Republic of the Philippines

SUPREME COURT
Baguio City

FIRST DIVISION

G.R. No. 197937 April 3, 2013

FILM DEVELOPMENT COUNCIL OF THE PHILIPPINES, Petitioner,

vs.
SM PRIME HOLDINGS, INC., Respondent.

DECISION

VILLARAMA, JR., J.:

Petitioner appeals the Orders1 dated February 21, 2011 and July 25, 2011 of the Regional Trial Court (RTC) of Pasig City,
Branch 166 which granted respondent's motion to dismiss on the ground of litis pendentia.

The factual antecedents:

Respondent SM Prime Holdings, Inc. is the owner and operator of cinema houses at SM Cebu in Cebu City. Under
Republic Act (R.A.) No. 7160 otherwise known as the Local Government Code of 1991, owners, proprietors and lessees
of theaters and cinema houses are subject to amusement tax as provided in Section 140, Book II, Title One, which
reads:

SECTION 140. Amusement Tax-

(a) The province may levy an amusement tax to be collected from the proprietors, lessees, or operators of theaters,
cinemas, concert halls, circuses, boxing stadia, and other places of amusement at a rate of not more than thirty percent
(30%) of the gross receipts from admission fees.

(b) In the case of theaters or cinemas, the tax shall first be deducted and withheld by their proprietors, lessees, or
operators and paid to the provincial treasurer before the gross receipts are divided between said proprietors, lessees,
or operators and the distributors of the cinematographic films.

xxxx

(d) The sangguniang panlalawigan may prescribe the time, manner, terms and conditions for the payment of tax. In
case of fraud or failure to pay the tax, the sangguniang panlalawigan may impose such surcharges, interest and
penalties as it may deem appropriate.

On June 21, 1993, the Sangguniang Panglunsod of Cebu City approved City Tax Ordinance No. LXIX 2 pursuant to
Section 140, in relation to Section 1513 of the Local Government Code of 1991. Chapter XI of said ordinance provides:

CHAPTER XI

Amusement Tax

SECTION 42. Rate of Tax. – There shall be paid to the Office of the City Treasurer by the proprietors, lessees, or
operators of theaters, cinemas, concert halls, circuses, boxing stadia and other places of amusement an amusement
tax at the rate of thirty percent (30%) of the gross receipts from admission fees.
SECTION 43. Manner of Payment. – In the case of theaters or cinemas, the tax shall first be deducted and withheld by
their proprietors, lessee, or operators and paid to the city treasurer before the gross receipts are divided between said
proprietors, lessee, operators and the distributors of the cinematographic films.
xxxx
SECTION 45. Time of Payment. – The tax shall be due and payable within the first twenty (20) days of the succeeding
month.
On June 7, 2002, Congress approved R.A. No. 91674 which created the Film Development Council of the Philippines,
herein petitioner. Petitioner’s mandate includes the development and implementation of "an incentive and reward
system for the producers based on merit to encourage the production of quality films." 5 The Cinema Evaluation Board
(CEB) was established to review and grade films in accordance with criteria and standards and procedures it shall
formulate subject to the approval of petitioner.
Films reviewed and graded favorably by the CEB are given the following privileges:
Section 13. Privileges of Graded Films. - Films which have obtained an "A" or "B" grading from the Council pursuant to
Sections 11 and 12 of this Act shall be entitled to the following privileges:
a. Amusement tax reward. - A grade "A" or "B" film shall entitle its producer to an incentive equivalent to the
amusement tax imposed and collected on the graded films by cities and municipalities in Metro Manila and other
highly urbanized and independent component cities in the Philippines pursuant to Sections 140 and 151 of Republic Act
No. 7160 at the following rates:
1. For grade "A" films - 100% of the amusement tax collected on such films; and
2. For grade "B" films. - 65% of the amusement tax collected on such films. The remaining thirty-five (35%) shall accrue
to the funds of the Council.
For the purpose of implementing the above incentive system, R.A. No. 9167 mandates the remittance of the proceeds
of the amusement tax collected by the local government units (LGUs) to petitioner.
Section 14. Amusement Tax Deduction and Remittances. - All revenue from the amusement tax on the graded film
which may otherwise accrue to the cities and municipalities in Metropolitan Manila and highly urbanized and
independent component cities in the Philippines pursuant to Section 140 of Republic Act. No. 7160 during the period
the graded film is exhibited, shall be deducted and withheld by the proprietors, operators or lessees of theaters or
cinemas and remitted within thirty (30) days from the termination of the exhibition to the Council which shall reward
the corresponding amusement tax to the producers of the graded film within fifteen (15) days from receipt thereof.
Proprietors, operators and lessees of theaters or cinemas who fail to remit the amusement tax proceeds within the
prescribed period shall be liable to a surcharge equivalent to five percent (5%) of the amount due for each month of
delinquency which shall be paid to the Council. (Emphasis supplied.)
To ensure enforcement of the above provision, the law empowered petitioner not only to impose administrative fines
and penalties but also to cause or initiate criminal or administrative prosecution to the violators. 6
On January 27, 2009, petitioner through the Office of the Solicitor General (OSG) sent a demand letter to respondent
for the payment of the sum of ₱76,836,807.08 representing the amusement tax rewards due to producers of 89 films
graded "A" and "B" which were shown at SM cinemas from September 11, 2003 to November 4, 2008.7
Sometime in May 2009, the City of Cebu filed in the RTC of Cebu City (Cebu City RTC) a petition 8 for declaratory relief
with application for a writ of preliminary injunction against the petitioner, docketed as Civil Case No. CEB-35529. The
City of Cebu sought to declare Section 14 of R.A. No. 9167 as invalid and unconstitutional on grounds that: (1) it violates
the basic policy on local autonomy; (2) it constitutes an undue limitation of the taxing power of LGUs; (3) it unduly
deprives LGUs of the revenue from the amusement tax imposed on theatre owners and operators; and (4) it amounts
to technical malversation since revenue from the collection of amusement taxes that would otherwise accrue to and
form part of the general fund of the LGU concerned would now be directly awarded to a private entity – the producers
of graded films – bypassing the budget process of the LGU and without the proper appropriation ordinance from the
sanggunian.9
A temporary restraining order (TRO) was issued by the Cebu City RTC enjoining petitioner and its duly constituted
agents from collecting the amusement tax incentive award from the owners, proprietors or lessees of theaters and
cinema houses within the City of Cebu; imposing surcharge on the unpaid amount; filing any case or suit of whatever
kind or nature due to or arising from the failure to deduct, withhold and remit the amusement tax incentives award on
the graded films of petitioner; and initiating administrative or criminal prosecution against the said owners, proprietors
or lessees.10
On October 16, 2009, petitioner sued the respondent for the payment of ₱76,836,807.08 representing the unpaid
amusement tax incentive reward (with 5% surcharge for each month of delinquency) due to the producers of 89 graded
films which were shown at SM Cinemas in Cebu City from September 11, 2003 to November 4, 2008, plus a 5%
surcharge for each month of delinquency until fully paid. Said collection suit was docketed as Civil Case No. 72238 of
the RTC of Pasig City (Pasig City RTC), Branch 166.11
Petitioner filed a Comment (In Lieu of Answer)12 in Civil Case No. CEB-35529 praying for the dismissal of the petition
filed by the City of Cebu.
Meanwhile, respondent filed a Motion to Dismiss13 in Civil Case No. 72238 arguing that petitioner’s complaint merits
outright dismissal considering that its claim had already been extinguished by respondent’s prior payment or
remittance of the subject amusement taxes to the City of Cebu. Respondent called attention to Section 26 of the
Implementing Rules and Regulations (IRR) of R.A. No. 9167 which directed petitioner to execute a Memorandum of
Agreement (MOA) with proprietors, operators and lessees of theaters and cinemas as well as movie producers, on the
systems and procedures to be followed for the collection, remittance and monitoring of the amusement taxes withheld
on graded films. In the apparent absence of such MOA and the "general procedure/process" duly adopted by all
proprietors, operators and lessees of theaters or cinemas, respondent has been withholding such taxes and remitting
the same to the City of Cebu pursuant to Cebu City Tax Ordinance No. LXIX, as shown by the Certification 14 dated
February 5, 2009 issued by the Office of the Treasurer of Cebu City stating that respondent "had religiously remitted
their monthly amusement taxes due to the Cebu City Government." Respondent pointed out that even the Cebu City
Government recognizes that when it receives the amusement taxes collected or withheld by the owners, operators and
proprietors of theaters and cinema houses on graded films, it is mandated to forward the said taxes to petitioner.
In its Comment15 on the motion to dismiss, petitioner argued that Section 14 of R.A. No. 9167 is valid and
constitutional. As to respondent’s defense of prior payment, petitioner asserted that the execution of a MOA with the
proprietors, owners and lessees of theaters and cinema houses is not a condition sine qua non for a valid enforcement
of the provisions of R.A. No. 9167. The IRR cited by respondent cannot prevail over the clear import of the law on which
it is based, and hence respondent cannot invoke it to excuse non-payment of the amusement tax incentive rewards due
to the producers of graded films which should have been remitted to petitioner in accordance with Section 14 of R.A.
No. 9167. Petitioner pointed out that from the time R.A. No. 9167 took effect up to the present, all the cities and
municipalities in Metropolitan Manila and highly urbanized and independent component cities in the Philippines, with
the sole exception of Cebu City and a number of theater establishments therein, have unanimously acceded to and
have faithfully complied with the mandate of said law notwithstanding the absence of a MOA.
Respondent filed its Reply16 to petitioner’s Comment maintaining that its remittance of the amusement tax incentive
reward to the City of Cebu extinguished its obligation to petitioner, and arguing that the case should be dismissed on
the additional ground of litis pendentia.
On August 13, 2010, respondent filed in Civil Case No. CEB-35529 a Motion for Leave to File and Admit Attached
Comment-in-Intervention.17 In its Comment-in-Intervention With Interpleader, respondent prayed that the judgment
on the validity and constitutionality of Sections 13 and 14 of R.A. No. 9167 include a pronouncement on its rights and
duties as a consequence of such judgment, as it clearly has a legal interest in the success of either party in the
case.18 On October 21, 2010, the Cebu City RTC granted respondent’s motion for intervention. 19
On February 21, 2011, the Pasig City RTC issued the assailed order granting the motion to dismiss, holding that the
action before the Cebu City RTC (Civil Case No. CEB-35529) is the appropriate vehicle for litigating the issues between
the parties in Civil Case No. 72238. Moreover, said court found all the elements of litis pendentia present and
accordingly dismissed the complaint. Petitioner’s motion for reconsideration was likewise denied. In a direct recourse
to this Court, petitioner advances the following questions of law:
I amusement taxes it is claiming against respondent in Civil Case No. 72238.
THE RTC, BRANCH 166, OF PASIG CITY UTTERLY IGNORED AND DISREGARDED THE WELL-SETTLED RULE THAT
UNLESS AND UNTIL A SPECIFIC PROVISION OF LAW IS DECLARED INVALID AND UNCONSTITUTIONAL, THE
SAME IS ENTITLED TO OBEDIENCE AND RESPECT.
II
THE RTC, BRANCH 166, OF PASIG CITY ERRED IN DISMISSING THE COMPLAINT IN CIVIL CASE NO. 72238 ON THE
GROUND OF LITIS PENDENTIA.20
Petitioner reiterates that every law has in its favor the presumption of constitutionality, and unless and until a specific
provision of law is declared invalid and unconstitutional, the same is valid and binding for all intents and purposes. In
dismissing the complaint, the Pasig City RTC abdicated its solemn duty and jurisdiction to rule on the constitutional
issues raised by respondent in Civil Case No. 72238 upon the mistaken assumption that only the Cebu City RTC in Civil
Case No. CEB-35529 can directly determine the constitutionality of Sections 13 and 14 of R.A. No. 9167 and the
indispensability of a MOA in the remittance to petitioner of amusement tax rewards due to the producers of graded
films. Petitioner further contends that, contrary to the ruling of the Pasig City RTC, the principle of judicial courtesy is
not applicable because a judgment in Civil Case No. CEB-35529 will not result in rendering moot the issues brought
before the Pasig City RTC in Civil Case No. 72238.
The petition has no merit.
We do not subscribe to petitioner’s view that the dismissal of the complaint in Civil Case No. 72238 amounts to an
abdication of the Pasig City RTC’s concurrent jurisdiction to settle constitutional questions involving a statute or its
implementing rules. The 1997 Rules of Civil Procedure, as amended, provides for specific grounds for the dismissal of
any complaint in civil cases including those where the trial court has competence and authority to hear and decide the
issues raised and relief sought. One of these grounds is litis pendentia.
Litis pendentia, as a ground for the dismissal of a civil action, refers to a situation where two actions are pending
between the same parties for the same cause of action, so that one of them becomes unnecessary and vexatious.21It is
based on the policy against multiplicity of suits22 and authorizes a court to dismiss a case motu proprio.23
Section 1(e), Rule 16 of the 1997 Rules of Civil Procedure, as amended, thus provides:
SECTION 1. Grounds.Within the time for but before filing the answer to the complaint or pleading asserting a claim,
a motion to dismiss may be made on any of the following grounds:
xxxx
(e) That there is another action pending between the same parties for the same cause.
The requisites in order that an action may be dismissed on the ground of litis pendentia are: (a) the identity of parties,
or at least such as representing the same interest in both actions; (b) the identity of rights asserted and relief prayed
for, the relief being founded on the same facts, and (c) the identity of the two cases such that judgment in one,
regardless of which party is successful, would amount to res judicata in the other. 24
Petitioner submits that while there is identity of parties in Civil Case Nos. CEB-35529 and 72238, the second and third
requisites are absent. It points out that in the former, it is not claiming any monetary award but merely prayed for the
dismissal of the declaratory relief petition. Moreover, since the issues raised in the former case are purely legal,
petitioner is not necessarily called upon to present testimonial or documentary evidence to prove factual matters.
Petitioner thus concludes that the judgment in former case would not amount to res judicata in the latter case.
Petitioner further notes that when a judgment dismissing the former case is appealed and the assailed provisions of
R.A. No. 9167 are declared constitutional by this Court, petitioner will not be automatically awarded the unpaid
Petitioner’s submissions fail to persuade.
The underlying principle of litis pendentia is the theory that a party is not allowed to vex another more than once
regarding the same subject matter and for the same cause of action. This theory is founded on the public policy that
the same subject matter should not be the subject of controversy in courts more than once, in order that possible
conflicting judgments may be avoided for the sake of the stability of the rights and status of persons, 25 and also to
avoid the costs and expenses incident to numerous suits.26
Among the several tests resorted to in ascertaining whether two suits relate to a single or common cause of action are:
(1) whether the same evidence would support and sustain both the first and second causes of action; and (2) whether
the defenses in one case may be used to substantiate the complaint in the other. 27
The determination of whether there is an identity of causes of action for purposes of litis pendentia is inextricably
linked with that of res judicata, each constituting an element of the other. In either case, both relate to the sound
practice of including, in a single litigation, the disposition of all issues relating to a cause of action that is before a
court.28
In this case, what petitioner failed to take into account is that the Cebu City RTC allowed respondent to intervene in
Civil Case No. CEB-35529 by way of an interpleader action as to which government entity – whether petitioner or the
Cebu City Government – should have remitted the amusement taxes it collected from the admission fees of graded
films shown in respondent’s cinemas in Cebu City. It must be noted that since 1993 when City Tax Ordinance No. LXIX
was enforced, respondent had been faithfully remitting amusement taxes to the City of Cebu and because of the
collection suit filed by petitioner, such defense of prior payment and evidence to prove it which respondent could have
presented at the trial in Civil Case No. 72238 would be the same defense and evidence necessary to sustain
respondent’s interpleader action in Civil Case No. CEB-35529 before the Cebu City RTC. Also, in both cases, respondent
had raised the matter of conflicting provisions of R.A. No. 9167 and Local Government Code of 1991, while petitioner
pleaded and argued the constitutionality and validity of Sections 13 and 14 of R.A. No. 9167.
The interpleader action of respondent/intervenor, anchored on its defense of prior payment, would be considered by
the Cebu City RTC in its final determination of the parties’ rights and interests as it resolves the legal questions. The
Pasig City RTC is likewise confronted with the legal and constitutional issues in the collection suit, alongside with
respondent’s defense of prior payment. It is evident that petitioner’s claim against the respondent hinges on the
correct interpretation of the conflicting provisions of the Local Government Code of 1991 and R.A. No. 9167. There
could be no doubt that a judgment in either case would constitute res judicata to the other. Sound practice thus
dictates that the common factual and legal issues be resolved in a single proceeding.
We also find no reversible error in the Pasig City RTC’s ruling that Civil Case No. CEB-35529 is the appropriate vehicle
for litigating the issues raised by petitioner and respondent in Civil Case No. 72238.
Under the established jurisprudence on litis pendentia, the following considerations predominate in the ascending
order of importance in determining which action should prevail: (1) the date of filing, with preference generally given to
the first action filed to be retained; (2) whether the action sought to be dismissed was filed merely to preempt the later
action or to anticipate its filing and lay the basis for its dismissal; and (3) whether the action is the appropriate vehicle
for litigating the issues between the parties.29
Moreover, considering the predicament of respondent, we also find relevant the criterion of the consideration of the
interest of justice we enunciated in Roa v. Magsaysay.30 In applying this standard, what was asked was which court
would be "in a better position to serve the interests of justice," taking into account (a) the nature of the controversy, (b)
the comparative accessibility of the court to the parties and (c) other similar factors. 31
In this case, all things considered, there can be no doubt Civil Case No. CEB-35529 is the appropriate vehicle to
determine the rights of petitioner and respondent. In that declaratory relief case instituted by the City of Cebu, to
which respondent had been remitting the subject amusement taxes being claimed by petitioner in Civil Case No.
72238, the issue of validity or constitutionality of Sections 13 and 14 of R.A. No. 9167 was directly pleaded and argued
between petitioner and the City of Cebu, with subsequent inclusion of respondent as intervenor. Moreover, the
presence of City of Cebu as party plaintiff would afford proper relief to respondent in the event the Cebu City R TC
renders judgment sustaining the validity of the said provisions. Respondent had vigorously asserted in both courts that
it had remitted the amusement taxes in good faith to the City of Cebu which had threatened sanctions for non-
compliance with City Tax Ordinance No. LXIX, and that it should not be made to pay once again the same taxes to
petitioner. As equally dire consequences for non-compliance with the demand for payment having been made by
petitioner, such defense of good faith is best ventilated in Civil Case No. CEB-35529 where the City of Cebu is a party.
Petitioner's insistence that the Pasig City RTC proceed with trial notwithstanding the pendency of Civil Case No. CEB-
35529 before the Cebu City RTC is thus untenable. To allow the parties to litigate the same issues upon the same
evidence and defenses will only defeat the public policy reasons behind litis pendentia, which, like the rule on forum
shopping, aims to prevent the unnecessary burdening of our courts and undue taxing of the manpower and financial
resources of the judiciary; to avoid the situation where co-equal courts issue conflicting decisions over the same cause;
and to preclude one party from harassing the other party through the filing of an unnecessary or vexatious suit. 32
WHEREFORE, the petition for review on certiorari is DENIED. The Orders dated February 21, 2011 and July 25, 2011 of
the Regional Trial Court of Pasig City, Branch 166 are hereby AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
THIRD DIVISION
G.R. No. 190814, October 09, 2013
MICHELLE LANA BROWN-ARANETA, FOR HERSELF AND REPRESENTING HER MINOR DAUGHTERS,
ARABELLA MARGARITA B. ARANETA AND AVANGELINA MYKAELA B. ARANETA, Petitioners, v. JUAN IGNACIO
ARANETA, Respondent.
DECISION
VELASCO JR., J.:
The Case
Assailed and sought to be set aside in this Petition for Review on Certiorari under Rule 45 are the May 11, 2009
Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 105442 and its Resolution2 of December 28, 2009 denying
petitioner’s motion for reconsideration of said decision.
The assailed decision ordered the dismissal of Civil Case No. 08-023 of the Regional Trial Court (RTC), Branch 207 in
Muntinlupa City and nullified all the issuances it made in that case, a petition for protection order under Republic Act
No. (RA) 9262, otherwise known as the Anti-Violence Against Women and Their Children Act of 2004, commenced by
petitioner Michelle Lana Brown-Araneta (Michelle) against respondent Juan Ignacio Araneta (Juan Ignacio) before that
court.
The Facts
On April 14, 2000, Juan Ignacio and Michelle were married in Las Vegas, Nevada, USA. The union produced two (2)
children, namely: Arabella Margarita (Ara) and Avangelina Mykaela (Ava), born on February 22, 2003 and April 15,
2005, respectively. After a little over seven years of disharmonious relationship, husband and wife separated. Since the
couple’s estrangement and de facto separation, Ara and Ava have remained in Michelle’s custody.
In November 2007 before the RTC of Makati City, Juan Ignacio filed, pursuant to A.M. No. 03-04-04-SC3or The Rule on
Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors (Rule on Custody of Minors), a Petition for
the Custody of the Minors Arabella Margarita Araneta and Avangelina Mykaela Araneta (Petition for Custody), with
prayer for visitation rights against Michelle and her mother, Glenda B. Santos (Santos). Docketed as SP PROC. Case
No. M-6543, this petition was eventually raffled to Branch 60 of the Makati City RTC (Makati RTC), presided over by
Judge Marissa Macaraig-Guillen (Judge Macaraig-Guillen).
Juan Ignacio invoked, as main basis for his petition, his right as father of Ava and Ara to have custody of and to exercise
parental authority over them, albeit both were below seven (7) years of age. In this regard, he claimed that, apart from
refusing to communicate with him, both Michelle and Santos have completely barred him from seeing or getting in
touch with his daughters despite repeated requests. He thus prayed the court to:chanroblesvirtualawlibrary
1. Immediately issue a Provisional Order granting [him] visitation rights with respect to the minors [Ava and Ara] x x x
during the pendency of these proceedings;
2. Immediately issue an ex parte Hold Departure Order preventing the departure of [both] minors x x x from the
country; and
3. After appropriate proceedings, render judgment granting [him] joint custody, or alternatively, granting him
permanent visitation rights, over [both] his legitimate children x x x.4
To facilitate service of summons, Juan Ignacio, via a Motion and Urgent Manifestation of November 27, 2007, would
inform the Makati RTC that Michelle and Santos may have transferred to No. 408 Anonas Street, Ayala Alabang
Village, Muntinlupa City (Anonas residence), an address different from what he provided in his basic petition, referring
to the Molave Drive residence in the same village. In her Officer’s Return dated December 10, 2007,5 process server
Linda Fallorin stated the following: (1) she initially attempted to serve the summons upon Michelle and Santos on
December 7, 2007 at the Anonas residence, only to be told by one Roberto Anonas, who refused to receive the
summons, that both were out at that time; and (2) on December 10, 2007, she was finally able to serve the summons
upon Michelle and Santos by substituted service through the driver of Santos’ husband.
In her Answer,6 Santos disclaimed knowledge of Michelle’s present address, or her whereabouts, adding in this regard
that the adverted Molave Drive residence was being rented out. As to be expected, Santos traversed Juan Ignacio’s
insinuation that she has conspired with Michelle to keep Ara and Ava out of his reach, or worse, hide them from him.
And in an obvious bid to deny Juan Ignacio of visitation rights, Santos raised the question of the court’s jurisdiction over
Michelle and then rattled off negative habits and character traits of Juan Ignacio as husband and father.
On December 18, 2007, Juan Ignacio moved for the issuance of provisional visitorial order. After a hearing on this
motion, the Makati RTC issued on December 21, 2007 an Order7 allowing Juan Ignacio to visit her daughters on
Christmas Day and New Year’s Day. The visiting grant came after the court, taking stock of the Officer’s Return,
declared that it has acquired jurisdiction over the person of Michelle, but despite being given the opportunity to file a
responsive pleading, she has failed to do so.
Christmas and New Year’s Day 2008 came and went, but Juan Ignacio was unable to see his little girls in those days for
reasons of little materiality to this narration.
On January 2, 2008, Michelle filed in SP PROC. Case No. M-6543 a Motion to Admit Answer and an Answer (with
Affirmative Defenses and With Very Urgent Ex-Parte Motion for Issuance of Protection Order).8cralawlibrary
In her Motion to Admit Answer, Michelle acknowledged learning from her mother about the delivery of the summons
and a copy of the petition for custody to their Anonas Residence. She, however, disregarded said summons thinking,
so she claimed, that it was improperly served upon her person. It was, she added, only upon learning of the issuance of
the provisional order of visitation rights that she gathered enough courage to come out to present her
side.9cralawlibrary
In her Answer, on the other hand, Michelle owned up sole responsibility for the decision not to allow her husband to
see their daughters. In support of her plea for the dismissal of his petition for custody, the denial of visitation
rights pendente lite, and in the meanwhile the ex parte issuance in her favor of a temporary protection order
(TPO),10 she recounted in lurid details incidents characterizing the painful life she and her children allegedly had to
endure from her husband whom she tagged as a drug user, sexual pervert, emotionally unstable and temperamental,
among other names. In her words, Juan Ignacio’s “wild, decadent, irresponsible lifestyle makes him unfit to exercise
parental authority and even enjoy visitation rights.”11cralawlibrary
During the January 4, 2008 hearing on Michelle’s prayer for a TPO, Judge Macaraig-Guillen expressed her bent to
maintain her jurisdiction over SP PROC. Case No. M-6543 and her disinclination to issue the desired TPO. In her Order
of even date, she directed that the ensuing observations she earlier made be entered into the
records:chanroblesvirtualawlibrary
1. She is not inclined to issue a [TPO] in favor of respondent at this time because she initially questioned the jurisdiction
of this Court over her person and only resorted to this Urgent Ex-Parte Motion for a Protective Order after she realized
that the Court had every intention of maintaining jurisdiction over this case x x x. It was emphasized that the Court
does not issue Protective Orders over a person who has not bothered to appear in Court x x x. Until the respondent
herself shows up in order to recognize the jurisdiction of this Court over her and in order to substantiate the allegations
in her Urgent Motion, there is no basis for this Court to address the matters contained in the said Urgent Ex-Parte
Motion.
2. Secondly, x x x even assuming for the sake of argument that the petitioner is, as respondent described him to be,
temperamental, violent, a habitual drug user and a womanizer, these qualities cannot, per se, prevent him from
exercising visitation rights over his children because these are rights due to him inherently, he being their biological
father.12
During the same hearing, the Makati RTC granted Juan Ignacio visitation rights on one (1) Saturday and Sunday in
January 2008 considering that he was unable to see his children on the days granted under the December 21, 2007
Order.
Subsequently, by its Order of January 21, 2008, as would later be effectively reiterated by another Order13 of March 7,
2008, the Makati RTC resolved to deny admission of Michelle’s answer to the petition for custody and declared her in
default, pertinently disposing thusly:chanroblesvirtualawlibrary
WHEREFORE, in view of the foregoing, respondent Araneta’s Motion to Admit Answer of January 2, 2008 is herein
DENIED for lack of merit.
Because of respondent Araneta’s failure to file her responsive pleading within the reglementary period, x x x
respondent Araneta is herein declared in DEFAULT in this proceedings.
As a consequence of this ruling, x x x the petitioner is allowed to present evidence ex-parte to substantiate the
allegation in his Petition x x x.14
On January 21, 2008 also, Michelle interposed a Motion to Withdraw Urgent Ex-Parte Motion for Protective Order,
there pointing out that no right of Juan Ignacio, if any, will be affected if the said urgent motion is withdrawn or
expunged from her answer. And obviously to sway the Makati RTC’s mind of the resulting insignificance of such
withdrawal, if approved, Michelle cited the ensuing observation thus made by the court during the hearing on January
4, 2008:chanroblesvirtualawlibrary
COURT:chanroblesvirtualawlibrary
Well, I agree, she should really appear but whether or not she should really appear here and substantiate her
allegations for the issuance of a protective order as far as I am concerned is irrelevant insofar as the enforcement of
petitioner’s visitation rights are concerned, this case is for custody, this is not a case for the issuance of protective
orders that is only a counter manifestation that she is seeking.15
It is upon the foregoing set of events and proceedings that Michelle, on March 25, 2008, instituted, pursuant to RA
9262, a Petition For Temporary and Permanent Protection Order16 (Petition for Protection Order) before the RTC in
Muntinlupa City, docketed as Civil Case No. 08-023. Thereat, Michelle claimed, among other things, that in the course
of their marriage, Juan Ignacio made her and their children engage in sexual acts inimical to their emotional, physical
and psychological development and well-being; that he engaged in perverted sexual acts with friends, victimizing her
and the children; that he has consistently failed and refused to support their family; and that he has a violent temper
and was consistently harassing and threatening her to get sole custody of the children. Michelle volunteered the
information that, per her therapist, she is suffering from Battered Woman’s Syndrome.17cralawlibrary
In the verification portion of her petition for protection order, Michelle stated that “[t]here is x x x a pending petition for
the custody of our children in the [RTC] Br. 60, Makati City, x x x Civil Case No. M-6543.”18cralawlibrary
The following events and proceedings then transpired:chanroblesvirtualawlibrary
1. On March 31, 2008, the Muntinlupa RTC granted Michelle’s prayer for a TPO which, at its most basic, ordered Juan
Ignacio (1) to stay away at a specified distance from Michelle and the children, inclusive of their present residence and
other places they frequent; and (2) to desist from calling or otherwise communicating with Michelle.
(2) On April 14, 2008, Juan Ignacio filed in Civil Case No. M-6543 a “Motion to Dismiss [Petition] with Prayer to Lift
[TPO]”19 anchored on several grounds, foremost of which are the following: (a) litis pendentia, Juan Ignacio noting in
this regard that the Makati RTC is competent to grant in its SP PROC. Case No. M-6543 the very same reliefs Michelle
seeks in Civil Case No. M-6543, pursuant to Sections 17 and 18 of the Rule on Custody of Minors;20 (b) in view of item (a)
above, the Makati RTC, having first assumed jurisdiction over identical subject matters, issues and parties, does so to
the exclusion of the Muntinlupa RTC; and (c) Michelle’s act of filing her petition for protection order before the
Muntinlupa RTC constitutes, under the premises, forum shopping, a practice proscribed owing to the possibility of
different courts arriving at conflicting decisions. Juan Ignacio would in fact stress that the TPO thus issued by the
Muntinlupa RTC directing him to stay at least a kilometer away from his children already conflicted with the Makati
RTC-issued provisional orders granting him visitation rights over them.
(3) By Order of May 12, 2008, the Muntinlupa RTC, conceding the exclusionary effect of the assumption at the first
instance by the Makati RTC of jurisdiction on the issue of custody on Ava and Ara and the likelihood of the issuance by
either court of clashing decisions, partially granted Juan Ignacio’s motion to dismiss and accordingly modified the TPO
issued on March 31, 2008. As thus modified, the protection order, or to be precise, the reliefs provided in favor of
Michelle in said TPO shall exclude from its coverage the orders issued by the Makati RTC in the exercise of its
jurisdiction on the pending custody case.
In another Order of June 30, 2008, the Muntinlupa RTC denied Juan Ignacio’s Motion for Reconsideration of the earlier
May 12, 2008 Order on the ground that such a motion is a prohibited pleading.21cralawlibrary
(4) Meanwhile, Michelle, in connection with certain orders of the Makati RTC in the custody case, denying her motion
to admit answer and its jurisdictional issue pronouncements, went to the CA on certiorari via a petition docketed
as CA-G.R. SP No. 103392.
On August 28, 2008, in CA-G.R. SP No. 103392, the CA rendered a judgment finding partly for Michelle, as petitioner,
it being the appellate court’s determination that the substituted service of summons upon her in the custody suit was
defective and irregular. Accordingly, the period within which Michelle was to file an answer, so the CA declared, did not
start to run and, hence, the denial by the Makati RTC of her motion to admit answer in the custody case and corollarily,
its holding that she is in default, by virtue of its Orders dated January 21, 2008 and March 7, 2008, were unwarranted
and ought to be nullified. Neither of the parties appealed the foregoing Decision. The CA Decision, thus, became final.
The fallo of the said CA Decision reads:chanroblesvirtualawlibrary
WHEREFORE, the foregoing considered, the instant petition is hereby PARTLY GRANTED. Accordingly, the assailed
Orders of 21 January 2008 and 7 March 2008 are REVERSED and SET ASIDE while the Orders of 29 February 2008 and
31 March 2008, in so far as the denial of petitioner’s Motion for Inhibition is concerned, are AFFIRMED. No costs.
SO ORDERED.22
Partly, the CA wrote:chanroblesvirtualawlibrary
x x x [T]he pivotal issue x x x is whether the [Makati RTC] had acquired jurisdiction over the person of the petitioner,
and if so, whether the disposition of the respondent [Makati RTC] judge in declaring her in default has factual and legal
basis. Admittedly, the summons and the copy of the petition were not personally served upon the petitioner as
explicitly required under Section 5 of A.M. No. 03-04-04-SC x x x.
Indeed, the records would show that the summons and the petition were served upon the petitioner x x x by
substituted service as they were received by x x x a certain Nilo Santos at said Anonas residence, an address belatedly
supplied by private respondent himself. However, x x x petitioner had actually been informed of such substituted
service sometime in the second week of December 2007 and that she had opted to simply disregard the same since she
had thought that such service is invalid x x x.
Despite the fact that she had known of the existence of the petition a quo and the fact that the service of summons had
been made upon her by substituted service, petitioner made a decision whether it be an informed one or not, not to
move for its dismissal on the ground of lack of jurisdiction over her person x x x. It was only upon the issuance of the
Provisional Order that she had opted to participate in the proceeding by filing her responsive pleading to the petition.
Unfortunately though, the respondent [Makati RTC] judge denied her motion to admit and declared her in default on
the basis of its disquisition that the failure of the petitioner to file her responsive pleading is not due to excusable
negligence or other circumstances beyond her control.
Still and all, it cannot be denied that the trial court, previous to or at the time the petitioner had filed her responsive
pleading, has yet to acquire jurisdiction over the person of the latter. The Rule on Custody of Minors specifically
requires that service of summons be made personally on the respondent and yet the trial court served the same
upon the person of the petitioner by substituted service without proof of exhaustion of means to personally serve the
same or the impossibility thereof to warrant the extraordinary method of substituted service.
Surely, while the Rule on Custody of Minors provides that the Rules of Court shall apply suppletorily in custody
proceedings, the express provision requiring personal service and the very nature of custody cases should have caused
the respondent judge x x x to adhere to the evident intention of the rules, that is to have both parties in a custody case
participate therein.
Regrettably, the respondent judge, relying on the Officer’s Return x x x, precipitately declared x x x that the trial court
had already acquired jurisdiction over the person of the petitioner. x x x
Sadly though, respondent judge, in grave abuse of discretion, assumed jurisdiction over the person of the petitioner
and proceeded to act on the petition. Worse, x x x the respondent judge denied the motion to admit filed by the
petitioner and declared the latter in default. While the petitioner had already submitted herself to the jurisdiction of
the trial court by way of her voluntary act of filing a responsive pleading to the petition a quo, the period to file said
responsive pleading, as already stated, in so far as the petitioner is concerned has yet to commence, and thus, the filing
of her motion to admit answer cannot plausibly be considered as to have been filed beyond the reglementary period. In
this light, the denial of said motion and the issuance of the default order are unwarranted and are reversible errors of
jurisdiction x x x.23 (Emphasis added.)
(5) From the adverse May 12, 2008 and June 30, 2008 Orders of the Muntinlupa RTC in Civil Case No. M-6543, Juan
Ignacio also repaired to the CA on a petition for certiorari. Docketed as CA-G.R. SP. No. 105442, the petition prayed
that the Muntinlupa RTC be enjoined from further taking cognizance of Michelle’s protection order petition as the said
case will infringe or intrude upon the Makati RTC’s disposition of the custody case.24cralawlibrary
Michelle opposed and sought the dismissal of the certiorari petition on the ground that it is a prohibited pleading under
Sec. 22(j) of RA 9262.
Eventually, the CA issued, on May 11, 2009, the assailed Decision which, on one hand, found Michelle guilty of forum
shopping, a sufficient cause for summary dismissal of a case, but viewed, on the other, Juan Ignacio’s petition for
certiorari as a prohibited pleading which, ordinarily, would then render it dismissible. In the veritable clash under the
premises of the effects of forum shopping and the rule on prohibited pleading, the CA nonetheless ruled for Juan
Ignacio, as petitioner, pertinently disposing as follows:chanroblesvirtualawlibrary
ACCORDINGLY, the petition is GIVEN DUE COURSE. Civil Case No. 08-023 is ORDERED DISMISSED and all
issuances made by [RTC], Branch 207, Muntinlupa City, are declared void. The [RTC] Branch 60, Makati City
is DIRECTED to proceed with the case with dispatch.25
The CA extricated itself from the foregoing legal bind on the basis of the following ratiocination and the plausible
suppositions interjected thereat:chanroblesvirtualawlibrary
In resolving the present petition, the Court had to consider two (2) things. First, pursuant to Section 22 (j) of A.M. No.
04-10-11-SC, a petition for certiorari against any interlocutory order issued by a family court is a prohibited pleading.
Accordingly, if this Court were to strictly follow [said] Section 22 (j) x x x, then the present petition for certiorari must
be dismissed. Second, the Private Respondent had first moved that the Makati RTC issue a TPO and that when her
motion was denied, she filed a petition before the Muntinlupa RTC asking that the said court issue a TPO. In short, the
Private Respondent committed forum-shopping. And when forum-shopping is committed, the case(s) must be
dismissed with prejudice.
Thus, it falls upon this Court to balance the conflict.
This Court notes that the Muntinlupa RTC tried to balance out the conflicting jurisdictional issues with the Makati RTC
by stating in its first assailed Order that the reliefs provided in favor of [herein private respondent] in the [TPO] x x x
are modified, to exclude from its coverage those Orders issued by the Makati Court in the exercise of its
jurisdiction on the pending custody case. Be that as it may, the Muntinlupa RTC itself recognized the jurisdiction of
the Makati RTC and that the case before it would, in fact, impinge upon the jurisdiction of the latter court when it
stated that the disposition on the matter by this Court may result in the possibility of conflicting decisions/orders.
In short, the Muntinlupa RTC itself acknowledges the fact that any future issuances, including its eventual decision
on the petition before it, would affect the custody case pending before the Makati RTC and might even result to
conflicting decisions. Thus, in the interest of judicial stability, it is incumbent upon this Court to ensure that this
eventuality will not come to pass.
xxxx
To test the argument that a petition for certiorari is an absolutely prohibited pleading, let us push the present case to
its logical extreme.
What if a woman claiming to be a battered wife leaves one of her children with her parents and another with a sibling
of hers? She then went to another place, transferred residency, and filed a petition for TPO. Her parents [and sibling],
who reside in another locality, likewise files a petition for TPO in behalf of the grandchild [and nephew/niece entrusted]
in their custody. x x x What if the family courts refuse consolidation? Is the man devoid of any remedy and would have
to spend his time shuttling between three (3) localities since a petition for certiorari is a prohibited pleading?
What if the woman went to another locality purposely in order to find a friendly venue x x x? Again, if we are to strictly
construe Section 22 (j) of A.M. No. 04-10-11-SC that man would just have to bear the consequences since he cannot
seek the extraordinary writ of certiorari. Or, what if both of the spouses do not reside within the court’s jurisdiction, but
the judge refuses to grant a motion to dismiss due to his zeal? What remedy would a man have since he cannot resort
to a petition for certiorari?
The rules are not sacrosanct. If they go in the way of the smooth and orderly administration of justice, then magistrates
should apply their best judgment. If not, courts would be so hideously bound or captives to the stern and literal
provisions of the law that they themselves would, wittingly or otherwise, become administrators of injustice.
On the one hand, this Court hereby notes that Private Respondent herself recognizes the jurisdiction of the Makati
RTC to issue a TPO. It was only after the Makati RTC denied her prayer for a TPO when she filed a petition before
the Muntinlupa RTC asking for the issuance of a TPO. It is thus highly disturbing that the Private Respondent sought
another forum in order to try to obtain a favorable judgment. Thus, as aptly pointed out by the Petitioner, some sort of
forum-shopping was committed.
On the other hand, if the Court were to dismiss the present petition on the ground that a petition for certiorari is a
prohibited pleading, it would have to close its eyes to the fact that the Private Respondent wilfully committed forum-
shopping. To dismiss the present petition would, in effect, “reward” her for this negative act. This, the Court cannot
countenance.
xxxx
Accordingly, x x x Civil Case No. 08-023 must not be allowed to proceed any further. Imperatively, to ensure that the
jurisdiction of the Makati RTC remains unshackled, all of the issuances of the Muntinlupa RTC should, by all means, be
nullified.26 (Emphasis added.)
The CA denied Michelle’s motion for reconsideration per its equally assailed Resolution of December 28, 2009.
Aggrieved, Michelle, for herself and for her minor daughters, filed the instant recourse, her submissions revolving on
the twin issues of forum shopping and the prohibition under Sec. 22 of the Rule on Violence Against Women and
Children27 against the filing of petitions for certiorari to defeat TPOs issued to promote the protection of victims of
violence against women and their children.
Michelle presently argues that the assailed Decision of the CA is based on an erroneous appreciation of the facts of the
case. To her, there was no forum shopping when she filed her Petition for Protection Order in the Muntinlupa RTC
while the custody case was pending in the Makati RTC. Her stated reason: the absence in both cases of identity of
parties and rights asserted, on top of which the reliefs sought and prayed for are different and not founded on the same
set of facts.
To downplay the application of the litis pendentia principle, she argues that it was impossible for her to apply for and
secure a protective order under RA 9262 in the custody case before the Makati RTC being, first, a respondent, not a
petitioner in the Makati case; and second, the venue for an application for protection order is, under RA 9262, the place
where the woman or the offended party resides, which in her case is Muntinlupa.28cralawlibrary
Michelle would invite attention to her having withdrawn her motion for protective order in the custody case before the
Makati RTC before she filed her Petition for Protective Order with the Muntinlupa RTC. Additionally, she points to the
CA’s Decision of August 28, 2008 in CA-G.R. SP No. 103392 (2008 CA Decision), which held that the Makati RTC did not
acquire jurisdiction over her so that all issuances of the Makati RTC were void. All these, Michelle claims, argue against
the existence of litis pendentia.
The Issue
The issue to be resolved in this case is whether or not petitioner, in filing her Petition for Protection Order before the
Muntinlupa RTC, violated the rule on forum shopping, given the pendency of the respondent’s Petition for Custody
before the Makati RTC and considering incidentally that she filed said petition for protection order after the Makati
RTC had denied her application for protection order in the custody case.
The Court’s Ruling

Before anything else, however, the Court wishes to point out disturbing developments in this proceeding which ought
not to be swept under the rug on the simplistic pretext that they may not be determinative of the outcome of this case.
But first, some basic premises on record.
First, as correctly stated in this petition, Michelle withdrew her Ex Parte Motion for Issuance of Protective Order in the
custody case prior to her filing of her Petition for Protection Order with the Muntinlupa RTC. It should be made clear,
however, that she filed said motion to withdraw on January 21, 2008, or afterthe Makati RTC, in its Order dated
January 4, 2008, had, for all intents and purposes, denied the said ex parte motion. To recapitulate, the Makati RTC
judge made it of record that she was not inclined to issue a protective order in favor of a person, i.e., petitioner
Michelle, who has not bothered to appear in court, even assuming, she adds, that the person against whom the
protection order is directed, i.e., Juan Ignacio, is prone to violence, a drug user and a womanizer.
Second, there is absolutely nothing in the 2008 CA Decision declaring that all issuances of the Makati RTC were void. In
order to bolster her position that the rule against forum shopping was not breached in this case, Michelle matter-of-
factly alleged in this recourse that since in the 2008 CA Decision it was ruled that the Makati RTC did not acquire
jurisdiction over her person due to the irregularity in the service of summons, then “all the issuances or orders of [the
Makati RTC in the custody case] were void;”29 and “[t]herefore, there was no litis pendentia to begin with since the RTC
of Makati City Branch 60 had no jurisdiction from the start.” 30cralawlibrary
For perspective, the 2008 CA Decision did not rule that the Makati RTC did not acquire jurisdiction over Michelle. Quite
the contrary. As a matter of record, the CA in that disposition found and thus declared Michelle to have voluntarily
submitted herself to the jurisdiction of the Makati RTC when she filed her Answer in SP. PROC. Case No. 6543 on
January 2, 2008. But to be precise about things, the CA in that 2008 Decision found, as having been tainted with of
grave abuse of discretion, only that part of the Makati RTC’s disposition denying Michelle’s motion to admit answer for
belated filing and the consequent default order. Along this line, the CA merely nullified the Makati RTC’s Orders dated
January 21, 2008 and March 7, 2008 which declared Michelle in default and denied her motion for reconsideration,
respectively. The ensuing excerpts of the 2008 CA Decision speak for themselves:chanroblesvirtualawlibrary
Sadly though, respondent judge, in grave abuse of discretion, assumed jurisdiction over the person of the petitioner
and proceeded to act on the petition. Worse, without due regard to the plain intention of the rule in ensuring the
adjudication of the controversy surrounding a custody case based on its merits, the respondent judge denied the
motion to admit filed by the petitioner and declared the latter in default. While the petitioner had already submitted
herself to the jurisdiction of the trial court by way of her voluntary act of filing a responsive pleading to the
petition a quo, the period to file said responsive pleading, as already stated, in so far as the petitioner is
concerned has yet to commence, and thus, the filing of her motion to admit answer cannot plausibly be
considered as to have been filed beyond the reglementary period. In this light, the denial of said motion and the
issuance of the default order are unwarranted and are reversible errors of jurisdiction, therefore correctible by a
writ of certiorari. (Emphasis supplied.)
xxxx
WHEREFORE, the foregoing considered, the instant petition is hereby PARTLY GRANTED. Accordingly, the assailed
Orders of 21 January 2008 and 7 March 2008 are REVERSED and SET ASIDE while the Orders of 29 February 2008 and
31 March 2008, in so far as the denial of petitioner’s Motion for Inhibition is concerned, are AFFIRMED. No costs.
SO ORDERED.31
Withal, the Court finds it downright offensive and utterly distasteful that petitioner raised the following as one of the
issues in this appellate proceeding:chanroblesvirtualawlibrary
Whether or not the petitioners are guilty of forum-shopping when the Petition for Custody of private respondent
Araneta was dismissed by the Court of Appeals on the ground that the RTC of Makati City Branch 60 did not acquire
jurisdiction because the summons was not served personally upon herein Petitioner Michelle Lana Brown
Araneta.32 (Emphasis supplied.)
Petitioner’s above posture smacks of bad faith, taken doubtless to deceive and mislead the Court. Indeed, nothing in
either the body or the fallo of the 2008 CA Decision would yield the conclusion that the petition for custody is being
dismissed, as petitioner unabashedly would have the Court believe.
Was there forum shopping? Did petitioner forum shop?
A circumstance of forum shopping occurs when, as a result or in anticipation of an adverse decision in one forum, a
party seeks a favorable opinion in another forum through means other than appeal or certiorari by raising identical
causes of action, subject matter and issues. Stated a bit differently, forum shopping is the institution of two or more
actions involving the same parties for the same cause of action, either simultaneously or successively, on the
supposition that one or the other court would come out with a favorable disposition.33 An indicium of the presence of,
or the test for determining whether a litigant violated the rule against, forum shopping is where the elements of litis
pendentia are present or where a final judgment in one case will amount to res judicata in the other case.34cralawlibrary
Litis pendentia,35 as a ground for the dismissal of a civil suit, refers to that situation wherein another action is pending
between the same parties for the same cause of action, such that the second action becomes vexatious and
unnecessary.36 For the bar of litis pendentia to be invoked, the concurring requisites must be present: (1) identity of
parties, or at least such parties as represent the same interests in both actions; (2) identity of rights asserted and relief
prayed for, the relief being founded on the same facts; and (3) the identity of the two preceding particulars is such that
any judgment rendered in the pending case, regardless of which party is successful would amount to res judicata in the
other.37cralawlibrary
Thus, it has been held that there is forum shopping (1) whenever as a result of an adverse decision in one forum, a party
seeks a favorable decision (other than by appeal or certiorari) in another; or (2) if, after he has filed a petition before the
Supreme Court, a party files another before the CA since in such case said party deliberately splits appeals “in the hope
that even as one case in which a particular remedy is sought is dismissed, another case (offering a similar remedy)
would still be open”; or (3) where a party attempts to obtain a preliminary injunction in another court after failing to
obtain it from the original court.38cralawlibrary
The evil sought to be avoided by the rule against forum shopping is the rendition by two competent tribunals of two
separate and contradictory decisions. Unscrupulous party litigants, taking advantage of a variety of competent
tribunals, may repeatedly try their luck in several different fora until a favorable result is reached. To avoid the resultant
confusion, the Court adheres to the rules against forum shopping, and a breach of these rules results in the dismissal of
the case.39cralawlibrary
Considering the above doctrinal pronouncements on forum shopping, We find all the badges of this deplorable,
docket-clogging practice present in this case.
As a result or in anticipation of an adverse ruling of the Makati RTC, petitioner sought the favorable opinion of the
Muntinlupa RTC
As discussed above, the presiding judge of the Makati RTC, in the custody case, made of record that she was not
inclined to issue a protection order in favor of Michelle because she did not bother to appear in Court and that the
allegations against Juan Ignacio cannot, per se, prevent him from exercising visitation rights over his children. After this
adverse ruling, Michelle sought the favorable opinion of the Muntinlupa RTC by filing an independent Petition for
Protection Order.
The cases have identical parties
Clearly, the Petition for Custody and the Petition for Protection Order have the same parties who represent the same
interests. The fact that Ava and Ara, who are parties in the Petition for Protection Order, are not impleaded in the
Petition for Custody is of no moment because they are precisely the very subjects of the Petition for Custody and their
respective rights are represented by their mother, Michelle. In a long line of cases on forum shopping, the Court has
held that absolute identity of the parties is not required, it being enough that there is substantial identity of the
parties40 or at least such parties represent the same interests in both actions. It does not matter, as here, that in the
Petition for Custody, Juan Ignacio is the petitioner and Michelle is the respondent while in the Petition for Protection
Order, their roles are reversed. That a party is the petitioner in one case and at the same time, the respondent in the
other case does not, without more, remove the said cases from the ambit of the rules on forum shopping. So did the
Court hold, for example in First Philippine International Bank v. Court of Appeals, that forum shopping exists even in
cases like this where petitioners or plaintiffs in one case were impleaded as respondents or defendants in
another.41 Moreover, this Court has constantly held that the fact that the positions of the parties are reversed, i.e., the
plaintiffs in the first case are the defendants in the second case or vice versa, does not negate the identity of parties for
purposes of determining whether the case is dismissible on the ground of litis pendentia.42cralawlibrary
The rights asserted and reliefs prayed for are based on the same facts
Further, the rights asserted and reliefs prayed for in Civil Case No. 08-023 are practically based on the same facts and
are so intertwined with that in SP. PROC. Case No. 6543, such that any judgment rendered in the pending cases,
regardless of which party is successful, will amount to res judicata.
In the custody case, Juan Ignacio mainly asserted his right, as father, to visit his children and enjoy joint custody over
them. He prayed for a judgment granting him joint custody, or alternatively, permanent visitation rights over Ava and
Ara.
In disposing of the custody case, the Makati RTC is expected, following the rationale behind the issuance of the Rule on
Custody of Minors, to consider, among others, the best interest of the children,43 any threat or danger of physical,
mental, sexual or emotional violence which endangers their safety and best interest, their health, safety and
welfare,44 any history of child or spousal abuse by the person seeking custody,45 habitual use of alcohol, dangerous
drugs or regulated substances,46 marital misconduct,47 and the most suitable physical, emotional, spiritual,
psychological and educational environment for the holistic development and growth of the minor. 48cralawlibrary
Michelle’s answer and motion for issuance of protection order in the custody case contained allegations of
psychological, sexual, emotional and economic abuse she and her children suffered at the hands of Juan Ignacio to
defeat his asserted right to have joint custody over Ava and Ara and as argument that the grant of visitation rights in
his favor will not be in the best interest of the children. These allegations of abuse were in substance the very same
ones she made in her Petition for Protection Order.
Juan Ignacio’s rights and reliefs prayed for are dependent on and, to be sure, would be predicated on the question of
whether or not granting him the desired custody or at least visitations rights over the children are in their best interest.
In deciding this issue, the Makati RTC will definitely have to reckon with and make a finding on Michelle’s allegations of
psychological, sexual, emotional and economic abuse.
Similarly, the Muntinlupa RTC must necessarily consider and make a determination based on the very same facts and
allegations on whether or not Michelle shall be entitled to the relief she prayed for in her own petition, in particular, a
permanent protection order against Juan Ignacio.
Elements of litis pendentia are present and any judgment in the pending cases would amount to res judicata
Any judgment rendered in the pending cases, regardless of which party is successful, would amount to res judicata.
Consider: If the Makati RTC were to grant Juan Ignacio’s petition for custody, this would necessarily mean that it would
be in the best interest of the children if he were allowed to visit and spend time with them and that granting Juan
Ignacio visitation rights would not pose any danger or threat to the children.
On the other hand, a grant by the Muntinlupa RTC of Michelle’s prayer for a permanent protection order would
presuppose at the minimum that it would be to the children’s best interest if Juan Ignacio is directed to keep away from
them, necessary implying that he is unfit even to visit Ara and Ava. Conversely, if Juan Ignacio’s Petition for Custody
were denied, then it would mean that the Makati RTC gave weight and credence to Michelle’s allegations of abuse and
found them to be in the best interest of the children to bar Juan Ignacio from visiting them. Thus, the Muntinlupa RTC
should have no ground to deny Michelle’s Petition for Protection Order pending before it.
The evil sought to be avoided by the rule against forum shopping is present in this case
The grave mischief sought to be avoided by the rule against forum shopping, i.e., the rendition by two competent
tribunals of two separate and contradictory decisions, is well-nigh palpable in this case. If the Muntinlupa RTC were to
rule that Michelle was entitled to a Protection Order, this would necessarily conflict with any order or decision from the
Makati RTC granting Juan Ignacio visitation rights over Ava and Ara. As aptly pointed out by Juan Ignacio in his
Comment such a conflict had already occurred, as the TPO issued by the Muntinlupa RTC actually conflicted with the
Orders issued by the Makati RTC granting Juan Ignacio temporary visitation rights over his children. There now exists
an Order from the Muntinlupa RTC which, among others, directed Juan Ignacio to stay at least one (1) kilometer away
from Ava and Ara, even as the Makati RTC recognized, in two (2) separate Orders, that he had the right, albeit
temporarily to see his children.49cralawlibrary
In fact, Michelle was very much aware of the possible conflicts between the orders of Makati RTC and Muntinlupa RTC.
In her Opposition (to Urgent Motion for Immediate Enforcement of Visitation Orders dated December 21, 2007 and
January 4, 2008), she recognized that the granting of visitation rights in favor of Juan Ignacio would conflict the TPO
and, therefore, the Makati Court would be rendering a conflicting decision with that of the Muntinlupa RTC,
viz:chanroblesvirtualawlibrary
x x x There is therefore, no conflict of jurisdiction in this case but since the petitioner filed a Petition for Certiorari in the
Court of Appeals, which includes the issue of custody, we submit that the matter of custody pendente lite including
visitation, should not and can not be resolved by this Honorable Court without conflicting with the Temporary
Protection Order of a co-equal court, the RTC of Muntinlupa City. x x x
xxxx
If the petitioner is granted visitation rights, the Honorable Court, with due respect would be allowing him to violate the
TPO against him; the Honorable Court would then be rendering a conflicting decision.50 (Emphasis supplied.)
No less than the Muntinlupa RTC itself recognized the resulting aberration of its orders conflicting with that/those of
the Makati RTC. As it were, the former, in its Order of May 12, 2008, resolving Juan Ignacio’s Motion to Dismiss with
Prayer to Lift Temporary Protection Order, categorically stated that there may be orders in the protection order case
that would possibly conflict with the orders issued by the Makati RTC in the custody case. So it was that to address
these possible conflicts, the Muntinlupa RTC partially granted Juan Ignacio’s Motion to Dismiss by modifying the reliefs
provided under the TPO by excluding from its coverage those orders issued by the Makati RTC in the exercise of its
jurisdiction over the custody case. Pursuant to the foregoing Order of the Muntinlupa RTC, the December 21, 2007 and
January 4, 2008 Orders of the Makati RTC, granting Juan Ignacio visitation rights on Christmas Day and New Year’s Day
and one (1) Saturday and Sunday in January 2008, are not covered by the reliefs under the TPO. Hence, despite the
TPO directing Juan Ignacio to stay at least one (1) kilometer away from Ava and Ara, Juan Ignacio would still have the
right to see his children by virtue of the orders issued by the Makati RTC granting him temporary visitation rights. The
said Muntinlupa RTC Order reads:chanroblesvirtualawlibrary
Based on the pleadings filed, this (Muntinlupa) Court holds that since the Makati Court first acquired jurisdiction over
the issue of custody, the latter continues to exercise it, so that any disposition on the matter by this Court may
result in the possibility of conflicting decisions/orders.
Wherefore, this Court partially grants respondent’s Motion to Dismiss insofar as those matters covered by A.M. No. 03-
04-04-SC, Rule on Custody of Minors and Writ of Habeas corpus in Relation to Custody of Minors are concerned, which
are within the jurisdiction of the Makati Court, but continues to take cognizance on matters not included therein (A.M.
No. 03-04-04-SC) but within the protective mantle of R.A. No. 9262.
Consequently, the reliefs provided in favor of the petitioner in the Temporary Protection Order dated March 31, 2008
are modified, to exclude from its coverage those Orders issued by the Makati Court in the exercise of its jurisdiction on
the pending custody case.
The motions to lift the temporary protection order (except on those matter stated above) and to cite petitioner in
contempt of court are denied for lack of merit.51 (Emphasis supplied.)
Verily, the Muntinlupa RTC was aware that its issuances and its eventual final disposition on the Petition for Protection
Order would affect the custody case before the Makati RTC, if not totally clash with the latter court’s decision. We
agree with the CA’s ensuing observation.
This Court notes that the Muntinlupa RTC tried to balance out the conflicting jurisdictional issues with the Makati RTC
by stating in its first assailed Order that the reliefs provided in favor of [herein private respondent] in the [TPO] dated
March 31, 2008 are modified, to exclude from its coverage those Orders issued by the Makati Court in the exercise of
its jurisdiction on the pending custody case. Be that as it may, the Muntinlupa RTC itself recognized the jurisdiction of
the Makati RTC and that the case before it would, in fact, impinge upon the jurisdiction of the latter court when it
stated that the disposition on the matter by this Court may result in the possibility of conflicting decisions/orders. In
short, the Muntinlupa RTC itself acknowledges the fact that any future issuances, including its eventual decision
on the petition before it, would affect the custody case pending before the Makati RTC and might even result to
conflicting decisions. Thus, in the interest of judicial stablility, it is incumbent upon this Court to ensure that this
eventuality will not come to pass.52
Civil Case No. 08-023 should, thus, be dismissed with prejudice for being a clear case of forum shopping.
WHEREFORE, premises considered, the appealed May 11, 2009 Decision and the December 28, 2009 Resolution of the
Court of Appeals in CA-G.R. SP. No. 105442, particularly insofar as these ordered the dismissal of subject Civil Case No.
08-023 and the nullification of the orders made in that case, are hereby AFFIRMED.
No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 173331 December 11, 2013
FLORPINA BENAVIDEZ, Petitioner,
vs.
NESTOR SALVADOR, Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari assailing the November 22, 2005 Decision1 and the June 8, 2006 Amended
Decision2 of the Court of Appeals (CA). in CA-G.R. CV No. 73487, which affirmed and modified the June 1, 2001
Decision3 of the Regional Trial Court. Branch 74, Anti polo City (RTC-Antipolo) in Civil Case No. 00-5660.
The Facts:
Sometime in February 1998, pet1t1oner Florpina Benavidez (Benavidez) approached and asked respondent Nestor
Salvador (Salvador) for a loan that she would use to repurchase her property in Tanay, Rizal which was foreclosed by
the Farmers Savings and Loan Bank, Inc. (Farmers Savings). After inspecting the said property, Salvador agreed to lend
the money subject to certain conditions. To secure the loan, Benavidez was required to execute a real estate mortgage,
a promissory note and a deed of sale. She was also required to submit a special power of attorney (SPA) executed and
signed by Benavidez’s daughter, Florence B. Baning (Baning), whom she named as the vendee in the deed of absolute
sale of the repurchased property. In the SPA, Baning would authorize her mother to obtain a loan and to constitute the
said property as security of her indebtedness to Salvador.
Pursuant to the agreement, Salvador issued a manager’s check in favor of Benavidez in the amount of One Million
Pesos (₱1,000,000.00) and released Five Hundred Thousand Pesos (₱500,000.00) in cash. For the loan obtained,
Benavidez executed a promissory note, dated March 11, 1998.
Benavidez, however, failed to deliver the required SPA. She also defaulted in her obligation under the promissory note.
All the postdated checks which she had issued to pay for the interests were dishonored. This development prompted
Salvador to send a demand letter with a corresponding statement of account, dated January 11, 2000. Unfortunately,
the demand fell on deaf ears which constrained Salvador to file a complaint for sum of money with damages with
prayer for issuance of preliminary attachment.
On May 4, 2000, Benavidez filed a motion to dismiss on the ground of litis pendentia. She averred that prior to the filing
of the case before the RTC-Antipolo, she had filed a Complaint for Collection for Sum of Money, Annulment of Contract
and Checks with Prayer for Preliminary Injunction and Temporary Restraining Order against Salvador; his counsel, Atty.
Nepthalie Segarra; Almar Danguilan; and Cris Marcelino, before the Regional Trial Court, Branch 80, Morong,
Rizal (RTC-Morong). The motion to dismiss, however, was denied by RTC-Antipolo on July 31, 2000. On September 15,
2000, Benavidez filed her answer with counterclaim. A pre-trial conference was scheduled on May 2, 2001 but she and
her counsel failed to appear despite due notice. Resultantly, upon motion, Salvador was allowed by the trial court to
present evidence ex parte.
On June 1, 2001, RTC-Antipolo decided the subject case for Salvador. It found that indeed Benavidez obtained a loan
from Salvador in the amount of ₱1,500,000.00. It also noted that up to the time of the rendition of the judgment, she
had failed to settle her obligation despite having received oral and written demands from Salvador. Also, the trial court
pointed out that the evidence had shown that as of January 11, 2000, Benavidez’s obligation had already reached the
total amount of ₱4,810,703.21.4 Thus, the fallo of the said decision reads:
WHEREFORE, in view of the foregoing premises, defendant is hereby directed to pay plaintiff the following:
1. The amount of ₱4,810,703.21, covering the period from June 11, 1998 to January 11, 2000, exclusive of
interest and penalty charges until the said amount is fully paid;
2. The amount of ₱50,000.00 as exemplary damages;
3. The sum of 25% of the total obligation as and by way of attorney’s fees; and,
4. Cost of suit.
SO ORDERED.5
Benavidez filed a motion for reconsideration but unfortunately for her, RTC-Antipolo, in its August 10, 2001
Order,6denied her motion for lack of merit.
Frustrated, Benavidez appealed the June 1, 2001 Decision and the August 10, 2001 Order of RTC-Antipolo to the CA.
She argued, in chief, that early on, the trial court should have dismissed the complaint for collection of sum of money
filed by Salvador on grounds of litis pendentia and erroneous certification against forum shopping. She claimed that
prior to the filing of the said complaint against her, she had already filed a complaint for the annulment of the
promissory note evidencing her obligation against Salvador. According to her, there was substantial identity in the
causes of action and any result of her complaint for annulment would necessarily affect the complaint for collection of
sum of money filed against her. She added that Salvador never informed RTC-Antipolo about the pending case before
RTC-Morong, rendering his certification on forum shopping erroneous. 7
Benavidez also argued that RTC-Antipolo erred in refusing to re-open the case for pre-trial conference and disallowing
her to present evidence. She added that the absence of her counsel on the scheduled pre-trial conference caused her
substantial prejudice. Though she was not unmindful of the general rule that a client was bound by the mistake or
negligence of her counsel, she insisted that since the incompetence or ignorance of her counsel was so great and the
error committed was so serious as it prejudiced her and denied her day in court, the litigation should have been
reopened to give her the opportunity to present her case.8
The CA was not moved.
The CA reasoned out that RTC-Antipolo did not err in allowing Salvador to present his evidence ex-parte in accordance
with Section 5, Rule 18 of the 1997 Rules of Court.9 Benavidez and her counsel failed to show a valid reason for their
non-appearance at the pre-trial and so their absence was not excusable. Her counsel’s negligence, as Benavidez cited,
was not among the grounds for new trial or reconsideration as required under Section 1, Rule 37 of the Rules of Civil
Procedure. The CA emphasized that well-entrenched was the rule that negligence of counsel bound his client. She was
bound by the action of his counsel in the conduct of the trial. The appellate court also took note that she herself was
guilty of negligence because she was also absent during the pre-trial despite due notice. Thus, Benavidez’s position
that the trial court should have reopened the case was untenable.10
With regards to the grounds of litis pendentia and forum shopping cited by Benavidez, the CA wrote that there was no
identity of the rights asserted in the cases filed before RTC-Morong and RTC-Antipolo. The reliefs prayed for in those
cases were different. One case was for the annulment of the promissory note while the other one was a complaint for
sum of money. There could be identity of the parties, but all the other requisites to warrant the dismissal of the case on
the ground of litis pendentia were wanting.11 Thus, on November 22, 2005, the CA affirmed in toto the decision of RTC-
Antipolo.12
Feeling aggrieved by the affirmance, Benavidez filed a motion for reconsideration on the ground that the same was
contrary to law and jurisprudence; that litis pendentia existed which resultantly made his certification on non-forum
shopping untruthful; and, that her absence during the pre-trial was justified.
On June 08, 2006, the CA issued the Amended Decision, holding that the motion was partly meritorious. Accordingly, it
modified its earlier decision by deleting the award of exemplary damages and attorney’s fees because the award
thereof was not supported by any factual, legal and equitable justification. Thus, the decretal portion of the Amended
Decision reads:
WHEREFORE, the motion for reconsideration is PARTIALLY GRANTED. The Decision dated November 22, 2005
is MODIFIED by DELETING the award of exemplary damages and attorney’s fees.
SO ORDERED. 13
Still unsatisfied, Benavidez comes before the Court via a petition for review under Rule 45 of the Rules of Court, raising
the following issues:14
1. Whether or not the present case is barred by Civil Case No. 00-05660 which is pending before the
RTC-Morong, Rizal.
2. Whether or not the case is dismissible because the certification against forum shopping was
defective.
3. Whether or not the executed promissory note is void for being unconscionable and shocking to the
conscience.
4. Whether or not the CA erred in holding that the order allowing respondent to present evidence ex-
parte and submitting the case for decision is valid despite the fact that default judgment is looked
upon with disfavor by this Court.
In fine, the core issue is whether or not the present case should have been dismissed on the ground of litis pendentia.
Benavidez argues that the outcome of the case, before RTC-Morong, where the annulment of the promissory note was
sought, would have been determinative of the subject case before RTC-Antipolo where the enforcement of the
promissory note was sought. If RTC-Morong would rule that the promissory note was null and void, then the case with
RTC-Antipolo would have no more leg to stand on. He concludes that the requisites of litis pendentia were indeed
present: first, both Benavidez and Salvador were parties to both complaints; second, both complaints were concerned
with the promissory note; and third, the judgment in either of the said complaints would have been determinative of
the other.15
Benavidez further claims that the case should have been dismissed because the certification on forum shopping which
accompanied Salvador’s complaint was defective. He declared therein that he was not aware of any pending case
before any court similar to the one he was filing, when in truth and in fact, there was one. This fact could not be denied
because summons in the case before RTC-Morong was served on him and he even filed his answer to the said
complaint.16
Benavidez also pushes the argument that RTC-Antipolo committed an error of law when it allowed Salvador to present
evidence ex-parte and eventually decided the case without waiting to hear her side. The trial court should have been
more lenient. If there was any one to be blamed for her predicament, it should have been his counsel, Atty. Rogelio
Jakosalem (Jakosalem). His counsel was negligent in his duties when he did not bother to file the necessary pre-trial
brief and did not even appear at the pre-trial conference. He did not assist her either in filing a motion for
reconsideration. Benavidez explains that Atty. Jakosalem did not appear on the scheduled pre-trial conference because
he got mad at her when she refused to heed his advice to settle when the trial court granted Salvador’s motion for
issuance of preliminary attachment. Under the circumstances, she should have been exempted from the rule that the
negligence of counsel binds the client.17
For her part, she failed to appear because she was then suffering from illness. Contrary to the finding of the CA, her
medical certificate was not belatedly submitted. She submitted it within a reasonable period after she received the
order allowing Salvador to present evidence ex-parte and considering the case for resolution thereafter.18
The Court’s Ruling
In litis pendentia, there is no
hard and fast rule in
determining which of the two
actions should be abated
Litis pendentia is a Latin term, which literally means "a pending suit" and is variously referred to in some decisions as lis
pendens and auter action pendant. As a ground for the dismissal of a civil action, it refers to the situation where two
actions are pending between the same parties for the same cause of action, so that one of them becomes unnecessary
and vexatious. It is based on the policy against multiplicity of suits.19
Litis pendentia exists when the following requisites are present: identity of the parties in the two actions; substantial
identity in the causes of action and in the reliefs sought by the parties; and the identity between the two actions should
be such that any judgment that may be rendered in one case, regardless of which party is successful, would amount
to res judicata in the other.20
On the other hand, forum shopping exists when, as a result of an adverse decision in one forum, or in anticipation
thereof, a party seeks a favorable opinion in another forum through means other than appeal or certiorari.21
There is forum shopping when the elements of litis pendentia are present or where a final judgment in one case will
amount to res judicata in another.22
In the present controversy, the Court is of the view that litis pendentia exists. All the elements are present: first, both
Benavidez and Salvador are parties in both cases; second, both complaints are concerned with the same promissory
note; and third, the judgment in either case would be determinative of the other.
With the foregoing, which case then should be dismissed? At first glance, it would seem that Civil Case No. 00-5660 or
the complaint filed with RTC-Antipolo should have been dismissed applying the "priority-in-time rule." This rule,
however, is not ironclad. The rule is not applied if the first case was filed merely to pre-empt the later action or to
anticipate its filing and lay the basis for its dismissal. A crucial consideration is the good faith of the parties. In recent
rulings, the more appropriate case is preferred and survives. In Spouses Abines v. BPI,23 it was written:
There is no hard and fast rule in determining which of the actions should be abated on the ground of litis pendentia, but
through time, the Supreme Court has endeavored to lay down certain criteria to guide lower courts faced with this
legal dilemma. As a rule, preference is given to the first action filed to be retained. This is in accordance with the
maxim Qui prior est tempore, potior est jure. There are, however, limitations to this rule. Hence, the first action may be
abated if it was filed merely to pre-empt the later action or to anticipate its filing and lay the basis for its dismissal.
Thus, the bona fides or good faith of the parties is a crucial element. A later case shall not be abated if not brought to
harass or vex; and the first case can be abated if it is merely an anticipatory action or, more appropriately, an
anticipatory defense against an expected suit – a clever move to steal the march from the aggrieved party.
Another exception to the priority in time rule is the criterion of the more appropriate action. Thus, an action, although
filed later, shall not be dismissed if it is the more appropriate vehicle for litigating the issues between the parties.
[Underscoring supplied]
In the relatively recent case of Dotmatrix Trading v. Legaspi,24 the Court had the occasion to extensively discuss the
various rules and consideration in determining which case to dismiss in such situations. It included its analysis
of Abines. Thus:
Early on, we applied the principle of Qui prior est tempore, potior est jure (literally, he who is before in time is better in
right) in dismissing a case on the ground of litis pendentia. This was exemplified in the relatively early case of Del
Rosario v. Jacinto where two complaints for reconveyance and/or recovery of the same parcel of land were filed by
substantially the same parties, with the second case only impleading more party-plaintiffs. The Court held that "parties
who base their contention upon the same rights as the litigants in a previous suit are bound by the judgment in the
latter case." Without expressly saying so in litis pendentia terms, the Court gave priority to the suit filed earlier.
In Pampanga Bus Company, Inc. v. Ocfemia, complaints for damages arising from a collision of a cargo truck and a bus
were separately filed by the owners of the colliding vehicles. The complaint of the owners of the cargo truck prevailed
and the complaint of the owners of the bus had to yield, as the cargo truck owners first filed their complaint. Notably,
the first and prevailing case was far advanced in development, with an answer with counterclaim and an answer to the
counterclaim having been already filed, thus fully joining the issues.
In Lamis Ents. v. Lagamon, the first case was a complaint for specific performance of obligations under a Memorandum
of Agreement, while the second case was a complaint for sums of money arising from obligations under a promissory
note and a chattel mortgage, and damages. We dismissed the second case because the claims for sums of money
therein arose from the Memorandum of Agreement sued upon in the first case.
Ago Timber Corporation v. Ruiz offered an insightful reason after both parties had each pleaded the pendency of
another action between the same parties for the same cause. The Court ruled that the second action should be
dismissed, "not only as a matter of comity with a coordinate and co-equal court (Laureta & Nolledo, Commentaries &
Jurisprudence on Injunction, p. 79, citing Harrison v. Littlefield, 57 Tex. Div. A. 617, 619, 124 SW 212), but also to prevent
confusion that might seriously hinder the administration of justice. (Cabigao, et al. v. Del Rosario, et al., 44 Phil. 182)."
In all these cases, we gave preference to the first action filed to be retained. The "priority-in-time rule," however, is
not absolute.
In the 1956 case of Teodoro v. Mirasol, we deviated from the "priority-in-time rule" and applied the "more appropriate
action test" and the "anticipatory test."
The "more appropriate action test" considers the real issue raised by the pleadings and the ultimate objective of
the parties; the more appropriate action is the one where the real issues raised can be fully and completely
settled. In Teodoro, the lessee filed an action for declaratory relief to fix the period of the lease, but the lessor moved
for its dismissal because he had subsequently filed an action for ejectment against the lessee. We noted that the
unlawful detainer suit was the more appropriate action to resolve the real issue between the parties - whether or not
the lessee should be allowed to continue occupying the land under the terms of the lease contract; this was the subject
matter of the second suit for unlawful detainer, and was also the main or principal purpose of the first suit for
declaratory relief.
In the "anticipatory test," the bona fides or good faith of the parties is the critical element.1âwphi1 If the first suit is
filed merely to preempt the later action or to anticipate its filing and lay the basis for its dismissal, then the first
suit should be dismissed. In Teodoro, we noted that the first action, declaratory relief, was filed by the lessee to
anticipate the filing of the second action, unlawful detainer, considering the lessor's letter informing the lessee that the
lease contract had expired.
We also applied the "more appropriate action test" in Ramos v. Peralta. In this case, the lessee filed an action for
consignation of lease rentals against the new owner of the property, but the new owner moved to dismiss the
consignation case because of the quieting of title case he had also filed against the lessee. Finding that the real issue
between the parties involved the right to occupy/possess the subject property, we ordered the dismissal of the
consignation case, noting that the quieting of title case is the more appropriate vehicle for the ventilation of the issues
between them; the consignation case raised the issue of the right to possession of the lessee under the lease contract,
an issue that was effectively covered by the quieting of title case which raised the issue of the validity and effectivity of
the same lease contract.
In University Physician Services, Inc. v. Court of Appeals, we applied both the "more appropriate action test" and
"anticipatory test." In this case, the new owner of an apartment sent a demand letter to the lessee to vacate the leased
apartment unit. When the lessee filed an action for damages and injunction against the new owner, the new owner
moved for the dismissal of the action for damages on account of the action for ejectment it had also filed. We noted
that ejectment suit is the more appropriate action to resolve the issue of whether the lessee had the right to occupy the
apartment unit, where the question of possession is likewise the primary issue for resolution. We also noted that the
lessee, after her unjustified refusal to vacate the premises, was aware that an ejectment case against her was
forthcoming; the lessee's filing of the complaint for damages and injunction was but a canny and preemptive maneuver
intended to block the new owner's action for ejectment.
We also applied the "more appropriate action test" in the 2003 case Panganiban v. Pilipinas Shell Petroleum
Corp., where the lessee filed a petition for declaratory relief on the issue of renewal of the lease of a gasoline service
station, while the lessor filed an unlawful detainer case against the lessee. On the question of which action should be
dismissed, we noted that the interpretation of a provision in the lease contract as to when the lease would expire is the
key issue that would determine the lessee's right to possess the gasoline service station. The primary issue – the
physical possession of the gasoline station - is best settled in the ejectment suit that directly confronted the physical
possession issue, and not in any other case such as an action for declaratory relief.
A more recent case - Abines v. Bank of the Philippine Islands in 2006 - saw the application of both the "priority-in-time
rule" and the "more appropriate action test." In this case, the respondent filed a complaint for collection of sum of
money against the petitioners to enforce its rights under the promissory notes and real estate mortgages, while the
petitioners subsequently filed a complaint for reformation of the promissory notes and real estate mortgages. We held
that the first case, the collection case, should subsist because it is the first action filed and the more appropriate vehicle
for litigating all the issues in the controversy. We noted that in the second case, the reformation case, the petitioners
acknowledged their indebtedness to the respondent; they merely contested the amounts of the principal, interest and
the remaining balance. We observed, too, that the petitioners' claims in the reformation case were in the nature of
defenses to the collection case and should be asserted in this latter case.
Under this established jurisprudence on litis pendentia, the following considerations predominate in the ascending
order of importance in determining which action should prevail: (1) the date of filing, with preference generally given
to the first action filed to be retained; (2) whether the action sought to be dismissed was filed merely to preempt the
later action or to anticipate its filing and lay the basis for its dismissal; and (3) whether the action is the appropriate
vehicle for litigating the issues between the parties.25 [Underscoring supplied]
In the complaint filed before RTC-Morong, Benavidez alleged, among others, that it was defendant Atty. Nepthalie
Segarra (Atty. Segarra) who arranged the loan in the amount of ₱1,500,000.00 for her at his own initiative; that he was
the one who received the amount for her on or about March 10, 1998 from defendant Salvador; that he paid Farmers
Bank the amount of ₱1,049,266.12 leaving a balance of more than ₱450,000.00 in his possession; and that he made her
sign a promissory note. Benavidez prayed, among others, that Atty. Segarra be ordered to give her the balance of the
amount loaned and that the promissory note that Salvador allegedly executed be declared null and void because she
was just duped into signing the said document through machinations and that the stipulated interest therein was
shocking to the conscience. Salvador, on the other hand, filed the subject case for the collection of a sum of money
before RTC-Antipolo to enforce his rights under the promissory note.
Considering the nature of the transaction between the parties, the Court believes that the case for collection of sum of
money filed before RTC-Antipolo should be upheld as the more appropriate case because the judgment therein would
eventually settle the issue in the controversy - whether or not Benavidez should be made accountable for the subject
loan. In the complaint that she filed with RTC- Morong, Benavidez never denied that she contracted a loan with
Salvador. Under her second cause of action, she alleged:
SECOND CAUSE OF ACTION
11. Defendant Atty. Nepthalie Segarra arranged a loan in the amount of ONE MILLION AND FIVE
HUNDRED THOUSAND (₱1,500,000.00) PESOS for plaintiff at his own initiative;
12. Defendant Atty. Nepthalie Segarra received the ₱1,500,000.00 on or about March 10, 1998 from
defendant Nestor Salvador in behalf of and for delivery to plaintiff;
13. Defendant Atty. Nepthalie Segarra paid Farmers Bank the amount of ₱1,049,266.12 leaving a balance
of more than ₱450,000.00 in his possession. A copy of the receipt evidencing payment is herewith
attached as Annex "A" and made an integral part hereof;
14. Defendant Atty. Nepthalie Segarra made plaintiff sign a Promissory Note evidencing the loan of
₱1,500,000.00. A copy of said Promissory Note is herewith attached as Annex "B" and made an integral
part hereof; 26 [Underscoring supplied]
From the foregoing, it is clear that there was an amount of money borrowed from Salvador which was used in the
repurchase of her foreclosed property. Whether or not it was Atty. Segarra who arranged the loan is immaterial. The
fact stands that she borrowed from Salvador and she benefited from it. Her insistence that the remaining balance of
₱450,000.00 of the money loaned was never handed to her by Atty. Segarra is a matter between the two of them. As
far as she and Salvador are concerned, there is admittedly an obligation. Whether the promissory note was void or not
could have been proven by her during the trial but she forfeited her right to do so when she and her lawyer failed to
submit a pre-trial brief and to appear at the pre-trial as will be discussed hereafter.
At this point, to dismiss Civil Case No. 00-5660 would only result in needless delay in the resolution of the parties'
dispute and bring them back to square one. This consequence will defeat the public policy reasons behind litis
pendentia which, like the rule on forum shopping, aim to prevent the unnecessary burdening of our courts and undue
taxing of the manpower and financial resources of the Judiciary; to avoid the situation where co-equal courts issue
conflicting decisions over the same cause; and to preclude one party from harassing the other party through the filing
of an unnecessary or vexatious suit.27
The failure of a party to file a
pre-trial brief or to appear at a
pre-trial conference shall be
cause to allow the other party
to present evidence ex parte.
Benavidez basically contends that she should not be made to suffer the irresponsibility of her former counsel, Atty.
Jakosalem, and that the trial court should have relaxed the application of the Rules of Court, reopened the case and
allowed her to present evidence in her favor.
The Court is not moved.
Section 4, Rule 18 of the Rules of Court provides that it is the duty of the parties and their counsel to appear at the pre-
trial conference. The effect of their failure to appear is provided by Section 5 of the same rule where it states:
Sec. 5. Effect of failure to appear.- The failure of the plaintiff to appear when so required pursuant to the next
preceding section shall be cause for dismissal of the action. The dismissal shall be with prejudice, unless otherwise
ordered by the court. A similar failure on the part of the defendant shall be cause to allow the plaintiff to present
his evidence ex parte and the court to render judgment on the basis thereof. [Emphasis supplied]
Furthermore, Section 6 thereof provides:
Sec. 6. Pre-trial brief.-The parties shall file with the court and serve on the adverse party, in such manner as shall ensure
their receipt thereof at least three (3) days before the date of the pre-trial, their respective pre-trial briefs which shall
contain, among others:
xxx
Failure to file the pre-trial brief shall have the same effect as failure to appear at the pre-trial.
From the foregoing, it is clear that the failure of a party to appear at the pre-trial has adverse consequences. If the
absent party is the plaintiff, then his case shall be dismissed. If it is the defendant who fails to appear, then the plaintiff
is allowed to present his evidence ex parte and the court shall render judgment on the basis thereof. Thus, the plaintiff
is given the privilege to present his evidence without objection from the defendant, the likelihood being that the court
will decide in favor of the plaintiff, the defendant having forfeited the opportunity to rebut or present its own
evidence.28
RTC-Antipolo then had the legal basis to allow Salvador to present evidence ex parte upon motion. Benavidez and her
counsel were not present at the scheduled pre-trial conference despite due notice. They did not file the required pre-
trial brief despite receipt of the Order. The rule explicitly provides that both parties and their counsel are mandated to
appear thereat except for: (1) a valid excuse; and (2) appearance of a representative on behalf of a party who is fully
authorized in writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and to
enter into stipulations or admissions of facts and documents.29 In this case, Benavidez’s lawyer was already negligent,
but she compounded this by being negligent herself. She was aware of the scheduled pre-trial conference, but she did
not make any move to prevent the prejudicial consequences of her absence or that of her counsel. If she knew that her
lawyer would not appear and could not because she was ill, she should have sent a representative in court to inform the
judge of her predicament.
Also, her failure to file the pre-trial brief warranted the same effect because the rules dictate that failure to file a pre-
trial brief shall have the same effect as failure to appear at the pre-trial. Settled is the rule that the negligence of a
counsel binds his clients.30 Neither Benavidez nor her counsel can now evade the effects of their misfeasance.
Stipulated interest should be
reduced for being iniquitous
and unconscionable.
This Court is not unmindful of the fact that parties to a loan contract have wide latitude to stipulate on any interest rate
in view of the Central Bank Circular No. 905 s. 1982 which suspended the Usury Law ceiling on interest effective
January I, 1983. It is, however, worth stressing that interest rates whenever unconscionable may still be declared illegal.
There is nothing in said circular which grants lenders carte blanche authority to raise interest rates to levels which will
either enslave their borrowers or lead to a hemorrhaging of their assets.31 In Menchavez v. Bermudez,32 the interest rate
of 5% per month, which when summed up would reach 60% per annum, is null and void for being excessive, iniquitous,
unconscionable and exorbitant, contrary to morals, and the law.33
Accordingly, in this case, the Court considers the compounded interest rate of 5% per month as iniquitous and
unconscionable and void and inexistent from the beginning. The debt is to be considered without the stipulation of the
iniquitous and unconscionable interest rate.34 In line with the ruling in the recent case of Nacar v. Gallery Frames,35 the
legal interest of 6% per annum must be imposed in lieu of the excessive interest stipulated in the agreement.
WHEREFORE, the petition is DENIED. The November 22, 2005 Decision and the June 8, 2006 Amended Decision of
the Court of Appeals are AFFIRMED with MODIFICATION. The interest rate of 5% per month which was the basis in
computing Benavidez's obligation is reduced to 6% per annum.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 104019 January 25, 1993
VICTRONICS COMPUTERS, INC., petitioner,
vs.
REGIONAL TRIAL COURT, BRANCH 63, MAKATI, presided by JUDGE JULIO R. LOGARTA, PANORAMA
ENTERPRISES, INC., PASIG TOURIST DEVELOPMENT CORP., GALACTIC SPACE DEVELOPMENT CORP.,
MALATE TOURIST DEVELOPMENT CORP., CALOOCAN TOURIST DEVELOPMENT CORP., BARRIENTOS & CO.,
INC., KARL C. VELHAGEN and ARCHIMEDES R. KING, who operate business under the names VICTORIA COURT,
GMT CONSOLIDATED COMPANY and VICTORIA GROUP OF COMPANIES, respondents.
Paras & Reynes Law Office for petitioner.
Ernest S. Ang for respondents.
DAVIDE, JR., J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court. Petitioner seeks to set aside, for being
inconsistent with law and jurisprudence, the 22 January 1992 Order of respondent Branch 63 of the Regional Trial Court
(RTC) of Makati, Metro Manila which, among others, denied a motion for reconsideration of its earlier dismissal, on the
ground of lis pendens, of a collection suit docketed as Civil Case No. 91-2069 filed against private respondents Karl C.
Velhagen and Archimedes R. King, alleged operators of a business under the names VICTORIA COURT, GMT
CONSOLIDATED COMPANY and VICTORIA GROUP OF COMPANIES. Petitioner further asks this Court, in the exercise
of its supervisory power over lower courts, to direct the respondent Court to issue alias summonses to the respondent
corporations which were impleaded as additional defendants in the amended complaint filed in said Civil Case No. 91-
2069, and to order the consolidation of this case in Branch 63 with Civil Case No. 91-2192 pending before Branch 150 of
the said court.
The records disclose the following antecedents:
Petitioner Victronics Computers, Inc., a domestic corporation engaged in the sale of computer systems and
peripherals, submitted a quotation for office systems to service the networking requirements of various Victoria Court
branches.
Satisfied with the said quotations, private respondents Velhagen and King placed an order with the petitioner in a
Purchase Order1 form on which is written "GMT CONSOLIDATED" above the printed word COMPANY, and the address
2129 Pasong Tamo St., Makati, Metro Manila below it. The private respondents ordered six (6) sets of 80 DATA 386
computer system with peripherals for the net consideration, after deducting a P7,000.00 discount, of P767,000.00,
subject to the following terms:
a) Payment — 50% down, 50% COD upon completion of delivery.
b) Delivery — within 30 calendar days upon receipt of P.O. and 50% down payment.
c) Penalty — 1% of total P.O. amount per day of delay.
These systems were to be delivered to the parties therein indicated, namely: VCAD, VCCU, VCHI, VCNE, VCMA and
VCES. Per the delivery receipts, these acronyms stand for Victoria Court drive-in motels located in different places.
The fifty per cent (50%) downpayment agreed upon was duly paid. Thereupon, petitioner delivered on 22 May 1991
three (3)of the six (6) sets to Victoria Court/North EDSA, Victoria Court/Adriatico and Victoria Court/Cuneta. 2 The
remaining sets were delivered on 20 June 1991 to Victoria Court/Hillcrest, Victoria Court/Panorama and Victoria
Court/McArthur.3
As revealed in the complaint in Civil Case No. 91-2192, each of the aforementioned establishments is owned by the
herein six (6) respondent corporations which, however, decided sometime in 1986 "to band together for their mutual
interest and benefit, under the trade name and style of the Victoria Court Group of Companies."4
As further revealed in the Comment of these corporations, they operate under a common management team wherein
respondents Velhagen and King are the General Manager and Chief Executive Officer, respectively. 5
Only fifty per cent (50%) of the purchase price of each of the sets delivered to the different establishments was paid by
the said corporations.6 The outstanding balance not having been paid within and even after the period stipulated in the
Purchase Order despite demands for its payment made on Velhagen and King, the petitioner filed, on 26 July 1991,
with the RTC of Makati a Complaint7 for a sum of money and damages against:
KARL C. VELHAGEN and ARCHIE R. KING, who operate business under the names VICTORIA
COURT, GMT CONSOLIDATED COMPANY, and VICTORIA GROUP OF COMPANIES.
The case was docketed as Civil Case No. 91-2069 and was raffled off to Branch 63 of the said court,
presided over by herein respondent Judge Julio R. Logarta.
Defendants Velhagen and King, herein private respondents, were each served with a summons and a copy
of the complaint on 8 August 1991.8
The following day, 9 August 1991, the six (6) respondent corporations9 filed with the RTC of Makati a Complaint, dated
7 August 1991, 10 for the nullification of the abovementioned Purchase Order and for damages against the herein
petitioner and one Teodorico B. Kabigting. It is prayed for in the complaint that:
. . . judgment be rendered for the plaintiffs and against the defendants declaring the contract
to purchase the aforementioned computer equipment null and void for fraud and undue
influence, and ordering defendants, jointly or severally, to pay plaintiffs:
1. The sum of P383,500.00 plus reasonable interest of at least 2% per month from the month
of May 1991 until the amount is actually paid, as compensary (sic) or actual damages;
2. The sum of P500,000.00 as exemplary damages;
3. The sum of P100,000.00 and a per appearance fee of P1,000.00 as and by way of attorney's
fees;
4. The cost of the suit.
The case was docketed as Civil Case No. 91-2192 and was raffled off to Branch 150 of the said court.
Four (4) causes of action are alleged in this complaint. In the first, the corporations claim that defendant
Kabigting, then the Manager of the Management Information Services of the Victoria Court Group of
Companies who was instructed to canvass or conduct a price survey of computer equipment supplied by
different companies, connived with Victor Mariano, the petitioner's General Manager and the latter's old
and close friend, in consideration of an alleged promise of a substantial commission, to falsify the price
survey report and recommend the purchase of the computer equipment from the petitioner corporation. A
routine check of the transaction likewise disclosed an overpricing of the equipment by at least
P200,000.00 while an audit revealed that the equipment sold was among the surplus stock of the
petitioner. In the second cause of action, they allege that they forthwith informed the petitioner's Mr.
Mariano about the fraud and sought an audience with him for an amicable solution to the controversy, but
that the petitioner failed to respond and instead referred the matter to its attorney who in turn wrote a
letter of demand for the payment of the balance of the purchase price. Reacting, they also referred the
matter to their lawyer who wrote the petitioner a letter informing it that the contract was being voided
due to fraud and undue influence and demanding that the fifty per cent (50%) downpayment be returned
with a reasonable interest at the rate of two per cent (2%) per month in exchange for the return of "all
computer equipment purchased from defendant (herein petitioner) in the same condition as they were
received." 11 Upon the petitioner's failure to respond positively to this offer, they filed the complaint. In the
third cause of action, they allege bad faith and a fraudulent intent on the part of the defendants and ask
for P500,000.00 as exemplary damages. The fourth cause of action is for attorney's and appearance fees.
No copy of any document whatsoever is attached to the complaint in said Civil Case No. 91-2192.
On 22 August 1991, private respondents Velhagen and King, represented by counsel of record for the six
(6) corporations in Civil Case No. 91-2192 — the law firm of ANG, CADIZ and ASSOCIATES — filed in Civil
Case No.
91-2069 a Motion To Dismiss and/or To Suspend Proceedings based on the following grounds: (a) plaintiff
(petitioner herein) failed to verify the complaint. (b) plaintiff failed to sue the proper parties and (c) there is
a prejudicial question or a pending incident before another court. In support of these grounds, they allege
that (a) verification is a formal requirement under Section 6, Rule 7 of the Rules of Court; (b) the
transaction in question was not entered into by them in their personal capacities — they acted for and on
 behalf of the corporations they represent; hence, the latter, who chose not to honor the contract, are the
real parties in interest; moreover, "Victoria Court, GMT Consolidated Company and Victoria Group of
Companies . . . are mere tradenames" 12 — none of these named companies really exist; and (c) Civil Case
No. 91-2192 (erroneously written as 91-2191) for the nullification of the subject purchase order has been
filed against the petitioner and is pending before Branch 150 of the trial court; accordingly, "[A]t the very
least, the Honorable Court (Branch 63) should suspend all proceedings in this case because of the
existence of a prejudicial question or a pending incident before another court." Elaborating thereon, said
movants state:
There is a situation wherein two suits were filed for different causes of action but involving the
same transaction or contract. One case, the one pending before this Honorable Court, is for
the enforcement of the contract, or more specifically, for the collection of the balance or sum
of money as provided for in the contract. In the other case before another court, what is being
sought is the nullification or the voiding of the same contract for alleged fraud and undue
influence. There is no debate that the more basic question is before the other court, as the
very validity of the contract sought to be enforced is at issue there.
It is clear therefore that the second case is prejudicial to the determination of the first case.
Whether or not the suit pending before this Honorable Court will prosper depends entirely on
how the case in the other court will fare. If for example the other court should determine that
there is (sic) sufficient grounds to nullify the contract, then the collection suit before this
Honorable Court must necessarily fail. It is only after the other court should determined (sic)
that the questioned contract is valid can this Honorable Court proceed with the collection
case.
Suspension of the proceedings before this Honorable Court is therefore the prudent thing to
do. This will avoid the absurd situation wherein one court will find for one party in one case,
and the other court will find for the adverse party in the second case. It is also an act of
courtesy to a co-equal branch of the same court. 13
They then end with an alternative prayer, thus:
WHEREFORE, premises considered, it is respectfully prayed that the instant Complaint be
dismissed for all or any of the grounds aforecited. On the alternative, it is prayed that the
proceedings before the Honorable Court be at least suspended until the final resolution of the
other case before Branch 150 of the Regional Trial Court of Makati. 14
Meanwhile, on 5 September 1991, the herein petitioner filed in Civil Case No. 91-2192 a Special Appearance and
Motion To Dismiss 15 asking the trial court to dismiss the said case on grounds of improper service of summons and lack
of jurisdiction over it as defendant therein.
On 16 September 1991, Branch 63 of the Makati RTC, through respondent Judge Julio Logarta, issued an order
dismissing Civil Case No.
91-2069 because of litis pendentia. 16 The court gave the following reasons, quoted verbatim, in support of its ruling:
. . . Clearly, the elements of litis pendentia, as a ground for a motion to dismiss is present, to
wit:
1. Identity of parties or at least such as representing the same
interests in both actions;
2. Identity of rights asserted and prayed for, the reliefs being
founded on the same facts;
3. The identity of the presiding particulars should be such that any
judgment which may be rendered on the other action will regardless
of which party is successful amount to res judicata in the action under
consideration (FEU — Dr. Nicanor Reyes Medical Foundation vs.
Trajano 152 SCRA 453 (1987); Lopez vs. Villaruel, G.R. No. 54323,
1988).
Further, it was held that "the Rule does not require as a ground for dismissal of a complaint
that there is a prior action, but only pending action (Teodoro vs. Mirasol 53 O.G., 8088 99 Phil.
150)." Thus, the contention of plaintiff that the case before this Branch is 123 days older than
Civil Case No. 91-2192 before Branch 150, hence, the one lodged with Branch 150 should be
the one dismissed by litis pendentia is untenable. Moreover, "inclusion of additional parties in
second case is no obstacle to its dismissal on the ground of litis pendentia" (Investors Finance
Corp. vs. Judge Ebarle, G.R. No. 70640, June 29, 1988). 17
On 19 September 1991, petitioner filed in Civil Case No. 91-2069 a contempt charge against respondents Velhagen and
King for forum-shopping, 18 claiming that after having respectively received the summons and a copy of the complaint,
both respondents did not file an answer with compulsory counterclaim. Instead, "using the names of certain
corporations that represent the same interests they advance, [they] filed a separate action one day later — before
Branch 150 of the Makati Regional Trial Court in Civil Case No.
91-2192" 19 — which arose from the same transaction or occurrence as that obtaining in Civil Case No. 91-2069; as a
matter of fact, the complaint in the former reads like an answer with compulsory counterclaim to the complaint in the
latter. Hence, both are guilty of forum-shopping, double dealing, trifling with the court and abusing its processes. 20
Meanwhile, acting on the petitioner's motion to dismiss Civil Case No. 91-2192, Branch 150 of the court below, per
Judge Zeus Abrogar, handed down an order, on 25 September 1991, directing — in order to remove any doubt on the
propriety of the service of summons — the re-service of summons on the petitioner." 21
On 4 October 1991, after allegedly accidentally learning of the 16 September 1991 Order of dismissal of Civil Case No.
91-2069, petitioner requested, and thereafter obtained, a photocopy of the said order which was not, unfortunately,
served on the petitioner's counsel until then. 22
On 9 October 1991, petitioner filed in Civil Case No. 91-2069 an Ex Abundante Cautela Motion To Refer Forum-
Shopping Charge to Executive Judge.23 On the same date, petitioner filed a Motion For Reconsideration24 of the said
order of dismissal.
On 14 October 1991, after proper service of summons to it, petitioner filed a Motion To Dismiss25 Civil Case No. 91-2192
on the grounds of litis pendentia and forum shopping.
Thereupon, on 11 December 1991, petitioner filed in Civil Case No.
91-2069 a motion for the consolidation 26 of the two (2) cases before Branch 63 where the prior case was filed; on 6
January 1992, it also filed in the same case a Manifestation Pro Hac Vice27 wherein it stated that "there was technically
no pending action before" Branch 150 as it had not yet acquired jurisdiction over the person of the petitioner (due to
improper service of summons) as evidenced by the 25 September 1991 Order of Judge Abrogar himself.
In the meantime, however, petitioner filed in Civil Case No. 91-2192 an Answer with Compulsory Counterclaim 28dated
20 January 1992. One of the Special and Affirmative Defenses averred therein is the pendency in Branch 63 of Civil
Case No. 91-2069. Also on 20 January 1992, petitioner filed in Civil Case No. 91-2069 an Amended Complaint
impleading therein, as additional defendants, the six (6) corporations which sued as plaintiffs in Civil Case No. 91-
2192. 29
On 7 February 1992, the Clerk of Court of Branch 63 sent the petitioner, by registered mail, 30 a copy of the 22 January
1992 Order in Civil Case No.
91-206931 which resolved the various motions filed by the latter. The said order reads:
Consequently, the Motion for Consolidation filed by plaintiff on December 11, 1991, perforce,
should also be DENIED for being moot and academic.
 WHEREFORE, premises considered, the Motion for Reconsideration dated October 7, 1991;
the Contempt Charge for Forum-Shopping; the Motion to Refer the Contempt Charge to the
Executive Judge; the Motion for Consolidation; and, Manifestation Pro Hac Vice are hereby
DENIED, and the order dated September 16, 1991, dismissing the
above-entitled case is hereby REITERATED.
Anent the particular issue of forum shopping, the lower court held that the same "is negated by the move of
defendants (private respondents Velhagen and King) to dismiss the case filed before this court [Civil Case No. 91-
2069], to give way to that which pends before Branch 150 [Civil Case No. 91-2192]." And, on the matter of litis
pendentia, it reiterated its ruling that the filing of one action ahead of another is not decisive on the issue of which of
the two (2) identical actions in two (2) separate courts of concurrent jurisdiction should be dismissed.
As a consequence of this 22 January 1992 Order, respondent Court, in Civil Case No. 91-2069, issued on 20 February
1992 an order denying the petitioner's motion for the issuance of an alias summons. 32
Hence, the instant petition wherein the petitioner claims that the respondent Court erred:
(1) in equating respondents' ground of "pending incident before another court" to ask for
suspension of proceedings with litis pendentia under Rule 16 when respondents' grounds to
ask for dismissal were only (a) lack of verification: and (b) not having initially impleaded
respondent corporations as proper parties — grounds not found in Rule 16;
(2) in ruling, with precipitate haste, and in insisting, despite a chance to reconsider, that there
was another pending action at the time of dismissal when technically there was none since
Branch 150 was still trying to acquire jurisdiction over petitioner's person and to notify
petitioner by new summons some 2 weeks later about the filing of the second;
(3) in preferring to maintain the second action over the first, which (a) was 123 cases (sic) older
than the second; (b) was the one pending when the second one was just filed; and (c) was
meant to collect the unpaid balance of close to half a million pesos that respondents still owe
and which in substantial justice was entitled to be heard if not preferentially over the second,
at least jointly with the second upon consolidation;
(4) in disregarding the Supreme Court's rulings in vda. de Tolentino v. de Guzman, Pambusco
v. Ocfemia, Ramos v. CIR, and other applicable decisions;
(5) in not finding, by itself or through the executive judge, that the institution of the second
action was a specie of forum shopping, in the light of DBP v. IAC, given that (a) the second
action came 2 weeks later after the first complaint; (b) the second complaint was filed after
respondents had already received a copy of the first; c) respondents' complaint reads like an
answer with compulsory counterclaim to petitioner's complaint; and (d) the second action
arose from the same transaction, facts, and circumstances identical to those in an already
pending proceeding;
(6) in totally ignoring the existence of the amended complaint; and
(7) in releasing an order on February 7, 1992 that did not conform with the prevailing state of
affairs of the action as of that time and with applicable Supreme Court decisions since (a) the
amended complaint had already rendered the first complaint functus oficio along with
resolutions that attached to it; (b) the motion for alias summons should have been granted as
a matter of course; and (c) consolidation should have afterwards been granted to promote the
Supreme Court's avowed preference for consolidation as expressed in Active Wood Products
v. CA because it is a "beneficial and desirable" practice. 33
On 10 June 1992,34 after the private respondents filed their Comment35 to the petition (on 20 April 1992) and the
petitioner filed its Reply 36 thereto (on 28 May 1992), We resolved to give due course to the petition and required the
parties to submit their respective Memoranda, which they subsequently complied with.
The pivotal issues raised in the instant petition are: (1) whether or not the respondent Court erred in dismissing, on the
ground of litis pendentia, Civil Case No. 91-2069 which has priority with respect to the time of filing, and (2) whether or
not the private respondents are guilty of forum-shopping.
It is a rule that for litis pendentia to be invoked as a ground for the abatement or dismissal of an action, the concurrence
of the following requisites is necessary: (a) identity of parties, or at least such as representing the same interest in both
actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the
identity in the two (2) cases should be such that the judgment that may be rendered in the pending case would,
regardless of which party is successful, amount to res judicata in the other.37
The presence of all the foregoing requisites with respect to Civil Case No. 91-2069 and Civil Case No. 91-2192 is not
controverted by the parties. As a matter of fact, both invoked these identities in their respective motions to dismiss.
As to the first requirement, it is quite evident that the petitioner is a party in both cases. There is, however, an initial
confusion as to the personalities of the defendants in Civil Case No. 91-2069 and the plaintiffs in Civil Case No. 91-2192,
who are claimed to be natural persons doing business under the names of "Victoria Court, GMT Consolidated Company
and Victoria Group of Companies" and juridical persons (the six (6) corporations), respectively. In the light of the
admission by the six (6) corporations that they banded together for their mutual interest and benefit under the trade
name and style of the Victoria Group of Companies; that they put up a common management team with respondents
Velhagen and King as General Manager and Chief Executive Officer, respectively; that the purchase order in question is
the official act of the said officers; and that the computer sets were in fact received by them for which they each paid a
downpayment of fifty per cent (50%) of the purchase price thereof, there can be no doubt that the defendants in the
first case and the plaintiffs in the second case represent the same interests.
As regards the second element, a careful reading of the allegations in the parties' respective complaints and motions to
dismiss in the two (2) civil actions below reveals that both assert rights founded on an identical set of facts which give
rise to one basic issue — the validity of the contract in question, the purchase order for the computer equipment. Civil
Case No. 91-2069 actually involves an action for specific performance; it thus upholds the contract and assumes its
validity. Civil Case No. 91-2192, on the other hand, is for the nullification of the contract on the grounds of fraud and
vitiated consent. While ostensibly the cause of action in one is opposite to that in the other, in the final analysis, what is
being determined is the validity of the contract. It would not have been unlikely that in its answer filed in Civil Case No.
91-2192, the petitioner would merely reiterate its allegations in the complaint in Civil Case No. 91-2069 sustaining and
invoking the validity of the purchase order and setting up lis pendens as a defense. This is what it exactly did. It would
not have been likewise unlikely that the defense of the private respondents in Civil Case No. 91-2069 would be one in
pursuit of their theory, as plaintiffs, in Civil Case No. 91-2192. Thus, the identity of rights asserted cannot be disputed.
Howsoever viewed, it is beyond cavil that regardless of the decision that would be promulgated in Civil Case No. 91-
2069, the same would constitute res judicata on Civil Case No. 91-2192 and vice-versa. But which case should be
abated? Squarely put, should it be the second, which was filed fourteen (14) days after the filing of the first, or should it
be the first?
Like res judicata as a doctrine, litis pendentia as a principle is a sanction of public policy against multiplicity of
suits. 38 Differently put, "[T]he principle upon which a 'plea of another action pending' is sustained is that the latter
action is deemed unnecessary and vexatious." 39
There is no hard and fast rule that governs the determination of which of the actions should be abated. A review of
relevant cases decided by this Court discloses that generally, it is the second case which is abated. Indeed, it seems that
the maxim Qui prior est tempore, potior est jure 40 controls.
To be sure, there are limitations to this rule. At common law, if it appears to the court that the second action was not
brought to harass or vex the defendant, and is not in fact vexatious, it may refuse to abate the second action, allow it to
stand, and order the first one to be discontinued on proper terms. The court may also permit the plaintiff to
discontinue the first suit and thereby defeat the plea in abatement where the second suit is necessary in order to
protect and secure the plaintiff's full rights, or where the abatement of the second suit is necessary in order to protect
and secure the plaintiff's full rights, or where the abatement of the second would result impossible loss of substantial
rights on the part of the plaintiff. 41
In our jurisdiction, the law itself 42 does not specifically require that the pending action which would hold in abatement
the other must be a pending prior action. Thus, in Teodoro vs. Mirasol, 43 this Court observed:
It is to be noted that the Rules do not require as a ground for dismissal of a complaint that
there is aprior pending action. They provide that there is a pending action, not a
pending prior action. The fact that the unlawful detainer suit was of a later date is no bar to
the dismissal of the present action. We find, therefore, no error in the ruling of the court a
quo that plaintiff's action should be dismissed on the ground of the pendency of another more
appropriate action between the same parties and for the same cause.
In Roa-Magsaysay vs. Magsaysay, 44 wherein it was the first case which was abated, this Court ruled:
In any event, since We are not really dealing with jurisdiction but mainly with venue,
considering both courts concerned do have jurisdiction over the causes of action of the parties
herein against each other, the better rule in the event of conflict between two courts of
concurrent jurisdiction as in the present case, is to allow the litigation to be tried and decided
by the court which, under the circumstances obtaining in the controversy, would, in the mind
of this Court, be in a better position to serve the interests of justice, considering the nature of
the controversy, the comparative accessibility of the court to the parties, having in view their
peculiar positions and capabilities, and other similar factors. Without in any manner casting
doubt as to the capacity of the Court of First Instance of Zambales to adjudicate properly
cases involving domestic relations, it is easy to see that the Juvenile and Domestic Relations
Court of Quezon City which was created in order to give specialized attention to family
problems, armed as it is with adequate and corresponding facilities not available to ordinary
courts of first instance, would be able to attend to the matters here in dispute with a little
more degree of expertise and experience, resulting in better service to the interests of justice.
A reading of the causes of action alleged by the contending spouses and a consideration of
their nature, cannot but convince Us that, since anyway, there is an available Domestic Court
that can legally take cognizance of such family issues, it is better that said Domestic Court be
the one chosen to settle the same as the facts and the law may warrant.
We made the same pronouncement in Ramos vs. Peralta:45
Finally, the rule on litis pendentia does not require that the later case should yield to the earlier
case. What is required merely is that there be another pending action, not a prior pending
action. Considering the broader scope of inquiry involved in Civil Case No. 4102 and the
location of the property involved, no error was committed by the lower court in deferring to
the Bataan court's jurisdiction.
An analysis of these cases unravels the ratio for the rejection of the priority-in-time rule and establishes the criteria to
determine which action should be upheld and which is to be abated. In Teodoro, this Court used the criterion of
the more appropriate action. We ruled therein that the unlawful detainer case, which was filed later, was the more
appropriate action because the earlier case — for specific performance or declaratory relief — filed by the lessee
(Teodoro) in the Court of First Instance (CFI) to seek the extension of the lease for another two (2) years or the fixing of
a longer term for it, was "prompted by a desire on plaintiff's part to anticipate the action for unlawful detainer, the
probability of which was apparent from the letter of the defendant to the plaintiff advising the latter that the contract
of lease expired on October 1, 1954."46The real issue between the parties therein was whether or not the lessee should
be allowed to continue occupying the leased premises under a contract the terms of which were also the subject
matter of the unlawful detainer case. Consonant with the doctrine laid down in Pue vs. Gonzales 47 and Lim Si vs.
Lim, 48 the right of the lessee to occupy the land leased against the lessor should be decided under Rule 70 of the Rules
of Court; the fact that the unlawful detainer case was filed later then of no moment. Thus, the latter was the more
appropriate action.
The "more appropriate action" criterion was also applied in Ramos vs. Peralta,49 Ramos, the lessee of a fishpond located
in Pilar, Bataan, sought to consign with the CFI of Manila the advance rentals for the fishpond for 15 March 1976 and 15
June 1976 after its tender was refused by the lessors (Ortañez spouses) 50 and after he was informed by the vendee of
the property, P.R. Roman Inc. — in its letter of 1 May 1976 — that it had acquired the property and would take
possession thereof on 16 May 1976. Ramos filed the consignation case, docketed as Civil Case No. 103647, with the
lower court on 2 August 1976. Meanwhile on 13 August 1976, P.R. Roman Inc. filed with the CFI of Bataan a complaint
for quieting of title against Ramos; this case was docketed as Civil Case No. 4102. Consequently, P.R. Roman, Inc. filed
a motion to dismiss Civil Case No. 103647 on the ground of, inter alia, lis pendens. The motion was granted. On appeal,
this Court affirmed the lower court's decision considering the "broader scope of inquiry involved in Civil Case No. 4102
and the location of the property involved."
In Roa-Magsaysay, the criterion used was the consideration of the interest of justice. In applying this standard, what was
asked was which court would be "in a better position to serve the interests of justice," 51 taking into account (a) the
nature of the controversy, (b) the comparative accessibility of the court to the parties and (c) other similar factors.
While such a test was enunciated therein, this Court relied on its constitutional authority to change venue to avoid a
miscarriage of justice.
It is interesting to note that in common law, as earlier adverted to, and pursuant to the Teodoro vs. Mirasol52 case,
the bona fides or good faith of the parties is a crucial element. In the former, the second case shall not be abated if not
brought to harass or vex; in the latter, the first case shall be abated if it is merely an anticipatory action or, more
appropriately, an anticipatory defense against an expected suit — a clever move to steal the march from the aggrieved
party.
In the case at bar, We do not hesitate to rule that the second case, Civil Case No. 91-2192, was filed not so much upon
the inspiration of unadulterated good faith to seek redress for a genuine wrong committed but more to vex or harass in
another forum the plaintiff in the first case, the herein petitioner. What cannot escape Our attention is the undue, if not
indecent, haste in the preparation of the complaint in Civil Case No. 91-2192 by the counsel for the defendants in Civil
Case No. 91-2069. Civil Case No. 91-2192 is for the nullification of a contract — the purchase order signed by no less
than the authorized officers of the six (6) respondent corporations. It is, therefore, based upon a written document.
Section 7, Rule 8 of the Rules of Court expressly provides that:
Sec. 7. Action or defense based on document. — Whenever an action or defense is based upon
a written instrument or document, the substance of such instrument or document shall be set
forth in the pleading, and the original or a copy thereof shall be attached to the pleading as an
exhibit, which shall be deemed to be a part of the pleading, or said copy may with like effect be
set forth in the pleading. (Emphasis supplied).
There was absolutely no compliance with this requisite as no copy of the purchase order was set forth in the body of
the complaint or attached to the complaint itself. The non-observance of this simple yet basic rule cannot be attributed
to the ignorance of the lawyers who, measured by their pleadings in this case, appear to be experienced and well-
versed in the law, but to the frenzied efforts to file the complaint at the earliest possible time. To make it appear that
the complaint was prepared before service of summons on the defendants in Civil Case No. 91-2069, it was dated 7
August 1991.53 It was, however, filed only on 9 August 1991 although the office of the abovementioned lawyers is
located at 2129 Pasong Tamo St., 54 Makati, Metro Manila, within the same municipality wherein the court sits.
Moreover, all six (6) corporations likewise have their principal office at the same Pasong Tamo address. 55 The private
respondents' claim in their Comment that:
. . . when undersigned counsel filed Civil Case No. 91-2192, neither he nor his clients had
actual notice of the earlier suit filed by petitioner. Civil Case No. 91-2192 was filed in good
faith.56
is clearly self-serving. Besides, counsel is careful enough to use "actual notice" thereby admitting, in effect, that some
other form of notice was received.
Being merely vexatious, Civil Case No. 91-2192 is the abatable case.
Independently of the element of bona fides, the fact remains that under the peculiar circumstances attending the
transaction in question, the first case — for specific performance — is the more appropriate action. In the first place,
petitioner, the unpaid seller in the amount of fifty per cent (50%) of the purchase price, had completely delivered the
six (6) computer sets to the establishments of the six (6) respondent corporations within the period stipulated in the
purchase order. Despite their assertion in the complaint in Civil Case No. 91-2192 that the equipment was "outmoded
and obsolete," 57 they neither claim the inability to use the computer sets nor insinuate that they had, at any time,
called upon the petitioner to account under its warranty against hidden
defects. 58 They did not even offer to return the computer equipment. Thus, in reality, it is the petitioner who has been
aggrieved; in availing of the remedy of specific performance allowed under Article 1191 of the Civil Code, it was acting
well within its rights. The subsequent action for the annulment of the contract on grounds of fraud and vitiated consent
is nothing but a mere defense thereto.
Respondents Velhagen and King very well acknowledged the weakness of the defense of lis pendens. In their Motion to
Dismiss and/or Suspend Proceedings, 59 they did not categorically refer to Civil Case No. 91-2192 as a pending action. In
lieu thereof, they chose the phrase "prejudicial question or a pending incident before another court;" in consonance
therewith, they even prayed that if Civil Case No. 91-2069 may not be dismissed for any of the grounds therein
invoked, it should be suspended until the final resolution of Civil Case No. 91-2192. Fortunately for them, respondent
Court read the phrase "prejudicial question or a pending incident" as lis pendens and thereafter decreed the dismissal of
said Civil Case No. 91-2069. This clearly amounted to grave abuse of discretion.
And now on the issue of forum-shopping.
In its Order of 22 January 1992, respondent Court held:
Likewise, the Court finds no basis to cite defendant in contempt of court, allegedly for
engaging in forum-shopping as this allegation is negated by the move of defendants to
dismiss the case filed before this Court, to give way to that which pends before Branch 150. 60
Respondent Court does not seem to have a full grasp of the underpinnings of forum-shopping. In People vs. Court of
Appeals, 61 We noted that forum-shopping has its roots in the rule that a party should not be allowed to pursue
simultaneous remedies in two (2) different forums for it does havoc to the rule on orderly procedure. Later, in E. Razon
Inc. vs. Philippine Port Authority,62 We specifically declared that forum-shopping is an act of malpractice that is
proscribed and condemned as trifling with the courts and abusing their processes; it is improper conduct that tends to
degrade the administration of justice. Thus, the said rule has been formalized in Section 17 of the Interim Rules and
Guidelines issued by this Court on 11 January 1983 in connection with the implementation of the Judiciary
Reorganization Act (Batas Pambansa Blg. 129). A review of the cases on forum-shopping reveals, however, that they
involve parties filing two (2) or more suits in different forums. 63 The rule has not been extended to a defendant who,
for reasons known only to him, commences a new action against the plaintiff — instead of filing a responsive pleading
in the other case — setting forth therein, as causes of action, specific denials, special and affirmative defenses or even
counterclaims. Thus, Velhagen's and King's motion to dismiss Civil Case No. 91-2069 by no means negates the charge
of forum-shopping as such did not exist in the first place.
IN VIEW OF THE FOREGOING, the instant petition is hereby GRANTED. The Order of respondent Court of 16
September 1991 dismissing Civil Case No. 91-2069 is SET ASIDE and a new one is entered DISMISSING instead, on
ground of lis pendens, Civil Case No. 91-2192 of Branch 150 of the Regional Trial Court of Makati, with costs against the
defendants therein. The Order of respondent Court of 22 January 1992 in Civil Case No. 91-2069 is hereby MODIFIED
by setting aside that portion thereof denying the motion to reconsider its Order of 16 September 1991 and declaring
that portion denying the motion for consolidation as moot and academic.
Cost against private respondents.
SO ORDERED.
THIRD DIVISION
[G.R. No. 112702. September 26, 1997]
NATIONAL POWER CORPORATION, petitioner, vs. COURT OF APPEALS and CAGAYAN ELECTRIC POWER AND
LIGHT CO., INC. (CEPALCO), respondents.
[G.R. No. 113613. September 26, 1997]
PHIVIDEC INDUSTRIAL AUTHORITY, petitioner, vs. COURT OF APPEALS and CAGAYAN ELECTRIC POWER AND
LIGHTCO., INC. (CEPALCO), respondents.
DECISION
ROMERO, J.:
Offered for resolution in these consolidated petitions for review on certiorari is the issue of whether or not the
National Power Corporation (NPC) has jurisdiction to determine whether it may supply electric power directly to the
facilities of an industrial corporation in areas where there is an existing and operating electric power franchisee.
On June 17, 1961, the Cagayan Electric and Power Light Company (CEPALCO) was enfranchised by Republic
Act No. 3247 "to construct, maintain and operate an electric light, heat and power system for the purpose of
generating and/or distributing electric light, heat and/or power for sale within the City of Cagayan de Oro and its
suburbs" for fifty (50) years. Republic Act No. 3570, approved on June 21, 1963, expanded the area of coverage of the
franchise to include the municipalities of Tagoloan and Opol, both in the Province of Misamis Oriental. On August 4,
1969, Republic Act No. 6020 further amended the same franchise to include in the areas of CEPALCO's authority of
"generating and distributing electric light and power for sale," the municipalities of Villanueva and Jasaan, also of the
said province.
Presidential Decree No. 243, issued on July 12, 1973, created a "body corporate and politic" to be known as the
Philippine Veterans Investment Development Corporation (PHIVIDEC) vested with authority to engage in "commercial,
industrial, mining, agricultural and other enterprises" among other powers [1] and "to allow the full and continued
employment of the productive capabilities of and investment of the veterans and retirees of the Armed Forces of the
Philippines." On August 13, 1974, Presidential Decree No. 538 was promulgated to create the PHIVIDEC Industrial
Authority (PIA), a subsidiary of PHIVIDEC, to carry out the government policy "to encourage, promote and sustain the
economic and social growth of the country and that the establishment of professionalized management of well-
planned industrial areas shall further this objective."[2] Under Sec. 3 of P.D. No. 538, the first area for development shall
be located in the municipalities of Tagoloan and Villanueva.[3] This area forms part of the PHIVIDEC Industrial Estate
Misamis Oriental (PIE-MO).
As manager of PIE-MO, PIA granted the Ferrochrome Philippines, Inc. (FPI) and Metal Alloys Corporation
(MAC) authority to operate in its area of development. On July 6, 1979, PIA granted CEPALCO a temporary authority to
retail electric power to the industries operating within the PIE-MO.[4] The Agreement executed by PIA and CEPALCO
authorized CEPALCO "to operate, administer, construct and distribute electric power within the PHIVIDEC Industrial
Estate, Misamis Oriental, such authority to be co-extensive with the territorial jurisdiction of PHIVIDEC Industrial
Estate, as defined in Sec. 3 of P.D. No. 538 and shall be for a period of five (5) years, renewable for another five (5) years
at the option of CEPALCO." The parties provided further that:
"9. At the end of the fifth year, or at the end of the 10th year, should this Agreement be thus renewed,
PIA has the option to take over the operation of the electric service and acquire by purchase CEPALCO's
assets within PIE-MO. This option shall be communicated to CEPALCO in writing at least 24 months
before the date of acquistion of assets and takeover of operation by PIA. Should PIA exercise its option
to purchase the assets of CEPALCO in PIE-MO, PIA shall respect the right of ownership of and
maintenance by CEPALCO of those assets inside PIE-MO not covered by such purchase. x x x."
According to PIA,[5] CEPALCO proved no match to the power demands of the industries in PIE-MO that most of
these companies operating therein closed shop.[6] Impelled by a "desire to provide cheap power costs to power-
intensive industries operating within the Estate," PIA applied with the National Power Corporation (NPC) for direct
power connection which the latter in due course approved.[7] One of the companies which entered into an agreement
with the NPC for a direct sale and supply of power was the Ferrochrome Phils., Inc. (FPI).
 Contending that the said agreement violated its right as the authorized operator of an electric light and power
system in the area and the national electrification policy, CEPALCO filed Civil Case No. Q-35945, a petition for
prohibition, mandamus and injunction before the Regional Trial Court of Quezon City against the
NPC. Notwithstanding NPC's claim that it was authorized by its Charter to sell electric power "in bulk" to industrial
enterprises, the lower court rendered a decision on May 2, 1984, restraining the NPC from supplying power directly to
FPI upon the ground that such direct sale, supply and delivery of electric power by the NPC to FPI was violative of the
rights of CEPALCO under its legislative franchise. Hence, the lower court ordered the NPC to "permanently desist"
from effecting direct supply of power to the FPI and "from entering into and/or implementing any agreement or
arrangement for such direct power connection, unless coursed through the power line" of CEPALCO.
Eventually, the case reached this Court through G.R. No. 72085.[8] On December 28, 1989, the Court denied the
appeal interposed by NPC on the ground that the statutory authority given to the NPC as regards direct supply of
power to BOI-registered enterprises "should always be subordinate to the 'total-electrification-of-the-entire-country-
on-an-area-coverage basis policy' enunciated in P. D. No. 40."[9] We held further that:
"Nor should we lose sight of the factual findings of the court a quo that petitioner-appellee CEPALCO
had not only been authorized by the Phividec Industrial Authority to provide electrical power to the
Phividec Industrial Estate within which the FPI plant is located, but that petitioner-appellee CEPALCO
had in fact, supplied the latter's power requirements for the construction of its plant, upon FPI's
application therefor as early as October 17, 1980.
It bears emphasis then that 'it is only after a hearing (or an opportunity for such a hearing) where it is
established that the affected private franchise holder is incapable or unwilling to match the reliability
and rates of NPC that a direct connection with NPC may be granted.' Here, petitioner-appellee's
reliability as a power supplier and ability to match the NPC rates were never put in issue.
It is immaterial that petitioner-appellee's franchise was not exclusive. A privilege to sell within specified
territory, even if not exclusive, is a valuable property right entitled to protection against unauthorized
competition."[10]
Notwithstanding said decision, in September 1990, FPI filed a new application for the direct supply of electric
power from NPC. The Hearing Committee of the NPC had started hearing the application but CEPALCO filed with the
Regional Trial Court of Quezon City a petition for contempt against NPC officials led by Ernesto Aboitiz. On August 10,
1992, the trial court found the respondents in direct contempt of court and accordingly imposed upon them a fine of
500.00 each.
The respondent NPC officials challenged before this Court the judgment holding them in contempt of court
through G.R. No. 107809, (Aboitiz v. Regino).[11] In the Decision of July 5, 1993, the Court upheld the contempt ruling
and, after quoting the lower court's decision of May 2, 1984 which the Court upheld in G.R. No. 72085, said:
"These directives show that the lower court (and this Court) intended the arrangment between FPI and
CEPALCO to be permanent and free from NAPOCOR's influence or intervention. Any attempt on the
part of NAPOCOR or its officers and/or employees to strike a deal with FPI would be a clear and direct
disobedience to a lawful order and therefore contemptuous.
The petitioners call the attention of the Court to the statement of CEPALCO that 'NAPOCOR has
already implemented in full' the May 2, 1984 decision of the lower court as affirmed by this Court. They
suggest that in view of this, the decision no longer has any binding effect upon the parties, or to put it
another way, has become functus officio. Consequently, when they entertained the re-application of FPI
for direct power connection to NAPOCOR, they were not disobeying the May 2, 1984 order of the trial
court and so should not be held in contempt.
This argument must be rejected in view of our finding of the permanence and comprehensiveness of the
challenged order of the trial court. 'Permanent' is not adifficult word to understand. It means 'lasting or
intended to last indefinitely without change.' As for the scope of the order, NAPOCOR was directed to
'desist from effecting, causing, and continuing the direct supply, sale and delivery of electricity from its
power line to the plant of Ferrochrome Philippines, Inc., and from entering into and/or implementing
any agreement or arrangement for such direct power connection, unless coursed through the power line
of petitioner." (Underscoring supplied.)
Meanwhile, the NPC Hearing Committee[12] proceeded with its hearings. CEPALCO was duly notified thereof
but it opted to question the committee's jurisdiction. It did not submit any evidence. Consequently, in its Report and
Recommendation dated September 27, 1991, the committee gave weight to the evidence presented by FPI that
CEPALCO charged higher rates than what the NPC would if allowed to supply power directly to FPI. Although the
committee considered as unfounded FPI's claim of CEPALCO's unreliability as a power supplier,[13] it nonetheless held
that:
"Form (sic) the foregoing and on the basis of the decision of the Supreme Court in the case of National
Power Corporation and Fine Chemicals (Phils.) Inc. v. The Court of Appeals and the Manila Electric
Company, G.R. No. 84695, May 8, 1990, FPI is entitled to a direct connection to NPC as applied for
considering that CEPALCO is unwilling to match the rates of NPC for directly serving FPI and that FPI is
a duly registered BOI registered enterprises (sic). The Supreme Court in the aforestated case has ruled
as follows:
'As consistently ruled by the Court pursuant to P.D. No. 380 as amended by P.D. No. 395,
NPC is statutorily empowered to directly service all the requirements of a BOI registered
enterprise provided that, first, any affected private franchise holder is afforded an
opportunity to be heard on the application therefor and second, from such a hearing, it is
established that said private franchise holder is incapable or unwilling to match the
reliability and rates of NPC for directly serving the latter (National Power
Corporation v. Jacinto, 134 SCRA 435 [1985]. National Power Corporation v. Court of
Appeals, 161 SCRA 103 [1988]).'"[14]
However, considering the "better and priority right" of PIA, the committee recommended that instead of a direct
power connection by the NPC to FPI, the connection should be made to PIA "as a utility user for its industrial Estate at
Tagoloan, Misamis Oriental."[15]
For its part, on November 3, 1989, CEPALCO filed with the Energy Regulatory Board (ERB) a petition praying
that the ERB "order the discontinuance of all existing direct supply of power by the NPC within petitioner's franchise
area" (ERB Case No. 89-430). On July 17, 1992, the ERB ruled that CEPALCO "is relatively efficient and reliable as
manifested by its very low system losses (far from the 14% standard) and very high power factors" and therefore
CEPALCO is technically capable "to distribute power to its consumers within its franchise area, particularly the
industrial customers." It disposed of the petition as follows:
"WHEREFORE, in view of the foregoing premises, when the petitioner has been proven to be capable of distributing
power to its industrial consumers and having passed the secondary considerations with a passing mark of 85%,
judgment is hereby rendered granting the relief prayed for. Accordingly, it is hereby declared that all direct connection
of industries to NPC within the franchise area of CEPALCO is no longer necessary.Therefore, all existing NPC direct
supply of power to industrial consumers within the franchise area of CEPALCO is hereby ordered discontinued. x x
x."[16]
However, during the pendency of the Aboitiz case in this Court or on August 3, 1992, PIA contracted the NPC
for the construction of a 138 kilovolt (KV) transmission line from Namutulan substation to the receiving and/or
substation of PIA.[17]
As expected, on February 17, 1993, CEPALCO filed in the Regional Trial Court of Pasig (Branch 68), a petition
for certiorari, prohibition, mandamus and injunction against the NPC and some officials of both the NPC and
PIA.[18]Docketed as SCA No. 290, the petition specifically sought the issuance of a temporary restraining
order. However, after hearing, the prayer for the temporary restraining order was denied by the court in its order of
March 12, 1993.[19]CEPALCO filed a motion for the reconsideration of said order while NPC and PIA moved for the
dismissal of the petition.[20]
On June 23, 1993, noting the cases filed by CEPALCO all seeking exclusivity in the distribution of electric power
to areas covered by its franchise, the court[21]ruled that "the right of petitioner to supply electric power in the aforesaid
area to the exclusion of other entities had been settled once and for all by the Regional Trial Court of Quezon City
wherein petitioner obtained a favorable judgment."Hence, the petition was dismissed on the ground of res judicata.[22]
Forthwith, CEPALCO elevated the case to this Court through a petition for certiorari, prohibition and injunction
with prayer for the issuance of a preliminary injunction or a temporary restraining order. The petition was docketed
as G.R. No. 110686 but on August 18, 1993, the Court referred it to the Court of Appeals pursuant to Sec. 9, paragraph
1 of B.P. Blg. 129 conferring upon the appellate court original jurisdiction to issue writs of prohibition and certiorari and
auxiliary writs.[23] In the Court of Appeals, the petition was docketed as CA-G.R. No. 31935-SP.
On September 10, 1993, the Fifteenth Division of the Court of Appeals issued a resolution[24] denying the prayer
for the issuance of a temporary restraining order on the strength of Sec. 1 of P.D. No. 1818. It ruled that since the NPC
is a public utility, it "enjoys the protective mantle" of said decree prohibiting courts from issuing restraining orders or
preliminary injunctions in cases involving infrastructure and natural resource development projects of, and operated
by, the government.[25]
However, on September 17, 1993, upon a motion for reconsideration filed by CEPALCO and a re-evaluation of
the provisions of P.D. No. 1818, the Court of Appeals set aside its resolution of September 10, 1993 and held that:
"x x x the project intended by respondent NPC, which is the construction, completion and operation of
the 138-kv line, is not in consonance with the intendment of said Decree which is to protect public
utilities and their projects and activities intended for public convenience and necessity. The project of
respondent NPC is intended to serve exclusively the needs of private entities, Metal Alloys Corporation
and Ferrochrome Philippine in Tagoloan, Misamis Oriental."
Accordingly, the Court of Appeals issued a temporary restraining order directing the private respondents
therein "to immediately cease and desist from proceeding with the construction, completion and operation of the 138-
kv line subject of the petition." The NPC, PIA and the officers of both were directed to explain why the preliminary
injunction prayed for should not issue.[26]
In due course, the Court of Appeals rendered the decision [27] of November 15, 1993 assailed herein. After ruling
that the lower court gravely abused its discretion in dismissing the petition below on the grounds of res judicata and litis
pendentia, the Court of Appeals confronted squarely the issue of whether or not "the NPC itself has the power to
determine the propriety of direct power connection from its lines to any entity located within the franchise area of
another public utility."[28]
Elucidating that the ruling of this Court in both G.R. No. 78609 (NPC v. Court of Appeals)[29] and G.R. No. 87697
(Del Monte [Philippines], Inc. v. Hon. Felix M. de Guzman, etc., et al.)[30] categorically held that before a direct
connection to the NPC may be granted, a proper administrative body must conduct a hearing "to determine which
entity, the franchise holder or the NPC, has the right to supply electric power to the entity applying for direct
connection," the Court of Appeals declared:
"We have no doubt that the ERB, and not the NPC, is the administrative body referred to by the Supreme Court where
the hearing is to be conducted to determine the propriety of direct connection. The charter of the ERB (PD 1206 in
relation to EO 172) is clear on this:
"The Board shall, after due notice and hearing, exercise the following powers and functions, among others:
xxxxxxxxx
e. Issue Certificate of Public Convenience for the operation of electric power utilities and services, ... including the
establishment and regulation of areas of operation of particular operators of public power utilities and services, the
fixing of standards and specifications in all cases related to the issued Certificate of Public Convenience ..."
Moreover, NPC is not an administrative body as jurisprudentially defined, and that the NPC cannot usurp a power it has
never been conferred by its charter or by other law -- the power to determine the validity of direct connection
agreement it enters into in violation of a power distributor's franchise.
Thus, considering that PIA professes to be and intends to engage in the business of a public power utility, it must first
apply for a public convenience and necessity (conferment of operating authority) with the ERB. This may have been the
opportune time for ERB to determine whether to allow PIA to directly connect with NPC, with notice and opportunity
for CEPALCO considering that, as the latter alleges, this new line which NPC is installing duplicates that existing
Cepalco 138 kv line which NPC itself turned over to Cepalco and for which it was paid in full."
Consequently, the Court of Appeals affirmed the dismissal of the petition, annulled and set aside the decision of the
Hearing Committee of the NPC on direct connection with PIA, and ordered the NPC "to desist from continuing the
construction of that NPC-Natumulan-Phividec 138 kv transmission line."[31]
Without filing a motion for the reconsideration of said Decision, NPC filed in this Court on December 9, 1993, a
motion for an extension of time within which to file "the proper petition." The motion which was docketed as G.R. No.
112702, was granted on December 20, 1993 with warning that no further extension would be granted. Thereafter, NPC
filed a motion praying that it be excused from filing the petition on account of the filing by PIA in the Court of Appeals
of a motion for the reconsideration of the Decision of November 15, 1993. In the Resolution of February 2, 1994, the
Court noted and granted petitioner's motion and considered the case "closed and terminated."[32] This resolution was
withdrawn in the Resolution of February 8, 1995[33] in view of the "inadvertent clerical error" terminating the case, after
the NPC had mailed its petition for review on certiorari on February 21, 1994.[34]
In the meantime, PIA filed a motion for reconsideration of the appellate court's Decision of November 15, 1993
arguing in the main that, not being a party to previous cases between CEPALCO and NPC, it was not bound by
decisions of this Court. The Court of Appeals denied the motion on January 28, 1994 on the basis of stare decisis where
once the court has laid down a principle of law as applicable to a certain state of facts, it will adhere to and apply the
principle to all future cases where the facts are substantially the same.[35] Hence, PIA filed a petition for review
on certiorari which was docketed as G.R. No. 113613.
G.R. Nos. 112702 and 113613 were consolidated on June 15, 1994.[36]
In G.R. No. 112702, petitioner NPC contends that private respondent CEPALCO is not entitled to relief because
it has been forum-shopping. Private respondent had filed Civil Case No. Q-93-14597 in the Regional Trial Court of
Quezon City which had been forwarded to it by the Regional Trial Court of Pasig. Said case and the instant case (SCA
No. 290) deal with the same issue of restoring CEPALCO's right to supply power to FPI and MAC. Petitioner thus
contends that because the principle of litis pendentia applies, although other parties are involved in the case before the
Quezon City court, there is no basis for granting relief to private respondent CEPALCO "(s)ince the dismissal for lack of
jurisdiction was affirmed by the respondent court."[37] Corollarily, petitioner asserts that because the main case herein
was dismissed "without trial," the respondent appellate court should not have accorded private respondent affirmative
relief.[38]
Petitioner NPC's contention is based on the fact that on October 6, 1992, private respondent CEPALCO filed
against the NPC in the Regional Trial Court of Pasig, Civil Case No. 62490, an action for specific performance and
damages with prayer for preliminary mandatory injunction directing the NPC to immediately restore to CEPALCO the
distribution of power pertaining to MAC's consumption.[39]However, no summons was served and the ex-parte writ
prayed for was not issued. Nevertheless, the case was forwarded to the Regional Trial Court of Quezon City where it
was docketed as Civil Case No. 93-14597. That case was pending when SCA No. 290 was filed before the Regional Trial
Court of Pasig.
The Court of Appeals affirmed the lower court's dismissal of the case neither on the grounds of res
judicata nor litis pendentia but on the "only one unresolved issue, which
is whether the NPC itself has the power to determine the propriety ofdirect power connection from its lines to any entit
y located within the franchisearea of another public utility."[40] The Court of Appeals opined that the effects of litis
pendentia could not have resulted in the dismissal of SCA No. 290 because Civil Case No. Q-35945 which
became G.R. No. 72085 was based on facts totally different from that of SCA No. 290.
In invoking litis pendentia, however, petitioner NPC refers to this case, SCA No. 290, and Civil Case No. 93-
14597. SCA No. 290 and Civil Case No. 93-14597 may both have the same objective, the restoration of CEPALCO's right
to distribute power to PIE-MO areas under its franchise aside from the fact that the cases involve practically the same
parties. However, litis pendentia may not be successfully invoked to cause the dismissal of SCA No. 290.
In order to constitute a ground for the abatement or dismissal of an action, litispendentia must exhibit the
concurrence of the following requisites: (a) identity of parties, or at least such as representing the same interest in both
actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts, and (c) identity
in the two (2) cases should be such that the judgment that may be rendered in the pending case would, regardless of
which party is successful, amount to res judicata in the other.[41] As a rule, the second case filed should be abated under
the maxim qui prior est tempore, potior est jure. However, this rule is not a hard and fast one. The "priority-in-time rule"
may give way to the criterion of "more appropriate action." More recently, the criterion used was the "interest of justice
rule."[42]
We hold that the last criterion should be the basis for resolving this case, although it was filed later than Civil
Case No. 62490 which, upon its transfer, became Civil Case No. 93-14795. In so doing, we shall avoid multiplicity of
suits which is the matrix upon which litis pendentia is anchored and eventually bring about the final settlement of the
recurring issue of whether or not the NPC may supply power directly to the industries within PIE-MO, notwithstanding
the operation of franchisee CEPALCO in the same area.
It should be noted that there is yet pending another case, namely, Civil Case No. 91-383, instituted by PIA
against CEPALCO in the Regional Trial Court of Misamis Oriental which apparently deals with a related issue - PIA's
franchise or authority to provide power to enterprises within the PIE-MO.[43] Hence, the principle of litis
pendentia which ordinarily demands the dismissal of an action filed later than another, should be considered under the
primordial concept of "interest of justice," in order that a recurrent issue common to all cases may be definitively
resolved.
The principal and common question raised in these consolidated cases is:whether or not the NPC may supply
power directly to PIA in the PIE-MO area where CEPALCO has a franchise. Petitioner PIA in G.R. No. 113613 asserts
that it may receive power directly from the NPC because it is a public utility. It avers that P.D. No. 538, as amended,
empowers PIA "as and to be a public utility to operate and serve the power needs within PIE-MO, i.e., a specific area
constituting a small portion of petitioner's franchise coverage," without, however, specifying the particular provision
which so empowers PIA.[44]
A "public utility" is a business or service engaged in regularly supplying the public with some commodity or
service of public consequence such as electricity, gas, water, transportation, telephone or telegraph service. [45] The
term implies public use and service.[46]
Petitioner PIA is a subsidiary of the PHIVIDEC with "governmental and proprietary functions."[47] Sec. 4 of P.D.
No. 538 specifically confers upon it the following powers:
"a. To operate, administer and manage the PHIVIDEC Industrial Areas and other areas which shall
hereafter be proclaimed, designated and specified in subsequent Presidential Proclamation; to
construct acquire, own, lease, operate and maintaininfrastructure facilities, factory buildings,
warehouses, dams, reservoirs, water distribution, electric light and power systems, telecommunications
and transportation networks, or such other facilities and services necessary or useful in the conduct of
industry and commerce or in the attainment of the purposes and objectives of this Decree;"
(Underscoring supplied.)
Clearly then, the PIA is authorized to render indirect service to the public by its administration of the PHIVIDEC
industrial areas like the PIE-MO and may, therefore, be considered a public utility. As it is expressly authorized by law
to perform the functions of a public utility, a certificate of public convenience, as suggested by the Court of Appeals, is
not necessary for it to avail of a direct power connection from the NPC. However, such authority to be a public utility
may not be exercised in such a manner as to prejudice the rights of existing franchisees. In fact, by its actions, PIA
recognized the rights of the franchisees in the area.
Accordingly, in pursuit of its powers "to grant such franchise for and to operate and maintain within the Areas
electric light, heat or power systems," etc. under Sec. 4 (i) of P.D. No. 538 and its rule-making power under Sec. 4 (l) of
the same law, on July 20, 1979, the PIA Board of Directors promulgated the "Rules and Regulations To Implement the
Intent and Provisions of Presidential Decree No. 538."[48] Rule XI thereof on "Utilities and Services" provides as follows:
"SECTION 1. Utilities - It is the responsibility of the Authority to provide all required utilities and services inside the
Estate:
x x x x x x x x x.
a) Contracts for the purchase of public utilities and/or services shall be subject to the prior approval of
the Authority; Provided, however, that similar contract(s) existing prior to the effectivity of this
Rules and Regulations shall continue to be in full force and effect.
x x x x x x x x x.
(Underscoring supplied.)
It should be noted that the Rules and Regulations took effect thirty (30) days after its publication in the Official
Gazette on September 24, 1979 or more than three (3) months after the July 6, 1979 contract between PIA and
CEPALCO was entered into. As such, the Rules and Regulations itself allowed the continuance of the supply of electric
power to PIE-MO by CEPALCO.
That the contract of July 6, 1979 was not renewed by the parties after the expiration of the five-year period
stipulated therein did not change the fact that within that five-year period, in violation of both the contract and its
Rules and Regulations, PIA applied with the NPC for direct power connection. The matter was aggravated by NPC's
favorable action on the application, totally unmindful of the extent of its powers under the law which, in National
Power Corporation v. Court of Appeals,[49] the Court delimits as follows:
"x x x. It is immaterial whether the direct connection is merely an improvement or an increase in existing
voltage, as alleged by petitioner, or a totally new and separate electric service as claimed by private
respondent. The law on the matter is clear. PD 40 promulgated on 7 November 1972 expressly provides
that the generation of electric power shall be undertaken solely by the NPC. However, Section 3 of the
same decree also provides that the distribution of electric power shall be undertaken by cooperatives,
private utilities (such as the CEPALCO), local governments and other entities duly authorized, subject to
state regulation. (Underscoring supplied.)
The same case ruled that "(i)t is only after a hearing (or an opportunity for such a hearing) where it is
established that the affected private franchise holder is incapable or unwilling to match the reliability and rates of NPC
that a direct connection with NPC may be granted."[50] As earlier stated, the Court arrived at the same ruling in the later
cases of G.R. Nos. 72085, 84695 and 87697.
Petitioner NPC attempted to abide by these rulings when it conducted a hearing to determine whether it may
supply power directly to PIA. While it notified CEPALCO of the hearing, the NPC is not the proper authority referred to
by this Court in the aforementioned earlier decisions, not only because the subject of the hearing is a matter involving
the NPC itself, but also because the law has created the proper administrative body vested with authority to conduct a
hearing.
CEPALCO shares the view of the Court of Appeals that the Energy Regulatory Board (ERB) is the proper
administrative body for such hearings. However, a recent legislative development has overtaken said view.
The ERB, which used to be the Board of Energy, is tasked with the following powers and functions by Executive
Order No. 172 which took effect immediately after its issuance on May 8, 1987:
"SEC. 3. Jurisdiction, Powers and Functions of the Board. - When warranted and only when public
necessity requires, the Board may regulate the business of importing, exporting, re-exporting, shipping,
transporting, processing, refining, marketing and distributing energy resources. x x x.
The Board shall, upon prior notice and hearing, exercise the following, among other powers and
functions:
(a) Fix and regulate the prices of petroleum products;
(b) Fix and regulate the rate schedule or prices of piped gas to be charged by duly franchised gas companies which
distribute gas by means of underground pipe system;
(c) Fix and regulate the rates of pipeline concessionaires under the provisions of Republic Act No. 387, as amended,
otherwise known as the 'Petroleum Act of 1949,' as amended by Presidential Decree No. 1700;
(d) Regulate the capacities of new refineries or additional capacities of existing refineries and license refineries that
may be organized after the issuance of this Executive Order, under such terms and conditions as are consistent with
the national interest;
(e) Whenever the Board has determined that there is a shortage or any petroleum product, or when public interest so
requires, it may take such steps as it may consider necessary, including the temporary adjustment of the levels of
prices of petroleum products and the payment to the Oil Price Stabilization Fund created under Presidential Decree
No. 1956 by persons or entities engaged in the petroleum industry of such amounts as may be determined by the
Board, which will enable the importer to recover its cost of importation."
As may be gleaned from said provisions, the ERB is basically a price or rate-fixing agency. Apparently
recognizing this basic function, Republic Act No. 7638 (An Act Creating the Department of Energy, Rationalizing the
Organization and Functions of Government Agencies Related to Energy, and for Other Purposes), [51]which was
approved on December 9, 1992 and which took effect fifteen days after its complete publication in at least two (2)
national newspapers of general circulation, specifically provides as follows:
"SEC. 18. Rationalization or Transfer of Functions of Attached or Related Agencies.- The non-price
regulatory jurisdiction, powers, and functions of the Energy Regulatory Board as provided for in Section
3 of Executive Order No. 172 are hereby transferred to the Department.
 The foregoing transfer of powers and functions shall include all applicable funds and appropriations,
records, equipment, property, and such personnel as may be necessary. Provided, That only such
amount of funds and appropriations of the Board as well as only the personnel thereof which are
completely or primarily involved in the exercise by said Board of its non-price regulatory powers and
functions shall be affected by such transfer.
The power of the NPC to determine, fix, and prescribe the rates being charged to its customers under
Section 4 of Republic Act No. 6395, as amended, as well as the power of electric cooperatives to fix rates
under Section 16 (o), Chapter II of Presidential Decree No. 269, as amended, are hereby transferred to
the Energy Regulatory Board. The Board shall exercise its new powers only after due notice and hearing
and under the same procedure provided for in Executive Order No. 172."
Upon the effectivity of Republic Act No. 7638, then Acting Chairman of the Energy Coordinating Council Delfin
Lazaro transmitted to the Department of Justice the query of whether or not the "non-power rate powers and
functions" of the ERB are included in the "jurisdiction, powers and functions transferred to the Department of Energy."
Answering the query in the affirmative, the Department of Justice rendered Opinion No. 22 dated February 12, 1993
the pertinent portion of which states:
"x x x we believe that since the provision of Section 18 on the transfer of certain powers and functions
from ERB to DOE is clear and unequivocal, and devoid of any ambiguity, in the sense that it
categorically refers to 'non-price jurisdiction, powers and functions' of ERB under Section 3 of E.O. No.
172, there is no room for interpretation, but only for application, of the law. This is a cardinal rule of
statutory construction.
Clearly, the parameters of the transfer of functions from ERB to DOE pursuant to Section 18, are
circumscribed by the provision of Section 3 of E.O. No. 172 alone, so that, if there are other 'related'
functions of ERB under other provisions of E.O. No. 172 or other energy laws, these 'related' functions,
which may conceivably refer to what you call 'non-power rate powers and functions' of ERB, are clearly
not contemplated by Section 18 and are, therefore, not to be deemed included in the transfer of
functions from ERB to DOE under the said provision.
It may be argued that Section 26 of R.A. No. 7638 contains a repealing clause which provides that:
'All laws, presidential decrees, executive orders, rules and regulations or parts thereof,
inconsistent with the provisions of this Act, are hereby repealed or modified accordingly.
x x x.'
and, therefore, all provisions of E.O. No. 172 and related laws which are inconsistent with the policy,
purpose and intent of R.A. No. 7638 are deemed repealed. It has been said, however, that a general
repealing clause of such nature does not operate as an express repeal because it fails to identify or
designate the act or acts that are intended to be repealed. Rather, it is a clause which predicates the
intended repeal upon the condition that a substantial conflict must be found on existing and prior acts
of the same subject matter. Such being the case, the presumption against implied repeals and the rule
on strict construction regarding implied repeals shall apply ex propio vigore. For the legislature is
presumed to know the existing laws so that, if repeal of particular or specific laws is intended, the proper
step is to so express it. The failure to add a specific repealing clause particularly mentioning the statute
to be repealed indicates that the intent was not to repeal any existing law on the matter, unless an
irreconcilable inconsistency and repugnancy exists in the terms of the new and the old laws (Iloilo Palay
and Corn Planters Association, Inc. vs. Feliciano, 13 SCRA 377; City of Naga vs. Agna, 71 SCRA 176, cited
in Agpalo, Statutory Construction, 1990 Edition, pp. 191-192).
In view of the foregoing, it is our opinion that only the non-price regulatory functions of ERB under
Section 3 of E.O. 172 are transferred to the DOE. All other powers of ERB which are not within the
purview of its 'non-price regulatory jurisdiction, powers and functions' as defined in Section 3 are not so
transferred to DOE and accordingly remain vested in ERB."
The determination of which of two public utilities has the right to supply electric power to an area which is
within the coverage of both is certainly not a rate-fixing function which should remain with the ERB. It deals with the
regulation of the distribution of energy resources which, under Executive Order No. 172, was expressly a function of
ERB. However, with the enactment of Republic Act No. 7638, the Department of Energy took over such
function. Hence, it is this Department which shall then determine whether CEPALCO or PIA should supply power to
PIE-MO.
Clearly, petitioner NPC's assertion that its "authority to entertain and hear direct connection applications is a
necessary incident of its express authority to sell electric power in bulk" is now baseless. [52] Even without the new
legislation affecting its power to conduct hearings, it is certainly irregular, if not downright anomalous for the NPC
itself to determine whether it should supply power directly to the PIA or the industries within the PIE-MO. It simply
cannot arrogate unto itself the authority to exercise non-rate fixing powers which now devolves upon the Department
of Energy and to hear and eventually grant itself the right to supply power in bulk.[53]
On the other hand, ventilating the issue in a public hearing would not unduly prejudice CEPALCO although it
was enfranchised by law earlier than the PIA.Exclusivity of any public franchise has not been favored by this Court such
that in most, if not all, grants by the government to private corporations, the interpretation of rights, privileges or
franchises is taken against the grantee. Thus in Alger Electric, Inc. v. Court of Appeals,[54] the Court said:
"x x x Exclusivity is given by law with the understanding that the company enjoying it is self-sufficient
and capable of supplying the needed service or product at moderate or reasonable prices. It would be
against public interest where the firm granted a monopoly is merely an unnecessary conduit of electric
power, jacking up prices as a superfluous middleman or an inefficient producer which cannot supply
cheap electricity to power intensive industries. It is in the public interest when industries dependent on
heavy use of electricity are given reliable and direct power at the lower costs thus enabling the sale of
nationally marketed products at prices within the reach of the masses. x x x."
WHEREFORE, both petitions in G.R. No. 112702 and 113613 are hereby DENIED. The Department of Energy is
directed to conduct a hearing with utmost dispatch to determine whether it is the Cagayan Electric Power and Light
Co., Inc. or the National Power Corporation, through the PHIVIDEC Industrial Authority, which should supply electric
power to the industries in the PHIVIDEC Industrial Estate-Misamis Oriental. This Decision is immediately executory.
SO ORDERED
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-45107 November 11, 1991
BENEDICTO RAMOS, petitioner,
vs.
HON. ELVIRO L. PERALTA, Presiding Judge, Branch XVII, Court of First Instance of Manila, SPOUSES JUVENCIO
ORTANEZ and JULIANA S. ORTANEZ, MINDANAO INSURANCE CO., INC. and P. R. ROMAN, INC.,respondents.
Angel Suntay, Jr. and Renato M. Coronado for petitioner.
Tolentino, Garcia, Cruz & Reyes for respondents Ortanez.
FERNAN, C.J.:
Put in issue in this petition for review on certiorari is the propriety of the dismissal by the then Court of First Instance of
(CFI) of Manila, Branch XVII of petitioner's action for consignation of the sum of P70,000.00 representing advance
rentals for the 101-hectare Salgado fishpond located in Bo. Balut, Pilar, Bataan.
Petitioner started occupying the Salgado fishpond in 1964 by virtue of a lease contract executed in his favor by private
respondents spouses Juvencio and Juliana Ortanez. The original lease for a term of five (5) years from January 1, 1964
to January 1, 1990, was renewed several times, the last renewal being on June 28, 1974 under a "Kasunduan sa Pag-
upa" for a period of three (3) years starting January 1, 1975 to December 31, 1977.
Unknown to petitioner, title 1 to said property was in the name of Philippine International Surety Co., Inc., a
corporation founded, organized and 99.5%-owned by the Salgado spouses. Later renamed Mindanao Insurance Co.,
Inc., 2 said corporation was placed under receivership and liquidation on June 20, 1968 in Civil Case No. Q-10664 of the
then CFI of Rizal, Branch IV, Quezon City, upon application of Insurance Commissioner Gregoria Cruz-Ansaldo who was
appointed receiver.
Thereafter on February 23, 1976, respondent P. R. Roman, Inc. purchased from Mindanao Insurance the Salgado
fishpond for P950,000.00. The deed of sale was signed by the receiver and duly approved by the liquidation court.
Apparently due to this development, the spouses Ortanez refused to accept from petitioner the advance rentals on the
fishpond due on March 15, 1976 in the amount of P30,000.00.
On or about May 1, 1976, petitioner received a letter from Don Pablo R. Roman informing him of the latter's acquisition
of the fishpond and intention to take possession thereof on May 16, 1976. In his letter-reply, petitioner reminded Mr.
Roman of his lease contract over the fishpond and refused to consent to the intended take over. Notwithstanding
petitioner's objection, P. R. Roman, Inc. took over possession of the fishpond.
On August 2, 1976, petitioner filed before the CFI of Manila the aforesaid complaint, docketed as Civil Case No.
103647, 3 against private respondents Juvencio and Juliana Ortanez, Mindanao Insurance and P. R. Roman, Inc. for
consignation of the sum of P70,000.00 representing advance rentals on the fishpond in the amounts of P30,000.00 and
P40,000.00 respectively due on March 15, 1976 and June 15, 1976, which he had previously tendered to, but refused by
the spouses Ortanez and Pablo Roman.
P. R. Roman, Inc. filed a motion to dismiss on the grounds that venue was improperly laid, the complaint states no
cause of action and the court has no jurisdiction over the subject of the action or suit. In its motion to dismiss, P. R.
Roman, Inc. cited the pendency before the then CFI of Bataan of Civil Case No 4102 instituted by P.R. Roman, Inc.
against petitioner Benedicto Ramos on August 13, 1976 to quiet its title over the Salgado fishpond.
On August 27, 1976, respondent CFI of Manila issued an order 4 dismissing Civil Case No. 103647, stating in part:
Without discussing in detail the grounds mentioned above, the Court really sees that this case should be
dismissed not only insofar as against P. R. Roman, Inc. but also as against the other defendants mentioned
above for the reason, principally, that there is already a case pending between the same parties and for the
same cause in Civil Case No. 4102 of Branch II of the Court of First Instance of Bataan, entitled P. R.
Roman, Inc. vs. Benedicto Roman, which is precisely for the ownership of the subject matter of the property
allegedly leased to the plaintiff herein (Exhibit "A"-Motion). In the said case, the defendant therein,
Benedicto Ramos, who is the plaintiff in the case at bar, filed a motion for leave to file a third-party
complaint against the spouses surnamed Ortanez and the Mindanao Insurance Company Inc. All the issues
respecting the fishpond, including the lease contract, are necessarily involved in the case pending now in
Bataan. Aside from the above, the Court cannot decide this case because it cannot pre-empt the Court of
Bataan on whether or nor the P. R. Roman, Inc. is already the owner because if it finds that the said
defendant P. R. Roman, Inc. is really the owner of the fishpond, there is no more lease for which rentals are
to be paid.
Petitioner moved for reconsideration, but was unsuccessful, the court a quo, standing "pat on its previous order and
reiterat(ing) its dismissal of the case, without costs." 5However, in his brief, no further mention of this assigned error
was made; a clear indication of petitioner's admission of the identity of parties in Civil Case No. 4102 and Civil Case No.
103647, particularly as he filed a third party complaint in Civil Case No. 4102 against the spouses Ortanez and
Mindanao Insurance.
Anent the second element, we agree with private respondents' observation that petitioner's approach to his
consignation case is quite constricted. His contention that the only issue in a consignation case is whether or not the
defendant is willing to accept the proffered payment is true only where there is no controversy with respect to the
obligation sought to be discharged by such payment. His consignation case, however, is not as simple. While
ostensibly, the immediate relief sought for in his consignation case is to compel therein defendants to accept his
advance rentals, the ultimate purpose of such action is to compel the new owner of the fishpond to recognize his
leasehold rights and right of occupation. In the last analysis, therefore, the issue involved in Civil Case No. 103647 is the
right of possession over the fishpond intertwined with the validity and effectivity of the lease contract.
This is the same issue involved in Civil Case No. 4102. Although an action for quieting of title refers to ownership, P. R.
Roman, Inc. in its complaint 9 in Civil Case No. 4102 alleged:
5. There is a cloud on the aforesaid titles of plaintiff on the said agricultural land, marked Annexes "A", "B"
and "C" hereof, as well as on its right of possession over that real property by reason of a certain "Kasunduan
sa Pagupa" (Contract of Lease) dated June 28, 1974 executed by and between the spouses Jovencio
Ortanez and Juliana S. Ortanez purportedly as "may-ari/Nagpapaupa" (owner/lessor) and the defendant as
lessee, which instrument is apparently valid or effective but in truth and in fact invalid, ineffective,
voidable or unenforceable, and is prejudicial to the said titles of plaintiff as well as to its right of possession
over the same fishpond/agricultural land in Barrio Balut, Pilar, Bataan.
Thus, while the respondent court in the assailed order of dismissal dated August 27, 1976 described Civil Case No. 4102
as "precisely for the ownership of the subject matter of the property allegedly leased to the plaintiff herein," 10its order
dated October 22, 1976 denying petitioner's motion for reconsideration, more perceptively stated: 11
At any rate, petitioner cannot complain of any inconvenience arising from the dismissal of Civil Case No. 103647. Being
the defendant in Civil Case No. 4102, he cannot but litigate before the Bataan court, and bringing his consignation case
before the same court would actually save him time, effort and litigation expenses.
Finally, the rule on litis pendentia does not require that the later case should yield to the earlier case. What is required
merely is that there be another pending action, not a prior pending action. Considering the broader scope of inquiry
involved in Civil Case No. 4102 and the location of the property involved, no error was committed by the lower court in
deferring to the Bataan court's jurisdiction.
WHEREFORE, the assailed decision dated August 27, 1976 of the then Court of First Instance of Manila, Branch XVII, is
AFFIRMED in toto. This decision is immediately executory, with costs against petitioner.
SO ORDERED.
FIRST DIVISION
[G.R. No. 126713. July 27, 1998]
ADORACION E. CRUZ, THELMA DEBBIE E. CRUZ and GERRY E. CRUZ, petitioners, vs. COURT OF APPEALS and
SPOUSES ELISEO and VIRGINIA MALOLOS, respondents.
DECISION
PANGANIBAN, J.:
Contracts constitute the law between the parties. They must be read together and interpreted in an manner
that reconciles and gives life to all of them. The intent of the parties, as shown by the clear language used, prevails
over post factoexplanations that find no support from the words employed by the parties of from their contemporary
and subsequent acts showing their understanding of such contracts, Furthermore, a subsequent agreement cannot
novate or change by implication a previous one, unless old and new contracts are, on every point, incompatible with
each other. Finally, collateral facts may be admitted in evidence when a rational similarity exists between the
conditions giving rise to the fact offered and the circumstances surrounding the issue or fact to be proved.
The Case
Before us is a petition for review on certiorari seeking to nullify the Court of Appeals (CA) Decision [1] in CA- GR
CV 33566, promulgated July 15, 1996, which reversed the Regional Trial Court (RTC) of Antipolo, Rizal; and CA
Resolution[2] of October 1, 1996, which denied petitioners Motion for Reconsideration.
Petitioners Adoracion, Thelma Debbie, Gerry and Arnel (all surnamed Cruz) filed an action for partition against
the private respondents, Spouses Eliseo and Virginia Malolos. On January 28, 1991, the trial court rendered a Decision
which disposed as follows:[3]
WHEREFORE, judgment is hereby rendered for the plaintiffs and against the defendants-spouses
1. Ordering the partition of the seven parcels of land totalling 1,912 sq. m. among the four (4) plaintiffs and the
defendants-spouses as follows:
a. Adoracion E. Cruz (1/5) --- 382 sq. m.
b. Thelma Debbie Cruz (1/5) --- 382 sq. m.
c. Gerry E. Cruz (1/5) --- 382 sq. m.
d. Arnel E. Cruz (1/5) --- 382 sq. m.
e. Spouses Eliseo and Virginia Malolos (1/5) --- 382 sq. m.
to whom Lot No. 1-C-2-B-2-B-4-L-1-A with an area of 276 sq. m. covered by TCT
No. 502603 and a portion of Lot No. 1-C-2-B-2-B-4-L-1-B covered by TCT No.
502604 to the extent of 106 sq. m. adjoining TCT No. 502603.
2. Ordering the parties herein to execute a project of partition in accordance [with] this decision indicating the partition
of the seven (7) parcels of land within fifteen (15) days upon receipt of this judgment.
3. Ordering defendants-spouses to pay plaintiffs herein P5,000.00 as and for attorneys fees;
4. Cost of suit.
On appeal, Respondent Court reversed the trial court thus:[4]
WHEREFORE, finding the appeal to be meritorious, we REVERSE the appealed decision and render
judgment DISMISSING the complaint without prejudice however to the claim of plaintiff-appellees for their shares in
the proceeds of the auction sale of the seven (7) parcels of land in question against Nerissa Cruz Tamayo pursuant to
the Memorandum Agreement.
Cost against the plaintiff-appellees.
As earlier stated, reconsideration was denied through the appellate courts challenged Resolution: [5]
WHEREFORE, for lack of merit, the Motion for Reconsideration in DENIED..
The Antecedent Facts
The facts of this case are undisputed. The assailed Decision relates them as follows:[6]
Delfin I. Cruz and Adoracion Cruz were spouses and their children were Thelma, Nerissa, Arnel and Gerry Cruz. Upon
the death of Delfin I. Cruz, [his] surviving spouse and children executed on August 22, 1977 a notarized Deed of Partial
Partition (Exhibit 2) by virtue of which each one of them was given a share of several parcels of registered lands all
situated in Taytay, Rizal.
The following day, August 23, 1977, the same mother and children executed a Memorandum Agreement (Exhibit H)
which provided:
That the parties hereto are common co-owners pro-indiviso in equal shares of the following registered real properties,
all situated at Taytay, Rizal, Philippines, x x x.
xxx
That sometime on August 22, 1977, a Deed of Partial Partition was executed among us before Atty. Virgilio J. Tamayo,
Notary Public on and for the Province of Rizal, per Doc. No. 1776; Page No. 14; of his Notarial Register No. XLIX, Series
of 1977;
xxx
That as a result of said partial partition, the properties affected were actually partitioned and the respective shares of
each party, adjudicated to him/her;
That despite the execution of this Deed of Partial Partition and the eventual disposal or sale of their respective shares,
the contracting parties herein covenanted and agreed among themselves and by these presents do hereby bind
themselves to one another that they shall share alike and received equal shares from the proceeds of the sale of any lot
or lots allotted to and adjudicated in their individual names by virtue of this deed of partial partition.
That this Agreement shall continue to be valid and enforceable among the contracting parties herein up to and until
the last lot covered by the Deed of [P]artial [P]artition above adverted to shall have been disposed of or sold and the
proceeds thereof equally divided and their respective shares received by each of them.
This Memorandum Agreement was registered and annotated in the titles of the lands covered by the Deed of Partial
Partition.
Subsequently, the same parties caused the consolidation and subdivisions of the lands they respectively inherited from
the late Delfin I. Cruz per Deed of Partial Partition. After that, they registered the Deed of Partial Partition and
subdivision plans and titles were issued in their names. In the case of Nerissa Cruz Tamayo, the following titles were
issued to her in her name: TCT No. 502603 (Exhibit A), TCT No. 502604, (Exhibit B), TCT No. 502605 (Exhibit C), TCT
No. 502606 (Exhibit D), TCT No. 502608 (Exhibit E), TCT No. 502609 (Exhibit F), TCT No. 502610 (Exhibit G),
hereinafter called the lands in question. Naturally, the annotation pertaining to the Memorandum Agreement was
carried in each of said seven (7) titles and annotated in each of them.
Meanwhile, the spouses Eliseo and Virginia Malolos filed Civil Case No. 31231 against the spouses Nerissa Cruz-Tamayo
and Nelson Tamayo for a sum of money. The Court of First Instance of Rizal, Branch XVI (Quezon City) rendered a
decision of June 1, 1981 in favor of Eliseo and Virginia condemning the spouses Nerissa and Nelson Tamayo to pay
them P126,529.00 with 12% interest per annum from the filing of the complaint plus P5,000.00 attorneys fee. After the
finality of that decision, a writ of execution (Exhibit J) was issued on November 20, 1981.
Enforcing said writ, the sheriff of the court levied upon the lands in question. On June 29, 1983, these properties were
sold in an execution sale to the highest bidders, the spouses Eliseo and Virginia Malolos. Accordingly, the sheriff
executed a Certificate of Sale (Exhibit K) over
all the rights, claims, interests, titles, shares, and participations of defendant spouses Nerissa Tamayo and Nelson
Tamayo..
Nerissa Cruz Tamayo failed to exercise her right of redemption within the statutory period and so the final deed of sale
was executed by the sheriff conveying the lands in question to spouses Eliseo and Virginia Malolos. The Malolos couple
asked Nerissa Cruz Tamayo to give them the owners duplicate copy of the seven (7) titles of the lands in question but
she refused. The couple moved the court to compel her to surrender said titles to the Register of Deeds of Rizal for
cancellation. This was granted on September 7, 1984. But Nerissa was adamant.She did not comply with the Order of
the court and so the Malolos couple asked the court to declare said titles as null and void.
At this point, Adoracion Cruz, Thelma Cruz, Gerry Cruz and Arnel Cruz entered the picture by filing is said lower court a
motion for leave to intervene and oppose [the] Maloloses motion. The Cruzes alleged that they were co-owners of
Nerissa Cruz Tamayo over the lands in question.
On January 18, 1985, said court issued an Order modifying the Order of September 7, 1984 by directing the surrender
of the owners duplicate copies of the titles of the lands in question to the Register of Deeds not for cancellation but for
the annotation of the rights, interest acquired by the Maloloses over said lands.
On February 17, 1987, Adoracion, Thelma, Gerry and Arnel Cruz filed Civil Case No. 961-A for Partition of Real Estate
against spouses Eliseo and Virginia Malolos over the lands in question.
As already stated in the first paragraph of this Decision, the court a quo rendered a decision in favor of the plaintiffs
from which the defendants appealed to this court, x x x x .
Ruling of the Court of Appeals
For Respondent Court, the central issue was: Did the Memorandum of Agreement [MOA] (Exhibit H)[7] revoke,
cancel or supersede the Deed of Partial Partition [DPP] (Exhibit 2)? [8] If so, then petitioners and Spouses Tamayo were
co-owners of the land in issue, and partition should ensue upon motion of the former; if not, then the latter are its
absolute owners and to partition should be made.
Respondent Court resolved the above question in the negative for the following reasons:
First, the DPP was not materially and substantially incompatible with the MOA.The DPP conferred absolute
ownership of the parcels of land in issue on Nerissa Cruz Tamayo, while the MOA merely created an obligation on her
part to share with the petitioners the proceeds of the sale of said properties.
Second, the fact that private respondent registered the DPP was inconsistent with the allegation that they
intended to abandon it. Indeed, had they meant to abandon it, they would have simply gathered the copies of said
document and then torn of burned them.
Third, petitioners were estopped from claiming co-ownership over the disputed properties because, as absolute
owners, they either mortgaged or sold the other properties adjudicated to them by virtue of the DPP.
Hence, this petition.[9]
Assignment of Errors
In their Memorandum,[10] petitioners submit the following assignment of errors:
A. Respondent Court erred in ruling that the Memorandum of Agreement (Exhibit H) does not prevail over the
Deed of Partial Partition (Exhibit 2).
B. Respondent Court erred in ruling that petitioners can only claim their right to the proceeds of [the] auction
sale.
C. Respondent Court erred in ruling that petitioners are in estoppel by deed.
D. Respondent Court erred in ruling that the registration of the deed of partial partition precluded the
petitioners from abrogating it.
E. Respondent Court erred when it completely ignored the finality of the order of the Regional Trial Court of
Quezon City, Branch LXXXVI as embodied in the decision of the Regional Trial Court of
Antipolo, Rizal, Branch 71.
In fine, the resolution of this petition hinges of the following issues: (1) whether DPP was cancelled or novated
by the MOA; (2) whether the MOA established, between petitioners and the judgment debtor, a co-ownership of the
lots in question; (3) whether petitioners are barred by estoppel from claiming co-ownership of the seven parcels of
land; and (4) whether res judicata has set in.
The Courts Ruling
The petition is bereft of merit. It fails to demonstrate any reversible error on the part of the Court of Appeals.
First Issue: No Novation or Cancellation
In their Memorandum, petitioners insist that the MOA categorically and unmistakably named and covenanted
them as co-owners of the parcels in issue and novated their earlier agreement, the Deed of Partial Partition.
Petitioners claim that the MOA clearly manifested their intention to create a co-ownership. This is particularly
evident in Exhibit 1-B, which provides:
That despite the execution of this Deed of Partial Partition and eventual disposal or sale of their respective shares, the
contracting parties herein covenanted and agreed among themselves and by these presents do hereby bind
themselves to one another that they shall share and receive equal shares from the proceeds of the sale of any lot or lots
allotted to and adjudicated in their individual names by virtue of this deed of partial partition.
The Court disagrees. The foregoing provision in the MOA does not novate, much less cancel, the earlier
DPP. Novation, one of the modes of extinguishing an obligation, requires the concurrence of the following: (1) there is
a previous valid obligation; (2) the parties concerned agree to a new contract; (3) the old contract is extinguished; and
(4) there is a valid new contract.[11] Novation may be express or implied. Article 1292 of the Code provides: In order that
an obligation may be extinguished by another which substitutes the same, it is imperative that it be so declared in
unequivocal terms [express novation],[12] or that the old and new obligations be on every point incompatible with each
other [implied novation].
Tested against the foregoing standards, petitioners stance is shattered to pieces. The stipulation that the
petitioners and Spouses Tamayo were co-owners was merely the introductory part of the MOA, and it reads:[13]
That the parties are common co-owners pro-indiviso in equal shares of the following registered real properties, all
situated at Taytay, Rizal, Philippines. xxx
xxxxxxxxx
That sometime in August 22, 1977, a Deed of Partial Partition was executed among us before Atty. Virgilio J. Tamayo,
Notary Public in and for the Province of Rizal, per Doc. No. 1796; Page No. 14; of his Notarial Register No. XLIX, Series
of 1977;
Following the above-quoted stipulation is a statement that the subject parcels of land had in fact been partitioned, but
that the former co-owner intended to share with petitioners the proceeds of any sale of said land,[14] viz:
That [as] a result of said partial partition, the properties affected were actually partitioned and the respective shares of
each party, adjudicated to him/her;
That despite the execution of this Deed of Partial Partition and the eventual disposal or sale of their respective shares,
the contracting parties herein covenanted and agreed among themselves [and] to one another that they shall do [sic]
hereby bind themselves to one another that they shall share alike and receive equal shares from the proceeds of the
sale of any lot or lots allotted to and adjudicated in their individual names by virtue of this deed of partial partition;
That this Agreement shall continue to be valid and enforceable among the contracting parties herein up to and until
the last lot covered by the deed or partial partition above adverted to shall have been disposed of or sold and the
proceeds thereof equally divided and their respective shares received by each of them.
xxxxxxxxx
The MOA falls short of producing a novation, because it does not express a clear intent to dissolve the old
obligation as a consideration for the emergence of the new one.[15] Likewise, petitioners fail to show that the DPP and
the MOA are materially and substantially incompatible with each other. Petitioners admit that, under the MOA, they
and the Tamayo spouses agreed to equally share in the proceeds of the sale of the lots. [16] Indeed, the DPP granted title
to the lots in question to the co-owner to whom they were assigned, and the MOA created an obligation on the part of
such co-owner to share with the others the proceeds of the sale of such parcels. There is no incompatibility between
these two contracts.
Verily, the MOA cannot be construed as a repudiation of the earlier DPP. Both documents can exist together
and must be so interpreted as to give life to both.Respondent Court aptly explained: [17]
The Deed of Partition conferred upon Nerissa Cruz Tamayo absolute ownership over the lands in question. The
Memorandum of Agreement merely created an obligation on the part of absolute owner Nerissa Cruz Tamayo to share
[with] the appellees with [sic] the proceeds of the sale of said properties.
The obligation of the owner of a piece of land to share [with] somebody with [sic] its fruits or the proceeds of its sale
does not necessarily impair his dominion over the property much less make the beneficiary his co-owner thereof.
All in all, the basic principle underlying this ruling is simple: when the text of a contract is explicit and leaves no
doubt as to its intention, the court may not read into it any intention that would contradict its plain import. [18] The
hornbook rule on interpretation of contracts gives primacy to the intention of the parties, which is the law among
them. Ultimately, their intention is to be deciphered not from the unilateral post facto assertions of one of the parties,
but from the language used in the contract. And when the terms of the agreement, as expressed in such language, are
clear, they are to be understood literally, just as they appear on the face of the contract.
Indeed, the legal effects of a contract are determined by extracting the intention of the parties from the
language they used and from their contemporaneous and subsequent acts. [19] This principle gains more force when
third parties are concerned. To require such persons to go beyond what is clearly written in the document is unfair and
unjust. They cannot possibly delve into the contracting parties minds and suspect that something is amiss, when the
language of the instrument appears clear and unequivocal.
Second Issue: No Co-ownership in the MOA
Petitioners contend that they converted their separate and individual ownership over the lands in dispute into a
co-ownership by their execution of the MOA and the annotation thereof on the separate titles.
The Court is not convinced. The very provisions of the MOA belie the existence of a co-ownership. First, it
retains the partition of the properties, which petitioners supposedly placed in co-ownership; and, second, it vests in the
registered owner the power to dispose of the land adjudicated to him or her under the DPP. These are antithetical to
the petitioners contention. In a co-ownership, an undivided thing or right belongs to two or more persons.[20] Put
differently, several persons hold common dominion over a spiritual (or ideal) part of a thing, which is not physically
divided.[21] In the present case, however, the parcels of land in the MOA have all been partitioned and titled under
separate and individual names.More important, the MOA stipulated that the registered owner could sell the land
without the consent of the other parties to the MOA. Jus disponendi is an attribute of ownership, and only the owner
can dispose of a property.[22]
Contrary to petitioners claim, the annotation of the MOA in the certificate of title did not engender any co-
ownership. Well settled is the doctrine that registration merely confirms, but does not confer, title.[23] It does not give
the holder any better title than what he actually has. As earlier observed, the MOA did not make petitioners co-owners
of the disputed parcels of land. Hence, the annotation of this document in the separate certificates of title did not grant
them a greater right over the same property.
Third Issue: Estoppel by Deed
Respondent Court found that several deeds of sale and real estate mortgage, which petitioners executed when
they sold or mortgaged some parcels adjudicated to them under the DPP, contained the statement that the
vendor/mortgagor was the absolute owner of the parcel of residential land and that he or she represented it as free
from liens and encumbrances. On the basis of these pieces of evidence, respondent Court held that petitioners
were estoppedfrom claiming that there was a co-ownership over the disputed parcels of land which were also covered
by the DPP. Petitioners contend that Respondent Court , in so ruling violated the res inter alios acta rule.
Petitioners contentions is untenable. Res inter alios acta, as a general rule, prohibits the admission of evidence
that tends to show that what a person has done at one time is probative of the contention that he has done a similar as
act at another time.[24] Evidence of similar acts or occurrences compels the dependant to meet allegations that are not
mentioned in the complaint, confuses him in his defense, raises a variety of irrelevant issues, and diverts the attention
of the court from the issues immediately before it. Hence, this evidentiary rule guards against the practical
inconvenience of trying collateral issues and protracting the trial and prevents surprise or other mischief prejudicial to
litigants.[25]
The rule, however, is not without exception. While inadmissible in general, collateral facts may be received as
evidence under exceptional circumstances, as when there is a rational similarity or resemblance between the
conditions giving rise to the fact offered and the circumstances surrounding the issue or fact to be
proved.[26] Evidence of similar acts may frequently become relevant, especially in actions based on fraud and deceit,
because it sheds light on the state of mind or knowledge of a persons; it provides insight into such persons motive or
intent; it uncovers a scheme, design or plan; or it reveals a mistake. [27]
In this case, petitioners argue that transactions relating to the other parcels of land they entered into, in the
concept of absolute owners, are inadmissible as evidence to show that the parcels in issue are not co-owned. The court
is not persuaded. Evidence of such transactions falls under the exception to the rule on the res inter alios acta. Such
evidence is admissible because it is relevant to an issue in the case and corroborative of evidence already
received.[28] The relevancy of such transactions is readily apparent. The nature of ownership of said property should be
the same as that of the lots on question since they are all subject to the MOA. If the parcels of land were held and
disposed by petitioners in fee simple, in the concept of absolute owners, then the lots in question should similarly be
treated as absolutely owned in fee simple by the Tamayo spouses. Unmistakably, the evidence in dispute manifests
petitioners common purpose and design to treat all the parcels of land covered by the DPP as absolutely owned and
not subject to co-ownership.[29]
Under the principle of estoppel, petitioners are barred from claiming co-ownership of the lands in
issue. In estoppel, a person, who by his deed or conduct has introduced another to act in a particular manner, is barred
from adopting an inconsistent position, attitude or course of conduct that thereby causes loss or injury to another. [30] It
further bars him from denying the truth of a fact which has, in the contemplation of law, become settled by the acts
and proceedings of judicial or legislative officers or by the act of the party himself, either by conventional writing or by
representations, express or implied or in pairs.[31]
In their transaction with others, petitioners have declared that the other lands covered by the same MOA are
absolutely owned, without indicating the existence of a co-ownership over such properties. Thus, they
are estopped from claiming otherwise because, by their very own acts and representations as evidenced by the deeds
of mortgage and of sale, they have denied such co-ownership.[32]
FOURTH ISSUES: No Res Judicata On Co-ownership
Petitioners argue that the Order (Exhibit J)[33] dated January 18, 1985, issued by the RTC of Quezon City, Branch
86, which had long become final and executory, confirmed their co-ownership. Thus, they claim that
Respondent Courts reversal of the ruling of the RTC of Antipolo, Rizal, is a violation of the rule on resjudicata.
This contention is equally untenable. The elements of res judicata are: (1) the former judgment was final; (2) the
court which rendered it had jurisdiction over the subject matter and the parties;(3) the judgment was on the merits;
and (4) the parties, subject matters and causes of action in the first and second actions are identical. [34]
The RTC of Quezon City had no jurisdiction to decide on the merits of the present case or to entertain questions
regarding the existence of co-ownership over the parcels in dispute, because the suit pending before it was only for the
collection of a sum of money. Its disquisition on co-ownership was merely for the levy and the execution of the
properties of the Tamayo spouses, in satisfaction of their judgment debt to the private respondents.
Perhaps more glaring is the lack of identity between the two actions. The first action before the RTC of Quezon
City was for the collection of money, while the second before the RTC of Antipolo, Rizal, was for partition. There being
no concurrence of the elements of res judicata in this case, the Court finds no error in Respondent Courts ruling. No
further discussion is needed to show the glaring difference between the two controversies.
WHEREFORE, the petition is hereby DENIED and the assailed Decision is Affirmed. Cost against petitioners.
SO ORDERED.
FIRST DIVISION
[G.R. No. 103476. November 18, 1999]
CODIDI MATA, CELESTINO, LUCIA, INGRACIO, PIO, MARCELO, MELETON, RICARDA, PAGAKAN, and CARING,
all surnamed MATA, and duly represented by their attorney-in-fact ISIDRO SEMBRANO, petitioners,
vs. COURT OF APPEALS and HEIRS OF CLARO L. LAURETA, respondents.
DECISION
KAPUNAN, J.:
The instant case is the fourth case that reached this Court involving the same parties and property.
In this case, the heirs of Marcos Mata (petitioners) seek the reversal of the decision, dated 31 July 1991, of the
Court of Appeals in CA-G.R. SP No. 24434, permanently enjoining the Regional Trial Court, Branch 1, Tagum, Davao
City, from proceeding with Civil Case No. 2468, an action to enforce petitioners' right to repurchase the subject lot
under Section 119 of the Public Land Act (Commonwealth Act No. 141, as amended).
The antecedent facts are as follows:
Sometime in 1940, spouses Marcos and Codidi Mata, members of a non-christian cultural minority in Davao and
predecessors-in-interest of petitioners, were granted a homestead patent over a parcel of land situated in Tagum,
Davao del Norte containing an area of 4.5777 hectares. Original Certificate of Title No. 3019 covering the subject lot
was issued in their favor.
On 10 June 1945, Marcos Mata (Mata) executed a Deed of Absolute Sale conveying the ownership of the subject
lot in favor of Claro L. Laureta the predecessor-in-interest of private respondents. On 10 May 1947, Mata executed
another document selling the same property to Fermin Caram, Jr. (Caram), who caused the cancellation of OCT No.
3019. In lieu thereof, Transfer Certificate of Title No. 140 was issued in Caram's name.
On 25 June 1956, Laureta filed before the Court of First Instance of Tagum (now RTC) an action, docketed as
Civil Case No. 3083, to declare the first sale of the subject lot in his favor valid and the second sale thereof to Caram
void.
On 29 February 1964, the CFI of Tagum rendered judgment as follows:
"WHEREFORE, judgment is hereby rendered:
1. Declaring that the deed of sale, Exhibit A, executed by Marcos Mata in favor of Claro L. Laureta stands
and prevails over the deed of sale, Exhibit F, in favor of Fermin Caram, Jr.;
2. Declaring as null and void the deed of sale, Exhibit F, in favor of Fermin Caram, Jr.;
3. Directing Marcos Mata to acknowledge the deed of sale, Exhibit A, in favor of Claro L. Laureta;
4. Directing Claro L. Laureta to secure the approval of the Secretary of Agriculture and Natural Resources
on the deed, Exhibit A, after Marcos Mata shall have acknowledge the same before a notary public;
5. Directing Claro L. Laureta to surrender to the Register of Deeds for the City and Province of Davao the
Owner's Duplicate of Original Certificate of Title No. 3019 and the latter to cancel the same;
6. Ordering the Register of Deeds for the City and Province of Davao to cancel Transfer Certificate of Title
No. T-140 in the name of Fermin Caram, Jr.;
7. Directing the Register of Deeds for the City and Province of Davao to issue a title in favor of Claro L.
Laureta, Filipino, resident of Quezon City, upon presentation of the deed executed by Marcos Mata in his
favor, Exhibit A, duly acknowledge by him and approved by the Secretary of Agriculture and Natural
Resources; and
8. Dismissing the counterclaim and crossclaim of Marcos Mata and Codidi Mata, the counterclaim of
Caram, Jr., the answer in intervention, counterclaim and crossclaim of the Mansacas." [1]
On appeal by the spouses Mata and Caram, the CA affirmed the aforesaid decision of the CFI. Two (2) separate
petitions for review were then filed by the Matas and Caram with this Court. The petition filed by the spouses Mata,
docketed as G.R. No. L-29147, was dismissed by the Court for lack of merit on 20 June 1968. Said decision became final
and executory on 26 July 1968. Upon the other hand, the petition filed by Caram, docketed as G.R. No. L-28740, was
dismissed by the Court on 24 February 1981.[2] Said decision became final and executory on 12 February 1982.
Meanwhile, on 23 February 1979, spouses Mata filed with the Court of First Instance (now RTC), Branch 1 of
Tagum, Davao del Norte, Civil Case No. 1071 against the Lauretas for recovery of ownership and possession of the
subject lot. The spouses Mata alleged that the deed of sale executed between Mata and Laureta involving the
subject lot is null and void and/or unenforceable because the same had not been approved by the Secretary of
Agriculture and Natural Resources as required by law and as directed by the CFI of Davao in its decision of 29 February
1964 in Civil Case No. 3083, and that said decision could no longer be executed as the same had already prescribed.
On 12 February 1983, an alias writ of execution was issued by the CFI enforcing its decision in Civil Case No.
3083. By then, Mata was already dead while his heirs (petitioners) refused to acknowledge the deed of sale in
accordance with the said decision.In lieu of the requisite acknowledgement, the officer-in-charge of the court (now
RTC, Branch VIII, Davao City) certified and affirmed the due execution of the deed of sale executed between Mata and
Laureta. Thereafter, on 21 February 1984, the deed of absolute sale in favor of Laureta was duly approved by the
Minister of Natural Resources. Finally, on 9 May 1985, TCT No. T-46346 covering the subject lot was issued in the name
of Laureta.
On 20 April 1983, the RTC rendered judgment in Civil Case No. 1071 declaring, among others, that the decision
in Civil Case No. 3083 in favor of private respondents had "become stale and unenforceable due to prescription." It
ordered the return of the ownership of the subject lot to petitioners.
On appeal by private respondents, the CA affirmed in toto the CFI decision in Civil Case No. 1071. The case was
then elevated to the Supreme Court which reversed and set aside the decision of the CA. Speaking through Justice
Regalado, the Court, in its decision[3] in G.R. No. 72194 promulgated on 5 April 1990, ruled that the execution of the
judgment in Civil Case No. 3083 was not time-barred because the ten-year period for the execution of the judgment in
Civil Case No. 3083 commenced to run only on 12 February 1982 when the decision denying Caram's petition became
final and executory .
Upon the belief that they could still exercise their right to repurchase the subject lot under the Public Land Act,
on 22 November 1990, petitioners filed with the RTC, Branch 1 of Tagum, Davao City, an action against private
respondents for legal redemption, reconveyance and consignation, docketed as Civil Case No. 2468.
Maintaining that Civil Case No. 2468 would render nugatory and ineffectual the decision of the court in G.R. No.
72194, private respondents instituted with this Court a petition for injunction and prohibition seeking, among others, to
restrain the trial court from proceeding with said case. On 11 March 1991, this Court referred the same to the CA for
resolution.
The CA ruled in favor of private respondents and permanently enjoined the RTC from further proceeding with
Civil Case No. 2468. The CA categorically declared that petitioners' right to repurchase the subject lot under the Public
Land Act had already prescribed.[4] Petitioners filed a motion for reconsideration but it was denied by the CA in its
resolution, dated 12 November 1991.
Aggrieved, the petitioners filed the instant Petition for review alleging in the main that respondent CA erred in
holding that petitioners right to repurchase the subject property under Section 119 of the Public Land Act had already
prescribed.
After the parties have submitted their respective pleadings, this Court issued a resolution, dated 5 September
1994, denying the petition for review for failure of the petitioners to sufficiently show that respondent court committed
any reversible error in rendering the assailed decision.
Upon petitioners motion for reconsideration, dated 27 September 1994, however, this Court, in its resolution,
dated 24 October 1994, reinstated the instant petition, gave due course to the same and directed the parties to file
their respective memoranda.
In their petition, the fundamental issue raised by petitioners is whether or not they could still exercise their right
to repurchase the subject lot under the Public Land Act. In their motion for reconsideration and memorandum,
however, petitioners question the validity of the sale of the subject lot to Laureta. They contend that said sale was void
because the document evidencing the same was written in English, a language not understood by the vendor, and that
it was not approved by the Office for the Southern Cultural Communities (OSCC) in violation of Section 4(n), Republic
Act No. 1888, as amended, in relation to Section 120 of the Public Land Act.
Subsequently, the various pleadings separately filed by petitioners themselves, on one hand, and Atty. Rodolfo
U. Jimenez, their counsel, and Isidro Sembrano, their purported attorney-in-fact, on the other hand, have left this
Court baffled as to petitioners real stand on the matter. Thus:
1. In a Manifestation with Motion, dated 23 November 1995, filed by petitioners themselves without the assistance of
their counsel, the informed the Court that they have agreed to an amicable settlement of the case with private
respondents. In view thereof, they prayed that they be allowed to withdraw their petition. Attached to the said
Manifestation with Motion were petitioners letters, dated 23 November 1995, addressed to their attorney-in-fact
(Isidro Sembrano) and to their counsel-on-record (Attys. Winston F. Garcia and Rodolfo U. Jimenez), informing them of
the termination of their services. The amicable settlement, of even date, purportedly signed by all the petitioners and
private respondents attorney-in-fact, was also attached to the said Manifestation with Motion.
2. On 15 January 1996, Celestino Mata and Andres Basaca filed with the Court their respective affidavits, dated 30
December 1995. Celestino Mata, one of petitioners, claimed that he is the same person referred to as Lucino Mata who
was made to sign the Manifestation with Motion, the letters terminating the services of the attorney-in-fact and the
lawyers, and the amicable settlement, all dated 23 November 1995. Celestino Mata averred that he did not understand
the contents of these documents and that his signatures thereon were obtained by fraud.
3. For his part, Alfredo Basaca assailed the authority of Arcadio Mata Pasindo to sign the amicable settlement on behalf
of the heirs of Marcos and Codidi Mata. While Alfredo Basaca asserted that he is one of the heirs of the spouses Mata,
however, the records show that he is not named as one of the petitioners in this case.
4. The Court, in its Resolution, dated 26 February 1996, directed the petitioners and Atty. Jimenez to comment on
and/or confirm the Manifestation with Motion of 23 November 1995. In compliance therewith, Atty. Jimenez filed his
Comment, dated 29 March 1996, informing the Court that he was not consulted by petitioners when they filed said
Manifestation with Motion. He urged the Court to decide the case on the merits.
5. Upon the other hand, most of the petitioners, namely Calrita Mata Pasindo, Julieta Mata Abundo, Engracio Mata,
Dagakan Mata vda. de Cuanas, Marcelo Mata, Severino Antolihao, Arcadio Mata Pasindo, Lucia Mata Antolihao and
Meliton Mata, filed their Manifestation with Motion (to Comment and/or Confirm), dated 27 March 1996. They
affirmed their respective signatures on the Manifestation with Motion of 23 November 1995 and the attachments
thereto and averred that they understood the contents thereof as these were fully explained to them in the presence of
the Provincial Officer of the OSCC in Tagum, Davao. They reiterated their prayer that they be allowed to withdraw
their petition.
6. On 5 September 1996, Isidro Sembrano submitted to this Court a Joint Affidavit of petitioners Ceelstino Mata and
Ricarda Mata, dated 21 February 1996, claiming, among others, that they were deceived into signing the amicable
settlement. On 10 January 1997, Isidro Sembrano submitted a Joint Affidavit of Rosendo Mata-Pasindo, Carmelita
Mata-Pasindo, Wlfredo Mata and Julieta Mata-Abundio, dated 9 January 1997, again claiming that they were deceived
into signing the amicable settlement. Curiously, however, except for Julieta Mata-Abundio, the three (3) other affiants,
namely, Rosendo Mata-Pasindo, Carmelita Mata-Pasindo and Wilfredo Mata, were not signatories to the amicable
settlement.
7. On 23 June 1997, petitioners filed with the Court their Joint Affidavit, dated 26 May 1997, reiterating their
Manifestation with Motion of 23 November 1995. They manifested in the Joint Affidavit that they voluntarily signed
the amicable settlement and reiterated their prayer that they be allowed to withdraw their petition. In support of said
Joint Affidavit, petitioners attached thereto the report of Mr. Romero A. Maing, the Provincial Officer of the OSCC in
Tagum, Davao, dated 10 February, regarding an investigation he conducted on 3 February 1997 attended by
petitioners. Mr. Maing attested that petitioners categorically denied having been coerced, forced or intimidated into
signing the amicable settlement. Upon Mr. Maing's query, petitioners expressed their desire to proceed with the
amicable settlement of the case.
8. Thereafter, Atty. Jimenez filed a motion, dated 25 August 1997, urging this Court to resolve the petition. He also
filed a Motion to Require Personal Appearance of Petitioners before the OSCC to Verify their Final Stand on the
Petition, dated 29 September 1997. In said motion, Atty. Jimenez admitted that he had only been in contact with the
attorney-in-fact of petitioners and never with petitioners themselves.
9. Private respondents then filed a Motion to Dismiss Petition, dated 10 September 1997.Petitioners likewise filed an
Opposition to Motion to Resolve Petition Filed by attorney Rodolfo U. Jimenez as Counsel for Petitioners, dated 1
October 1997. In said opposition, signed by all the petitioners themselves, they reiterated that the amicable settlement
of 23 November 1995 was their own free and voluntary act. They explained that although it was written in English, the
contents thereof were translated and fully explained to them in the dialect known to and understood by them. With
regard to their relationship to Attorney Jimenez, petitioners denied that they personally engaged him to represent
them in this case. It was allegedly only Isidro Sembrano, acting on his own, who engaged Atty. Jimenez legal
services. At any rate, having terminated the same on 23 November 1995, petitioners claimed that Atty. Jimenez no
longer had any authority to represent them in the case. Petitioners reiterated their prayer that they be allowed to
withdraw their petition. The Provincial Officer of the OSCC in Tagum, Davao issued a Certification, dated 3 October
1997, attesting that the contents of said opposition were fully explained to petitioners in their dialect.
10. In a resolution, dated 10 December 1997, the Court required Atty. Jimenez to file his comment on said
opposition. In compliance therewith, Atty. Jimenez averred in his comment, dated 5 February 1998, that he is merely
protecting the interests of petitioners and urged this Court to resolve the case on the merits. A few months later, said
counsel filed the Motion for Leave to File Attached Joint Affidavit of Some of the Petitioners, dated 1 June 1998. The
Joint Affidavit, dated 20 March 1998, purportedly executed by six (6) affiants, namely, Arcadio M. Pasindo, Julieta M.
Abundio, Celestino Mata, Clarita M. Pasindo, Marcelo Mata and Ricarda vda. de Ayonan, averred that they are
retracting their statements contained in the Manifestation with Motion, dated 23 November 1995, and its attachments,
and in the Opposition to Motion to Resolve Petition Filed by Atty. Rodolfo Jimenez as counsel for petitioners, dated 1
October 1997.
11. The affiants in said Joint Affidavit claimed that they were deceived into signing and/or affixing their thumbmarks on
the said pleadings and documents. They stated that they are no longer withdrawing their petition and urged the Court
to resolve it on the merits. A careful perusal of the said Joint Affidavit shows that petitioners Marcelo Mata and Ricarda
vda. de Ayonan did not personally affix their respective signatures thereon. Rather, two (2) other persons signed above
their names although it does not appear that they had been duly authorized by petitioners Marcelo Mata and Ricarda
vda. de Ayonan to do so.
12. Petitioners thereafter filed their Opposition, dated 4 November 1998, to Atty. Jimenez Motion to Resolve
petition. Attached to the said opposition is a Clarificatory Affidavit, dated 26 August 1998, executed by the petitioners
except Celestino Mata and Clarita Mata Pasindo, who did not affix their respective signatures thereon. In said affidavit,
affiants accused Isidro Sembrano and Atty. Manuel Iral, Chief of the Legal Division of the Central Office of the OSCC of
having conspired with each other and deceived some of the petitioners into signing the Joint Affidavit, dated 20 March
1998, and retracting their statements in the Manifestation with Motion, dated 23 November 1995. Affiants affirmed
that they voluntarily signed said Manifestation with Motion and its attached documents including the amicable
settlement. They likewise maintained that Isidro Sembrano is no longer authorized to act on their behalf and that Atty.
Jimenez no longer had any authority to represent them in this case. Petitioners once again sought this Court's approval
of their amicable settlement.
13. On 1 March 1999, Atty. Jimenez submitted to this Court an Investigation Report, dated 14 January 1999,
purportedly prepared by Atty. Iral in his capacity as Chief of the Legal Division of the present National Commission on
Indigenous People. Attached to the report were the Panunumpa, both dated 11 January 1999, of petitioners Celestino
Mata and Clarita Mata-Pasindo. These affiants affirmed the retraction of their signatures on the Manifestation with
Motion, dated 23 November 1995, claiming that they did not understand its contents. They likewise affirmed the
appointment of Isidro Sembrano and Atty. Jimenez as their attorney-in-fact and counsel, respectively.
Given the dizzying and seeemingly interminable equivocation in the stance of the petitioners vis--vis the
proposed amicable settlement of 23 November 1995, we are constrained to disregard the same and proceed with the
resolution of the case on the merits.
I
As stated earlier, in their Motion for Reconsideration and Memorandum, petitioners harp on the alleged nullity
of the deed of sale executed between Mata and Laureta in 1945 on the ground that it was written in English, a language
not understood by the former, and that it was not approved by the OSCC in violation of Section 4(n), Republic Act No.
1888, as amended, in relation to Section 120 of the Public Land Act. The issue of the validity or nullity of the aforesaid
deed of sale, however, had already been passed upon by this Court in the case of Caram, Jr. vs. Laureta,[5] the first case
decided at length by this Court involving the subject property. Previously, another petition filed by Mata questioning
the decision of the CA which upheld the sale of the subject property to Laureta was dismissed by this Court on 24
February 1981.
In the Caram case, the issue raised was which sale was valid considering that Mata sold the same property
twice: first to Laureta and later on to Caram. We upheld therein the validity of the sale in favor of Laureta as we
affirmed the findings of the lower court to the effect that while the sale to Laureta was voidable, as it was procured by
force, the same "was cured when, after the lapse of four years from the time the intimidation ceased, Marcos Mata lost
both his rights to file an action for annulment or set up the nullity of the contract as a defense in an action to enforce
the same."[6] We stated therein that "the first sale in favor of Laureta prevails over the sale in favor of Caram." [7] This
pronouncement cannot be construed in any other way but that the Court affirmed the validity of the sale of the subject
property in favor of Laureta as against the sale of the same to Caram, which we categorically declared as void.
Then again, in the case of Heirs of Claro L. Laureta vs. Intermediate Appellate Court,[8] this Court ordered the
dismissal of Civil Case No. 1071 filed by petitioners. It must be noted that in their complaint therein, petitioners also
raised the issue of the nullity of the deed of sale executed between Mata and Laureta on the ground that, among
others, it had not been approved by the then Secretary of Agriculture and Natural Resources as required by law. Thus,
by ordering the dismissal of Civil Case No. 1071, we, in effect, upheld anew the validity of the sale of the subject
property in favor of Laureta. In the said decision, we likewise allowed private respondents to proceed with the
execution of the judgment in Civil Case No. 3083 as the same was not yet time-barred.
The foregoing rulings in the earlier related cases, which had long attained finality, upholding the validity of the
sale of the subject property in favor of Laureta effectively foreclose any further inquiry as to its validity. This is in
consonance with the doctrine of res judicata as embodied in Rule 39, Section 47 of the Rules of Court:
"Sec. 47. Effect of judgments or final orders. The effect of a judgment or final order rendered by a court of
the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:
(a) x x x
(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any
other matter that could have been raised in relation thereto, conclusive between the parties and their
successors in interest by title subsequent to the commencement of the action or special proceeding,
litigating for the same thing and under the same title and in the same capacity: and
(c) In any other litigation between the same parties or their successors in interest, that only is deemed to
have been adjudged in a former judgment or final order which appears upon its face to have been so
adjudged , or which was actually and necessarily included therein or necessary thereto."
The doctrine of res judicata actually embraces two (2) concepts: the first is "bar by prior judgment" under
paragraph (b) of Rule 39, Section 47, and the second is "conclusiveness of judgment" under paragraph (c) thereof. [9] In
the present case, the second concept conclusiveness of judgment applies. The said concept is explained in this manner:
"[A] fact or question which was in issue in a former suit and was there judicially passed upon and
determined by a court of competent jurisdiction, is conclusively settled by the judgment therein as far as
the parties to that action and persons in privity with them are concerned 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 different cause of action, while the judgment remains unreversed by
proper authority. It has been held that in order that a judgment in one action can be conclusion as to a
particular matter in another action between the same parties or their privies, it is essential that the issue
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 or
their privies will be final and conclusive in the second if that same point or question was in issue and
adjudicated in the first suit. x x x."[10]
Although the action instituted by petitioners in the lower court in this case (action for reconveyance) is different
from the actions they instituted in the earlier cases, the concept of conclusiveness of judgment still applies because
under this principle "the identity of causes of action is not required but merely identity of issues." [11]
Simply put, 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.In Lopez vs. Reyes,[12] we expounded on the concept of
conclusiveness of judgment as follows:
"The general rule precluding the relitigation of material facts or questions which were in issue and
adjudicated in former action are commonly applied to all matters essentially connected with the
subject matter of litigation. Thus it extends to questions necessarily involved in an issue, and
necessarily adjudicated, or necessarily implied in the final judgment, although no specific finding may
have been made in reference thereto, and although such matters were directly referred to in the
pleadings and were not actually or formally presented. Under this rule, if the record of the former trial
shows that the judgment could not have been rendered without deciding the particular matter, it will
be considered as having settled that matter as to all future actions between the parties, and if a
judgment necessarily presupposes certain premises, they are as conclusive as the judgment
itself. Reasons for the rule are that a judgment is an adjudication on all the matters which are essential to
support it, and that every proposition assumed or decided by the court leading up to the final conclusion
and upon which such conclusion is based is as effectually passed upon as the ultimate question which is
solved."[13]
There is no question that the issue of the validity or nullity of the sale of the subject property in favor of Laureta
had already been passed upon by this Court in Caram, where we categorically pronounced that the sale in favor of
Laureta prevails over that of Caram, which we declared void, and in Laureta, where we stated that private respondents
may still validly proceed with the execution of the decision in Civil Case No. 3083. Caram became final and executory on
12 February 1982 while Laureta on 5 July 1990. Applying the rule on conclusiveness of judgment, the matter may no
longer be relitigated in this case.
As held in Legarda vs. Savellano[14]
"It is a general rule common to all civilized system of jurisprudence, that the solemn and deliberate
sentence of the law, pronounced by its appointed organs, upon a disputed fact or a state of facts, should
be regarded as a final and conclusive determination of the question litigated, and should forever set the
controversy at rest. Indeed, it has been well said that this maxim is more than a mere rule of law, more
than an important principle of public policy: and that it is not too much to say that it is a fundamental
concept in the organization of the jural sytem. Public policy and sound practice demand that, at the risk of
occasional errors, judgments of courts should become final at some definite date fixed by law. The very
object for which courts were constituted was to put an end to controversies." [15]
 II
The next issue is whether or not petitioners can still validly exercise their right to repurchase the subject
property pursuant to Section 119 of the Public Land Act:
"Sec. 119. Every conveyance of land acquired under the free patent or homestead provisions, when proper, shall be
subject to repurchase by the applicant, his widow, or legal heirs, within a period of five (5) years from date of
conveyance,"
The term "conveyance" imports the transfer of legal title from one person to another. It usually takes place
upon the execution of the deed purporting to transfer the ownership of the land as the same is already valid and
binding against the parties thereto even without the act of registration. The registration is intended to protect the
buyer against claims of third parties against subsequent alienations by the vendor, and is certainly not necessary to
give effect, as between the parties, to their deed of sale. Thus, for the purpose of reckoning the five-year period to
exercise the right to repurchase, the date of conveyance is construed to refer to the date of the execution of the deed
transferring the ownership of the land to the buyer.[16]
In this case, Mata conveyed the ownership of the subject property to Laureta by virtue of a Deed of Absolute
Sale, dated 10 June 1945. Petitioners, as heirs of Marcos Mata, filed the action for reconveyance (Civil Case No. 2468)
on 24 November 1990. From this date up to the time of the filing of the action for reconveyance, more than forty-five
(45) years had lapsed. Clearly, petitioners right to redeem the subject property had already prescribed by the time they
went to court. As correctly pointed out by the CA, if the five-year period to repurchase were to be reckoned from 12
February 1982, the date of finality of our decision in the Caram case[17] where we declared that the sale in favor of
Laureta prevails over that in favor of Caram, prescription of the right to repurchase had set in.
The same conclusion would obtain even if the running of the five-year period were to start from 9 May 1985,
when Transfer Certificate of Title No. T-46346 covering the subject property was issued in favor Laureta after the sale
in his favor was approved by the Minister of Natural Resources in accordance with the decision in Civil Case No. 3083,
petitioners action to repurchase the subject property would still be time-barred, as more than five (5) years had already
lapsed.
Petitioners further argue that the five-year period should be reckoned from September 1990, when the decision
of this Court in Laureta[18] allegedly became final and executory.Petitioners maintain that prior to the said date, they
could not exercise their right to repurchase since the issue of its ownership was still then under litigation. This
contention is without merit. As earlier discussed, the act of conveyance within the meaning of the Section 119 of the
Public Land Act had already been made long before the finality of our decision in Laureta. At any rate, said case
resolved an entirely different issue, i.e., whether or not private respondents motion for execution of the judgment in
Civil Case No. 3083 was time-barred. Accordingly, the CA correctly ordered the dismissal of petitioners action for
reconveyance on ground of prescription.
III
With respect to the procedural issue raised by petitioners, i.e., whether the CA erred in granting private
respondents petition for injunction as it had allegedly the effect of disposing the case without trial on the merits,
suffice it to say that since private respondents right to injunctive relief was clear, the CA properly granted the
same. The CA, likewise, correctly ordered the dismissal of Civil Case No. 2468 as the records of the case clearly showed
that petitioners right to repurchase had already prescribed. A trial on the merits thereon would serve no other purpose
and would only result in needless delay.
Indeed, this controversy has already dragged on for more than half a century, it is, thus, high time that we
write finis to it.
"x x x (L)itigations must end and terminate sometime and somewhere, it being essential to the effective administration
of justice that once judgment has become final, the winning party be not, through a mere subterfuge, deprived of the
fruits of the verdict. Hence, courts must guard themselves against any scheme to bring about that result, for
constituted a they are to put an end to controversies, they should frown upon any attempt to prolong it. Public policy
and sound practice demand that at the risk of occasional errors, judgments of courts should become final and
irrevocable at some definite date fixed by law. Interes rei publicae ut finis sit litium. xxx."[19]
WHEREFORE, premises considered, the petition is hereby DENIED and the assailed decision of the respondent
Court of Appeals is AFFIRMED.
SO ORDERED.
SECOND DIVISION
HEIRS OF WENCESLAO TABIA, et al. vs. COURT OF APPEALS, et al.
G.R. Nos. 129377 & 129399; February 22, 2007
DECISION
TINGA, J.:
Before this Court are two Petitions for Review[1] both filed under Rule 45 of the Revised Rules of Court assailing the 29
November 1996 Decision,[2]as well as the 4 June 1997 Resolution[3] of the 8th Division of the Court of Appeals in CA-G.R.
CV No. 39205, which affirmed the 31 August 1992 Order[4] of the Regional Trial Court of Sta. Cruz, Laguna in Civil Case
No. SC-2852 and denied reconsideration thereof, respectively.
On 16 April 1991, Francisco, Amparo, Rosita, Araceli and Teresita, all surnamed Tabia; Yolanda, Roynilo,
Tomas, Jr., Domingo, Carlito and Augustus, all surnamed Aonuevo; Susan, Jojo, and Wilma, all surnamed Cacalda; and
Danilo, Moises, Jr., Ramon and Roberto, all surnamed Paraiso(herein petitioners) filed a complaint, docketed as Civil
Case No. SC-2852, for Annulment of Free Patent No. DENR IV-FP No. 00002P and Damages and/or Reconveyance of
Title with the Regional Trial Court (RTC) of Laguna against Abraham dela Cruz (dela Cruz), representing the heirs
of Antonina Rabie, and Abelardo G. Palad, Jr., Director of Lands.
The case arose from a Decision[5] rendered by the Director of Lands on 1 February 1989 in B.L. Claim No. 288(n),
the dispositive portion of which reads:
WHEREFORE, the claim of the Heirs of Wenceslao Tabia represented
by Narciso Tabia, et al[.] is hereby dismissed and this case, dropped from the records. Within
the period of sixty (60) days from finality hereof, the [petitioners] shall remove their
improvements from the land and shall vacate the premises thereof. The Free Patent
Application (Unnumbered) of Antonina Rabie, represented by Abraham dela Cruz, is hereby
amended to exclude therefrom the portions occupied by the Provincial
Road and Lumban Elementary School. As thus amended the same shall be given further due
course.
SO ORDERED.[6]
The subject matter of B.L. Claim No. 288(n) was Lot No. 1430 situated at Lumban, Laguna. It appears that on 21
October 1984, dela Cruz, in behalf of the heirs of the deceased Antonina Rabie, applied for a free patent with the
Bureau of Lands (now Lands Management Bureau) covering said lot.[7]Petitioners filed their respective protests and/or
oppositions to said application, alleging ownership and possession for over 50 years, and lack of jurisdiction by the
Bureau of Lands inasmuch as the subject property had become private land.[8] An ocular inspection was conducted by
the Bureau of Lands in the presence of all the parties claimants. Thereafter, the Director of the Bureau of Lands
rendered the Decision quoted above.
Petitioners filed a motion for reconsideration but the same was denied by the Director of Lands in his
Order, dated 27 June 1989.[9] The matter was brought by petitioners to the Secretary of Agriculture and Natural
Resources. The appeal, however, was dismissed by the Secretary in his Order of 27 December 1989, for failure of
petitioners to file an appeal memorandum.[10] Accordingly, Free Patent No. DENR IV-FP No. 00002P and Original
Certificate of Title No. P-9927 were issued in favor of and in the name of dela Cruz on 26 October 1990.[11]
In Civil Case No. SC-2852, petitioners accused the Director of Lands of unlawful conspiracy with dela Cruz
and gross ignorance of the law in issuing the 1 February 1989 decision. They claimed that the decision was obtained
through misrepresentation of facts and pursuant to a conspiracy for some unlawful and illegal consideration. They
further claimed damages, attorneys fees and litigation expenses.
Dela Cruz filed a Motion to Dismiss[12] Civil Case No. SC-2852 on the following grounds: (1) lack of
jurisdiction, and (2) bar by prior judgment. On the other hand, the Director of Lands, through the Office of the Solicitor
General, filed an Answer.[13] Petitioners filed a Motion for Admission of/and Opposition to Motion to Dismiss. [14]
 On 19 August 1991, the trial court resolved to deny the motion to dismiss.[15] Meanwhile, dela Cruz filed a
Reply[16] to petitioners Opposition to the Motion to Dismiss.
On 7 May 1992, dela Cruz filed a Motion for Reconsideration of the 19 August 1991 Order of the trial
court.[17] On 31 August 1992, the trial court granted reconsideration and dismissed the complaint. [18]
The trial court noted the Director of Lands exhaustive findings of fact and conclusions of law. It held that
petitioners failure to exploit the available administrative remedy of appeal to the Secretary of Agriculture and Natural
Resources rendered the decision of the Director of Lands final and executory. Consequently, the filing of Civil Case No.
SC-2852 was deemed premature for failure to exhaust administrative remedies. Further, the decision of the Director of
Lands having become final, res judicata operated to preclude the trial court from assuming jurisdiction. The trial court
further found that petitioners were precluded from questioning the jurisdiction of the Director of Lands because they
voluntarily submitted themselves to said jurisdiction by actively participating in B.L. Claim No. 288(n). Finally, it held
that the decision of the Director of Lands was supported by substantial evidence.
On 11 September 1992, petitioners filed with the trial court a Notice of Appeal to the Court of Appeals of
the Order dated 31 August 1992.[19]On 16 September 1992, the records of the case were ordered forwarded to the
Court of Appeals.[20]
On 29 November 1996, the Court of Appeals rendered a Decision affirming the Order of the trial
court.[21] The appellate court stressed the fact that the matters raised by petitioner in Civil Case No. SC-2852 were the
same matters raised in their protests filed in B.L. Claim No. 288(n).
Petitioners filed a motion for reconsideration of the 29 November 1996Decision of the Court of Appeals but the same
was denied on 4 June 1997.[22] Hence, petitioners filed the instant Petitions for Review.
The grounds relied upon by the trial court and the Court of Appeals in granting the Motion to Dismiss filed
by dela Cruz in Civil Case No. SC-2852 were the following: (1) finality of the Director of Lands findings of facts; (2)
failure of petitioners to exhaust administrative remedies; and (3) res judicata. All the grounds relied upon by the trial
court and the Court of Appeals are all meritorious.
Petitioners foremost contention is anchored on the Director of Lands alleged disregard of a supposedly
undisputed factual matter, which is that Wenceslao Tabia and the predecessors-in-interest of petitioners, had been in
open, continuous, exclusive, and notorious possession and occupation of Lot No. 1430 for a period of more than fifty
(50) years, and by virtue of this possession, they are the owners of the said lot, to the exclusion of dela Cruz. It is on this
basis that they seek the annulment of Free Patent No. DENR IV-FP No. 00002P which, it was alleged, was fraudulently
issued to dela Cruz who misrepresented himself as the actual possessor of the land.
A determination of the validity of petitioners claim necessitates a review of the factual findings of the
Director of Lands. However, in petitions such as the one in the case at bar, pure questions of fact may not be the
proper subject of appeal by certiorari under Rule 45 of the Revised Rules of Court as this mode of appeal is generally
confined only to questions of law.[23] Further, findings of the Director of Lands as to questions of fact shall be
conclusive when approved by the Secretary of Agriculture and Natural Resources. [24] In this case, the dismissal of
petitioners appeal with the Secretary of Agriculture and Natural Resources had the effect of rendering the decision of
the Director of Lands final and executory.
The factual findings of the Director of Lands assume an even more conclusive character because they were
affirmed by both the Regional Trial Court and the Court of Appeals. Their reliance on the factual findings of the
Director of Lands is not without reason. By reason of his special knowledge and expertise over matters falling under his
jurisdiction, he is in a better position to pass judgment thereon. Thus, his factual findings in that regard are generally
accorded great respect, if not finality, by the courts, as long as they are supported by substantial evidence, even if such
evidence might not be overwhelming or even preponderant. It is not the task of an appellate court to weigh once more
the evidence submitted before the administrative body and to substitute its own judgment for that of the
administrative agency in respect of sufficiency of evidence.[25]
Petitioners cannot fault the Director of Lands for not appreciating the Deeds of Sale [26] allegedly executed
by and between Glicerio Tabia (the immediate heir of Wenceslao Tabia) and the parents of dela Cruz for the reason
that said documents were not presented in B.L. Claim No. 288(n). They presented said documents only in Civil Case
No. SC-2852. Thus, the Director of Lands, in his Answer to the Complaint, denied petitioners allegation to the effect
that the parents of dela Cruz bought portions of Lot No. 1430 from Glicerio Tabia.[27] Further, considering that the
Deeds of Sale were allegedly dated 1951, there was no reason for their non-production or presentation in B.L. Claim
No. 288(n). Failure to submit evidence could only mean that if produced, it would have been adverse to petitioners
case.[28] If the inability to produce it was due to their counsels negligence or omission, the same would bind petitioners.
It is worth mentioning that the bulk of the evidence presented in support of their protest to dela Cruzs
application for free patent consisted mainly of the following documents: (1) tax declarations, the earliest of which is for
the year 1945; (2) Deeds of Sale; (3) Deeds of Partition; and (4) Payment Receipts. The transactions evidenced by the
Deeds of Sale, the earliest of which is dated 1958, show the chain of transfer from Glicerio Tabia to the predecessors-
in-interest of petitioners. On this score, the Director of Lands ruled:
Wenceslao Tabia is neither a survey-claimant nor owner of the land in
question and the same cannot form part of his estate which could be validly transmitted
to his heirs by succession. The extra-judicial partition of the land, confirmatory deed of sale
and deed of sale executed by the Heirs of Wenceslao Tabia are, therefore, null and void
because they have not acquired any right to the land in question.
xxx
[Petitioners] anchored their right to, and interest in, the land by virtue of the sale executed by
the heirs of Wenceslao Tabia and alleged continuous possession of their respective portions.
As earlier mentioned, Tabia was not the owner of the land in question and as such, he has
nothing to transmit to his heirs. Corrorarily,[sic] his heirs has [sic] nothing to sell in favor
of the [petitioners].[29] [Emphasis supplied.]
On the other hand, the conclusions of the Director of Lands were drawn from affidavits, public documents and
records,[30] as well as the results of the ocular inspection conducted.
On petitioners failure to exhaust administrative remedies, the trial court aptly held that petitioners were,
in effect, seeking a review of the decision of the Director of Lands which was the basis for the issuance of the free
patent. Since what is being disputed is an action of an administrative agency, in consonance with the principle of
exhaustion of administrative remedy, the concerned agency should be given the opportunity to correct itself before
the intervention of the court is sought. There is a further requirement that the party with an administrative remedy
must not merely initiate the prescribed administrative procedure to obtain relief, but must also pursue it to its
appropriate conclusion before seeking judicial intervention.[31]
Petitioners in the instant case did not fully exploit the administrative remedies available to them. In fact, they were
responsible for the dismissal of their appeal before the Secretary of Agriculture and Natural Resource. It should be
remembered that their failure to file an appeal memorandum was the cause for the dismissal of their appeal. They did
not even question the dismissal by the Secretary of Agriculture and Natural Resource. Indeed, by their own neglect and
grave omission they allowed the Decision of the Director of Lands to become final and executory, a matter that they
could no longer question in Civil Case No. SC-2852.
While the rule on exhaustion of administrative remedies has recognized exceptions, [32] none of them
obtains in the case at bar.
On the third ground relied upon for granting the Motion to Dismiss, we agree with the trial court that the
doctrine of res judicata operates to bar the filing of Civil Case No. SC-2852.
We have held that the rule of res judicata which forbids the reopening of a matter once judicially
determined by competent authority applies as well to the judicial and quasi-judicial acts of public, executive or
administrative officers and boards acting within their jurisdiction as to the judgments of courts having general judicial
powers.[33] The Director of Lands is a quasi-judicial officer.[34] As such officer, his decisions and orders rendered
pursuant to his quasi-judicial authority, have upon their finality, the force and binding effect of a final judgment within
the purview of the doctrine of res judicata.[35]
Res judicata comprehends two distinct concepts: (1) bar by former judgment and (2) conclusiveness of
judgment. In the case at bar, where there is no identity of causes of action, but only an identity of issues, there
exists res judicata in the concept of conclusiveness of judgment. Thus, the issues in B.L. Claim No. 288(n) of prior
possession of Lot No. 1430 as well as the sufficiency of the evidence supporting the Director of Lands conclusion may
no longer be relitigated.
The issues now remaining for the Court to resolve do not detract from the conclusion that the dismissal of
Civil Case No. SC-2852 is proper. The issues are: (1) whether petitioners have the legal personality to institute the
action for annulment of the free patent and/or reconveyance; (2) whether the Director of Lands had jurisdiction to
award the free patent to dela Cruz; and (3) whether a constructive trust was created in favor of petitioners when the
free patent was awarded to dela Cruz.
 The first issue is the personality of petitioners to bring the action for annulment of Free Patent No. DENR
IV-FP No. 00002P. Suffice it to say that since the land in this case was public land prior to the issuance of the free
patent, the only party who could question that grant is the government, represented by the Solicitor General. The free
patent is a grant by the government, acting through the Director of Lands. Thus, the cancellation thereof is a matter
between the grantor and the grantee.[36]
On the issue of jurisdiction, there is no question that the Director of Lands had jurisdiction over B.L. Claim No. 288(n).
Under Commonwealth Act (C.A.) No. 141, or the Public Land Law, the Director of Lands has jurisdiction, authority and
control over public lands.[37] Section 4 of C.A. No. 141 states:
Sec. 4. Subject to said control, the Director of Lands shall have direct executive
control of the survey, classification, lease, sale or any other form of concession or
disposition and management of the lands of the public domain, and his decisions as to
questions of fact shall be conclusive when approved by the Secretary of Agriculture and
Natural Resources. [Emphasis supplied.]
The alleged pendency of a cadastral case involving Lot No. 1430 is not at all inconsistent with the Director
of Lands exercise of jurisdiction in B.L. Claim No. 288(n). In fact, the assumption underlying the initiation of cadastral
registration proceedings is that the parcels of land covered by the cadastral proceedings are public lands and it is up to
the claimants as oppositors to plead and prove otherwise. Precisely, the cadastral proceedings is an innovation which
was conceived to hasten and accelerate registration of lands with the Director of Lands, not the claimants, initiating
the proceedings.[38] Since there is no showing that the cadastral case adjudicated Lot No. 1430 in favor of one of the
claimants therein, it may still be presumed to be land of the public domain under the jurisdiction of the Director of
Lands.
If public purpose is to encourage land registration for lands to be covered by the Torrens System and
considering further that the cadastral proceedings has remained pending and unresolved since 1930, the Director of
Lands properly entertained dela Cruzs application for free patent.
Furthermore, the effect of registration of a homestead or any similar patent and the issuance of a duplicate certificate
of title to the patentee is to vest in him an incontestable title to the land, in the same manner as if ownership had been
determined by final decree of the court.[39] Thus, in the case at bar, the issuance of Original Certificate of Title No. P-
9927 operates to take Lot No. 1430 out of that mass of public land that could be the proper subject of cadastral
registration proceedings.
Petitioners alternative prayer for reconveyance of Lot No. 1430 based on the principle of constructive
trust[40] must likewise fail considering that their claimed ownership of Lot No. 1430 was found to be without basis.
Under this principle, registration of property by one person in his name, whether by mistake or fraud, the real owner
being another person, impresses upon the title so acquired the character of a constructive trust for the real owner,
which would justify an action for reconveyance.[41] The essence of an action for reconveyance is that the decree of
registration is respected as incontrovertible but what is sought instead is the transfer of the property which has been
wrongfully or erroneously registered in another persons name, to its rightful owner or to one with a better
right.[42] Clearly, not being the owners of Lot No. 1430, petitioners cannot ask for reconveyanceof the property to them
under the principle of constructive trust.
WHEREFORE, premises considered, the petition are hereby DENIED. The 29 November 1996 Decision and
the 4 June 1997 Resolution of the Court of Appeals in CA-G.R. CV No. 39205 are hereby AFFIRMED.
Costs against petitioners.
SO ORDERED.
FIRST DIVISION
[G.R. NO. 166781 : September 5, 2006]
ALEJANDRO MORAGA, represented by ENRIQUE MORAGA, Petitioner, v. SPOUSES JULIAN and FELICIDAD
SOMO, Spouses REYNALDO and CARMELITA FERNANDEZ and GIL and HERMINIGILDA SAN
DIEGO, Respondents.
DECISION
CHICO-NAZARIO, J.:
This Petition for Review under Rule 45 of the Rules of Court, filed by petitioner Enrique Moraga, seeks to nullify and set
aside the 23 April 2004 Decision1 and 11 January 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 70051
which reversed and set aside the Decision of the Department of Agrarian Reform Adjudication Board (DARAB) in
DARAB Case No. 5086 dated 11 January 2001.
The property in dispute is a parcel of agricultural land consisting of 1.7467 hectares which is located in Pandayan,
Meycauayan, Bulacan, and covered under Transfer Certificate of Title (TCT) No. T-5926 in the name of Victoriano Ipapo
who died on 6 June 1976. This property was tenanted by Alejandro Moraga, the deceased father of petitioner Enrique
Moraga.
On 7 March 1973, Victoriano Ipapo sold the landholding to his daughters Felicidad, Carmelita, and Herminigilda, and
their respective spouses, Julian Somo, Reynaldo Fernandez and Gil San Diego (respondents) for P10,000.00 per Bilihan
Tuluyan of even date.
Inasmuch as an affidavit of consent of the tenant is required by the agrarian laws in the transfer of title, Alejandro
Moraga on 19 November 1979 executed a Sinumpaang Salaysay admitting that he had knowledge and consent of the
sale. Thus, on 19 November 1979, a new certificate of title over the disputed land, TCT No. T-29031 (M), was issued in
favor of the respondents.
Unknown to respondents, on 22 July 1981, a Certificate of Land Transfer (CLT) No. 0-042737 was issued in favor of
Alejandro Moraga for the same parcel of agricultural land. On the basis of such CLT, Alejandro Moraga, on 3 November
1993, filed an application for the issuance of Emancipation Patent (EP) over the land in question before the Provincial
Assessor of Bulacan. Apparently, respondents belatedly filed a written protest of the application since on 16
September 1993, EP No. 496453 was granted to Alejandro Moraga, and pursuant to which TCT No. EP-108(M) was
likewise issued in his favor.
On 11 October 1993, respondents filed with the DARAB a complaint for Cancellation of the Certificate of Land Transfer
and the Emancipation Patent and for Ejectment against Enrique and Mercedes Moraga (Moragas), the surviving heirs
of the late Alejandro Moraga who died on 25 August 1993. Mercedes Moraga is the surviving spouse of the deceased
Alejandro Moraga. The case was docketed as DARAB Case No. 567-Bul '93.
Respondents alleged in their complaint, among other things, the following: (1) that the proceedings leading to the
issuance of the CLT in favor of Alejandro Moraga were irregular, i.e., the issuance of such CLT was based on a
fraudulent or false certification of the Provincial Assessor of Bulacan stating that the total landholding of their
predecessor-in-interest, Victoriano Ipapo, was 9.2986 hectares, when in truth and in fact, it was only 6.3197 hectares,
(2) that the CLT was issued in violation of respondents' and/or Victoriano Ipapo's retention rights, 3) that the tenants,
the Moragas violated their obligations as tenants.
Finding that the EP was issued not in accordance with Presidential Decree No. 27 and that the Moragas violated their
obligations as tenants of the subject landholding, the Provincial Adjudicator, in a decision dated 30 June 1994,
rendered a judgment in favor of respondents. The dispositive portion of the decision reads:
WHEREFORE, premises considered judgment is hereby rendered as follows:
1. Finding the landholding of the late Victoriano Ipapo not covered by P.D. 27. Accordingly, EP No. 496453 issued in
favor of Alejandro Moraga is hereby recalled and cancelled.
2. Ordering defendant Alejandro Moraga and all other persons acting in his behalf to vacate the premises in question
for the peaceful possession of the plaintiff. 2
The Moragas filed a motion for reconsideration which was denied for lack of merit.
The Moragas then appealed to the Court of Appeals.
In the meantime, respondents filed an application for retention with the Department of Agrarian Reform (DAR) which
was opposed by petitioner Enrique Moraga. In an Order dated 22 February 1994, the Regional Director of DAR Region
III granted the application for retention by respondents.
Petitioner appealed to the Secretary of Agrarian Reform who affirmed the decision of the Regional Director in an Order
dated 14 October 1994.
Unfazed, petitioner appealed the ruling of the Secretary of Agrarian Reform to the Court of Appeals. Said appealed
ruling of the Secretary of Agrarian Reform was consolidated by the Court of Appeals with the appealed decision of the
DARAB in Case No. 567-Bul '93. The consolidated cases were docketed as CA-G.R. No. SP No. 38445.
In a Decision dated 28 September 1995, the Court of Appeals dismissed the two appeals in CA-G.R. SP No. 38445, thus
affirming the rulings of the DARAB and the Secretary of Agrarian Reform. The decision became final and executory
since no either motion for reconsideration nor appeal from the same were ever filed by any party.
While the CA-G.R. SP No. 38445 was still pending before the Court of Appeals, petitioner and Mercedes Moraga, on 6
April 1995, filed before the Provincial Adjudicator of Malolos, Bulacan, a complaint for Redemption against
respondents which was docketed as DARAB Case No. 927-Bul '95. The complaint alleged that upon Alejandro Moraga's
death, the Moragas succeeded Alejandro Moraga as tenants over the parcel of land that is the subject of the
controversy. It was likewise averred that the sale entered into between Victoriano Ipapo and respondents on 7 March
1973, involving the said property, was made without the written notice given to Alejandro Moraga and the DAR, in
violation of Section 2 of Republic Act No. 3844, as amended by Republic Act No. 6389. Within the purview of the said
provisions of law, the Moragas were exercising their right of redemption over the said landholding.
In a Decision dated 23 November 1995, the Provincial Adjudicator, taking into consideration the earlier ruling of the
Court of Appeals in CA-G.R. SP No. 38445, which affirmed the judgment of the DARAB ordering Alejandro Moraga to
vacate the premises of land in question and the order of the Secretary of Agrarian Reform granting respondents'
application for retention, opined that the case for redemption has been rendered moot and academic inasmuch as
respondents, by virtue of the said ruling of the Court of Appeals, had acquired vested rights over the subject property.
Accordingly, such vested rights entitled respondents to exercise all the attributes of ownership, hence, said property is
beyond the reach of redemption. The Provincial Adjudicator further argued that even if the action for redemption may
be availed of, the same is still barred by prescription considering that the Moragas exercised the said right only after 22
years had lapsed.
On appeal, the DARAB in Case No. 927-Bul '95 affirmed with modification the decision of the Provincial Adjudicator.
The DARAB, while sustaining the Provincial Adjudicator's ruling that the Moragas' right to redeem has prescribed,
stated that the heirs of Alejandro Moraga shall remain as tenants and are entitled to security of tenure, to wit:
WHEREFORE, premises considered, the appealed decision is hereby MODIFIED declaring the heirs of the late
Alejandro Moraga, herein plaintiffs, are not entitled to redeem the subject property. However, they shall remain as
tenants thereof entitled to security of tenure.3
The Moragas filed a motion for reconsideration of the foregoing decision denying their claim for redemption.
Respondents likewise filed a motion for reconsideration of the said decision insofar as it decreed that Alejandro
Moraga's heirs shall "remain tenants entitled to security of tenure."
Both motions were denied by the DARAB.
Hence, both parties appealed to the Court of Appeals.
The appeal of the Moragas which assailed the DARAB decision denying their claim for redemption was docketed as
CA-G.R. SP No. 63895, while the appeal of respondents questioning the DARAB decision ordering the heirs of
Alejandro Moraga to "remain as tenants entitled to security of tenure" was docketed as CA-G.R. SP No. 70051.
In a decision dated 29 January 2003, the Special Third Division of the Court of Appeals rendered a judgment in CA-G.R.
SP No. 63895 affirming in toto the decision of the DARAB. Since no appeal was filed by either party, this decision
became final and executory.
On the other hand, the Sixth Division of the Court of Appeals, in resolving the sole issue in CA-G.R. SP No. 70051 on
whether or not the DARAB is correct in ordering that the heirs of Alejandro Moraga remain as tenants in the subject
landholding, ruled for the respondents. It ratiocinated that the DARAB committed palpable error in decreeing that
Alejandro Moraga's heir "shall remain as tenants entitled to security of tenure" considering that the said ruling alters
the already final and executory decision of the Court of Appeals in CA-G.R. SP No. 38445, enunciating that the Moragas
are not entitled to security of tenure for violating their obligations as tenants.
Undeterred, petitioner filed a motion for reconsideration of the above decision. The Court of Appeals did not budge
from its stand and denied the motion in a Resolution dated 11 January 2005.
Hence, the instant petition.
Petitioner submitted the following issues:
A. WHETHER OR NOT PETITIONER HAS A RIGHT OF REDEMPTION OVER THE LANDHOLDING SUBJECT OF THE
INSTANT CASE;
B. IF IN THE NEGATIVE, WHETHER OR NOT PETITIONER SHALL REMAIN AS TENANT OF THE LANDHOLDING
ENTITLED TO SECURITY OF TENURE;
C. WHETHER OR NOT RESPONDENTS HAVE A LEGAL RIGHT TO EJECT PETITIONER FROM THE LANDHOLDING IN
QUESTION;
D. IF IN THE AFFIRMATIVE, WHETHER OR NOT PETITIONER IS ENTITLED TO DISTURBANCE COMPENSATION. 4
As gleaned from the issues presented by petitioner, it is quite evident that petitioner would want this Court to revisit
the final and executory decisions of the Court of Appeals in CA-G.R. SP No. 38445, where petitioner's claim of security
of tenure was settled, and in CA-G.R. SP No. 63895 which resolved petitioner's complaint for redemption. However,
this cannot be done by this Court without violating the doctrine of res judicata.
In Spouses Barretto v. Court of Appeals,5 this Court elucidated the doctrine of res judicata in this fashion:
Section 47, Rule 39 of the Rules of Court, provides:
Sec. 47. Effect of judgments or final orders. - The effect of a judgment or final order rendered by a court of the
Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:
xxx
(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; andcralawlibrary
(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.
The aforecited rule in point embodies the fundamental principles of res judicata, finality of judgment and estoppel by
judgment, which means that once a judgment has become final and executory, the issues therein litigated upon are
laid to rest.
The doctrine of res judicata is of two aspects. The first aspect is the effect of a judgment as a bar to the prosecution of a
second action upon the same claim, damand or cause of action. The second aspect precludes the relitigation of a
particular fact or issue in another action between the same parties or their successors in interest, on a different claim or
cause of action.
Calalang v. Register of Deeds of Quezon City6 further explained:
The doctrine res judicata actually embraces two different concepts: (1) bar by former judgment and (b) conclusiveness
of judgment.
The second concept - conclusiveness of judgment - states that a fact or question which was in issue in a former suit and
was there judicially passed upon and determined by a court of competent jurisdiction, is conclusively settled by the
judgment therein as far as the parties to that action and persons in privity with them are concerned 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 different cause of action, while the judgment remains unreversed by
proper authority. 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 issue 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 or their privies will be final and conclusive in the second if
that same point or question was in issue and adjudicated in the first suit. x x x.
Res judicata is grounded on fundamental considerations of public and sound practice that at the risk of occasional error,
the judgments of courts must become final at some definite date set by law.7 After the judgment has become final,
nothing can be done therewith; otherwise there can be no end to litigation, thus setting at naught the main role of
courts, which is to assist in the enforcement of the rule of law and the maintenance of peace and order, by settling
justiciable controversies with finality.8
In the case under consideration, it bears stressing that the Court of Appeals came out with its Decision, dated 28
September 1995, in CA-G.R. SP No. 38445, where the issue of security of tenure was resolved and was laid to rest. The
pertinent decision of the DARAB which was affirmed by the Court of Appeals reads:
On the second issue, evidences adduced reveal that defendant Alejandro Moraga failed to pay rentals from 1990 up to
the present. Under Presidential Decree 816, a tenant who deliberately refuses to pay rentals for two consecutive years
can be ejected. Section 2 thereof provides:
"Any agricultural lessee of a rice or corn land under PD 27 who deliberately refuses and/or continues to refuse to pay
rental or amortization payments when they fail due for a period of two years, shall [upon] hearing and [final] judgment,
forfeit the certificate of land transfer issued in his favor, if his landholding is already covered by such certificate of land
transfer."
Thirdly, tenant Alejandro Moraga aside from being remiss in paying his rental has allowed third person to occupy
portions of his landholding without informing the landowners. These to the mind of the Board are acts inimical to the
right and obligation of the tenant to pursue and protect his landholding from any trespassers or would be occupant
without the knowledge and consent of the landowners. In this regard, the Board finds, defendant Alejandro Moraga to
have violated his obligations as a tenant to warrant his ejectment therefore.
WHEREFORE, premises considered judgment is hereby rendered as follows:
xxx
2. Ordering defendant Alejandro Moraga and all other persons acting in his behalf to vacate the premises in question
for the peaceful possession of the plaintiff. 9
Petitioner, however, insinuated that in the same decision for ejectment in CA-G.R. SP No. 38445, the Court of Appeals
made a pronouncement that petitioner remains as tenant of the landholding, viz:
Finally, with the finding that the Emancipation Patent issued to Alejandro Moraga was void, petitioners' status will
revert back to being tenants and thus are liable for the payment of the corresponding rentals, including the unpaid
rentals which, from the evidence adduced, was from 1990.10
Contrary to what petitioner believed, the said portion of the body of the decision is merely an obiter dictum. In fact, the
dispositive portion of the decision categorically upholds the eviction of petitioner. If indeed, it was pronounced in the
said decision that petitioner were to remain as tenant, then the dispositive portion of the same would not have upheld
petitioner's eviction. It should be remembered that while the body of a decision, order or resolution might create some
ambiguity regarding which way the court's reasoning propenderates, it is the dispositive portion thereof that finally
invests rights upon the parties, sets conditions for the exercise of those rights, and imposes the corresponding duties
and obligations.11
Since CA-G.R. SP No. 38445 resolved the issue of security of tenure and ordered petitioner's eviction, this Court can no
longer entertain petitioner's attempt to re-litigate the same on the ground of res judicata.
In a zealous attempt to salvage his case for redemption, petitioner insisted that the late Victoriano Ipapo failed to
inform petitioner's deceased father in writing and the DAR of the sale of the land in question in violation of Section 12
of Republic Act No. 6389, amending Sections 11 and 12 of Republic Act No. 3844, to wit:
Sec. 12. Lessee's Right to Redemption. In case the landholding is sold to a third person without the knowledge of the
agricultural lessee, the latter shall have the right to redeem the same at a reasonable price and consideration; Provided,
that where there are two or more agricultural lessees, each shall be entitled to said right of redemption only to [the]
extent of the area actually cultivated by him. The right of redemption under this Section may be exercised within one
hundred eighty days from notice in writing which shall be served by the vendee on all lessees affected and the
Department of Agrarian Reform upon the registration of the sale, and shall have priority over any other right of legal
redemption. The redemption price shall be the reasonable price of the land at the time of the sale.
By raising this issue, petitioner is trying to resuscitate the decision of the Court of Appeals in CA-G.R. SP No. 63895,
dated 29 January 2003, which has already attained finality. It must be recalled that said decision declared that
petitioner lost his right to redeem the property on the grounds of prescription and that petitioner's father has waived
his right to redeem said property. Relevant portion of the decision states:
It must be noted that the purpose of the written notice required by law is to remove all uncertainties as to the sale, its
terms and its validity, and to quiet any doubts that the alienation is not definitive. The law however, does not prescribe
any particular form of notice, nor any distinctive method for notifying the redemptioner. So long as the redemptioner
is informed in writing of the sale and the particulars thereof, the period for redemption will start running. x x x A copy of
the deed of sale, in an authentic form, will satisfy the requirement of the law and serve the purpose thereof.
It is worthy to note that the petitioners have secured a copy of the said Deed of Sale and attached the same in their
Answer dated October 20, 1993 in DARAB Case No. 567-Bul '93. Thus, it is proper to reckon the period of redemption
on October 20, 1993. The complaint filed on April 6, 1995 is clearly beyond the redemption period of one hundred
eighty (180) days.
Even assuming that their right to redeem the property has not prescribed, however, by virtue of the Sinumpaang
Salaysay executed by Alejandro Moraga on November 19, 1979, the latter is deemed to have waived his right to
redeem the same. x x x.12
THIRD DIVISION
Said issue on redemption having attained finality, petitioner's effort to modify the same is barred by res judicata.
FELS ENERGY, INC., G.R. No. 168557
Petitioner, likewise, assails the 23 April 2004 Decision of the Sixth Division of the Court of Appeals in CA-G.R. SP No. Petitioner,
70051 as having effectively nullified the 29 January 2003 Decision of the Special Third Division of the Court of Appeals
in CA-G.R. SP No. 63895, thereby ditching the principle of res judicata. According to petitioner, CA-G.R. SP No. 63895 -versus-
affirmed the DARAB decision decreeing, among other things, that petitioner and his mother shall remain as tenants of
the land in dispute and are entitled to security of tenure. Said ruling was allegedly reversed by CA-G.R. SP No. 70051
when the latter ruled in this manner: THE PROVINCE OF BATANGAS and
THE OFFICE OF THE PROVINCIAL
ASSESSOR OF BATANGAS,
In fine, the DARAB committed a palpable error in decreeing that Alejandro's heirs "shall remain as tenants (of the Respondents.
landholding) entitled to security of tenure."13 x----------------------------------------------------x
NATIONAL POWER CORPORATION, G.R. No. 170628
Petitioner,
A scrutiny of the genesis of CA-G.R. SP No. 63895 and CA-G.R. SP No. 70051 is enlightening. As already mentioned,
Present:
these two cases originated from a single complaint for redemption filed by petitioner and his mother before the
Provincial Adjudicator of Malolos, Bulacan on 6 April 1995, docketed as DARAB Case No. 927-Bul '95. In the pleadings
YNARES-SANTIAGO, J.,
filed by petitioner before the Provincial Adjudicator, he did not raise the issue of security of tenure. Thus, the Provincial
- versus - Chairperson,
Adjudicator, in resolving the case confined his decision on the sole issue of whether petitioner and his mother can
AUSTRIA-MARTINEZ,
redeem the subject property. He ruled they cannot. When DARAB Case No. 927-Bul '95 was elevated to the DARAB,
CALLEJO, SR. and
security of tenure was also a non-issue in the pleadings of the parties. However, the DARAB, instead of confining itself
LOCAL BOARD OF ASSESSMENT CHICO-NAZARIO, JJ.
to the sole issue at hand, veered away and ventured into the realm of an unraised question, i.e., the issue of security of
APPEALS OF BATANGAS, LAURO C.
tenure. This actuation of the DARAB prompted respondents to appeal to the Court of Appeals, docketed as CA-G.R. SP
ANDAYA, in his capacity as the Assessor
No. 70051, questioning the DARAB decision that ordered the heirs of Alejandro Moraga to "remain as tenants entitled
of the Province of Batangas, and the Promulgated:
to security of tenure."
PROVINCE OF BATANGAS represented
by its Provincial Assessor, February 16, 2007
On the other hand, petitioner appealed the same decision of the DARAB denying him the right to redeem the property. Respondents.
Petitioner's appeal was docketed as CA-G.R. SP No. 63895. x--------------------------------------------------------------------------------------------x

While the Court of Appeals in CA-G.R. SP No. 70051, limited itself to the issue presented by petitioner, the contrary
happened in CA-G.R. SP No. 63895, when the Court of Appeals fell into the same pitfall as the DARAB in fiddling with
the issue of security of tenure. This conduct of the DARAB and the Court of Appeals in CA-G.R. SP No. 63895 cannot be
countenanced. First, it goes against the tenet that "courts of justice have no jurisdiction or power to decide a question
not in issue."14 A judgment that goes outside the issues and purports to adjudicate something on which the court did
not hear the parties, is not only irregular but also extra-judicial and invalid.15 This norm does not only apply to courts
but also to quasi-judicial bodies such as the DARAB.16 Prescinding from this rule, the DARAB ruling on security of
tenure, which was affirmed by the Court of Appeals in CA-G.R. SP No. 63895, is therefore irrregular and invalid. From
this disquisition, it is readily clear that the decision in CA-G.R. SP No. 63895 is valid only insofar as it ruled that
petitioner can no longer exercise his right to redeem the said property. Res judicata is not applicable because CA-G.R.
SP No. 63895, in effect, has no ruling on the issue of security of tenure which CA-G.R. SP No. 70051 could have
modified.
DECISION
CALLEJO, SR., J.:
Before us are two consolidated cases docketed as G.R. No. 168557 and G.R. No. 170628, which were filed by petitioners
FELS Energy, Inc. (FELS) and National Power Corporation (NPC), respectively. The first is a petition for review
on certiorari assailing the August 25, 2004 Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 67490 and its
Resolution[2] dated June 20, 2005; the second, also a petition for review on certiorari, challenges the February 9, 2005
Decision[3] and November 23, 2005 Resolution[4] of the CA in CA-G.R. SP No. 67491. Both petitions were dismissed on
the ground of prescription.
The pertinent facts are as follows:

On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc. over 3x30 MW diesel engine power
Anent petitioner's claim of disturbance compensation, suffice it to state that since this matter is brought up for the first
barges moored at Balayan Bay in Calaca, Batangas. The contract, denominated as an Energy Conversion
time in this Petition for Review, this Court cannot take cognizance of the same. The settled rule is that matters or
Agreement[5] (Agreement), was for a period of five years. Article 10 reads:
issues not raised below cannot be raised before this Court for the first time.17
10.1 RESPONSIBILITY. NAPOCOR shall be responsible for the payment of (a) all taxes,
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated 23 April 2004, and its Resolution import duties, fees, charges and other levies imposed by the National Government of the
dated 11 January 2005, in CA-G.R. SP No. 70051 are AFFIRMED. Costs against petitioner. Republic of the Philippines or any agency or instrumentality thereof to which POLAR may be
or become subject to or in relation to the performance of their obligations under this
agreement (other than (i) taxes imposed or calculated on the basis of the net income
SO ORDERED. of POLAR and Personal Income Taxes of its employees and (ii) construction permit fees,
environmental permit fees and other similar fees and charges) and (b) all real estate taxes and
assessments, rates and other charges in respect of the Power Barges.[6]
 Subsequently, Polar Energy, Inc. assigned its rights under the Agreement to FELS. The NPC initially
opposed the assignment of rights, citing paragraph 17.2 of Article 17 of the Agreement.
On August 7, 1995, FELS received an assessment of real property taxes on the power barges from
Provincial Assessor Lauro C. Andaya of Batangas City. The assessed tax, which likewise covered those due for 1994,
amounted to P56,184,088.40 per annum. FELS referred the matter to NPC, reminding it of its obligation under the
Agreement to pay all real estate taxes. It then gave NPC the full power and authority to represent it in any conference
regarding the real property assessment of the Provincial Assessor.
In a letter[7] dated September 7, 1995, NPC sought reconsideration of the Provincial Assessors decision to assess real
property taxes on the power barges. However, the motion was denied on September 22, 1995, and the Provincial
Assessor advised NPC to pay the assessment.[8] This prompted NPC to file a petition with the Local Board of
Assessment Appeals (LBAA) for the setting aside of the assessment and the declaration of the barges as non-taxable
items; it also prayed that should LBAA find the barges to be taxable, the Provincial Assessor be directed to make the
necessary corrections.[9]
In its Answer to the petition, the Provincial Assessor averred that the barges were real property for purposes of
taxation under Section 199(c) of Republic Act (R.A.) No. 7160.
Before the case was decided by the LBAA, NPC filed a Manifestation, informing the LBAA that the
Department of Finance (DOF) had rendered an opinion [10] dated May 20, 1996, where it is clearly stated that power
barges are not real property subject to real property assessment.
On August 26, 1996, the LBAA rendered a Resolution[11] denying the petition. The fallo reads:
WHEREFORE, the Petition is DENIED. FELS is hereby ordered to pay the real
estate tax in the amount of P56,184,088.40, for the year 1994.
SO ORDERED.[12]
The LBAA ruled that the power plant facilities, while they may be classified as movable or personal property, are
nevertheless considered real property for taxation purposes because they are installed at a specific location with a
character of permanency. The LBAA also pointed out that the owner of the bargesFELS, a private corporationis the
one being taxed, not NPC. A mere agreement making NPC responsible for the payment of all real estate taxes and
assessments will not justify the exemption of FELS; such a privilege can only be granted to NPC and cannot be
extended to FELS. Finally, the LBAA also ruled that the petition was filed out of time.
Aggrieved, FELS appealed the LBAAs ruling to the Central Board of Assessment Appeals (CBAA).
On August 28, 1996, the Provincial Treasurer of Batangas City issued a Notice of Levy and Warrant by Distraint[13] over
the power barges, seeking to collect real property taxes amounting to P232,602,125.91 as of July 31, 1996. The notice
and warrant was officially served to FELS on November 8, 1996. It then filed a Motion to Lift Levy dated November 14,
1996, praying that the Provincial Assessor be further restrained by the CBAA from enforcing the disputed assessment
during the pendency of the appeal.
On November 15, 1996, the CBAA issued an Order[14] lifting the levy and distraint on the properties of FELS in order not
to preempt and render ineffectual, nugatory and illusory any resolution or judgment which the Board would issue.
Meantime, the NPC filed a Motion for Intervention[15] dated August 7, 1998 in the proceedings before the CBAA. This
was approved by the CBAA in an Order[16] dated September 22, 1998.
During the pendency of the case, both FELS and NPC filed several motions to admit bond to guarantee the payment of
real property taxes assessed by the Provincial Assessor (in the event that the judgment be unfavorable to them). The
bonds were duly approved by the CBAA.
On April 6, 2000, the CBAA rendered a Decision [17] finding the power barges exempt from real property tax. The
dispositive portion reads:
WHEREFORE, the Resolution of the Local Board of Assessment Appeals of
the Province of Batangas is hereby reversed. Respondent-appellee Provincial Assessor of
the Province of Batangas is hereby ordered to drop subject property under ARP/Tax
Declaration No. 018-00958 from the List of Taxable Properties in the Assessment Roll. The
Provincial Treasurer of Batangas is hereby directed to act accordingly.
SO ORDERED.[18]
Ruling in favor of FELS and NPC, the CBAA reasoned that the power barges belong to NPC; since they are actually,
directly and exclusively used by it, the power barges are covered by the exemptions under Section 234(c) of R.A. No.
7160.[19] As to the other jurisdictional issue, the CBAA ruled that prescription did not preclude the NPC from pursuing
its claim for tax exemption in accordance with Section 206 of R.A. No. 7160. The Provincial Assessor filed a motion for
reconsideration, which was opposed by FELS and NPC.
In a complete volte face, the CBAA issued a Resolution[20] on July 31, 2001 reversing its earlier decision.
The fallo of the resolution reads:
WHEREFORE, premises considered, it is the resolution of this Board that:
(a) The decision of the Board dated 6 April 2000 is hereby reversed.
(b) The petition of FELS, as well as the intervention of NPC, is dismissed.
(c) The resolution of the Local Board of Assessment Appeals of Batangas is hereby
affirmed,
(d) The real property tax assessment on FELS by the Provincial Assessor of Batangas is
likewise hereby affirmed.
SO ORDERED.[21]
FELS and NPC filed separate motions for reconsideration, which were timely opposed by the Provincial
Assessor. The CBAA denied the said motions in a Resolution [22] dated October 19, 2001.
Dissatisfied, FELS filed a petition for review before the CA docketed as CA-G.R. SP No. 67490. Meanwhile,
NPC filed a separate petition, docketed as CA-G.R. SP No. 67491.
On January 17, 2002, NPC filed a Manifestation/Motion for Consolidation in CA-G.R. SP No. 67490 praying
for the consolidation of its petition with CA-G.R. SP No. 67491. In a Resolution[23] dated February 12, 2002, the
appellate court directed NPC to re-file its motion for consolidation with CA-G.R. SP No. 67491, since it is the ponente of
the latter petition who should resolve the request for reconsideration.
NPC failed to comply with the aforesaid resolution. On August 25, 2004, the Twelfth Division of the
appellate court rendered judgment in CA-G.R. SP No. 67490 denying the petition on the ground of prescription. The
decretal portion of the decision reads:
WHEREFORE, the petition for review is DENIED for lack of merit and the assailed
Resolutions dated July 31, 2001 and October 19, 2001 of the Central Board of Assessment
Appeals are AFFIRMED.
SO ORDERED.[24]
On September 20, 2004, FELS timely filed a motion for reconsideration seeking the reversal of the appellate courts
decision in CA-G.R. SP No. 67490.
Thereafter, NPC filed a petition for review dated October 19, 2004 before this Court, docketed as G.R. No. 165113,
assailing the appellate courts decision in CA-G.R. SP No. 67490. The petition was, however, denied in this Courts
Resolution[25] of November 8, 2004, for NPCs failure to sufficiently show that the CA committed any reversible error in
the challenged decision. NPC filed a motion for reconsideration, which the Court denied with finality in a
Resolution[26] dated January 19, 2005.
Meantime, the appellate court dismissed the petition in CA-G.R. SP No. 67491. It held that the right to question the
assessment of the Provincial Assessor had already prescribed upon the failure of FELS to appeal the disputed
assessment to the LBAA within the period prescribed by law. Since FELS had lost the right to question the assessment,
the right of the Provincial Government to collect the tax was already absolute.
NPC filed a motion for reconsideration dated March 8, 2005, seeking reconsideration of the February 5, 2005 ruling of
the CA in CA-G.R. SP No. 67491. The motion was denied in a Resolution [27] dated November 23, 2005.

The motion for reconsideration filed by FELS in CA-G.R. SP No. 67490 had been earlier denied for lack of merit in a
Resolution[28] dated June 20, 2005.
On August 3, 2005, FELS filed the petition docketed as G.R. No. 168557 before this Court, raising the
following issues:
A.
Whether power barges, which are floating and movable, are personal properties and
therefore, not subject to real property tax.
B.
Assuming that the subject power barges are real properties, whether they are exempt from
real estate tax under Section 234 of the Local Government Code (LGC).
C.
Assuming arguendo that the subject power barges are subject to real estate tax, whether or
not it should be NPC which should be made to pay the same under the law.
D.
Assuming arguendo that the subject power barges are real properties, whether or not the
same is subject to depreciation just like any other personal properties.
E.
Whether the right of the petitioner to question the patently null and void real property tax
assessment on the petitioners personal properties is imprescriptible.[29]
On January 13, 2006, NPC filed its own petition for review before this Court (G.R. No. 170628), indicating
the following errors committed by the CA:
I procedure likewise does not permit the property owner the remedy of filing a motion for reconsideration before the
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE APPEAL TO THE LBAA
WAS FILED OUT OF TIME.
II
THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE POWER BARGES
ARE NOT SUBJECT TO REAL PROPERTY TAXES.
III
THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE ASSESSMENT ON
THE POWER BARGES WAS NOT MADE IN ACCORDANCE WITH LAW.[30]
Considering that the factual antecedents of both cases are similar, the Court ordered the consolidation of the two
cases in a Resolution[31] dated March 8, 2006.
In an earlier Resolution dated February 1, 2006, the Court had required the parties to submit their respective
Memoranda within 30 days from notice. Almost a year passed but the parties had not submitted their respective
memoranda. Considering that taxesthe lifeblood of our economyare involved in the present controversy, the Court was
prompted to dispense with the said pleadings, with the end view of advancing the interests of justice and avoiding
further delay.
In both petitions, FELS and NPC maintain that the appeal before the LBAA was not time-barred. FELS argues that
when NPC moved to have the assessment reconsidered on September 7, 1995, the running of the period to file an
appeal with the LBAA was tolled. For its part, NPC posits that the 60-day period for appealing to the LBAA should be
reckoned from its receipt of the denial of its motion for reconsideration.
Petitioners contentions are bereft of merit.
Section 226 of R.A. No. 7160, otherwise known as the Local Government Code of 1991, provides:
SECTION 226. Local Board of Assessment Appeals. Any owner or person having
legal interest in the property who is not satisfied with the action of the provincial, city or
municipal assessor in the assessment of his property may, within sixty (60) days from the date
of receipt of the written notice of assessment, appeal to the Board of Assessment Appeals of
the province or city by filing a petition under oath in the form prescribed for the purpose,
together with copies of the tax declarations and such affidavits or documents submitted in
support of the appeal.
We note that the notice of assessment which the Provincial Assessor sent to FELS on August 7, 1995, contained the
following statement:
If you are not satisfied with this assessment, you may, within sixty (60) days from the date of
receipt hereof, appeal to the Board of Assessment Appealsof the province by filing a petition
under oath on the form prescribed for the purpose, together with copies of ARP/Tax
Declaration and such affidavits or documents submitted in support of the appeal.[32]
Instead of appealing to the Board of Assessment Appeals (as stated in the notice), NPC opted to file a
motion for reconsideration of the Provincial Assessors decision, a remedy not sanctioned by law.
The remedy of appeal to the LBAA is available from an adverse ruling or action of the provincial, city or
municipal assessor in the assessment of the property. It follows then that the determination made by the respondent
Provincial Assessor with regard to the taxability of the subject real properties falls within its power to assess properties
for taxation purposes subject to appeal before the LBAA.[33]
We fully agree with the rationalization of the CA in both CA-G.R. SP No. 67490 and CA-G.R. SP No. 67491.
The two divisions of the appellate court cited the case of Callanta v. Office of the Ombudsman,[34] where we ruled that
under Section 226 of R.A. No 7160,[35] the last action of the local assessor on a particular assessment shall be the notice
of assessment; it is this last action which gives the owner of the property the right to appeal to the LBAA. The
local assessor. The pertinent holding of the Court in Callanta is as follows:
x x x [T]he same Code is equally clear that the aggrieved owners should have
brought their appeals before the LBAA. Unfortunately, despite the advice to this effect
contained in their respective notices of assessment, the owners chose to bring their requests
for a review/readjustment before the city assessor, a remedy not sanctioned by the law. To
allow this procedure would indeed invite corruption in the system of appraisal and
assessment. It conveniently courts a graft-prone situation where values of real property may
be initially set unreasonably high, and then subsequently reduced upon the request of a
property owner. In the latter instance, allusions of a possible covert, illicit trade-off cannot be
avoided, and in fact can conveniently take place. Such occasion for mischief must be
prevented and excised from our system.[36]
For its part, the appellate court declared in CA-G.R. SP No. 67491:
x x x. The Court announces: Henceforth, whenever the local assessor sends a notice
to the owner or lawful possessor of real property of its revised assessed value, the former shall no
longer have any jurisdiction to entertain any request for a review or readjustment. The
appropriate forum where the aggrieved party may bring his appeal is the LBAA as provided by
law. It follows ineluctably that the 60-day period for making the appeal to the LBAA runs
without interruption. This is what We held in SP 67490 and reaffirm today in SP 67491. [37]
To reiterate, if the taxpayer fails to appeal in due course, the right of
the local government to collect the taxes due with respect to the taxpayers property becomes absolute upon the
expiration of the period to appeal.[38] It also bears stressing that the taxpayers failure to question the assessment in the
LBAA renders the assessment of the local assessor final, executory and demandable, thus, precluding the taxpayer
from questioning the correctness of the assessment, or from invoking any defense that would reopen the question of
its liability on the merits.[39]
 In fine, the LBAA acted correctly when it dismissed the petitioners appeal for having been filed out of time;
the CBAA and the appellate court were likewise correct in affirming the dismissal. Elementary is the rule that the
perfection of an appeal within the period therefor is both mandatory and jurisdictional, and failure in this regard
renders the decision final and executory.[40]
In the Comment filed by the Provincial Assessor, it is asserted that the instant petition is barred by res
judicata; that the final and executory judgment in G.R. No. 165113 (where there was a final determination on the issue
of prescription), effectively precludes the claims herein; and that the filing of the instant petition after an adverse
judgment in G.R. No. 165113 constitutes forum shopping.
FELS maintains that the argument of the Provincial Assessor is completely misplaced since it was not a
party to the erroneous petition which the NPC filed in G.R. No. 165113. It avers that it did not participate in the
aforesaid proceeding, and the Supreme Court never acquired jurisdiction over it. As to the issue of forum shopping,
petitioner claims that no forum shopping could have been committed since the elements of litis pendentia or res
judicata are not present.
We do not agree.
Res judicata pervades every organized system of jurisprudence and is founded upon two grounds
embodied in various maxims of common law, namely: (1) public policy and necessity, which makes it to the interest of
the
State that there should be an end to litigation republicae ut sit litium; and (2) the hardship on the individual of being
vexed twice for the same cause nemo debet bis vexari et eadem causa. A conflicting doctrine would subject the public
peace and quiet to the will and dereliction of individuals and prefer the regalement of the litigious disposition on the
part of suitors to the preservation of the public tranquility and happiness. [41] As we ruled in Heirs of Trinidad De Leon
Vda. de Roxas v. Court of Appeals:[42]
x x x An existing final judgment or decree rendered upon
the merits, without fraud or collusion, by a court of competent
jurisdiction acting upon a matter within its authority is conclusive on
the rights of the parties and their privies. This ruling holds in all other
actions or suits, in the same or any other judicial tribunal of
concurrent jurisdiction, touching on the points or matters in issue in
the first suit.
xxx
Courts will simply refuse to reopen what has been decided. They will not allow
the same parties or their privies to litigate anew a question once it has been considered and
decided with finality. Litigations must end and terminate sometime and somewhere. The
effective and efficient administration of justice requires that once a judgment has become
final, the prevailing party should not be deprived of the fruits of the verdict by subsequent
suits on the same issues filed by the same parties.
This is in accordance with the doctrine of res judicata which has the following
elements: (1) the former judgment must be final; (2) the court which rendered it had
jurisdiction over the subject matter and the parties; (3) the judgment must be on the merits;
and (4) there must be between the first and the second actions, identity of parties, subject
matter and causes of action. The application of the doctrine of res judicata does not require
absolute identity of parties but merely substantial identity of parties.There is substantial
identity of parties when there is community of interest or privity of interest between a
party in the first and a party in the second case even if the first case did not implead the
latter.[43]
To recall, FELS gave NPC the full power and authority to represent itin any proceeding regarding real
property assessment. Therefore, when petitioner NPC filed its petition for review docketed as G.R. No. 165113, it did so
not only on its behalf but also on behalf of FELS. Moreover, the assailed decision in the earlier petition for review filed
in this Court was the decision of the appellate court in CA-G.R. SP No. 67490, in which FELS was the petitioner. Thus,
the decision in G.R. No. 165116 is binding on petitioner FELS under the principle of privity of interest. In fine, FELS and
NPC are substantially identical parties as to warrant the application of res judicata. FELSs argument that it is not bound
by the erroneous petition filed by NPC is thus unavailing.
On the issue of forum shopping, we rule for the Provincial Assessor. Forum shopping exists when, as a
result of an adverse judgment in one forum, a party seeks another and possibly favorable judgment in another forum
other than by appeal or special civil action or certiorari. There is also forum shopping when a party institutes two or
more actions or proceedings grounded on the same cause, on the gamble that one or the other court would make a
favorable disposition.[44]
Petitioner FELS alleges that there is no forum shopping since the elements of res judicata are not present
in the cases at bar; however, as already discussed, res judicata may be properly applied herein. Petitioners engaged in
forum shopping when they filed G.R. Nos. 168557 and 170628 after the petition for review in G.R. No. 165116. Indeed,
petitioners went from one court to another trying to get a favorable decision from one of the tribunals which allowed
them to pursue their cases.
It must be stressed that an important factor in determining the existence of forum shopping is the
vexation caused to the courts and the parties-litigants by the filing of similar cases to claim substantially the same
reliefs.[45] The rationale against forum shopping is that a party should not be allowed to pursue simultaneous remedies
in two different fora. Filing multiple petitions or complaints constitutes abuse of court processes, which tends to
degrade the administration of justice, wreaks havoc upon orderly judicial procedure, and adds to the congestion of the
heavily burdened dockets of the courts.[46]
Thus, there is forum shopping when there exist: (a) identity of parties, or at least such parties as represent
the same interests in both actions, (b) identity of rights asserted and relief prayed for, the relief being founded on the
same facts, and (c) the identity of the two preceding particulars is such that any judgment rendered in the pending
case, regardless of which party is successful, would amount to res judicata in the other.[47]
Having found that the elements of res judicata and forum shopping are present in the consolidated cases, a
discussion of the other issues is no longer necessary. Nevertheless, for the peace and contentment of petitioners, we
shall shed light on the merits of the case.
As found by the appellate court, the CBAA and LBAA power barges are real property and are thus subject
to real property tax. This is also the inevitable conclusion, considering that G.R. No. 165113 was dismissed for failure to
sufficiently show any reversible error. Tax assessments by tax examiners are presumed correct and made in good faith,
with the taxpayer having the burden of proving otherwise.[48] Besides, factual findings of administrative bodies, which
have acquired expertise in their field, are generally binding and conclusive upon the Court; we will not assume to
interfere with the sensible exercise of the judgment of men especially trained in appraising property. Where the judicial
mind is left in doubt, it is a sound policy to leave the assessment undisturbed.[49] We find no reason to depart from this
rule in this case.
In Consolidated Edison Company of New York, Inc., et al. v. The City of New York, et al.,[50] a power company
brought an action to review property tax assessment. On the citys motion to dismiss, the Supreme Court of New
York held that the barges on which were mounted gas turbine power plants designated to generate electrical power,
the fuel oil barges which supplied fuel oil to the power plant barges, and the accessory equipment mounted on the
barges were subject to real property taxation.
Moreover, Article 415 (9) of the New Civil Code provides that [d]ocks and structures which, though
floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast are considered
immovable property. Thus, power barges are categorized as immovable property by destination, being in the nature of
machinery and other implements intended by the owner for an industry or work which may be carried on in a building
or on a piece of land and which tend directly to meet the needs of said industry or work.[51]
Petitioners maintain nevertheless that the power barges are exempt from real estate tax under Section
234 (c) of R.A. No. 7160 because they are actually, directly and exclusively used by petitioner NPC, a government-
owned and controlled corporation engaged in the supply, generation, and transmission of electric power.
We affirm the findings of the LBAA and CBAA that the owner of the taxable properties is petitioner FELS,
which in fine, is the entity being taxed by the local government. As stipulated under Section 2.11, Article 2 of the
Agreement:
OWNERSHIP OF POWER BARGES. POLAR shall own the Power Barges and all
the fixtures, fittings, machinery and equipment on the Site used in connection with the Power
Barges which have been supplied by it at its own cost. POLAR shall operate, manage and
maintain the Power Barges for the purpose of converting Fuel of NAPOCOR into electricity.[52]

It follows then that FELS cannot escape liability from the payment of realty taxes by invoking its
exemption in Section 234 (c) of R.A. No. 7160, which reads:
SECTION 234. Exemptions from Real Property Tax. The following are exempted
from payment of the real property tax:
xxx
(c) All machineries and equipment that are actually, directly and exclusively used
by local water districts and government-owned or controlled corporations
engaged in the supply and distribution of water and/or generation and
transmission of electric power; x x x
Indeed, the law states that the machinery must be actually, directly and exclusively used by the
government owned or controlled corporation; nevertheless, petitioner FELS still cannot find solace in this provision
because Section 5.5, Article 5 of the Agreement provides:
OPERATION. POLAR undertakes that until the end of the Lease Period, subject
to the supply of the necessary Fuel pursuant to Article 6 and to the other provisions hereof, it
will operate the Power Barges to convert such Fuel into electricity in accordance with Part A
of Article 7.[53]
It is a basic rule that obligations arising from a contract have the force of law between the parties. Not
being contrary to law, morals, good customs, public order or public policy, the parties to the contract are bound by its
terms and conditions.[54]
Time and again, the Supreme Court has stated that taxation is the rule and exemption is the
exception.[55] The law does not look with favor on tax exemptions and the entity that would seek to be thus privileged
must justify it by words too plain to be mistaken and too categorical to be misinterpreted.[56] Thus, applying the rule of
strict construction of laws granting tax exemptions, and the rule that doubts should be resolved in favor of provincial
corporations, we hold that FELS is considered a taxable entity.
The mere undertaking of petitioner NPC under Section 10.1 of the Agreement, that it shall be responsible
for the payment of all real estate taxes and assessments, does not justify the exemption. The privilege granted to
petitioner NPC cannot be extended to FELS. The covenant is between FELS and NPC and does not bind a third person
not privy thereto, in this case, the Province of Batangas.
It must be pointed out that the protracted and circuitous litigation has seriously resulted in the local
governments deprivation of revenues. The power to tax is an incident of sovereignty and is unlimited in its magnitude,
acknowledging in its very nature no perimeter so that security against its abuse is to be found only in the responsibility
of the legislature which imposes the tax on the constituency who are to pay for it.[57] The right of local government
units to collect taxes due must always be upheld to avoid severe tax erosion. This consideration is consistent with the
State policy to guarantee the autonomy of local governments[58] and the objective of the Local Government Code that
they enjoy genuine and meaningful local autonomy to empower them to achieve their fullest development as self-
reliant communities and make them effective partners in the attainment of national goals.[59]
In conclusion, we reiterate that the power to tax is the most potent instrument to raise the needed
revenues to finance and support myriad activities of the local government units for the delivery of basic services
essential to the promotion of the general welfare and the enhancement of peace, progress, and prosperity of the
people.[60]
WHEREFORE, the Petitions are DENIED and the assailed Decisions and Resolutions AFFIRMED.
SO ORDERED.
SECOND DIVISION
CHRISGARMENTSCORPORATION, G.R. No. 167426
Petitioner,
Present:
QUISUMBING,J.,Chairperson,
- versus - CARPIO,*
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
HON. PATRICIA A. STO. TOMAS and CHRIS GARMENTS WORKERS UNION-
PTGWO LOCAL CHAPTER No. 832, Promulgated:
Respondents.
January 12, 2009
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
QUISUMBING, J.:
Petitioner assails the Resolutions dated February 22, 2005[1] and March 16, 2005[2] of the Court of Appeals
in CA-G.R. SP No. 88444, which dismissed its petition for certiorari due to its failure to file a motion for reconsideration
from the Decision[3] of the Secretary of the Department of Labor and Employment before filing the petition.
The relevant facts are as follows:
Petitioner Chris Garments Corporation is engaged in the manufacture and export of quality garments and
apparel.
On February 8, 2002, respondent Chris Garments Workers UnionPTGWO, Local Chapter No. 832, filed a
petition for certification election with the Med-Arbiter. The union sought to represent petitioners rank-and-file
employees not covered by its Collective Bargaining Agreement (CBA) with the Samahan Ng Mga Manggagawa sa Chris
Garments CorporationSolidarity of Union in the Philippines for Empowerment and Reforms (SMCGC-SUPER), the
certified bargaining agent of the rank-and-file employees. The union alleged that it is a legitimate labor organization
with a Certificate of Creation of Local/Chapter No. PTGWO-832[4] dated January 31, 2002 issued by the Bureau of Labor
Relations.[5]
Petitioner moved to dismiss the petition. It argued that it has an existing CBA from July 1, 1999 to June 30,
2004 with SMCGC-SUPER which bars any petition for certification election prior to the 60-day freedom period. It also
contended that the union members are not its regular employees since they are direct employees of qualified and independent
contractors.[6]
The union countered that its members are regular employees of petitioner since: (1) they are engaged in
activities necessary and desirable to its main business although they are called agency employees; (2) their length of
service have spanned an average of four years; (3) petitioner controlled their work attitude and performance; and (4)
petitioner paid their salaries. The union added that while there is an existing CBA between petitioner and SMCGC-
SUPER, there are other rank-and-file employees not covered by the CBA who seek representation for collective
bargaining purposes. It also contended that the contract bar rule does not apply. [7]
The Med-Arbiter dismissed the petition. The Med-Arbiter ruled that there was no employer-employee
relationship between the parties since the union itself admitted that its members are agency employees. The Med-
Arbiter also held that even if the union members are considered direct employees of petitioner, the petition for
certification election will still fail due to the contract bar rule under Article 232 [8] of the Labor Code. Hence, a petition
could only be filed during the 60-day freedom period of the CBA or from May 1, 2004 to June 30, 2004. Nevertheless,
the Med-Arbiter ruled that the union may avail of the CBA benefits by paying agency fees to SMCGC-SUPER.[9]
 In a Resolution[10] dated December 27, 2002, the Secretary of Labor and Employment affirmed the
decision of the Med-Arbiter. She ruled that petitioner failed to prove that the union members are employees of
qualified and independent contractors with substantial capital or investment and added that petitioner had the right to
control the performance of the work of such employees. She also noted that the union members are garment workers
who performed activities directly related to petitioners main business. Thus, the union members may be considered
part of the bargaining unit of petitioners rank-and-file employees. However, she held that the petition could not be
entertained except during the 60-day freedom period.She also found no reason to split petitioners bargaining unit.
On May 16, 2003, the union filed a second petition for certification election. The Med-Arbiter dismissed
the petition on the ground that it was barred by a prior judgment. On appeal, the Secretary of Labor and Employment
affirmed the decision of the Med-Arbiter.[11]
On June 4, 2004, the union filed a third petition for certification election.[12] The Med-Arbiter dismissed the
petition on the grounds that no employer-employee relationship exists between the parties and that the case was
barred by a prior judgment. On appeal, the Secretary of Labor and Employment granted the petition in a
Decision[13] dated January 18, 2005.Thus:
WHEREFORE, the appeal filed by Chris Garment[s] Workers UnionPTGWO is
hereby GRANTED. The 7 July 2004 Order of Med-Arbiter Tranquilino B. Reyes is
hereby REVERSED and SET ASIDE.Accordingly, let the entire records of the case be
remanded to the Regional Office of origin for the immediate conduct of a certification
election, subject to the usual pre-election conference, among the regular rank-and-file
employees of Chris Garments Corporation, with the following choices:
1. Chris Garments Workers Union PTGWO Local Chapter No. 832;
2. Samahan ng Manggagawa sa Chris Garments Corp. SUPER; and
3. No Union.
Pursuant to Section 13(e), Rule VIII of Department Order No. 40-03, the employer
is hereby directed to submit to the office of origin, within ten (10) days from receipt hereof,
the certified list of its employees in the bargaining unit or when necessary a copy of its payroll
covering the same employees for the last three (3) months preceding the issuance of this
Decision.
SO DECIDED.[14]
Petitioner received a copy of the decision on January 25, 2005. On February 4, 2005, petitioner filed a
petition for certiorari with the Court of Appeals which was dismissed due to its failure to file a motion for
reconsideration of the decision before filing the petition.
Incidentally, a certification election was conducted on June 21, 2005among petitioners rank-and-file
employees where SMCGC-SUPER emerged as the winning union. On January 20, 2006, the Med-Arbiter certified
SMCGC-SUPER as the sole and exclusive bargaining agent of all the rank-and-file employees of petitioner.[15]
Petitioner now comes before us arguing that:
I.
THE COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF
DISCRETION IN DISMISSING THE PETITION [FOR CERTIORARI] ON THE SOLE GROUND
THAT THE COMPANY DID NOT FILE A MOTION FOR RECONSIDERATION DESPITE
SECTION 21, RULE VIII OF DEPARTMENT ORDER NO. 43-03, . . . SERIES OF 2003, [WHICH]
PROHIBITS THE FILING OF A MOTION FOR RECONSIDERATION FROM A DECISION OF THE
SECRETARY OF LABOR.
II.
THE COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION
IN REFUSING TO RESOLVE THE MERITS OF THE PETITION AS IT DISMISSED THE SAME BY
MERE, ALBEIT, BASELESS TECHNICALITY WHICH ONLY FRUSTRATED RATHER THAN
PROMOTED SUBSTANTIAL JUSTICE . . .
III.
PUBLIC RESPONDENT SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF
DISCRETION IN REVERSING THE DECISION OF THE MED-ARBITER AND GIVING [DUE]
COURSE TO THE PETITION FOR CERTIFICATION ELECTION FILED BY PRIVATE
RESPONDENT CGWU-PTGWO DESPITE THE ABSENCE OF ANY EMPLOYER-EMPLOYEE
RELATIONSHIP BETWEEN THE COMPANY AND ITS MEMBERS.
IV.
PUBLIC RESPONDENT SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF
DISCRETION IN REVERSING THE FINDINGS OF THE MED-ARBITER THAT THE PETITION
FOR CERTIFICATION ELECTION WAS BARRED BY RES JUDICATA AND/OR THE PRINCIPLE
OF CONCLUSIVENESS OF JUDGMENT.
V.
PUBLIC RESPONDENT SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF
DISCRETION IN NOT DISMISSING OUTRIGHT THE APPEAL OF PRIVATE RESPONDENT FOR
FAILURE TO SUBMIT A CERTIFICATION AGAINST FORUM SHOPPING.[16]
The principal issues are: (1) Is a motion for reconsideration necessary before a party can file a petition for
certiorari from the decision of the Secretary of Labor and Employment? (2) Is the case barred by res judicataor
conclusiveness of judgment? and (3) Is there an employer-employee relationship between petitioner and the union
members?
First. It is settled that the filing of a motion for reconsideration is a prerequisite to the filing of a special civil
action for certiorari to give the lower court the opportunity to correct itself.[17] This rule, however, admits of exceptions,
such as when a motion for reconsideration would be useless under the circumstances.[18]
Under Department Order No. 40-03, Series of 2003,[19] the decision of the Secretary of Labor and
Employment shall be final and executory after ten days from receipt thereof by the parties and that it shall not be
subject of a motion for reconsideration.
In this case, the Decision dated January 18, 2005 of the Secretary of Labor and Employment was received
by petitioner on January 25, 2005. It would have become final and executory on February 4, 2005, the tenth day from
petitioners receipt of the decision. However, petitioner filed a petition for certiorari with the Court of Appeals on even
date. Clearly, petitioner availed of the proper remedy since Department Order No. 40-03 explicitly prohibits the filing
of a motion for reconsideration. Such motion becomesdispensable and not at all necessary.
Second. The doctrine of res judicata provides that a final judgment or decree on the merits by a court of
competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on points and matters
determined in the former suit.[20] The elements of res judicata are: (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.[21]
Res judicata has a dual aspect: first, bar by prior judgment which is provided in Rule 39, Section 47(b)[22] of
the 1997 Rules of Civil Procedure and second, conclusiveness of judgment which is provided in Section 47(c) [23] of the
same Rule.
 There is bar by prior judgment when, as between the first case where the judgment was rendered, and the
second case that is sought to be barred, there is identity of parties, subject matter, and causes of action. [24] In this
instance, the judgment in the first case constitutes an absolute bar to the second action. Otherwise put, 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.[25]
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. 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.[26]
In the instant case, there is no dispute as to the presence of the first three elements of res judicata. The
Resolution dated December 27, 2002 of the Secretary of Labor and Employment on the first petition for certification
election became final and executory. It was rendered on the merits and the Secretary of Labor and Employment had
jurisdiction over the case. Now, is the fourth element identity of parties, subject matter, and causes of action between
the first and third petitions for certification election present? We hold in the negative.
The Secretary of Labor and Employment dismissed the first petition as it was filed outside the 60-day freedom
period. At that time therefore, the union has no cause of action since they are not yet legally allowed to challenge openly
and formally the status of SMCGC-SUPER as the exclusive bargaining representative of the bargaining unit. Such dismissal,
however, has no bearing in the instant case since the third petition for certification election was filed well within the 60-day
freedom period. Otherwise stated, there is no identity of causes of action to speak of since in the first petition, the union
has no cause of action while in the third, a cause of action already exists for the union as they are now legally allowed to
challenge the status of SMCGC-SUPER as exclusive bargaining representative.
Third. The matter of employer-employee relationship has been resolved with finality by the Secretary of
Labor and Employment in the Resolution dated December 27, 2002. Since petitioner did not appeal this factual finding,
then, it may be considered as the final resolution of such issue. To reiterate, conclusiveness of judgment has the effect
of preclusion of issues.[27]
WHEREFORE, the instant petition is DENIED for lack of merit.
SO ORDERED.
FIRST DIVISION
SOCIAL SECURITY COMMISSION, G.R. No. 167050
Petitioner,
Present:
CORONA, C.J.,
Chairperson
-versus- VELASCO, JR.,
LEONARDO-DE CASTRO,
PERALTA,* and
PEREZ, JJ.
RIZAL POULTRY and LIVESTOCK ASSOCIATION, INC.,
BSD AGRO INDUSTRIAL DEVELOPMENT CORPORATION
and BENJAMIN SAN DIEGO,
Respondents.
Promulgated:
June 1, 2011
x ----------------------------------------------------------------------------------------x
DECISION
PEREZ, J.:
This petition for certiorari challenges the Decision[1] dated 20 September 2004 and Resolution[2] dated 9
February 2005 of the Court of Appeals. The instant case stemmed from a petition filed by Alberto Angeles (Angeles)
before the Social Security Commission (SSC) to compel respondents Rizal Poultry and Livestock Association, Inc. (Rizal
Poultry) or BSD Agro Industrial Development Corporation (BSD Agro) to remit to the Social Security System (SSS) all
contributions due for and in his behalf.Respondents countered with a Motion to Dismiss [3] citing rulings of the National
Labor Relations Commission (NLRC) and Court of Appeals regarding the absence of employer-employee relationship
between Angeles and the respondents.
As a brief backgrounder, Angeles had earlier filed a complaint for illegal dismissal against BSD Agro and/or
its owner, Benjamin San Diego (San Diego). The Labor Arbiter initially found that Angeles was an employee and that
he was illegally dismissed. On appeal, however, the NLRC reversed the Labor Arbiters Decision and held that no
employer-employee relationship existed between Angeles and respondents. The ruling was anchored on the finding
that the duties performed by Angeles, such as carpentry, plumbing, painting and electrical works, were not
independent and integral steps in the essential operations of the company, which is engaged in the poultry
business.[4] Angeles elevated the case to the Court of Appeals via petition for certiorari. The appellate court affirmed
the NLRC ruling and upheld the absence of employer-employee relationship.[5]Angeles moved for reconsideration but
it was denied by the Court of Appeals.[6] No further appeal was undertaken, hence, an entry of judgment was made on
26 May 2001.[7]
At any rate, the SSC did not take into consideration the decision of the NLRC. It denied respondents
motion to dismiss in an Order dated 19 February 2002. The SSC ratiocinated, thus:
Decisions of the NLRC and other tribunals on the issue of existence of employer-
employee relationship between parties are not binding on the Commission. At most, such
finding has only a persuasive effect and does not constitute res judicata as a ground for
dismissal of an action pending before Us. While it is true that the parties before the NLRC and
in this case are the same, the issues and subject matter are entirely different. The labor case is
for illegal dismissal with demand for backwages and other monetary claims, while the present
action is for remittance of unpaid SS[S] contributions. In other words, although in both suits
the respondents invoke lack of employer-employee relationship, the same does not proceed
from identical causes of action as one is for violation of the Labor Code while the instant case
is for violation of the SS[S] Law.
Moreover, the respondents arguments raising the absence of employer-
employee relationship as a defense already traverse the very issues of the case at bar, i.e., the
petitioners fact of employment and entitlement to SS[S] coverage. Generally, factual matters
should not weigh in resolving a motion to dismiss when it is based on the ground of failure to
state a cause of action, but rather, merely the sufficiency or insufficienciy of the allegations in
the complaint. x x x. In this respect, it must be observed that the petitioner very categorically
set forth in his Petition, that he was employed by the respondent(s) from 1985 to 1997. [8]
A subsequent motion for reconsideration filed by respondents was likewise denied on 11 June 2002. The
SSC reiterated that the principle of res judicata does not apply in this case because of the absence of the indispensable
element of identity of cause of action.[9]
Unfazed, respondents sought recourse before the Court of Appeals by way of a petition for certiorari. The
Court of Appeals reversed the rulings of the SSC and held that there is a common issue between the cases before the
SSC and in the NLRC; and it is whether there existed an employer-employee relationship between Angeles and
respondents. Thus, the case falls squarely under the principle of res judicata, particularly under the rule on
conclusiveness of judgment, as enunciated in Smith Bell and Co. v. Court of Appeals.[10]
The Court of Appeals disposed, thus:
WHEREFORE, the petition is GRANTED. The Order dated February 19, 2000 and
the Resolution dated June 11, 2002 rendered by public respondent Social Security
Commissoin in SSC Case No. 9-15225-01 are hereby REVERSED and SET ASIDE and the
respondent commission is ordered to DISMISS Social Security Commission Case No. 9-15225-
01.[11]

After the denial of their motion for reconsideration in a Resolution [12] dated 9 February 2005, petitioner
filed the instant petition.
For our consideration are the issues raised by petitioner, to wit:
WHETHER OR NOT THE DECISION OF THE NLRC AND THE COURT OF APPEALS, FINDING
NO EMPLOYER-EMPLOYEE RELATIONSHIP, CONSTITUTES RES JUDICATA AS A RULE ON
CONCLUSIVENESS OF JUDGMENT AS TO PRECLUDE THE RELITIGATION OF THE ISSUE OF
EMPLOYER-EMPLOYEE RELATIONSHIP IN A SUBSEQUENT CASE FILED BEFORE THE
PETITIONER.
WHETHER OR NOT RESPONDENT COURT OF APPEALS MAY ORDER OUTRIGHT THE
DISMISSAL OF THE SSC CASE IN THE CERTIORARI PROCEEDINGS BEFORE IT.[13]
SSC maintains that the prior judgment rendered by the NLRC and Court of Appeals, that no employer-
employee relationship existed between the parties, does not have the force of res judicata by prior judgment or as a
rule on the conclusiveness of judgment. It contends that the labor dispute and the SSC claim do not proceed from the
same cause of action in that the action before SSC is for non-remittance of SSS contributions while the NLRC case was
for illegal dismissal. The element of identity of parties is likewise unavailing in this case, according to SSC. Aside from
SSS intervening, another employer, Rizal Poultry, was added as respondent in the case lodged before the SSC. There is
no showing that BSD Agro and Rizal Poultry refer to the same juridical entity. Thus, the finding of absence of
employer-employee relationship between BSD Agro and Angeles could not automatically extend to Rizal
Poultry. Consequently, SSC assails the order of dismissal of the case lodged before it.
SSC also claims that the evidence submitted in the SSC case is different from that adduced in the NLRC
case. Rather than ordering the dismissal of the SSC case, the Court of Appeals should have allowed SSC to resolve the
case on its merits by applying the Social Security Act of 1997.
Respondents assert that the findings of the NLRC are conclusive upon the SSC under the principle of res
judicata and in line with the ruling in Smith Bell v. Court of Appeals. Respondents argue that there is substantially an
identity of parties in the NLRC and SSC cases because Angeles himself, in his Petition, treated Rizal Poultry, BSD Agro
and San Diego as one and the same entity.
Respondents oppose the view proffered by SSC that the evidence to prove the existence of employer-
employee relationship obtaining before the NLRC and SSS are entirely different. Respondents opine that the definition
of an employee always proceeds from the existence of an employer-employee relationship.
In essence, the main issue to be resolved is whether res judicataapplies so as to preclude the SSC from
resolving anew the existence of employer-employee relationship, which issue was previously determined in the NLRC
case.
Res judicata embraces two concepts: (1) bar by prior judgment as enunciated in Rule 39, Section 47(b) of
the Rules of Civil Procedure; and (2) conclusiveness of judgment in Rule 39, Section 47(c). [14]
There is bar by prior judgment when, as between the first case where the judgment was rendered and the
second case that is sought to be barred, there is identity of parties, subject matter, and causes of action. In this
instance, the judgment in the first case constitutes an absolute bar to the second action. [15]
But where there is identity of parties in the first and second cases, but no identity of causes of action, the
first judgment is conclusive only as to those matters actually and directly controverted and determined and not as to
matters merely involved therein. This is the concept of res judicataknown as conclusiveness of judgment. Stated
differently, any right, fact or matter in issue directly adjudicated or necessarily involved in the determination of an
action before a competent court in which judgment is rendered on the merits is conclusively settled by the judgment
therein and cannot again be litigated between the parties and their privies, whether or not the claim, demand, purpose,
or subject matter of the two actions is the same.[16]
Thus, 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 or their privies will be
final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit. Identity of
cause of action is not required but merely identity of issue.[17]
The elements of res judicata are: (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. Should identity of parties, subject matter, and causes of action
be shown in the two cases, then res judicata in its aspect as a bar by prior judgment would apply. If as between the two
cases, only identity of parties can be shown, but not identical causes of action, then res judicata as conclusiveness of
judgment applies.[18]
Verily, the principle of res judicata in the mode of conclusiveness of judgment applies in this case. The first
element is present in this case. The NLRC ruling was affirmed by the Court of Appeals. It was a judicial affirmation
through a decision duly promulgated and rendered final and executory when no appeal was undertaken within the
reglementary period.The jurisdiction of the NLRC, which is a quasi-judicial body, was undisputed. Neither can the
jurisdiction of the Court of Appeals over the NLRC decision be the subject of a dispute. The NLRC case was clearly
decided on its merits; likewise on the merits was the affirmance of the NLRC by the Court of Appeals.
With respect to the fourth element of identity of parties, we hold that there is substantial compliance.
The parties in SSC and NLRC cases are not strictly identical. Rizal Poultry was impleaded as additional
respondent in the SSC case.Jurisprudence however does not dictate absolute identity but only substantial
identity.[19] There is substantial identity of parties when there is a community of interest between a party in the first
case and a party in the second case, even if the latter was not impleaded in the first case. [20]
BSD Agro, Rizal Poultry and San Diego were litigating under one and the same entity both before the
NLRC and the SSC. Although Rizal Poultry is not a party in the NLRC case, there are numerous indications that all the
while, Rizal Poultry was also an employer of Angeles together with BSD Agro and San Diego. Angeles admitted before
the NLRC that he was employed by BSD Agro and San Diego from 1985 until 1997. [21] He made a similar claim in his
Petition before the SSC including as employer Rizal Poultry as respondent.[22] Angeles presented as evidence before
the SSC his Identification Card and a Job Order to prove his employment in Rizal Poultry. He clarified in his Opposition
to the Motion to Dismiss[23] filed before SSC that he failed to adduce these as evidence before the NLRC even if it
would have proven his employment with BSD Agro. Most significantly, the three respondents, BSD Agro, Rizal Poultry
and San Diego, litigated as one entity before the SSC. They were represented by one counsel and they submitted their
pleadings as such one entity. Certainly, and at the very least, a community of interest exists among them. We therefore
rule that there is substantial if not actual identity of parties both in the NLRC and SSC cases.
As previously stated, an identity in the cause of action need not obtain in order to apply res judicata by conclusiveness
of judgment. An identity of issues would suffice.
The remittance of SSS contributions is mandated by Section 22(a) of the Social Security Act of 1997, viz:
SEC. 22. Remittance of Contributions. - (a) The contributions imposed in the
preceding Section shall be remitted to the SSS within the first ten (10) days of each calendar
month following the month for which they are applicable or within such time as the
Commission may prescribe. Every employer required to deduct and to remit such
contributions shall be liable for their payment and if any contribution is not paid to the SSS as
herein prescribed, he shall pay besides the contribution a penalty thereon of three percent
(3%) per month from the date the contribution falls due until paid. x x x.
The mandatory coverage under the Social Security Act is premised on the existence of an employer-
employee relationship.[24] This is evident from Section 9(a) which provides:
SEC. 9. Coverage. - (a) Coverage in the SSS shall be compulsory upon all
employees not over sixty (60) years of age and their employers: Provided, That in the case of
domestic helpers, their monthly income shall not be less than One thousand pesos
(P1,000.00) a month x x x.
Section 8(d) of the same law defines an employee as any person who performs services for an employer in
which either or both mental or physical efforts are used and who receives compensation for such services, where there
is an employer-employee relationship. The illegal dismissal case before the NLRC involved an inquiry into the existence
or non-existence of an employer-employee relationship. The very same inquiry is needed in the SSC case. And there
was no indication therein that there is an essential conceptual difference between the definition of employee under the
Labor Code and the Social Security Act.
In the instant case, therefore, res judicata in the concept of conclusiveness of judgment applies. The judgment in the
NLRC case pertaining to a finding of an absence of employer-employee relationship between Angeles and respondents
is conclusive on the SSC case.
A case in point is Smith Bell and Co. v. Court of Appeals[25] which, contrary to SSC, is apt and proper reference. Smith April 13, 2016
Bell availed of the services of private respondents to transport cargoes from the pier to the company's
warehouse. Cases were filed against Smith Bell, one for illegal dismissal before the NLRC and the other one with the
SSC, to direct Smith Bell to report all private respondents to the SSS for coverage. While the SSC case was pending G.R. No. 217930
before the Court of Appeals, Smith Bell presented the resolution of the Supreme Court in G.R. No. L-44620, which
affirmed the NLRC, Secretary of Labor, and Court of Appeals finding that no employer-employee relationship existed SPOUSES JORGE NAVARRA and CARMELITA NAVARRA, Petitioners,
between the parties, to constitute as bar to the SSC case. We granted the petition of Smith Bell and ordered the vs.
dismissal of the case. We held that the controversy is squarely covered by the principle of res judicata, particularly YOLANDA LIONGSON, Respondent.
under the rule on conclusiveness of judgment.Therefore, the judgment in G.R. No. L-44620 bars the SSC case, as the
relief sought in the latter case is inextricably related to the ruling in G.R. No. L-44620 to the effect that private
respondents are not employees of Smith Bell. DECISION

The fairly recent case of Co v. People,[26] likewise applies to the present case. An information was filed against Co by
MENDOZA, J:
private respondent spouses who claim to be employees of the former for violation of the Social Security Act,
specifically for non-remittance of SSS contributions. Earlier, respondent spouses had filed a labor case for illegal
dismissal. The NLRC finally ruled that there was no employer-employee relationship between her and respondent This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the August 28, 2014 Amended
spouses. Co then filed a motion to quash the information, arguing that the facts alleged in the Information did not Decision 1 and the April 16, 2015 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 105568, which reversed its
constitute an offense because respondent spouses were not her employees. In support of her motion, she cited the December 8, 2011 Decision3 and recalled and set aside the entry of judgment issued on January 6, 2012.
NLRC ruling. This Court applied Smith Bell and declared that the final and executory NLRC decision to the effect that
respondent spouses were not the employees of petitioner is a ruling binding in the case for violation of the Social
Security Act. The Court further stated that the doctrine of conclusiveness of judgment also applies in criminal cases. [27] The Antecedents:

Applying the rule on res judicata by conclusiveness of judgment in conjunction with the aforecited cases,
the Court of Appeals aptly ruled, thus:
In SSC Case No. 9-15225-01, private respondent Angeles is seeking to compel
herein petitioners to remit to the Social Security System (SSS) all contributions due for and in
his behalf, whereas in NLRC NCR CA 018066-99 (NLRC RAB-IV-5-9028-97 RI) private
respondent prayed for the declaration of his dismissal illegal. In SSC No. 9-15225-01, private
respondent, in seeking to enforce his alleged right to compulsory SSS coverage, alleged that
he had been an employee of petitioners; whereas to support his position in the labor case that
he was illegally dismissed by petitioners BSD Agro and/or Benjamin San Diego, he asserted
that there was an employer-employee relationship existing between him and petitioners at
the time of his dismissal in 1997. Simply stated, the issue common to both cases is whether
there existed an employer-employee relationship between private respondent and petitioners
at the time of the acts complaint of were committed both in SSC Case No. 9-15225-01 and
NLRC NCR CA 018066-99 (NLRC RAB-IV-5-9028-977-RI).
The issue of employer-employee relationship was laid to rest in CA GR. SP. No.
55383, through this Courts Decision dated October 27, 2000 which has long attained
finality. Our affirmation of the NLRC decision of May 18, 1999 was an adjudication on the
merits of the case.
Considering the foregoing circumstances, the instant case falls squarely under
the umbrage of res judicata, particularly, under the rule on conclusiveness of
judgment. Following this rule, as enunciated in Smith Bell and Co. and Carriaga, Jr. cases, We
hold that the relief sought in SSC Case No. 9-15225-01 is inextricably related to Our ruling in
CA GR SP No. 55383 to the effect that private respondent was not an employee of
petitioners.[28]
The NLRC decision on the absence of employer-employee relationship being binding in the SSC case, we
affirm the dismissal by Court of Appeals of the SSC case.
WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated 20
September 2004, as well as its Resolution dated 9 February 2005, is AFFIRMED.
SO ORDERED.
On September 23, 1993, Jose Liongson (Jose), the deceased husband of respondent Yolanda Liongson (Yolanda), filed a
complaint for damages based on malicious prosecution against spouses Jorge and Carmelita Navarra (Spouses
Navarra) and spouses Ruben and Cresencia Bernardo (Spouses Bernardo) [collectively referred as defendant spouses],
before the Regional Trial Court, Branch 255, Las Piñas City (RTC).
After the presentation and formal offer of their respective evidence, the parties were required to file their respective
memoranda.
On January 4, 2001, Atty. Salvador B. Aguas (Atty. Aguas), counsel of Jose, filed the Motion for Time to Submit Motion
for Substitution of Plaintiff with Motion For Suspension/Commencement of Counting of Period in Filing
Pleadings4 informing the RTC of the death of Jose and praying for time to submit a motion for substitution pending
receipt of the death certificate.
On May 2, 2001, a Decision5 was rendered in favor of Jose ordering defendant spouses to pay P500,000.00 for moral
damages; P200,000.00 for exemplary damages; P20,000.00 for reimbursement of expenses; P35,000.00 for substantial
number of appearance, P50,000.00 for attorney’s fees; and the costs of suit.
On July 13, 2001, defendant spouses filed their Motion for Declaration of Nullity of the Decision and/or Notice of
Appeal6 based on the absence of a valid substitution of Jose.
Consequently, Atty. Aguas filed the Motion for Substitution,7 dated July 30, 2001, praying that Jose be substituted by
his surviving wife, Yolanda.
In its Order,8 dated May 13, 2002, the RTC denied the motion for declaration of nullity of the May 2, 2001 decision.
Defendant spouses then elevated the matter before the CA, docketed as CA-G.R. CV No. 74988. In a Resolution[[,9]]
dated July 30, 2004, the CA dismissed the petition for want of appellant’s brief. On August 30, 2004, an entry of
judgment10 was issued.
Thereafter, Atty. Aguas filed a motion for execution,11 but it was opposed by defendant spouses on the ground that no
valid substitution had been made, and that the continued appearance of Atty. Aguas was ultra vires.12

In the Order,13 dated October 28, 2005, the motion for execution was deemed withdrawn upon motion of Atty. Aguas.
SECOND DIVISION
On November 20, 2005, Atty. Aguas filed a pleading denominated as Motions to Resolve Motion for Substitution of
Parties, dated July 31, 2001 or Considered it Deemed Admitted, and Thereafter Issue Writ of Execution of the Judgment,
dated May 2, 2001, in the name of Yolanda Liongson as Substituting Party for Plaintiff Jose Liongson.14In the said motion,
it was prayed that Yolanda be allowed to substitute her deceased husband and that a writ of execution be issued in her
favor. Attached to the motion was a copy of the death certificate15 of Jose indicating that the latter died on November
28, 2000.
In the Order,16 dated March 17, 2006, the RTC denied the motion to resolve the motion for substitution of parties and
the motion for issuance of a writ of execution for lack of merit.
In the meantime, Yolanda filed a petition for issuance of letters of administration of the estate of Jose, her deceased
husband, before the Regional Trial Court, Branch 274, Parañaque City. In the December 29, 2006 Order, the Letter of
Administration was issued appointing Yolanda as administratix of the estate of Jose.
Thus, acting as the administratix of the estate of Jose, Yolanda filed a motion for execution of the May 2, 2001
decision.[[ 17]] It was, however, denied in an Order,18 dated September 14, 2007, on the ground that no proper
substitution had been made yet.
Unperturbed, Yolanda, thru her new counsel, Atty. Bonifacio G. Caboboy (Atty. Caboboy), filed her Motion to
Substitute the Plaintiff Jose Liongson19 which was finally granted by the RTC in the Order,20 dated January 25, 2008.
Defendant spouses then filed a motion for reconsideration of the January 25, 2008 Order.21 On May 22, 2008, the RTC
denied the said motion.22
Defendant spouses then filed a petition for certiorari before the CA, docketed as CA-G.R. SP No. 104667, assailing the
January 25, 2008 and May 22, 2008 orders of the RTC. They insisted that the issue of substitution had been laid to rest
by the RTC on three (3) occasions and Yolanda did not question the propriety of its denial. Hence, she was forever
barred from effecting the substitution.
Meanwhile, Yolanda filed her Motion for Execution of Judgment 23 which was granted by the RTC in its Order,24 dated
July 25, 2008. On August 1, 2008, a writ of execution 25 was issued and the Notice to Pay,26 dated August 5, 2008, was
served upon defendant spouses. The latter then filed a motion to recall or hold in abeyance the implementation of the
writ of execution and the sheriff’s notice to pay.
Without waiting for the RTC to rule on the said motion, defendant spouses filed another petition for certiorari under
Rule 65 of the Rules of Court before the CA, docketed as CA-G.R. SP No. 105568, this time questioning the July 25, 2008
Order and the August 1, 2008 Writ of Execution issued by the RTC. Defendant spouses insisted that the RTC gravely
abused its discretion when it allowed the substitution and then issued the writ of execution.
In its January 16, 2009 Order,27 the RTC denied the motion to recall or hold in abeyance the implementation of the
August 1, 2008 writ of execution and the August 5, 2008 sheriff’s notice to pay for lack of merit. Thereafter, the notice
of garnishment and the notice of levy were issued. Spouses Navarra’s property, covered by TCT No. 103473, was levied
and subsequently sold in a public auction pursuant to the writ of execution. 28
Meanwhile, on October 28, 2009, the CA rendered a Decision,29 in CA-G.R. SP No. 104667, dismissing the petition
for certiorari and declaring the substitution of plaintiff in order. The CA held that the rule on substitution was not a
matter of jurisdiction but a requirement of due process; and that considering that both parties had already completed
the presentation of their evidence in chief before Jose died, neither of them was denied due process of law. Thus, the
CA stated that the belated substitution of Jose as plaintiff to the case did not affect the validity of the final and
executory judgment.
On December 8, 2011, a decision30 was rendered in CA-G.R. SP No. 105568, in favor of defendant spouses. The
CA reversed and set aside the questioned RTC order granting the motion for execution and the issuance of the writ of
execution. The CA held that the complaint for damages, arising from malicious prosecution filed by Jose against
defendant spouses was a purely personal action that did not survive upon his death; and because the action was
deemed abated upon his death, the RTC was found to have gravely abused its discretion when it allowed the
substitution of Jose and issued the writ of execution. The CA further stated that upon the death of Jose, the RTC lost
jurisdiction over the case and the decision rendered therein was a void judgment; hence, all acts performed pursuant
thereto and all claims emanating therefrom had no legal effect.
On January 6, 2012, the December 8, 2011 decision of the CA in CAG. R. SP No. 105568 became final and executory and
the entry of judgment31 was issued.
On December 16, 2013, almost two years later, Yolanda filed her Urgent Omnibus Motion 32 praying for the recall/lifting
of the entry of judgment and for the admission of the attached motion for reconsideration. Yolanda contended that
she was totally unaware of this petition for certiorari filed before the CA and docketed as CA-G.R. SP No. 105568; that
although notices were sent to her counsel, Atty. Caboboy, the latter did not inform or furnish her with copies of the
notices and the petition; that Atty. Caboboy did not file any comment on the petition or a motion for reconsideration;
and that Atty. Caboboy’s gross negligence and mistake should not bind her because the said negligence and mistake
would amount to deprivation of her property without due process of law.
On August 28, 2014, the CA promulgated an amended decision in CA-G.R. SP No. 105568. While the CA took note that
no comment was filed by defendant spouses despite notice, it granted the omnibus motion and the motion for
reconsideration filed by Yolanda. The appellate court recalled and set aside the entry of judgment and reversed its
December 8, 2011 decision in the interest of substantial justice. The CA discovered that the appellate court rendered
two conflicting decisions in CA-G.R. SP No. 104667 and CA-G.R. SP No. 105568. In CA-G.R. SP No. 104667, earlier filed
by defendant spouses, the appellate court arrived at a decision allowing the substitution of Jose. The same issue of
substitution was debunked in the December 8, 2011 CA decision in CA-G.R. SP No. 105568.
In its amended decision, the CA did not apply the general rule that the negligence of counsel would bind the client so as
not to deprive Yolanda of her right to due process of law. On the merits, the CA ruled that the action filed by Jose
before the RTC was not extinguished upon his death as it was one for recovery of damages for injury to his person
caused by defendant spouses’ tortuous conduct of maliciously filing an unfounded suit.
Spouses Navarra (petitioners) filed their separate motions for reconsideration, but both were denied by the CA in a
Resolution,33 dated April 16, 2015.
Hence, this petition anchored on the following –
GROUNDS FOR THE PETITION
THE COURT OF APPEALS DECIDED THE INSTANT CASE IN A WAY NOT IN ACCORD WITH LAW AND WITH THE
APPLICABLE DECISIONS OF THE SUPREME COURT.
A. THE COURT OF APPEALS BREACHED THE WELLSETTLED RULE THAT A FINAL AND EXECUTORY
JUDGMENT MAY NO LONGER BE MODIFIED IN ANY RESPECT, EVEN IF THE MODIFICATION IS
MEANT TO CORRECT WHAT IS PERCEIVED TO BE AN ERRONEOUS CONCLUSION OF LAW OR
FACT.
B. THE COURT OF APPEALS ERRED WHEN IT AMENDED A FINAL AND EXECUTORY DECISION
UPON PRIVATE RESPONDENT’S MERE MOTION FOR RECONSIDERATION.
C. THE COURT OF APPEALS LEGALLY ERRED IN EXCEPTING THE INSTANT CASE FROM THE RULE
THAT THE MISTAKE OR NEGLIGENCE OF COUNSEL BINDS THE CLIENT.
D. AT ALL EVENTS, THE COURT OF APPEALS LEGALLY ERRED IN DISMISSING THE PETITION IN
CA-G.R. SP NO.105568.[[34]]
Petitioners argue that it is beyond the power of the CA to amend its original decision in this case, dated December 8,
2011, for it violates the principle of finality of judgment and its immutability. They point out that the said CA decision
had acquired finality, hence, it could no longer be modified in any respect even if the modification was meant to correct
erroneous conclusions of fact or law, or it would be made by the court that rendered it or by the highest court of the
land.
Petitioners also aver that there was no conflict in the decisions rendered by the CA in CA-G.R. SP No. 104667 and in the
present case as the two cases involved different issues. The former case ruled on the validity of the January 25, 2008
Order of the RTC which granted the substitution of Jose by Yolanda, while the present case questioned the July 25,
2008 Order of the RTC which granted the motion for execution of judgment filed by Yolanda.
Finally, petitioners assert that the CA erred when it granted the motion for reconsideration filed by Yolanda after
almost two years from the time the decision was rendered. They point out that Yolanda did not even indicate in
her motion for reconsideration the exact date of her receipt of the copy of the December 8, 2011 decision and that it
could not be presumed that she learned of it only two (2) years after its issuance. They contend that the respondent
was negligent because she waited for two long years before she filed a motion for reconsideration. They added that
she should have made efforts to ascertain the status of the case considering that she was appointed administratix of
the estate of Jose.
Respondent Yolanda counters that the CA was correct when it reversed and set aside its December 8, 2011 decision
and dismissed the petition for certiorari as the issues therein had already been laid to rest in the October 28, 2009 CA
decision in CA- G.R. SP No. 104667. She argues that because the petitions in both CA- G.R. SP No. 104667 and CA- G.R.
SP No. 105568, involved the same issues and parties under similar factual and legal settings, the decision rendered in
the first case became final and could no longer be changed, revised or reversed.
All the arguments by both parties boil down to the lone issue of whether or not the CA erred and violated the principle
of immunity of judgment when it amended its December 8, 2011 decision.
The Court’s Ruling
The petition is not meritorious.
Well-settled is the rule that a judgment that has acquired finality "becomes immutable and unalterable, and may no
longer be modified in any respect, even if the modification is meant to correct erroneous conclusions of fact and law,
and whether it be made by the court that rendered it or by the Highest Court of the land." 35 The rationale of this
doctrine is to avoid delay in the administration of justice and in order to put an end to judicial controversies. In the case
of Manotok Realty, Inc. v. CLT Realty Development Corp.,36 the Court explained the principle of immunity of judgment in
this wise:
The doctrine of finality of judgment is grounded on fundamental considerations of public policy and sound practice,
and that, at the risk of occasional errors, the judgments or orders of courts must become final at some definite time
fixed by law; otherwise, there would be no end to litigations, thus setting to naught the main role of courts of justice
which is to assist in the enforcement of the rule of law and the maintenance of peace and order by settling justiciable
controversies with finality.37
Nonetheless, this doctrine may be relaxed in order to serve substantial justice in case compelling circumstances that
clearly warrant the exercise of the Court’s equity jurisdiction are extant.38 Thus, like any other rule, it has exceptions,
such as: (1) the correction of clerical errors; (2) the so-called nunc pro tunc entries which cause no prejudice to any
party; (3) void judgments; and (4) whenever circumstances transpire after the finality of the decision rendering its
execution unjust and inequitable.39 After all, the rules of procedure intend to promote the ends of justice, thus, their
strict and rigid application must always be eschewed when it would subvert its primary objective. 40
The issue posed before the Court is not of first impression. It involves three conflicting final and executory judgments
rendered by the RTC and the CA. The first is the May 2, 2001 RTC decision which granted the complaint
for damages. The second is the October 28, 2009 CA decision in CA-G.R. SP No. 104667 which granted the motion for
substitution and the motion for execution. The third, which is obviously in conflict with the first and second judgment,
is the December 8, 2011 CA decision in CA-G.R. SP No. 105568 which not only reversed and set aside the motion for
execution but also declared the May 2, 2001 RTC decision a void judgment.
Where a certain case comprises two or more conflicting judgments which are final and executory, the Court, in the case
of Collantes v. Court of Appeals41 (Collantes), offered three (3) options in resolving the same. First, the court may opt to
require the parties to assert their claims anew; second, to determine which judgment came first; and third, to
determine which of the judgments had been rendered by a court of last resort.
In the case of Heirs of Maura So v. Obliosco,42 the Court stated that it was more equitable to apply the second and third
options mentioned in Collantes. It, thus, sustained the earlier decisions over the current ones, as they already had
vested rights over the winning party, and accorded more respect to the decisions of this Court than those made by the
lower courts.
The Court, in Government Service Insurance System v. Group Management Corporation,43 also resorted to the second
and third options and affirmed the finality of the earlier decisions rendered by the Court. The Court held that:
In Collantes, this Court applied the first option and resolved the conflicting issues anew. However, resorting to the first
solution in the case at bar would entail disregarding not only the final and executory decisions of the Lapu-Lapu RTC
and the Manila RTC, but also the final and executory decisions of the Court of Appeals and this Court. Moreover, it
would negate two decades worth of litigating. Thus, we find it more equitable and practicable to apply
the second and third options consequently maintaining the finality of one of the conflicting judgments. The primary
criterion under the second option is the time when the decision was rendered and became final and executory, such
that earlier decisions should prevail over the current ones since final and executory decisions vest rights in the winning
party. In the third solution, the main criterion is the determination of which court or tribunal rendered the decision.
Decisions of this Court should be accorded more respect than those made by the lower courts. 44
Guided by these jurisprudence, the Court agrees with the CA that it would be more equitable to make use of the
second option mentioned in Collantes and sustain the finality of the earlier decisions rendered by the RTC and the CA in
CA-G.R. SP No. 104667. To recall, the RTC decision in the complaint for damages was promulgated as early as May 2,
2001 and became final and executory on August 30, 2004.45 The only reason why the said decision was not immediately
executed was the petitioners’ insistence on the improper substitution of plaintiff. This issue, however, was laid to rest
on October 8, 2009 by the CA when it rendered its decision in CA-G.R. SP
No. 104667. The CA declared that the decision and the proceedings in the said case were not rendered nugatory
notwithstanding the belated compliance with the rules on substitution as none of the parties was denied
due process. The appellate court further stated that the rule on the substitution by heirs was not a matter of
jurisdiction, but a requirement of due process. It follows therefore, that when due process is not violated as when the
right of the representative or heir is recognized and protected, noncompliance or belated formal compliance with the
rules cannot affect the validity of a promulgated decision. 46 Moreover, the Court notes that petitioners did not
question the propriety of the May 2, 2001 decision in their petition in CA-G.R. SP No. 104667 but even admitted the
finality and executory nature of the said decision and their only concern was how the said decision would be executed
without a valid substitution of the plaintiff.
Clearly, the October 28, 2009 decision of the CA in CA-G.R. SP No. 104667 constituted res judicata with respect to the
latter case in CA-G.R. SP No. 105568.1âwphi1 "Res judicata is defined as ‘a matter adjudged; a thing judicially acted
upon or decided; a thing or matter settled by judgment.’ 47" Based on this principle, a final judgment or order on the
merits, rendered by a competent court on any matter within its jurisdiction, "is conclusive in a subsequent case
between the same parties and their successor-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." 48 Simply put, "a
final judgment on the merits rendered by a court of competent jurisdiction, is conclusive as to the rights of the parties
and their privies and constitutes an absolute bar to subsequent actions involving the same claim, demand, or cause of
action."49
For res judicata to serve as an absolute bar to a subsequent action, the following requisites must concur: (a) the former
judgment is final; (b) it was rendered by a court having jurisdiction over the subject matter and the parties; (c) it is a
judgment on the merits; and, (d) there is, between the first and second actions, identity of parties, of subject matter
and of cause of action.50
In the present case, there is no quibble that all the elements adverted to above obtain in this case. There is no dispute
that the December 2, 2001 RTC decision had become final and executory and the entry of judgment was issued on
August 30, 2004. There is no question either that the RTC had jurisdiction over the subject matter and the parties, and
that the decision was a judgment on the merits.
The controversy arose when petitioners questioned the propriety of the substitution of Jose before the CA in CA-G.R.
SP No. 104667 and subsequently the July 25, 2008 RTC order and its August 1, 2008 writ of execution in CA-G.R. SP No.
105568, which was raffled to a different division of the CA. Although petitioners would like to impress to this Court that
the issues raised in two cases before the CA were anchored on different causes of action, the Court rules otherwise.
Under the doctrine of conclusiveness of judgment, facts and issues actually and directly resolved in a former suit can
never again be raised in any future case between the same parties even involving a different cause of action. 51 The CA
decision in CA-G.R. SP No. 104667 concerning the validity of plaintiffs substitution became conclusive on the parties.
Thus, petitioners cannot again seek refuge by filing their second petition (CA-G.R. SP No. 105568) in the guise of
questioning the order of execution but actually invoking the alleged nullity of the substitution of plaintiff. Petitioners
cannot evade or avoid the application of res judicata by· simply varying· the form of his action or adopting a different
method of presenting their case.52
Indeed, it is time to put an end to this litigation as the enforcement of the final judgment has long been delayed. In the
interest of justice, petitioners are ordered to respect and comply with the final and executor judgment of the Court. As
stated in the case of Selga v. Sony Entierro Brar :53
It must be remembered that it is to the interest of the public thatthere should be an end to litigation by the parties over
a subject fully and fairly adjudicated. 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) public
policy and necessity, which dictates that it would be in the interest of the State that there should be an end to
litigation republicae ut sit litium; and (2) the hardship on the individual that he should be vexed twice for the same
cause nemo debet bis vexari pro una et eadem causa. A contrary doctrine would subject public peace and quiet to the will
and neglect of individuals and prefer the gratification of the litigious disposition on the part of suitors to the
preservation of public tranquility and happiness.54
WHEREFORE, the petition is DENIED. The August 28, 2014 Amended Decision and the April 16, 2015 Resolution of
the· Court of Appeals in CA-G.R. SP No. 105568 are AFFIRMED.
SO ORDERED.
THIRD DIVISION
G.R. No. 202531, August 17, 2016
GOMECO METAL CORPORATION, Petitioner, v. THE COURT OF APPEALS, AND *PAMANA ISLAND RESORT
HOTEL AND MARINA CLUB, INCORPORATED, Respondents.
DECISION
PEREZ, J.:
This is a petition for certiorari,1 assailing the Decision2 dated 28 December 2011 and Resolution3 dated 28 June 2012 of
the Court of Appeals (CA) in CA-G.R. SP No. 119053.
The facts:
chanRoblesvirtualLawlibrary
Parties and Civil Case No. 4349-V-94
Petitioner Gomeco Metal Corporation (Gomeco) is a domestic corporation engaged in the business of selling steel and
metal products. Respondent Pamana Island Resort Hotel and Marina Club, Inc. (Pamana), on the other hand, is a
domestic-corporation engaged in the business of operating leisure resorts.
In 1994, Gomeco filed a Complaint for Collection of Sum of Money (Complaint) against Pamana before the Regional
Trial Court (RTC) of Valenzuela City. In the Complaint, Gomeco sought to collect payment for the stainless steel
products4 it sold to Pamana in 1991. The Complaint was raffled to Branch 75 and was docketed as Civil Case No. 4349-
V-94.
In 1997, Gomeco and Pamana entered into a Compromise Agreement5 to end litigation in Civil Case No. 4349-V-94.
The compromise agreement, which required Pamana to pay Gomeco P1,800,000.00, was consequently approved by
the RTC in an Order dated 16 January 1997.6chanrobleslaw
Writ of Execution and First Notice of Levy
Of the P1,800,000.00 that was due Gomeco under the compromise agreement, however, Pamana was actually able to
pay only P450,000.00. This eventually led the RTC, on 2 March 1998, to issue an order directing Pamana, within twenty
(20) days from its receipt thereof, to pay Gomeco P1,350,000.00 or the remaining balance under the compromise
agreement. Such order, however, was unheeded by Pamana.
Thus, the RTC, upon application therefor by Gomeco, issued a Writ of Execution 7 on 7 May 1998 commanding the
court's sheriff, then one Jaime T. Montes (Sheriff Montes), to enforce the court-approved compromise agreement
against Pamana.
Pursuant to the writ of execution, Sheriff Montes first garnished Pamana's bank accounts by sending notices of
garnishment with the Philippine National Bank, Metropolitan Bank and Trust Company, Westmont Bank, Union Bank
and Prudential Bank. The garnishment of Pamana's accounts with the aforementioned banks yielded futile results,
however, as the same failed to satisfy, whether fully or in part, Pamana's indebtedness.
Hence, on 22 May 1998, Sheriff Montes issued a Notice of Levy8 placing under levy on execution one of Pamana's real
estate properties—the 53,285 square meter Pequeña Island in Subic, Zambales. On the belief that the Pequeña Island is
property not registered under the Torrens System, such island was identified in the notice of levy by Tax Declaration
No. 007-0001 with Property Index No. 016-13-007-01-001.9chanrobleslaw
Notable, moreover, are the following entries in the notice of levy:
1. The amount of the levy on the Pequeña Island was fixed at "P2,065,500.00."
2. The property being levied, i.e., Pequeña Island, was referred to as "personal properties" of Pamana.
Notice of Sheriff's Sale, Execution Sale and CA-G.R. SP No. 62391
On 11 December 2000, with Pamana's indebtedness still unsatisfied, Sheriff Montes issued a Notice of Sheriff Sale10 on
the Pequeña Island. Like the notice of levy, the notice of sheriffs sale identified the Pequeña Island through Tax
Declaration No. 007-0001 with Property Index No. 016-13-007-01-001. It set the public auction of the Pequeña Island on
10 January 2001.
The notice of sheriff s sale bears the following entries:
1. The amount of levy on the Pequeña Island was fixed at "P2,065,00[0].00."
2. The property levied and the subject of public auction, i.e., the Pequeña Island, was referred to as the
"personal/real properties" of Pamana.
The notice of sheriffs sale was duly posted and published in a newspaper of general circulation in the manner required
by Section 15(c) of Rule 39 of the Rules of Court.
On 28 December 2000, Pamana filed a Petition for Prohibition (with prayer for the issuance of a temporary restraining
order) before the CA, seeking to nullify the notice of sheriff s sale and enjoin the public auction of the Pequeña Island
scheduled thereunder. The Petition was docketed in the CA as CA-G.R. SP No. 62391 and impleaded Gomeco and
Sheriff Montes as respondents. On 9 January 2001, i.e., a day before the public auction of the Pequeña Island was
scheduled to take place pursuant to the notice of sheriffs sale, the CA issued a temporary restraining order (TRO)
against holding such public auction.
Despite the TRO issued by the CA, however, the public auction of the Pequeña Island still pushed through, as
scheduled, on 10 January 2001. As it happened, the TRO was not served upon Gomeco and Sheriff Montes until
moments after the public auction was already concluded.
At the 10 January 2001 public auction, Gomeco became the winning bidder for the Pequeña Island at the price of
P2,065,000.00.
Aggrieved by the turn of events, Pamana filed a Supplementary Petition in CA-G.R. SP No. 62391 asking the CA to
strike down as null and void the 10 January 2001 public auction of the Pequeña Island.
On 22 March 2001, a Sheriff's Certificate of Sale covering the Pequeña Island was issued in favor of Gomeco. On 28
March 2001, the said certificate was registered11 with the Register of Deeds (RD) of Iba, Zambales, under the Registry
of Unregistered Properties pursuant to Section 194 of Republic Act No. 2711 or the Revised Administrative Code of
1917, as amended by Republic Act No. 3344.12chanrobleslaw
Decision of the CA in CA-G.R. SP No. 62391
On 19 February 2002, the CA rendered a Decision13 in CA-G.R. SP No. 62391 declaring as null and void the Notice of
Sheriff s Sale and the 10 January 2001 public auction of the Pequeña Island. Underlying such declaration is the CA's
finding that the Notice of Levy and the Notice of Sheriffs Sale were fatally defective due to their erroneous indication
that the levy thereunder was enforceable up to the amount of P2,065,000.00, instead of only up to the P1,350,000.00
remaining indebtedness of Pamana under the compromise agreement plus other lawful fees. 14chanrobleslaw
Gomeco filed a Motion for Reconsideration.
Acting on Gomeco's Motion for Reconsideration, the CA issued a Resolution 15dated 9 July 2002. In the said Resolution,
the CA modified its earlier Decision and declared the levy and the ensuing 10 January 2001 public auction to be
valid but only to the extent of the P1,350,000.00 remaining indebtedness of Pamana plus 12% legal interest thereon
and other lawful fees in the implementation of such levy and auction.16chanrobleslaw
Pamana, in turn, filed a Motion for Reconsideration.
On 16 January 2003, the CA issued a Resolution17 wherein it affirmed in all respects its 9 July 2002 Resolution except
only to the inclusion of the "12% legal interest" as a component of the entire amount satisfiable by the levy and
execution sale.
The 16 January 2003 Resolution of the CA became final and executory on 10 February 2003. 18chanrobleslaw
Motion for Clarification in CA-G.R. SP No. 62391
After the finality of the 16 January 2003 Resolution, Pamana filed with the CA a Motion for Clarification in CA-G.R. SP
No. 62391. In the said motion, Pamana asked the CA to require disclosure of the list of properties in the Pequeña Island
that were levied upon and sold during the 10 January 2001 public auction, and their corresponding values.
Pamana's Motion for Clarification rests on the following key assumptions:ChanRoblesVirtualawlibrary
1. The object of the Notice of Levy is not actually the Pequeña Island itself but only the "personal properties"
in the said island;
2. The 10 January 2001 public auction resulted in the sale not of the Pequeña Island but only of certain
properties therein;
3. The notice of levy, the Minutes of Auction Sale and the Sheriffs Return, however, did not specify which
personal properties in the Pequeña Island were actually levied and sold during the 10 January 2001 public
auction; and cralawlawlibrary
4. The Minutes of Auction Sale and the Sheriffs Return did not reveal for how much Pamana's properties in
the Pequeña Island had been sold during the 10 January 2001 public auction.
The CA, at first, denied Pamana's Motion for Clarification. However, on 17 September 2004, the CA issued a
Resolution19 directing Deputy Sheriff Montes to "point out which of petitioner's specific properties [in the Pequeña Island]
had been levied and sold in public auction and to determine the exact value of said properties if sufficient to satisfy in full
the judgment debt of [P]1,350,000.00 and other lawful expenses" and to "return to [Pamana] such amount, if any, in
excess of the judgment debt."20chanrobleslaw
TCT No. T-38774
Meanwhile, on 29 January 2003, Gomeco was issued a Sheriff's Final Deed of Sale21 over the Pequeña Island. The
Sheriffs Final Deed of Sale attested that Pamana had failed to exercise his right of redemption on the Pequeña Island
within the period allowed by law and that, as a consequence thereof, Gomeco was now absolute owner of the said
island. Like the Sheriffs Certificate of Sale, the Sheriffs Final Deed of Sale was registered 22 with the RD of Iba,
Zambales, under the Registry of Unregistered Properties pursuant to Section 194 of the Revised Administrative Code
of 1917, as amended.
Sometime in March 2003, however, Gomeco discovered that the Pequeña Island was not, as it formerly believed,
unregistered property but was in fact registered land under Transfer Certificate of Title (TCT) No. T-38774 in the name
of Pamana. This discovery prompted Gomeco to file, before the RTC in Civil Case No. 4349-V-94, a Motion for the
Cancellation of Pamana's Title and the issuance of a new title in its (Gomeco) name (Motion for Cancellation of Title).
On 5 January 2005, the RTC issued an Order23 granting Gomeco's Motion for Cancellation of Title and directing the RD
of Iba, Zambales, to cancel Pamana's title over Pequeña Island and to issue a new title in lieu thereof in the name of
Gomeco. In the body, as well as the dispositive portion of the said Order, however, the RTC mistakenly identified
Pamana's title as TCT No. T-38744 instead of TCT No. T-38774.
Against the foregoing Order of the RTC, Pamana filed an Urgent Motion for Reconsideration and a Motion for
Correction of the Order dated 5 January 2005 (Motion for Correction).
In its Urgent Motion for Reconsideration, Pamana assails the 5 January 2005 Order of the RTC primarily for being
contrary to the resolutions of the CA in CA-G.R. SP No. 62391. Pamana alleged that it was erroneous for the RTG to
recognize Gomeco's absolute ownership over the Pequeña Island since the CA, in CA-G.R. SP No. 62391, already
substantially nullified the levy and public auction on the said island. Pamana also contended that the Sheriffs Final
Deed of Sale was still premature in light of the 17 September 2004 Resolution of the CA that required an accounting of
the properties sold and the proceeds realized from the 10 January 2001 public auction. For Pamana, no such final deed
of sale can be issued in favor of Gomeco unless the 17 September 2004 Resolution is first complied with to the letter.
In its Motion for Correction, on the other hand, Pamana asked that its title over Pequeña Island, as stated in the 5
January 2005 Order, be changed from TCT No. T-38744 to TCT No. T-38774.
On 20 April 2005, Gomeco, for its part, filed a Motion to Order the Appointed Sheriff to Annotate the Notice of Levy,
Deed of Sale and Sheriffs Final Deed "of Sale [in] TCT No. T-38774 (Motion to Order Annotation). In the said motion,
Gomeco prayed that the RTC, pending the possible cancellation of TCT No. T-38774 and the issuance of a new title in
its name, order the annotation of the Notice of Levy, Certificate of Sheriff s Sale and the Sheriffs Final Deed of Sale in
TCT No. T-38774.
On 3 March 2011, the RTC issued an Order: 24
1. Denying Pamana's Urgent Motion for Reconsideration;
2. Granting Pamana's Motion for Correction;
3. Granting Gomeco's Motion to Order Annotation; and cralawlawlibrary
 4. Directing its incumbent sheriff, for the purpose ascertaining the total amount of money for which the levy
and sale of the Pequeña Island were meant to satisfy, to compute the actual amount of the lawful fees and
expenses incurred in connection with the enforcement of the writ of execution.
In compliance with the directive regarding the computation of the actual amount of lawful fees and expenses in the
enforcement of the writ of execution, Sheriff Louie C. Dela Cruz (Sheriff Dela Cruz) submitted to the RTC its
Report25cralawred dated 16 March 2011. In the said report, the lawful fees and expenses for the enforcement of the
writ of execution were pegged at P111,767.75.
On 25 March 2011, the RD of Iba, Zambales cancelled TCT No. T-38774 in the name of Pamana and,1 in lieu thereof,
issued TCT No. 044-2011000502 in favor of Gomeco.
CA-G.R. SP No. 119053
On 18 April 2011, Pamana filed with the CA a Petition for Certiorari assailing the 5 January 2005 and 3 March 2011
Orders of the RTC. This Petition was docketed as CA-G.R. SP No. 119053.
During the pendency of the CA-G.R. SP No. 119053, on 6 June 2011, Pamana filed with the CA an Urgent Motion to
Approve Tender of Payment and Consignation accompanied with checks in the aggregate amount of P1,500,000.00. In
the said motion, Pamana prayed that the CA approve the checks so submitted as a valid tender of payment and
consignation as against all of its outstanding indebtedness (i.e., the P1,350,000.00 remaining balance under the
compromise agreement plus the P111,767.75 lawful fees and expenses in the enforcement of the writ of execution).
Decision of the CA in CA-G.R. SP No. 119053
On 28 December 2011, the CA rendered a Decision 26 in CA-G.R. SP No. 119053, setting aside the 5 January 2005 and 3
March 2011 Orders of the RTC in Civil Case No. 4349-V-94. The CA also directed therein the Registrar of Deeds of Iba,
Zambales, to cancel TCT No. 044-2011000502 in the name of Gomeco and to reinstate TCT No. T-38774 in favor of
Pamana.
Siding with Pamana, the CA held that it was grave abuse of discretion on the part of the RTC to have recognized
Gomeco's absolute ownership over the Pequeña Island. In support, the CA gives the following ratiocinations:
1. There was no valid levy on the Pequeña Island.27
a. The Resolutions in CA-G.R. SP No. 62391 already substantially nullified the levy and public
auction on the Pequeña Island.
b. The Notice of Levy and the Notice of Sheriffs Sale issued by Sheriff Montes cannot be
considered as a valid levy on the Pequeña Island. The two notices confuse as to what
properties are being subjected to levy; the Notice of Levy says "personal properties" but the
Notice of Sheriffs Sale says "personal/realproperties."
c. Neither Notice of Levy nor the Notice of Sheriffs Sale was registered with the RD.
d. Any levy on Pequeña Island must be preceded by a levy on Pamana's personal properties as is
required by Rule 39 of the Rules of Court. In this case, Sheriff Montes did not bother to levy on
Pamana's other personal properties but instead levied the entire Pequeña Island at the very
first instance.
2. Even assuming that the Pequeña Island had been validly levied upon and sold in execution, the period of
redemption in favor of Pamana was not yet fully exhausted by the time a Sheriffs Final Deed of Sale was
issued in favor of Gomeco. Indeed, the period of redemption in favor of Pamana could not be considered
to have even begun since the Sheriffs Certificate of Sale covering the Pequeña Island was not registered in
the correct registry. It is to be pointed out that Sheriffs Certificate of Sale had been erroneously registered
in the Registry of Unregistered Properties, despite the fact that the Pequeña Island is property titled under
the Torrens system. Hence, even though the levy and auction on the Pequeña may be valid, Gomeco still
could not acquire absolute ownership of the disputed island.28
Moreover, in the same Decision, the CA granted and approved Pamana's Urgent Motion to Approve Tender of
Payment and Consignation. The CA considered Pamana's submission of checks as a valid tender of payment and
consignation and declared all of the latter's indebtedness thereby extinguished.
Gomeco moved for reconsideration but the CA, in its Resolution 29 dated 28 June 2012, remained steadfast.
This Petition
Aggrieved, Gomeco filed the instant Petition for Certiorari before this Court.
In this Petition, Gomeco claims that the CA gravely abused its discretion when it ruled: (a) to reinstate Pamana's title to
the Pequeña Island and (b) to consider the Pamana's submission of checks as a valid tender of payment and
consignation for all of its outstanding indebtedness. Gomeco argues that such rulings rest on findings that were
patently erroneous.
Gomeco thus prays for the nullification of the Decision of the CA in CA-G.R. SP No. 119053, as well as for the
restoration of the 5 January 2005 and 3 March 2011 Orders of the RTC in Civil Case No. 4349-V-94.
OUR RULING
I
The Decision of the CA in CA-G.R. SP No. 119053 is underpinned, primarily, by two findings: first, that there was no
valid levy upon the Pequeña Island and second, that—even assuming that there was such a valid levy—the redemption
period in favor of Pamana was not yet fully exhausted by the time a Sheriffs Final Deed of Sale was issued in favor of
Gomeco. We have examined both findings in light of the facts and the applicable law. And we found that Gomeco is
right; both findings were patently erroneous.
The erroneous findings—most especially the first—were of such gross nature that they indicate that the CA, in making
them, had at the least committed grave abuse of discretion, if not acted wholly beyond its jurisdiction.
We are therefore compelled to GRANT the instant Petition.
A. The First Finding: Levy on Pequeña Island
The finding by the CA that there was no valid levy on the Pequeña Island is erroneous for one essential reason—it
directly contradicts what the appellate court itself already finally settled through its 16 January 2003 Resolution in CA-
G.R. SP No. 62391. Such finding, in other words, was a blatant violation of the principle of res judicata.
Principle of Res Judicata and its Applications
Res judicata30 is a legal principle that regards a final judgment on the merits of a case as conclusive between the parties
to such case and their privies.31 The principle, at least in our jurisdiction, has two (2) recognized applications.
The first application pertains to a scenario where the parties to a case, whose merits had already been finally
adjudicated by a court with jurisdiction, (or their privies) become parties to a subsequent case that involves the same
claim, demand or cause of action as that of the previous case. In this scenario, the principle of res judicata applies in
such a way that the judgment in the previous case stands as an absolute and complete bar to the subsequent case
itself.32 This application of res judicata is also known as the "bar by former judgment rule"33 and is sanctioned under
Section 47(b) of Rule 39 of the Rules of Court.34chanrobleslaw
For convenience and ease of understanding, we dissect hereunder the circumstances that must concur in order for the
bar by former judgment rule to apply:35
1. There is a judgment in a case that:
chanRoblesvirtualLawlibrary a. disposed of such case on the merits,
b. was issued by a court of competent jurisdiction,
c. has attained final and executory status;
 2. There is another case subsequently filed in court;
3. Between the previous case and the subsequent case, there is an identity of parties; and cralawlawlibrary
4. The previous case and the subsequent case are based on the same claim, demand or cause of action.
The second application of the principle of res judicata, on the other hand, contemplates of a scenario that is almost
similar to that of the first: the parties to a case, whose merits had already been finally adjudicated by a court with
jurisdiction, (or their privies) also become parties to a subsequent case. However, unlike in the first application, the
subsequent case herein does not involve the same claim, demand or cause of action as the previous case. In this
scenario, the principle of res judicata applies, not to wholly bar the subsequent case, but only to preclude the
relitigation or redermination therein of any matter actually or deemed36settled by the judgment in the previous
case.37 This application of res judicata is known as the "conclusiveness of judgment rule" and is sanctioned under Section
47(c) of Rule 39 of the Rules of Court.38chanrobleslaw
The circumstances that must concur in order for the conclusiveness of judgment rule to apply arelthe same as those
needed for the bar by judgment rule to set in, except for the last circumstance. In the application of the conclusiveness
of judgmerit rule, the previous case and the subsequent case must notbe based on the Isame claim, demand or cause of
action but only pass upon the same matters or issues.
Guided by the foregoing precepts, we shall now address the issue at hand.
Conclusiveness of Judgment Rule Applies; Issue of the Validity of the; Levy On and Auction Sale of Pequeña Island
Precluded by the 16 January 2003 Resolution in CA-G.R. SP No. 62391
In this case, we find that the CA in CA-G.R. SP No. 119053 grossly erred when it made a finding concerning the validity
of the levy on the Pequeña Island that is diametrically opposed to what was already finally settled in the earlier case- of
CA-G.R. SP No. 62391. By ignoring and contradicting the final settlement in CA-G.R. SP No. 62391, the CA evidently
went beyond its jurisdiction and violated the principle of res judicata, particularly the conclusiveness of judgment rule.
A review of the facts clearly reveal the existence of circumstances that should have warranted the application of the
conclusiveness of judgment rule in CA-G.R. SP No. 119053, insofar as the matter of validity of the levy on the Pequeña
Island is concerned:ChanRoblesVirtualawlibrary
1. The 16 January 2003 Resolution in CA-G.R. SP No. 62391 satisfies the first circumstance. Such resolution,
in effect, brought the merits of CA-G.R. SP No. 62391 to a close.39 It essentially held that there was a valid
levy and auction on the Pequeña Island. The resolution, moreover, already became final and executory on
10 February 2003.40chanrobleslaw
2. CA-G.R. SP No. 119053 fits the second circumstance. It is a case filed subsequent to CA-G.R. SP No. 62391.
In fact, CA-G.R. SP No. 119053 was only filed on 18 April 2011—or more than eight years after CA-G.R. SP
No. 62391 was finally decided on the merits.
3. Both CA-G.R. SP No. 62391 and CA-G.R. SP No. 119053 featured Pamana and Gomeco as parties. Though
technically based on distinct causes of action,41 both CA-G.R. SP No. 62391 and CA-G.R. SP No. 119053
nonetheless passed upon the issue of the validity of the levy on and auction sale of Pequeña Island. Such
facts satisfy the third circumstance.
Verily, the collusiveness of judgment rule ought to have applied. The 16 January 2003 Resolution in CA-G.R. SP No.
62391 should have had a preclusive effect on the subsequent case, CA-G.R. SP No. 119053, as to all matters settled in
the said resolution—including the validity of the levy on the Pequeña Island.
The CA, therefore, cannot pass upon, and should not have passed upon, the issue pertaining to the validity of the levy
on the Pequeña Island. That issue was already settled in the final ruling of CA-G.R. SP No. 62391 and such settlement is
conclusive upon both Pamana and Gomeco. It cannot be relitigated or be redetermined, much less be overturned, in
any subsequent case between them. Res judicata has already set in.
By disregarding the final ruling in CA-G.R. SP No. 62391, the CA evidently went beyond its jurisdiction and violated the
principle of res judicata, particularly the collusiveness of judgment rule. Accordingly, the finding that there was no valid
levy on the Pequeña Island—the very fruit of such disregard—must be stricken down.
The 17 September 2004 Resolution in CA-G.R. SP No. 62391 is Void Under the Doctrine of Immutability of Judgment
In disregarding the 16 January 2003 Resolution in CA-G.R. SP No. 62391, the CA seems to have harbored the belief that
the foregoing resolution had somehow been supplanted by a later resolution in the same case—the 17 September 2004
Resolution in CA-G.R. SP No. 62391.
To facilitate recollection of the 17 September 2004 Resolution in CA-G.R. SP No. 62391, as well as the circumstances
surrounding its issuance, we reproduce hereunder the following portion in our narration of
facts:ChanRoblesVirtualawlibrary
Motion for Clarification in CA-G.R. SP No. 62391
After the finality of the 16 January 2003 Resolution, Pamana filed with the CA a Motion for Clarification in CA-G.R. SP
No. 62391. In the said motion, Pamana asked the CA to require disclosure of the list of properties in the Pequeña Island
that were levied upon and sold during the 10 January 2001 public auction, and their corresponding values.
Pamana's Motion for Clarification rests on the following key assumptions:ChanRoblesVirtualawlibrary
1. The object of the Notice of Levy is not actually the Pequeña Island itself but only the "personal properties"
in the said island;
2. The 10 January 2001 public auction resulted in the sale not of the Pequeña Island but only of certain
properties therein;
3. The Notice of Levy, the Minutes of Auction Sale and the Sheriffs Return, however, did not specify which
personal properties in the Pequeña Island were actually .levied and sold during the 10 January 2001 public
auction; and cralawlawlibrary
4. The Minutes of Auction Sale and the Sheriffs Return did not reveal for how much Pamana's properties in
the Pequeña Island had been sold during the 10 January 2001 public auction.
The CA, at first, denied Pamana's Motion for Clarification. However, on 17 September 2004, the CA issued
a Resolution directing Sheriff Montes to "point out which of[Pamana's] specific properties [in the Pequeña Island] had
been levied and sold in public auction and to determine the exact value of said properties if sufficient to satisfy in full the
judgment debt of [P]1,350,000.00 and other lawful expenses" and to "return to [Pamana] such amount, if any, in excess of
the judgment debt."
The 17 September 2004 Resolution in CA-G.R. SP No. 62391 was a virtual acceptance of Pamana's assumptions in its
Motion for Clarification.42 The resolution—with its distinct directive for the sheriff to "point out which
of [Pamana's] specific properties had been levied and sold in public auction"43—indubitably proceeds from the same
proposition that the object of the levy in the case was never the Pequeña Island itself but only the properties therein.
Though it fashioned itself as affirmative of the 16 January 2003 Resolution in CA-G.R. SP No. 62391,44the 17 September
2004 Resolution in actuality and in effect varied a very significant import of the former resolution and of all other
resolutions in CA-G.R. SP No. 62391—that the levy, whose validity was sustained under the said case, had for its object
no other property but the Pequeña Island itself.45chanrobleslaw
Thereupon lies the reason why the CA's apparent reliance on the 17 September 2004 Resolution in CA-G.R. SP No.
62391 is mistaken. The said Resolution could never have validly altered, amended or modified the import of the 16
January 2003 Resolution in CA-G.R. SP No. 62391 in light of the doctrine of immutability of judgment.
The doctrine of immutability of judgment maintains that once a judgment has attained finality, the same can no longer
be changed or modified in any respect, either by the court that rendered it or by any other court.46 In FGU Insurance v.
Regional Trial Court,47 we explained the full breadth of such doctrine, including the few recognized exceptions thereto,
as follows:ChanRoblesVirtualawlibrary
Under the doctrine of finality of judgment or immutability of judgment, a decision that has acquired finality becomes
immutable and unalterable, and may no longer be modified in any respect, even if the modification is meant to correct
erroneous conclusions of fact and law, and whether it be made by the court that rendered it or by the Highest Court of
the land. Any act which violates this principle must immediately be struck down.
But like any other rule, it has exceptions, namely: (1) the correction of clerical errors; (2) the so-called nunc pro tune
entries which cause no prejudice to any party; (3) void judgments; and (4) whenever circumstances transpire after the
finality of the decision rendering its execution unjust and inequitable.
In this case, the doctrine of immutability of judgment applies to preserve the final ruling in CA-G.R. SP No. 62391, as
embodied under 16 January 2003 Resolution, from any alteration or modification. Such resolution, as stated
beforehand, had already become final and executory as of 10 February 2003.48 As of that date, the 16 January 2003
Resolution—and its holding that there was a valid levy on the Pequeña Island itself—was vested the quality of
immutability.
The 17 September 2004 Resolution, on the other hand, is neither a clerical correction nor a nunc pro tuncorder. Neither
does the said resolution aim to address any injustice or inequity that may result from the implementation of the 16
January 2003 Resolution. With none of the exceptions to the application of the doctrine of immutability of judgment
existing in its favor, the 17 September 2004 Resolution in CA-G.R. SP No. 62391—with its confused attempt to alter a
final and executory ruling in the same case—must then be stricken down as a nullity.
Having thus settled the folly of the first finding, we shall now proceed to an exposition of the second finding.
B. The Second Finding: Redemption Period of Pamana
To enable its Decision to stand in the event that the first finding fails, the CA made its second finding under the context
that the levy and auction on the Pequeña Island were valid.
Under such context, the CA found that the period of redemption in favor of Pamana was not yet fully exhausted by the
time a Sheriffs Final Deed of Sale was issued in favor of Gomeco. According to the CA, the said period could not be"
considered to have even begun in view of the registration of the Sheriffs Certificate of Sale of the Pequeña Island at a
"wrong" registry.
We do not agree.
Despite the error in the registration of the Sheriffs Certificate of Sale, we hold that Pamana ought to be held bound,
nonetheless, by such registration. As shall be discussed below, there are circumstances peculiar to this case that
warrants us to adopt such a holding. Hence, we find that the period of redemption of Pamana would have been fully
exhausted by the time a Sheriffs Final Deed of Sale was issued in favor of Gomeco.
Redemption in Execution Sales; Commencement of Redemption Period; Registration with the Register of Deeds
When real property is levied and sold on execution pursuant to a final judgment, our rules of procedure allows the
judgment debtor49 or a "redemptioner"50 to redeem such property within one (1) year from the "date of the registration
of the certificate of sale" viz:ChanRoblesVirtualawlibrary
RULE 39
Section 28. Time and manner of, and amounts payable on, successive redemptions; notice to be given and filed.—The
judgment obligor, or redemptioner, may redeem the property from the purchaser, at any time within one (1) year from
the date of the registration of the certificate of sale, by paying the purchaser the amount of his purchase, with
the per centum per month interest thereon in addition, up to the time of redemption, together with the amount of any
assessments or taxes which the purchaser may have paid thereon after purchase, and interest on such last named
amount at the same rate; and if the purchaser be also a creditor having a prior lien to that of the redemptioner, other
than the judgment under which such purchase was made, the amount of such other lien, with interest.
x x x. (Emphasis supplied)
The commencement of the one-year redemption period is of critical importance, not only to the judgment debtor or a
redemptioner, but even more so to the successful purchaser in the execution sale. This is because, under the rules, it is
only after the lapse of such one-year period with no valid redemption having been effected, that a successful
purchaser acquires absolute ownership over the real property he purchased in the execution sale and becomes entitled
to a final deed of sale.51chanrobleslaw
As can be gleaned above, commencement of the one-year redemption period is reckoned from "the date of registration
of the certificate of sale."52 The phrase "registration of certificate of sale" means registration of such certificate with the
RD.
The RD is the official public repository of records or instruments affecting lands.53 As presently constituted though, the
RD maintains separate registries for real properties registered under the Torrens system and for "unregistered" real
properties i.e., real properties not registered under the Torrens system.54 Each registry has its own set of day book and
registration book.55chanrobleslaw
Logically, and under normal circumstances, a certificate of sale ought to be registered with the RD at the particular
registry corresponding to the status of the real property it covers. Thus, a certificate of sale covering property
registered under the Torrens system ought to be registered with the RD under its registry for properties registered
under the Torrens system. Likewise, a certificate of sale covering property not registered under the Torrens system
ought to be registered with the RD under its registry for unregistered real properties.
There is no doubt that, when a certificate of sale is so registered, the period of redemption would by then start to run.
The question, however, is what would be the effect of a "wrong" registration (i.e., the registration of a certificate of sale
with the RD albeit under a registry that does not correspond to the status of the real property it covers) upon the
commencement of the period of redemption in execution sales?
Effect of Wrong Registration; The Two Situations
We must qualify our answer.
To answer the question before us, we must first familiarize ourselves with the process of levy prior to an execution sale.
Our familiarization with such process will, in turn, enable us to identify the two (2) general situations that can
ultimately lead to wrong registrations. It is between such situations that our qualification lies.
It is basic that before any property is sold in execution, and a certificate of sale issued therefor, such property must first
be the subject of a levy.56 A levy on execution refers to the essential act by which a property of the judgment debtor is
taken into the custody of the law and set apart for the satisfaction of the judgment debt.57 In our jurisdiction, a levy on
execution" is effected by the sheriff of the court.
When the property sought to be levied is realty, the sheriff must first prepare a Notice of Levy that contains, among
others, an adequate description of the real property sought to be levied.58Significantly, the notice of levy is also
required to ascertain whether the particular realty sought to be levied is registered under the Torrens system or
not, such that if it is, the notice must contain "a reference to the number of the certificate of title, the volume and
page in the registration book where the certificate is registered, and the registered owner or owners
thereof."59chanrobleslaw
To actually effect the levy upon a real property, however, the sheriff is required to do two (2) specific things: (1) file with
the RD a copy of the Notice of Levy, and (2) leave with the occupant of the property a copy of the same
notice.60chanrobleslaw
Verily, since it is the duty of the sheriff preparing the Notice of Levy to ascertain whether the particular realty sought to
be levied is registered under Torrens system or not, then there can be two (2) possible situations that can lead to a
wrong registration:
chanRoblesvirtualLawlibraryFirst. The sheriff who prepared the Notice of Levy correctly ascertained the status of the
real property (i.e., whether the same is registered under the Torrens system or not) but the ensuing certificate of sale
issued during the execution sale was still registered under the wrong registry of the RD.
Second. The sheriff who prepared the Notice of Levy incorrectly ascertained the status of the real property leading to
the registration of the certificate of sale under the wrong registry of the RD.
As just said, it is between such situations that our qualification lies.
Under the first situation, the effect of the wrong registration must be to prevent the commencement of the
redemption period altogether. In this case, the sheriff performs his duty correctly and the wrong registration is actually
the fault of the successful purchaser. Such type of wrong registration is deemed non-compliant with the requirement
of registration under Section 28 of Rule 39 of the Rules of Court.
A different treatment, however, is certainly warranted under the second situation. In this case, the sheriff failed to
perform his duties correctly and such failure directly contributed to the fact of wrong registration. Under this situation,
it is actually both unfair and inequitable to allow the judgment debtor to be benefited and for the successful purchaser
to be prejudiced.
The judgment debtor, for one, ought not to be benefited since it is in the position to correct the mistake of the sheriff
but it did not do so. Hence, in this situation, the judgment debtor could be considered to be in bad faith and a
contributor to the wrong registration.
On the other hand, the successful purchaser ought not to be prejudiced since it only relied on the representations of
the sheriff who, as a public officer, may be presumed to have performed his duties regularly.61chanrobleslaw
Thus, for the sake of fairness and equality, a wrong registration committed under the second situation should be
considered substantially compliant with the requirement of registration under Section 28 of Rule 39 of the Rules of
Court and is, therefore, sufficient to commence the redemption period.
Application
In the case at bench, the wrong registration was committed under the second situation. Hence, the wrong registration
in this case is considered to be substantially compliant with the requirement of registration under Section 28 of Rule 39
of the Rules of Court and sufficient to commence the redemption period.
The facts are clear that the Notice of Levy and the Notice of Sheriff's Sale prepared by Sheriff Montes incorrectly
depicted the Pequeña Island as unregistered property; both having only identified the said island via Tax Declaration
No. 007-0001 with Property Index No. 016-13-007-01-001.62 On the other hand, it is also crystal that Pamana—who
admitted to owning the Pequeña Island and was furnished with the said notices—knowingly allowed the incorrect
depiction of the status of the island to prevail by doing nothing to correct it. The incorrect depiction of Sheriff Montes,
coupled by the bad faith of Pamana, were thus joint contributors to the registration of the ensuing certificate sale
covering the Pequeña Island under the wrong registry in the RD. Verily, all points of the second situation are present in
this case.
Since the wrong registration in this case was committed under the second situation, the same is considered to be
substantially compliant with the requirement of registration.under Section 28 of Rule 39 of the Rules of Court and
sufficient to commence the redemption period. These, in turn, produce the following specific effects:
1. The redemption period of Pamana is deemed to have begun on 28 March 2001, i.e., the date when
the Sheriff's Certificate of Sale covering the Pequeña Island was registered with the RD under the Registry
of Unregistered Properties;
Petition for Certiorari may be resorted to despite the existence of or prior availability of an appeal—one of which is
when the court a quo had "patently acted in excess of or outside its jurisdiction":ChanRoblesVirtualawlibrary
Doctrinally entrenched is the general rule that certiorari is not a substitute for a lost appeal. However, Justice Florenz D.
Regalado lists several exceptions to this rule, viz.: (1) where the appeal does not constitute a speedy and adequate
remedy (Salvadades vs. Pajarillo, et al., 78 Phil. 77), as where 33 appeals were involved from orders issued in a single
proceeding which will inevitably result in a proliferation of more appeals (PCIB vs. Escolin, et al., L-27860 and 27896,
Mar. 29, 1974); (2) where the orders were also issued either in excess of or without jurisdiction (Aguilar vs. Tan, L-23600,
Jun 30, 1970, Cf. Bautista, et al. vs. Sarmiento, et al., L-45137, Sept. 231985); (3) for certain special consideration, as
public welfare or public policy (See Jose vs. Zulueta, et al. -16598, May 31, 1961 and the cases cited therein); (4) where in
criminal actions, the court rejects rebuttal evidence for the prosecution as, in case of acquittal, there could be no
remedy (People vs. Abalos, L029039, Nov. 28, 1968); (5) where the order is a patent nullity (Marcelo vs. De Guzman, et
al., L-29077, June 29, 1982); and (6) where the decision in the certiorari case will avoid future litigations (St. Peter
Memorial Park, Inc. vs. Campos, et al., L-38280, Mar. 21, 1975). Even in a case where the remedy of appeal was lost,
the Court has issued the writ of certiorari where the lower court patently acted in excess of or outside its
jurisdiction, as in the present case. (Emphasis supplied)
We believe that our discussion in the preceding section had amply demonstrated that the CA, through its grossly
erroneous decision in CA-G.R SP No. 119053, had patently acted in excess of or outside its jurisdiction. The erroneous
findings of the CA were of such gross nature and so contemptuous of basic legal doctrines that they indicate that the
CA, in making them, had committed grave abuse of discretion, if not acted wholly beyond its jurisdiction. Under such
scenario, jurisprudence allows a Petition for Certiorari to be resorted to by the aggrieved party.
Hence, we uphold the propriety of Gomeco's resort to the instant certiorari petition.
WHEREFORE, premises considered, the instant Petition is GRANTED. The Decision dated 28 December 2011 and
Resolution dated 28 June 2012 of the Court of Appeals in CA-G.R. SP No. 119053 are hereby ANNULLED and SET
ASIDE. The Orders dated 5 January 2005 and 3 March 2011 of the Regional Trial Court, Branch 75 of Valenzuela City in
Civil Case No. 4349-V-94 are REINSTATED.
SO ORDERED.

2. The redemption period of Pamana is slated to end exactly one year from 28 March 2001;

3. Since Pamana never exercised its right of redemption within one year from 28 March 2001, the issuance of
a Sheriff's Final Deed of Sale63 over the Pequeña Island in favor of Gomeco on 29 January 2003 is, therefore,
valid.

All in all, Gomeco should now be considered the rightful absolute owner of the Pequeña Island. The Orders dated 5
January 2005 and 3 March 2011 of the RTC in Civil Case No. 4349-V-94 were just correct in recognizing such fact.

Having thus exposed the Decision in CA-G.R. SP No. 119053 as being supported by patently erroneous findings, we feel
compelled to exercise our certiorari jurisdiction. For law and justice to prevail, we must set aside and nullify the Decision
of the CA in CA-G.R. SP No. 119053.

II

The final point that we need to address is the procedural challenge posed against the instant Petition by Pamana.

In its Comment,64 Pamana questioned the propriety of Gomeco's resort to a special civil action for certiorari in assailing
the Decision of the CA in CA-G.R. SP No. 119053. For Pamana, the filing of the instant certiorari petition was not proper
since another remedy—an appeal to this Court, in particular—was available and could have been filed by Gomeco
under the circumstances. Pamana postulated that the availability of an appeal is fatal to the instant petition in light of
the procedural norm that proscribes the use of certiorari as substitute for a lost appeal.65chanrobleslaw

We reject the procedural challenge.

The procedural norm referred to is not absolute. In Sanchez v. Court of Appeals,66 we enumerated the instances when a