UNICAN VS.

NEA The Case This is an original action for Injunction to restrain and/or prevent the implementation of Resolution Nos. 46 and 59, dated July 10, 2003 and September 3, 2003, respectively, otherwise known as the National Electrification Administration (NEA) Termination Pay Plan, issued by respondent NEA Board of Administrators (NEA Board). The Facts Petitioners are former employees of NEA who were terminated from their employment with the implementation of the assailed resolutions. Respondent NEA is a government-owned and/or controlled corporation created in accordance with Presidential Decree No. (PD) 269 issued on August 6, 1973. Under PD 269, Section 5(a)(5), the NEA Board is empowered to organize or reorganize NEAs staffing structure, as follows: Section 5. National Electrification Administration; Board of Administrators; Administrator. (a) For the purpose of administering the provisions of this Decree, there is hereby established a public corporation to be known as the National Electrification Administration. All of the powers of the corporation shall be vested in and exercised by a Board of Administrators, which shall be composed of a Chairman and four (4) members, one of whom shall be the Administrator as ex-officio member. The Chairman and the three other members shall be appointed by the President of the Philippines to serve for a term of six years. x x x xxxx The Board shall, without limiting the generality of the foregoing, have the following specific powers and duties. 1. To implement the provisions and purposes of this Decree; xxxx 5. To establish policies and guidelines for employment on the basis of merit, technical competence and moral character, and, upon the recommendation of the Administrator to organize or reorganize NEAs staffing structure, to fix the salaries of personnel and to define their powers and duties. (Emphasis supplied.) Thereafter, in order to enhance and accelerate the electrification of the whole country, including the privatization of the National Power Corporation, Republic Act No. (RA) 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA Law), was enacted, taking effect on June 26, 2001. The law imposed upon NEA additional mandates in relation to the promotion of the role of rural electric cooperatives to achieve national electrification. Correlatively, Sec. 3 of the law provides: Section 3. Scope. - This Act shall provide a framework for the restructuring of the electric power industry, including the privatization of the assets of NPC, the transition to the desired competitive structure, and the definition of the responsibilities of the various government agencies and private entities. (Emphasis supplied.) Sec. 77 of RA 9136 also provides: Section 77. Implementing Rules and Regulations. - The DOE shall, in consultation with the electric power industry participants and end-users, promulgate the Implementing Rules and Regulations (IRR) of this Act within six (6) months from the effectivity of this Act, subject to the approval by the Power Commission.

Thus, the Rules and Regulations to implement RA 9136 were issued on February 27, 2002. Under Sec. 3(b)(ii), Rule 33 of the Rules and Regulations, all the NEA employees and officers are considered terminated and the 965 plantilla positions of NEA vacant, to wit: Section 3. Separation and Other Benefits. (a) x x x (b) The following shall govern the application of Section 3(a) of this Rule:

xxxx (ii) With respect to NEA officials and employees, they shall be considered legally terminated and shall be entitled to the benefits or separation pay provided in Section 3(a) herein when a restructuring of NEA is implemented pursuant to a law enacted by Congress or pursuant to Section 5(a)(5) of Presidential Decree No. 269. (Emphasis supplied.)

Meanwhile, on August 28, 2002, former President Gloria Macapagal- Arroyo issued Executive Order No. 119 directing the NEA Board to submit a reorganization plan. Thus, the NEA Board issued the assailed resolutions. On September 17, 2003, the Department of Budget and Management approved the NEA Termination Pay Plan. Thereafter, the NEA implemented an early retirement program denominated as the Early Leavers Program, giving incentives to those who availed of it and left NEA before the effectivity of the reorganization plan. The other employees of NEA were terminated effective December 31, 2003. Hence, We have this petition. The Issues Petitioners raise the following issues: 1. 2. and 3. Resolution Nos. 46 and 59 were carried out in bad faith. The NEA Board has no power to terminate all the NEA employees; Executive Order No. 119 did not grant the NEA Board the power to terminate all NEA employees;

On the other hand, respondents argue in their Comment dated August 20, 2009 that: 1. 2. The Court has no jurisdiction over the petition; Injunction is improper in this case given that the assailed resolutions of the NEA Board have long

been implemented; and 3. The assailed NEA Board resolutions were issued in good faith.

The Courts Ruling This petition must be dismissed. The procedural issues raised by respondents shall first be discussed. This Court Has Jurisdiction over the Case Respondents essentially argue that petitioners violated the principle of hierarchy of courts, pursuant to which the instant petition should have been filed with the Regional Trial Court first rather than with this Court directly. We explained the principle of hierarchy of courts in Mendoza v. Villas, stating: In Chamber of Real Estate and Builders Associations, Inc. (CREBA) v. Secretary of Agrarian Reform, a petition for certiorari filed under Rule 65 was dismissed for having been filed directly with the Court, violating the principle of hierarchy of courts, to wit: Primarily, although this Court, the Court of Appeals and the Regional Trial Courts have concurrent jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence does not give the petitioner unrestricted freedom of choice of court forum. In Heirs of Bertuldo Hinog v. Melicor, citing People v. Cuaresma, this Court made the following pronouncements: This Courts original jurisdiction to issue writs of certiorari is not exclusive. It is shared by this Court with Regional Trial Courts and with the Court of Appeals. This concurrence of jurisdiction is not, however, to be taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of the court to which application therefor will be directed. There is after all a hierarchy of courts. That hierarchy is determinative of the venue of appeals, and also serves as a general determinant of the appropriate forum for petitions for the extraordinary writs. A becoming regard for that judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first level (inferior) courts should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Courts original j urisdiction to issue these writs
[1]

should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This is [an] established policy. It is a policy necessary to prevent inordinate demands upon the Courts time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the Courts docket. (Emphasis supplied.) Evidently, the instant petition should have been filed with the RTC. However, as an exception to this general rule, the principle of hierarchy of courts may be set aside for special and important reasons. Such reason exists in the instant case involving as it does the employment of the entire plantilla of NEA, more than 700 employees all told, who were effectively dismissed from employment in one swift stroke. This to the mind of the Court entails its attention. Moreover, the Court has made a similar ruling in National Power Corporation Drivers and Mechanics Association (NPC-DAMA) v. National Power Corporation (NPC).
[2]

In that case, the NPC-DAMA also filed a petition for injunction

directly with this Court assailing NPC Board Resolution Nos. 2002-124 and 2002-125, both dated November 18, 2002, directing the termination of all employees of the NPC on January 31, 2003. Despite such apparent disregard of the principle of hierarchy of courts, the petition was given due course. We perceive no compelling reason to treat the instant case differently. The Remedy of Injunction Is still Available Respondents allege that the remedy of injunction is no longer available to petitioners inasmuch as the assailed NEA Board resolutions have long been implemented. Taking respondents above posture as an argument on the untenability of the petition on the ground of mootness, petitioners contend that the principle of mootness is subject to exceptions, such as when the case is of transcendental importance. In Funa v. Executive Secretary, the Court passed upon the seeming moot issue of the appointment of Maria Elena H. Bautista (Bautista) as Officer-in-Charge (OIC) of the Maritime Industry Authority (MARINA) while concurrently serving as Undersecretary of the Department of Transportation and Communications. There, even though Bautista later on was appointed as Administrator of MARINA, the Court ruled that the case was an exception to the principle of mootness and that the remedy of injunction was still available, explaining thus: A moot and academic case is one that ceases to present a justiciable controversy by virtue of supervening events, so that a declaration thereon would be of no practical use or value. Generally, courts decline jurisdiction over such case or dismiss it on ground of mootness. However, as we held in Public Interest Center, Inc. v. Elma, supervening events, whether intended or accidental, cannot prevent the Court from rendering a decision if there is a grave violation of the Constitution. Even in cases where supervening events had made the cases moot, this Court did not hesitate to resolve the legal or constitutional issues raised to formulate controlling principles to guide the bench, bar, and public. As a rule, the writ of prohibition will not lie to enjoin acts already done. However, as an exception to the rule on mootness, courts will decide a question otherwise moot if it is capable of repetition yet evading review. (Emphasis supplied.) Similarly, in the instant case, while the assailed resolutions of the NEA Board may have long been implemented, such acts of the NEA Board may well be repeated by other government agencies in the reorganization of their offices. Petitioners have not lost their remedy of injunction. The Power to Reorganize Includes the Power to Terminate The meat of the controversy in the instant case is the issue of whether the NEA Board had the power to pass Resolution Nos. 46 and 59 terminating all of its employees. This must be answered in the affirmative. Under Rule 33, Section 3(b)(ii) of the Implementing Rules and Regulations of the EPIRA Law, all NEA employees shall be considered legally terminated with the implementation of a reorganization program pursuant to a law enacted by Congress or pursuant to Sec. 5(a)(5) of PD 269 through which the reorganization was carried out, viz: Section 5. National Electrification Administration; Board of Administrators; Administrator (a) For the purpose of administering the provisions of this Decree, there is hereby established a public corporation to be known as the National Electrification Administration. x x x
[3]

xxxx The Board shall, without limiting the generality of the foregoing, have the following specific powers and duties. xxxx 5. To establish policies and guidelines for employment on the basis of merit, technical competence and moral character, and, upon the recommendation of the Administrator to organize or reorganize NEAs staffing structure, to fix the salaries of personnel and to define their powers and duties. (Emphasis supplied.) Thus, petitioners argue that the power granted unto the NEA Board to organize or reorganize does not include the power to terminate employees but only to reduce NEAs manpower complement. Such contention is erroneous. In Betoy v. The Board of Directors, National Power Corporation , the Court upheld the dismissal of all the employees of the NPC pursuant to the EPIRA Law. In ruling that the power of reorganization includes the power of removal, the Court explained: [R]eorganization involves the reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of functions. It could result in the loss of ones position through removal or abolition of an office. However, for a reorganization for the purpose of economy or to make the bureaucracy more efficient to be valid, it must pass the test of good faith; otherwise, it is void ab initio. (Emphasis supplied.) Evidently, the termination of all the employees of NEA was within the NEA Boards powers and may not successfully be impugned absent proof of bad faith. Petitioners Failed to Prove that the NEA Board Acted in Bad Faith Next, petitioners challenge the reorganization claiming bad faith on the part of the NEA Board. Congress itself laid down the indicators of bad faith in the reorganization of government offices in Sec. 2 of RA 6656, an Act to Protect the Security of Tenure of Civil Service Officers and Employees in the Implementation of Government Reorganization, to wit: Section 2. No officer or employee in the career service shall be removed except for a valid cause and after due notice and hearing. A valid cause for removal exists when, pursuant to a bona fide reorganization, a position has been abolished or rendered redundant or there is a need to merge, divide, or consolidate positions in order to meet the exigencies of the service, or other lawful causes allowed by the Civil Service Law. The existence of any or some of the following circumstances may be considered as evidence of bad faith in the removals made as a result of reorganization, giving rise to a claim for reinstatement or reappointment by an aggrieved party: (a) Where there is a significant increase in the number of positions in the new staffing pattern of the department or agency concerned; (b) Where an office is abolished and other performing substantially the same functions is created; (c) Where incumbents are replaced by those less qualified in terms of status of appointment, performance and merit; (d) Where there is a reclassification of offices in the department or agency concerned and the reclassified offices perform substantially the same function as the original offices; (e) Where the removal violates the order of separation provided in Section 3 hereof. (Emphasis supplied.) It must be noted that the burden of proving bad faith rests on the one alleging it. As the Court ruled in Culili v. Eastern Telecommunications, Inc., According to jurisprudence, basic is the principle that good faith is presumed and he who alleges bad faith has the duty to prove the same. Moreover, in Spouses Palada v. Solidbank Corporation, the Court stated, Allegations of bad faith and fraud must be proved by clear and convincing evidence. Here, petitioners have failed to discharge such burden of proof.
[6] [5] [4]

In alleging bad faith, petitioners cite RA 6656, particularly its Sec. 2, subparagraphs (b) and (c). Petitioners have the burden to show that: (1) the abolished offices were replaced by substantially the same units performing the same functions; and (2) incumbents are replaced by less qualified personnel. Petitioners failed to prove such facts. Mere allegations without hard evidence cannot be considered as clear and convincing proof. Next, petitioners state that the NEA Board should not have abolished all the offices of NEA and instead made a selective termination of its employees while retaining the other employees. Petitioners argue that for the reorganization to be valid, it is necessary to only abolish the offices or terminate the employees that would not be retained and the retention of the employees that were tasked to carry out the continuing mandate of NEA. Petitioners argue in their Memorandum dated July 27, 2010: A valid reorganization, pursued in good faith, would have resulted to: (1) the abolition of old positions in the NEAs table of organization that pertain to the granting of franchises and rate fixing functions as these were all abolished by Congress (2) the creation of new positions that pertain to the additional mandates of the EPIRA Law and (3) maintaining the old positions that were not affected by the EPIRA Law. The Court already had the occasion to pass upon the validity of the similar reorganization in the NPC. In the aforecited case of Betoy,
[7]

the Court upheld the policy of the Executive to terminate all the employees of the office before

rehiring those necessary for its operation. We ruled in Betoy that such policy is not tainted with bad faith: It is undisputed that NPC was in financial distress and the solution found by Congress was to pursue a policy towards its privatization. The privatization of NPC necessarily demanded the restructuring of its operations. To carry out the purpose, there was a need to terminate employees and re-hire some depending on the manpower requirements of the privatized companies. The privatization and restructuring of the NPC was, therefore, done in good faith as its primary purpose was for economy and to make the bureaucracy more efficient . (Emphasis supplied.) Evidently, the fact that the NEA Board resorted to terminating all the incumbent employees of NPC and, later on, rehiring some of them, cannot, on that ground alone, vitiate the bona fides of the reorganization. WHEREFORE, the instant petition is hereby DISMISSED. Resolution Nos. 46 and 59, dated July 10, 2003 and September 3, 2003, respectively, issued by the NEA Board of Directors are hereby UPHELD. NM ROTHSCHILD & SONS VS. LEPANTO CONSOLIDATED MINING COMPANY, This is a Petition for Review on Certiorari assailing the Decision of the Court of Appeals dated September 8, 2006 in [2] CA-G.R. SP No. 94382 and its Resolution 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] [1]

against petitioner NM Rothschild & Sons (Australia) Limited praying for a judgment declaring
[4]

the loan and hedging contracts between the parties void for being contrary to Article 2018

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] [9]

On April 3, 2006, petitioner sought redress via a Petition for Certiorari

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 Septemer 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. 34). 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 [11] Beneficial Association, 18 RI 165, 26 A 36). 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 (Austra lia) 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 [16] duty or to a virtual refusal to perform the duty enjoined by or to act all in contemplation of law. 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. exceptions. Thus, in Tan v. Court of Appeals,
[23] [22]

However, this principle of hypothetical admission admits of

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 [24] pleader himself in ruling on the demurrer to the complaint . (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. 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] [26]

The trial court, therefore, correctly denied the Motion to

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 mattersrequire presentation [28] and/or determination of facts, they can be best resolved after trial on the merits . (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. 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. 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.
[30] [29]

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 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 [34] court. (Emphases supplied.) In Domagas v. Jensen, 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 [36] to compel a defendant to specifically perform some act or actions to fasten a pecuniary liability on him. 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] [35] [33]

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 of La 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 wouldbe 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 [43] to the court's jurisdiction. (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. International Bank v. Dy Hong Pi,
[46] [45]

Thus, in Philippine Commercial

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 [47] said party from later on impugning the court's jurisdiction. (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. Section 1. Grounds. Within the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made on any of the following grounds: (a) That the court has no jurisdiction over the person of the defending party; (b) That the court has no jurisdiction over the subject matter of the claim; (c) That venue is improperly laid; (d) That the plaintiff has no legal capacity to sue; (e) That there is another action pending between the same parties for the same cause; (f) That the cause of action is barred by a prior judgment or by the statute of limitations; (g) That the pleading asserting the claim states no cause of action; (h) That the claim or demand set forth in the plaintiff's pleading has been paid, waived, abandoned, or otherwise extinguished; (i) That the claim on which the action is founded is unenforceable under the provisions of the statute of frauds; and (j) That a condition precedent for filing the claim has not been complied with. BF HOMES VS. MANILA ELECTRIC COMPANY This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the Decision 27, 2005 of the Court of Appeals in CA-G.R. SP No. 82826, nullifying and setting aside (1) the Order
[2] [1]

dated October

dated November

21, 2003 of the Regional Trial Court (RTC), Branch 202 of Las Pias City, in Civil Case No. 03-0151, thereby dissolving the writ of injunction against respondent Manila Electric Company (MERALCO); and (2) the Resolution
[3]

dated February

7, 2006 of the Court of Appeals denying the Motion for Reconsideration of petitioners BF Homes, Inc. (BF Homes) and Philippine Waterworks and Construction Corporation (PWCC).

MERALCO is a corporation duly organized and existing under Philippine laws engaged in the distribution and sale of electric power in Metro Manila. On the other hand, BF Homes and PWCC are owners and operators of waterworks systems delivering water to over 12,000 households and commercial buildings in BF Homes subdivisions in Paraaque City, Las Pias City, Caloocan City, and Quezon City. The water distributed in the waterworks systems owned and operated by BF Homes and PWCC is drawn from deep wells using pumps run by electricity supplied by MERALCO.

On June 23, 2003, BF Homes and PWCC filed a Petition [With Prayer for the Issuance of Writ of Preliminary Injunction and for the Immediate Issuance of Restraining Order] against MERALCO before the RTC, docketed as Civil Case No. 03-0151. In their Petition before the RTC, BF Homes and PWCC invoked their right to refund based on the ruling of this Court in Republic v. Manila Electric Company : 7. It is of judicial notice that on November 15, 2002, in G.R. No. 141314, entitled Republic of the Philippines vs. Manila Electric Company, and G.R. No. 141369, entitledLawyers Against Monopoly and Poverty (LAMP) et al. vs. Manila Electric Compnay (MERALCO) , (both cases shall hereafter be referred to as MERALCO Refund cases, for brevity), the Supreme Court ordered MERALCO to refund its customers, which shall be credited against the customers future consumption, the excess average amount of P0.167 per kilowatt hour starting with the customers billing cycles beginning February 1998. The dispositive portion of the Supreme Court Decision in the MERALCO Refund cases reads: WHEREFORE, in view of the foregoing, the instant petitions are GRANTED and the decision of the Court of Appeals in C.A. G.R. SP No. 46888 is REVERSED. Respondent MERALCO is authorized to adopt a rate adjustment in the amount of P0.017 kilowatthour, effective with respect to MERALCOs billing cycles beginning February 1994. Further, in accordance with the decision of the ERB dated February 16, 1998, the excess average amount of P0.167 per kilowatt hour starting with the applicants billing cycles beginning February 1998 is ordered to be refunded to MERALCOs customers or correspondingly credited in their favor for future consumption. x x x x. 8. The Motion for Reconsideration filed by MERALCO in the MERALCO Refund cases was DENIED WITH FINALITY (the uppercase letters were used by the Supreme Court) in the Resolution of the Supreme Court dated April 9, 2003. 9. The amount that MERALCO was mandated to refund to [BF Homes and PWCC] pursuant [5] to the MERALCO Refund cases is in the amount of P11,834,570.91. BF Homes and PWCC then alleged in their RTC Petition that: 10. On May 20, 2003, without giving any notice whatsoever, MERALCO disconnected electric supply to [BF Homes and PWCCs] sixteen (16) water pumps located in BF Homes in Paraaque, Caloocan, and Quezon City, which thus disrupted water supply in those areas. 11. On June 4, 2003, [BF Homes and PWCC] received by facsimile transmission a letter from MERALCO, x x x, in which MERALCO demanded to [BF Homes and PWCC] the payment of electric bills amounting to P4,717,768.15. 12. [MERALCO] replied in a letter dated June 11, 2003, x x x, requesting MERALCO to apply the P4,717,768.15 electric bill against the P11,834,570.91 that MERALCO was ordered to refund to [BF Homes and PWCC] pursuant to the MERALCO Refund cases. x x x 13. Displaying the arrogance that has become its distinction, MERALCO, in its letter dated June 16, 2003, x x x, denied [BF Homes and PWCCs] request alleging that it has not yet come up with the schedule for the refund of large amounts, such as those of [BF Homes and PWCC]. 14. Even while MERALCO was serving its reply-letter to [BF Homes and PWCC], MERALCO, again, without giving any notice, cut off power supply to [BF Homes and PWCCs] five (5) water pumps located in BF Homes Paraaque and BF Resort Village, in Pamplona, Las Pias City. 15. In its letter dated June 4, 2003 (Annex A), MERALCO threatened to cut off electric power connections to all of [BF Homes and PWCCs] water pumps if [BF Homes and PWCC] faile d to pay their [6] bills demanded by MERALCO by June 20, 2003. BF Homes and PWCC thus cited the following causes of action for their RTC Petition: 16. In refusing to apply [MERALCOs] electric bills against the amounts that it was ordered to refund to [BF Homes and PWCC] pursuant to the MERALCO Refund cases and in making the implementation of the refund ordered by the Supreme Court dependent upon its own will and caprice, MERALCO acted with utmost bad faith. 17. [BF Homes and PWCC] are clearly entitled to the remedies under the law to compel MERALCO to consider [BF Homes and PWCCs] electric bills fully paid by the amounts which MERALCO
[4]

was ordered to refund to [BF Homes and PWCC] pursuant to the MERALCO Refund cases, to enjoin MERALCO to reconnect electric power to all of [BF Homes and PWCCs] water pumps, and to order MERALCO to desist from further cutting off power connection to [BF Homes and PWCCs] water pumps. 18. MERALCOs unjust and oppressive acts have cast dishonor upon [BF Homes and PWCCs] good name and besmirched their reputation for which [BF Homes and PWCC] should be indemnified by way of moral damages in the amount of not less than P1,000,000.00. 19. As an example for the public good, to dissuade others from emulating MERALCOs unjust, oppressive and mercenary conduct, MERALCO should be directed to pay [BF Homes and PWCC] exemplary damages of at least P1,000,000.00. 20. MERALCOs oppressive and inequitable conduct forced [BF Homes and PWCC] to engage the services of counsel to defend their rights and thereby incur litigation expenses in the amount [7] of at least P500,000.00 for which [BF Homes and PWCC] should be indemnified. BF Homes and PWCC additionally prayed that the RTC issue a writ of preliminary injunction and restraining order considering that: 21. As indicated in its letter dated June 4, 2003 (Annex A), unless seasonably restrained, MERALCO will cut off electric power connections to all of [BF Homes and PWCCs] water pumps on June 20, 2003. 22. Part of the reliefs herein prayed for is to restrain MERALCO from cutting off electric power connections to [BF Homes and PWCCs] water pumps. 23. Unless MERALCOS announced intention to cut off electric power connections to [BF Homes and PWCCs] water pumps is restrained, [BF Homes and PWCC] will suffer great and irreparable injury because they would not [be] able to supply water to their customers. 24. [BF Homes and PWCC] therefore pray that a writ for preliminary injunction be issued upon posting of a bond in an amount as will be determined by this Honorable Court. 25. [BF Homes and PWCC] further pray that, in the meantime and immediately upon the filing of the above captioned Petition, a restraining order be issued before the matter of preliminary injunction [8] can be heard.

On August 15, 2003, MERALCO filed before the RTC its Answer with Counterclaims and Opposition to the Application for Writ of Preliminary Injunction
[9]

of BF Homes and PWCC.

According to MERALCO: 2.2. Both petitioners BF Homes, Incorporated and Philippine Waterworks Corporation are admittedly the registered customers of [MERALCO] by virtue of the service contracts executed between them under which the latter undertook to supply electric energy to the former for a fee. The following twenty-three (23) Service Identification Nos. (SINs) are registered under the name of BF Homes, Incorporated: x x x. While the following twenty-one (21) Service Identification Nos. (SINs) are registered under the name of Philippine Waterworks Construction Corporation: x x x xxxx 2.4. The service contracts as well as the terms and conditions of [MERALCOs] service as approved by BOE [Board of Energy], now ERC [Energy Regulatory Commission], provide in relevant parts, that [BF Homes and PWCC] agree as follows: DISCONTINUANCE OF SERVICE: The Company reserves the right to discontinue service in case the customer is in arrears in the payment of bills or for failure to pay the adjusted bills in those cases where the meter stopped or failed to register the correct amount of energy consumed, or for failure to comply with any of these terms and conditions, or in case of or to prevent fraud upon the Company. Before disconnection is made in the case of, or to prevent fraud, the Company may adjust the bill of said customer accordingly and if the adjusted bill is not paid, the Company may disconnect the same. (Emphasis supplied) 2.5. This contractual right of [MERALCO] to discontinue electric service for default in the payment of its regular bills is sanctioned and approved by the rules and regulations of ERB (now the ERC). This right is necessary and reasonable means to properly protect and enable [MERALCO] to perform and discharge its legal and contractual obligation under its legislative franchise and the law. Cutting off service for non-payment by the customers of the regular monthly electric bills is the only

practical way a public utility, such as [MERALCO], can ensure and maintain efficient service in accordance with the terms and conditions of its legislative franchise and the law. xxxx 2.14. Instead of paying their unpaid electric bills and before [MERALCO] could effect its legal and contractual right to disconnect [BF Homes and PWCCs] electric services, [BF Homes and PWCC] filed the instant petition to avoid payment of [MERALCOs] valid and legal claim for regular monthly electric bills. 2.15. [BF Homes and PWCCs] unpaid regular bills totaled P6,551,969.55 covering the May and June 2003 electric bills. x x x xxxx 2.17. [BF Homes and PWCC] knew that [MERALCO] is already in the process of implementing the decision of the Supreme Court as to the refund case. But this refund has to be implemented in accordance with the guidelines and schedule to be approved by the ERC. Thus [BF Homes and PWCCs] filing of the instant petition is merely to evade payment of their unpaid electric bills to [10] [MERALCO]. Hence, MERALCO sought the dismissal of the RTC Petition of BF Homes and PWCC on the following grounds: 3.1 The Honorable Court has no jurisdiction to award the relief prayed for by [BF Homes and PWCC] because: a) The petition is in effect preempting or defeating the power of the ERC to implement the decision of the Supreme Court. [MERALCO] is a utility company whose business activity is wholly regulated by the ERC. The latter, being the regulatory agency of the government having the authority over the respondent, is the one tasked to approve the guidelines, schedules and details of the refund. The decision of the Supreme Court, dated November 15, 2002, clearly states that respondent is directed to make the refund to its customers in accordance with the decision of the ERC (formerly ERB) dated February 16, 1998. Hence, [MERALCO] has to wait for the schedule and details of the refund to be approved by the ERC before it can comply with the Supreme Court decision. [MERALCO] has the right to disconnect the electric service to [BF Homes and PWCC]

b)

c)

3.2. in that: a)

The service contracts between [MERALCO] and [BF Homes and PWCC] expressly authorize the former to discontinue and disconnect electric services of the latter for their failure to pay the regular electric bills rendered. It is [MERALCOs] legal duty as a public utility to furnish its service to the general public without arbitrary discrimination and, consequently, [MERALCO] is obligated to discontinue and disconnect electric services to [BF Homes and PWCC] for their refusal or failure to pay [11] the electric energy actually used by them.

b)

For its compulsory counterclaims, MERALCO prayed that the RTC orders BF Homes and PWCC to pay MERALCO P6,551,969.55 as actual damages (representing the unpaid electric bills of BF Homes and PWCC for May and June 2003), P1,500,000.00 as exemplary damages, P1,500,000.00 as moral damages, andP1,000,000.00 as attorneys fees. Lastly, MERALCO opposed the application for writ of preliminary injunction of BF Homes and PWCC because: I [MERALCO] HAS THE LEGAL AND CONTRACTUAL RIGHT TO DEMAND PAYMENT OF THE ELECTRIC BILLS AND, IN CASE OF NON-PAYMENT, TO DISCONTINUE THE ELECTRIC SERVICES OF [BF HOMES and PWCC] II [BF HOMES and PWCC] HAVE NO CLEAR RIGHT WHICH WARRANTS PROTECTION BY INJUNCTIVE PROCESS

After hearing,

[12]

the RTC issued an Order on November 21, 2003 granting the application of BF Homes and PWCC

for the issuance of a writ of preliminary injunction. The RTC found that the records showed that all requisites for the issuance of said writ were sufficiently satisfied by BF Homes and PWCC. The RTC stated in its Order: Albeit, this Court respects the right of a public utility company like MERALCO, being a grantee of a legislative franchise under Republic Act No. 9029, to collect overdue payments from its subscribers or customers for their respective consumption of electric energy, such right must, however, succumb to the paramount substantial and constitutional rights of the public to the usage and enjoyment of waters in their community. Thus, there is an urgent need for the issuance of a writ of preliminary injunction in order to prevent social unrest in the community for having been deprived of the use and enjoyment of waters [13] flowing through [BF Homes and PWCCs] water pumps. The RTC decreed in the end: WHEREFORE, in the light of the foregoing, [BF Homes and PWCCs] prayer for the issuance of a writ of preliminary injunction is hereby GRANTED. Respondent Manila Electric Company is permanently restrained from proceeding with its announced intention to cut-off electric power connection to [BF Homes and PWCCs] water pumps unless otherwise ordered by this Court. Further, [BF Homes and PWCC] are hereby ordered to post a bond in the amount of P500,000 to answer for whatever injury or damage that [14] may be caused by reason of the preliminary injunction. The Motion for Reconsideration of MERALCO of the aforementioned Order was denied by the RTC in another Order issued on January 9, 2004.
[15]

The RTC reiterated its earlier finding that all the requisites for the proper issuance of

an injunction had been fully complied with by BF Homes and PWCC, thus: Records indubitably show that all the requisites for the proper issuance of an injunction have been fully complied with in the instant case. It should be noted that a disconnection of power supply would obviously cause irreparable injury because the pumps that supply water to the BF community will be without electricity, thereby rendering said community without water. Water is a basic and endemic necessity of life. This is why its enjoyment and use has been constitutionally safeguarded and protected. Likewise, a community without water might create social unrest, which situation this Court has the mandate to prevent. There is an urgent and paramount necessity for the issuance of the injunctive writ to prevent serious damage to the guaranteed [16] rights of [BF Homes and PWCC] and the residents of the community to use and enjoy water. The RTC resolved the issue on jurisdiction raised by MERALCO, as follows: As to the jurisdictional issue raised by respondent MERALCO, it can be gleaned from a reevaluation and re-assessment of the records that this Court has jurisdiction to delve into the case. This Court gave both parties the opportunity to be heard as they introduced evidence on the propriety of the issuance of the injunctive writ. It is well-settled that no grave abuse of discretion could be attributed to its issuance where a party was not deprived of its day in court as it was heard and had exhaustively presented all its arguments and defenses. (National Mines and Allied Workers Union vs. Valero, 132 [17] SCRA 578, 1984.) Aggrieved, MERALCO filed with the Court of Appeals a Petition for Certiorari under Rule 65 of the Rules of Court, docketed as CA-G.R. SP No. 82826. MERALCO sought the reversal of the RTC Orders dated November 21, 2003 and January 9, 2004 granting a writ of preliminary injunction in favor of BF Homes and PWCC. MERALCO asserted that the RTC had no jurisdiction over the application of BF Homes and PWCC for issuance of such a writ. In its Decision dated October 27, 2005, the Court of Appeals agreed with MERALCO that the RTC had no jurisdiction to issue a writ of preliminary injunction in Civil Case No. 03-0151, as said trial court had no jurisdiction over the subject matter of the case to begin with. It ratiocinated in this wise: For one, it cannot be gainsaid that the ERC has original and exclusive jurisdiction over the case. Explicitly, Section 43(u) of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act, (RA 9136), states that the ERC shall have the original and exclusive jurisdiction over all cases contesting rates, fees, fines and penalties imposed by the ERC in the exercise of its powers, functions and responsibilities and over all cases involving disputes between and among participants or players in the energy sector. Section 4(o) of Rule 3 of the Implementing Rules and Regulations of RA 9136 likewise provides that the ERC shall also be empowered to issue such other rules that are essential in the discharge of its functions as an independent quasi-judicial body.

For another, the respondent judge, instead of presiding over the case, should have dismissed the same and yielded jurisdiction to the ERC pursuant to the doctrine of primary jurisdiction. It is plain error on the part of the respondent judge to determine, preliminary or otherwise, a controversy involving a question which is within the jurisdiction of an administrative tribunal, especially so where the question demands the exercise of sound administrative discretion. Needless to state, the doctrine of primary jurisdiction applies where the administrative agency, as in the case of ERC, exercises its quasi-judicial and adjudicatory function. Thus, in cases involving specialized disputes, the practice has been to refer the same to an administrative agency of special competence pursuant to the doctrine of primary jurisdiction. The courts will not determine a controversy involving a question which is within the jurisdiction of the administrative tribunal prior to the resolution of that question by the administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the premises of the regulatory statute administered. Verily, the cause of action of [BF Homes and PWCC] against [MERALCO] originates from the Meralco Refund Decision as it involves the perceived right of the former to compel the latter to set-off or apply their refund to their present electric bill. The issue delves into the right of the private respondents to collect their refund without submitting to the approved schedule of the ERC, and in effect give unto themselves preferential right over other equally situated consumers of [MERALCO]. Perforce, the ERC, as can be gleaned from the afore-stated legal provisions, has primary, original and exclusive jurisdiction over the said controversy. Indeed, the respondent judge glaringly erred in enjoining the right of [MERALCO] to disconnect its services to [BF Homes and PWCC] on the premise that the court has jurisdiction to apply the provisions on compensation or set-off in this case. Although [MERALCO] recognizes the right of [BF Homes and PWCC] to the refund as provided in the Meralco Refund Decision, it is the ERC which has the authority to implement the same according to its approved schedule, it being a dispute arising from the exercise of its jurisdiction. Moreover, it bears to stress that the Meralco Refund Decision was brought into fore by the Decision dated 16 February 1998 of the ERC (then Energy Regulatory Board) granting refund to [MERALCOs] consumers. Being the agency of origin, the ERC has the jurisdiction to execute the same. Besides, as stated, it is empowered to promulgate rules that are essential in the discharge of its [18] functions as an independent quasi-judicial body. The dispositive portion of the judgment of the appellate court reads:

WHEREFORE, the foregoing considered, the instant petition is hereby GRANTED and the assailed Orders REVERSED and SET ASIDE. Accordingly, the writ of injunction against [MERALCO] is [19] hereby DISSOLVED. No costs. In a Resolution dated February 7, 2006, the Court of Appeals denied the Motion for Reconsideration of BF Homes and PWCC for failing to raise new and persuasive and meritorious arguments. Now, BF Homes and PWCC come before this Court via the instant Petition, raising the following assignment of errors: 1. The Court of Appeals ERRED in saying that the respondent judge committed grave abuse of discretion by issuing the disputed writ of injunction pending the merits of the case including the issue of subject matter jurisdiction. The Court of Appeals ERRED in saying that the ERC under the doctrine of primary jurisdiction has the original and EXCLUSIVE jurisdiction to take cognizance of a petition for injunction to prevent electrical disconnection to a customer entitled to a refund. The Court of Appeals ERRED in NOT SAYING that the ERC as a quasi-judicial body under RA 9136 has no power to issue any injunctive relief or remedy to prevent disconnection.

2.

3.

4. The Court of Appeals ERRED in not resolving the issue as to the violation of MERALCO of a standing [20] injunction order while the case remains undecided. At the core of the Petition is the issue of whether jurisdiction over the subject matter of Civil Case No. 03-0151 lies with the RTC or the Energy Regulatory Commission (ERC). If it is with the RTC, then the said trial court also has jurisdiction to issue the writ of preliminary injunction against MERALCO. If it is with the ERC, then the RTC also has no

jurisdiction to act on any incidents in Civil Case No. 03-0151, including the application for issuance of a writ of preliminary injunction of BF Homes and PWCC therein. BF Homes and PWCC argued that due to the threat of MERALCO to disconnect electric services, BF Homes and PWCC had no other recourse but to seek an injunctive remedy from the RTC under its general jurisdiction. The merits of Civil Case No. 03-0151 was not yet in issue, only the propriety of issuing a writ of preliminary injunction to prevent an irreparable injury. Even granting that the RTC has no jurisdiction over the subject matter of Civil Case No. 03-0151, the ERC by enabling law has no injunctive power to prevent the disconnection by MERALCO of electric services to BF Homes and PWCC. The Petition has no merit. Settled is the rule that jurisdiction is conferred only by the Constitution or the law. Appeals
[22] [21]

Republic v. Court of

also enunciated that only a statute can confer jurisdiction on courts and administrative agencies.

Related to the foregoing and equally well-settled is the rule that the nature of an action and the subject matter thereof, as well as which court or agency of the government has jurisdiction over the same, are determined by the material allegations of the complaint in relation to the law involved and the character of the reliefs prayed for, whether or not the complainant/plaintiff is entitled to any or all of such reliefs. A prayer or demand for relief is not part of the petition of the cause of action; nor does it enlarge the cause of action stated or change the legal effect of what is alleged. In determining which body has jurisdiction over a case, the better policy is to consider not only the status or relationship of the parties but also the nature of the action that is the subject of their controversy. In Manila Electric Company v. Energy Regulatory Board,
[24] [23]

the Court traced the legislative history of the

regulatory agencies which preceded the ERC, presenting a summary of these agencies, the statutes or issuances that created them, and the extent of the jurisdiction conferred upon them, viz: 1. The first regulatory body, the Board of Rate Regulation (BRR), was created by virtue of Act No. 1779. Its regulatory mandate under Section 5 of the law was limited to fixing or regulating rates of every public service corporation. 2. In 1913, Act No. 2307 created the Board of Public Utility Commissioners (BPUC) to take over the functions of the BRR. By express provision of Act No. 2307, the BPUC was vested with jurisdiction, supervision and control over all public utilities and their properties and franchises. 3. On November 7, 1936, Commonwealth Act (C.A.) No. 146, or the Public Service Act (PSA), was passed creating the Public Service Commission (PSC) to replace the BPUC. Like the BPUC, the PSC was expressly granted jurisdiction, supervision and control over public services, with the concomitant authority of calling on the public force to exercise its power, to wit: SEC. 13. Except as otherwise provided herein, the Commission shall have general supervision and regulation of, jurisdiction and control over, all public utilities,and also over their property, property rights, equipment, facilities and franchises so far as may be necessary for the purpose of carrying out the provisions of this Act, and in the exercise of its authority it shall have the necessary powers and the aid of the public force x x x. Section 14 of C.A. No. 146 defines the term public service or public utility as including every individual, copartnership, association, corporation or joint-stock company, . . . that now or hereafter may own, operate, manage or control within the Philippines, for hire or compensation, any common carrier, x x x, electric light, heat, power, x x x, when owned, operated and managed for public use or service within the Philippines x x x. Under the succeeding Section 17(a), the PSC has the power even without prior hearing (a) To investigate, upon its own initiative, or upon complaint in writing, any matter concerning any public service as regards matters under its jurisdiction; to require any public service to furnish safe, adequate and proper service as the public interest may require and warrant, to enforce compliance with any standard, rule, regulation, order or other requirement of this Act or of the Commission, x x x. 4. Then came Presidential Decree (P.D.) No. 1, reorganizing the national government and implementing the Integrated Reorganization Plan. Under the reorganization plan, jurisdiction, supervision and control over public services related to electric light, and power heretofore vested in the PSC were transferred to the Board of Power and Waterworks (BOPW).

Later, P.D. No. 1206 abolished the BOPW. Its powers and function relative to power utilities, including its authority to grant provisional relief, were transferred to the newly-createdBoard of Energy (BOE). 5. On May 8, 1987, then President Corazon C. Aquino issued E.O. No. 172 reconstituting the BOE into the ERB, transferring the formers functions and powers under P.D. No. 1206 to the latter and consolidating in and entrusting on the ERB all the regulatory and adjudicatory functions covering the energy sector. Section 14 of E.O. No. 172 states that (T)he applicable provisions of [C.A.] No. 146, as amended, otherwise known as the Public Service Act; x x x and [P.D.] No. 1206, as amended, creating the Department of Energy, shall continue to have full force and effect, except insofar as inconsistent with [25] this Order. Thereafter, on June 8, 2001, Republic Act No. 9136, known as the Electric Power Industry Reform Act of 2001 (EPIRA), was enacted, providing a framework for restructuring the electric power industry. One of the avowed purposes of the EPIRA is to establish a strong and purely independent regulatory body. The Energy Regulatory Board (ERB) was abolished and its powers and functions not inconsistent with the provision of the EPIRA were expressly transferred to the ERC.
[26]

The powers and functions of the ERB not inconsistent with the EPIRA were transferred to the ERC by virtue of Sections 44 and 80 of the EPIRA, which read: Sec. 44. Transfer of Powers and Functions. The powers and functions of the Energy Regulatory Board not inconsistent with the provisions of this Act are hereby transferred to the ERC. The foregoing transfer of powers and functions shall include all applicable funds and appropriations, records, equipment, property and personnel as may be necessary. Sec. 80. Applicability and Repealing Clause. The applicability provisions of Commonwealth Act No. 146, as amended, otherwise known as the Public Service Act. Republic Act 6395, as amended, revising the charter of NPC; Presidential Decree 269, as amended, referred to as the National Electrification Decree; Republic Act 7638, otherwise known as the Department of Energy Act of 1992; Executive Order 172, as amended, creating the ERB; Republic Act 7832 otherwise known as the Anti Electricity and Electric Transmission Lines/Materials Pilferage Act of 1994; shall continue to have full force and effect except insofar as they are inconsistent with this Act. The provisions with respect to electric power of Section 11(c) of Republic Act 7916, as amended, and Section 5(f) of Republic Act 7227, are hereby repealed or modified accordingly. Presidential Decree No. 40 and all laws, decrees, rules and regulations, or portions thereof, inconsistent with this Act are hereby repealed or modified accordingly. In addition to the foregoing, the EPIRA also conferred new powers upon the ERC under Section 43, among which are: SEC. 43. Functions of the ERC. The ERC shall promote competition, encourage market development, ensure customer choice and penalize abuse of market power in the restructured electricity industry. In appropriate cases, the ERC is authorized to issue cease and desist order after due notice and hearing. Towards this end, it shall be responsible for the following key functions in the restructured industry: xxxx

(f) In the public interest, establish and enforce a methodology for setting transmission and distribution wheeling rates and retail rates for the captive market of a distribution utility, taking into account all relevant considerations, including the efficiency or inefficiency of the regulated entities. The rates must be such as to allow the recovery of just and reasonable costs and a reasonable return on rate base (RORB) to enable the entity to operate viably. The ERC may adopt alternative forms of internationally-accepted rate-setting methodology as it may deem appropriate. The rate-setting methodology so adopted and applied must ensure a reasonable price of electricity. The rates prescribed shall be non-discriminatory. To achieve this objective and to ensure the complete removal of cross subsidies, the cap on the recoverable rate of system losses prescribed in Section 10 of Republic Act No. 7832, is hereby amended and shall be replaced by caps which shall be determined by the ERC based on load density, sales mix, cost of service, delivery voltage and other technical considerations it may promulgate. The ERC shall determine such form of rate-setting methodology, which shall promote efficiency. x x x. xxxx

(u) The ERC shall have the original and exclusive jurisdiction over all cases contesting rates, fees, fines and penalties imposed by the ERC in the exercise of the abovementioned powers, functions and responsibilities and over all cases involving disputes between and among participants or players in the energy sector. All notices of hearings to be conducted by the ERC for the purpose of fixing rates or fees shall be published at least twice for two successive weeks in two (2) newspapers of nationwide circulation. A careful review of the material allegations of BF Homes and PWCC in their Petition before the RTC reveals that the very subject matter thereof is the off-setting of the amount of refund they are supposed to receive from MERALCO against the electric bills they are to pay to the same company. This is squarely within the primary jurisdiction of the ERC.

The right of BF Homes and PWCC to refund, on which their claim for off-setting depends, originated from the MERALCO Refund cases. In said cases, the Court (1) authorized MERALCO to adopt a rate adjustment in the amount of P0.017 per kilowatthour, effective with respect to its billing cycles beginning February 1994; and (2) ordered MERALCO to refund to its customers or credit in said customers favor for future consumption P0.167 per kilowatthour, starting with the customers billing cycles that begin February 1998, in accordance with the ERB Decision dated February 16, 1998. It bears to stress that in the MERALCO Refund cases, this Court only affirmed the February 16, 1998 Decision of the ERB (predecessor of the ERC) fixing the just and reasonable rate for the electric services of MERALCO and granting refund to MERALCO consumers of the amount they overpaid. Said Decision was rendered by the ERB in the exercise of its jurisdiction to determine and fix the just and reasonable rate of power utilities such as MERALCO. Presently, the ERC has original and exclusive jurisdiction under Rule 43(u) of the EPIRA over all cases contesting rates, fees, fines, and penalties imposed by the ERC in the exercise of its powers, functions and responsibilities, and over all cases involving disputes between and among participants or players in the energy sector. Section 4(o) of the EPIRA Implementing Rules and Regulation provides that the ERC shall also be empowered to issue such other rules that are essential in the discharge of its functions as in independent quasi-judicial body. Indubitably, the ERC is the regulatory agency of the government having the authority and supervision over MERALCO. Thus, the task to approve the guidelines, schedules, and details of the refund by MERALCO to its consumers, to implement the judgment of this Court in the MERALCO Refund cases, also falls upon the ERC. By filing their Petition before the RTC, BF Homes and PWCC intend to collect their refund without submitting to the approved schedule of the ERC, and in effect, enjoy preferential right over the other equally situated MERALCO consumers. Administrative agencies, like the ERC, are tribunals of limited jurisdiction and, as such, could wield only such as are specifically granted to them by the enabling statutes. In relation thereto is the doctrine of primary jurisdiction involving matters that demand the special competence of administrative agencies even if the question involved is also judicial in nature. Courts cannot and will not resolve a controversy involving a question within the jurisdiction of an administrative tribunal, especially when the question demands the sound exercise of administrative discretion requiring special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact. The court cannot arrogate into itself the authority to resolve a controversy, the jurisdiction of which is initially lodged with the administrative body of special competence.
[27]

Since the RTC had no jurisdiction over the Petition of BF Homes and PWCC in Civil Case No. 03-0151, then it was also devoid of any authority to act on the application of BF Homes and PWCC for the issuance of a writ of preliminary injunction contained in the same Petition. The ancillary and provisional remedy of preliminary injunction cannot exist except only as an incident of an independent action or proceeding.
[28]

Incidentally, BF Homes and PWCC seemed to have lost sight of Section 8 of Executive Order No. 172 which explicitly vested on the ERB, as an incident of its principal function, the authority to grant provisional relief, thus: Section 8. Authority to Grant Provisional Relief. The Board may, upon the filing of an application, petition or complaint or at any stage thereafter and without prior hearing, on the basis of

supporting papers duly verified or authenticated, grant provisional relief on motion of a party in the case or on its own initiative, without prejudice to a final decision after hearing, should the Board find that the pleadings, together with such affidavits, documents and other evidence which may be submitted in support of the motion, substantially support the provisional order: Provided, That the Board shall immediately schedule and conduct a hearing thereon within thirty (30) days thereafter, upon publication and notice to all affected parties. The aforequoted provision is still applicable to the ERC as it succeeded the ERB, by virtue of Section 80 of the EPIRA. A writ of preliminary injunction is one such provisional relief which a party in a case before the ERC may move for. Lastly, the Court herein already declared that the RTC not only lacked the jurisdiction to issue the writ of preliminary injunction against MERALCO, but that the RTC actually had no jurisdiction at all over the subject matter of the Petition of BF Homes and PWCC in Civil Case No. 03-0151. Therefore, in addition to the dissolution of the writ of preliminary injunction issued by the RTC, the Court also deems it appropriate to already order the dismissal of the Petition of BF Homes and PWCC in Civil Case No. 03-0151 for lack of jurisdiction of the RTC over the subject matter of the same. Although only the matter of the writ of preliminary injunction was brought before this Court in the instant Petition, the Court is already taking cognizance of the issue on the jurisdiction of the RTC over the subject matter of the Petition. The Court may motu proprio consider the issue of jurisdiction. The Court has discretion to determine whether the RTC validly acquired jurisdiction over Civil Case No. 03-0151 since, to reiterate, jurisdiction over the subject matter is conferred only by law. Jurisdiction over the subject matter cannot be acquired through, or waived by, any act or omission of the parties. Neither would the active participation of the parties nor estoppel operate to confer jurisdiction on the RTC where the latter has none over a cause of action. only power it has is to dismiss the action.
[30] [29]

Indeed, when a court has no jurisdiction over the subject matter, the

WHEREFORE, the instant Petition for Review is DENIED. The Decision dated October 27, 2005 of the Court of Appeals in CA-G.R. SP No. 82826 is AFFIRMED with the MODIFICATION that the Regional Trial Court, Branch 202 of Las Pias City, is ORDERED to dismiss the Petition [With Prayer for the Issuance of Writ of Preliminary Injunction and for the Immediate Issuance of Restraining Order] of BF Homes, Inc. and Philippine Waterworks and Construction Corporation in Civil Case No. 03-0151. Costs against BF Homes, Inc. and Philippine Waterworks and Construction Corporation. SO ORDERED.

MAY D. AONUEVO, ALEXANDER BLEE DESANTIS AND JOHN DESANTIS NERI, PETITIONERS VS. INTESTATE ESTATE OF RODOLFO G. JALANDONI, REPRESENTED BY BERNARDINO G. JALANDONI AS SPECIAL ADMINISTRATOR, RESPONDENT (FIRS DIVISION, G.R. NO. 178221, O1 DECEMBER 2010) THIS CASE IS ABOUT LEGAL PRESUMPTION OF MARRIAGE. BIRTH CERTIFICATE STATING THAT ONES PARENTS WERE MARRIED ESTABLISHES THE PRESUMPTION THAT INDEED THEY WERE MARRIED. READ THE FULL TEXT OF THE DECISION IN jabbulao.com under the category RECENT SUPREME COURT DECISIONS. DIGEST: FACTS: RODOLFO DIED. HIS BROTHER FILED AT RTC PETITION FOR ISSUANCE OF LETTERS OF ADMINISTRATION. ANONUEVO ET AL INTERVENED. THEY SAID THEIR MOTHER SYLVIA WAS DAUGHTER OF ISABEL AND JOHN. BUT AT THE TIME OF RODOLFOS DEATH, THEIR GRANDMOTHER ISABEL WAS THE LAWFUL WIFE OF RODOLFO BASED ON A MARRIAGE CERTIFICATE. RODOLFOS BROTHER OPPOSED THEIR INTERVENTION BECAUSE THE BIRTH CERTIFICATE OF SYLVIA STATES THAT ISABEL AND JOHN WERE MARRIED. THEREFORE ISABELS MARRIAGE TO RODOLFO WAS NULL AND VOID. ANONUEVO ET AL HOWEVER ARGUED THAT THE ENTRIES IN THE BIRTH CERTIFICATE OF SYLVIA COULD NOT BE USED AS PROOF THAT ISABEL AND JOHN WERE INDEED MARRIED. FURTHER, SUCH STATEMENT OF MARRIAGE IN THE BIRTH CERTIFICATE IS JUST TO SAVE FACE AND IS CUSTOMARY.

ISSUE: CAN ANONUEVO ET AL INTERVENE? RULING: NO. THEY HAVE NO PERSONAL STANDING TO INTERVENE. THE BIRTH CERTIFICATE OF SYLVIA WHICH SHOWS THAT ISABEL AND JOHN WERE MARRIED IS SUFFICIENT PROOF THAT INDEED THEY WERE MARRIED. THEREFORE ISABELS MARRIAGE TO RODOLFO IS VOID SINCE AT THAT TIME ISABEL WAS STILL MARRIED TO JOHN. BEING NOT MARRIED TO RODOLFO, ISABEL AND HER DESCENDANTS HAVE NO SHARE IN THE ESTATE OF RODOLFO. WHILE A MARRIAGE CERTIFICATE IS CONSIDERED THE PRIMARY EVIDENCE OF A MARITAL UNION, IT IS NOT REGARDED AS THE SOLE AND EXCLUSIVE EVIDENCE OF MARRIAGE.[1][47] JURISPRUDENCE TEACHES THAT THE FACT OF MARRIAGE MAY BE PROVEN BY RELEVANT EVIDENCE OTHER THAN THE MARRIAGE CERTIFICATE.[2][48] HENCE, EVEN A PERSONS BIRTH CERTIFICATE MAY BE RECOGNIZED AS COMPETENT EVIDENCE OF THE MARRIAGE BETWEEN HIS PARENTS. THE REASON FACE SAVING/ CUSTOMARY IS WITHOUT MERIT. THE COURT CANNOT TAKE JUDICIAL NOTICE OF A FOLKWAY. The ruling of the Court: PEREZ, J.: XXXXXX The second argument of the petitioners is also without merit. We agree with the finding of the Court of Appeals that the petitioners and their siblings failed to offer sufficient evidence to establish that Isabel was the legal spouse of Rodolfo. The very evidence of the petitioners and their siblings negates their claim that Isabel has interest in Rodolfos estate. Contrary to the position taken by the petitioners, the existence of a previous marriage between Isabel and John Desantis was adequately established. This holds true notwithstanding the fact that no marriage certificate between Isabel and John Desantis exists on record. While a marriage certificate is considered the primary evidence of a marital union, it is not regarded as the sole and exclusive evidence of marriage.[3][47] Jurisprudence teaches that the fact of marriage may be proven by relevant evidence other than the marriage certificate.[4][48] Hence, even a persons birth certificate may be recognized as competent evidence of the marriage between his parents.[5][49] In the present case, the birth certificate of Sylvia precisely serves as the competent evidence of marriage between Isabel and John Desantis. As mentioned earlier, it contains the following notable entries: (a) that Isabel and John Desantis were married and (b) that Sylvia is their legitimate child.[6][50] In clear and categorical language, Sylvias birth certificate speaks of a subsisting marriage between Isabel and John Desantis. Pursuant to existing laws,[7][51] the foregoing entries are accorded prima facie weight. They are presumed to be true. Hence, unless rebutted by clear and convincing evidence, they can, and will, stand as proof of the facts attested. [8][52] In the case at bench, the petitioners and their siblings offered no such rebuttal. The petitioners did no better than to explain away the entries in Sylvias birth certificate as untruthful statements made only in order to save face.[9][53] They urge this Court to take note of a typical practice among unwed Filipino couples to concoct the illusion of marriage and make it appear that a child begot by them is legitimate. That, the Court cannot countenance. The allegations of the petitioners, by themselves and unsupported by any other evidence, do not diminish the probative value of the entries. This Court cannot, as the petitioners would like Us to do, simply take judicial notice of a supposed folkway and conclude therefrom that the usage was in fact followed. It certainly is odd that the petitioners would themselves argue that the document on which they based their interest in intervention contains untruthful statements in its vital entries. Ironically, it is the evidence presented by the petitioners and their siblings themselves which, properly appreciated, supports the finding that Isabel was, indeed, previously married to John Desantis. Consequently, in the absence of any proof that such marriage had been dissolved by the time Isabel was married to Rodolfo, the inescapable conclusion is that the latter marriage is bigamous and, therefore, void ab initio. The inability of the petitioners and their siblings to present evidence to prove that Isabels prior marriage was dissolved results in a failure to establish that she has interest in the estate of Rodolfo. Clearly, an intervention by the petitioners and their siblings in the settlement proceedings cannot be justified. We affirm the Court of Appeals. WHEREFORE, the instant appeal is DENIED. Accordingly, the decision dated 31 May 2007 of the Court of Appeals in CA-G.R. SP No. 00576 is hereby AFFIRMED.

Costs against the petitioners. SO ORDERED. MAY D. AONUEVO, ALEXANDER BLEE DESANTIS and JOHN DESANTIS NERI, Petitioners, vs. INTESTATE ESTATE OF RODOLFO G. JALANDONI, represented by BERNARDINO G. JALANDONI as Special Administrator, Respondent. On appeal is the Decision dated 31 May 2007 of the Court of Appeals in CA-G.R. SP No. 00576. In the said decision, 3 the Court of Appeals nullified, on certiorari, the Orders of the Regional Trial Court, Branch 40, of Negros Occidental 4 (intestate court) allowing herein petitioners and their siblings to intervene in the estate proceedings of the late Rodolfo G. 5 Jalandoni. The decretal portion of the decision of the appellate court reads: ACCORDINGLY, the petition for certiorari is hereby GRANTED, the assailed Orders dated July 2, 2004 and January 26, 2005, of the Regional Trial Court in Spec. Proc. No. 338 are hereby SET ASIDE and NULLIFIED, and a permanent injunction is hereby issued enjoining respondents [petitioners], their agents and anyone acting for and in their behalves, 6 from enforcing the assailed Orders. No costs. The antecedents are: Rodolfo G. Jalandoni (Rodolfo) died intestate on 20 December 1966. He died without issue.
7 8 1 2

On 28 April 1967, Bernardino G. Jalandoni (Bernardino), the brother of Rodolfo, filed a petition for the issuance of letters 9 of administration with the Court of First Instance of Negros Occidental, to commence the judicial settlement of the latters 10 estate. The petition was docketed as Spec. Proc. No. 338 and is currently pending before the intestate court. On 17 January 2003, the petitioners and their siblings filed a Manifestation before the intestate court. In the Manifestation, they introduced themselves as the children of Sylvia Blee Desantis (Sylvia) who, in turn, was revealed to 12 be the daughter of Isabel Blee (Isabel) with one John Desantis. The petitioners and their siblings contend that their grandmotherIsabelwas, at the time of Rodolfos death, the legal 13 spouse of the latter. For which reason, Isabel is entitled to a share in the estate of Rodolfo. Seeking to enforce the right of Isabel, the petitioners and their siblings pray that they be allowed to intervene on her behalf 14 in the intestate proceedings of the late Rodolfo G. Jalandoni. As it was, by the time the Manifestation was filed, both 15 Sylvia and Isabel have already passed away with the former predeceasing the latter. To support their cause, the petitioners and their siblings appended in their Manifestation, the following documents: a.) Two (2) marriage certificates between Isabel and Rodolfo; b.) The birth certificate of their mother, Sylvia; c.) Their respective proof of births.
18 17 16 11

and

It is the assertion of the petitioners and their siblings that the foregoing pieces of evidence sufficiently establish that Isabel was the spouse of Rodolfo, and that they are her lawful representatives. The respondent intestate estate of Rodolfo G. Jalandoni, now represented by Bernardino as its Special Administrator, however, begged to differ. It opposed the intervention on the ground that the petitioners and their siblings have failed to establish the status of Isabel as an heir of Rodolfo. The very evidence presented by the petitioners and their siblings showed that Isabel had a previous and subsisting marriage with John Desantis at the time she was purportedly married to Rodolfo. In its Comment to the Manifestation, the respondent called attention to the entries in the birth certificate of Sylvia, who 20 was born on 14 February 1946. As it turned out, the record of birth of Sylvia states that she was a "legitimate" child of 21 22 Isabel and John Desantis. The document also certifies the status of both Isabel and John Desantis as "married." The respondent posits that the foregoing entries, having been made in an official registry, constitute prima facie proof of a prior 23 marriage between Isabel and John Desantis. According to the respondent, Isabels previous marriage, in the absence of an y proof that it was dissolved, made her 24 subsequent marriage with Rodolfo bigamous and void ab initio. On 2 July 2004, the intestate court issued an order allowing the petitioners and their siblings to take part in the settlement 25 proceedings. The intestate court was convinced that the evidence at hand adequately est ablish Isabels status as the legal spouse of Rodolfo and, by that token, permitted the petitioners and their siblings to intervene in the proceedings on 26 her behalf.
19

The intestate court also held that the birth certificate of Sylvia was insufficient to prove that there was a previous marriage 27 between Isabel and John Desantis. It ventured on the possibility that the entries in the birth record of Sylvia regarding her legitimacy and the status of her parents, may have been made only in order to save Isabel and her family from the 28 social condemnation of having a child out of wedlock. The respondent sought for reconsideration, but was denied by the intestate court in its order dated 26 January 29 2006. Undeterred, the respondent hoisted a petition for certiorari before the Court of Appeals. On 31 May 2007, the Court of Appeals granted the petition and nullified the orders of the intestate court.
30

In coming to its conclusion, the Court of Appeals found that it was an error on the part of the intestate court to have 31 disregarded the probative value of Sylvias birth certificate. The appellate court, siding with the respondent, held that Sylvias birth certificate serves as prima facie evidence of the facts therein statedwhich includes the civil status of her 32 parents. Hence, the previous marriage of Isabel with John Desantis should have been taken as established. The Court of Appeals added that since the petitioners and their siblings failed to offer any other evidence proving that the marriage of Isabel with John Desantis had been dissolved by the time she was married to Rodolfo, it then follows that the 33 latter marriagethe Isabel-Rodolfo unionis a nullity for being bigamous. From that premise, Isabel cannot be considered as the legal spouse of Rodolfo. The petitioners and their siblings, therefore, failed to show that Isabel has any interest in the estate of Rodolfo. Hence, the instant appeal.
34

The sole issue in this appeal is whether the Court of Appeals erred when it nullified the orders of the intestate court allowing the petitioners and their siblings to intervene in the settlement proceedings. The petitioners answer in the affirmative. They proffer the following arguments: One. The Court of Appeals exceeded the limits of review under a writ of certiorari. In nullifying the intestate courts order, the appellate court did not confine itself to the issue of whether the same was issued with grave abuse of 36 discretion. Rather, it chose to re-assess the evidence and touch upon the issue pertaining to Isabels right to inherit from 37 Rodolfo. Had the appellate court limited itself to the issue of whether grave abuse of discretion exists, it would have found that the 38 intestate court did not act whimsically or capriciously in issuing its assailed orders. Grave abuse of discretion on the part of the intestate court is belied by the fact that the said orders may be supported by the two (2) marriage certificates 39 between Isabel and Rodolfo. Second. Assuming ex-gratia argumenti that the Court of Appeals was correct in addressing the issue of whether there was sufficient evidence to prove that Isabel has a right to inherit from Rodolfo, it nevertheless erred in finding that there 40 was none. A proper evaluation of the evidence at hand does not support the conclusion that Isabel had a previous 41 marriage with John Desantis. To begin with, the respondent was not able to produce any marriage certificate executed between Isabel and John 42 Desantis. The conspicuous absence of such certificate can, in turn, only lend credibility to the position that no such marriage ever took place. Moreover, the entries in the birth certificate of Sylvia do not carry the necessary weight to be able to prove a marriage 43 between Isabel and John Desantis. In assessing the probative value of such entries, the Court of Appeals should have taken note of a "typical" practice among unwed Filipino couples who, in order to "save face" and "not to embarrass their 44 families," concoct the illusion of marriage and make it appear that a child begot by them is legitimate. Since the alleged previous marriage of Isabel with John Desantis was not satisfactorily proven, the Court of Appeals clearly erred in finding that her marriage with Rodolfo is bigamous. We are not impressed. First Argument The first argument raised by the petitioners is specious at best. The question of whether the intestate court gravely abused its discretion is intricately linked with the issue of whether there was sufficient evidence to establish Isabels status as the legal spouse of Rodolfo. A courts power to allow or deny intervention, albeit discretionary in nature, is circumscribed by the basic demand of sound judicial procedure that only a person with interest in an action or proceeding may be allowed to 45 intervene. Otherwise stated, a court has no authority to allow a person, who has no interest in an action or proceeding, 46 to intervene therein. Consequently, when a court commits a mistake and allows an uninterested person to intervene in a case the mistake is not simply an error of judgment, but one of jurisdiction. In such event, the allowance is made in excess of the courts
35

jurisdiction and can only be the product of an exercise of discretion gravely abused. That kind of error may be reviewed in a special civil action for certiorari. Verily, the Court of Appeals was acting well within the limits of review under a writ of certiorari, when it examined the evidence proving Isabels right to inherit from Rodolfo. The sufficiency or insufficiency of such evidence determines whether the petitioners and their siblings have successfully established Isabels interest in Rodolfos estatewhich, as already mentioned, is an indispensable requisite to justify any intervention. Ultimately, the re-assessment of the evidence presented by the petitioners and their siblings will tell if the assailed orders of the intestate court were issued in excess of the latters jurisdiction or with grave abuse of discretion. We now proceed to the second argument of the petitioners. Second Argument The second argument of the petitioners is also without merit. We agree with the finding of the Court of Appeals that the petitioners and their siblings failed to offer sufficient evidence to establish that Isabel was the legal spouse of Rodolfo. The very evidence of the petitioners and their siblings negates their claim that Isabel has interest in Rodolfos estate. Contrary to the position taken by the petitioners, the existence of a previous marriage between Isabel and John Desantis was adequately established. This holds true notwithstanding the fact that no marriage certificate between Isabel and John Desantis exists on record. While a marriage certificate is considered the primary evidence of a marital union, it is not regarded as the sole and 47 exclusive evidence of marriage. Jurisprudence teaches that the fact of marriage may be proven by relevant evidence 48 other than the marriage certificate. Hence, even a persons birth certificate may be recognized as competent evidence of 49 the marriage between his parents. In the present case, the birth certificate of Sylvia precisely serves as the competent evidence of marriage between Isabel and John Desantis. As mentioned earlier, it contains the following notable entries: (a) that Isabel and John Desantis were 50 "married" and (b) that Sylvia is their "legitimate" child. In clear and categorical language, Sylvias birth certificate speaks of a subsisting marriage between Isabel and John Desantis. Pursuant to existing laws, the foregoing entries are accorded prima facie weight. They are presumed to be true. Hence, 52 unless rebutted by clear and convincing evidence, they can, and will, stand as proof of the facts attested. In the case at bench, the petitioners and their siblings offered no such rebuttal. The petitioners did no better than to explain away the entries in Sylvias birth certificate as untruthful statements made 53 only in order to "save face." They urge this Court to take note of a "typical" practice among unwed Filipino couples to concoct the illusion of marriage and make it appear that a child begot by them is legitimate. That, the Court cannot countenance. The allegations of the petitioners, by themselves and unsupported by any other evidence, do not diminish the probative value of the entries. This Court cannot, as the petitioners would like Us to do, simply take judicial notice of a supposed folkway and conclude therefrom that the usage was in fact followed. It certainly is odd that the petitioners would themselves argue that the document on which they based their interest in intervention contains untruthful statements in its vital entries. Ironically, it is the evidence presented by the petitioners and their siblings themselves which, properly appreciated, supports the finding that Isabel was, indeed, previously married to John Desantis. Consequently, in the absence of any proof that such marriage had been dissolved by the time Isabel was married to Rodolfo, the inescapable conclusion is that the latter marriage is bigamous and, therefore, void ab initio. The inability of the petitioners and their siblings to present evidence to prove that Isabels prior marriage was dissolved results in a failure to establish that she has interest in the estate of Rodolfo. Clearly, an intervention by the petitioners and their siblings in the settlement proceedings cannot be justified. We affirm the Court of Appeals. WHEREFORE, the instant appeal is DENIED. Accordingly, the decision dated 31 May 2007 of the Court of Appeals in CA-G.R. SP No. 00576 is hereby AFFIRMED. Costs against the petitioners. SO ORDERED.
51

PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Petitioner,

G.R. No. 171137

Present:

- versus -

PUNO, C.J., Chairperson, CARPIO, CORONA, LEONARDO-DE CASTRO, and BERSAMIN, JJ.

SPOUSES WILSON DY HONG PI and LOLITA DY and SPOUSES PRIMO CHUYACO, JR. and LILIA CHUYACO, Respondents.

Promulgated:

June 5, 2009

x--------------------------------------------------x DECISION PUNO, C.J.: Before the Court is a petition for review on certiorari assailing the Decision Appeals in CAG.R. SP. No. 85282, and its Resolution reconsideration. Spouses Damian and Tessie Amadeo are indebted to petitioner Philippine Commercial International Bank, a domestic uni-banking corporation, as sureties for Streamline Cotton Development Corporation. The promissory notes became due and demandable, but the Amadeo spouses failed to pay their outstanding obligations despite repeated demands. As of February 15, 1994, these obligations stood at Ten Million, Six Hundred Seventy-One Thousand, Seven Hundred Twenty-Six Pesos and Sixty-One Centavos (P10,671,726.61). Petitioner subsequently discovered that roughly a month before the due date of the promissory notes, the Amadeo spouses (i) sold three (3) or nearly all of their real properties to respondents, Spouses Wilson and Lolita Dy and Spouses Primo and Lilia Chuyaco, and (ii) immediately caused the transfer of the titles covering the parcels of land in favor of the latter. The consideration for these sales was further alleged to have been grossly insufficient or inadequate. Believing that the transfers were done in fraud of creditors, petitioner instituted an action for rescission and damages on April 22, 1994. In its Complaint
[3] [2] [1]

dated July 18, 2005 of the Court of

dated January 10, 2006, denying petitioners motion for

in Civil Case No. 94-1585 against Spouses Amadeo, Dy and Chuyaco,

petitioner asked the Regional Trial Court of Makati City for the following reliefs: 1. Annulling the Deeds of Absolute Sale both dated September 16, 1993 and thereafter, direct the Registries of Deeds of Sultan Kudarat and Davao City to cancel the Transfer Certificates of Title Nos. (sic) T-27628, T-202868, and T-202869 issued in the name of Wilson Dy Hong Pi and Lolita G. Dy AND Primo Chuyaco, Jr. and Lilia O. Chuyaco, respectively, and in lieu thereof, issue new ones under the name of Damian and Tessie Amadeo. 2. Ordering the defendants to pay the plaintiff moral damages in the sum of P200,000.00; [4] exemplary damages in the sum of P200,000.00; and P100,000.00 as[,] and for[,] attorneys fees. The case was then raffled to Branch 133, presided over by Judge Napoleon E. Inoturan. Upon service of summons on the Amadeo spouses, the latter filed a Motion to Dismiss
[5]

on the ground that the

Complaint violated the explicit terms of Supreme Court Circular No. 04-94, as the Verification was executed by petitioners legal counsel.
[6]

Petitioner filed its Opposition to the Motion to Dismiss, where it argued that (i) the rule cited by the

[7]

Amadeo spouses should not be applied literally, and (ii) at any rate, petitioners legal counsel was authorized by petitioner to institute the Complaint.
[8]

On February 4, 1995, the trial court issued an Order

[10]

[9]

denying the Motion to Dismiss.

The Amadeo spouses subsequently filed an Answer

where they alleged that petitioner failed to release the loans

to Streamline Cotton Development Corporation on the agreed date, thereby constraining them to incur loans from third parties at high interest rates to keep the company afloat. These loans were covered by postdated checks which had to be funded once the obligations fell due, lest the Amadeo spouses face criminal prosecution. In order to pay the said loans, they thus had to sell the properties subject of this case. The Amadeo spouses further claimed that the purchase price for

the three (3) parcels of land was the fair market value, and that they had other personal and real properties which may be availed of to answer for their obligations. In their Counterclaim, they prayed for moral damages ofP200,000.00, attorneys fees and expenses of litigation. Petitioner filed its Reply and Answer to Counterclaim
[11]

on March 8, 1995.
[12]

On September 13, 1995, petitioner filed an Ex Parte Motion for Leave to Serve Summons by Publication Spouses Dy and Chuyaco. However, this was denied in an Order
[13]

on

dated September 14, 1995 on the ground that

summons by publication cannot be availed of in an action in personam. Accordingly, on March 4, 1996, petitioner filed an Amended Complaint
[14]

to include allegations in support of, and

a prayer for, a writ of preliminary attachment. Petitioner then presented evidence in relation thereto, and on February 25, 1997, the trial court issued an Order
[15]

for the issuance of the writ. Upon petitioners ex-parte motion, the trial court

likewise directed the Clerk of Court of the Regional Trial Court of Davao City to designate a Special Sheriff to implement the writ of preliminary attachment. In Orders
[17] [16]

dated January 12, 1998 and February 20, 1998, respectively, petitioner was directed to inform the

court whether it still intended to pursue the case. This appears to have been motivated by the fact that no property of the defendants had been attached as of yet. Petitioner did not comply with the said Orders; consequently, the case was dismissed without prejudice on June 26, 1998 for failure to prosecute.
[18]

By this time, petitioner had already caused the

annotation of a notice of lis pendens at the back of the titles of the properties subject of this case ( i.e., TCT Nos. T-27628, T-202868, and T-202869). On August 3, 1998, petitioner filed a Motion for Reconsideration of the June 26, 1998 Order, alleging that its failure to notify the trial court of its intention to pursue the case was prompted solely by the difficulty of locating properties against which the writ of attachment could be enforced. In the interest of justice, the trial court granted the motion.
[19]

Defendant Spouses Amadeo, Dy and Chuyaco then filed an Omnibus Motion to Dismiss and to Annul All the Proceedings Taken Against the Defendants
[20]

on December 11, 1998, in which motion they questioned the jurisdiction of

[21]

the trial court over their persons. Petitioner filed its Opposition Reply
[22]

thereto on February 15, 1999. Defendants filed their on June 9, 1999. Said motion, however, was merely

on March 10, 1999, while petitioner filed its Rejoinder

[24]

[23]

noted without action in an August 2, 2001 Order Court, viz.:

since its notice of hearing was addressed only to the Clerk of

It appears from the Motion that its Notice of Hearing is not addressed to any of the parties concerned as otherwise required by Rule 15[,] Section 5 of the 1997 Rules of Civil Procedure. Such being the case, the Motion is deemed a mere scrap of paper as held in Provident International Resources Corporation vs. Court of Appeals, 259 SCRA 510. In any event, the record shows that defendants Sps. Amadeo have been duly served with summons as early as November 11, 1994 per Sheriffs Return of Service dated November 14, 1994, and they are therefore within the jurisdiction of the Court. However, defendants Spouses Dy and Chuyaco have not been served with summons as evidenced by Officers Return dated May 24, 1994 and Return of Service dated June 10, 1994, respectively, and so the Court has not yet acquired jurisdiction over them. Since aforesaid Motion is deemed a scrap of paper, it cannot be construed to manifest a (sic) voluntary appearance on their part. Wherefore, the Omnibus Motion is noted without action. Let alias summons be issued to defendants-spouses Dy and Chuyaco. For plaintiffs guidance, it may avail itself of Rule 14[,] Section 14 on summons by publication if it so desires, upon proper motion. SO ORDERED. (underscoring in the original) Spouses Dy and Chuyaco subsequently filed a Motion to Dismiss (for Lack of Jurisdiction)
[25]

on February 18,

2002, in which motion they essentially accused petitioner of not causing summons to be served upon them and losing interest in the case. Petitioner filed its Opposition
[26]

thereto, and in an April 23, 2002 Order,

[28]

[27]

the trial court denied the

Motion to Dismiss on account of (i) petitioners Compliance and Manifestation

that it had not lost interest in pursuing the

case, and (ii) the Motion for Leave of Court to Serve Summons by Publication that petitioner filed simultaneously with its Opposition. On April 24, 2002, the Motion for Leave of Court to Serve Summons by Publication was submitted for resolution.
[29] [30]

Respondent Spouses Dy and Chuyaco next filed a Motion to Dismiss for Failure to Prosecute 2003. The significant portions of the motion state:

on June 17,

2. That based on the order of this Honorable Court dated April 23, 2003 (sic), the Motion for Leave of Court to Serve Summons by Publication was submitted for resolution, but the movantsdefendants would like to remind the Honorable Court that a Motion of the same nature was already filed on September 13, 1995 and was DENIED on September 14, 1995. xxx; 3. That therefore, the order dated August 21, 2001 of this Honorable Court which advised the complainant to avail of Rule 14 Section 14 of the Rules is contrary to its order dated September 14, 1995; 4. That up to this date, the complainant has not lifted a finger to pursue this case against movants-defendants, hence, this Motion to Dismiss. WHEREFORE, premises considered, it is most respectfully prayed that this case be dismissed against the movants-defendants and to order the deletion of the Notice of Lis Pendens at the back of the subject title (sic). This was opposed by petitioner, arguing that it had already filed a motion for the service of summons by publication, but the trial court had yet to act on it.
[31]

On July 25, 2003, this Motion was submitted for resolution.

[32]

On November 4, 2003, Spouses Dy and Chuyaco personally, and not through their counsel, filed a Motion for Inhibition without submitting themselves to the jurisdiction of this Honorable Court,
[33]

the relevant portions of which state:

1. That since 1998, the defendants-movants have been moving for the dismissal of this case as far as the movants are concerned and to nullify the proceedings taken against them since the Honorable Court has not yet acquired jurisdiction over their persons when the plaintiff presented its evidence against defendants (sic) Sps. Damian and Tessie Amadeo and even thereafter; 2. That, however only on (sic) August 2, 2001 or after more than three (3) years, that this Honorable Court denied the said Motion to Dismiss due to technicality (sic) and merely require (sic) the plaintiff to serve the summons either personally or thru publication; 3. That, however in the order of this Honorable Court dated September 14, 1995, it already denied the Ex-Parte Motion for Leave to Serve Summons by Publication considering that the action herein is in personam, hence, this order is contrary to its latest order dated August 2, 2001; 4. That another Motion to Dismiss was filed last June 11, 2003 on the ground of lack of interest to pursue the case but up to this date, the Honorable Court has done nothing that delays (sic) the proceedings to the prejudice of the defendants-movants; 5. That this continuous delay in the proceedings shows that the Honorable Court may not be competent enough to further hear this case. WHEREFORE, premises considered, it is most respectfully prayed for the inhibition of this Honorable Court (sic) from further hearing this case. This was submitted for resolution on November 13, 2003. The motion for inhibition was adopted by their counsel on record, Clarissa Castro, through a Motion to Adopt Motion for Inhibition and Manifestation, which was filed on February 11, 2004 20, 2004 Order.
[36] [35] [34]

and noted by the trial court in a February

On June 23, 2004, however, the trial court (i) denied the motion for inhibition for lack of merit, (ii) ruled

that Spouses Dy and Chuyaco have voluntarily submitted themselves to the jurisdiction of the trial court, and (iii) gave them fifteen (15) days from receipt of the Order within which to file their respective answers, as follows: Acting on the Motion for Inhibition, the Court hereby denies the same for lack of legal basis. In any event, the fact that defendants Wilson Dy and Primo Chuyaco, Jr. signed said Motion themselves and in behalf of their respective spouses undoubtedly indicates their voluntary appearance in this case and their submission to the jurisdiction of this Court. The phrase without submitting themselves to the jurisdiction of this Honorable Court in the heading of said Motion can not qualify the clear import of Rule 14 section 20 which states:

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. (23a) It may be noted that subject Motion for Inhibition is not a Motion to Dismiss. Wherefore, defendants-spouses Dy and Chuyaco are given fifteen (15) days from receipt hereof within which to file their respective answers. All pending incidents are deemed resolved.
[37]

Unsatisfied with the Order, respondent Spouses Dy and Chuyaco filed a Petition for Certiorari under Rule 65
[38]

before the CA, alleging that the public respondent committed grave abuse of discretion when he considered the

Motion to Inhibit (without submitting to the jurisdiction of the Honorable Court) which they had filed to question his impartiality and competence due to the delay in resolving the Motion to Dismiss based on lack of jurisdiction, as voluntary appearance, and wherein he required the respondents to file their Answer within the required period. The CA granted the petition in this wise: The old provision under Section 23, Rule 14 of the Revised Rules of Court provided that: Section 23. What is equivalent to service. The defendants voluntary appearance in the action shall be equivalent to service. Under Section 20, Rule 14 of the 1997 Rules of Civil Procedure, the provision now reads as follows: 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. What remains the same, carry (sic) over from the old doctrine, is that the issue of jurisdiction must be raised seasonably. But everything else changed. What changed is that: if a motion is filed, whatever kind it is, it need no longer be for the sole and separate purpose of objecting to the jurisdiction of the court because the motion may raise myriad issues in that one motion of special appearance as long as the objection to the jurisdiction of the court is included. xxx What necessarily changed also is that the medium of special appearance is no longer restricted to a motion to dismiss because one could now file any type of motion provided you included the issue of lack of jurisdiction due to defective service of summons. Thus, in this case at bar, the two motions to dismiss and the motion to inhibit may be treated as special appearance since they all included the issue of lack of jurisdiction due to non -service of summons. They did not constitute as submitting the movant to the jurisdiction of the court. xxx xxx xxx

There being no proper service of summons on petitioners and there being no voluntary appearance by petitioners, the trial court did not acquire jurisdiction over the persons of the defendants, the herein petitioners. Any proceeding undertaken by the trial court against them would consequently be null and void. WHEREFORE, premises considered, the assailed June 23, 2004 Order of the Regional Trial Court of Makati City, Branch 133, is hereby DECLARED NULL AND VOID as against herein petitioners. The April 22, 1994 complaint filed by Philippine Commercial International Bank is hereby DISMISSED as against herein petitioners DY and CHUYACO only, no jurisdiction over their persons having been acquired. SO ORDERED.
[39]

Petitioners motion for reconsideration was denied by the appellate court. Hence this appeal, where petitioner argues that: I.

[40]

THE COURT OF APPEALS ERRED IN DECLARING THE JUNE 23, 2004 ORDER OF THE TRIAL COURT NULL AND VOID AND IN DISMISSING THE COMPLAINT AS AGAINST RESPONDENTS DY AND CHUYACO AND RENDERING THE QUESTIONED DECISION AND RESOLUTION IN A WAY THAT IS NOT IN ACCORD WITH THE FACTS AND APPLICABLE LAWS AND JURISPRUDENCE, WHICH HOLD THAT BY THEIR SUCCESSIVE FILING OF MOTIONS WITH THE CONVENIENT CAVEAT THAT THEY ARE NOT SUBMITTING TO THE JURISDICTION OF THE COURT A QUO, THEY HAVE VOLUNTARILY SUBMITTED TO THE TRIAL COURTS JURISDICTION. A. THE HONORABLE COURT OF APPEALS ERRED WHEN IT DISMISSED THE CASE AS AGAINST DY AND CHUYACO. THE SPOUSES DY AND CHUYACO HAVE LOST THEIR RIGHT TO QUESTION THE TRIAL COURTS JURISDICTION OVER THEM WHEN THEY DID NOT RAISE THE DENIAL OF THEIR APRIL 22, 2002 MOTION TO DISMISS TO THE COURT OF APPEALS. THE SPOUSES DY AND CHUYACO HAVE MISERABLY FAILED TO SHOW BASIS IN SEEKING THE TRIAL COURTS JURISDICTION. THE SPOUSES DY AND CHUYACO HAVE VOLUNTARILY SUBMITTED THEMSELVES TO THE TRIAL COURTS JURISDICTION. II. THE COURT OF APPEALS ERRED IN A WAY THAT IS NOT IN ACCORD WITH APPLICABLE LAWS AND JURISPRUDENCE IN NOT DISMISSING THE PETITION FOR CERTIORARI NOTWITHSTANDING THAT THE DY AND CHUYACO SPOUSES FAILED TO SHOW THAT THERE IS NO APPEAL, OR ANY PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF [41] LAW AVAILABLE TO THEM. Simply stated, the issues are: (1) Was the petition for certiorari prematurely filed? (2) Has there been voluntary appearance on the part of respondent Spouses Dy and Chuyaco as to confer the trial court with jurisdiction over their persons? and (3) Did the trial court correctly deny the motion for inhibition? We shall discuss these issues in seriatim. First Issue: Propriety of Certiorari Petitioner contends that respondents subverted the settled rule that a Petition for Certiorari under Rule 65 is available only when there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law.
[42]

B.

C.

D.

It

asserts that respondents failure to move for reconsideration of the June 23, 2004 Order of the trial court, denying the latters motion for inhibition, provides sufficient cause for the outright dismissal of the instant petition. We disagree. Petitioner is correct that a motion for reconsideration, as a general rule, must have first been filed before the tribunal, board, or officer against whom the writ of certiorari is sought. to correct any actual or fancied error attributed to it.
[44] [43]

This is intended to afford the latter an opportunity

However, there are several exceptions where the special civil

action for certiorari will lie even without the filing of a motion for reconsideration, namely: a. b. where the order is a patent nullity, as where the court a quo has no jurisdiction; where the questions raised in the certiorari proceeding have been duly raised and passed upon by the lower court, or are the same as those raised and passed upon in the lower court; c. where there is an urgent necessity for the resolution of the question and any further delay would prejudice the interests of the government or the petitioner, or the subject matter of the action is perishable; d. e. f. where, under the circumstances, a motion for reconsideration would be useless; where petitioner was deprived of due process and there is extreme urgency for relief; where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial court is improbable; g. h. where the proceedings in the lower court are a nullity for lack of due process; where the proceedings were ex parte or in which the petitioner had no opportunity to object; and

i.

where the issue raised is one purely of law or where public interest is involved.

[45]

Otherwise stated, a motion for reconsideration may be dispensed with only if there are concrete, compelling, and valid reasons for doing so.
[46]

We find that respondents non-filing of a motion for reconsideration is justifiable under the circumstances of this case. It is not disputed that the trial court, rightly or wrongly, considered them to have voluntarily submitted to its jurisdiction by virtue of their motion for inhibition. Thus, respondents apprehension that the motion for reconsideration might be construed as further manifesting their voluntary appearance is certainly well-grounded. They may not, therefore, be faulted for having resorted immediately to a special civil action for certiorari. Second Issue: Voluntary Appearance Preliminarily, jurisdiction over the defendant in a civil case is acquired either by the coercive power of legal processes exerted over his person, or his voluntary appearance in court.
[47]

As a general proposition, one who seeks an It is by reason of this rule that we have had

affirmative relief is deemed to have submitted to the jurisdiction of the court.

[48]

occasion to declare that the filing of motions to admit answer, for additional time to file answer, for reconsideration of a default judgment, and to lift order of default with motion for reconsideration, is considered voluntary submission to the courts jurisdiction.
[49]

This, however, is tempered by the concept of conditional appearance, such that a party who makes

a special appearance to challenge, among ot hers, the courts jurisdiction over his person cannot be considered to have submitted to its authority.
[50]

Prescinding from the foregoing, it is thus clear that: (1) Special appearance operates as an exception to the general rule on voluntary appearance; (2) Accordingly, objections to the jurisdiction of the court over the person of the defendant must be explicitly made, i.e., set forth in an unequivocal manner; and (3) Failure to do so constitutes voluntary submission to the jurisdiction of the court, especially in instances where a pleading or motion seeking affirmative relief is filed and submitted to the court for resolution. Measured against these standards, it is readily apparent that respondents have acquiesced to the jurisdiction of the trial court as early as June 17, 2003, when they filed their Motion to Dismiss for Failure to Prosecute. Significantly, the motion did not categorically and expressly raise the jurisdiction of the court over their persons as an issue. It merely (i) reminded the court of its purportedly conflicting Orders in respect of summons by publication, (ii) alleged that because petitioner has not lifted a finger to pursue this case against movants-defendants, the case may be dismissed for failure to prosecute, and (iii) prayed additionally for the deletion of the Notice of Lis Pendens indicated at the back of the transfer certificates of title covering the subject properties. We note, furthermore, that the motion failed to qualify the capacity in which respondents were appearing and seeking recourse. v. Court of Appeals
[52] [51]

It is in this light that the Courts pronouncement in Busuego

finds cogent application:

A voluntary appearance is a waiver of the necessity of a formal notice. An appearance in whatever form, without explicitly objecting to the jurisdiction of the court over the person, is a submission to the jurisdiction of the court over the person. While the formal method of entering an appearance in a cause pending in the courts is to deliver to the clerk a written direction ordering him to enter the appearance of the person who subscribes it, an appearance may be made by simply filing a formal motion, or plea or answer. This formal method of appearance is not necessary. He may appear without such formal appearance and thus submit himself to the jurisdiction of the court. He may appear by presenting a motion, for example, and unless by such appearance he specifically objects to the jurisdiction of the court, he thereby gives his assent to the jurisdiction of the court over his [53] person. (emphasis supplied)

Besides, any lingering doubts on the issue of voluntary appearance d issipate 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 courts jurisdiction. It is well-settled that the active participation of a party in the proceedings is tantamount to an invocation of the courts jurisdiction and a willingness to abide by the resolution of th e case, and will bar said party from later on impugning the courts jurisdiction.
[54]

To be sure, the convenient caveat in the title of the motion for inhibition (i.e., without submitting themselves to the jurisdiction of this Honorable Court) does not detract from this conclusion. It would suffice to say that the allegations in a pleading or motion are determinative of its nature; the designation or caption thereof is not controlling.
[55]

Furthermore, no

amount of caveat can change the fact that respondents tellingly signed the motion to inhibit in their own behalf and not through counsel, let alone through a counsel making a special appearance. Third Issue: Inhibition Respondents argue that the trial courts so-called continuous delay in the proceedings is indicative of the fact that it is incompetent to continue hearing the case. Respondents therefore assert that the trial court acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it denied their motion to inhibit and required them to file their Answer. We are not convinced. Under the first paragraph of Section 1, Rule 137 of the Rules of Court, a judge or judicial officer shall be mandatorily disqualified to sit in any case in which: (a) he, or his wife or child, is pecuniarily interested as heir, legatee, creditor or otherwise; or (b) he is related to either party within the sixth degree of consanguinity or affinity, or to counsel within the fourth degree, computed according to the rules of civil law; or (c) he has been executor, administrator, guardian, trustee or counsel; or

(d) he has presided in any inferior court when his ruling or decision is the subject of review, without the written consent of all parties in interest, signed by them and entered upon the record.
[56]

Paragraph two of the same provision meanwhile provides for the rule on voluntary inhibition and states: [a] judge may, in the exercise of his sound discretion, disqualify himself from sitting in a case, for just or valid reasons other than those mentioned above. That discretion is a matter of conscience and is addressed primarily to the judges sense of fairness and justice.
[57]

We have elucidated on this point in Pimentel v. Salanga,

[58]

as follows:

A judge may not be legally prohibited from sitting in a litigation. But when suggestion is made of record that he might be induced to act in favor of one party or with bias or prejudice against a litigant arising out of circumstances reasonably capable of inciting such a state of mind, he should conduct a careful self-examination. He should exercise his discretion in a way that the people's faith in the courts of justice is not impaired. A salutary norm is that he reflect on the probability that a losing party might nurture at the back of his mind the thought that the judge had unmeritoriously tilted the scales of justice against him. That passion on the part of a judge may be generated because of serious charges of misconduct against him by a suitor or his counsel, is not altogether remote. He is a man, subject to the frailties of other men. He should, therefore, exercise great care and caution before making up his mind to act in or withdraw from a suit where that party or counsel is involved. He could in good grace inhibit himself where that case could be heard by another judge and where no appreciable prejudice would be occasioned to others involved therein. On the result of his decision to sit or not to sit may depend to a great extent the all-important confidence in the impartiality of the judiciary. If after reflection he should resolve to voluntarily desist from sitting in a case where his motives or fairness might be seriously impugned, his action is to be interpreted as giving meaning and substances to the second paragraph of Section 1, Rule 137. He serves the cause of the law who forestalls miscarriage of justice. The present case not being covered by the rule on mandatory inhibition, the issue thus turns on whether Judge Napoleon Inoturan should have voluntarily inhibited himself. At the outset, we underscore that while a party has the right to seek the inhibition or disqualification of a judge who does not appear to be wholly free, disinterested, impartial and independent in handling the case, this right must be weighed with the duty of a judge to decide cases without fear of repression.
[59]

Respondents consequently have no vested

[60]

right to the issuance of an Order granting the motion to inhibit, given its discretionary nature.

However, the second paragraph of Rule 137, Section 1 does not give judges unfettered discretion to decide whether to desist from hearing a case.
[61]

The inhibition must be for just and valid causes, and in this regard, we have

noted that the mere imputation of bias or partiality is not enough ground for inhibition, especially when the charge is without basis.
[62]

This Court has to be shown acts or conduct clearly indicative of arbitrariness or prejudice before it can
[63]

brand them with the stigma of bias or partiality.

Moreover, extrinsic evidence is required to establish bias, bad faith,

[64]

malice or corrupt purpose, in addition to palpable error which may be inferred from the decision or order itself.

The only

exception to the rule is when the error is so gross and patent as to produce an ineluctable inference of bad faith or malice.
[65]

We do not find any abuse of discretion by the trial court in denying respondents motion to inhibit. Our pronouncement in Webb, et al. v. People of thePhilippines, et al.
[66]

is apropos:

A perusal of the records will reveal that petitioners failed to adduce any extrinsic evidence to prove that respondent judge was motivated by malice or bad faith in issuing the assailed rulings. Petitioners simply lean on the alleged series of adverse rulings of the respondent judge which they characterized as palpable errors. This is not enough . We note that respondent judge's rulings resolving the various motions filed by petitioners were all made after considering the arguments raised by all the parties. xxx xxx xxx xxx

We hasten to stress that a party aggrieved by erroneous interlocutory rulings in the course of a trial is not without remedy. The range of remedy is provided in our Rules of Court and we need not make an elongated discourse on the subject. But certainly, the remedy for erroneous rulings, absent any extrinsic evidence of malice or bad faith, is not the outright disqualification of the judge . For there is yet to come a judge with the omniscience to issue rulings that are always infallible. The courts will close shop if we disqualify judges who err for we all err. (emphasis supplied) Truth be told, respondents are not entirely blameless for any perceived delay in the resolution of the various incidents of the case. For instance, they make much of the fact that close to three years passed before their Omnibus Motion to Dismiss and to Annul All the Proceedings Taken Against the Defendants, filed on December 11, 1998, was noted by the trial court. But the fact remains that the said motion, not having a notice of hearing addressed to the adverse party, is legally a mere scrap of paper.
[67]

It presents no question which merits the attention and consideration of

[68]

the court, and is not entitled to judicial cognizance.

Considering the foregoing, we rule that respondents accusations of delay, incompetence, and bias on the part of the trial court are unfounded. Hence, they are not entitled to the inhibition of Judge Inoturan as a relief. IN VIEW WHEREOF, the Petition is hereby GRANTED. The Decision dated July 18, 2005 of the Court of Appeals and its Resolution dated January 10, 2006 are hereby REVERSED and SET ASIDE, and another in their stead is hereby rendered ORDERING respondent Spouses Dy and Chuyaco to answer the Complaint in Civil Case No. 94-1585 within fifteen (15) days from receipt of this Decision. The trial court is directed to proceed hearing the case, and to resolve the same with dispatch. No costs. LOURDES L. ERISTINGCOL, Petitioner, - versus G.R. No. 167702

COURT OF APPEALS and RANDOLPHC. LIMJOCO, Respondents.

This is a petition for review on certiorari under Rule 45 of the Rules of Court which assails the [1] Court of Appeals (CA) Decision in CA-G.R. SP. No. 64642 dismissing Civil Case No. 99-297 before the Regional Trial Court (RTC) for lack of jurisdiction. The facts, as narrated by the CA, are simple. [Petitioner Lourdes] Eristingcol is an owner of a residential lot in Urdaneta Village (or village), Makati City and covered by Transfer Certificate of Title No. 208586. On the other hand, [respondent Randolph] Limjoco, [Lorenzo] Tan and [June] Vilvestre were the former president and chairman of the board of governors (or board), construction committee chairman and village manager of [Urdaneta Village Association Inc.] UVAI, respectively. UVAI is an association of homeowners at Urdaneta Village. [Eristingcols] action [against UVAI, Limjoco, Tan and Vilvestre] is founded on the allegations that in compliance with the National Building Code and after UVAIs approval of her building plans and acceptance of the construction bond and architects fee, Eristingcol started constructing a house on her lot with concrete canopy directly above the main door and highway; that for alleged violation of its Construction Rules and Regulations (or CRR) on Set Back Line vis-a-vis the canopy easement, UVAI imposed on her a penalty of P400,000.00 and barred her workers and contractors from entering the village and working on her property; that the CRR, particularly on Set Back Line, is contrary to law; and that the penalty is unwarranted and excessive. On February 9, 1999, or a day after the filing of the complaint, the parties reached a temporary settlement whereby UVAI, Limjoco, Tan and Vilvestre executed an undertaking which allowed Eristingcols workers, contractors and suppliers to leave and enter the village, subject only to normal security regulations of UVAI. On February 26, 1999, UVAI, Limjoco, Tan and Vilvestre filed a motion to dismiss on ground of lack of jurisdiction over the subject matter of the action. They argued that it is the Home Insurance [2] Guaranty Corporation (or HIGC) which has jurisdiction over intra-corporate disputes involving homeowners associations, pursuant to Exec. Order No. 535, Series of 1979, as amended by Exec. Order No. 90, Series of 1986. Opposing the motion, Eristingcol alleged, among others, that UVAI, Limjoco, Tan and Vilvestre did not comply with the mandatory provisions of Secs. 4 and 6, Rule 15 of the 1997 Rules of Civil Procedure and are estopped from questioning the jurisdiction of the [RTC] after they voluntarily appeared therein and embraced its authority by agreeing to sign an Undertaking. On May 20, 1999, Eristingcol filed an amended complaint by (i) impleading Manuel Carmona (or Carmona) and Rene Cristobal (or Cristobal), UVAIs newly-elected president and chairman of the board and newly-designated construction committee chairman, respectively, as additional defendants and (ii) increasing her claim for moral damages against each petitioner from P500,000.00 to P1,000,000.00. On May 25, 1999, Eristingcol filed a motion for production and inspection of documents, which UVAI, Limjoco, Tan, Vilvestre, Carmona and Cristobal opposed. The motion sought to compel [UVAI and its officers] to produce the documents used by UVAI as basis for the imposition of the P400,000.00 penalty on Eristingcol as well as letters and documents showing that UVAI had informed the other homeowners of their violations of the CRR. On May 26, 1999, the [RTC] issued an order which pertinently reads: IN VIEW OF THE FOREGOING, for lack of merit, the defendants Motion to Dismiss is Denied, and plaintiffs motion to declare defendants in default and for contempt are also Denied. The [RTC] ratiocinated that [UVAI, Limjoco, Tan and Vilvestre] may not assail its jurisdiction after they voluntarily entered their appearance, sought reliefs therein, and embraced its authority by agreeing to sign an undertaking to desist from prohibiting (Eristingcols) workers from entering the village. In so ruling, it applied the doctrine enunciated in Tijam v. Sibonghanoy. On June 7, 1999, Eristingcol filed a motion reiterating her earlier motion for production and inspection of documents. On June 8, 1999, [UVAI, Limjoco, Tan and Vilvestre] moved for partial reconsideration of the order dated May 26, 1999. Eristingcol opposed the motion.

On March 24, 2001, the [RTC] issued an order granting Eristingcols motion for production and inspection of documents, while on March 26, 2001, it issued an order denying [UVAIs, Limjocos, Tans and Vilvestres] motion for partial reconsideration. On May 10, 2001, [UVAI, Limjoco, Tan and Vilvestre] elevated the dispute before [the CA] via [a] petition for certiorari alleging that the [RTC] acted without jurisdiction in issuing the orders of May 26, [3] 1999 and March 24 and 26, 2001. The CA issued the herein assailed Decision reversing the RTC Order jurisdiction. Hence, this appeal positing a sole issue for our resolution: Whether it is the RTC or the Housing and Land Use Regulatory Board (HLURB) which has jurisdiction over the subject matter of Eristingcols complaint. Before anything else, we note that the instant petition impleads only Limjoco as private respondent. The rest of the defendants sued by Eristingcol before the RTC, who then collectively filed the petition for certiorari before the CA assailing the RTCs Order, were, curiously, not included as private respondents in this particular petition. Eristingcol explains that only respondent Limjoco was retained in the instant petition as her discussions with UVAI and the other defendants revealed their lack of participation in the work-stoppage order which was supposedly singlehandedly thought of and implemented by Limjoco. The foregoing clarification notwithstanding, the rest of the defendants should have been impleaded as respondents in this petition considering that the complaint before the RTC, where the petition before the CA and the instant petition originated, has yet to be amended. Furthermore, the present petition maintains that it was serious error for the CA to have ruled that the RTC did not have jurisdiction over a complaint for declaration of nullity of UVAIs Construction Rules. Clearly, UVAI and the rest of the defendants should have been impleaded herein as respondents. Section 4(a), Rule 45 of the Rules of Court, requires that the petition shall state the full name of the appealing party as petitioner and the adverse party as respondent, without impleading the lower courts or judges thereof either as petitioners or respondents. As the losing party in defendants petition for certiorari before the CA, Eristingcol should have impleaded all petitioners, the winning and adverse parties therein. On this score alone, the present petition could have been dismissed outright. jurisdiction, we have opted to dispose of this case on the merits. Despite her having dropped UVAI, Lorenzo Tan (Tan) and June Vilvestre (Vilvestre) from this suit, Eristingcol insists that her complaint against UVAI and the defendants was properly filed before the RTC as it prays for the declaration of nullity of UVAIs Construction Rules and asks that damages be paid by Limjoco and the o ther UVAI officers who had inflicted injury upon her. Eristingcol asseverates that since the case before the RTC is one for declaration of nullity, the nature of the question that is the subject of controversy, not just the status or relationship of the parties, should determine which body has jurisdiction. In any event, Eristingcol submits that the RTCs jurisdiction over the case was foreclosed by the prayer of UVAI and its officers, including Limjoco, for affirmative relief from that court. Well-settled in jurisprudence is the rule that in determining which body has jurisdiction over a case, we should consider not only the status or relationship of the parties, but also the nature of the question that is the subject of their controversy.
[6] [5] [4]

and dismissing Eristingcols complaint for lack of

However, to settle the issue of

To determine the nature of an action and which court has jurisdiction, courts must look at the averments of
[7]

the complaint or petition and the essence of the relief prayed for. Eristingcols complaint, specifically her amended complaint, to wit:

Thus, we examine the pertinent allegations in

Allegations Common to All Causes of Action 3. In 1958 and upon its incorporation, [UVAI] adopted a set of By-laws and Rules and Regulations, x x x. Item 5 of [UVAIs] Construction Rules pertinently provides: Set back line: All Buildings, including garage servants quarters, or parts thereof (covered terraces, portes cocheres) must be constructed at a distance of not less than three (3) meters from the boundary fronting a street and not less than four (4) meters fronting the drainage creek or underground culvert and two (2) meters from other boundaries of a lot. Distance will be measured from the vertical projection of the roof nearest the property line. Completely open and unroofed terraces are not included in these restrictions.

Suffice it to state that there is nothing in the same By-laws which deals explicitly with canopies or marquees which extend outward from the main building. 4. [Eristingcol] has been a resident of Urdaneta Village for eleven (11) years. In February 1997, she purchased a parcel of land in the Village, located at the corner of Urdaneta Avenue and Cerrada Street. x x x. 5. In considering the design for the house (the Cerrada property) which she intended to construct on Cerrada Street, [Eristingcol] referred to the National Building Code of thePhilippines. After assuring herself that the said law does not expressly provide any restrictions in respect thereof, and after noting that other houses owned by prominent families had similar structures without being cited by the Villages Construction Committee, [Eristingcol] decided that the Cerrada property would have a concrete canopy directly above the main door and driveway. 6. In compliance with [UVAIs] rules, [Eristingcol] submitted to [UVAI] copies of her building plans in respect of the Cerrada property and the building plans were duly approved by [UVAI]. x x x. 7. [Eristingcol] submitted and/or paid the cash bond/construction bond deposit and architects inspection fee of P200,000.00 and the architects inspection fee of P500.00 as required nder Construction Rules x x x. 8. In the latter part of 1997, and while the construction of the Cerrada property was ongoing, [Eristingcol] received a notice from [UVAI], charging her with alleged violations of the Construction Rules, i.e., those on the height restriction of eleven (11.0) meters, and the canopy extension into the easement. nd On 22 January 1998, [Eristingcol] (through her representatives) met with, among others, defendant Limjoco. In said meeting, and after deliberation on the definition of the phrase original ground elevation as a reference point, [Eristingcols] representatives agreed to revise the building plan by removing what was intended to be a parapet or roof railing, and thereby reduce the height of the structure by 40 centimeters, which proposal was accepted by the Board through defendant Limjoco, Gov. Catalino Macaraig Jr. ([UVAIs] Construction Committee chairman), and the Villages Architect. However, the issue of the alleged violation in respect of the canopy/extension remained unresolved. xxxx 9. In compliance with the agreement reached at the 22 January 1998 meeting, [Eristingcol] caused the revision of her building plans such that, as it now stands, the Cerrada property has a vertical height of 10.96 meters and, thus, was within the Villages allowed maximum height of 11 meters. 10. Sometime in June 1998, [Eristingcol] was surprised to receive another letter from [UVAI], this time from the Construction Committee chairman (defendant Tan), again calling her attention to th alleged violations of the Construction Rules. On 15 June 1998, [UVAI] barred [Eristingcols ] construction workers from entering the Village. Thus, [Eristingcols] Construction Manager (Mr. Jaime M. Hidalgo) wrote defendant Tan to explain her position, and attached photographs of similar violations by other property owners which have not merited the same scrutiny and sanction from [UVAI]. xxxx 11. On 26 October 1998, and for reasons known only to him, defendant Vilvestre sent a letter to Mr. Geronimo delos Reyes, demanding for an idea of how [Mr. delos Reyes] can demonstrate in concrete terms [his] good faith as a quid pro quo for compromise to [UVAIs] continued insistence that [Eristingcol] had violated [UVAIs] Construction Rules. x x x.
th nd

12. [Eristingcol] through Mr. Hidalgo sent a letter dated 24 November 1998 to defendant Tan, copies of which were furnished defendants Limjoco, Vilvestre and the Board, reiterating that, among others: (i) the alleged height restriction violation is untrue, since the Cerrada property now has a height within the limits imposed by [UVAI]; and (ii) the demand to reduce the canopy by ninety (90) centimeters is without basis, in light of the existence of thirty-five (35) similar violations of the same nature by other homeowners. [Eristingcol] through Mr. Hidalgo further mentioned that she had done nothing to deserve the crude and coercive Village letters and the Boards threats of work stoppage, and she cited instances when she dealt with [UVAI] and her fellow homeowners in good faith and goodwill such as in 1997, when she very discreetly spent substantial amounts to landscape the entire Village Park, concrete the Park track oval which was being used as a jogging path, and donate to the Association molave benches used as Park benches. 13. On the same date (24 November 1998), defendant Vilvestre sent another letter addressed to [Eristingcols] construction manager Hidalgo, again threatening to enjoin all construction activity on the Cerrada property as well as ban entry of all workers and construction deliveries effective st 1 December 1998 unless Mr. delos Reyes met with defendants. x x x. 14. On 2 December 1998, [Eristingcols] representatives met with defendants Limjoco, Tan, and Vilvestre. During that meeting, defendants were shown copies of the architectural plans for the Cerrada property. [Eristingcols] representatives agreed to allow [UVAIs] Construction Committees architect to validate the measurements given. However, on the issue of the canopy extension, the defendants informed [Eristingcols] representatives that the Board would impose a penalty of Four Hundred Thousand Pesos (P400,000.00) for violation of [UVAIs] set back or easement rule. Defendants cited the Boards imposition of similar fines to previous homeowners who had violated the same rule, and they undertook to furnish [Eristingcol] with a list of past penalties imposed and paid by homeowners found by the Board to have violated the Villages set back provision. 15. On 22 December 1998, defendant Vilvestre sent [Eristingcol] a letter dated th 18 December 1998 formally imposing a penalty of P400,000.00 for the canopy easement violation. x x x. 16. On 29 December 1998, x x x, Vilvestre sent a letter to [Eristingcol], stating that as far as [his] administration is concerned, there has been no past penalties executed by [UVAI], similar to the one we are presently demanding on your on going construction. x x 17. On 4 January 1999, [Eristingcols] representative sent a letter to the Board, asking for a reconsideration of the imposition of the P400,000.00 penalty on the ground that the same is unwarranted th and excessive. On 6 January 1999, [Eristingcol] herself sent a letter to the Board, expounding on the th reasons for opposing the Boards action. On 18 January 1999, [Eristingcol] sent another letter in compliance with defendants request for a breakdown of her expenditures in respect of h er donations relative to the Village park. 18. On 3 February 1999, [Eristingcol] through her lawyers sent defendants a letter, th th requesting that her letters of 4 and 6 January 1999 be acted upon. 19. On 4 February 1999, x x x, defendant Limjoco gave a verbal order to [UVAIs] guards to bar the entry of workers working on the Cerrada property. 20. In the morning of 5 February 1999, defendants physically barred [Eristingcols] workers [8] and contractors from entering the Village and working at the Cerrada property. Eristingcol then lists the following causes of action: 1. Item 5 of UVAIs Construction Rules constitutes an illegal and unwarranted intrusion upon Eristingcols
th th rd th th nd nd th

th

proprietary rights as it imposes a set-back or horizontal easement of 3.0 meters from the property line greater than the specification in Section 1005(b) of the Building Code that the horizontal clearance between the outermost edge of the marquee and the curb line shall be not less than 300 millimeters. As such, Eristingcol prays for the declaration of nullity of this provision in UVAIs Construction Rules insofar as she is concerned. 2. UVAIs imposition of a P400,000.00 penalty on Eristingcol has no factual basis, is arbitrary, whimsical and

capricious as rampant violations of the set-back rule by other homeowners in the Village were not penalized by UVAI. Eristingcol prays to put a stop to defendants arbitrary exercise of power pursuant to UVAIs by-laws.

3.

Absent any factual or legal bases for the imposition of a P400,000.00 penalty, defendants and all persons

working under their control should be permanently barred or restrained from imposing and/or enforcing any penalty upon Eristingcol for an alleged violation of UVAIs Construction Rules, specifically the provision on set -back. 4. Defendants Limjoco, Tan, and Vilvestre, in violation of Article 19 of the Civil Code, demonstrated bias against

Eristingcol by zeroing in on her alone and her supposed violation, while other homeowners, who had likewise violated UVAIs Construction Rules, were not cited or penalized therefor. Defendants actuations were in clear violation of their duty to give all homeowners, including Eristingcol, their due. 5. Defendants actuations have seriously affected Eristingcols mental disposition and have caused her to su ffer

sleepless nights, mental anguish and serious anxiety. Eristingcols reputation has likewise been besmirched by UVAIs and defendants arbitrary charge that she had violated UVAIs Construction Rules. In this regard, individual defendants should each pay Eristingcol moral damages in the amount of P1,000,000.00. 6. Lastly, defendants should pay Eristingcol P1,000.000.00 for litigation expenses she incurred in instituting this

suit and for attorneys fees. At the outset, we note that the relationship between the parties is not in dispute and is, in fact, admitted by Eristingcol in her complaint. Nonetheless, Eristingcol is adamant that the subject matter of her complaint is properly cognizable by the regular courts and need not be filed before a specialized body or commission. Eristingcols contention is wrong. Ostensibly, Eristingcols complaint, designated as one for declaration of nullity, falls within the regular courts jurisdiction. However, we have, on more than one occasion, held that the caption of the complaint is not determinative of the nature of the action.
[9]

A scrutiny of the allegations contained in Eristingcols complaint reveals that the nature of the question subject of this controversy only superficially delves into the validity of UVAIs Construction Rules. The complaint actually goes into the proper interpretation and application of UVAIs by-laws, specifically its construction rules. Essentially, the conflict between the parties arose as Eristingcol, admittedly a member of UVAI, now wishes to be exempt from the application of the canopy requirement set forth in UVAIs Construction Rules. Significantly, Eristingcol does not assail the height restriction of UVAIs Construction Rules, as she has readily complied therewith. Distinctly in point is China Banking Corp. v. Court of Appeals,
[10]

which upheld the jurisdiction of the Securities and

Exchange Commission (SEC) over the suit and recognized its special competence to interpret and apply Valley Golf and Country Club, Inc.s (VGCCIs) by-laws. We ruled, thus: Applying the foregoing principles in the case at bar, to ascertain which tribunal has jurisdiction we have to determine therefore whether or not petitioner is a stockholder of VGCCI and whether or not the nature of the controversy between petitioner and private respondent corporation is intra-corporate. As to the first query, there is no question that the purchase of the subject share or membership certificate at public auction by petitioner (and the issuance to it of the corresponding Certificate of Sale) transferred ownership of the same to the latter and thus entitled petitioner to have the said share registered in its name as a member of VGCCI. x x x. By virtue of the aforementioned sale, petitioner became a bona fide stockholder of VGCCI and, therefore, the conflict that arose between petitioner and VGCCI aptly exemplifies an intra-corporate controversy between a corporation and its stockholder under Sec. 5(b) of P.D. 902-A. An important consideration, moreover, is the nature of the controversy between petitioner and private respondent corporation. VGCCI claims a prior right over the subject share anchored mainly on

Sec. 3, Art. VIII of its by-laws which provides that after a member shall have been posted as delinquent, the Board may order his/her/its share sold to satisfy the claims of the Club It is pursuant to this provision that VGCCI also sold the subject share at public auction, of which it was the highest bidder. VGCCI caps its argument by asserting that its corporate by-laws should prevail. The bone of contention, thus, is the proper interpretation and application of VGCCIs aforequoted by -laws, a subject which irrefutably calls for the special competence of the SEC. We reiterate herein the sound policy enunciated by the Court in Abejo v. De la Cruz: 6. In the fifties, the Court taking cognizance of the move to vest jurisdiction in administrative commissions and boards the power to resolve specialized disputes in the field of labor (as in corporations, public transportation and public utilities) ruled that Congress in requiring the Industrial Courts intervention in the resolution of labor management controversies likely to cause strikes or lockouts meant such jurisdiction to be exclusive, although it did not so expressly state in the law. The Court held that under the sense-making and expeditious doctrine of primary jurisdiction the courts cannot or will not determine a controversy involving a question which is within the jurisdiction of an administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience, and services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the purposes of the regulatory statute administered . In this case, the need for the SECs technical expertise cannot be over -emphasized involving as it does the meticulous analysis and correct inte rpretation of a corporations by-laws as well as the applicable provisions of the Corporation Code in order to determine the validity of [11] VGCCIs claims. The SEC, therefore, took proper cognizance of the instant case. Likewise in point is our illuminating ruling in Sta. Clara Homeowners Association v. Sps. [12] Gaston, although it ultimately held that the question of subject matter jurisdiction over the complaint of respondent- spouses Gaston for declaration of nullity of a board resolution issued by Sta. Clara Homeowners Association (SCHA) was vested in the regular courts. In Sta. Clara, the main issue raised by SCHA reads: Whether [the CA] erred in upholding the jurisdiction of the [RTC], to declare as null and void the resolution of the Board of SCHA, decreeing that only members [in] good standing of the said association were to be issued stickers for use in their vehicles. In holding that the regular courts had jurisdiction over respondent-spouses Gastons complaint for declaration of nullity, we stressed the absence of relationship and the consequent lack of privity of contract between the parties, thus: Are [Respondent-Spouses Gaston] SCHA Members? In order to determine if the HIGC has jurisdiction over the dispute, it is necessary to resolve preliminarilyon the basis of the allegations in the Complaintwhether [respondent-spouses Gaston] are members of the SCHA. [SCHA] contend[s] that because the Complaint arose from intra-corporate relations between the SCHA and its members, the HIGC therefore has jurisdiction over the dispute. To support their contention that [respondent-spouses Gaston] are members of the association, [SCHA] cite[s] the SCHAs Articles of Incorporation and By-laws which provide that all landowners of the Sta. Clara Subdivision are automatically members of the SCHA. We are not persuaded. The constitutionally guaranteed freedom of association includes the freedom not to associate. The right to choose with whom one will associate oneself is the very foundation and essence of that partnership. It should be noted that the provision guarantees the right to form an association. It does not include the right to compel others to form or join one. More to the point, [respondent-spouses Gaston] cannot be compelled to become members of the SCHA by the simple expedient of including them in its Articles of Incorporation and By-laws without their express or implied consent. x x x. In the present case, however, other than the said Articles of Incorporation and By-laws, there is no showing that [respondent-spouses Gaston] have agreed to be SCHA members. No privity of Contract Clearly then, no privity of contract exists between [SCHA] and [respondent-spouses Gaston]. As a general rule, a contract is a meeting of minds between two persons. The Civil Code upholds the spirit over the form; thus, it deems an agreement to exist, provided the essential requisites are present. x x x. From the moment there is a meeting of minds between the parties, it is perfected.

As already adverted to, there are cases in which a party who enters into a contract of sale is also bound by a lien annotated on the certificate of title. We recognized this in Bel Air Village Association, Inc. v. Dionisio, in which we ruled: There is no dispute that Transfer Certificate of Title No. 81136 covering the subject parcel of land issued in the name of the petitioner contains an annotation to the effect that the lot owner becomes an automatic member of the respondent Bel-Air Association and must abide by such rules and regulations laid down by the Association in the interest of the sanitation, security and the general welfare of the community. It is likewise not disputed that the provision on automatic membership was expressly annotated on the petitioners Transfer Certificate of Title and on the title of his predecessor-in-interest.

The question, therefore, boils down to whether or not the petitioner is bound by such annotation. Section 39 of Art. 496 (The Land Registration Act) states: Sec. 39. Every person receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land who takes a certificate of title for value in good faith shall hold the same free of all encumbrances except those noted on said certificate x x x. (Italics supplied) The above ruling, however, does not apply to the case at bar. When [respondent-spouses Gaston] purchased their property in 1974 and obtained Transfer Certificates of Title Nos. T-126542 and T-127462 for Lots 11 and 12 of Block 37 along San Jose Avenue in Sta. Clara Subdivision, there was no annotation showing their automatic membership in the SCHA. Thus, no privity of contract arising from the title certificate exists between [SCHA] and [respondent-spouses Gaston]. Further, the records are bereft of any evidence that would indicate that private respondents intended to become members of the SCHA. Prior to the implementation of the aforesaid Resolution, they and the other homeowners who were not members of the association were issued non-member gate pass stickers for their vehicles. This fact has not been disputed by [SCHA]. Thus, the SCHA recognized that there were subdivision landowners who were not members thereof, notwithstanding the provisions of its Articles of Incorporation and By-laws. Jurisdiction Determined by Allegations in the Complaint It is a settled rule that jurisdiction over the subject matter is determined by the allegations in the complaint. Jurisdiction is not affected by the pleas or the theories set up by the defendant in an answer or a motion to dismiss. Otherwise, jurisdiction would become dependent almost entirely upon the whims of the defendant. The Complaint does not allege that [respondent-spouses Gaston] are members of the SCHA. In [13] point of fact, they deny such membership. Thus, the HIGC has no jurisdiction over the dispute. In stark contrast, the relationship between the parties in the instant case is well-established. Given this admitted relationship, the privity of contract between UVAI and Eristingcol is palpable, despite the latters deft phraseology of its primary cause of action as a declaration of nullity of UVAIs Construction Rules. In short, the crux of Eristingcols complaint is UVAIs supposed arbitrary implementation of its construction rules against Eristingcol, a member thereof. Moreover, as in Sta. Clara (had respondent-spouses Gaston been members of SCHA), the controversy which arose between the parties in this case partook of the nature of an intra-corporate dispute. Executive Order (E.O.) No. 535,
[14]

which amended Republic Act No. 580 creating the HIGC, transferred to the HIGC the regulatory and administrative

functions over homeowners associations originally vested with the SEC. Section 2 of E.O. No. 535 provides in pertinent part: 2. In addition to the powers and functions vested under the Home Financing Act, the Corporation, shall have among others, the following additional powers:

(a) x x x; and exercise all the powers, authorities and responsibilities that are vested on the Securities and Exchange Commission with respect to home owners association, the provision of Act 1459, as amended by P.D. 902-A, to the contrary notwithstanding; (b) To regulate and supervise the activities and operations of all houseowners association registered in accordance therewith. By virtue thereof, the HIGC likewise assumed the SECs original and exclusive jurisdiction to hear and decide cases involving controversies arising from intra-corporate or partnership relations.
[15]

Thereafter, with the advent of Republic Act

No. 8763, the foregoing powers and responsibilities vested in the HIGC, with r espect to homeowners associations, were transferred to the HLURB. As regards the defendants supposed embrace of the RTCs jurisdiction by appearing thereat and undertaking to desist from prohibiting Eristingcols workers from entering the villa ge, suffice it to state that the invocation of the doctrine in Tijam, et al. v. Sibonghanoy, et al.
[16]

is quite a long stretch.

The factual milieu obtaining in Tijam and in the case at bench are worlds apart. As found by the CA, defendants appearance before the RTC was pursuant to, and in compliance with, a subpoena issued by that court in connection with Eristingcols application for a Temporary Restraining Order (TRO). On defendants supposed agreement to sign the Undertaking allowing Eristingcols workers, contractors, and suppliers to enter and exit the village, this temporary settlement cannot be equated with full acceptance of the RTCs authority, as what actually transpired in Tijam. The landmark case of Tijam is, in fact, only an exception to the general rule that an objection to the courts jurisdiction over a case may be raised at any stage of the proceedings, as the lack of jurisdiction affects the very authority of the court to take cognizance of a case.
[17]

In that case, the Surety filed a Motion to Dismiss before the CA, raising the

question of lack of jurisdiction for the first timefifteen years after the action was commenced in the Court of First Instance (CFI) of Cebu. Indeed, in several stages of the proceedings in the CFI, as well as in the CA, the Surety invoked the jurisdiction of said courts to obtain affirmative relief, and even submitted its case for a final adjudication on the merits. Consequently, it was barred by laches from invoking the CFIs lack of jurisdiction. To further highlight the distinction in this case, the TRO hearing was held on February 9, 1999, a day after the filing of the complaint. On even date, the parties reached a temporary settlement reflected in the Undertaking. Fifteen days thereafter, defendants, including Limjoco, filed a Motion to Dismiss. Certainly, this successive and continuous chain of events cannot be characterized as laches as would bar defendants from questioning the RTCs jurisdiction. In fine, based on the allegations contained in Eristingcols complaint, it is the HLURB, not the RTC, which has jurisdiction over this case. WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP. No. 64642 is hereby AFFIRMED. Costs against petitioner. G.R. No. 175914 February 10, 2009

RUBY SHELTER BUILDERS AND REALTY DEVELOPMENT CORPORATION, Petitioner, vs. HON. PABLO C. FORMARAN III, Presiding Judge of Regional Trial Court Branch 21, Naga City, as Pairing Judge for Regional Trial Court Branch 22, Formerly Presided By HON. NOVELITA VILLEGAS-LLAGUNO (Retired 01 May 2006), ROMEO Y. TAN, ROBERTO L. OBIEDO and ATTY. TOMAS A. REYES, Respondents. Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of the 1 Decision dated 22 November 2006 of the Court of Appeals in CA-G.R. SP No. 94800. The Court of Appeals, in its 2 assailed Decision, affirmed the Order dated 24 March 2006 of the Regional Trial Court (RTC), Branch 22, of Naga City, in Civil Case No. RTC-2006-0030, ordering petitioner Ruby Shelter Builders and Realty Development Corporation to pay additional docket/filing fees, computed based on Section 7(a) of Rule 141 of the Rules of Court, as amended.

The present Petition arose from the following facts: Petitioner obtained a loan in the total amount of P95,700,620.00 from respondents Romeo Y. Tan (Tan) and Roberto L. Obiedo (Obiedo), secured by real estate mortgages over five parcels of land, all located in Triangulo, Naga City, covered 4 5 6 7 8 by Transfer Certificates of Title (TCTs) No. 38376, No. 29918, No. 38374, No. 39232, and No. 39225, issued by the Registry of Deeds for Naga City, in the name of petitioner. When petitioner was unable to pay the loan when it became due and demandable, respondents Tan and Obiedo agreed to an extension of the same. In a Memorandum of Agreement dated 17 March 2005, respondents Tan and Obiedo granted petitioner until 31 December 2005 to settle its indebtedness, and condoned the interests, penalties and surcharges accruing thereon from 1 October 2004 to 31 December 2005 which amounted to P74,678,647.00. The Memorandum of Agreement required, in turn, that petitioner execute simultaneously with the said Memorandum, "by way of dacion en pago," Deeds of Absolute Sale in favor of respondents Tan and Obiedo, covering the same parcels of land subject of the mortgages. The Deeds of Absolute Sale would be uniformly dated 2 January 2006, and state that petitioner sold to respondents Tan and Obiedo the parcels of land for the following purchase prices: TCT No. 38376 29918 38374 39232 39225 Purchase Price P 9,340,000.00 P 28,000,000.00 P 12,000,000.00 P 1,600,000.00 P 1,600,000.00
9 3

Petitioner could choose to pay off its indebtedness with individual or all five parcels of land; or it could redeem said properties by paying respondents Tan and Obiedo the following prices for the same, inclusive of interest and penalties: TCT No. 38376 29918 38374 39232 39225 Redemption Price P 25,328,939.00 P 35,660,800.00 P 28,477,600.00 P 6,233,381.00 P 6,233,381.00

In the event that petitioner is able to redeem any of the afore-mentioned parcels of land, the Deed of Absolute Sale covering the said property shall be nullified and have no force and effect; and respondents Tan and Obiedo shall then return the owners duplicate of the corresponding TCT to petitioner and also execute a Deed of Discharge of Mortgage . However, if petitioner is unable to redeem the parcels of land within the period agreed upon, respondents Tan and Obiedo could already present the Deeds of Absolute Sale covering the same to the Office of the Register of Deeds for Naga City so respondents Tan and Obiedo could acquire TCTs to the said properties in their names. The Memorandum of Agreement further provided that should petitioner contest, judicially or otherwise, any act, transaction, or event related to or necessarily connected with the said Memorandum and the Deeds of Absolute Sale involving the five parcels of land, it would pay respondents Tan and Obiedo P10,000,000.00 as liquidated damages inclusive of costs and attorneys fees. Petitioner would likewise pay respondents Tan and Obiedo th e condoned interests, 10 surcharges and penalties. Finally, should a contest arise from the Memorandum of Agreement, Mr. Ruben Sia (Sia), President of petitioner corporation, personally assumes, jointly and severally with petitioner, the latters monetary obligation to respondent Tan and Obiedo. Respondent Atty. Tomas A. Reyes (Reyes) was the Notary Public who notarized the Memorandum of Agreement dated 17 March 2005 between respondent Tan and Obiedo, on one hand, and petitioner, on the other. Pursuant to the Memorandum of Agreement, petitioner, represented by Mr. Sia, executed separate Deeds of Absolute 11 Sale, over the five parcels of land, in favor of respondents Tan and Obiedo. On the blank spaces provided for in the said rd Deeds, somebody wrote the 3 of January 2006 as the date of their execution. The Deeds were again notarized by respondent Atty. Reyes also on 3 January 2006. Without payment having been made by petitioner on 31 December 2005, respondents Tan and Obiedo presented the Deeds of Absolute Sale dated 3 January 2006 before the Register of Deeds of Naga City on 8 March 2006, as a result of which, they were able to secure TCTs over the five parcels of land in their names. On 16 March 2006, petitioner filed before the RTC a Complaint against respondents Tan, Obiedo, and Atty. Reyes, for declaration of nullity of deeds of sales and damages, with prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order (TRO). The Complaint was docketed as Civil Case No. 2006-0030.
12

On the basis of the facts already recounted above, petitioner raised two causes of action in its Complaint. As for the first cause of action, petitioner alleged that as early as 27 December 2005, its President already wrote a letter informing respondents Tan and Obiedo of the intention of petitioner to pay its loan and requesting a meeting to compute the final amount due. The parties held meetings on 3 and 4 January 2006 but they failed to arrive at a mutually acceptable computation of the final amount of loan payable. Respondents Tan and Obiedo then refused the request of petitioner for further dialogues. Unbeknownst to petitioner, despite the ongoing meetings, respondents Tan and Obiedo, in evident bad faith, already had the pre-executed Deeds of Absolute Sale notarized on 3 January 2006 by respondent Atty. Reyes. Atty. Reyes, in connivance with respondents Tan and Obiedo, falsely made it appear in the Deeds of Absolute Sale that Mr. Sia had personally acknowledged/ratified the said Deeds before Atty. Reyes. Asserting that the Deeds of Absolute Sale over the five parcels of land were executed merely as security for the payment of its loan to respondents Tan and Obiedo; that the Deeds of Absolute Sale, executed in accordance with the Memorandum of Agreement, constituted pactum commisorium and as such, were null and void; and that the acknowledgment in the Deeds of Absolute Sale were falsified, petitioner averred: 13. That by reason of the fraudulent actions by the [herein respondents], [herein petitioner] is prejudiced and is now in danger of being deprived, physically and legally, of the mortgaged properties without benefit of legal processes such as the remedy of foreclosure and its attendant procedures, solemnities and remedies available to a mortgagor, while 13 [petitioner] is desirous and willing to pay its obligation and have the mortgaged properties released. In support of its second cause of action, petitioner narrated in its Complaint that on 18 January 2006, respondents Tan and Obiedo forcibly took over, with the use of armed men, possession of the five parcels of land subject of the falsified Deeds of Absolute Sale and fenced the said properties with barbed wire. Beginning 3 March 2006, respondents Tan and Obiedo started demolishing some of the commercial spaces standing on the parcels of land in question which were being rented out by petitioner. Respondents Tan and Obiedo were also about to tear down a principal improvement on the properties consisting of a steel-and-concrete structure housing a motor vehicle terminal operated by petitioner. The actions of respondents Tan and Obiedo were to the damage and prejudice of petitioner and its tenants/lessees. Petitioner, alone, claimed to have suffered at least P300,000.00 in actual damages by reason of the physical invasion by respondents Tan and Obiedo and their armed goons of the five parcels of land. Ultimately, petitioners prayer in its Complaint reads: WHEREFORE, premises considered, it is most respectfully prayed of this Honorable Court that upon the filing of this complaint, a 72-hour temporary restraining order be forthwith issued ex parte: (a) Restraining [herein respondents] Tan and Obiedo, their agents, privies or representatives, from committing act/s tending to alienate the mortgaged properties from the [herein petitioner] pending the resolution of the case, including but not limited to the acts complained of in paragraph "14", above; (b) Restraining the Register of Deeds of Naga City from entertaining moves by the [respondents] to have [petitioners] certificates of title to the mortgaged properties cancelled and changed/registered in [respondents] Tans and Obiedos names, and/or released to them; (c) After notice and hearing, that a writ of preliminary injunction be issued imposing the same restraints indicated in the next preceding two paragraphs of this prayer; and (d) After trial, judgment be rendered: 1. Making the injunction permanent; 2. Declaring the provision in the Memorandum of Agreement requiring the [petitioner] to execute deed of sales (sic) in favor of the [respondents Tan and Obiedo] as dacion en pago in the event of non-payment of the debt as pactum commissorium; 3. Annulling the Deed[s] of Sale for TCT Nos. 29918, 38374, 38376, 39225 and 39232, all dated January 3, 2006, the same being in contravention of law; 4. Ordering the [respondents] jointly and solidarily to pay the [petitioner] actual damages of at leastP300,000.00; attorneys fees in the amount of P100,000.00 plus P1,000.00 per court attendance of counsel as appearance fee; litigation expenses in the amount of at least P10,000.00 and exemplary damages in the amount of P300,000.00, plus the costs. [Petitioner] further prays for such other reliefs as may be proper, just and equitable under the premises.
14

Upon filing its Complaint with the RTC on 16 March 2006, petitioner paid the sum of P13,644.25 for docket and other legal fees, as assessed by the Office of the Clerk of Court. The Clerk of Court initially considered Civil Case No. 2006-0030 as an action incapable of pecuniary estimation and computed the docket and other legal fees due thereon according to Section 7(b)(1), Rule 141 of the Rules of Court.

Only respondent Tan filed an Answer to the Complaint of petitioner. Respondent Tan did admit that meetings were held with Mr. Sia, as the representative of petitioner, to thresh out Mr. Sias charge that the computation by respondents Tan and Obiedo of the interests, surcharges and penalties accruing on the loan of petitioner was replete with errors and uncertainties. However, Mr. Sia failed to back up his accusation of errors and uncertainties and to present his own final computation of the amount due. Disappointed and exasperated, respondents Tan and Obiedo informed Mr. Sia that they had already asked respondent Atty. Reyes to come over to notarize the Deeds of Absolute Sale. Respondent Atty. Reyes asked Mr. Sia whether it was his signature appearing above his printed name on the Deeds of Absolute Sale, to which Mr. Sia replied yes. On 4 January 2006, Mr. Sia still failed to establish his claim of errors and uncertainties in the computation of the total amount which petitioner must pay respondent Tan and Obiedo. Mr. Sia, instead, sought a nine-month extension for paying the loan obligation of petitioner and the reduction of the interest rate thereon to only one percent (1%) per month. Respondents Tan and Obiedo rejected both demands. Respondent Tan maintained that the Deeds of Absolute Sale were not executed merely as securities for the loan of petitioner. The Deeds of Absolute Sale over the five parcels of land were the consideration for the payment of the total indebtedness of petitioner to respondents Tan and Obiedo, and the condonation of the 15-month interest which already accrued on the loan, while providing petitioner with the golden opportunity to still redeem all or even portions of the properties covered by said Deeds. Unfortunately, petitioner failed to exercise its right to redeem any of the said properties. Belying that they forcibly took possession of the five parcels of land, respondent Tan alleged that it was Mr. Sia who, with the aid of armed men, on board a Sports Utility Vehicle and a truck, rammed into the personnel of respondents Tan and Obiedo causing melee and disturbance. Moreover, by the execution of the Deeds of Absolute Sale, the properties subject thereof were, ipso jure, delivered to respondents Tan and Obiedo. The demolition of the existing structures on the properties was nothing but an exercise of dominion by respondents Tan and Obiedo. Respondent Tan, thus, sought not just the dismissal of the Complaint of petitioner, but also the grant of his counterclaim. The prayer in his Answer is faithfully reproduced below: Wherefore, premises considered, it is most respectfully prayed that, after due hearing, judgment be rendered dismissing the complaint, and on the counterclaim, [herein petitioner] and Ruben Sia, be ordered to indemnify, jointly and severally [herein respondents Tan and Obiedo] the amounts of not less than P10,000,000.00 as liquidated damages and the further sum of not less than P500,000.00 as attorneys fees. In the alternative, and should it become necessary, it is hereby prayed that [petitioner] be ordered to pay herein [respondents Tan and Obiedo] the entire principal loan of P95,700,620.00, plus interests, surcharges and penalties computed from March 17, 2005 until the entire sum is fully paid, including the amount of P74,678,647.00 foregone interest covering the period from October 1, 2004 to December 31, 2005 or for a total of fifteen (15) months, plus incidental expenses as may be proved in court, in the event that Annexes "G" to "L" be nullified. Other relief and remedies as are just and equitable under the premises are hereby prayed 16 for. Thereafter, respondent Tan filed before the RTC an Omnibus Motion in which he contended that Civil Case No. 20060030 involved real properties, the docket fees for which should be computed in accordance with Section 7(a), not Section 7(b)(1), of Rule 141 of the Rules of Court, as amended by A.M. No. 04-2-04-SC which took effect on 16 August 2004. Since petitioner did not pay the appropriate docket fees for Civil Case No. 2006-0030, the RTC did not acquire jurisdiction over the said case. Hence, respondent Tan asked the RTC to issue an order requiring petitioner to pay the correct and accurate docket fees pursuant to Section 7(a), Rule 141 of the Rules of Court, as amended; and should petitioner fail to do so, to deny and dismiss the prayer of petitioner for the annulment of the Deeds of Absolute Sale for having been executed in contravention of the law or of the Memorandum of Agreement as pactum commisorium. As required by the RTC, the parties submitted their Position Papers on the matter. On 24 March 2006, the RTC issued an 17 Order granting respondent Tans Omnibus Motion. In holding that both petitioner and respondent Tan must pay docket fees in accordance with Section 7(a), Rule 141 of the Rules of Court, as amended, the RTC reasoned: It must be noted that under paragraph (b) 2. of the said Section 7, it is provided that QUIETING OF TITLE which is an action classified as beyond pecuniary estimation "shall be governed by paragraph (a)". Hence, the filing fee in an action for Declaration of Nullity of Deed which is also classified as beyond pecuniary estimation, must be computed based on the provision of Section 7(A) herein-above, in part, quoted. Since [herein respondent], Romeo Tan in his Answer has a counterclaim against the plaintiff, the former must likewise pay the necessary filling (sic) fees as provided for under Section 7 (A) of Amended Administrative Circular No. 35-2004 issued 18 by the Supreme Court. Consequently, the RTC decreed on the matter of docket/filing fees: WHEREFORE, premises considered, the [herein petitioner] is hereby ordered to pay additional filing fee and the [herein respondent], Romeo Tan is also ordered to pay docket and filing fees on his counterclaim, both computed based on Section 7(a) of the Supreme Court Amended Administrative Circular No. 35-2004 within fifteen (15) days from receipt of this Order to the Clerk of Court, Regional Trial Court, Naga City and for the latter to compute and to collect the said fees 19 accordingly. Petitioner moved for the partial reconsideration of the 24 March 2006 Order of the RTC, arguing that Civil Case No. 2006-0030 was principally for the annulment of the Deeds of Absolute Sale and, as such, incapable of pecuniary estimation. Petitioner submitted that the RTC erred in applying Section 7(a), Rule 141 of the Rules of Court, as amended, to petitioners first cause of action in its Complaint in Civil Case No. 2006 -0030.
20

15

In its Order dated 29 March 2006, the RTC refused to reconsider its 24 March 2006 Order, based on the following ratiocination: Analyzing, the action herein pertains to real property, for as admitted by the [herein petitioner], "the deeds of sale in question pertain to real property" x x x. The Deeds of Sale subject of the instant case have already been transferred in the name of the [herein respondents Tan and Obiedo]. Compared with Quieting of Title, the latter action is brought when there is cloud on the title to real property or any interest therein or to prevent a cloud from being cast upon title to the real property (Art. 476, Civil Code of the Philippines) and the plaintiff must have legal or equitable title to or interest in the real property which is the subject matter of the action (Art. 447, ibid.), and yet plaintiff in QUIETING OF TITLE is required to pay the fees in accordance with paragraph (a) of Section 7 of the said Amended Administrative Circular No. 35-2004, hence, with more reason that the [petitioner] who no longer has title to the real properties subject of the instant case must be required to pay the required fees in accordance with Section 7(a) of the Amended Administrative Circular No. 35-2004 afore-mentioned. Furthermore, while [petitioner] claims that the action for declaration of nullity of deed of sale and memorandum of agreement is one incapable of pecuniary estimation, however, as argued by the [respondent Tan], the issue as to how much filing and docket fees should be paid was never raised as an issue in the case of Russell vs. Vestil, 304 SCRA 738. xxxx WHEREFORE, the Motion for Partial Reconsideration is hereby DENIED.
22

21

In a letter dated 19 April 2006, the RTC Clerk of Court computed, upon the request of counsel for the petitioner, the additional docket fees petitioner must pay for in Civil Case No. 2006-0030 as directed in the afore-mentioned RTC Orders. Per the computation of the RTC Clerk of Court, after excluding the amount petitioner previously paid on 16 March 2006, 23 petitioner must still pay the amount of P720,392.60 as docket fees. Petitioner, however, had not yet conceded, and it filed a Petition for Certiorari with the Court of Appeals; the petition was 24 docketed as CA-G.R. SP No. 94800. According to petitioner, the RTC acted with grave abuse of discretion, amounting to lack or excess of jurisdiction, when it issued its Orders dated 24 March 2006 and 29 March 2006 mandating that the docket/filing fees for Civil Case No. 2006-0030, an action for annulment of deeds of sale, be assessed under Section 7(a), Rule 141 of the Rules of Court, as amended. If the Orders would not be revoked, corrected, or rectified, petitioner would suffer grave injustice and irreparable damage. On 22 November 2006, the Court of Appeals promulgated its Decision wherein it held that: Clearly, the petitioners complaint involves not only the annulment of the deeds of sale, but also the recovery of the real properties identified in the said documents. In other words, the objectives of the petitioner in filing the complaint were to cancel the deeds of sale and ultimately, to recover possession of the same. It is therefore a real action. Consequently, the additional docket fees that must be paid cannot be assessed in accordance with Section 7(b). As a real action, Section 7(a) must be applied in the assessment and payment of the proper docket fee. Resultantly, there is no grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the court a quo. By grave abuse of discretion is meant capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, and mere abuse of discretion is not enough it must be grave. The abuse must be grave and patent, and it must be shown that the discretion was exercised arbitrarily and despotically.1avvphi1 Such a situation does not exist in this particular case. The evidence is insufficient to prove that the court a quo acted despotically in rendering the assailed orders. It acted properly and in accordance with law. Hence, error cannot be 25 attributed to it. Hence, the fallo of the Decision of the appellate court reads: WHEREFORE, the petition for certiorari is DENIED. The assailed Orders of the court a quo are AFFIRMED.
26

Without seeking reconsideration of the foregoing Decision with the Court of Appeals, petitioner filed its Petition for Review on Certiorari before this Court, with a lone assignment of error, to wit: 18. The herein petitioner most respectfully submits that the Court of Appeals committed a grave and serious reversible error in affirming the assailed Orders of the Regional Trial Court which are clearly contrary to the pronouncement of this Honorable Court in the case of Spouses De Leon v. Court of Appeals, G.R. No. 104796, March 6, 1998, not to mention the fact that if the said judgment is allowed to stand and not rectified, the same would result in grave injustice and 27 irreparable damage to herein petitioner in view of the prohibitive amount assessed as a consequence of said Orders. In Manchester Development Corporation v. Court of Appeals, the Court explicitly pronounced that "[t]he court acquires jurisdiction over any case only upon the payment of the prescribed docket fee." Hence, the payment of docket fees is not only mandatory, but also jurisdictional.
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In Sun Insurance Office, Ltd. (SIOL) v. Asuncion, the Court laid down guidelines for the implementation of its previous pronouncement in Manchester under particular circumstances, to wit: 1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee, that vests a trial court with jurisdiction over the subject matter or nature of the action. Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period. 2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall not be considered filed until and unless the filing fee prescribed therefor is paid. The court may also allow payment of said fee within a reasonable time but also in no case beyond its applicable prescriptive or reglementary period. 3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been left for determination by the court, the additional filing fee therefor shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee. In the Petition at bar, the RTC found, and the Court of Appeals affirmed, that petitioner did not pay the correct amount of docket fees for Civil Case No. 2006-0030. According to both the trial and appellate courts, petitioner should pay docket fees in accordance with Section 7(a), Rule 141 of the Rules of Court, as amended. Consistent with the liberal tenor of Sun Insurance, the RTC, instead of dismissing outright petitioners Complaint in Civil Case No. 2006 -0030, granted petitioner time to pay the additional docket fees. Despite the seeming munificence of the RTC, petitioner refused to pay the additional docket fees assessed against it, believing that it had already paid the correct amount before, pursuant to Section 7(b)(1), Rule 141 of the Rules of Court, as amended. Relevant to the present controversy are the following provisions under Rule 141 of the Rules of Court, as amended by 30 31 A.M. No. 04-2-04-SC and Supreme Court Amended Administrative Circular No. 35-2004 : SEC. 7. Clerks of Regional Trial Courts. (a) For filing an action or a permissive OR COMPULSORY counterclaim, CROSS-CLAIM, or money claim against an estate not based on judgment, or for filing a third-party, fourth-party, etc. complaint, or a complaint-in-intervention, if the total sum claimed, INCLUSIVE OF INTERESTS, PENALTIES, SURCHARGES, DAMAGES OF WHATEVER KIND, AND ATTORNEYS FEES, LITIGATIO NEXPENSES AND COSTS and/or in cases involving property, the FAIR MARKET value of the REAL property in litigation STATED IN THE CURRENT TAX DECLARATION OR CURRENT ZONAL VALUATION OF THE BUREAU OF INTERNAL REVENUE, WHICHEVER IS HIGHER, OR IF THERE IS NONE, THE STATED VALUE OF THE PROPERTY IN LITIGATION OR THE VALUE OF THE PERSONAL PROPERTY IN LITIGATION OR THE VALUE OF THE PERSONAL PROPERTY IN LITIGATION AS ALLEGED BY THE CLAIMANT, is: [Table of fees omitted.] If the action involves both a money claim and relief pertaining to property, then THE fees will be charged on both the amounts claimed and value of property based on the formula prescribed in this paragraph a. (b) For filing: 1. Actions where the value of the subject matter cannot be estimated 2. Special civil actions, except judicial foreclosure of mortgage, EXPROPRIATION PROCEEDINGS, PARTITION AND QUIETING OF TITLE which will 3. All other actions not involving property [Table of fees omitted.] The docket fees under Section 7(a), Rule 141, in cases involving real property depend on the fair market value of the same: the higher the value of the real property, the higher the docket fees due. In contrast, Section 7(b)(1), Rule 141 imposes a fixed or flat rate of docket fees on actions incapable of pecuniary estimation. In order to resolve the issue of whether petitioner paid the correct amount of docket fees, it is necessary to determine the true nature of its Complaint. The dictum adhered to in this jurisdiction is that the nature of an action is determined by the 32 allegations in the body of the pleading or Complaint itself, rather than by its title or heading. However, the Court finds it necessary, in ascertaining the true nature of Civil Case No. 2006-0030, to take into account significant facts and circumstances beyond the Complaint of petitioner, facts and circumstances which petitioner failed to state in its Complaint but were disclosed in the preliminary proceedings before the court a quo. Petitioner persistently avers that its Complaint in Civil Case No. 2006-0030 is primarily for the annulment of the Deeds of Absolute Sale. Based on the allegations and reliefs in the Complaint alone, one would get the impression that the titles to the subject real properties still rest with petitioner; and that the interest of respondents Tan and Obiedo in the same lies only in the Deeds of Absolute Sale sought to be annulled.

29

What petitioner failed to mention in its Complaint was that respondents Tan and Obiedo already had the Memorandum of Agreement, which clearly provided for the execution of the Deeds of Absolute Sale, registered on the TCTs over the five parcels of land, then still in the name of petitioner. After respondents Tan and Obiedo had the Deeds of Absolute Sale notarized on 3 January 2006 and presented the same to Register of Deeds for Naga City on 8 March 2006, they were already issued TCTs over the real properties in question, in their own names. Respondents Tan and Obiedo have also acquired possession of the said properties, enabling them, by petitioners own admission, to demolish the improvements thereon. It is, thus, suspect that petitioner kept mum about the afore-mentioned facts and circumstances when they had already taken place before it filed its Complaint before the RTC on 16 March 2006. Petitioner never expressed surprise when such facts and circumstances were established before the RTC, nor moved to amend its Complaint accordingly.1avvphi1.zw+ Even though the Memorandum of Agreement was supposed to have long been registered on its TCTs over the five parcels of land, petitioner did not pray for the removal of the same as a cloud on its title. In the same vein, although petitioner alleged that respondents Tan and Obiedo forcibly took physical possession of the subject real properties, petitioner did not seek the restoration of such possession to itself. And despite learning that respondents Tan and Obiedo already secured TCTs over the subject properties in their names, petitioner did not ask for the cancellation of said titles. The only logical and reasonable explanation is that petitioner is reluctant to bring to the attention of the Court certain facts and circumstances, keeping its Complaint safely worded, so as to institute only an action for annulment of Deeds of Absolute Sale. Petitioner deliberately avoided raising issues on the title and possession of the real properties that may lead the Court to classify its case as a real action. No matter how fastidiously petitioner attempts to conceal them, the allegations and reliefs it sought in its Complaint in Civil Case No. 2006-0030 appears to be ultimately a real action, involving as they do the recovery by petitioner of its title to and possession of the five parcels of land from respondents Tan and Obiedo. A real action is one in which the plaintiff seeks the recovery of real property; or, as indicated in what is now Section 1, 33 Rule 4 of the Rules of Court, a real action is an action affecting title to or recovery of possession of real property. Section 7, Rule 141 of the Rules of Court, prior to its amendment by A.M. No. 04-2-04-SC, had a specific paragraph governing the assessment of the docket fees for real action, to wit: In a real action, the assessed value of the property, or if there is none, the estimated value thereof shall be alleged by the claimant and shall be the basis in computing the fees. It was in accordance with the afore-quoted provision that the Court, in Gochan v. Gochan, held that although the caption of the complaint filed by therein respondents Mercedes Gochan, et al. with the RTC was denominated as one for "specific performance and damages," the relief sought was the conveyance or transfer of real property, or ultimately, the execution of deeds of conveyance in their favor of the real properties enumerated in the provisional memorandum of agreement. Under these circumstances, the case before the RTC was actually a real action, affecting as it did title to or possession of real property. Consequently, the basis for determining the correct docket fees shall be the assessed value of the property, or the estimated value thereof as alleged in the complaint. But since Mercedes Gochan failed to allege in their complaint the value of the real properties, the Court found that the RTC did not acquire jurisdiction over the same for non-payment of the correct docket fees. Likewise, in Siapno v. Manalo, the Court disregarded the title/denomination of therein plaintiff Manalos amended petition as one for Mandamus with Revocation of Title and Damages; and adjudged the same to be a real action, the filing fees for which should have been computed based on the assessed value of the subject property or, if there was none, the estimated value thereof. The Court expounded in Siapno that: In his amended petition, respondent Manalo prayed that NTAs sale of the property in dispute to Standford East Realty Corporation and the title issued to the latter on the basis thereof, be declared null and void. In a very real sense, albeit the amended petition is styled as one for "Mandamus with Revocation of Title and Damages," it is, at bottom, a suit to recover from Standford the realty in question and to vest in respondent the ownership and possession thereof. In short, the amended petition is in reality an action in res or a real action. Our pronouncement in Fortune Motors (Phils.), Inc. vs. Court of Appeals is instructive. There, we said: A prayer for annulment or rescission of contract does not operate to efface the true objectives and nature of the action which is to recover real property. (Inton, et al., v. Quintan, 81 Phil. 97, 1948) An action for the annulment or rescission of a sale of real property is a real action. Its prime objective is to recover said real property. (Gavieres v. Sanchez, 94 Phil. 760, 1954) An action to annul a real estate mortgage foreclosure sale is no different from an action to annul a private sale of real property. (Muoz v. Llamas, 87 Phil. 737, 1950). While it is true that petitioner does not directly seek the recovery of title or possession of the property in question, his action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building which, under the law, is considered immovable property, the recovery of which is petitioner's primary objective. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the fundamental and prime objective and nature of the case, which is to recover said real property. It is a real action.
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Unfortunately, and evidently to evade payment of the correct amount of filing fee, respondent Manalo never alleged in the body of his amended petition, much less in the prayer portion thereof, the assessed value of the subject res, or, if there is none, the estimated value thereof, to serve as basis for the receiving clerk in computing and arriving at the proper amount of filing fee due thereon, as required under Section 7 of this Courts en banc resolution of 04 September 1990 (Re: Proposed Amendments to Rule 141 on Legal Fees). Even the amended petition, therefore, should have been expunged from the records. In fine, we rule and so hold that the trial court never acquired jurisdiction over its Civil Case No. Q-95-24791.
37 36

It was in Serrano v. Delica, however, that the Court dealt with a complaint that bore the most similarity to the one at bar. Therein respondent Delica averred that undue influence, coercion, and intimidation were exerted upon him by therein petitioners Serrano, et al. to effect transfer of his properties. Thus, Delica filed a complaint before the RTC against Serrano, et al., praying that the special power of attorney, the affidavit, the new titles issued in the names of Serrano, et al., and the contracts of sale of the disputed properties be cancelled; that Serrano, et al. be ordered to pay Delica, jointly and severally, actual, moral and exemplary damages in the amount of P200,000.00, as well as attorneys fee of P200,000.00 and costs of litigation; that a TRO and a writ of preliminary injunction be issued ordering Serrano, et al. to immediately restore him to his possession of the parcels of land in question; and that after trial, the writ of injunction be made permanent. The Court dismissed Delicas complaint for the following reaso ns: A careful examination of respondents complaint is that it is a real action. In Paderanga vs. Buissan, we held that "in a rea l action, the plaintiff seeks the recovery of real property, or, as stated in Section 2(a), Rule 4 of the Revised Rules of Court, a real action is one affecting title to real property or for the recovery of possession of, or for partition or condemnation of, or foreclosure of a mortgage on a real property." Obviously, respondents complaint is a real action involving not only th e recovery of real properties, but likewise the cancellation of the titles thereto. Considering that respondents complaint is a real action, the Rule requires that "the assessed value of the property, or if there is none, the estimated value thereof shall be alleged by the claimant and shall be the basis in computing the fees." We note, however, that neither the "assessed value" nor the "estimated value" of the questioned parcels of land were alleged by respondent in both his original and amended complaint. What he stated in his amended complaint is that the disputed realties have a "BIR zonal valuation" of P1,200.00 per square meter. However, the alleged "BIR zonal valuation" is not the kind of valuation required by the Rule. It is the assessed value of the realty. Having utterly failed to comply with the requirement of the Rule that he shall allege in his complaint the assessed value of his real properties in controversy, the correct docket fee cannot be computed. As such, his complaint should not have been accepted by the trial court. We thus rule that it has not acquired jurisdiction over the present case for failure of herein respondent to pay the required 38 docket fee. On this ground alone, respondents complaint is vulnerable to dismissal. Brushing aside the significance of Serrano, petitioner argues that said decision, rendered by the Third Division of the Court, and not by the Court en banc, cannot modify or reverse the doctrine laid down in Spouses De Leon v. Court of 39 Appeals. Petitioner relies heavily on the declaration of this Court in Spouses De Leon that an action for annulment or rescission of a contract of sale of real property is incapable of pecuniary estimation. The Court, however, does not perceive a contradiction between Serrano and the Spouses De Leon. The Court calls attention to the following statement in Spouses De Leon: "A review of the jurisprudence of this Court indicates that in determining whether an action is one the subject matter of which is not capable of pecuniary estimation, this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought." Necessarily, the determination must be done on a case-to-case basis, depending on the facts and circumstances of each. What petitioner conveniently ignores is that in Spouses De Leon, the action therein that private respondents instituted before the RTC 40 was "solely for annulment or rescission" of the contract of sale over a real property. There appeared to be no transfer of title or possession to the adverse party. Their complaint simply prayed for: 1. Ordering the nullification or rescission of the Contract of Conditional Sale (Supplementary Agreement) for having violated the rights of plaintiffs (private respondents) guaranteed to them under Article 886 of the Civil Code and/or violation of the terms and conditions of the said contract. 2. Declaring void ab initio the Deed of Absolute Sale for being absolutely simulated; and 3. Ordering defendants (petitioners) to pay plaintiffs (private respondents) attorney's fees in the amount 41 ofP100,000.00. As this Court has previously discussed herein, the nature of Civil Case No. 2006-0030 instituted by petitioner before the RTC is closer to that of Serrano, rather than of Spouses De Leon, hence, calling for the application of the ruling of the Court in the former, rather than in the latter. It is also important to note that, with the amendments introduced by A.M. No. 04-2-04-SC, which became effective on 16 August 2004, the paragraph in Section 7, Rule 141 of the Rules of Court, pertaining specifically to the basis for computation of docket fees for real actions was deleted. Instead, Section 7(1) of Rule 141, as amended, provides that "in cases involving real property, the FAIR MARKET value of the REAL property in litigation STATED IN THE CURRENT TAX DECLARATION OR CURRENT ZONAL VALUATION OF THE BUREAU OF INTERNAL REVENUE, WHICH IS

HIGHER, OR IF THERE IS NONE, THE STATED VALUE OF THE PROPERTY IN LITIGATION x x x" shall be the basis for the computation of the docket fees. Would such an amendment have an impact on Gochan, Siapno, and Serrano? The Court rules in the negative. A real action indisputably involves real property. The docket fees for a real action would still be determined in accordance with the value of the real property involved therein; the only difference is in what constitutes the acceptable value. In computing the docket fees for cases involving real properties, the courts, instead of relying on the assessed or estimated value, would now be using the fair market value of the real properties (as stated in the Tax Declaration or the Zonal Valuation of the Bureau of Internal Revenue, whichever is higher) or, in the absence thereof, the stated value of the same. In sum, the Court finds that the true nature of the action instituted by petitioner against respondents is the recovery of title to and possession of real property. It is a real action necessarily involving real property, the docket fees for which must be computed in accordance with Section 7(1), Rule 141 of the Rules of Court, as amended. The Court of Appeals, therefore, did not commit any error in affirming the RTC Orders requiring petitioner to pay additional docket fees for its Complaint in Civil Case No. 2006-0030. The Court does not give much credence to the allegation of petitioner that if the judgment of the Court of Appeals is allowed to stand and not rectified, it would result in grave injustice and irreparable injury to petitioner in view of the prohibitive amount assessed against it. It is a sweeping assertion which lacks evidentiary support. Undeniably, before the Court can conclude that the amount of docket fees is indeed prohibitive for a party, it would have to look into the financial capacity of said party. It baffles this Court that herein petitioner, having the capacity to enter into multi-million transactions, now stalls at paying P720,392.60 additional docket fees so it could champion before the courts its rights over the disputed real properties. Moreover, even though the Court exempts individuals, as indigent or pauper litigants, from paying docket fees, it has never extended such an exemption to a corporate entity. WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED. The Decision, dated 22 November 2006, of the Court of Appeals in CA-G.R. SP No. 94800, which affirmed the Orders dated 24 March 2006 and 29 March 2006 of the RTC, Branch 22, of Naga City, in Civil Case No. RTC-2006-0030, ordering petitioner Ruby Shelter Builders and Realty Development Corporation to pay additional docket/filing fees, computed based on Section 7(a), Rule 141 of the Rules of Court, as amended, is hereby AFFIRMED. Costs against the petitioner. ROMULO PECSON vs. COMELEC

This petition for certiorari filed by Romulo F. Pecson ( Pecson) under Rule 64, in relation with Rule 65 of the Revised Rules of Court seeks to set aside and annul the Resolution dated May 21, 2008 of the Commission on Elections en banc (COMELEC) in SPR 60-2007.
[1]

The assailed Resolution nullified the grant ( via a Special Order)

by the Regional Trial Court (RTC), Branch 56, Angeles City, of the execution pending appeal of its Decision in the election contest between Pecson and the private respondent Lyndon A. Cunanan ( Cunanan), the proclaimed winner in the 2007 mayoralty election in Magalang, Pampanga. THE ANTECEDENTS Pecson and Cunanan were candidates for the mayoralty position in

the Municipality of Magalang, Province of Pampanga in the May 2007 elections. On May 17, 2007, Cunanan was proclaimed the winning candidate, garnering a total of 12,592 votes as against Pecsons 12,531, or a margin of 61 votes. Cunanan took his oath and assumed the position of Mayor of Magalang. Soon thereafter, Pecson filed an election protest, docketed as EPE No. 07-51, with the RTC. On November 23, 2007, the RTC rendered a Decision in Pecsons favor. The RTC ruled that Pecson received a total of 14,897 votes as against Cunanans 13,758 a vote margin of 1,139. Cunanan received a copy of the Decision on November 26, 2007 and filed a Notice of Appeal the day after. The RTC issued on November 27, 2008 an Order noting the filing of the notice of appeal and the payment of appeal fee and directing the transmittal of the records of the case to the Electoral Contests Adjudication Department (ECAD) of the COMELEC. Pecson, on the other hand, filed on November 28, 2007 an Urgent Motion for Immediate Execution Pending Appeal, claiming that Section 11, Rule 14 of the Rules of Procedure in Election Contests before the Courts Involving Elective Municipal and Barangay Officials
[2]

(Rules) allows this remedy.

The RTC granted Pecsons motion for execution pending appeal via a Special Order dated December 3, 2007 (Special Order) but suspended, pursuant to the Rules, the actual issuance of the writ of execution for twenty (20) days. The Special Order states the following reasons: 1. The result of the judicial revision show[s] that the protestant garnered 14,897 votes as against protestees 13,758 votes or a plurality of 1,139 votes. The victory of the protestant is clearly and manifestly established by the rulings and tabulation of results made by the Court x x x; 2. It is settled jurisprudence that execution pending appeal in election cases should be granted to give as much recognition to the worth of a trial judges decision as that which is initially ascribed by the law to the proclamation by the board of canvassers. The Court holds that this wisp of judicial wisdom of the Supreme Court enunciated in the Gahol case and subsequent cases citing it is borne by the recognition that the decision of the trial court in an election case is nothing but the court upholding the mandate of the voter, which has as its source no other than the exercise of the constitutional right to vote. While it is true that the protestee can avail of the remedy of appeal before the COMELEC, the Court is more convinced that between upholding the mandate of the electorate of Magalang, Pampanga which is the fruit of the exercise of the constitutional right to vote and a procedural remedy, the Court is more inclined to uphold and give effect to and actualize the mandate of the electorate of Magalang. To the mind of the Court, in granting execution pending appeal the Court is being true to its bounden duty to uphold the exercise of constitutional rights and gives flesh to the mandate of the people. The foregoing is, as far as the Court is concerned, considered far superior circumstance that convinces the Court to grant protestants motion; 3. Public interest and the will of the electorate must be respected and given meaning;

4. In the case of Navarosa v. Comelec, the Supreme Court held that In the Gahol case, the Court gave an additional justification for allowing execution pending appeal of decisions of trial courts, thus: Public policy underlies it, x x x [S]omething had to be done to strike the death blow at the pernicious grab-the-proclamation-prolong-the-protest technique often, if not invariably, resorted to by unscrupulous politicians who would render nugatory the peoples verdict against them and persist in continuing i n an office they very well know they have no legitimate right to hold. x x x. A primordial public interest is served by the grant of the protestants motion, i.e., to obviate a hollow victory for the duly elected candidate. In the words of Chief Justice Cesar Bengzon, The well known delay in the adjudication of election protests often gave the successful contestant a mere pyrrhic victory, i.e., a vindication when the term of office is about to expire or has expired. Expectedly, Cunanan moved to reconsider the Order, arguing that the RTC gravely abused its discretion: (1) in ruling that there were good reasons to issue a writ of execution pending appeal; and (2) in entertaining and subsequently granting the motion for execution pending appeal despite the issuance of an order transmitting the records of the case. Thereupon, Cunanan filed with the COMELEC a Petition for Application of Preliminary Injunction with Prayer for Status Quo Ante Order/Temporary Restraining Order ( TRO) with Prayer for Immediate Raffle. He argued in his petition that: (1) the RTC Decision did not clearly establish Pecsons victory or his (Cunanans) defeat a requirement of Section 11, Rule 14 of the Rules; among other reasons, the number of votes the RTC tallied and tabulated exceeded the number of those who actually voted and the votes cast for the position of Mayor, and (2) the RTC had constructively relinquished its jurisdiction by the issuance of the Order dated November 27, 2007 directing the transmittal of the records of the case. The Second Division of the COMELEC issued on January 4, 2008 a 60-day TRO directing: (1) the RTC to cease and desist from issuing or causing the issuance of a writ of execution or implementing the Special Order; and (2) Cunanan to continue performing the functions of Mayor of Magalang. In his Answer and/or Opposition, with Prayer for Immediate Lifting of TRO, Pecson argued that: (1) preliminary injunction cannot exist except as part or incident of an independent action, being a mere ancillary remedy that exists only as an incident of the main proceeding; (2) the petition for application of preliminary injunction, as an original action, should be dismissed outright; and (3) Cunanan is guilty of forum shopping, as he filed a motion for reconsideration of the Special Order simultaneously with the petition filed with the COMELEC. The COMELECs Second Division denied Cunanans petition in a Resolution dated March 6, 2008. It ruled that: (1) the resolution of the motion for execution pending appeal is part of the residual jurisdiction of the RTC to settle pending incidents; the motion was filed prior to the expiration of the period to appeal and while the RTC was still in possession of

the original record; and (2) there is good reason to justify the execution of the Decision pending appeal, as Pecsons victory was clearly and manifestly established. Ruling on the alleged defect in the RTC count, the Second Division ruled: [A]fter a careful scrutiny of the Decision, We found that the error lies in the trial courts computation of the results. In its Decision, the trial court, to the votes obtained by the party (as per proclamation of the MBOC), deducted the votes per physical count after revision and deducted further the invalid/nullified ballots per the trial courts appreciation and thereafter added the valid claimed ballots per the trial courts appreciation, thus: Votes obtained per proclamation of the MBOC (-) Votes per physical count (-) Invalid or nullified ballots (+) Valid claimed ballots = Total Votes Obtained The formula used by the trial court is erroneous as it used as its reference the votes obtained by the parties as per the proclamation of the MBOC. It complicated an otherwise simple and straightforward computation, thus leading to the error. The correct formula should have been as follows: Total Number of Uncontested Ballots (+) Valid Contested Ballots (+) Valid Claimed Ballots = Total Votes Obtained Using this formula and applying the figures in pages 744 and 745 of the trial courts Decision, the results will be as follows: For the Petitioner Cunanan Total Number of Uncontested Ballots Add: Valid Contested Ballots Add: Valid Claimed Ballots Total Votes of Petitioner For the Private Respondent (Pecson) Total Number of Uncontested Ballots Add: Valid Contested Ballots Add: Valid Claimed Ballots Total Votes of Petitioner

9,656 2,058 36 11,750

9,271 2,827 39 12,134

Using the correct formula, private respondent still obtained a plurality of the votes cast and enjoys a margin of 384 votes over the petitioner. Although not as wide as the margin found by the trial court, We are nevertheless convinced that the victory of private respondent has been clearly established in the trial courts decision for the following reasons: First, the error lies merely in the computation and does not put in issue the appreciation and tabulation of votes. The error is purely mathematical which will not involve the opening of ballot boxes or an examination and appreciation of ballots. It is a matter of arithmetic which calls for the mere clerical act of reflecting the true and correct votes of the candidates. Second, the error did not affect the final outcome of the election protest as to which candidate obtained the plurality of the votes cast. We are likewise convinced that the assailed order states good or special reasons justifying the execution pending appeal, to wit: (1) The victory of the protestant was clearly and manifestly established; (2) Execution pending appeal in election cases should be granted to give as much recognition to the worth of a trial judges decision as that which is initially ascribed by the law to the proclamation by the board of canvassers; (3) Public interest and the will of the electorate must be respected and given meaning; and (4) Public policy underlies it, as something had to be done to strike the death blow at the pernicious grab-the-proclamation-prolong-the-protest technique often, if not invariably resorted to by unscrupulous politicians. Such reasons to Our mind constitute superior circumstances as to warrant the execution of the trial courts decision pending appeal.

Pecson thus asked for the issuance of a writ of execution via an Ex-Parte Motion. Despite Cunanans opposition, the RTC granted Pecsons motion and issued the writ of execution on March 11, 2008. Pecson thereafter assumed the duties and functions of Mayor of Magalang. The Assailed Resolution On Cunanans motion, the COMELEC en banc issued its Resolution dated May 21, 2008 reversing the ruling of the Second Division insofar as it affirmed the RTCs findings of good reasons to execute the decision pending appeal. It

affirmed the authority of the RTC to order execution pending appeal; it however nullified the March 11, 2008 writ of execution on the ground that the RTC could no longer issue the writ because it had lost jurisdiction over the case after transmittal of the records and the perfection of the appeals of both Cunanan and Pecson (to be accurate, the lapse of Pecsons period to appeal). On the propriety of executing the RTC Decision pending appeal, the COMELEC en banc ruled that it was not convinced of the good reasons stated by the RTC in its Special Order. It ruled that recognition of the worth of a trial judges decision, on the one hand, and the right to appeal, including the Commissions authority to review the decision of the trial court, on the other, requires a balancing act; and not every invocation of public interest will suffice to justify an execution pending appeal. It added that at a stage when the decision of the trial court has yet to attain finality, both the protestee and the protestant are to be considered presumptive winners. It noted too that the Second Division already cast a doubt on the correctness of the number of votes obtained by the parties after the trial courts revision; thus, the resolution of the pending appeal becomes all the more important. Between two presumptive winners, considering the pending appeal of the election protest to the Commission and public service being the prime consideration, the balance should tilt in favor of non-disruption of government service. The execution of the RTC Decision pending appeal would necessarily entail the unseating of the protestee, resulting not only in the disruption of public service, but also in confusion in running the affairs of the government; a subsequent reversal too of the RTC Decision also results in the unseating of the protestant. This situation (i.e., the series of turn-over of the seat of power from one presumptive winner to another) cannot but cause irreparable damage to the people of Magalang, and overweighs the reasons asserted by the RTC in its Special Order. In the end, according to the COMELEC, public interest is best served when he who was really voted for the position is proclaimed and adjudged as winner with finality. The Petition and the Prayer for the issuance of a Status Quo Order In imputing grave abuse of discretion to the COMELEC en banc, Pecson argues that: (1) the RTC Decision clearly showed Pecsons victory; (2) the reasons for the reversal of the RTC Decision practically render impossible a grant of an execution pending appeal; and (3) the RTC correctly found the presence of the requisites for execution pending appeal. Threatened to be unseated, Pecson asked, as interim relief, for the issuance of a Status Quo Order. He claimed that: (1) the Department of Interior and Local Government already recognized (based on the issuance of the assailed Resolution) Cunanans assumption of office even if the assailed Resolution had not attained finality; and (2) in order to prevent grave and irreparable injury to Pecson and the perpetuation of a travesty of justice, a Status Quo Order must immediately issue. THE COURTS RULING We find the petition meritorious. The remedy of executing court decisions pending appeal in election contests is provided under the Rules as follows: SEC. 11. Execution pending appeal . On motion of the prevailing party with notice to the adverse party, the court, while still in possession of the original records, may, at its discretion, order the execution of the decision in an election contest before the expiration of the period to appeal, subject to the following rules: (a) There must be a motion by the prevailing party with three-day notice to the adverse party. Execution pending appeal shall not issue without prior notice and hearing. There must be good reasons for the execution pending appeal. The court, in a special order, must state the good or special reasons justifying the execution pending appeal. Such reasons must: (1) constitute superior circumstances demanding urgency that will outweigh the injury or damage should the losing party secure a reversal of the judgment on appeal; and (2) be manifest, in the decision sought to be executed, that the defeat of the protestee or the victory of the protestant has been clearly established.

(b) If the court grants execution pending appeal, an aggrieved party shall have twenty working days from notice of the special order within which to secure a restraining order or status quo order from the Supreme Court of the Commission on Elections. The corresponding writ of execution shall issue after twenty days, if no restraining order or status quo order is issued. During such period, the writ [3] of execution pending appeal shall be stayed. This remedy is not new. Under prevailing jurisprudence,
[4]

the remedy may be resorted to pursuant to the

[5]

suppletory application of the Rules of Court, specifically its Section 2, Rule 39.

What the Rules (A.M. No. 07-4-15-C) has

done is to give the availability of the remedy the element of certainty. Significantly, the Rules similarly apply the good reason standard (in fact, the even greater superior circumstances standard) for execution pending appeal under the Rules of Court, making the remedy an exception rather than the rule. At the heart of the present controversy is the question of whether there has been compliance with the standards required for an execution pending appeal in an election contest. As heretofore cited, the RTC found all these requisites present. The Second Division of the COMELEC supported the RTCs ruling, but the COMELEC en banc held a contrary view and nullified the execution pending appeal. This en banc ruling is now before us. Our review of a COMELEC ruling or decision is via a petition for certiorari. This is a limited review on jurisdictional grounds, specifically of the question onwhether the COMELEC has jurisdiction, or whether the assailed order or resolution is tainted with grave abuse of discretion amounting to lack or excess of jurisdiction. Correctly understood, grave abuse of discretion is such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or [an] exercise of power in an arbitrary and despotic manner by reason of passion or personal hostility, or an exercise of judgment so patent and gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined, or to act in a manner not at all in contemplation of law.
[6]

Because this case is essentially about the implementation of an RTC decision pending appeal, we must first dwell on the writ the RTC issued. The COMELEC ruled in this regard that the writ of execution the RTC issued on March 11, 2008 was void; the RTC could no longer issue the writ because of the lapse of the period for appeal, and because the RTC no longer held the records of the election contest which had then been transmitted to the ECAD-COMELEC. Cunanan argues in his Comment that this ruling has become final and executory because Pecson did not question it in the present petition. In Cunanans view, the finality of this aspect of the COMELEC ruling renders the issue of the nullification of the Special Order moot and academic, as any ruling we shall render would serve no practical purpose; it can no longer be implemented since the means (obviously referring to the writ the RTC issued on March 11, 2008) of executing the RTC decision ( i.e., seating Pecson as Mayor of Magalang) has, to all intents and purposes, been nullified and rendered ineffective. We see no merit in Cunanans argument. The writ of execution issued by the RTC is a mere administrative enforcement medium of the Special Order the main order supporting Pecsons motion for the issuance of a writ of execution. The writ itself cannot and does not assume a life of its own independent from the Special Order on which it is based. Certainly, its nullification does not carry with it the nullification of the Special Order. This consequence does not of course hold true in the reverse situation the nullification of the Special Order effectively carries with it the nullification of its implementing writ and removes the basis for the issuance of another implementing writ. In the present case, the reality is that if and when we ultimately affirm the validity of the Special Order, nothing will thereafter prevent the RTC from issuing another writ. Another legal reality is that the COMELEC is wrong in its ruling that the RTC could no longer actually issue the writ on March 11, 2008 because it no longer had jurisdiction to do so after the appeal period lapsed and after the records were transmitted to the ECAD-COMELEC. That the RTC is still in possession of the records and that the period to appeal (of both contending parties) must have not lapsed are important for jurisdictional purposes if the issue is the authority of the RTC to grant a Special Order allowing execution pending appeal; they are requisite elements for the exercise by the RTC of its residual jurisdiction to validly order an execution pending appeal, not for the issuance of the writ itself. This is

clearly evident from the cited provision of the Rules which does not require the issuance of the implementing writ within the above limited jurisdictional period. The RTC cannot legally issue the implementing writ within this limited period for two reasons: (1) the cited twenty-day waiting period under Section 11(b); and (2) the mandatory immediate transmittal of the records to the ECAD of the COMELEC under Section 10 of the Rules.
[7]

On the substantive issue of whether a writ of execution pending appeal should issue, we do not agree with the COMELECs view that there are two presumptive winners prior to its ruling on the protest case. We likewise cannot support its balancing act view that essentially posits that given the pendency of the appeal and the lack of finality of a decision in the election protest, the unseating of the protestee, and the need for continuity of public service, the balance should tilt in favor of continuity or non-disruption of public service; hence, the execution pending appeal should be denied. As Pecson correctly argued, this reasoning effectively prevents a winner (at the level of the courts) of an election protest from ever availing of an execution pending appeal; it gives too much emphasis to the COMELECs authority to decide the election contest and the losing partys right to appeal. What is there to exe cute pending appeal if, as the COMELEC suggested, a party should await a COMELEC final ruling on the protest case? Effectively, the two presumptive winners and the balancing act views negate the execution pending appeal that we have categorically and unequivocally recognized in our rulings and in the Rules we issued. To be sure, the COMELEC cannot, on its own, render ineffective a rule of procedure we established by formulating its own ruling requiring a final determination at its level before an RTC decision in a protest case can be implemented. We additionally note that disruption of public service necessarily results from any order allowing execution pending appeal and is a concern that this Court was aware of when it expressly provided the remedy under the Rules. Such disruption is therefore an element that has been weighed and factored in and cannot be per se a basis to deny execution pending appeal. What comes out clearly from this examination of the COMELEC ruling is that it looked at the wrong material considerations when it nullified the RTCs Special Order. They are the wrong considerations because they are not the standards outlined under Section 11, Rule 14 of the Rules against which the validity of a Special Order must be tested. Significantly, the use of wrong considerations in arriving at a decision constitutes grave abuse of discretion.
[8]

The proper consideration that the COMELEC made relates to the correctness of the RTCs Decision in light of the Rules requirement that the victory of the protestant and the defeat of the protestee be clearly established for execution pending appeal to issue. According to the COMELEC, no less than the Second Division cast a doubt on the correctness of the number of votes obtained by the parties after the revision of ballots when the Second Division proposed a mathematical formula to correct the RTC count. At the same time, the COMELEC noted that the Second Division could not have corrected the RTC count, as the petition before it was one for certiorari while the correction of errors in computation properly pertained to the resolution of Cunanans pending appeal. To the COMELEC, all these showed that the correctness of the RTC Decision in favor of Pecson was far from clear and cannot support an execution pending appeal. We disagree once more with the COMELEC en banc in this conclusion, as it failed to accurately and completely appreciate the Second Divisions findings. The RTC Decision, on its face, shows that Pecson garnered more valid votes than Cunanan after the revision of ballots. The Second Division properly recognized, however, that the RTC computation suffered from a facial defect that did not affect the final results; as Cunanan pointed out, the votes for Pecson and Cunanan, if totally summed up, exceeded the total number of valid votes for mayor. Duly alerted, the Second Division looked into the purported error, analyzed it, and found the error to be merely mathematical; the RTC formula would necessarily exceed the total number of votes cast for mayor because it counted some votes twice. In making this finding, the Second Division was guided by the rule that one of the requisites for an execution pending appeal is a clear showing in the decision of the protestants victory and the protestees defeat. Its

examination of the RTC Decision was only for this limited purpose and this was what it did, no more no less. Specifically, it did not review the RTCs appreciation of the ballots on revision; it did not review the intrinsic merits of the RTC Decision issues that properly belong to the appeal that is currently pending. It merely found that the defect Cunanan noted was actually inconsequential with respect to the results, thus showing Pecsons clear victory under the RTC Decision. In other words, the Second Divisions corrected view of the RTC count confirmed, rather than contradicted or placed in doubt, the conclusion that Pecson won. Other than the clarity of Pecsons victory under the RTC Decision, the Special Order cited good and special reasons that justified an execution pending appeal, specifically: (1) the need to give as much recognition to the worth of a trial judges decision as that which is initially given by the law to the proclamation by the board of canvassers; (2) public interest and/or respect for and giving meaning to the will of the electorate; and (3) public policy something had to be done to deal a death blow to the pernicious grab-the-proclamation-prolong-the-protest technique often, if not invariably, resorted to by unscrupulous politicians who would render nugatory the peoples verdict against them. Unfortunately, the COMELEC en banc simply glossed over the RTCs cited reasons and did not fully discuss why these reasons were not sufficient to justify execution pending appeal. A combination, however, of the reasons the RTC cited, to our mind, justifies execution of the RTC Decision pending appeal. A striking feature of the present case is the time element involved. We have time and again noted the well known delay in the adjudication of election contests that, more often than not, gives the protestant an empty or hollow victory in a long drawn-out legal battle.
[9]

Some petitions before us involving election contests have been in fact dismissed for being
[10]

moot, the term for the contested position having long expired before the final ruling on the merits came.

In the present

case, the term for mayor consists of only three (3) years. One year and six months has lapsed since the May 2007 election; thus, less than two years are left of the elected mayors term. The election protest, while already decided at the RTC level, is still at the execution-pending-appeal stage and is still far from the finality of any decision on the merits, given the available appellate remedies and the recourses available through special civil actions. To be sure, there is nothing definite in the horizon on who will finally be declared the lawfully elected mayor. Also, we reiterate here our consistent ruling that decisions of the courts in election protest cases, resulting as they do from a judicial evaluation of the ballots and after full-blown adversarial proceedings, should at least be given similar worth and recognition as decisions of the board of canvassers.
[11]

This is especially true when attended by other equally

weighty circumstances of the case, such as the shortness of the term of the contested elective office, of the case. In light of all these considerations, we conclude that the COMELEC erred in nullifying the RTCs Special Order in a manner sufficiently gross to affect its exercise of jurisdiction. Specifically, it committed grave abuse of discretion when it looked at wrong considerations and when it acted outside of the contemplation of the law in nullifying the Special Order. WHEREFORE, premises considered, we GRANT the petition and accordingly ANNUL the assailed COMELEC Resolution.

KOREA TECHNOLOGIES CO., LTD., petitioner, vs. HON. ALBERTO A. LERMA, in his capacity as Presiding Judge of Branch 256 of Regional Trial Court of Muntinlupa City, and PACIFIC GENERAL STEEL MANUFACTURING CORPORATION, respondents. DECISION VELASCO, JR., J.: In our jurisdiction, the policy is to favor alternative methods of resolving disputes, particularly in civil and commercial disputes. Arbitration along with mediation, conciliation, and negotiation, being inexpensive, speedy and less hostile

methods have long been favored by this Court. The petition before us puts at issue an arbitration clause in a contract mutually agreed upon by the parties stipulating that they would submit themselves to arbitration in a foreign country. Regrettably, instead of hastening the resolution of their dispute, the parties wittingly or unwittingly prolonged the controversy. Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation which is engaged in the supply and installation of Liquefied Petroleum Gas (LPG) Cylinder manufacturing plants, while private respondent Pacific General Steel Manufacturing Corp. (PGSMC) is a domestic corporation. On March 5, 1997, PGSMC and KOGIES executed a Contract whereby KOGIES would set up an LPG Cylinder Manufacturing Plant in Carmona, Cavite. The contract was executed in the Philippines. On April 7, 1997, the parties 2 executed, in Korea, an Amendment for Contract No. KLP-970301 dated March 5, 1997 amending the terms of payment. The contract and its amendment stipulated that KOGIES will ship the machinery and facilities necessary for manufacturing LPG cylinders for which PGSMC would pay USD 1,224,000. KOGIES would install and initiate the operation of the plant for which PGSMC bound itself to pay USD 306,000 upon the plants production of the 11 -kg. LPG cylinder samples. Thus, the total contract price amounted to USD 1,530,000. On October 14, 1997, PGSMC entered into a Contract of Lease with Worth Properties , Inc. (Worth) for use of Worths 5,079-square meter property with a 4,032-square meter warehouse building to house the LPG manufacturing plant. The monthly rental was PhP 322,560 commencing on January 1, 1998 with a 10% annual increment clause. Subsequently, the machineries, equipment, and facilities for the manufacture of LPG cylinders were shipped, delivered, and installed in the Carmona plant. PGSMC paid KOGIES USD 1,224,000. However, gleaned from the Certificate executed by the parties on January 22, 1998, after the installation of the plant, the initial operation could not be conducted as PGSMC encountered financial difficulties affecting the supply of materials, thus forcing the parties to agree that KOGIES would be deemed to have completely complied with the terms and conditions of the March 5, 1997 contract. For the remaining balance of USD306,000 for the installation and initial operation of the plant, PGSMC issued twopostdated checks: (1) BPI Check No. 0316412 dated January 30, 1998 for PhP 4,500,000; and (2) BPI Check No. 5 0316413 dated March 30, 1998 for PhP 4,500,000. When KOGIES deposited the checks, these were dishonored for the reason "PAYMENT STOPPED." Thus, on May 8, 6 1998, KOGIES sent a demand letter to PGSMC threatening criminal action for violation of Batas Pambansa Blg. 22 in case of nonpayment. On the same date, the wife of PGSMCs President faxed a letter dated May 7, 1998 to KOGIES President who was then staying at a Makati City hotel. She complained that not only did KOGIES deliver a different brand of hydraulic press from that agreed upon but it had not delivered several equipment parts already paid for. On May 14, 1998, PGSMC replied that the two checks it issued KOGIES were fully funded but the payments were 7 stopped for reasons previously made known to KOGIES. On June 1, 1998, PGSMC informed KOGIES that PGSMC was canceling their Contract dated March 5, 1997 on the ground that KOGIES had altered the quantity and lowered the quality of the machineries and equipment it delivered to PGSMC, and that PGSMC would dismantle and transfer the machineries, equipment, and facilities installed in the Carmona plant. Five days later, PGSMC filed before the Office of the Public Prosecutor an Affidavit-Complaint for Estafa docketed as I.S. No. 98-03813 against Mr. Dae Hyun Kang, President of KOGIES. On June 15, 1998, KOGIES wrote PGSMC informing the latter that PGSMC could not unilaterally rescind their contract nor dismantle and transfer the machineries and equipment on mere imagined violations by KOGIES. It also insisted that their disputes should be settled by arbitration as agreed upon in Article 15, the arbitration clause of their contract. On June 23, 1998, PGSMC again wrote KOGIES reiterating the contents of its June 1, 1998 letter threatening that the machineries, equipment, and facilities installed in the plant would be dismantled and transferred on July 4, 1998. Thus, on July 1, 1998, KOGIES instituted an Application for Arbitration before the Korean Commercial Arbitration Board (KCAB) in Seoul, Korea pursuant to Art. 15 of the Contract as amended. On July 3, 1998, KOGIES filed a Complaint for Specific Performance, docketed as Civil Case No. 98-117 against PGSMC before the Muntinlupa City Regional Trial Court (RTC). The RTC granted a temporary restraining order (TRO) on July 4, 1998, which was subsequently extended until July 22, 1998. In its complaint, KOGIES alleged that PGSMC had initially admitted that the checks that were stopped were not funded but later on claimed that it stopped payment of the checks for the reason that "their value was not received" as the former allegedly breached their contract by "altering the quantity and lowering the quality of the machinery and equipment" installed in the plant and failed to make the plant operational although it earlier certified to the contrary as shown in a January 22, 1998 Certificate. Likewise, KOGIES averred that PGSMC violated Art. 15 of their Contract, as amended, by unilaterally rescinding the contract without resorting to arbitration. KOGIES also asked that PGSMC be restrained from dismantling and transferring the machinery and equipment installed in the plant which the latter threatened to do on July 4, 1998. On July 9, 1998, PGSMC filed an opposition to the TRO arguing that KOGIES was not entitled to the TRO since Art. 15, the arbitration clause, was null and void for being against public policy as it ousts the local courts of jurisdiction over the instant controversy.
8 4 3 1

On July 17, 1998, PGSMC filed its Answer with Compulsory Counterclaim asserting that it had the full right to dismantle and transfer the machineries and equipment because it had paid for them in full as stipulated in the contract; that KOGIES was not entitled to the PhP 9,000,000 covered by the checks for failing to completely install and make the plant operational; and that KOGIES was liable for damages amounting to PhP 4,500,000 for altering the quantity and lowering the quality of the machineries and equipment. Moreover, PGSMC averred that it has already paid PhP 2,257,920 in rent (covering January to July 1998) to Worth and it was not willing to further shoulder the cost of renting the premises of the plant considering that the LPG cylinder manufacturing plant never became operational. After the parties submitted their Memoranda, on July 23, 1998, the RTC issued an Order denying the application for a writ of preliminary injunction, reasoning that PGSMC had paid KOGIES USD 1,224,000, the value of the machineries and equipment as shown in the contract such that KOGIES no longer had proprietary rights over them. And finally, the RTC held that Art. 15 of the Contract as amended was invalid as it tended to oust the trial court or any other court jurisdiction 10 over any dispute that may arise between the parties. KOGIES prayer for an injunctive writ was denied. The dispositive portion of the Order stated: WHEREFORE, in view of the foregoing consideration, this Court believes and so holds that no cogent reason exists for this Court to grant the writ of preliminary injunction to restrain and refrain defendant from dismantling the machineries and facilities at the lot and building of Worth Properties, Incorporated at Carmona, Cavite and transfer the same to another site: and therefore denies plaintiffs application for a writ of preliminary injunction. On July 29, 1998, KOGIES filed its Reply to Answer and Answer to Counterclaim. KOGIES denied it had altered the quantity and lowered the quality of the machinery, equipment, and facilities it delivered to the plant. It claimed that it had performed all the undertakings under the contract and had already produced certified samples of LPG cylinders. It averred that whatever was unfinished was PGSMCs fault since it failed to procure raw materials due to lack of funds. KOGIES, 12 relying on Chung Fu Industries (Phils.), Inc. v. Court of Appeals, insisted that the arbitration clause was without question valid. After KOGIES filed a Supplemental Memorandum with Motion to Dismiss answering PGSMCs memorandum of July 22, 1998 and seeking dismissal of PGSMCs counterclaims, KOGIES, on August 4, 1998, filed its Motion for 14 Reconsideration of the July 23, 1998 Order denying its application for an injunctive writ claiming that the contract was not merely for machinery and facilities worth USD 1,224,000 but was for the sale of an "LPG manufacturing plant" consisting of "supply of all the machinery and facilities" and "transfer of technology" for a total contract price of USD 1,530,000 such that the dismantling and transfer of the machinery and facilities would result in the dismantling and transfer of the very plant itself to the great prejudice of KOGIES as the still unpaid owner/seller of the plant. Moreover, KOGIES points out that the arbitration clause under Art. 15 of the Contract as amended was a valid arbitration stipulation 15 under Art. 2044 of the Civil Code and as held by this Court in Chung Fu Industries (Phils.), Inc. In the meantime, PGSMC filed a Motion for Inspection of Things to determine whether there was indeed alteration of the quantity and lowering of quality of the machineries and equipment, and whether these were properly installed. KOGIES opposed the motion positing that the queries and issues raised in the motion for inspection fell under the coverage of the arbitration clause in their contract. On September 21, 1998, the trial court issued an Order (1) granting P GSMCs motion for inspection; (2) denying KOGIES motion for reconsideration of the July 23, 1998 RTC Order; and (3) denying KOGIES motion to dismiss PGSMCs compulsory counterclaims as these counterclaims fell within the requisites of compulsory counterclaims. On October 2, 1998, KOGIES filed an Urgent Motion for Reconsideration of the September 21, 1998 RTC Order granting inspection of the plant and denying dismissal of PGSMCs compulsory counterclaims. Ten days after, on October 12, 1998, without waiting for the resolution of its October 2, 1998 urgent motion for 18 reconsideration, KOGIES filed before the Court of Appeals (CA) a petition for certiorari docketed as CA-G.R. SP No. 49249, seeking annulment of the July 23, 1998 and September 21, 1998 RTC Orders and praying for the issuance of writs of prohibition, mandamus, and preliminary injunction to enjoin the RTC and PGSMC from inspecting, dismantling, and transferring the machineries and equipment in the Carmona plant, and to direct the RTC to enforce the specific agreement on arbitration to resolve the dispute. In the meantime, on October 19, 1998, the RTC denied KOGIES urgent motion for reconsideration and directed the 19 Branch Sheriff to proceed with the inspection of the machineries and equipment in the plant on October 28, 1998. Thereafter, KOGIES filed a Supplement to the Petition in CA-G.R. SP No. 49249 informing the CA about the October 19, 1998 RTC Order. It also reiterated its prayer for the issuance of the writs of prohibition, mandamus and preliminary injunction which was not acted upon by the CA. KOGIES asserted that the Branch Sheriff did not have the technical expertise to ascertain whether or not the machineries and equipment conformed to the specifications in the contract and were properly installed. On November 11, 1998, the Branch Sheriff filed his Sheriffs Report equipment were not fully and properly installed.
21 20 17 16 13 11

finding that the enumerated machineries and

The Court of Appeals affirmed the trial court and declared the arbitration clause against public policy

On May 30, 2000, the CA rendered the assailed Decision affirming the RTC Orders and dismissing the petition for certiorari filed by KOGIES. The CA found that the RTC did not gravely abuse its discretion in issuing the assailed July 23, 1998 and September 21, 1998 Orders. Moreover, the CA reasoned that KOGIES contention that the total contract price for USD 1,530,000 was for the whole plant and had not been fully paid was contrary to the finding of the RTC that PGSMC fully paid the price of USD 1,224,000, which was for all the machineries and equipment. According to the CA, this determination by the RTC was a factual finding beyond the ambit of a petition for certiorari. On the issue of the validity of the arbitration clause, the CA agreed with the lower court that an arbitration clause which provided for a final determination of the legal rights of the parties to the contract by arbitration was against public policy. On the issue of nonpayment of docket fees and non-attachment of a certificate of non-forum shopping by PGSMC, the CA held that the counterclaims of PGSMC were compulsory ones and payment of docket fees was not required since the Answer with counterclaim was not an initiatory pleading. For the same reason, the CA said a certificate of non-forum shopping was also not required. Furthermore, the CA held that the petition for certiorari had been filed prematurely since KOGIES did not wait for the resolution of its urgent motion for reconsideration of the September 21, 1998 RTC Order which was the plain, speedy, and adequate remedy available. According to the CA, the RTC must be given the opportunity to correct any alleged error it has committed, and that since the assailed orders were interlocutory, these cannot be the subject of a petition for certiorari. Hence, we have this Petition for Review on Certiorari under Rule 45. The Issues Petitioner posits that the appellate court committed the following errors: a. PRONOUNCING THE QUESTION OF OWNERSHIP OVER THE MACHINERY AND FACILITIES AS "A QUESTION OF FACT" "BEYOND THE AMBIT OF A PETITION FOR CERTIORARI" INTENDED ONLY FOR CORRECTION OF ERRORS OF JURISDICTION OR GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF (SIC) EXCESS OF JURISDICTION, AND CONCLUDING THAT THE TRIAL COURTS FINDING ON THE SAME QUESTION WAS IMPROPERLY RAISED IN THE PETITION BELOW; b. DECLARING AS NULL AND VOID THE ARBITRATION CLAUSE IN ARTICLE 15 OF THE CONTRACT BETWEEN THE PARTIES FOR BEING "CONTRARY TO PUBLIC POLICY" AND FOR OUSTING THE COURTS OF JURISDICTION; c. DECREEING PRIVATE RESPONDENTS COUNTERCLAIMS TO BE ALL COMPULSORY NOT NECESSITATING PAYMENT OF DOCKET FEES AND CERTIFICATION OF NON-FORUM SHOPPING; d. RULING THAT THE PETITION WAS FILED PREMATURELY WITHOUT WAITING FOR THE RESOLUTION OF THE MOTION FOR RECONSIDERATION OF THE ORDER DATED SEPTEMBER 21, 1998 OR WITHOUT GIVING THE TRIAL COURT AN OPPORTUNITY TO CORRECT ITSELF; e. PROCLAIMING THE TWO ORDERS DATED JULY 23 AND SEPTEMBER 21, 1998 NOT TO BE PROPER SUBJECTS OF CERTIORARI AND PROHIBITION FOR BEING "INTERLOCUTORY IN NATURE;" f. NOT GRANTING THE RELIEFS AND REMEDIES PRAYED FOR IN HE (SIC) PETITION AND, INSTEAD, 23 DISMISSING THE SAME FOR ALLEGEDLY "WITHOUT MERIT." The Courts Ruling The petition is partly meritorious. Before we delve into the substantive issues, we shall first tackle the procedural issues. The rules on the payment of docket fees for counterclaims and cross claims were amended effective August 16, 2004 KOGIES strongly argues that when PGSMC filed the counterclaims, it should have paid docket fees and filed a certificate of non-forum shopping, and that its failure to do so was a fatal defect. We disagree with KOGIES. As aptly ruled by the CA, the counterclaims of PGSMC were incorporated in its Answer with Compulsory Counterclaim dated July 17, 1998 in accordance with Section 8 of Rule 11, 1997 Revised Rules of Civil Procedure, the rule that was effective at the time the Answer with Counterclaim was filed. Sec. 8 on existing counterclaim or cross-claim states, "A compulsory counterclaim or a cross-claim that a defending party has at the time he files his answer shall be contained therein."

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On July 17, 1998, at the time PGSMC filed its Answer incorporating its counterclaims against KOGIES, it was not liable to pay filing fees for said counterclaims being compulsory in nature. We stress, however, that effective August 16, 2004 under Sec. 7, Rule 141, as amended by A.M. No. 04-2-04-SC, docket fees are now required to be paid in compulsory counterclaim or cross-claims. As to the failure to submit a certificate of forum shopping, PGSMCs Answer is not an initiatory pleading which requires a 24 certification against forum shopping under Sec. 5 of Rule 7, 1997 Revised Rules of Civil Procedure. It is a responsive pleading, hence, the courts a quo did not commit reversible error in denying KOGIES motion to dismiss PGSMCs compulsory counterclaims. Interlocutory orders proper subject of certiorari Citing Gamboa v. Cruz, the CA also pronounced that "certiorari and Prohibition are neither the remedies to question the 26 propriety of an interlocutory order of the trial court." The CA erred on its reliance on Gamboa.Gamboa involved the denial of a motion to acquit in a criminal case which was not assailable in an action for certiorari since the denial of a motion to quash required the accused to plead and to continue with the trial, and whatever objections the accused had in his motion to quash can then be used as part of his defense and subsequently can be raised as errors on his appeal if the judgment of the trial court is adverse to him. The general rule is that interlocutory orders cannot be challenged by an 27 appeal. Thus, in Yamaoka v. Pescarich Manufacturing Corporation , we held: The proper remedy in such cases is an ordinary appeal from an adverse judgment on the merits, incorporating in said appeal the grounds for assailing the interlocutory orders. Allowing appeals from interlocutory orders would result in the sorry spectacle of a case being subject of a counterproductive ping-pong to and from the appellate court as often as a trial court is perceived to have made an error in any of its interlocutory rulings. However, where the assailed interlocutory order was issued with grave abuse of discretion or patently erroneous and the remedy of appeal would not afford adequate and expeditious relief, the Court allows certiorari as a mode of 28 redress. Also, appeals from interlocutory orders would open the floodgates to endless occasions for dilatory motions. Thus, where the interlocutory order was issued without or in excess of jurisdiction or with grave abuse of discretion, the remedy is 29 certiorari. The alleged grave abuse of discretion of the respondent court equivalent to lack of jurisdiction in the issuance of the two assailed orders coupled with the fact that there is no plain, speedy, and adequate remedy in the ordinary course of law amply provides the basis for allowing the resort to a petition for certiorari under Rule 65. Prematurity of the petition before the CA Neither do we think that KOGIES was guilty of forum shopping in filing the petition for certiorari. Note that KOGIES motion for reconsideration of the July 23, 1998 RTC Order which denied the issuance of the injunctive writ had already been denied. Thus, KOGIES only remedy was to assail the RTCs interlocutory order via a petition for certiorari under Rule 65. While the October 2, 1998 motion for reconsideration of KOGIES of the September 21, 1998 RTC Order relating to the inspection of things, and the allowance of the compulsory counterclaims has not yet been resolved, the circumstances in this case would allow an exception to the rule that before certiorari may be availed of, the petitioner must have filed a motion for reconsideration and said motion should have been first resolved by the court a quo. The reason behind the rule is "to enable the lower court, in the first instance, to pass upon and correct its mistakes without the intervention of the 30 higher court." The September 21, 1998 RTC Order directing the branch sheriff to inspect the plant, equipment, and facilities when he is not competent and knowledgeable on said matters is evidently flawed and devoid of any legal support. Moreover, there is an urgent necessity to resolve the issue on the dismantling of the facilities and any further delay would prejudice the interests of KOGIES. Indeed, there is real and imminent threat of irreparable destruction or substantial damage to KOGIES equipment and machineries. We find the resort to certiorari based on the gravely abusive orders of the trial court sans the ruling on the October 2, 1998 motion for reconsideration to be proper. The Core Issue: Article 15 of the Contract We now go to the core issue of the validity of Art. 15 of the Contract, the arbitration clause. It provides: Article 15. Arbitration.All disputes, controversies, or differences which may arise between the parties, out of or in relation to or in connection with this Contract or for the breach thereof, shall finally be settled by arbitration in Seoul, Korea in accordance with the Commercial Arbitration Rules of the Korean Commercial Arbitration Board. The award rendered by the arbitration(s) shall be final and binding upon both parties concerned. (Emphasis supplied.) Petitioner claims the RTC and the CA erred in ruling that the arbitration clause is null and void. Petitioner is correct.
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Established in this jurisdiction is the rule that the law of the place where the contract is made governs. Lex loci contractus. The contract in this case was perfected here in the Philippines. Therefore, our laws ought to govern. Nonetheless, Art. 2044 of the Civil Code sanctions the validity of mutually agreed arbitral clause or the finality and binding effect of an arbitral award. Art. 2044 provides, " Any stipulation that the arbitrators award or decision shall be final, is valid , without prejudice to Articles 2038, 2039 and 2040." (Emphasis supplied.) Arts. 2038, 2039, and 2040 abovecited refer to instances where a compromise or an arbitral award, as applied to Art. 34 2044 pursuant to Art. 2043, may be voided, rescinded, or annulled, but these would not denigrate the finality of the arbitral award. The arbitration clause was mutually and voluntarily agreed upon by the parties. It has not been shown to be contrary to any law, or against morals, good customs, public order, or public policy. There has been no showing that the parties have not dealt with each other on equal footing. We find no reason why the arbitration clause should not be respected and 35 complied with by both parties. In Gonzales v. Climax Mining Ltd., we held that submission to arbitration is a contract and that a clause in a contract providing that all matters in dispute between the parties shall be referred to arbitration is a 36 contract. Again in Del Monte Corporation-USA v. Court of Appeals, we likewise ruled that "[t]he provision to submit to 37 arbitration any dispute arising therefrom and the relationship of the parties is part of that contract and is itself a contract." Arbitration clause not contrary to public policy The arbitration clause which stipulates that the arbitration must be done in Seoul, Korea in accordance with the Commercial Arbitration Rules of the KCAB, and that the arbitral award is final and binding, is not contrary to public policy. This Court has sanctioned the validity of arbitration clauses in a catena of cases. In the 1957 case ofEastboard Navigation 38 Ltd. v. Juan Ysmael and Co., Inc., this Court had occasion to rule that an arbitration clause to resolve differences and breaches of mutually agreed contractual terms is valid. In BF Corporation v. Court of Appeals, we held that "[i]n this jurisdiction, arbitration has been held valid and constitutional. Even before the approval on June 19, 1953 of Republic Act No. 876, this Court has countenanced the settlement of disputes through arbitration. Republic Act No. 876 was adopted to 39 supplement the New Civil Codes provisions on arbitration." And in LM Power Engineering Corporation v. Capitol Industrial Construction Groups, Inc., we declared that: Being an inexpensive, speedy and amicable method of settling disputes, arbitrationalong with mediation, conciliation and negotiation is encouraged by the Supreme Court. Aside from unclogging judicial dockets, arbitration also hastens the resolution of disputes, especially of the commercial kind. It is thus regarded as the "wave of the future" in international civil and commercial disputes. Brushing aside a contractual agreement calling for arbitration between the parties would be a step backward. Consistent with the above-mentioned policy of encouraging alternative dispute resolution methods, courts should liberally construe arbitration clauses. Provided such clause is susceptible of an interpretation that covers the 40 asserted dispute, an order to arbitrate should be granted. Any doubt should be resolved in favor of arbitration. Having said that the instant arbitration clause is not against public policy, we come to the question on what governs an arbitration clause specifying that in case of any dispute arising from the contract, an arbitral panel will be constituted in a foreign country and the arbitration rules of the foreign country would govern and its award shall be final and binding. RA 9285 incorporated the UNCITRAL Model law to which we are a signatory For domestic arbitration proceedings, we have particular agencies to arbitrate disputes arising from contractual relations. In case a foreign arbitral body is chosen by the parties, the arbitration rules of our domestic arbitration bodies would not 41 be applied. As signatory to the Arbitration Rules of the UNCITRAL Model Law on International Commercial Arbitration of the United Nations Commission on International Trade Law (UNCITRAL) in the New York Convention on June 21, 1985, the Philippines committed itself to be bound by the Model Law. We have even incorporated the Model Law in Republic Act No. (RA) 9285, otherwise known as the Alternative Dispute Resolution Act of 2004 entitled An Act to Institutionalize the Use of an Alternative Dispute Resolution System in the Philippines and to Establish the Office for Alternative Dispute Resolution, and for Other Purposes, promulgated on April 2, 2004. Secs. 19 and 20 of Chapter 4 of the Model Law are the pertinent provisions: CHAPTER 4 - INTERNATIONAL COMMERCIAL ARBITRATION SEC. 19. Adoption of the Model Law on International Commercial Arbitration.International commercial arbitration shall be governed by the Model Law on International Commercial Arbitration (the "Model Law") adopted by the United Nations Commission on International Trade Law on June 21, 1985 (United Nations Document A/40/17) and recommended for enactment by the General Assembly in Resolution No. 40/72 approved on December 11, 1985, copy of which is hereto attached as Appendix "A". SEC. 20. Interpretation of Model Law.In interpreting the Model Law, regard shall be had to its international origin and to the need for uniformity in its interpretation and resort may be made to the travaux preparatories and the report of the Secretary General of the United Nations Commission on International Trade Law dated March 25, 1985 entitled, "International Commercial Arbitration: Analytical Commentary on Draft Trade identified by reference number A/CN. 9/264."
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While RA 9285 was passed only in 2004, it nonetheless applies in the instant case since it is a procedural law which has a retroactive effect. Likewise, KOGIES filed its application for arbitration before the KCAB on July 1, 1998 and it is still pending because no arbitral award has yet been rendered. Thus, RA 9285 is applicable to the instant case. Well-settled is the rule that procedural laws are construed to be applicable to actions pending and undetermined at the time of their passage, and are deemed retroactive in that sense and to that extent. As a general rule, the retroactive application of 42 procedural laws does not violate any personal rights because no vested right has yet attached nor arisen from them. Among the pertinent features of RA 9285 applying and incorporating the UNCITRAL Model Law are the following: (1) The RTC must refer to arbitration in proper cases Under Sec. 24, the RTC does not have jurisdiction over disputes that are properly the subject of arbitration pursuant to an arbitration clause, and mandates the referral to arbitration in such cases, thus: SEC. 24. Referral to Arbitration.A court before which an action is brought in a matter which is the subject matter of an arbitration agreement shall, if at least one party so requests not later than the pre-trial conference, or upon the request of both parties thereafter, refer the parties to arbitration unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. (2) Foreign arbitral awards must be confirmed by the RTC Foreign arbitral awards while mutually stipulated by the parties in the arbitration clause to be final and binding are not 43 immediately enforceable or cannot be implemented immediately. Sec. 35 of the UNCITRAL Model Law stipulates the requirement for the arbitral award to be recognized by a competent court for enforcement, which court under Sec. 36 of the UNCITRAL Model Law may refuse recognition or enforcement on the grounds provided for. RA 9285 incorporated these provisos to Secs. 42, 43, and 44 relative to Secs. 47 and 48, thus: SEC. 42. Application of the New York Convention.The New York Convention shall govern the recognition and enforcement of arbitral awards covered by said Convention. The recognition and enforcement of such arbitral awards shall be filed with the Regional Trial Court in accordance with the rules of procedure to be promulgated by the Supreme Court. Said procedural rules shall provide that the party relying on the award or applying for its enforcement shall file with the court the original or authenticated copy of the award and the arbitration agreement. If the award or agreement is not made in any of the official languages, the party shall supply a duly certified translation thereof into any of such languages. The applicant shall establish that the country in which foreign arbitration award was made in party to the New York Convention. xxxx SEC. 43. Recognition and Enforcement of Foreign Arbitral Awards Not Covered by the New York Convention . The recognition and enforcement of foreign arbitral awards not covered by the New York Convention shall be done in accordance with procedural rules to be promulgated by the Supreme Court. The Court may, on grounds of comity and reciprocity, recognize and enforce a non-convention award as a convention award. SEC. 44. Foreign Arbitral Award Not Foreign Judgment.A foreign arbitral award when confirmed by a court of a foreign country, shall be recognized and enforced as a foreign arbitral award and not as a judgment of a foreign court. A foreign arbitral award, when confirmed by the Regional Trial Court, shall be enforced in the same manner as final and executory decisions of courts of law of the Philippines xxxx SEC. 47. Venue and Jurisdiction.Proceedings for recognition and enforcement of an arbitration agreement or for vacations, setting aside, correction or modification of an arbitral award, and any application with a court for arbitration assistance and supervision shall be deemed as special proceedings and shall be filed with the Regional Trial Court (i) where arbitration proceedings are conducted; (ii) where the asset to be attached or levied upon, or the act to be enjoined is located; (iii) where any of the parties to the dispute resides or has his place of business; or (iv) in the National Judicial Capital Region, at the option of the applicant. SEC. 48. Notice of Proceeding to Parties.In a special proceeding for recognition and enforcement of an arbitral award, the Court shall send notice to the parties at their address of record in the arbitration, or if any part cannot be served notice at such address, at such partys last known address. The notice shall be sent al least fifteen (15) days before the date set for the initial hearing of the application. It is now clear that foreign arbitral awards when confirmed by the RTC are deemed not as a judgment of a foreign court but as a foreign arbitral award, and when confirmed, are enforced as final and executory decisions of our courts of law.

Thus, it can be gleaned that the concept of a final and binding arbitral award is similar to judgments or awards given by some of our quasi-judicial bodies, like the National Labor Relations Commission and Mines Adjudication Board, whose final judgments are stipulated to be final and binding, but not immediately executory in the sense that they may still be judicially reviewed, upon the instance of any party. Therefore, the final foreign arbitral awards are similarly situated in that they need first to be confirmed by the RTC. (3) The RTC has jurisdiction to review foreign arbitral awards Sec. 42 in relation to Sec. 45 of RA 9285 designated and vested the RTC with specific authority and jurisdiction to set aside, reject, or vacate a foreign arbitral award on grounds provided under Art. 34(2) of the UNCITRAL Model Law. Secs. 42 and 45 provide: SEC. 42. Application of the New York Convention.The New York Convention shall govern the recognition and enforcement of arbitral awards covered by said Convention. The recognition and enforcement of such arbitral awards shall be filed with the Regional Trial Court in accordance with the rules of procedure to be promulgated by the Supreme Court. Said procedural rules shall provide that the party relying on the award or applying for its enforcement shall file with the court the original or authenticated copy of the award and the arbitration agreement. If the award or agreement is not made in any of the official languages, the party shall supply a duly certified translation thereof into any of such languages. The applicant shall establish that the country in which foreign arbitration award was made is party to the New York Convention. If the application for rejection or suspension of enforcement of an award has been made, the Regional Trial Court may, if it considers it proper, vacate its decision and may also, on the application of the party claiming recognition or enforcement of the award, order the party to provide appropriate security. xxxx SEC. 45. Rejection of a Foreign Arbitral Award.A party to a foreign arbitration proceeding may oppose an application for recognition and enforcement of the arbitral award in accordance with the procedures and rules to be promulgated by the Supreme Court only on those grounds enumerated under Article V of the New York Convention. Any other ground raised shall be disregarded by the Regional Trial Court. Thus, while the RTC does not have jurisdiction over disputes governed by arbitration mutually agreed upon by the parties, still the foreign arbitral award is subject to judicial review by the RTC which can set aside, reject, or vacate it. In this sense, what this Court held in Chung Fu Industries (Phils.), Inc. relied upon by KOGIES is applicable insofar as the foreign arbitral awards, while final and binding, do not oust courts of jurisdiction since these arbitral awards are not absolute and without exceptions as they are still judicially reviewable. Chapter 7 of RA 9285 has made it clear that all arbitral awards, whether domestic or foreign, are subject to judicial review on specific grounds provided for. (4) Grounds for judicial review different in domestic and foreign arbitral awards The differences between a final arbitral award from an international or foreign arbitral tribunal and an award given by a local arbitral tribunal are the specific grounds or conditions that vest jurisdiction over our courts to review the awards. For foreign or international arbitral awards which must first be confirmed by the RTC, the grounds for setting aside, rejecting or vacating the award by the RTC are provided under Art. 34(2) of the UNCITRAL Model Law. For final domestic arbitral awards, which also need confirmation by the RTC pursuant to Sec. 23 of RA 876 and shall be 45 recognized as final and executory decisions of the RTC, they may only be assailed before the RTC and vacated on the 46 grounds provided under Sec. 25 of RA 876. (5) RTC decision of assailed foreign arbitral award appealable Sec. 46 of RA 9285 provides for an appeal before the CA as the remedy of an aggrieved party in cases where the RTC sets aside, rejects, vacates, modifies, or corrects an arbitral award, thus: SEC. 46. Appeal from Court Decision or Arbitral Awards.A decision of the Regional Trial Court confirming, vacating, setting aside, modifying or correcting an arbitral award may be appealed to the Court of Appeals in accordance with the rules and procedure to be promulgated by the Supreme Court. The losing party who appeals from the judgment of the court confirming an arbitral award shall be required by the appellate court to post a counterbond executed in favor of the prevailing party equal to the amount of the award in accordance with the rules to be promulgated by the Supreme Court. Thereafter, the CA decision may further be appealed or reviewed before this Court through a petition for review under Rule 45 of the Rules of Court. PGSMC has remedies to protect its interests
44

Thus, based on the foregoing features of RA 9285, PGSMC must submit to the foreign arbitration as it bound itself through the subject contract. While it may have misgivings on the foreign arbitration done in Korea by the KCAB, it has available remedies under RA 9285. Its interests are duly protected by the law which requires that the arbitral award that may be rendered by KCAB must be confirmed here by the RTC before it can be enforced. With our disquisition above, petitioner is correct in its contention that an arbitration clause, stipulating that the arbitral award is final and binding, does not oust our courts of jurisdiction as the international arbitral award, the award of which is not absolute and without exceptions, is still judicially reviewable under certain conditions provided for by the UNCITRAL Model Law on ICA as applied and incorporated in RA 9285. Finally, it must be noted that there is nothing in the subject Contract which provides that the parties may dispense with the arbitration clause. Unilateral rescission improper and illegal Having ruled that the arbitration clause of the subject contract is valid and binding on the parties, and not contrary to public policy; consequently, being bound to the contract of arbitration, a party may not unilaterally rescind or terminate the contract for whatever cause without first resorting to arbitration. What this Court held in University of the Philippines v. De Los Angeles and reiterated in succeeding cases, that the act of treating a contract as rescinded on account of infractions by the other contracting party is valid albeit provisional as it can be judicially assailed, is not applicable to the instant case on account of a valid stipulation on arbitration. Where an arbitration clause in a contract is availing, neither of the parties can unilaterally treat the contract as rescinded since whatever infractions or breaches by a party or differences arising from the contract must be brought first and resolved by arbitration, and not through an extrajudicial rescission or judicial action. The issues arising from the contract between PGSMC and KOGIES on whether the equipment and machineries delivered and installed were properly installed and operational in the plant in Carmona, Cavite; the ownership of equipment and payment of the contract price; and whether there was substantial compliance by KOGIES in the production of the samples, given the alleged fact that PGSMC could not supply the raw materials required to produce the sample LPG cylinders, are matters proper for arbitration. Indeed, we note that on July 1, 1998, KOGIES instituted an Application for Arbitration before the KCAB in Seoul, Korea pursuant to Art. 15 of the Contract as amended. Thus, it is incumbent upon PGSMC to abide by its commitment to arbitrate. Corollarily, the trial court gravely abused its discretion in granting PGSMCs Motion for Inspection of Things on September 21, 1998, as the subject matter of the motion is under the primary jurisdiction of the mutually agreed arbitral body, the KCAB in Korea. In addition, whatever findings and conclusions made by the RTC Branch Sheriff from the inspection made on October 28, 1998, as ordered by the trial court on October 19, 1998, is of no worth as said Sheriff is not technically competent to ascertain the actual status of the equipment and machineries as installed in the plant. For these reasons, the September 21, 1998 and October 19, 1998 RTC Orders pertaining to the grant of the inspection of the equipment and machineries have to be recalled and nullified. Issue on ownership of plant proper for arbitration Petitioner assails the CA ruling that the issue petitioner raised on whether the total contract price of USD 1,530,000 was for the whole plant and its installation is beyond the ambit of a Petition for Certiorari. Petitioners position is untenable. It is settled that questions of fact cannot be raised in an original action for certiorari. Whether or not there was full payment for the machineries and equipment and installation is indeed a factual issue prohibited by Rule 65. However, what appears to constitute a grave abuse of discretion is the order of the RTC in resolving the issue on the ownership of the plant when it is the arbitral body (KCAB) and not the RTC which has jurisdiction and authority over the said issue. The RTCs determination of such factual issue constitutes grave abuse of discretion and must be reversed and set aside. RTC has interim jurisdiction to protect the rights of the parties Anent the July 23, 1998 Order denying the issuance of the injunctive writ paving the way for PGSMC to dismantle and transfer the equipment and machineries, we find it to be in order considering the factual milieu of the instant case. Firstly, while the issue of the proper installation of the equipment and machineries might well be under the primary jurisdiction of the arbitral body to decide, yet the RTC under Sec. 28 of RA 9285 has jurisdiction to hear and grant interim measures to protect vested rights of the parties. Sec. 28 pertinently provides: SEC. 28. Grant of interim Measure of Protection.(a) It is not incompatible with an arbitration agreement for a party to request, before constitution of the tribunal, from a Court to grant such measure. After
49 47 48

constitution of the arbitral tribunal and during arbitral proceedings, a request for an interim measure of protection, or modification thereof, may be made with the arbitral or to the extent that the arbitral tribunal has no power to act or is unable to act effectivity, the request may be made with the Court . The arbitral tribunal is deemed constituted when the sole arbitrator or the third arbitrator, who has been nominated, has accepted the nomination and written communication of said nomination and acceptance has been received by the party making the request. (b) The following rules on interim or provisional relief shall be observed: Any party may request that provisional relief be granted against the adverse party. Such relief may be granted: (i) to prevent irreparable loss or injury; (ii) to provide security for the performance of any obligation; (iii) to produce or preserve any evidence; or (iv) to compel any other appropriate act or omission. (c) The order granting provisional relief may be conditioned upon the provision of security or any act or omission specified in the order. (d) Interim or provisional relief is requested by written application transmitted by reasonable means to the Court or arbitral tribunal as the case may be and the party against whom the relief is sought, describing in appropriate detail the precise relief, the party against whom the relief is requested, the grounds for the relief, and the evidence supporting the request. (e) The order shall be binding upon the parties. (f) Either party may apply with the Court for assistance in implementing or enforcing an interim measure ordered by an arbitral tribunal. (g) A party who does not comply with the order shall be liable for all damages resulting from noncompliance, including all expenses, and reasonable attorney's fees, paid in obtaining the orders judicial enforcement. (Emphasis ours.) Art. 17(2) of the UNCITRAL Model Law on ICA defines an "interim measure" of protection as: Article 17. Power of arbitral tribunal to order interim measures xxx xxx xxx (2) An interim measure is any temporary measure, whether in the form of an award or in another form, by which, at any time prior to the issuance of the award by which the dispute is finally decided, the arbitral tribunal orders a party to: (a) Maintain or restore the status quo pending determination of the dispute; (b) Take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself; (c) Provide a means of preserving assets out of which a subsequent award may be satisfied; or (d) Preserve evidence that may be relevant and material to the resolution of the dispute. Art. 17 J of UNCITRAL Model Law on ICA also grants courts power and jurisdiction to issue interim measures: Article 17 J. Court-ordered interim measures A court shall have the same power of issuing an interim measure in relation to arbitration proceedings, irrespective of whether their place is in the territory of this State, as it has in relation to proceedings in courts. The court shall exercise such power in accordance with its own procedures in consideration of the specific features of international arbitration. In the recent 2006 case of Transfield Philippines, Inc. v. Luzon Hydro Corporation , we were explicit that even "the pendency of an arbitral proceeding does not foreclose resort to the courts for provisional reliefs." We explicated this way:

As a fundamental point, the pendency of arbitral proceedings does not foreclose resort to the courts for provisional reliefs. The Rules of the ICC, which governs the parties arbitral dispute, allows the application of a party to a judicial authority for interim or conservatory measures. Likewise, Section 14 of Republic Act (R.A.) No. 876 (The Arbitration Law) recognizes the rights of any party to petition the court to take measures to safeguard and/or conserve any matter which is the subject of the dispute in arbitration. In addition, R.A. 9285, otherwise known as the "Alternative Dispute Resolution Act of 2004," allows the filing of provisional or interim measures with 50 the regular courts whenever the arbitral tribunal has no power to act or to act effectively. It is thus beyond cavil that the RTC has authority and jurisdiction to grant interim measures of protection. Secondly, considering that the equipment and machineries are in the possession of PGSMC, it has the right to protect and preserve the equipment and machineries in the best way it can. Considering that the LPG plant was non-operational, PGSMC has the right to dismantle and transfer the equipment and machineries either for their protection and preservation or for the better way to make good use of them which is ineluctably within the management discretion of PGSMC. Thirdly, and of greater import is the reason that maintaining the equipment and machineries in Worths property is not to the best interest of PGSMC due to the prohibitive rent while the LPG plant as set-up is not operational. PGSMC was losing PhP322,560 as monthly rentals or PhP3.87M for 1998 alone without considering the 10% annual rent increment in maintaining the plant. Fourthly, and corollarily, while the KCAB can rule on motions or petitions relating to the preservation or transfer of the equipment and machineries as an interim measure, yet on hindsight, the July 23, 1998 Order of the RTC allowing the transfer of the equipment and machineries given the non-recognition by the lower courts of the arbitral clause, has accorded an interim measure of protection to PGSMC which would otherwise been irreparably damaged. Fifth, KOGIES is not unjustly prejudiced as it has already been paid a substantial amount based on the contract. Moreover, KOGIES is amply protected by the arbitral action it has instituted before the KCAB, the award of which can be enforced in our jurisdiction through the RTC. Besides, by our decision, PGSMC is compelled to submit to arbitration pursuant to the valid arbitration clause of its contract with KOGIES. PGSMC to preserve the subject equipment and machineries Finally, while PGSMC may have been granted the right to dismantle and transfer the subject equipment and machineries, it does not have the right to convey or dispose of the same considering the pending arbitral proceedings to settle the differences of the parties. PGSMC therefore must preserve and maintain the subject equipment and machineries with the 51 diligence of a good father of a family until final resolution of the arbitral proceedings and enforcement of the award, if any. WHEREFORE, this petition is PARTLY GRANTED, in that: (1) The May 30, 2000 CA Decision in CA-G.R. SP No. 49249 is REVERSED and SET ASIDE; (2) The September 21, 1998 and October 19, 1998 RTC Orders in Civil Case No. 98-117 are REVERSED andSET ASIDE; (3) The parties are hereby ORDERED to submit themselves to the arbitration of their dispute and differences arising from the subject Contract before the KCAB; and (4) PGSMC is hereby ALLOWED to dismantle and transfer the equipment and machineries, if it had not done so, and ORDERED to preserve and maintain them until the finality of whatever arbitral award is given in the arbitration proceedings. No pronouncement as to costs. PLANTERS DEVELOPMENT BANK, Petitioner, vs. JULIE CHANDUMAL, Respondent. In this petition for review under Rule 45 of the Rules of Court, Planters Development Bank (PDB) questions the 1 2 Decision dated July 27, 2010 of the Court of Appeals (CA), as well as its Resolution dated February 16, 2011, denying 3 the petitioner's motion for reconsideration in CA-G.R. CV No. 82861. The assailed decision nullified the Decision dated May 31, 2004 of the Regional Trial Court (RTC), Las Pias City, Branch 255 in Civil Case No. LP-99-0137. Antecedent Facts The instant case stemmed from a contract to sell a parcel of land, together with improvements, between BF Homes, Inc. (BF Homes) and herein respondent Julie Chandumal (Chandumal). The property subject of the contract is located in Talon Dos, Las Pias City and covered by Transfer Certificate of Title No. T-10779. On February 12, 1993, BF Homes sold to PDB all its rights, participations and interests over the contract.

Chandumal paid her monthly amortizations from December 1990 until May 1994 when she began to default in 4 herpayments. In a Notice of Delinquency and Rescission of Contract with Demand to Vacate dated July 14, 1998, PDB gave Chandumal a period of thirty (30) days from receipt within which to settle her installment arrearages together with all its increments; otherwise, all her rights under the contract shall be deemed extinguished and terminated and the contract declared as rescinded. Despite demand, Chandumal still failed to settle her obligation. On June 18, 1999, an action for judicial confirmation of notarial rescission and delivery of possession was filed by PDB against Chandumal, docketed as Civil Case No. LP-99-0137. PDB alleged that despite demand, Chandumal failed and/or refused to pay the amortizations as they fell due; hence, it caused the rescission of the contract by means of 5 notarial act, as provided in Republic Act (R.A.) No. 6552. According to PDB, it tried to deliver the cashsurrender value of the subject property, as required under R.A. No. 6552, in the amount of P 10,000.00; however, the defendant was 6 unavailable for such purpose. Consequently, summons was issued and served by deputy sheriff Roberto T. Galing (Sheriff Galing). According to his return, Sheriff Galing attempted to personally serve the summons upon Chandumal on July 15, 19 and 22, 1999 but it was unavailing as she was always out of the house on said dates. Hence, the sheriff caused substituted service of summons 7 on August 5, 1999 by serving the same through Chandumals mother who acknowledged receipt thereof. For her failure to file an answer within the prescribed period, PDB filed on April 24, 2000 an ex parte motion to declare 8 Chandumal in default. On January 12, 2001, the RTC issued an Order granting the motion of PDB. On February 23, 2001, Chandumal filed an Urgent Motion to Set Aside Order of Default and to Admit Attached Answer. She maintained that she did not receive the summons and/or was not notified of the same. She further alleged that her failure to file an answer within the reglementary period was due to fraud, mistake or excusablenegligence. In her answer, Chandumal alleged the following defenses: (a) contrary to the position of PDB, the latter did not make any demand for her to pay the unpaid monthly amortization; and (b) PDB did not tender or offer to give the cash surrender value of the property in an amount equivalent to fifty percent (50%) of the actual total payment made, as provided for under Section 3(b) of R.A. No. 6552. Moreover, Chandumal claimed that since the total payment she made amounts to P 782,000.00, 9 the corresponding cash surrender value due her should be P 391,000.00. Per Order dated August 2, 2001, the RTC denied Chandumals motion to set aside the order of default. Her motion for 11 reconsideration was also denied for lack of merit. Conformably, the RTC allowed PDB to present its evidence ex 12 parte. On May 31, 2004, the RTC rendered a Decision
13 10

in favor of PDB, the dispositive portion of which reads:

WHEREFORE, the foregoing considered, judgment is hereby rendered in favor of the plaintiff Planters Development Bank and against defendant Julie Chandumal as follows, to wit: 1. Declaring the notarial rescission of the Contract to Sell dated 03 January 1990 made by the plaintiff per the Notice of Delinquency and Rescission of Contract with Demand to Vacate dated 14 July 1998 as judicially confirmed and ratified; 2. Requiring the plaintiff to deposit in the name of the defendant the amount of P 10,000.00 representing the cash surrender value for the subject property with the Land Bank of the Philippines, Las Pi[]as City Branch in satisfaction of the provisions of R.A. No. 6552; and, 3. Ordering the defendant to pay the plaintiff the amount of P 50,000.00 as and by way of attorneys fees, including the costs of suit. SO ORDERED.
14

From the foregoing judgment, Chandumal appealed to the CA. On July 27, 2010, the CA, without ruling on the propriety of the judicial confirmation of the notarial rescission , rendered the assailed decision nullifying the RTC decision due to invalid and ineffective substituted service of summons. The dispositive portion of the CA decision provides: WHEREFORE, premises considered, the decision of Branch 255 of the Regional Trial Court of Las Pias City, dated May 31, 2004, in Civil Case No. LP-99-0137 is hereby NULLIFIED and VACATED. SO ORDERED.
15

PDB filed a motion for reconsideration but it was denied by the CA in its Resolution dated February 16, 2011. Hence, this petition based on the following assignment of errors: I

The Honorable Court of Appeals erred in reversing the decision of the trial court on the ground of improper service of summons; II The decision of the trial court is valid as it duly acquired jurisdiction over the person of respondent Chandumal through voluntary appearance; and III The trial court did not err in confirming and ratifying the notarial rescission of the subject contract to sell.
16

PDB contends that the RTC properly acquired jurisdiction over the person of Chandumal. 1wphi1 According to PDB, there was proper service of summons since the sheriff complied with the proper procedure governing substituted service of summons as laid down in Section 7, Rule 14 of the Rules of Court. PDB alleges that it is clear from the sheriffs return that there were several attempts on at least three (3) different dates to effect personal service within a reasonable period of nearly a month, before he caused substituted service of summons. The sheriff likewise stated the reason for his failure to effect personal service and that on his fourth attempt, he effected the service of summons through Chandumals mother who is unarguably, a person of legal age and with sufficient discretion. PDB also argues that Chandumal voluntarily submitted herself to the jurisdiction of the court when she filed an Urgent Motion to Set Aside Order of Default and to Admit Attached Answer. For her part, Chandumal asserts that she never received a copy of the summons or was ever notified of it and she only came to know of the case sometime in July or August 2000, but she was already in the United States of America by that time, and that the CA correctly ruled that there was no valid service of summons; hence, the RTC never acquired jurisdiction over her person. Issues 1. Whether there was a valid substituted service of summons; 2. Whether Chandumal voluntarily submitted to the jurisdiction of the trial court; and 3. Whether there was proper rescission by notarial act of the contract to sell. Our Ruling The fundamental rule is that jurisdiction over a defendant in a civil case is acquired either through service of summons or through voluntary appearance in court and submission to its authority. If a defendant has not been properly summoned, 17 the court acquires no jurisdiction over its person, and a judgment rendered against it is null and void. Where the action is in personam and the defendant is in the Philippines, service of summons may be made through personal service, that is, summons shall be served by handing to the defendant in person a copy thereof, or if he refuses 19 to receive and sign for it, by tendering it to him. If the defendant cannot be personally served with summons within a 20 reasonable time, it is then that substituted service may be made. Personal service of summons should and always be the first option, and it is only when the said summons cannot be served within a reasonable time can the process server 21 resort to substituted service. No valid substituted service of summons In this case, the sheriff resorted to substituted service of summons due to his failure to serve it personally. In Manotoc v. 22 Court of Appeals, the Court detailed the requisites for a valid substituted service of summons, summed up as follows: (1) impossibility of prompt personal service the party relying on substituted service or the sheriff must show that the defendant cannot be served promptly or there is impossibility of prompt service; (2) specific details in the return the sheriff must describe in the Return of Summons the facts and circumstances surrounding the attempted personal service; (3) a person of suitable age and discretion the sheriff must determine if the person found in the alleged dwelling or residence of defendant is of legal age, what the recipients relationship with the defendant is, and whether said person comprehends the significance of the receipt of the summons and his duty to immediately deliver it to the defendant or at least notify the defendant of said receipt of summons, which matters must be clearly and specifically described in the Return of Summons; and (4) a competent person in charge, who must have sufficient knowledge to understand the obligation of the defendant in the summons, its importance, and the prejudicial effects arising from inaction on the 23 24 summons. These were reiterated and applied in Pascual v. Pascual, where the substituted service of summon made was invalidated due to the sheriffs failure to specify in the return the necessary details of the failed attempts to effect personal service which would justify resort to substituted service of summons. In applying the foregoing requisites in the instant case, the CA correctly ruled that the sheriffs return failed to justify a resort to substituted service of summons. According to the CA, the Return of Summons does not specifically show or indicate in detail the actual exertion of efforts or any positive step taken by the officer or process server in attempting to serve the summons personally to the defendant. The return merely states the alleged whereabouts of the defendant 25 without indicating that such information was verified from a person who had knowledge thereof. Indeed, the sheriffs
18

return shows a mere perfunctory attempt to cause personal service of the summons on Chandumal. There was no indication if he even asked Chandumals mother as to her specific whereabouts except that she was "out of the house", where she can be reached or whether he even tried to await her return. The "efforts" exerted by the sheriff clearly do not 26 suffice to justify substituted service and his failure to comply with the requisites renders such service ineffective. Respondent voluntarily submitted to the jurisdiction of the trial court Despite that there was no valid substituted service of summons, the Court, nevertheless, finds that Chandumal voluntarily submitted to the jurisdiction of the trial court. Section 20, Rule 14 of the Rules of Court states: Sec. 20. Voluntary appearance. The defendants 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. When Chandumal filed an Urgent Motion to Set Aside Order of Default and to Admit Attached Answer, she effectively submitted her person to the jurisdiction of the trial court as the filing of a pleading where one seeks an affirmative relief is equivalent to service of summons and vests the trial court with jurisdiction over the defendants person. Thus, it was ruled that the filing of motions to admit answer, for additional time to file answer, for reconsideration of a default judgment, and to lift order of default with motion for reconsideration is considered voluntary submission to the trial courts 27 jurisdiction. The Court notes that aside from the allegation that she did not receive any summons, Chandumals motion to set aside order of default and to admit attached answer failed to positively assert the trial courts lack of jurisdicti on. In fact, what was set forth therein was the substantial claim that PDB failed to comply with the requirements of R.A. No. 6552 28 on payment of cash surrender value, which already delves into the merits of PDBs cause of action. In addition, Chandumal even appealed the RTC decision to the CA, an act which demonstrates her recognition of the trial courts jurisdiction to render said judgment. Given Chandumals voluntary submission to the jurisdiction of the trial court, the RTC, Las Pias City, Branch 255, had all authority to render its Decision dated May 31, 2004. The CA, therefore, erred in nullifying said RTC decision and dispensing with the resolution of the substantial issue raised herein, i.e., validity of the notarial rescission. Instead, however, of remanding this case to the CA, the Court will resolve the same considering that the records of the case are 29 already before us and in order to avoid any further delay. There is no valid rescission of the contract to sell by notarial act pursuant to Section 3(b), R.A. No. 6552 That the RTC had jurisdiction to render the decision does not necessarily mean, however, that its ruling on the validity of the notarial rescission is in accord with the established facts of the case, the relevant law and jurisprudence. 1wphi1 PDB claims that it has validly rescinded the contract by notarial act as provided under R.A. No. 6552. Basically, PDB instituted Civil Case No. LP-99-0137 in order to secure judicial confirmation of the rescission and to recover possession of the property subject of the contract. In Leao v. Court of Appeals, it was held that: R. A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force. The law also provides for the rights of the buyer in case of cancellation. Thus, Sec. 3 (b) of the law provides that: "If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent of the total payments made and, after five years of installments, an additional five percent every year but not to exceed ninety percent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the 31 contract by a notarial act and upon full payment of the cash surrender value to the buyer." (Citation omitted and emphasis ours) R.A. No. 6552 recognizes the right of the seller to cancel the contract but any such cancellation must be done in conformity with the requirements therein prescribed. In addition to the notarial act of rescission, the seller is required to refund to the buyer the cash surrender value of the payments on the property. The actual cancellation of the contract can only be deemed to take place upon the expiry of a thirty (30)-day period following the receipt by the buyer of the notice of 32 cancellation or demand for rescission by a notarial act and the full payment of the cash surrender value. In this case, it is an admitted fact that PDB failed to give Chandumal the full payment of the cash surrender value. In its 33 complaint, PDB admitted that it tried to deliver the cash surrender value of the subject property as required under R.A. No. 6552 but Chandumal was "unavailable" for such purpose. Thus, it prayed in its complaint that it be ordered to "deposit with a banking institution in the Philippines, for the account of Defendants (sic), the amount of Ten Thousand Pesos 34 (P 10,000.00), Philippine Currency, representing the cash surrender value of the subject property; x x x." The allegation that Chandumal made herself unavailable for payment is not an excuse as the twin requirements for a valid and effective
30

cancellation under the law, i.e., notice of cancellation or demand for rescission by a notarial act and the full payment of the 35 cash surrender value, is mandatory. Consequently, there was no valid rescission of the contract to sell by notarial act undertaken by PDB and the RTC should not have given judicial confirmation over the same. WHEREFORE, the petition is DENIED. The Decision dated July 27, 2010 of the Court of Appeals, as well as its Resolution dated February 16, 2011, denying the Motion for Reconsideration in CA-G.R. CV No. 82861 are AFFIRMED in so far as there was no valid service of summons. Further, the Court DECLARES that there was no valid rescission of contract pursuant to R.A. No. 6552. Accordingly, the Decision dated May 31, 2004 of the Regional Trial Court, Las Pias City, Branch 255 in Civil Case No. LP-99-0 137 is REVERSED and SET ASIDE, and is therefore, DISMISSED for lack of merit.

CONSTANTINO PASCUAL vs. LOURDES PASCUAL Due process dictates that jurisdiction over the person of a defendant can only be acquired by the courts after a strict compliance with the rules on the proper service of summons. Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction, seeking to annul the Decision the Resolution
[2] [1]

dated June 29, 2005 and

[3]

dated March 14, 2006 of the Court of Appeals (CA) nullifying and vacating the Decision
[4]

dated

December 3, 2002 and Order

dated April 4, 2003 of the Regional Trial Court (RTC), Branch 12, Malolos, Bulacan.

The facts, as found in the records, are the following: Petitioner filed a Complaint for Specific Performance with Prayer for Issuance of Preliminary Mandatory Injunction with Damages before the RTC of Malolos, Bulacan against respondent. The process server, in his Return of Service
[5]

dated May 21, 2002, reported, among others that:

The undersigned Process Server of this Honorable Court went at defendant's given address at No. 4 Manikling St., Talayan Village, Quezon City on May 20, 2002 to serve the summons and copy of the Complaint together with the annexes thereto in connection with the above-entitled case. At the time of the service of the said summons, the defendant was not at her home and only her maid was there who refused to receive the said summons [in spite] of the insistence of the undersigned. The undersigned, upon his request with the Brgy. Clerk at the said place, was given a certification that he really exerted effort to effect the service of the said summons but failed due to the above reason. (Annex A). The following day, May 21, 2002, the undersigned went back at defendant's residence to have her receive the subject summons but again the above defendant was not at her house. WHEREFORE, the original summons and copy of the complaint is hereby returned to the Honorable Court NOT SERVED.

Malolos, Bulacan, May 21, 2002.

Thereafter, an alias summons was issued by the RTC and, on May 29, 2002, the following report was submitted: rd The undersigned, on May 29, 2002, made a 3 attempt to serve the alias summons issued by the Hon. Court relative with the above-entitled case at the given address of the defendant. The undersigned, accompanied by the barangay officials of the said place, proceeded at defendant's residence but the undersigned was not permitted to go inside her house and was given information by her maid that the defendant was not there. The defendant's car was parked inside her house and inquiries/verification made on her neighbors revealed that the defendant was inside her house at the time of service of said summons and probably did not want to show-up when her maid informed her of undersigned's presence. WHEREFORE, the undersigned court process server respectfully returned the alias summons dated May 29, 2002 issued by the Hon. Court UNSERVED for its information and guidance. Malolos, Bulacan, May 30, 2002.
[6]

Subsequently, on August 14, 2002, the process server returned with the following report,

[7]

stating that a

substituted service was effected: th This is to certify that on the 14 day of August, 2002, I personally went at Dr. Lourdes Pascual's residence at #4 Manikling Street, Talayan Village, Quezon City, to serve the copy of the Summons dated August 12, 2002, together with a copy of the Complaint and its annexes thereto. Defendant Dr. Lourdes Pascual was out during the time of service of the said summons and only her housemaid was present. The undersigned left a copy of the same to the latter who is at the age of reason but refused to sign the same. WHEREFORE, the undersigned respectfully return the service of summons duly served for information and guidance of the Honorable Court.

Malolos, Bulacan, August 14, 2002. For failure of the respondent to file a responsive pleading, petitioner, on September 17, 2002, filed a Motion to Declare Defendant in Default Defendant in Default
[9] [8]

to which the petitioner filed an Opposition/Comment to Plaintiff's Motion to Declare

dated October 1, 2002, claiming that she was not able to receive any summons and copy of the
[10]

complaint. The RTC, in its Order his evidence ex-parte.

dated October 30, 2002, declared respondent in default and allowed petitioner to file

Respondent filed a Motion for Reconsideration mentioned Order

[12]

[11]

dated November 18, 2002 seeking to set aside the abovethe said motion was denied by the RTC in its

Order

dated October

30,

2002.

However,

dated November 27, 2002.

[13]

Consequently, on December 3, 2002, the RTC, in its Decision,

found in favor of the petitioner. The dispositive

portion of the said Decision reads: WHEREFORE, in light of all the foregoing, judgment is hereby rendered in favor of the plaintiff, Constantino A. Pascual, and against Lourdes S. Pascual, ordering the latter as follows: a. to CEASE AND DESIST from further intervening with the corporate and internal affairs of Rosemoor Mining Corporation, consisting of acts and omissions prejudicial and detrimental to the interest of the said corporation resulting to irreparable injury to herein plaintiff; b. to pay plaintiff the sum of One Hundred Thousand Pesos (P100,000.00), for and by way of moral damages; c. to pay the sum of Thirty Thousand Pesos (P30,000.00) for and by way of Attorney's fees; and d. to pay the costs of this suit. SO ORDERED. Respondent then filed a Motion to Set Aside Order of Default
[14]

dated December 13, 2002, with the argument of

[15]

non-service of summons upon her. This was denied by the RTC in its Order

dated April 4, 2003; and on the same day,

a Certificate of Finality and Entry of Judgment was issued. Eventually, respondent, onApril 28, 2003, filed a Motion for Reconsideration
[16]

of the Order dated April 4, 2003, which was denied by the RTC in its Order

[17]

dated June 23,

2003. Finally, onJune 26, 2003, a Writ of Execution was issued to enforce the Decision dated December 3, 2002 of the RTC.

Aggrieved, respondent filed with the CA a Petition for Certiorari and Prohibition under Rule 65 of the Rules of Court which was granted by the same Court in its Decision
[18]

dated June 29, 2005, the dispositive portion of which reads:

WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED. The said Decision, as well as the Orders and the processes on which this is premised, are NULLIFIED and VACATED. SO ORDERED.

Petitioner comes now to this Court through a Petition for Review on Certiorari under Rule 45 of the Rules of Court, with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction, on the following grounds: THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS AN INVALID SERVICE OF SUMMONS UPON THE RESPONDENT AND, HENCE, THE COURT (REGIONAL TRIAL COURT) DID NOT ACQUIRE JURISDICTION OVER THE RESPONDENT.

II THE HONORABLE COURT OF APPEALS ERRED IN GIVING DUE COURSE TO THE PETITION WHEN FROM THE UNDISPUTED FACTS, THE RESPONDENT'S FAILURE TO INTERPOSE AN APPEAL OR TO FILE A MOTION FOR RECONSIDERATION OR A PETITION FOR RELIEF FROM JUDGMENT CLEARLY BARS THE INSTITUTION OF THE SPECIAL CIVIL ACTION FOR CERTIORARI UNDER RULE 65, 1997 RULES OF CIVIL PROCEDURE.

Petitioner insists that there was a valid substituted service of summons and that there should be a presumption of regularity in the performance of official functions. He also avers that certiorari, which was filed by the respondent with the CA, does not lie when the remedy of appeal has been lost.

In her Comment with Motion to Cite for Contempt issues:

[19]

dated August 29, 2006, respondent raises the following

1. SHOULD THE PETITION BE DISMISSED FOR HAVING BEEN FILED IN VIOLATION REPUBLIC ACT NO. 6713 IN RELATION TO ART. 5 OF THE CIVIL CODE? 2. ARE THE PETITIONER AND HIS COUNSEL PUNISHABLE FOR CONTEMPT OF COURT FOR KNOWINGLY MISLEADING THIS HONORABLE COURT? 3. WAS THE ALLEGED SERVICE OF SUMMONS ON THE ILLITERATE MAID EFFECTIVE TO CONFER JURISDICTION OVER THE DEFENDANT BEFORE THE RTC OF MALOLOS, BULACAN? 4. ASSUMING FOR THE SAKE OF ARGUMENT THAT THE SERVICE OF SUMMONS WAS VALID, WAS THE ORDER DECLARING THE DEFENDANT IN DEFAULT RENDERED WITH GRAVE ABUSE OF DISCRETION? 5. WAS THE ORDER DENYING THE MOTION TO LIFT AND SET ASIDE THE ORDER OF DEFAULT RENDERED WITH GRAVE ABUSE OF DISCRETION? 6. IS THE PETITIONER GUILTY OF FORUM SHOPPING? 7. WILL THIS HONORABLE COURT ALLOW THE NULL AND VOID DECEMBER 3, 2002 DECISION OF THE RTC TO BECOME FINAL AND EXECUTORY AND OBLITERATE THE CRIMINAL ACT OF FALSIFICATION, THEREBY REWARDING THE AUTHOR OF THE CRIMINAL OFFENSE?

In addressing the above issues, the respondent argues that the CA decision became final by operation of law because the present petition is null and void for being a violation of the provisions of Republic Act No. 6712, in relation to Article 5 of the Civil Code, the counsel for petitioner having filed a Motion for Extension of Time to File Petition for Review and, thereafter, the Petition for Review itself. She also claims that there was no proper service of summons as the maid who was purportedly served a copy thereof was illiterate and has denied being served in a sworn statement executed before a notary public and, thus, the RTC never acquired jurisdiction over her person. According to her, assuming that the summons were indeed served, the RTC was guilty of grave abuse of discretion for declaring her in default and for refusing to lift the order of default because it deprived her of her right to present evidence in support of her defense. She further disputes the argument of the petitioner that the Decision dated December 3, 2002 became final because it did not become the subject of appeal by stating that the said principle can only be applied to valid judgments that were rendered in accordance with law and not to void judgments rendered without jurisdiction or in excess thereof. In addition, she avers that petitioner made a deliberate and malicious concealment of the fact that at the time he filed the case for specific performance, as well as during the time it was being heard, he was already being investigated in administrative

proceedings before the National Bureau of Investigation, the Department of Justice and the Municipal Trial Court of Malolos, Bulacan, Branch 2, involving the same subject matter, issues and parties; hence, he violated the law against forum shopping. Lastly, respondent points out that the CA Decision dated June 29, 2005 is a permanent injunction against the implementation of the contested Orders and Decisions of the RTC; therefore, there is an urgent necessity to enforce the said judgment. On June 30, 2008, this Court granted Zenaida Pascual, after the Manifestation respondent. After a careful study of the records of this case, this Court finds the petition bereft of any merit. Clearly, the main, if not the only issue that needs to be resolved is whether or not there was a proper and valid substituted service of summons, the resolution of which, will determine whether jurisdiction was indeed acquired by the trial court over the person of the petitioner. In a case where the action is in personam and the defendant is in the Philippines, the service of summons may be done by personal or substituted service as laid out in Sections 6 and 7 of Rule 14 of the Revised Rules of Court. The provisions state: Section 6. Service in person on defendant. - Whenever practicable, the summons shall be served by handing a copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by tendering it to him. Section 7. Substituted service. - If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendant's residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendants office or regular place of business with some competent person in charge thereof. A plain and simple reading of the above provisions indicates that personal service of summons should and always be the first option, and it is only when the said summons cannot be served within a reasonable time can the process server resort to substituted service. This Court gave an in-depth discussion as to the nature and requisites of substituted service in Manotoc v. Court of Appeals, et al.:
[22] [21] [20]

the substitution of the respondent by his heirs as represented by his wife

dated June 12, 2008 was filed informing this Court of the demise of the same

We can break down this section into the following requirements to effect a valid substituted service: (1) Impossibility of Prompt Personal Service The party relying on substituted service or the sheriff must show that defendant cannot be [23] served promptly or there is impossibility of prompt service . Section 8, Rule 14 provides that the plaintiff or the sheriff is given a reasonable time to serve the summons to the defendant in person, but no specific time frame is mentioned. Reasonable time is defined as so much time as is necessary under the circumstances for a reasonably prudent and diligent man to do, conveniently, what the contract or duty requires that should be done, having a regard for the rights and possibility of loss, if any, to the [24] other party. Under the Rules, the service of summons has no set period. However, when the court, clerk of court, or the plaintiff asks the sheriff to make the return of the summons and the latter submits the return of summons, then the validity of the summons lapses. The plaintiff may then ask for an alias [25] summons if theservice of summons has failed. What then is a reasonable time for the sheriff to effect a personal service in order to demonstrate impossibility of prompt service? To the plaintiff, reasonable time means no more than seven (7) days since an expeditious processing o f a complaint is what a plaintiff wants. To the sheriff, reasonable time means 15 to 30 days because at the end of the month, it is a practice for the branch clerk of court to require the sheriff to submit a return of the summons assigned to the sheriff for service. The Sheriffs Return provides data to the Clerk of Court, which the clerk uses in the Monthly Report of Cases to be submitted to the Office of the Court Administrator within the first ten (10) days of the succeeding month. Thus, one month from the issuance of summons can be considered reasonable time with regard to personal service on the defendant. Sheriffs are asked to discharge their duties on the service of summons with due care, utmost diligence, and reasonable promptness and speed so as not to prejudice the expeditious dispensation of justice. Thus, they are enjoined to try their best efforts to accomplish personal service on defendant. On the other hand, since the defendant is expected to try to avoid and evade service of summons, the sheriff must be resourceful, persevering, canny, and diligent in serving the process on the defendant. For

substituted service of summons to be available, there must be several attempts by the sheriff to personally serve the summons within a reasonable period [of one month] which eventually resulted in failure to prove impossibility of prompt service. Several attempts means at least three (3) tries, preferably on at least two different dates. In addition, the sheriff must cite why such efforts were unsuccessful. It is only then that impossibility of service can be confirmed or accepted. (2) Specific Details in the Return The sheriff must describe in the Return of Summons the facts and circumstances [26] surrounding the attempted personal service. The efforts made to find the defendant and the reasons behind the failure must be clearly narrated in detail in the Return. The date and time of the attempts on personal service, the inquiries made to locate the defendant, the name/s of the occupants of the alleged residence or house of defendant and all other acts done, though futile, to serve the summons on defendant must be specified in the Return to just ify substituted service. The form on Sheriffs Return of Summons on Substituted Service prescribed in the Handbook for Sheriffs published by the Philippine Judicial Academy requires a narration of the efforts made to find the defendant personally and the fact of [27] failure. Supreme Court Administrative Circular No. 5 dated November 9, 1989 requires that impossibility of prompt service should be shown by stating the efforts made to find the defendant personally and the failure of such efforts, which should be made in the proof of service. (3) A Person of Suitable Age and Discretion If the substituted service will be effected at defendants house or residenc e, it should be [28] left with a person of suitable age and discretion then residing therein. A person of suitable age and discretion is one who has attained the age of full legal capacity (18 years old) and is considered to have enough discernment to understand the importance of a summons. Discretion is defined as the ability to make decisions which represent a responsible choice and for which an understanding of what is [29] lawful, right or wise may be presupposed. Thus, to be of sufficient discretion, such person must know how to read and understand English to comprehend the import of the summons, and fully realize the need to deliver the summons and complaint to the defendant at the earliest possible time for the person to take appropriate action. Thus, the person must have the relation of confidence to th e defendant, ensuring that the latter would receive or at least be notified of the receipt of the summons. The sheriff must therefore determine if the person found in the alleged dwelling or residence of defendant is of legal age, what the recipients relationship with the defendant is, and whether said person comprehends the significance of the receipt of the summons and his duty to immediately deliver it to the defendant or at least notify the defendant of said receipt of summons. These matters must be clearly and specifically described in the Return of Summons. (4) A Competent Person in Charge If the substituted service will be done at defendants office or regular place of business, then it should be served on a competent person in charge of the place. Thus, the person on whom the substituted service will be made must be the one managing the office or business of defendant, such as the president or manager; and such individual must have sufficient knowledge to understand the obligation of the defendant in the summons, its importance, and the prejudicial effects arising from inaction on the summons. Again, these details must be contained in the Return. Petitioner contends that there was a valid substituted service of summons as shown in not one, but three Officer's Return. He points out that the absence in the officer's return of a statement about the impossibility of personal service does not conclusively prove that the service was invalid. He adds that proof of prior attempts to serve personally can be deduced from the other returns when there are several in a series of officer's returns all tending to establish the impossibility of personal service upon the respondent. However, the said argument of the petitioner is merely a plain deduction that veers away from the well-established requisite that the officer must show that the defendant cannot be served promptly, or that there was an impossibility of prompt service. A cursory reading of the three Officer's Returns does not show any compliance with the said requisite. The Return of Service dated May 21, 2002 inadequately states that: xxxx At the time of service of the said summons, the defendant was not at her home and only her maid was there who refused to receive the said summons [in spite] of the insistence of the undersigned. The undersigned, upon his request with the Brgy. Clerk at the said place, was given a certification that he really exerted effort to effect the service of the said summons but failed due to the above reason. (Annex A). The following day, May 21, 2002, the undersigned went back at defendant's residence to have her receive the subject summons but again the above defendant was not at her house. xxxx

Similarly, in the Return of Service dated May 30, 2002, pertinent details were wanting, as it reads: xxxx The undersigned accompanied by the barangay officials of the said place proceeded at defendant's residence but the undersigned was not permitted to go inside her house and was given information by her maid that the defendant was not there. The defendant's car was parked inside her house and inquiries/verification made on her neighbors revealed that the defendant was inside her house at the time of service of said summons and probably did not want to show-up when her maid informed her of undersigned's presence. xxxx Lastly, the Return of Service dated August 14, 2002 was no different. It reads: xxxx Defendant Dr. Lourdes Pascual was out during the time of service of the said summons and only her housemaid was present. The undersigned left a copy of the same to the latter who is at the age of reason but refused to sign the same. xxxx The above Return of Summons does not show or indicate the actual exertion or any positive steps taken by the officer or process server in serving the summons personally to the defendant. As in Jose v. Boyon, that: The Return of Summons shows no effort was actually exerted and no positive step taken by either the process server or petitioners to locate and serve the summons personally on respondents. At best, the Return merely states the alleged whereabouts of respondents without indicating that such information was verified from a person who had knowledge thereof. Certainly, without specifying the details of the attendant circumstances or of the efforts exerted to serve the summons, a general statement that such efforts were made will not suffice for purposes of complying with the rules of substituted service of summons. The necessity of stating in the process server's Return or Proof of Service the material facts and circumstances sustaining the validity of substituted service was explained by this Court inHamilton v. [31] Levy, from which we quote: x x x The pertinent facts and circumstances attendant to the service of summons must be stated in the proof of service or Officer's Return; otherwise, any substituted service made in lieu of personal service cannot be upheld. This is necessary because substituted service is in derogation of the usual method of service. It is a method extraordinary in character and, hence, may be used only as prescribed and in the circumstances authorized by statute. Here, no such explanation was made. Failure to faithfully, strictly, and fully comply with the requirements of substituted service renders [32] said service ineffective. Petitioner further states that the presumption of regularity in the performance of official functions must be applied to the present case. He expounds on the fact that as between the process server's return of substituted service, which carries with it the presumption of regularity and the respondent's self-serving assertion that she only came to know of the case against her when she received a copy of the petitioner's motion to declare her in default, the process server's return is undoubtedly more deserving of credit. The said argument, however, is only meritorious, provided that there was a strict compliance with the procedure for serving a summons. In the absence of even the barest compliance with the procedure for a substituted service of summons outlined in the Rules of Court, the presumption of regularity in the performance of public functions does not apply.
[33] [30]

this Court ruled

Applying the above disquisitions, the jurisdiction over the person of the respondent was never vested with the RTC, because the manner of substituted service by the process server was apparently invalid and ineffective. As such, there was a violation of due process. Jurisdiction over the defendant is acquired either upon a valid service of summons or the defendants voluntary appearance in court. When the defendant does not voluntarily submit to the courts jurisdiction or when there is no valid service of summons, any judgment of the court which has no jurisdiction over the person of the defendant is null and void.
[34]

Petitioner also raises the issue of the impropriety of the remedy resorted to by the respondent which is the filing of a Petition for Certiorari under Rule 65 of the Rules of Court, claiming that the said remedy is inappropriate because there are still other plain, speedy and adequate remedies available, such as an ordinary appeal, the Decision of the RTC having attained its finality. The question, however, is whether the said Decision has indeed attained finality. The importance of

the doctrine of the finality of judgment has always been emphasized by this Court. In Pasiona, Jr. v. Court of Appeals, this Court has expounded on the said doctrine, thus: [36] The Court re-emphasizes the doctrine of finality of judgment. In Alcantara v. Ponce, the Court, [37] citing its much earlier ruling in Arnedo v. Llorente, stressed the importance of said doctrine, to wit: It is true that it is the purpose and intention of the law that courts should decide all questions submitted to them "as truth and justice require," and that it is greatly to be desired that all judgments should be so decided; but controlling and irresistible reasons of public policy and of sound practice in the courts demand that at the risk of occasional error, judgments of courts determining controversies submitted to them should become final at some definite time fixed by law, or by a rule of practice recognized by law, so as to be thereafter beyond the control even of the court which rendered them for the purpose of correcting errors of fact or of law, into which, in the opinion of the court it may have fallen. The very purpose for which the courts are organized is to put an end to controversy, to decide the questions submitted to the litigants, and to determine the respective rights of the parties. With the full knowledge that courts are not infallible, the litigants submit their respective claims for judgment, and they have a right at some time or other to have final judgment on which they can rely as a final disposition of the issue [38] submitted, and to know that there is an end to the litigation. Then, in Juani v. Alarcon,
[39] [35]

it was held, thus:

This doctrine of finality of judgment is grounded on fundamental considerations of public policy and sound practice. In fact, nothing is more settled in law than that once a judgment attains finality it thereby becomes immutable and unalterable. It may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification [40] is attempted to be made by the court rendering it or by the highest court of the land. Again, in Dinglasan v. Court of Appeals, the Court declared that: After the judgment or final resolution is entered in the entries of judgment, the case shall be laid to rest. x x x xxxx The finality of decision is a jurisdictional event which cannot be made to depend on the convenience of the party. To rule otherwise would completely negate the purpose of the rule on completeness of service, which is to place the date of receipt of pleadings, judgment and processes beyond the power of the party being served to determine at his [42] pleasure. The said doctrine, however, is applicable only when the judgment or decision is valid. In the present case, as earlier pronounced, and as ruled by the CA, the judgment in question is void, the RTC not having acquired jurisdiction over the person of the respondent. It is a well-entrenched principle that a void judgment can never become final. As ruled by this Court in Metropolitan Bank & Trust Company v. Alejo : In Leonor v. Court of Appeals
[44] [43] [41]

and Arcelona v. Court of Appeals,

[45]

we held thus:

A void judgment for want of jurisdiction is no judgment at all . It cannot be the source of any right nor the creator of any obligation. All acts performed pursuant to it and all claims emanating from it have no legal effect. Hence, it can never become final and any writ of execution based on it is void: x x x it may be said to be a lawless thing which can be treated as an outlaw and slain at sight, or ignored wherever and whenever it exhibits its head.

Thus, from the above discussion, the Decision of the RTC, not having attained

its finality due to its being void,

the Petition for Certiorari under Rule 65, filed by the respondent with the CA, was proper. WHEREFORE, the Petition dated May 3, 2006 is hereby DENIED and the Decision dated June 29, 2005 of the Court of Appeals in CA-G.R. SP No. 77789 is hereby AFFIRMED in toto. ARNEL SAGANA vs. RICHARD FRANCISCO

It is, at times, difficult to reconcile the letter of the law with its spirit. Thus, it is not altogether surprising that two competing values are usually discernable in every controversy the principle of dura lex sed lex versus the notion that

technicalities should yield to broader interests of justice. In our rules of procedure, for instance, judges often struggle to find a balance between due process considerations and a liberal construction to secure a just disposition of every action. In such cases, where a measure of discretion is permitted, courts must tread carefully, with due consideration of the factual milieu and legal principles involved. In so doing, we take steps - sometimes tentative, sometimes bold - to apply prior experience and precedent towards an eventual just resolution. It is these principles that animate our decision in the instant case. Assailed in this Petition for Review on Certiorari under Rule 45 of the Rules of Court is the 13 August 2003 Decision Decision
[2] [3] [1]

of the Court of Appeals in CA-G.R. CV No. 66412 which reversed and set aside the 20 September 1999 of the Regional Trial Court of Quezon City, Branch 99 in Civil Case No. Q-94-22445 and held that there was no

valid service of summons to respondent Richard A. Francisco. On 13 December 1994, petitioner Arnel Sagana filed a Complaint
[4]

for Damages before the Regional Trial Court of

Quezon City docketed as Civil Case No. Q-94-22445 and raffled to Branch 99. Petitioner alleged that on 20 November 1992, respondent Richard A. Francisco, with intent to kill and without justifiable reason, shot him with a gun hitting him on the right thigh. As a result, petitioner incurred medical expenses and suffered wounded feelings, and was compelled to engage the services of a lawyer, due to respondents refusal to pay said expenses. Petitioner thus demanded payment of P300,000.00 as actual damages, P150,000.00 as moral damages, P50,000.00, exemplary damages, and P50,000.00 as attorneys fees. On 31 January 1995, process server Manuel S. Panlasigui attempted to serve summons at respondents address at No. 36 Sampaguita St., Baesa, Quezon Citybut was unsuccessful. In his Servers Return,
[5]

Panlasigui stated that he

tried to personally serve the summons to respondent at his given address at No. 36 Sampaguita St., Baesa, Quezon City. However, the occupant of that house, who refused to give his identity, told him that respondent is unknown at said address. Panlasigui also declared that diligent efforts were exerted to serve the summons but these proved to be futile.
[6]

Subsequently, the trial court attempted to serve summons to respondents office through registered mail on 9

February 1995. However, despite three notices, respondent failed to pick up the summons. On 30 June 1995, the trial court dismissed the case on account of petitioners lack of interest to prosecute.
[7]

It

noted that since the filing of the Servers Return on 8 February 1995, petitioner did not take any action thus indicating lack of interest to prosecute the case. Petitioner filed a Motion for Reconsideration
[8]

stating that after the Servers Return was filed, he exerted efforts to

locate the respondent, and it was confirmed that respondent indeed lived at No. 36 Sampaguita St., Baesa, Quezon City. On 4 August 1995, the trial court granted petitioners motion for reconsideration, conditioned upon the service of summons on the respondent within 10 days from receipt of the Order.
[9]

Thus, on 25 August 1995, Process Server Jarvis Iconar again tried to serve the summons at the address of the respondent but no avail. According to Iconars handwritten notation on the summons,
[10]

he was informed by Michael

Francisco, respondents brother, that respondent no longer lived at said address. However, he left a copy of the summons to Michael Francisco.
[11] [12]

On 10 November 1995, petitioner filed a Motion to Declare Defendant in Default,

alleging that despite service of

[13]

summons, respondent still failed to file an Answer. On 16 February 1996, the trial court issued an Order

finding that the

summons was validly served to respondent through his brother, Michael. It thus declared respondent in default and allowed petitioner to present his evidence ex parte. Nonetheless, copies of all pleadings and court documents were furnished to respondent at No. 36 Sampaguita St. In the meantime, on 1 March 1996, Michael Francisco, through his counsel, Atty. Bernardo Q. Cuaresma, filed a Manifestation and Motion
[14]

denying that he received the summons or that he was authorized to receive summons on

behalf of his brother, respondent Richard Francisco. He alleged that the substituted service did not comply with Section

8, Rule 14 of the Rules of Court, since summons was not served at defendants residence or left with any person who was authorized to receive it on behalf of the defendant. Michael Francisco also prayed that his name be stricken off the records as having received a copy of the summons. In the Affidavit of Merit
[15]

submitted together with the Manifestation and Motion, Michael Francisco asserted that he

was 19 years of age; that his brother, herein respondent Richard Francisco, had left their residence in March 1993; and that respondent would just write his family without informing them of his address, or would just call by phone. Thereafter, petitioner and movant Michael Francisco submitted their respective Opposition, Reply, and Rejoinder. In his Rejoinder, petitioner attached a copy of an Affidavit
[16]

prepared by respondent Richard A. Francisco dated 23

December 1992, where he declared himself a resident of No. 36 Sampaguita St. Interestingly, the lawyer who notarized the affidavit for the respondent, Atty. Bernardo Q. Cuaresma, was the same lawyer who represented respondents b rother before the trial court. On 4 October 1996, the trial court issued an Order of merit, holding thus: It should be considered that earlier, plaintiff had already sent numerous pleadings to defendant at his last known address. As also pointed out by [petitioner] in his Opposition, movant has not adduced evidence, except his affidavit of merit, to impugn the service of summons thru him. Movant herein also admits that defendant communicates with him through telephone. Movant, therefore, being a person of sufficient age and discretion, would be able, more likely than not, to inform defendant of the fact that [18] summons was sent to him by the court. Having failed to file an answer or any responsive pleading, respondent was declared in default and petitioner was allowed to present evidence ex parte. On 20 September 1999, the trial court rendered its Decision, portion of which reads: WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff and hereby orders defendant to pay plaintiff the amount of THIRTY FIVE THOUSAND PESOS (PhP35,000.00) as and for actual damages, the amount of FIFTEEN THOUSAND PESOS (PhP15,000.00) as and for moral damages, the amount of TEN THOUSAND PESOS (PhP10,000.00) for exemplary damages and the amount of TWENTY THOUSAND PESOS (PhP20,000.00) as attorneys fees. No further costs. SO ORDERED.
[20] [19] [17]

denying Michael Franciscos Manifestation and Motion for lack

the dispositive

On 23 November 1999, respondent Richard A. Francisco filed a Notice of Appeal, claiming that he received a copy of the trial courts Decision on 9 November 1999; that the same was contrary to the law, facts, and evidence, and praying that his appeal be given due course.
[21]

On 5 June 2000, the Court of Appeals directed the parties to file their respective briefs, a copy of which was sent to respondent by registered mail at No. 36 Sampaguita St., Baesa, Quezon City. argued that: THE COURT A QUO ERRED IN ASSUMING JURISDICTION OVER THE PERSON OF THE DEFENDANT-APPELLANT DESPITE THE IRREGULARITY OF THE SUBSTITUTED SERVICE OF SUMMONS BY THE COURT PROCESS SERVER. II THE COURT A QUO ERRED IN AWARDING ACTUAL DAMAGES IN THE AMOUNT OF THIRTY FIVETHOUSAND PESOS (P35,000.00) TO THE PLAINTIFF-APPELLEE ALTHOUGH ONLY SEVENTEEN THOUSAND PESOS (P17,000.00) WAS DULY SUPPORTED BY RECEIPTS. III THE COURT A QUO LIKEWISE ERRED IN AWARDING UNREASONABLE MORAL DAMAGES IN THE AMOUNT OF FIFTEEN THOUSAND PESOS (P15,000.00); EXEMPLARY DAMAGES IN THE AMOUNT OF TEN THOUSAND PESOS (P10,000.00); AND ATTORNEYS FEES IN THE AMOUNT OF TWENTY THOUSAND PESOS (P20,000.00) DESPITE THE FACT THAT THERE IS NO FACTUAL AND [23] SUBSTANTIVE BASIS FOR ALL THESE. On 15 August 2002, the Court of Appeals issued a Resolution
[24] [22]

In his Appellants brief, respondent

ordering the parties to personally appear for the

conduct of preliminary conference to consider amicably settling the appeal, pursuant to Sec. 1(a), Rule 7 of the Revised

Internal Rules of the Court of Appeals and the Courts Resolution A.M. No. 02 -2-17-SC dated 16 April 2002 regarding the Pilot Testing of Mediation in the Court of Appeals. Respondent was furnished
[25]

a copy of this Resolution at his address

at No. 36 Sampaguita Street, Baesa, Quezon City. Per Delivery Receipt of the Court of Appeals, the same was personally received by respondent on 23 August 2002.
[26]

On 3 September 2002, respondent attended the preliminary conference; however the parties failed to reach an amicable settlement.
[27]

Thus, on 13 August 2003, the Court of Appeals rendered the herein assailed Decision granting

the appeal and setting aside the Decision of the trial court. The appellate court held that the service of summons was irregular and such irregularity nullified the proceedings before the trial court. Since it did not acquire jurisdiction over the person of the respondent, the trial courts decision was void. In brief, the Court of Appeals found that there was no valid service of summons for the following reasons: 1. Except for the notation made by the process server on the summons, no proof of service by way of a Process Servers Return was prepared; 2. The process server failed to state the specific facts and circumstances that would justify valid substituted service of summons, to wit: (a) the impossibility of service of summons within a reasonable time, (b) the efforts exerted to locate the respondent, and (c) it was served on a person of sufficient age and discretion residing therein. 3. Petitioner failed to prove that, at the time summons was served, respondent actually lived in No. 36 Sampaguita St. Petitioner filed a Motion for Reconsideration
[28]

where he alleged that respondent did, in fact, reside at No. 36

Sampaguita St. To prove this assertion, petitioner submitted the original copy of the envelope containing respondents Notice of Appeal, which indicated respondents return address to be No. 36 Sampaguita St. January 2004, the Court of Appeals denied the Motion for Reconsideration. Hence, petitioner filed this Petition for Review on Certiorari under Rule 45 of the Rules of Court, raising the sole issue of whether there was valid service of summons upon the respondent. The petition is meritorious. Under the circumstances obtaining in this case, we find there was proper substituted service of summons upon the respondent. Section 8 of Rule 14 of the old Revised Rules of Court, the rules of procedure then in force at the time summons was served, provided: Section 8. Substituted service. If the defendant cannot be served within a reasonable time as provided in the preceding section [personal service on defendant], service may be effected (a) by leaving copies of the summons at the defendants residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendants office or regular place of business with some competent person in charge thereof. Jurisprudence has long established that for substituted service of summons to be valid, the following must be demonstrated: (a) that personal service of summons within a reasonable time was impossible; (b) that efforts were exerted to locate the party; and (c) that the summons was served upon a person of sufficient age and discretion residing at the party's residence or upon a competent person in charge of the party's office or regular place of business.
[30] [29]

Nonetheless, on 29

It is

likewise required that the pertinent facts proving these circumstances be stated in the proof of service or in the officer's return.
[31]

In this case, personal service of summons was twice attempted by the trial court, although unsuccessfully. In the first attempt, the resident of the house refused to receive the summons; worse, he would not even give his name. In the second attempt, respondents own brother refused to sign for receipt of the summons, and then later claimed that he never received a copy, despite his participation in the proceedings. The trial court also thrice attempted to contact the

respondent through his place of work, but to no avail. These diligent efforts to locate the respondent were noted in the first sheriff's return, the process server's notation, as well as the records of the case. Clearly, personal service of summons was made impossible by the acts of the respondent in refusing to reveal his whereabouts, and by the act of his brother in claiming that respondent no longer lived at No. 36 Sampaguita St., yet failing to disclose his brother's location. We also note that it was the trial court which directed that the second service of summons be made within seven days; thus, the reasonable time was prescribed by the trial court itself. Undeniably, no Sheriffs Return was prepared by process server Jarvis Iconar; the only record of the s econd service of summons was Mr. Iconars handwritten notation in the summons itself. However, the information required by law and prevailing jurisprudence, that is, that personal service was impossible because of the claim that respondent no longer lived at the stated address, that efforts were exerted to locate the respondent through the multiple attempts to serve summons, and that summons was served upon a person of sufficient age and discretion, were already in the records of the trial court.

Moreover, we find the claim that respondent moved out of their residence in March 1993 without informing his brother or parents his whereabouts, despite regular calls and letters, simply incredulous. What makes this version of events even more implausible is respondents admission that he received a copy of the trial court's Decision of 20 September 1999 that was sent to No. 36 Sampaguita Street. Respondent even filed a Notice of Appeal coincidentally indicating that his address was No. 36 Sampaguita St., Baesa, Quezon City. He also received a copy of the appellate courts order for preliminary conference that was sent to said address. These were never denied by respondent, despite being given every opportunity to do so. Respondent also wishes us to believe that it was pure chance that he and his brother were assisted by the same lawyer, Atty. Bernardo Q. Cuaresma, and yet it never occurred to respondents own brother or lawyer to inform him about the receipt of summons. All these militate against respondents self-serving declaration that he did not reside at No. 36 Sampaguita St. Indeed, there was no proof presented as to when respondent left and then returned to his original home, if he actually did leave his home. In view of the foregoing, we find that substituted service of summons was validly made upon respondent through his brother. We do not intend this ruling to overturn jurisprudence to the effect that statutory requirements of substituted service must be followed strictly, faithfully, and fully, and that any substituted service other than that authorized by the Rules is considered ineffective.
[32]

However, an overly strict application of the Rules is not warranted in this case, as it would

clearly frustrate the spirit of the law as well as do injustice to the parties, who have been waiting for almost 15 years for a resolution of this case. We are not heedless of the widespread and flagrant practice whereby defendants actively attempt to frustrate the proper service of summons by refusing to give their names, rebuffing requests to sign for or receive documents, or eluding officers of the court. Of course it is to be expected that defendants try to avoid service of summons, prompting this Court to declare that, the sheriff must be resourceful, persevering, canny, and diligent in serving the process on the defendant.
[33]

However, sheriffs are not expected to be sleuths, and cannot be faulted where the

defendants themselves engage in deception to thwart the orderly administration of justice. The purpose of summons is two-fold: to acquire jurisdiction over the person of the defendant and to notify the defendant that an action has been commenced so that he may be given an opportunity to be heard on the claim against him. Under the circumstances of this case, we find that respondent was duly apprised of the action against him and had every opportunity to answer the charges made by the petitioner. However, since respondent refused to disclose his true address, it was impossible to personally serve summons upon him. Considering that respondent could not have received

summons because of his own pretenses, and has failed to provide an explanation of his purported new residence, he must now bear the consequences.
[34]

WHEREFORE, the Petition for Review on Certiorari is GRANTED. The 13 August 2003 Decision of the Court of Appeals in CA-G.R. CV No. 66412 and its 29 January 2004 Resolution are REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Quezon City, Branch 99, dated 20 September 1999 in Civil Case No. Q-94-22445 holding that there was valid service of summons, and ordering respondent to pay petitioner the amounts of P35,000.00 as actual damages,P15,000.00 as moral damages, P10,000.00 as exemplary damages, and P20,000.00 as attorneys fees, is REINSTATED and AFFIRMED. DATU MAMGUDADATU vs HRET Before us is a petition for certiorari with prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction
[1]

assailing Resolution Nos. 07-179

[2]

dated August 16, 2007 and 07-300

[3]

dated September 19,

2007, of the House of Representatives Electoral Tribunal (HRET) in HRET Case No. 07-021, entitled Angelo O. Montilla v. Datu Pax Pakung S. Mangudadatu.

Datu Pax Pakung S. Mangudadatu (petitioner) and Angelo O. Montilla (private respondent) were congressional candidates for the First District of Sultan Kudarat during the May 14, 2007 national elections. Petitioner won by 17,451 votes and was proclaimed on May 22, 2007 by the Provincial Board of Canvassers as the duly elected Representative of the said congressional district.

On May 31, 2007, respondent filed with the HRET a Petition of Protest (Ad Cautelam) elections and the proclamation of petitioner.

[4]

contesting the results of the

On June 14, 2007, the Secretary of the HRET caused the service of summons mail at Purok Losaria,
[6]

[5]

upon petitioner through registered

Tamnag (Poblacion), Lutayan, Sultan Kudarat, requiring petitioner to file an Answer to the protest

within ten (10) days from receipt thereof.

On July 11, 2007, the HRET received the Registry Return Receipt Card, Baldenas
[8]

[7]

showing that a certain Aileen R.

(Baldenas) received the summons onJune 27, 2007.

On August 16, 2007, the HRET issued Resolution No. 07-179

[9]

which noted the aforementioned Registry Return

Receipt Card and that despite the fact that 43 days from June 27, 2007 had passed since Baldenas received the summons, petitioner had not filed an answer in accordance with Rule 27
[10]

of the 2004 HRET Rules. In the same

Resolution, the HRET considered petitioner to have entered a general denial of the allegations of the protest.

In an Order dated August 17, 2007, the HRET set the preliminary conference on September 27, 2007 at 11:00 a.m.

Meanwhile, petitioner informally learned of respondents protest, prompting petitioner to request his lawyers to verify the same from the records of the HRET. Thereafter, his lawyers entered their appearance on September 4, 2007 and requested that they be furnished with copies of the petition of protest as well as notices, orders and resolutions pertaining to the protest.

On September 10, 2007, petitioner filed a Motion to Reconsider

[11]

Resolution No. 07-179 and Motion to Admit

Answer with Counter-Protest, alleging that he never received the summons issued by the HRET. In his affidavit
[12]

attached to the motion, petitioner denied that Baldenas was a member of his household or his employee. He

further claimed that she was not authorized to receive any important documents addressed to him. And assuming that he had authorized her, the summons received by her was never brought to his attention.

On September 19, 2007, the HRET issued Resolution No. 07-300

[13]

denying for lack of merit, petitioners Motion to

Reconsider Resolution No. 07-179, as well as his Motion to Admit Answer with Counter-Protest, the latter for having been filed out of time. The HRET explained that:

In the instant case, the recipient, Ailene R. Baldenas, could not have received the summons had she not been found in said address or had she not been present therein as to have been in a position to have acted in behalf of the resident of the house, the protestee herein. The act of a person in receiving a mail matter cannot be easily defied by simply denying that the receipt was unauthorized. We doubt protestees self-serving allegation of lack of knowledge of Ailene R. Baldenas. This denial of authority, or of knowledge of the recipients identity must be supported by conclusive proof, the burden of which belongs to no other than the one making such assertion, the protestee himself. The ruling cited by protestee in J.M. Tuason & Co. vs. Fernandez does not apply herein as the summons was served at protestees residence and not just at any house owned by him. In that case, service of summons was made in a house, but not the defendants residence or dwelling place. Thus, such service was ineffective and improper which is not the case herein as the service of the summons was made to protestees residence in the province.

The records of the case bear that protestees residence is Purok Lo[sa]ria, Tamnag (Poblacion), Lutayan, Sultan Kudarat. Aside from the protest, a Manifestation filed by protestant to submit the Roll of Attorneys Numbers of his counsels indicates that a copy thereof was sent to the same address on June 5, 2007, through registered mail. The summons was sent and was received at the same address stated in the protest. Accordingly, the registry return receipt card shows proper receipt by Ailene R. Baldena[s] on June 27, 2007. In all instances of posting, either by protestant or by the Tribunal, the presumption is that mailed matters were duly received by the addressee, by himself or his representatives. The Tribunal should not be taken to task to ascertain or cause the Postmasters per sonnel to first determine whether or not the person receiving was or was not known to protestee. With the proof of service, such as the registry return receipt card, at hand, the Tribunal is satisfied that jurisdiction was acquired over protestee.

After the preliminary conference on September 27, 2007, the HRET issued a Preliminary Conference Order, of even date, granting respondents motion for the revision of ballots and directing the Secretary of the HRET to conduct the same in all or 100% of the protested precincts in the instant case. The HRET also noted petitioners manifestation in open court that his participation in the preliminary conference was without prejudice to whatever legal remedies he may avail for the reconsideration of Resolution No. 07-300 dated September 13, 2007, denying his Motion to Reconsider Resolution No. 07-179 with Motion to Admit Answer with Counter-Protest.

Petitioner filed the instant petition imputing grave abuse of discretion amounting to lack of jurisdiction on the part of the HRET for issuing Resolution Nos. 07-179 and 07-300. He also prayed for a temporary restraining order and/or a writ of preliminary injunction for this Court to enjoin the HRET from further proceeding with HRET Case No.07-021.

Petitioner contended that the HRET never acquired jurisdiction over his person because of the absence of a valid service of summons. He argued that a substitute service of summons is made only when the defendant cannot be served personally at a reasonable time after efforts to locate him have failed.
[14]

In his case, since the process servers

return failed to show on its face the impossibility of personal service, then the substituted service was improper and invalid.

In the Resolution of this Court dated October 16, 2007, we required respondent to file his comment on the petition for certiorari within a non-extendible period of ten (10) days from notice.

In his comment, respondent countered that the HRET did not commit grave abuse of discretion in issuing Resolution Nos. 07-179 dated August 16, 2007 and 07-300 dated September 19, 2007. He argued that Rule 22 of the 2004 HRET Rules merely states that the S ecretary of the Tribunal shall issue the corresponding summons to the protestee or respondent, as the case may be. He posited then that the intent of the HRET in not expressly specifying personal service of summons on the protestee or respondent was to give it a reasonable discretion or leeway in serving the summons by other means such as registered mail. Thus, service of summons on petitioner through registered mail did not violate Rule 22 of the 2004 HRET Rules. Further, respondent claimed that Rule 14, Sections 6 and 7 of the Rules of Court were inconsistent with Rule 22 of the 2004 HRET Rules and therefore should not be given suppletory application to HRET proceedings.

Petitioner, in his reply, posited that Rule 22 of the 2004 HRET Rules was not inconsistent with Sections 6 and 7 of Rule 14 of the Rules of Court. According to petitioner, the Secretary of the Tribunal is equivalent to the Clerk of Court, and both the regular courts and the HRET have process servers and sheriffs who may serve notices, orders, and summons. Petitioner further contends that there is nothing in the 2004 HRET Rules that allows service of summons by registered mail and strongly asserts that service of summons by registered mail is susceptible to fraud and manipulation.

We grant the petition.

Rule 22 of the 2004 HRET Rules provides:

RULE 22. Summons. If the petition is not summarily dismissed in accordance with Rule 21 of these Rules, the Secretary of the Tribunal shall issue the corresponding summons to the protestee or respondent, as the case may be, together with a copy of the petition, requiring him within ten (10) days from receipt thereof to file his answer. The 2004 HRET Rules on summons is silent on how the summons should be served on the [15] protestee. Significantly, Rule 80 of the 2004 HRET Rules provides that the 1997 Rules of Civil Procedure applies by analogy or suppletorily in so far as the latter may be applicable and not inconsistent therewith as well as with the orders, resolutions and decisions of the HRET. In view of the failure of the HRET Rules to specify the

authorized modes of service of summons, resort then is necessary to Sections 6 and 7, Rule 14, 1997 Rules of Civil Procedure, which state: SEC. 6. Service in person on defendant. Whenever practicable, the summons shall be served handling a copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by tendering it to him. SEC. 7. Substituted service. If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected ( a) by leaving copies of the summons at the defendants residence with some person of suitable age and discretion then residing therein, or (b) by leaving copies at defendants office or regular place of business with some competent person in charge thereof. In the case at bar, the service of the summons was made through registered mail, which is not among the allowed modes of service under Rule 14 of the Rules of Court. In Federico S. Sandoval II v. House of Representatives Electoral Tribunal (HRET) and Aurora Rosario A. Oreta,
[16]

this Court has held that in the matter of service of summons, Sections 6 and 7, Rule 14 of the Rules of Court

apply suppletorily to the rules of the HRET. To quote from that case: The matter of serving summons is governed by the 1997 Rules of Civil Procedure which applies suppletorily to 23 the Revised Rules of the House of Representatives Electoral Tribunal through its Rule 80. Sections 6 and 7 of Rule 14 of the 1997 Rules of Civil Procedure provide Sec. 6. Service in person on defendant. - Whenever practicable, the summons shall be served by handing a copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by tendering it to him. Sec. 7. Substituted service. - If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendant's residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendant's office or regular place of business with some competent person in charge thereof. It is well-established that summons upon a respondent or a defendant (i.e., petitioner herein) must be served by handing a copy thereof to him in person or, if he refuses to receive it, by tendering it to him. Personal service of summons most effectively ensures that the notice desired under the constitutional requirement of due process is accomplished. If however efforts to find him personally would make prompt service impossible, service may be completed by substituted service, i.e., by leaving copies of the summons at his dwelling house or residence with some person of suitable age and discretion then residing therein or by leaving the copies at his office or regular place of business with some competent person in charge thereof. Substituted service derogates the regular method of personal service. It is an extraordinary method since it seeks to bind the respondent or the defendant to the consequences of a suit even though notice of such action is served not upon him but upon another to whom the law could only presume would notify him of the pending proceedings. As safeguard measures for this drastic manner of bringing in a person to answer for a claim, it is required that statutory restrictions for substituted service must be strictly, faithfully and fully observed. In our jurisdiction, for service of summons to be valid, it is necessary first to establish the following circumstances, i.e., (a) impossibility of service of summons within a reasonable time, (b) efforts exerted to locate the petitioners and, (c) service upon a person of sufficient age and discretion residing therein or some competent person in charge of his office or regular place of business. It is also essential that the pertinent facts proving these circumstances be stated in the proof of service or officers retur n itself and only under exceptional terms may they be proved by evidence aliunde. Failure to comply with this rule renders absolutely void the substituted service along with the proceedings taken thereafter for lack of jurisdiction over the person of the defendant or the respondent. We find no merit in respondent Oretas austere argument that personal service need not be exhausted before substituted service may be used since time in election protest cases is of the essence. Precisely, time in election protest cases is very critical so all efforts must be realized to serve the summons and a copy of the election protest by the means most likely to reach the protestee. No speedier method could achieve this purpose than by personal service thereof. As already stated, the preferential rule regarding service of summons found in the Rules of Court applies suppletorily to the Revised Rules of the House of Representatives Electoral Tribunal. Hence, as regards the hierarchy in the service of summons, there ought to be no rational basis for distinguishing between regular court cases and election protest cases pending before the HRET. (emphasis and underscoring supplied)

Indeed the doctrine in Sandoval has been reiterated by this Court in subsequent decisions to reiterate that in ordinary civil cases, personal service of summons is preferred and resort to substituted service not only must be fully justified but also comply strictly with requirements of the Rules of Court for substituted [17] [18] service. In the early case of Olar v. Cuna, we held that: In the case at bar, the summons were served by registered mail, which is not among the modes of service under Rule 14 of the Revised Rules of Court. Besides, under Section 5 of aforesaid rule, the summons "may be served by the sheriff or other proper officer of the province in which the service is to be made, or for special reasons by any person especially authorized by the judge of the court issuing the summons." The postmaster of Bato, Leyte, not being a sheriff or court officer, or a person authorized by the court to serve the summons cannot validly serve the summons. The petitioners, therefore, were not duly served with the summons in Civil Case No. B-674.

Indeed, if in ordinary civil cases (which involve only private and proprietary interests) personal service of summons is preferred and service by registered mail is not allowed on jurisdictional and due process grounds, with more reason should election cases (which involve public interest and the will of the electorate) strictly follow the hierarchy of modes of service of summons under the Rules of Court.

We note that the HRET, in its Resolution No. 07-300, justified its resort to registered mail in this wise: In cases filed before the Tribunal involving distant legislative districts and provinces, it has been its practice to serve the summons through registered mail, it being impracticable to send the same by personal service to protestees or respondents who reside in said far provinces. Since protestee resides in Sultan Kudarat, summons was served to him through registered mail. We do not agree. The Court sees no reason why the HRET cannot make use of its own process servers to personally serve the summons, or alternatively, delegate the matter to the process server of a court with territorial jurisdiction over the place of residence of the respondent/protestee in the election case, at the expense of the petitioner/protestant. Considering that the proper service of summons on the respondent/protestee is a jurisdictional requirement and goes to heart of due process, we cannot allow service of summons by a method not sanctioned by the HRET Rules in relation to the Rules of Court. In view of the foregoing, we find that the HRET committed grave abuse of discretion in considering petitioner to have entered a general denial of the allegations in respondents petition of protest and in denying his motion to reconsider as well as his motion to admit answer with counter-protest.

WHEREFORE, the petition for certiorari is hereby GRANTED. Resolution Nos. 07-179 and 07-300 of the House of Representatives Electoral Tribunal (HRET) in HRET Case No. 07-021 are SET ASIDE and the HRET is directed to admit the Answer with Counter-Protest of petitioner Datu Pax Pakung S. Mangudadatu.

No pronouncement as to costs.

SPOUSES JULIAN SANTIAGO, SR. and LEONILA SANTIAGO and SPOUSES LIM JOSE ONG and MIMI ONG LIM, Petitioners, - versus BANK OF THE PHILIPPINE ISLANDS as successor in interest of Far East Bank & Trust Co.,

G.R. No. 163749

Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, and REYES, JJ.

substituted by Investments 2234 [1] Philippines Fund I (SPV-AMC), Inc., Respondent.

Promulgated: September 26, 2008 x----------------------------------------------------------x

DECISION

AUSTRIA-MARTINEZ, J.: Before the Court is a Petition for Review on Certiorari filed by Spouses Julian Santiago, Sr. and Leonila Santiago (Spouses Santiago) and Spouses Lim Jose Ong and MimiOng Lim (Spouses Lim), seeking to reverse and set aside the Decision dated November 14, 2003 and the Resolution dated June 2, 2004 issued by the Court of Appeals (CA) in CA-G.R. SP No. 73110. Petitioners Spouses Santiago were the original owners of three parcels of land covered by TCT Nos. 3943, 9797 and 15131, all situated in Barrio Piapi, Dumaguete City. They mortgaged the said properties to spouses Bienvenido and
[3] [2]

Theresa Deloria (spouses Deloria) as security for their loan in the amount of P2,370,000.00. On August 24, 1994, Far East Bank and Trust Company (FEBTC) wrote a letter addressed to spouses Deloria stating that the bank had approved a term loan facility in favor of petitioner Lim Jose Ong, andamong the conditions for the approval of the facility was that the entire proceeds shall be exclusively used to purchase the three parcels of land, with its improvement mortgaged to them; and that the amount of P2,370,000.00 shall be delivered to spouses Deloria in consideration of their release of the mortgage.
[4]

Subsequently, a deed of sale over the three parcels of land was executed by Spouses Santiago in favor of Spouses Lim; and new TCT Nos. 23276, 23277 and 23278 were issued to Spouses Lim. On September 29, 1994, Spouses Lim executed in favor of FEBTC a real estate mortgage over the three parcels of land to secure the amount of P2,500,000.00 loaned from the bank; the mortgage was made to stand as a security for the payment of the loan, as well as those loans that the mortgagee may extend to the mortgagor, including interest and expenses or any other obligation owed to the mortgagee whether direct or indirect, principal or secondary, as appearing in the accounts, books and records of the mortgagee. Petitioner Lim Jose Ong was also an officer of Marichris Development Corporation (MDC), one of FEBTC's valued clients, which has a credit line with the bank. However due to the business slow-down brought about by the economic crisis, MDC through petitioner Lim Jose Ong requested a restructuring of its loan term, which was granted by the FEBTC. Meanwhile, FEBTC merged with the Bank of the Philippine Islands (private respondent), with the latter as the surviving corporation. Thus, private respondent assumed all the rights, privileges and obligations of FEBTC. As Spouses Lim failed to pay their indebtedness with the bank in the total amount of P18,630,011.96, private respondent filed on August 2, 2002 an application for extra-judicial foreclosure of real estate mortgage with the Office of the Clerk of Court, Dumaguete City, and the case was raffled to sheriff Ramoneto Hedriana. The public auction was scheduled on September 13, 2002 at 9 o'clock in the morning.
[6] [7] [5]

Petitioners filed with the Regional Trial Court (RTC) of Negros Oriental, Dumaguete City, a complaint for injunction, damages and accounting with prayer for preliminary injunction and/or temporary restraining order against private respondent as successor-in-interest of FEBTC. They also filed together with the complaint a motion for special raffle in view of the urgency of the relief sought and for the issuance of an ex-parte temporary restraining order (TRO). In their complaint, petitioners alleged that since petitioners Spouses Santiago, as the original owners of the three parcels of land, could not pay their mortgage loan with the spouses Deloria, they tried to apply for a loan with FEBTC but was told that they should be accommodated by a person with a good credit standing with the bank; that the titles to their land should be transferred to the accommodating party; that Spouses Santiago sought the help of petitioner Lim, who had a good reputation and credit facility with the bank, and who accommodated them; that titles to the three parcels of land were transferred toSpouses Lim who subsequently executed a real estate mortgage over the three parcels of land in favor of FEBTC to secure the P2.5 million loan of petitioners Spouses Lim; that the fact of accommodation was with prior approval of FEBTC officials, since they

had been directly transacting with the original mortgagees for the release of the mortgage; that petitionersSpouses Santiago, being the real borrowers, have been paying the loan after the execution of the mortgage, as appearing on various FEBTC official receipts, in which it was stated:Julian Santiago for the account (FAO) of Lim Jose Ong; that they had asked for, apart from the mortgage, a detailed statement of account, which was unheeded; thus, the obligation being claimed by private respondent is unliquidated. On September 12, 2002, Executive Judge Eleuterio E. Chiu issued a TRO valid for 72 hours ordering the bank or any person acting on its behalf from conducting the scheduled auction sale of the subject three parcels of land. Summons, together with a copy of the complaint, was served on private respondent through the managers of its branches located in San Jose Street and Percedes Street,Dumaguete City. The case was raffled to Branch 33, and a hearing for the issuance of the TRO was scheduled on September 13, 2002. During the hearing, counsel for private respondent raised the issue of the RTC's lack of jurisdiction over private respondent, as the summons was served on its branch manager in Dumaguete City, and not on any one of those persons enumerated under Section 11, Rule 14 of the 1997 Rules of Civil Procedure. Petitioners' counsel had argued that service of summons even to a substation of the corporation was valid, as it was in effect served on a principal of the corporation. The RTC judge continued with the reception of petitioners' evidence and ruled that he would include in his resolution for the issuance of a TRO whether the court had jurisdiction when the summons was served only on the manager of BPI,Dumaguete Branch. 2002. On September 16, 2002, private respondent filed a memorandum
[11] [10] [9] [8]

The continuation of the hearing was set on September 16,

in support of the opposition to the petition for preliminary

injunction or TRO. It moved for the dismissal of the complaint on the following grounds: 1. 2. 3. 4. that the court has no jurisdiction over the person of the defending party; the court has no jurisdiction over the subject matter of the claim because the proper docketing fees have not been paid; that Julian Santiago, Sr. and Leonila Santiago are not the real party [sic] in interest to file this claim; that this court has no jurisdiction or authority to issue injunction against extrajudicial foreclosure under Art. [12] 3135.

In the hearing of even date, petitioners argued that the memorandum was in reality a motion to dismiss; thus, it should comply with the three-day notice rule. The RTC,however, stated that petitioners' counsel was aware that during the last hearing, private respondent had insisted that the RTC had no jurisdiction over the case because of improper service of summons; that the motion was only a follow up, as counsel for private respondent could not cite authorities; that with or without authority, Rule 14 enumerated the persons on whom service of summons may be served.
[13]

The RTC also stated that even without the motion, it would resolve
[14]

whether a TRO should be issued, and whether the court hadjurisdiction over the case. On the same day, the RTC issued its Order,
[15]

the dispositive portion of which reads:

WHEREFORE, on the ground that this Court did not acquire jurisdiction over the defendant because of improper service of summons, the prayer for the issuance of the restraining order is hereby dismissed and this case is [16] likewise dismissed on the same ground. Petitioners filed with the CA a petition for certiorari with prayer for the issuance of a TRO and injunction. In a Resolution
[17]

dated October 17, 2002, the CA issued a TRO effective for 60 days, restraining private respondent from

conducting the foreclosure sale of the subject properties. On January 8, 2003, the CA issued another Resolution of a bond in the amount of one million pesos. On November 14, 2003, the CA issued its assailed Decision, the dispositive portion of which reads: WHEREFORE, the instant petition is hereby DISMISSED and consequently the order decreeing the issuance of a writ of preliminary injunction dated 08 January 2003 [is] set aside. Petitioners' motion for reconsideration was denied in a Resolution dated June 2, 2004. The CA found that the RTC did not commit any grave abuse of discretion in finding that summons served on the branch managers of BPI Dumaguete City was not valid and therefore the RTC did not acquire jurisdiction over the person of private respondent. The CA upheld the RTC's application of this Courts ruling in E.B. Villarosa & Partner Co., Ltd v. Benito,
[19] [18]

for the issuance of a writ of preliminary injunction upon petitioners' filing

in which it was held that the designation

of persons or officers who were authorized to accept summons for a domestic corporation or partnership was now limited and more clearly specified in Section 11, Rule 14 of the 1997 Rules of Civil Procedure. The CA found no merit in private respondent's contention that the CA failed to acquire jurisdiction over it, since no copy of the petition for certiorari and motion for reconsideration were furnished to the bank through any of the persons enumerated under Section 11, Rule 14; that counsel was not one of the in-house counsels of private respondent,but was the counsel on record of the Dumaguete branch only. The CA ruled that there was no requirement of service of summons in the manner provided for under Section 11, Rule 14, relative to a special civil action of certiorari under Rule 65. Hence herein petition raising the following issues: I. WHETHER OR NOT SERVICE OF SUMMONS UPON TWO (2) BRANCH MANAGERS OF BPI IN DUMAGUETE IS A SUBSTANTIAL COMPLIANCE OF THE RULES. II. WHETHER OR NOT BPI'S MOTION TO DISMISS VIOLATES THE THREE-DAY NOTICE RULE. III. WHETHER OR NOT THERE IS SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW [20] AVAILABLE FOR THE PETITIONERS WHEN CA G.R. SP NO. 73110 WAS FILED. Petitioners filed a Motion for Leave of Court to admit the urgent motion for issuance of TRO since the notice of extra-judicial sale set the auction sale of the subject properties on September 7, 2003. On September 6, 2004, the Court issued a TRO thousand pesos which petitioners did. The main issue for resolution is whether or not the service of summons on the branch managers of private respondent's two separate branches in Dumaguete City constitutes substantial compliance with Section 11, Rule 14 of the 1997 Rules of Civil Procedure. The complaint was filed by petitioners in 2002 when the 1997 Rules of Civil Procedure was already in force. Section 11, Rule 14 of the 1997 Rules of Civil Procedure provides: SECTION 11. Service upon domestic private juridical entity - When the defendant is a corporation, partnership or association organized under the laws of the Philippines with a juridical personality, service may be made on the president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel. This provision revised the former Section 13, Rule 14 of the Rules of Court, which provided that: SECTION 13. Service upon private domestic corporation or partnership. - If the defendant is a corporation organized under the laws of the Philippines or a partnership duly registered, service may be made on the president, manager, secretary, cashier, agent, or any of its directors. The designation of persons or officers who are authorized to accept summons for a domestic corporation or partnership is now limited and more clearly specified in Section 11, Rule 14 of the 1997 Rules of Civil Procedure.
[22] [21]

and ordered petitioners to post a bond in the amount of two million five hundred

The rule now states "general manager"

instead of only "manager"; "corporate secretary" instead of "secretary"; and "treasurer" instead of "cashier." The phrase "agent, or any of its directors" is conspicuously deleted from the new rule.
[23]

Basic is the rule that a strict compliance with the mode of service is necessary to confer jurisdiction of the court over a corporation. insufficient.
[24]

The officer upon whom service is made must be one who is named in the statute; otherwise, the service is The purpose is to render it reasonably certain that the corporation will receive prompt and proper notice in an action against

[25]

it or to insure that the summons be served on a representative so integrated with the corporation that such person will know what to do with the legal papers served on him.
[26]

Petitioners contend that the summons were received by two branch managers of BPI's San Jose Street and Perdeces Street, Dumaguete City on September 12, 2002; that the branch manager is the chief executive officer of the branch and the alter ego of the management within his/her jurisdiction and oversees the overall operations of the branch; that for certain, the two branch managers, upon receipt of summons, have sufficient responsibility and discretion to realize the importance of the legal papers served on them and are expected to relay to the president, or other responsible officer of the company, the complaint filed against it; that in Millenium Industrial Commercial Corporation v. Tan,
[27]

it was held that service of summons upon a defendant corporation must be

made on a representative so integrated with the corporation sued as to make it a priori presumable that he would realize his

responsibilities and know what he should do with any legal papers received by him; that clearly then, there is in this case substantial compliance with the rule on service of summons; and that the need for speedy justice must prevail over technicality. We are not persuaded. The matter of whether petitioners can invoke substantial compliance with Section 11, Rule 14 of the 1997 Rules of Civil Procedure, has been settled in Mason v. Court of Appeals,
[28]

thus:

The question of whether the substantial compliance rule is still applicable under Section 11, Rule 14 of the 1997 Rules of Civil Procedure has been settled in Villarosa which applies squarely to the instant case. In the said case, petitioner E.B. Villarosa & Partner Co. Ltd. (hereafter Villarosa) with principal office address at 102 Juan Luna St., Davao City and with branches at 2492 Bay View Drive, Tambo, Paraaque, Metro Manila and Kolambog, Lapasan, Cagayan de Oro City, entered into a sale with development agreement with private respondent Imperial Development Corporation. As Villarosa failed to comply with its contractual obligation, private respondent initiated a suit for breach of contract and damages at the Regional Trial Court of Makati. Summons, together with the complaint, was served upon Villarosa through its branch manager at Kolambog, Lapasan, Cagayan de Oro City. Villarosa filed a Special Appearance with Motion to Dismiss on the ground of improper service of summons and lack of jurisdiction. The trial court denied the motion and ruled that there was substantial compliance with the rule, thus, it acquired jurisdiction over Villarosa. The latter questioned the denial before us in its petition for certiorari. We decided in Villarosa's favor and declared the trial court without jurisdiction to take cognizance of the case. We held that there was no valid service of summons on Villarosa as service was made through a person not included in the enumeration in Section 11, Rule 14 of the 1997 Rules of Civil Procedure, which revised the Section 13, Rule 14 of the 1964 Rules of Court. We discarded the trial court's basis for denying the motion to dismiss, namely, private respondent's substantial compliance with the rule on service of summons, and fully agreed with petitioner's assertions that the enumeration under the new rule is restricted, limited and exclusive, following the rule in statutory construction that expressio unios est exclusio alterius. Had the Rules of Court Revision Committee intended to liberalize the rule on service of summons, we said, it could have easily done so by clear and concise language. Absent a manifest intent to liberalize the rule, we stressed strict compliance with Section 11, Rule 14 of the 1997 Rules of Civil Procedure. Neither can herein petitioners invoke our ruling in Millennium to support their position for said case is not on all fours with the instant case. We must stress that Millennium was decided when the 1964 Rules of Court were still in force and effect, unlike the instant case which falls under the new rule. Hence, the cases cited by petitioners where we upheld the doctrine of substantial compliance must be deemed overturned byVillarosa, which is the later case. At this juncture, it is worth emphasizing that notice to enable the other party to be heard and to present evidence is not a mere technicality or a trivial matter in any administrative or judicial proceedings. The service of [29] summons is a vital and indispensable ingredient of due process. Moreover, in the recent case of Bank of Philippine Islands v. Santiago,
[30]

it was ruled that service of the original summons upon

the branch manager of BPI's Sta. Cruz,Laguna branch did not bind the corporation, for the branch manager was not included in the enumeration in the statute of the persons upon whom service can be validly made in behalf of the corporation; thus, such service was therefore void and ineffectual. It was only upon the issuance and proper service of new summons validly served on BPI's corporate secretary that the RTC acquired jurisdiction to issue the Order granting the application for the issuance of a writ of preliminary injunction filed by the plaintiffs therein. Petitioners further contend that the motion to dismiss filed by private respondent came as a surprise, as they were not notified three days prior to the hearing thereon, and petitioners were made to oppose the motion on the same day it was filed; that a motion that does not comply with requirements of Sections 4
[31]

and 5,

[32]

Rule 15 of the Rules of Court, is a worthless piece of paper which the clerk

has no right to receive, and which the court has no authority to act upon. This time, the Court does not agree. Private respondent filed a memorandum in support of its opposition to the petition for preliminary injunction or TRO and moved for the dismissal of the complaint claiming,among others, that the court had no jurisdiction over the person of BPI. Even if it would appear that the memorandum was a motion to dismiss, which was filed on the same day where the court's hearing for the issuance of TRO was set, the non-observance of the three-day notice rule would not affect the RTC's Order dismissing the case for lack of jurisdiction over the person of private respondent. The purpose of the law in requiring the filing of motions at least three days before the hearing thereof is to avoid surprises upon the opposite party and to give the latter time to study and meet the arguments of the movant.
[33]

In this case, during the initial hearing for the

issuance of the TRO on September 13, 2002, counsel of private respondent had already raised the issue of the court's lack of jurisdiction over the private respondent, since the summons was not served on any of the persons enumerated under Section 11, Rule 14. Notably,

in that same hearing, petitioners' counsel presented arguments and even cited jurisprudence to prove the validity of the service of summons on private respondent's branch managers inDumaguete City. Thus, when BPI filed its memorandum/motion to dismiss on September 16, 2002, there was no element of surprise to speak of, as petitioners knew that private respondent was already questioning the jurisdiction of the court over it, but this time it had jurisprudence cited in its memorandum to support its argument. Procedural due process is not based solely on a mechanistic and literal application of a rule, such that any deviation is inexorably fatal.
[34]

Rules of procedure, and theseinclude the three-day notice requirement, are liberally construed to promote their object and to
[35]

assist the parties in obtaining just, speedy and inexpensive determination of every action and proceeding.

Lapses in the literal

observance of a rule of procedure may be overlooked when they have not prejudiced the adverse party and have not deprived the court of its authority.
[36]

Moreover, as the RTC correctly observed, it would still resolve the issue of jurisdiction over the person of private respondent even without taking into consideration the memorandum as the issue of jurisdiction was already raised during the initial hearing for the issuance of the TRO on September 13, 2002, which must be ruled upon before the RTC could issue the TRO. WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated November 14, 2003 and the Resolution dated June 2, 2004 issued by the Court of Appeals in CA-G.R. SP No. 73110 are AFFIRMED. Costs against petitioners.

DOLE PHILIPPINES, INC. (TROPIFRESH DIVISION), Petitioner,

G.R. No. 168723 Present: QUISUMBING, J., Chairperson, CARPIO MORALES, TINGA, VELASCO, JR., and BRION, JJ. Promulgated: July 9, 2008

- versus

HON. REINATO G. QUILALA in his capacity as pairing judge of Branch 150, RTC-Makati City, and ALL SEASON FARM, CORP., Respondents.
[1]

This petition for review assails the Decision dated May 20, 2005 of the Court of Appeals in CA-G.R. SP No. 87723 [2] and its Resolution dated June 28, 2005, denying the motion for reconsideration. The appellate court had affirmed the [3] Order dated February 6, 2004 of the Regional Trial Court (RTC) of Makati City, Branch 150, in Civil Case No. 03-093 [4] and its Order dated September 16, 2004 denying the motion for partial reconsideration.

The factual antecedents of this case are as follows.

In a complaint filed with the RTC of Makati City, presided over by Pairing Judge Reinato Quilala, private respondent All Season Farm Corporation (All Season) sought the recovery of a sum of money, accounting and damages from petitioner Dole Philippines, Inc. (Tropifresh Division) (Dole) and several of its officers. According to Dole, an alias summons was served upon it through a certain Marifa Dela Cruz, a legal assistant employed by Dole Pacific General Services, Ltd., which is an entity separate from Dole.

On May 20, 2003, Dole filed a motion to dismiss the complaint on the following grounds: (a) the RTC lacked jurisdiction over the person of Dole due to improper service of summons; (b) the complaint failed to state a cause of action; (c) All Season was not the real party in interest; and (d) the officers of Dole cannot be sued in their personal capacities for alleged acts performed in their official capacities as corporate officers of Dole.
[5]

In its Order dated February

6, 2004, the RTC denied said motion. Dole moved for partial reconsideration raising the same issues but its motion was denied.

Thereafter, Dole filed a petition for certiorari with the Court of Appeals contending that the alias summons was not properly served. The appellate court, however, ruled otherwise. It reasoned that Doles president had known of the service of the alias summons although he did not personally receive and sign it. It also held that in todays corporate setup, documents addressed to corporate officers are received in their behalf by their staff. reconsideration, but its motion was likewise denied.
[6]

Dole sought

Hence, this petition where petitioner raises the lone issue: WHETHER OR NOT THE COURT OF APPEALS COMMITTED AN ERROR OF LAW WHEN IT ALLOWED SUBSTITUTED SERVICE ON A PRIVATE CORPORATION WHEN IT HELD THAT DOLE WAS VALIDLY SERVED WITH SUMMONS IN SPITE OF THE FACT THAT SUMMONS WAS NOT SERVED ON ITS PRESIDENT, MANAGING PARTNER, GENERAL MANAGER, CORPORATE SECRETARY, TREASURER OR IN-HOUSE COUNSEL THEREBY IGNORING THE RULE ON [7] SERVICE OF SUMMONS ON PRIVATE DOMESTIC CORPORATIONS.

Simply stated, the issue in this case is whether there was a valid service of summons on petitioner for the trial court to acquire jurisdiction over the person of the corporate defendant below, now the petitioner herein.

Petitioner contends that for the court to validly acquire jurisdiction over a domestic corporation, summons must be served only on the corporate officers enumerated in Section 11,
[8]

Rule 14 of the 1997 Rules

of

Civil

Procedure. Petitioner maintains that the alias summons was not validly served on it since the alias summons was served on Marifa Dela Cruz, an employee of Dole Pacific General Services, Ltd., which is an entity separate and distinct from petitioner. It further avers that even if she were an employee of the petitioner, she is not one of the officers enumerated under Section 11, Rule 14. Thus, the RTC, without proper service of summons, lacks jurisdiction over petitioner as defendant below.

Private respondent All Season, for its part, contends that the trial court had acquired jurisdiction over petitioner, since petitioner received the alias summons through its president on April 23, 2003. According to private respondent, there was full compliance with Section 11, Rule 14, when Marifa Dela Cruz received the summons upon instruction of petitioners president as indicated in the Officers Return. summons in its Entry of Appearance with Motion for Time
[9]

More so, petitioner had admitted that it received the alias

[10]

filed on May 5, 2003.

Well-settled is the rule that service of summons on a domestic corporation is restricted, limited and exclusive to the persons enumerated in Section 11, Rule 14 of the 1997 Rules of Civil Procedure, following the rule in statutory construction that expressio unios est exclusio alterius.
[11]

Service must therefore be made on the president, managing

partner, general manager, corporate secretary, treasurer, or in-house counsel.

In this case, it appears that on April 23, 2003, Marifa Dela Cruz, a legal assistant, received the alias summons.
[12]

Contrary to private respondents claim that it was received upon instruction of the president of the

corporation as indicated in the Officers Return, such fact does not appear in the receiving copy of the alias summons which Marifa Dela Cruz signed. There was no evidence that she was authorized to receive court processes in behalf of the president. Considering that the service of summons was made on a legal assistant, not employed by herein petitioner and who is not one of the designated persons under Section 11, Rule 14, the trial court did not validly acquire jurisdiction over petitioner.

However, under Section 20 of the same Rule, a defendants voluntary appearance in the action is equivalent to service of summons.
[13]

As held previously by this Court, the filing of motions seeking affirmative relief, such as, to admit

answer, for additional time to file answer, for reconsideration of a default judgment, and to lift order of default with motion for reconsideration, are considered voluntary submission to the jurisdiction of the court.
[14]

Note that on May 5, 2003, petitioner filed an Entry of Appearance with Motion for Time. It was not a conditional appearance entered to question the regularity of the service of summons, but an appearance submitting to the jurisdiction of the court by acknowledging the receipt of the alias summons and praying for additional time to file responsive pleading.
[15]

Consequently, petitioner having acknowledged the receipt of the summons and also having invoked the

jurisdiction of the RTC to secure affirmative relief in its motion for additional time, petitioner effectively submitted voluntarily to the jurisdiction of the RTC. It is estopped now from asserting otherwise, even before this Court.
[16]

The RTC

therefore properly took cognizance of the case against Dole Philippines, Inc., and we agree that the trial and the appellate courts committed no error of law when Doles contentions were overruled.

WHEREFORE, the petition is DENIED for lack of merit. The Decision dated May 20, 2005 of the Court of Appeals in CA-G.R. SP No. 87723 and its Resolution dated June 28, 2005 are AFFIRMED. Costs against petitioner.

DOLORES MONTEFALCON & LAURENCE MONTEFALCON, Petitioners,

G.R. No. 165016

Present:

QUISUMBING, J., Chairperson, TINGA, - versus REYES,

*

LEONARDO-DE CASTRO, and BRION, JJ.

RONNIE S. VASQUEZ, Respondent.

Promulgated: June 17, 2008

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

DECISION QUISUMBING, J.:

This petition for review assails the September 29, 2003 Decision

[1]

and the July 19, 2004 Resolution

[3]

[2]

of the Court

of Appeals in CA-G.R. CV No. 71944, which had reversed the May 28, 2001 Decision Branch 19, of Naga City in Civil Case No. RTC 99-4460.

of the Regional Trial Court (RTC),

The facts culled from the records are as follows.

In 1999, petitioner Dolores P. Montefalcon filed a Complaint

[4]

for acknowledgment and support against

respondent Ronnie S. Vasquez before the RTC of Naga City. Alleging that her son Laurence is the illegitimate child of Vasquez, she prayed that Vasquez be obliged to give support to co-petitioner Laurence Montefalcon, whose certificate of live birth he signed as father.
[5]

According to petitioners, Vasquez only gave a total of P19,000 as support for Laurence

since Laurence was born in 1993. Vasquez allegedly also refused to give him regular school allowance despite repeated demands. Petitioner Dolores added that she and Vasquez are not legally married, and that Vasquez has his own family. A sheriff tried to serve the summons and complaint on Vasquez in Aro-aldao, Nabua, Camarines Sur. Vasquezs grandfather received them as Vasquez was inManila. Vasquezs mother returned the documents to the clerk of court, who informed the court of [6] the non-service of summons.

Petitioners then filed a motion to declare Vasquez in default. The court denied it for lack of proper service of summons.
[7]

In 2000, the court issued an alias summons on Vasquez at 10 Int. President Garcia St., Zone 6, Signal Village, Taguig, Metro Manila upon petitioners motion. Albeit a Taguig deputy sheriff served it by substituted service on Vasquezs caretaker Raquel Bejer, the sheriffs return incorrectly stated Lazaro as Vasquezs surname.
[8]

Another alias summons

[9]

was issued, also received by Bejer. The second sheriffs return states:
th

THIS IS TO CERTIFY THAT on the 19 day of July 2000 the undersigned sheriff caused the service of summons issued by the court in the above-entitled case together with the copy of the complaint and annexes attached thereon upon defendant RONNIE S. VASQUEZ, by substituted service, thru his caretaker, RAQUEL BEJER, a person of sufficient discretion, who acknowledged the receipt thereof at No. 10 Int. President Garcia St. Zone 6, Signal Village, Taguig, Metro Manila, as evidenced by her signature appearing at the lower portion of the original copy of summons. WHEREFORE, said summons is hereby returned to the court of origin DULY SERVED for its records and information. Taguig for Naga City, July 19, 2000 (SGD.) ERNESTO G. RAYMUNDO, JR., Deputy Sheriff MTC BR 74 Taguig, Metro Manila
[10]

On petitioners motion, the trial court declared Vasquez in default for failure to file an answer despite the substituted service of summons. Vasquez was furnished with court orders and notices of the proceedings at his last known address, but these were returned as he had allegedly moved to another place and left no new address.
[11]

In 2001, the court granted petitioners prayers, explaining that they had no ill-motive and that Dolores gave a truthful testimony. The court added that Vasquez admitted the truth of the allegations by his silence. It further explained that Laurences certificate of live birth, being a public document, is irrefutably a prima facieevidence of illegitimate filiation. The trial court decreed: WHEREFORE, by preponderant evidence, judgment is hereby rendered in favor of the plaintiffs Dolores Montefalcon and her minor child Laurence Montefalcon and against defendant Ronnie S. Vasquez who is hereby ordered to: 1. Acknowledge plaintiff Laurence Montefalcon as his illegitimate child with Dolores Montefalcon;

2. Give support to the said minor in the amount of FIVE THOUSAND (P5,000.00) PESOS monthly commencing on June 1, 1993, the past support for eight (8) years in the amount of FOUR HUNDRED EIGHTY THOUSAND (P480,000.00) PESOS less the amount of NINETEEN THOUSAND (P19,000.00) PESOS previously given, shall be paid promptly and the monthly support of FIVE THOUSAND (P5,000.00) PESOS shall be paid not later than the end of each month beginning on July 31, 2001 and every end of the month thereafter as prayed for in the complaint; and 3. Pay the sum of TEN THOUSAND (P10,000.00) PESOS and THREE THOUSAND (P3,000.00) PESOS as attorneys and appearance fees, respectively, and litigation expenses of ONE THOUSAND (P1,000.00) PESOS. SO ORDERED.
[12]

In the same year, Vasquez surfaced. He filed a notice of appeal to which petitioners opposed. Appeal was granted by the court.
[13]

Before the appellate court, he argued that the trial court erred in trying and deciding the case as it never

acquired jurisdiction over his person, as well as in awarding P5,000-per-month support, which was allegedly excessive and exorbitant. The appellate court noted that the service of summons on Vasquez was defective as there was no explanation of impossibility of personal service and an attempt to effect personal service, and decreed as follows: WHEREFORE, based on the foregoing premises, the instant appeal is GRANTED. The appealed May 28, 2001 Decision of the Regional Trial Court of Naga City in Civil Case No. RTC 99-4460 is hereby NULLIFIED and SET ASIDE. Accordingly, let this case be REMANDED to the court a quo for further proceedings. SO ORDERED.
[14]

Petitioners argued in their motion for reconsideration

[15]

that any attempt at personal service of summons was

needless as Vasquez already left for abroad. The appellate court, however, denied the motion. Hence, this petition.

Petitioners assign two appellate court errors: I. THE COURT OF APPEALS ERRED IN HOLDING THAT THE RESPONDENT IN THIS CASE WAS NOT VALIDLY SERVED WITH THE SUMMONS AND COMPLAINT IN CIVIL CASE NO. RTC 99-4460; AND THAT II.

THE COURT OF APPEALS ERRED IN ANNUL[L]ING AND SETTING ASIDE THE TRIAL COURTS [16] DECISION (ANNEX B) FOR LACK OF JURISDICTION.

Petitioners justify the validity of substituted service as Vasquez had left as overseas seafarer when the sheriff served the summons on July 19, 2000 in Taguig. Noting that Vasquezs seamans book indicated that he left the country on January 24, 2000 and came back on October 12, 2000, they criticize the appellate court for anchoring its rulings on mere technicality.

Vasquez counters that because he was abroad, service of summons should have been personal or by publication as substituted service is proper only if a defendant is in the country. Vasquez also added that the sheriffs return did not state that he exerted efforts to personally serve the summons.
[17]

In their reply, petitioners insist that a substituted service is the normal method if one is temporarily away from the country as personal service abroad or by publication are not ordinary means of service.
[18]

Simply put, the issues now for resolution are: (1) whether there is a valid substituted service of summons on Vasquez to clothe the trial court with jurisdiction over his person; and (2) whether he is obliged to give support to copetitioner Laurence.

To acquire jurisdiction over the person of a defendant, service of summons must be personal, feasible within a reasonable time, then by substituted service.
[20]

[19]

or if this is not

It is of judicial notice that overseas Filipino seafarers are

contractual employees. They go back to the country once their contracts expire, and wait for the signing of another contract with the same or new manning agency and principal if they wish. It is therefore common knowledge that a Filipino seaman often has a temporary residence in the urban areas like Metro Manila, where majority of the manning agencies hold offices, aside from his home address in the province where he originates. In this case, respondent Vasquez hails from Camarines Sur but he has lived in Taguig City when the complaint was filed. Notice may then be taken that he has established a residence in either place. Residence is a place where the person named in the summons is living at the time when the service was made, even though he was temporarily abroad at the time. As an overseas seafarer, Vasquez was a Filipino resident temporarily out of the country. Hence, service of summons on him is governed by Rule 14, Section 16 of the Rules of Court: SEC. 16. Residents temporarily out of the Philippines. When any action is commenced against a defendant who ordinarily resides within the Philippines, but who is temporarily out of it, service may, by leave of court, be also effected out of the Philippines, as under the preceding section. (Emphasis supplied.)

The preceding section referred to states: 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.

Because Section 16 of Rule 14 uses the words may and also, it is not mandatory. Other methods of service of summons allowed under the Rules may also be availed of by the serving officer on a defendant-seaman.

Ideally,

Vasquez

must

be

personally

served

summons. But

was

personal

service

of

summons

practicable? Conversely, was substituted service of summons justified?

Obviously, personal service of summons was not practicable since the defendant was temporarily out of the country. To proceed with personal service of summons on a defendant-seaman who went on overseas contract work would not only be impractical and futile it would also be absurd.

The impossibility of prompt personal service was shown by the fact that the Naga City-based sheriff purposely went to a barrio in Camarines Sur to serve the summons personally on Vasquez. When service of summons failed, said sheriff ascertained the whereabouts of Vasquez. Upon being informed that Vasquez was inManila, the Naga court commissioned a Taguig City-based sheriff to serve the summons. Both the Naga and Taguig sheriffs inquired about Vasquezs whereabouts, signifying that the y did not immediately resort to substituted service. There was no undue haste in effecting substituted service. The fact that the Naga court allowed a reasonable time to locate Vasquez to as far as Taguig shows that there was indeed no precipitate haste in serving the summons.

In this case, we agree that the substituted service in Taguig was valid and justified because previous attempts were made by the sheriffs to serve the summons, but to no avail. Diligent efforts were evidently exerted in the conduct of the concerned sheriffs in the performance of their official duty. Also, the person who received the alias summons was of suitable age and discretion, then residing at Vasquezs dwelling. There is no quarrel that it was really Vasquezs residence, as evidenced by his employment contract, executed under the supervision and authority of the Philippine Overseas Employment Administration (POEA). Vasquez cannot deny that in his contract of employment and seafarers information sheet, both bearing POEAs letterhead, his address in Metro Manila was what was correctly mentioned in the alias summons that Bejer received. She must have informed Vasquez one way or another of the suit upon his return in October 2000 after finishing his nine-month contract with Fathom Ship Management.

Thus, it is reasonable to conclude that he had enough time to have the default order set aside. The default judgment was rendered on May 28, 2001. He also had enough time to file a motion for reconsideration. But he did nothing. The interregnum between the first but failed attempt at personal service by the RTC of Naga City in Vasquezs place in Camarines Sur to the final substituted service in Metro Manila by a Taguig RTC sheriff was almost eight months, a reasonable time long enough to conclude that personal service had failed and was futile.

Montalban v. Maximo

[21]

offers a rational and logical solution of the issue. We held in said case that the normal

method of service of summons on one temporarily absent is by substituted service because personal service abroad and service by publication are not ordinary means of summoning defendants. Summons in a suit in personam against a temporarily absent resident may be by substituted service as domiciliaries of a State are always amenable to suits in personam therein.
[22]

Residence is the place where the person named in the summons is living at the time when the service is made, even though he may be temporarily out of the country at the time. A plaintiff is merely required to know the defendants residence, office or regular business place. He need not know where a resident defendant actually is at the very moment of filing suit. He is not even duty-bound to ensure that the person upon whom service was actually made delivers the summons to the defendant or informs him about it. The law presumes that for him. It is immaterial that defendant does not receive actual notice.

As well said in Montalban: . . . A man temporarily absent from this country leaves a definite place of residence, a dwelling where he lives, a local base, so to speak, to which any inquiry about him may be directed and where he is bound to return. Where one temporarily absents himself, he leaves his affairs in the hands of one who may be reasonably expected to act in his place and stead; to do all that is necessary to protect his interests; and to communicate with him from time to time any incident of importance that may affect him or his business or his affairs. It is usual for such a man to leave at his home or with his business associates information as to where he may be contacted in the event a question that affects him crops up. If he does not do what is expected of him, and a case comes up in court against him, he cannot in justice raise his voice and say that he is not subject to the processes of our courts. He cannot stop a suit from being filed against him upon a claim that he cannot be summoned at his dwelling house or residence or his office or regular place of business. Not that he cannot be reached within a reasonable time to enable him to contest a suit against him. There are now advanced facilities of communication. Long distance telephone calls and cablegrams [23] make it easy for one he left behind to communicate with him.

Aside from, at present, various forms of texting and short message services by the ubiquitous cellular phones. More importantly, the letter of the law must yield to its spirit. The absence in the final sheriffs return of a statement about the impossibility of personal service does not conclusively prove that the service is invalid. Such failure should not unduly prejudice petitioners if what was undisclosed was in fact done. Proof of prior attempts at personal service may have been submitted by the plaintiff during the hearing of any incident assailing the validity of the substituted service
[24]

had Vasquez surfaced when the case was heard. In fact, he was declared in default. It was only when a

judgment against him was rendered by the trial court that he questioned the validity of service of summons before the appellate court. Such failure to appear, and then later to question the courts jurisdiction over his person, should not be taken against herein petitioners. Between Vasquezs self-serving assertion that he only came to know of the case when his mother told him about the trial courts decision and the sheriffs return on the substituted service which carries a presumption of regularity, the latter is undoubtedly deserving of more faith and credit. The sheriffs certificate of service of summons is prima facie evidence of the facts set out in it. Only clear and convincing evidence may overcome its presumption of regularity. Given the circumstances in the present case, we agree that the presumption of regularity in the performance of duty on the part of the sheriff stands.
[25]

On the second issue, the trial courts order must also be sustained. Co-petitioner Laurence is legally entitled to support from the respondent, and the amount ofP5,000 monthly set by the trial court is neither excessive nor unreasonable.

Article 175

[26]

of the Family Code of the Philippines mandates that illegitimate filiation may be established in the
[27]

same way and on the same evidence as legitimate children. Under Article 172,

the filiation of legitimate children is

established by any of the following: (1) through record of birth appearing in the civil register or a final order; or (2) by admission of filiation in a public document or private handwritten instrument and signed by the parent concerned; or in default of these two, by open and continuous possession of the status of a legitimate child or by any other means allowed by the Rules of Court and special laws.

Laurences record of birth is an authentic, relevant and admissible piece of evidence to prove paternity and filiation. Vasquez did not deny that Laurence is his child with Dolores. He signed as father in Laurences certificate of live birth, a public document. He supplied the data entered in it. Thus, it is a competent evidence of filiation as he had a hand in its preparation. In fact, if the child had been recognized by any of the modes in the first paragraph of Article 172, there is no further need to file any action for acknowledgment because any of said modes is by itself a consummated act.
[28]

As filiation is beyond question, support follows as matter of obligation. Petitioners were able to prove that Laurence needs Vasquezs support and that Vasquez is capable of giving such support . Dolores testified that she spent around P200,000 for Laurence; she spends P8,000 a month for his schooling and their subsistence. She told the lower court Vasquez was earning US$535 monthly based on his January 10, 2000 contract of employment Management and his seafarer information sheet.
[30] [29]

with Fathom Ship

That income, if converted at the prevailing rate, would be more than

sufficient to cover the monthly support for Laurence.

Under Article 195 (4)

[31]

of the Family Code, a parent is obliged to support his illegitimate child. The amount is

variable. There is no final judgment thereof as it shall be in proportion to the resources or means of the giver and the necessities of the recipient.
[32]

It may be reduced or increased proportionately according to the reduction or increase of the

[33]

necessities of the recipient and the resources or means of the person obliged to support.

Support comprises everything

indispensable for sustenance, dwelling, clothing, medical attendance, education and transportation, in keeping with the financial capacity of the family.
[34]

Under the premises, the award of P5,000monthly support to Laurence is reasonable, and not

excessive nor exorbitant.

In sum, we rule that the Court of Appeals erred in invalidating the substituted service of summons and remanding the case. As there was valid substituted service of summons under the circumstances of this case, the lower court acquired jurisdiction over his person and correctly ordered him to pay past and present monthly support to his illegitimate child as well as attorneys fees and litigation expenses to petitioners.

WHEREFORE, the petition is GRANTED. The Decision dated September 29, 2003 and Resolution dated July 19, 2004 of the Court of Appeals in CA-G.R. CV No. 71944 are REVERSED and SET ASIDE. The Decision dated May 28, 2001 of the Regional Trial Court, Branch 19, Naga City in Civil Case No. RTC 99-4460 is hereby REINSTATED.

Costs against respondent.

SOCORRO LIMOS, ROSA DELOS REYES and SPOUSES ROLANDO DELOS REYES and EUGENE DELOS REYES Petitioners,

G.R. No. 186979

SPOUSES FRANCISCO P. ODONES and ARWENIA R. ODONES, Respondents.

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the August 14, 2008 Decision
[1]

of the Court of Appeals (CA) in C.A. GR. SP No. 97668 and its Resolution

[2]

dated March 9, 2009 denying

petitioners motion for reconsideration. The impugned Decision affirmed the resolution dated November 16, 2006
[3]

and Order dated January 5, 2007

[4]

of

the trial court, which respectively denied petitioners Motion to Set f or Preliminary Hearing the Special and Affirmative Defenses
[5]

and motion for reconsideration.

[6]

The antecedents: On June 17, 2005, private respondents-spouses Francisco Odones and Arwenia Odones, filed a complaint for Annulment of Deed, Title and Damages against petitioners Socorro Limos, Rosa Delos Reyes and Spouses Rolando Delos Reyes and Eugene Delos Reyes, docketed as Civil Case No. 05-33 before the Regional Trial Court (RTC) of Camiling, Tarlac, Branch 68. The complaint alleged that spouses Odones are the owners of a 940- square meter parcel of land located at Pao 1 , Camiling, Tarlac by virtue of an Extrajudicial Succession of Estate and Sale dated, January 29, 2004, executed by the surviving grandchildren and heirs of Donata Lardizabal in whom the original title to the land was registered. These heirs were Soledad Razalan Lagasca, Ceferina Razalan Cativo, Rogelio Lagasca Razalan and Dominador Razalan. It took a while before respondents decided to register the document of conveyance; and when they did, they found out that the lands Original Certificate of Title (OCT) was cancelled on April 27, 2005 and replaced by Transfer Certificate of Title (TCT) No. 329427 in the name of herein petitioners. Petitioners were able to secure TCT No. 329427 by virtue of a Deed of Absolute Sale allegedly executed by Donata Lardizabal and her husband Francisco Razalan on April 18, 1972. Petitioners then subdivided the lot among themselves and had TCT No. 329427 cancelled. In lieu thereof, three new TCTs were issued: TCT No. 392428 in the names of Socorro Limos and spouses Rolando Delos Reyes and Eugene Delos Reyes, TCT No. 392429 in the names of Spouses delos Reyes and TCT No. 392430 in the name of Rosa Delos Reyes. Respondents sought the cancellation of these new TCTs on the ground that the signatures of Donata Lardizabal and Francisco Razalan in the 1972 Deed of Absolute Sale were forgeries, because they died on June 30, 1926 and June 5, 1971, respectively.
[7] st

In response, petitioners filed a Motion for Bill of Particulars

[8]

claiming ambiguity in respondents claim that their

vendors are the only heirs of Donata Lardizabal. Finding no merit in the motion, the trial court denied the same and ordered petitioners to file their answer to the complaint. In their answer,
[10] [9]

petitioners pleaded affirmative defenses, which also constitute grounds for dismissal of the

complaint. These grounds were: (1) failure to state a cause of action inasmuch as the basis of respondents alleged title is void, since the Extrajudicial Succession of Estate and Sale was not published and it contained formal defects, the vendors are not the legal heirs of Donata Lardizabal, and respondents are not the real parties-in-interest to question the title of petitioners, because no transaction ever occurred between them; (2) non-joinder of the other heirs of Donata Lardizabal as indispensable parties; and (3) respondents claim is barred by laches. In their Reply, respondents denied the foregoing affirmative defenses, and insisted that the Extrajudicial Succession of Estate and Sale was valid. They maintained their standing as owners of the subject parcel of land and the nullity of the 1972 Absolute Deed of Sale, upon which respondents anchor their purported title. sworn statement of Amadeo Razalan declaring, among other things that: (2) Na hindi ko minana at ibinenta ang nasabing lupa kay Socorro Limos at Rosa delos Reyes at hindi totoo na ako lang ang tagapagmana ni Donata Lardizabal; xxxx
[11]

They appended the

(4) Ang aming lola na si Donata Lardizabal ay may tatlong (3) anak na patay na sina Tomas Razalan, Clemente Razalan at Tomasa Razalan; (5) Ang mga buhay na anak ni Tomas Razalan ay sina; 1. Soledad Razalan; 2. Ceferina Razalan; 3. Dominador Razalan; at 4. Amadeo Razalan. Ang mga buhay na anak ni Clemente Razalan ay sina 1. Rogelio Lagasca (isang abnormal). Ang mga buhay na anak ni Tomasa Razalan ay sina 1. Sotera Razalan at 2 pang kapatid; xxxx
[12]

Thereafter, petitioners served upon respondents a Request for Admission of the following matters: 1. 2. That the husband of the deceased Donata Lardizabal is Francisco Razalan; That the children of the deceased Sps. Donata Lardizabal and Francisco Razalan are Mercedes Razalan, Tomasa Razalan and Tomas Razalan;

3.

That this Tomasa Razalan died on April 27, 1997, if not when? [A]nd her heirs are (a) Melecio Partido surviving husband, and her surviving children are (b) Eduardo Partido married to Elisa Filiana, (c) Enrique Razalan Partido married to Lorlita Loriana, (d) Eduardo Razalan Partido, (e) Sotera Razalan Partido married to James Dil-is and (f) Raymundo Razalan Partido married to Nemesia Aczuara, and all residents of Camiling, Tarlac. That Amadeo Razalan is claiming also to be a grandchild and also claiming to be sole forced heir of Donata Lardizabal pursuant to the Succession by a Sole Heir with Sale dated January 24, 2000, executed before Atty. Rodolfo V. Robinos. That Amadeo Razalan is not among those who signed the Extra[j]udicial Succession of Estate and Sale dated January 29, 2004 allegedly executed in favor of the plaintiffs, Sps. Francisco/Arwenia Odones; That as per Sinumpaang Salaysay of Amadeo Razalan which was submitted by the plaintiffs, the children of Tomasa Razalan are Sotera Razalan and 2 brothers/sisters. These children of Tomasa Razalan did not also sign the Extra[j]udicial Succession of Estate and Sale; That there is/are no heirs of Clemente Razalan who appeared to have executed the Extra[j]udicial Succession of Estate and Sale;

4.

5.

6.

7.

8.

That Soledad Razalan Lagasca, Ceferina Razalan Cativo, Rogelio Lagasca Razalan and Dominador Razalan did not file any letters (sic) of administration nor declaration of heirship before executing the [13] alleged Extra[j]udicial Succession of Estate and Sale in favor of plaintiffs.

Respondents failed to respond to the Request for Admission, prompting petitioners to file a Motion to Set for Preliminary Hearing on the Special and Affirmative Defenses,
[14]

arguing that respondents failure to respond or object to

the Request for Admission amounted to an implied admission pursuant to Section 2 of Rule 26 of the Rules of Court. As such, a hearing on the affirmative defenses had become imperative because petitioners were no longer required to present evidence on the admitted facts. Respondents filed a comment on the Motion, contending that the facts sought to be admitted by petitioners were not material and relevant to the issue of the case as required by Rule 26 of the Rules of Court. Respondents emphasized that the only attendant issue was whether the 1972 Deed of Absolute Sale upon which petitioners base their TCTs is valid.
[15]

In its Resolution dated November 16, 2006, the RTC denied the Motion and held that item nos. 1 to 4 in the Request for Admission were earlier pleaded as affirmative defenses in petitioners Answer, to which respondents already replied on July 17, 2006. Hence, it would be redundant for respondents to make another denial. The trial court further observed that item nos. 5, 6, and 7 in the Request for Admission were already effectively denied by the Extrajudicial Succession of Estate and Sale appended to the complaint and by the Sinumpaang Salaysay of Amadeo Razalan attached to respondents Reply. 2007.
[18] [16]

Petitioners moved for reconsideration

[17]

but the same was denied in an Order dated January 5,

Petitioners elevated this incident to the CA by way of a special civil action for certiorari, alleging grave abuse of discretion on the part of the RTC in issuing the impugned resolution and order. On August 14, 2008, the CA dismissed the petition ruling that the affirmative defenses raised by petitioners were not indubitable, and could be best proven in a full-blown hearing. Their motion for reconsideration the CAs pronouncements. In essence, petitioners contend that the affirmative defenses raised in their Motion are indubitable, as they were impliedly admitted by respondents when they failed to respond to the Request for Admission. As such, a preliminary hearing on the said affirmative defenses must be conducted pursuant to our ruling in Gochan v. Gochan. We deny the petition. Pertinent to the present controversy are the rules on modes of discovery set forth in Sections 1 and 2 of Rule 26 of the Rules of Court, viz: Section 1. Request for admission. At any time after issues have been joined, a party may file and serve upon any other party a written request for the admission by the latter of the genuineness of any material and relevant document described in and exhibited with the request or of the truth of any material and relevant matter of fact set forth in the request. Copies of the documents shall be delivered with the request unless copies have already been furnished. SEC. 2 Implied admission. Each of the matters of which an admission is requested shall be deemed admitted unless, within a period designated in the request, which shall be not less than fifteen (15) days after service thereof, or within such further time as the court may allow on motion, the party to whom the request is directed files and serves upon the party requesting the admission a sworn statement
[22] [20] [19]

having been denied,

[21]

petitioners are now before this Court seeking a review of

either denying specifically the matters for which an admission is requested or setting forth in detail the reasons why he cannot truthfully either admit or deny those matters. xxxx Under these rules, a party who fails to respond to a Request for Admission shall be deemed to have impliedly admitted all the matters contained therein. It must be emphasized, however, that the application of the rules on modes of discovery rests upon the sound discretion of the court. As such, it is the duty of the courts to examine thoroughly the circumstances of each case and to determine the applicability of the modes of discovery, bearing always in mind the aim to attain an expeditious administration of justice.
[23]

The determination of the sanction to be imposed upon a party who fails to comply with the modes of discovery also rests on sound judicial discretion.
[24]

Corollarily, this discretion carries with it the determination of whether or not to

impose the sanctions attributable to such fault. As correctly observed by the trial court, the matters set forth in petitioners Request for Admission were the same affirmative defenses pleaded in their Answer which respondents already traversed in their Reply. The said defenses were likewise sufficiently controverted in the complaint and its annexes. In effect, petitioners sought to compel respondents to deny once again the very matters they had already denied, a redundancy, which if abetted, will serve no purpose but to delay the proceedings and thus defeat the purpose of the rule on admission as a mode of discovery which is to expedite trial and relieve parties of the costs of proving facts which will not be disputed on trial and the truth of which can be ascertained by reasonable inquiry.
[25]

A request for admission is not intended to merely reproduce or reiterate the allegations of the requesting partys pleading but should set forth relevant evidentiary matters of fact described in the request, whose purpose is to establish said partys cause of action or defense. Unless it serves that purpose, it is pointless, useless, and a mere redundancy.
[26]

Verily then, if the trial court finds that the matters in a Request for Admission were already admitted or denied in previous pleadings by the requested party, the latter cannot be compelled to admit or deny them anew. In turn, the requesting party cannot reasonably expect a response to the request and thereafter, assume or even demand the application of the implied admission rule in Section 2, Rule 26. In this case, the redundant and unnecessarily vexatious nature of petitioners R equest for Admission rendered it ineffectual, futile, and irrelevant so as to proscribe the operation of the implied admission rule in Section 2, Rule 26 of the Rules of Court. There being no implied admission attributable to respondents failure to respon d, the argument that a preliminary hearing is imperative loses its point. Moreover, jurisprudence
[27]

has always been firm and constant in declaring that when the affirmative defense

raised is failure to state a cause of action, a preliminary hearing thereon is unnecessary, erroneous, and improvident. In any event, a perusal of respondents complaint shows that it was sufficiently clothed with a cause of action a nd they were suited to file the same. In an action for annulment of title, the complaint must contain the following allegations: (1) that the contested land was privately owned by the plaintiff prior to the issuance of the assailed certificate of title to the defendant; and (2) that the defendant perpetuated a fraud or committed a mistake in obtaining a document of title over the parcel of land claimed by the plaintiff.
[28]

Such action goes into the issue of ownership of the land covered by a Torrens title, hence, the relief generally prayed for by the plaintiff is to be declared as the lands true owner. claiming title or ownership adverse to that of the registered owner.
[30] [29]

Thus, the real party-in-interest is the person

The herein complaint alleged: (1) that respondents are the owners and occupants of a parcel of land located at Pao 1 Camiling, Tarlac, covered by OCT No. 11560 in the name of Donata Lardizabal by virtue of an Extrajudicial Succession of Estate and Sale; and (2) that petitioners fraudulently caused the cancellation of OCT No. 11560 and the issuance of new TCTs in their names by presenting a Deed of Absolute Sale with the forged signatures of Donata Lardizabal and her husband, Francisco Razalan. The absence of any transaction between petitioners and respondents over the land is of no moment, as the thrust of the controversy is the respondents adverse claims of rightful title and ownership over the same property, which arose precisely because of the conflicting sources of their respective claims. As to the validity of the Extrajudicial Succession of Estate and Sale and the status of petitioners predecessors-ininterest as the only heirs of Donata Lardizabal, these issues go into t he merits of the parties respective claims and defenses that can be best determined on the basis of preponderance of the evidence they will adduce in a full-blown trial. A preliminary hearing, the objective of which is for the court to determine whether or not the case should proceed to trial, will not sufficiently address such issues. Anent the alleged non-joinder of indispensable parties, it is settled that the non-joinder of indispensable parties is not a ground for the dismissal of an action. The remedy is to implead the non-party claimed to be indispensable. Parties may be added by order of the court on motion of the party or on its own initiative at any stage of the action and/or such times as are just. It is only when the plaintiff refuses to implead an indispensable party despite the order of the court, that the latter may dismiss the complaint.
[31] st

In this case, no such order was issued by the trial court.

Equally settled is the fact that laches is evidentiary in nature and it may not be established by mere allegations in the pleadings and can not be resolved in a motion to dismiss.
[32]

Finally, we cannot subscribe to petitioners contention that the status of the heirs of Donata Lardizabal who sold the property to the respondents must first be established in a special proceeding. The pronouncements in Heirs of Yaptinchay v. Hon. Del Rosario controversy. In both cases, this Court held that the declaration of heirship can be made only in a special proceeding and not in a civil action. It must be noted that inYaptinchay and Enriquez, plaintiffs action for annulment of title was anchored on their alleged status as heirs of the original owner whereas in this case, the respondents claim is rooted on a sale transaction. Respondents herein are enforcing their rights as buyers in good faith and for value of the subject land and not as heirs of the original owner. Unlike in Yaptinchay and Enriquez, the filiation of herein respondents to the original owner is not determinative of their right to claim title to and ownership of the property. WHEREFORE, foregoing considered, the instant Petition is DENIED. The Decision of the Court of Appeals dated August 14, 2008 and its Resolution dated March 9, 2009 are hereby AFFIRMED.
[33]

and in Reyes v. Enriquez

[34]

that the petitioners invoke do not find application in the present

DOUGLAS F. ANAMA, Petitioner,

- versus -

COURT OF APPEALS, PHILIPPINE SAVINGS BANK, SPOUSES SATURNINA BARIA &TOMAS CO and THE REGISTER OF DEEDS, METROMANILA, DISTRICT II,

This is a petition for review under Rule 45 assailing the March 31, 2008 Decision Appeals (CA) and its February 27, 2009 Resolution,
[2]

[1]

of the Court of

in CA G.R. No. SP-94771, which affirmed the November 25, 2005

Order of the Regional Trial Court, Branch 167, Pasig City (RTC), granting the motion for issuance of a writ of execution of respondents. The Facts The factual and procedural backgrounds of this case were succinctly recited by the CA in its decision as follows: Sometime in 1973, the Petitioner, Douglas F. Anama (Anama), and the Respondent, Philippine Savings Bank (PSB), entered into a Contract to Buy, on installment basis, the real property owned and covered by Transfer Certificate of Title (TCT) No. 301276 in the latters name. However, Anama defaulted in paying his obligations thereunder, thus, PSB rescinded the said contract and title to the property remained with the latter. Subsequently, the property was sold by PSB to the Spouses Saturnina Baria and Tomas Co (Co Spouses) who, after paying the purchase price in full, caused the registration of the same in their names and were, thus, issued TCT No. 14239. Resultantly, Anama filed before the Respondent Court a complaint for declaration of nullity of the deed of sale, cancellation of transfer certificate of title, and specific performance with damages against PSB, the Co Spouses, and the Register of Deeds of Metro Manila, District II. On August 21, 1991 and after trial on the merits, the Respondent Court dismissed Anamas complaint and upheld the validity of the sale between PSB and the Co Spouses. Undaunted, Anama appealed, at first, to this Court, and after failing to obtain a favorable decision, to the Supreme Court. On January 29, 2004, the Supreme Court rendered judgment denying Anamas petition and sustaining the validity of the sale between PSB and the Co Spouses. Its decision became final and executory on July 12, 2004. Pursuant thereto, the Co Spouses moved for execution, which was granted by the Respondent Court per its Order, dated November 25, 2005. Aggrieved, Anama twice moved for the reconsideration of the Respondent Courts November 25, 2005 Order arguing that the Co Spouses motion for execution is fatally defective. He averred that the Spouses motion was pro forma because it lacked the required affidavit of service and has a defective notice of hearing, hence, a mere scrap of paper. The Respondent Court, however, denied Anamas motion(s) for reconsideration. Dissatisfied, the petitioner questioned the RTC Order before the CA for taking judicial cognizance of the motion for execution filed by spouses Tomas Co and Saturnina Baria (Spouses Co) which was (1) not in accord with Section 4 and Section 15 of the Rules of Court because it was without a notice of hearing addressed to the parties; and (2) not in accord with Section 6, Rule 15 in conjunction with Section 13, Rule 13 of the Rules of Court because it lacks the mandatory affidavit of service. On March 31, 2008, the CA rendered a decision dismissing the petition. It reasoned out, among others, that the issue on the validity of the deed of sale between respondents, Philippine Savings Bank (PSB) and the Spouses Co, had long been laid to rest considering that the January 29, 2004 Decision of this Court became final and executory on July 12, 2004. Hence, execution was already a matter of right on the part of the respondents and the RTC had the ministerial duty to issue a writ of execution enforcing a final and executory decision.

The CA also stated that although a notice of hearing and affidavit of service in a motion are mandatory requirements, the Spouses Cos motion for execution of a final and executory judgment could be acted upon by the RTC ex parte, and therefore, excused from the mandatory requirements of Sections 4, 5 and 6 of Rule 15 of the Rules of Court. The CA was of the view that petitioner was not denied due process because he was properly notified of the motion for execution of the Spouses Co. It stated that the act of the Spouses Co in resorting to personal delivery in serving their motion for execution did not render the motion pro forma. It refused to apply a rigid application of the rules because it would result in a manifest failure of justice considering that petitioners position was nothing but an obvious dilatory tactic designed to prevent the final disposition of Civil Case No. 44940. Not satisfied with the CAs unfavorable disposition, petitioner filed this petition praying for the reversal thereof presenting the following ARGUMENTS: THE RESPONDENT APPELLATE COURT DID NOT TAKE INTO CONSIDERATION THE CLEAR TEACHING OF THE HONORABLE COURT WITH REGARD TO THE REQUISITE NOTICE OF HEARING IT SHOULD BE ADDRESSED TO THE PARTIES NOT TO THE CLERK OF COURT, THE LATEST (THEN) BEING GARCIA V. SANDIGANBAYAN, G.R. NO. 167103, AUGUST 31, 2006, 500 SCRA 361; DE JESUS V. JUDGE DILAG, A.M. NO. RTJ-05-1921,SEPTEMBER 30, 2005, 471 SCRA 176; LAND BANK OF THE PHILIPPINES V. NATIVIDAD, G.R. NO. 127198, MAY 16, 2005, 458 SCRA 441; ATTY. JULIUS NERI V. JUDGE JESUS S. DE LA PEA, A.M NO. RTJ-05-1896, APRIL 29, 2005, 457 SCRA 538; AND ALVAREZ V. DIAZ, A.M. NO. MTJ-00-1283, MARCH 3, 2004, 424 SCRA 213; THE RESPONDENT APPELLATE COURT DID NOT TAKE INTO CONSIDERATION THE CLEAR TEACHING OF THE HONORABLE COURT WITH REGARD TO THE REQUISITE AFFIDAVIT OF SERVICE IT SHOULD BE IN THE PROPER FORM AS PRESCRIBED IN THE RULES AND IT SHOULD BE ATTACHED TO THE MOTION, THE LATEST (THEN) BEING ELLO V. COURT OF APPEALS, G.R. NO. 141255, JUNE 21, 2005, 460 SCRA 406; LOPEZ DELA ROSA DEVELOPMENT CORPORATION V. COURT OF APPEALS, G.R. NO. 148470, APRIL 29, 2005, 457 SCRA 614; ALVAREZ V. DIAZ, A.M. NO. MTJ-00-1283, MARCH 3, 2004, 424 SCRA 213; EL REYNO HOMES, INC. V. ERNESTO ONG, 397 SCRA 563; CRUZ V. COURT OF APPEALS, 388 SCRA 72, 80-81; AND MERIS V. OFILADA, 293 SCRA 606; THE RESPONDENT APPELLATE COURT DID NOT TAKE APPROPRIATE ACTION ON THE FRAUD PERPETRATED UPON THE COURT BY RESPONDENT -SPOUSES AND THEIR LEAD COUNSEL. SINCE THE RESPONDENT APPELLATE COURT REFUSED TO TAKE INTO CONSIDERATION THE RESPONDENT BANKS ACTION THAT OF:

ENGAGING IN A DAGDAG-BAWAS (LEGALLY INTERCALATION) OPERATION OF A PORTION OF THE TRANSCRIPT OF STENOGRAPHIC NOTES (TSN), OCTOBER 12, 1984, OF THE REGIONAL TRIAL COURT, BRANCH 167, PASIG CITY, IN CIVIL CASE NO. 44940, PAGES 54-55, AND PRESENTING IT IN ITS APPELLEES BRIEF (IN THE OWNERSHIP CASE, CA-G.R. NO. CV-42663, LIKEWISE, BEFORE THE RESPONDENT APPELLATE COURT) BY CITING IT ON PAGE 14 OF SAID BRIEF, AS IMPLIEDLY COMING FROM THE TSN OF THE TRIAL COURT. THINKING THAT THEIR FALSIFIED APPELLEES BRIEF WAS MATERIAL IN SAID CAG.R. NO. CV-42663. IT COULD NOT RULE THAT THE SAME HAS BROUGHT ABOUT A CRUCIAL MATERIAL CHANGE IN THE SITUATION OF THE PARTIES WHICH MAKES EXECUTION INEQUITABLE (PUNCIA V. GERONA, 252 SCRA 424, 430-431), OR, IN THE WORDS OF DEVELOPMENT BANK OF RIZAL V. CA, G.R. NO. 75964, DECEMBER 1, 1987, 156 SCRA 84, 90, THERE EXISTS A COMPELLING REASON FOR STAYING THE EXECUTION OF JUDGMENT.

Basically, petitioner argues that the respondents failed to substantially comply with the rule on notice and hearing when they filed their motion for the issuance of a writ of execution with the RTC. He claims that the notice of hearing in the motion for execution filed by the Spouses Co was a mere scrap of paper because it was addressed to the Clerk of Court and not to the parties. Thus, the motion for execution did not contain the required proof of service to the adverse party. He adds that the Spouses Co and their counsel deliberately misserved the copy of their motion for execution, thus, committing fraud upon the trial court. Additionally, he claims that PSB falsified its appellees brief by engaging in a dagdag -bawas (intercalation) operation in pages 54 to 55 of the TSN, datedOctober 12, 1984. Position of the Spouses Co The Spouses Co counter that the petition should be dismissed outright for raising both questions of facts and law in violation of Section 1, Rule 45 of the Rules of Court. The Spouses Co aver that petitioner attempts to resurrect the issue that PSB cheated him in their transaction and that th e RTC committed a dagdag-bawas. According to the Spouses Co, these issues had long been threshed out by this Court. At any rate, they assert that they have substantially complied with the requirements of notice and hearing provided under Sections 4 and 5 of Rule 15 and Section 13, Rule 13 of the Rules of Court. Contrary to petitioners allegations, a copy of the motion for the issuance of a writ of execution was given to petitioner through his principal counsel, the Quasha Law Offices. At that time, the said law office had not formally withdrawn its appearance as counsel for petitioner. Spouses Co argue that what they sought to be executed was the final judgment of the RTC duly affirmed by the CA and this Court, thus, putting the issues on the merits to rest. The issuance of a writ of execution then becomes a matter of right and the courts duty to issue the writ becomes ministerial. Position of respondent PSB

PSB argues that the decision rendered by the RTC in Civil Case No. 44940 entitled Douglas F. Anama v. Philippine Savings Bank, et. al.
[3]

had long become final and executory as shown by the Entry of Judgment made by the

Court on July 12, 2004. The finality of the said decision entitles the respondents, by law, to the issuance of a writ of execution. PSB laments that petitioner relies more on technicalities to frustrate the ends of justice and to delay the enforcement of a final and executory decision. As to the principal issue, PSB points out that the notice of hearing appended to the motion for execution filed by the Spouses Co substantially complied with the requirements of the Rules since petitioners then counsel of record was duly notified and furnished a copy of the questioned motion for execution. Also, the motion for execution filed by the Spouses Co was served upon and personally received by said counsel. The Courts Ruling The Court agrees with the Spouses Co that petitioners allegations on the dagdag-bawas operation of the Transcript of Stenographic Notes, the fraud perpetuated upon the Court by said spouses and their lead counsel, the ownership, and falsification had long been laid to rest in the case of Douglas F. Anama v. Philippine Savings Bank, et. al. For said reason, the Court cannot review those final pronouncements. To do so would violate the rules as it would open a final judgment to another reconsideration which is a prohibited procedure.
[4]

On the subject procedural question, the Court finds no compelling reason to stay the execution of the judgment because the Spouses Co complied with the notice and hearing requirements under Sections 4, 5 and 6 of Rule 15. Said sections, as amended, provide: 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.

Pertinently, Section 13 of Rule 13 of the 1997 Rules of Civil Procedure, as amended, provides: SEC. 13. Proof of service. Proof of personal service shall consist of a written admission of the party served, or the official return of the server, or the affidavit of the party serving, containing a full statement of the date, place, and manner of service. If the service is by ordinary mail, proof thereof shall consist of an affidavit of the person mailing of facts showing compliance with section 7 of this Rule. If service is made by registered mail, proof shall be made by such affidavit and the registry receipt issued by the mailing office. The registry return card shall be filed immediately upon its receipt by the sender, or in lieu thereof the unclaimed letter together with the certified or sworn copy of the notice given by the postmaster to the addressee. Elementary is the rule that every motion must contain the mandatory requirements of notice and hearing and that there must be proof of service thereof. The Court has consistently held that a motion that fails to comply with the above requirements is considered a worthless piece of paper which should not be acted upon. The rule, however, is not absolute. There are motions that can be acted upon by the court ex parte if these would not cause prejudice to the other party. They are not strictly covered by the rigid requirement of the rules on notice and hearing of motions. The motion for execution of the Spouses Co is such kind of motion. It cannot be denied that the judgment sought to be executed in this case had already become final and executory. As such, the Spouses Co have every right to the issuance of a writ of execution and the RTC has the ministerial duty to enforce the same. This right on the part of the Spouses Co and duty on the part of the RTC are based on Section 1 and Section 2 of Rule 39 of the 1997 Revised Rules of Civil Procedure provides, as follows: Section 1. Execution upon judgments or final orders. Execution shall issue as a matter of right, on motion, upon a judgment or order that disposes of the action or proceeding upon the expiration of the period to appeal therefrom if no appeal has been duly perfected. If the appeal has been duly perfected and finally resolved, the execution may forthwith be applied for in the court of origin, on motion of the judgment obligee, submitting therewith certified true copies of the judgment or judgments or final order or orders sought to be enforced and of the entry thereof, with notice to the adverse party. The appellate court may, on motion in the same case, when the interest of justice so requires, direct the court of origin to issue the writ of execution. SEC. 2. Discretionary execution. (a) Execution of a judgment or final order pending appeal. On motion of the prevailing party with notice to the adverse party filed in the trial court while it has jurisdiction over the case and is in possession of either the original record or the record on appeal, as the case may be, at the time of the filing of such motion, said court may, in its discretion, order execution of a judgment or final order even before the expiration of the period to appeal. After the trial court has lost jurisdiction, the motion for execution pending appeal may be filed in the appellate court. Discretionary execution may only issue upon good reasons to be stated in a special order after due hearing.

(b) Execution of several, separate or partial judgments. A several, separate or partial judgment may be executed under the same terms and conditions as execution of a judgment or final order pending appeal. (2a) [Emphases and underscoring supplied] As can be gleaned therefrom, under Paragraph 1 of Section 1 of Rule 39 of the 1997 Revised Rules of Civil Procedure, the Spouses Co can have their motion for execution executed as a matter of right without the needed notice and hearing requirement to petitioner. This is in contrast to the provision of Paragraph 2 of Section 1 and Section 2 where there must be notice to the adverse party. In the case of Far Eastern Surety and Insurance Company, Inc. v. Virginia D. Vda. De Hernandez, it was written: It is evident that Section 1 of Rule 39 of the Revised Rules of Court does not prescribe that a copy of the motion for the execution of a final and executory judgment be served on the defeated party, like litigated motions such as a motion to dismiss (Section 3, Rule 16), or motion for new trial (Section 2, Rule 37), or a motion for execution of judgment pending appeal (Section 2, Rule 39), in all of which instances a written notice thereof is required to be served by the movant on the adverse party in order to afford the latter an opportunity to resist the application. It is not disputed that the judgment sought to be executed in the case at bar had already become final and executory. It is fundamental that the prevailing party in a litigation may, at any time within five (5) years after the entry thereof, have a writ of execution issued for its enforcement and the court not only has the power and authority to order its execution but it is its ministerial duty to do so. It has also been held that the court cannot refuse to issue a writ of execution upon a final and executory judgment, or quash it, or order its stay, for, as a general rule, the parties will not be allowed, after final judgment, to object to the execution by raising new issues of fact or of law, except when there had been a change in the situation of the parties which makes such execution inequitable or when it appears that the controversy has ever been submitted to the judgment of the court; or when it appears that the writ of execution has been improvidently issued, or that it is defective in substance, or is issued against the wrong party, or that judgment debt has been paid or otherwise satisfied; or when the writ has been issued without authority. Defendant-appellant has not shown that she falls in any of the situations aforementioned. Ordinarily, an order of execution of a final judgment is not appealable .Otherwise, as was said by this Court in Molina v. de la Riva, a case could never end. Once a court renders a final judgment, all the issues between or among the parties before it are deemed resolved and its judicial function as regards any matter related to the controversy litigated comes to an end. The execution of its judgment is purely a ministerial phase of adjudication. The nature of its duty to see to it that the claim of the prevailing party is fully satisfied from the properties of the loser is generally ministerial. In Pamintuan v. Muoz, We ruled that once a judgment becomes final and executory, the prevailing party can have it executed as a matter of right, and thejudgment debtor need not be given advance notice of the application for execution. Also of the same stature is the rule that once a judgment becomes final and executory, the prevailing party can have it executed as a matter of right and the granting of execution becomes a ministerial duty of the court. Otherwise stated, once sought by the prevailing party, execution of a final judgment will just follow as a matter of course. Hence, the judgment debtor need not be given advance notice of the application for execution nor he afforded prior hearing. Absence of such advance notice to the judgment debtor does not constitute an infringement of the constitutional guarantee of due process. However, the established rules of our system of jurisprudence do not require that a defendant who has been granted an opportunity to be heard and has had his day in court should, after a judgment has been rendered against him, have a further notice and hearing before supplemental proceedings are taken to reach his property in satisfaction of the judgment. Thus, in the absence of a statutory requirement, it is not essential that he be given notice before the issuance of an execution against his tangible property; after the rendition of the judgment he must take "notice of what will follow," no further notice being "necessary to advance justice." [Emphases and underscoring supplied] Likewise, in the case of Leonardo Lim De Mesa v. Hon. Court of Appeals,
[6] [5]

it was stated:

In the present case, the decision ordering partition and the rendition of accounting had already become final and executory. The execution thereof thus became a matter of right on the part of the plaintiffs, herein private respondents, and is a mandatory and ministerial duty on the part of the court. Once a judgment becomes final and executory, the prevailing party can have it executed as a matter of right, and the judgment debtor need not be given advance notice of the application for execution nor be afforded prior hearings thereon. On the bases of the foregoing considerations, therefore, the Court of Appeals acted correctly in holding that the failure to serve a copy of the motion for execution on petitioner is not a fatal defect. In fact, there was no necessity for such service. [Emphases and underscoring supplied]

At any rate, it is not true that the petitioner was not notified of the motion for execution of the Spouses Co. The records clearly show that the motion for execution was duly served upon, and received by, petitioners counsel -of-record, the Quasha Ancheta Pena Nolasco Law Offices, as evidenced by a signed stamped received mark appearing on said pleading.
[7]

The records are bereft of proof showing any written denial from petitioners counsel of its valid receipt on

behalf of its client. Neither is there proof that the Quasha Ancheta Pena Nolasco Law Offices has formally withdrawn its appearance as petitioners counsel-of-record. Considering that there is enough proof shown on record of personal delivery in serving the subject motion for execution, there was a valid compliance with the Rules, thus, no persuasive reason to stay the execution of the subject final and executory judgment. Moreover, this Court takes note that petitioner was particularly silent on the ruling of the CA that he was notified, through his counsel, of the motion for execution of the Spouses Co when he filed a motion for reconsideration of the RTCs order dated June 28, 2005, holding in abeyance said motion pending the resolution of petitioners pleading filed before this Court. He did not dispute the ruling of the CA either that the alleged defect in the Spouses Cos motion was cured when his new counsel was served a copy of said motion for reconsideration of the RTCs June 28, 2005 Order. 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 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 [9] motion and meaningfully oppose or controvert the grounds upon which it is based . [Emphases and underscoring supplied] Likewise, in the case of KKK Foundation, Inc. v. Hon. Adelina Calderon-Bargas, this Court stated: 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 of the Rules of Court is considered a worthless piece of paper, which the Clerk of Court has no right to receive and the trial court has no authority to act upon. Service of a copy of a motion containing a notice of the time and the place of hearing of that motion is a mandatory requirement, and the failure of movants to comply with these requirements renders their motions fatally defective. 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. 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. 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
[10] [8]

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. [Emphases supplied] At any rate, it is undisputed that the August 21, 1991 RTC Decision
[11]

in Civil Case No. 44940 is already final and

executory. Once a judgment becomes final and executory, all the issues between the parties are deemed resolved and laid to rest. All that remains is the execution of the decision which is a matter of right. The prevailing party is entitled to a writ of execution, the issuance of which is the trial courts ministerial duty.
[12]

The Court agrees with the respondents that petitioner mainly relies on mere technicalities to frustrate the ends of justice and further delay the execution process and enforcement of the RTC Decision that has been affirmed by the CA and this Court. The record shows that the case has been dragging on for almost 30 years since petitioner filed an action for annulment of sale in 1982. From the time the Spouses Co bought the house from PSB in 1978, they have yet to set foot on the subject house and lot. To remand the case back to the lower court would further prolong the agony of the Spouses Co. The Court should not allow this to happen. The Spouses Co should not be prevented from enjoying the fruits of the final judgment in their favor. In another protracted case, the Court wrote: As a final note, it bears to point out that this case has been dragging for more than 15 years and the execution of this Courts judgment in PEA v. CA has been delayed for almost ten years now simply because De Leon filed a frivolous appeal against the RTCs order of execution based on arguments that cannot hold water. As a consequence, PEA is prevented from enjoying the fruits of the final judgment in its favor. The Court agrees with the Office of the Solicitor General in its contention that every litigation must come to an end once a judgment becomes final, executory and unappealable. Just as a losing party has the right to file an appeal within the prescribed period, the winning party also has the correlative right to enjoy the finality of the resolution of his case by the execution and satisfaction of the judgment, which is the "life of the law." To frustrate it by dilatory schemes on the part of the losing party is to frustrate all the efforts, time and expenditure of the courts. It is in the interest of justice that this Court should write finis to [13] this litigation. WHEREFORE, the petition is DENIED. EXECUTION OF JUDGMENT: IS NOTICE OF HEARING REQUIRED? In a motion for the issuance of a writ of execution relative a decision which has already become final and executory by reason of the non-filing of appeal within the prescribed period, must there be notice served on the adverse party and a hearing conducted first before such decision can be executed?

Instructive on this matter is the case of ANAMA vs. COURT OF APPEALS, G.R. No.187021, January 25, 2012 where it was held that: Elementary is the rule that every motion must contain the mandatory requirements of notice and hearing and that there must be proof of service thereof. The Court has consistently held that a motion that fails to comply with the above requirements is considered a worthless piece of paper which should not be acted upon. The rule, however, is not absolute. There are motions that can be acted upon by the court ex parte if these would not cause prejudice to the other party. They are not strictly covered by the rigid requirement of the rules on notice and hearing of motions. The motion for execution of the Spouses Co is such kind of motion. It cannot be denied that the judgment sought to be executed in this case had already become final and executory. As such, the Spouses Co have every right to the issuance of a writ of execution and the RTC has the ministerial duty to enforce the same. This right on the part of the Spouses Co and duty on the part of the RTC are based on Section 1 and Section 2 of Rule 39 of the 1997 Revised Rules of Civil Procedure provides, as follows: Section 1. Execution upon judgments or final orders. Execution shall issue as a matter of right, on motion, upon a judgment or order that disposes of the action orproceeding upon the expiration of the period to appeal therefrom if no appeal has been duly perfected.

If the appeal has been duly perfected and finallyresolved, the execution may forthwith be applied for in the court of origin, on motion of the judgment obligee, submitting therewith certified true copies of the judgment or judgments or final order or orders sought to be enforced and of the entry thereof, with notice to the adverse party. Xxxxx As can be gleaned therefrom, under Paragraph 1 of Section 1 of Rule 39 of the 1997 Revised Rules of Civil Procedure, the Spouses Co can have their motion for execution executed as a matter of right without the needed notice and hearing requirement to petitioner. This is in contrast to the provision of Paragraph 2 of Section 1 and Section 2 where there must be notice to the adverse party. In the case of Far Eastern Surety and Insurance Company, Inc. v. Virginia D. Vda. De Hernandez, it was written: It is evident that Section 1 of Rule 39 of the Revised Rules of Court does not prescribe that a copy of the motion for the execution of a final and executory judgment be served on the defeated party, like litigated motions such as a motion to dismiss (Section 3, Rule 16), or motion for new trial (Section 2, Rule 37), or a motion for execution of judgment pending appeal (Section 2, Rule 39), in all of which instances a written notice thereof is required to be served by the movant on the adverse party in order to afford the latter an opportunity to resist the application. Based on the quoted decision, it is clear that the mandatory requirement of notice and hearing involving litigated motions do not apply to a motion for writ execution of a judgment that has already become final and executory because no appeal was perfected within the prescribed period. This is because the execution of such final decision is precisely no longer a litigated matter. Execution of such judgment is a matter of right

UNITED PULP AND PAPER CO., INC., ACROPOLIS CENTRAL GUARANTY CORPORATION,

G.R. No. 171750

This is a petition for review under Rule 45 praying for the annulment of the November 17, 2005 Decision 2, 2006 Resolution
[2]

[1]

and the March

of the Court of Appeals (CA) in CA-G.R. SP No. 89135 entitled Acropolis Central Guaranty

Corporation (formerly known as the Philippine Pryce Assurance Corp.) v. Hon. Oscar B. Pimentel, as Presiding Judge, RTC of Makati City, Branch 148 (RTC), and United Pulp and Paper Co., Inc The Facts On May 14, 2002, United Pulp and Paper Co., Inc. (UPPC) filed a civil case for collection of the amount of P42,844,353.14 against Unibox Packaging Corporation (Unibox) and Vicente Ortega (Ortega) before the Regional Trial Court of Makati, Branch 148 (RTC).
[4] [3]

UPPC also prayed for a Writ of Preliminary Attachment against the properties of
[5]

Unibox and Ortega for the reason that the latter were on the verge of insolvency and were transferring assets in fraud of creditors. On August 29, 2002, the RTC issued the Writ of Attachment after UPPC posted a bond in the same amount
[6]

of its claim. By virtue of the said writ, several properties and assets of Unibox and Ortega were attached. On October 10, 2002, Unibox and Ortega filed their Motion for the Discharge of Attachment,
[7]

praying that they be

allowed to file a counter-bond in the amount of P42,844,353.14 and that the writ of preliminary attachment be discharged after the filing of such bond. Although this was opposed by UPPC, the RTC, in its Order dated October 25, 2002, granted the said motion for the discharge of the writ of attachment subject to the condition that Unibox and Ortega file a counterbond.
[8]

Thus, on November 21, 2002, respondent Acropolis Central Guaranty Corporation ( Acropolis) issued the
[9]

Defendants Bond for Dissolution of Attachment

in the amount of P42,844,353.14 in favor of Unibox.

Not satisfied with the counter-bond issued by Acropolis, UPPC filed its Manifestation and Motion to Discharge the Counter-Bond
[10]

dated November 27, 2002, claiming that Acropolis was among those insurance companies whose

licenses were set to be cancelled due to their failure to put up the minimum amount of capitalization required by law. For that reason, UPPC prayed for the discharge of the counter-bond and the reinstatement of the attachment. In

its December 10, 2002Order,

[11]

the RTC denied UPPCs Motion to Discharge Counter -Bond and, instead, approved and

admitted the counter-bond posted by Acropolis. Accordingly, it ordered the sheriff to cause the lifting of the attachment on the properties of Unibox and Ortega. On September 29, 2003, Unibox, Ortega and UPPC executed a compromise agreement,
[12]

wherein Unibox and

Ortega acknowledged their obligation to UPPC in the amount of P35,089,544.00 as of August 31, 2003, inclusive of the principal and the accrued interest, and bound themselves to pay the said amount in accordance with a schedule of payments agreed upon by the parties. Consequently, the RTC promulgated its Judgment 2003 approving the compromise agreement. For failure of Unibox and Ortega to pay the required amounts for the months of May and June 2004 despite demand by UPPC, the latter filed its Motion for Execution 2004 Order, Execution.
[15] [16] [14] [13]

dated October 2,

to satisfy the remaining unpaid balance. In the July 30,

the RTC acted favorably on the said motion and, on August 4, 2004, it issued the requested Writ of

The sheriff then proceeded to enforce the Writ of Execution. It was discovered, however, that Unibox had already ceased its business operation and all of its assets had been foreclosed by its creditor bank. Moreover, the responses of the selected banks which were served with notices of garnishment indicated that Unibox and Ortega no longer had funds available for garnishment. The sheriff also proceeded to the residence of Ortega to serve the writ but he was denied entry to the premises. Despite his efforts, the sheriff reported in his November 4, 2008 Partial Return satisfaction of the remaining unpaid balance by Unibox and Ortega. On the basis of the said return, UPPC filed its Motion to Order Surety to Pay Amount of Counter-Bond Acropolis. On November 30, 2004, the RTC issued its Order
[19] [18] [17]

that there was no

directed at

granting the motion and ordering Acropolis to comply with

the terms of its counter-bond and pay UPPC the unpaid balance of the judgment in the amount of P27,048,568.78 with interest of 12% per annum from default. Thereafter, on December 13, 2004, Acropolis filed its Manifestation and Very Urgent Motion for Reconsideration,
[20]

arguing that it could not be made to pay the amount of the counter-bond because it did not receive a

demand for payment from UPPC. Furthermore, it reasoned that its obligation had been discharged by virtue of the novation of its obligation pursuant to the compromise agreement executed by UPPC, Unibox and Ortega. The motion, which was set for hearing onDecember 17, 2004, was received by the RTC and UPPC only on December 20, 2004.
[22] [21]

In

the Order dated February 22, 2005, the RTC denied the motion for reconsideration for lack of merit and for having been filed three days after the date set for the hearing on the said motion.

Aggrieved, Acropolis filed a petition for certiorari before the CA with a prayer for the issuance of a Temporary Restraining Order and Writ of Preliminary Injunction.
[23]

On November 17, 2005, the CA rendered its Decision

[24]

granting

the petition, reversing the February 22, 2005 Order of the RTC, and absolving and relieving Acropolis of its liability to honor and pay the amount of its counter-attachment bond. In arriving at said disposition, the CA stated that, firstly, Acropolis was able to comply with the three-day notice rule because the motion it filed was sent by registered mail on December 13, 2004, four days prior to the hearing set for December 17, 2004;
[25]

secondly, UPPC failed to comply with

the following requirements for recovery of a judgment creditor from the surety on the counter-bond in accordance with Section 17, Rule 57 of the Rules of Court, to wit: (1) demand made by creditor on the surety, (2) notice to surety and (3) summary hearing as to his liability for the judgment under the counter-bond; Acropolis in the compromise agreement was fatal to its case.
[27] [26]

and, thirdly, the failure of UPPC to include

UPPC then filed a motion for reconsideration but it was denied by the CA in its Resolution dated March 1, 2006. Hence, this petition. The Issues

[28]

For the allowance of its petition, UPPC raises the following GROUNDS I. The Court of Appeals erred in not holding respondent liable on its counter-attachment bond which it posted before the trial court inasmuch as: A. The requisites for recovering upon the respondent-surety were clearly complied with by petitioner and the trial court, inasmuch as prior demand and notice in writing was made upon respondent, by personal service, of petitioners motion to order respondent surety to pay the amount of its counter-attachment bond, and a hearing thereon was held for the purpose of determining the liability of the respondent-surety. B. The terms of respondents counter-attachment bond are clear, and unequivocally provide that respondent as surety shall jointly and solidarily bind itself with defendants to secure and pay any judgment that petitioner may recover in the action. Hence, such being the terms of the bond, in accordance with fair insurance practices, respondent cannot, and should not be allowed to, evade its liability to pay on its counter-attachment bond posted by it before the trial court. II. The Court of Appeals erred in holding that the trial court gravely abused its discretion in denying respondents manifestation and motion for reconsideration considering that the said motion failed to comply with the three (3)-day notice rule under Section 4, Rule 15 of the Rules of Court, [29] and that it had lacked substantial merit to warrant a reversal of the trial courts previous ord er. Simply put, the issues to be dealt with in this case are as follows: (1) (2) Whether UPPC failed to make the required demand and notice upon Acropolis; and Whether the execution of the compromise agreement between UPPC and Unibox and Ortega was tantamount to a novation which had the effect of releasing Acropolis from its obligation under the counter-attachment bond. The Courts Ruling UPPC complied with the twin requirements of notice and demand On the recovery upon the counter-bond, the Court finds merit in the arguments of the petitioner. UPPC argues that it complied with the requirement of demanding payment from Acropolis by notifying it, in writing and by personal service, of the hearing held on UPPCs Motion to Order Respondent -Surety to Pay the Bond.
[30]

Moreover, it points out that the terms of the counter-attachment bond are clear in that Acropolis, as surety, shall
[31]

jointly and solidarily bind itself with Unibox and Ortega to secure the payment of any judgment that UPPC may recover in the action.

Section 17, Rule 57 of the Rules of Court sets forth the procedure for the recovery from a surety on a counter-bond: Sec. 17. Recovery upon the counter-bond. When the judgment has become executory, the surety or sureties on any counter-bond given pursuant to the provisions of this Rule to secure the payment of the judgment shall become charged on such counter-bond and bound to pay the judgment obligee upon demand the amount due under the judgment, which amount may be recovered from such surety or sureties after notice and summary hearing on the same action. From a reading of the abovequoted provision, it is evident that a surety on a counter-bond given to secure the payment of a judgment becomes liable for the payment of the amount due upon: (1) demand made upon the surety; and (2) notice and summary hearing on the same action. After a careful scrutiny of the records of the case, the Court is of the view that UPPC indeed complied with these twin requirements. This Court has consistently held that the filing of a complaint constitutes a judicial demand.
[32]

Accordingly, the filing

by UPPC of the Motion to Order Surety to Pay Amount of Counter-Bond was already a demand upon Acropolis, as surety,

for the payment of the amount due, pursuant to the terms of the bond. In said bond, Acropolis bound itself in the sum of 42,844,353.14 to secure the payment of any judgment that UPPC might recover against Unibox and Ortega.
[33]

Furthermore, an examination of the records reveals that the motion was filed by UPPC on November 11, 2004 and was set for hearing on November 19, 2004. copy of the motion on November 11, 2004,
[34]

Acropolis was duly notified of the hearing and it was personally served a

[35]

contrary to its claim that it did not receive a copy of the motion.

On November 19, 2004, the case was reset for hearing on November 30, 2004. The minutes of the hearing on both dates show that only the counsel for UPPC was present. Thus, Acropolis was given the opportunity to defend itself. That it chose to ignore its day in court is no longer the fault of the RTC and of UPPC. It cannot now invoke the alleged lack of notice and hearing when, undeniably, both requirements were met by UPPC. No novation despite compromise agreement; Acropolis still liable under the terms of the counter-bond UPPC argues that the undertaking of Acropolis is to secure any judgment rendered by the RTC in its favor. It points out that because of the posting of the counter-bond by Acropolis and the dissolution of the writ of preliminary attachment against Unibox and Ortega, UPPC lost its security against the latter two who had gone bankrupt. cases of Guerrero v. Court of Appeals
[37] [36]

It cites the

and Martinez v. Cavives

[38]

to support its position that the execution of a

[39]

compromise agreement between the parties and the subsequent rendition of a judgment based on the said compromise agreement does not release the surety from its obligation nor does it novate the obligation.

Acropolis, on the other hand, contends that it was not a party to the compromise agreement. Neither was it aware of the execution of such an agreement which contains an acknowledgment of liability on the part of Unibox and Ortega that was prejudicial to it as the surety. Accordingly, it cannot be bound by the judgment issued based on the said agreement.
[40]

Acropolis also questions the applicability of Guerrero and draws attention to the fact that in said case, the
[41]

compromise agreement specifically stipulated that the surety shall continue to be liable, unlike in the case at bench where the compromise agreement made no mention of its obligation to UPPC. On this issue, the Court finds for UPPC also. The terms of the Bond for Dissolution of Attachment issued by Unibox and Acropolis in favor of UPPC are clear and leave no room for ambiguity: WHEREAS, the Honorable Court in the above-entitled case issued on _____ an Order dissolving / lifting partially the writ of attachment levied upon the defendant/s personal property, upon the filing of a counterbond by the defendants in the sun of PESOS FORTY TWO MILLION EIGHT HUNDRED FORTY FOUR THOUSAND THREE HUNDRED FIFTY THREE AND 14/100 ONLY (P 42,844,353.14) Philippine Currency. NOW, THEREFORE, we UNIBOX PACKAGING CORP. as Principal and PHILIPPINE PRYCE ASSURANCE CORP., a corporation duly organized and existing under and by virtue of the laws of the Philippines, as Surety, in consideration of the dissolution of said attachment, hereby jointly and severally bind ourselves in the sum of FORTY TWO MILLION EIGHT HUNDRED FORTY FOUR THOUSAND THREE HUNDRED FIFTY THREE AND 14/100 ONLY (P 42,844,353.14) Philippine Currency, in favor of the plaintiff to secure the payment of any judgment that the plaintiff may [42] recover against the defendants in this action. [Emphasis and underscoring supplied] Based on the foregoing, Acropolis voluntarily bound itself with Unibox to be solidarily liable to answer for ANY judgment which UPPC may recover from Unibox in its civil case for collection. Its counter-bond was issued in consideration of the dissolution of the writ of attachment on the properties of Unibox and Ortega. The counter-bond then replaced the properties to ensure recovery by UPPC from Unibox and Ortega. It would be the height of injustice to allow Acropolis to evade its obligation to UPPC, especially after the latter has already secured a favorable judgment. This issue is not novel. In the case of Luzon Steel Corporation v. Sia,
[43]

Luzon Steel Corporation sued Metal

Manufacturing of the Philippines and Jose Sia for breach of contract and damages. A writ of preliminary attachment was issued against the properties of the defendants therein but the attachment was lifted upon the filing of a counter-bond issued by Sia, as principal, and Times Surety & Insurance Co., as surety. Later, the plaintiff and the defendants entered

into a compromise agreement whereby Sia agreed to settle the plaintiffs claim. The lower court rendered a judgment in accordance with the terms of the compromise. Because the defendants failed to comply with the same, the plaintiff obtained a writ of execution against Sia and the surety on the counter-bond. The surety moved to quash the writ of execution on the ground that it was not a party to the compromise and that the writ was issued without giving the surety notice and hearing. Thus, the court set aside the writ of execution and cancelled the counter-bond. On appeal, this Court, speaking through the learned Justice J.B.L. Reyes, discussed the nature of the liability of a surety on a counterbond: Main issues posed are (1) whether the judgment upon the compromise discharged the surety from its obligation under its attachment counterbond and (2) whether the writ of execution could be issued against the surety without previous exhaustion of the debtor's properties Both questions can be solved by bearing in mind that we are dealing with a counterbond filed to discharge a levy on attachment. Rule 57, section 12, specifies that an attachment may be discharged upon the making of a cash deposit or filing a counterbond in an amount equal to the value of the property attached as determined by the judge; that upon the filing of the counterbond the property attached ... shall be delivered to the party making the deposit or giving the counterbond, or the person appearing on his behalf, the deposit or counterbond aforesaid standing in place of the property so released.

The italicized expressions constitute the key to the entire problem. Whether the judgment be rendered after trial on the merits or upon compromise, such judgment undoubtedly may be made effective upon the property released; and since the counterbond merely stands in the place of such property, there is no reason why the judgment should not be made effective against the counterbond regardless of the manner how the judgment was obtained. xxx As declared by us in Mercado v. Macapayag, 69 Phil. 403, 405-406, in passing upon the liability of counter sureties in replevin who bound themselves to answer solidarily for the obligations of the defendants to the plaintiffs in a fixed amount of 912.04, to secure payment of the amount that said plaintiff be adjudged to recover from the defendants, the liability of the sureties was fixed and conditioned on the finality of the judgment rendered regardless of whether the decision was based on the consent of the parties or on the merits. A judgment entered on a stipulation is nonetheless [44] a judgment of the court because consented to by the parties. The argument of Acropolis that its obligation under the counter-bond was novated by the compromise agreement is, thus, untenable. In order for novation to extinguish its obligation, Acropolis must be able to show that there is an incompatibility between the compromise agreement and the terms of the counter-bond, as required by Article 1292 of the Civil Code, which provides that: Art. 1292. In order that an obligation may be extinguished by another which substitute the same, it is imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each other. (1204)

Nothing in the compromise agreement indicates, or even hints at, releasing Acropolis from its obligation to pay UPPC after the latter has obtained a favorable judgment. Clearly, there is no incompatibility between the compromise agreement and the counter-bond. Neither can novation be presumed in this case. As explained in Dugo v. Lopena: Novation by presumption has never been favored. To be sustained, it need be established that the old and new contracts are incompatible in all points, or that the will to novate appears by express [46] agreement of the parties or in acts of similar import.
[45]

All things considered, Acropolis, as surety under the terms of the counter-bond it issued, should be held liable for the payment of the unpaid balance due to UPPC. Three-day notice rule, not a hard and fast rule Although this issue has been obviated by our disposition of the two main issues, the Court would like to point out that the three-day notice requirement is not a hard and fast rule and substantial compliance is allowed.

Pertinently, Section 4, Rule 15 of the Rules of Court reads: 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 insure 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. [Emphasis supplied] The law is clear that it intends for the other party to receive a copy of the written motion at least three days before the date set for its hearing. The purpose of the three (3)-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. Development Corporation,
[48] [47]

In Preysler, Jr. v. Manila Southcoast

the Court restated the ruling that the date of the hearing should be at least three days after

receipt of the notice of hearing by the other parties. It is not, however, a hard and fast rule. Where a party has been given the opportunity to be heard, the time to study the motion and oppose it, there is compliance with the rule. This was the ruling in the case of Jehan Shipping Corporation v. National Food Authority,
[49]

where it was written:

Purpose Behind the Notice Requirement This Court has indeed held time and time again that, under Sections 4 and 5 of Rule 15 of the Rules of Court, mandatory is the notice 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 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 by 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 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. Considering the circumstances of the present case, we believe that the requirements of procedural due process were substantially complied with, and that the compliance justified a departure from a literal application of the [50] rule on notice of hearing. [Emphasis supplied] In the case at bench, the RTC gave UPPC sufficient time to file its comment on the motion. On January 14, 2005, UPPC filed its Opposition to the motion, discussing the issues raised by Acropolis in its motion. Thus, UPPCs right to due process was not violated because it was afforded the chance to argue its position. WHEREFORE, the petition is GRANTED. The November 17, 2005 Decision and the March 1, 2006 Resolution of the Court of Appeals, in CA-G.R. SP No. 89135, are hereby REVERSED and SET ASIDE. The November 30, 2004 Order of the Regional Trial Court, Branch 148, Makati City, ordering Acropolis to comply with the terms of its counter-bond and pay UPPC the unpaid balance of the judgment in the amount of P27,048,568.78 with interest of 12% per annum from default is REINSTATED.

PRISCILLA ALMA JOSE, Petitioner,

G.R. No. 158239

RAMON C. JAVELLANA, ET AL., Respondents.

The denial of a motion for reconsideration of an order granting the defending partys motion to dismiss is not an interlocutory but a final order because it puts an end to the particular matter involved, or settles definitely the matter

therein disposed of, as to leave nothing for the trial court to do other than to execute the order. Accordingly, the claiming party has a fresh period of 15 days from notice of the denial within which to appeal the denial. Antecedents
[2]

[1]

On September 8, 1979, Margarita Marquez Alma Jose (Margarita) sold for consideration of P160,000.00 to respondent Ramon Javellana by deed of conditional sale two parcels of land with areas of 3,675 and 20,936 square meters located in Barangay Mallis, Guiguinto, Bulacan. They agreed that Javellana would pay P80,000.00 upon the execution of the deed and the balance of P80,000.00 upon the registration of the parcels of land under the Torrens System (the registration being undertaken by Margarita within a reasonable period of time); and that should Margarita become incapacitated, her son and attorney-in-fact, Juvenal M. Alma Jose (Juvenal), and her daughter, petitioner Priscilla M. Alma Jose, would receive the payment of the balance and proceed with the application for registration.
[3]

After Margarita died and with Juvenal having predeceased Margarita without issue, the vendors undertaking fell on the shoulders of Priscilla, being Margaritas sole surviving heir. However, Priscilla did not comply with the undertaking to cause the registration of the properties under the Torrens System, and, instead, began to improve the properties by dumping filling materials therein with the intention of converting the parcels of land into a residential or industrial subdivision.
[4]

Faced with Priscillas refusal to comply, Javellana commenced on February 10, 1997 an action for specific

performance, injunction, and damages against her in the Regional Trial Court in Malolos, Bulacan (RTC), docketed as Civil Case No. 79-M-97 entitled Ramon C. Javellana, represented by Atty. Guillermo G. Blanco v. Priscilla Alma Jose . In Civil Case No. 79-M-97, Javellana averred that upon the execution of the deed of conditional sale, he had paid the initial amount of P80,000.00 and had taken possession of the parcels of land; that he had paid the balance of the purchase price to Juvenal on different dates upon Juvenals representation that Margarita had needed funds for the expenses of registration and payment of real estate tax; and that in 1996, Priscilla had called to inquire about the mortgage constituted on the parcels of land; and that he had told her then that the parcels of land had not been mortgaged but had been sold to him.
[5]

Javellana prayed for the issuance of a temporary restraining order or writ of preliminary injunction to restrain Priscilla from dumping filling materials in the parcels of land; and that Priscilla be ordered to institute registration proceedings and then to execute a final deed of sale in his favor.
[6]

Priscilla filed a motion to dismiss, stating that the complaint was already barred by prescription; and that the complaint did not state a cause of action.
[7] [8]

The RTC initially denied Priscillas motion to dismiss on February 4, 1998.

However, upon her motion for

reconsideration, the RTC reversed itself on June 24, 1999 and granted the motion to dismiss, opining that Javellana had no cause of action against her due to her not being bound to comply with the terms of the deed of conditional sale for not being a party thereto; that there was no evidence showing the payment of the balance; that he had never demanded the registration of the land from Margarita or Juvenal, or brought a suit for specific performance against Margarita or Juvenal; and that his claim of paying the balance was not credible.
[9]

Javellana moved for reconsideration, contending that the presentation of evidence of full payment was not necessary at that stage of the proceedings; and that in resolving a motion to dismiss on the ground of failure to state a cause of action, the facts alleged in the complaint were hypothetically admitted and only the allegations in the complaint should be considered in resolving the motion. showing the payments made to Juvenal.
[11] [10]

Nonetheless, he attached to the motion for reconsideration the receipts

Moreover, he maintained that Priscilla could no longer succeed to any rights

respecting the parcels of land because he had meanwhile acquired absolute ownership of them; and that the only thing that she, as sole heir, had inherited from Margarita was the obligation to register them under the Torrens System.
[12]

On June 21, 2000, the RTC denied the motion for reconsideration for lack of any reason to disturb the order of June 24, 1999.
[13]

Accordingly, Javellana filed a notice of appeal from the June 21, 2000 order, to, and the records were elevated to the Court of Appeals (CA).

[14]

which the RTC gave due course

In his appeal (C.A.-G.R. CV No. 68259), Javellana submitted the following as errors of the RTC, to wit: I THE TRIAL COURT GRIEVOUSLY ERRED IN NOT CONSIDERING THE FACT THAT PLAINTIFFAPELLANT HAD LONG COMPLIED WITH THE FULL PAYMENT OF THE CONSIDERATION OF THE SALE OF THE SUBJECT PROPERTY AND HAD IMMEDIATELY TAKEN ACTUAL AND PHYSICAL POSSESSION OF SAID PROPERTY UPON THE SIGNING OF THE CONDITIONAL DEED OF SALE; II THE TRIAL COURT OBVIOUSLY ERRED IN MAKING TWO CONFLICTING INTERPRETATIONS OF THE PROVISION OF THE CIVIL [CODE], PARTICULARLY ARTICLE 1911, IN THE LIGHT OF THE TERMS OF THE CONDITIONAL DEED OF SALE;

[15]

III THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANT-APPELLEE BEING NOT A PARTY TO THE CONDITIONAL DEED OF SALE EXECUTED BY HER MOTHER IN FAVOR OF PLAINTFFAPPELLANT IS NOT BOUND THEREBY AND CAN NOT BE COMPELLED TO DO THE ACT REQUIRED IN THE SAID DEED OF CONDITIONAL SALE; IV THE TRIAL COURT ERRED IN DISMISSING THE AMENDED COMPLAINT WITHOUT HEARING THE CASE ON THE MERITS. Priscilla countered that the June 21, 2000 order was not appealable; that the appeal was not perfected on time; and that Javellana was guilty of forum shopping.
[16]

It appears that pending the appeal, Javellana also filed a petition for certiorari in the CA to assail the June 24, 1999 and June 21, 2000 orders dismissing his complaint (C.A.-G.R. SP No. 60455). On August 6, 2001, however, the CA dismissed the petition for certiorari,
[17]

finding that the RTC did not commit grave abuse of discretion in issuing the orders,

and holding that it only committed, at most, an error of judgment correctible by appeal in issuing the challenged orders. On November 20, 2002, the CA promulgated its decision in C.A.-G.R. CV No. 68259,
[18]

reversing and setting

aside the dismissal of Civil Case No. 79-M-97, and remanding the records to the RTC for further proceedings in accordance with law.
[19]

The CA explained that the complaint sufficiently stated a cause of action; that Priscilla, as sole

heir, succeeded to the rights and obligations of Margarita with respect to the parcels of land; that Margaritas undertaking under the contract was not a purely personal obligation but was transmissible to Priscilla, who was consequently bound to comply with the obligation; that the action had not yet prescribed due to its being actually one for quieting of title that was imprescriptible brought by Javellana who had actual possession of the properties; and that based on the complaint, Javellana had been in actual possession since 1979, and the cloud on his title had come about only when Priscilla had started dumping filling materials on the premises.
[20] [21]

On May 9, 2003, the CA denied the motion for reconsideration,

stating that it decided to give due course to the

appeal even if filed out of time because Javellana had no intention to delay the proceedings, as in fact he did not even seek an extension of time to file his appellants brief; that current jurisprudence afforded litigants the amplest opportunity to present their cases free from the constraints of technicalities, such that even if an appeal was filed out of time, the appellate court was given the discretion to nonetheless allow the appeal for justifiable reasons. Issues Priscilla then brought this appeal, averring that the CA thereby erred in not outrightly dismissing Javellanas appeal because: (a) the June 21, 2000 RTC order was not appealable; ( b) the notice of appeal had been filed belatedly by three days; and (c) Javellana was guilty of forum shopping for filing in the CA a petition for certiorari to assail the orders of the RTC that were the subject matter of his appeal pending in the CA. She posited that, even if the CAs decision to entertain the appeal was affirmed, the RTCs dismissal of the complaint should nonetheless be upheld because the complaint stated no cause of action, and the action had already prescribed.

On his part, Javellana countered that the errors being assigned by Priscilla involved questions of fact not proper for the Court to review through petition for review on certiorari; that the June 21, 2000 RTC order, being a final order, was appealable; that his appeal was perfected on time; and that he was not guilty of forum shopping because at the time he filed the petition for certiorari the CA had not yet rendered a decision in C.A.-G.R. CV No. 68259, and because the issue of ownership raised in C.A.-G.R. CV No. 68259 was different from the issue of grave abuse of discretion raised in C.A.-G.R. SP No. 60455. Ruling The petition for review has no merit. I Denial of the motion for reconsideration of the order of dismissal was a final order and appealable

Priscilla submits that the order of June 21, 2000 was not the proper subject of an appeal considering that Section 1 of Rule 41 of the Rules of Court provides that no appeal may be taken from an order denying a motion for reconsideration.

Priscillas submission is erroneous and cannot be sustained. First of all, the denial of Javellanas motion for reconsideration left nothing more to be done by the RTC because it confirmed the dismissal of Civil Case No. 79-M-97. It was clearly a final order, not an interlocutory one. The Court has distinguished between final and interlocutory orders in Pahila-Garrido v. Tortogo, thuswise: The distinction between a final order and an interlocutory order is well known. The first disposes of the subject matter in its entirety or terminates a particular proceeding or action, leaving nothing more to be done except to enforce by execution what the court has determined, but the latter does not completely dispose of the case but leaves something else to be decided upon. An interlocutory order deals with preliminary matters and the trial on the merits is yet to be held and the judgment rendered. The test to ascertain whether or not an order or a judgment is interlocutory or final is: does the order or judgment leave something to be done in the trial court with respect to the merits of the case? If it does, the order or judgment is interlocutory; otherwise, it is final. And, secondly, whether an order is final or interlocutory determines whether appeal is the correct remedy or not. A final order is appealable, to accord with thefinal judgment rule enunciated in Section 1, Rule 41 of the Rules of Court to the effect that appeal may be taken from a judgment or final order that completely disposes of the case, or of a particular matter therein when declared by these Rules to be appealable;
[23] [22]

but the remedy from an interlocutory one is not an

appeal but a special civil action for certiorari. The explanation for the differentiation of remedies given in Pahila-Garrido v. Tortogo is apt: xxx The reason for disallowing an appeal from an interlocutory order is to avoid multiplicity of appeals in a single action, which necessarily suspends the hearing and decision on the merits of the action during the pendency of the appeals. Permitting multiple appeals will necessarily delay the trial on the merits of the case for a considerable length of time, and will compel the adverse party to incur unnecessary expenses, for one of the parties may interpose as many appeals as there are incidental questions raised by him and as there are interlocutory orders rendered or issued by the lower court. An interlocutory order may be the subject of an appeal, but only after a judgment has been rendered, with the ground for appealing the order being included in the appeal of the judgment itself. The remedy against an interlocutory order not subject of an appeal is an appropriate special civil action under Rule 65, provided that the interlocutory order is rendered without or in excess of jurisdiction or with grave abuse of discretion. Then is certiorari under Rule 65 allowed to be resorted to. Indeed, the Court has held that an appeal from an order denying a motion for reconsideration of a final order or judgment is effectively an appeal from the final order or judgment itself; and has expressly clarified

that the prohibition against appealing an order denying a motion for reconsideration referred only to a denial of a motion for reconsideration of an interlocutory order. II
[24]

Appeal was made on time pursuant to Neypes v. CA Priscilla insists that Javellana filed his notice of appeal out of time. She points out that he received a copy of the June 24, 1999 order on July 9, 1999, and filed his motion for reconsideration on July 21, 1999 (or after the lapse of 12 days); that the RTC denied his motion for reconsideration through the order of June 21, 2000, a copy of which he received on July 13, 2000; that he had only three days from July 13, 2000, or until July 16, 2000, within which to perfect an appeal; and that having filed his notice of appeal on July 19, 2000, his appeal should have been dismissed for being tardy by three days beyond the expiration of the reglementary period. Section 3 of Rule 41 of the Rules of Court provides:

Section 3. Period of ordinary appeal. The appeal shall be taken within fifteen (15) days from notice of the judgment or final order appealed from. Where a record on appeal is required, the appellant shall file a notice of appeal and a record on appeal within thirty (30) days from notice of the judgment or final order. The period of appeal shall be interrupted by a timely motion for new trial or reconsideration. No motion for extension of time to file a motion for new trial or reconsideration shall be allowed. (n) Under the rule, Javellana had only the balance of three days from July 13, 2000, or until July 16, 2000, within which to perfect an appeal due to the timely filing of his motion for reconsideration interrupting the running of the period of appeal. As such, his filing of the notice of appeal only on July 19, 2000 did not perfect his appeal on time, as Priscilla insists. The seemingly correct insistence of Priscilla cannot be upheld, however, considering that the Court meanwhile adopted the fresh period rule in Neypes v. Court of Appeals,
[25]

by which an aggrieved party desirous of appealing an

adverse judgment or final order is allowed a fresh period of 15 days within which to file the notice of appeal in the RTC reckoned from receipt of the order denying a motion for a new trial or motion for reconsideration, to wit: The Supreme Court may promulgate procedural rules in all courts. It has the sole prerogative to amend, repeal or even establish new rules for a more simplified and inexpensive process, and the speedy disposition of cases. In the rules governing appeals to it and to the Court of Appeals, particularly Rules 42, 43 and 45, the Court allows extensions of time, based on justifiable and compelling reasons, for parties to file their appeals. These extensions may consist of 15 days or more. To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to file the notice of appeal in the Regional Trial Court, counted from receipt of the order dismissing a motion for a new trial or motion for reconsideration. Henceforth, this fresh period rule shall also apply to Rule 40 governing appeals from the Municipal Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review from the Regional Trial Courts to the Court of Appeals; Rule 43 on appeals from quasi-judicial agencies to the Court of Appeals and Rule 45 governing appeals by certiorari to the Supreme Court. The new rule aims to regiment or make the appeal period uniform, to be counted from receipt of the order denying the motion for new trial, motion for [26] reconsideration (whether full or partial) or any final order or resolution. The fresh period rule may be applied to this case, for the Court has already retroactively extended the fresh period rule to actions pending and undetermined at the time of their passage and this will not violate any right of a person who may feel that he is adversely affected, inasmuch as there are no vested rights in rules of procedure.
[28] [27]

According

to De los Santos v. Vda. de Mangubat: Procedural law refers to the adjective law which prescribes rules and forms of procedure in order that courts may be able to administer justice. Procedural laws do not come within the legal conception of a retroactive law, or the general rule against the retroactive operation of statues they may be given retroactive effect on actions pending and undetermined at the time of their passage and this will not violate any right of a person who may feel that he is adversely affected, insomuch as there are no vested rights in rules of procedure. The fresh period rule is a procedural law as it prescribes a fresh period of 15 days within which an appeal may be made in the event that the motion for reconsideration is denied by the lower court. Following the rule on retroactivity of procedural laws, the "fresh period rule" should be applied to pending actions, such as the present case.

Also, to deny herein petitioners the benefit of the fresh period rule will amount to injustice, if not absurdity, since the subject notice of judgment and final order were issued two years later or in the year 2000, as compared to the notice of judgment and final order in Neypes which were issued in 1998. It will be incongruous and illogical that parties receiving notices of judgment and final orders issued in the year 1998 will enjoy the benefit of the fresh period rule while those later rulings of the lower courts such as in [29] the instant case, will not. Consequently, we rule that Javellanas notice of appeal was timely filed pursuant to the fresh period rule. III No forum shopping was committed Priscilla claims that Javellana engaged in forum shopping by filing a notice of appeal and a petition for certiorari against the same orders. As earlier noted, he denies that his doing so violated the policy against forum shopping. The Court expounded on the nature and purpose of forum shopping in In Re: Reconstitution of Transfer Certificates of Title Nos. 303168 and 303169 and Issuance of Owners Duplicate Certificates of Title In Lieu of Those Lost, Rolando Edward G. Lim, Petitioner:
[30]

Forum shopping is the act of a party litigant against whom an adverse judgment has been rendered in one forum seeking and possibly getting a favorable opinion in another forum, other than by appeal or the special civil action of certiorari, or the institution of two or more actions or proceedings grounded on the same cause or supposition that one or the other court would make a favorable disposition. Forum shopping happens when, in the two or more pending cases, there is identity of parties, identity of rights or causes of action, and identity of reliefs sought. Where the elements of litis pendentia are present, and where a final judgment in one case will amount to res judicata in the other, there is forum shopping. For litis pendentia to be a ground for the dismissal of an action, there must be: ( a) identity of the parties or at least such as to represent the same interest in both actions; ( b) identity of rights asserted and relief prayed for, the relief being founded on the same acts; and (c) the identity in the two cases should be such that the judgment which may be rendered in one would, regardless of which party is successful, amount to res judicata in the other. For forum shopping to exist, both actions must involve the same transaction, same essential facts and circumstances and must raise identical causes of action, subject matter and issues. Clearly, it does not exist where different orders were questioned, two distinct causes of action and issues were raised, and two objectives were sought. Should Javellanas present appeal now be held barred by his filing of the petition for certiorari in the CA when his appeal in that court was yet pending? We are aware that in Young v. Sy,
[31]

in which the petitioner filed a notice of appeal to elevate the orders

concerning the dismissal of her case due to non-suit to the CA and a petition for certiorari in the CA assailing the same orders four months later, the Court ruled that the successive filings of the notice of appeal and the petition for certiorari to attain the same objective of nullifying the trial courts dismissal orders constituted for um shopping that warranted the dismissal of both cases. The Court said: Ineluctably, the petitioner, by filing an ordinary appeal and a petition for certiorari with the CA, engaged in forum shopping. When the petitioner commenced the appeal, only four months had elapsed prior to her filing with the CA the Petition for Certiorari under Rule 65 and which eventually came up to this Court by way of the instant Petition (re: Non-Suit). The elements of litis pendentia are present between the two suits. As the CA, through its Thirteenth Division, correctly noted, both suits are founded on exactly the same facts and refer to the same subject matter the RTC Orders which dismissed Civil Case No. SP-5703 (2000) for failure to prosecute. In both cases, the petitioner is seeking the reversal of the RTC orders. The parties, the rights asserted, the issues professed, and the reliefs prayed for, are all the same. It is evident that the judgment of one forum may amount to res judicata in the other. xxxx The remedies of appeal and certiorari under Rule 65 are mutually exclusive and not alternative or cumulative. This is a firm judicial policy. The petitioner cannot hedge her case by wagering two or more appeals, and, in the event that the ordinary appeal lags significantly behind the others, she cannot post facto validate this circumstance as a demonstration that the ordinary appeal had not been speedy or adequate enough, in order to justify the recourse to Rule 65. This practice, if adopted, would sanction the filing of multiple suits in multiple fora, where each one, as the petitioner couches it, becomes a precautionary measure for the rest, thereby increasing the chances of a favorable decision. This is the very evil that the proscription on forumshopping seeks to put right. In Guaranteed Hotels, Inc. v. Baltao, the Court stated that the grave evil sought to be avoided by the rule against forum shopping is the rendition by two competent tribunals of two separate and contradictory decisions. Unscrupulous party litigants, taking advantage of a variety of competent tribunals, may repeatedly try their luck in several

different fora until a favorable result is reached. To avoid the resultant confusion, the Court adheres strictly to the rules against forum shopping, and any violation of these rules results in the dismissal of the [32] case. The same result was reached in Zosa v. Estrella,
[33]

which likewise involved the successive filing of a notice of

appeal and a petition for certiorari to challenge the same orders, with the Court upholding the CAs dismis sals of the appeal and the petition for certiorari through separate decisions. Yet, the outcome in Young v. Sy and Zosa v. Estrella is unjust here even if the orders of the RTC being challenged through appeal and the petition for certiorariwere the same. The unjustness exists because the appeal and the petition for certiorari actually sought different objectives. In his appeal in C.A.-G.R. CV No. 68259, Javellana aimed to undo the RTCs erroneous dismissal of Civil Case No. 79-M-97 to clear the way for his judicial demand for specific performance to be tried and determined in due course by the RTC; but his petition for certiorari had the ostensible objective to prevent (Priscilla) from developing the subject property and from proceeding with the ejectment case until his appeal is finally resolved, as the CA explicitly determined in its decision in C.A. -G.R. SP No. 60455.
[34]

Nor were the dangers that the adoption of the judicial policy against forum shopping designed to prevent or to eliminate attendant. The first danger, i.e., the multiplicity of suits upon one and the same cause of action, would not materialize considering that the appeal was a continuity of Civil Case No. 79-M-97, whereas C.A.-G.R. SP No. 60455 dealt with an independent ground of alleged grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the RTC. The second danger, i.e., the unethical malpractice of shopping for a friendly court or judge to ensure a favorable ruling or judgment after not getting it in the appeal, would not arise because the CA had not yet decided C.A.G.R. CV No. 68259 as of the filing of the petition for certiorari. Instead, we see the situation of resorting to two inconsistent remedial approaches to be the result of the tactical misjudgment by Javellanas counsel on the efficacy of the appeal to stave off his caretakers eviction from the parcels of land and to prevent the development of them into a residential or commercial subdivision pending the appeal. In the petition for certiorari, Javellana explicitly averred that his appeal was inadequate and not speedy to prevent private respondent Alma Jose and her transferee/assignee xxx from developing and disposing of the subject property to other parties to the total deprivation of petitioners rights of possession and ownership over the subject property, and that the dismissal by the RTC had emboldened private respondents to fully develop the p roperty and for respondent Alma Jose to file an ejectment case against petitioners overseer xxx.
[35]

Thereby, it became far-fetched that Javellana brought the

petition for certiorari in violation of the policy against forum shopping. WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the decision promulgated on November 20, 2002; and ORDERS the petitioner to pay the costs of suit.

BANCO DE ORO-EPCI, INC. (formerly Equitable PCI Bank),

G.R. No. 181235

JOHN TANSIPEK, Before Us is a Petition for Review on Certiorari assailing the Decision The facts of the case are as follows: J. O. Construction, Inc. (JOCI), a domestic corporation engaged in the construction business in Cebu City, filed a complaint against Philippine Commercial and Industrial Bank (PCIB) in the Regional Trial Court (RTC) of Makati City docketed as Civil Case No. 97-508. The Complaint alleges that JOCI entered into a contract with Duty Free Philippines, Inc. for the construction of a Duty Free Shop in Mandaue City. As actual construction went on, progress billings were made. Payments were received by JOCI directly or through herein respondent John Tansipek, its authorized collector. Payments received by respondent Tansipek were initially remitted to JOCI. However, payment through PNB
[1]

of the Court of Appeals in CA-G.R. CV

No. 69130 dated 18 August 2006 and the Resolution of the same court dated 9 January 2008.

Check No. 0000302572 in the amount of P4,050,136.51 was not turned over to JOCI. Instead, respondent Tansipek endorsed said check and deposited the same to his account in PCIB, Wilson Branch, Wilson Street, Greenhills, San Juan, Metro Manila. PCIB allowed the said deposit, despite the fact that the check was crossed for the deposit to payees account only, and despite the alleged lack of authority of respondent Tansipek to endorse said check. PCIB refused to pay JOCI the full amount of the check despite demands made by the latter. JOCI prayed for the payment of the amount of the check (P4,050,136.51), P500,000.00 in attorneys fees, P100,000.00 in expenses, P50,000.00 for costs of suit, and P500,000.00 in exemplary damages. PCIB filed a Motion to Dismiss the Complaint on the grounds that (1) an indispensable party was not impleaded, and (2) therein plaintiff JOCI had no cause of action against PCIB. The RTC denied PCIBs Motion to Dismiss. PCIB filed its answer alleging as defenses that (1) JOCI had clothed Tansipek with authority to act as its agent, and was therefore estopped from denying the same; (2) JOCI had no cause of action against PCIB ; (3) failure to implead Tansipek rendered the proceedings taken after the filing of the complaint void; (4) PCIBs act of accepting the deposit was fully justified by established bank practices; (5) JOCIs claim was barred by laches; and (6) the damages alleged by JOCI were hypothetical and speculative. PCIB incorporated in said Answer its counterclaims for exemplary damages in the amount of P400,000.00, and litigation expenses and attorneys fees in the amount of P400,000.00. PCIB likewise moved for leave for the court to admit the formers third -party complaint against respondent Tansipek. The third-party complaint alleged that respondent Tansipek was a depositor at its Wilson Branch, San Juan, Metro Manila, where he maintained Account No. 5703-03538-3 in his name and/or that of his wife, Anita. Respondent Tansipek had presented to PCIB a signed copy of the Minutes of the meeting of the Board of Directors of JOCI stating the resolution that Checks payable to J.O. Construction, Inc. may be deposited to Account No. 5703-03538-3 under the [2] name of John and/or Anita Tansipek, maintained at PCIB, Wilson Branch. Respondent Tansipek had also presented a copy of the Articles of Incorporation of JOCI showing that he and his wife, Anita, were incorporators of JOCI, with Anita as Treasurer. In the third-party complaint, PCIB prayed for subrogation and payment of attorneys fees in the sum of P400,000.00. PCIB filed a Motion to Admit Amended Third-Party Complaint. The amendment consisted in the correction of the caption, so that PCIB appeared as Third-Party Plaintiff and Tansipek as Third-Party Defendant. Upon Motion, respondent Tansipek was granted time to file his Answer to the Third-Party Complaint. He was, however, declared in default for failure to do so. The Motion to Reconsider the Default Order was denied. Respondent Tansipek filed a Petition for Certiorari with the Court of Appeals assailing the Default Order and the denial of the Motion for Reconsideration. The Petition was docketed as CA-G.R. SP No. 47727. On 29 May 1998, the Court of Appeals dismissed the Petition for failure to attach the assailed Orders. On 28 September 1998, the Court of Appeals denied respondent Tansipeks Motion for Reconsideration for having been filed out of time. Pre-trial on the main case ensued, wherein JOCI and PCIB limited the issues as follows: 1. Whether or not the defendant bank erred in allowing the deposit of Check No. 0302572 (Exh. A) in the amount of P4,050,136.51 drawn in favor of plaintiff JO Construction, Inc. in John Tansipeks account when such check was crossed and clearly marked for payees account only. 2. Whether the alleged board resolution and the articles of Incorporation are genuine and a valid defense against plaintiffs effort to collect the amount of P4,050,136.51. On 14 July 2000, the RTC promulgated its Decision in Civil Case No. 97-508, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered in favor of the plaintiff [JOCI] and against the defendant bank [PCIB] ordering the latter to pay to the plaintiff the sum of P4,050,136.51 with interest at the rate of twelve percent (12%) per annum from the filing of this complaint until fully paid plus costs of suit. The other damages claimed by the plaintiff are denied for being speculative. On the third party complaint, third-party defendant John Tansipek is ordered to pay the third-party plaintiff Philippine Commercial and Industrial Bank all amounts said defendant/third-party plaintiff shall [3] have to pay to the plaintiff on account of this case. Respondent Tansipek appealed the Decision to the Court of Appeals. The case was docketed as CA-G.R. CV No. 69130. Respondent Tansipek assigned the following alleged errors: a) The trial courts decision upholding the order of default and the consequent ex-parte reception of appellees evidence was anchored on erroneous and baseless conclusion that:

1) 2) 3)

The original reglementary period to plead has already expired. The ten day extended period to answer has likewise expired. There is no need to pass upon a second motion to plead much less, any need for a new motion for extended period to plead.

b) The trial court erred in utterly depriving the appellant of his day in court and in depriving constitutional, substantive and procedural due process premised solely on pure and simple technicality which never existed and are imaginary and illusory. c) The trial court erred in ordering the third-party defendant-appellant John Tansipek to pay the third party plaintiff-appellee PCIBank all amounts said bank shall have to pay to the plaintiff-appellee by way of subrogation since appellant if allowed to litigate in the trial court, would have obtained a favorable [4] judgment as he has good, valid and meritorious defenses. On 18 August 2006, the Court of Appeals issued the assailed Decision finding that it was an error for the trial court to have acted on PCIBs motion to declare respondent Tansipek in default. The Court of Appeals thus remanded the case to the RTC for further proceedings, to wit: WHEREFORE, premises considered, the appeal is GRANTED. The decision relative to the third party complaint is REVERSED and SET ASIDE. The case is ordered REMANDED to the trial court for [5] further proceedings on the third party complaint. The Court of Appeals denied the Motion for Reconsideration of PCIB in a Resolution dated 9 January 2008. Petitioner Banco de Oro-EPCI, Inc., as successor-in-interest to PCIB, filed the instant Petition for Review on Certiorari, assailing the above Decision and Resolution of the Court of Appeals, and laying down a lone issue for this Courts consideration: WHETHER OR NOT THE COURT OF APPEALS CAN REVERSE ITS DECISION HANDED DOWN [6] EIGHT YEARS BEFORE. To recapitulate, upon being declared in default, respondent Tansipek filed a Motion for Reconsideration of the Default Order. Upon denial thereof, Tansipek filed a Petition for Certiorari with the Court of Appeals, which was dismissed for failure to attach the assailed Orders. Respondent Tansipeks Motion for Reconsideration with the Court of Appeals was denied for having been filed out of time. Respondent Tansipek did not appeal said denial to this Court. Respondent Tansipeks remedy against the Order of Default was erroneous from the very beginning. Respondent Tansipek should have filed a Motion to Lift Order of Default, and not a Motion for Reconsideration, pursuant to Section 3(b), Rule 9 of the Rules of Court: (b) Relief from order of default.A party declared in default may at any time after notice thereof and before judgment file a motion under oath to set aside the order of default upon proper showing that his failure to answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense. In such case, the order of default may be set aside on such terms and conditions as the judge may impose in the interest of justice. A Motion to Lift Order of Default is different from an ordinary motion in that the Motion should be verified; and must show fraud, accident, mistake or excusable neglect, and meritorious defenses. accident, mistake or excusable neglect, and (2) of meritorious defenses must concur.
[8] [7]

The allegations of (1) fraud,

Assuming for the sake of argument, however, that respondent Tansipeks Motion for Reconsideration may be treated as a Motion to Lift Order of Default, his Petition for Certiorari on the denial thereof has already been dismissed with finality by the Court of Appeals. Respondent Tansipek did not appeal said ruling of the Court of Appeals to this Court. The dismissal of the Petition for Certiorari assailing the denial of respondent Tansipeks Motion constitutes a bar to the retrial of the same issue of default under the doctrine of the law of the case. In People v. Pinuila, we held that: Law of the case has been defined as the opinion delivered on a former appeal. More specifically, it means that whatever is once irrevocably established as the controlling legal rule of decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court. It may be stated as a rule of general application that, where the evidence on a second or succeeding appeal is substantially the same as that on the first or preceding appeal, all matters, questions, points, or issues adjudicated on the prior appeal are the law of the case on all subsequent appeals and will not be considered or readjudicated therein. As a general rule a decision on a prior appeal of the same case is held to be the law of the case whether that decision is right or wrong, the remedy of the party deeming himself aggrieved being to seek a rehearing.
[9]

Questions necessarily involved in the decision on a former appeal will be regarded as the law of the case on a subsequent appeal, although the questions are not expressly treated in the opinion of the court, as the presumption is that all the facts in the case bearing on the point decided have received due consideration whether all or none of them are mentioned in the opinion. (Emphasis supplied.) The issue of the propriety of the Order of Default had already been adjudicated in Tansipeks Petition for Certiorari with the Court of Appeals. As such, this issue cannot be readjudicated in Tansipeks appeal of the Decision of the RTC on the main case. Once a decision attains finality, it becomes the law of the case, whether or not said decision is erroneous.
[10]

Having been rendered by a court of competent jurisdiction acting within its authority, the
[11]

judgment may no longer be altered even at the risk of legal infirmities and errors it may contain.

Respondent Tansipek counters that the doctrine of the law of the case is not applicable, inasmuch as a Petition for Certiorari is not an appeal. Respondent Tansipek further argues that the Doctrine of the Law of the Case applies only when the appellate court renders a decision on the merits, and not when such appeal was denied due to technicalities. We are not persuaded. In Buenviaje v. Court of Appeals,
[12]

therein respondent Cottonway Marketing Corporation filed a Petition

for Certiorari with this Court assailing the Decision of the National Labor Relations Commission (NLRC) ordering, inter alia, the reinstatement of therein petitioners and the payment of backwages from the time their salaries were withheld up to the time of actual reinstatement. The Petition for Certiorari was dismissed by this Court. The subsequent Motion for Reconsideration was likewise denied. However, the Labor Arbiter then issued an Order limiting the amount of backwages that was due to petitioners. The NLRC reversed this Order, but the Court of Appeals reinstated the same. This Court, applying the Doctrine of the Law of the Case, held: The decision of the NLRC dated March 26, 1996 has become final and executory upon the dismissal by this Court of Cottonways petition for certiorari assailing said decision and the denial of its motion for reconsideration. Said judgment may no longer be disturbed or modified by any court or tribunal. It is a fundamental rule that when a judgment becomes final and executory, it becomes immutable and unalterable, and any amendment or alteration which substantially affects a final and executory judgment is void, including the entire proceedings held for that purpose. Once a judgment becomes final and executory, the prevailing party can have it executed as a matter of right, and the issuance of a writ of execution becomes a ministerial duty of the court. A decision that has attained finality becomes the law of the case regardless of any claim that it is erroneous. The writ of execution must therefore conform to the judgment to be executed and adhere strictly to the very [13] essential particulars. (Emphases supplied.) Furthermore, there is no substantial distinction between an appeal and a Petition for Certiorari when it comes to the application of the Doctrine of the Law of the Case. The doctrine is founded on the policy of ending litigation. The doctrine is necessary to enable the appellate court to perform its duties satisfactorily and efficiently, which would be impossible if a question once considered and decided by it were to be litigated anew in the same case upon any and every subsequent appeal.
[14]

Likewise, to say that the Doctrine of the Law the Case applies only when the appellate court renders a decision on the merits would be putting a premium on the fault or negligence of the party losing the previous appeal. In the case at bar, respondent Tansipek would be awarded (1) for his failure to attach the necessary requirements to his Petition for Certiorari with the Court of Appeals; (2) for his failure to file a Motion for Reconsideration in time; and (3) for his failure to appeal the Decision of the Court of Appeals with this Court. The absurdity of such a situation is clearly apparent. It is important to note that a party declared in default respondent Tansipek in this case is not barred from appealing from the judgment on the main case, whether or not he had previously filed a Motion to Set Aside Order of Default, and regardless of the result of the latter and the appeals therefrom. However, the appeal should be based on the Decisions being contrary to law or the evidence already presented, and not on the alleged invalidity of the default order.
[15]

WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 69130 dated 18 August 2006 and the Resolution of the same court dated 9 January 2008 are hereby REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Makati City in Civil Case No. 97-508 dated 14 July 2000 is hereby REINSTATED. No pronouncement as to costs

JOSEPHINE MARMO, NESTOR ESGUERRA, DANILO DEL PILAR and MARISA DEL PILAR,

G.R. No. 182585

MOISES O. ANACAY, BRION, J.: Before us is the Petition for Review on Certiorari, filed by the spouses Josephine Marmo and Nestor Esguerra and the spouses Danilo del Pilar and Marisa del Pilar (collectively, the petitioners), to reverse and set aside the Decision
[2] [3] [1]

dated December 28, 2007 and the Resolution

dated April 11, 2008 of the Former Special Eleventh Division of

[4] [5]

the Court of Appeals (CA) in CA-G.R. SP No. 94673. The assailed CA Decision dismissed the petitioners petition for certiorari challenging the Orders dated March 14, 2006 and May 8, 2006 of the Regional Trial Court (RTC), Branch

90, Dasmarias, Cavite in Civil Case No. 2919-03, while the assailed CA Resolution denied the petitioners motion for reconsideration. FACTUAL BACKGROUND The facts of the case, as gathered from the parties pleadings, are briefly summarized below: On September 16, 2003, respondent Moises O. Anacay filed a case for Annulment of Sale, Recovery of Title with Damages against the petitioners
[7] [6]

and the Register of Deeds of the Province of Cavite, docketed as Civil Case No. 2919-

03. The complaint states, among others, that: the respondent is the bona-fide co-owner, together with his wife, Gloria P. Anacay (now deceased), of a 50-square meter parcel of land and the house built thereon, located at Blk. 54, Lot 9, Regency Homes, Brgy. Malinta, Dasmarias, Cavite, covered by Transfer Certificate of Title (TCT) No. T-815595 of the Register of Deeds of Cavite; they authorized petitioner Josephine to sell the subject property; petitioner Josephine sold the subject property to petitioner Danilo for P520,000.00, payable in monthly installments of P8,667.00 from May 2001 to June 2006; petitioner Danilo defaulted in his installment payments from December 2002 onwards; the respondent subsequently discovered that TCT No. 815595 had been cancelled and TCT No. T-972424 was issued in petitioner Josephines name by virtue of a falsified Deed of Absolute Sale dated September 20, 2001; petitioner Josephine subsequently transferred her title to petitioner Danilo; TCT No. T-972424 was cancelled and TCT No. T-991035 was issued in petitioner Danilos name. The respondent sought the annulment of the Deed of Absolute Sale dated September 20, 2001 and the cancellation of TCT No. T-991035; in the alternative, he demanded petitioner Danilos payment of the balance of P347,000.00 with interest from December 2002, and the payment of moral damages, attorneys f ees, and cost of suit. In her Answer, petitioner Josephine averred, among others, that the respondents children, as co -owners of the subject property, should have been included as plaintiffs because they are indispensable parties. echoed petitioner Josephines submission in his Answer.
[10] [9] [8]

Petitioner Danilo

Following the pre-trial conference, the petitioners filed a Motion to Dismiss the case for the respondents failure to include his children as indispensable parties.

The respondent filed an Opposition, arguing that his children are not indispensable parties because the issue in the case can be resolved without their participation in the proceedings.
[11]

THE RTC RULING The RTC found the respondents argument to be well-taken and thus denied the petitioners motion to dismiss in an Order dated March 14, 2006.
[12]

It also noted that the petitioners motion was simply filed to delay the proceedings.
[13]

After the denial of their Motion for Reconsideration, Petition for Certiorari under Rule 65 of the Rules of Court.

the petitioners elevated their case to the CA through a They charged the RTC with grave abuse of discretion

[14]

amounting to lack of jurisdiction for not dismissing the case after the respondent failed to include indispensable parties. THE CA RULING The CA dismissed the petition
[15]

in a Decision promulgated on December 28, 2007. It found that the RTC did not

commit any grave abuse of discretion in denying the petitioners motion to dismiss, noting that the respondents ch ildren are not indispensable parties.

The petitioners moved

[16]

but failed

[17]

to secure a reconsideration of the CA Decision; hence, the present petition.

[18]

Following the submission of the respondents Comment

and the petitioners Reply,

[20]

[19]

we gave due course to the

[21]

petition and required the parties to submit their respective memoranda.

Both parties complied.

Meanwhile, on April 24, 2009, the petitioners filed with the RTC a Motion to Suspend Proceedings due to the pendency of the present petition. The RTC denied the motion to suspend as well as the motion for reconsideration that followed. The petitioners responded to the denial by filing with us a petition for the issuance of a temporary restraining order (TRO) to enjoin the RTC from proceeding with the hearing of the case pending the resolution of the present petition. THE PETITION and THE PARTIES SUBMISSIONS The petitioners submit that the respondents children, who succeeded their deceased mother as co-owners of the property, are indispensable parties because a full determination of the case cannot be made without their presence, relying on Arcelona v. Court of Appeals,
[22] [23] [24]

Orbeta v. Sendiong,

and Galicia v. Manliquez Vda. de Mindo.

They argue

that the non-joinder of indispensable parties is a fatal jurisdictional defect. The respondent, on the other hand, counters that the respondent s children are not indispensable parties because the issue involved in the RTC whether the signatures of the respondent and his wife in the Deed of Absolute Sale dated September 20, 2001 were falsified - can be resolved without the participation of the respondents children. THE ISSUE The core issue is whether the respondents children are indispensable parties in Civil Case No. 2919 -03. In the context of the Rule 65 petition before the CA, the issue is whether the CA correctly ruled that the RTC did not commit any grave abuse of discretion in ruling that the respondents children are not indispensable parties. OUR RULING We see no merit in the petition. General Rule: The denial of a motion to dismiss is an interlocutory order which is not the proper subject of an appeal or a petition for certiorari. At the outset, we call attention to Section 1 of Rule 41
[25]

of the Revised Rules of Court governing appeals from the

RTC to the CA. This Section provides that an appeal may be taken only from a judgment or final order that completely disposes of the case, or of a matter therein when declared by the Rules to be appealable. It explicitly states as well that no appeal may be taken from an interlocutory order. In law, the word interlocutory refers to intervening developments between the commencement of a suit and its complete termination; hence, it is a development that does not end the whole controversy.
[27] [26]

An interlocutory order

merely rules on an incidental issue and does not terminate or finally dispose of the case; it leaves something to be done before the case is finally decided on the merits.

An Order denying a Motion to Dismiss is interlocutory because it does not finally dispose of the case, and, in effect, directs the case to proceed until final adjudication by the court. Only when the court issues an order outside or in excess of jurisdiction or with grave abuse of discretion, and the remedy of appeal would not afford adequate and expeditious relief, will certiorari be considered an appropriate remedy to assail an interlocutory order.
[28]

In the present case, since the petitioners did not wait for the final resolution on the merits of Civil Case No. 291903 from which an appeal could be taken, but opted to immediately assail the RTC Orders dated March 14, 2006 and May 8, 2006 through a petition for certiorari before the CA, the issue for us to address is whether the RTC, in issuing its orders, gravely abused its discretion or otherwise acted outside or in excess of its jurisdiction. The RTC did not commit grave abuse of discretion in denying the petitioners Motion to Dismiss; the respondents coowners are not indispensable parties.

The RTC grounded its Order dated March 14, 2006 denying the petitioners motion to dismiss on the finding that the respondents children, as co-owners of the subject property, are not indispensable parties to the resolution of the case. We agree with the RTC. Section 7, Rule 3 of the Revised Rules of Court
[29]

defines indispensable parties as parties-in-interest without

whom there can be no final determination of an action and who, for this reason, must be joined either as plaintiffs or as defendants. Jurisprudence further holds that a party is indispensable, not only if he has an interest in the subject matter of the controversy, but also if his interest is such that a final decree cannot be made without affecting this interest or without placing the controversy in a situation where the final determination may be wholly inconsistent with equity and good conscience. He is a person whose absence disallows the court from making an effective, complete, or equitable determination of the controversy between or among the contending parties.
[30]

When the controversy involves a property held in common, Article 487 of the Civil Code explicitly provides that any one of the co-owners may bring an action in ejectment. We have explained in Vencilao v. Camarenta
[31] [32]

and in Sering v. Plazo

that the term action in ejectment

[34]

includes a suit for forcible entry (detentacion) or unlawful detainer (desahucio).

[35]

[33]

We also noted in Sering that the term (recovery of

action in ejectment includes also, an accion publiciana (recovery of possession) or accion reinvidicatoria ownership). Most recently in Estreller v. Ysmael, Court of Appeals
[36]

we applied Article 487 to an accion publiciana case; in Plasabas v.

we categorically stated that Article 487 applies to reivindicatory actions.

We upheld in several cases the right of a co-owner to file a suit without impleading other co-owners, pursuant to Article 487 of the Civil Code. We made this ruling in Vencilao, where the amended complaint for forcible entry and detainer specified that the plaintiff is one of the heirs who co -owns the disputed properties. InSering, and Resuena v. Court of Appeals,
[37]

the co-owners who filed the ejectment case did not represent themselves as the exclusive owners of
[38]

the property. InCelino v. Heirs of Alejo and Teresa Santiago , the co-owners precisely to recover lots owned in common.

the complaint for quieting of title was brought in behalf of In Plasabas, the plaintiffs alleged in their complaint for

[39]

recovery of title to property (accion reivindicatoria) that they are the sole owners of the property in litigation, but acknowledged during the trial that the property is co-owned with other parties, and the plaintiffs have been authorized by the co-owners to pursue the case on the latters behalf. These cases should be distinguished from Baloloy v. Hular
[40] [41]

and Adlawan v. Adlawan

where the actions for

quieting of title and unlawful detainer, respectively, were brought for the benefit of the plaintiff alone who claimed to be the sole owner. We held that the action will not prosper unless the plaintiff impleaded the other co-owners who are indispensable parties. In these cases, the absence of an indispensable party rendered all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even as to those present. We read these cases to collectively mean that where the suit is brought by a co-owner, without repudiating the coownership, then the suit is presumed to be filed for the benefit of the other co-owners and may proceed without impleading the other co-owners. However, where the co-owner repudiates the co-ownership by claiming sole ownership of the property or where the suit is brought against a co-owner, his co-owners are indispensable parties and must be impleaded as party-defendants, as the suit affects the rights and interests of these other co-owners. In the present case, the respondent, as the plaintiff in the court below, never disputed the existence of a coownership nor claimed to be the sole or exclusive owner of the litigated lot. In fact, he recognized that he is a bonafide co-owner of the questioned property, along with his deceased wife. Moreover and more importantly, the respondents claim in his complaint in Civil Case No. 2919-03 is personal to him and his wife, i.e., that his and his wifes signatures in the Deed of Absolute Sale in favor of petitioner Josephine were falsified. The issue therefore is falsification, an issue which does not require the participation of the respondents co -owners at the trial; it can be determined without their presence because they are not parties to the document; their signatures do not appear therein. Their rights and interests as coowners are adequately protected by their co-owner and father, respondent Moises O. Anacay, since the complaint was made precisely to recover ownership and possession of the properties owned in common, and, as such, will redound to the benefit of all the co-owners.
[42]

In sum, respondents children, as co-owners of the subject property, are not indispensable parties to the resolution of the case. We held in Carandang v. Heirs of De Guzman
[44] [43]

that in cases like this, the co-owners are not even necessary

parties, for a complete relief can be accorded in the suit even without their participation, since the suit is presumed to be filed for the benefit of all. 2919-03. We cannot subscribe to the petitioners reliance on our rulings in Arcelona v. Court of Appeals, Sendiong
[46] [45]

Thus, the respondents children need not be impleaded as party-plaintiffs in Civil Case No.

Orbeta v.

and Galicia v. Manliquez Vda. de Mindo,

[47]

for these cases find no application to the present case. In these

cited cases, the suits were either filed against a co-owner without impleading the other co-owners, or filed by a party claiming sole ownership of a property that would affect the interests of third parties. Arcelona involved an action for security of tenure filed by a tenant without impleading all the co-owners of a fishpond as party-defendants. We held that a tenant, in an action to establish his status as such, must implead all the proindiviso co-owners as party-defendants since a tenant who fails to implead all the co-owners as party-defendants cannot establish with finality his tenancy over the entire co-owned land. Orbeta, on the other hand, involved an action for recovery of possession, quieting of title and damages wherein the plaintiffs prayed that they be declared absolute co -owners of the disputed property, but we found that there were third parties whose rights will be affected by the ruling and who should thus be impleaded as indispensable parties. In Galicia, we noted that the complaint for recovery of possession and ownership and annulment of title alleged that the plaint iffs predecessor-in-interest was deprived of possession and ownership by a third party, but the complaint failed to implead all the heirs of that third party, who were considered indispensable parties. In light of these conclusions, no need arises to act on petitioners prayer for a TRO to suspend the proceedings in the RTC and we find no reason to grant the present petition. WHEREFORE, premises considered, we hereby DENY the petition for its failure to show any reversible error in the assailed Decision dated December 28, 2007 and Resolution dated April 11, 2008 of the Court of Appeals in CA-G.R. SP No. 94673, both of which we hereby AFFIRM. Costs against the petitioners.

PEDRO T. SANTOS, JR., Petitioner,

G.R. No. 170943

PNOC EXPLORATION CORPORATION,

This is a petition for review

[1]

of the September 22, 2005 decision

[2]

and December 29, 2005 resolution

[3]

of the

Court of Appeals in CA-G.R. SP No. 82482.

On December 23, 2002, respondent PNOC Exploration Corporation filed a complaint for a sum of money against petitioner Pedro T. Santos, Jr. in the Regional Trial Court of Pasig City, Branch 167. The complaint, docketed as Civil Case No. 69262, sought to collect the amount of P698,502.10 representing petitioners unpaid balance of the car loan advanced to him by respondent when he was still a member of its board of directors.
[4]

Personal service of summons to petitioner failed because he could not be located in his last known address despite earnest efforts to do so. Subsequently, on respondents motion, the trial court allowed service of summons by publication.

Respondent caused the publication of the summons in Remate, a newspaper of general circulation in the Philippines, on May 20, 2003. Thereafter, respondent submitted the affidavit of publication of the advertising manager of Remate and an affidavit of service of respondents employee registered mail to petitioners last known address.
[5] [6]

to the effect that he sent a copy of the summons by

When petitioner failed to file his answer within the prescribed period, respondent moved that the case be set for the reception of its evidence ex parte. The trial court granted the motion in an order dated September 11, 2003.

Respondent proceeded with the ex parte presentation and formal offer of its evidence. Thereafter, the case was deemed submitted for decision on October 15, 2003.

On October 28, 2003, petitioner filed an Omnibus Motion for Reconsideration and to Admit Attached Answer. He sought reconsideration of the September 11, 2003 order, alleging that the affidavit of service submitted by respondent failed to comply with Section 19, Rule 14 of the Rules of Court as it was not executed by the clerk of court. He also claimed that he was denied due process as he was not notified of the September 11, 2003 order. He prayed that respondents evidence ex parte be stricken off the records and that his answer be admitted.

Respondent naturally opposed the motion. It insisted that it complied with the rules on service by publication. Moreover, pursuant to the September 11, 2003 order, petitioner was already deemed in default for failure to file an answer within the prescribed period.

In an order dated February 6, 2004, the trial court denied petitioners motion for reconsideration of the September 11, 2003 order. It held that the rules did not require the affidavit of complementary service by registered mail to be executed by the clerk of court. It also ruled that due process was observed as a copy of the September 11, 2003 order was actually mailed to petitioner at his last known address. It also denied the motion to admit petitioners answer because the same was filed way beyond the reglementary period.

Aggrieved, petitioner assailed the September 11, 2003 and February 6, 2004 orders of the trial court in the Court of Appeals via a petition for certiorari. He contended that the orders were issued with grave abuse of discretion. He imputed the following errors to the trial court: taking cognizance of the case despite lack of jurisdiction due to improper service of summons; failing to furnish him with copies of its orders and processes, particularly the September 11, 2003 order, and upholding technicality over equity and justice.

During the pendency of the petition in the Court of Appeals, the trial court rendered its decision in Civil Case No. 69262. It ordered petitioner to pay P698,502.10 plus legal interest and costs of suit.
[7]

Meanwhile, on September 22, 2005, the Court of Appeals rendered its decision

[8]

sustaining the September 11,

[9]

2003 and February 6, 2004 orders of the trial court and dismissing the petition. It denied reconsideration. petition.

Thus, this

Petitioner essentially reiterates the grounds he raised in the Court of Appeals, namely, lack of jurisdiction over his person due to improper service of summons, failure of the trial court to furnish him with copies of its orders and processes including the September 11, 2003 order and preference for technicality rather than justice and equity. In particular, he claims that the rule on service by publication under Section 14, Rule 14 of the Rules of Court applies only to actions in rem, not actions in personam like a complaint for a sum of money. He also contends that the affidavit of service of a copy of the summons should have been prepared by the clerk of court, not respondents messenger.

The petition lacks merit. PROPRIETY OF

SERVICE BY PUBLICATION

Section 14, Rule 14 (on Summons) of the Rules of Court provides: SEC. 14. Service upon defendant whose identity or whereabouts are unknown. In any action where the defendant is designated as an unknown owner, or the like, or whenever his whereabouts are unknown and cannot be ascertained by diligent inquiry, service may, by leave of court, be effected upon him by publication in a newspaper of general circulation and in such places and for such times as the court may order. (emphasis supplied)

Since petitioner could not be personally served with summons despite diligent efforts to locate his whereabouts, respondent sought and was granted leave of court to effect service of summons upon him by publication in a newspaper of general circulation. Thus, petitioner was properly served with summons by publication.

Petitioner invokes the distinction between an action in rem and an action in personam and claims that substituted service may be availed of only in an action in rem. Petitioner is wrong. The in rem/in personam distinction was significant under the old rule because it was silent as to the kind of action to which the rule was applicable. silence, the Court limited the application of the old rule to in rem actions only.
[11] [10]

Because of this

This has been changed. The present rule expressly states that it applies [i]n any action where the defendant is designated as an unknown owner, or the like, or whenever his whereabouts are unknown and cannot be ascertained by diligent inquiry. Thus, it now applies to any action, whether in personam, in rem or quasi in rem.
[13] [12]

Regarding the matter of the affidavit of service, the relevant portion of Section 19, simply speaks of the following:

Rule 14 of the Rules of Court

an affidavit showing the deposit of a copy of the summons and order for publication in the post office, postage prepaid, directed to the defendant by registered mail to his last known address.

Service of summons by publication is proved by the affidavit of the printer, his foreman or principal clerk, or of the editor, business or advertising manager of the newspaper which published the summons. The service of summons by publication is complemented by service of summons by registered mail to the defendants last known address. This complementary service is evidenced by an affidavit showing the deposit of a copy of the summons and order for publication in the post office, postage prepaid, directed to the defendant by r egistered mail to his last known address.

The rules, however, do not require that the affidavit of complementary service be executed by the clerk of court. While the trial court ordinarily does the mailing of copies of its orders and processes, the duty to make the complementary service by registered mail is imposed on the party who resorts to service by publication.

Moreover, even assuming that the service of summons was defective, the trial court acquired jurisdiction over the person of petitioner by his own voluntary appearance in the action against him. In this connection, Section 20, Rule 14 of the Rules of Court states: SEC. 20. Voluntary appearance. The defendants 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)

Petitioner voluntarily appeared in the action when he filed the Omni bus Motion for Reconsideration and to Admit Attached Answer.
[14]

This was equivalent to service of summons and vested the trial court with jurisdiction over the

person of petitioner. ENTITLEMENT TO

NOTICE OF PROCEEDINGS

The trial court allowed respondent to present its evidence ex parte on account of petitioners failure to file his answer within the prescribed period. Petitioner assails this action on the part of the trial court as well as the said courts failure to furnish him with copies of orders and processes issued in the course of the proceedings.

The effects of a defendants failure to file an answer within the time allowed therefor a re governed by Sections 3 and 4, Rule 9 (on Effect of Failure to Plead) of the Rules of Court: SEC. 3. Default; declaration of. If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default . Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court. SEC. 4. Effect of order of default. A party in default shall be entitled to notice of subsequent proceedings but not to take part in the trial. (emphasis supplied) If the defendant fails to file his answer on time, he may be declared in default upon motion of the plaintiff with notice to the said defendant. In case he is declared in default, the court shall proceed to render judgment granting the plaintiff such relief as his pleading may warrant, unless the court in its discretion requires the plaintiff to submit evidence. The defaulting defendant may not take part in the trial but shall be entitled to notice of subsequent proceedings.

In this case, even petitioner himself does not dispute that he failed to file his answer on time. That was in fact why he had to file an Omnibus Motion for Reconsideration and to Admit Attached Answer. But respondent moved only for the ex parte presentation of evidence, not for the declaration of petitioner in default. In its February 6, 2004 order, the trial court stated: The disputed Order of September 11, 2003 allowing the presentation of evidence ex-parte precisely ordered that despite and notwithstanding service of summons by publication, no answer has been filed with the Court within the required period and/or forthcoming.[] Effectively[,] that was a finding that the defendant [that is, herein petitioner] was in default for failure to file an answer or any responsive pleading within the period fixed in the publication as precisely the defendant [could not] be found and for which reason, service of summons by publication was ordered. It is simply illogical to notify the defendant of the Order of September 11, 2003 simply on account of the reality that he was no longer residing and/or found on his last known address and his whereabouts unknown thus the publication of the summons. In other words, it was reasonable to expect that the defendant will not receive any notice or order in his last known address. Hence, [it was] impractical to send any notice or order to him. Nonetheless, the record[s] will bear out that a copy of the order of September 11, 2003 was mailed to the defendant at his last known address but it was not claimed. (emphasis supplied) As is readily apparent, the September 11, 2003 order did not limit itself to permitting respondent to present its evidence ex parte but in effect issued an order of default. But the trial court could not validly do that as an order of default [15] can be made only upon motion of the claiming party. Since no motion to declare petitioner in default was filed, no default order should have been issued. To pursue the matter to its logical conclusion, if a party declared in default is entitled to notice of subsequent proceedings, all the more should a party who has not been declared in default be entitled to such notice. But what happens if the residence or whereabouts of the defending party is not known or he cannot be located? In such a case, there is obviously no way notice can be sent to him and the notice requirement cannot apply to him. The law does not [16] require that the impossible be done. Nemo tenetur ad impossibile. The law obliges no one to perform an [17] impossibility. Laws and rules must be interpreted in a way that they are in accordance with logic, common sense, [18] reason and practicality.

Hence, even if petitioner was not validly declared in default, he could not reasonably demand that copies of orders and processes be furnished him. Be that as it may, a copy of the September 11, 2003 order was nonetheless still mailed to petitioner at his last known address but it was unclaimed. CORRECTNESS OF

NON-ADMISSION OF ANSWER

Petitioner failed to file his answer within the required period. Indeed, he would not have moved for the admission of his answer had he filed it on time. Considering that the answer was belatedly filed, the trial court did not abuse its discretion in denying its admission.

Petitioners plea for equity must fail in the face of the clear and express language of the rules of procedure and of the September 11, 2003 order regarding the period for filing the answer. Equity is available only in the absence of law, not as its replacement.
[19]

Equity may be applied only in the absence of rules of procedure, never in contravention thereof.

WHEREFORE, the petition is hereby DENIED. Costs against petitioner.

GOVERNMENT SYSTEM (GSIS),

SERVICE

INSURANCE

G.R. Nos. 158090

HEIRS OF FERNANDO F. CABALLERO, represented by his daughter, JOCELYN G. CABALLERO,

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to set aside the [1] [2] Decision and the Resolution, dated December 17, 2002 and April 29, 2003, respectively, of the Court of Appeals (CA) in CA-G.R. CV. No. 49300. The antecedents are as follows:

Respondent Fernando C. Caballero (Fernando) was the registered owner of a residential lot designated as Lot No. 3355, Ts-268, covered by TCT No. T-16035 of the Register of Deeds of Cotabato, containing an area of 800 square meters and situated at Rizal Street, Mlang, Cotabato. On the said lot, respondent built a residential/commercial building consisting of two (2) stories. On March 7, 1968, Fernando and his wife, Sylvia Caballero, secured a loan from petitioner Government Service Insurance System (GSIS) in the amount ofP20,000.00, as evidenced by a promissory note. Fernando and his wife likewise executed a real estate mortgage on the same date, mortgaging the afore-stated property as security. Fernando defaulted on the payment of his loan with the GSIS. Hence, on January 20, 1973, the mortgage covering the subject property was foreclosed, and on March 26, 1973, the same was sold at a public auction where the petitioner was the only bidder in the amount of P36,283.00. For failure of Fernando to redeem the said property within the designated period, petitioner executed an Affidavit of Consolidation of Ownership on September 5, 1975. Consequently, TCT No. T-16035 was cancelled and TCT No. T-45874 was issued in the name of petitioner.

On November 26, 1975, petitioner wrote a letter to Fernando, informing him of the consolidation of title in its favor, and requesting payment of monthly rental in view of Fernando's continued occupancy of the subject property. In reply, Fernando requested that he be allowed to repurchase the same through partial payments. Negotiation as to the repurchase by Fernando of the subject property went on for several years, but no agreement was reached between the parties. On January 16, 1989, petitioner scheduled the subject property for public bidding. On the scheduled date of bidding, Fernando's daughter, Jocelyn Caballero, submitted a bid in the amount of P350,000.00, while Carmelita Mercantile Trading Corporation (CMTC) submitted a bid in the amount of P450,000.00. Since CMTC was the highest

bidder, it was awarded the subject property. On May 16, 1989, the Board of Trustees of the GSIS issued Resolution No. 199 confirming the award of the subject property to CMTC for a total consideration of P450,000.00. Thereafter, a Deed of Absolute Sale was executed between petitioner and CMTC on July 27, 1989, transferring the subject property to

CMTC. Consequently, TCT No. T-45874 in the name of GSIS was cancelled, and TCT No. T-76183 was issued in the name of CMTC. Due to the foregoing, Fernando, represented by his daughter and attorney-in-fact, Jocelyn Caballero, filed with the Regional Trial Court (RTC) of Kabacan, Cotabato a Complaint
[3]

against CMTC, the GSIS and its responsible officers, and

the Register of Deeds of Kidapawan, Cotabato. Fernando prayed, among others, that judgment be rendered: declaring GSIS Board of Trustees Resolution No. 199, dated May 16, 1989, null and void; declaring the Deed of Absolute Sale between petitioner and CMTC null and void ab initio; declaring TCT No. 76183 of the Register of Deeds of Kidapawan, Cotabato, likewise, null and void ab initio; declaring the bid made by Fernando in the amount of P350,000.00 for the repurchase of his property as the winning bid; and ordering petitioner to execute the corresponding Deed of Sale of the subject property in favor of Fernando. He also prayed for payment of moral damages, exemplary damages, attorney's fees and litigation expenses.

In his complaint, Fernando alleged that there were irregularities in the conduct of the bidding. CMTC misrepresented itself to be wholly owned by Filipino citizens. It misrepresented its working capital. Its representative Carmelita Ang Hao had no prior authority from its board of directors in an appropriate board resolution to participate in the bidding. The corporation is not authorized to acquire real estate or invest its funds for purposes other than its primary purpose. Fernando further alleged that the GSIS allowed CMTC to bid despite knowledge that said corporation has no authority to do so. The GSIS also disregarded Fernando's prior right to buy back his family home and lot in violation of the laws. The Register of Deeds of Cotabato acted with abuse of power and authority when it issued the TCT in favor of CMTC without requiring the CMTC to submit its supporting papers as required by the law. filed their Answer with Affirmative Defenses and Counterclaim.
[4]

Petitioner and its officers

The GSIS alleged that Fernando lost his right of

redemption. He was given the chance to repurchase the property; however, he did not avail of such option compelling the GSIS to dispose of the property by public bidding as mandated by law. There is also no prior right to buy back that can be exercised by Fernando. Further, it averred that the articles of incorporation and other papers of CMTC were all in order. In its counterclaim, petitioner alleged that Fernando owed petitioner the sum of P130,365.81, representing back rentals, including additional interests from January 1973 to February 1987, and the additional amount of P249,800.00, excluding applicable interests, representing rentals Fernando unlawfully collected from Carmelita Ang Hao from January 1973 to February 1988. After trial, the RTC, in its Decision
[5]

dated September 27, 1994, ruled in favor of petitioner and dismissed the

complaint. In the same decision, the trial court granted petitioner's counterclaim and directed Fernando to pay petitioner the rentals paid by CMTC in the amount of P249,800.00. The foregoing amount was collected by Fernando from the

CMTC and represents payment which was not turned over to petitioner, which was entitled to receive the rent from the date of the consolidation of its ownership over the subject property. Fernando filed a motion for reconsideration, which was denied by the RTC in an Order dated March 27, 1995. Aggrieved by the Decision, respondent filed a Notice of Appeal.
[6]

The CA, in its Decision dated December 17,

2002, affirmed the decision of the RTC with the modification that the portion of the judgment ordering Fernando to pay rentals in the amount of P249,800.00, in favor of petitioner, be deleted. Petitioner filed a motion for reconsideration, which the CA denied in a Resolution dated April 29, 2003. Hence, the instant petition. An Ex Parte Motion for Substitution of Party,
[7]

dated July 18, 2003, was filed by the surviving heirs of Fernando,

who died on February 12, 2002. They prayed that they be allowed to be substituted for the deceased, as respondents in this case. Petitioner enumerated the following grounds in support of its petition:I THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN HOLDING THAT GSIS' COUNTERCLAIM, AMONG OTHERS, OF P249,800.00 REPRESENTING RENTALS COLLECTED BY PRIVATE RESPONDENT FROM CARMELITA MERCANTILE TRADING CORPORATION IS IN THE NATURE OF A PERMISSIVE COUNTERCLAIM WHICH REQUIRED THE PAYMENT BY GSIS OF DOCKET FEES BEFORE THE TRIAL COURT CAN ACQUIRE JURISDICTION OVER SAID COUNTERCLAIM. II THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN HOLDING THAT GSIS' DOCUMENTARY EVIDENCE SUPPORTING ITS CLAIM OFP249,800.00 LACKS PROPER [8] IDENTIFICATION.

The petition of the GSIS seeks the review of the CA's Decision insofar as it deleted the trial court's award of P249,800.00 in its favor representing rentals collected by Fernando from the CMTC. In their Memorandum, respondents claim that CMTC cannot purchase real estate or invest its funds in any purpose other than its primary purpose for which it was organized in the absence of a corporate board resolution; the bid award, deed of absolute sale and TCT No. T-76183, issued in favor of the CMTC, should be nullified; the trial court erred in concluding that GSIS personnel have regularly performed their official duty when they conducted the public bidding; Fernando, as former owner of the subject property and former member of the GSIS, has the preemptive right to repurchase the foreclosed property. These additional averments cannot be taken cognizance by the Court, because they were substantially respondents arguments in their petition for review oncertiorari earlier filed before Us and docketed as G.R. No. 156609. Records show that said petition was denied by the Court in a Resolution
[9]

dated April 23, 2003, for petitioners

(respondents herein) failure to sufficiently show that the Court of Appeals committed any reversible error in the challenged decision as to warrant the exercise by this Court of its discretionary appellate jurisdiction. and executory on June 9, 2003.
[11] [10]

Said resolution became final

Respondents attempt to re-litigateclaims already passed upon and resolved with

finality by the Court in G.R. No. 156609 cannot be allowed.

Going now to the first assigned error, petitioner submits that its counterclaim for the rentals collected by Fernando from the CMTC is in the nature of a compulsory counterclaim in the original action of Fernando against petitioner for annulment of bid award, deed of absolute sale and TCT No. 76183. Respondents, on the other hand, alleged that petitioner's counterclaim is permissive and its failure to pay the prescribed docket fees results into the dismissal of its claim. To determine whether a counterclaim is compulsory or not, the Court has devised the following tests: (a) Are the issues of fact and law raised by the claim and by the counterclaim largely the same? (b) Would res judicata bar a subsequent suit on defendants claims, absent the compulsory counterclaim rule? (c) Will substantially the same evidence support or refute plaintiffs claim as well as the defendants counterclaim? and (d) Is there any logical relation between th e claim and the counterclaim? A positive answer to all four questions would indicate that the counterclaim is compulsory.
[12]

Tested against the above-mentioned criteria, this Court agrees with the CA's view that petitioner's counterclaim for the recovery of the amount representing rentals collected by Fernando from the CMTC is permissive. The evidence needed by Fernando to cause the annulment of the bid award, deed of absolute sale and TCT is different from that required to establish petitioner's claim for the recovery of rentals. The issue in the main action, i.e., the nullity or validity of the bid award, deed of absolute sale and TCT in favor of CMTC, is entirely different from the issue in the counterclaim, i.e., whether petitioner is entitled to receive the CMTC's rent payments over the subject property when petitioner became the owner of the subject property by virtue of the consolidation of ownership of the property in its favor. The rule in permissive counterclaims is that for the trial court to acquire jurisdiction, the counterclaimant is bound to pay the prescribed docket fees.
[13]

This, petitioner did not do, because it asserted that its claim for the collection of

rental payments was a compulsory counterclaim. Since petitioner failed to pay the docket fees, the RTC did not acquire jurisdiction over its permissive counterclaim. The judgment rendered by the RTC, insofar as it ordered Fernando to pay petitioner the rentals which he collected from CMTC, is considered null and void. Any decision rendered without jurisdiction is a total nullity and may be struck down at any time, even on appeal before this Court.
[14]

Petitioner further argues that assuming that its counterclaim is permissive, the trial court has jurisdiction to try and decide the same, considering petitioner's exemption from all kinds of fees. In In Re: Petition for Recognition of the Exemption of the Government Service Insurance System from Payment of Legal Fees,
[15]

the Court ruled that the provision in the Charter of the GSIS, i.e., Section 39 of Republic Act No. 8291,

which exempts it from all taxes, assessments, fees, charges or duties of all kinds, cannot operate to exempt it from the payment of legal fees. This was because, unlike the 1935 and 1973 Constitutions, which empowered Congress to repeal, alter or supplement the rules of the Supreme Court concerning pleading, practice and procedure, the 1987 Constitution removed this power from Congress. Hence, the Supreme Court now has the sole authority to promulgate rules concerning pleading, practice and procedure in all courts. In said case, the Court ruled that: The separation of powers among the three co-equal branches of our government has erected an impregnable wall that keeps the power to promulgate rules of pleading, practice and procedure within the sole province of this Court. The other branches trespass upon this prerogative if they enact laws or issue

orders that effectively repeal, alter or modify any of the procedural rules promulgated by this Court. Viewed from this perspective, the claim of a legislative grant of exemption from the payment of legal fees under Section 39 of RA 8291 necessarily fails. Congress could not have carved out an exemption for the GSIS from the payment of legal fees without transgressing another equally important institutional safeguard of the Court's independence fiscal autonomy. Fiscal autonomy recognizes the power and authority of the Court to levy, assess and collect fees, including legal fees. Moreover, legal fees under Rule 141 have two basic components, the Judiciary Development Fund (JDF) and the Special Allowance for the Judiciary Fund (SAJF). The laws which established the JDF and the SAJF expressly declare the identical purpose of these funds to "guarantee the independence of the Judiciary as mandated by the Constitution and public policy." Legal fees therefore do not only constitute a vital source of the Court's financial resources but also comprise an essential element of the Court's fiscal independence. Any exemption from the payment of legal fees granted by Congress to government-owned or controlled corporations and local government units will necessarily reduce the JDF and the SAJF. Undoubtedly, such situation is constitutionally infirm for it impairs the Court's guaranteed fiscal autonomy and erodes its independence.
[16]

Petitioner also invoked our ruling in Sun Insurance Office, Ltd. v. Judge Asuncion,

where the Court held that:

3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been left for determination by the court, the additional filing fee therefor shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee. In Ayala Corporation v. Madayag,
[17]

the Court, in interpreting the third rule laid down in Sun Insurance Office, Ltd.

v. Judge Asuncion regarding awards of claims not specified in the pleading, held that the same refers only to damages arising after the filing of the complaint or similar pleading as to which the additional filing fee therefor shall constitute a lien on the judgment. The amount of any claim for damages, therefore, arising on or before the filing of the complaint or any pleading should be specified. While it is true that the determination of certain damages as exemplary or corrective damages is left to the sound discretion of the court, it is the duty of the parties claiming such damages to specify the amount sought on the basis of which the court may make a proper determination, and for the proper assessment of the appropriate docket fees. The exception contemplated as to claims not specified or to claims although specified are left for determination of the court is limited only to any damages that may arise after the filing of the complaint or similar pleading for then it will not be possible for the claimant to specify nor speculate as to the amount thereof. (Emphasis supplied.)

Petitioner's claim for payment of rentals collected by Fernando from the CMTC did not arise after the filing of the complaint; hence, the rule laid down in Sun Insurance finds no application in the present case. Due to the non-payment of docket fees on petitioner's counterclaim, the trial court never acquired jurisdiction over it and, thus, there is no need to discuss the second issue raised by petitioner. WHEREFORE, the petition is DENIED. The Decision and the Resolution, dated December 17, 2002 and April 29, 2003, respectively, of the Court of Appeals in CA-G.R. CV. No. 49300, are AFFIRMED.

METROPOLITAN BANK AND TRUST CO. and SOLIDBANK CORPORATION,

BERNARDITA H. PEREZ, represented by her Attorney-in-Fact PATRIA H. PEREZ,

On September 17, 1997, petitioner Solidbank Corporation (Solidbank) forged a lease contract with Bernardita H. Perez (respondent), represented by her attorney-in-fact Patria H. Perez , over two parcels of land located in Sta. Maria, Bulacan for a period of 15 years commencing on January 1, 1998. Solidbank was to, as it did, construct a one-storey building specifically suited for bank premises. Solidbank was later acquired by its co-petitioner Metropolitan Bank and Trust Company (Metrobank), the latter as the surviving entity.
[1]

On September 24, 2002, Metrobank sent a notice of termination of the lease contract effective September 30, 2002.
[2]

Respondent, objecting to the termination, filed a complaint for breach of contract and damages against herein

petitioners Solidbank and Metrobank before the Regional Trial Court (RTC) of Malolos, Bulacan praying that, inter alia, herein petitioners be ordered to pay her the would be unrealized income for the ensuing idle months of the said building.
[3]

Metrobank asserted in its Answer with Counterclaim, however, that the lease contract did not prohibit pretermination by the parties. After respondent rested her case, Metrobank was, by Order of January 12, 2006, declared to have waived its right to present evidence after its counsel incurred several unexcused absences. By Decision of April 5, 2006, Branch 22 of the Malolos RTC ruled in favor of respondent, disposing as follows: WHEREFORE, IN VIEW OF THE FOREGOING, judgment is hereby rendered in favor of the plaintiff and against the defendants ordering the latter, jointly and severally: 1. To pay the plaintiff the amount of P212,322.60 as unrealized income before the filing of the case (Sept. 2002 to Feb. 2003); 2. To pay the plaintiff the amount of P2,013,753.03 as unrealized (income) after the filing of the case up to present (March 2003 to March 2006); 3. To pay the plaintiff the would be unrealized income for the ensuing idle months of said building amounting to P7,126,494.30 (covering April 2006 until expiration of the contract of lease); 4. To pay plaintiff the amount of P200,000.00 as moral damages; 5. To pay plaintiff the amount of P100,000.00 as exemplary damages; 6. To pay plaintiff the amount of P100,000.00 as attorneys fees and 7. To pay plaintiff as litigation expenses. [4] SO ORDERED. (emphasis and underscoring supplied) On appeal, Metrobank challenged, in the main, the trial cour ts award of unrealized income for the ensuing idle months despite respondents failure to pay docket fees thereon to thus render the complaint dismissible for lack of jurisdiction. By Decision
[5]

of November 23, 2007, the appellate court affirmed that of the trial court

[6]

and denied, by Resolution

of February 21, 2008, a reconsideration thereof. Hence, the present petition for review on certiorari. In her Comment, respondent admitted that the filing fees she paid did not cover her prayer for unrealized income for the ensuing idle months, for at the time of filing and payment[,] the period that the building would be idle could not yet be determined.
[7]

In sustaining respondents justification for nonpayment of additional docket fees, the appellate court held: For one, plaintiff-appellee Perez could not have been certain at the time she filed the Complaint that defendant-appellant Metrobank would no longer return to the Leased Property. It would have been speculative therefore on the part of plaintiff-appellee Perez to allege in her Complaint any unrealized income for the remaining period of the Lease Contract considering that the possibility of defendant-appellant Metrobank reconsidering its decision to terminate the said Lease Contract and returning to the Leased Property at some future time was not definitively foreclosed when the Complaint was filed. In light of her predicamentplaintiff-appellee Perez was thus justified in just making a general prayer for the court a quo to award unrealized income for the ensuing idle months of [8] the Leased Property. (italics in the original; underscoring supplied) The petition is partly meritorious. In Manchester Development Corporation v. Court of Appeals , the
[9]

Court held that a pleading which does not specify in the prayer the amount sought shall not be admitted or shall be

expunged, and that a court acquires jurisdiction only upon payment of the prescribed docket fee. This rule was relaxed in Sun Insurance Office, Ltd. v. Asuncion
[10]

which was echoed in the 2005 case of Heirs of Bertuldo Hinog v. Melico, the

pertinent portion of the decision in the latter case reads: Plainly, while the payment of prescribed docket fee is a jurisdictional requirement, even its nonpayment at the time of filing does not automatically cause the dismissal of the case, as long as the fee is paid within the applicable prescriptive or reglementary period , more so when the party involved demonstrates a willingness to abide by the rules prescribing such payment. Thus, when insufficient filing fees were initially paid by the plaintiffs and there was no intention to defraud the government , [11] the Manchester rule does not apply. (emphasis and underscoring supplied) Metrobank takes exception to the application of Sun Insurance Office to the present case because, by its claim, respondent deliberately concealed the insufficient payment of docket fees. Metrobanks position fails. The ensuing months in which the leased premises would be rendered vacant could not be determined at the time of the filing of the complaint. It bears recalling that the building constructed on respondents leased premises was specifically constructed to house a bank, hence, the idle period before another occupant with like business may opt to lease would be difficult to project. On Metrobanks raising the issue of lack of jurisdiction over the complaint for respondents failure to pay the correct docket fees, apropos is the ruling inNational Steel Corporation v. Court of Appeals:
[12]

Although the payment of the proper docket fees is a jurisdictional requirement, the trial court may allow the plaintiff in an action to pay the same within a reasonable time before the expiration of the applicable prescriptive or reglementary period. If the plaintiff fails to comply with this requirement, the defendant should timely raise the issue of jurisdiction or else he would be considered in estoppel. In the latter case, the balance between the appropriate docket fees and the amount actually paid by the plaintiff [13] will be considered a lien on any award he may obtain in his favor. (emphasis and underscoring supplied) Metrobank raised the issue of jurisdiction only before the appellate court after it and its co-petitioner participated in the proceedings before the trial court. While lack of jurisdiction may be raised at any time, a party may be held in estoppel if, as in the present case, it has actively taken part in the proceedings being questioned. The foregoing disposition notwithstanding, respondent is liable for the balance between the actual fees paid and the correct payable filing fees to include an assessment on the award of unrealized income, following Section 2 of Rule 141 which provides: SEC. 2. Fees in lien. Where the court in its final judgment awards a claim not alleged, or a relief different from, or more than that claimed in the pleading, the party concerned shall pay the additional fees which shall constitute a lien on the judgment in satisfaction of said lien. The clerk of court shall assess and collect the corresponding fee (underscoring supplied), and jurisprudence, viz: The exception contemplated as to claims not specified or to claims although specified are left for determination of the court is limited only to any damages that may arise after the filing of the complaint or similar pleading for then it will not be possible for the claimant to specify nor speculate as to the amount [14] thereof. (emphasis and underscoring supplied) A word on the grant of moral and exemplary damages and attorneys fees. The Court notes that respondents witness-attorney-in-fact testified only on the existence of the lease agreement and unrealized income due to pre-termination. Since an award of moral damages is predicated on a categorical showing from the claimant that emotional and mental sufferings were actually experienced, absent any evidence thereon in the present case,
[15]

the award must be disallowed. And so too must the award of attorneys fees, absent an indication in the

trial courts Decision of the factual basis thereof, the award having been merely sta ted in the dispositive portion.
[16]

Parenthetically, while respondent prayed in her complaint for the award of attorneys fees and testified during Now, in connection with the filing of this case and hiring your lawyer, do you have agreement with your counsel with respect to attorneys fees? P100,000.00 acceptance fees.

the trial that: Q: A:

Q: A:

What about appearance fees? [17] I forgot already, sir.,

there is no showing that she submitted any documentary evidence in support thereof. WHEREFORE, the petition is in part GRANTED. The November 23, 2007 Decision of the Court of Appeals is MODIFIED. The Clerk of Court of the Regional Trial Court of Malolos, Bulacan is ordered to reassess, determine and collect additional fees that should be paid by respondent within fifteen (15) days, in accordance with the foregoing discussion of the Court, provided the applicable prescriptive or reglementary period has not yet expired, which additional fees shall constitute a lien on the judgment in satisfaction of said lien. The award of moral and exemplary damages and attorneys fees is DELETED. In all other respects, the appellate courts Decision is AFFIRMED. SIMEON CABANG, VIRGINIA CABANG and VENANCIO CABANG ALIAS DONDON, Petitioners, MR. & MRS. GUILLERMO BASAY, Respondents. G.R. No. 180587

This petition for review on certiorari under Rule 45 of the Rules of Court seeks to annul and set aside the Decision of the Court of Appeals in CA-G.R. CV No. 76755
[1]

dated May 31, 2007

[2]

which reversed the Order

[3]

of the Regional Trial

Court of Molave, Zamboanga Del Sur, Branch 23 in Civil Case No. 99-20-127 which denied respondents motion for execution on the ground that petitioners family home was still subsisting. Also assailed is the Resolution dated September 21, 2007 denying the motion for reconsideration. The facts as summarized by the appellate court: Deceased Felix Odong was the registered owner of Lot No. 7777, Ts- 222 located in Molave, Zamboanga del Sur. Said lot was covered by Original Certificate of Title No. 0-2,768 pursuant to Decree No. N-64 and issued on March 9, 1966. However, Felix Odong and his heirs never occupied nor took possession of the lot. On June 16, 1987, plaintiff-appellants bought said real property from the heirs of Felix Odong for P8,000.00. Consequently, OCT No. 0-2,768 was cancelled and in its stead, Transfer Certificate of Title No. T-22,048 was issued on August 6, 1987 in the name of plaintiff-appellants. The latter also did not occupy the said property. Defendant-appellees, on the other hand, had been in continuous, open, peaceful and adverse possession of the same parcel of land since 1956 up to the present. They were the awardees in the cadastral proceedings of Lot No. 7778 of the Molave Townsite, Ts-222. During the said cadastral proceedings, defendant-appellees claimed Lot No. 7778 on the belief that the area they were actually occupying was Lot No. 7778. As it turned out, however, when the Municipality of Molave relocated the townsite lots in the area in 1992 as a big portion of Lot No. 7778 was used by the government as a public road and as there were many discrepancies in the areas occupied, it was then discovered that defendantappellees were actually occupying Lot No. 7777. On June 23, 1992, plaintiff-appellants filed a Complaint docketed as Civil Case No. 92-20-127 for Recovery of Property against defendant-appellees. On July 19, 1996, the trial court rendered its decision, the dispositive portion of which reads, thus: WHEREFORE, judgment is hereby rendered in favor of the defendants and against the plaintiff 1. Holding that the rights of the plaintiffs to recover the land registered in their names, have been effectively barred by laches; and Ordering the dismissal of the above-entitled case. No pronouncement as to cost. SO ORDERED. Aggrieved, plaintiff-appellants filed an appeal before the Court of Appeals assailing the abovedecision. Said appeal was docketed as CA-G.R. CV No. 55207. On December 23, 1998, the Court of Appeals, through the then Second Division, rendered a Decision reversing the assailed decision and decreed as follows:

2.

WHEREFORE, the judgment herein appealed from is hereby REVERSED, and judgment is hereby rendered declaring the plaintiffs-appellants to be entitled to the possession of Lot No. 7777 of the Molave Townsite, subject to the rights of the defendants-appellees under Article (sic) 448, 546, 547 and 548 of the New Civil Code. The records of this case are hereby ordered remanded to the court of origin for further proceedings to determine the rights of the defendants-appellees under the aforesaid article (sic) of the New Civil Code, and to render judgment thereon in accordance with the evidence and this decision. No pronouncement as to costs. SO ORDERED. Defendant-appellees thereafter filed a petition for review on certiorari under Rule 45 of the Rules of Court before the Supreme Court docketed as G.R. No. 139601. On October 18, 1999, the Supreme Court issued a Resolution denying the petition for late filing and lack of appropriate service. Subsequently, or on February 15, 2000, the Supreme Court Resolution had become final and executory. Consequently, the case was remanded to the court a quo and the latter commissioned the Municipal Assessor of Molave, Zamboanga del Sur to determine the value of the improvements introduced by the defendant-appellees. The Commissioners Report determined that at the time of ocular inspection, there were three (3) residential buildings constructed on the property in litigation. During the ocular inspection, plaintiffappellants son, Gil Basay, defendant-appellee Virginia Cabang, and one Bernardo Mendez, an occupant of the lot, were present. In the report, the following appraised value of the improvements were determined, thus: Owner Virginia Cabang Jovencio Capuno Amelito Mata 7777 Lot No. 7777 7777 14.00 Toilet Area (sq.m.) 32.55 15.75 Improvement Building Building Appraised Value P21,580.65 18,663.75

Trees 6.50

2,164.00

Building 5,658.10 1,500.00 Plants TOTAL

& P49,56

Thereafter, upon verbal request of defendant-appellees, the court a quo in its Order declared that the tie point of the survey should be the BLLM (Bureau of Lands Location Monument) and authorized the official surveyor of the Bureau of Lands to conduct the survey of the litigated property. Pursuant to the above Order, the Community Environment and Natural Resources Office (CENRO) of the Department of Environment and Natural Resources (DENR)-Region XI designated Geodetic Engineer Diosdado L. de Guzman to [act] as the official surveyor. On March 2002, Engr. De Guzman submitted his survey report which stated, inter alia: 1. That on September 18, 2001, the undersigned had conducted verification survey of Lot 7777, Ts222 and the adjacent lots for reference purposes-with both parties present on the survey; 2. That the survey was started from BLLM #34, as directed by the Order, taking sideshots of lot corners, existing concrete fence, road and going back to BLLM #34, a point of reference; 3. Considering that there was only one BLLM existing on the ground, the undersigned conducted astronomical observation on December 27, 2001 in order to check the carried Azimuth of the traverse; 4. That per result of the survey conducted, it was found out and ascertained that the area occupied by Mrs. Virginia Cabang is a portion of Lot 7777, with lot assignment to be known as Lot 7777-A with an area of 303 square meters and portion of Lot 7778 with lot assignment to be known as Lot 7778-A with an area of 76 square meters. On the same lot, portion of which is also occupied by Mr. Bernardo Mendez with lot assignment to be known as Lot 7777-B with an area of 236 square meters and Lot 7778-B with an area of 243 square meters as shown on the attached sketch for ready reference; 5. That there were three (3) houses made of light material erected inside Lot No. 7777-A, which is owned by Mrs. Virginia Cabang and also a concrete house erected both on portion of Lot No. 7777-B and Lot No. 7778-B, which is owned by Mr. Bernardo Mendez. x x x; 6. That the existing road had been traversing on a portion of Lot 7778 to be know (sic) as Lot 7778CA-G.R. SP No. with an area of 116 square meters as shown on attached sketch plan. During the hearing on May 10, 2002, plaintiff-appellants offer to pay P21,000.00 for the improvement of the lot in question was rejected by defendant-appellees. The court a quodisclosed its difficulty in resolving whether or not the houses may be subject of an order of execution it being a family home. On June 18, 2002, plaintiff-appellants filed their Manifestation and Motion for Execution alleging therein that defendant-appellees refused to accept payment of the improvements as determined by the court appointed Commissioner, thus, they should now be ordered to remove said improvements at their expense or if they refused, an Order of Demolition be issued. On September 6, 2002, the court a quo issued the herein assailed Order denying the motion for [4] execution.

Respondents thereafter elevated their cause to the appellate court which reversed the trial court in its May 31, 2007 Decision in CA-G.R. CV No. 76755. Petitioners Motion for Reconsideration was denied by the Court of Appeals in its Resolution
[5]

dated September 21, 2007.

Hence, this petition. Petitioners insist that the property subject of the controversy is a duly constituted family home which is not subject to execution, thus, they argue that the appellate tribunal erred in reversing the judgment of the trial court. The petition lacks merit. It bears stressing that the purpose for which the records of the case were remanded to the court of origin was for the enforcement of the appellate courts final and executory judgment
[6]

in CA-G.R. CV No. 55207 which, among others,

declared herein respondents entitled to the possession of Lot No. 7777 of the Molave Townsite subject to the provisions of Articles 448,
[7]

546,

[8]

547 an 548

[9]

[10]

of the Civil Code. Indeed, the decision explicitly decreed that the remand of the

records of the case was for the court of origin [t]o determine the rights of the defendants-appellees under the aforesaid article[s] of the New Civil Code, and to render judgment thereon in accordance with the evidence and this decision.

A final and executory judgment may no longer be modified in any respect, even if the modification is meant to correct erroneous conclusions of fact or law and whether it will be made by the court that rendered it or by the highest court in the land.
[11]

The only exceptions to this rule are the correction of (1) clerical errors; (2) the so-called nunc pro
[12]

tunc entries which cause no prejudice to any party, and (3) void judgments.

Well-settled is the rule that there can be no execution until and unless the judgment has become final and executory, i.e. the period of appeal has lapsed without an appeal having been taken, or, having been taken, the appeal has been resolved and the records of the case have been returned to the court of origin, in which event, execution shall issue as a matter of right.
[13]

In short, once a judgment becomes final, the winning party is entitled to a writ of execution
[14]

and the issuance thereof becomes a courts ministerial duty.

Furthermore, as a matter of settled legal principle, a writ of execution must adhere to every essential particulars of the judgment sought to be executed. judgment it seeks to enforce.
[16] [15]

An order of execution may not vary or go beyond the terns of the

A writ of execution must conform to the judgment and if it is different from, goes
[17]

beyond or varies the tenor of the judgment which gives it life, it is a nullity.

Otherwise stated, when the order of

execution and the corresponding writ issued pursuant thereto is not in harmony with and exceeds the judgment which gives it life, they have pro tanto no validity
[18]

to maintain otherwise would be to ignore the constitutional provision

[19]

against depriving a person of his property without due process of law.

As aptly pointed out by the appellate court, from the inception of Civil Case No. 99-20-127, it was already of judicial notice that the improvements introduced by petitioners on the litigated property are residential houses not family homes. Belatedly interposing such an extraneous issue at such a late stage of the proceeding is tantamount to interfering with and varying the terms of the final and executory judgment and a violation of respondents right to due process because As a general rule, points of law, theories and issues not brought to the attention of the trial court cannot be raised for the first time on appeal. For a contrary rule would be unfair to the adverse party who would have no opportunity to present further evidence material to the new theory, which it could have done had [20] it been aware of if at the time of the hearing before the trial court. The refusal, therefore, of the trial court to enforce the execution on the ground that the improvements introduced on the litigated property are family homes goes beyond the pale of what it had been expressly tasked to do, i.e. its ministerial duty of executing the judgment in accordance with its essential particulars . The foregoing factual, legal and jurisprudential scenario reduces the raising of the issue of whether or not the improvements introduced by petitioners are family homes into a mere afterthought.

Even squarely addressing the issue of whether or not the improvements introduced by petitioners on the subject land are family homes will not extricate them from their predicament. As defined, [T]he family home is a sacred symbol of family love and is the repository of cherished memories that last during ones lifetime.
[21]

It is the dwelling house where the husband and wife, or an unmarried head of a family reside,
[22]

including the land on which it is situated.

[23]

It is constituted jointly by the husband and the wife or by an unmarried head

of a family. Article 153 of the Family Code provides that The family home is deemed constituted from the time it is occupied as a family residence. From the time of its constitution and so long as any of its beneficiaries actually resides therein, the family home continues to be such and is exempt from execution, forced sale or attachment except as hereinafter provided and to the extent of the value allowed by law. The actual value of the family home shall not exceed, at the time of its constitution, the amount of P300,000.00 in urban areas and P200,000.00 in rural areas.
[24]

Under the afore-quoted provision, a family home is deemed constituted on

a house and a lot from the time it is occupied as a family residence. There is no need to constitute the same judicially or extra-judicially.
[25] [26]

There can be no question that a family home is generally exempt from execution,

provided it was duly constituted

as such. It is likewise a given that the family home must be constituted on property owned by the persons constituting it. Indeed as pointed out in Kelley, Jr. v. Planters Products, Inc.
[27]

[T]he family home m ust be part of the properties of

the absolute community or the conjugal partnership, or of the exclusive properties of either spouse with the latters consent, or on the property of the unmarried head of the family. In other words: The family home must be established on the properties of (a) the absolute community, or (b) the conjugal partnership, or (c) the exclusive property of either spouse with the consent of the other. It cannot be established on property held in co-ownership with third persons. However, it can be established partly on community property, or conjugal property and partly on the exclusive property of either spouse with the consent of the latter. If constituted by an unmarried head of a family, where there is no communal or conjugal property [29] existing, it can be constituted only on his or her own property. (Emphasis and italics supplied) Therein lies the fatal flaw in the postulate of petitioners. For all their arguments to the contrary, the stark and immutable fact is that the property on which their alleged family home stands is owned by respondents and the question of ownership had been long laid to rest with the finality of the appellate courts judgment in CA -G.R. CV No. 55207. Thus, petitioners continued stay on the subject land is only by mere toleran ce of respondents. All told, it is too late in the day for petitioners to raise this issue. Without doubt, the instant case where the family home issue has been vigorously pursued by petitioners is but a clear-cut ploy meant to forestall the enforcement of an otherwise final and executory decision. The execution of a final judgment is a matter of right on the part of the prevailing party whose implementation is mandatory and ministerial on the court or tribunal issuing the judgment. The most important phase of any proceeding is the execution of judgment.
[31] [30] [28]

Once a judgment becomes final,

the prevailing party should not, through some clever maneuvers devised by an unsporting loser, be deprived of the fruits of the verdict.
[32]

An unjustified delay in the enforcement of a judgment sets at naught the role of courts in disposing of
[33]

justiciable controversies with finality.

Furthermore, a judgment if not executed would just be an empty victory for the
[34]

prevailing party because execution is the fruit and end of the suit and very aptly called the life of the law.

The issue is moreover factual and, to repeat that trite refrain, the Supreme Court is not a trier of facts. It is not the function of the Court to review, examine and evaluate or weigh the probative value of the evidence presented. A question of fact would arise in such event. Questions of fact cannot be raised in an appeal via certiorari before the Supreme Court and are not proper for its consideration.
[35]

The rationale behind this doctrine is that a review of the findings of fact of the

appellate tribunal is not a function this Court normally undertakes. The Court will not weigh the evidence all over again unless there is a showing that the findings of the lower court are totally devoid of support or are clearly erroneous so as to constitute serious abuse of discretion. to justify a departure therefrom.
[36]

Although there are recognized exceptions

[37]

to this rule, none exists in this case

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated May 31, 2007 in CA-G.R. CV No. 76755 declaring respondents entitled to the writ of execution and ordering petitioners to vacate the subject property, as well as the Resolution dated September 21, 2007 denying the motion for reconsideration, are AFFIRMED. Costs against petitioners. SO ORDERED.

ROWENA PADILLA-RUMBAUA,

G.R. No. 166738

EDWARD RUMBAUA,
[1]

Petitioner Rowena Padilla-Rumbaua (petitioner) challenges, through her petition for review on certiorari, decision dated June 25, 2004
[2]

the

and the resolution dated January 18, 2005

[4]

[3]

of the Court of Appeals (CA) in CA-G.R. CV

No. 75095. The challenged decision reversed the decision

of the Regional Trial Court (RTC) declaring the marriage of

the petitioner and respondent Edward Rumbaua (respondent) null and void on the ground of the latters psychological incapacity. The assailed resolution, on the other hand, denied the petitioners motion for reconsideration. ANTECEDENT FACTS The present petition traces its roots to the petitioners complaint for the declaration of nullity of marriage against the respondent before the RTC, docketed as Civil Case No. 767. The petitioner alleged that the respondent was psychologically incapacitated to exercise the essential obligations of marriage as shown by the following circumstances: the respondent reneged on his promise to live with her under one roof after finding work; he failed to extend financial support to her; he blamed her for his mothers death; he represented himself as single in his transactions; a nd he pretended to be working in Davao, although he was cohabiting with another woman in Novaliches, Quezon City. Summons was served on the respondent through substituted service, as personal service proved futile.
[5]

The

RTC ordered the provincial prosecutor to investigate if collusion existed between the parties and to ensure that no fabrication or suppression of evidence would take place. of collusion between the parties.
[7] [6]

Prosecutor Melvin P. Tiongsons report negated the presence

The Republic of the Philippines (Republic), through the office of the Solicitor General (OSG), opposed the petition.
[8]

The OSG entered its appearance and deputized the Provincial Prosecutor of Nueva Vizcaya to assist in all
[9]

hearings of the case.

The petitioner presented testimonial and documentary evidence to substantiate her charges. The petitioner related that she and the respondent were childhood neighbors in Dupax del Norte, Nueva Vizcaya. Sometime in 1987, they met again and became sweethearts but the respondents family did not approve of thei r relationship. After graduation from college in 1991, the respondent promised to marry the petitioner as soon as he found a job. The job came in 1993, when the Philippine Air Lines ( PAL) accepted the respondent as a computer engineer. The respondent proposed to the petitioner that they first have a secret marriage in order not to antagonize his parents. The petitioner agreed; they were married in Manila on February 23, 1993. The petitioner and the respondent, however, never

lived together; the petitioner stayed with her sister in Fairview, Quezon City, while the respondent lived with his parents in Novaliches. The petitioner and respondent saw each other every day during the first six months of their marriage. At that point, the respondent refused to live with the petitioner for fear that public knowledge of their marriage would affect his application for a PAL scholarship. Seven months into their marriage, the couples daily meetings became occasional visits to the petitioners house in Fairview; they would have sexual trysts in motels. Later that year, the respondent enrolled at FEATIUniversity after he lost his employment with PAL.
[10]

In 1994, the parties respective families discovered their secret marriage. The respondents mother tried to convince him to go to the United States, but he refused. To appease his mother, he continued living separately from the petitioner. The respondent forgot to greet the petitioner during her birthday in 1992 and likewise failed to send her greeting cards on special occasions. The respondent indicated as well in his visa application that he was single. In April 1995, the respondents mother died. The respondent blamed the petitioner, associating his mothers death to the pain that the discovery of his secret marriage brought. Pained by the respondents action, the petitioner severed her relationship with the respondent. They eventually reconciled thro ugh the help of the petitioners father, although they still lived separately. In 1997, the respondent informed the petitioner that he had found a job in Davao. A year later, the petitioner and her mother went to the respondents house in Novaliches and fo und him cohabiting with one Cynthia Villanueva (Cynthia). When she confronted the respondent about it, he denied having an affair with Cynthia.
[11]

The petitioner

apparently did not believe the respondents and moved to to Nueva Vizcaya to recover from the pain and anguish that her discovery brought.
[12]

The petitioner disclosed during her cross-examination that communication between her and respondent had ceased. Aside from her oral testimony, the petitioner also presented a certified true copy of their marriage contract; the testimony, curriculum vitae, Tayag). Dr. Tayag declared on the witness stand that she administered the following tests on the petitioner: a Revised Beta Examination; a Bender Visual Motor Gestalt Test; a Rorschach Psychodiagnostic Test; a Draw a Person Test; a Sachs Sentence Completion Test; and MMPI. findings: TEST RESULTS AND EVALUATION Psychometric tests data reveal petitioner to operate in an average intellectual level. Logic and reasoning remained intact. She is seen to be the type of woman who adjusts fairly well into most situations especially if it is within her interests. She is pictured to be faithful to her commitments and had reservations from negative criticisms such that she normally adheres to social norms, behavior-wise. Her age speaks of maturity, both intellectually and emotionally. Her one fault lies in her compliant attitude which makes her a subject for manipulation and deception such that of respondent. In all the years of their relationship, she opted to endure his irresponsibility largely because of the mere belief that someday things will be much better for them. But upon the advent of her husbands infidelity, she gradually lost hope as well as the sense of self-respect, that she has finally taken her tool to be assertive to the point of being aggressive and very cautious at times so as to fight with the frustration and insecurity she had especially regarding her failed marriage. Respondent in this case, is revealed to operate in a very self-centered manner as he believes that the world revolves around him. His egocentrism made it so easy for him to deceitfully use others for his own advancement with an extreme air of confidence and
[16] [14] [13]

and

and psychological report

[15]

of clinical psychologist Dr. Nedy Lorenzo Tayag ( Dr.

She thereafter prepared a psychological report with the following

dominance. He would do actions without any remorse or guilt feelings towards others especially to that of petitioner. REMARKS Love happens to everyone. It is dubbed to be boundless as it goes beyond the expectations people tagged with it. In love, age does matter. People love in order to be secure that one will share his/her life with another and that he/she will not die alone. Individuals who are in love had the power to let love grow or let love die it is a choice one had to face when love is not the love he/she expected. In the case presented by petitioner, it is very apparent that love really happened for her towards the young respondent who used love as a disguise or deceptive tactic for exploiting the confidence she extended towards him. He made her believe that he is responsible, true, caring and thoughtful only to reveal himself contrary to what was mentioned. He lacked the commitment, faithfulness, and remorse that he was able to engage himself to promiscuous acts that made petitioner look like an innocent fool. His character traits reveal him to suffer Narcissistic [17] Personality Disorder - declared to be grave, severe and incurable. [Emphasis supplied.] The RTC Ruling The RTC nullified the parties marriage in its decision of April 19, 2002. The trial court saw merit in the testimonies of the petitioner and Dr. Tayag, and concluded as follows: xxxx Respondent was never solicitous of the welfare and wishes of his wife. Respondent imposed limited or block [sic] out communication with his wife, forgetting special occasions, like petitioners birthdays and Valentines Day; going out only on occasions despite their living separately and to go to a motel to have sexual intercourse. It would appear that the foregoing narration are the attendant facts in this case which show the psychological incapacity of respondent, at the time of the celebration of the marriage of the parties, to enter into lawful marriage and to discharge his marital responsibilities (See Articles 68 to 71, Family Code). This incapacity is declared grave, severe and incurable. WHEREFORE, in view of the foregoing, the marriage between petitioner Rowena Padilla Rumbaua and respondent Edwin Rumbaua is hereby declared annulled. [18] SO ORDERED. The CA Decision The Republic, through the OSG, appealed the RTC decision to the CA.
[19]

The CA decision of June 25,

[20]

2004 reversed and set aside the RTC decision, and denied the nullification of the parties marriage.

In its ruling, the CA observed that Dr. Tayags psychiatric report did not mention the cause of the respondents so called narcissistic personality disorder; it did not discuss the respondents childhood and thus failed to give the court an insight into the respondents developmental years. Dr. Tayag likewise failed to explain why she came to the conclusion that the respondents incapacity was deep-seated and incurable. The CA held that Article 36 of the Family Code requires the incapacity to be psychological, although its manifestations may be physical. Moreover, the evidence presented must show that the incapacitated party was mentally or physically ill so that he or she could not have known the marital obligations assumed, knowing them, could not have assumed them. In other words, the illness must be shown as downright incapacity or inability, not a refusal, neglect, or difficulty to perform the essential obligations of marriage. In the present case, the petitioner suffered because the respondent adamantly refused to live with her because of his parents objection to their marriage. The petitioner moved to reconsider the decision, but the CA denied her motion in its resolution of January 18, 2005.
[21]

The Petition and the Issues The petitioner argues in the present petition that 1. the OSG certification requirement under Republic v. Molina
[22]

(the Molina case) cannot be dispensed with

because A.M. No. 02-11-10-SC, which relaxed the requirement, took effect only on March 15, 2003;

2.

vacating the decision of the courts a quo and remanding the case to the RTC to recall her expert witness and cure the defects in her testimony, as well as to present additional evidence, would temper justice with mercy; and

3.

Dr. Tayags testimony in court cured the deficiencies in her psychiatric report.

The petitioner prays that the RTCs and the CAs decisions be reversed and set aside, and the case be remanded to the RTC for further proceedings; in the event we cannot grant this prayer, that the CAs decision be set aside and the RTCs decision be reinstated. The Republic maintained in its comment that: (a) A.M. No. 02-11-10-SC was applicable although it took effect after the promulgation of Molina; (b) invalidating the trial courts decision and remanding the case for further proceedings were not proper; and (c) the petitioner failed to establish respondents psychological incapacity. The parties simply reiterated their arguments in the memoranda they filed. THE COURTS RULING We resolve to deny the petition for lack of merit. A.M. No. 02-11-10-SC is applicable In Molina, the Court emphasized the role of the prosecuting attorney or fiscal and the OSG; they are to appear as counsel for the State in proceedings for annulment and declaration of nullity of marriages: (8) The trial court must order the prosecuting attorney or fiscal and the Solicitor General to appear as counsel for the state. No decision shall be handed down unless the Solicitor General issues a certification, which will be quoted in the decision, briefly stating therein his reasons for his agreement or opposition, as the case may be, to the petition. The Solicitor General, along with the prosecuting attorney, shall submit to the court such certification within fifteen (15) days from the date the case is deemed submitted for resolution of the court. The Solicitor General shall discharge the equivalent function of the defensor vinculi contemplated under Canon 1095. [Emphasis supplied.]
[24] [23]

A.M. No. 02-11-10-SC

-- which this Court promulgated on March 15, 2003 and duly published -- is geared

towards the relaxation of the OSG certification that Molina required. Section 18 of this remedial regulation provides: SEC. 18. Memoranda. The court may require the parties and the public prosecutor, in consultation with the Office of the Solicitor General, to file their respective memoranda in support of their claims within fifteen days from the date the trial is terminated. It may require the Office of the Solicitor General to file its own memorandum if the case is of significant interest to the State. No other pleadings or papers may be submitted without leave of court. After the lapse of the period herein provided, the case will be considered submitted for decision, with or without the memoranda. The petitioner argues that the RTC decision of April 19, 2002 should be vacated for prematurity, as it was rendered despite the absence of the required OSG certification specified in Molina. According to the petitioner, A.M. No. 02-11-10-SC, which took effect only on March 15, 2003, cannot overturn the requirements of Molina that was promulgated as early as February 13, 1997. The petitioners argument lacks merit. The amendment introduced under A.M. No. 02-11-10-SC is procedural or remedial in character; it does not create or remove any vested right, but only operates as a remedy in aid of or confirmation of already existing rights. The settled rule is that procedural laws may be given retroactive effect, as we held in De Los Santosv. Vda. de Mangubat: Procedural Laws do not come within the legal conception of a retroactive law, or the general rule against the retroactive operation of statues - they may be given retroactive effect on actions pending and undetermined at the time of their passage and this will not violate any right of a person who may feel that he is adversely affected, insomuch as there are no vested rights in rules of procedure.
[25] [26]

A.M. No. 02-11-10-SC, as a remedial measure, removed the mandatory nature of an OSG certification and may be applied retroactively to pending matters. In effect, the measure cures in any pending matter any procedural lapse on

the certification prior to its promulgation. Our rulings in Antonio v. Reyes

[27]

and Navales v. Navales

[28]

have since

confirmed and clarified that A.M. No. 02-11-10-SC has dispensed with the Molina guideline on the matter of certification, although Article 48 mandates the appearance of the prosecuting attorney or fiscal to ensure that no collusion between the parties would take place. Thus, what is important is the presence of the prosecutor in the case, not the remedial requirement that he be certified to be present. From this perspective, the petitioners objection regarding the Molina guideline on certification lacks merit. A Remand of the Case to the RTC is Improper The petitioner maintains that vacating the lower courts decisions and the remand of the case to the RTC for further reception of evidence are procedurally permissible. She argues that the inadequacy of her evidence during the trial was the fault of her former counsel, Atty. Richard Tabago, and asserts that remanding the case to the RTC would allow her to cure the evidentiary insufficiencies. She posits in this regard that while mistakes of counsel bind a party, the rule should be liberally construed in her favor to serve the ends of justice. We do not find her arguments convincing. A remand of the case to the RTC for further proceedings amounts to the grant of a new trial that is not procedurally proper at this stage. Section 1 of Rule 37 provides that an aggrieved party may move the trial court to set aside a judgment or final order already rendered and to grant a new trial within the period for taking an appeal. In addition, a motion for new trial may be filed only on the grounds of (1) fraud, accident, mistake or excusable negligence that could not have been guarded against by ordinary prudence, and by reason of which the aggrieved partys rights have probably been impaired; or (2) newly discovered evidence that, with reasonable diligence, the aggrieved party could not have discovered and produced at the trial, and that would probably alter the result if presented. In the present case, the petitioner cites the inadequacy of the evidence presented by her former counsel as basis for a remand. She did not, however, specify the inadequacy. That the RTC granted the petition for declaration of nullity prima facie shows that the petitioners counsel had not been negligent in handling the case. Granting arguendo that the petitioners counsel had been negligent, the negligence that would justify a new trial must be excusable, i.e. one that ordinary diligence and prudence could not have guarded against. The negligence that the petitioner apparently adverts to is that cited in Uy v. First Metro Integrated Steel Corporation where we explained:
[29]

Blunders and mistakes in the conduct of the proceedings in the trial court as a result of the ignorance, inexperience or incompetence of counsel do not qualify as a ground for new trial. If such were to be admitted as valid reasons for re-opening cases, there would never be an end to litigation so long as a new counsel could be employed to allege and show that the prior counsel had not been sufficiently diligent, experienced or learned. This will put a premium on the willful and intentional commission of errors by counsel, with a view to securing new trials in the event of conviction, or an adverse decision, as in the instant case. Thus, we find no justifiable reason to grant the petitioners requested remand. Petitioner failed to establish the respondents psychological incapacity A petition for declaration of nullity of marriage is anchored on Article 36 of the Family Code which provides that a marriage contracted by any party who, at the time of its celebration, was psychologically incapacitated to comply with the essential marital obligations of marriage, shall likewise be void even if such incapacity becomes manifest only after its solemnization. In Santos v. Court of Appeals,
[30]

the Court first declared that psychological incapacity must be

characterized by (a) gravity; (b) juridical antecedence; and (c) incurability. The defect should refer to no less than a

mental (not physical) incapacity that causes a party to be truly incognitive of the basic marital covenants that concomitantly must be assumed and discharged by the parties to the marriage. It must be confined to the most serious cases of personality disorders clearly demonstrative of an utter insensitivity or inability to give meaning and significance to the marriage. We laid down more definitive guidelines in the interpretation and application of Article 36 of the Family Code in Republic v. Court of Appeals where we said: (1) The burden of proof to show the nullity of the marriage belongs to the plaintiff. Any doubt should be resolved in favor of the existence and continuation of the marriage and against its dissolution and nullity. This is rooted in the fact that both our Constitution and our laws cherish the validity of marriage and unity of the family. Thus, our Constitution devotes an entire Article on the Family, recognizing it as the foundation of the nation. It decrees marriage as legally inviolable, thereby protecting it from dissolution at the whim of the parties. Both the family and marriage are to be protected by the state. The Family Code echoes this constitutional edict on marriage and the family and emphasizes their permanence, inviolability and solidarity. (2) The root cause of the psychological incapacity must be (a) medically or clinically identified, (b) alleged in the complaint, (c) sufficiently proven by experts and (d) clearly explained in the decision. Article 36 of the Family Code requires that the incapacity must be psychological - not physical, although its manifestations and/or symptoms may be physical. The evidence must convince the court that the parties, or one of them, was mentally or psychically ill to such an extent that the person could not have known the obligations he was assuming, or knowing them, could not have given valid assumption thereof. Although no example of such incapacity need be given here so as not to limit the application of the provision under the principle of ejusdem generis, nevertheless such root cause must be identified as a psychological illness and its incapacitating nature fully explained. Expert evidence may be given by qualified psychiatrists and clinical psychologists. (3) The incapacity must be proven to be existing at the time of the celebration of the marriage. The evidence must show that the illness was existing when the parties exchanged their I do's. The manifestation of the illness need not be perceivable at such time, but the illness itself must have attached at such moment, or prior thereto. (4) Such incapacity must also be shown to be medically or clinically permanent or incurable. Such incurability may be absolute or even relative only in regard to the other spouse, not necessarily absolutely against everyone of the same sex. Furthermore, such incapacity must be relevant to the assumption of marriage obligations, not necessarily to those not related to marriage, like the exercise of a profession or employment in a job. x x x (5) Such illness must be grave enough to bring about the disability of the party to assume the essential obligations of marriage. Thus, mild characteriological peculiarities, mood changes, oc casional emotional outbursts cannot be accepted as root causes. The illness must be shown as downright incapacity or inability, not a refusal, neglect or difficulty, much less ill will. In other words, there is a natal or supervening disabling factor in the person, an adverse integral element in the personality structure that effectively incapacitates the person from really accepting and thereby complying with the obligations essential to marriage. (6) The essential marital obligations must be those embraced by Articles 68 up to 71 of the Family Code as regards the husband and wife as well as Articles 220, 221 and 225 of the same Code in regard to parents and their children. Such non-complied marital obligation(s) must also be stated in the petition, proven by evidence and included in the text of the decision. (7) Interpretations given by the National Appellate Matrimonial Tribunal of the Catholic Church in the Philippines, while not controlling or decisive, should be given great respect by our courts (8) The trial court must order the prosecuting attorney or fiscal and the Solicitor General to appear as counsel for the state. No decision shall be handed down unless the Solicitor General issues a certification, which will be quoted in the decision, briefly stating therein his reasons for his agreement or opposition, as the case may be, to the petition. The Solicitor General, along with the prosecuting attorney, shall submit to the court such certification within fifteen (15) days from the date the case is deemed submitted for resolution of the court. The Solicitor General shall discharge the equivalent function of the defensor vinculi contemplated under Canon 1095. These Guidelines incorporate the basic requirements we established in Santos. To reiterate, psychological incapacity must be characterized by: (a) gravity; (b)juridical antecedence; and (c) incurability.
[31]

These requisites must

be strictly complied with, as the grant of a petition for nullity of marriage based on psychological incapacity must be confined only to the most serious cases of personality disorders clearly demonstrative of an utter insensitivity or inability to

give meaning and significance to the marriage. Furthermore, since the Family Code does not define psychological incapacity, fleshing out its terms is left to us to do so on a case -to-case basis through jurisprudence. this approach in the recent case of Ting v. Velez-Ting
[33] [32]

We emphasized

when we explained:

It was for this reason that we found it necessary to emphasize in Ngo Te that each case involving the application of Article 36 must be treated distinctly and judged not on the basis of a priori assumptions, predilections or generalizations but according to its own attendant facts. Courts should interpret the provision on a case-to-case basis, guided by experience, the findings of experts and researchers in psychological disciplines, and by decisions of church tribunals. In the present case and using the above standards and approach, we find the totality of the petitioners evidence insufficient to prove that the respondent is psychologically unfit to discharge the duties expected of him as a husband. a. Petitioners testimony did not prove the root cause, gravity and incurability of respondents condition The petitioners evidence merely showed that the respondent: (a) reneged on his promise to cohabit with

her; (b) visited her occasionally from 1993 to 1997; (c) forgot her birthday in 1992, and did not send her greeting cards during special occasions; (d) represented himself as single in his visa application; (e) blamed her for the death of his mother; and (f) told her he was working in Davao when in fact he was cohabiting with another woman in 1997. These acts, in our view, do not rise to the level of the psychological incapacity that the law requires, and should be distinguished from the difficulty, if not outright refusal or neglect in the p erformance of some marital obligations that characterize some marriages. In Bier v. Bier,
[34]

we ruled that it was not enough that respondent, alleged to be

psychologically incapacitated, had difficulty in complying with his marital obligations, or was unwilling to perform these obligations. Proof of a natal or supervening disabling factor an adverse integral element in the respondent's personality structure that effectively incapacitated him from complying with his essential marital obligations had to be shown and was not shown in this cited case. In the present case, the respondents stubborn refusal to cohabit with the petitioner was doubtlessly irresponsible, but it was never proven to be rooted in some psychological illness. As the petitioners testimony

reveals, respondent merely refused to cohabit with her for fear of jeopardizing his application for a scholarship, and later due to his fear of antagonizing his family. The respondents failure to greet the petitioner on her birthday and to send her cards during special occasions, as well as his acts of blaming petitioner for his mothers death and of representing himself as single in his visa application, could only at best amount to forgetfulness, insensitivity or emotional immaturity, not necessarily psychological incapacity. Likewise, the respondents act of living with another woman four years into the marriage cannot automatically be equated with a psychological disorder, especially when no specific evidence was shown that promiscuity was a trait already existing at the inception of marriage. In fact, petitioner herself admitted that respondent was caring and faithful when they were going steady and for a time after their marriage; their problems only came in later. To be sure, the respondent was far from perfect and had some character flaws. The presence of these imperfections, however, does not necessarily warrant a conclusion that he had a psychological malady at the time of the marriage that rendered him incapable of fulfilling his duties and obligations. To use the words of Navales v. Navales: Article 36 contemplates downright incapacity or inability to take cognizance of and to assume basic marital obligations. Mere difficulty, refusal or neglect in the performance of marital obligations or ill will on the part of the spouse is different from incapacity rooted on some debilitating psychological condition or illness. Indeed, irreconcilable differences, sexual infidelity or perversion, emotional immaturity and irresponsibility, and the like, do not by themselves warrant a finding of psychological incapacity under Article 36, as the same may
[35]

only be due to a person's refusal or unwillingness to assume the essential obligations of marriage and not due to some psychological illness that is contemplated by said rule. b. Dr. Tayags psychological report and court testimony We cannot help but note that Dr. Tayags conclusions about the respondents psychological incapacity were based on the information fed to her by only one side the petitioner whose bias in favor of her cause cannot be doubted. While this circumstance alone does not disqualify the psychologist for reasons of bias, her report, testimony and conclusions deserve the application of a more rigid and stringent set of standards in the manner we discussed above.
[36]

For, effectively, Dr. Tayag only diagnosed the respondent from the prism of a third party account; she did not

actually hear, see and evaluate the respondent and how he would have reacted and responded to the doctors probes. Dr. Tayag, in her report, merely summarized the petitioners narrations, and on this basis characterized the respondent to be a self-centered, egocentric, and unremorseful person who believes that the world revolves around him; and who used love as adeceptive tactic for exploiting the confidence [petitioner] extended towards him. Dr. Tayag then incorporated her own idea of love; made a generalization that respondent was a person who lacked commitment, faithfulness, and remorse, and who engaged in promiscuous acts that made the petitioner look like a fool; and finally concluded that the respondents character traits reveal him to suf fer Narcissistic Personality Disorder with traces of Antisocial Personality Disorder declared to be grave and incurable. We find these observations and conclusions insufficiently in-depth and comprehensive to warrant the conclusion that a psychological incapacity existed that prevented the respondent from complying with the essential obligations of marriage. It failed to identify the root cause of the respondent's narcissistic personality disorder and to prove that it existed at the inception of the marriage. Neither did it explain the incapacitating nature of the alleged disorder, nor show that the respondent was really incapable of fulfilling his duties due to some incapacity of a psychological, not physical, nature. Thus, we cannot avoid but conclude that Dr. Tayags conclusion in her Report i.e., that the respondent suffered Narcissistic Personality Disorder with traces of Antisocial Personality Disorder declared to be grave and incurable is an unfounded statement, not a necessary inference from her previous characterization and portrayal of the respondent. While the various tests administered on the petitioner could have been used as a fair gauge to assess her own psychological condition, this same statement cannot be made with respect to the respondents condition. To make conclusions and generalizations on the respondents psychological condition based on the information fed by only one side is, to our mind, not different from admitting hearsay evidence as proof of the truthfulness of the content of such evidence. Petitioner nonetheless contends that Dr. Tayags subsequent testimony in court cured whatever deficiencies attended her psychological report. We do not share this view.

A careful reading of Dr. Tayags testimony reveals that she failed to establish the fact that at the time the parties were married, respondent was already suffering from a psychological defect that deprived him of the ability to assume the essential duties and responsibilities of marriage. Neither did she adequately explain how she came to the conclusion that respondents condition was grave and incurable. To directly quote from the records: ATTY. RICHARD TABAGO:

Q:

I would like to call your attention to the Report already marked as Exh. E -7, there is a statement to the effect that his character traits begin to suffer narcissistic personality disorder with traces of antisocial personality disorder. What do you mean? Can you please explain in laymans word, Madam Witness?

DR. NEDY LORENZO TAYAG: A: Actually, in a laymans term, narcissistic personality disorder cannot accept that there is something wrong with his own behavioral manifestation. [sic] They feel that they can rule the world; they are eccentric; they are exemplary, demanding financial and emotional support, and this is clearly manifested by the fact that respondent abused and used petitioners love. Along the line, a narcissistic person cannot give empathy; cannot give love simply because they love themselves more than anybody else; and thirdly, narcissistic person cannot support his own personal need and gratification without the help of others and this is where the petitioner set in. Can you please describe the personal [sic] disorder? Clinically, considering that label, the respondent behavioral manifestation under personality disorder [sic] this is already considered grave, serious, and treatment will be impossible [sic]. As I say this, a kind of developmental disorder wherein it all started during the early formative years and brought about by one familiar relationship the way he was reared and cared by the family. Environmental exposure is also part and parcel of the child disorder. [sic] You mean to say, from the formative [years] up to the present? Actually, the respondent behavioral manner was [present] long before he entered marriage. [Un]fortunately, on the part of the petitioner, she never realized that such behavioral manifestation of the respondent connotes pathology. [sic] xxxx Q: So in the representation of the petitioner that the respondent is now lying [ sic] with somebody else, how will you describe the character of this respondent who is living with somebody else? This is where the antisocial personality trait of the respondent [ sic] because an antisocial person is one who indulge in philandering activities, who do not have any feeling of guilt at the expense of another person, and this [is] again a buy-product of deep seated psychological incapacity. And this psychological incapacity based on this particular deep seated [ sic], how would you describe the psychological incapacity? [sic] As I said there is a deep seated psychological dilemma, so I would say incurable in nature and at this time and again [sic] the psychological pathology of the respondent. One plays a major factor of not being able to give meaning to a relationship in terms of sincerity and endurance. And if this psychological disorder exists before the marriage of the respondent and the petitioner, Madam Witness? Clinically, any disorder are usually rooted from the early formative years and so if it takes enough that such psychological incapacity of respondent already existed long before he entered marriage, because if you analyze how he was reared by her parents particularly by the mother, there is already an unhealthy symbiosis developed between the two, and this creates a major emotional havoc when he reached adult age. How about the gravity? This is already grave simply because from the very start respondent never had an inkling that his behavioral manifestation connotes pathology and second ground [ sic], respondent will never admit again that such behavior of his connotes again pathology simply because the disorder of the respondent is not detrimental to himself but, more often than not, it is detrimental to other party involved. xxxx

Q: A:

Q: A:

A:

Q:

A:

Q:

A:

Q: A:

PROSECUTOR MELVIN TIONGSON: Q: You were not able to personally examine the respondent here?

DR. NEDY TAYAG:

A:

Efforts were made by the psychologist but unfortunately, the respondent never appeared at my clinic. On the basis of those examinations conducted with the petitioning wife to annul their marriage with her husband in general, what can you say about the respondent? That from the very start respondent has no emotional intent to give meaning to their relationship. If you analyze their marital relationship they never lived under one room. From the very start of the [marriage], the respondent to have petitioner to engage in secret marriage until that time their family knew of their marriage [ sic]. Respondent completely refused, completely relinquished his marital obligation to the petitioner. xxxx

Q:

A:

COURT: Q: Because you have interviewed or you have questioned the petitioner, can you really enumerate the specific traits of the respondent?

DR. NEDY TAYAG: A: One is the happy-go-lucky attitude of the respondent and the dependent attitude of the respondent. Even if he is already eligible for employment? He remains to be at the mercy of his mother. He is a happy-go-lucky simply because he never had a set of responsibility. I think that he finished his education but he never had a stable job because he completely relied on the support of his mother. You give a more thorough interview so I am asking you something specific? The happy-go-lucky attitude; the overly dependent attitude on the part of the mother merely because respondent happened to be the only son. I said that there is a unhealthy symbiosis relationship [sic] developed between the son and the mother simply because the mother always pampered completely, pampered to the point that respondent failed to develop his own sense of assertion or responsibility particularly during that stage and there is also presence of the simple lying act particularly his responsibility in terms of handling emotional imbalance and it is clearly manifested by the fact that respondent refused to build a home together with the petitioner when in fact they are legally married. Thirdly, respondent never felt or completely ignored the feelings of the petitioner; he never felt guilty hurting the petitioner because on the part of the petitioner, knowing that respondent indulge with another woman it is very, very traumatic on her part yet respondent never had the guts to feel guilty or to atone said act he committed in their [37] relationship, and clinically this falls under antisocial personality.

Q: A:

Q: A:

In terms of incurability, Dr. Tayags answer was very vague and inconclusive, thus: xxxx ATTY. RICHARD TABAGO Q: Can this personally be cured, madam witness? DR. NEDY TAYAG A: Clinically, if persons suffering from personality disorder curable, up to this very moment, no scientific could be upheld to alleviate their kind of personality disorder; Secondly, again respondent or other person suffering from any kind of disorder particularly narcissistic personality will never admit that they are suffering from this kind of disorder, and then [38] again curability will always be a question. [sic]

This testimony shows that while Dr. Tayag initially described the general characteristics of a person suffering from a narcissistic personality disorder, she did not really show how and to what extent the respondent exhibited these traits. She mentioned the buzz words that jurisprudence requires for the nullity of a marriage namely, gravity, incurability, existence at the time of the marriage, psychological incapacity relating to marriage and in her own limited way, related these to the medical condition she generally described. The testimony, together with her report, however, suffers from very basic flaws.

First, what she medically described was not related or linked to the respondents exact co ndition except in a very general way. In short, her testimony and report were rich in generalities but disastrously short on particulars, most notably on how the respondent can be said to be suffering from narcissistic personality disorder; why and to what extent the disorder is grave and incurable; how and why it was already present at the time of the marriage; and the effects of the disorder on the respondents awareness of and his capability to undertake the duties and responsibilities of marriage. All these are critical to the success of the petitioners case. Second, her testimony was short on factual basis for her diagnosis because it was wholly based on what the petitioner related to her. As the doctor admitted to the prosecutor, she did not at all examine the respondent, only the petitioner. Neither the law nor jurisprudence requires, of course, that the person sought to be declared psychologically incapacitated should be personally examined by a physician or psychologist as a condition sine qua non to arrive at such declaration.
[39]

If a psychological disorder can be proven by independent means, no reason exists why such independent
[40]

proof cannot be admitted and given credit.

No such independent evidence, however, appears on record to have been

gathered in this case, particularly about the respondents early life and associations, and about events on or about the time of the marriage and immediately thereafter. Thus, the testimony and report appear to us to be no more than a diagnosis that revolves around the one-sided and meager facts that the petitioner related, and were all slanted to support the conclusion that a ground exists to justify the nullification of the marriage. We say this because only the baser qualities of the respondents life were examined and given focus; none of these qualiti es were weighed and balanced with the better qualities, such as his focus on having a job, his determination to improve himself through studies, his care and attention in the first six months of the marriage, among others. The evidence fails to mention also what character and qualities the petitioner brought into her marriage, for example, why the respondents family opposed the marriage and what events led the respondent to blame the petitioner for the death of his mother, if this allegation is at all correct. To be sure, these are important because not a few marriages have failed, not because of psychological incapacity of either or both of the spouses, but because of basic incompatibilities and marital developments that do not amount to psychological incapacity. The continued separation of the spouses likewise never appeared to have been factored in. Not a few married couples have likewise permanently separated simply because they have fallen out of love, or have outgrown the attraction that drew them together in their younger years. Thus, on the whole, we do not blame the petitioner for the move to secure a remand of this case to the trial courts for the introduction of additional evidence; the petitioners evidence in its present state is woefully insufficient to support the conclusion that the petitioners marriage to the respondent should be nullified on the ground of the respondents psychological incapacity. The Court commiserates with the petitioners marital predicament. The respondent may indeed be unwilling to discharge his marital obligations, particularly the obligation to live with ones spouse. Nonetheless, we cannot presume psychological defect from the mere fact that respondent refuses to comply with his marital duties. As we ruled in Molina, it is not enough to prove that a spouse failed to meet his responsibility and duty as a married person; it is essential that he must be shown to be incapable of doing so due to some psychological illness. The psychological illness that must afflict a party at the inception of the marriage should be a malady so grave and permanent as to

deprive the party of his or her awareness of the duties and responsibilities of the matrimonial bond he or she was then about to assume.
[41]

WHEREFORE, in view of these considerations, we DENY the petition and AFFIRM the decision and resolution of the Court of Appeals dated June 25, 2004and January 18, 2005, respectively, in CA-G.R. CV No. 75095.

JULIO B. PURCON, JR., Petitioner, MRM PHILIPPINES, INC. and MIGUEL L. RIVERA/MARITIME RESOURCES MANAGEMENT,

G.R. No. 182718

A PETITION for relief from judgment under Rule 38 of the 1997 Rules of Civil Procedure is an equitable remedy that is allowed only in exceptional cases when there is no other available or adequate remedy. It may be availed of only after a judgment, final order, or other proceeding was taken against petitioner in any court through fraud, accident, mistake, or excusable negligence.
[1] [2]

Before Us is a petition for relief from judgment 2007 Resolution,

[3]

filed by Julio B. Purcon, seeking to set aside Our July 16,

[4]

which denied his petition for review, as well as the October 9, 2007 Entry of Judgment.

He pleads for

the Courts leniency on account of the negligence and inefficiency of his counsel, which resulted in the late filing of the petition and in filing defective pleadings within this Court. The Antecedents The case stemmed from a complaint filed by petitioner for reimbursement of medical expenses, sickness allowance and permanent disability benefits with prayer for compensatory, moral and exemplary damages and attorneys fees before the Arbitration Branch of the National Labor Relations Commission (NLRC). In his verified position paper, petitioner alleged that on January 28, 2002, respondent MRM Philippines, Inc. hired him as a seaman on board the vessel M/T SARABELLE 2. He signed a contract for three (3) months with a monthly salary of $584.00. According to petitioner, his work involved a day-to-day activity that required exertion of strenuous effort, and that he often worked overtime due to the pressure of his work. His contract was extended for another three (3) months. On the second week of June 2002, he felt an excruciating pain in his left testicle. After being examined by a doctor at the port of France, he was diagnosed with hernia. OnJune 26, 2002, he was repatriated due to his ailment. Upon petitioners return to the Philippines, he was examined by Dr. Alegre, the company physician, who prescribed certain medication. On July 24, 2002, Dr. Alegre declared that he was fit to resume work. When he reported to MRM Philippines, Inc. hoping to be re-hired for another contract, he was told that there was no vacancy for him. On September 17, 2003, he consulted Dr. Efren R. Vicaldo, an internist-cardiologist of Philippine Heart Center. On March 3, 2004, after a thorough medical examination and evaluation, he was diagnosed with EPIDIDYMITIS, LEFT; UPPER RESPIRATORY TRACT INFACTION WITH INPEDIMENT GRADE XIV. Respondents, on the other hand, countered that since petitioners ailment, hernia, is not work-related, he is not entitled to disability benefit and related claims. In fact, he was declared fit to resume work on July 23, 2002 by the company-designated physician. Respondents likewise argued that his ailment is not to be considered a permanent disability as this is easily correctable by simple surgery. More importantly, petitioner signed a Quitclaim and Release which was notarized. On March 31, 2005 Labor Arbiter Donato G. Quinto, Jr. rendered its decision
[5]

dismissing the complaint for utter

lack of merit. The Labor Arbiter explained that petitioner was fit to resume work as a seafarer as of July 23, 2002 as his hernia was already cured or non-existent. In fact, petitioner was ready to resume work. Unfortunately, he was not

accommodated due to lack of vacancy. The fact that he was not re-hired by respondent did not mean that he was suffering from disability. On May 5, 2005, complainant-appellant (petitioner) filed a memorandum of appeal with the NLRC Third Division. On September 30, 2005, the NLRC Third Division issued a resolution
[6]

as follows:

WHEREFORE, the appeal is DISMISSED for lack of merit and the assailed decision dated March 31, 2005 is hereby AFFIRMED. [7] SO ORDERED. On December 20, 2005, the motion for reconsideration was dismissed for lack of merit. On January 27, 2006, the NLRC resolution became final and executory and was recorded in the Book of Entries of Judgments. On March 2, 2006, petitioner filed a petition for certiorari under Rule 65 of the Revised Rules of Court with the Court of Appeals (CA). However, on June 7, 2006, the CA dismissed the case due to formal infirmities. Petitioners motion for reconsideration was denied. On September 29, 2006, the CA resolution became final and executory. On May 9, 2007, petitioner filed with this Court a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the June 7, 2006and September 5, 2006 Resolutions of the CA, which dismissed his petition for certiorari. In Our Resolution
[8]

dated July 16, 2007, We denied the petition for the following reasons: (1) the petition was

filed beyond the reglementary period of fifteen (15) days fixed in Section 2, Rule 45 in relation to Section 5(a), Rule 56, 1997 Rules of Civil Procedure, as amended; (2) failure to pay on time docket and other fees and deposit for costs in violation of Section 3, Rule 45, in relation to Section 5(c) of Rule 56; and (3) insufficient or defective verification under Section 4, Rule 7. We likewise held that petitioner failed to sufficiently show that the CA committed any reversible error in the challenged resolutions as to warrant the exercise of this Courts discretionary appellate jurisdiction. He was not able to convince this Court why the actions of the Labor Arbiter, the NLRC and the CA, which have passed upon the same issue, should be reversed. Consequently, on October 9, 2007, an Entry of Judgment was issued. On May 6, 2008, petitioner filed the instant petition for relief from judgment interposing the following grounds: I. The Honorable Labor Arbiter committed a GROSS MISTAKE when he based his decision on the fit to work certification issued by the company-designated physician and on the Quitclaim and Release executed by the complainant; II. The Honorable Labor Arbiter further committed a GROSS MISTAKE when he adopted the irrelevant jurisprudence cited by the respondents and by adopting it in his decision;

III. The Honorable NLRC Third Division also committed a GROSS MISTAKE when it affirms the ERRONEOUS decision of the Honorable Labor Arbiter; IV. The factual findings of the Honorable Labor Arbiter, and the Honorable NLRC Third Division, are not based on substantial evidence and that their decisions are contrary to the applicable law and jurisprudence; and V. The collaborating counsel of the petitioner committed a GROSS MISTAKE in filing defective [9] pleadings to the prejudice of the herein petitioner.

The threshold issue before Us is Can petitioner avail of a petition for relief from judgment under Rule 38 of the 1997 Rules of Civil Procedure from Our resolution denying his petition for review? We answer in the negative. A petition for relief from judgment is not an available remedy in the Supreme Court. First, although Section 1 of Rule 38 states that when a judgment or final order is entered through fraud, accident, mistake, or excusable negligence, a party in any court may file a petition for relief from judgment, this rule must be interpreted in harmony with Rule 56, which enumerates the original cases cognizable by the Supreme Court, thus: Section 1. Original cases cognizable. Only petitions for certiorari, prohibition, mandamus, quo warranto, habeas corpus, disciplinary proceedings against members of the judiciary and attorneys, and cases affecting ambassadors, other public ministers and consuls may be filed originally in the Supreme Court.

A petition for relief from judgment is not included in the list of Rule 56 cases originally cognizable by this Court. In Dela Cruz v. Andres,
[10]

We reiterated Our pronouncement in Mesina v. Meer,

[11]

that a petition for relief from

judgment is not an available remedy in the Court of Appeals and the Supreme Court. The Court explained that under the 1997 Revised Rules of Civil Procedure, the petition for relief must be filed within sixty (60) days after petitioner learns of the judgment, final order or other proceeding to be set aside and must be accompanied with affidavits showing the fraud, accident, mistake, or excusable negligence relied upon, and the facts constituting petitioners good and substantial cause of action or defense, as the case may be. Most importantly, it should be filed with the same court which rendered the decision, viz.: Section 1. Petition for relief from judgment, order, or other proceedings . When a judgment or final order is entered, or any other proceeding is thereafter taken against a party inany court through fraud, accident, mistake, or excusable negligence, he may file a petition in such court and in [12] the same case praying that the judgment, order or proceeding be set aside. (Underscoring supplied) Second, while Rule 38 uses the phrase any court, it refers only to Municipal/Metropolitan and Regional Trial Courts. As revised, Rule 38 radically departs from the previous rule as it now allows the Metropolitan or Municipal Trial Court which decided the case or issued the order to hear the petition for relief. Under the old rule, a petition for relief from the judgment or final order of Municipal Trial Courts should be filed with the Regional Trial Court, viz.: Section 1. Petition to Court of First Instance for relief from judgment of inferior court . When a judgment is rendered by an inferior court on a case, and a party thereto by fraud, accident, mistake, or excusable negligence, has been unjustly deprived of a hearing therein, or has been prevented from taking an appeal, he may file a petition in the Court of First Instance of the province in which the original judgment was rendered, praying that such judgment be set aside and the case tried upon its merits. Section 2. Petition to Court of First Instance for relief from the judgment or other proceeding thereof. When a judgment order is entered, or any other proceeding is taken against a party in a Court of First Instance through fraud, accident, mistake, or excusable negligence, he may file a petition in such court and in the same case praying that the judgment, order or proceeding be set aside. The procedural change in Rule 38 is in line with Rule 5, prescribing uniform procedure for Municipal and Regional Trial Courts
[13]

and designation of Municipal/Metropolitan Trial Courts as courts of record.

[14]

Third, the procedure in the CA and the Supreme Court are governed by separate provisions of the Rules of Court.
[15]

It may, from time to time, be supplemented by additional rules promulgated by the Supreme Court through
[16]

resolutions or circulars. As it stands, neither the Rules of Court nor the Revised Internal Rules of the CA remedy of petition for relief in the CA

allows the

There is no provision in the Rules of Court making the petition for relief applicable in the CA or this Court. The procedure in the CA from Rules 44 to 55, with the exception of Rule 45 which pertains to the Supreme Court, identifies the remedies available before said Court such as annulment of judgments or final orders or resolutions (Rule 47), motion for reconsideration (Rule 52), and new trial (Rule 53). Nowhere is a petition for relief under Rule 38 mentioned. If a petition for relief from judgment is not among the remedies available in the CA, with more reason that this remedy cannot be availed of in the Supreme Court. This Court entertains only questions of law. A petition for relief raises questions of facts on fraud, accident, mistake, or excusable negligence, which are beyond the concerns of this Court. Nevertheless, even if We delve into the merits of the petition, the same must still be dismissed. The late filing of the petition for review does not amount to excusable negligence. Petitioners lack of devotion in discharging his duty, without demonstrating fraud, accident, mistake or excusable negligence, cannot be a basis for judicial relief. For a claim of counsels gross negligence to prosper, nothing short of clear abandonment of the clients cause must be shown. The relief afforded by Rule 38 will not be granted to a party who seeks to be relieved from the effects of the judgment when the loss of the remedy of law was due to his own negligence, or mistaken mode of procedure for that matter; otherwise the petition for relief will be tantamount to reviving the right of appeal which has already been lost, either because of inexcusable negligence or due to a mistake of procedure by counsel.

In exceptional cases, when the mistake of counsel is so palpable that it amounts to gross negligence, this Court affords a party a second opportunity to vindicate his right. But this opportunity is unavailing in the instant case, especially since petitioner has squandered the various opportunities available to him at the different stages of this case. Public interest demands an end to every litigation and a belated effort to reopen a case that has already attained finality will serve no purpose other than to delay the administration of justice. Finally, it is a settled rule that relief will not be granted to a party who seeks to be relieved from the effects of the judgment when the loss of the remedy at law was due to his own negligence, or a mistaken mode of procedure; otherwise, the petition for relief will be tantamount to reviving the right of appeal which has already been lost either because of inexcusable negligence or due to mistaken mode of procedure by counsel. ACCORDINGLY, the petition is DISMISSED.
[17]

VASHDEO GAGOOMAL vs spouses ramon and natividad villacorta,

Assailed in this Petition for Review on Certiorari under Rule 45 of the Rules of Court is the Decision of the Court of Appeals (CA) dated March 8, 2010 in CA-G.R. SP No. 109004, as well as the Resolution dated July 7, 2010 denying the motion for reconsideration thereof. The dispositive portion of the assailed Decision reads: WHEREFORE, premises considered, the petition is GRANTED. The assailed Orders dated August 5, 2008 and March 20, 2009 issued by Hon. Danilo S. Cruz of the Regional Trial Court, Branch 152, Pasig City are hereby REVERSED and SET ASIDE and another one entered, the Motion to Quash Writ of Possession filed by spouses Ramon and Natividad Villacorta in Civil Case No. 67381 is GRANTED. ACCORDINGLY, the Writ of Possession issued in Civil Case No. 67381 is ordered QUASHED. SO ORDERED. The Facts Albert Zearosa (Zearosa) was the registered owner of a parcel of land located in Ayala Alabang Village, Alabang, Muntinlupa City, covered by Transfer Certificate of Title (TCT) No. 170213. He mortgaged the same in favor of BPI Family Savings Bank (BPI) which was duly annotated on the title on June 7, 1990.
2

Subsequently, Zearosa obtained a loan in the amount of $300,000.00 from RAM Holdings Corporation (RAM), secured by a second mortgage over the property and a Promissory Note . The parties likewise executed a Memorandum of Agreement (MOA) dated March 2, 1995 whereby Zearosa, through an Irrevocable Special Power of Attorney, authorized RAM, among others, to sell the subject property in case of his failure to pay.
5 3 4

Zearosa failed to settle his obligations prompting RAM to file a Complaint for collection of sum of money with damages against him and BPI before the RTC of Pasig City, Branch 152, docketed as Civil Case No. 67381. RAM also caused the annotation of a notice of lis pendens on TCT No. 170213 on June 11, 1999.

Pending Civil Case No. 67381, Zearosa failed to pay his obligation to BPI resulting in the foreclosure of the subject property. The certificate of sale was annotated on TCT No. 170213 on March 24, 2000.

Meanwhile, RAM sold its rights and interests over the subject property to New Summit International, Inc., represented by its President, Vashdeo Gagoomal, herein petitioner. The assignment was annotated on TCT No. 170213 on October 16, 2000.

On August 29, 2002, one Luis P. Lorenzo, Jr. (Lorenzo) filed a complaint for recovery of sum of money with application for a writ of preliminary attachment against Zearosa before the RTC of Makati City, Branch 64, docketed as Civil Case No. 02-1038. A writ of preliminary attachment was issued on September 20, 2002, pursuant to which the Branch Sheriff of Makati City attached the subject property. The lien was annotated on TCT No. 170213 on September 30, 2002.

On the other hand, Zearosa redeemed the foreclosed property from BPI on March 23, 2003. Thereafter, he sold the property to a certain Patricia A. Tan (Tan) in whose favor TCT No. 10206 was issued on April 4, 2003. The annotations of the notice of lis pendens in Civil Case No. 67381, as well as the notice of levy on attachment in Civil Case No. 02-1038, were carried over to her title.
7

In the meantime, in Civil Case No. 02-1038, Lorenzo obtained a favorable decision which had become final and executory. A notice of levy and execution on the subject attached property was issued and annotated on the title. On January 15, 2004, the property was sold at public auction to

Lorenzo for P9,034,166.00 and the Certificate of Sale was annotated on TCT No. 10206 on January 30, 2004, giving Zearosa until January 29, 2005 within which to redeem the property.

Subsequently, or on April 30, 2004, the RTC rendered judgment in favor of RAM in Civil Case No. 67381 for sum of money. Pending Zearosa's appeal to the CA, docketed as CA-G.R. CV No. 84523, RAM filed a motion for execution pending appeal, which was granted. On December 14, 2004, the property subject of notice of lis pendens was sold at public auction to petitioner, the successor-in-interest of RAM, for P19,793,500.00. on Tan's TCT No. 10206 on December 17, 2004.
10 9 8

The certificate of sale was annotated

On January 29, 2005, in view of Zearosa's failure to redeem the property from Lorenzo, the title over the subject property was consolidated in the latter's name. A writ of possession was issued in favor of Lorenzo, who subsequently sold the property to Natividad Villacorta, one of the respondents herein, for P6,000,000.00. Immediately after purchasing the property, respondents took possession thereof.

Meanwhile, Zearosa's appeal in CA-G.R. CV No. 84523 was dismissed, and the decision in favor of RAM became final and executory on October 7, 2005. With a sale annotated in its favor, and without Zearosa exercising his right of redemption, a final Deed of Sale was issued in favor of petitioner, the successor-in-interest of RAM, on December 14, 2005. By virtue of a writ of possession
11

issued by the RTC on February 1, 2007 in Civil Case No. 67381, petitioner

divested the respondents of possession of the disputed property.

The foregoing developments prompted the respondents to file a Motion to Quash Writ of Possession

12

in Civil Case No.

67381 before the RTC of Pasig City, Branch 152, on March 20, 2007. They also filed a case for quieting of title and recovery of possession before the RTC of Muntinlupa City, Branch 276, docketed as Civil Case No. 08-011.

On August 5, 2008, the RTC of Pasig City, Branch 152, issued an Order

13

in Civil Case No. 67381 denying respondents'

Motion to Quash Writ of Possession. It also directed the Registry of Deeds of Muntinlupa City to issue a new transfer certificate of title in the name of petitioner Vashdeo Gagoomal. The motion for reconsideration thereof was similarly denied.
15 14

Aggrieved, the respondents filed a petition for certiorari with prayer for injunctive relief

16

before the CA, ascribing grave

abuse of discretion on the part of the RTC in directing the transfer of title over the subject property to petitioner; in denying their motion to quash the writ of possession; and in refusing to restore to them the possession of the subject property.

In its assailed Decision, the CA granted respondents' petition, ratiocinating as follows: Records show that spouses Villacorta derived their rights in the subject property from their predecessor in-interest, Lorenzo, who purchased the same in a sale on execution on January 15, 2004. The title to the subject property was consolidated in favor of Lorenzo on January 29, 2005 and said annotation was reflected on the certificate of title. Gagoomal, on his part, maintains that he has a superior right over Lorenzo because his predecessor-in-interest, Ram, was able to cause the annotation of lis pendens ahead of Lorenzo's writ of attachment. The fact that the notice of lis pendens regarding to [sic] Civil Case No. 67381 was annotated ahead of the attachment of the subject property in Civil Case No. 02-1038 is of no moment. Hence, We agree with spouses Villacorta that Gagoomal did not acquire any title to the property since what he purchased during the public auction on October 14, 2004 was only the remaining right of redemption of Zearosa. xxx xxx xxx In the present case, the annotation of Ram of the lis pendens was improper because the case filed by Ram against Zearosa was purely a personal action. Civil Case No. 67381, entitled Ram Holdings Corporation vs. Albert Zearosa, et. al., is for Collection of Sum of Money with Damages. It has been held that the doctrine of lis pendens has no application to a proceeding in which the only object sought is the recovery of a money judgment, though the title or right of possession to property may be affected. It is essential that the property be directly affected, as where the relief sought in the action or suit includes the recovery of possession, or the enforcement of a lien, or an adjudication between conflicting claims of title, 17 possession, or right of possession to specific property, or requiring its transfer or sale [citation omitted]

Essentially, the CA concluded that the RTC committed grave abuse of discretion when it ordered the Register of Deeds to transfer to petitioner the title and possession of the subject property notwithstanding unrebutted evidence that Zearosa, the judgment debtor in Civil Case No. 67381, was no longer its owner and had only the remaining right of redemption at the time the property was sold at public auction to petitioner on December 14, 2004.

Corollary thereto, the CA held that the power of the RTC to execute its judgment extends only to property belonging to the judgment debtor in Civil Case No. 67381, Zearosa in this case, and did not include the respondents. The CA likewise refused to give merit to petitioner's contentions that the respondents can no longer ask for the modification or abrogation of the decision of the RTC which had already attained finality, and that since the writ of possession had already been implemented, then it can no longer be quashed.

The Issues

Hence, this petition advancing the following issues for Our resolution, to wit: I. RESPONDENTS DO NOT HAVE A RIGHTFUL CLAIM TO THE PROPERTY. II. RESPONDENTS HAD NO BASIS TO ASK FOR THE QUASHAL OF THE WRIT OF POSSESSION. III. THE PASIG REGIONAL TRIAL COURT CAN RULE ON TRANSFER OF TITLE. IV. PETITIONER'S RIGHTS ARE SUPERIOR TO THAT OF RESPONDENT'S. V. THE HONORABLE COURT OF APPEALS' DECISION OVERSTEPPED ISSUES. The Ruling of the Court
18

The petition is bereft of merit.

A writ of possession is an order by which the sheriff is commanded to place a person in possession of a real or personal property. We clarified in the case of Motos v. Real Bank (A Thrift Bank), Inc.
19

that a writ of possession may be issued

20

under any of the following instances: (a) land registration proceedings under Section 17 of Act No. 496 ; (b) judicial foreclosure, provided the debtor is in possession of the mortgaged realty and no third person, not a party to the foreclosure suit, had intervened; and (c) extrajudicial foreclosure of a real estate mortgage under Section 7 of Act No. 3135 as amended by Act No. 4118 .
21

Corollary thereto, Section 33, Rule 39 of the Rules of Court provides: SEC. 33. Deed and possession to be given at expiration of redemption period; by whom executed or given. - If no redemption be made within one (1) year from the date of the registration of the certificate of sale, the purchaser is entitled to a conveyance and possession of the property; or, if so redeemed whenever sixty (60) days have elapsed and no other redemption has been made, and notice thereof given, and the time for redemption has expired, the last redemptioner is entitled to the conveyance and possession; but in all cases the judgment obligor shall have the entire period of one (1) year from the date of the registration of the sale to redeem the property. The deed shall be executed by the officer making the sale or by his successor in office, and in the latter case shall have the same validity as though the officer making the sale had continued in office and executed it. Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the levy. The possession of the property shall be given to the purchaser or last redemptioner by the same officer unless a third party is actually holding the property adversely to the judgme nt obligor.

In this case, the writ of possession was issued and executed in favor of petitioner under the foregoing provision. However, a punctilious review of the records will show that its grant and enforcement against the subject property, over which the respondents third parties to Civil Case No. 67381 claim an adverse interest, are devoid of legal basis.

It is a basic principle of law that money judgments are enforceable only against property incontrovertibly belonging to the judgment debtor, and if property belonging to any third person is mistakenly levied upon to answer for another mans indebtedness, such person has all the right to challenge the levy through any of the remedies provided for under the Rules of Court. Section 16 , Rule 39 thereof specifically provides that a third person may avail himself of the remedies of either terceria, to determine whether the sheriff has rightly or wrongly taken hold of the property not belonging to the judgment debtor or obligor, or an independent separate action to vindicate their claim of ownership and/or possession over the foreclosed property.
23 22

However, a person other than the judgment debtor who claims ownership or right over the
24

levied properties is not precluded from taking other legal remedies to prosecute his claim.

In the present case, respondents filed a motion to quash the writ of possession substantiating their preferential rights over the subject property which they had purchased from Lorenzo. As earlier stated, Lorenzo, in Civil Case No. 021038, caused the annotation of a writ of preliminary attachment on September 30, 2002 and thereafter, a notice of levy and execution, finally acquiring the property in a public auction sale on January 30, 2004. Similarly, respondents have instituted a separate civil action for quieting of title and recovery of property before the RTC of Muntinlupa City, Branch 276, docketed as Civil Case No. 08-011.

Petitioner's argument that he acquired a superior right over the subject property by virtue of the earlier annotation of a notice of lis pendens on June 11, 1999 by his predecessor-in-interest RAM on the same title cannot be given credence.

Section 14, Rule 13 of the Rules of Court provides: Sec. 14.Notice of lis pendens. - In an action affecting the title or the right of possession of real property, the plaintiff and the defendant, when affirmative relief is claimed in his answer, may record in the office of the registry of deeds of the province in which the property is situated a notice of the pendency of the action. Said notice shall contain the names of the parties and the object of the action or defense, and a description of the property in that province affected thereby. Only from the time of filing such notice for record shall a purchaser, or encumbrancer of the property affected thereby, be deemed to have constructive notice of the pendency of the action, and only of its pendency against the parties designated by their real names. The notice of lis pendens hereinabove mentioned may be cancelled only upon order of the court, after proper showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the party who caused it to be recorded. [emphasis ours] The filing of a notice of lis pendens has a dual effect: (1) to keep the property subject matter of the litigation within the power of the court until the entry of the final judgment in order to prevent the defeat of the final judgment by successive alienations; and (2) to bind a purchaser, bona fide or otherwise, of the property subject of the litigation to the judgment 25 that the court will subsequently promulgate.

Relative thereto, a notice of lis pendens is proper in the following actions and their concomitant proceedings:

(a) an action to recover possession of real estate;

(b) an action to quiet title thereto;

(c) an action to remove clouds thereon;

(d) an action for partition; and

(e) any other proceedings of any kind in Court directly affecting the title to the land or the use or occupation thereof or the buildings thereon.
26

Thus, a notice of lis pendens is only valid and effective when it affects title over or right of possession of a real property.

In this case, it cannot be denied that Civil Case No. 67381, which RAM, predecessor-in-interest of petitioner, instituted against Zearosa was for collection of sum of money with damages a purely personal action. Hence, the notice of lis pendens in favor of RAM annotated on the cancelled TCT No. 170213 and carried over to Tan's TCT No. 10206 conferred upon it no rights over the subject property and, as a necessary consequence, upon petitioner, its successor-in-interest.

To be sure, in Atlantic Erectors, Inc. v. Herbal Cove Realty Corporation , We have previously explained that the doctrine of lis pendens has no application to a proceeding in which the only object sought is the recovery of a money judgment, though the title or right of possession to property be incidentally affected. It is essential that the property be directly affected such as when the relief sought in the action or suit includes the recovery of possession, or the enforcement of a lien, or an adjudication between conflicting claims of title, possession, or the right of possession to specific property, or requiring its transfer or sale. Even if a party initially avails of a notice of lis pendensupon the filing of a case in court, such notice is rendered nugatory if the case turns out to be a purely personal action. In such event, the notice of lis pendens becomesfunctus officio.

27

Accordingly, petitioner has not created a superior right over the subject property as against respondents by reason of the prior annotation in 1999 of the notice of lis pendensby his predecessor RAM. Hence, the subsequent levy on execution on October 14, 2004 arising from the final money judgment in favor of petitioner cannot prevail over the earlier annotated attachment made by Lorenzo on September 30, 2002 and its subsequent notice of levy on execution and sale of the property to respondents on January 30, 2004, who then took possession. On October 14, 2004, what petitioner merely levied upon on execution was the remaining redemption rights of Zearosa until January 29, 2005 which period expired without any redemption having been made. Consequently, the writ of possession issued as a result of a wrongful execution was not proper and cannot be enforced against the respondents who are third parties in possession of and claiming an adverse interest on the property in controversy.

It bears to stress that the court issuing the writ of execution may enforce its authority only over properties or rights of the judgment debtor, and the sheriff acts properly only when he subjects to execution property undeniably belonging to the judgment debtor. Should the sheriff levy upon the assets of a third person in which the judgment debtor has not even the remotest interest, then he is acting beyond the limits of his authority. A judgment can only be executed or issued against a party to the action, not against one who has not yet had his day in court.
28

Neither can We affirm petitioner's contention that in seeking the quashal of the writ of possession, the respondents were, in effect, asking the RTC to abrogate its decision, which had already attained finality. As correctly observed
29

by the CA,

the quashal of a writ of possession does not have the effect of modifying or abrogating the judgment of the RTC. The settled rule is that a judgment which has acquired finality becomes immutable and unalterable, and hence may no longer

be modified in any respect except only to correct clerical errors or mistakes all the issues between the parties being deemed resolved and laid to rest.
30

To reiterate, however, the court's power with regard to execution of

judgments extends only to properties irrefutably belonging to the judgment debtor, which does not obtain in this case.

Therefore, petitioner's contention that the writ of possession had already been enforced and can no longer be quashed deserves scant consideration. Unquestionably, the RTC has a general supervisory control over the entire execution process, and such authority carries with it the right to determine every question which may be invariably involved in the execution. Respondents invoked this supervisory power when they sought the quashal of the writ of possession.
31

Finally, considering the circumstances of this case, We cannot uphold the RTC's directive to transfer the title over the subject property from respondents to petitioner, for utter lack of legal basis. To emphasize, apart from the motion to quash the writ of possession, respondents have instituted a case for quieting of title and recovery of possession before the RTC of Muntinlupa City, docketed as Civil Case No. 08-011.

In sum, We find that the RTC erred in implementing the writ of execution against the subject property which does not irrefutably belong to Zearosa, the judgment debtor in Civil Case No. 67381. Hence, the writ of possession issued relative thereto was likewise improper and must necessarily be quashed, as correctly ruled by the CA. Accordingly, since the respondents were unduly deprived of possession of the subject property, they must be immediately restored into its possession, without prejudice to the result of Civil Case No. 08-011.

WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are hereby AFFIRMED. G.R. No. 192377 July 25, 2012

CESAR V. MADRIAGA, JR., Petitioner, vs. CHINA BANKING CORPORATION, Respondent. Before us is a petition for review of the Decision dated January 27, 2010 of the Court of Appeals (CA) dismissing the 2 petition for certiorari and the Resolution dated May 26, 2010 denying the motion for reconsideration thereof in CA-G.R. SP No. 96640. The CA upheld the Order dated August 11, 2006 of the Regional Trial Court (RTC), Branch 17 of Malolos, in Civil Case No. P-167-2002 denying herein petitioner Cesar V. Madriaga, Jr.s (petitioner) motion to quash the ex parte writ of possession issued in favor of herein respondent China Banking Corporation (China Bank). Factual Antecedents The spouses Rolando and Norma Trajano (Spouses Trajano) were the original registered owners of the properties in dispute two residential properties located in Ibayo, Marilao, Bulacan, covered by TCT Nos. 114853(M) and 114854(M). Sometime in 1991, they agreed to sell the properties to the petitioners father, Cesar Madriaga, Sr. (Madriaga, Sr.) for 4 P1,300,000.00 payable on installment basis. Upon completion of payment, Spouses Trajano executed in Madriaga, Sr.s 5 favor a Deed of Absolute Sale dated September 2, 1992. Spouses Trajano, however, failed to deliver the lot titles, so Madriaga, Sr. sued for specific performance with the RTC Branch 19 of Malolos City, and docketed as Civil Case No. 521-M-93. The parties later entered into acompromise 6 agreement, which the court approved on June 13, 1994. It was agreed that Spouses Trajano will take out a loan with Asia Trust Bank secured by a mortgage over the properties, and from the proceeds, settle the P1,225,000.00 they owed Madriaga, Sr.. It also appears from the agreement that the titles to the properties were retained by a certain Mariano and 7 Florentino Blanco as security for a loan received by both Spouses Trajano and Madriaga, Sr.. It was also agreed that the 8 notice of lis pendens previously caused by Madriaga, Sr. to be annotated on the titles will be cancelled.
3 1

Spouses Trajano, however, failed to comply with their obligation under the compromise judgment. On motion of Madriaga, Sr., the RTC issued a writ of execution on September 6, 1994, and several properties of Spouses Trajano were levied upon, including the disputed properties. A notice of levy dated January 18, 1995 was also given to the Register of 9 Deeds. At the auction held on February 22, 1995, Madriaga, Sr. was declared the winning bidder, and a certificate of sale was issued to him on March 22, 1995. After the lapse of the one-yearredemption period, he was issued a final deed of sale; consequently, TCT Nos. 114853(M) and 114854(M) were cancelled and replaced by TCT Nos. T-284713(M) and 10 T-284714 in his name. On January 27, 1997, he secured an ex parte writ of possession. Meanwhile, on January 2, 1995, Spouses Trajano obtained a loan from China Bank in the amount of P700,000.00, payable in one year and secured by a mortgage over TCT Nos. 114853(M) and 114854(M). They defaulted on their loan, and on October 20, 1997, China Bank foreclosed the mortgage and was declared the highest bidder at the foreclosure sale held on November 24, 1997. After consolidation of its titles, TCT Nos. T-346239(M) and T-346240(M) were issued to 11 China Bank to replace, for the second time, TCT Nos. 114853(M) and 114854(M). On April 2, 2002, China Bank filed with the RTC Branch 17 of Malolos, an ex parte petition for writ of possession, docketed as Civil Case No. P-167-2002. It impleaded as respondents the "Sps. Trajano and/or all persons claiming rights under their name." The writ was granted on July 12, 2002, and a copy served upon Madriaga, Sr. on August 2, 2002. On November 1, 2002, Madriaga, Sr. filed an opposition to the writ wherein he asserted that he was the true owner of the properties, having obtained them at an earlier execution sale, and that his titles were subsisting. The RTC dismissed his opposition and denied his motion for reconsideration. Undeterred, on April 13, 2005, the petitioner filed a "Motion to Quash/Abate the Writ of Possession," which was denied 13 by the RTC in its Order dated February 6, 2006. The RTC ruled that it had no jurisdiction over the parties contending claims of ownership which was already pending before RTC Branch 12 of Malolos, docketed as Civil Case No. 406-M2002 (specific performance case), entitled "Cesar Madriaga v. China Banking Corporation, Register of Deeds of Meycauayan and Spouses Rolando and Norma Trajano." The RTC also noted that the petitioners motion had been 14 mooted by the satisfaction of the writ on April 15, 2005, per the Sheriffs return. On March 6, 2006, the petitioner moved for reconsideration of the Order dated February 6, 2006 in Civil Case No. P-16715 2002 (writ of possession case), insisting that he was deprived of due process because he was not served with notice of China Banks ex parte petition for writ of possession, and that he came to know of its separate titles only when he was served the writ of possession. Unmoved, the RTC denied his motion for reconsideration in its Order dated August 11, 2006, reasoning that it was merely performing a ministerial duty to issue the writ of possession to China Bank. The petitioner, who succeeded to his fathers properties then filed a petition for certiorari to the CA averring that the RTC gravely and seriously abused its discretion in denying the motion to abate/quash the writ of possession; in considering the issuance of the writ as ministerial; and in not declaring China Bank in bad faith, hence, not entitled to possession of the 17 properties. In the Decision dated January 27, 2010, the CA ruled that the RTC did not commit grave abuse of discretion in denying Madriaga, Sr.s motion to quash or abate the ex parte writ of possession for the reason that the motion had already been rendered moot and academic after the writ was satisfied on April 15, 2005 with the physical removal of Madriaga, Sr. from 18 the premises. On May 26, 2010, the CA denied the petitioners motion for reconsideration. Hence, the present petition. The petitioner avers that the writ of possession was directed, not against his father, but against Spouses Trajano and "all persons claiming rights under them." He insists that his father derived his titles not through a voluntary transaction with Spouses Trajano, but by purchase in an execution sale. He also maintains that China Banks titles are void because they came from a void mortgage. The petitioner also asserts that the RTC gravely erred in not finding that China Bank failed to investigate the titles of Spouses Trajano before approving their loan, in view of the lis pendens annotation thereon. The petitioner adverts to the 19 decision of the RTC in Civil Case No. 406-M-2002 (specific performance case) charging China Bank with notice of a serious flaw in Spouses Trajanos titles, whereas the petitioners titles came from an earlier execution sale, and he and his father had been in open, uninterrupted and adverse possession since 1991. The petitioner also insists that an ex parte writ of possession can be attacked either directly or collaterally for being null and void ab initio due to lack of due process, notwithstanding that in the meantime it has even been satisfied. The petitioner, thus, maintains that his restoration to possession must be ordered because his eviction by a mere ex parte writ of possession violated his right to due process, since his father was unable to participate in the said proceedings due to lack of notice. Our Ruling We deny the petition.
16 12

The case has been rendered moot and academic by the full implementation/satisfaction of the writ of possession. The trial court in its Order dated February 6, 2006 took note of the Sheriffs return stating that the writ of possession it issued to China Bank had been satisfied on April 15, 2005 after the petitioner had been successfully removed from the subject premises, prompting the court to declare that the petitioners Motion to Quash/Abate the Writ of Possession has been rendered moot and academic. Indeed, with the writ of possession having been served and satisfied, the said motions had ceased to present a justiciable 20 controversy, and a declaration thereon would be of no practical use or value. Judicial power presupposes actual controversies, the very antithesis of mootness. Where there is no more live subject of 21 controversy, the Court ceases to have a reason to render any ruling or make any pronouncement. Courts generally decline jurisdiction on the ground of mootness save when, among others, a compelling constitutional issue raised requires the formulation of controlling principles to guide the bench, the bar and the public; or when the case is capable of 22 repetition yet evading judicial review, which are not extant in this case. The issuance of the ex parte writ of possession did not violate Madriaga, Sr.s right to due process. Section 7 of Act 3135 expressly allows the buyer at the auction to file a verified petition in the form of an ex parte motion for issuance of a writ of possession. This connotes that it is for the benefit of one party, without notice to or challenge by an adverse party. Being summary in nature, it cannot be said to be a judgment on the merits, but is simply an incident in 23 24 the transfer of title. As pointed out in Philippine National Bank v. Court of Appeals, an ex parte petition for writ of possession under Act 3135 is, strictly speaking, not a judicial, or litigious, proceeding, for the reason that an extrajudicial foreclosure of mortgage is accomplished by filing a petition, not with any court of justice, but with the office of the sheriff of the place where the sale is to be made. Indeed, the proceeding in a petition for a writ of possession is ex parte and summary in nature. It is a judicial proceeding brought for the benefit of one party only and without notice by the court to any person adversely interested. It is a proceeding wherein relief is granted without affording the person against whom the relief is sought the opportunity to be 25 26 heard. No notice is needed to be served upon persons interested in the subject property. And as held in Carlos v. 27 Court of Appeals, the ex parte nature of the proceeding does not deny due process to the petitioners because the issuance of the writ of possession does not bar a separate case for annulment of mortgage and foreclosure sale. Hence, the RTC may grant the petition even in the absence of Madriaga, Sr.s participation. Moreover, records show that Madriaga, Sr. was able to air his side when he filed: on November 1, 2002 an opposition to the writ; on April 13, 2005, a "Motion to Quash/Abate the Writ of Possession"; and on March 6, 2006, a motion for reconsideration of the Order dated February 6, 2006 denying his motion to quash/abate the writ of possession. When a 28 party has been afforded opportunity to present his side, he cannot feign denial of due process. The petitioners predecessor is not a third-party whose possession of the disputed properties is adverse to that of Spouses Trajano. A writ of possession of real property may be issued in cases of extrajudicial foreclosure of a real estate mortgage under 29 Section 7 of Act 3135, as amended by Act 4118. Sec. 7 provides: Sec. 7. Possession during redemption period. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under Sec. 194 of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of court shall, upon the filing of such petition, collect the fees specified in par. 11 of Sec. 114 of Act No. 496, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately. The right of the owner to the possession of a property is an essential attribute of ownership. In extrajudicial foreclosures, the purchaser becomes the absolute owner when no redemption is made. Thus, after consolidation of ownership and 31 issuance of a new transfer certificate of title in the name of the purchaser, he is entitled to possession of the property as 32 a matter of right under Section 7, and its issuance by the RTC is a mere ministerial function. The rule, however, admits of an exception. Thus, it is specifically provided in Section 33, Rule 39 of the Rules of 33 Court that the possession of the extrajudicially foreclosed property shall be withheld from the purchaser if a third-party is 34 actually holding the same adversely to the mortgagor/debtor. "Sec. 33. Deed and possession to be given at expiration of redemption period; by whom executed or given. x x x x x x The possession of the property shall be given to the purchaser or last redemptioner by the same officer unless a third party is actually holding the property adversely to the judgment obligor."
30

In an extrajudicial foreclosure of real property, when the foreclosed property is in the possession of a third-party holding the same adversely to the defaulting debtor/mortgagor, the issuance by the RTC of a writ of possession in favor of the purchaser of the said real property ceases to be ministerial and may no longer be done ex parte. For the exception to apply, however, the property need not only be possessed by a third-party, but also held by the third-party adversely to the 35 debtor/mortgagor. 1wphi1 In BPI Family Savings Bank, Inc. v. Golden Power Diesel Sales Center, Inc., the Court discussed the meaning of a "third-party who is actually holding the property adversely to the judgment obligor" "The exception provided under Section 33 of Rule 39 of the Revised Rules of Court contemplates a situation in which a third party holds the property by adverse title or right, such as that of a co-owner, tenant or usufructuary. The co-owner, agricultural tenant, and usufructuary possess the property in their own right, and they are not merely the successor or 37 transferee of the right of possession of another co-owner or the owner of the property." It is not disputed that Madriaga, Sr. was in actual possession of the disputed properties at the time the writ of possession was issued by the RTC. China Bank, on the other hand, has in its favor TCT Nos. T-346239(M) and T-346240(M) issued pursuant to the extrajudicial foreclosure sale. The RTC, at that juncture, had no alternative but to issue the writ of possession. As it stated in its Order dated February 6, 2006," x x x [a]t the time it rendered its Decision on July 12, 2002 (granting the ex parte petition for the issuance of the writ of possession), the evidence obtaining herein overwhelmingly 38 warranted the issuance of the possessory writ in favor of petitioner Bank." Moreover, it must be emphasized that Madriaga, Sr.s possession was by vi rtue of the 1991 agreement between him and Spouses Trajano for the sale of the properties. As it turned out, Spouses Trajano reneged on their original contractual undertaking to deliver the titles thereby prompting the petitioner to pursue his claim over the disputed properties. The writ of execution and execution sale referred to by the petitioner as basis of their alleged adverse possession was issued by the RTC, as a matter of course in Civil Case No. 521-M-93, which was the initial civil case filed by them to compel Spouses Trajano to deliver the title to the properties pursuant to the sale. The filing of Civil Case No. 521-M-93, the compromise agreement subsequently entered into by the parties, and the judgment and orders issued by the RTC in said case, in fact, confinned the existence of the previous transaction between Madriaga, Sr. and Spouses Trajano, i.e., the transfer of the disputed properties to Madriaga, Sr. by way of sale. Evidently, Madriaga, Sr.'s interest from the properties sprung from his supposed right as the successor or transferee of Spouses Trajano. It cannot be gainsaid, therefore, that their claim of possession was acquired from Spouses Trajano, which cannot be considered adverse or contrary, and the RTC had all the authority to issue the ex parte writ of possession. In any event, as we have previously noted, the petitioner has already pursued Civil Case No. 406-M-2002 for "Specific Performance, Nullification of Title, Reconveyance and Damages," a plenary action to recover possession or an accion 39 reivindicatoria." It is in said forum that the contending ownership claims of the parties, and resultantly the right of possession, can be best ventilated and resolved with definiteness. WHEREFORE, the petition for review is DENIED for lack of merit. ALPA-PCM, INC.,
36

VINCENT BULASAO, JULIET BULASAO and SUSANA BULASAO, HONORABLE JUDGE DANILO F. CAMACHO, and THE DEPUTY SHERIFF OF THE REGIONAL TRIAL COURT, LA TRINIDAD, BENGUET,

The petitioner, ALPA-PCM, Inc. (ALPA-PCM), filed with the Court a petition for review on certiorari under Rule 45 of the Rules of Court, praying for the reversal of the decision
[1]

dated January 6, 2011 and the resolution

[2]

dated May 19, 2011

of the Court of Appeals (CA) in CA G.R. SP No. 102417. On July 6, 2011, the Court denied the petition for failure to find any reversible error in the assailed CA rulings. Courts Resolution. BACKGROUND FACTS In 2004, the private respondents, Vincent, Juliet and Susana, all surnamed Bulasao ( the Bulasaos) filed an action for unlawful detainer against ALPA-PCM before the Municipal Trial Court (MTC) of La Trinidad, Benguet.
[4] [3]

ALPA-PCM filed the present motion seeking a reconsideration of the

The MTC

ruled in favor of the Bulasaos and ordered ALPA-PCM to vacate the subject property in a decision dated May 31,

2006.

[5]

On appeal, the Regional Trial Court (RTC) of La Trinidad, Benguet, Branch 62, affirmed the MTCs ruling in a
[6]

decision dated July 31, 2007.

On August 13, 2007, the Bulasaos filed a motion for the issuance of a writ of execution. Three days after or on August 16, 2007, ALPA-PCM filed its motion for reconsideration of the RTC decision dismissing its appeal, which the RTC denied on October 25, 2007. Intending to seek recourse against the RTC rulings via an appeal, ALPA-PCM initially filed a Motion for Extension of Time to File Petition/Appeal on November 13, 2007.
[7]

In the meantime, the RTC granted the Bulasaos motion for execution through an order dated November 21, 2007. ALPA-PCM sought reconsideration of the November 21, 2007 order, but the RTC denied the motion in an order dated February 5, 2008. The RTC subsequently issued a writ of execution on February 12, 2008. ALPA-PCM questioned the RTC orders granting execution of the decision, as well as the writ of execution itself, before the CA by filing a separatecertiorari petition. ALPA-PCM alleged that the RTCs orders authorizing the execution of the decision in favor of the Bulasaos are null and void, since the filing of its appeal with the CA deprived the RTC of jurisdiction to issue the orders. In a decision dated January 6, 2011, the CA dismissed ALPA-PCMs petition,
[8]

finding no grave abuse of

discretion on the part of the RTC in granting the Bulasaos motion for execution. The CA declared that the RTC had power to grant execution pending appeal as part of its residual jurisdiction under Section 8, Rule 42 of the Rules of Court. As stated earlier, ALPA-PCM took exception from the CAs ruling by filing a petition for review on certiorari with this Court. It argued that there must be good reasons to justify execution pending appeal and cited as basis Section 2, Rule 39 of the Rules of Court. It pointed out that the RTC failed to state good reasons that justified the writ of execution. We denied ALPA-PCMs petition in our Resolution of July 6, 2011. In support of its motion for reconsideration of the Courts Resolution, ALPA -PCM reiterated the above arguments and added that the RTC acted with undue haste in granting the Bulasaos motion for writ of execution. It alleged that the filing of a motion for execution by the Bulasaos (August 13, 2007) preceded its filing of a motion for reconsideration of the RTC decision (August 16, 2007); hence, the motion for execution was premature since the decision sought to be executed was still for further review by the RTC. It cited the Courts ruling in JP Latex Technology, Inc. v. Ballons Granger Balloons, Inc.,
[9]

which said that [w]here there is a pending motion for reconsideration of the RTC decision, an order

execution (sic) pending appeal is improper and premature. THE COURTS RULING The Court fails to find any substantial argument raised by ALPA-PCM that merits a reconsideration of our earlier Resolution. Execution pending appeal of decisions in ejectment cases Rule 42 of the Rules of Court governs the appeal of a decision of the RTC rendered in the exercise of its appellate jurisdiction; the appeal is made by filing a [10] petition for review with the CA. Despite the filing of a petition with the CA, however, Rule 42 grants the RTC residual jurisdiction to order execution pending appeal, so long as (1) the CA has not yet given due course to the petition, and (2) the requirements of Section 2, Rule 39 are observed. The relevant portion of Section 8, Rule 42 of the Rules of Court states: Section 8. Perfection of appeal; effect thereof (a) x x x However, before the Court of Appeals gives due course to the petition, the Regional Trial Court may issue orders for the protection and preservation of the rights of the parties which do not involve any matter litigated by the appeal, approve compromises, permit appeals of indigent

litigants, order execution pending appeal in accordance with Section 2 of Rule 39 , and allow withdrawal of the appeal. xxxx Under Section 6, Rule 42 of the Rules of Court, the CA can give due course to a petition for review when it finds prima facie that the lower court has committed an error of fact or law that will warrant a reversal or modification of the appealed decision.
[11]

This initial determination by the CA can take place only when the proper pleadings have

actually been filed before the CA, enabling it to study the facts of the case and the alleged errors of the assailed ruling. In other words, the CA can give due course to an appeal of the RTC decision only (1) after the filing of a petition for review, and (2) upon the filing of the comment or other pleading required by the CA, or the expiration of the period for the filing thereof without such comment or pleading having been submitted. When the RTC granted the Bulasaos motion for execution pending appeal on November 21, 200 7, ALPA-PCM has not yet filed its petition for review with the CA; what ALPA-PCM filed on November 13, 2007 was only a motion for extension of time to file its petition. In the absence of any petition for review actually filed with the CA, the CA could clearly not have given due course to ALPA-PCMs appeal. The RTC, thus, retained its residual jurisdiction over the case to authorize execution of the decision. The Court also fails to find anything irregular in the filing by the Bulasaos of a motion for execution ahead of the filing by ALPA-PCM of its motion for reconsideration of the RTC decision. ALPA-PCM misconstrues our ruling in JP Latex Technology, Inc. v. Ballons Granger Balloons, Inc.
[12]

The ruling does not prevent the prevailing party from filing a motion

for execution until after the adverse party has filed a motion for reconsideration of the judgment. The RTC, however, is precluded from acting on the motion for execution until it has resolved the motion for reconsideration. In the present case, the RTC heeded this rule, as it granted the Bulasaos motion for execution only after it has resolved to deny ALPA PCMs motion for reconsideration of its decision. Immediate execution of the RTC decision on appeal to CA or SC After affirming the RTCs power to allow execution, we now consider ALPA -PCMs claim that the RTC must nonetheless cite good reasons justifying execution, citing as basis Section 2, Rule 39 of the Rules of Court. The Court reminds ALPA-PCM, particularly its counsel, Atty. Guillermo R. Bandonil, Jr., that this case originated from the complaint for unlawful detainer filed by the Bulasaos against it. Actions for unlawful detainer are governed primarily by the Revised Rules on Summary Procedure Revised Rules on Summary Procedure states that: Sec. 21. Appeal. The judgment or final order shall be appealable to the appropriate regional trial court which shall decide the same in accordance with Section 22 of Batas Pambansa Blg. 129. The decision of the regional trial court in civil cases governed by this Rule, including forcible entry and unlawful detainer, shall be immediately executory,without prejudice to a further appeal that may be taken therefrom. Section 10 of Rule 70 shall be deemed repealed. [emphasis and underscoring ours] The above rule, without any qualification whatsoever, has decreed the immediately executory nature of decisions of the RTC rendered in the exercise of its appellate jurisdiction, involving cases falling under the Revised Rules on Summary Procedure. It requires no further justification or even good reasons for the RTC to authorize execution, even if an appeal has already been filed before the CA. Indeed, the provision does not even require a bond to be filed by the prevailing party to allow execution to proceed.
[15] [13]

and suppletorily by the Rules of Court.

[14]

Section 21 of the

The rationale for this is the objective of the Revised Rules on Summary

Procedure to achieve an expeditious and inexpensive determination of cases governed by it. This objective provides

the good reason that justifies immediate execution of the decision , if the standards of Section 2, Rule 39 of the Rules of Court on execution pending appeal, as what ALPA-PCM insists, are considered. Notwithstanding the rules objective and clear mandate, losing litigants and their lawyers are determined to stall execution by misusing judicial remedies, putting forth arguments that, by simple logic, can easily be resolved by a basic reading of the applicable laws and rules. When judicial remedies are misused to delay the resolution of cases, the Rules of Court authorizes the imposition of sanctions. Section 3, Rule 142 of the Rules of Court states: Sec. 3. Costs when appeal frivolous.Where an action or an appeal is found to be frivolous, double or treble costs may be imposed on the plaintiff or appellant, which shall be paid by his attorney, if so ordered by the court. WHEREFORE, the Court resolves to DENY the ALPA-PCM, Inc.s motion for reconsideration of our Resolution dated July 6, 2011. For instituting a frivolous appeal manifestly intended for delay, the Court imposes treble costs against ALPA-PCM, Inc., to be paid by its counsel, Atty. Guillermo R. Bandonil, Jr. MINDANAO TERMINAL AND BROKERAGE SERVICE, INC., Petitioner, vs. COURT OF APPEALS AND PHILIPPINE PORTS AUTHORITY, Respondents. PHILIPPINE PORTS AUTHORITY, Petitioner, vs. HON. CESAR M. SOLIS, PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH 14, MANILA AND MINDANAO TERMINAL AND BROKERAGE SERVICE, INC., Respondents. PHILIPPINE PORTS AUTHORITY, Petitioner, vs. HON. CESAR M. SOLIS, PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH 14, MANILA AND MINDANAO TERMINAL AND BROKERAGE SERVICE, INC., Respondents. Before us are the consolidated petitions which the Philippine Ports Authority (PPA), a government owned and controlled 1 corporation, tasked with the management and control of all government and privately-owned ports in the country filed against the Mindanao Terminal and Brokerage Services, Inc. (MINTERBRO), a private domestic corporation and grantee 2 of a PPA-issued special permit for stevedoring services at the Davao City's government and privately-owned wharves. The Facts On 28 August 1990, the Regional Trial Court (RTC), Br. 14, Manila rendered a decision in Philippine Ports Authority v. 3 Mindanao Terminal amd Brokerage Service, Inc., ordering MINTERBRO to pay PPA the sum of Thirty Six Million Five Hundred Eighty Five Thousand Nine Hundred One Pesos and Eighteen Centavos (P36,585,901.18), as governments ten 4 percent (10%) share in MINTERBROs gross income from its port-related services, viz: WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff [PPA] and against the defendant [MINTERBRO], ordering the latter to pay the former the sum of THIRTY SIX MILLION FIVE HUNDRED EIGHTY FIVE THOUSAND NINE HUNDRED ONE PESOS and EIGHTEEN CENTAVOS (P 36,585,901.18) and the costs 5 of suit. Aggrieved, MINTERBRO assailed the RTC decision before the Court of Appeals. The Court of Appeals in a 6 Decision dated 21 November 2002, affirmed in toto the RTC decision: WHEREFORE, premises considered and pursuant to applicable law and jurisprudence on the matter, the appealed Decision (dated August 28, 1990) of the Regional Trial Court (Branch XIV) in Manila in Civil Case No. 87-42747, is hereby 7 AFFIRMED in toto. Costs against the appellant. On even date, copies of the said Decision were sent via registered mail to the parties respective counsels along with the Notice of the Decision stating that: Please take notice that on November 21, 2002, a DECISION, copy hereto attached, was rendered by the TENTH DIVISION of the Court of Appeals in the above-entitled case, the original copy of which is on file with this Office. You are hereby required to inform this Court, within five (5) days from receipt hereof, of the date when you received this 8 notice and a copy of the DECISION.

While the PPA filed "Compliance" on 17 January 2003 manifesting its receipt of the decision, MINTERBRO failed to do the same, constraining the Court of Appeals Division Clerk of Court to send a letter -tracer to the Postmaster of Pasig City with the following directive: Upon instruction of the Court, you are HEREBY REQUIRED to INFORM this Office within ten (10) days from receipt hereof, of the exact date when Registered Letter No. 6270-B mailed at Manila on November 27, 2002 and addressed to Atty. Rafael S. Dizon of 6/F, Padilla Bldg., Emerald Ave., Ortigas Commercial Center, Pasig City, was delivered to and received by the addressee. If the said registered letter, however, is still in your possession, unclaimed by the addressee notwithstanding the required notices, sent to and received by him/her, you are directed to return and mail to this Court within the same period indicated above together with your certification of the date the first notice was sent to and received by the said addressee, the 9 person receiving the same and how delivery thereof was made. (Underscoring and emphasis supplied) In reply, the Postmaster of Pasig City - Central Post Office advised the Court of Appeals that registered letter No. 627010 B was received by Virgie Cabrera (Cabrera) at the stated address on 4 December 2002. Counted from that date, 4 December 2002, the Court of Appeals Decision became final and executory on 20 December 2002 or 15 days after Cabreras receipt of the decision. The decision was, thus, recorded in the Book of 11 Entries of Judgments. Copies of the Entry of Judgment were sent on 1 August 2003 to the parties counsels, with MINTERBROs copy having been addressed to Atty. Rafael Dizon (Atty. Dizon), 6/F Padilla Building, Emerald 12 Avenue, Ortigas Commercial Center, Pasig City. On 29 August 2003, Atty. Dizon, filed a Motion for Reconsideration of the Declaration of Finality and to Set Aside Entry of Judgment. Atty. Dizon argued that he did not receive the 21 November 2002 Court of Appeals Decision, and, hence, "considering the fact that the Decision rendered by this Honorable Court Court of Appeals has not been served on the defendant-appellant, it is without doubt that the reglementary period to appeal has not commenced and therefore, the 13 aforesaid decision has not become final." Atty. Dizon added that since the Court of Appeals decision has not yet become 14 final, the issuance by the Division Clerk of Court of the Entry of Judgment was premature. The Court of Appeals, however, in a Resolution dated 21 April 2004, denied Atty. Dizons motion and re -affirmed the 15 finality of the questioned decision. MINTERBRO assailed the 21 April 2004 Resolution via petition for review on certiorari before this Court which was docketed as G.R. No. 163286. Meanwhile, the PPA, by virtue of the Entry of Judgment, filed a Motion for the Issuance of a Writ of Execution which was granted by the RTC of Manila, Br. 14. This not withstanding, the RTC later held in abeyance the execution of judgment, 18 per motion of MINTERBRO. The RTC Order, penned by Judge Cesar M. Solis, dated 26 February 2004, ratiocinated that: Admittedly, the case now pending before the Court of Appeals questioning the finality of judgment before the Court of Appeals (sic) in this case warrants the stay of the execution. Indeed, to execute the judgment at this stage would certainly result in grave injustice if and when the Court of Appeals would grant the defendants Motion for Reconsideration of the Declaration of Finality and to Set Aside Entry of Judgment. Besides, to implement the Decision at this juncture, pending the resolution of the incident before the appellate court would render the adjudication of issue therein, moot and academic. While the Court of Appeals did not issue any restraining order to prevent this Court from taking any action with regard to its Order granting p laintiffs Motion for Execution, it is deemed proper upon this Court to refrain from enforcing the Decision. Due respect to the latter court and practical and ethical considerations should prompt this court to wait for the final determination of the Motion now 19 pending with the Court of Appeals. (Underscoring and emphasis supplied) The PPAs Motion for Reconsideration of the above Order was denied, constraining PPA to file a second motion for 21 reconsideration, which the RTC again denied in an Order dated 17 September 2004. Noticeably, though, this order purportedly reiterating its earlier resolution, held the execution in abeyance "until after the Petition for Review of the defendant shall have been resolved by the Supreme Court," in stark contrast with the tone of the Order dated 26 February 2004 holding in abeyance only "until after the Petition for Review of the defendant shall have been resolved by the Court of Appeals." The original Resolution dated 26 February 2004 stated: WHEREFORE, and in view of the foregoing considerations, the Motion for Reconsideration of the defendant is hereby GRANTED. The execution of the Decision rendered in this case is hereby held in abeyance until the Motion for Reconsideration of the Declaration of Finality and to Set Aside Entry of 22 Judgment shall have been resolved by theCourt of Appeals. (Underscoring and emphasis supplied) While the Order dated 17 September 2004 said: WHEREFORE, and in view of the foregoing considerations, the instant Motion for Reconsideration of the plaintiff is 23 DENIED. Accordingly, this Court hereby REITERATES its February 26, 2004 and May 28, 2004 Orders holding in abeyance the execution of the Decision in this Case until after the Petition for Review of the defendant shall have been 24 resolved by the Supreme Court with Finality. (Underscoring and emphasis supplied)
20 17 16

Hence, PPA filed a petition for certiorari, via Rule 65, assailing the RTC Orders, holding in abeyance the execution of judgment, which was docketed as G.R. No. 166025. While G.R. Nos. 163286 and 166025 were pending before this Court, MINTERBRO filed with the RTC, again, with the sala of Judge Cesar M. Solis, a Motion for Issuance of Status Quo Ante Order to compel the PPA to renew its port 25 operators permit, which Judge Cesar M. Solis granted in an Order dated 20 June 2005 despite PPAs opposition: WHEREFORE, let a Status Quo Ante Order be issued against plaintiff Philippine Ports Authority (PPA) to (1) CEASE and DESIST from imposing certain requirements in consideration of defendant Mindanao Terminal and Brokerage Service, Inc.s application for renewal/issuance of its COR/PTO permits, and to (2) Act Immediately upon the said defendants pending application without necessarily considering the existence of such disputed account, should it be warranted by the other circumstances, subject to the satisfaction of the monetary requirement as determined finally by the competent 26 authority. This prompted the PPA to seek this Courts direct intervention through a petition for certiorari under Rule 65, now docketed as G.R. No. 170269. ISSUES: G.R. No. 163286 a. Whether the Court of Appeals Decision dated 21 November 2002 had become final and executory; and b. Whether the decision was properly served on MINTERBROs counsel. G.R. No. 166025 Whether or not the RTC committed grave abuse of discretion amounting to lack or in excess of jurisdiction when it refused to implement/execute its 28 August 1990 Decision which had already become final and executory, in the 28 absence of an injunction or temporary restraining order from higher courts? G.R. No. 170269 Whether the RTC committed grave abuse of discretion when: a. it resolved issues alien to the main case; and b. it supplanted PPAs constitutionally protected right to contract. Our Ruling The service of judgment serves as the reckoning point to determine whether a decision had been appealed within the reglementary period or has already become final. The threshold issue that must be resolved first is whether the Court of Appeals Decision dated 21 November 2002 was properly served on MINTERBROs counsel in accordance with service of judgment under Sections 9 and 10, Rule 13 of the Rules of Court, which require that: Section 9. Service of judgments, final orders, or resolutions. Judgments, final orders or resolutions shall be served either personally or by registered mail. When a party summoned by publication has failed to appear in the action, judgments, final orders or resolutions against him shall be served upon him also by publication at the expense of the prevailing party. Section 10. Completeness of service. Personal service is complete upon actual delivery. Service by ordinary mail is complete upon the expiration of ten (10) days after mailing, unless the court otherwise provides. Service by registered mail is complete upon actual receipt by the addressee, or after five (5) days from the date he received the first notice of the postmaster, whichever date is earlier. The first point is crucial for the service of judgment serves as the reckoning point to determine whether a decision was appealed within the reglementary period, because otherwise, i.e., in the absence of an appeal or if the appeal was made beyond the reglementary period, the decision would, as a consequence, become final. Atty. Dizon contends that he was not properly served with the Court of Appeals decision since Cabrera who received the decision was not connected with his office. She was a front desk receptionist at the Prestige Tower 30 Condominium, where Atty. Dizon was holding his office, as shown by the affidavits executed by Cabrera and the Prestige Towers management. Atty. Dizon rhetorically argued: "Who is this Virgie Cabrera? Is she an employee of the
29 27

counsel of record of the petitioner? Is she authorized to receive a copy of a judgment ordering the petitioner to pay PPA the amount of P 36,585,901.18?" To him, the decision, as the rules dictate, if served by way of registered mail, must be actually received by the addressee 31 or any person in his office, otherwise, service cannot be considered complete. Because no valid service was made, the 32 period to appeal did not prescribe and the decision has not yet attained finality. There is no dispute that as dictated by the Rules on Civil Procedure, Rule 13, Section 10 thereof, service by registered mail is complete upon actual receipt by the addressee, or five (5) days from the date he received the first notice of the postmaster, whichever date is earlier. The purpose of the afore-quoted rule on service is to make sure that the party being served with the pleading, order or judgment is duly informed of the same so that such party can take steps to protect the interests, i.e.,enable to file an 33 appeal or apply for other appropriate reliefs before the decision becomes final. Atty. Dizon, however, has forgotten that it was his elementary responsibility to have informed the Court of Appeals of his change of address from 6/F Padilla Building, Emerald Avenue, Ortigas Commercial Center, Pasig City, toSuite 402, Prestige Tower, Emerald Avenue, Ortigas Center, Pasig City. The records show that Atty. Dizon only informed the Court 34 of Appeals of his change of address on 12 November 2003. This was almost one year after the entry of judgment was made on 20 December 2002. It did not escape us that Atty. Dizon filed on 29 August 2003 a Motion for Reconsideration of the Declaration of Finality and to Set Aside Entry of Judgment, months prior to his filing of change of address. The said motion conspicuously bore his old address at Padilla Building, the same address where the postmaster delivered the Court of Appeals decision where it was received by Cabrera. Atty. Dizons reason therefore, that Cabrera is not his employee but that of Prestige Tower Condominium does not persuade us, because, as certified by the postmaster, Cabrera received the letter on 4 December 2002 or a year before Atty. Dizons change of address, and while his office address was at the Padilla Building. On that particular date, therefore, his office at the Prestige Tower Condominium was yet nonexistent. At the very least, if it were true that he already moved to his new address, he should have indicated his new address in his motion for reconsideration. But even then, still, the responsibility was with Atty. Dizon to inform the Court of Appeals of such change. As between the claim of non-receipt of notices of registered mail by a party and the assertion of an official whose duty is to send notices, which assertion is fortified by the presumption that the official duty has been regularly performed, the 35 choice is not difficult to make. As shown in the records, the postmaster included in his certification the manner, date and the recipient of the delivery, a criterion for the proper service of judgment which this Court enunciated in Santos v. Court of Appeals, viz: Clearly then, proof should always be available to the post office not only of whether or not the notices of registered mail have been reported delivered by the letter carrier but also of how or to whom and when such delivery has been made. Consequently, it cannot be too much to expect that when the post office makes a certification regarding delivery of registered mail, such certification should include the data not only as to whether or not the corresponding notices were 36 issued or sent but also as to how, when and to whom the delivery thereof was made. An examination of the postmasters certification shows that: x x x registered letter No. 6270-B was received by Virgie Cabrera on 4 December 2002. (Emphasis supplied) This certification, the form of which came from the Supreme Court, and which only needs to be filled-up by the postmaster, to the mind of this Court, satisfies the requirement stated in Santos. Atty. Dizon has no one to blame but himself for allowing his client to lose the multi-million case because of his negligence to appeal the same within the reglementary period. Losing a case on account of a counsels negligence is a bitter pill to 38 swallow for the litigant. But then, the Court is duty-bound to observe its rules and procedures. And, in the observance thereof, for the orderly administration of justice, it cannot countenance the negligence and ineptitude of lawyers who wantonly jeopardize the interests of their clients. On his part, a lawyer shall observe the rules of procedure and shall not 39 misuse them to defeat the ends of justice. Once a judgment becomes final, the prevailing party is entitled as a matter of right to a writ of execution. As a matter of law, once a judgment becomes final, the prevailing party is entitled as a matter of right to a Writ of 40 Execution as mandated by Section 1, Rule 39 of the 1997 Rules of Civil Procedure, which states that: Section 1. Execution upon judgments or final orders. Execution shall issue as a matter of right, on motion, upon a judgment or order that disposes of the action or proceeding upon the expiration of the period to appeal therefrom if no appeal has been duly perfected.(Emphasis supplied) The rule is clear that it becomes mandatory or ministerial duty of the court to issue a writ of execution to enforce the judgment which has become executory.
37

Hence, this Court holds that the RTC abused its discretion when it held in abeyance the issuance of the writ of execution of the judgment in Civil Case No. 87-42747 entitled Philippine Ports Authority v. Mindanao Terminal and Brokerage Services, Inc., notwithstanding the fact that the same had already become final and executory this notwithstanding that MINTERBRO filed before this Court a petition for certiorari under Rule 65 of the Rules of Court. It did not escape this Court that the RTC Order dated 26 February 2004, holding in abeyance the writ of execution was only "until after the 41 Petition for Review of the defendant shall have been resolved by the Court of Appeals." After the Court of Appeals, however, decided and held that its decision was already final and executory, the RTC issued another Order dated 17 September 2004, which in the guise of reiterating the 24 February 2004 order, changed its tone to the effect of holding in abeyance "until after the Petition for Review of the defendants hall have been resolved by the Supreme Court with 42 Finality." It is a basic rule that a petition forcertiorari under Rule 65 does not by itself interrupt the course of the proceedings. It is necessary to avail of either a temporary restraining order or a writ of preliminary injunction to be issued by a higher court against a public respondent so that it may, during the pendency of the petition, refrain from further 43 proceedings. This was the Courts ruling in Peza v. Hon. Alikpala,
44

where this Court ruled that:

It is elementary that the mere pendency of a special civil action for certiorari, commenced in relation to a case pending 45 before a lower Court, does not interrupt the course of the latter when there is no writ of injunction restraining it. In Balintawak Construction Supply Corp. v. Valenzuela , this Court held that: It is basic that once a judgment becomes final, the prevailing party is entitled as a matter of right to a Writ of Execution, and the issuance thereof is the Court's ministerial duty, compellable by Mandamus. In fact, it has been fittingly said that "an execution is the fruit and end of the suit, and is very aptly called the life of the law." Petitioner, therefore, as the prevailing party was entitled as a matter of right to the execution of the judgment x x x in its favor that had become final 47 and executory. To this day, these rules remain the same. This Court, likewise, rules that Judge Cesar M. Solis, the presiding judge of the cases in controversy, gravely abused his discretion when he ordered the PPA to act immediately on MINTERBROs application for renewal of the latters Certificate of Registration/Permit to Operate (COR/PTO) when its prior registration expired, and for PPA to cease and desist from 48 imposing certain requirements in consideration of MINTERBROs application for renewal of said COR/PTO. It is noteworthy that Civil Case No. 87-42747, the principal case in controversy was already appealed to and decided by the Court of Appeals, which decision, in fact, had, by the records, already become final and executory, and has been consequently entered in the book of judgments. The only issue that remained in litigation was whether or not the decision of the Court of Appeals affirming the trial courts decision in favor of PPA is no longer appealable. On that issue, we did not grant any temporary restraining order. Notably, the trial court lost its jurisdiction over the case from the time MINTERBRO perfected its appeal of the RTC 49 decision to the Court of Appeals. From that time on, the RTC was divested of any authority over the substantive issues of the case. This is clear from the reading of Section 8, Rule 42 of the Rules of Court, thus: Sec. 8. Perfection of appeal: effect thereof. (a) Upon the timely filing of a petition for review and the payment of the corresponding docket and other lawful fees, the appeal is deemed perfected as to the petitioner. The Regional Trial Court loses jurisdiction over the case upon the perfection of the appeals filed in due time and the expiration of the time to appeal of the other parties. However, before the Court of Appeals gives due course to the petition, the Regional Trial Court may issue orders for the protection and preservation of the rights of the parties which do not involve any matter litigated by the appeal, approve compromises, permit appeals of indigent litigants, order execution pending appeal in accordance with Section 2 of Rule 39, and allow withdrawal of the appeal. (Emphasis supplied) While Judge Cesar M. Solis anchors his action in citing the same afore-quoted provision "that the RTC may issue orders for the protection and preservation of the rights of the parties which do not involve any matter litigated by the 50 appeal," the same is applicable only "before the Court of Appeals gives due course to the petition," as mandated by the very same provision cited by Judge Cesar M. Solis. This was the Courts pronouncement in Atty. Fernandez v. Court of 51 Appeals, where this Court held that "this residual jurisdiction of the trial court (referring to Section 8[a] par. 3, Rule 42, 1997 Rules on Civil Procedure) is available at a stage in which the court is normally deemed to have lost jurisdiction over the case or the subject matter involved in the appeal. This stage is reached upon the perfection of the appeals by the parties or upon the approval of the records on appeal, but prior to the transmittal of the original records or the records on 52 appeal." At the time that Judge Cesar M. Solis issued hisStatus Quo Ante Order of 20 June 2005, even the Court of Appeals has lost jurisdiction over the issue of finality of decision. This Court has by then taken over. WHEREFORE, premises considered, this Court HOLDS that: (A) There was proper service of judgment on MINTERBROs counsel; and
46

(B) The Court of Appeals Decision dated 2 I November 2002 in CA G.R. CV No. 35884 had become final and executory. This Court further RESOLVES TO: (A) DIRECT the Regional Trial Court, Manila, Br. 14, to ISSUE THE WRIT OF EXECUTION in Civil Case No. 8742747, and to implement and execute the same without delay; and (B) NULLIFY the Orders of the RTC dated 10 June 2005,20 June 2005, and 6 September 2005, granting MINTERBRO's Motion for Issuance of Status Quo Ante Order, issuing the Status Quo Ante Order, and, denying PPA's Motion to lift the Status Quo Ante Order, respectively. SO ORDERED.

CRISANTA ALCARAZ MIGUEL

JERRY D. MONTANEZ, Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. Petitioner Crisanta Alcaraz Miguel (Miguel) seeks the reversal and setting aside of the September 17, 2009 Decision 2010 Resolution Alcaraz Miguel. Antecedent Facts On February 1, 2001, respondent Jerry Montanez (Montanez) secured a loan of One Hundred Forty-Three Thousand Eight Hundred Sixty-Four Pesos (P143,864.00), payable in one (1) year, or until February 1, 2002, from the petitioner. The respondent gave as collateral therefor his house and lot located at Block 39 Lot 39 Phase 3, Palmera Spring, Bagumbong, Caloocan City. Due to the respondents failure to pay the loan, the petitioner filed a complaint against the respondent before the Lupong Tagapamayapa of Barangay San Jose, Rodriguez, Rizal. The parties entered into a Kasunduang Pagaayos wherein the respondent agreed to pay his loan in installments in the amount of Two Thousand Pesos (P2,000.00) per month, and in the event the house and lot given as collateral is sold, the respondent would settle the balance of the loan in full. However, the respondent still failed to pay, and on December 13, 2004, the Lupong Tagapamayapa issued a certification to file action in court in favor of the petitioner. On April 7, 2005, the petitioner filed before the Metropolitan Trial Court (MeTC) of Makati City, Branch 66, a complaint for Collection of Sum of Money. In his Answer with Counterclaim,
[3] [2] [1]

and February 11,

of the Court of Appeals (CA) in CA-G.R. SP No. 100544, entitled Jerry D. Montanez v. Crisanta

the respondent raised the defense of

improper venue considering that the petitioner was a resident of Bagumbong, Caloocan City while he lived in San Mateo, Rizal. After trial, on August 16, 2006, the MeTC rendered a Decision,
[4]

which disposes as follows:

WHEREFORE, premises considered[,] judgment is hereby rendered ordering defendant Jerry D. Montanez to pay plaintiff the following: 1. The amount of [Php147,893.00] representing the obligation with legal rate of interest from February 1, 2002 which was the date of the loan maturity until the account is fully paid; 2. The amount of Php10,000.00 as and by way of attorneys fees; and the costs. SO ORDERED.
[5]

On appeal to the Regional Trial Court (RTC) of Makati City, Branch 146, the respondent raised the same issues cited in his Answer. In its March 14, 2007 Decision,
[6]

the RTC affirmed the MeTC Decision, disposing as follows:

WHEREFORE, finding no cogent reason to disturb the findings of the court a quo, the appeal is hereby DISMISSED, and the DECISION appealed from is hereby AFFIRMED in its entirety for being in accordance with law and evidence. SO ORDERED.
[7]

Dissatisfied, the respondent appealed to the CA raising two issues, namely, (1) whether or not venue was improperly laid, and (2) whether or not theKasunduang Pag-aayos effectively novated the loan agreement. On September 17, 2009, the CA rendered the assailed Decision, disposing as follows: WHEREFORE, premises considered, the petition is hereby GRANTED. The appealed Decision dated March 14, 2007 of the Regional Trial Court (RTC) of Makati City, Branch 146, is REVERSED and SET ASIDE. A new judgment is entered dismissing respondents complaint for collection of sum of money, without prejudice to her right to file the necessary action to enforce the Kasunduang Pag-aayos. SO ORDERED. Anent the
[8]

issue

of

whether

or

not

there

is

novation

of

the

loan

contract, the CA ruled in the negative. It ratiocinated as follows: Judging from the terms of the Kasunduang Pag-aayos, it is clear that no novation of the old obligation has taken place. Contrary to petitioners assertion, there was no reduction of the term or period originally stipulated. The original period in the first agreement is one (1) year to be counted from February 1, 2001, or until January 31, 2002. When the complaint was filed before the barangay on February 2003, the period of the original agreement had long expired without compliance on the part of petitioner. Hence, there was nothing to reduce or extend. There was only a change in the terms of payment which is not incompatible with the old agreement. In other words, the Kasunduang Pag-aayos merely supplemented [9] the old agreement. The CA went on saying that since the parties entered into a Kasunduang Pag-aayos before the Lupon ng Barangay, such settlement has the force and effect of a court judgment, which may be enforced by execution within six (6) months from the date of settlement by the Lupon ng Barangay, or by court action after the lapse of such time.
[10]

Considering that more than six (6) months had elapsed from the date of settlement, the CA ruled that the remedy

of the petitioner was to file an action for the execution of the Kasunduang Pag-aayos in court and not for collection of sum of money.
[11]

Consequently, the CA deemed it unnecessary to resolve the issue on venue.

[12]

The petitioner now comes to this Court. Issues (1) Whether or not a complaint for sum of money is the proper remedy for the petitioner, notwithstanding the Kasunduang Pag-aayos; (2) Whether
[13]

and not the CA should have decided

[14]

or

the

case

on

the

merits

rather than remand the case for the enforcement of the Kasunduang Pag-aayos. Our Ruling Because the respondent failed to comply with the terms of the Kasunduang Pag-aayos, said agreement is deemed rescinded pursuant to Article 2041 of the New Civil Code and the petitioner can insist on his original demand. Perforce, the complaint for collection of sum of money is the proper remedy.

The petitioner contends that the CA erred in ruling that she should have followed the procedure for enforcement of the amicable settlement as provided in theRevised Katarungang Pambarangay Law, instead of filing a collection case. The petitioner points out that the cause of action did not arise from the Kasunduang Pag-aayos but on the respondents breach of the original loan agreement.
[15]

This Court agrees with the petitioner. It is true that an amicable settlement reached at the barangay conciliation proceedings, like the Kasunduang Pagaayos in this case, is binding between the contracting parties and, upon its perfection, is immediately executory insofar as it is not contrary
[16]

to

law,

good

morals,

good

customs, public order and public policy.

This is in accord with the broad precept of Article 2037 of the Civil Code, viz:

A compromise has upon the parties the effect and authority of res judicata; but there shall be no execution except in compliance with a judicial compromise. Being a by-product of mutual concessions and good faith of the parties, an amicable settlement has the force and effect of res judicata even if not judicially approved.
[17]

It transcends being a mere contract binding only upon the parties

[18]

thereto, and is akin to a judgment that is subject to execution in accordance with the Rules. the Local Government Code,
[19]

Thus, under Section 417 of

such amicable settlement or arbitration award may be enforced by execution by

the Barangay Lupon within six (6) months from the date of settlement, or by filing an action to enforce such settlement in the appropriate city or municipal court, if beyond the six-month period. Under the first remedy, the proceedings are covered by the Local Government Code and the Katarungang Pambarangay Implementing Rules and Regulations. The Punong Barangay is called upon during the hearing to determine solely the fact of non-compliance of the terms of the settlement and to give the defaulting party another chance at voluntarily complying with his obligation under the settlement. Under the second remedy, the proceedings are governed by the Rules of Court, as amended. The cause of action is the amicable settlement itself, which, by operation of law, has the force and effect of a final judgment.
[20]

It must be emphasized, however, that enforcement by execution of the amicable settlement, either under the first or the second remedy, is only applicable if the contracting parties have not repudiated such settlement within ten (10) days from the date thereof in accordance with Section 416 of the Local Government Code. If the amicable settlement is repudiated by one party, either expressly or impliedly, the other party has two options, namely, to enforce the compromise in accordance with the Local Government Code or Rules of Court as the case may be, or to consider it rescinded and insist upon his original demand. This is in accord with Article 2041 of the Civil Code, which qualifies the broad application of Article 2037, viz: If one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand. In the case of Leonor v. Sycip,
[21]

the Supreme Court (SC) had the occasion to explain this provision of law. It ruled that

Article 2041 does not require an action for rescission, and the aggrieved party, by the breach of compromise agreement, may just consider it already rescinded, to wit: It is worthy of notice, in this connection, that, unlike Article 2039 of the same Code, which speaks of "a cause of annulment or rescission of the compromise" and provides that "the compromise may be annulled or rescinded" for the cause therein specified, thus suggesting an action for annulment or rescission, said Article 2041 confers upon the party concerned, not a "cause" for rescission, or the right to "demand" the rescission of a compromise, but the authority, not only to "regard it as rescinded", but, also, to "insist upon his original demand". The language of this Article 2041, particularly when contrasted with that of Article 2039, denotes that no action for rescission is required in said Article 2041, and that the party aggrieved by the breach of a compromise

agreement may, if he chooses, bring the suit contemplated or involved in his original demand, as if there had never been any compromise agreement, without bringing an action for rescission thereof. He need not seek a judicial declaration of rescission, for he may "regard" the compromise [22] agreement already "rescinded". (emphasis supplied) As so well stated in the case of Chavez v. Court of Appeals,
[23]

a party's non-compliance with the amicable

settlement paved the way for the application of Article 2041 under which the other party may either enforce the compromise, following the procedure laid out in the Revised Katarungang Pambarangay Law, or consider it as rescinded and insist upon his original demand. To quote: In the case at bar, the Revised Katarungang Pambarangay Law provides for a two-tiered mode of enforcement of an amicable settlement, to wit: (a) by execution by the Punong Barangay which is quasijudicial and summary in nature on mere motion of the party entitled thereto; and (b) an action in regular form, which remedy is judicial. However, the mode of enforcement does not rule out the right of rescission under Art. 2041 of the Civil Code. The availability of the right of rescission is apparent from the wording of Sec. 417 itself which provides that the amicable settlement " may" be enforced by execution by the lupon within six (6) months from its date or by action in the appropriate city or municipal court, if beyond that period. The use of the word "may" clearly makes the procedure provided in the Revised Katarungang Pambarangay Law directory or merely optional in nature. Thus, although the "Kasunduan" executed by petitioner and respondent before the Office of the Barangay Captain had the force and effect of a final judgment of a court, petitioner's noncompliance paved the way for the application of Art. 2041 under which respondent may either enforce the compromise, following the procedure laid out in the Revised Katarungang Pambarangay Law, or regard it as rescinded and insist upon his original demand. Respondent chose the latter option when he instituted Civil Case No. 5139-V-97 for recovery of unrealized profits and reimbursement of advance rentals, moral and exemplary damages, and attorney's fees . Respondent was not limited to claiming P150,000.00 because although he agreed to the amount in the "Kasunduan," it is axiomatic that a compromise settlement is not an admission of liability but merely a recognition that there is a dispute and an impending litigation which the parties hope to prevent by making reciprocal concessions, adjusting their respective positions in the hope of gaining balanced by the danger of losing. Under the "Kasunduan," respondent was only required to execute a waiver of all possible claims arising from the lease contract if petitioner fully complies with his obligations thereunder. It is undisputed [24] that herein petitioner did not. (emphasis supplied and citations omitted) In the instant case, the respondent did not comply with the terms and conditions of the Kasunduang Pag-aayos. Such non-compliance may be construed as repudiation because it denotes that the respondent did not intend to be bound by the terms thereof, thereby negating the very purpose for which it was executed. Perforce, the petitioner has the option either to enforce the Kasunduang Pagaayos, or to regard it as rescinded and insist upon his original demand, in accordance with the provision of Article 2041 of the Civil Code. Having instituted an action for collection of sum of money, the petitioner obviously chose to rescind theKasunduang Pag-aayos. As such, it is error on the part of the CA to rule that enforcement by execution of said agreement is the appropriate remedy under the circumstances. Considering that the Kasunduang Pag-aayos is deemed rescinded by the non-compliance of the respondent of the terms thereof, remanding the case to the trial court for the enforcement of said agreement is clearly unwarranted. The petitioner avers that the CA erred in remanding the case to the

trial court for the enforcement of the Kasunduang Pag-aayos as it prolonged the process, thereby putting off the case in an indefinite pendency.
[25]

Thus, the petitioner insists that she should be allowed to ventilate her rights before this Court

and not to repeat the same proceedings just to comply with the enforcement of theKasunduang Pag-aayos, in order to finally enforce her right to payment.
[26]

The CA took off on the wrong premise that enforcement of the Kasunduang Pag-aayos is the proper remedy, and therefore erred in its conclusion that the case should be remanded to the trial court. The fact that the petitioner opted to rescind the Kasunduang Pag-aayos means that she is insisting upon the undertaking of the respondent under the original loan contract. Thus, the CA should have decided the case on the merits, as an appeal before it, and not prolong the determination of the issues by remanding it to the trial court. Pertinently, evidence abounds that the respondent has failed

to comply with his loan obligation. In fact, the Kasunduang Pag-aayos is the well nigh incontrovertible proof of the respondents indebtedness with the petitioner as it was executed precisely to give the respondent a second chance to make good on his undertaking. And since the respondent still reneged in paying his indebtedness, justice demands that he must be held answerable therefor. WHEREFORE, the petition is GRANTED. The assailed decision of the Court of Appeals is SET ASIDE and the Decision of the Regional Trial Court, Branch 146, Makati City, dated March 14, 2007 is REINSTATED.

BPI FAMILY SAVINGS BANK, INC., Petitioner,

The Case

- versus -

This is a petition for review of the 13 March 2006 Decision and 19 December 3 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 78626. In its 13 March 2006 Decision, the Court of Appeals denied petitioner BPI Family Savings Bank, Inc.s (BPI Family) petition for mandamus and certiorari. In its 19 December 2006 Resolution, the Court of Appeals denied BPI Familys motion for reconsideration. The Facts

On 26 October 1994, CEDEC Transport, Inc. (CEDEC) mortgaged two parcels of land covered by Transfer Certificate of Title (TCT) Nos. 134327 and 134328 GOLDEN POWER DIESEL SALES situated inMalibay, Pasay City, including all the improvements thereon CENTER, INC. and RENATO C. TAN, (properties), in favor of BPI Family to secure a loan of P6,570,000. On the same day, the mortgage was duly annotated on the titles under Entry No. 94Respondents. 2878. On 5 April and 27 November 1995, CEDEC obtained from BPI Family additional loans of P2,160,000 and P1,140,000, respectively, and again mortgaged the same properties. These latter mortgages were duly annotated on the titles under Entry Nos. 95-6861 and 95-11041, respectively, on the same day the loans were obtained. Despite demand, CEDEC defaulted in its mortgage obligations. On 12 October 1998, BPI Family filed with the ex-officio sheriff of the Regional Trial Court of Pasay City (RTC) a verified petition for extrajudicial foreclosure of real estate 4 mortgage over the properties under Act No. 3135, as amended. On 10 December 1998, after due notice and publication, the sheriff sold the properties at public auction. BPI Family, as the highest bidder, acquired the properties forP13,793,705.31. On 14 May 1999, the Certificate of Sheriffs Sale, dated 24 February 1999, was duly annotated on the titles covering the properties. On 15 May 1999, the one-year redemption period expired without CEDEC redeeming the properties. Thus, the titles to the properties were consolidated in the name of BPI Family. On 13 September 2000, the Registry of Deeds of Pasay City issued new titles, TCT Nos. 142935 and 142936, in the name of BPI Family. However, despite several demand letters, CEDEC refused to vacate the properties and to surrender possession to BPI Family. On 31 January 2002, BPI Family filed an Ex-Parte Petition for Writ of Possession over the properties with Branch 114 of the Regional Trial Court of Pasay City (trial court). In its 27 June 2002 Decision, the trial court granted 5 BPI Familys petition. On 12 July 2002, the trial court issued the Writ of Possession. On 29 July 2002, respondents Golden Power Diesel Sales Center, Inc. and Renato C. Tan (respondents) filed a Motion 7 to Hold Implementation of the Writ of Possession. Respondents alleged that they are in possession of the properties which they acquired from CEDEC on 10 September 1998 pursuant to the Deed of Absolute Sale with Assumption of 8 Mortgage (Deed of Sale). Respondents argued that they are third persons claiming rights adverse to CEDEC, the judgment obligor and they cannot be deprived of possession over the properties. Respondents also disclosed that they filed a complaint before Branch 111 of the Regional Trial Court of Pasay City, docketed as Civil Case No. 99-0360, for the cancellation of the Sheriffs Certificate of Sale and an order to direct BPI Family to honor and accept the Deed of Absolute 9 Sale between CEDEC and respondents. On 12 September 2002, the trial court denied respondents motion. Thereafter, the trial court issued an alias writ of possession which was served upon CEDEC and all other persons claiming rights under them.
10 6

However, the writ of possession expired without being implemented. On 22 January 2003, BPI Family filed an Urgent ExParte Motion to Order the Honorable Branch Clerk of Court to Issue Alias Writ of Possession. In an Order dated 27 January 2003, the trial court granted BPI Familys motion. Before the alias writ could be implemented, respondent Renato C. Tan filed with the trial court an Affidavit of Third Party 11 Claim on the properties. Instead of implementing the writ, the sheriff referred the matter to the trial court for resolution. On 11 February 2003, BPI Family filed an Urgent Motion to Compel Honorable Sheriff and/or his Deputy to Enforce Writ of Possession and to Break Open the properties. In its 7 March 2003 Resolution, the trial court denied BPI Familys motion 12 and ordered the sheriff to suspend the implementation of the alias writ of possession. According to the trial court, the order granting the alias writ of possession should not affect third persons holding adverse rights to the judgment obligor. The trial court admitted that in issuing the first writ of possession it failed to take into consideration respondents complaint before Branch 111 claiming ownership of the property. The trial court also noted that respondents were in actual possession of the properties and had been updating the payment of CEDECs loan balances with BPI Family. Thus, the trial court found it necessary to amend its 12 September 2002 Order and suspend the implementation of the writ of possession until Civil Case No. 99-0360 is resolved. BPI Family filed a motion for reconsideration. In its 20 June 2003 Resolution, the trial court denied the motion.
13

BPI Family then filed a petition for mandamus and certiorari with application for a temporary restraining order or preliminary injunction before the Court of Appeals. BPI Family argued that the trial court acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it ordered the suspension of the implementation of the alias writ of possession. According to BPI Family, it was the ministerial duty of the trial court to grant the writ of possession in its favor considering that it was now the owner of the properties and that once issued, the writ should be implemented without delay. The Court of Appeals dismissed BPI Familys petition. The dispositive portion of the 13 March 2006 Decision reads: WHEREFORE, the instant Petition for Writ of Mandamus and Writ of Certiorari with Application for a TRO and/or Preliminary Injunction is hereby DENIED. The twin Resolutions dated March 7, 2003 and June 20, 2003, both issued by the public respondent in LRC Case No. 02-0003, ordering the sheriff to suspend the implementation of the Alias Writ of Possession issued in favor of the petitioner, and denying its Urgent Omnibus Motion thereof, respectively, are hereby AFFIRMED. SO ORDERED.
14

BPI Family filed a motion for reconsideration. In its 19 December 2006 Resolution, the Court of Appeals denied the motion. The Ruling of the Court of Appeals The Court of Appeals ruled that the trial court did not commit grave abuse of discretion in suspending the implementation of the alias writ of possession because respondents were in actual possession of the properties and are claiming rights adverse to CEDEC, the judgment obligor. According to the Court of Appeals, the principle that the implementation of the writ of possession is a mere ministerial function of the trial court is not without exception. The Court of Appeals held that the obligation of the court to issue an ex parte writ of possession in favor of the purchaser in an extrajudicial foreclosure sale ceases to be ministerial once it appears that there is a third party in possession of the property who is claiming a right adverse to that of the debtor or mortgagor. The Issues BPI Family raises the following issues: A. The Honorable Court of Appeals seriously erred in upholding the finding of the Honorable Regional Trial Court that despite the fact that private respondents merely stepped into the shoes of mortgagor CEDEC, being the vendee of the properties in question, they are categorized as third persons in possession thereof who are claiming a right adverse to that of the debtor/mortgagor CEDEC. B. The Honorable Court of Appeals gravely erred in sustaining the aforementioned twin orders suspending the implementation of the writ of possession on the ground that the annulment case filed by private respondents is still pending despite the established ruling that pendency of a case questioning the legality of a mortgage or 15 auction sale cannot be a ground for the non-issuance and/or non-implementation of a writ of possession. The Ruling of the Court The petition is meritorious.

BPI Family argues that respondents cannot be considered a third party who is claiming a right adverse to that of the debtor or mortgagor because respondents, as vendee, merely stepped into the shoes of CEDEC, the vendor and judgment obligor. According to BPI Family, respondents are mere extensions or successors-in-interest of CEDEC. BPI Family also argues that the pendency of an action questioning the validity of a mortgage or auction sale cannot be a ground to oppose the implementation of a writ of possession. On the other hand, respondents insist that they are third persons who claim rights over the properties adverse to CEDEC. Respondents argue that the obligation of the court to issue an ex parte writ of possession in favor of the purchaser in an extrajudicial foreclosure sale ceases to be ministerial once it appears that there is a third party in possession of the property who is claiming a right adverse to that of the judgment obligor. In extrajudicial foreclosures of real estate mortgages, the issuance of a writ of possession is governed by Section 7 of Act No. 3135, as amended, which provides: SECTION 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance (Regional Trial Court) of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately. This procedure may also be availed of by the purchaser seeking possession of the foreclosed property bought at the 16 public auction sale after the redemption period has expired without redemption having been made. In China Banking Corporation v. Lozada,
17

we ruled:

It is thus settled that the buyer in a foreclosure sale becomes the absolute owner of the property purchased if it is not redeemed during the period of one year after the registration of the sale. As such, he is entitled to the possession of the said property and can demand it at any time following the consolidation of ownership in his name and the issuance to him of a new transfer certificate of title. The buyer can in fact demand possession of the land even during the redemption period except that he has to post a bond in accordance with Section 7 of Act No. 3135, as amended. No such bond is required after the redemption period if the property is not redeemed. Possession of the land then becomes an absolute right of the purchaser as confirmed owner. Upon proper application and proof of title, the issuance of the writ of possession becomes a ministerial 18 duty of the court. (Emphasis supplied) Thus, the general rule is that a purchaser in a public auction sale of a foreclosed property is entitled to a writ of possession and, upon an ex parte petition of the purchaser, it is ministerial upon the trial court to issue the writ of possession in favor of the purchaser. There is, however, an exception. Section 33, Rule 39 of the Rules of Court provides: Section 33. Deed and possession to be given at expiration of redemption period; by whom executed or given . xxx Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the levy. The possession of the property shall be given to the purchaser or last redemptioner by the same officer unless a third party is actually holding the property adversely to the judgment obligor. (Emphasis supplied) Therefore, in an extrajudicial foreclosure of real property, when the foreclosed property is in the possession of a third party holding the same adversely to the judgment obligor, the issuance by the trial court of a writ of possession in favor of the 19 purchaser of said real property ceases to be ministerial and may no longer be done ex parte. The procedure is for the 20 trial court to order a hearing to determine the nature of the adverse possession. For the exception to apply, however, the property need not only be possessed by a third party, but also held by the third party adversely to the judgment obligor. In this case, BPI Family invokes the general rule that they are entitled to a writ of possession because respondents are mere successors-in-interest of CEDEC and do not possess the properties adversely to CEDEC. Respondents, on the other hand, assert the exception and insist that they hold the properties adversely to CEDEC and that their possession is a sufficient obstacle to the ex parte issuance of a writ of possession in favor of BPI Family.

Respondents argument fails to persuade the Court. It is clear that respondents acquired possession over the properties pursuant to the Deed of Sale which provides that forP15,000,000 CEDEC will sell, transfer and convey to respondents the properties free from all liens and encumbrances excepting the mortgage as may be subsisting in favor of the BPI 21 FAMILY SAVINGS BANK. Moreover, the Deed of Sale provides that respondents bind themselves to assume the payment of the unpaid balance of the mortgage indebtedness of the VENDOR (CEDEC) amounting to P7,889,472.48, as of July 31, 1998, in favor of the aforementioned mortgagee (BPI Family) by the mortgage instruments and does hereby 22 further agree to be bound by the precise terms and conditions therein contained. In Roxas v. Buan,
23

we ruled:

It will be recalled that Roxas possession of the property was premised on its alleged sale to him by Valentin for the amount of P100,000.00. Assuming this to be true, it is readily apparent that Roxasholds title to and possesses the property as Valentins transferee. Any right he has to the property is necessarily derived from that of Valentin. As transferee, he steps into the latters shoes. Thus, in the instant case, considering that the property had already been sold at public auction pursuant to an extrajudicial foreclosure, the only interest that may be transferred by Valentin to Roxas is the right to redeem it within the period prescribed by law. Roxas is therefore the successor-in-interest of Valentin, to whom the latter had conveyed his interest in the property for the purpose of 24 redemption. Consequently, Roxas occupancy of the property cannot be considered adverse to Valentin. In this case, respondents possession of the properties was premised on the sale to them by CEDEC for the amount of P15,000,000. Therefore, respondents hold title to and possess the properties as CEDECs transferees and any right they have over the properties is derived from CEDEC. As transferees of CEDEC, respondents merely stepped into CEDECs shoes and are necessarily bound to acknowledge and respect the mortgage CEDEC had earlier executed in 25 favor of BPI Family. Respondents are the successors-in-interest of CEDEC and thus, respondents occupancy over the properties cannot be considered adverse to CEDEC. Moreover, in China Bank v. Lozada, we discussed the meaning of a third party who is actually holding the property adversely to the judgment obligor. We stated: The exception provided under Section 33 of Rule 39 of the Revised Rules of Court contemplates a situation in which a third party holds the property by adverse title or right, such as that of a co-owner, tenant or usufructuary. The co-owner, agricultural tenant, and usufructuary possess the property in their own right, and they are not 27 merely the successor or transferee of the right of possession of another co-owner or the owner of the property. In this case, respondents cannot claim that their right to possession over the properties is analogous to any of these. Respondents cannot assert that their right of possession is adverse to that of CEDEC when they have no independent right of possession other than what they acquired from CEDEC. Since respondents are not holding the properties adversely to CEDEC, being the latters successors-in-interest, there was no reason for the trial court to order the suspension of the implementation of the writ of possession. Furthermore, it is settled that a pending action for annulment of mortgage or foreclosure sale does not stay the issuance 28 of the writ of possession. The trial court, where the application for a writ of possession is filed, does not need to look into 29 the validity of the mortgage or the manner of its foreclosure. The purchaser is entitled to a writ of possession without 30 prejudice to the outcome of the pending annulment case. In this case, the trial court erred in issuing its 7 March 2003 Order suspending the implementation of the alias writ of possession. Despite the pendency of Civil Case No. 99-0360, the trial court should not have ordered the sheriff to suspend the implementation of the writ of possession. BPI Family, as purchaser in the foreclosure sale, is entitled to a writ of possession without prejudice to the outcome of Civil Case No. 99-0360. WHEREFORE, we GRANT the petition. We SET ASIDE the 13 March 2006 Decision and the 19 December 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 78626. We SET ASIDE the 7 March and 20 June 2003 Resolutions of the Regional Trial Court, Branch 114, Pasay City. We ORDER the sheriff to proceed with the implementation of the writ of possession without prejudice to the outcome of Civil Case No. 99-0360.
26

JOSEPH BERNARDEZ,

COMMISSION TOLEAN,

ON

ELECTIONSand AVELINO

This is a Petition for Certiorari

[1]

with Urgent Prayer for the Issuance of a Temporary Restraining Order and/or Writ
[2]

of Preliminary Injunction and/or Status Quo Ante Order, assailing the Order (COMELEC) En Banc, dated November 4, 2009, and the Resolution
[3]

of the Commission on Elections

of the Second Division of the COMELEC dated

September 22, 2009, setting aside the Special Order

[4]

in Election Case No. 1255, dated March 31, 2009, of Branch 36,

Regional Trial Court (RTC) of Bontoc, Mountain Province. The factual background of this case is as follows: Petitioner Joseph Bernardez and private respondent Avelino Tolean were candidates for Vice-Mayor in the Municipality of Sabangan, Mountain Province during the May 14, 2007 synchronized national and local elections. After the election, petitioner garnered 2,136 votes while private respondent garnered 2,137 votes. The Municipal Board of Canvassers proclaimed private respondent as the duly elected Vice-Mayor after winning by a single vote over the petitioner. Petitioner filed an election protest on May 24, 2007, docketed as Election Case No. 1255 before the RTC, Branch 36, Bontoc, Mountain Province, contesting the result of the election on the ground of fraud and deceit. Acting on the said election protest, the RTC promulgated its Decision
[5]

dated February 25, 2009, finding petitioner

as winner by eleven (11) votes during theMay 14, 2007 mid-term election. The dispositive portion of the said Decision reads: WHEREFORE, in view of all the foregoing findings, judgment is hereby rendered: 1) Declaring the proclamation of Avelino Tolean as the Vice Mayor elect of Sabangan, Mountain Province, in the May 14, 2007 national and local elections, null and void; and 2) Proclaiming Joseph Bernardez, as the duly elected Vice mayor of [6] Sabangan, Mountain Province, by majority of eleven (11) votes, in said election. On March 5, 2009, petitioner filed a Motion for Writ of Execution Pending Appeal of the decision of the trial court, which was set for hearing on March 9, 2009. On the same day, private respondent's counsel filed a Manifestation and Motion
[7]

with the RTC stating that he would not be available on the suggested hearing date due to his previous

commitment to appear in his other cases of similar importance. Thus, during the hearing, only the petitioner and his counsel appeared and orally argued on his special reasons for an execution pending appeal. Private respondent, on the other hand, did not appear, but filed his Comment and/or Opposition to the Motion. Meanwhile, on March 6, 2009, private respondent filed a Notice of Appeal of the decision of the trial court. Thereafter, the records of the case were forwarded to the Second Division of the COMELEC. On March 31, 2009, the RTC issued a Special Order
[8]

granting petitioner's Motion for Execution Pending Appeal,

the dispositive portion of which reads: WHEREFORE, the Motion for Execution Pending Appeal is hereby granted. The Branch Clerk of Court, is hereby ordered to issue a Writ of Execution Pending Appeal, after the lapse of twenty (20) working days, to be counted from the time Protestee's counsel receives a copy of this Special Order, if no restraining order or status quo order is issued, pursuant to Sec. 11, Rule 14 of the Rules of Procedure in Election [9] Contests before the Courts involving Elective Municipal and Barangay Officials. (A.M. No. 07-4-15-SC). Since no restraining or status quo order was issued pursuant to Section 11, Rule 14 of the Rules of Procedure in Election Contests before the Courts involving Elective Municipal and Barangay Officials
[10]

during the twenty-day allowable

period, the Special Order above-mentioned became valid and effective; hence, petitioner assumed the Vice-Mayoralty position of Sabangan, Mountain Province. It was only on April 20, 2009 that private respondent filed his Petition for Injunction with Prayer for the Issuance of a Writ of Preliminary Injunction and/or Temporary Restraining Order before public respondent COMELEC (Second Division) to enjoin the RTC from implementing the latter's Special Order granting the execution of its Decision on account of the pendency of private respondent's Notice of Appeal. On June 1, 2009, the Second Division of the COMELEC issued an Order
[11]

dismissing private respondent's appeal

for failure to pay the appeal fees, thus: It appearing that the appeal fees of three thousand pesos (P3,000.00), bailiff's fees of one hundred fifty pesos (P150.00) and legal research fees of fifty pesos (P50.00) required by COMELEC Rules were paid only on April 03, 2009, or more than fifteen (15) days from the filing of notice of appeal, hence, not in accordance with COMELEC Resolution No. 8486. xxxx

The Commission (Second Division) resolves to dismiss the instant appeal case.

[12]

However, on September 22, 2009, the same division of the COMELEC, which dismissed private respondent's Notice of Appeal, issued the first assailed Resolution
[13]

reversing the Special Order of the RTC dated March 31, 2009,

and granting private respondent's Petition for Injunction and Prayer for the Issuance of a Status Quo Ante Order on the grounds that: (1) private respondent was not furnished a Notice of Hearing as required under Section 11, Rule 14 of the New Rules, as a result of which, he was not properly represented in the hearing without his fault; and (2) the RTC neglected to state that the reasons advanced for granting the Motion for Execution Pending Appeal were superior circumstances demanding urgency that will outweigh the injury or damage should the losing party secure a reversal of the judgment on appeal. On October 6, 2009, petitioner filed a motion for reconsideration of the resolution of the Second Division of the COMELEC before the COMELEC en banc. OnNovember 4, 2009, the COMELEC e n banc issued the second assailed Order
[14]

in this case, denying petitioner's Motion for Reconsideration for failure to pay the required motion fees. Thus: xxxx the Commission En Banc hereby resolves to deny the same for movant-private respondent's failure to pay the required motion fees in the amount of P700.00 as provided under Section 7(f), Rule 40, COMELEC Rules of Procedure, as amended by COMELEC Minute Resolution No. 02-0130 dated September 18, 2002, within the five-day reglementary period for filing motions for reconsideration enjoined under Section 2, Rule19, same COMELEC Rules. There being no valid motion for reconsideration to speak of, the provision of Section 13, paragraph (c), Rule 18, Comelec Rules of Procedure, to wit: Sec. 13. Finality of Decisions or Resolutions. xxxx (c) Unless a motion for reconsideration is seasonably filed, a decision or resolution of a Division shall become final and executory after the lapse of five (5) days in Special actions and Special cases and after fifteen (15) days in all other actions or proceedings, following its promulgation.

applies, hence, the Resolution of the Commission (Second Division) dated September 22, 2009, a copy of which was received by the private respondent on October 1, 2009, per his admission in his Motion for Reconsideration filed on October 6, 2009, had become final and executory as of October 17, 2009. ACCORDINGLY, the Clerk of the Commission, Electoral Contests Adjudication Department (ECAD), this Commission, is hereby directed to immediately issue an Entry of Judgment in the aboveentitled case. SO ORDERED.
[15]

On November 19, 2009, upon private respondent's urgent motion, the COMELEC issued a Writ of Execution

[16]

of

the Resolution of the Second Division of the COMELEC dated September 22, 2009, and the Order of the COMELEC e n banc dated November 4, 2009, the pertinent portion of which states, thus: NOW, THEREFORE, the Provincial Election Supervisor of Mountain Province, Comelec, is hereby directed to immediately implement this Writ of Execution, in coordination with the Department of the Interior and Local Government (DILG) Provincial Operations Officer of Mountain Province and the Provincial Director, PNP, by serving a copy hereof, together with the certified true copies of the Resolution of the Commission (Second Division) dated September 22, 2009 and the Order of the Commission En Banc issued on November 4, 2009, upon private respondent JOSEPH BERNARDEZ (1) ordering him to cease and desist from discharging the powers and functions of Vice-Mayor of Sabangan. Mt. Province, and to relinquish and vacate the same in favor of petitioner Avelino Tolean, (2) to cause the peaceful and smooth turn-over of office to aforesaid petitioner, and 3) make a return of your action within [17] five (5) days from receipt hereof. Thereafter, pursuant to the above-mentioned Writ of Execution, private respondent took his oath and assumed office as the Vice Mayor elect of the Municipality of Sabangan as per Certification
[18]

issued by the Sangguniang Bayan of

[19]

Sabangan, Mountain Province dated November 27, 2009, and the Panunumpa ng Katungkulan 2009. Hence, this petition. Petitioner raises the following issues:

dated November 24,

I. THAT COMELEC (2ND DIVISION) COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT PROCEEDED TO DECIDE THE MOTION FOR TRO/STATUS QUO ANTE ORDER WITHOUT CONSIDERING THE DISMISSED MAIN APPEAL OF RESPONDENT FOR FAILURE TO PAY FILING FEE NINE (9) MONTHS AFTER THE COMELEC CLARIFICATORY RESOLUTION BECOMES FINAL AND EXECUTORY. II. THAT COMELEC (2ND DIVISION) ERRED WHEN IT RESOLVED TO GRANT THE PRELIMINARY INJUNCTION AND TEMPORARY RESTRAINING ORDER/STATUS QUO ORDER ALTHOUGH RESPONDENT FAILED TO ESTABLISH THE EXISTENCE OF A CLEAR AND UNMISTAKABLE RIGHT THAT MUST BE PROTECTED, AS WELL AS THE SERIOUS DAMAGE OR IRREPARABLE LOSS THAT RESPONDENT WOULD SUFFER IF THE WRIT IS NOT GRANTED. III. THAT COMELEC (2ND DIVISION) AND THE HONORABLE COMELEC COMMISSION EN BANC HAD ACTED ARBITRARILY AND IN MANIFEST GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT DEVIATED FROM ITS MANDATE TO REASONABLY AND LIBERALLY CONSTRUE ELECTION LAWS TO ACHIEVE THE PURPOSE WHICH IS TO SAFEGUARD THE WILL OF THE ELECTORATE IN THE CHOICE OF THEIR REPRESENTATIVE. IV. COMELEC COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT WHIMSICALLY AND CAPRICIOUSLY SET ASIDE THE TIME-HONORED DUE PROCESS. THERE WAS NO PRIOR NOTICE [20] AND HEARING BEFORE IMPLEMENTING THE SAID WRIT OF EXECUTION. The main issue is whether or not public respondent COMELEC en banc committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing its Order dated November 4, 2009. There is grave abuse discretion where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility which must be so patent and gross as to amount to an invasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.
[21]

Petitioner contends that public respondent COMELEC en banc committed grave abuse of discretion when it proceeded to decide and thereby grant private respondent's Petition for Injunction and Prayer for the Issuance of a Status Quo Ante Order, without considering the fact of dismissal of private respondent's Notice of Appeal. Petitioner further avers that the allowance by the COMELEC Second Division of private respondent's Urgent Motion for the Issuance of a Writ of Execution, notwithstanding the dismissal of private respondents Notice of Appeal, amounted to the reversal of the decision of the RTC via a mere motion and not via an appeal as inscribed in our Constitution. What the law forbids to be done directly was made possible by private respondent indirectly.

A careful review of the antecedent facts bears out the fact that, indeed, the COMELEC Second Division granted private respondent Tolean's petition for injunction without considering that it had already dismissed private respondent's Notice of Appeal. It is undisputed that on April 20, 2009, private respondent filed the subject petition for injunction before the COMELEC Second Division, to enjoin the execution of the Decision of the RTC, citing mainly as ground the fact that the victory of petitioner had not been clearly and sufficiently established due to the pendency of his Notice of Appeal. However, on June 1, 2009, while the petition for injunction was still pending, the COMELEC Second Division dismissed private respondent's Notice of Appeal due to his failure to pay the required appeal fees in violation of COMELEC Resolution No. 8486,
[22]

which states, thus:

WHEREFORE, in view of the foregoing, the Commission hereby RESOLVES to DIRECT as follows: 1.) That if the appellant had already paid the amount of P1,000.00 before the Regional Trial Court, Metropolitan Trial Court, Municipal Trial Court or lower courts within the five-day period, pursuant to Section 9, Rule 14 of the Rules of Procedure in Election Contests Before the Courts Involving Elective Municipal and Barangay Officials (Supreme Court Administrative Order No. 07-4-15) and his Appeal was given due course by the Court, said appellant is required to pay the Comelec appeal fee of P3,200.00 at the Commissions Cash Division through the Electoral Contests Adjudication Department (ECAD) or by postal money order payable to the Commission on Elections through ECAD, within a period of fifteen (15)

days from the time of the filing of the Notice of Appeal with the lower court. If no payment is made within the prescribed period, the appeal shall be dismissed pursuant to Section 9(a) of Rule 22 of the COMELEC Rules of Procedure, which provides: Sec. 9. Grounds for Dismissal of Appeal. The appeal may be dismissed upon motion of either party or at the instance of the Commission on any of the following grounds: (a.) Failure of the appellant to pay the correct appeal fee; x x x 2.) That if the appellant failed to pay the P1,000.00 - appeal fee with the lower court within the five (5)-day period as prescribed by the Supreme Court New Rules of Procedure but the case was nonetheless elevated to the Commission, the appeal shall be dismissed outright by the Commission, in accordance with the aforestated Section 9(a) of Rule 22 of the Comelec Rules of Procedure. With the dismissal by the COMELEC Second Division of private respondent's Notice of Appeal without any showing that he had appealed the dismissal to the COMELEC en banc, the decision of the RTC proclaiming petitioner as the duly elected Vice-Mayor of Sabangan, Mountain Province becomes final and executory. Thus, the dismissal of private respondent's Notice of Appeal settles absolutely the victory of petitioner and the defeat of private respondent in the vice-mayoralty race. Considering the foregoing, the COMELEC Second Division gravely abused its discretion when it granted private respondent's petition for injunction onSeptember 22, 2009 after the victory of petitioner Bernardez had already become final. To reiterate, the petition for injunction was filed by private respondent to enjoin the RTC from executing its decision proclaiming petitioner as Vice-Mayor of the Municipality of Sabangan due to the pendency of the Notice of Appeal. Since it has been ruled that the Notice of Appeal was rightfully dismissed and the ruling has become final and executory, it follows then that the right sought to be protected and the irreparable injury sought to be prevented by the private respondent through injunction or prohibition has already been rendered fait accompli. In Caneland Sugar Corporation v. Alon,
[23]

it was settled that injunctive reliefs are preservative remedies for the

protection of substantive rights and interests. Injunction is not a cause of action in itself, but merely a provisional remedy, an adjunct to a main suit. When the act sought to be enjoined has become fait accompli, the prayer for provisional remedy should be denied. In Go v. Looyuko,
[24]

the Court ruled that when the events sought to be prevented by injunction or prohibition have

already happened, nothing more could be enjoined or prohibited. Indeed, it is a universal principle of law that an injunction will not issue to restrain the performance of an act already done. This is so for the simple reason that nothing more can be done in reference thereto. A writ of injunction becomes moot and academic after the act sought to be enjoined has already been consummated. Since the COMELEC, Second Division, granted the petition for injunction despite finality of the Decision in the election protest case, petitioner filed with the COMELEC en banc a motion for reconsideration of the Resolution of the COMELEC, Second Division, granting the private respondents petition for preliminary injunction. The COMELEC en banc was, therefore, challenged to weigh an issue of technicality as against the substance of the motion for reconsideration. In dismissing the motion for reconsideration due to failure to pay appeal fees, the COMELEC en banc gave importance to technicality, which could have been disregarded at its own discretion, and failed to give weight to the fact that petitioners proclamation as the duly elected Vice -Mayor of the Municipality of Sabangan, Mountain Province by the RTC had become final with the dismissal by the COMELEC, Second Division of private respondents appeal in the election protest case. Hence, the Commission failed to protect and uphold the will of the electorate in voting petitioner as the Vice-Mayor of their municipality. Based on the Resolution dated September 22, 2009 of the COMELEC, Second Division and the Order dated November 4, 2009 of the COMELEC en banc, the Commission issued a writ of execution ordering petitioner to cease and desist from discharging the powers and functions of Vice-Mayor of Sabangan, Mountain Province and to relinquish and vacate the same in favor of private respondent. Again, this issuance was made despite the fact that it was the petitioner who won by a margin of 11 votes over private respondent, and that the decision of the RTC became final with the dismissal of private respondents notice of appeal by the COMELEC, Second Division on June 1, 2009. An injustice

was, therefore, committed by the Commission against petitioner in unseating him from his office and in swearing private respondent into office as Vice-Mayor of Sabangan, Mountain Province, even if he lost to petitioner. In fine, the Order of the COMELEC en banc dated November 4, 2009 and the Resolution of the COMELEC, Second Division dated September 22, 2009 were issued in grave abuse of discretion and are, therefore, null and void, considering that the RTC Decision dated February 25, 2009 became final and executory with the dismissal of private respondents appeal by the COMELEC, Second Division on June 1, 2009. The ground for the petition for preliminary injunction, which was the pendency of the notice of appeal, had no more basis with the dismissal of the appeal; hence, that petition should have been denied. WHEREFORE, the petition is GRANTED. The Order dated November 4, 2009 of the COMELEC en banc and the Resolution dated September 22, 2009, of the Second Division of the COMELEC are ANNULLED and SET ASIDE. The Entry of Judgment issued on November 5, 2009 by the Electoral Contests Adjudication Department, as well as the Writ of Execution issued on November 19, 2009 by the COMELEC are likewise ANNULLED and SET ASIDE. Private respondent Avelino Tolean is hereby ordered (1) to cease and desist from exercising the power and functions of ViceMayor of Sabangan, Mountain Province, and to relinquish and vacate the same in favor of petitioner Joseph Bernardez, and (2) to cause the peaceful and smooth turn-over of office to aforesaid petitioner Joseph Bernardez.

NELSON JENOSA and his sonNIO CARLO JENOSA,SOCORRO CANTO and her sonPATRICK CANTO, CYNTHIA APALISOK and her daughterCYNDY APALISOK, EDUARDO VARGAS and his son CLINT EDUARD VARGAS, and NELIA DURO and her son NONELL GREGORY DURO, REV. FR. JOSE RENE C. DELARIARTE, O.S.A., in his capacity as the incumbent Principal of the High School Department of the University of San Agustin, and theUNIVERSITY OF SAN AGUSTIN, herein represented by its incumbent President REV. FR. MANUEL G. VERGARA, O.S.A.,

The Case This is a petition for review

[1]

of the 16 June 2005 Decision

[2]

and 22 March 2006

[3]

Resolution of the Court of

Appeals in CA-G.R. SP No. 78894. In its 16 June 2005 Decision, the Court of Appeals granted the petition of respondents University of San Augustin (University), represented by its incumbent President Rev. Fr. Manuel G. Vergara, O.S.A. (University President), and Rev. Fr. Jose Rene C. Delariarte, O.S.A. (Principal), in his capacity as the incumbent Principal of the High School Department of the University (respondents) and ordered the dismissal of Civil Case Nos. 0327460 and 03-27646 for lack of jurisdiction over the subject matter. In its 22 March 2006 Resolution, the Court of Appeals denied the motion for reconsideration of petitioners Nelson Jenosa and his son Nio Carlo Jenosa, Socorro Canto and her son Patrick Canto, Cynthia Apalisok and her daughter Cyndy Apalisok, Eduardo Vargas and his son Clint Eduard Vargas, and Nelia Duro and her son Nonell Gregory Duro (petitioners). The Facts

On 22 November 2002, some students of the University, among them petitioners Nio Carlo Jenosa, Patrick Canto, Cyndy Apalisok, Clint Eduard Vargas, and Nonell Gregory Duro (petitioner students), were caught engaging in hazing outside the school premises. The hazing incident was entered into the blotter of the Iloilo City Police.
[4]

Thereafter, dialogues and consultations were conducted among the school authorities, the apprehended students and their parents. During the 28 November 2002 meeting, the parties agreed that, instead of the possibility of being charged and found guilty of hazing, the students who participated in the hazing incident as initiators, including petitioner students, would just transfer to another school, while those who participated as neophytes would be suspended for one month. The parents of the apprehended students, including petitioners, affixed their signatures to the minutes of the

meeting to signify their conformity.

[5]

In view of the agreement, the University did not anymore convene the Committee on

Student Discipline (COSD) to investigate the hazing incident. On 5 December 2002, the parents of petitioner students (petitioner parents) sent a letter to the University President urging him not to implement the 28 November 2002 agreement.
[6]

According to petitioner parents, the Principal, without

convening the COSD, decided to order the immediate transfer of petitioner students. On 10 December 2002, petitioner parents also wrote a letter to Mrs. Ida B. Endonila, School Division

Superintendent, Department of Education (DepEd), Iloilo City, seeking her intervention and prayed that petitioner students be allowed to take the home study program instead of transferring to another school. to comment on the letter.
[8] [7]

The DepEd asked the University

[9]

The University replied and attached the minutes of the 28 November 2002 meeting.

On 3 January 2003, petitioners filed a complaint for injunction and damages with the Regional Trial Court, Branch 29, Iloilo City (trial court) docketed as Civil Case No. 03-27460.
[10]

Petitioners assailed the Principals decision to order the

immediate transfer of petitioner students as a violation of their right to due process because the COSD was not convened. On 5 February 2003, the trial court issued a writ of preliminary injunction and directed respondents to admit petitioner students during the pendency of the case. The 5 February 2003 Order reads: WHEREFORE, let [a] Writ of Preliminary Mandatory Injunction issue. The defendants are hereby directed to allow the plaintiffs minor children to attend their classes during the pendency of this case, without prejudice to any disciplinary proceeding to which any or all of them may be liable. SO ORDERED.
[12] [11]

Respondents filed a motion for reconsideration and asked for the dissolution of the writ. The trial court denied respondents motion. Respondents complied but with reservations.

On 25 March 2003, respondents filed a motion to dismiss. Respondents alleged that the trial court had no jurisdiction over the subject matter of the case and that petitioners were guilty of forum shopping. On 19 May 2003, the trial court denied respondents motion. Respondents filed a motion for reconsideration. On 21 April 2003, petitioners wrote the DepEd and asked that it direct the University to release the report cards and other credentials of petitioner students.
[13]

On 8 May 2003, the DepEd sent a letter to the University advising it to release
[14]

petitioner students report cards and other credentials if there was no valid reason to withhold the same. 2003, the DepEd sent another letter to the University to follow-up petitioners request.
[15]

On 14 May

On 20 May 2003, the University

[16]

replied that it could not release petitioner students report cards due to their pending disciplinary case with the COSD.

On 28 May 2003, petitioners filed another complaint for mandatory injunction praying for the release of petitioner students report cards and other credentials docketed as Civil Case No. 03-27646. The trial court consolidated the two cases.
[18] [17]

On 17 June 2003, the trial court issued a writ of preliminary injunction and directed the University to release petitioner students report cards and other credentials.
[19]

Respondents filed a motion for reconsideration. Respondents

alleged that they could not comply with the writ because of the on-going disciplinary case against petitioner students. On 26 June 2003, the COSD met with petitioners for a preliminary conference on the hazing incident. On 7 July 2003, the University, through the COSD, issued its report finding petitioner students guilty of hazing. The COSD also recommended the exclusion of petitioner students from its rolls effective 28 November 2002. On 14 July 2003, the trial court issued an Order denying both motions for reconsideration.
[20]

On 1 September 2003, respondents filed a special civil action for certiorari with the Court of Appeals. Respondents insisted that the trial court had no jurisdiction over the subject matter of Civil Case Nos. 03-27460 and 0327646. Respondents also alleged that petitioners were guilty of forum shopping. The Ruling of the Court of Appeals In its 16 June 2005 Decision, the Court of Appeals granted respondents petition and ordered the trial court to dismiss Civil Case Nos. 03-27460 and 03-27646 for lack of jurisdiction over the subject matter because of petitioners

failure to exhaust administrative remedies or for being premature. According to the Court of Appeals, petitioners should have waited for the action of the DepEd or of the University President before resorting to judicial action. The Court of Appeals held: From the foregoing, it is clear that the court a quo committed grave [abuse] of discretion amounting to LACK OF JURISDICTION in INTERFERING, pre-maturely, with the exclusive and inherent authority of educational institutions to discipline. In directing herein petitioners [respondents in this case] to re-admit herein private respondents [petitioners in this case] and eventually, to release the report cards and other school credentials, prior to the action of the President of USA and of the recommendation of the COSD, the court a quo is guilty of improper judicial [21] intrusion by encroaching into the exclusive prerogative of educational institutions. Petitioners filed a motion for reconsideration. petitioners motion for lack of merit. The Issues Petitioners raise the following issues: 1. Was the Court of Appeals correct in holding that Branch 29 of the Regional Trial Court of Iloilo City in Civil Case Nos. 03-27460 and 03-27646 did not acquire jurisdiction over the subject matter of this case for failure of petitioners to exhaust administrative remedies? 2. Was the recommendation/report/order of the Committee on Student Discipline dated 7 July 2003 valid, and did it justify the order of exclusion of petitioner students retroactive to 28 November 2002? The Ruling of the Court The petition has no merit. Discipline in education is specifically mandated by the 1987 Constitution which provides that all educational institutions shall teach the rights and duties of citizenship, strengthen ethical and spiritual values, develop moral character and personal discipline. discipline
[25] [24] [23] [22]

In its 22 March 2006 Resolution, the Court of Appeals denied

Schools and school administrators have the authority to maintain school

[26]

and the right to impose appropriate and reasonable disciplinary measures.

On the other hand, students

have the duty and the responsibility to promote and maintain the peace and tranquility of the school by observing the rules of discipline.
[27]

In this case, we rule that the Principal had the authority to order the immediate transfer of petitioner students because of the 28 November 2002 agreement.
[28]

Petitioner parents affixed their signatures to the minutes of the 28

November 2002 meeting and signified their conformity to transfer their children to another school. Petitioners Socorro Canto and Nelia Duro even wrote a letter to inform the University that they would transfer their children to another school and requested for the pertinent papers needed for the transfer.
[29]

In turn, the University did not anymore convene the

COSD. The University agreed that it would no longer conduct disciplinary proceedings and instead issue the transfer credentials of petitioner students. Then petitioners reneged on their agreement without any justifiable reason. Since petitioners present complaint is one for injunction, and inju nction is the strong arm of equity, petitioners must come to court with clean hands. In University of the Philippines v. Hon. Catungal, Jr. , Court ruled: Since injunction is the strong arm of equity, he who must apply for it must come with equity or with clean hands. This is so because among the maxims of equity are (1) he who seeks equity must do equity, and (2) he who comes into equity must come with clean hands. The latter is a frequently stated maxim which is also expressed in the principle that he who has done inequity shall not have equity. It signifies that a litigant may be denied relief by a court of equity on the ground that his conduct has been [31] inequitable, unfair and dishonest, or fraudulent, or deceitful as to the controversy in issue.
[30]

a case involving student misconduct, this

Here, petitioners, having reneged on their agreement without any justifiable reason, come to court with unclean hands. This Court may deny a litigant relief if his conduct has been inequitable, unfair and dishonest as to the controversy in issue.

Since petitioners have come to court with inequitable and unfair conduct, we deny them relief. We uphold the validity of the 28 November 2002 agreement and rule that the Principal had the authority to order the immediate transfer of petitioner students based on the 28 November 2002 agreement. WHEREFORE, we DENY the petition. We AFFIRM the 16 June 2005 Decision and the 22 March 2006 Resolution of the Court of Appeals.

ROGER V. NAVARRO,

HON. JOSE L. ESCOBIDO, Presiding Judge, RTC Branch 37, Cagayan de Oro City, and KAREN T. GO, doing business under the name KARGO ENTERPRISES,

This Decision
[2]

is

petition

for

review

on certiorari that
[3]

[1]

seeks

to

set

aside

the

Court

of

Appeals

( CA)

dated October 16, 2001 and Resolution

[4]

dated May 29, 2002 in CA-G.R. SP. No. 64701. These CA rulings

affirmed the July 26, 2000

and March 7, 2001

[5]

orders of the Regional Trial Court (RTC), Misamis Oriental, Cagayan de

Oro City, denying petitioner Roger V. Navarros (Navarro) motion to dismiss. BACKGROUND FACTS On September 12, 1998, respondent Karen T. Go filed two complaints, docketed as Civil Case Nos. 98-599 (first complaint)
[6]

and 98-598 (second complaint),

[7]

before the RTC for replevin and/or sum of money with damages against

Navarro. In these complaints, Karen Go prayed that the RTC issue writs of replevin for the seizure of two (2) motor vehicles in Navarros possession. The first complaint stated: 1. That plaintiff KAREN T. GO is a Filipino, of legal age, married to GLENN O. GO, a resident of Cagayan de Oro City and doing business under the trade name KARGO ENTERPRISES , an entity duly registered and existing under and by virtue of the laws of the Republic of the Philippines, which has its business address at Bulua, Cagayan de Oro City; that defendant ROGER NAVARRO is a Filipino, of legal age, a resident of 62 Dolores Street, Nazareth, Cagayan de Oro City, where he may be served with summons and other processes of the Honorable Court; tha t defendant JOHN DOE whose real name and address are at present unknown to plaintiff is hereby joined as party defendant as he may be the person in whose possession and custody the personal property subject matter of this suit may be found if the same is not in the possession of defendant ROGER NAVARRO; 2. That KARGO ENTERPRISES is in the business of, among others, buying and selling motor vehicles, including hauling trucks and other heavy equipment; 3. That for the cause of action against defendant ROGER NAVARRO, it is hereby stated that on August 8, 1997, the said defendant leased [from] plaintiff a certain motor vehicle which is more particularly described as follows Make/Type Serial No. Motor No. Plate No. FUSO WITH MOUNTED CRANE FK416K-51680 6D15-338735 GHK-378

as evidenced by a LEASE AGREEMENT WITH OPTION TO PURCHASE entered into by and between KARGO ENTERPRISES, then represented by its Manager, the aforementioned GLENN O. GO, and defendant ROGER NAVARRO xxx; that in accordance with the provisions of the above LEASE AGREEMENT WITH OPTION TO PURCHASE, defendant ROGER NAVARRO delivered unto plaintiff six

(6) post-dated checks each in the amount of SIXTY-SIX THOUSAND THREE HUNDRED THIRTYTHREE & 33/100 PESOS (P66,333.33) which were supposedly in payment of the agreed rentals; that when the fifth and sixth checks, i.e. PHILIPPINE BANK OF COMMUNICATIONS CAGAYAN DE ORO BRANCH CHECKS NOS. 017112 and 017113, respectively dated January 8, 1998 and February 8, 1998, were presented for payment and/or credit, the same were dishonored and/or returned by the drawee bank for the common reason that the current deposit account against which the said checks were issued did not have sufficient funds to cover the amounts thereof; that the total amount of the two (2) checks, i.e. the sum of ONE HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED SIXTY-SIX & 66/100 PESOS (P132,666.66) therefore represents the principal liability of defendant ROGER NAVARRO unto plaintiff on the basis of the provisions of the above LEASE AGREEMENT WITH RIGHT TO PURCHASE; that demands, written and oral, were made of defendant ROGER NAVARRO to pay the amount of ONE HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED SIXTY-SIX & 66/100 PESOS (P132,666.66), or to return the subject motor vehicle as also provided for in the LEASE AGREEMENT WITH RIGHT TO PURCHASE, but said demands were, and still are, in vain to the great damage and injury of herein plaintiff; xxx 4. That the aforedescribed motor vehicle has not been the subject of any tax assessment and/or fine pursuant to law, or seized under an execution or an attachment as against herein plaintiff; 8. That plaintiff hereby respectfully applies for an order of the Honorable Court for the immediate delivery of the above-described motor vehicle from defendants unto plaintiff pending the final determination of this case on the merits and, for that purpose, there is attached hereto an affidavit duly executed and bond double the value of the personal property subject matter hereof to answer for damages and costs which defendants may suffer in the event that the order for replevin prayed for may be found out to having not been properly issued. The second complaint contained essentially the same allegations as the first complaint, except that the Lease Agreement with Option to Purchase involved is dated October 1, 1997 and the motor vehicle leased is described as follows: Make/Type Serial No. Motor No. FUSO WITH MOUNTED CRANE FK416K-510528 6D14-423403

The second complaint also alleged that Navarro delivered three post-dated checks, each for the amount of P100,000.00, to Karen Go in payment of the agreed rentals; however, the third check was dishonored when presented for payment.
[8]

On October 12, 1998

[9]

and October 14, 1998,

[10]

the RTC issued writs of replevin for both cases; as a result, the

Sheriff seized the two vehicles and delivered them to the possession of Karen Go. In his Answers, Navarro alleged as a special affirmative defense that the two complaints stated no cause of action, since Karen Go was not a party to the Lease Agreements with Option to Purchase (collectively, the lease agreements) the actionable documents on which the complaints were based. On Navarros motion, both cases were duly consolidated on December 13, 1999. In its May 8, 2000 order, the RTC dismissed the case on the ground that the complaints did not state a cause of action. In response to the motion for reconsideration Karen Go filed dated May 26, 2000,
[11]

the RTC issued another

order dated July 26, 2000 setting aside the order of dismissal. Acting on the presumption that Glenn Gos leasing business is a conjugal property, the RTC held that Karen Go had sufficient interest in his leasing business to file the action against Navarro. However, the RTC held that Karen Go should have included her husband, Glenn Go, in the complaint based on Section 4, Rule 3 of the Rules of Court ( Rules). motion for the inclusion of Glenn Go as co-plaintiff.
[12]

Thus, the lower court ordered Karen Go to file a

When the RTC denied Navarros motion for reconsideration on March 7, 2001, Navarro filed a petition for certiorari with the CA, essentially contending that the RTC committed grave abuse of discretion when it reconsidered the dismissal of the case and directed Karen Go to amend her complaints by including her husband Glenn Go as coplaintiff. According to Navarro, a complaint which failed to state a cause of action could not be converted into one with a cause of action by mere amendment or supplemental pleading. On October 16, 2001, the CA denied Navarros petition and affirmed the RTCs order. Navarros motion for reconsideration in its resolution of May 29, 2002, THE PETITION Navarro alleges that even if the lease agreements were in the name of Kargo Enterprises, since it did not have the requisite juridical personality to sue, the actual parties to the agreement are himself and Glenn Go. Since it was Karen Go who filed the complaints and not Glenn Go, she was not a real party-in-interest and the complaints failed to state a cause of action. Navarro posits that the RTC erred when it ordered the amendment of the complaint to include Glenn Go as a coplaintiff, instead of dismissing the complaint outright because a complaint which does not state a cause of action cannot be converted into one with a cause of action by a mere amendment or a supplemental pleading. In effect, the lower court created a cause of action for Karen Go when there was none at the time she filed the complaints. Even worse, according to Navarro, the inclusion of Glenn Go as co-plaintiff drastically changed the theory of the complaints, to his great prejudice. Navarro claims that the lower court gravely abused its discretion when it assumed that the leased vehicles are part of the conjugal property of Glenn and Karen Go. Since Karen Go is the registered owner of Kargo Enterprises, the vehicles subject of the complaint are her paraphernal properties and the RTC gravely erred when it ordered the inclusion of Glenn Go as a co-plaintiff. Navarro likewise faults the lower court for setting the trial of the case in the same order that required Karen Go to amend her complaints, claiming that by issuing this order, the trial court violated Rule 10 of the Rules. Even assuming the complaints stated a cause of action against him, Navarro maintains that the complaints were premature because no prior demand was made on him to comply with the provisions of the lease agreements before the complaints for replevin were filed. Lastly, Navarro posits that since the two writs of replevin were issued based on flawed complaints, the vehicles were illegally seized from his possession and should be returned to him immediately. Karen Go, on the other hand, claims that it is misleading for Navarro to state that she has no real interest in the subject of the complaint, even if the lease agreements were signed only by her husband, Glenn Go; she is the owner of Kargo Enterprises and Glenn Go signed the lease agreements merely as the manager of Kargo Enterprises. Moreover, Karen Go maintains that Navarros insistence that Kargo Enterprises is Karen Gos paraphernal property is without basis. Based on the law and jurisprudence on the matter, all property acquired during the marriage is presumed to be conjugal property. Finally, Karen Go insists that her complaints sufficiently established a cause of action against Navarro. Thus, when the RTC ordered her to include her husband as co-plaintiff, this was merely to comply with the rule that spouses should sue jointly, and was not meant to cure the complaints lack of cause of action. THE COURTS RULING We find the petition devoid of merit.
[14] [13]

The CA also denied

leading to the filing of the present petition.

Karen Go is the real party-in-interest The 1997 Rules of Civil Procedure requires that every action must be prosecuted or defended in the name of the real party-in-interest, i.e., the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit.
[15]

Interestingly, although Navarro admits that Karen Go is the registered owner of the business name Kargo Enterprises, he still insists that Karen Go is not a real party-in-interest in the case. According to Navarro, while the lease contracts were in Kargo Enterprises name, this was merely a trade name without a juridical personality, so the actual parties to the lease agreements were Navarro and Glenn Go, to the exclusion of Karen Go. As a corollary, Navarro contends that the RTC acted with grave abuse of discretion when it ordered the inclusion of Glenn Go as co-plaintiff, since this in effect created a cause of action for the complaints when in truth, there was none. We do not find Navarros arguments persuasive. The central factor in appreciating the issues presented in this case is the business name Kargo Enterprises. The name appears in the title of the Complaint where the plaintiff was identified as KAREN T. GO doing business under the name KARGO ENTERPRISES, and this identification was repeated in the first paragraph of the Complaint. Paragraph 2 defined the business KARGO ENTERPRISES undertakes. Paragraph 3 continued with the allegation that the defendant leased from plaintiff a certain motor vehicle that was thereafter descr ibed. Significantly, the Complaint specifies and attaches as its integral part the Lease Agreement that underlies the transaction between the plaintiff and the defendant. Again, the name KARGO ENTERPRISES entered the picture as this Lease Agreement provides: This agreement, made and entered into by and between: GLENN O. GO, of legal age, married, with post office address at xxx, herein referred to as the LESSOR-SELLER; representing KARGO ENTERPRISES as its Manager, xxx thus, expressly pointing to KARGO ENTERPRISES as the principal that Glenn O. Go represented. In other words, by the express terms of this Lease Agreement, Glenn Go did sign the agreement only as the manager of Kargo Enterprises and the latter is clearly the real party to the lease agreements. As Navarro correctly points out, Kargo Enterprises is a sole proprietorship, which is neither a natural person, nor a juridical person, as defined by Article 44 of the Civil Code: Art. 44. The following are juridical persons: (1) The State and its political subdivisions; (2) Other corporations, institutions and entities for public interest or purpose, created by law; their personality begins as soon as they have been constituted according to law; (3) Corporations, partnerships and associations for private interest or purpose to which the law grants a juridical personality, separate and distinct from that of each shareholder, partner or member. Thus, pursuant to Section 1, Rule 3 of the Rules,
[16]

Kargo Enterprises cannot be a party to a civil action. This

legal reality leads to the question: who then is the proper party to file an action based on a contract in the name of Kargo Enterprises? We faced a similar question in Juasing Hardware v. Mendoza, where we said: Finally, there is no law authorizing sole proprietorships like petitioner to bring suit in court. The law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit by a single individual, and requires the proprietor or owner thereof to secure licenses and permits, register the business name, and pay taxes to the national government. It does not vest juridical or legal personality upon the sole proprietorship nor empower it to file or defend an action in court. Thus, the complaint in the court below should have been filed in the name of the owner of Juasing Hardware. The allegation in the body of the complaint would show that the suit is brought by such person as proprietor or owner of the business conducted under the name and style Juasing Hardware. The descriptive words doing business as Juasing Hardware may be added to the title of the [18] case, as is customarily done. [Emphasis supplied.]
[17]

This conclusion should be read in relation with Section 2, Rule 3 of the Rules, which states: SEC. 2. Parties in interest. A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit . Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest. As the registered owner of Kargo Enterprises, Karen Go is the party who will directly benefit from or be injured by a judgment in this case. Thus, contrary to Navarros contention, Karen Go is the real party -in-interest, and it is legally incorrect to say that her Complaint does not state a cause of action because her name did not appear in the Lease Agreement that her husband signed in behalf of Kargo Enterprises. Whether Glenn Go can legally sign the Lease Agreement in his capacity as a manager of Kargo Enterprises, a sole proprietorship, is a question we do not decide, as this is a matter for the trial court to consider in a trial on the merits. Glenn Gos Role in the Case We find it significant that the business name Kargo Enterprises is in the name of Karen T. Go,
[19]

who described

herself in the Complaints to be a Filipino, of legal age, married to GLENN O. GO, a resident of Cagayan de Oro City, and doing business under the trade name KARGO ENTERPRISES.
[20]

That Glenn Go and Karen Go are married to

each other is a fact never brought in issue in the case. Thus, the business name KARGO ENTERPRISES is registered in the name of a married woman, a fact material to the side issue of whether Kargo Enterprises and its properties are paraphernal or conjugal properties. To restate the parties positions, Navarro alleges that Kargo Enterprises is Karen Gos paraphernal property, emphasizing the fact that the business is registered solely in Karen Gos name. On the other hand, Karen Go contends that while the business is registered in her name, it is in fact part of their conjugal property. The registration of the trade name in the name of one person a woman does not necessarily lead to the conclusion that the trade name as a property is hers alone, particularly when the woman is married. By law, all property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved.
[21]

Our examination of the records of

the case does not show any proof that Kargo Enterprises and the properties or contracts in its name are conjugal. If at all, only the bare allegation of Navarro to this effect exists in the records of the case. As we emphasized in Castro v. Petitioners also overlook Article 160 of the New Civil Code. It provides that all property of the marriage is presumed to be conjugal partnership, unless it be prove[n] that it pertains exclusively to the husband or to the wife. This article does not require proof that the property was acquired with funds of the partnership. The presumption applies even when the manner in which the property was [23] acquired does not appear. [Emphasis supplied.] Thus, for purposes solely of this case and of resolving the issue of whether Kargo Enterprises as a sole proprietorship is conjugal or paraphernal property, we hold that it is conjugal property. Article 124 of the Family Code, on the administration of the conjugal property, provides: Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of disagreement, the husbands decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the contract implementing such decision. This provision, by its terms, allows either Karen or Glenn Go to speak and act with authority in managing their conjugal property, i.e., Kargo Enterprises. No need exists, therefore, for one to obtain the consent of the other before performing an act of administration or any act that does not dispose of or encumber their conjugal property. Under Article 108 of the Family Code, the conjugal partnership is governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter or by the spouses in their marriage settlements. In other words, the property relations of the husband and wife shall be governed primarily by

Chapter 4 on Conjugal Partnership of Gains of the Family Code and, suppletorily, by the spouses marriage settlement and by the rules on partnership under the Civil Code. In the absence of any evidence of a marriage settlement between the spouses Go, we look at the Civil Code provision on partnership for guidance. A rule on partnership applicable to the spouses circumstances is Article 1811 of the Civil Code, which states: Art. 1811. A partner is a co-owner with the other partners of specific partnership property. The incidents of this co-ownership are such that: (1) A partner, subject to the provisions of this Title and to any agreement between the partners, has an equal right with his partners to possess specific partnership property for partnership purposes; xxx Under this provision, Glenn and Karen Go are effectively co-owners of Kargo Enterprises and the properties registered under this name; hence, both have an equal right to seek possession of these properties. Applying Article 484 of the Civil Code, which states that in default of contracts, or special provisions, co-ownership shall be governed by the provisions of this Title, we find further support in Article 487 of the Civil Code tha t allows any of the co-owners to bring an action in ejectment with respect to the co-owned property. While ejectment is normally associated with actions involving real property, we find that this rule can be applied to the circumstances of the present case, following our ruling in Carandang v. Heirs of De Guzman.
[24]

In this case, one

spouse filed an action for the recovery of credit, a personal property considered conjugal property, without including the other spouse in the action. In resolving the issue of whether the other spouse was required to be included as a coplaintiff in the action for the recovery of the credit, we said: Milagros de Guzman, being presumed to be a co-owner of the credits allegedly extended to the spouses Carandang, seems to be either an indispensable or a necessary party. If she is an indispensable party, dismissal would be proper. If she is merely a necessary party, dismissal is not warranted, whether or not there was an order for her inclusion in the complaint pursuant to Section 9, Rule 3. Article 108 of the Family Code provides: Art. 108. The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter or by the spouses in their marriage settlements. This provision is practically the same as the Civil Code provision it superseded: Art. 147. The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter. In this connection, Article 1811 of the Civil Code provides that [a] partner is a co -owner with the other partners of specific partnership property. Taken with the presumption of the conjugal nature of the funds used to finance the four checks used to pay for petitioners stock subscriptions, and with the presumption that the credits themselves are part of conjugal funds, Article 1811 makes Quirino and Milagros de Guzman co-owners of the alleged credit. Being co-owners of the alleged credit, Quirino and Milagros de Guzman may separately bring an action for the recovery thereof. In the fairly recent cases of Baloloy v. Hular andAdlawan v. Adlawan, we held that, in a co-ownership, co-owners may bring actions for the recovery of coowned property without the necessity of joining all the other co-owners as co-plaintiffs because the suit is presumed to have been filed for the benefit of his co-owners. In the latter case and in that of De Guia v. Court of Appeals, we also held that Article 487 of the Civil Code, which provides that any of the co-owners may bring an action for ejectment, covers all kinds of action for the recovery of possession. In sum, in suits to recover properties, all co-owners are real parties in interest. However, pursuant to Article 487 of the Civil Code and relevant jurisprudence, any one of them may bring an

action, any kind of action, for the recovery of co-owned properties. Therefore, only one of the coowners, namely the co-owner who filed the suit for the recovery of the co-owned property, is an indispensable party thereto. The other co-owners are not indispensable parties. They are not even necessary parties, for a complete relief can be accorded in the suit even without their participation, since [25] the suit is presumed to have been filed for the benefit of all co-owners. [Emphasis supplied.]

Under this ruling, either of the spouses Go may bring an action against Navarro to recover possession of the Kargo Enterprises-leased vehicles which they co-own. This conclusion is consistent with Article 124 of the Family Code, supporting as it does the position that either spouse may act on behalf of the conjugal partnership, so long as they do not dispose of or encumber the property in question without the other spouses consent. On this basis, we hold that since Glenn Go is not strictly an indispensable party in the action to recover possession of the leased vehicles, he only needs to be impleaded as a pro-forma party to the suit, based on Section 4, Rule 4 of the Rules, which states: Section 4. Spouses as parties. Husband and wife shall sue or be sued jointly, except as provided by law. Non-joinder of indispensable parties not ground to dismiss action Even assuming that Glenn Go is an indispensable party to the action, we have held in a number of cases
[26]

that

the misjoinder or non-joinder of indispensable parties in a complaint is not a ground for dismissal of action. As we stated in Macababbad v. Masirag:
[27]

Rule 3, Section 11 of the Rules of Court provides that neither misjoinder nor nonjoinder of parties is a ground for the dismissal of an action, thus: Sec. 11. Misjoinder and non-joinder of parties. Neither misjoinder nor non-joinder of parties is ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a misjoined party may be severed and proceeded with separately. In Domingo v. Scheer, this Court held that the proper remedy when a party is left out is to implead the indispensable party at any stage of the action. The court, either motu proprioor upon the motion of a party, may order the inclusion of the indispensable party or give the plaintiff opportunity to amend his complaint in order to include indispensable parties. If the plaintiff to whom the order to include the indispensable party is directed refuses to comply with the order of the court, the complaint may be dismissed upon motion of the defendant or upon the court's own motion. Only upon unjustified failure or refusal to obey the order to include or to amend is the action dismissed. In these lights, the RTC Order of July 26, 2000 requiring plaintiff Karen Go to join her husband as a party plaintiff is fully in order. Demand not required prior to filing of replevin action In arguing that prior demand is required before an action for a writ of replevin is filed, Navarro apparently likens a replevin action to an unlawful detainer. For a writ of replevin to issue, all that the applicant must do is to file an affidavit and bond, pursuant to Section 2, Rule 60 of the Rules, which states: Sec. 2. Affidavit and bond. The applicant must show by his own affidavit or that of some other person who personally knows the facts:

(a)

That the applicant is the owner of the property claimed, particularly describing it, or is entitled to the possession thereof; That the property is wrongfully detained by the adverse party, alleging the cause of detention thereof according to the best of his knowledge, information, and belief; That the property has not been distrained or taken for a tax assessment or a fine pursuant to law, or seized under a writ of execution or preliminary attachment, or otherwise placed undercustodia legis, or if so seized, that it is exempt from such seizure or custody; and

(b)

(c)

(d) The actual market value of the property. The applicant must also give a bond, executed to the adverse party in double the value of the property as stated in the affidavit aforementioned, for the return of the property to the adverse party if such return be adjudged, and for the payment to the adverse party of such sum as he may recover from the applicant in the action. We see nothing in these provisions which requires the applicant to make a prior demand on the possessor of the property before he can file an action for a writ of replevin. Thus, prior demand is not a condition precedent to an action for a writ of replevin. More importantly, Navarro is no longer in the position to claim that a prior demand is necessary, as he has already admitted in his Answers that he had received the letters that Karen Go sent him, demanding that he either pay his unpaid obligations or return the leased motor vehicles. Navarros position that a demand is necessary and has not been made is therefore totally unmeritorious. WHEREFORE, premises considered, we DENY the petition for review for lack of merit. Costs against petitioner Roger V. Navarro. METRO vs. laRAS GIFT AND DCOR LUIS VILLAFUERTE The Case This is a petition for review
[1]

of the 29 September 2004 Decision

[2]

and 2 March 2006 Resolution

[3]

of the Court of

Appeals in CA-G.R. SP No. 79475. In its 29 September 2004 Decision, the Court of Appeals granted the petition for certiorari of respondents Laras Gifts and Decors, Inc., Luis Villafuerte, Jr., and Lara Maria R. Villafuerte (respondents). In its 2 March 2006 Resolution, the Court of Appeals denied the motion for reconsideration of petitioners Metro, Inc., Frederick Juan and Liza Juan (petitioners). The Facts Laras Gifts and Decors Inc. (LGD) and Metro, Inc. are corporations engaged in the business of manufacturing, producing, selling and exporting handicrafts. Luis Villafuerte, Jr. and Lara Maria R. Villafuerte are the president and vicepresident of LGD respectively. Frederick Juan and Liza Juan are the principal officers of Metro, Inc. Sometime in 2001, petitioners and respondents agreed that respondents would endorse to petitioners purchase orders received by respondents from their buyers in the United States of America in exchange for a 15% commission, to be shared equally by respondents and James R. Paddon (JRP), LGDs agent. The terms of the agreement were later [4] embodied in an e-mail labeled as the 2001 Agreement. In May 2003, respondents filed with the Regional Trial Court, Branch 197, Las Pias City (trial court) a complaint against petitioners for sum of money and damages with a prayer for the issuance of a writ of preliminary [5] attachment. Subsequently, respondents filed an amended complaint and alleged that, as of July 2002, petitioners defrauded them in the amount of $521,841.62. Respondents also prayed for P1,000,000 as moral damages, P1,000,000 as exemplary damages and 10% of the judgment award as attorneys fees. Respondents also prayed for the issuance of a writ of preliminary attachment. In its 23 June 2003 Order, the trial court granted respondents prayer and issued the writ of attachment against the properties and assets of petitioners. The 23 June 2003 Order provides:
[6]

WHEREFORE, let a Writ of Preliminary Attachment issue against the properties and assets of Defendant METRO, INC. and against the properties and assets of Defendant SPOUSES FREDERICK AND LIZA JUAN not exempt from execution, as may be sufficient to satisfy the applicants demand of US$521,841.62 US Dollars or its equivalent in Pesos upon actual attachment, which is about P27 Million, unless such Defendants make a deposit or give a bond in an amount equal to P27 Million to satisfy the applicants demand exclusive of costs, upon posting by the Plaintiffs of a Bond for Preliminary Attachment in the amount of twenty five million pesos (P25,000,000.00), subject to the approval of this Court. SO ORDERED.
[7]

On 26 June 2003, petitioners filed a motion to discharge the writ of attachment. Petitioners argued that the writ of attachment should be discharged on the following grounds: (1) that the 2001 agreement was not a valid contract because it did not show that there was a meeting of the minds between the parties; (2) assuming that the 2001 agreement was a valid contract, the same was inadmissible because respondents failed to authenticate it in accordance with the Rules on Electronic Evidence; (3) that respondents failed to substantiate their allegations of fraud with specific acts or deeds showing how petitioners defrauded them; and (4) that respondents failed to establish that the unpaid commissions were already due and demandable. After considering the arguments of the parties, the trial court granted petitioners motion and lifted the writ of attachment. The 12 August 2003 Order
[8]

of the trial court provides:

Premises considered, after having taken a second hard look at the Order dated June 23, 2003 granting plaintiffs application for the issuance of a writ of preliminary attachment, the Court holds that the issuance of a writ of preliminary attachment in this case is not justified. WHEREFORE, the writ of preliminary attachment issued in the instant case is hereby ordered immediately discharged and/or lifted. SO ORDERED.
[9]

Respondents filed a motion for reconsideration. In its 10 September 2003 Order, the trial court denied the motion. Respondents filed a petition for certiorari before the Court of Appeals. Respondents alleged that the trial court gravely abused its discretion when it ordered the discharge of the writ of attachment without requiring petitioners to post a counter-bond. In its 29 September 2004 Decision, the Court of Appeals granted respondents petition. The 29 September 2004 Decision provides: WHEREFORE, finding merit in the petition, We GRANT the same. The assailed Orders are hereby ANNULLED and SET ASIDE. However, the issued Writ of Preliminary Attachment may be ordered discharged upon the filing by the private respondents of the proper counter-bond pursuant to Section 12, Rule 57 of the Rules of Civil Procedure. SO ORDERED.
[10]

Petitioners filed a motion for reconsideration. In its 2 March 2006 Resolution, the Court of Appeals denied the motion. Hence, this petition. The 12 August 2003 Order of the Trial Court According to the trial court, respondents failed to sufficiently show that petitioners were guilty of fraud either in incurring the obligation upon which the action was brought, or in the performance thereof. The trial court found no proof that petitioners were motivated by malice in entering into the 2001 agreement. The trial court also declared that petitioners failure to fully comply with their obligation, absent other facts or circumstances to indicate evil intent, does not automatically amount to fraud. Consequently, the trial court ordered the discharge of the writ of attachment for lack of evidence of fraud.

The 29 September 2004 Decision of the Court of Appeals According to the Court Appeals, the trial court gravely abused its discretion when it ordered the discharge of the writ of attachment without requiring petitioners to post a counter-bond. The Court of Appeals said that when the writ of attachment is issued upon a ground which is at the same time also the applicants cause of action, courts are precluded from hearing the motion for dissolution of the writ when such hearing would necessarily force a trial on the merits of a case on a mere motion.
[11]

The Court of Appeals pointed out that, in this case, fraud was not only alleged as the ground

for the issuance of the writ of attachment, but was actually the core of respondents complaint. The Court of Appeals declared that the only way that the writ of attachment can be discharged is by posting a counter-bond in accordance with Section 12,
[12]

Rule 57 of the Rules of Court. The Issue

Petitioners raise the question of whether the writ of attachment issued by the trial court was improperly issued such that it may be discharged without the filing of a counter-bond. The Ruling of the Court The petition has no merit. Petitioners contend that the writ of attachment was improperly issued because respondents amended complaint failed to allege specific acts or circumstances constitutive of fraud. Petitioners insist that the improperly issued writ of attachment may be discharged without the necessity of filing a counter-bond. Petitioners also argue that respondents failed to show that the writ of attachment was issued upon a ground which is at the same time also respondents cause of action. Petitioners maintain that respondents amended complaint was not an action based on fraud but was a simple case for collection of sum of money plus damages. On the other hand, respondents argue that the Court of Appeals did not err in ruling that the writ of attachment can [13] only be discharged by filing a counter-bond. According to respondents, petitioners cannot avail of Section 13, Rule 57 of the Rules of Court to have the attachment set aside because the ground for the issuance of the writ of attachment is also the basis of respondents amended complaint. Respondents assert that the amended complaint is a complaint for damages for the breach of obligation and acts of fraud committed by petitioners. In this case, the basis of respondents application for the issuance of a writ of preliminary attachment is Section 1(d), Rule 57 of the Rules of Court which provides: SEC. 1. Grounds upon which attachment may issue. At the commencement of the action or at any time before entry of judgment, a plaintiff or any proper party may have the property of the adverse party attached as security for the satisfaction of any judgment that maybe recovered in the following cases: x x x (d) In an action against a party who has been guilty of fraud in contracting the debt or incurring the obligation upon which the action is brought, or in the performance thereof; x x x In Liberty Insurance Corporation v. Court of Appeals,
[14]

we explained:

To sustain an attachment on this ground, it must be shown that the debtor in contracting the debt or incurring the obligation intended to defraud the creditor. The fraud must relate to the execution of the agreement and must have been the reason which induced the other party into giving consent which he would not have otherwise given. To constitute a ground for attachment in Section 1(d), Rule 57 of the Rules of Court, fraud should be committed upon contracting the obligation sued upon. A debt is fraudulently contracted if at the time of contracting it the debtor has a preconceived plan or intention not [15] to pay, as it is in this case. The applicant for a writ of preliminary attachment must sufficiently show the factual circumstances of the alleged fraud because fraudulent intent cannot be inferred from the debtors mere non-payment of the debt or failure to comply with his obligation.
[16]

In their amended complaint, respondents alleged the following in support of their prayer for a writ of preliminary attachment: 5. Sometime in early 2001, defendant Frederick Juan approached plaintiff spouses and asked them to help defendants export business. Defendants enticed plaintiffs to enter into a business deal. He proposed to plaintiff spouses the following a. That plaintiffs transfer and endorse to defendant Metro some of receive from their US buyers; the Purchase Orders (POs) they will

b. That defendants will sell exclusively and only thru plaintiffs for their US buyer; xxx 6. After several discussions on the matter and further inducement on the part of defendant spouses, plaintiff spouses agreed. Thus, on April 21, 2001, defendant spouses confirmed and finalized the agreement in a letter-document entitled 2001 Agreement they emailed to plaintiff spouses, a copy of which is hereto attached as Annex A. 20. Defendants are guilty of fraud committed both at the inception of the agreement and in the performance of the obligation. Through machinations and schemes, defendants successfully enticed plaintiffs to enter into the 2001 Agreement. In order to secure plaintiffs full trust in them and lure plaintiffs to endorse more POs and increase the volume of the orders, defendants during the early part, remitted to plaintiffs shares under the Agreement. 21. However, soon thereafter, just when the orders increased and the amount involved likewise increased, defendants suddenly, without any justifiable reasons and in pure bad faith and fraud, abandoned their contractual obligations to remit to plaintiffs their shares. And worse, defendants transacted directly with plaintiffs foreign buyer to the latters exclusion and damage. Clearly, defendants planned everything from the beginning, employed ploy and machinations to defraud plaintiffs, and consequently take from them a valuable client.

22. Defendants are likewise guilty of fraud by violating the trust and confidence reposed upon them by plaintiffs. Defendants received the proceeds of plaintiffs LCs with the clear obligation of remitting 15% thereof to the plaintiffs. Their refusal and failure to remit the said amount despite demand constitutes a breach of trust [17] amounting to malice and fraud. (Emphasis and underscoring in the original) (Boldfacing and italicization supplied) We rule that respondents allegation that petitioners undertook to sell exclusively and only through JRP/LGD for Target Stores Corporation but that petitioners transacted directly with respondents foreign buyer is sufficient allegation of fraud to support their application for a writ of preliminary attachment. Since the writ of preliminary attachment was properly issued, the only way it can be dissolved is by filing a counter-bond in accordance with Section 12, Rule 57 of the Rules of Court. Moreover, the reliance of the Court of Appeals in the cases of Chuidian v. Sandiganbayan, FCY Construction [19] [20] Group, Inc. v. Court of Appeals, andLiberty Insurance Corporation v. Court of Appeals is proper. The rule that when the writ of attachment is issued upon a ground which is at the same time the applicants cause of action, the only other [21] way the writ can be lifted or dissolved is by a counter-bond is applicable in this case. It is clear that in respondents amended complaint of fraud is not only alleged as a ground for the issuance of the writ of preliminary attachment, but it is also the core of respondents complaint. The fear of the Court of Appeals that petitioners could force a trial on the merits of the case on the strength of a mere motion to dissolve the attachment has a basis. WHEREFORE, we DENY the petition. We AFFIRM the Resolution of the Court of Appeals in CA-G.R. SP No. 79475. 29 September 2004 Decision and 2 March 2006
[18]

ARMANDO Q. CANLAS, MIGUEL D. CAPISTRANO, MARRIETA PIA, petitioners, vs. NAPICO HOMEOWNERS ASSN., I XIII, INC., ET AL., respondents. THE present petition filed on May 26, 2008 seeks the issuance of a Writ of Amparo upon the following premise: Petitioners were deprived of their liberty, freedom and/or rights to shelter enshrined and embodied in our Constitution, as the result of these nefarious activities of both the Private and Public Respondents. This ardent

request filed before this Honorable Supreme Court is the only solution to this problem via this newly advocated 1 principles incorporated in the Rules the "RULE ON THE WRIT OF AMPARO." It appears that petitioners are settlers in a certain parcel of land situated in Barangay Manggahan, Pasig City. Their dwellings/houses have either been demolished as of the time of filing of the petition, or is about to be demolished pursuant to a court judgment. While they attempted to focus on issuance of what they claimed to be fraudulent and spurious land titles, to wit: Petitioners herein are desirous to help the government, the best way they can, to unearth these so-called "syndicates" clothed with governmental functions, in cahoots with the "squatting syndicates" - - - - the low so defines. If only to give its proper meanings, the Government must be the first one to cleans (sic) its ranks from these unscrupulous political protges. If unabated would certainly ruin and/or destroy the efficacy of the Torrens System of land registration in this Country. It is therefore the ardent initiatives of the herein Petitioners, by way of the said prayer for the issuance of the Writ of Amparo, that these unprincipled Land Officials be summoned to answer their participation in the issuances of these fraudulent and spurious titles, NOW, in the hands of the Private Respondents. The Courts of Justice, including this Honorable Supreme Court, are likewise being made to believe that said titles in the possession of the Private Respondents were issued untainted 2 with frauds. what the petition ultimately seeks is the reversal of this Courts dismissal of petitions in G.R. Nos. 177448, 180768, 177701, 177038, thus: That, Petitioners herein knew before hand that: there can be no motion for reconsideration for the second or third time to be filed before this Honorable Supreme Court. As such therefore, Petitioners herein are aware of the opinion that this present petition should not in any way be treated as such motions fore reconsideration. Solely, this petition is only for the possible issuance of the writ of amparo, although it might affect the previous rulings of this Honorable Supreme Court in these cases, G.R. Nos. 177448, 180768, 177701 and 177038. Inherent in the powers of the Supreme Court of the Philippines is to modify, reverse and set aside, even its own previous decision, that can not be thwarted nor influenced by any one, but, only on the basis of merits and 3 evidence. This is the purpose of this petition for the Writ of Amparo. We dismiss the petition. The Rule on the Writ of Amparo provides: Section 1. Petition. The petition for a writ of amparo is a remedy available to any person whose right to life, liberty and security is violated or threatened with violation by an unlawful act or omission of a public official or employee, or of a private individual or entity. The writ shall cover extralegal killings and enforced disappearances or threats thereof. (Emphasis supplied.) The threatened demolition of a dwelling by virtue of a final judgment of the court, which in this case was affirmed with finality by this Court in G.R. Nos. 177448, 180768, 177701, 177038, is not included among the enumeration of rights as stated in the above-quoted Section 1 for which the remedy of a writ of amparo is made available. Their claim to their dwelling, assuming they still have any despite the final and executory judgment adverse to them, does not constitute right to life, liberty and security. There is, therefore, no legal basis for the issuance of the writ of amparo. Besides, the factual and legal basis for petitioners claim to the land in question is not alleged in the petition at all. The Court can only surmise that these rights and interest had already been threshed out and settled in the four cases cited above. No writ of amparo may be issued unless there is a clear allegation of the supposed factual and legal basis of the right sought to be protected. Under Section 6 of the same rules, the court shall issue the writ upon the filing of the petition, only if on its face, the court ought to issue said writ. Section 6. Issuance of the Writ. Upon the filing of the petition, the court, justice or judge shall immediately order the issuance of the writ if on its face it ought to issue. The clerk of court shall issue the writ under the seal of the court; or in case of urgent necessity, the justice or the judge may issue the writ under his or her own hand, and may deputize any officer or person to serve it. The writ shall also set the date and time for summary hearing of the petition which shall not be later than seven (7) days from the date of its issuance. Considering that there is no legal basis for its issuance, as in this case, the writ will not be issued and the petition will be dismissed outright. This new remedy of writ of amparo which is made available by this Court is intended for the protection of the highest possible rights of any person, which is his or her right to life, liberty and security. The Court will not spare any time or

effort on its part in order to give priority to petitions of this nature. However, the Court will also not waste its precious time and effort on matters not covered by the writ. WHEREFORE, the petition is DISMISSED. SO ORDERED. LPBS COMMERCIAL vs HON VENANCIO AMILA This petition for certiorari assails the January 17, 2001 Order
[1] [2]

of the Regional Trial Court of Bohol, Branch 3

denying petitioners Urgent Motion for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction. Also assailed is the February 22, 2001 Order
[3]

denying the Motion for Reconsideration.

In 1991, petitioner obtained several loans from respondent First Consolidated Bank (FCB) of Bohol Inc. By July 1997, petitioners loan with respondent bank amounted to P11.5 Million with an average interest rate of 15.5% per annum. The loan was covered by several Promissory Notes and secured with a Real Estate Mortgage parcels of land. In October 1997, petitioners loan obligation was restruct ured and consolidated into three Promissory Notes
[5] [4]

covering five

executed as follows: October 16, 1997 October 23, 1997 November 10, 1997 P4,775,000.00 P5,150,000.00 P1,575,000.00

Consequently, the old Promissory Notes were deemed cancelled and superseded by the new ones which provided for an increased interest rate of 20% per annum for the first two notes, and 30% per annum for the third note. On June 11, 1998, petitioner filed a Complaint
[6]

for Reformation of Documents, Recovery of Excessive Interest

Payments, Damages, Injunction with Preliminary Injunction and/or Temporary Restraining Order against respondent bank before the Regional Trial Court of Bohol (RTC-Bohol) docketed as Civil Case No. 6200. The RTC-Bohol, through Executive Judge Achilles L. Melicor subsequently issued an Order directing the special raffle of Civil Case No. 6200 and denying petitioners application for TRO. by Judge Fernando G. Fuentes III. In its complaint, petitioner alleged that additional oppressive and excessive charges were unilaterally imposed by respondent bank in violation of their agreement. Petitioner claimed that the interest rates applicable to the aggregate loan is only 20% and not 30% as reflected in the third Promissory Note dated November 10, 1997; and that the term of the promissory notes was six months and not 30 days. In its Answer,
[8] [7]

The case was eventually assigned to RTC-Bohol Branch 3 which was presided

respondent bank alleged that the imposition of the additional charge of 5% per annum based on

the outstanding principal and the total amount of the unpaid interest was in accordance with the provisions of the Promissory Notes. Respondent bank added that contrary to petitioners claim, the parties did not have any agreement providing for a maturity period of six months. Despite being given countless opportunities to settle the matter, the parties were unable to reach an agreement. In the course of the protracted proceedings, Judge Fuentes was replaced by Judge Venancio J. Amila. Noting the slow progress of the case in the hearing held on May 11, 2000, Judge Amila gave the parties a last chance to settle before finally proceeding to pre-trial.
[9]

Meanwhile, on November 10, 2000, respondent bank filed an Application for the Extra-Judicial Foreclosure of the Real Estate Mortgage. On December 11, 2000, petitioner filed an Urgent Motion for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction to enjoin foreclosure. When said motion was heard on December 20, 2000, petitioner asked the trial court to reset the hearing claiming the possibility of an amicable agreement between the parties. The trial court reset the hearing to January 15, 2001, but on January 12, 2001, petitioner again filed an urgent motion for the postponement of the hearing which the trial court denied. During the January 15, 2001 hearing, respondent bank manifested that there has been no settlement between the parties and moved for the resolution of petitioners pending motion for the issuance of a TRO. On January 17, 2001, the trial court issued an Order denying the motion for issuance of a TRO, thus: WHEREFORE, considering that there has been a long default of plaintiff to pay its loan obligation to defendant bank according to the reconstructed promissory notes, the foreclosure of the mortgaged properties is therefore due and proper. However, as the propriety of additional interests allegedly unilaterally imposed by defendant are being questioned by plaintiff, the foreclosure should be limited only to the uncontested agreement in fairness to both, which is the amount of the loan and the interest therein due as mutually agreed by the parties. The penalties and all other additional increments thereto shall be the subject of hearing to determine its propriety or justification. SO ORDERED.
[10]

Petitioner moved for reconsideration but was denied by the trial court. Hence, this petition The order denying petitioners motion for issuance of a TRO is an interlocutory order on an incident which does not touch on the merits of the case or put an end to the proceedings.
[11]

The remedy against an interlocutory order is not

certiorari, but an appeal in case of an unfavorable decision. Only if there are circumstances that clearly demonstrate the inadequacy of an appeal that the remedy of certiorari is allowed,
[12]

none of which is present in the instant case.

Moreover, no special and important reason or exceptional and compelling circumstance has been adduced by the petitioner why direct recourse to this Court should be allowed. This Courts original jurisdiction to issue a writ of certiorari (as well as of prohibition, mandamus, quo warranto, habeas corpus and injunction) is not exclusive, but is concurrent with the Regional Trial Courts and the Court of Appeals in certain cases. In Liga ng mga Barangay v. City Mayor of Manila we held that This concurrence of jurisdiction is not, however, to be taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of the court to which application therefor will be directed. There is after all a hierarchy of courts. That hierarchy is determinative of the venue of appeals, and also serves as a general determinant of the appropriate forum for petitions for the extraordinary writs. A becoming regard of that judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct invocation of th e Supreme Courts original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This is [an] established policy. It is a policy necessary to prevent inordinate demands upon the Courts time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the Courts docket. The propensity of litigants and lawyers to disregard the hierarchy of courts in our judicial system by seeking relief directly from this Court must be put to a halt for two reasons: (1) it would be an imposition upon the precious time of this Court; and (2) it would cause an inevitable and resultant delay, intended or otherwise, in the adjudication of cases, which in some instances had to be remanded or referred to the lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues because this Court is not a trier of facts.
[14] [13]

WHEREFORE, the petition is DISMISSED.