as
the father. If the DNA types match, then he
is not excluded as the father.[52]

It is not enough to state that the childs DNA profile matches


that of the putative father. A complete match between the
DNA profile of the child and the DNA profile of the putative
father does not necessarily establish paternity. For this
reason, following the highest standard adopted in an
American jurisdiction,[53] trial courts should require at least
99.9% as a minimum value of the Probability of Paternity
(W) prior to a paternity inclusion. W is a numerical estimate

for the likelihood of paternity of a putative father compared


to the probability of a random match of two unrelated
individuals. An appropriate reference population database,
such as the Philippine population database, is required to
compute for W. Due to the probabilistic nature of paternity
inclusions, W will never equal to 100%. However, the
accuracy of W estimates is higher when the putative father,
mother and child are subjected to DNA analysis compared
to those conducted between the putative father and child
alone.[54]

DNA analysis that excludes the putative father from


paternity should be conclusive proof of non-paternity. If the
value of W is less than 99.9%, the results of the DNA
analysis should be considered as corroborative evidence. If
the value of W is 99.9% or higher, then there
is refutable presumption of paternity.[55] This refutable
presumption of paternity should be subjected to
the Vallejo standards.

Right Against
Self-Incrimination
Section 17, Article 3 of the 1987 Constitution provides
that no person shall be compelled to be a witness against
himself. Petitioner asserts that obtaining samples from him
for DNA testing violates his right against self-incrimination.
Petitioner ignores our earlier pronouncements that the

privilege is applicable only to testimonial evidence. Again,


we quote relevant portions of the trial courts 3 February
2000 Order with approval:

Obtaining DNA samples from an accused in a criminal


case or from the respondent in a paternity case,
contrary to the belief of respondent in this action, will
not violate the right against self-incrimination. This
privilege
applies
only
to
evidence
that
is communicative in essence taken under duress
(People vs. Olvis, 154 SCRA 513, 1987). The Supreme
Court has ruled that the right against selfincrimination is just a prohibition on the use of
physical
or
moral
compulsion
to
extort
communication
(testimonial
evidence)
from
a
defendant, not an exclusion of evidence taken from
his body when it may be material. As such, a
defendant can be required to submit to a test to
extract virus from his body (as cited in People vs.
Olvis, Supra); the substance emitting from the body
of the accused was received as evidence for acts of
lasciviousness (US vs. Tan Teng, 23 Phil. 145);
morphine forced out of the mouth was received as
proof (US vs. Ong Siu Hong, 36 Phil. 735); an order by
the judge for the witness to put on pair of pants for
size was allowed (People vs. Otadora, 86 Phil. 244);
and the court can compel a woman accused of
adultery to submit for pregnancy test (Villaflor vs.
Summers, 41 Phil. 62), since the gist of the privilege
is the restriction on testimonial compulsion.[56]

The policy of the Family Code to liberalize the rule on


the investigation of the paternity and filiation of children,
especially of illegitimate children, is without prejudice to the
right of the putative parent to claim his or her own
defenses.[57] Where the evidence to aid this investigation is
obtainable through the facilities of modern science and
technology, such evidence should be considered subject to
the limits established by the law, rules, and jurisprudence.

WHEREFORE, we DISMISS the petition. We AFFIRM


the Decision of the Court of Appeals dated 29 November
2000 in CA-G.R. SP No. 59766. We also AFFIRM the Orders
dated 3 February 2000 and 8 June 2000 issued by Branch
48 of the Regional Trial Court of Manila in Civil Case No. SP98-88759.
SO ORDERED.

SECOND DIVISION
[G.R. No. 76519 : December 21, 1990.]
192 SCRA 575
TIMOTEO POJAS, Petitioner, vs. THE HONORABLE MERCEDES GOZODALOLE, REGIONAL TRIAL COURT JUDGE, CITY OF TAGBILARAN,
IRENEA POJAS, CESARIA LAGROSA and CORNELIA BETINOL,
Respondents.
PARAS, J.:

DECISION

In a petition for Certiorari and mandamus with preliminary


injunction, petitioner seeks the annulment of the July 15,
1986 Order of the Regional Trial Court of Tagbilaran, Branch
I, presided by herein respondent judge, denying the Notice
of Appeal in Civil Case No. 3430 for being filed out of time;
and the July 29, 1986 Order of the same court denying the
motion for reconsideration.
On March 26, 1981, private respondents filed with the
Regional Trial Court of Tagbilaran, Branch I, a complaint for
recovery of possession with writ of preliminary mandatory
injunction, against herein petitioner. The same was
amended several times until a Second Amended Complaint
dated July 12, 1981 was filed and admitted by the court in
its order, August 12, 1981 (Ibid., pp. 15-20). On August 20,
1981, petitioner filed his Answer to the second amended
complaint (Ibid., pp. 21-23).
Respondent judge, after trial, in her decision of March 1,
1986, ruled in favor of private respondents. The said
decision, among others, declared that private respondents
Irenea Pojas and Cesaria Logrosa, are the lawful owners of
parcel No. 1 a one-half portion of parcel No. 2 of the
questioned property, and ordered petitioner to vacate and
deliver the possession thereof to private respondent
Cornelia Betinol, being the vendee-a-retro of the same
(Ibid., p. 30). The said decision was received by petitioner's
counsel on April 15, 1986 (Ibid., p. 4).

Petitioner's motion for reconsideration (Ibid., pp. 35-37)


was denied in the Order of May 8, 1986 for failure to
mention the day the motion is to be resolved, which was
considered violative of Section 5, Rule 15 of the New Rules
of Court and therefore, a mere scrap of paper (Ibid., p. 38).
His second motion for reconsideration dated April 25, 1986
(Ibid., p. 39) was denied in respondent judge's order of
June 20, 1986 for lack of merit (Ibid., p. 86).
On July 2, 1986, Petitioner, after receipt of said order of
June 20, 1986, on July 1, 1986 (Ibid., p. 4) filed a Notice of
Appeal (Ibid., p. 42); but the same was denied in an order
dated July 15, 1986, for being filed out of time (Ibid., p. 9)
on the ground that the motion for reconsideration which the
Court ruled as pro-forma did not stop the running of the 15day period to appeal.
On July 22, 1986, petitioner filed a Motion for
Reconsideration of the July 15, 1986 order and a
supplemental pleading thereto (Ibid., pp. 12-13), but
respondent judge in her order July 29, 1986, denied the
same (Ibid., p. 14). Hence, the instant petition.
The sole issue in this case is whether or not the public
respondent judge acted in grave abuse of discretion
amounting to lack or in excess of jurisdiction in denying
petitioner's Notice of Appeal.
The answer is in the negative.
Section 4 of Rule 15 of the Rules of Court requires that not
of motion be served by the movant on all parties concerned
at least three (3) days before its hearing. Section 5 of the
same Rule provides that the notice shall be directed to the
parties concerned, and shall state the time and place for the
hearing of the motion. A motion which does not meet the
requirements of Sections 4 and 5 of Rule 15 of the Rules of

Court is considered a worthless piece of paper which the


clerk has no right to receive and the court has no authority
to act upon. Service of copy of a motion containing notice of
the time and place of hearing of said motion is a mandatory
requirement (Fecundo v. Berjame, G.R. 88015, December
18, 1989), and the failure of the movant to comply with said
requisites renders his motion fatally defective (New Japan
Motors, Inc. v. Perucho, 74 SCRA 14 [1974]; Filipinas
Fabricators & Sales, Inc. v. Magsino, 157 SCRA 469
[1988]).chanrobles virtual law library
Hence, petitioner's motion for reconsideration filed on April
23, 1986 which failed to mention the day the motion is
asked to be resolved, is a mere scrap of paper, being
violative of Section 5, Rule 15 of the Rules of Court (Rollo,
p. 38), and as such, did not stop the running of the period
of appeal. Without such notice, the motion is pro-forma,
and hence, does not suspend the running of the period of
appeal (Sembrano v. Ramirez, G.R. 45447, September 28,
1988).
Likewise
untenable
is
petitioner's
contention
that
respondent judge in refusing to entertain the April 25, 1986
Motion for Reconsideration for being violative of Section 5,
Rule 15 of the Rules of Court and later denying said motion
for lack of merit is now estopped from declaring the same
motion as pro-forma. As ruled by this Court, in the case of
Filipinas Fabricators & Sales, Inc. v. Magsino (157 SCRA
469, 475 [1988])
". . . , the fact that the court had taken cognizance of the
defective motion first, by requiring the parties to set it for
hearing and second, when it denied the same for lack of
merit in its omnibus motion, did not cure the defect nor
alter the nature of the defective motion . . ."
PREMISES CONSIDERED, the instant petition is DISMISSED
for lack of merit.

SO ORDERED.

THIRD DIVISION
ATTY. EDWARD ANTHONY A.M. No. P-12-3061
B. RAMOS, [Formerly OCA-IPI No. 08-3022-P]
Complainant,
Present:
VELASCO, JR., J., Chairperson,
- versus - PERALTA,

REYNALDO S. TEVES, Clerk of


Court III, Municipal Trial Court Promulgated:
in Cities, Branch 4, Cebu City,
Respondent. June 27, 2012

BERSAMIN,*
ABAD, and
PERLASBERNABE, JJ.

x -------------------------------------------------------------------------------- x
DECISION
ABAD, J.:

This case is about the clerk of courts discretion in refusing


to receive a pleading or motion that he believes has not complied
with the requirements of the rules.
The Facts and the Case
On August 15, 2008 Atty. Edward Anthony B. Ramos filed a
complaint for money in his clients behalf before the Municipal Trial
Court in Cities (MTCC) of Cebu City, Branch 4, in which complaint
he sought the ex parte issuance of a writ of preliminary
attachment.
Since the MTCC already served summons on the defendant
but did not yet act on his ex parte request for preliminary
attachment, Atty. Ramos went to Branch 4 on September 8, 2008
to personally file an urgent ex parte motion to resolve the pending
incident. But respondent Reynaldo S. Teves, the branch clerk of
court, refused to receive the motion for the reason that it did not
bear proof of service on the defendant. Atty. Ramos explained

that ex parte motions did not require such service. A heated


argument between Atty. Ramos and Teves ensued, prompting the
presiding judge who heard it to intervene and direct the clerk in
charge of civil cases to receive the ex parte motion.
On November 24, 2008 Atty. Ramos charged Teves before the
Office of the Court Administrator (OCA) with arrogance and
discourtesy in refusing to receive his motion despite his
explanation and a reading of Section 1, Rule 57 of the Rules of
Court and Justice Oscar Herreras commentary on the Rules of
Court relative to ex parte motions.
In his comment, Teves claimed that he was neither arrogant nor
discourteous and that his argument with Atty. Ramos had been
cordial and professional. Citing Rule 19 of the Rules of Court, Teves
asserted that he acted correctly in refusing to accept Atty. Ramos
non pro forma motion for failure to furnish the adverse party with
a copy of the notice of hearing. Teves claimed that he could not
just accept pro forma pleadings because these would burden the
court with having to decide matters based on a technicality,
resulting in delay and clogging of the dockets. Teves added that
while the clerk of court has the ministerial duty to receive
pleadings, he is not precluded from requiring the complainant to
furnish the adverse party with a copy especially his litigious motion
as prescribed under Rules 13 and 15.
The Court referred the case to Cebu City MTCC Executive Judge
Oscar D. Andrino for investigation, report and recommendation.
[1]
In his report, Judge Andrino found Teves arrogant, discourteous,
and rude in refusing to receive the motion and recommended the
imposition of one month and one day suspension on him with a
warning of a stiffer penalty in case of repetition of similar acts.
Issue Presented
The issue in this case is whether or not the branch clerk of
court may refuse to receive a pleading that does not conform with
the requirements of the Rules of Court.
Ruling of the Court
Clearly Teves erred in refusing to receive Atty. Ramos
motion on the ground that it did not bear proof of service on the
defendant. Unless specifically provided by the rules, clerks of court

have no authority to pass upon the substantive or formal


correctness of pleadings and motions that parties file with the
court. Compliance with the rules is the responsibility of the parties
and their counsels. And whether these conform to the rules
concerning substance and form is an issue that only the judge of
the court has authority to determine.
The duty of clerks of courts to receive pleadings, motions,
and other court-bound papers is purely ministerial. Although they
may on inspection advise the parties or their counsels of possible
defects in the documents they want to file, which may be regarded
as part of public service, they cannot upon insistence of the filing
party refuse to receive the same.
The charge against branch clerk of court Teves is that he
was arrogant and discourteous in refusing to receive Atty. Ramos
motion despite the latters explanation, as a lawyer, that a copy of
the same did not have to be served on the defendant. Actually,
neither Atty. Ramos nor Judge Andrino claims that Teves used foul
language. The latter just stubbornly stood his ground.
Still, Teves was discourteous. Canon IV, Section 2 of the
Code of Conduct for Court Personnel provides that court personnel
shall carry out their responsibilities as public servants in as
courteous a manner as possible. Atty. Ramos was counsel in a case
before Teves branch. He was an officer of the court who expressed
a desire to have the presiding judge, to whom he addressed his
motion, see and consider the same. Teves arrogated onto himself
the power to decide with finality that the presiding judge was not
to be bothered with that motion. He denied Atty. Ramos the
courtesy of letting the presiding judge decide the issue between
him and the lawyer.
As succinctly held in Macalua v. Tiu, Jr.,[2] an employee of
the judiciary is expected to accord respect for the person and right
of others at all times, and his every act and word should be
characterized by prudence, restraint, courtesy and dignity. These
are absent in this case.
Civil Service Resolution 99-1936 classifies discourtesy in
the course of official duties as a light offense, the penalty for which

is reprimand for the first offense, suspension of 1-30 days for the
second offense, and dismissal for the third offense.
The record shows that Teves had previously been
administratively charged with grave abuse of authority and gross
discourtesy in OCA-IPI 08-2981-P. Although the Court dismissed
the charge for lack of merit on November 18, 2009, it reminded
him to be more circumspect in dealing with litigants and their
counsel.
In two consolidated administrative cases, one for grave
misconduct and immorality and the other for insubordination, [3] the
Court meted out on Teves the penalty of suspension for six months
in its resolution of October 5, 2011. The Court of course decided
these cases and warned Teves to change his ways more than a
year after the September 8, 2008 incident with Atty.
Ramos. Consequently, it could not be said that he ignored with
respect to that incident the warnings given him in the
subsequently decided cases.

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 169135

June 18, 2010

JOSE DELOS REYES, Petitioner,


vs.
JOSEPHINE ANNE B. RAMNANI, Respondent.

Still those cases show Teves propensity for misbehavior.


ACCORDINGLY, the Court IMPOSES on Reynaldo S.
Teves, Branch Clerk of Court of Municipal Trial Court in
Cities, Cebu City,
the
penalty
of
30
days
suspension
with WARNING that a repetition of the same or a similar offense
will be dealt with more severely. The suspension is immediately
executory upon respondents receipt of this resolution.
SO ORDERED.

DECISION
DEL CASTILLO, J.:

A judgment debt is enforced by the levy and sale of the debtors


property.1 The issuance of the final certificate of sale to the
purchaser at the execution sale is a mere formality upon the
debtors failure to redeem the property within the redemption
period.

This Petition for Review on Certiorari seeks to reverse and set


aside the May 13, 2005 Decision 2 of the Court of Appeals (CA) in
CA-G.R. SP No. 87972, which affirmed the August 19, 2004 3 and
November 10, 20044 Orders of the Regional Trial Court (RTC) of
Pasig City, Branch 159 in Civil Case No. 24858. Also assailed is the

August 3, 2005
reconsideration.

Resolution5 denying

petitioners

motion

for

Court to issue the corresponding Final Certificate of Sale in the


above-entitled case in accordance with the rules immediately upon
receipt hereof.
SO ORDERED.6

Factual Antecedents
On October 11, 1977, the trial court rendered a Decision in Civil
Case No. 24858 in favor of respondent Josephine Anne B.
Ramnani. Thereafter, a writ of execution was issued by the trial
court. On June 6, 1978, then Branch Sheriff Pedro T. Alarcon
conducted a public bidding and auction sale over the property
covered by Transfer Certificate of Title (TCT) No. 480537 (subject
property) during which respondent was the highest bidder.
Consequently, a certificate of sale was executed in her favor on
even date. On November 17, 1978, a writ of possession was issued
by the trial court. On March 8, 1990, the certificate of sale was
annotated at the back of TCT No. 480537. Thereafter, the taxes
due on the sale of the subject property were paid on September
26, 2001.1avvphi1

The trial court ruled that the prescription for the issuance of a writ
of execution is not applicable in this case. Less than a year from
the October 11, 1977 Decision, respondent exercised her right to
enforce the same through the levy and sale of the subject property
on June 6, 1978. Although the certificate of sale was annotated on
TCT No. 480537 only on March 8, 1990, petitioner did not exercise
his right to redeem the subject property within one year from said
registration. Thus, what remains to be done is the issuance of the
final certificate of sale which was, however, not promptly
accomplished at that time due to the demise of the trial courts
sheriff. The issuance of the final certificate of sale is a ministerial
duty of the sheriff in order to complete the already enforced
judgment.

On February 17, 2004, respondent filed a motion (subject motion)


for the issuance of an order directing the sheriff to execute the
final certificate of sale in her favor. Petitioner opposed on the twin
grounds that the subject motion was not accompanied by a notice
of hearing and that the trial courts October 11, 1977 Decision can
no longer be executed as it is barred by prescription.

Petitioner moved for reconsideration which was denied by the trial


court in its November 10, 2004 Order. Petitioner thereafter sought
review via certiorari before the CA.

Ruling of the Regional Trial Court

Ruling of the Court of Appeals

In its August 19, 2004 Order, the trial court granted the motion:

The CA denied the petition in its assailed May 13, 2005 Decision:

WHEREFORE, premises considered, the motion is hereby


GRANTED; and this Court hereby directs the Branch Sheriff of this

WHEREFORE, premises considered, the petition is


hereby DENIED. The orders dated August 19, 2004 and November

10, 2004 of the RTC, Branch 159, Pasig City in Civil Case No.
24858 are hereby AFFIRMED.
SO ORDERED.7

In affirming the ruling of the trial court, the CA noted that the
subject motion is a non-litigious motion, hence, the three-day
notice rule does not apply. Further, it agreed with the trial court
that the issuance of the final certificate of sale is not barred by
prescription, laches or estoppel because the October 11, 1977
Decision was already executed through the levy and sale of the
subject property on June 6, 1978. Respondent is entitled to the
issuance of the final certificate of sale as a matter of right because
petitioner failed to redeem the subject property.

of sale is fatally defective because it does not contain a notice of


hearing. He further claims that the subject motion seeks to enforce
the trial courts October 11, 1977 Decision which can no longer be
done because 27 years have elapsed from the finality of said
Decision.

Respondents Arguments
Respondent contends that the subject motion is a non-litigious
motion and that petitioner was not denied due process because he
was given an opportunity to be heard by the trial court. She also
points out that said motion is not barred by prescription, laches
and estoppel considering that the levy and sale of the subject
property was conducted on June 6, 1978 and petitioner failed to
redeem the same.

Issues
Our Ruling
1. Whether the trial court acted with grave abuse of
discretion amounting to lack or excess of jurisdiction in
taking cognizance of the fatally defective motion and the
subsequent issuance of the Orders dated August 19, 2004
and November 10, 2004;
2. Whether respondent is barred by prescription, laches or
estoppel.8

Petitioners Arguments
Petitioner contends that the motion dated February 16, 2004 filed
by respondent to compel the sheriff to execute the final certificate

The petition lacks merit.

Respondent is entitled to the issuance of the final certificate of


sale as a matter of right.

Petitioner, in essence, argues that the October 11, 1977 Decision


was not timely executed because of respondents failure to secure
the final certificate of sale within 10 years from the entry of said
judgment. This is erroneous. It is not disputed that shortly after
the trial court rendered the aforesaid judgment, respondent moved

for execution which was granted by the trial court. On June 6,


1978, the subject property was sold on execution sale. Respondent
emerged as the highest bidder, thus, a certificate of sale was
executed by the sheriff in her favor on the same day. As correctly
held by the trial court, the October 11, 1977 Decision was already
enforced when the subject property was levied and sold on June 6,
1978 which is within the five-year period for the execution of a
judgment by motion under Section 6, 9 Rule 39 of the Rules of
Court.

It is, likewise, not disputed that petitioner failed to redeem the


subject property within one year from the annotation of the
certificate of sale on TCT No. 480537. The expiration of the oneyear redemption period foreclosed petitioners right to redeem the
subject property and the sale thereby became absolute. The
issuance thereafter of a final certificate of sale is a mere formality
and confirmation of the title that is already vested in
respondent.10 Thus, the trial court properly granted the motion for
issuance of the final certificate of sale.

As to petitioners claim that the subject motion is defective for lack


of a notice of hearing, the CA correctly ruled that the subject
motion is a non-litigious motion. While, as a general rule, all
written motions should be set for hearing under Section 4, 11 Rule
15 of the Rules of Court, excepted from this rule are non-litigious
motions or motions which may be acted upon by the court without
prejudicing the rights of the adverse party.12 As already discussed,
respondent is entitled to the issuance of the final certificate of sale
as a matter of right and petitioner is powerless to oppose the
same.13 Hence, the subject motion falls under the class of nonlitigious motions. At any rate, the trial court gave petitioner an
opportunity to oppose the subject motion as in fact he filed a
Comment/ Opposition14 on March 1, 2004 before the trial court.
Petitioner cannot, therefore, validly claim that he was denied his
day in court.

WHEREFORE, the petition is DENIED. The May 13, 2005 Decision


and August 3, 2005 Resolution of the Court of Appeals in CA-G.R.
SP No. 87972 are AFFIRMED.
Costs against petitioner.