[G.R. No. 132577.

August 17, 1999]

PEOPLE OF THE PHILIPPINES, petitioner, vs. HUBERT JEFFREY P. WEBB, respondent.
DECISION
YNARES-SANTIAGO, J.:
Challenged in this petition for review on certiorari is the Decision of the Court of Appeals in CA-G.R. SP No. 45399
entitled Hubert Jeffrey P. Webb v. Hon. Amelita Tolentino, in her capacity as Presiding Judge of Branch 274 of the
Regional Trial Court of Paraaque, People of the Philippines and Lauro Vizconde which set aside the order of respondent
judge therein denying herein respondent Hubert Jeffrey P. Webbs request to take the depositions of five (5) citizens and
residents of the United States before the proper consular officer of the Philippines in Washington D.C. and California, as
the case may be.
The factual and procedural antecedents are matters of record or are otherwise uncontroverted.
Respondent Hubert Jeffrey P. Webb is one of the accused in Criminal Case No. 95-404 for Rape with Homicide
entitled People of the Philippines v. Hubert Jeffrey P. Webb, et al. presently pending before Branch 274 of the Regional
Trial Court of Paraaque, presided by Judge Amelita G. Tolentino.
During the course of the proceedings in the trial court, respondent filed on May 2, 1997, a Motion To Take
Testimony By Oral Deposition[1] praying that he be allowed to take the testimonies of the following:
1.] Steven Bucher
Acting Chief, Records Services Branch
U.S. Department of Justice
Immigration and Naturalization Service
425 Eye Street, N.W.
Washington D.C. 20536
U.S.A.
2.] Debora Farmer
Records Operations, Office of Records
U.S. Department of Justice
Immigration and Naturalization Service
Washington D.C.
U.S.A.
3.] Jaci Alston
Department of Motor Vehicles
Sacramento, California
U.S.A.
4.] Ami Smalley
Department of Motor Vehicles
Sacramento, California
U.S.A.
5.] John Pavlisin
210 South Glasell, City of Orange
California, 92666
U.S.A.
before the general consul, consul, vice-consul or consular agent of the Philippines in lieu of presenting them as witnesses
in court alleging that the said persons are all residents of the United States and may not therefore be compelled by
subpoena to testify since the court had no jurisdiction over them.
Respondent further alleged that the taking of the oral depositions of the aforementioned individuals whose
testimonies are allegedly material and indispensable to establish his innocence of the crime charged is sanctioned by
Section 4, Rule 24 of the Revised Rules of Court which provides that:
SEC. 4. Use of depositions. At the trial or upon the hearing of a motion or an interlocutory proceeding, any part or all of
a deposition, so far as admissible under the rules of evidence, may be used against any party who was present or
represented at the taking of the deposition or who had due notice thereof, in accordance with any one of the following
provisions:
(a) Any deposition may be used by any party for the purpose of contradicting or impeaching the testimony of the deponent
as a witness;
(b) The deposition of a party or of any one who at the time of taking the deposition was an officer, director, or managing
agent of a public or private corporation, partnership, or association which is a party may be used by an adverse party for
any purpose;
(c) The deposition of a witness whether or not a party, may be used by any party for any purpose if the court finds: (1)
that the witness is dead; (2) that the witness is out of the province and a greater distance than fifty (50) kilometers from
the place of trial or hearing, or is out of the Philippines, unless it appears that his absence was procured by the party
offering the deposition; or (3) that the witness is unable to attend or testify because of age, sickness, infirmity, or
imprisonment; or (4) that the party offering the deposition has been unable to procure the attendance of the witness by
subpoena or (5) upon application and notice, that such exceptional circumstances exist as to make it desirable in the
interest of justice and with due regard to the importance of presenting the testimony of witnesses orally in open court, to
allow the deposition to be used;
(d) If only part of a deposition is offered in evidence by a party, the adverse party may require him to introduce all of it
which is relevant to the part introduced and any party may introduce any other parts. (italics supplied).
The prosecution thereafter filed an opposition to the said motion averring that: 1.] Rule 24, Section 4 of the Rules of
Court, contrary to the representation of respondent-accused, has no application in criminal cases; 2.] Rule 119, Section 4
of the Rules of Court on Criminal Procedure, being a mode of discovery, only provides for conditional examination of
witnesses for the accused before trial not during trial; 3.] Rule 119, Section 5 of the Rules of Court on Criminal Procedure
does not sanction the conditional examination of witnesses for the accused/defense outside Philippine jurisdiction. [2]
In an Order dated June 11, 1997, the trial court denied the motion of respondent on the ground that the same is not
allowed by Section 4, Rule 24 and Sections 4 and 5 of Rule 119 of the Revised Rules of Court.[3]
A motion for reconsideration[4] thereto on the grounds that: 1.] The 1997 Rules of Court expressly allows the taking
of depositions, and 2.] Section 11 of Rule 23 of the 1997 Rules of Court expressly allows the taking of depositions in
foreign countries before a consul general, consul, vice-consul or consular agent of the Republic of the Philippines, was
likewise denied by the trial court in an order dated July 25, 1997.[5]
Dissatisfied, respondent elevated his cause to the Court of Appeals by way of a petition for certiorari[6] naming as
respondents therein the Presiding Judge Amelita G. Tolentino, the People and private complainant Lauro Vizconde. In the
petition, docketed as CA-G.R. SP No. 45399, respondent Webb argued that: 1.] The taking of depositions pending action
is applicable to criminal proceedings; 2.] Depositions by oral testimony in a foreign country can be taken before a
consular officer of the Philippine Embassy in the United States; and, 3.] He has the right to completely and fully present
evidence to support his defense and the denial of such right will violate his constitutional right to due process.
Commenting[7] on the petition, the People contended that the questioned orders of the Presiding Judge are well within
the sphere of her judicial discretion and do not constitute grave abuse of discretion amounting to lack or excess of
jurisdiction and that if at all, they may be considered merely as errors of judgment which may be corrected by appeal in
due time because: a.] The motion failed to comply with the requirements of Section 4, Rule 119 of the Rules of Court; b.]
The conditional examination must be conducted before an inferior court; and c.] The examination of the witnesses must be
done in open court.
In his Comment,[8] private respondent Lauro Vizconde sought the dismissal of the petition contending that:
1.] The public respondent did not commit grave abuse of discretion in denying petitioner [now herein
respondent] Webbs motion to take testimony by oral deposition dated 29 April 1997 as well as petitioners
motion for reconsideration dated 23 June 1997 for not being sanctioned by the Rules of Court.
a.] The public respondent correctly held that Rule 23, Section 1 of the 1997 Revised Rules of Civil
Procedure finds no application in criminal actions such as the case at bar.
b.] The public respondent correctly ruled that Rule 119, Section 4 of the Rules of Criminal Procedure
only provides for conditional examination of witnesses before trial but not during trial.
c.] The public respondent correctly ruled that Rule 119 of the Rules on Criminal Procedure does not
sanction the conditional examination of witnesses for the accused/defense outside of Philippine jurisdiction.
2.] The public respondent did not commit any grave abuse of discretion in denying petitioner Webbs motion to
take testimony by oral deposition considering that the proposed deposition tends only to further establish the
admissibility of documentary exhibits already admitted in evidence by the public respondent.
On February 6, 1998, the Fourth Division[9] of the Court of Appeals rendered judgment,[10] the dispositive portion of
which reads:
WHEREFORE, the petition is GRANTED. The orders of respondent judge dated 11 June 1997 (Annex A of the Petition)
and 25 July 1997 (Annex B of the Petition) are hereby ANNULLED and SET ASIDE. It is hereby ordered that the
deposition of the following witnesses be TAKEN before the proper consular officer of the Republic of the Philippines in
Washington D.C. and California, as the case may be:
(a) Mr. Steven Bucher;
(b) Ms. Deborah Farmer;
 (c) Mr. Jaci Alston;
(d) Ms. Ami Smalley; and
(e) Mr. John Pavlisin.
SO ORDERED.
From the foregoing, the People forthwith elevated its cause to this Court by way of the instant petition dispensing
with the filing of a motion for reconsideration for the following reasons: 1.] The rule that the petitioner should first file a
motion for reconsideration applies to the special civil action of certiorari under Rule 65 of the 1997 Rules of Civil
Procedure and there is no similar requirement in taking an appeal from a final judgment or order [11] such as the present
appeal by certiorari; 2.] Section 4, Rule 45 in requiring a petition for review on certiorari which indicates that when a
motion for new trial or reconsideration, if any, was filed implies that petitioner need not file a motion for reconsideration;
3.] The questions being raised before the Court are the same as those which were squarely raised before the Court of
Appeals;[12] 4.] The issues being raised here are purely legal;[13] 5.] There is an urgent need to resolve the issues
considering that the trial of the accused in the criminal case is about to end; and, 6.] The nature of this case requires a
speedy and prompt disposition of the issues involved.[14]
What are challenged before this Court are interlocutory orders and not a final judgment. The respondent has filed his
Comment[15] which We treat as an Answer. The petitioner, in turn, filed a Reply.[16]The petition is ripe for decision.
In urging this Tribunal to exercise its power of review over the assailed decision of the Appellate Court, petitioner
asserts that the Court of Appeals committed serious and reversible error
I
IN RULING THAT RULE 23 OF THE 1997 RULES OF CIVIL PROCEDURE IS APPLICABLE TO CRIMINAL
PROCEEDINGS.
II
IN RULING THAT THE DEPOSITION MAY BE TAKEN BEFORE A CONSULAR OFFICER OF THE PHILIPPINES
WHERE THE PROSPECTIVE WITNESSES RESIDE OR ARE OFFICIALLY STATIONED.
III
IN RULING THAT RESPONDENT WAS DEPRIVED OF DUE PROCESS OF LAW BY THE TRIAL COURT.
which can be reduced to the primordial issue of whether or not the trial judge gravely abused her discretion in denying the
motion to take testimony by oral depositions in the United States which would be used in the criminal case before her
Court.
In setting aside the order of the trial judge, the Appellate Courts Fourth Division reasoned, inter alia, thus:
Settled is the rule that the whole purpose and object of procedure is to make the powers of the court fully and completely
available for justice. Thus, as the Supreme Court has ruled in Manila Railroad Co. vs. Attorney General and reiterated in
subsequent cases:
x x x The most perfect procedure that can be devised is that which give the opportunity for the most complete and perfect
exercise of the powers of the court within the limitations set by natural justice. It is that one which, in other words, gives
the most perfect opportunity for the powers of the court to transmute themselves into concrete acts of justice between the
parties before it. The purpose of such a procedure is not to restrict the jurisdiction of the court over the subject matter, but
to give it effective facility in righteous action. It may be said in passing that the most salient objection which can be urged
against procedure today is that it so restricts the exercise of the courts powers by technicalities that part of its authority
effective for justice between the parties is many times an inconsiderable portion of the whole. The purpose of procedure is
not to thwart justice. Its proper aim is to facilitate the application of justice to the rival claims of the 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 the courts are always striving to secure the litigants. It is designed as the means best adapted to obtain
that thing.In other words, it is a means to an end. It is the means by which the powers of the court are made effective in
just judgments. When it loses the character of the one and takes on the other [,] the administration of justice becomes
incomplete and unsatisfactory and lays itself open to grave criticism.[17]
In the light of the foregoing judicial precedent, this Court finds that the public respondent gravely abused her discretion
in denying the motion to take the deposition of the witnesses for petitioner. While petitioner had invoked Rule 23, Section
1 of the Rules of Court, which is found under the general classification of Civil Procedure, it does not prevent its
application to the other proceedings, provided the same is not contrary to the specific rules provided therein. Indeed, the
Rules of Court is to be viewed and construed as a whole, and if the Supreme Court had compartmentalized the same into
four divisions, it was, as petitioner had claimed, for the purpose of organization and expediency and not, for exclusivity.
To be sure, a reading of the rules on criminal procedure, specifically Section 4, Rule 119 vis--vis Section 1, Rule 23 would
reveal no inconsistency so as to exclude the application of the latter rule in criminal proceedings. Section 4, Rule 119
refers to the conditional examination of witnesses for the accused before trial, while Section 1, Rule 23 refers to the
taking of deposition witnesses during trial. x x x
xxxxxxxxx
While the taking of depositions pending trial is not expressly provided [for] under the Rules on Criminal Procedure, we
find no reason for public respondent to disallow the taking of the same in the manner provided for under Section 1 of Rule
23 under the circumstances of the case. To disallow petitioner to avail of the specific remedies provided under the Rules
would deny him the opportunity to adequately defend himself against the criminal charge of rape with homicide now
pending before the public respondent and, further, [it] loses sight of the object of procedure which is to facilitate the
application of justice to the rival claims of contending parties.
xxxxxxxxx
Even granting arguendo that Rule 23 is to be exclusively applied to civil actions, the taking of the deposition of petitioners
US-based witnesses should be still allowed considering that the civil action has been impliedly instituted in the criminal
action for rape with homicide. Since public respondent has jurisdiction over the civil case to recover damages, she
exercised full authority to employ all auxillary writs, processes and other means to carry out the jurisdiction conferred
and [to] adopt any suitable process or mode of proceeding which includes the application of the rule on depositions
pending action under Rule 23 in the case pending before her.
Second. Depositions obtained during trial in a foreign state or country may be taken before a consular officer of the
Republic of the Philippines where the deponent resides or is officially stationed.[18] Section 5, Rule 119 of the Rules of
Court is thus clearly inapplicable in the instant case since the same relates to the examination of witnesses under Section
4 thereof and not Section 1 of Rule 23. Consistent with the procedure provided [for] under Rule 23, the deposition of the
petitioners witnesses, which include four (4) officials of the United States government, will be taken before a consular
officer of the Philippines where these witnesses reside or are officially stationed, as the case may be.
The denial of petitioners right to present his witnesses, who are residing abroad, based on a very shaky technical ground,
is tantamount to depriving him of his constitutional right to due process. This Court recognizes the impossibility of
enforcing the right of petitioner to secure the attendance of the proposed witnesses through compulsory process
considering that they are beyond the jurisdiction of Philippine Courts. Petitioner, however, is not without any remedy and
he correctly sought to secure the testimonies of his witnesses through the process of taking their depositions pending the
trial of Criminal Case No. 95-404 in the court below under Rule 23 of the Rules of Court. In any event, the prosecution
would have the opportunity to cross-examine the witnesses for accused Hubert Webb (petitioner herein) since they will be
given the opportunity to cross-examine the deponents as in accordance with Sections 3 to 18 of Rule 132.[19]
Furthermore, no prejudice would be suffered in the taking of the depositions of petitioners US-based witness[es]. On the
other hand, a denial of the same would be prejudicial to petitioner-accused since he would be denied an opportunity to
completely present his evidence, which strikes at the very core of the due process guarantee of the Constitution. To
reiterate, it is not the function of this Court to second-guess the trial court on its ruling on the admissibility of the pieces
of documentary evidence as well as the latters witnesses,[20] but it is definitely within this courts inherent power to
scrutinize, as it does in the case at bench, the acts of respondent judge and declare that she indeed committed grave abuse
of discretion in issuing the questioned Orders.
In the final analysis, this Court rules that the denial of the deposition-taking amounts to the denial of the constitutional
right to present his evidence and for the production of evidence in his behalf. The denial is not justified by the flimsy
reason that Sec. 1 of Rule 23 of the Rules of Court is not applicable to criminal proceedings. To rule that petitioner
cannot take the testimony of these witnesses by deposition is to put [a] premium on technicality at the expense of the
constitutional rights of the accused, which this court is not inclined to do. Particularly where the issue of the guilt or
innocence of petitioner is bound to hinge heavily upon the testimonies of his US-based witnesses, it behooves upon public
respondent not only to guarantee that accused is given a reasonable opportunity to present his evidence, but also to allow
him a certain latitude in the presentation of his evidence, lest he may be so hampered that the ends of justice may
eventually be defeated or appear to be defeated. Finally, even if respondents contention is correct, it cannot be denied
that the case at bar includes the recovery of the civil liability of the accused, which normally is done through a civil case.
We disagree.
As defined, a deposition is -
"The testimony of a witness taken upon oral question or written interrogatories, not in open court, but in pursuance of a
commission to take testimony issued by a court, or under a general law or court rule on the subject, and reduced to writing
and duly authenticated, and intended to be used in preparation and upon the trial of a civil or criminal
prosecution. A pretrial discovery device by which one party (through his or her attorney) asks oral questions of the other
party or of a witness for the other party. The person who is deposed is called the deponent. The deposition is conducted
under oath outside of the court room, usually in one of the lawyers offices. A transcript - word for word account - is made
of the deposition. Testimony of [a] witness, taken in writing, under oath or affirmation, before some judicial officer in
answer to questions or interrogatories x x x.[21]
and the purposes of taking depositions are to: 1.] Give greater assistance to the parties in ascertaining the truth and in
checking and preventing perjury; 2.] Provide an effective means of detecting and exposing false, fraudulent claims and
defenses; 3.] Make available in a simple, convenient and inexpensive way, facts which otherwise could not be proved
except with great difficulty; 4.] Educate the parties in advance of trial as to the real value of their claims and defenses
thereby encouraging settlements; 5.]Expedite litigation; 6.] Safeguard against surprise; 7.] Prevent delay; 8.] Simplify
and narrow the issues; and 9.] Expedite and facilitate both preparation and trial.[22] As can be gleaned from the foregoing,
a deposition, in keeping with its nature as a mode of discovery, should be taken before and not during trial.In fact, rules on
criminal practice - particularly on the defense of alibi, which is respondents main defense in the criminal proceedings
against him in the court below - states that when a person intends to rely on such a defense, that person must move for the
taking of the deposition of his witnesses within the time provided for filing a pre-trial motion.[23]
It needs to be stressed that the only reason of respondent for seeking the deposition of the foreign witnesses is to
foreclose any objection and/or rejection of, as the case may be, the admissibility of Defense Exhibits 218 and 219. This
issue has, however, long been rendered moot and academic by the admission of the aforementioned documentary exhibits
by the trial court in its order dated July 10, 1998.[24]
In fact, a circumspect scrutiny of the record discloses that the evidence to be obtained through the deposition-taking
would be superfluous or corroborative at best. A careful examination of Exhibits 218 and 219 readily shows that these are
of the same species of documents which have been previously introduced and admitted into evidence by the trial court in
its order dated July 18, 1997 which We noted in Webb, et al. v. People of the Philippines, et al.[25] wherein We pointed
out, among others, [t]hat respondent judge reversed this erroneous ruling and already admitted these 132 pieces of
evidence after finding that the defects in (their) admissibility have been cured though the introduction of additional
evidence during the trial on the merits.[26]
Indeed, a comparison of Exhibit 218-A which is a U.S. Department of State Certification issued by Joan C. Hampton,
Assistant Authenticating Officer of the said agency, for and in the name of Madeleine K. Albright, stating that the
documents annexed thereto were issued by the U.S. Department of Justice as shown by seal embossed thereon,[27] with
other exhibits previously offered as evidence reveals that they are of the same nature as Exhibits 42-H[28] and 42-
M.[29] The only difference in the documents lies in the fact that Exhibit 218-A was signed by Joan C. Hampton for and in
behalf of the incumbent Secretary of State, Madeleine K. Albright whereas, Exhibits 42-H and 42-M were signed by
Authenticating Officer Annie R. Maddux for and in behalf of former Secretary of State Warren Christopher.[30]
A comparison of Exhibit 218-B[31] with the other documentary exhibits offered by respondent, likewise discloses that
its contents are the same as Exhibits 42-I[32] and 42-N.[33] The only difference in the three exhibits, which are actually
standard issue certification forms issued by the U.S. Department of Justice with blanks to be filled up, is that Exhibit 218-
B is dated February 5, 1997 and signed by one of the U.S. Attorney Generals several Deputy Assistant Attorneys for
Administration for and in her behalf, while Exhibits 42-I and 42-N are both dated September 21, 1995 with another of the
said deputies signing both documents.[34]
Still comparing respondents Exhibit 218-F,[35] which is likewise a standard issue U.S. Department of Justice
Certification Form, with other documents previously introduced as evidence reveals that it is the same as Exhibits 39-
D[36] and 42-C.[37] The only differences in these documents are that Exhibit 218-F is dated October 13, 1995 and is signed
by Debora A. Farmer while Exhibits "-39-D and 42-C are both dated August 31, 1995 and signed by Cecil G. Christian,
Jr., Assistant Commissioner, Officer of Records, INS.[38]
Still further scrutinizing and comparing respondents Exhibit 218-G[39] which was also introduced and admitted into
evidence as Defense Exhibit 207-B[40] shows that the document has been earlier introduced and admitted into evidence by
the trial court an astounding seven (7) times, particularly as Exhibits 34-A, 35-F, 39-E, 42-D, 42-P, 50 and 50-F.[41] The
only difference in these documents is that they were printed on different dates. Specifically, Exhibits 218-G as with
Exhibits 34-A, 35-F, 50, and 52-F were printed out on October 26, 1995[42] whereas Exhibit 207-B as with Exhibits 39-E,
42-D and 42-F were printed out on August 31, 1995.[43]
In fact, the records show that respondents: a.] application for Non-Commercial Drivers License; b.] Documentary
records based on Clets Database Response; c.] Computer-generated thumb-print; d.] Documentary records based on still
another Clets Database Response, and e.] The Certification issued by one Frank Zolin, Director of the State of Californias
Department of Motor Vehicles, were already introduced and admitted into evidence as Defense Exhibits 66-J, 66-K, 66-H,
66-I and 66-L, respectively.[44]
It need not be overemphasized that the foregoing factual circumstances only serves to underscore the immutable fact
that the depositions proposed to be taken from the five U.S. based witnesses would be merely corroborative or cumulative
in nature and in denying respondents motion to take them, the trial court was but exercising its judgment on what it
perceived to be a superfluous exercise on the belief that the introduction thereof will not reasonably add to the
persuasiveness of the evidence already on record. In this regard, it bears stressing that under Section 6, Rule 113 of the
Revised Rules of Court:
SEC. 6. Power of the court to stop further evidence. - The court may stop the introduction of further testimony upon any
particular point when the evidence upon it is already so full that more witnesses to the same point cannot be reasonably
expected to be additionally persuasive. But this power should be exercised with caution. (emphasis and italics supplied.)
Needless to state, the trial court can not be faulted with lack of caution in denying respondents motion considering
that under the prevailing facts of the case, respondent had more than ample opportunity to adduce evidence in his defense.
Certainly, a party can not feign denial of due process where he had the opportunity to present his side.[45] It must be borne
in mind in this regard that due process is not a monopoly of the defense. Indeed, the State is entitled to due process as
much as the accused.[46] Furthermore, while a litigation is not a game of technicalities, it is a truism that every case must
be prosecuted in accordance with the prescribed procedure to insure an orderly and speedy administration of justice.[47]
The use of discovery procedures is directed to the sound discretion of the trial judge.[48] The deposition taking can not
be based nor can it be denied on flimsy reasons.[49] Discretion has to be exercised in a reasonable manner and in
consonance with the spirit of the law. There is no indication in this case that in denying the motion of respondent-accused,
the trial judge acted in a biased, arbitrary, capricious or oppressive manner. Grave abuse of discretion x x x 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 and despotic manner by reason of passion or personal hostility, and it must be so patent and
gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act all in
contemplation of law.[50]
Certiorari as a special civil action can be availed of only if there is concurrence of the essential requisites, to wit: (a) the
tribunal, board or officer exercising judicial functions has acted without or in excess of jurisdiction or with grave abuse of
discretion amounting to lack or in excess or jurisdiction, and (b) there is no appeal, nor any plain, speedy and adequate
remedy in the ordinary course of law for the purpose of annulling or modifying the proceeding. There must be a
capricious, arbitrary and whimsical exercise of power for it to prosper.[51]
To question the jurisdiction of the lower court or the agency exercising judicial or quasi-judicial functions, the remedy is a
special civil action for certiorari under Rule 65 of the Rules of Court. The petitioner in such cases must clearly show that
the public respondent acted without jurisdiction or with grave abuse of discretion amounting to lack or excess of
jurisdiction. Grave abuse of discretion defies exact definition, but generally refers to capricious or whimsical exercise of
judgment as is 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.
It has been held, however, that no grave abuse of discretion may be attributed to a court simply because of its alleged
misappreciation of facts and evidence. A writ of certiorari may not be used to correct a lower tribunal's evaluation of the
evidence and factual findings. In other words, it is not a remedy for mere errors of judgment, which are correctible by an
appeal or a petition for review under Rule 45 of the Rules of Court.
In fine, certiorari will issue only to correct errors of jurisdiction, not errors of procedure or mistakes in the findings or
conclusions of the lower court. As long as a court acts within its jurisdiction, any alleged errors committed in the exercise
of its discretion will amount to nothing more than errors of judgment which are reviewable by timely appeal and not by
special civil action for certiorari.[52]
Whether or not the respondent-accused has been given ample opportunity to prove his innocence and whether or not
a further prolongation of proceedings would be dilatory is addressed, in the first instance, to the sound discretion of the
trial judge. If there has been no grave abuse of discretion, only after conviction may this Court examine such matters
further. It is pointed out that the defense has already presented at least fifty-seven (57) witnesses and four hundred sixty-
four (464) documentary exhibits, many of them of the exact nature as those to be produced or testified to by the proposed
foreign deponents. Under the circumstances, We sustain the proposition that the trial judge commits no grave abuse of
discretion if she decides that the evidence on the matter sought to be proved in the United States could not possibly add
anything substantial to the defense evidence involved. There is no showing or allegation that the American public officers
and the bicycle store owner can identify respondent Hubert Webb as the very person mentioned in the public and private
documents. Neither is it shown in this petition that they know, of their own personal knowledge, a person whom they can
identify as the respondent-accused who was actually present in the United States and not in the Philippines on the
specified dates.
WHEREFORE, in view of all the foregoing, the petition is hereby GRANTED. The Decision of the Court of
Appeals dated February 6, 1998 in CA-G.R. SP No. 45399 is hereby REVERSED and SET ASIDE. The Regional Trial
Court of Paraaque City is ordered to proceed posthaste in the trial of the main case and to render judgment therein
accordingly.
SO ORDERED.
Kapunan, and Pardo, JJ., concur.
Davide, Jr., C.J., see separate opinion.
Puno, J., see concurring opinion.

G.R. No. 108229 August 24, 1993

DASMARIAS GARMENTS, INC., petitioner,
vs.
HON. RUBEN T. REYES, Judge, Regional Trial Court, Manila, Branch 50, and AMERICAN PRESIDENT
LINES, LTD., respondents.
Sobrevias, Diaz, Haudini & Bodegon Law Offices for petitioner.
Tan, Manzano & Velez Law Offices for private respondent.

RESOLUTION
NARVASA, C.J.:
Sometime in September, 1987, in the Regional Trial Court of Manila, the American President Lines, Ltd. sued
Dasmarias Garments, Inc. to recover the sum of US $53,228.45 as well as an amount equivalent to twenty-
five percent (25%) thereof as attorney's fees and litigation expenses.
In its answer dated December 1, 1987, Dasmarias Garments, Inc. (hereafter, simply Dasmarias) specifically
denied any liability to the plaintiff (hereafter simply APL), and set up compulsory counterclaims against it.
The case was in due course scheduled for trial on April 27, 1988. On that date APL presented its first witness
whose testimony was completed on November 12, 1988. The case was reset to May 3, 1989 for reception of
the testimony of two (2) more witnesses in APL's behalf.
At the hearing of May 3, 1989, instead of presenting its witnesses, APL filed a motion praying that it intended to
take the depositions of H. Lee and Yeong Fang Yeh in Taipei, Taiwan and prayed that for this purpose, a
"commission or letters rogatory be issued addressed to the consul, vice-consul or consular agent of the
Republic of the Philippines in Taipei . . . " Five (5) days later APL filed an amended motion stating that since
the Philippine Government has no consulate office in Taiwan in view of its "one China policy," there being in
lieu thereof an office set up by the President "presently occupied by Director Joaquin Roces which is the Asia
Exchange Center, Inc.," it was necessary and it therefore prayed "that commission or letters rogatory be
issued addressed to Director Joaquin Roces, Executive Director, Asian Executive Exchange Center, Inc.,
Room 901, 112 Chunghsiao, E. Road, Section 1, Taipe, Republic of China, to hear and take the oral deposition
of the aforenamed persons . . . ."
The motion was opposed by Dasmarias. It contended that (a) the motion was "fatally defective in that it does
not seek . . . that a foreign court examine a person within its jurisdiction;" (b) issuance of letters rogatory was
unnecessary because the witnesses "can be examined before the Philippine Court;" and
(c) the Rules of Court "expressly require that the testimony of a witness must be taken orally in open court and
not by deposition."
Extensive argument on the matter thereafter followed, through various pleadings filed by the parties, in the
course of which APL submitted to the Trial Court (a) the letter received by its counsel from Director Joaquin R.
Roces of the Asian Exchange Center, Inc., dated November 20, 1989, advising that "this Office can only take
deposition upon previous authority from the Department of Foreign Affairs," this being "in consonance with the
Supreme Court Administrative Order requiring courts or judicial bodies to course their requests through the
Department of Foreign Affairs;" and (b) a letter sent by "fax" to the same counsel by a law firm in Taipei, Lin &
Associates Maritime Law Office, transmitting information inter alia of the mode by which, under the "ROC Civil
Procedure Code," "a copy or an abridged copy" of documents on file with a Taiwan Court may be obtained.
By Order dated March 15, 1991, the Trial Court resolved the incident in favor of APL, disposing as follows:
ACCORDINGLY, the motion to take testimonies of plaintiff's Taiwanese witnesses, Kenneth H.
Lee and Yeong Fah Yeh, by deposition (upon written interrogatories) is hereby GRANTED. The
Asian Exchange Center, Inc. thru Director Joaquin R. Roces is hereby COMMISSIONED to take
down the deposition. Compliance with the Rules on the taking of testimony by deposition upon
written interrogatories under Sections 25-29 of Rule 24, Rules of Court is enjoined.
Let this Order be coursed through the Department of Foreign Affairs, Manila, pursuant to
Supreme Court Administrative Circular No. 4 dated April 6, 1987.
The Court opined that "the Asian Exchange Center, Inc. being the authorized Philippine representative in
Taiwan, may take the testimonies of plaintiff's witnesses residing there by deposition, but only upon written
interrogatories so as to give defendant the opportunity to cross-examine the witnesses by serving cross-
examination."
Dasmarias sought reconsideration by motion filed June 25, 1991 on the following grounds: (1) authority of the
Asian Exchange Center, Inc. (AECI) to take depositions has not been established, it not being one of those so
authorized by the Rules of Court to take depositions in a foreign state; (2) AECI's articles of incorporation show
that it is not vested with any such authority; (3) to permit deposition-taking by commission without the authority
of the foreign state in which deposition is taken constitutes infringement of judicial sovereignty; and (4)
depositions by written interrogatories have inherent limitations and are not suitable to matters dependent on
the credibility of witnesses; oral testimony in open court remains the "most satisfactory method of investigation
of facts'" and "'affords the greatest protection to the rights and liberties of citizens."
By Order dated July 5, 1991, the motion for reconsideration was denied because "filed out of time" and being a
mere rehash of arguments already passed upon. In the same Order, APL was directed "to take the necessary
steps to implement the order authorizing the . . . (deposition-taking) of its witnesses not later than the end of
this month, otherwise the Court will consider inaction or lack of interest as waiver to adduce additional
evidence by deposition."
Dasmarias instituted a special civil action of certiorari in the Court of Appeals to nullify the orders of the Trial
Court just described. Said Appellate Court restrained enforcement of the orders of March 15, 1991 and July 5,
1991 "in order to maintain the status quo and to prevent the infliction of irreparable damage and injury upon the
petitioner."
After due proceedings, the Court of Appeals (Third Division) rendered judgment on September 23, 1992
denying Dasmarias petition for certiorari and upholding the challenged orders of the Trial Court. Once again,
Dasmarias sought reconsideration of an adverse disposition, and once again, was rebuffed. Its motion for
reconsideration was denied in a Resolution of the Court of Appeals dated December 11, 1992.
Once again Dasmarias has availed of the remedy of appeal. It has come to this Court and prays for the
reversal of the Appellate Court's Decision of September 23, 1992 and Resolution dated December 11, 1992.
Once again, it will fail.
Dasmarias ascribes to the Court of Appeals the following errors, to wit:
1) "in holding that a party could, during the trial of the case, present its evidence by taking the
deposition of its witnesses in a foreign jurisdiction before a private entity not authorized by law
to take depositions in lieu of their oral examination in open Court considering that:
a) the taking of deposition is a mode of pretrial discovery to be availed of before
the action comes to trial;
b) no urgent or compelling reason has been shown to justify the departure from
the accepted and usual judicial proceedings of examining witnesses in open
court where their demeanor could be observed by the trial judge;"
2) "in disregarding the inherently unfair situation in allowing private respondent, a foreign entity
suing in the Philippines, to present its evidence by mere deposition of its witnesses away from
the 'penetrating scrutiny' of the trial Judge while petitioner is obligated to bring and present its
witnesses in open court subject to the prying eyes and probing questions of the Judge;" and
3) "in sanctioning the deposition taking of . . . (APL's) witnesses in Taipei, Taiwan, a foreign
jurisdiction not recognized by the Philippines in view of its 'one-China policy,' before the AECI, a
private entity not authorized by law to take depositions."
Depositions are chiefly a mode of discovery. They are intended as a means to compel disclosure of facts
resting in the knowledge of a party or other person which are relevant in some suit or proceeding in court.
Depositions, and the other modes of discovery (interrogatories to parties; requests for admission by adverse
party; production or inspection of documents or things; physical and mental examination of persons) are meant
to enable a party to learn all the material and relevant facts, not only known to him and his witnesses but also
those known to the adverse party and the latter's own witnesses. In fine, the object of discovery is to make it
possible for all the parties to a case to learn all the material and relevant facts, from whoever may have
knowledge thereof, to the end that their pleadings or motions may not suffer from inadequacy of factual
foundation, and all the relevant facts may be clearly and completely laid before the Court, without omission or
suppression.
Depositions are principally made available by law to the parties as a means of informing themselves of all the
relevant facts; they are not therefore generally meant to be a substitute for the actual testimony in open court
of a party or witness. The deponent must as a rule be presented for oral examination in open court at the trial
or hearing. This is a requirement of the rules of evidence. Section 1, Rule 132 of the Rules of Court provides:
Sec. 1. Examination to be done in open court. The examination of witnesses presented in a
trial or hearing shall be done in open court, and under oath or affirmation. Unless the witness is
incapacitated to speak, or the question calls for a different mode of answer, the answers of the
witness shall be given orally.
Indeed, any deposition offered to prove the facts therein set out during a trial or hearing, in lieu of the actual
oral testimony of the deponent in open court, may be opposed and excluded on the ground that it is hearsay;
the party against whom it is offered has no opportunity to cross-examine the deponent at the time that his
testimony is offered. It matters not that that opportunity for cross-examination was afforded during the taking of
the deposition; for normally, the opportunity for cross-examination must be accorded a party at the time that
the testimonial evidence is actually presented against him during the trial or hearing.
However, depositions may be used without the deponent being actually called to the witness stand by the
proponent, under certain conditions and for certain limited purposes. These exceptional situations are
governed by Section 4, Rule 24 of the Rules of Court.
Sec. 4. Use of depositions. At the trial or upon the hearing of a motion of an interlocutory
proceeding, any part or all of a deposition, so far as admissible under the rules of evidence, may
be used against any party who was present or represented at the taking of the deposition or
who had due notice thereof, in accordance with any of the following provisions:
(a) Any deposition may be used by any party for the purpose of contradicting or impeaching the
testimony of deponent as a witness;
(b) The deposition of a party or of any one who at the time of taking the deposition was an
officer, director, or managing agent of a public or private corporation, partnership, or association
which is a party may be used by an adverse party for any purpose;
(c) The deposition of a witness, whether or not a party, may be used by any party for any
purpose if the court finds: (1) that the witness is dead; or (2) that the witness if out of the
province and at a greater distance than fifty (50) kilometers from the place of trial or hearing, or
is out of the Philippines, unless it appears that his absence was procured by the party offering
the deposition; or (3) that the witness is unable to attend to testify because of age, sickness,
infirmity, or imprisonment; or (4) that the party offering the deposition has been unable to
 procure the attendance of the witness by subpoena; or (5) upon application and notice, that
such exceptional circumstances exist as to make it desirable, in the interest of justice and with
due regard to the importance of presenting the testimony of witnesses orally in open court, to
allow the deposition to be used;
(d) If only part of a deposition is offered in evidence by a party, the adverse party may require
him to introduce all of it which is relevant to the part introduced, and any party may introduce
any other parts.
The principle conceding admissibility to a deposition when the deponent is dead, out of the Philippines, or
otherwise unable to come to court to testify, is consistent with another rule of evidence, found in Section 47,
Rule 132 of the Rules of Court.
Sec. 47. Testimony or deposition at a former proceeding. The testimony or deposition of a
witness deceased or unable to testify, given in a former case or proceeding, judicial or
administrative, involving the same parties and subject matter, may be given in evidence against
the adverse party who had the opportunity to cross-examine him.
It is apparent then that the deposition of any person may be taken wherever he may be, in the Philippines or
abroad. If the party or witness is in the Philippines, his deposition "shall be taken before any judge, municipal
or notary public" (Sec. 10, Rule 24, Rules of Court). If in a foreign state or country, the deposition "shall be
taken: (a) on notice before a secretary or embassy or legation, consul general, consul, vice-consul, or consular
agent of the Republic of the Philippines, or (b) before such person or officer as may be appointed by
commission or under letters rogatory" (Sec. 11, Rule 24).
Leave of court is not necessary where the deposition is to be taken before "a secretary or embassy or legation,
consul general, consul, vice-consul, or consular agent of the Republic of the Philippines," and the defendant's
answer has already been served (Sec. 1 Rule 24). After answer, whether the deposition-taking is to be
accomplished within the Philippines or outside, the law does not authorize or contemplate any intervention by
the court in the process, all that is required being that "reasonable notice" be given "in writing to every other
party to the action . . . (stating) the time and place for taking the deposition and the name and address of each
person to be examined, if known, and if the name is not known, a general description sufficient to identify him
or the particular class or group to which he belongs. . . . " (Sec. 15, Rule 24). The court intervenes in the
process only if a party moves (1) to "enlarge or shorten the time" stated in the notice (id.), or (2) "upon notice
and for good cause shown," to prevent the deposition-taking, or impose conditions therefor, e.g., that "certain
matters shall not be inquired into" or that the taking be "held with no one present except the parties to the
action and their officers or counsel," etc. (Sec. 16, Rule 24), or
(3) to terminate the process on motion and upon a showing that "it is being conducted in bad faith or in such
manner as unreasonably to annoy, embarrass, or oppress the deponent or party" (Sec 18, Rule 24).
Where the deposition is to be taken in a foreign country where the Philippines has no "secretary or embassy or
legation, consul general, consul, vice-consul, or consular agent," then obviously it may be taken only "before
such person or officer as may be appointed by commission or under letters rogatory. Section 12, Rule 24
provides as follows:
Sec. 12. Commission or letters rogatory. A commission or letters rogatory shall be issued
only when necessary or convenient, on application and notice, and on such terms and with such
directions as are just and appropriate. Officers may be designated in notices or commissions
either by name or descriptive title and letters rogatory may be addressed "To the Appropriate
Judicial Authority in (here name the country)."
A commission may be defined as "(a)n instrument issued by a court of justice, or other competent tribunal, to
authorize a person to take depositions, or do any other act by authority of such court or tribunal" (Feria, J., Civil
Procedure, 1969 ed., p. 415, citing Cyclopedic Law Dictionary, p. 200). Letters rogatory, on the other hand,
may be defined as "(a)n instrument sent in the name and by the authority of a judge or court to another,
requesting the latter to cause to be examined, upon interrogatories filed in a cause pending before the former,
a witness who is within the jurisdiction of the judge or court to whom such letters are addressed" (Feria, J., op.
cit., citing Cyclopedic Law Dictionary, p. 653). Section 12, Rule 24 just quoted states that a commission is
addressed to "officers . . . designated . . . either by name or descriptive title," while letters rogatory are
addressed to some "appropriate judicial authority in the foreign state." Noteworthy in this connection is the
indication in the Rules that letters rogatory may be applied for and issued only after a commission has been
"returned unexecuted" as is apparent from Form 21 of the "Judicial Standard Forms" appended to the Rules of
Court, which requires the inclusion in a "petition for letters rogatory" of the following paragraph, viz.:
xxx xxx xxx
3. A commission issued by this Court on the ______ day of ______, 19__, to take the testimony
of (here name the witness or witnesses) in (here name the foreign country in which the
testimony is to be taken), before _________________ (name of officer), was returned
unexecuted by __________________ on the ground that ____________, all of which more fully
appears from the certificate of said __________ to said commission and made a part hereof by
attaching it hereto (or state other facts to show commission is inadequate or cannot be
executed) (emphasis supplied).
In the case at bar, the Regional Trial Court has issued a commission to the "Asian Exchange Center, Inc. thru
Director Joaquin R. Roces" "to take the testimonies of . . . Kenneth H. Lee and Yeong Fah Yeh, by deposition
(upon written interrogatories) . . . ." It appears that said Center may, "upon request and authority of the Ministry
(now Department) of Foreign Affairs, Republic of the Philippines" issue a "Certificate of Authentications"
attesting to the identity and authority of Notaries Public and other public officers of the Republic of China,
Taiwan (eg., the Section Chief, Department of Consular Affairs of the latter's Ministry of Foreign Affairs) (Annex
B of Annex N of the petition for review on certiorari) a prima facie showing not rebutted by petitioner.
It further appears that the commission is to be coursed through the Department of Foreign Affairs conformably
with Circular No. 4 issued by Chief Justice Claudio Teehankee on April 6, 1987, pursuant to the suggestion of
the Department of Foreign Affairs directing "ALL JUDGES OF THE REGIONAL TRIAL COURTS,
METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL COURTS IN CITIES, MUNICIPAL TRIAL COURTS
AND MUNICIPAL CIRCUIT TRIAL COURTS" "to course all requests for the taking of deposition of witnesses
residing abroad through the Department of Foreign Affairs" to enable it and "the Philippine Foreign Service
establishments to act on the matter in a judicious and expeditious manner;" this, "in the interest of justice," and
to avoid delay in the deposition-taking.
Petitioner would however prevent the carrying out of the commission on various grounds.
The first is that the deposition-taking will take place in "a foreign jurisdiction not recognized by the Philippines
in view of its 'one-China policy.'" This is inconsequential. What matters is that the deposition is taken before a
Philippine official acting by authority of the Philippine Department of Foreign Affairs and in virtue of a
commission duly issued by the Philippine Court in which the action is pending, and in accordance, moreover,
with the provisions of the Philippine Rules of Court pursuant to which opportunity for cross-examination of the
deponent will be fully accorded to the adverse party.
Dasmarias also contends that the "taking of deposition is a mode of pretrial discovery to be availed of before
the action comes to trial." Not so. Depositions may be taken at any time after the institution of any action,
whenever necessary or convenient. There is no rule that limits deposition-taking only to the period of pre-trial
or before it; no prohibition against the taking of depositions after pre-trial. Indeed, the law authorizes the taking
of depositions of witnesses before or after an appeal is taken from the judgment of a Regional Trial Court "to
perpetuate their testimony for use in the event of further proceedings in the said court" (Rule 134, Rules of
Court), and even during the process of execution of a final and executory judgment (East Asiatic Co. v. C.I.R.,
40 SCRA 521, 544).
Dasmarias further claims that the taking of deposition under the circumstances is a "departure from the
accepted and usual judicial proceedings of examining witnesses in open court where the demeanor could be
observed by the trial judge;" that it is "inherently unfair" to allow APL, "a foreign entity suing in the Philippines,
to present its evidence by mere deposition of its witnesses away from the 'penetrating scrutiny' of the trial
Judge while petitioner is obligated to bring and present its witnesses in open court subject to the prying eyes
and probing questions of the Judge."
Of course the deposition-taking in the case at bar is a "departure from the accepted and usual judicial
proceedings of examining witnesses in open court where their demeanor could be observed by the trial judge;"
but the procedure is not on that account rendered illegal nor is the deposition thereby taken, inadmissible. It
precisely falls within one of the exceptions where the law permits such a situation, i.e., the use of deposition in
lieu of the actual appearance and testimony of the deponent in open court and without being "subject to the
prying eyes and probing questions of the Judge." This is allowed provided the deposition is taken in
accordance with the applicable provisions of the Rules of Court and the existence of any of the exceptions for
its admissibility e.g., "that the witness if out of the province and at a greater distance than fifty (50)
kilometers from the place of trial or hearing, or is out of the Philippines, unless it appears that his absence was
procured by the party offering the deposition; or . . . that the witness is unable to attend to testify because of
age, sickness, infirmity, or imprisonment, etc." (Sec. 4 Rule 24, supra, emphasis supplied) is first
satisfactorily established (See Lopez v. Maceren, 95 Phil. 754).
The Regional Trial Court saw fit to permit the taking of the depositions of the witnesses in question only by
written interrogatories, removing the proponent's option to take them by oral examination, i.e., by going to
Taipei and actually questioning the witnesses verbally with the questions and answers and observations of the
parties being recorded stenographically. The imposition of such a limitation, and the determination of the cause
thereof, are to be sure within the Court's discretion. The ostensible reason given by the Trial Court for the
condition that the deposition be taken "only upon written interrogatories" is "so as to give defendant
(Dasmarias) the opportunity to cross-examine the witnesses by serving cross-interrogatories." The statement
implies that opportunity to cross-examine will not be accorded the defendant if the depositions were to be
taken upon oral examination, which, of course, is not true. For even if the depositions were to be taken on oral
examination in Taipei, the adverse party is still accorded full right to cross-examine the deponents by the law,
either by proceeding to Taipei and there conducting the cross-examination orally, or opting to conduct said
cross-examination merely by serving cross-interrogatories.
One other word. In its Order of July 5, 1991 denying Dasmarias motion for reconsideration of the earlier
order dated March 15, 1991 (allowing the taking of deposition by commission) one of the reasons adduced
by the Regional Trial Court for the denial was that the motion had been "filed out of time." Evidently, the Trial
Court reached this conclusion because, as the record discloses, the motion for reconsideration was filed by
Dasmarias on June 25, 1991, twenty-five (25) days after notice (on May 20, 1991) of the Order of March 15,
1991 sought to be reconsidered. Denial of the motion on such a ground is incorrect. In the first place, it
appears that there was a motion for extension of time to file a motion for reconsideration, ending on June 25,
1991 which was however not acted on or granted by the Court. More importantly, the order sought to be
reconsidered is an interlocutory order, in respect of which there is no provision of law fixing the time within
which reconsideration thereof should be sought.
PREMISES CONSIDERED, the Court Resolved to DISMISS the petition for review on certiorari. Costs against
petitioner.
SO ORDERED.
Padilla, Regalado, Nocon and Puno, JJ., concur.

G.R. No. 90478 November 21, 1991

REPUBLIC OF THE PHILIPPINES (PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT), petitioner,
vs.
SANDIGANBAYAN, BIENVENIDO R. TANTOCO, JR. and DOMINADOR R. SANTIAGO, respondents.
Dominador R. Santiago for and in his own behalf and as counsel for respondent Tantoco, Jr.

NARVASA, J.:p
Private respondents Bienvenido R. Tantoco, Jr. and Dominador R. Santiago together with Ferdinand E.
Marcos, Imelda R. Marcos, Bienvenido R. Tantoco, Sr., Gliceria R. Tantoco, and Maria Lourdes Tantoco-
Pineda-are defendants in Civil Case No. 0008 of the Sandiganbayan. The case was commenced on July 21,
1987 by the Presidential Commission on Good Government (PCGG) in behalf of the Republic of the
Philippines. The complaint which initiated the action was denominated one "for reconveyance, reversion,
accounting, restitution and damages," and was avowedly filed pursuant to Executive Order No. 14 of President
Corazon C. Aquino.
After having been served with summons, Tantoco, Jr. and Santiago, instead of filing their answer, jointly filed a
"MOTION TO STRIKE OUT SOME PORTIONS OF THE COMPLAINT AND FOR BILL OF PARTICULARS OF
OTHER PORTIONS" dated Nov. 3, 1987. 1 The PCGG filed an opposition thereto, 2 and the movants, a reply
to the opposition. 3 By order dated January 29, 1988, the Sandiganbayan, in order to expedite proceedings
and accommodate the defendants, gave the PCGG forty-five (45) days to expand its complaint to make more
specific certain allegations. 4
Tantoco and Santiago then presented a "motion for leave to file interrogatories under Rule 25 of the Rules of
Court" dated February 1, 1988, and "Interrogatories under Rule 25." 5 Basically, they sought an answer to the
question: "Who were the Commissioners of the PCGG (aside from its Chairman, Hon. Ramon Diaz, who
verified the complaint) who approved or authorized the inclusion of Messrs. Bienvenido R. Tantoco, Jr. and
Dominador R. Santiago as defendants in the . . case?" 6 The PCGG responded by filing a motion dated
February 9, 1988 to strike out said motion and interrogatories as being impertinent, "queer," "weird," or
"procedurally bizarre as the purpose thereof lacks merit as it is improper, impertinent and irrelevant under any
guise." 7
On March 18, 1988, in compliance with the Order of January 29, 1988, the PCGG filed an Expanded
Complaint. 8 As this expanded complaint, Tantoco and Santiago reiterated their motion for bill of particulars,
through a Manifestation dated April 11, 1988. 9
Afterwards, by Resolution dated July 4, 1988, 10 the Sandiganbayan denied the motion to strike out, for bill of
particulars, and for leave to file interrogatories, holding them to be without legal and factual basis. Also denied
was the PCGG's motion to strike out impertinent pleading dated February 9, 1988. The Sandiganbayan
declared inter alia the complaint to be "sufficiently definite and clear enough," there are adequate allegations . .
which clearly portray the supposed involvement and/or alleged participation of defendants-movants in the
transactions described in detail in said Complaint," and "the other matters sought for particularization are
evidentiary in nature which should be ventilated in the pre-trial or trial proper . ." It also opined that "(s)ervice of
interrogatories before joinder of issue and without leave of court is premature . . (absent) any special or
extraordinary circumstances . . which would justify . . (the same)."
Tantoco and Santiago then filed an Answer with Compulsory Counterclaim under date of July 18, 1988. 11 In
response, the PCGG presented a "Reply to Answer with Motion to Dismiss Compulsory Counterclaim " 12
The case was set for pre-trial on July 31, 1989. 13 On July 25, 1989, the PCGG submitted its PRE-
TRIAL. 14 The pre-trial was however reset to September 11, 1989, and all other parties were required to
submit pre-trial briefs on or before that date. 15
On July 27, 1989 Tantoco and Santiago filed with the Sandiganbayan a pleading denominated "Interrogatories
to Plaintiff," 16 and on August 2, 1989, an "Amended Interrogatories to Plaintiff"' 17 as well as a Motion for
Production and Inspection of Documents. 18
The amended interrogatories chiefly sought factual details relative to specific averments of PCGG's amended
complaint, through such questions, for instance, as
1. In connection with the allegations . . in paragraph 1 . ., what specific property or properties
does the plaintiff claim it has the right to recover from defendants Tantoco, Jr. and Santiago for
being ill-gotten?
3. In connection with the allegations . . in paragraph 10 (a) . . what specific act or acts . . were
committed by defendants Tantoco, Jr. and Santiago in "concert with" defendant Ferdinand
Marcos and in furtherance or pursuit, of the alleged systematic plan of said defendant Marcos to
accumulate ill-gotten wealth?"
5. In connection with . . paragraph 13 . ., what specific act or acts of the defendants Tantoco, Jr.
and Santiago . . were committed by said defendants as part, or in furtherance, of the alleged
plan to conceal assets of defendants Ferdinand and Imelda Marcos?
7. In connection with . . paragraph 15(c) . . is it plaintiff's position or theory of the case that
Tourist Duty Free Shops, Inc., including all the assets of said corporation, are beneficially
owned by either or both defendants Ferdinand and Imelda Marcos and that the defendants
Tantoco, Jr. and Santiago, as well as, the other stockholders of record of the same corporation
are mere "dummies" of said defendants Ferdinand and /or Imelda R. Marcos?
On the other hand, the motion for production and inspection of documents prayed for examination and copying
of
1) the "official records and other evidence" on the basis of which the verification of the Amended
Complaint asserted that the allegations thereof are "true and correct;"
2) the documents listed in PCGG's Pre-Trial Brief as those "intended to be presented and . .
marked as exhibits for the plaintiff;" and
3) "the minutes of the meeting of the PCGG which chronicles the discussion (if any) and the
decision (of the Chairman and members) to file the complaint" in the case at bar.
By Resolutions dated August 21, 1989 and August 25, 1989, the Sandiganbayan admitted the Amended
Interrogatories and granted the motion for production and inspection of documents (production being
scheduled on September 14 and 15, 1989), respectively.
On September 1, 1989, the PCGG filed a Motion for Reconsideration of the Resolution of August 25, 1989
(allowing production and inspection of documents). It argued that
1) since the documents subject thereof would be marked as exhibits during the pre-trial on September 11,
1989 anyway, the order for "their production and inspection on September 14 and 15, are purposeless and
unnecessary;"
2) movants already know of the existence and contents of the document which "are clearly described . . (in)
plaintiff's Pre-Trial Brief;"
3) the documents are "privileged in character" since they are intended to be used against the PCGG and/or its
Commissioners in violation of Section 4, Executive Order No. 1, viz.:
(a) No civil action shall lie against the Commission or any member thereof for anything done or
omitted in the discharge of the task contemplated by this Order.
(b) No member or staff of the Commission shall be required to testify or produce evidence in
any judicial, legislative, or administrative proceeding concerning matters within its official
cognizance.
It also filed on September 4, 1989 an opposition to the Amended Interrogatories, 19 which the Sandiganbayan
treated as a motion for reconsideration of the Resolution of August 21, 1989 (admitting the Amended
Interrogatories). The opposition alleged that
1) the interrogatories "are not specific and do not name the person to whom they are propounded . .," or "who
in the PCGG, in particular, . . (should) answer the interrogatories;"
2) the interrogatories delve into "factual matters which had already been decreed . . as part of the proof of the
Complaint upon trial . .;"
3) the interrogatories "are frivolous" since they inquire about "matters of fact . . which defendants . . sought to .
. (extract) through their aborted Motion for Bill of Particulars;"
4) the interrogatories "are really in the nature of a deposition, which is prematurely filed and irregularly utilized .
. (since) the order of trial calls for plaintiff to first present its evidence."
Tantoco and Santiago filed a reply and opposition on September 18, 1989.
After hearing, the Sandiganbayan promulgated two (2) Resolutions on September 29, 1989, the first, denying
reconsideration (of the Resolution allowing production of documents), and the second, reiterating by
implication the permission to serve the amended interrogatories on the plaintiff (PCGG). 20
Hence, this petition for certiorari.
The PCGG contends that said orders, both dated September 29, 1989, should be nullified because rendered
with grave abuse of discretion amounting to excess of jurisdiction. More particularly, it claims
a) as regards the order allowing the amended interrogatories to the plaintiff PCGG:
1) that said interrogatories are not specific and do not name the particular individuals to whom
they are propounded, being addressed only to the PCGG;
2) that the interrogatories deal with factual matters which the Sandiganbayan (in denying the
movants' motion for bill of particulars) had already declared to be part of the PCGG's proof upon
trial; and
3) that the interrogatories would make PCGG Commissioners and officers witnesses, in
contravention of Executive Order No. 14 and related issuances; and
b) as regards the order granting the motion for production of documents:
1) that movants had not shown any good cause therefor;
2) that some documents sought to be produced and inspected had already been presented in
Court and marked preliminarily as PCGG's exhibits, and the movants had viewed, scrutinized
and even offered objections thereto and made comments thereon; and
3) that the other documents sought to be produced are either
(a) privileged in character or confidential in nature and their use is
proscribed by the immunity provisions of Executive Order No. 1, or
(b) non-existent, or mere products of the movants' suspicion and
fear.
This Court issued a temporary restraining order on October 27, 1989, directing the Sandiganbayan to desist
from enforcing its questioned resolutions of September 29, 1989 in Civil Case No. 0008. 21
After the issues were delineated and argued at no little length by the parties, the Solicitor General withdrew "as
counsel for plaintiff . . with the reservation, however, conformably with Presidential Decree No. 478, the
provisions of Executive Order No. 292, as well as the decisional law of 'Orbos v. Civil Service Commission, et
al.,' (G.R. No. 92561, September 12, 1990) 22 to submit his comment/observation on incidents/matters
pending with this . . Court if called for by circumstances in the interest of the Government or if he is so required
by the Court." 23 This, the Court allowed by Resolution dated January 21, 1991. 24
Subsequently, PCGG Commissioner Maximo A. Maceren advised the Court that the cases from which the
Solicitor General had withdrawn would henceforth be under his (Maceren's) charge "and/or any of the following
private attorneys: Eliseo B. Alampay, Jr., Mario E. Ongkiko, Mario Jalandoni and such other attorneys as it
may later authorize." 25
The facts not being in dispute, and it appearing that the parties have fully ventilated their respective positions,
the Court now proceeds to decide the case.
Involved in the present proceedings are two of the modes of discovery provided in the Rules of Court:
interrogatories to parties , 26 and production and inspection of documents and things. 27 Now, it appears to
the Court that among far too many lawyers (and not a few judges), there is, if not a regrettable unfamiliarity and
even outright ignorance about the nature, purposes and operation of the modes of discovery, at least a strong
yet unreasoned and unreasonable disinclination to resort to them which is a great pity for the intelligent and
adequate use of the deposition-discovery mechanism, coupled with pre-trial procedure, could, as the
experience of other jurisdictions convincingly demonstrates, effectively shorten the period of litigation and
speed up adjudication. 28 Hence, a few words about these remedies is not at all inappropriate.
The resolution of controversies is, as everyone knows, the raison d'etre of courts. This essential function is
accomplished by first, the ascertainment of all the material and relevant facts from the pleadings and from the
evidence adduced by the parties, and second, after that determination of the facts has been completed, by the
application of the law thereto to the end that the controversy may be settled authoritatively, definitely and
finally.
It is for this reason that a substantial part of the adjective law in this jurisdiction is occupied with assuring that
all the facts are indeed presented to the Court; for obviously, to the extent that adjudication is made on the
basis of incomplete facts, to that extent there is faultiness in the approximation of objective justice. It is thus the
obligation of lawyers no less than of judges to see that this objective is attained; that is to say, that there no
suppression, obscuration, misrepresentation or distortion of the facts; and that no party be unaware of any fact
material a relevant to the action, or surprised by any factual detail suddenly brought to his attention during the
trial. 29
Seventy-one years ago, in Alonso v. Villamor, 30 this Court described the nature and object of litigation and in
the process laid down the standards by which judicial contests are to be conducted in this jurisdiction. It said:
A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the
subtle art of movement and position, entraps and destroys the other. It is, rather a contest in
which each contending party fully and fairly lays before the court the facts in issue and then
brushing aside as wholly trivial and indecisive all imperfections of form and technicalities of
procedure, asks that justice be done on the merits. Lawsuits, unlike duels, are not to be won by
a rapier's thrust. Technicality, when it deserts its proper office as an aid to justice and becomes
its great hindrance and chief enemy, deserves scant consideration from courts. There should be
no vested right in technicalities. . . .
The message is plain. It is the duty of each contending party to lay before the court the facts in issue-fully and
fairly; i.e., to present to the court all the material and relevant facts known to him, suppressing or concealing
nothing, nor preventing another party, by clever and adroit manipulation of the technical rules of pleading and
evidence, from also presenting all the facts within his knowledge.
Initially, that undertaking of laying the facts before the court is accomplished by the pleadings filed by the
parties; but that, only in a very general way. Only "ultimate facts" are set forth in the pleadings; hence, only the
barest outline of the facfual basis of a party's claims or defenses is limned in his pleadings. The law says that
every pleading "shall contain in a methodical and logical form, a plain, concise and direct statement of
the ultimate facts on which the party pleading relies for his claim or defense, as the case may be, omitting the
statement of mere evidentiary facts." 31
Parenthetically, if this requirement is not observed, i.e., the ultimate facts are alleged too generally or "not
averred with sufficient definiteness or particularity to enable . . (an adverse party) properly to prepare his
responsive pleading or to prepare for trial," a bill of particulars seeking a "more definite statement" may be
ordered by the court on motion of a party. The office of a bill of particulars is, however, limited to making more
particular or definite the ultimate facts in a pleading It is not its office to supply evidentiary matters. And the
common perception is that said evidentiary details are made known to the parties and the court only during the
trial, when proof is adduced on the issues of fact arising from the pleadings.
The truth is that "evidentiary matters" may be inquired into and learned by the parties before the trial. Indeed, it
is the purpose and policy of the law that the parties before the trial if not indeed even before the pre-trial
should discover or inform themselves of all the facts relevant to the action, not only those known to them
individually, but also those known to adversaries; in other words, the desideratum is that civil trials should not
be carried on in the dark; and the Rules of Court make this ideal possible through the deposition-discovery
mechanism set forth in Rules 24 to 29. The experience in other jurisdictions has been that ample discovery
before trial, under proper regulation, accomplished one of the most necessary of modern procedure: it not only
eliminates unessential issue from trials thereby shortening them considerably, but also requires parties to play
the game with the cards on the table so that the possibility of fair settlement before trial is measurably
increased. . ." 32
As just intimated, the deposition-discovery procedure was designed to remedy the conceded inadequacy and
cumbersomeness of the pre-trial functions of notice-giving, issue-formulation and fact revelation theretofore
performed primarily by the pleadings.
The various modes or instruments of discovery are meant to serve (1) as a device, along with the pre-trial
hearing under Rule 20, to narrow and clarify the basic issues between the parties, and (2) as a device for
ascertaining the facts relative to those issues. The evident purpose is, to repeat, to enable parties, consistent
with recognized privileges, to obtain the fullest possible knowledge of the issues and facts before trials and
thus prevent that said trials are carried on in the dark. 33
To this end, the field of inquiry that may be covered by depositions or interrogatories is as broad as when the
interrogated party is called as a witness to testify orally at trial. The inquiry extends to all facts which are
relevant, whether they be ultimate or evidentiary, excepting only those matters which are privileged. The
objective is as much to give every party the fullest possible information of all the relevant facts before the trial
as to obtain evidence for use upon said trial. The principle is reflected in Section 2, Rule 24 (governing
depositions) 34 which generally allows the examination of a deponent
1) "regarding any matter, not privileged, which is relevant to the subject of the pending action,
whether relating to the claim or defense of any other party;"
2) as well as:
(a) "the existence, description, nature, custody, condition and location of any books, documents,
or other tangible things" and
(b) "the identity and location of persons having knowledge of relevant facts."
What is chiefly contemplated is the discovery of every bit of information which may be useful in the preparation
for trial, such as the identity and location of persons having knowledge of relevant facts; those relevant facts
themselves; and the existence, description, nature, custody, condition, and location of any books, documents,
or other tangible things. Hence, "the deposition-discovery rules are to be accorded a broad and liberal
treatment. No longer can the time-honored cry of "fishing expedition" serve to preclude a party from inquiring
into the facts underlying his opponent's case. Mutual knowledge of all the relevant facts gathered by both
parties is essential to proper litigation. To that end, either party may compel the other to disgorge whatever
facts he has in his possession. The deposition-discovery procedure simply advances the stage at which the
disclosure can be compelled from the time of trial to the period preceding it, thus reducing the possibility, of
surprise, . . . 35
In line with this principle of according liberal treatment to the deposition-discovery mechanism, such modes of
discovery as (a) depositions (whether by oral examination or written interrogatories) under Rule 24, (b)
interrogatories to parties under Rule 25, and (c) requests for admissions under Rule 26, may be availed of
without leave of court, and generally, without court intervention. The Rules of Court explicitly provide that leave
of court is not necessary to avail of said modes of discovery after an answer to the complaint has been
served. 36 It is only when an answer has not yet been filed (but after jurisdiction has been obtained over the
defendant or property subject of the action) that prior leave of court is needed to avail of these modes of
discovery, the reason being that at that time the issues are not yet joined and the disputed facts are not
clear. 37
On the other hand, leave of court is required as regards discovery by (a) production or inspection of documents
or things in accordance with Rule 27, or (b) physical and mental examination of persons under Rule 28, which
may be granted upon due application and a showing of due cause.
To ensure that availment of the modes of discovery is otherwise untrammeled and efficacious, the law imposes
serious sanctions on the party who refuses to make discovery, such as dismissing the action or proceeding or
part thereof, or rendering judgment by default against the disobedient party; contempt of court, or arrest of the
party or agent of the party; payment of the amount of reasonable expenses incurred in obtaining a court order
to compel discovery; taking the matters inquired into as established in accordance with the claim of the party
seeking discovery; refusal to allow the disobedient party support or oppose designated claims or defenses;
striking out pleadings or parts thereof; staying further proceedings. 38
Of course, there are limitations to discovery, even when permitted to be undertaken without leave and without
judicial intervention. "As indicated by (the) Rules . . ., limitations inevitably arise when it can be shown that the
examination is being conducted in bad faith or in such a manner as to annoy, embarass, or oppress the person
subject to the inquiry. 39 And . . . further limitations come into existence when the inquiry touches upon the
irrelevant or encroaches upon the recognized domains of privilege." 40
In fine, the liberty of a party to make discovery is well nigh unrestricted if the matters inquired into are
otherwise relevant and not privileged, and the inquiry is made in good faith and within the bounds of the law.
It is in light of these broad principles underlying the deposition-discovery mechanism, in relation of course to
the particular rules directly involved, that the issues in this case will now be resolved.
The petitioner's objections to the interrogatories served on it in accordance with Rule 25 of the Rules of Court
cannot be sustained.
It should initially be pointed out as regards the private respondents "Motion for Leave to File Interrogatories"
dated February 1, 1988 41 that it was correct for them to seek leave to serve interrogatories, because
discovery was being availed of before an answer had been served. In such a situation, i.e., "after jurisdiction
has been obtained over any defendant or over property subject of the action" but before answer, Section 1 of
Rule 24 (treating of depositions), in relation to Section 1 of Rule 25 (dealing with interrogatories to parties)
explicitly requires "leave of court." 42 But there was no need for the private respondents to seek such leave to
serve their "Amended Interrogatories to Plaintiff" (dated August 2, 1989 43) after they had filed their answer to
the PCGG's complaint, just as there was no need for the Sandiganbayan to act thereon.
1. The petitioner's first contention that the interrogatories in question are defective because they (a) do not
name the particular individuals to whom they are propounded, being addressed only to the PCGG, and (b) are
"fundamentally the same matters . . (private respondents) sought to be clarified through their aborted Motion . .
for Bill of Particulars" are untenable and quickly disposed of.
The first part of petitioner's submission is adequately confuted by Section 1, Rule 25 which states that if the
party served with interrogatories is a juridical entity such as "a public or private corporation or a partnership or
association," the same shall be "answered . . by any officer thereof competent to testify in its behalf." There is
absolutely no reason why this proposition should not be applied by analogy to the interrogatories served on the
PCGG. That the interrogatories are addressed only to the PCGG, without naming any specific commissioner o
officer thereof, is utterly of no consequence, and may not be invoked as a reason to refuse to answer. As the
rule states, the interrogatories shall be answered "by any officer thereof competent to testify in its behalf."
That the matters on which discovery is desired are the same matters subject of a prior motion for bill of
particulars addressed to the PCGG's amended complaint and denied for lack of merit is beside the point.
Indeed, as already pointed out above, a bill of particulars may elicit only ultimate facts, not so-
called evidentiary facts. The latter are without doubt proper subject of discovery. 44
Neither may it be validly argued that the amended interrogatories lack specificity. The merest glance at them
disproves the argument. The interrogatories are made to relate to individual paragraphs of the PCGG's
expanded complaint and inquire about details of the ultimate facts therein alleged. What the PCGG may
properly do is to object to specific items of the interrogatories, on the ground of lack of relevancy, or privilege,
or that the inquiries are being made in bad faith, or simply to embarass or oppress it. 45 But until such an
objection is presented and sustained, the obligation to answer subsists.
2. That the interrogatories deal with factual matters which will be part of the PCGG's proof upon trial, is not
ground for suppressing them either. As already pointed out, it is the precise purpose of discovery to ensure
mutual knowledge of all the relevant facts on the part of all parties even before trial, this being deemed
essential to proper litigation. This is why either party may compel the other to disgorge whatever facts he has
in his possession; and the stage at which disclosure of evidence is made is advanced from the time of trial to
the period preceding it.
3. Also unmeritorious is the objection that the interrogatories would make PCGG Commissioners and officers
witnesses, in contravention of Executive Order No. 14 and related issuances. In the first place, there is nothing
at all wrong in a party's making his adversary his witness .46 This is expressly allowed by Section 6, Rule 132
of the Rules of Court, viz.:
Sec. 6. Direct examination of unwilling or hostile witnesses. A party may . . . call an adverse
party or an officer, director, or managing agent of a public or private corporation or of a
partnership or association which is an adverse party, and interrogate him by leading questions
and contradict and impeach him in all respects as if he had been called by the adverse party,
and the witness thus called may be contradicted and impeached by or on behalf of the adverse
party also, and may be cross-examined by the adverse party only upon the subject-matter of his
examination in chief.
The PCGG insinuates that the private respondents are engaged on a "fishing expedition," apart from the fact
that the information sought is immaterial since they are evidently meant to establish a claim against PCGG
officers who are not parties to the action. It suffices to point out that "fishing expeditions" are precisely
permitted through the modes of discovery. 47 Moreover, a defendant who files a counterclaim against the
plaintiff is allowed by the Rules to implead persons (therefore strangers to the action) as additional defendants
on said counterclaim. This may be done pursuant to Section 14, Rule 6 of the Rules, to wit:
Sec. 14. Bringing new parties. When the presence of parties other than those to the original
action is required for the granting of complete relief in the determination of a counterclaim or
cross-claim, the court shall order them to be brought in as defendants, if jurisdiction over them
can be obtained."
The PCGG's assertion that it or its members are not amenable to any civil action "for anything done or omitted
in the discharge of the task contemplated by . . (Executive) Order (No. 1)," is not a ground to refuse to answer
the interrogatories. The disclosure of facto relevant to the action and which are not self-incriminatory or
otherwise privileged is one thing; the matter of whether or not liability may arise from the facts disclosed in light
of Executive Order
No. 1, is another. No doubt, the latter proposition may properly be set up by way of defense in the action.
The apprehension has been expressed that the answers to the interrogatories may be utilized as foundation for
a counterclaim against the PCGG or its members and officers. They will be. The private respondents have
made no secret that this is in fact their intention. Withal, the Court is unable to uphold the proposition that while
the PCGG obviously feels itself at liberty to bring actions on the basis of its study and appreciation of the
evidence in its possession, the parties sued should not be free to file counterclaims in the same actions against
the PCGG or its officers for gross neglect or ignorance, if not downright bad faith or malice in the
commencement or initiation of such judicial proceedings, or that in the actions that it may bring, the PCGG may
opt not to be bound by rule applicable to the parties it has sued, e.g., the rules of discovery.
So, too, the PCGG's postulation that none of its members may be "required to testify or produce evidence in
any judicial . . proceeding concerning matters within its official cognizance," has no application to a judicial
proceeding it has itself initiated. As just suggested, the act of bringing suit must entail a waiver of the
exemption from giving evidence; by bringing suit it brings itself within the operation and scope of all the rules
governing civil actions, including the rights and duties under the rules of discovery. Otherwise, the absurd
would have to be conceded, that while the parties it has impleaded as defendants may be required to
"disgorge all the facts" within their knowledge and in their possession, it may not itself be subject to a like
compulsion.
The State is, of course, immune from suit in the sense that it cannot, as a rule, be sued without its consent. But
it is axiomatic that in filing an action, it divests itself of its sovereign character and sheds its immunity from suit,
descending to the level of an ordinary litigant. The PCGG cannot claim a superior or preferred status to the
State, even while assuming to represent or act for the State. 48
The suggestion 49 that the State makes no implied waiver of immunity by filing suit except when in so doing it
acts in, or in matters concerning, its proprietary or non-governmental capacity, is unacceptable; it attempts a
distinction without support in principle or precedent. On the contrary
The consent of the State to be sued may be given expressly or impliedly. Express consent may
be manifested either through a general law or a special law. Implied consent is given when the
State itself commences litigation or when it enters into a contract. 50
 The immunity of the State from suits does not deprive it of the right to sue private parties in its
own courts. The state as plaintiff may avail itself of the different forms of actions open to private
litigants. In short, by taking the initiative in an action against the private parties, the state
surrenders its privileged position and comes down to the level of the defendant. The latter
automatically acquires, within certain limits, the right to set up whatever claims and other
defenses he might have against the state. . . . (Sinco, Philippine Political Law, Tenth E., pp. 36-
37, citing U.S. vs. Ringgold, 8 Pet. 150, 8 L. ed. 899)" 51
It can hardly be doubted that in exercising the right of eminent domain, the State exercises its jus imperii, as
distinguished from its proprietary rights or jus gestionis. Yet, even in that area, it has been held that where
private property has been taken in expropriation without just compensation being paid, the defense of immunity
from suit cannot be set up by the State against an action for payment by the owner. 52
The Court also finds itself unable to sustain the PCGG's other principal contention, of the nullity of the
Sandiganbayan's Order for the production and inspection of specified documents and things allegedly in its
possession.
The Court gives short shrift to the argument that some documents sought to be produced and inspected had
already been presented in Court and marked preliminarily as PCGG's exhibits, the movants having in fact
viewed, scrutinized and even offered objections thereto and made comments thereon. Obviously, there is
nothing secret or confidential about these documents. No serious objection can therefore be presented to the
desire of the private respondents to have copies of those documents in order to study them some more or
otherwise use them during the trial for any purpose allowed by law.
The PCGG says that some of the documents are non-existent. This it can allege in response to the
corresponding question in the interrogatories, and it will incur no sanction for doing so unless it is subsequently
established that the denial is false.
The claim that use of the documents is proscribed by Executive Order No. 1 has already been dealt with. The
PCGG is however at liberty to allege and prove that said documents fall within some other privilege,
constitutional or statutory.
The Court finally finds that, contrary to the petitioner's theory, there is good cause for the production and
inspection of the documents subject of the motion dated August 3, 1989. 53 Some of the documents are,
according to the verification of the amended complaint, the basis of several of the material allegations of said
complaint. Others, admittedly, are to be used in evidence by the plaintiff. It is matters such as these into which
inquiry is precisely allowed by the rules of discovery, to the end that the parties may adequately prepare for
pre-trial and trial. The only other documents sought to be produced are needed in relation to the allegations of
the counterclaim. Their relevance is indisputable; their disclosure may not be opposed.
One last word. Due no doubt to the deplorable unfamiliarity respecting the nature, purposes and operation of
the modes of discovery earlier
mentioned, 54 there also appears to be a widely entertained idea that application of said modes is a
complicated matter, unduly expensive and dilatory. Nothing could be farther from the truth. For example, as will
already have been noted from the preceding discussion, all that is entailed to activate or put in motion the
process of discovery by interrogatories to parties under Rule 25 of the Rules of Court, is simply the delivery
directly to a party of a letter setting forth a list of least questions with the request that they be answered
individually. 55 That is all. The service of such a communication on the party has the effect of imposing on him
the obligation of answering the questions "separately and fully in writing underoath," and serving "a copy of the
answers on the party submitting the interrogatories within fifteen (15) days after service of the interrogatories . .
." 56 The sanctions for refusing to make discovery have already been mentioned. 57 So, too, discovery under
Rule 26 is begun by nothing more complex than the service on a party of a letter or other written
communication containing a request that specific facts therein set forth and/or particular documents copies of
which are thereto appended, be admitted in writing. 58 That is all. Again, the receipt of such a communication
by the party has the effect of imposing on him the obligation of serving the party requesting admission with "a
sworn statement either denying specifically the matters of which an admission is requested or setting forth in
detail the reasons why he cannot truthfully either admit or deny those matters," failing in which "(e)ach of the
matters of which admission is requested shall be deemed admitted." 59 The taking of depositions in
accordance with Rule 24 (either on oral examination or by written interrogatories) while somewhat less simple,
is nonetheless by no means as complicated as seems to be the lamentably extensive notion.
WHEREFORE, the petition is DENIED, without pronouncement as to costs. The temporary restraining order
issued on October 27, 1989 is hereby LIFTED AND SET ASIDE.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Paras, Feliciano, Padilla, Bidin, Grio-Aquino, Medialdea, Regalado and Davide,
Jr., JJ., concur.
Melencio-Herrera, J., I also join Justice Cruz's concurrence.
Romero, J., took no part.
G.R. No. L-34341 August 22, 1988
PRISCILLA SUSAN PO, petitioner,
vs.
HON. COURT OF APPEALS, HON. JUDGE JULIAN LUSTRE, AND JOSE P. MANANZAN, respondents.
Panganiban, Linsangan & Associates for petitioner.
Antonio M. Chavez and Benjamin C. Santos & Fortunato Gupit, Jr. for respondents.

GRIO-AQUINO, J.:
This case demonstrates the adage that sometimes "haste makes waste." Seventeen (17) years after the
petitioner Priscilla Susan Po filed a motion for summary judgment in the damage suit which she filed against
the private respondent, her refusal to abide by the trial court's order and the Appellate Court's resolution
denying her motion, has kept her complaint waiting in the wings to be called for pre-trial. Had she been less
intransigent, the case might have been finished long ago.
The petitioner filed in 1971 a complaint for P35,000 damages against the private respondent Jose P.
Mananzan as operator of a banca service for shooting the rapids at Pagsanjan Falls, arising from an accidental
spill into the water, which she and her friend suffered when the banca in which they were riding capsized
during their trip back to town. After Mananzan had answered the complaint, petitioner served upon him a
request for admission.
On February 27, 1971, Mananzan asked for an extension of time to answer the request for admission. The
petitioner opposed the motion for extension of time on account of alleged defects in the notice of hearing.
On March 4, 1971, the petitioner filed a motion for summary judgment on the ground that there exists no
genuine or substantial controversy on any issue of fact raised in the complaint because the defendant, by
failure to answer her request for admission within the reglementary period (Sec. 2, Rule 26, Rules of Court) is
deemed to have admitted the facts set forth in the request.
Mananzan answered the request for admission and sent a copy of his answer to the petitioner. He filed an
opposition to the petitioner's motion for summary judgment.
On April 16, 1971, respondent Judge Lustre denied the motion for summary judgment, observing that "the
interrogatories ... are nothing but a reiteration of a portion of the plaintiffs allegations in the complaint, which
have already been answered and denied by the defendant in his answer" hence, they "need not be answered
again if asked in the form of interrogatories." (p. 10, Brief for Respondents, p. 151, Rollo.)
After the trial court had denied her motion for reconsideration of its order, the petitioner elevated the matter to
the Court of Appeals on a petition for certiorari (CA-G.R. No. 00220-R entitled, "Priscilla Susan Po vs. Hon.
Julian Lustre, et al.") which the Court of Appeals likewise denied on September 23, 1971 for lack of merit. The
pertinent observations of the Court of Appeals are quoted hereunder:
... With the absolute denial of private respondent in his answer to the complaint, petitioner's
subsequent request for admission of the same facts already denied does not serve the purpose
of Rule 26 as a mode of discovery. As aptly stated by respondent Judge, Rule 26 contemplates
interrogatories that would clarify and tend to show light on the truth or falsity of the allegations of
the complaint, and does not refer to a mere reiteration of what has been alleged in the complaint
and unconditionally denied in the answer. Petitioner's request constitutes an utter redundancy
and a useless, pointless process which private respondent should not be subjected to and
which the lower court should not countenance as the respondent Judge rightfully did.
Respondent Judge did not commit any grave abuse of discretion amounting to lack of
jurisdiction nor has he unlawfully deprived petitioner of any right in concluding that petitioner's
request for admission does not fall under Rule 26 and that therefore the same need not be
answered by private respondent. The allegations of facts in the complaint remain to have been
controverted by the answer of private respondent to the complaint. There being genuine issues
between the parties, respondent Judge correctly denied petitioner's Motion for Summary
Judgment. Unless it is shown that respondent Judge has committed a palpable grave abuse of
 discretion, amounting to lack of jurisdiction, this Court will not issue the writs prayed for. (pp. 19-
20, Rollo.)
Nothing daunted, the petitioner appealed to this Court.
An examination of petitioner's complaint and her request for admission confirms Judge Lustre's finding (which
the Court of Appeals upheld) that the "fact" set forth in the request for admission, including the amount of
damages claimed, are the same factual allegations set forth in her complaint which the defendant either
admitted or denied in his answer.
A party should not be compelled to admit matters of fact already admitted by his pleading and concerning
which there is no issue (Sherr vs. East, 71 A2d 752, Terry 260, cited in 27 C.J.S. 91), nor should he be
required to make a second denial of those already denied in his answer to the complaint. A request for
admission is not intended to merely reproduce or reiterate the allegations of the requesting party's pleading but
should set forth relevant evidentiary matters of fact, or documents described in and exhibited with the request,
whose purpose is to establish said party's cause of action or defense. Unless it serves that purpose, it is, as
correctly observed by the Court of Appeals, "pointless, useless," and "a mere redundancy."
WHEREFORE, the judgment of the Court of Appeals is affirmed with costs against the petitioner. This decision
is immediately executory, hence no motion for extension of time to file a motion for reconsideration will be
entertained.
SO ORDERED.
Narvasa, Cruz and Medialdea, JJ., concur.
Gangayco, J., is on leave.
G.R. No. 163515 October 31, 2008
ISIDRO T. PAJARILLAGA, Petitioner,
vs.
COURT OF APPEALS and THOMAS T. KALANGEG, Respondents.
DECISION
QUISUMBING, Acting C.J.:
This is a petition for review on certiorari of the Decision1 dated January 26, 2004 and the Resolution2 dated
May 14, 2004 of the Court of Appeals in CA-G.R. SP No. 47526. The appellate court affirmed the
Orders3 dated January 29, 1998 and March 26, 1998 of the Regional Trial Court (RTC) of Bontoc, Mt.
Province, Branch 36, which had denied petitioners Motion for Leave of Court to Take the Deposition of the
Defendant Upon Written Interrogatories.
The antecedent facts are as follows:
On November 24, 1995, private respondent Thomas T. Kalangeg filed with the RTC of Bontoc, Mt. Province,
Branch 36, a complaint4 for a sum of money with damages against petitioner Isidro T. Pajarillaga.
Since the parties failed to reach an amicable settlement, trial on the merits ensued. On March 10, 1997, private
respondent presented his first witness. At the next scheduled hearing on August 8, 1997, neither petitioner nor
his counsel appeared despite notice. Upon private respondents motion, the trial court allowed him to present
his remaining two witnesses subject to petitioners cross-examination on the next scheduled hearing on
September 2, 1997. But when the case was called on that date, petitioner and his counsel were again absent.
Upon private respondents motion, the trial court declared petitioner to have waived his right of cross-
examination and allowed private respondent to make a formal offer of evidence.
In an Order dated October 8, 1997, the trial court admitted all the exhibits formally offered by private
respondent. It also scheduled petitioners presentation of evidence on October 28, 29 and 30, 1997.
Petitioner moved to reset the hearing to November 17, 1997. The trial court granted his motion and reset the
hearing to December 15, 1997.
On December 10, 1997, however, petitioner filed a Motion for Leave of Court to Take the Deposition of the
Defendant Upon Written Interrogatories5 on the grounds that: (1) petitioner resides in Manila which is more
than four hundred (400) kilometers from Bontoc, Mt. Province; and (2) petitioner is suffering from an illness
which prohibits him from doing strenuous activities.
Private respondent opposed the motion. On December 15, 1997, neither petitioner nor his counsel again
appeared. Nonetheless, the trial court reset the case to January 12, 1998 for the presentation of petitioners
evidence. What transpired on said date, however, is not disclosed by the records before this Court.
In an Order6 dated January 29, 1998, the trial court denied petitioners motion, in this wise:
Considering that the above-entitled case has been pending since November 24, 1995, and hearings thereof
have been delayed almost always at the instance of the defendant, the latters motion for leave of Court to take
said defendants deposition upon written interrogatories at this late stage of the proceedings is hereby denied.
Wherefore, in the interest of justice defendant is granted one more chance to adduce his evidence on February
18, 1998, at 8:30 oclock in the morning. Otherwise, he shall be deemed to have waived his right thereto.
SO ORDERED.
Petitioner moved for reconsideration which the trial court denied. It also reset the hearing to April 20, 1998.7
Petitioner elevated the case to the Court of Appeals via a petition for certiorari under Rule 65 of the 1997 Rules
of Court. In affirming the trial courts orders, the appellate court ruled that: First, the denial of petitioners motion
was not tainted with grave abuse of discretion since the trial court gave petitioner full opportunity to present his
evidence. Second, petitioners motion came much too late in the proceedings since private respondent has
already rested his case. Third, the medical certificate which petitioner submitted to validate his allegation of
illness merely contained a remark that the "patient is advised to avoid strenuous activity." It did not state that
the travel from Manila to Mt. Province for the scheduled hearings was too strenuous to endanger petitioners
health. Fourth, the threats to petitioners life by private respondents relatives were belatedly alleged only in his
motion for reconsideration.
Dissatisfied, petitioner appealed to this Court on the ground that the Court of Appeals erred in:
DENYING PETITIONERS PRAYER THAT HIS DEPOSITION BE TAKEN THROUGH WRITTEN
INTERROGATORIES IN CONNECTION WITH A CASE WHICH IS BEING HEARD BY THE REGIONAL
TRIAL COURT OF BONTOC, MT. PROVINCE THAT CAN BE REACHED AFTER A GRUELLING SEVEN (7)
HOUR RIDE TRAVERSING VERY ROUGH AND RUGGED ROADS.8
Simply stated, the issue is whether the taking of petitioners deposition by written interrogatories is proper
under the circumstances obtaining in this case.
Petitioner asserts that the trial court should have allowed the taking of his deposition through written
interrogatories since: (1) this discovery measure may be availed of by a party as a matter of right; (2) he has
good reasons for invoking his right to this discovery measure, i.e., he resides in Manila which is more than four
hundred (400) kilometers from Bontoc, Mt. Province and he is suffering from an illness which prohibits him
from doing strenuous activities. Petitioner adds that there are serious threats to his life by private respondents
relatives.
Private respondent counters that petitioner could no longer avail of this discovery measure since the trial court
has already given him sufficient time to present his evidence and yet he failed to do so. Private respondent
adds that petitioners motion was made purposely to further delay the resolution of the case as it was invoked
during the late stage of the proceedings. Private respondent also avers that the medical certificate submitted to
show petitioners illness does not contain any statement that he could not travel from Manila to Mt. Province for
the scheduled hearings. In fact, the medical certificate was not even notarized.
After considering the contentions and submissions of the parties, we are in agreement that the petition lacks
merit.
Deposition is chiefly a mode of discovery, the primary function of which is to supplement the pleadings for the
purpose of disclosing the real points of dispute between the parties and affording an adequate factual basis
during the preparation for trial. 9 It should be allowed absent any showing that taking it would prejudice any
party. It is accorded a broad and liberal treatment and the liberty of a party to make discovery is well-nigh
unrestricted if the matters inquired into are otherwise relevant and not privileged, and the inquiry is made in
good faith and within the bounds of law. It is allowed as a departure from the accepted and usual judicial
proceedings of examining witnesses in open court where their demeanor could be observed by the trial judge,
consistent with the principle of promoting just, speedy and inexpensive disposition of every action and
proceeding; and provided it is taken in accordance with the provisions of the Rules of Court, i.e., with leave of
court if summons have been served, and without such leave if an answer has been submitted; and provided
further that a circumstance for its admissibility exists.10
There is nothing in the Rules of Court or in jurisprudence which restricts a deposition to the sole function of
being a mode of discovery before trial. Under certain conditions and for certain limited purposes, it may be
taken even after trial has commenced and may be used without the deponent being actually called to the
witness stand.11There is no rule that limits deposition-taking only to the period of pre-trial or before it; no
prohibition exists against the taking of depositions after pre-trial. There can be no valid objection to allowing
them during the process of executing final and executory judgments, when the material issues of fact have
become numerous or complicated.12
Such being the case, there is really nothing objectionable, per se, with petitioner availing of this discovery
measure after private respondent has rested his case and prior to petitioners presentation of evidence. To
reiterate, depositions may be taken at any time after the institution of any action, whenever necessary or
convenient.
But when viewed vis the several postponements made by petitioner for the initial presentation of his evidence,
we are of the view that his timing is, in fact, suspect. The records before us show that petitioner stopped
attending the hearings after private respondent presented his first witness. Petitioner offered no excuse for his
and his counsels absences. Moreover, the trial court has set four (4) hearing dates for the initial presentation
of his evidence. But he merely moved for its resetting without invoking the grounds which he now presents
before us.
Besides, even as we scrutinize petitioners arguments, we think that he has not sufficiently shown an
"exceptional" or "unusual" case for us to grant leave and reverse the trial and appellate courts.
Under Section 4, Rule 23 of the Rules of Court, depositions may be used for the trial or for the hearing of a
motion or an interlocutory proceeding, under the following circumstances:
SEC. 4. Use of depositions.
xxxx
(c) The deposition of a witness, whether or not a party, may be used by any party for any purpose if the court
finds: (1) that the witness is dead; or (2) that the witness resides at a distance more than one hundred (100)
kilometers from the place of trial or hearing, or is out of the Philippines, unless it appears that his absence was
procured by the party offering the deposition; or (3) that the witness is unable to attend or testify because of
age, sickness, infirmity, or imprisonment; or (4) that the party offering the deposition has been unable to
procure the attendance of the witness by subpoena; or (5) upon application and notice, that such exceptional
circumstances exist as to make it desirable, in the interest of justice and with due regard to the importance of
presenting the testimony of witnesses orally in open court, to allow the deposition to be used; and
x x x x13
In this case, petitioner invokes distance and illness to avail of the discovery measure.1avvphi1 We agree with
private respondent that the matter of distance could have been settled had petitioner requested for a change of
venue earlier in the proceedings. Petitioner has attended the pre-trial and the hearing where private
respondent presented his first witness. He need not await his turn to present evidence before realizing the
great inconvenience caused by the enormous distance between his place of residence and the place of
hearing.
Nor are we inclined to accept petitioners claim of illness. As aptly observed by the Court of Appeals, the
medical certificate submitted by petitioner merely contained a remark that the "patient is advised to avoid
strenuous activity." It was not alleged that the travel from Manila to Mt. Province for the scheduled hearings
was too strenuous to endanger petitioners health.
We also agree with the Court of Appeals that the threats to petitioners life by private respondents relatives
appear to be a mere afterthought since it was raised only in petitioners motion for reconsideration of the trial
courts denial of his motion for leave. We also note that the incident which gave rise to the alleged threats took
place prior to the pre-trial. Surely, petitioner could have informed the trial court of this incident had there been
truth to, and serious implication of, his allegation.
Finally, we must emphasize that while the rules on discovery are liberally constructed so as to ascertain truth
and to expedite the disposal of cases, the trial court may disallow a deposition if there are valid reasons for so
ruling.14 Here, we find the protracted delay in the litigation at petitioners instance coupled with the belated and
unsubstantiated allegations of illness and threats to petitioners life, more than sufficient reasons for the trial
court to deny petitioners motion.
WHEREFORE, the instant petition is DENIED for lack of merit. The Decision dated January 26, 2004 and the
Resolution dated May 14, 2004 of the Court of Appeals in CA-G.R. SP No. 47526, are AFFIRMED. Costs
against petitioner.
SO ORDERED.
LEONARDO A. QUISUMBING
Acting Chief Justice
WE CONCUR:
CONCHITA CARPIO MORALES
Associate Justice
DANTE O. TINGA PRESBITERO J. VELASCO, JR.
Associate Justice Associate Justice
ARTURO D. BRION
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
LEONARDO A. QUISUMBING
Acting Chief Justice
A.M. No. 03-1-09-SC
RE: PROPOSED RULE ON GUIDELINES TO BE OBSERVED BY TRIAL COURT JUDGES AND CLERKS
OF COURT IN THE CONDUCT OF PRE-TRIAL AND USE OF DEPOSITION-DISCOVERY
MEASURES
 RESOLUTION
Acting on the recommendation of the Chairman of the Committee on Revision of the Rules of Court
submitting for this Court's, consideration and approval the Proposed Rule on Guidelines to be Observed by
Trial Court Judges and Clerks of Court in the Conduct of Pre-Trial and Use of Deposition-Discovery Measures,
the Court Resolved to APPROVE the same. The said Rule is hereto attached as an integral part of this
Resolution.
The Rule shall take effect on August 16, 2004 following its publication in a newspaper of general
circulation not later than July 30, 2004.
July 13, 2004.
(Sgd.)Davide, Jr. C.J., Puno, Vitug, Panganiban, Quisumbing, Ynarez-Santiago, Sandoval-Gutierrez, Carpio,
Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna and Tinga JJ.
GUIDELINES TO BE OBSERVED BY TRIAL COURT JUDGES AND CLERKS OF COURT IN THE
CONDUCT OF PRE-TRIAL AND USE OF DEPOSITION-DISCOVERY MEASURES
The use of pre-trial and the deposition-discovery measures are undeniably important and vital
components of case management in trial courts. To abbreviate court proceedings, ensure prompt disposition of
cases and decongest court dockets, and to further implement the pre-trial guidelines laid down in
Administrative Circular No. 3-99 dated January 15, 1999 and except as otherwise specifically provided for in
other special rules, the following guidelines are issued for the observance and guidance of trial judges and
clerks of court:
I. PRE-TRIAL
A. Civil Cases
1. Within one day from receipt of the complaint:
1.1 Summons shall be prepared and shall contain a reminder to defendant to observe restraint in
filing a motion to dismiss and instead allege the grounds thereof as defenses in the Answer, in
conformity with IBP-OCA Memorandum on Policy Guidelines dated March 12, 2002. A copy of
the summons is hereto attached as Annex "A;" and
1.2 The court shall issue an order requiring the parties to avail of interrogatories to parties under Rule
25 and request for admission by adverse party under Rule 26 or at their discretion make use of
depositions under Rule 23 or other measures under Rules 27 and 28 within five days from the
filing of the answer.1 A copy of the order shall be served upon the defendant together with the
summons and upon the plaintiff.
Within five (5) days from date of filing of the reply,2 the plaintiff must promptly move ex parte that
the case be set for pre-trial conference.3 If the plaintiff fails to file said motion within the given
period, the Branch COC shall issue a notice of pre-trial.
2. The parties shall submit, at least three (3) days before the pre-trial, pre-trial briefs containing the
following:4
a. A statement of their willingness to enter into an amicable settlement indicating the desired terms
thereof or to submit the case to any of the alternative modes of dispute resolution;
b. A summary of admitted facts and proposed stipulation of facts;
c. The issues to be tried or resolved;
d. The documents or exhibits to be presented, stating the purpose thereof. (No evidence shall be
allowed to be presented and offered during the trial in support of a party's evidence-in-chief
other than those that had been earlier identified and pre-marked during the pre-trial, except if
allowed by the court for good cause shown);
e. A manifestation of their having availed or their intention to avail themselves of discovery
procedures or referral to commissioners; and
f. The number and names of the witnesses, the substance of their testimonies, and the approximate
number of hours that will be required by the parties for the presentation of their respective
witnesses.
A copy of the Notice of Pre-trial Conference is hereto attached as Annex "B."
The rule on the contents of the pre-trial brief must strictly be complied with.
The parties are bound by the representations and statements in their respective pre-trial briefs.
 3. At the start of the pre-trial conference, the judge shall immediately refer the parties and/or their
counsel if authorized by their clients to the PMC mediation unit for purposes of mediation if
available.5 If mediation fails, the judge will schedule the continuance of the pre-trial
conference. Before the continuance, the Judge may refer the case to the Branch COC for a preliminary
conference to assist the parties in reaching a settlement, to mark the documents or exhibits to be
presented by the parties and copies thereof to be attached to the records after comparison and to
consider such other matters as may aid in its prompt disposition.6
During the preliminary conference, the Branch COC shall also ascertain from the parties the
undisputed facts and admissions on the genuineness and due execution of the documents marked as
exhibits. The proceedings during .the preliminary conference shall be recorded in the "Minutes of
Preliminary Conference" to be signed by both parties and/or counsel, the form of which is hereto
attached as Annex. "C".
The minutes of preliminary conference and the exhibits shall be attached by the Branch COC to the
case record before the pre-trial.
4. Before the continuation of the pre-trial conference, the judge must study all the pleadings of the
case, and determine the issues thereof and the respective positions of the parties thereon to enable
him to intelligently steer the parties toward a possible amicable settlement of the case, or, at the
very least, to help reduce and limit the issues. The judge should not allow the termination of pre-
trial simply because of the manifestation of the parties that they cannot settle the case. He should
expose the parties to the advantages of pre-trial. He must also be mindful that there are other
important aspects of the pre-trial that ought to be taken up to expedite the disposition of the case.7
The Judge with all tact, patience, impartiality and with due regard to the rights of the parties shall
endeavor to persuade them to arrive at a settlement of the dispute.8 The court shall initially ask the
parties and their lawyers if an amicable settlement of the case is possible. If not, the judge may confer
with the parties with the opposing counsel to consider the following:
a. Given the evidence of the plaintiff presented in his pre-trial brief to support his claim, what
manner of compromise is considered acceptable to the defendant at the present stage?
b. Given the evidence of the defendant described in his pre-trial brief to support his defense,
what manner of compromise is considered acceptable to the plaintiff at the present stage?
If not successful, the court shall confer with the party and his counsel separately.
If the manner of compromise is not acceptable, the judge shall confer with the parties without their
counsel for the same purpose of settlement.
5. If all efforts to settle fail, the trial judge shall:
a. Adopt the minutes of preliminary conference as part of the pre-trial proceedings and confirm
markings of exhibits or substituted photocopies and admissions on the genuineness and due
execution of documents;
b. Inquire if there are cases arising out of the same facts pending before other courts and order its
consolidation if warranted;
c. Inquire if the pleadings are in order. If not, order the amendments if necessary;
d. Inquire if interlocutory issues are involved and resolve the same;
e. Consider the adding or dropping of parties;
f. Scrutinize every single allegation of the complaint, answer and other pleadings and
attachments thereto and the contents of documents and all other evidence identified and pre-
marked during pre-trial in determining further admissions of facts and documents. To obtain
admissions, the Court shall ask the parties to submit the depositions taken under Rule 23, the
answers to written interrogatories under Rule 25 and the answers to request for admissions by
the adverse party under Rule 26. It may also require the production of documents or things
requested by a party under Rule 27 and the results of the physical and mental examination of
persons under Rule 28;
g. Define and simplify the factual and legal issues arising from the pleadings. Uncontroverted
issues and frivolous claims or defenses should be eliminated. For each factual issue, the
parties/counsel shall state all the evidence to support their positions thereon. For each legal
issue, parties/counsel shall state the applicable law and jurisprudence supporting their
respective positions thereon. If only legal issues are presented, the judge shall require the
parties to submit their respective memoranda and the court can proceed to render judgment;9
 h. Determine the propriety of rendering a summary judgment dismissing the case based on the
disclosures made at the pre-trial or a judgment based on the pleadings, evidence identified
and admissions made during pre-trial;10
i. Ask parties to agree on the specific trial dates for continuous trial in accordance with Circular
No. 1-89 dated January 19, 1989; adhere to the case flow chart determined by the court, which
shall contain the different stages of the proceedings up to the promulgation of the decision
and use the time frame for each stage in setting the trial dates. The One-Day Examination of
Witness Rule, that is, a witness has to be fully examined in one (1) day only, shall be strictly
adhered to subject to the courts' discretion during trial on whether or not to extend the direct
and/or cross-examination for justifiable reasons. On the last hearing day allotted for each
party, he is required to make his formal offer of evidence after the presentation of his last
witness and the opposing party is required to immediately interpose his objection thereto.
Thereafter, the Judge shall make the ruling on the offer of evidence in open court. However
the judge has the discretion to allow the offer of evidence in writing in conformity with
Section 35, Rule 132;
j. Determine the most important witnesses to be heard and limit the number of witnesses (Most
Important Witness Rule). The facts to be proven by each witness and the approximate number
of hours per witness shall be fixed;
k. At his discretion, order the parties to use the affidavits of witnesses as direct testimonies
subject to the right to object to inadmissible portions thereof and to the right of cross-
examination by the other party. The affidavits shall be based on personal knowledge, shall set
forth facts as would be admissible in evidence, and shall show affirmatively that the affiant is
competent to testify to the matters stated therein. The affidavits shall be in question and
answer form, and shall comply with the rules on admissibility of evidence;
l. Require the parties and/or counsel to submit to the Branch COC the names, addresses and
contact numbers of the witnesses to be summoned by subpoena;
m. Order the delegation of the reception of evidence to the Branch COC under Rule 30; and
n. Refer the case to a trial by commissioner under Rule 32.
During the pre-trial, the judge shall be the one to ask questions on issues raised therein and all
questions or comments by counsel or parties must be directed to the judge to avoid hostilities
between the parties.
6. The trial judge shall schedule the pre-trial in the afternoon sessions and set as many pre-trial
conferences as may be necessary.
7. All proceedings during the pre-trial shall be recorded. The minutes of each pre-trial conference
shall contain matters taken up therein more particularly admissions of facts and exhibits and shall
be signed by the parties and their counsel.
8. The judge shall issue the required Pre-Trial Order within ten (10) days after the termination of the
pre-trial. Said Order shall bind the parties, limit the trial to matters not disposed of and control the
course of the action during the trial. A sample Pre-Trial Order is hereto attached as Annex "D."
However, the Court may opt to dictate the Pre-Trial Order in open court in the presence of the
parties and their counsel and with the use of a computer, shall have the same immediately
finalized and printed. Once finished, the parties and/or their counsel shall sign the same to
manifest their conformity thereto.
9. The court shall endeavor to make the parties agree to an equitable compromise or settlement at any
stage of the proceedings before rendition of judgment.
B. Criminal Cases
1. Before arraignment, the Court shall issue an order directing the public prosecutor to submit the
record of the preliminary investigation to the Branch COC for the latter to attach the same to the
record of the criminal case.
Where the accused is under preventive detention, his case shall be raffled and its records
transmitted to the judge to whom the case was raffled within three days from the filing of the
complaint or information. The accused shall be arraigned within ten days from the date of the
raffle. The pre-trial of his case shall be held within ten days after arraignment unless a shorter
period is provided for by law.11
2. After the arraignment, the court shall forthwith set the pre-trial conference within thirty days from
the date of arraignment, and issue an order: (a) requiring the private offended party to appear
 thereat for purposes of plea-bargaining except for violations of the Comprehensive Dangerous
Drugs Act of 2002, and for other matters requiring his presence;12 (b) referring the case to the
Branch COC, if warranted, for a preliminary conference to be set at least three days prior to the
pre-trial to mark the documents or exhibits to be presented by the parties and copies thereof to be
attached to the records after comparison and to consider other matters as may aid in its prompt
disposition; and (c) informing the parties that no evidence shall be allowed to be presented and
offered during the trial other than those identified and marked during the pre-trial except when
allowed by the court for good cause shown. A copy of the order is hereto attached as Annex "E". In
mediatable cases, the judge shall refer the parties and their counsel to the PMC unit for purposes of
mediation if available.
3. During the preliminary conference, the Branch COC shall assist the parties in reaching a settlement
of the civil aspect of the case, mark the documents to be presented as exhibits and copies thereof
attached to the records after comparison, ascertain from the parties the undisputed facts and
admissions on the genuineness and due execution of documents marked as exhibits and consider
such other matters as may aid in the prompt disposition of the case. The proceedings during the
preliminary conference shall be recorded in the Minutes of Preliminary Conference to be signed by
both parties and counsel. (Please see Annex "B")
The Minutes of Preliminary Conference and the exhibits shall be attached by the Branch COC to
the case record before the pre-trial.
4. Before the pre-trial conference the judge must study the allegations of the information, the
statements in the affidavits of witnesses and other documentary evidence which form part of the
record of the preliminary investigation.
5. During the pre-trial, except for violations of the Comprehensive Dangerous Drugs Act of 2002, the
trial judge shall consider plea-bargaining arrangements.13 Where the prosecution and the offended
party agree to the plea offered by the accused, the court shall:
a. Issue an order which contains the plea bargaining arrived at;
b. Proceed to receive evidence on the civil aspect of the case; and
c. Render and promulgate judgment of conviction, including the civil liability or damages
duly established by the evidence.14
6. When plea bargaining fails, the Court shall:
a. Adopt the minutes of preliminary conference as part of the pre-trial proceedings, confirm
markings of exhibits or substituted photocopies and admissions on the genuineness and due
execution of documents and list object and testimonial evidence;
b. Scrutinize every allegation of the information and the statements in the affidavits and other
documents which form part of the record of the preliminary investigation and other
documents identified and marked as exhibits in determining farther admissions of facts,
documents and in particular as to the following:15
1. the identity of the accused;
2. court's territorial jurisdiction relative to the offense/s charged;
3. qualification of expert witness/es;
4. amount of damages;
5. genuineness and due execution of documents;
6. the cause of death or injury, in proper cases;
7. adoption of any evidence presented during the preliminary investigation;
8. disclosure of defenses of alibi, insanity, self-defense, exercise of public authority and
justifying or exempting circumstances; and
9. such other matters that would limit the facts in issue.
c. Define factual and legal issues;
d. Ask parties to agree on the specific trial dates and adhere to the flow chart determined by the
court which shall contain the time frames for the different stages of the proceeding up to
promulgation of decision and use the time frame for each stage in setting the trial dates;
e. Require the parties to submit to the Branch COC the names, addresses and contact numbers of
witnesses that need to be summoned by subpoena;16 and
 f. Consider modification of order of trial if the accused admits the charge but interposes a lawful
defense.
7. During the pre-trial, the judge shall be the one to ask questions on issues raised therein and all
questions must be directed to him to avoid hostilities between parties.
8. All agreements or admissions made or entered during the pre-trial conference shall be reduced in
writing and signed by the accused and counsel, otherwise, they cannot be used against the
accused. The agreements covering the matters referred to in Section 1 of Rule 118 shall be
approved by the court. (Section 2, Rule 118)
9. All proceedings during the pre-trial shall be recorded, the transcripts prepared and the minutes
signed by the parties and/or their counsels.
10. The trial judge shall issue a Pre-trial Order within ten (10) days after the termination of the pre-
trial setting forth the actions taken during the pre-trial conference, the facts stipulated, the
admissions made, evidence marked, the number of witnesses to be presented and the schedule of
trial. Said Order shall bind the parties, limit the trial to matters not disposed of and control the
course the action during the trial.17
Encl:
Annex "A" - Summons
Annex "B" - Notice of Pre-trial Conference in Civil Cases
Annex "C" - Minutes of Preliminary Conference
Annex "D" - Pre-trial Order in Civil Cases
Annex "E" - Notice of Pre-trial Conference in Criminal Cases

1 According to Justice Jose Y. Feria, Co-Chairman of the Revision of the Rules of Court Committee, Rules 25
and 26 require the parties to avail of said rules. (1997 Rules of Civil Procedure, p. 88 and p. 89,
Philippine Legal Studies, Series No. 5, 1998)
2 Administrative Circular No. 3-99 dated 15 January 1999.
3 Sec. 1, Rule 18, 1997 Rules of Civil Procedure.
4 Sec. 6, Rule 18, 1997 Rules of Civil Procedure.
5 Issuances of the Court in A.M. No. 01-10-5-SC-PHILJA dated October 16, 2001, Administrative Circular No.
20-2002 dated April 24, 2002 and A.M. No. 04-3-15-SC-PHILJA dated March 23, 2004 relative to the use
of Alternative Dispute Resolution in Pre-Trial, particularly, on court-annexed mediation shall continue
to apply in proceedings before pilot courts in Metro Manila, Cebu and Davao.
6 Vol. I, 2002 Revised Manual for Clerks of Court, pp. 234-244.
7 Administrative Circular No. 3-99 dated 15 January 1999.
8 Ibid.
9 Administrative Circular No. 3-99 dated 15 January 1999.
10 Ibid.
11 Sec. 1, Rule 116, Revised Rules of Criminal Procedure, as amended.
12 Sec. 1, Rule 118, Id
13 Bellosillo, J., Effective Pre-trial Technique, pp. 4-42.
14 Id., pp. 4-43.
15 Id., pp. 4-44.
16 Id., pp. 4-45.
17 Bellosillo, Effective Pre-trial Technique, 1990, p. 622, Sec. 7, Rule 18, 1997 Rules of Civil Procedure and Sec. 4,
Rule 118, Revised Rules of Criminal Procedure.
[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 payments or a partial remission does not
involve novation (id., p. 387). Neither does the reduction of the amount of an obligation amount to a novation because it
only means a partial remission or condonation of the same debt.
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?
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?
IV. WHERE THERE IS A VALID NOVATION, MAY THE ORIGINAL TERMS OF CONTRACT WHICH HAS
BEEN NOVATED STILL PREVAIL?[10]
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;
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]
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.
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.
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.
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.
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.
Quisumbing, Ynares-Santiago, Carpio, and Azcuna, JJ., concur.

REPUBLIC OF THE PHILIPPINES, G.R. No. 148246

Petitioner,
Present:

QUISUMBING, J.,
Chairperson,
- versus - CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
JUAN C. TUVERA, VICTOR P.
TUVERA and TWIN PEAKS
DEVELOPMENT CORPORATION, Promulgated:
Respondents.
February 16, 2007

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

DECISION

TINGA, J.:

The long-term campaign for the recovery of ill-gotten wealth of former President Ferdinand E. Marcos, his wife Imelda,
and their associates, has been met with many impediments, some of which are featured in this case, that have led to doubts
whether there is still promise in that enterprise. Yet even as the prosecution of those cases have drudged on and on, the era
of their final reckoning is just beginning before this Court. The heavy hammer of the law is just starting to fall.

The instant action originated from a civil complaint for restitution and damages filed by the Republic of
the Philippines against Marcos and his longtime aide Juan Tuvera, as well as Tuvera's son Victor and a corporation the
younger Tuvera had controlled. Trial on the case against the Tuveras proceeded separately before the Sandiganbayan.
After the Republic had presented its evidence, the Tuveras successfully moved for the dismissal of the case on demurrer
to evidence. The demurrer was sustained, and it falls upon this Court to ascertain the absence or existence of sufficient
proof to support the relief sought by the Republic against the Tuveras.

I.

We begin with the facts.

Twin Peaks Development Corporation (Twin Peaks) was organized on 5 March 1984 as a corporation with a
principal purpose of engaging in the real estate business. There were five incorporating stockholders, including respondent
Victor Tuvera (Victor)[1] who owned 48% of the shares of the fledgling corporation. Victor was the son of respondent Juan
Tuvera, who was then Presidential Executive Assistant of President Marcos.

Acting on a letter dated 31 May 1984 of Twin Peaks Vice-President and Treasurer Evelyn Fontanilla in behalf of the
corporation, President Marcos granted the award of a Timber License Agreement (TLA), more specifically TLA No. 356,
in favor of Twin Peaks to operate on 26,000 hectares of forest land with an annual allowable cut of 60,000 cubic meters of
timber and to export 10,000 cubic meters of mahogany of the narra species.[2] As a result, Twin Peaks was able to engage
in logging operations.

On 25 February 1986, President Marcos was ousted, and Corazon C. Aquino assumed the presidency. Among her
first acts as President was to establish the Philippine Commission on Good Government (PCGG), tasked with tracking
down the ill-gotten wealth procured by Marcos, his family, and associates during his 20-year rule. Among the powers
granted to the PCGG was the power to issue writs of sequestration. [3] On 13 June 1988, the PCGG issued a Writ of
Sequestration on all assets, properties, records, documents, and shares of stock of Twin Peaks on the ground that all the
assets of the corporation are ill-gotten wealth for having been acquired directly or
indirectly through fraudulent and illegal means.[4] This was followed

two days later by Mission Order No. MER-88 (Mission Order), also issued by the PCGG, implementing the
aforementioned Writ of Sequestration.[5]

On 9 December 1988, the PCGG, in behalf of the Republic, filed the Complaint now subject of this Petition.[6] Impleaded
as defendants in the Complaint[7] were Juan and Victor Tuvera, as well as the then-exiled President Marcos. Through the
Complaint, the Republic sought to recover funds allegedly acquired by said parties in flagrant breach of trust and fiduciary
obligations with grave abuse of right and power in violation of the Constitution and the laws of the Republic of
the Philippines.[8]

In particular, the Complaint alleged that Juan Tuvera, as Presidential Executive Assistant of President Marcos,
took advantage of his relationship to influence upon and connection with the President by engaging in a scheme to
unjustly enrich himself at the expense of the Republic and of the Filipino people. This was allegedly accomplished on his
part by securing TLA No. 356 on behalf of Twin Peaks despite existing laws expressly prohibiting the exportation of
mahogany of the narra species[9] and Twin Peaks lack of qualification to be a grantee thereof for lack of sufficient logging
equipment to engage in the logging business.[10] The Complaint further alleged that Twin Peaks exploited the countrys
natural resources by engaging in large-scale logging and the export of its produce through its Chinese operators whereby
respondents obtained a revenue of approximately P45 million.

The Complaint prayed that (1) TLA No. 356 be reverted to the State or cancelled; (2) respondents be jointly and
severally ordered to pay P48 million[11] as actual damages; and (3) respondents pay moral, temperate and exemplary
damages, litigation expenses, and treble judicial costs.[12] It cited as grounds for relief, gross abuse of official position and
authority, breach of public trust and fiduciary obligations, brazen abuse of right and power, unjust enrichment, and
violation of the Constitution.[13]
 In their Answer,[14] respondents Victor Tuvera and Twin Peaks claimed that Twin Peaks was awarded TLA No.
356 only after its articles of incorporation had been amended enabling it to engage in logging operations,[15] that the
Republics reference to Chinese operations and revenue of approximately P45 million were merely

imagined,[16] and that the PCGG has no statutory authority to institute the action.[17] By way of counterclaim, respondents
asked that the Republic be ordered to pay Victor Tuvera moral damages and to pay both Victor Tuvera and Twin
Peaks exemplary damages, and to reimburse their attorneys fees.[18]

Anent the allegation that Twin Peaks sold about P3 million worth of lumber despite the Writ of Sequestration
issued by the PCGG, respondents stressed that the Director of Forest Development acted within the scope of his authority
and the courts have no supervising power over the actions of the Director of Forest Development and the Secretary of the
Department of Environment and Natural Resources (DENR) in the performance of their official duties. [19]

As an affirmative and special defense, respondents Victor Tuvera and Twin Peaks alleged that after Twin
Peaks was granted TLA No. 356 in 24 August 1984, Felipe Ysmael, Jr. and Co., Inc. had filed a motion for the
cancellation of the same with the DENR

Secretary. When respondents submitted their Answer, the denial by the DENR of the Ysmael motion was under review
before the Court.[20]

Juan Tuvera, who was abroad when the case was filed on 9 December 1988, later submitted his own Answer on 6
December 1989.[21] He also denied the allegations of the Republic and alleged that as Presidential Executive Assistant of
then President Marcos, he acted within the confines of his duties and had perpetrated no unlawful acts. He merely
transmitted communications of approval in the course of his duties and had nothing to do with the decisions of then
President Marcos.[22] He denied having anything to do with Twin Peaks.

Juan Tuvera filed a compulsory counterclaim on the ground that the instant action had besmirched his reputation
and caused serious anxiety and mental anguish thus entitling him to moral and exemplary damages and litigation
expenses.[23]

On 3 May 1989, respondents filed an Omnibus Motion to Nullify Writ of Sequestration and/or the Mission
Order.[24] The Sandiganbayan issued a Temporary Restraining Order against the PCGG requiring it to cease, refrain and
desist from further implementing the Writ of Sequestration and the Mission Order. [25] Subsequently, on motion of
respondents, the Sandiganbayan granted a Writ of Preliminary Injunction covering the Mission Order. The Sandiganbayan
deferred its resolution on the Motion to Lift the Writ of Sequestration.[26]

From 1988 to 1993, the proceedings before the Sandiganbayan were delayed owing to the difficulty of acquiring
jurisdiction over the person of President Marcos, who was by then already in exile. Thus, upon motion by respondents, the
Sandiganbayan granted them a separate pre-trial/trial from President Marcos.[27]

Respondents submitted their documentary evidence in the Pre-Trial Conference while the Republic reserved to
present the same during trial. After the pre-trial conference, the Sandiganbayan issued a Pre-Trial Order[28] dated 3
November 1993, which presented the issues for litigation as follows:

Whether or not defendant Juan C. Tuvera who was a Presidential Executive Assistant at the time material
to this case, by himself and in concert with his co-defendants Ferdinand E. Marcos and Victor Tuvera,
took advantage of his relation and connection with the late Marcos, secure (sic) a timber concession for
Twin Peaks Development Corporation and, engage (sic) in a scheme to unjustly enrich himself at the
expense of the Republic and the Filipino People.[29]
 The Pre-Trial Order also indicated that the Republic admitted the exhibits by respondents, subject to the
presentation of certified true copies thereof. Respondents exhibits were as follows:[30]

Exhibit Nos. Description

1 Amended Articles of Incorporation dated 31 July 1984
2 TLA No. 356
3 Order, Minister Ernesto M. Maceda, 22 July 1986
3-A Order, Minister Ernesto M. Maceda, 10 October 1986
3-B Order, Minister Ernesto M. Maceda, 26 November 1986, O.P. Case No.
3521
3-C Resolution, Office of the President, 6 July 1987, O.P. Case No. 3521
3-D Order, Office of the President, 14 August 1987, I.S. No. 66
3-E Complaint, PCGG, dated 20 July 1988
3-E-1, 3-E-2, I.S. No. 66 Affidavit, PCGG, Almario F. Mendoza, Ltv. Ramon F. Mendoza
and Affidavit, Isidro Santiago
3-E-3
3-F Counter-Affidavit, Juan C. Tuvera, 17 August 1989
3-F-1 PCGG, Motion to Withdraw, Jose Restituto F. Mendoza, 10 May 1989
3-F-2 Decision, Supreme Court, 18 October 1990
3-G Resolution, Supreme Court, 5 June 1991
4 Complaint, DENR, Almario F, Mendoza, 9 March 1990
4-A Answer/Comment, DENR, Almario F. Mendoza, dated 20 April 1990
4-B Decision, DENR, dated 28 August 1990
5 Complaint, Ombudsman, etc., Case No. 0-90-0708, 9 March 1990
6, 6-A Answer/Counter-Affidavit, etc.
6-B Decision, Ombudsman Case No. 0-90-0708, dated 8 August 1990

The Republic presented three (3) witnesses during the trial. The first witness was Joveniana M. Galicia, Chief of
the National Forest Management Division of the Forest Management Bureau. She identified TLA No. 356 of Twin
Peaks dated 20 August 1984 and a Memorandum dated 18 July 1984. She testified that TLA No. 356 covers 26,000
hectares of forest land located in the Municipality of Isabela, Province of Quirino.[31] The Memorandum dated 18 July
1984 addressed to Director Edmundo Cortez recited then President Marcos grant of the timber concession to Twin Peaks.
Identified and marked in the same memorandum were the name and signature of Juan Tuvera. [32] Upon cross-
examination, Galicia stated that she was not yet the chief of the Division when the documents she identified were
submitted to the Bureau. She further stated it was her first time to see the aforementioned documents when she was asked
to bring the same before the trial court.[33]

The next witness was Fortunato S. Arcangel, Regional Technical Director III of the DENR. He testified that he is
a Technical Director under the Forest Management Services of the DENR.[34] He identified Forestry Administration Order
(FAO) No. 11 dated 1 September 1970. He said he was aware of TLA No. 356 of Twin Peaks[35]because at the time it was
issued, he was the chief of the Forestry Second Division and his duties included the evaluation and processing of
applications for licenses and permits for the disposition and distribution of timber and other forest
products.[36] Consequently,

he was aware of the process by which TLA No. 356 was issued to Twin Peaks.[37] According to him, they processed the
application insofar as they evaluated the location of the area concerned and its present vegetative state, examined the
records, and determined the annual allowable land. After the examination, the license agreement was prepared and
submitted for approval.[38] He continued that under FAO No. 11, a public bidding is required before any license agreement
or permit for the utilization of timber within the forestry land is issued [39] but no public bidding was conducted for TLA
No. 356.[40] He explained that no such bidding was conducted because of a Presidential Instruction not to accept any
application for timber licensing as a consequence of which bidding procedures were stopped. [41] Upon cross-examination,
Arcangel said that at the time TLA No. 356 was issued, the Revised Forestry Code of the Philippines[42] was already in
effect but there were still provisions in FAO No. 11 that remained applicable such as the terms and conditions of granting
a license. He also stated that the issuance of the license to Twin Peaks emanated from the President of the Philippines.[43]

The Republics third and last witness was Teresita M. Zuiga, employee of the Bureau of Internal Revenue. She
identified the 1986 Income Tax Returns of Victor P. Tuvera, Evelyn Fontanilla and Feliciano O. Salvana, stockholders
of Twin Peaks.[44]

On 24 June 1994, the Republic rested its case after its formal offer of evidence, as follows:[45]

Exhibits Documents Purpose

A Timber License To prove that the Timber License Agreement was
Agreement No. 356 of executed prior to the amendment of the Articles of
Twin Peaks Realty Incorporation of Twin Peaks Realty Development Corp.
Development Corp.
dated 20 August 1984
B Memorandum dated 18 To prove the participation of Juan C. Tuvera in the
July 1984 of Juan C. grant of the timber concession of Twin Peaks Realty
Tuvera, Presidential Development Corp.
Executive Secretary
C Forestry Administrative To prove that Twin Peaks Realty Development Corp.
Order No. 11 (Revised) was granted a timber license agreement without
following the procedure outlined in the forestry rules
and regulation and in violation of law.
D Income Tax Return of To prove that Victor Tuvera was not a legitimate
Victor Tuvera stockholder of Twin Peaks Realty Development Corp.
E Income Tax Return of To prove that Evelyn Fontanilla was not a legitimate
Evelyn Fontanilla stockholder of Twin Peaks Realty Development Corp.
F Income Tax Return of To prove that Feliciano Salvana was not a legitimate
Feliciano Salvana stockholder of Twin Peaks Realty Development Corp.
G Articles of Incorporation To prove that Twin Peaks Realty Development Corp.
of Twin Peaks Realty was organized to engage in the real estate business and
Development Corp. not in the logging industry.
(original)
H Timber Manifestation To show that Twin Peaks Realty Development Corp.
Report of [Twin Peaks lacks equipment to process logs.
Realty Development
Corp.] consigned to Scala
Sawmill[46]
I Timber Manifestation To show that Twin Peaks Realty Development Corp.
Report of Twin lacks equipment to process logs.
Peaksconsigned to La Pea
Sawmill[47]

Respondents subsequently submitted certified true copies of the exhibits they had presented during the pre-trial
conference.[48]

With leave of court, respondents filed a Demurrer to Evidence. Respondents argued that the Republic failed to
present sufficient legal affirmative evidence to prove its claim. In particular, respondents demurrer contends that the
memorandum (Exh. B) and TLA No. 356 are not legal evidence because legal evidence is not meant to raise a mere
suspicion or doubt. Respondents also claim that income tax returns are not sufficient to show ones holding in a
corporation. Respondents also cited the factual antecedents culminating with the Courts decision in Felipe Ysmael, Jr. &
Corp., Inc. v. Sec. of Environment and Natural Resources.[49]

The Republic filed a Manifestation, contending that the demurrer is not based on the insufficiency of its evidence
but on the strength of the evidence of respondents as shown by their own exhibits. The Republic claimed that the Revised
Forestry Code of the Philippines does not dispense with the requirement of public bidding. The Republic added that Sec. 5
of said law clearly provides that all applications for a timber license agreement must be filed before the Bureau of Forest
Development and that respondents still have to prove compliance with the requirements for service contracts.[50]

Respondents opposed the Manifestation, maintaining that since the Republic admitted the exhibits of respondents
during the pre-trial, it is bound by its own admission.Further, these same exhibits contain uncontroverted facts and laws
that only magnify the conclusion that the Republic has no right to relief.[51]
In its Resolution dated 23 May 2001,[52] the Sandiganbayan sustained the demurrer to evidence and referred to the
decision of this Court in Ysmael in holding that res judicata applies. The Anti-Graft Court also did not give credence to
the Republics allegations concerning respondents abuse of power and/or public trust and consequent liability for damages
in view of its failure to establish any violation of Arts. 19, 20 and 21 of the Civil Code.

In essence, the Sandiganbayan held that the validity of TLA No. 356 was already fully adjudicated in a
Resolution/Order issued by the Office of the President on 14 August 1987, which had become final and executory with
the failure of the aggrieved party to seek a review thereof. The Sandiganbayan continued that the above pronouncement is
supported by this Court in Ysmael. Consequently, the Sandiganbayan concluded, the Republic is barred from questioning
the validity of TLA No. 356 in consonance with the principle of res judicata.

The Republic now questions the correctness of the Sandiganbayans decision to grant the demurrer to evidence
because it was not based solely on the insufficiency of its evidence but also on the evidence of respondent mentioned
during the pre-trial conference. The Republic also challenges the applicability of res judicata.

II.

Preliminarily, we observe that respondents had filed before the Sandiganbayan a pleading captioned Motion to
Dismiss or Demurrer to Evidence, thus evincing that they were seeking the alternative reliefs of either a motion to dismiss
or a demurrer to evidence. However, the Sandiganbayan, in resolving this motion, referred to it as Motion to
Dismiss on Demurrer to Evidence, a pleading of markedly different character from a Motion to Dismiss or Demurrer to
Evidence. Still, a close reading of the Sandiganbayan Resolution reveals clearly that the Sandiganbayan was treating the
motion as a demurrer, following Rule 33, Section 1 of the Rules of Court, rather than a motion to dismiss under Rule 16,
Section 1.

This notwithstanding, the Sandiganbayan justified the grant of demurrer with res judicata as rationale. Res
judicata is an inappropriate ground for sustaining a demurrer to evidence, even as it stands as a proper ground for a
motion to dismiss. A demurrer may be granted if, after the presentation of plaintiffs evidence, it appears upon the facts
and the law that the plaintiff has shown no right to relief. In contrast, the grounds for res judicata present themselves even
before the presentation of evidence, and it should be at that stage that the defense of res judicata should be invoked as a
ground for dismissal. Properly speaking, the movants for demurral who wish to rely on a controlling value of a settled
case as a ground for demurrer should invoke the ground of stare decisis in lieu of res judicata.

In Domondon v. Lopez,[53] we distinguished a motion to dismiss for failure of the complainant to state a cause of
action from a motion to dismiss based on lack of cause of action. The first is governed by Rule 16, Section 1(g), [54] while
the second by Rule 33[55] of the Rules of Court, to wit:

x x x The first [situation where the complaint does not alleged cause of action] is raised in a motion to
dismiss under Rule 16 before a responsive pleading is filed and can be determined only from the
allegations in the initiatory pleading and not from evidentiary or other matter aliunde. The second
[situation where the evidence does not sustain the cause of

action alleged] is raised in a demurrer to evidence under Rule 33 after the plaintiff has rested his case and
can be resolved only on the basis of the evidence he has presented in support of his claim. The first does
not concern itself with the truth and falsity of the allegations while the second arises precisely because
the judge has determined the truth and falsity of the allegations and has found the evidence wanting.
 Hence, a motion to dismiss based on lack of cause of action is filed by the defendant after the plaintiff
has presented his evidence on the ground that the latter has shown no right to the relief sought. While a
motion to dismiss under Rule 16 is based on preliminary objections which can be ventilated before the
beginning of the trial, a motion to dismiss under Rule 33 is in the nature of a demurrer to evidence on
the ground of insufficiency of evidence and is presented only after the plaintiff has rested his
case.[56] [Emphasis supplied]

III.

We shall first discuss the question of whether or not a demurrer to evidence may be granted based on the evidence
presented by the opposing parties.

An examination of the Sandiganbayans Resolution shows that dismissal of the case on demurrer to evidence was
principally anchored on the Republics failure to show its right to relief because of the existence of a prior judgment which
consequently barred the relitigation of the same issue. In other words, the Sandiganbayan did

not dismiss the case on the insufficiency of the Republics evidence

nor on the strength of respondents evidence. Rather, it based its dismissal on the existence of the Ysmael case which,
according to it, would render the case barred by res judicata.

Prescinding from this procedural miscue, was the Sandiganbayan correct in applying res judicata to the case at
bar? To determine whether or not res judicata indeed applies in the instant case, a review of Ysmael is proper.

In brief, Felipe Ysmael, Jr. & Co., Inc. was a grantee of a timber license agreement, TLA No. 87. Sometime in
August 1983, the Bureau of Forest Development cancelled TLA No. 87 despite the companys letter for the
reconsideration of the revocation. Barely one year thereafter, one-half (or 26,000 hectares) of the area formerly covered by
TLA No. 87 was re-awarded to Twin Peaks under TLA No. 356.

In 1986, Felipe Ysmael, Jr. & Co., Inc. sent separate letters to the Office of the President and the Ministry of
Natural Resources primarily seeking the reinstatement of TLA No. 87 and the revocation of TLA No. 356. Both offices
denied the relief prayed for. Consequently, Felipe Ysmael, Jr. & Co., Inc. filed a petition for review before this Court.

The Court, through the late Justice Irene Cortes, held that Ysmaels letters to the Office of the President and to the
Ministry of Natural Resources in 1986 sought the reconsideration of a memorandum order by the Bureau of Forest
Development canceling their timber license agreement in 1983 and the revocation of TLA No. 356 subsequently issued by
the Bureau in 1984. Ysmael did not attack the administrative actions until after 1986. Since the decision of the Bureau has
become final, it has the force and effect of a final judgment within the purview of the doctrine of res judicata. These
decisions and orders, therefore, are conclusive upon the rights of the affected parties as though the same had been
rendered by a court of general jurisdiction. The Court also denied the petition of Ysmael because it failed to file the
special civil action for certiorari under Rule 65 within a reasonable time, as well as in due regard for public policy
considerations and the principle of non-interference by the courts in matters which are addressed to the sound discretion
of government agencies entrusted with the regulation of activities coming under the special technical knowledge and
training of such agencies.

In Sarabia and Leido v. Secretary of Agriculture and Natural Resources, et al.,[57] the Court discussed the
underlying principle for res judicata, to wit:
 The fundamental principle upon which the doctrine of res judicata rests is that parties ought not
to be permitted to litigate the same issue more than once; that, when a right or fact has been judicially
tried and determined by a court of competent jurisdiction, or an opportunity for such trial has been given,
the judgment of the court, so long as it remains unreversed, should be conclusive upon the parties and
those in privity with them in law or estate.

For res judicata to serve as an absolute bar to a subsequent action, the following requisites must concur: (1) the
former judgment or order must be final; (2) the judgment or order must be on the merits; (3) it must have been rendered
by a court having jurisdiction over the subject matter and parties; and (4) there must be between the first and second
actions, identity of parties, of subject matter, and of causes of action. [58] When there is only identity of issues with no
identity of causes of action, there exists res judicata in the concept of conclusiveness of judgment.[59]

In Ysmael, the case was between Felipe Ysmael Jr. & Co., Inc. and the Deputy Executive Secretary, the Secretary
of Environment and Natural Resources, the Director of the Bureau of Forest Development and Twin Peaks Development
and Realty Corporation. The present case, on the other hand, was initiated by the Republic of

the Philippines represented by the Office of the Solicitor General. No amount of imagination could let us believe that
there was an identity of parties between this case and the one formerly filed by Felipe Ysmael Jr. & Co., Inc.

The Sandiganbayan held that despite the difference of parties, res judicata nevertheless applies on the basis of the
supposed sufficiency of the substantial identity between the Republic of the Philippines and Felipe Ysmael, Jr. Co.,
Inc. We disagree. The Court in a number of cases considered the substantial identity of parties in the application of res
judicata in instances where there is privity between the two parties, as between their successors in interest by title[60] or
where an additional party was simply included in the subsequent case[61] or where one of the parties to a previous case was
not impleaded in the succeeding case.[62]

The Court finds no basis to declare the Republic as having substantial interest as that of Felipe Ysmael, Jr. & Co.,
Inc. In the first place, the Republics cause of action liesin the alleged abuse of

power on respondents part in violation of R.A. No. 3019[63] and breach of public trust, which in turn warrants its claim for
restitution and damages. Ysmael, on the other hand, sought the revocation of TLA No. 356 and the reinstatement of its
own timber license agreement. Indeed, there is no identity of parties and no identity of causes of action between the two
cases.

IV.

What now is the course of action to take since we cannot affirm the Sandiganbayans grant of the demurrer to
evidence? Rule 33, Sec. 1 reads:

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

The general rule is that upon the dismissal of the demurrer in the appellate court, the defendant loses the right to
present his evidence and the appellate court shall then proceed to render judgment on the

merits on the basis of plaintiffs evidence. As the Court explained in Generoso Villanueva Transit Co., Inc. v. Javellana:[64]

The rationale behind the rule and doctrine is simple and logical. The defendant is permitted,
without waiving his right to offer evidence in the event that his motion is not granted, to move for a
dismissal (i.e., demur to the plaintiffs evidence) on the ground that upon the facts as thus established and
the applicable law, the plaintiff has shown no right to relief. If the trial court denies the dismissal
motion, i.e., finds that plaintiffs evidence is sufficient for an award of judgment in the absence of
contrary evidence, the case still remains before the trial court which should then proceed to hear and
receive the defendants evidence so that all the facts and evidence of the contending parties may be
properly placed before it for adjudication as well as before the appellate courts, in case of
appeal. Nothing is lost. The doctrine is but in line with the established procedural precepts in the conduct
of trials that the trial court liberally receive all proffered evidence at the trial to enable it to render its
decision with all possibly relevant proofs in the record, thus assuring that the appellate courts upon
appeal have all the material before them necessary to make a correct judgment, and avoiding the need of
remanding the case for retrial or reception of improperly excluded evidence, with the possibility
thereafter of still another appeal, with all the concomitant delays. The rule, however, imposes the
condition by the same token that if his demurrer is granted by the trial court, and the order of dismissal is
reversed on appeal, the movant loses his right to present evidence in his behalf and he shall have been
deemed to have elected to stand on the insufficiency of plaintiffs case and evidence. In such event, the
appellate court which reverses the order of dismissal shall proceed to render judgment on the merits on
the basis of plaintiffs evidence.[65]

It thus becomes the Court's duty to rule on the merits of the complaint, duly taking into account the evidence
presented by the Republic, and without need to consider whatever evidence the Tuveras have, they having waived their
right to present evidence in their behalf.

V.

Executive Order No. 14-A[66] establishes that the degree of proof required in cases such as this instant case is
preponderance of evidence. Section 3 thereof reads:

SEC. 3. The civil suits to recover unlawfully acquired property under Republic Act No. 1379 or
for restitution, reparation of damages, or indemnification for consequential and other damages or any
other civil actions under the Civil Code or other existing laws filed with the Sandiganbayan against
Ferdinand E. Marcos, Imelda R. Marcos, members of their immediate family, close relatives,
subordinates, close and/or business associates, dummies, agents and nominees, may proceed
independently of any criminal proceedings and may be proved by a preponderance of evidence.
[Emphasis supplied.]

Thus, the Court recently held in Yuchengco v. Sandiganbayan,[67] that in establishing the quantum of evidence
required for civil cases involving the Marcos wealth held by their immediate family, close
relatives, subordinates, close and/or business associates, dummies,
agents and nominees filed before the Sandiganbayan, that the Sandiganbayan, x x x was not to look for proof beyond
reasonable doubt, but to determine, based on the evidence presented, in light of common human experience, which of the
theories proffered by the parties is more worthy of credence.

In order that restitution may be proper in this case, it must be first established that the grant of the TLA to Twin
Peaks was illegal. With the illegality of the grant established as fact, finding Victor Tuvera, the major stockholder of Twin
Peaks, liable in this case should be the ineluctable course. In order that Juan Tuvera may be held answerable as well, his
own participation in the illegal grant should also be substantiated.

Regarding the first line of inquiry, the Complaint adverted to several provisions of law which ostensibly were
violated by the grant of the TLA in favor of Twin Peaks. These include R.A. No. 3019, otherwise known as the Anti-Graft
and Corrupt Practices Act, and Articles 19, 20 and 21 of the Civil Code.

Still, the most organic laws that determine the validity or invalidity of the TLA are those that governed the
issuance of timber license agreements in 1984. In that regard, the Republic argues that the absence of a bidding process is
patent proof of the irregularity of the issuance of the TLA in favor of Twin Peaks.

A timber license agreement authorizes a person to utilize forest resources within any forest land with the right of
possession and exclusion of others.[68] The Forestry Reform Code prohibits any person from utilizing, exploiting,
occupying, possessing or conducting any activity within any forest land unless he had been authorized to do so under a
license agreement, lease, license or permit.[69] The Code also mandates that no timber license agreement shall be issued
unless the applicant satisfactorily proves that he has the financial resources and technical capability not only to minimize
utilization, but also to practice forest protection, conservation and development measures to insure the perpetuation of said
forest in productive condition.[70] However, the Code is silent as to the procedure in the acquisition of such timber license
agreement. Such procedure is more particularly defined under FAO No. 11, dated 1 September 1970, which provides for
the revised forestry license regulations.

FAO No. 11 establishes that it is the Director of Forestry who has the power to grant timber licenses and
permits.[71] It also provides as a general policy that timber license agreements shall be

granted through no other mode than public bidding.[72] However, Section 24 of FAO No. 11 does admit that a timber
license agreement may be granted through negotiation, as well as through public bidding.

26. When license may be issued.A license under this Regulations may be issued or granted only after an
application and an award either through bidding or by negotiation has been made and the Director of
Forestry is satisfied that the issuance of such license shall not be inconsistent with existing laws and
regulations or prejudicial to public interest, and that the necessary license fee, bond deposit and other
requirements of the Bureau of Forestry have been paid and complied with.[73] [Emphasis supplied.]

However, even a person who is granted a TLA through negotiation is still required to submit the same
requirements and supporting papers as required for public bidding. The pertinent provisions of FAO No. 11 state:

18. Requirements and supporting papers to be submitted.The following requirements with

accompanying supporting papers or documents shall be submitted in addition to the requirements of
Section 12:

a. With bid application:

The applicant shall support his bid application with the required application fee duly paid and
proofs of the following:

(1) Capitalization.Cash deposits and established credit line by applicant in domestic

bank certified to by the bank President or any of its authorized officials, duly
attested by depositor as his own to be used exclusively in logging and wood
processing operations if awarded the area. The bank certificate shall be
accompanied by a written consent by the applicant-depositor for the Director of
Forestry or his authorized representative to verify such cash deposit with bank
authorities.

Capitalization and financial statements. A minimum capitalization of P20.00 per

cubit meter in cash and an established credit line of P150.00 per cubic meter based
on the allowable annual cut are required. Financial statements certified by the
independent and reputable certified public accountants must accompany the
application as proof of the necessary capitalization.

Additional capitalization, Real Estate. In the event that the capitalization of the
applicant is less than the minimum or less than that set by the Director of Forestry
for the area, the applicant bidder may be asked to submit an affidavit signifying his
readiness, should the area be awarded to him, to convert within a specified time any
specified unencumbered and titled real estate into cash for use in operating and
developing the area. Presentation of real estate should show location by
municipality and province, hectarage, title number, latest land tax declaration,
assessed value of land and improvements (stating kind of improvements), and
encumbrances if any.

(2) Logging machinery and equipment.Evidence of ownership or capacity to acquire

the requisite machinery or equipment shall accompany the bid application. The
capacity or ability to acquire machineries and equipments shall be determined by
the committee on award. Leased equipment or machineries may be considered in
the determination by the Committee if expressly authorized in writing by the
Director of Forestry.
(3) Technical know-how.To assure efficient operation of the area or concession, the
applicant shall submit proof of technical competence and know-how and/or his
ability to provide hired services of competent personnel.
(4) Operation or development plan. An appropriate plan of operation and
development of the forest area applied for shall be submitted, including phasing
plans and the fund requirements therefor, consistent with selective logging
methods and the sustained yield policy of the Bureau of Forestry. This plan must
be in general agreement with the working unit plan for the area as contained in
Chapter III, Section 6(a) hereinabove.
(5) Processing plant.The bidder or applicant shall show evidence of ownership of, or
negotiation to acquire, a wood processing plant. The kind and type of plant, such
as plywood, veneer, bandmill, etc. shall be specified. The plant should be capable
of processing at least 60% of the allowable annual cut.
(6) Forestry Department.The applicant shall submit assurance under oath that he
shall put a forestry department composed of trained or experienced foresters to
carry out forest management activities such as selective logging, planting of
denuded or logged-over areas within the concessions as specified by the Director
of Forestry and establish a forest nursery for the purpose.
(7) Statement on sustained yield operations, reforestation, and protection under
management plans. The bidder or applicant shall submit a sworn statement of his
agreement and willingness to operate the area under sustained yield to reforest
cleared areas and protect the concession or licensed area and under the approved
management plan, and to abide with all existing forestry laws, rules and
 regulations and those that may hereafter be promulgated; and of his agreement that
any violation of these conditions shall be sufficient cause for the cancellation of
the licenses.
(8) Organization plan.Other important statement connected with sound management
and operation of the area, such as the submission among others, of the
organizational plan and employment of concession guards, shall be submitted. In
this connection, the applicant shall submit a sworn statement to the effect no alien
shall be employed without prior approval of proper authorities.
(9) Unauthorized use of heave equipment.The applicant shall give his assurance that
he shall not introduce into his area additional heave equipment and machinery
without approval of the Director of Forestry.
(10) Such other inducements or considerations to the award as will serve public interest
may also be required from time to time.
xxxx

d) With applications for areas to be negotiated.All the foregoing requirements and supporting
papers required for bidding under Section 18(a) hereinabove and of Section 20(b)
hereinbelow shall also apply to all areas that may be granted through negotiation. In no
case shall an area exceeding 100,000 hectares be granted thru negotiation.[74]

The rationale underlying the very elaborate procedure that entails prior to the grant of a timber license agreement
is to avert the haphazard exploitation of the State's forest resources as it provides that only the most qualified applicants
will be allowed to engage in timber activities within the strict limitations of the grant and that cleared forest areas will
have to be renewed through reforestation. Since timber is not a readily renewable natural resource, it is essential and
appropriate that the State serve and act as a jealous and zealous guardian of our forest lands, with the layers of
bureaucracy that encumber the grant of timber license agreements effectively serving as a defensive wall against the
thoughtless ravage of our forest resources.

There is no doubt that no public bidding occurred in this case. Certainly, respondents did not raise the defense in
their respective answers. The absence of such bidding was testified on by prosecution witness Arcangel. Yet even if we
consider that Twin Peaks could have acquired the TLA through negotiation, the prescribed requirements for negotiation
under the law were still not complied with.

It is evident that Twin Peaks was of the frame of mind that it could simply walk up to President Marcos and ask
for a timber license agreement without having to comply with the elaborate application procedure under the law. This is
indicated by the letter dated 31 May 1984[75] signed by Twin Peaks Vice President and Treasurer Evelyn Fontanilla,
addressed directly to then President Marcos, wherein Twin Peaks expressed that we would like to request a permit to
export 20,000 cubic meters of logs and to cut and process 10,000 cubic meters of the narra species in the same area. [76] A
marginal note therein signed by Marcos indicates an approval thereof. Neither the Forestry Reform Code nor FAO No. 11
provide for the submission of

an application directly to the Office of the President as a proper mode for the issuance of a TLA. Without discounting the
breadth and scope of the Presidents powers as Chief Executive, the authority of the President with respect to timber
licenses is, by the express terms of the Revised Forestry Code, limited to the amendment, modification, replacement or
rescission of any contract, concession, permit, license or any other form of privilege granted by said Code. [77]

There are several factors that taint this backdoor application for a timber license agreement by Twin Peaks. The
forest area covered by the TLA was already the subject of a pre-existing TLA in favor of Ysmael. The Articles of
Incorporation of Twin Peaks does not even stipulate that logging was either a principal or secondary purpose of the
corporation. Respondents do allege that the Articles was amended prior to the grant in order to accommodate logging as a
corporate purpose, yet since respondents have waived their right to present evidence by reason of their resort to demurrer,
we cannot consider such allegation as proven.

Sec. 18(a)(1) of FAO No. 11 requires that an applicant must have a minimum capitalization of P20.00 per cubic meter in
cash and an established credit line of P150.00 per cubic meter based on the allowable annual cut. TLA No. 356
allowed Twin Peaks to operate on 26,000 hectares of forest land with an annual allowable cut of 60,000 cubic meters
of timber. With such annual allowable cut, Twin
Peaks, therefore, must have at least P1,200,000.00 in cash as its minimum capitalization, following FAO No. 11. An
examination of Twin Peaks Articles of Incorporation shows that its paid-up capital was
only P312,500.00.[78] Clearly, Twin Peaks paid-up capital is way below the minimum capitalization requirement.

Moreover, Sec. 18(5) provides that the bidder or applicant shall show evidence of ownership of, or negotiation to
acquire, a wood processing plant. However, although TLA No. 356 was issued to Twin Peaks in 1984, it continued to
engage the services of at least two sawmills[79] as late as 1988. Four (4) years from the issuance of the license, Twin
Peaks remained incapable of processing logs.

What could have made Twin Peaks feel emboldened to directly request President Marcos for the grant of Timber
License Agreement despite the obvious problems relating to its capacity to engage in timber activities? The reasonable
assumption is that the official and personal proximity of Juan Tuvera to President Marcos was a key factor, considering
that he was the father of Twin Peaks' most substantial stockholder.

The causes of action against respondents allegedly arose from Juan Tuveras abuse of his relationship, influence
and connection as Presidential Executive Assistant of then President Marcos. Through Juan Tuveras position, the
Republic claims that Twin Peaks was able to secure a Timber License Agreement despite its lack of qualification and the
absence of a public bidding. On account of the unlawful issuance of a timber license agreement, the natural resources of
the country were unlawfully exploited at the expense of the Filipino people. Victor Tuvera, as son of Juan Tuvera and a
major stockholder of Twin Peaks, was included as respondent for having substantially benefited from this breach of trust.
The circumstance of kinship alone may not be enough to disqualify Victor Tuvera from seeking a timber license
agreement. Yet the basic ethical principle of delicadezashould have dissuaded Juan Tuvera from any official or unofficial
participation or intervention in behalf of the request of Twin Peaks for a timber license.

Did Juan Tuvera do the honorable thing and keep his distance from Twin Peaks' request? Apparently not. Instead,
he penned a Memorandum dated 18 July 1984 in his capacity as Presidential Executive Assistant, directed at the Director
of Forestry, the official who, under the law, possessed the legal authority to decide whether to grant the timber license
agreements after deliberating on the application and its supporting documents. The Memorandum reads in full:

Office of the President

of the Philippines
Malacanang

18 July 1984
74-84
MEMORANDUM to

Director Edmundo Cortes

Bureau of Forest Development

I wish to inform you that the President has granted the award to the Twin Peaks Realty Development
Corporation, of the concession to manage, operate and develop in accordance with existing policies and
regulations half of the timber area in the Province of Quirino covered by TLA No. 87, formerly belonging
 to the Felipe Ysmael, Jr. & Company and comprising 54,920 hectares, and to export half of the requested
20,000 cubic meters of logs to be gathered from the area.

Herewith is a copy of the letter concering (sic) this matter of Ms. Evelyn F. Fontanilla, Vice-
President and Treasurer of the Twin Peaks Realty Development Corporation, on which the President
indicated such approval in his own hand, which I am furnishing you for your information and appropriate
action.

(signed)
JUAN C. TUVERA
Presidential Executive Assistant[80]

The Memorandum establishes at the very least that Tuvera knew about the Twin Peaks request, and of President
Marcos's favorable action on such request. The Memorandum also indicates that Tuvera was willing to convey those facts
to the Director of Forestry, the ostensible authority in deciding whether the Twin Peaks request should have been granted.
If Juan Tuvera were truly interested in preventing any misconception that his own position had nothing to do with the
favorable action on the request lodged by the company controlled by his son, he would not have prepared or signed the
Memorandum at all. Certainly, there were other officials in Malacaang who could have performed that role had the intent
of the Memorandum been merely to inform the Director of Forestry of such Presidential action.

Delicadeza is not merely a stentorian term evincing a bygone ethic. It is a legal principle as embodied by certain
provisions of the Anti-Graft and Corrupt Practices Act. Section 3 of R.A. No. 3019 states in part:

Sec. 3. Corrupt practices of public officers.In addition to acts or omissions of public officers already
penalized by existing law, the following shall constitute corrupt practices of any public officer and are
hereby declared to be unlawful:

(a) Persuading, inducing or influencing another public officer to perform an act constituting a violation of
rules and regulations duly promulgated by competent authority or an offense in connection with the
official duties of the latter, or allowing himself to be persuaded, induced or influenced to commit such
violation or offense.

xxxx

(h) Directly or indirectly having financial or pecuniary interest in any business, contract or transaction in
connection with which he intervenes or takes part in his official capacity, or in which he is prohibited by
the Constitution or by any law from having any interest.

The Memorandum signed by Juan Tuvera can be taken as proof that he persuaded, induced or influenced the Director of
Forestry to accommodate a timber license agreement in favor of Twin Peaks, despite the failure to undergo public
bidding, or to comply with the requisites for the grant of such agreement by negotiation, and in favor of a corporation that
did not appear legally capacitated to be granted such agreement. The fact that the principal stockholder of Twin Peaks was
his own son establishes his indirect pecuniary interest in the transaction he appears to have intervened in. It may have
been possible on the part of Juan Tuvera to prove that he did not persuade, induce or influence the Director of Forestry or
any other official in behalf of the timber license agreement of Twin Peaks, but then again, he waived his right to present
evidence to acquit himself of such suspicion. Certainly, the circumstances presented by the evidence of the prosecution
are sufficient to shift the burden of evidence to Tuvera in establishing that he did not violate the provisions of the Anti-
Graft and Corrupt Practices Act in relation to the Twin Peaks request. Unfortunately, having waived his right to present
evidence, Juan Tuvera failed to disprove that he failed to act in consonance with his obligations under the Anti-Graft and
Corrupt Practices Act.

In sum, the backdoor recourse for a hugely priced favor from the government by itself, and more in tandem with other
brazen relevant damning circumstances, indicates the impudent abuse of power and the detestable misuse of influence that
homologously made the acquisition of ill-gotten wealth a reality. Upon the facts borne out by the evidence for the
Republic and guideposts supplied by the governing laws, the Republic has a clear right to the reliefs it seeks.
 VI.
If only the Court's outrage were quantifiable in sums of money, respondents are due for significant pecuniary hurt.
Instead, the Court is forced to explain in the next few paragraphs why respondents could not be forced to recompensate
the Filipino people in appropriate financial terms. The fault lies with those engaged by the government to litigate this case
in behalf of the State.

It bears to the most primitive of reasons that an action for recovery of sum of money must prove the amount
sought to be recovered. In the case at bar, the Republic rested its case without presenting any evidence, documentary or
testimonial, to establish the amount that should be restituted to the State by reason of the illegal acts committed by the
respondents. There is the bare allegation in the complaint that the State is entitled to P48 million by way of actual
damages, but no single proof presented as to why the State is entitled to such amount.

Actual damages must be proven, not presumed.[81] The Republic failed to prove damages. It is not enough for the
Republic to have established, as it did, the legal travesty that led to the wrongful obtention by Twin Peaks of the TLA. It
should have established the degree of injury sustained by the State by reason of such wrongful act.

We fail to comprehend why the Republic failed to present any proof of actual damages. Was it the inability to
obtain the necessary financial documents that would establish the income earned by Twin Peaks during the period it
utilized the TLA, despite the presence of the discovery processes? Was it mere indolence or sheer incompetence?
Whatever the reason, the lapse is inexcusable, and the injury ultimately conduces to the pain of the Filipino people. If the
litigation of this case is indicative of the mindset in the prosecution of ill-gotten wealth cases, it is guaranteed to ensure
that those who stole from the people will be laughing on their way to the bank.

The claim for moral damages deserves short shrift. The claimant in this case is the Republic of the Philippines, a
juridical person. We explained in Filipinas Broadcasting v. Ago Medical & Educational Center-
Bicol Christian College of Medicine (AMEC-BCCM):[82]

A juridical person is generally not entitled to moral damages because, unlike a natural person, it
cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental
anguish or moral shock. The Court of Appeals cites Mambulao Lumber Co. v. PNB, et al. to justify the
award of moral damages. However, the Court's statement in Mambulao that "a corporation may have a
good reputation which, if besmirched, may also be a ground for the award of moral damages" is an obiter
dictum.

Nevertheless, AMEC's claim for moral damages falls under item 7 of Article 2219 of the Civil
Code. This provision expressly authorizes the recovery of moral damages in cases of libel, slander or any
other form of defamation. Article 2219(7) does not qualify whether the plaintiff is a natural or juridical
person. Therefore, a juridical person such as a corporation can validly complain for libel or any other
form of defamation and claim for moral damages.[83]

As explained, a juridical person is not entitled to moral damages under Article 2217 of the Civil Code. It may
avail of moral damages under the analogous cases listed in Article 2219, such as for libel, slander or any other form of
defamation. Suffice it to say that the action at bar does not involve any of the analogous cases under Article 2219, and
indeed upon an intelligent reading of Article 2219, it is difficult to see how the Republic could sustain any of the injuries
contemplated therein. Any lawyer for the Republic who poses a claim for moral damages in behalf of the State stands in
risk of serious ridicule.

However, there is sufficient basis for an award of temperate damages, also sought by the Republic
notwithstanding the fact that a claim for both actual and temperate damages is internally inconsistent. Temperate or
moderate damages avail when the court finds that some pecuniary loss has been suffered but its amount can not from the
nature of the case, be proved with certainty.[84] The textual language might betray an intent that temperate damages do not
avail when the case, by its nature, is susceptible to proof of pecuniary loss; and certainly the Republic could have proved
pecuniary loss herein.[85] Still, jurisprudence applying Article 2224 is clear that temperate damages may be awarded even
in instances where pecuniary loss could theoretically have been proved with certainty.

In a host of criminal cases, the Court has awarded temperate damages to the heirs of the victim in cases where the
amount of actual damages was not proven due to the inadequacy of the evidence presented by the prosecution. These
cases include People v. Oliano,[86] People v. Suplito,[87] People v. De la Tongga,[88] People v. Briones,[89] and People v.
Plazo.[90] In Viron Transportation Co., Inc. v. Delos Santos,[91] a civil action for damages involving a vehicular collision,
temperate damages were awarded for the resulting damage sustained by a cargo truck, after the plaintiff had failed to
submit competent proof of actual damages.

We cannot discount the heavy influence of common law, and its reliance on judicial precedents, in our law on tort
and damages. Notwithstanding the language of Article 2224, a line of jurisprudence has emerged authorizing the award of
temperate damages even in cases where the amount of pecuniary loss could have been proven with certainty, if no such
adequate proof was presented. The allowance of temperate damages when actual damages were not adequately proven is
ultimately a rule drawn from equity, the principle affording relief to those definitely injured who are unable to prove how
definite the injury. There is no impediment to apply this doctrine to the case at bar, which involves one of the most
daunting and noble undertakings of our young democracythe recovery of ill-gotten wealth salted away during the Marcos
years. If the doctrine can be justified to answer for the unlawful damage to a cargo truck, it is a

compounded wrath if it cannot answer for the unlawful exploitation of our forests, to the injury of the Filipino people. The
amount of P1,000,000.00 as temperate damages is proper.

The allowance of temperate damages also paves the way for the award of exemplary damages. Under Article 2234
of the Civil Code, a showing that the plaintiff is entitled to temperate damages allows for the award of exemplary
damages. Even as exemplary damages cannot be recovered as a matter of right, the courts are empowered to decide
whether or not they should be adjudicated. Ill-gotten wealth cases are hornbook demonstrations where damages by way of
example or correction for the public good should be awarded. Fewer causes of action deserve the stigma left by exemplary
damages, which serve as a deterrent against or as a negative incentive to curb socially deleterious actions. [92] The
obtention of the timber license agreement by Twin Peaks through fraudulent and illegal means was highlighted by Juan
Tuveras abuse of his position as Presidential Executive Assistant. The consequent exploitation of 26 hectares of forest
land benefiting all respondents is a grave case of unjust enrichment at the expense of the Filipino people and of the
environment which should never be countenanced. Considering the expanse of forest land exploited by respondents, the
volume of timber that was necessarily cut by virtue of their abuse and the estimated wealth acquired by respondents
through grave abuse of trust and public office, it is only reasonable that petitioner be granted the amount of P1,000,000.00
as exemplary damages.

The imposition of exemplary damages is a means by which the State, through its judicial arm, can send the clear
and unequivocal signal best expressed in the pithy but immutable phrase, never again. It is severely unfortunate that the
Republic did not exert its best efforts in the full recovery of the actual damages caused by the illegal grant of the Twin
Peaks TLA. To the best of our ability, through the appropriate vehicle of exemplary damages, the Court will
try to fill in that deficiency. For if there is a lesson that should be
learned from the national trauma of the rule of Marcos, it is that kleptocracy cannot pay. As those dark years fade into the
backburner of the collective memory, and a new generation emerges without proximate knowledge of how bad it was
then, it is useful that the Court serves a reminder here and now.

WHEREFORE, the petition is GRANTED. The Resolution of the Sandiganbayan dated 23 May 2001 is
REVERSED. Respondents Juan C. Tuvera, Victor P. Tuvera and Twin Peaks Development Corporation are hereby
ordered to jointly and severally pay to the Republic of the Philippines One Million (P1,000,000.00) Pesos, as and for
temperate damages, and One Million (P1,000,000.00) Pesos, as and for exemplary damages, plus costs of suit.

SO ORDERED.

DANTE O. TINGA Associate Justice

WE CONCUR:
 LEONARDO A. QUISUMBING
Associate Justice
Chairperson

ANTONIO T. CARPIO CONCHITA CARPIO MORALES

Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

ATTESTATION

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

LEONARDO A. QUISUMBING
Associate Justice
Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified
that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of
the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

THE MANILA BANKING G.R. No. 159189

CORPORATION,
Petitioner,
Present:

QUISUMBING, J.,
 Chairperson,
- versus - CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
UNIVERSITY OF BAGUIO, INC. and Promulgated:
GROUP DEVELOPERS, INC.,
Respondents.
February 21, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
QUISUMBING, J.:
On appeal is the Order[1] dated April 11, 2002 of the Regional Trial Court (RTC) of Makati City, Branch 61, in Civil Case
No. 90-389, dismissing petitioners amended complaint for a sum of money with application for preliminary attachment. In
the appeal under Section 2, Rule 41, on a pure question of law, petitioner alleges that the assailed Order of the RTC was
manifestly not in accord with law and jurisprudence. Also assailed is the trial courts June 27, 2003 Order[2] denying the
motion for reconsideration.

The facts are culled from the records.

On November 26, 1981, petitioner Manila Banking Corporation granted a P14 million credit line[3] to
respondent University of Baguio, Inc. for the construction of additional buildings and purchase of new equipment.[4] On
behalf of the university, then Vice-Chairman Fernando C. Bautista, Jr.[5] signed Promissory Note
(PN) Nos. 10660, 10672, 10687, and 10708 and executed a continuing suretyship agreement.[7] However, Bautista, Jr.
[6]

diverted the net proceeds of the loan. He endorsed and delivered the four checks representing the net proceeds to
respondent Group Developers, Inc. (GDI).[8] The loan was not paid.

On February 12, 1990, the bank filed a complaint for a sum of money with application for preliminary
attachment[9] against the university, Bautista, Jr. and his wife Milagros, before the RTC of Makati City. Five years later,
on March 31, 1995, the bank amended the complaint and impleaded GDI as additional defendant.
In the amended complaint,[10] the bank alleged that it was unaware and did not approve the diversion of the loan to GDI;
that it granted the loan without collateral upon the universitys undertaking that it would construct new buildings; and that
GDI connived with the university and Bautista, Jr. in fraudulently contracting the debt.

In its Answer, the university claimed that the bank and GDI approved the diversion. Allegedly, Victor G. Puyat,
then GDIs President, and Vicente G. Puyat, then the banks President, decided to use the proceeds of the loan. The
university stated that Vicente G. Puyat and Victor G. Puyat even assured the university, in separate
letters[11] both dated October 22, 1981, that it would be relieved of any liability from the loan. Consequently, even if the
loan was overdue, the bank did not demand payment until February 8, 1989.By way of cross-claim, the university prayed
that GDI be ordered to pay the university the amount it would have to pay the bank. In addition, the university filed a
third-party complaint against Victor G. Puyat and the heirs of Vicente G. Puyat.

On December 14, 1995, the bank and GDI executed a deed of dacion en pago.[12] As attorney-in-fact of Batulao Bio-Loop
Farms, Inc., GDI ceded and transferred to the bank a parcel of land consisting of 210,000 square meters located in
Nasugbu, Batangas and covered by Transfer Certificate of Title No. T-70784. The dacion en pago was for a consideration
of P78 million and in full settlement of the loan under PN Nos. 10660, 10672, 10687, and 10708, subject of Civil Case
No. 90-389.[13]

In an Omnibus Order[14] dated April 21, 1997, the trial court dismissed the third-party complaint against the heirs of
Vicente G. Puyat for being premature since the banks cause of action was against the university as a dummy of GDI. The
trial court also dismissed the case as to Fernando Bautista, Jr. and his wife upon Fernandos death. The trial court further
ruled that the universitys motion to implead GDI as third-party defendant, and GDIs motions to dismiss the amended
complaint and cross-claim, had been mooted by the dacion en pago.

On March 19, 1998, the university moved to dismiss the amended complaint on the grounds that: (1) there was no more
cause of action against it since the loan had been settled by GDI; and (2) the bank failed to prosecute the action for an
unreasonable length of time.[15] In an Order[16] dated August 17, 1999, the trial court denied the motion since the matters
relied upon by the university were evidentiary in nature.
On October 14, 1999, the university moved to set the case for pre-trial on December 2, 1999.[17]

On August 3, 2000, the trial court resolved GDIs motion to resolve the motions to dismiss and defer pre-trial; expunged
from the record the deed of dacion en pago; and reinstated GDIs motions to dismiss the amended complaint and cross-
claim on the ground that no compromise agreement was submitted for its approval.[18]

On August 29, 2001, the university filed a manifestation with motion for reconsideration of the August 17, 1999 Order
denying the universitys motion to dismiss the amended complaint. The university argued that the grounds for its motion to
dismiss were not evidentiary as the deed of dacion en pago and the banks judicial admission thereof were on record.

The bank opposed the motion on the ground that the motion for reconsideration of the August 17, 1999 Order was filed
after more than two years. The bank noted that it was the university which moved to set the case for pre-trial;
thus, its claim of not seeking reconsideration of the August 17, 1999 Order because of the scheduled pre-
trial was preposterous. The bank concluded that the motion to dismiss lacked basis since the deed of dacion en pago had
already been expunged.

In the appealed Order of April 11, 2002, the trial court ruled that the bank had no cause of action against the defendants
because its claim for a sum of money had been paid through the dacion en pago. The trial court noted that the bank even
admitted the settlement. It disposed of the case as follows:
WHEREFORE, in view of the foregoing, defendant [respondent herein] University of Baguios Motion to
Dismiss Amended Complaint is herein GRANTED and this complaint for collection of sum of money is
herein DISMISSED.
Defendant UBI [respondent university] shall file the appropriate Manifestation in Court
specifying the dates in June when it will be available to present evidence on its counterclaim.
SO ORDERED.[19]
Hence, this appeal where petitioner alleges:
I.
THE RTC SERIOUSLY ERRED IN GRANTING THE MOTION TO DISMISS OF
RESPONDENT UBI ON THE BASIS OF A DOCUMENT THAT HAS ALREADY BEEN
INDISPUTABLY STRICKEN OFF FROM (sic) THE RECORDS OF THE CASE.
II.
THE RTC SERIOUSLY ERRED IN GRANTING UBIS MOTION TO DISMISS WHEN THE ISSUES
RAISED THEREIN ARE EVIDENTIARY IN NATURE AND DID NOT REFER TO THE
ALLEGATIONS IN THE COMPLAINT.
III.
THE RTC SERIOUSLY ERRED IN RULING, WITHOUT TRIAL, THAT THE DEED OF DACION EN
PAGO BETWEEN PETITIONER AND RESPONDENT UBI [SHOULD BE GDI]HAS NOT BEEN
RESCINDED.
IV.
THE RTC SHOULD HAVE DENIED UBIS MANIFESTATION (WITH MOTION FOR
RECONSIDERATION) AS THE FILING OF THE MOTION TO DISMISS AFTER
RESPONDENT UBI FILED ITS ANSWER VIOLATED THE RULES OF COURT.
V.
THE RTC, WITHOUT JUSTIFIABLE NOR LEGAL BASIS, ADOPTED DIFFERENT POLICIES TO
PARTIES SIMILARLY SITUATED.
VI.
THE RTC, WITHOUT JUSTIFIABLE NOR LEGAL BASIS, RESOLVED FOR THE SECOND TIME
A MOTION TO DISMISS WHICH IT HAS EARLIER DENIED INSTEAD OF RESOLVING THE
MANIFESTATION (WITH MOTION FOR RECONSIDERATION OF SAID DENIAL) WHICH IT
WAS BEING ASKED TO RESOLVE.[20]
In essence, the issue for our resolution is, did the trial court err in dismissing the amended complaint, without trial, upon
motion of respondent university?
Petitioner argues that the universitys motion to dismiss on alleged lack of cause of action because of the deed of dacion en
pago, an evidence aliunde, was improper since petitioner has yet to present its evidence. Petitioner also argues that
the April 11, 2002 appealed Order was flawed because it was based on evidence expunged from the record.

Respondent university counters that the amended complaint deserved dismissal because petitioner admitted the dacion en
pago and stated its lack of interest to pursue the caseagainst respondent university. The university contends that
petitioners acceptance of the Batangas property, as equivalent of performance, extinguished the obligation under the four
promissory notes. Thus, the university concludes that no more cause of action lies against it.

For its part, respondent GDI maintains that the dacion en pago has no legal effect but also avers that the dacion en
pago effectively paid the loan warranting dismissal of the complaint, cross-claim and counterclaim against it.

Prefatorily, we note the trial courts inconsistent rulings in this case. To recall, the Omnibus Order dated April 21,
1997 appeared to have considered the dacion en pago as full settlement of the case. The trial court thus ruled that
the dacion en pago mooted the motion to implead GDI as third-party defendant, and GDIs motions to dismiss amended
complaint and third-party cross-claim.[21] Yet, in the same order, the trial court dismissed the case against the heirs of
Vicente G. Puyat on the ground of prematurity, sincepetitioners cause of action was against respondent university as
dummy of GDI, implying that the case was not yet actually settled. Recall also that the August 17, 1999 Order ruled
that the payment of the loan through the dacion en pago was evidentiary[22] or had to be proved. The order was silent on
whether it reversed the trial courts earlier statement that the dacion en pago settled the loan and the case.
A year later, on August 3, 2000, the trial court expunged the deed of dacion en pago and reinstated GDIs motions
to dismiss the amended complaint and cross-claim.[23]Then, the appealed Order of April 11, 2002 ruled that petitioner had
no cause of action against the defendants since the loan was settled by the dacion en pago,[24] despite the order which
expunged the deed.
In Domondon v. Lopez,[25] we distinguished a motion to dismiss for failure of the complaint to state a cause of action from
a motion to dismiss based on lack of cause of action.The first is governed by Section 1 (g),[26] Rule 16, while the second
by Rule 33,[27] of the Rules of Court, to wit:
. . . The first [situation where the complaint does not allege a sufficient cause of
action] is raised in a motion to dismiss under Rule 16 before a responsive pleading is filed and
can be determined only from the allegations in the initiatory pleading and not from evidentiary or
other matters aliunde. The second [situation where the evidence does not sustain the cause of
action alleged] is raised in a demurrer to evidence under Rule 33 after the plaintiff has rested his
case and can be resolved only on the basis of the evidence he has presented in support of his
claim. The first does not concern itself with the truth and falsity of the allegations while the
second arises precisely because the judge has determined the truth and falsity of the allegations
and has found the evidence wanting.
Hence, a motion to dismiss based on lack of cause of action is filed by the defendant after the plaintiff
has presented his evidence on the ground that the latter has shown no right to the relief sought. While a
motion to dismiss under Rule 16 is based on preliminary objections which can be ventilated before the
beginning of the trial, a motion to dismiss under Rule 33 is in the nature of a demurrer to evidence on
the ground of insufficiency of evidence and is presented only after the plaintiff has rested his
case.[28] (Emphasis supplied.)
In this case, the universitys March 19, 1998 motion to dismiss the amended complaint was improper under Rule
16 because it was filed after respondent university filed itsresponsive pleading, its Answer. Also, the motions merit could
not be determined based solely on the allegations of the initiatory pleading, the amended complaint, since the motion was
based on the deed of dacion en pago, which was not even alleged in the complaint. And since the deed of dacion en
pago had been expunged from the record, the trial court erred in its finding of payment and lack of cause of action based
on the deed. In fact, on January 11, 2002 or just three months before it dismissed the amended complaint, the trial court
had even noted petitioner counsels manifestation regarding the parties initial efforts to enter into a dacion en pago but not
based on the previous offer made but on a new proposal involving new properties[29] and urged them to pursue further
settlement discussions.[30]

In addition, the motion alleged that petitioner had no more cause of action or lacked a cause of action against the
university. Following Domondon, that motion was a motion to dismiss under Rule 33 in the nature of demurrer to
evidence and would be proper only after petitioner had presented its evidence and rested its case. In the case at bar, there
had been no presentation of evidence yet and petitioner had not rested its case. Therefore, the August 17, 1999 Order
properly denied the motion to dismiss for being improper under either Rule 16 or 33.

The trial court had also made a premature statement in its Omnibus Order dated April 21, 1997 that the dacion en
pago settled the loan and the case, even as it also stated that respondent university was used as a dummy of GDI. If indeed
there was fraud, considering the uncollateralized loan, its diversion, nonpayment, absence of demand although overdue,
 and the dacion en pago where title of the property accepted as payment cannot be transferred, the fraud should be
uncovered to determine who are liable to pay the loan.We note too that the April 11, 2002 Order was unclear if it ruled
again on the universitys March 19, 1998 motion to dismiss or acted on its August 29, 2001 manifestation with motion for
reconsideration of the two-year old August 17, 1999 Order. To reiterate, the August 17, 1999 Order aptly denied the
motion. Thus, we reverse the April 11, 2002 and June 27, 2003 assailed Orders.

Lastly, it must be pointed out that while the Court allows a relaxation in the application of procedural rules in
some instances, courts and litigants are enjoined to followrules strictly because they are designed to facilitate the
adjudication of cases.[31] Instead of rules being followed, however, we find their misapplication in this case resulting to
inconsistent rulings, confusion and delay. Had the trial court exercised its inherent power to control its proceedings,[32] it
would not have taken this long to reach pre-trial, which had been first set on December 2, 1999 through respondent
universitys motion. Significantly, even the trial court had tentatively set the pre-trial on June 7, 2002[33] but erroneously
dismissed the amended complaint on April 11, 2002.

WHEREFORE, we GRANT the petition and SET ASIDE the trial courts April 11, 2002 and June 27, 2003 Orders. The
trial court is ORDERED to proceed with the pre-trial and hear this case with dispatch. No pronouncement as to costs.
SO ORDERED.
ANACLETO R. MENESES, G.R. No. 156304
FRANCISCO C. MENESES
CECILIA C. MEMESES,
RAMON M. VASCO,
CARMENCITA M. VASCO-
ALIVIA, VICTOR A.
MENESES, MA. ROSARIO
MENESES-CARREON,
GAVINO A. MENESES,
ARTEMIO A. MENESES, JR.,
MA. CARMEN R. BONGGA, Present:
MA. THERESA M. RODRIGO,
JACINTO M. RODRIGO, MA.
ELIZABETH M. RODRIGO, PANGANIBAN, CJ., Chairperson,
MARTIN M. RODRIGO, JOSE YNARES-SANTIAGO,
ANTONIO M. RODRIGO, AUSTRIA-MARTINEZ,
DOMINGO M. SALONGA, CALLEJO, SR. and
CAROLINA M. SALONGA, CHICO-NAZARIO, JJ.
CORAZON M. SALONGA,
CRISTINA M. SALONGA,
CARMELITA M. SALONGA,
CYNTHIA M. SALONGA and
MARILYN F. SALONGA,
Petitioners,

- versus -

SECRETARY OF
AGRARIAN REFORM,
LAND BANK OF THE
PHILIPPINES, RODRIGO
VELAYO, ANGEL SOLIMAN,
RICARDO MASASU, REGINA
STA. ANA, JUANITO CASTRO,
SEVERINO LIGON,
MARCELINO CUEVAS,
MANOLO GARCIA, RODRIGO
URBANO, FELIX BINUYA,
GORGONIO CATU, ERLINDA
ABLAZA, IGMEDIO SANTOS,
FLORENTINA SUSPAN,
PEDRO SUPAN, GABRIEL
PONCE, FELIPE PONCE,
MAGNO PONCE, RELELCIO
PONCE, IRENEO RAMOS,
ORLANDO TAYAO, EULALIO
TRINIDAD, MOISES MORALES,
LAZARO MATIAS, FORTUNATA
MANUGON, ROMEO MANUZON, and
DAMASO DURIA,
Promulgated:
Respondents. October 23, 2006
x------------------------------------------------x

DECISION

AUSTRIA-MARTINEZ, J.:

Petitioners were co-owners pro-indiviso of an irrigated rice land in Barangay Batasan, San Miguel, Bulacan, measuring
60.8544 hectares and registered in the name of their grandparents, the spouses Ramon Meneses and Carmen Rodriguez-
Meneses. On October 21, 1972, the property was distributed to farmer-beneficiaries by virtue of Presidential Decree No.
27 (P.D. No. 27).

On July 16, 1993, petitioners filed with the Regional Trial Court (RTC) of Bulacan, Branch 13, a complaint for
determination and payment of just compensation. Petitioners alleged that from the time the land was distributed to farmer-
beneficiaries in 1972 up to the time of the filing of the complaint, no payment or rentals has been made, and titles have
already been issued to the farmer-beneficiaries. Petitioners also alleged that the fair market value of the property
is P6,000,000.00.[1]
The farmer-beneficiaries, the Land Bank of the Philippines-Land Valuation and Landowners Compensation III (LBP-
LVLCO III), the Department of Agrarian Reform (DAR) Secretary, and the DAR all filed their respective Answers. For
their part, the farmer-beneficiaries alleged that the land valuation establishing the average gross production per hectare by
the Barangay Committee on Land Production (BCLP) based on three normal crop years before P.D. No. 27 is in
accordance with the existing guidelines and procedure on Operation Land Transfer; they have no unpaid rentals; and
jurisdiction over the case lies with the Department of Agrarian Reform Adjudication Board (DARAB).[2]

Meanwhile, the LBP-LVLCO III averred that it has been acting in good faith in discharging its obligations, and that the
computation was obtained through the valuation processes of the DAR on lands covered by P.D. No. 27 and Executive
Order No. 228 (E.O. No. 228). The LBP-LVLCO III likewise alleged that jurisdiction over the case lies with the
DARAB.[3]
The DAR Secretary, on the other hand, alleged that the valuation of the property was pursuant to the Operation Land
Transfer under P.D. No. 27 and the reckoning date should be at the time of the taking of the property, i.e., October 21,
1972.[4]

Lastly, the DAR claimed that the filing of the case is premature since there is no valuation yet made by the DAR based on
E.O. No. 228, and petitioners must cooperate with the DAR by submitting all the necessary papers for proper valuation
and expeditious payment of the land. The DAR also claimed that it must first determine the valuation before resort to the
court can be made.[5]

Thereafter, in an Order dated June 22, 1994, the RTC dismissed the complaint for lack of cause of action. According to
the RTC, the determination of just compensation must first be filed with the DAR and not the Special Agrarian Court.[6]

Petitioners filed a motion for reconsideration, which was partially granted by the RTC in its Order dated September 7,
1994, setting aside its order of dismissal, ordering the suspension of the proceedings and archiving the case until primary
determination has been made on the issue of just compensation.[7]

On October 5, 1994, petitioners filed a complaint for determination and payment of just compensation with the
DARAB. The DARAB, however, dismissed the complaint on the ground that it has no jurisdiction to hear and decide
valuation cases covered by P.D. No. 27, as the same is within the exclusive administrative powers of the Office of the
Secretary.[8] Because of the foregoing dismissal, petitioners filed with the RTC a motion to re-open and calendar case for
hearing,[9] which was granted by the RTC.

In an Order dated May 9, 1996, the RTC, with the agreement of the parties, constituted Commissioners to determine just
compensation,[10] but the same was dissolved per its Report and Recommendation dated October 9, 1996, [11]as granted by
the RTC in its Order dated October 11, 1996.[12]
Pre-trial was terminated on July 10, 1997, and petitioners were scheduled to present their evidence.[13] During the hearing
held on August 14, 1997, the parties agreed as to the issue to be resolved whether or not the plaintiffs [petitioners] are
entitled to just compensation as provided for in Republic Act No. 6657 (R.A. No. 6657) and the Constitution of 1987 and
not P.D. No. 27 which was the basis of valuation made by defendants Secretary of Agrarian Reform and the Land Bank of
the Philippines of the subject parcel of land which was acquired in October 21, 1972.[14] The parties were then given a
period within which to fie their respective motions for judgment on the pleadings and comment/opposition thereto, after
which the case shall be deemed submitted for resolution.[15]

On February 7, 1998, the RTC rendered its Decision dismissing the complaint. It was the RTCs ruling that since the
subject property was taken from petitioners on October 21, 1972 under the DARs Operation Land Transfer pursuant to
P.D. No. 27, then just compensation must be based on the value of the property at the time of taking.

Thus, petitioners filed an appeal with the Court of Appeals (CA), docketed as CA-G.R. CV No. 60355, where petitioners
prayed for a remand of the case to the RTC for further proceedings and/or reception of evidence on the just and fair
market value of the property.

On May 30, 2002, the CA[16] rendered its Decision dismissing the appeal.[17] Petitioners filed a motion for reconsideration,
but the same was denied on the grounds that it was filed 44 days late and the CA found no

cogent reason to reverse or modify its Decision.[18]

Hence, this petition for review on certiorari based on the following reasons:

I - THAT THE APPEALED DECLISION (sic) IS RENDERED BY THE COURT OF APPEALS NOT
IN ACCORDANCE WITH LAW OR WITH APPLICABLE DECISIONS OF THE SUPREME
COURT.[19]

II - THAT THE COURT OF APPEALS HAS DEPARTED FROM THE ACCEPTED AND USUAL
COURSE OF JUDICIAL PROCEEDINGS OR HAS SANCTIONED SUCH DEPARTURE BY
THE LOWER COURT.[20]
 Petitioners argue that the CA erred in sustaining the propriety of the motion for judgment on the pleadings filed
by respondents with the RTC. It was the CAs ruling that the motion for judgment on the pleadings was proper since
respondents can be considered as plaintiffs in a counter-claim. Petitioners also impute error in the CAs ruling that the
RTC properly dismissed the case since it appears that there was no initial valuation yet made by the DARAB.

Respondents, however, argue that the CA Decision dated May 30, 2002 is already final and executory due to
petitioners failure to seasonably file a motion for reconsideration. Respondents also argue, among others, that the
applicable law in this case is P.D. No. 27 and E.O. No. 228, which provides for the formula for the determination of just
compensation, as recognized in the cases of Land Bank of the Philippines v. Court of Appeals, 378 Phil. 1248 (1999),
and Gabatin v. Land Bank of the Philippines, G.R. No. 148223, November 25, 2004, 444 SCRA 176.

The Courts finds merit in the petition.

It is true that petitioners failure to file their motion for reconsideration within the reglementary period rendered
the CA Decision dated May 30, 2002 final and executory.For all intents and purposes, said Decision should now be
immutable and unalterable; however, the Court relaxes this rule in order to serve substantial justice considering (a)
matters of life, liberty, honor or property, (b) the existence of special or compelling circumstances, (c) the merits of the
case, (d) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules, (e) a
lack of any showing that the review sought is merely frivolous and dilatory, and (f) the other party will not be unjustly
prejudiced thereby.[21]

The explanation of petitioners counsel for the delayed filing of the motion for reconsideration was that their law
firm secretary failed to inform the court of their change of address. [22] This, of course, is not a valid excuse. As a general
rule, a client is bound by the acts of his counsel, including even the latters mistakes and negligence. But where such
mistake or neglect would result in serious injustice to the client, a departure from this rule is warranted. To cling to the
general rule is to condone rather than rectify a serious injustice to petitioners whose only fault was to repose his faith and
entrust his innocence to his lawyer.[23]

In Ginete v. Court of Appeals,[24] the Court disregarded the failure of the petitioners to file a motion for
reconsideration of the CAs dismissal, and instead, ruled that their counsels negligence should not prejudice the merits of
their case, as they were bound to lose their alleged rightful share in their inheritance to a 59-hectare property.

In Philippine Ports Authortity v. Sargasso Construction & Development Corp.,[25] the Court excused the Office of
the Government Corporate Counsels belated filing of the notice of appeal because sustaining the finality of the CAs
dismissal of the appeal would leave the petitioner no other remedy to assail the decision of the trial court, and it would
then have to implement the award of the reclamation project to the respondents for the enhancement of the San Fernando,
La Union port for the price of P30,794,230.89 without the benefit of a public bidding, and sans the approval of its Board
of Directors.

After reviewing the records of this case, the Court resolves to give due course to the case in order to put to rest the
issues herein presented, specially in light of the Courts ruling in Solmayor v. Arroyo,[26] to wit:

Furthermore, we must bear in mind that procedural rules are intended to ensure the proper
administration of law and justice. 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. A deviation from its rigid
enforcement may thus be allowed to attain its prime objective, for after all, the dispensation of justice is
the core reason for the existence of courts. Moreover, we cannot shy away from our constitutionally
mandated duty to questions of law set forth in this petition which hinges on the determination of the
rights of herein litigants in the light of a very important piece of social legislation, Presidential
Decree No. 27, which aims for the equitable distribution and ownership of land, without
disregarding the property rights of landowners. Thus, for pragmatic reasons and consideration of
justice and equity, the Court must put to rest the issues presented before us. (Emphasis supplied)

If the Court sustains the CA Decision, which affirmed the RTC Decision, petitioners will be left holding an empty
bag, so to speak. It should be noted that the property subject of this case has already been distributed to the farmer-
beneficiaries way back in 1972, and up to now, 34 years later, petitioners have yet to enjoy the fruits of its
value.Moreover, petitioners will be left without any recourse as regards the resolution of the issue of just compensation
since both the RTC and the DARAB already dismissed the separate complaints for just compensation filed before
them. Indeed, the Court has the power to except a particular case from the operation of the rule whenever the purposes of
justice requires it because what should guide judicial action is that a party is given the fullest opportunity to establish the
merits of his action or defense rather than for him to lose life, honor, or property on mere technicalities.[27]

On the propriety of the filing of a motion for judgment on the pleadings by the LBP and adopted by the DAR Secretary
the Court finds that the CA erred in sustaining its propriety.

Rule 34, Section 1 of the Rules of Court,[28] provides that a judgment on the pleadings is proper when an answer
fails to render an issue or otherwise admits the material allegations of the adverse partys pleading. The essential question
is whether there are issues generated by the pleadings. A judgment on the pleadings may be sought only by a claimant,
who is the party seeking to recover upon a claim, counterclaim or cross-claim; or to obtain a declaratory relief.[29]

In this case, the separate Answers filed by the respondents definitely tendered issues, as it made specific denials
of the material allegations in the complaint and asserted affirmative defenses, which would bar recovery by
petitioners. Moreover, it was erroneous for the RTC to require the filing of a motion for judgment on the pleadings and for
the LBP and the DAR Secretary to file the same since in the first place, the latter are neither plaintiffs in the case nor
counter-claimants or cross-claimants.

What the RTC obviously meant to be filed was a motion for summary judgment, a procedural device designed for
the prompt disposition of actions, which may be rendered if the pleadings, supporting affidavits, depositions and
admissions on file show that, after a summary hearing, there is no genuine issue regarding any material fact, except as to
the amount of damages, and the moving party is entitled to a judgment as a matter of law, and which may be applied for
by either a claimant or a defending party.[30] This is obvious from the fact that although the Answers raised issues, these
were not factual ones requiring trial, nor were they genuine issues,[31] as the parties were able to agree to limit the same to
whether petitioners are entitled to just compensation under R.A. No. 6657 and not P.D. No. 27.[32]

The Court also finds that the CA erred in sustaining the RTC ruling that just compensation in this case should be
based on the value of the property at the time of taking, October 21, 1972, which is the effectivity date of P.D. No. 27.

Respondent correctly cited the case of Gabatin v. Land Bank of the Philippines,[33] where the Court ruled that in
computing the just compensation for expropriation proceedings, it is the value of the land at the time of the taking
[or October 21, 1972, the effectivity date of P.D. No. 27], not at the time of the rendition of judgment, which should be
taken into consideration. Under P.D. No. 27 and E.O. No. 228, the following formula is used to compute the land value
for palay:

LV (land value) = 2.5 x AGP x GSP x (1.06)n

It should also be pointed out, however, that in the more recent case of Land Bank of the Philippines vs.
Natividad,[34] the Court categorically ruled: the seizure of the landholding did not take place on the date of effectivity of
P.D. No. 27 but would take effect on the payment of just compensation. Under Section 17 of R.A. No. 6657, the following
factors are considered in determining just compensation, to wit:

Sec. 17. Determination of Just Compensation. - In determining just compensation, the cost of
acquisition of the land, the current value of like properties, its nature, actual use and income, the
sworn valuation by the owner, the tax declarations, and the assessment made by government
assessors shall be considered. The social and economic benefits contributed by the farmers and the
farm-workers and by the Government to the property as well as the non-payment of taxes or loans
secured from any government financing institution on the said land shall be considered as additional
factors to determine its valuation. (Emphasis supplied)

Consequently, the question that arises is which of these two rulings should be applied?

Under the circumstances of this case, the Court deems it more equitable to apply the ruling in the Natividad
case. In said case, the Court applied the provisions of R.A. No. 6657 in computing just compensation for property
expropriated under P.D. No. 27, stating, viz.:
 Land Banks contention that the property was acquired for purposes of agrarian reform on October
21, 1972, the time of the effectivity of PD 27, ergo just compensation should be based on the value of the
property as of that time and not at the time of possession in 1993, is likewise erroneous. In Office of the
President, Malacaang, Manila v. Court of Appeals, we ruled that the seizure of the landholding did not
take place on the date of effectivity of PD 27 but would take effect on the payment of just compensation.

Under the factual circumstances of this case, the agrarian reform process is still incomplete
as the just compensation to be paid private respondents has yet to be settled. Considering the
passage of Republic Act No. 6657 (RA 6657) before the completion of this process, the just
compensation should be determined and the process concluded under the said law. Indeed, RA
6657 is the applicable law, with PD 27 and EO 228 having only suppletory effect, conformably with
our ruling in Paris v. Alfeche.

xxxx

It would certainly be inequitable to determine just compensation based on the guideline provided
by PD 27 and EO 228 considering the DARs failure to determine the just compensation for a considerable
length of time. That just compensation should be determined in accordance with RA 6657, and not PD 27
or EO 228, is especially imperative considering that just compensation should be the full and fair
equivalent of the property taken from its owner by the expropriator, the equivalent being real, substantial,
full and ample.

In this case, the trial court arrived at the just compensation due private respondents for their
property, taking into account its nature as irrigated land, location along the highway, market value,
assessors value and the volume and value of its produce. This Court is convinced that the trial court
correctly determined the amount of just compensation due private respondents in accordance with, and
guided by, RA 6657 and existing jurisprudence.[35] (Emphasis supplied)

As previously noted, the property was expropriated under the Operation Land Transfer scheme of P.D. No. 27 way back
in 1972. More than 30 years have passed and petitioners are yet to benefit from it, while the farmer-beneficiaries have
already been harvesting its produce for the longest time. Events have rendered the applicability of P.D. No. 27
inequitable. Thus, the provisions of R.A. No. 6657 should apply in this case.

Finally, the Court sustains petitioners contention that the CA erred in ruling that the RTC correctly dismissed their
complaint. Even assuming that the RTC was correct in holding that P.D. No. 27 applies, still it should not have simply
dismissed the complaint after resolving the issue of which law should apply. Instead, it should have proceeded to
determine the just compensation due to petitioners.

Records show that the complaint for just compensation was first filed in the RTC, but this was dismissed in the
Order dated June 22, 1994, for the reason that the determination of just compensation must first be filed with the
DAR.[36] Conformably with said ruling, petitioners filed the complaint with the DAR, which dismissed the same on the
ground that it has no jurisdiction to hear and decide valuation cases covered by P.D. No. 27. [37] Because of said dismissal,
petitioners went back to the RTC for the re-opening of the case. Petitioners case was obviously thrown back and forth
between the two venues, and with the RTCs second dismissal, they were left hanging and without any recourse, which, of
course, is iniquitous considering that their property has already long been expropriated by the government and its fruits
enjoyed by the farmer-beneficiaries.

Given the foregoing conclusion, this case should then be remanded to the Regional Trial Court (RTC) of Bulacan,
Branch 13, for the final determination of just compensation.

WHEREFORE, the petition is GRANTED. The Decision dated May 30, 2002 and Resolution dated December 9, 2002
rendered by the Court of Appeals in CA-G.R. CV No. 60355 is REVERSED and SET ASIDE. The records of this case is
ordered REMANDED to Regional Trial Court (RTC) of Bulacan, Branch 13, for further proceedings with deliberate
dispatch and in accordance with the Courts discussion in this Decision.

No costs.
SO ORDERED.
 [G.R. No. 131466. November 27, 1998]
CRISTINA DIMAN, CLARISSA DIMAN, GEORGE DIMAN, FELIPE DIMAN and FLORINA
DIMAN, petitioners, vs. HON, FLORENTINO M. ALUMBRES, PRESIDING JUDGE, REGIONAL
TRIAL COURT, LAS PIAS, BRANCH 255; HEIRS OF VERONICA V. MORENO LACALLE,
REPRESENTED BY JOSE MORENO LACALLE, respondents.
DECISION
NARVASA, C.J.:
The petition for review on certiorari in this case was initially dismissed by Resolution dated January 14, 1998; but
after deliberating on petitioners' motion for reconsideration dated February 23, 1998, the private respondents' comment
thereon, the reply to the comment, as well as the record of the case itself, the Court was convinced that the order of
dismissal should be reconsidered and the petition reinstated. It accordingly promulgated a resolution to that effect on
October 12, 1998, and required "respondents to file their Comment on the petition within ten (10) days from notice **."
Notice of the Resolution was duly served on private respondents' attorney on October 21, 1998. The latter filed a
motion for extension of time of thirty (30) days to file comment, counted from October 31. The Court granted the
extension sought, but only for fifteen (15) days.
The comment was filed late, on November 20, 1998, Counsel's explanation is that he had sought an extension of 30
days "due to the other volume of legal works similarly situated and school work of the undersigned as professor of law
and dean of the University of Manila," and had entertained "the honest belief" that it would be granted. However, he
learned belatedly that only a 15-day extension had been conceded. He forthwith completed the comment and filed it,
albeit five days late.
The Court admits the late comment, but takes this occasion to reiterate the familiar doctrine that no party has
a right to an extension of time to comply with an obligation within the period set therefor by law; motions for extension
are not granted as a matter of course; their concession lies in the sound discretion of the Court exercised in accordance
with the attendant circumstances; the movant is not justified in assuming that the extension sought will be granted, or that
it will be granted for the length of time suggested by him. It is thus incumbent on any movant for extension to exercise
due diligence to inform himself as soon as possible of the Court's action on his motion, by time inquiry of the Clerk of
Court. Should he neglect to do so, he runs the risk of time running out on him, for which he will have nobody but himself
to blame.
Now, the petition for review on certiorari appends practically all the material pleadings, motions, orders and
judgments in the Regional Trial Court and the Court of Appeals. The respondents' comment on the petition has been filed,
as just mentioned, and opposes its material averments. There is now no impediment to the adjudication of petitioners'
appeal on the merits on the basis of the record as it stands at this time. This, the Court will now proceed to do.
In 1991, more than fifty years after the effectivity of the Rules of Court [1] -- containing provisions relative inter
alia to the modes of discovery[2] -- this Court had occasion to observe that "among far too many lawyers (and not a few
judges), there is, if not regrettable unfamiliarity and even outright ignorance about the nature, purposes and operation of
the modes of discovery, at least a strong yet unreasoned and unreasonable disinclination to resort to them -- which is a
great pity for the intelligent and adequate use of the deposition-discovery procedure, could, as the experience of other
jurisdictions convincingly demonstrate, effectively shorten the period of litigation and speed up adjudication." [3]
The case at bar deals with one of such modes of discovery -- a request for admission under Rule 26 of the Rules of
1964; more particularly, the legal consequences of the failure to respond thereto in the manner indicated by law. It also
treats of other adjective devices to expedite litigation: a summary judgment under Rule 34,[4] and a judgment on demurrer
to evidence under Rule 35.[5] Had the principles involved been better understood and more faithfully observed, the case
might have been more quickly decided.
Actually, there are several adjective tools incorporated in the Rules of Court explicitly designed, like those just
mentioned, to abbreviate litigation or abort it at certain stages. Their obvious purpose is to unmask as quickly as may be
feasible, and give short shrift to, untenable causes of action or defenses and thus avoid waste of time, effort and
money.[6] For reasons yet to be fathomed, these devices seem to be of scant familiarity and of infrequent availment, as
above observed, with the result that the salutary objective of the Rules of bringing about a simple, inexpensive and
expeditious system of litigation has not been fully achieved.
Now, to come to grips with the case. There is no disagreement about the antecedents. The case began in the Regional
Trial Court of Las Pias (Branch 255), where a complaint for "Quieting of Title and Damages" was filed by the Heirs of
Veronica V.Moreno Lacalle (represented by Jose Moreno Lacalle) against Cristina Diman, Clarissa Diman, George
Diman, Felipe Diman and Florina Diman.[7] In their complaint, the Lacalle heirs claimed that:
a) their mother, the late Veronica V. Moreno Lacalle (who died in 1992), was the owner of a "parcel of land
situated at Brgy. Pulang Lupa Uno, Las Pias, ** covered by Transfer Certificate of Title No. 273301 of the
Registry of Deeds of the Province of Rizal;"
b) Veronica Lacalle had acquired the land in 1959 by virtue of a deed of absolute sale, and retained as caretakers
the persons she found in occupancy of the lot at the time of the sale, namely: Julian Nario and his wife, Adelaida
Legaspi, "with arrangement to share the agricultural fruits" until the former would have need of the property;
c) the caretakers of the lot were served with a notice for them to vacate the land (dated November 22, 1994) and
an alias writ of demolition (dated June 7, 1994) issued by the Metropolitan Trial Court in Civil Case No. 2619 --
 a case for "ejectment with damages" filed by the Dimans against the Narios, judgment in which, commanding
the Narios' ouster, had supposedly been affirmed by the Makati Regional Trial Court (Branch 137);
d) neither the deceased Veronica nor any of her heirs had been made parties to said ejectment action;
e) the complaint for ejectment contains false assertions, and had caused them injury for which the Dimans
should be made to pay damages.
In their answer with counterclaim dated February 2, 1995,[8] the Dimans alleged that:
a) they are the registered and absolute owners of the land registered in their names under TCT Nos. 90628,
90629 and 58676 (Pasay City), and have no knowledge of the land claimed by the Lacalle Heirs;
b) they are entitled to eject from their land the Nario Spouses, who were falsely claiming to be their lessees;
c) if the Heirs' theory is that the land in their title, No. 273301, is the same as that covered by the Dimans' titles,
then said title No. 2733101 is spurious because:
(1) no less than three official agencies -- (i) the Office of the Registrar of Deeds for Rizal and Regional
Registrar for Region IV, (ii) the Registrar of Deeds of Pasay City, and (iii) the Pangasiwaan
Pangtalaan ng Lupain (Land Registration Authority) -- have certified to the absence of any entry in
their records concerning TCT No. 273301 covering land with an area of 22,379 square meters in the
name of Veronica Vda. De Moreno Lacalle;
(2) Decree No. N-11601 explicitly cited as basis by TCT No. 273301 refers to land in Mauban, Quezon
Province, according to the records of the Land Registration Authority; and GLRO Record No. 14978
also expressly mentioned as basis for TCT No. 273301, refers to a registration case heard in
Pangasinan;
and
d) they are entitled to damages on their counterclaim.
After joinder of the issues, the Dimans served on the Heirs on February 2, 1995, a REQUEST FOR ADMISSION
(dated February 2, 1995) of the truth of the following specified matters of fact, to wit:[9]
a) the Heirs' TCT 273301 (Rizal) is not recorded in the Registry of Rizal, or of Pasay City, or of Paraaque, or of
Las Pias;
b) the Dimans' transfer certificates of title are all duly registered in their names in Pasay City, as alleged in their
answer;
c) in the Index Records of Registered Property Owners under Act No. 496 in the Office of the land Registration
Authority, there is no record of any property situated in Las Pias in the name of Veronica Lacalle, more
particularly described in TCT 273301;
4) the Heirs cannot produce a certified true copy of TCT 273301;
5) neither Veronica Lacalle nor any of her heirs ever declared the property under TCT 273301 for taxation
purposes since its alleged acquisition on February 24, 1959 or since the issuance of said title on August 7, 1959;
6) not a single centavo has been paid by the Heirs as real estate taxes; and
7) no steps have been taken by the Heirs to ascertain the genuineness and authenticity of the conflicting titles.
The REQUEST FOR ADMISSION was received by Jose Lacalle himself through registered mail on February 6,
1995, and copy thereof, by the latter's lawyer (Atty. Cesar T. Ching) on February 4, 1995.However, no response whatever
was made to the request by Lacalle, his lawyer, or anyone else, despite the lapse of the period therefor fixed by Section 2
of Rule 26 (not less than ten days after service). The Dimans thereupon filed with the Court a "MANIFESTATION WITH
MOTION TO REQUIRE PLAINTIFFS TO ANSWER REQUEST FOR ADMISSION," dated March 28, 1995, [10] giving
the Heirs ten (10) more days to file their answer to the request for admission, a copy of which was personally delivered to
the latter's lawyer; but again, no response whatever was made.
The Dimans then submitted a "MOTION FOR SUMMARRY JUDGMENT" dated April 17, 1995. [11] In that motion
they drew attention to the Heirs' failure to file any Pre-Trial Brief, and the several instances when the Heirs failed to
appear at scheduled hearings resulting in the dismissal of their complaint, which was however later reinstated. They
argued that because the heirs had failed to respond to their REQUEST FOR ADMISSION, each of the matters of which
an admission was requested, was deemed admitted pursuant to Section 2, Rule 26. On this basis, and on the basis of the
joint affidavit of Clarissa Diman de los Reyes and Florina Diman Tan -- attached to the motion and substantiating the
facts recited in the request for admission -- the Dimans asserted that no genuine issue existed and prayed that "a summary
judgment be entered dismissing the case for lack of merit."
The Heirs' counsel filed a two-page opposition dated May 15, 1995[12] in which, betraying an unfortunate
unfamiliarity with the concept of summary judgments, he asserted inter alia that:
"In order for defendants (Dimans) to successfully pray for judgment on the pleadings, they have to clearly
alleged in their permissive counterclaim their cause of action and if the answer of the plaintiffs (Heirs) to such
kind of counterclaim admit (sic) it or the answer to the counterclaim is a sham, that is the time for the defendants
 to move for a judgment summarily. ** ** (D)efendants have no cause of action for praying for summary
judgment. It is the plaintiffs who will pray for that and not the defendants."
Subsequently, the Dimans submitted a reply dated May 23, 1995;[13] the Heirs, a rejoinder dated June 1, 1995;[14] and
the Dimans, a pleading entitled "Exceptions and Comment to Plaintiffs' Rejoinder" dated June 8, 1995.[15]
The Trial Court denied the Dimans' motion for summary judgment. In its Order of June 14, 1995,[16] the Court
declared that a "perusal of the Complaint and the Answer will clearly show that material issue is raised in that both
plaintiffs and defendants claimed ownership over the land in dispute, presenting their respective titles thereto and accused
each other of possessing false title to the land." It stressed, citing jurisprudence, that a summary judgment "is not proper
where the defendant presented defenses tendering factual issues which call for the presentation of evidence."
The case proceeded to trial in due course. At its start, the Heirs' counsel, Atty. Michael Moralde, responding to
questions of the Court, admitted that his clients did not have the original copy of the title which was the basis for
their cause of action, but asserted that they were "still searching" for it since "(i)n every municipality there are several
Registry of Deeds." He theorized that the word "'title' ** is a relative term ** (and) does not only refer to a document but
refers to ownership."[17]
Only Jose Moreno Lacalle gave evidence for the plaintiff Heirs. Like Atty. Moralde, he admitted that he had no copy
"of the document which says ** (his) mother is the registered owner;" that the deed of sale was not the only basis for his
and his co-heirs' claim to the land, but also "a xerox copy of the ** title ** except that ** (he) cannot find the original;"
that "maybe" the original was in possession of the person who was his mother's agent in all her transactions, a certain Mr.
Lopez, whom he could no longer locate; that he had tried to verify the existence of the title "from the Register of Deeds of
Pasig and Pasay" without success; that he had not, however, gone to the Register of Deeds of Paraaque or Las Pias.[18]
The Heirs' documentary evidence consisted of (1) Veronica Lacalle's death certificate, (2) the special power of
attorney authorizing Jose Lacalle to act for his brothers and sisters; and (3) the deed of absolute sale purportedly executed
by Eusebio Mojica, Clara Mojica, Maria Mojica, Antonia Mojica, Amanda Mojica and Teodora Aranda which deeded
over to Veronica Lacalle the "Land 'known as Lot 1 PSU-151453,'" but which made no reference to any Torrens title over
it
Shortly after the Heirs rested their case, the Dimans filed a "Motion for Judgment on Demurrer to Evidence," dated
June 25, 1996.[19] They summarized the Heirs' evidence -- focusing attention on the Heirs failure to present "even an
unauthenticated photocopy of the title," and the absence of any proof that any proceedings for registration of the land
under the Torrens Act had been instituted -- and emphasized anew said Heirs' implied admissions resulting from their
failure to answer their (the Dimans') request therefor as a mode of discovery. On these premises, the Dimans contended
that a judgment on demurrer should be rendered, there being no genuine issue between the parties notwithstanding the
ostensible conflict of averments in their basic pleadings.
The Heirs presented a three-page opposition, dated July 7, 1996.[20] In it their counsel set out the startling contention
that "(d)emurrer to evidence is violative to due process as the judgment be rendered without giving the plaintiff the
opportunity to cross-examine the defendant," and petulantly inquired, "How could the truth come out without cross-
examination of the defendants by plaintiff?" particularly, as regards "whether their (the Dimans') title is not fake." Said
counsel also posited the amazing notion that "Demurrer to evidence may be correct only in criminal cases as it is the right
of the accused to remain silent, and that includes his right to file demurrer for fear of cross-examination. But not in Civil
Cases." Once more counsel regrettably exposed his ignorance of quite elementary legal principles.
Again, the Dimans' efforts at expediting disposition of the litigation were unsuccessful. By Order dated December 2,
1996,[21] the Trial Court denied their motion to dismiss. Respecting the Heirs' omission to present in evidence any copy
(even a photocopy) of TCT No. 273301, the Court remarked that "Not being able to prove the genuineness and
authenticity of TCT No. 273301, it being only a mere xerox copy ** (the Heirs) did not formally offer the same in
evidence." However, the Court said, the deed of sale of the land in Veronica Lacalle's favor that was submitted instead --
the "genuineness and authenticity ** (of which had) been fully established" by the certification of the Clerk of Court of
the Manila RTC -- was adequate for the purpose. According to the Court, "(e)xecution of a deed of conveyance in a
certain prescribed form gave to the transfer of a title to the land conveyed ** (and) without being controverted by any
convincing evidence to the contrary can be sufficient basis in granting the plaintiffs' relief for quieting of their title." The
Order passed sub silentio on the quaint contentions in the Heirs' opposition.
The Dimans moved for reconsideration under date of January 2, 1997,[22] inter alia (1) alleging that although the
photocopy of TCT 2773301 annexed to the Heirs' complaint states that the "certificate is a transfer from T.C.T. No.
259150" (and this, presumably, would be the vendors' [the Mojicas'] title), no effort whatever was made to submit proof
thereof, and (2) reiterating the proposition that the Heirs were bound by their implied admissions under Rule 26.
The Dimans also submitted a "SUPPLEMENT TO MOTION FOR RECONSIDERATION" dated January 7,
1997[23] in which they invited attention to the identity of the technical description of the land contained in the deed of sale
to Veronica Lacalle and that set out in TCT No. 273301. It must therefore have been Veronica Lacalle, they reasoned,
who had instituted the registration proceedings leading to the supposed issuance of said TCT No. 273301. Yet the heirs
failed to present evidence of the record of any such registration proceedings, just as they failed to present evidence of any
authentic copy of the title itself.
The Heirs filed a one-page "Vehement Opposition ** " dated February 15, 1997.[24] Once again they reiterated the
astounding argument that the Dimans' "insistence ** (on the demurrer to evidence) is tantamount to suppression of their
evidence as they are afraid of cross-examination"!
 Again the Trial Court rebuffed the Dimans. In its Order of February 28, 1997,[25] the Court ruled that the issues raised
in the motion for reconsideration and its supplement had already been passed upon in the Order of December 2, 1996. It
then set the case "for the reception of defendants' evidence on April 22, 1997 **."
What the Dimans did was to commence a special civil action of certiorari, mandamus and prohibition in the Court of
Appeals praying (a) that it set aside the Orders of June 14, 1995 (denying summary judgment), of December 2, 1996
(denying demurrer to evidence), and of February 28, 1997 (denying reconsideration); (b) that the Trial Judge be
commanded to dismiss the case before it; and (c) that said judge be prohibited from conducting further proceedings in the
case.
But once again their efforts met with failure. The Appellate Tribunal (Seventh Division) promulgated judgment on
September 9, 1997 decreeing that their petition be "DENIED due course and DISMISSED." The Court of Appeals held
that insofar as concerned the Order of June 14, 1995, the petition for its invalidation had not been filed within a reasonable
time; and that as regards the Order of December 2, 1996, the remedy of certiorari was improper because : (1) said order
was merely interlocutory, (2) any error therein constituted only an error of judgment correctible by appeal, and (3) there
was no capriciousness or whimsicality attendant upon the order. The Dimans' motion for reconsideration was later denied
by the Court of Appeals by Resolution dated November 5, 1997.[26]
The Dimans thereupon filed with this Court a petition for review on certiorari of the Appellate Tribunal's Decision of
September 9, 1997. But seemingly consistent with the pattern of judicial misfortune which they had theretofore been
traversing, their petition for review was dismissed, by Resolution dated January 14, 1998. Their appeal was however
subsequently reinstated, as earlier recounted.
Now, what first strikes the Court about the case at bar is the regrettable absence of familiarity, therein laid bare, with
the rules of discovery and with the underlying philosophy and principles of the cognate remedy of summary
judgment. That resulted in the undue protraction of the present action despite ample demonstration of the absence of any
genuine issue -- that is to say, that the issues ostensibly arising from the pleadings were sham or fictitious.
A Trial Court has no discretion to determine what the consequences of a party's refusal to allow or make discovery
should be; it is the law which makes that determination; and it is grave abuse of discretion for the Court to refuse to
recognize and observe the effects of that refusal as mandated by law. Particularly as regards request for admission under
Rule 26 of the Rules of Court, the law ordains that when a party is served with a written request that he admit : (1) the
genuineness of any material and relevant document described in and exhibited with the request, or (2) the truth of any
material and relevant matter of fact set forth in the request, said party is bound within the period designated in the
request,[27] to file and serve on the party requesting the admission a sworn statement either (10 denying specifically the
matters of which an admission is requested or (2) setting forth in details the reasons why he cannot truthfully either admit
or deny those matters. If the party served does not respond with such sworn statement, each of the matters of which an
admission is requested shall be deemed admitted.[28]
In this case, the Dimans' request for admission was duly served by registered mail on Jose Lacalle on February 6,
1995, and a copy thereof on his lawyers on February 4, 1995. Neither made any response whatever within the
reglementary period. Nor did either of them do so even after receiving copy of the Dimans' "MANIFESTATION WITH
MOTION TO REQUIRE PLAINTIFFS TO ANSWER REQUEST FOR ADMISSION." dated March 28, 1995. On
account thereof, in legal contemplation, the Heirs impliedly admitted all the facts listed in the request for
admission. These plain and simple legal propositions were disregarded by His Honor.
It is also the law which determines when a summary judgment is proper. It declares that although the pleadings on
their face appear to raise issues of fact -- e.g., there are denials of, or a conflict in, factual allegations -- if it is shown by
admissions, depositions or affidavits, that those issues are sham, fictitious, or not genuine, or, in the language of the Rules,
that "except as to the amount of damages, there is no genuine issue as to any material fact and that the moving party is
entiled to a judgment as a matter of law,[29] the Court shall render a summary judgment for the plaintiff [30] or the
defendant[31] as the case may be.[32]
Parenthetically, the existence or appearance of ostensible issues in the pleadings, on the one hand, and their sham or
fictitious character, on the other, are what distinguish a proper case for a summary judgment [33] from one for a judgment
on the pleadings under Rule 19 of the 1964 Rules.[34] In the latter case, there is no ostensible issue at all, but the absence
of any because of the failure of the defending party's answer to raise an issue. Rule 19 expresses the principle as follows:
"Where an answer fails to tender an issue, or otherwise admits the material allegations of the adverse party's
pleading, the court may, on motion of that party, direct judgment on such pleading **."[35]
On the other hand, in the case of a summary judgment, issues apparently exist -- i.e., facts are asserted in the
complaint regarding which there is as yet no admission, disavowal or qualification; or specific denials or affirmative
defenses are in truth set out in the answer -- but the issues thus arising from the pleadings are sham, fictitious, not
genuine, as shown by admissions, depositions or admissions. In other words, as a noted authority remarks, a judgment on
the pleadings is a judgment on the facts as pleaded while a summary judgment is a judgment on the facts as summarily
proven by affidavits, depositions or admissions.[36] Another distinction is that while the remedy of a judgment on the
pleadings may be sought only by a claimant (one seeking to recover upon a claim, counterclaim, or cross-claim or to
obtain a declaratory relief, supra), a summary judgment may be applied for by either a claimant or a defending party.
These basic distinctions escaped His Honor. He denied the Dimans' motion for summary judgment in his Order of
June 14, 1995, opining that a "perusal of the Complaint and the Answer will clearly show that material issue is raised in
that both plaintiffs and defendants claimed ownership over the land in dispute, presenting their respective titles thereto
and accused each other of possessing false title to the land." He added, citing cases, that a summary judgment "is not
proper where the defendant presented defenses tendering factual issues which call for the presentation of evidence." Such
a ratiocination is grossly erroneous. Clearly, the grounds relied on by the Judge are proper for the denial of a motion
for judgment on the pleadings -- as to which the essential question, as already remarked, is: are there issues arising from
or generated by the pleadings? -- but not as regards a motion for summary judgment -- as to which the crucial question
is: issues having been raised by the pleadings, are those issues genuine, or sham or fictitious, as shown by affidavits,
depositions or admissions accompanying the application therefor?
Errors on principles so clear and fundamental as those herein involved cannot but be deemed so egregious as to
constitute grave abuse of discretion, being tantamount to whimsical or capricious exercise of judicial prerogative.
When the Heirs closed their evidence as party plaintiffs, and the Dimans moved to dismiss on ground of insufficiency
of the Heirs' evidence, the Trial Judge was charged with the duty to assess the evidence to ascertain whether or not "upon
the facts and the law the plaintiff(s) ** (have) shown no right to relief." It was in the first place incumbent on His Honor
to hold the Heirs bound to their admissions appearing in the record, express and implied. In accordance with Section 2,
Rule 26 of the 1964 Rules of Court, the Heirs were impliedly, but no less indubitably, deemed to have admitted the facts
on which admissions had been duly requested by reason of their failure to reply thereto. Said Section 2 reads as follows:
"SEC. 2. Implied admissions. -- Each of the matters of which an admission is requested shall be deemed admitted
unless, within a period designated in the request, which shall not be less than twn (10) days after service thereof,
or within such further time as the court may allow on motion and notice, the party to whom the request is
directed serves upon the party requesting the admission a sworn statement either denying specifically the matters
on which an admission is requested or setting forth in detail the reasons why he cannot truthfully either admit or
deny those matters.
Objections on the ground of irrelevancy or impropriety of the matter requested shall be promptly submitted to the
court for resolution."[37]
In determining the chief issue in the case, the Trial Judge should have taken due account of the following
circumstances on record and obvious legal propositions:
1) the Heirs' admissions of the following facts, viz.:
a) the Heirs' TCT 273301 (Rizal) is not recorded in the Registry of Rizal, or of Pasay City, or of Paraaque, or of Las Pias;
b) on the other hand, the Dimans' transfer certificates of title are all duly registered in their names in Pasay City;
c) there is no record of any property situated in Las Pias in the name of Veronica Lacalle -- more particularly described in
TCT 273301 -- in the Index Records of Registered Property Owners under Act No. 496 in the Office of the Land
Registration Authority;
d) the Heirs do not have and cannot produce even a certified true copy of TCT 273301;
e) neither Veronica Lacalle nor any of her heirs ever declared the property under TCT 273301 for taxation purposes since
its alleged acquisition on February 24, 1959 or since the issuance of said title on August 7, 1959;
f) not a single centavo was ever paid by the Heirs as real estate taxes; and
g) no steps were ever taken by the Heirs to ascertain the genuineness and authenticity of the conflicting titles.
2) the statement in open Court of the Heirs' own counsel that his clients did not have original copy of the title,
that they were fact "still searching" for the title;[38]
3) the testimony of Jose Moreno Lacalle that he had no copy "of the document which says ** (his) mother is the
registered owner" of the land in question; that he "cannot find the original" which "maybe" was in possession of
his mother's agent, a certain Mr. Lopez, who, he could no longer locate; that he had tried to verify the existence
of the title "from the Register of Deeds of Pasig and Pasay" without success; that he had not, however, gone to
the Register of Deeds of Paraaque or Las Pias;[39]
4) that the only document bearing on the issue submitted by the heirs, the deed of absolute sale purportedly
executed by Eusebio Mojica, Clara Mojica, Maria Mojica, Antonia Mojica, Amanda Mojica and Teodora Aranda
-- which deeded over to Veronica Lacalle the "land 'known as Lot 1 PSU-151453,'" but which made no reference
to any Torrens title over it -- was not accompanied by proof of the vendors' ownership of the land in question;
5) that the land subject of the Heirs' action for quieting of title being registered land (being in fact registered in
the Dimans' favor), the unregistered deed of sale relied upon by the Heirs cannot and does not affect said land, or
bind any third party (including the Dimans) for the reason that, as a matter of law:
" ** (N)o deed, mortgage, lease or other voluntary instrument, except a will purporting to convey or
affect registered land, shall take effect as a conveyance or bind the land, but shall operate only as a
contract between the parties and as evidence of authority to the Register of Deeds to make registration;"
and it is the "act of registration (that) shall be the operative act to convey or effect the land in so far as
third persons are concerned," which "registration shall be made in the ** Register of Deeds for the
province or city where the land lies."[40]
and
6) that there is no proof whatever of the ownership or character of the rights of the vendors (the Mojicas) over the
property purportedly conveyed.
 In fine, the Heirs had proven nothing whatever to justify a judgment in their favor. They had not presented any copy
whatever of the title they wished to be quieted. They had not adduced any proof worthy of the name to establish their
precedessors' ownership of the land. On the contrary, their own evidence, from whatever aspect viewed, more than
persuasively indicated their lack of title over the land, or the spuriousness of their claim of ownership thereof. The
evidence on record could not be interpreted in any other way, and no other conclusion could be drawn therefrom except
the unmeritoriousness of the complaint. The case at bar is a classic example of the eminent propriety of a summary
judgment, or a judgment on demurrer to evidence.
Considering these circumstances, including the outlandish grounds of opposition advanced by the Heirs against the
Dimans' motions for summary judgment and for demurrer to evidence, no less than the obviously mistaken grounds cited
by the Trial Court for denying said motions, this Court has no hesitation in declaring that it was indeed grave abuse of
discretion on the part of the Trial Court to have refused to render a summary judgment or one on demurrer to evidence. In
no sense may the Trial Court's errors be considered, as the Court of Appeals did in its judgment of September 9, 1997, as
mere errors of judgment correctible by appeal, untarnished by any capriciousness or whimsicality.
WHEREFORE, the challenged decision of the Court of Appeals promulgated on September 9, 1997 is REVERSED
and SET ASIDE: the Orders dated July 14, 1996 and December 2, 1996 rendered in the action for "Quieting of Title and
Damages" -- docketed as Civil Case No. 94-3085 of the Regional Trial Court at Las Pias (Branch 255) and entitled "Heirs
of Veronica V. Moreno Lacalle, represented by Jose Moreno Lacalle versus Cristina Diman, Clarissa Diman, George
Diman, Felipe Diman and Florina Diman" -- are annuled; and said Civil Case No. 94-3085 is DISMISSED. Costs against
private respondents.
IT IS SO ORDERED.
Romero, Kapunan, Purisima, and Pardo, JJ., concur.
JOSE D. ONTIMARE, JR., and RENE D. ONTIMARE, G.R. No. 159224
as sons/heirs, substituted for their deceased
father and the original party JOSE M. ONTIMARE,
SR., Present:
Petitioners,
Quisumbing, J.,
(Chairman),
- versus - Carpio,
Carpio Morales, and
Tinga, JJ.

SPS. RENATO and ROSARIO ELEP, Promulgated:

Respondents.
January 20, 2006

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

DECISION
QUISUMBING, J.:

For review on certiorari is the Decision,[1] dated July 18, 2003, of the Court of Appeals in CA-G.R. CV No. 69138,
affirming with modifications the Summary Judgment[2] dated July 11, 2000 of the Regional Trial Court of Quezon City,
Branch 77, in Civil Case No. Q-96-28991. The RTC ordered Jose M. Ontimare, Sr. to pay respondents actual and
compensatory damages in the amount of P75,000 per month from July 1996 to September 1998, exemplary damages
amounting to P50,000, attorneys fees in the amount of P30,000, and the sum of P150,000 as reimbursement for the
damage on respondents wood parquet floors, wall paintings and ceiling.
The facts, as borne by the records, are as follows:
Ontimare Sr. and respondents are neighbors in Hyacinth Street, Roxas District, Quezon City. Respondents
wanted to build a four-door, two-storey apartment on their lot at No. 74 Hyacinth Street and applied for a building
permit with the Building Official of Quezon City sometime in December 1995.
 Ontimare Sr. owned the adjoining house and adjacent lot on No. 72 Hyacinth Street. His terrace extends to the
boundary between his property and respondents. On December 3, 1995, respondents wrote Ontimare Sr. a letter
seeking his written consent to the construction of a firewall adjacent to his existing firewall.
Instead of consenting, on December 20, 1995, Ontimare Sr. filed a Complaint with the Building Official asking
that the request for a building permit be withheld since a firewall would adversely affect the ventilation and market
value of his property.
Despite a building permit issued to respondents on January 8, 1996,[3] a Cease and Desist Order[4] to stop the
construction of the four-door apartment was issued on January 12, 1996, as a result of the Complaint of Ontimare Sr.
However, when respondents wrote the City Engineer and explained they were constructing a one-sided firewall
within their property, the Cease and Desist Order was forthwith lifted on January 16, 1996.
On January 26, 1996, the complaint of Ontimare Sr. was dismissed. He appealed to the City Mayor, who ordered
an investigation on the matter.
On February 2, 1996, Ontimare Sr. filed a Notarial Prohibition.
After hearings conducted on June 18 and 25, 1996, the Building Official dismissed the complaint on July 11, 1996
and ordered Ontimare Sr. to make the adjustments in the construction of his house.[5] Respondents were issued a new
building permit on July 16, 1996.[6]
Meanwhile, the day before, on July 15, 1996, while respondents workers were plastering and water-proofing the
firewall, Ontimare Sr. fired his shotgun, threatening to kill anyone who would enter his property and work on
respondents construction.[7] As a result, a portion of the firewall remained unfinished. According to respondents, water
seeped in the building and damaged the sanding, the wood parquet floors and the ceiling. Respondents filed an action
for damages with application for preliminary injunction and restraining order against Ontimare Sr. before the Regional
Trial Court of Quezon City, Branch 77.
After trial, Ontimare Sr. moved for a summary judgment while the respondents moved for the resolution of the
case on the merits. The RTC issued the summary judgment, the dispositive portion of which reads,
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs, and
the defendant is hereby ordered to pay the plaintiffs:
1. Actual and compensatory damages in the form of unrealized income and bank
amortization interest in the amount of P75,000.00 per month from July, 1996 to September,
1998;
2. The amount of P150,000.00 as reimbursement for the damage on the wood parquet
floors, wall paintings and ceiling;
3. P50,000.00 as and by way of exemplary damages; and
4. P30,000.00 as and by way of attorneys fees.
SO ORDERED.[8]
On appeal, the Court of Appeals affirmed the assailed summary judgment with modification,
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs, and
the defendant is hereby ordered to pay the plaintiffs:
1. Compensatory damages in the form of unrealized income in the total amount of
Two Hundred Eighty-eight Thousand Pesos (P288,000.00) for Apartments A, B and C, and
bank amortization interest from July 1996 to July 1997 in the total amount of Three
Hundred Forty-four Thousand Eight Hundred Seventy-five Pesos and 74/100 centavos
(P344,875.74);
2. The amount of P150,000.00 as reimbursement for the damage on the wood parquet
floors, wall paintings and ceiling;
3. P50,000.00 as and by way of exemplary damages; and
4. P30,000 as and by way of attorneys fees.
SO ORDERED.[9]
Meanwhile, while the case was on appeal, Ontimare Sr. died. He was survived by his two sons, petitioners
herein, who now come to us on a petition for review on certiorari on the ground that:
1. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN MAINTAINING THE TRIAL COURTS
SUMMARY JUDGMENT AGAINST MOVANT DEFENDANT
2. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN OVERLOOKING MATERIAL FACTS TO FIND
DEFENDANT SOLELY LIABLE FOR THE DELAY IN THE PLASTERING OF THE FIREWALL
 3. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT HOLDING THAT THE LOWER COURT
ERRED IN CONSIDERING DEFENDANTS MOTION FOR RECONSIDERATION AS A MERE SCRAP OF
PAPER WHICH COULD NOT BE ACTED UPON BY THE COURT
4. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN AWARDING UNEARNED RENT AND
REIMBURSEMENT OF BANK INTEREST AMORTIZATION FOR ANY PERIOD AFTER THE REWORK ON THE
FIREWALL HAD BEEN COMPLETED IN SEPTEMBER 1996
5. THE COURT OF APPEALS COMMITTED A PATENT ERROR IN GRANTING DAMAGES EQUIVALENT TO
ELEVEN MONTHS WHEN THE LIABILITY PERIOD IT COMPUTED ONLY ADDED UP TO TEN MONTHS
6. THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN AWARDING EXEMPLARY DAMAGES
WITHOUT ANY BAD FAITH ON THE PART OF DEFENDANT[10]
Simply put, there are two issues for resolution, namely (1) Is the summary judgment rendered by the trial court
proper? (2) Are petitioners liable for the damages awarded?
Anent the first issue, petitioners argue that summary judgment may issue only in favor of a moving party and only
when there is no genuine issue on any material fact, except for the amount of damages. Petitioners insist that the
summary judgment in this case was rendered against the movant and despite the existence of disputed facts.
On the other hand, respondents counter that Ontimare Sr., in moving for summary judgment indicated that he
did not want a de riguer trial. Further, respondents argue that he waived his right to question the said summary
judgment when he did not object to respondents motion that the case be resolved on its merits.
On this issue, Rule 34, Section 3 of the Rules of Court is pertinent. It provides:
SEC. 3. Motion and proceedings thereon. - After the hearing, the judgment sought shall be
rendered forthwith if the pleading, depositions, and admissions on file together with the affidavits, show
that, except as to the amount of damages, there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.
Hence, for summary judgment to be proper, two (2) requisites must concur, to wit: (1) there must be no genuine
issue on any material fact, except for the amount of damages; and (2) the moving party must be entitled to a judgment
as a matter of law.
When, on their face, the pleadings tender a genuine issue, summary judgment is not proper. An issue is genuine
if it requires the presentation of evidence as distinguished from a sham, fictitious, contrived or false claim.[11]
In the instant case, the summary judgment was rendered after the presentation of evidence by both parties in a
full blown trial. Records show that during the two-year trial of the case, Ontimare Sr. had presented his own witnesses,
all four of them, and had cross-examined the witnesses of the opposing party.
The trial courts decision was merely denominated as summary judgment. But in essence, it is actually equivalent
to a judgment on the merits, making the rule on summary judgment inapplicable in this case.
Anent the second issue, petitioners contend that respondents were issued locational clearance only on July 16,
1996 and hence, the start of the construction work should be reckoned not earlier than the said date. When the shotgun
incident happened on July 15, 1996, respondents had no locational clearance.
Petitioners also argue that the unearned rent and reimbursement of bank interest amortization should be
counted up to and not from the completion of the rework because the apartments could have been rented out and
could have started to earn once the rework was completed. Petitioners insist the period for the computation of
unrealized income should have been ten months.
Lastly, petitioners maintain that Ontimare Sr. did not act in bad faith nor abusively in the protection of his rights,
thus no exemplary damages should be granted.
For their part, respondents counter that petitioners raise pure questions of fact already ruled upon by the Court
of Appeals, hence, the instant petition should be denied outright. Granting arguendo that the petition should be given
due course, respondents aver that Ontimare Sr., despite knowledge that respondents had already acquired a building
permit, nevertheless, threatened bodily harm on workers of respondents to prevent the construction. He should thus be
held liable for damages for abuse of his rights to the prejudice of respondents.
Respondents alleged that rework on the firewall started from September 1996, as evidenced by the receipts
issued by the contractor. The compensatory damages in the form of unearned rent started to accrue on October 1, 1996
until the completion of the rework on August 1, 1997 for Apartment A (a total of eleven months) and until July 15, 1997
for Apartments B and C (a total of ten months and fifteen days).
Lastly, respondents posit that Ontimare Sr.s threats with use of a firearm constitute bad faith.
At the outset, it bears stressing that, except for the issue on exemplary damages, petitioners raise pure
questions of fact, which may not be the subject of a petition for review on certiorari.[12] Well-settled is the rule that the
Supreme Court is not a trier of facts. When supported by substantial evidence, the findings of fact of the Court of
 Appeals are conclusive and binding on the parties and are not reviewable by this Court, unless the case falls under any of
the following recognized exceptions:
(1) When the conclusion is a finding grounded entirely on speculation, surmises and conjectures;
(2) When the inference made is manifestly mistaken, absurd or impossible;
(3) Where there is a grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the findings of fact are conflicting;
(6) When the Court of Appeals, in making its findings, went beyond the issues of the case and
the same is contrary to the admissions of both appellant and appellee;
(7) When the findings are contrary to those of the trial court;
(8) When the findings of fact are conclusions without citation of specific evidence on which they
are based;
(9) When the facts set forth in the petition as well as in the petitioners main and reply briefs are
not disputed by the respondents; and
(10) When the findings of fact of the Court of Appeals are premised on the supposed absence of
evidence and contradicted by the evidence on record.[13]
Petitioners failed to show that their case falls under any of the above-quoted exceptions. Hence, we see no
reason to disturb the findings of the Court of Appeals, which we find supported by evidence on record.
We are likewise constrained from reversing the award of exemplary damages. Exemplary damages are imposed by way
of example or correction for the public good.[14]Ontimare Sr.s firing his shotgun at respondents workers cannot be
countenanced by this Court. Exemplary damages in the amount of P50,000 is proper.
WHEREFORE, the petition is DENIED. The assailed Decision, of the Court of Appeals dated July 18, 2003, in CA-
G.R. CV No. 69138 is AFFIRMED. Costs against petitioners.

SO ORDERED.

ASIAN CONSTRUCTION AND DEVELOPMENT G.R. No. 153827

CORPORATION,
Petitioner,
Present:

PUNO, J., Chairperson,*

SANDOVAL-GUTIERREZ,**
CORONA,
AZCUNA, and
- versus -
GARCIA, JJ.

Promulgated:
PHILIPPINE COMMERCIAL INTERNATIONAL
BANK,
Respondent.
April 25, 2006
x-----------------------------------------------------------------------------------x

DECISION
GARCIA, J.:

In this petition for review under Rule 45 of the Rules of Court, petitioner Asian Construction and
Development Corporation or ASIAKONSTRUKT, seeks the reversal and setting aside of the decision[1]dated
March 15, 2002 and the Resolution[2] dated June 3, 2002 of the Court of Appeals (CA) in CA-G.R. CV No.
68189. The assailed decision affirm with modification the Summary Judgment rendered by the Regional
Trial Court (RTC) of Makati City in an action for a sum of money thereat commenced by the herein
respondent, Philippine Commercial International Bank (PCIBANK) against the petitioner, while the challenged
resolution denied petitioners motion for reconsideration.

The facts:

On February 24, 1999, in the RTC of Makati City, respondent PCIBANK filed a complaint[3] for a sum of
money with prayer for a writ of preliminary attachment against petitioner ASIAKONSTRUKT. Docketed as Civil
Case No. 99-432, the complaint alleged, inter alia, as follows:

FIRST CAUSE OF ACTION

2.01 On various occasions, ASIAKONSTRUKT obtained U.S. dollar denominated credit

accommodations from PCIBANK in the amount of Four Million Four Hundred Eighty
Seven Thousand U.S. dollars (US$4,487,000.00), exclusive of interests, charges and fees
thereon and the cost of collecting the same. These credit accommodations are covered
by the following promissory notes:

xxx xxx xxx

2.02 Prompt and faithful payment of all the foregoing promissory notes was secured by the
following deeds of assignment executed by ASIAKONSTRUKT in favor of PCIBANK:

(a) Deed of Assignment of Receivables/Contract Proceeds dated 20

July 1994 where ASIAKONSTRUKT assigned its receivables from its
Contract with the National Power Corporation (NPC) in the amount
of .P54,500,000;

(b) Deed of Assignment of Receivables dated 28 June 1995 where

ASIAKONSTRUKT assigned its receivables from its Contract with the
NPC in the amount of P26,281,000.00;

(c) Deed of Assignment of Receivables dated 28 August 1995 where

ASIAKONSTRUKT assigned its receivables from its Sub-Contract with
ABB Power, Inc., in the amount of P43,000,000.00;

(d) Deed of Assignment of Contract Proceeds dated 27 March 1996

where ASIAKONSTRUKT assigned its receivables from its contracts
with PNOC in the aggregate amount of P46,000,000.00; and

(e) Deed of Assignment of Contract Proceeds dated 20 February

1997 where ASIAKONSTRUKT assigned its receivables from the
Ormat Philippines, Inc., in the aggregate amount of
US$3,350,000.00;
 2.03 All the foregoing deeds of assignments stipulate, among others, the following terms
and conditions:

a) The assignment is for the purpose of securing payment of

the principal amount and the interests and bank charges
accruing thereon, the costs of collecting the same and all other
expenses which PCIBANK may be put in connection with or as
an incident of the assignment;

b) That the assignment secures also any extension or renewal

of the credit which is the subject thereof as any and all other
obligations of ASIAKONSTRUKT of whatever kind and nature as
appear in the records of PCIBANK, which ASIAKONSTRUKT
accepts as the final and conclusive evidence of such obligations
to PCIBANK, whether contracted before, during or after the
constitution of [the assignment agreement];

c) That PCIBANK authorizes ASIAKONSTRUKT, at the latters

expense, to collect and receive for [PCIBANK] all the
Receivables; and

d) That ASIAKONSTRUKT shall have no right, and agrees

not to use any of the proceeds of any collections, it being
agreed by the parties that [ASIAKONSTRUKT] divests itself of all
the rights, title and interest in said Receivables and the
proceeds of the collection received thereon.

2.04 The promissory notes have remained not fully paid despite their having become due
and demandable. Repeated verbal and written demands were made upon
ASIAKONSTRUKT, but to no avail. It has failed and refused, and continues to fail and
refuse, to pay its outstanding obligations to PCIBANK;

2.05 As a result of ASIAKONSTRUKTs refusal to pay its outstanding obligations, PCIBANK

was constrained to refer the matter to counsel and thus incur attorneys fees and legal
costs.

2.06 The aggregate unpaid obligation of ASIAKONSTRUKT to PCIBANK, as of 31 December

1998, amounts to US$4,553,446.06, broken down as follows:

Principal US$ 4,067,867.23

Interest US$ 291,263.27
Penalties US$ 194,315.56
TOTAL US$ 4,553,446.06

For its second cause of action, PCIBANK alleged in the same complaint as follows:

SECOND CAUSE OF ACTION

4.02 as a result of the fraudulent acts of ASIAKONSTRUKT, PCIBANK suffered the following
damages, all of which ASIAKONSTRUKT must be held to pay PCIBANK:
 4.02.1 Exemplary damages, in the interest of public good and purposes
of correction, in the amount of not less than .P50,000.00;

4.02.2 Attorneys fees in the amount of not less than . P1,800,000.00;

and

4.02.3 Costs of suit.

In support of its prayer for a writ of preliminary attachment embodied in the complaint, plaintiff
PCIBANK alleges the following:

3.02 ASIAKONSTRUKT is guilty of fraud in contracting the debt, in the performance thereof,
or both, xxx;

303. PCIBANK agreed to enter into the above-mentioned credit accommodations primarily
because of the existence of the deeds of assignment listed above. However, from
telephone inquiries made with responsible officers of the National Power Corporation,
ABB Power, Inc., PNOC and Ormat Philippines, Inc., PCIBANK was surprised to learn that
ASIAKONSTRUKT had long ago collected the contract proceeds, or portions thereof,
which were previously assigned to PCIBANK. However, to date, it has yet to turn over
these proceeds to PCIBANK. Worse, PCIBANK learned that the contract proceeds were
used by ASIAKONSTRUKT for its own purposes clear evidence of fraud, which has
deprived PCIBANK of its security. ASIAKONSTRUKTs unauthorized use of the contract
proceeds for its own purposes was subsequently confirmed by Mr. Napoleon Garcia,
Vice President for Finance of ASIAKONSTRUKT, in a telephone discussion on 12 January
1999 with Ms. Maricel E. Salaveria of PCIBANK. xxx Needless to say, ASIAKONSTRUKT
has fraudulently collected such receivables to the prejudice of PCIBANK.

3.04 it is evident that ASIAKONSTRUKT never had any intention of complying with the deeds of
assignment. ASIAKONSTRUKT only misled PCIBANK into believing that it had sufficient
security to ensure payment of its loan obligations.

3.05 Alternatively, granting, in argumenti gratia, that ASIAKONSTRUKT, at the time it executed
the foregoing deeds of assignment, really intended to abide by their terms and
conditions, it nevertheless committed manifest fraud when it collected the contract
proceeds, and instead of remitting them to PCIBANK, used them for its own purposes.

In an order[4] dated April 13, 1999, the trial court, after receiving ex parte PCIBANKs evidence in
support of its prayer for preliminary attachment, directed the issuance of the desired writ, thus:

WHEREFORE, let a writ of preliminary attachment issue against all the property of defendant not
exempt from execution or so much thereof as may be sufficient to satisfy plaintiffs principal claim of
US$4,553,446.06, representing the alleged unpaid obligation of defendant, inclusive of interest and
penalty charges, as of December 31, 1998, which is equivalent to P174,260,380.72, upon plaintiffs filing
of a bond in an equal amount to answer for all it may sustain by reason of the attachment if the Court
shall finally adjudge that plaintiff was not entitled thereto.

SO ORDERED.

With plaintiff PCIBANK having posted the requisite bond, a writ of preliminary attachment was
thereafter issued by the trial court. Per records, defendant ASIAKONSTRUKT did not file any motion for
the quashal or dissolution of the writ.
 Meanwhile, on August 27, 1999, defendant ASIAKONSTRUKT filed its Answer,[5] thereunder making
admissions and denials. Defendant admits, subject to its defenses, the material allegations of the Complaint as
regards its indebtedness to plaintiff PCIBANK and its execution of the various deeds of assignment enumerated
therein. It, however, denies, for lack of knowledge sufficient to form a belief as to the truth thereof, the
averments in the Complaint that it has not paid, despite demands, its due and demandable obligations, as well
as the amounts due the plaintiff as itemized in paragraph 2.06, supra, of the Complaint. It likewise denies
PCIBANKs allegations in the same Complaint in support of its prayer for a writ of preliminary attachment,
particularly its having fraudulently misappropriated for its own use the contract proceeds/receivables under the
contracts mentioned in the several deeds of assignments, claiming in this respect that it has still remaining
receivables from those contracts.

By way of defenses, defendant pleads in its Answer the alleged severe financial and currency crisis
which hit the Philippines in July 1997, which adversely affected and ultimately put it out of business. Defendant
adds that the deeds of assignments it executed in favor of PCIBANK were standard forms proposed by the
bank as pre-condition for the release of the loans and therefore partake of the nature of contracts of
adhesion, leaving the defendant to the alternative of taking it or leaving it. By way of counterclaim, defendant
prayed for an award of P1,000,000.00 as and for attorneys fees and P200,000.00 as litigation expenses.

On January 24, 2000, plaintiff PCIBANK filed a verified Motion for Summary Judgment,[6] therein
contending that the defenses interposed by the defendant are sham and contrived, that the alleged financial
crisis pleaded in the Answer is not a fortuitous event that would excuse debtors from their loan obligations, nor
is it an exempting circumstance under Article 1262 of the New Civil Code where, as here, the same is attended
by bad faith. In the same motion, PCIBANK also asserts that the deeds of assignments executed in its favor
are not contracts of adhesion, and even if they were, the same are valid.

To the Motion for Summary Judgment, defendant interposed an Opposition[7] insisting that its Answer
tendered or raised genuine and substantial issues of material facts which require full-blown trial, namely:

1. Whether or not defendant received all or part of the proceeds/receivables due from the
contracts mentioned in the deeds of assignment at the time the complaint was filed;

2. Granting that defendant received those proceeds/receivables, whether or not defendant

fraudulently misappropriated the same;

3. Whether or not defendant is virtually insolvent as a result of the regionwide economic crisis
that hit Asia, causing the Philippine peso to depreciate drastically; and

4. Whether the parties dealt with each other on equal footing with respect to the execution of
the deeds of assignment as to give the defendant an honest opportunity to reject the onerous terms
imposed therein.

Significantly, defendant did not append to its aforementioned Opposition any affidavit in support of the
alleged genuine issues of material facts mentioned therein.

Before the pending incident (motion for summary judgment) could be resolved by the trial court,
plaintiff PCIBANK waived its claim for exemplary damages and agreed to reduce its claim for attorneys fees
from P1,800,000.00 to P1,260,000.00, but made it clear that its waiver of exemplary damages and reduction of
attorneys fees are subject to the condition that a full and final disposition of the case is obtained via summary
judgment.
On May 16, 2000, the trial court, acting favorably on PCIBANKs motion for summary judgment, came
out with its Summary Judgment,[8] the decretal portion of which reads:
WHEREFORE, judgment is hereby rendered ordering defendant to pay plaintiff:
 1. the sum of US$4,553,446.06, or its equivalent in Philippine currency at the
time of payment, with interest thereon at the rate of 8.27% per annum
from February 24, 1999 until fully paid;
2. P1,260,000.00 as and for attorneys fees; and
3. the costs of suit.
SO ORDERED.

Explains the trial court in rendering its Summary Judgment:

A thorough examination of the parties pleadings and their respective stand in the foregoing
motion, the court finds that indeed with defendants admission of the first cause of action there remains
no question of facts in issue. Further, the proffered defenses are worthless, unsubstantial, sham and
contrived.
Considering that there is no more issue to be resolved, the court hereby grants plaintiffs Motion
and renders Judgment in favor of the plaintiff against the defendant based on their respective pleadings
in accordance with Section 4, Rule 35 of the Rules of Court.

In time, petitioner went to the CA whereat its appellate recourse was docketed as CA-G.R. CV No.
68189. As stated at the threshold hereof, the CA, in its decision[9] of May 15, 2002, affirmed with modification
the Summary Judgment rendered by the trial court, the modification being as regards the award for attorneys
fees which the CA reduced to P1,000,000.00, to wit:

IN THE LIGHT OF ALL THE FOREGOING, the appeal is PARTIALLY GRANTED. The Decision
appealed from is AFFIRMED with the MODIFICATION THAT THE AWARD FOR ATTORNEYS FEES is
reduced to P1,000,000.00.
SO ORDERED.

With its motion for reconsideration having been denied by the CA in its Resolution[10] of June 3, 2002,
petitioner is now with us via the present recourse, raising the following issues:

I WHETHER OR NOT THERE IS A GENUINE ISSUE AS TO A MATERIAL FACT WHICH RULES OUT THE
PROPRIETY OF A SUMMARY JUDGMENT.
II WHETHER OR NOT THE AWARD OF ATTORNEYS FEES IS EXORBITANT OR UNCONSCIONABLE.

We DENY.

As in the two courts below, it is petitioners posture that summary judgment is improper in this case
because there are genuine issues of fact which have to be threshed out during trial, to wit: (a) whether or not
petitioner was able to collect only a portion of the contract proceeds/receivables it was bound to deliver, remit
and tender to respondent under the several deeds of assignment it executed in favor of the latter; and (b)
whether or not petitioner fraudulently misappropriated and used for its benefit the said
proceeds/receivables. Ergo, so petitioner maintains, genuine triable issues of fact are present in this case,
which thereby precludes rendition of summary judgment.

We are not persuaded.

Under Rule 35 of the 1997 Rules of Procedure, as amended, except as to the amount of damages,
when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a
matter of law, summary judgment may be allowed.[11] Summary or accelerated judgment is a procedural
technique aimed at weeding out sham claims or defenses at an early stage of litigation thereby avoiding the
expense and loss of time involved in a trial.[12]
 Under the Rules, summary judgment is appropriate when there are no genuine issues of fact which call
for the presentation of evidence in a full-blown trial. Even if on their face the pleadings appear to raise issues,
when the affidavits, depositions and admissions show that such issues are not genuine, then summary
judgment as prescribed by the Rules must ensue as a matter of law. The determinative factor, therefore, in a
motion for summary judgment, is the presence or absence of a genuine issue as to any material fact.

A genuine issue is an issue of fact which requires the presentation of evidence as distinguished from a
sham, fictitious, contrived or false claim. When the facts as pleaded appear uncontested or undisputed, then
there is no real or genuine issue or question as to the facts, and summary judgment is called for. The party
who moves for summary judgment has the burden of demonstrating clearly the absence of any genuine issue
of fact, or that the issue posed in the complaint is patently unsubstantial so as not to constitute a genuine
issue for trial. Trial courts have limited authority to render summary judgments and may do so only when
there is clearly no genuine issue as to any material fact. When the facts as pleaded by the parties are disputed
or contested, proceedings for summary judgment cannot take the place of trial.[13]

The CA, in its challenged decision, stated and we are in full accord with it:

In the present recourse, the [petitioner] relied not only on the judicial admissions in its
pleadings, more specifically its Answer to the complaint, the testimony of Maricel Salaveria as well
as Exhibits A to T-3, adduced in evidence by the [respondent], during the hearing on its plea for the
issuance, by the Court a quo, of a writ of preliminary attachment. Significantly, the [petitioner] did not
bother filing a motion for the quashal of the Writ issued by the Court a quo.

It must be borne in mind, too, that the [petitioner] admitted, in its Answer the due execution
and authenticity of the documents appended to the complaint . The [petitioner] did not deny its liability
for the principal amount claimed by the [respondent] in its complaint. The [petitioner] merely alleged,
by way of defenses, that it failed to pay its account because of the region-wide economic crisis that
engulfed Asia, in July, 1997, and the Deeds of Assignment executed by it in favor of the [respondent]
were contracts of adhesion:

xxx xxx xxx

The [petitioner] elaborated on and catalogued its defenses in its Appellants Brief what it
believed, as genuine issues.

(i) Whether or not [petitioner] received all or part of the proceeds/receivables due from the
construction contracts at the time the civil action was filed;

(ii) Granting that [petitioner] received the proceeds/receivables from the construction
contracts, whether or not [petitioner] fraudulently misappropriated the same;

(iii) Whether or not [petitioner] had become virtually insolvent as a result of the region-
wide economic crisis that hit Asia, causing the Philippine peso to depreciate
dramatically; and

(iv) Whether or not [respondent] and [petitioner] dealt with each other on equal footing
with respect to the execution of the deeds of assignment of receivables as to give
[petitioner] an honest opportunity to reject the onerous terms imposed on it.

However, the [petitioner] failed to append, to its Opposition to the Motion for Summary
Judgment, Affidavits showing the factual basis for its defenses of extraordinary deflation, including
facts, figures and data showing its financial condition before and after the economic crisis and that the
crisis was the proximate cause of its financial distress. It bears stressing that the [petitioner] was
burdened to demonstrate, by its Affidavits and documentary evidence, that, indeed, the Philippines was
engulfed in an extraordinary deflation of the Philippine Peso and that the same was the proximate cause
of the financial distress, it claimed, it suffered.

xxx xxx xxx

Where, on the basis of the records, inclusive of the pleadings of the parties, and the testimonial
and documentary evidence adduced by the [respondent], supportive of its plea for a writ of preliminary
attachment, the [respondent] had causes of action against the [petitioner], it behooved the [petitioner]
to controvert the same with affidavits/documentary evidence showing a prima facie genuine defense.
As the Appellate Court of Illinois so aptly declared:

The defendant must show that he has a bona fide defense to the action, one
which he may be able to establish. It must be a plausible ground of defense, something
fairly arguable and of a substantial character. This he must show by affidavits or other
proof.

The trial court, of course, must determine from the affidavits filed whether the
defendant has interposed a sufficiently good defense to entitle it to defend, but where
defendants affidavits present no substantial triable issues of fact, the court will grant
the motion for summary judgment.

xxx xxx xxx

The failure of the [petitioner] to append to its Opposition any Affidavits showing that its
defenses were not contrived or cosmetic to delay judgment created a presumption that the defenses of
the [petitioner] were not offered in good faith and that the same could not be sustained (Unites
States versus Fiedler, et al., Federal Reported, 2nd, 578).

If, indeed, the [petitioner] believed it that was prevented from complying with its obligations to
the [respondent], under its contracts, it should have interposed a counterclaims for rescission of
contracts, conformably with the pronouncement of our Supreme Court, thus:

xxx xxx xxx

The [petitioner] did not. This only exposed the barrenness of the pose of the [petitioner].

The [petitioner] may have experienced financial difficulties because of the 1997 economic
crisis that ensued in Asia. However, the same does not constitute a valid justification for the [petitioner]
to renege on its obligations to the [respondent]. The [petitioner] cannot even find solace in Articles 1266
and 1267 of the New Civil Code for, as declared by our Supreme Court:

It is a fundamental rule that contracts, once perfected, bind both contracting

parties, and obligations arising therefrom have the force of law between the parties and
should be complied with in good faith. But the law recognizes exceptions to the
principle of the obligatory force of contracts. One exception is laid down in Article 1266
of the Civil Code, which reads: The debtor in obligations to do shall also be released
when the prestation becomes legally or physically impossible without the fault of the
obligor.
 Petitioner cannot, however, successfully take refuge in the said article, since it is applicable only
to obligations to do, and not obligations to give. An obligation to do includes all kinds of work or service;
while an obligation to give is a prestation which consists in the delivery of a movable or an immovable
thing in order to create a real right, or for the use of the recipient, or for its simple possession, or in
order to return it to its owner.

xxx xxx xxx

In this case, petitioner wants this Court to believe that the abrupt change in the political climate
of the country after the EDSA Revolution and its poor financial condition rendered the performance of
the lease contract impractical and inimical to the corporate survival of the petitioner. (Philippine
National Construction Corporation versus Court of Appeals, et al., 272 SCRA 183, at pages 191-
192, supra)

The [petitioner] even failed to append any Affidavit to its Opposition showing how much it had
received from its construction contracts and how and to whom the said collections had been appended.
The [petitioner] had personal and sole knowledge of the aforesaid particulars while the [respondent] did
not.

In fine, we rule and so hold that the CA did not commit any reversible error in affirming the summary
judgment rendered by the trial court as, at bottom, there existed no genuine issue as to any material fact. We
also sustain the CAs reduction in the award of attorneys fees to only P1,000,000.00, given the fact that there
was no full-blown trial.

WHEREFORE, the assailed CA decision is AFFIRMED in toto and this petition is DENIED for lack of
merit.

Costs against petitioner.

SO ORDERED.

G.R. No. 107345 January 27, 1994

BA FINANCE CORPORATION, petitioner,
vs.
COURT OF APPEALS AND WILSON SIY, respondents.
Makalintal, Barrot, Torres & Ibarra for petitioner.
Santiago & Santiago for private respondent.

BELLOSILLO, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals 1 in CA-G.R. CV No. 28714
dated 23 June 1992 affirming the order of the trial court dated 22 January 1986 in Civil Case No. 144269, BA
Finance Corporation v. Yanky Hardware Co., Inc., for replevin with damages or, in the alternative, for payment
of P559,565.00 plus interest.
On 15 June 1976, Yanky Hardware Company, Inc. (YANKY, for brevity), applied for and was granted by BA
Finance Corporation a credit accommodation in the form of a discounting line under which YANKY could from
time to time discount with and assign its trade receivables to petitioner. To secure the payment of all its loans,
YANKY executed a chattel mortgage over its stock-in-trade or merchandise inventory in favor of petitioner. To
guarantee those loans, Antonio Ngui Yek Siem, President and General Manager of YANKY, executed a
continuing suretyship agreement in favor of petitioner.
On various occasions, YANKY drew on that credit accommodation and executed in favor of petitioner separate
deeds of assignment.
In time, petitioner demanded from YANKY the payment of its accumulated obligations which, as of 20 October
1981, had allegedly reached the amount of P559,565.00, or the delivery of the mortgaged chattels for
purposes of extrajudicial foreclosure.
On 21 October 1981, petitioner filed with the then Court of First Instance a complaint against YANKY and
Antonio Ngui Yek Siem for replevin with damages or, in the alternative, payment of the amount of P559,565.00
plus interest. Petitioner contended that it had the right to take possession of the chattels described in the
chattel mortgage or to be paid the total amount of the loans plus interest since YANKY had breached the
conditions of the chattel mortgage by failing to pay the amounts secured thereby.
On 26 October 1981, the trial court ordered the seizure of all the merchandise and other personal properties
described in the chattel mortgage. The sheriff accordingly seized chattels found in the premises of YANKY and
later transferred them to petitioner's warehouse. He then issued a sheriff's receipt dated 26 October 1981
containing a list of the properties seized and a sheriff's return dated 4 November 1981. But on 5 November
1981, the sheriff filed another report which, according to him, superseded the earlier list, stating therein that
this list was arrived at after he and some of petitioner's employees had conducted a reinventory of the
replevied chattels in petitioner's warehouse.
YANKY and Antonio Ngui Yek Siem filed an answer claiming that since not all of their obligations were due,
petitioner had as yet no cause of action against them.
Meanwhile, YANKY came into deep financial difficulties. Rizal Commercial Banking Corporation (RCBC),
China Banking Corporation (China Bank) and International Corporate Bank (Interbank) intervened in the
replevin case as creditors of YANKY. During the pre-trial conference on 27 February 1984, RCBC moved for
the sale at public auction of the replevied chattels in order to prevent further depreciation of their value.
Petitioner and the rest of the intervenors agreed with the motion. On the same day, the trial court accordingly
issued an order granting the motion for the sale of the mortgaged properties at public auction and directing that
the proceeds of the sale be deposited in a government bank.
In compliance with the aforesaid order, the sheriff issued a Notice of Sheriff's Sale dated 3 April 1984
announcing the public auction sale on 24 April 1984 of the chattels included in the list of mortgaged properties
mentioned in the notice.
In the auction sale, Lito Ramos was declared the highest bidder. Unfortunately, he failed to remit the amount of
his bid. As a consequence of his failure, another auction sale had to be conducted and rescheduled on various
dates. Eventually, a public auction sale was held on 31 May 1984 at petitioner's warehouse, as evidenced by a
Notice of Sheriff's Sale dated 21 May 1984 of "Assorted Hardware for Cash." The highest bidder was
respondent Wilson Siy with a bid price of P60,000.00. After Wilson Siy tendered the amount of his bid, a
Certificate of Sale was issued.
Petitioner then filed an Urgent Motion to Cancel Auction Sale stating that it was not given an opportunity to
participate in the sale and was deprived of its right to bid considering that the winning bid of P60,000.00 was
insufficient compared to the proposed bid of plaintiff which was willing to go up to P150,000.00; that since the
other bidders criticized its representative for not bringing cash for the public bidding, it was forced to put
together P150,000.00 in bills, and since the counting of the bills took some time, its representative arrived late
for the bidding.
On 1 June 1984, the sheriff submitted a Sheriff's Report which detailed the factual antecedents of the auction
sale. The trial court then cancelled the auction sale.
On 6 June 1984, private respondent Siy, as the highest bidder in the 31 May 1984 auction sale, filed his motion
for reconsideration on the following grounds: (a) Petitioner was afforded full opportunity to participate in the 31
May 1984 public auction sale; (b) The sale of the properties in the public auction was consummated, thereby
vesting legal title to the movant as highest bidder who should not be deprived of such properties without due
process of law; and, (c) The bid price of movant, contrary to the allegation of petitioner, was not shockingly low
and hence was not a ground to nullify the public auction sale.
In an order dated 20 June 1984, the trial court granted the motion for reconsideration and modified its 1 June
1984 order holding that respondent Siy agreed to put up a surety bond subject to approval by the court to
justify the release to him of the properties purchased at auction.
Respondent Siy submitted a surety bond of P140,000.00 after which, on 28 June 1984, the sheriff was directed
to deliver to Siy the chattels thus sold.
Conformably with the above order, the sheriff delivered assorted hardware materials to Siy and submitted a
Sheriff's Report on the properties actually delivered. However, the sheriff subsequently informed the court that
what he delivered to Siy were substantially less than those listed in the Notice of Sheriff's Sale dated 3 April
1984.
On 24 July 1984, private respondent filed his motion to compel delivery of certain chattels sold in the auction
sale but not delivered by petitioner to him. In an order dated 27 July 1984, the trial court directed petitioner to
produce and/or account for the undelivered properties.
On 2 August 1984, petitioner manifested that the alleged undelivered chattels were those listed in the inventory
attached to the Sheriff's Report dated 5 November 1981, which list was not furnished petitioner prior to the
auction sale.
The trial court then appointed a commissioner to look into the matter. The first commissioner rendered a report
stating that petitioner should produce or account for certain undelivered personal properties. Petitioner and the
intervenor banks opposed this report and the court disapproved it. A second commissioner designated by the
trial court similarly reported that not all of the properties mortgaged and sold at the public auction had been
delivered to Siy as highest bidder. This second report was approved by the trial court in an order dated 11
June 1985.
Petitioner moved to reconsider the foregoing order, but without success. On 24 September 1985, the trial court
issued an order requiring petitioner to deliver the alleged missing chattels or their value.
This time, Siy filed a motion for reconsideration contending that because petitioner was depository of the
chattels, it should be made liable to him for damages for having failed to deliver the chattels listed in the 27
October 1981 inventory.
On 22 January 1986, the trial court issued an order amending and/or modifying the order of 24 September
1985, and directed petitioner to deliver to Siy the properties appearing in the inventory attached to the Sheriff's
Report of 5 November 1981 minus the properties already delivered on 28 June 1984, and if this be not
possible, to pay the equivalent amount thereof. To determine the monetary value of these properties, the trial
court appointed a committee chaired by Atty. Francisco Sanchez III, its Legal Researcher, and one
representative each from the petitioner and the highest bidder, as members, to canvass the current price of the
subject properties and to make a report thereon.
Twenty-three days after its receipt of the aforementioned order, petitioner filed its notice of appeal and a record
on appeal which the trail court disapproved due to late filing. After denial of its motion for reconsideration,
petitioner went to the Court of Appeals on a Petition for Mandamus and Certiorari. But the appellate court
dismissed the petition because the notice of appeal was filed late. Hence, petitioner filed a petition for review
on certiorari with this Court.
On 16 October 1989, in BA Finance Corporation v. Court of Appeals, 2 we directed the trial court to approve the
notice of appeal and record on appeal filed by petitioner because the same was actually filed within the
reglementary period of thirty (30) days, the case being regarded as one falling within the term "other cases
wherein multiple appeals are allowed," where the period to appeal is not fifteen (15) days but thirty (30) days,
in accordance with Sec. 19,
B.P. 129.
On 23 June 1992, the Court of Appeals rendered its decision on the appeal from the order in Civil Case No.
144269 which directed petitioner to deliver to respondent Siy certain properties appearing in the inventory
attached to the Sheriff's Report of 5 November 1981. The appellate court considered the first and second
errors assigned by petitioner as moot and academic. In these assigned errors, petitioner questioned the 20
June 1984 order of the trial which, in effect, permitted the intervention of respondent Siy by entertaining his
motion for reconsideration and allowing him to put up a surety bond to justify the release of the properties to
him. The Court of Appeals held that petitioner could no longer appeal the 20 June 1984 order because it was
already way beyond the reglementary period to appeal.
In the third assigned error of petitioner, it argued that what should have been delivered to respondent Siy was
the list of merchandise inventory appearing in the Sheriff's Receipt of 26 October 1981 and not the list in the
inventory report attached to the Sheriff's Report of 5 November 1981. In the order of the trial court of 22
January 1986, the Court of Appeals found that the Sheriff's Receipt of 26 October 1981, which petitioner insists
to be the correct list, had been superseded by the reinventoried list attached to the Sheriff's Report of 5
November 1981. On 28 September 1992, petitioner's motion for reconsideration of the decision was denied.
Hence, this petition imputing error to the Court of Appeals in not allowing petitioner's appeal from the order of
the trial court of 20 June 1984 which permitted the intervention of respondent Siy and ordered the release of
the properties purchased by the latter at the auction sale, and in affirming the order of the trial court of 22
January 1986 directing petitioner to deliver to respondent Siy as highest bidder the properties appearing in the
inventory attached to the Sheriff's Report of 5 November 1981.
There is not merit in the petition. In its first assigned error, petitioner submits that the order of 20 June 1984
was merely interlocutory hence unappealable, and that in appealing the final order of 22 January 1986, it
should be allowed to question the order of 20 June 1984 because its reversal will necessarily render null and
void the final order of 22 January 1986. Petitioner also argues that the trial court erred in allowing the
intervention of respondent Siy as the legal requisites for intervention were not complied with, and in not setting
aside the auction sale of 31 May 1984 which involved many irregularities, to wit: (a) The price of P60,000.00
realized in the bidding was grossly inadequate; (b) There was undue haste in the conduct of the sale; and, (c)
The deputy sheriff conducted the sale in the absence of petitioner or its duly authorized representative.
In BA Finance Corporation v. Court of Appeals, supra, which involved the same parties, this Court noted that
the principal case filed with the trial court by petitioner against YANKY was for replevin or, in the alternative, for
collection of the amount of the loans, plus interest owed by YANKY. This Court likewise noted that the disputed
order of 22 January 1986, subject of the present appeal, only directed petitioner to turn over to respondent Siy
properties which had remained undelivered to the latter as highest bidder, a matter which was merely an
incident of the principal case. However, this Court recognized therein that the order of the trial court was
already final so far as it concerned the dispute between petitioner and respondent Siy because it was to
resolve the right of the latter to receive the disputed properties and petitioner's obligation to deliver those
properties to Siy. This is based on the settled rule that only a final order or judgment on the merits may be the
subject of an appeal. A final order is defined as one which disposes of the whole subject matter or terminates a
particular proceeding or action, leaving nothing to be done but to enforce by execution what has been
determined; on the other hand, an order is interlocutory if it does not dispose of a case completely, but leaves
something more to be done upon its merits. 3
Hence, the argument of petitioner that it can still question the order of 20 June 1984 while appealing the final
order of 22 January 1986 is untenable. It may be true that the 20 June 1984 order allowed the intervention of
respondent Siy and reversed the court's previous order setting aside the auction sale by allowing him to put up
a surety bond to justify the release of the properties to him. However, upon submission by Siy of a surety bond
with the court, the latter issued a final order dated 28 June 1984, which was issued earlier than the final order
of 22 January 1986. The order of 28 June 1984 directed the delivery of the auctioned properties to respondent
Siy.
Although the order of 20 June 1984 may be considered interlocutory as it required something more to be done
by respondent Siy, i.e., the filing of the bond, the subsequent order of 28 June 1984 can be considered a final
one which determined and settled the issue on the validity of the auction sale and the right of respondent Siy
as highest bidder to acquire the properties he purchased. Petitioner should have appealed the 28 June 1984
order if it wanted to question the validity of the intervention of respondent Siy as well as of the auction sale. But
it did not do so. Moreover, records show that after the issuance of the order of 28 June 1984 directing the
delivery of the properties to Siy, the remaining proceedings in the trial court pertained only to the execution and
implementation by the sheriff of the order of 28 June 1984. Hence, when the deputy sheriff informed the court
that what were delivered to Siy were less than those listed in the Notice of Sheriff's Sale, respondent Siy filed
on 24 July 1984 a motion to compel delivery. The trial court even appointed a commissioner to investigate the
matter and found that not all the properties sold in the auction sale were actually delivered to the awardee.
It may be worth to note that petitioner impliedly admitted the regularity of the auction sale of 31 May 1984 when
it manifested before the court on 2 August 1984 that the chattels allegedly undelivered to Siy were those
appearing in the list attached to the Sheriff's Report of 5 November 1981, which list was allegedly not furnished
petitioner, without raising any issue as to the validity of the auction sale and the right of Siy as highest bidder.
Petitioner cannot belatedly question the validity of the auction sale. It is estopped from claiming that the bidding
was not validly and regularly conducted after it had led the court and respondent Siy, as well as other parties to
the case, to believe that the remaining unresolved issue after 28 June 1984 was the identification of the
properties to be delivered to Siy. Estoppel arises, as in this case, when one by his acts, representations or
admissions, or by his silence when he ought to speak out, intentionally or through culpable negligence, induces
another to believe certain facts to exist and such other rightfully relies and acts on such belief, so that he will
be prejudiced if the former is permitted to deny the existence of such facts. 4
In its third assigned error, petitioner contends that it had no knowledge of the reinventory attached to the
Sheriff's Report of 5 November 1981 as it was not furnished copy thereof; that what was sold to Siy in the
auction sale of 31 May 1984 were pieces of "assorted hardware" as indicated in the notice of sale of 21 May
1984 and which were on display inside the warehouse of petitioner, and not those listed in the inventory
attached to the Sheriff's Report of 5 November 1981.
The issue raised here by petitioner involves a question of fact which is not reviewable by this Court in this
petition. The jurisdiction of this Court in cases brought to it from the Court of Appeals is limited to reviewing and
revising the errors of law imputed to it, its findings of fact being conclusive. It is not the function of the Supreme
Court to analyze or weigh such evidence all over again, its jurisdiction being limited to reviewing errors of law
that might have been committed, unless there is a showing that the findings complained of are totally devoid of
support in the record or that they are so glaringly erroneous as to constitute serious abuse of discretion. 5
In affirming the order directing the delivery of the properties sold to respondent Siy as appearing in the new
inventory of 5 November 1981, the Court of Appeals made the following factual findings in support of its
decision: (a) The Sheriff's Report of 5 November 1981 which contains the reinventory of the merchandise
seized in the premises of YANKY expressly states that the earlier list of 26 October 1981 had been
superseded by this new list; (b) On 4 November 1981, the sheriff notified the petitioner of a reinventory, which
was actually conducted in petitioner's own warehouse; the petitioner's representatives were the ones who
inventoried and prepared the list of items actually taken from YANKY; and, the original copy of the inventory list
duly signed and verified by petitioner's representatives is in the possession of the latter; (c) Petitioner did not
question the Sheriff's Report of 5 November 1981 for a period of almost three (3) years; and (d) On 27
February 1984, the trial court ordered the sale of the properties mentioned in the "list of properties mortgaged"
appended to the chattel mortgage.
These properties also appear in the inventory attached to the Sheriff's Report of 5 November 1981. In
compliance with the order of 27 February 1984, the sheriff issued a notice of sheriff's sale dated 3 April 1984
announcing the public auction sale on 24 April 1984 of the chattels enumerated in the "list of properties
mortgaged." This notice includes an enumeration of all the merchandise seized by the sheriff as shown in the
Sheriff's Report of 5 November 1981. On the basis of the foregoing, there is no doubt that the conclusions of
the Court of Appeals are fully supported by the evidence on record.
WHEREFORE, the petition is DENIED and the assailed decision of the Court of Appeals dated 23 June 1992
is AFFIRMED.
SO ORDERED.
Cruz and Davide, Jr., JJ., concur.
Quiason, J., took no part.
G.R. No. 73794 September 19, 1988
ETERNAL GARDENS MEMORIAL PARKS CORPORATION, petitioner,
vs.
FIRST SPECIAL CASES DIVISION INTERMEDIATE APPELLATE COURT and NORTH PHILIPPINE UNION
MISSION OF THE SEVENTH-DAY ADVENTISTS, respondents.

PARAS, J.:
This is a special civil action for certiorari, prohibition and mandamus seeking to set aside the two resolutions of
public respondent First Special Cases Division of the then Intermediate Appellate Court in AC-G.R. No. 04869
entitled "North Philippine Union Mission of the Seventh Day Adventists versus Hon. Antonia Corpus-
Macandog, Presiding Judge, Branch CXX, Regional Trial Court, Caloocan City and Eternal Gardens Memorial
Park Corporation, (a) dated September 5, 1985 (Rollo, pp. 21-25) reconsidering its Decision 1 of February 27,
1985 (Rollo, pp. 38-48) and ordering petitioner to deposit whatever amounts due from it under the Land
Development Agreement, and (b) dated February 13, 1986 (Rollo, p. 27) denying for lack of merit petitioner's
motion for reconsideration.
Petitioner Eternal Gardens Memorial Parks Corporation and private respondent North Philippine Union Mission
Corporation of the Seventh Day Adventists (MISSION for short) are corporations duly organized and existing
under and by virtue of the laws of the Republic of the Philippines.
They executed a Land Development Agreement (Rollo, pp. 179-182) on October 6, 1976 whereby the former
undertook to introduce and construct at its own expense and responsibility necessary improvements on the
property owned by private respondent into a memorial park to be subdivided into and sold as memorial plot
lots, at a stipulated area and price per lot. Out of the proceeds from the sale, private respondent is entitled to
receive 40% of the net gross collection from the project to be remitted monthly by petitioner to private
respondent through a designated depositary trustee bank. On the same date private respondent executed in
petitioner's favor a Deed of Absolute Sale with Mortgage (Rollo, pp. 183-186) on the lots with titles involved in
the land development project. The deed was supplemented by a Sale of Real Property with Mortgage and
Special Conditions dated October 28, 1978 (Rollo, pp. 189-194 The amounts totalling about P984,110.82 paid
by petitioner were to be considered as part of the 40% due private respondent under the Land Development
Agreement. All went well until Maysilo Estate asserted its claim of ownership over the parcel of land in
question. Confronted with such conflicting claims, petitioner as plaintiff filed a complaint for interpleader (Rollo,
pp. 169-179) against private respondent MISSION and Maysilo Estate, docketed as Special Court Case No. C-
9556 of the then CFI of Rizal, Branch XII, Caloocan, alleging among others, that in view of the conflicting
claims of ownership of the defendants (herein private respondent and Maysilo Estate) over the properties
subject matter of the contracts, over which plaintiff corporation (herein petitioner) has no claim of ownership
except as a purchaser thereof, and to protect the interests of plaintiff corporation which has no interest in the
subject matter of the dispute and is willing to pay whoever is entitled or declared to be the owners of said
properties, the defendants should be required to interplead and litigate their several claims between
themselves (Rollo, p. 177).
An order was issued by the presiding judge 2 requiring defendants to interplead on October 22, 1981.
MISSION filed a motion to dismiss dated November 10, 1981 for lack of cause of action but also presented an
answer dated November 12, 1981. The motion to dismiss was denied in an Order dated January 12, 1982. The
heirs of Maysilo Estate filed their own answer dated November 11, 1981 and an amended answer dated
October 20, 1983 thru the estate's special receiver. The heirs of Pedro Banon filed an "Answer in Intervention
with Special and Affirmative Defenses" dated October 24, 1983, while Lilia B. Sevilla and husband Jose Seelin
filed their "Answer in Cross-claim" dated October 31, 1983 (Rollo, p. 30). The heirs of Sofia O'Farrel y Patino,
et al. filed their Answer in Intervention dated November 10, 1983.
However, earlier on November 21, 1982, private respondent presented a motion for the placing on judicial
deposit the amounts due and unpaid from petitioner. Acting on such motion, the trial court 3 denied judicial
deposit in its order dated February 13, 1984, the decretal portion of which reads:
PREMISES CONSIDERED, all or the full amount the plaintiff, Eternal Gardens Memorial Parks
Corporation have already paid the North Philippine Union Mission Corporation of the Seventh
Day Adventist is hereby ordered to deposit the same to this Court within thirty (30) days from
receipt of this order considering that real or true owner of the subject properties in question, due
hearing of this court has yet to be undergone in order to decide as to who is the true owner
 which is a prejudicial question. Hence the motion dated November 21, 1983 of the NPUM for
the Eternal Gardens Corporation to deposit the balance due and unpaid is hereby ordered
denied and the opposition thereto dated December 19, 1983 is hereby ordered granted.
The contract between the Eternal Gardens Corporation and the North Philippine Union Mission
dated October 16, 1976 is ordered and declared ineffective as of today, February 13, 1984
because the subject matter of the sale is not existing between the contracting parties until after
the question of ownership is resolved by this court. The court will order the revival of the
contract if the North Philippine Union Mission will win.
If not, the declared winner among the intervenors will be the party to enter into a contract of sale
with the plaintiff as aforementioned. (Rollo, p. 66).
Another order dated October 26, 1984 was issued amending the February 13, 1984 order and setting aside the
order for private respondent's deposit of the amounts it had previously received from petitioner, thus:
WHEREFORE IN VIEW OF ALL THE FOREGOING CONSIDERATIONS the order of February
13, 1984, is hereby ordered amended, reconsidered and modified by this same Court as
follows:
(a) The order directing the NORTH PHILIPPINE UNION MISSION CORPORATION OF
SEVENTH-DAY ADVENTISTS to deposit the amounts it received under the implementation of
the LAND DEVELOPMENT AGREEMENT which is not questioned by the plaintiff, Eternal
Gardens, is hereby ordered set aside for the reason that the titles to ownership, the North
Philippine Union Mission Corporation of Seventh Day Adventists on the lots subject matter of
the aforesaid agreement is not established invalid, and the alleged titles of intervenors are not
proven yet by competent evidence;
(b) The motion to require Eternal Gardens to deposit the balance under the Land Development
Agreement is likewise hereby ordered denied considering the fact the aforesaid plaintiff had not
denied its obligations under the aforesaid contract; and
(c) The trial or hearing is hereby ordered as scheduled to proceed on November 29, 1984 and
on December 6, 1984 at 8:30 in the morning per order of this Court dated October 4, 1984 in
order to determine the alleged claims of ownership by the intervenors and all claims and
allegations of each party to the instant" case will be considered and decided carefully by this
court on just and meritorious grounds. (Rollo, p. 39)
Said Orders were assailed twice in the Intermediate Appellate Court (Court of Appeals) and in the Supreme
Court as follows:
In G.R. No. 73569 it appeared that on January 11, 1985, MISSION filed a motion to dismiss the Interpleader
and the claims of the Maysilo Estate and the Intervenors and to order the Eternal Gardens to comply with its
Land Management with MISSION.
On January 28, 1985, the trial court passed a resolution, the dispositive portion of which reads:
WHEREFORE, premises considered, this Court, after a lengthy, careful judicious study and
perusal of all the stand of each and everyone of all the parties participating in this case, hereby
orders the dismissal of the interpleader, and the interventions filed by the intervenors, heirs of
Pedro Banon, heirs of O'Farrel, heirs of Rivera, heirs of Maria del Concepcion Vidal,
consolidated with the Maysilo Estate as represented by receiver Arturo Salientes the heirs of
Vicente Singson Encarnacion, and Lilia Sevilla Seeling
This Court likewise orders the plaintiff, Eternal Gardens Memorial Parks Corporation to comply
with the Land Development Agreement dated October 6, 1978, it entered into with the North
Philippine Union Mission Corporation of the Seventh-Day Adventists. (Rollo. p. 68)
The heirs of the Maysilo Estate moved for reconsideration of the aforementioned order of dismissal, the
hearing of which was requested to be set on February, 28, 1985. However, the trial judge, on February 14,
1985 issued the following orders:
Considering Motions for Reconsideration filed, the Court resolves that the same be GRANTED
and instead of a hearing of the said motions on February 20, 1985, at 8:30 a.m., a hearing on
the merits shall be held. (Rollo, p. 68)
In spite of the February 14, 1985 order, MISSION filed on March 6, 1985 a motion for Writ of Execution of the
resolution of January 28, 1985. This was denied on June 25, 1985. The said court further set the case for pre-
trial and trial on July 18, 1985.
It was elevated on certiorari and mandamus to the Intermediate Appellate Court (Court of Appeals), docketed
as AC-G.R. Sp No. 06696 "North Philippine Union Mission of the Seventh Day Adventists, vs. Hon. Antonia
Corpus-Macandog Presiding Judge, Branch CXX, Regional Trial Court, Caloocan City, Eternal Gardens
Memorial Parks Corporation, and Heirs of Vicente Singson Encarnacion It was raffled to the Second Special
Division. MISSION assailed the February 14, 1985 and June 25, 1985 orders as violative of due process and
attended by grave abuse of discretion amounting to lack of jurisdiction. The petition was however dismissed in
the decision of said Appellate Court, promulgated on December 4, 1985, the dispositive portion of which reads:
WHEREFORE, for want of merit the petition for certiorari and mandamus under consideration
cannot be given due course and is accordingly, DISMISSED, without any pronouncement, as to
costs. The restraining order embodied in Our Resolution of July 31, 1985, is hereby lifted.
(Rollo, G.R. No. 73569 p. 232)
The private respondent challenged the above decision in the Supreme Court in G.R. No. 73569. In its
resolution dated June 11, 1986, the Supreme Court denied the petition for review on certiorari for lack of merit,
as follows:
G.R. No. 73569 (North Philippine Union Mission Corporation of the Seventh Day Adventists vs.
Intermediate Appellate Court, et al.) considering the allegations, issues, and arguments
adduced in the petition for review on certiorari, the Court Resolved to DENY the same for lack of
merit. (Ibid p. 263)
Said resolution has become final and executory on July 16, 1986. (Ibid p. 269)
Earlier in 1983, the heirs of the late spouses Vicente Singson Encarnacion and Lucila Conde filed Civil Case
No. C-11836 for quieting of title with Branch CXXII, Regional Trial Court, Caloocan City, where petitioner and
private respondent were named as defendants.
Said case is still pending in the lower Court.
In the case at bar, G.R. No. 73794, MISSION, herein private respondent filed a petition for certiorari with the
then Intermediate Appellate Court docketed as AC-G.R. No. 04869 praying that the aforementioned Orders of
February 13, 1984 and October 26, 1984 of the Regional Trial Court be set aside and that an order be issued
to deposit in court or in a depositor trustee bank of any and all payments, plus interest thereon, due the private
respondent MISSION under the Land Development Agreement, said amounts deposited to be paid to
whomever may be found later to be entitled thereto, with costs. (Rollo, G.R. No. 73794 p. 38)
The Intermediate Appelate Court, acting through its First Special Cases Division 4 dismissed the petition in its
decision on February 27, 1985 (Rollo, pp. 38-48). In its Resolution 5 promulgated on September 5, 1985, the
Court however, reversed its decision, thus:
WHEREFORE, the Court reconsiders its decision of February 27, 1986, and sets aside the
questioned portions of the respondent Court's orders of February 13 and October 26, 1984. The
private respondent is hereby ordered to deposit whatever amounts are due from it under the
Land Development Agreement of October 6, 1976 with a reputable bank to be designated by
the respondent court to be the depository trustee of the said amounts to be paid to whoever
shall be found entitled thereto. No costs. (Rollo, p. 25)
Eternal Gardens moved for a reconsideration of the above decision but it was denied for lack of merit in a
resolution promulgated on February 13, 1986, which states:
The private respondent Eternal Gardens Memorial Park Corporation's Motion for
Reconsideration of the Court's resolution promulgated September 5, 1985 requiring it "to
deposit whatever amounts are due from it under the Land Development Agreement of October
6, 1976 ...," which was strongly opposed by the petitioner North Philippine Union Mission of the
Seventh Day Adventists, is hereby denied for lack of merit, reiterating as it does, the very same
issues and arguments that were passed upon and considered by the Court in the very same
resolution sought to be reconsidered. (Rollo, p. 27)
Hence, this petition. On July 8,1987, the Third Division of this Court issued the following resolution:
... the court RESOLVED to give due course to this petition and require the parties to file
memoranda.
In the meantime, to avoid possible wastage of funds, the Court RESOLVED to require the
private respondent 6 to DEPOSIT its accruing installments within ten (10) days from notice with
a reputable commercial bank in a savings deposit account, in the name of the Supreme Court of
the Philippines, with the details to be reported or manifested to this Court within ten (10) days
from the time the deposit/deposits are made, such deposits not to be withdrawn without
authority from this Court. (Rollo, p. 162)
Petitioner's Memorandum With Prayer for the Deferment of Time to Make Deposit (Rollo, p. 218-236) was filed
on July 14, 1987. Its prayer was granted for a period of ten (10) days for the purpose, in the resolution of July
29, 1987 (Rollo, p. 238). Private respondent filed its Opposition to Deferment of Time to Make Deposit (Rollo,
pp. 239-253) on July 24, 1987 to which petitioner filed its Reply to Opposition on August 4, 1987 (Rollo, pp.
256-267). Both were noted by the Court in its resolution dated September 7, 1987 (Rollo, p. 270). On August
25, 1987, private respondent filed its Rejoinder to Petitioner's Reply to Opposition (Rollo, pp. 271-292).
Petitioner filed its Supplemental Memorandum with Reply to Opposition (To Deferment of time to Make
Deposit) on August 31, 1987 (Rollo, pp. 294-313) and a Sur-rejoinder on September 1, 1987 (Rollo, pp. 304-
315).
The main issues in this case are:
I
Whether or not respondent Court of Appeals abused its discretion amounting to lack of
jurisdiction in reconsidering its resolution of February 27, 1985 and in requiring instead in the
resolution of September 5, 1985, that petitioner Eternal Gardens deposit whatever amounts are
due from it under the Land Development Agreement with a reputable bank to be designated by
the respondent court.
II
Whether or not the dismissal of AC-G.R. SP No. 06696 (North Philippine Union Mission of the
Seventh Day Adventists vs. Hon. Macandog, et al.) by the Second Special Cases Division of the
IAC which was affirmed by the Supreme Court in G.R. No. 73569 constitutes a basis for the
dismissal of the case at bar on the ground of res adjudicata.
I
There is no question that courts have inherent power to amend their judgments, to make them conformable to
the law applicable provided that said judgments have not yet attained finality (Villanueva v. Court of First
Instance of Oriental Mindoro, Pinamalayan Branch II, 119 SCRA 288 [1982]). In fact, motions for
reconsideration are allowed to convince the courts that their rulings are erroneous and improper Siy v. Court of
Appeals, 138 SCRA 543-544 [1985]; Guerra Enterprises Co., Inc. v. CFI of Lanao del Sur (32 SCRA 317
[1970]) and in so doing, said courts are given sufficient opportunity to correct their errors.
In the case at bar, a careful analysis of the records will show that petitioner admitted among others in its
complaint in Interpleader that it is still obligated to pay certain amounts to private respondent; that it claims no
interest in such amounts due and is willing to pay whoever is declared entitled to said amounts. Such
admissions in the complaint were reaffirmed in open court before the Court of Appeals as stated in the latter
court's resolution dated September 5, 1985 in A.C. G.R. No. 04869 which states:
The private respondent (MEMORIAL) then reaffirms before the Court its original position that it
is a disinterested party with respect to the property now the subject of the interpleader case ...
In the light of the willingness, expressly made before the court, affirming the complaint filed
below, that the private respondent (MEMORIAL) will pay whatever is due on the Land
Development Agreement to the rightful owner/owners, there is no reason why the amount due
on subject agreement has not been placed in the custody of the Court. (Rollo, p. 227).
Under the circumstances, there appears to be no plausible reason for petitioner's objections to the deposit of
the amounts in litigation after having asked for the assistance of the lower court by filing a complaint for
interpleader where the deposit of aforesaid amounts is not only required by the nature of the action but is a
contractual obligation of the petitioner under the Land Development Program (Rollo, p. 252).
As correctly observed by the Court of Appeals, the essence of an interpleader, aside from the disavowal of
interest in the property in litigation on the part of the petitioner, is the deposit of the property or funds in
controversy with the court. it is a rule founded on justice and equity: "that the plaintiff may not continue to
benefit from the property or funds in litigation during the pendency of the suit at the expense of whoever will
ultimately be decided as entitled thereto." (Rollo, p. 24).
The case at bar was elevated to the Court of Appeals on certiorari with prohibitory and mandatory injunction.
Said appellate court found that more than twenty million pesos are involved; so that on interest alone for
savings or time deposit would be considerable, now accruing in favor of the Eternal Gardens. Finding that such
is violative of the very essence of the complaint for interpleader as it clearly runs against the interest of justice
in this case, the Court of Appeals cannot be faulted for finding that the lower court committed a grave abuse of
discretion which requires correction by the requirement that a deposit of said amounts should be made to a
bank approved by the Court. (Rollo, p.-25)
Petitioner would now compound the issue by its obvious turn-about, presently claiming in its memorandum that
there is a novation of contract so that the amounts due under the Land Development Agreement were
allegedly extinguished, and the requirement to make a deposit of said amounts in a depositary bank should be
held in abeyance until after the conflicting claims of ownership now on trial before Branch CXXII RTC-
Caloocan City, has finally been resolved.
All these notwithstanding, the need for the deposit in question has been established, riot only in the lower
courts and in the Court of Appeals but also in the Supreme Court where such deposit was required in "the
resolution of July 8, 1987 to avoid wastage of funds.
II
The claim that this case should be barred by res judicata is even more untenable.
The requisite of res judicata are: (1) the presence of a final former judgment; (2) the former judgment was
rendered by a court having jurisdiction over the subject matter and the parties; (3) the former judgment is a
judgment on the merits; and (4) there is between the first and the second action identity of parties, of subject
matter, and of causes of action Arguson v. Miclat 135 SCRA 678 [1985]; Carandang v. Venturanza, 133 SCRA
344 [1984]).
There is no argument against the rule that parties should not be permitted to litigate the same issue more than
once and when a right or fact has been judicially tried and determined by a court of competent jurisdiction, so
long as it remains unreversed, it should be conclusive upon the parties and those in privity with them in law or
estate (Sy Kao v. Court of Appeals, 132 SCRA 302 [1984]).
But a careful review of the records shows that there is no judgment on the merits in G.R. No. 73569 and in the
case at bar, G.R. No. 73794; both of which deal on mere incidents arising therefrom.
In G.R. No 73569, the issue raised is the propriety of the grant of the motion for reconsideration without a
hearing thereon and the denial of the motion for execution, while in the case at bar, what is assailed is the
propriety of the order of respondent appellant court that petitioner Eternal Gardens should deposit whatever
amounts are due from it under the Land Development Agreement with a reputable bank to be designated by
the Court. In fact, there is a pending trial on the merits in the trial court which the petitioner insists is a
prejudicial question which should first be resolved. Moreover, while there may be Identity of parties and of
subject matter, the Land Development Contract, there is no Identity of issues as clearly shown by the petitions
filed.
PREMISES CONSIDERED, (a) the petition is DISMISSED for lack of merit; (b) this case (together with all the
claims of the intervenors on the merits) is REMANDED to the lower court for further proceedings; and (c) the
resolution of the Third Division of this Court of July 8, 1987 requiring the deposit by the petitioner (see footnote
No. 6) of the amounts contested in a depositary bank STANDS (the Motion for Reconsideration thereof being
hereby DENIED for reasons already discussed) until after the decision on the merits shall have become final
and executory.
SO ORDERED.
Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur.
G.R. No. 94005. April 6, 1993.
LUISA LYON NUAL, herein represented by ALBERT NUAL, and ANITA NUAL HORMIGOS, petitioners,
vs.
THE COURT OF APPEALS and EMMA LYON DE LEON in her behalf and as guardian ad litem of the minors
HELEN SABARRE and KENNY SABARRE, EDUARDO GUZMAN, MERCEDEZ LYON TAUPAN, WILFREDO
GUZMAN, MALLY LYON ENCARNACION and DORA LYON DELAS PEAS, respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT; ONCE IT BECOMES FINAL, MAY NO LONGER BE
MODIFIED IN ANY RESPECT; EXCEPTIONS. In the case of Manning International Corporation v. NLRC,
(195 SCRA 155, 161 [1991]) We held that ". . ., nothing is more settled in the law than that when a final
judgment becomes executory, it thereby becomes immutable and unalterable. The judgment may no longer be
modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous
conclusion of fact or law, and regardless of whether the modification is attempted to be made by the Court
rendering it or by the highest Court of land. The only recognized exceptions are the correction of clerical errors
or the making of so-called nunc pro tunc entries which cause no prejudice to any party, and, of course, where
the judgment is void." Furthermore, "(a)ny amendment or alteration which substantially affects a final and
executory judgment is null and void for lack of jurisdiction, including the entire proceedings held for that
purpose."
2. ID.; ID.; ID.; ID.; REMEDY OF AGGRIEVED PARTY. In the case at bar, the decision of the trial court in
Civil Case No. 872 has become final and executory. Thus, upon its finality, the trial judge lost his jurisdiction
over the case. Consequently, any modification that he would make, as in this case, the inclusion of Mary Lyon
Martin would be in excess of his authority. The remedy of Mary Lyon Martin is to file an independent suit
against the parties in Civil Case No. 872 and all other heirs for her share in the subject property, in order that
all the parties in interest can prove their respective claims.
DECISION
CAMPOS, JR., J p:
This is a petition for review on certiorari of the decision ** dated February 22, 1990 of the Court of Appeals in
CA-G.R. CV No. 14889 entitled "Emma Lyon de Leon, et al., plaintiffs-appellees versus Luisa Lyon Nual, now
deceased herein represented by Albert Nual, et al., defendants appellants," dismissing petitioners' appeal and
affirming the trial court's order *** dated January 9, 1987 for the inclusion of Mary Lyon Martin as one of the
heirs who shall benefit from the partition.
The facts as culled from the records of the case are as follows.
This case originated from a suit docketed as Civil Case No. 872 filed by Emma Lyon de Leon in her behalf and
as guardian ad litem of the minors Helen Sabarre and Kenny Sabarre, Eduardo Guzman, Mercedes Lyon
Taupan, Wilfredo Guzman, Mally Lyon Encarnacion and Dona Lyon de las Peas, (herein private respondents)
against Luisa Lyon Nual, now deceased and herein represented by her heirs, Albert Nual and Anita Nual
Hormigos (herein petitioners), for partition and accounting of a parcel of land located in Isabela, Basilan City.
Subject parcel of land was formerly owned by Frank C. Lyon and May Ekstrom Lyon, deceased parents of
Helen, Dona, Luisa, Mary, Frank and William James. Private respondents claimed that said parcel of land,
formerly covered by Transfer Certificate of Title No. 3141 in the name of Frank C. Lyon, has been in
possession of petitioner Luisa Lyon Nual since 1946 and that she made no accounting of the income derived
therefrom, despite demands made by private respondents for the partition and delivery of their shares.
On December 17, 1974, after trial and hearing, the then Court of First Instance (now Regional Trial court)
rendered its judgment in favor of private respondents and ordered the partition of the property but dismissing
private respondents' complaint for accounting. The dispositive portion of the judgment reads as follows:
"WHEREFORE, judgment is hereby rendered ordering the partition of the land covered by Transfer Certificate
of Title No. 3141 among the plaintiffs and defendant. The parties shall make partition among themselves by
proper instruments of conveyance, subject to the Court's confirmation, should the parties be unable to agree
on the partition, the court shall appoint commissioners to make the partition, commanding them to set off to
such party in interest such part and proportion of the property as the Court shall direct. Defendant is further
ordered to pay plaintiffs attorney's fees in the sum of P2,000.00." 1
On July 30, 1982, the order of partition was affirmed in toto by the Court of Appeals in CA-G.R. No. 57265-R.
The case was remanded to the court of origin for the ordered partition. 2
On May 17, 1984, an order for the issuance of the writ of execution was issued by the court a quo. 3
On July 17, 1984, Mary Lyon Martin, daughter of the late Frank C. Lyon and Mary Ekstrom Lyon, assisted by
her counsel filed a motion to quash the order of execution with preliminary injunction. In her motion, she
contends that not being a party to the above-entitled case her rights, interests, ownership and participation
over the land should not be affected by a judgment in the said case; that the order of execution is
unenforceable insofar as her share, right, ownership and participation is concerned, said share not having
been brought within the Jurisdiction of the court a quo. She further invokes Section 12, Rule 69 of the Rules of
Court. 4
On June 26, 1985, the trial court issued an order revoking the appointment of the three commissioners and in
lieu thereof, ordered the issuance of a writ of execution. 5
On February 4, 1986, the said court issued an order appointing a Board of Commissioners to effect the
partition of the contested property. 6
On May 28, 1986, the trial court dismissed the motion to quash order of execution with preliminary injunction
filed by Mary Lyon Martin and directed the partition of the property among the original party plaintiffs and
defendants. 7
On September 24, 1986, the Commissioners manifested to the trial court that in view of the fact that the name
of Mary Lyon Martin also appears in the Transfer Certificate of Title, she could therefore be construed as one
of the heirs. A ruling from the trial court was then sought. 8
On September 29, 1986, the lower court issued an order directing the counsel of Emma Lyon de Leon to
furnish the court within five days from receipt thereof all the names the of heirs entitled to share in the partition
of the subject property. 9
On October 1, 1986, the petitioners filed a manifestation praying that the court issue an order directing the
partition of the property in consonance the decision dated December 17, 1974 of the trial court the order of
said court dated May 28, 1986. 10
Without ruling on the manifestation, the lower court issued an order directing the Board of Commissioners to
immediately partition the said property. 11
On January 3, 1987, the private respondents filed motion for clarification as to whether the partition of property
is to be confined merely among the party plaintiffs and defendants, to the exclusion of Mary Lyon Martin. 12
On January 9, 1987, the lower court issued the assailed order directing the inclusion of Mary Lyon Martin as
co-owner with a share in the partition of the property, to wit:
"After a perusal of the decision of the Court of Appeals CA-G.R. No. 57265-R, where this case was appealed
by the unsatisfied parties, there is a finding that Mary now Mary Lyon Martin is one of the legitimate children of
Frank C. Lyon and Mary Ekstrom. (Page 3 of the decision).
In view of this finding, it would be unfair and unjust if she would be left out in the partition of this property now
undertaking (sic) by the said court appointed commissioners.
WHEREFORE, premises considered, the court appointed commissioners is hereby directed to include Mary
Lyon Martin as co-owner in the said property subject of partition with the corresponding shares adjudicated to
her.
SO ORDERED." 13
Petitioners' motion for reconsideration 14 of the aforesaid order was denied by the trial court. 15
On February 22, 1990 the Court of Appeals rendered its decision dismissing petitioners' appeal, the dispositive
portion of which reads as follows:
"WHEREFORE, premises considered, there being no legal impediment to the inclusion of Mary Lyon Martin by
the court-appointed Board of Commissioners as one of the heirs who shall benefit from the partition, the instant
appeal is DISMISSED for lack of merit.
NO COSTS.
SO ORDERED." 16
Petitioners' motion for reconsideration was denied on June 6, 1990. 17
Petitioners filed this petition for review alleging that the Court of Appeals has decided questions of substance
contrary to law and the applicable decisions of this Court, for the following reasons:
"1.) BY SUSTAINING THE ORDER OF THE REGIONAL TRIAL COURT DIRECTING THE COURT
APPOINTED BOARD OF COMMISSIONERS TO INCLUDE MARY L. MARTIN TO SHARE IN THE
PARTITION OF THE PROPERTY IN LITIGATION DESPITE THE FACT, OVER WHICH THERE IS NO
DISPUTE, THAT SHE HAS NOT LITIGATED EITHER AS A PARTY PLAINTIFF OR DEFENDANT IN CIVIL
CASE NO. 872, IT HAS REFUSED TO RECOGNIZE THAT THE REGIONAL TRIAL COURT HAS NO
JURISDICTION TO AMEND OR MODIFY THE JUDGMENT IN CIVIL CASE NO. 872 AND THE REGIONAL
TRIAL COURT'S ORDER DATED 28 MAY 1986 WHICH HAS BECOME FINAL AND EXECUTORY.
2.) WHEN THE COURT OF APPEALS HAS CATEGORICALLY STATED THAT MARY L. MARTIN "NEVER
LITIGATED AS ONE OF THE PLAINTIFFS IN SAID CASE," AND HER ONLY PARTICIPATION THEREIN
WAS SIMPLY CONFINED "AS A WITNESS FOR DEFENDANT-SISTER LUISA LY ON NUAL," AND TO
ALLOW HER TO SHARE IN THE PARTITION THIS LATE WITHOUT REQUIRING A PROCEEDING WHERE
THE PARTIES COULD PROVE THEIR RESPECTIVE CLAIMS, IS TANTAMOUNT TO DENYING THE
NUALS OF THEIR RIGHT TO DUE PROCESS. 18
The crux of this case is whether of not the trial court may order the inclusion of Mary L. Martin as co-heir
entitled to participate in the partition of the property considering that she was neither a party plaintiff nor a party
defendant in Civil Case No. 872 for partition and accounting of the aforesaid property and that the decision
rendered in said case has long become final and executory.
Petitioners contend that the trial court's decision dated December 14, 1974 in Civil Case No. 872 ordering the
partition of the parcel of land covered by Transfer Certificate of Title No. 3141 among plaintiffs and defendants
has long become final and executory. Hence the trial court has no jurisdiction to issue the questioned Order
dated January 9, 1987 ordering the Board of Commissioners to include Mary Lyon Martin to share in the
partition of said property despite the fact that she was not a party to the said case. Said Order, therefore,
resulted in an amendment or modification of its decision rendered in Civil Case No. 872.
We find merit in the instant petition.
In the ease of Manning International Corporation v. NLRC, 19 We held that ". . ., nothing is more settled in the
law than that when a final judgment becomes executory, it thereby becomes immutable and unalterable. The
judgment may no longer be modified in any respect, even if the modification is meant to correct what is
perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted
to be made by the Court rendering it or by the highest Court of land. The only recognized exceptions are the
correction of clerical errors or the making of so-called nunc pro tunc entries which cause no prejudice to any
party, and, of course, where the judgment is void."
Furthermore, "(a)ny amendment. or alteration which substantially affects a final and executory judgment is null
and void for lack of jurisdiction, including the entire proceedings held for that purpose." 20
In the case at bar, the decision of the trial court in Civil Case No. 872 has become final and executory. Thus,
upon its finality, the trial judge lost his jurisdiction over the case. Consequently, any modification that he would
make, as in this case, the inclusion of Mary Lyon Martin would be in excess of his authority.
The remedy of Mary Lyon Martin is to file an independent suit against the parties in Civil Case No. 872 and all
other heirs for her share in the subject property, in order that all the parties in interest can prove their
respective claims.
WHEREFORE, the petition is GRANTED. The Order dated January 9, 1987 of the trial Court as affirmed by the
Court of Appeals is hereby REVERSED and SET ASIDE. The decision of the trial court dated December 17,
1974 in Civil Case No. 872 is hereby REINSTATED.
SO ORDERED.
G.R. No. 111985 June 30, 1994
INDUSTRIAL TIMBER CORP. and/or LORENZO TANGSOC, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CONCORDIA DOS PUEBLOS and LOLITA
SANCHEZ, respondents.
Patrick R. Battad for petitioner.
Estanislao Ebarle, Jr. for private respondents.

CRUZ, J.:
In the earlier case of Industrial Timber Corporation v. NLRC, G.R.
No. 83616, 1 this Court affirmed the finding of the NLRC that the petitioners are the employers of private
respondents and remanded the case for a determination of the validity of the quitclaim allegedly signed by the
latter.
In its resolution dated February 3, 1992, 2 the NLRC affirmed in toto the decision of Labor Arbiter Amado M.
Solamo on February 26, 1987, ordering the petitioners to reinstate the private respondents (complainants
therein) without loss of seniority rights and privileges, and to pay them back wages, ECOLA, 13th month pay,
holiday pay, vacation and sick leave pay in the amount of P24,300 each, moral and exemplary damages of
P10,000 each, and attorneys fees equivalent to 10% of the total award.
In view of the lapse of time since the promulgation of the decision, the NLRC likewise directed the petitioners
to pay the private respondents severance benefits equivalent to one month pay for every year of service
computed from the date of their employment up to the promulgation of the resolution should reinstatement of
the private respondents to their former position be no longer possible. 3
This resolution became final and executory on March 9, 1992, and entry of judgment was made on March 25,
1992.
The private respondents meanwhile had filed on March 20, 1992, an ex parte motion for issuance of a writ of
execution with manifestation that from February 26, 1987, up to the present, they have not been reinstated and
thus were entitled to back salaries for the said period and until actual reinstatement shall have been made.
Executive Labor Arbiter Benjamin E. Pelaez thereupon directed the Fiscal Examiner of the Arbitration Branch
to compute the actual amount that the private respondents should receive. In a report dated March 22,
1992, 4Fiscal Examiner Renrico N. Pacamo found that each of them was entitled to P175,964.84, representing
three years back wages, ECOLA under Wage Order No. 6, 13th month pay, legal holiday pay, vacation and
sick leave pay and other privileges under the collective bargaining agreement likewise for a period of three
years. In addition, the private respondents should also be awarded moral and exemplary damages of P10,000
each and attorneys fees equivalent to 10% of the total monetary award. In sum, the petitioners were held
liable to the private respondents for the total amount of P387,122.65.
Both the petitioners and the private respondents filed their respective objections to this computation.
Meanwhile, the Executive Labor Arbiter transferred the case to Labor Arbiter Leon P. Murillo, who thereafter
issued an order dated November 19, 1992, 5 concurring with the computation of the Fiscal Examiner Pacamo.
The Commission, on appeal of the computation, only made a slight modification of the amount of the award
and directed the petitioners to pay the private respondents the sum of P375,795.20. 6 The motion for
reconsideration filed by the petitioners through JRS-Butuan, a private letter-forwarding company, reached the
NLRC a day late and was denied on August 31, 1993, mainly for tardiness. 7
In this petition now before us, the NLRC is faulted with grave abuse of discretion for merely modifying the
award of damages and denying the motion for reconsideration.
On the first issue, the petitioners submit that the NLRC decision of February 3, 1992, which affirmed in toto the
order of Arbiter Solamo and remanded the case for immediate execution need not be recomputed because the
monetary awards due the private respondents had already been determined and fixed in the said order. It is
argued that to allow the decision of Arbiter Murillo to prevail and sizably increase the monetary award to the
private respondents would in effect allow an arbiter to change a decision of the Commission that has become
final and executory. Arbiter Murillos duty, it is stressed, is limited to the ministerial act of executing the NLRC
decision.
We disagree.
It is true that after a judgment has become final and executory, it can no longer be modified or otherwise
disturbed. However, this principle admits of exceptions, as where facts and circumstances transpire which
render its execution impossible or unjust and it therefore becomes necessary, "in the interest of justice, to
direct its modification in order to harmonize the disposition with the prevailing circumstances." 8
The general rule is indeed, that once a judgment becomes final and executory, said judgment
can no longer be disturbed, altered or modified. That principle, however, admits of exceptions
as in cases where, because of supervening events, it becomes imperative, in the higher interest
of justice, to direct its modification in order to harmonize the disposition with the prevailing
circumstances (Seavan Carrier Inc. vs. GTI Sportswear Corp., 137 SCRA 580) or whenever it is
necessary to accomplish the aims of justice (Pascual vs. Tan, 85 Phil. 164; Central Textile Mills
vs. United Textile Workers Union, 94 SCRA 883). In the case at bar, the modification of the
judgment, rendered by the Labor Arbiter on
4 May 1993, is warranted by the fact that the Bank had been placed under liquidation thereby
permanently foreclosing the possibility for the Bank to resume its business. Reinstatement of
 Galindez, as Cashier, therefore was rendered inappropriate considering the Banks eventual
closure. (Emphasis supplied). 9
Applying this exception to the case at bar, we note with approval the following observations of the Solicitor
General: 10
It may be true that the amount of backwages and other benefits due to the private respondents
as recomputed, is not in harmony with the literal import of the dispositive portion of the decision
subject of execution. However, sight must not be lost of the fact that at the time the
recomputation was made in 1992, five (5) years had already elapsed from the time the Labor
Arbiter rendered his Decision on February 26, 1987. Thus, a recomputation was necessary to
arrive at a just and proper determination of the monetary awards due the private respondents.
Indeed, the back wages and other benefits awarded by Arbiter Solamo to each of the private respondents in
the amount of P24,300.00 correspond merely to the period between their illegal dismissal on April 26, 1986, up
to the time of the rendition of the decision on February 26, 1987. There is no dispute that from April 26, 1986,
to this date, the private respondents have not been reinstated nor has payment of the monetary awards
decreed by the NLRC been made to them.
A similar action was taken in the recent case of Sampaguita Garments Corporation v. NLRC, 11 where this
Court upheld the nullification of a decision of the NLRC ordering the reinstatement of an employee after her
conviction of the same offense of which she was absolved in the administrative case.
On the issue of the timeliness of the petitioners motion for reconsideration, we find that the NLRC correctly
applied the rule that where a pleading is filed by ordinary mail or by private messengerial service, it is deemed
filed on the day it is actually received by the court, not on the day it was mailed or delivered to the
messengerial service.
As this Court held in Benguet Electric Cooperative, Inc. v. NLRC: 12
The established rule is that the date of delivery of pleadings to a private letter-forwarding
agency is not to be considered as the date of filing thereof in court, and that in such cases, the
date of actual receipt by the court, and not the date of delivery to the private carrier, is deemed
the date of filing of that pleading.
The 10th day for filing the motion for reconsideration was June 26, 1993, which fell on a Saturday. The last day
for filing would have been the following business day, June 28, 1993, which was a Monday. The petitioners
counsel claims he was able to deliver the pleading to JRS-Butuan on June 26, 1993, but the motion for
reconsideration reached the Commission on June 29, 1993, or a day late.
At any rate, the respondent Commission noted that the motion contained no substantial matters to warrant the
reconsideration sought and could have been denied just the same on that ground.
WHEREFORE, the petition is DISMISSED. The resolutions of the respondent NLRC dated May 31, 1993, and
August 31, 1993, are AFFIRMED, with costs against the petitioners. It is so ordered.
Davide, Jr., Bellosillo, Quiason and Kapunan, JJ., concur.
G.R. No. 79425 April 17, 1989
CRESENCIANA ATUN ESQUIVEL, and LAMBERTO ESQUIVEL, petitioners,
vs.
HON. ANGEL M. ALEGRE, Presiding Judge, Regional Trial Court, Branch II, 5th Judicial Region,
Legaspi City and TEOTIMO ALAURIN VISITACION MAGNO & SPS. WILFREDO ENCINAS &
PATROCINIA ENCINAS, respondents.
R. Aquende Raeses for petitioners.
Otilio Sy Bongon for respondents.
Florante C. Dris collaborating counsel for petitioners.

PARAS, J.:
This is a petition for certiorari seeking to set aside, nullify and declare invalid the order of respondent Judge in
Civil Case No. 4883, dated July 21, 1987 denying petitioners' motion dated July 3, 1987 and the order of
August 6, 1987 denying petitioners' motion for reconsideration of the order of July 21, 1987.
The questioned order of July 21, 1987 (Rollo, p. 10) reads, as follows:
For utter lack of factual and legal basis, and considering further that this case was already
terminated and decided against the plaintiffs-movants by the g decision of the Supreme Court,
the motion of plaintiffs- movants dated July 3, 1987 is hereby DENIED.
The dispositive portion of the questioned order of August 6, 1987 (Rollo, p. 11) also reads as follows:
WHEREAS, for lack of merit, the motion for reconsideration is hereby DENIED. This shall be a
final Order on the same incident.
The antecedents of the case are taken from G.R. No. L-38826 which was promulgated by the Court on June
27, 1975 (Rollo, p. 46) and are quoted as follows:
It appears that in the action of ejectment (Civil Case No. 990 of the City Court of Legaspi City),
petitioners secured a judgment ordering respondents to vacate a parcel of land, with an area of
205 square meters situated in Legaspi Port, Legaspi City and known as Lot No. 57 of Plan MSI-
V-11535-D of the Cadastral Survey of said City. In said ejectment case, respondents claimed
prior and continued possession of the land in question, and with respect to Original Certificate of
Title No. 28 of the Register of Deeds of Legaspi City on which petitioners based their action,
respondents alleged that the same was secured through fraud. Upon this decision being
appealed to the Court of First Instance, the same was affirmed, the court holding that the
evidence of prior possession in favor of petitioners was so strong that the action for annulment
of petitioner's (Teotimo Alaurin) title (Civil Case No. 4602 filed by the Republic of the Philippines
at the instance of respondents) was only a mere weak attempt to annul an existing certificate of
title in favor of which the presumption of law is clearly on its side. Eventually, this decision of the
Court of First Instance was affirmed by the Court of appeals, said appellate court holding that
Civil Case No. 4602 is 'a contingency which may not be taken into consideration in deciding the
issue of who has prior possession. Respondents' attempt to have the case appealed to the
Supreme Court did not prosper, and so, the ejectment decision became final and executory.
The judgment having become final and executory on July 25, 1973, the City Court of Legaspi ordered the
issuance of a writ of execution for the enforcement of its judgment (Rollo, p. 123). However, before the
decision could be executed, petitioners, the spouses Cresenciana Atun and Lamberto Esquivel filed against
respondents Teotimo Alaurin and Visitacion Magno and the City Sheriff, Civil Case No. 4883 on August 24,
1973, for reconveyance with nullity of judgment, damages and preliminary injunction, before the Court of First
Instance of Albay, Branch I, (Respondents' Memorandum, Rollo, p. 245). The issuance of the writ of
preliminary injunction having been granted by the court a quo (Rollo, p. 104), the respondent spouses and
Teotimo Alaurin and Visitacion Magno, filed a petition for certiorari with the Court to set aside the order
granting the writ, docketed as G.R. No. L-38826 (Respondents' Memorandum, Rollo, p. 246). Meantime, on
July 1, 1974, Civil Case No. 4602, the case filed by Republic against private respondent Teotimo Alaurin was
dismissed (Rollo, p. 47).
During the hearing of the petition, the parties agreed to file with the Court a Joint Manifestation which when
filed was embodied in the decision of the Court promulgated on June 27, 1975 (Rollo, p. 46), as follows:
The PARTIES, assisted by their respective counsel, unto the Honorable Supreme Court
respectfully set forth:
1. That during the hearing of the above-entitled case on November 25, 1974, the parties agreed
to the suspension of the consideration of the petition for certiorari. Instead the parties agreed to
have Civil Case No. 4883 entitled Cresenciana Atun et al. versus Teotimo Alaurin et. al., before
the Court of First Instance of Albay, tried on the merits.
2. That after a decision is rendered in Civil Case No. 4883, the winning party shall possess the
land in litigation that is, if the plaintiffs win (private respondents herein) they shall be entitled to
the writ of preliminary injunction issued by the Court of First Instance of Albay, otherwise,
plaintiffs shall immediately vacate the premises and the defendants (petitioners herein) restored
to the possession of the land in litigation.
3. That the parties pray that a directive be issued by the Honorable Supreme Court to Branch II,
Court of First Instance of Albay (Branch I of the same Court where Civil Case No. 4883 was
assigned for hearing has no presiding Judge) to expedite the trial of Civil Case No. 4883,
preferably to hear and decide the case within ninety (90) days from notice.
In view of the joint manifesto, the Court dismissed the case and ordered the trial court to expedite the trial of
Civil Case No. 4883 and to try and decide the same within ninety (90) days from notice. The Court also
ordered the transfer of the case from Branch I of the Court of First Instance of Albay which had no presiding
Judge then, to Branch II, enjoining the judge therein to comply with the decision, and the parties, to observe
the agreement embodied in the aforequoted joint manifesto (Rollo, p. 49).
On October 29, 1975, the Court of First Instance of Albay, Branch II, rendered a decision in Civil Case No.
4883 dismissing the case and dissolving the preliminary injunction issued earlier (Rollo, p. 107), the dispositive
portion of which reads as follows:
WHEREFORE, the above-entitled case is hereby dismissed. Accordingly, the writ of preliminary
injunction heretofore issued is hereby dissolved.
On January 19, 1976, herein petitioners filed a notice of appeal. The record of appeal was filed in due time
(Rollo, p. 30). They were, however, directed to amend their record on appeal in an order dated April 14, 1978
but before they filed their amended record on appeal, on May 10, 1978 petitioners filed a motion for permission
to serve supplemental complaint impleading the spouses Wilfredo Encinas and Patrocinia Dasmarinas, the two
other private respondents herein (Rollo, p. 30). The amended record on appeal was only filed on August 24,
1978 after several extensions granted by the court a quo. On July 20, 1979, private respondents filed a notice
to disapprove the record on appeal and for execution of judgment which was denied by the court a quo, in its
order of August 15, 1979 (Rollo, p. 31).
The supplemental complaint was admitted by the court a quo in its order dated January 12, 1979 and on
motion of respondents herein in that supplemental complaint, supplemental defendants were declared in
default (Rollo, p. 17).
On July 31, 1979, the court a quo rendered a decision on the supplemental complaint declaring the
supplemental defendants as successors-in-interest of herein private respondents Teotimo Alaurin and
Visitacion Magno, such that whatever is the result of the appealed case shag be legally binding upon them
(Rollo, p. 17). This dispositive portion of the decision reads, as follows:
WHEREFORE, premises considered, judgment is hereby rendered declaring that Wilfredo
Encinas and Patrocinia Dasmarinas are successors-in-interest of defendants Teotimo Alaurin
and Visitacion Magno such that whatever is the result of the appealed case shall be legally
binding upon them, with costs against supplemental defendants.
Not satisfied with the trial courts decision in the supplemental complaint declaring private respondents Wilfredo
Encinas and Patrocinia Dasmarinas as successors-in-interest of private respondents Teotimo Alaurin and
Visitacion Magno, said private respondents flied a petition for certiorari in the Court of Appeals praying that: (1)
the petition be given due course; (2) after hearing on the merits, the decision in Civil Case No. 4883
entitled Cresenciana Atun, et. al. v. Alaurin, et al., be declared final and executory; and (3) the decision against
supplemental defendant spouses Wilfredo Encinas and Patrocinia Dasmarinas be declared null and void
(Rollo, p. 29).
The appellate court dismissed the petition in a decision promulgated on November 18, 1982. The dispositive
portion of the decision (Rollo, p. 29), states:
WHEREFORE, the instant petition is hereby DISMISSED with costs.
The decision became final and executory on December 20, 1982 (Rollo, p. 36).
On the other hand, the appeal of herein petitioners of the decision of the trial court promulgated on October 29,
1975 in the original complaint for reconveyance with nullity of judgment, damages and preliminary injunction
was docketed in the appellate court as AC-G.R. CV No. 01896. On March 10, 1986 the appellate court
rendered a decision (Rollo, G.R. No. 74339, p. 47) affirming the appealed decision, as follows:
WHEREFORE, the decision appealed from hereby AFFIRMED with costs against plaintiffs-
appellants.
The motion for reconsideration filed by petitioners herein was denied by the appellate court in a resolution
dated April 14,1986, for lack of merit (Rollo, G.R. No. 74339, p. 52). Consequently, the case was raised to the
Court for the second time in G.R. No. 74339 in a petition for certiorari, also filed by petitioners herein (Rollo,
G.R. No. 74339, p. 11).
On July 2, 1986, the Court resolved to deny the petition for lack of merit (Rollo, G.R. No. 74339, p. 58). The
motion for reconsideration filed by petitioner herein (Rollo, G.R. No. 74339, p. 63) was also denied by the
Court in a resolution dated September 17,1986 wherein the Court resolved "to DENY the Motion for lack of
merit, and this denial is FINAL" (Rollo, G.R. No. 74339, p. 102). The decision of the Court became final and
executory on October 6,1986 (Rollo, G.R. No. 74339, p. 100).
On October 16, 1986, petitioners herein moved for the issuance of a writ of execution of respondent, court's
supplemental decision as affirmed by the appellate court in CA-G.R. No. 09754-P (Rollo, p. 39) which was
granted by the trial court in its order of October 2, 1986 (December 2, 1986 according to petitioners, Rollo, p.
54), "it appearing further that the decision rendered in this case has already become final and executory." It
directed the Branch Clerk of Court to issue the corresponding writ of execution upon receipt of proof of
payment of the corresponding sheriffs fee. (Rollo, p. 41).
Armed with the said order of respondent courts, on May 23, 1987 petitioner herein Cresenciana Atun claiming
to be the prevailing party, took possession of the property in question (Rollo, pp. 15; 133).
On May 25, 1987, a motion for contempt was filed by private respondents herein, the prevailing parties in Civil
Case No. 4883, against petitioners herein, praying among others, that respondent court: (1) immediately order
petitioners herein to appear in court and be, ordered to desist from doing the contemptuous acts complained of
in order to maintain the status quo before this contempt charge; and (2) hold petitioners herein in contempt of
court (Rollo, p. 132), but it was dismissed and denied by respondent court in an order dated June 5, 1987
(Rollo, p. 43). A restraining order was however, issued by the Court of First Instance of Legaspi City, Branch X,
on June 8, 1987 which according to the Sheriffs return was served personally on petitioners herein who
declined to vacate the premises subject of the restraining order (Rollo, p. 62). Upon motion of the new owners
of the subject premises (Rollo, p. 124), the same branch of the court issued its order of June 10, 1987 ordering
the Station Commander of the INP, Legaspi, "to assign two (2) policemen to help the sheriff implement the
restraining order of this Court dated June 8, 1987, and to use force, if necessary, should the defendants still
refuse to abide by the above-mentioned Order" (Rollo, p. 61).
On July 3, 1987, petitioners herein, filed a motion with respondent court praying among others, that an order
be issued: (1) ordering private respondents herein to reconvey to movants the property in question, and
directing the City Register of Deeds to cancel TCT No. 311 in the name of Encinas, for having been obtained
through fraud, hence, null and void; and (2) allowing petitioners herein to immediately take possession of the
property in question, it being in accordance with the agreement of the parties in a manifestation submitted and
approved by the court (Rollo, p. 16). Respondent court denied the motion in the questioned order of July 21,
1987 (Rollo, p. 10).
A motion for reconsideration was filed by petitioners herein on August 6, 1987 (Rollo, p. 54), which motion was
likewise denied by respondent court in its equally questioned order of the same date which respondent court
denominated as a final order on the same incident (Rollo, p. 221).
Hence, the instant petition filed with the Court on August 20,1987 (Rollo, p. 4).
In the resolution of March 14, 1988 the Court resolved: (a) to give due course to the petition; and (b) to require
the parties to submit simultaneously their respective memoranda within thirty (30) days from notice thereof.
The sole issue is whether or not the decision rendered by a trial court in a supplemental complaint modified the
decision of the same branch of the court in the original complaint and amounts to an amendment of the original
decision.
The question must be answered in the negative.
The original complaint for reconveyance with nullity of judgment damages and preliminary injunction in Civil
Case No. 4883 decided by respondent court on October 29, 1975 arose from Civil Case No. 990 for unlawful
detainer filed by the spouses Teotimo Alaurin and Visitacion Magno, private respondents herein, against the
spouses Cresenciana Atun and Lamberto Esquivel, petitioners herein, in the City Court of Legaspi which
rendered a decision in favor of private respondents herein, the spouses Teotimo Alaurin and Visitacion Magno.
Said decision was affirmed by respondent court herein, the Court of Appeals and finally by the Supreme Court.
The question of prior possession of the land in question was raised and passed upon in that case which had
already become final and executory when Civil Case No. 4883 was filed in the Court of First Instance of Albay.
In Civil Case No. 4883, petitioners herein anchored their action for reconveyance on their claim of prior
possession but this matter had already been resolved in favor of private respondents herein and therefore,
conclusive on respondent court in Civil Case No. 4883 being res judicata as to the issue of possession de facto
(Ang Ping, et. al. v. Regional Trial Court, 154 SCRA 77 [1987]. Trial on the merits was held on all the other
aspects of the case after which judgment was rendered by respondent court which proved to be unfavorable to
petitioners herein.
After their motion for reconsideration was denied, petitioners herein filed their notice of appeal but due to the
opposition of private respondents herein, to the non-inclusion in the record on appeal of certain pleadings,
orders and decisions which they claimed are relevant to the disposition of the appeal, petitioners herein were
ordered by respondent court to amend their record on appeal to satisfy the objections of the private
respondents who were the original defendants in Civil Case No. 4883 (Rollo, p. 30). In the meantime private
respondents transferred the property in question to the spouses Wilfredo Encinas and Patrocinia Dasmarinas,
the two other private respondents herein, evidenced by an inscription of a Deed of Absolute Sale dated April
19, 1970 at the back of Original Certificate of Title No. 28 on November 2, 1976 (Rollo, p. 38). Petitioners must
have learned of the sale before they could file their amended record on appeal which must have prompted
them to file a motion for supplemental complaint against the vendees of the property in question, the spouses
Wilfredo Encinas and Patrocinia Dasmarinas which was admitted by respondent court. As borne by the records
of the case, respondent court ruled in favor of herein petitioners in the supplemental complaint which was
affirmed by the Court of Appeals.
Petitioners claim that the decision of respondent court in the supplemental complaint revised the decision in
the original complaint tantamount to an amendment or reversal of said original decision of respondent court
penned by a previous presiding judge therein (Petitioner's Memorandum, Rollo, p. 181).
The claim is without merit.
There is a difference between an amended judgment and a supplemental judgment. In an amended and
clarified judgment, the lower court makes a thorough study of the original judgment and renders the amended
and clarified judgment only after considering all the factual and legal issues. The amended and clarified
decision is an entirely new decision which supersedes the original decision (Magdalena Estate, Inc. v.
Caluag, 11 SCRA 333 [1964]; Sta. Romana v. Lacson, 104 SCRA 93 [1981]). Following the Court's
differentiation of a supplemental pleading from an amending pleading, it can be said that a supplemental
decision does not take the place or extinguish the existence of the original. As its very name denotes, it only
serves to bolster or adds something to the primary decision. A supplement exists side by side with the original.
It does not replace that which it supplements (Aznar III, et. al. v. Bernard, et. al., G.R. No. 81190, May 9,
1988).
In the instant case no restudy was made by respondent court of the original decision but only on the issues
raised in the supplemental complaint. The supplemental decision cannot stand alone as a judgment on the
merits as there was no declaration of the respective rights and duties of the parties. It only declared the
supplemental defendants as successors-in-interest of the defendants in the original complaint, "such that
whatever is the result of the appealed case shall be legally binding upon them ..." (Rollo, p. 28).
The part of the supplemental decision which petitioners claim to have revised the original, is quoted as follows:
 In the light of the foregoing testimony of the witnesses presented by supplemental plaintiffs
together with the documentary exhibits supporting the allegations of the supplemental
complaint, the Court finds that the evidence presented by the supplemental plaintiffs are
preponderantly sufficient to justify and warrant a judgment in their favor. (Rollo, p. 28).
There can be no other interpretation of the above statement of respondent court than that all documentary and
testimonial evidence prescribed by supplemental plaintiffs, petitioners herein, sufficiently prove that when
supplemental defendants entered into the contract of absolute sale with the original defendants, they already
had full knowledge of the controversy between supplemental plaintiffs and the original defendants in Civil Case
No. 4883 such that they must be adjudged as successors-in-interest of original defendants Teotimo Alaurin
and Visitacion Magno. This interpretation is borne by the statement of respondent court at the end of the
paragraph preceding that which petitioners herein claim to have revised the original decision, which states:
... One thing, however, clear is that both supplemental defendants are successors-in-interest of
Teotimo Alaurin The prayer for reconveyance of the property in question cannot be justified in
the light of the decision of Hon. Jose C. Razo. (Rollo, p. 28)
It must be pointed out that the dispositive portion itself of the supplemental decision is clear and unambiguous.
It does not make any declaration or pronouncement that may be taken to have revised or amended the original
decision. All that it declares is that the supplemental defendants Wilfredo Encinas and Patrocinia Dasmarinas
are successors-in-interest of defendants Teotimo Alaurin and Visitacion Magno such that whatever is the result
of the appealed case shall be legally binding upon them.
Petitioners herein pursued their appeal of the original decision with the Court of Appeals which can be
interpreted to mean that they themselves did not believe that the supplemental decision had amended the
original decision of respondent court. Unfortunately for them, the appellate court found the appeal without
merit. Petitioners herein then filed a petition for certiorari with the Supreme Court questioning the decision of
the appellate court which petition likewise did not prosper.
The original decision became final and executory on October 6, 1986. In general, the prevailing party is entitled
as a matter of right to a writ of execution, the issuance of which is a ministerial duty compellable
by mandamus (Nunez v. Court of Appeals, 152 SCRA 197 [1987]; Borja v. Court of Appeals, G.R. No. 37944,
June 30, 1988; Ngo Bun Tiong v. Sayo, G.R. No. 45875, June 30, 1988). The issuance of an order of
execution is the ministerial duty of the lower court once the judgment of a higher court is returned to it and it is
without jurisdiction to interpret or reverse the judgment of the higher court (Ang Ping v. Regional Trial
Court, 154 SCRA 77 [1987]). The writ of execution must, however, conform to the judgment which is to be
executed (Gabaya v. Mendoza, 113 SCRA 400 [1982]) which in this instant case, is the dispositive portion of
the original decision in Civil Case No. 4883.
The restraining order issued by respondent court on June 8, 1987 restored the status quo between the parties
before May 23, 1987. There was no need for the issuance of a writ of execution. The respondents who won the
case were already in actual possession of the property in question (Respondents' Memorandum, Rollo, p. 258)
in accordance with the decision rendered in Civil Case No. 4883 and in consonance with paragraph No. 2 of
the joint manifestation of the parties embodied in the decision of the Court in G.R. No. L-38826. As a
consequence, respondent judge did not commit any grave abuse of discretion amounting to lack of jurisdiction
in denying the motion of petitioners herein to take possession of the property in question, in his order of July
21, 1987 and petitioners' motion for reconsideration of aforesaid order.
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit and the restraining order issued by
respondent court on June 8, 1987 is made permanent.
SO ORDERED.
G.R. No. L-59284 January 12, 1990
JUANITO CARDOZA, petitioner,
vs.
HON. PABLO S. SINGSON, Judge of Branch I of the Court of First Instance of Southern Leyte,
ROMULO G. MADREDIJO, Executive Sheriff of Maasin, Southern Leyte, PONCIANO ALVAREZ and
CIRILO ALVAREZ, respondents.
Jose Batiquin for petitioner.
Adelino B. Sitoy for private respondents.

PARAS, J.:
This is a petition for certiorari, prohibition and mandamus with preliminary injunction seeking (a) to annul and
set aside the writ of execution dated July 2, 1981 issued by respondent Judge Pablo S. Singson in Civil Case
No. 1853 entitled: Juana Corollo, et al. v. Juan Cardoza et al.; (b) to restore to petitioner possession of the
three parcels of land in controversy; and (c) to nullify the proceedings leading to the issuance of the order and
writ of execution.
It appears on record that in a Motion for Execution of Judgment dated August 29, 1979, Atty. Adelino B. Sitoy
as counsel for the plaintiffs in Civil Case No. 1853 entitled: "Juana Corollo, Silvestre Corollo, Severino Corollo,
Ponciano Alvarez, Cirilo Alvarez, Candido Alvarez, Leon Ageroy Bustico Agero Demandantes Contra Juan
Cardoza, Por si y Como Administrator de los bienes de Eulalia Cardoza, Urbano Cadabos, Magdalena Ordiz y
Miguel Galos, Demandados" prayed for the issuance of a writ of execution in the aforesaid case. The motion
alleged that a decision dated February 7, 1938 of the Court of First Instance, Maasin, Leyte which was affirmed
with modification in the decision of the Court of Appeals in CA G.R. No. 3545 promulgated on December 6,
1939 had long been final and executory. Plaintiffs allegedly acquired knowledge of the appellate court's
decision only in November 11, 1974 because before the death of their original counsel in 1944 they were not
informed of the said decision. Attached to the motion is the certification dated January 9, 1979 of the Clerk of
Court of the Court of First Instance of Southern Leyte to the effect that the record does not show that plaintiffs'
counsel Atty. Francisco Zialcita and defendants' counsel were furnished a copy of the decision. Also the Clerk
of Court of the Court of Appeals issued a Certification dated August 23, 1979 that the record of the case in
C.A. G.R. No. 3545 was burned during the liberation of Manila in 1945 (Rollo, pp. 39-40).
In an order dated September 4, 1979, the trial court directed the plaintiffs movants to submit their
memorandum within fifteen days and for the defendants oppositors to file their opposition thereto within the
same period from receipt of the memorandum. Plaintiffs submitted their memorandum on August 18, 1980.
Defendants did not submit their memorandum nor submitted their reply to written interrogatories (Rollo, pp. 42-
45).
On May 4, 1980, plaintiffs' counsel filed a motion to defer the consideration of the motion for execution on the
ground that in the April 22, 1980 hearing they allegedly discovered that no entry of judgment had been made
and that nobody could tell whether parties or their counsel received a copy of the decision of the Court of
Appeals. (Rollo, p. 41) Plaintiffs therefore, prayed for the recording of the decision of the Court of Appeals in
the book of entries of Judgment.
On July 6, 1981, the trial court issued an order that "a nunc pro tunc judgment be entered pursuant to the
decision of the Court of Appeals in Civil Case No. C.A. G.R. No. 3645". For the satisfaction of the judgment it
likewise ordered the issuance of a writ of execution (Ibid).
On July 21, 1981, the writ of execution was issued directing the Provincial Sheriff of Southern Leyte or his
deputies to enforce and execute the decision of the trial court as modified by the appellate court.
The February 7, 1938 decision of the then Court of First Instance of Leyte reads as follows, viz:
En sue virtud, se dicta sentencia declaranda a los demandantes con derecho a la mitad de la
parcelas A, B, C y D y se ordena al Albacea que haga entrega de la mitad de diches parcelas a
los demandantes declarando al demandado Juan Cardoza dueno de las parcelas E, G y H, y
sobreseyendo la demanda con respecto a las parcelas F, I y J, sin especial pronunciamiento en
cuanto a las costas.
ASI SE ORDENA.
On the other hand, the dispositive portion of the Court of Appeals decision promulgated on December 6, 1939,
provides as follows, viz:
In view of the foregoing, the decision appealed from is hereby affirmed with the modification that
Urbano Cadabos is ordered to deliver to the plaintiffs one-half of parcel I. There is no
pronouncement as to costs.
On July 29, 1981, Sheriff Romulo Madredizo served a copy of the writ of execution on petitioner Juanita
Cardoza through his wife and son at Sta. Cruz, Maasin, Southern Leyte. Trinidad Malbas who was in actual
possession of parcel I was also served a copy of the writ on July 30, 1981 (Rollo, p. 50).
On July 31, 1981, Juanita Cordoza's counsel filed a motion for reconsideration and to hold in abeyance the
execution of the writ. Accordingly, the implementation of the writ was held in abeyance.
On September 14, 1981 the heirs of the original defendants filed a manifestation to the effect that they
interpose no objection to the issuance of a nunc pro tunc judgment. The manifestation was filed by Rustico
Cardoza, the son of the late original defendant Juan Cardoza, who also represented the late original defendant
Magdalena Ordiz and the grandchildren of the deceased original defendant Miguel Galos. The children of the
original defendant Urbano Cadabos, namely: Honorato Camilla and Basilio all surnamed Cadabos except
Basilio whose surname is Calapre by reason of the judicial adoption joined in the said manifestation (Rollo, pp.
78-79).
On October 14, 1981 the trial court reinstated its order dated July 6, 1981 and directed the issuance of
an alias writ of execution (Rollo, p. 49). The trial court opined that courts are given wide latitude in allowing the
issuance of a nunc pro tunc judgment.
On November 11, 1981 respondent Sheriff executed the writ and personally delivered to plaintiffs the property
subject matter in Civil Case No. 1853. Rustico Cardoza was furnished a copy of the writ on November 23,
1981. On November 26, 1981 Juanita Cardoza was informed of the formal turn over of the property and was
furnished a copy of the writ of execution (Rollo, p. 50).
On November 26, 1981, Petitioner appeared before the trial court in compliance with the summons directing
him to appear and explain why he should not be declared in contempt of court for harvesting the coconuts in
parcels A, B and C, the land in question. In the hearing, petitioner was personally served the writ of execution
and the respondent judge directed him to desist from harvesting the coconuts and to explain in writing why he
should not be declared in contempt of court.
On January 8, 1982 herein petitioner Juanito Cardoza filed the instant petition for certiorari, mandamus and
prohibition with preliminary injunction. In his petition, he alleged inter alia that the respondent judge usurped
the jurisdiction of the Court of Appeals when it issued the Order of July 6, 1981 directing that "a non pro
tunc' judgment be entered pursuant to the decision of the Court of Appeals in Civil Case C.A. G.R. No. 3545"
because under Section 10 of Rule 5 of the Revised Rules of Court, its issuance is the ministerial duty of the
Clerk of Court of the Court of Appeals; that the trial court erred in granting the application for issuance of
a nunc pro tunc judgment because plaintiffs' inaction to move for the execution of the Judgment 40 years after
its promulgation is a ground for its denial; that private respondents have not adduced evidence to overcome
the regularity in the performance of official function so that it can be presumed that the Clerk of Court of the
Court of Appeals made the entry of judgment; that respondent judge gravely abused his discretion when he
deprived petitioner of his property without due process of law; that petitioner acquired the land from his aunt
Eulalia Cardoza who executed on April 13, 1935 her last will and testament in the Visayan dialect; that after the
death of Eulalia Cardoza her last will and testament was probated on February 25, 1936 in special proceeding
No. 1781 of the then Court of First Instance of Maasin, Leyte and as a legatee, petitioner received the four (4)
parcels of land identified as parcels A, B, C, and D from the Court-appointed administrator Juan Cardoza; that
as owner he paid the real property tax and caused the issuance of tax declarations in his name; that when
plaintiffs in Civil Case No. 1853 received a copy of the decision they agreed to receive parcel D, the biggest
land, instead of getting one-half of the four parcels of land; that his uncle Juan Cardoza prevailed upon
petitioner to turn over parcel D to the plaintiffs; that' assuming that the respondent Judge can issue a writ of
execution 40 years from the rendition of the Judgment, nonetheless, it could not deprive petitioner of the one-
half portion of the four (4) parcels of land decreed to him in the judgment sought to be implemented.
Petitioner, therefore, prayed for the immediate issuance of a writ of preliminary mandatory injunction to direct
public respondents to restore to him the three (3) parcels of land and to recall the writ of execution.
On February 18, 1982, the First Division of this Court issued a resolution directing public respondents to
restore to petitioner possession of the three (3) parcels of land. Also, respondent Judge was enjoined from
further proceeding or enforcing the writ of execution issued by him in Civil Case No. 1853. Likewise the
respondents were required to file their comment within ten (10) days from receipt of the resolution (Rollo, p.
52).
On the other hand, private respondents alleged, among others, that the respondent Judge did not usurp the
jurisdiction of the Court of Appeals when he issued the July 6, 1981 Order because the Court of Appeals, that
decided CA G.R. No. 3545 and failed to leave any record of entry of judgment was different from the present
Court of Appeals as the former which was created under Commonwealth Act No. 3 on February 1, 1936
(Amended by Commonwealth Act Nos. 259, 425 and 639) was abolished under Executive Order No. 37 dated
March 10, 1945; that in the exercise of its function as court of law and equity and as the final repository of the
decision transmitted by the defunct appellate court, the trial court correctly made the entry of judgment nunc
pro tunc; that despite the lapse of about 40 years, execution is still in order because under Section 443,
Chapter IX of Act No. 190 of the Code of Civil Procedure the counting of the five (5) year period to enforce the
Judgment starts from the entry of judgment and not from its promulgation; that except for original plaintiffs
Ponciano Alvarez and Cirilo Alvarez, all the other original plaintiffs in Civil Case No. 1853 are all dead; that it is
not true that petitioner had been the owner and possessor of the subject property for 45 years; that Tax
Declaration No. 16832 covering parcel "A", Tax Declaration No. 18307 covering parcel "B" and Tax Declaration
No. 18301 covering parcel "C" previously in the name of Pablo Corollo were cancelled and transferred in the
name of Juanito Cardoza only in 1964 and 1965. Private respondents therefore prayed for the dismissal of the
petition.
The decisive issues to be resolved in the instant case are (1) whether or not the decision of the trial court as
modified by the Court of Appeals can still be enforced and (2) whether or not the trial court committed a grave
abuse of discretion when it made the entry of judgment nunc pro tunc and issued the writ of execution.
On the issue of whether or not the judgment of the trial court dated February 7, 1938 in Civil Case No. 1853 as
modified by the Court of Appeals in the decision promulgated on December 6, 1939 can still be enforced, the
answer is in the affirmative.
Under Section 443, Chapter IX of Act No. 190, otherwise known as the Code of Civil Procedure which took
effect on September 1, 1901, the prevailing party in a civil action is entitled to a writ of execution of the final
judgment obtained by him within five years from the date of its entry. The counting of the five-year period starts
from the entry of judgment and not from its promulgation.
No presumption of regularity in the performance of the duties of the Clerk of Court of the Court of Appeals can
apply to the instant case. There is no record whatsoever whether in the appellate court or in the court below of
any entry of judgment in Civil Case No. 1853. Presumptions cannot substitute for the records much less
prejudice vested rights.
Acting not only as a court of law but also as a court of equity, the trial court correctly made the entry of a
judgment nunc pro tunc pursuant to the decision of the Court of Appeals in Civil Case No. C.A. G.R. No. 3545.
In so doing, the lower court merely ordered the judgment of the, Court of Appeals to be executed.
The issuance of a nunc pro tunc order was recognized by this Court in Lichauco v. Tan Pho, 51 Phil. 862
where an order or judgment actually rendered by a court at a former time had not been entered of record as
rendered. There is no doubt that such an entry operates to save proceedings had before it was made.
Contrary to what the petitioner claims, the lower courts actiondecreeing the entry of a judgment nunc pro
tuncwas not done arbitrarily nor capriciously. The petitioner was allowed to oppose the motions in open court
and was even required to submit a memorandum to support his position. The petitioner, however, failed to
submit a memorandum. Neither did he adduce sufficient evidence to support his claims over the properties in
question.
Finally, well settled is the rule that a judgment which has become final and executory can no longer be
amended or corrected by the court except for clerical errors or mistakes. In such a situation, the trial court
loses jurisdiction over the case except to execute the final judgment, as in this case. (Marcopper Mining
Corporation v. Briones, 165 SCRA 470)
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.
ERNESTO C. DEL ROSARIO andDAVAO G.R. No. 150134
TIMBER CORPORATION,
Petitioners,
Present:

QUISUMBING, J., Chairperson,

CARPIO,
- versus -
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

FAR EAST BANK & TRUST

COMPANY[1] and
PRIVATE DEVELOPMENTCORPORATION PROMULGATED:
OF THE PHILIPPINES,
Respondents. October 31, 2007

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

DECISION

CARPIO MORALES, J.:

The Regional Trial Court (RTC) of Makati City, Branch 65 (sic) [2] having, by Decision[3] of July 10, 2001,
dismissed petitioners complaint in Civil Case No. 00-540 on the ground of res judicata and splitting of a cause of action,
and by Order of September 24, 2001[4] denied their motion for reconsideration thereof, petitioners filed the present petition
for review on certiorari.

From the rather lengthy history of the present controversy, a recital of the following material facts culled from the
records is in order.

On May 21, 1974, petitioner Davao Timber Corporation (DATICOR) and respondent Private Development Corporation
of the Philippines (PDCP) entered into a loan agreement under which PDCP extended to DATICOR a foreign currency
loan of US $265,000 and a peso loan of P2.5 million or a total amount of approximately P4.4 million, computed at the
then prevailing rate of exchange of the dollar with the peso.
The loan agreement provided, among other things, that DATICOR shall pay: (1) a service fee of one percent (1%) per
annum (later increased to six percent [6%] per annum) on the outstanding balance of the peso loan; (2) 12 percent (12%)
per annum interest on the peso loan; and (3) penalty charges of two percent (2%) per month in case of default.

The loans were secured by real estate mortgages over six parcels of land one situated in Manila (the Otis property)
which was registered in the name of petitioner Ernesto C. Del Rosario, and five in Mati, Davao Oriental and chattel
mortgages over pieces of machinery and equipment.

Petitioners paid a total of P3 million to PDCP, which the latter applied to interest, service fees and penalty
charges. This left petitioners, by PDCPs computation, with an outstanding balance on the principal of more than P10
million as of May 15, 1983.

By March 31, 1982, petitioners had filed a complaint against PDCP before the then Court of First Instance (CFI)
of Manila for violation of the Usury Law, annulment of contract and damages. The case, docketed as Civil Case No. 82-
8088, was dismissed by the CFI.

On appeal, the then Intermediate Appellate Court (IAC) set aside the CFIs dismissal of the complaint and
declared void and of no effect the stipulation of interest in the loan agreement between DATICOR and PDCP.

PDCP appealed the IACs decision to this Court where it was docketed as G.R. No. 73198.

In the interim, PDCP assigned a portion of its receivables from petitioners (the receivables) to its co-respondent
Far East Bank and Trust Company (FEBTC) under a Deed of Assignment dated April 10, 1987[5] for a consideration
of P5,435,000. The Deed of Assignment was later amended by two Supplements.[6]

FEBTC, as assignee of the receivables, and petitioners later executed a Memorandum of Agreement (MOA)
dated December 8, 1988 whereby petitioners agreed to, as they did pay FEBTC[7] the amount of P6.4 million as full
settlement of the receivables.

On September 2, 1992, this Court promulgated its Decision in G.R. No. 73198[8] affirming in toto the decision of the IAC.
It determined that after deducting the P3 million earlier paid by petitioners to PDCP, their remaining balance on the
principal loan was only P1.4 million.

Petitioners thus filed on April 25, 1994 a Complaint[9] for sum of money against PDCP and FEBTC before the
RTC of Makati, mainly to recover the excess payment which they computed to be P5.3 million[10] P4.335 million from
PDCP, and P965,000 from FEBTC. The case, Civil Case No. 94-1610, was raffled to Branch 132 of the Makati RTC.

On May 31, 1995, Branch 132 of the Makati RTC rendered a decision[11] in Civil Case No. 94-1610 ordering
PDCP to pay petitioners the sum of P4.035 million,[12] to bear interest at 12% per annum from April 25, 1994 until fully
paid; to execute a release or cancellation of the mortgages on the five parcels of land in Mati, Davao Oriental and on the
pieces of machinery and equipment and to return the corresponding titles to petitioners; and to pay the costs of the suit.

As for the complaint of petitioners against respondent FEBTC, the trial court dismissed it for lack of cause of action,
ratiocinating that the MOA between petitioners and FEBTC was not subject to this Courts Decision in G.R. No. 73198,
FEBTC not being a party thereto.

From the trial courts decision, petitioners and respondent PDCP appealed to the Court of Appeals (CA). The appeal was
docketed as CA-G.R. CV No. 50591.

On May 22, 1998, the CA rendered a decision[13] in CA-G.R. CV No. 50591, holding that petitioners outstanding
obligation, which this Court had determined in G.R. No. 73198 to be P1.4 million, could not be increased or decreased by
any act of the creditor PDCP.
 The CA held that when PDCP assigned its receivables, the amount payable to it by DATICOR was the same
amount payable to assignee FEBTC, irrespective of any stipulation that PDCP and FEBTC might have

provided in the Deed of Assignment, DATICOR not having been a party thereto, hence, not bound by its terms.

Citing Articles 2154[14] and 2163[15] of the Civil Code which embody the principle of solutio indebiti, the CA held
that the party bound to refund the excess payment of P5 million[16] was FEBTC as it received the overpayment; and that
FEBTC could recover from PDCP the amount of P4.035 million representing its overpayment for the assigned receivables
based on the terms of the Deed of Assignment or on the general principle of equity.

Noting, however, that DATICOR claimed in its complaint only the amount of P965,000 from FEBTC, the CA
held that it could not grant a relief different from or in excess of that prayed for.

Finally, the CA held that the claim of PDCP against DATICOR for the payment of P1.4 million had no
basis, DATICORs obligation having already been paid in full, overpaid in fact, when it paid assignee FEBTC the amount
of P6.4 million.

Accordingly, the CA ordered PDCP to execute a release or cancellation of the mortgages it was holding over the
Mati real properties and the machinery and equipment, and to return the corresponding certificates of title to
petitioners. And it ordered FEBTC to pay petitioners the amount of P965,000 with legal interest from the date of the
promulgation of its judgment.

FEBTCs motion for reconsideration of the CA Decision was denied, and so was its subsequent appeal to this
Court.

On April 25, 2000, petitioners filed before the RTC of Makati a Complaint[17] against FEBTC to recover the
balance of the excess payment of P4.335 million.[18] The case was docketed as Civil Case No. 00-540, the precursor of the
present case and raffled to Branch 143 of the RTC.

In its Answer,[19] FEBTC denied responsibility, it submitting that nowhere in the dispositive portion of the CA
Decision in CA-G.R. CV No. 50591 was it held liable to return the whole amount of P5.435 million representing the
consideration for the assignment to it of the receivables, and since petitioners failed to claim the said whole amount in
their original complaint in Civil Case No. 94-1610 as they were merely claiming the amount of P965,000 from it, they
were barred from claiming it.

FEBTC later filed a Third Party Complaint[20] against PDCP praying that the latter be made to pay the P965,000
and the interests adjudged by the CA in favor of petitioners, as well as the P4.335 million and interests that petitioners
were claiming from it. It posited that PDCP should be held liable because it received a consideration of P5.435 million
when it assigned the receivables.

Answering[21] the Third Party Complaint, PDCP contended that since petitioners were not seeking the recovery of
the amount of P965,000, the same cannot be recovered via the third party complaint.

PDCP went on to contend that since the final and executory decision in CA-G.R. CV No. 50591 had held that
DATICOR has no cause of action

against it for the refund of any part of the excess payment, FEBTC can no longer re-litigate the same issue.

Moreover, PDCP contended that it was not privy to the MOA which explicitly excluded the receivables from the
effect of the Supreme Court decision, and that the amount of P6.4 million paid by petitioners to FEBTC was clearly
intended as consideration for the release and cancellation of the lien on the Otis property.
Replying,[22] FEBTC pointed out that PDCP cannot deny that it benefited from the assignment of its rights over the
receivables from petitioners. It added that the third party claim being founded on a valid and justified cause, PDCPs
counterclaims lacked factual and legal basis.

Petitioners thereafter filed a Motion for Summary Judgment[23] to which FEBTC filed its opposition.[24]

By Order of March 5, 2001, the trial court denied the motion for summary judgment for lack of merit.[25]

On July 10, 2001, the trial court issued the assailed Decision dismissing petitioners complaint on the ground
of res judicata and splitting of cause of action. It recalled that petitioners had filed Civil Case No. 94-1610 to recover the
alleged overpayment both from PDCP and FEBTC and to secure the cancellation and release of their mortgages on real
properties, machinery and equipment; that when said case was appealed, the CA, in its Decision, ordered PDCP to release
and cancel the mortgages and FEBTC to pay P965,000 with interest, which Decision became final and executory on
November 23, 1999; and that a Notice of Satisfaction of Judgment between petitioners and FEBTC was in fact submitted
on August 8, 2000, hence, the issue between them was finally settled under the doctrine of res judicata.

The trial court moreover noted that the MOA between petitioners and FEBTC clearly stated that the pending
litigation before the Supreme Court of the Philippines with respect to the Loan exclusive of the Receivables assigned to
FEBTC shall prevail up to the extent not covered by this Agreement. That statement in the MOA, the trial court ruled,
categorically made only the loan subject to this Courts Decision in G.R. No. 73198, hence, it was with the parties full
knowledge and consent that petitioners agreed to pay P6.4 million to FEBTC as consideration for the settlement. The
parties cannot thus be allowed to welsh on their contractual obligations, the trial court concluded.

Respecting the third party claim of FEBTC, the trial court held that FEBTCs payment of the amount
of P1,224,906.67 (P965,000 plus interest) to petitioners was in compliance with the final judgment of the CA, hence, it
could not entertain such claim because the Complaint filed by petitioners merely sought to recover from FEBTC the
alleged overpayment of P4.335 million and attorneys fees of P200,000.

Petitioners motion for reconsideration[26] of the July 10, 2001 decision of the trial court was denied by Order
of September 24, 2001.

Hence, the present petition.

In their Memorandum,[27] petitioners proffer that, aside from the issue of whether their complaint is dismissible on
the ground of res judicata and splitting of cause of action, the issues of 1) whether FEBTC can be held liable for the
balance of the overpayment of P4.335 million plus interest
which petitioners previously claimed against PDCP in Civil Case No. 94-1610, and 2) whether PDCP can interpose as
defense the provision in the Deed of Assignment and the MOA that the assignment of the receivables shall not be affected
by this Courts Decision in G.R. No. 73198, be considered.

Stripped of the verbiage, the only issue for this Courts consideration is the propriety of the dismissal of Civil Case
No. 00-540 upon the grounds stated by the trial court.This should be so because a Rule 45 petition, like the one at bar, can
raise only questions of law (and that justifies petitioners elevation of the case from the trial court directly to this Court)
which must be distinctly set forth.[28]

The petition is bereft of merit.

Section 47 of Rule 39 of the Rules of Court, on the doctrine of res judicata, reads:

Sec. 47. Effect of judgments or final orders. The effect of a judgment or final order rendered by a
court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:

xxxx
 (b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as
to any other matter that could have been raised in relation thereto, conclusive between the parties and
their successors in interest by title subsequent to the commencement of the action or special proceeding,
litigating for the same thing and under the same title and in the same capacity; and

(c) In any other litigation between the same parties or their successors in interest, that only
is deemed to have been adjudged in a former judgment or final order which appears upon its face to have
been so adjudged, or which was actually and necessarily included therein or necessary
thereto. (Underscoring supplied)

The above-quoted provision lays down two main rules. Section 49(b) enunciates the first rule of res
judicata known as bar by prior judgment or estoppel by judgment, which states that the judgment or decree of a court of
competent jurisdiction on the merits concludes the parties and their privies to the litigation and constitutes a bar to a new
action or suit involving the same cause of action either before the same or any other tribunal.[29]

Stated otherwise, bar by former judgment makes the judgment rendered in the first case an absolute bar to the
subsequent action since that judgment is conclusive not only as to the matters offered and received to sustain it but also as
to any other matter which might have been offered for that purpose and which could have been adjudged therein.[30] It is in
this concept that the term res judicata is more commonly and generally used as a ground for a motion to dismiss in civil
cases.[31]

The second rule of res judicata embodied in Section 47(c), Rule 39 is conclusiveness of judgment. This rule
provides that any right, fact, or matter in issue directly adjudicated or necessarily involved in the determination of an
action before a competent court in which a judgment or decree is rendered on the merits is conclusively settled by the
judgment therein and cannot again be litigated between the parties and their privies whether or not the claim or demand,
purpose, or subject matter of the two suits is the same.[32] It refers to a situation where the judgment in the prior

action operates as an estoppel only as to the matters actually determined or which were necessarily included therein.[33]

The case at bar satisfies the four essential requisites of bar by prior judgment, viz:

(a) finality of the former judgment;

(b) the court which rendered it had jurisdiction over the subject matter and the parties;

(c) it must be a judgment on the merits; and

(d) there must be, between the first and second actions, identity of parties, subject matter and
causes of action.[34]

There is no doubt that the judgment on appeal relative to Civil Case No. 94-1610 (that rendered in CA-G.R. CV
No. 50591) was a final judgment. Not only did it dispose of the case on the merits; it also became executory as a
consequence of the denial of FEBTCs motion for reconsideration and appeal.[35]

Neither is there room to doubt that the judgment in Civil Case No. 94-1610 was on the merits for it determined
the rights and liabilities of the parties.[36] To recall, it was ruled that: (1) DATICOR overpaid by P5.3 million; (2) FEBTC
was bound to refund the excess payment but because DATICORs claim against FEBTC was only P965,000, the court
could only grant so much as the relief prayed for; and (3) PDCP has no further claim against DATICOR because its
obligation had already been paid in full.

Right or wrong, that judgment bars another case based upon the same cause of action.[37]
 As to the requisite of identity of parties, subject matter and causes of action, it cannot be gainsaid that the first
case, Civil Case No. 94-1610, was brought by petitioners to recover an alleged overpayment of P5.3
million P965,000 from FEBTC and P4.335 million from PDCP.

On the other hand, Civil Case No. 00-540, filed by the same petitioners, was for the recovery of P4.335 million
which is admittedly part of the P5.3 million earlier sought to be recovered in Civil Case No. 94-1610. This time, the action
was brought solely against FEBTC which in turn impleaded PDCP as a third party defendant.

In determining whether causes of action are identical to warrant the application of the rule of res judicata, the test
is to ascertain whether the same evidence which is necessary to sustain the second action would suffice to authorize a
recovery in the first even in cases in which the forms or nature of the two actions are different.[38] Simply stated, if the
same facts or evidence would sustain both, the two actions are considered the same within the rule that the judgment in
the former is a bar to the subsequent action.

It bears remembering that a cause of action is the delict or the wrongful act or omission committed by the
defendant in violation of the primary rights of the plaintiff.[39]

In the two cases, petitioners imputed to FEBTC the same alleged wrongful act of mistakenly receiving and
refusing to return an amount in excess of what was due it in violation of their right to a refund. The same facts and
evidence presented in the first case, Civil Case No. 94-1610, were the very same facts and evidence that petitioners
presented in Civil Case No. 00-540.

Thus, the same Deed of Assignment between PDCP and FEBTC, the first and second supplements to the Deed,
the MOA between petitioners and FEBTC, and this Courts Decision in G.R. No. 73198 were submitted in Civil Case No.
00-540.

Notably, the same facts were also pleaded by the parties in support of their allegations for, and defenses against,
the recovery of the P4.335 million. Petitioners, of course, plead the CA Decision as basis for their subsequent claim for
the remainder of their overpayment. It is well established, however, that a party cannot, by varying the form of action or
adopting a different method of presenting his case, or by pleading justifiable circumstances as herein petitioners are doing,
escape the operation of the principle that one and the same cause of action shall not be twice litigated. [40]

In fact, authorities tend to widen rather than restrict the doctrine of res judicata on the ground that public as well
as private interest demands the ending of suits by requiring the parties to sue once and for all in the same case all the
special proceedings and remedies to which they are entitled.[41]

This Court finds well-taken then the pronouncement of the court a quo that to allow the re-litigation of an issue
that was finally settled as between petitioners and FEBTC in the prior case is to allow the splitting of a cause of action, a
ground for dismissal under Section 4 of Rule 2 of the Rules of Court reading:

SEC. 4. Splitting of a single cause of action; effect of. If two or more suits are instituted on the
basis of the same cause of action, the filing of one or a judgment upon the merits in any one is
available as a ground for the dismissal of the others. (Emphasis and underscoring supplied)

This rule proscribes a party from dividing a single or indivisible cause of action into several parts or claims and instituting
two or more actions based on it.[42] Because the plaintiff cannot divide the grounds for recovery, he is mandated to set
forth in his first action every ground for relief which he claims to exist and upon which he relies; he cannot be permitted
to rely upon them by piecemeal in successive actions to recover for the same wrong or injury.[43]

Clearly then, the judgment in Civil Case No. 94-1610 operated as a bar to Civil Case No. 00-540, following the
above-quoted Section 4, Rule 2 of the Rules of Court.
A final word. Petitioners are sternly reminded that both the rules on res judicata and splitting of causes of action are based
on the salutary public policy against unnecessary multiplicity of suits interest reipublicae ut sit finis litium.[44] Re-
litigation of matters already settled by a courts final judgment merely burdens the courts and the taxpayers, creates
uneasiness and confusion, and wastes valuable time and energy that could be devoted to worthier cases.[45]

WHEREFORE, the Petition is DENIED. The assailed Decision of the RTC, Branch 143, Makati dismissing
petitioners complaint in Civil Case No. 00-540 is AFFIRMED.

Costs against petitioners.

SO ORDERED.
DOMINIC GRIFFITH, G.R. No. 161777
Petitioner,
Present:

PUNO, C.J., Chairperson,

CARPIO,
AZCUNA,
- versus - VELASCO, JR.,* and
LEONARDO-DE CASTRO, JJ.

ANGELITO ESTUR,
JUAN OFALSA, and Promulgated:
ROLANDO EREVE,
Respondents. May 7, 2008

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

DECISION

CARPIO, J.:

The Case

This is a petition for review[1] of the Decision[2] dated 24 September 2003 and the Resolution dated 16 January 2004 of
the Court of Appeals in CA-G.R. SP No. 73663.

The Facts

On 25 July 1997, respondents Angelito Estur, Juan Ofalsa, and Rolando Ereve (respondents) filed an amended
complaint[3] for illegal dismissal, nonpayment of legal holiday pay, 13th month pay, and service incentive leave pay
against Lincoln Gerald, Inc. (Lincoln) and petitioner Dominic Griffith (petitioner).

Lincoln, a corporation owned by the Griffith family, is engaged in the manufacture of furniture. Respondents alleged that
petitioner, the Vice President for Southeast Asia Operations, managed the corporation.
On 4 October 1999, Labor Arbiter Vicente R. Layawen (Labor Arbiter Layawen) decided the case in favor of
respondents. The dispositive portion of the decision reads as follows:

WHEREFORE, judgment is hereby entered with the following rulings:

1. Dismissing the complaint of complainant Angelito Estur for illegal dismissal for lack of merit.

2. Ordering respondent(s) to pay Angelito Estur his 13th month pay for the (sic) 1996 in the
amount of PHP7,930.00, but dismissing his other claims for insufficiency of evidence.

3. Declaring the dismissal of complainants Juan Ofalsa and Rolando Ereve [illegal], and ordering
respondents to pay them their backwages from the time of their dismissal up to the rendition of this
decision. Due to the apparent strained relationship between complainants and respondents, the latter
are directed to pay complainants their separation pay in lieu of reinstatement equivalent to one month
salary for every year of service.

4. Their money claims are dismissed for lack of merit.

SO ORDERED.[4]
Lincoln filed a notice of appeal on 9 November 1999 but failed to file the required memorandum of appeal. On 6 July
2001, the decision of Labor Arbiter Layawen became final and executory, and the first writ of execution was issued on 2
October 2001.

In February 2002, petitioner received a copy of the first alias writ of execution dated 7 January 2002, issued by Labor
Arbiter Jaime Reyno (Labor Arbiter Reyno) directed against him and Lincoln. The first alias writ of execution orders the
sheriff:

NOW, THEREFORE, you are hereby commanded to proceed to the premises of respondent(s) Lincoln
Gerald, Inc. and/or Dominic G. Griffith located at #7 Sheridan corner Pioneer streets, Mandaluyong City
or anywhere respondents may be found in the Philippines and collect the total amount
of Php 590,828.00 representing their backwages, separation pay and 13th month pay plus execution fee
in the amount of PhP 5,408.00 and to turn over the said amount to this Office, for further disposition to
the the complainants.[5] (Emphasis supplied)

On 19 February 2002, petitioner filed a motion to quash the first alias writ of execution.[6] Petitioner alleged in his
motion that he was unaware of the labor case filed against him because he was Lincolns Vice President for Southeast
Asia Operations only until 17 September 1997. Petitioner contended that the addition of the execution fee in the writ in
effect modified Labor Arbiter Layawens decision, and thus nullified the writ. Furthermore, petitioner maintained that as
an officer of Lincoln, he was not personally liable to pay the judgment debt because he acted in good faith and within
the bounds of his authority. Labor Arbiter Reyno denied the motion in an order dated 24 April 2002. Petitioner filed a
motion for reconsideration, which the National Labor Relations Commission (NLRC) denied on 16 July 2002.
On 11 September 2002, Labor Arbiter Reyno issued a second alias writ of execution against petitioner and Lincoln.

On 4 November 2002, petitioner filed with the Court of Appeals a petition for certiorari with application for temporary
restraining order or preliminary injunction. The Court of Appeals dismissed the petition in its Decision dated 24
September 2003, and subsequently denied petitioners motion for reconsideration.
Hence, this petition for review.
 The Ruling of the Court of Appeals

The Court of Appeals held that the NLRC did not commit grave abuse of discretion in denying petitioners motion for
reconsideration of the Labor Arbiters order. The appellate court cited Section 19, Rule V of the New Rules of Procedure
of the NLRC (NLRC Rules) which prohibits motions for reconsideration of any order or decision of a Labor Arbiter.
However, when a motion for reconsideration is filed, it shall be treated as an appeal provided that it complies with the
requirements for perfecting an appeal. The Court of Appeals held that petitioners motion to recall the first alias writ of
execution cannot be treated as an appeal.
Furthermore, the Court of Appeals ruled that the addition of the execution fee did not modify the decision because the
NLRC Rules and the NLRC Manual on Execution of Judgment (Sheriff Manual)[7] provide for the inclusion of the execution
fee which shall be collected from the losing party.

Lastly, the appellate court found no evidence which would substantiate petitioners claim that as of 17 September 1997,
he was no longer connected with Lincoln. There was no evidence that there was a change in the situation of the parties.

The Issue
The sole issue for resolution is whether the Court of Appeals erred in ruling that the NLRC did not commit grave abuse of
discretion in upholding the order of Labor Arbiter Reyno, denying the motion to quash the writ.
The issue revolves on the validity of the first alias writ of execution dated 7 January 2002, issued by Labor Arbiter Reyno.

The Ruling of the Court

The petition is without merit.

At the outset, it should be stressed that the 4 October 1999 decision of Labor Arbiter Layawen, finding Lincoln and
petitioner solidarily liable to respondents, became final and executory on 6 July 2001. Petitioner, however, persists in
challenging Labor Arbiter Layawens decision by insisting that the judgment debt should have been the sole liability
of Lincoln. Petitioner maintains that the writ is defective because it makes him personally liable for the judgment debt
even though he was only a corporate officer acting in good faith and within the bounds of his authority. The inclusion of
petitioner in the writ as solidarily liable with Lincoln for the backwages, separation pay, and 13th month pay of
respondents does not make the writ defective. On the contrary, the writ is in accord with the terms of Labor
Arbiter Layawens decision which the writ seeks to enforce.

Labor Arbiter Layawens decision is already final and executory and can no longer be the subject of an appeal. Thus,
petitioner is bound by the decision and can no longer impugn the same.[8] Indeed, well-settled is the rule that a decision
that has attained finality can no longer be modified even if the modification is meant to correct erroneous conclusions of
fact or law.[9] The doctrine of finality of judgment is explained in Gallardo-Corro v. Gallardo:[10]

Nothing is more settled in law than that once a judgment attains finality it thereby becomes immutable
and unalterable. It may no longer be modified in any respect, even if the modification is meant to
correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the
modification is attempted to be made by the court rendering it or by the highest court of the land. Just
as the losing party has the right to file an appeal within the prescribed period, the winning party also
has the correlative right to enjoy the finality of the resolution of his case. The doctrine of finality of
judgment is grounded on fundamental considerations of public policy and sound practice, and that, at
the risk of occasional errors, the judgments or orders of courts must become final at some definite time
fixed by law; otherwise, there would be no end to litigations, thus setting to naught the main role of
courts of justice which is to assist in the enforcement of the rule of law and the maintenance of peace
and order by settling justiciable controversies with finality.[11]
While petitioner can no longer challenge the decision which has become final and executory, he can question the
manner of its execution especially if it is not in accord with the tenor and terms of the judgment.[12] As held in Abbott v.
NLRC:[13]
In Sawit v. Rodas and Daquis v. Bustos, we held that a judgment becomes final and executory by
operation of law, not by judicial declaration. Accordingly, finality of judgment becomes a fact upon the
lapse of the reglementary period of appeal if no appeal is perfected. In such a situation, the prevailing
party is entitled as a matter of right to a writ of execution; and issuance thereof is a ministerial duty,
compellable by mandamus.

In the instant case, however, what is sought to be reviewed is not the decision itself but the manner of
its execution. There is a big difference. While it is true that the decision itself has become final
and executory and so can no longer be challenged, there is no question either that it must be enforced in
accordance with its terms and conditions. Any deviation therefrom can be the subject of a proper
appeal.[14]

In his motion to quash the writ, petitioner alleged that the writ was a nullity because it modified the 4 October
1999 decision of Labor Arbiter Layawen by including the amount of the execution fee in the writ.

The inclusion of the execution fee is not a modification of the Labor Arbiters decision. Section 6, Rule IX of the Sheriff
Manual provides that the execution fee shall be charged against the losing party, thus:

SECTION 6. Sheriffs/Execution Fees. Sheriffs and deputy sheriffs shall be provided at the beginning of the
month with a cash advance of five hundred pesos only (P500.00) for transportation expenses which shall
be liquidated at the end of the month with a statement of expenses and itinerary of travel duly
approved by the Commission or Labor Arbiter issuing the writ.

In the National Labor Relations Commission, the sheriff or duly designated officer shall collect the
following execution fees which shall be charged against the losing party:

(1) For awards less than P5,000.00 P200.00;

(2) P5,000.00 or more but less than P20,000.00 P400.00;
(3) P20,000.00 or more but less than P50,000.00 P600.00;
(4) P50,000.00 or more but less than P100,000.00 P800.00;
(5) P100,000.00 or more but not exceeding P150,000.00 P1,000.00;
(6) P150,000.00 the fee is plus P10.00 for every P1,000.00 in excess of P150,000.00.

The sheriff or duly designated officer shall be administratively liable in case of failure to collect the
execution fees without any justifiable reason. (Emphasis supplied)

Clearly, the inclusion of the execution fee does not make the writ of execution defective.

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 24 September 2003 and the Resolution dated 16
January 2004 of the Court of Appeals in CA-G.R. SP No. 73663.

SO ORDERED.
 [G.R. No. 125447. August 14, 1998]

MARINA PROPERTIES CORPORATION, petitioner, vs. COURT OF APPEALS and

H.L. CARLOS CONSTRUCTION, INC., respondents.

[G.R. No. 125475. August 14, 1998]

H.L. CARLOS CONSTRUCTION, INC., petitioner, vs. COURT OF APPEALS and

MARINA PROPERTIES CORPORATION, respondents.

DECISION
DAVIDE, JR., J.:

We resolve here two (2) separate appeals from the decision [1] of the Court of Appeals of 27 June
1996 in CA-G.R. SP No. 37927, which affirmed with modification the 15 March 1995 Order[2] of the
Office of the President in O.P. Case No. 5462 which, in turn, affirmed in toto the 14 June 1993
decision[3] of the Housing and Land Use Regulatory Board (HLURB) in the case filed by H.L. Carlos
Construction, Inc. (hereafter H.L. CARLOS) against MARINA Properties Corporation (hereafter
MARINA) for Specific Performance with Damages and docketed as REM-A-1179.[4]
The factual antecedents, as summarized by the Court of Appeals, are as follows:

Petitioner Marina Properties Corporation (MARINA for short) is a domestic corporation

engaged in the business of real estate development. Among its projects is a condominium
complex project, known as the MARINA BAYHOMES CONDOMINIUM PROJECT
consisting of 10 building clusters with 31 housing units to be built on a parcel of land at
Asiaworld City, Coastal Road in Paranaque, Metro Manila. The area is covered by T.C.T.
No. (121211) 42201 of the Registry of Deeds of the same municipality.

The construction of the project commenced sometime in 1988, with respondent H.L.
Carlos Construction, Inc. (H.L. CARLOS for brevity) as the principal contractor, particularly
of Phase III.

As an incentive to complete the construction of Phase III, MARINA allowed H.L. CARLOS
to purchase a condominium unit therein known as Unit B-121. Thus, on October 9, 1988,
the parties entered into a Contract to Purchase and to Sell covering Unit B-121
for P3,614,000.00. H.L. CARLOS paid P1,034,200.00 as downpayment, P50,000.00 as
cash deposit and P67,024.22 equivalent to 13 monthly amortizations.

After paying P1,810,330.70, which was more than half of the contract price, H.L. CARLOS
demanded for the delivery of the unit, but MARINA refused. This prompted H.L. CARLOS
to file with the Regional Trial Court of Makati, Branch 61 a complaint for damages against
MARINA, docketed as Civil Case No. 89-5870.

Meanwhile, on April 20, 1990, MARINA wrote H.L. CARLOS that it was exercising its
option under their Contract to Purchase and to Sell to take over the completion of the
project due to its (H.L. CARLOS) abandonment of the construction of the Phase III project.

In a letter dated March 15, 1991, H.L. CARLOS inquired from MARINA about the turn-over
status of the condominium unit. MARINA replied that it was cancelling the Contract to
Purchase and Sell due to H.L. CARLOS abandonment of the construction of the Phase III
Project and its filing of baseless and harassment suits against MARINA and its officers.
Forthwith, H.L. CARLOS filed the instant complaint for specific performance with damages
against MARINA with the Housing and Land Use Regulatory Board (HLURB), alleging
among others, that it has substantially complied with the terms and conditions of the
Contract to Purchase and Sell, having paid more than 50% of the contract price of the
condominium unit; and that MARINAs act of cancelling the contract was done with malice
and bad faith. H.L. CARLOS prays that MARINA be ordered to deliver to it the subject
unit, accept the monthly amortizations on the remaining balance, execute the final deed of
sale and deliver the title of the unit upon full payment of the contract price. Also, H.L.
CARLOS prays for the award of actual and exemplary damages as well as attorneys fees.

In its answer, MARINA claimed that its cancellation of the Contract to Purchase and Sell is
justified since H.L. CARLOS has failed to pay its monthly installment since October 1989
or for a period of almost two (2) years; that H.L. CARLOS abandoned its work on the
project as of December 1989; and that the instant case should have been suspended in
view of the pendency of Civil Case No. 89-5870 for damages in the Makati RTC involving
the same issues.

On February 21, 1992, the HLURB, through Atty. Abraham N. Vermudez, Arbiter,
rendered a decision, the dispositive portion of which reads:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered declaring the

cancellation of the subject Contract to Sell as null and void and ordering respondent
Marina Properties Corporation as follows:

1. To turn over the subject condominium unit to herein complainant, accept monthly
amortization[s] on the remaining balance and to execute the final deed of sale and deliver
title/ownership of the subject property to the complainant upon full payment of the contract
price.

2. To pay complainant actual damages of P30,000.00 per month commencing from March
1990 until the delivery of the subject property and the amount of P50,000.00 as exemplary
damages.

3. To pay complainant the amount of P50,000.00 as and by way of attorneys fees.

4. To pay to this Board the amount of P5,000.00 as [an] administrative fine.

IT IS SO ORDERED.

In ruling for H.L. CARLOS, the HLURB Arbiter held:

x x x.

Respondents position that the case is a complex one is more imaginary than real. Clearly,
the cancellation of the subject Contract to Purchase and to Sell was in violation of
Republic Act No. 6552, otherwise known as the Realty Installment Buyers Protection Act,
which prescribes the procedure for cancellation of installment contracts for the purchase
of subdivision lots and/or condominium units.

In the case at bar, the complainant had already paid P1,810,330.70 or more than 50% of
the contract price of P3,614,000.00 and more than the total of two years (24 months)
installments computed at the monthly installment of P67,024.22, inclusive of the
downpayment, which is more than 24 installments. Under R.A. 6552, notarial cancellation
of the installment contract becomes effective only upon payment of the cash surrender
value to the purchaser, which however respondent did not do.
Respondents cancellation of the subject contract was clearly illegal, void and cannot be
sanctioned.

Neither can this Office find merit in respondents contention that this case should be
suspended because of the pending civil case between the parties, said pending case, Civil
Case No. 89-5870 in the Regional Trial Court, Branch 61, Makati, Metro Manila, was filed
by the same complainant herein against the same respondent for collection of unpaid
billings in the amount of about P10,000,000.00.

On the other hand, this Office finds that respondents act in cancelling the subject
installment sales contract without following the provisions of R.A. 6552 is an unsound real
estate business practice for which respondent is fined the sum of P5,000.00.

As to damages and attorneys fees claimed by complainant and borne out by the records,
this Office finds that respondent should be held liable for unearned rental income
of P30,000.00 per month, commencing from March 1990 when the condominium unit
should have been delivered until actual delivery thereof, and attorneys fees of P50,000.00,
both amounts to be deducted from the unpaid balance due on the subject condominium
unit.

Likewise, for its wanton breach of the subject contract, respondent is ordered to pay
exemplary damages in the amount of P50,000.00 as an example for the public good,
deductible from the balance due on the subject condominium unit.

x x x.

Whereupon, MARINA interposed an appeal to the Board of Commissioners of HLURB (First Division)
which affirmed the assailed decision.

On further appeal to the Office of the President, the decision of the Board of
Commissioners (First Division) was affirmed.

MARINA filed a motion for reconsideration but was denied.[5]

MARINA filed a petition for review with the Court of Appeals ascribing the following errors to the
Office of the President:
(1) In sustaining the award of actual damages for unrealized profits in favor of private respondent H.L.
CARLOS which were unliquidated, speculative and patently unreasonable;
(2) In declaring the motion for reconsideration filed by MARINA pro-forma and depriving it of the right
of appeal; and
(3) In not dismissing the case on the grounds of litis pendentia, forum-shopping and splitting
a single cause of action.[6]
The Court of Appeals sustained MARINA as regards the award of actual damages, finding that no
evidence was presented to prove the P30,000.00 award as monthly rental for the condominium
unit. However, as to the pronouncement of the Office of the President that MARINAs motion for
reconsideration was merely pro-forma, the Court of Appeals noted that MARINA did not raise any
new issue in its motion for reconsideration. In the same vein, respondent court ruled that MARINA
was not deprived of its right to appeal.
The Court of Appeals likewise brushed aside MARINAs assertion that the complaint should have
been dismissed on the ground of litis pendentia thus:

The requisites of lis pendens as a ground for dismissal of a complaint are: (1) identity of parties or at
least such representing the same interest in both actions; (2) identity of rights asserted as prayed for,
the reliefs being founded on the same facts; and (3) identity in both cases is such that the judgment
that may be rendered in the pending case, regardless of which party is successful, would amount
to res judicata to the other case.
There is no dispute that the case at bench and Civil Case No. 89-5870 for damages at the
Makati RTC involves the same parties although in the civil case, the officers of MARINA
have been impleaded as co-defendants. While the first requisite obtains in this case, the
last two are conspicuously absent.

It will be observed that the two cases involve distinct and separate causes of action or
rights asserted. Civil Case No. 89-5870 is for the collection of sums of money
corresponding to unpaid billings and labor costs incurred by H.L. CARLOS in the
construction of the project under the Construction Contract agreed upon by the
parties. Upon the other hand, the case at bench is for specific performance (delivery of the
condominium unit) and damages arising from the unilateral cancellation of the Contract to
Purchase and to Sell by MARINA.

Moreover, the reliefs sought are also different. In the civil case, H.L. CARLOS prays for
the award of P7,065,885.03 representing unpaid labor costs, change orders and price
escalations including the sum of P2,000,000.00 as additional compensatory damages. In
the instant case, H.L. CARLOS seeks not only the awa[r]d of actual and exemplary
damages but also the delivery of the condominium unit upon MARINAs acceptance of the
monthly amortization on the remaining balance, the execution of a final deed of sale and
the delivery of the title to the said private respondent.

MARINAs claim that the present complaint should be dismissed on the ground of splitting a cause of
action, deserves scant consideration. The two complaints did not arise from a single cause of action
but from two separate causes of action. It bears emphasis that H.L. CARLOS cause of action in the
civil case stemmed from the breach by MARINA of its contractual obligation under the Construction
Contract, while in the case at bench, H.L. CARLOS cause of action is premised on the unilateral
cancellation of the Contract to Purchase and Sell by MARINA.[7]

Accordingly, the Court of Appeals affirmed the Order of the Office of the President but deleted the
award of actual damages. As such, the parties sought redress from this Court by way of separate
petitions.
In G.R. No. 125447, MARINA asserts that the Court of Appeals erred: (1) in finding that petitioner
should turn over the subject condominium unit to H.L. CARLOS and accept monthly amortizations on
the remaining balance; and (2) in not ordering the dismissal of the case on the grounds of litis
pendentia, forum-shopping and splitting of a single cause of action.
On the other hand, in G.R. No. 125475, H.L. CARLOS contends that the Court of Appeals gravely
erred in: (1) finding that the award of actual damages equivalent to P30,000.00 in unearned monthly
rentals was not sustained by evidence; (2) in not declaring that the petition for review was filed out of
time and fatally defective for lack of verification and certification by MARINA Properties, and in not
declaring the decision of the Office of the President final and executory; and 3) in not dismissing
MARINAs appeal as without merit.
MARINAs motion to consolidate both cases was granted in a resolution dated 27 January 1997. [8]
We first address the lone procedural issue of the timeliness of the petition for review filed by
MARINA with the Court of Appeals and the supposed lack of verification and certification.
We find without merit the allegation that MARINAs petition for review before the Court of Appeals
was filed out of time as MARINAs motion for reconsideration (of the order of the Office of the
President) was found to be pro forma and, therefore, did not stop the running of its period to appeal.
MARINA filed its Motion for Reconsideration[9] on the last day of its period to appeal, specifically,
on 3 May 1995. However, the motion was found by the Office of the President to be pro forma as the
issues of litis pendentia, forum-shopping and splitting of a cause of action as well as the issue of
unliquidated, speculative and unreasonable damages raised therein were basically the same issues
raised and discussed extensively in the Appeal Memorandum and which were already weighed,
discussed and considered by this Office in its Order dated March 15, 1995. [10] As a consequence, the
Office of the President declared its decision final and executory.
Under our rules of procedure, a party adversely affected by a decision of a trial court may move
for reconsideration thereof on the following grounds: (a) the damages awarded are excessive; (b) the
evidence is insufficient to justify the decision; or (c) the decision is contrary to law.[11] A motion for
reconsideration interrupts the running of the period to appeal, unless the motion is pro forma.[12] This
is now expressly set forth in the last paragraph of Section 2, Rule 37, 1997 Rules of Civil Procedure.
A motion for reconsideration based on the foregoing grounds is deemed pro forma if the same
does not specify the findings or conclusions in the judgment which are not supported by the evidence
or contrary to law, making express reference to the pertinent evidence or legal provisions. [13] It is
settled that although a motion for reconsideration may merely reiterate issues already passed upon
by the court, that by itself does not make it pro forma and is immaterial because what is essential is
ompliance with the requisites of the Rules.[14] Thus, in Guerra Enterprises, Co. Inc. v. CFI of Lanao del
Sur,[15] we ruled:

Among the ends to which a motion for reconsideration is addressed, one is precisely
to convince the court that its ruling is erroneous and improper, contrary to the law or
the evidence; and in doing so, the movant has to dwell of necessity upon the issues
passed upon by the court. If a motion for reconsideration may not discuss these
issues, the consequence would be that after a decision is rendered, the losing party
would be confined to filing only motions for reopening and new trial. We find in the
Rules of Court no warrant for ruling to that effect, a ruling that would, in effect
eliminate subsection (c) of Section 1 of Rule 37.

On this note, it has also been fittingly observed that:

Where the circumstances of a case do not show an intent on the part of the pleader to merely delay
the proceedings, and his motion reveals a bona fide effort to present additional matters or to reiterate
his arguments in a different light, the courts should be slow to declare the same outright as pro
forma. The doctrine relating to pro forma motions has a direct bearing upon the movants valuable
right to appeal. It would be in the interest of justice to accord the appellate court the opportunity to
review the decision of the trial court on the merits than to abort the appeal by declaring the motion pro
forma, such that the period to appeal was not interrupted and had consequently lapsed.[16]

We are thus unable to hold that MARINAs motion for reconsideration was merely pro forma. Our
review of the records reveals that said motion adequately pointed out the conclusions MARINA
regarded as erroneous and contrary to law, and even referred to findings not supported by evidence
as well as jurisprudence to sustain MARINAs claims. As to the justification proffered by the Office of
the President that it had already passed upon the issues raised by MARINA in its motion, plainly, the
authorities cited above readily refute such a position.
It may be pointed out that under Supreme Court Circular No. 1-91 dated 27 February 1991 and
Revised Administrative Circular No. 1-95 dated 16 May 1995, which took effect on 1 June 1995, an
aggrieved party is allowed one motion for reconsideration of the assailed decision or final order
before he may file a petition for review with the Court of Appeals. All told, MARINAs motion for
reconsideration was but proper under the adjective rules extant in this jurisdiction.
The charge of a lack of verification or certification in MARINAs petition before the Court of
Appeals is baseless. Even the most cursory of reviews will disclose that such may be found on pages
30 and 31 of the Petition.[17]
We agree with the conclusion of the Court of Appeals that the award of P30,000.00 as actual
damages for unearned monthly rental income starting from March 1990 until the delivery of the
property to H.L. CARLOS was arbitrary. Article 2199 of the Civil Code provides that one is entitled to
adequate compensation only for such pecuniary loss suffered by him as is duly proved.[18] Actual
damages, to be recoverable, must not only be capable of proof, but must actually be proved with a
reasonable degree of certainty.[19] Courts cannot simply rely on speculation, conjecture or guesswork
in determining the fact and amount of damages.[20] As the Court of Appeals correctly found here that
no proof was submitted by H.L. CARLOS to substantiate the recovery of actual damages in the form
of monthly rentals, the deletion of such award was but appropriate.
The issue of forum shopping raised by MARINA deserves scant consideration. H.L. CARLOS was
not guilty of forum shopping when it sued MARINA before the HLURB to enforce their Contract To
Purchase and To Sell. Forum shopping is the act of a party against whom an adverse judgment has
been rendered in one forum, of seeking another (and possibly favorable) opinion in another forum
other than by appeal or the special civil action of certiorari, or the institution of two (2) or more actions
or proceedings grounded on the same cause on the supposition that one or the other court might look
with favor upon the party.[21] Contrary to MARINAs assertion, H.L. CARLOS complaint was hardly a
duplication of Civil Case No. 89-5870 which was filed to collect the sum of money corresponding to
unpaid billings from their Construction Contract. The cause of action in the civil case was, therefore,
totally distinct from the cause of action in the complaint before the HLURB. For this reason, neither
could there have been splitting of a cause of action.
Anent the absence of litis pendentia, the Court of Appeals meticulous analysis of this issue leaves
no room for improvement and we adopt it as our own.
We likewise uphold the finding that MARINAs cancellation of the Contract To Buy and To
Sell was clearly illegal. Prior to MARINAs unilateral act of rescission, H.L. CARLOS had already
paid P1,810,330.70, or more than 50% of the contract price of P3,614,000.00. Moreover, the sum
H.L. CARLOS had disbursed amounted to more than the total of 24 installments, i.e., two years worth
of installments computed at a monthly installment rate of P67,024.22, inclusive of the downpayment.
As to the governing law, Section 24 of P.D. 957[22] provides:

SEC.24. Failure to pay installments. -- The rights of the buyer in the event of his failure to
pay the installments due for reasons other than failure of the owner or developer to
develop the project shall be governed by Republic Act No. 6552.

Then among the requirements of R.A. No. 6552,[23] in order to effect the cancellation of a contract, a
notarial cancellation must first be had.[24] Therefore, absent this, MARINAs cancellation of its contract
with H.L. CARLOS was void.
In conclusion, cases involving specific performance of contractual and statutory obligations, filed
by buyers of subdivision lots or condominium units against the owner, developer, dealer, broker or
salesman fall under the jurisdiction of the HLURB.[25] It is incumbent upon said administrative agency,
in the exercise of its powers and functions, to interpret and apply contracts, determine the rights of
the parties under these contracts, and award damages whenever appropriate. [26]
WHEREFORE, the petitions in these consolidated cases, G.R. No. 125447 and G.R. No. 125475
are DENIED and the assailed decision of respondent Court of Appeals of 27 June 1996 is hereby
AFFIRMED.
Costs against petitioner in each case.
SO ORDERED.
Bellosillo, Vitug and Panganiban, JJ., concur.