THIRD DIVISION

G.R. No. 219815, September 14, 2016

J.O.S. MANAGING BUILDERS, INC. AND EDUARDO B. OLAGUER, Petitioners, v. UNITED OVERSEAS BANK
PHILIPPINES (FORMERLY KNOWN AS WESTMONT BANK), EMMANUEL T. MANGOSING AND DAVID GOH CHAI
ENG, Respondents.

DECISION

JARDELEZA, J.:

Before us is a Petition for Review1 assailing the October 7, 20142 and July 20, 20153 Orders of the Regional Trial Court
(RTC) of Quezon City (RTC-QC), Branch 87 (RTC Br. 87) in Civil Case No. Q-11-69413. The first Order dismissed the
petition for contempt filed by J.O.S. Managing Builders, Inc. (J.O.S.) and Eduardo B. Olaguer 4 (collectively, petitioners)
against United Overseas Bank Philippines (UOBP), Emmanuel T. Mangosing and David Goh Chai Eng 5 (collectively,
respondents) on the ground of mootness. The second Order expunged petitioners' motion for reconsideration of the
October 7, 2014 Order from the record of the case due to violation of the three-day notice rule on motions.

Facts

On September 10, 1999, petitioners filed a Petition for Annulment of Extrajudicial Foreclosure Sale (annulment case)
against UOBP and Atty. Ricardo F. De Guzman in RTC-QC.6 The case was raffled to RTC-QC, Branch 98 (RTC Br. 98)
and docketed as Civil Case No. Q-99-38701.7 On May 17, 2000, RTC Br. 98 issued a writ of preliminary injunction (2000
writ) against respondents prohibiting them from: (a) consolidating title to the subject properties; and (b) committing
any acts prejudicial to petitioners.8Eventually, on June 12, 2008, it also issued a decision annulling the extrajudicial
foreclosure and public auction sale of the properties.9 Respondents filed an appeal to the Court of Appeals (CA)
docketed as CA-G.R. CV No. 92414.10

On May 5, 2008, while the annulment case was still pending, respondents sold the properties to Onshore Strategic
Assets, Inc.11 Thus, petitioners filed a Petition to Declare Respondents in Contempt of Court12(contempt case) in RTC-
QC. The case was docketed as Civil Case No. Q-11-69413 and raffled to RTC, Branch 220 (RTC Br. 220). Petitioners
averred that respondents' sale of the properties constitutes indirect contempt of court because it was done in violation
of the 2000 writ issued by RTC Br. 98. Additionally, they prayed that respondents be ordered to pay actual, moral and
exemplary damages including attorney's fees and cost of suit.

Respondents filed a Motion to Dismiss on the ground of failure to state a cause of action. They countered that the sale
of the properties did not violate the 2000 writ because petitioners did not plead that the sale was prejudicial to them.
Further, the petition did not allege that respondents consolidated title to the properties. RTC Br. 220 denied the
motion to dismiss. Respondents moved for reconsideration, but it was denied.13 They elevated the case to the CA via a
petition for certiorari, but the CA also dismissed it.14

Respondents then filed an Answer Ad Cautelam15 in RTC Br. 220, contending that the 2000 writ merely prohibited
UOBP from consolidating title to the properties and did not enjoin it from selling or transferring them to any person or
entity.16 Respondents also asserted that the sale is not prejudicial to the interest of petitioners because the 1997 Rules
of Civil Procedure (the Rules) recognizes and allows transfers pendente lite.17 By way of counterclaim, respondents
prayed that petitioners be ordered to pay moral and exemplary damages and attorney's fees. 18

In another turn of events, the contempt case was re-raffled to RTC Br. 87.19 On May 8, 2014, respondents filed its
second motion to dismiss.20 They argued that the decision of RTC Br. 98 in the annulment case was reversed by the CA
in its Decision dated November 28, 2013. They claimed that the CA's dismissal of the annulment case automatically
dissolved or set aside the 2000 writ because a writ of preliminary injunction is merely ancillary to the main
case.21 Therefore, the contempt case which seeks to punish them for the alleged violation of the 2000 writ had become
moot and academic.22 Petitioners opposed the motion but RTC Br. 87, in its first assailed Order, granted respondent's
motion and dismissed the case. It ruled that "the writ of preliminary injunction was rendered moot and academic with
the [CA's dismissal of the annulment case] on the merits, which in effect automatically terminated the writ of
preliminary injunction issued therein, even if an appeal is taken from said judgment." 23
Petitioners filed a Motion for Reconsideration24 (MR) of the order of dismissal. Respondents filed a Motion to
Expunge25cralawred the MR on the ground that petitioners violated the three-day notice rule under Section 4, Rule 15
of the Rules. Respondents alleged that the hearing for petitioners' MR was set on November 7, 2014 but they received
the notice only on November 6 or one (1) day before the scheduled hearing. In its second assailed Order, RTC Br. 87
granted respondent's motion to expunge.26
Petitioners now directly seek recourse to us via this petition for review on certiorari raising the following issues:
1. Whether RTC Br. 87 erred in expunging petitioners' MR from the record of the case;
2. Whether RTC Br. 87 erred in giving due course to respondents' motion to dismiss filed after their answer ad
cautelam; and cralawlawlibrary
3. Whether RTC Br. 87 erred in dismissing the contempt case on the ground of mootness.
Petitioners pray that we set aside the October 7, 2014 and July 20, 2015 Orders of RTC Br. 87, declare respondents
guilty of contempt of court, and order them to pay damages.27
Our Ruling
We partially grant the petition and reverse the challenged Orders of RTC Br. 87.
At the outset, we find no merit in the claim of respondents that petitioners' direct resort to us violates the hierarchy of
courts. Section 2(c), Rule 41 of the Rules provides that in all cases where only questions of law are raised or involved,
the appeal shall be before us.28 Petitioners question the grant of due course to respondents' motion to dismiss filed
after the filing of their Answer Ad Cautelam, the grant of respondents' motion to dismiss the contempt case on the
ground of mootness, and the grant of respondents' motion to expunge petitioners' MR on the ground of violation of
the three-day notice rule. In order to resolve these issues, we need not examine or evaluate the evidence of the parties,
but rely solely on what the law provides on the given set of undisputed facts. 29 Consequently, petitioners' remedy for
assailing the correctness of the Orders of RTC Br. 87, involving as it does a pure question of law, indeed lies with us. 30
RTC Br. 87 erred when it granted
respondent's motion to expunge
petitioner's MR from the records.
Section 4, Rule 15 of the Rules, provides that:
Sec. 4. Hearing of motion. — Except for motions which the court may act upon without prejudicing the rights of the
adverse party, every written motion shall be set for hearing by the applicant.
Every written motion required to be heard and the notice of the hearing thereof shall be served in such a manner as to
ensure its receipt by the other party at least three (3) days before the date of hearing, unless the court for good cause
sets the hearing on shorter notice.
The general rule is that the three-day notice requirement in motions under Section 4 of the Rules is mandatory. It is an
integral component of procedural due process. The purpose of the three-day notice requirement, which was
established not for the benefit of the movant but rather for the adverse party, is to avoid surprises upon the latter and
to grant it sufficient time to study the motion and to enable it to meet the arguments interposed therein.31
In Cabrera v. Ng,32 the facts of which are analogous to the present petition, we held that the three-day notice
requirement is not a hard-and-fast rule. A liberal construction of the procedural rules is proper where the lapse in the
literal observance of a rule of procedure has not prejudiced the adverse party and has not deprived the court of its
authority.33 We ruled:
It is undisputed that the hearing on the motion for reconsideration filed by the spouses Cabrera was reset by the RTC
twice with due notice to the parties; it was only on October 26, 2007 that the motion was actually heard by the RTC. At
that time, more than two months had passed since the respondent received a copy of the said motion for
reconsideration on August 21, 2007. The respondent was thus given sufficient time to study the motion and to enable
him to meet the arguments interposed therein. Indeed, the respondent was able to file his opposition thereto on
September 20, 2007.
Notwithstanding that the respondent received a copy of the said motion for reconsideration four days after the date
set by the spouses Cabrera for the hearing thereof, his right to due process was not impinged as he was afforded the
chance to argue his position. Thus, the RTC erred in denying the spouses Cabrera's motion for reconsideration based
merely on their failure to comply with the three-day notice requirement.34
Thus, the test is the presence of opportunity to be heard, as well as to have time to study the motion and meaningfully
oppose or controvert the grounds upon which it is based.35 When the adverse party had been afforded such
opportunity, and has been indeed heard through the pleadings filed in opposition to the motion, the purpose behind
the three-day notice requirement is deemed realized. In such case, the requirements of procedural due process are
substantially complied with.36
Here, respondents claimed to have actually received the notice for the November 7, 2014 hearing only on November 6,
2014.37 On the supposed day of hearing, however, RTC Br. 87 issued a Constancia38resetting the hearing to December 5,
2014. Thereafter, on November 11, 2014, respondent filed a motion to expunge petitioners' MR. 39 Clearly, respondents'
right to due process was not violated as they were able to oppose petitioner's MR in the form of their motion to
expunge.
RTC Br. 87 did not err in giving due
course to respondents' motion to
dismiss.
Petitioners fault RTC Br. 87 for giving due course to respondents' motion to dismiss. Respondents filed their second
motion to dismiss almost one (1) year and six (6) months after they submitted their Answer Ad Cautelam.40 Thus,
petitioners aver that respondents violated Section 1, Rule 16 of the Rules, stating that a motion to dismiss must be filed
"within the time for but before filing the answer to the complaint or pleading asserting a claim."
Petitioners are incorrect. In Obando v. Figueras,41 we held that the period to file a motion to dismiss depends upon the
circumstances of the case:
x x x Section 1 of Rule 16 of the Rules of Court requires that, in general, a motion to dismiss should be filed within the
reglementary period for filing a responsive pleading. Thus, a motion to dismiss alleging improper venue cannot be
entertained unless made within that period.
However, even after an answer has been filed, the Court has allowed a defendant to file a motion to dismiss on the
following grounds: (1) lack of jurisdiction, (2) litis pendentia, (3) lack of cause of action, and (4) discovery during trial of
evidence that would constitute a ground for dismissal. Except for lack of cause of action or lack of jurisdiction, the
grounds under Section 1 of Rule 16 may be waived. If a particular ground for dismissal is not raised or if no motion to
dismiss is filed at all within the reglementary period, it is generally considered waived under Section 1, Rule 9 of the
Rules.
Applying this principle to the case at bar, the respondents did not waive their right to move for the dismissal of the civil
case based on Petitioner Obando's lack of legal capacity. It must be pointed out that it was only after he had been
convicted of estafa through falsification that the probate court divested him of his representation of the Figueras
estates. It was only then that this ground became available to the respondents. Hence, it could not be said that
they waived it by raising it in a Motion to Dismiss filed after their Answer was submitted. Verily, if the plaintiff
loses his capacity to sue during the pendency of the case, as in the present controversy, the defendant should be
allowed to file a motion to dismiss, even after the lapse of the reglementary period for filing a responsive
pleading.42(Emphasis supplied.)
In the same manner, respondents' motion to dismiss was based on an event that transpired after it filed its Answer Ad
Cautelam. Consequently, there was no violation of Section 1, Rule 16 of the Rules as they could not have possibly raised
it as an affirmative defense in their answer.
While RTC Br. 87 did not err in giving due course to respondents' motion to dismiss, the propriety of granting it is an
entirely different matter.
RTC Br. 87 erred when it dismissed
the contempt case for being moot and
academic.
In their motion to dismiss, respondents advance that the CA's reversal of RTC Br. 98's ruling is a supervening event that
renders the contempt case moot and academic. They argue that it would now be absurd to restrain UOBP from
exercising its rights under the Deed of Real Estate Mortgage when it was found to have proceeded lawfully in the
foreclosure proceedings. Respondents maintain that it would be illogical to hold them in contempt for a lawful act. 43
RTC Br. 87 agreed,44 citing the cases of Golez v. Leonidas45 and Buyco v. Baraquia,46 where we held that a writ of
preliminary injunction is deemed lifted upon dismissal of the main case, its purpose as a provisional remedy having
been served, despite the filing of an appeal.
We are not persuaded. A case is moot when it ceases to present a justiciable controversy by virtue of supervening
events so that a declaration thereon would be of no practical value.47 Courts decline jurisdiction over it as there is no
substantial relief to which petitioner will be entitled and which will anyway be negated by the dismissal of the
petition.48 Here, the consequent dissolution of the 2000 writ did not render the contempt case moot and academic.
Foremost, RTC Br. 87's reliance in Golez and Buyco is misplaced. As correctly pointed out by petitioners, the facts and
circumstances in the two cases differ from the present petition. In Golez and Buyco, the alleged acts in violation of the
writ of preliminary injunction were committed AFTER the writ was lifted upon the dismissal of the main action, such
that a case for contempt on the ground of violation of the writ would be unavailing. In the case before us, the sale of
the properties—which is the act alleged to be in violation of the 2000 writ—was conducted while the 2000 writ was
still subsisting. In fact, the 2000 writ was issued on May 17, 2000, while the sale was made on May 5, 2008. RTC Br. 98
annulled the sale in favor of petitioners on June 12, 2008.49
The reversal by the CA of the ruling of RTC Br. 98 in the annulment case and the automatic dissolution of the 2000 writ
will not protect respondents from an action ascribing a violation of the 2000 writ, which was committed while it was
still in full force and effect. In Lee v. Court of Appeals,50 we explained that:
An injunction or restraining order which is not void must be obeyed while it remains in full force and effect, and has not
been overturned, that is, in general, until the injunction or restraining order has been set aside, vacated, or modified by
the court which granted it, or until the order or decree awarding it has been reversed on appeal or error. The injunction
must be obeyed irrespective of the ultimate validity of the order, and no matter how unreasonable and unjust the
injunction may be in its terms. Defendant cannot avoid compliance with the commands, or excuse his violation, of the
injunction by simply moving to dissolve it, or by the pendency of a motion to modify it. The fact that an injunction or
restraining order has been dissolved or terminated, or has expired, does not necessarily protect a person in a
proceeding against him for a violation of the injunction or order while it was in force, as by acts between granting of the
injunction and its termination, at least where the proceeding is one to punish for a criminal contempt. 51
Notably, this is not to say that respondents are already guilty of indirect contempt. Whether respondents violated the
2000 writ is not for us to decide. Section 5, Rule 71 of the Rules provides that where the charge for indirect contempt
has been committed against a Regional Trial Court or a court of equivalent or higher rank, or against an officer
appointed by it, the charge may be filed with such court. Here, the petition for indirect contempt was correctly filed
with the RTC. The contempt case was however dismissed while it was only in the pre-trial stage and clearly before the
parties could present their evidence. Proceedings for indirect contempt of court require normal adversarial procedures.
It is not summary in character. The proceedings for the punishment of the contumacious act committed outside the
personal knowledge of the judge generally need the observance of all the elements of due process of law, that is,
notice, written charges, and an opportunity to deny and to defend such charges before guilt is adjudged and sentence
imposed.52
In this regard, we cannot grant petitioners' prayer to declare respondents guilty of contempt of court and order them
to pay damages.
WHEREFORE, the petition is PARTIALLY GRANTED. The October 7, 2014 and July 20, 2015 Orders of the Regional
Trial Court of Quezon City, Branch 87 in Civil Case No. Q-11-69413 are hereby REVERSED. The case is REMANDED to
the court a quo for continuance of the trial of the case.
SO ORDERED.
Velasco, Jr., (Chairperson), Peralta, Perez, and Reyes, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 185145 February 5, 2014
SPOUSES VICENTE AFULUGENCIA and LETICIA AFULUGENCIA, Petitioners,
vs.
METROPOLITAN BANK & TRUST CO. and EMMANUEL L. ORTEGA, Clerk of Court, Regional Trial Court and Ex-
Officio Sheriff, Province of Bulacan, Respondents.
DECISION
DEL CASTILLO, J.:
Section 6,1 Rule 25 of the Rules of Court (Rules) provides that "a party not served with written interrogatories may not
be compelled by the adverse party to give testimony in open court, or to give a deposition pending appeal." The
provision seeks to prevent fishing expeditions and needless delays. Its goal is to maintain order and facilitate the
conduct of trial.
Assailed in this Petition for Review on Certiorari2 are the April 15, 2008 Decision3 of the Court of Appeals (CA) in CA-
G.R. SP No. 99535 which dismissed petitioners' Petition for Certiorari for lack of merit and its October 2, 2008
Resolution4 denying petitioners' Motion for Reconsideration.5
Factual Antecedents
Petitioners, spouses Vicente and Leticia Afulugencia, filed a Complaint 6 for nullification of mortgage, foreclosure,
auction sale, certificate of sale and other documents, with damages, against respondents Metropolitan Bank & Trust
Co. (Metrobank) and Emmanuel L. Ortega (Ortega) before the Regional Trial Court (RTC) of Malolos City, where it was
docketed as Civil Case No. 336-M-2004 and assigned to Branch 7.
Metrobank is a domestic banking corporation existing under Philippine laws, while Ortega is the Clerk of Court and Ex-
Officio Sheriff of the Malolos RTC.
After the filing of the parties’ pleadings and with the conclusion of pre-trial, petitioners filed a Motion for Issuance of
Subpoena Duces Tecum Ad Testificandum7 to require Metrobank’s officers8 to appear and testify as the petitioners’
initial witnesses during the August 31, 2006 hearing for the presentation of their evidence-in-chief, and to bring the
documents relative to their loan with Metrobank, as well as those covering the extrajudicial foreclosure and sale of
petitioners’ 200-square meter land in Meycauayan, Bulacan covered by Transfer Certificate of Title No. 20411 (M). The
Motion contained a notice of hearing written as follows:
NOTICE
The Branch Clerk of Court
Regional Trial Court
Branch 7, Malolos, Bulacan
Greetings:
Please submit the foregoing motion for the consideration and approval of the Hon. Court immediately upon receipt
hereof.
(signed)
Vicente C. Angeles9
Metrobank filed an Opposition10 arguing that for lack of a proper notice of hearing, the Motion must be denied; that
being a litigated motion, the failure of petitioners to set a date and time for the hearing renders the Motion ineffective
and pro forma; that pursuant to Sections 1 and 611 of Rule 25 of the Rules, Metrobank’s officers – who are considered
adverse parties – may not be compelled to appear and testify in court for the petitioners since they were not initially
served with written interrogatories; that petitioners have not shown the materiality and relevance of the documents
sought to be produced in court; and that petitioners were merely fishing for evidence.
Petitioners submitted a Reply12 to Metrobank’s Opposition, stating that the lack of a proper notice of hearing was
cured by the filing of Metrobank’s Opposition; that applying the principle of liberality, the defect may be ignored; that
leave of court is not necessary for the taking of Metrobank’s officers’ depositions; that for their case, the issuance of a
subpoena is not unreasonable and oppressive, but instead favorable to Metrobank, since it will present the testimony
of these officers just the same during the presentation of its own evidence; that the documents sought to be produced
are relevant and will prove whether petitioners have paid their obligations to Metrobank in full, and will settle the issue
relative to the validity or invalidity of the foreclosure proceedings; and that the Rules do not prohibit a party from
presenting the adverse party as its own witness.
Ruling of the Regional Trial Court
On October 19, 2006, the trial court issued an Order13 denying petitioners’ Motion for Issuance of Subpoena Duces
Tecum Ad Testificandum, thus:
The motion lacks merit.
As pointed out by the defendant bank in its opposition, the motion under consideration is a mere scrap of paper by
reason of its failure to comply with the requirements for a valid notice of hearing as specified in Sections 4 and 5 of Rule
15 of the Revised Rules of Court. Moreover, the defendant bank and its officers are adverse parties who cannot be
summoned to testify unless written interrogatories are first served upon them, as provided in Sections 1 and 6, Rule 25
of the Revised Rules of Court.
In view of the foregoing, and for lack of merit, the motion under consideration is hereby DENIED.
SO ORDERED.14
Petitioners filed a Motion for Reconsideration15 pleading for leniency in the application of the Rules and claiming that
the defective notice was cured by the filing of Metrobank’s Opposition, which they claim is tantamount to notice. They
further argued that Metrobank’s officers – who are the subject of the subpoena – are not party-defendants, and thus do
not comprise the adverse party; they are individuals separate and distinct from Metrobank, the defendant corporation
being sued in the case.
In an Opposition16 to the Motion for Reconsideration, Metrobank insisted on the procedural defect of improper notice
of hearing, arguing that the rule relative to motions and the requirement of a valid notice of hearing are mandatory and
must be strictly observed. It added that the same rigid treatment must be accorded to Rule 25, in that none of its
officers may be summoned to testify for petitioners unless written interrogatories are first served upon them. Finally, it
said that since a corporation may act only through its officers and employees, they are to be considered as adverse
parties in a case against the corporation itself.
In another Order17 dated April 17, 2007, the trial court denied petitioners’ Motion for Reconsideration. The trial court
held, thus:
Even if the motion is given consideration by relaxing Sections 4 and 5, Rule 15 of the Rules of Court, no such laxity could
be accorded to Sections 1 and 6 of Rule 25 of the Revised Rules of Court which require prior service of written
interrogatories to adverse parties before any material and relevant facts may be elicited from them more so if the party
is a private corporation who could be represented by its officers as in this case. In other words, as the persons sought to
be subpoenaed by the plaintiffs-movants are officers of the defendant bank, they are in effect the very persons who
represent the interest of the latter and necessarily fall within the coverage of Sections 1 and 6, Rule 25 of the Revised
Rules of Court.
In view of the foregoing, the motion for reconsideration is hereby denied.
SO ORDERED.18
Ruling of the Court of Appeals
Petitioners filed a Petition for Certiorari19 with the CA asserting this time that their Motion for Issuance of Subpoena
Duces Tecum Ad Testificandum is not a litigated motion; it does not seek relief, but aims for the issuance of a mere
process. For these reasons, the Motion need not be heard. They likewise insisted on liberality, and the disposition of
the case on its merits and not on mere technicalities. 20 They added that Rule 2121 of the Rules requires prior notice and
hearing only with respect to the taking of depositions; since their Motion sought to require Metrobank’s officers to
appear and testify in court and not to obtain their depositions, the requirement of notice and hearing may be
dispensed with. Finally, petitioners claimed that the Rules – particularly Section 10,22 Rule 132 – do not prohibit a party
from presenting the adverse party as its own witness.
On April 15, 2008, the CA issued the questioned Decision, which contained the following decretal portion:
WHEREFORE, the petition is DISMISSED for lack of merit. The assailed orders dated October 19, 2006 and April 17,
2007 in Civil Case No. 336-M-2004 issued by the RTC, Branch 7, Malolos City, Bulacan, are AFFIRMED. Costs against
petitioners.
SO ORDERED.23
The CA held that the trial court did not commit grave abuse of discretion in issuing the assailed Orders; petitioners’
Motion is a litigated motion, especially as it seeks to require the adverse party, Metrobank’s officers, to appear and
testify in court as petitioners’ witnesses. It held that a proper notice of hearing, addressed to the parties and specifying
the date and time of the hearing, was required, consistent with Sections 4 and 5, 24 Rule 15 of the Rules.
The CA held further that the trial court did not err in denying petitioners’ Motion to secure a subpoena duces tecum/ad
testificandum, ratiocinating that Rule 25 is quite clear in providing that the consequence of a party’s failure to serve
written interrogatories upon the opposing party is that the latter may not be compelled by the former to testify in court
or to render a deposition pending appeal. By failing to serve written interrogatories upon Metrobank, petitioners
foreclosed their right to present the bank’s officers as their witnesses.
The CA declared that the justification for the rule laid down in Section 6 is that by failing to seize the opportunity to
inquire upon the facts through means available under the Rules, petitioners should not be allowed to later on burden
Metrobank with court hearings or other processes. Thus, it held:
x x x Where a party unjustifiedly refuses to elicit facts material and relevant to his case by addressing written
interrogatories to the adverse party to elicit those facts, the latter may not thereafter be compelled to testify thereon
in court or give a deposition pending appeal. The justification for this is that the party in need of said facts having
foregone the opportunity to inquire into the same from the other party through means available to him, he should not
thereafter be permitted to unduly burden the latter with courtroom appearances or other cumbersome processes. The
sanction adopted by the Rules is not one of compulsion in the sense that the party is being directly compelled to avail
of the discovery mechanics, but one of negation by depriving him of evidentiary sources which would otherwise have
been accessible to him.25
Petitioners filed their Motion for Reconsideration, 26 which the CA denied in its assailed October 2, 2008 Resolution.
Hence, the present Petition.
Issues
Petitioners now raise the following issues for resolution:
I
THE COURT OF APPEALS COMMITTED REVERSIBLE ERRORS IN REQUIRING NOTICE AND HEARING (SECS. 4 AND
5, RULE 15, RULES OF COURT) FOR A MERE MOTION FOR SUBPOENA OF RESPONDENT BANK’S OFFICERS WHEN
SUCH REQUIREMENTS APPLY ONLY TO DEPOSITION UNDER SEC. 6, RULE 25, RULES OF COURT.
II
THE COURT OF APPEALS COMMITTED (REVERSIBLE) ERROR IN HOLDING THAT THE PETITIONERS MUST FIRST
SERVE WRITTEN INTERROGATORIES TO RESPONDENT BANK’S OFFICERS BEFORE THEY CAN BE SUBPOENAED. 27
Petitioners’ Arguments
Praying that the assailed CA dispositions be set aside and that the Court allow the issuance of the subpoena duces
tecum/ad testificandum, petitioners assert that the questioned Motion is not a litigated motion, since it seeks not a
relief, but the issuance of process. They insist that a motion which is subject to notice and hearing under Sections 4 and
5 of Rule 15 is an application for relief other than a pleading; since no relief is sought but just the process of subpoena,
the hearing and notice requirements may be done away with. They cite the case of Adorio v. Hon. Bersamin,28 which
held that –
Requests by a party for the issuance of subpoenas do not require notice to other parties to the action.1âwphi1 No
violation of due process results by such lack of notice since the other parties would have ample opportunity to examine
the witnesses and documents subpoenaed once they are presented in court.29
Petitioners add that the Rules should have been liberally construed in their favor, and that Metrobank’s filing of its
Opposition be considered to have cured whatever defect the Motion suffered from.
Petitioners likewise persist in the view that Metrobank’s officers – the subject of the Motion – do not comprise the
adverse party covered by the rule; they insist that these bank officers are mere employees of the bank who may be
called to testify for them.
Respondents’ Arguments
Metrobank essentially argues in its Comment30 that the subject Motion for the issuance of a subpoena duces tecum/ad
testificandum is a litigated motion, especially as it is directed toward its officers, whose testimony and documentary
evidence would affect it as the adverse party in the civil case. Thus, the lack of a proper notice of hearing renders it
useless and a mere scrap of paper. It adds that being its officers, the persons sought to be called to the stand are
themselves adverse parties who may not be compelled to testify in the absence of prior written interrogatories; they
are not ordinary witnesses whose presence in court may be required by petitioners at any time and for any reason.
Finally, Metrobank insists on the correctness of the CA Decision, adding that since petitioners failed up to this time to
pay the witnesses’ fees and kilometrage as required by the Rules,31 the issuance of a subpoena should be denied.
Our Ruling
The Court denies the Petition.
On the procedural issue, it is quite clear that Metrobank was notified of the Motion for Issuance of Subpoena Duces
Tecum Ad Testificandum; in fact, it filed a timely Opposition thereto. The technical defect of lack of notice of hearing
was thus cured by the filing of the Opposition.32
Nonetheless, contrary to petitioners’ submission, the case of Adorio cannot apply squarely to this case. In Adorio, the
request for subpoena duces tecum was sought against bank officials who were not parties to the criminal case for
violation of Batas Pambansa Blg. 22. The situation is different here, as officers of the adverse party Metrobank are
being compelled to testify as the calling party’s main witnesses; likewise, they are tasked to bring with them
documents which shall comprise the petitioners’ principal evidence. This is not without significant consequences that
affect the interests of the adverse party, as will be shown below.
As a rule, in civil cases, the procedure of calling the adverse party to the witness stand is not allowed, unless written
interrogatories are first served upon the latter. This is embodied in Section 6, Rule 25 of the Rules, which provides –
Sec. 6. Effect of failure to serve written interrogatories.
Metrobank’s documentary evidence for the purpose of making it their own. This is tantamount to building their whole
case from the evidence of their opponent. The burden of proof and evidence falls on petitioners, not on Metrobank; if
petitioners cannot prove their claim using their own evidence, then the adverse party Metrobank may not be pressured
to hang itself from its own defense.
It is true that under the Rules, a party may, for good cause shown and to prevent a failure of justice, be compelled to
give testimony in court by the adverse party who has not served written interrogatories. But what petitioners seek
goes against the very principles of justice and fair play; they would want that Metrobank provide the very evidence with
which to prosecute and build their case from the start. This they may not be allowed to do.
Finally, the Court may not turn a blind eye to the possible consequences of such a move by petitioners. As one of their
causes of action in their Complaint, petitioners claim that they were not furnished with specific documents relative to
their loan agreement with Metrobank at the time they obtained the loan and while it was outstanding. If Metrobank
were to willingly provide petitioners with these documents even before petitioners can present evidence to show that
indeed they were never furnished the same, any inferences generated from this would certainly not be useful for
Metrobank. One may be that by providing petitioners with these documents, Metrobank would be admitting that
indeed, it did not furnish petitioners with these documents prior to the signing of the loan agreement, and while the
loan was outstanding, in violation of the law.

Unless thereafter allowed by the court for good cause shown and to prevent a failure of justice, a party not served with With the view taken of the case, the Court finds it unnecessary to further address the other issues raised by the parties,
written interrogatories may not be compelled by the adverse party to give testimony in open court, or to give a which are irrelevant and would not materially alter the conclusions arrived at.
deposition pending appeal.

WHEREFORE, the Petition is DENIED. The assailed April 15, 2008 Decision and October 2, 2008 Resolution of the Court
One of the purposes of the above rule is to prevent fishing expeditions and needless delays; it is there to maintain order of Appeals in CA-G.R. SP No. 99535 are AFFIRMED.
and facilitate the conduct of trial. It will be presumed that a party who does not serve written interrogatories on the
adverse party beforehand will most likely be unable to elicit facts useful to its case if it later opts to call the adverse
SO ORDERED.
party to the witness stand as its witness. Instead, the process could be treated as a fishing expedition or an attempt at
delaying the proceedings; it produces no significant result that a prior written interrogatories might bring.
MARIANO C. DEL CASTILLO
Associate Justice
Besides, since the calling party is deemed bound by the adverse party’s testimony, 33 compelling the adverse party to
take the witness stand may result in the calling party damaging its own case. Otherwise stated, if a party cannot elicit
facts or information useful to its case through the facility of written interrogatories or other mode of discovery, then WE CONCUR:
the calling of the adverse party to the witness stand could only serve to weaken its own case as a result of the calling
party’s being bound by the adverse party’s testimony, which may only be worthless and instead detrimental to the
ANTONIO T. CARPIO
calling party’s cause.
Associate Justice
Chairperson
Another reason for the rule is that by requiring prior written interrogatories, the court may limit the inquiry to what is
relevant, and thus prevent the calling party from straying or harassing the adverse party when it takes the latter to the
stand. ARTURO D. BRION JOSE PORTUGAL PEREZ
Associate Justice Associate Justice

Thus, the rule not only protects the adverse party from unwarranted surprises or harassment; it likewise prevents the
calling party from conducting a fishing expedition or bungling its own case. Using its own judgment and discretion, the ESTELA M. PERLAS-BERNABE
court can hold its own in resolving a dispute, and need not bear witness to the parties perpetrating unfair court Associate Justice
practices such as fishing for evidence, badgering, or altogether ruining their own cases. Ultimately, such unnecessary
processes can only constitute a waste of the court’s precious time, if not pointless entertainment. ATTESTATION

In the present case, petitioners seek to call Metrobank’s officers to the witness stand as their initial and main witnesses, I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to
and to present documents in Metrobank’s possession as part of their principal documentary evidence. This is improper. the writer of the opinion of the Court's Division.
Petitioners may not be allowed, at the incipient phase of the presentation of their evidence-in-chief at that, to present
Metrobank’s officers – who are considered adverse parties as well, based on the principle that corporations act only
through their officers and duly authorized agents34 – as their main witnesses; nor may they be allowed to gain access to
ANTONIO T. CARPIO On 13 December 2002, the MTC ruled in favor of petitioner and ordered respondent to vacate the disputed land
Associate Justice covered by TCT No. TF-1217 in the name of petitioner and to return the possession of the land to
Chairperson petitioner.[7]Respondent appealed to the Regional Trial Court (RTC). In its Decision dated 22 January 2004, the RTC,
Branch 14, Nasugbu, Batangas reversed the MTC decision and dismissed petitioners complaint.
Petitioner received the RTC Decision on 9 February 2004 and thereafter filed a Motion for Reconsideration, which was
CERTIFICATION
set for hearing on 26 February 2004. Petitioner sent a copy of the Motion for Reconsideration to respondents counsel
by registered mail on 23 February 2004. During the 26 February 2004 scheduled hearing of the motion, the RTC judge
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the reset the hearing to 2 April 2004 because the courts calendar could not accommodate the hearing of the motion. All
conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the the parties were notified of the schedule for the next hearing.
opinion of the Court's Division.
Meanwhile, it was only on 3 March 2004, or 6 days after the scheduled hearing on 26 February 2004, that respondents
MARIA LOURDES P. A. SERENO counsel received a copy of petitioners Motion for Reconsideration.
Chief Justice
The rescheduled hearing on 2 April 2004 was again reset on 7 May 2004 because the RTC judge was on official leave.
The 7 May 2004 hearing was further reset to 6 August 2004. After the hearing, respondent filed its Motion to Dismiss
dated 9 August 2004,[8] claiming that non-compliance with the three-day notice rule did not toll the running of the
SECOND DIVISION period of appeal, which rendered the decision final.

FAUSTO R. PREYSLER, JR., G.R. No. 171872 On 4 October 2004, the RTC issued an Order, denying petitioners Motion for Reconsideration for failure to appeal
Petitioner, within the 15 days reglementary period and declaring the 22 January 2004 Decision as final and executory. The RTC
Present: ruled that petitioners Motion for Reconsideration was fatally flawed for failure to observe the three-day notice rule.
Petitioner filed an Omnibus Motion for Reconsideration of the Order dated 4 October 2004. In its Order dated 22
CARPIO, J., Chairperson, February 2005, the RTC dismissed the Omnibus Motion. Petitioner then filed a petition for certiorari with the Court of
NACHURA, Appeals, alleging that the RTC committed grave abuse of discretion in dismissing the Motion for Reconsideration and
PERALTA, Omnibus Motion for petitioners alleged failure to observe the three-day notice rule.
- versus - ABAD, and
MENDOZA, JJ. The Ruling of the Court of Appeals

In its Decision dated 22 November 2005, the Court of Appeals dismissed the petition. The Court of Appeals held that
MANILA SOUTHCOAST DEVELOPMENT CORPORATION, the three-day notice rule under Sections 4, 5, and 6 of Rule 15 of the Rules of Court is mandatory and non-compliance
Respondent. Promulgated: therewith is fatal and renders the motion pro forma. As found by the RTC, petitioners Motion for Reconsideration dated
12 February 2004 was received by respondent only on 3 March 2004, or six days after the scheduled hearing on 26
June 28, 2010 February 2004. Furthermore, the Court of Appeals held that all violations of Sections 4, 5, and 6 of Rule 15 which render
the purpose of the notice of hearing of the motion nugatory are deemed fatal.
x--------------------------------------------------x
Petitioner moved for reconsideration, which the Court of Appeals denied in its Resolution dated 3 March 2006. Hence,
this petition for review.
DECISION
The Issues
CARPIO, J.:
The Case In his petition for review, petitioner submits that:

This petition for review[1] assails the 22 November 2005 Decision[2] and the 3 March 2006 Resolution[3] of the Court of I
Appeals in CA-G.R. SP No. 89621. THE COURT OF APPEALS COMMITTED GRAVE ERROR IN AFFIRMING THE RULING OF THE
PUBLIC RESPONDENT THAT PETITIONER HAD VIOLATED THE THREE-DAY NOTICE RULE
The Facts DESPITE THE FACTS THAT:

On 15 January 2002, petitioner Fausto R. Preysler, Jr. (petitioner) filed with the Municipal Trial Court (MTC) of Batangas
a complaint for forcible entry against respondent Manila Southcoast Development Corporation (respondent). The A) PRIVATE RESPONDENT WAS DULY HEARD ON THE MOTION
subject matter of the complaint is a parcel of land with an area of 21,922 square meters located in Sitio Kutad, FOR RECONSIDERATION, HAD OPPORTUNITY TO OPPOSE, AND
Barangay Papaya, Nasugbu, Batangas. The disputed land, covered by Transfer Certificate of Title (TCT) No. TF- ACTUALLY OPPOSED SAID MOTION.
1217[4] in the name of petitioner, is also within the property covered by TCT No. T-72097[5] in the name B) PRIVATE RESPONDENT WAS NOT PREJUDICED BY THE
of respondent.[6]TCT No. T-72097 covers three contiguous parcels of land with an aggregate area of 86,507,778 square ALLEGED DEFECT OF THE MOTION.
meters. C) THE PURPOSE OF THE THREE-DAY NOTICE RULE WAS
SUFFICIENTLY ACHIEVED.
 D) THE ALLEGED FAILURE OF PETITIONER TO COMPLY WITH
SECTION 4, RULE 15 WAS CURED BY THE FACT THAT THE PUBLIC
RESPONDENT RESET SEVERAL TIMES THE HEARING OF
THE MOTION, AND THE PRIVATE RESPONDENT WAS PROPERLY
NOTIFIED THEREOF AND OPPOSED SAID MOTION.
E) PETITIONER HAD AN EXTREMELY MERITORIOUS CASE.
II
THE COURT OF APPEALS SERIOUSLY ERRED IN NOT RULING ON THE ISSUE OF THE
ALLEGED DEFECT OF THE PETITIONERS OMNIBUS MOTION, THEREBY AFFIRMING THE
ERRONEOUS COMPUTATION OF THE THREE-DAY NOTICE BY THE RESPONDENT TRIAL
JUDGE.
III
THE COURT OF APPEALS ERRED IN NOT RESOLVING THE MERITS OF THE PETITIONERS
MOTION FOR RECONSIDERATION FILED BEFORE THE PUBLIC RESPONDENT.[9]
The Ruling of the Court
We find the petition meritorious.
In upholding the RTC Order denying petitioners Motion for Reconsideration, the Court of Appeals relied mainly on
petitioners alleged violation of the notice requirements under Sections 4, 5, and 6, Rule 15 of the Rules of Court which
read:
SECTION 4. Hearing of motion. Except for motions which the court may act upon without
prejudicing the rights of the adverse party, every written motion shall be set for hearing by
the applicant.
Every written motion required to be heard and the notice of the hearing thereof shall be
served in such a manner as to ensure its receipt by the other party at least three (3) days
before the date of hearing, unless the court for good cause sets the hearing on shorter notice.
SECTION 5. Notice of hearing. The notice of hearing shall be addressed to all parties
concerned, and shall specify the time and date of the hearing which must not be later than
ten (10) days after the filing of the motion.
SECTION 6. Proof of service necessary. No written motion set for hearing shall be acted upon
by the court without proof of service thereof.
The three-day notice rule is not absolute. A liberal construction of the procedural rules is proper where the lapse in the
literal observance of a rule of procedure has not prejudiced the adverse party and has not deprived the court of its
authority.[10] Indeed, Section 6, Rule 1 of the Rules of Court provides that the Rules should be liberally construed in
order to promote their objective of securing a just, speedy and inexpensive disposition of every action and proceeding.
Rules of procedure are tools designed to facilitate the attainment of justice, and courts must avoid their strict and rigid
application which would result in technicalities that tend to frustrate rather than promote substantial justice. [11]
In Somera Vda. De Navarro v. Navarro,[12] the Court held that there was substantial compliance of the rule on notice of
motions even if the first notice was irregular because no prejudice was caused the adverse party since the motion was
not considered and resolved until after several postponements of which the parties were duly notified. [13]
Likewise, in Jehan Shipping Corporation v. National Food Authority,[14]the Court held that despite the lack of notice of
hearing in a Motion for Reconsideration, there was substantial compliance with the requirements of due process where
the adverse party actually had the opportunity to be heard and had filed pleadings in opposition to the motion. The
Court held:
This Court has indeed held time and again, that under Sections 4 and 5 of Rule 15 of the Rules
of Court, mandatory is the requirement in a motion, which is rendered defective by failure to
comply with the requirement. As a rule, a motion without a notice of hearing is considered pro
forma and does not affect the reglementary period for the appeal or the filing of the requisite
pleading.
As an integral component of the procedural due process, the three-day notice required by
the Rules is not intended for the benefit of the movant. Rather, the requirement is for the
purpose of avoiding surprises that may be sprung upon the adverse party, who must be
given time to study and meet the arguments in the motion before a resolution of the
court. Principles of natural justice demand that the right of a party should not be affected
without giving it an opportunity to be heard.
The test is the presence of opportunity to be heard, as well as to have time to study the
motion and meaningfully oppose or controvert the grounds upon which it is based. x x x
A close perusal of the records reveal that the trial court gave petitioner ten days within which
to comment on respondents Motion for Reconsideration. Petitioner filed its Opposition to the
Motion on November 26, 2001. In its 14-page Opposition, it not only pointed out that the
Motion was defective for not containing a notice of hearing and should then be dismissed
outright by the court; it also ventilated its substantial arguments against the merits of the
Motion and of the Supplemental Motion for Reconsideration. Notably, its arguments were
recited at length in the trial courts January 8, 2002 Joint Resolution. Nevertheless, the court
proceeded to deny the Motions on the sole ground that they did not contain any notice of
hearing.
The requirement of notice of time and hearing in the pleading filed by a party is necessary
only to apprise the other of the actions of the former. Under the circumstances of the present
case, the purpose of a notice of hearing was served.[15] (Emphasis supplied)
In this case, the Court of Appeals ruled that petitioner failed to comply with the three-day notice rule. However, the
Court of Appeals overlooked the fact that although respondent received petitioners Motion for Reconsideration six
days after the scheduled hearing on 26 February 2004, the said hearing wasreset three (3) times with due notice to the
parties. Thus, it was only on 6 August 2004, or more than five months after respondent received a copy of petitioners
Motion for Reconsideration, that the motion was heard by the RTC. Clearly, respondent had more than sufficient time
to oppose petitioners Motion for Reconsideration. In fact, respondent did oppose the motion when it filed its Motion to
Dismiss dated 9 August 2004. In view of the circumstances of this case, we find that there was substantial compliance
with procedural due process. Instead of dismissing petitioners Motion for Reconsideration based merely on the alleged
procedural lapses, the RTC should have resolved the motion based on the merits.
Furthermore, the RTC likewise erred in dismissing petitioners Omnibus Motion for allegedly failing to comply with the
three-day notice requirement. The RTC found that the notice of hearing of petitioners Omnibus Motion which was set
to be heard on 12 November 2004 was received by respondent on 9 November 2004. The RTC held that the serviceof
the notice of hearing was one day short of the prescribed minimum three days notice.
We disagree. Section 4 of Rule 15 provides that [e]very written motion required to be heard and the notice of the
hearing thereof shall be served in such a manner as to ensure its receipt by the other party at least three (3) days
before the date of the hearing, unless the court for good cause sets the hearing on shorter notice. Thus, the date of
the hearing should be at least three days after receipt of the notice of hearing by the other parties. In this case, the
petitioners Omnibus Motion was set for hearing on 12 November 2004. Thus, to comply with the notice requirement,
respondent should have received the notice of the hearing at least three days before 12 November 2004, which is 9
November 2004. Clearly, respondents receipt on 9 November 2004 (Tuesday) of the notice of hearing of the Omnibus
Motion which was set to be heard on 12 November 2004 (Friday), was within the required minimum three-days
notice. As explained by Retired Justice Jose Y. Feria in his book, Civil Procedure Annotated, when the notice of hearing
should be given:
 The ordinary motion day is Friday. Hence, the notice should be served by Tuesday at the for an inadequate bid of only P4,181,450; and (5) the auction sale involved eight parcels of land covered by individual
latest, in order that the requirement of the three days may be complied with. titles but the same were sold en masse.

If notice be given by ordinary mail, it should be actually received by Tuesday, or if not claimed
from the post office, the date of the first notice of the postmaster should be at least five (5)
days before Tuesday.[16](Emphasis supplied)
WHEREFORE, we GRANT the petition. We SET ASIDE the Decision dated 22 November 2005 and the Resolution
dated 3 March 2006 of the Court of Appeals in CA-G.R. SP No. 89621. We REMAND the case to the Regional Trial
Court, Branch 14, Nasugbu, Batangas to resolve petitioners Motion for Reconsideration and Omnibus Motion on the
merits.
On March 7, 2002, Judge Adelina Calderon-Bargas issued a temporary restraining order preventing
Angeles from consolidating her ownership to the foreclosed properties. On even date, petitioner and Angeles executed
a Compromise Agreement wherein petitioner agreed to pay Angeles the bid price of the eight parcels of land within 20
days. The parties then filed a Motion to Approve Compromise Agreement.[4]
On April 1, 2002, petitioner filed an Urgent Ex-Parte Motion to Recall Compromise Agreement[5] since the
other property owner and other trustees of petitioner were not consulted prior to the signing of the agreement.
Angeles opposed the motion.

SO ORDERED. On May 2, 2002, Judge Calderon-Bargas issued an Order,[6] which reads in part:
xxxx
SECOND DIVISION
Record shows that the Urgent Ex-Parte Motion to Recall Compromise Agreement
KKK FOUNDATION, INC., G.R. No. 163785 and Motion to Approve Compromise Agreement both failed to comply with Sec[s]. 4 and 5,
Petitioner, Rule 15 of the Civil Procedure. Both proceedings have no specific date of hearing. The reason
Present: why the Motion to Approve Compromise Agreement up to now has not yet been acted upon
was that it has no date of hearing.
QUISUMBING, J., Chairperson,
- versus - CARPIO, WHEREFORE, the Urgent Ex-Parte Motion to Recall Compromise Agreement and
CARPIO MORALES, the Motion to [Approve] Compromise Agreement are considered mere scrap[s] of paper.
TINGA, and
VELASCO, JR., JJ.
SO ORDERED.
HON. ADELINA CALDERON-BARGAS, in her capacity as Presiding Judge of
the REGIONAL TRIAL COURT, Branch 78 of Morong, Rizal, SHERIFF IV
SALES T. BISNAR, THE REGISTER OF DEEDS FOR MORONG, RIZAL, and
IMELDA A. ANGELES, Promulgated: In its Decision[7] dated June 28, 2002, the trial court approved the Compromise Agreement, as follows:
Respondents.
The parties, duly assisted by their respective counsels, submitted before this
Court a Compromise Agreement, as follows:

December 27, 2007 xxxx

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
[1.] The plaintiff shall pay to the defendant, Imelda Angeles, the amount of
P5,500,000.00 representing the bid price for all the eight titles (TCT Nos. M-
DECISION
95417, 95419, 95418, 95420, 95421, 50889, 50890 and 50893) subject of the
auction sale dated March 7, 2001 plus whatever taxes [and/or] assessments and
QUISUMBING, J.: expenses of the public auction as prescribed under Act 3135, within twenty (20)
days from the signing of this compromise agreement. Said payment shall be
In this petition for review under Rule 45 of the Rules of Court, petitioner urges this Court to reverse and set considered full settlement of all obligations stated under that Real Estate
aside the Decision[1] dated November 28, 2003, and the Resolution[2] dated May 26, 2004, of the Court of Appeals in Mortgage, dated July 15, 1997and that Deed of Assumption of Mortgage
CA-G.R. SP No. 73965. dated August 11, 1999.

The antecedent facts are as follows:
On March 1, 2002, petitioner KKK Foundation, Inc. filed a complaint for Annulment of Extra-judicial
Foreclosure of Real Estate Mortgage and/or Nullification of Sheriffs Auction Sale and Damages with Prayer for the
Issuance of Temporary Restraining Order and/or Writ of Preliminary Injunction. [3] Petitioner alleged that: (1) the
auction sale was made with fraud and/or bad faith since there was no public bidding; (2) the sheriff did not post the
requisite Notice of Sheriffs Sale; (3) the petition for extrajudicial foreclosure was fatally defective since it sought to
foreclose properties of two different entities; (4) the foreclosed properties were awarded and sold to Imelda A. Angeles
2. Upon the payment of the afore-stated amount, the defendant shall make, sign,
execute and deliver to the plaintiff a Certificate of Deed of Redemption of all the
above titles, and shall surrender and deliver to the plaintiff all the eight titles
mentioned above. The defendant shall also make, sign, execute and deliver to
the plaintiff a Deed of Cancellation of Mortgage annotated at the back of all the
eight titles above-mentioned. The defendant shall also return to the plaintiff all
checks issued by the plaintiff to the defendant as payment of its obligations.
xxxx
 Finding the Compromise Agreement quoted above to be not contrary to law,
morals, good customs and public policy, the same is hereby APPROVED.
xxxx
Angeles then moved for the issuance of a writ of execution. OnSeptember 9, 2002, the trial court required
petitioner to comment on the motion within ten (10) days.[8] On October 3, 2002, the trial court directed the Clerk of
Court to issue a writ of execution.[9] On the same date, the trial court received petitioners Motion for Extension of Time
to File Comment with Entry of Appearance which was denied on October 10, 2002.[10]Petitioner then moved for
reconsideration of the October 3, 2002 Order.
Petitioner came to the Court of Appeals via petition for certiorarialleging that Judge Calderon-Bargas
committed grave abuse of discretion amounting to lack or excess of jurisdiction when: (1) she issued the October 3,
2002 and the October 10, 2002 Orders even before petitioner could file its comment; (2) she granted the Motion for
Issuance of Writ of Execution although it lacked the requisite notice of hearing; and (3) the writ of execution changed
the tenor of the decision dated June 28, 2002.
In dismissing the petition, the appellate court ruled that petitioner was not deprived of due process when the
trial court issued the October 3, 2002 and the October 10, 2002 Orders since it was given sufficient time to file its comment.
The appellate court did not rule on the second and third issues after noting that petitioners motion for reconsideration of
the October 3, 2002 Order had not yet been resolved by the trial court. It did not resolve the issues even after the trial court
denied petitioners motion for reconsideration on December 12, 2003,[11] ratiocinating that the trial courts denial of
petitioners motion for reconsideration did not operate to reinstate the petition because at the time it was filed, petitioner
had no cause of action.
In the instant petition before us, petitioner alleges that the appellate court seriously erred:
I.
IN NOT HOLDING THAT PETITIONER WAS DENIED THE REQUISITE PROCEDURAL DUE
PROCESS WHEN PUBLIC RESPONDENT ISSUED THE QUESTIONED ORDERS OF OCTOBER
3, 2002 AND OCTOBER 10, 2002 EVEN BEFORE PETITIONER COULD FILE ITS COMMENT
AND IN FURTHER ISSUING THE WRIT OF EXECUTION EVEN BEFORE THE RESOLUTION OF
THE PETITIONERS MOTION FOR RECONSIDERATION OF THE ORDER OF OCTOBER 3,
2002.
II.
IN NOT HOLDING THAT PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION WHEN IT GRANTED PRIVATE RESPONDENTS MOTION FOR ISSUANCE OF
WRIT OF EXECUTION ALTHOUGH THE SAME WAS FILED WITHOUT AN ACCOMPANYING
NOTICE OF HEARING.
III.
IN NOT HOLDING THAT PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION IN NOT HOLDING THAT EVEN ASSUMING THAT THE DECISION RENDERED
IN ACCORDANCE WITH THE COMPROMISE AGREEMENT IS VALID AND BINDING UPON
THE PETITIONER, THE WRIT OF EXECUTION ISSUED PURSUANT THERETO IS VOID AS IT
VARIES THE TENOR OF THE JUDGMENT.[12]
Simply, the issues are whether the trial court seriously erred: (1) in issuing the October 3, 2002 and the
October 10, 2002 Orders without awaiting petitioners comment; (2) in granting the Motion for Issuance of Writ of
Execution although it lacked the requisite notice of hearing; and (3) in issuing the writ of execution since it varied the
tenor of the decision dated June 28, 2002.
Petitioner contends that it was denied due process when the trial court granted Angeless Motion for
Issuance of Writ of Execution on October 3, 2002, despite its receipt of petitioners Motion for Extension of Time to File
Comment with Entry of Appearance on the same day. Further, Sheriff Sales T. Bisnar served upon petitioner the Notice
to Settle and/or Pay the Compromise Judgment Amount although its motion for reconsideration of the October 3,
2002 Order was still pending. Petitioner also argues that Angeless Motion for Issuance of Writ of Execution lacked the
requisite notice of hearing. Finally, petitioner claims that the writ of execution varied the tenor of the decision
dated June 28, 2002.
Respondent Angeles counters that petitioner was not denied due process since it was given ten (10) days to
comment on the Motion for Issuance of Writ of Execution which period had lapsed without petitioner filing any comment.
Petitioner filed its Motion for Extension of Time to File Comment with Entry of Appearance only after the reglementary period
had expired. Angeles further contends that the Motion for Issuance of Writ of Execution contained the requisite notice of
hearing. Finally, she argues that the writ of execution did not vary the tenor of the decision dated June 28, 2002.
On the first issue, we note that in its September 9, 2002 Order, the trial court gave petitioner ten (10) days to
file its comment to Angeless Motion for Issuance of Writ of Execution. While petitioner claims that it received the Order
only on September 21, 2002, Angeles counters that petitioner received it on September 12, 2002. We are more inclined to
believe Angeless allegation since the trial court itself declared in its Order dated October 10, 2002 that the Order
dated September 9, 2002 was personally served upon petitioner on September 12, 2002.[13] Thus, petitioner had until
September 22, 2002 within which to file its comment or to request for an extension of time. Consequently, petitioners
motion for extension and comment were not seasonably filed and such procedural lapse binds petitioner.
Anent the second issue, we have consistently held that a motion which does not meet the requirements of
Sections 4 and 5 of Rule 15[14] of the Rules of Court is considered a worthless piece of paper, which the Clerk of Court has no
right to receive and the trial court has no authority to act upon.[15] Service of a copy of a motion containing a notice of the
time and the place of hearing of that motion is a mandatory requirement, and the failure of movants to comply with these
requirements renders their motions fatally defective. However, there are exceptions to the strict application of this
rule.These exceptions are: (1) where a rigid application will result in a manifest failure or miscarriage of justice especially if a
party successfully shows that the alleged defect in the questioned final and executory judgment is not apparent on its face
or from the recitals contained therein; (2) where the interest of substantial justice will be served; (3) where the resolution of
the motion is addressed solely to the sound and judicious discretion of the court; and (4) where the injustice to the adverse
party is not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed.[16]
A notice of hearing is an integral component of procedural due process to afford the adverse parties a chance
to be heard before a motion is resolved by the court. Through such notice, the adverse party is given time to study and
answer the arguments in the motion.[17] Records show that while Angeless Motion for Issuance of Writ of Execution
contained a notice of hearing, it did not particularly state the date and time of the hearing. However, we still find that
petitioner was not denied procedural due process. Upon receiving the Motion for Issuance of Writ of Execution, the trial
court issued an Order dated September 9, 2002 giving petitioner ten (10) days to file its comment. The trial court ruled on
the motion only after the reglementary period to file comment lapsed. Clearly, petitioner was given time to study and
comment on the motion for which reason, the very purpose of a notice of hearing had been achieved.
The notice requirement is not a ritual to be followed blindly. Procedural due process is not based solely on a
mechanical and literal application that renders any deviation inexorably fatal. Instead, procedural rules are liberally construed to
promote their objective and to assist in obtaining a just, speedy and inexpensive determination of any action and proceeding.[18]
On the last issue, we note that the Compromise Agreement approved by the trial court in its Decision
dated June 28, 2002 merely provided that petitioner would pay Angeles the bid price of P5,500,000, for the eight
parcels of land subject of the auction sale, within twenty (20) days. Upon payment, Angeles would execute a Certificate
of Deed of Redemption and a Deed of Cancellation of Mortgage, and surrender to petitioner the titles to the eight
parcels of land. Nevertheless, when the trial court issued the writ of execution, the writ gave Sheriff Bisnar the option
to allow the consolidation of the subject real properties in favor of the defendant Imelda Angeles. [19]
Undoubtedly, the writ of execution imposed upon petitioner an alternative obligation which was not
included or contemplated in the Compromise Agreement. While the complaint originally sought to restrain Angeles
from consolidating her ownership to the foreclosed properties, that has been superseded by the Compromise
Agreement. Therefore, the writ of execution which directed Sheriff Bisnar to cause the Register of Deeds of
Morong, Rizal, to allow the consolidation of the subject real properties in favor of the defendant Imelda Angeles is
clearly erroneous because the judgment under execution failed to provide for consolidation.
Because the writ of execution varied the terms of the judgment and exceeded them, it had no validity. The
writ of execution must conform to the judgment which is to be executed, as it may not vary the terms of the judgment
it seeks to enforce. Neither may it go beyond the terms of the judgment sought to be executed. Where the execution is
not in harmony with the judgment which gives it life and exceeds it, it has pro tanto no validity.[20]
WHEREFORE, the instant petition is PARTIALLY GRANTED. The Decision dated November 28, 2003 and
the Resolution dated May 26, 2004 of the Court of Appeals in CA-G.R. SP No. 73965 are MODIFIED such that the writ
of execution issued on October 11, 2002 by Judge Adelina Calderon-Bargas is declared NULL and VOID.
Let this case be REMANDED to the Regional Trial Court of Morong, Rizal, Branch 78, which is
hereby ORDERED to issue another writ of execution against petitioner KKK Foundation, Inc., in conformity with the
Decision dated June 28, 2002 of the trial court. This is without prejudice to filing a new motion for consolidation by
respondent Angeles.
No pronouncement as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 201601 March 12, 2014
MARYLOU CABRERA, Petitioner,
vs.
FELIX NG, Respondent.
DECISION
REYES, J.:
Before this Court is a petition for review on certiorari1 under Rule 45 of the Rules of Court seeking to annul and set aside
the Decision2 dated October 21, 2009 and the Resolution3 dated March 26, 2012 of the Court of Appeals (CA) in CA-
G.R. SP No. 03392. The CA denied the petition for certiorari filed by Marylou Cabrera (petitioner), which assailed the
Order4 dated December 19, 2007 of the Regional Trial Court (RTC) of Mandaue City, Branch 56, in Civil Case No. MAN-
4773.
The Facts
On February 14, 2004, Felix Ng (respondent) filed a complaint for sum of money with the RTC against the petitioner
and her husband Marionilo Cabrera (spouses Cabrera), alleging that the latter issued to him the following: (1)
Metrobank Check No. 0244694 dated June 30, 2002 for the amount of Thirty-One Thousand Pesos (₱31,000.00); (2)
Metrobank Check No. 0244674 dated August 9, 2002 for the amount of Thirty-Eight Thousand Seventy-Four Pesos and
Seventy-Six Centavos (₱38,074.76); and (3) Metrobank Check No. 0244745 dated August 15, 2005 for Two Million Five
Hundred Thousand Pesos (₱2,500,000.00). That when presented for payment, the said checks were all dishonored as
the accounts from which they had been drawn were already closed.
The spouses Cabrera admitted that they issued Metrobank Check No. 0244694 and Metrobank Check No. 0244674 to
the respondent and that the same were dishonored when presented for payment. However, they claimed that they
paid the respondent the amount represented by the said checks through the latter’s son Richard Ng. Further, they deny
having issued Metrobank Check No. 0244745 to the respondent, alleging that the said check was forcibly taken from
them by Richard Ng.
On August 7, 2007, the RTC rendered a Decision,5 which ordered the spouses Cabrera to pay the respondent the
following: (1) Two Million Five Hundred Sixty-Nine Thousand Seventy-Four Pesos (₱2,569,074.00) plus legal interest
from inception of the obligation until fully paid; (2) moral damages in the amount of Fifty Thousand Pesos
(₱50,000.00); (3) attorney’s fees of Twenty Thousand Pesos (₱20,000.00); and (4) litigation expenses in the amount of
Ten Thousand Pesos (₱10,000.00).
On August 8, 2007, the spouses Cabrera received a copy of the RTC Decision dated August 7, 2007. On August 14, 2007,
the spouses Cabrera filed with the RTC a motion for reconsideration,6 which they set for hearing on August 17, 2007.
On even date, the spouses Cabrera sent a copy of their motion for reconsideration to the respondent thru registered
mail; it was actually received by the respondent on August 21, 2007.
The said motion for reconsideration, however, was not heard on August 17, 2007 as the new acting presiding judge of
the said court had just assumed office. On August 28, 2007, the RTC issued a notice,7 which set the said motion for
reconsideration for hearing on September 25, 2007.
On September 20, 2007, the respondent filed an opposition8 to the motion for reconsideration filed by the spouses
Cabrera. The respondent alleged that the said motion for reconsideration is a mere scrap of paper since it violated the
three-day notice requirement. The respondent pointed out that the spouses Cabrera sent to him a copy of their motion
for reconsideration, which was set for hearing on August 17, 2007, via registered mail on August 14, 2007; that he
actually received a copy thereof only on August 21, 2007 – four days after the scheduled hearing thereon.
It appears that the scheduled hearing of the spouses Cabrera’s motion for reconsideration on September 25, 2007 did
not push through. Consequently, on September 26, 2007, the RTC issued another notice,9 which set the said motion for
reconsideration for hearing on October 26, 2007.
On October 26, 2007, the RTC issued an Order,10 which directed the parties to file their additional pleadings, after
which the motion for reconsideration filed by the spouses Cabrera would be deemed submitted for resolution.
On December 19, 2007, the RTC issued an Order11 which denied the motion for reconsideration filed by the spouses
Cabrera. The RTC pointed out that the spouses Cabrera violated Section 4, Rule 15 of the Rules of Court, which
mandates that every motion required to be heard should be served by the movant in such a manner as to ensure its
receipt by the other party at least three days before the date of hearing. Thus:
After a meticulous scrutiny of the records of this case, the court opines that the motion was filed beyond the
reglementary three (3)[-]day period.
As the records bear out, the instant motion was mailed to the plaintiff’s counsel on August 14[, 2007] and was set for
hearing on August 17, 2007. However, the copy of said motion had reached plaintiff’s side and a copy of which was
received by plaintiff’s counsel only on August 17, 2007[,] four (4) days late after it was supposed to be heard. Hence, a
clear blatant violations [sic] of the rule on notice and hearing.12
The RTC further opined that a motion, which fails to comply with the three-day notice requirement is a mere scrap of
paper; it is not entitled to judicial cognizance and would not toll the running of the reglementary period for filing the
requisite pleadings. Accordingly, the RTC held, its Decision dated August 7, 2007 had already become final for failure of
the spouses Cabrera to comply with the three-day notice requirement.
The petitioner then filed a petition for certiorari13 with the CA, alleging that the RTC gravely abused its discretion in
denying her motion for reconsideration. The petitioner pointed out that the RTC did not actually conduct a hearing on
her motion for reconsideration on August 17, 2007;
that her motion for reconsideration was actually heard on October 26, 2007, after the respondent had already filed his
opposition thereto. Thus, the petitioner claimed, the issue of her failure to comply with the three-day notice
requirement had already been rendered moot. In any case, the petitioner asserted, the RTC should have resolved her
motion for reconsideration on its merits rather than simply denying it on mere technicality.
On October 21, 2009, the CA, by way of the assailed Decision,14 denied the petition for certiorari filed by the petitioner.
The CA opined that the RTC did not abuse its discretion in denying the motion for reconsideration filed by the spouses
Cabrera since it merely applied the three-day notice requirement under Section 4, Rule 15 of the Rules of Court. Thus:
It appears that petitioner’s Motion for Reconsideration was set for hearing on 17 August 2007. A copy thereof was
mailed to private respondent on 14 August 2007, and private respondent actually received his copy only on 21 August
2007 or four (4) days after the set date of hearing; and thus, depriving him of the opportunity to oppose the motion.
Respondent court, therefore, correctly held that such motion violated the three (3)-day notice rule; the essence of due
process. Respondent court had applied said rule to the given situation, and of no doubt, mere adherence to the rules
cannot be considered grave abuse of discretion on the part of the respondent court. x x x.15(Citation omitted)
The petitioner sought a reconsideration of the Decision dated October 21, 2009 but it was denied by the CA in its
Resolution16 dated March 26, 2012.
Hence, the instant petition.
The Issue
The sole issue to be resolved by the Court is whether the CA erred in affirming the RTC Order dated December 19,
2007, which denied the motion for reconsideration filed by the spouses Cabrera.
The Court’s Ruling
The petition is meritorious.
Sections 4 and 5, Rule 15 of the Rules of Court provide that:
Sec. 4. Hearing of motion. – Except for motions which the court may act upon without prejudicing the rights of the
adverse party, every written motion shall be set for hearing by the applicant.
Every written motion required to be heard and the notice of the hearing thereof shall be served in such a manner as to
ensure its receipt by the other party at least three (3) days before the date of hearing, unless the court for good cause
sets the hearing on shorter notice.
Sec. 5. Notice of hearing. – The notice of hearing shall be addressed to all parties concerned, and shall specify the time
and date of the hearing which must not be later than ten (10) days after the filing of the motion. (Emphasis ours)
The general rule is that the three-day notice requirement in motions under Sections 4 and 5 of the Rules of Court is
mandatory. It is an integral component of procedural due process.17 "The purpose of the three-day notice requirement,
which was established not for the benefit of the movant but rather for the adverse party, is to avoid surprises upon the
latter and to grant it sufficient time to study the motion and to enable it to meet the arguments interposed therein." 18
"A motion that does not comply with the requirements of Sections 4 and 5 of Rule 15 of the Rules of Court is a
worthless piece of paper which the clerk of court has no right to receive and which the court has no authority to act
upon."19 "Being a fatal defect, in cases of motions to reconsider a decision, the running of the period to appeal is not
tolled by their filing or pendency."20
Nevertheless, the three-day notice requirement is not a hard and fast rule. When the adverse party had been afforded
the opportunity to be heard, and has been indeed heard through the pleadings filed in opposition to the motion, the
purpose behind the three-day notice requirement is deemed realized. In such case, the requirements of procedural due
process are substantially complied with. Thus, in Preysler, Jr. v. Manila Southcoast Development Corporation,21 the
Court ruled that:
The three-day notice rule is not absolute. A liberal construction of the procedural rules is proper where the lapse in the
literal observance of a rule of procedure has not prejudiced the adverse party and has not deprived the court of its
authority. Indeed, Section 6, Rule 1 of the Rules of Court provides that the Rules should be liberally construed in order
to promote their objective of securing a just, speedy and inexpensive disposition of every action and proceeding. Rules
of procedure are tools designed to facilitate the attainment of justice, and courts must avoid their strict and rigid
application which would result in technicalities that tend to frustrate rather than promote substantial justice.
In Somera Vda. De Navarro v. Navarro, the Court held that there was substantial compliance of the rule on notice of
motions even if the first notice was irregular because no prejudice was caused the adverse party since the motion was
not considered and resolved until after several postponements of which the parties were duly notified.
Likewise, in Jehan Shipping Corporation v. National Food Authority, the Court held that despite the lack of notice of
hearing in a Motion for Reconsideration, there was substantial compliance with the requirements of due process where
the adverse party actually had the opportunity to be heard and had filed pleadings in opposition to the motion. The
Court held:
This Court has indeed held time and again, that under Sections 4 and 5 of Rule 15 of the Rules of Court, mandatory is
the requirement in a motion, which is rendered defective by failure to comply with the requirement. As a rule, a motion
without a notice of hearing is considered pro forma and does not affect the reglementary period for the appeal or the
filing of the requisite pleading.
As an integral component of the procedural due process, the three-day notice required by the Rules is not intended for Regional Trial Court (RTC) in Criminal Case No. 12691-2004-C 3 dismissing the charge of estate against respondent
the benefit of the movant. Rather, the requirement is for the purpose of avoiding surprises that may be sprung upon Joaquin Ang; 4
the adverse party, who must be given time to study and meet the arguments in the motion before a resolution of the
court.1âwphi1 Principles of natural justice demand that the right of a party should not be affected without giving it an
The antecedent facts are as follows:
opportunity to be heard.

San Miguel Packaging Products-Metal Closures Lithography Plant (SMC-MCLP) allegedly awarded petitioner an
The test is the presence of opportunity to be heard, as well as to have time to study the motion and meaningfully
exclusive contract to purchase its aluminum-and tin-based scrap materials from 20 March 2003 to 31 January 2004.
oppose or controvert the grounds upon which it is based. x x x22
However, on 23 January 2004, the President of Anlud Metal Recycling Corporation Found that SMC-MCLP’s employee
Conrado Alday had allowed Nenita B. Dela Cruz to load
(Emphasis supplied and citations omitted)

scrap materials in two trucks! owned by respondent Ang, which were then operated by his truck drivers Edjanel Jose
It is undisputed that the hearing on the motion for reconsideration filed by the spouses Cabrera was reset by the RTC Paniergo and Renato Bagauana.
twice with due notice to the parties; it was only on October 26, 2007 that the motion was actually heard by the RTC. At
that time, more than two months had passed since the respondent received a copy of the said motion for
Based on the narration of petitioner, Dela Cruz pretended to be an agent of Anlud Metal Recycling Corporation when
reconsideration on August 21, 2007. The respondent was thus given sufficient time to study the motion and to enable
she arranged for the transport of the scrap materials. She had allegedly coordinated the hauling with Alday, who was
him to meet the arguments interposed therein. Indeed, the respondent was able to file his opposition thereto on
then working for SMC-MCLP. Alday purportedly allowed the trucks driven by Paniergo and Bagaua to enter the plant
September 20, 2007.
and load the scrap materials in the cargoes based on a false representation that the transaction was authorized by
petitioner. Fortunately, the two trucks was not able to leave the premises of SMC-MCLP.
Notwithstanding that the respondent received a copy of the said motion for reconsideration four days after the date
set by the spouses Cabrera for the hearing thereof, his right to due process was not impinged as he was afforded the
Petitioner lodged a Complaint for attempted estafa through falsification of commercial/private document against
chance to argue his position. Thus, the R TC erred in denying the spouses Cabrera's motion for reconsideration based
Alday, Dela Cruz, Paniergo, Bagaua, and respondent Ang. Subsequently, the Investigating Prosecutor caused the filing
merely on their failure to comply with the three-day notice requirement.
with the RTC of an Information for estafa under Article 315, paragraph 2( a) of the Revised Penal Code, which reads as
follows: 5
WHEREFORE, in consideration of the foregoing disquisitions, the instant petition is GRANTED. The Decision dated
October 21, 2009 and the Resolution dated March 26, 2012 of the Court of Appeals in CA-G.R. SP No. 03392, are
That on or about January 23, 2004 at Brgy. Canlubang, in the City of Calamba and within the jurisdiction of this
hereby REVERSED and SET ASIDE. The case is hereby REMANDED to the Regional Trial Court of Mandaue City,
Honorable Court, the above-named accused, conspiring, confederating and mutually helping one another, with intent
Branch 56, to resolve the Motion for Reconsideration filed by the spouses Cabrera on the merits within five (5) days
to defraud by means of fraudulent acts executed prior to or simultaneously with the commission of the fraud, did then
from the finality of this Decision.
there unlawfully, willfully and feloniously pretend to possess business or imaginary transactions by claiming that he has
the authority from complainant Anlud Metal Recycling Corporation to withdraw from San Miguel Corp - Metal Closure
SO ORDERED. Lithography Plant (SMC MCLP), when in truth and in fact they were not and as a consequence, they were able to
withdraw thirty (30) metric tons of Aluminum Scraps from the said SMC-MCLP estimated at more than ₱500,000 using
the name of Anlud Metal Recycling Corporation (ANLUD), which was charged to the latter's account, to its damage and
Republic of the Philippines
prejudice in the amount of PS00,000.
SUPREME COURT
Manila
CONTRARY TO LAW.

FIRST DIVISION
The RTC issued a Warrant of Arrest 6 on 26 October 2004 against Ang and his co-accused. Thereafter, respondent filed
a Petition for Reinvestigation and a Motion for Preliminary Investigation before the City Prosecutor's Office. He also
G.R. No.182157 August 17, 2015
filed with the RTC an Urgent Motion to Suspend Proceedings Pending Reinvestigation and to Recall Order of Arrest
Against Accused Movant Joaquin Ang. 7
ANLUD METAL RECYCLING CORPORATION, as represented by ALFREDO A. DY, Petitioner,
vs.
In its Order dated 20 January 2005, 8 the RTC denied the motion filed by Ang. It ruled that his allegations were not
JOAQUIN ANG, Respondent.
supported by evidence; and that based on the facts of the case, there was a reasonable ground to engender a well-
founded belief that he had committed estafa.
DECISION

SERENO, CJ:
We resolve the Petition for Review 1 filed by petitioner Anlud Metal Recycling Corporation, which assails the Decision
and Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 97124. 2 The CA affirmed the Decision and Order of the
In contrast, on 3 February 2005, the City Prosecutor's Office issued its Resolution on Reconsideration 9 absolving
respondent from the offense charged. It discussed that although he owned the trucks that carried the scrap materials,
the theory of conspiracy had no foundation absent any proof that he had performed any overt act of estafa. It also
highlighted the fact that he was not present at the time of the incident. As a result, the City Prosecutor's Office filed an
Amended Information, 10 which no longer included him as an accused.
Petitioner bewailed the dropping of respondent from the charge. Thus, it filed with the Department of Justice (DOJ) a Petitioner argues that since the CA has already ruled upon this issue, without respondent filing a partial appeal, then
Petition for Review, which the latter granted. 11 According to the DOJ, respondent could not be considered innocent of the latter has already lost its right to question the standing of Anlud ·Metal Recycling Corporation. This argument is
estafa, since (1) his denial was self-serving; (2) he owned the trucks used in loading the scrap materials; (3) he failed to unmeritorious. In the past, the Court has motu propre ascertained the standing of a private offended party to appeal
adduce exculpatory evidence showing that it was Dela Cruz who had commanded the use of his trucks; ( 4) the drivers the dismissal of a criminal case.24
of the trucks were respondent's own; and (5) it can be inferred from the action of the truck drivers that they received
instructions from him. Respondent filed a Motion for Reconsideration, but to no avail. 12 Thus, a Second Amended
In any event, respondent cannot be considered to have waived its argument regarding the personality of petitioner to
Information 13 was filed with the RTC, which already named Ang as one of the accused. On 16 June 2006, respondent
file the instant appeal. In his Comment, respondent cites Republic v. Partisala 25 and asserts that petitioner has no right
sought judicial relief by filing an Omnibus Motion to Determine Probable Cause and to Defer Issuance of Warrant of
to appeal the dismissal of the criminal case absent the participation of the OSG. In its Reply, petitioner responds by
Arrest Until Determination of Probable Cause Is Completed (Omnibus Motion). 14 Petitioner filed its
quoting the ruling of the CA, viz: 26
Comment/Opposition 15 thereto on 7 July 2006. ·

As argued by petitioner, citing the case of Perez v. Hagonoy Rural Bank, Inc., the petitioner, as private complainant,
This time around, the court took a different stance. In its Decision dated 18 September 2006, the RTC dismissed the
has legal personality to impugn the dismissal of the criminal case against the private respondent under Rule 65. As
case against respondent for want of probable cause. It explained that mere ownership of the trucks did not make
private offended party, the petitioner has an interest in the civil aspect of the case; thus, it may file a special civil action
respondent a co-conspirator for estafa. For conspiracy to be appreciated against Ang, the trial court required proof
for certiorari and prosecute the same in its own name without making the People of the Philippines a party. While it is
showing that he knew of the crime, consented to its commission, or performed any of its elements.
only the Solicitor General who may bring or defend actions in behalf of the Republic of the Philippines, or represent the
People or State in criminal proceedings pending in the Supreme Court and the Court of Appeals, the private offended
Petitioner filed a Motion for Reconsideration 16 and a Motion for Inhibition, 17 but both were denied through the RTC party retains the right to bring a special civil action for certiorari in his own name in criminal proceedings before the
Order dated 3 October 2006. 18 The court reiterated in its ruling that "in the resolution of the judicial determination of courts of law.
probable cause, the court is not bound and cannot be bound by the findings of the Secretary of Justice in the existence
of probable cause and hold the accused for trial." 19
Notably, both positions taken by the parties are supported by jurisprudence. It is then proper for this Court to clarify
the standing of a private offended party - in this case, petitioner - to appeal the dismissal of the criminal case against
Unrelenting, petitioner questioned the dismissal of Ang's criminal case before the CA. In its Decision dated 4 December the accused, who in this case is respondent.
2007, and subsequent Resolution dated 13 March 2008, the CA gave due course to the Petition for
Certiorari 20 notwithstanding that Anlud Metal Recycling Corporation had appealed without the participation of the
The real party in interest in a criminal case is the People of the Philippines. Hence, if the criminal case is dismissed by
Office of the Solicitor General (OSG), which was supposed to act on behalf of the People of the Philippines.
the trial court, the criminal aspect of the case must be instituted by the Solicitor General on behalf of the State. 27

However, the petition failed on the merits. Petitioner had argued before the CA that the RTC should not have
As a qualification, however, this Court recognizes that the private offended party has an interest in the civil aspect of
entertained respondent's Omnibus Motion, because its Notice of Hearing was addressed only to the public prosecutor
the case. 28 Logically, the capability of the private complainant to question the dismissal of the criminal proceedings is
and not to petitioner. The CA rejected this argument and ruled that the "absence of a notice to a private prosecutor
limited only to questions relating to the civil aspect of the case. 29 It should ideally be along this thin framework that we
although the public prosecutor has been notified is a matter that is for a trial judge to consider in his sound
may entertain questions regarding the dismissals of criminal cases instituted by private offended parties. Enlarging this
discretion." 21
scope may result in wanton disregard of the OSG's personality, as well as the clogging of our dockets, which this Court
is keen to avoid. Therefore, the litmus test in ascertaining the personality of herein petitioner lies in whether or not the
Petitioner also failed to dispute the RTC's ruling to exclude Ang as an accused in the crime of estafa. According to the substance of the certiorari action it instituted in the CA referred to the civil aspect of the case. 30
CA, since the trial court had conducted an independent evaluation, the fact alone that the latter reversed its earlier
finding of probable cause did not amount to grave abuse of discretion; and any error of the RTC was an error of
Here in this Rule 45 petition, petitioner argues that the RTC erred when it concluded that "there is no evidence of
judgment not correctible by certiorari.
conspiracy against private respondent Ang." Petitioner goes on to enumerate circumstances that collectively amount
to a finding that based on probable cause, respondent conspired with the accused in defrauding Anlud Metal Recycling
Aggrieved, petitioner filed the instant petition before this Court and raised the following contentions: (1) the RTC had Corporation.: 31
no jurisdiction to determine probable cause; (2) it abused its discretion when it entertained respondent's Omnibus
Motion for determination of probable cause despite a defective Notice of Hearing; and (3) it erred in dismissing the
Clearly, petitioner mainly disputes the RTC's finding of want of probable cause to indict Ang as an accused for estafa.
charge of estafa against Ang. In turn, respondent filed a Comment, 22 which included the issue of petitioner's standing
This dispute refers, though, to the criminal, and not the civil, aspect of the case. In Jimenez v. Sorongon 32we similarly
to file this appeal without the participation of the OSG. Petitioner submitted its Reply 23 to refute the allegations of
ruled:
respondent.

RULING OF THE COURT
Petitioner has no personality to appeal the dismissal of the criminal case for estafa before this Court. Before the Court
proceeds with the substantive issues in this case, the procedural issue of petitioner's personality to appeal the dismissal
of the criminal case merits preliminary attention.
In this case, the petitioner has no legal personality to assail the dismissal of the criminal case since the main issue raised
by the petitioner involved the criminal aspect of the case, i.e., the existence of probable cause. The petitioner did not
appeal to protect his alleged pecuniary interest as an offended party of the crime, but to cause the reinstatement of the
criminal action against the respondents. This involves the right to prosecute which pertains exclusively to the People,
as represented by the OSG. (Emphasis supplied)
Given that nowhere in the pleadings did petitioner even briefly discuss the civil liability of respondent, this Court holds
that Anlud Metal Recycling Corporation lacks the requisite legal standing to appeal the discharge of respondent Ang
from the Information for estafa. On this ground alone, the petition already fails. 33
Nonetheless, this Court has already acknowledged the interest of substantial justice, grave error committed by the
judge, and lack of due process as veritable grounds to allow appeals to prosper despite the non participation of the
OSG. 34 But as will be discussed below, petitioner has failed to demonstrate that the petition falls under any of these
exceptions.
The RTC may conduct a judicial determination of probable cause.
Petitioner explains that there are two determinations of probable cause: the first is for the purpose of filing a criminal
information in the court, and the second is for the issuance of a warrant of arrest. Petitioner submits that since the first
kind is executive in nature, then the RTC had absolutely no jurisdiction to determine the existence of probable cause to
hold respondent as an accused in the crime of estafa.
Hence, for petitioner, the RTC grievously erred when it gave due course to the Omnibus Motion of respondent, which
questioned the determination of probable cause by the prosecutor. Respondent counters this argument by alleging
that the RTC may resolve issues brought before it pursuant to the power of the court to administer justice.
Petitioner's interpretation of the rules on the determination of probable cause is inaccurate. Although courts must
respect the executive determination of probable cause, 35 the trial courts may still independently determine probable
cause. They are not irrevocably bound to the determination of probable cause by the prosecutor and the DOJ. 36
The trial court actually has the following options upon the filing of a criminal information: ( 1) immediately dismiss the
case if the evidence on record clearly fails to establish probable cause; (2) issue a warrant of arrest if it finds probable
cause; and (3) order the prosecutor to present additional evidence within five days from notice in case of doubt as to
the existence of probable cause. 37 These options are provided in Rule 112, Section 6 (a) of the Rules of Court, which
reads:
SECTION 6. When warrant of arrest may issue.-" (a) By the Regional Trial Court. -" Within ten ( 10) days from the filing
of the complaint or information, the judge shall personally evaluate the resolution of the prosecutor and its supporting
evidence. He may immediately dismiss the case if the evidence on record clearly fails to establish probable cause. If he
finds probable cause, he shall issue a warrant of arrest, or a commitment order if the accused has already been arrested
pursuant to a warrant issued by the judge who conducted the preliminary investigation or when the complaint or
information was filed pursuant to Section 7 of this Rule. In case of doubt on the existence of probable cause, the judge
may order the prosecutor to present additional evidence within five (5) days from notice and the issue must be resolved
by the court within thirty (30) days from the filing of the complaint of information. (Emphasis supplied)
Indeed, the RTC is allowed to dismiss the charge of estafa against Ang notwithstanding the executive determination of
probable cause by the prosecutor. If we were to construe otherwise, we would be contradicting the basic principle that
"once an information is filed in RTC, any disposition of the case rests already in the sound discretion of the court." 38
Rule 15, Section 5 of the Rules of Court was substantially complied with.
Citing Rule 15, Section 5 of the Rules of Court, petitioner regards the Notice of Hearing appended to respondent's
Omnibus Motion as defective. This is because the notice was addressed only to the public prosecutor and the clerk of
court, and not to the private offended party - petitioner herein. 39
By having a defective Notice of Hearing, petitioner concludes that the Omnibus Motion was a mere scrap of paper,
which the RTC should have instantly disregarded. Thus, when the RTC, as affirmed by the CA, gave due course to the
motion, petitioner believes that its right to due process was oppressed.
Petitioner correctly argues that a notice of hearing must be addressed to all the parties concerned; 40 and that failure to
comply with this directive results in a motion that should be treated as a mere scrap of paper. 41 However, this general
requirement of a valid notice of hearing is one of those procedural rules that admit of various exceptions. 42
In Jehan Shipping Corporation v. National Food Authority, 43 the Court considered the defect in the notice of hearing as
cured, since the adverse party had the opportunity to be heard and had filed pleadings in opposition to the motion. In
particular, the adverse party was able to argue the procedural defects and even ventilate substantial arguments.
This same application has already been echoed in our past decisions. 44 In those cases, the Court observes that the real
purpose behind the requirement of notice of hearing is to afford the adverse parties a chance to be heard before a
motion is resolved by the court. 45 The test is the presence of the opportunity to be heard, as well as to have time to
study the motion and meaningfully oppose or controvert the grounds upon which it is based. 46 Considering the
circumstances of the present case, . we believe that procedural due process has substantially been complied with.
Petitioner filed a Comment/Opposition on 7 July 2006 specifically to oppose the supposedly defective Omnibus Motion
filed by respondent on 16 June 2006. In that pleading, petitioner raised the incompleteness of the Notice of Hearing
and likewise argued about the substantive merits - that probable cause existed to indict Ang as an accused. Thereafter,
the RTC scheduled the hearing for the judicial determination of probable cause on 16 August 2006, but the hearing was
later rescheduled on 30 August 2006. 47 Only after these proceedings had transpired did the trial court issue its assailed
Decision on 18 September 2006 finding a want of probable cause to hold Ang for trial for the crime of estafa.
Thereafter, petitioner filed a Motion for Reconsideration on 2 October 2006, which the RTC denied in its Order dated 3
October 2006.
Based on the sequence of events mentioned above, it is clear that petitioner was given an opportunity to be heard. It
advanced its opposition to the Omnibus Motion when it filed its Comment/Opposition on 7 July 2006 and later on in its
Motion for Reconsideration dated 2 October 2006. From these facts, we conclude that Rule 15, Section 5 of the Rules
of Court on notice of hearing was substantially complied with. Consequently, this Court cannot agree with petitioner
that the latter's right to due process has been denied. In any event, petitioner cannot anchor the reversal of the finding
of want of probable cause on the mere pretext that the Omnibus Motion filed by respondent was just a scrap of paper
as it contained a defective Notice of Hearing. The judicial determination of probable cause may proceed even if the
accused does not file a pertinent motion. As adverted to earlier, the RTC may immediately dismiss the case if the
evidence on record clearly fails to establish probable cause. 48
The RTC did not exceed its jurisdiction when it dismissed the charge of estafa against respondent for want of probable
cause.
In the main, petitioner questions the ruling of the CA, which dismissed its Petition for Certiorari. The CA held that the
RTC did not commit an error of jurisdiction when the latter ruled that the prosecution failed to establish probable cause
against respondent.
Ordinarily, the detennination of probable cause is not lodged with this Court. 49 We emphasize that the viewpoint we
follow must conform to the nature of reviewing a CA decision, which was rendered under Rule 65 of the Rules of Court.
In Hao v. People, [[50] ] we explained that in this situation, the Court is confronted with the question of whether the CA
correctly determined the presence or absence of grave abuse of discretion on the part of the trial court, and not on the
basis of whether the latter's assessment of the incidents before it was strictly legally correct. To recall, grave abuse of
discretion exists when there is an arbitrary or despotic exercise of power due to passion, prejudice or personal hostility;
or a whimsical, arbitrary or capricious exercise of power that amounts to an evasion of or a refusal to perform a positive
duty enjoined by law or to act at all in contemplation of law. 51
In this case, the CA no longer dealt with the particular exhibits relied upon by the RTC to conclude the absence of
probable cause to indict Ang as an accused in the case for estafa. In its rulings, the RTC reasoned as follows: 52
The fact that the accused is the owner of the truck that carried the objects of the crime cannot make him a co-
conspirator in the execution of the crime of estafa. An affirmation of this supposition (sic) open a floodgate for charges
against people, whose only fault was being owners of vehicle used in the commission of the crime.
Petitioner relies on the Memorandum submitted by Ang before the Office of the Provincial Prosecutor of Calamba,
Laguna, on 25 September 2004 to argue that respondent admitted his complicity in the transaction. He purportedly
admitted to the crime when he pleaded: 56
Worse, Alfredo (petitioner's representative) went beyond the bounds of fairness and good faith by maliciously and
recklessly accusing the poor truck drivers Edjanel and Renato of the crime when all they did was to drive the truck for
their employer who had negotiated with San Miguel for the purchase of the scrap material.
This issue was already raised by petitioner in the proceedings below. Unfortunately, neither the RTC nor the CA
discussed this matter.

xxxx
Based on our own appreciation then, we find that nowhere in the above-quoted passage is it indicated that respondent
specifically made a factual admission that he had instructed his drivers to go to the plant, misrepresent that they were
Upon review and examination of the prosecution evidence in the judicial determination of probable cause, there is total
from Anlud Metal Recycling Corporation, and coordinate the hauling of the scrap materials with Alday and Dela Cruz.
absence of any prosecution evidence in their documents (Annexes "A-1" to "A-9") and witnesses' affidavits (Exhibits "A"
An admission must be clear; and in this instance, it must take into account the unwavering position of Ang that he did
& "B") where this Court can logically surmised nor inferred (sic) from any of the proven acts of any of the other accused
not conspire with any of the accused in their alleged scheme to haul scrap materials with the use of his trucks. 57
that Accused Joaquin Ang was in conspiracy with the other accused in their common criminal unity and intent to
defraud Anlud.
All told, we are not inclined to disturb the conclusions of the RTC, as these are based on the evidence on record.
Neither are we in disagreement with the CA, which remarked that the dismissal of the criminal action against Ang is
There was nothing from these documents and affidavits that Accused Joaquin Ang committed, executed or implied
"not fatal to the cause of the public prosecution because such quashal appears to have been issued at the initial stage
any act leading to a conclusion that he knew the commission of the crime or performed any of the elements of the
of the criminal trial process." 58 Considering the foregoing, we rule to sustain the judgments of the courts a quo.
offense to establish that he acted in unison with the other accused. There was no proof that he benefited from the
effects of the crime. There was no proof that he gave his consent to the commission of the alleged crime.
WHEREFORE, the Petition for Review filed by Anlud Metal Recycling Corporation is DENIED. The Court of Appeals
Decision dated 4 December 2007 and subsequent Resolution dated 13 March 2008 in CA G.R. SP. No. 97124, affirming
In view of this (sic) findings, this Court agrees with the observation of the Office of the City Prosecutor of Calamba City
the Regional Trial Court Decision dated 18 September 2006 and Order dated 3 October 2006 in Criminal Case No.
in their Resolution on Reconsideration dated 22 September 2004 that absolved Accused Joaquin Ang. To quote their
12691-04-C are AFFIRMED.
logic and ratio:

SO ORDERED.
The bone of movant's contention dwells on the theory of conspiracy which was the basis of his inclusion as one of the
accused. Indubitably, accused Renato Bagaua and Edjanel Jose were the assigned drivers of his trucks with plate
number UUG 787 and TJL 632 that were chanced upon by the complainant loading scrap materials inside the premises SECOND DIVISION
of San Miguel Corporation-Metal Closure Lithography Plant (SMC-MCLP) sometime in January 23, 2004. A careful
perusal of the evidence adduced by the parties will clearly show that moving was not around at the premises of SMC
G.R. No. 216566, February 17, 2016
MCLP during the time that the other respondents were loading scrap materials on his truck Neither that he executed
any act leading to a conclusion that he has knowledge thereof or performed any of the elements of the offense charged
to show that he acted in unison with the accused. There is also no proof that he benefited, in any manner, from the MAGELLAN AEROSPACE CORPORATION, Petitioner, v. PHILIPPINE AIR FORCE, Respondent.
effects of the crime or gave his consent to the commission thereof.
DECISION
Based on the explanation of the RTC, this Court holds that the CA was correct in not finding grave abuse of discretion
on the part of the trial court.1âwphi1 In referring to the extant facts, the arguments of the parties, as well as logic and MENDOZA, J.:
law, the RTC did not whimsically, arbitrarily, or capriciously ascertain the absence of probable cause.

Probable cause, albeit requiring less evidence than that which would justify a conviction, nevertheless implies the
probability of guilt and requires more than bare suspicion. 53 Given that Ang was implicated in the conspiracy, the trial
court correctly looked into whether respondent performed any overt act as direct or indirect contribution to the
execution of the crime planned to be committed. 54
In this petition1 for review on certiorari under Rule 45 of the Rules of Court, petitioner Magellan Aerospace Corporation
(MAC) seeks the review of the November 18, 2013 Decision2 and January 26, 2015 Resolution3 of the Court of
Appeals (CA) in CA-G.R. CV No. 96589, insofar as they sustained the February 14, 2011 Order4 of the Regional Trial
Court, Branch 211, Mandaluyong City (RTC), in dismissing the complaint5 filed by MAC against the respondent,
Philippine Air Force (PAF).

As held by the RTC, apart from owning the trucks, no other link has been established by the prosecution to hold The Antecedents
respondent as a conspirator in the hauling of the scrap materials. Even in the instant petition, 55 petitioner harps only on
Ang being engaged in scrap trading, owning the trucks, and employing the accused as his truck drivers. Without more, On September 18, 2008, PAF contracted Chervin Enterprises, Inc. (Chervin) for the overhaul of two T76 aircraft engines
none of these depicts any overt act of respondent connected to the accomplishment of estafa. in an agreement denominated as "Contract for the Procurement of Services and Overhaul of Two (2) OV10
Engines."6 Due to its lack of technical capability to effect the repair and overhaul required by PAF, Chervin
commissioned MAC to do the work for US$364,577.00. MAC, in turn, outsourced the overhaul service from another
subcontractor, National Flight Services, Inc. (NFSI). Eventually, the engines were overhauled and delivered to the PAF.
Satisfied with the service, PAF accepted the overhauled engines.7
On December 15, 2008, MAC demanded from Chervin the payment of US$264,577.00 representing the balance of the
contract price. In a letter to the Trade Commission of the Canadian Embassy, dated December 21, 2009, PAF
confirmed that it had already released to Chervin the amount of P23,760,000.00, on November 7, 2008, as partial
payment for the overhaul service, and that it withheld the amount of P2,376,000.00 as retention fund. 8
Notwithstanding the release of funds to Chervin, MAC was not paid for the services rendered despite several demands.
Unpaid, MAC demanded from PAF the release of the retained amount. In a letter, dated March 3, 2010, however, PAF
rejected the demand and informed MAC that the amount could not be released as it was being held in trust for
Chervin.9
On July 6, 2010, MAC filed a complaint10 for sum of money before the RTC against Chervin together with its Managing
Director, Elvi T. Sosing (Sosing), and the PAF. It prayed that Chervin be ordered to pay the amount of US$264,577.00,
plus 12% legal interest from January 15, 2009 until full payment; that in the event of failure of Chervin to pay the
amount claimed, PAF be ordered to pay the said amount with interest and to release the retained amount of
P2,376,000.00 plus attorneys fees and litigation expenses amounting to P500,000.00; and that the defendants pay the
costs of suit. MAC alleged that Chervin merely acted as an agent of PAF.
On August 24, 2010, PAF moved to dismiss the complaint averring that its contract with Chervin was one for repair and
overhaul and not for agency; that it was never privy to any contract between Chervin and MAC; and that it already paid
Chervin on January 22, 2009, and on July 13, 2010 in full settlement of its obligations. 11
Chervin also asked the RTC to dismiss the complaint against them asserting that MAC had no capacity to sue because
of its status as a nonresident doing business in the Philippines without the required license, and that no disclosure was
made that it was suing on an isolated transaction which would mean that the real party-in-interest was not MAC, but
NFSI.12
On February 14, 2011, the RTC granted both motions to dismiss and ordered the dismissal of the complaint filed by
MAC. The decretal portion of the said order reads:
WHEREFORE, finding defendants CHERVIN ENTERPRISES, INC. AND ELVI T. SOSING, and public
defendant PHILIPPINE AIR FORCE'S motions to be impressed with merit, the same are hereby GRANTED.
SO ORDERED.13ChanRoblesVirtualawlibrary
Aggrieved, MAC appealed before the CA.
On November 18, 2013, the CA partly granted MAC's appeal by reversing the RTC order of dismissal of the complaint
against Chervin and Sosing. It, however, affirmed the dismissal of the complaint against PAF. The CA explained that
MAC failed to show that PAF had a correlative duty of paying under the overhauling contract as it was obvious that the
contract was executed only between MAC and Chervin. Thus, the CA disposed:
We PARTIALLY GRANT the appeal, and REVERSE the Order dated 14 February 2011 of the Regional Trial Court,
Branch 211, Mandaluyong City, insofar as it dismissed the Complaint against defendants-appellees Chervin
Enterprises, Inc., and Elvi T. Sosing. We REMAND the case to the RTC for the continuation of proceedings against said
defendants-appellees.
IT IS SO ORDERED.14ChanRoblesVirtualawlibrary
MAC moved for a partial reconsideration of the decision but its motion was denied by the CA in its January 26, 2015
Resolution.
Persistent, MAC filed this petition citing the following
GROUNDS IN SUPPORT OF THE PETITION
I. THE COURT OF APPEALS ERRED IN RULING THAT THE COMPLAINT DOES NOT STATE A CAUSE OF
ACTION AGAINST RESPONDENT PAF, WHEN THE COMPLAINT CLEARLY AND SUFFICIENTLY
ALLEGED ULTIMATE FACTS THAT WILL SHOW AND SUPPORT SUCH CAUSE OF ACTION.
II. THE COURT OF APPEALS DECIDED IN A MANNER CONTRARY TO LEGAL PRECEDENT WHEN IT
RULED THAT THERE WAS NO AGENCY RELATIONSHIP BETWEEN RESPONDENT PAF AND
CHERVIN/SOSING, AND DISMISSED THE COMPLAINT BASED ON FAILURE TO STATE A CAUSE OF
ACTION.
III. THE COURT OF APPEALS DECIDED IN A MANNER CONTRARY TO LAW AND LEGAL PRECEDENT
WHEN IT FAILED TO CONSIDER THAT RESPONDENT PAF'S MOTION TO DISMISS VIOLATED THE
MANDATORY RULE ON NOTICE FOR MOTIONS AND SHOULD NOT HAVE BEEN TAKEN
COGNIZANCE BY THE RTC IN THE FIRST PLACE.15
MAC prays that its complaint against PAF be reinstated and that this Court rule that (1) the CA erred in finding that the
complaint against PAF failed to sufficiently state a cause of action; (2) the conclusion of the CA that no agency
relationship existed between PAF and Chervin is premature as such conclusion can only be had after the trial on the
merits is conducted; and (3) PAF violated the three-day notice rule relative to the motion to dismiss filed before the
RTC.
The Court's Ruling
The Court denies the petition.
Cause of action is defined as an act or omission by which a party violates a right of another.16 In pursuing that cause, a
plaintiff must first plead in the complaint a "concise statement of the ultimate or essential facts constituting the cause
of action."17 In particular, the plaintiff must show on the face of the complaint that there exists a legal right on his or her
part, a correlative obligation of the defendant to respect such right, and an act or omission of such defendant in
violation of the plaintiffs rights.18
Such a complaint may, however, be subjected to an immediate challenge. Under Section 1(g), Rule 16 of the Rules of
Court (Rules), the defendant may file a motion to dismiss "[w]ithin the time for but before filing the answer to the
complaint or pleading asserting a claim" anchored on the defense that the pleading asserting the claim stated no cause
of action.19
In making such challenge, the defendant's issue is not whether a plaintiff will ultimately prevail, but whether the
claimant is entitled to offer evidence to support the claims.20 It has nothing to do with the merits of the case. "Whether
those allegations are true or not is beside the point, for their truth is hypothetically admitted by the motion." 21 The
inquiry is then limited only into the sufficiency, not the veracity of the material allegations.22 Thus, if the allegations in
the complaint furnish sufficient basis on which it can be maintained, it should not be dismissed regardless of the
defense that may be presented by the defendants.23 Conversely, the dismissal of the complaint is permitted if the
allegations stated therein fail to show that plaintiff is entitled to relief.
Accordingly, the survival of the complaint against a Rule 16 challenge depends upon the sufficiency of the averments
made. In determining whether an initiatory pleading sufficiently pleads, the test applied is whether the court can
render a valid judgment in accordance with the prayer if the truth of the facts alleged is admitted. 24

In this case, MAC seeks the Court's attention to the following allegations in the complaint as cited in the petition:
5. On or about 18 September 2008, defendant PAF contracted defendant Chervin for the overhaul of two (2) T76
aircraft engines, with serial numbers GE-00307 and GE-00039, respectively.
6. Defendant Chervin did not and does not have the capacity, technical skilled personnel or tools to directly perform
the overhaul of aircraft engines. In order to perform the overhaul services, defendant Chervin and its Managing
Director/Proprietor, defendant Sosing, acting for and on behalf or for the benefit of defendant PAF, commissioned
plaintiff to perform the services and to overhaul the subject aircraft engines for the price of US$364,577.00.
xxx
10. Meanwhile, on or about 7 November 2008, defendant PAF released the amount of Twenty Three Million Seven
Hundred Sixty Thousand Pesos (£23,760,000.00) to its agents, defendants Chervin and Sosing, as payment of 90% of
the total price of the overhaul services. Defendant PAF retained a 10% retention fund in the amount of Two Million
Three Hundred Seventy Six Thousand Pesos (P2,376,000.00). A copy of defendant PAF's letter dated 21 December
2009 to Trade Commissioner of the Canadian Embassy, affirming the PAF's release and retention of the aforestated
sums of money, is attached hereto as Annex "I".
11. However, notwithstanding defendant PAF's release of funds covering 90% payment for the repair of the subject
aircraft engines, defendant PAF's agents - defendants Chervin and Sosing - did not pay plaintiff for the services
rendered, leaving an indebtedness to plaintiff in the amount of Two Hundred Sixty Four Thousand Five Hundred
Seventy Seven US Dollars (US$264,577.00).
xxx
18. Meanwhile, plaintiff also sent to defendant PAF - as the principal of defendants Chervin and Sosing, and the
beneficiary of plaintiffs overhaul and repair services which were commissioned by defendants Chervin and Sosing for
and on its behalf - a demand letter dated 26 January 2010, demanding the release of the 10% retention amount of Two
Million Three Hundred Seventy Six Thousand Pesos (P2,376,000.00) directly to plaintiff, as partial payment of the
amount owed to it. A copy of plaintiffs demand letter to defendant PAF is attached hereto as Annex "M".
19. However, in a reply letter dated 3 March 2010, defendant PAF rejected plaintiffs demand, alleging that 'the amount
of retention money (P2,376,000.00) withheld by the PAF is kept in trust for Chervin Enterprises who is the owner
thereof. A copy of defendant PAF's reply letter dated 3 March 2010 is attached hereto as Annex "N".
20. As defendants Chervin's and Sosing's principal, defendant PAF must comply with all the obligations which its
agents, defendants Chervin and Sosing, may have contracted within the scope of their authority (Article 1910, Civil
Code of the Philippines). These obligations include paying plaintiff in full for the overhaul and repair services performed
on defendant PAF's aircraft engines, which services were commissioned by defendants Chervin and Sosing for and on
behalf of defendant PAF.
21. Hence, as the principal of defendants Chervin and Sosing, and the beneficiary of plaintiffs overhaul and repair
services, defendant PAF must be made answerable for defendants Chervin's and Sosing's failure to pay plaintiff.
Therefore, as an alternative cause of action in the event that the First Cause of Action is not and/or cannot be fully
satisfied by defendants Chervin and Sosing, defendant PAF must be held liable for the outstanding amount of Two
Hundred Sixty Four Thousand Five Hundred Seventy Seven US Dollars (US$264,577.00), plus 12% legal interest
thereon from 15 January 2009 until full payment is received.25ChanRoblesVirtualawlibrary
In essence, MAC asserts that the allegations stating that Chervin "acted for and in behalf of a "principal," PAF, in
tapping its services for the overhaul of the aircraft engines, completed with the requirements of sufficiency in stating
its cause of action against PAF. MAC claims that its allegation of Chervin being "mere agents" of PAF in the overhaul
contract, establishes clearly, under the premise of admitting them as true for purposes of a Rule 16 challenge, its
entitlement to recover from PAF, the latter being the "principal" and "beneficiary."
The Court is not persuaded.
The standard used in determining the sufficiency of the allegations is not as comprehensive as MAC would want to
impress.
The assumption of truth (commonly known as hypothetical admission of truth), accorded under the test, does not
cover all the allegations pleaded in the complaint. Only ultimate facts or those facts which the expected evidence will
support26 are considered for purposes of the test.27 It does not cover legal conclusions or evidentiary facts.
The reason for such a rule is quite simple. The standard requires that "[e]very pleading shall contain in a methodical and
logical form, a plain, concise and direct statement of the ultimate facts on which the party pleading relies for his claim
or defense, as the case may be, omitting the statement of mere evidentiary facts."28 Thus, trial courts need not overly
stretch its limits in considering all allegations just because they were included in the complaint. Evidently, matters that
are required and expected to be sufficiently included in a complaint and, thus, accorded the assumption of truth,
exclude those that are mere legal conclusions, inferences, evidentiary facts, or even unwarranted deductions.
In this case, the averment that Chervin acted as PAF's mere agents in subsequently contracting MAC to perform the
overhauling services is not an ultimate fact. Nothing can be found in the complaint that can serve as a premise of PAF's
status as the principal in the contract between Chervin and MAC. No factual circumstances were alleged that could
plausibly convince the Court that PAF was a party to the subsequent outsourcing of the overhauling services. Not even
in the annexes can the Court find any plausible basis for the assertion of MAC on PAF's status as a principal. Had MAC
went beyond barren words and included in the complaint essential supporting details, though not required to be overly
specific, this would have permitted MAC to substantiate its claims during the trial and survive the Rule 16 challenge. In
short, factual circumstances serving as predicates were not provided, to add to MAC's barren statement concerning
PAF's liability.
What MAC entirely did was to state a mere conclusion of law, if not, an inference based on matters not stated in the
pleading. To clarify, a mere allegation that PAF, as a principal of Chervin, can be held liable for nonpayment of the
amounts due, does not comply with the ultimate fact rule. Without the constitutive factual predicates, any assertion
could never satisfy the threshold of an ultimate fact.
Not being an ultimate fact, the assumption of truth does not apply to the aforementioned allegation made by MAC
concerning PAF. Consequently, the narrative that PAF can be held liable as a principal in the agreement between
Chervin and MAC cannot be considered in the course of applying the sufficiency test used in Section 1(g) Rule 16. It,
therefore, produces no link to the alleged PAF's correlative duty to pay the amounts being claimed by MAC - a
necessary element of a cause of action that must be found in the pleading.
Lacking that essential link, and after hypothetically admitting the truth of all the allegations other than those that are
ought to be excluded for not being ultimate facts, it is demonstrable that the CA correctly ruled for the dismissal of the
complaint on the ground of MAC s failure to state its cause of action against PAF.
The foregoing discussion makes plain that the CA did not act prematurely in dismissing the complaint. To reiterate, in a
motion to dismiss filed under Section 1(g) of Rule 16, the issue is not whether the plaintiff is entitled to relief. Instead,
the issue is simply whether the plaintiff, on the basis of the allegations hypothetically admitted as true, can be
permitted to substantiate the claims during the trial. The trial court only passes upon the issue on the basis of the
allegations in the complaint assuming them to be true and does not make any inquiry into the truth of the allegations
or a declaration that they are false.29
Perhaps, the CA might have been misunderstood as, indeed, the tenor of its decision apparently gave an untimely
conclusion that no agency relationship existed. Be that as it may, this Court affirms the findings of the CA - that the
order of dismissal of MAC s complaint against PAF is proper.
Proceeding now to whether PAF violated the three-day notice rule relative to its motion to dismiss filed before the
RTC, it has been repeatedly held that the three 3-day notice requirement in motions under Sections 4 and 5, Rule 15 of
the Rules of Court as mandatory for being an integral component of procedural due process.30 Just like any other rule,
however, this Court has permitted its relaxation subject, of course, to certain conditions. Jurisprudence provides that
for liberality to be applied, it must be assured that the adverse party has been afforded the opportunity to be heard
through pleadings filed in opposition to the motion. In such a way, the purpose behind the three-day notice rule is
deemed realized. In Anama v. Court of Appeals,31 the Court explained:
In Somera Vda. De Navarro v. Navarro, the Court held that there was substantial compliance of the rule on notice of
motions even if the first notice was irregular because no prejudice was caused the adverse party since the motion was
not considered and resolved until after several postponements of which the parties were duly notified.
Likewise, in Jehan Shipping Corporation v. National Food Authority, the Court held that despite the lack of notice of
hearing in a motion for reconsideration, there was substantial compliance with the requirements of due process where
the adverse party actually had the opportunity to be heard and had filed pleadings in opposition to the motion. The
Court held:
chanRoblesvirtualLawlibrary
This Court has indeed held time and again, that under Sections 4 and 5 of Rule 15 of the Rules of Court, mandatory is
the requirement in a motion, which is rendered defective by failure to comply with the requirement. As a rule, a motion
without a notice of hearing is considered pro forma and does not affect the reglementary period for the appeal or the
filing of the requisite pleading.32
Here, the Court agrees with the observations of the OSG, representing PAF. Indeed, it is a matter of record that during
the August 21, 2010 scheduled hearing, MAC's counsel did not object to receiving the copy of PAF's motion to dismiss
on the same day. What that counsel did instead was to ask for a period of 15 days within which to file its
comment/opposition to the said motion which the RTC granted. On September 14, 2010, MAC filed its Opposition.33
Clearly, MAC was afforded the opportunity to be heard as its opposition to the motion to dismiss was considered by
the RTC in resolving the issue raised by PAF. Objectively speaking, the spirit behind the three (3)-day notice
requirement was satisfied.
One Final Note
The Court has observed that Chervin was allowed and considered qualified to bid despite the fact that it had no
technical capability to provide the services required by the PAF. It is quite disturbing that after Chervin's initial
subcontracting agreement with MAC, another layer of subcontractor entered the scene so that the overhaul and repair
could be completed. Moreover, it appears that the subcontractors engaged by Chervin are foreign entities.
These arrangements appear to be non-compliant with the rules on subcontracting particularly on disclosure and the
limits on the participation of foreign entities. Under the Government Procurement Policy Board (GPPB) Manual of
Procedures for the Procurement of Goods and Services, subcontracting rules are laid down as follows:
Generally, a supplier may be allowed to subcontract a portion of the contract or project. However, the supplier should
not be allowed to subcontract a material or significant portion of the contract or project, which portion must not
exceed twenty percent (20%) of the total project cost. The bidding documents must specify what are considered as
significant/material component(s) of the project. All subcontracting arrangements must be disclosed at the time of
bidding, and subcontractors must be identified in the bid submitted by the supplier. Any subcontracting
arrangements made during project implementation and not disclosed at the time of the bidding shall not be
allowed. The subcontracting arrangement shall not relieve the supplier of any liability or obligation under the contract.
Moreover, subcontractors are obliged to comply with the provisions of the contract and shall be jointly and severally
liable with the principal supplier, in case of breach thereof, in so far as the portion of the contract subcontracted to it is
concerned. Subcontractors are also bound by the same nationality requirement that applies to the principal
suppliers.34
[Emphases Supplied]
Were the above stated rules adhered to? As the Court has no time and resources to probe into the matter, it is in the
interest of the public that separate investigations be conducted by the Office of the Ombudsman and the Commission
on Audit to find out if the provisions in the Government Procurement Reform Act (Procurement Law) and its
implementing rules and regulations on subcontracting and participation of foreign suppliers of services were complied
with.
If warranted by any initial finding of irregularities, appropriate charges should be filed against the responsible
officers.chanrobleslaw
WHEREFORE, the petition is DENIED.
The Office of the Ombudsman and the Commission on Audit are hereby ordered to investigate and find out if the
provisions in the Procurement Law and its implementing rules and regulations on subcontracting and participation of
foreign bidders were complied with and file the appropriate charges, if warranted.
SO ORDERED.cralawlawlibrary
Carpio, (Chairperson), Del Castillo, Mendoza, and Leonen, JJ., concur.
Brion, J., on leave.chanroblesvirtuallawlibrary
THIRD DIVISION
[G.R. NO. 182673 : October 5, 2009]
AQUALAB PHILIPPINES, INC., Petitioner, v. HEIRS OF MARCELINO PAGOBO, namely: PELAGIO PAGOBO,
GONZALO PAGOBO, ANIANA PAGOBO, ALFREDO SALVADOR, SAMUEL PAGOBO, REMEDIOS PAGOBO,
VALENTINA PAGOBO, JONATHAN PAGOBO, VIRGILIO PAGOBO, FELISA YAYON, SIMPLICIO YAYON,
BARTOLOME YAYON, BERNARDINA YAYON, and ISIDRA YAYON; HEIRS OF HILARION PAGOBO, namely:
PABLO PAGOBO, ALFREDO PAGOBO, FELIX PAGOBO, RUFINA P. DAHIL, BRIGIDA P. GODINEZ, HONORATA P.
GODINEZ, MAXIMO PAGOBO, ADRIANA PAGOBO, CECILIA PAGOBO, LILIA PAGOBO, CRESCENCIO PAGOBO,
ROBERTO PAGOBO, ALFONSO PAGOBO, CANDIDO PAGOBO, BARTOLOME PAGOBO, ELPIDIO PAGOBO,
PEDRO PAGOBO, ROGELIO PAGOBO, SHIRLEY P. CAÑETE, MILAGROS PAGOBO, JUANITO PAGOBO, JR.,
ANTONIO PAGOBO, IRENEA PAGOBO, and ANIANO P. WAGWAG; HEIRS OF ANTONIO PAGOBO, namely:
GAUDENCIO PAGOBO, LOTITA PAGOBO, ERNESTO PAGOBO, ROMANA P. DANIL, FELISA PAGOBO, CARMEN
PAGOBO, and SALUD PAGOBO; HEIRS OF MAXIMO PAGOBO, namely: RAMON PAGOBO, RODULFO PAGOBO,
CRIPSIN PAGOBO, and URBANO PAGOBO; HEIRS OF DONATA PAGOBO WAGWAG, namely: FELISA WAGWAG,
ANASTACIO WAGWAG, FILDEL WAGWAG, and NEMESIA WAGWAG; HEIR OF AQUILINA PAGOBO: VICTOR
PAGOBO; HEIRS OF JUANITO PAGOBO EYAS, namely: MARCELO P. EYAS, ROCHI P. FLORES, and ORDIE P.
FLORES; HEIRS OF CATALINA PAGOBO, namely: RESTITUTO PAGOBO, CARLINA P. TALINGTING, TEOFILO P.
TALINGTING, and JUANITO P. TALINGTING,Respondents.
DECISION
VELASCO, JR., J.:
The Case
In this Petition for Review on Certiorari under Rule 45, Aqualab Philippines, Inc. (Aqualab) assails the March 15, 2007
Decision1 and April 22, 2008 Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No. 58540, which reversed the
September 30, 1997 Order3 of the Regional Trial Court (RTC), Branch 53 in Lapu-lapu City, Cebu. The RTC dismissed
Civil Case No. 4086-L for Partition, Declaration of Nullity of Documents, Cancellation of Transfer Certificate of Titles,
Reconveyance with Right of Legal Redemption, Damages and Attorney's Fees filed by Respondents.
The Facts
Subject of the complaint initiated by respondents are Lots 6727-Q and 6727-Y of the Opon Cadastre, situated in Punta
Engaño, Lapu-lapu City, Mactan Island, Cebu, particularly described as follows:
LOT NO. 6727-Q
A parcel of land (Lot 6727-Q of the subdivision on plan (LRC) Psd-117050, being a portion of Lot 6727 of the Cadastral
Survey of Opon, L.R.C. (GLRO) Cad. Rec. No. 1004), situated in the Barrio of Punta Engaño, City of Lapu-lapu, Island of
Mactan x x x containing an area of ONE THOUSAND (1,000) SQUARE METERS, more or less. All points referred to are
indicated on the plan and marked on the ground as follows: x x x date of the original survey, Aug. 1927 - Dec. 1928, and
that of the subdivision survey, Aug. 7, and 10, 1963, and Sept. 27 and 30, 1967.
LOT NO. 6727-Y
A parcel of land (Lot 6727-Y of the subdivision on plan (LRC) Psd-117050, being a portion of Lot 6727 of the Cadastral
Survey of Opon, L.R.C. (GLRO) Cad. Rec. No. 1004), situated in the Barrio of Punta Engaño, City of Lapu-lapu, Island of
Mactan x x x containing an area of SIXTEEN THOUSAND ONE HUNDRED SIXTY SEVEN (16,167) SQUARE METERS,
more or less. All points referred to are indicated on the plan and marked on the ground as follows: x x x date of the
original survey, Aug. 1927 - Dec. 1928, and that of the subdivision survey, Aug. 7, and 10, 1963, and Sept. 27 and 30,
1967.
Lot 6727-Q and Lot 6727-Y used to form part of Lot 6727 owned by respondents' great grandfather, Juan Pagobo,
covered by Original Certificate of Title No. (OCT) RO-22464 containing an area of 127,436 square meters.
Lot 6727 was once covered by Juan Pagobo's homestead application. Upon his death on January 18, 1947,5 his
homestead application continued to be processed culminating in the issuance on December 18, 1969 of Homestead
Patent No. 128470 for Lot 6727. On the basis of this homestead patent, OCT RO-2246 was issued in the name of Juan
Pagobo. Apparently, from the description of the subdivision lots of Lot 6727, particularly those of subject Lots 6727-Q
and 6727-Y above, and even before the issuance of OCT RO-2246, the mother Lot 6727 was surveyed in 1963 and 1967
and eventually subdivided into 34 subdivision lots denominated as Lots 6727-A to 6727-HH.
Incidentally, on the same date that OCT RO-2246 was issued covering Lot 6727, OCT RO-12776 was likewise issued also
covering Lot 6727 in the name of the late Juan Pagobo also pursuant to Homestead Patent No. 128470. Subsequently,
however, on August 10, 1977, OCT RO-1277 was canceled for being null and void pursuant to an Order issued on August
4, 1977 by the Court of First Instance in Lapu-lapu City in view of the issuance of OCT RO-2246.7
Shortly after OCT RO-1277 and OCT RO-2246 were issued, subject Lots 6727-Q and 6727-Y were subsequently sold to
Tarcela de Espina who then secured Transfer Certificate of Title No. (TCT) 3294 8therefor on April 21, 1970. The
purchase by Tarcela de Espina of subject Lot 6727-Y from the heirs of Juan Pagobo and subject Lot 6727-Q from one
Antonio Alcantara was duly annotated on the Memorandum of Incumbrances of both OCT RO-12779 and OCT RO-
2246.10
Subsequently, Tarcela de Espina sold subject lots to Rene Espina who was issued, on September 28, 1987, TCT
1783011 for Lot 6727-Q and TCT 1783112 for Lot 6727-Y. Thereafter, Rene Espina sold subject lots to Anthony Gaw
Kache, who in turn was issued TCT 1791813 and TCT 18177,14 respectively, on November 9, 1987. Finally, Aqualab
acquired subject lots from Anthony Gaw Kache and was issued TCT 1844215 and TCT 18443,16 respectively, on May 4,
1988.
On August 10, 1994, respondents, alleging that Aqualab has disturbed their peaceful occupation of subject lots in 1991,
filed a Complaint17 for Partition, Declaration of Nullity of Documents, Cancellation of Transfer Certificate of Titles,
Reconveyance with Right of Legal Redemption, Damages and Attorney's Fees against Aqualab, the Register of Deeds of
Lapu-Lapu City, Cebu, and, for being unwilling co-plaintiffs and alleged refusal to have subject lots partitioned, the
Heirs of Bernabe Pagobo, namely: Anastacio Pagobo, Demetrio Pagobo, Felix Pagobo, Olympia P. Tampus, Damasa
Pagobo, Salud P. Maloloy-on, Candida Pagobo, and Adriana P. Mahusay.
The Complaint pertinently alleged that:
ALLEGATIONS COMMON TO ALL CAUSE OF ACTION
4. Plaintiffs are the absolute and legal owners and rightful possessors of Lot [no.] 6727-Q and Lot no. 6727-Y. These are
ancestral lands which are part of a bigger parcel of land, registered in the name of the plaintiffs' great grandfather Juan
Pagobo and more particularly described as follows:
xxx
5. Ownership and Possession by plaintiff's [sic] predecessors-in-interest, and plaintiffs herein, respectively, over the
said land, have been peaceful, continuous [sic] open, public and adverse, since the year 1936 or even earlier. Their
peaceful possession was disturbed only in 1991 as hereinafter described.
xxx
15. In the records with the office of the Registry of Deeds of Lapu-Lapu City, Lot No. 6727 of the Opon Cadastre has
been subdivided in to THIRTY-FOUR (34) lots and are denominated as Lots Nos. 6727-A to 6727-HH, respectively, as
per subdivision plan, a machine copy of which is hereto attached and marked as Annex "A" hereof.
16. Defendants Anastacio Pagobo, x x x are the surviving children and grandchildren, respectively, of the late BERNABE
PAGOBO and are herein joined as party-defendants for being "unwilling co-plaintiffs"; and also because despite
demands by plaintiffs upon these aforenamed defendants for the partition of the aforesaid land, the latter refused and
still refuses to have the same partitioned.
FIRST CAUSE OF ACTION AGAINST DEFENDANT
AQUALAB PHILIPPINES, INC. AND SANTIAGO TANCHAN, JR.
17. Sometime in 1991, defendant Aqualab Philippines Inc. represented by Santiago Tanchan, Jr., claiming ownership of
Lot Nos. 6727-Q and 6727-Y, forcibly entered, and without any court Order, and against the will of the plaintiffs, said
Lot no. 6727-Q and Lot no. 6727-Y. The truth of the matter is that these defendants despite full knowledge that
absolute and legal ownership of Lot no. 6727-Q and Lot no. 6727-Y belonged to plaintiffs, and despite knowledge that
peaceful, public and adverse possession were being continuously exercised by plaintiff over said land for a period in
excess of THIRTY (30) years, did there and then, by the use of fraud and misrepresentation and without informing the
plaintiffs, caused the transfer into the name of defendant Aqualab Philippines Inc., Lot no. 6727-Q and Lot no. 6727-Y,
consisting of an area of ONE THOUSAND (1,000) SQUARE METERS and SIXTEEN THOUSAND ONE HUNDRED SIXTY
SEVEN (16,167) SQUARE METERS, respectively. Lots No. 6727-Q and Lot no. 6727-Y are presently covered by Transfer
Certificate of Titles No. 18442 and CTC No. 18443, respectively, copies of which are hereto attached as Annexes "B"
and "C", respectively.
18. The defendants entered into transactions of the lands subject matter of this case, without the knowledge of
plaintiffs and their predecessors-in-interest, and defendants did so despite full knowledge that ownership of said lands
belonged to plaintiffs and their predecessors-in-interest; and that defendants entered into said transactions despite
full knowledge by them and their predecessors-in-interest that the lots was [sic] covered by a homestead patent and as
such cannot be alienated within twenty-five (25) years from its issuance on February 10, 1970.
SECOND CAUSE OF ACTION
xxx
The CA saw things differently. On March 15, 2007, it rendered the assailed decision, reversing the September 30, 1997
Order of dismissal by the RTC, declaring the sale of subject lots as null and void, and remanding the case to the trial
court for partition proceedings. The fallo reads:
WHEREFORE, in view of the foregoing premises, the Order of the Regional Trial Court dismissing the instant
Complaint for Partition, Declaration of Nullity of Documents, Cancellation of Transfer Certificates of Title,
Reconveyance with Right of Legal Redemption, Damages and Attorney's Fees, and other Reliefs is REVERSED and SET
ASIDE, and the instant appeal is GRANTED, hereby declaring the sale of the homestead and TCT Nos. 18442 and 18443
under the name of Aqualab null and void, and ordering the Register of Deeds for the City of Lapu-lapu to cancel both
certificates of title and to issue new certificates of title over Lots 6727-Q and 6727-Y under the name of appellants, and
let this case be REMANDED to the trial court for the presentation of evidence on the claim for partition and for
damages.

SO ORDERED.23
20. Granting, without necessarily admitting, that the transaction entered into by the defendants are legal and binding;
Plaintiffs then have not been duly notified of the said sale and therefore, have the right to redeem the same under
The CA resolved the following issues: (1) the propriety of the dismissal of the complaint by the RTC; and, (2) whether
Article 1620 in relation to Article 1623 of the New Civil Code, and also under Commonwealth Acts [sic] No. 141, as
respondents have the right to redeem subject lots. The CA ruled that the trial court erred in dismissing the complaint as
amended.18
the sale of subject lots to Tarcela de Espina was void, thus making the subsequent conveyances ineffective and no titles
were validly transferred. Moreover, it ruled that Aqualab is not an innocent purchaser for value, and held that
On August 26, 1994, the heirs of Bernabe Pagobo filed their Answer,19 asserting that subject Lot 6727-Y was owned by respondents, as heirs of the homestead grantee, never lost their valid title to the subject lots.
their predecessor Bernabe Pagobo as evidenced by Tax Declaration No. (TD) 00520. 20They maintained that even
before the Second World War and before the death of Juan Pagobo on January 18, 1947, Bernabe Pagobo already had
Through the equally assailed April 22, 2008 Resolution, the CA denied Aqualab's motion for reconsideration.
possession of subject Lot 6727-Y which was the portion assigned to him. Moreover, they contended that respondents
never made any demands for partition of subject Lot 6727-Y.
Hence, we have this petition.

On September 12, 1994, Aqualab filed its Motion to Dismiss 21 on the grounds of: (1) prescription of the action for
declaration of nullity of documents, cancellation of transfer certificates of title, and reconveyance; and (2) no cause of The Issues
action for partition and legal redemption of the mother title of subject lots, i.e., OCT RO-2246 had already been
subdivided and several conveyances made of the subdivided lots.
(A)

Ruling of the Trial Court

WHETHER OR NOT THE COURT OF APPEALS COMMITTED A RADICAL DEPARTURE FROM THE USUAL AND
ACCEPTED COURSE OF JUDICIAL PROCEEDINGS THAT WOULD WARRANT THE REVERSAL OF THE COURT OF
By Order dated September 30, 1997, the RTC granted Aqualab's motion and dismissed respondents' complaint, APPEALS' DECISION
disposing as follows:

(B)
Wherefore, in the light of the foregoing considerations, defendant Aqualab's motion to dismiss, being impressed with
merit, is hereby granted. The complaint in the above-entitled case is hereby dismissed.
WHETHER OR NOT THE COMPLAINT SHOULD BE DISMISSED COMPLAINT [SIC] ON THE GROUND OF LACK OF
CAUSE OF ACTION
SO ORDERED.22

(C)
In granting Aqualab's motion to dismiss, the trial court ruled that prescription has set in. Moreover, the trial court held
that Aqualab is an innocent purchaser for value and, thus, its rights are protected by law. Finally, it concluded that legal
WHETHER OR NOT THE TRANSFERS OF THE DISPUTED PROPERTY TO HEREIN PETITIONER'S PREDECESSORS-IN-
redemption or reconveyance was no longer available to respondents.
INTEREST WERE VIOLATIVE OF THE FIVE (5) YEAR PROHIBITIVE PERIOD UNDER SECTION 118 OF THE PUBLIC
LAND ACT SO AS TO WARRANT THEIR NULLIFICATION
Undaunted, respondents appealed the above dismissal to the CA. The parties thereafter filed their respective briefs.

(D)
Ruling of the Appellate Court

WHETHER OR NOT THE PETITIONER IS AN INNOCENT PURCHASER IN GOOD FAITH

(E) Moreover, the trial court, also relying on Tenio-Obsequio, agreed with Aqualab's assertion that it was an innocent
purchaser for value, which merely relied on the correctness of the TCTs covering subject lots, i.e., TCT 17918 and TCT
18177 in the name of Anthony Gaw Kache, and, as such, Aqualab, as vendee, need not look beyond the certificate of
WHETHER OR NOT THE RESPONDENTS' CAUSE OF ACTION HAS PRESCRIBED WARRANTING THE DISMISSAL OF
title and investigate the title of the vendor appearing on the face of said titles.
THEIR COMPLAINT ON THE GROUND OF PRESCRIPTION

(F)
WHETHER OR NOT THE RESPONDENTS' COMPLAINT CONSTITUTES A COLLATERAL ATTACK AGAINST THE
TITLES OF HEREIN PETITIONER'S PREDECESSORS-IN-INTEREST WARRANTING THE DISMISSAL THEREOF
Finally, the trial court concluded that respondents cannot invoke legal redemption under Article 1620 in relation to Art.
1623 of the Civil Code and under Commonwealth Act No. (CA) 141, as amended, 27 for Lot 6727 had already been
divided into subdivision lots, the subject of numerous transactions. Besides, it reasoned that legal redemption under
CA 141 is only applicable to cases of proper conveyance of a land covered by a homestead patent, but not, as in the
instant case, when the conveyances were assailed to be improper.

(G) Aqualab Hypothetically Admitted the Fraudulent Conveyances

and Respondents' Possession of Subject Lots
WHETHER OR NOT THE RESPONDENTS' APPEAL BEFORE THE COURT OF APPEALS SHOULD HAVE BEEN
DISMISSED IN VIEW OF THE RESPONDENTS' ADMISSION THAT THE CONVEYANCE OF THE DISPUTED PROPERTY Respondents aver that they are the absolute and lawful owners of subject properties, i.e., Lots 6727-Q and 6727-Y, over
TO HEREIN PETITIONER WAS VALID which they have had actual possession since 1936 or earlier until sometime in 1991, when Aqualab disturbed such
possession.28 While the records show that respondents did not have in their names the certificate of titles over subject
(H) lots, the factual assertion of open, peaceful, public, and adverse possession is hypothetically admitted by Aqualab.

WHETHER OR NOT THE COURT OF APPEALS DEPRIVED THE PETITIONER OF ITS PROPERTY WITHOUT DUE
PROCESS OF LAW WHEN IT NULLIFIED THE PETITIONER'S TITLE AND OWNERSHIP OVER SUBJECT PROPERTY
WITHOUT TRIAL THEREBY DEPRIVING THE PETITIONER OF ITS PROPERTY WITHOUT DUE PROCESS OF LAW 24
The Court's Ruling
Moreover, respondents allege that the conveyances of subject lots were fraudulently made in violation of the
restrictions on alienation of homesteads under CA 141, and that said conveyances were made without their knowledge
and, thus, asserting their right to redeem the subject properties in line with the policy of CA 141 that the homestead
should remain with the grantee and his family.29 The alleged fraudulent conveyances were likewise hypothetically
admitted by Aqualab.

The petition is partly meritorious.
The core issues raised in the instant petition are factual in nature and can be summed up into two: first, whether the
action of respondents is barred by prescription; and second, whether Aqualab is an innocent purchaser for value.
On the other hand, Aqualab's co-defendants, the heirs of Bernabe Pagobo, to respondents' complaint, filed their
Answer asserting possession and ownership over subject Lot 6727-Y by submitting TD 00520 to prove payment of the
real estate tax thereon. However, on the allegation of disturbance of possession and fraudulent conveyances without
knowledge of respondents, the heirs of Bernabe Pagobo merely maintained that they had no knowledge and
information sufficient to form a belief as to the truth thereof.

Hypothetical Admission of Factual Allegations It is, thus, clear that by filing its motion to dismiss, Aqualab hypothetically admitted the veracity of respondents'
in the Complaint by Filing a Motion to Dismiss continuous possession of subject lots until 1991 when Aqualab disturbed such possession. Aqualab likewise
hypothetically admitted the fraudulent and illegal conveyances of subject lots.

In filing a motion to dismiss, the movant hypothetically admits the truth of the material and relevant facts alleged and
pleaded in the complaint. The court, in resolving the motion to dismiss, must consider such hypothetical admission, the In its Motion to Dismiss, Aqualab moved for the dismissal of respondents' complaint on the ground of prescription, that
documentary evidence presented during the hearing thereof, and the relevant laws and jurisprudence bearing on the it is an innocent purchaser for value whose rights are protected by law, and that the complaint failed to state a cause of
issues or subject matter of the complaint. action for partition and legal redemption.

Dismissal by Trial Court on Prescription and Prescription Is Not Apparent

Finding Defendant an Innocent Purchaser for Value on the Face of the Complaint

The trial court ruled that prescription has set in, since respondents alleged in the complaint fraud and
misrepresentation in procuring the transfer of subject lots, and such transfer was made on April 21, 1970, while the
instant complaint was filed only on August 10, 1994, or a little over 24 years. Relying on Buenaventura v. Court of
Appeals,25 where the Court held that an action for reconveyance of title due to fraud is susceptible to prescription either
within four or 10 years, the trial court held that the instant action is definitely barred. It also ruled that even if a
constructive trust was created as averred by respondents, still, the instant action has prescribed for a constructive trust
prescribes in 10 years, relying on Tenio-Obsequio v. Court of Appeals.26
From the foregoing premises, the trial court erred in finding prescription. Prescription, as a ground for a motion to
dismiss, is adequate when the complaint, on its face, shows that the action has already prescribed. 30 Such is not the
case in this instance. Respondents have duly averred continuous possession until 1991 when such was allegedly
disturbed by Aqualab. Being in possession of the subject lots'hypothetically admitted by Aqualab respondents' right to
reconveyance or annulment of title has not prescribed or is not time-barred.
Verily, an action for annulment of title or reconveyance based on fraud is imprescriptible where the plaintiff is in
possession of the property subject of the acts.31 And the prescriptive period for the reconveyance of fraudulently
registered real property is 10 years, reckoned from the date of the issuance of the certificate of title, if the plaintiff is
not in possession.32 Thus, one who is in actual possession of a piece of land on a claim of ownership thereof may wait
until his possession is disturbed or his title is attacked before taking steps to vindicate his right. 33
In the instant case, as hypothetically admitted, respondents were in possession until 1991, and until such possession is
disturbed, the prescriptive period does not run. Since respondents filed their complaint in 1994, or three years after
their possession was allegedly disturbed, it is clear that prescription has not set in, either due to fraud or constructive
trust.
Indeed, to sustain a motion to dismiss for lack of cause of action, the complaint must show that the claim for relief does
not exist rather than that a claim has been defectively stated or is ambiguous, indefinite, or uncertain. 42 However, a
perusal of respondents' Complaint before the RTC, in light of Aqualab's motion to dismiss which hypothetically
admitted the truth of the allegations in the complaint, shows that respondents' action before the RTC has sufficiently
stated a cause of action. Hypothetically admitting fraud in the transfers of subject lots, which indisputably were first
transferred in apparent violation of pertinent provisions in CA 141 prohibiting alienation of homesteads within five
years from the grant of the homestead patent, and the continuing possession of respondents until 1991 of the subject
lots, the action for reconveyance and nullification filed in 1994 not only sufficiently stated a cause of action but also has
not yet prescribed.

Besides, if the plaintiff, as the real owner of the property, remains in possession of the property, the prescriptive period
to recover title and possession of the property does not run against him. In such a case, an action for reconveyance, if
nonetheless filed, would be in the nature of a suit for quieting of title, an action that is imprescriptible. 34
Republic of the Philippines
Supreme Court
Thus, the trial court's reliance on Buenaventura35 and Tenio-Obsequio36 for prescription on the right of reconveyance
Manila
due to fraud and constructive trust, respectively, is misplaced, for in both cases, the plaintiffs before the trial court
were not in possession of the lots subject of their action.
THIRD DIVISION

Aqualab Not an Innocent Purchaser for Value Due to the Hypothetically Admitted Respondents' Possession of
Subject Lots THE MUNICIPALITY OF HAGONOY, BULACAN, represented by the HON. G.R. No. 168289
FELIX V. OPLE, Municipal Mayor, and FELIX V. OPLE, in his personal
In the instant case, again based on the hypothetically admitted allegations in the complaint, it would appear that capacity,
Anthony Gaw Kache, Aqualab's predecessor-in-interest, was not in possession of subject lots. Such a fact should have Petitioners, Present:
put Aqualab on guard relative to the possessors' (respondents') interest over subject lots. A buyer of real property that
is in the possession of a person other than the seller must be wary, and a buyer who does not investigate the rights of - versus - CORONA, J., Chairperson,
the one in possession can hardly be regarded as a buyer in good faith.37 VELASCO, JR.,
HON. SIMEON P. DUMDUM, JR., in his capacity as the Presiding Judge of NACHURA,
the REGIONAL TRIAL COURT, BRANCH 7, CEBU CITY; HON. CLERK OF PERALTA, and
Having hypothetically admitted respondents' possession of subject lots, Aqualab cannot be considered, in the context COURT & EX-OFFICIO SHERIFF of the REGIONAL TRIAL COURT of CEBU MENDOZA, JJ.
of its motion to dismiss, to be an innocent purchaser for value or a purchaser in good faith. Moreover, the defense of CITY; HON. CLERK OF COURT & EX-OFFICIO SHERIFF of the REGIONAL
indefeasibility of a Torrens title does not extend to a transferee who takes it with notice of a flaw in the title of his TRIAL COURT of BULACAN and his DEPUTIES; and EMILY ROSE GO KO LIM
transferor.38 CHAO, doing business under the name and style KD SURPLUS,
Respondents.
The Complaint Sufficiently
States a Cause of Action

Upon the foregoing disquisitions, it is abundantly clear to the Court that respondents' complaint sufficiently stated,
under the premises, a cause of action. Not lost on us is the fact that the RTC dismissed the complaint of respondents on
Promulgated:
the grounds of prescription and in the finding that Aqualab is an innocent purchaser for value of the subject lots.
Quoting Philippine Bank of Communications v. Trazo,39 the Court said in Bayot v. Court of Appeals40 that:
March 22, 2010
x-----------------------------------------------------------------------------------------x
A cause of action is an act or omission of one party in violation of the legal right of the other. A motion to dismiss based
on lack of cause of action hypothetically admits the truth of the allegations in the complaint. The allegations in a
complaint are sufficient to constitute a cause of action against the defendants if, hypothetically admitting the facts DECISION
alleged, the court can render a valid judgment upon the same in accordance with the prayer therein. A cause of action
exists if the following elements are present, namely: (1) a right in favor of the plaintiff by whatever means and under PERALTA, J.:
whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate
such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a
breach of the obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of This is a Joint Petition[1] under Rule 45 of the Rules of Court brought by the Municipality of Hagonoy, Bulacan and its
damages.41 former chief executive, Mayor Felix V. Ople in his official and personal capacity, from the January 31, 2005
Decision[2] and the May 23, 2005 Resolution[3] of the Court of Appeals in CA-G.R. SP No. 81888. The assailed decision
affirmed the October 20, 2003 Order[4] issued by the Regional Trial Court of Cebu City, Branch 7 in Civil Case No. CEB-
28587 denying petitioners motion to dismiss and motion to discharge/dissolve the writ of preliminary attachment
previously issued in the case. The assailed resolution denied reconsideration.
The case stems from a Complaint[5] filed by herein private respondent Emily Rose Go Ko Lim Chao against herein
petitioners, the Municipality of Hagonoy, Bulacan and its chief executive, Felix V. Ople (Ople) for collection of a sum of
money and damages. It was alleged that sometime in the middle of the year 2000, respondent, doing business as KD
Surplus and as such engaged in buying and selling surplus trucks, heavy equipment, machinery, spare parts and related
supplies, was contacted by petitioner Ople. Respondent had entered into an agreement with petitioner municipality
through Ople for the delivery of motor vehicles, which supposedly were needed to carry out certain developmental
undertakings in the municipality. Respondent claimed that because of Oples earnest representation that funds had
already been allocated for the project, she agreed to deliver from her principal place of business in Cebu City twenty-
one motor vehicles whose value totaled P5,820,000.00. To prove this, she attached to the complaint copies of the bills
of lading showing that the items were consigned, delivered to and received by petitioner municipality on different
dates.[6] However, despite having made several deliveries, Ople allegedly did not heed respondents claim for payment.
As of the filing of the complaint, the total obligation of petitioner had already totaled P10,026,060.13 exclusive of
penalties and damages. Thus, respondent prayed for full payment of the said amount, with interest at not less than 2%
per month, plus P500,000.00 as damages for business losses, P500,000.00 as exemplary damages, attorneys fees
of P100,000.00 and the costs of the suit.
On February 13, 2003, the trial court issued an Order[7] granting respondents prayer for a writ of preliminary
attachment conditioned upon the posting of a bond equivalent to the amount of the claim. On March 20, 2003, the trial
court issued the Writ of Preliminary Attachment[8] directing the sheriff to attach the estate, real and personal
properties of petitioners.
Instead of addressing private respondents allegations, petitioners filed a Motion to Dismiss [9] on the ground that the
claim on which the action had been brought was unenforceable under the statute of frauds, pointing out that there was
no written contract or document that would evince the supposed agreement they entered into with respondent. They
averred that contracts of this nature, before being undertaken by the municipality, would ordinarily be subject to
several preconditions such as a public bidding and prior approval of the municipal council which, in this case, did not
obtain. From this, petitioners impress upon us the notion that no contract was ever entered into by the local
government with respondent.[10] To address the claim that respondent had made the deliveries under the agreement,
they advanced that the bills of lading attached to the complaint were hardly probative, inasmuch as these documents
had been accomplished and handled exclusively by respondent herself as well as by her employees and agents.[11]
Petitioners also filed a Motion to Dissolve and/or Discharge the Writ of Preliminary Attachment Already
Issued,[12] invoking immunity of the state from suit, unenforceability of the contract, and failure to substantiate the
allegation of fraud.[13]
On October 20, 2003, the trial court issued an Order[14] denying the two motions. Petitioners moved for
reconsideration, but they were denied in an Order[15] dated December 29, 2003.
Believing that the trial court had committed grave abuse of discretion in issuing the two orders, petitioners elevated
the matter to the Court of Appeals via a petition for certiorari under Rule 65. In it, they faulted the trial court for not
dismissing the complaint despite the fact that the alleged contract was unenforceable under the statute of frauds, as
well as for ordering the filing of an answer and in effect allowing private respondent to prove that she did make several
deliveries of the subject motor vehicles. Additionally, it was likewise asserted that the trial court committed grave
abuse of discretion in not discharging/dissolving the writ of preliminary attachment, as prayed for in the motion, and in
effect disregarding the rule that the local government is immune from suit.
On January 31, 2005, following assessment of the parties arguments, the Court of Appeals, finding no merit in the
petition, upheld private respondents claim and affirmed the trial courts order.[16] Petitioners moved for
reconsideration, but the same was likewise denied for lack of merit and for being a mere scrap of paper for having been
filed by an unauthorized counsel.[17] Hence, this petition.
In their present recourse, which raises no matter different from those passed upon by the Court of Appeals, petitioners
ascribe error to the Court of Appeals for dismissing their challenge against the trial courts October 20 and December
29, 2003 Orders. Again, they reason that the complaint should have been dismissed at the first instance based on
unenforceability and that the motion to dissolve/discharge the preliminary attachment should have been granted.[18]
Commenting on the petition, private respondent notes that with respect to the Court of Appeals denial of
the certiorari petition, the same was rightly done, as the fact of delivery may be properly and adequately addressed at
the trial of the case on the merits; and that the dissolution of the writ of preliminary attachment was not proper under
the premises inasmuch as the application for the writ sufficiently alleged fraud on the part of petitioners.In the same
breath, respondent laments that the denial of petitioners motion for reconsideration was rightly done by the Court of
Appeals, because it raised no new matter that had not yet been addressed.[19]
After the filing of the parties respective memoranda, the case was deemed submitted for decision.
We now rule on the petition.
To begin with, the Statute of Frauds found in paragraph (2), Article 1403 of the Civil Code, [20] requires for
enforceability certain contracts enumerated therein to be evidenced by some note or memorandum. The term Statute
of Frauds is descriptive of statutes that require certain classes of contracts to be in writing; and that do not deprive the
parties of the right to contract with respect to the matters therein involved, but merely regulate the formalities of the
contract necessary to render it enforceable.[21]
In other words, the Statute of Frauds only lays down the method by which the enumerated contracts may
be proved. But it does not declare them invalid because they are not reduced to writing inasmuch as, by law, contracts
are obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity
are present.[22] The object is to prevent fraud and perjury in the enforcement of obligations depending, for evidence
thereof, on the unassisted memory of witnesses by requiring certain enumerated contracts and transactions to be
evidenced by a writing signed by the party to be charged.[23] The effect of noncompliance with this requirement is
simply that no action can be enforced under the given contracts.[24] If an action is nevertheless filed in court, it shall
warrant a dismissal under Section 1(i),[25] Rule 16 of the Rules of Court,unless there has been, among others, total or
partial performance of the obligation on the part of either party.[26]
It has been private respondents consistent stand, since the inception of the instant case that she has
entered into a contract with petitioners. As far as she is concerned, she has already performed her part of the
obligation under the agreement by undertaking the delivery of the 21 motor vehicles contracted for by Ople in the
name of petitioner municipality. This claim is well substantiated at least for the initial purpose of setting out a valid
cause of action against petitioners by copies of the bills of lading attached to the complaint, naming petitioner
municipality as consignee of the shipment.Petitioners have not at any time expressly denied this allegation and, hence,
the same is binding on the trial court for the purpose of ruling on the motion to dismiss. In other words, since
there exists an indication by way of allegation that there has been performance of the obligation on the part of
respondent, the case is excluded from the coverage of the rule on dismissals based on unenforceability under the
statute of frauds, and either party may then enforce its claims against the other.
No other principle in remedial law is more settled than that when a motion to dismiss is filed, the material
allegations of the complaint are deemed to be hypothetically admitted.[27] This hypothetical admission, according
to Viewmaster Construction Corporation v. Roxas[28] and Navoa v. Court of Appeals,[29] extends not only to the relevant
and material facts well pleaded in the complaint, but also to inferences that may be fairly deduced from them. Thus,
where it appears that the allegations in the complaint furnish sufficient basis on which the complaint can be
maintained, the same should not be dismissed regardless of the defenses that may be raised by the
defendants.[30] Stated differently, where the motion to dismiss is predicated on grounds that are not indubitable, the
better policy is to deny the motion without prejudice to taking such measures as may be proper to assure that the ends
of justice may be served.[31]
It is interesting to note at this point that in their bid to have the case dismissed, petitioners theorize that
there could not have been a contract by which the municipality agreed to be bound, because it was not shown that
there had been compliance with the required bidding or that the municipal council had approved the contract. The
argument is flawed. By invoking unenforceability under the Statute of Frauds, petitioners are in effect acknowledging
the existence of a contract between them and private respondent only, the said contract cannot be enforced by action
for being non-compliant with the legal requisite that it be reduced into writing. Suffice it to say that while this assertion
might be a viable defense against respondents claim, it is principally a matter of evidence that may be properly
ventilated at the trial of the case on the merits.
Verily, no grave abuse of discretion has been committed by the trial court in denying petitioners motion to
dismiss this case. The Court of Appeals is thus correct in affirming the same.
We now address the question of whether there is a valid reason to deny petitioners motion to discharge
the writ of preliminary attachment.
Petitioners, advocating a negative stance on this issue, posit that as a municipal corporation,
the Municipality of Hagonoy is immune from suit, and that its properties are by law exempt from execution and
garnishment.Hence, they submit that not only was there an error committed by the trial court in denying their motion
to dissolve the writ of preliminary attachment; they also advance that it should not have been issued in the first
place.Nevertheless, they believe that respondent has not been able to substantiate her allegations of fraud necessary
for the issuance of the writ.[32]
Private respondent, for her part, counters that, contrary to petitioners claim, she has amply discussed the
basis for the issuance of the writ of preliminary attachment in her affidavit; and that petitioners claim of immunity from
suit is negated by Section 22 of the Local Government Code, which vests municipal corporations with the power to sue
and be sued.Further, she contends that the arguments offered by petitioners against the writ of preliminary
attachment clearly touch on matters that when ruled upon in the hearing for the motion to discharge, would amount to
a trial of the case on the merits.[33]
The general rule spelled out in Section 3, Article XVI of the Constitution is that the state and its political
subdivisions may not be sued without their consent. Otherwise put, they are open to suit but only when they consent
to it. Consent is implied when the government enters into a business contract, as it then descends to the level of the
other contracting party; or it may be embodied in a general or special law [34] such as that found in Book I, Title I,
Chapter 2, Section 22 of the Local Government Code of 1991, which vests local government units with certain
corporate powers one of them is the power to sue and be sued.
Be that as it may, a difference lies between suability and liability. As held in City of Caloocan v.
Allarde,[35] where the suability of the state is conceded and by which liability is ascertained judicially, the state is at
liberty to determine for itself whether to satisfy the judgment or not.Execution may not issue upon such judgment,
because statutes waiving non-suability do not authorize the seizure of property to satisfy judgments recovered from
the action. These statutes only convey an implication that the legislature will recognize such judgment as final and
make provisions for its full satisfaction. Thus, where consent to be sued is given by general or special law, the
implication thereof is limited only to the resultant verdict on the action before execution of the judgment.[36]
Traders Royal Bank v. Intermediate Appellate Court,[37] citing Commissioner of Public Highways v. San
Diego,[38] is instructive on this point. In that case which involved a suit on a contract entered into by an entity supervised
by the Office of the President, the Court held that while the said entity opened itself to suit by entering into the subject
contract with a private entity; still, the trial court was in error in ordering the garnishment of its funds, which were
public in nature and, hence, beyond the reach of garnishment and attachment proceedings. Accordingly, the Court
ordered that the writ of preliminary attachment issued in that case be lifted, and that the parties be allowed to prove
their respective claims at the trial on the merits. There, the Court highlighted the reason for the rule, to wit:
The universal rule that where the State gives its consent to be sued by private
parties either by general or special law, it may limit claimants action only up to the completion
of proceedings anterior to the stage of execution and that the power of the Courts ends when
the judgment is rendered, since government funds and properties may not be seized under
writs of execution or garnishment to satisfy such judgments, is based on obvious
considerations of public policy. Disbursements of public funds must be covered by the
corresponding appropriations as required by law.The functions and public services rendered
by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds
from their legitimate and specific objects. x x x[39]
With this in mind, the Court holds that the writ of preliminary attachment must be dissolved and, indeed,
it must not have been issued in the very first place. While there is merit in private respondents position that she, by
affidavit, was able to substantiate the allegation of fraud in the same way that the fraud attributable to petitioners was
sufficiently alleged in the complaint and, hence, the issuance of the writ would have been justified. Still, the writ of
attachment in this case would only prove to be useless and unnecessary under the premises, since the property of the
municipality may not, in the event that respondents claim is validated, be subjected to writs of execution and
garnishment unless, of course, there has been a corresponding appropriation provided by law.[40]
Anent the other issues raised by petitioners relative to the denial of their motion to dissolve the writ of
attachment, i.e., unenforceability of the contract and the veracity of private respondents allegation of fraud, suffice it
to say that these pertain to the merits of the main action. Hence, these issues are not to be taken up in resolving the
motion to discharge, lest we run the risk of deciding or prejudging the main case and force a trial on the merits at this
stage of the proceedings.[41]
There is one final concern raised by petitioners relative to the denial of their motion for reconsideration.
They complain that it was an error for the Court of Appeals to have denied the motion on the ground that the same was
filed by an unauthorized counsel and, hence, must be treated as a mere scrap of paper.[42]
It can be derived from the records that petitioner Ople, in his personal capacity, filed his Rule 65 petition
with the Court of Appeals through the representation of the law firm Chan Robles & Associates. Later on, municipal
legal officer Joselito Reyes, counsel for petitioner Ople, in his official capacity and for petitioner municipality, filed with
the Court of Appeals a Manifestation with Entry of Appearance [43] to the effect that he, as counsel, was adopting all the
pleadings filed for and in behalf of [Oples personal representation] relative to this case.[44]
It appears, however, that after the issuance of the Court of Appeals decision, only Oples personal
representation signed the motion for reconsideration. There is no showing that the municipal legal officer made the
same manifestation, as he previously did upon the filing of the petition. [45] From this, the Court of Appeals concluded
that it was as if petitioner municipality and petitioner Ople, in his official capacity, had never moved for reconsideration
of the assailed decision, and adverts to the ruling in Ramos v. Court of Appeals[46] and Municipality of Pililla, Rizal v. Court
of Appeals[47] that only under well-defined exceptions may a private counsel be engaged in lawsuits involving a
municipality, none of which exceptions obtains in this case.[48]
The Court of Appeals is mistaken. As can be seen from the manner in which the Manifestation with Entry
of Appearance is worded, it is clear that petitioner municipalitys legal officer was intent on adopting, for both the
municipality and Mayor Ople, not only the certiorari petition filed with the Court of Appeals, but also all other pleadings
that may be filed thereafter by Oples personal representation, including the motion for reconsideration subject of this
case. In any event, however, the said motion for reconsideration would warrant a denial, because there seems to be no
matter raised therein that has not yet been previously addressed in the assailed decision of the Court of Appeals as well
as in the proceedings below, and that would have otherwise warranted a different treatment of the issues involved.
WHEREFORE, the Petition is GRANTED IN PART. The January 31, 2005 Decision of the Court of Appeals
in CA-G.R. SP No. 81888 is AFFIRMED insofar as it affirmed the October 20, 2003 Decision of the Regional Trial Court
of Cebu City, Branch 7 denying petitioners motion to dismiss in Civil Case No. CEB-28587. The assailed decision
is REVERSED insofar as it affirmed the said trial courts denial of petitioners motion to discharge the writ of preliminary
attachment issued in that case.Accordingly, the August 4, 2003 Writ of Preliminary Attachment issued in Civil Case
No. CEB-28587 is ordered lifted.
SO ORDERED.
Republic of the Philippines
Supreme Court
Baguio City
EN BANC
LEAGUE OF CITIES OF THE PHILIPPINES (LCP), represented by LCP
National President Jerry P. Treas; CITY OF CALBAYOG, represented
by Mayor Mel Senen S. Sarmiento; and JERRY P. TREAS, in his
personal capacity as Taxpayer,
Petitioners,
- versus -
COMMISSION ON ELECTIONS; MUNICIPALITY OF BAYBAY,
PROVINCE OF LEYTE; MUNICIPALITY OF BOGO, PROVINCE OF
CEBU; MUNICIPALITY OF CATBALOGAN, PROVINCE OF WESTERN
SAMAR; MUNICIPALITY OF TANDAG, PROVINCE OF SURIGAO DEL
SUR; MUNICIPALITY OF BORONGAN, PROVINCE OF EASTERN
SAMAR; AND MUNICIPALITY OF TAYABAS, PROVINCE OF
QUEZON,
Respondents.
x----------------------x
LEAGUE OF CITIES OF THE PHILIPPINES (LCP), represented by LCP
National President Jerry P. Treas; CITY OF CALBAYOG, represented
by Mayor Mel Senen S. Sarmiento; and JERRY P. TREAS, in his
personal capacity as Taxpayer,
Petitioners,
versus
COMMISSION ON ELECTIONS; MUNICIPALITY OF LAMITAN,
PROVINCE OF BASILAN; MUNICIPALITY OF TABUK, PROVINCE OF
KALINGA; MUNICIPALITY OF BAYUGAN, PROVINCE OF AGUSAN
DEL SUR; MUNICIPALITY OF BATAC, PROVINCE OF ILOCOS
NORTE; MUNICIPALITY OF MATI, PROVINCE OF DAVAO
ORIENTAL; AND MUNICIPALITY OF GUIHULNGAN, PROVINCE OF
NEGROS ORIENTAL,
Respondents.
x----------------------x
LEAGUE OF CITIES OF THE PHILIPPINES (LCP), represented by LCP
National President Jerry P. Treas; CITY OF CALBAYOG, represented
by Mayor Mel Senen S. Sarmiento; and JERRY P. TREAS, in his
personal capacity as Taxpayer,
Petitioners,
- versus -
COMMISSION ON ELECTIONS; MUNICIPALITY OF CABADBARAN,
PROVINCE OF AGUSAN DEL NORTE; MUNICIPALITY OF CARCAR,
PROVINCE OF CEBU; MUNICIPALITY OF EL SALVADOR, PROVINCE
OF MISAMIS ORIENTAL; MUNICIPALITY OF NAGA,
CEBU; and DEPARTMENT OF BUDGET AND MANAGEMENT,
Respondents.
G.R. No. 178056
Promulgated:
April 12, 2011
G.R. No. 176951
x-----------------------------------------------------------------------------------------x
RESOLUTION
BERSAMIN, J.:
We consider and resolve the Ad Cautelam Motion for Reconsiderationfiled by the petitioners vis--vis the
Resolution promulgated on February 15, 2011.
To recall, the Resolution promulgated on February 15, 2011 granted the Motion for Reconsideration of the
respondents presented against the Resolution dated August 24, 2010, reversed the Resolution dated August 24, 2010,
and declared the 16 Cityhood Laws Republic Acts Nos. 9389, 9390, 9391, 9392, 9393, 9394, 9398, 9404, 9405, 9407,
9408, 9409, 9434, 9435, 9436, and 9491 constitutional.
Now, the petitioners anchor their Ad Cautelam Motion for Reconsideration upon the primordial ground that
the Court could no longer modify, alter, or amend its judgment declaring the Cityhood Laws unconstitutional due to
such judgment having long become final and executory. They submit that the Cityhood Laws violated Section 6 and
Section 10 of Article X of the Constitution, as well as the Equal Protection Clause.
The petitioners specifically ascribe to the Court the following errors in its promulgation of the
assailed February 15, 2011 Resolution, to wit:
I. THE HONORABLE COURT HAS NO JURISDICTION TO PROMULGATE THE
RESOLUTION OF 15 FEBRUARY 2011BECAUSE THERE IS NO LONGER ANY ACTUAL
CASE OR CONTROVERSY TO SETTLE.
II. THE RESOLUTION CONTRAVENES THE 1997 RULES OF CIVIL PROCEDURE AND
G.R. No. 177499 RELEVANT SUPREME COURT ISSUANCES.
III. THE RESOLUTION UNDERMINES THE JUDICIAL SYSTEM IN ITS DISREGARD OF THE
PRINCIPLES OF RES JUDICATA AND THE DOCTRINE OF IMMUTABILITY OF FINAL
JUDGMENTS.
IV. THE RESOLUTION ERRONEOUSLY RULED THAT THE SIXTEEN (16) CITYHOOD BILLS
DO NOT VIOLATE ARTICLE X, SECTIONS 6 AND 10 OF THE 1987 CONSTITUTION.
V. THE SIXTEEN (16) CITYHOOD LAWS VIOLATE THE EQUAL PROTECTION CLAUSE OF
THE CONSTITUTION AND THE RIGHT OF LOCAL GOVERNMENTS TO A JUST SHARE
IN THE NATIONAL TAXES.
Ruling
Upon thorough consideration, we deny the Ad Cautelam Motion for Reconsideration for its lack of merit.
I.
Procedural Issues
With respect to the first, second, and third assignments of errors, supra, it appears that the petitioners assail the
jurisdiction of the Court in promulgating the February 15, 2011 Resolution, claiming that the decision herein had long
become final and executory. They state that the Court thereby violated rules of procedure, and the principles of res
judicata and immutability of final judgments.
The petitioners posit that the controversy on the Cityhood Laws ended with the April 28, 2009 Resolution denying the
respondents second motion for reconsideration vis--vis the November 18, 2008 Decision for being a prohibited
pleading, and in view of the issuance of the entry of judgment on May 21, 2009.
The Court disagrees with the petitioners.
In the April 28, 2009 Resolution, the Court ruled:
By a vote of 6-6, the Motion for Reconsideration of the Resolution of 31 March
2009 is DENIED for lack of merit. The motion is denied since there is no majority that voted to
overturn the Resolution of 31 March 2009.
The Second Motion for Reconsideration of the Decision of 18 November 2008 is
DENIED for being a prohibited pleading, and the Motion for Leave to Admit Attached Petition
in Intervention dated 20 April 2009 and the Petition in Intervention dated 20 April 2009 filed
by counsel for Ludivina T. Mas, et al. are also DENIED in view of the denial of the second
motion for reconsideration. No further pleadings shall be entertained. Let entry of judgment
be made in due course.
Justice Presbitero J. Velasco, Jr. wrote a Dissenting Opinion, joined by Justices
Consuelo Ynares-Santiago, Renato C. Corona, Minita Chico-Nazario, Teresita Leonardo-De
Castro, and Lucas P. Bersamin. Chief Justice Reynato S. Puno and Justice Antonio Eduardo B.
Nachura took no part.Justice Leonardo A. Quisumbing is on leave. [1]
Within 15 days from receipt of the April 28, 2009 Resolution, the respondents filed a Motion To Amend
Resolution Of April 28, 2009 By Declaring Instead That Respondents Motion for Reconsideration Of the Resolution Of
March 31, 2009 And Motion For Leave To File, And To Admit Attached Second Motion For Reconsideration Of The Decision
Dated November 18, 2008 Remain Unresolved And To Conduct Further Proceedings Thereon, arguing therein that a
determination of the issue of constitutionality of the 16 Cityhood Laws upon a motion for reconsideration by an equally
divided vote was not binding on the Court as a valid precedent, citing the separate opinion of then Chief Justice
Reynato S. Puno in Lambino v. Commission on Elections.[2]
Thus, in its June 2, 2009 Resolution, the Court issued the following clarification of the April 28,
2009 Resolution, viz:
As a rule, a second motion for reconsideration is a prohibited pleading pursuant to
Section 2, Rule 52 of the Rules of Civil Procedure which provides that: No second motion for
reconsideration of a judgment or final resolution by the same party shall be entertained. Thus,
a decision becomes final and executory after 15 days from receipt of the denial of the first
motion for reconsideration.
However, when a motion for leave to file and admit a second motion for
reconsideration is granted by the Court, the Court therefore allows the filing of the
second motion for reconsideration. In such a case, the second motion for reconsideration
is no longer a prohibited pleading.
In the present case, the Court voted on the second motion for reconsideration
filed by respondent cities. In effect, the Court allowed the filing of the second motion for
reconsideration. Thus, the second motion for reconsideration was no longer a prohibited
pleading.However, for lack of the required number of votes to overturn the 18 November
2008 Decision and 31 March 2009 Resolution, the Court denied the second motion for
reconsideration in its 28 April 2009 Resolution.[3]
As the result of the aforecited clarification, the Court resolved to expunge from the records several
pleadings and documents, including respondents Motion To Amend Resolution Of April 28, 2009 etc.
The respondents thus filed their Motion for Reconsideration of the Resolution of June 2, 2009, asseverating
that their Motion To Amend Resolution Of April 28, 2009 etc. was not another motion for reconsideration of the
November 18, 2008 Decision, because it assailed the April 28, 2009 Resolution with respect to the tie-vote on the
respondents Second Motion For Reconsideration. They pointed out that the Motion To Amend Resolution Of April 28,
2009 etc. was filed on May 14, 2009, which was within the 15-day period from their receipt of the April 28, 2009
Resolution; thus, the entry of judgment had been prematurely made. They reiterated their arguments with respect to a
tie-vote upon an issue of constitutionality.
In the September 29, 2009 Resolution,[4] the Court required the petitioners to comment on the Motion for
Reconsideration of the Resolution of June 2, 2009 within 10 days from receipt.
As directed, the petitioners filed their Comment Ad Cautelam With Motion to Expunge.
The respondents filed their Motion for Leave to File and to Admit Attached Reply to Petitioners Comment Ad
Cautelam With Motion to Expunge, together with the Reply.
On November 17, 2009, the Court resolved to note the petitioners Comment Ad Cautelam With Motion to
Expunge, to grant the respondents Motion for Leave to File and Admit Reply to Petitioners Comment Ad Cautelam with
Motion to Expunge, and to note the respondents Reply to Petitioners Comment Ad Cautelam with Motion to Expunge.
On December 21, 2009, the Court, resolving the Motion To Amend Resolution Of April 28, 2009 etc. and
voting anew on the Second Motion For Reconsideration in order to reach a concurrence of a majority, promulgated its
Decision granting the motion and declaring the Cityhood Laws as constitutional, [5] disposing thus:
WHEREFORE, respondent LGUs Motion for Reconsideration dated June 2, 2009,
their Motion to Amend the Resolution of April 28, 2009 by Declaring Instead that
Respondents Motion for Reconsideration of the Resolution of March 31, 2009 and Motion for
Leave to File and to Admit Attached Second Motion for Reconsideration of the Decision
Dated November 18, 2008 Remain Unresolved and to Conduct Further Proceedings, dated
May 14, 2009, and their second Motion for Reconsideration of the Decision dated November
18, 2008 are GRANTED. The June 2, 2009, the March 31, 2009, and April 31, 2009 Resolutions
are REVERSED and SET ASIDE. The entry of judgment made on May 21, 2009 must
accordingly be RECALLED.
The instant consolidated petitions and petitions-in-intervention are DISMISSED. The
cityhood laws, namely Republic Act Nos. 9389, 9390, 9391, 9392, 9393, 9394, 9398, 9404,
9405, 9407, 9408, 9409, 9434, 9435, 9436, and 9491 are
declared VALID and CONSTITUTIONAL.
SO ORDERED.
On January 5, 2010, the petitioners filed an Ad Cautelam Motion for Reconsideration against the December
21, 2009 Decision.[6] On the same date, the petitioners also filed a Motion to Annul Decision of 21 December 2009.[7]
On January 12, 2010, the Court directed the respondents to comment on the motions of the petitioners. [8]
On February 4, 2010, petitioner-intervenors City of Santiago, City of Legazpi, and City of Iriga filed their
separate Manifestations with Supplemental Ad Cautelam Motions for Reconsideration.[9] Similar manifestations with
supplemental motions for reconsideration were filed by other petitioner-intervenors, specifically: City
of Cadiz on February 15, 2010;[10] City of Batangas on February 17, 2010;[11] and City of Oroquietaon February 24,
2010.[12] The Court required the adverse parties to comment on the motions.[13] As directed, the respondents complied.
On August 24, 2010, the Court issued its Resolution reinstating the November 18, 2008 Decision.[14]
On September 14, 2010, the respondents timely filed a Motion for Reconsideration of the Resolution Dated August 24,
2010.[15] They followed this by filing on September 20, 2010 a Motion to Set Motion for Reconsideration of the Resolution
dated August 24, 2010 for Hearing.[16]On November 19, 2010, the petitioners sent in their Opposition [To the Motion for
Reconsideration of Resolution dated August 24, 2010].[17] On November 30, 2010,[18] the Court noted, among others, the
petitioners Opposition.
On January 18, 2011,[19] the Court denied the respondents Motion to Set Motion for Reconsideration of the
Resolution dated August 24, 2010 for Hearing.
Thereafter, on February 15, 2011, the Court issued the Resolution being now challenged.
It can be gleaned from the foregoing that, as the June 2, 2009 Resolution clarified, the respondents Second Motion For
Reconsideration was not a prohibited pleading in view of the Courts voting and acting on it having the effect
of allowing the Second Motion For Reconsideration; and that when the respondents filed their Motion for Reconsideration
of the Resolution of June 2, 2009 questioning the expunging of their Motion To Amend Resolution Of April 28, 2009
etc. (which had been filed within the 15-day period from receipt of the April 28, 2009 Resolution), the Court opted to
act on the Motion for Reconsideration of the Resolution of June 2, 2009 by directing the adverse parties through its
September 29, 2009 Resolution to comment. The same permitting effect occurred when the Court, by its November
17, 2009 Resolution, granted the respondents Motion for Leave to File and Admit Reply to Petitioners Comment Ad
Cautelam with Motion to Expunge, and noted the attached Reply.
Moreover, by issuing the Resolutions dated September 29, 2009 and November 17, 2009, the Court: (a)
rendered ineffective the tie-vote under the Resolution of April 28, 2009 and the ensuing denial of the Motion for
Reconsideration of the Resolution of March 31, 2009 for lack of a majority to overturn; (b), re-opened the Decision of
November 18, 2008 for a second look under reconsideration; and (c) lifted the directive that no further pleadings would
be entertained. The Court in fact entertained and acted on the respondents Motion for Reconsideration of the Resolution
of June 2, 2009. Thereafter, the Court proceeded to deliberate anew on the respondents Second Motion for
Reconsideration and ended up with the promulgation of the December 21, 2009 Decision (declaring the Cityhood Laws
valid and constitutional).
It is also inaccurate for the petitioners to insist that the December 21, 2009 Decision overturned the November 18,
2008 Decision on the basis of the mere Reflections of the Members of the Court. To be sure, the Reflectionswere the
legal opinions of the Members and formed part of the deliberations of the Court. The reference in the December 21,
2009 Decision to the Reflections pointed out that there was still a pending incident after the April 28, 2009 Resolution
that had been timely filed within 15 days from its receipt,[20] pursuant to Section 10, Rule 51,[21] in relation to Section 1,
Rule 52,[22] of the Rules of Court. Again, the Court did act and deliberate upon this pending incident, leading to the
issuance of the December 21, 2009 Decision (declaring the Cityhood Laws free from constitutional infirmity). It was
thereafter that the Court rendered its August 24, 2010Resolution (reinstating the November 18, 2008 Decision), to
correct which the respondents Motion for Reconsideration of the Resolution Dated August 24, 2010 was filed. And,
finally, the Court issued its February 15, 2011Resolution, reversing and setting aside the August 24, 2010 Resolution.
It is worth repeating that the actions taken herein were made by the Court en banc strictly in accordance with the Rules
of Court and its internal procedures. There has been no irregularity attending or tainting the proceedings.
It also relevant to state that the Court has frequently disencumbered itself under extraordinary circumstances from the
shackles of technicality in order to render just and equitable relief.[23]
On whether the principle of immutability of judgments and bar by res judicata apply herein, suffice it to
state that the succession of the events recounted herein indicates that the controversy about the 16 Cityhood Laws has
not yet been resolved with finality. As such, the operation of the principle of immutability of judgments did not yet
come into play. For the same reason is an adherence to the doctrine of res judicata not yet warranted, especially
considering that the precedential ruling for this case needed to be revisited and set with certainty and finality.
II.
Substantive Issues
The petitioners reiterate their position that the Cityhood Laws violate Section 6 and Section 10 of Article X
of the Constitution, the Equal Protection Clause, and the right of local governments to a just share in the national
taxes.
The Court differs.
Congress clearly intended that the local government units covered by the Cityhood Laws be exempted
from the coverage of R.A. No. 9009. The apprehensions of the then Senate President with respect to the considerable
disparity between the income requirement of P20 million under the Local Government Code (LGC) prior to its
amendment, and the P100 million under the amendment introduced by R.A. No. 9009 were definitively articulated in
his interpellation of Senator Pimentel during the deliberations on Senate Bill No. 2157. The then Senate President was
cognizant of the fact that there were municipalities that then had pending conversion bills
during the 11th Congress prior to the adoption of Senate Bill No. 2157 as R.A. No. 9009,[24] including the municipalities
covered by the Cityhood Laws. It is worthy of mention that the pertinent deliberations on Senate Bill No. 2157 occurred
on October 5, 2000 while the 11th Congress was in session, and the conversion bills were then pending in the
Senate. Thus, the responses of Senator Pimentel made it obvious that R.A. No. 9009 would not apply to the conversion
bills then pending deliberation in the Senate during the 11th Congress.
R.A. No. 9009 took effect on June 30, 2001, when the 12th Congress was incipient. By reason of the clear
legislative intent to exempt the municipalities covered by the conversion bills pending during the 11th
Congress, the House of Representatives adopted Joint Resolution No. 29, entitled Joint Resolution to Exempt Certain
Municipalities Embodied in Bills Filed in Congress before June 30, 2001 from the coverage of Republic Act No.
9009. However, the Senate failed to act on Joint Resolution No. 29. Even so, the House of Representatives readopted
Joint Resolution No. 29 as
Joint Resolution No. 1 during the 12th Congress,[25] and forwarded Joint Resolution No. 1 to the Senate for
approval. Again, the Senate failed to approve Joint Resolution No. 1.
At this juncture, it is worthwhile to consider the manifestation of Senator Pimentel with respect to Joint
Resolution No. 1, to wit:
MANIFESTATION OF SENATOR PIMENTEL
House Joint Resolution No. 1 seeks to exempt certain municipalities seeking conversion into
cities from the requirement that they must have at least P100 million in income of locally
generated revenue, exclusive of the internal revenue share that they received from the central
government as required under Republic Act No. 9009.
The procedure followed by the House is questionable, to say the least. The House wants the
Senate to do away with the income requirement of P100 million so that, en masse, the
municipalities they want exempted could now file bills specifically converting them into
cities. The reason they want the Senate to do it first is that Cong. Dodo Macias, chair of the
House Committee on Local Governments, I am told, will not entertain any bill for the
conversion of municipalities into cities unless the issue of income requirement is first
hurdled. The House leadership therefore wants to shift the burden of exempting certain
municipalities from the income requirement to the Senate rather than do it itself.
That is most unusual because, in effect, the House wants the Senate to pass a blanket
resolution that would qualify the municipalities concerned for conversion into cities on the
matter of income alone. Then, at a later date, the House would pass specific bills converting
the municipalities into cities.However, income is not only the requirement for municipalities
to become cities. There are also the requirements on population and land area.

In effect, the House wants the Senate to tackle the qualification of the municipalities they
want converted into cities piecemeal and separately, first is the income under the joint
resolution, then the other requirements when the bills are file to convert specific
municipalities into cities. To repeat, this is a most unusual manner of creating cities.
My respectful suggestion is for the Senate to request the House to do what they want to do
regarding the applications of certain municipalities to become cities pursuant to the
requirements of the Local Government Code.If the House wants to exempt certain
municipalities from the requirements of the Local Government Code to become cities, by all
means, let them do their thing. Specifically, they should act on specific bills to create cities
and cite the reasons why the municipalities concerned are qualified to become cities. Only
after the House shall have completed what they are expected to do under the law would it be
proper for the Senate to act on specific bills creating cities.
In other words, the House should be requested to finish everything that needs to be done in
the matter of converting municipalities into cities and not do it piecemeal as they are now
trying to do under the joint resolution.
In my long years in the Senate, this is the first time that a resort to this subterfuge is being
undertaken to favor the creation of certain cities. I am not saying that they are not qualified.
All I am saying is, if the House wants to pass and create cities out of certain
municipalities, by all means let them do that. But they should do it following the
requirements of the Local Government Code and, if they want to make certain
exceptions, they can also do that too. But they should not use the Senate as a ploy to get
things done which they themselves should do.
Incidentally, I have recommended this mode of action verbally to some leaders of the
House. Had they followed the recommendation, for all I know, the municipalities they had
envisioned to be covered by House Joint Resolution No. 1 would, by now if not all, at least
some have been converted into cities. House Joint Resolution No. 1, the House, in effect,
caused the delay in the approval in the applications for cityhood of the municipalities
concerned.
Lastly, I do not have an amendment to House Joint Resolution No. 1. What I am suggesting is
for the Senate to request the House to follow the procedure outlined in the Local Government
Code which has been respected all through the years. By doing so, we uphold the rule of law
and minimize the possibilities of power play in the approval of bills converting municipalities
into cities.[26]
Thereafter, the conversion bills of the respondents were individually
filed inthe House of Representatives, and were all unanimously and
favorably voted upon by the Members of the House of Representatives.[27]The bills, when forwarded to the Senate,
were likewise unanimously approved by the Senate.[28] The acts of both Chambers of Congress show that the
exemption clauses ultimately incorporated in the Cityhood Laws are but the express articulations of the clear
legislative intent to exempt the respondents, without exception, from the coverage of R.A. No. 9009.Thereby, R.A. No.
9009, and, by necessity, the LGC, were amended, not by repeal but by way of the express exemptions being embodied
in the exemption clauses.
The petitioners further contend that the new income requirement of P100 million from locally generated sources is not
arbitrary because it is not difficult to comply with; that there are several municipalities that have already complied with
the requirement and have, in fact, been converted into cities, such as Sta. Rosa in Laguna (R.A. No 9264), Navotas
(R.A. No. 9387) and San Juan (R.A. No. 9388) in Metro Manila, Dasmarias in Cavite (R.A. No. 9723), and Bian in Laguna
(R.A. No. 9740); and that several other municipalities have supposedly reached the income of P100 million from locally
generated sources, such as Bauan in Batangas, Mabalacat in Pampanga, and Bacoor in Cavite.
The contention of the petitioners does not persuade.
As indicated in the Resolution of February 15, 2011, fifty-nine (59) existing cities had failed as of 2006 to
post an average annual income of P100 million based on the figures contained in the certification dated December 5,
2008 by the Bureau of Local Government. The large number of existing cities, virtually 50% of them, still unable to
comply with the P100 million threshold income five years after R.A. No. 9009 took effect renders it fallacious and
probably unwarranted for the petitioners to claim that the P100 million income requirement is not difficult to comply
with.
In this regard, the deliberations on Senate Bill No. 2157 may prove enlightening, thus:
Senator Osmea III. And could the gentleman help clarify why a municipality would want to be
converted into a city?
Senator Pimentel. There is only one reason, Mr. President, and it is not hidden. It is the fact
that once converted into a city, the municipality will have roughly more than three times the
share that it would be receiving over the internal revenue allotment than it would have if it
were to remain a municipality. So more or less three times or more.
Senator Osmea III. Is it the additional funding that they will be able to enjoy from a larger
share from the internal revenue allocations?
Senator Pimentel. Yes, Mr. President.
Senator Osmea III. Now, could the gentleman clarify, Mr. President, why in the original
Republic Act No. 7160, known as the Local Government Code of 1991, such a wide gap was
made between a municipalitywhat a municipality would earnand a city? Because essentially,
to a persons mind, even with this new requirement, if approved by Congress, if a municipality
is earning P100 million and has a population of more than 150,000 inhabitants but has less
than 100 square kilometers, it would not qualify as a city.
Senator Pimentel. Yes.
Senator Osmea III. Now would that not be quite arbitrary on the part of the municipality?
Senator Pimentel. In fact, Mr. President, the House version restores the or.So, this is a matter
that we can very well take up as a policy issue. The chair of the committee does not say that
we should, as we know, not listen to arguments for the restoration of the word or in the
population or territorial requirement.
Senator Osmea III. Mr. President, my point is that, I agree with the gentlemans and, but
perhaps we should bring down the area. There are certainly very crowded places in this
country that are less than 10,000 hectares100 square kilometers is 10,000 hectares. There
might only be 9,000 hectares or 8,000 hectares. And it would be unfair if these municipalities
already earning P100,000,000 in locally generated funds and have a population of over
150,000 would not be qualified because of the simple fact that the physical area does not
cover 10,000 hectares.
Senator Pimentel. Mr. President, in fact, in Metro Manila there are any number of
municipalities. San Juan is a specific example which, if we apply the present requirements,
would not qualify: 100 square kilometers and a population of not less than 150,000.
But my reply to that, Mr. President, is that they do not have to become a city?

Senator Osmea III. Because of the income.
Senator Pimentel. But they are already earning a lot, as the gentleman said. Otherwise, the
danger here, if we become lax in the requirements, is the metropolis-located local
governments would have more priority in terms of funding because they would have
more qualifications to become a city compared to far-flung areas in Mindanao or in the
Cordilleras, or whatever.
Therefore, I think we should not probably ease up on the requirements.Maybe we can restore
the word or so that if they do not have the 100 square kilometers of territory, then if they
qualify in terms of population and income, that would be all right, Mr. President.
Senator Osmea III. Mr. President, I will not belabor the point at this time. I know that the
distinguished gentleman is considering several amendments to the Local Government
Code. Perhaps this is something that could be further refined at a later time, with his
permission.
So I would like to thank the gentleman for his graciousness in answering our questions.
Senator Pimentel. I also thank the gentleman, Mr. President.[29]
The Court takes note of the fact that the municipalities cited by the petitioners as having generated the threshold
income of P100 million from local sources, including those already converted into cities, are either in Metro Manila or in
provinces close to Metro Manila. In comparison, the municipalities covered by the Cityhood Laws are spread out in the
different provinces of the Philippines, including the Cordillera and Mindanao regions, and are considerably very distant
from Metro Manila. This reality underscores the danger the enactment of R.A. No. 9009 sought to prevent, i.e., that the
metropolis-located local governments would have more priority in terms of funding because they would have more
qualifications to become a city compared to the far-flung areas in Mindanao or in the Cordilleras, or whatever, actually
resulting from the abrupt increase in the income requirement. Verily, this result is antithetical to what the Constitution
and LGC have nobly envisioned in favor of countryside development and national growth. Besides, this result should be
arrested early, to avoid the unwanted divisive effect on the entire country due to the local government units closer to
the National Capital Region being afforded easier access to the bigger share in the national coffers than other local
government units.
There should also be no question that the local government units covered by the Cityhood Laws belong to a class of
their own. They have proven themselves viable and capable to become component cities of their respective provinces.
They are and have been centers of trade and commerce, points of convergence of transportation, rich havens of
agricultural, mineral, and other natural resources, and flourishing tourism spots. In his speech delivered on the floor of
the Senate to sponsor House Joint Resolution No. 1, Senator Lim recognized such unique traits, [30] viz:
It must be noted that except for Tandag and Lamitan, which are both second-class
municipalities in terms of income, all the rest are categorized by the Department of Finance
as first-class municipalities with gross income of at least P70 million as per Commission of
Audit Report for 2005. Moreover, Tandag and Lamitan, together with Borongan, Catbalogan,
and Tabuk, are all provincial capitals.
The more recent income figures of the 12 municipalities, which would have
increased further by this time, indicate their readiness to take on the responsibilities of
cityhood.
Moreover, the municipalities under consideration are leading localities in their
respective provinces. Borongan, Catbalogan, Tandag, Batac and Tabuk are ranked number
one in terms of income among all the municipalities in their respective provinces; Baybay and
Bayugan are number two; Bogo and Lamitan are number three; Carcar, number four; and
Tayabas, number seven. Not only are they pacesetters in their respective provinces, they are
also among the frontrunners in their regions Baybay, Bayugan and Tabuk are number two
income-earners in Regions VIII, XIII, and CAR, respectively; Catbalogan and Batac are number
three in Regions VIII and I, respectively; Bogo, number five in Region VII; Borongan and Carcar
are both number six in Regions VIII and VII, respectively. This simply shows that these
municipalities are viable.
Petitioner League of Cities argues that there exists no issue with respect to the cityhood of its member
cities, considering that they became cities in full compliance with the criteria for conversion at the time of their
creation.
The Court considers the argument too sweeping. What we pointed out was that the previous income
requirement of P20 million was definitely not insufficient to provide the essential government facilities, services, and
special functions vis--vis the population of a component city. We also stressed that the increased income requirement
of P100 million was not theonly conclusive indicator for any municipality to survive and remain viableas a component
city. These observations were unerringly reflected in the respective incomes of the fifty-nine (59) members of the
League of Cities that have still failed, remarkably enough, to be compliant with the new requirement of the P100
million threshold income five years after R.A. No. 9009 became law.
Undoubtedly, the imposition of the income requirement of P100 million from local sources under R.A. No. 9009 was
arbitrary. When the sponsor of the law chose the specific figure of P100 million, no research or empirical data
buttressed the figure. Nor was there proof that the proposal took into account the after-effects that were likely to
arise. As already mentioned, even the danger the passage of R.A. No. 9009 sought to prevent might soon become a
reality. While the Constitution mandates that the creation of local government units must comply with the criteria laid
down in the LGC, it cannot be justified to insist that the Constitution must have to yield to every amendment to the
LGC despite such amendment imminently producing effects contrary to the original thrusts of the LGC to promote
autonomy, decentralization, countryside development, and the concomitant national growth.
Moreover, if we were now to adopt the stringent interpretation of the Constitution the petitioners are espousing, we
may have to apply the same restrictive yardstick against the recently converted cities cited by the petitioners, and find
two of them whose conversion laws have also to be struck down for being unconstitutional. The two laws are R.A. No.
9387[31]and R.A. No. 9388,[32] respectively converting the municipalities of San Juan and Navotas into highly urbanized
cities. A cursory reading of the laws indicates that there is no indication of compliance with the requirements imposed
by the LGC, for, although the two local government units concerned presumably complied with the income
requirement of P50 million under Section 452 of the LGC and the income requirement of P100 million under the
amended Section 450 of the LGC, they obviously did not meet the requirements set forth under Section 453 of the
LGC, to wit:
Section 453. Duty to Declare Highly Urbanized Status.It shall be the duty of the
President to declare a city as highly urbanized within thirty (30) days after it shall have met the
minimum requirements prescribed in the immediately preceding Section, upon proper
application therefor and ratification in a plebiscite by the qualified voters therein.
Indeed, R.A. No. 9387 and R.A. No. 9388 evidently show that the President had not classified San Juan and
Navotas as highly urbanized cities upon proper application and ratification in a plebiscite by the qualified voters
therein. A further perusal of R.A. No. 9387 reveals that San Juan did not qualify as a highly urbanized city because it had
a population of only 125,558, contravening the required minimum population of 200,000 under Section 452 of the
LGC. Such non-qualification as a component city was conceded even by Senator Pimentel during the deliberations on
Senate Bill No. 2157.
The petitioners contention that the Cityhood Laws violated their right to a just share in the national taxes
is not acceptable.
 In this regard, it suffices to state that the share of local government units is a matter of percentage under
Section 285 of the LGC, not a specific amount. Specifically, the share of the cities is 23%, determined on the basis of
population (50%), land area (25%), and equal sharing (25%). This share is also dependent on the number of existing
cities, such that when the number of cities increases, then more will divide and share the allocation for cities. However,
we have to note that the allocation by the National Government is not a constant, and can either increase or decrease.
With every newly converted city becoming entitled to share the allocation for cities, the percentage of internal revenue
allotment (IRA) entitlement of each city will decrease, although the actual amount received may be more than that
received in the preceding year. That is a necessary consequence of Section 285 and Section 286 of the LGC.
As elaborated here and in the assailed February 15, 2011 Resolution, the Cityhood Laws were not violative
of the Constitution and the LGC. The respondents are thus also entitled to their just share in the IRA allocation for
cities. They have demonstrated their viability as component cities of their respective provinces and are developing
continuously, albeit slowly, because they had previously to share the IRA with about 1,500 municipalities. With their
conversion into component cities, they will have to share with only around 120 cities.
Local government units do not subsist only on locally generated income, but also depend on the IRA to
support their development. They can spur their own developments and thereby realize their great potential of
encouraging trade and commerce in the far-flung regions of the country. Yet their potential will effectively be stunted
if those already earning more will still receive a bigger share from the national coffers, and if commercial activity will be
more or less concentrated only in and near Metro Manila.
III.
Conclusion
We should not ever lose sight of the fact that the 16 cities covered by the Cityhood Laws not only had
conversion bills pending during the 11thCongress, but have also complied with the requirements of the LGC prescribed
prior to its amendment by R.A. No. 9009. Congress undeniably gave these cities all the considerations that justice and
fair play demanded.Hence, this Court should do no less by stamping its imprimatur to the clear and unmistakable
legislative intent and by duly recognizing the certain collective wisdom of Congress.
WHEREFORE, the Ad Cautelam Motion for Reconsideration (of the Decision dated 15 February 2011) is
denied with finality.
SO ORDERED.
FIRST DIVISION
ATTY. RESTITUTO G. CUDIAMAT, ERLINDA P. CUDIAMAT[1] and CORAZON G.R. No. 182403
D. CUDIAMAT,
Petitioners, Present:
PUNO, C.J., Chairperson,
- versus - CARPIO MORALES,
LEONARDO-DE CASTRO,
BERSAMIN, and
BATANGAS SAVINGS AND LOAN BANK, INC., and THE REGISTER OF VILLARAMA, JR., JJ.
DEEDS, NASUGBU, BATANGAS,
Respondents. Promulgated:
March 9, 2010
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CARPIO MORALES, J.:
Petitioner Atty. Restituto Cudiamat and his brother Perfecto were the registered co-owners of a 320 square meter
parcel of land (the property) in Balayan, Batangas, covered by TCT No. T-37889 of the Register of Deeds of Nasugbu,
Batangas. Restituto, who resided in Ozamiz City with his wife, entrusted the custody of the title to who was residing in
Balayan.
In 1979, Perfecto, without the knowledge and consent of Restituto, obtained a loan from respondent
Batangas Savings and Loan Bank, Inc. (the bank). To secure the payment of the loan, Perfecto mortgaged the property
for the purpose of which he presented a Special Power of Attorney (SPA) purportedly executed by Restituto, with the
marital consent of his wife-herein co-petitioner Erlinda Cudiamat.
On June 19, 1991, Restituto was informed, via letter[2] dated June 7, 1991 from the bank, that the property
was foreclosed. He thus, by letter[3]dated June 25, 1991, informed the bank that he had no participation in the
execution of the mortgage and that he never authorized Perfecto for the purpose.
In the meantime, Perfecto died in 1990. In 1998, as Perfectos widow petitioner Corazon was being evicted
from the property, she and her co-petitioner-spouses Restituto and Erlinda filed on August 9, 1999 before the Regional
Trial Court (RTC) of Balayan a complaint [4] for quieting of title with damages against the bank and the Register of
Deeds of Nasugbu, docketed as Civil Case No. 3618, assailing the mortgage as being null and void as they did not
authorize the encumbrance of the property.
In its Answer to the complaint, the bank, maintaining the validity of the mortgage, alleged that it had in
fact secured a title in its name, TCT No. T-48405, after Perfecto failed to redeem the mortgage; that the Balayan RTC
had no jurisdiction over the case as the bank had been placed under receivership and under liquidation by the
Philippine Deposit Insurance Corporation (PDIC); that PDIC filed before the RTC of Nasugbu a petition for assistance in
the liquidation of the bank which was docketed as SP No. 576; and that jurisdiction to adjudicate disputed claims
against it is lodged with the liquidation court-RTC Nasugbu.
By Decision of January 17, 2006,[5] Branch 9 of the Balayan RTC rendered judgment, in the complaint for quieting of
title, in favor of the plaintiffs-herein petitioners. It ordered respondent Register of Deeds of Nasugbu to cancel the
encumbrance annotated on TCT No. T-37889, and to cancel TCT No. T-48405 issued in the name of the bank and
reinstate the former title. It also directed the bank to return the property to petitioner spouses Restituto and Erlinda
and to pay P20,000 to all the petitioners to defray the costs of suit.
The bank appealed to the Court of Appeals, contending, inter alia, that the Balayan RTC had no jurisdiction
over petitioners complaint for quieting of title.
By the assailed Decision of December 21, 2007,[6] the appellate court, ruling in favor of the bank, dismissed petitioners
complaint for quieting of title, without prejudice to the right of petitioners to take up their claims with the Nasugbu
RTC sitting as a liquidation court.
To the appellate court, the Balayan RTC, as a court of general jurisdiction, should have deferred to the
Nasugbu RTC which sits as a liquidation court, given that the bank was already under receivership when petitioners
filed the complaint for quieting of title.
Petitioners Motion for Reconsideration having been denied by the appellate court by Resolution of March
27, 2008, they filed the present petition for review on certiorari.
Assailing the appellate courts ruling that the Balayan RTC had no jurisdiction over their complaint,
petitioners argue that their complaint was filed earlier than PDICs petition for assistance in the liquidation; and that the
bank is now estopped from questioning the jurisdiction of the Balayan RTC because it actively participated in the
proceedings thereat.
The petition is impressed with merit.
 SECOND DIVISION
Estoppel bars the bank from raising the issue of lack of jurisdiction of the Balayan RTC.
REPUBLIC OF THE PHILIPPINES, G. R. No. 162322
In Lozon v. NLRC,[7] the Court came up with a clear rule on when jurisdiction by estoppel applies and when Petitioner,
it does not: Present:

The operation of estoppel on the question of jurisdiction seemingly depends on whether the CARPIO, J., Chairperson,
lower court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and - versus - BRION,
decided upon the theory that it had jurisdiction, the parties are not barred, on appeal, from PEREZ,
assailing such jurisdiction, for the same must exist as a matter of law, and may not be SERENO, and
conferred by the consent of the parties or by estoppel. However, if the lower court REYES, JJ.
had jurisdiction, and the case was heard and decided upon a given theory, such, for instance, BANTIGUE POINT DEVELOPMENT CORPORATION,
as that the court had no jurisdiction, the party who induced it to adopt such theory will not Respondent. Promulgated:
be permitted, on appeal, to assume an inconsistent position that the lower court
had jurisdiction (underscoring supplied) March 14, 2012

The ruling was echoed in Metromedia Times Corporation v. Pastorin.[8]

In the present case, the Balayan RTC, sitting as a court of general jurisdiction, had jurisdiction over the
complaint for quieting of title filed by petitioners on August 9, 1999. The Nasugbu RTC, as a liquidation court, assumed
jurisdiction over the claims against the bank only on May 25, 2000, when PDICs petition for assistance in the liquidation
was raffled thereat and given due course.
While it is well-settled that lack of jurisdiction on the subject matter can be raised at any time and is not
lost by estoppel by laches, the present case is an exception. To compel petitioners to re-file and relitigate their claims
before the Nasugbu RTC when the parties had already been given the opportunity to present their respective evidence DECISION
in a full-blown trial before the Balayan RTC which had, in fact, decided petitioners complaint (about two years before
the appellate court rendered the assailed decision) would be an exercise in futility and would unjustly burden
petitioners. SERENO, J.:

The Court, in Valenzuela v. Court of Appeals,[9] held that as a general rule, if there is a judicial liquidation of
This Rule 45 Petition requires this Court to address the issue of the proper scope of the delegated jurisdiction of
an insolvent bank, all claims against the bank should be filed in the liquidation proceeding. The Court
municipal trial courts in land registration cases. Petitioner Republic of the Philippines (Republic) assails the Decision of
in Valenzuela, however, after considering the circumstances attendant to the case, held that the general rule should
the Court of Appeals (CA)[1] in CA-G.R. CV No. 70349, which affirmed the Decision of the Municipal Trial Court (MTC) of
not be applied if to order the aggrieved party to refile or relitigate its case before the litigation court would be an
San Juan, Batangas[2] in LRC Case No. N-98-20, LRA Record No. 68329, granting respondent Bantigue Point
exercise in futility. Among the circumstances the Court considered in that case is the fact that the claimants were poor
Development Corporations (Corporation) application for original registration of a parcel of land. Since only questions
and the disputed parcel of land was their only property, and the parties claims and defenses were properly ventilated in
of law have been raised, petitioner need not have filed a Motion for Reconsideration of the assailed CA Decision before
and considered by the judicial court.
filing this Petition for Review.
In the present case, the Court finds that analogous considerations exist to warrant the application
of Valenzuela. Petitioner Restituto was 78 years old at the time the petition was filed in this Court, and his co-
petitioner-wife Erlinda died[10] during the pendency of the case. And, except for co-petitioner Corazon, Restituto is a
resident of Ozamis City. To compel him to appear and relitigate the case in the liquidation court-Nasugbu RTC when
the issues to be raised before it are the same as those already exhaustively passed upon and decided by the Balayan The Facts
RTC would be superfluous.

WHEREFORE, the petition is GRANTED. The Decision of December 21, 2007 and Resolution dated March
27, 2008 of the Court of Appeals are SET ASIDE. The Decision dated January 17, 2006 of the Regional Trial Court of
Balayan, Batangas, Branch 9 is REINSTATED.
SO ORDERED.
On 17 July 1997, respondent Bantigue Point Development Corporation filed with the Regional Trial Court (RTC) of
Rosario, Batangas an application for original registration of title over a parcel of land with an assessed value
of ₱4,330, ₱1,920 and ₱8,670, or a total assessed value of ₱14,920 for the entire property, more particularly described as
Lot 8060 of Cad 453-D, San Juan Cadastre, with an area of more or less 10,732 square meters, located at Barangay
Barualte, San Juan, Batangas. [3]

Republic of the Philippines

On 18 July 1997, the RTC issued an Order setting the case for initial hearing on 22 October 1997. [4] On 7 August 1997, it
Supreme Court
issued a second Order setting the initial hearing on 4 November 1997.[5]
Manila
Petitioner Republic filed its Opposition to the application for registration on 8 January 1998 while the records were still
with the RTC.[6]
On 31 March 1998, the RTC Clerk of Court transmitted motu proprio the records of the case to the MTC of San Juan,
because the assessed value of the property was allegedly less than ₱100,000.[7]
Thereafter, the MTC entered an Order of General Default[8] and commenced with the reception of evidence.[9] Among
the documents presented by respondent in support of its application are Tax Declarations, [10] a Deed of Absolute Sale
in its favor,[11] and a Certification from the Department of Environment and Natural Resources (DENR) Community
Environment and Natural Resources Office (CENRO) of Batangas City that the lot in question is within the alienable
and disposable zone.[12]Thereafter, it awarded the land to respondent Corporation.[13]
Acting on an appeal filed by the Republic,[14] the CA ruled that since the former had actively participated in the
proceedings before the lower court, but failed to raise the jurisdictional challenge therein, petitioner is thereby
estopped from questioning the jurisdiction of the lower court on appeal. [15]The CA further found that respondent
Corporation had sufficiently established the latters registrable title over the subject property after having proven open,
continuous, exclusive and notorious possession and occupation of the subject land by itself and its predecessors-in-
interest even before the outbreak of World War II.[16]
Dissatisfied with the CAs ruling, petitioner Republic filed this instant Rule 45 Petition and raised the following
arguments in support of its appeal:
I.
THE REPUBLIC CANNOT BE ESTOPPED FROM QUESTIONING THE JURISDICTION OF THE
MUNICIPAL TRIAL COURT OVER THE APPLICATION FOR ORIGINAL REGISTRATION OF
LAND TITLE EVEN FOR THE FIRST TIME ON APPEAL
II.
THE MUNICIPAL TRIAL COURT FAILED TO ACQUIRE JURISDICTION OVER THE
APPLICATION FOR ORIGINAL REGISTRATION OF LAND TITLE.[17]
The Courts Ruling
We uphold the jurisdiction of the MTC, but remand the case to the court a quo for further proceedings in order to
determine if the property in question forms part of the alienable and disposable land of the public domain.
I from filing of the application, issue an order setting the date and hour of the initial hearing
The Republic is not estopped from raising the issue of jurisdiction in this case.
At the outset, we rule that petitioner Republic is not estopped from questioning the jurisdiction of the lower court,
even if the former raised the jurisdictional question only on appeal. The rule is settled that lack of jurisdiction over the
subject matter may be raised at any stage of the proceedings.[18] Jurisdiction over the subject matter is conferred only
by the Constitution or the law.[19] It cannot be acquired through a waiver or enlarged by the omission of the parties or
conferred by the acquiescence of the court.[20] Consequently, questions of jurisdiction may be cognizable even if raised
for the first time on appeal.[21]
The ruling of the Court of Appeals that a party may be estopped from raising such [jurisdictional] question if he has
actively taken part in the very proceeding which he questions, belatedly objecting to the courts jurisdiction in the event
that the judgment or order subsequently rendered is adverse to him[22] is based on the doctrine of estoppel by laches.
We are aware of that doctrine first enunciated by this Court in Tijam v. Sibonghanoy.[23] In Tijam, the party-litigant
actively participated in the proceedings before the lower court and filed pleadings therein. Only 15 years thereafter,
and after receiving an adverse Decision on the merits from the appellate court, did the party-litigant question the lower
courts jurisdiction. Considering the unique facts in that case, we held that estoppel by laches had already precluded the
party-litigant from raising the question of lack of jurisdiction on appeal. In Figueroa v. People,[24] we cautioned
that Tijam must be construed as an exception to the general rule and applied only in the most exceptional cases whose
factual milieu is similar to that in the latter case.
The facts are starkly different in this case, making the exceptional rule in Tijam inapplicable. Here,
petitioner Republic filed its Opposition to the application for registration when the records were still with the
RTC.[25] At that point, petitioner could not have questioned the delegated jurisdiction of the MTC, simply because the
case was not yet with that court. When the records were transferred to the MTC, petitioner neither filed pleadings nor
requested affirmative relief from that court. On appeal, petitioner immediately raised the jurisdictional question in its
Brief.[26] Clearly, the exceptional doctrine of estoppel by laches is inapplicable to the instant appeal.
Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of time, to
do that which, by exercising due diligence, could or should have been done earlier; it is negligence or omission to assert
a right within a reasonable time, warranting the presumption that the party entitled to assert it either has abandoned
or declined to assert it.[27] In this case, petitioner Republic has not displayed such unreasonable failure or neglect that
would lead us to conclude that it has abandoned or declined to assert its right to question the lower court's jurisdiction.
II
The Municipal Trial Court properly acquired jurisdiction over the case.
In assailing the jurisdiction of the lower courts, petitioner Republic raised two points of contention: (a) the period for
setting the date and hour of the initial hearing; and (b) the value of the land to be registered.
First, petitioner argued that the lower court failed to acquire jurisdiction over the application, because the
RTC set the date and hour of the initial hearing beyond the 90-day period provided under the Property Registration
Decree.[28]
We disagree.
The Property Registration Decree provides:
Sec. 23. Notice of initial hearing, publication, etc. - The court shall, within five days
which shall not be earlier than forty-five days nor later than ninety days from the date of the
order. x x x.
In this case, the application for original registration was filed on 17 July 1997.[29] On 18 July 1997, or a day after the filing
of the application, the RTC immediately issued an Order setting the case for initial hearing on 22 October 1997, which
was 96 days from the Order.[30] While the date set by the RTC was beyond the 90-day period provided for in
Section 23, this fact did not affect the jurisdiction of the trial court. In Republic v. Manna Properties, Inc.,[31] petitioner
Republic therein contended that there was failure to comply with the jurisdictional requirements for original
registration, because there were 125 days between the Order setting the date of the initial hearing and the initial
hearing itself. We ruled that the lapse of time between the issuance of the Order setting the date of initial hearing and
the date of the initial hearing itself was not fatal to the application. Thus, we held:
x x x [A] party to an action has no control over the Administrator or the Clerk of
Court acting as a land court; he has no right to meddle unduly with the business of such
official in the performance of his duties. A party cannot intervene in matters within the
exclusive power of the trial court. No fault is attributable to such party if the trial court errs on
matters within its sole power. It is unfair to punish an applicant for an act or omission over
which the applicant has neither responsibility nor control, especially if the applicant has
complied with all the requirements of the law.[32]
Indeed, it would be the height of injustice to penalize respondentCorporation by dismissing its application
for registration on account of events beyond its control.
Moreover, since the RTC issued a second Order on 7 August 1997 setting the initial hearing on 4 November
1997,[33] within the 90-day period provided by law, petitioner Republic argued that the jurisdictional defect was still not
cured, as the second Order was issued more than five days from the filing of the application, again contrary to the
prescribed period under the Property Registration Decree.[34]
Petitioner is incorrect.
The RTCs failure to issue the Order setting the date and hour of the initial hearing within five days from the filing of the
application for registration, as provided in the Property Registration Decree, did not affect the courts its jurisdiction.
Observance of the five-day period was merely directory, and failure to issue the Order within that period did not
deprive the RTC of its jurisdiction over the case. To rule that compliance with the five-day period is mandatory would
make jurisdiction over the subject matter dependent upon the trial court. Jurisdiction over the subject matter is
conferred only by the Constitution or the law.[35] It cannot be contingent upon the action or inaction of the court.
This does not mean that courts may disregard the statutory periods with impunity. We cannot assume that the law
deliberately meant the provision to become meaningless and to be treated as a dead letter. [36] However, the records of
this case do not show such blatant disregard for the law. In fact, the RTC immediately set the case for initial hearing a
day after the filing of the application for registration,[37] except that it had to issue a second Order because the initial
hearing had been set beyond the 90-day period provided by law.
Second, petitioner contended[38] that since the selling price of the property based on the Deed of Sale
annexed to respondents application for original registration was ₱160,000,[39] the MTC did not have jurisdiction over
the case. Under Section 34 of the Judiciary Reorganization Act, as amended,[40] the MTCs delegated jurisdiction to try
cadastral and land registration cases is limited to lands, the value of which should not exceed ₱100,000.
We are not persuaded.
The delegated jurisdiction of the MTC over cadastral and land registration cases is indeed set forth in the Judiciary
Reorganization Act, which provides:
Sec. 34. Delegated Jurisdiction in Cadastral and Land Registration Cases. -
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts may be
assigned by the Supreme Court to hear and determine cadastral or land registration cases
covering lots where there is no controversy or opposition, or contested lots where the value
of which does not exceed One hundred thousand pesos (₱100,000.00), such value to be
ascertained by the affidavit of the claimant or by agreement of the respective claimants if
there are more than one, or from the corresponding tax declaration of the real property. Their
decision in these cases shall be appealable in the same manner as decisions of the Regional
Trial Courts. (As amended by R.A. No. 7691) (Emphasis supplied.)
Thus, the MTC has delegated jurisdiction in cadastral and land registration cases in two instances: first, where there is
no controversy or opposition; or, second, over contested lots, the value of which does not exceed ₱100,000.
The case at bar does not fall under the first instance, because petitioner opposed respondent Corporations application
for registration on 8 January 1998.[41]
However, the MTC had jurisdiction under the second instance, because the value of the lot in this case does not
exceed ₱100,000.
Contrary to petitioners contention, the value of the land should not be determined with reference to its selling price.
Rather, Section 34 of the Judiciary Reorganization Act provides that the value of the property sought to be registered
may be ascertained in three ways: first, by the affidavit of the claimant; second, by agreement of the respective
claimants, if there are more than one; or, third, from the corresponding tax declaration of the real property.[42]
In this case, the value of the property cannot be determined using the first method, because the records are bereft of
any affidavit executed by respondent as to the value of the property. Likewise, valuation cannot be done through the
second method, because this method finds application only where there are multiple claimants who agree on and
make a joint submission as to the value of the property. Here, only respondent Bantigue Point Development
Corporation claims the property.
The value of the property must therefore be ascertained with reference to the corresponding Tax Declarations
submitted by respondent Corporation together with its application for registration. From the records, we find that the
assessed value of the property is ₱4,330, ₱1,920 and ₱8,670, or a total assessed value of ₱14,920 for the entire
property.[43] Based on these Tax Declarations, it is evident that the total value of the land in question does not
exceed ₱100,000. Clearly, the MTC may exercise its delegated jurisdiction under the Judiciary Reorganization Act, as
amended.
III
A certification from the CENRO is not sufficient proof that the property in question is
alienable and disposable land of the public domain.
Even as we affirm the propriety of the MTCs exercise of its delegated jurisdiction, we find that the lower
court erred in granting respondent Corporations application for original registration in the absence of sufficient proof
that the property in question was alienable and disposable land of the public domain.
The Regalian doctrine dictates that all lands of the public domain belong to the State. [44] The applicant for
land registration has the burden of overcoming the presumption of State ownership by establishing through
incontrovertible evidence that the land sought to be registered is alienable or disposable based on a positive act of
the government.[45] We held in Republic v. T.A.N. Properties, Inc. that a CENRO certification is insufficient to prove the
alienable and disposable character of the land sought to be registered.[46] The applicant must also show sufficient proof
that the DENR Secretary has approved the land classification and released the land in question as alienable and
disposable.[47]
 Thus, the present rule is that an application for original registration must be accompanied by (1) a CENRO
or PENRO[48] Certification; and (2) a copy of the original classification approved by the DENR Secretary and certified as
a true copy by the legal custodian of the official records.[49]
Here, respondent Corporation only presented a CENRO certification in support of
application.[50] Clearly, this falls short of the requirements for original registration.
We therefore remand this case to the court a quo for reception of further evidence to prove that the
property in question forms part of the alienable and disposable land of the public domain. If respondent Bantigue Point
Development Corporation presents a certified true copy of the original classification approved by the DENR Secretary,
the application for original registration should be granted. If it fails to present sufficient proof that the land in question
is alienable and disposable based on a positive act of the government, the application should be denied.
WHEREFORE, premises considered, the instant Petition for Review is DENIED. Let this case be REMANDED to the
Municipal Trial Court of San Juan, Batangas, for reception of evidence to prove that the property sought to be
registered is alienable and disposable land of the public domain.
SO ORDERED.
FIRST DIVISION
[G.R. NO. 160604 : March 28, 2008]
PHILIPPINE DAILY INQUIRER, ISAGANI YAMBOT, LETTY JIMENEZ-MAGSANOC, PERGENITO B. BANDAYREL,
JR., GOBLETH C. MOULIC, ESTANISLAO CALDEZ, and ZENAIDA CALDEZ, Petitioners, v. HON. ELMO M.
ALAMEDA, in his capacity as the Presiding Judge of the REGIONAL TRIAL COURT OF TUGUEGARAO CITY,
CAGAYAN, BRANCH 5, and LUZ CORTEZ BABARAN,Respondents.
DECISION
AZCUNA, J.:
Before us is a Petition for Review on Certiorari seeking the review, setting aside, and annulment of the Resolution 1 of
the Court of Appeals (CA) in CA-G.R. SP No. 79702 dated October 22, 2003 dismissing the petition for certiorari and
prohibition filed by petitioners.
The antecedents are as follows:
The Philippine Daily Inquirer (PDI), in its August 1, 2000 issue, published an article with the heading "After Bong, who's
next?"2 The article narrates the death of Expedito "Bong" Caldez, a photo correspondent of the PDI in Cagayan. In said
article, the family of the deceased correspondent laments the death of their loved one due to the alleged erroneous
diagnosis of Dr. Luz Babaran.3
Later, in its September 29, 2000 issue, the PDI published another article with the heading "DOH orders probe of fotog's
death."4In said article, it was reported that the regional Department of Health (DOH) in Tuguegarao City has started
investigating the death of Expedito Caldez following an order from the DOH's Bureau of Licensing and Regulation.
On July 25, 2001, based on the two PDI column articles, Dr. Babaran filed a complaint for Damages, 5 Civil Case No.
5850, against herein petitioners. In said complaint Dr. Babaran alleged, among other things, that: after learning about
the article published in the August 1, 2000 issue of the PDI, she wrote a letter to the editor of the PDI but she never
received any response from the latter; to aggravate the matter, another article appeared in the September 29, 2000
its issue of the PDI and she was again singled out as having erroneously diagnosed the illness of Expedito Caldez; the
Report6 of the DOH Fact-Finding Committee concluding that her diagnosis cannot be considered erroneous, was
suppressed and was never published by the PDI; the articles portrayed her as incompetent and one whose alleged
erroneous diagnosis caused the death of Expedito Caldez; and, in causing the articles to be published, petitioners acted
in bad faith.
On September 13, 2001, petitioners filed their Answer7with counterclaims. In said answer, petitioners raised, among
others, the following defenses: that the complaint states no cause of action against them; that the complaint fails and
omits to state the factual premises to support a conclusion that there was malice on the part of the PDI in publishing
the questioned news report; that private respondent failed to allege "actual malice" on the part of the petitioners; that
a case for actionable libel with claims for damages has not been adequately stated in the complaint; and, that the
complaint fails to establish the basis of petitioners' liability.8
Pre-trial was held and terminated, and petitioners thereafter filed a Motion for a Preliminary Hearing on Affirmative
Defense Raised in the Answer (which is also a ground for a motion to dismiss).9 In said motion, it was alleged that at the
pre-trial on February 19, 2003, the court noted that one of the defenses raised by petitioners was that private
respondent has not delineated the participation of each of petitioners in the publication of the alleged libelous
articles.10 Thereupon, private respondent's counsel asked for a few days to determine whether the complaint should be
amended to cure its defects. However, private respondent had not moved to amend the complaint, hence, petitioners
filed the motion.11
In support thereof, petitioners contend that: in libel charges, the participation of each defendant must be specifically
alleged in the complaint, which private respondent failed to do; and the allegations of the complaint are mere
conclusions of law and opinions of the private respondent.12Petitioners ultimately prayed that a preliminary hearing be
conducted on their affirmative defense that the complaint failed to state a cause of action; and that, thereafter, the
complaint be dismissed.13
Subsequently, private respondent filed a Comment/Opposition to the Motion to Dismiss Based on Affirmative
Defense.14 In said comment/opposition, private respondent averred that at the February 19, 2003 pre-trial, the issue of
whether or not the complaint states a cause of action was not raised. As such, it is no longer an issue to be litigated in
the case. Private respondent prayed that the court deny petitioners' motion to dismiss.
On May 30, 2003, the Regional Trial Court (RTC) issued an Order15 denying petitioners' motion in this wise:
With this finding and conclusion, the Court finds no further necessity in dwelling at length on the other issues raised by
the defendants. Consequently, the motion for a Preliminary Hearing on Affirmative Defense Raised in the Answer
(which is also a ground for a motion to dismiss) is hereby DENIED. The initial presentation of plaintiff's evidence is set
on July 3, 2003, at 8:30 o'clock in the morning.
SO ORDERED.16
The RTC opined that private respondent's allegations in her complaint, as well as her documentary evidence, show that
there is sufficient cause of action. It added that the documentary evidence discloses facts which are sufficient to enable
the court to go beyond the disclosures in the complaint. Considering that the facts alleged in the complaint which
make out the principal cause of action and relief are sufficient, the case should not be dismissed.17
Petitioners filed a Motion for Reconsideration18 but it was denied in the Order19 dated July 29, 2003.
Aggrieved, petitioners filed a Petition for Certiorari and Prohibition (with Prayer for the Issuance of Temporary
Restraining Order and/or Preliminary Injunction)20 with the CA, relying on the ground that:
THE RESPONDENT TRIAL JUDGE GRAVELY ABUSED HIS DISCRETION AND EXCEEDED HIS JURISDICTION IN NOT
DISMISSING THE COMPLAINT DESPITE ITS FAILURE TO VALIDLY AND SUFFICIENTLY STATE A CAUSE OF ACTION
FOR LIBEL AGAINST THE PETITIONERS BECAUSE:
A) THE PARTICIPATION OF EACH DEFENDANT (PETITIONER) IN THE WRITING, EDITING, PRINTING, AND
PUBLICATION OF THE NEWS ARTICLES IN QUESTION IS NOT SPECIFICALLY SET OUT IN THE COMPLAINT;
B) THE MATERIAL ALLEGATIONS OF THE COMPLAINT ARE PURELY LEGAL CONCLUSIONS AND OPINIONS OF
PRIVATE RESPONDENT, AND NOT STATEMENTS OF ULTIMATE FACTS.21
Petitioners prayed among others: that the Orders of the RTC dated May 30, 2003 and July 29, 2003 be annulled and set
aside for having been rendered with grave abuse of discretion and/or excess of jurisdiction; and that Civil Case No. 5850
be dismissed for failure to state a cause of action.22
On October 22, 2003, the CA issued a Resolution23 dismissing the petition for being insufficient in form and substance
and for presenting no justiciable issue needing serious consideration by the court. Also, the CA noted that the Order
dated May 30, 2003 shows that the RTC had already ruled against petitioners' affirmative defense that the complaint
states no cause of action.
Hence, this petition, raising the following issues:
WHETHER OR NOT A COMPLAINT WHICH FAILS TO VALIDLY AND SUFFICIENTLY STATE A CAUSE OF ACTION FOR
LIBEL BECAUSE:
A) THE PARTICIPATION OF EACH DEFENDANT (PETITIONER) IN THE WRITING, EDITING, PRINTING, AND
PUBLICATION OF THE NEWS ARTICLES IN QUESTION IS NOT SPECIFICALLY SET OUT IN THE COMPLAINT;
B) THE MATERIAL ALLEGATIONS OF THE COMPLAINT ARE PURELY LEGAL CONCLUSIONS AND OPINIONS OF
PRIVATE RESPONDENT, AND NOT STATEMENTS OF ULTIMATE FACTS; AND
C) THE COMPLAINT IS VIOLATIVE OF PETITIONERS' CONSTITUTIONAL RIGHTS TO FREE PRESS AND TO FREE
SPEECH.
SHOULD BE DISMISSED UPON MOTION BY THE DEFENDANTS (PETITIONERS HEREIN).24
Petitioners argue that private respondent's complaint failed to comply with the requirement in libel cases that the
participation of each defendant must be specifically alleged in the complaint. Petitioners maintain that their divergent
personal circumstances and different legal existence, not to mention the absence of any professional relationship of
two of petitioners with the rest of them, should have prompted private respondent to specify the participation of each
petitioner in the news gathering, reporting, editing, publication, and circulation of the subject articles. As such it
cannot be determined with certainty from the allegations in the complaint whose acts and omissions are actually
complained of.25
Also, petitioners added that the material allegations of the complaint are not statements of ultimate facts but were
mere conclusions of law and were merely private respondent's opinions.26
Finally, petitioners contend that the complaint violates their constitutionally protected freedom of speech and of the
press.27
As defined in Section 2, Rule 2 of the Rules of Court, a cause of action is the act or omission by which a party violates
the right of another. In relation to a complaint, it is a formal statement of the operative facts that give rise to a remedial
right. The question of whether the complaint states a cause of action is determined by its averments regarding the acts
committed by the defendant. Thus, it must contain a concise statement of the ultimate or essential facts constituting
the plaintiff's cause of action. As such, the failure to make a sufficient allegation of a cause of action in the complaint
warrants its dismissal.28 Its essential elements are as follows:
1. A right in favor of the plaintiff by whatever means and under whatever law it arises or is created;
2. An obligation on the part of the named defendant to respect or not to violate such right; andcralawlibrary
3. Act or omission on the part of such defendant in violation of the right of the plaintiff or constituting a breach of the
obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of damages or
other appropriate relief.
Of the three, the most important is the last element since it is only upon the occurrence of the last element that a cause
of action arises, giving the plaintiff the right to maintain an action in court for recovery of damages or other
appropriate relief.29 In determining whether an initiatory pleading states a cause of action, "the test is as follows:
admitting the truth of the facts alleged, can the court render a valid judgment in accordance with the prayer?" To be
taken into account are only the material allegations in the complaint; extraneous facts and circumstances or other
matters aliunde are not considered. The court may however consider, in addition to the complaint, the appended
annexes or documents, other pleadings of the plaintiff, or admissions in the records. 30
When a defendant seeks the dismissal of the complaint through a motion to dismiss, the sufficiency of the motion
should be tested on the strength of the allegations of facts contained in the complaint and on no other basis. 31 The
issue of whether or not the complaint failed to state a cause of action, warranting its dismissal, must be passed upon on
the basis of the allegations stated therein assuming them to be true and the court cannot inquire into the truth of the
allegations and declare them to be false; otherwise, it would be a procedural error and a denial of due process to the
plaintiff.32
This Court finds that petitioners raised the threshold question of whether the complaint sufficiently alleges a cause of
action.chanrobles virtual law library
Hence, the trial court should have granted petitioners' motion for a preliminary hearing on the affirmative defenses
raised in the answer based on failure to state a cause of action. This procedure is designed to prevent a tedious, if not
traumatic, trial in case the complaint falls short of sufficiently alleging a cause of action.
WHEREFORE, the petition is GRANTED. The Resolution of the Court of Appeals dated October 22, 2003 is REVERSED,
and the case is REMANDED to the Regional Trial Court of Tuguegarao City, Cagayan, Branch 5, for the trial court to
hear and resolve petitioners' Affirmative Defenses Raised in the Answer.
No costs.
SO ORDERED.
SECOND DIVISION
JESSE U. LUCAS, G.R. No. 190710
Petitioner,
Present:
CARPIO, J.,
Chairperson,
- versus - NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.
Promulgated:
JESUS S. LUCAS,
Respondent. June 6, 2011
x----------------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
Is a prima facie showing necessary before a court can issue a DNA testing order? In this petition for review
on certiorari, we address this question to guide the Bench and the Bar in dealing with a relatively new evidentiary tool.
Assailed in this petition are the Court of Appeals (CA) Decision[1]dated September 25, 2009 and Resolution dated
December 17, 2009.
The antecedents of the case are, as follows:
On July 26, 2007, petitioner, Jesse U. Lucas, filed a Petition to Establish Illegitimate Filiation (with Motion for the
Submission of Parties to DNA Testing)[2] before the Regional Trial Court (RTC), Branch 72, ValenzuelaCity. Petitioner
narrated that, sometime in 1967, his mother, Elsie Uy (Elsie), migrated to Manila from Davao and stayed with a certain
Ate Belen (Belen) who worked in a prominent nightspot in Manila. Elsie would oftentimes accompany Belen to work.
On one occasion, Elsie got acquainted with respondent, Jesus S. Lucas, at Belens workplace, and an intimate
relationship developed between the two. Elsie eventually got pregnant and, on March 11, 1969, she gave birth to
petitioner, Jesse U. Lucas. The name of petitioners father was not stated in petitioners certificate of live birth.
However, Elsie later on told petitioner that his father is respondent. On August 1, 1969, petitioner was baptized at San
Isidro Parish, Taft Avenue, Pasay City. Respondent allegedly extended financial support to Elsie and petitioner for a
period of about two years. When the relationship of Elsie and respondent ended, Elsie refused to accept respondents
offer of support and decided to raise petitioner on her own. While petitioner was growing up, Elsie made several
attempts to introduce petitioner to respondent, but all attempts were in vain.
Attached to the petition were the following: (a) petitioners certificate of live birth; (b) petitioners baptismal certificate;
(c) petitioners college diploma, showing that he graduated from Saint Louis University in Baguio City with a degree in
Psychology; (d) his Certificate of Graduation from the same school; (e) Certificate of Recognition from the University of
the Philippines, College of Music; and (f) clippings of several articles from different newspapers about petitioner, as a
musical prodigy.
Respondent was not served with a copy of the petition. Nonetheless, respondent learned of the petition to establish
filiation. His counsel therefore went to the trial court on August 29, 2007 and obtained a copy of the petition.
Petitioner filed with the RTC a Very Urgent Motion to Try and Hear the Case. Hence, on September 3, 2007, the RTC,
finding the petition to be sufficient in form and substance, issued the Order[3] setting the case for hearing and urging
anyone who has any objection to the petition to file his opposition. The court also directed that the Order be published
once a week for three consecutive weeks in any newspaper of general circulation in the Philippines, and that the
Solicitor General be furnished with copies of the Order and the petition in order that he may appear and represent the
State in the case.
On September 4, 2007, unaware of the issuance of the September 3, 2007 Order, respondent filed a Special
Appearance and Comment. He manifested inter alia that: (1) he did not receive the summons and a copy of the
petition; (2) the petition was adversarial in nature and therefore summons should be served on him as respondent; (3)
should the court agree that summons was required, he was waiving service of summons and making a voluntary
appearance; and (4) notice by publication of the petition and the hearing was improper because of the confidentiality
of the subject matter.[4]
On September 14, 2007, respondent also filed a Manifestation and Comment on Petitioners Very Urgent Motion to Try
and Hear the Case. Respondent reiterated that the petition for recognition is adversarial in nature; hence, he should be
served with summons.
After learning of the September 3, 2007 Order, respondent filed a motion for reconsideration.[5] Respondent averred
that the petition was not in due form and substance because petitioner could not have personally known the matters
that were alleged therein. He argued that DNA testing cannot be had on the basis of a mere allegation pointing to
respondent as petitioners father. Moreover, jurisprudence is still unsettled on the acceptability of DNA evidence.
On July 30, 2008, the RTC, acting on respondents motion for reconsideration, issued an Order [6] dismissing the case.
The court remarked that, based on the case of Herrera v. Alba,[7] there are four significant procedural aspects of a
traditional paternity action which the parties have to face: a prima facie case, affirmative defenses, presumption of
legitimacy, and physical resemblance between the putative father and the child. The court opined that petitioner must
first establish these four procedural aspects before he can present evidence of paternity and filiation, which may
include incriminating acts or scientific evidence like blood group test and DNA test results. The court observed that the
petition did not show that these procedural aspects were present. Petitioner failed to establish a prima faciecase
considering that (a) his mother did not personally declare that she had sexual relations with respondent, and
petitioners statement as to what his mother told him about his father was clearly hearsay; (b) the certificate of live
birth was not signed by respondent; and (c) although petitioner used the surname of respondent, there was no
allegation that he was treated as the child of respondent by the latter or his family. The court opined that, having failed
to establish a prima facie case, respondent had no obligation to present any affirmative defenses. The dispositive
portion of the said Order therefore reads:
WHEREFORE, for failure of the petitioner to establish compliance with the four
procedural aspects of a traditional paternity action in his petition, his motion for the
submission of parties to DNA testing to establish paternity and filiation is
hereby DENIED. This case is DISMISSED without prejudice.
SO ORDERED.[8]
Petitioner seasonably filed a motion for reconsideration to the Order dated July 30, 2008, which the RTC resolved in his
favor. Thus, on October 20, 2008, it issued the Order[9] setting aside the courts previous order, thus:
WHEREFORE, in view of the foregoing, the Order dated July 30, 2008 is hereby
reconsidered and set aside.
Let the Petition (with Motion for the Submission of Parties to DNA Testing) be
set for hearing on January 22, 2009 at 8:30 in the morning.
xxxx
SO ORDERED.[10]
This time, the RTC held that the ruling on the grounds relied upon by petitioner for filing the petition is premature
considering that a full-blown trial has not yet taken place. The court stressed that the petition was sufficient in form
and substance. It was verified, it included a certification against forum shopping, and it contained a plain, concise, and
direct statement of the ultimate facts on which petitioner relies on for his claim, in accordance with Section 1, Rule 8 of
the Rules of Court. The court remarked that the allegation that the statements in the petition were not of petitioners
personal knowledge is a matter of evidence. The court also dismissed respondents arguments that there is no basis for Petitioner moved for reconsideration. On December 17, 2009, the CA denied the motion for lack of
the taking of DNA test, and that jurisprudence is still unsettled on the acceptability of DNA evidence. It noted that the merit.[16]
new Rule on DNA Evidence[11] allows the conduct of DNA testing, whether at the courts instance or upon application of In this petition for review on certiorari, petitioner raises the following issues:
any person who has legal interest in the matter in litigation. I.
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT RESOLVED THE ISSUE OF
Respondent filed a Motion for Reconsideration of Order dated October 20, 2008 and for Dismissal of LACK OF JURISDICTION OVER THE PERSON OF HEREIN RESPONDENT ALBEIT THE SAME
Petition,[12] reiterating that (a) the petition was not in due form and substance as no defendant was named in the title, WAS NEVER RAISED IN THE PETITION FOR CERTIORARI.
and all the basic allegations were hearsay; and (b) there was no prima facie case, which made the petition susceptible to
dismissal. I.A
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT
The RTC denied the motion in the Order dated January 19, 2009, and rescheduled the hearing.[13] RULED THAT JURISDICTION WAS NOT ACQUIRED OVER THE
PERSON OF THE RESPONDENT.
Aggrieved, respondent filed a petition for certiorari with the CA, questioning the Orders dated October 20,
2008 and January 19, 2009. I.B
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT
On September 25, 2009, the CA decided the petition for certiorari in favor of respondent, thus: FAILED TO REALIZE THAT THE RESPONDENT HAD ALREADY
SUBMITTED VOLUNTARILY TO THE JURISDICTION OF THE
WHEREFORE, the instant petition for certiorari is hereby GRANTED for being COURT A QUO.
meritorious. The assailed Orders dated October 20, 2008 and January 19, 2009 both issued by
the Regional Trial Court, Branch 172 of Valenzuela City in SP. Proceeding Case No. 30-V-07 are I.C
REVERSED and SET ASIDE. Accordingly, the case docketed as SP. Proceeding Case No. 30-V- WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT
07 is DISMISSED.[14] ESSENTIALLY RULED THAT THE TITLE OF A PLEADING, RATHER
THAN ITS BODY, IS CONTROLLING.
The CA held that the RTC did not acquire jurisdiction over the person of respondent, as no summons had
been served on him. Respondents special appearance could not be considered as voluntary appearance because it was II.
filed only for the purpose of questioning the jurisdiction of the court over respondent. Although respondent likewise WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT ORDERED THE DISMISSAL
questioned the courts jurisdiction over the subject matter of the petition, the same is not equivalent to a waiver of his OF THE PETITION BY REASON OF THE MOTION (FILED BY THE PETITIONER BEFORE THE
right to object to the jurisdiction of the court over his person. COURT A QUO) FOR THE CONDUCT OF DNA TESTING.

The CA remarked that petitioner filed the petition to establish illegitimate filiation, specifically seeking a II.A
DNA testing order to abbreviate the proceedings. It noted that petitioner failed to show that the four significant WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT
procedural aspects of a traditional paternity action had been met. The CA further held that a DNA testing should not be ESSENTIALLY RULED THAT DNA TESTING CAN ONLY BE
allowed when the petitioner has failed to establish a prima facie case, thus: ORDERED AFTER THE PETITIONER ESTABLISHES PRIMA FACIE
PROOF OF FILIATION.
While the tenor [of Section 4, Rule on DNA Evidence] appears to be absolute, the rule could not really have
been intended to trample on the substantive rights of the parties. It could have not meant to be an III.
instrument to promote disorder, harassment, or extortion. It could have not been intended to legalize WHETHER OR NOT THE COURT OF APPEALS ERRED WITH ITS MISPLACED
unwarranted expedition to fish for evidence. Such will be the situation in this particular case if a court may RELIANCE ON THE CASE OF HERRERA VS. ALBA,
at any time order the taking of a DNA test. If the DNA test in compulsory recognition cases is immediately
available to the petitioner/complainant without requiring first the presentation of corroborative proof, ESPECIALLY AS REGARDS THE FOUR SIGNIFICANT PROCEDURAL ASPECTS OF A
then a dire and absurd rule would result. Such will encourage and promote harassment and extortion. TRADITIONAL PATERNITY ACTION.[17]

xxxx
At the risk of being repetitious, the Court would like to stress that it sees the danger of allowing an
absolute DNA testing to a compulsory recognition test even if the plaintiff/petitioner failed to
establish prima facie proof. x x x If at anytime, motu proprio and without pre-conditions, the court can
indeed order the taking of DNA test in compulsory recognition cases, then the prominent and well-to-do
members of our society will be easy prey for opportunists and extortionists. For no cause at all, or even for
[sic] casual sexual indiscretions in their younger years could be used as a means to harass them.
Unscrupulous women, unsure of the paternity of their children may just be taking the chances-just in case-
by pointing to a sexual partner in a long past one-time encounter. Indeed an absolute and unconditional
taking of DNA test for compulsory recognition case opens wide the opportunities for extortionist to prey
on victims who have no stomach for scandal.[15]
Petitioner contends that respondent never raised as issue in his petition for certiorari the courts lack of jurisdiction over
his person. Hence, the CA had no legal basis to discuss the same, because issues not raised are deemed waived or
abandoned. At any rate, respondent had already voluntarily submitted to the jurisdiction of the trial court by his filing
of several motions asking for affirmative relief, such as the (a) Motion for Reconsideration of the Order dated
September 3, 2007; (b) Ex Parte Motion to Resolve Motion for Reconsideration of the Order dated November 6, 2007;
and (c) Motion for Reconsideration of the Order dated October 20, 2008 and for Dismissal of Petition. Petitioner points
out that respondent even expressly admitted that he has waived his right to summons in his Manifestation and
Comment on Petitioners Very Urgent Motion to Try and Hear the Case. Hence, the issue is already moot and
academic.
Petitioner argues that the case was adversarial in nature. Although the caption of the petition does not state
respondents name, the body of the petition clearly indicates his name and his known address. He maintains that the
body of the petition is controlling and not the caption.
Finally, petitioner asserts that the motion for DNA testing should not be a reason for the dismissal of the petition since
it is not a legal ground for the dismissal of cases. If the CA entertained any doubt as to the propriety of DNA testing, it
should have simply denied the motion.[18] Petitioner points out that Section 4 of the Rule on DNA Evidence does not
require that there must be a prior proof of filiation before DNA testing can be ordered. He adds that the CA erroneously
relied on the four significant procedural aspects of a paternity case, as enunciated in Herrera v. Alba.[19] Petitioner avers
that these procedural aspects are not applicable at this point of the proceedings because they are matters of evidence
that should be taken up during the trial.[20]
In his Comment, respondent supports the CAs ruling on most issues raised in the petition for certiorari and merely
reiterates his previous arguments. However, on the issue of lack of jurisdiction, respondent counters that, contrary to
petitioners assertion, he raised the issue before the CA in relation to his claim that the petition was not in due form and
substance. Respondent denies that he waived his right to the service of summons. He insists that the alleged waiver
and voluntary appearance was conditional upon a finding by the court that summons is indeed required. He avers that
the assertion of affirmative defenses, aside from lack of jurisdiction over the person of the defendant, cannot be
considered as waiver of the defense of lack of jurisdiction over such person.
The petition is meritorious.
Primarily, we emphasize that the assailed Orders of the trial court were orders denying respondents
motion to dismiss the petition for illegitimate filiation. An order denying a motion to dismiss is an interlocutory
order which neither terminates nor finally disposes of a case, as it leaves something to be done by the court before the
case is finally decided on the merits. As such, the general rule is that the denial of a motion to dismiss cannot be
questioned in a special civil action for certiorari, which is a remedy designed to correct errors of jurisdiction and not
errors of judgment. Neither can a denial of a motion to dismiss be the subject of an appeal unless and until a final
judgment or order is rendered. In a number of cases, the court has granted the extraordinary remedy of certiorari on
the denial of the motion to dismiss but only when it has been tainted with grave abuse of discretion amounting to lack
or excess of jurisdiction.[21] In the present case, we discern no grave abuse of discretion on the part of the trial court in
denying the motion to dismiss.
The grounds for dismissal relied upon by respondent were (a) the courts lack of jurisdiction over his person
due to the absence of summons, and (b) defect in the form and substance of the petition to establish illegitimate
filiation, which is equivalent to failure to state a cause of action.
We need not belabor the issues on whether lack of jurisdiction was raised before the CA, whether the court
acquired jurisdiction over the person of respondent, or whether respondent waived his right to the service of summons.
We find that the primordial issue here is actually whether it was necessary, in the first place, to serve summons on
respondent for the court to acquire jurisdiction over the case. In other words, was the service of summons
jurisdictional? The answer to this question depends on the nature of petitioners action, that is, whether it is an action in
personam, in rem, or quasi in rem.
An action in personam is lodged against a person based on personal liability; an action in rem is directed
against the thing itself instead of the person; while an action quasi in rem names a person as defendant, but its object is
to subject that person's interest in a property to a corresponding lien or obligation. A petition directed against the
"thing" itself or the res, which concerns the status of a person, like a petition for adoption, annulment of marriage, or
correction of entries in the birth certificate, is an action in rem.[22]
In an action in personam, jurisdiction over the person of the defendant is necessary for the court to validly
try and decide the case. In a proceeding in rem or quasi in rem, jurisdiction over the person of the defendant is not a
prerequisite to confer jurisdiction on the court, provided that the latter has jurisdiction over the res. Jurisdiction over
the res is acquired either (a) by the seizure of the property under legal process, whereby it is brought into actual
custody of the law, or (b) as a result of the institution of legal proceedings, in which the power of the court is
recognized and made effective. [23]
The herein petition to establish illegitimate filiation is an action in rem. By the simple filing of the petition
to establish illegitimate filiation before the RTC, which undoubtedly had jurisdiction over the subject matter of the
petition, the latter thereby acquired jurisdiction over the case. An in rem proceeding is validated essentially through
publication. Publication is notice to the whole world that the proceeding has for its object to bar indefinitely all who
might be minded to make an objection of any sort to the right sought to be established.[24] Through publication, all
interested parties are deemed notified of the petition.
If at all, service of summons or notice is made to the defendant, it is not for the purpose of vesting the
court with jurisdiction, but merely for satisfying the due process requirements.[25] This is but proper in order to afford
the person concerned the opportunity to protect his interest if he so chooses. [26] Hence, failure to serve summons will
not deprive the court of its jurisdiction to try and decide the case. In such a case, the lack of summons may be excused
where it is determined that the adverse party had, in fact, the opportunity to file his opposition, as in this case. We find
that the due process requirement with respect to respondent has been satisfied, considering that he has participated in
the proceedings in this case and he has the opportunity to file his opposition to the petition to establish filiation.
To address respondents contention that the petition should have been adversarial in form, we further hold
that the herein petition to establish filiation was sufficient in form. It was indeed adversarial in nature despite its
caption which lacked the name of a defendant, the failure to implead respondent as defendant, and the non-service of
summons upon respondent. A proceeding is adversarial where the party seeking relief has given legal warning to the
other party and afforded the latter an opportunity to contest it.[27] In this petitionclassified as an action in remthe notice
requirement for an adversarial proceeding was likewise satisfied by the publication of the petition and the giving of
notice to the Solicitor General, as directed by the trial court.
The petition to establish filiation is sufficient in substance. It satisfies Section 1, Rule 8 of the Rules of
Court, which requires the complaint to contain a plain, concise, and direct statement of the ultimate facts upon which
the plaintiff bases his claim. A fact is essential if it cannot be stricken out without leaving the statement of the cause of
action inadequate.[28] A complaint states a cause of action when it contains the following elements: (1) the legal right of
plaintiff, (2) the correlative obligation of the defendant, and (3) the act or omission of the defendant in violation of said
legal right.[29]
The petition sufficiently states the ultimate facts relied upon by petitioner to establish his filiation to
respondent. Respondent, however, contends that the allegations in the petition were hearsay as they were not of
petitioners personal knowledge. Such matter is clearly a matter of evidence that cannot be determined at this point
but only during the trial when petitioner presents his evidence.
In a motion to dismiss a complaint based on lack of cause of action, the question submitted to the court for
determination is the sufficiency of the allegations made in the complaint to constitute a cause of action and not
whether those allegations of fact are true, for said motion must hypothetically admit the truth of the facts alleged in
the complaint.[30]
The inquiry is confined to the four corners of the complaint, and no other.[31] The test of the sufficiency of the facts
alleged in the complaint is whether or not, admitting the facts alleged, the court could render a valid judgment upon
the same in accordance with the prayer of the complaint.[32]
If the allegations of the complaint are sufficient in form and substance but their veracity and correctness are assailed, it
is incumbent upon the court to deny the motion to dismiss and require the defendant to answer and go to trial to prove
his defense. The veracity of the assertions of the parties can be ascertained at the trial of the case on the merits.[33]
The statement in Herrera v. Alba[34] that there are four significant procedural aspects in a traditional
paternity case which parties have to face has been widely misunderstood and misapplied in this case. A party is
confronted by these so-called procedural aspects during trial, when the parties have presented their respective
evidence. They are matters of evidence that cannot be determined at this initial stage of the proceedings, when only
the petition to establish filiation has been filed. The CAs observation that petitioner failed to establish a prima
facie casethe first procedural aspect in a paternity caseis therefore misplaced. A prima faciecase is built by a partys
evidence and not by mere allegations in the initiatory pleading.
Clearly then, it was also not the opportune time to discuss the lack of a prima facie case vis--vis the motion
for DNA testing since no evidence has, as yet, been presented by petitioner. More essentially, it is premature to discuss
whether, under the circumstances, a DNA testing order is warranted considering that no such order has yet been issued
by the trial court. In fact, the latter has just set the said case for hearing.
At any rate, the CAs view that it would be dangerous to allow a DNA testing without corroborative proof is
well taken and deserves the Courts attention. In light of this observation, we find that there is a need to supplement
the Rule on DNA Evidence to aid the courts in resolving motions for DNA testing order, particularly in paternity and
other filiation cases. We, thus, address the question of whether a prima facie showing is necessary before a court can
issue a DNA testing order.
The Rule on DNA Evidence was enacted to guide the Bench and the Bar for the introduction and use of
DNA evidence in the judicial system. It provides the prescribed parameters on the requisite elements for reliability and
validity (i.e., the proper procedures, protocols, necessary laboratory reports, etc.), the possible sources of error, the
available objections to the admission of DNA test results as evidence as well as the probative value of DNA evidence. It
seeks to ensure that the evidence gathered, using various methods of DNA analysis, is utilized effectively and properly,
[and] shall not be misused and/or abused and, more importantly, shall continue to ensure that DNA analysis serves
justice and protects, rather than prejudice the public.[35]
Not surprisingly, Section 4 of the Rule on DNA Evidence merely provides for conditions that are aimed to
safeguard the accuracy and integrity of the DNA testing. Section 4 states:
SEC. 4. Application for DNA Testing Order. The appropriate court may, at any time,
either motu proprio or on application of any person who has a legal interest in the matter in
litigation, order a DNA testing. Such order shall issue after due hearing and notice to the
parties upon a showing of the following:
(a) A biological sample exists that is relevant to the case;
(b) The biological sample: (i) was not previously subjected to the type of DNA
testing now requested; or (ii) was previously subjected to DNA testing, but
the results may require confirmation for good reasons;
(c) The DNA testing uses a scientifically valid technique;
(d) The DNA testing has the scientific potential to produce new information that
is relevant to the proper resolution of the case; and
(e) The existence of other factors, if any, which the court may consider as
potentially affecting the accuracy or integrity of the DNA testing.
This Rule shall not preclude a DNA testing, without need of a prior court order, at
the behest of any party, including law enforcement agencies, before a suit or proceeding is
commenced.
This does not mean, however, that a DNA testing order will be issued as a matter of right if, during the
hearing, the said conditions are established.
In some states, to warrant the issuance of the DNA testing order, there must be a show cause hearing
wherein the applicant must first present sufficient evidence to establish a prima facie case or a reasonable possibility of
paternity or good cause for the holding of the test. [36] In these states, a court order for blood testing is considered a
search, which, under their Constitutions (as in ours), must be preceded by a finding of probable cause in order to be
valid. Hence, the requirement of a prima facie case, or reasonable possibility, was imposed in civil actions as a
counterpart of a finding of probable cause. The Supreme Court of Louisiana eloquently explained
Although a paternity action is civil, not criminal, the constitutional prohibition against
unreasonable searches and seizures is still applicable, and a proper showing of sufficient
justification under the particular factual circumstances of the case must be made before a
court may order a compulsory blood test. Courts in various jurisdictions have differed
regarding the kind of procedures which are required, but those jurisdictions have almost
universally found that a preliminary showing must be made before a court can constitutionally
order compulsory blood testing in paternity cases. We agree, and find that, as a preliminary
matter, before the court may issue an order for compulsory blood testing, the moving party
must show that there is a reasonable possibility of paternity. As explained hereafter, in cases
in which paternity is contested and a party to the action refuses to voluntarily undergo a blood
test, a show cause hearing must be held in which the court can determine whether there is
sufficient evidence to establish a prima facie case which warrants issuance of a court order for
blood testing.[37]
The same condition precedent should be applied in our jurisdiction to protect the putative father from
mere harassment suits. Thus, during the hearing on the motion for DNA testing, the petitioner must present prima
facie evidence or establish a reasonable possibility of paternity.
Notwithstanding these, it should be stressed that the issuance of a DNA testing order remains
discretionary upon the court. The court may, for example, consider whether there is absolute necessity for the DNA
testing. If there is already preponderance of evidence to establish paternity and the DNA test result would only be
corroborative, the court may, in its discretion, disallow a DNA testing.
WHEREFORE, premises considered, the petition is GRANTED. The Court of Appeals Decision dated
September 25, 2009 and Resolution dated December 17, 2009 are REVERSED and SET ASIDE. The Orders dated
October 20, 2008 and January 19, 2009 of the Regional Trial Court of Valenzuela City are AFFIRME D.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 143188 February 14, 2007
FLORENTINO PINEDA, Petitioner,
vs.
HEIRS OF ELISEO GUEVARA, represented by ERNESTO E. GUEVARA and ISAGANI S. GUEVARA, namely:
ELISEO GUEVARA, JR., ZENAIDA G. SAPALICIO, DANTE G. GUEVARA, DANILO C. GUEVARA, and ISAGANI S.
GUEVARA, Respondents.
DECISION
TINGA, J.:
On appeal by way of certiorari under Rule 45 of the 1997 Rules of Civil Procedure are the Decision1 and Resolution of
the Court of Appeals in CA-G.R. CV No. 54074. The Decision reversed the order of dismissal of the Regional Trial Court
(RTC), Branch 273, Marikina, and directed the court a quo to conduct trial on the merits, while the Resolution denied
petitioner Pineda’s motion for reconsideration.
As borne out by the records, the following are the factual antecedents.
On 7 September 1995, respondents Eliseo Guevara, Jr., Zenaida G. Sapalicio, Dante G. Guevara and Isagani S. Guevara,
collectively referred hereinafter as the Guevara heirs, filed an action for the nullification of the certificates of title of a
parcel of land measuring approximately 2,304 hectares situated in Marikina.
Named defendants were the estate of the late Pedro Gonzales, Virginia Perez, Crisanta Perez, Jose Perez, Roy
Guadalupe, Lino Bucad and Florentino Pineda. The complaint, docketed as Civil Case No. 95-171-MK, was raffled to
Branch 273 of the RTC of Marikina.
The Guevara heirs alleged in the complaint that they were the co-owners of a property originally covered by Original
Certificate of Title (OCT) No. 386 issued on 7 December 1910 in favor of the spouses Emiliano Guevara and Matilde
Crimen. The couple’s son, and the Guevara heirs’ predecessor-in-interest, Eliseo Guevara, allegedly purchased the
property on 1 January 1932 and had exercised ownership over the property since then by selling and donating portions
thereof to third persons. The Guevara heirs averred that the sale of the property to Eliseo Guevara was annotated at
the back of OCT No. 386.
According to the Guevara heirs, the defendants illegally claimed ownership and possession over a certain portion of the
property, particularly that area covered by Transfer Certificate of Title (TCT) No. 223361 issued to the estate of Pedro
C. Gonzales. TCT No. 223361 was derived from OCT No. 629, which the Guevara heirs described as fake, having been
issued only on 26 January 1912 or subsequent to the issuance of OCT No. 386. Hence, the Guevara heirs prayed that
OCT No. 629 and its derivative titles, to wit, TCT Nos. 223361, 244447, 244448, 244449 be cancelled, that the Guevara
heirs be declared owners of the property and that a new certificate of title be issued in their names.
Defendant Pineda filed an answer with counterclaim, raising the defenses of lack of cause of action, prescription,
laches and estoppel. He averred that he was a buyer in good faith and had been in actual possession of the land since
1970 initially as a lessor and subsequently as an owner. He registered the property in his name and was issued TCT No.
257272.
Defendants Virginia, Crisanta, and Jose, all surnamed Perez, filed an answer with compulsory counterclaim and averred
that their father, Marcos Perez, purchased the property from the late Pedro Gonzales and had it declared in Perez’s
name for taxation purposes. According to them, they had been in actual possession of a lot measuring 375 square
meters before 1958 and had been regularly paying the property taxes thereon.
The rest of the defendants, including the estate of Pedro Gonzales, also filed an answer with counterclaim, raising the
same defenses of laches and prescription and res judicata. They claimed that OCT No. 629 was issued to the
Municipality of Marikina in 1912 and that the late Pedro Gonzales and his family started occupying the property as early
as 1950 as lessees thereon. The late Pedro Gonzales allegedly bought the property from the Municipality of Marikina in
a public bidding on 25 April 1966 and had allowed defendants to occupy the property. They asserted that the Guevara
heirs never actually occupied the property.
On 4 December 1995, the RTC set the case for hearing as if a motion to dismiss had been filed. During the hearing, the
parties presented oral arguments and were directed to file their memoranda.
After submission of memoranda, the RTC issued an Order dated 7 May 1996, dismissing the action on the ground of
laches. The Guevara heirs appealed the order of dismissal, claiming the denial of their right to due process.
On 23 August 1999, the Court of Appeals promulgated the assailed Decision, which set aside the RTC’s order of
dismissal and directed the reinstatement of Civil Case No. 95-171-MK. The appellate court ruled that a complaint
cannot be dismissed under Rule
16, Section 12 of the Rules of Court based on laches since laches is not one of the grounds enumerated under said
provision. Although the RTC order of dismissal did not rule on the other affirmative defenses raised by petitioners in
the answer, such as lack of cause of action, prescription and res judicata, the Court of Appeals discussed them and
ruled that none of these affirmative defenses raised were present to warrant the dismissal of the action.
Only Pineda sought reconsideration. In its 3 May 2000 Resolution, the Court of Appeals denied Pineda’s motion. Hence,
the instant petition, attributing the following errors to the Court of Appeals:
THE COURT OF APPEALS ERRED IN TAKING COGNIZANCE OF THE APPEAL OF RESPONDENTS WHICH RAISED
ONLY PURELY QUESTIONS OF LAW; AND, THEREFORE, IT ACTED WITHOUT JURISDICTION IN HEARING AND
DECIDING THE SAID APPEALED CASE.
THE COURT OF APPEALS ERRED IN NOT CONSIDERING THE AFFIRMATIVE DEFENSE OF LACHES AS ANALOGOUS
TO PRESCRIPTION.
THE COURT OF APPEALS ERRED IN HOLDING THAT THE TRIAL COURT’S DISMISSAL OF THE RESPONDENTS’
COMPLAINT IS ERRONEOUS FOR THE REASON THAT THE AFFIRMATIVE DEFENSE OF LACHES IS NOT AMONG
THE GROUNDS FOR A MOTION TO DISMISS UNDER THE RULES, WHICH MAY BE ALLEGED AS AFFIRMATIVE
DEFENSE TO BE PROVED DURING THE TRIAL.
AS A COROLLARY TO THE THIRD ASSIGNED ERROR ABOVE, THE COURT OF APPEALS ERRED IN NOT TREATING
THE ASSAILED ORDER OF DISMISSAL OF RESPONDENTS’ COMPLAINT BY THE TRIAL COURT AS A SUMMARY
JUDGMENT, TO AVOID PROTRACTED LITIGATION.
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT WHILE PRESCRIPTION IN DEROGATION OF THE TITLE
TO REGISTERED OWNERS WILL NOT LIE, LACHES WILL.3
Counsel for the estate of Pedro Gonzales filed a Comment/Manifestation,4 stating that her clients have adopted and
joined Pineda’s petition praying for the reinstatement of the trial court’s order of dismissal.
At bottom, the petition raises two main issues, to wit: (1) whether or not the appeal of the heirs of Guevara was
improperly elevated to the Court of Appeals since, according to them, it raised a pure question of law; and (2) whether
or not the trial court correctly dismissed the action on the ground of laches without conducting trial on the merits.
Petitioner Pineda had ample opportunity to raise before the Court of Appeals the objection on the improper mode of
appeal taken by the heirs of Guevara. This, he failed to do. The issue of improper appeal was raised only in Pineda’s
motion for reconsideration of the Court of Appeals’ Decision. Hence, this Court cannot now, for the first time on
appeal, pass upon this issue. For an issue cannot be raised for the first time on appeal. 5 In any case, the appeal by the
heirs of Guevara also raised the issue regarding the existence of laches on the part of petitioners as defendants, which
is factual in nature as discussed below.
Now, did the trial court correctly order the dismissal of the complaint based on laches without conducting trial on the
merits? The Court of Appeals disagreed, holding that under Rule 16, Section 1 6 of the Rules of Court, laches is not
enumerated under said provision, hence, it must be proved during trial. On the other hand, petitioner Pineda asserts
that laches is analogous to prescription and, therefore, can be a ground of dismissing a complaint as though a motion
to dismiss is filed.
Neither does the affirmative defense of prescription alleged in an answer automatically warrant the dismissal of the
complaint under Rule 16. An allegation of prescription can effectively be used in a motion to dismiss only when the
complaint on its face shows that indeed the action has already prescribed. 17 Otherwise, the issue of prescription is one
involving evidentiary matters requiring a full-blown trial on the merits and cannot be determined in a mere motion to
dismiss.18 Pineda’s theory that the defense of laches should be treated as an affirmative defense of prescription
warranting the dismissal of the complaint is erroneous.1awphi1.net

Well-settled is the rule that the elements of laches must be proved positively. Laches is evidentiary in nature which
could not be established by mere allegations in the pleadings and can not be resolved in a motion to dismiss. At this There is also no basis in procedural law to treat the RTC’s order of dismissal as a summary judgment. The trial court
stage therefore, the dismissal of the complaint on the ground of laches is premature. 7 Those issues must be resolved at cannot motu proprio decide that summary judgment on an action is in order. Under the applicable provisions of Rule 35,
the trial of the case on the merits wherein both parties will be given ample opportunity to prove their respective claims the defending party or the claimant, as the case may be, must invoke the rule on summary judgment by filing a
and defenses.8 motion.19 The adverse party must be notified of the motion for summary judgment20 and furnished with supporting
affidavits, depositions or admissions before hearing is conducted. 21 More importantly, a summary judgment is
permitted only if there is no genuine issue as to any material fact and a moving party is entitled to a judgment as a
The elements of laches are: (1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the
matter of law.22
situation of which the complaint seeks a remedy; (2) delay in asserting the complainant’s rights, the complainant
having had knowledge or notice of the defendant’s conduct as having been afforded an opportunity to institute a suit;
(3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right in which he Based on the parties’ allegations in the complaint and answer, the issues in the case at bar are far from settled. For
bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit instance, both petitioner and respondents claim their ownership rights over the same property based on two different
is not held barred.9 original certificates of title. Respondents charge petitioner of illegal occupation while the latter invokes good faith in
the acquisition of the property. Clearly, these are factual matters which can be best ventilated in a full-blown
proceeding before the trial court, especially when what are involved appear to be sizeable parcels of land covered by
Whether or not the elements of laches are present is a question involving a factual determination by the trial court.
two certificates of title.
There is no absolute rule as to what constitutes laches or staleness of demand; each case is to be determined according
to its particular circumstances.10 Laches is not concerned with the mere lapse of time, rather, the party must have been
afforded an opportunity to pursue his claim in order that the delay may sufficiently constitute laches. 11 Without Except for Pineda, the other defendants did not elevate the Court of Appeals’ Decision to this Court. With respect to
prejudging the instant case, an apparent delay in the enforcement of one’s claim does not automatically constitute them, the appellate court’s Decision has already become final and conclusive, notwithstanding their adoption23 of
laches. The party charged with negligence or omission in invoking his right must be afforded the opportunity to raise Pineda’s petition.
his defenses, which can be accommodated only in a contentious proceeding.
WHEREFORE, the instant petition for review on certiorari is DENIED and the Decision and Resolution of the Court of
In reversing the RTC’s order of dismissal, the Court of Appeals held that "laches could not be a ground to dismiss the Appeals in CA-G.R. CV No. 54074 are AFFIRMED. Let the records of the case be remanded for further proceedings to
complaint as it is not enumerated under Rule 16, Section 1."12 This is not entirely correct. Under paragraph (h) thereof, the Regional Trial Court of Marikina City, which is hereby ORDERED to try and decide the case with deliberate speed.
where a claim or demand set forth in the plaintiff’s pleading has been paid, waived, abandoned, or otherwise
extinguished, the same may be raised in a motion to dismiss. The language of the rule, particularly on the relation of
SO ORDERED.
the words "abandoned" and "otherwise extinguished" to the phrase "claim or demand deemed set forth in the
plaintiff’s pleading" is broad enough to include within its ambit the defense of bar by laches. However, when a party
moves for the dismissal of the complaint based on laches, the trial court must set a hearing on the motion where the FIRST DIVISION
parties shall submit not only their arguments on the questions of law but also their evidence on the questions of fact
involved.13 Thus, being factual in nature, the elements of laches must be proved or disproved through the presentation
of evidence by the parties. As discussed above, an apparent delay in the filing of a complaint as shown in a pleading JOSE FERNANDO, JR., ZOILO FERNANDO, NORMA G.R. No. 161030
does not automatically warrant the dismissal of the complaint on the ground of laches. FERNANDO BANARES, ROSARIO FERNANDO
TANGKENCGO, HEIRS OF TOMAS FERNANDO,
represented by ALFREDO V. FERNANDO, HEIRS OF Present:
In the case at bar, while the trial court correctly set the case for hearing as though a motion to dismiss had been filed,
GUILLERMO FERNANDO, represented by Ronnie H.
the records do not reveal that it extended to the parties the opportunity to present evidence. For instance, counsel for
Fernando, HEIRS OF ILUMINADA FERNANDO, CORONA, C.J.,
the heirs of Guevara filed and served written interrogatories14 on one of the defendants but the trial court held in
represented by Benjamin Estrella and HEIRS OF Chairperson,
abeyance the resolution of the motion to order the defendant to submit answers to the written interrogatories. 15 The
GERMOGENA FERNANDO, LEONARDO-DE CASTRO,
trial court likewise denied the Ex Parte Motion To Set Trial filed by the heirs of Guevara.16These were the instances
Petitioners, BERSAMIN,
which would have enabled the trial court to receive evidence on which to anchor its factual findings. Although the trial
DEL CASTILLO, and
court heard oral arguments and required the parties to submit their respective memoranda, the presentation of
- versus - VILLARAMA, JR., JJ.
evidence on the defenses which are grounds for a motion to dismiss was not held at all. Otherwise, the oral arguments
and memoranda submitted by the parties would have enabled this Court to review the trial court’s factual finding of
LEON ACUNA, HERMOGENES FERNANDO, HEIRS OF
laches instead of remanding the case for trial on the merits. A perusal of the records precludes this Court from making
SPOUSES ANTONIO FERNANDO AND FELISA
a categorical declaration on whether the heirs of Guevara were guilty of laches.
CAMACHO, represented by HERMOGENES
FERNANDO,
Respondents.
 Promulgated:
September 14, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
LEONARDO-DE CASTRO, J.:
This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure seeking to reverse and set
aside the Decision[1] dated November 24, 2003 of the Court of Appeals in CA-G.R. CV No. 75773, entitled Jose Fernando,
Jr., et al. v. Heirs of Germogena Fernando, et al.,which reversed and set aside the Decision[2] dated May 16, 2002 of
Branch 84, Regional Trial Court (RTC) of Malolos, Bulacan in Civil Case No. 256-M-97.
At the heart of this controversy is a parcel of land covered by Original Certificate of Title (OCT) No. RO-487
(997)[3] registered in the names of Jose A. Fernando, married to Lucila Tinio, and Antonia A. Fernando, married to
Felipe Galvez, and located in San Jose, Baliuag, Bulacan. When they died intestate, the property remained undivided.
Petitioners herein namely, Jose Fernando, Jr., Zoilo Fernando, Norma Fernando Banares, Rosario Fernando
Tangkencgo, the heirs of Tomas Fernando, the heirs of Guillermo Fernando, the heirs of Iluminada Fernando and the
heirs of Germogena Fernando are the heirs and successors-in-interest of the deceased registered owners. However,
petitioners failed to agree on the division of the subject property amongst themselves, even after compulsory
conciliation before the Barangay Lupon.
Thus, petitioners, except for the heirs of Germogena Fernando, filed a Complaint [4] for partition on April
17, 1997 against the heirs of Germogena Fernando. In the Complaint, plaintiffs alleged, among others, that they and
defendants are common descendants and compulsory heirs of the late spouses Jose A. Fernando and Lucila Tinio, and
the late spouses Antonia A. Fernando and Felipe Galvez. They further claimed that their predecessors-in-interest died
intestate and without instructions as to the disposition of the property left by them covered by OCT No. RO-487
(997). There being no settlement, the heirs are asking for their rightful and lawful share because they wish to build up
their homes or set up their business in the respective portions that will be allotted to them. In sum, they prayed that
the subject property be partitioned into eight equal parts, corresponding to the hereditary interest of each group of
heirs.
In their Answer[5] filed on May 20, 1997, defendants essentially admitted all of the allegations in the complaint. They
alleged further that they are not opposing the partition and even offered to share in the expenses that will be incurred
in the course of the proceedings.
In his Complaint in Intervention[6] filed on January 12, 1998, respondent Leon Acuna (Acuna) averred that
in the Decision[7] dated November 29, 1929 of the Cadastral Court of Baliuag, Bulacan, the portion of the property
identified as Lot 1303 was already adjudicated to: (a) Antonio Fernando, married to Felisa Camacho; (b) spouses Jose
Martinez and Gregoria Sison; (c) spouses Ignacio de la Cruz and Salud Wisco; and (d) Jose Fernando, married to Lucila
Tinio, the petitioners predecessor-in-interest. He likewise claimed that in a 1930 Decision of the Cadastral Court, the
portion identified as Lot 1302 was also already adjudicated to other people as well.
Respondent Acuna further alleged that Salud Wisco, through her authorized attorney-in-fact, Amador W.
Cruz, sold her lawful share denominated as Lot 1303-D with an area of 3,818 square meters to Simeon P.
Cunanan,[8] who in turn sold the same piece of land to him as evidenced by a Deed of Sale. [9] He also belied petitioners
assertion that the subject property has not been settled by the parties after the death of the original owners in view of
the Decision[10] dated July 30, 1980 of the Court of First Instance (CFI) of Baliuag, Bulacan, in LRC Case No. 80-389
which ordered the Register of Deeds of Bulacan to issue the corresponding certificates of title to the claimants of the
portion of the subject property designated as Lot 1302.[11] Norma Fernando, one of the petitioners in the instant case,
even testified in LRC Case No. 80-389. According to respondent Acuna, this circumstance betrayed bad faith on the
part of petitioners in filing the present case for partition.
Respondent Acuna likewise averred that the action for partition cannot prosper since the heirs of the
original owners of the subject property, namely Rosario, Jose Jr., Norma, Tomas, Guillermo, Leopoldo, Hermogena,
Illuminada and Zoilo, all surnamed Fernando, and Lucila Tinio, purportedly had already sold their respective one-tenth
(1/10) share each in the subject property to Ruperta Sto. Domingo Villasenor for the amount of P35,000.00 on January
25, 1978 as evidenced by a Kasulatan sa Bilihang Patuluyan.[12] He added that he was in possession of the original copy
of OCT No. RO-487 (997) and that he had not commenced the issuance of new titles to the subdivided lots because he
was waiting for the owners of the other portions of the subject property to bear their respective shares in the cost of
titling.
Subsequently, a Motion for Intervention[13] was filed on June 23, 1998 by respondent Hermogenes
Fernando (Hermogenes), for himself and on behalf of the heirs of the late spouses, Antonio A. Fernando and Felisa
Camacho. According to him, in the July 30, 1980 Decision of the CFI of Bulacan, their predecessors-in-interest had
already been adjudged owners of Lots 1302-A, 1302-F, 1302-G,[14] 1302-H and 1302-J of OCT No. RO-487 (997) and any
adverse distribution of the properties would cause respondents damage and prejudice. He would also later claim, in his
Answer-in-Intervention,[15] that the instant case is already barred by res judicata and, should be dismissed.
In the interest of substantial justice, the trial court allowed the respondents to intervene in the case.
The plaintiffs and defendants jointly moved to have the case submitted for judgment on the pleadings on
May 7, 1999.[16] However, the trial court denied said motion in a Resolution [17] dated August 23, 1999 primarily due to
the question regarding the ownership of the property to be partitioned, in light of the intervention of respondents
Acuna and Hermogenes who were claiming legal right thereto.
In their Manifestation[18] filed on April 12, 2000, petitioners affirmed their execution of a Deed of Sale in
favor of Ruperta Sto. Domingo Villasenor in 1978, wherein they sold to her 1,000 square meters from Lot 1303 for the
sum of ₱35,000.00.
After the pre-trial conference, trial ensued. On September 19, 2000, petitioner Elizabeth Alarcon testified
that they (plaintiffs) are not claiming the entire property covered by OCT No. RO-487 (997) but only the area referred
to as Lot 1303 and Sapang Bayan. She also admitted that Lot 1302 had already been divided into ten (10) sublots and
allocated to various owners pursuant to the July 30, 1980 Decision of the CFI of Baliuag, Bulacan and these owners
already have their own titles. She likewise claimed that the entire area consisting of Lot 1303 and Sapang Bayan is
based on the subdivision plan of Lot 1303. She admitted that plaintiffs predecessor-in-interest was only allocated a
portion of Lot 1303 based on the said plan. However, she claimed that the November 29, 1929 Decision subdividing Lot
1303 was never implemented nor executed by the parties.[19]
Petitioner Norma Fernando testified on October 3, 2000 that she is one of the children of Jose A. Fernando
and Lucila Tinio. She affirmed that plaintiffs were only claiming Lot 1303 and Sapang Bayan. She also testified
that Sapang Bayan was supposedly included in Lot 1302 and was previously a river until it dried up. Unlike Lot 1302, the
rest of the property was purportedly not distributed. She likewise averred that she is aware of a November 29, 1929
Decision concerning the distribution of Lot 1303 issued by the cadastral court but insisted that the basis of the claims of
the petitioners over Lot 1303 is the title in the name of her ascendants and not said Decision. [20]
On November 16, 2000, as previously directed by the trial court and agreed to by the parties, counsel for
respondent Hermogenes prepared and submitted an English translation of the November 29, 1929 Decision. The same
was admitted and marked in evidence as Exhibit X[21] as a common exhibit of the parties. The petitioners also
presented Alfredo Borja, the Geodetic Engineer who conducted a relocation survey of the subject property.
After plaintiffs rested their case, respondent Hermogenes testified on December 7, 2000. In his testimony,
he claimed to know the plaintiffs and defendants as they were allegedly his relatives and neighbors. He confirmed that
according to the November 29, 1929 Decision, portions of Lot 1303 was designated as Lots 1303-A, 1303-B, 1303-C and
1303-D which were adjudicated to certain persons, including Jose Fernando, while the rest of Lot 1303 was adjudicated
to his parents, Antonio A. Fernando married to Felisa Camacho. According to respondent Hermogenes, his familys
tenant and the latters children occupied the portion of Lot 1303 allotted to his (Hermogenes) parents while the rest of
Lot 1303 was occupied by the persons named in the said November 29, 1929 Decision. He admitted, however, that
nobody among the purported possessors of Lot 1303 registered the lots assigned to them in the Decision. [22]
 On January 18, 2001, respondent Hermogenes presented a witness, Engineer Camilo Vergara who testified
that the subject land is divided into Lots 1302 and 1303 with a creek dividing the two lots known as Sapang Bayan. He
also identified a Sketch Plan numbered as PSD-45657 and approved on November 11, 1955.[23] During the hearing on
January 30, 2001, respondent Hermogenes made an oral offer of his evidence and rested his case. On the same date,
respondent Acuna, in lieu of his testimony, offered for the parties to simply stipulate on the due execution and
authenticity of the Deeds of Sale dated April 6, 1979 and December 28, 1980, showing the transfer of Lot 1303-D from
Salud Wisco to Simeon Cunanan and subsequently to respondent Acuna. When counsel for plaintiffs and defendants
agreed to the stipulation, albeit objecting to the purpose for which the deeds of sale were offered, the trial court
admitted Acunas exhibits and Acuna rested his case.[24]
On February 15, 2001, plaintiffs recalled Norma Fernando as a rebuttal witness. In her rebuttal testimony,
she identified the tax declaration[25] over the said property in the name of Jose A. Fernando; an official receipt[26] dated
October 3, 1997 issued by the Office of the Treasurer of the Municipality of Baliuag, Bulacan for payment of real
property taxes from 1991 to 1997; and a real property tax clearance [27]dated October 6, 1997, to show that plaintiffs
have allegedly been paying the real property taxes on the entire property covered by OCT No. RO-487 (997). However,
she further testified that they were now willing to pay taxes only over the portion with an area of 44,234 square meters,
which is included in their claim.[28]
In a Decision dated May 16, 2002, the trial court ruled that plaintiffs and defendants (petitioners herein)
were indeed the descendants and successors-in-interest of the registered owners, Jose A. Fernando (married to Lucila
Tinio) and Antonia Fernando (married to Felipe Galvez), of the property covered by OCT No. RO-487 (997). After
finding that the parties admitted that Lot 1302 was already distributed and titled in the names of third persons per the
July 30, 1980 Decision of the CFI of Baliuag, Bulacan the trial court proceeded to rule on the allocation of Lot 1303
and Sapang Bayan.
With respect to Lot 1303, the trial court found that the November 29, 1929 Decision of the Cadastral Court,
adjudicating said lot to different persons and limiting Jose Fernandos share to Lot 1303-C, was never implemented nor
executed despite the lapse of more than thirty years. Thus, the said decision has already prescribed and can no longer
be executed. The trial court ordered the reversion of Lot 1303 to the ownership of spouses Jose A. Fernando and Lucila
Tinio and spouses Antonia A. Fernando and Felipe Galvez under OCT No. RO-487 (997) and allowed the partition of Lot
1303 among petitioners as successors-in-interest of said registered owners. Excluded from the partition, however, were
the portions of the property which petitioners admitted had been sold or transferred to Ruperta Sto. Domingo
Villasenor and respondent Acuna.
As for the ownership of Sapang Bayan, the trial court found that the same had not been alleged in the
pleadings nor raised as an issue during the pre-trial conference. Also, according to the trial court, the parties failed to
clearly show whether Sapang Bayan was previously a dry portion of either Lot 1302 or Lot 1303. Neither was there any
proof that Sapang Bayan was a river that just dried up or that it was an accretion which the adjoining lots gradually
received from the effects of the current of water. It was likewise not established who were the owners of the lots
adjoining Sapang Bayan. The trial court concluded that none of the parties had clearly and sufficiently established their
claims over Sapang Bayan.
The dispositive portion of the May 16, 2002 Decision of the trial court reads:
WHEREFORE, all the foregoing considered, judgment is hereby rendered
ordering the reversion of Lot 1303, except the portions allotted to Acuna and Ruperta Sto.
Domingo Villasenor, to the ownership of Jose Fernando and Lucia Tinio and Antonia Fernando
and Felipe Galvez under OCT No. 997 and thereafter allowing the partition of said Lot 1303
among the plaintiffs and the defendants as successors-in-interest of Jose and Lucia as well as
Antonia and Felipe after the settlement of any inheritance tax, fees, dues and/or obligation
chargeable against their estate.[29]
All the parties, with the exception of respondent Acuna, elevated this case to the Court of Appeals which
rendered the assailed November 24, 2003 Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, the decision dated May 16, 2002, of the
Regional Trial Court of Malolos, Bulacan, Third Judicial Region, Branch 84, in Civil Case No.
256-M-97, is hereby REVERSED and SET ASIDE and the complaint dated April 17, 1997 filed
by plaintiffs-appellants is dismissed. Costs against plaintiffs-appellants.[30]
Hence, plaintiffs and defendants in the court a quo elevated the matter for our review through the instant
petition.
Petitioner raises the following issues for consideration:
1. Whether or not the ownership of Lot 1303 and the Sapang Bayan portion of the piece of land covered
by O.C.T. No. RO-487 (997) or Plan Psu-39080 should revert to the descendants and heirs of the late
spouses Jose Fernando and Lucila Tinio and Antonia Fernando, married to Felipe Galvez;
2. Whether or not a title registered under the Torrens system, as the subject original certificate of title is
the best evidence of ownership of land and is a notice against the world.[31]
The petition is without merit.
Petitioners based their claims to the disputed areas designated as Lot 1303 and Sapang Bayan on their
ascendants title, OCT No. RO-487 (997), which was issued on February 26, 1927 in the name of Jose A. Fernando
married to Lucila Tinio and Antonia A. Fernando married to Felipe Galvez. The Court now rules on these claims in
seriatim.
Petitioners claim with respect to Lot 1303
As the records show, in the November 29, 1929 Decision of the Cadastral Court of Baliuag, Bulacan (in
Cadastral Record No. 14, GLRO Cad. Record No. 781) which was written in Spanish, Lot 1303 had already been divided
and adjudicated to spouses Jose A. Fernando and Lucila Tinio; spouses Antonia A. Fernando and Felipe Galvez; spouses
Antonio A. Fernando and Felisa Camacho; spouses Jose Martinez and Gregoria Sison; and spouses Ignacio de la Cruz
and Salud Wisco from whom respondent Acuna derived his title. The English translation of the said November 29, 1929
Decision was provided by respondent Hermogenes and was adopted by all the parties as a common exhibit designated
as Exhibit X. The agreed English translation of said Decision reads:
Lot No. 1303 This lot is decreed in record No. 448, G.L.R.O. Record No. 25414 and
actually with Original Certificate No. 997 (exhibited today) in the name of Jose A. Fernando
and Antonia A. Fernando, who now pray that said lot be subdivided in accordance with the
answers recorded in the instant cadastral record, and the sketch, Exh. A, which is attached to
the records.
A part or portion of the lot has been claimed by Antonio A. Fernando, of legal
age, married to Felisa Camacho; another portion by the spouses Jose Martinez and Gregoria
Sison; another portion by Antonia A. Fernando, of legal age, married to Felipe Galvez; another
portion by Jose A. Fernando, of legal age, married to Lucila Tinio; and another portion by the
spouses Ignacio de la Cruz and Salud Wisco, both of legal age. The part claimed by the
spouses Jose A. Martinez and Gregoria Sison is Lot 1303-A of Exh. A; the part claimed by
Antonia A. Fernando is Lot 1303-B of said exhibit; the part claimed by Jose A. Fernando is Lot
1303-C of said exhibit, and the part claimed by the spouses Ignacio de la Cruz and Salud Wisco
is Lot 1303-D of the aforementioned Exhibit.
The subdivision of said lot is hereby ordered, separating from the same the
portions that correspond to each of the claimants, which portions are known as Lots 1303-A,
 1303-B, 1303-C, and 1303-D in the sketch, Exh. A, and once subdivided, are adjudicated in
favor of the spouses, Jose Martinez and Gregoria Sison, of legal age, Lot No. 1303-A, in favor
of Antonia A. Fernando, of legal age, married to Felipe Galvez, Lot No. 1303-B; in favor of Jose
A. Fernando, of legal age, married to Lucila Tinio, Lot 1303-C; in favor of the spouses Ignacio
de la Cruz and Salud Wisco, of legal age, Lot 1303-D; and the rest of Lot 1303 is adjudged in
favor of Antonio A. Fernando married to Felisa Camacho. It is likewise ordered that once the
subdivision plan is approved, the same be forwarded by the Director of Lands to this Court for
its final decision.
It is ordered that the expense for mentioned subdivision, shall be for the account
of the spouses Jose Martinez and Gregoria Sison, Antonia A. Fernando, Jose A. Fernando, the
spouses Ignacio de la Cruz and Salud Wisco, and Antonio A. Fernando. [32]
From the foregoing, it would appear that petitioners ascendants themselves petitioned for the cadastral
court to divide Lot 1303 among the parties to the 1929 case and they were only allocated Lots 1303-B and 1303-C. Still,
as the trial court noted, the November 29, 1929 Decision was never fully implemented in the sense that the persons
named therein merely proceeded to occupy the lots assigned to them without having complied with the other
directives of the cadastral court which would have led to the titling of the properties in their names. Nonetheless, it is
undisputed that the persons named in the said November 29, 1929 Decision and, subsequently, their heirs and assigns
have since been in peaceful and uncontested possession of their respective lots for more than seventy (70) years until
the filing of the suit for partition on April 17, 1997 by petitioners which is the subject matter of this case. Respondent
Hermogenes, who testified that petitioners were his relatives and neighbors, further affirmed before the trial court that
the persons named in the November 29, 1929 Decision took possession of their respective lots:
ATTY. VENERACION:
Q This Jose A. Fernando married to Lucila Tinio, you testified earlier are the parents of the
plaintiffs. Did they take possession of lot 1303-C?
A Yes, sir. They took possession.
Q Did they take possession of the other lots?
A No. Yes, the portion
Q The other lots in the name of the other persons. Did they take possession of that?
A Yes, they took took possession of the other No, sir.
Q I am asking you whether they took possession, the children
ATTY. SANTIAGO:
The questions are already answered, your Honor.
ATTY. VENERACION:
What is the answer?
ATTY. SANTIAGO:
Its in the record.
COURT:
The persons named in the Decision already took possession of the lots allotted to
them as per that Decision. So that was already answered. Anything else?
ATTY. VENERACION;
No more question, Your Honor.[33]
It is noteworthy that petitioners do not dispute that the November 29, 1929 Decision of the cadastral court
already adjudicated the ownership of Lot 1303 to persons other than the registered owners thereof. Petitioners would,
nonetheless, claim that respondents purported failure to execute the November 29, 1929 Decision over Lot 1303 (i.e.,
their failure to secure their own titles) meant that the entire Lot 1303 being still registered in the name of their
ascendants rightfully belongs to them. This is on the theory that respondents right to have the said property titled in
their names have long prescribed.
On this point, we agree with the appellate court.
Section 47 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, states
that [n]o title to registered land in derogation of the title of the registered owner shall be acquired by prescription or
adverse possession. Thus, the Court has held that the right to recover possession of registered land is imprescriptible
because possession is a mere consequence of ownership.[34]
However, in Heirs of Anacleto B. Nieto v. Municipality of Meycauayan, Bulacan,[35] the Court had recognized
the jurisprudential thread regarding the exception to the foregoing doctrine that while it is true that a Torrens title is
indefeasible and imprescriptible, the registered landowner may lose his right to recover possession of his registered
property by reason of laches.
Thus, in Heirs of Batiog Lacamen v. Heirs of Laruan,[36] the Court had held that while a person may not
acquire title to the registered property through continuous adverse possession, in derogation of the title of the original
registered owner, the heir of the latter, however, may lose his right to recover back the possession of such property
and the title thereto, by reason of laches.
In the more recent case of Bartola M. Vda. De Tirona v. Encarnacion,[37] we similarly held that while
jurisprudence is settled on the imprescriptibility and indefeasibility of a Torrens title, there is equally an abundance of
cases where we unequivocally ruled that registered owners may lose their right to recover possession of property
through the equitable principle of laches.
Laches means the failure or neglect for an unreasonable and unexplained length of time to do that which,
by observance of due diligence, could or should have been done earlier. It is negligence or omission to assert a right
within a reasonable time, warranting the presumption that the party entitled to assert his right either has abandoned
or declined to assert it. Laches thus operates as a bar in equity.[38] The essential elements of laches are: (a) conduct on
the part of the defendant, or of one under whom he claims, giving rise to the situation complained of; (b) delay in
asserting complainants rights after he had knowledge of defendants acts and after he has had the opportunity to sue;
(c) lack of knowledge or notice by defendant that the complainant will assert the right on which he bases his suit; and
(d) injury or prejudice to the defendant in the event the relief is accorded to the complainant. [39]
In view of respondents decades long possession and/or ownership of their respective lots by virtue of a
court judgment and the erstwhile registered owners inaction and neglect for an unreasonable and unexplained length
of time in pursuing the recovery of the land, assuming they retained any right to recover the same, it is clear that
respondents possession may no longer be disturbed. The right of the registered owners as well as their successors-in-
interest to recover possession of the property is already a stale demand and, thus, is barred by laches.
In the same vein, we uphold the finding of the Court of Appeals that the title of petitioners ascendants
wrongfully included lots belonging to third persons.[40] Indeed, petitioners ascendants appeared to have acknowledged
this fact as they were even the ones that prayed for the cadastral court to subdivide Lot 1303 as evident in the
November 29, 1929 Decision. We concur with the Court of Appeals that petitioners ascendants held the property
erroneously titled in their names under an implied trust for the benefit of the true owners. Article 1456 of the Civil Code
provides:
ART. 1456. If property is acquired through mistake or fraud, the person obtaining
it is, by force of law, considered a trustee of an implied trust for the benefit of the person from
whom the property comes.
dominion:
As aptly observed by the appellate court, the party thus aggrieved has the right to recover his or their title
over the property by way of reconveyance while the same has not yet passed to an innocent purchaser for value. [41] As
we held in Medizabel v. Apao,[42] the essence of an action for reconveyance is that the certificate of title is respected as
incontrovertible. What is sought is the transfer of the property, in this case its title, which has been wrongfully or
erroneously registered in another person's name, to its rightful owner or to one with a better right. It is settled in
jurisprudence that mere issuance of the certificate of title in the name of any person does not foreclose the possibility
that the real property may be under co-ownership with persons not named in the certificate or that the registrant may
only be a trustee or that other parties may have acquired interest subsequent to the issuance of the certificate of
title.[43]
are therefore classified as property of the public domain under Article 420 paragraph 1 and
Article 502, paragraph 1 of the Civil Code of the Philippines. They are not open to registration
under the Land Registration act. The adjudication of the lands in question as private property
in the names of the private respondents is null and void.[49]
Furthermore, in Celestial v. Cachopero,[50] we similarly ruled that a dried-up creek bed is property of public
A creek, like the Salunayan Creek, is a recess or arm extending from a river and
participating in the ebb and flow of the sea. As such, under Articles 420(1) and 502(1) of the
Civil Code, the Salunayan Creek, including its natural bed, is property of the public domain
which is not susceptible to private appropriation and acquisitive prescription. And, absent any
declaration by the government, that a portion of the creek has dried-up does not, by itself,
alter its inalienable character.[51]

We cannot subscribe to petitioners argument that whatever rights or claims respondents may have under
the November 29, 1929 Decision has prescribed for their purported failure to fully execute the same. We again concur Therefore, on the basis of the law and jurisprudence on the matter, Sapang Bayan cannot be adjudged to
with the Court of Appeals in this regard. An action for reconveyance of registered land based on implied trust any of the parties in this case.
prescribes in ten (10) years, the point of reference being the date of registration of the deed or the date of the issuance
of the certificate of title over the property. However, this Court has ruled that the ten-year prescriptive period applies WHEREFORE, premises considered, the petition is hereby DENIED. The assailed Decision dated
only when the person enforcing the trust is not in possession of the property. If a person claiming to be its owner is in November 24, 2003 of the Court of Appeals in CA-G.R. CV No. 75773 is hereby AFFIRMED. Costs against petitioners.
actual possession of the property, the right to seek reconveyance, which in effect seeks to quiet title to the property,
does not prescribe. The reason is that the one who is in actual possession of the land claiming to be its owner may wait SO ORDERED.
until his possession is disturbed or his title is attacked before taking steps to vindicate his right.[44]
Republic of the Philippines
Petitioners claim with respect to Sapang Bayan Supreme Court
Manila
As for the issue of the ownership of Sapang Bayan, we sustain the appellate court insofar as it ruled that
petitioners failed to substantiate their ownership over said area. However, we find that the Court of Appeals erred in
ruling that the principle of accretion is applicable. The said principle is embodied in Article 457 of the Civil Code which FIRST DIVISION
states that [t]o the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive
from the effects of the current of the waters. We have held that for Article 457 to apply the following requisites must
concur: (1) that the deposit be gradual and imperceptible; (2) that it be made through the effects of the current of the NM ROTHSCHILD & SONS (AUSTRALIA) LIMITED, G.R. No. 175799
water; and (3) that the land where accretion takes place is adjacent to the banks of rivers. [45] The character of Petitioner,
the Sapang Bayan property was not shown to be of the nature that is being referred to in the provision which is an Present:
accretion known as alluvion as no evidence had been presented to support this assertion.
CORONA, C.J.,
In fact from the transcripts of the proceedings, the parties could not agree how Sapang Bayan came Chairperson,
about. Whether it was a gradual deposit received from the river current or a dried-up creek bed connected to the main - versus - LEONARDO-DE CASTRO,
river could not be ascertained. BERSAMIN,
DEL CASTILLO, and
Even assuming that Sapang Bayan was a dried-up creek bed, under Article 420, paragraph 1[46] and Article VILLARAMA, JR., JJ.
502, paragraph 1[47] of the Civil Code, rivers and their natural beds are property of public dominion. In the absence of
any provision of law vesting ownership of the dried-up river bed in some other person, it must continue to belong to LEPANTO CONSOLIDATED MINING COMPANY, Promulgated:
the State. Respondent.

We ruled on this issue in Republic v. Court of Appeals,[48] to wit: November 28, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

The lower court cannot validly order the registration of Lots 1 and 2 in the names
of the private respondents. These lots were portions of the bed of the Meycauayan river and DECISION

LEONARDO-DE CASTRO, J.:
This is a Petition for Review on Certiorari assailing the Decision[1] of the Court of Appeals dated September
8, 2006 in CA-G.R. SP No. 94382 and its Resolution[2] dated December 12, 2006, denying the Motion for
Reconsideration.
On August 30, 2005, respondent Lepanto Consolidated Mining Company filed with the Regional Trial Court
(RTC) of Makati City a Complaint[3] against petitioner NM Rothschild & Sons (Australia) Limited praying for a judgment
declaring the loan and hedging contracts between the parties void for being contrary to Article 2018 [4] of the Civil Code
of the Philippines and for damages. The Complaint was docketed as Civil Case No. 05-782, and was raffled to Branch
150. Upon respondents (plaintiffs) motion, the trial court authorized respondents counsel to personally bring the
summons and Complaint to the Philippine Consulate General in Sydney, Australia for the latter office to effect service
of summons on petitioner (defendant).
On October 20, 2005, petitioner filed a Special Appearance With Motion to Dismiss [5] praying for the
dismissal of the Complaint on the following grounds: (a) the court has not acquired jurisdiction over the person of
petitioner due to the defective and improper service of summons; (b) the Complaint failed to state a cause of action and
respondent does not have any against petitioner; (c) the action is barred by estoppel; and (d) respondent did not come
to court with clean hands.
On November 29, 2005, petitioner filed two Motions: (1) a Motion for Leave to take the deposition of Mr.
Paul Murray (Director, Risk Management of petitioner) before the Philippine Consul General; and (2) a Motion for Leave
to Serve Interrogatories on respondent.
On December 9, 2005, the trial court issued an Order[6] denying the Motion to Dismiss. According to the
trial court, there was a proper service of summons through the Department of Foreign Affairs (DFA) on account of the
fact that the defendant has neither applied for a license to do business in the Philippines, nor filed with the Securities
and Exchange Commission (SEC) a Written Power of Attorney designating some person on whom summons and other
legal processes maybe served. The trial court also held that the Complaint sufficiently stated a cause of action. The
other allegations in the Motion to Dismiss were brushed aside as matters of defense which can best be ventilated during
the trial.
On December 27, 2005, petitioner filed a Motion for Reconsideration.[7] On March 6, 2006, the trial court issued an
Order denying the December 27, 2005 Motion for Reconsideration and disallowed the twin Motions for Leave to take
deposition and serve written interrogatories.[8]
On April 3, 2006, petitioner sought redress via a Petition for Certiorari[9] with the Court of Appeals, alleging
that the trial court committed grave abuse of discretion in denying its Motion to Dismiss. The Petition was docketed as
CA-G.R. SP No. 94382.
On September 8, 2006, the Court of Appeals rendered the assailed Decision dismissing the Petition
for Certiorari. The Court of Appeals ruled that since the denial of a Motion to Dismiss is an interlocutory order, it cannot
be the subject of a Petition for Certiorari, and may only be reviewed in the ordinary course of law by an appeal from the
judgment after trial. On December 12, 2006, the Court of Appeals rendered the assailed Resolution denying the
petitioners Motion for Reconsideration.
Meanwhile, on December 28, 2006, the trial court issued an Order directing respondent to answer some of
the questions in petitioners Interrogatories to Plaintiff dated September 7, 2006.
Notwithstanding the foregoing, petitioner filed the present petition assailing the September 8, 2006
Decision and the December 12, 2006 Resolution of the Court of Appeals. Arguing against the ruling of the appellate
court, petitioner insists that (a) an order denying a motion to dismiss may be the proper subject of a petition
for certiorari; and (b) the trial court committed grave abuse of discretion in not finding that it had not validly acquired
jurisdiction over petitioner and that the plaintiff had no cause of action.
Respondent, on the other hand, posits that: (a) the present Petition should be dismissed for not being filed by a real
party in interest and for lack of a proper verification and certificate of non-forum shopping; (b) the Court of Appeals
correctly ruled that certiorari was not the proper remedy; and (c) the trial court correctly denied petitioners motion to
dismiss.
Our discussion of the issues raised by the parties follows:
Whether petitioner is a real party in
interest
Respondent argues that the present Petition should be dismissed on the ground that petitioner no longer
existed as a corporation at the time said Petition was filed on February 1, 2007. Respondent points out that as of the
date of the filing of the Petition, there is no such corporation that goes by the name NM Rothschild and Sons (Australia)
Limited. Thus, according to respondent, the present Petition was not filed by a real party in interest, citing our ruling
in Philips Export B.V. v. Court of Appeals,[10] wherein we held:
A name is peculiarly important as necessary to the very existence of a corporation
(American Steel Foundries vs. Robertson, 269 US 372, 70 L ed 317, 46 S Ct 160; Lauman vs.
Lebanon Valley R. Co., 30 Pa 42; First National Bank vs. Huntington Distilling Co., 40 W Va
530, 23 SE 792). Its name is one of its attributes, an element of its existence, and essential to
its identity (6 Fletcher [Perm Ed], pp. 3-4). The general rule as to corporations is that each
corporation must have a name by which it is to sue and be sued and do all legal acts. The
name of a corporation in this respect designates the corporation in the same manner as the
name of an individual designates the person (Cincinnati Cooperage Co. vs. Bate, 96 Ky 356, 26
SW 538; Newport Mechanics Mfg. Co. vs. Starbird, 10 NH 123); and the right to use its
corporate name is as much a part of the corporate franchise as any other privilege granted
(Federal Secur. Co. vs. Federal Secur. Corp., 129 Or 375, 276 P 1100, 66 ALR 934; Paulino vs.
Portuguese Beneficial Association, 18 RI 165, 26 A 36).[11]
In its Memorandum[12] before this Court, petitioner started to refer to itself as Investec Australia Limited
(formerly NM Rothschild & Sons [Australia] Limited) and captioned said Memorandum accordingly.Petitioner claims that
NM Rothschild and Sons (Australia) Limited still exists as a corporation under the laws of Australia under said new
name. It presented before us documents evidencing the process in the Australian Securities & Investment Commission
on the change of petitioners company name from NM Rothschild and Sons (Australia) Limited to Investec Australia
Limited.[13]
We find the submissions of petitioner on the change of its corporate name satisfactory and resolve not to
dismiss the present Petition for Review on the ground of not being prosecuted under the name of the real party in
interest. While we stand by our pronouncement in Philips Export on the importance of the corporate name to the very
existence of corporations and the significance thereof in the corporations right to sue, we shall not go so far as to
dismiss a case filed by the proper party using its former name when adequate identification is presented. A real party in
interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails
of the suit.[14] There is no doubt in our minds that the party who filed the present Petition, having presented sufficient
evidence of its identity and being represented by the same counsel as that of the defendant in the case sought to be
dismissed, is the entity that will be benefited if this Court grants the dismissal prayed for.
Since the main objection of respondent to the verification and certification against forum shopping
likewise depends on the supposed inexistence of the corporation named therein, we give no credit to said objection in
light of the foregoing discussion.
Propriety of the Resort to a Petition
for Certiorari with the Court of Appeals
We have held time and again that an order denying a Motion to Dismiss is an interlocutory order which
neither terminates nor finally disposes of a case as it leaves something to be done by the court before the case is finally
decided on the merits. The general rule, therefore, is that the denial of a Motion to Dismiss cannot be questioned in a
special civil action for Certiorari which is a remedy designed to correct errors of jurisdiction and not errors of
judgment.[15] However, we have likewise held that when the denial of the Motion to Dismiss is tainted with grave abuse
of discretion, the grant of the extraordinary remedy of Certiorari may be justified. By grave abuse of discretion is meant:
[S]uch capricious and whimsical exercise of judgment that is equivalent to lack of
jurisdiction. The abuse of discretion must be grave as where the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent
and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the
duty enjoined by or to act all in contemplation of law.[16]
The resolution of the present Petition therefore entails an inquiry into whether the Court of Appeals
correctly ruled that the trial court did not commit grave abuse of discretion in its denial of petitioners Motion to
Dismiss. A mere error in judgment on the part of the trial court would undeniably be inadequate for us to reverse the
disposition by the Court of Appeals.
Issues more properly ventilated during
the trial of the case
As previously stated, petitioner seeks the dismissal of Civil Case No. 05-782 on the following grounds: (a)
lack of jurisdiction over the person of petitioner due to the defective and improper service of summons; (b) failure of the
Complaint to state a cause of action and absence of a cause of action; (c) the action is barred by estoppel; and (d)
respondent did not come to court with clean hands.
As correctly ruled by both the trial court and the Court of Appeals, the alleged absence of a cause of action
(as opposed to the failure to state a cause of action), the alleged estoppel on the part of petitioner, and the argument
that respondent is in pari delicto in the execution of the challenged contracts, are not grounds in a Motion to Dismiss as
enumerated in Section 1, Rule 16[17] of the Rules of Court. Rather, such defenses raise evidentiary issues closely related
to the validity and/or existence of respondents alleged cause of action and should therefore be threshed out during the
trial.
As regards the allegation of failure to state a cause of action, while the same is usually available as a ground
in a Motion to Dismiss, said ground cannot be ruled upon in the present Petition without going into the very merits of
the main case.
It is basic that [a] cause of action is the act or omission by which a party violates a right of another.[18] Its
elements are the following: (1) a right existing in favor of the plaintiff, (2) a duty on the part of the defendant to respect
the plaintiff's right, and (3) an act or omission of the defendant in violation of such right. [19] We have held that to sustain
a Motion to Dismiss for lack of cause of action, the complaint must show that the claim for relief does not exist and not
only that the claim was defectively stated or is ambiguous, indefinite or uncertain. [20]
The trial court held that the Complaint in the case at bar contains all the three elements of a cause of
action, i.e., it alleges that: (1) plaintiff has the right to ask for the declaration of nullity of the Hedging Contracts for
being null and void and contrary to Article 2018 of the Civil Code of the Philippines; (2) defendant has the corresponding
obligation not to enforce the Hedging Contracts because they are in the nature of wagering or gambling agreements
and therefore the transactions implementing those contracts are null and void under Philippine laws; and (3) defendant
ignored the advice and intends to enforce the Hedging Contracts by demanding financial payments due therefrom. [21]
The rule is that in a Motion to Dismiss, a defendant hypothetically admits the truth of the material
allegations of the ultimate facts contained in the plaintiff's complaint.[22] However, this principle of hypothetical
admission admits of exceptions. Thus, in Tan v. Court of Appeals, [23] we held:
The flaw in this conclusion is that, while conveniently echoing the general rule
that averments in the complaint are deemed hypothetically admitted upon the filing of a
motion to dismiss grounded on the failure to state a cause of action, it did not take into
account the equally established limitations to such rule, i.e., that a motion to dismiss does
not admit the truth of mere epithets of fraud; nor allegations of legal conclusions; nor an
erroneous statement of law; nor mere inferences or conclusions from facts not stated;
nor mere conclusions of law; nor allegations of fact the falsity of which is subject to judicial
notice; nor matters of evidence; nor surplusage and irrelevant matter; nor scandalous matter
inserted merely to insult the opposing party; nor to legally impossible facts; nor to facts which
appear unfounded by a record incorporated in the pleading, or by a document referred to;
and, nor to general averments contradicted by more specific averments. A more judicious
resolution of a motion to dismiss, therefore, necessitates that the court be not restricted to
the consideration of the facts alleged in the complaint and inferences fairly deducible
therefrom.Courts may consider other facts within the range of judicial notice as well as
relevant laws and jurisprudence which the courts are bound to take into account, and they are
also fairly entitled to examine records/documents duly incorporated into the complaint by
the pleader himself in ruling on the demurrer to the complaint.[24] (Emphases supplied.)
In the case at bar, respondent asserts in the Complaint that the Hedging Contracts are void for being
contrary to Article 2018[25] of the Civil Code. Respondent claims that under the Hedging Contracts, despite the express
stipulation for deliveries of gold, the intention of the parties was allegedly merely to compel each other to pay the
difference between the value of the gold at the forward price stated in the contract and its market price at the supposed
time of delivery.
Whether such an agreement is void is a mere allegation of a conclusion of law, which therefore cannot be
hypothetically admitted. Quite properly, the relevant portions of the contracts sought to be nullified, as well as a copy
of the contract itself, are incorporated in the Complaint. The determination of whether or not the Complaint stated a
cause of action would therefore involve an inquiry into whether or not the assailed contracts are void under Philippine
laws. This is, precisely, the very issue to be determined in Civil Case No. 05-782. Indeed, petitioners defense against the
charge of nullity of the Hedging Contracts is the purported intent of the parties that actual deliveries of gold be made
pursuant thereto. Such a defense requires the presentation of evidence on the merits of the case. An issue that requires
the contravention of the allegations of the complaint, as well as the full ventilation, in effect, of the main merits of the
case, should not be within the province of a mere Motion to Dismiss.[26] The trial court, therefore, correctly denied the
Motion to Dismiss on this ground.
It is also settled in jurisprudence that allegations of estoppel and bad faith require proof. Thus, in Paraaque
Kings Enterprises, Inc. v. Court of Appeals,[27] we ruled:
Having come to the conclusion that the complaint states a valid cause of action
for breach of the right of first refusal and that the trial court should thus not have dismissed
the complaint, we find no more need to pass upon the question of whether the complaint
states a cause of action for damages or whether the complaint is barred by estoppel or
laches. As these matters require presentation and/or determination of facts, they can be
best resolved after trial on the merits.[28] (Emphases supplied.)
On the proposition in the Motion to Dismiss that respondent has come to court with unclean hands, suffice
it to state that the determination of whether one acted in bad faith and whether damages may be awarded is
evidentiary in nature. Thus, we have previously held that [a]s a matter of defense, it can be best passed upon after a
full-blown trial on the merits.[29]
Jurisdiction over the person of petitioner
Petitioner alleges that the RTC has not acquired jurisdiction over its person on account of the improper
service of summons. Summons was served on petitioner through the DFA, with respondents counsel personally
bringing the summons and Complaint to the Philippine Consulate General in Sydney, Australia.
In the pleadings filed by the parties before this Court, the parties entered into a lengthy debate as to
whether or not petitioner is doing business in the Philippines. However, such discussion is completely irrelevant in the
case at bar, for two reasons. Firstly, since the Complaint was filed on August 30, 2005, the provisions of the 1997 Rules
of Civil Procedure govern the service of summons. Section 12, Rule 14 of said rules provides:
Sec. 12. Service upon foreign private juridical entity. When the defendant is a
foreign private juridical entity which has transacted business in the Philippines, service may
be made on its resident agent designated in accordance with law for that purpose, or, if there
be no such agent, on the government official designated by law to that effect, or on any of its
officers or agents within the Philippines. (Emphasis supplied.)
This is a significant amendment of the former Section 14 of said rule which previously provided:
Sec. 14. Service upon private foreign corporations. If the defendant is a foreign
corporation, or a nonresident joint stock company or association, doing business in the
Philippines, service may be made on its resident agent designated in accordance with law for
that purpose, or if there be no such agent, on the government official designated by law to
that effect, or on any of its officers or agents within the Philippines. (Emphasis supplied.)
The coverage of the present rule is thus broader.[30] Secondly, the service of summons to petitioner through the DFA by
the conveyance of the summons to the Philippine Consulate General in Sydney, Australia was clearly made not through
the above-quoted Section 12, but pursuant to Section 15 of the same rule which provides:
Sec. 15. Extraterritorial service. When the defendant does not reside and is not
found in the Philippines, and the action affects the personal status of the plaintiff or relates to,
or the subject of which is property within the Philippines, in which the defendant has or claims
a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in
part, in excluding the defendant from any interest therein, or the property of the defendant
has been attached within the Philippines, service may, by leave of court, be effected out of
the Philippines by personal service as under section 6; or by publication in a newspaper of
general circulation in such places and for such time as the court may order, in which case a
copy of the summons and order of the court shall be sent by registered mail to the last known
address of the defendant, or in any other manner the court may deem sufficient. Any order
granting such leave shall specify a reasonable time, which shall not be less than sixty (60) days
after notice, within which the defendant must answer.
Respondent argues[31] that extraterritorial service of summons upon foreign private juridical entities is not
proscribed under the Rules of Court, and is in fact within the authority of the trial court to adopt, in accordance with
Section 6, Rule 135:
Sec. 6. Means to carry jurisdiction into effect. When by law jurisdiction is conferred
on a court or judicial officer, all auxiliary writs, processes and other means necessary to carry it
into effect may be employed by such court or officer; and if the procedure to be followed in
the exercise of such jurisdiction is not specifically pointed out by law or by these rules, any
suitable process or mode of proceeding may be adopted which appears comformable to the
spirit of said law or rules.
Section 15, Rule 14, however, is the specific provision dealing precisely with the service of summons on a
defendant which does not reside and is not found in the Philippines, while Rule 135 (which is in Part V of the Rules of
Court entitled Legal Ethics) concerns the general powers and duties of courts and judicial officers.
Breaking down Section 15, Rule 14, it is apparent that there are only four instances wherein a defendant
who is a non-resident and is not found in the country may be served with summons by extraterritorial service, to wit: (1)
when the action affects the personal status of the plaintiffs; (2) when the action relates to, or the subject of which is
property, within the Philippines, in which the defendant claims a lien or an interest, actual or contingent; (3) when the
relief demanded in such action consists, wholly or in part, in excluding the defendant from any interest in property
located in the Philippines; and (4) when the defendant non-resident's property has been attached within the
Philippines. In these instances, service of summons may be effected by (a) personal service out of the country, with
leave of court; (b) publication, also with leave of court; or (c) any other manner the court may deem sufficient.[32]
Proceeding from this enumeration, we held in Perkin Elmer Singapore Pte Ltd. v. Dakila Trading
Corporation[33] that:
Undoubtedly, extraterritorial service of summons applies only where the
action is in rem or quasi in rem, but not if an action is in personam.
When the case instituted is an action in rem or quasi in rem, Philippine courts
already have jurisdiction to hear and decide the case because, in actions in rem and quasi in
rem, jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on
the court, provided that the court acquires jurisdiction over the res. Thus, in such instance,
extraterritorial service of summons can be made upon the defendant. The said extraterritorial
service of summons is not for the purpose of vesting the court with jurisdiction, but for
complying with the requirements of fair play or due process, so that the defendant will be
informed of the pendency of the action against him and the possibility that property in the
Philippines belonging to him or in which he has an interest may be subjected to a judgment in
favor of the plaintiff, and he can thereby take steps to protect his interest if he is so
minded. On the other hand, when the defendant or respondent does not reside and is not
found in the Philippines, and the action involved is in personam, Philippine courts cannot
try any case against him because of the impossibility of acquiring jurisdiction over his
person unless he voluntarily appears in court.[34] (Emphases supplied.)
In Domagas v. Jensen,[35] we held that:
[T]he aim and object of an action determine its character. Whether a proceeding is in rem,
or in personam, or quasi in rem for that matter, is determined by its nature and purpose, and
by these only. A proceeding in personam is a proceeding to enforce personal rights and
obligations brought against the person and is based on the jurisdiction of the person,
although it may involve his right to, or the exercise of ownership of, specific property, or seek
to compel him to control or dispose of it in accordance with the mandate of the court. The
purpose of a proceeding in personam is to impose, through the judgment of a court, some
responsibility or liability directly upon the person of the defendant. Of this character are suits
to compel a defendant to specifically perform some act or actions to fasten a pecuniary
liability on him.[36]
It is likewise settled that [a]n action in personam is lodged against a person based on personal liability; an action in rem is
directed against the thing itself instead of the person; while an action quasi in rem names a person as defendant, but its
object is to subject that persons interest in a property to a corresponding lien or obligation. [37]
The Complaint in the case at bar is an action to declare the loan and Hedging Contracts between the
parties void with a prayer for damages.It is a suit in which the plaintiff seeks to be freed from its obligations to the
defendant under a contract and to hold said defendant pecuniarily liable to the plaintiff for entering into such
contract. It is therefore an action in personam, unless and until the plaintiff attaches a property within the Philippines
belonging to the defendant, in which case the action will be converted to one quasi in rem.
Since the action involved in the case at bar is in personam and since the defendant, petitioner
Rothschild/Investec, does not reside and is not found in the Philippines, the Philippine courts cannot try any case
against it because of the impossibility of acquiring jurisdiction over its person unless it voluntarily appears in court. [38]
In this regard, respondent vigorously argues that petitioner should be held to have voluntarily appeared
before the trial court when it prayed for, and was actually afforded, specific reliefs from the trial court.[39]Respondent
points out that while petitioners Motion to Dismiss was still pending, petitioner prayed for and was able to avail of
modes of discovery against respondent, such as written interrogatories, requests for admission, deposition, and
motions for production of documents.[40]
Petitioner counters that under this Courts ruling in the leading case ofLa Naval Drug Corporation v. Court of
Appeals,[41] a party may file a Motion to Dismiss on the ground of lack of jurisdiction over its person, and at the same
time raise affirmative defenses and pray for affirmative relief, without waiving its objection to the acquisition of
jurisdiction over its person.[42]
It appears, however, that petitioner misunderstood our ruling in La Naval. A close reading of La
Naval reveals that the Court intended a distinction between the raising of affirmative defenses in an Answer (which
would not amount to acceptance of the jurisdiction of the court) and the prayer for affirmative reliefs (which would be
considered acquiescence to the jurisdiction of the court):
In the same manner that a plaintiff may assert two or more causes of action in
a court suit, a defendant is likewise expressly allowed, under Section 2, Rule 8, of the
Rules of Court, to put up his own defenses alternatively or even hypothetically. Indeed,
under Section 2, Rule 9, of the Rules of Court, defenses and objections not pleaded either in a
motion to dismiss or in an answer, except for the failure to state a cause of action, are deemed
waived. We take this to mean that a defendant may, in fact, feel enjoined to set up, along with
his objection to the court's jurisdiction over his person, all other possible defenses. It thus
appears that it is not the invocation of any of such defenses, but the failure to so raise them,
that can result in waiver or estoppel. By defenses, of course, we refer to the grounds
provided for in Rule 16 of the Rules of Court that must be asserted in a motion to dismiss
or by way of affirmative defenses in an answer.
Mindful of the foregoing, in Signetics Corporation vs. Court of Appeals and
Freuhauf Electronics Phils., Inc. (225 SCRA 737, 738), we lately ruled:
This is not to say, however, that the petitioner's right
to question the jurisdiction of the court over its person is now to
be deemed a foreclosed matter. If it is true, as Signetics claims, that
its only involvement in the Philippines was through a passive
investment in Sigfil, which it even later disposed of, and that TEAM
Pacific is not its agent, then it cannot really be said to be doing
business in the Philippines. It is a defense, however, that requires the
contravention of the allegations of the complaint, as well as a full
ventilation, in effect, of the main merits of the case, which should
not thus be within the province of a mere motion to dismiss. So, also,
the issue posed by the petitioner as to whether a foreign corporation
which has done business in the country, but which has ceased to do
business at the time of the filing of a complaint, can still be made to
answer for a cause of action which accrued while it was doing
business, is another matter that would yet have to await the
reception and admission of evidence. Since these points have
seasonably been raised by the petitioner, there should be no real
cause for what may understandably be its apprehension, i.e., that
by its participation during the trial on the merits, it may, absent
an invocation of separate or independent reliefs of its own, be
considered to have voluntarily submitted itself to the court's
jurisdiction.[43] (Emphases supplied.)
In order to conform to the ruling in La Naval, which was decided by this Court in 1994, the former Section
23, Rule 14[44] concerning voluntary appearance was amended to include a second sentence in its equivalent provision
in the 1997 Rules of Civil Procedure:
SEC. 20. Voluntary appearance. The defendant's voluntary appearance in the
action shall be equivalent to service of summons. The inclusion in a motion to dismiss of
other grounds aside from lack of jurisdiction over the person of the defendant shall not be
deemed a voluntary appearance. (Emphasis supplied.)
The new second sentence, it can be observed, merely mentions other grounds in a Motion to Dismiss aside
from lack of jurisdiction over the person of the defendant. This clearly refers to affirmative defenses, rather than
affirmative reliefs.
Thus, while mindful of our ruling in La Naval and the new Section 20, Rule 20, this Court, in several cases,
ruled that seeking affirmative relief in a court is tantamount to voluntary appearance therein. [45] Thus, in Philippine
Commercial International Bank v. Dy Hong Pi,[46] wherein defendants filed a Motion for Inhibition without submitting
themselves to the jurisdiction of this Honorable Court subsequent to their filing of a Motion to Dismiss (for Lack of
Jurisdiction), we held:
Besides, any lingering doubts on the issue of voluntary appearance dissipate
when the respondents' motion for inhibition is considered. This motion seeks a sole relief:
inhibition of Judge Napoleon Inoturan from further hearing the case. Evidently, by seeking
affirmative relief other than dismissal of the case, respondents manifested their voluntary
submission to the court's jurisdiction. It is well-settled that the active participation of a party
in the proceedings is tantamount to an invocation of the court's jurisdiction and a willingness
to abide by the resolution of the case, and will bar said party from later on impugning the
court's jurisdiction.[47] (Emphasis supplied.)
In view of the above, we therefore rule that petitioner, by seeking affirmative reliefs from the trial court, is
deemed to have voluntarily submitted to the jurisdiction of said court. A party cannot invoke the jurisdiction of a court
to secure affirmative relief against his opponent and after obtaining or failing to obtain such relief, repudiate or
question that same jurisdiction.[48] Consequently, the trial court cannot be considered to have committed grave abuse
of discretion amounting to lack or excess of jurisdiction in the denial of the Motion to Dismiss on account of failure to
acquire jurisdiction over the person of the defendant.
WHEREFORE, the Petition for Review on Certiorari is DENIED.The Decision of the Court of Appeals dated
September 8, 2006 and its Resolution dated December 12, 2006 in CA-G.R. SP No. 94382 are hereby AFFIRMED.
No pronouncement as to costs.
 SO ORDERED.

THE MAN IN THE ARENA

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds
could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust
and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort
without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great
devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement,
and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and
timid souls who neither know victory nor defeat.