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EN BANC

[G.R. No. L-19613. April 30, 1966.]

ALFONSO G. LOPEZ, Plaintiff-Appellant, v. FILIPINAS COMPANIA DE


SEGUROS, Defendant-Appellee.

Antonio M. Mendoza for plaintiff and Appellant.

Josue H. Gustilo & Associates for defendant and appellee.

SYLLABUS

1. ACTIONS; OPERATIVE FACT WHICH CONVERTS A CLAIM INTO AN ACTION OR


SUIT. — The terms "action" and "suit" are synonymous, and the determinative or
operative fact which converts a claim into an "action" or "suit" is the filing of the
same with a "court of justice." Filed elsewhere, as with some other body or office
not a court of justice, the claim may not properly be categorized under either term.

2. ID.; ID.; COMPLAINT FILED WITH OFFICE OF INSURANCE COMMISSIONER NOT


AN ACTION OR SUIT. — An "action or suit" is essentially "for the enforcement or
protection of a right, or the prevention or redress of a wrong." (Rule 2, Sec. 1,
Rules of Court.) There is nothing in the Insurance Law, Act No. 2427, as amended,
or in any of its allied legislations, which empowers the Insurance Commissioner to
adjudicate on disputes relating to an insurance company’s liability to an insured
under a policy issued by the former to the latter. The validity of an insured’s claim
under a specific policy, its amount, and all such other matters as might involve the
interpretation and construction of the insurance policy, are issues which only a
regular court of justice may resolve and settle. Consequently, a complaint filed by
the insured with the Office of the Insurance Commissioner is not an "action or suit."

DECISION

REGALA, J.:

This is an appeal by the plaintiff-appellant, Alfonso G. Lopez, from an order of the


Court of First Instance of Manila, dated January 25, 1962, dismissing his complaint
against the defendant-appellee, Filipinas Compania de Seguros.

Prior to April 22, 1959, the plaintiff applied with the defendant company for the
insurance of his property consisting of a Biederman truck tractor and a Winter Weils
trailer from loss or damage in the amount of P26,000.00 and P10,000.00
respectively. In connection with the above application, the defendant company
inquired of the plaintiff the following:jgc:chanrobles.com.ph

"5. Has any company in respect of the insurance of any car or vehicle
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(a) declined, canceled or refused to renew your insurance?

(b) increased your premium on renewal?

To both questions the plaintiff answered: "none," though the truth was at that time,
the American International Underwriters of the Philippines (AIU) had already
declined a similar application for insurance by the plaintiff in respect of the above-
described vehicles.

On April 22, 1959, the defendant appellee issued to the plaintiff-appellant two
Commercial Vehicle Comprehensive Policies covering the above properties. On
August 30, 1959, while the said policies were in force, the aforementioned vehicles
figured in an accident at Bagabag, Nueva Vizcaya, resulting in the total loss of the
tractor and partial damage to the trailer. Accordingly, the plaintiff gave notice of the
same to the defendant company and made demand upon the latter for the payment
to him of P27,962.00, the total amount of damages resulting from the accident.

On April 28, 1960, the defendant-appellant rejected the above claim by reason of,
among others, the claimant’s alleged "concealment of a material fact," namely: that
the insured property previously had been declined insurance by another company.

In view of the rejection of his claim by the defendant company, the plaintiff-
appellant filed on May 27, 1960 with the Office of the Insurance Commissioner a
complaint against the said company. On June 7, 1960, the Assistant Insurance
Commissioner requested the defendant company to give its side of the above
complaint and, thereafter, or on August 1, 1960, the said official "transmitted to the
plaintiff, thru his counsel, the `self-explanatory letters’ dated June 12, 1960 of the
American International Underwriters of the Philippines, Inc., and June 21, 1960 of
the defendant, which the said office had received from said parties in connection
with plaintiff’s complaint, with the suggestion that in view of the reluctant attitude
of plaintiff towards the company’s proposal for the matter to be settled thru
arbitration, and considering the informative facts disclosed’ in the letter of AIUPI,
plaintiff should pursue his case to the Court which has proper competence to
resolve said matter."cralaw virtua1aw library

On August 16, 1961, the plaintiff-appellant informed by letter the Office of the
Insurance Commissioner that he was willing to submit his claim to arbitration and,
in the premises, suggested that the Assistant Insurance Commissioner be
designated as the sole arbitrator of the same. On September 1, 1960, the
Insurance Commissioner informed the plaintiff-appellant of his willingness to act as
the single arbitrator, provided that both parties to the dispute manifest in writing
their conformity thereto and to abide by the arbitrator’s award. The defendant-
appellee, on the other hand, informed the Insurance Commissioner on September
22, 1960 that it could not consent to the above proposal since the claim of the
plaintiff cannot be resolved by arbitration, as recourse to arbitration referred to in
the policy contract, envisioned only differences or disputes, `with respect to the
amount of the company’s liability,’ and not to cases where the company does not
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admit its liability to the insured." With this rejection, the plaintiff-appellant filed his
complaint with the Court of First Instance of Manila on September 19, 1961.

Against the above complaint, the defendant-appellee filed on September 29, 1961 a
motion to dismiss on the ground of prescription. The latter argued that the
plaintiff’s claim had already prescribed since it was not filed within twelve months
from its rejection by the insurance company as stipulated under paragraph 9 of the
General Conditions of Commercial Vehicle Comprehensive Policy Nos. 5598 and
5599, to wit:jgc:chanrobles.com.ph

"If a claim be made and rejected and an action or suit be not commenced within
twelve months after such rejection or (in case of arbitration taking place as
provided herein) within twelve months after the arbitrator, arbitrators, or umpire
shall have made their award then the claim shall for all purposes be deemed to
have been abandoned and shall not thereafter be recovered hereunder."cralaw
virtua1aw library

On January 25, 1962, the court a quo sustained the above motion and dismissed
the complaint. Thus, the instant appeal.

The principal issue raised in this appeal is simple: Was the complaint filed by the
plaintiff-appellant with the Office of the Insurance Commissioner on May 27, 1960 a
commencement of an "action or suit" within the meaning and intent of general
condition quoted above? If it was, then the plaintiff’s complaint has not yet
prescribed since the complaint filed with the said office was made on May 27, 1960
or just about a month after his claim was rejected by the defendant- appellee on
April 28, 1960. On the other hand, if the abovequoted condition refers alone to an
"action or suit" filed with a court of justice, as the Order appealed from urges and
as the herein appellee maintains, then, indeed, must the finding of prescription in
this incident be upheld. For, while the plaintiff’s claim was rejected on April 28,
1960 by the insurance company, the "action or suit" thereon with a court of justice
was filed some 17 months later, September 19, 1961.

We find for the appellee.

In 1 Moran 86 (1963 ed.), the following jurisprudence is


expressed:jgc:chanrobles.com.ph

"Action is the act by which one sues another in "a court of justice" for the
enforcement or protection of a right, or the prevention or redress of a wrong.
Special proceeding is the act by which one seeks to establish the status or right of a
party, or a particular fact. Hence, an action is distinguished from special proceeding
in that the former is a formal demand of a right by one against another, while the
latter is but a petition for a declaration of a status, right or fact." (Italics supplied).

The above distinction was laid down in connection with the definition of "action" in
Rule 2, Section 1 of the Rules of Court that:chanrob1es virtual 1aw library

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Section 1. Action defined. — Action means an ordinary suit in a Court of Justice by
which one party prosecutes another for the enforcement or protection of a right, or
the prevention or redress of a wrong." (Italics supplied).

Also, in 1 Am. Jur. 407, as cited in Francisco, Civil Procedure, p. 91, a suit is
defined as:jgc:chanrobles.com.ph

"Suit is the prosecution or pursuit of some claim or demand in a court of justice, or


any proceeding in a court of justice in which a plaintiff pursues his remedy to
recover a right or claim." (Italics supplied)

Upon the authorities, therefore, it is settled that the terms "action" and "suit" are
synonymous. Moreover, it is clear that the determinative or operative fact which
converts a claim into an "action or suit" is the filing of the same with a "court of
justice." Filed elsewhere, as with some other body or office not a court of justice,
the claim may not properly be categorized under either term.

Apart from the foregoing, however, there is yet one other reason why the
appellant’s recourse to the Office of the Insurance Commissioner could not have
been an "action or suit" which could have halted the running of the prescriptive
period stipulated in the insurance policies involved. An "action or suit" is essentially
"for the enforcement or protection of a right, or the prevention or redress of a
wrong." (Rule 2, Sec. 1, Rules of Court). There is nothing in the Insurance Law, Act
No. 2427, as amended, nor in any of its allied legislations, which empowers the
Insurance Commissioner to adjudicate on disputes relating to an insurance
company’s liability to an insured under a policy issued by the former to the latter.
The validity of an insured’s claim under a specific policy, its amount, and all such
other matters as might involve the interpretation and construction of the insurance
policy, are issues which only a regular court of justice may resolve and settle.
Consequently, the complaint filed by the appellant herein with the Office of the
Insurance Commission could not have been an "action or suit."cralaw virtua1aw
library

The other assignments of error in the appellant’s brief spring from or are
consequences of the latter’s view that the claim be filed with the Office of the
Insurance Commissioner was an "action or suit" within the contemplation of
paragraph 9 of the general condition earlier quoted. With our ruling above,
therefore, the necessity to pass on them becomes inconsequential.

Wherefore, the order appealed from is hereby affirmed, with costs.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Dizon, Makalintal,


Bengzon, J.P. and Zaldivar, JJ., concur.

Barrera, J., concurs in the result.

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[G.R. No. 128646. March 14, 2003]

CRISELDA F. JOSE, petitioner, vs. HON. COURT OF APPEALS and DANILO OMEGA,
respondents.

DECISION
AUSTRIA-MARTINEZ, J.:

Before us is a petition erroneously entitled as a Petition for Review on Certiorari which should
be a petition for certiorari under Rule 65 of the Rules of Court.
The factual background of the case is as follows:
On November 14, 1994, the Regional Trial Court of Cebu City (Branch 22) rendered a
decision in Civil Case No. CEO-15709, entitled Danilo Omega, Plaintiff, versus, Criselda F. Jose,
Defendant., the dispositive portion of which reads as follows:
WHEREFORE, based on the evidence thus presented, this Court finds for the
plaintiff. Judgment is hereby rendered declaring the March 3, 1981 marriage between
plaintiff Danilo Omega and Criselda F. Jose, null and void ab initio. Custody over the
three children Joselyn, Danilo, Jr. and Jordan, all surnamed Omega shall be entrusted
to plaintiff Danilo Omega.
Furnish the Local Civil Registrar of Manila with a copy of this judgment. No costs.
SO ORDERED.1
The ground for declaring the marriage null and void is psychological incapacity on the part of
defendant Criselda under Article 36 of the Family Code of the Philippines. During the trial, the
counsel on record of defendant Criselda was Atty. Margarito D. Yap of the Cebu City District
Office of the Public Attorneys Office (PAO). However, defendant Criselda filed a Notice of Appeal,
dated December 7, 1994, on her own, without the assistance of Atty. Yap.2
The Judicial Records Division (JRD) of the Court of Appeals sent a notice to pay docket fee,
dated August 3, 1995 to Atty. Yap which was received by him.3 On October 24, 1995, the appellate
court, through the Former Sixteenth Division,4 promulgated a Resolution which reads as follows:
For failure of the defendant-appellant to pay the docketing fee in this case within the
reglementary period which expired on August 25, 1995, despite receipt by his counsel
on August 10, 1995 of this Courts notice dated August 3, 1995, this appeal is hereby

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DISMISSED pursuant to Section 1(d), Rule 50 of the Rules of Court.
SO ORDERED.5
On May 9, 1996, the Division Clerk of Court issued the Entry of Judgment certifying that the
above-quoted Resolution had become final and executory as of December 1, 1995.6 It is indicated
at the bottom of said Entry of Judgment that Atty. Yap and the Special and Appealed Cases
Division of the PAO were sent copies of the Entry of Judgment.
On May 13, 1996, the appellate court received a letter of even date from defendant-appellant
Criselda addressed to the Clerk of Court of the Court of Appeals inquiring about the status of her
appeal and claiming that she has not received any notice from the appellate court.7
The appellate court noted the explanation of the clerk in the Civil Cases Section of the Judicial
Records Division (JRD) of said court that Atty. Yap was sent the notice to pay docket fee because
Criselda had sent a copy of her Notice of Appeal to Atty. Yap and that per the records of the case,
Atty. Yap was earlier sent a copy of the formal offer of exhibits and duly received in his behalf, he
filed the comments and objections to the exhibits for the plaintiff; he appeared at the hearings
conducted by the trial court.8
On October 28, 1996, Criselda through counsel filed a Motion for Leave of Court to File
Omnibus Motions/Motion to Reinstate Appeal.9 On December 16, 1996, the Court of Appeals
issued the following Resolution:
Considering that the Resolution dismissing this appeal has become final on
December 1, 1995 and an Entry of Judgment has in fact been made on May 9, 1996, the
Motion for Leave of Court to File Omnibus Motions/Motion to Reinstate Appeal and the
Omnibus Motions/Motion to Reinstate Appeal are hereby denied.
SO ORDERED.10
Criseldas motion for reconsideration was denied by the Court of Appeals.
Hence, the present petition on the following ground:
The public respondent Honorable Court of Appeals committed grave error in denying

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the petitioners Motion for Leave of Court to file Omnibus Motions/Motion to Reinstate
Appeal and the Omnibus Motions/Motion to Reinstate Appeal which if not corrected,
would deprive petitioner of her constitutional right to due process and injustice would be
done to her.11
on which basis, petitioner Criselda raises the following issues:
I.
WHETHER OR NOT THE PETITIONER WHO APPEALED HER CASE BY HERSELF
WITHOUT COUNSEL WAS VALIDLY SERVED WITH NOTICE TO PAY THE
DOCKETING FEE AND NOTICE OF THE RESOLUTION DISMISSING HER APPEAL
FOR FAILURE TO PAY THE DOCKETING FEE.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN DENYING
THE PETITIONERS MOTION FOR LEAVE OF COURT TO FILE OMNIBUS
MOTIONS/MOTION TO REINSTATE APPEAL AND THE OMNIBUS
MOTIONS/MOTION TO REINSTATE APPEAL.12
After private respondent filed his Comment, parties filed their respective Memoranda in
compliance with the Resolution of the Court dated December 14, 1998.
We find the petition devoid of merit.
Based on the records, it appears that the PAO, through Atty. Victor C. Laborte and Atty. Yap,
represented petitioner during the trial of the case. Although petitioner herself personally filed the
Notice of Appeal, the fact remains that Atty. Yap or the PAO has not filed any formal notice of
withdrawal of appearance in the trial court. Therefore, insofar as the appellate court is concerned,
Atty. Yap is the counsel of record. As such, the appellate court did not commit any grave abuse
of discretion in denying petitioners motion for leave of court to file omnibus motions or motion to
reinstate appeal.
Section 22, Rule 138 of the Rules of Court, provides:
Section 22. Attorney who appears in lower court presumed to represent client on
appeal. An attorney who appears de parte in a case before a lower court shall be
presumed to continue representing his client on appeal, unless he files a formal petition
withdrawing his appearance in the appellate court.
Payment of the docket and other legal fees within the prescribed period is both mandatory
and jurisdictional, and failure of the appellant to conform with the rules on appeal renders the
judgment final and executory.13
Indeed, the Court, in some instances, had allowed liberal construction of the Rules of Court
with respect to the rules on the manner and periods for perfecting appeals on equitable

7
consideration.14 In Buenaflor vs. Court of Appeals, the Court has enunciated the following:
The established rule is that the payment in full of the docket fees within the
prescribed period is mandatory. Nevertheless, this rule must be qualified, to wit: First,
the failure to pay appellate court docket fee within the reglementary period allows only
discretionary dismissal, not automatic dismissal, of the appeal; Second, such power
should be used in the exercise of the Courts sound discretion in accordance with the
tenets of justice and fair play and with great deal of circumspection considering all
attendant circumstances.
Admittedly, this Court has allowed the filing of an appeal in some cases where a
stringent application of the rules would have denied it, only when to do so would serve
the demands of justice and in the exercise of the Courts equity jurisdiction. This is based
on the rule of liberality in the interpretation of the Rules to achieve substantial justice. It
may be recalled that the general rule is that the Rules of Court are rules of procedure
and whenever called for they should be so construed as to give effect rather than defeat
their essence.
Section 6, Rule 1 of the 1997 Rules of Civil Procedure provides:
SEC. 6. Construction These Rules shall be liberally construed in order to
promote their objective of securing a just, speedy and inexpensive disposition
of every action and proceeding.
Rules of procedures are intended to promote, not to defeat, substantial justice and,
therefore, they should not be applied in a very rigid and technical sense. The exception
is that, while the Rules are liberally construed, the provisions with respect to the rules on
the manner and periods for perfecting appeals are strictly applied. As an exception to
the exception, these rules have sometimes been relaxed on equitable considerations.
Also, in some cases the Supreme Court has given due course to an appeal perfected
out of time where a stringent application of the rules would have denied it, but only when
to do so would serve the demands of substantial justice, and in the exercise of equity
jurisdiction of the Supreme Court.
The underlying consideration in this petition is that the act of dismissing the notice
of appeal, if done in excess of the trial courts jurisdiction, amounts to an undue denial of
the petitioners right to appeal. The importance and real purpose of the remedy of appeal
has been emphasized in Castro v. Court of Appeals where this Court ruled that an appeal
is an essential part of our judicial system and trial courts are advised to proceed with
caution so as not to deprive a party of the right to appeal and instructed that every party-
litigant should be afforded the amplest opportunity for the proper and just disposition of
his cause, freed from the constraints of technicalities.15
However, the Court finds no cogent reason to be liberal in the present case for the following
reasons:
Petitioners counsel, Atty. Margarito Yap of the PAO was properly sent by the appellate court
a notice to pay the docket fees. Atty. Yap or the PAO did not file any formal withdrawal of
appearance and therefore, for all intents and purposes, the appellate court correctly sent the
notice to Atty. Yap. It is settled that clients are bound by the mistakes, negligence and omission

8
of their counsel.16
Moreover, under Section 21, Rule 138 of the Rules of Court, an attorney is presumed to be
properly authorized to represent any cause in which he appears. Under Section 22 of the same
Rule, an attorney who appears de parte in a case before a lower court shall be presumed to
continue representing his client on appeal, unless he files a formal petition withdrawing his
appearance in the appellate court.
Petitioner failed to pursue her appeal for almost two years. She herself filed the notice of
appeal on December 4, 1994 but thought of inquiring from the Court of Appeals about her appeal
only on May 13, 1996 (or after the lapse of one year and five months) as to the status of her
appeal.
Petitioner failed to show that her appeal is extremely meritorious that to deprive her of an
appeal would unduly affect her substantial rights.
In other words, petitioner failed to show any compelling reason to warrant the issuance of the
writ of certiorari. The Court of Appeals committed no grave abuse of discretion in denying
petitioners Motion for Leave of Court to File Omnibus Motions/Motion to Reinstate Appeal. Its
Resolution dated October 24, 1995 dismissing petitioners appeal had become final and executory
as of December 1, 1995.
WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioner.

[G.R. No. 112597. April 2, 1996]

VIRGINIA A. LEONOR, petitioner, vs. COURT OF APPEALS, HON. ROLINDO D. BELDIA,


JR., as Presiding Judge of the Regional Trial Court of San Carlos City, Branch 57,
and MAURICIO D. LEONOR, JR., respondents.
SYLLABUS
1. REMEDIAL LAW; SPECIAL PROCEEDINGS; CANCELLATION OR CORRECTION OF
ENTRIES IN THE CIVIL REGISTRY (RULE 108); COVERS ONLY TYPOGRAPHICAL OR
CLERICAL ERRORS. - The only errors that can be cancelled or corrected under Rule 108
of the Rules of Court are typographical or clerical errors, not material or substantial ones like
the validity or nullity of a marriage. A clerical error is one which is visible to the eyes or obvious
to the understanding; error made by a clerk or a transcriber; a mistake in copying or writing
(Black vs. Republic, L-10869, Nov. 28, 1958); or some harmless and innocuous change such
as a correction of name that is clearly misspelled or of a mis-statement of the occupation of
the parent. Where the effect of a correction in a civil registry will change the civil status of
petitioner and her children from legitimate to illegitimate, the same cannot be granted except
only in an adversarial proceeding.
2. ID.; ID.; ID.; RULE, NOT APPLICABLE IN CHANGE OF STATUS. - The summary procedure
under Rule 108, and for that matter under Art. 412 of the Civil Code, cannot be used by
Mauricio to change his and Virginias civil status from married to single and of their three
children from legitimate to illegitimate. Neither does the trial court, under said Rule, have any

9
jurisdiction to declare their marriage null and void and as a result thereof, to order the local
civil registrar to cancel the marriage entry in the civil registry. Further, the respondent trial
judge gravely and seriously abused his discretion in unceremoniously expanding his very
limited jurisdiction under such rule to hear evidence on such a controversial matter as nullity
of a marriage under the Civil Code and/or Family Code, a process that is proper only in
ordinary adversarial proceedings under the Rules.
3. ID.; JUDGMENT; EFFECT OF VOID JUDGMENT. - A void judgment for want of jurisdiction
is no judgment at all. It cannot be the source of any right nor the creator of any obligation. All
acts performed pursuant to it and all claims emanating from it have no legal effect. Hence, it
can never become final and any writ of execution based on it is void; x x x it may be said to
be a lawless thing which can be treated as an outlaw and slain at sight, or ignored wherever
and whenever it exhibits its head. Banco Espaol-Filipino vs. Palanca, 37 Phil. 921, 949
(1918).
4. ID.; PROACTIVE ROLE OF SUPREME COURT. - The Supreme Court is not just a toothless
promoter of procedural niceties which are understood and appreciated only by lawyers and
jurists. It cannot shrink from its quintessential role as the fountain of speedy, adequate and
substantial justice. If the Court, as the head and guardian of the judicial branch, must
continuously merit the force of public trust and confidence - which ultimately is the real source
of its sovereign power, possessing neither the purse nor the sword - and if it must decisively
discharge its sacred duty as the last sanctuary of the oppressed and the weak, it must, in
appropriate cases like the one before us, pro-actively provide weary litigants with immediate
legal and equitable relief, free from the delays and legalistic contortions that oftentimes result
from applying purely formal and procedural approaches to judicial dispensations. Pursuant
to the foregoing principle and considering the peculiar circumstances of the present case
which are patent on the basis of the admitted facts, as well as the undisputed copies of the
pleadings presented by the parties, and especially the verified copy of the trial courts decision
which loudly speaks for itself, the Court therefore resolved to make an exception to the normal
procedures and to delve deeper into the substantive issue of the validity/nullity of the trial
courts proceedings and judgment. Happily, both parties had expressed a desire to have this
case resolved soonest. Upon the other hand, remanding the case back to the trial court for
the perfection of the appeal and requiring the parties to re-litigate in the Court of Appeals with
the use of probably the same documents and arguments ventilated in the kilometric pleadings
filed here would just unnecessarily clog the courts dockets; besides, in all likelihood the
parties would eventually come before this Court anyway.
APPEARANCES OF COUNSEL
Edgar Mendoza for petitioner.
Reynaldo C. Depasucat for private respondent.

DECISION
PANGANIBAN, J.:

Is a judgment voiding a marriage and rendered by the regional trial court under Rule 108 of
the Rules of Court valid and proper? May its validity be challenged by the wife in a petition for
certiorari against the husband who abandoned her and who is now living abroad with a foreign
woman?
These are the two main issues that were posed before this Court in this petition for review

10
seeking a partial reversal of the Decision1 of the Court of Appeals2 promulgated September 30,
1993 in CA-G.R. SP No. 30606 and its Resolution3 promulgated November 11, 1993, which
denied petitioners motion for partial reconsideration of the Decision.

The Facts

Petitioner Virginia A. Leonor was married to private respondent Mauricio D. Leonor, Jr., in
San Carlos City on March 13, 1960. Out of the union, three children, Mauricio III, Ned and Don,
were born. The spouses were separated for a substantial part of their married life for, while
Mauricio resided in Switzerland studying and working, Virginia stayed in the Philippines working
as a nurse in Laguna. Mauricio became unfaithful and lived with a certain Lynda Pond abroad.
This induced petitioner to institute a civil action in Geneva, Switzerland for separation and
alimony. Private respondent counter-sued for divorce.
On February 14, 1991, the lower Cantonal Civil Court of Switzerland pronounced the divorce
of the spouses Leonor but reserved the liquidation of the matrimonial partnership. The said Swiss
Court denied alimony to petitioner. In a letter to the lower Cantonal Civil Court dated March 1,
1991, Mauricio, for the first time, raised the issue of the alleged non-existence of the marriage
between him and Virginia. Meanwhile, Virginia learned that the solemnizing officer in the
Philippines, Justice of the Peace Mabini Katalbas, failed to send a copy of their marriage contract
to the Civil Registrar of San Carlos City for registration. Hence, on July 11, 1991, Virginia applied
for the late registration of her marriage. The Civil Registrar, finding said application in order,
granted the same.
On appeal to the higher Cantonal Civil Court, Mauricio asked for the cancellation of his
marriage in the Philippines. On January 17, 1992, the higher Cantonal Civil Court granted
petitioner alimony, prompting Mauricio to elevate the matter on appeal to the Federal Court of
Switzerland, In its decision dated July 9, 1992, the Federal Court affirmed the decision of the
higher Cantonal Civil Court.4
On May 22, 1992, Mauricio, represented by his brother Teodoro Leonor, filed a petition for
the cancellation of the late registration of marriage in the civil registry of San Carlos City with the
Regional Trial Court, Branch 59, San Carlos City (Special Proceeding No. RTC- 144). Given as
grounds for the cancellation were the tardiness of the registration and the nullity of his marriage
with Virginia due to the non-observance of the legal requirements for a valid marriage. Mauricios
petition was filed pursuant to Rule 108 of the Rules of Court.

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After several hearings and on December 14, 1992, the trial court rendered judgment 5
declaring said marriage null and void for being sham and fictitious. The dispositive portion of said
decision reads:
AND IN THE LIGHT OF THE FOREGOING, this Court finds and orders that the
registration of the marriage contract between Mauricio Leonor, Jr. and Virginia Amor
dated March 13, 1960 must be canceled in (sic) the Books of the Local Civil Registry of
San Carlos City for being a null and void marriage not in accordance with a (sic) New
Civil Code under Articles 52, 53 and 55 now presently amended by the Family Code of
the Philippines, Executive Order No. 209 as amended by Executive Order No. 227,
without pronouncement as to cost.
Virginia received notice of the decision on January 4, 1993, and on January 15, 1993, she
filed her notice of appeal.
On February 24, 1993, the trial court, on motion of Mauricios counsel, issued an order 6
dismissing Virginias appeal on the ground that she had failed to file a record on appeal within
thirty days and had thus failed to perfect her appeal. It was the erroneous holding of the trial court
that in special proceedings, a record on appeal was an indispensable requisite under Rule 19,
Section 6 of the Interim Rules and Guidelines in relation to Rule 109 of the Rules of Court. Such
failure, according to respondent Judge, caused the decision to become executory.
On April 1, 1993, Virginia filed a petition for certiorari, prohibition and mandamus with the
Court of Appeals (CA-G.R. SP NO. 30606) and sought the nullification of both the decision dated
December 14, 1992 and the order dated February 24, 1993 of the trial court for having been
issued in excess ofjurisdiction and/or with grave abuse of discretion.
The Court of Appeals dismissed the petition insofar as it sought the reversal of the decision
of the trial court, saying that the remedy for said purpose was an appeal, not a special civil action.
The appellate court, however, granted the petition insofar as it sought the nullification of the
Order dated February 24, 1993 dismissing the appeal. Said the appellate court:
Even so, this petition is an appropriate remedy against the dismissal of the
petitioners appeal, which dismissal we sense to be erroneous and issued in excess of
jurisdiction.
xxx xxx xxx
WHEREFORE, judgment is hereby rendered setting aside the questioned order of
respondent judge dated February 24, 1993, with instructions to the latter to give due
course to petitioners appeal in the subject special proceeding. Costs against private
respondents.
Dissatisfied with the above Decision, petitioner filed a motion for partial reconsideration
asking the Court of Appeals to annul the decision of the trial court. The Court of Appeals denied
the motion, stating that the central issue in the special civil action was only the validity of the trial
courts order denying petitioners right to appeal and that said issue was resolved in petitioners
favor. Further, it said that the correctness or validity of the trial courts decision should properly be
resolved in the appeal.

12
Hence, the present recourse.

Issues Raised by the Parties

The petition assailed the respondent Courts Decision and Order mentioned in the second
paragraph of this Decision for alleged -
1. Procedural Errors x x x in not finding x x x (a) that the lower court gravely abused
its discretion in recognizing the action as one for declaration of nullity of marriage instead
of a special proceeding for cancellation of (an) entry in the civil registry and (b) in not
finding that the lower court had no jurisdiction (over) the issue of nullity; and
2. Substantive errors x x x in not finding x x x (a) that the lower court gravely erred
in declaring the marriage null and void x x x and (b) x x x in disregarding the presumptions
in favor of the rights of children and to the administration of the conjugal property x x x
and the validity of marriage x x x.
In her Memorandum, petitioner elucidated and spiritedly argued the above grounds.
In fine, the foregoing issues could be restated as follows:
1. Did the respondent Court err in holding that petitioner should have appealed
from the trial courts decision instead of filing a petition for certiorari?
2. Did the respondent Court err in refusing to decide upon the merits of the case,
that is, to declare whether or not the judgment of the trial court is null and void? Should
the Supreme Court now resolve the merits of the case, i.e., decide the issue of nullity of
the assailed decision of the trial court?

The Courts Ruling

Since these issues are intimately intertwined, we shall discuss them together.
At the outset, it must be stressed that the Court of Appeals acted within its authority in simply
ordering the trial court to give due course to petitioners appeal without going into the merits of the
case.
In Municipality of Binan, Laguna vs. Court of Appeals,7 we held:
Respondent Court of Appeals has no jurisdiction in a certiorari proceeding involving
an incident in a case to rule on the merits of the main case itself which was not on appeal
before it. x x x.
In other words, the Court of Appeals has already done its duty by declaring that the lower
court gravely abused its discretion or acted without jurisdiction in refusing to give due course to
petitioners appeal. Hence, it ordered said court to allow the appeal. Once appeal is perfected, the
merits of the case, i.e. the validity/nullity of the trial courts decision, would then be resolved by
said Court.
Understandably, the Court of Appeals has limited itself to ruling upon the procedural question

13
lodged before it. It cannot be seriously faulted - as petitioner vehemently did - for opting to
navigate within the narrow banks of the placid waters of certiorari. For in doing so, it was strictly
following established legal doctrines and precedents.
Upon the other hand, the Supreme Court is not just a toothless promoter of procedural
niceties which are understood and appreciated only by lawyers and jurists. It cannot shrink from
its quintessential role as the fountain of speedy, adequate and substantial justice. If the Court, as
the head and guardian of the judicial branch, must continuously merit the force of public trust and
confidence - which ultimately is the real source of its sovereign power, possessing neither the
purse nor the sword - and if it must decisively discharge its sacred duty as the last sanctuary of
the oppressed and the weak, it must, in appropriate cases like the one before us, pro-actively
provide weary litigants with immediate legal and equitable relief, free from the delays and legalistic
contortions that oftentimes result from applying purely formal and procedural approaches to
judicial dispensations.
Pursuant to the foregoing principle and considering the peculiar circumstances of the present
case which are patent on the basis of the admitted facts, as well as the undisputed copies of the
pleadings presented by the parties, and especially the verified copy of the trial courts decision
which loudly speaks for itself, the Court therefore resolved to make an exception to the normal
procedures and to delve deeper into the substantive issue of the validity/nullity of the trial courts
proceedings and judgment. Happily, both parties had expressed a desire to have this case
resolved soonest. Upon the other hand, remanding the case back to the trial court for the
perfection of the appeal and requiring the parties to re-litigate in the Court of Appeals with the use
of probably the same documents and arguments ventilated in the kilometric pleadings filed here
would just unnecessarily clog the courts dockets; besides, in all likelihood the parties would
eventually come before this Court anyway.
Also, it must be observed that Virginia actually filed a proper Notice of Appeal which the trial
court disallowed. Hence, she had no choice but to bring her petition for certiorari in the respondent
Court. To constrain her to go back to said Court, this time by ordinary appeal, would be tantamount
to punishing her and delaying her cause for faults not attributable to her, but rather to the manifest
error of the respondent trial judge.
So, too, as will be shown shortly, the trial courts decision is really a nullity for utter want of
jurisdiction. Hence, it could be challenged at any time.
It is not disputed that the original petition8 in the trial court was for cancellation of entry in the
civil registry of the late registration of the marriage between Leonor and Mauricio, in consonance
with Section 3, Rule 108 of the Rules of Court. Ground alleged for the nullity and cancellation of
the marriage was non-observance of the legal requirements for a valid marriage.
Later, on August 22, 1992, an amended petition9 was filed adding essentially the following
allegations; (a) that there was no marriage contract, (b) that the marriage was a sham x x x to
cover-up the (alleged) shame of Virginia Amor who was then pregnant, (c) that Virginia allegedly
assured Mauricio that they need not live together x x x and Mauricio need not give any support,
(d) that the couple always had trouble (and) quarrel, and (e) that Mauricio had been transferring
residence to avoid Virginia until he went abroad for good. The answer10 of the Civil Registrar and

14
the opposition11 of Virginia, among others, disputed the propriety of the collateral attack against
the marriage, under said Rule.
The decision12 of the trial court is, painfully, a sophomoric and pathetic portrayal of Virginia
as allegedly an unbecoming x x x unmarried woman (who) wormed her to a (sic) heart of the
matriarch of the Leonor Family x x x to summon the son Mauricio to come to her rescue and as a
scheming nurse who lured a struggling young teacher x x x to this unwelcomed (sic) love affair.
These matters, needless to say, border on the incredible, as they were brought up some thirty
(30) years after the marriage was celebrated in 1960 and only after Virginia discovered her
husbands infidelity. The said decisions crude attempt at literary sophistication is matched only by
its jarring syntax and grammatical incongruencies.13 Insofar as this Court can figure out from the
convoluted language of the decision, the trial court (a) declared the marriage null and void and
(b) ordered the local civil registrar of San Carlos City to cancel its entry in the local civil registry,
the sum total of which, coincidentally (and most conveniently), would enable Mauricio to show to
the Swiss courts that he was never married and thus, to convince said courts to reverse their
order granting alimony to his abandoned wife. Such blatant abuse and misuse of court
proceedings cannot be countenanced by this Court.
The ultimate legal question therefore is this: In disposing of a special proceeding under Rule
108, did the trial court have jurisdiction to declare the marriage null and void and to order the
cancellation of its entry in the local civil registry?
To contribute to the cause of clarity, Rule 108 of the Rules of Court is reproduced hereunder.
Rule 108
CANCELLATION OR CORRECTION OF ENTRIES
IN THE CIVIL REGISTRY
SEC. 1. Who may file petition. - Any person interested in any act, event, order or
decree concerning the civil status of persons which has been recorded in the civil
register, may file a verified petition for the cancellation or correction of any entry relating
thereto, with the court of First Instance of the province where the corresponding civil
registry is located.
SEC. 2. Entries subject to cancellation or correction. - Upon good and valid grounds,
the following entries in the civil register may be cancelled or corrected; (a) births; (b)
marriages; (c) deaths; (d) legal separations; (e) judgments of annulments of marriage;
(f) judgments declaring marriages void from the beginning; (g) legitimations; (h)
adoptions; (i) acknowledgments of natural children; (j) naturalization; (k)election, loss or
recovery of citizenship; (l) civil interdiction; (m) judicial determination of filiation; (n)
voluntary emancipation of a minor; and (o) changes of name.

15
SEC. 3. Parties. - When cancellation or correction of an entry in the civil register is
sought, the civil registrar and all persons who have or claim any interest which would be
affected thereby shall be made parties to the proceeding.
SEC. 4. Notice and publication. - Upon the filling of the petition, the court shall, by
an order, fix the time and place for the hearing of the same, and cause reasonable notice
thereof to be given to the persons named in the petition. The court shall also cause the
order to be published once a week for three (3) consecutive weeks in a newspaper of
general circulation in the province.
SEC. 5. Opposition. - The civil registrar and any person having or claiming any
interest under the entry whose cancellation or correction is sought may, within fifteen
(15) days from notice of the petition, or from the last date of publication of such notice,
file his opposition thereto.
SEC. 6. Expediting proceedings. - The court in which the proceeding is brought may
make orders expediting the proceedings, and may also grant preliminary injunction for
the preservation of the rights of the parties pending such proceedings.
SEC. 7. Order. - After hearing, the court may either dismiss the petition or issue an
order granting the cancellation or correction prayed for. In either case, a certified copy
of the judgment shall be served upon the civil registrar concerned who shall annotate the
same in his record.
On its face, the Rule would appear to authorize the cancellation of any entry regarding
marriages in the civil registry for any reason by the mere filing of a verified petition for the purpose.
However, it is not as simple as it looks. Doctrinally, the only errors that can be cancelled or
corrected under this Rule are typographical or clerical errors, not material or substantial ones like
the validity or nullity of a marriage.14 A clerical error is one which is visible to the eyes or obvious
to the understanding; error made by a clerk or a transcriber; a mistake in copying or writing (Black
vs. Republic, L-10869, Nov. 28, 1958); or some harmless and innocuous change such as a
correction of name that is clearly misspelled or of a mis-statement of the occupation of the parent
(Ansalada vs. Republic, No. L-10226, Feb. 14, 1958).15
Where the effect of a correction in a civil registry will change the civil status of petitioner and
her children from legitimate to illegitimate, the same cannot be granted except only in an
adversarial proceeding.16 In Vda. de Castro vs. Republic,17 this Court held:
x x x It has been the consistent ruling of this Court since the Ty Kong Tin vs.
Republic, 94 Phil. 321, that substantial alterations, such as those affecting the status and
citizenship of a person in the Civil Registry Records, cannot be ordered by the court
unless first threshed out in an appropriate action wherein all parties who may be affected

16
by the entries are notified or represented (see Rule 108 of the Revised Rules of Court),
and that the summary proceedings under Article 412 of the Civil Code only justify an
order to correct innocuous or clerical errors, such as misspellings and the like, errors that
are visible to the eyes or obvious to the understanding. (Baybayan vs. Republic of the
Philippines, 16 SCRA 403)
Clearly and unequivocally, the summary procedure under Rule 108, and for that matter under
Art. 412 of the Civil Code, cannot be used by Mauricio to change his and Virginias civil status
from married to single and of their three children from legitimate to illegitimate. Neither does the
trial court, under said Rule, have any jurisdiction to declare their marriage null and void and as a
result thereof, to order the local civil registrar to cancel the marriage entry in the civil registry.
Further, the respondent trial judge gravely and seriously abused his discretion in unceremoniously
expanding his very limited jurisdiction under such rule to hear evidence on such a controversial
matter as nullity of a marriage under the Civil Code and/or Family Code, a process that is proper
only in ordinary adversarial proceedings under the Rules.
A void judgment for want of jurisdiction is no judgment at all. It cannot be the source of any
right nor the creator of any obligation. All acts performed pursuant to it and all claims emanating
from it have no legal effect. Hence, it can never become final and any writ of execution based on
it is void; x x x it may be said to be a lawless thing which can be treated as an outlaw and slain at
sight, or ignored wherever and whenever it exhibits its head.18
WHEREFORE, the petition is GRANTED. Judgment is hereby rendered DECLARING NULL and VOID the
decision of the respondent judge dated February 14,1992 in Special Proceedings No. RTC-144 and MODIFYING
accordingly the Decision dated September 30, 1993 of the respondent Court of Appeals in CA-G.R. No. SP-30606. Let
a copy of this Decision be spread in the records of respondent Judge in the Office of the Court
Administrator. Costs against private respondent Mauricio D. Leonor, Jr. SO ORDERED.
[G.R. No. 146559. August 13, 2004]
PRUDENTIAL GUARANTEE AND ASSURANCE INC., petitioner, vs. HON.
COURT OF APPEALS, Special Former Eight Division, HON. LOLITA BESANA,
and MARIANO ONG, respondents.
RESOLUTION
CARPIO MORALES, J.:
The petition for review on certiorari at bar seeks to set aside and annul the Court of
Appeals June 13, 2000 Resolution[1] in CA-G.R. SP No. 59022 dismissing the petition
of Prudential Guarantee and Assurance, Inc. (petitioner), a motion for reconsideration[2]
of which was, by Resolution[3] of November 14, 2000, denied.
On January 16, 1990, ARMCO Industrial Corporation, (ARMCO) filed a complaint for
specific performance and damages with prayer for the issuance of a writ of attachment
against Mariano Ong and several other defendants before the Regional Trial Court of
Iloilo City, docketed as Civil Case No. 18978. Branch 32 of the court to which the case
was raffled issued a writ of attachment upon the filing by ARMCO of a bond in the
amount of P1,200,056.00.
In the Plaintiffs Bond for Levying of Attachment No. WV-B-90/0006,[4] ARMCO,
represented by its president Edward C. Ong, as principal, and petitioner, represented
by its vice-president Ramon E. Kilayko, as surety, jointly and severally bound

17
themselves in the above-stated amount to pay all the costs which may be adjudged to
the defendant . . . and all damages which he may sustain by reason of the attachment
...
During the pendency of the case, ARMCO failed to pay the premiums on the bond as
they fell due, prompting petitioner to file an Urgent Ex-Parte Motion for Cancellation of
Bond and Release of Surety[5] before the trial court. Acting on said motion, the trial
court, by Order[6] of September 10, 1997, holding that the agreement was that the
surety bond was to answer for the whole period of the case so that there will be no
liability on the part of the plaintiff but that ARMCO did not pay premiums on the bond,
directed ARMCO to put up another bond within fifteen (15) days otherwise the writ of
attachment would be dissolved.[7]
By a subsequent Order[8] of September 16, 1997, the trial court directed ARMCO to pay
the premiums on the bond or put up a new bond to protect the rights of the defendants.
ARMCO, however, failed to either pay the premiums on the bond or put up a new bond,
prompting the trial court to direct, by Order[9] of May 21, 1999, the release and delivery
to the defendant Mariano Ong within fifteen (15) days all the attached properties
enumerated in the Depository Receipt dated April 24, 1990.
The trial court went on to declare as follows:
The Prudential Guarantee and Assurance Inc. shall be released of its obligations as
surety company immediately after compliance by the plaintiff of the herein order and let
this case be submitted for decision after such compliance.[10] (Underscoring supplied)
Without resolving the incidental issue on the motion for release of Surety and the
cancellation of the surety bond,[11] the trial court rendered on June 21, 1999 a decision
on the main case.
Petitioner thereupon filed a second Urgent Ex-Parte Motion to Release Surety[12] which
was, by Order[13] of January 17, 2000, denied, the trial court holding as follows:
In view of the fact that this Surety is the one who undertook the liability of the plaintiff
while the case is pending, this Court in the interest of justice DENIE[S] the Motion to
Release Surety for non-payment. It is the duty of the Surety to institute proper action
against the creditor/plaintiff ARMCO also known as ARMAGRI but the liability
undertaken by them remains.[14]
Petitioners Motion for Reconsideration[15] of the trial courts January 17, 2000 Order
having been denied for lack of merit by Order[16] of February 22, 2000, petitioner
assailed said orders by certiorari[17] before the Court of Appeals (CA), docketed as CA-
G.R. SP No. 59022.
By Resolution[18] of June 13, 2000, the CA, finding that the petition was filed three (3)
days late, dismissed it pursuant to Section 1(A), Rule 50[19] of the Rules of Court.
Petitioner herein claims that this petition has been filed within the reglementary period
since the last day of filing happens to be May 13, 2000 which is a Saturday, and the
same was mailed on May 15, 2000, Monday, the next working day.
However, a careful consideration of the said reglementary period would readily reveal
that this petition was filed three (3) days late. It is admitted in the petition that the court

18
a quos order denying petitioners motion for reconsideration was received by them on
March 13, 2000. Hence, petitioner has sixty (60) days from that date to file this petition.
Since March has 31 days, then necessarily the last day for the filing is May 12, 2000, a
Friday, which is the 60th day from March 13, 2000, and not May 13, 2000 as erroneously
claimed by petitioner.[20] (Underscoring supplied)
Petitioner filed a Motion for Reconsideration[21] which the CA denied by Resolution[22]
of November 14, 2000 in this wise:
Sec. 4, Rule 65 of the 1997 Rules of Civil Procedure already specifically provides the
period within which to file a petition for Certiorari. Unlike in the old rule where mere
reasonable time was required. By reason of such new provision under the Rules, failure
to file the petition within the reglementary period required by law will make the assailed
Order final and executory.
Petitioner invokes higher interest of justice in seeking reconsideration of this Courts
Resolution. This, We cannot do in as much as the rule is very specific on the matter of
filing of petitions under Rule 65. Petitioner must be reminded that justice must not only
be served for the latter but also for the respondents.[23]
Hence, the petition for review at bar, petitioner contending that the above resolutions of
the CA are not in accord with law and applicable jurisprudence.
Banking on a liberal interpretation of the Rules of Court, petitioner asserts that mere
technicalities should be set aside in the interest of substantial justice in view of its
highly meritorious case.
The Rules of Court and prevailing jurisprudence are not on petitioners side.
Under Section 4 of Rule 65[24] of the 1997 Revised Rules of Court, certiorari should be
instituted within a period of sixty (60) days from notice of the judgment, order or
resolution sought to be assailed.
The 60-day period is deemed reasonable and sufficient time for a party to mull over and
to prepare a petition asserting grave abuse of discretion by a lower court. The period
was specifically set to avoid any unreasonable delay that would violate the constitutional
rights of parties to a speedy disposition of their case. For these reasons, the 60-day-
period ought to be considered inextendible.[25] (Underscoring supplied)
Rules of procedure prescribing the time within which certain acts must be done, or
certain proceedings taken, are absolutely indispensable to the prevention of needless
delays and the orderly and speedy discharge of judicial business. Strict compliance
therewith is thus mandatory and imperative.[26]
Rules of procedure may, however, be relaxed for the most persuasive of reasons.
x x x A party who seeks to avail of the extraordinary remedy of certiorari must observe the
rules laid down by law, and non-observance of the said rules may not be brushed aside as
mere technicality.
It is true that a litigation is not a game of technicalities and that the rules of procedure
should not be strictly enforced at the cost of substantial justice. However, it does not mean
that the Rules of Court may be ignored at will and at random to the prejudice of the orderly
presentation and assessment of the issues and their just resolution. It must be emphasized
that procedural rules should not be belittled or dismissed simply because their non-
19
observance may have resulted in prejudice to a partys substantial rights. Like all rules, they
are required to be followed except only for the most persuasive of reasons.[27] (Emphasis
and underscoring supplied)
Concomitant to a liberal application of such rules should be an effort on the part of the party
invoking liberality to at least proffer a reason for its failure to comply therewith.[28]
Petitioner has proffered none such, however. The general rule must thus stand. For utter
disregard of the rules cannot justly be rationalized by merely harking on the policy of liberal
construction.[29]
WHEREFORE, the assailed Resolutions of the Court of Appeals dated June 13, 2000 and November 14,
2000 are hereby AFFIRMED. The instant petition is hereby DENIED. SO ORDERED.

G.R. No. 183965 September 18, 2009

JOANIE SURPOSA UY, Petitioner,


vs.
JOSE NGO CHUA, Respondent.

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review under Rule 45 of the Rules of Court assailing the Resolution dated
25 June 2008 of the Regional Trial Court (RTC) of Cebu City, Branch 24, which granted the
demurrer to evidence of respondent Jose Ngo Chua, resulting in the dismissal of Special
Proceeding No. 12562-CEB.

Petitioner Joanie Surposa Uy filed on 27 October 2003 before the RTC a Petition1 for the issuance
of a decree of illegitimate filiation against respondent. The Complaint was docketed as Special
Proceeding No. 12562-CEB, assigned to RTC-Branch 24.

Petitioner alleged in her Complaint that respondent, who was then married, had an illicit
relationship with Irene Surposa (Irene). Respondent and Irene had two children, namely,
petitioner and her brother, Allan. Respondent attended to Irene when the latter was giving birth to
petitioner on 27 April 1959, and instructed that petitioner’s birth certificate be filled out with the
following names: "ALFREDO F. SURPOSA" as father and "IRENE DUCAY" as mother. Actually,
Alfredo F. Surposa was the name of Irene’s father, and Ducay was the maiden surname of Irene’s
mother. Respondent financially supported petitioner and Allan. Respondent had consistently and
regularly given petitioner allowances before she got married. He also provided her with
employment. When petitioner was still in high school, respondent required her to work at the Cebu
Liberty Lumber, a firm owned by his family. She was later on able to work at the Gaisano-
Borromeo Branch through respondent’s efforts. Petitioner and Allan were introduced to each other
and became known in the Chinese community as respondent’s illegitimate children. During
petitioner’s wedding, respondent sent his brother Catalino Chua (Catalino) as his representative,
and it was the latter who acted as father of the bride. Respondent’s relatives even attended the
baptism of petitioner’s daughter.2

In his Answer3 to the Complaint, filed on 9 December 2003, respondent denied that he had an
illicit relationship with Irene, and that petitioner was his daughter. 4 Hearings then ensued during
which petitioner testified that respondent was the only father she knew; that he took care of all
her needs until she finished her college education; and that he came to visit her on special family
occasions. She also presented documentary evidence to prove her claim of illegitimate filiation.
Subsequently, on 27 March 2008, respondent filed a Demurrer to Evidence5 on the ground that
20
the Decision dated 21 February 2000 of RTC-Branch 9 in Special Proceeding No. 8830-CEB had
already been barred by res judicata in Special Proceeding No. 12562-CEB before RTC-Branch
24.

It turned out that prior to instituting Special Proceeding No. 12562-CEB on 27 October 2003,
petitioner had already filed a similar Petition for the issuance of a decree of illegitimate affiliation
against respondent. It was docketed as Special Proceeding No. 8830-CEB, assigned to RTC-
Branch 9. Petitioner and respondent eventually entered into a Compromise Agreement in Special
Proceeding No. 8830-CEB, which was approved by RTC-Branch 9 in a Decision6 dated 21
February 2000. The full contents of said Decision reads:

Under consideration is a Compromise Agreement filed by the parties on February 18, 2000,
praying that judgment be rendered in accordance therewith, the terms and conditions of which
follows:

"1. Petitioner JOANIE SURPOSA UY declares, admits and acknowledges that there is no
blood relationship or filiation between petitioner and her brother Allan on one hand and
[herein respondent] JOSE NGO CHUA on the other. This declaration, admission or
acknowledgement is concurred with petitioner’s brother Allan, who although not a party to
the case, hereby affixes his signature to this pleading and also abides by the declaration
herein.

2. As a gesture of goodwill and by way of settling petitioner and her brother’s (Allan) civil,
monetary and similar claims but without admitting any liability, [respondent] JOSE NGO
CHUA hereby binds himself to pay the petitioner the sum of TWO MILLION PESOS
(P2,000,000.00) and another TWO MILLION PESOS (P2,000,000.00) to her brother,
ALLAN SURPOSA. Petitioner and her brother hereby acknowledge to have received in
full the said compromise amount.

3. Petitioner and her brother (Allan) hereby declare that they have absolutely no more
claims, causes of action or demands against [respondent] JOSE NGO CHUA, his heirs,
successors and assigns and/or against the estate of Catalino Chua, his heirs, successors
and assigns and/or against all corporations, companies or business enterprises including
Cebu Liberty Lumber and Joe Lino Realty Investment and Development Corporation
where defendant JOSE NGO CHUA or CATALINO NGO CHUA may have interest or
participation.

4. [Respondent] JOSE NGO CHUA hereby waives all counterclaim or counter-demand


with respect to the subject matter of the present petition.

5. Pursuant to the foregoing, petitioner hereby asks for a judgment for the permanent
dismissal with prejudice of the captioned petition. [Respondent] also asks for a judgment
permanently dismissing with prejudice his counterclaim."

Finding the said compromise agreement to be in order, the Court hereby approves the same.
Judgment is rendered in accordance with the provisions of the compromise agreement. The
parties are enjoined to comply with their respective undertakings embodied in the agreement.7

With no appeal having been filed therefrom, the 21 February 2000 Decision of RTC-Branch 9 in
Special Proceeding 8830-CEB was declared final and executory.

21
Petitioner filed on 15 April 2008 her Opposition8 to respondent’s Demurrer to Evidence in Special
Proceeding No. 12562-CEB. Thereafter, RTC-Branch 24 issued its now assailed Resolution dated
25 June 2008 in Special Proceeding No. 12562-CEB, granting respondent’s Demurrer.

RTC-Branch 24 summarized the arguments of respondent and petitioner in the Demurrer and
Opposition, respectively, as follows:

This is to resolve the issues put across in the Demurrer to the Evidence submitted to this Court;
the Opposition thereto; the Comment on the Opposition and the Rejoinder to the Comment.

xxxx

1. The instant case is barred by the principle of res judicata because there was a judgment
entered based on the Compromise Agreement approved by this multiple-sala Court,
branch 09, on the same issues and between the same parties.

2. That such decision of Branch 09, having attained finality, is beyond review, reversal or
alteration by another Regional Trial Court and not even the Supreme Court, no matter how
erroneous.

3. Judicial Admissions or admission in petitioner’s pleadings to the effect that there is no


blood relationship between petitioner and respondent, which is a declaration against
interest, are conclusive on her and she should not be permitted to falsify.

4. That the Certificate of Live Birth showing that petitioner’s father is Alfredo Surposa is a
public document which is the evidence of the facts therein stated, unless corrected by
judicial order.

5. After receiving the benefits and concessions pursuant to their compromise agreement,
she is estopped from refuting on the effects thereof to the prejudice of the [herein
respondent].

The summary of the Opposition is in this wise:

1. That the illegitimate filiation of petitioner to respondent is established by the open, and
continuous possession of the status of an illegitimate child.

2. The Demurrer to the evidence cannot set up the affirmative grounds for a Motion to
Dismiss.

3. The question on the civil status, future support and future legitime can not be subject to
compromise.

4. The decision in the first case does not bar the filing of another action asking for the
same relief against the same defendant.9

Taking into consideration the aforementioned positions of the parties, RTC-Branch 24 held that:

Looking at the issues from the viewpoint of a judge, this Court believes that its hands are tied.
Unless the Court of Appeals strikes down the Compromise Judgment rendered by Branch 09 of
the Regional Trial Court of Cebu City, this Court will not attempt to vacate, much more annul, that
Judgment issued by a co-equal court, which had long become final and executory, and in fact
executed.
22
This court upholds the Policy of Judicial Stability since to do otherwise would result in patent
abuse of judicial discretion amounting to lack of jurisdiction. The defense of lack of jurisdiction
cannot be waived. At any rate, such is brought forth in the Affirmative Defenses of the Answer.

This Court, saddled with many cases, suffers the brunt of allowing herein case involving same
parties to re-litigate on the same issues already closed.10

In the end, RTC-Branch 24 decreed:

WHEREFORE, in view of the foregoing, the Demurrer to the Evidence is hereby given due course,
as the herein case is hereby ordered DISMISSED.11

RTC-Branch 24 denied petitioner’s Motion for Reconsideration12 in a Resolution13 dated 29 July


2008.

Petitioner then filed the instant Petition raising the following issues for resolution of this Court:

Whether or not the principle of res judicata is applicable to judgments predicated upon a
compromise agreement on cases enumerated in Article 2035 of the Civil Code of the Philippines;

II

Whether or not the compromise agreement entered into by the parties herein before the Regional
Trial Court, Branch 09 of Cebu City effectively bars the filing of the present case.14

At the outset, the Court notes that from the RTC Resolution granting respondent’s Demurrer to
Evidence, petitioner went directly to this Court for relief. This is only proper, given that petitioner
is raising pure questions of law in her instant Petition.a1f

Section 1, Rule 45 of the Rules of Court provides:

SECTION 1. Filing of petition with Supreme Court. – A party desiring to appeal by certiorari from
a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional
Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified
petition for review on certiorari. The petition shall raise only questions of law which must be
distinctly set forth.

Clearly, a party may directly appeal to this Court from a decision or final order or resolution of the
trial court on pure questions of law. A question of law lies, on one hand, when the doubt or
difference arises as to what the law is on a certain set of facts; a question of fact exists, on the
other hand, when the doubt or difference arises as to the truth or falsehood of the alleged facts.
Here, the facts are not disputed; the controversy merely relates to the correct application of the
law or jurisprudence to the undisputed facts.15

The central issue in this case is whether the Compromise Agreement entered into between
petitioner and respondent, duly approved by RTC-Branch 9 in its Decision dated 21 February
2000 in Special Proceeding No. 8830-CEB, constitutes res judicata in Special Proceeding No.
12562-CEB still pending before RTC-Branch 24.1avvphi1

The doctrine of res judicata is a rule that pervades every well- regulated system of jurisprudence
and is founded upon two grounds embodied in various maxims of the common law, namely: (1)
23
public policy and necessity, which makes it in the interest of the State that there should be an end
to litigation, interest reipublicae ut sit finis litium, and (2) the hardship of the individual that he
should be vexed twice for the same cause, nemo debet bis vexari pro eadem causa.16

For res judicata, to serve as an absolute bar to a subsequent action, the following requisites must
concur: (1) there must be a final judgment or order; (2) the court rendering it must have jurisdiction
over the subject matter and the parties; (3) it must be a judgment or order on the merits; and (4)
there must be, between the two cases, identity of parties, subject matter, and causes of action.17

It is undeniable that Special Proceeding No. 8830-CEB, previously before RTC-Branch 9, and
Special Proceeding No. 12562-CEB, presently before RTC-Branch 24, were both actions for the
issuance of a decree of illegitimate filiation filed by petitioner against respondent. Hence, there is
apparent identity of parties, subject matter, and causes of action between the two cases.
However, the question arises as to whether the other elements of res judicata exist in this case.

The court rules in the negative.

A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a


litigation or put an end to one already commenced.18 In Estate of the late Jesus S. Yujuico v.
Republic,19 the Court pronounced that a judicial compromise has the effect of res judicata. A
judgment based on a compromise agreement is a judgment on the merits.

It must be emphasized, though, that like any other contract, a compromise agreement must
comply with the requisites in Article 1318 of the Civil Code, to wit: (a) consent of the contracting
parties; (b) object certain that is the subject matter of the contract; and (c) cause of the obligation
that is established. And, like any other contract, the terms and conditions of a compromise
agreement must not be contrary to law, morals, good customs, public policy and public order. Any
compromise agreement that is contrary to law or public policy is null and void, and vests no rights
in and holds no obligation for any party. It produces no legal effect at all.20

In connection with the foregoing, the Court calls attention to Article 2035 of the Civil Code, which
states:

ART. 2035. No compromise upon the following questions shall be valid:

(1) The civil status of persons;

(2) The validity of a marriage or a legal separation;

(3) Any ground for legal separation;

(4) Future support;

(5) The jurisdiction of courts;

(6) Future legitime. (Emphases ours.)

The Compromise Agreement between petitioner and respondent, executed on 18 February 2000
and approved by RTC-Branch 9 in its Decision dated 21 February 2000 in Special Proceeding
No. 8830-CEB, obviously intended to settle the question of petitioner’s status and filiation, i.e.,
whether she is an illegitimate child of respondent. In exchange for petitioner and her brother Allan
acknowledging that they are not the children of respondent, respondent would pay petitioner and
Allan P2,000,000.00 each. Although unmentioned, it was a necessary consequence of said
24
Compromise Agreement that petitioner also waived away her rights to future support and future
legitime as an illegitimate child of respondent. Evidently, the Compromise Agreement dated 18
February 2000 between petitioner and respondent is covered by the prohibition under Article 2035
of the Civil Code.

Advincula v. Advincula21 has a factual background closely similar to the one at bar. Manuela
Advincula (Manuela) filed, before the Court of First Instance (CFI) of Iloilo, Civil Case No. 3553
for acknowledgment and support, against Manuel Advincula (Manuel). On motion of both parties,
said case was dismissed. Not very long after, Manuela again instituted, before the same court,
Civil Case No. 5659 for acknowledgment and support, against Manuel. This Court declared that
although Civil Case No. 3553 ended in a compromise, it did not bar the subsequent filing by
Manuela of Civil Case No. 5659, asking for the same relief from Manuel. Civil Case No. 3553 was
an action for acknowledgement, affecting a person’s civil status, which cannot be the subject of
compromise.

It is settled, then, in law and jurisprudence, that the status and filiation of a child cannot be
compromised. Public policy demands that there be no compromise on the status and filiation of a
child.22 Paternity and filiation or the lack of the same, is a relationship that must be judicially
established, and it is for the Court to declare its existence or absence. It cannot be left to the will
or agreement of the parties.23

Being contrary to law and public policy, the Compromise Agreement dated 18 February 2000
between petitioner and respondent is void ab initio and vests no rights and creates no obligations.
It produces no legal effect at all. The void agreement cannot be rendered operative even by the
parties' alleged performance (partial or full) of their respective prestations.24

Neither can it be said that RTC-Branch 9, by approving the Compromise Agreement, in its
Decision dated 21 February 2000 in Special Proceeding No. 8830-CEB, already made said
contract valid and legal. Obviously, it would already be beyond the jurisdiction of RTC-Branch 9
to legalize what is illegal. RTC-Branch 9 had no authority to approve and give effect to a
Compromise Agreement that was contrary to law and public policy, even if said contract was
executed and submitted for approval by both parties. RTC-Branch 9 would not be competent,
under any circumstances, to grant the approval of the said Compromise Agreement. No court can
allow itself to be used as a tool to circumvent the explicit prohibition under Article 2035 of the Civil
Code. The following quote in Francisco v. Zandueta25 is relevant herein:

It is a universal rule of law that parties cannot, by consent, give a court, as such, jurisdiction in a
matter which is excluded by the laws of the land. In such a case the question is not whether a
competent court has obtained jurisdiction of a party triable before it, but whether the court itself is
competent under any circumstances to adjudicate a claim against the defendant. And where there
is want of jurisdiction of the subject-matter, a judgment is void as to all persons, and consent of
parties can never impart to it the vitality which a valid judgment derives from the sovereign state,
the court being constituted, by express provision of law, as its agent to pronounce its decrees in
controversies between its people. (7 R. C. L., 1039.)

A judgment void for want of jurisdiction is no judgment at all. It cannot be the source of any right
or the creator of any obligation. All acts performed pursuant to it and all claims emanating from it
have no legal effect. Hence, it can never become final, and any writ of execution based on it is
void. It may be said to be a lawless thing that can be treated as an outlaw and slain on sight, or
ignored wherever and whenever it exhibits its head.26

In sum, Special Proceeding No. 12562-CEB before RTC-Branch 24 is not barred by res judicata,
since RTC-Branch 9 had no jurisdiction to approve, in its Decision dated 21 February 2000 in
Special Proceeding No. 8830-CEB, petitioner and respondent’s Compromise Agreement, which
25
was contrary to law and public policy; and, consequently, the Decision dated 21 February 2000
in Special Proceeding No. 8830-CEB, being null and void for having been rendered by RTC-
Branch 9 without jurisdiction, could not have attained finality or been considered a judgment on
the merits.

Nevertheless, the Court must clarify that even though the Compromise Agreement between
petitioner and respondent is void for being contrary to law and public policy, the admission
petitioner made therein may still be appreciated against her in Special Proceeding No. 12562-
CEB. RTC-Branch 24 is only reminded that while petitioner’s admission may have evidentiary
value, it does not, by itself, conclusively establish the lack of filiation.27

Proceeding from its foregoing findings, the Court is remanding this case to the RTC-Branch 24
for the continuation of hearing on Special Proceedings No. 12562-CEB, more particularly, for
respondent’s presentation of evidence.

Although respondent’s pleading was captioned a Demurrer to Evidence, it was more appropriately
a Motion to Dismiss on the ground of res judicata.

Demurrer to Evidence is governed by Rule 33 of the Rules of Court, Section 1 of which is


reproduced in full below:

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

Demurrer to evidence authorizes a judgment on the merits of the case without the defendant
having to submit evidence on his part, as he would ordinarily have to do, if plaintiff's evidence
shows that he is not entitled to the relief sought. Demurrer, therefore, is an aid or instrument for
the expeditious termination of an action, similar to a motion to dismiss, which the court or tribunal
may either grant or deny.28

The Court has recently established some guidelines on when a demurrer to evidence should be
granted, thus:

A demurrer to evidence may be issued when, upon the facts and the law, the plaintiff has shown
no right to relief. Where the plaintiff's evidence together with such inferences and conclusions as
may reasonably be drawn therefrom does not warrant recovery against the defendant, a demurrer
to evidence should be sustained. A demurrer to evidence is likewise sustainable when, admitting
every proven fact favorable to the plaintiff and indulging in his favor all conclusions fairly and
reasonably inferable therefrom, the plaintiff has failed to make out one or more of the material
elements of his case, or when there is no evidence to support an allegation necessary to his claim.
It should be sustained where the plaintiff's evidence is prima facie insufficient for a recovery.29

The essential question to be resolved in a demurrer to evidence is whether petitioner has been
able to show that she is entitled to her claim, and it is incumbent upon RTC-Branch 24 to make
such a determination. A perusal of the Resolution dated 25 June 2008 of RTC-Branch 24 in
Special Proceeding No. 12562-CEB shows that it is barren of any discussion on this matter. It did
not take into consideration any of the evidence presented by petitioner. RTC-Branch 24 dismissed
Special Proceedings No. 12562-CEB on the sole basis of res judicata, given the Decision dated
21 February 2000 of RTC-Branch 9 in Special Proceeding No. 8830-CEB, approving the
Compromise Agreement between petitioner and respondent. Hence, the Resolution dated 25

26
June 2008 of RTC-Branch 24 should be deemed as having dismissed Special Proceeding No.
12562-CEB on the ground of res judicata rather than an adjudication on the merits of respondent’s
demurrer to evidence. Necessarily, the last line of Section 1, Rule 33 of the Rules of Court should
not apply herein and respondent should still be allowed to present evidence before RTC-Branch
24 in Special Proceedings No. 12562-CEB.

It must be kept in mind that substantial justice must prevail. When there is a strong showing that
grave miscarriage of justice would result from the strict application of the Rules, this Court will not
hesitate to relax the same in the interest of substantial justice. The Rules of Court were conceived
and promulgated to set forth guidelines in the dispensation of justice but not to bind and chain the
hand that dispenses it, for otherwise, courts will be mere slaves to or robots of technical rules,
shorn of judicial discretion. That is precisely why courts in rendering real justice have always
been, as they in fact ought to be, conscientiously guided by the norm that when on the balance,
technicalities take backseat against substantive rights, and not the other way around.30

WhereforE, premises considered, the Resolution dated 25 June 2008 of the Regional Trial Court
of Cebu City, Branch 24, in Special Proceeding No. 12562-CEB is REVERSED and set aside.
This case is ordered REMANDED to the said trial court for further proceedings in accordance with
the ruling of the Court herein. No costs.

SO ORDERED.

27
G.R. No. 174975 January 20, 2009

LUISA KHO MONTAÑER, ALEJANDRO MONTAÑER, JR., LILLIBETH MONTAÑER-


BARRIOS, AND RHODORA ELEANOR MONTAÑER-DALUPAN, Petitioners,
vs.
SHARI'A DISTRICT COURT, FOURTH SHARI'A JUDICIAL DISTRICT, MARAWI CITY, LILING
DISANGCOPAN, AND ALMAHLEEN LILING S. MONTAÑER, Respondents.

DECISION

PUNO, C.J.:

This Petition for Certiorari and Prohibition seeks to set aside the Orders of the Shari’a District
Court, Fourth Shari’a Judicial District, Marawi City, dated August 22, 20061 and September 21,
2006.2

On August 17, 1956, petitioner Luisa Kho Montañer, a Roman Catholic, married Alejandro
Montañer, Sr. at the Immaculate Conception Parish in Cubao, Quezon City.3 Petitioners Alejandro
Montañer, Jr., Lillibeth Montañer-Barrios, and Rhodora Eleanor Montañer-Dalupan are their
children.4 On May 26, 1995, Alejandro Montañer, Sr. died.5

On August 19, 2005, private respondents Liling Disangcopan and her daughter, Almahleen Liling
S. Montañer, both Muslims, filed a "Complaint" for the judicial partition of properties before the
Shari’a District Court.6 The said complaint was entitled "Almahleen Liling S. Montañer and Liling
M. Disangcopan v. the Estates and Properties of Late Alejandro Montañer, Sr., Luisa Kho
Montañer, Lillibeth K. Montañer, Alejandro Kho Montañer, Jr., and Rhodora Eleanor K. Montañer,"
and docketed as "Special Civil Action No. 7-05."7 In the said complaint, private respondents made
the following allegations: (1) in May 1995, Alejandro Montañer, Sr. died; (2) the late Alejandro
Montañer, Sr. is a Muslim; (3) petitioners are the first family of the decedent; (4) Liling
Disangcopan is the widow of the decedent; (5) Almahleen Liling S. Montañer is the daughter of
the decedent; and (6) the estimated value of and a list of the properties comprising the estate of
the decedent.8 Private respondents prayed for the Shari’a District Court to order, among others,
the following: (1) the partition of the estate of the decedent; and (2) the appointment of an
administrator for the estate of the decedent.9

Petitioners filed an Answer with a Motion to Dismiss mainly on the following grounds: (1) the
Shari’a District Court has no jurisdiction over the estate of the late Alejandro Montañer, Sr.,
because he was a Roman Catholic; (2) private respondents failed to pay the correct amount of
docket fees; and (3) private respondents’ complaint is barred by prescription, as it seeks to
establish filiation between Almahleen Liling S. Montañer and the decedent, pursuant to Article
175 of the Family Code.10

28
On November 22, 2005, the Shari’a District Court dismissed the private respondents’ complaint.
The district court held that Alejandro Montañer, Sr. was not a Muslim, and its jurisdiction extends
only to the settlement and distribution of the estate of deceased Muslims.11

On December 12, 2005, private respondents filed a Motion for Reconsideration.12 On December
28, 2005, petitioners filed an Opposition to the Motion for Reconsideration, alleging that the
motion for reconsideration lacked a notice of hearing.13 On January 17, 2006, the Shari’a District
Court denied petitioners’ opposition.14 Despite finding that the said motion for reconsideration
"lacked notice of hearing," the district court held that such defect was cured as petitioners "were
notified of the existence of the pleading," and it took cognizance of the said motion.15 The Shari’a
District Court also reset the hearing for the motion for reconsideration.16

In its first assailed order dated August 22, 2006, the Shari’a District Court reconsidered its order
of dismissal dated November 22, 2005.17 The district court allowed private respondents to adduce
further evidence.18 In its second assailed order dated September 21, 2006, the Shari’a District
Court ordered the continuation of trial, trial on the merits, adducement of further evidence, and
pre-trial conference.19

Seeking recourse before this Court, petitioners raise the following issues:

I.

RESPONDENT SHARI’A DISTRICT COURT – MARAWI CITY LACKS JURISDICTION OVER


PETITIONERS WHO ARE ROMAN CATHOLICS AND NON-MUSLIMS.

II.

RESPONDENT SHARI’A DISTRICT COURT – MARAWI CITY DID NOT ACQUIRE


JURISDICTION OVER "THE ESTATES AND PROPERTIES OF THE LATE ALEJANDRO
MONTAÑER, SR." WHICH IS NOT A NATURAL OR JURIDICAL PERSON WITH CAPACITY TO
BE SUED.

III.

RESPONDENT SHARI’A DISTRICT COURT DID NOT ACQUIRE JURISDICTION OVER THE
COMPLAINT OF PRIVATE RESPONDENTS AGAINST PETITIONERS DUE TO NON-
PAYMENT OF THE FILING AND DOCKETING FEES.

IV.

RESPONDENT SHARI’A DISTRICT COURT—MARAWI CITY COMMITTED GRAVE ABUSE OF


DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT DENIED THE
OPPOSITION OF PETITIONERS AND THEN GRANTED THE MOTION FOR
RECONSIDERATION OF RESPONDENTS LILING DISANGCOPAN, ET AL. WHICH WAS
FATALLY DEFECTIVE FOR LACK OF A "NOTICE OF HEARING."

V.

RESPONDENT SHARI’A DISTRICT COURT—MARAWI CITY COMMITTED GRAVE ABUSE OF


DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT SET SPL. CIVIL ACTION
7-05 FOR TRIAL EVEN IF THE COMPLAINT PLAINLY REVEALS THAT RESPONDENT
ALMAHLEEN LILING S. MONTAÑER SEEKS RECOGNITION FROM ALEJANDRO

29
MONTAÑER, SR. WHICH CAUSE OF ACTION PRESCRIBED UPON THE DEATH OF
ALEJANDRO MONTAÑER, SR. ON MAY 26, 1995.

In their Comment to the Petition for Certiorari, private respondents stress that the Shari’a District
Court must be given the opportunity to hear and decide the question of whether the decedent is
a Muslim in order to determine whether it has jurisdiction.20

Jurisdiction: Settlement of the Estate of Deceased Muslims

Petitioners’ first argument, regarding the Shari’a District Court’s jurisdiction, is dependent on a
question of fact, whether the late Alejandro Montañer, Sr. is a Muslim. Inherent in this argument
is the premise that there has already been a determination resolving such a question of fact. It
bears emphasis, however, that the assailed orders did not determine whether the decedent is a
Muslim. The assailed orders did, however, set a hearing for the purpose of resolving this issue.

Article 143(b) of Presidential Decree No. 1083, otherwise known as the Code of Muslim Personal
Laws of the Philippines, provides that the Shari’a District Courts have exclusive original
jurisdiction over the settlement of the estate of deceased Muslims:

ARTICLE 143. Original jurisdiction. — (1) The Shari'a District Court shall have exclusive original
jurisdiction over:

xxxx

(b) All cases involving disposition, distribution and settlement of the estate of deceased Muslims,
probate of wills, issuance of letters of administration or appointment of administrators or executors
regardless of the nature or the aggregate value of the property.

The determination of the nature of an action or proceeding is controlled by the averments and
character of the relief sought in the complaint or petition.21 The designation given by parties to
their own pleadings does not necessarily bind the courts to treat it according to the said
designation. Rather than rely on "a falsa descriptio or defective caption," courts are "guided by
the substantive averments of the pleadings."22

Although private respondents designated the pleading filed before the Shari’a District Court as a
"Complaint" for judicial partition of properties, it is a petition for the issuance of letters of
administration, settlement, and distribution of the estate of the decedent. It contains sufficient
jurisdictional facts required for the settlement of the estate of a deceased Muslim,23 such as the
fact of Alejandro Montañer, Sr.’s death as well as the allegation that he is a Muslim. The said
petition also contains an enumeration of the names of his legal heirs, so far as known to the
private respondents, and a probable list of the properties left by the decedent, which are the very
properties sought to be settled before a probate court. Furthermore, the reliefs prayed for reveal
that it is the intention of the private respondents to seek judicial settlement of the estate of the
decedent.24 These include the following: (1) the prayer for the partition of the estate of the
decedent; and (2) the prayer for the appointment of an administrator of the said estate.

We cannot agree with the contention of the petitioners that the district court does not have
jurisdiction over the case because of an allegation in their answer with a motion to dismiss that
Montañer, Sr. is not a Muslim. Jurisdiction of a court over the nature of the action and its subject
matter does not depend upon the defenses set forth in an answer25 or a motion to dismiss.26
Otherwise, jurisdiction would depend almost entirely on the defendant27 or result in having "a case
either thrown out of court or its proceedings unduly delayed by simple stratagem. 28 Indeed, the

30
"defense of lack of jurisdiction which is dependent on a question of fact does not render the court
to lose or be deprived of its jurisdiction."29

The same rationale applies to an answer with a motion to dismiss.30 In the case at bar, the Shari’a
District Court is not deprived of jurisdiction simply because petitioners raised as a defense the
allegation that the deceased is not a Muslim. The Shari’a District Court has the authority to hear
and receive evidence to determine whether it has jurisdiction, which requires an a priori
determination that the deceased is a Muslim. If after hearing, the Shari’a District Court determines
that the deceased was not in fact a Muslim, the district court should dismiss the case for lack of
jurisdiction.

Special Proceedings

The underlying assumption in petitioners’ second argument, that the proceeding before the
Shari’a District Court is an ordinary civil action against a deceased person, rests on an erroneous
understanding of the proceeding before the court a quo. Part of the confusion may be attributed
to the proceeding before the Shari’a District Court, where the parties were designated either as
plaintiffs or defendants and the case was denominated as a special civil action. We reiterate that
the proceedings before the court a quo are for the issuance of letters of administration, settlement,
and distribution of the estate of the deceased, which is a special proceeding. Section 3(c) of the
Rules of Court (Rules) defines a special proceeding as "a remedy by which a party seeks to
establish a status, a right, or a particular fact." This Court has applied the Rules, particularly the
rules on special proceedings, for the settlement of the estate of a deceased Muslim.31 In a petition
for the issuance of letters of administration, settlement, and distribution of estate, the applicants
seek to establish the fact of death of the decedent and later to be duly recognized as among the
decedent’s heirs, which would allow them to exercise their right to participate in the settlement
and liquidation of the estate of the decedent.32 Here, the respondents seek to establish the fact
of Alejandro Montañer, Sr.’s death and, subsequently, for private respondent Almahleen Liling S.
Montañer to be recognized as among his heirs, if such is the case in fact.

Petitioners’ argument, that the prohibition against a decedent or his estate from being a party
defendant in a civil action33 applies to a special proceeding such as the settlement of the estate
of the deceased, is misplaced. Unlike a civil action which has definite adverse parties, a special
proceeding has no definite adverse party. The definitions of a civil action and a special
proceeding, respectively, in the Rules illustrate this difference. A civil action, in which "a party
sues another for the enforcement or protection of a right, or the prevention or redress of a wrong" 34
necessarily has definite adverse parties, who are either the plaintiff or defendant.35 On the other
hand, a special proceeding, "by which a party seeks to establish a status, right, or a particular
fact,"36 has one definite party, who petitions or applies for a declaration of a status, right, or
particular fact, but no definite adverse party. In the case at bar, it bears emphasis that the estate
of the decedent is not being sued for any cause of action. As a special proceeding, the purpose
of the settlement of the estate of the decedent is to determine all the assets of the estate, 37 pay
its liabilities,38 and to distribute the residual to those entitled to the same.39

Docket Fees

Petitioners’ third argument, that jurisdiction was not validly acquired for non-payment of docket
fees, is untenable. Petitioners point to private respondents’ petition in the proceeding before the
court a quo, which contains an allegation estimating the decedent’s estate as the basis for the
conclusion that what private respondents paid as docket fees was insufficient. Petitioners’
argument essentially involves two aspects: (1) whether the clerk of court correctly assessed the
docket fees; and (2) whether private respondents paid the correct assessment of the docket fees.

31
Filing the appropriate initiatory pleading and the payment of the prescribed docket fees vest a trial
court with jurisdiction over the subject matter.40 If the party filing the case paid less than the correct
amount for the docket fees because that was the amount assessed by the clerk of court, the
responsibility of making a deficiency assessment lies with the same clerk of court. 41 In such a
case, the lower court concerned will not automatically lose jurisdiction, because of a party’s
reliance on the clerk of court’s insufficient assessment of the docket fees.42 As "every citizen has
the right to assume and trust that a public officer charged by law with certain duties knows his
duties and performs them in accordance with law," the party filing the case cannot be penalized
with the clerk of court’s insufficient assessment.43 However, the party concerned will be required
to pay the deficiency.44

In the case at bar, petitioners did not present the clerk of court’s assessment of the docket fees.
Moreover, the records do not include this assessment. There can be no determination of whether
private respondents correctly paid the docket fees without the clerk of court’s assessment.

Exception to Notice of Hearing

Petitioners’ fourth argument, that private respondents’ motion for reconsideration before the
Shari’a District Court is defective for lack of a notice of hearing, must fail as the unique
circumstances in the present case constitute an exception to this requirement. The Rules require
every written motion to be set for hearing by the applicant and to address the notice of hearing to
all parties concerned.45 The Rules also provide that "no written motion set for hearing shall be
acted upon by the court without proof of service thereof."46 However, the Rules allow a liberal
construction of its provisions "in order to promote [the] objective of securing a just, speedy, and
inexpensive disposition of every action and proceeding."47 Moreover, this Court has upheld a
liberal construction specifically of the rules of notice of hearing in cases where "a rigid application
will result in a manifest failure or miscarriage of justice 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."48 In these exceptional cases, the Court considers that "no
party can even claim a vested right in technicalities," and for this reason, cases should, as much
as possible, be decided on the merits rather than on technicalities.49

The case at bar falls under this exception. To deny the Shari’a District Court of an opportunity to
determine whether it has jurisdiction over a petition for the settlement of the estate of a decedent
alleged to be a Muslim would also deny its inherent power as a court to control its process to
ensure conformity with the law and justice. To sanction such a situation simply because of a lapse
in fulfilling the notice requirement will result in a miscarriage of justice.

In addition, the present case calls for a liberal construction of the rules on notice of hearing,
because the rights of the petitioners were not affected. This Court has held that an exception to
the rules on notice of hearing is where it appears that the rights of the adverse party were not
affected.50 The purpose for the notice of hearing coincides with procedural due process,51 for the
court to determine whether the adverse party agrees or objects to the motion, as the Rules do not
fix any period within which to file a reply or opposition.52 In probate proceedings, "what the law
prohibits is not the absence of previous notice, but the absolute absence thereof and lack of
opportunity to be heard."53 In the case at bar, as evident from the Shari’a District Court’s order
dated January 17, 2006, petitioners’ counsel received a copy of the motion for reconsideration in
question. Petitioners were certainly not denied an opportunity to study the arguments in the said
motion as they filed an opposition to the same. Since the Shari’a District Court reset the hearing
for the motion for reconsideration in the same order, petitioners were not denied the opportunity
to object to the said motion in a hearing. Taken together, these circumstances show that the
purpose for the rules of notice of hearing, procedural process, was duly observed.

Prescription and Filiation


32
Petitioners’ fifth argument is premature. Again, the Shari’a District Court has not yet determined
whether it has jurisdiction to settle the estate of the decedent. In the event that a special
proceeding for the settlement of the estate of a decedent is pending, questions regarding heirship,
including prescription in relation to recognition and filiation, should be raised and settled in the
said proceeding.54 The court, in its capacity as a probate court, has jurisdiction to declare who are
the heirs of the decedent.55 In the case at bar, the determination of the heirs of the decedent
depends on an affirmative answer to the question of whether the Shari’a District Court has
jurisdiction over the estate of the decedent.

IN VIEW WHEREOF, the petition is DENIED. The Orders of the Shari’a District Court, dated
August 22, 2006 and September 21, 2006 respectively, are AFFIRMED. Cost against petitioners.

SO ORDERED.

G.R. No. 169942 January 24, 2011

BARANGAY DASMARIÑAS thru BARANGAY CAPTAIN MA. ENCARNACION R. LEGASPI,


Petitioner,
vs.
CREATIVE PLAY CORNER SCHOOL, DR. AMADO J. PIAMONTE, REGINA PIAMONTE
TAMBUNTING, CELINE CONCEPCION LEBRON and CECILE CUNA COLINA, Respondents.

DECISION

DEL CASTILLO, J.:

"Utter disregard of [the rules of procedure] cannot justly be rationalized by harking on the policy
of liberal construction."1

This Petition for Review on Certiorari assails the Resolution2 dated July 21, 2005 of the Court of
Appeals (CA) in CA-G.R. SP No. 89723 denying petitioner’s Second Motion for Extension of Time
to File Petition for Review and consequently dismissing the Petition for Review for having been
filed beyond the period allowed by the Rules of Court. Likewise assailed is the Resolution3 dated
September 29, 2005 denying the Motion for Reconsideration thereto.

Factual Antecedents

On June 28, 2004, petitioner Barangay Dasmariñas thru Ma. Encarnacion R. Legaspi (Legaspi)
filed a Complaint-Affidavit4 before the Office of the Prosecutor of Makati docketed as I.S. No. 04-
F-10389, charging respondent Creative Play Corner School (CPC) and its alleged owners,
respondents Dr. Amado J. Piamonte (Piamonte), Regina Piamonte Tambunting (Tambunting),
Celine Concepcion Lebron (Lebron) and Cecille Cuna Colina (Colina) with Falsification and Use
of Falsified Documents. Petitioner alleged that respondents falsified and used the Barangay
Clearance and Official Receipt purportedly issued in the name of CPC by the Office of the
Barangay Captain of Dasmariñas Village, Makati City of which Lepaspi was Barangay Captain.

In their Counter-Affidavit,5 Lebron and Colina denied having falsified the subject documents. They
averred that petitioner's assertion that they were owners of CPC is a mere allegation without
proof. They also pointed out that the complaint neither shows any operative act committed by any
of the respondents in perpetrating the crime charged nor identified who among them actually
committed it. They thus insisted that no probable cause exists to warrant their indictment for the
offense charged. For their part, Tambunting and Piamonte in their respective Counter-Affidavits6
affirmed the arguments made by Lebron and Colina. In addition, Tambunting alleged that the
33
subject documents were not received by any relevant office while Piamonte claimed that he had
no participation whatsoever in the operation of CPC. Both of them averred that petitioner was not
able to discharge its burden of presenting sufficient evidence to support the belief that they
committed the crime charged.

Ruling of the Prosecutor

In a Resolution7 dated September 29, 2004, Assistant City Prosecutor Carolina Esguerra-Ochoa
(Prosecutor Ochoa) recommended the dismissal of the case because of failure to establish
probable cause. Prosecutor Ochoa noted the absence of any finding from pertinent police
laboratory tests and/or law enforcement agency confirming that the subject documents were
indeed falsified, forged or tampered or if so, that respondents were the ones who falsified, forged
or tampered the same. Prosecutor Ochoa concluded that petitioner failed to show any cause
which would engender the belief that respondents are probably guilty of the offense charged.

City Prosecutor Feliciano Aspi approved the Resolution and released the same on November 4,
2004.

Petitioner thus brought the case before the Department of Justice (DOJ) through a Petition for
Review.

Ruling of the Department of Justice

Petitioner refuted the prosecutor’s finding of lack of probable cause. It claimed that since it was
Legaspi's signature which was forged, she was in the best position to attest to the fact of
falsification and therefore her affidavit speaks volumes. Petitioner likewise argued that the
documents attached to the complaint, i.e. sample format of Barangay Clearances legitimately
issued by the Office of the Barangay Captain showing Legaspi's signature and Certifications
regarding the allegation of tampered official receipt, were sufficient to support a finding of probable
cause. After all, a finding of probable cause does not mean conviction; it simply manifests that
there is sufficient evidence to procure a conviction. It is enough that it is believed that the act
complained of constitutes the offense charged. Thus, petitioner sought for the reversal and setting
aside of the Resolution of the Prosecution Office and prayed for the issuance of an order directing
it to cause the filing of the corresponding criminal information against respondents.

Respondents, on the other hand, basically reiterated the allegations in their respective counter-
affidavits and maintained that Prosecutor Ochoa did not err in holding that no probable cause
exists against them.

The DOJ, though, after finding that no error which would justify the reversal of the assailed
resolution was committed by Prosecutor Ochoa and that the petition was filed late, dismissed the
Petition for Review through a Resolution8 dated February 21, 2005. Petitioner filed a Motion for
Reconsideration9 thereto but same was also denied in a Resolution10 dated April 25, 2005.

Still unsatisfied, petitioner challenged this dismissal through a Petition for Review before the CA.

Ruling of the Court of Appeals

But before petitioner was able to file its petition, it first sought for an extension of time11 of 15 days
from May 13, 200512 or until May 28, 2005 within which to file the same due to counsel’s heavy
workload. The CA granted the extension in a Resolution13 dated May 23, 2005. Subsequently,
petitioner asked for another extension14 of five days from May 28, 2005 until June 2, 2005 for the
same reason given in its first motion for extension. However, petitioner filed the petition by mail
34
only on June 7, 2005.15 Because of these, the CA issued the following assailed Resolution of July
21, 2005:

In a Resolution dated May 23, 2005, this Court granted petitioner an additional period of fifteen
(15) days from May 13, 2005 or until May 28, 2005 within which to file its petition for review.
However, instead of filing its petition on May 28, 2005, petitioner filed [the] Second Motion for
Extension of Time to File Petition for Review requesting for an additional period of five days from
May 28, 2005 or until June 2, 2005 within which to file its petition for review.

Section 4, Rule 43 of the Rules of Court provides that we may grant an additional period of fifteen
(15) days only within which to file the petition for review and no further extension shall be granted
except for the most compelling reason. We do not find petitioner’s reason to be compelling to
grant another extension. In this second motion, petitioner gave the same reason it gave us in its
first motion for extension of time to file petition for review, i.e. pressures of other equally important
pleadings. The original period of fifteen days and the extension of fifteen days granted are not
unreasonable as they add up to thirty days within which petitioner can prepare, perfect and file its
petition.

In addition, records of the case show that petitioner filed its petition for review on June 7, 2005 or
five days late from the extension sought from us.

WHEREFORE, premises considered, we hereby DENY the ‘Second Motion for Extension of Time
to File Petition for Review’ and DISMISS the Petition for Review for having been filed beyond the
period allowed by the Revised Rules of Civil Procedure.

SO ORDERED.16

Petitioner filed a Motion for Reconsideration17 explaining therein that aside from the first and
second motions for extension, it also filed a Final Motion for Additional Time to File Petition for
Review18 asking for another five days from June 2, 2005 or until June 7, 2005 within which to file
the petition. This new request for extension was allegedly on account of a sudden death in the
family of the handling lawyer, Atty. Maria Katrina Bote-Veguillas (Atty. Bote-Veguillas). Thus,
petitioner argued that when the petition was filed on June 7, 2005, it was still within the period of
extension prayed for in said final motion for extension. At any rate, petitioner prayed that the CA
set aside rules of technicalities as it claimed that the slight delay in the filing of the petition did not
after all result to the prejudice of respondents. More importantly, it believed that the merits of the
case justify the relaxation of technical rules.

After respondents filed their Comment,19 the CA issued its September 29, 2005 Resolution20
denying the Motion for Reconsideration. The CA ratiocinated that while Section 4, Rule 43 of the
Rules of Court allows it a great leeway in the exercise of discretion in granting an additional period
of 15 days for filing a petition for review, said Rules, however, limit such discretion in the grant of
a second extension only to the most compelling reasons presented by the movant. And,
considering that the reason given by petitioner for the extension sought in its first and second
motions for extension, i.e. pressure and large volume of work of counsel, is, as held by
jurisprudence, not an excuse for filing a petition out of time, the CA was constrained to deny the
second motion for extension and consequently, dismiss the petition for review.

With respect to the final motion for extension, the CA gave three reasons for it to disregard the
same: First, a third extension is not authorized by the Rules of Court. Second, the reason given
for the extension sought was the sudden death of a relative of the handling lawyer Atty. Bote-
Veguillas. However, no details as to the degree of relationship between Atty. Bote-Veguillas and
the deceased was given for the court to determine whether such reason is indeed compelling.

35
Third, the reason given is not sufficiently persuasive because petitioner’s counsel of record is
Dela Vega Matta Bote-Veguillas and Associates Law Offices and not Atty. Bote-Veguillas alone.
This means that any member of the law firm could have prepared, perfected and filed the petition
for the law firm other than Atty. Bote-Veguillas if the latter has indeed gone through a personal
tragedy. The CA thus saw no reason to grant petitioner's Motion for Reconsideration.

This notwithstanding, petitioner still firmly believes that the case should have been resolved on
the merits and hence, it is now before this Court via this Petition for Review on Certiorari.

Issues

Petitioner advances the following grounds:

The Honorable Court of Appeals gravely erred in dismissing the Petition For Review on a mere
technicality, without considering the substantive grounds on which the Petition For Review was
based.

The Honorable Court of Appeals gravely erred in not considering that respondents’ rights had not
been prejudiced in any way by the short delay of ten days on account of the requests for extension
of time to file Petition for Review.

The Honorable Court of Appeals gravely erred when it dismissed the Petition for Review despite
the clear and categorical existence of probable cause that would justify the filing of criminal cases
against the respondents.21

Petitioner’s Arguments

Petitioner harps on the policy of liberal construction embodied in Section 6, Rule 1 of the Rules
of Court which provides that the rules shall be liberally construed in order to promote their object
and to assist the parties in obtaining just, speedy and inexpensive determination of every action.
It cites several jurisprudence22 where this Court set aside technical rules to give way to the merits
of the case. Petitioner notes that the CA in dismissing the petition merely focused on the technical
infirmity and did not even bother to take a look at its substance. Petitioner believes that if only the
CA examined the records of the case, it would find that the substantial merits of the case are
enough to override technical deficiencies. It likewise argues that Cosmo Entertainment
Management, Inc. v. La Ville Commercial Corporation23 relied upon by respondents does not
apply because although the Court dismissed the appeal in said case for having been filed beyond
the reglementary period and did not find "pressure of work on equally important cases" as
compelling reason to grant an extension of time to file the same, still the merits of the case were
nevertheless examined and considered.

Moreover, petitioner avers that even if the petition was filed 10 days beyond the extended period,
respondents have not been prejudiced in any way by such delay as they were free and not
detained. Petitioner also posits that since it received the CA’s resolution denying its Second
Motion for Extension on July 27, 2005 or after it has filed the Petition for Review and paid the
corresponding docket fees, such belated filing of the petition has already become moot and the
more equitable action of the CA should have been to admit the petition.

Lastly, petitioner believes that there is probable cause for the charge of falsification and use of
falsified documents against respondents and that it was able to discharge its burden of
establishing the same.1avvphi1

Respondents’ Arguments
36
Respondents find no error on the part of the CA in denying petitioner’s Second Motion for
Extension and in dismissing the petition. They cited Cosmo Entertainment Management, Inc. v.
La Ville Commercial Corporation24 wherein this Court held that "pressure of work on equally
important cases" is not a compelling reason to merit an extension of time. Besides, even assuming
that petitioner’s Second Motion for Extension was granted, respondents point out that the petition
was nevertheless filed beyond the period requested. With respect to petitioner's Final Motion for
Extension, the CA has already adequately explained the reasons why it cannot consider the
same.

Moreover, respondents call this Court’s attention to petitioner’s repeated transgression of


technical rules: first, before the DOJ where it belatedly filed thereat its petition for review and
again, before the CA. To respondents, petitioner's utter disregard of the rules should not be
countenanced and hence the Court must not excuse it from complying therewith.

Respondents also put forward the principle that the determination of probable cause is an
executive function and that as a matter of sound judicial policy, courts should refrain from
interfering in the conduct of investigation. It is precisely because of this principle that the DOJ has
a wide latitude of discretion in the determination of what constitutes sufficient evidence to
establish probable cause. This means that petitioner can assail the decision of the prosecuting
arm of the government only if the same is tainted with grave abuse of discretion. In this case,
however, it is clear that there is no grave abuse of discretion. As petitioner was not able to point
out any operative act committed by any of the respondents in perpetrating the crime charged or
when and who among them perpetrated it, the CA, therefore, was correct in dismissing the
petition. Finally, respondents argue that the issues raised are factual and hence cannot be passed
upon by this Court in this Petition for Review on Certiorari. In sum, respondents pray that the
present petition be dismissed and the assailed CA resolutions affirmed.

Our Ruling

We deny the petition.

Section 4, Rule 43 of the Rules of Court provides:

Section 4. Period of appeal. The appeal shall be taken within fifteen (15) days from notice of the
award, judgment, final order or resolution, or from the date of its last publication, if publication is
required by law for its effectivity, or of the denial of petitioner’s motion for new trial or
reconsideration duly filed in accordance with the governing law of the court or agency a quo. Only
one (1) motion for reconsideration shall be allowed. Upon proper motion and the payment of
the full amount of the docket fee before the expiration of the reglementary period, the Court
of Appeals may grant an additional period of fifteen (15) days only within which to file the
petition for review. No further extension shall be granted except for the most compelling
reason and in no case to exceed fifteen (15) days. (Emphasis supplied.)

From the above, it is clear that the CA, after it has already allowed petitioner an extension of 15
days within which to file a petition for review, may only grant a further extension when presented
with the most compelling reason but same is limited only to a period of 15 days. Thus, when the
CA denied petitioner’s Second Motion for Extension of five days, it was merely following the
abovementioned provision of the rules after it found the reason for the second extension as not
compelling. And, considering that the CA has already sufficiently explained how it was able to
arrive at the conclusion that there is no compelling reason for such second extension, we deem
it unnecessary to repeat the same especially since we are in total agreement with the ratiocination
of the CA.

37
As to petitioner’s invocation of liberal application of the rules, we cannot heed the same. "It is true
that litigation is not a game of technicalities and that the rules of procedure should not be strictly
followed in the interest of substantial justice. However, it does not mean that the Rules of Court
may be ignored at will. It bears emphasizing that procedural rules should not be belittled or
dismissed simply because their non-observance may have resulted in prejudice to a party’s
substantial rights. Like all rules, they are required to be followed except only for the most
persuasive of reasons."25

While petitioner cites several jurisprudence wherein this Court set aside procedural rules, an
imperative existed in those cases that warranted a liberal application of the rules. We have
examined the records of this case, however, and we are convinced that the present case is not
attended by such an imperative that justifies relaxation of the rules. Moreover, as pointed out by
respondents, petitioner had not only once transgressed procedural rules. This Court has
previously held that "[t]echnical rules may be relaxed only for the furtherance of justice and to
benefit the deserving."26 Petitioner’s low regard of procedural rules only shows that it is
undeserving of their relaxation.

Also, we cannot subscribe to petitioner’s argument that considering that no prejudice was caused
to respondents by the belated filing of the petition as the latter were free and not detained hence,
the CA should have just disregarded such belated filing. Likewise, the filing of the petition and
payment of the corresponding docket fees prior to petitioner’s receipt of the CA’s resolution
denying its Second Motion for Extension does not, contrary to petitioner’s position, render such
belated filing moot. If such would be the case, the delay in the delivery of court resolutions caused
by the limitations of postal service would serve as a convenient cover up for a pleading or a
motion’s belated filing. This would be contrary to the aim of procedural rules which is to secure
an effective and expeditious administration of justice.

Besides, even if the CA ignores the petition’s belated filing, the same would have been dismissed
for being an improper remedy. It has been held that "[t]he remedy of a party desiring to elevate to
the appellate court an adverse resolution of the Secretary of Justice is a petition for certiorari
under Rule 65. A Rule 43 petition for review is a wrong mode of appeal."27

With the foregoing, it is clear that the present petition is unworthy of this Court’s attention and
should be denied.

WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed Resolutions dated
July 21, 2005 and September 29, 2005 of the Court of Appeals in CA-G.R. SP No. 89723 are
AFFIRMED.

SO ORDERED.

38
G.R. No. 79899 April 24, 1989

D. ANNIE TAN, petitioner,


vs.
COURT OF APPEALS, CHINA BANKING CORPORATION, GEORGE LAUREL TAN,
TEODORA TAN ONG, ROSA TAN, ROSITA TAN, and MAURO UMALI TAN, respondents.

Tabaquero, Albano & Evangelista for petitioner.

Del Rosario, Lim, Telan De Vera & Vigilia for respondent China Banking Corporation. Estela B.
Perlas for respondents Tan.

GUTIERREZ, JR., J.:

Tan Tiong Tick, married to Tan Ong Hun, was the registered owner of a 178 square meter parcel
of land and its improvements located at Lot No. 5, Block No. 2021 of the Cadastral Survey of
Manila, Carvajal Street, Binondo, Manila.

Mr. and Mrs. Tan had six children - respondents George Laurel Tan, Teodora Tan Ong, Rosa
Tan, Rosita Tan, Mauro Umali Tan, and the petitioner, D. Annie Tan.

On February 6, 1963, in order to secure payment of various obligations with respondent China
Banking Corporation or China Bank for short, Mr. and Mrs. Tan Tiong Tick mortgaged the disputed
property to the bank. Tan Tiong Tick died on December 22, 1969 without having paid his
obligations.

On June 27, 1972, China Bank foreclosed the mortgage and purchased the property at public
auction as the highest bidder for the sum of P186,100.00.

On August 31, 1972, the widow and children of Tan Tiong Tick filed a complaint against China
Bank with the Court of First Instance of Manila praying for the nullity of the real estate mortgage
executed by the spouses Tan and the foreclosure sale conducted by the Sheriff. They also asked
that the redemption period be suspended.

The one year period for redemption expired on July 6, 1973 without the Tan heirs having exercised
the right to redeem the property. The widow Tan Ong Hun having died, only the children were left
to redeem the lot and building. China Bank consolidated its ownership over the land and

39
improvements and a new title, Transfer Certificate Title No. 112924 was issued in the name of
the bank on August 16, 1973.

About two weeks earlier, however, the heirs of Tan and China Bank agreed to amicably settle the
action for nullity of mortgage before the Court of First Instance of Manila. The parties filed a joint
motion to dismiss.

The verbal agreement regarding the disposition of the property was confirmed in a letter of China
Bank signed by four of the children and one daughter-in-law on August 3, 1973. The heirs were
given the right to repurchase the property for P180,000.00 provided it was done on or before
August 31,1974. The agreement reads in part:

xxx xxx xxx

It is understood, that should you fail to pay us in full the aforesaid sum of
P180,000.00 on or before August 31, 1974, your right to repurchase the
property shall terminate and we shall be free to dispose of the property to
any other party. (p. 81, Folder of Exhibits; Exhibit 2, CBC)

There are allegations that some of the heirs tried to buy the property in the ensuing one year
period but for one reason or another, were unable to do so.

Finally, on August 30, 1974, or one day before the end of the period to buy back, petitioner D.
Annie Tan went to the office of Mr. Dee K. Chiong of China Bank and tendered her China Bank
Manager's Check for P180,000.00 as payment. Upon the insistence of the bank official, the deed
of sale returning the property to the heirs was executed in favor, not of D. Annie Tan who alone
paid for the property but of all the six heirs of Tan Tiong Tick who would, therefore, share and
share alike.

This led to the filing of the action by D. Annie Tan against her brothers and sisters and the China
Banking Corporation, now respondents in this petition. The petitioner prayed the trial court to
order the respondents-(1) to reconvey the disputed property to her and (2) to pay actual damages
in the amount of P300,000.00, moral damages in the amount of P100,000.00, exemplary
damages in the amount of P50,000.00, and attorney's fees in the amount of P10,000.00.

On September 1, 1980, the Court of First Instance of Manila rendered a decision, the dispositive
portion of which reads:

ACCORDINGLY, judgment is hereby rendered as follows:

(1) Dismissing the complaint as well as defendants' counter-claim;

(2) Ordering each of the defendants, namely George Laurel Tan, Teodora
Tan Ong, Rosa Tan and Rosita Tan to reimburse the plaintiff the sum of
P30,000.00 plus 12% interest from August 20, 1974 until the whole amount
is fully paid;

(3) Ordering the defendant Mauro Umali Tan who had been ordered in
default to execute the deed of sale of his rights and interests over the
property covered in Transfer Certificate of Title No. 64806 in favor of the
plaintiff in accordance with his instrument of waiver dated June 25, 1974,
and

40
(4) Without pronouncement as to costs. (Annex B, Rollo, pp. 43-44)

On October 17, 1986, the Court of Appeals affirmed the decision of the trial court. On September
7, 1987, a motion for reconsideration was denied. Hence this petition.

The petitioner gives the following grounds why her petition should be given due course:

1. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN


AFFIRMING THE DECISION OF THE TRIAL COURT ORDERING
REIMBURSEMENT TO THE PETITIONER INSPITE OF THE FACT THAT
THE LEGAL BASIS FOR THE REIMBURSEMENT, WHICH WAS NOT
CLEARLY EXPLAINED IN THE DECISION, MAY HAVE BEEN THE
ALLEGED EXISTENCE OF (1) A CO-OWNERSHIP AMONG THE HEIRS,
AND (2) CREDITOR-DEBTOR RELATIONSHIP BETWEEN THE HEIRS
AND THE BANK, WHICH HAVE NOT BEEN FULLY ESTABLISHED BY
EVIDENCE.

2. ASSUMING, WITHOUT ADMITTING, THE EXISTENCE AMONG THE


HEIRS OF A CO-OWNERSHIP AND/OR A CREDITOR/ DEBTOR
RELATIONSHIP BETWEEN THE RESPONDENT BANK AND THE
HEIRS, RESPONDENT COURT GRAVELY ERRED IN NOT HOLDING
THAT THE CO-HEIRS OF PETITIONER, THE PRIVATE RESPONDENTS
HEREIN, HAVE IMPLIEDLY WAIVED THEIR RIGHT TO BUY BACK THE
PROPERTY BY THEIR FAILURE TO RAISE THE MONEY FOR THEIR
RESPECTIVE SHARES UP TO THE LAST DAY GIVEN THEM BY THE
RESPONDENT BANK ON AUGUST 31, 1974, THUS WHEN PETITIONER
BOUGHT THE PROPERTY BY HER EXCLUSIVE FUNDS, IT BENEFITED
HER ALONE AND NOT HER CO-HEIRS.

3. RESPONDENT COURT OF APPEALS, GRAVELY ERRED IN NOT


HOLDING THAT THE LETTER-AGREEMENT DATED AUGUST 3, 1973,
FOR WHICH THE RIGHTS OF THE PETITIONER AND HER CO-HEIRS
TO BUY BACK THE FORECLOSED PROPERTY AROSE, IS ACTUALLY
NOT A RIGHT TO REPURCHASE BUT IS AN OPTION TO BUY BACK
THE PROPERTY WHICH MAY BE EXERCISED BY THE HEIRS SINGLY
OR COLLECTIVELY. (Rollo, pp. 21-22)

The decision of the trial court, affirmed by the Court of Appeals, is based on the principle that the
heirs of Mr. and Mrs. Tan Tiong Tick being co- owners of the foreclosed property, a repurchase
or reconveyance effected by only one of those heirs redounds to the co-ownership. This explains
why the courts below ordered four of the heirs - George Laurel Tan, Teodora Tan Ong, Rosa Tan
and Rosita Tan - to reimburse D. Annie Tan the sum of P30,000.00 each plus 12% interests while
the share of the fifth heir who was in default and who had waived his interest would go to the
petititioner.

The petitioner contends that there was no co-ownership and no creditor/debtor relationship
between her and the other children.

The petitioner states:

This controversy addresses itself to the question of whether or not the co-
ownership among the heirs over a parcel of land formerly belonging to their
parents had been dissolved by the foreclosure and consolidation of title by

41
a bank after the redemption period of one (1) year had expired, such that
a unilateral obligation given by the bank to the heirs to buy back the
foreclosed property out of liberality is actually an option to buy given to the
heirs as group of persons singly or collectively, and not strictly a right of
repurchase to be exercised by the heirs as co-owners. If it is admitted that
the co-ownership of the heirs over the foreclosed property of their parents
had been dissolved by the consolidation of the title in the mortgagee's
name, which in this case is respondent Bank and that there exists no
creditor-debtor relationship between respondent Bank and the heirs, then
the bank may not impose an obligation to the heirs that they should
purchase back the property only as former co-owners or as solidary
debtors, but as groups of persons, singly or collectively. The bank would
then be imposing an onerous condition upon the heirs of going back to the
dissolved co- ownership which the law frowns upon. To settle this case
once and for all, herein petitioner anchors her claim on the theory that when
the respondent Bank foreclosed the property and consolidated its title on
August 16, 1973 and T.C.T. No. 112924 was issued in its name, the co-
ownership of the heirs of the deceased parents of petitioner and private
respondents over the property in question have been dissolved. In this
wise, the decision of the respondent court premised on the existence of a
co-ownership or in a creditor-debtor relationship, and ordering the
reimbursement to petitioner of the money for the purchase of the property
in question which allegedly redounded to the benefits of her co-heirs as co-
owners or solidary debtors has no leg to stand on. It is this erroneous
decision of respondent court based on a misapprehension of facts and
contrary to settled jurisprudence that petitioner comes to this Honorable
Court, for relief. (Sese v. Intermediate Appellate Court, G.R. No. 66186,
July 31, 1987; Moran, Jr. v. Court of Appeals, 133 SCRA 88; Manero v.
Court of Appeals, 102 SCRA 817; Carolina Industries v. CMS Brokerage,
97 SCRA 734; Sacay v. Sandiganbayan, 142 SCRA 593) (Rollo, pp. 7-9)

The first question which arises is the correctness of the assumption that there was a co-ownership
among the children of Tan Tiong Tick and Tan Ong Hun when the petitioner purchased the
property.

Since the lot and its improvement were mortgaged by the deceased parents, there can be no
question that a co-ownership existed among the heirs during the period given by law to redeem
the foreclosed property. Redemption by one during this period would have inured to the benefit
of all (Adille v. Court of Appeals, G.R. No. 44546, 157 SCRA 455 [1988]; and De Guzman v. Court
of Appeals, G.R. No. 47378, 148 SCRA 75 [1987]).

The records show, however, that when the petitioner purchased the disputed property on August
30, 1974, any co-ownership among the brothers and sisters no longer existed. The period to
redeem had expired more than one year earlier, on July 6, 1973. The respondent China Bank
consolidated its ownership and a new title was issued in the bank's name. When the heirs allowed
the one year redemption period to expire without redeeming their parents' former property and
permitted the consolidation of ownership and the issuance of a new title, the co-ownership was
extinguished. The challenged ruling of the respondent court is, therefore, based on erroneous
premises.

Under Section 63-B of Presidential Decree No. 1529, the Property Registration Decree, in case
of non-redemption, the purchaser at the foreclosure sale, meaning the respondent Bank in this
case, is entitled to a new certificate of title in its name after filing the necessary papers with the
Register of Deeds (Spouses Teofisto and Eulalia Verceles v. Court of First Instance of Rizal, et
42
al., G.R. No. 62219, February 28, 1989). It becomes a ministerial duty to place the buyer in
possession of the property he now owns (Banco Filipino v. Intermediate Appellate Court, G.R.
No. 68878,142 SCRA 44 [1986]). Ownership, therefore, passed to China Bank and there was no
more co-ownership among the heirs.

The non-existence of a common inheritance of the Tan children at the time the disputed property
was purchased from China Bank is moreover supported by the evidence showing that there was
no more inheritance to divide. It had already been divided. Tan Tiong Tick left other properties in
addition to the property disputed in this petition. The eldest son, George Laurel Tan, inherited
practically all the properties consisting of several hectares of real estate in Novaliches, Metro
Manila; a furnished house in Greenhills, Mandaluyong; and a cigar factory (t.s.n., November 18,
1976, p. 24). The petitioner also claims that stock certificates went to another sister, Teodora Tan
Ong because she "forced" the other heirs to sign a deed of sale in her favor.

May the heirs be considered as debtors in common, substituting for their parents in liquidating the
latter's obligations?

The answer is again, No.

Upon the foreclosure of the mortgaged property and its purchase by China Bank as the highest
bidder, the proceeds of the auction sale were applied to the various debts of the Tan spouses.
The parents' debts were paid. The obligation having been extinguished, there was no more
common debt and no legal subrogation arising when one pays the debts properly accruing to
several others.

Respondent China Bank contends that the letter agreement dated August 3, 1973 called for the
reconveyance of the land and improvements to all the heirs "in equal undivided shares."

There is no such stipulation in the letter. There is reference to a verbal agreement to reconvey to
the "heirs of your late father" but no requirement that everybody must share in the purchase or
the offer would be withdrawn.

What is clear is that the bank's general manager, Mr. Dee K. Chiong tried to impose the above
requirement when the one year period to buy back was about to expire. Mr. Dee rejected the offer
of D. Annie Tan to buy the property for herself alone. He insisted that the money brought by the
petitioner would be considered a joint fund of all the heirs and ordered the same annotated on the
back of the check given as payment for the property.

This attitude of Mr. Dee K. Chiong is in sharp contrast to the bank's official stand embodied in a
letter to the Central Bank.

Asked to comment on a letter-complaint filed by D. Annie Tan with Malacañang and forwarded to
the Central Bank, the respondent bank through its Legal Officer wrote the Director, Department
of Commercial and Savings Bank, Central Bank an explanation, part of which states:

To our mind, the dispute is not between the Bank and the heirs or any one
of them, but among the heirs themselves, for as far as the Bank is
concerned, it makes no difference whether the property is reconveyed to
all the heirs or to any one of them alone as they may agree. As a matter of
fact the complainant has already filed a Petition under the Cadastral Case
now pending in the CFI, Manila, involving the property and all the heirs.
(Copy of the Petition is hereto attached as Annex "l0").

43
At any rate, it is our honest conviction that the charges filed by the
complainant and the interpretation of Articles 1302 and 1303 of the New
Civil Code properly belong to the Courts where the complainant can always
have her right, if any, vindicated, and if only to resolve the issue, we shall
welcome any court action to clear the matter. (Folder of Exhibits, pp. 97-
98)

The petitioner questions the unusual interest shown by China Bank in the case when its stand
should be one of neutrality. She claims that there is an orchestrated alliance between the bank
and the other private respondents as shown by the fact that the bank seems to be more eager
and vigorous than the other heirs to win the case. (Rollo, p. 310).

As earlier stated, there is nothing in the August 3, 1973 letter-agreement which called for either a
purchase by all the heirs or no purchase at all. But could not Mr. Dee K. Chiong validly impose
such a requirement at the time the tender of money to buy the property was made?

Again, the answer is in the negative.

We agree with the petitioner that her agreeing to sign an annotation at the back of the check was
a case of vitiated consent. She states that her conformity was null and void because it was made
under duress. The records show that up to the last hour the petitioner was pleading with Mr. Dee
K. Chiong to buy the property for herself alone as the money she had raised was not in any way
owned by the other heirs. Since the period was expiring, the petitioner had no choice. It was a
case of either agreeing to the bank executive's requirement or losing the family property forever
to strangers.

Mr. Dee could not impose a new co-ownership upon the petitioner, her brothers and sisters. Co-
ownership is discouraged by law.

As held in the case of Basa v. Aguilar (G.R. No. L-30994, 117 SCRA 128, 130-131 [1982]):

Legal redemption is in the nature of a privilege created by law partly for


reasons of public policy and partly for the benefit and convenience of the
redemptioner, to afford him a way out of what might be a disagreeable or
inconvenient association into which he has thrust. (10 Manresa, 4th Ed.,
317.) It is intended to minimize co-ownership. The law grants a co-owner
the exercise of the said right of redemption when the shares of the other
owners are sold to "a third person." A third person, within the meaning of
this Article, is anyone who is not a co-owner. (Sentencia of February 7,
1944 as cited in Tolentino, Comments on the Civil Code, Vol. V, p. 160.)
(Emphasis supplied)

The records show that the annotation at the back of the P180,000.00 manager's check that the
funds were contributed by all the heirs was made by a China Bank representative and that D.
Annie Tan was told by Dee K Chiong that if she would not sign it, he would not accept the
manager's check and she would lose her right to buy the lot within the period offered by the bank.
The petitioner, at first, refused but being placed between the difficulty of agreeing to the condition
or losing the property, she decided to agree. (t.s.n., September 27, 1976, pp. 24-25; t.s.n.,
November 18, 1976, p. 36) The petitioner was also aware that a certain Mr. Ang who operated a
travel agency in the next door building was eager to buy the property at double the price stated
in the letter-agreement executed more than a year earlier. (Court of Appeals Rollo, Brief for
Plaintiff-Appellant, p. 77)

44
The petitioner further argues:

The insistence by respondent Bank that the said letter-agreement is a right


to re-purchase given to all the heirs of the late Tan Tiong Tick to be
exercised only collectively cannot legally stand considering the following
circumstances:

a) What will happen if one of the heirs of the late Tan Tiong Tick refuses or
fails to exercise his right to purchase for whatever reason? Cannot any of
the other heirs, but all, raise sufficient funds for the full amount of the
purchase price because the other heirs could not let him or her borrow
money to cover his or her share? Would such refusal then prejudice the
other heirs?

b) Cannot two or more heirs, but not all, who have sufficient funds exercise
the right of purchase?

c) Would all the heirs then who signed the letter-agreement as in the case
at bar lose their right to purchase the property because of the refusal of
one heir?

d) If only one of the heirs has sufficient funds to purchase the property and
the others do not have, and this particular heir does not want to lend her or
his money to the other heirs who have none, can the offer of the other heir
to exercise the option to buy in her or his own name alone be legally
refused?

e) Finally, can the buying back of the property by one heir alone be
disallowed considering that she is the one who has enough or sufficient
funds and that her action will prevent the property from going to third
persons, like respondent Bank, for failure to pay the purchase price on the
last day of the period given by respondent Bank?'

It is petitioner's submission that to follow the arguments of respondent Bank


that the letter-agreement can only be exercised collectively and not singly
would render the said agreement a useless piece of paper, and gravely
prejudicial to the property itself.

What is more, even the respondent bank's legal officer, Atty. Arsenio Sy
Santos, when asked to comment on the case of the petitioner, admitted
that indeed the letter-agreement of August 3,1973 is actually an option to
buy. Said legal officer gave the following observations and comments, to
wit:

xxxxxxxxx

Observations and comments -

It may be interesting to note that the provisions of Articles 1302 and 1303
which read as follows:

"Art. 1302. It is presumed that there is legal subrogation:

45
(1) When a creditor pays another creditor who is preferred
even without the debtor's knowledge;

(2) When a third person, not interested in the obligation,


pays with the express or tacit approval of the debtor.

(3) When even without the knowledge of the debtor, a


person interested in the fulfillment of the obligation pays,
without prejudice to the effects of confusion as to the latter's
share.

Art. 1303. Subrogation transfers to the person subrogated


the credit with all the rights thereto appertaining, either
against the debtor or against third person, be they
guarantors or possessors of mortgages, subject to
stipulated in a conventional subrogations (sic)."

refer to cases where the creditor-debtor relationship exists among the


parties. (Rollo, pp. 243-246)

xxx xxx xxx

There was no creditor-debtor relationship existing among the heirs and Mr. Dee had no legal
authority to create one.

China Bank contends that when it told the petitioner that the property could not be reconveyed to
her alone, she was likewise informed that a similar offer from some of the other co-heirs had also
been politely turned down. (Exhibit 7, China Bank, Folder of Exhibits, p. 87)

The petitioner disputes this claim. She states that there was no such offer by her co-heirs because
she was the only one willing to buy back the lot and the only one with the means to do so at that
time. It was only on September 12, 1974 that the individual respondents offered to repurchase.
By that time, D. Annie Tan had already paid for the lot and was already insisting on a conveyance
of the property in her name alone.

The petitioner states:

There is, therefore, no doubt that the money used in buying back the
property belongs exclusively to the petitioner. Private respondents' in
action in not contributing the necessary money up to the last day of the buy
back period is fatal to their cause. To paraphrase one case decided by this
Honorable Court, courts cannot look with favor at parties who, by their
silence, delay and inaction, knowingly induce another to spend time, effort
and expense in protecting their interests over the property by paying the
buy back money only to spring from ambush and claim title or interest over
the property when the land and building value have become higher. (See
Lola v. Court of Appeals, G.R. No. 46575, November 13, 1986). Moreover,
the laws aid the vigilant, not those who slumber on their rights. (Miraflor v.
Court of Appeals, G.R. Nos. 40151-52, April 8, 1986).

Definetly, the effects of a waiver militates against the private respondents.


Having forfeited, abandoned and/or waived their rights, private
respondents are now estopped from taking an inconsistent position. They
46
cannot now assert that they are still CO-owners of the property with the
petitioner. (Sec. 65, Rule 123, Rules of Court; Hernaez v. Hernaez, 32 Phil.
214) (See also Banco de Oro Savings & Mortgage Bank v. Equitable
Banking Corporation, G.R. No. 74917, January 20, 1988, citing Saura
Import and Export Co. v. Court of Appeals, 24 SCRA 974). All the elements
of a valid waiver (1) the existence of a right; (2) the knowledge of the
existence thereof; and (3) the intention to relinquish such right, either
expressly or impliedly are present. (Director of Lands v. Abiertas, 44 O.G.
928). ... (Rollo, pp. 238-239)

The claim of the respondents Tan in their memorandum that they gave their individual
contributions to the petitioner to raise the P180,000.00 is not worthy of credence. At the time of
the repurchase, the petitioner was already estranged from the respondents Tan and they would
not have given her any money without corresponding receipts or given her money under any
circumstance, for that matter. In fact, there is no reason why the petitioner should be the one to
collect the money of the heirs and bring it to China Bank. She was neither a son nor the eldest.
Neither did the others feel kindly towards her. The petitioner had called for a conference on July
23, 1974 at 619 Carvajal Street, Binondo, Manila to discuss compliance with the letter-agreement
considering the fast approaching deadline. Not one showed up. (Rollo, pp. 44-45) The money
was raised by D. Annie Tan through her connections with Jardine Davies because of her
construction business. The decision of the respondent court confirmed the factual findings of the
trial court. It declared that the respondents Tan became debtors of petitioner Tan and ordered
them to reimburse the P30,000.00 each which were advanced by the petitioner. There was no
pooling of resources up to August 30,1974 when at 4:00 in the afternoon, D. Annie Tan went to
Mr. Dee K. Chiong with the China Bank manager's check for P180,000.00.

The equities of this case also favor the grant of the petition. D. Annie Tan went to plenty of trouble
in her effort to buy back the property formerly owned by her parents. There is nothing in the
records to show that, beyond making some perfunctory allegations, the respondents Tan did
anything to save the property from falling into the hands of other persons. The petitioner states
that she has now spent substantial sums to pay for real estate taxes and to renovate, and improve
the premises. According to her she has "spent her little fortunes to preserve the patrimony left by
her parents." She alone deserves to be entitled to the property, in law and equity. (Rollo, p. 317)

WHEREFORE, the petition is hereby GRANTED. The questioned decision of the Court of Appeals
is REVERSED and SET ASIDE. The respondent China Banking Corporation is ordered to execute
the deed of sale over the disputed property in favor of the petitioner alone.

SO ORDERED.

47
G.R. No. 153306 August 27, 2004

HEIRS OF THE LATE CRUZ BARREDO, petitioners,


vs.
SPS. VIRGILIO L. ASIS and MAUDE MASA ASIS, respondents.

DECISION

TINGA, J.:

This Petition for Review on Certiorari1 seeks to set aside the Resolutions of the Court of Appeals
dated November 29, 20012 and April 29, 2002,3 respectively dismissing petitioners’ appeal for
failure to file an appellants’ brief and denying their Motion for Reconsideration and/or Petition for
Relief from Judgment of the Resolution of November 29, 2001,4 for having been filed out of time
and for being an improper remedy.

We gather the following facts from the records before us:

On February 3, 1997, petitioners herein filed an action for Cancellation of Certificate of Title and
Damages5 against the respondents involving a seven (7)-hectare parcel of land located in Roxas
City. After trial on the merits, the Regional Trial Court (RTC) rendered a decision6 dated July 21,
2000 dismissing the complaint for lack of merit; ordering the Registry of Deeds of Roxas City to
cancel the annotation of lis pendens on Transfer Certificate of Title No. T-34929 covering the
subject property; and ordering the plaintiffs, petitioners herein, to pay the defendants the sum of
P200,000.00 as attorney’s fees and P50,000.00 as litigation expenses.

Upon petitioners’ filing of a Notice of Appeal through their counsel, Atty. Ray B. Fagutao (Atty.
Fagutao), the RTC forwarded the records of the case to the Court of Appeals. The appellate court
issued a Notice to File Brief dated February 7, 2001 giving the appellants, petitioners herein, a
period of 45 days within which to file their brief. However, petitioners failed to file their brief despite
Atty. Fagutao’s receipt of the Notice to File Brief on February 20, 2001. Hence, the appellate court
considered the appeal abandoned and accordingly dismissed the same in its questioned
Resolution dated November 29, 2001.7

Petitioners, through their new counsel, Atty. Diosdado B. Solidum, Jr., filed a Motion for
Reconsideration and/or Petition for Relief from Judgment of the Resolution of November 29,
20018 dated March 1, 2002, alleging that they received a copy of the Resolution dated November
29, 2001 on December 10, 2001; and that the dismissal of their appeal as a result of the mistake

48
or gross negligence of their former counsel effectively deprived them of their property without due
process of law.

The respondents filed a Comment/Opposition9 dated March 15, 2002 asserting that petitioners’
Motion for Reconsideration and/or Petition for Relief from Judgment of the Resolution of
November 29, 2001 was filed out of time. Having admitted receiving a copy of the questioned
Resolution dated November 29, 2001 on December 10, 2001, the respondents aver that
petitioners should have filed their motion within the 15-day period provided under Section 1, Rule
52 of the 1997 Rules of Civil Procedure (the Rules). Moreover, the remedy of petition for relief
from judgment is unavailable in the Court of Appeals, was unverified, unaccompanied by an
affidavit of merit and filed beyond the period provided under Section 3, Rule 38 of the Rules.

Agreeing with the respondents, the appellate court denied petitioners’ Motion for Reconsideration
and/or Petition for Relief from Judgment of the Resolution of November 29, 2001 in its second
assailed Resolution10 dated April 29, 2002.

In the instant petition, petitioners reiterate their argument that the dismissal of their appeal as a
result of the mistake or gross negligence of their counsel deprived them of their property without
due process of law. Petitioners insist that theirs is a situation that must be viewed as an exception
to the general rule that the negligence of counsel binds the client. They also question the trial
court’s award of attorney’s fees and litigation expenses which they claim are damages imposed
upon them for exercising their right to litigate.

The respondents filed a Comment11 dated September 6, 2002 reaffirming their position that
petitioners’ Motion for Reconsideration and/or Petition for Relief from Judgment of the Resolution
of November 29, 2001 was properly denied for the reasons set forth by the Court of Appeals.
Additionally, the respondents emphasize that petitioners were equally negligent in failing to follow-
up the status of their appeal. Besides, they did not even file the appropriate administrative charges
against their former counsel. The respondents likewise insist that petitioners were not deprived of
due process because a full trial was accorded them by the RTC. Moreover, petitioners’ inaction
on their appeal caused considerable damage to the respondents’ real estate business.

Petitioners filed a Motion for Leave to file Incorporated Reply to Respondents’ Comment Dated
September 6, 2002 on the Petition for Review on Certiorari12 dated September 30, 2002, arguing
that the questioned Resolutions dismissing their appeal and denying their Motion for
Reconsideration and/or Petition for Relief from Judgment of the Resolution of November 29, 2001
are void as they were deprived of due process. Since void resolutions do not attain finality, they
posit that their Motion for Reconsideration and/or Petition for Relief from Judgment of the
Resolution of November 29, 2001 was not filed out of time. They also aver that they were not
negligent as they contacted Atty. Fagutao to inquire about their case but were not informed that
the trial court had already ruled against them. In any case, petitioners insist that attorney’s fees
and litigation expenses should not have been awarded to the respondents.

The petition should be denied.

This Court has invariably ruled that the right to appeal is not a natural right nor a part of due
process; it is merely a statutory privilege, and may be exercised only in the manner and in
accordance with the provisions of the law. The party who seeks to avail of the same must comply
with the requirements of the Rules. Failing to do so, the right to appeal is lost.13

In the present case, petitioners failed to file the required brief within the period prescribed under
Section 7, Rule 44 of the Rules. Thus, the appellate court rightly considered their appeal
abandoned and consequently dismissed the same in its Resolution dated November 29, 2001.

49
Petitioners received a copy of this Resolution on December 10, 2001. They then had 15 days or
until December 25, 2001, or the next working day since December 25, 2001 was a legal holiday,
within which to file their motion for reconsideration.14 However, it was only on March 1, 2002,
more than two (2) months after the deadline, that they filed their Motion for Reconsideration and/or
Petition for Relief from Judgment of the Resolution of November 29, 2001. Even their petition for
relief (from the denial of their appeal) was filed beyond the period provided under Section 3, Rule
38 of the Rules.15 Hence, the appellate court again correctly denied their motion.

Petitioners blame the alleged negligence of their former counsel for their failure to file an
appellants’ brief on time. However, there is no rule more settled than that a client is bound by his
counsel’s conduct, negligence and mistake in handling the case.16 Besides, petitioners had an
opportunity to rectify their former counsel’s blunder by timely filing a motion for reconsideration of
the Resolution dismissing their appeal. As it is, their new counsel also belatedly filed their Motion
for Reconsideration and/or Petition for Relief from Judgment of the Resolution of November 29,
2001.

Parenthetically, petitioners explain that the Resolution dated November 29, 2001 was received
on December 10, 2001, not by their new counsel but by their former counsel, Atty. Fagutao. This
despite the unequivocal statement in their Motion for Reconsideration and/or Petition for Relief
from Judgment of the Resolution of November 29, 2001 that the questioned Resolution "was
received by the herein counsel (Atty. Solidum) on December 10, 2001."17 This explanation is but
a feeble attempt to justify the late filing of petitioners’ motion for reconsideration and does not
hold favor with the Court.

What is more, their petition for relief lacked the requisite affidavits showing the fraud, accident,
mistake or excusable negligence relied upon, and the facts constituting their good and substantial
cause of action.18

While it is true that rules of procedure are not cast in stone, it is equally true that strict compliance
with the Rules is indispensable for the prevention of needless delays and for the orderly and
expeditious dispatch of judicial business.19 Unfortunately for them, petitioners failed to show that
their counsels’ negligence was so gross and palpable as to call for the exercise of this Court’s
equity jurisdiction. Neither have they shown that the ends of justice will be better served by
relaxing procedural rules. It should be recalled that petitioners were accorded a full trial by the
RTC although its Decision was ultimately adverse to them. They cannot feign lack of due process.

In fine, the dismissal of petitioners’ appeal for failure to comply with the requirements of the Rules
is fatal to their cause and renders the Decision of the RTC final, executory and no longer subject
to review.

WHEREFORE, the petition is hereby DENIED for lack of merit. Costs against petitioners.

SO ORDERED.

50
G.R. No. 117209 February 9, 1996

REPUBLIC OF THE PHILIPPINES, petitioner,


vs.
HON. JOSE R. HERNANDEZ, in his capacity as Presiding Judge, Regional Trial Court,
Branch 158, Pasig City and SPOUSES VAN MUNSON y NAVARRO and REGINA MUNSON
y ANDRADE, respondents.

DECISION

REGALADO, J.:

Indeed, what's in a name, as the Bard of Avon has written, since a rose by any other name would
smell as sweet?

This could well be the theme of the present appeal by certiorari which challenges, on pure
questions of law, the order of the Regional Trial Court, Branch 158, Pasig City, dated September
13, 1994 1 in JDRC Case No. 2964. Said court is faulted for having approved the petition for
adoption of Kevin Earl Bartolome Moran and simultaneously granted the prayer therein for the
change of the first name of said adoptee to Aaron Joseph, to complement the surname Munson
y Andrade which he acquired consequent to his adoption.

The facts are undisputed. On March 10, 1994, herein private respondent spouses, Van Munson
y Navarro and Regina Munson y Andrade, filed a p petition 2 to adopt the minor Kevin Earl
Bartolome Moran, duly alleging therein the jurisdictional facts required by Rule 99 of the Rules of
Court for adoption, their qualifications as and fitness to be adoptive parents, as well as the
circumstances under and by reason of which the adoption of the aforenamed minor was sought.
In the very same petition, private respondents prayed for the change of the first name or said
minor adoptee to Aaron Joseph, the same being the name with which he was baptized in keeping
with religious tradition and by which he has been called by his adoptive family, relatives and
friends since May 6, 1993 when he arrived at private respondents' residence. 3

At the hearing on April 18, 1994, petitioner opposed the inclusion of the relief for change of name
in the same petition for adoption. In its formal opposition dated May 3, 1995, 4 petitioner reiterated
its objection to the joinder of the petition for adoption and the petitions for change of name in a
single proceeding, arguing that these petition should be conducted and pursued as two separate
proceedings.

After considering the evidence and arguments of the contending parties, the trial court ruled in
favor of herein private respondents in this wise:

51
WHEREFORE, minor child Kevin Earl Bartolome Moran is freed from all legal obligations
of obedience and maintenance with respect to his natural parents, and for all legal intents
and purposes shall be known as Aaron Joseph Munson y Andrade, the legally adopted
child of Van Munson and Regina Munson effective upon the filing of the petition on March
10, 1994. As soon as the decree of adoption becomes final and executory, it shall be
recorded in the Office of the Local Civil Registrar of Pasig, Metro Manila pursuant to
Section 8, Rule 99 and Section 6, Rule 103, respectively, of the Rules of Court, and shall
be annotated in the record of birth of the adopted child, which in this case is in Valenzuela,
Metro Manila, where the child was born. Likewise, send a copy of this Order to the National
Census and Statistics Office, Manila, for its appropriate action consisten(t) herewith. 5

At this juncture, it should be noted that no challenge has been raised by petitioner regarding the
fitness of herein private respondents to be adopting parents nor the validity of the decree of
adoption rendered in their favor. The records show that the latter have commendably established
their qualifications under the law to be adopters, 6 and have amply complied with the procedural
requirements for the petition for adoption, 7 with the findings of the trial court being recited thus:

To comply with the jurisdictional requirements, the Order of this Court dated March 16,
1994 setting this petition for hearing (Exh. "A") was published in the March 31, April 6 and
13, 1994 issues of the Manila Chronicle, a newspaper of general circulation (Exhs. "B" to
"E" and submarkings). . . .

xxx xxx xxx

Petitioners apart from being financially able, have no criminal nor derogatory record (Exhs.
"K" to "V"); and are physically fit to be the adoptive parents of the minor child Kevin (Exh.
"W"). Their qualification to become the adoptive parents of Kevin Earl finds support also
in the Social Case Study Report prepared by the DSWD through Social Worker Luz Angela
Sonido, the pertinent portion of which reads:

"Mr. and Mrs. Munson are very religious, responsible, mature and friendly
individuals. They are found physically healthy; mentally fit, spiritually and
financially capable to adopt Kevin Earl Moran aka Aaron Joseph.

"Mr. and Mrs. Munson have provided AJ with all his needs. They unselfishly share
their time, love and attention to him. They are ready and willing to continuously
provide him a happy and secure home life.

"Aaron Joseph, on the other hand, is growing normally under the care of the
Munsons. He had comfortably settled in his new environment. His stay with the
Munsons during the six months trial custody period has resulted to a close bond
with Mr. and Mrs. Munson and vice-versa.

"We highly recommend to the Honorable Court that the adoption of Kevin Earl
Moran aka Aaron Joseph by Mr. and Mrs. Van Munson be legalized." 8

It has been said all too often enough that the factual findings of the lower court, when sufficiently
buttressed by legal and evidential support, are accorded high respect and are binding and
conclusive upon this Court. 9 Accordingly, we fully uphold the propriety of that portion of the order
of the court below granting the petition, for adoption.

The only legal issues that need to be resolved may then be synthesized mainly as follows. (1)
whether or not the court a quo erred in granting the prayer for the change of the registered proper
52
or given name of the minor adoptee embodied in the petition for adoption; and (2) whether or not
there was lawful ground for the change of name.

I. It is the position of petitioner that respondent judge exceeded his jurisdiction when he
additionally granted the prayer for the change of the given or proper name of the adoptee in a
petition for adoption.

Petitioner argues that a petition for adoption and a petition for change of name are two special
proceedings which, in substance and purpose, are different from and are not related to each other,
being respectively governed by distinct sets of law and rules. In order to be entitled to both reliefs,
namely, a decree of adoption and an authority to change the giver or proper name of the adoptee,
the respective proceedings for each must be instituted separately, and the substantive and
procedural requirements therefor under Articles 183 to 193 of the Family Code in relation to Rule
99 of the Rules of Court for adoption, and Articles 364 to 380 of the Civil Code in relation to Rule
103 of the Rules of Court for change of name, must correspondingly be complied with. 10

A perusal of the records, according to petitioner, shows that only the laws and rules on adoption
have been observed, but not those for a petition for change of name. 11 Petitioner further contends
that what the law allows is the change of the surname of the adoptee, as a matter of right, to
conform with that of the adopter and as a natural consequence of the adoption thus granted. If
what is sought is the change of the registered given or proper name, and since this would involve
a substantial change of one's legal name, a petition for change of name under Rule 103 should
accordingly be instituted, with the substantive and adjective requisites therefor being conformably
satisfied. 12

Private respondents, on the contrary, admittedly filed the petition for adoption with a prayer for
change of name predicated upon Section 5, Rule 2 which allows permissive joinder of causes of
action in order to avoid multiplicity of suits and in line with the policy of discouraging protracted
and vexatious litigations. It is argued that there is no prohibition in the Rules against the joinder
of adoption and change of name being pleaded as two separate but related causes of action in a
single petition. Further, the conditions for permissive joinder of causes of action, i.e., jurisdiction
of the court, proper venue and joinder of parties, have been met. 13

Corollarily, petitioner insists on strict adherence to the rule regarding change of name in view of
the natural interest of the State in maintaining a system of identification of its citizens and in the
orderly administration of justice. 14 Private respondents argue otherwise and invoke a liberal
construction and application of the Rules, the welfare and interest of the adoptee being the
primordial concern that should be addressed in the instant proceeding. 15

On this score, the trial court adopted a liberal stance in holding that -

Furthermore, the change of name of the child from Kevin Earl Bartolome to Aaron Joseph
should not be treated strictly, it appearing that no rights have been prejudiced by said
change of name. The strict and meticulous observation of the requisites set forth by Rule
103 of the Rules of Court is indubitably for the purpose of preventing fraud, ensuring that
neither State nor any third person should be prejudiced by the grant of the petition for
change of name under said rule, to a petitioner of discernment.

The first name sought to be changed belongs to an infant barely over a year old. Kevin
Earl has not exercised full civil rights nor engaged in any contractual obligations. Neither
can he nor petitioners on his behalf, be deemed to have any immoral, criminal or illicit
purpose for seeking said cha(n)ge of name. It stands to reason that there is no way that
the state or any person may be so prejudiced by the action for change of Kevin Earl's first

53
name. In fact, to obviate any possible doubts on the intent of petitioners, the prayer for
change of name was caused to be published together with the petition for adoption. 16

Art. 189 of the Family Code enumerates in no uncertain terms the legal effects of adoption:

(1) For civil purposes, the adopted shall be deemed to be a legitimate child of the adopters
and both shall acquire the reciprocal rights and obligations arising from the relationship of
parent and child, including the right of the adopted to use the surname of the adopters;

(2) The parental authority of the parents by nature over the adopted shall terminate and
be vested in the adopters, except that if the adopter is the spouse of the parent by nature
of the adopted, parental authority over the adopted shall be exercised jointly by both
spouses; and

(3) The adopted shall remain an intestate heir of his parents and other blood relatives.

Clearly, the law allows the adoptee, as a matter of right and obligation, to bear the surname of
the adopter, upon issuance of the decree of adoption. It is the change of the adoptee's surname
to follow that of the adopter which is the natural and necessary consequence of a grant of adoption
and must specifically be contained in the order of the court, in fact, even if not prayed for by
petitioner.

However, the given or proper name, also known as the first or Christian name, of the adoptee
must remain as it was originally registered in the civil register. The creation of an adoptive
relationship does not confer upon the adopter a license to change the adoptee's registered
Christian or first name. The automatic change thereof, premised solely upon the adoption thus
granted, is beyond the purview of a decree of adoption. Neither is it a mere incident in nor an
adjunct of an adoption proceeding, such that a prayer therefor furtively inserted in a petition for
adoption, as in this case, cannot properly be granted.

The name of the adoptee as recorded in the civil register should be used in the adoption
proceedings in order to vest the court with jurisdiction to hear and determine the same, 17 and
shall continue to be so used until the court orders otherwise. Changing the given or proper name
of a person as recorded in the civil register is a substantial change in one's official or legal name
and cannot be authorized without a judicial order. The purpose of the statutory procedure
authorizing a change of name is simply to have, wherever possible, a record of the change, and
in keeping with the object of the statute, a court to which the application is made should normally
make its decree recording such change. 18

The official name of a person whose birth is registered in the civil register is the name appearing
therein. If a change in one's name is desired, this can only be done by filing and strictly complying
with the substantive and procedural requirements for a special proceeding for change of name
under Rule 103 of the Rules of Court, wherein the sufficiency of the reasons or grounds therefor
can be threshed out and accordingly determined.

Under Rule 103, a petition for change of name shall be filed in the regional trial court of the
province where the person desiring to change his name resides. It shall be signed and verified by
the person desiring his name to be changed or by some other person in his behalf and shall state
that the petitioner has been a bona fide resident of the province where the petition is filed for at
least three years prior to such filing, the cause for which the change of name is sought, and the
name asked for. An order for the date and place of hearing shall be made and published, with the
Solicitor General or the proper provincial or city prosecutor appearing for the Government at such
hearing. It is only upon satisfactory proof of the veracity of the allegations in the petition and the

54
reasonableness of the causes for the change of name that the court may adjudge that the name
be changed as prayed for in the petition, and shall furnish a copy of said judgment to the civil
registrar of the municipality concerned who shall forthwith enter the same in the civil register.

A petition for change of name being a proceeding in rem, strict compliance with all the
requirements therefor is indispensable in order to vest the court with jurisdiction for its
adjudication. 19 It is an independent and discrete special proceeding, in and by itself, governed by
its own set of rules. A fortiori, it cannot be granted by means of any other proceeding. To consider
it as a mere incident or an offshoot of another special proceeding would be to denigrate its role
and significance as the appropriate remedy available under our remedial law system.

The Solicitor General correctly points out the glaring defects of the subject petition insofar as it
seeks the change of name of the adoptee, 20 all of which taken together cannot but lead to the
conclusion that there was no petition sufficient in form and substance for change of name as
would rightfully deserve an order therefor. It would be procedurally erroneous to employ a petition
for adoption to effect a change of name in the absence of the corresponding petition for the latter
relief at law.

Neither can the allowance of the subject petition, by any stretch of imagination and liberality, be
justified under the rule allowing permissive joinder of causes of action. Moreover, the reliance by
private respondents on the pronouncements in Briz vs. Brit, et al. 21 and Peyer vs. Martinez, et al.
22
is misplaced. A restatement of the rule and jurisprudence on joinder of causes of action would,
therefore, appear to be called for.

By a joinder of actions, or more properly, a joinder of causes of action, is meant the uniting of two
or more demands or rights of action in one action; the statement of more than one cause of action
in a declaration. 23 It is the union of two or more civil causes of action, each of which could be
made the basis of a separate suit, in the same complaint, declaration or petition. A plaintiff may
under certain circumstances join several distinct demands, controversies or rights of action in one
declaration, complaint or petition. 24

As can easily be inferred from the above definitions, a party is generally not required to join in one
suit several distinct causes of action. The joinder of separate causes of action, where allowable,
is permissive and not mandatory in the absence of a contrary statutory provision, even though
the causes of action arose from the same factual setting and might under applicable joinder rules
be joined. 25 Modern statutes and rules governing joinders are intended to avoid a multiplicity of
suits and to promote the efficient administration of justice wherever this may be done without
prejudice to the rights of the litigants. To achieve these ends, they are liberally construed. 26

While joinder of causes of action is largely left to the option of a party litigant, Section 5, Rule 2 of
our present Rules allows causes of action to be joined in one complaint conditioned upon the
following requisites: (a) it will not violate the rules on jurisdiction, venue and joinder of parties; and
(b) the causes of action arise out of the same contract, transaction or relation between the parties,
or are for demands for money or are of the same nature and character.

The objectives of the rule or provision are to avoid a multiplicity of suits where the same parties
and subject matter are to be dealt with by effecting in one action a complete determination of all
matters in controversy and litigation between the parties involving one subject matter, and to
expedite the disposition of litigation at minimum cost. The provision should be construed so as to
avoid such multiplicity, where possible, without prejudice to the rights of the litigants. Being of a
remedial nature, the provision should be liberally construed, to the end that related controversies
between the same parties may be adjudicated at one time; and it should be made effectual as far
as practicable, 27 with the end in view of promoting the efficient administration of justice. 28

55
The statutory intent behind the provisions on joinder of causes of action is to encourage joinder
of actions which could reasonably be said to involve kindred rights and wrongs, although the
courts have not succeeded in giving a standard definition of the terms used or in developing a
rule of universal application. The dominant idea is to permit joinder of causes of action, legal or
equitable, where there is some substantial unity between them. 29 While the rule allows a plaintiff
to join as many separate claims as he may have, there should nevertheless be some unity in the
problem presented and a common question of law and fact involved, subject always to the
restriction thereon regarding jurisdiction, venue and joinder of parties. Unlimited joinder is not
authorized. 30

Our rule on permissive joinder of causes of action, with the proviso subjecting it to the correlative
rules on jurisdiction, venue and joinder of parties 31 and requiring a conceptual unity in the
problems presented, effectively disallows unlimited joinder. 32

Turning now to the present petition, while it is true that there is no express prohibition against the
joinder of a petition for adoption and for change of name, we do not believe that there is any
relation between these two petitions, nor are they of the same nature or character, much less do
they present any common question of fact or law, which conjointly would warrant their joinder. In
short, these petitions do not rightly meet the underlying test of conceptual unity demanded to
sanction their joinder under our Rules.

As keenly observed and correctly pointed out by the Solicitor General -

A petition for adoption and a petition for change of name are two special proceedings
which, in substance and purpose, are different from each other. Each action is individually
governed by particular sets of laws and rules. These two proceedings involve disparate
issues. In a petition for adoption, the court is called upon to evaluate the proposed
adopter's fitness and qualifications to bring up and educate the adoptee properly (Prasnick
vs. Republic, 99 Phil. 665). On the other hand, in a petition for change of name, no family
relations are created or affected for what is looked into is the propriety and reasonableness
of the grounds supporting the proposed change of name (Yu vs. Republic, 17 SCRA 253).

xxx xxx xxx

. . . Hence, the individual merits of each issue must be separately assessed and
determined for neither action is dependent on the other. 33

The rule on permissive joinder of: causes of action is clear. Joinder may be allowed only
if the actions show a commonality of relationship and conform to the rules on jurisdiction,
venue and joinder of parties (Section 5, Rule 2, Rules of Court).

These conditions are wanting in the instant case. As already pointed out in our Petition
(pp. 9-10), an action for adoption and an action for change of name are, in nature and
purpose, not related to each other and do not arise out of the same relation between the
parties. While what is cogent in an adoption proceeding is the proposed adopter's fitness
and qualifications to adopt, a petition for change of first name may only prosper upon proof
of reasonable and compelling grounds supporting the change requested. Fitness to adopt
is not determinative of the sufficiency of reasons justifying a change of name. And
similarly, a change of first name cannot be justified in view of a finding that the proposed
adopter was found fit to adopt. There is just no way that the two actions can connect and
find a common ground, thus the joinder would be improper.

56
In contending that adoption and change of name may be similarly sought in one petition,
private respondents rely upon Peyer vs. Martinez and Briz vs. Briz (p. 4, Comment)

We however submit that these citations are non sequitur. In both cases, the fact of intimacy
and relatedness of the issues is so pronounced. In Peyer, an application to pronounce the
husband an absentee is obviously intertwined with the action to transfer the management
of conjugal assets to the wife. In Briz, an action for declaration of heirship was deemed a
clear condition precedent to an action to recover the land subject of partition and
distribution proceeding. However, the commonality of relationship which stands out in both
cases does not characterize the present action for adoption and change of name. Thus
the rulings in Peyer and Briz find no place in the case at bar.

Besides, it is interesting to note that although a joinder of the two actions was, in Briz,
declared feasible, the Supreme Court did not indorse an automatic joinder and instead
remanded the matter for further proceedings, granting leave to amend the pleadings and
implead additional parties-defendants for a complete determination of the controversy
(Briz vs. Briz, 43 Phil. 763, 770). Such cautionary stance all the more emphasizes that
although joinders are generally accepted, they are not allowed where the conditions are
not satisfactorily met. 34

It furthermore cannot be said that the proposed joinder in this instance will make for a complete
determination of all matters pertaining to the coetaneous grant of adoption and change of name
of the adoptee in one petition. As already stated, the subject petition was grossly insufficient in
form and substance with respect to the prayer for change of name of the adoptee. The policy of
avoiding multiplicity of suits which underscores the rule on permissive joinder of causes of action
is addressed to suits that are intimately related and also present interwoven and dependent issues
which can be most expeditiously and comprehensively settled by having just one judicial
proceeding, but not to suits or actions whose subject matters or corresponding reliefs are
unrelated or diverse such that they are best taken up individually.

In Nabus vs. Court of Appeals, et al., 35 the Court clarified the rule on permissive joinder of causes
of action:

The rule is clearly permissive. It does not constitute an obligatory rule, as there is no
positive provision of law or any rule of jurisprudence which compels a party to join all his
causes of action and bring them at one and the same time. Under the present rules, the
provision is still that the plaintiff may, and not that he must, unite several causes of action
although they may be included in one of the classes specified. This, therefore, leaves it to
the plaintiff's option whether the causes of action shall be joined in the same action, and
no unfavorable inference may be drawn from his failure or refusal to do so. He may always
file another action based on the remaining cause or causes of action within the prescriptive
period therefor. (Emphasis supplied.)

The situation presented in this case does not warrant exception from the Rules under the policy
of liberal construction thereof in general, and for change of name in particular, as proposed by
private respondents and adopted by respondent judge. Liberal construction of the Rules may be
invoked in situations wherein there may be some excusable formal deficiency or error in a
pleading, provided that the same does not subvert the essence of the proceeding and connotes
at least a reasonable attempt at compliance with the Rules. Utter disregard of the Rules cannot
justly be rationalized by harking on the policy of liberal construction.

The Court is not impervious to the frustration that litigants and lawyers alike would at times
encounter in procedural bureaucracy but imperative justice requires correct observance of
indispensable technicalities precisely designed to ensure its proper dispensation. 36 It has long
57
been recognized that strict compliance with the Rules of Court is indispensable for the prevention
of needless delays and for the orderly and expeditious dispatch of judicial business. 37

Procedural rules are not to be disdained as mere technicalities that may be ignored at will to suit
the convenience of a party. Adjective law is important in ensuring the effective enforcement of
substantive rights through the orderly and speedy administration of justice. These rules are not
intended to hamper litigants or complicate litigation but, indeed to provide for a system under
which a suitor may be heard in the correct form and manner and at the prescribed time in a
peaceful confrontation before a judge whose authority they acknowledge. 38

It cannot be overemphasized that procedural rules have their own wholesome rationale in the
orderly administration of justice. Justice has to be administered according to the Rules in order to
obviate arbitrariness, caprice, or whimsicality. 39 We have been cautioned and reminded in Limpot
vs. CA, et al. that: 40

Rules of procedure are intended to ensure the orderly administration of justice and the
protection of substantive rights in judicial and extrajudicial proceedings. It is a mistake to
propose that substantive law and adjective law are contradictory to each other or, as has
often been suggested, that enforcement of procedural rules should never be permitted if
it will result in prejudice to the substantive rights of the litigants. This is not exactly true;
the concept is much misunderstood. As a matter of fact, the policy of the courts is to give
both kinds of law, as complementing each other, in the just and speedy resolution of the
dispute between the parties. Observance of both substantive rights is equally guaranteed
by due process, whatever the source of such rights, be it the Constitution itself or only a
statute or a rule of court.

xxx xxx xxx

. . . (T)hey are required to be followed except only when for the most persuasive of reasons
they may be relaxed to relieve a litigant of an injustice not commensurate with the degree
of his thoughtlessness in not complying with the procedure prescribed. . . . While it is true
that a litigation is not a game of technicalities, this does not mean that the Rules of Court
may be ignored at will and at random to the prejudice of the orderly presentation and
assessment of the issues and their just resolution. Justice eschews anarchy.

Only exceptionally in very extreme circumstances, when a rule deserts its proper office as an aid
to justice and becomes its great hindrance and chief enemy such that rigid application thereof
frustrates rather than promotes substantial justice, will technicalities deserve scant consideration
from the court. In such situations, the courts are empowered, even obligated, to suspend the
operation of the rules. 41

We do not perceive any injustice that can possibly be visited upon private respondents by
following the reglementary procedure for the change in the proper or given name that they seek
for their adopted child. We are hard put to descry the indispensability of a change of the first name
of the adoptee to his welfare and benefit. Nor is the said change of such urgency that would justify
an exemption from or a relaxation of the Rules. It is the State that stands to be prejudiced by a
wanton disregard of Rule 103 in this case, considering its natural interest in the methodical
administration of justice and in the efficacious maintenance of a system of identification of its
citizens.

The danger wrought by non-observance of the Rules is that the violation of or failure to comply
with the procedure prescribed by law prevents the proper determination of the questions raised
by the parties with respect to the merits of the case and makes it necessary to decide, in the first

58
place, such questions as relate to the form of the action. The rules and procedure laid down for
the trial court and the adjudication of cases are matters of public policy. 42 They are matters of
public order and interest which can in no wise be changed or regulated by agreements between
or stipulations by parties to an action for their singular convenience. 43

In Garcia vs. Republic, 44 we are reminded of the definiteness in the application of the Rules and
the importance of seeking relief under the appropriate proceeding:

. . . The procedure set by law should be delimited. One should not confuse or misapply
one procedure for another lest we create confusion in the application of the proper remedy.

Respondent judge's unmindful disregard of procedural tenets aimed at achieving stability of


procedure is to be deplored. He exceeded his prerogatives by granting the prayer for change of
name, his order being unsupported by both statutory and case law. The novel but unwarranted
manner in which he adjudicated this case may be characterized as a regrettable abdication of the
duty to uphold the teachings of remedial law and jurisprudence.

II. Petitioner avers that it was error for the lower court to grant the petition for change of name
without citing or proving any lawful ground. Indeed, the only justification advanced for the change
of name was the fact of the adoptee's baptism under the name Aaron Joseph and by which he
has been known since he came to live with private respondents. 45

Private respondents, through a rather stilted ratiocination, assert that upon the grant of adoption,
the subject minor adoptee ipso facto assumed a new identification and designation, that is, Aaron
Joseph which was the name given to him during the baptismal rites. Allowing the change of his
first name as prayed for in the petition, so they claim, merely confirms the designation by which
he is known and called in the community in which he lives. This largely echoes the opinion of the
lower court that naming the child Aaron Joseph was symbolic of naming him at birth, and that
they, as adoptive parents, have as much right as the natural parents to freely select the first name
of their adopted child. 46

The lower court was sympathetic to herein private respondents and ruled on this point in this
manner:

As adoptive parents, petitioner like other parents may freely select the first name given to
his/her child as it is only the surname to which the child is entitled that is fixed by law. . . .

xxx xxx xxx

The given name of the minor was Kevin Earl, a name given for no other purpose than for
identification purposes in a birth certificate by a woman who had all intentions of giving
him away. The naming of the minor as Aaron Joseph by petitioners upon the grant of their
petition for adoption is symbolic of naming the minor at birth. 47

We cannot fathom any legal or jurisprudential basis for this attenuated ruling of respondent judge
and must thus set it aside.

It is necessary to reiterate in this discussion that a person's name is a word or combination of


words by which he is known and identified, and distinguished from others, for the convenience of
the world at large in addressing him, or in speaking of or dealing with him. It is both of personal
as well as public interest that every person must have a name. The name of an individual has two
parts: the given or proper name and the surname or family name. The giver or proper name is
that which is given to the individual at birth or at baptism, to distinguish him from other individuals.
59
The surname or family name is that which identifies the family to which he belongs and is
continued from parent to child. The given name may be freely selected by the parents for the
child, but the surname to which the child is entitled is fixed by law. 48

By Article 408 of the Civil Code, a person's birth must be entered in the civil register. The official
name of a person is that given him in the civil register. That is his name in the eyes of the law. 49
And once the name of a person is officially entered in the civil register, Article 376 of the same
Code seals that identity with its precise mandate: no person can change his name or surname
without judicial authority. This statutory restriction is premised on the interest of the State in names
borne by individuals and entities for purposes of identification. 50

By reason thereof, the only way that the name of person can be changed legally is through a
petition for change of name under Rule 103 of the Rules of Court. 51 For purposes of an application
for change of name under Article 376 of the Civil Code and correlatively implemented by Rule
103, the only name that may be changed is the true or official name recorded in the civil register.
As earlier mentioned, a petition for change of name being a proceeding in rem, impressed as it is
with public interest, strict compliance with all the requisites therefor in order to vest the court with
jurisdiction is essential, and failure therein renders the proceedings a nullity. 52

It must likewise be stressed once again that a change of name is a privilege, not a matter of right,
addressed to the sound discretion of the court which has the duty to consider carefully the
consequences of a change of name and to deny the same unless weighty reasons are shown.
Before a person can be authorized to change his name, that is, his true or official name or that
which appears in his birth certificate or is entered in the civil register, he must show proper and
reasonable cause or any convincing reason which may justify such change. 53

Jurisprudence has recognized, inter alia, the following grounds as being sufficient to warrant a
change of name: (a) when the name is ridiculous, dishonorable or extremely difficult to write or
pronounce; (b) when the change results as a legal consequence of legitimation or adoption; (c)
when the change will avoid confusion; (d) when one has continuously used and been known since
childhood by a Filipino name and was unaware of alien parentage; (e) when the change is based
on a sincere desire to adopt a Filipino name to erase signs of former alienage, all in good faith
and without prejudice to anybody; and (f) when the surname causes embarrassment and there is
no showing that the desired change of name was for a fraudulent purpose or that the change of
name would prejudice public interest. 54

Contrarily, a petition for change of name grounded on the fact that one was baptized by another
name, under which he has been known and which he used, has been denied inasmuch as the
use of baptismal names is not sanctioned. 55 For, in truth, baptism is not a condition sine qua non
to a change of name. 56 Neither does the fact that the petitioner has been using a different name
and has become known by it constitute proper and reasonable cause to legally authorize a change
of name. 57 A name given to a person in the church records or elsewhere or by which be is known
in the community - when at variance with that entered in the civil register - is unofficial and cannot
be recognized as his real name. 58

The instant petition does not sufficiently persuade us to depart from such rulings of long accepted
wisdom and applicability. The only grounds offered to justify the change of name prayed for was
that the adopted child had been baptized as Aaron Joseph in keeping with the religious faith of
private respondents and that it was the name by which he had been called and known by his
family, relatives and friends from, the time he came to live with private respondents. 59 Apart from
suffusing their pleadings with sanctimonious entreaties for compassion, none of the justified
grounds for a change of name has been alleged or established by private respondents. The legal
bases chosen by them to bolster their cause have long been struck down as unavailing for their
present purposes. For, to allow the adoptee herein to use his baptismal name, instead of his name
60
registered in the civil register, would be to countenance or permit that which has always been
frowned upon. 60

The earlier quoted posturing of respondent judge, as expressed in his assailed order that -

(a)s adoptive parents, petitioners like other parents may freely select the first name given
to his/her child as it is only the surname to which the child is entitled that is fixed by law. .
..

The given name of the minor was Kevin Earl, a name given for no other purpose than for
identification purposes in a birth certificate by a woman who had all the intentions of giving
him away. The naming of the minor as Aaron Joseph by petitioners upon grant of their
petition for adoption is symbolic of naming the minor at birth.

and supposedly based on the authority of Republic vs. Court of Appeals and Maximo Wong,
supra, painfully misapplies the ruling therein enunciated.

The factual backdrop of said case is not at all analogous to that of the case at bar. In the Wong
case, therein petitioner Maximo Wong sought the change of his surname which he acquired by
virtue of the decree of adoption granted in favor of spouses Hoong Wong and Concepcion Ty
Wong. Upon reaching the age of majority, he filed a petition in court to change his surname from
Wong to Alcala, which was his surname prior to the adoption. He adduced proof that the use of
the surname Wong caused him embarrassment and isolation from friends and relatives in view of
a suggested Chinese ancestry when in reality he is a Muslim Filipino residing in a Muslim
community, thereby hampering his business and social life, and that his surviving adoptive mother
consented to the change of name sought. This Court granted the petition and regarded the change
of the surname as a mere incident in, rather than the object of, the adoption.

It should be noted that in said case the change of surname, not the given name, and the legal
consequences thereof in view of the adoption were at issue. That it was sought in a petition duly
and precisely filed for that purpose with ample proof of the lawful grounds therefor only serves to
reinforce the imperative necessity of seeking relief under and through the legally prescribed
procedures.

Here, the Solicitor General meritoriously explained that:

Respondent Judge failed to distinguish between a situation wherein a child is being named
for the first time by his natural parent, as against one wherein, a child is previously
conferred a first name by his natural parent, and such name is subsequently sought to be
disregarded and changed by the adoptive parents. In the first case, there is no dispute
that natural parents have the right to freely select and give the child's first name for every
person, including juridical persons, must have a name (Tolentino, A., Commentaries and
Jurisprudence on the Civil Code, Vo. I, 1987 edition, page 721). In the second case,
however, as in the case at bar, private respondents, in their capacities as adopters, cannot
claim a right to name the minor adoptee after such right to name the child had already
been exercised by the natural parent. Adopting parents have not been conferred such
right by law, hence, the right assertes by private respondents herein remains but illusory.
Renaming the adoptee cannot be claimed as a right. It is merely a privilege necessitating
judicial consent upon compelling grounds. 61

The liberality with which this Court treats matters leading up to adoption insofar as it carries out
the beneficent purposes of adoption and ensures to the adopted child the rights and privileges
arising therefrom, ever mindful that the paramount consideration is the overall benefit and interest

61
of the adopted child, 62 should be understood in its proper context. It should not be misconstrued
or misinterpreted to extend to inferences beyond the contemplation of law and jurisprudence.

The practically unrestricted freedom of the natural parent to select the proper or given name of
the child presupposes that no other name for it has theretofore been entered in the civil register.
Once such name is registered, regardless of the reasons for such choice and even if it be solely
for the purpose of identification, the same constitutes the official name. This effectively
authenticates the identity of the person and must remain unaltered save when, for the most
compelling reasons shown in an appropriate proceeding, its change may merit judicial approval.

While the right of a natural parent to name the child is recognized, guaranteed and protected
under the law, the so-called right of an adoptive parent to re-name an adopted child by virtue or
as a consequence of adoption, even for the most noble intentions and moving supplications, is
unheard of in law and consequently cannot be favorably considered. To repeat, the change of the
surname of the adoptee as a result of the adoption and to follow that of the adopter does not
lawfully extend to or include the proper or given name. Furthermore, factual realities and legal
consequences, rather than sentimentality and symbolisms, are what are of concern to the Court.

Finally, it is understood that this decision does not entirely foreclose and is without prejudice to,
private respondents' privilege to legally change the proper or given name of their adopted child,
provided that the same is exercised, this time, via a proper petition for change of name. Of course,
the grant thereof is conditioned on strict compliance with all jurisdictional requirements and
satisfactory proof of the compelling reasons advanced therefor.

WHEREFORE, on the foregoing premises, the assailed order of respondent judge is hereby
MODIFIED. The legally adopted child of private respondents shall henceforth be officially known
as Kevin Earl Munson y Andrade unless a change thereof is hereafter effected in accordance with
law. In all other respects, the order is AFFIRMED.

SO ORDERED.

62
G.R. No. L-110736 December 27, 1993

WALTER T. YOUNG, petitioner,


vs.
OFFICE OF THE OMBUDSMAN, ALBERTO P. ATAS, JUANITO B. ALMOSA, JR., AND
ROLANDO C. MALABONGA, MEMBERS, PANEL OF HEARING OFFICERS OF THE SEC,
respondents.

Ocampo, Quiroz, Mina & Associates for petitioners.

RESOLUTION

VITUG, J.:

Petitioner Walter Young, in his capacity as "counsel" for Allied Finance and Leasing Corporation
("ALFC"), filed the instant petition for certiorari praying for the reversal of the Resolution, dated 5
March 1993, and the Order, dated 1 June 1993, of the Ombudsman, which dismissed petitioner's
complaint against herein respondents, all members of the panel of hearing officers in the
Securities and Exchange Commission ("SEC"), and, ultimately, asking for an order from us to
direct the Ombudsman to charge said hearing officers with having violated paragraphs (e) and (i)
of Section 3, Republic Act 3019, and Article 204 of the Revised Penal Code.

This case is an offshoot of the SEC Case No. EB-187, entitled "In the Matter of Suspension of
Payments, Ruby Industrial Corporation ('RUBY'), Petitioner," pending with the SEC en banc.

In an Order, dated 10 August 1984, the SEC created a Management Committee, headed by a
representative of ALFC, along with, as members, representatives of the majority and minority
stockholders of RUBY. The committee was tasked to manage and preserve the latter's asset. On
29 May 1990, the majority stockholders of RUBY filed a verified "URGENT EX-PARTE PETITION
TO CREATE A NEW MANAGEMENT COMMITTEE AND APPROVE THE REVISED
REHABILITATION PLAN OF RUBY INDUSTRIAL CORPORATION." After an exchange of
pleadings, the SEC en banc referred the petition to herein respondent hearing officers. On 16
January 1991, the panel set the case for hearing and directed RUBY to furnish each and every
creditor listed in the petition with a copy of the order. One such copy was sent to the law firm of
"Ocampo, Quiroz, Mina and Associates," counsel for ALFC and its representative in the
management committee.

On 21 May 1991, RUBY manifested that it was submitting the petition to constitute a new
management committee for resolution on the basis of the pleadings. The minority stockholders of
RUBY, as well as ALFC, however, expressed their desire to present evidence. Respondent
63
hearing officers scheduled a hearing for the purpose. On 19 August 1991, the panel issued an
order, directing the management committee and ALFC to submit their respective comments and
petition papers on the rehabilitation plan prepared by the majority stockholders of RUBY.

The management committee moved for a reconsideration but the motion was denied.

On 18 September 1991, the hearing officers granted the petition to create a new management
committee and approved a revised rehabilitation plan.

An appeal to the SEC en banc was taken by ALFC, as well as the minority stockholders of RUBY
and the still standing management committee, on 22 October, 21 October and 23 October 1991,
respectively. During the pendency of the appeal, RUBY filed an urgent motion to implement the
order of 18 September 1991, which the herein respondent hearing officers granted on 12
December 1991. The order, however, was interdicted due to the issuance by the SEC en banc of
a writ of preliminary injunction.

On 13 July 1992, herein petitioner Walter Young filed a complaint with the Ombudsman against
respondent hearing officers for alleged corrupt practices under Section 3 [(e) and (i) of Republic
Act 3019] and for knowingly rendering an unjust judgment punishable under Article 204 of the
Revised Penal Code.

On 5 March 1993, the Office of the Ombudsman dismissed the petitioner's complaint. It also
denied the subsequent motion for reconsideration.

Hence, this recourse.

Initially, a fatal defect pointed out by the Solicitor General is the failure of the petitioner to move,
within the reglementary period, for the reconsideration of the Resolution of 5 March 1993 of the
public respondent dismissing the complaint. In the order, dated 1 June 1993, denying petitioner's
Motion for Reconsideration, the public respondent said:

Finally, as correctly pointed out by respondents in their Opposition, dated


May 11, 1993 (Vide: Record, page 239), the subject Motion for
Reconsideration should not be given due course by the Office anymore
under Section 27 of Republic Act 6770, otherwise known as "The
Ombudsman Act of 1989, and its implementing Administrative Order No.
09 issued by this Office on October 15, 1991, amending Section 7 (a), Rule
II of Administrative Order No. 07, which fixes "an INEXTENSIBLE period of
five (5) days from notice thereof" in that, while complainant admitted having
received his copy of the resolution in question on April 16, 1993, yet he filed
his instant Motion for Reconsideration with this Office only on April 29, 1993
or after the lapse of more than five (5) days, counted from April 16, 1993.

Ordinarily, the above infirmity warrant the original dismissal of the petition. Let us, nonetheless,
also delve into the propositions advanced in support of the petition.

The petitioner contends that the management committee has not been duly notified of the orders,
dated 19 August 1991 and 18 September 1991, and that, instead, said orders have been sent
erroneously to the law firm of "Ocampo, Quiroz, Mina and Associates," counsel for the
representative of ALFC and chairman of the management committee, and not to the law office of
"Quiroz and Young," being the counsel for the management committee itself. On this score, the
Office of the Ombudsman finds, thus:

64
. . . (C)ontrary to the allegations of complaint (petitioner herein), the records
of this case clearly show that these hearings as well as in the other previous
hearings by the Commission en banc, it was the Law Firm of Ocampo,
Quiroz, Mina and Associates, represented invariably therein by either the
herein complainant or Atty. Raymundo Quiroz, who appeared not only for
ALFC, but also for the Chairman of the Management Committee (MC), Atty.
Raymundo Quiroz, and who were invariably furnished by respondents with
copies of the assailed orders. Hence, it is not true as claimed by
complainant that the MC was furnished by respondents with copies of their
Order dated September 18, 1991. The law is clear on this matter that notice
to the Law Firm appearing for a client is notice upon the client himself.

Clearly, we must accord due respect and weight to the above factual findings of the Office of the
Ombudsman. On such basis, the legal conclusion is inevitable, i.e., that the service of notice has
been properly effected.

The petitioner next avers that it is an error on the part of the public respondent in refusing to
consider the respondent hearing officers to have acted without jurisdiction, and to have thus
knowingly rendered an unjust judgment, when they issued the "implement order" of 12 December
1991. The order, however, along with the other orders of the hearing officers, are still pending
consideration by the SEC en banc. It would have unduly precipitate for the Ombudsman, as it
would be for us, to preempt the SEC en banc on such matter. Simply courtesy demands it. We
can understand the frustration that litigants, and lawyers alike, would at times encounter in
procedural bureaucracy but imperative justice require our proper observance of indispensable
technicalities precisely designed to ensure its proper dispensation. Surely, we cannot righteously
be asked top utterly disregard them.

Furthermore, absent a clear case of grave abuse of discretion, this Court will not interfere with
the discretion of the Ombudsman, who, depending on his own findings and considered elevation
of the case, either dismisses a complaint or proceeds with it. In Ocampo vs. Ombudsman (G.R.
No. 103446-47, 30 August 1993), this Court, speaking through Mr. Justice Teodoro Padilla, said:

. . . The rule is based not only upon respect for the investigatory and
prosecutory powers granted by the Constitution to the Office of the
Ombudsman but upon practicality as well. Otherwise, the functions of the
courts will be grievously hampered by inumerable petitions assailing the
dismissal of investigatory proceedings conducted by the Office of the
Ombudsman with regard to the complaints filed before it, in much the same
way that the courts would be extremely swamped if they could be
compelled to review the exercise of discretion on the part of the fiscals or
prosecuting attorneys each time they decide to file an information in court
or dismiss a complaint by a private complainant.

In this instance, given the attendant circumstances, we see no grave abuse of discretion on the
part of the Ombudsman in dismissing the complaint.

All told, we cannot grant the extraordinary relief prayed for.

WHEREFORE, the petition is DISMISSED.

SO ORDERED.

65
G.R. No. 99357 January 27, 1992

MA. LOURDES VILLANUEVA, petitioner,


vs.
COURT OF APPEALS and BLUE CROSS INSURANCE, INC., respondents.

Aggabao, Fernandez, Arellano & Fule Law Offices for petitioner.

Samuel F. Baldado for private respondent.

REGALADO, J.:

This petition for review on certiorari seeks the nullification of the resolution of respondent Court
of Appeals dated May 8, 1991, reconsidering its preceding resolution of March 15, 1991, in CA-
G.R. SP No. 24120, entitled "Ma. Lourdes R. Villanueva vs. Blue Cross Insurance, Inc."

Petitioner's plaint in her present recourse narrates that on October 12, 1989, she filed a complaint
with the Insurance Commission alleging, inter alia, that, in consideration of the annual payment
of P7,535.00, private respondent executed a policy of sickness and accident insurance; that on
August 12, 1989, petitioner was admitted to a hospital where she was diagnosed and operated
on for cholecystitis; that petitioner paid the hospital and doctor's bills in the aggregate sum of
P48,934.05, the same being the actual hospital and professional fees charged to her; and that
private respondent wrongfully refused to pay petitioner the said amount which she is entitled to
recover under the policy.

Private respondent's answer raised the special and affirmative defenses that under the insurance
policy, definitions and exclusions were clearly specified and among the exclusions are conditions
which pre-existed before the effective date of the insurance of which the insured was aware or
should reasonably be aware; and that cholecystitis was a pre-existing condition, hence petitioner's
sickness is non-compensable.

On September 21, 1990, the Insurance Commission rendered its decision in I.C. Case No. 3277
in favor of petitioner ordering private respondent to pay the latter the amount of P48,934.05 with
legal interest from the date of the filing of the complaint until fully satisfied, plus P5,000.00
attorney's fees and costs. In the main, the Insurance Commission, after a review of the evidence
presented, concluded that petitioner's illness, contrary to private respondent's defenses, was not
a pre-existing disease and therefore, is fully compensable. 1

66
According to respondent court, a copy of said decision was received by private respondent on
September 27, 1990. On October 15, 1990, or more than the fifteen (15) days allowed by Section
2, Republic Act No. 5434, private respondent filed a motion for reconsideration which petitioner
opposed. On December 13, 1990, the Insurance Commission denied said motion for
reconsideration. 2 On December 17, 1990, private respondent filed a notice of appeal with the
Insurance Commission. 3

On March 15, 1991, the Third Division of respondent Court of Appeals dismissed the appeal on
the ground that it was filed out of time and that private respondent did not duly file a copy of its
notice of appeal with respondent Court as mandated by Republic Act No. 5434. 4

Respondent court noted that under the aforesaid Section 2 of Republic Act No. 5434, private
respondent had ten (10) days from its receipt on December 14, 1990 of the aforesaid order
denying its motion for reconsideration within which to appeal. While respondent court, in its
resolution of May 8, 1991, subsequently agreed that private respondent filed its notice of appeal
with the Insurance Commission within the said 10-day period, no such notice was filed with
respondent court as required by Section 3, Republic Act No. 5434.

Private respondent then moved for the reconsideration of the dismissal of its appeal. On May 8,
1991, the Special Third Division of respondent court resolved to reconsider its original resolution
and ordered the reinstatement of the appeal "in keeping with the ends of substantial justice." 5

Hence, the petition at bar with the following assignment of errors:

1. The respondent court committed an error in reinstating the appeal when it has
no jurisdiction to do so, no notice of appeal having been filed with it.

2. The manner of appeal from quasi-judicial bodies has been fixed with the
solemnity of a statute; the Court of Appeals erred in ignoring it. 6

We agree with petitioner that the Court of Appeals erred in reconsidering its previous resolution
dismissing herein private respondent's appeal in CA-G.R. SP No. 24120. The dismissal of said
appeal is proper and fully justified by private respondent's failure to file a notice of appeal with the
Court of Appeals as required by Republic Act No. 5434 for the perfection of its appeal from the
decision of the Insurance Commission.

The Court of Appeals has been vested with exclusive appellate jurisdiction over all final
judgments, decisions, resolutions, orders or awards of quasi-judicial agencies, instrumentalities,
boards or commissions, except those falling within the exclusive appellate jurisdiction of the
Supreme Court. During the period relevant to and involved in the appeal from the Insurance
Commission to respondent court in CA-G.R. SP No. 24120, subject of the present review, the
appeal to the Court of Appeals from said quasi-judicial body was governed by the provisions of
Republic Act No. 5434 insofar as the same are not inconsistent with the provisions of Batas
Pambansa Blg. 129. 7

As restated and clarified in the Lacsamana case, to perfect an appeal under Republic Act No.
5434, the following rules must be observed:

In an appeal from quasi-judicial bodies to the Court of Appeals under Republic Act
No. 5434 and Section 22(c) of the Interim Rules, the appeal shall be taken by filing
a notice of appeal with the Court of Appeals and with the quasi-judicial body within
fifteen days from notice of the ruling, award, order, decision or judgment; or in case
a motion for reconsideration is filed within said period, then within ten days from
67
notice of the resolution denying the motion for reconsideration (Sections 2 and 3
of R.A. No. 5434). No extension of time to file such a notice of appeal is needed,
much less allowed. 8

It is, therefore, indubitable that to perfect an appeal, notice must be filed both with the Court of
Appeals and with the board, commission or agency that made or rendered the ruling, award,
order, decision or judgment appealed from. In the instant case, even assuming that a notice of
appeal was seasonably filed with the Insurance Commission, no such notice of appeal was filed
with the Court of Appeals. The said failure of petitioner to comply with the requirements of law for
the perfection of its appeal is fatal to its present remedial attempt. It renders the decision of the
Insurance Commission final and executory and the same can no longer be a subject of review. 9

This Court has invariably ruled that perfection of an appeal in the manner and within the period
laid down by law is not only mandatory but also jurisdictional. 10 The failure to perfect an appeal
as required by the rules has the effect of defeating the right of appeal of a party and precluding
the appellate court from acquiring jurisdiction over the case. 11

The right to appeal is not a natural right nor a part of due process; it is merely a statutory privilege,
and may be exercised only in the manner and in accordance with the provisions of the law. 12 The
party who seeks to avail of the same must comply with the requirements of the rules. Failing to
do so, the right to appeal is lost. 13

It is true that in some cases the filing of an appeal was allowed where a stringent application of
the rules would have denied it, but only when it would serve the demands of substantial justice
and in the exercise of the court's equity jurisdiction. 14 In the case at bar, however, the interests
of justice would not be served by a policy of liberality, nor has the private respondent advanced
any compelling reason to warrant the same. In fact, in its original resolution, 15 respondent court
itself expounded at length on the very same doctrines enjoining strict compliance with the rules
governing appeals which we have set out herein and, on such considerations, dismissed the
appeal therein.

Moreover, relaxation of the rules is not called for since the issues raised are mainly factual. The
decision of the Insurance Commission was based on its findings that the illness of private
respondent, cholecystitis, was not a pre-existing ailment and is, therefore, fully compensable. It
further specifically found that private respondent failed to prove petitioner's awareness of that pre-
existing condition which is excluded under the insurance policy. We find no reason to disturb the
said findings which are supported by the evidence on record and the conclusions of experts.

Settled is the rule that factual findings of administrative agencies are accorded not only respect
but finality, because of the special knowledge and expertise gained by these quasi-judicial
tribunals from handling specific matters falling under their jurisdiction. 16 Courts cannot take
cognizance of such factual issues. 17 In reviewing administrative decisions, the reviewing court
cannot re-examine the sufficiency of the evidence. The findings of fact must be respected, so long
as they are supported by substantial evidence. 18

It has long been recognized that strict compliance with the Rules of Court is indispensable for the
prevention of needless ENDING delays and for the orderly and expeditious dispatch of judicial
business. 19 For a party to seek exception for its failure to comply strictly with the statutory
requirements for perfecting its appeal, strong compelling reasons such as serving the ends of
justice and preventing a grave miscarriage thereof must be shown, in order to warrant the Court's
suspension of the rules. 20 Otherwise, the rules must strictly apply, as in this case.

68
WHEREFORE, the petition is granted. The challenged resolution of respondent court dated May
8, 1991 is hereby ANNULLED and SET ASIDE and its resolution of March 15, 1991 is
REINSTATED. The decision of the Insurance Commission in I.C. Case No. 3277, dated
September 21, 1990, is hereby declared FINAL and EXECUTORY.

SO ORDERED.

G.R. No. 92862 July 4, 1991

NICANOR T. SANTOS, petitioner,


vs.
COURT OF APPEALS and H.M. MONTENEGRO & ASSOCIATES, INC., respondents.

Del Rosario & Del Rosario for petitioner.

Cruz, Palabyab, Llorin & Associates for private respondent.

CRUZ, J.:p

The private respondent's counsel has acted quite in character up to the end and even unto this
Court. The respondent court should not have been so forbearing.

The private respondent lost in a suit for damages in the Regional Trial Court of Caloocan City. It
appealed to the respondent court and on May 17, 1989, was required to file its brief within 45
days from notice. The notice was received by its counsel on May 24, 1989.

The 45-day period expired on July 8, 1989. No brief had been filed by the appellant nor had it at
least moved for extension of time to do so.

On September 19, 1989, the Court of Appeals issued a resolution requiring the private respondent
to show cause why its appeal should not be considered abandoned or dismissed for its failure to
file the appellant's brief. This was ignored by the private respondent. 1

On October 4, 1989, the petitioner filed a motion for the dismissal of the private respondent's
appeal for failure to file the appellant's brief. No action having been taken thereon, it was reiterated
on December 12, 1989. There was no reaction from the private respondent to either of the two
motions,

On December 11, 1989, two hundred and one days from the start of the 45-day reglementary
period and after the expiration of the 10-day period to show cause, the respondent court dismissed
the private respondent's appeal pursuant to Section 1(f), Rule 50 of the Rules of Court. 2

69
It was only after more than a month, on January 17, 1990, that the private respondent roused
itself and filed a motion for reconsideration of the dismissal of its appeal and for the admission of
the appellant's brief. Its counsel alleged that an employee of another client had taken the records
of the case and had returned them only after Christmas of 1989. It also averred that it could not
file the appeal brief on time because of the aborted coup d'etat in December of that year and the
frequent power interruptions in the Makati area, where its office was located.

An opposition was filed by the petitioner, but the motion was granted by the respondent court on
February 21, 1990. 3 The resolution read in part:

The Court has no way to determine the veracity of the claim of defendant-
appellant's counsel that an employee of another client took the records of
the case from his office. The motion filed has no affidavit attached to the
same. However, the court could take judicial notice of the electrical power
interruption at Makati as well as the occurrence of the aborted coup.

PREMISES CONSIDERED, in the interest of substantial justice, the


resolution dated December 11, 1989 dismissing the appeal interposed by
defendant-appellant is hereby RECONSIDERED and the Brief filed is
ADMITTED and appellees are given the reglementary period of forty-five
(45) days within which to file appellee's brief.

The petitioner's own motion for reconsideration having been denied, it has come to this Court to
fault the reinstatement of the appeal with grave abuse of discretion.

We find at the outset, considering the ground invoked, that the petitioner should have filed a
special civil action for certiorari under Rule 65 of the Rules of Court rather than a petition for
review on certiorari under Rule 45. We shall disregard this procedural lapse, however, to correct
the obvious flaw in the challenged resolutions.

The conduct of the private respondent and its counsel reveals a careless disregard of the Rules
of Court and, indeed, even a contemptuous rejection of the authority of the respondent court.

Required to show cause why the appeal should not be dismissed for failure to file the appellant's
brief, 4 the private respondent and its counsel saw fit not to dignify the warning with a response.
Only after the respondent court had dismissed the appeal did it occur to them to move for
reconsideration, and for reasons too flimsy to be believed.

The respondent court itself noted that the motion for reconsideration carried no supporting
affidavits to prove the grounds alleged. There was no showing of how the coup d-etat and the
power interruptions prevented the private respondent's counsel from filing the appellant's brief on
time. Notably, the period for the filing of the brief began on May 24, 1989, long before the failed
November-December coup d'etat.

Other law offices similarly inconvenienced by the attempted coup d'etat and the power
interruptions have not been similarly remiss as the private respondent's counsel. Some of them
have pleaded for more time to meet 15-day or 30-day deadlines and have been accommodated.
But it is different in the case at bar, where the private respondent's counsel had delayed for more
than four months and had not even asked for an extension.

Given this inexcusable delay, the respondent court should not have been so tolerant. The
appellee, no less than the appellant, was entitled to speedy justice. Whether deliberate or not, the
non-filing of the appellant's brief on time had the effect of postponing action on the judgment the
70
petitioner had already won in the trial court. In reinstating the appeal, the respondent court allowed
itself to emasculate the policy of expeditious judicial action mandated by the Constitution itself.

It has to be noted that the irresponsibility of the private respondent's counsel did not stop at the
respondent court but has marred even the proceedings in this Court. In our resolution dated June
20, 1990, we required the private respondent to file a Comment on the petition within ten days
from notice. No such Comment was filed. The same counsel was required in the resolution dated
January 23, 1991, to show cause why it should not be disciplined for failure to submit its Comment,
and to comply with the Court resolution. It has completely ignored that warning as if this did not
deserve its attention.

We will not countenance such disrespect. All lawyers are expected to recognize the authority of
the Supreme Court and obey its lawful processes and orders. For the failure of the private
respondent to submit its Comment, we have dispensed with and resolved this petition on the basis
of the pleadings and other available documents. Moreover, for its intransigence and as a warning
to other lawyers who may be similarly disposed, the law office of Cruz, Palabyab, Llorin and
Associates is hereby fined in the amount of One Thousand Pesos, to be paid to the Cashier of
the Court within ten days from notice of this decision. Any further disrespect or disobedience of
this Court by the said law firm shall be dealt with more severely.

The record does not show if the private respondent condoned or contributed to its counsel's
negligence. If it did not and feels it has reason to complain, it may file administrative charges
against such counsel with the Integrated Bar of the Philippines.

Procedural rules are not to be disdained as mere technicalities that may be ignored at will to suit
the convenience of a party. Adjective law is important in insuring the effective enforcement of
substantive rights through the orderly and speedy administration of justice. These rules are not
intended to hamper litigants or complicate litigation but, indeed, to provide for a system under
which suitors may be heard in the correct form and manner and at the prescribed time in a
peaceful confrontation before a judge whose authority they acknowledge. The other alternative is
the settlement of their conflict through the barrel of a gun.

WHEREFORE, the petition is GRANTED and the resolution of the respondent court reinstating
the appeal in CA-G.R. CV No. 20225 is SET ASIDE, with costs against the private respondent.

SO ORDERED.

71
G.R. No. L-104437 December 17, 1993

PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, petitioner,


vs.
THE HONORABLE COURT OF APPEALS, THE HON. SANTIAGO RANADA, JR., JUDGE RTC
OF MAKATI METRO MANILA, BR. 137; CEFERINO PADUA; FERNANDO GAITE;
FEDERATION OF PARAÑAQUE HOMEOWNERS ASSOCIATION, AMELITO MUTUC,
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, TOLL REGULATORY BOARD; AND
THE REPUBLIC OF THE PHILIPPINES, respondents.

Ceferino Padua Law Office for private respondents.

Aquilino Q. Pimentel, Jr. & Associates Law Office for intervenor.

R E SO L U T I O N

VITUG, J.:

This Petition for review on Certiorari seeks to annul and set aside the decision of 25 November
1991 and Resolution of 2 March 1992 of the respondent Court of Appeals, upholding the writ of
execution issued by the Regional Trial Court of Makati in Civil Case No. 16699.

The antecedent events that led to the present petition might be culled, thus —

The Republic of the Philippines filed in 1987, with the Regional Trial Court a petition for quo
warranto, docketed as Civil Case No. 16699, seeking to exclude from the franchise of the
Philippine National Construction Corporation ("PNCC") certain segments of the Northern Luzon
Expressway and Southern Luzon Expressway. The court denied the Republic's prayer for a writ
of preliminary injunction. Its motion for reconsideration having likewise been denied, the Republic
filed with the Court of Appeals a petition, docketed as CA-G.R. SP No. 13235, for certiorari,
prohibition and injunction. On 04 August 1989, the appellate court issued a decision granting the
writ prayed for.

72
PNCC forthwith filed with this Court a petition for certiorari and prohibition, docketed as G.R. No.
89557, questioning the decision of the appellate court. Before final action entered into a
compromise agreement, expressing, after a recital of the mutual covenants of the parties, that —

Should PNCC fail to comply with any of its commitments under this
Compromise Agreement set forth in paragraph 2 (c) hereof, the Court of
Appeals Decision dated August 4, 1989 in CA-G.R. SP No. 13235, entitled
"Republic of the Philippines versus Hon. Jesus Guerrero," RTC Br. 148,
Makati, Metro Manila, and Philippine National Construction Corporation
(PNCC) formerly CDCP; Federation of Parañaque Homeowners
Associations and Ceferino P. Padua, Intervenors; Amelito Mutuc,
Intervenor; Fernando A. Gaite, Intervenor shall become immediately final
and executory. This sanction becomes without force and effect upon
PNCC's compliance with such commitments except its other commitments
under this Agreement and the maintenance of the questioned portions of
the expressways which PNCC shall continue pursuant to paragraph 2 (b)
hereof.

Finding the compromise agreement not to be contrary to law, morals, public order, good customs
or public policy, this Court, in its decision, dated 20 August 1990, gave its imprimatur thereto and
thus enjoined the parties to faithfully comply with the terms and conditions thereof.

Several months later, on the contention that PNCC had violated the compromise agreement, a
writ of execution was applied for with the Regional Trial Court ("RTC") in Civil Case No. 16699,
thus resuscitating the judicial controversy. The issue of whether the compromise agreement had
in truth been observed or branched by PNCC had well preoccupied the parties and the trial court,
until, finally, the latter issued the writ applied for in its Orders of 17 June 1991 and 19 August
1991.

A petition for certiorari was filed by PNCC with the Court of Appeals, this time docketed as CA-
G.R. 25859, questioning the jurisdiction of the RTC and its findings. The Court of Appeals, in its
decision of 25 November 1991, denied the petition and sustained the validity of the writ of
execution issued by the RTC.

Hence, the instant petition (G.R. No. 104437).

The petitioner, which we find to have been ably represented by the Office of the Government
Counsel, insists that the challenged writ of execution has been improperly issued. Such writ, the
petitioner maintains, can only be issued by the court which has rendered the judgment. The
petitioner, in main, relies on Section 8, Rule 39, of the Rules of Court providing that "the writ of
execution must issue in the name of the Republic of the Philippines from the court in which the
judgment or order is entered: . . ." The petitioner points out that the decision of this Court in G.R.
No. 89557, which has approved the compromise, is upon an original action, that has sought to
nullify the decision of the Court of Appeals in CA-G.R. No. 13235. Observe, however, that the
latter case, in turn, has been occasioned by RTC's denial of the Republic's prayer for a writ of
preliminary injunction in Civil Case No. 16699.

In any case, the rule invoked by the petitioner is not without exceptions. Even the petitioner itself
concedes that one such exception is when "the records of the case had been transferred to
another court," in which event the latter may issue the writ. In practice, in the case of the appellate
courts, this Court included, rarely would the court by itself execute its own decision, whether the
petition is brought up to it under Rule 45 or under Rule 65 of the Rules of Court. Almost invariably,
the appellate records, including the judgment, are forwarded to the court whose decision or order
has been questioned or put to issue. Thus, our decision and other records in G.R. No. 89557,
73
have been, upon entry of judgment, transmitted to the Court of Appeals, the latter's decision being
the subject of the petition in G.R. No. 89557. In the same vein, the Court of Appeals, in turn, has
returned the records to the RTC, the latter being the court, as we have earlier said, where the
judicial controversy on the subject matter involved in the case had, in the first place, originated.
This we can do, and in so doing, the Court is not thereby conferring jurisdiction on a court where
none theretofore has altogether existed.

But in the same way that it can allow the lower court to issue the writ of execution, it is also within
this Court's prerogative to itself consider the application for such a writ.

The Rules of Court, Section 8 of Rule 39 included, are rules of procedure, and, whenever called
for, they should be so construed as to give effect, rather than to defeat, their essence. The Rules
are designed to facilitate, rather than hinder, the expeditious settlement of controversies and, with
it, the prompt dispensation of justice.

While the matter of estoppel, given the above conclusion, no longer is an issue still required to be
resolved, we, nonetheless, deem it appropriate to express our agreement with the petitioner that,
under the circumstances which has put it to task, it has indeed, only been constrained, as it is
entitled, to make its own submission which, in our view fall short of seeking its own affirmative
relief that might have warranted estoppel to set in against it.

Instead of a peremptory resolution of the case solely predicted on the purely legal issues that
have been raised, the Court has thought it to be imperative, nonetheless, to have the parties
address with the greater paramount concern the "safety and convenience of an innumerable
number of commuters" than just the "legal niceties, occupying, so to speak, the forefront of the
scenario." Thus, in its deliberations on 25 August 1993, this Court has instead resolved to require
the parties to appear before it for hearing on 27 September 1993, with these words:

One overriding matter. The Government Corporate counsel has asked us


to consider the following point which we here reproduce; viz:

xxx xxx xxx

(c) Further, the continued implementation of the said Writ


greatly inconveniences the estimated 200,000 motorists
availing of the facilities on a daily basis inasmuch as the
absence of road maintenance and upkeep will cause road
deterioration of the road facilities. Petitioner, as operator
thereof, stands to also incur tremendous expenses just to
bring the condition of the facilities back to order, without
benefit of security or relief therefrom;

xxx xxx xxx

Seconding the petitioner's above apprehensions are the Toll Regulatory


Board and the Department of Public Workers and Highways, which have
both expounded, in their Joint Comment, their own position on the matter,
as follows:

That as a result of the parties squabbles, the contested


segments of the expressways have been left without prior
preparation to the care of the Government, which with all of
its budgetary limitations, cannot be expected to devote its
74
full energy and resources thereto. The operation of a road
as a toll facility is a multi-faceted undertaking, which does
not merely connote a routinary maintenance of road
surfaces, shoulders, ditches, drainage structures but also
includes traffic services, traffic enforcement, motorist
assistance, fences, removal of debris, roadside cleaning,
security, grass cutting, and providing ambulances and
towing services. In fact, for a complete maintenance of the
expressways three more government agencies should be
directly involved, and they are: Traffic Engineering Center of
the Department of Transportation and Communication, for
traffic engineering facilities, lane markings, signs, other
traffic control devices; Philippine National Police, for
security traffic enforcement and motorist assistance; and
the Metro Manila Authority, for maintenance of cleanliness
of non-road side facilities, such as plants, lights and phones.
Thus, all these other agencies shall be needing additional
funding for such services. Besides, at present, the
questioned segments need major rehabilitation works and
not a mere routinary maintenance works.

We are not unmoved. It is enough that one reads daily newspaper reports
and hears broadcast accounts or, perhaps even better, simply negotiates
the entire length of each expressway — both the franchised and the so-
called disenfranchised portions — to appreciate why this Court cannot
close its eyes to the above concerns. This case undeniably is impressed
with public interest, affecting, as it does, no less than the safety and
convenience of an innumerable number of commuters. Yet, we are puzzled
by what seems to be a finical to legal niceties, occupying, so to speak, the
forefront of the scenario. With all due respect, should not the welfare of the
riding public be considered more paramount that the legal intricacies posed
in this case?

The Office of the Solicitor General, the Office of Government Corporate


Counsel, and, but not least, the Toll Regulatory Board, as well as the
Department of Public Works and Highways, all governmental entities
themselves, posit views. Lest it be misunderstood, our approval of the
compromise agreement in G.R. No. 89557 not withstanding, the real
parties thereto are certainly not precluded from re-examining their
respective positions, if truly desirable, and from accordingly reacting in
consonance therewith. A compromise agreement, although judicially
approved, is still basically an agreement, and it is precisely for this reason
that a court is not, as a general rule, free to impose on the parties a
judgment different from the terms and conditions thereof (Philippine Bank
of Communication vs. Echiverri, G.R. L-41795, 99 SCRA 508 [1980]). Like
any other contract, so long as the obligation remains outstanding, a
compromise agreement can be the subject of change or modification, freely
entered into, that would thereby have effects no different from those arising
from novation (Gatchalian vs. Arlegui, G.R. No. L-35615, 75 SCRA 234
[1977]; Dormitorio vs. Fernandez, G.R. No. L-25897, 72 SCRA 388 [1976]).
It is also hardly debatable that agreements may be affected by the
interposition of important public policy.

75
During the hearing held on 27 September 1993, the parties appeared; on even date, following the
oral submissions made, the Court issued the following resolution:

In today's hearing, petitioner Philippine National Construction Corporation


was represented by Asst. Government Corporate Counsel Ramiro
Madarang and State Corporate Attorney Jesus Clariza, both of the Office
of the Government Corporate Counsel. Asst. Solicitor General Mariano
Martinez appeared and argued for respondent Republic.
Attys. Ceferino Padua and Fernando Gaite appeared and argued as
intervenors.

After hearing the arguments of the parties, the court Resolved to require
them to SUBMIT simultaneous MEMORANDA, and to discuss therein the
points brought out during the hearing, within ten (10) days from today,
September 27, 1993.

Considering that public interest, including the interest of the public in safe,
secure and modern highways which must be continuously and effectively
maintained and policed, is or has become heavily engaged in this case;
and considering further that the principal parties, that is, petitioner PNCC
and respondent Republic of the Philippines (which owns 93% of the stock
of petitioner and therefore controls petitioner), have both announced during
the oral hearing their mutual intent to arrive at a practical and operable
agreement that would not only resolve the issues of this case but also take
adequate account of the paramount interest of the public, while consulting
with herein intervenors, the court also Resolved to REQUIRE said
petitioner and respondent to SUBMIT to this Court the agreement that they
shall have reached, within thirty (30) days from today, 27 September 1993.

Since then, other pleadings have been filed with this Court by the parties and other, including by
some concerned local officials, which are all hereby NOTED.

On 26 November 1993, a Joint Manifestation and Motion was filed with this Court. Its full text:

JOINT MANIFESTATION AND MOTION

Petitioner Philippine National Construction Corporation (PNCC) and respondent


Republic of the Philippines, Department of Public Works and Highways (DPWH) and
the Toll Regulatory Board (TRB), by their respective undersigned counsel, unto this
Honorable Tribunal respectfully jointly manifest:

1. That petitioner and the respondents aforementioned, all government agencies,


affirm that the instant case is impressed with public interest which require, no less,
an efficient, comfortable and safe passage along the expressways;

2. Cognizant of this pressing and paramount consideration, petitioner and public


respondents agree to set aside the legal differences which characterized their
previous conflicting stands and to adopt a common approach which will best serve
the interest of the public;

3. Petitioner and public respondents recognize that the disputed portions of the North
and South Luzon expressways have deteriorated badly and are in a sad state today.
There is, in fact, an urgent need not only to arrest the continuing deterioration, but
76
to restore and improve both the physical facilities and the requisite services within
the said portions of the expressways;

4. The required immediate restoration and improvement of the said disputed portions
of the expressways can be best undertaken, and petitioner and public respondents
agree, as follows:

4.1. The disputed segments of the expressways (Nichols to Alabang in the South
and Balintawak to Alabang in the North) shall be recognized as part of the franchise
of, or otherwise restored as toll facilities to be operated by, petitioner PNCC;

4.2. Should this Honorable Court agree with this arrangement, PNCC shall thence
be allowed to regain control of the disputed segments and to resume toll collection
thereon based on 1983-approved TRB rates within seven (7) calendar days from the
finality of this Honorable Court's judgment and after PNCC shall have been placed
in actual control of the disputed segments;

4.3. Within three (3) months from the finality of this Honorable Court's judgment and
from the time PNCC is placed in full control of the disputed segments, PNCC will
restore the following thereon, to wit:

a) Traffic management, to include traffic control, security and safety services;

b) Damaged pavements and shoulders;

c) Right-of-way fences;

d) Operation of toll booths; and

e) Tollways lights, call boxes in the North Luzon Expressway and, where
required by the TRB, call boxes in the South Luzon Expressway;

4.4. PNCC will prepare a program for major rehabilitation and initiate pre-
construction activities thereon within four (4) months from the finality of this
Honorable Court's judgment giving full control of the disputed segments back
to PNCC;

4.5. Thereafter, PNCC will pursue the pre-construction activities on the


disputed segments as determined by DPWH/TRB and, once the results of the
pre-construction activities are approved by DPWH and TRB, will embark on
extensive rehabilitation works and improvement of facilities thereon under the
supervision of the DPWH and TRB.

5. Premises considered, petitioner and public respondents respectfully entreat


and move this Honorable Court to approve the afore-delineated agreement
and to render judgment on the basis thereof.

Other and/or further relief or remedy just and equitable in the premises,
including the nullification of the writ of execution issued by the respondent
RTC Judge and the questioned decision/resolution of the Court of Appeals,
are likewise prayed for.

SO RESPECTFULLY MOVED AND PRAYED FOR.


77
Manila, September 27, 1993.
PHILIPPINE NATIONAL REPUBLIC OF THE
CONSTRUCTION CORPORATION PHILIPPINES
represented by the
Solicitor General
Petitioner Respondent
By:

(Sgd.) (Sgd.)
RAMONCITO C. ABAD RAUL I. GOCO
President Solicitor General

We take note that the conformity to the compromise agreements has not been given by all the
parties who have intervened in this case; indeed, some of them have heretofore expressed strong
reservations on, if not outright opposition to, said agreement. Being merely nominal parties,
however, their consent to the agreement, although preferable, is not indispensable. Let it be said,
in any event, that the Court has taken due consideration of their respective positions and views
on the matter.

All given, we find the compromise agreement not to be contrary to law, moral, good customs,
public order and public policy, and therefore, the same is accepted as sufficient COMPLIANCE
by the parties thereto with our resolution of 27 September 1993.

One observation, nonetheless, on an item that may have been overlooked is that the Compromise
Agreement has not made explicit provisions on the appropriate measures that can be adopted
regarding the openings along the fence on South Superhighway leading to various subdivisions
in the vicinity. We take judicial notice of the great hazard to file and limb posed by such
approaches.

In closing, we express appreciation for the time and effort given by well meaning persons and
groups, notably Attorney Ceferino P. Padua and Attorney Fernando Gaite, on a matter so imbued
with public interest as in this instance.

WHEREFORE, the compromise agreement referred to above is hereby APPROVED, and the
parties are ENJOINED to faithfully comply with the covenants, terms and conditions therein
expressed. This resolution is immediately executory. No costs.

SO ORDERED.

78
G.R. No. L-46763 February 28, 1978

ANTONIO VASCO, petitioner,


vs.
COURT OF APPEALS, LEONOR INES LUCIANO, as Presiding Judge of the Juvenile &
Domestic Relations Court, Quezon City; NICANOR SALAYSAY, as Sheriff for the
Province of Rizal, and ANGELINA REYES Y BAJACAN, REYNALDO VASCO and LOLITA
VASCO, respondents.

Quasha, Asperilla, Ancheta, Valmonte, Peña & Marcoa for petitioner.

Alejandro S. Quizon for private respondents.

AQUINO, J.:

This case is about the trial court's jurisdiction to execute pending appeal a judgment for support.

The Juvenile and Domestic Relations Court of Quezon City in a decision dated October 5, 1976
found that Reynaldo Vasco and Lolita Vasco (born on April 8, 1952 and April 27, 1954,
respectively) are the illegitimate children of Antonio Vasco and Angelina Reyes. It ordered Antonio
to pay them the sum of P200 as monthly allowance for support, beginning October, 1976 plus
P500 as attorney's fees (Civil Case No. QE-00888, Reyes vs. Vasco).

Antonio Vasco appealed to the Court of Appeals from that decision. He perfected his appeal on
January 6, 1977. In its order dated April 21, 1977 the lower court approved Vasco's record on
appeal and ordered the elevation of the record to the Court of Appeals.

On June 22, 1977, or two months after the approval of the record on appeal, Reynaldo Vasco and
Lolita Vasco filed a motion for the execution of the said judgment pending appeal.

Antonio Vasco opposed that motion on the ground that the lower court had no jurisdiction to grant
execution. He invoked section 9, Rule 41 of the Rules of Court.

The lower court granted the motion in its order of July 13, 1972. Antonio Vasco assailed that order
of execution in his petition for certiorari in the Court of Appeals.

79
The Court of Appeals in its decision of August 10, 1977 upheld that order of execution pending
appeal in the "interest of substantial justice" and on the theory that the judiciary is an agency of
the State acting as parens patriae and that if the said order is erroneous, the error is only an error
of judgment and is not a grave abuse of discretion or an act in excess of jurisdiction.

On August 26, 1977 Antonio Vasco filed in this Court the instant petition for certiorari.

The petition is meritorious because the trial court had no jurisdiction (long after the perfection of
the appeal) to issue an order for execution pending appeal It had no jurisdiction because, after
the perfection of the appeal, "the trial court loses its jurisdiction over the case, except to issue
orders for the protection and preservation of the rights of the parties which do not involve any
matter litigated by the appeal to prove compromises offered by the parties prior to the transmittal
of the record on appeal to the appellate court, and to permit the prosecution of pauper's appeals"
(Sec. 9, Rule 41, Rules of Court.)

An order for execution pending appeal does not fall within the said exceptions because it is a
proceeding involving the very matter litigated by the appeal (Cabilao vs. Judge of the Court of
First Instance of Zamboanga, L-18454, August 29, 1966, 17 SCRA 992, 997).

Before the rendition of the judgment, the plaintiffs could have availed themselves in the lower
court of the provisional remedy of support pendente lite (Rule 61, Rules of Court). They did not
do so.

On the other hand, the general rule is that an appeal stays the execution of the judgment (Araneta
vs. Gatmaitan, 101 Phil. 328, 338; Caragao vs. Maceren and Sebellino 92 Phil. 121, 124).

In granting execution pending appeal, the lower court relied upon Garcia vs. Court of Appeals,
114 Phil. 619 and Hamoy vs. Batingolo, 116 Phil. 115. The facts of the two cases are different
from the situation in the instant case.

The Garcia case refers to support pendente lite which is immediately executory. The Hamoy case
refers to an execution pending appeal against a person who was not a party to the case and who
had a remedy in the trial court, which issued the writ of execution, even if the appeal of a party
had already been perfected. That is different from the incident in this case.

The instant case is governed by the rule that a trial court, in ordering (after the approval of the bill
of exceptions, now record on appeal) the execution of a judgment requiring the husband to pay
support to his wife, acted without jurisdiction and, therefore, the order of execution is illegal and
void (Marcelo vs. Estacio, 69 Phil. 145; Estacio vs. Provincial Warden of Rizal, 69 Phil. 150).

Contrary to the impression of the Court of Appeals, the trial court's error is not merely an error of
judgment. It is clear that the trial court acted without jurisdiction. Hence, certiorari lies to annul its
order of execution pending appeal.

The Court of Appeals in sustaining the trial court's order of execution cited the demands of
substantial justice and the role of the State as parens patriae protecting the interests of minors
(Cabanas vs. Pilapil, L-25843, July 25, 1974, 58 SCRA 94).

It is axiomatic that the courts should endeavor to do substantial justice in all cases and that as much
as possible technicalities should be eschewed. As has been said, a technicality should be an aid to
justice and not its great hindrance and chief enemy. And, as the saying goes, we should dispense
compassionate justice which is the hallmark of the New Society. "For Moses gave us only the Law

80
with its frigid demands and merciless justice, while Jesus Christ brought us loving forgiveness as well."
(Line 17, Chapter 1, Gospel of Saint John).

However, we should not forget that procedural rules have their own wholesome rationale in the orderly
administration of justice. Justice has to be administered according to the rules in order to obviate
arbitrariness, caprice or whimsicality.

As to the doctrine of parens patriae (father of his country), its relevancy to this case is doubtful
because the recipients of the support granted by the lower court are no longer honors. The
doctrine refers to the inherent power and authority of the state to provide protection of the person
and property of a person non sui juries. Under that doctrine, the state has the sovereign power of
guardianship over persons under disability. Thus, the state is considered the parens patriae of
minors. (67 C.J.S. 624; Government of the P. I. vs. Monte de Piedad, 35 Phil. 728, 747; 31 Words
and Phrases Judicially Defined, Per. Ed., pp. 99-100).

WHEREFORE, the decision of the Court of Appeals and the lower court's order and writ of
execution are reversed and set aside. No costs.

G.R. No. L-44642 February 20, 1989

AURIA LIMPOT, petitioner,


vs.
COURT OF APPEALS, PROV. SHERIFF, Southem Leyte, CONCHITA TAN DE LIM,
MARCELINA LIM GO, RUDELIA LIM GO, DULCITA LIM HORTIGUELA, and EDITO LIM,
respondents.

CRUZ, J.:

Rules of procedure are intended to ensure the orderly administration of justice and the protection
of substantive rights in judicial and extrajudicial proceedings. It is a mistake to purpose that
substantive law and adjective law are contradictory to each other or, as has often been suggested,
that enforcement of procedural rules should never be permitted if it will result in prejudice to the
substantive rights of the litigants. This is not exactly true; the concept is much misunderstood. As
a matter of fact, the policy of the courts is to give effect to both kinds of law, as complementing
each other, in the just and speedy resolution of the dispute between the parties. Observance of
both substantive rights is equally guaranteed by due process whatever the source of such rights,
be it the Constitution itself or only a statute or a rule of court.

In the case at bar, the petitioner claims that she has been deprived of her day in court because
of a strict adherence to procedural rules and as a consequence prevented from defending her
substantive rights. She asks that the decision of the Court of Appeals 1 sustaining the trial court
be reversed and that the case be remanded to the court a quo for a thorough examination of the
issues in contention between her and the plaintiffs, the private respondents herein.

Briefly stated, the facts involved in this petition are as follows:

On October 3, 1967, the private respondents filed a complaint for quieting of title and recovery of
possession against the petitioner in the Court of First Instance of Southern Leyte. 2 After the
plaintiffs had rested and following the presentation of one witness for the defendant, Atty. Braulio
G. Alfaro, the petitioner's counsel, sent on August 12, 1972 a telegraphic motion for the
postponement of the hearing set for August 22, 1972, alleging physical indisposition because of
injuries sustained by him due to a fall from a bus. 3 The petitioner was informed of the motion,
also by telegram, and asked to notify the adverse parties. 4 On the day of the scheduled hearing,

81
the motion was opposed by the private respondents for lack of notice and failure to indicate the
date of the resetting. 5 Judge Gibson Ara-ula denied the motion and said he would continue with
the hearing scheduled the following day. However, instead of proceeding with the trial on that
date, he required the petitioner, who was present without counsel, to submit proof within five days
that the plaintiffs had been notified of the motion for postponement. 6 No such proof was
submitted.

Accordingly, on September 2, 1972, the trial judge issued an order declaring the case submitted
for decision on the basis of the evidence so far presented by the parties. 7

The petitioner received a copy of this order on October 12, 1972. 8 Ten days later, Atty. "Alfaro
filed a motion for reconsideration on the ground of excusable negligence and/or honest mistake,
alleging that his chent had misunderstood his telegram asking her to notify the private respondent
herself as he did not have enough money for the additional telegrams. 9 This motion was denied
on January 19, 1973. 10 On January 31, 1973, Atty. Alfaro's motion to withdraw as petitioner's
counsel was granted 11 and Atty. Gilberts C. Alfafara filed his entry of appearance as replacement
on March 10, 1973, coupled with the request that the court inform him of the status of the case.
12
Decision on the merits was rendered on March 15,1973, and a copy thereof was received by
the petitioner on March 23, 1973. 13 On April 16, 1973, she filed a motion for new trial, which was
denied on May 14, 1973. 14 She was notified of the denial on May 25, 1973. 15 The petitioner filed
her notice of appeal and appeal bond on May 31, 1973, and the original record on appeal the
following day, June 1, 1973. 16 On June 12, the private respondents filed a motion to dismiss the
petitioner's appeal on the ground of tardiness, followed by an amended motion on July 5, 1973,
amplifying their original motion. 17 After hearing, the trial court dismissed the appeal and ordered
the issuance of a writ of execution. 18 On August 9, 1973, the petitioner elevated the case on
certiorari to the Court of Appeals, which denied the same on July 15, 1976. 19 A motion for
reconsideration was likewise denied on AugUst 30, 1976. 20 Notice of this denial was received on
September 13, 1976, by the petitioner, who came to this Court on November 9, 1976, for certiorari
under Rule 45 of the Rules of Court. 21 Her petition was denied for lack of merit on January 26,
1977 but, upon our reconsideration of the denial, given due course on May 6, 1977, with the
parties being required to file their respective memoranda. 22 Only the private respondents did so
despite the extension granted to but not availed of by the petitioner. The case was considered
submitted for decision without the memorandum. 23

We find no error in the decision of the Court of Appeals. The petitioner has only herself to blame
if judgment was rendered against her in the light of the circumstances above narrated. The Court
is not unfamiliar with the ploy resorted to by losing parties of complaining that their right to due
process has been violated where the rules of procedure they have not observed are applied
against them. Such ploys do not persuade.

The petitioner argues that in denying her motion for postponement and considering the case
submitted for decision, the trial court deprived her of ber chance to fully ventilate ber side in the
land conflict between her and the private respondents. The record does not support this
contention. On the contrary, it appears that she filed a motion for reconsideration in which she
argued that she had not understood her counsel's telegram that she take care of informing the
private respondents of the telegraphic motion for postponement. She was heard by the trial court.
If it nevertheless did not accept her explanation of honest mistake or excusable negligence, this
did not signify that she was denied due process as she claims. Later, after the decision on the
merits was rendered, her new counsel filed for her a motion for new trial, in which she again
argued for the setting aside of the decision so she could submit additional evidence to resist the
private respondents' claims. If the trial court was not convinced that she had a meritorious case,
this too did not mean that she was deprived of her day in court.

82
The Court notes that Atty. Alfaro had all of ten days after sending his telegrams to file a regular
motion for postponement, with copies furnished to the private respondents, conformably to the
Rules of Court. He did not do so. Worse, he simply assumed that his telegraphic motion would be
automatically granted and did not even bother to check with his client if she had notified the
adverse panes of the motion as he had requested. He also assumed they would have no
objection. Such assumptions are risky, let alone unjustified. The petitioner cannot contend that
she was denied due process just because her lawyer's assumptions proved to be wrong.

Atty. Alfafara complains that he was not informed of the status of the case as he had requested
of the trial court when he entered his appearance as the petitioner's new counsel. The argument,
as we understand it, is that the court should not have rendered its decision on the merits four days
later without first acting on his request. Counsel should have known better. His posture was
presumptuous. The trial court was not under any obligation to brief him on the progress of the
case, the records of which were available to him for his own examination. It was for him-or his
assistant if he had any-to examine such records for whatever he needed or wanted to know. It is
fortunate for him in fact that, instead of reproving him as it could have, the trial court chose merely
to ignore his impertinent request.

The motion for new trial filed by the petitioner was deficient in form because it did not comply with
Rule 37, section 2, of the Rules of Court. No afndavit of merit was attached, as required, to support
the claim of honest mistake or excusable negligence when she failed to notify the private
respondents of the telegraphic motion for postponement. As for the second ground, to wit, the
insufficiency of the evidence to justify the decision, the trial court took pains to refute the
petitioner's contentions, discussing her arguments one by one, and extensively. A careful reading
of its order of May 14, 1973, wfll show that the motion was not denied out of hand in violation of
her right to be heard, as the petitioner suggests.

This is the reason why we cannot agree with the private respondents' submission that the motion
for new trial was merely pro forma and so did not suspend the running of the period for appeal.

The question of the timeliness of the petitionees appeal was resolved on the basis of the factual
findings of both the trial court and the respondent court regarding the date the petitioner was
notified of the decision of March 15, 1973. The petitioner claims it was March 25, 1973, but the
correct date found was March 23, 1973, as established by the certification made by the
postmaster of Cebu City and the registry return card. 24 There is no reason not to accept this
determination. Conformably thereto, we also affirm the dismissal of the appeal on the following
justification made by the trial court:

From March 23, 1973, the date a copy of thedecision was received by the defendant to April
16, 1973, the date the motion for new trial was filed a period of twenty-four (24) days has
elapsed after excluding the first day. Then from May 25, 1973, the day the defendant
received a copy of the Order denying her motion for new trial to June 1, 1973, the day she
filed and submitted her Record on Appeal, a period of eight (8) days had elapsed. Adding
this eight (8) days to the twenty-four (24) days will give a total of thirty-two (32)days. So that
when defendant filed her Notice of Appeal and Appeal Bond on May 31, 1973 and the Record
on Appeal on June 1, 1973, it was already beyond the reglementary period of thirty (30) days
within which a party may be allowed to appeal. 25

The Court notes that the petitioner could have filed the notice of appeal and the appeal bond within
the reglementary period and then asked for an extension to submit the record on appeal if she needed
more time to prepare it. No such extention was sought. Among conscientious practitioners, verification
of the material dates, especially in connection with the reglementary periods, is a wise and
indispensable precaution. This precaution was not taken in this case. Atty Alfafara's chimed mistake
of misreading the date when the notice of the decision of March 15, 1973, was received-considering

83
what be calls the ambiguity in the writing of the disputed ciphers-is, if anything, but still another proof
of his inexcusable carelessness. It also does not advance the petitioner's cause that she first claimed
she had received the notice on May 25, 1973, and then, when confronted with evidence to the contrary,
averred that she had misread the figure "23" as "25."

The petitioner says she was also denied due process when the trial court resolved the motion to
dismiss the appeal and the supplemental motion flied later by the private respondents although she
had not yet been given an opportunity to file an opposition to the supplemental motion. She stresses
that she learned of the amended motion only at the hearing schedule, as she thought, only on the
original motion. We find no such denial. The supplemental motion was actually but an amplification of
the original motion and merely adduced additional evidence to support the contention that the appeal
had not been filed on time. The second motion was based on the same ground invoked in the first
motion. By any reasonable standard, rejection of this contention by the trial court and the respondent
court cannot be considered arbitrary.

And now, to rectify her tardiness, the petitioner would ask us to consider ber subsequent petition
for certiorari with the respondent court as a substitute for her lost appeal. Obviously, this should
not be permitted. As we have repeatedly held in innumerable cases:

... Where another such remedy like an appeal may be taken, certiorari does not lie. And, it is by
now abundantly clear that certiorari may not be utilized to offset the adverse effect of failure to
appeal.

Here, petitioner had the remedy of appeal from the judgment of respondent judge. In fact, he
did attempt to appeal. But his appeal was dismissed by this Court for failure to pay the docket
fee on time. He cannot revive his appeal. He bad lost it through his own fault. certiorari is no
substitute for appeal. 26

Where an appeal would have been an adequate remedy but it was lost through petitioner's
inexcusable negligence, certiorari is not in order.'Time and again, this Court dismissed petitions
for certiorari to annul decisions or final orders which could have, but were not, appealed. They
were dismissed because certiorari cannot take the place of an appeal. 27

Curiously, while insisting that her appeal was filed on time, the petitioner would also justify her
petition for certiorari with the respondent court as an exception to the above-discussed rule. The
simple justification she offers for her inconsistency is that the judgment rendered by the trial court
in Civil Case No. R-1564 was void ab initio for violation of due process and therefore correctible
by the present petition for certiorari.

If that be so, the Court can only wonder why she attempted to file her appeal in the first place
instead of coming directly to the respondent court in the petition for certiorari she claims is proper.
The act that she sought to file an ordinary appeal clearly shows that she herself believed that the
claimed errors of the trial court were appropriate for review only in that appeal and not by certiorari.
It is obvious that when she subsequently filed the petition for certiorari after her appeal had been
dismissed for tardiness, she was availing herself'of the second remedy only as a substitute for
her lost appeal. The petitioner forgets that the two remedies are mutually exclusive and not
alternative or successive.

Recapitulating, we find that the petitioner's counsel did not comply with the requirements of the
Rules of Court when he sent the telegraphic motion for postponement; that he did not rectify the
deficiency even if he had sufficient time to do so before the hearing sought to be postponed; that
it was therefore not improper for the trial court to consider the case submitted for decision on the
basis of the evidence presented so far by the parties; that the petitioner had and enjoyed the
chance to be heard through her motion for reconsideration and her subsequent motion for new
trial; that the alleged erors sought to be reviewed were reversible only in an ordinary appeal, that
84
this appeal was, however, not filed on time; and that the petition for certiorari with the respondent
court could not be resorted to by the petitioner as a substitute for her dismissed appeal. The
respondent court was therefore correct in denying the said petition.

We conclude as we began, by stressing that procedural rules are not to be belittled or dismissed
simply because their nonobservance may have resulted in prejudice to a party's substantive
rights, as in this case. Like all rules, they are required to be followed except only when for the
most persuasive of reasons they may be relaxed to relieve a litigant of an injustice not
commensurate with the degree of his thoughtlessness in not complying with the procedure
prescribed. Such reasons are not present here. We do not find that compelling justification for the
exception sought and so must sustain the respondent court. While it is true that a litigation is not
a game of technicalities, this does not mean that the Rules of Court may be ignored at will and at
random to the prejudice of the orderly presentation and assessment of the issues and their just
resolution. Justice eschews anarchy.

WHEREFORE, the petition is DENIED and the challenged decision of the respondent court is
AFFIRMED, with costs against the petitioner. This decision is immediately executory.

G.R. No. L-75041 November 13, 1989

ROSA N. EDRA, MERCY EDRA, WINMELYN EDRA, and JERICO EDRA, the last three being
minors are represented by their mother, petitioner, ROSA N. EDRA, petitioners,
vs.
HON. INTERMEDIATE APPELLATE COURT (FIRST SPECIAL CASES DIVISION),
MARCELINO T. SADUMIANO alias MARIO T. SADREMIANO and PEPITO N. ZAMBRANA,
respondents.

PARAS, J:

This is a petition for review on certiorari seeking to annul the decision of the Intermediate Appellate
Court (now Court of' Appeals) 1 in AC-G.R. SP No. 08330 entitled Marcelino T. Sadumiano alias
Mario T. Sadremiano and Pepito Zambrana v. Hon. Eficio B. Acosta, etc. et al. which set aside
the decision of the Court of First Instance of Rizal (now Regional Trial Court). Branch X 2 in Civil
Case No. 41513 entitled Roza N. Edra et al. v. Mario T. Sadremiano and Pepito M. Zambrana,
which ordered the defendants to pay the plaintiffs, jointly and severally actual expenses and
damages.

As culled from the records, the undisputed facts are as follows:

On June 3, 1981 the petitioners Rosa N. Edra and her minor children Mercy, Winmelyn and Jerico,
all surnamed Edra filed a complaint for damages before the Court of First Instance of Rizal against
the private respondents Mario T. Sadremiano (alias Marcelino T. Sadremiano) as operator of a
passenger jeepney and the driver thereof Pepito Zambrana. (Rollo, p. 15)

On July 22, 1981 a copy of the summons and a copy of the complaint were served upon the
private respondent Mario T. Sadremiano at No. 187-D Ist Kamuning Road, Quezon City and
Pepito M. Zambrana at No. 128 Kamuning Road, Quezon City thru the wife of one of them, Teofila
Sadremiano, a person of age, living therein, with sufficient discretion to receive such kind of
process (Sheriffs Return, p. 20, Ibid.).

For failure of the private respondents to file their, answers within the reglementary period, counsel
for the petitioners moved to declare them in default and allow presentation of their evidence ex
parte (p. 19, lbid.) which was granted by the trial court on February 4, 1982 (p. 21, Ibid.).
85
The following circumstances were duly established by the petitioners, viz:

On April 15,1981 at about 4:00 p.m., the plaintiffs, Rosa N. Edra together, with her husband,
Nardito Edra, Rosalia Edra, Ernesto Edra, Clarita Edra, Elpidio Edra, Wilfredo Inay with
their children, namely: Mercy, Winmelyn and Jerico all surnamed Edra hired from
defendants, Mario Sadremiano and Pepito Zambrana a 'Sarao Jeepney, with Plate No.
PUJ-O Phil. 80' owned by the former former them to be transported to Dingras, Ilocos Norte
at P 100.00 per head excluding the children on a round trip basis; that they left
Mandaluyong, Metro Manila the place where the agreement to transport plaintiffs and
companions took place and travelled north; that while travelling alone,, the National
Highway going north and upon reaching Barrio Payocpoc Bauang La Union which was
about 1:30 a.m. April 16, 1981, the driver, defendant Pepito N. Zambrana, disregard the
norms of conduct of a driver by not taking the precautionary measures, while driving at
night, did not exert extraordinary diligence in the vigilance for the safety of his passenger,
and as a consequence thereof, the jeepney he was driving rolled down the road and landed
upside down thereby injuring seriously the plaintiffs, Rosa N. Edra, Mercy Edra, Winmelyn
Edra and Jerico Edra with first and second degree burns (Exh. E); that by reason of the
injuries sustained by the plaintiffs, they were all hospitalized, deformed and in fact they are
still under treatment and have suffered and will continue to suffer damages by way of
medical expense of not less than P 30,000.00 (Exhs. A to D); that likewise by reason of the
negligence of the defendants, who under the law shall exercise due and extraordinary
diligence plaintiff shall suffer P 40.000.00 as moral damages; exemplary or corrective
damages as the plaintiffs were left and abandoned helpless and penniless in a far away
place by the defendants, in the amount of P 20,000.00; and by way of attorney's fees and
costs suit of P 9,000.00. (pp. 22-23, Ibid.)

February 17, 1982 the trial court rendered its decision the decretal portion of which reads:

WHEREFORE, judgement is hereby rendered in favor of the plaintiffs and against the defendants
ordering the latter to pay to the former, jointly and severally the sum for medical expenses and
other actual expenses for transportation in the amount of P 30,000.00; moral damages in the
amount of P 10,000.00; attorney's fees in the amount of P 5,000.00 plus cost suit. SO ORDERED.
(p. 23, Ibid.)

On March 2, 1982 private respondent Pepito M. Zambrana received a copy of the said decision
and on April 1, 1982, he filed a motion to lift order of default and set aside the
proceedings/decision claiming lack of jurisdiction of the trial court as he was never served with
summons; that the person of Teofila Sadremiano who appeared to have received the summons
is nonexistent and unknown in the given address nor known to the defendant and that assuming
that said person is existing, the aforesaid summons was never given to him. (pp. 24-25, Ibid.)

On September 2, 1982 counsel for the petitioners filed a motion for execution on the ground that
the decision has become final and executory and to set the motion of Zambrana for hearing (p.
26, Ibid.).

On September 27, 1982, Zambrana filed an opposition to plaintiffs motion for execution on the
ground of pre-maturity pending resolution of the motion to lift order of default and set aside
proceedings/decision and that said filing of motion injured to the benefit of all the defendants
(private respondent herein) (p. 281, Ibid.)

A reply to the opposition was filed by the petitioners asking for a denial of the private respondent
Zambrana's earlier motion and the grant of the motion for the execution inasmuch as six (61)
months had already elapsed from the time the private respondents were notified of the decision.
(p. 30, Ibid.)

86
Finding the motion to lift the order of default and set aside the decision to be without merit the
same was denied in the Order of December 22, 1982. (pp. 33, Ibid.)

A motion to reconsider the same was filed on January 18, 1983 ( p. 34, Ibid.) which was likewise
denied on January 28, 1983 as the decision sought to be annulled has become final and
executory. A writ of execution was ordered to be issued. (p. 33, Ibid.)

On February 19, 1983, Deputy Sheriff Norberto B. Doblada, Jr. proceeded to the residence of
private respondent Mario T. Sadremiano at No. 187-D Ist Kamuning, Quezon City and discovered
that the person residing therein was one Mario T. Sadumiano and (later found to be as Marcelino
T. Sadumiano) as per his Residence Certificate. He tried to enforce the writ of execution
levying/attaching the motor vehicles found inside the supposed garage of the said private
respondent at 120 Kamuning St., Quezon City but found out that the motor vehicles were
registered in the name of Marcelino T. Sadumiano as shown in the Registration Certificate. The
sheriff tried to locate the other private respondent Zambrana but to no avail as he was no longer
a resident at the given address (Sheriffs Return, p. 52, lbid). The sheriff did not know that private
respondent Marcelino T. Sadumiano and Mario T. Sadremiano refer to one and the same person.

On February 10, 1986, private respondent Marcelino T. Sadumiano alias Mario T. Sadremiano
filed a petition for certiorari with urgent injunction/restraining order with the Intermediate Appellate
Court praying for a nullification of the decision dated February 17, 1982 based on the same
premise set forth in Zambrano's earlier motion but this time to enjoin the Deputy Sheriff of Rizal
from levying/selling oil private respondent's property at public auction on February 11, 1986 (p.
40, Ibid.).

Petitioner was ordered to file their comment in the Resolution of February 12, 1986 and this order
was sent to 671 Nueve de Pebrero Mandaluyong, Metro Manila instead of 671-H Nueve de
Pebrero, Mandaluyong, M. M. as shown in the complaint dated June 3, 1981 (pp. 22, CA Rollo).
Consequently, petitioners failed to file the required comment and a decision was rendered on
April 16, 1986 by respondent Court of Appeals, the dispositive part of which reads:

WHEREFORE, in view of the foregoing the decision dated February 17, 1982 as
well as the subsequent notice of levy and sale on writ of execution dated February
5, 1986, is hereby set aside insofar as petitioner Mario Sadumiano is concerned.
No special pronouncement is rnade as to costs.
SO ORDERED. (p. 51. Rollo)

Petitioners likewise failed to receive a copy of respondent court's decision of April 16, 1986 but
discovered its issuance only upon follow-up of the case status re: writ of execution before the
sheriffs office, Pasig, Metro Manila Immediately thereafter, private respondent Rosa Edra filed a
manifestation to that effect and moved that she be given fifteen (15) days within which to file a
motion for reconsideration or to appeal to the Supreme Court (p. 31, CA Rollo) which was granted
in the Resolution of June 19, 1986. (p. 34, lbid.)

Hence the instant petition.

The petitioners advance the sole issue of whether or not the trial court acquired jurisdiction over
the person of private respondent Marcelino T. Sadumiano alias Mario T. Sadremiano.

The petition is impressed with merit.

87
It is axiomatic that where the conclusions of the appellate court on factual matters differ from
those of the trial court, a minute scrutiny thereof and resort to duly proven evidence becomes
necessary ( Pacmac Inc. v. Intermediate Appellate Court, 150 SCRA 55 [1987]).

Private respondents were duly served with summons at 187-D Ist Kamuning Road, Quezon City
thru Teofila Sadremiano, as appearing in the Sheriffs Return dated July 22, 1981. By service of
summons upon them, the trial court had acquired jurisdiction over their persons (Paramount
Insurance Corporation v. Luna, 148 SCRA 564 [1987]).

The deputy sheriff is a public officer and one of his official duties is to effect prompt and effective
service of summons issued by the court. Hence, in the absence of contrary evidence the
presumption is that he has regularly performed his official duty (Tolentino v. Galano, G.R. No. L-
49008, April 15,1988).

A copy of the decision dated February 17, 1982, was likewise sent by registered mall at the
aforestated address of private respondent Sadremiano but he failed to claim the same despite
three (3) notices given him (p. 17, CA Rollo). Against his claim that he never received any registry
notice of the decision are the notations: first notice 3/l/82; second notice 3/3/82 and last notice
3/12/82 on the envelope containing the decision of the trial court, but returned unclaimed.

Said decision was sent to the correct address of private respondent Sadremiano (alias Marcelino
Sadumiano) as the deputy sheriff was able to locate him thereat in an effort to enforce the decision
on February 19, 1983 (p. 52, Rollo).

Section 8, Rule 13 of the Rules of Court provides that if the addressee of a registered mail fails
to claim it from the Post Office within five days from the date of the first notice of the postmaster,
service becomes effective upon the expiration of that five-day period (Aportadera Sr. v. Court of
Appeals G.R. No. 41358, March 16, 1988).

In the case at bar, service of the decision is deemed completed five (5) days after March 1, 1982
the date when the first notice was given by the postmaster. Within thirty (30) days reckoned from
March 6, 1982, private respondent Sadumiano had a chance to appeal the trial court's decision
of February 17, 1982 but he chose not to do so.

On April 5, 1982, the judgment of the court a quo had become final and executory by operation
of law.

A judgment becomes final after the period of appeal has lapsed without one having been perfected
(Munez v. CA, 152 SCRA 197 [1987]). Judgments which had long become final and executory can no
longer be annulled or modified by the courts (United CMC Textile Workers Union v. Labor Arbiter, 149
SCRA 424 [1987]) and the appellate court is deprived of jurisdiction to alter the trial court's final
judgments (Carbonell v. CA, 147 SCRA 565 [1987]); Republic v. Reyes, 155 SCRA 313 [1987]). The
doctrine of finality of judgments is grounded on fundamental considerations of public policy and sound
practice that at the ask of occasional error the judgments of the courts must become final at some
definite date fixed by law. Reopening of a case which has become final and executory is disallowed
(Philippine Rabbit Bus Lines Inc. v. Arciaga, 148 SCRA 433 [1987]).

Evidently, when private respondent Sadumiano filed his petition before the respondent Intermediate
Appellate Court on February 10, 1986, the decision sought to be annulled for alleged lack of jurisdiction
had already attained finality and could not have been reopened by petitioners' non-compliance with its
resolution which admittedly they did not receive at all. certiorari is no substitute for appeal which had
been lost (Landicho v. Tensuan, 151 SCRA 410 [1987], Sarmiento v. Intermediate Appellate Court,
153 SCRA 104 [1987]; Acain v. Intermediate Appellate Court, 155 SCRA 100 [1987]; and Auria Limpot
v. Court of Appeals, G.R. No. L-44642, February 20, 1989).
88
Obviously the pleadings filed by counsel for private respondent Sadumiano were merely intended
to frustrate and defeat the execution of the judgment.

The judgment rendered is founded upon the evidence adduced by the petitioners. The fact that
the trial court in said case proceeded to hear evidence ex parte can only be attributed to private
respondents' fault and no other,

While it is true that a litigation is not a game of technicalities, this does not mean that the Rules
of Court may be ignored at will and at random to the prejudice of the orderly presentation and
assessment of the issues and their just resolution. Justice eschews anarchy. (Auria Limpot v.
Court of Appeals, supra).

PREMISES CONSIDERED, the (a) petition is GRANTED; (b) appealed decision of respondent
Court of Appeals is REVERSED and SET ASIDE; and (c) judgment of the trial court dated
February 17, 1982 is hereby REINSTATED.

G.R. No. 184915 June 30, 2009

NILO T. PATES, Petitioner,


vs.
COMMISSION ON ELECTIONS and EMELITA B. ALMIRANTE, Respondents.

RESOLUTION

BRION, J.:

Our Resolution of November 11, 2008 dismissed the petition in caption pursuant to Section 3, Rule 64
of the Rules of Court which provides:

SEC. 3. Time to file petition.—The petition shall be filed within thirty (30) days from notice of the
judgment or final order or resolution sought to be reviewed. The filing of a motion for new trial or
reconsideration of said judgment or final order or resolution, if allowed under the procedural rules of
the Commission concerned, shall interrupt the period herein fixed. If the motion is denied, the
aggrieved party may file the petition within the remaining period, but which shall not be less than five
(5) days in any event, reckoned from notice of denial.

taking into account the following material antecedents:

a. February 1, 2008 – The COMELEC First Division issued its Resolution (assailed in the
petition);

b. February 4, 2008 – The counsel for petitioner Nilo T. Pates (petitioner) received a copy of
the February 1, 2008 Resolution;

c. February 8, 2008 – The petitioner filed his motion for reconsideration (MR) of the February
1, 2008 Resolution (4 days from receipt of the February 1, 2008 Resolution)

d. September 18, 2008 – The COMELEC en banc issued a Resolution denying the petitioner’s
MR (also assailed in the petition).

89
e. September 22, 2008 – The petitioner received the COMELEC en banc Resolution of
September 18, 2008

Under this chronology, the last day for the filing of a petition for certiorari, i.e., 30 days from notice of
the final COMELEC Resolution, fell on a Saturday (October 18, 2008), as the petitioner only had the
remaining period of 26 days to file his petition, after using up 4 days in preparing and filing his Motion
for Reconsideration. Effectively, the last day for filing was October 20, 2008 – the following Monday or
the first working day after October 18, 2008. The petitioner filed his petition with us on October 22,
2008 or two days late; hence, our Resolution of dismissal of November 11, 2008.

The Motion for Reconsideration

The petitioner asks us in his "Urgent Motion for Reconsideration with Reiteration for the Issuance of a
Temporary Restraining Order" to reverse the dismissal of his petition, arguing that the petition was
seasonably filed under the fresh period rule enunciated by the Supreme Court in a number of cases
decided beginning the year 2005. The "fresh period" refers to the original period provided under the
Rules of Court counted from notice of the ruling on the motion for reconsideration by the tribunal below,
without deducting the period for the preparation and filing of the motion for reconsideration.

He claims that, historically, the fresh period rule was the prevailing rule in filing petitions for certiorari.
This Court, he continues, changed this rule when it promulgated the 1997 Rules of Civil Procedure
and Circular No. 39-98, which both provided for the filing of petitions within the remainder of the original
period, the "remainder" being the original period less the days used up in preparing and filing a motion
for reconsideration. He then points out that on September 1, 2000 or only three years after, this Court
promulgated A.M. No. 00-02-03-SC bringing back the fresh period rule. According to the petitioner,
the reason for the change, which we supposedly articulated in Narzoles v. National Labor Relations
Commission,1 was the tremendous confusion generated by Circular No. 39-98.

The fresh period rule, the petitioner further asserts, was subsequently applied by this Court in the
following cases:

(1) Neypes v. Court of Appeals2 which thenceforth applied the fresh

eriod rule to ordinary appeals of decisions of the Regional Trial Court to the Court of Appeals;

(2) Spouses de los Santos v. Vda. de Mangubat3 reiterating Neypes;

(3) Active Realty and Development Corporation v. Fernandez4 which, following Neypes,
applied the fresh period rule to ordinary appeals from the decisions of the Municipal Trial Court
to the Regional Trial Court; and

(4) Romero v. Court of Appeals5 which emphasized that A.M. No. 00-02-03-SC is a curative
statute that may be applied retroactively.

A reading of the ruling in these cases, the petitioner argues, shows that this Court has consistently
held that the order or resolution denying the motion for reconsideration or new trial is considered as
the final order finally disposing of the case, and the date of its receipt by a party is the correct reckoning
point for counting the period for appellate review.

The Respondent’s Comment

We asked the respondents to comment on the petitioner’s motion for reconsideration. The Office of
the Solicitor General (OSG), citing Section 5, Rule 65 of the Rules of Court and its related cases,
asked via a "Manifestation and Motion" that it be excused from filing a separate comment. We granted
the OSG’s manifestation and motion.
90
For her part, respondent Emelita B. Almirante (respondent Almirante) filed a comment stating that: (1)
we are absolutely correct in concluding that the petition was filed out of time; and (2) the petitioner’s
reliance on Section 4, Rule 65 of the Rules of Court (as amended by A.M. No. 00-02-03-SC) is totally
misplaced, as Rule 64, not Rule 65, is the vehicle for review of judgments and final orders or
resolutions of the COMELEC. Respondent Almirante points out that Rule 64 and Rule 65 are different;
Rule 65 provides for a 60-day period for filing petitions for certiorari, while Rule 64 provides for 30
days.

OUR RULING

We do not find the motion for reconsideration meritorious.

A. As a Matter of Law

Section 7, Article IX-A of the Constitution provides that unless otherwise provided by the Constitution
or by law, any decision, order, or ruling of each Commission may be brought to the Court on certiorari
by the aggrieved party within 30 days from receipt of a copy thereof. For this reason, the Rules of
Court provide for a separate rule (Rule 64) specifically applicable only to decisions of the COMELEC
and the Commission on Audit. This Rule expressly refers to the application of Rule 65 in the filing of a
petition for certiorari, subject to the exception clause – "except as hereinafter provided."6

Even a superficial reading of the motion for reconsideration shows that the petitioner has not
challenged our conclusion that his petition was filed outside the period required by Section 3, Rule 64;
he merely insists that the fresh period rule applicable to a petition for certiorari under Rule 65 should
likewise apply to petitions for certiorari of COMELEC rulings filed under Rule 64.

Rule 64, however, cannot simply be equated to Rule 65 even if it expressly refers to the latter rule.
They exist as separate rules for substantive reasons as discussed below. Procedurally, the most
patent difference between the two – i.e., the exception that Section 2, Rule 64 refers to – is Section 3
which provides for a special period for the filing of petitions for certiorari from decisions or rulings of
the COMELEC en banc. The period is 30 days from notice of the decision or ruling (instead of the 60
days that Rule 65 provides), with the intervening period used for the filing of any motion for
reconsideration deductible from the originally-granted 30 days (instead of the fresh period of 60 days
that Rule 65 provides).

Thus, as a matter of law, our ruling of November 11, 2008 to dismiss the petition for late filing cannot
but be correct. This ruling is not without its precedent; we have previously ordered a similar dismissal
in the earlier case of Domingo v. Commission on Elections.7 The Court, too, has countless times in
the past stressed that the Rules of Court must be followed. Thus, we had this to say in Fortich v.
Corona:8

Procedural rules, we must stress, should be treated with utmost respect and due regard since they
are designed to facilitate the adjudication of cases to remedy the worsening problem of delay in the
resolution of rival claims and in the administration of justice. The requirement is in pursuance to the
bill of rights inscribed in the Constitution which guarantees that "all persons shall have a right to the
speedy disposition of their before all judicial, quasi-judicial and administrative bodies," the adjudicatory
bodies and the parties to a case are thus enjoined to abide strictly by the rules. While it is true that a
litigation is not a game of technicalities, it is equally true that every case must be prosecuted in
accordance with the prescribed procedure to ensure an orderly and speedy administration of justice.
There have been some instances wherein this Court allowed a relaxation in the application of the
rules, but this flexibility was "never intended to forge a bastion for erring litigants to violate the rules
with impunity." A liberal interpretation and application of the rules of procedure can be resorted to only
in proper cases and under justifiable causes and circumstances. (Emphasis supplied)

91
As emphasized above, exceptional circumstances or compelling reasons may have existed in the past
when we either suspended the operation of the Rules or exempted a particular case from their
application.9 But, these instances were the exceptions rather than the rule, and we invariably took this
course of action only upon a meritorious plea for the liberal construction of the Rules of Court based
on attendant exceptional circumstances. These uncommon exceptions allowed us to maintain the
stability of our rulings, while allowing for the unusual cases when the dictates of justice demand a
correspondingly different treatment.

Under this unique nature of the exceptions, a party asking for the suspension of the Rules of Court
comes to us with the heavy burden of proving that he deserves to be accorded exceptional treatment.
Every plea for a liberal construction of the Rules must at least be accompanied by an explanation of
why the party-litigant failed to comply with the rules and by a justification for the requested liberal
construction.10

Significantly, the petitioner presented no exceptional circumstance or any compelling reason to


warrant the non-application of Section 3, Rule 64 to his petition. He failed to explain why his filing was
late. Other than his appeal to history, uniformity, and convenience, he did not explain why we should
adopt and apply the fresh period rule to an election case.

To us, the petitioner’s omissions are fatal, as his motion does not provide us any reason specific to
his case why we should act as he advocates.

B. As a Matter of Policy

In harking back to the history of the fresh period rule, what the petitioner apparently wants – for reasons
of uniformity and convenience – is the simultaneous amendment of Section 3, Rule 64 and the
application of his proposed new rule to his case. To state the obvious, any amendment of this provision
is an exercise in the power of this Court to promulgate rules on practice and procedure as provided by
Section 5(5), Article VIII of the Constitution. Our rulemaking, as every lawyer should know, is different
from our adjudicatory function. Rulemaking is an act of legislation, directly assigned to us by the
Constitution, that requires the formulation of policies rather than the determination of the legal rights
and obligations of litigants before us. As a rule, rulemaking requires that we consult with our own
constituencies, not necessarily with the parties directly affected in their individual cases, in order to
ensure that the rule and the policy that it enunciates are the most reasonable that we can promulgate
under the circumstances, taking into account the interests of everyone – not the least of which are the
constitutional parameters and guidelines for our actions. We point these out as our adjudicatory
powers should not be confused with our rulemaking prerogative. lavv phil

We acknowledge that the avoidance of confusion through the use of uniform standards is not without
its merits. We are not unmindful, too, that no less than the Constitution requires that "motions for
reconsideration of [division] decisions shall be decided by the Commission en banc."11 Thus, the ruling
of the Commission en banc on reconsideration is effectively a new ruling rendered separately and
independently from that made by a division.

Counterbalanced against these reasons, however, are other considerations no less weighty, the most
significant of which is the importance the Constitution and this Court, in obedience to the Constitution,
accord to elections and the prompt determination of their results. Section 3, Article IX-C of the
lawphil

Constitution expressly requires that the COMELEC’s rules of procedure should expedite the
disposition of election cases. This Court labors under the same command, as our proceedings are in
fact the constitutional extension of cases that start with the COMELEC.

Based on these considerations, we do not find convenience and uniformity to be reasons sufficiently
compelling to modify the required period for the filing of petitions for certiorari under Rule 64. While

92
the petitioner is correct in his historical data about the Court’s treatment of the periods for the filing of
the different modes of review, he misses out on the reason why the period under Section 3, Rule 64
has been retained. The reason, as made clear above, is constitutionally-based and is no less than the
importance our Constitution accords to the prompt determination of election results. This reason far
outweighs convenience and uniformity. We significantly note that the present petition itself, through its
plea for the grant of a restraining order, recognizes the need for haste in deciding election cases.

C. Our Liberal Approach

Largely for the same reason and as discussed below, we are not inclined to suspend the rules to come
to the rescue of a litigant whose counsel has blundered by reading the wrong applicable provision.
The Rules of Court are with us for the prompt and orderly administration of justice; litigants cannot,
after resorting to a wrong remedy, simply cry for the liberal construction of these rules.12 Our ruling in
Lapid v. Laurea13 succinctly emphasized this point when we said:

Members of the bar are reminded that their first duty is to comply with the rules of procedure, rather
than seek exceptions as loopholes. Technical rules of procedure are not designed to frustrate the ends
of justice. These are provided to effect the prompt, proper and orderly disposition of cases and, thus,
effectively prevent the clogging of court dockets. Utter disregard of these rules cannot justly be
rationalized by harking on the policy of liberal construction. [Emphasis supplied.]

We add that even for this Court, liberality does not signify an unbridled exercise of discretion. It has
its limits; to serve its purpose and to preserve its true worth, it must be exercised only in the most
appropriate cases.14

WHEREFORE, premises considered, we DENY the motion for reconsideration for lack of merit. Our
Resolution of November 11, 2008 is hereby declared FINAL. Let entry of judgment be made in due
course.

SO ORDERED.

93
G.R. No. 139607 October 28, 2002

RAMON ISIDRO P. LAPID and GLADYS B. LAPID, in behalf of their minor child
CHRISTOPHER B. LAPID, petitioners,
vs
HON. EMMANUEL D. LAUREA, Presiding Judge of RTC, BR. 169, Malabon,
ST. THERESE OF THE CHILD JESUS, INC., and COURT OF APPEALS, ET. AL.,
respondents.

RESOLUTION

QUISUMBING, J.:

In this petition for review, petitioners assail the resolution1 dated June 1, 1999, of the Court of
Appeals in CA-G.R. SP No. 52970 dismissing their special civil action for certiorari, and also its
resolution dated August 4, 1999, denying their motion for reconsideration.

The factual antecedents of this petition are as follows:

Spouses Ramon Isidro P. Lapid and Gladys B. Lapid are the parents of seven-year-old
Christopher B. Lapid, who was a Grade 1 pupil of the respondent school, St. Therese of the Child
Jesus, a private educational institution providing preschool and elementary education at Malabon,
Metro Manila. Private respondents Esperanza N. Prim, Norilyn A. Cruz, Flordeliza C. Santos and
Macario B. Binondo are its directress, teacher-in-charge, guidance counselor and principal,
respectively.

On May 8, 1998, petitioners filed a complaint for damages against the private respondents before
the Regional Trial Court (RTC), Malabon, Metro Manila, Branch 169, docketed as Civil Case No.
2839 MN.2

94
In their complaint, the Lapid spouses averred that on November 5, 1997, Mrs. Lapid went to St.
Therese and looked for Ms. Norilyn A. Cruz, Christopher’s classroom teacher. The directress,
Mrs. Esperanza N. Prim, prohibited her from seeing Ms. Cruz so as not to disrupt ongoing classes.
Mrs. Prim advised Mrs. Lapid to return later that day. On her return, Mrs. Lapid was surprised to
see that a letter prepared by Mr. Binondo, the school principal, was already waiting for her,
apprising her of Christopher’s suspension for five days effective the following day or on November
6, 1997.

Petitioners averred that their son was summarily dismissed from school sans notice and hearing.
Petitioners denied any knowledge of the alleged letters of complaint filed by the parents whose
children were allegedly offended by Christopher. As a result of the strained relations between the
Lapids and the school management, Christopher was transferred to a different school immediately
thereafter.

Petitioners then filed a letter-complaint with Hon. Antonio Nachura, Undersecretary of the
Department of Education, Culture & Sports (DECS), assailing the respondent school’s refusal to
admit their son in his class. Petitioners also demanded an investigation of the circumstances
leading to their son’s suspension. This letter-complaint was later indorsed to the DECS Hearing
Officer of Valenzuela, Metro Manila. At the hearing, petitioners demanded a written retraction and
a public apology from the school officials, copy furnished the DECS. The school officials, however,
refused. This compelled petitioners to file the present case for damages.

According to petitioners, the school’s malicious imputation against their son tarnished their good
name and reputation. Petitioners said Mr. Lapid is a Bachelor of Laws graduate, a college
professor, and Branch Clerk of Court of the Metropolitan Trial Court, Branch 41, Quezon City;
while Mrs. Lapid is an account analyst at the Philippine Airlines Administrative Office in Makati,
and both of them belonging to good and reputable families. They prayed for moral damages in
the amount of One Million Pesos (P1,000,000), exemplary damages in the amount of P100,000,
and another P100,000 for actual and consequential damages.3

In their answer, respondent school officials stated that as early as June 1997, Ms. Cruz had been
sending them letters regarding Christopher’s mischief in school, as evidenced by the letters dated
June 20, 1997 and June 25, 1997. According to said respondents, Christopher had committed
serious infractions when he hurt not only his classmates but also his classroom teacher, Ms. Cruz,
and one school employee. They added that at one time, Christopher stabbed a classmate with a
pencil, and at another time, he hit a teacher with a backpack. These incidents were all recorded
by Ms. Cruz and reported to the Guidance Counselor, Mrs. Flordeliza C. Santos.

Private respondents added in their answer that on several occasions, the parents of students
offended by Christopher lodged complaints with the school against Christopher, urging the
administration to impose appropriate disciplinary action on him. After most of these incidents,
averred private respondents, Ms. Cruz had called up petitioners’ house to acquaint them with
these complaints. Said phone calls were received, often by Mrs. Gloria Manapat Bautista,
grandmother and guardian de facto of Christopher. Private respondents lamented, however, that
all their efforts to reach the Lapid spouses personally turned out to be futile.

On November 18, 1998,4 petitioners filed a motion to declare respondent school as in default,
which motion was denied by the trial court in an order dated February 9, 1999.5 Petitioners moved
for a reconsideration, but said motion was likewise denied on March 11, 1999.6

With the denial of their motion for reconsideration, petitioners filed a petition for certiorari with the
Court of Appeals, docketed as CA-G.R. SP No. 52970.

95
In a resolution June 1, 1999, the appellate court dismissed the petition for failure to indicate the
material date, particularly the date of filing of motion for reconsideration with the RTC, as required
by Supreme Court Circular No. 39-98, amending Section 3 of Rule 46 of the 1997 Rules of Civil
Procedure.7

In the appellate court’s view, this formal requirement is needed to ascertain whether the petition
was filed within the reglementary period as provided in Section 4, Rule 65 of the same rules, also
as amended by SC Circular No. 39-98.8

Unfazed, on June 15, 1999, the petitioners filed a motion for reconsideration of the CA resolution,
but still without indicating the date as to when their motion for reconsideration of the RTC order
was filed. Hence, in its second assailed resolution9 dated August 4, 1999, the appellate court
denied said motion for reconsideration.

Before us, petitioners now impute error to the Court of Appeals in issuing the June 1, 1999 and
August 4, 1999 resolutions, in this wise:

THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE PETITION ON


GROUNDS OF PURE TECHNICALITY, FAILING TO APPRECIATE THE IMPORT OR MERIT
OF THE CASE WHICH POSES THE QUESTION OF WHETHER OR NOT A CORPORATION
CAN ACT WITHOUT THE EXPRESS CONCURRENCE OF ITS BOARD OF DIRECTORS.10

The basic issue posed before this Court is whether or not the Court of Appeals erred in dismissing
the petition for certiorari filed by petitioners on the ground of formal and procedural deficiency,
i.e., the petitioners’ failure to state a material date in their petition for certiorari.

Petitioners contend that it was error for the appellate court to dismiss the petition on grounds of
pure technicality. This, they say, undermines the oft-repeated doctrine by this Court that the rules
of procedure are used only to help secure, not override, substantial justice11 considering that the
principal appellant is their seven-year-old son.12 They boldly assert that technicalities should be
set aside in this case on meritorious grounds, which they have raised in the petition particularly
the issue as to whether or not a corporation can act without the express concurrence of its Board
of Directors.13

Private respondents, for their part, staunchly maintain that petitioners’ wanton disregard of the
Rules of Court warrant the outright dismissal of their petition. 14 In their memorandum, private
respondents stressed that petitioners had made false statements of material dates.[15] They add
that the present petition raises factual issues that the Court cannot pass upon at the first instance.

After a careful consideration of the submissions of the parties, particularly their respective
memoranda, we are constrained to agree with the ruling of the respondent appellate court which
dismissed the instant petition for certiorari. We find no reversible error in the assailed resolutions
of the Court of Appeals because in filing a special civil action for certiorari without indicating the
requisite material date thereon, petitioners violated basic tenets of remedial law, particularly Rule
65 of the Rules of Court.

There are three material dates that must be stated in a petition for certiorari brought under Rule
65. First, the date when notice of the judgment or final order or resolution was received; second,
the date when a motion for new trial or for reconsideration was filed; and third, the date when
notice of the denial thereof was received. 16 In the case before us, the petition filed with the CA
failed to indicate the second date, particularly the date of filing of their motion for reconsideration.17
As explicitly stated in the aforementioned Rule, failure to comply with any of the requirements
shall be sufficient ground for the dismissal of the petition.

96
The rationale for this strict provision of the Rules of Court is not difficult to appreciate. As stated
in Santos vs. Court of Appeals,18 the requirement is for purpose of determining the timeliness of
the petition, thus:

The requirement of setting forth the three (3) dates in a petition for certiorari under Rule 65 is for
the purpose of determining its timeliness. Such a petition is required to be filed not later than sixty
(60) days from notice of the judgment, order or Resolution sought to be assailed. Therefore, that
the petition for certiorari was filed forty-one (41) days from receipt of the denial of the motion for
reconsideration is hardly relevant. The Court of Appeals was not in any position to determine
when this period commenced to run and whether the motion for reconsideration itself was
filed on time since the material dates were not stated. x x x (Stress supplied.)

Moreover, as reiterated in Mabuhay vs. NLRC, 288 SCRA 1, 6: "As a rule, the perfection of an
appeal in the manner and within the period prescribed by law is jurisdictional and failure to perfect
an appeal as required by law renders the judgment final and executory."

We are not unmindful of exceptional cases where this Court has set aside procedural defects to
correct a patent injustice. However, concomitant to a liberal application of the rules of procedure
should be an effort on the part of the party invoking liberality to at least explain its failure to comply
with the rules.19 In the instant case, the petition was bereft of any persuasive explanation as to
why petitioners Ramon and Gladys Lapid failed to observe procedural rules properly. The record
shows that through their counsel they failed not only once but twice to indicate the material date
required by law. Counsel for petitioners had all the opportunity to comply with the rules, but
counsel remained obstinate in her non-observance thereof even when she sought reconsideration
of the ruling of the respondent court dismissing her clients’ petition.20 Such obstinacy is
inconsistent with her late plea for liberality in construing the rules on certiorari. Thus, any further
delay that would inadvertently result from the dismissal of the instant petition is one purely of
petitioners’ own making, considering that it is an elementary principle in law that negligence of
counsel binds the client.21

We find unsatisfactory the explanation of petitioners, through counsel, that they have not come
across said Circular No. 39-98 at the time of the filing of the petition in the CA. 22 On one hand,
law practitioners and all lawyers, for that matter, should be fully conversant with the requirements
for the institution of certiorari proceedings under Rule 65 of the Revised Rules of Court. On the
other hand, ignorantia legis non excusat.23 Ignorance in this regard encompasses not only
substantive but also procedural laws.

A final note. Members of the bar are reminded that their first duty is to comply with the rules of
procedure, rather than seek exceptions as loopholes. Technical rules of procedure are not
designed to frustrate the ends of justice. These are provided to effect the prompt, proper and
orderly disposition of cases and thus effectively prevent the clogging of court dockets. Utter
disregard of these rules cannot justly be rationalized by harking on the policy of liberal
construction.24

All told, no reversible error can be ascribed to the Court of Appeals for dismissing the petition for
certiorari and later denying the petitioners’ motion for reconsideration.

WHEREFORE, the instant petition is DENIED. The assailed resolutions of the Court of Appeals
dated June 1,1999 and August 4, 1999 in CA-G.R. SP No. 52970 are AFFIRMED. Cost against
petitioners.

SO ORDERED.

97
G.R. No. L-50997
SUMMIT GUARANTY AND INSURANCE COMPANY, INC., petitioner,
vs.
HON. JOSE C. DE GUZMAN, in his capacity as Presiding Judge of Branch III, CFI of Tarlac,
GERONIMA PULMANO and ARIEL PULMANO, respondents.

June 30, 1987


No. L-48679
SUMMIT GUARANTY AND INSURANCE COMPANY, INC., petitioner,
vs.
THE HONORABLE GREGORIA C. ARNALDO, in her capacity as Insurance Commissioner, and
JOSE G. LEDESMA, JR., respondents.

June 30, 1987


No. L-48758
SUMMIT GUARANTY AND INSURANCE COMPANY, INC., petitioner,
vs.
HONORABLE RAMON V. JABSON, in his capacity as Presiding Judge of Branch XXVI, Court
of First Instance of Rizal, Pasig, Metro Manila and AMELIA GENERAO, respondents.

GANCAYCO, J.:

These three consolidated cases arose from three separate complaints filed against Summit
Guaranty and Insurance Company, Inc., herein petitioner, for the payment of insurance on
insurance policies issued by the latter.

The facts are as follows:

G.R. No. L-48679

98
Private respondent Jose Ledesma was the owner of a tractor which was bumped by a
minibus insured with petitioner company for purposes of Third Party Liability. The incident
took place on March 10, 1977.

Immediately thereafter, private respondent made a notice of claim with petitioner company
for the damage and loss suffered by the tractor. Petitioner company then advised private
respondent to have the tractor repaired at GA Machineries which estimated the job at
Twenty-One Thousand Pesos (P21,000.00). 1 Later, petitioner company through its
officials, made an assurance of payment of the said amount. 2

When G.A. Machineries was finally through with the repair, private respondent made
several demands on petitioner company because of the repair shop's warning that failure
to pay would result in the auctioning of the tractor to cover the mechanic's lien. However,
private respondent only received additional assurances of payment.

On June 8, 1977, due to the failure of petitioner company to settle his claim, private
respondent submitted a letter-complaint to the Insurance Commission. 3 The latter, in turn,
wrote petitioner company to inquire about the status of the claim. 4

Again, in March, 1978, petitioner company promised to pay. 5

On April 26, 1978, for not having received any payment of its credit, private respondent filed a
formal complaint with the Insurance Commission 6 which petitioner company moved to dismiss
on the ground of prescription. The Commission, through an order of respondent Commissioner
Gregoria Arnaldo, deferred the resolution of the motion to dismiss causing petitioner company to
file a motion for reconsideration which was later denied. Hence, this petition for certiorari and
prohibition.

G.R. No. 50997

Private respondent Geronima Pulmano was the owner of a jeep insured with petitioner company
in the amount of Twenty Thousand Pesos (P120,000.00). On Sept. 5, 1977, while being driven
by private respondent Ariel Pulmano this jeep got involved in a vehicular accident which resulted
in the death of one of the victims.

Private respondent immediately filed a notice of accident and claim with the petitioner company
and diligently submitted all the required documents with it. 7 However, petitioner company did not
take any steps to process the claim.

Because of this, private respondents brought their claim to the Insurance Commission and the
latter wrote petitioner company three letters dated October 11, 13 and 21, 1977. 8 On December
22, 1977, the heirs of the victim themselves filed a letter-complaint with the Insurance Commission
9
a copy of which was sent to petitioner company by registered mail. 10 Still petitioner company
failed to settle the claim.

Since all the waiting for petitioner company to act proved to be futile, private respondents were
constrained to file a complaint with the Court of First Instance of Tarlac dated October 5, 1978.
Petitioner company moved to dismiss on the ground of prescription but respondent Judge Jose
C. de Guzman denied the motion. Hence, this petition for certiorari and prohibition.

G.R. No. L-48758

99
Private respondent Amelia Generao owned a passenger jeepney that was insured with petitioner
company under a Vehicle Comprehensive Policy. On June 23, 1976, while being driven by private
respondent Carlos Pagkalinawan, this jeepney struck the van of a certain Mr. Hahn.

Two days after the accident or on June 25, 1976, Generao notified petitioner company of the
vehicular accident and demanded from it payment of damages on both vehicles. 11 Thereafter,
Generao submitted to petitioner company all the necessary papers in support of the claim and
required of her by the latter.12 Following this, Generao and petitioner company had a dialogue at
the office of the insurance company to settle the claim. 13 Then, in the initial hearing of the criminal
case that arose out of the incident, accused Pagkalinawan was represented by a lawyer of
petitioner company. 14

Nonetheless, time passed without petitioner company taking any final action on Generao's claim.

On August 3, 1977, Mr. Hahn filed a complaint for damages against herein respondents Generao
and Pagkalinawan with the Court of First Instance of Rizal, Branch XXVI. Private respondents, on
the other hand, filed a third party complaint against petitioner company which in turn filed a motion
to dismiss on the ground of prescription. Respondent Judge Ramon V. Jabson, however, denied
the said motion. Subsequently, petitioner company filed a motion for reconsideration which again
was denied. Hence, this petition for certiorari and prohibition,

The only issue at bar is whether or not the causes of action of private respondents have already
prescribed.

According to the petitioner company, the complaints of private respondents, having been filed
beyond the one-year period provided in Section 384 of the Insurance Code, can no longer
prosper. Said law reads as follows:

SECTION 384. Any person having any claim upon the policy issued pursuant to this
chapter shall, without any unnecessary delay, present to the insurance company
concerned a written notice of claim setting forth the amount of his loss, and/or the nature,
extent and duration of the injuries sustained as certified by a duly licensed physician.
Notice of claim must be filed within six months from date of the accident, otherwise, the
claim shall be deemed waived Action or suit for recovery of damage due to loss or injury
must be brought, in proper cases, with the Commission or the Courts within one year from
date of accident, otherwise the claimant's right of action shall be prescribe. (Emphasis
supplied.)15

Petitioner company contends that the two periods prescribed in the aforementioned law-that is,
the six-month period for filing the notice of claim and the one-year period for bringing an action or
suit-are mandatory and must always concur. Petitioner company argues that under this law, even
if the notice of claim was timely filed with the insurance company within the six-month period, as
what happened in the three cases before Us, the action or suit that follows, if filed beyond the
one-year period should necessarily be dismissed on the ground of prescription.

We find no merit in the contention of petitioner company. There is absolutely nothing in the law
which mandates that the two periods must always concur. On the contrary, it is very clear that the
one-year period is only required "in proper cases." It appears that petitioner company disregarded
this very significant phrase when it made its own interpretation of the law. Had the lawmakers
intended it to be the way petitioner company assumes it to be, then the phrase "in proper cases"
would not have been inserted. At this point, it is but appropriate for Us to reiterate our ruling in
Aisporna vs. Court of Appeals, 16 to wit:

100
Legislative intent must be ascertained from a consideration of the statute as a whole. The
particular words, clauses and phrases should not be studied as detached and isolated
expressions, but the whole and every part of the statute must be considered in fixing the
meaning of any of its parts and in order to produce a harmonious whole. A statute must
be so construed as to harmonize and give effect to all its provisions whenever possible.

It is very obvious that petitioner company is trying to use Section 384 of the Insurance Code as a
cloak to hide itself from its liabilities. The facts of these cases evidently reflect the deliberate efforts
of petitioner company to prevent the filing of a formal action against it. Bearing in mind that if it
succeeds in doing so until one year lapses from the date of the accident it could set up the defense
of prescription, petitioner company made private respondents believe that their claims would be
settled in order that the latter will not find it necessary to immediately bring suit. In violation of its
duties to adopt and implement reasonable standards for the prompt investigation of claims and to
effectuate prompt, fair and equitable settlement of claims, 17 and with manifest bad faith, petitioner
company devised means and ways of stalling the settlement proceedings. In G.R, No. L-50997,
no steps were taken to process the claim and no rejection of said claim was ever made even if
private respondent had already complied with all the requirements. In G.R. No. L-48758-petitioner
company even provided legal assistance to one of the private respondents in the criminal case
filed against him leading private respondents to believe that it was ready to pay. In the same case,
petitioner company admits that it took no final action or adjudication of the claim. 18 Worse still, in
G.R. No. L-48679, assurances of payment were constantly given and petitioner company even
said that a check was ready for release.

This Court has made the observation that some insurance companies have been inventing
excuses to avoid their just obligations 19 and it is only the State that can give the protection which
the insuring public needs from possible abuses of the insurers. 20

In view of the foregoing, We hold that these three cases do not fall within the meaning of "proper
cases" as contemplated in Section 384 of the Insurance Code. To hold otherwise would enable
petitioner company to evade its responsibility through a clever scheme it had contrived.

To strengthen its position, petitioner company cites the following principle laid down in the case
of Ang vs. Fulton Fire Insurance, 21 to wit:

The condition contained in an insurance policy that claims must be presented within one
year after rejection is not merely a procedural requirement but an important matter
essential to a prompt settlement of claims against insurance companies as it demands
that insurance suits be brought by the insured while the evidence as to the origin and
cause of destruction have not yet disappeared. It is in the nature of a condition precedent
to the liability of the insurer, or in other terms, a resolutory clause, the purpose of which is
to terminate all liabilities in case the action is not filed by the insured within the period
stipulated.

Suffice it to say that the aforementioned case has no application to the present cases as in that
case the claim of the plaintiffs was denied as early as April 18, 1956 and the action was brought
only on May 5, 1958 or almost 2 years after. As we have already noted earlier, in the cases at
bar, no denial of the claims was ever made and on the contrary, private respondents were made
to believe that they will be paid by petitioner company. The alleged delay, which is quite
insignificant compared to the length of time that the plaintiffs took in the Ang case in bringing suit,
was not caused by herein private respondents but by the petitioner company itself.

The one-year period should instead be counted from the date of rejection by the insurer as this is
the time when the cause of action accrues. Since in these cases there has yet been no accrual
of cause of action, We hold that prescription has not yet set in.
101
In Eagle Star Insurance Co., Ltd., et al. vs. Chia Yu, 22 this Court ruled:

The plaintiff's cause of action did not accrue until his claim was finally rejected by the
insurance company. This is because, before such final rejection, there was no real
necessity for bringing suit.

The philosophy of the above pronouncement was pointed out in the case of ACCFA vs. Alpha
Insurance and Surety Co., 23 viz:

Since a "cause of action" requires, as essential elements, not only a legal right of the
plaintiff and a correlative obligation of the defendant but also "an act or omission of the
defendant in violation of said legal right," the cause of action does not accrue until the
party obligated refuses, expressly or impliedly, to comply with its duty.

Finally, We are pleased to note that the now defunct Batasang Pambansa, after having
recognized that Section 384 of the Insurance Code, has created so many problems for the insured
24
amended the law to read as follows:

SEC. 384. Any person having any claim upon the policy issued pursuant to this chapter
shall, without any unnecessary delay, present to the insurance company concerned a
written notice of claim setting forth the nature, extent and duration of the injuries sustained
as certified by a duly licensed physician. Notice of claim must be filed within six months
from date of the accident otherwise, the claim shall be deemed waived. Action or suit for
recovery of damage due to loss or injury must be brought in proper cases, with the
Commissioner or the Courts within one year from denial of the claim, otherwise the
claimant's right of action shall prescribe. (Emphais supplied.) 25

WHEREFORE, the instant petitions are hereby dismissed for lack of merit. The temporary
restraining order dated July 18, 1979 issued in G.R. No. 50997 is hereby lifted. With costs against
petitioner company. Let the records of these cases be immediately remanded for prompt
determination of the claims. This decision is immediately executory. SO ORDERED.

102
G.R. No. L-45543 May 17, 1939

SURIGAO MINE EXPLORATION CO., INC., plaintiff-appellant,


vs.
C. HARRIS, SURIGAO-MAINIT MINING SYNDICATE, SURIGAO CONSOLIDATED MINING
CO., INC., OTTO WEBER, ET AL., defendants-appellees.

LAUREL, J.:

On October 24, 1935, the original complaint in this case was filed in the Court of First Instance of
Surigao in which the plaintiff, a domestic private corporation domiciled in Cebu, sought a judicial
pronouncement (a) adjudging the plaintiff to be the owner and possessor of the fourteen placer
mining claims mentioned in the complaint and located in the barrio of Tubod, municipality of
Mainit, Province of Surigao; (b) annulling the forty-three lode mining claims of the defendants, C.
Harris, Surigao-Mainit Mining Syndicate, Surigao Consolidated Mining Co., Inc., and Otto Weber,
and cancelling the registration of said lode claims in the records of the mining recorder of Surigao
and in all other official records; (c) prohibiting the defendants and their agents, employees and
laborers from interfering with plaintiff's ownership and possession of its placer claims; (d)
sentencing the defendants to pay jointly and severally to the plaintiff the sum of P47,000 by way
of damages; (e) assessing the costs of the action against the defendants; and (f) awarding the
plaintiff such other proper, just and equitable relief. The theory of the plaintiff, under the complaint,
is that it is the owner by purchase of the aforesaid placer claims and that the lode claims
complained of were staked and located by the defendants on plaintiff's placer claims after the
latter had been validly and duly staked and located by the plaintiff or its grantors and predecessors
in interest.

On November 23, 1935, the defendants C. Harris, Surigao-Mainit Mining Syndicate, Surigao
Consolidated Mining Co., Inc., and Otto Weber demurred to the complaint on the grounds (1) that
there was a misjoinder of parties in that Otto Weber had been included as defendant; (2) that the
complaint did not state facts sufficient to constitute a cause of action, because it merely alleged
that the plaintiff was the owner by purchase of the placer claims named therein; and (3) that the
103
complaint was ambiguous and unintelligible. On January 9, 1936 the Court of First Instance of
Surigao entered an order finding merit in the third ground of the demurrer and requiring the plaintiff
to amend its complaint so as to contain a detailed description of its placer claims.

On January 13, 1936 an amended complaint was filed to which another demurrer was interposed
on January 22, 1936. In the order of January 27, 1936 the Court of First Instance of Surigao
overruled the demurrer and required the defendants to file their answer within the reglementary
period. Pursuant to the order of the Court of First Instance of Surigao of June 5, 1936, the plaintiff
filed, on June 11, 1936, a third amended complaint in which, additional to C. Harris, Surigao-
Mainit Mining Syndicate, Surigao Consolidated Mining Co., Inc., and Otto Weber, the original
defendants, thirty-two other individual's were included as parties defendant. In this third amended
complaint the placer claims alleged to be owned by the plaintiff were reduced to eleven, and the
relief prayed for was about the same as that asked in the original complaint, although the amount
sought to be recovered as damages was increased to P49,000.

On August 3, 1936 the defendants, other than Surigao-Mainit Mining Syndicate, Surigao
Consolidated Mining Co., Inc., and Otto Weber, filed an answer, which was amended on
September 10, 1936, containing a general denial, setting up five special defenses and praying
that the location of the alleged placer claims described in paragraph 4 of the third amended
complaint and of any placer claim which might be shown in the trial to have been located by the
plaintiff or its predecessors in interest illegally and in fraud of the government, be declared null
and void and that the registration of said claims in the office of the mining recorder of Surigao be
ordered cancelled.

On August 24, 1936 the defendants Surigao-Mainit Mining Syndicate, Surigao Consolidated
Mining Co., Inc., and Otto Weber filed an answer containing a general denial, five special
defenses and a counterclaim in the sum of P40,000 and praying the Court of First Instance of
Surigao (a) to declare the nullity of the registration in the office of the mining recorder of Surigao
of the placer claims specified in paragraphs 3 and 4 of the third amended complaint and to order
the cancellation of said registration; (b) to declare the defendants the lawful owners and
possessors of the of the lode claims enumerated in paragraph 6 of the third amended complaint;
(c) to restrain the plaintiff and its agents, employees and laborers from interfering with the
ownership, possession and enjoyment of the defendants of their lode claims; and (d) to sentence
the plaintiff to pay to the defendants the sum of P40,000 as damages.

In the course of the adduction of plaintiff's evidence in the Court of First Instance of Surigao,
Exhibits O and O-1 to O-9 were presented. With the exception of Exhibit O-7, all of said exhibits
are deeds of sale in favor of the plaintiff covering, among others, the placer claims here in question
and bear dates posterior to October 24, 1935, the date of the filing of the original complaint. Exhibit
0-7 is a deed of sale executed by Pablo S. Atillo in favor of Maximo Borromeo on January 23,
1935. A perusal of this Exhibit O-7 in connection with Exhibit O-9 reveals the fact that the mining
claims conveyed by Maximo Borromeo to the plaintiff under said Exhibit O-9, dated December
21, 1935, were the same claims acquired by Maximo Borromeo under Exhibit O-7.

Whereupon, before the plaintiff could close its evidence, the defendants moved for the dismissal
of the complaint on the ground that, when the action was commenced, plaintiff's right of action
had not yet accrued, since, under its own Exhibits O and O-1 to O-9, the plaintiff did not become
the owner of the claims in dispute until after the original complaint was filed in the Court of First
Instance of Surigao on October 24, 1935.

The present appeal is from the order of the Court of First Instance of Surigao entered on
September 12, 1936 dismissing the complaint, with costs against the plaintiff, the latter alleging
that the trial court erred and abused its discretion in so ordering the dismissal of the complaint.

104
No pretense is here made by the plaintiff-appellant that it became the owner and possessor of
the claims in question by virtue of muniments of title other than Exhibits O and O-1 to O-9, and
this appeal will be disposed of on the assumption that the alleged rights of the appellant to said
claims had been conferred solely by said Exhibits O and O-1 to O-9. In other words, this case
must be decided on the premise that the deeds of sale in favor of the appellant were executed
after the filing of the original complaint. Exhibit O-7, executed on January 23, 1935, will not affect
the situation, for the reason that said exhibit evidences a deed of sale in favor of Maximo
Borromeo, who conveyed the claims acquired by him thereunder to the plaintiff by virtue of Exhibit
O-9, executed on December 21, 1935, or after the filing of the original complaint.

Subject to certain qualifications, and except as otherwise provided by law, an action commenced
before the cause of action has accrued is prematurely brought and should be dismissed, provided
an objection on this ground is properly and seasonably interposed. The fact that the cause of
action accrues after the action is commenced and while it is pending is of no moment. In the
present case, timely objection was made by counsel for the appellees upon discovery of the
immaturity of the action a a result of the presentation by plaintiff-appellant of certain exhibits
hereinabove mentioned. The date when a civil action is deemed commenced is determined by
section 389 of the Code of Civil Procedure. Without the need of commenting on this section in
relation to allied sections of the same Code, it is sufficient to observe that here summons was
issued by the Court of First Instance of Surigao on October 25, 1935 and was served on the
defendants C. Harris, Surigao-Mainit Mining Syndicate and Surigao Consolidated Mining Co.,
Inc., on October 28, 1935, and on the defendant Otto Weber on November 11, 1935. Under
section 389, which was taken from section 405 of the Code of Civil Procedure of California, the
action is deemed commenced upon the "filing of a complaint in the office of the clerk of the court
in which the action is to be instituted" (Sotelo vs. Dizon, G.R. No. 46492, promulgated April 26,
1939, and authorities therein cited). The original complaint was filed in the present case on
October 24, 1935. But although it be assumed that, under said section 389, the date or dates of
the issuance and service of the summons might affect the true date of the commencement of the
action, the points is of no legal consequence because whether the date of the filing of the original
complaint, or the date of the issuance of the summons, or the date of the service of said summons,
is considered as the time of the commencement of the suit, it is clear that any of said dates is
anterior to those of Exhibits O and O-1 to O-9.

Notwithstanding divergence of authorities and the apparent confusion that has arisen in the
country of origin of our procedural system, we believe that certain principles are well settled.
Primarily, the right to amend a pleading is not an absolute and unconditional right. It is to be
allowed in furtherance of justice under a sound judicial discretion. This judicial discretion, upon
the other hand, is of course not without any restriction. The cause of action must exist at the time
the action was begun, and the plaintiff will not be allowed by an amendment to introduce a cause
of action which had no existence when the action was commenced. As soon as an action is
brought and the complaint is filed, the proceedings thus initiated are not subject to the arbitrary
control of the parties or of the court, but must be dealt with in accordance with recognized rules
of pleading and practice. Amendments "must be such, and only such, as are necessary to
promote the completion of the action begun — all parties necessary for that purpose may come
or be brought into it, and so also, any and all such amendments may be made as to the cause of
action, as may be necessary to its completeness in all respects. But neither general principles of
practice, nor the statute providing for amendments, authorize amendments that reach beyond
these purposes. Especially, the court has no authority to allow such amendments as to parties,
or as to the cause of action, as make new, or substancially a new action, unless by the consent
of the parties. Indeed, this would not be to amend, in any proper sense, but to substitute a new
action by order, for and in place of a pending one, which the court cannot do. General principles
of procedure, and, as well, the statutory regulations upon the subject, contemplate and intend that
an action shall embrace but one litigation or matter, and only such parties, matters and things, as
are necessary, germane, and incident to it, except that several causes of action may be united in
105
the same action, as specially provided by statute. Any other rule or method would certainly be
subversive of orderly and intelligent procedure, and lead to intolerable confusion, as well as
injustice to litigants. (Grant vs. Burgwyn, 88 N.C., 95; Merrill vs. Merrill, 92 N.C., 657; McNair vs.
Commissioners, 93 N.C., 364; Ely vs. Early, 94 N.C., 1.)" (Clendenin vs. Turner [1887], 96 N.C.,
304, 306.)

It is a rule of law to which there is, perhaps, no exception, either at law or in equity, that to recover
at all there must be some cause of action at the commencement of the suit. As observed by
counsel for appellees, there are reasons of public policy why there should be no needless haste
in bringing up litigation, and why people who are in no default and against whom there is as yet
no cause of action should not be summoned before the public tribunals to answer complaints
which are groundless. We say groundless because if the action is immature, it should not be
entertained, and an action prematurely brought is a groundless suit.

It is true, that an amended complaint and the answer thereto take the place of the originals which
are thereby regarded as abandoned (Reynes vs. Compañia General de Tabacos [1912], 21 Phil.,
416; Ruyman and Farris vs. Director of Lands [1916], 34 Phil., 428) and that "the complaint and
answer having been superseded by the amended complaint and the answer thereto, and the
answer to the original complaint not having been presented in evidence as an exhibit, the trial
court was not authorized to take it into account." (Bastida vs. Menzi & Co. [1933], 58 Phil., 188.)
But in none of these cases or in any other case have we held that if a right of action did not exist
when the original complaint was filed, one could be created by filing an amended complaint. In
some jurisdictions in the United States what was termed an "imperfect cause of action" could be
perfected by suitable amendment (Brown vs. Galena Mining & Smelting Co., 32 Kan., 528;
Hooper vs. City of Atlanta, 26 Ga. App., 221) and this is virtually what we also permitted in Banzon
and Rosauro vs. Sellner ([1933], 58 Phil., 453); Asiatic Petroleum Co. vs. Veloso ([1935], 62 Phil.,
683); and recently in Ramos vs. Gibbon (38 Off. Gaz., 241). That, however, which is no cause of
action whatsoever cannot by amendment or supplemental pleading be converted into a cause of
action: Nihil de re accrescit ei qui nihil in re quando jus accresceret habet.

We are therefore of the opinion, and so hold, that unless the plaintiff has a valid and subsisting
cause of action at the time his action is commenced, the defect cannot be cured or remedied by
the acquisition or accrual of one while the action is pending, and a supplemental complaint or an
amendment setting up such after-accrued cause of action is not permissible (Cf. Compañia gral.
de Tabacos vs. Araza [1907], 7 Phil., 455; Santos vs. Marquez [1909], 13 Phil., 207; Barretto vs.
Lane [1915], 29 Phil., 487; National Bank vs. De la Viña [1924], 46 Phil., 63; Hodges vs. Locsin
[1933], 58 Phil., 607; Limpangco vs. Mercado [1908], 10 Phil., 508).

The order appealed from is affirmed, without prejudice, with costs against the appellant. So
ordered.

106
G.R. No. 183984 April 13, 2011

ARTURO SARTE FLORES, Petitioner,


vs.
SPOUSES ENRICO L. LINDO, JR. and EDNA C. LINDO, Respondents.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review1 assailing the 30 May 2008 Decision2 and the 4 August
2008 Resolution3 of the Court of Appeals in CA-G.R. SP No. 94003.

The Antecedent Facts

The facts, as gleaned from the Court of Appeals’ Decision, are as follows:

On 31 October 1995, Edna Lindo (Edna) obtained a loan from Arturo Flores (petitioner) amounting
to P400,000 payable on 1 December 1995 with 3% compounded monthly interest and 3%
surcharge in case of late payment. To secure the loan, Edna executed a Deed of Real Estate
Mortgage4 (the Deed) covering a property in the name of Edna and her husband Enrico (Enrico)
Lindo, Jr. (collectively, respondents). Edna also signed a Promissory Note5 and the Deed for
herself and for Enrico as his attorney-in-fact.

Edna issued three checks as partial payments for the loan. All checks were dishonored for
insufficiency of funds, prompting petitioner to file a Complaint for Foreclosure of Mortgage with

107
Damages against respondents. The case was raffled to the Regional Trial Court of Manila, Branch
33 (RTC, Branch 33) and docketed as Civil Case No. 00-97942.

In its 30 September 2003 Decision,6 the RTC, Branch 33 ruled that petitioner was not entitled to
judicial foreclosure of the mortgage. The RTC, Branch 33 found that the Deed was executed by
Edna without the consent and authority of Enrico. The RTC, Branch 33 noted that the Deed was
executed on 31 October 1995 while the Special Power of Attorney (SPA) executed by Enrico was
only dated 4 November 1995.

The RTC, Branch 33 further ruled that petitioner was not precluded from recovering the loan from
Edna as he could file a personal action against her. However, the RTC, Branch 33 ruled that it
had no jurisdiction over the personal action which should be filed in the place where the plaintiff
or the defendant resides in accordance with Section 2, Rule 4 of the Revised Rules on Civil
Procedure.

Petitioner filed a motion for reconsideration. In its Order7 dated 8 January 2004, the RTC, Branch
33 denied the motion for lack of merit.

On 8 September 2004, petitioner filed a Complaint for Sum of Money with Damages against
respondents. It was raffled to Branch 42 (RTC, Branch 42) of the Regional Trial Court of Manila,
and docketed as Civil Case No. 04-110858.

Respondents filed their Answer with Affirmative Defenses and Counterclaims where they admitted
the loan but stated that it only amounted to P340,000. Respondents further alleged that Enrico
was not a party to the loan because it was contracted by Edna without Enrico’s signature.
Respondents prayed for the dismissal of the case on the grounds of improper venue, res judicata
and forum-shopping, invoking the Decision of the RTC, Branch 33. On 7 March 2005, respondents
also filed a Motion to Dismiss on the grounds of res judicata and lack of cause of action.

The Decision of the Trial Court

On 22 July 2005, the RTC, Branch 42 issued an Order8 denying the motion to dismiss. The RTC,
Branch 42 ruled that res judicata will not apply to rights, claims or demands which, although
growing out of the same subject matter, constitute separate or distinct causes of action and were
not put in issue in the former action. Respondents filed a motion for reconsideration. In its Order9
dated 8 February 2006, the RTC, Branch 42 denied respondents’ motion. The RTC, Branch 42
ruled that the RTC, Branch 33 expressly stated that its decision did not mean that petitioner could
no longer recover the loan petitioner extended to Edna.

Respondents filed a Petition for Certiorari and Mandamus with Prayer for a Writ of Preliminary
Injunction and/or Temporary Restraining Order before the Court of Appeals.

The Decision of the Court of Appeals

In its 30 May 2008 Decision, the Court of Appeals set aside the 22 July 2005 and 8 February
2006 Orders of the RTC, Branch 42 for having been issued with grave abuse of discretion.

The Court of Appeals ruled that while the general rule is that a motion to dismiss is interlocutory
and not appealable, the rule admits of exceptions. The Court of Appeals ruled that the RTC,
Branch 42 acted with grave abuse of discretion in denying respondents’ motion to dismiss.

The Court of Appeals ruled that under Section 3, Rule 2 of the 1997 Rules of Civil Procedure, a
party may not institute more than one suit for a single cause of action. If two or more suits are
108
instituted on the basis of the same cause of action, the filing of one on a judgment upon the merits
in any one is available ground for the dismissal of the others. The Court of Appeals ruled that on
a nonpayment of a note secured by a mortgage, the creditor has a single cause of action against
the debtor, that is recovery of the credit with execution of the suit. Thus, the creditor may institute
two alternative remedies: either a personal action for the collection of debt or a real action to
foreclose the mortgage, but not both. The Court of Appeals ruled that petitioner had only one
cause of action against Edna for her failure to pay her obligation and he could not split the single
cause of action by filing separately a foreclosure proceeding and a collection case. By filing a
petition for foreclosure of the real estate mortgage, the Court of Appeals held that petitioner had
already waived his personal action to recover the amount covered by the promissory note.

Petitioner filed a motion for reconsideration. In its 4 August 2008 Resolution, the Court of Appeals
denied the motion.

Hence, the petition before this Court.

The Issue

The sole issue in this case is whether the Court of Appeals committed a reversible error in
dismissing the complaint for collection of sum of money on the ground of multiplicity of suits.

The Ruling of this Court

The petition has merit.

The rule is that a mortgage-creditor has a single cause of action against a mortgagor-debtor, that
is, to recover the debt.10 The mortgage-creditor has the option of either filing a personal action for
collection of sum of money or instituting a real action to foreclose on the mortgage security. 11 An
election of the first bars recourse to the second, otherwise there would be multiplicity of suits in
which the debtor would be tossed from one venue to another depending on the location of the
mortgaged properties and the residence of the parties.12

The two remedies are alternative and each remedy is complete by itself. 13 If the mortgagee opts
to foreclose the real estate mortgage, he waives the action for the collection of the debt, and vice
versa.14 The Court explained:

x x x in the absence of express statutory provisions, a mortgage creditor may institute against the
mortgage debtor either a personal action for debt or a real action to foreclose the mortgage. In
other words, he may pursue either of the two remedies, but not both. By such election, his cause
of action can by no means be impaired, for each of the two remedies is complete in itself. Thus,
an election to bring a personal action will leave open to him all the properties of the debtor for
attachment and execution, even including the mortgaged property itself. And, if he waives such
personal action and pursues his remedy against the mortgaged property, an unsatisfied judgment
thereon would still give him the right to sue for deficiency judgment, in which case, all the
properties of the defendant, other than the mortgaged property, are again open to him for the
satisfaction of the deficiency. In either case, his remedy is complete, his cause of action
undiminished, and any advantages attendant to the pursuit of one or the other remedy are purely
accidental and are all under his right of election. On the other hand, a rule that would authorize
the plaintiff to bring a personal action against the debtor and simultaneously or successively
another action against the mortgaged property, would result not only in multiplicity of suits so
offensive to justice (Soriano v. Enriques, 24 Phil. 584) and obnoxious to law and equity (Osorio v.
San Agustin, 25 Phil. 404), but also in subjecting the defendant to the vexation of being sued in

109
the place of his residence or of the residence of the plaintiff, and then again in the place where
the property lies.15

The Court has ruled that if a creditor is allowed to file his separate complaints simultaneously or
successively, one to recover his credit and another to foreclose his mortgage, he will, in effect, be
authorized plural redress for a single breach of contract at so much costs to the court and with so
much vexation and oppressiveness to the debtor.16

In this case, however, there are circumstances that the Court takes into consideration.

Petitioner filed an action for foreclosure of mortgage. The RTC, Branch 33 ruled that petitioner
was not entitled to judicial foreclosure because the Deed of Real Estate Mortgage was executed
without Enrico’s consent. The RTC, Branch 33 stated:

All these circumstances certainly conspired against the plaintiff who has the burden of proving his
cause of action. On the other hand, said circumstances tend to support the claim of defendant
Edna Lindo that her husband did not consent to the mortgage of their conjugal property and that
the loan application was her personal decision.

Accordingly, since the Deed of Real Estate Mortgage was executed by defendant Edna Lindo
lacks the consent or authority of her husband Enrico Lindo, the Deed of Real Estate Mortgage is
void pursuant to Article 96 of the Family Code.

This does not mean, however, that the plaintiff cannot recover the P400,000 loan plus interest
which he extended to defendant Edna Lindo. He can institute a personal action against the
defendant for the amount due which should be filed in the place where the plaintiff resides, or
where the defendant or any of the principal defendants resides at the election of the plaintiff in
accordance with Section 2, Rule 4 of the Revised Rules on Civil Procedure. This Court has no
jurisdiction to try such personal action.17

Edna did not deny before the RTC, Branch 33 that she obtained the loan. She claimed, however,
that her husband did not give his consent and that he was not aware of the transaction.18 Hence,
the RTC, Branch 33 held that petitioner could still recover the amount due from Edna through a
personal action over which it had no jurisdiction.

Edna also filed an action for declaratory relief before the RTC, Branch 93 of San Pedro Laguna
(RTC, Branch 93), which ruled:

At issue in this case is the validity of the promissory note and the Real Estate Mortgage executed
by Edna Lindo without the consent of her husband.

The real estate mortgage executed by petition Edna Lindo over their conjugal property is
undoubtedly an act of strict dominion and must be consented to by her husband to be effective.
In the instant case, the real estate mortgage, absent the authority or consent of the husband, is
necessarily void. Indeed, the real estate mortgage is this case was executed on October 31, 1995
and the subsequent special power of attorney dated November 4, 1995 cannot be made to
retroact to October 31, 1995 to validate the mortgage previously made by petitioner.

The liability of Edna Lindo on the principal contract of the loan however subsists notwithstanding
the illegality of the mortgage. Indeed, where a mortgage is not valid, the principal obligation which
it guarantees is not thereby rendered null and void. That obligation matures and becomes
demandable in accordance with the stipulation pertaining to it. Under the foregoing
circumstances, what is lost is merely the right to foreclose the mortgage as a special remedy for
110
satisfying or settling the indebtedness which is the principal obligation. In case of nullity, the
mortgage deed remains as evidence or proof of a personal obligation of the debtor and the amount
due to the creditor may be enforced in an ordinary action.

In view of the foregoing, judgment is hereby rendered declaring the deed of real estate mortgage
as void in the absence of the authority or consent of petitioner’s spouse therein. The liability of
petitioner on the principal contract of loan however subsists notwithstanding the illegality of the
real estate mortgage.19

The RTC, Branch 93 also ruled that Edna’s liability is not affected by the illegality of the real estate
mortgage.

Both the RTC, Branch 33 and the RTC, Branch 93 misapplied the rules.

Article 124 of the Family Code provides:

Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to
both spouses jointly. In case of disagreement, the husband’s decision shall prevail, subject to
recourse to the court by the wife for proper remedy, which must be availed of within five years
from the date of contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include disposition or encumbrance without authority of the
court or the written consent of the other spouse. In the absence of such authority or consent the
disposition or encumbrance shall be void. However, the transaction shall be construed as a
continuing offer on the part of the consenting spouse and the third person, and may be
perfected as a binding contract upon the acceptance by the other spouse or authorization
by the court before the offer is withdrawn by either or both offerors. (Emphasis supplied)

Article 124 of the Family Code of which applies to conjugal partnership property, is a reproduction
of Article 96 of the Family Code which applies to community property.

Both Article 96 and Article 127 of the Family Code provide that the powers do not include
disposition or encumbrance without the written consent of the other spouse. Any disposition or
encumbrance without the written consent shall be void. However, both provisions also state that
"the transaction shall be construed as a continuing offer on the part of the consenting spouse and
the third person, and may be perfected as a binding contract upon the acceptance by the
other spouse x x x before the offer is withdrawn by either or both offerors."

In this case, the Promissory Note and the Deed of Real Estate Mortgage were executed on 31
October 1995. The Special Power of Attorney was executed on 4 November 1995. The execution
of the SPA is the acceptance by the other spouse that perfected the continuing offer as a
binding contract between the parties, making the Deed of Real Estate Mortgage a valid
contract.

However, as the Court of Appeals noted, petitioner allowed the decisions of the RTC, Branch 33
and the RTC, Branch 93 to become final and executory without asking the courts for an alternative
relief. The Court of Appeals stated that petitioner merely relied on the declarations of these courts
that he could file a separate personal action and thus failed to observe the rules and settled
jurisprudence on multiplicity of suits, closing petitioner’s avenue for recovery of the loan.

Nevertheless, petitioner still has a remedy under the law.


111
In Chieng v. Santos,20 this Court ruled that a mortgage-creditor may institute against the
mortgage-debtor either a personal action for debt or a real action to foreclose the mortgage. The
Court ruled that the remedies are alternative and not cumulative and held that the filing of a
criminal action for violation of Batas Pambansa Blg. 22 was in effect a collection suit or a suit for
the recovery of the mortgage-debt.21 In that case, however, this Court pro hac vice, ruled that
respondents could still be held liable for the balance of the loan, applying the principle that no
person may unjustly enrich himself at the expense of another.22

The principle of unjust enrichment is provided under Article 22 of the Civil Code which provides:

Art. 22. Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just or legal
ground, shall return the same to him.

There is unjust enrichment "when a person unjustly retains a benefit to the loss of another, or
when a person retains money or property of another against the fundamental principles of justice,
equity and good conscience."23 The principle of unjust enrichment requires two conditions: (1)
that a person is benefited without a valid basis or justification, and (2) that such benefit is derived
at the expense of another.241avvphi1

The main objective of the principle against unjust enrichment is to prevent one from enriching
himself at the expense of another without just cause or consideration.25 The principle is applicable
in this case considering that Edna admitted obtaining a loan from petitioners, and the same has
not been fully paid without just cause. The Deed was declared void erroneously at the instance
of Edna, first when she raised it as a defense before the RTC, Branch 33 and second, when she
filed an action for declaratory relief before the RTC, Branch 93. Petitioner could not be expected
to ask the RTC, Branch 33 for an alternative remedy, as what the Court of Appeals ruled that he
should have done, because the RTC, Branch 33 already stated that it had no jurisdiction over any
personal action that petitioner might have against Edna.

Considering the circumstances of this case, the principle against unjust enrichment, being a
substantive law, should prevail over the procedural rule on multiplicity of suits. The Court of
Appeals, in the assailed decision, found that Edna admitted the loan, except that she claimed it
only amounted to P340,000. Edna should not be allowed to unjustly enrich herself because of the
erroneous decisions of the two trial courts when she questioned the validity of the Deed.
Moreover, Edna still has an opportunity to submit her defenses before the RTC, Branch 42 on her
claim as to the amount of her indebtedness.

WHEREFORE, the 30 May 2008 Decision and the 4 August 2008 Resolution of the Court of
Appeals in CA-G.R. SP No. 94003 are SET ASIDE. The Regional Trial Court of Manila, Branch
42 is directed to proceed with the trial of Civil Case No. 04-110858.

SO ORDERED.

112
G.R. No. 147593 July 31, 2006

GERONIMO Q. QUADRA, petitioner,


vs.
THE COURT OF APPEALS and the PHILIPPINE CHARITY SWEEPSTAKES OFFICE,
respondents.

DECISION

PUNO, J.:

This is a petition for review of the decision of the Court of Appeals in CA-G.R. SP No. 55634 dated
December 29, 2000 and its resolution dated March 26, 2001. The Court of Appeals reversed and
set aside the decision of the National Labor Relations Commission (NLRC) in NLRC NCR Case
No. 4312-ULP which affirmed the decision of the Labor Arbiter granting moral and exemplary
damages to petitioner Geronimo Q. Quadra in connection with his dismissal from the service.

Petitioner Geronimo Q. Quadra was the Chief Legal Officer of respondent Philippine Charity
Sweepstakes Office (PCSO) when he organized and actively participated in the activities of
Philippine Charity Sweepstakes Employees Association (CUGCO), an organization composed of
the rank and file employees of PCSO, and then later, the Association of Sweepstakes Staff
Personnel and Supervisors (CUGCO) (ASSPS [CUGCO]). In April 1964, he was administratively
charged before the Civil Service Commission with violation of Civil Service Law and Rules for
neglect of duty and misconduct and/or conduct prejudicial to the interest of the service. On July
14, 1965, the Civil Service Commission rendered a decision finding petitioner guilty of the charges
and recommending the penalty of dismissal. The following day, on July 15, 1965, the General
Manager of PCSO, Ignacio Santos Diaz, sent petitioner a letter of dismissal, in accordance with
the decision of the Civil Service Commission. Petitioner filed a motion for reconsideration of the

113
decision of the Civil Service Commission on August 10, 1965. At the same time, petitioner,
together with ASSPS (CUGCO), filed with the Court of Industrial Relations (CIR) a complaint for
unfair labor practice against respondent PCSO and its officers. The case was docketed as Case
No. 4312-ULP.

On November 19, 1966, the CIR issued its decision finding respondent PCSO guilty of unfair labor
practice for having committed discrimination against the union and for having dismissed petitioner
due to his union activities. It ordered the reinstatement of petitioner to his former position with full
backwages and with all the rights and privileges pertaining to said position.1

Respondent PCSO complied with the decision of the CIR. But while it reinstated petitioner to his
former position and paid his backwages, it also filed with the Supreme Court a petition for review
on certiorari entitled "Philippine Charity Sweepstakes Office, et al. v. The Association of
Sweepstakes Staff Personnel, et al." assailing the decision of the CIR in Case No. 4312-ULP.
The petition was docketed as G.R. No. L-27546.2

On March 16, 1967, during the pendency of the case in the Supreme Court, petitioner filed with
the CIR a "Petition for Damages." He prayed for moral and exemplary damages in connection
with Case No. 4312-ULP. He cited the decision of the Supreme Court in Rheem of the
Philippines, Inc., et al. v. Ferrer, et al.3 where it upheld the jurisdiction of the CIR over claims
for damages incidental to an employee's dismissal.

Respondent PCSO moved to dismiss the petition for damages on the following grounds: (1) the
CIR has no jurisdiction to award moral and exemplary damages; (2) the cause of action is barred
by prior judgment, it appearing that two complaints are brought for different parts of a single cause
of action; and (3) the petition states no valid cause of action.

Petitioner resigned from PCSO on August 18, 1967.

The petition for damages and the motion to dismiss, however, remained pending with the CIR
until it was abolished and the NLRC was created. On April 25, 1980, the Labor Arbiter rendered
a decision awarding moral and exemplary damages to petitioner in the amount of P1.6 million.
The dispositive portion of the decision stated:

WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered


awarding to complainant Geronimo Q. Quadra moral damages consisting of the following
sum: Three Hundred Fifty Thousand Pesos (P350,000.00) for besmirched reputation;
Three Hundred Fifty Thousand Pesos (P350,000.00) for social humiliation; One Hundred
Thousand Pesos (P100,000.00) for mental anguish; One Hundred Thousand Pesos
(P100,000.00) for serious anxiety; One Hundred Thousand Pesos (P100,000.00) for
wounded feelings; One Hundred Thousand Pesos (P100,000.00) for moral shock; and the
further sum of P500,000.00 as exemplary damages, on account of the arbitrary and
unlawful dismissal effected by respondents. Consequently, respondents are therefore
ordered to pay complainant Quadra the total sum of One Million Six Hundred Thousand
Pesos (P1,600,000.00) within ten (10) days after this Decision becomes final.

SO ORDERED.4

The NLRC affirmed the decision of the Labor Arbiter,5 prompting respondent PCSO to file a
petition for certiorari with the Court of Appeals.

The Court of Appeals reversed the decision of the NLRC. It held that there was no basis for the
grant of moral and exemplary damages to petitioner as his dismissal was not tainted with bad
114
faith. It was the Civil Service Commission that recommended petitioner's dismissal after
conducting an investigation. It also held that the petition claiming moral and exemplary damages
filed by petitioner after respondent PCSO had complied with the CIR decision of reinstatement
and backwages amounted to splitting of cause of action.6

Petitioner filed a motion for reconsideration of the decision of the Court of Appeals, but the same
was denied for lack for merit.7

Petitioner now seeks the Court to review the ruling of the Court of Appeals. He basically argues:

First: The ruling of the Court of Appeals that the PCSO did not act in bad faith when it
dismissed the petitioner is contrary to the already final and executory decision of the CIR
dated November 1[9], 1966 finding the PCSO guilty of bad faith and unfair labor practice
in dismissing the petitioner. The decision of the CIR was affirmed by the High Court in the
case of PCSO, et al. v. Geronimo Q. Quadra, et al., 115 SCRA 34. The Court of Appeals
has no jurisdiction to amend the final and executory decision of November 1[9], 1966 of
the CIR which was affirmed by the High Court. Once a decision has become final [and]
executory, it could no longer be amended or altered.

Second: The ruling of the Court of Appeals that the claims for moral and exemplary
damages of the petitioner is allegedly "tantamount to splitting of cause of action under
Sec. 4, Rule 2 of the 1997 Rules of Civil Procedure" is contrary to law. When petitioner
filed with the CIR his complaint for illegal dismissal and unfair labor practice, the prevailing
law and jurisprudence was that the CIR did not have jurisdiction to grant moral and
exemplary damages. Petitioner's claim for moral damages was filed with the CIR in the
same case by virtue of the ruling of the High Court in Rheem v. Ferrer, 19 SCRA 130
holding that the CIR has jurisdiction to award moral and exemplary damages arising out
of illegal dismissal and unfair labor practice.8

The petition is impressed with merit.

A dismissed employee is entitled to moral damages when the dismissal is attended by bad faith
or fraud or constitutes an act oppressive to labor, or is done in a manner contrary to good morals,
good customs or public policy. Exemplary damages may be awarded if the dismissal is effected
in a wanton, oppressive or malevolent manner.9 It appears from the facts that petitioner was
deliberately dismissed from the service by reason of his active involvement in the activities of the
union groups of both the rank and file and the supervisory employees of PCSO, which unions he
himself organized and headed. Respondent PCSO first charged petitioner before the Civil Service
Commission for alleged neglect of duty and conduct prejudicial to the service because of his union
activities. The Civil Service Commission recommended the dismissal of petitioner. Respondent
PCSO immediately served on petitioner a letter of dismissal even before the latter could move for
a reconsideration of the decision of the Civil Service Commission. Respondent PCSO may not
impute to the Civil Service Commission the responsibility for petitioner's illegal dismissal as it was
respondent PCSO that first filed the administrative charge against him. As found by the CIR,
petitioner's dismissal constituted unfair labor practice. It was done to interfere with, restrain or
coerce employees in the exercise of their right to self-organization. It stated:

Upon the entire evidence as a whole (sic), the [c]ourt feels and believes that complainant
Quadra was discriminatorily dismissed by reason of his militant union activities, not only
as President of PCSEA, but also as President of the ASSPS.10

115
In Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees Association, et al. v. NLRC,
et al.,11 we found it proper to award moral and exemplary damages to illegally dismissed
employees as their dismissal was tainted with unfair labor practice. The Court said:

Unfair labor practices violate the constitutional rights of workers and employees to self-
organization, are inimical to the legitimate interests of both labor and management,
including their right to bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect; and disrupt industrial peace and hinder the
promotion of healthy and stable labor-management relations. As the conscience of the
government, it is the Court's sworn duty to ensure that none trifles with labor rights.

For this reason, we find it proper in this case to impose moral and exemplary damages on
private respondent. x x x

On the second issue, we agree with petitioner that the filing of a petition for damages before the
CIR did not constitute splitting of cause of action under the Revised Rules of Court. The Revised
Rules of Court prohibits parties from instituting more than one suit for a single cause of action.
Splitting a cause of action is the act of dividing a single cause of action, claim or demand into two
or more parts, and bringing suit for one of such parts only, intending to reserve the rest for another
separate action. The purpose of the rule is to avoid harassment and vexation to the defendant
and avoid multiplicity of suits.12

The prevailing rule at the time that the action for unfair labor practice and illegal dismissal was
filed and tried before the CIR was that said court had no jurisdiction over claims for damages.
Hence, petitioner, at that time, could not raise the issue of damages in the proceedings. However,
on January 27, 1967, the Supreme Court rendered its ruling in Rheem of the Philippines, Inc.,
et al. v. Ferrer, et al.13 upholding the jurisdiction of the CIR over claims for damages incidental
to an employee's illegal dismissal. Petitioner properly filed his claim for damages after the
declaration by the Court and before the ruling on their case became final. Such filing could not be
considered as splitting of cause of action.

IN VIEW WHEREOF, the assailed decision and resolution of the Court of Appeals are
REVERSED and SET ASIDE. The decision of the NLRC in NLRC NCR Case No. 4312-ULP is
REINSTATED. SO ORDERED.

116
G.R. No. L-25134 October 30, 1969

THE CITY OF BACOLOD, plaintiff-appellee,


vs.
SAN MIGUEL BREWERY, INC., defendant-appellant.

BARREDO, J.:

An appeal from the decision of the Court of First Instance of Negros Occidental in its Civil Case
No. 7355, ordering the San Miguel Brewery, Inc. to pay to the City of Bacolod the sum of
P36,519.10, representing surcharges on certain fees which, under existing ordinances of the City
of Bacolod, the San Miguel Brewery should have paid quarterly to the treasurer of the said city
for and/or during the period from July, 1959 to December, 1962, but which were paid only on April
23, 1963.

On February 17, 1949, the City Council of Bacolod passed Ordinance No. 66, series of 1949
imposing upon "any person, firm or corporation engaged in the manufacturer bottling of coca-
cola, pepsi cola, tru orange, lemonade, and other soft drinks within the jurisdiction of the City of
Bacolod, ... a fee of ONE TWENTY-FOURTH (1/24) of a centavo for every bottle thereof," plus "a
surcharge of 2% every month, but in no case to exceed 24% for one whole year," upon "such
local manufacturers or bottler above-mentioned who will be delinquent on any amount of fees
due" under the ordinance.

In 1959, this ordinance was amended by Ordinance No. 150, series of 1959, by increasing the
fee to "one-eighth (1/8) of a centavo for every bottle thereof." In other words, the fee was

117
increased from P0.01 to P0.03 per case of soft drinks. Appellant refused to pay the additional fee
and challenged the validity of the whole ordinance.

Under date of March 23, 1960, appellee sued appellant in Civil Case No. 5693 of the Court of
First Instance of Negros Occidental, with the corresponding Complaint alleging, inter alia:

3. — That the defendant, Manager of the San Miguel Brewery, Bacolod Coca Cola
Plant, Bacolod Branch since the approval of Ordinance No. 66, Series of 1949 as
amended by Ordinance No. 150, Series of 1959, which took effect on July 1, 1959,
only paid to the plaintiff herein the P0.01 bottling tax per case of soft drinks thereby
refusing to pay the P0.03 bottling tax per case of soft drinks which amounted to
P26,306.54 at P0.02 per case of soft drinks such as coca cola and tru orange
manufactured or bottled by said company as per statement submitted by the
Assistant City Treasurer of Bacolod City herewith attached as Annex "C" of this
complaint;

and praying

... that judgment be rendered for the plaintiff:

"(a) Ordering the defendant to pay the plaintiff the bottling taxes of P0.03
per case of soft drinks as provided for in Section 1, Ordinance No. 66,
Series of 1949, as amended by Ordinance No. 150, Series of 1959, as well
as the sum of P26,306.54 representing unpaid bottling taxes due with legal
rate of interest thereon from the date of the filing of this complaint until
complete payment thereof; ... costs, etc."'

In due time, appellant filed its answer. This was followed by a stipulation of facts between the
parties, whereupon, the court rendered judgment on November 12, 1960; with the following
dispositive portion:

WHEREFORE, San Miguel Brewery Inc. is ordered to pay to the plaintiff the sum
of P26,306.54 and the tax at the rate of three centavos per case levied in
Ordinance No. 66 and 150 from March, 1960, and thereafter. Costs against the
defendant.

Appellant appealed from the said decision to this Court where it pressed the question of the
invalidity of the abovementioned taxing ordinances. In that appeal (G.R. No. L-18290), however,
this Court affirmed the decision appealed from and upheld the constitutionality of the questioned
ordinances and the authority of the appellee to enact the same. For reasons not extant in the
record, it was already after this decision had become final when appellee moved for the
reconsideration thereof, praying that the same be amended so as to include the penalties and
surcharges provided for in the ordinances. Naturally, the said motion was denied, for the reason
that "the decision is already final and may not be amended." When execution was had before the
lower court, the appellee again sought the inclusion of the surcharges referred to; and once again
the move was frustrated by the Court of First Instance of Negros Occidental which denied the
motion, as follows:

Acting upon the motion dated October 24, 1963, filed by the Assistant City Fiscal,
Raymundo Rallos, counsel for the plaintiff, and the opposition thereto filed by
attorneys for the defendants dated November 9, 1963, as well as the reply to the
opposition of counsel for the defendants dated December 5, 1963, taking into
consideration that the decision of this Court as affirmed by the Supreme Court

118
does not specifically mention the alleged surcharges claimed by the plaintiff-
appellee, the Court hereby resolves to deny, as it hereby denies, the aforesaid
motion, for not being meritorious.

Failing thus in its attempt to collect the surcharge provided for in the ordinances in question,
appellee filed a second action (Civil Case No. 7355) to collect the said surcharges. Under date of
July 10, 1964, it filed the corresponding complaint before the same Court of First Instance of
Negros Occidental alleging, inter alia, that:

6. That soon after the decision of the Honorable Supreme Court affirming the
decision of the Hon. Court, the defendant herein on April 23, 1963 paid to the City
of Bacolod, the amount of ONE HUNDRED FIFTY SIX THOUSAND NINE
HUNDRED TWENTY FOUR PESOS and TWENTY CENTAVOS (P156,924.20)
as taxes from July, 1959 to December, 1962 in compliance with the provision of
Section 1, Ordinance No. 66, Series of 1949, as amended by Ordinance No. 150,
Series of 1959, which corresponds to the taxes due under said section in the
amount of P0.03 per case of soft soft drinks manufactured by the defendant, but
refused and still continued refusing to pay the surcharge as provided for under
Section 4 of Ordinance No. 66, Series of 1949, as amended by Ordinance No. 150,
Series of 1959, which reads as follows:

"SEC. 4 — A surcharge of 2% every month, but in no case to exceed 24%


for one whole year, shall be imposed on such local manufacturer or bottlers
above mentioned who will be delinquent on any amount of fees under the
ordinance."

which up to now amounted to THIRTY SIX THOUSAND FIVE HUNDRED


NINETEEN PESOS AND TEN CENTAVOS (P36,519.10), as shown by the
certified statement of the office of the City Treasurer of Bacolod City herewith
attached as Annex "E" and made an integral part of this complaint;

7. That the said interest and/or penalties to the said bottling taxes which defendant
refused to pay have long been overdue;

and again praying

... that judgment be rendered for the plaintiff:

(a) Ordering the defendant to pay the penalty and/or interest therein
Section 4 of Ordinance No. 66, Series of 1949, as amended by Ordinance
No. 150, Series of 1959 the total amount of THIRTY SIX THOUSAND FIVE
HUNDRED NINETEEN PESOS and TEN CENTAVOS (P36,519.10),
representing the surcharges from August, 1959 to December, 1962,
inclusive, and the 24% penalty computed as of June 30, 1964, from the
amount of P152,162.90, with legal rate of interest thereon from the date of
the filing of this complaint until complete payment thereof;" plus costs, etc.

On July 24, 1964, appellant filed a motion to dismiss the case on the grounds that: (1) the cause
of action is barred by a prior judgment, and (2) a party may not institute more than one suit for a
single cause of action. This motion was denied by the court a quo in its order dated August 22,
1964; so appellant filed its answer wherein it substantially reiterated, as affirmative defenses, the
above-mentioned grounds of its motion to dismiss. Thereafter, the parties submitted the case for

119
judgment on the pleadings, whereupon, the court rendered judgment on March 11, 1965 with the
following dispositive portion: .

IN VIEW THEREOF, judgment is hereby rendered ordering the defendant San


Miguel Brewery, Inc. to pay to the plaintiff the sum of P36,519.10 representing the
surcharges as provided in section 4 of Ordinance 66, series of 1949 of the City of
Bacolod. No costs.

Appellants moved for reconsideration but its motion was denied, hence, the instant appeal.

Appellant has only one assignment of error, to wit:

THE LOWER COURT ERRED IN FINDING THE APPELLANT LIABLE TO THE


APPELLEE FOR THE SUM OF P36,519.10 REPRESENTING SURCHARGES AS
PROVIDED IN TAX ORDINANCE NO. 66, SERIES OF 1949, AS AMENDED, OF
THE CITY OF BACOLOD.

Under this, it argues that the action of appellee cannot be maintained because (1) a party may
not institute more than one suit for a single cause of action; and (2) appellee's action for recovery
of the surcharges in question is barred by prior judgment.

We find appellant's position essentially correct. There is no question that appellee split up its
cause of action when it filed the first complaint on March 23, 1960, seeking the recovery of only
the bottling taxes or charges plus legal interest, without mentioning in any manner the surcharges.

The rule on the matter is clear. Sections 3 and 4 of Rule 2 of the Rules of Court of 1940 which
were still in force then provided:

SEC. 3. Splitting a cause of action, forbidden. — A single cause of action cannot


be split up into two or more parts so as to be made the subject of different
complaints. .

SEC. 4. Effect of splitting. — If separate complaints were brought for different parts
of a single cause of action, the filing of the first may be pleaded in abatement of
the others, and a judgment upon the merits in either is available as a bar in the
others.

Indeed, this rule against the splitting up of a cause of action is an old one. In fact, it preceded the
Rules of Court or any statutory provision. In Bachrach Motor Co., Inc. vs. Icarangal et al.,1 this
Court already explained its meaning, origin and purpose, thus:

But, even if we have no such section 708 of our Code of Civil Procedure, or section
59 of the Insolvency Law, we have still the rule against splitting a single cause of
action. This rule, though not contained in any statutory provision, has been applied
by this court in all appropriate cases. Thus, in Santos vs. Moir (36 Phil. 350, 359),
we said: "It is well recognized that a party cannot split a single cause of action into
parts and sue on each part separately. A complaint for the recovery of personal
property with damages for detention states a single cause of action which cannot
be divided into an action for possession and one for damages; and if suit is brought
for possession only a subsequent action cannot be maintained to recover the
damages resulting from the unlawful detention." In Rubio de Larena vs. Villanueva
(53 Phil. 923, 927), we reiterated the rule by stating that "... a party will not be
permitted to split up a single cause of action and make it the basis for several suits"
120
and that when a lease provides for the payment of the rent in separate installments,
each installment constitutes an independent cause of action, but when, at the time
the complaint is filed, there are several installments due, all of them constitute a
single cause of action and should be included in a single complaint, and if some of
them are not so included, they are barred. The same doctrine is stated in Lavarro
vs. Labitoria (54 Phil. 788), wherein we said that "a party will not be permitted to
split up a single cause of action and make it a basis for several suits" and that a
claim for partition of real property as well as for improvements constitutes a single
cause of action, and a complaint for partition alone bars a subsequent complaint
for the improvements. And in Blossom & Co. vs. Manila Gas Corporation (55 Phil.
226-240), we held that "as a general rule a contract to do several things at several
times is divisible in its nature, so as to authorize successive actions; and a
judgment recovered for a single breach of a continuing contract or covenant is no
bar to suit for a subsequent breach thereof. But where the covenant or contract is
entire, and the breach total, there can be only one action, and plaintiff must therein
recover all his damages.

The rule against splitting a single cause of action is intended "to prevent repeated
litigation between the same parties in regard to the same subject of controversy;
to protect defendant from unnecessary vexation; and to avoid the costs and
expenses incident to numerous suits." (1 C.J. 1107) It comes from that old maxim
nemo debet bis vexare pro una et eadem causa (no man shall be twice vexed for
one and the same cause). (Ex parte Lange, 18 Wall 163, 168; 21 Law Ed. 872;
also U.S. vs. Throckmorton, 98 U.S. 61; 25 Law Ed. 93). And it developed, certainly
not as an original legal right of the defendant, but as an interposition of courts upon
principles of public policy to prevent inconvenience and hardship incident to
repeated and unnecessary litigations. (1 C. J. 1107).

In the light of these precedents, it cannot be denied that appellant's failure to pay the bottling
charges or taxes and the surcharges for delinquency in the payment thereof constitutes but one
single cause of action which under the above rule can be the subject of only one complaint, under
pain of either of them being barred if not included in the same complaint with the other. The error
of appellee springs from a misconception or a vague comprehension of the elements of a cause
of action. The classical definition of a cause of action is that it is "a delict or wrong by which the
rights of the plaintiff are violated by the defendant." Its elements may be generally stated to be (1)
a right existing in favor of the plaintiff; (2) a corresponding obligation on the part of the defendant
to respect such right; and (3) an act or omission of the plaintiff which constitutes a violation of the
plaintiff's right which defendant had the duty to respect. For purposes, however, of the rule against
splitting up of a cause of action, a clearer understanding can be achieved, if together with these
elements, the right to relief is considered.

In the last analysis, a cause of action is basically an act or an omission or several acts or
omissions. A single act or omission can be violative of various rights at the same time, as when
the act constitutes juridically a violation of several separate and distinct legal obligations. This
happens, for example, when a passenger of a common carrier, such as a taxi, is injured in a
collision thereof with another vehicle due to the negligence of the respective drivers of both
vehicles. In such a case, several rights of the passenger are violated, inter alia, (1) the right to be
safe from the negligent acts of either or both the drivers under the law on culpa-acquiliana or
quasi-delict; (2) the right to be safe from criminal negligence of the said drivers under the penal
laws; and (3) the right to be safely conducted to his destination under the contract of carriage and
the law covering the same, not counting anymore the provisions of Article 33 of the Civil Code.
The violation of each of these rights is a cause of action in itself. Hence, such a passenger has at
least three causes of action arising from the same act. On the other hand, it can happen also that
several acts or omissions may violate only one right, in which case, there would be only one cause
121
of action. Again the violation of a single right may give rise to more than one relief. In other words,
for a single cause of action or violation of a right, the plaintiff may be entitled to several reliefs. It
is the filing of separate complaints for these several reliefs that constitutes splitting up of the cause
of action. This is what is prohibited by the rule.

In the case at bar, when appellant failed and refused to pay the difference in bottling charges from
July 1, 1959, such act of appellant in violation of the right of appellee to be paid said charges in
full under the Ordinance, was one single cause of action, but under the Ordinance, appellee
became entitled, as a result of such non-payment, to two reliefs, namely: (1) the recovery of the
balance of the basic charges; and (2) the payment of the corresponding surcharges, the latter
being merely a consequence of the failure to pay the former. Stated differently, the obligation of
appellant to pay the surcharges arose from the violation by said appellant of the same right of
appellee from which the obligation to pay the basic charges also arose. Upon these facts, it is
obvious that appellee has filed separate complaints for each of two reliefs related to the same
single cause of action, thereby splitting up the said cause of action.

The trial court held that inasmuch as there was no demand in the complaint in the first case for
the payment of the surcharges, unlike in the case of Collector of Internal Revenue vs. Blas
Gutierrez, et al., G.R. No. L-13819. May 25, 1960, wherein there was such a demand, there is no
bar by prior judgment as to said surcharges, the same not having been "raised as an issue or
cause of action in Civil Case No. 5693." This holding is erroneous.

Section 4 of Rule 2, above-quoted, is unmistakably clear as to the effect of the splitting up of a


cause of action. It says, "if separate complaints are brought for different parts (reliefs) of a single
cause of action, the filing of the first (complaint) may be pleaded in abatement of the others, and
a judgment upon the merits in either is available as a bar in the others." In other words, whenever
a plaintiff has filed more than one complaint for the same violation of a right, the filing of the first
complaint on any of the reliefs born of the said violation constitutes a bar to any action on any of
the other possible reliefs arising from the same violation, whether the first action is still pending,
in which event, the defense to the subsequent complaint would be litis pendentia, or it has already
been finally terminated, in which case, the defense would be res adjudicata.2 Indeed, litis
pendentia and res adjudicata, on the one hand, and splitting up a cause of action on the other,
are not separate and distinct defenses, since either of the former is by law only the result or effect
of the latter, or, better said, the sanction for or behind it.

It thus results that the judgment of the lower court must be, as it is hereby, reversed and the
complaint of appellee is dismissed. No costs.

122
G.R. No. L-22979 June 26, 1967

RHEEM OF THE PHILIPPINES, INC., ET AL., petitioners,


vs.
ZOILO R. FERRER, ET AL., respondents.

IN RE PROCEEDINGS AGAINST ALFONSO PONCE ENRILE, LEONARDO SIGUION REYNA,


MANUEL G. MONTECILLO, ENRIQUE M. BELO, OSCAR R. ONGSIAKO, and JOSE S.
ARMONIO, members of the Philippine Bar.

Ponce Enrile, Siguion Reyna, Montecillo and Belo for petitioners.


Jose T. Valmonte for respondents.

RESOLUTION

SANCHEZ, J.:

Contempt proceedings. The following from the motion to reconsider the decision herein, filed by
counsel for petitioners —

One pitfall into which this Honorable Court has repeatedly fallen whenever the
question as to whether or not a particular subject matter is within the jurisdiction of
the Court of Industrial Relations is the tendency of this Honorable Court to rely
upon its own pronouncement without due regard to the statutes which delineate
the jurisdiction of the industrial court. Quite often, it is overlooked that no court, not
even this Honorable Court, is empowered to expand or contract through its
123
decision the scope of its jurisdictional authority as conferred by law. This error is
manifested by the decisions of this Honorable Court citing earlier rulings but
without making any reference to and analysis of the pertinent statute governing the
jurisdiction of the Court of Industrial Relations. This manifestation appears in this
Honorable Court's decision in the instant case. As a result, the errors committed
in earlier cases dealing with the jurisdiction of the industrial court are perpetuated
in subsequent cases involving the same issue . . . .

It may also be mentioned in passing that this Honorable Court contravened Rule
2, Section 5 of the Rules of Court when it applied the so-called "rule against
splitting of jurisdiction" in its Decision in the present case. As applied by this
Honorable Court, the rule means that when an employee files with the Court of
Industrial Relations numerous claims relative to his employment but only one [of]
which is cognizable by said court under the law, while the others pertain to other
tribunals, that court has authority to entertain all the claims to avoid multiplicity, of
suits. . . . .

drew from the Court an order directing counsel to show cause why they should not be dealt with
for contempt of court.

In respondent attorneys' verified return, they offered "their most sincere apologies for the
language used" and stated that "[i]t was not and it has never been their intention to be
disrespectful." They manifested that the language "was the result of overenthusiasm on the part
of Atty. [Jose S.] Armonio, who thought best to focus the attention of this Honorable Court to the
issue in the case, as not in any way meant to slight or offend this Honorable Court. They also said
that the unfortunate Motion for Reconsideration was prepared and filed by Atty. Armonio who had
been personally handling the case since its inception at the Court of Industrial Relations, and who
had, perhaps, become too emotionally involved in the case."

Respondent members of the law firm, namely, Attys. Alfonso Ponce Enrile, Leonardo Siguion
Reyna, Manuel G. Montecillo, Enrique M. Belo and Oscar R. Ongsiako assumed "full
responsibility" for what appears in the motion for reconsideration. They submitted, not as an
excuse, but as fact, that not one of the partners was able to pass upon the draft or final form of
the said motion, and that Atty. Armonio, an associate, prepared, signed and filed the motion
"without clearing it with any of the partners of the firm." The return winds up with an expression of
deep regret about the incident, coupled with an earnest pledge that it "shall never happen again."

Subsequent to the return, respondent attorneys appeared in court. Attys. Ponce Enrile and
Armonio were orally heard.1äwphï1.ñët

1. As we look back at the language (heretofore quoted) employed in the motion for
reconsideration, implications there are which inescapably arrest attention. It speaks of one pitfall
into which this Court has repeatedly fallen whenever the jurisdiction of the Court of Industrial
Relations comes into question. That pitfall is the tendency of this Court to rely on its own
pronouncements in disregard of the law on jurisdiction. It makes a sweeping charge that the
decisions of this Court blindly adhere to earlier rulings without as much as making "any reference
to and analysis of" the pertinent statute governing the jurisdiction of the industrial court. The plain
import of all these is that this Court is so patently inept that in determining the jurisdiction of the
industrial court, it has committed error and continuously repeated that error to the point of
perpetuation. It pictures this Court as one which refuses to hew to the line drawn by the law on
jurisdictional boundaries. Implicit in the quoted statements is that the pronouncements of this
Court on the jurisdiction of the industrial court are not entitled to respect. Those statements detract
much from the dignity of and respect due this Court. They bring into question the capability of the
members and — some former members — of this Court to render justice. The second paragraph
124
quoted yields a tone of sarcasm when counsel labelled as "so-called" the "rule against splitting of
jurisdiction."1

By now, a lawyer's duties to the Court have become common place. Really, there could hardly be
any valid excuse for lapses in the observance thereof. Section 20 (b), Rule 138 of the Rules of
Court, in categorical terms, spells out one such duty: "To observe and maintain the respect due
to the courts of justice and judicial officers." As explicit is the first canon of legal ethics which
pronounces that "[i]t is the duty of the lawyer to maintain towards the Courts a respectful attitude,
not for the sake of the temporary incumbent of the judicial office, but for the maintenance of its
supreme importance." That same canon, as a corollary, makes it peculiarly incumbent upon
lawyers to support the courts against "unjust criticism and clamor." And more. The attorney's oath
solemnly binds him to a conduct that should be "with all good fidelity . . . to the courts." Worth
remembering is that the duty of an attorney to the courts "can only be maintained by rendering no
service involving any disrespect to the judicial office which he is bound to uphold." 2

We concede that a lawyer may think highly of his intellectual endowment. That is his privilege.
And, he may suffer frustration at what he feels is others' lack of it. That is his misfortune. Some
such frame of mind, however, should not be allowed to harden into a belief that he may attack a
court's decision in words calculated to jettison the time-honored aphorism that courts are the
temples of right. He should give due allowance to the fact that judges are but men; and men are
encompassed by error, fettered by fallibility.

2. What we have before us is not without precedent. Time and again, this Court has admonished
and punished, in varying degrees, members of the Bar for statements, disrespectful or irreverent,
acrimonious or defamatory, of this Court or the lower courts. 3 Resort by an attorney — in a motion
for reconsideration — to words which may drag this Court down into disrepute, is frowned upon
as "neither justified nor in the least necessary, because in order to call the attention of the court
in a special way to the essential points relied upon in his argument and to emphasize the force
thereof, the many reasons stated in the motion" are "sufficient," and such words "superfluous." 4
It is in this context that we must say that just because Atty. Armonio "thought best to focus the
attention" of this Court "to the issue in the case" does not give him in bridled license in language.
To be sure, lawyers may come up with various methods, perhaps much more effective, in calling
the Court's attention to the issues involved. The language vehicle does not run short of
expressions, emphatic but respectful, convincing but not derogatory, illuminating but not
offensive.

To be proscribed then is the use of unnecessary language which jeopardizes high esteem in
courts, creates or promotes distrust in judicial administration, or which could have the effect of
"harboring and encouraging discontent which, in many cases, is the source of disorder, thus
undermining the foundation upon which rests that bulwark called judicial power to which those
who are aggrieved turn for protection and relief." 5 Stability of judicial institutions suggests that the
Bar stand firm on this precept.

The language here in question, respondents aver, "was the result of overenthusiasm." It is but to
repeat an old idea when we say that enthusiasm, or even excess of it, is not really bad. In fact,
the one or the other is no less a virtue, if channelled in the right direction. However, it must be
circumscribed within the bounds of propriety and with due regard for the proper place of courts in
our system of government. 6

We are not unmindful of counsel's statement that the language used "was not in any way meant
to slight or offend" this Court. Want of intention, we feel constrained to say, is no excuse for the
language employed. For, counsel cannot escape responsibility "by claiming that his words did not
mean what any reader must have understood them as meaning." 7 At best, it extenuates liability.

125
3. We now turn to the partners of the law firm. They explained that not one of them cleared the
motion in which the questionable portion appears. Their reason is that they were not in the office
at the time said motion was filed — which was the last day. They added that "it is the policy of the
firm known to all its members and associates that only the partners can sign court pleadings
except in rare cases where, for want of time or due to unexpected circumstances, an associate
has to sign the same." We understood Atty. Alfonso Ponce Enrile to have said in open court that
in his long years of practice, he knows that it serves no useful purpose to downgrade the dignity
of the Court. We may overlook the shortcomings of the members of the law firm; except that, as
we see it, partners are duty bound to provide for efficacious control of court pleadings and other
court papers that carry their names or the name of their law firm. Seemingly, such control was
absent here.

In the end, we admonish Atty. Jose S. Antonio, with the warning that repetition of this incident will
be dealt with accordingly. Let a copy of this resolution be attached to his record.

Attention of Attys. Alfonso Ponce Enrile, Leonardo Siguion Reyna, Manuel G. Montecillo, Enrique
M. Belo and Oscar R. Ongsiako is invited to the necessity of exercising adequete supervision and
control of the pleadings and other documents submitted by their law firm to the courts of justice
of this country.

So ordered.

G.R. No. 117209 February 9, 1996

REPUBLIC OF THE PHILIPPINES, petitioner,


vs.
HON. JOSE R. HERNANDEZ, in his capacity as Presiding Judge, Regional Trial Court,
Branch 158, Pasig City and SPOUSES VAN MUNSON y NAVARRO and REGINA MUNSON
y ANDRADE, respondents.

DECISION

REGALADO, J.:

Indeed, what's in a name, as the Bard of Avon has written, since a rose by any other name would
smell as sweet?

This could well be the theme of the present appeal by certiorari which challenges, on pure
questions of law, the order of the Regional Trial Court, Branch 158, Pasig City, dated September
13, 1994 1 in JDRC Case No. 2964. Said court is faulted for having approved the petition for
adoption of Kevin Earl Bartolome Moran and simultaneously granted the prayer therein for the
change of the first name of said adoptee to Aaron Joseph, to complement the surname Munson
y Andrade which he acquired consequent to his adoption.

The facts are undisputed. On March 10, 1994, herein private respondent spouses, Van Munson
y Navarro and Regina Munson y Andrade, filed a p petition 2 to adopt the minor Kevin Earl
Bartolome Moran, duly alleging therein the jurisdictional facts required by Rule 99 of the Rules of
Court for adoption, their qualifications as and fitness to be adoptive parents, as well as the
circumstances under and by reason of which the adoption of the aforenamed minor was sought.
126
In the very same petition, private respondents prayed for the change of the first name or said
minor adoptee to Aaron Joseph, the same being the name with which he was baptized in keeping
with religious tradition and by which he has been called by his adoptive family, relatives and
friends since May 6, 1993 when he arrived at private respondents' residence. 3

At the hearing on April 18, 1994, petitioner opposed the inclusion of the relief for change of name
in the same petition for adoption. In its formal opposition dated May 3, 1995, 4 petitioner reiterated
its objection to the joinder of the petition for adoption and the petitions for change of name in a
single proceeding, arguing that these petition should be conducted and pursued as two separate
proceedings.

After considering the evidence and arguments of the contending parties, the trial court ruled in
favor of herein private respondents in this wise:

WHEREFORE, minor child Kevin Earl Bartolome Moran is freed from all legal obligations
of obedience and maintenance with respect to his natural parents, and for all legal intents
and purposes shall be known as Aaron Joseph Munson y Andrade, the legally adopted
child of Van Munson and Regina Munson effective upon the filing of the petition on March
10, 1994. As soon as the decree of adoption becomes final and executory, it shall be
recorded in the Office of the Local Civil Registrar of Pasig, Metro Manila pursuant to
Section 8, Rule 99 and Section 6, Rule 103, respectively, of the Rules of Court, and shall
be annotated in the record of birth of the adopted child, which in this case is in Valenzuela,
Metro Manila, where the child was born. Likewise, send a copy of this Order to the National
Census and Statistics Office, Manila, for its appropriate action consisten(t) herewith. 5

At this juncture, it should be noted that no challenge has been raised by petitioner regarding the
fitness of herein private respondents to be adopting parents nor the validity of the decree of
adoption rendered in their favor. The records show that the latter have commendably established
their qualifications under the law to be adopters, 6 and have amply complied with the procedural
requirements for the petition for adoption, 7 with the findings of the trial court being recited thus:

To comply with the jurisdictional requirements, the Order of this Court dated March 16,
1994 setting this petition for hearing (Exh. "A") was published in the March 31, April 6 and
13, 1994 issues of the Manila Chronicle, a newspaper of general circulation (Exhs. "B" to
"E" and submarkings). . . .

xxx xxx xxx

Petitioners apart from being financially able, have no criminal nor derogatory record (Exhs.
"K" to "V"); and are physically fit to be the adoptive parents of the minor child Kevin (Exh.
"W"). Their qualification to become the adoptive parents of Kevin Earl finds support also
in the Social Case Study Report prepared by the DSWD through Social Worker Luz Angela
Sonido, the pertinent portion of which reads:

"Mr. and Mrs. Munson are very religious, responsible, mature and friendly
individuals. They are found physically healthy; mentally fit, spiritually and
financially capable to adopt Kevin Earl Moran aka Aaron Joseph.

"Mr. and Mrs. Munson have provided AJ with all his needs. They unselfishly share
their time, love and attention to him. They are ready and willing to continuously
provide him a happy and secure home life.

127
"Aaron Joseph, on the other hand, is growing normally under the care of the
Munsons. He had comfortably settled in his new environment. His stay with the
Munsons during the six months trial custody period has resulted to a close bond
with Mr. and Mrs. Munson and vice-versa.

"We highly recommend to the Honorable Court that the adoption of Kevin Earl
Moran aka Aaron Joseph by Mr. and Mrs. Van Munson be legalized." 8

It has been said all too often enough that the factual findings of the lower court, when sufficiently
buttressed by legal and evidential support, are accorded high respect and are binding and
conclusive upon this Court. 9 Accordingly, we fully uphold the propriety of that portion of the order
of the court below granting the petition, for adoption.

The only legal issues that need to be resolved may then be synthesized mainly as follows. (1)
whether or not the court a quo erred in granting the prayer for the change of the registered proper
or given name of the minor adoptee embodied in the petition for adoption; and (2) whether or not
there was lawful ground for the change of name.

I. It is the position of petitioner that respondent judge exceeded his jurisdiction when he
additionally granted the prayer for the change of the given or proper name of the adoptee in a
petition for adoption.

Petitioner argues that a petition for adoption and a petition for change of name are two special
proceedings which, in substance and purpose, are different from and are not related to each other,
being respectively governed by distinct sets of law and rules. In order to be entitled to both reliefs,
namely, a decree of adoption and an authority to change the giver or proper name of the adoptee,
the respective proceedings for each must be instituted separately, and the substantive and
procedural requirements therefor under Articles 183 to 193 of the Family Code in relation to Rule
99 of the Rules of Court for adoption, and Articles 364 to 380 of the Civil Code in relation to Rule
103 of the Rules of Court for change of name, must correspondingly be complied with. 10

A perusal of the records, according to petitioner, shows that only the laws and rules on adoption
have been observed, but not those for a petition for change of name. 11 Petitioner further contends
that what the law allows is the change of the surname of the adoptee, as a matter of right, to
conform with that of the adopter and as a natural consequence of the adoption thus granted. If
what is sought is the change of the registered given or proper name, and since this would involve
a substantial change of one's legal name, a petition for change of name under Rule 103 should
accordingly be instituted, with the substantive and adjective requisites therefor being conformably
satisfied. 12

Private respondents, on the contrary, admittedly filed the petition for adoption with a prayer for
change of name predicated upon Section 5, Rule 2 which allows permissive joinder of causes of
action in order to avoid multiplicity of suits and in line with the policy of discouraging protracted
and vexatious litigations. It is argued that there is no prohibition in the Rules against the joinder
of adoption and change of name being pleaded as two separate but related causes of action in a
single petition. Further, the conditions for permissive joinder of causes of action, i.e., jurisdiction
of the court, proper venue and joinder of parties, have been met. 13

Corollarily, petitioner insists on strict adherence to the rule regarding change of name in view of
the natural interest of the State in maintaining a system of identification of its citizens and in the
orderly administration of justice. 14 Private respondents argue otherwise and invoke a liberal
construction and application of the Rules, the welfare and interest of the adoptee being the
primordial concern that should be addressed in the instant proceeding. 15

128
On this score, the trial court adopted a liberal stance in holding that -

Furthermore, the change of name of the child from Kevin Earl Bartolome to Aaron Joseph
should not be treated strictly, it appearing that no rights have been prejudiced by said
change of name. The strict and meticulous observation of the requisites set forth by Rule
103 of the Rules of Court is indubitably for the purpose of preventing fraud, ensuring that
neither State nor any third person should be prejudiced by the grant of the petition for
change of name under said rule, to a petitioner of discernment.

The first name sought to be changed belongs to an infant barely over a year old. Kevin
Earl has not exercised full civil rights nor engaged in any contractual obligations. Neither
can he nor petitioners on his behalf, be deemed to have any immoral, criminal or illicit
purpose for seeking said cha(n)ge of name. It stands to reason that there is no way that
the state or any person may be so prejudiced by the action for change of Kevin Earl's first
name. In fact, to obviate any possible doubts on the intent of petitioners, the prayer for
change of name was caused to be published together with the petition for adoption. 16

Art. 189 of the Family Code enumerates in no uncertain terms the legal effects of adoption:

(1) For civil purposes, the adopted shall be deemed to be a legitimate child of the adopters
and both shall acquire the reciprocal rights and obligations arising from the relationship of
parent and child, including the right of the adopted to use the surname of the adopters;

(2) The parental authority of the parents by nature over the adopted shall terminate and
be vested in the adopters, except that if the adopter is the spouse of the parent by nature
of the adopted, parental authority over the adopted shall be exercised jointly by both
spouses; and

(3) The adopted shall remain an intestate heir of his parents and other blood relatives.

Clearly, the law allows the adoptee, as a matter of right and obligation, to bear the surname of
the adopter, upon issuance of the decree of adoption. It is the change of the adoptee's surname
to follow that of the adopter which is the natural and necessary consequence of a grant of adoption
and must specifically be contained in the order of the court, in fact, even if not prayed for by
petitioner.

However, the given or proper name, also known as the first or Christian name, of the adoptee
must remain as it was originally registered in the civil register. The creation of an adoptive
relationship does not confer upon the adopter a license to change the adoptee's registered
Christian or first name. The automatic change thereof, premised solely upon the adoption thus
granted, is beyond the purview of a decree of adoption. Neither is it a mere incident in nor an
adjunct of an adoption proceeding, such that a prayer therefor furtively inserted in a petition for
adoption, as in this case, cannot properly be granted.

The name of the adoptee as recorded in the civil register should be used in the adoption
proceedings in order to vest the court with jurisdiction to hear and determine the same, 17 and
shall continue to be so used until the court orders otherwise. Changing the given or proper name
of a person as recorded in the civil register is a substantial change in one's official or legal name
and cannot be authorized without a judicial order. The purpose of the statutory procedure
authorizing a change of name is simply to have, wherever possible, a record of the change, and
in keeping with the object of the statute, a court to which the application is made should normally
make its decree recording such change. 18

129
The official name of a person whose birth is registered in the civil register is the name appearing
therein. If a change in one's name is desired, this can only be done by filing and strictly complying
with the substantive and procedural requirements for a special proceeding for change of name
under Rule 103 of the Rules of Court, wherein the sufficiency of the reasons or grounds therefor
can be threshed out and accordingly determined.

Under Rule 103, a petition for change of name shall be filed in the regional trial court of the
province where the person desiring to change his name resides. It shall be signed and verified by
the person desiring his name to be changed or by some other person in his behalf and shall state
that the petitioner has been a bona fide resident of the province where the petition is filed for at
least three years prior to such filing, the cause for which the change of name is sought, and the
name asked for. An order for the date and place of hearing shall be made and published, with the
Solicitor General or the proper provincial or city prosecutor appearing for the Government at such
hearing. It is only upon satisfactory proof of the veracity of the allegations in the petition and the
reasonableness of the causes for the change of name that the court may adjudge that the name
be changed as prayed for in the petition, and shall furnish a copy of said judgment to the civil
registrar of the municipality concerned who shall forthwith enter the same in the civil register.

A petition for change of name being a proceeding in rem, strict compliance with all the
requirements therefor is indispensable in order to vest the court with jurisdiction for its
adjudication. 19 It is an independent and discrete special proceeding, in and by itself, governed by
its own set of rules. A fortiori, it cannot be granted by means of any other proceeding. To consider
it as a mere incident or an offshoot of another special proceeding would be to denigrate its role
and significance as the appropriate remedy available under our remedial law system.

The Solicitor General correctly points out the glaring defects of the subject petition insofar as it
seeks the change of name of the adoptee, 20 all of which taken together cannot but lead to the
conclusion that there was no petition sufficient in form and substance for change of name as
would rightfully deserve an order therefor. It would be procedurally erroneous to employ a petition
for adoption to effect a change of name in the absence of the corresponding petition for the latter
relief at law.

Neither can the allowance of the subject petition, by any stretch of imagination and liberality, be
justified under the rule allowing permissive joinder of causes of action. Moreover, the reliance by
private respondents on the pronouncements in Briz vs. Brit, et al. 21 and Peyer vs. Martinez, et al.
22
is misplaced. A restatement of the rule and jurisprudence on joinder of causes of action would,
therefore, appear to be called for.

By a joinder of actions, or more properly, a joinder of causes of action, is meant the uniting of two
or more demands or rights of action in one action; the statement of more than one cause of action
in a declaration. 23 It is the union of two or more civil causes of action, each of which could be
made the basis of a separate suit, in the same complaint, declaration or petition. A plaintiff may
under certain circumstances join several distinct demands, controversies or rights of action in one
declaration, complaint or petition. 24

As can easily be inferred from the above definitions, a party is generally not required to join in one
suit several distinct causes of action. The joinder of separate causes of action, where allowable,
is permissive and not mandatory in the absence of a contrary statutory provision, even though
the causes of action arose from the same factual setting and might under applicable joinder rules
be joined. 25 Modern statutes and rules governing joinders are intended to avoid a multiplicity of
suits and to promote the efficient administration of justice wherever this may be done without
prejudice to the rights of the litigants. To achieve these ends, they are liberally construed. 26

130
While joinder of causes of action is largely left to the option of a party litigant, Section 5, Rule 2 of
our present Rules allows causes of action to be joined in one complaint conditioned upon the
following requisites: (a) it will not violate the rules on jurisdiction, venue and joinder of parties; and
(b) the causes of action arise out of the same contract, transaction or relation between the parties,
or are for demands for money or are of the same nature and character.

The objectives of the rule or provision are to avoid a multiplicity of suits where the same parties
and subject matter are to be dealt with by effecting in one action a complete determination of all
matters in controversy and litigation between the parties involving one subject matter, and to
expedite the disposition of litigation at minimum cost. The provision should be construed so as to
avoid such multiplicity, where possible, without prejudice to the rights of the litigants. Being of a
remedial nature, the provision should be liberally construed, to the end that related controversies
between the same parties may be adjudicated at one time; and it should be made effectual as far
as practicable, 27 with the end in view of promoting the efficient administration of justice. 28

The statutory intent behind the provisions on joinder of causes of action is to encourage joinder
of actions which could reasonably be said to involve kindred rights and wrongs, although the
courts have not succeeded in giving a standard definition of the terms used or in developing a
rule of universal application. The dominant idea is to permit joinder of causes of action, legal or
equitable, where there is some substantial unity between them. 29 While the rule allows a plaintiff
to join as many separate claims as he may have, there should nevertheless be some unity in the
problem presented and a common question of law and fact involved, subject always to the
restriction thereon regarding jurisdiction, venue and joinder of parties. Unlimited joinder is not
authorized. 30

Our rule on permissive joinder of causes of action, with the proviso subjecting it to the correlative
rules on jurisdiction, venue and joinder of parties 31 and requiring a conceptual unity in the
problems presented, effectively disallows unlimited joinder. 32

Turning now to the present petition, while it is true that there is no express prohibition against the
joinder of a petition for adoption and for change of name, we do not believe that there is any
relation between these two petitions, nor are they of the same nature or character, much less do
they present any common question of fact or law, which conjointly would warrant their joinder. In
short, these petitions do not rightly meet the underlying test of conceptual unity demanded to
sanction their joinder under our Rules.

As keenly observed and correctly pointed out by the Solicitor General -

A petition for adoption and a petition for change of name are two special proceedings
which, in substance and purpose, are different from each other. Each action is individually
governed by particular sets of laws and rules. These two proceedings involve disparate
issues. In a petition for adoption, the court is called upon to evaluate the proposed
adopter's fitness and qualifications to bring up and educate the adoptee properly (Prasnick
vs. Republic, 99 Phil. 665). On the other hand, in a petition for change of name, no family
relations are created or affected for what is looked into is the propriety and reasonableness
of the grounds supporting the proposed change of name (Yu vs. Republic, 17 SCRA 253).

xxx xxx xxx

. . . Hence, the individual merits of each issue must be separately assessed and
determined for neither action is dependent on the other. 33

131
The rule on permissive joinder of: causes of action is clear. Joinder may be allowed only
if the actions show a commonality of relationship and conform to the rules on jurisdiction,
venue and joinder of parties (Section 5, Rule 2, Rules of Court).

These conditions are wanting in the instant case. As already pointed out in our Petition
(pp. 9-10), an action for adoption and an action for change of name are, in nature and
purpose, not related to each other and do not arise out of the same relation between the
parties. While what is cogent in an adoption proceeding is the proposed adopter's fitness
and qualifications to adopt, a petition for change of first name may only prosper upon proof
of reasonable and compelling grounds supporting the change requested. Fitness to adopt
is not determinative of the sufficiency of reasons justifying a change of name. And
similarly, a change of first name cannot be justified in view of a finding that the proposed
adopter was found fit to adopt. There is just no way that the two actions can connect and
find a common ground, thus the joinder would be improper.

In contending that adoption and change of name may be similarly sought in one petition,
private respondents rely upon Peyer vs. Martinez and Briz vs. Briz (p. 4, Comment)

We however submit that these citations are non sequitur. In both cases, the fact of intimacy
and relatedness of the issues is so pronounced. In Peyer, an application to pronounce the
husband an absentee is obviously intertwined with the action to transfer the management
of conjugal assets to the wife. In Briz, an action for declaration of heirship was deemed a
clear condition precedent to an action to recover the land subject of partition and
distribution proceeding. However, the commonality of relationship which stands out in both
cases does not characterize the present action for adoption and change of name. Thus
the rulings in Peyer and Briz find no place in the case at bar.

Besides, it is interesting to note that although a joinder of the two actions was, in Briz,
declared feasible, the Supreme Court did not indorse an automatic joinder and instead
remanded the matter for further proceedings, granting leave to amend the pleadings and
implead additional parties-defendants for a complete determination of the controversy
(Briz vs. Briz, 43 Phil. 763, 770). Such cautionary stance all the more emphasizes that
although joinders are generally accepted, they are not allowed where the conditions are
not satisfactorily met. 34

It furthermore cannot be said that the proposed joinder in this instance will make for a complete
determination of all matters pertaining to the coetaneous grant of adoption and change of name
of the adoptee in one petition. As already stated, the subject petition was grossly insufficient in
form and substance with respect to the prayer for change of name of the adoptee. The policy of
avoiding multiplicity of suits which underscores the rule on permissive joinder of causes of action
is addressed to suits that are intimately related and also present interwoven and dependent issues
which can be most expeditiously and comprehensively settled by having just one judicial
proceeding, but not to suits or actions whose subject matters or corresponding reliefs are
unrelated or diverse such that they are best taken up individually.

In Nabus vs. Court of Appeals, et al., 35 the Court clarified the rule on permissive joinder of causes
of action:

The rule is clearly permissive. It does not constitute an obligatory rule, as there is no
positive provision of law or any rule of jurisprudence which compels a party to join all his
causes of action and bring them at one and the same time. Under the present rules, the
provision is still that the plaintiff may, and not that he must, unite several causes of action
although they may be included in one of the classes specified. This, therefore, leaves it to
the plaintiff's option whether the causes of action shall be joined in the same action, and
132
no unfavorable inference may be drawn from his failure or refusal to do so. He may always
file another action based on the remaining cause or causes of action within the prescriptive
period therefor. (Emphasis supplied.)

The situation presented in this case does not warrant exception from the Rules under the policy
of liberal construction thereof in general, and for change of name in particular, as proposed by
private respondents and adopted by respondent judge. Liberal construction of the Rules may be
invoked in situations wherein there may be some excusable formal deficiency or error in a
pleading, provided that the same does not subvert the essence of the proceeding and connotes
at least a reasonable attempt at compliance with the Rules. Utter disregard of the Rules cannot
justly be rationalized by harking on the policy of liberal construction.

The Court is not impervious to the frustration that litigants and lawyers alike would at times
encounter in procedural bureaucracy but imperative justice requires correct observance of
indispensable technicalities precisely designed to ensure its proper dispensation. 36 It has long
been recognized that strict compliance with the Rules of Court is indispensable for the prevention
of needless delays and for the orderly and expeditious dispatch of judicial business. 37

Procedural rules are not to be disdained as mere technicalities that may be ignored at will to suit
the convenience of a party. Adjective law is important in ensuring the effective enforcement of
substantive rights through the orderly and speedy administration of justice. These rules are not
intended to hamper litigants or complicate litigation but, indeed to provide for a system under
which a suitor may be heard in the correct form and manner and at the prescribed time in a
peaceful confrontation before a judge whose authority they acknowledge. 38

It cannot be overemphasized that procedural rules have their own wholesome rationale in the
orderly administration of justice. Justice has to be administered according to the Rules in order to
obviate arbitrariness, caprice, or whimsicality. 39 We have been cautioned and reminded in Limpot
vs. CA, et al. that: 40

Rules of procedure are intended to ensure the orderly administration of justice and the
protection of substantive rights in judicial and extrajudicial proceedings. It is a mistake to
propose that substantive law and adjective law are contradictory to each other or, as has
often been suggested, that enforcement of procedural rules should never be permitted if
it will result in prejudice to the substantive rights of the litigants. This is not exactly true;
the concept is much misunderstood. As a matter of fact, the policy of the courts is to give
both kinds of law, as complementing each other, in the just and speedy resolution of the
dispute between the parties. Observance of both substantive rights is equally guaranteed
by due process, whatever the source of such rights, be it the Constitution itself or only a
statute or a rule of court.

xxx xxx xxx

. . . (T)hey are required to be followed except only when for the most persuasive of reasons
they may be relaxed to relieve a litigant of an injustice not commensurate with the degree
of his thoughtlessness in not complying with the procedure prescribed. . . . While it is true
that a litigation is not a game of technicalities, this does not mean that the Rules of Court
may be ignored at will and at random to the prejudice of the orderly presentation and
assessment of the issues and their just resolution. Justice eschews anarchy.

Only exceptionally in very extreme circumstances, when a rule deserts its proper office as an aid
to justice and becomes its great hindrance and chief enemy such that rigid application thereof
frustrates rather than promotes substantial justice, will technicalities deserve scant consideration

133
from the court. In such situations, the courts are empowered, even obligated, to suspend the
operation of the rules. 41

We do not perceive any injustice that can possibly be visited upon private respondents by
following the reglementary procedure for the change in the proper or given name that they seek
for their adopted child. We are hard put to descry the indispensability of a change of the first name
of the adoptee to his welfare and benefit. Nor is the said change of such urgency that would justify
an exemption from or a relaxation of the Rules. It is the State that stands to be prejudiced by a
wanton disregard of Rule 103 in this case, considering its natural interest in the methodical
administration of justice and in the efficacious maintenance of a system of identification of its
citizens.

The danger wrought by non-observance of the Rules is that the violation of or failure to comply
with the procedure prescribed by law prevents the proper determination of the questions raised
by the parties with respect to the merits of the case and makes it necessary to decide, in the first
place, such questions as relate to the form of the action. The rules and procedure laid down for
the trial court and the adjudication of cases are matters of public policy. 42 They are matters of
public order and interest which can in no wise be changed or regulated by agreements between
or stipulations by parties to an action for their singular convenience. 43

In Garcia vs. Republic, 44 we are reminded of the definiteness in the application of the Rules and
the importance of seeking relief under the appropriate proceeding:

. . . The procedure set by law should be delimited. One should not confuse or misapply
one procedure for another lest we create confusion in the application of the proper remedy.

Respondent judge's unmindful disregard of procedural tenets aimed at achieving stability of


procedure is to be deplored. He exceeded his prerogatives by granting the prayer for change of
name, his order being unsupported by both statutory and case law. The novel but unwarranted
manner in which he adjudicated this case may be characterized as a regrettable abdication of the
duty to uphold the teachings of remedial law and jurisprudence.

II. Petitioner avers that it was error for the lower court to grant the petition for change of name
without citing or proving any lawful ground. Indeed, the only justification advanced for the change
of name was the fact of the adoptee's baptism under the name Aaron Joseph and by which he
has been known since he came to live with private respondents. 45

Private respondents, through a rather stilted ratiocination, assert that upon the grant of adoption,
the subject minor adoptee ipso facto assumed a new identification and designation, that is, Aaron
Joseph which was the name given to him during the baptismal rites. Allowing the change of his
first name as prayed for in the petition, so they claim, merely confirms the designation by which
he is known and called in the community in which he lives. This largely echoes the opinion of the
lower court that naming the child Aaron Joseph was symbolic of naming him at birth, and that
they, as adoptive parents, have as much right as the natural parents to freely select the first name
of their adopted child. 46

The lower court was sympathetic to herein private respondents and ruled on this point in this
manner:

As adoptive parents, petitioner like other parents may freely select the first name given to
his/her child as it is only the surname to which the child is entitled that is fixed by law. . . .

xxx xxx xxx


134
The given name of the minor was Kevin Earl, a name given for no other purpose than for
identification purposes in a birth certificate by a woman who had all intentions of giving
him away. The naming of the minor as Aaron Joseph by petitioners upon the grant of their
petition for adoption is symbolic of naming the minor at birth. 47

We cannot fathom any legal or jurisprudential basis for this attenuated ruling of respondent judge
and must thus set it aside.

It is necessary to reiterate in this discussion that a person's name is a word or combination of


words by which he is known and identified, and distinguished from others, for the convenience of
the world at large in addressing him, or in speaking of or dealing with him. It is both of personal
as well as public interest that every person must have a name. The name of an individual has two
parts: the given or proper name and the surname or family name. The giver or proper name is
that which is given to the individual at birth or at baptism, to distinguish him from other individuals.
The surname or family name is that which identifies the family to which he belongs and is
continued from parent to child. The given name may be freely selected by the parents for the
child, but the surname to which the child is entitled is fixed by law. 48

By Article 408 of the Civil Code, a person's birth must be entered in the civil register. The official
name of a person is that given him in the civil register. That is his name in the eyes of the law. 49
And once the name of a person is officially entered in the civil register, Article 376 of the same
Code seals that identity with its precise mandate: no person can change his name or surname
without judicial authority. This statutory restriction is premised on the interest of the State in names
borne by individuals and entities for purposes of identification. 50

By reason thereof, the only way that the name of person can be changed legally is through a
petition for change of name under Rule 103 of the Rules of Court. 51 For purposes of an application
for change of name under Article 376 of the Civil Code and correlatively implemented by Rule
103, the only name that may be changed is the true or official name recorded in the civil register.
As earlier mentioned, a petition for change of name being a proceeding in rem, impressed as it is
with public interest, strict compliance with all the requisites therefor in order to vest the court with
jurisdiction is essential, and failure therein renders the proceedings a nullity. 52

It must likewise be stressed once again that a change of name is a privilege, not a matter of right,
addressed to the sound discretion of the court which has the duty to consider carefully the
consequences of a change of name and to deny the same unless weighty reasons are shown.
Before a person can be authorized to change his name, that is, his true or official name or that
which appears in his birth certificate or is entered in the civil register, he must show proper and
reasonable cause or any convincing reason which may justify such change. 53

Jurisprudence has recognized, inter alia, the following grounds as being sufficient to warrant a
change of name: (a) when the name is ridiculous, dishonorable or extremely difficult to write or
pronounce; (b) when the change results as a legal consequence of legitimation or adoption; (c)
when the change will avoid confusion; (d) when one has continuously used and been known since
childhood by a Filipino name and was unaware of alien parentage; (e) when the change is based
on a sincere desire to adopt a Filipino name to erase signs of former alienage, all in good faith
and without prejudice to anybody; and (f) when the surname causes embarrassment and there is
no showing that the desired change of name was for a fraudulent purpose or that the change of
name would prejudice public interest. 54

Contrarily, a petition for change of name grounded on the fact that one was baptized by another
name, under which he has been known and which he used, has been denied inasmuch as the
use of baptismal names is not sanctioned. 55 For, in truth, baptism is not a condition sine qua non
to a change of name. 56 Neither does the fact that the petitioner has been using a different name
135
and has become known by it constitute proper and reasonable cause to legally authorize a change
of name. 57 A name given to a person in the church records or elsewhere or by which be is known
in the community - when at variance with that entered in the civil register - is unofficial and cannot
be recognized as his real name. 58

The instant petition does not sufficiently persuade us to depart from such rulings of long accepted
wisdom and applicability. The only grounds offered to justify the change of name prayed for was
that the adopted child had been baptized as Aaron Joseph in keeping with the religious faith of
private respondents and that it was the name by which he had been called and known by his
family, relatives and friends from, the time he came to live with private respondents. 59 Apart from
suffusing their pleadings with sanctimonious entreaties for compassion, none of the justified
grounds for a change of name has been alleged or established by private respondents. The legal
bases chosen by them to bolster their cause have long been struck down as unavailing for their
present purposes. For, to allow the adoptee herein to use his baptismal name, instead of his name
registered in the civil register, would be to countenance or permit that which has always been
frowned upon. 60

The earlier quoted posturing of respondent judge, as expressed in his assailed order that -

(a)s adoptive parents, petitioners like other parents may freely select the first name given
to his/her child as it is only the surname to which the child is entitled that is fixed by law. .
..

The given name of the minor was Kevin Earl, a name given for no other purpose than for
identification purposes in a birth certificate by a woman who had all the intentions of giving
him away. The naming of the minor as Aaron Joseph by petitioners upon grant of their
petition for adoption is symbolic of naming the minor at birth.

and supposedly based on the authority of Republic vs. Court of Appeals and Maximo Wong,
supra, painfully misapplies the ruling therein enunciated.

The factual backdrop of said case is not at all analogous to that of the case at bar. In the Wong
case, therein petitioner Maximo Wong sought the change of his surname which he acquired by
virtue of the decree of adoption granted in favor of spouses Hoong Wong and Concepcion Ty
Wong. Upon reaching the age of majority, he filed a petition in court to change his surname from
Wong to Alcala, which was his surname prior to the adoption. He adduced proof that the use of
the surname Wong caused him embarrassment and isolation from friends and relatives in view of
a suggested Chinese ancestry when in reality he is a Muslim Filipino residing in a Muslim
community, thereby hampering his business and social life, and that his surviving adoptive mother
consented to the change of name sought. This Court granted the petition and regarded the change
of the surname as a mere incident in, rather than the object of, the adoption.

It should be noted that in said case the change of surname, not the given name, and the legal
consequences thereof in view of the adoption were at issue. That it was sought in a petition duly
and precisely filed for that purpose with ample proof of the lawful grounds therefor only serves to
reinforce the imperative necessity of seeking relief under and through the legally prescribed
procedures.

Here, the Solicitor General meritoriously explained that:

Respondent Judge failed to distinguish between a situation wherein a child is being named
for the first time by his natural parent, as against one wherein, a child is previously
conferred a first name by his natural parent, and such name is subsequently sought to be

136
disregarded and changed by the adoptive parents. In the first case, there is no dispute
that natural parents have the right to freely select and give the child's first name for every
person, including juridical persons, must have a name (Tolentino, A., Commentaries and
Jurisprudence on the Civil Code, Vo. I, 1987 edition, page 721). In the second case,
however, as in the case at bar, private respondents, in their capacities as adopters, cannot
claim a right to name the minor adoptee after such right to name the child had already
been exercised by the natural parent. Adopting parents have not been conferred such
right by law, hence, the right assertes by private respondents herein remains but illusory.
Renaming the adoptee cannot be claimed as a right. It is merely a privilege necessitating
judicial consent upon compelling grounds. 61

The liberality with which this Court treats matters leading up to adoption insofar as it carries out
the beneficent purposes of adoption and ensures to the adopted child the rights and privileges
arising therefrom, ever mindful that the paramount consideration is the overall benefit and interest
of the adopted child, 62 should be understood in its proper context. It should not be misconstrued
or misinterpreted to extend to inferences beyond the contemplation of law and jurisprudence.

The practically unrestricted freedom of the natural parent to select the proper or given name of
the child presupposes that no other name for it has theretofore been entered in the civil register.
Once such name is registered, regardless of the reasons for such choice and even if it be solely
for the purpose of identification, the same constitutes the official name. This effectively
authenticates the identity of the person and must remain unaltered save when, for the most
compelling reasons shown in an appropriate proceeding, its change may merit judicial approval.

While the right of a natural parent to name the child is recognized, guaranteed and protected
under the law, the so-called right of an adoptive parent to re-name an adopted child by virtue or
as a consequence of adoption, even for the most noble intentions and moving supplications, is
unheard of in law and consequently cannot be favorably considered. To repeat, the change of the
surname of the adoptee as a result of the adoption and to follow that of the adopter does not
lawfully extend to or include the proper or given name. Furthermore, factual realities and legal
consequences, rather than sentimentality and symbolisms, are what are of concern to the Court.

Finally, it is understood that this decision does not entirely foreclose and is without prejudice to,
private respondents' privilege to legally change the proper or given name of their adopted child,
provided that the same is exercised, this time, via a proper petition for change of name. Of course,
the grant thereof is conditioned on strict compliance with all jurisdictional requirements and
satisfactory proof of the compelling reasons advanced therefor.

WHEREFORE, on the foregoing premises, the assailed order of respondent judge is hereby
MODIFIED. The legally adopted child of private respondents shall henceforth be officially known
as Kevin Earl Munson y Andrade unless a change thereof is hereafter effected in accordance with
law. In all other respects, the order is AFFIRMED.

SO ORDERED.

137
G.R. No. 91670 February 7, 1991

ALBERT NABUS, petitioner,


vs.
THE HONORABLE COURT OF APPEALS and MARIANO LIM, respondents.

REGALADO, J.:

This petition for review by certiorari seeks the reversal of the decision 1 of respondent Court of Appeals
in CA-G.R. CV No. 15846 which affirmed the order of the trial court dismissing herein petitioner's
complaint for rescission with damages on the ground of res judicata.

The records show that on June 22, 1970, herein petitioner Albert Nabus brought an action for
reconveyance of a parcel of land against herein private respondent Mariano Lim in the then Court of
First Instance of Baguio and Benguet, La Trinidad, Benguet, which was docketed as Civil Case No.
2159 (24), alleging inter alia:

2. That on June 23, 1965, plaintiff sold to defendant one (1) parcel of land, situated in the
Barrio of Ambiong, Municipality of La Trinidad, Province of Benguet, . . . as evidenced by a
deed of absolute sale, . . . ;

3. That the said property is a portion of a bigger parcel of land, with an area of 15 hectares, 05
ares and 17 centares, covered by and embraced in Original Certificate of Title No. P-136 (Free
Patent No. V48737) issued in the name of plaintiff, on July 5, 1956, . . . ;

4. That although the purchase price of the . . . property in the amount of P258,000.00 was
amortized . . ., title to the same was transferred to the defendant under TCT No. 2814, . . .,
and was later subdivided by said defendant into four (4) lots . . . ;
138
5. That as of the date thereof, defendant has still an unpaid balance of P75,000.00;

6. That on June 8, 1970 (or 4 years, 11 months and 15 days from June 23, 1965); plaintiff
through counsel offered to repurchase the above-described parcel of land, pursuant to Sec.
119 of the Public Land Law (C.A. No. 141, as amended), as evidenced by a letter of the
undersigned counsel to defendant, . . .; and which was confirmed by the plaintiff in his letter to
defendant, dated June 12, 1970, . . . .

7. That notwithstanding the written offers . . . and subsequent verbal offers of plaintiff to
repurchase the above-described property according to law, the defendant refused and denied,
and still refuses and denies, the said offer;

8. That plaintiff is ready and willing to repurchase the said property and to pay defendant the
sum of P183,000.00, the difference between the stipulated purchase price of P258,000.00 and
the unpaid balance thereof in the amount of P75,000.00 referred to in paragraph 5 hereof. 2

xxx xxx xxx

On December 11, 1971, after Nabus had rested his case, Lim moved to dismiss the complaint in Civil
Case No. 2159(24) on the grounds of lack of cause of action, there being no tender of the repurchase
price of the parcel of land in question, and of prescription. This was denied by the trial court. Thereafter,
Lim filed a motion for reconsideration of the order denying his motion to dismiss, to which on February
3, 1972 Nabus filed an opposition on the ground that tender of the repurchase price of the parcel of
land in question was allegedly not a requirement under the Public Land Act, unlike the provisions of
the Civil Code, the repurchase of the said lot being a substantive right coupled with public interest.

On February 5, 1980, the trial court, upon motion of Lim, ordered Nabus to deposit the repurchase
pace of the said lot in the amount of P183,000.00. On November 13,1980, Lim filed a motion to dismiss
Civil Case No. 2159(24) for failure of Nabus to deposit in court the required amount. On December 1,
1980, Nabus, by counsel, filed a motion for extension of time within which to file an opposition to Lim's
motion to dismiss. On March 13, 1981, no opposition having been filed to the motion to dismiss
because of the death of Nabus' counsel, the trial court dismissed with prejudice Civil Case No.
2159(24) for his failure to deposit the required amount, evincing lack of interest to repurchase the
parcel of land in question. 3

On May 14, 1981, Nabus filed, through a new counsel, a motion for reconsideration of the order
dismissing Civil Case No. 2159(24). On January 26, 1982, the trial court denied Nabus' motion for
reconsideration. 4

No appeal was taken from said order of dismissal.

On March 15, 1982, Nabus filed Civil Case No. 4293 in the same Court of First Instance of Baguio
and Benguet for the annulment of the order of dismissal in Civil Case No. 2159(24), claiming that the
failure of Atty. Florendo, his former counsel, to file an opposition to Lim's motion to dismiss was due
to his serious illness; that the dismissal of his complaint therein, without Nabus being able to file an
opposition to Lim's motion to dismiss, deprived him of the opportunity to be heard amounting to denial
of due process; and that the denial of his motion for reconsideration constituted grave abuse of
discretion tantamount to lack of jurisdiction on the part of the trial court.

Civil Case No. 4293 was subsequently amended to allege grounds for rescission and damages as
additional causes of action. These second and third causes of action added in the amended compliant
aver that:

SECOND CAUSE OF ACTION

139
xxx xxx xxx

21. That as appearing in the Deed of Absolute Sale Annex "A" of Civil Case No. 2159, . . .
defendant was to pay the purchase price of P258,000.00 in installment; however, defendant
failed to pay the total amount of P258,000.00 having paid only the sum of P183,000.00 and
leaving an unpaid balance of P75,000.00 which defendant failed and refused to pay in spite of
repeated demands;

22. That due to the foregoing, plaintiff is left with no other alternative but to seek for a rescission
(sic) of the contract of Sale aforesaid . . . ;

23. That plaintiff is ready and willing to return the sum of P183,000.00 he has received from
defendant minus of course such damages as the Court may adjudge against defendant;

24. That the said properties covered by said Deed of Absolute Sale have not been transferred
to third persons acting in good faith;

THIRD CAUSE OF ACTION

25. That due to the gross and evident bad faith of defendant in committing the foregoing acts
and in failing and refusing to comply with his obligations to the plaintiff, the latter has suffered
damages to wit: –– attorneys fee –– 15% of the total value of the lots subject matter of the
aforesaid Deed of Absolute Sale; expenses and losses incident to litigation –– P500,000.00;
moral and other damages –– one hundred thousand pesos (P100,000.00). 5

On August 8, 1986, Lim filed a motion to dismiss the complaint in Civil Case No. 4293 on the ground
that it was barred by prior judgment or res judicata and that the action had already prescribed. On
October 7, 1986, Nabus filed an opposition to the motion to dismiss. A reply to the opposition and a
supplement to his motion to dismiss was filed by Lim, to which Nabus filed a rejoinder. On July 22,
1987, the trial court dismissed the complaint in Civil Case No. 4293 on both grounds invoked in the
motion to dismiss. 6

On appeal to respondent court, Nabus claimed that the trial court erred in holding that all the causes
of action in the case are barred by res judicata and that the action for rescission and damages has
prescribed. The annulment of the dismissal order issued in Civil Case No. 2159(24) was no longer
pursued or raised on appeal.

As earlier stated, respondent court sustained the said order of dismissal on the ground of res judicata,
the relevant portion of its decision reading as follows:

It is within the power of the trial court to dismiss the appellant's complaint in Civil Case No.
2159(24) for failure to comply with its order to deposit the repurchase price of the parcel of
land in question. And such dismissal, rightly or wrongly, has the effect of an adjudication upon
the merits, it not having been provided otherwise (Section 3, Rule 17. Revised Rules of Court).
Dismissal on a technicality is no different in effect and consequences from a dismissal on the
merits under the cited provision of the Rules (General Offset Press, Inc. vs. Anatalio, 17 SCRA
688, 691). So too is the order of dismissal, with prejudice, res judicata upon finality under
Section 49, Rule 39, of the Revised Rules of Court, . . . .

Respondent court, however, found no necessity to rule on the matter of prescription.

Hence, the instant petition reiterating substantially the same issues raised on appeal with respondent
court, that is, whether or not (1) the complaint for rescission and damages is barred by the order of
dismissal of petitioner's action for reconveyance under the principle of res judicata; (2) petitioner's
action for rescission has prescribed; and (3) it is equitable to deny petitioner his day in court,
140
considering that admittedly private respondent has not paid the last three installments of the contract
of sale amounting to P75,000.00.

I. Res judicata is a rule of universal law pervading every well regulated system of jurisprudence, and
is put on two grounds, embodied in various maxims of the common law; the one, public policy and
necessity, which makes it the interest of the state that there should be an end to litigation — interest
reipublicae ut sit finis litium; the other, the hardship on the individual that he should be vexed twice for
the same cause — nemo debet bis vexari pro una et eadem causa. 7 The doctrine applies and treats
the final determination of the action as speaking the infallible truth as to the rights of the parties as to
the entire subject of the controversy, and such controversy and every part of it must stand irrevocably
closed by such determination. The sum and substance of the whole doctrine is that a matter once
judicially decided is finally decided. 8

The foundation principle upon which the doctrine of res judicata rests is that parties ought not to be
permitted to litigate the same issue more than once; that, when a right or fact has been judicially tried
and determined by a court of competent jurisdiction, or an opportunity for such trial has been given,
the judgment of the court, so long as it remains unreversed, should be conclusive upon the parties
and those in privity with them in law or estate. 9

Section 49, Rule 39 of the Rules of Court which embodies the principle of res judicata pertinent to this
case provides:

xxx xxx xxx

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

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

The principle of res judicata actually embraces two different concepts: (1) bar by former judgment and
(2) conclusiveness of judgment. There is "bar by former judgment" when, between the first case where
the judgment was rendered, and the second case where such judgment is invoked, there is identity of
parties, subject matter and cause of action. When the three identities are present, the judgment on the
merits rendered in the first constitutes an absolute bar to the subsequent action. It is final as to the
claim or demand in controversy, including the parties and those in privity with them, not only as to
every matter which was offered and received to sustain or defeat the claim or demand, but as to any
other admissible matter which might have been offered for that purpose. But where between the first
case wherein judgment is rendered and the second case wherein such judgment is invoked, there is
identity of parties, but there is no identity of cause of action, the judgment is conclusive in the second
case, only as to those matters actually and directly controverted and determined, and not as to matters
merely involved therein. This is what is termed conclusiveness of the judgment. 10

A. A case is said to be barred by a former judgment when the following requisites concur: (1) the
presence of a final former judgment; (2) the former judgment was rendered by a court having
jurisdiction over the subject matter and the parties; (3) the former judgment is a judgment on the merits;
and, (4) there is, between the first and the second actions, identity of parties, subject matter, and
causes of action. 11 There is no dispute as to the existence of and compliance with the first two elements
of res judicata in the case at bar. In issue are the alleged absence of a judgment on the merits in the
first case and the identity of causes of action in both cases.

141
1. Elemental is the rule that in order that a judgment may operate as a bar to a subsequent suit on the
same cause of action it must have been based on the merits of the case. And a judgment is on the
merits when it determines the rights and liabilities of the parties based on the disclosed facts,
irrespective of formal, technical, or dilatory objections. It is not necessary, however, that there should
have been a trial. If the judgment is general, and not based on any technical defect or objection, and
the parties had a full legal opportunity to be heard on their respective claims and contentions, it is on
the merits although there was no actual hearing or arguments on the facts of the case. 12 Such is one
of the situations contemplated in Section 3, Rule 17 of the Rules of Court, where a complaint is
dismissed for failure of the plaintiff to comply with a lawful order of the court which dismissal, as
correctly argued by private respondent, has the effect of an adjudication upon the merits.

In the present case, petitioner labors upon the erroneous conceptualization that the order of dismissal
issued in Civil Case No. 2159(24) was based merely on a preliminary matter, that is, failure to deposit
the repurchase price which allegedly is not the matter in controversy, hence it is not an adjudication
on the merits. While we do not discount the rule that a judgment dismissing a suit because of a purely
technical defect, irregularity, or informality is not strictly on the merits and is, therefore, no bar to
subsequent actions, 13 this is however, not applicable to the present case. Under the circumstances
obtaining herein, we have to consequently reject petitioner's ratiocination.

Firstly, it will be remembered that the order dismissing petitioner's complaint in Civil Case No. 2159(24)
is specified to be with prejudice. Our law reports are replete with jurisprudence declaring that a
dismissal with prejudice is an adjudication on the merits which finally disposes of the controversy and,
unless reversed, constitutes a bar to a future action. 14

Secondly, the aforesaid order of dismissal is not a dismissal on sheer technicality but actually goes
into the very substance of the relief sought therein by petitioner, that is, for the reconveyance of the
subject property which was denied in said case, and must thus be regarded as an adjudication on the
merits. It is the dismissal premised on such technical grounds as a mis-joinder, non-joinder, misnomer
or defect of parties; or that plaintiff has no sufficient title or authority to bring the suit, or want of legal
capacity to sue on his part; or formal defects in the pleadings; or a dismissal of the action for failure of
the complaint to state a cause of action which is not a bar to a new action on a good complaint wherein
the defects and omissions in the first complaint are corrected and supplied by the second complaint.
Also, a failure to allege a matter essential to the jurisdiction of the court is no bar to a second complaint
wherein such defect is cured or obviated by further and sufficient allegations. 15

The aforesaid instances are deemed to have no bearing on the merits of the case and will thus not
bar a subsequent suit on the same cause of action. The order of dismissal issued in Civil Case No.
2159(24) definitely does not fall within any of the above-mentioned exceptions and is considered in
our procedural rules as an adjudication on the merits. 16 It would not be amiss to state that a "dismissal
of an action with prejudice" by court order is to be considered no less than a "judgment." 17

It must be noted, however, that while the first order of dismissal is an adjudication on the merits, this
does not necessarily mean that it is a bar to the filing of petitioner's second complaint for rescission,
for, as hereinunder discussed, there is no identity of causes of action whereby the first action would
constitute res judicata to the second.

2. Petitioner next submits that there can be no identity of causes of action between the first and second
cases since the former involves the right of petitioner to redeem the subject property under Section
119 of the Public Land Act within five years from the date of sale, whereas the latter arose from the
failure of private respondent to pay the balance of the purchase price thereby authorizing the
rescission of the contract of sale pursuant to Article 1191 of the Civil Code. More importantly, it is
argued that the same evidence does not support and establish the causes of action in both cases.

On the other hand, private respondent theorizes that there is identity of causes of action between the
previous and subsequent cases in that: (1) the allegations contained and the facts which form the
bases of the two complaints are essentially and substantially the same; (2) the pivotal issue raised in
142
both cases involves non-payment of the last three installments of the purchase price; (3) the crux of
the prayer of the two cases are exactly the same, that is, the reconveyance of the subject lot; (4) both
actions originated from the same deed of sale; and, (5) the documentary evidence presented, as well
as the testimony given by the petitioner, in Civil Case No. 2159(24) can also be used to sustain the
prosecution of Civil Case No. 4293.

We find for petitioner on this score.

In determining whether causes of action are identical so as to warrant application of the rule of res
judicata, the test most commonly stated is to ascertain whether the same evidence which is necessary
to sustain the second action would have been sufficient to authorize a recovery in the first, even if the
forms or nature of the two actions be different. If the same facts or evidence would sustain both, the
two actions are considered the same within the rule that the judgment in the former is a bar to the
subsequent action; otherwise it is not. It has been said that this method is the best and most accurate
test as to whether a former judgment is a bar in subsequent proceedings between the same parties,
and it has even been designated as infallible. 18

It will be observed that Civil Case No. 2159(24) is based on petitioner's light to repurchase the subject
property under Section 119 of the Public Land Act, while Civil Case No. 4293 involves the rescission
of the contract of sale by reason of the failure of private respondent to pay in full the value of the
property, pursuant to Article 1191 of the Civil Code. The former, in order to prosper, requires proof that
the land was granted under a free patent, that the land was sold within five years from the grant thereof,
and that the action for reconveyance was filed within five years from the execution of the deed of sale.
In the second case, proof of the unpaid installments is the only evidence necessary to sustain the
action for rescission. It is thus apparent that a different set of evidence is necessary to sustain and
establish the variant causes of action in the two cases.

In addition, causes of action which are distinct and independent, although arising out of the same
contract, transaction, or state of facts, may be sued on separately, recovery on one being no bar to
subsequent actions on others. 19 Also, the mere fact that the same relief is sought in the subsequent
action will not render the judgment in the prior action operative as res judicata, 20

such as where the two actions are brought on different statutes, 21 as in the case at bar.

Under the circumstances, therefore, the doctrine of res judicata will not apply. To repeat, for emphasis,
the cause of action asserted by petitioner in the former suit was anchored upon his right to repurchase
the subject lot. The cause of action sought to be enforced in the present action is predicated upon the
failure of private respondent to pay the last three installments of the purchase price. It is a cause of
action which is wholly independent of, and entirely separate and discrete from, the alleged cause of
action asserted by petitioner in the former suit. Since petitioner seeks relief in the instant case upon a
cause of action different from the one asserted by him in the former suit, the judgment in the former
suit is conclusive only as to such points or questions as were actually in issue or adjudicated therein.
And this brings us to the rule on conclusiveness of judgment.

B. Private respondent avers that granting arguendo that there is no identity of cause of action,
considering that the issue on the unpaid installments has been raised, considered, and passed upon
in Civil Case No. 2159(24), such issue can no longer be relitigated anew in Civil Case No. 4293,
invoking thereby the doctrine of conclusiveness of judgment.

The doctrine states that a fact or question which was in issue in a former suit, and was there judicially
passed on and determined by a court of competent jurisdiction, is conclusively settled by the judgment
therein, as far as concerns the parties to that action and persons in privity with them, and cannot be
again litigated in any future action between such parties or their privies, in the same court or any other
court of concurrent jurisdiction on either the same or a different cause of action, while the judgment
remains unreversed or unvacated by proper authority. 22 The only identities thus required for the

143
operation of the judgment as an estoppel, in contrast to the judgment as a bar, are identity of parties
and identity of issues. 23

It has been held that in order that a judgment in one action can be conclusive as to a particular matter
in another action between the same parties or their privies, it is essential that the issues be identical.
If a particular point or question is in issue in the second action, and the judgment will depend on the
determination of that particular point or question, a former judgment between the same parties will be
final and conclusive in the second if that same point or question was in issue and adjudicated in the
first suit; but the adjudication of an issue in the first case is not conclusive of an entirely different and
distinct issue arising in the second. In order that this rule may be applied, it must clearly and positively
appear, either from the record itself or by the aid of competent extrinsic evidence that the precise point
or question in issue in the second suit was involved and decided in the first. And in determining whether
a given question was an issue in the prior action, it is proper to look behind the judgment to ascertain
whether the evidence necessary to sustain a judgment in the second action would have authorized a
judgment for the same party in the first action. 24

Applying these rules to, the case at bar, it becomes crystal clear that the doctrine of res judicata will
still not apply even under the rule on conclusiveness of judgment. To begin with, the fact that there
was an unpaid balance equivalent to three installments was never put in issue in Civil Case No.
2159(24). The same was considered or assumed only for purposes of determining the amount of the
redemption price It was never directly admitted, controverted nor litigated therein, it being merely
incidental or peripheral to the main issue of whether petitioner could still exercise his right to
repurchase the subject lot by reason of the breach of the prohibition imposed by law. On the other
hand, the issue of non-payment of the installments is the primary and sole controversy presented in
the subsequent case for rescission. It is thus evident that the two cases involve two different issues.
Hence, it would be safe to conclude that neither a "bar by prior judgment" nor "conclusiveness of
judgment" would operate upon or adversely affect the second action for rescission.

C. Private respondent insists that petitioner should have included and alleged rescission of contract
as a second cause of action in Civil Case No. 2159(24) considering that at the time the first complaint
was filed, the breach of the contract of sale was already total, hence the ground for rescission was
available and in existence. This very argument, significantly, is in line with petitioner's own assertion
that, being based on different causes of action, the action for rescission under Article 1191 of the Civil
Code is distinct from the action for reconveyance under Section 119 of the Public Land Act.
Accordingly, said action for rescission could have been brought independently of the action for
reconveyance since Section 5, Rule 2 of the Rules of Court merely provides:

Sec. 5. Joinder of causes of action. –– Subject to rules regarding jurisdiction, venue and joinder
of parties, a party may in one pleading state, in the alternative or otherwise, as many causes
of action as he may have against an opposing party (a) if the said causes of action arise out
of the same contract, transaction or relation between the parties, or (b) if the causes of action
are for demands for money, or are of the same nature and character.

xxx xxx xxx

The rule is clearly permissive. It does not constitute an obligatory rule, as there is no positive provision
of law or any rule of jurisprudence which compels a party to join all his causes of action and bring them
at one and the same time. 25

Under the present rules, the provision is still that the plaintiff may, and not that he must, unite several
causes of action although they may be included in one of the classes specified. This, therefore, leaves
it to the plaintiffs option whether the causes of action shall be joined in the same action, and no
unfavorable inference may be drawn from his failure or refusal to do so. He may always file another
action based on the remaining cause or causes of action within the prescriptive period therefor.

144
II. We, however, find and so hold that in the controversy now before us the action for rescission has
prescribed and should consequently be dismissed on said ground. There can be no dispute that
actions based on written contracts prescribe after ten years from the time the right of the action
accrues. 26 It is elementary that the computation of the period of prescription of any cause of action,
which is the same as saying prescription of the action, should start from the date when the cause of
action accrues or from the day the right of the plaintiff is violated. This is as it should be.

A cause of action has three elements, namely: (1) a right in favor of the plaintiff by whatever means
and under whatever law it arises or is created: (2) an obligation on the part of the named defendant to
respect or not to violate such right; and, (3) an act or omission on the part of such defendant violative
of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff. It is
only when the last element occurs or takes place that it can be said in law that a cause of action has
arisen. Translated in terms of a hypothetical situation regarding a written contract, no cause of action
arises until there is a breach or violation thereof by either party. 27

Conversely, upon the occurrence of a breach, a cause of action exists and the concomitant right of
action may then be enforced.

In the present case, petitioner's position is that the last three installments which he claims were not
paid by private respondent, allegedly fell due on July 1, 1968, July 1, 1969, and July 1,1970,
respectively. 28 Indulging petitioner in his own submissions, therefore, the breach committed by private
respondent occurred, at the earliest, on July 1, 1968 or, at the latest, on July 1, 1970.

Now, even taking the non-payment of the last installment as the basis, an actionable breach of the
contract was already committed on said date, hence, as of that time there arose and existed a cause
of action for petitioner to file a case for rescission. This remedy could already have been availed of by
petitioner for, as earlier discussed, there has been no legal obstacle thereto. Since the ten-year period
had started to run on July 2, 1970, petitioner should have filed the action before July 2, 1980 when the
prescriptive period expired. Considering that the amended complaint in Civil Case No. 4293, invoking
petitioner's right to rescind the contract, was filed only on May 3, 1985, the action therefor has
obviously and ineluctably prescribed.

ACCORDINGLY, the instant petition for review on certiorari is hereby DENIED.

SO ORDERED.

145
G.R. No. L-10458 April 22, 1957

VICENTE MIJARES and SULPICIA GUANZON, petitioner,


vs.
HONORABLE EDMUNDO S. PICCIO, Judge of the Court of First Instance of Cebu and
PASTORA ALVAREZ GUANZON, respondents.

Luis G. Torres for petitioners.


Antonio Y. de Pio and Pedro T. Garcia for respondent Pastora A. Guanzon.

BAUTISTA ANGELO, J.:

This is a petition for prohibition and certiorari with preliminary injunction seeking to enjoin
respondent Judge from enforcing his order requiring petitioners to answer the complaint and
proceed with the trial in Civil Case No. R-3822 and asking at the same time that said order be set
aside and the case be dismissed as regards said petitioners.

On December 24, 1954, Pastora Alvarez Guanzon filed a complaint in the Court of First Instance
of Cebu against her husband Jose M. Guanzon containing two causes of action: one for the
annulment of a deed of sale in favor of Sulpicia Guanzon of certain real properties situated in the
province of Negros Occidental, and the annulment of a deed of donation inter-vivos in favor of
Joven Salvador Guanzon of another set of real properties situated in the province of Cebu; and
another for the separation of their conjugal properties which include both real and personal
acquired during marriage (Civil Case No. R-3823).

On October 19, 1955, plaintiff filed a motion to bring into the case Sulpicia Guanzon and her
husband Vicente Mijares as parties defendants alleging that their presence there in is
indispensable. This motion was granted and said defendants were duly summoned in accordance
with law.

146
On January 17, 1956, new defendants Sulpicia Guanzon and Vicente Mijares, of filing their
answer, filed a motion to dismiss based on three grounds to wit: (1) that venue is improperly laid,
(2) that their is a misjoinder of cause, of action and of and (3) that the court has no jurisdiction of
said defendants. After hearing the parties on this motion, the court denied the same on February
7, 1956, holding that the action is in personam as it does affect title to real property, that there is
no misjoinder of causes of action, and that it has jurisdiction over the persons of the movants.
The movants filed a motion for the reconsideration, and when this was denied, they interposed
the present petition for prohibition and certiorari seeking to set aside the two orders adverted to.

The present case involves the rule which the joinder of several causes of action, the pertinent
provision of which is embodied in Rule 2, section 5, which provides that "Subject to rules regarding
venue and joinder of parties, a party may in one complaint, counterclaim, cross-claim and third-
party claim state, in the alternative or otherwise, as many different causes of action as he may
have against an opposing party."

While this rule appears simple, however, difficulties may arise in its application, for it does not
state specifically the cases where several causes of action may be joined, each case apparently
depending upon the nature of the transactions involved. But one thing is clear: That the joining of
causes of action must be subject to the rules regarding venue and joinder of parties. If these rules
are violated, then a misjoinder of causes of action may arise.

Former Chief Justice Moran gives several illustrations of how this rule may be applied which are
interesting. On this point he makes the following comment:

This rule, which is expressly extended to counterclaims, cross-claims, and third-


party claims, is subject to the limitation regarding venue, whereby several causes
of action with no common venue cannot be joined. For instance, if A, a resident of
Manila, has against E, a resident of Baguio, two causes of action, one for money,
and another for title to real property located in Zamboanga, he cannot join them in
a single complaint, for the venue of the first action, which is either Manila or Baguio,
is different from the venue of the second, which is Zamboanga.

The rule is likewise subject to the limitation regarding joinder of parties. For
instance plaintiff A has a cause of action against B, another cause of action against
C, and another cause of action against D, the three causes of action cannot be
joined, because there would be a misjoinder of parties defendant, each of them
being interested in the cause of action alleged against him not in the other causes
of action pleaded against the others.1 A claim on a promissory note against three
defendants may not be joined with a claim on another promissory note against two
of the defendants, for again there is a misjoinder of parties, the third defendant in
the first cause of action not having an interest in the second cause of
action.2(Moran, Comments on the Rules of Court, Vol. 1, 1952 Ed., p. 24).

In the light of the instances cited by former Chief Justice Moran, it maybe stated that there is a
misjoinder of causes of action in the present case not only as regards venue but also as regards
the defendants. With regard to the first, it should be noted that the first cause of action stated in
the complaint refers to the annulment of a deed of sale real properties situated in the province of
Negros Occidental, and of a deed of donation inter vivos of another set of real properties situated
in the province of Cebu. They refer to two different transactions which properties situated in two
different provinces. The venue has therefore been improperly laid as regards the properties in
Negros Occidental. With regard to the second, it also appears that the deed sale which is sought
to be annulled was made in favor of Sulpicia Guanzon whereas the deed of donation was made
in favor of Joven Salvador Guanzon, and there is nothing from which it maybe inferred that the

147
two defendants have a common interest that maybe joined in one cause of action on the contrary
their interest is distinct and separate. They cannot therefore be joined in one cause of action.

In the light of the above considerations, it may be stated that the motion to dismiss filed by
petitioners in so far as the cause of action involving the annulment of the deed of sale covering
the properties in Negros Occidental is well taken and should have by the lower court.

Petition is granted. The orders of respondent Judge dated February 7, 1956, and March 5, 1956
are hereby set aside. The complaint in so far as the cause of action affecting petitioners is hereby
dismissed, leaving the complaint valid as regards the other defendants, with costs against
respondent Pastora Alvarez Guanzon.

G.R. No. L-3038 January 31, 1951

VISITACION A. GACULA, assisted by her husband FACUNDO GACULA, plaintiffs-appellants,


vs.
PILAR MARTINEZ, CRISTINA GUIRNALDA, EDEN GUIRNALDA, GENEROSA DE MANZANO and
LUZ DE GACUSAN, defendants-appellees.

Vicente Llanes and Alfonso Rosal for appellants.


No appearance for appellees.

MONTEMAYOR, J.:

In the Court of First Instance of Ilocos Sur, Visitacion A. Gacula assisted by her husband Facundo
Gacula, filed a civil action No. 616 against Pilar Martinez, Cristina Guirnalda, Eden Guirnalda,
Generosa de Manzano and Luz de Gacusan, to recover from them the sum of P920, alleged value of
four pieces of jewelry plus P1,250 as damages or a total of P2,200.

The complaint alleges that plaintiff Vicitacion was the owner of one ring valued at P200; another ring
worth P200; a "medallon de oro" valued at P170 and a pair of earings worth P350; that on March 9,
19, 20 and 31 and April 10, 1948, one Aquilina Saraos de Gabas received said jewelry to be sold on
commission with the obligation to return them to the owner or deliver their value, within ten days; that
Aquilina without authority of the owner delivered the first ring to Cristina and Eden, both surnamed
Guirnalda and the second ring to Pilar Martinez, the "medallon" to Generosa de Manzano and the
earings to Luz de Gacusan; that Aquilina Saraos was convicted of estafa in June, 1948 and was
sentenced to suffer ten months imprisonment, to indemnify Visitacion in the sum of P1,450.65 or suffer
subsidiary imprisonment in case of insolvency; that Aquilina failed to return the jewelry because they
remained in the possession of the respective defendants; that neither could Aquilina pay their value,
she being insolvent; and that the defendants refused to return the pieces of jewelry in their possession
to plaintiff Visitacion in spite of the several demands made upon them and despite the search warrant
issued by the court.
148
Cristina in her answer alleges that she is ignorant of the transaction between the plaintiff and Aquilina;
that she had nothing to do with the conviction of Aquilina for estafa, and that she knows nothing of the
ring said to have been delivered to her nor its demand for its return and that she never received said
ring from the plaintiff.

Generosa de Manzano in her answer claims that she never had any transaction with Aquilina Saraos
but that she possesses a "medallon" like that described in the complaint but that she had bought it not
from Aquilina but from one Mrs. Isabel Manzano de Maramba.

Defendants Pilar, Eden and Luz filed a motion to dismiss the claiming that the court has no jurisdiction
over the subject matter; that the cause of action is barred by the prior judgment and that the claim in
plaintiff's complaint has been released. They contend that the claim and interest in each piece of
jewelry is seperate and distinct and should be the subject of an action, that because of the value of
each piece of jewelry, such action falls within the jurisdiction of the justice of the peace court; that the
cause of action is barred by the criminal action of estafa against Aquilina on which she was duly
convicted, and that the sentenced to indemnify the plaintiff in the sum of P1,450.65 bars the present
claim of the plaintiff, said judgment having the effect of a release on the present claim of the plaintiff.

The trial court granted the motion and dismissed the case with costs, on the ground that the plaintiff
had distinct and seperate actions against each defendant, and since the amount of the claim against
each defendant ranges from P170 to P350, in accordance with the provisions of the section 88,
Republic Act 296, the plaintiff's case falls within the exclusive jurisdiction of the justice of the peace
court. The plaintiff appealed directly to this court because only questions of law are involved.

The contention of the defendants that the cause of action is barred by the prosecution of Aquilina for
estafa and that her conviction thereof and the sentence to indemnify the plaintiff in the sum of
P1,450.65 which includes the value of the jewelry, bars the claim of the plaintiffs, is untenable. Article
104 of the Revised Penal Code states that civil liability includes among other things, restitution, and
article 105 of the same code provides that the thing itself shall be restored, even though it be found in
the possession of a third person who has acquired it by lawful means, saving to the latter his action
against the person who may be liable to him. In other words, the owner of an article who has been
deprived thereof through the commission of crime may follow and recover it from any person in
possession thereof, except in certain specific cases. And the conviction of the person illegally depriving
the owner of the possession of an article and his being sentenced to either restore the article taken
away or pay the value thereof, is no bar to the recovery of the said article by the owner from anyone
holding it.

The case of Arenas vs. Raymundo, (19 Phil., 46), is directly in point. There, several pieces of jewelry
were delivered by the owner to an agent to be sold on commission, but the agent instead of selling the
jewelry or accounting for their value, pledged the same to a pawnshop. The agent as in the present
case was prosecuted for estafa, convicted, and sentenced to pay the value of the jewelry or suffer
subsidiary imprisonment in case of insolvency. And yet, this court held that the owner could recover
said jewelry from the pawnshop owner, citing in support of its holding the provisions of article 120 of
the old penal code, from which was copied article 105 of the Revised Penal Code, as well as the
doctrine laid down in the cases of Varela vs. Matute, and Valera vs. Finnick (9 Phil., 479 and 482),
respectively.

As regards jurisdiction, however, we agree to the contention of the defendants and the ruling of the
trial court that it had no jurisdiction. The claim against each defendant for the recovery, of the piece of
jewelry said to be in her possession, really constitutes a separate cause of action; so is the defense
of each defendant, separate and distinct from those of her co-defendants. The ruling in the case of
Brillo vs. Buklatan et al., (87 Phil., 519) is applicable. In said case, the first cause of action is that the
plaintiff as President of the Leyte United Workers, sought to recover from several defendants the
amounts of money which the latter in their capacities as chief foreman and foreman had been
collecting from several groups of laborers as their contributions to funds of the association of which

149
plaintiff was the president. In affirming the order of dismissal of the complaint this court said the
following:

Furthermore, the first cause of action is composed of separate claims against several
defendants of different amounts each of which is not more than P2,000 and falls under
the jurisdiction of the justice of the peace court under section 88 of Republic Act No.
296. The several claims do not seem to arise from the same transaction or series of
transactions and there seem to be no question of law or of fact common to all
defendants as may warrant their joinder under Rule 3, section 6. Therefore, if new
complaints are to be filed in the name of the real party in interest they should be filed
in the justice of the peace court.

In the present case, the several claims against the defendants do not seem to arise from the same
transaction or series of transactions. In fact complaint, the different pieces were received by the agent
from the owner on different dates. It is highly possible that assuming that said pieces of jewelry were
given by the agent to each of the several defendants, the transaction between the agent Aquilina and
each defendant was separate and distinct from that of the rest, and effected on a different occasion.
There is no pretense that there was any conspiracy between or among the different defendants to
obtain the pieces of jewelry from the agent and latter refuse to return or account for them. Furthermore,
the defense of each defendant as already stated, may be different from the rest. As may be seen from
their answers, while one defendant says that she possesses one of the pieces of jewelry involved in
the case, but insists that she had bought it from a person other than Aquilina, the other defendants
flatly deny having received any jewelry from the plaintiff's agent. It is not therefore permissable to
include these separate and distinct claims or causes of action and the several defendants in one single
complaint, and inasmuch as each claim does not exceed P2,000 the justice of the peace court has
jurisdiction, if and when new complaints are filed.

In view of the foregoing, the order appealed from is hereby affirmed, with costs. So ordered.

150
G.R. No. 149041 July 12, 2006

HEIRS OF ROLANDO N. ABADILLA, represented herein by SUSAN SAMONTE ABADILLA,


petitioners,
vs.
GREGORIO B. GALAROSA, respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari assailing the Decision1 of the Court of Appeals (CA) in
CA-G.R. CV No. 60766 promulgated on May 28, 2001 as well as its Resolution 2 dated July 17, 2001
denying petitioners’ motion for reconsideration thereof. The CA reversed the Order3 of the Regional
Trial Court (RTC), Quezon City, Branch 84 dated February 16, 1998 which dismissed the Complaint
of herein respondent on the ground that it is barred by prior judgment.

The facts are as follows:

Respondent Gregorio B. Galarosa (Galarosa) filed on February 8, 1990, a Petition for Reconstitution
of Lost Title, Transfer Certificate of Title (TCT) No. 261465, docketed as LRC Case No. Q-3536(90)
before the RTC, Branch 105, presided by Judge Tomas V. Tadeo, Jr.. On September 25, 1990, Judge
Tadeo issued an Order directing the Register of Deeds of Quezon City to reconstitute the original of
TCT No. 261465, thus:

WHEREFORE, premises considered, the Register of Deeds of Quezon City or his duly
authorized representative is hereby ordered to reconstitute the original title that was burned,
destroyed or lost from the said owner’s duplicate copy of Transfer Certificate of Title No.
261465 to be presented by herein petitioner or counsel upon FINALITY of this ORDER. Let
copies of the same be furnished the Register of Deeds of Quezon City and the Land
Registration Authority.

151
SO ORDERED.4

In issuing said Order, Judge Tadeo noted that: the concerned government agencies, namely, the
Office of the Solicitor General, the Land Registration Authority (LRA), the Register of Deeds of Quezon
City, the Director of Lands, and the City Prosecutor of Quezon City were duly served copies of
Galarosa’s Petition for Reconstitution; a representative from the Office of the City Prosecutor appeared
at the hearing and interposed no objection thereto; Galarosa caused the publication of the court order
setting the case for hearing in the Official Gazette dated June 25, 1990, July 2, 1990, and July 6, 1990;
said court order was also posted at the main entrance of the Quezon City Hall, the Bulletin Boards of
the Quezon City courts, the Sheriff’s Office and at the hall of the barangay where the property is
located; the Register of Deeds also issued a certificate that the original copy of TCT No. 261465 was
burned, destroyed, or lost when the Office of the Register of Deeds was gutted by fire on June 11,
1988; the owner’s duplicate copy of TCT No. 261465 was brought and presented before the court and
upon verification was found to be genuine and authentic. 5

When Galarosa presented the said court order together with his duplicate certificate of title to the
Register of Deeds of Quezon City, the latter, however, refused to comply prompting Galarosa to file
on June 25, 1991 an urgent motion with the RTC seeking to compel the Register of Deeds of Quezon
City to reconstitute his title.6

On September 16, 1993, RTC, Branch 105, this time through Judge Benedicto B. Ulep, issued an
Order denying the motion of Galarosa, explaining as follows:

While it is true that the Register of Deeds earlier issued a certification, this does not bar said
office from refusing to reconstitute because [of] the supervening event, that is, the discovery
of the spuriousness of the signature of then Register of Deeds Nestor Peña, has materially
changed the situation so that if reconstitution will be ordered by this Court of a non-existent
certificate of title, the same will be inequitable and unjust because the Court will be made an
instrument in impairing the integrity of the torrens system. Once reconstituted, the spurious
title may be conveyed to third persons who are innocent of the infirmities of the title and will
have no better right to ownership of the property. It is basic under R.A. No. 26 that for
reconstitution to be effected, the title must have been duly issued by the Register of Deeds
and destroyed while it was still in force. Since the title, therefore, was spurious because it was
not duly issued by the Register of Deeds (whose signature was simulated) and the judicial
form used in the Deeds of Ozamis City (not Quezon City), then there was no valid title on file
with the Register of Deeds of Quezon City which was in force at the time of the burning of
Quezon City Hall.

WHEREFORE, in the light of the foregoing, the urgent motion is denied.

SO ORDERED.7

In refusing to compel the Register of Deeds to effect the reconstitution, the trial court gave weight to
the (1) manifestation of the Register of Deeds of Quezon City, Samuel C. Cleofe, stating that it had to
deny reconstitution of the original of TCT No. 261465 based on the findings of the LRA Administrator
that said title, subject of the order for reconstitution, is of doubtful authenticity;8 (2) the National Bureau
of Investigation (NBI) report finding that the signature that appears on TCT No. 261465 and the
standard sample signatures of then Register of Deeds of Quezon City, Nestor Peña, were not written
by one and the same person;9 and the (3) Consulta of LRA Administrator Teodoro C. Bonifacio stating
that Serial Number 4055240 which appears on the face of the owner’s duplicate certificate of TCT No.
261465, was not assigned to the Registry of Deeds of Quezon City but was issued to the Registry of
Deeds of Ozamis City.10

Galarosa filed a Motion for Reconsideration which was denied by the trial court in its Order dated April
19, 1994.11

152
Three years later, or on June 4, 1997, Galarosa filed a Complaint for Recovery of Ownership,
Annulment of Title with Damages12 seeking the annulment of TCT No. 60405 which is in the name of
deceased Rolando N. Abadilla, docketed as Civil Case No. Q-97-31250 (hereafter CV No. Q-97-
31250) and assigned to RTC Branch 84 of Quezon City. Galarosa claims that TCT No. 60405 is
fraudulent, fake, and unauthorized under existing laws.13

The Heirs of Rolando N. Abadilla (Abadillas) filed an Answer on July 14, 1997, claiming that Galarosa’s
complaint states no cause of action and it is barred by prior judgment. The Abadillas cited the
September 16, 1993 Order of RTC, Branch 105, which denied Galarosa’s motion to compel the
Register of Deeds to reconstitute his title after finding that said title is spurious, as well as the April 19,
1994 Order denying Galarosa’s Motion for Reconsideration.14

On July 30, 1997, the Abadillas filed A Motion for Preliminary Hearing on Affirmative Defenses and to
Cancel the Notice of Lis Pendens.15

On February 16, 1998, RTC, Branch 84 of Quezon City issued an Order dismissing CV No. Q-97-
31250, as follows:

LRC Case No. Q-3536(90) of Branch 105 of this Court is conclusive of the rights of the parties
herein. The main issue was finally decided in the Orders of 16 September 1993 and 19 April
1994, both issued in LRC Case No, Q-3536(90). As a consequence, it can not be litigated
anew. The present action is thus barred by a prior judgment.

ACCORDINGLY, this case is dismissed. No costs.

SO ORDERED.16

Galarosa appealed to the CA claiming that the trial court erred in dismissing his complaint and in
refusing to rule that his title is genuine. He then prayed that the Order dated February 16, 1998 be
reversed and set aside and that a new order be issued annulling TCT No. 60405.17

On May 28, 2001, the CA issued the herein assailed Decision granting the appeal and setting aside
the order appealed from, thus:18

A simple perusal of the case shows that there is no identity of cause of action. The first action
is to reconstitute title, while the second one is for recovery of ownership, annulment of title with
damages. There are other issues in the second case which must be resolved by the court.
Hence, the first case cannot be considered as a bar to the resolution of the second case.

Even assuming however that the second case is barred by prior judgment, yet judging from
the facts presented by the present case, it is beyond doubt that serious injustice will be
committed if strict adherence to procedural rules were to be followed.

It is worthy to note that rules of procedure are but mere tools designed to facilitate the
attainment of justice, such that when rigid application of the rules would tend to frustrate rather
than promote substantial justice, this Court is empowered to suspend its operation.

The other errors raised by the plaintiff-appellant need not be resolved by this Court as the
same may be threshed out in the appropriate action that appellant may file in the proper court
to protect his interest. The appellant should have filed an action for cancellation of title. As held
by the Court in the case of Republic vs. Court of Appeals, a torrens title cannot be collaterally
attacked. The issue of validity of a torrens title, whether fraudulently issued or not, may be
posed only in an action brought to impugn or annul it. Unmistakable, and cannot be ignored,
is the germane provision of Section 48 of P.D. 1529, that a certificate of title can never be the

153
subject of a collateral attack. It cannot be altered, modified, or cancelled except in a direct
proceeding instituted in accordance with law.

WHEREFORE, the appeal is hereby GRANTED and the order appealed from is accordingly
SET ASIDE.

SO ORDERED.19

The Abadillas filed a Motion for Reconsideration to no avail.20 Hence the present petition on the
following grounds:

A.

THE HONORABLE COURT OF APPEALS HAS DECIDED QUESTIONS OF SUBSTANCE IN


A WAY PROBABLY NOT IN ACCORD WITH LAW AND/OR WITH THE APPLICABLE
DECISIONS OF THE HONORABLE SUPREME COURT.

B.

THE HONORABLE COURT OF APPEALS HAS SO FAR DEPARTED FROM THE


ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN
EXERCISE OF THE POWER OF SUPERVISION.

DISCUSSION

I.

THE RTC OF QUEZON CITY, BRANCH 84, CORRECTLY DISMISSED CIVIL CASE
NO. Q-97-31250 FOR BEING BARRED BY PRIOR JUDGMENT IN LRC CASE NO.
Q-3536 (90) IN LIGHT OF THE FOLLOWING-

a) The principle of res judicata applies notwithstanding respondent’s attempt to vary


his form of action in Civil Case No. Q-97-31250;

b) Respondent filed Civil Case No. Q-97-31250 for recovery of ownership, annulment
of title with damages to have his title validated in effect, in an indirect or subtle way of
challenging the final and executory judgment in the reconstitution proceeding
denominated as LRC Case No. Q-3536 wherein his title was declared as fake or
spurious;

c) It was pointless for respondent to bring an action for recovery of


ownership/annulment of title when he has not disproved the findings of the Register of
Deeds of Quezon City, the NBI and the LRA Administrator that his title is fake or
spurious;

d) Serious injustice will be caused not to respondent who holds a fake or spurious title,
but to petitioners who have a genuine and valid title.21

Petitioners argue that: the CA erred in ruling that res judicata does not apply in this case as substantial
identity of causes of action exists in the petition for reconstitution of title (LRC Case No. Q-3536[90])
and in the action for recovery of ownership/annulment of title with damages (CV No. Q-97-31250);
"genuineness of title" has to be alleged and established in both cases; respondent’s complaint for
recovery/annulment is a mere attempt to vary the form of action from the reconstitution case and
thereby avoid the effects of the final and executory judgment in the latter; res judicata or bar by prior
judgment forecloses not only matters squarely raised and litigated but all such matters which could
154
have been raised in the litigation but were not; proceedings in the reconstitution case are conclusive
on the rights of the parties, particularly as to whose title is genuine; respondent did not controvert the
manifestation of the Register of Deeds of Quezon City, the findings of the NBI, the Consulta of the
LRA Administrator, neither did he present evidence to the contrary; respondent also did not appeal
the Orders of Judge Ulep dated September 16, 1993 and April 19, 1994 which have become final and
executory; respondent deliberately suppressed facts which give rise to suspicion that he is a party to
a fraudulent scheme to validate/legitimize fake titles; respondent anchored his right of ownership on a
deed of absolute sale executed by one Wilfredo Gener, an alleged agent of the heirs of Don Mariano
San Pedro y Esteban; Don Mariano’s claim however was predicated upon a Spanish title, which is no
longer countenanced as indubitable evidence of land ownership.22

Petitioners then pray that the Decision of the CA dated May 28, 2001 and its Resolution dated July
17, 2001 be reversed and set aside, the appeal of Galarosa be dismissed for lack of merit, and the
Order dated February 16, 1998 of the RTC be affirmed.23

Respondent in his Comment contends that: he did not appeal the Orders dated September 16, 1993
and April 19, 1994 as said Orders were null and void having been rendered by Branch 105 long after
it had lost jurisdiction over the case; what respondent’s counsel did then was to file a separate civil
case for recovery of ownership, annulment of title with damages; the genuineness and authenticity of
respondent’s title is not an issue in this appeal; Act No. 496 as amended by Presidential Decree No.
1529, Sec. 48, provides that certificates of title are not subject to collateral attack and may not be
altered, modified, or cancelled except in a direct proceeding in accordance with law; the principal issue
in the present petition is whether the dismissal of the complaint in CV No. Q-97-31250 is meritorious,
or whether the Orders dated September 16, 1993 and April 19, 1994 could properly constitute a bar
to the filing of CV No. Q-97-31250; the issue of whose title is genuine has not been brought to the
appropriate courts; there can be no identity of causes of action between LRC Case No. Q-3536(90)
and CV No. Q-97-31250 as the first involves a court of limited jurisdiction while the latter involves a
court of general jurisdiction.24

Respondent filed a Supplement to Comment, adding that: there can be no res judicata as there is no
identity of causes of action between the first and the second case; even assuming that the
genuineness of title should be established in both actions, in the latter case, not only genuineness of
title must be looked into but recovery of ownership and damages as well; the two actions entail different
pieces of evidence; a reconstitution proceeding is an action in rem while an action to recover title or
possession of real property is not; respondent purchased the property from Wilfredo Gener in good
faith and for valuable consideration; for as long as respondent can prove that he was issued a title
which was destroyed, the trial court has no alternative but to grant the petition for reconstitution; the
NBI report is not conclusive and the Register of Deeds has not presented evidence to disprove the
existence of the title of respondent; in refusing to reconstitute the title of respondent, TCT No. 261465,
the Register of Deeds acted illegally and violated his ministerial duty; there is no suppression of facts
in this case as the same form part of the records which can easily be alleged by petitioners in their
answer.25

Petitioners filed a Consolidated Reply insisting that Rolando Abadilla’s acquisition of the property was
valid and his title, TCT No. 60405, is genuine and authentic while Galarosa’s acquisition of the same
is dubious and his title, TCT No. 261465, is spurious as borne out by the findings of the Register of
Deeds of Quezon City, LRA, NBI, and the RTC, Branch 105 of Quezon City.26

Stripped to its core, the issue that has to be resolved in the present petition is: Whether the CA erred
in ruling that the Complaint for Recovery of Ownership, Annulment of Title with Damages, CV No. Q-
97-31250, filed by Galarosa in 1997 is not barred by the Orders dated September 16, 1993 and April
19, 1994, in the reconstitution case, LRC Case No. Q-3536(90).

The Court rules against petitioners and upholds the assailed Decision and Resolution of the CA.

155
Res judicata, which is being invoked by petitioner, presupposes the existence of the following: (1) the
judgment sought to bar the new action must be final; (2) the decision must have been rendered by a
court having jurisdiction over the subject matter and the parties; (3) the disposition of the case must
be a judgment on the merits; and (4) there must be as between the first and second action, identity of
parties, subject matter, and causes of action.27

It has two aspects: first, "bar by prior judgment" which is provided in Rule 39, Section 47(b) of the 1997
Rules of Civil Procedure and second, "conclusiveness of judgment" which is provided in Section 47(c)
of the same Rule, to wit:

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

xxxx

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

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

Petitioners claim that the civil case for recovery of ownership should be barred by the orders of the
trial court in the reconstitution proceedings; or at the very least, that the doctrine of conclusiveness of
judgment be applied in this case.

The Court finds that there is neither a bar by prior judgment nor conclusiveness of judgment.

There is "bar by prior judgment" when there is identity of parties, subject matter, and causes of action,
between the first case where the judgment was rendered, and the second case which is sought to be
barred. Under this principle, the judgment in the first case constitutes an absolute bar to the second
action, i.e., the judgment or decree of the court of competent jurisdiction on the merits concludes the
litigation between the parties, as well as their privies and constitutes a bar to a new action or suit
involving the same cause of action before the same or any other tribunal.28

As correctly pointed out by the CA, there is no identity of causes of action between the reconstitution
case and the civil action for recovery of ownership and annulment of title with damages. Thus, there
can be no bar by prior judgment in this case.

A cause of action is the act or omission by which a party violates a right of another.29 It is determined
by the facts alleged in the complaint and not by the prayer therein.30 The test to determine if there is
identity of causes of action is to consider whether the same evidence would sustain both causes of
action, i.e., whether the same evidence which is necessary to sustain the second action would have
been sufficient to authorize a recovery in the first, even if the forms or nature of the two actions be
different.31 When evidence to sustain the respective causes of action in the two cases is not exactly
the same, there is no identity between the causes of action.32

The nature of judicial reconstitution proceedings is the restoration of an instrument or the reissuance
of a new duplicate certificate of title which is supposed to have been lost or destroyed in its original
form and condition.33 Its purpose is to have the title reproduced after proper proceedings in the same
156
form they were when the loss or destruction occurred and not to pass upon the ownership of the land
covered by the lost or destroyed title.34 Possession of a lost certificate of title is not the same as
ownership of the land covered by it, and the certificate does not vest ownership but merely evinces
title over a particular property.35 Indeed, registering land under the Torrens System does not create or
vest title because registration is not a mode of acquiring ownership.36

The civil action filed by respondent is for Recovery of Ownership and Annulment of Title with Damages.
It principally delves on the issue of ownership of the land covered by the title of Rolando Abadilla.
Such issue of ownership of Abadilla was not touched upon in the reconstitution proceedings.

On the other hand, the doctrine of "conclusiveness of judgment" provides that issues actually and
directly resolved in a former suit cannot again be raised in any future case between the same parties
involving a different cause of action.37 Under this doctrine, identity of causes of action is not required
but merely identity of issues. Otherwise stated, conclusiveness of judgment bars the relitigation of
particular facts or issues in another litigation between the same parties on a different claim or cause
of action.38

Readily apparent is the fact that the parties are not the same in the reconstitution proceedings and the
civil case for recovery of ownership and annulment of title with damages. In any case, the applicability
of the doctrine of "conclusiveness of judgment," in this case, is immaterial as the genuineness of the
transfer certificate of title of Galarosa, which is the subject of the reconstitution proceeding, is not
determinative of the outcome of the civil case for recovery of ownership and annulment of title.

The issue of ownership must be threshed out in a separate civil suit and should not be confused with
reconstitution proceedings.

As pronounced by this Court in Lee v. Republic of the Philippines39

[A] reconstitution of title is the re-issuance of a new certificate of title lost or destroyed in its
original form and condition. It does not pass upon the ownership of the land covered by the
lost or destroyed title. Any change in the ownership of the property must be the subject of a
separate suit. Thus, although petitioners are in possession of the land, a separate proceeding
is necessary to thresh out the issue of ownership of the land.40

In the Heirs of De Guzman Tuazon v. Court of Appeals41 the Court also explained that:

[I]n x x x reconstitution under Section 109 of P.D. No. 1529 and R.A. No. 26, the nature of the
action denotes a restoration of the instrument which is supposed to have been lost or
destroyed in its original form and condition. The purpose of the action is merely to have the
same reproduced, after proper proceedings, in the same form they were when the loss or
destruction occurred, and does not pass upon the ownership of the land covered by the lost
or destroyed title. It bears stressing at this point that ownership should not be confused with a
certificate of title. Registering land under the Torrens System does not create or vest title
because registration is not a mode of acquiring ownership. A certificate of title is merely an
evidence of ownership or title over the particular property described therein. Corollarily, any
question involving the issue of ownership must be threshed out in a separate suit, which is
exactly what the private respondents did when they filed Civil Case No. 95-3577 ["Quieting of
Title and Nullification and Cancellation of Title"] before Branch 74. The trial court will then
conduct a full-blown trial wherein the parties will present their respective evidence on the issue
of ownership of the subject properties to enable the court to resolve the said issue.42 x x x

WHEREFORE, the petition is DENIED. The Decision dated May 28, 2001 and Resolution dated July
17, 2001 of the Court of Appeals setting aside the Order dated February 16, 1998 of the Regional Trial
Court, Quezon City, Branch 84 in Civil Case No. Q-97-31250, are AFFIRMED. The trial court is
ordered to proceed with the trial of Civil Case No. Q-97-31250.

157
No costs.

SO ORDERED.

G.R. No. 131277 February 2, 1999

Spouses FRANCISCO and ANGELA C. TANKIKO and Spouses ISAIAS and ANITA E.
VALDEHUEZA, petitioners,

vs.

JUSTINIANO CEZAR, EUGENIO ENDAN, BONIFACIO ACLE, EUSEBIO ANTIG, JULIO


ASENERO, PILAR ARBOLADURA, JUANA BALISTOY, APOLINARIO BAHADE, REMEGIO
CAGADAS, TEODORO CAGANTAS, ALEJANDRO DE LA CERNA, NILO DE LA CRUZ,
REMEDIOS F. COLLERA, TERESITA COLLERA, ANASTACIO DAGANDARA, HEIRS OF
SOTERO ESCOLANA represented by LUZ ESCOLANA, HEIRS OF FELICISIMO
EXCLAMADO represented by ALFREDO EXCLAMADO CARLOS GOMEZ, ELEUTERIO
GUIWAN HEIRS OF TEODORO JANDAYAN represented by MARINA ANAYA VDA. DE
JANDAYAN, HEIRS OF GUILLERMO NARISMA, IGNACIO OPAON, ANTONIO PALMA,
ELADIO RAAGAS, HEIRS OF MARTIN RODRIGUEZ represented by LUZMINDA
RODRIGUEZ ABEJARON, RUFINO SUMAMPONG, HEIRS OF ASUNCION TACDER
represented by EUSEBIO ANTIG, DOMINGO TORDILLO, LUCIANO UAYAN and JULIO
WALAG, respondents.

PANGANIBAN, J.:

Equity may be invoked only in the absence of law; it may supplement the law, but it can neither
contravene nor supplant it.

158
Statement of the Case

This principle is stressed by this Court in granting the Petition for Review on Certiorari before us
seeking the nullify of the April 16, 1997 Decision of the Court of Appeals 1 in CA-GR CV No. 50025
and its October 13, 1997 Resolution denying reconsideration. The dispositive portion of the
assailed Decision reads as follows:

WHEREFORE, the foregoing considered, the appealed decision is SET


ASIDE and another one entered allowing plaintiffs-appellants to stay in the
premises pending final termination of the administrative proceedings for
cancellation of defendants-appellees' titles and final termination of the
action for reversion and annulment of title. Let notice of lis pendens be
annotated on Original Certificate of Title Nos. T-55515 and T-55516.

Let a copy of this decision be furnished to the Director of Lands and the
Office of the Solicitor General for the administrative investigation of plaintiff-
appellant's complaint and [for] the eventual filing of the petition for the
cancellation of defendants-appellees' title [to] be initiated, expedited if still
pending, and resolved without further delay. 2

By the foregoing disposition, the Court of Appeals effectively reversed the February 9, 1995
Decision 3 of the Regional Trial Court of Misamis Oriental, Branch 17, which disposed:

WHEREFORE, premises considered, the complaint filed in this case


against the defendants by the plaintiffs should be, as it is hereby ordered,
DISMISSED, for lack of merit. Accordingly, the defendants are hereby
declared as owners of the property in litigation as evidenced by their
certificates of title covering their respective portions of Lot No. 3714 and
the plaintiffs, who are now possessing and occupying said parcel of land,
are hereby ordered to vacate the same within ninety (90) days, so that the
defendants can take possession of their respective portions and enjoy the
same as owners thereof.

The counter-claims are, likewise, dismissed for failure to prove the same.
Costs against the plaintiffs. 4

Hence, this recourse to this Court. 5

The Facts

As found by the Court of Appeals, the facts of the case are as follows:

. . . Plaintiffs-appellant [herein respondents] are the actual occupants and


residents of a portion [of land] consisting of 1 ha. 7552 sq. m. (Appellants'
Brief, p. 28, Rollo) of the controverted lot, Lot No. 3714 of the Cadastral
Survey of Cagayan [(]Cadastral Case No. 18, L.R.C. Rec. No. 1562[)] with
the improvements thereon, situated in the Barrio of Lapasan, City of
Cagayan de Oro . . . containing an area of ONE HUNDRED TWENTY SIX
THOUSAND ONE HUNDRED AND TWELVE (126,112) SQUARE
METERS, more or less (Exhibit "2"; Records, pp. 12-13).

Plaintiffs-appellants are miscellaneous sales patent applicants of their


respective portions of the aforedescribed lot occupied by them [(]some as
159
far back as 1965[)] and have been religiously paying taxes on the property.
The action for reconveyance with damages filed before the Regional Trial
Court, Misamis Oriental, Cagayan de Oro City springs from the fact that the
lot in question [(]Lot 3714[)] had been titled under Original Certificate of
Title No. O-740 issued by the then Land Registration Commission on
December 13, 1977 in the name of Patricio Salcedo married to Pilar Nagac.
Said OCT was issued pursuant to Decree of Registration No. N-168305 in
accordance with a decision of the Cadastral Court in Cadastral Case No.
18, LRC Cad. Rec. No. 1562 dated August 6, 1941 penned by the Hon.
Lope Consing (Pre-Trial Brief for Defendant Spouses Francisco and
Angela Tankiko and Spouses Isaias and Anita Valdehueza, Records, p.
258). Subsequently, separate titles (Transfer Certificates of Title NO. T-
55515 and T-55516) were issued to defendant-appellee Tankiko after the
latter purchased Lots 3714-B, 3714-C of the subdivision plan from the Heirs
of Patricio Salcedo represented by Atty. Godofredo Cabildo, their attorney-
in-fact. In turn, defendant-appellee Francisco Tankiko sold Lot 3714-C to
defendant-appellees Isaias and Anita Valdehueza.

Plaintiff-appellants contest the existence of the Consing decision and cite


the decision of the Hon. Eulalio Rosete dated April 18, 1980 [in] Civil Case
No. 6759 involving the neighboring lot (Lot No. 3715) likewise (formerly)
covered by OCT O-740 which makes the following observation regarding
Lot 3714:

There is no record showing that a decision has been


rendered in Cadastral Case No. 18; G.L.T.O Record No.
1562 adjudicating Lots Nos. 3714 and 3715 in favor of
Patricio Salcedo married to Pilar Nagac. (Exh UU and VV).
If there was such a decision it would have been with the
records of the Land Registration Commission inasmuch [as]
the decree was issued only on December 13, 1977 so that
decision was still available on that date.

On the contrary, it was the decision rendered in Epediente


(sic) Catastro No. 18, G.L.R.P Record No. 1562, entitled,
"Commonwealth De Pilipinas, Solicitante, Antonia Abaday,
et al. Reclamantes," rendered on December 19, 1940 which
was found. This decision shows that Lots Nos. 3714 and
3715 were declared public lands. (Exh. WW-2). Said
decision, rendered by Judge Ricardo Summers, reads,
among others.

xxx xxx xxx

Lote No. 3714 — Declarado terreno publico por haber sido


reclamado unicamente por los Directores de Terrenos y
Montes.

Lote No. 3715 — Declarado toreno publico por haber sido


reclamado unificamente porlos Directores de Terrenos y
Montes. (Exh WW-2-A).

. . . (Emphasis Supplied)

160
xxx xxx xxx

The Court notes that Original Certificate of Title No.


[O-]740 covers not only Lot 3715, but also Lot No. 3714, a
parcel of land which has been occupied and [is] now being
used by the Don Mariano Marcos Polytechnic College.
Before this College, the Misamis Oriental School of Arts and
Trades, has been occupying and using the Lot No. 3714
since before the war. This lot was also declared public land
by the Cadastral Court in Expediente Catastro No. 18
G.L.R.O. Record No. 1562, because only the Directors of
Land and Forestry were the claimants (Exh WW-2-A). It
would seem therefore that Original Certificate of Title No.
[O-]740 is likewise void ab initio as regards this lot. But, this
Court cannot make any pronouncement on this lot because
it has not been admitted for determination.

(Records, pp. 41-43)

In the course of the presentation plaintiffs' evidence in this appealed case,


the parties submitted a stipulation of facts (Records, pp. 392, 427, 429)
wherein the parties admitted the existence of Civil Case No. 6646, Regional
Trial Court Branch 24, Misamis Oriental; and the Decision-Adjudicando
Lotes No Controvertidos rendered by Judge Ricardo Summers in
Expediente Cat. No. 18 G.L.R.O. Rec. No. 1562 on December 14, 1940
which shows on page 6 thereof that Lot 3714 was "declarado terreno
publico". However[,] defendants asserted that Lot 3714 was subsequently
adjudicated to and ordered registered in the name of Patricio Salcedo
pursuant to Decree of Registration No. 168305 issued on August 6, 1941
by Judge Lope Consing but the Original Certificate of Title No. O-740 was
actually issued only on December 13, 1977. Parties further stipulated to the
existence of Civil Case No. 6759 referring to the neighboring Lot 3715 and
the decision rendered therein supra declaring null and void Original
Certificate of Title No. O-740 as regards Lot No. 3715 and containing the
opinion that OCT-O740 was likewise void respecting Lot No. 3714; the
existence of Civil Case No. 89-243 entitled Heirs of Bartolome Calderon,
et al. vs. Salcedo, et al. which was terminated by a Judgment on
Compromise Agreement recognizing Miscellaneous Sales Patent No. 4744
in favor of the Heirs of Bartolome Calderon over a 750 square meter portion
of the land covered by OCT No. O-740; the existence of tax declarations
and tax receipts of the plaintiff; the existence of OCT No. O-740 over Lot
3714, Subdivision Plan of Patricio Salcedo over Lot 3714, Extra-judicial
Settlement of [the] Estate of Patricio Salcedo, and the Special Power of
Attorney in favor of Atty. Godofredo Cabildo as attorney-in-fact of the
Salcedos (pp. 4298-430, Record). 6

Ruling of the Court of Appeals

The Court of Appeals (CA) found that Patricio Salcedo did not acquire any right or title over the
disputed land and, consequently, did not transmit any registrable title to herein petitioners. Never
presented as evidence was any copy of the Consing Decision, which had allegedly authorized
the Decree of Registration of the property in favor of Patricio Salcedo. Evidence also shows that
the land that Patricio Salcedo succeeded in registering in his name had been previously declared
public land on December 19, 1940, in Expediente Cat. No. 18 penned by Judge Ricardo
161
Summers. Under the Regalian Doctrine, no public land can be acquired by private persons without
a grant from the government; since petitioners did not present any evidence that Patricio Salcedo
had acquired the property from the government as a favored recipient — by homestead, free
patent or sales patent — said property could not have been acquired by him.

As the property in dispute is still part of the public domain, respondents are nor the proper parties
to file an action for reconveyance, as they are not owners of the land, but only applicants for sales
patent thereon. However, equitable considerations persuaded the CA to allow plaintiffs-appellants
to remain on the land in question, so that future litigation may be avoided.

Statement of the Issues

In their Memorandum, petitioners claim that the CA erred in its ruling on the following issues:

1. Respondents' legal personality to sue;

2. Decree of Registration;

3. Petitioners as innocent purchasers for value;

4. Allowing respondents to stay in the premises; and

5. Prescription. 7

This Court believes that the pivotal issue in this case is whether the private respondents may be
deemed the proper parties to initiate the present suit.

The Court's Ruling

The petition is meritorious.

Main Issue: Personality to Sue

Although the respondents had no personality to file the action for reconveyance with damages,
the Court of Appeals still ruled that the particular circumstances of this case necessitated the
exercise of equity jurisdiction, in order to avoid leaving unresolved the matter of possession of the
land in question.

On the other hand, petitioners insist that respondents had no legal capacity to file the Complaint,
because they were not the owners of the land but mere applicants for sales parent thereon.
Therefore, petitioners argue that respondents, not being the real parties in interest, have no legal
standing to institute the Complaint in the trial court.

We agree with petitioners. The Court is not persuaded that the circumstances of this case justify
the exercise of equity jurisdiction that would allow a suit to be filed by one who is not a real party
in interest.

First, equity is invoked only when the plaintiff, on the basis of the action filed and the relief sought,
has a clear right that he seeks to enforce, or that would obviously be violated if the action filed
were to be dismissed for lack of standing. In the present case, respondents have no clear
enforceable right, since their claim over the land in question is merely inchoate and uncertain.
Admitting that they are only applicants for sales patents on the land, they are not and they do not
even claim to be owners thereof. In fact, there is no certainty that their applications would even
162
be ruled upon favorably, considering that some of the applications have been pending for more
than ten years already.

Second, it is evident that respondents are not the real parties in interest. Because they admit that
they are not the owners of the land but mere applicants for sales patents thereon, it is daylight
clear that the land is public in character and that it should revert to the State. This being the case,
Section 101 of the Public Land Act categorically declares that only the government may institute
an action to recover ownership of a public land. 8 In Sumail v. CFI, 9 a case involving facts identical
to the present controversy, the Court held that a private party had no personality to institute an
action for reversion of a parcel of land to the public domain, viz.:

Under section 101 above reproduced, only the Solicitor General or the
officer acting in his stead may bring the action for reversion. Consequently,
Sumail may not bring such action or any action which would have the effect
of cancelling a free patent and the corresponding certificate of title issued
on the basis thereof, with the result that the land covered thereby will again
form part of the public domain. Furthermore, there is another reason for
withholding legal personality from Sumail. He does not claim the land to be
his private property. . . . Consequently, even if the parcel were declared
reverted to the public domain, Sumail does not automatically become
owner thereof. He is a mere public land applicant like others who might
apply for the same.

Under Section 2, Rule 3 of the Rules of Court, 10 every action must be prosecuted or defended in
the name of the real party in interest. It further defines a "real party in interest" as one who stands
to be benefited or injured by the judgment in the suit. In Joya v. Presidential Commission on Good
Government, this Court explained that "legal standing means a personal and substantial interest
in the case such that the party has sustained or will sustain direct injury as a result of . . . the act
being challenged. The term "interest" is material interest, an interest in issue and to be affected
by the decree, as distinguished from mere interest in the question involved, or a mere incidental
interest. Moreover, the interest of the party must be personal and not one based on a desire to
vindicate the constitutional right of some third and unrelated party." 11

Clearly, a suit filed by a person who is not a party in interest must be dismissed. Thus, in Lucas
v. Durian, 12 the Court affirmed the dismissal of a Complaint filed by a party who alleged that the
patent was obtained by fraudulent means and, consequently, prayed for the annulment of said
patent and the cancellation of a certificate of title. The Court declared that the proper party to
bring the action was the government, to which the property would revert. Likewise affirming the
dismissal of a Complaint for failure to state a cause of action, the Court in Nebrada v. Heirs of
Alivio 13 noted that the plaintiff, being a mere homestead applicant, was not the real party in
interest to institute an action for reconveyance. In Gabila v. Bariga, 14 the Court further declared:

The present motion to dismiss is actually predicated on Section 1(g), Rule


16 of the Revised Rules of Court, i.e., failure of the complaint to state a
cause of action, for it alleged in paragraph 12 thereof that the plaintiff
admits that he has no right to demand the cancellation or amendment of
the defendant's title, because, even if the said title were cancelled or
amended, the ownership of the land embraced therein, or the portion
thereof affected by the amendment would revert to the public domain. In
his amended complaint, the plaintiff makes no pretense at all that any part
of the land covered by the defendant's title was privately owned by him or
by his predecessors-in-interest. Indeed, it is admitted therein that the said
land was at all times a part of the public domain until December 18, 1964,

163
when the government issued a title thereon in favor of the defendant. Thus,
if there is any person or entity in relief, it can only by the government.

Verily, the Court stressed that "[i]f the suit is not brought in the name of or against the real party
in interest, a motion to dismiss may be filed on the ground that the complaint states no cause of
action." 15 In fact, a final judgment, may be invalidated if the real parties in interest are not included.
This was underscored by the Court in Arcelona v. CA, 16 in which a final judgment was nullified
because indispensable parties were not impleaded.

In the present dispute, only the State can file a suit for reconveyance of a public land. Therefore,
not being the owners of the land but mere applicants for sales parents thereon, respondents have
no personality to file the suit. Neither will they be directly affected by the judgment in such suit.

Indeed, "[f]or all its conceded merits, equity is available only in the absence of law and not as its
replacement. Equity is described as justice which legality, which simply means that it cannot
supplant although it may, as often happens, supplement the law." 17 To grant respondent standing
in the present case is to go against the express language of the law. Equity cannot give them this
privilege. Equity can only supplement the law, not supplant it.

Having resolved that the respondents have no legal standing to sue and are not the real parties
in interest, we find no more necessity to take up the other issues. They shall become important
only if a proper suit is instituted by the solicitor general in the future.

WHEREFORE, the petition is hereby GRANTED and the assailed Decision is REVERSED and
SET ASIDE. The Complaint filed in Civil Case No. 91-241 before the Regional Trial Court of
Misamis Oriental, Branch 17, is DISMISSED. No costs.

SO ORDERED.

164
G.R. No. 149417 June 4, 2004

GLORIA SANTOS DUEÑAS, petitioner,


vs.
SANTOS SUBDIVISION HOMEOWNERS ASSOCIATION, respondent.

DECISION

QUISUMBING, J.:

For review on certiorari is the Decision1 dated December 29, 2000, of the Court of Appeals in CA-G.R.
SP No. 51601, setting aside the Decision2 of the Housing and Land Use Regulatory Board (HLURB)
in HLURB Case No. REM-A-980227-0032 which earlier affirmed the Decision3 of the HLURB-NCR
Regional Field Office in HLURB Case No. REM-070297-9821. Said Regional Field Office dismissed
the petition of herein respondent Santos Subdivision Homeowners Association (SSHA) seeking to
require herein petitioner, Gloria Santos Dueñas, to provide for an open space in the subdivision for
recreational and community activities. In its assailed decision, the CA remanded the case to the
HLURB for determination of a definitive land area for open space.4 Petitioner assails also the Court of
Appeals’ Resolution5 dated July 31, 2001, denying her motion for reconsideration.

The facts of this case are as follows:

Petitioner Gloria Santos Dueñas is the daughter of the late Cecilio J. Santos who,
during his lifetime, owned a parcel of land with a total area of 2.2 hectares located at
General T. De Leon, Valenzuela City, Metro Manila. In 1966, Cecilio had the realty
subdivided into smaller lots, the whole forming the Cecilio J. Santos Subdivision (for
brevity, Santos Subdivision). The then Land Registration Commission (LRC) approved
the project and the National Housing Authority (NHA) issued the required Certificate
of Registration and License to Sell. At the time of Cecilio’s death in 1988, there were
already several residents and homeowners in Santos Subdivision.

165
Sometime in 1997, the members of the SSHA submitted to the petitioner a resolution asking her to
provide within the subdivision an open space for recreational and other community activities, in
accordance with the provisions of P.D. No. 957,6 as amended by P.D. No. 1216.7 Petitioner, however,
rejected the request, thus, prompting the members of SSHA to seek redress from the NHA.

On April 25, 1997, the NHA General Manager forwarded the SSHA resolution to Romulo Q. Fabul,
Commissioner and Chief Executive Officer of the HLURB in Quezon City.8

In a letter dated May 29, 1997, the Regional Director of the Expanded NCR Field Office, HLURB,
opined that the open space requirement of P.D. No. 957, as amended by P.D. No. 1216, was not
applicable to Santos Subdivision.9

SSHA then filed a petition/motion for reconsideration,10 docketed as HLURB Case No. REM-070297-
9821, which averred among others that: (1) P.D. No. 957 should apply retroactively to Santos
Subdivision, notwithstanding that the subdivision plans were approved in 1966 and (2) Gloria Santos
Dueñas should be bound by the verbal promise made by her late father during his lifetime that an open
space would be provided for in Phase III of Santos Subdivision, the lots of which were at that time
already for sale.

Petitioner denied any knowledge of the allegations of SSHA. She stressed that she was not a party to
the alleged transactions, and had neither participation nor involvement in the development of Santos
Subdivision and the sale of the subdivision’s lots. As affirmative defenses, she raised the following:
(a) It was her late father, Cecilio J. Santos, who owned and developed the subdivision, and she was
neither its owner nor developer; (b) that this suit was filed by an unauthorized entity against a non-
existent person, as SSHA and Santos Subdivision are not juridical entities, authorized by law to
institute or defend against actions; (c) that P.D. No. 957 cannot be given retroactive effect to make it
applicable to Santos Subdivision as the law does not expressly provide for its retroactive applicability;
and (d) that the present petition is barred by laches.

On January 14, 1998, HLURB-NCR disposed of HLURB Case No. REM-070297-9821 in this wise:

In view of the foregoing, the complaint is hereby dismissed.

It is So Ordered.11

In dismissing the case, the HLURB-NCR office ruled that while SSHA failed to present evidence
showing that it is an association duly organized under Philippine law with capacity to sue, nonetheless,
the suit could still prosper if viewed as a suit filed by all its members who signed and verified the
petition. However, the petition failed to show any cause of action against herein petitioner as (1) there
is no evidence showing Santos-Dueñas as the owner/developer or successor-in-interest of Cecilio
Santos, who was the owner/developer and sole proprietor of Santos Subdivision; (2) the LRC-
approved subdivision plan was bereft of any proviso indicating or identifying an open space, as
required by P.D. No. 957, as amended, hence there was no legal basis to compel either Cecilio or his
daughter Santos-Dueñas, as his purported successor, to provide said space; and (3) the alleged verbal
promise of the late Cecilio Santos was inadmissible as evidence under the dead man’s statute.12

SSHA then appealed the NCR office’s ruling to the HLURB Board of Commissioners. The latter body,
however, affirmed the action taken by the HLURB-NCR office, concluding thus:

WHEREFORE, premises considered, the Petition for Review is hereby DISMISSED


and the decision of the Office below is hereby AFFIRMED IN TOTO.

SO ORDERED.13

166
The HLURB Board decreed that there was no basis to compel the petitioner to provide an open space
within Santos Subdivision, inasmuch as the subdivision plans approved on July 8, 1966, did not
provide for said space and there was no law requiring the same at that time. It further ruled that P.D.
No. 957 could not be given retroactive effect in the absence of an express provision in the law. Finally,
it found the action time-barred since it was filed nine (9) years after the death of Cecilio. The Board
noted that SSHA sought to enforce an alleged oral promise of Cecilio, which should have been done
within the six-year prescriptive period provided for under Article 114514 of the Civil Code.

Dissatisfied, respondent sought relief from the Court of Appeals via a petition for review under Rule
43 of the 1997 Rules of Civil Procedure. The petition, docketed as CA-G.R. SP No. 51601, was
decided by the appellate court in this manner:

WHEREFORE, the petition is GRANTED--and the decision, dated January 20, 1999,
of the Housing and Land Use Regulatory Board (HLURB) in HLURB Case No. REM-
A-980227-0032 is hereby REVERSED and SET ASIDE. Accordingly, this case is
ordered REMANDED to the HLURB for the determination of the definitive land area
that shall be used for open space in accordance with law and the rules and standards
prescribed by the HLURB. No pronouncement as to costs.

SO ORDERED.15

In finding for SSHA, the appellate court relied upon Eugenio v. Exec. Sec. Drilon,16 which held that
while P.D. No. 957 did not expressly provide for its retroactive application, nonetheless, it can be
plainly inferred from its intent that it was to be given retroactive effect so as to extend its coverage
even to those contracts executed prior to its effectivity in 1976. The Court of Appeals also held that
the action was neither barred by prescription nor laches as the obligation of a subdivision developer
to provide an open space is not predicated upon an oral contract, but mandated by law, hence, an
action may be brought within ten (10) years from the time the right of action accrues under Article
114417 of the Civil Code. Moreover, the equitable principle of laches will not apply when the claim was
filed within the reglementary period.

Petitioner duly moved for reconsideration, which the Court of Appeals denied on July 31, 2001.

Hence, this petition grounded on the following assignment of errors:

I. THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW BY TAKING


COGNIZANCE OF RESPONDENTS’ PETITION (WHICH ASSAILS THE DECISION
OF THE BOARD OF COMMISSIONERS OF THE HLURB) WHEN JURISDICTION
THEREON IS WITH THE OFFICE OF THE PRESIDENT, AS CLEARLY MANDATED
BY SEC. 2, RULE XVIII OF THE 1996 RULES OF PROCEDURE OF THE HOUSING
AND LAND USE REGULATORY BOARD.

II. IT WAS GRAVE ERROR FOR THE COURT OF APPEALS TO HAVE ASSUMED
JURISDICTION OVER THE PETITION BELOW WHEN RESPONDENTS CLEARLY
FAILED TO EXHAUST THE ADMINISTRATIVE REMEDIES AVAILABLE TO THEM
UNDER THE LAW.

III. THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT


RESPONDENT SANTOS SUBDIVISION HOMEOWNERS ASSOCIATION, A NON-
REGISTERED ORGANIZATION, LACKED THE LEGAL PERSONALITY TO SUE.

IV. THE COURT OF APPEALS SERIOUSLY ERRED IN NOT HOLDING THAT


RESPONDENT SANTOS SUBDIVISION HOMEOWNERS ASSOCIATION HAS NO
CAUSE OF ACTION AGAINST PETITIONER; NEITHER WAS SANTOS
SUBDIVISION, A NON-ENTITY, POSSESSED WITH CAPACITY TO BE SUED NOR

167
IS PETITIONER GLORIA SANTOS-DUEÑAS A PROPER PARTY TO THE CASE,
THE LATTER NOT BEING THE OWNER OR DEVELOPER OF SANTOS
SUBDIVISION.

V. THE COURT OF APPEALS SERIOUSLY ERRED IN SUBSTITUTING ITS


FINDINGS WITH THAT OF THE ADJUDICATION BOARD AND BOARD OF
COMMISSIONERS OF THE HLURB WHEN THEIR DECISION IS BASED ON
SUBSTANTIAL EVIDENCE AND NO GRAVE ABUSE OF DISCRETION CAN BE
ATTRIBUTED TO THEM.

VI. THE COURT OF APPEALS DEVIATED FROM THE EXISTING LAW AND
JURISPRUDENCE WHEN IT RULED THAT P.D. 957 HAS RETROACTIVE
APPLICATION -- WHEN THE LAW ITSELF DOES NOT PROVIDE FOR ITS
RETROACTIVITY AND THE EXISTING JURISPRUDENCE THEREON CLEARLY
PRONOUNCED THAT IT HAS NO RETROACTIVE APPLICATION. TO PROVIDE
RETROACTIVITY TO P.D. 957 WOULD CAUSE IMPAIRMENT OF VESTED
RIGHTS.

VII. WHILE AS A GENERAL RULE, THE FACTUAL FINDINGS OF THE COURT OF


APPEALS IS BINDING ON THE SUPREME COURT, THE SAME IS NOT TRUE
WHEN THE FORMER’S CONCLUSION IS BASED ON SPECULATION, SURMISES
AND CONJECTURES, THE INFERENCE MADE IS MANIFESTLY MISTAKEN OR
ABSURD, THERE IS GRAVE ABUSE OF DISCRETION, JUDGMENT IS BASED ON
MISAPPREHENSION OF FACTS CONTRARY TO THOSE OF THE
ADMINISTRATIVE AGENCY CONCERNED, AND IT WENT BEYOND THE ISSUES
OF THE CASE AND THE SAME IS CONTRARY TO THE ADMISSIONS OF BOTH
PARTIES.18

To our mind, the foregoing may be reduced into the following issues: (1) the applicability of the doctrine
of non-exhaustion of administrative remedies; (2) the legal capacity of respondent to sue the petitioner
herein; and (3) the retroactivity of P.D. No. 957, as amended by P.D. No. 1216.

On the first issue, the petitioner contends that the filing of CA-G.R. SP No. 51601 was premature as
SSHA failed to exhaust all administrative remedies. Petitioner submits that since Section 1,19 Rule 43
of the 1997 Rule of Civil Procedure does not mention the HLURB, the respondent should have
appealed the decision of the HLURB Board in HLURB Case No. REM-A-980227-0032 to the Office of
the President prior to seeking judicial relief. In other words, it is the decision of the Office of the
President,20 and not that of the HLURB Board, which the Court of Appeals may review.

We find petitioner’s contentions bereft of merit. The principle of non-exhaustion of administrative


remedies is, under the factual circumstances of this case, inapplicable. While this Court has held that
before a party is allowed to seek intervention of the courts, it is a pre condition that he avail himself of
all administrative processes afforded him,21 nonetheless, said rule is not without exceptions.22 The
doctrine is a relative one and is flexible depending on the peculiarity and uniqueness of the factual
and circumstantial settings of each case.23

In the instant case, the questions posed are purely legal, namely: (1) whether the respondent had any
right to demand an open space and the petitioner had any legal obligation to provide said open space
within Santos Subdivision under P.D. No. 957, as amended by P.D. No. 1216, and (2) whether the
action had already prescribed under Article 1145 of the Civil Code. Moreover, the Court of Appeals
found that SSHA had sought relief from the Office of the President, but the latter forwarded the case
to the HLURB. In view of the foregoing, we find that in this particular case, there was no need for
SSHA to exhaust all administrative remedies before seeking judicial relief.

On the second issue, the petitioner claims that respondent SSHA failed to present any evidence
showing that it is a legally organized juridical entity, authorized by law to sue or be sued in its own
168
name. Thus, pursuant to Section 1, Rule 324 of the 1997 Rules of Civil Procedure, it has no legal
capacity to file this suit before the HLURB and the Court of Appeals.

SSHA counters that it has the capacity to sue as an association, since it is a member of the Federation
of Valenzuela Homeowners Association, Inc., which is registered with the Securities and Exchange
Commission. In the alternative, the individual members of SSHA who signed both the resolution and
the complaint in this case may, as natural persons, pursue the action.

There is merit in petitioner’s contention. Under Section 1, Rule 3 of the Revised Rules of Court, only
natural or juridical persons, or entities authorized by law may be parties in a civil action. Article 4425 of
the Civil Code enumerates the various classes of juridical persons. Under said Article, an association
is considered a juridical person if the law grants it a personality separate and distinct from that of its
members.26 The records of the present case are bare of any showing by SSHA that it is an association
duly organized under Philippine law. It was thus an error for the HLURB-NCR Office to give due course
to the complaint in HLURB Case No. REM-070297-9821, given the SSHA’s lack of capacity to sue in
its own name. Nor was it proper for said agency to treat the complaint as a suit by all the parties who
signed and verified the complaint. The members cannot represent their association in any suit without
valid and legal authority. Neither can their signatures confer on the association any legal capacity to
sue. Nor will the fact that SSHA belongs to the Federation of Valenzuela Homeowners Association,
Inc., suffice to endow SSHA with the personality and capacity to sue. Mere allegations of membership
in a federation are insufficient and inconsequential. The federation itself has a separate juridical
personality and was not impleaded as a party in HLURB Case No. REM-070297-9821 nor in this case.
Neither was it shown that the federation was authorized to represent SSHA. Facts showing the
capacity of a party to sue or be sued or the authority of a party to sue or be sued in a representative
capacity or the legal existence of an organized association of persons that is made a party, must be
averred.27 Hence, for failing to show that it is a juridical entity, endowed by law with capacity to bring
suits in its own name, SSHA is devoid of any legal capacity, whatsoever, to institute any action.

Anent the third issue, the petitioner ascribes error to the appellate court for holding that P.D. No. 957
has retroactive application. She points out that there is no retroactivity provision in the said decree.
Hence, it cannot be applied retroactively pursuant to Article 428 of the Civil Code of the Philippines.
The same holds true for P.D. No. 1216, which amended Section 31 of P.D. No. 957 and imposed the
open space requirement in subdivisions. Petitioner stresses that P.D. No. 1216 only took effect on
October 14, 1977 or more than ten (10) years after the approval of the subdivision plans of Cecilio
Santos.

Although it may seem that this particular issue, given our ruling on the first issue regarding the lack of
capacity of SSHA to bring any action in its name, is now moot and academic, we are constrained to
still address it.

This petition was brought to us not by respondent SSHA but by Gloria Santos Dueñas who assails the
appellate court’s finding that our ruling in Eugenio v. Exec. Sec. Drilon29 allows P.D. No. 957, as
amended, to apply retroactively.

We find merit in petitioner’s contention.

Eugenio v. Exec. Sec. Drilon is inapplicable. It is not on all fours with the instant case. The issue in
Eugenio was the applicability of P.D. No. 957 to purchase agreements on lots entered into prior to its
enactment where there was non-payment of amortizations, and failure to develop the subdivision. We
held therein that although P.D. No. 957 does not provide for any retroactive application, nonetheless,
the intent of the law of protecting the helpless citizens from the manipulations and machinations of
unscrupulous subdivision and condominium sellers justify its retroactive application to contracts
entered into prior to its enactment. Hence, we ruled that the non-payment of amortizations was justified
under Section 23 of the said decree in view of the failure of the subdivision owner to develop the
subdivision project.

169
Unlike Eugenio, non-development of the subdivision is not present in this case, nor any allegation of
non-payment of amortizations. Further, we have held in a subsequent case30 that P.D. No. 957, as
amended, cannot be applied retroactively in view of the absence of any express provision on its
retroactive application. Thus:

…Article 4 of the Civil Code provides that laws shall have no retroactive effect, unless
the contrary is provided. Thus, it is necessary that an express provision for its
retroactive application must be made in the law. There being no such provision in both
P.D. Nos. 957 and 1344, these decrees cannot be applied to a situation that occurred
years before their promulgation….

At any rate, our principal concern in this case is Section 31 of P.D. No. 957, an
amendment introduced by P.D. No. 1216. Properly, the question should focus on the
retroactivity of P.D. No. 1216 and not P.D. No. 957 per se.

We have examined the text of P.D. No. 1216 and nowhere do we find any clause or provision expressly
providing for its retroactive application. Basic is the rule that no statute, decree, ordinance, rule or
regulation shall be given retrospective effect unless explicitly stated.31 Hence, there is no legal basis
to hold that P.D. No. 1216 should apply retroactively.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 51601 are REVERSED and SET ASIDE. The Decision of the HLURB
dated January 20, 1999 sustaining that of its Regional Office is AFFIRMED and REINSTATED. No
pronouncement as to costs.

G.R. No. 153788 November 27, 2009

ROGER V. NAVARRO, Petitioner,


vs.
HON. JOSE L. ESCOBIDO, Presiding Judge, RTC Branch 37, Cagayan de Oro City, and KAREN
T. GO, doing business under the name KARGO ENTERPRISES, Respondents.

DECISION

BRION, J.:

This is a petition for review on certiorari1 that seeks to set aside the Court of Appeals (CA) Decision2
dated October 16, 2001 and Resolution3 dated May 29, 2002 in CA-G.R. SP. No. 64701. These CA
rulings affirmed the July 26, 20004 and March 7, 20015 orders of the Regional Trial Court (RTC),
Misamis Oriental, Cagayan de Oro City, denying petitioner Roger V. Navarro’s (Navarro) motion to
dismiss.

BACKGROUND FACTS

On September 12, 1998, respondent Karen T. Go filed two complaints, docketed as Civil Case Nos.
98-599 (first complaint)6 and 98-598 (second complaint),7 before the RTC for replevin and/or sum of
money with damages against Navarro. In these complaints, Karen Go prayed that the RTC issue writs
of replevin for the seizure of two (2) motor vehicles in Navarro’s possession.

The first complaint stated:

1. That plaintiff KAREN T. GO is a Filipino, of legal age, married to GLENN O. GO, a resident
of Cagayan de Oro City and doing business under the trade name KARGO ENTERPRISES,
an entity duly registered and existing under and by virtue of the laws of the Republic of the
Philippines, which has its business address at Bulua, Cagayan de Oro City; that defendant
170
ROGER NAVARRO is a Filipino, of legal age, a resident of 62 Dolores Street, Nazareth,
Cagayan de Oro City, where he may be served with summons and other processes of the
Honorable Court; that defendant "JOHN DOE" whose real name and address are at present
unknown to plaintiff is hereby joined as party defendant as he may be the person in whose
possession and custody the personal property subject matter of this suit may be found if the
same is not in the possession of defendant ROGER NAVARRO;

2. That KARGO ENTERPRISES is in the business of, among others, buying and selling motor
vehicles, including hauling trucks and other heavy equipment;

3. That for the cause of action against defendant ROGER NAVARRO, it is hereby stated that
on August 8, 1997, the said defendant leased [from] plaintiff a certain motor vehicle which is
more particularly described as follows –

Make/Type FUSO WITH MOUNTED CRANE

Serial No. FK416K-51680


Motor No. 6D15-338735
Plate No. GHK-378

as evidenced by a LEASE AGREEMENT WITH OPTION TO PURCHASE entered into by and between
KARGO ENTERPRISES, then represented by its Manager, the aforementioned GLENN O. GO, and
defendant ROGER NAVARRO xxx; that in accordance with the provisions of the above LEASE
AGREEMENT WITH OPTION TO PURCHASE, defendant ROGER NAVARRO delivered unto plaintiff
six (6) post-dated checks each in the amount of SIXTY-SIX THOUSAND THREE HUNDRED THIRTY-
THREE & 33/100 PESOS (P66,333.33) which were supposedly in payment of the agreed rentals; that
when the fifth and sixth checks, i.e. PHILIPPINE BANK OF COMMUNICATIONS – CAGAYAN DE
ORO BRANCH CHECKS NOS. 017112 and 017113, respectively dated January 8, 1998 and February
8, 1998, were presented for payment and/or credit, the same were dishonored and/or returned by the
drawee bank for the common reason that the current deposit account against which the said checks
were issued did not have sufficient funds to cover the amounts thereof; that the total amount of the
two (2) checks, i.e. the sum of ONE HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED SIXTY-
SIX & 66/100 PESOS (P132,666.66) therefore represents the principal liability of defendant ROGER
NAVARRO unto plaintiff on the basis of the provisions of the above LEASE AGREEMENT WITH
RIGHT TO PURCHASE; that demands, written and oral, were made of defendant ROGER NAVARRO
to pay the amount of ONE HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED SIXTY-SIX &
66/100 PESOS (P132,666.66), or to return the subject motor vehicle as also provided for in the LEASE
AGREEMENT WITH RIGHT TO PURCHASE, but said demands were, and still are, in vain to the great
damage and injury of herein plaintiff; xxx

4. That the aforedescribed motor vehicle has not been the subject of any tax assessment and/or fine
pursuant to law, or seized under an execution or an attachment as against herein plaintiff;

xxx

8. That plaintiff hereby respectfully applies for an order of the Honorable Court for the immediate
delivery of the above-described motor vehicle from defendants unto plaintiff pending the final
determination of this case on the merits and, for that purpose, there is attached hereto an affidavit duly
executed and bond double the value of the personal property subject matter hereof to answer for
damages and costs which defendants may suffer in the event that the order for replevin prayed for
may be found out to having not been properly issued.

The second complaint contained essentially the same allegations as the first complaint, except that
the Lease Agreement with Option to Purchase involved is dated October 1, 1997 and the motor vehicle
leased is described as follows:

171
Make/Type FUSO WITH MOUNTED CRANE
Serial No. FK416K-510528
Motor No. 6D14-423403

The second complaint also alleged that Navarro delivered three post-dated checks, each for the
amount of P100,000.00, to Karen Go in payment of the agreed rentals; however, the third check was
dishonored when presented for payment.8

On October 12, 19989 and October 14, 1998,10 the RTC issued writs of replevin for both cases; as a
result, the Sheriff seized the two vehicles and delivered them to the possession of Karen Go.

In his Answers, Navarro alleged as a special affirmative defense that the two complaints stated no
cause of action, since Karen Go was not a party to the Lease Agreements with Option to Purchase
(collectively, the lease agreements) – the actionable documents on which the complaints were based.

On Navarro’s motion, both cases were duly consolidated on December 13, 1999.

In its May 8, 2000 order, the RTC dismissed the case on the ground that the complaints did not state
a cause of action.

In response to the motion for reconsideration Karen Go filed dated May 26, 2000,11 the RTC issued
another order dated July 26, 2000 setting aside the order of dismissal. Acting on the presumption that
Glenn Go’s leasing business is a conjugal property, the RTC held that Karen Go had sufficient interest
in his leasing business to file the action against Navarro. However, the RTC held that Karen Go should
have included her husband, Glenn Go, in the complaint based on Section 4, Rule 3 of the Rules of
Court (Rules).12 Thus, the lower court ordered Karen Go to file a motion for the inclusion of Glenn Go
as co-plaintiff.
1avvphi1

When the RTC denied Navarro’s motion for reconsideration on March 7, 2001, Navarro filed a petition
for certiorari with the CA, essentially contending that the RTC committed grave abuse of discretion
when it reconsidered the dismissal of the case and directed Karen Go to amend her complaints by
including her husband Glenn Go as co-plaintiff. According to Navarro, a complaint which failed to state
a cause of action could not be converted into one with a cause of action by mere amendment or
supplemental pleading.

On October 16, 2001, the CA denied Navarro’s petition and affirmed the RTC’s order.13 The CA also
denied Navarro’s motion for reconsideration in its resolution of May 29, 2002,14 leading to the filing of
the present petition.

THE PETITION

Navarro alleges that even if the lease agreements were in the name of Kargo Enterprises, since it did
not have the requisite juridical personality to sue, the actual parties to the agreement are himself and
Glenn Go. Since it was Karen Go who filed the complaints and not Glenn Go, she was not a real party-
in-interest and the complaints failed to state a cause of action.

Navarro posits that the RTC erred when it ordered the amendment of the complaint to include Glenn
Go as a co-plaintiff, instead of dismissing the complaint outright because a complaint which does not
state a cause of action cannot be converted into one with a cause of action by a mere amendment or
a supplemental pleading. In effect, the lower court created a cause of action for Karen Go when there
was none at the time she filed the complaints.

Even worse, according to Navarro, the inclusion of Glenn Go as co-plaintiff drastically changed the
theory of the complaints, to his great prejudice. Navarro claims that the lower court gravely abused its
discretion when it assumed that the leased vehicles are part of the conjugal property of Glenn and
172
Karen Go. Since Karen Go is the registered owner of Kargo Enterprises, the vehicles subject of the
complaint are her paraphernal properties and the RTC gravely erred when it ordered the inclusion of
Glenn Go as a co-plaintiff.

Navarro likewise faults the lower court for setting the trial of the case in the same order that required
Karen Go to amend her complaints, claiming that by issuing this order, the trial court violated Rule 10
of the Rules.

Even assuming the complaints stated a cause of action against him, Navarro maintains that the
complaints were premature because no prior demand was made on him to comply with the provisions
of the lease agreements before the complaints for replevin were filed.

Lastly, Navarro posits that since the two writs of replevin were issued based on flawed complaints, the
vehicles were illegally seized from his possession and should be returned to him immediately.

Karen Go, on the other hand, claims that it is misleading for Navarro to state that she has no real
interest in the subject of the complaint, even if the lease agreements were signed only by her husband,
Glenn Go; she is the owner of Kargo Enterprises and Glenn Go signed the lease agreements merely
as the manager of Kargo Enterprises. Moreover, Karen Go maintains that Navarro’s insistence that
Kargo Enterprises is Karen Go’s paraphernal property is without basis. Based on the law and
jurisprudence on the matter, all property acquired during the marriage is presumed to be conjugal
property. Finally, Karen Go insists that her complaints sufficiently established a cause of action against
Navarro. Thus, when the RTC ordered her to include her husband as co-plaintiff, this was merely to
comply with the rule that spouses should sue jointly, and was not meant to cure the complaints’ lack
of cause of action.

THE COURT’S RULING

We find the petition devoid of merit.

Karen Go is the real party-in-interest

The 1997 Rules of Civil Procedure requires that every action must be prosecuted or defended in the
name of the real party-in-interest, i.e., the party who stands to be benefited or injured by the judgment
in the suit, or the party entitled to the avails of the suit.15

Interestingly, although Navarro admits that Karen Go is the registered owner of the business name
Kargo Enterprises, he still insists that Karen Go is not a real party-in-interest in the case. According to
Navarro, while the lease contracts were in Kargo Enterprises’ name, this was merely a trade name
without a juridical personality, so the actual parties to the lease agreements were Navarro and Glenn
Go, to the exclusion of Karen Go.

As a corollary, Navarro contends that the RTC acted with grave abuse of discretion when it ordered
the inclusion of Glenn Go as co-plaintiff, since this in effect created a cause of action for the complaints
when in truth, there was none.

We do not find Navarro’s arguments persuasive.

The central factor in appreciating the issues presented in this case is the business name Kargo
Enterprises. The name appears in the title of the Complaint where the plaintiff was identified as
"KAREN T. GO doing business under the name KARGO ENTERPRISES," and this identification was
repeated in the first paragraph of the Complaint. Paragraph 2 defined the business KARGO
ENTERPRISES undertakes. Paragraph 3 continued with the allegation that the defendant "leased
from plaintiff a certain motor vehicle" that was thereafter described. Significantly, the Complaint
specifies and attaches as its integral part the Lease Agreement that underlies the transaction between
173
the plaintiff and the defendant. Again, the name KARGO ENTERPRISES entered the picture as this
Lease Agreement provides:

This agreement, made and entered into by and between:

GLENN O. GO, of legal age, married, with post office address at xxx, herein referred to as the
LESSOR-SELLER; representing KARGO ENTERPRISES as its Manager,

xxx

thus, expressly pointing to KARGO ENTERPRISES as the principal that Glenn O. Go represented. In
other words, by the express terms of this Lease Agreement, Glenn Go did sign the agreement only as
the manager of Kargo Enterprises and the latter is clearly the real party to the lease agreements.

As Navarro correctly points out, Kargo Enterprises is a sole proprietorship, which is neither a natural
person, nor a juridical person, as defined by Article 44 of the Civil Code:

Art. 44. The following are juridical persons:

(1) The State and its political subdivisions;

(2) Other corporations, institutions and entities for public interest or purpose, created by law;
their personality begins as soon as they have been constituted according to law;

(3) Corporations, partnerships and associations for private interest or purpose to which the law
grants a juridical personality, separate and distinct from that of each shareholder, partner or
member.

Thus, pursuant to Section 1, Rule 3 of the Rules,16 Kargo Enterprises cannot be a party to a civil action.
This legal reality leads to the question: who then is the proper party to file an action based on a contract
in the name of Kargo Enterprises?

We faced a similar question in Juasing Hardware v. Mendoza,17 where we said:

Finally, there is no law authorizing sole proprietorships like petitioner to bring suit in court. The law
merely recognizes the existence of a sole proprietorship as a form of business organization conducted
for profit by a single individual, and requires the proprietor or owner thereof to secure licenses and
permits, register the business name, and pay taxes to the national government. It does not vest
juridical or legal personality upon the sole proprietorship nor empower it to file or defend an action in
court.

Thus, the complaint in the court below should have been filed in the name of the owner of Juasing
Hardware. The allegation in the body of the complaint would show that the suit is brought by such
person as proprietor or owner of the business conducted under the name and style Juasing Hardware.
The descriptive words "doing business as Juasing Hardware" may be added to the title of the case,
as is customarily done.18 [Emphasis supplied.]

This conclusion should be read in relation with Section 2, Rule 3 of the Rules, which states:

SEC. 2. Parties in interest. – A real party in interest is the party who stands to be benefited or injured
by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized
by law or these Rules, every action must be prosecuted or defended in the name of the real party in
interest.

174
As the registered owner of Kargo Enterprises, Karen Go is the party who will directly benefit from or
be injured by a judgment in this case. Thus, contrary to Navarro’s contention, Karen Go is the real
party-in-interest, and it is legally incorrect to say that her Complaint does not state a cause of action
because her name did not appear in the Lease Agreement that her husband signed in behalf of Kargo
Enterprises. Whether Glenn Go can legally sign the Lease Agreement in his capacity as a manager
of Kargo Enterprises, a sole proprietorship, is a question we do not decide, as this is a matter for the
trial court to consider in a trial on the merits.

Glenn Go’s Role in the Case

We find it significant that the business name Kargo Enterprises is in the name of Karen T. Go,19 who
described herself in the Complaints to be "a Filipino, of legal age, married to GLENN O. GO, a resident
of Cagayan de Oro City, and doing business under the trade name KARGO ENTERPRISES."20 That
Glenn Go and Karen Go are married to each other is a fact never brought in issue in the case. Thus,
the business name KARGO ENTERPRISES is registered in the name of a married woman, a fact
material to the side issue of whether Kargo Enterprises and its properties are paraphernal or conjugal
properties. To restate the parties’ positions, Navarro alleges that Kargo Enterprises is Karen Go’s
paraphernal property, emphasizing the fact that the business is registered solely in Karen Go’s name.
On the other hand, Karen Go contends that while the business is registered in her name, it is in fact
part of their conjugal property.

The registration of the trade name in the name of one person – a woman – does not necessarily lead
to the conclusion that the trade name as a property is hers alone, particularly when the woman is
married. By law, all property acquired during the marriage, whether the acquisition appears to have
been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal
unless the contrary is proved.21 Our examination of the records of the case does not show any proof
that Kargo Enterprises and the properties or contracts in its name are conjugal. If at all, only the bare
allegation of Navarro to this effect exists in the records of the case. As we emphasized in Castro v.
Miat:22

Petitioners also overlook Article 160 of the New Civil Code. It provides that "all property of the marriage
is presumed to be conjugal partnership, unless it be prove[n] that it pertains exclusively to the husband
or to the wife." This article does not require proof that the property was acquired with funds of
the partnership. The presumption applies even when the manner in which the property was acquired
does not appear.23 [Emphasis supplied.]

Thus, for purposes solely of this case and of resolving the issue of whether Kargo Enterprises as a
sole proprietorship is conjugal or paraphernal property, we hold that it is conjugal property.

Article 124 of the Family Code, on the administration of the conjugal property, provides:

Art. 124. The administration and enjoyment of the conjugal partnership property shall belong
to both spouses jointly. In case of disagreement, the husband’s decision shall prevail, subject to
recourse to the court by the wife for proper remedy, which must be availed of within five years from
the date of the contract implementing such decision.

xxx

This provision, by its terms, allows either Karen or Glenn Go to speak and act with authority in
managing their conjugal property, i.e., Kargo Enterprises. No need exists, therefore, for one to obtain
the consent of the other before performing an act of administration or any act that does not dispose of
or encumber their conjugal property.

Under Article 108 of the Family Code, the conjugal partnership is governed by the rules on the contract
of partnership in all that is not in conflict with what is expressly determined in this Chapter or by the

175
spouses in their marriage settlements. In other words, the property relations of the husband and wife
shall be governed primarily by Chapter 4 on Conjugal Partnership of Gains of the Family Code and,
suppletorily, by the spouses’ marriage settlement and by the rules on partnership under the Civil Code.
In the absence of any evidence of a marriage settlement between the spouses Go, we look at the Civil
Code provision on partnership for guidance.

A rule on partnership applicable to the spouses’ circumstances is Article 1811 of the Civil Code, which
states:

Art. 1811. A partner is a co-owner with the other partners of specific partnership property.

The incidents of this co-ownership are such that:

(1) A partner, subject to the provisions of this Title and to any agreement between the partners, has
an equal right with his partners to possess specific partnership property for partnership
purposes; xxx

Under this provision, Glenn and Karen Go are effectively co-owners of Kargo Enterprises and the
properties registered under this name; hence, both have an equal right to seek possession of these
properties. Applying Article 484 of the Civil Code, which states that "in default of contracts, or special
provisions, co-ownership shall be governed by the provisions of this Title," we find further support in
Article 487 of the Civil Code that allows any of the co-owners to bring an action in ejectment with
respect to the co-owned property.

While ejectment is normally associated with actions involving real property, we find that this rule can
be applied to the circumstances of the present case, following our ruling in Carandang v. Heirs of De
Guzman.24 In this case, one spouse filed an action for the recovery of credit, a personal property
considered conjugal property, without including the other spouse in the action. In resolving the issue
of whether the other spouse was required to be included as a co-plaintiff in the action for the recovery
of the credit, we said:

Milagros de Guzman, being presumed to be a co-owner of the credits allegedly extended to the
spouses Carandang, seems to be either an indispensable or a necessary party. If she is an
indispensable party, dismissal would be proper. If she is merely a necessary party, dismissal is not
warranted, whether or not there was an order for her inclusion in the complaint pursuant to Section 9,
Rule 3.

Article 108 of the Family Code provides:

Art. 108. The conjugal partnership shall be governed by the rules on the contract of partnership in all
that is not in conflict with what is expressly determined in this Chapter or by the spouses in their
marriage settlements.

This provision is practically the same as the Civil Code provision it superseded:

Art. 147. The conjugal partnership shall be governed by the rules on the contract of partnership in all
that is not in conflict with what is expressly determined in this Chapter.

In this connection, Article 1811 of the Civil Code provides that "[a] partner is a co-owner with the other
partners of specific partnership property." Taken with the presumption of the conjugal nature of the
funds used to finance the four checks used to pay for petitioners’ stock subscriptions, and with the
presumption that the credits themselves are part of conjugal funds, Article 1811 makes Quirino and
Milagros de Guzman co-owners of the alleged credit.

176
Being co-owners of the alleged credit, Quirino and Milagros de Guzman may separately bring an action
for the recovery thereof. In the fairly recent cases of Baloloy v. Hular and Adlawan v. Adlawan, we
held that, in a co-ownership, co-owners may bring actions for the recovery of co-owned property
without the necessity of joining all the other co-owners as co-plaintiffs because the suit is presumed
to have been filed for the benefit of his co-owners. In the latter case and in that of De Guia v. Court of
Appeals, we also held that Article 487 of the Civil Code, which provides that any of the co-owners may
bring an action for ejectment, covers all kinds of action for the recovery of possession.

In sum, in suits to recover properties, all co-owners are real parties in interest. However, pursuant to
Article 487 of the Civil Code and relevant jurisprudence, any one of them may bring an action, any
kind of action, for the recovery of co-owned properties. Therefore, only one of the co-owners, namely
the co-owner who filed the suit for the recovery of the co-owned property, is an indispensable party
thereto. The other co-owners are not indispensable parties. They are not even necessary parties, for
a complete relief can be accorded in the suit even without their participation, since the suit is presumed
to have been filed for the benefit of all co-owners.25 [Emphasis supplied.]

Under this ruling, either of the spouses Go may bring an action against Navarro to recover possession
of the Kargo Enterprises-leased vehicles which they co-own. This conclusion is consistent with Article
124 of the Family Code, supporting as it does the position that either spouse may act on behalf of the
conjugal partnership, so long as they do not dispose of or encumber the property in question without
the other spouse’s consent.

On this basis, we hold that since Glenn Go is not strictly an indispensable party in the action to recover
possession of the leased vehicles, he only needs to be impleaded as a pro-forma party to the suit,
based on Section 4, Rule 4 of the Rules, which states:

Section 4. Spouses as parties. – Husband and wife shall sue or be sued jointly, except as provided by
law.

Non-joinder of indispensable parties not ground to dismiss action

Even assuming that Glenn Go is an indispensable party to the action, we have held in a number of
cases26 that the misjoinder or non-joinder of indispensable parties in a complaint is not a ground for
dismissal of action. As we stated in Macababbad v. Masirag:27

Rule 3, Section 11 of the Rules of Court provides that neither misjoinder nor nonjoinder of parties is a
ground for the dismissal of an action, thus:

Sec. 11. Misjoinder and non-joinder of parties. Neither misjoinder nor non-joinder of parties is ground
for dismissal of an action. Parties may be dropped or added by order of the court on motion of any
party or on its own initiative at any stage of the action and on such terms as are just. Any claim against
a misjoined party may be severed and proceeded with separately.

In Domingo v. Scheer, this Court held that the proper remedy when a party is left out is to implead the
indispensable party at any stage of the action. The court, either motu proprio or upon the motion of a
party, may order the inclusion of the indispensable party or give the plaintiff opportunity to amend his
complaint in order to include indispensable parties. If the plaintiff to whom the order to include the
indispensable party is directed refuses to comply with the order of the court, the complaint may be
dismissed upon motion of the defendant or upon the court's own motion. Only upon unjustified failure
or refusal to obey the order to include or to amend is the action dismissed.

In these lights, the RTC Order of July 26, 2000 requiring plaintiff Karen Go to join her husband as a
party plaintiff is fully in order.

177
Demand not required prior
to filing of replevin action

In arguing that prior demand is required before an action for a writ of replevin is filed, Navarro
apparently likens a replevin action to an unlawful detainer.

For a writ of replevin to issue, all that the applicant must do is to file an affidavit and bond, pursuant to
Section 2, Rule 60 of the Rules, which states:

Sec. 2. Affidavit and bond.

The applicant must show by his own affidavit or that of some other person who personally knows the
facts:

(a) That the applicant is the owner of the property claimed, particularly describing it, or is
entitled to the possession thereof;

(b) That the property is wrongfully detained by the adverse party, alleging the cause of
detention thereof according to the best of his knowledge, information, and belief;

(c) That the property has not been distrained or taken for a tax assessment or a fine pursuant
to law, or seized under a writ of execution or preliminary attachment, or otherwise placed under
custodia legis, or if so seized, that it is exempt from such seizure or custody; and

(d) The actual market value of the property.

The applicant must also give a bond, executed to the adverse party in double the value of the property
as stated in the affidavit aforementioned, for the return of the property to the adverse party if such
return be adjudged, and for the payment to the adverse party of such sum as he may recover from the
applicant in the action.

We see nothing in these provisions which requires the applicant to make a prior demand on the
possessor of the property before he can file an action for a writ of replevin. Thus, prior demand is not
a condition precedent to an action for a writ of replevin.

More importantly, Navarro is no longer in the position to claim that a prior demand is necessary, as he
has already admitted in his Answers that he had received the letters that Karen Go sent him,
demanding that he either pay his unpaid obligations or return the leased motor vehicles. Navarro’s
position that a demand is necessary and has not been made is therefore totally unmeritorious.

WHEREFORE, premises considered, we DENY the petition for review for lack of merit. Costs against
petitioner Roger V. Navarro.

SO ORDERED.

178
G.R. No. L-55687 July 30, 1982

JUASING HARDWARE, petitioner,


vs.
THE HONORABLE RAFAEL T. MENDOZA, Judge of the Court of First Instance of Cebu, and
PILAR DOLLA, respondents.

Luis V. Diones, Paulito Y. Cabrera and Victor C. Laborte for petitioner.

Amadeo D. Seno for respondents.

GUERRERO, J.:

In this special civil action for certiorari, petitioner Juasing Hardware seeks to annul the Orders of
respondent Judge dated September 5, 1980 and October 21, 1980 issued in Civil Case No. R-18386.

Records show the pertinent factual and procedural antecedents of the instant Petition to be as follows:

On August 17, 1979, Juasing Hardware, alleging to be a single proprietorship duly organized and
existing under and by virtue of the laws of the Philippines and represented by its manager Ong Bon
Yong, filed a complaint for the collection of a sum of money against Pilar Dolla. 1 The complaint charged
that defendant Dolla failed and refused to pay, despite repeated demands, the purchase price of items,
materials and merchandise which she bought from the plaintiff. 2 In her Answer, defendant stated, among
others, that she "has no knowledge about plaintiff's legal personality and capacity to sue as alleged in ...
the complaint." 3 The case proceeded to pre-trial and trial. After plaintiff had completed the presentation of
its evidence and rested its case, defendant filed a Motion for Dismissal of Action (Demurrer to Evidence) 4
praying that the action be dismissed for plaintiff's lack of legal capacity to sue. Defendant in said Motion
contended that plaintiff Juasing Hardware is a single proprietorship, not a corporation or a partnership duly
registered in accordance with law, and therefore is not a juridical person with legal capacity to bring an
action in court. Plaintiff filed an Opposition and moved for the admission of an Amended Complaint. 5

179
Resolving the foregoing controversy, respondent Judge issued the Order dated September 5, 1980
dismissing the case and denying admission of the Amended Complaint. Pertinent portions of said
Order follow:

The Answer of the defendant to the complaint alleged the lack of legal capacity
to sue of the plaintiff as contained in its affirmative defense. inspite of the
allegation that plaintiff has no legal capacity to sue, the plaintiff insisted in
proceeding to trial instead of amending the Complaint. During the trial, it was
found out that the affirmative defense of defendant of plaintiff's lack of legal
capacity to sue is very evident for plaintiff Juasing Hardware is a single
proprietorship which is neither a partnership nor a corporation. The
amendment therefore ' is now too late it being substantial.

In view of all the foregoing, this case is hereby DISMISSED with costs de oficio.
6

Plaintiff's Motion for Reconsideration of the above Order was denied in another Order issued by
respondent Judge on October 21, 1980. 7

The sole issue in this case is whether or not the lower court committed a grave abuse of discretion
when it dismissed the case below and refused to admit the Amended Complaint filed by therein
plaintiff, now herein petitioner, Juasing Hardware.

Rule 3 of the Revised Rules of Court provides as follows:

Sec. 1. Who may be parties.-Only natural or juridical persons or entities authorized by


law may be parties in a civil action.

Petitioner is definitely not a natural person; nor is it a juridical person as defined in the New Civil Code
of the Philippines thus:

Art. 44. The following are juridical persons:

(1) The State and its political subdivisions;

(2) Other corporations, institutions and entities for public interest or purpose, created by law;
their personality begins as soon as they have been constituted according to law;

(3) Corporations, partnerships and associations for private interest or purpose to which the law
grants a juridical personality, separate and distinct from that of each shareholder,
partner or member.

Finally, there is no law authorizing sole proprietorships like petitioner to bring suit in court. The law
merely recognizes the existence of a sole proprietorship as a form of business organization conducted
for profit by a single individual, and requires the proprietor or owner thereof to secure licenses and
permits, register the business name, and pay taxes to the national government. It does not vest
juridical or legal personality upon the sole proprietorship nor empower it to file or defend an action in
court.

Thus, the complaint in the court below should have been filed in the name of the owner of Juasing
Hardware. The allegations in the body of the complaint would show that the suit is brought by such
person AS proprietor or owner of the business conducted under the name and style Juasing
Hardware". The descriptive words "doing business as Juasing Hardware' " may be added in the title
of the case, as is customarily done.

180
Be that as it may, petitioner's contention that respondent Judge erred in not allowing the amendment
of the complaint to correct the designation of the party plaintiff in the lower court, is impressed with
merit. Such an amendment is authorized by Rule 10 of the Revised Rules of Court which provides
thus:

Sec. 4. Formal Amendments. — A defect in the designation of the parties may be summarily
corrected at any stage of the action provided no prejudice is caused thereby to the adverse
party. (Emphasis supplied.)

Contrary to the ruling of respondent Judge, the defect of the complaint in the instant case is merely
formal, not substantial. Substitution of the party plaintiff would not constitute a change in the Identity
of the parties. No unfairness or surprise to private respondent Dolla, defendant in the court a quo,
would result by allowing the amendment, the purpose of which is merely to conform to procedural rules
or to correct a technical error.

In point is the case of Alonzo vs. Villamor, et al. 8 which applied Sec. 110 of the Code of Civil Procedure
authorizing the court "in furtherance of justice ... (to) allow a party to amend any pleading or proceeding
and at any stage of the action, in either the Court of First Instance or the Supreme Court, by adding or
striking out the name of any party, either plaintiff or defendant, or by correcting a mistake in the name of a
party ..." In the Alonzo case, Fr. Eladio Alonzo, a priest of the Roman Catholic Church, brought an action
to recover from therein defendants the value of certain properties taken from the Church. The defendants
contended that Fr. Alonzo was not the real party in interest. This Court, speaking through Justice Moreland,
ordered the substitution of the Roman Catholic Apostolic Church in the place and stead of Eladio Alonzo
as party plaintiff, and aptly held in this wise:

... Defect in form cannot possibly prejudice so long as the substantial is clearly
evident. ...

No one has been misled by the error in the name of the party plaintiff. If we
should by reason of this error send this case back for amendment and new
trial, there would be on the retrial the same complaint, the same answer, the
same defense, the same interests, the same witnesses, and the same
evidence. The name of the plaintiff would constitute the only difference
between the old trial and the new. In our judgment there is not enough in a
name to justify such action.

There is nothing sacred about processes or pleadings, their forms or contents.


Their sole purpose is to facilitate the application of justice to the rival claims of
contending parties. They were created, not to hinder and delay, but to facilitate
and promote, the administration of justice. They do not constitute the thing
itself, which courts are always striving to secure to litigants. They are designed
as the means best adapted to obtain that thing. In other words, they are a
means to an end. When they lose the character of the one and become the
other, the administration of justice is at fault and courts are correspondingly
remiss in the performance of their obvious duty.

The error in this case is purely technical. To take advantage of it for other
purposes than to cure it, does not appeal to a fair sense of justice. Its
presentation as fatal to the plaintiff's case smacks of skill rather than right. A
litigation is not a game of technicalities in which one, more deeply schooled
and skilled in the subtle art of movement and position, entraps and destroys
the other. It is, rather, a contest in which each contending party fully and fairly
lays before the court the facts in issue and then, brushing aside as wholly trivial
and indecisive all imperfections of form and technicalities of procedure, asks
that justice be done upon the merits. Lawsuits, unlike duels, are not to be won
by a rapier's thrust. Technicality, when it deserts its proper office as an aid to
181
justice and becomes its great hindrance and chief enemy, deserves scant
consideration from courts. There should be no vested rights in technicalities.
No litigant should be permitted to challenge a record of a court ... for defect of
form when his substantial rights have not been prejudiced thereby. 9

We reiterate what this Court had stated in the more recent case of Shaffer vs. Palma 10 that "(t)he courts
should be liberal in allowing amendments to pleadings to avoid multiplicity of suits and in order that t he
real controversies between the parties are presented and the case decided on the merits without
unnecessary delay." 11 This rule applies with more reason and with greater force when, as in the case at
bar, the amendment sought to be made refers to a mere matter of form and no substantial rights are
prejudiced. 12

WHEREFORE, the Petition is hereby granted. The Orders dated September 5, 1980 and October 21,
1980 are hereby annulled and the lower court is hereby ordered to admit the Amended Complaint in
conformity with the pronouncements in this Decision. No costs.

SO ORDERED.

G.R. No. 129008 January 13, 2004

TEODORA A. RIOFERIO, VERONICA O. EVANGELISTA assisted by her husband ZALDY


EVANGELISTA, ALBERTO ORFINADA, and ROWENA O. UNGOS, assisted by her
husband BEDA UNGOS, petitioners,
vs.
COURT OF APPEALS, ESPERANZA P. ORFINADA, LOURDES P. ORFINADA, ALFONSO
ORFINADA, NANCY P. ORFINADA, ALFONSO JAMES P. ORFINADA, CHRISTOPHER P.
ORFINADA and ANGELO P. ORFINADA, respondents.

DECISION

TINGA, J.:

Whether the heirs may bring suit to recover property of the estate pending the appointment of an
administrator is the issue in this case.

This Petition for Review on Certiorari, under Rule 45 of the Rules of Court, seeks to set aside the
Decision1 of the Court of Appeals in CA-G.R. SP No. 42053 dated January 31, 1997, as well as
its Resolution2 dated March 26, 1997, denying petitioners’ motion for reconsideration.

On May 13, 1995, Alfonso P. Orfinada, Jr. died without a will in Angeles City leaving several
personal and real properties located in Angeles City, Dagupan City and Kalookan City. 3 He also
left a widow, respondent Esperanza P. Orfinada, whom he married on July 11, 1960 and with
whom he had seven children who are the herein respondents, namely: Lourdes P. Orfinada,
Alfonso "Clyde" P. Orfinada, Nancy P. Orfinada-Happenden, Alfonso James P. Orfinada,
Christopher P. Orfinada, Alfonso Mike P. Orfinada (deceased) and Angelo P. Orfinada.4

Apart from the respondents, the demise of the decedent left in mourning his paramour and their
children. They are petitioner Teodora Riofero, who became a part of his life when he entered into
an extra-marital relationship with her during the subsistence of his marriage to Esperanza
sometime in 1965, and co-petitioners Veronica5, Alberto and Rowena.6
182
On November 14, 1995, respondents Alfonso James and Lourdes Orfinada discovered that on
June 29, 1995, petitioner Teodora Rioferio and her children executed an Extrajudicial Settlement
of Estate of a Deceased Person with Quitclaim involving the properties of the estate of the
decedent located in Dagupan City and that accordingly, the Registry of Deeds in Dagupan issued
Certificates of Titles Nos. 63983, 63984 and 63985 in favor of petitioners Teodora Rioferio,
Veronica Orfinada-Evangelista, Alberto Orfinada and Rowena Orfinada-Ungos. Respondents
also found out that petitioners were able to obtain a loan of P700,000.00 from the Rural Bank of
Mangaldan Inc. by executing a Real Estate Mortgage over the properties subject of the extra-
judicial settlement.7

On December 1, 1995, respondent Alfonso "Clyde" P. Orfinada III filed a Petition for Letters of
Administration docketed as S.P. Case No. 5118 before the Regional Trial Court of Angeles City,
praying that letters of administration encompassing the estate of Alfonso P. Orfinada, Jr. be
issued to him.8

On December 4, 1995, respondents filed a Complaint for the Annulment/Rescission of Extra


Judicial Settlement of Estate of a Deceased Person with Quitclaim, Real Estate Mortgage and
Cancellation of Transfer Certificate of Titles with Nos. 63983, 63985 and 63984 and Other Related
Documents with Damages against petitioners, the Rural Bank of Mangaldan, Inc. and the Register
of Deeds of Dagupan City before the Regional Trial Court, Branch 42, Dagupan City. 9

On February 5, 1996, petitioners filed their Answer to the aforesaid complaint interposing the
defense that the property subject of the contested deed of extra-judicial settlement pertained to
the properties originally belonging to the parents of Teodora Riofero10 and that the titles thereof
were delivered to her as an advance inheritance but the decedent had managed to register them
in his name.11 Petitioners also raised the affirmative defense that respondents are not the real
parties-in-interest but rather the Estate of Alfonso O. Orfinada, Jr. in view of the pendency of the
administration proceedings.12 On April 29, 1996, petitioners filed a Motion to Set Affirmative
Defenses for Hearing13 on the aforesaid ground.

The lower court denied the motion in its Order14 dated June 27, 1996, on the ground that
respondents, as heirs, are the real parties-in-interest especially in the absence of an administrator
who is yet to be appointed in S.P. Case No. 5118. Petitioners moved for its reconsideration15 but
the motion was likewise denied.16

This prompted petitioners to file before the Court of Appeals their Petition for Certiorari under Rule
65 of the Rules of Court docketed as CA G.R. S.P. No. 42053.17 Petitioners averred that the RTC
committed grave abuse of discretion in issuing the assailed order which denied the dismissal of
the case on the ground that the proper party to file the complaint for the annulment of the
extrajudicial settlement of the estate of the deceased is the estate of the decedent and not the
respondents.18

The Court of Appeals rendered the assailed Decision19 dated January 31, 1997, stating that it
discerned no grave abuse of discretion amounting to lack or excess of jurisdiction by the public
respondent judge when he denied petitioners’ motion to set affirmative defenses for hearing in
view of its discretionary nature.

A Motion for Reconsideration was filed by petitioners but it was denied.20 Hence, the petition
before this Court.

The issue presented by the petitioners before this Court is whether the heirs have legal standing
to prosecute the rights belonging to the deceased subsequent to the commencement of the
administration proceedings.21

183
Petitioners vehemently fault the lower court for denying their motion to set the case for preliminary
hearing on their affirmative defense that the proper party to bring the action is the estate of the
decedent and not the respondents. It must be stressed that the holding of a preliminary hearing
on an affirmative defense lies in the discretion of the court. This is clear from the Rules of Court,
thus:

SEC. 5. Pleadings grounds as affirmative defenses.- Any of the grounds for


dismissal provided for in this rule, except improper venue, may be pleaded as an
affirmative defense, and a preliminary hearing may be had thereon as if a motion
to dismiss had been filed.22 (Emphasis supplied.)

Certainly, the incorporation of the word "may" in the provision is clearly indicative of the optional
character of the preliminary hearing. The word denotes discretion and cannot be construed as
having a mandatory effect.23 Subsequently, the electivity of the proceeding was firmed up beyond
cavil by the 1997 Rules of Civil Procedure with the inclusion of the phrase "in the discretion of the
Court", apart from the retention of the word "may" in Section 6,24 in Rule 16 thereof.

Just as no blame of abuse of discretion can be laid on the lower court’s doorstep for not hearing
petitioners’ affirmative defense, it cannot likewise be faulted for recognizing the legal standing of
the respondents as heirs to bring the suit.

Pending the filing of administration proceedings, the heirs without doubt have legal personality to
bring suit in behalf of the estate of the decedent in accordance with the provision of Article 777 of
the New Civil Code "that (t)he rights to succession are transmitted from the moment of the death
of the decedent." The provision in turn is the foundation of the principle that the property, rights
and obligations to the extent and value of the inheritance of a person are transmitted through his
death to another or others by his will or by operation of law.25

Even if administration proceedings have already been commenced, the heirs may still bring the
suit if an administrator has not yet been appointed. This is the proper modality despite the total
lack of advertence to the heirs in the rules on party representation, namely Section 3, Rule 326
and Section 2, Rule 8727 of the Rules of Court. In fact, in the case of Gochan v. Young,28 this
Court recognized the legal standing of the heirs to represent the rights and properties of the
decedent under administration pending the appointment of an administrator. Thus:

The above-quoted rules,29 while permitting an executor or administrator to


represent or to bring suits on behalf of the deceased, do not prohibit the heirs from
representing the deceased. These rules are easily applicable to cases in which
an administrator has already been appointed. But no rule categorically
addresses the situation in which special proceedings for the settlement of
an estate have already been instituted, yet no administrator has been
appointed. In such instances, the heirs cannot be expected to wait for the
appointment of an administrator; then wait further to see if the administrator
appointed would care enough to file a suit to protect the rights and the interests of
the deceased; and in the meantime do nothing while the rights and the properties
of the decedent are violated or dissipated.

Even if there is an appointed administrator, jurisprudence recognizes two exceptions, viz: (1) if
the executor or administrator is unwilling or refuses to bring suit;30 and (2) when the administrator
is alleged to have participated in the act complained of 31 and he is made a party defendant.32
Evidently, the necessity for the heirs to seek judicial relief to recover property of the estate is as
compelling when there is no appointed administrator, if not more, as where there is an appointed
administrator but he is either disinclined to bring suit or is one of the guilty parties himself.

184
All told, therefore, the rule that the heirs have no legal standing to sue for the recovery of property
of the estate during the pendency of administration proceedings has three exceptions, the third
being when there is no appointed administrator such as in this case.

As the appellate court did not commit an error of law in upholding the order of the lower court,
recourse to this Court is not warranted.

WHEREFORE, the petition for review is DENIED. The assailed decision and resolution of the
Court of Appeals are hereby AFFIRMED. No costs.

SO ORDERED.

G.R. No. 131889 March 12, 2001

VIRGINIA O. GOCHAN, FELIX Y. GOCHAN III, MAE GOCHAN EFANN, LOUISE Y. GOCHAN,
ESTEBAN Y. GOCHAN JR., DOMINIC Y.GOCHAN, FELIX 0. GOCHAN III, MERCEDES R.
GOCHAN, ALFREDO R. GOCHAN, ANGELINA R. GOCHAN-HERNAEZ, MARIA MERCED R.
GOCHAN, CRISPO R. GOCHAN JR., MARION R. GOCHAN, MACTAN REALTY
DEVELOPMENT CORPORATION and FELIX GOCHAN & SONS REALTY CORPORATION,
petitioner,
vs.
RICHARD G. YOUNG, DAVID G. YOUNG, JANE G. YOUNG-LLABAN, JOHN D. YOUNG JR.,
MARY G. YOUNG-HSU and ALEXANDER THOMAS G. YOUNG as heirs of Alice Gochan;
the INTESTATE ESTATE OF JOHN D. YOUNG SR.; and CECILIA GOCHAN-UY and MIGUEL
C. UY, for themselves and on behalf and for the benefit of FELIX GOCHAN & SONS REALTY
CORPORATION, respondents.

PANGANIBAN, J.:

A court or tribunal's jurisdiction over the subject matter is determined by the allegations in the
complaint. The fact that certain persons are not registered as stockholders in the books of the
corporation will not bar them from filing a derivative suit, if it is evident from the allegations in the
complaint that they are bona fide stockholders. In view of RA 8799, intra-corporate controversies
are now within the jurisdiction of courts of general jurisdiction, no longer of the Securities and
Exchange Commission. 1âwphi1.nêt

The Case

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. The Petition
assails the February 28, 1996 Decision1 of the Court of Appeals (CA), as well as its December
18, 1997 Resolution denying petitioner's Motion for Reconsideration. The dispositive part of the
CA Decision reads as follows:

"WHEREFORE, the petition as far as the heirs of Alice Gochan, is DISMISSED,


without prejudice to filing the same in the regular courts.
185
SO ORDERED."2

In dismissing the Complaint before the SEC regarding only Alice Gochan's heirs but not the other
complainants, the CA effectively modified the December 9, 1994 Order of the hearing officer 3 of
the Securities and Exchange Commission (SEC). The Order, which was affirmed in full by the
SEC en banc, dismissed the entire case.

The Facts

The undisputed facts are summarized by the Court of Appeals as follows:

"Felix Gochan and Sons Realty Corporation (Gochan Realty, for brevity) was
registered with the SEC on June, 1951, with Felix Gochan, Sr., Maria Pan Nuy Go
Tiong, Pedro Gochan, Tomasa Gochan, Esteban Gochan and Crispo Gochan as
its incorporators.

"Felix Gochan Sr.'s daughter, Alice, mother of [herein respondents], inherited 50


shares of stock in Gochan Realty from the former.

"Alice died in 1955, leaving the 50 shares to her husband, John Young, Sr.

"In 1962, the Regional Trial Court of Cebu adjudicated 6/14 of these shares to her
children, herein [respondents] Richard Young, David Young, Jane Young Llaban,
John Young Jr., Mary Young Hsu and Alexander Thomas Young.

"Having earned dividends, these stocks numbered 179 by 20 September 1979.

"Five days later (25 September), at which time all the children had reached the age
of majority, their father John Sr., requested Gochan Realty to partition the shares
of his late wife by cancelling the stock certificates in his name and issuing in lieu
thereof, new stock certificates in the names of [herein respondents].

"On 17 October 1979, respondent Gochan Realty refused, citing as reason, the
right of first refusal granted to the remaining stockholders by the Articles of
Incorporation.

"On 21, 1990, [sic] John, Sr. died, leaving the shares to the [respondents].

"On 8 February 1994, [respondents] Cecilia Gochan Uy and Miguel Uy filed a


complaint with the SEC for issuance of shares of stock to the rightful owners,
nullification of shares of stock, reconveyance of property impressed with trust,
accounting, removal of officers and directors and damages against respondents.
A Notice of Lis Pendens was annotated as [sic] real properties of the corporation.

"On 16 March 1994, [herein petitioners] moved to dismiss the complaint alleging
that: (1) the SEC ha[d] no jurisdiction over the nature of the action; (2) the
[respondents] [were] not the real parties-in-interest and ha[d] no capacity to sue;
and (3) [respondents'] causes of action [were] barred by the Statute of Limitations.

"The motion was opposed by herein [respondents].

"On 29 March 1994, [petitioners'] filed a Motion for cancellation of Notice of Lis
Pendens. [Respondents] opposed the said motion.
186
"On 9 December 1994, the SEC, through its Hearing Officer, granted the motion
to dismiss and ordered the cancellation of the notice of lis pendens annotated upon
the titles of the corporate lands. In its order, the SEC opined:

'In the instant case, the complaint admits that complainants Richard G.
Young, David G. Young, Jane G. Young Llaban, John D. Young, Jr., Mary
G. Young Hsu and Alexander Thomas G. Young, who are the children of
the late Alice T. Gochan and the late John D. Young, Sr. are suing in their
own right and as heirs of and/or as the beneficial owners of the shares in
the capital stock of FGSRC held in trust for them during his lifetime by the
late John D. Young. Moreover, it has been shown that said complainants
ha[d] never been x x x stockholder[s] of record of FGSRC to confer them
with the legal capacity to bring and maintain their action. Conformably, the
case cannot be considered as an intra-corporate controversy within the
jurisdiction of this Commission.

'The complainant heirs base what they perceived to be their stockholders'


rights upon the fact of their succession to all the rights, property and interest
of their father, John D. Young, Sr. While their heirship is not disputed, their
right to compel the corporation to register John D. Young's Sr. shares of
stock in their names cannot go unchallenged because the devolution of
property to the heirs by operation of law in succession is subject to just
obligations of the deceased before such property passes to the heirs.
Conformably, until therefore the estate is settled and the payment of the
debts of the deceased is accomplished, the heirs cannot as a matter of
right compel the delivery of the shares of stock to them and register such
transfer in the books of the corporation to recognize them as stockholders.
The complainant heirs succeed to the estate of [the] deceased John D.
Young, Sr. but they do not thereby become stockholders of the corporation.

'Moreover, John D. [Young Sr.'s] shares of stocks form part of his estate
which is the subject of Special Proceedings No. 3694-CEB in the Regional
Trial Court of Cebu, Branch VIII, [par. 4 of the complaint]. As complainants
clearly claim[,] the Intestate Estate of John D. Young, Sr. has an interest in
the subject matter of the instant case. However, actions for the recovery or
protection of the property [such as the shares of stock in question] may be
brought or defended not by the heirs but by the executor or administrator
thereof.

'Complainants further contend that the alleged wrongful acts of the


corporation and its directors constitute fraudulent devices or schemes
which may be detrimental to the stockholders. Again, the injury [is]
perceived[,] as is alleged[,] to have been suffered by complainants as
stockholders, which they are not. Admittedly, the SEC has no jurisdiction
over a controversy wherein one of the parties involved is not or not yet a
stockholder of the corporation. [SEC vs. CA, 201 SCRA 134].

'Further, by the express allegation of the complaint, herein complainants


bring this action as [a] derivative suit on their own behalf and on behalf of
respondent FGSRC.

'Section 5, Rule III of the Revised Rules of Procedure in the Securities and
Exchange Commission provides:

187
'Section 5. Derivative Suit. No action shall be brought by
stockholder in the right of a corporation unless the complainant was
a stockholder at the time the questioned transaction occurred as
well as at the time the action was filed and remains a stockholder
during the pendency of the action. x x x.'

'The rule is in accord with well settled jurisprudence holding that a


stockholder bringing a derivative action must have been [so] at the time the
transaction or act complained of [took] place. (Pascual vs. Orozco, 19 Phil.
82; Republic vs. Cuaderno, 19 SCRA 671; San Miguel Corporation vs.
Khan, 176 SCRA 462-463) The language of the rule is mandatory, strict
compliance with the terms thereof thus being a condition precedent, a
jurisdictional requirement to the filing of the instant action.

'Otherwise stated, proof of compliance with the requirement must be


sufficiently established for the action to be given due course by this
Commission. The failure to comply with this jurisdictional requirement on
derivative action must necessarily result in the dismissal of the instant
complaint.' (pp. 77-79, Rollo)

"[Respondents] moved for a reconsideration but the same was denied for being
pro-forma.

"[Respondents] appealed to the SEC en banc, contending, among others, that the
SEC ha[d] jurisdiction over the case.

"[Petitioners], on the other hand, contend that the appeal was 97 days late, beyond
the 30-day period for appeals.

"On 3 March 1995, the SEC en banc ruled for the [petitioners,] holding that the
[respondents'] motion for reconsideration did not interrupt the 30-day period for
appeal because said motion was pro-forma."4

Aggrieved, herein respondents then filed a Petition for Review with the Court of Appeals.

Ruling of the Court of Appeals

The Court of Appeals ruled that the SEC had no jurisdiction over the case as far as the heirs of
Alice Gochan were concerned, because they were not yet stockholders of the corporation. On the
other hand, it upheld the capacity of Respondents Cecilia Gochan Uy and her spouse, Miguel Uy.
It also held that the Intestate Estate of John Young Sr. was an indispensable party.

The appellate court further ruled that the cancellation of the notice of lis pendens on the titles of
the corporate real estate was not justified. Moreover, it declared that respondents' Motion for
Reconsideration before the SEC was not pro forma; thus, its filing tolled the appeal period.

Hence, this Petition.5

The Issues

These are the issues presented before us:

188
"A. Whether or not the Spouses Uy have the personality to file an action before the
SEC against Gochan Realty Corporation.

"B. Whether or not the Spouses Uy could properly bring a derivative suit in the
name of Gochan Realty to redress wrongs allegedly committed against it for which
the directors refused to sue.

"C. Whether or not the intestate estate of John D. Young Sr. is an indispensable
party in the SEC case considering that the individual heirs' shares are still in the
decedent stockholder's name.

"D. Whether or not the cancellation of [the] notice of lis pendens was justified
considering that the suit did not involve real properties owned by Gochan Realty."6

In addition, the Court will determine the effect of Republic Act No.87997 on this case.

The Court's Ruling

The Petition has no merit. In view of the effectivity of RA 8799, however, the case should be
remanded to the proper regional trial court, not to the Securities and Exchange Commission.

First Issue:

Personality of the Spouses Uy to File a Suit Before the SEC

Petitioners argue that Spouses Cecilia and Miguel Uy had no capacity or legal standing to bring
the suit before the SEC on February 8, 1994, because the latter were no longer stockholders at
the time. Allegedly, the stocks had already been purchased by the corporation. Petitioners further
assert that, being allegedly a simple contract of sale cognizable by the regular courts, the
purchase by Gochan Realty of Cecilia Gochan Uy's 210 shares does not come within the purview
of an intra-corporate controversy.

As a general rule, the jurisdiction of a court or tribunal over the subject matter is determined by
the allegations in the complaint.8 For purposes of resolving a motion to dismiss, Cecilia Uy's
averment in the Complaint -that the purchase of her stocks by the corporation was null and void
ab initio - is deemed admitted. It is elementary that a void contract produces no effect either
against or in favor of anyone; it cannot create, modify or extinguish the juridical relation to which
it refers.9 Thus, Cecilia remains a stockholder of the corporation in view of the nullity of the
Contract of Sale. Although she was no longer registered as a stockholder in the corporate records
as of the filing of the case before the SEC, the admitted allegations in the Complaint made her
still a bona fide stockholder of Felix Gochan & Sons Realty Corporation (FGSRC), as between
said parties.

In any event, the present controversy, whether intra-corporate or not, is no longer cognizable by
the SEC, in view of RA 8799, which transferred to regional trial courts the former's jurisdiction
over cases involving intra-corporate disputes.

Action Has Not Prescribed

Petitioners contend that the statute of limitations already bars the Uy spouses' action, be it one
for annulment of a voidable contract or one based upon a written contract. The Complaint,
however, contains respondents' allegation that the sale of the shares of stock was not merely
voidable, but was void ab initio. Below we quote its relevant portion:
189
"38. That on November 21, 1979, respondent Felix Gochan & Sons Realty
Corporation did not have unrestricted retained earnings in its books to cover the
purchase price of the 208 shares of stock it was then buying from complainant
Cecilia Gochan Uy, thereby rendering said purchase null and void ab initio for
being violative of the trust fund doctrine and contrary to law, morals good customs,
public order and public policy;"

Necessarily, petitioners' contention that the action has prescribed cannot be sustained.
Prescription cannot be invoked as a ground if the contract is alleged to be void ab initio.10 It is
axiomatic that the action or defense for the declaration of nullity of a contract does not prescribe. 11

Second Issue:

Derivative Suit and the Spouses Uy

Petitioners also contend that the action filed by the Spouses Uy was not a derivative suit, because
the spouses and not the corporation were the injured parties. The Court is not convinced. The
following quoted portions of the Complaint readily shows allegations of injury to the corporation
itself:

"16. That on information and belief, in further pursuance of the said conspiracy and
for the fraudulent purpose of depressing the value of the stock of the Corporation
and to induce the minority stockholders to sell their shares of stock for an
inadequate consideration as aforesaid, respondent Esteban T. Gochan . . ., in
violation of their duties as directors and officers of the Corporation . . ., unlawfully
and fraudulently appropriated [for] themselves the funds of the Corporation by
drawing excessive amounts in the form of salaries and cash advances. . . and by
otherwise charging their purely personal expenses to the Corporation."

xxx xxx xxx

"41. That the payment of P1,200,000.00 by the Corporation to complainant Cecilia


Gochan Uy for her shares of stock constituted an unlawful, premature and partial
liquidation and distribution of assets to a stockholder, resulting in the impairment
of the capital of the Corporation and prevented it from otherwise utilizing said
amount for its regular and lawful business, to the damage and prejudice of the
Corporation, its creditors, and of complainants as minority stockholders;"12

As early as 1911, this Court has recognized the right of a single stockholder to file derivative suits.
In its words:

"[W]here corporate directors have committed a breach of trust either by their


frauds, ultra vires acts, or negligence, and the corporation is unable or unwilling to
institute suit to remedy the wrong, a single stockholder may institute that suit, suing
on behalf of himself and other stockholders and for the benefit of the corporation,
to bring about a redress of the wrong done directly to the corporation and indirectly
to the stockholders."13

In the present case, the Complaint alleges all the components of a derivative suit. The allegations
of injury to the Spouses Uy can coexist with those pertaining to the corporation. The personal
injury suffered by the spouses cannot disqualify them from filing a derivative suit on behalf of the
corporation. It merely gives rise to an additional cause of action for damages against the erring
directors. This cause of action is also included in the Complaint filed before the SEC.
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The Spouses Uy have the capacity to file a derivative suit in behalf of and for the benefit of the
corporation. The reason is that, as earlier discussed, the allegations of the Complaint make them
out as stockholders at the time the questioned transaction occurred, as well as at the time the
action was filed and during the pendency of the action.

Third Issue:

Capacity of the Intestate Estate of John D. Young Sr.

Petitioners contend that the Intestate Estate of John D. Young Sr. is not an indispensable party,
as there is no showing that it stands to be benefited or injured by any court judgement.

It would be useful to point out at this juncture that one of the causes of action stated in the
Complaint filed with the SEC refers to the registration, in the name of the other heirs of Alice
Gochan Young, of 6/14th of the shares still registered under the name of John D. Young Sr. Since
all the shares that belonged to Alice are still in his name, no final determination can be had without
his estate being impleaded in the suit. His estate is thus an indispensable party with respect to
the cause of action dealing with the registration of the shares in the names of the heirs of Alice.

Petitioners further claim that the Estate of John Young Sr. was not properly represented. They
claim that "when the estate is under administration, suits for the recovery or protection of the
property or rights of the deceased may be brought only by the administrator or executor as
approved by the court."14 The rules relative to this matter do not, however, make any such
categorical and confining statement.

Section 3 of Rule 3 of the Rules of Court, which is cited by petitioners in support of their position,
reads:

"Sec. 3. Representatives as parties. - Where the action is allowed to be prosecuted


or defended by a representative or someone acting in a fiduciary capacity, the
beneficiary shall be included in the title of the case and shall be deemed to be the
real party in interest. A representative may be a trustee of an express trust, a
guardian, an executor or administrator, or a party authorized by law or these Rules.
An agent acting in his own name and for the benefit of an undisclosed principal
may sue or be sued without joining the principal except when the contract involves
things belonging to the principal."

Section 2 of Rule 87 of the same Rules, which also deals with administrators, states:

"Sec. 2. Executor or administrator may bring or defend actions which survive. -For
the recovery or protection of the property or rights of the deceased, an executor or
administrator may bring or defend, in the right of the deceased, actions for causes
which survive."

The above-quoted rules, while permitting an executor or administrator to represent or to bring


suits on behalf of the deceased, do not prohibit the heirs from representing the deceased. These
rules are easily applicable to cases in which an administrator has already been appointed. But no
rule categorically addresses the situation in which special proceedings for the settlement of an
estate have already been instituted, yet no administrator has been appointed. In such instances,
the heirs cannot be expected to wait for the appointment of an administrator; then wait further to
see if the administrator appointed would care enough to file a suit to protect the rights and the
interests of the deceased; and in the meantime do nothing while the rights and the properties of
the decedent are violated or dissipated.1âwphi1.nêt
191
The Rules are to be interpreted liberally in order to promote their objective of securing a just,
speedy and inexpensive disposition of every action and proceeding.15 They cannot be interpreted
in such a way as to unnecessarily put undue hardships on litigants. For the protection of the
interests of the decedent, this Court has in previous instances16 recognized the heirs as proper
representatives of the decedent, even when there is already an administrator appointed by the
court. When no administrator has been appointed, as in this case, there is all the more reason to
recognize the heirs as the proper representatives of the deceased. Since the Rules do not
specifically prohibit them from representing the deceased, and since no administrator had as yet
been appointed at the time of the institution of the Complaint with the SEC, we see nothing wrong
with the fact that it was the heirs of John D. Young Sr. who represented his estate in the case
filed before the SEC.

Fourth Issue

Notice of Lis Pendens

On the issue of the annotation of the Notice of Lis Pendens on the titles of the properties of the
corporation and the other respondents, we still find no reason to disturb the ruling of the Court of
Appeals.

Under the third, fourth and fifth causes of action of the Complaint, there are allegations of breach
of trust and confidence and usurpation of business opportunities in conflict with petitioners'
fiduciary duties to the corporation, resulting in damage to the Corporation. Under these causes of
action, respondents are asking for the delivery to the Corporation of possession of the parcels of
land and their corresponding certificates of title. Hence, the suit necessarily affects the title to or
right of possession of the real property sought to be reconveyed. The Rules of Court 17 allows the
annotation of a notice of lis pendens in actions affecting the title or right of possession of real
property.18 Thus, the Court of Appeals was correct in reversing the SEC Order for the cancellation
of the notice of lis pendens.

The fact that respondents are not stockholders of the Mactan Realty Development Corporation
and the Lapu-Lapu Real Estate Corporation does not make them non-parties to this case. To
repeat, the jurisdiction of a court or tribunal over the subject matter is determined by the
allegations in the Complaint. In this case, it is alleged that the aforementioned corporations are
mere alter egos of the directors-petitioners, and that the former acquired the properties sought to
be re conveyed to FGSRC in violation of the directors-petitioners' fiduciary duty to FGSRC. The
notion of corporate entity will be pierced or disregarded and the individuals composing it will be
treated as identical19 if, as alleged in the present case, the corporate entity is being used as a
cloak or cover for fraud or illegality; as a justification for a wrong; or as an alter ego, an adjunct,
or a business conduit for the sole benefit of the stockholders.

Effect of RA 8799

While we sustain the appellate court, the case can no longer be remanded to the SEC. As earlier
stated, RA 8799, which became effective on August 8, 2000, transferred SEC's jurisdiction over
cases involving intra-corporate disputes to courts of general jurisdiction or to the regional trial
courtS.20 Section 5.2 thereof reads as follows:

"5.2. The Commission's jurisdiction over all cases enumerated under Section 5 of
Presidential Decree No. 902-A is hereby transferred to the Courts of general
jurisdiction or the appropriate Regional Trial Court: Provided, That the Supreme
Court in the exercise of its authority may designate the Regional Trial Court
branches that shall exercise jurisdiction over these cases. The Commission shall

192
retain jurisdiction over pending cases involving intra-corporate disputes submitted
for final resolution which should be resolved within one (1) year from the enactment
of this Code. The Commission shall retain jurisdiction over pending suspension of
payments/rehabilitation cases filed as of 30 June 2000 until finally disposed."

In the light of the Resolution issued by this Court in AM No. 00-8-10-SC,21 the Court Administrator
and the Securities and Exchange Commission should be directed to cause the transfer of the
records of SEC Case No. 02-94-4674 to the appropriate court of general jurisdiction.

WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED, subject to
the modification that the case be remanded to the proper regional trial court. The December 9,
1994 Order of Securities and Exchange Commission hearing officer dismissing the Complaint
and directing the cancellation of the notice of lis pendens, as well as the March 3, 1995 Order
denying complainants' motion for reconsideration are REVERSED and SET ASIDE. Pursuant to
AM No. 00-8-10-SC, the Office of the Court Administrator and the SEC are DIRECTED to cause
the actual transfer of the records of SEC Case No.02-94-467 4 to the appropriate regional trial
court.

G.R. NO. 145379 December 9, 2005

DAMIANA INTO, Petitioner,


vs.
MARIO VALLE, OCTAVIO VALLE, ALBERTO VALLE, OLIVER VALLE, BRENDA VALLE,
and LUISA VDA. DE VALLE, Respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

This refers to the petition for review by certiorari under Rule 45 of the Rules of Court assailing the
Decision1 of the Court of Appeals (CA) dated May 5, 2000 and its Resolution2 dated August 31,
2000 denying petitioner’s motion for reconsideration.

The facts are as follows:

On August 13, 1990, petitioner Damiana Into (petitioner) obtained a judgment from the Regional
Trial Court (RTC), Davao City, Branch 14, in Civil Case No. 19-896-89, whereby Eleanor Valle
Siapno (Eleanor) and Oscar Siapno were ordered to pay to petitioner the total amount of
P283,000.00 plus interests.3 The judgment became final and executory. On August 6, 1992,
Sheriffs Alberto C. Esguerra and Diosdado A. Cajes sold at public auction "all the rights, interests,
title, claims and participation pro-indiviso by Eleanor Valle Siapno, married to Oscar Siapno over
the following real properties subject of Special Proceedings No. 63, In Re: In the Matter of the
Intestate Estate of Victorio Valle, Luisa vda. de Valle – Petitioner which is pending consideration
before RTC, Branch 2, Tagum..."4 consisting of six parcels of land covered by certificates of title.
On August 7, 1992, Sheriff Esguerra executed a Provisional Certificate of Sale in favor of
petitioner as the highest bidder.5

On November 23, 1992, herein respondent Luisa vda. de Valle as the surviving spouse of the late
Victorio Valle together with their children, namely, Mario, Octavio, Alberto, Oliver and Brenda, all
surnamed Valle (respondents), filed a complaint against petitioner and the Sheriffs, docketed as
Civil Case No. 2671, for "Declaration of Nullity of Sheriff’s Sale and/or Recovery of Hereditary
Shares, Damages and Attorney’s fees" with the RTC of Tagum, Davao City, raffled to Branch 1.

193
Respondents claim that on February 2, 1991, Eleanor, daughter of Victorio and Luisa, for valuable
consideration, waived her rights to, interests in and participation in all properties, real and
personal, which include the six parcels of land sold at public auction; that at the time of the
execution of the "Waiver of Hereditary Shares and/or Rights" (Waiver) of Eleanor to her co-heirs,
her shares in the subject properties were free from any burden voluntary or involuntary there
being no indication of any writ of attachment or levy annotated or inscribed in the Torrens titles;
that in June 1992, respondent Luisa, as administratrix of the Estate of her husband Victorio Valle,
was served a Sheriff’s Notice of Sale of Real Properties; that despite their verbal notice to
petitioner that the shares of Eleanor have been conveyed, waived and ceded to respondents, the
Sheriffs proceeded with the public auction; that the auction sale conducted by the Sheriffs was
null and void for being irregular and illegal as the subject properties were not validly attached and
levied, and, at the time of the sale, judgment debtor Eleanor had no more rights and interests on
the properties subject of the auction sale.6

On February 3, 1993, petitioner together with the defendant Sheriffs filed a Motion to Dismiss on
the following grounds: that respondents have no capacity to sue considering the pendency of the
settlement of the estate of the late Victorio Valle; that the repudiation made by Eleanor was invalid
as it was not made pursuant to Article 1051 of the Civil Code; that the Waiver executed by Eleanor
cannot prevail over the judgment credit of the petitioner.7

On March 12, 1993, the RTC, Branch 1, issued an Order transferring Civil Case No. 2671 to
Branch 2 where SP Proc. No. 63 is pending.8

Over the objections of respondents, the RTC issued an Order dated August 31, 1993 in Civil Case
No. 2671, portions of which read as follows:

It will be noted that the judgment in Civil Case No. 19-896-89 was rendered on August 13, 1990
while the waiver of her proprietary rights in favor of the plaintiffs was only on February 2, 1991.

Clearly, the obligation of Eleanor Siapno to Damiana Into already existed at the time the waiver
of her hereditary rights was executed in favor of her co-heirs.

The execution, therefore, of the waiver by Eleanor Siapno, naturally, prejudiced the right of
Damiana Into which was already in existence.

"Rights may be waived unless the waiver is contrary to law, public order, public policy, morals, or
good customs, or prejudicial to a third person with a right recognized by law" (Art. 6, New Civil
Code).

There cannot be any doubt that Damiana Into had a right to the properties of Siapno which is
recognized by law.

Article 1051 of the New Civil Code also provides that "The repudiation of an inheritance shall be
made in a public or authentic instrument, or by petition presented to the court having jurisdiction
over the testamentary or intestate proceedings."

Construing the said provision of law, in view of the pendency of the intestate proceedings of the
estate of the late Victorio Valle, the waiver of her hereditary rights in favor of her co-heirs should
have been by petition filed with this court which has acquired jurisdiction over Special Proceedings
No. 63 (Intestate Estate of Victorio Valle).

Nevertheless, since Eleanor Valle Siapno has not yet received her share of the estate of the late
Victorio Valle, the claim of Damiana Into should have been filed with the intestate estate
194
proceeding and not the auction sale of a portion of the property which is still very much a part of
the subject of Special Proceedings No. 63.

In the light of the foregoing, while it is hereby ordered that the present case be dismissed, the
nullity of the questioned auction sale and the provisional sheriff’s sale is also hereby ordered.

SO ORDERED.9

Parties filed their respective motions for reconsideration.

On April 28, 1994, the RTC issued an Order which reads:

In their motion, the plaintiffs contended that the repudiation by Eleanor Siapno of her share in the
estate was for consideration and not gratuitous. Therefore, according to the plaintiffs, Article 6 of
the New Civil Code has no application.

This Court is of the view that whether or not there was consideration, there was an act of
repudiation and, therefore, the requirements of the law should have been observed.

The order of dismissal stands.

The defendants, in their motion for reconsideration, cited Section 7(f), Rule 57 of the Rules of
Court, among others, which reads:

"Properties shall be attached by the officer executing the order in the following manner:

...

(f) The interest of the party against whom attachment is issued in property belonging to the estate
of the decedent, whether as heir, legatee, or devisee, by serving the executor or administrator or
other personal representative of the decedent with a copy of the order and notice that said interest
is attached. A copy of said order of attachment and of said notice shall be filed in the office of the
clerk of the court in which said estate is being settled and served upon the heir, legatee or devisee
concerned."

In the light of the said provision of law, the order declaring as null and void the auction sale and
the provisional sheriff’s sale is hereby set aside and reconsidered.

SO ORDERED.10

Respondents appealed to the CA, docketed as CA-G.R. CV No. 46382. On May 5, 2000, the CA
promulgated its Decision, portions of which read:

After due study, the Court finds merit in the appeal.

In ruling for the dismissal of the complaint below, the lower court committed grave, but correctible
conclusions and applications of law, which directly bear on the validity of its judgment.

Firstly, the lower court erred in ruling that Eleanor Valle Siapno’s alleged repudiation of her
inheritance is invalid, having been improperly made. A close scrutiny of the act of Eleanor, taking
into consideration the statements appearing in her "Waiver of Hereditary Shares and/or Rights"
(p. 8, Records) shows that she did not repudiate her inheritance, but had actually accepted the

195
same, but had waived its enjoyment in exchange for valuable consideration which she had already
received and enjoyed. (Id., at 10) Furthermore, even if such act may be construed as a repudiation
of her inheritance, the same has been validly made through a public document pursuant to Article
1051 of the Civil Code, which states:

"Article 1051. The repudiation of an inheritance shall be made in a public or authentic instrument,
or by a petition duly presented to the court having jurisdiction over the testamentary or intestate
proceedings."

It is undeniable that Eleanor’s act was made through a document duly signed by her and executed
before notary public Hermenegildo Monja, (p. 11, Records) which sufficiently qualifies the same
as a public document. It must be noted that nowhere in the abovequoted article is it required that
in case of the pendency of testamentary or intestate proceedings, any repudiation of inheritance
must be made exclusively by petition in the estate court. Where the law is unambiguous and clear,
it must be applied according to its plain and obvious meaning, according to its express terms.
(Cecilleville Realty and Service Corporation v. Court of Appeals, 278 SCRA 819 [1997])

Furthermore, the fact that the RTC of Davao had ruled Eleanor Valle Siapno as a judgment debtor
of Damiana Into prior to her waiver of inheritance does not render the subsequent levy and auction
sale of the subject properties as a valid measure, not even vis-a-vis the prescription under Rule
57, Section 7(f) of the Rules of Court, which is hereby reproduced:

Sec. 7. Attachment of real and personal property; recording thereof. – Properties shall be attached
by the officer executing the order in the following manner:

...

(f) The interest of the party against whom attachment is issued in property belonging to the estate
of the decedent, whether as heir, legatee, or devisee, by serving the executor or administrator or
other personal representative of the decedent with a copy of the order and notice that said interest
is attached. A copy of said order of attachment and of said notice shall be filed in the office of the
clerk of court in which said estate is being settled and served upon the heir, legatee or devisee
concerned.

If the property sought to be attached is in custodia legis, copy of the order of attachment shall be
filed with the proper court and notice of the attachment shall be filed with the proper court and
notice of the attachment served upon the custodian of such property.

Taken in its proper context, the abovequoted rule of procedure presents merely the remedy of a
claiming party to attach the interests of a defending party in the properties belonging to the estate
of a decedent. In no way, however, does the said provision set forth the rule that such inchoate
interests of a person may be duly levied upon and sold to satisfy the execution of a judgment
debt. It must be noted that an heir’s right of ownership over the properties of the decedent is
merely inchoate as long as the estate has not been fully settled and partitioned. (Estate of Hilario
M. Ruiz v. Court of Appeals, 252 SCRA 541 [1996]) This means that the impending heir has yet
no absolute dominion over any specific property in the decedent’s estate that could be specifically
levied upon and sold at public auction. Any encumbrance of attachment over the heir’s interests
in the estate, therefore, remains a mere probability, and cannot summarily be satisfied without
the final distribution of the properties in the estate.

From the foregoing, it appears that plaintiffs-appellants have good reason to object from the
premature dismissal of its action below. As prospective heirs of the properties of the late Victorio
Valle, they certainly have the capacity to sue against any perceived impropriety or railroaded

196
disposition of the properties under settlement proceedings, as their inheritance stand to be
depleted by the execution even before the final decree of partition or distribution in the partition
proceedings is issued. They have a right to be heard, and to present evidence to advance their
rights. For this reason, the Court finds that the proceedings below regarding the appellant’s action
for declaration of the nullity of the sheriff’s sale should be allowed to proceed.

WHEREFORE, premises considered, the instant appeal is hereby GRANTED, and the appealed
orders of the Regional Trial Court of Davao are hereby SET ASIDE. The said RTC is hereby
ordered to REINSTATE the plaintiffs-appellants’ complaint, and to proceed with the trial of the
same.

SO ORDERED.11

Hence, the present petition on the following grounds:

1. The Court of Appeals erred in holding that the "Waiver of Hereditary Shares and/or Rights"
executed by Eleanor Valle Siapno is valid and that it was properly made. It is not in accord with
law (Articles 6; 1050; 1051 and 1082 of the Civil Code of the Philippines) and the applicable
decisions of the Supreme Court;

2. The Court of Appeals erred in holding that Eleanor Valle Siapno’s interest in the assets of the
estate of her late father, Victorio Valle as an heir is merely inchoate and therefore may not be
levied upon and sold. It is not in accord with Section 7(f) of Rule 57 of the Rules of Court (now
Section 7(e) of Rule 57 of the 1997 Rules of Civil Procedure) and the applicable decisions of the
Supreme Court.

3. The Court of Appeals erred in granting the appeal and denying the Petitioner’s Motion for
Reconsideration and in ordering the RTC of Tagum, Davao . . ."to REINSTATE the plaintiffs-
appellants’ complaint, and to proceed with the trial of the same . . ," because this is not accord
with the applicable decisions of the Supreme Court and this is tantamount to allowing the RTC,
Branch 2 of Tagum (now Tagum City), Province of Davao del Norte to interfere with the levy on
attachment and levy on execution of the interests of Eleanor Valle Siapno in the assets of the
estate of her late father, of the Deputy Sheriff of the RTC, Branch 14 in the City of Davao, which
is a coordinate court.12

In their Comment, respondents contend that: the Waiver is not the waiver contemplated by Article
1051 of the Civil Code; the document is in fact an acknowledgment of the extent of her hereditary
rights and interest to the estate of Eleanor’s deceased father; Eleanor has not actually repudiated
her inheritance but had actually accepted the same and waived its enjoyment in exchange of a
monetary consideration which she had already received long before the execution of the Waiver;
the fact that Eleanor is adjudged as a judgment debtor of petitioner does not justify the subsequent
levy and auction sale of the properties wherein the judgment debtor has a right or interest on,
using Rule 39 of the Rules of Court; the right of heirs to specific distributive shares of inheritance
does not become finally determinable until all the debts of the estate are paid, per Jimoga-on vs.
Belmonte;13 until then their rights are inchoate and cannot be enforced, subject to the existence
of a residue after payment of the debts; the heirs have yet no absolute dominion over any
particular and definite property in the estate of the decedent which can be specifically attached,
levied and sold; Section 7(f), Rule 57 of the Rules of Court requires that the attachment of the
interest of the party against whom attachment is issued in property belonging to the estate of the
decedent is effected by service of said writ of attachment and notice to the executor or
administrator or other personal representative, and, by filing a copy thereof in the Office of the
Clerk of Court in which the estate is being settled; the attachment and levy were not properly
registered or annotated in the certificate of title; the obligation of Eleanor or the judgment against
her was not known to them prior to the execution of the Waiver; the reinstatement of the complaint
197
before the RTC, Branch 2, Tagum, Davao City does not interfere with the judgment of RTC,
Branch 14, Davao City; the complaint in Branch 2 does not seek the reversal of the judgment of
Branch 14; what is prayed for in respondents’ complaint is the invalidation of the act of the Sheriff
in selling the real properties of the decedent, Victorio Valle; it appears in the "Sheriff’s Provisional
Certificate of Sale" that he "sold at public auction the said real properties to the highest bidder;"
RTC, Branch 2, Tagum, Davao City has jurisdiction to nullify the auction sale of the sheriff and
therefore the CA did not err when it ordered the reinstatement of respondents’ complaint.14

Parties filed their respective memoranda, dwelling on the following issues:

1. Whether or not the "Waiver of Hereditary shares and/or Rights" executed by Eleanor Valle
Siapno is valid and that it was properly made;

2. Whether or not Eleanor Valle Siapno’s interests in the assets of the Estate of her late father,
Victorio Valle, as an heir is merely inchoate and therefore may not be levied upon and sold;

3. Whether or not the granting of the appeal and ordering the RTC of Tagum by the Court of
Appeals to reinstate the Respondents’ complaint and to proceed with the trial of the same [is]
tantamount to allowing the RTC, Branch 2 of Tagum (now Tagum City), Province of Davao del
Norte, to interfere with the levy on attachment and levy on execution of the interests of Eleanor
Valle Siapno in the assets of the estate of her late father of the Deputy Sheriff of the RTC Branch
14 of the City of Davao, which is a coordinate court.15

The first and second issues go into the merits of the complaint for "Declaration of Nullity of Sheriff’s
Sale and/or Recovery of Hereditary Shares, Damages and Attorney’s fees." It is gathered from
the pleadings filed by the parties that the issues involve the determination of the following
questions, although not exclusive: (1) Was SP Proc. No. 63 already instituted when the decision
in Civil Case No. 19-896-89 was issued on August 13, 1990?; (2) If in the affirmative, was there
a duly constituted administrator in SP Proc. No. 63 at that time?; (3) Did the Sheriffs in executing
the final decision in Civil Case No. 19-896-89 notify the administratrix and the RTC (Branch 2),
Tagum, Davao City in SP Proc. No. 63 of the final decision in Civil Case No. 19-896-89 in favor
of petitioner and against Eleanor?; (4) Were the Sheriffs properly notified of the Waiver executed
by Eleanor?; (5) Did the writ of attachment issued by RTC, Branch 14, Davao City, validly attach
the properties pursuant to the Rules of Court?; (6) Was Eleanor duly notified of the decision
against her in Civil Case No. 19-896-89?; (7) Was Eleanor in good faith when she executed the
Waiver in favor of the other heirs of the late Victorio Valle?; (8) Was the Waiver submitted to the
RTC in SP Proc. No. 63? If in the affirmative, when?; (9) Was there a proper and valid levy on the
properties?; (10) Under the "Sheriff’s Provisional Certificate of Sale," what was actually sold at
public auction by the sheriffs – the rights, interests, title, claims and participation pro-indiviso of
Eleanor over the real properties subject of SP Proc. No. 63, as stated in the early portion of the
"Sheriff’s Provisional Certificate of Sale," or, the six parcels of land enumerated and described in
said document, as stated in the latter portion of the said certificate of sale?; (11) Were Eleanor’s
interests in the assets of the Estate of Victorio Valle already defined by the court in SP Proc. No.
63 on the date of execution of the final judgment in Civil Case No. 19-896-89? Evidently, these
matters cannot be resolved by this Court at the first instance. It is not a trier of facts. 16 Such
questions may be determined by the RTC only after a full- blown trial of the case

Thus, the Court will resolve only the third issue, i.e., whether or not the CA erred in ordering the
RTC, Branch 2, Tagum, Davao City to reinstate the complaint of respondents and to proceed with
the trial. Corollary to this is the question whether respondents have a valid cause of action against
petitioner.

In her Memorandum, petitioner argues that the CA erred in ordering the RTC of Tagum to reinstate
the complaint of respondents and to proceed with the trial of the same as it is tantamount to
198
allowing the RTC, Branch 2, Tagum to interfere with the levy on attachment and levy on execution
of the interests of Eleanor in the assets of the estate of her late father by the Deputy Sheriff of the
RTC, Branch 14, Davao City which is a coordinate court.17

In their Memorandum, respondents contend that if ever the complaint is reinstated, it will not
necessarily be in disagreement with the final judgment of RTC, Branch 14, Davao City in Civil
Case No. 19-896-89, considering that the issue to be resolved by the RTC, Branch 2, Tagum,
Davao City is limited in the determination of the validity or nullity of the Sheriff’s Sale. 18

The petition lacks merit. The CA did not err in ordering the RTC to reinstate the complaint and to
proceed with the trial of the same. Respondents have a valid cause of action against petitioner.

Section 2, Rule 2 of the Rules of Court provides that a cause of action is the act or omission by
which a party violates a right of another. In De Guzman, Jr. vs. Court of Appeals,19 this Court held:

A cause of action is the fact or combination of facts which affords a party a right to judicial
interference in his behalf. An action means an ordinary suit in a court of justice, by which one
party prosecutes another for the enforcement or protection of a right, or the prosecution or redress
of a wrong.

The cause of action must always consist of two elements: (1) the plaintiff’s primary right and the
defendant’s corresponding primary duty, whatever may be the subject to which they relate –
person, character, property or contract; and (2) the delict or wrongful act or omission of the
defendant, by which the primary right and duty have been violated. The cause of action is
determined not by the prayer of the complaint but by the facts alleged.

A cause of action exists if the following elements are present: (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (2) an obligation on the part of
the named defendant to respect or not to violate such right; and (3) an act or omission on the part
of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of
defendant to the plaintiff for which the latter may maintain an action for recovery of damages.20

In the present case, it is alleged in the complaint that herein respondents are the children and the
wife of the late Victorio Valle whose real and personal properties are subject of SP Proc. No. 63.
In a gist, respondents claim "that without having legal custody of the share or properties of Eleanor
Valle Siapno by inscribing, annotating or indicating the attachment and levy in the certificate of
titles of the properties mentioned in paragraph IV of this complaint, defendants Sheriff proceeded
to sell the properties at public auction inspite of the prior verbal notice to them that the shares of
Eleanor Valle Siapno has been conveyed, waived and ceded to the herein plaintiffs."21 It is clear,
therefore, that respondents seek to protect their rights over the subject real properties as heirs of
the deceased Victorio which the Sheriffs have allegedly violated by selling said properties or
interests therein at public auction. The complaint satisfies the elements of a valid cause of action.

The complaint was filed on November 23, 1992. Prior to the 1997 amendment of the Rules of
Court, an executor or administrator may sue or be sued without joining the party for whose benefit
the action is presented or defended. Section 3, Rule 3 of the old Rules of Court, provides:

SEC. 3. Representative Parties.- A trustee of an express trust, a guardian, executor or


administrator, or a party authorized by statute, may sue or be sued without joining the party for
whose benefit the action is presented or defended; but the court may, at any stage of the
proceedings, order such beneficiary to be made a party. An agent acting in his own name and for
the benefit of an undisclosed principal may sue or be sued without joining the principal except
when the contract involves things belonging to the principal.

199
Accordingly, in Ramos vs. Ramos,22 the Court held that the heirs of a decedent have no standing
in court with respect to actions over a property of the estate, if the latter is represented by an
executor or administrator.

Considering that plaintiff-respondent Luisa vda. de Valle is admittedly the administratrix of the
Estate of her late husband Victorio Valle, and considering further that the subject properties
belong to the Estate, the complaint against the Sheriffs who sold the same at public auction
constitutes a valid cause of action. The fact that the children of the decedent are co-plaintiffs is
not a ground to dismiss the complaint.

Pursuant to the present Section 3, Rule 3 of the Rules of Court which took effect on July 1, 1997,
to wit:

SEC. 3. Representatives as parties.- Where the action is allowed to be prosecuted or defended


by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in
the title of the case and shall be deemed to be the real party in interest. A representative may be
a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by
law or these Rules. An agent acting in his own name and for the benefit of an undisclosed principal
may sue or be sued without joining the principal except when the contract involves things
belonging to the principal.

and for orderly administration of justice, the administratrix should be allowed by the RTC to
implead the Estate of the deceased Victorio Valle. However, this holds true only if, at this time,
the Estate has not been finally settled in that debts have been paid and the heirs given their
respective shares. In the event that the Estate has been settled, then the Heirs to whom the real
properties or portions thereof, subject of the auction sale, had been adjudged by the probate court
would have the legal personality to be included as plaintiffs in Civil Case No. 2671.

WHEREFORE, the petition is DENIED for lack of merit.

200
G.R. No. 105188 January 23, 1998

MYRON C. PAPA, Administrator of the Testate Estate of Angela M. Butte, petitioner,


vs.
A.U. VALENCIA and CO. INC., FELIX PEÑARROYO, SPS. ARSENIO B. REYES & AMANDA
SANTOS, and DELFIN JAO, respondents.

KAPUNAN, J.:

In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Myron C.
Papa seeks to reverse and set aside 1) the Decision dated 27 January 1992 of the Court of
Appeals which affirmed with modification the decision of the trial court; and 2) the Resolution
dated 22 April 1992 of the same court, which denied petitioner's motion for reconsideration of the
above decision.

The antecedent facts of this case are as follows:

Sometime in June 1982, herein private respondents A.U. Valencia and Co., Inc. (hereinafter
referred to as respondent Valencia, for brevity) and Felix Peñarroyo (hereinafter called
respondent Peñarroyo), filed with the Regional Trial Court of Pasig, Branch 151, a complaint for
specific performance against herein petitioner Myron C. Papa, in his capacity as administrator of
the Testate Estate of one Angela M. Butte.

The complaint alleged that on 15 June 1973, petitioner Myron C. Papa, acting as attorney-in-fact
of Angela M. Butte, sold to respondent Peñarroyo, through respondent Valencia, a parcel of land,
consisting of 286.60 square meters, located at corner Retiro and Cadiz Streets, La Loma, Quezon
City, and covered by Transfer Certificate of Title No. 28993 of the Register of Deeds of Quezon
City; that prior to the alleged sale, the said property, together with several other parcels of land
likewise owned by Angela M. Butte, had been mortgaged by her to the Associated Banking
Corporation (now Associated Citizens Bank); that after the alleged sale, but before the title to the
subject property had been released, Angela M. Butte passed away; that despite representations
made by herein respondents to the bank to release the title to the property sold to respondent
Peñarroyo, the bank refused to release it unless and until all the mortgaged properties of the late
Angela M. Butte were also redeemed; that in order to protect his rights and interests over the
property, respondent Peñarroyo caused the annotation on the title of an adverse claim as
evidenced by Entry No. P.E.-6118/T-28993, inscribed on 18 January 1997.

201
The complaint further alleged that it was only upon the release of the title to the property,
sometime in April 1977, that respondents Valencia and Peñarroyo discovered that the mortgage
rights of the bank had been assigned to one Tomas L. Parpana (now deceased), as special
administrator of the Estate of Ramon Papa, Jr., on 12 April 1977; that since then, herein petitioner
had been collecting monthly rentals in the amount of P800.00 from the tenants of the property,
knowing that said property had already been sold to private respondents on 15 June 1973; that
despite repeated demands from said respondents, petitioner refused and failed to deliver the title
to the property. Thereupon, respondents Valencia and Peñarroyo filed a complaint for specific
performance, praying that petitioner be ordered to deliver to respondent Peñarroyo the title to the
subject property (TCT 28993); to turn over to the latter the sum of P72,000.00 as accrued rentals
as of April 1982, and the monthly rental of P800.00 until the property is delivered to respondent
Peñarroyo; to pay respondents the sum of P20,000.00 as attorney's fees; and to pay the costs of
the suit.

In his Answer, petitioner admitted that the lot had been mortgaged to the Associated Banking
Corporation (now Associated Citizens Bank). He contended, however, that the complaint did not
state a cause of action; that the real property in interest was the Testate Estate of Angela M.
Butte, which should have been joined as a party defendant; that the case amounted to a claim
against the Estate of Angela M. Butte and should have been filed in Special Proceedings No. A-
17910 before the Probate Court in Quezon City; and that, if as alleged in the complaint, the
property had been assigned to Tomas L. Parpana, as special administrator of the Estate of Ramon
Papa, Jr., said estate should be impleaded. Petitioner, likewise, claimed that he could not recall
in detail the transaction which allegedly occurred in 1973; that he did not have TCT No. 28993 in
his possession; that he could not be held personally liable as he signed the deed merely as
attorney-in-fact of said Angela M. Butte. Finally, petitioner asseverated that as a result of the filing
of the case, he was compelled to hire the services of counsel for a fee of P20,000.00 for which
respondents should be held liable.

Upon his motion, herein private respondent Delfin Jao was allowed to intervene in the case.
Making common cause with respondents Valencia and Peñarroyo, respondent Jao alleged that
the subject lot which had been sold to respondent Peñarroyo through respondent Valencia was
in turn sold to him on 20 August 1973 for the sum of P71,500.00, upon his paying earnest money
in the amount of P5,000.00. He, therefore, prayed that judgment be rendered in favor of
respondents, the latter in turn be ordered to execute in his favor the appropriate deed of
conveyance covering the property in question and to turn over to him the rentals which aforesaid
respondents sought to collect from petitioner Myron V. Papa.

Respondent Jao, likewise, averred that as a result of petitioner's refusal to deliver the title to the
property to respondents Valencia and Peñarroyo, who in turn failed to deliver the said title to him,
he suffered mental anguish and serious anxiety for which he sought payment of moral damages;
and, additionally, the payment of attorney's fees and costs.

For his part, petitioner, as administrator of the Testate Estate of Angela M. Butte, filed a third-
party complaint against herein private respondents, spouses Arsenio B. Reyes and Amanda
Santos (respondent Reyes spouses, for short). He averred, among other's that the late Angela
M. Butte was the owner of the subject property; that due to non-payment of real estate tax said
property was sold at public auction the City Treasurer of Quezon City to the respondent Reyes
spouses on 21 January 1980 for the sum of P14,000.00; that the one-year period of redemption
had expired; that respondents Valencia and Peñarroyo had sued petitioner Papa as administrator
of the estate of Angela M. Butte, for the delivery of the title to the property; that the same
aforenamed respondents had acknowledged that the price paid by them was insufficient, and that
they were willing to add a reasonable amount or a minimum of P55,000.00 to the price upon
delivery of the property, considering that the same was estimated to be worth P143,000.00; that
petitioner was willing to reimburse respondents Reyes spouses whatever amount they might have
202
paid for taxes and other charges, since the subject property was still registered in the name of the
late Angela M. Butte; that it was inequitable to allow respondent Reyes spouses to acquire
property estimated to be worth P143,000.00, for a measly sum of P14,000.00. Petitioner prayed
that judgment be rendered canceling the tax sale to respondent Reyes spouses; restoring the
subject property to him upon payment by him to said respondent Reyes spouses of the amount
of P14,000.00, plus legal interest; and, ordering respondents Valencia and Peñarroyo to pay him
at least P55,000.00 plus everything they might have to pay the Reyes spouses in recovering the
property.

Respondent Reyes spouses in their Answer raised the defense of prescription of petitioner's right
to redeem the property.

At the trial, only respondent Peñarroyo testified. All the other parties only submitted documentary
proof.

On 29 June 1987, the trial court rendered a decision, the dispositive portion of which reads:

WHEREUPON, judgment is hereby rendered as follows:

1) Allowing defendant to redeem from third-party defendants and ordering the latter to
allow the former to redeem the property in question, by paying the sum of P14,000.00
plus legal interest of 12% thereon from January 21, 1980;

2) Ordering defendant to execute a Deed of Absolute Sale in favor of plaintiff Felix


Peñarroyo covering the property in question and to deliver peaceful possession and
enjoyment of the said property to the said plaintiff, free from any liens and
encumbrances;

Should this not be possible, for any reason not attributable to defendant, said defendant
is ordered to pay to plaintiff Felix Peñarroyo the sum of P45,000.00 plus legal interest of
12% from June 15, 1973;

3) Ordering plaintiff Felix Peñarroyo to execute and deliver to intervenor a deed of


absolute sale over the same property, upon the latter's payment to the former of the
balance of the purchase price of P71,500.00;

Should this not be possible, plaintiff Felix Peñarroyo is ordered to pay intervenor the
sum of P5,000.00 plus legal interest of 12% from August 23, 1973; and

4) Ordering defendant to pay plaintiffs the amount of P5,000.00 for and as attorney's
fees and litigation expenses.

SO ORDERED. 1

Petitioner appealed the aforesaid decision of the trial court to the Court of Appeals, alleging
among others that the sale was never "consummated" as he did not encash the check (in the
amount of P40,000.00) given by respondents Valencia and Peñarroyo in payment of the full
purchase price of the subject lot. He maintained that what said respondent had actually paid was
only the amount of P5,000.00 (in cash) as earnest money.

Respondent Reyes spouses, likewise, appealed the above decision. However, their appeal was
dismissed because of failure to file their appellant's brief.

203
On 27 January 1992, the Court of Appeals rendered a decision, affirming with modification the
trial court's decision, thus:

WHEREFORE, the second paragraph of the dispositive portion of the appealed


decision is MODIFIED, by ordering the defendant-appellant to deliver to plaintiff-
appellees the owner's duplicate of TCT No. 28993 of Angela M. Butte and the
peaceful possession and enjoyment of the lot in question or, if the owner's duplicate
certificate cannot be produced, to authorize the Register of Deeds to cancel it and
issue a certificate of title in the name of Felix Peñarroyo. In all other respects, the
decision appealed from is AFFIRMED. Costs against defendant-appellant Myron C.
Papa.

SO ORDERED. 2

In affirming the trial court's decision, respondent court held that contrary to petitioner's claim that
he did not encash the aforesaid check, and therefore, the sale was not consummated, there was
no evidence at all that petitioner did not, in fact, encash said check. On the other hand, respondent
Peñarroyo testified in court that petitioner Papa had received the amount of P45,000.00 and
issued receipts therefor. According to respondent court, the presumption is that the check was
encashed, especially since the payment by check was not denied by defendant-appellant (herein
petitioner) who, in his Answer, merely alleged that he "can no longer recall the transaction which
is supposed to have happened 10 years ago." 3

On petitioner's claim that he cannot be held personally liable as he had acted merely as attorney-
in-fact of the owner, Angela M. Butte, respondent court held that such contention is without merit.
This action was not brought against him in his personal capacity, but in his capacity as the
administrator of the Testate Estate of Angela M. Butte. 4

On petitioner's contention that the estate of Angela M. Butte should have been joined in the action
as the real party in interest, respondent court held that pursuant to Rule 3, Section 3 of the Rules
of Court, the estate of Angela M. Butte does not have to be joined in the action. Likewise, the
estate of Ramon Papa, Jr., is not an indispensable party under Rule 3, Section 7 of the same
Rules. For the fact is that Ramon Papa, Jr., or his estate, was not a party to the Deed of Absolute
Sale, and it is basic law that contracts bind only those who are parties thereto. 5

Respondent court observed that the conditions under which the mortgage rights of the bank were
assigned are not clear. In any case, any obligation which the estate of Angela M. Butte might
have to the estate of Ramon Papa, Jr. is strictly between them. Respondents Valencia and
Peñarroyo are not bound by any such obligation.

Petitioner filed a motion for reconsideration of the above decision, which motion was denied by
respondent Court of Appeals.

Hence, this petition wherein petitioner raises the following issues:

I. THE CONCLUSION OR FINDING OF THE COURT OF APPEALS THAT THE SALE IN


QUESTION WAS CONSUMMATED IS GROUNDED ON SPECULATION OR
CONJECTURE, AND IS CONTRARY TO THE APPLICABLE LEGAL PRINCIPLE.

II. THE COURT OF APPEALS, IN MODIFYING THE DECISION OF THE TRIAL COURT,
ERRED BECAUSE IT, IN EFFECT, CANCELLED OR NULLIFIED AN ASSIGNMENT OF
THE SUBJECT PROPERTY IN FAVOR OF THE ESTATE OF RAMON PAPA, JR. WHICH
IS NOT A PARTY IN THIS CASE.
204
III. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE ESTATE OF
ANGELA M. BUTTE AND THE ESTATE OF RAMON PAPA, JR. ARE INDISPENSABLE
PARTIES IN THIS
6
CASE.

Petitioner argues that respondent Court of Appeals erred in concluding that alleged sale of the
subject property had been consummated. He contends that such a conclusion is based on the
erroneous presumption that the check (in the amount of P40,000.00) had been cashed, citing Art.
1249 of the Civil Code, which provides, in part, that payment by checks shall produce the effect
of payment only when they have been cashed or when through the fault of the creditor they have
been impaired. 7 Petitioner insists that he never cashed said check; and, such being the case, its
delivery never produced the effect of payment. Petitioner, while admitting that he had issued
receipts for the payments, asserts that said receipts, particularly the receipt of PCIB Check No.
761025 in the amount of P40,000.00, do not prove payment. He avers that there must be a
showing that said check had been encashed. If, according to petitioner, the check had been
encashed, respondent Peñarroyo should have presented PCIB Check No. 761025 duly stamped
received by the payee, or at least its microfilm copy.

Petitioner finally avers that, in fact, the consideration for the sale was still in the hands of
respondents Valencia and Peñarroyo, as evidenced by a letter addressed to him in which said
respondents wrote, in part:

. . . Please be informed that I had been authorized by Dr. Ramon Papa, Jr., heir of Mrs.
Angela M. Butte to pay you the aforementioned amount of P75,000.00 for the release and
cancellation of subject property's mortgage. The money is with me and if it is alright with
you, I would like to tender the payment as soon as possible. . . . 8

We find no merit in petitioner's arguments.

It is an undisputed fact that respondents Valencia and Peñarroyo had given petitioner Myron C.
Papa the amounts of Five Thousand Pesos (P5,000.00) in cash on 24 May 1973, and Forty
Thousand Pesos (P40,000.00) in check on 15 June 1973, in payment of the purchase price of the
subject lot. Petitioner himself admits having received said amounts, 9 and having issued receipts
therefor. 10 Petitioner's assertion that he never encashed the aforesaid check is not substantiated
and is at odds with his statement in his answer that "he can no longer recall the transaction which
is supposed to have happened 10 years ago." After more than ten (10) years from the payment
in party by cash and in part by check, the presumption is that the check had been encashed. As
already stated, he even waived the presentation of oral evidence.

Granting that petitioner had never encashed the check, his failure to do so for more than ten (10)
years undoubtedly resulted in the impairment of the check through his unreasonable and
unexplained delay.

While it is true that the delivery of a check produces the effect of payment only when it is cashed,
pursuant to Art. 1249 of the Civil Code, the rule is otherwise if the debtor is prejudiced by the
creditor's unreasonable delay in presentment. The acceptance of a check implies an undertaking
of due diligence in presenting it for payment, and if he from whom it is received sustains loss by
want of such diligence, it will be held to operate as actual payment of the debt or obligation for
which it was given. 11 It has, likewise, been held that if no presentment is made at all, the drawer
cannot be held liable irrespective of loss or injury 12 unless presentment is otherwise excused.
This is in harmony with Article 1249 of the Civil Code under which payment by way of check or
other negotiable instrument is conditioned on its being cashed, except when through the fault of
the creditor, the instrument is impaired. The payee of a check would be a creditor under this

205
provision and if its no-payment is caused by his negligence, payment will be deemed effected and
the obligation for which the check was given as conditional payment will be discharged. 13

Considering that respondents Valencia and Peñarroyo had fulfilled their part of the contract of
sale by delivering the payment of the purchase price, said respondents, therefore, had the right
to compel petitioner to deliver to them the owner's duplicate of TCT No. 28993 of Angela M. Butte
and the peaceful possession and enjoyment of the lot in question.

With regard to the alleged assignment of mortgage rights, respondent Court of Appeals has found
that the conditions under which said mortgage rights of the bank were assigned are not clear.
Indeed, a perusal of the original records of the case would show that there is nothing there that
could shed light on the transactions leading to the said assignment of rights; nor is there any
evidence on record of the conditions under which said mortgage rights were assigned. What is
certain is that despite the said assignment of mortgage rights, the title to the subject property has
remained in the name of the late Angela M. Butte. 14 This much is admitted by petitioner himself
in his answer to respondent's complaint as well as in the third-party complaint that petitioner filed
against respondent-spouses Arsenio B. Reyes and Amanda Santos. 15 Assuming arquendo that
the mortgage rights of the Associated Citizens Bank had been assigned to the estate of Ramon
Papa, Jr., and granting that the assigned mortgage rights validly exists and constitute a lien on
the property, the estate may file the appropriate action to enforce such lien. The cause of action
for specific performance which respondents Valencia and Peñarroyo have against petitioner is
different from the cause of action which the estate of Ramon Papa, Jr. may have to enforce
whatever rights or liens it has on the property by reason of its being an alleged assignee of the
bank's rights of mortgage.

Finally, the estate of Angela M. Butte is not an indispensable party. Under Section 3 of Rule 3 of
the Rules of Court, an executor or administrator may sue or be sued without joining the party for
whose benefit the action is presented or defended, thus:

Sec. 3. Representative parties. — A trustee of an express trust, a guardian, executor or


administrator, or a party authorized by statute, may sue or be sued without joining the
party for whose benefit the action is presented or defended; but the court may, at any
stage of the proceedings, order such beneficiary to be made a party. An agent acting in
his own name and for the benefit of an undisclosed principal may sue or be sued without
joining the principal except when the contract involves things belonging to the principal. 16

Neither is the estate of Ramon Papa, Jr. an indispensable party without whom, no final
determination of the action can be had. Whatever prior and subsisting mortgage rights the estate
of Ramon Papa, Jr. has over the property may still be enforced regardless of the change in
ownership thereof.

WHEREFORE, the petition for review is hereby DENIED and the Decision of the Court of Appeals,
dated 27 January 1992 is AFFIRMED.

SO ORDERED.

206
G.R. No. 178529 September 4, 2009

EQUITABLE PCI BANK, INC. (now known as BANCO DE ORO - EPCI, INC.) Petitioner,
vs.
HEIRS OF ANTONIO C. TIU, namely: ARLENE T. FU, MICHAEL U. TIU, ANDREW U. TIU,
EDGAR U. TIU and ERWIN U. TIU, Respondents.

DECISION

CARPIO MORALES, J.:

To secure loans in the aggregate amount of P7 Million obtained by one Gabriel Ching from herein
petitioner Equitable PCI Bank, Inc. (now known as Banco de Oro-EPCI, Inc.),1 Antonio C. Tiu
(Antonio), of which herein respondents allege to be heirs, executed on July 6, 1994 a Real Estate
Mortgage (REM)2 in favor of petitioner covering a lot located in Tacloban City. Before the words
"With my Marital Consent" appearing in the REM is a signature attributed to Antonio’s wife Matilde.

On October 5, 1998, Antonio executed an Amendment to the Real Esate Mortgage3 (AREM)
increasing the amount secured by the mortgage to P26 Million, also bearing a signature attributed
to his wife Matilde above the words "With my Marital Consent."

The property mortgaged was covered by TCT No. T-1381 of the Tacloban Register of Deeds
which, the AREM states, was "registered in the name of the Mortgagor."

Antonio died on December 26, 1999.4

The loan obligation having remained unsettled, petitioner filed in November 2003 before the
Regional Trial Court (RTC) of Tacloban City a "Petition for Sale"5 dated November 4, 2003, for
the extrajudicial foreclosure of the AREM and the sale at public auction of the lot covered thereby.
Acting on the petition, the RTC Clerk of Court and Ex-Oficio Sheriff scheduled the public auction
on December 17, 2003.6

A day before the scheduled auction sale or on December 16, 2003, the herein respondents, Heirs
of Antonio C. Tiu, namely Arlene T. Fu, Michael U. Tiu, Andrew U. Tiu, Edgar U. Tiu, and Erwin
U. Tiu, filed a Complaint/Petition7 before the RTC of Tacloban against petitioner and the Clerk of
Court-Ex Oficio Sheriff, docketed as Civil Case No. 2003-12-205 for annulment of the AREM,
injunction with prayer for issuance of writ of preliminary injunction and/or temporary restraining
order and damages, alleging, among other things, that

x x x the said AREM is without force and effect, the same having been executed without the valid
consent of the wife of mortgagor Antonio C. Tiu who at the time of the execution of the said
207
instrument was already suffering from advance[d] Alzheimer’s Disease and, henceforth,
incapable of giving consent, more so writing and signing her name[.]8 (Emphasis and
underscoring supplied.)1awphi1

The RTC issued a temporary restraining order,9 and subsequently, a writ of preliminary
injunction.10

To the Complaint petitioner filed a Motion to Dismiss,11 raising the following grounds:

THE PLAINTIFFS/PETITIONERS NOT BEING THE REAL PARTIES-IN-INTEREST, THEIR


COMPLAINT STATES NO CAUSE OF ACTION;

II

EVEN IF THERE IS A CAUSE OF ACTION, THE SAME IS ALREADY BARRED BY THE


STATUTE OF LIMITATIONS; and

III

THE PRESENT ACTION BEING A PERSONAL ONE, THE VENUE IS IMPROPERLY LAID.12
(Underscoring supplied)

By Resolution13 of April 14, 2004, Branch 8 of the Tacloban RTC denied the Motion to Dismiss in
this wise:

From the facts of the case, herein plaintiffs/petitioners are so situated that they will either be
benefited or injured in subject action. They are therefore real parties in interest, as they will be
damnified and injured or their inheritance rights and interest on the subject property protected and
preserved in this action. As they are real parties in interest, they therefore have a cause of action
against herein defendant.14

It thus ordered petitioner to file Answer within the reglementary period. Petitioner’s motion for
reconsideration of the said Resolution having been denied,15 it filed a Petition16 for Certiorari,
Prohibition, and Mandamus with prayer for preliminary injunction before the Court of Appeals
which it denied by Decision17 of August 30, 2006, quoting with approval the trial court’s ratio in
denying petitioner’s Motion to Dismiss.

Hence, the present Petition,18 petitioner faulting the Court of Appeals in affirming the trial court’s
denial of its Motion to Dismiss.

Petitioner argues, in the main, that as respondents are not the real parties in interest, their
complaint states no cause of action. Citing Travel Wide Associated, Inc. v. Court of Appeals, 19
petitioner adds that since the party in interest is respondents’ mother but the complaint is not
brought in her name, respondents’ complaint states no cause of action.

The issue in the main thus is whether the complaint filed by respondents-children of Antonio,
without impleading Matilde who must also be Antonio’s heir and who, along with Antonio, was
principally obliged under the AREM sought to be annulled, is dismissible for lack of cause of
action.

The pertinent provision of the Civil Code on annulment of contracts reads:


208
Art. 1397. The action for the annulment of contracts may be instituted by all who are thereby
obliged principally or subsidiarily. However, persons who are capable cannot allege the incapacity
of those with whom they contracted; nor can those who exerted intimidation, violence, or undue
influence, or employed fraud, or caused mistake base their action upon these flaws of the contract.
(Emphasis and underscoring supplied)

Upon the other hand, the pertinent provisions of Rule 3 of the Rules of Court (Parties to Civil
Actions) read:

SEC. 2 Parties in interest. ─ A real party in interest is the party who stands to be benefited or
injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise
authorized by law or these Rules, every action must be prosecuted or defended in the name of
the real party in interest. (Emphasis and underscoring supplied)

SEC. 3. Representatives as parties. ─ Where the action is allowed to be prosecuted or defended


by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in
the title of the case and shall be deemed to be the real party in interest. A representative may be
a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by
law or these Rules. An agent acting in his own name and for the benefit of an undisclosed principal
may sue or be sued without joining the principal except when the contract involves things
belonging to the principal. (Emphasis and underscoring supplied)

The AREM was executed by Antonio, with the marital consent of Matilde. Since the mortgaged
property is presumed conjugal, she is obliged principally under the AREM. It is thus she, following
Art. 1397 of the Civil Code vis a vis Sec. 2 of Rule 3 of the Rules of Court, who is the real party
in interest, hence, the action must be prosecuted in her name as she stands to be benefited or
injured in the action.

Assuming that Matilde is indeed incapacitated, it is her legal guardian who should file the action
on her behalf. Not only is there no allegation in the complaint, however, that respondents have
been legally designated as guardians to file the action on her behalf. The name of Matilde, who
is deemed the real party in interest, has not been included in the title of the case, in violation of
Sec. 3 of Rule 3 of the Rules of Court.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated August 30,
2006 is REVERSED and SET ASIDE. Civil Case No. 2003-12-205 lodged before Branch 8 of the
Regional Trial Court of Tacloban City is DISMISSED for lack of cause of action.

SO ORDERED.

209
G.R. No. 74886 December 8, 1992

PRUDENTIAL BANK, petitioner,


vs.
INTERMEDIATE APPELLATE COURT, PHILIPPINE RAYON MILLS, INC. and ANACLETO
R. CHI, respondents.

DAVIDE, JR., J.:

Petitioner seeks to review and set aside the decision 1 of public respondent; Intermediate
Appellate Court (now Court of Appeals), dated 10 March 1986, in AC-G.R. No. 66733 which
affirmed in toto the 15 June 1978 decision of Branch 9 (Quezon City) of the then Court of First
Instance (now Regional Trial Court) of Rizal in Civil Case No. Q-19312. The latter involved an
action instituted by the petitioner for the recovery of a sum of money representing the amount
paid by it to the Nissho Company Ltd. of Japan for textile machinery imported by the defendant,
now private respondent, Philippine Rayon Mills, Inc. (hereinafter Philippine Rayon), represented
by co-defendant Anacleto R. Chi.

The facts which gave rise to the instant controversy are summarized by the public respondent as
follows:

On August 8, 1962, defendant-appellant Philippine Rayon Mills, Inc.


entered into a contract with Nissho Co., Ltd. of Japan for the importation of
textile machineries under a five-year deferred payment plan (Exhibit B,
Plaintiff's Folder of Exhibits, p 2). To effect payment for said machineries,
the defendant-appellant applied for a commercial letter of credit with the
Prudential Bank and Trust Company in favor of Nissho. By virtue of said
application, the Prudential Bank opened Letter of Credit No. DPP-63762
for $128,548.78 (Exhibit A, Ibid., p. 1). Against this letter of credit, drafts
were drawn and issued by Nissho (Exhibits X, X-1 to X-11, Ibid., pp. 65, 66
to 76), which were all paid by the Prudential Bank through its correspondent
in Japan, the Bank of Tokyo, Ltd. As indicated on their faces, two of these
drafts (Exhibit X and X-1, Ibid., pp. 65-66) were accepted by the defendant-
appellant through its president, Anacleto R. Chi, while the others were not
(Exhibits X-2 to X-11, Ibid., pp. 66 to 76).

Upon the arrival of the machineries, the Prudential Bank indorsed the
shipping documents to the defendant-appellant which accepted delivery of
the same. To enable the defendant-appellant to take delivery of the
machineries, it executed, by prior arrangement with the Prudential Bank, a
trust receipt which was signed by Anacleto R. Chi in his capacity as
President (sic) of defendant-appellant company (Exhibit C, Ibid., p. 13).

210
At the back of the trust receipt is a printed form to be accomplished by two
sureties who, by the very terms and conditions thereof, were to be jointly
and severally liable to the Prudential Bank should the defendant-appellant
fail to pay the total amount or any portion of the drafts issued by Nissho
and paid for by Prudential Bank. The defendant-appellant was able to take
delivery of the textile machineries and installed the same at its factory site
at 69 Obudan Street, Quezon City.

Sometime in 1967, the defendant-appellant ceased business operation


(sic). On December 29, 1969, defendant-appellant's factory was leased by
Yupangco Cotton Mills for an annual rental of P200,000.00 (Exhibit I, Ibid.,
p. 22). The lease was renewed on January 3, 1973 (Exhibit J, Ibid., p. 26).
On January 5, 1974, all the textile machineries in the defendant-appellant's
factory were sold to AIC Development Corporation for P300,000.00 (Exhibit
K, Ibid., p. 29).

The obligation of the defendant-appellant arising from the letter of credit


and the trust receipt remained unpaid and unliquidated. Repeated formal
demands (Exhibits U, V, and W, Ibid., pp. 62, 63, 64) for the payment of
the said trust receipt yielded no result Hence, the present action for the
collection of the principal amount of P956,384.95 was filed on October 3,
1974 against the defendant-appellant and Anacleto R. Chi. In their
respective answers, the defendants interposed identical special defenses,
viz., the complaint states no cause of action; if there is, the same has
prescribed; and the plaintiff is guilty of laches. 2

On 15 June 1978, the trial court rendered its decision the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered sentencing the defendant


Philippine Rayon Mills, Inc. to pay plaintiff the sum of P153,645.22, the
amounts due under Exhibits "X" & "X-1", with interest at 6% per annum
beginning September 15, 1974 until fully paid.

Insofar as the amounts involved in drafts Exhs. "X" (sic) to "X-11", inclusive,
the same not having been accepted by defendant Philippine Rayon Mills,
Inc., plaintiff's cause of action thereon has not accrued, hence, the instant
case is premature.

Insofar as defendant Anacleto R. Chi is concerned, the case is dismissed.


Plaintiff is ordered to pay defendant Anacleto R. Chi the sum of P20,000.00
as attorney's fees.

With costs against defendant Philippine Rayon Mills, Inc.

SO ORDERED. 3

Petitioner appealed the decision to the then Intermediate Appellate Court. In urging the said court
to reverse or modify the decision, petitioner alleged in its Brief that the trial court erred in (a)
disregarding its right to reimbursement from the private respondents for the entire unpaid balance
of the imported machines, the total amount of which was paid to the Nissho Company Ltd., thereby
violating the principle of the third party payor's right to reimbursement provided for in the second
paragraph of Article 1236 of the Civil Code and under the rule against unjust enrichment; (b)
refusing to hold Anacleto R. Chi, as the responsible officer of defendant corporation, liable under

211
Section 13 of P.D No 115 for the entire unpaid balance of the imported machines covered by the
bank's trust receipt (Exhibit "C"); (c) finding that the solidary guaranty clause signed by Anacleto
R. Chi is not a guaranty at all; (d) controverting the judicial admissions of Anacleto R. Chi that he
is at least a simple guarantor of the said trust receipt obligation; (e) contravening, based on the
assumption that Chi is a simple guarantor, Articles 2059, 2060 and 2062 of the Civil Code and
the related evidence and jurisprudence which provide that such liability had already attached; (f)
contravening the judicial admissions of Philippine Rayon with respect to its liability to pay the
petitioner the amounts involved in the drafts (Exhibits "X", "X-l" to "X-11''); and (g) interpreting
"sight" drafts as requiring acceptance by Philippine Rayon before the latter could be held liable
thereon. 4

In its decision, public respondent sustained the trial court in all respects. As to the first and last
assigned errors, it ruled that the provision on unjust enrichment, Article 2142 of the Civil Code,
applies only if there is no express contract between the parties and there is a clear showing that
the payment is justified. In the instant case, the relationship existing between the petitioner and
Philippine Rayon is governed by specific contracts, namely the application for letters of credit, the
promissory note, the drafts and the trust receipt. With respect to the last ten (10) drafts (Exhibits
"X-2" to "X-11") which had not been presented to and were not accepted by Philippine Rayon,
petitioner was not justified in unilaterally paying the amounts stated therein. The public respondent
did not agree with the petitioner's claim that the drafts were sight drafts which did not require
presentment for acceptance to Philippine Rayon because paragraph 8 of the trust receipt
presupposes prior acceptance of the drafts. Since the ten (10) drafts were not presented and
accepted, no valid demand for payment can be made.

Public respondent also disagreed with the petitioner's contention that private respondent Chi is
solidarily liable with Philippine Rayon pursuant to Section 13 of P.D. No. 115 and based on his
signature on the solidary guaranty clause at the dorsal side of the trust receipt. As to the first
contention, the public respondent ruled that the civil liability provided for in said Section 13
attaches only after conviction. As to the second, it expressed misgivings as to whether Chi's
signature on the trust receipt made the latter automatically liable thereon because the so-called
solidary guaranty clause at the dorsal portion of the trust receipt is to be signed not by one (1)
person alone, but by two (2) persons; the last sentence of the same is incomplete and unsigned
by witnesses; and it is not acknowledged before a notary public. Besides, even granting that it
was executed and acknowledged before a notary public, Chi cannot be held liable therefor
because the records fail to show that petitioner had either exhausted the properties of Philippine
Rayon or had resorted to all legal remedies as required in Article 2058 of the Civil Code. As
provided for under Articles 2052 and 2054 of the Civil Code, the obligation of a guarantor is merely
accessory and subsidiary, respectively. Chi's liability would therefore arise only when the principal
debtor fails to comply with his obligation. 5

Its motion to reconsider the decision having been denied by the public respondent in its Resolution
of 11 June 1986, 6 petitioner filed the instant petition on 31 July 1986 submitting the following
legal issues:

I. WHETHER OR NOT THE RESPONDENT APPELLATE COURT


GRIEVOUSLY ERRED IN DENYING PETITIONER'S CLAIM FOR FULL
REIMBURSEMENT AGAINST THE PRIVATE RESPONDENTS FOR THE
PAYMENT PETITIONER MADE TO NISSHO CO. LTD. FOR THE
BENEFIT OF PRIVATE RESPONDENT UNDER ART. 1283 OF THE NEW
CIVIL CODE OF THE PHILIPPINES AND UNDER THE GENERAL
PRINCIPLE AGAINST UNJUST ENRICHMENT;

II. WHETHER OR NOT RESPONDENT CHI IS SOLIDARILY LIABLE


UNDER THE TRUST RECEIPT (EXH. C);
212
III. WHETHER OR NOT ON THE BASIS OF THE JUDICIAL ADMISSIONS
OF RESPONDENT CHI HE IS LIABLE THEREON AND TO WHAT
EXTENT;

IV. WHETHER OR NOT RESPONDENT CHI IS MERELY A SIMPLE


GUARANTOR; AND IF SO; HAS HIS LIABILITY AS SUCH ALREADY
ATTACHED;

V. WHETHER OR NOT AS THE SIGNATORY AND RESPONSIBLE


OFFICER OF RESPONDENT PHIL. RAYON RESPONDENT CHI IS
PERSONALLY LIABLE PURSUANT TO THE PROVISION OF SECTION
13, P.D. 115;

VI. WHETHER OR NOT RESPONDENT PHIL. RAYON IS LIABLE TO THE


PETITIONER UNDER THE TRUST RECEIPT (EXH. C);

VII. WHETHER OR NOT ON THE BASIS OF THE JUDICIAL


ADMISSIONS RESPONDENT PHIL. RAYON IS LIABLE TO THE
PETITIONER UNDER THE DRAFTS (EXHS. X, X-1 TO X-11) AND TO
WHAT EXTENT;

VIII. WHETHER OR NOT SIGHT DRAFTS REQUIRE PRIOR


ACCEPTANCE FROM RESPONDENT PHIL. RAYON BEFORE THE
LATTER BECOMES LIABLE TO PETITIONER. 7

In the Resolution of 12 March 1990, 8 this Court gave due course to the petition after the filing of
the Comment thereto by private respondent Anacleto Chi and of the Reply to the latter by the
petitioner; both parties were also required to submit their respective memoranda which they
subsequently complied with.

As We see it, the issues may be reduced as follows:

1. Whether presentment for acceptance of the drafts was indispensable to make


Philippine Rayon liable thereon;

2. Whether Philippine Rayon is liable on the basis of the trust receipt;

3. Whether private respondent Chi is jointly and severally liable with Philippine
Rayon for the obligation sought to be enforced and if not, whether he may be
considered a guarantor; in the latter situation, whether the case should have been
dismissed on the ground of lack of cause of action as there was no prior exhaustion
of Philippine Rayon's properties.

Both the trial court and the public respondent ruled that Philippine Rayon could be held liable for
the two (2) drafts, Exhibits "X" and "X-1", because only these appear to have been accepted by
the latter after due presentment. The liability for the remaining ten (10) drafts (Exhibits "X-2" to
"X-11" inclusive) did not arise because the same were not presented for acceptance. In short,
both courts concluded that acceptance of the drafts by Philippine Rayon was indispensable to
make the latter liable thereon. We are unable to agree with this proposition. The transaction in
the case at bar stemmed from Philippine Rayon's application for a commercial letter of credit with
the petitioner in the amount of $128,548.78 to cover the former's contract to purchase and import
loom and textile machinery from Nissho Company, Ltd. of Japan under a five-year deferred

213
payment plan. Petitioner approved the application. As correctly ruled by the trial court in its Order
of 6 March 1975: 9

. . . By virtue of said Application and Agreement for Commercial Letter of


Credit, plaintiff bank 10 was under obligation to pay through its
correspondent bank in Japan the drafts that Nisso (sic) Company, Ltd.,
periodically drew against said letter of credit from 1963 to 1968, pursuant
to plaintiff's contract with the defendant Philippine Rayon Mills, Inc. In turn,
defendant Philippine Rayon Mills, Inc., was obligated to pay plaintiff bank
the amounts of the drafts drawn by Nisso (sic) Company, Ltd. against said
plaintiff bank together with any accruing commercial charges, interest, etc.
pursuant to the terms and conditions stipulated in the Application and
Agreement of Commercial Letter of Credit Annex "A".

A letter of credit is defined as an engagement by a bank or other person made at the request of
a customer that the issuer will honor drafts or other demands for payment upon compliance with
the conditions specified in the credit. 11 Through a letter of credit, the bank merely substitutes its
own promise to pay for one of its customers who in return promises to pay the bank the amount
of funds mentioned in the letter of credit plus credit or commitment fees mutually agreed upon. 12
In the instant case then, the drawee was necessarily the herein petitioner. It was to the latter that
the drafts were presented for payment. In fact, there was no need for acceptance as the issued
drafts are sight drafts. Presentment for acceptance is necessary only in the cases expressly
provided for in Section 143 of the Negotiable Instruments Law (NIL). 13 The said section reads:

Sec. 143. When presentment for acceptance must be made. —


Presentment for acceptance must be made:

(a) Where the bill is payable after sight, or in any other case, where presentment for
acceptance is necessary in order to fix the maturity of the instrument; or

(b) Where the bill expressly stipulates that it shall be presented for acceptance; or

(c) Where the bill is drawn payable elsewhere than at the residence or place of business
of the drawee.

In no other case is presentment for acceptance necessary in order to


render any party to the bill liable.

Obviously then, sight drafts do not require presentment for acceptance.

The acceptance of a bill is the signification by the drawee of his assent to the order of the drawer;
14
this may be done in writing by the drawee in the bill itself, or in a separate instrument. 15

The parties herein agree, and the trial court explicitly ruled, that the subject, drafts are sight drafts.
Said the latter:

. . . In the instant case the drafts being at sight, they are supposed to be
payable upon acceptance unless plaintiff bank has given the Philippine
Rayon Mills Inc. time within which to pay the same. The first two drafts
(Annexes C & D, Exh. X & X-1) were duly accepted as indicated on their
face (sic), and upon such acceptance should have been paid forthwith.
These two drafts were not paid and although Philippine Rayon Mills

214
ought to have paid the same, the fact remains that until now they are still
unpaid. 16

Corollarily, they are, pursuant to Section 7 of the NIL, payable on demand. Section 7 provides:

Sec. 7. When payable on demand. — An instrument is payable on demand


(a) When so it is expressed to be payable on demand, or at sight, or on presentation; or

(b) In which no time for payment in expressed.

Where an instrument is issued, accepted, or indorsed when overdue, it is,


as regards the person so issuing, accepting, or indorsing it, payable on
demand. (emphasis supplied)

Paragraph 8 of the Trust Receipt which reads: "My/our liability for payment at
maturity of any accepted draft, bill of exchange or indebtedness shall not be
extinguished or modified" 17 does not, contrary to the holding of the public
respondent, contemplate prior acceptance by Philippine Rayon, but by the
petitioner. Acceptance, however, was not even necessary in the first place
because the drafts which were eventually issued were sight drafts And even if
these were not sight drafts, thereby necessitating acceptance, it would be the
petitioner — and not Philippine Rayon — which had to accept the same for the
latter was not the drawee. Presentment for acceptance is defined an the production
of a bill of exchange to a drawee for acceptance. 18 The trial court and the public
respondent, therefore, erred in ruling that presentment for acceptance was an
indispensable requisite for Philippine Rayon's liability on the drafts to attach.
Contrary to both courts' pronouncements, Philippine Rayon immediately became
liable thereon upon petitioner's payment thereof. Such is the essence of the letter
of credit issued by the petitioner. A different conclusion would violate the principle
upon which commercial letters of credit are founded because in such a case, both
the beneficiary and the issuer, Nissho Company Ltd. and the petitioner,
respectively, would be placed at the mercy of Philippine Rayon even if the latter
had already received the imported machinery and the petitioner had fully paid for
it. The typical setting and purpose of a letter of credit are described in Hibernia
Bank and Trust Co. vs. J. Aron & Co., Inc., 19 thus:

Commercial letters of credit have come into general use in international


sales transactions where much time necessarily elapses between the sale
and the receipt by a purchaser of the merchandise, during which interval
great price changes may occur. Buyers and sellers struggle for the
advantage of position. The seller is desirous of being paid as surely and as
soon as possible, realizing that the vendee at a distant point has it in his
power to reject on trivial grounds merchandise on arrival, and cause
considerable hardship to the shipper. Letters of credit meet this condition
by affording celerity and certainty of payment. Their purpose is to insure to
a seller payment of a definite amount upon presentation of documents. The
bank deals only with documents. It has nothing to do with the quality of the
merchandise. Disputes as to the merchandise shipped may arise and be
litigated later between vendor and vendee, but they may not impede
acceptance of drafts and payment by the issuing bank when the proper
documents are presented.

215
The trial court and the public respondent likewise erred in disregarding the trust receipt and in not
holding that Philippine Rayon was liable thereon. In People vs. Yu Chai Ho, 20 this Court explains
the nature of a trust receipt by quoting In re Dunlap Carpet Co., 21 thus:

By this arrangement a banker advances money to an intending importer,


and thereby lends the aid of capital, of credit, or of business facilities and
agencies abroad, to the enterprise of foreign commerce. Much of this trade
could hardly be carried on by any other means, and therefore it is of the
first importance that the fundamental factor in the transaction, the banker's
advance of money and credit, should receive the amplest protection.
Accordingly, in order to secure that the banker shall be repaid at the critical
point — that is, when the imported goods finally reach the hands of the
intended vendee — the banker takes the full title to the goods at the very
beginning; he takes it as soon as the goods are bought and settled for by
his payments or acceptances in the foreign country, and he continues to
hold that title as his indispensable security until the goods are sold in the
United States and the vendee is called upon to pay for them. This security
is not an ordinary pledge by the importer to the banker, for the importer has
never owned the goods, and moreover he is not able to deliver the
possession; but the security is the complete title vested originally in the
bankers, and this characteristic of the transaction has again and again
been recognized and protected by the courts. Of course, the title is at
bottom a security title, as it has sometimes been called, and the banker is
always under the obligation to reconvey; but only after his advances have
been fully repaid and after the importer has fulfilled the other terms of the
contract.

As further stated in National Bank vs. Viuda e Hijos de Angel Jose, 22 trust receipts:

. . . [I]n a certain manner, . . . partake of the nature of a conditional sale as


provided by the Chattel Mortgage Law, that is, the importer becomes
absolute owner of the imported merchandise as soon an he has paid its
price. The ownership of the merchandise continues to be vested in the
owner thereof or in the person who has advanced payment, until he has
been paid in full, or if the merchandise has already been sold, the proceeds
of the sale should be turned over to him by the importer or by his
representative or successor in interest.

Under P.D. No. 115, otherwise known an the Trust Receipts Law, which took effect on 29 January
1973, a trust receipt transaction is defined as "any transaction by and between a person referred
to in this Decree as the entruster, and another person referred to in this Decree as the entrustee,
whereby the entruster, who owns or holds absolute title or security interests' over certain specified
goods, documents or instruments, releases the same to the possession of the entrustee upon the
latter's execution and delivery to the entruster of a signed document called the "trust receipt"
wherein the entrustee binds himself to hold the designated goods, documents or instruments in
trust for the entruster and to sell or otherwise dispose of the goods, documents or instruments
with the obligation to turn over to the entruster the proceeds thereof to the extent of the amount
owing to the entruster or as appears in the trust receipt or the goods, instruments themselves if
they are unsold or not otherwise disposed of, in accordance with the terms and conditions
specified in the trusts receipt, or for other purposes substantially equivalent to any one of the
following: . . ."

It is alleged in the complaint that private respondents "not only have presumably put said
machinery to good use and have profited by its operation and/or disposition but very recent
216
information that (sic) reached plaintiff bank that defendants already sold the machinery covered
by the trust receipt to Yupangco Cotton Mills," and that "as trustees of the property covered by
the trust receipt, . . . and therefore acting in fiduciary (sic) capacity, defendants have willfully
violated their duty to account for the whereabouts of the machinery covered by the trust receipt
or for the proceeds of any lease, sale or other disposition of the same that they may have made,
notwithstanding demands therefor; defendants have fraudulently misapplied or converted to their
own use any money realized from the lease, sale, and other disposition of said machinery." 23
While there is no specific prayer for the delivery to the petitioner by Philippine Rayon of the
proceeds of the sale of the machinery covered by the trust receipt, such relief is covered by the
general prayer for "such further and other relief as may be just and equitable on the premises." 24
And although it is true that the petitioner commenced a criminal action for the violation of the Trust
Receipts Law, no legal obstacle prevented it from enforcing the civil liability arising out of the trust,
receipt in a separate civil action. Under Section 13 of the Trust Receipts Law, the failure of an
entrustee to turn over the proceeds of the sale of goods, documents or instruments covered by a
trust receipt to the extent of the amount owing to the entruster or as appear in the trust receipt or
to return said goods, documents or instruments if they were not sold or disposed of in accordance
with the terms of the trust receipt shall constitute the crime of estafa, punishable under the
provisions of Article 315, paragraph 1(b) of the Revised Penal Code. 25 Under Article 33 of the
Civil Code, a civil action for damages, entirely separate and distinct from the criminal action, may
be brought by the injured party in cases of defamation, fraud and physical injuries. Estafa falls
under fraud.

We also conclude, for the reason hereinafter discussed, and not for that adduced by the public
respondent, that private respondent Chi's signature in the dorsal portion of the trust receipt did
not bind him solidarily with Philippine Rayon. The statement at the dorsal portion of the said trust
receipt, which petitioner describes as a "solidary guaranty clause", reads:

In consideration of the PRUDENTIAL BANK AND TRUST COMPANY complying with the
foregoing, we jointly and severally agree and undertake to pay on demand to the
PRUDENTIAL BANK AND TRUST COMPANY all sums of money which the said
PRUDENTIAL BANK AND TRUST COMPANY may call upon us to pay arising out of or
pertaining to, and/or in any event connected with the default of and/or non-fulfillment in
any respect of the undertaking of the aforesaid:

PHILIPPINE RAYON MILLS, INC.

We further agree that the PRUDENTIAL BANK AND TRUST COMPANY does not have
to take any steps or exhaust its remedy against aforesaid:

before making demand on me/us.

(Sgd.) Anacleto R. Chi


ANACLETO R. CHI 26

Petitioner insists that by virtue of the clear wording of the statement, specifically the clause ". . .
we jointly and severally agree and undertake . . .," and the concluding sentence on exhaustion,
Chi's liability therein is solidary.

In holding otherwise, the public respondent ratiocinates as follows:

With respect to the second argument, we have our misgivings as to


whether the mere signature of defendant-appellee Chi of (sic) the guaranty
agreement, Exhibit "C-1", will make it an actionable document. It should be

217
noted that Exhibit "C-1" was prepared and printed by the plaintiff-appellant.
A perusal of Exhibit "C-1" shows that it was to be signed and executed by
two persons. It was signed only by defendant-appellee Chi. Exhibit "C-1"
was to be witnessed by two persons, but no one signed in that capacity.
The last sentence of the guaranty clause is incomplete. Furthermore, the
plaintiff-appellant also failed to have the purported guarantee clause
acknowledged before a notary public. All these show that the alleged
guaranty provision was disregarded and, therefore, not consummated.

But granting arguendo that the guaranty provision in Exhibit "C-1" was fully
executed and acknowledged still defendant-appellee Chi cannot be held
liable thereunder because the records show that the plaintiff-appellant had
neither exhausted the property of the defendant-appellant nor had it
resorted to all legal remedies against the said defendant-appellant as
provided in Article 2058 of the Civil Code. The obligation of a guarantor is
merely accessory under Article 2052 of the Civil Code and subsidiary under
Article 2054 of the Civil Code. Therefore, the liability of the defendant-
appellee arises only when the principal debtor fails to comply with his
obligation. 27

Our own reading of the questioned solidary guaranty clause yields no other conclusion than that
the obligation of Chi is only that of a guarantor. This is further bolstered by the last sentence which
speaks of waiver of exhaustion, which, nevertheless, is ineffective in this case because the space
therein for the party whose property may not be exhausted was not filled up. Under Article 2058
of the Civil Code, the defense of exhaustion (excussion) may be raised by a guarantor before he
may be held liable for the obligation. Petitioner likewise admits that the questioned provision is a
solidary guaranty clause, thereby clearly distinguishing it from a contract of surety. It, however,
described the guaranty as solidary between the guarantors; this would have been correct if two
(2) guarantors had signed it. The clause "we jointly and severally agree and undertake" refers to
the undertaking of the two (2) parties who are to sign it or to the liability existing between
themselves. It does not refer to the undertaking between either one or both of them on the one
hand and the petitioner on the other with respect to the liability described under the trust receipt.
Elsewise stated, their liability is not divisible as between them, i.e., it can be enforced to its full
extent against any one of them.

Furthermore, any doubt as to the import, or true intent of the solidary guaranty clause should be
resolved against the petitioner. The trust receipt, together with the questioned solidary guaranty
clause, is on a form drafted and prepared solely by the petitioner; Chi's participation therein is
limited to the affixing of his signature thereon. It is, therefore, a contract of adhesion; 28 as such,
it must be strictly construed against the party responsible for its preparation. 29

Neither can We agree with the reasoning of the public respondent that this solidary guaranty
clause was effectively disregarded simply because it was not signed and witnessed by two (2)
persons and acknowledged before a notary public. While indeed, the clause ought to have been
signed by two (2) guarantors, the fact that it was only Chi who signed the same did not make his
act an idle ceremony or render the clause totally meaningless. By his signing, Chi became the
sole guarantor. The attestation by witnesses and the acknowledgement before a notary public are
not required by law to make a party liable on the instrument. The rule is that contracts shall be
obligatory in whatever form they may have been entered into, provided all the essential requisites
for their validity are present; however, when the law requires that a contract be in some form in
order that it may be valid or enforceable, or that it be proved in a certain way, that requirement is
absolute and indispensable. 30 With respect to a guaranty, 31 which is a promise to answer for the
debt or default of another, the law merely requires that it, or some note or memorandum thereof,
be in writing. Otherwise, it would be unenforceable unless ratified. 32 While the acknowledgement
218
of a surety before a notary public is required to make the same a public document, under Article
1358 of the Civil Code, a contract of guaranty does not have to appear in a public document.

And now to the other ground relied upon by the petitioner as basis for the solidary liability of Chi,
namely the criminal proceedings against the latter for the violation of P.D. No. 115. Petitioner
claims that because of the said criminal proceedings, Chi would be answerable for the civil liability
arising therefrom pursuant to Section 13 of P.D. No. 115. Public respondent rejected this claim
because such civil liability presupposes prior conviction as can be gleaned from the phrase
"without prejudice to the civil liability arising from the criminal offense." Both are wrong. The said
section reads:

Sec. 13. Penalty Clause. — The failure of an entrustee to turn over the
proceeds of the sale of the goods, documents or instruments covered by a
trust receipt to the extent of the amount owing to the entruster or as appears
in the trust receipt or to return said goods, documents or instruments if they
were not sold or disposed of in accordance with the terms of the trust
receipt shall constitute the crime of estafa, punishable under the provisions
of Article Three hundred and fifteen, paragraph one (b) of Act Numbered
Three thousand eight hundred and fifteen, as amended, otherwise known
as the Revised Penal Code. If the violation or offense is committed by a
corporation, partnership, association or other juridical entities, the penalty
provided for in this Decree shall be imposed upon the directors, officers,
employees or other officials or persons therein responsible for the offense,
without prejudice to the civil liabilities arising from the criminal offense.

A close examination of the quoted provision reveals that it is the last sentence which provides for
the correct solution. It is clear that if the violation or offense is committed by a corporation,
partnership, association or other juridical entities, the penalty shall be imposed upon the directors,
officers, employees or other officials or persons therein responsible for the offense. The penalty
referred to is imprisonment, the duration of which would depend on the amount of the fraud as
provided for in Article 315 of the Revised Penal Code. The reason for this is obvious: corporations,
partnerships, associations and other juridical entities cannot be put in jail. However, it is these
entities which are made liable for the civil liability arising from the criminal offense. This is the
import of the clause "without prejudice to the civil liabilities arising from the criminal offense." And,
as We stated earlier, since that violation of a trust receipt constitutes fraud under Article 33 of the
Civil Code, petitioner was acting well within its rights in filing an independent civil action to enforce
the civil liability arising therefrom against Philippine Rayon.

The remaining issue to be resolved concerns the propriety of the dismissal of the case against
private respondent Chi. The trial court based the dismissal, and the respondent Court its
affirmance thereof, on the theory that Chi is not liable on the trust receipt in any capacity — either
as surety or as guarantor — because his signature at the dorsal portion thereof was useless; and
even if he could be bound by such signature as a simple guarantor, he cannot, pursuant to Article
2058 of the Civil Code, be compelled to pay until
after petitioner has exhausted and resorted to all legal remedies against the principal debtor,
Philippine Rayon. The records fail to show that petitioner had done so 33 Reliance is thus placed
on Article 2058 of the Civil Code which provides:

Art. 2056. The guarantor cannot be compelled to pay the creditor unless
the latter has exhausted all the property of the debtor, and has resorted to
all the legal remedies against the debtor.

Simply stated, there is as yet no cause of action against Chi.

219
We are not persuaded. Excussion is not a condition sine qua non for the institution of an action
against a guarantor. In Southern Motors, Inc. vs. Barbosa, 34 this Court stated:

4. Although an ordinary personal guarantor — not a mortgagor or pledgor


— may demand the aforementioned exhaustion, the creditor may, prior
thereto, secure a judgment against said guarantor, who shall be entitled,
however, to a deferment of the execution of said judgment against him until
after the properties of the principal debtor shall have been exhausted to
satisfy the obligation involved in the case.

There was then nothing procedurally objectionable in impleading private respondent Chi as a co-
defendant in Civil Case No. Q-19312 before the trial court. As a matter of fact, Section 6, Rule 3
of the Rules of Court on permissive joinder of parties explicitly allows it. It reads:

Sec. 6. Permissive joinder of parties. — All persons in whom or against


whom any right to relief in respect to or arising out of the same transaction
or series of transactions is alleged to exist, whether jointly, severally, or in
the alternative, may, except as otherwise provided in these rules, join as
plaintiffs or be joined as defendants in one complaint, where any question
of law or fact common to all such plaintiffs or to all such defendants may
arise in the action; but the court may make such orders as may be just to
prevent any plaintiff or defendant from being embarrassed or put to
expense in connection with any proceedings in which he may have no
interest.

This is the equity rule relating to multifariousness. It is based on trial convenience and is designed
to permit the joinder of plaintiffs or defendants whenever there is a common question of law or
fact. It will save the parties unnecessary work, trouble and expense. 35

However, Chi's liability is limited to the principal obligation in the trust receipt plus all the
accessories thereof including judicial costs; with respect to the latter, he shall only be liable for
those costs incurred after being judicially required to pay. 36 Interest and damages, being
accessories of the principal obligation, should also be paid; these, however, shall run only from
the date of the filing of the complaint. Attorney's fees may even be allowed in appropriate cases.
37

In the instant case, the attorney's fees to be paid by Chi cannot be the same as that to be paid by
Philippine Rayon since it is only the trust receipt that is covered by the guaranty and not the full
extent of the latter's liability. All things considered, he can be held liable for the sum of P10,000.00
as attorney's fees in favor of the petitioner.

Thus, the trial court committed grave abuse of discretion in dismissing the complaint as against
private respondent Chi and condemning petitioner to pay him P20,000.00 as attorney's fees.

In the light of the foregoing, it would no longer necessary to discuss the other issues raised by
the petitioner

WHEREFORE, the instant Petition is hereby GRANTED.

The appealed Decision of 10 March 1986 of the public respondent in AC-G.R. CV


No. 66733 and, necessarily, that of Branch 9 (Quezon City) of the then Court of
First Instance of Rizal in Civil Case No. Q-19312 are hereby REVERSED and SET
ASIDE and another is hereby entered:
220
1. Declaring private respondent Philippine Rayon Mills, Inc. liable on the twelve drafts
in question (Exhibits "X", "X-1" to "X-11", inclusive) and on the trust receipt (Exhibit
"C"), and ordering it to pay petitioner: (a) the amounts due thereon in the total sum of
P956,384.95 as of 15 September 1974, with interest thereon at six percent (6%) per
annum from 16 September 1974 until it is fully paid, less whatever may have been
applied thereto by virtue of foreclosure of mortgages, if any; (b) a sum equal to ten
percent (10%) of the aforesaid amount as attorney's fees; and (c) the costs.

2. Declaring private respondent Anacleto R. Chi secondarily liable on the trust receipt
and ordering him to pay the face value thereof, with interest at the legal rate,
commencing from the date of the filing of the complaint in Civil Case No. Q-19312
until the same is fully paid as well as the costs and attorney's fees in the sum of
P10,000.00 if the writ of execution for the enforcement of the above awards against
Philippine Rayon Mills, Inc. is returned unsatisfied.

Costs against private respondents. SO ORDERED.

221
G.R. No. L-3884 November 29, 1951

INTERNATIONAL COLLEGES, INC., petitioner-appellee,


vs.
NIEVES ARGONZA, ET AL., respondents-appellants.

Avena, Villaflores & Lopez for petitioner and appellee.


Cecilio I. Lim and Atanacio Mardo for respondents and appellants.

REYES, J.:

This case had its origin in the Municipal Court of Manila where 25 dismissed teachers of the
International Colleges, Inc., a domestic corporation, jointly sued this entity for unpaid salaries, the
complaint alleging that plaintiffs were employed by defendant for the whole school year ending
April 30, l949, any specified salary each, but that without justification and in violation of their
contract they were on December l0, l948, dismissed by defendant without being paid their
respective salaries due under the contract, all aggregating P14,211.13 but with the highest
individual claim not exceeding P1,300. Instead of filing an answer defendant moved for dismissal,
contending that there was misjoinder of parties-plaintiff and that the total amount involved was
beyond the jurisdiction of the court. The motion having been denied, defendant took the case by
certiorari to the Court of First Instance of Manila. Upholding defendant's contention, that court
revoked the order complained of and ordered the complaint in the municipal court dismissed
without pronouncement as to costs. From this decision the plaintiffs have appealed, alleging that
the lower court erred in holding (1) that there was a misjoinder of parties-plaintiff and (2) that it
was the aggregate amount of plaintiffs' claim and not the amount of each claim that should
constitute the basis for determining the court's jurisdiction.

The first specification of error has no basis, it appearing from the order denying plaintiffs' motion
for reconsideration that the lower court has receded from its former position on the question of
misjoinder of parties plaintiff and has denied said motion simply on the ground that the municipal
court had no jurisdiction over the amount involved. Nevertheless, we are constrained to express
an opinion on said question since the appellee seeks to uphold the decision appealed from, not
only on the ground of lack of jurisdiction on the part of the municipal court but also on the ground
of misjoinder of parties plaintiff.

Our view is that the joinder of the 25 plaintiffs in one single complaint against the defendant is
authorized by section 6 of Rule 3 of the Rules of Court, which reads:

SEC. 6. Permissive joinder of parties.—All persons in whom or against whom any


right to relief in respect to or arising out of the transaction or series of transactions
is alleged to exist, whether jointly, severally, or in the alternative, may, except as
otherwise provided in these rules, join as plaintiffs or be joined as defendants in
one complaint, where any question of law or fact common to all such plaintiffs or
to all such defendants may arise in the action; but the court may make such orders
as may be just to prevent any plaintiff or defendant from being embarassed or put
to expense in connection with any proceedings in which he may have no interest.

222
Commenting on this section of the Rules Chief Justice Moran says:

The principle contained in this provision amplifies the old procedure. Formerly, it
was only community of interest in the same subject which constituted a ground for
joinder of parties; now, it is also the existence of a question of fact or of law,
provided the relief sought for or against the several parties arises from the same
transaction or series of transactions whether jointly, severally, or in the alternative.
In this connection, the term "transaction" means not only a stipulation or
agreement, but any event resulting in wrong, without regard to whether the wrong
has been done by violence, neglect or breach of contract. And the term "series of
transactions" is equivalent to "transactions" connected with the same subject of
the action.

For instance, A, B, C, and D are owners, respectively, of four houses destoyed by


fire caused by sparks coming from a defective chimney of a passing locomotive
owned by the Manila Railroad Company. Under the old procedure, the four owners
cannot join in a single complaint for damages against the Manila Railroad
Company, for the reason that they do not have a community of interest in the same
subject of the litigation, each of them being interested in covering the value of his
house alone. Under the new procedure, they may join in a single complaint, for a
right to relief is alleged to exist in their favor severally arising out of the same cause,
namely, the single negligent act of the defendant by which the four houses were
destroyed by fire, and which is also a common question of fact to all of the four
plaintiffs.

Again, several farmers, defending upon a system for the irrigation of their crops,
have sustained damages by reason of the diversion of the water from said system
by the defendant company. Under the old procedure, those several farmers cannot
unite in a single action, they having no community of interest in the same subject,
for each of them is interested in the damages to his own farm and not in those of
the others. But, under the new procedure, they may join in a single action, for their
right to relief arises from the occurence, namely, the diversion of the water from
the aforesaid system, which is also a question of fact common to all of them.

A collector of taxes for three political subdivisions in the United States gave a single
fidelity bond. The state law imposed on each political subdivision a liability for each
proportionate share of the bond premium. Held: The surety could join the three
parties as defendants in an action to recover the premium although each of them
is liable seperately for one third of the premium, the right to relief having arisen
from the same transaction, namely, the giving of the bond, and there is a question
of fact or of law common to all of the three defendants.

If a collision of motor cars, a chauffer sustained personal injuries and damages are
caused to the car he was driving, two causes of action arise: one, in favor of the
chauffer for the injuries caused to his person, and another, in favor of the owner of
the car for the damages caused thereto. Under the old procedure, it is doubtful
whether the owner and the chauffer may join in a single complaint, because they
are not interested in the same subject, each of them claiming a different and
seperate kind of damages, but under the new procedure, they may join, because
a right of relief exists in their favor arising out of the same transaction or occurence,
namely, the collision, and a question of fact will arise at the trial common to both
of them.

223
If a person has a title to a real property which he has been possessing for many
years, and four persons united by the same purpose, successively deprived him
of the property and later partioned it among themselves; under the old procedure
it was doubtful whether the four persons could be joined in a single action, each of
them being interested only in the portion he is occupying and not in the portions
respectively occupied by the others. But under the new procedure, it is clear that
they may be joined in a single complaint, because a right to relief is alleged to exist
against all of them arising out of a series of occurrences, and question of fact
common to all of them will arise in the action, that is, the ownership and possession
for years of the plaintiff.

As previously indicated, it is not enough that there be a question of fact common


to several parties in order that they may be joined; it is essential that a right of relief
should exist in favor of, or against, all of them in respect to, or arising out of, the
same transaction or series of transactions. If the right to relief does not arise out
of the same transactions or series of transactions, although there may be a
common question of fact, joinder is not proper. For instance, if the plaintiff has a
single title to and has been for many years in possession of, two parcels of land,
one of which had been taken by force by one of the defendants nine years ago,
and the other, by the other defendant five years ago under different circumstances,
the two defendants cannot be joined, for there is no right or relief against them
arising out of the same transaction or occurence, the acts of dispossessions having
been done seperately, at different times and in a different manner, although there
is a question of fact common to them, which is the plaintiff's ownership and
possession of the property.

Professor Sunderland rightly says that under these new rules a number of joinders
are permissible, such as claims for damages in the alternative against two
independent tortfeasors; damages for injury to a house by the owner and the
occupier; damages claimed by many persons affected by the same libelous
statement; claims against a person causing a personal injury and a physician who
afterwards negligently treats the patient.

Under the new liberal rule of joinder, a situation may arise in which, while one of
the parties is proving his claim, the other parties may have no interest therein and
may remain idle in court. In this event, the above section provides that "the court
may make such orders as may be just to prevent any plaintiff or defendant from
being embarassed or put to expense in connection with any proceedings in which
he may have no interest." For instance, in the first illustration given above, while
one of the owners of the houses burned is proving the value of his house, the
others may have nothing to do in court, they having no interest in the subject matter
of the evidence being presented. In such case, the court may fix another time or
date for each of the other plaintiffs to introduce their respective proofs. (I Moran,
Rules of Court, 3rd rev. ed., 36-40).

On all fours with the present case is that of A. Soriano y Cia. vs. Gonzalo M. Jose, et al., * G.R.
No. L-3211 decided May 30, l950, where various employees of that company who had been
against it in the municipal court to collect a month's salary each in lieu of 30 days' notice. The
procedure was sanctioned by this Court section of the Rules. In our opinion all that section
requires is that there be a question of fact common to the several parties that have been joined
as plaintiffs and that a right of relief exists in favor of all of them in respect to or arising out of the
same transaction or series of transactions "whether jointly, severally, or in the alternative." These
requisites are fulfilled in the present case where the joint plaintiffs allege to have a right to relief
arising out of the same transaction or series of transaction consisting in the mass dismissal of the
224
plaintiffs from defendant's employ, an action or series of actions giving rise to a question of law
common to all of the plaintiffs. Our conclusion, therefore, is that the joinder of the 25 plaintiffs in
one single complaint was proper in this case.

The above-cited is also decisive on the question raised in the second specification of error. In that
case the complaint alleged that prior to August 28, l929, A. Soriano y Cia. had engaged the
plaintiffs as employees or laborers at its surplus department at Santa Mesa yard in different
capacities, and that on diverse dates between May 17 and September 30, 1948, A. Soriano y Cia.
had dismissed them without cause and the plaintiffs, 29 in number, brought a joint complaint in
the municipal court against their former employer, praying that judgement be rendered sentencing
defendant to pay each of them one month's salary in lieu of 30 day's notice. The total of the claims
was P5,235, but the largest single claim was only P300. Contending that the municipal court had
no jurisdiction to try the action because the amount of the demand exceeded P2,000, exclusive
of interest and costs, the defendant filed a motion to dismiss, and, after that motion was denied,
instituted proceedings for certiorari in the Court of First Instance. The petition for certiorari having
been denied in that court the defendant appealed to this Court, and the question presented was
whether the jurisdiction of the municipal court was governed by the amount of each claim or by
the aggregate sum of all the claims when there were several plaintiffs suing jointly but having
independent causes of action. Passing on that question, this Court said:

The point wherein the parties are not in agreement is whether the claim of each
plaintiff or the aggregate claims of all is the measure of jurisdiction. This question
has been the subject of decisions by American courts. In Hackner vs. Guaranty
Trust Co. of New York, 4 Fed. Rules Serv. 378; U.S. Circuit Court of Appeals,
Second Circuit, Jan. 13, 1941; 117 F. (2nd) 95, it was held that "when two or more
plaintiffs, each having seperate and distinct demand, join in a single suit, the
demand, of each must be of the requisite jurisdictional amount. Aggregation of the
claims are of a joint nature, as when it is sought to enforce a single right in which
plaintiffs have a common interest." As American Jurisprudence, Vol. 14, p 413,
puts it, "Where several claimants have seperate and distinct demands against a
defendant or defendants, which may properly joined in a single suit, the claims can
not be added together to make up the required jurisdictional amount; each
seperate claim furnishes the jurisdictional test."

The petitioner believes that the joining of plaintiffs having seperate claims should
be controlled by the principle bearing on the court jurisdiction in suit where one
plaintiffs alleges in one complaint several independent causes of action, in which
case it is the aggregate amount which determines the jurisdiction. But there is a
fundamental difference between such cases and one like that before us. In the
first, the total demand accrues to one person, while in the latter only part of the
combined demand, which does not exceed the jurisdictional amount, pertains to a
single plaintiff. In other words, the court takes into account what one party would
recover and not what is adjudged to all the parties or some of them.

There would be more similarity if the present case were compared with one in
which several actions commenced by different plaintiffs, handled by the same
attorneys, raising the same questions, and founded on the same facts or evidence,
were tried together and only one judgement were handed down. If the plaintiffs
and the court had adopted such procedure, we do not think that the court
jurisdiction would be open to attack on the ground that the judgement, by reason
of the joint trial, adjudicated a greater amount than the law allowed. Yet the only
difference between the hypothetical case we have given and the case at bar is that
in the latter, only one complaint was filed instead of as many as there are plaintiffs.
The sole effect, and we should say the sole purpose, of the new rule on joinder of
225
parties is to save them unnecessary work, trouble and expense, consistent with
the liberal spirit of the new Rules, and not to enlarge the court's jurisdiction as
applied to the amount in controversy.

It is effect argued that plaintiffs could, through collision, shift the court jurisdiction
if individual demands rather than their aggregate were used as the criterion. It is
the other way around; it is the adoption of the opposite theory, as we see it, which
would open the door to manipulation. Several plaintiffs wishing to avoid trial in the
justice of the peace court could combine their demands in one complaint so as to
put the action beyond the jurisdiction of the inferior court.

In view of the foregoing, the decision appealed from is revoked, and the complaint of the teachers
(appellants herein), ordered reinstated in the municipal court of Manila.

The appellants shall recover costs.

226
G.R. No. L-3211 May 30, 1950

A. SORIANO Y CIA., petit