[G.R. No. 133775.

January 20, 2000]

FIDEL DABUCO, FELICIANO EBINA, MELICIO BOLO, AURELIO CABAJAR, EUSTIQUIO
CABATUAN, RAFAEL OCAREZA, SAMUEL RECO, ALEJANDRO IBONALO
TEMPLATURA, NEMESIO OBESO, ALEJANDRA CABILES, JULIAN RESPONDE,
CATALINO BORDAS, FELICISIMA BALILI, FELIX PAGATPAT, NOLI BALILI, BONIFACIO
BORDAS, VICENTE GONZAGA, EUGENIO HABONITA, ARSENIO BALDADO,
DOMINADOR BORDAS, JUANA CABILES, DINDO PAGATPAT, LUZVIMINDA LACERNA,
ANTONIA TEE LADRAZO AND VICENTE CABILES, petitioners, vs. COURT OF APPEALS
AND GABI MULTI PURPOSE COOPERATIVE, REPRESENTED BY MARIA QUISUMBING
ALVAREZ AND COL. SOLOMON DALID, RET., respondents.
DECISION
KAPUNAN, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45, with a prayer for issuance of a
Restraining Order or Writ of Preliminary Injunction. The Petition assails the Decision[1], dated October 6, 1997 and
the Order, dated April 30, 1998, both of the Court of Appeals. The issue raised in the petition before the Court of Appeals was whether the dismissal of Civil Case No.

CEB-16217 by the Regional Trial Court of Cebu City, Branch 15, was proper.

The case in the trial court, Civil Case No. CEB-16217, was an action for quieting of title, accion
publiciana and damages involving agricultural lands located in Gabi, Sudlon, Cebu City. Private
respondent GABI Multi Purpose Cooperative (GABI, for brevity) was the plaintiff in the case below,
while petitioners were the defendants.
As an incident to the instant petition, petitioners filed an Urgent Motion, dated June 10, 1998, for the
issuance of a Restraining Order or Writ of Preliminary Injunction, wherein they alleged that GABI had
commenced to enter the disputed lands. On July 17, 1998, an Opposition by GABI to petitioners' Urgent
Motion was received by the Court. Petitioners filed a Reply to the Opposition on July 28, 1998, and a
Rejoinder, dated August 28, 1998 was filed by GABI.
GABI filed a 2-page Comment,[2] wherein GABI dismissed petitioners' contentions as a mere rehash of its arguments in the appellate court. The
Solicitor General also filed a Comment[3] in behalf of the respondent Court of Appeals. On February 18, 1999, the Court received petitioners' Reply to the Comment

of the Solicitor General.


The antecedent facts are summarized in the assailed Decision of the Court of Appeals. We quote the
pertinent portions below:
The Lazarrabal [sic] family were the registered owners of the properties, subject matter of
this case.
In 1991, on different occasions, the subject properties were sold to Ruben Baculi, Editha
Belocura, Lira Puno, Rafael Lapuz, Ladrioro Montealto, Joel Masecampo, Delsa N.
Manay, Ilderim Castaares, Maria Theresa Puno, [and] Jill Mendoza. On June 27, 1994,
plaintiff [herein private respondent GABI Multi-Purpose Cooperative], a registered non-
stock, non-profit cooperative filed a civil complaint against defendants [herein
petitioners] who were found residing and/or tilling the subject properties. Plaintiff alleged
therein that it is the owner in fee simple of the subject properties; that defendants without
any authority, resided, tilled, sow [sic] in the subject properties; that defendants refused
to vacate inspite [sic] notice.
 Plaintiff prays for the issuance of preliminary mandatory injunction to require defendants
to remove the barricade constructed by them and for the issuance of a writ of injunction
to restrain defendants from preventing plaintiff in developing the subject properties.
On July 20, 1997, the trial court issued a Temporary Restraining Order, enjoining
defendants to desist from further stopping plaintiff's development of the properties. The
trial court further required defendants to show cause why no writ of preliminary or
mandatory injunction be issued against them.
On July 27, 1997, after hearing, the trial court lifted and dissolved the temporary
restraining order it earlier issued upon failure of the plaintiff to prove its title over the
subject properties.
On July 29, 1994, defendants filed their answer alleging that plaintiff has no personality
to file this case since plaintiff does not appear to be the buyer of the properties neither
were the properties titled in its name; that the subject properties are part of the forest
reserve which cannot be privately acquired.
On August 3, 1994, defendants filed a Motion to Dismiss the complaint on the ground of
lack of cause of action, plaintiff has no personality to sue; and lack of jurisdiction.
Plaintiff moved for the striking out of defendants' motion to dismiss, alleging that at this
stage defendants could no longer file the said motion.
On August 18, 1994, the assailed order dismissing the complaint on the ground that
plaintiff has no real interest in the case, was rendered.
Plaintiff filed a motion for reconsideration of the said order, but the trial court denied
the same. The dispositive portion of the order dated January 9, 1995, of the trial court
denying plaintiff's motion for reconsideration reads:
WHEREFORE, finding the Motion for Reconsideration to be without merit, the same is
hereby denied. Notify counsel accordingly.
IT IS SO ORDERED.[4]
GABI appealed to the Court of Appeals. Thereafter, the respondent court issued its assailed decision, the
dispositive portion of which reads:
WHEREFORE, foregoing considered, the appealed order is hereby REVERSED and
SET-ASIDE. A new one is hereby issued ordering the trial court to reinstate the
complaint and to proceed with deliberate speed with the trial of the case.[5]
Petitioners' Motion for Reconsideration was denied by the appellate court in its assailed Order, dated
April 30, 1998. They then filed the instant petition praying that the dismissal of Civil Case No. CEB-
16217 by the trial court be affirmed, and the decision by the appellate court reversing such dismissal be
set aside.
The success of this petition rests on the validity of the dismissal by the trial court. Petitioners assert that
there was sufficient reason to dismiss the action below on the ground that GABI had no cause of action
against petitioners. They also aver in the alternative that the Complaint by GABI was properly dismissed
on the ground that it failed to state a cause of action.
As a preliminary matter, we wish to stress the distinction between the two grounds for dismissal of an
action: failure to state a cause of action, on the one hand, and lack of cause of action, on the other hand.
The former refers to the insufficiency of allegation in the pleading, the latter to the insufficiency of factual
basis for the action. Failure to state a cause may be raised in a Motion to Dismiss under Rule 16,[6] while lack
of cause may be raised any time.[7] Dismissal for failure to state a cause can be made at the earliest stages of an action. Dismissal for lack of cause is usually made
after questions of fact have been resolved on the basis of stipulations, admissions or evidence presented.[8]

We find no merit in petitioners' first contention that dismissal was proper on the ground of lack of cause
of action. We note that the issue of sufficiency of GABI's cause of action does not appear to have been
passed upon by the appellate court in its assailed decision. However, inasmuch as this issue was raised in
the trial court as an affirmative defense by petitioners and is now assigned in error, we resolve the
same.
The pertinent portions of the trial court Order dismissing the action are reproduced below:
The court was confronted with plaintiffs Motion to Strike Out defendants' pleading
entitled: Motion to Dismiss, after the court allowed the same to be filed on the ground
alleged in the affirmative defenses, that the plaintiff has no real interest in the property in
question. Inasmuch as the action in this case was instituted by the Gabi Multi-Purpose
Cooperative which is not the titled owner, nor the holder of the title to the property in
question, therefore, it has no legal capacity to sue in this case for lack of interest, not
being the real party in interest of the property involved in this litigation. Plaintiffs motion
to strike out defendants' motion to dismiss is therefore denied for lack of merit, on the
ground that the court has already resolved in the July 27, 1994 Order that if until today
the plaintiff cannot produce and to show to this court the title in the name of Gabi Multi-
Purpose Cooperative, the court will proceed to dismiss this case.
xxx
WHEREFORE, in view of all the foregoing arguments and considerations, this court
hereby resolves to dismiss this case as it is hereby disrnissed.[9]
It appears that the trial court dismissed the case on the ground that GABI was not the owner of the lands
or one entitled to the possession thereof, and thus had no cause of action. In dismissal for lack of cause of
action, the court in effect declared that plaintiff is not entitled to a favorable judgment inasmuch as one or
more elements of his cause of action do not exist in fact.
Because questions of fact are involved, courts hesitate to declare a plaintiff as lacking in cause of action.
Such declaration is postponed until the insufficiency of cause is apparent from a preponderance of
evidence. Usually, this is done only after the parties have been given the opportunity to present all
relevant evidence on such questions of fact.
We do not here rule on whether GABI has a cause of action against petitioners. What we are saying is that
the trial court's ruling, to the effect that GABI had no title to the lands and thus had no cause of action,
was premature. Indeed, hearings were conducted. And the view of the Court of Appeals was that such
hearings were sufficient. In its assailed decision, the appellate court stated the following:
Records show that plaintiff-appellant was afforded the preliminary hearing required by
law before the dismissal of the complaint based on the ground raised in the affirmative
defenses.
 xxx
Procedurally, therefore, the complaint was properly dismissed.[10]
The Court disagrees with the appellate court's ruling. The hearing of July 27, 1994 was on the propriety of
lifting the restraining order. At such preliminary hearing, the trial court required GABI to produce
Certificates of Title to the lands in its name. GABI admitted that it did not have such Certificates, only
Deeds of Sale from the registered owners. The order of the trial court dated July 27, 1994, reads in
part:
To begin with, the discussions started with the court asking whether the parties are
present, and asked the defendants whether they have evidence to show why the temporary
restraining order should not be continued, and not ripen into a preliminary injunction and
they answered that the plaintiff, Gabi Multi Purpose Cooperative has "no locus standi"
with Col.Solomon Dalid, to appear and litigate in this case, not being the actual registered
owner of the property in question and therefore not the real party in interest.
In view thereof, the court asked the plaintiffs counsel to show to the court titles to prove
that they are really the owners of the properties in question. And they could [not] show
any, inasmuch as from the records before this court, only Deeds of Sale from the original
owners of the properties in favor of individual persons appear.
WHEREFORE, as this hearing was called for the purpose of determining whether the
temporary restraining order should ripen into a permanent injunction or in the alternative
be lifted this afternoon, for failure of the plaintiffs to show titles to the properties in their
names, and they have miserably failed the court hereby resolves to lift and dissolve the
temporary restraining order it has issued. However, the defendants are hereby allowed,
upon their own request, to file a motion to dismiss questioning the legal personality of
Gabi Multi Purpose Cooperative within 15 days from today.[11]
Instead, GABI offered to present evidence to prove its title in the ordinary course of trial. The pertinent
portions of the Transcript of Stenographic Notes quoted by petitioners in their Manifestation and Motion,
dated September 29, 1998, are reproduced below:
COURT:
What we are saying, because it has been raised by counsel for the defendants[,] is: what
personality has Gabi to sue in this case[.] They are saying that you have no locus
standing[sic] in court. You need the proper party in interest. You are not the owners
according to the titles. And you are suing, claiming that you are the owners and you have
been in possession and that you have been molested by the defendants because you are
the owner. But where does it show these? Of course, you alleged that. But where is the
proof? We want the proof that you are really the owner. (TSN, 27 July 1994, at 9)
We are asking a question of how does Gabi become the owner of this property such that
Gabi is now trying to claim this property against the defendants. Such as [to] exclude the
defendants from cultivating or tilting [sic] this property. There is no question about it. We
are not questioning your existence as a corporation[,] as a corporate entity. We are asking
the question, where lies the right of the ownership of Gabi? How can you prove that you
own the property, adverse or against these defendants? And you did not show it to this
court. I am afraid you have no cause of action. (TSN, id., at 9-10).
 ATTY. P. FLORES:
...in due time, we are going to present the document.
COURT:
But you have to present that now. Otherwise, I lift the injunction. I lift the temporary
restraining order. And I have said and do [sic] it.
ATTY. P. FLORES:
Your Honor, please, the incident this afternoon is for the defendants to show cause why
the injunction cannot be issued.
COURT:
When the court made a mistake in giving you this petition, the court cannot order another
procedure. If the court commit[s] an error, it is the inherent power of this court to see to it
that no injustice is committed. I am not bound by my own error. Only the dead and fools
don't change their minds. (TSN, id., at 10)
ATTY. FLORES
First of all, your Honor, it is not [sic] an error to say that the Gabi Cooperative is not the
owner because as a matter of fact, it is the owner. It is just bad enough that [they] were
not able to bring with them the documents.[12]
On August 18, 1994, another hearing was conducted wherein GABI was again required to show
Certificates of Title to the property in its name. On the basis of GABI's failure to show such Certificates
at this second preliminary hearing, the trial court concluded that GABI had no title and thereafter
dismissed the case.[13] Such action by the trial court was premature inasmuch as the issues of fact pertaining to GABI's title had not yet been adequately
ventilated at that preliminary stage.

Anent petitioners' thesis that dismissal of the complaint by the trial court was proper for failure to state a
cause of action, we, likewise, find no valid basis to sustain the same.
Dismissal of a Complaint for failure to state a cause of action is provided for by the Rules of Court.[14]
In dismissal for failure to state a cause, the inquiry is into the sufficiency, not the veracity, of the material
allegations.[15] The test is whether the material allegations, assuming these to be true, state ultimate facts which constitute plaintiff's cause of action, such that
plaintiff is entitled to a favorable judgment as a matter of law.[16] The general rule is that inquiry is confined to the four corners of the complaint, and no other.[17] E-
xsm

This general rule was applied by the Court of Appeals. Said court stated:
It is a well-settled rule that in determining the sufficiency of the cause of action, ONLY
the facts alleged in the complaint and no others, should be considered. In determining the
existence of a cause of action, only the statements in the complaint may properly be
considered. If the complaint furnish sufficient basis by which the complaint may be
maintained, the same should not be dismissed regardless of the defenses that may be
assessed [sic] by defendants-appellees.[18]
The appellate court, relying on the general rule, made the following conclusion:
 A reading of the above-quoted complaint would readily show that plaintiff-appellant has
sufficient cause of action as against defendants-appellees.
In the complaint, it is alleged that plaintiff-appellant is the owner of the subject
properties, thus, entitled to be respected in its possession and ownership. This is the first
element.
Defendants-appellees are mere squatters of the subject properties who should vacate the
premises upon demand by plaintiff-appellant. This is the second element.
Defendants-appellees unjustly refused to vacate the subject premises, thus, depriving
plaintiff-appellant possession of the same. This is the third element.
In this case therefore, plaintiff-appellant has sufficient cause of action.[19]
There are well-recognized exceptions to the rule that the allegations are hypothetically admitted as true
and inquiry is confined to the face of the complaint. There is no hypothetical admission of the veracity of
allegations if their falsity is subject to judicial notice,[20] or if such allegations are legally impossible, or if these refer to facts which are
inadmissible in evidence, or if by the record or document included in the pleading these allegations appear unfounded.[21] Also, inquiry is not confined to the
complaint if there is evidence which has been presented to the court by stipulation of the parties,[22] or in the course of hearings related to the case.[23] Calr-ky

Petitioners invoke these exceptions to justify the dismissal by the RTC. They particularly rely on the
ruling of this Court in Tan vs. Director of Forestry.[24] As in this case, Tan involved the issue of whether
the dismissal for failure to state a cause of action was proper. A hearing was conducted on Tan's prayer
for preliminary injunction, wherein evidence was submitted by the parties and extensive discussion held.
The trial court then resolved the Motion to Dismiss and dismissed Tan's petition for failure to state a
cause of action. The trial court held that, on the basis of the evidence presented in the hearings, the timber
license relied upon by Tan was null and void. Such license being void, Tan's allegation that his right had
been violated was false. On appeal, this Court ruled that the trial court was correct in considering the
evidence already presented and in not confining itself to the allegations in Tan's petition.
The theory behind Tan is that the trial court must not rigidly apply the device of hypothetical admission
of allegations when, on the basis of evidence already presented, such allegations are found to be false.
Thus, findings of fact are not postponed until after trial, but are made at the preliminary stage because
there is sufficient evidence available.
We find, however, that Tan is not applicable in this case. Unlike in Tan where the parties were given
ample opportunity in the preliminary hearing to present evidence on their contentions, GABI did not have
sufficient chance to prove its allegation of ownership. Thus, the conclusion that GABI's allegation of
ownership is false and that its complaint stated no cause of action, appears to be without basis.
Petitioners also invoke Drilon vs. Court of Appeals.[25] Yet, a close reading of Drilon reveals that petitioners'
contention is weakened rather than strengthened by said case. Drilon also involved the issue of whether
the dismissal for failure to state a cause of action was proper. However, the Court applied the general rule
that inquiry is confined to the face of the complaint and no other.[26]
In sum, as appears from the available records, the Court of Appeals was correct in ruling that the
dismissal by the trial court of GABI's complaint was incorrect. The case should, therefore, proceed to trial
where the parties may adduce evidence to support their claims and defenses.
IN VIEW OF THE FOREGOING, the Court resolved to DENY the Petition.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur.
 [G.R. Nos. 121662-64. July 6, 1999]
VLASON ENTERPRISES CORPORATION, petitioner, vs. COURT OF APPEALS and
DURAPROOF SERVICES, represented by its General Manager, Cesar Urbino Sr.,
respondents.
DECISION
PANGANIBAN, J.:
Summons to a domestic or resident corporation should be served on officers, agents or employees,
who are responsible enough to warrant the presumption that they will transmit to the corporation notice of
the filing of the action against it. Rules on the service of motions should be liberally construed in order to
promote the ends of substantial justice. A rigid application that will result in the manifest injustice should
be avoided. A default judgment against several defendants cannot affect the rights of one who was never
declared in default. In any event, such judgment cannot include an award not prayed for in the complaint,
even if proven ex parte.
The Case

These principles were used by this Court in resolving this Petition for Review on Certiorari before us,
assailing the July 19, 1993 Decision[1] and the August 15, 1995 Resolution,[2] both promulgated by the Court of Appeals. The assailed Decision
disposed as follows:[3]

ACCORDINGLY, in view of the foregoing disquisitions, all the three (3) consolidated petitions for
certiorari are hereby GRANTED.
THE assailed Order of respondent Judge Arsenio Gonong of the Regional Trial Court of Manila, Branch
8, dated April 5, 1991, in the first petition for certiorari (CA-G.R. SP No. 24669); the assailed Order of
Judge Bernardo Pardo, Executive Judge of the Regional Trial Court of Manila, Branch 8, dated July 6,
1992, in the second petition for certiorari (CA-G.R. SP No. 28387); and finally, the assailed order or
Resolution en banc of the respondent Court of Tax Appeals Judges Ernesto Acosta, Ramon de Veyra and
Manuel Gruba, under date of October 5, 1992, in the third petition for certiorari (CA-G.R. SP No. 29317)
are all hereby NULLIFIED and SET ASIDE thereby giving way to the entire decision dated February 18,
1991 of the respondent Regional Trial Court of Manila, Branch 8, in Civil Case No. 89-51451 which
remains valid,final and executory, if not yet wholly executed.
THE writ of preliminary injunction heretofore issued by this Court on March 6, 1992 and reiterated on
July 22, 1992 and this date against the named respondents specified in the dispositive portion of the
judgment of the respondent Regional Trial Court of Manila, Branch 8 in the first petition for certiorari,
which remains valid, existing and enforceable, is hereby MADE PERMANENT without prejudice (1) to
the [private respondents] remaining unpaid obligations to the herein party-intervenor in accordance with
the Compromise Agreement or in connection with the decision of the respondent lower court in CA-G.R.
SP No. 24669 and (2) to the government, in relation to the forthcoming decision of the respondent Court
of Tax Appeals on the amount of taxes, charges, assessments or obligations that are due, as totally secured
and fully guaranteed payment by the [private respondents] bond, subject to the relevant rulings of the
Department of Finance and other prevailing laws and jurisprudence.
The assailed Resolution ruled:
ACCORDINGLY, in the light of the foregoing disquisitions, as well as considering these clarifications,
the three (3) motions aforementioned are hereby DENIED.
The Facts

Poro Point Shipping Services, then acting as the local agent of Omega Sea Transport Company of
Honduras & Panama, a Panamanian company, (hereafter referred to as Omega), requested permission for
its vessel M/V Star Ace, which had engine trouble, to unload its cargo and to store it at the Philippine Ports
Authority (PPA) compound in San Fernando, La Union while awaiting transhipment to Hongkong. The
request was approved by the Bureau of Customs.[4] Despite the approval, the customs personnel boarded the vessel when it docked on
January 7, 1989, on suspicion that it was the hijacked
M/V Silver Med owned by Med Line Philippines Co., and that its cargo
would be smuggled into the country.[5] The district customs collector seized said vessel and its cargo pursuant to Section 2301, Tariff and Customs
Code. A notice of hearing of SFLU Seizure Identification No. 3-89 was served on its consignee, Singkong Trading Co. of Hongkong, and its shipper, Dusit International
Co., Ltd. of Thailand.

While seizure proceedings were ongoing, La Union was hit by three typhoons, and the vessel ran
aground and was abandoned. On June 8, 1989, its authorized representative, Frank Cadacio, entered into a
salvage agreement with private respondent to secure and repair the vessel at the agreed consideration of $1
million and fifty percent (50%) [of] the cargo after all expenses, cost and taxes.[6]
Finding that no fraud was committed, the District Collector of Customs, Aurelio M. Quiray, lifted the
warrant of seizure on July 16, 1989.[7] However, in a Second Indorsement dated November 11, 1989, then Customs Commissioner Salvador M.
Mison declined to issue a clearance for Quirays Decision; instead, he forfeited the vessel and its cargo in accordance with Section 2530 of the Tariff and Customs
Code.[8] Accordingly, acting District Collector of Customs John S. Sy issued a Decision decreeing the forfeiture and the sale of the cargo in favor of the government.[9]

To enforce its preferred salvors lien, herein Private Respondent Duraproof Services filed with the
Regional Trial Court of Manila a Petition for Certiorari, Prohibition and Mandamus[10] assailing the actions of
Commissioner Mison and District Collector Sy. Also impleaded as respondents were PPA Representative Silverio Mangaoang and Med Line Philippines, Inc.

On January 10, 1989, private respondent amended its Petition[11] to include former District Collector Quiray; PPA Port
Manager Adolfo Ll. Amor Jr; Petitioner Vlason Enterprises as represented by its president, Vicente Angliongto; Singkong Trading Company as represented by Atty.
Eddie Tamondong; Banco Du Brasil; Dusit International Co., Inc.; Thai-Nan Enterprises Ltd. and Thai-United Trading Co., Ltd.[12] In both Petitions, private respondent
plainly failed to include any allegation pertaining to petitioner, or any prayer for relief against it.

Summonses for the amended Petition were served on Atty. Joseph Capuyan for Med Line Philippines:
Angliongto (through his secretary, Betty Bebero), Atty. Tamondong and Commissioner Mison.[13] Upon motion
of the private respondent, the trial court allowed summons by publication to be served upon the alien defendants who were not residents and had no direct representatives
in the country.[14]

On January 29, 1990, private respondent moved to declare respondents in default, but the trial court
denied the motion in its February 23, 1990 Order,[15] because Mangaoang and Amor had jointly filed a Motion to Dismiss, while Mison
and Med Line had moved separately for an extension to file a similar motion.[16] Later it rendered an Order dated July 2, 1990, giving due course to the motions to
dismiss filed by Mangaoang and Amor on the ground of
litis pendentia, and by the commissioner and district collector of
customs on the ground of lack of jurisdiction.[17] In another Order, the trial court dismissed the action against Med Line Philippines on the
ground of
litis pendentia.[18]
On two other occasions, private respondent again moved to declare the following in default: petitioner,
Quiray, Sy and Mison on March 26, 1990;[19] and Banco Du Brazil, Dusit International Co., Inc., Thai-Nan Enterprises Ltd. and Thai-United
Trading Co., Ltd. on August 24, 1990.[20] There is no record, however, that the trial court acted upon the motions. On September 18, 1990, petitioner filed another
Motion for leave to amend the petition,[21] alleging that its counsel failed to include the following necessary and/or indispensable parties: Omega represented by
Cadacio; and
M/V Star Ace represented by Capt. Nahon Rada, relief captain. Aside from impleading these
additional respondents, private respondent also alleged in the Second (actually, third) Amended Petition[22]
that the owners of the vessel intended to transfer and alienate their rights and interests over the vessel and its cargo, to the detriment of the private respondent.

The trial court granted leave to private respondent to amend its Petition, but only to exclude the
customs commissioner and the district collector.[23] Instead, private respondent filed the Second Amended Petition with Supplemental
Petition against Singkong Trading Company; and Omega and
M/V Star Ace,[24] to which Cadacio and Rada filed a Joint Answer.[25]
Declared in default in an Order issued by the trial court on January 23, 1991, were the following:
Singkong Trading Co., Commissioner Mison, M/V Star Ace and Omega.[26] Private respondent filed, and the trial court
granted, an
ex parte Motion to present evidence against the defaulting respondents.[27] Only private respondent, Atty.
Tamondong, Commissioner Mison, Omega and
M/V Star Ace appeared in the next pretrial hearing; thus, the trial court
declared the other respondents in default and allowed private respondent to present evidence against
them.[28] Cesar Urbino, general manager of private respondent, testified and adduced evidence against the other respondents, including herein petitioner. As regards
petitioner, he declared: Vlason Enterprises represented by Atty. Sy and Vicente Angliongto thru constant intimidation and harassment of utilizing the PPA Management
of San Fernando, La Union x x x further delayed, and [private respondent] incurred heavy overhead expenses due to direct and incidental expenses xxx causing irreparable
damages of about
P3,000,000 worth of ship tackles, rigs, and appurtenances including radar antennas and
apparatuses, which were taken surreptitiously by persons working for Vlason Enterprises or its agents[.][29]
On December 29, 1990, private respondent and Rada, representing Omega, entered into a
Memorandum of Agreement stipulating that Rada would write and notify Omega regarding the demand for
salvage fees of private respondent; and that if Rada did not receive any instruction from his principal, he
would assign the vessel in favor of the salvor.[30]
On February 18, 1991, the trial court disposed as follows:
WHEREFORE, IN VIEW OF THE FOREGOING, based on the allegations, prayer and evidence
adduced, both testimonial and documentary, the Court is convinced, that, indeed, defendants/respondents
are liable to [private respondent] in the amount as prayed for in the petition for which it renders judgment
as follows:
1. Respondent M/V Star Ace, represented by Capt. Nahum Rada, [r]elief [c]aptain of the vessel and
Omega Sea Transport Company, Inc., represented by Frank Cadacio[,] is ordered to refrain from
alienating or [transferring] the vessel M/V Star Ace to any third parties;
2. Singkong Trading Company to pay the following:
a. Taxes due the government;
b. Salvage fees on the vessel in the amount of $1,000,000.00 based on xxx Lloyds Standard Form of
Salvage Agreement;
c. Preservation, securing and guarding fees on the vessel in the amount of $225,000.00;
d. Maintenance fees in the amount of P2,685,000.00;
e. Salaries of the crew from August 16, 1989 to December 1989 in the amount of $43,000.00 and unpaid
salaries from January 1990 up to the present;
f. Attorneys fees in the amount of P656,000.00;
3. [Vlason] Enterprises to pay [private respondent] in the amount of P3,000,000.00 for damages;
4. Banco [Du] Brazil to pay [private respondent] in the amount of $300,000.00 in damages; and finally,
5. Costs of [s]uit.
Subsequently, upon the Motion of Omega, Singkong Trading Co. and private respondent, the trial
court approved a Compromise Agreement[31] among the movants, reducing by 20 percent the amounts adjudged. For their part, respondents-
movants agreed not to appeal the Decision.[32] On March 8, 1991, private respondent moved for the execution of judgment, claiming that the trial court Decision had
already become final and executory.[33] The Motion was granted[34] and a Writ of Execution was issued.[35] To satisfy the Decision, Sheriffs Jorge Victorino, Amado
Sevilla and Dionisio Camagon were deputized on March 13, 1991 to levy and to sell on execution the defendants vessel and personal property.

On March 14, 1991, petitioner filed, by special appearance, a Motion for Reconsideration, on the
grounds that it was allegedly not impleaded as a defendant, served summons or declared in default; that
private respondent was not authorized to present evidence against it in default; that the judgment in default
was fatally defective, because private respondent had not paid filing fees for the award; and that private
respondent had not prayed for such award.[36] Private respondent opposed the Motion, arguing that it was a mere scrap of paper due to its
defective notice of hearing.

On March 18, 1991, the Bureau of Customs also filed an ex parte Motion to recall the execution, and
to quash the notice of levy and the sale on execution.[37] Despite this Motion, the auction sale was conducted on March 21, 1991 by
Sheriff Camagon, with private respondent submitting the winning bid.[38] The trial court ordered the deputy sheriffs to cease and desist from implementing the Writ of
Execution and from levying on the personal property of the defendants.[39] Nevertheless, Sheriff Camagon issued the corresponding Certificate of Sale on March 27,
1991.[40]

On April 12, 1991,[41] private respondent filed with the Court of Appeals (CA) a Petition for Certiorari and Prohibition to nullify
the cease and desist orders of the trial court.[42] Respondent Court issued on April 26, 1991 a Resolution which reads:[43]
MEANWHILE, in order to preserve the status quo and so as not to render the present petition moot and
academic, a TEMPORARY RESTRAINING ORDER is hereby ISSUED enjoining the respondent Judge,
the Honorable Arsenio M. Gonong, from enforcing and/or implementing the Orders dated 22 March 1991
and 5 April 1991 which ordered respondent Sheriff to cease and desist from implementing the writ of
execution and the return thereof, the quashing of the levy xxx on [the] execution [and sale] of the
properties levied upon and sold at public auction by the Sheriff, for reason of grave abuse of discretion
and in excess of jurisdiction, until further orders from this Court.
WITHIN ten (10) days from notice hereof, respondents [petitioner included] are also required to SHOW
CAUSE why the prayer for a writ of preliminary injunction should not be granted.
On May 8, 1991, petitioner received from Camagon a notice to pay private respondent P3 million to
satisfy the trial court Decision. Not having any knowledge of the CA case to which it was not impleaded,
petitioner filed with the trial court a Motion to Dismiss ex abutandi ad cautelam on the grounds that (1) the
Petition of private respondent stated no cause of action against it, (2) the trial court had no jurisdiction over
the case, and (3) litis pendentia barred the suit.[44]
On May 10, 1991, Camagon levied on petitioners properties, which were scheduled for auction later
on May 16, 1991. Specific descriptions of the properties are as follows:[45]
a) Motor Tugboat DEN DEN ex Emerson-I
Length: 35.67 ms. Breadth: 7.33 ms.
Depth: 3.15 ms. Gross Tons: 205.71
Net tons: 67.78 Official Number 213551
Material: Steel Class License: CWL
License No. 4424
b) Barge - FC99" ex YD-153
Length: 34.15 ms. Breadth: 15.85 m.s.
Depth: 2.77 m.s. Gross Tons: 491.70
Net Tons: 491.70 Official Number 227236
Material: Steel Class License: CWL
License No. 83-0012
c) Barge LAWIN ex Sea Lion 2
Length: 66.92 ms. Breadth: 11.28 ms.
Depth: 4.52 m.s. Gross Tons: 1,029.56
Net Tons: 1,027/43 Official Number 708069
Material: Steel Class License: Coastwise
License No. 81-0059
Petitioner also filed a special appearance before the CA. It prayed for the lifting of the levy on its
properties or, alternatively, for a temporary restraining order against their auction until its Motion for
Reconsideration was resolved by the trial court.[46]
Acting on petitioners Motion for Reconsideration, the trial court reversed its Decision of February 18,
1991, holding in its May 22, 1991 Resolution as follows:[47]
xxx [T]hat xxx Motion For Reconsideration [of the petitioner] was filed on March 14, 1991 (See: page
584, records, Vol.2) indubitably showing that it was seasonably filed within the 15-day time-frame.
Therefore, xxx said default-judgment ha[d] not yet become final and executory when the Writ of
Execution was issued on March 13, 1991 xxx The rules [provide] that [the e]xecution shall issue as a
matter of right upon the expiration of the period of appeal from a judgment if no appeal has been duly
perfected (Sec. 1, R-39, RRC). That being the case, VEC has all the right to file as it did xxx the
aforementioned reconsideration motion calling [the] attention of the Court and pointing therein its
supposed error and its correction if, indeed, any [error was] committed. It is in this light that this Court
made an in-depth reflection and assessment of the premises or reasons raised by [petitioner], and after a
re-examination of the facts and evidence spread on the records, it has come to the considered conclusion
that the questioned default-judgment has been improvidently issued. By the records, the claim of [private
respondent] that his January 29, 1990 Ex-Parte Motion To Declare Defendants In Default (pp. 174-177,
records, Vol. 1) including VEC had been granted is belied by the February 23, 1990 Order (pp. 214-215,
records, ibid) par. 2, thereof, reading to wit:
By the foregoing, for reasons stated thereunder respectively, this Court, in the exercise of its judicious
discretion, in the sense that the rules should be liberally construed in order to promote their object and to
assist the parties, resolves to DENY petitioners Motion to have the Commissioner of Customs AND
OTHER ENUMERATED RESPONDENTS DECLARED IN DEFAULT. [Emphasis ours].
Not even [private respondents] November 23, 1990 Ex-Parte Motion To Present [Evidence] Against
Defaulting Defendants (page 489, records, Vol.2) [can] be deemed as a remedy of the fact that there never
was issued an order of default against respondents including [petitioner] VEC. Having thus established
that there [had] been no order of default against VEC as contemplated by Sec. 1, Rule 18, in relation to
Sec. 9, Rule 13, Revised Rules of Court, there could not have been any valid default-judgment rendered
against it. The issuance of an order of default is a condition sine qua non in order [that] a judgment by
default be clothed with validity. Further, records show that this Court never had authorized [private
respondent] to adduce evidence ex-parte against [petitioner] VEC. In sum, the February 18, 1991 decision
by default is null and void as against [petitioner] VEC. With this considered conclusion of nullity of said
default judgment in question, this Court feels there is no more need for it to resolve Arguments I-A & I-B,
as well as III-A & III-B, of the March 14, 1991 Motion for Reconsideration. The Court agrees, however,
with said discussions on the non-compliance [with] Sec. 2, Rule 7 (Title of Complaint) and Sec. I, Rule 8
on the requirement of indicating in the complaint the ultimate facts on which the party pleading relies for
his claim of defense [--] which is absent in the January 9, Amended Petition (pp. 122-141, records, Vol. I)
[--] for it merely mentioned [petitioner] VEC in par. 5 thereof and no more. It abides, likewise, with
[Argument] III-B that the Decision in suit award[ed] amounts never asked for in instant petition as
regards VEC (Sec. 5, Rule 18, RRC). xxx.
WHEREFORE, in view of the foregoing consideration, and as prayed for, the February 18, 1991
Judgment by Default is hereby reconsidered and SET ASIDE.
On June 26, 1992, then Executive Judge Bernardo P. Pardo[48] of the Regional Trial Court of Manila issued an Order[49]
annulling the Sheriffs Report/Return dated April 1, 1991, and all proceedings taken by Camagon.

The CA granted private respondents Motion to file a Supplemental Petition impleading petitioner in
CA-GR 24669.[50] In view of the rampant pilferage of the cargo deposited at the PPA compound, private respondent obtained from the appellate court a Writ
of Preliminary Injunction dated March 6, 1992. The Writ reads:[51]

ACCORDINGLY, in view of the foregoing disquisitions, the urgent verified motion for preliminary
injunction dated February 11, 1992 is hereby GRANTED. Therefore, let a writ of preliminary injunction
forthwith issue against the respondents and all persons or agents acting in their behalf, enjoining them not
to interfere in the transferring of the aforementioned vessel and its cargoes, or in removing said cargoes
xxx from [the] PPA compound.
On September 15, 1992, Sheriff Amado Sevilla seized petitioners motor tugboat Den Den by virtue of
the Order[52] dated April 3, 1992, issued by the RTC of Manila, Branch 26.[53]
On August 6, 1992, the CA consolidated CA-GR SP No. 28387[54] with CA-GR SP No. 24669.[55] The Court of Tax
Appeals issued on October 5, 1992, a Resolution in CTA Case Nos. 4492, 4494 and 4500, which disposed as follows:

Confirming the order in open court on October 5, 1992, the Court hereby RESOLVES to:
1. Order Respondent Commissioner of Customs to assign or detail [a] sufficient number of customs
police and guards aboard, and around the vicinity of, the vessel M/V Star Ace now in anchor at
Mariveles, Bataan or elsewhere, in order to ensure its safety during the pendency of these cases;
2. Direct him to assign personnel and/or representatives to conduct an inventory of part of the vessels
cargo now in the possession of Mr. Cesar S. Urbino, Sr. at 197 Heroes del 96 Street, Caloocan City,
which inventory may be participated in by all the parties interested in said cargo.
 To enjoin the CTA from enforcing said Order, private respondent filed before the Court of Appeals
another Petition for Certiorari,[56] which was later also consolidated with CA-GR SP No. 24669.
On July 19, 1993, the CA rendered the assailed Decision. Petitioner filed (1) a Motion for Clarification,
praying for a declaration that the trial court Decision against it was not valid; and (2) a partial Motion for
Reconsideration, seeking to set aside the assailed Decision insofar as the latter affected it.
On July 5, 1995, the Court of Appeals issued the following Resolution:[57]
Pending resolution of the motions for reconsideration, filed by Vlason Enterprises Corporation and
Banco [Du] Brazil, and considering [private respondents] Motion for Entry of Judgment with respect to
respondent PPA having already been granted by this Court as far back as June 17, 1994, pursuant to the
resolution of the Supreme Court dated December 8, 1993 in G.R. No. 111270-72 (Philippine Ports
Authority vs. Court of Appeals, et al.) informing the parties in said case that the judgment sought to be
reviewed has now become final and executory, the lower court may now take appropriate action on the
urgent ex-parte motion for issuance of a writ of execution, filed by [private respondent] on July 15, 1994.
On August 28, 1995, the Regional Trial Court of Manila, Branch 26, issued a Writ of Possession which
resulted in private respondent taking possession of petitioners barge Lawin (formerly Sea Lion 2) on
September 1, 1995.[58]
Hence, this Petition.[59]
Ruling of the Respondent Court

As already adverted to, Respondent Court granted the Petition for Certiorari of the private respondent,
which was consolidated with the latters two other Petitions. The court a quo issued the following rulings:
1. The trial court had jurisdiction over the salvors claim or admiralty case pursuant to Batas Pambansa
Bilang 129.
2. Since the Decision of the trial court became final and executory, never having been disputed or
appealed to a higher court, the trial judge committed grave abuse of discretion in recalling the Writ
of Execution and in quashing the levy and the execution of the sale of M/V Star Ace and its cargo.
2. Such acts constituted an alteration or a modification of a final and executory judgment and could
never be justified under law and jurisprudence.
3. Civil Case 59-51451 dealt only with the salvors claim without passing upon the legality or the
validity of the undated Decision of the Commissioner of Customs in the seizure proceeding.
4. Petitioner and his co-respondents could not invoke the jurisdiction of a court to secure affirmative
relief against their opponent and, after failing to obtain such relief, question the courts jurisdiction.
5. Petitioner had no recourse through any of the following judicially accepted means to question the
final judgment:
a. a petition for relief from judgment under Rule 38,
b. a direct action to annul and enjoin the enforcement of the questioned judgment, and
c. a collateral attack against the questioned judgment which appears void on its face.
 6. A court which has already acquired jurisdiction over a case cannot be ousted by a coequal court; the
res in this casethe vessel and its cargowere placed under the control of the trial court ahead of the
CTA.
7. The admiralty Decision had attained finality while the issue of the validity of the seizure proceedings
was still under determination.
In the assailed Resolution, Respondent Court clarified that there was no need to serve summons anew
on petitioner, since it had been served summons when the Second Amended Petition (the third) was filed;
and that petitioners Motion for Reconsideration was defective and void, because it contained no notice of
hearing addressed to the counsel of private respondent in violation of Rule 16, Section 4 of the Rules of
Court.
To this second motion, [private respondent] contends that there was no need to serve summons anew to
VEC when the second amended petition was filed impleading VEC, pursuant to the ruling of the Supreme
Court in Asiatic Travel Corp. vs. CA (164 SCRA 623); and that finally, the decision of the court a quo
o[n] February 18, 1991 became final and executory, notwithstanding the timely filing of the motion for
reconsideration of VEC for the reason that the said motion for reconsideration was defective or void,
there being no notice of hearing addressed to the counsel of petitioner. In fact, no motion such as this
instant one can be acted upon by the Court without proof of service of the notice thereof, pursuant to Rule
16, Section 4 of the Rules of Court.
xxxxxxxxx
Finally, we should never lose sight of the fact that the instant petition for certiorari is proper only to
correct errors of jurisdiction committed by the lower court, or grave abuse of discretion which is
tantamount to lack of jurisdiction. Where the error is not one of jurisdiction but an error of law or of fact
which is a mistake of judgment, appeal is the remedy (Salas vs. Castro, 216 SCRA 198). Here,
respondents failed to appeal. Hence, the decision dated February 18, 1991 of the lower court has long
become final, executory and unappealable. We do not and cannot therefore review the instant case as if it
were on appeal and direct actions on these motions. While the proper remedy is appeal, the action for
certiorari will not be entertained. Indeed, certiorari is not a substitute for lapsed appeal.
At any rate, the decision dated July 19, 1993 of this Court on the main petition for certiorari is not yet
final (except with respect to respondent PPA), the Bureau of Customs having filed a petition for certiorari
and prohibition, under Rule 65 of the Rules of Court, with the Supreme Court, necessitating prudence on
Our part to await its final verdict.[60]
Assignment of Errors

Before us, petitioner submits the following assignment of errors on the part of Respondent Court:[61]
I
The Court of Appeals committed serious error in ruling that the entire decision of the trial court in Civil
Case No. 89-51451 dated 18 February 1991 became final and executory because it was never disputed or
appealed.
A. VEC filed a motion for reconsideration of the said decision two days before deadline, which motion
was granted by the trial court.
B. The trial court correctly granted VECs motion for reconsideration and set aside the 18 February 1991
decision xxx against VEC, for:
1. The trial court never acquired jurisdiction over the person of VEC as to enable it to render any
judgment against it:
(i) VEC was not impleaded as a respondent in Civil Case No. 89-51451;
(ii) Summons was not served on VEC;
2. The trial court improperly rendered judgment by default against VEC;
(i) The trial court never issued an order of default against VEC;
(ii) The trial court never authorized ex-parte presentation of evidence against VEC.
3. The Judgment by default was fatally defective because:
(i) No filing fee was paid by [private respondent] for the staggering amount of damages awarded by the
trial court.
(ii) The 18 February 1991 decision violates the Revised Rules of Court, which prescribe that a judgment
by default cannot decree a relief not prayed for.
II
Since the 18 February 1991 Decision in Civil Case No. 89-51451 is void as against VEC, the recall of the
writ of execution was valid, as far as VEC is concerned.
The Court believes that the issues can be simplified and restated as follows:
1. Has the February 18, 1991 RTC Decision become final and executory in regard to petitioner?
2. Did the trial court acquire jurisdiction over the petitioner?
3. Was the RTC default judgment binding on petitioner?
4. Was the grant of damages against petitioner procedurally proper?
5. Was private respondent entitled to a writ of execution?
This Courts Ruling

The petition is meritorious.

First Issue: Finality of the RTC Decision

A judgment becomes final and executory by operation of law. Its finality becomes a fact when the
reglementary period to appeal lapses, and no appeal is perfected within such period. [62] The admiralty case filed by
private respondent with the trial court involved multiple defendants. This being the case, it necessarily follows that the period of appeal of the February 18, 1991 RTC
Decision depended on the date a copy of the judgment was received by each of the defendants. Elsewise stated, each defendant had a different period within which to
appeal, depending on the date of receipt of the Decision.[63]

Omega, Singkong Trading Co. and M/V Star Ace chose to enter into a compromise agreement with
private respondent. As to these defendants, the trial court Decision had become final, and a writ of execution
could be issued against them.[64] Doctrinally, a compromise agreement is immediately final and executory.[65]
 Petitioner, however, is not in the same situation. Said Decision cannot be said to have attained finality
as to the petitioner, which was not a party to the compromise. Moreover, petitioner filed a timely Motion
for Reconsideration with the trial court, thirteen days after it received the Decision or two days before the
lapse of the reglementary period to appeal. A motion for reconsideration tolls the running of the period to
appeal.[66] Thus, as to petitioner, the trial court Decision had not attained finality.
Exception to the Rule on Notice of Hearing

Respondent Court and private respondent argue that, although timely filed, petitioners Motion for
Reconsideration was a mere scrap of paper, because (1) it did not contain a notice of hearing addressed to
the current counsel of private respondent, and (2) the notice of hearing addressed to and served on private
respondents deceased counsel was not sufficient. Admittedly, this Motion contained a notice of hearing
sent to Atty. Jesus C. Concepcion who, according to private respondent, had already died and had since
been substituted by its new counsel, Atty. Domingo Desierto. Therefore, the appellate court ruled that the
said Motion did not toll the reglementary period to appeal and that the trial court Decision became final.
This Court disagrees. Rule 15 of the Rules of Court states:
SEC. 4. Notice.Notice of a motion shall be served by the applicant to all parties concerned, at least three
(3) days before the hearing thereof, together with a copy of the motion, and of any affidavits and other
papers accompanying it. The court, however, for good cause may hear a motion on shorter notice,
specially on matters which the court may dispose of on its own motion.
SEC. 5. Contents of notice.The notice shall be directed to the parties concerned, and shall state the time
and place for the hearing of the motion. [67]
Ideally, the foregoing Rule requires the petitioner to address and to serve on the counsel of private
respondent the notice of hearing of the Motion for Reconsideration. The case at bar, however, is far from
ideal. First, petitioner was not validly summoned and it did not participate in the trial of the case in the
lower court; thus, it was understandable that petitioner would not be familiar with the parties and their
counsels. Second, Atty. Desierto entered his appearance only as collaborating counsel,[68] who is normally not entitled
to notices even from this Court.
Third, private respondent made no manifestation on record that Atty. Concepcion was
already dead. Besides, it was Atty. Concepcion who signed the Amended Petition, wherein petitioner was
first impleaded as respondent and served a copy thereof. Naturally, petitioners attention was focused on this
pleading, and it was within its rights to assume that the signatory to such pleading was the counsel for
private respondent.
The Court has consistently held that a motion which does not meet the requirements of Sections 4 and
5 of Rule 15 of the Rules of Court is considered a worthless piece of paper, which the clerk of court has no
right to receive and the trial court has no authority to act upon. Service of a copy of a motion containing a
notice of the time and the place of hearing of that motion is a mandatory requirement, and the failure of
movants to comply with these requirements renders their motions fatally defective.[69] However, there are exceptions
to the strict application of this rule. These exceptions are as follows:[70]

xxx Liberal construction of this rule has been allowed by this Court in cases (1) where a rigid application
will result in a manifest failure or miscarriage of justice;[71] especially if a party successfully shows that the alleged defect in the
questioned final and executory judgment is not apparent on its face or from the recitals contained therein; (2) where the interest of substantial justice will be
served;[72] (3) where the resolution of the motion is addressed solely to the sound and judicious discretion of the court;[73] and (4) where the injustice to the adverse
party is not commensurate [to] the degree of his thoughtlessness in not complying with the procedure prescribed.[74]
 The present case falls under the first exception. Petitioner was not informed of any cause of action or
claim against it. All of a sudden, the vessels which petitioner used in its salvaging business were levied
upon and sold in execution to satisfy a supposed judgment against it. To allow this to happen simply because
of a lapse in fulfilling the notice requirement which, as already said, was satisfactorily explained would be
a manifest failure or miscarriage of justice.
A notice of hearing is conceptualized as an integral component of procedural due process intended to
afford the adverse parties a chance to be heard before a motion is resolved by the court. Through such
notice, the adverse party is permitted time to study and answer the arguments in the motion.
Circumstances in the case at bar show that private respondent was not denied procedural due process,
and that the very purpose of a notice of hearing had been served. On the day of the hearing, Atty. Desierto
did not object to the said Motion for lack of notice to him; in fact, he was furnished in open court with a
copy of the motion and was granted by the trial court thirty days to file his opposition to it. These
circumstances clearly justify a departure from the literal application of the notice of hearing rule. [75] In other
cases, after the trial court learns that a motion lacks such notice, the prompt resetting of the hearing with due notice to all the parties is held to have cured the defect.[76]

Verily, the notice requirement is not a ritual to be followed blindly. Procedural due process is not based
solely on a mechanistic and literal application that renders any deviation inexorably fatal. Instead,
procedural rules are liberally construed to promote their objective and to assist in obtaining a just, speedy
and inexpensive determination of any action and proceeding.[77] For the foregoing reasons, we believe that Respondent Court
committed reversible error in holding that the Motion for Reconsideration was a mere scrap of paper.

Second Issue: Jurisdiction Over Petitioner

Service of Summons on a Corporation

The sheriffs return shows that Angliongto who was president of petitioner corporation, through his
secretary Betty Bebero, was served summons on January 18, 1990.[78] Petitioner claims that this service was defective for two
reasons: (1) Bebero was an employee of Vlasons Shipping, Inc., which was an entity separate and distinct from Petitioner Vlason Enterprises Corporation (VEC); and
(2) the return pertained to the service of summons for the amended Petition, not for the Second Amended Petition with Supplemental Petition, the latter pleading having
superseded the former.

A corporation may be served summons through its agents or officers who under the Rules are
designated to accept service of process. A summons addressed to a corporation and served on the secretary
of its president binds that corporation.[79] This is based on the rationale that service must be made on a representative so integrated with the
corporation sued, that it is safe to assume that said representative had sufficient responsibility and discretion to realize the importance of the legal papers served and to
relay the same to the president or other responsible officer of the corporation being sued.[80] The secretary of the president satisfies this criterion. This rule requires,
however, that the secretary should be an employee of the corporation sought to be summoned. Only in this manner can there be an assurance that the secretary will bring
home to the corporation [the] notice of the filing of the action against it.

In the present case, Bebero was the secretary of Angliongto, who was president of both VSI and
petitioner, but she was an employee of VSI, not of petitioner. The piercing of the corporate veil cannot be
resorted to when serving summons.[81] Doctrinally, a corporation is a legal entity distinct and separate from the members and stockholders who
compose it. However, when the corporate fiction is used as a means of perpetrating a fraud, evading an existing obligation, circumventing a statute, achieving or
perfecting a monopoly or, in generally perpetrating a crime, the veil will be lifted to expose the individuals composing it. None of the foregoing exceptions has been
shown to exist in the present case. Quite the contrary, the piercing of the corporate veil in this case will result in manifest injustice. This we cannot allow. Hence, the
corporate fiction remains.

Effect of Amendment of Pleadings on Jurisdiction

 Petitioner claims that the trial court did not acquire jurisdiction over it, because the former had not
been served summons anew for the Second Amended Petition or for the Second Amended Petition with
Supplemental Petition. In the records, it appears that only Atty. Tamondong, counsel for Singkong Trading,
was furnished a copy of the Second Amended Petition.[82] The corresponding sheriffs return indicates that only Omega, M/V Star
Ace and Capt. Rada were served summons and copies of said Petition.[83]
We disagree. Although it is well-settled that an amended pleading supersedes the original one, which
is thus deemed withdrawn and no longer considered part of the record, it does not follow ipso facto that the
service of a new summons for amended petitions or complaints is required. Where the defendants have
already appeared before the trial court by virtue of a summons on the original complaint, the amended
complaint may be served upon them without need of another summons, even if new causes of action are
alleged.[84] After it is acquired, a courts jurisdiction continues until the case is finally terminated. Conversely, when defendants have not yet appeared in court and
no summons has been validly served, new summons for the amended complaint must be served on them.[85] It is not the change of cause of action that gives rise to the
need to serve another summons for the amended complaint, but rather the acquisition of jurisdiction over the persons of the defendants. If the trial court has not yet
acquired jurisdiction over them, a new service of summons for the amended complaint is required.

In this case, the trial court obviously labored under the erroneous impression that petitioner had already
been placed under its jurisdiction since it had been served summons through the secretary of its president.
Thus, it dispensed with the service on petitioner of new summons for the subsequent amendments of the
Petition. We have already ruled, however, that the first service of summons on petitioner was invalid.
Therefore, the trial court never acquired jurisdiction, and the said court should have required a new service
of summons for the amended Petitions.
Impleading a Party in the Title of the Complaint

Petitioner further claims that the trial court failed to acquire jurisdiction to render judgment against it
because (1) the title of the three Petitions filed by private respondent never included petitioner as a party-
defendant, in violation of Rule 7; and (2) the Petitions failed to state any allegation of ultimate facts
constituting a cause of action against petitioner.
We disagree with petitioner on the first ground. The judicial attitude has always been favorable and
liberal in allowing amendments to pleadings. Pleadings shall be construed liberally so as to render
substantial justice to the parties and to determine speedily and inexpensively the actual merits of the
controversy with the least regard to technicalities.[86]
The inclusion of the names of all the parties in the title of a complaint is a formal requirement under
Section 3, Rule 7. However, the rules of pleadings require courts to pierce the form and go into the
substance, and not to be misled by a false or wrong name given to a pleading.The averments in the
complaint, not the title, are controlling. Although the general rule requires the inclusion of the names of all
the parties in the title of a complaint, the non-inclusion of one or some of them is not fatal to the cause of
action of a plaintiff, provided there is a statement in the body of the petition indicating that a defendant was
made a party to such action.
Private respondent claims that petitioner has always been included in the caption of all the Petitions it
filed, which included Antonio Sy, field manager of petitioner. We checked and noted that in the caption
and the body of the Amended Petition and Second Amended Petition with Supplemental Petition, Antonio
Sy was alleged to be representing Med Line Philippines, not petitioner. Because it was private respondent
who was responsible for the errors, the Court cannot excuse it from compliance, for such action will
prejudice petitioner, who had no hand in the preparation of these pleadings. In any event, we reiterate that,
as a general rule, mere failure to include the name of a party in the title of a complaint is not fatal by itself.
Stating a Cause of Action in the Complaint

The general rule is allegata et probata -- a judgment must conform to the pleadings and the theory of
the action under which the case was tried.[87] But a court may also rule and render judgment on the basis of the evidence before it, even though
the relevant pleading has not been previously amended, so long as no surprise or prejudice to the adverse party is thereby caused.[88]

In the case at bar, the liability of petitioner was based not on any allegation in the four Petitions filed
with the trial court, but on the evidence presented ex parte by the private respondent. Since the trial court
had not validly acquired jurisdiction over the person of petitioner, there was no way for the latter to have
validly and knowingly waived its objection to the private respondents presentation of evidence against it.
Third Issue: Judgment By Default

The trial court Decision holding petitioner liable for damages is basically a default judgment. In
Section 18, judgment by default is allowed under the following condition:[89]
SEC. 1. Judgment by default.If the defendant fails to answer within the time specified in these rules, the
court shall, upon motion of the plaintiff and proof of such failure, declare the defendant in default.
Thereupon the court shall proceed to receive the plaintiffs evidence and render judgment granting him
such relief as the complaint and the facts proven may warrant. xxxx.
Thus, it becomes crucial to determine whether petitioner was ever declared in default, and whether the
reception of evidence ex parte against it was procedurally valid.
Petitioner Was Never Declared In Default

Petitioner insists that the trial court never declared it in default.

We agree. The trial court denied the January 29, 1990 Motion of private respondent to declare all the
defendants in default, but it never acted on the latters subsequent Motion to declare petitioner likewise.
During the pretrial on January 23, 1993, the RTC declared in default only Atty. Eddie Tamondong, as well
as the other defendants Hon. Salvador Mison, M/V Star Ace, Omega Sea Transport Co., Inc. of Panama and
Sinkong Trading Co., [but] despite xxx due notice to them, [they] failed to appear.[90] Even private respondent cannot
pinpoint which trial court order held petitioner in default.

More important, the trial court, in its Resolution dated May 22, 1991, admitted that it never declared
petitioner in default, viz.:
xxx It is in this light that this [c]ourt made an in-depth reflection and assessment of the premises or
reasons raised by [petitioner] VEC[;] and after a re-examination of the facts and evidence spread on the
records, it has come to the considered conclusion that the questioned default-judgment has been
improvidently issued. [Based on] the records, the claim of [private respondent] that [its] January 29, 1990
Ex-Parte Motion to Declare Defendants In Default (pp. 174-177, records, Vol. 1) including VEC had been
granted is belied by the February 23, 1990 Order (pp. 214-215, records, ibid) par. 2, thereof, xxx
xxxxxxxxx
Not even petitioners November 23, 1990 Ex-Parte Motion To Present Evidence Against Defaulting
Defendants (page 489, records, Vol. 2) [can] be deemed as a remedy [for] the fact that there never was
issued an order of default against respondents including [petitioner] VEC. Having thus established that
there ha[d] been no order of default against VEC as contemplated by Sec. 1, Rule 18, in relation to Sec. 9,
Rule 13, Revised Rules of Court, there could not have been any valid default-judgment rendered against
it. The issuance of an order [o]f default is a condition sine qua non in order [that] a judgment by default
be clothed with validity. Further, records show that this [c]ourt never had authorized [private respondent]
to adduce evidence ex-parte against [Petitioner] VEC. In sum, the February 18, 1991 decision by default
is null and void as against [Petitioner] VEC. xxxx.
The aforementioned default judgment refers to the February 18, 1989 Decision, not to the Order
finding petitioner in default as contended by private respondent. Furthermore, it is a legal impossibility to
declare a party-defendant to be in default before it was validly served summons.
Trial Court Did Not Allow Presentation of Evidence Ex Parte Against Petitioner

The Order of December 10, 1990, which allowed the presentation of evidence ex parte against the
defaulting defendants, could not have included petitioner, because the trial court granted private
respondents motion praying for the declaration of only the foreign defendants in default. So too, private
respondents ex parte Motion to present evidence referred to the foreign defendants only.[91]
Furthermore, the reception of evidence ex parte against a non-defaulting party is procedurally
indefensible. Without a declaration that petitioner is in default as required in Section 1, Rule 18, the trial
court had no authority to order the presentation of evidence ex parte against petitioner to render judgment
against it by default. The trial judge must have thought that since it failed to appear despite summons and
was in default, it effectively waived any objection to the presentation of evidence against it. This rule,
however, would have applied only if petitioner had submitted itself to the jurisdiction of the trial court. The
latter correctly declared, in the Resolution just cited, that the default judgment against the former had been
improvidently rendered.
Fourth Issue: Awards Not Paid and Prayed For

Additional Filing Fees as Lien on the Judgment

Had the trial court validly acquired jurisdiction over petitioner, nonpayment of docket fees would not
have prevented it from holding petitioner liable for damages. The Court, in Manchester Development
Corporation v. Court of Appeals,[92] ruled that a court acquires jurisdiction over any case only upon the
payment of the prescribed docket fee, not upon the amendment of the complaint or the payment of the
docket fees based on the amount sought in the amended pleading. This ruling, however, was modified in
Sun Insurance Office, Ltd. v. Asuncion,[93]which added:
3. Where the trial court acquires jurisdiction over a claim [through] the filing of the appropriate pleading
and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in
the pleading, or if specified the same has been left for determination by the court, the additional filing fee
therefor shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or his
duly authorized deputy to enforce said lien and assess and collect the additional fee.
Filing fees for damages and awards that cannot be estimated constitute liens on the awards finally
granted by the trial court. Their nonpayment alone is not a ground for the invalidation of the award.
Judgment by Default Cannot Grant Relief Not Prayed For

A declaration or order of default is issued as a punishment for unnecessary delay in joining issues. In
such event, defendants lose their standing in court, they cannot expect the trial court to act upon their
pleadings, and they are not entitled to notice of the proceeding until the final termination of the case.[94] Thus,
the trial court proceeds with the reception of the plaintiffs evidence upon which a default judgment is rendered.
 Section 1 of Rule 18 provides that after the defendant has been declared in default, the court shall
proceed to receive the plaintiffs evidence and render judgment granting him such relief as the complaint
and the facts proven may warrant. The reliefs that may be granted, however, are restricted by Section 5,
which provides that a judgment entered against a party in default shall not exceed the amount or be different
in kind from that prayed for.
In other words, under Section 1, a declaration of default is not an admission of the truth or the validity
of the plaintiffs claims.[95] The claimant must still prove his claim and present evidence. In this sense the law gives defaulting parties some measure of
protection because plaintiffs, despite the default of defendants, are still required to substantiate their allegations in the complaint. The judgment of default against
defendants who have not appeared or filed their answers does not imply a waiver of all their rights, except their right to be heard and to present evidence in their favor.
Their failure to answer does not imply their admission of the facts and the causes of action of the plaintiffs, because the latter are required to adduce evidence to support
their allegations.

Moreover, the trial court is not allowed by the Rules to receive evidence that tends to show a relief not
sought or specified in the pleadings.[96] The plaintiff cannot be granted an award greater than or different in kind from that specified in the
complaint.[97]

This case should be distinguished, however, from that of defendants, who filed an answer but were
absent during trial. In that case, they can be held liable for an amount greater than or different from that
originally prayed for, provided that the award is warranted by the proven facts. This rule is premised on the
theory that the adverse party failed to object to evidence relating to an issue not raised in the pleadings.
The latter rule, however, is not applicable to the instant case. Admittedly, private respondent presented
evidence that would have been sufficient to hold petitioner liable for damages. However, it did not include
in its amended Petitions any prayer for damages against petitioner.Therefore, the trial court could not have
validly held the latter liable for damages even if it were in default.
Fifth Issue: Execution of Final Judgment

Section 1 of Rule 39 provides that execution shall issue only upon a judgment that finally disposes of
the action or proceeding. Such execution shall issue as a matter of right upon the expiration of the period
to appeal it, if no appeal has been duly perfected.[98]
In the present case, however, we have already shown that the trial courts Decision has not become
final and executory against petitioner. In fact, the judgment does not even bind it. Obviously, Respondent
Court committed serious reversible errors when it allowed the execution of the said judgment against
petitioner.
WHEREFORE, the appeal is hereby GRANTED, and the assailed Decision and Resolution of the
Court of Appeals are REVERSED and SET ASIDE insofar as they affect petitioner. The levy and the sale
on execution of petitioners properties are declared NULL and VOID. Said properties are ordered
RESTORED to petitioner. No pronouncement as to cost.
SO ORDERED.
Purisima, and Gonzaga-Reyes, JJ., concur.
Romero, J., (Chairman), on official business abroad.
Vitug, J., concur in the result.
G.R. No. 131482 July 3, 2002
REGALADO P. SAMARTINO, petitioner,
vs.
LEONOR B. RAON, AGUSTIN G. CRISOSTOMO, THE MUNICIPAL TRIAL COURT OF
NOVELETA, CAVITE, HON. MANUEL A. MAYO, REGIONAL TRIAL COURT, BRANCH 16,
CAVITE CITY, HON. ROLANDO D. DIAZ, REGIONAL TRIAL COURT, BRANCH 17, CAVITE
CITY, SHERIFF DANILO G. LAPUZ, CAVITE CITY and THE HON. COURT OF APPEALS,
respondents.
YNARES-SANTIAGO, J.:
Respondents Leonor Bernardo-Raon and Agustin G. Crisostomo are the surviving sister and
spouse, respectively, of the late Filomena Bernardo-Crisostomo, who passed away on May 17,
1994. Among the properties left by the deceased was her one-half share in a parcel of land in
Noveleta, Cavite, registered under Transfer Certificate of Title No. T- 131898 in the name of co-
owners Lido Beach Corporation and Filomena Bernardo.
On January 25, 1996, respondents instituted against petitioner Regalado P. Samartino a
complaint for ejectment, docketed as Civil Case No. 744 of the Municipal Trial Court of Noveleta,
Cavite.1 They alleged that during the lifetime of Filomena Bernardo, she leased her share in the
property to petitioner for a period of five years counted from 1986; that the said lease expired and
was not extended thereafter; and that petitioner refused to vacate the property despite demands
therefor.
Summons was served on Roberto Samartino, brother of petitioner.2 At the time of service of
summons at petitioner’s house, he was not at home as he was then confined at the National
Bureau of Investigation Treatment and Rehabilitation Center (NBI-TRC), Tagaytay City since
January 19, 1996, where he was undergoing treatment and rehabilitation for drug dependency.
Thus, on February 2, 1996, a liaison officer of the NBI-TRC appeared before the trial court with a
certification that petitioner will be unable to comply with the directive to answer the complaint
within the reglementary period, inasmuch as it will take six months for him to complete the
rehabilitation program and before he can be recommended for discharge by the Rehabilitation
Committee.3
The trial court, despite the written certification from NBI-TRC, granted respondents’ motion to
declare petitioner in default and ordered them to present evidence ex-parte. On March 21, 1996,
the trial court rendered judgment in favor of respondents as follows:
FROM THE FOREGOING CONSIDERATIONS, judgment is hereby rendered in favor of the
plaintiffs and against the defendant ordering the latter and other person/s claiming rights under
him:
1. To vacate immediately the land in question after the finality of the decision.
2. For the defendant to pay the plaintiffs the sum of P5,000.00 monthly from January, 1992 up to
the time he surrenders the premises considered as damages for the use of the subject land.
3. For the defendant to pay the plaintiffs P 10,000.00 as and for attorney’s fees with an additional
P800.00 as appearance fees.
4. To pay the plaintiffs P 100.00 as filing fee.
SO ORDERED.4
After learning of the adverse decision against him, petitioner’s counsel filed with the Regional Trial
Court of Cavite City, Branch 16, a motion to set aside judgment. The motion was treated as an
appeal and docketed as Civil Case No. N-6281. On July 18, 1996, the RTC affirmed the decision
of the MTC.5
The aforesaid decision became final. Accordingly, the court of origin issued on September 17,
1996 a writ of execution.6 Petitioner was given a grace period of one month within which to vacate
the premises. His real property situated in Noveleta, Cavite, covered by Transfer Certificate of
Title No. T-283572, was levied and sold at public auction to respondents in full satisfaction of the
monetary award.7
On November 25, 1996, petitioner filed with the Regional Trial Court of Cavite City, a petition for
relief from judgment, docketed as Civil Case No. N-6393.8 In support thereof, petitioner submitted
an affidavit of merit,9alleging in fine that the parcel of land from which he was being evicted had
been sold to him by Filomena Bernardo-Crisostomo, as evidenced by the Deed of Absolute Sale
dated December 13, 1988.10
The following day, November 26, 1996, the RTC issued an Order dismissing the petition for relief
from judgment.11Petitioner’s Motion for Reconsideration was denied on December 12, 1996. A
second Motion for Reconsideration was likewise denied on January 14, 1997.12 On the same day,
a writ of demolition was issued commanding the sheriff to remove the building and improvements
made by petitioner on the subject premises and to deliver the possession thereof to
respondents.13
Petitioner thus filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP
No. 432O2.14 On August 29, 1997, the Court of Appeals dismissed the petition.15 Petitioner’s
Motion for Reconsideration was denied on November 14, 1997.16 Hence this petition for review.
The petition is impressed with merit.
In actions in personam, summons on the defendant must be served by handing a copy thereof to
the defendant in person, or, if he refuses to receive it, by tendering it to him. If efforts to serve the
summons personally to defendant is impossible, service may be effected by leaving copies of the
summons at the defendant’s dwelling house or residence with some person of suitable age and
discretion residing therein, or by leaving the copies at the defendant’s office or regular place of
business with some competent person in charge thereof. Otherwise stated, service of summons
upon the defendant shall be by personal service first and only when the defendant cannot be
promptly served in person will substituted service be availed of.17
Rule 14 of the 1997 Rules of Civil Procedure clearly provides:
Sec. 6. Service in person on defendant. - Whenever practicable, the summons shall be served by
handing a copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by
tendering it to him.
Sec. 7. Substituted service. - If, for justifiable causes, the defendant cannot be served within a
reasonable time as provided in the preceding section, service may be effected (a) by leaving
copies of the summons at the defendant’s residence with some person of suitable age and
discretion then residing therein, or (b) by leaving the copies at defendant’s office or regular place
of business with some competent person in charge thereof.
We have long held that the impossibility of personal service justifying availment of substituted
service should be explained in the proof of service; why efforts exerted towards personal service
failed. The pertinent facts and circumstances attendant to the service of summons must be stated
in the proof of service or Officer’s Return; otherwise, the substituted service cannot be upheld. It
is only under exceptional terms that the circumstances warranting substituted service of summons
may be proved by evidence aliunde. It bears stressing that since service of summons, especially
for actions in personam, is essential for the acquisition of jurisdiction over the person of the
defendant, the resort to a substituted service must be duly justified. Failure to do so would
invalidate all subsequent proceedings on jurisdictional grounds.18
In this connection, Supreme Court Administrative Circular No. 59 was issued on November 19,
1989 to stress the importance of strict compliance with the requisites for a valid substituted
service, to wit:
Delays in court proceedings have been caused by faulty and erroneous implementation of Section
8, Rule 14, Rules of Court on Substituted Service of Summons.
The Trial Judges of all lower courts, as well as the Clerks of Court in their capacity as Ex-Officio
Sheriffs together with the Deputy Sheriffs are reminded of the provision of Section 8, Rule 14,
Rules of Court on substituted service as follows:
xxx xxx xxx
The manner of effecting substituted service as prescribed in Venturanza vs. Court of Appeals,
156 SCRA 305, must be strictly complied with, thus:
"The substituted service should be availed only when the defendant cannot be served
promptly in person. Impossibility of prompt service should be shown by stating the efforts
made to find the defendant personally and the failure of such efforts. The statement should
be made in the proof of service. This is necessary because substituted service is in
derogation of the usual method of service.
Substituted service is a method extraordinary in character, and hence may be used only as
prescribed in the circumstances authorized by statute. Thus, the statutory requirements of
substituted service must be followed strictly, faithfully and any substituted service other than
authorized by the statute is considered ineffective."
For immediate compliance.
In the case at bar, the sheriff’s Return of Summons simply states:
This is to certify that on this date: 26th day of January I have caused the service of summons,
together with the attached complaint and its annexes issued in the above entitled case upon
defendant REGALADO SAMARTINO thru ROBERTO SAMARTINO, Brother of the defendant
acknowledge receipt of said court processes by affixing his signature at the lower left portion of
the original summons hereto attached.
WHEREFORE, the attached original summons is hereby respectfully returned to the court of
origin duly served for information and record purposes.
Noveleta, Cavite, February 9, 1996.19
Clearly, the above return failed to show the reason why personal service could not be made. It
failed to state that prompt and personal service on the defendant was rendered impossible. It was
not shown that efforts were made to find the defendant personally and that said efforts failed;
hence the resort to substituted service. As stated above, these requirements are indispensable
because substituted service is in derogation of the usual method of service. It is an extraordinary
method since it seeks to bind the defendant to the consequences of a suit even though notice of
such action is served not upon him but upon another whom law could only presume would notify
him of the pending proceedings. For this reason, failure to faithfully, strictly, and fully comply with
the requirements of substituted service renders said service ineffective.20
Furthermore, nowhere in the return of summons or in the records of this case is it shown that
petitioner’s brother, on whom substituted service of summons was effected, was a person of
suitable age and discretion residing at petitioner’s residence.
There being no valid substituted service of summons, the trial court did not acquire jurisdiction
over the person of petitioner. It should be emphasized that the service of summons is not only
required to give the court jurisdiction over the person of the defendant, but also to afford the latter
an opportunity to be heard on the claim made against him. Thus, compliance with the rules
regarding the service of summons is as much an issue of due process as of jurisdiction. The
essence of due process is to be found in the reasonable opportunity to be heard and submit any
evidence one may have in support of his defense. It is elementary that before a person can be
deprived of his property, he should first be informed of the claim against him and the theory on
which such claim is premised.21
By reason of the ineffective service of summons, petitioner was not duly apprised of the action
against him. Consequently, he was prevented from answering the claims against him. He was not
given a chance to be heard on his defenses. What made matters worse was that the trial court
had actual knowledge that petitioner was then indisposed and unable to file his answer to the
complaint, as he was then confined at the NBI-TRC. The trial court’s failure to give petitioner a
reasonable opportunity to file his answer violated his right to due process. Perforce, the judgment
rendered against petitioner is nugatory and without effect.
The trial court should not have been too rash in declaring petitioner in default, considering it had
actual notice of valid reasons that prevented him from answering. Well-settled is the rule that
courts should be liberal in setting aside orders of default for default judgments are frowned upon,
unless in cases where it clearly appears that the reopening of the case is intended for delay. The
issuance of orders of default should be the exception rather than the rule, to be allowed only in
clear cases of obstinate refusal by the defendant to comply with the orders of the trial court.22
Suits should as much as possible be decided on the merits and not on technicalities. In this regard,
we have often admonished courts to be liberal in setting aside orders of default as default
judgments are frowned upon and not looked upon with favor for they may amount to a positive
and considerable injustice to the defendant and the possibility of such serious consequences
necessitates a careful examination of the grounds upon which the defendant asks that it be set
aside. Since rules of procedure are mere tools designed to facilitate the attainment of justice, it is
well recognized that this Court is empowered to suspend its operation, or except a particular case
from its operation, when the rigid application thereof tends to frustrate rather than promote the
ends of justice. We are not unmindful of the fact that during the pendency of the instant petition,
the trial court has rendered judgment against petitioners. However, being the court of last resort,
we deem it in the best interest that liberality and relaxation of the Rules be extended to petitioners
by setting aside the order of default issued by the trial court and the consequent default judgment;
otherwise, great injustice would result if petitioners are not afforded an opportunity to prove their
claims.23
In addition, the Regional Trial Court committed reversible error in dismissing the petition for relief
from judgment for having been filed out of time. According to the Regional Trial Court, the petition
for relief, filed on November 25, 1996, was late because petitioner had actual knowledge of the
judgment in the ejectment case since March 1996. The period within which to file a petition for
relief should have been reckoned from the date petitioner learned of the judgment of the Regional
Trial Court. It should not have been counted from the date of the Municipal Trial Court’s decision
because, precisely, petitioner appealed the same. It was the Regional Trial Court’s decision that
became final and, hence, was the proper subject of the petition for relief from judgment. It is
axiomatic that a petition for relief is only available against a final and executory judgment.24
Section 3, Rule 38, of the 1997 Rules of Civil Procedure provides that a verified petition for relief
must be filed within sixty (60) days after the petitioner learns of the judgment, final order, or other
proceeding to be set aside and not more than six (6) months after such judgment or final order
has been entered or such proceeding has been taken. It must be accompanied with affidavits
showing the fraud, accident, mistake, or excusable negligence relied upon, and the facts
constituting petitioner’s good and substantial cause of action or defense.25
It is not clear from the records of the case at bar when petitioner learned of the decision of the
Regional Trial Court affirming the judgment of the Municipal Trial Court. What appears is that the
said decision became final only on August 15, 1996, and must have been entered sometime
thereafter. Hence, the petition for relief filed on November 25, 1996 was well within the six-month
period prescribed by the Rules.
Finally, the records show that petitioner raised a meritorious defense in his affidavit of merit. He
alleged therein that the property from which he was being ejected had been sold to him by its
registered owner. Ownership is a valid defense in unlawful detainer cases. While possession is
the main issue in ejectment, it is also one of the essential attributes of ownership. It follows that
an owner of real property is entitled to possession of the same. Petitioner can, therefore, properly
plead his right of possession to defeat that of respondents. Indeed, an owner who cannot exercise
the seven "juses" or attributes of ownership - the right to possess, to use and enjoy, to abuse or
consume, to accessories, to dispose or alienate, to recover or vindicate and to the fruits - is a
crippled owner.26
All told, the Municipal Trial Court of Noveleta and the Regional Trial Court of Cavite City did not
have jurisdiction over the person of petitioner. Hence, all proceedings had as regards petitioner
were null and void. Necessarily, the enforcement of the writ of execution as well as the sale at
public auction of petitioner’s real property to satisfy the void judgment must also be declared of
no legal effect.
There is a real need to resolve the issue of ownership over the premises in order to determine
who, as between petitioner and respondents, has a better right to possess the property in dispute.
This can only be done in the proper proceeding before the trial court wherein petitioner will be
afforded every right to present evidence in his behalf.
WHEREFORE, in view of the foregoing, the petition is GRANTED. The decision of the Court of
Appeals in CA-G.R. SP No. 43202 is REVERSED and SET ASIDE. This case is REMANDED to
the Municipal Trial Court of Noveleta, Cavite, which is directed to continue proceedings in Civil
Case No. 744 by affording petitioner Regalado P. Samartino a chance to file his answer and
present evidence in his defense, and thereafter to hear and decide the case. The Writ of Execution
dated September 17, 1996, the Writ of Demolition dated January 14, 1997, and the certificate of
sale over Transfer Certificate of Title No. T-283572, as well as all acts and deeds incidental to the
judgment in Civil Case No. 744, are declared NULL AND VOID.
SO ORDERED.
Davide, Jr., Vitug, Kapunan, and Austria-Martinez, JJ., concur.
 PRINCE TRANSPORT, INC. and MR. G.R. No. 167291
RENATO CLAROS,
Petitioners, Present:

CARPIO, J., Chairperson,

NACHURA,
- versus - PERALTA,
ABAD, and
_____________,** JJ.

DIOSDADO GARCIA, LUISITO

GARCIA, RODANTE ROMERO, REX Promulgated:
BARTOLOME, FELICIANO GASCO,
JR., DANILO ROJO, EDGAR
SANFUEGO, AMADO GALANTO,
EUTIQUIO LUGTU, JOEL January 12, 2011
GRAMATICA, MIEL CERVANTES,
TERESITA CABANES, ROE DELA
CRUZ, RICHELO BALIDOY, VILMA
PORRAS, MIGUELITO SALCEDO,
CRISTINA GARCIA, MARIO
NAZARENO, DINDO TORRES,
ESMAEL RAMBOYONG,
ROBETO*MANO, ROGELIO BAGAWISAN, ARIEL
SNACHEZ, ESTAQULO VILLAREAL, NELSON MONTERO,
GLORIA ORANTE, HARRY TOCA, PABLITO MACASAET
and RONALD GARCITA

Respondents.
x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court praying for the
annulment of the Decision[1] and Resolution[2] of the Court of Appeals (CA) dated December 20, 2004 and February 24, 2005, respectively, in CA-
G.R. SP No. 80953. The assailed Decision reversed and set aside the Resolutions dated May 30, 2003[3] and September 26, 2003[4] of the National Labor Relations

Commission (NLRC) in
CA No. 029059-01, while the disputed Resolution denied petitioners' Motion for
Reconsideration.
The present petition arose from various complaints filed by herein respondents charging petitioners with
illegal dismissal, unfair labor practice and illegal deductions and praying for the award of premium pay for
holiday and rest day, holiday pay, service leave pay, 13th month pay, moral and exemplary damages and
attorney's fees.

Respondents alleged in their respective position papers and other related pleadings that they were
employees of Prince Transport, Inc. (PTI), a company engaged in the business of transporting passengers
by land; respondents were hired either as drivers, conductors, mechanics or inspectors, except for
respondent Diosdado Garcia (Garcia), who was assigned as Operations Manager; in addition to their regular
monthly income, respondents also received commissions equivalent to 8 to 10% of their wages; sometime
in October 1997, the said commissions were reduced to 7 to 9%; this led respondents and other employees
of PTI to hold a series of meetings to discuss the protection of their interests as employees; these meetings
led petitioner Renato Claros, who is the president of PTI, to suspect that respondents are about to form a
union; he made known to Garcia his objection to the formation of a union; in December 1997, PTI
employees requested for a cash advance, but the same was denied by management which resulted in
demoralization on the employees' ranks; later, PTI acceded to the request of some, but not all, of the
employees; the foregoing circumstances led respondents to form a union for their mutual aid and protection;
in order to block the continued formation of the union, PTI caused the transfer of all union members and
sympathizers to one of its sub-companies, Lubas Transport (Lubas); despite such transfer, the schedule of
drivers and conductors, as well as their company identification cards, were issued by PTI; the daily time
records, tickets and reports of the respondents were also filed at the PTI office; and, all claims for salaries
were transacted at the same office; later, the business of Lubas deteriorated because of the refusal of PTI to
maintain and repair the units being used therein, which resulted in the virtual stoppage of its operations and
respondents' loss of employment.

Petitioners, on the other hand, denied the material allegations of the complaints contending that herein
respondents were no longer their employees, since they all transferred to Lubas at their own request;
petitioners have nothing to do with the management and operations of Lubas as well as the control and
supervision of the latter's employees; petitioners were not aware of the existence of any union in their
company and came to know of the same only in June 1998 when they were served a copy of the summons
in the petition for certification election filed by the union; that before the union was registered on April 15,
1998, the complaint subject of the present petition was already filed; that the real motive in the filing of the
complaints was because PTI asked respondents to vacate the bunkhouse where they (respondents) and their
respective families were staying because PTI wanted to renovate the same.

Subsequently, the complaints filed by respondents were consolidated.

On October 25, 2000, the Labor Arbiter rendered a Decision,[5] the dispositive portion of which reads as follows:

WHEREFORE, judgment is hereby rendered:

1. Dismissing the complaints for Unfair Labor Practice, non-payment of holiday pay
and holiday premium, service incentive leave pay and 13th month pay;

Dismissing the complaint of Edgardo Belda for refund of boundary-hulog;

2. Dismissing the complaint for illegal dismissal against the respondents Prince
Transport, Inc. and/or Prince Transport Phils. Corporation, Roberto Buenaventura, Rory Bayona,
Ailee Avenue, Nerissa Uy, Mario Feranil and Peter Buentiempo;

3. Declaring that the complainants named below are illegally dismissed by Lubas
Transport; ordering said Lubas Transport to pay backwages and separation pay in lieu of
reinstatement in the following amount:

4. Ordering Lubas Transport to pay attorney's fees equivalent to ten (10%) of the total
monetary award; and

6. Ordering the dismissal of the claim for moral and exemplary damages for lack merit.
SO ORDERED.[6]
The Labor Arbiter ruled that petitioners are not guilty of unfair labor practice in the absence of evidence to
show that they violated respondents right to self-organization. The Labor Arbiter also held that Lubas is the
respondents employer and that it (Lubas) is an entity which is separate, distinct and independent from PTI.
Nonetheless, the Labor Arbiter found that Lubas is guilty of illegally dismissing respondents from their
employment.

Respondents filed a Partial Appeal with the NLRC praying, among others, that PTI should also be held
equally liable as Lubas.

In a Resolution dated May 30, 2003, the NLRC modified the Decision of the Labor Arbiter and disposed
as follows:

WHEREFORE, premises considered, the appeal is hereby PARTIALLY GRANTED.

Accordingly, the Decision appealed from is SUSTAINED subject to the modification that
Complainant-Appellant Edgardo Belda deserves refund of his boundary-hulog in the amount of
P446,862.00; and that Complainants-Appellants Danilo Rojo and Danilo Laurel should be included
in the computation of Complainants-Appellants claim as follows:

Complainants Backwages Separation Pay

41. Danilo Rojo P355,560.00 P48,000.00
42. Danilo Laurel P357,960.00 P72,000.00

As regards all other aspects, the Decision appealed from is SUSTAINED.

SO ORDERED.[7]
Respondents filed a Motion for Reconsideration, but the NLRC denied it in its Resolution[8] dated September 26,
2003.

Respondents then filed a special civil action for certiorari with the CA assailing the Decision and
Resolution of the NLRC.

On December 20, 2004, the CA rendered the herein assailed Decision which granted respondents' petition.
The CA ruled that petitioners are guilty of unfair labor practice; that Lubas is a mere instrumentality, agent
conduit or adjunct of PTI; and that petitioners act of transferring respondents employment to Lubas is
indicative of their intent to frustrate the efforts of respondents to organize themselves into a union.
Accordingly, the CA disposed of the case as follows:

WHEREFORE, the Petition for Certiorari is hereby GRANTED. Accordingly, the subject
decision is hereby REVERSED and SET ASIDE and another one ENTERED finding the
respondents guilty of unfair labor practice and ordering them to reinstate the petitioners to their
former positions without loss of seniority rights and with full backwages.

With respect to the portion ordering the inclusion of Danilo Rojo and Danilo Laurel in the
computation of petitioner's claim for backwages and with respect to the portion ordering the refund
of Edgardo Belda's boundary-hulog in the amount of P446,862.00, the NLRC decision is affirmed
and maintained.

SO ORDERED.[9]

Petitioners filed a Motion for Reconsideration, but the CA denied it via its Resolution[10] dated February 24, 2005.

Hence, the instant petition for review on certiorari based on the following grounds:
 A
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN GIVING
DUE COURSE TO THE RESPONDENTS' PETITION FOR CERTIORARI

1. THE COURT OF APPEALS SHOULD HAVE RESPECTED THE FINDINGS OF

THE LABOR ARBITER AND AFFIRMED BY THE NLRC

2. ONLY ONE PETITIONER EXECUTED AND VERIFIED THE PETITION

3. THE COURT OF APPEALS SHOULD NOT HAVE GIVEN DUE COURSE TO THE
PETITION WITH RESPECT TO RESPONDENTS REX BARTOLOME, FELICIANO
GASCO, DANILO ROJO, EUTIQUIO LUGTU, AND NELSON MONTERO AS THEY
FAILED TO FILE AN APPEAL TO THE NLRC

B
THE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT PETITIONERS
PRINCE TRANSPORT, INC. AND MR. RENATO CLAROS AND LUBAS TRANSPORT ARE
ONE AND THE SAME CORPORATION AND THUS, LIABLE IN SOLIDUM TO
RESPONDENTS.

C
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN ORDERING
THE REINSTATEMENT OF RESPONDENTS TO THEIR PREVIOUS POSITION WHEN IT IS
NOT ONE OF THE ISSUES RAISED IN RESPONDENTS' PETITION FOR CERTIORARI.[11]

Petitioners assert that factual findings of agencies exercising quasi-judicial functions like the NLRC are
accorded not only respect but even finality; that the CA should have outrightly dismissed the petition filed
before it because in certiorariproceedings under Rule 65 of the Rules of Court it is not within the province
of the CA to evaluate the sufficiency of evidence upon which the NLRC based its determination, the inquiry
being limited essentially to whether or not said tribunal has acted without or in excess of its jurisdiction or
with grave abuse of discretion. Petitioners assert that the CA can only pass upon the factual findings of the
NLRC if they are not supported by evidence on record, or if the impugned judgment is based on
misapprehension of facts which circumstances are not present in this case. Petitioners also emphasize that
the NLRC and the Labor Arbiter concurred in their factual findings which were based on substantial
evidence and, therefore, should have been accorded great weight and respect by the CA.

Respondents, on the other hand, aver that the CA neither exceeded its jurisdiction nor committed error in
re-evaluating the NLRCs factual findings since such findings are not in accord with the evidence on record
and the applicable law or jurisprudence.

The Court agrees with respondents.

The power of the CA to review NLRC decisions via a petition for certiorari under Rule 65 of the Rules of
Court has been settled as early as this Courts decision in St. Martin Funeral Homes v. NLRC.[12] In said case, the
Court held that the proper vehicle for such review is a special civil action for
certiorari under Rule 65 of the said Rules, and that the
case should be filed with the CA in strict observance of the doctrine of hierarchy of courts. Moreover, it is
already settled that under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902,
the CA pursuant to the exercise of its original jurisdiction over petitions for certiorari is specifically given
the power to pass upon the evidence, if and when necessary, to resolve factual issues.[13] Section 9 clearly states:

xxxx

The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence and
perform any and all acts necessary to resolve factual issues raised in cases falling within its original
and appellate jurisdiction, including the power to grant and conduct new trials or further
proceedings. x x x
However, equally settled is the rule that factual findings of labor officials, who are deemed to have acquired
expertise in matters within their jurisdiction, are generally accorded not only respect but even finality by
the courts when supported by substantial evidence, i.e., the amount of relevant evidence which a reasonable
mind might accept as adequate to justify a conclusion.[14] But these findings are not infallible. When there is a showing that they were
arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts.[15] The
CA can grant the petition for certiorari
if it finds that the NLRC, in its assailed decision or resolution, made a factual finding not supported by
substantial evidence.[16] It is within the jurisdiction of the CA, whose jurisdiction over labor cases has been expanded to review the findings of the
NLRC.[17]

In this case, the NLRC sustained the factual findings of the Labor Arbiter. Thus, these findings are generally
binding on the appellate court, unless there was a showing that they were arrived at arbitrarily or in disregard
of the evidence on record. In respondents' petition for certiorari with the CA, these factual findings were
reexamined and reversed by the appellate court on the ground that they were not in accord with credible
evidence presented in this case. To determine if the CA's reexamination of factual findings and reversal of
the NLRC decision are proper and with sufficient basis, it is incumbent upon this Court to make its own
evaluation of the evidence on record.[18]

After a thorough review of the records at hand, the Court finds that the CA did not commit error in arriving
at its own findings and conclusions for reasons to be discussed hereunder.

Firstly, petitioners posit that the petition filed with the CA is fatally defective, because the attached
verification and certificate against forum shopping was signed only by respondent Garcia.

The Court does not agree.

While the general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs in a
case and the signature of only one of them is insufficient, the Court has stressed that the rules on forum
shopping, which were designed to promote and facilitate the orderly administration of justice, should not
be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective. [19] Strict
compliance with the provision regarding the certificate of non-forum shopping underscores its mandatory nature in that the certification cannot be altogether dispensed

with or its requirements completely disregarded.[20] It does not, however, prohibit substantial compliance therewith under justifiable circumstances, considering

especially that although it is obligatory, it is not jurisdictional.[21]

In a number of cases, the Court has consistently held that when all the petitioners share a common interest
and invoke a common cause of action or defense, the signature of only one of them in the certification
against forum shopping substantially complies with the rules.[22] In the present case, there is no question that respondents share a
common interest and invoke a common cause of action. Hence, the signature of respondent Garcia is a sufficient compliance with the rule governing certificates of non-

forum shopping. In the first place, some of the respondents actually executed a Special Power of Attorney authorizing Garcia as their attorney-in-fact in filing a petition

for certiorari with the CA.[23]

The Court, likewise, does not agree with petitioners' argument that the CA should not have given due course
to the petition filed before it with respect to some of the respondents, considering that these respondents
did not sign the verification attached to the Memorandum of Partial Appeal earlier filed with the NLRC.
Petitioners assert that the decision of the Labor Arbiter has become final and executory with respect to these
respondents and, as a consequence, they are barred from filing a petition for certiorari with the CA.

With respect to the absence of some of the workers signatures in the verification, the verification
requirement is deemed substantially complied with when some of the parties who undoubtedly have
sufficient knowledge and belief to swear to the truth of the allegations in the petition had signed the same.
Such verification is deemed a sufficient assurance that the matters alleged in the petition have been made
in good faith or are true and correct, and not merely speculative. Moreover, respondents' Partial Appeal
shows that the appeal stipulated as complainants-appellants Rizal Beato, et al., meaning that there were
more than one appellant who were all workers of petitioners.
In any case, the settled rule is that a pleading which is required by the Rules of Court to be verified, may
be given due course even without a verification if the circumstances warrant the suspension of the rules in
the interest of justice.[24]Indeed, the absence of a verification is not jurisdictional, but only a formal defect, which does not of itself justify a court in refusing
to allow and act on a case.[25] Hence, the failure of some of the respondents to sign the verification attached to their Memorandum of Appeal filed with the NLRC is

not fatal to their cause of action.

Petitioners also contend that the CA erred in applying the doctrine of piercing the corporate veil with respect
to Lubas, because the said doctrine is applicable only to corporations and Lubas is not a corporation but a
single proprietorship; that Lubas had been found by the Labor Arbiter and the NLRC to have a personality
which is separate and distinct from that of PTI; that PTI had no hand in the management and operation as
well as control and supervision of the employees of Lubas.

The Court is not persuaded.

On the contrary, the Court agrees with the CA that Lubas is a mere agent, conduit or adjunct of PTI. A
settled formulation of the doctrine of piercing the corporate veil is that when two business enterprises are
owned, conducted and controlled by the same parties, both law and equity will, when necessary to protect
the rights of third parties, disregard the legal fiction that these two entities are distinct and treat them as
identical or as one and the same.[26] In the present case, it may be true that Lubas is a single proprietorship and not a corporation. However,
petitioners attempt to isolate themselves from and hide behind the supposed separate and distinct
personality of Lubas so as to evade their liabilities is precisely what the classical doctrine of piercing the
veil of corporate entity seeks to prevent and remedy.

Thus, the Court agrees with the observations of the CA, to wit:

As correctly pointed out by petitioners, if Lubas were truly a separate entity, how come that it was
Prince Transport who made the decision to transfer its employees to the former? Besides, Prince
Transport never regarded Lubas Transport as a separate entity. In the aforesaid letter, it referred to
 said entity as Lubas operations. Moreover, in said letter, it did not transfer the employees; it
assigned them. Lastly, the existing funds and 201 file of the employees were turned over not to a
new company but a new management.[27]

The Court also agrees with respondents that if Lubas is indeed an entity separate and independent from PTI
why is it that the latter decides which employees shall work in the former?

What is telling is the fact that in a memorandum issued by PTI, dated January 22, 1998, petitioner company
admitted that Lubas is one of its sub-companies.[28] In addition, PTI, in its letters to its employees who were transferred to Lubas, referred
to the latter as its New City Operations Bus.[29]

Moreover, petitioners failed to refute the contention of respondents that despite the latters transfer to Lubas
of their daily time records, reports, daily income remittances of conductors, schedule of drivers and
conductors were all made, performed, filed and kept at the office of PTI. In fact, respondents identification
cards bear the name of PTI.

It may not be amiss to point out at this juncture that in two separate illegal dismissal cases involving
different groups of employees transferred by PTI to other companies, the Labor Arbiter handling the cases
found that these companies and PTI are one and the same entity; thus, making them solidarily liable for the
payment of backwages and other money claims awarded to the complainants therein.[30]

Petitioners likewise aver that the CA erred and committed grave abuse of discretion when it ordered
petitioners to reinstate respondents to their former positions, considering that the issue of reinstatement was
never brought up before it and respondents never questioned the award of separation pay to them.

The Court is not persuaded.

It is clear from the complaints filed by respondents that they are seeking reinstatement.[31]

In any case, Section 2 (c), Rule 7 of the Rules of Court provides that a pleading shall specify the relief
sought, but may add a general prayer for such further or other reliefs as may be deemed just and equitable.
Under this rule, a court can grant the relief warranted by the allegation and the proof even if it is not
specifically sought by the injured party; the inclusion of a general prayer may justify the grant of a remedy
different from or together with the specific remedy sought, if the facts alleged in the complaint and the
evidence introduced so warrant.[32]

Moreover, in BPI Family Bank v. Buenaventura,[33] this Court ruled that the general prayer is broad enough
to justify extension of a remedy different from or together with the specific remedy sought. Even without
the prayer for a specific remedy, proper relief may be granted by the court if the facts alleged in the
complaint and the evidence introduced so warrant. The court shall grant relief warranted by the allegations
and the proof even if no such relief is prayed for. The prayer in the complaint for other reliefs equitable and
just in the premises justifies the grant of a relief not otherwise specifically prayed for.[34] In the instant case, aside
from their specific prayer for reinstatement, respondents, in their separate complaints, prayed for such reliefs which are deemed just and equitable.

As to whether petitioners are guilty of unfair labor practice, the Court finds no cogent reason to depart from
the findings of the CA that respondents transfer of work assignments to Lubas was designed by petitioners
as a subterfuge to foil the formers right to organize themselves into a union. Under Article 248 (a) and (e)
of the Labor Code, an employer is guilty of unfair labor practice if it interferes with, restrains or coerces its
employees in the exercise of their right to self-organization or if it discriminates in regard to wages, hours
of work and other terms and conditions of employment in order to encourage or discourage membership in
any labor organization.

Indeed, evidence of petitioners' unfair labor practice is shown by the established fact that, after respondents'
transfer to Lubas, petitioners left them high and dry insofar as the operations of Lubas was concerned. The
Court finds no error in the findings and conclusion of the CA that petitioners withheld the necessary
financial and logistic support such as spare parts, and repair and maintenance of the transferred buses until
only two units remained in running condition. This left respondents virtually jobless.

WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of
Appeals, dated December 20, 2004 and February 24, 2005, respectively, in CA-G.R. SP No. 80953, are
AFFIRMED.

SO ORDERED.