21A.

Formal Amendments

G.R. No. L-22388 December 2, 1924

CHUA KIONG, as special attorney-in-fact for Chua Yu, plaintiff-appellee,

vs.
PHILIP C. WHITAKER, ET AL., defendants. PHILIP C. WHITAKER, appellant.

Hartigan & Welch and Arroyo, Gurrea & Mueller for appellant.
Powell & Hill for appellee.

OSTRAND, J.:

On June 7, 1922, Chua Kiong, as attorney-in-fact for Chino Chua Yu, brought an action against
Philip C. Whitaker and Venancio Conception on the following document, alleging that of the amount
therein mentioned only the sum of P3,903.16 has been paid leaving a balance still due from said
defendants to the plaintiff in the sum of P11,640.06:

CENTRAL PALMA
Ilog, Negros Occidental,
I. F.

WHITAKER Y. CONCEPCION,
Propietarios.

Recibi del chino Chua Yu de Ilog la cantidad de quince mil quinientos cuarenta y tres pesos
con 22/100 (P15,543.22) como prestamo sin interes por cuenta de la "Central Palma."

Ilog, 29 de junio de 1921.

CENTRAL PALMA
(Sgd.) Por TIMOTEO LAUREANO
Cajero

(Sgd.) S. CONCEPCION
Gerente

The defendants answered by a general denial but did not appear at the trial of the case and
judgment was rendered against them and in favor of the plaintiff for the sum of P11,640.06, with
legal interest from June 13, 1922, and with the costs. From this judgment the defendant Philip C.
Whitaker appealed.

After the case had been docketed in this court the plaintiff presented a motion to amend his
complaint by changing the title of the case to read as follows:
lawphi1.net
 CHUA YU, represented by his special attorney-in-fact, CHUA KIONG, plaintiff, vs. PHILIP C.
WHITAKER and VENANCIO CONCEPCION, defendants.

The appellant filed an opposition to the motion on technical grounds but did not allege that he had a
good defense and did not present an affidavit of merit. The writer, then on duty as Vacation Justice,
therefore overruled the objection and granted the appellee's motion under the provisions of section
110 of the Code of Civil Procedure.

The defendant-appellant has now presented a motion asking that the case be reopened for the sole
purpose of receiving his evidence. The motion is accompanied by an affidavit to the effect that said
defendant-appellant did not appear at the trial of the case, for the reason that the action was
commenced and prosecuted and decision rendered therein in the name of "Chua Kiong, as special
attorney-in-fact for Chua Yu;" that he was informed that an action so commenced, prosecuted, and
decided, could in no way affected his interests and that it was not necessary for him to appear at the
trial or present any defense whatsoever and, acting on that information, he did not appear at the trial
nor present any defense; that he has a good and valid defense consisting in this: that Severiano
Concepcion had absolutely no authority to borrow the money referred to in the complaint and that
the power of the attorney executed by defendant-appellant in favor of said Severiano Concepcion
prohibited him from borrowing money in excess of P1,000. The affidavit is accompanied by a copy of
said power of attorney.

Counsel for the defendant-appellant intimates that the aforesaid amendment to the complaint was
improperly allowed by this court and very confidently and rather emphatically asserts that his court
never applied the provisions of section 110 and allowed the amendment of the pleadings. In this
counsel is mistaken; in the case ofAlonso vs. Villamor (16 Phil., 315), the complaint was amended by
substituting one party-plaintiff for another even after the case had been-submitted to this court for
decision upon the merits. In that case the court, speaking through Mr. Justice Moreland, says:

It is undoubted that the bishop of the diocese or the Roman Catholic Apostolic Church itself
is the real party in interest. The plaintiff personally has no interest in the cause of action.
Section 114 of the Code of Civil Procedure requires that every action must be prosecuted in
the name of the real party in interest. The plaintiff is not such party.

After quoting section 110 and 503 of the Code of Civil Procedure, the court continues:

We are confident under these provisions that this court has full power, apart from that power
and authority which is inherent, to amend the process, pleadings, proceedings, and decision
in this case by substituting, as party plaintiff, the real party in interest. Not only are we
confident that we may do so, but we are convinced that we should do so. Such an
amendment does not constitute, really, a change in the identity of the parties. The plaintiff
asserts in his complaint, and maintains that assertion all through the record, that he is
engaged in the prosecution of this case, not for himself, but for the bishop of the diocese
not by his own right, but by right of another. He seeks merely to do for the bishop what the
bishop might do for himself. His own personality is not involved. His own rights are not
presented. He claims no interest whatever in the litigation. He seeks only the welfare of the
great church whose servant he is. He gladly permits his identity to be wholly swallowed up in
that of his superior. The substitution, then, of the name of the bishop of the diocese, or the
Roman Catholic Apostolic Church, for that of Padre Alonso, as party plaintiff, is not in reality
the substitution of one identity for another, of one party for another, but is simply to make the
form express the substance. The substance is there. It appears all through the proceedings.
No one is deceived for an instant as to whose interests are at stake. The form of its
expression is alone defective. The substitution, then, is not substantial but formal. Defect in
 mere form cannot possibly prejudice so long as the substantial is clearly evident. Form is a
method of speech used to express substance and made it clearly appear. It the form be
faulty and still the substance shows plainly through, no harm can come by making the form
accurately expressive of the substance.

Numerous decisions both from Federal and State courts are cited in support of the opinion.

As a matter of fact, amendments to pleadings are frequently allowed after the case has been
entered upon the docket. It is true that such matters are usually disposed of by minute-orders which
do not appear in the reports, but there is enough in the reports to show that it is never safe for a
party in a civil action to rely on purely technical defenses; under our liberal Code of Civil Procedure
but scant consideration is ordinarily given such defenses by this court. In the present case counsel
for the defendant-appellant in resisting the amendment of the complaint gave the court no intimation
that his client had any defense on the merits nor was there anything in the record showing such
defense. In these circumstances the court was fully justified in authorizing the amendment in
question, and might well declined to entertain the motion now under consideration. It seems evident
that counsel deliberately refrained from calling the attention of the court below to the mistake of his
adversary, apparently with the intention of lying in ambush until the proceedings had reached a
stage where the error would be beyond correction. Such practice leads only to delay in the
administration of justice and is no longer encouraged by the courts.

We feel, however, that under the circumstances of the present case the client should not be made to
suffer for the mistake of his counsel and that he should be afforded another opportunity for his day in
court.

The case will therefore be remanded to the court below for the reception of the evidence of the
defendant-appellant and such additional evidence as the plaintiff may offer and for judgment upon all
of the evidence. No costs will be allowed in this instance. So ordered.

Johnson, Street, Avancea, Villamor, Johns and Romualdez, JJ., concur.

Malcolm, J., concurs in the result.

22A. Action or defense I s based on a written instrument or document.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-57821 January 17, 1985

SEGUNDINO TORIBIO, EUSEBIA TORIBIO, and the HEIRS OF OLEGARIO TORIBIO,

represented by his widow, ADELA DE LOS REYES, petitioners,
vs.
THE HON. JUDGE ABDULWAHID A. BIDIN, in his capacity as Presiding Judge, Branch I, Court
of First Instance, City of Zamboanga, DALMACIO RAMOS, and JUANITO
CAMACHO, respondents.
GUTIERREZ, J.:

This petition is premised on the interpretation and application of Sections 7 and 8, Rule 8 of the
Revised Rules of Court on actionable documents, which state:

SEC. 7. Action or defense based on document. Whenever an action or defense is

based upon a written instrument or document, the substance of such instrument or
document shall be set forth in the pleading, and the original or a copy thereof shall be
attached to the pleading as an exhibit, which shall be deemed to be a part of the
pleading, or said copy may with like effect be set forth in the pleading.

SEC. 8. How to contest genuineness of such documents. When an action or

defense is founded upon a written instrument, copied in or attached to the
corresponding pleading as provided in the preceding section, the genuineness and
due execution of the instrument shall be deemed admitted unless the adverse party,
under oath, specifically denies them, and sets forth what he claims to be the facts;
but this provision does not apply when the adverse party does not appear to be a
party to the instrument or when compliance with an order for an inspection of the
original instrument is refused.

The present controversy stems from a complaint filed by the petitioners against private respondents
Dalmacio Ramos and Juanita Camacho.

Engracio Francisco and Juliana Esteban were the registered owners of the parcel of land
Zamboanga. At the death of said spouses, they were survived by their ten (10) children who
inherited their state in equal pro indiviso shares. Subsequently, the property was subdivided among
the heirs and a portion designated as Lot No. 1943-B was allotted to the Justa Francisco. Justa died
and was survived among by eight (8) children namely: Dionoso, Eufremia, Alfonso, Rafael, Petrona,
Olegario, Segundino and Eusebia, all surnamed Toribio, who eight heirs, Eufremia, Alfonso and
Petrona, sold their in the property to Ramon Ledesma. Rafael also sold his share to Dinisio who, in
turn, sold the same to Ramon Ledesma. Thus, the latter acquired four (4) shares out of eight (8)
shares, or a pro indiviso share of Lot 1943-B.

Subsequently, Dionisio sold his own hereditary share in the aforesaid estate of his mother to Juanito
Camacho, who by said sale acquired a 1/8 pro indiviso share of the property.

The three other heirs, petitioners Segundino Eusebia and Olegario alleging that their shares had
never been sold nor in any wise transferred or disposed to others filed a case against herein private
respondents for recovery of hereditary rights. How Juanito Camacho, who was entitled to only a total
area of 931 square meters, nor, how one Dalmacio Ramos, Jr., acquired share of the property
was allegedly not known to them.

In their answer, the defendants-respondents alleged that the shares of plaintiffs-petitioners had
likewise been sold to Dionisio Toribio, their brother, who, in turn, sold the same to Juanito Camacho
and Dalmacio Ramos. The alleged sale from petitioners to Dionisio and the sale from Dionisio to the
respondents were evidenced by deeds of sale, xerox copies of which were appended to and made
an integral part of the respondents' partition agreement between the respondents and also a xerox
copy of the respondents' transfer certificates of title.

While testifying during the trial, Eusebia Toribio was asked whether she executed any sale of her
share in the parcel of land in litigation. The counsel for private respondents objected, raising the
proper mode of contesting the genuineness of an actionable document pursuant to Sections 7 and 8,
Rule 8 of the Revised Rules of Court. The trial court sustained the objection.

Petitioners, thereupon, filed a constancia with a motion for reconsideration stating that the
documents submitted by the respondents were merely evidentiary in nature, not a cause of action or
defense, the due execution and genuineness of which they had to prove. They alleged that the
subject of litigation was the hereditary shares of plaintiffs-petitioners, not any document. They stated
that the defense consisting mainly of transfer certificates of titles in the respondents' names
originating from the sale from petitioners to Dionisio and from the latter to the respondents were
merely evidentiary in nature. They argued that a simple specific denial without oath is sufficient. The
court denied the motion for reconsideration. The documents attached to the respondents' answer
and made an integral part thereof were declared to be the very foundation or basis of the
respondents' defense and not merely evidentiary in nature. Hence, this petition for review on
certiorari.

The initial issue brought before us is whether or not the deeds of sale allegedly executed by the
petitioners in favor of their brother Dionisio Toribio and appended to the respondents' answer are
merely evidentiary in nature or the very foundation of their defense which must be denied under oath
by the petitioner.

The records show that the deeds of sale are actionable documents.

Jurisprudence has centered mainly on a discussion of actionable documents as basis of a plaintiff's

cause of action. Little has been said of actionable documents being the foundation of a defense. The
Rule, however, covers both an action or a defense based on documents.

The situation obtaining in the case at bar is not a common one. The usual case is between plaintiff
and defendant where, the latter, as his defense, would present a document to which both parties are
parties and which states that the former relinquishes his rights to the defendant. In the case at bar,
we have a situation where the defendant presented a document in his defense, a document to which
the plaintiff is a party but to which defendant is not. Thus, the question arises as to whether or not
the document is included as a necessary part of the defense so as to make it actionable.

The petitioners alleged in their complaint that their shares in the inheritance left by their mother were
never sold nor in any wise transferred or disposed to others.

The defendants, in their answers, declare:

xxx xxx xxx

 ... that the hereditary shares of plaintiffs OLEGARIO TORIBIO, SEGUNDINO
TORIBIO and EUSEBIA TORIBIO were likewise sold, transferred and conveyed, first
in favor of DIONISIO TORIBIO by virtue of two (2) deeds of sale executed in due
form on October 24, 1964 and November 2, 1964, respectively, and thereafter, by
DIONISIO TORIBIO in favor of defendants JUANITO A. CAMACHO and DALMACIO
C. RAMOS, JR., on November 11, 1964 as adverted to in the preceding paragraph,
as will be discussed further in the specific and/or affirmative defenses hereunder; ...

As heretofore alleged, the hereditary shares of all the plaintiffs herein in and over Lot
1943-B were all sold, transferred and conveyed in favor of DIONISIO TORIBIO
plaintiffs OLEGARIO TORIBIO and SEGUNDINO TORIBIO on October 24, 1964 and
that of plaintiff EUSEBIA TORIBIO on November 2, 1964, by virtue of two (2) deeds
of sale all of which were acknowledged before Notary Public for and within the City of
Zamboanga, Atty. Armando B. Torralba and entered as Doc. No. 6, Page No. 3, Book
No. IX, Series of 1964, respectively, in his notarial register, xerox copies of which are
appended hereto to form integral part hereof as Annexes "1" & "2", respectively.

From the foregoing, it is clear that the respondents anchor their defense on the deeds of sale by
virtue of which the hereditary rights of all the petitioners over Lot 1943-B were sold, transferred, and
conveyed in favor of their brother, Dionisio Toribio, who in turn sold the same to herein respondents.
The deed of sale executed by the petitioners in favor of their brother Dionisio is an essential and
indispensable part of their defense to the allegation that the petitioners had never disposed of their
property.

The following question furnishes an absolute test as to the essentiality of any allegation: Can it be
made the subject of a material issue? In other words, if it be denied, win the failure to prove it decide
the case in whole or in part? If it will not, the fact is not essential. It is not one of those which
constitute the cause of action, defense, or reply (Sutherland's Code of Pleading, Practice and Forms,
p. 82). A fact is essential if it cannot be stricken out without leaving the statement of the cause of
action or defense insufficient.

Apart from alleging that the documents in this case are merely evidentiary, the petitioners also point
out that the deeds of sale purportedly executed by them were in favor of their brother, Dionisio, who
in turn executed deeds of sale in favor of the respondents. Under this circumstance, does the
genuineness and due execution of the deeds evidencing the two transactions have to be denied
under oath?

The deed of sale executed by Dionisio Toribio in favor of the respondents, by itself, would be
insufficient to establish a defense against the petitioners' claims. If the petitioners deny that they ever
sold their shares in the inherited lot to their brother Dionisio, a failure to prove the sale would be
decisive. For if it can be shown that no conveyance of the property was executed by the petitioners,
then Dionisio Toribio had no right to convey what did not belong to him. The respondents could
acquire only the rights that Dionisio had over the disputed property. The genuineness and due
execution of the deed between the co-heirs is also elemental to the defense of the respondents. The
first deeds of sale, to which the respondents were not parties but which they seek to enforce against
the parties are also actionable documents.
The petitioners further alleged that this case falls under the exception to Section 8, Rule 8 which
provides:

SECTION 8. ... but this provision does not apply when the adverse party does not
appear to be a party to the instrument.

As early as Lim-Chingco v. Terariray (5 Phil. 120), this Court gave the reason for the rule on
contesting actionable documents. The purpose is:

Reasonably construed, the purpose of the enactment (sec. 103) appears to have
been to relieve a party of the trouble and expense of proving in the first instance an
alleged fact, the existence or nonexistence of which is necessarily within the
knowledge of the adverse party, and of the necessity (to his opponent's case) of
establishing which such adverse party is notified by his opponent's pleading.

This being so, the documents have to be treated in like manner. The petitioners are themselves
parties to the deeds of sale which are sought to be enforced against them. The complaint was filed
by the petitioners. They filed suit to recover their hereditary properties. The new owners introduced
deeds of sale as their main defense. In other words, the petitioners brought the issue upon
themselves. They should meet it properly according to the Rules of Court.

Sections 7 and 8 of Rule 8, therefore, apply. The proper procedure was for the petitioners to
specifically deny under oath the genuineness and due execution of the questioned deeds of sale and
to set forth what they claim to be the facts. However, the oversight or negligence of petitioners'
counsel in not properly drafting a reply to the answer and an answer to the counter claim is not
necessarily fatal to their cause.

The facts of the case and equitable considerations constrain us to grant the petition and to set aside
the questioned order of the respondent court.

As stated earlier, the reason for the rule is to enable the adverse party to know beforehand whether
he will have to meet the issue of genuineness or due execution of the document during trial. (In re
Dick's Estate, 235 N.W. 401). While mandatory, the rule is a discovery procedure and must be
reasonably construed to attain its purpose, and in a way as not to effect a denial of substantial
justice. The interpretation should be one which assist the parties in obtaining a speedy, inexpensive,
and most important, a just determination of the disputed issues.

Paragraphs 11 and 13 of the petitioners' complaint reads:

xxx xxx xxx

11. That the share of herein Plaintiffs were never sold or in any wise transferred or
disposed to others;

xxx xxx xxx

 13. That just how and by what means Defendant, JUANITO CAMACHO was able to
acquire the total area of 931 square meters, is not known; however, the acquisition
might have been effected, the same was in fraud of herein plaintiffs; and so with the
share of Defendant, DALMACIO C. RAMOS, Jr., herein Plaintiffs, jointly and/or
severally, do not know the person; and, however he might have acquired the said
share of ONE FOURTH () of the property, was not from either, much less all of the
Plaintiffs;

xxx xxx xxx

The complaint was verified under oath by the petitioners.

The petitioners' counsel was obviously lulled into complacency by two factors. First, the plaintiffs,
now petitioners, had already stated under oath that they never sold, transferred, or disposed of their
shares in the inheritance to others. Second, the usual procedure is for a defendant to specifically
deny under oath the genuineness and due execution of documents set forth in and annexed to
the complaint. Somehow, it skipped counsel's attention that the rule refers to either an action or
a defense based upon a written instrument or document. It applies to both plaintiffs and defendants.

Under the facts of this case, the private respondents were placed on adequate notice by Paragraph
11 of the verified complaint that they would be caned upon during trial to prove the genuineness or
due execution of the disputed deeds of sale.

Moreover, the heirs of Olegario Toribio, his widow and minor children represented by their mother,
are among the plaintiffs-petitioners. They are not parties to the deeds of sale allegedly executed by
their father, aunt, and uncle. They are not required to deny the deeds of sale under oath. The private
respondents will still have to introduce evidence to establish that the deeds of sale are genuine and
that they were truly executed by the parties with authority to dispose of the disputed property.

It bears repeating that rules of procedure should be liberally construed to the end that substantial
justice may be served. As stated in Pongasi v. Court of Appeals (71 SCRA 614):

We repeat what We said in Obut v. Court of Appeals, et al., supra, that 'what should
guide judicial action is the principle that a party-litigant is to be given the fullest
opportunity to establish the merits of his complaint or defense rather than for him to
lose life, liberty, honor or property on technicalities.

In dispensing justice Our action must reflect a deep insight into the failings of human
nature, a capability for making allowances for human error and/or negligence, and
the ability to maintain the scales of justice happily well-balanced between these
virtues and the application of the law.

An interpretation of a rule of procedure which would not deny to the petitioners their rights to their
inheritance is warranted by the circumstances of this case.
WHEREFORE, the order of the respondent court dated July 20, 1981 is hereby REVERSED and
SET ASIDE. The Regional Trial Court which took over the cases of the respondent court is ordered
to receive the petitioners' evidence regarding the genuineness and due execution of the disputed
deeds of sale.

SO ORDERED.

Teehankee, Melencio-Herrera, Plana, Relova and De la Fuente, JJ., concur.

23. Meaning of genuineness and due execution

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-46892 September 30, 1981

HEIRS OF AMPARO DEL ROSARIO, plaintiffs-appellees,

vs.
AURORA O. SANTOS, JOVITA SANTOS GONZALES, ARNULFO O. SANTOS, ARCHIMEDES O.
SANTOS, ERMELINA SANTOS RAVIDA, and ANDRES O. SANTOS, JR., defendants-appellants.

GUERRERO, J.:

The Court of Appeals, 1 in accordance with Section 31 of the Judiciary Act of 1948, as amended, certified
to Us the appeal docketed as CA-G.R. No. 56674-R entitled "Amparo del Rosario, plaintiff-appellee, vs.
Spouses Andres Santos and Aurora Santos, defendants-appellants," as only questions of law are
involved.

On January 14, 1974, Amparo del Rosario filed a complaint against the spouses Andres F. Santos
and Aurora O. Santos, for specific performance and damages allegedly for failure of the latter to
execute the Deed of Confirmation of Sale of an undivided 20,000 square meters of land, part of Lot
1, Psu-206650, located at Barrio Sampaloc, Tanay, Rizal, in malicious breach of a Deed of Sale
(Exhibit A or 1) dated September 28, 1964.

Amparo del Rosario died on Sept. 21, 1980 so that she is now substituted by the heirs named in her
will still undergoing probate proceedings. Andres F. Santos also died, on Sept. 5, 1980, and he is
substituted by the following heirs: Jovita Santos Gonzales, Arnulfo O. Santos, Archimedes O.
Santos, Germelina Santos Ravida, and Andres O. Santos, Jr.

The Deed of Sale (Exh. A or 1) is herein reproduced below:

 DEED OF SALE

KNOW ALL MEN BY THESE PRESENTS:

I, ANDRES F. SANTOS, of legal age, married to Aurora 0. Santos, Filipino and

resident cf San Dionisio, Paranaque, Rizal, Philippines, for and in consideration of
the sum of TWO THOUSAND (P 2,000.00) PESOS, Philippine Currency, the receipt
whereof is hereby acknowledged, do hereby SELLS, CONVEYS, and TRANSFERS
(sic) unto Amparo del Rosario, of legal age, married to Fidel del Rosario but with
legal separation, Filipino and resident of San Dionisio, Paranaque, Rizal, Philippines
that certain 20,000 square meters to be segregated from Lot 1 of plan Psu-206650
along the southeastern portion of said lot, which property is more particularly
described as follows:

A parcel of land (Lot 1 as shown on plan Psu-206650, situated in the

Barrio of Sampaloc, Municipality of Tanay, Province of Rizal.
Bounded on the SW., along lines 1-2-3, by Lot 80 of Tanay Public
Land Subdivision, Pls-39; on the NW., along lines 3-4-5, by Lot 2; and
along lines 5-6-7-8-9-10-11, by Lot 6; on the NE., along lines 11-12-
13, by Lot 3: and along lines 13-1415, by Lot 4, all of plan Psu-
206650; and on the SE., along line 15-1, by Lot 5 of plan Psu-
206650 ... ; containing an area of ONE HUNDRED EIGHTY ONE
THOUSAND FOUR HUNDRED TWENTY (181,420) SQUARE
METERS. All points referred to are indicated on the plan and are
marked on the ground as follows: ...

of which above-described property, I own one-half (1/2) interest thereof being my

attorney's fee, and the said 20,000 square meters will be transferred unto the
VENDEE as soon as the title thereof has been released by the proper authority or
authorities concerned:

That the parties hereto hereby agree that the VENDOR shall execute a Deed of
Confirmation of Deed of Sale in favor of the herein VENDEE as soon as the title has
been released and the subdivision plan of said Lot 1 has been approved by the Land
Registration Commissioner.

IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of September,
1964, in the City of Manila, Philippines.

s/ ANDRES F. SANTOS t/ ANDRES F. SANTOS

With My Marital Consent:

s/ Aurora O. Santos (Wife) t/ Aurora O. Santos (Wife)

SIGNED IN THE PRESENCE OF: s/ Felicitas C. Moro s/ Corona C. Venal

REPUBLIC OF THE PHILIPPINES) ) SS.

BEFORE ME, a Notary Public for and in Rizal, Philippines, personally appeared
Andres F. Santos, with Res. Cert. No. 4500027 issued at Paranaque, Rizal, on Jan.
 9, 1964, B-0935184 issued at Paranaque, Rizal on April 15, 1964, and Aurora 0.
Santos, with Res. Cert. No. A-4500028 issued at Paranaque, Rizal, on Jan. 9, 1964,
giving her marital consent to this instrument, both of whom are known to me and to
me known to be the same persons who executed the foregoing instruments and they
acknowledged to me that the same is their free act and voluntary deed.

IN WITNESS WHEREOF, I have hereunto signed this instrument and affixed my

notarial seal this lst day of October, 1964, in Pasig, Rizal, Philippines.

Doc. No. 1792; Page No. 85; Book No. 19; Series of 1964.

s/ FLORENCIO LANDRITO t/ FLORENCIO LANDRITO

NOTARY PUBLIC Until December 31, 1965 2

Plaintiff claimed fulfillment of the conditions for the execution of the Deed of Confirmation of Sale,
namely: the release of the title of the lot and the approval of the subdivision plan of said lot by the
Land Registration Commission. She even enumerated the titles with their corresponding land areas
derived by defendants from the aforesaid lot, to wit:

(a) TCT 203580 30,205 sq. meters

(b) TCT 203581 19, 790 sq. meters

(c) TCT 167568 40,775 sq. meters

In a motion to dismiss, defendants pleaded, inter alia, the defenses of lack of jurisdiction of the court
a quo over the subject of the action and lack of cause of action allegedly because there was no
allegation as to the date of the approval of the subdivision plan, no specific statement that the titles
therein mentioned were curved out of Lot I and no clear showing when the demands were made on
the defendants. They likewise set up the defense of prescription allegedly because the deed of sale
was dated September 28, 1964 and supposedly ratified October 1, 1964 but the complaint was filed
only on January 14, 1974, a lapse of more than nine years when it should have been filed within five
years from 1964 in accordance with Article 1149, New Civil Code.

Defendant also claimed that the demand set forth in the complaint has been waived, abandoned or
otherwise extinguished. It is alleged that the deed of sale was "only an accommodation graciously
extended, out of close friendship between the defendants and the plaintiff and her casual business
partner in the buy and sell of real estate, one Erlinda Cortez;" 3 that in order to allay the fears of plaintiff
over the non-collection of the debt of Erlinda Cortez to plaintiff in various sums exceeding P 2,000.00,
defendants, who were in turn indebted to Erlinda Cortez in the amount of P 2,000.00, voluntarily offered to
transfer to plaintiff their inexistent but expectant right over the lot in question, the same to be considered
as part payment of Erlinda Cortez' indebtedness; that as Erlinda Cortez later on paid her creditor what
was then due, the deed of sale had in effect been extinguished. Defendants thereby characterized the
said deed of sale as a mere tentative agreement which was never intended nor meant to be ratified by
and acknowledged before a notary public. In fact, they claimed that they never appeared before Notary
Public Florencio Landrito.

Finally, defendants alleged that the claim on which the action or suit is founded is unenforceable
under the statute of frauds and that the cause or object of the contract did not exist at the time of the
transaction.
After an opposition and a reply were filed by the respective parties, the Court a quo resolved to deny
the motion to dismiss of defendants. Defendants filed their answer with counterclaim interposing
more or less the same defenses but expounding on them further. In addition, they claimed that the
titles allegedly derived by them from Lot 1 of Annex A or I were cancelled and/or different from said
Lot I and that the deed of sale was simulated and fictitious, plaintiff having paid no amount to
defendants; and that the deed was entrusted to plaintiff's care and custody on the condition that the
latter; (a) would secure the written consent of Erlinda Cortez to Annex A or I as part payment of what
she owed to plaintiff; (b) would render to defendants true accounting of collections made from
Erlinda showing in particular the consideration of 2,000.00 of Annex A or I duly credited to Erlinda's
account.4

Plaintiff filed a reply and answer to counterclaim and thereafter a motion for summary judgment
and/or judgment on the pleadings on the ground that the defenses of defendants fail to tender an
issue or the same do not present issues that are serious enough to deserve a trial on the
merits, 5 submitting on a later date the affidavit of merits. Defendants filed their corresponding opposition
to the motion for summary judgment and/or judgment on the pleadings. Not content with the pleadings
already submitted to the Court, plaintiff filed a reply while defendants filed a supplemental opposition.

With all these pleadings filed by the parties in support of their respective positions, the Court a
quo still held in abeyance plaintiff's motion for summary judgment or judgment on the pleadings
pending the pre-trial of the case. At the pre-trial, defendants offered by way of compromise to pay
plaintiff the sum of P2,000.00, the consideration stated in the deed of sale. But the latter rejected the
bid and insisted on the delivery of the land to her. Thus, the pre-trial proceeded with the presentation
by plaintiff of Exhibits A to Q which defendants practically admitted, adopted as their own and
marked as Exhibits 1 to 17. In addition, the latter offered Exhibit 18, which was their reply to plaintiff's
letter of demand dated December 21, 1973.

From the various pleadings filed in this case by plaintiff, together with the annexes and affidavits as
well as the exhibits offered in evidence at the pre-trial, the Court a quo found the following facts as
having been duly established since defendant failed to meet them with countervailing evidence:

In February, 1964, Teofilo Custodia owner of a parcel of unregistered land with an

area of approximately 220,000 square meters in Barrio Sampaloc, Tanay, Rizal, hired
Attorney Andres F. Santos "to cause the survey of the above-mentioned property, to
file registration proceedings in court, to appear and represent him in all government
office relative thereto, to advance all expenses for surveys, taxes to the government,
court fees, registration fees ... up to the issuance of title in the name" of Custodia.
They agreed that after the registration of the title in Custodio's name, and "after
deducting all expenses from the total area of the property," Custodio would assign
and deliver to Santos "one-half (1/2) share of the whole property as appearing in the
certificate of title so issued." Exh. B or 2).

On March 22, 1964, Custodio's land was surveyed under plan Psu-226650 (Exh. D
or 4). It was divided into six (6) lots, one of which was a road lot. The total area of the
property as surveyed was 211,083 square meters. The respective areas of the lots
were as follows:

Lot 1 181,420
square
 meters

Lot 2 7,238
square
meters

Lot 3 7,305
square
meters

Lot 4 5,655
square
meters

Lot 5 5,235
square
meters

Road Lot 6 4,230

square
meters

TOTAL 211,083
square
meters

xxx xxx xxx

On December 27, 1965, a decree of registration No. N-108022 was issued in Land
Registration Case No. N-5023, of the Court of First Instance of Rizal, LRC Record
No. N-27513, in favor of Teofilo Custodia married to Miguela Perrando resident of
Tanay, Rizal. On March 23, 1966, Original Certificate of Title No. 5134 (Exh. Q or 17)
was issued to Custodio for Lots 1, 2, 3, 4 and 5, Psu- 206650, with a total area of
206,853 square meters. The areas of the five (5) lots were as follows:
 Lot 1 181,420
square
meters

Lot 2 7,238
square
meters

Lot 3 7,305
square
meters

Lot 4 5,655
square
meters

Lot 5 5,235
square
meters

In April to May, 1966, a consolidation-subdivision survey (LRC) Pcs-5273 (Exh. E or

5) was made on the above lots converting them into six (6) new lots as follows:

xxx xxx xxx

Lot 1 20,000
square
meters

Lot 2 40,775
square
meters

Lot 3 50,000
 square
meters

Lot 4 40,775
square
meters

Lot 5 50,000
square
meters

Road Lot 6 5,303

square
meters

TOTAL 206,853
square
meters

On June 22, 1966, the consolidation-subdivision plan (LRC) Pcs-5273 (Exh. E or 5)

was approved by the Land Registration Commission and by the Court of First
Instance of Rizal in an order dated July 2, 1966 (Entry No. 61037 T-167561, Exh. Q).
Upon its registration, Custodio's O.C.T. No. 5134 (Exh. Q) was cancelled and TCT
Nos. 167561, 167562, 167563, 167564 (Exh. G), 167565 (Exh. H and 167566 were
issued for the six lots in the name of Custodio (Entry No. 61035, Exh. Q).

On June 23, 1966, Custodio conveyed to Santos Lots 4 and 5, Pcs-5273 with a total
area of 90,775 square meters (Exh. B or 2) described in Custodio's TCT No. 167564
(Exh. G or 7) and TCT No. 167565 (Exh. H or 8), plus a one-half interest in the Road
Lot No. 6, as payment of Santos' attorney's fees and advances for the registration of
Custodio's land.

Upon registration of the deed of conveyance on July 5, 1966, Custodio's TCT Nos.
167564 and 167565 (Exhs. G and H) were cancelled. TCT No. 167568 (Exh. I or 9)
for Lot 4 and TCT No. 167585 (Exh. J or 10) for Lot 5 were issued to Santos.

On September 2, 1967, Santos' Lot 5, with an area of 50,000 square meters was
subdivided into two (2) lots, designated as Lots 5-A and 5-B in the plan Psd-78008
(Exh. F or 6), with the following areas:
 Lot 30,205
5-A
square
meters

Lot 19,795s
5- quare
B meters

TO 50,000
TA square
L meters

Upon registration of Psd-78008 on October 3, 1967, Santos' TCT No. 167585 (Exh.
J) was cancelled and TCT No. 203578 for Lot 5- A and TCT No. 203579 for Lot 5-B
were supposed to have been issued to Santos (See Entry 6311 in Exh. J or 10).
Actually, TCT No. 203580 was issued for Lot 5-A (Exh. K or 1 1), and TCT No.
203581 for Lot 5-B (Exh. L or 12), both in the name of Andres F. Santos.

Out of Custodio's original Lot 1, Psu-206650, with an area of 181,420 square meters,
Santos was given a total of 90,775 square meters, registered in his name as of
October 3, 1967 under three (3) titles, namely:

TCT No.
167585 for

Lot 4 Pcs- 40,775 sq.

5273 m.

(Exh. J or 10)

TCT No.
203580 for
 Lot 5-A Psd- 30,205 sq.
78008 m.

(Exh. K or 11)

TCT No.
203581 for

Lot 5-B Psd- 19,795 sq.

78008 m.

(Exh. L or 12)

90,775 sq.m.

plus one-half of the road lot, Lot 6, PCS-5273, with an area of 5,303 square meters,
which is registered jointly in the name of Santos and Custodio (Exh. B & E) 6

The court a quo thereupon concluded that there are no serious factual issues involved so the motion
for summary judgment may be properly granted. Thereafter, it proceeded to dispose of the legal
issues raised by defendants and rendered judgment in favor of plaintiff. The dispositive portion of the
decision states as follows:

WHEREFORE, defendants Andres F. Santos and Aurora Santos are ordered to

execute and convey to plaintiff Amparo del Rosario, within ten (10) days from the
finality of this decision, 20,000 square meters of land to be taken from the
southeastern portion of either Lot 4, Pcs-5273, which has an area of 40,775 square
meters, described in TCT No. 167568 (Exh. I or 9) of from their LOL 5-A. with an
area of 30,205 square meters, described in TCI No. 203; O (Exh. K or 11). The
expenses of segregating the 20,000 square meters portion shall be borne fqually by
the parties. rhe expenses for the execution and registration of the sale shall be borne
by the defendants (Art. 1487, Civil Code). Since the defendants compelled the
plaintiff to litigate and they failed to heed plainliff's just demand, they are further
ordered to pay the plaintiff the sum of P2,000.00 as attorney's fees and the costs of
this action.

SO ORDERED. 7
Aggrieved by the aforesaid decision, the defendant's filed all appeal to the Court of Appeals
submitting for resolution seven assignments of errors, to wit:

I. The lower court erred in depriving the appellants of their right to the procedural due
process.

II. The lower court erred in holding that the appellee's claim has not been
extinguished.

III. The lower court erred in sustaining appellee's contention that there are no other
unwritten conditions between the appellants and the appellee except those express
in Exh. "1" or "A", and that Erlinda Cortez' conformity is not required to validate the
appellants' obligation.

IV. The lower court erred in holding that Exh. "l" or "A" is not infirmed and expressed
the true intent of the parties.

V. The lower court erred in declaring that the appellants are co-owners of the lone
registered owner Teofilo Custodia.

VI. The lower court erred in ordering the appellants to execute and convey to the
appellee 20,000 sq. m. of land to be taken from the southeastern portion of either
their lot 4, Pcs-5273, which has an area of 40,775 sq.m., described in T.C.T. No.
167568 (Exh. 9 or 1), or from their lot No. 5-A, with an area of 30,205 sq.m.
described in T.C.T. No. 203580 (Exh. 11 or K), the expenses of segregation to be
borne equally by the appellants and the appellee and the expenses of execution and
registration to be borne by the appellants.

VII. Thelowercourterredinorderingtheappellantstopayto the appellee the sum of

P2,000. 00 as attorney's fee and costs. 8

The first four revolve on the issue of the propriety of the rendition of summary judgment by the
court a quo, which concededly is a question of law. The last three assail the summary judgment
itself. Accordingly, the Court of Appeals, with whom the appeal was filed, certified the records of the
case to this Court for final determination.

For appellants herein, the rendition of summary judgment has deprived them of their right to
procedural due process. They claim that a trial on the merits is indispensable in this case inasmuch
as they have denied under oath all the material allegations in appellee's complaint which is based on
a written instrument entitled "Deed of Sale", thereby putting in issue the due execution of said deed.

Appellants in their opposition to the motion for summary judgment and/or judgment on the pleadings,
however, do not deny the genuineness of their signatures on the deed of sale.

(Par. 3 of said Motion, p. 101, Record on Appeal). They do not contest the words and figures in said
deed except in the acknowledgment portion thereof where certain words were allegedly cancelled
and changed without their knowledge and consent and where, apparently, they appeared before
Notary Public Florencio Landrito when, in fact, they claimed that they did not. In effect, there is an
admission of the due execution and genuineness of the document because by the admission of the
due execution of a document is meant that the party whose signature it bears admits that voluntarily
he signed it or that it was signed by another for him and with his authority; and the admission of the
genuineness of the document is meant that the party whose signature it bears admits that at the time
it was signed it was in the words and figures exactly as set out in the pleading of the party relying
upon it; and that any formal requisites required by law, such as swearing and acknowledgment or
revenue stamps which it requires, are waived by him. 9

As correctly pointed out by the court a quo, the alleged false notarization of the deed of sale is of no
consequence. For a sale of real property or of an interest therein to be enforceable under the Statute
of Frauds, it is enough that it be in writing. 10 It need not be notarized. But the vendee may avail of the
right under Article 1357 of the New Civil Code to compel the vendor to observe the form required by law in
order that the instrument may be registered in the Registry of Deeds. 11 Hence, the due execution and
genuineness of the deed of sale are not really in issue in this case. Accordingly, assigned error I is without
merit.

What appellants really intended to prove through the alleged false notarization of the deed of sale is
the true import of the matter, which according to them, is a mere tentative agreement with appellee.
As such, it was not intended to be notarized and was merely entrusted to appellee's care and
custody in order that: first, the latter may secure the approval of one Erlinda Cortez to their
(appellants') offer to pay a debt owing to her in the amount of P2,000.00 to appellee instead of
paying directly to her as she was indebted to appellee in various amounts exceeding P2,000.00; and
second once the approval is secured, appellee would render an accounting of collections made from
Erlinda showing in particular the consideration of P2,000.00 of the deed of sale duly credited to
Erlinda's account.

According to appellants, they intended to prove at a full dress trial the material facts: (1) that the
aforesaid conditions were not fulfilled; (2) that Erlinda Cortez paid her total indebtedness to appellee
in the amount of P14,160.00, the P2,000.00 intended to be paid by appellant included; and (3) that
said Erlinda decided to forego, renounce and refrain from collecting the P2,000.00 the appellants
owed her as a countervance reciprocity of the countless favors she also owes them.

Being conditions which alter and vary the terms of the deed of sale, such conditions cannot,
however, be proved by parol evidence in view of the provision of Section 7, Rule 130 of the Rules of
Court which states as follows:

Sec. 7. Evidence of written agreements when the terms of an agreement have been
reduced to writing, it is to be considered as containing all such terms, and, therefore,
there can be, between the parties and their successors in interest, no evidence of the
terms of the agreement other than the contents of the writing, except in the following
cases:

(a) Where a mistake or imperfection of the writing, or its failure to express the true
intent and agreement of the parties, or the validity of the agreement is put in issue by
the pleadings;

(b) When there is an intrinsic ambiguity in the writing. The term "agreement" includes
wills."

The parol evidence rule forbids any addition to or contradiction of the terms of a written instrument
by testimony purporting to show that, at or before the signing of the document, other or different
terms were orally agreed upon by the parties. 12

While it is true, as appellants argue, that Article 1306 of the New Civil Code provides that "the
contracting parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided that they are not contrary to law, morals, good customs, public order, or public
policy" and that consequently, appellants and appellee could freely enter into an agreement
imposing as conditions thereof the following: that appellee secure the written conformity of Erlinda
Cortez and that she render an accounting of all collections from her, said conditions may not be
proved as they are not embodied in the deed of sale.

The only conditions imposed for the execution of the Deed of Confirmation of Sale by appellants in
favor of appellee are the release of the title and the approval of the subdivision plan. Thus,
appellants may not now introduce other conditions allegedly agreed upon by them because when
they reduced their agreement to writing, it is presumed that "they have made the writing the only
repository and memorial of truth, and whatever is not found in the writing must be understood to
have been waived and abandoned." 13

Neither can appellants invoke any of the exceptions to the parol evidence rule, more particularly, the
alleged failure of the writing to express the true intent and agreement of the parties. Such an
exception obtains where the written contract is so ambiguous or obscure in terms that the
contractual intention of the parties cannot be understood from a mere reading of the instrument. In
such a case, extrinsic evidence of the subject matter of the contract, of the relations of the parties to
each other, and of the facts and circumstances surrounding them when they entered into the.
contract may be received to enable the court to make a proper interpretation of the instrumental. 14 In
the case at bar, the Deed of Sale (Exh. A or 1) is clear, without any ambiguity, mistake or imperfection,
much less obscurity or doubt in the terms thereof. We, therefore, hold and rule that assigned errors III and
IV are untenable.

According to the court a quo, "(s)ince Santos, in his Opposition to the Motion for Summary Judgment
failed to meet the plaintiff's evidence with countervailing evidence, a circumstance indicating that
there are no serious factual issues involved, the motion for summary judgment may properly be
granted." We affirm and sustain the action of the trial court.

Indeed, where a motion for summary judgment and/or judgment on the pleadings has been filed, as
in this case, supporting and opposing affidavits shall be made on personal knowledge, shall set forth
such facts as may be admissible in evidence, and shall show affirmatively that the affiant is
competent to testify as to the matters stated therein. Sworn or certified copies of all papers or parts
thereof referred to in the affidavitshalibeattachedtheretoorservedtherewith. 15

Examining the pleadings, affidavits and exhibits in the records, We find that appellants have not
submitted any categorical proof that Erlinda Cortez had paid the P2,000.00 to appellee, hence,
appellants failed to substantiate the claim that the cause of action of appellee has been
extinguished. And while it is true that appellants submitted a receipt for P14,160.00 signed by
appellee, appellants, however, have stated in their answer with counterclaim that the P2,000.00
value of the property covered by the Deed of Sale, instead of being credited to Erlinda Cortez, was
conspicuously excluded from the accounting or receipt signed by appellee totalling P14,160.00. The
aforesaid receipt is no proof that Erlinda Cortez subsequently paid her P2,000.00 debt to appellee.
As correctly observed by the court a quo, it is improbable that Cortez would still pay her debt to
appellee since Santos had already paid it.

Appellants' claim that their P2,000.00 debt to Erlinda Cortez had been waived or abandoned is not
also supported by any affidavit, document or writing submitted to the court. As to their allegation that
the appellee's claim is barred by prescription, the ruling of the trial court that only seven years and
six months of the ten-year prescription period provided under Arts. 1144 and 155 in cases of actions
for specific performance of the written contract of sale had elapsed and that the action had not yet
prescribed, is in accordance with law and, therefore, We affirm the same.
The action of the court a quo in rendering a summary judgment has been taken in faithful
compliance and conformity with Rule 34, Section 3, Rules of Court, which provides that "the
judgment sought shall be rendered forthwith if the pleadings, depositions, and admissions on file
together with the affidavits, show that, except as to the amount of damages, there is no genuine
issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. "

Resolving assignments of errors, V, VI, and VII which directly assail the summary judgment, not the
propriety of the rendition thereof which We have already resolved to be proper and correct, it is Our
considered opinion that the judgment of the court a quo is but a logical consequence of the failure of
appellants to present any bona fidedefense to appellee's claim. Said judgment is simply the
application of the law to the undisputed facts of the case, one of which is the finding of the court a
quo, to which We agree, that appellants are owners of one-half (1/2) interest of Lot I and, therefore,
the fifth assignment of error of appellants is without merit.

By the terms of the Deed of Sale itself, which We find genuine and not infirmed, appellants declared
themselves to be owners of one-half (1/2) interest thereof. But in order to avoid appellee's claim,
they now contend that Plan Psu-206650 where said Lot I appears is in the exclusive name of Teofilo
Custodio as the sole and exclusive owner thereof and that the deed of assignment of one-half (1/2)
interest thereof executed by said Teofilo Custodio in their favor is strictly personal between them.
Notwithstanding the lack of any title to the said lot by appellants at the time of the execution of the
deed of sale in favor of appellee, the said sale may be valid as there can be a sale of an expected
thing, in accordance with Art. 1461, New Civil Code, which states:

Art. 1461. Things having a potential existence may be the object of the contract of
sale.

The efficacy of the sale of a mere hope or expectancy is deemed subject to the
condition that the thing will come into existence.

The sale of a vain hope or expectancy is void.

In the case at bar, the expectant right came into existence or materialized for the appellants actually
derived titles from Lot I .

We further reject the contention of the appellants that the lower court erred in ordering the appellants
to execute and convey to the appellee 20,000 sq.m. of land to be taken from the southeastern
portion of either their Lot 4, Pcs-5273, which has an area of 40,775 sq.m., described in T.C.T. No.
167568 (Exh. 9 or 1), or from their Lot No. 5-A, with an area of 30,205 sq.m. described in T.C.T. No.
203580 (Exh. 11 or K), the expenses of segregation to be borne equally by the appellants and the
appellee and the expenses of execution and registration to be borne by the appellants. Their
argument that the southeastern portion of Lot 4 or Lot 5-A is no longer the southeastern portion of
the bigger Lot 1, the latter portion belonging to the lone registered owner, Teofilo Custodia is not
impressed with merit. The subdivision of Lot I between the appellants and Teofilo Custodio was
made between themselves alone, without the intervention, knowledge and consent of the appellee,
and therefore, not binding upon the latter. Appellants may not violate nor escape their obligation
under the Deed of Sale they have agreed and signed with the appellee b3 simply subdividing Lot 1,
bisecting the same and segregating portions to change their sides in relation to the original Lot 1.
Finally, considering the trial court's finding that the appellants compelled the appellee to litigate and
they failed to heed appellee's just demand, the order of the court awarding the sum of P2,000.00 as
attorney's fees is just and lawful, and We affirm the same.

WHEREFORE, IN VIEW OF THE FOREGOING, the judgment appealed from is hereby AFFIRMED
in toto, with costs against the appellants.

SO ORDERED.

Makasiar, (Actg. Chairman), Fernandez, De Castro and Melencio-Herrera, JJ., concur.

24A. Trial Court cannot motu propio dismiss the case on improper venue.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 74854 April 2, 1991

JESUS DACOYCOY, petitioner,

vs.
HON. INTERMEDIATE APPELLATE COURT, HON. ANTONIO V. BENEDICTO, Executive Judge,
Regional Trial Court, Branch LXXI, Antipolo, Rizal, and RUFINO DE GUZMAN, respondents.

Ramon V. Sison for petitioner.

Public Attorney's Office for private respondent.

FERNAN, C.J.:

May the trial court motu proprio dismiss a complaint on the ground of improper venue? This is the
issue confronting the Court in the case at bar.

On March 22, 1983, petitioner Jesus Dacoycoy, a resident of Balanti, Cainta, Rizal, filed before the
Regional Trial Court, Branch LXXI, Antipolo, Rizal, a complaint against private respondent Rufino de
Guzman praying for the annulment of two (2) deeds of sale involving a parcel of riceland situated in
Barrio Estanza, Lingayen, Pangasinan, the surrender of the produce thereof and damages for
private respondent's refusal to have said deeds of sale set aside upon petitioner's demand.

On May 25, 1983, before summons could be served on private respondent as defendant therein, the
RTC Executive Judge issued an order requiring counsel for petitioner to confer with respondent trial
judge on the matter of venue. After said conference, the trial court dismissed the complaint on the
ground of improper venue. It found, based on the allegations of the complaint, that petitioner's action
is a real action as it sought not only the annulment of the aforestated deeds of sale but also the
recovery of ownership of the subject parcel of riceland located in Estanza, Lingayen, Pangasinan,
which is outside the territorial jurisdiction of the trial court.

Petitioner appealed to the Intermediate Appellate Court, now Court of Appeals, which in its decision
of April 11, 1986, affirmed the order of dismissal of his complaint.
1

In this petition for review, petitioner faults the appellate court in affirming what he calls an equally
erroneous finding of the trial court that the venue was improperly laid when the defendant, now
private respondent, has not even answered the complaint nor waived the venue. 2

Petitioner claims that the right to question the venue of an action belongs solely to the defendant and
that the court or its magistrate does not possess the authority to confront the plaintiff and tell him that
the venue was improperly laid, as venue is waivable. In other words, petitioner asserts, without the
defendant objecting that the venue was improperly laid, the trial court is powerless to dismiss the
case motu proprio.

Private respondent, on the other hand, maintains that the dismissal of petitioner's complaint is proper
because the same can "readily be assessed as (a) real action." He asserts that "every court of
justice before whom a civil case is lodged is not even obliged to wait for the defendant to raise that
venue was improperly laid. The court can take judicial notice and motu proprio dismiss a suit clearly
denominated as real action and improperly filed before it. . . . the location of the subject parcel of
land is controlling pursuant to Sec. 2, par. (a), Rule 4 of the New Rules of Court . . . 3

We grant the petition.

The motu proprio dismissal of petitioner's complaint by respondent trial court on the ground of
improper venue is plain error, obviously attributable to its inability to distinguish between jurisdiction
and venue.

Questions or issues relating to venue of actions are basically governed by Rule 4 of the Revised
Rules of Court. It is said that the laying of venue is procedural rather than substantive. It relates to
the jurisdiction of the court over the person rather than the subject matter. Provisions relating to
venue establish a relation between the plaintiff and the defendant and not between the court and the
subject matter. Venue relates to trial not to jurisdiction, touches more of the convenience of the
parties rather than the substance of the case. 4

Jurisdiction treats of the power of the court to decide a case on the merits; while venue deals on the
locality, the place where the suit may be had. 5

In Luna vs. Carandang, involving an action instituted before the then Court of First Instance of
6

Batangas for rescission of a lease contract over a parcel of agricultural land located in Calapan,
Oriental Mindoro, which complaint said trial court dismissed for lack of jurisdiction over the leased
land, we emphasized:

(1) A Court of First Instance has jurisdiction over suits involving title to, or possession of, real
estate wherever situated in the Philippines, subject to the rules on venue of actions (Manila
Railroad Company vs. Attorney General, etc., et al., 20 Phil. 523; Central Azucarera de
Tarlac vs. De Leon, et al., 56 Phil. 169; Navarro vs. Aguila, et al., 66 Phil. 604; Lim Cay, et al.
vs. Del Rosario, etc., et al., 55 Phil. 692);
 (2) Rule 4, Section 2, of the Rules of Court requiring that an action involving real property
shall be brought in the Court of First Instance of the province where the land lies is a rule on
venue of actions, which may be waived expressly or by implication.

In the instant case, even granting for a moment that the action of petitioner is a real action,
respondent trial court would still have jurisdiction over the case, it being a regional trial court vested
with the exclusive original jurisdiction over "all civil actions which involve the title to, or possession of,
real property, or any interest therein . . ." in accordance with Section 19 (2) of Batas Pambansa Blg.
129. With respect to the parties, there is no dispute that it acquired jurisdiction over the plaintiff
Jesus Dacoycoy, now petitioner, the moment he filed his complaint for annulment and damages.
Respondent trial court could have acquired jurisdiction over the defendant, now private respondent,
either by his voluntary appearance in court and his submission to its authority, or by the coercive
power of legal process exercised over his person. 7

Although petitioner contends that on April 28, 1963, he requested the City Sheriff of Olongapo City or
his deputy to serve the summons on defendant Rufino de Guzman at his residence at 117 Irving St.,
Tapinac, Olongapo City, it does not appear that said service had been properly effected or that
8

private respondent had appeared voluntarily in court or filed his answer to the complaint. At this
9 10

stage, respondent trial court should have required petitioner to exhaust the various alternative
modes of service of summons under Rule 14 of the Rules of Court,i.e., personal service under
Section 7, substituted service under Section 8, or service by publication under Section 16 when the
address of the defendant is unknown and cannot be ascertained by diligent inquiry.

Dismissing the complaint on the ground of improper venue is certainly not the appropriate course of
action at this stage of the proceeding, particularly as venue, in inferior courts as well as in the courts
of first instance (now RTC), may be waived expressly or impliedly. Where defendant fails to
challenge timely the venue in a motion to dismiss as provided by Section 4 of Rule 4 of the Rules of
Court, and allows the trial to be held and a decision to be rendered, he cannot on appeal or in a
special action be permitted to challenge belatedly the wrong venue, which is deemed waived. 11

Thus, unless and until the defendant objects to the venue in a motion to dismiss, the venue cannot
be truly said to have been improperly laid, as for all practical intents and purposes, the venue,
though technically wrong, may be acceptable to the parties for whose convenience the rules on
venue had been devised. The trial court cannot pre-empt the defendant's prerogative to object to the
improper laying of the venue by motu proprio dismissing the case.

Indeed, it was grossly erroneous for the trial court to have taken a procedural short-cut by
dismissing motu propriothe complaint on the ground of improper venue without first allowing the
procedure outlined in the Rules of Court to take its proper course. Although we are for the speedy
and expeditious resolution of cases, justice and fairness take primary importance. The ends of
justice require that respondent trial court faithfully adhere to the rules of procedure to afford not only
the defendant, but the plaintiff as well, the right to be heard on his cause.

WHEREFORE, in view of the foregoing, the decision of the Intermediate Appellate Court, now Court
of Appeals, dated April 11, 1986, is hereby nullified and set aside. The complaint filed by petitioner
before the Regional Trial Court of Antipolo, Branch LXXI is revived and reinstated. Respondent court
is enjoined to proceed therein in accordance with law.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ., concur.

25A. Lis Pendens

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-50471 June 29, 1979

JULIO SALACUP, petitioner,

vs.
HON. TOMAS P. MADDELA, JR., and FILIPINAS MILLS, INC., respondents.

DE CASTRO, J.:

A special civil action of certiorari with preliminary injunction wherein the petitioner prays that this
Court:

1. Issues an Order requiring the respondents to answer this petition;

2. After hearing, nullifies the Orders of the respondent Judge denying petitioner's
Motion to Dismiss and denying the Motion for Reconsideration;

3. Allows the petitioner his cost;

4. Issues, before this petition can be heard, a Writ of Preliminary Injunction forthwith
restraining the respondent Judge from proceeding or trying the case; and,

5. Grants to the petitioner such other reliefs and remedies which are just and
equitable in the premises. 1

On December 12, 1973, a contract was executed between respondent Filipinas Mills Inc. and
petitioner Julio Salacup whereby the former agreed to sell one rice thresher with complete
accessories to petitioner in exchange of the quantity of palay. As to the consideration, respondent
claims that the purchase price is to be paid in the form of 111,500 cavans of palay at 50 kilos per
sack at the rate of P1.10 a kilo or as computed, P82,500. On the other hand, petitioner asserts that
the prestation as to the price is P45,000 payable in palay.

The terms of payment as agreed upon by both parties are as follows:

 a. 200 cavans of palay, upon delivery of the thresher but not later than January
15,1974;

b. 500 cavans of palay on February 15, 1974; and

c. 800 cavans of palay on or before March 15, 1974.

On April 5, 1976, petitioner filed a complaint against respondent for the recovery of the overpayment
paid by the petitioner for the rice thresher with the Court of First Instance of Isabela, Branch III,
docketed as Civil Case No. III-194, entitled "Julio Salacup, plaintiff, versus Ben Tan representing
Filipinos Mills Incorporated, defendants." In the complaint, petitioner avers that he delivered 1,058
cavans valued at P51,557. The price of the rice thresher is only P45,000 and therefore, there is an
overpayment in the amount of P6,557.

On June 7, 1978, respondent also filed a complaint for breach of contract and/or collection of the
undelivered 442 cavans of palay or its value, P24,310 with the Court of First Instance of Manila,
Branch XXXIV docketed as Civil Case No. 115997, entitled "Filipinas Mills, Inc. plaintiff, versus Julio
Salacup, defendant." In that complaint, respondent asserts that petitioner delivered only 1,058
cavans out of 1,500 cavans of palay thereby, leaving a balance of 442 cavans, under the same
contract previously adverted to.

A motion to dismiss Civil Case No. 115997 was filed by petitioner on the ground that there is another
action pending between the same parties for the same cause of action before the Court of First
Instance of Isabela, Branch III. An opposition to the motion was filed by respondent on July 28, 1978
alleging that the pendency of a case presupposes a valid sion, of summons and copy of the
complaint upon the defendant, and that no valid sion, of summons and copy of the complaint have
been served upon it.

On October 3, 1978, respondent Judge issued an order which reads:

This is a Motion to Dismiss filed by the defendant thru counsel, on the ground
of lis pendens. Plaintiff filed its opposition to said Motion.

After a careful consideration of the foregoing, the Court finds the opposition well
taken, and on the grounds stated therein, the Court hereby denies the Motion to
Dismiss filed by the defendant.

The defendant is hereby required to file his Answer to the Complaint within fifteen
(15) days from receipt hereof. 2

A motion for reconsideration was filed by petitioner on January 4, 1979 followed by an opposition to
motion for reconsideration filed by respondent on February 13, 1979. Respondent Judge denied the
motion for reconsideration on March 9, 1979.

Unable to obtain a reconsideration, the petitioner filed this instant petition with this Court.
On May 16, 1979, this Court issued a temporary restraining order enjoining respondent Judge from
proceeding with or trying Civil Case No. 115997. 3

The only issue raised before Us is whether or not there is another action pending between the same
parties for the same cause in the Court of First Instance of Isabela, Branch III, within the meaning of
Section 1, paragraph (e) of Rule 16 of the Rules of Court enumerating grounds for a motion to
dismiss.

The requisites for lis pendens as a ground for dismissal, of a complaint are: 1) Identity of parties or
at least such as representing the same interests in both actions; 2) Identity of rights asserted and
prayed for, the relief being founded on the same facts; and 3) The Identity in both cases is such that
the judgment that may be rendered in the pending case, regardless of which party is successful
would amount to res judicata in the other case. 4 Clearly, all these requisites are present in the two
cases involved herein.

Firstly, in Civil Case No. III-194 and Civil Case No. 115997, the parties are the same for they are
merely suing each other. Although in the latter case, Ben Tan is not a party therein, he was made a
party in the first case as a representative of respondent.

Secondly, in the first case, petitioner prays for the collection of the overpayment paid for the rice
thresher to the respondent, while in the second case, respondent asks for the undelivered cavans of
palay as part of the purchase price of the rice thresher. The Identity of rights asserted and prayed
for, is thus established, which shows that the relief is founded on the same facts.

And thirdly, with the Identity of the cases as shown above, a judgment that may be rendered in the
first case would be determinative of the rights of the parties concerned and thus, it would be res
judicata to the second case.

Respondent contends that lis pendens does not obtain here because pendency of a case
presupposes a valid sion, of summons and a copy of the complaint upon the defendant. In the case
at bar, respondent alleges that no valid service of summons and copy of the complaint have been
served upon it.

We find no merit in this contention. Under Section 6, Rule 2 of the Rules of Court "a civil action is
commenced by filing a complaint with the court." And as held by this Court in the case of Pampanga
Bus Company, Inc. vs. Ocfemia: 5

The rule of lis pendens refers to another pending "action." An action starts only upon
the filing of a complaint in Court.

The fact that when appellant brought the present case it did not know of the firing of
a previous case against it by appellees, as it received the summons and a copy of
the complaint only after it had filed its own action against them, is immaterial. Suffice
it to state that the fact is, at the time it brought the present case, there was already
another pending action between the same parties, seeking to assert Identical rights
 with Identical prayers for relief based on the same facts, the decision in which would
beres judicata herein.

It was also held in the case of Sotelo vs. Dizon, et. al.: 6

Under Section 389 of the Code of Civil Procedure, a civil action is deemed legally
commenced from the date of the filing and docketing of the complaint with the clerk
of Court of First Instance, without taking into account the issuance and sion, of the
summons. Section 389 of the Code of Civil Procedure is taken from section 405 of
the California Code of Civil Procedure, and the Supreme Court of said State has so
interpreted it in Tinn vs. United States District Attorney (148 Cal., 773);Dowling vs.
Comerford (99 Cal., 204); Ex parte Fil Ki (79 Cal., 584); and Nash vs. El Dorado
County(24 Fed. 252; 1 C.J., Sec. 403, pp. 1155, 1156).

Patently, Civil Case No. III-194 was filed on April 5, 1976, very much ahead of the filing of Civil Case
No. 115997 on June 7, 1978. When the latter case was filed with the Court of First Instance of
Manila, the former filed with the Court of First Instance of Isabela was already pending. It was an
action between the same parties for the same cause which should bar the later case. The lower
court, therefore, erred in not granting the motion to dismiss.

WHEREFORE, the appealed orders of October 3, 1978 and March 9, 1979 are set aside, and it is
ordered that Civil Case No. 115997 be as it is hereby dismissed, without prejudice to such
counterclaim as private respondent may wish to interpose in Civil Case No. III-194 of the Court of
First Instance of Isabela, Branch III.

SO ORDERED.

Teehankee (Chairman), Makasiar, Fernandez, Guerrero and Melencio-Herrera, JJ., concur.

26A. Res Judicata

G.R. No. L-22996 May 31, 1972

DR. MELCHOR SANTOS, plaintiff-appellant,

vs.
EMILIANO GABRIEL and BENITO FRANCISCO, JR., defendants-appellees.

Norberto J. Quisumbing for plaintiff-appellant.

Neptali A. Gonzales for defendant-appellee Benito Francisco, Jr.

ZALDIVAR, J.:p

Certified by the Court of Appeals that the issues raise purely questions of law, this case is now
before this Court on appeal from the order of the Court of First Instance of Rizal, in its Civil Case No.
7121, dated October 20, 1962, dismissing the case upon the ground of res judicata, and from the
order of January 9, 1963 denying the motion for reconsideration of the order of October 20, 1962.

The antecedent facts before the filing of the complaint in the present case in the court below are, as
follows:

On May 19, 1958, Rodolfo Santos, the son of plaintiff appellant Dr. Melchor Santos, was hit and run
over by a passenger truck (bearing plate No. TPU-24605) owned and operated by defendant-
appellee Benito Francisco, Jr., and driven by defendant-appellee Emiliano Gabriel, resulting in the
instantaneous death of Rodolfo. Consequently, a criminal complaint, docketed as Criminal Case No.
7864, was filed in the Court of First Instance of Rizal charging Emiliano Gabriel with homicide
through reckless imprudence.

The right to institute a separate civil action having been expressly reserved by the private
prosecution in the above mentioned Criminal Case No. 7864, on June 4, 1958, during the pendency
of the criminal case, Melchor Santos filed before the same Court of First Instance of Rizal a
combined complaint, docketed as Civil Case No. 5031, against Benito Francisco, Jr. alone, to
recover from him, as owner and operator of the passenger truck and the employer of Emiliano
Gabriel, damages for the death of his son.

In Criminal Case No. 7864 Emiliano Gabriel pleaded guilty to the charge against him, and on
December 10, 1958, the Court of First Instance of Rizal sentenced him to suffer imprisonment for
one year, as the minimum, to three years, as the maximum, and to pay the costs. On February 19,
1959, Melchor Santos, as plaintiff in Civil Case No. 5031, filed his second amended complaint,
alleging therein the fact of Emiliano Gabriel's having been convicted in the criminal case, but without
joining said Emiliano Gabriel as party defendant.

Defendant Benito Francisco, Jr., in Civil Case No. 5031, filed his answer to the amended complaint,
setting up affirmative and special defenses, among which are: (1) that the complaint, as amended,
states no cause of action; (2) that Emiliano Gabriel, alleged to be driving the passenger truck at the
time of the incident in question, was not his employee, and so he could not be liable for Gabriel's
negligence; and (3) that assuming that Emiliano Gabriel was his employee, he had exercised due
care and diligence in selecting him and supervising over his work, and so he (Benito Francisco)
could not be held liable for the result of his (Gabriel's) acts.

At the hearing of Civil Case No. 5031, held on March 23, 1959, counsel for defendant Benito
Francisco, Jr. asked the counsel for plaintiff Melchor Santos to state positively and categorically the
nature of the cause of action of the complaint whether it was one to enforce the subsidiary civil
liability of an employer for the criminal act committed by his employee under the provision of Article
103 of the Revised Penal Code, or it was to enforce the primary liability of the employer for a quasi-
delict committed by his employee under the provisions of Article 2180 of the Civil Code. Counsel for
plaintiff Melchor Santos asserted that the cause of action could be gleaned from the allegations of
the complaint, but he indicated that the cause of action was not based on culpa contractual. Plaintiff
in the case then presented evidence in support of his complaint.

When the turn of defendant Benito Francisco, Jr. to present his evidence came up, his counsel
announced that he would introduce evidence in support of the special defense of due diligence on
the part of defendant in the selection and supervision of his employees. At this juncture, plaintiff's
counsel objected to the presentation of such evidence and declared before the court that plaintiff's
action was based solely on the provisions of Article 103 of the Revised Penal Code. 1

Being thus apprised by plaintiff's counsel that plaintiff's complaint was based on the provisions of
Article 103 of the Revised Penal Code, counsel for the defendant did not insist on presenting
evidence to establish diligence on the part of the defendant. Instead counsel for defendant asked the
court for time to file a motion to dismiss, and the court granted him leave to do so. In due time
defendant's counsel filed a motion to dismiss the complaint upon the ground that there was no cause
of action against the defendant Benito Francisco, Jr. contending that if the action was based on
the provisions of Article 103 of the Revised Penal Code, the complaint should include the employee
Emiliano Gabriel as party defendant, the liability of defendant Benito Francisco, Jr. being only
subsidiary to that of his alleged employee who is primarily liable to answer for the civil
responsibilities arising from his (employee's) criminal act, and the insolvency of the employee must
first be shown before the employer can be held civilly liable.

On August 11, 1959, or after defendant's counsel had filed the motion to dismiss, plaintiff filed a
motion to admit another amended complaint, which was then attached to the motion. In this new
amended complaint Emiliano Gabriel was included as party defendant. In the motion to admit the
new amended complaint, plaintiff's counsel stated the "the present action is based on the civil liability
arising from the criminal imprudence of Emiliano Gabriel who was convicted in Criminal Case No.
7864 of this Court." 2 In its order, dated September 23, 1959, the trial court denied the admission of the
amended complaint.

On January 30, 1960, the court a quo issued an order dismissing the complaint in Civil Case No.
5031. The pertinent portions of the order read as follows:

Defendant in his argument in support of the motion to dismiss contends that if the
action is based on the provision on Article 103 of the Revised Penal Code, plaintiff
has no cause of action against the defendant because the latter's liability is merely
subsidiary. In other words, plaintiff must have to establish first by sufficient and
competent evidence that the employee is insolvent. In the instant case, the alleged
employee, whose alleged negligence was the immediate cause of the death of
plaintiff's son, has not been included as a co-defendant. This employee, Emiliano
Gabriel y Susi, is alleged to have been charged with the crime of double homicide
with less serious physical injuries by reason of the accident and has been found
guilty and convicted by a final judgment of this Court where he was sentenced to
suffer imprisonment. No allegation however has been made that said Gabriel was
condemned in the decision aforementioned to pay damages resulting from the
mishap and was found insolvent upon execution.
 xxx xxx xxx

As shown elsewhere in this order, there was no evidence introduced by the plaintiff
that defendant's alleged employees Emiliano Gabriel y Susi has been condemned in
a final judgment to pay damages to the plaintiff by reason of the death of the
plaintiff's son as a result of the fact that the passenger vehicle driven by him had hit
and run over plaintiff's son causing the latter's death. There was also no evidence
that any judgment has been enforced against the said Gabriel but could not be
satisfied because he was insolvent. It therefore appears that no sufficient cause of
action has been established by the plaintiff against the defendant to establish the
subsidiary liability of the latter.

In his opposition to the motion to dismiss, plaintiff did not question the facts shown in
the motion to dismiss as have been established by his evidence. He only maintained
that the allegations of his amended complaint were sufficient to constitute a cause of
action. With this contention, the Court does not take issue. The Court, however, as
has already been stated, holds that his evidence failed to establish a cause of action.

In his opposition, plaintiff seems to imply that he was adhering to the theory adopted
in his amended complaint, that is, that his action is one to enforce the primary liability
of the defendant as an employer under the provision of the Civil Code. But even
assuming that this is his real theory and that he was adhering to it, in other words,
changing front, still the Court is of the opinion that he has not by his evidence
established a sufficient cause of action. First, because he has not established the
fact that Emiliano Gabriel y Susi was an employee of the defendant at the time of the
mishap on May 19, 1958 and that he was then driving the vehicle which caused the
mishap as an employee of the defendant. But even assuming that he has so
established the relationship of employer and employee between defendant and
Emiliano Gabriel y Susi, it is now too late for the plaintiff to change front after he has
successfully blocked defendant from presenting evidence in support of his defense to
the effect that he had exercised due diligence in the selection and supervision of his
employees.

xxx xxx xxx

WHEREFORE, the Court hereby grants the motion to dismiss this action for failure of
the plaintiff to establish a cause of action. Without costs.

Plaintiff Melchor Santos in that Civil Case No. 5031 of the Court of First Instance of Rizal did not
appeal from the above-mentioned order dismissing his complaint, and so said order had become
final.

On May 12, 1962, or more than two years after the abovementioned order was issued, Melchor
Santos, through a new counsel, filed a new complaint before the Court of First Instance of Rizal,
docketed as Civil Case No. 7121, naming both Emiliano Gabriel and Benito Francisco, Jr. as parties
defendants therein. This new complaint embodied practically the same allegations as those stated in
the second amended complaint in prior Civil Case No. 5031 regarding the fact of the death of
plaintiff's son due to the recklessness and imprudence of Emiliano Gabriel as employee of Benito
Francisco, Jr., of the damages suffered by plaintiff by reason of the death of his son, and of the
conviction on Emiliano Gabriel in Criminal Case No. 7864 of the Court of First Instance of Rizal. The
new complaint prayed that Emiliano Gabriel be ordered to pay plaintiff the damage sought to be
recovered therein, and in case of the insolvency of Emiliano Gabriel that Benito Francisco, Jr. be
ordered to pay the damages.

On June 13, 1962, counsel for defendant Benito Francisco, Jr. filed a motion to dismiss the
complaint with respect to said defendant, upon the ground that the cause of action therein alleged
was already barred by a prior judgement rendered by the Court of First Instance of Rizal in Civil
Case No. 5031, pursuant to Section 1 (e), Rule 8 of the Rules of Court. 3 On June 28, 1962, counsel
for the plaintiff filed an opposition to the motion to dismiss.

On October 20, 1962, Judge Eulogio Mencias the same Judge who dismissed Civil Case No.
5031 issued an order dismissing Civil Case No. 7121. On December 6, 1962, counsel for the
plaintiff filed a motion for reconsideration of the order of October 20, 1962. On January 9, 1963, the
lower court denied the motion for reconsideration. Hence, this appeal by the plaintiff from those
orders of the lower court, dated October 20, 1962 and January 9, 1963.

The principal question to be resolved in the present case is whether the action in Civil Case No.
7121 is barred by the prior judgment rendered in Civil Case No. 5031 both of the Court of First
Instance of Rizal under the doctrine of res judicata.

It is the settled rule that in order that the doctrine of res judicata may apply the following requisites
must be present: (a) the former judgment or order must be final; (b) the judgment or order had been
rendered by a court having jurisdiction over the subject matter and over the parties; (c) there must
be judgment or order on the merits; and (d) there must be between the first case and the second
case identity of parties, identity of subject matter and identity of cause of action. 4

It is not disputed that the order of the Court of First Instance of Rizal of January 30, 1960, dismissing
the combined complaint in Civil Case No. 5031, was final and it constitute a final judgment in the
case; that the order was rendered by a court having jurisdiction over the subject matter and the
parties in that case; and that the order was on the merits it having been entered after the issues
had been jointed and the court heard the pertinent evidence.

Appellant Melchor Santos does not deny that the subject matter of the two cases (Civil Cases Nos.
5031 and 7121 of the Court of First Instance of Rizal) is the same the recovery of damages for
the death of his son, Rodolfo Santos, due to the recklessness and imprudence of Emiliano Gabriel,
the alleged employee of appellee Benito Francisco, Jr. The appellant, however, maintains that there
is no identity of parties, nor is there identity of cause of action, between the two cases, it being the
contention of appellant that the cause of action in Civil Case No. 5031 was based on Article 2180 of
the Civil Code, while the cause of action in Civil Case No. 7121 is based on Article 103 of the
Revised Penal Code.

The stand of the appellant can not be sustained.

Herein appellant Melchor Santos, who is the plaintiff in Civil Case No. 7121 the case at bar
was the plaintiff in Civil Case No. 5031. Herein appellee Benito Francisco, Jr., who is one of the two
defendants in Civil Case No. 7121, was the only defendant in Civil Case No. 5031. Although
Emiliano Gabriel was not a party defendant in Civil Case No. 5031, but is now included as defendant
in Civil Case No. 7121, this circumstance does not prevent the application of the principle of res
judicata, because the rule does not require absolute, but only substantial, identity of parties. 5 In the
case of Aguilar vs. Gamboa, 6 this Court held that "it makes no difference that Serafin Gamboa was
defendant with others in the first case; because if he had been sued alone in the first case and he is now
sued with others, the defense of res judicata would be decisive just the same." Reiterating that ruling, this
Court, in the case ofRepublic of the Philippines vs. Planas, et al. 7 said: .

The inclusion of the surety as party defendant in Civil Case No. 51080, where it is not
so named in Civil Case No. 49206, cannot be invoked to nullify the effect on the
former case of the dismissal order issued in the latter proceedings. It has been ruled
that where the one who is offering a judgment as an estoppel and the party against
whom it is being offered were both parties to the action, in which such judgment was
rendered, it is no objection that the action included some additional parties who are
joined in the second case. Conversely, the operation of the final judgment or order in
a previous case is not altered by the fact that somebody who was not a party in that
first action has been impleaded in the second case. Otherwise, litigants can always
renew any litigation by the mere expediency of including new parties.

The lower court dismissed the first case filed by appellant, because appellant, as plaintiff therein,
"has not established the fact that Emiliano Gabriel y Susi was an employee of the defendant at the
time of the mishap on May 19, 1958 and that he was then driving the vehicle which caused the
mishap as an employee of the defendant," 8 and this conclusion of the court a quo was arrived at after it
had weighed the evidence presented by the appellant. Appellant having failed to appeal from that order of
dismissal, this finding of the trial court cannot again be litigated in a new suit, and that finding should be
considered conclusive on that same point in the present case. The cardinal rule ofres judicata is that
parties should not be permitted to litigate the same issue more than once; that when a right, or a fact, has
been judicially determined by a court of competent jurisdiction, or an opportunity for hearing on the matter
had been given, the judgment of the court, when final should be conclusive and no longer debatable
between the parties in subsequent proceedings. 9

The causes of action in the two cases are the same. As shown above, the first case, Civil Case No.
5031, was expressly based on the provisions of Article 103 of the Revised Penal Code as per
plaintiff's counsel's expressed manifestation, and not on Article 2180 of the Civil Code, as now
pretended. 10 Since the present case, Civil Case No. 7121, is admittedly based also on Article 103 of the
Revised Penal Code, the dismissal of the first case on the ground of failure to establish the employer-
employee relationship between defendant Benito Francisco and the driver Emiliano Gabriel now bars the
present case by virtue of res judicata. 11

Access to the courts is guaranteed. But there must be a limit thereto. Once a litigant's rights have
been adjudicated in a valid final judgment of a competent court, he should not be granted an
unbridled license to come back for another try. The prevailing party should not be harassed. For, if
endless litigations were to be encouraged, then unscrupulous litigants will multiply in number to the
detriment of the administration of justice. This is a situation which should not be permitted to obtain
here or elsewhere where there is an orderly form of government. Public policy demands that judicial
proceedings be upheld. The maxim non quieta movere cannot be meaningless. (Banco Espaol-
Filipino vs. Palanca, 37 Phil. 921, 942). 12

WHEREFORE, the orders of the lower court, appealed from, one dated October 20, 1962
dismissing the case, and the other dated January 9, 1963 denying the motion for the reconsideration
of said order of dismissal, should be, as they are hereby, asffirmed. No pronouncement as to costs.
It is so ordered.

Reyes, J.B.L., Makalintal, Teehankee, Barredo, Makasiar and Antonio, JJ., concur.

Castro and Fernando, JJ., took no part.

Concepcion, C.J., is on leave.

27A. When Intervention may not be allowed; when intervention may be allowed
even after judgment.

G.R. No. L-41432 July 30, 1979

IVOR ROBERT DAYTON GIBSON, petitioner,

vs.
HON. PEDRO A. REVILLA, in his official capacity as Presiding Judge of Branch XIII, Court of
First Instance of Rizal, and LEPANTO CONSOLIDATED MINING COMPANY, respondents.

Quasha, Asperilla, Ancheta, Valmonte, Pe;a & Marcos for petitioner.

Sycip, Salazar, Feliciano, Hernandez & Castillo for respondents.

GUERRERO, J.: 1wph1.t

This is a petition for review 1 seeking to set aside the Order of the Court of First Instance of Rizal Branch
XIII, presided by respondent Judge Pedro A. Revilla, in Civil Case No. 20046 entitled "Lepanto
Consolidated Mining Company versus Malayan Insurance Company, Inc." denying the motion of the
petitioner Ivor Robert Dayton Gibson for leave to intervene in said case, and to order the respondent
Judge to admit him as intervenor therein.

The antecedent facts of this case are as follows:

Lepanto Consolidated Mining Company (hereinafter referred to as Lepanto) filed on September 27,
1974 in the Court of First Instance of Rizal, Branch XIII a complaint with a plea for preliminary
mandatory injunction against Malayan Insurance Company, Inc., (hereinafter referred to as
Malayan), docketed as Civil Case No. 20046 seeking the following relief: t.hqw

(a) upon the firing of this complaint, a writ of preliminary mandatory injunction be
issued directing defendant to advance to plaintiff an interest-free loan of
P1,831,695.75; and

(b) upon trial on the merits t.hqw

(i) an accounting or average adjustments be made for the liquidation

of the general average losses, damages and expenses arising from
the marine accidents subject of this action and the determination of
the contributions due from subject cargoes under the Policy;

(ii) defendant be ordered to pay plaintiff the amounts under item (i)
above, with interest thereon at the rate of 12% per annum, from
February 20, 1972 as to the cargo's contribution relative to the
'Hermonsa' and from March 27, 1972 as to the cargo's contribution
relative to the 'General Aguinaldo;'

(iii) the amount of P1,831,695.75 as interest-free loan due plaintiff

from defendant be declared repayable upon and only to the extent of
any corresponding recovery from the owners of the 'Hermosa' and
'General Aguinaldo; ...

Lepanto also sought payment of interest on delayed loan amounts, exemplary damages of at least
P500,000.00, attorney's fees and other litigation expenses, and other cumulative and/or alternative
reliefs as may be lawful, just or equitable in the premises.

The civil suit thus instituted by Lepanto against Malayan was founded on the fact that on Sept. 9,
1971, Malayan issued Marine Open Policy No. LIDC-MOP-001/71 covering an shipments of copper,
gold and silver concentrates in bulk from Poro, San Fernando, La Union to Tacoma, Washington or
to other places in the United States which Lepanto may make on and after August 1, 1971 and until
the cancellation of the policy upon thirty (30) days' written notice. Thereafter, Malayan obtained
reinsurance abroad through Sedgwick, Collins & Co., Limited, a London insurance brokerage. The
Memorandum of Insurance issued by Sedgwick to Malayan on September 24, 1971 listed three
groups of underwriters or re-insurers and their reinsurance interest are as follows: t.hqw

Lloyds 62.808%
Companies (I.L.U.) 34.705%
Other Companies 2.487%
100.000%

At the top of the list of underwriting members of Lloyds is Syndicate No. 448, assuming 2.48% of the
risk assumed by the reinsurer, which syndicate number petitioner Ivor Robert Dayton Gibson claims
to be himself.
In November, 1971, a cargo of concentrates was shipped by Lepanto on the M/V Hermosa at Poro,
San Fernando, La Union destined for Tacoma, Washington. During the sea voyage, while the vessel
was in the Northern Pacific Ocean south of Japan on or about Nov. 11, 1971, it encountered heavy
weather and rough seas which caused it to roll, pitch and vibrate heavily so that certain shifting
boards in the vessel broke and part of the cargo shifted transversely, thereby causing a list. The
vessel deviated to Moji, Japan and after the shifting boards were repaired and/or replaced, it
proceeded on its trip to Tacoma, but about the end of the month, the ship once again met with strong
winds, monsoon rains, severe winter and very rough seas and it roiled, pitched and vibrated heavily
so other shifting boards broke and part of the cargo also shifted causing a heavier list. The captain of
the boat, fearing that the vessel might sink, sailed to Osaka and unloaded the cargo. Expenses were
incurred by Lepanto relative to the cargo while in Japan but eventually the cargo was transhipped to
Tacoma via another vessel.

Also in November, 1971, another cargo of concentrates was shipped by Lepanto on board the MIV
General Aguinaldo at Poro, San Fernando, La Union and destined for Tacoma, Washington.
Similarly, during the sea voyage on or about November 30, 1971 in the Northern Pacific Ocean
southeast of Japan, it met with heavy weather and rough seas, causing it to pitch, roll and vibrate
heavily so that certain shifting boards in the vessel broke and part of the cargo shifted transversely
which caused the listing of the vessel The captain, fearing also that the vessel The captain, fearing
also that the vessel might sink, sailed for Miyako, Japan, unloaded the cargo and expenses were
incurred relative to the cargo while in Japan. Thereafter, the cargo was transhipped to Tacoma on
board another vessel.

Lepanto notified Malayan and another insurer, Commercial Union in London in November and
December, 1971 of the accidents. Formal claims under the open policy were also filed by Lepanto
with Malayan in March and July, 1972 upon the conclusion of the voyages and the determination of
the shortweight.

The claims were denied by Malayan tentatively at first claiming that it needed time to determine
whether or not the marine accidents resulted from the inherent vice or nature of the cargo and finally
Malayan rejected Lepanto's insurance claim for the reason that the cargoes were inherently vicious
on loading and such condition caused the listing of the vessel.

Hence, the complaint filed by Lepanto against Malayan in Civil Case No. 20046 for the interest-free
loan to Lepanto as stipulated in the policy computed at P1,831,695.75.

Malayan filed a motion to dismiss the case on three grounds: 1. that the instant case has been
brought in the name of other than the real party in interest; 2. that the complaint states no cause of
action; and 3. that the claim set forth in the complaint has been extinguished.

On December 4, 1974, Malayan's motion to dismiss was denied. On January 17, 1975, Malayan filed
its Answers incorporating as part of its special and affirmative defenses the following allegations:t.hqw

(5) Defendant acted in good faith in rejecting plaintiff's insurance claims, not only
because of the circumstances and reasons set forth in the preceding sub-paragraphs
(1) to (4) which defendant had been reasonably led to believe by reports of reputed
 experts and/or by legal advice as justifying rejection, but also because, as plaintiff
had been repeatedly told, it is under constraint, on one hand, by customs of the
insurance trade to adhere to the decisions of the lead insurers, and on another hand,
by its contract with its reinsurer which among others, prohibit settlement of the
reinsured claims without the reinsurer's assent.

On January 27, 1975, Lepanto filed its reply. On January 30, 1975, the Court denied Lepanto's
motion for mandatory preliminary injunction "without prejudice to reconsider the said motion after the
pre-trial of this case shall have been concluded." On March 19, 1975, the first pre-trial conference
was held and on March 25, 1975, the parties filed their Stipulation of Facts and Issues, which
Stipulations was approved en toto in the trial court's order of April 1, 1975.

Subsequently, pre-trial conferences were held on April 3, 1975, May 21, 1975, and June 19, 1975
when Lepanto concluded its evidence. Defendant through counsel reserved its right to make a
formal offer of its evidence at the continuation of the hearing scheduled on July 16, 1975.

Then on June 25, 1975, petitioner Ivor Robert Dayton Gibson filed a motion to intervene as
defendant, which motion is as follows: t.hqw

MOTION TO INTERVENE

COMES NOW Ivor Robert Dayton Gibson, Reinsurer in the above-entitled case,
through undersigned counsel, and to this Honorable Court respectfully & Heges that:

1. Movant is of legal age, a British citizen, with address at Lloyd's Lime Street,
London, EC 3;

2. Movant is the leading re-insurer of the risks and liabilities assumed by defendant
Malayan Insurance Co., Inc. in a contract of marine insurance involving two (2)
separate shipments of copper' concentrates aboard the MV "Hermosa" and the MV
"General Aguinaldo" shipped by Lepanto Consolidated Mining Co., Inc. to American
Smelting & Refining Co. from Poro Point, San Fernando, La Union, to Tacoma,
Washington for which defendant issued Policy No. LIDC-MOP-001/71 dated
September 9, 1971, in the amount of 20% of the declared value of each shipment but
not to exceed US $2,000,000 per shipment.

3. Prior to these two shipments and after defendant Malayan contracted with Lepanto
to insure these two (2) copper concentrates shipments against risks of loss and
damage, defendant Malayan in turn, re-insured its liabilities for losses and damages
in accordance with the terms of their reinsurance contract.

4. After the defendant Malayan filed Answer to this suit, movant was informed that
defendant made express reservations "to file in due time a third-party complaint
against the lead insurers and/or its reinsurers" (par. XVIII, Answer).
 5. Movant has a legal interest in the subject matter of litigation in that he stands to be
held liable to pay on its re-insurance contract should judgment be rendered requiring
the defendant to pay the claim of the plaintiff.

6. To avoid multiplicity of suits and allow all parties who have any relation to the
cause of action, whether legally or in equity, to ventilate expeditiously every issue
relevant to the suit, it is respectfully submitted that movant be allowed to intervene as
a defendant in the interest of justice.

7. By the very nature of a contract of reinsurance and considering that the reinsurer
is obliged "to pay as may be paid thereon" (referring to the original policies), although
this is subject to other stipulations and conditions of the re-insurance contract, it will
serve better the ends of justice if a full disclosure of all pertinent facts and issues is
made with the participation of the movant at this trial where his interests have been
and are already inevitably at stake.

Counsel for the movant submitted the foregoing motion for the consideration and resolution of the
Court on June 30, 1975. The motion to intervene was opposed by Lepanto on the following grounds:
1. Movant Ivor Robert Dayton Gibson has no legal interest in the matter in litigation or in the success
of either plaintiff or defendant; 2. Movant is estopped by his laches from intervening in this action; 3.
The intervention is intended for delay and if allowed, win unduly delay the proceedings between
plaintiff and defendant; and 4. The rights, if any, of movant are not prejudiced by the present suit and
win be fully protected in a separate action against him and his co-insurers by defendant herein.

Replying to Lepanto's opposition, movant Ivor Robert Dayton Gibson contended that 1. Contrary to
oppositors contention, movant Gibson has a legal interest in the matter in litigation because a
contract of reinsurance between the defendant Malayan Insurance Company, Inc. and the movant
herein is a contract of indemnity against liability, and not merely against damage, and therefore,
movant has a direct and immediate interest in the success of defendant Malayan Insurance
Company, Inc.; 2. Neither estoppel nor laches applies to the movant since the motion to intervene
was filed seasonably on June 25, 1975 during the period of introduction of evidence by defendant
Malayan; 3. The intervention is not intended for delay; movant is merely asserting a legal right or
interest in the pending case with the request for opportunity to appear and be joined so that he could
protect or assert such right or interest; and 4. The filing of an independent and separate suit
proposed by the plaintiff is condemned by the basic and fundamental principles against multiplicity of
suits.

On July 26, 1975, Lepanto filed a Rejoinder to the movant's "Reply to Opposition." On July 28, 1975,
Malayan made a manifestation that it had no objection to the "Motion to Intervene" of Ivor Robert
Dayton Gibson and on July 31, 1975, movant made a Sur-Rejoinder to Lepanto's Rejoinder.

On August 18, 1975, the Court a quo resolved to deny the Motion for Intervention in the following: t.hqw

ORDER
 Ivor Robert Dayton Gibson, thru counsel, has presented before this Court a motion to
intervene on June 25, 1975. In his motion, he alleges that he is a British citizen with
address at Lloyd's Lime Street, London, EC3; that he is the leading re-insurer of the
risks and liabilities assumed by defendant Malayan Insurance Company, Inc. in the
contract of marine insurance involving the shipments subject of the instant suit. He
further contends that he has a legal interest in the subject matter of litigation for he
stands liable on his reinsurances contract should judgment be rendered against the
defendant and that this intervention would avoid a multiplicity of suits. Plaintiff
vigorously opposed the motion contending that movant Ivor Robert Dayton Gibson
has no legal interest in the matter in litigation or in the success of either parties in this
suit; that he is estopped by laches; that the intervention is intended for delay and will
unduly delay the proceedings between plaintiff and defendant; and that movant will
not be prejudiced by the present suit and can be fully protected in any separate
action which defendant may file against him and his co-insurers.

Considering the grounds of the opposition, the Court believes that the third and
fourth grounds raised in the opposition appear highly meritorious. Since movant Ivor
Robert Dayton Gibson appears to be only one of several re-insurers of the risks and
liabilities assumed by Malayan Insurance Company, Inc., it is highly probable that
other re-insurers may likewise intervene. This would definitely disrupt the trial
between plaintiff and defendant, the principal protagonists in this suit. To allow the
intervention would certainly unduly delay the proceedings between plaintiff and
defendant especially at this stage where plaintiff had already rested its case. It would
also compound the issues as more parties and more matters will have to be litigated.
At any rate, Ivor Robert Dayton Gibson may protect whatever interest he has in a
separate action.

IN VIEW OF ALL THE FOREGOING, the Court resolves to deny the motion for
intervention.

SO ORDERED.

Pasig, Rizal, August 18, 1975. t.hqw

(SGD)
PEDR
O A.
REVIL
LA
Judg
e

Not satisfied with the denial of his Motion to Intervene, petitioner now comes before Us seeking to
set aside the order of denial and to order the respondent Judge to admit him as intervenor. By
resolution of this Court dated November 17, 1975, the petition was denied due course for lack of
merit, but upon petitioner's motion for reconsideration, the petition was allowed in the Resolution of
February 18, 1976, treating it as a special civil action.

The principal issue is whether the lower court committed reversible error in refusing the intervention
of petitioner Ivor Robert Dayton Gibson in the suit between Lepanto and Malayan.

We lay down the law on Intervention as found in Sec. 2, Rule 12 of the Rules of Court: t.hqw

Section 2. Intervention. A person may, before or during a trial, be permitted by the

court, in its discretion, to intervene in an action, if he has legal interest in the matter
in litigation, or in the success of either of the parties or an interest against both, or
when he is so situated as to be adversely affected by a distribution or other
disposition of property in the custody of the court or of an officer thereof.

(a) Motion for intervention. A person desiring to intervene shall file a motion for
leave of court with notice upon all the parties to the action.

(b) Discretion of court. In allowing or disallowing a motion for intervention, the

court, in the exercise of discretion, shall consider whether or not the intervention will
unduly delay or prejudice the adjudication of the rights of the original parties and
whether or not the intervenor's rights may be fully protected in a separate
proceeding.

(c) Complaint or answer in intervention. The intervention shall be made by

complaint filed and served in a regular form, and may be answered as if it were an
original complaint; but where intervenor unites with the defendant in resisting the
claims of the plaintiff, the intervention may be made in the form of an answer to the
complaint,

(d) Time. Unless a different period is fixed by the court, the complaint or answer in
intervention shall be filed within ten (10) days from notice of the order permitting such
intervention.

According to pertinent jurisprudence, the term "intervention" refers to the proceeding by which one
not originally a party to an action is permitted, on his own application, to appear therein and join one
of the original parties in maintaining the action or defense, or to assert a claim or defense against
some or all of the parties to the proceeding as originally instituted. Such a third party may, upon the
discretion of the court, become a party to a pending proceedings between others for the protection of
some rights or interest alleged by him to be affected by such proceedings. 2

Intervention is not a matter of absolute right but may be permitted by the court when the applicant
shows facts which satisfy the requirements of the statute authorizing intervention. 3 Under our rules of
Court, what qualifies a person to intervene is his possession of a legal interest in the matter in litigation, or
in the success of either of the parties, or an interest against both; or when he is so situated as to be
adversely affected by a distribution or other disposition of property in the custody of the court or an officer
thereof. 4 As regards the legal interest as qualifying factor, tills Court has ruled that such interest must be
of a direct and immediate character so that the intervenor wig either gain or lose by the direct legal
operation of the judgment. The interest must be actual and material, a concern which is more than mere
curiosity, or academic or sentimental desire; it must not be indirect and contingent, indirect and remote,
conjectural, consequential or collateral. 5 However, notwithstanding the presence of a legal interest,
permission to intervene is subject to the sound discretion of the court, the exercise of which is limited by
considering I 'whether or not the intervention will unduly delay or prejudice the adjudication of the rights of
the original parties and whether or not the intervenor's rights may be fully protected in a separate
proceeding. 6 Once judicial discretion is exercised, the action of the court cannot be reviewed or
controlled by mandamus however erroneous it may be, except only when there is an arbitrary or
capricious exercise of discretion, in which case, the fault is correctible by mandamus if there be no other
adequate and speedy remedy. 7

As may be noted in the questioned Order, respondent Judge denied the Motion to Intervene on the
last two grounds of Lepanto's Opposition, namely: "3. The intervention is intended for delay and if
allowed, will unduly delay the proceedings between plaintiff and defendant; and 4. The rights, if any,
of movant are not prejudiced by the present suit and will be fully protected in a separate action
against him and his co-insurers by defendant herein.

Respondent Judge, reasoning out his Order, ruled that "(s)ince movant Ivor Robert Dayton Gibson
appears to be only one of several co-insurers of the risks and liabilities assumed by Malayan
Insurance Company, Inc., it is highly probable that other re-insurers may likewise intervene. This
would definitely disrupt the trial between plaintiff and defendant, the principal protagonists in this suit.
To allow the intervention would certainly unduly delay the proceedings between plaintiff and
defendant especially at this stage where plaintiff had already rested its case. It would also compound
the issues as more parties and more matters will have to be litigated. At any rate, Ivor Robert Dayton
Gibson may protect whatever interest he has in a separate action."

In his petition, petitioner submits that the respondent Judge, in refusing to permit/allow him to
intervene in Civil Case No. 20046, incorrectly interpreted and/or appreciated the purpose/intent of
the pertinent rules of procedure that govern intervention of parties in a given action and that the
respondent Judge erred: (1) In concluding that to allow the intervention of herein petitioner "would
definitely disrupt the trial" and "would certainly unduly delay the proceedings," when such
apprehension appears to be clearly immaterial in determining when intervention is proper or not; (2)
In viewing the alleged availability of another recourse on the part of herein petitioner to protect his
interest, i.e. separate action, as an added justification to deny his intervention, despite the fact that
the applicable rule of procedure in this regard (Section 2, Rule 12) does not preclude intervention
even if another separate action is appropriate and for available; and (3) In its obvious disregard of
the very rule (Section 2, Rule 12) precisely designed to apply on cases where intervention is sought,
thereby departing from the accepted and usual procedure under the premises.

After carefully considering the arguments of both the petitioner and Lepanto, the facts and
circumstances obtaining in the case at bar and applying Rule 12, Sec. 2 of the Rules of Court and
the doctrines enunciated by the Supreme Court on the matter, We rule that the respondent Judge
committed no error of law in denying petitioner's Motion to Intervene. And neither has he abused his
discretion in his denial of petitioner's Motion for Intervention.
It is quite crystal clear that the questioned Order of the respondent Court was based strictly and
squarely on Section 2(b) of Rule 12 which specifically directs the Court in allowing or disallowing a
motion for intervention in the exercise of discretion to consider whether or not the intervention will
unduly delay or prejudice the adjudication of the rights of the original parties and whether or not the
intervenor's rights may be fully protected in a separate proceeding. The Court a quo has specifically
and correctly complied with the Rule's mandate and We cannot fault the respondent Judge
therefore.

We reject the contention of the petitioner that the question regarding delay in the adjudication of the
rights of the original contending parties, while recognized as factors in allowing or disallowing
intervention, should assume a secondary role to the primary and imperative requirement that the
legal interest of the would-be intervenor in the matter under litigation must be clearly shown and that
once the legal interest of the would be intervenor is clearly shown, the fact that his intervention may
work to delay a little the main conflict between the parties should not by itself justify the denial of
intervention.

Petitioner's contention is untenable. The first paragraph of Section 2, Rule 12 prescribes the time to
intervene and also who may intervene, that is, one who has legal interest in the matter in litigation, or
in the success of either of the parties or an interest against both or when he is so situated as to be
adversely affected by a distribution or other disposition of property in the custody of the court or of
an officer thereof Paragraph (b) of the same section directs what matter are to be considered in
exercising discretion to snow or disallow a motion for intervention, which are whether or not the
intervention will unduly delay or prejudice the adjudication of the rights of the original parties and
whether or not the intervenor's rights may be fully protected in a separate proceeding. Clearly, for the
Court to permit intervention, it must be shown that movant is possession of legal interest in the
matter in litigation or otherwise qualified under the first paragraph of Section 2, and the Court must
also consider the matters mentioned in paragraph (b) thereof. The latter are not and should not be
taken as secondary to the former for both must concur since they are equally important, requisite
and necessary for consideration in the exercise of discretion by the Court to allow or disallow
intervention. We cannot invest nor render primary or secondary importance to either of these
requirements for the law does not make any distinction. Each case must be decided according to its
facts and merits, subject to the discretion of the Court.

From the particular facts and circumstances of the case at bar, We are satisfied that the respondent
Judge has not abused his discretion in denying petitioner's Motion to Intervene. We agree with the
holding of the respondent Court that since movant Ivor Robert Dayton Gibson appears to be only
one of several re-insurers of the risks and liabilities assumed by Malayan Insurance Company, Inc., it
is highly probable that other re- insurers may likewise intervene. The record shows that aside from
the petitioner there are sixty-three (63) other syndicate members of Lloyds, the twenty-six (26)
companies in the " I.L.U. " group holding a 34.705 % reinsurance interest and the two (2) "Other
Companies" holding the balance of the reinsurances, as listed in Annex "A", Sur-Rejoinder to
Lepanto's Rejoinder, pp. 136-138, Records. The high probability that these other re-insurers like the
petitioner herein may likewise intervene if the latter's motion is granted is not an arbitrary assumption
of the Court. Considering petitioner's assertion that he will have the opportunity to show, among
others, that the losses and damages purportedly sustained by Lepanto occurred not from the perils
of the seas but from perils of the ships; that Lepanto is not the real party in interest; that it has no
cause of action; and, neither has it complied with its obligations under the policy which makes the
filing of the complaint premature (p. 118, Records, Reply to Opposition) if petitioner is allowed to
intervene, We hold that there is good and sufficient basis for the Court a quoto declare that. the trial
between Lepanto and Malayan would be definitely disrupted and would certainly unduly delay the
proceedings between the parties especially at the stage where Lepanto had already rested its case
and that the issues would also be compounded as more parties and more matters will have to be
litigated. In other words, the Court's discretion is justified and reasonable.

We also hold that respondent Judge committed no reversible error in further sustaining the fourth
ground of Lepanto's Opposition to the Motion to Intervene that the rights, if any, of petitioner are not
prejudiced by the present suit and win be fully protected in a separate action against him and his co-
insurers by Malayan.

Petitioner contends that this rights would not be fully protected in a separate proceeding because
"(a) decision in favor of Lepanto, declaring Malayan liable on its insurance policies would necessarily
and injuriously affect the interests of petitioner, (which) interest as a re-insurer of Malayan's risk is
not only inchoate but material, direct and immediate and for such interest to be in any manner
prejudiced without first giving petitioner a chance to be heard would be violative of due process.
Upon the other hand, a decision in favor of Malayan, recognizing it as not liable under its insurance
policies, could subject petitioner to the danger of having to admit that Malayan had not breached its
insurance contract with the entity (Lloyds) of which petitioner is the leading syndicate member."
(Petitioner's Memorandum p. 230, Records). Petitioner also asserts that "by the very nature of a
contract of reinsurance and considering that the re-insurer is obliged 'to pay as may be paid thereon'
(referring to the original policies), although this is subject to other stipulations and conditions of the
reinsurance contract, it will serve better the ends of justice if a full disclosure of all pertinent facts and
issues is made with the participation of the movant at this trial where his interests have been and are
already inevitably at stake." (Petition, p. 18, Records).

On the contrary, Lepanto insists that petitioner win have his day in court and his rights can be fully
protected in a separate proceeding. According to Lepanto, if it loses the case against Malayan,
petitioner cannot possibly be liable to Malayan for indemnity on the reinsurances. If Lepanto wins,
then petitioner, the sixty-three (63) other syndicate members of Lloyds, the twenty-six (26)
companies in the "I.L.U." group holding a 34.705% reinsurance interest and the two (2) "Other
Companies" holding the balance of the reinsurances are free either to pay Malayan or to resist
Malayan and thus force Malayan to sue in whatever country most of them, qualitatively and not
quantitatively, may be served with summons.

Petitioner's contention that he has to pay once Malayan is finally adjudged to pay Lepanto because
of the very nature of a contract of reinsurance and considering that the re-insurer is obliged 'to pay
as may be paid thereon' (referring to the original policies), although this is subject to other
stipulations and conditions of the reinsurance contract, is without merit. The general rule in the law of
reinsurance is that the re-insurer is entitled to avail itself of every defense which the re-insured
(which is Malayan) might urge in an action by the person originally insured (which is Lepanto).
Specifically, the rule is stated thus t.hqw
 Sec. 1238. In an action on a contract of reinsurance, as a general rule the
reinsurer is entitled to avail itself of every defense which the reinsured might urge in
an action by the person originally insured; ...

The same rule is stated otherwise in 44 An-L Jur. 2d, Sec. 1862, p. 793, as follows: t.hqw

Moreover, where an action is brought against the reinsurer by the reinsured, the
former may assert any defense that the latter might have made in an action on the
policy of original insurance. (Eagle Ins. Co. vs. Lafayette, Ins. Co., 9 Ind. 443)

As to the effect of the clause "to pay as may be paid thereon" contained in petitioner's re-insurance
contract, Arnould, on the Law of Marine Insurance and Average, 13th Ed., Vol. 1, Section 327, p.
315, states the rule, thus:
t.hqw

It has been decided that this clause does not preclude the reinsurer from insisting
upon proper proof that a loss strictly within the terms of the original policy has taken
place.

This clause does not enable the original underwriter to recover from his re-insurer to
an extent beyond the subscription of the latter.

It is significant and revealing that petitioner himself admits in his Memorandum, p. 231, Records, that
"(o)f course, petitioner, if finally sued in London, (he) could avail himself of remedies available to
him." He adds that "such a procedure, if not entirely time-consuming, would actually beg the issue
on hand. Petitioner believes that his defenses on the claims ventilated in the court a quo can be
appreciated only here; elsewhere in view of the peculiar circumstances surrounding Lepanto's claims
the basic issue win be obfuscated and perhaps even obliterated by arguments on procedural
niceties." However, such a procedural problem is no legal ground to compel allowance of and insist
on his intervention.

WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby dismiss. No costs.

SO ORDERED.

Teehankee (Chairman), Makasiar, Fernandez, De Castro and Melencio-Herrera, JJ., concur. 1wph1.t

27B. When Intervention may not be allowed; when intervention may be allowed even after
judgment.

G.R. No. L-45168 September 25, 1979

DIRECTOR OF LANDS, petitioner,
vs.
COURT OF APPEALS, ET AL., respondents, GREENFIELD DEVELOPMENT CORP., intervenor,
ALABANG DEVELOPMENT CORPORATION and RAMON D. BAGATSING, intervenors.

RESOLUTION

GUERRERO, J.:

Two motions for leave of court to intervene in the above entitled case are before Us, the first by
Greenfield Development Corporation, claiming to be the registered owner of seven (7) parcels of
land adjoining that of private respondent, situated in the Barrio of Cupang, Municipality of
Muntinlupa, Province of Rizal (now portion of Metro Manila), with an aggregate area of 783,367
square meters with TCT Nos. 366292, S-38660, S-38661, S-43229, 43230 and 93980 in the name of
the movant, which land was originally registered on September 20, 1913 in the registration book of
the Office of the Register of Deeds of Rizal, Vol. A-7, page 84, as Original Certificate of Title No. 684,
pursuant to Decree No. 4552 issued on August 27, 1910 in the name of the "Government of the Phil.
Island" covering and embracing the land otherwise known as the "Muntinlupa Estate."

Movant alleges that upon comparison of the technical descriptions set forth in TCT No. 42449 sought
to be reconstituted by the private respondent Demetria Sta. Maria Vda. de Bernal consisting of two
parcels of land located in Barrio San Dionisio, Paranaque Rizal with an aggregate area of 143
hectares, more or less, and designated as Lots 1 and 3 of Plan 11-4374, with those described in the
certificates of title of the movant, it appears that the land supposedly covered by the certificate
sought to be reconstituted overlapped and included substantial portions of movant's land, the
location and extent of the overlapping having been platted on the basis of the respective technical
descriptions referred to in the plan marked Annex 8 attached to the motion; that movant therefore
claims a substantial, material, proprietary and legal interest in the subject matter of the instant
petition which will directly and adversely affect the petition for reconstitution of the respondent.

Movant also alleges that among those overlapped by and adjacent to the land supposedly covered
by the title to be reconstituted aside from the movant are the residences within the Alabang Hills
Subdivision, Cielito Homes Subdivision, Tahanan Village, portion of the South Super Highway,
Meralco Substation, factories as well as roads and infrastructures which respondent allegedly
omitted to name and to give notice of her petition for reconstitution.

It is further contended that if re-constitution is granted, other title holders and possessors overlapped
by the land covered by the title sought to be reconstituted stand to be deprived of their property
rights and that greater injury shall be inflicted to the Torrens system of registration for there will be
two holders of certificates of title overlapping each other thereby negating the very purpose of the
Torrens system and imperiling the indefeasibility and stability of the same such that when this
happens "the chaos that it will create will be unimaginable."
The second motion for intervention filed by Alabang Development Corporation and Ramon D.
Bagatsing likewise prays for leave of court to intervene on substantially the same grounds: I. That
the Honorable Court a quo has no jurisdiction to grant the petition for reconstitution; II. That granting
arguendo, that the title sought to be reconstituted is valid which it is not, the same cannot prevail
over the earlier title of herein intervenors or their predecessors-in- interest; and III. That intervenors
stand to be divested of their property and thereby suffer special, immediate, direct and irreparable
injury in their proprietary rights if reconstitution is granted.

These second movants allege that they are the registered owners of parcels of land located at
Cupang, Muntinlupa, Metro Manila covered and evidenced by Transfer Certificates of Title issued by
the Register of Deeds of the Province of Rizal which were transfers from Original Certificate, of Title
No. 684 registered in the name of "The Government of the Phil. Islands" originally registered on
Sept. 20, 1913, per survey in 1907 pursuant to Decree No. 4552 issued on August 27, 1910; that
being registered owners and persons in actual possession and as adjoining owners they were not
personally notified of the petition for reconstitution and that copies of the notices of hearing were not
posted on Lots 1 and 3 of the respondent before the hearing as required by the trial court so that if
reconstitution will be carried out, they stand to be divested of their property by the overlapping of the
area of the title sought to be reconstituted on the land owned and actually in the possession of the
movants and their successors-in-.interest, which overlapping are shown in the certified plans,
Annexes 1 and 2 of the motion.

Movants further allege that a portion of the land in dispute was covered by TCT No. 45397 (Lot 398-
B) and 45398 (Lot 398A) in the name of movant Ramon D. Bagatsing and Toribio G. Reyes with an
area of 815,317 sq. meters and 201,591 sq. meters. respectively, the same being transfers from TCT
No. 14812 in the name of Toribio G. Reyes which in turn was a transfer from OCT No. 684 in the
name of "The Government of the Phil. Islands" originally registered on Sept. 20, 1913 pursuant to
Decree No. 4552 issued on August 27, 1910; that subsequent transfers by movant Ramon D.
Bagatsing of portions of the land were made to Meralco, to Alabang Development Corporation which
in turn sold to some 36 innocent purchasers for value in the Alabang Hills Subdivision.

It is also averred that movant Alabang Development Corporation obtained from the Court of First
instance of Rizal, Branch XIII an order dated April 19, 1969 for the issuance of certificates of title
numbering 92 titles over said parcels of land now surrounded by a high perimeter wall on its
boundaries which were sold to innocent purchasers in good faith for valuable consideration who
were not personally notified of the pendency of the reconstitution case not only as adjoining owners
but as actual possessors thereof .

Private respondent separately opposed both motions, the, first motion on the ground that the
supposed TOTs of the intervenor are of the 1972 vintage so that if same are true that titles are the
ones that overlap that of private respondent which was procured as early as November 13, 1942 and
that of her mother-predecessor issued on Sept. 29, 1942; that the motion to intervene constitutes a
mere annoyance tending merely to derail and delay the proceedings; that petitioner is guilty of
laches and that to grant the motion after trial and judgment rendered comes out of time as an abuse
of judicial discretion and that whatever interest or right movants are supposed to have may be fully
protected by a separate proceeding.
Before resolving both motions for intervention, a brief recital of the antecedent facts is necessary.

In an amended petition filed on November 12, 1970 before the Court of First Instance of Rizal,
private respondent Demetria Sta. Maria Vda. de Bernal sought the reconstitution of her Transfer
Certificate of Title No. 42449 of the Registry of Deeds of Rizal alleged to have been lost or destroyed
during the last war, covering two parcels of land described as follows: (a) Lot 1 of plan II-4374
situated in the Barrio of San Dionisio, Municipality of Paranaque (now Muntinlupa), Province of Rizal,
with an aggregate area of 717,523 sq. m., and (b) Lot 3 of plan II-4374 situated in the Barrio of San
Dionisio, Municipality of Paranaque, Province of Rizal, with an aggregate area of 717,539 sq. m.
Presented as the basic source of the title sought to be reconstituted was the owner's duplicate of
Transfer Certificate of Title No. T-42449 issued in the name of herein private respondent.

Opposition to the petition for reconstitution was filed by the Director of Lands, Pedro de la Pena
Leodegario R. Alba, Jr., Angel Cruz, Aurora Favila, Democrito R. Favila and Eufracia R. Favila some
of whom withdrew or never appeared or abandoned their claims and after trial, the Court of First
Instance of Rizal on November 19, 1973 denied the petition for reconstitution of Transfer Certificate
of Title No. T-42449 for insufficiency of evidence. Private respondent moved for reconsideration of
the Order, or in the alternative, for the vacation thereof and for a new trial on the ground of newly
discovered evidence. The motion for new trial was granted. After the hearing on the newly
discovered evidence, the court issued on September 18, 1974 an Order again denying reconstitution
of private respondent's original Transfer Certificate of Title No. T-42449, declaring that "(T)he Court
still entertains doubt as to the authenticity and genuineness of Transfer Certificate of Title No. 42449
(Exhibit C) which is sought to be reconstituted."

On appeal to the respondent Court of Appeals 1 filed by private respondent, the same court in its
decision promulgated on October 1, 1976 reversed the appealed Orders.

On October 21, 1976, the remaining oppositor, the Director of Lands, thru the Office of the Solicitor
General, filed with the respondent court a Motion for New Period to File Motion for Reconsideration
alleging excusable negligence on his part for his failure to file an extension of the period within which
to file a motion for reconsideration, to which herein private respondent filed her Opposition. On
November 2, 1976, without waiting for the resolution of the above motion, the Director of Lands filed
a Motion to Admit Motion for Reconsideration attaching thereto his Motion for Reconsideration dated
October 1, 1976. Opposition thereto was likewise filed by herein private respondent. On November
11, 1976, respondent Court issued its Resolution denying herein petitioner's motions on the ground
that the decision sought to be reconsidered had become final and executory.

Hence, the petition at bar filed by the Director of Lands which was given due course by this Court in
the Resolution dated April 22,1977.

On June 14, 1978, the case was submitted for decision. Thereafter, the herein two motions to
intervene were separately filed on December 7, 1978 and December 29, 1978.

Rule 12, Section 2 of the Rules of Court provides the procedure for intervention. According to
Section 2 thereof, which reads:
 Sec. 2. Intervention. - A person may, before or during a trial, be permitted by the
court, in its discretion, to intervene in an action, if he has legal interest in the matter
in litigation, or in the success of either of the parties, or an interest against both, or
when he is so situated as to be adversely affected by a distribution or other
disposition of property in the custody of the court or of an officer thereof.

It is quite clear and patent that the motions for intervention filed by the movants at this stage of the
proceedings where trial has already been concluded, a judgment thereon had been promulgated in
favor of private respondent and on appeal by the losing party, the Director of Lands, the same was
affirmed by the Court of Appeals and the instant petition for certiorari to review said judgment is
already submitted for decision by the Supreme Court, are obviously and manifestly late, beyond the
period prescribed under the aforecoded Section 2, Rule 12 of the Rules of Court.

But Rule 12 of the Rules of Court like all other Rules therein promulgated, is simply a rule of
procedure, the whole purpose and object of which is to make the powers of the Court fully and
completely available for justice. The purpose of procedure is not to thwart justice. Its proper aim is to
facilitate the application of justice to the rival claims of contending parties. It was created not to
hinder and delay but to facilitate and promote the administration of justice. It does not constitute the
thing itself which courts are always striving to secure to litigants. It is designed as the means best
adopted to obtain that thing. In other words, it is a means to an end. 2

The denial of the motions for intervention arising from the strict application of the Rule due to alleged
lack of notice to, or the alleged failure of, movants to act seasonably will lead the Court to commit an
act of injustice to the movants, to their successors-in-interest and to all purchasers for value and in
good faith and thereby open the door to fraud, falsehood and misrepresentation should intervenors'
claims be proven to be true. For it cannot be gainsaid that if the petition for reconstitution is finally
granted, the chaos and confusion arising from a situation where the certificates of title of the
movants covering large areas of land overlap or incroach on properties the title to which is being
sought to be reconstituted by private respondent, who herself indicates in her Opposition that,
according to the Director of Lands, the overlapping embraces some 87 hectares only, is certain and
inevitable. The aggregate area of the property claimed by respondent covering Lot 1 and Lot 2 is
1,435,062 sq. meters which is situated in a fast-growing, highly residential sector of Metro Manila
where growth and development are in rapid progress to meet the demands of an urbanized,
exploding population. Industries, factories, warehouses, plants, and other commercial infrastructures
are rising and spreading with the area and the owners of these lands and the valuable improvements
thereon will not simply fold their hands but certainly will seek judicial protection of their property
rights or may even take the law into their own hands, resulting to multiplicity of suits.

This Tribunal can take judicial notice of innumerable litigations and legal controversies spawned by
overlapping and encroaching boundaries, each party relying on certificates of titles issued under the
Torrens System or the Spanish registration laws or other deeds and documents which prima
facie show their lawful interests or ownership therein. To the ordinary land purchaser not fully
acquainted with the intricacies of the law nor the validity much less the authenticity of these
instruments which in many instances are found to be forged or simply reconstituted with areas that
have increased in "table surveys" with the cooperation of unscrupulous officials, the courts by hastily
stamping their approval on reconstituted titles have wittingly and unwittinglly aided and abetted these
fraudulent transactions resulting in the wiping out of the lifesavings of many a poor, unlettered and
inexperienced lot buyer. The court must guard against such haste and carefully take due precautions
that the public interest be protected.

In the case at bar, the sprawling area of the property in question where various subdivisions.,
residential houses and homes and infrastructures have mushroomed and the great number of
people living or having proprietary rights and interests in such a vast property would certainly bring
about the swamping of the courts and the clogging of their dockets with cases involving not only the
original parties and the movants but also their successors-in-interest. This litigation will have no end,
which this Court will not allow nor tolerate.

But over and above these considerations and circumstances which We have pointed out, there is the
basic and fundamental requirement under the Rules of Court, Section 7, Rule 3, that "Parties in
interest without whom no final determination can be had of an action shall be joined either as
plaintiffs or defendants," The joinder of indispensable parties is compulsory, under any and all
conditions, their presence being a sine qua non of the exercise of judicial power. 3

The herein movants, Greenfield Development Corporation, Alabang Development Corporation,

Ramon D. Bagatsing, and all buyers from them, at least those with ostensible proprietary interests
as the MERALCO, Alabang Hills Subdivision, Cielito Homes Subdivision, Tahanan Village, the
Ministry of Highways insofar as the South Super Highway is affected, are indispensable parties to
these proceedings as it has been shown affirmatively that they have such an interest in the
controversy or subject matter that a final adjudication cannot be made, in their absence, without
injuring or affecting such interest. The joinder must be ordered in order to prevent multiplicity of suits,
so that the whole matter in dispute may be determined once and for all in one litigation. 4 The evident
aim and intent of the Rules regarding the joinder of indispensable and necessary parties is a complete
determination of all possible issues, not only between the parties themselves but also as regards to other
persons who may be affected by the judgment. 5 A valid judgment cannot seven be rendered where there
is want of indispensable parties. 6

We agree with the movants that the indefeasibility and stability of the Torrens System wig be
imperiled should reconstitution be granted, resulting into two holders of certificates of title to areas
that overlap each other. And where the overlapping area embraces 87 hectares or 870,000 sq.
meters as alleged, it becomes essential and imperative to preserve the efficacy and integrity of our
registration system. This aspect of the case which commands the joinder of indispensable parties to
allow them to uphold their interests based upon the Torrens titles they hold overrides any question of
late intervention.

The crux of the matter, however, lies in ascertaining whether there really is overlapping of
boundaries of the properties of the movants for intervention and that of the private respondent. As
We scrutinize carefully the claim of each party based on survey readings and plattings appearing on
the plans submitted as annexes, We find that the same have not passed the rigid test of accuracy
and authenticity as should be determined by precision instruments duly verified by accredited
surveyors. Indeed, each claim may appear to be as good and self-serving as the other. And since
the Supreme Court is not a trier of facts, the veracity and correctness of the alleged overlapping is
better left to those scientifically qualified, trained and experienced and whose integrity is beyond
question and dispute.

PREMISES CONSIDERED, in view of the higher and greater interest of the public and in order to
administer justice consistent with a just, speedy and inexpensive determination of the respective
claims of the parties and their numerous successors-in-interest, the motions for intervention are
hereby granted.

The Court directs the Chief of the Survey Division of the Bureau of Lands or his duly authorized
representative with due notice to the parties and in their presence or that of their duly authorized
representatives to conduct a relocation of the respective boundaries of the properties claimed by the
movants and the private respondent within 90 days after notice and his fees shag be borne equally
by the parties and thereafter to submit to this Court the result of such relocation survey, indicating
therein such overlapping as he may have found and determined and the location of such industries,
factories, warehouses, plants and other commercial infrastructures, residential buildings and other
constructions, public or private roads, and other landmarks found within the areas concerned.

SO ORDERED.

Teehankee, Actg. C.J, (Chairman), Fernandez, De Castro and Melencio-Herrera, JJ., concur.

Makasiar, J., is on leave.

28A. Modes off Discovery (Rule 23-29)

28B. Modes off Discovery (Rule 23-29)

29A. Demurrer to Evidence in Civil Case

[G.R. No. 101941. January 25, 1996]

EDMUNDO QUEBRAL, petitioner, vs. COURT OF APPEALS and UNION

REFINERY CORPORATION, respondents.

DECISION

PANGANIBAN, J.:
 The main question answered in this Decision is: what are the effects of a
reversal by an appellate court of a trial courts order of dismissal based on a
demurrer to evidence? Secondarily, when and how does the Supreme Court
review factual findings of the Court of Appeals?

This is a petition for review on certiorari under Rule 45 of the Revised

Rules of Court to reverse the Decision of the Court of Appeals promulgated
1

on July 29, 1991, in CA-G.R. CV No. 24954, which ordered petitioner to pay
private respondent various sums of money.

This case was originally assigned to the First Division, but by a resolution
dated November 13, 1995, it was transferred to the Third Division. After
deliberating on the petition, comment, reply, and memoranda of the parties -
as well as the records of the case in both the Court of Appeals and in the
Regional Trial Court, this Court assigned the writing of this Decision to the
undersigned ponente.

The Facts

A complaint for a sum of money and damages with preliminary attachment

was filed by private respondent Union Refinery Corporation against petitioner
and Higidio B. Gay-ya, Jr. before the Regional Trial Court, Branch
172, Valenzuela, to collect the amount of P102,991.54, representing the un-
2

paid oil products allegedly purchased by them from private respondent (Civil
Case No. 2664-V-87).

The complaint alleged that on August 6, 1984, private respondent, a

corporation engaged in refining, sale and distribution of oil, gasoline and
lubricants, approved the credit application filed by petitioner which would allow
him to sell private respondents products in La Union, Ilocos Sur, Abra
and Baguio City. Sometime in October, 1984, petitioner and Gay-ya, doing
business under the name Taurus Commercial, represented to private
respondent that they had closed a sale to Susan Lo of Basic Shell Service
Station in Mayumbo, Dagupan City of ten drums of Uniplus oil products for the
amount of P34,201.54, which private respondent delivered as evidenced by
Sales Invoice No. 4106 dated October 22, 1984. Petitioner and Gay-ya had
also caused the delivery of twenty drums of Uniplus oil products costing
P68,790.00, including freight charges allegedly to the service station of
Joseph Li in Mangaldan, Pangasinan as evidenced by Sales Invoice No. 4060
dated October 8, 1984.

The complaint further alleged that since demands for payment of the
deliveries were unheeded by petitioner and Gay-ya, private respondent found
out, upon inquiry, that the duo had connived and conspired with each other
under the business name Taurus Commercial in defrauding private
respondent because Susan Lo and Joseph Li never ordered any products of
private respondent; rather, the said orders were actually sold by the petitioner
and Gay-ya to third persons.

Alleging further that petitioner and Gay-ya were intending to leave the
country thereby exposing private respondent to irreparable damages, the
same complaint prayed for the issuance of a writ of preliminary attachment. It
also prayed that petitioner and Gay-ya be held jointly and severally liable in
the amounts of P102,991.54 plus interest thereon, P100,000.00 as damages,
and P50,000.00 as attorneys fees.

After hearing, the trial court granted the prayer for a writ of preliminary
attachment upon private respondents filing of a bond in the amount of
P103,000.00. In compliance with the order of attachment duly issued by the
court on December 28, 1987, a parcel of riceland and a house in Villa Quirino,
San Esteban, Ilocos Sur, declared by petitioner and his wife as their own for
tax purposes, were attached. Personal properties owned by Gay-ya were also
attached.

Contending that he was merely a sales agent of petitioner, Gay-ya filed a

motion to dismiss the complaint and to lift the attachment of his proper-ties.
Private respondent opposed the motion asserting that Gay-ya x x x converted
to his own use the proceeds of the oil products amounting to P100,000.00.
Annexed to the opposition was a copy of Gay-yas letter dated July 19, 1985
addressed to the Credit and Collection Manager of private respondent,
referring to the account of Mr. EDMUNDO V. QUEBRAL in the amount of
P102,991.54 and admitting personal liability for the following:

21 (I/200) Drums Uniplus at P3,500.00 per Drum - P73,500.00

Personal loan from E.V. Quebral - 18,404.73

Total accountability due URC &/or E.V. Quebral - P91,904.73

In the promissory note dated July 19, 1985 appended to the aforesaid
letter, Gay-ya obligated himself to pay the total amount of P91,904.73 to
private respondent under a schedule of payments showing that the payments
would be made between August 30, 1985 and May 30, 1986. Both the
promissory note and the schedule of payments bore the signature of petitioner
under the word Conforme.

On April 11, 1988, the trial court denied Gay-yas motion to dismiss and to
lift the attachment. On April 19, 1988, private respondent moved that
petitioner be declared in default but on April 26, 1988, petitioner filed an
answer with counterclaim.

In his answer, petitioner categorically denied that he was a business

partner of Gay-ya but admitted that he was Gay-yas erstwhile co-employee at
the Getty Oil Philippines. He averred that Gay-ya transacted business with
private respondent without his knowledge and consent while using his good
name and credit standing with private respondent. He asserted that he did not
benefit from the business transactions between private respondent and Gay-
ya and denied that he was leaving the country to abscond. He interposed a
counterclaim against private respondent for the malicious and groundless
action brought against him which allegedly caused him mental anguish. He
therefore prayed for reasonable damages plus attorneys fees aside from the
crossclaim for damages he filed against Gay-ya.

Upon motion of private respondent, Gay-ya was declared in default in the

order of June 17, 1988.

In its order of September 23, 1988, the trial court granted petitioners
motion to lift the order of attachment citing as reasons therefor private
respondents failure to substantiate its claim that petitioner was leaving the
country to abscond and to prove that there were no sufficient securities for the
enforcement of its claims.
 The possibility of an amicable settlement between petitioner and private
respondent being re-mote, the case was heard in due course. On June 15,
1989, after the private respondent had presented its evidence, petitioner filed
a demurrer to evidence contending that private respondent had failed to
present material and competent evidence sufficient to hold (petitioner) civilly
liable for the claims against him. Petitioner averred that private respondents
evidence failed to prove that: (a) his credit application was duly approved; (b)
granting that such application was approved by private respondent, the
deliveries, per the invoices presented in evidence, were outside of the named
areas of coverage appearing in the application, and (c) he never signed any
purchase order in relation to the subject of the claims.

On June 26, 1989, the trial court rendered a decision holding that there
was no evidence of petitioners participation in the transactions involved, as he
had not received the goods and the deliveries were made in places outside of
La Union, Ilocos Sur, Ilocos Norte, Abra and Baguio City. It also found that
petitioners conformity to Gay-yas promissory note and schedule of payments
did not make him liable because it merely showed his conformity to the
assumption by defendant Higidio Gay-ya, Jr. of such liability. It disposed of the
case as follows:

WHEREFORE, in view of the foregoing, the case as against Edmundo Quebral is

hereby dismissed. On the other hand, judgment is hereby rendered in favor of plaintiff
and against defendant Higidio Gay-ya, Jr. ordering him to pay plaintiff:

1. The sum of P102,991.54 plus interest at legal rate from October 8, 1984 until the full
amount is paid;

2. To pay plaintiff the sum of P20,000.00 by way of attorneys fees;

3. Declaring the writ of preliminary attachment against the property of defendant

Higidio Gay-ya, Jr. permanent; and

4. Defendant to pay the costs of suit.

Gist of Appellate Courts Decision

Private respondent appealed to the Court of Appeals which, on July 29,

1991, rendered its Decision finding that, contrary to petitioners allegation in
his demurrer to evidence, it was not necessary for private respondent to prove
the approval of petitioners credit application because the fact of such approval
was alleged in paragraph 3 of the complaint, and petitioner had admitted in
paragraph 2 of his answer said paragraph of the complaint. The appellate
court ruled that by such judicial ad-mission, petitioner could no longer dispute
the fact of the approval of his credit application.

On petitioners denials that he was the business partner of Gay-ya and that
he had not known about nor consented to Gay-yas transactions with private
respondent, the Court of Appeals said:

Defendant Quebral, however, denied in his answer that the other defendant Higidio
Gay-ya, Jr. was his business partner. This denial might be true, but in his credit
application Exh. B or 1, he expressly named Gay-ya together with himself as the
PERSONS AU-THORIZED TO RECEIVE GOODS/DELIVERIES from plaintiff-
appellant corporation; and in his letter to appellants official Efren Vargas Exh. K,
defendant Quebral introduced Gay-ya to Vargas as my representative. Hence, although
Gay-ya might not have been defendant Quebrals partner, he (Quebral), however,
expressly made known to appellant corporation that Gay-ya was his duly authorized
representative in his business, and he could not, therefore, blame appellant for
regarding Gay-ya as such.

Defendant Quebral also denied in his answer knowledge of or consent to the

transactions represented by the unpaid Sales Invoices Exhs. C and D dated October 8,
and 22, 1984, respectively, claiming that it was only his defaulting co-defendant
Higidio B. Gay-ya, Jr. who transacted said sales with plaintiff-appellant corporation.
And Quebral later claimed in his demurrer, which the lower court sustained, that
plain-tiff-appellants evidence had failed to show that he knew of and was equally
liable with Gay-ya for the value of the unpaid sales invoices. We are of the opinion,
though, that contrary to defendant Quebrals claim and the ruling of the lower court in
his favor, plaintiff-appellant corporation had sufficiently established by its evidence
defendant Quebrals knowledge of and liability for the unpaid sales invoices in
question, and as said defendant opted not to present evidence for himself and to rely
solely on his demurrer to plaintiff-appellants evidence, then the latters evidence in this
case stands uncontradicted and unrefuted and should, therefore, be taken as true.
 The Court of Appeals noted petitioners ad-mission to the sheriff of his
liability. As reflected in the sheriffs return, upon receiving the order of
attachment, petitioner proposed an arrangement wherein he undertook to
settle his obligation with the plaintiff corporation within reasonable time, for
which reason the sheriff, in good faith, did not effect the attachment
immediately. As regards Gay-yas promissory note bearing petitioners
conformity and signature, the Court of Appeals held that such conforme to
Gay-yas personal assumption of responsibility for P91,904.73 out of the
P102,991.54 which the latter even referred to in his covering letter as the
account of Mr. EDMUNDO V. QUEBRAL, only binds Gay-ya and himself but
does not necessarily bind appellant corporation who does not appear to have
agreed to Gay-yas promissory note assuming personal liability for P9
1,904.73 out of Quebrals account of P102,991.54 and his (Gay-yas) proposal
to pay said amount on installment x x x. Therefore, the Court of Appeals
concluded that petitioner is still liable to private respondent for the amount of
P102,991.54 inspite of Gay-yas promissory note, and especially as said
promissory note also has remained unpaid. Furthermore, it was immaterial
that the transactions involved were made in areas outside of the cover-age of
the credit application for, as testified to by the private respondents comptroller,
petitioner could also sell in nearby provinces.

The Court of Appeals considered as the most telling documentary

evidence yet against petitioner his own handwritten letter dated January 19,
1985 to Efren Vargas, an official of private respondent, which reads:

1-19, 1985

MR. EFREN VARGAS

UNIOIL

Dear Mr. Vargas,

Bearer is Mr. HB Gay-ya, Jr., my representative. He is accompanying Mr. DICK

COSUE, operator of SHELL SS in Carmen, Rosales, Pang. He is the cousin of Mr. W.
T. KHO. He is interested in buying 20 drums of PROCESS OIL 150. He is asking for
30 days term and will give you his personal check. His present terms with SHELL is
M-30. If you can accomodate him, bill him directly at P3100.00/drum. You may send
Mr. Gay-ya to the plant to insure correctness of invoicing.

We are consolidating collection of the drums delivered to Joseph Li & Ms. Susan Lo.
Mr. Gay-ya will explain to you further.

By the way, 1 drum delivered to Ms. Lo is leaking. It was half the content already
when I last visited her in Dagupan.

We will remit our collection soon.

Thanks & Regards,

Ed

On this piece of evidence, the Court of Ap-peals said:

Defendant Quebral did not deny, as he could not have denied, his foregoing personal
letter to appellants official Efren Vargas who approved his credit application with said
corporation. All he stated in his demurrer to plaintiff-appellants evidence with respect
to said letter is that it is worthless and does not have probative value in relation to the
purpose for which it is being offered considering that it was never duly established.
The alleged addressee of the letter was never presented to properly identify the same.
(p. 180, Rec.) We find this contention incorrect, however, since said letter which was
addressed to appellants official Efren Vargas, was presented by appellant as its Exhs.
K and K-I and identified by its witness Milagros Po during her direct and additional
direct examination to have been received by their office from defendant Quebral by
way of reply to their collection letter and telegram which they had sent to the latter
(pp. 2-3, tsn. Jan. 10, 1989; pp. 16-17, tsn Feb. 21, 1989). There was no need for
Efren Vargas then to identify said letter himself since it was written to him by Quebral
not in his personal capacity but in his capacity as an officer of appellant corporation
and in connection with its business dealings with Quebral, and especially as the very
contents of said letter shows that it was personally delivered to Vargas by defendant
Quebrals representative, the other defendant Higidio Gay-ya. In fact, appellant
corporation would not have been able to present said letter of Quebral as evidence in
this case if it did not receive the same from the latter in the ordinary course of
business. As defendant Quebral had failed to present any contrary evidence to show
that his said letter Exh. K had not been actually received by or delivered to appellant
corporation, therefore, we believe and so hold that appellant corporation had
sufficiently proved its receipt of said letter from Quebral.

Interpreting petitioners letter, the Court of Appeals drew the following

conclusions: petitioner had indeed ordered oil products which he sold to
Joseph Li and Susan Lo, and he himself promised to collect from said
customers and to remit the collections to private respondent. Noting that in the
letter, petitioner was introducing Gay-ya while in-voices involved were dated
before the letter was sent, the Court of Appeals held that it could not have
been possible for Gay-ya to make the particular orders manifested by the
invoices. Thus, were it not for Gay-yas promissory note, petitioner should be
held liable for the total amount of P102,991.54 because he acted upon the
authority given him by the petitioner. Accordingly, the Court of Appeals
disposed of the appeal as follows:

WHEREFORE, the judgment appealed from herein is REVERSED and SET ASIDE,
and another judgment is entered herein:

On appellants complaint:

(1) Holding both defendants Edmundo Quebral and the defaulting defendant Higidio
Gay-ya, Jr. liable to appellant corporation for the amount of P91,904.73, plus legal
interests thereon until said amount is fully paid, with the right on the part of appellant
corporation to collect said amount from either defendant Quebral or Gay-ya;

(2) Ordering defendant Edmundo Quebral to pay appellant corporation the amount of
P11,086.81, which is the difference between the amount of P91,904.73 covered by
defendant Gay-yas promissory note of Exh. J-2 and the amount of P102,991.54,
which is the aggregate value of the Sales Invoices Exhs. C and D;

(3) Ordering defendant Quebral to pay appellant corporation 25% attorneys fees on the
amount of P102,991.54, as stipulated in the Sales Invoices Exhs. C and D; and

(4) Ordering both defendants Quebral and Gay-ya to pay the costs of this suit.

On defendant Quebrals cross-claim:

(1) Ordering defendant Gay-ya to pay his co-defendant Quebral whatever principal
amount the latter would be compelled to pay appellant corporation, up to the amount
of P91,904.73, plus legal interests thereon until said amount is fully paid; and
 (2) Ordering defendant Gay-ya to pay one-half of the attorneys fees and costs that
defendant Quebral would likewise be compelled to pay appellant corporation in this
case.

Alleged Errors of the Court of Appeals Raised by Petitioner

Petitioner filed a motion for the reconsideration of the Court of Appeals

decision but it was denied. Hence, the instant petition charging the Court of
Appeals with patent and manifest error in: (a) admitting and considering
Exhibit K as the basis for the finding that Gay-ya was petitioners
representative; (b) finding that there were purchase orders made by petitioner;
(c) finding that petitioner had sufficient knowledge of and liability for the
unpaid sales invoices, and (d) relying upon and giving weight to the
report/explanation of the deputy sheriff.

The foregoing alleged errors are attacks on factual findings of the

appellate court, which normally are not reviewable by this Court in petitions
under Rule 45. However, since the factual findings of the respondent Court
are at variance with those of the trial court, we decided to go over the records
of the case both in the Court of Appeals and in the Regional Trial Court.

Petitioner asserts that he vigorously objected to the admission of Exhibit K

primarily because its original was not produced and introduced in court nor
was the supposed addressee presented as a witness to testify and be cross-
examined on said exhibit.

The Courts Ruling

We find such assertion to be an attempt on the part of petitioner to foist a

falsehood and to mislead this Court. The same attempt to mislead is repeated
in petitioners blatant statement that a careful scrutiny of the record of Civil
Case No. 2664-V reveals that theres no indication that said original was ever
produced in court. However, extant in the folder of Exhibits in Civil Case No.
2664-V-87, specifically page 7 thereof, is Exhibit K. It is the original letter
itself, handwritten by petitioner on a piece of stationery the upper lefthand
corner of which bears this printed identification: From the desk of: E.V.
Quebral, which was marked as Exh. K-2.
 Even if it were true that Exhibit K consisted of a mere photocopy and not
the original of the petitioners letter, petitioner nevertheless failed to make
timely objection thereto. As to when an objection to a document must be
made, the Court ruled in Interpacific Transit, Inc. v. Aviles: 3

Objection to the documentary evidence must be made at the time it is formally

offered, not earlier. The identification of the document before it is marked as an
exhibit does not constitute the formal offer of the document as evidence for the party
presenting it. Objection to the identification and marking of the document is not
equivalent to objection to the document when it is formally offered in evidence. What
really matters is the objection to the document at the time it is formally offered as an
exhibit. (Italics supplied)

In the case at bench, no such timely objection was ever made.

Consequently, the evidence not objected to became property of the case, and
all parties to the case are considered amenable to any favorable or
unfavorable effects resulting from the evidence. As it was, instead of objecting
to said document, petitioner simply filed a demurrer to evidence, in the
manner described in his own words, as folIows: 4

Said EXH. K was never admitted in evidence as the record shows. When
the court a quo directed defendant (herein petitioner) Edmundo Quebral to file
a written comment on the exhibits submitted by plaintiff (respondent herein),
before it could make any ruling on their admission, defendant Quebral filed
instead a demurrer to evidence which the court sustained that led to the
dismissal of the case insofar as herein petitioner Quebral is concerned.

Contrary to petitioners claim, however, Exhibit K was in fact produced,

introduced, and offered as evidence. This is reflected in the transcript of
stenographic notes as follows:

ATTY. QUINONES:

xxx xxx xxx

Q In your additional direct examination last time, you presented a letter from Mr.
Edmundo Quebral, which was marked as Exhibit K. Kindly show it to the Court..

A (Witness producing..)
ATTY. QUINONES:

Witness producing Exhibit K which is the letter addressed to Mr. Efren Vargas of
UNIOIL, dated January 19, 1985 and the dorsal portion marked as Exh. K-I. May
we be allowed to have this into the records -

COURT: Is that letter the subject of cross-examination?

ATTY. QUEBRAL:

No, your Honor, I have not touched on that.

COURT: You cannot present that. It is not even in my notes.

ATTY. QUINONES:

May we have it recorded.

COURT: You should have done that during the direct. Why dont you move for
additional direct?

ATTY. QUINONES:

If the Court would only remember, during that time that we are presenting this letter,
this representation was .

COURT: It would only prolong the whole thing. Since the question is not the subject of
cross-examination you cannot ask redirect on that. If you want to, ask permission
that you want to ask additional direct. I just want this to be on procedure.

ATTY. QUINONES:

I remember it was.

COURT: Show it if it was the subject of cross-examination.

ATTY. QUEBRAL:

Considering that we requested that we be furnished a copy, we did not touch that on
cross-examination, your Honor.

COURT: That is why I said you should ask for additional direct.

ATTY. QUINONES:
 In that case, may we be allowed to ask additional direct, Your Honor.

COURT: So this is additional direct..

ADDITIONAL DIRECT BY:

ATTY. QUINONES:

Q This letter that you have produced already marked as Exhibit K and the dorsal
portion as Exh. K-I, there is a signature below the words Thanks and regards, Ed.
Tell the Honorable Court who is this Ed mentioned in this letter?

A Mr. Ed Quebral, that is his signature, because he suing (sic) his stationery.

Q To whom was it addressed?

A To Mr. Efren Vargas, sir.

Q Not to you?

A No, sir.

ATTY. QUINONES:

This is a stationery coming from the desk of E.V. Quebral, which for purposes of
identification, we request to be marked as Exhibit K-2, your Honor.

COURT: Mark it.

ATTY. QUINONES:

And likewise, this portion which was identified by the witness, Thanks and regards
Ed be bracketed and marked as Exh. K-3, your Honor.

COURT: Mark it.

ATTY. QUINONES:

May I then go back to redirect examination, your Honor.

Exhibit K was formally offered in evidence by private respondent on June

8, 1989 together with other exhibits. Asked by the lower court to comment on
the exhibits offered, petitioner instead re-quested that he be formally furnished
with copies of the documents and that he be given seven days to comment.
The court, however, gave him only five days. As earlier stated, petitioner did
not file the required comment - he opted to file a demurrer to evidence. Such
move proved to be costly error.

Section 1, Rule 35 of the Revised Rules of Court provides:

Section. 1. Effect of judgment on demurrer to evidence. - After plaintiff has completed

the presentation of his evidence, the defendant without waiving his right to offer
evidence in the event the motion is not granted, may move for a dismissal on the
ground that upon the facts and the law the plaintiff has shown no right to relief.
However, if the motion is granted and the order of dismissal is reversed on appeal, the
movant loses his right to present evidence in his behalf.

A demurrer to evidence abbreviates proceedings, it being an aid or

instrument for the expeditious termination of an action, similar to a motion to
dismiss, which the court or tribunal may either grant or deny. However, 5

whoever avails of it gambles his right to adduce evidence. Pursuant to the

6

aforequoted provisions of Rule 35, if the defendants motion for judgment on

demurrer to evidence is granted and the order of dismissal is reversed on
appeal, judgment is rendered in favor of the adverse party because the
movant loses his right to present evidence. 7

Petitioners contentions before this Court are premised on the erroneous

appreciation by the Court of Appeals of private respondents evidence in the
trial court. Since such appreciation and the appellate courts conclusions
thereon, as mentioned earlier, are contradictory to that of the trial court, the
case at bench falls under the exception to the general rule that factual findings
of the Court of Appeals are considered final and conclusive. Accordingly, the
8

Court closely examined the records, only to find out that there is no reason to
overturn the findings of the Court of Appeals which are amply supported by
sufficient evidence.

WHEREFORE, the instant petition for review is DENIED and the decision
of the Court of Appeals is affirmed in toto. Costs against petitioner.

SO ORDERED.
 Narvasa, C.J. (Chairman), Davide, Jr., Melo, and Francisco, JJ., concur.

29B. Order granting demurrer to evidence should contain facts and law on which it
is based.

G.R. No. 88709 February 11, 1992

NICOS INDUSTRIAL CORPORATION, JUAN COQUINCO and CARLOS COQUINCO, petitioners,

vs.
THE COURT OF APPEALS, VICTORINO P. EVANGELISTA, in his capacity as Ex-Officio Sheriff
of Bulacan, UNITED COCONUT PLANTERS BANK, MANUEL L. CO, GOLDEN STAR
INDUSTRIAL CORPORATION and THE REGISTER OF DEEDS FOR THE PROVINCE OF
BULACAN, respondents.

Manuel T. Ubarra for petitioners.

Encanto, Mabugat & Associates for UCPB.

Mangalindan and Bermas Law Offices for private respondent.

Federico Reyes for Manuel L. Co.

CRUZ, J.:

We are asked once again to interpret the constitutional provision that no decision shall be rendered
by any court without stating therein clearly and distinctly the facts and the law on which it is
based, 1 this time in connection with an order of the trial court sustaining demurrer to the evidence. 2 The
order has been affirmed by the respondent Court of Appeals, 3 and the appellant has come to this Court in
this petition for review on certiorari, invoking the said provision and alleging several reversible errors.

In the complaint filed by the petitioners before the Regional Trial Court of Bulacan, it was alleged that
on January 24, 1980, NICOS Industrial Corporation obtained a loan of P2,000,000.00 from private
respondent United Coconut Planters Bank and to secure payment thereof executed a real estate
mortgage on two parcels of land located at Marilao, Bulacan. The mortgage was foreclosed for the
supposed non-payment of the loan, and the sheriff's sale was held on July 11, 1983, without re-
publication of the required notices after the original date for the auction was changed without the
knowledge or consent of the mortgagor. UCPB was the highest and lone bidder and the mortgaged
lands were sold to it for P3,558,547.64. On August 29, 1983, UCPB sold all its rights to the
properties to private respondent Manuel Co, who on the same day transferred them to Golden Star
Industrial Corporation, another private respondent, upon whose petition a writ of possession was
issued to it on November 4, 1983. On September 6, 1984, NICOS and the other petitioners, as
chairman of its board of directors and its executive vice-president, respectively, filed their action for
"annulment of sheriff's sale, recovery of possession, and damages, with prayer for the issuance of a
preliminary prohibitory and mandatory injunction."
Golden Star and Victorino P. Evangelista, as ex officio sheriff of Bulacan, moved to dismiss the
complaint on the grounds of lack of jurisdiction, prescription, estoppel, and regularity of the sheriff's
sale. Co denied the allegations of the plaintiffs and, like the other defendants, counterclaimed for
damages. In its answer with counterclaim, UCPB defended the foreclosure of the mortgage for
failure of NICOS to pay the loan in accordance with its promissory note and insisted that the sheriff's
sale had been conducted in accordance with the statutory requirements.

The plaintiffs presented two witnesses, including petitioner Carlos Coquinco, who testified at three
separate hearings. They also submitted 21 exhibits. On April 30, 1986, Golden Star and Evangelista
filed a 7-page demurrer to the evidence where they argued that the action was a derivative suit that
came under the jurisdiction of the Securities and Exchange Commission; that the mortgage had
been validly foreclosed; that the sheriff's sale had been held in accordance with Act 3135; that the
notices had been duly published in a newspaper of general circulation; and that the opposition to the
writ of possession had not been filed on time. No opposition to the demurrer having been submitted
despite notice thereof to the parties, Judge Nestor F. Dantes considered it submitted for resolution
and on June 6, 1986, issued the
following

ORDER

Acting on the "Demurrer to Evidence" dated April 30, 1986 filed by defendants
Victorino P. Evangelista and Golden Star Industrial Corporation to which plaintiff and
other defendants did not file their comment/opposition and it appearing from the very
evidence adduced by the plaintiff that the Sheriff's Auction Sale conducted on July
11, 1983 was in complete accord with the requirements of Section 3, Act 3135 under
which the auction sale was appropriately held and conducted and it appearing from
the allegations in paragraph 13 of the plaintiff's pleading and likewise from plaintiff
Carlos Coquinco's own testimony that his cause is actually-against the other officers
and stockholders of the plaintiff Nicos Industrial Corporation ". . . for the purpose of
protecting the corporation and its stockholders, as well as their own rights and
interests in the corporation, and the corporate assets, against the fraudulent ants and
devices of the responsible officials of the corporation, in breach of the trust reposed
upon them by the stockholders . . ." a subject matter not within the competent
jurisdiction of the Court, the court finds the same to be impressed with merit.

WHEREFORE, plaintiff's complaint is hereby dismissed. The Defendants' respective

counterclaims are likewise dismissed.

The Writ of Preliminary Injunction heretofore issued is dissolved and set aside.

It is this order that is now assailed by the petitioners on the principal ground that it violates the
aforementioned constitutional requirement. The petitioners claim that it is not a reasoned decision
and does not clearly and distinctly explain how it was reached by the trial court. They also stress that
the sheriff's sale was irregular because the notices thereof were published in a newspaper that did
not have general circulation and that the original date of the sheriff's sale had been changed without
its consent, the same having been allegedly given by a person not authorized to represent NICOS. It
is also contended that the original P2 million loan had already been paid and that if there was indeed
a second P2 million loan also secured by the real estate mortgage, it was for UCPB to prove this, as
well as its allegation that NICOS had defaulted in the payment of the first quarterly installment on the
first loan.
The petitioners complain that there was no analysis of their testimonial evidence or of their 21
exhibits, the trial court merely confining itself to the pronouncement that the sheriff's sale was valid
and that it had no jurisdiction over the derivative suit. There was therefore no adequate factual or
legal basis for the decision that could justify its review and affirmance by the Court of Appeals.

Rejecting this contention, the respondent court held:

In their first assignment of error, appellants faults the court for its failure to state
clearly and distinctly the facts and the law on which the order of dismissal is based,
as required by Section 1, Rule 36, of the Rules of Court and the Constitution.

An order granting a demurrer to the evidence is in fact an adjudication on the merits

and consequently the requirements of Section 1, Rule 36, is applicable. We are not
however prepared to hold that there is a reversible omission of the requirements of
the rule in the Order appealed from, it appearing from a reading thereof that there is
substantial reference to the facts and the law on which it is based.

The Order which adverts to the Demurrer to the Evidence expressly referred to the
evidence adduced by the plaintiff as showing that the Sheriff's auction sale
conducted on July 11, 1983, was in complete accord with the requisites of Section 3,
Act 3135 under which the auction sale was apparently held and conducted. It
likewise makes reference to the allegations in paragraph 13 of plaintiff's pleadings
and plaintiff Carlos Coquinco's own testimony that the case is actually against the
other officers and stockholders of plaintiff NICOS Industrial Corporation and
concludes, rightly or wrongly, that the subject matter thereof is not within the
competent jurisdiction of the Court.

We hold that the order appealed from as framed by the court a quo while leaving
much to be desired, substantially complies with the rules.

This Court does not agree. The questioned order is an over-simplification of the issues, and violates
both the letter and spirit of Article VIII, Section 14, of the Constitution.

It is a requirement of due process that the parties to a litigation be informed of how it was decided,
with an explanation of the factual and legal reasons that led to the conclusions of the court. The
court cannot simply say that judgment is rendered in favor of X and against Y and just leave it at that
without any justification whatsoever for its action. The losing party is entitled to know why he lost, so
he may appeal to a higher court, if permitted, should he believe that the decision should be reversed.
A decision that does not clearly and distinctly state the facts and the law on which it is based leaves
the parties in the dark as to how it was reached and is especially prejudicial to the losing party, who
is unable to pinpoint the possible errors of the court for review by a higher tribunal.

It is important to observe at this point that the constitutional provision does not apply to interlocutory
orders, such as one granting a motion for postponement or quashing a subpoena, because it "refers
only to decisions on the merits and not to orders of the trial court resolving incidental matters." 4 As
for the minute resolutions of this Court, we have already observed in Borromeo v. Court of Appeals 5 that

The Supreme Court disposes of the bulk of its cases by minute resolutions and
decrees them as final and executory, as where a case is patently without merit,
where the issues raised are factual in nature, where the decision appealed from is
supported by substantial evidence and is in accord with the facts of the case and the
 applicable laws, where it is clear from the records that the petitions were filed merely
to forestall the early execution of judgment and for non-compliance with the rules.
The resolution denying due course or dismissing a petition always gives the legal
basis.

xxx xxx xxx

The Court is not duty bound to render signed decisions all the time. It has ample
discretion to formulate decisions and/or minute resolutions, provided a legal basis is
given, depending on its evaluation of a case.

The order in the case at bar does not come under either of the above exceptions. As it is settled that
an order dismissing a case for insufficient evidence is a judgment on the merits, 6 it is imperative that
it be a reasoned decision clearly and distinctly stating therein the facts and the law on which it is based.

It may be argued that a dismissal based on lack of jurisdiction is not considered a judgment on the
merits and so is not covered by the aforecited provision. There is no quarrel with this established
principle. However, the rule would be applicable only if the case is dismissed on the sole ground of
lack of jurisdiction and not when some other additional ground is invoked.

A careful perusal of the challenged order will show that the complaint was dismissed not only for lack
of jurisdiction but also because of the insufficiency of the evidence to prove the invalidity of the
sheriff's sale. Regarding this second ground, all the trial court did was summarily conclude "from the
very evidence adduced by the plaintiff" that the sheriff's sale "was in complete accord with the
requirements of Section 3, Act 3135." It did not bother to discuss what that evidence was or to
explain why it believed that the legal requirements had been observed. Its conclusion was
remarkably threadbare. Brevity is doubtless an admirable trait, but it should not and cannot be
substituted for substance. As the ruling on this second ground was unquestionably a judgment on
the merits, the failure to state the factual and legal basis thereof was fatal to the order.

Significantly, the respondent court found that the trial court did have jurisdiction over the case after
all. This made even more necessary the factual and legal explanation for the dismissal of the
complaint on the ground that the plaintiff's evidence was insufficient.

In People v. Escober, 7 the trial court in a decision that covered only one and a half pages, single spaced
found the defendant guilty of murder and sentenced him to death. Holding that the decision violated the
constitutional requirement, the Court observed through then Associate Justice Marcelo B. Fernan:

The above-quoted decision falls short of this standard. The inadequacy stems
primarily from the respondent judge's tendency to generalize and to form conclusions
without detailing the facts from which such conclusions are deduced. Thus, he
concluded that the material allegations of the Amended Information were the facts
without specifying which of the testimonies or the exhibits supported this conclusion.
He rejected the testimony of accused-appellant Escober because it was allegedly
replete with contradictions without pointing out what these contradictions consist of or
what "vital details" Escober could have recalled as a credible witness. He also found
the crime to be attended by the aggravating circumstances of cruelty, nighttime,
superior strength, treachery, in band, "among others" but did not particularly state the
factual basis for such findings.

While it is true that the case before us does not involve the life or liberty of the defendant, as in
Escober, there is still no reason for the constitutional short-cut taken by the trial judge. The
properties being litigated are not of inconsequential value; they were sold for three and a half million
pesos in 1983 and doubtless have considerably appreciated since then, after more than eight years.
These facts alone justified a more careful and thorough drafting of the order, to fully inform the
parties and the courts that might later be called upon to review it of the reasons why the demurrer to
the evidence was sustained and the complaint dismissed.

In Romero v. Court of Appeals, 8 the Court, somewhat reluctantly, approved a memorandum decision of the Court of Appeals
consisting of 4 pages, single-spaced, which adopted by reference the findings of fact and conclusions of law of the Court of Agrarian
Relations. While holding that the decision could be considered substantial compliance with PD 946, Section 18, 9 and BP 129, Section
40, 10 Justice Jose Y. Feria nevertheless expressed the misgiving that "the tendency would be to follow the
line of least resistance by just adopting the findings and conclusions of the lower court without thoroughly
studying the appealed case."

Obviously, the order now being challenged cannot qualify as a memorandum decision because it
was not issued by an appellate court reviewing the findings and conclusions of a lower court. We
note that, contrary to the impression of the respondent court, there is not even an incorporation by
reference of the evidence and arguments of the parties, assuming this is permitted. No less
importantly, again assuming arguendo that such reference is allowed and has been made, there is
no immediate accessibility to the incorporated matters so as to insure their convenient examination
by the reviewing court. In Francisco v. Permskul, 11 which is the latest decision of the Court on the issue
now before us, we categorically required:

. . . Although only incorporated by reference in the memorandum decision of the

regional trial court, Judge Balita's decision was nevertheless available to the Court of
Appeals. It is this circumstance, or even happenstance, if you will, that has validated
the memorandum decision challenged in this case and spared it from constitutional
infirmity.

That same circumstance is what will move us now to lay down the following
requirement, as a condition for the proper application of Section 40 of BP Blg. 129.
The memorandum decision, to be valid, cannot incorporate the findings of fact and
the conclusions of law of the lower court only by remote reference, which is to say
that the challenged decision is not easily and immediately available to the person
reading the memorandum decision. For the incorporation by reference to be allowed,
it must provide for direct access to the facts and the law being adopted, which must
be contained in a statement attached to the said decision. In other words, the
memorandum decision authorized under Section 40 of BP Blg. 129 should actually
embody the findings of fact and conclusions of law of the lower court in an annex
attached to and made an indispensable part of the decision.

It is expected that this requirement will allay the suspicion that no study was made of
the decision of the lower court and that its decision was merely affirmed without a
proper examination of the facts and the law on which it was based. The proximity at
least of the annexed statement should suggest that such an examination has been
undertaken. It is, of course, also understood that the decision being adopted should,
to begin with, comply with Article VIII, Section 14 as no amount of incorporation or
adoption will rectify its violation.

In Escober, the Court observed that the flawed decision "should have been remanded to the court a
quo for the rendition of a new judgment" but decided nevertheless to decide the case directly, the
records being already before it and in deference to the right of the accused to a speedy trial as
guaranteed by the Bill of Rights. However, we are not so disposed in the case now before us.
It is not the normal function of this Court to rule on a demurrer to the evidence in the first instance;
our task comes later, to review the ruling of the trial court after it is examined by the Court of Appeals
and, when proper, its decision is elevated to us. In the present case, we find that the respondent
court did not have an adequate basis for such examination because of the insufficiency of the
challenged order. It must also be noted that we deal here only with property rights and, although we
do not mean to minimize them, they do not require the same urgent action we took in Escober, which
involved the very life of the accused. All things considered, we feel that the proper step is to remand
this case to the court a quo for a revision of the challenged order in accordance with the
requirements of the Constitution.

Review by the Court of the other issues raised, most of which are factual, e.g., the allegation of
default in the payment of the loan, the existence of a second loan, the nature of the newspapers
where the notices of the sale were published, the authority of the person consenting to the
postponement of the sale, etc., is impractical and unnecessary at this time. These matters should be
discussed in detail in the revised order to be made by the trial court so that the higher courts will
know what they are reviewing when the case is appealed.

In one case, 12 this Court, exasperated over the inordinate length of a decision rife with irrelevant details,
castigated the trial judge for his "extraordinary verbiage." Kilometric decisions without much substance
must be avoided, to be sure, but the other extreme, where substance is also lost in the wish to be brief, is
no less unacceptable either. The ideal decision is that which, with welcome economy of words, arrives at
the factual findings, reaches the legal conclusions, renders its ruling and, having done so, ends.

WHEREFORE, the challenged decision of the Court of Appeals is SET ASIDE for lack of basis. This
case is REMANDED to the Regional Trial Court of Bulacan, Branch 10, for revision, within 30 days
from notice, of the Order of June 6, 1986, conformably to the requirements of Article VIII, Section 14,
of the Constitution, subject to the appeal thereof, if desired, in accordance with law. It is so ordered.

Narvasa, C.J., Grio-Aquino and Medialdea, JJ., concur.

29C. Certiorari does not lie to review an order denying a demurrer to evidence.

[G.R. No. 129774. December 29, 1998]

NARCISO A. TADEO, petitioner, vs. PEOPLE OF THE

PHILIPPINES, respondent.

DECISION

PARDO, J.:

The case before the Court is an appeal via certiorari taken by petitioner from the decision of
the Court of Appeals dismissing the petition for certiorari to annul the trial courts order denying
his demurrer to evidence in eight (8) cases for violation of Batas Pambansa Bilang 22 filed
against him before the Regional Trial Court, Branch 94, Quezon City.
 Complainant Ms. Luz M. Sison was the owner of commercial apartments at 731 Edsa corner
Ermin Garcia, Cubao, Quezon City.[1]

In 1985, petitioners wife leased from complainant one unit of the apartment at a monthly
consideration of P7,000.00, for a period of five years. After two years, she also leased the
adjacent apartment at an additional monthly consideration of P4,000.00. However, in early 1988,
petitioners wife incurred rental arrears with complainant in the amount of P113,300.00. In order
to settle the account, petitioner negotiated with complainant. He issued eight (8) postdated
checks dated February 8, 1988 to August, 1988, payable to complainant covering the unpaid
rental arrears of P113,300.00. All the checks bounced upon deposit with the drawee bank. After
the last check was returned to complainant unpaid, with the notation DAIF, meaning drawn
against insufficient funds stamped thereon, on October 13, 1988, complainants counsel wrote
petitioner demanding that the unpaid checks be redeemed within three (3) days from receipt of
the letter.[2]

On October 26, 1988, petitioner wrote complainant expressing willingness to discuss the
matter with her counsel. However, he did not redeem the unpaid checks; indeed, he did not even
mention any intention to pay complainant or to make arrangements for payment of the
dishonored checks.[3]

On January 9, 1989, Assistant Prosecutor Jesus E. Bigornia, Jr. of Quezon City, filed with
the Regional Trial Court, Quezon City, eight (8) Informations charging petitioner with violation
of Batas Pambansa Bilang 22, which were consolidated before Branch 94.[4] Petitioner then
moved to quash the informations on the ground that the court lacked jurisdiction over the subject
cases.[5] On June 24, 1990, the trial court denied the motion. [6] After
petitioner entered a plea of not guilty to the charges, on April 30, 1991, the trial court conducted
a pre-trial at which the parties marked their respective documentary evidence. Thereafter, the
trial court declared the pre-trial of the cases closed and terminated.[7]

On March 29, 1993, at the trial of the cases, the prosecution presented the testimony of
complainant Luz Sison to prove the charges against petitioner. After her cross-examination, the
prosecution rested its case, and formally offered the documentary exhibits marked at the pre-trial.
[8]

On May 15, 1994, without prior leave of court, petitioner filed a demurrer to evidence on the
ground that the prosecution failed to present sufficient evidence proving all the elements of the
offense charged. The prosecution filed an opposition thereto. On November 27, 1994, the trial
court declared that there exists a prima facie case after the prosecution has presented its evidence
and rested its case and accordingly denied the demurrer to evidence for lack of merit. [9] On
January 13, 1995, the trial court also denied petitioners motion for reconsideration.[10]
 On September 7, 1995, petitioner filed with the Court of Appeals a special civil action
for certiorari seeking to annul the lower courts orders denying his demurrer to evidence.[11]

After due proceedings, on February 7, 1997, the Court of Appeals

rendered decision dismissing the petition, for lack of merit.[12] The Court of Appeals ruled
that certiorari does not lie to challenge the trial
courts interlocutory order denying the accuseds motion to dismiss. Appeal in due time is the
proper remedy in order to have the findings of facts of the respondent judge reviewed by a
superior court.

Hence, this petition.

We deny the petition. We agree with the Court of Appeals that certiorari does not lie to
review a trial courts interlocutory order denying a motion to dismiss (or to acquit),
which is equivalent to a demurrer to evidence, filed after the prosecution had presented its
evidence and rested its case. An order denying a demurrer to evidence is interlocutory. It is not
appealable. Neither can it be the subject of a petition for certiorari. From such denial, appeal in
due time is the proper remedy, not certiorari, in the absence of grave abuse of discretion or
excess of jurisdiction, or an oppressive exercise of judicial authority.[13]

However, petitioner submits that the trial court acted with grave abuse of discretion when
the court held that there exists a prima facie case, disregarding the prosecutions failure to present
as witness a representative of the drawee bank to testify on the dishonor of the questioned checks
as an element of the offense charged. He insists that the testimony of the banks representative is
mandatory.[14]

We do not agree.

It is not required, much less indispensable, for the prosecution to present the drawee banks
representative as a witness to testify on the dishonor of the checks because of insufficiency of
funds. The prosecution may present, as it did in this case, only complainant as a witness to prove
all the elements of the offense charged.[15] She is a competent and qualified witness to testify that
she deposited the checks to her account in a bank; that she subsequently received from the bank
the checks returned unpaid with a notation drawn against insufficient funds stamped or written
on the dorsal side of the checks themselves, or in a notice attached to the dishonored checks duly
given to complainant, and that petitioner failed to pay complainant the value of the checks or
make arrangements for their payment in full within five (5)
banking days after receiving notice that such checks had not been paid by the drawee bank.
[16]
Otherwise stated, complainants sole testimony suffices to identify the dishonored checks with
the drawee banks notation stamped or written on the dorsal side drawn against insufficient funds
or in a notice attached thereto and such notice of dishonor given to the drawer. A legal
presumption arises that petitioner had knowledge of the making of the checks, the due
presentment to the drawee bank for payment, the dishonor and the reason therefor written,
stamped or notice of dishonor attached by the drawee bank to the returned checks.[17] Such prima
facie presumption proves that petitioner has knowledge of the insufficiency of funds. [18] Unless
rebutted, the prosecution may rely on such presumption to establish that element of the offense
charged. It is for petitioner, as accused, to rebut the presumption, disputable as it is.
[19]
Otherwise, the presumption would be sufficient basis to convict.

Consequently, in the case below, the prosecution has proved all the essential elements of the
offense charged with the sole testimony of complainant Luz Sison.

We note that petitioner did not ask the trial court for leave to file a demurrer to evidence. In
such case, he loses the right to adduce evidence in his defense.[20]

IN VIEW WHEREOF, the Court hereby AFFIRMS the appealed decision of the Court of
Appeals in CA-G. R. SP No. 37503.

We remand the records to the trial court for further proceedings consistent with this opinion,
which shall be limited to the lower courts imposition of the proper sentence on petitioner and its
promulgation with notice to the parties.

Costs against petitioner.

SO ORDERED.

Romero, Kapunan and Purisima, JJ., concur.

30A. Judgment on the Pleadings

G.R. No. L-43886 July 19, 1989

IRENE DINO, petitioner,

vs.
HON. AUGUSTO L. VALENCIA in his capacity as Presiding Judge of the Court of First
Instance of Rizal, Quezon City, Branch XXXI and FRANCISCO L. ONG, respondents.

PADILLA, J.:
This is a petition for certiorari, mandamus and prohibition to annul and set aside the judgment on the
pleadings, dated 26 January 1976, rendered by the respondent Judge in Civil Case No. Q-20350 as
well as his order dated 14 April 1976 denying the petitioner's motion for reconsideration, and to
compel the said respondent Judge to allow her to, present evidence.

The record discloses the following facts:

Petitioner Irene Dino is the registered owner of a parcel of land together with all the improvements
thereon, situated at No. 94 West Kaunlaran Street, Philamlife Homes, Quezon City, covered by
Transfer Certificate of Title No. 140987 issued by the Register of Deeds of Quezon City.

Private respondent Francisco L. Ong is the adverse claimant of the said parcel of land, having filed
an Affidavit of Adverse Claim with the Register of Deeds of Quezon City, as evidenced by Entry No.
5608 on the said TCT No. 140987.

On 26 April 1974, private respondent executed a document entitled "AFFIDAVIT AND

MEMORANDUM OF QUITCLAIM," 1 wherein he waived and renounced all his claims, rights and credits
over and against the aforesaid parcel of land, the pertinent part of which reads as follows:

2. That for and in consideration of the sum of NINETY THOUSAND PESOS, payable
as follows:

(a) Downpayment of FORTY THOUSAND PESOS (P40,000.00) on or before

February 15, 1974, receipt of which (sic) hereby acknowledged; and the future sums
covered by postdated checks in denominations of:

(b) TEN THOUSAND PESOS(Pl0,000.00)payable or redeemable on or before April

15, 1974; and,

(c) EIGHT THOUSAND PESOS (Pl0,000.00) (sic) EACH payable or redeemable on

or before the 15th of June, August, October, December of 1974 and February of
1975, respectively, and for a total of FORTY THOUSAND PESOS (P40,000.00),

I hereby waive and renounce forever and in a manner absolute all my claims, rights and credits over
and against the aforesaid parcel of land covered by Transfer Certificate of Title No. 140987 and
likewise release the registered owner, IRENE DINO, her heirs, assigns, or representatives, from all
obligations including those credits (sic) claimant;

(3) That it is the essence of this Affidavit and Memorandum of Quitclaim that should
said IRENE DINO fail or refuse to comply with the payments stipulated about (sic) or
default in any single payment, then the full and existing balance shall become due
and demandable without further necessity of demand, and that said IRENE DINO
undertakes to pay the further sum of TWENTY THOUSAND PESOS (P20,000.00) by
way of liquidated damages;

(4) That this Affidavit and Memorandum of Quitclaim is executed for the sole purpose
of cancelling my adverse claim and the corresponding Entry thereof on Transfer
Certificate of Title No. 140987 and for no other purpose contrary to law; as well as
the Deed of Sale With Assumption of Mortgage dated September 21, 1970.'
Apparently, petitioner failed to comply with her obligations under the aforestated document, for on 20
March 1975, private respondent filed with the Court of First Instance of Rizal, Quezon City, Branch
XXI, a complaint 2 against the petitioner for breach of contract and damages, docketed therein as Civil
Case No. Q-20350, alleging inter alia:

3. That, during the period from June 21, 1974 to February 21, 1975, Defendant
issued in favor of the Plaintiff herein, Philippine Commercial and Industrial Bank
(PCIB)-Greenhills Branch-Checks Nos. 14872 to 14876, inclusive, each in the
amount of P 8,000.00, all of which were dishonored by the drawee bank; the first two,
for having been 'drawn against insufficient funds' and the last three thereof, for
'account closed';

4. That the aforementioned checks were drawn by the Defendant in payment to the
Plaintiff of the remaining P40,00.00 balance on a total amount of P90,000.00 which
Defendant undertook to pay the Plaintiff in consideration on the latter's executing the
AFFIDAVIT AND MEMORANDUM OF QUITCLAIM (contents of which are self-
explanatory) dated February 26,1974, a xerox copy of which is hereto attached as
ANNEX 'A' and made an integral part hereof;

5. That Paragraph 3 thereof, to which Defendant conformed and accepted, clearly

states:

3. That it is the essence of this Affidavit and Memorandum of Quitclaim that should
said IRENE DINO fail or refuse to comply with the payments stipulated above or
defaulted (sic) in any single payment, then the full and existing balance shall become
due and demandable without further necessity of demand, and that said IRENE
DINO undertakes to pay the further sum of TWENTY THOUSAND PESOS
(P20,000.00) by way of liquidated damages;

6. That when Defendant issued the checks mentioned in Par. 3 of this Complaint, she
was aware that she did not have sufficient funds with the drawee bank and had
already closed her account with the bank when the last three checks were presented
for payment;

7. That, in view thereof, the 'full and existing balance' of Defendant's obligation to the
Plaintiff, which now stands at P32,000.00 (one of the five dishonored checks having
been replaced with one good check), is now 'due and demandable without further
necessity of demand,' and Defendant is further obligated to pay the Plaintiff the
amount of P 20,000.00 by way of liquidated damages;

8. That, despite repeated demands by Plaintiff on the Defendant, the latter has failed
and still continues to fail to pay the P 52,000.00 due to the Plaintiff, in view of which
Plaintiff was constrained to file this case in Court to protect his rights and was thus
forced to engage the services of counsel and to defray the costs of this suit."

In her answer, 3 petitioner alleged:

2. That she admits the allegations contained in paragraph 3 of the complaint insofar
only as the issuance of check Nos. 14872 to 14876 of the PCIB and that they were at
P8,000.00 each are concerned, but specifically denies the rest, the truth being that
not all of the said checks were dishonored by the bank, but only four (4) and also that
the original agreement of the parties as to the payment of the said checks had
 already been novated and disregarded by the parties after the issuance of the said
checks and after the Affidavit and Memorandum of Quitclaim dated February 26,
1974, had been signed and executed by the parties, considering the fact that plaintiff
agreed to the request of the defendant not to deposit the said checks but wait for
sometime to pay the said amount of P40,000.00 in one lump sum, that as a matter of
fact, defendant (sic) deposited the said checks long, long after the supposed date of
issuance of the same.

3. That she admits the allegations contained in paragraph 3 of the complaint subject
to the allegations contained in the next preceding paragraph.

4. That she admits the reproduction of No. 3 of the Affidavit and Memorandum of
Quitclaim insofar only as they are consistent with the contents of paragraph 3 of the
said document and also subject to the allegations contained in paragraph 2 above.

5. That she specifically denies the allegations contained in the paragraph 6 of the
complaint, the truth of the matter being that when said checks were issued, they
were postdated and plaintiff knew for a fact they did not have sufficient funds, but
plaintiff just the same accepted them subject to the conditions of availability of funds
by the plaintiff (sic). In other words said checks were issued only to guarantee the
payment of the P 40,000.00 but not as payment itself, that is why plaintiff as a matter
of fact agreed not to deposit the said checks until after further notice from the
defendant, as alleged in paragraph 2 above.

6. That she admits that the outstanding balance due the plaintiff is P 32,000.00 as
alleged in paragraph 2 hereof, but denies specifically that they are now 'due and
demandable without further necessity of demand', the truth of the matter being that
said agreement was already novated and voided as alleged in paragraph 2 above.
(Par. 7, comp)

7. That she specifically denies the allegations contained in paragraph 8 of the

complaint the truth of the matter being those contained in paragraph 2 above."

Private respondent (as plaintiff) filed a reply, 4 alleging that petitioner should be declared in default for
having filed her answer on 1 September 1975, or two (2) days beyond the extended period, or in the
alternative, that a judgment on the pleadings be rendered at the pre-trial, for the reason that the petitioner
virtually admitted the material averments of the complaint, having failed to deny under oath the
genuineness and due execution of the Affidavit and Memorandum of Quitclaim, as required by Sec. 8 of
Rule 8 of the Rules of Court, and that petitioner admitted in par. 6 of her answer that the outstanding
balance due to him (private respondent) is P32,000.00, which negates her gratuitous allegation that the
said Affidavit and Memorandum of Quitclaim was novated or voided.

During the pre-trial conference, petitioner through counsel, offered to pay her obligations by monthly
installments but the same was unacceptable to the private respondent; hence, the pre-trial
conference was considered terminated. Thereafter, private respondent's counsel manifested in open
court, and without objection on the part of petitioner's counsel, that he was submitting for resolution
by the court his alternative motions to declare petitioner in default or for a judgment on the
pleadings. Likewise, in open court, respondent judge denied the private respondent's motion to
declare petitioner in default but made it clear that he was considering the alternative motion for a
judgment on the pleadings, and gave petitioner sufficient time to file a responsive pleading or
opposition to the said motion. 5 Petitioner filed an opposition 6 thereto, dated 22 November 1975,
alleging that there is no room for a judgment on the pleadings as her answer to the complaint tendered an
issue, and that the private respondent's reply is, in fact, a motion to declare petitioner in default or for a
judgment on the pleadings, and since said motion does not contain a notice of hearing, the same is
nothing but a useless piece of paper.

On 26 January, 1976 respondent ... pleadings 7 the dispositive part of which reads:

WHEREFORE, judgment on the pleadings is hereby rendered in favor of the plaintiff,

ordering the defendant to pay him the balance of P32,000.00 plus liquidated
damages of P20,000.00, and cost of suit. 8

Petitioner moved to reconsider, 9 which the private respondent opposed. 10 On 14 April 1976, respondent
Judge issued an order 11 denying the petitioner's motion for reconsideration.

Hence, petitioner filed the instant petition, claiming that respondent Judge acted in excess of his
jurisdiction or with grave abuse of discretion in rendering the judgment on the pleadings and in
issuing the order denying her motion for reconsideration, and that she has no remedy nor any other
plain, speedy and adequate remedy in the course of law except through the present petition.

Petitioner maintains that her answer to the complaint tendered an issue, as it did not only deny the
material allegations contained therein but it also set up special as well as affirmative defenses.
Hence, she argues, there is no room for a judgment on the pleadings. 12

The petitioner's contention is untenable. Her defense that the original agreement of the parties had
already been novated and disregarded after the issuance of the checks mentioned in private
respondent's complaint and after the private respondent had executed and signed the Affidavit and
Memorandum of Quitclaim, 13 is a sham and false defense and did not tender an issue that would require
a hearing for the reception of evidence. It is a mere device or scheme to avoid or delay the immediate
payment of petitioner's obligation to the private respondent under the Affidavit and Memorandum of
Quitclaim. Thus, as aptly observed by the court a quo-

A novation under the rules of civil law, where the term has been introduced into the
modern nomenclature of our common law jurisprudence, was a mode of
extinguishing one obligation by another; the substitution, not of a new paper or rate
but of a new obligation in lieu of an old one, the effect of which was to pay, dissolve
or otherwise discharge it (ibid).

It will be noted that the original contract (Annex "A") was not actually altered or
changed. The defendant, as a matter of fact, and for all intents and purposes, had
issued checks in payment of her obligation as prestated by the contract but asserts
that the same were issued only to guarantee but not as a payment in itself, but it is
not denying the fact that one of the five checks were cashed, thus making the
balance of only P32,000.00, that is without mention the liquidated damage of
P20,000.00. The ambivalent attitude of the defendant could only mean or should be
construed as a mere pretense to avoid an immediate demand for the payment of her
obligation.

In order that an obligation may be extinguished by another which substitutes the

same, it is imperative that it be so declared in unequivocal terms, or that the old and
new obligation be on every point incompatible with each other (Art. 1292-New Civil
Code.)
 In the present case the contract referred to did not expressly extinguish the obligation
existing in said affidavit and memorandum of quitclaim. On the contrary, it expressly
recognized the obligation between the parties and expressly provide a method by
which the same shall be extinguished, which method was expressly provided in the
aforementioned contract, by means of periodical payments.

For all the foregoing considerations, the court believes, and so holds, that the
aforementioned contract has never been altered, changed or novated. For what the
herein defendant actually did is not absolutely incompatible with the prestation of the
existing contract but rather she expressly ratified such obligation through the
issuance of postdated checks, some of which were cashed and others not for reason
of insufficiency of funds or 'account closed. 14

Besides, the private respondent's cause of action is based on the "Affidavit and Memorandum of
Quitclaim," the substance of which was properly alleged in the complaint, and copies thereof, were
attached thereto. Section 8, Rule 8 of the Rules of Court provides that when an action is founded
upon a written instrument, copied in or attached to the corresponding pleading, the genuineness and
due execution of the instrument shall be deemed admitted unless the adverse party, under oath,
specifically denies them. In the present case, the petitioner is deemed to have admitted the
genuineness and due execution of the "Affidavit and Memorandum of Quitclaim" for her failure to
deny the same under oath; consequently, the judgment on the pleadings rendered by respondent
Judge was proper. 15

In her memorandum, 16 petitioner further contends that the private respondent's reply should not have
been treated as a motion for a judgment on the pleadings for non-compliance with the three-day notice
rule and for lack of a notice of hearing. 17

Again, the petitioner's contention is devoid of merit. Section 1, Rule 19 of the Rules of Court which
states that where an answer "admits the material allegations of the adverse party's pleading, the
court may, on motion of that party, direct judgment on such pleading", does not state whether the
motion for judgment on the pleading may be considered ex-parte or only after notice of hearing
served on the adverse party. A motion for a judgment on the pleadings, where the answer admits all
the material averments of the complaint, as in the present case, is one that may be considered ex-
parte because, upon the particular facts thus presented and laid before the court, the plaintiff is
entitled to the judgment. 18 Besides, the purpose of the law in requiring the filing of motions, at least three
(3) days before the hearing thereof, is to avoid suprises upon the opposite party and to give the latter time
to study and meet the arguments of the movant. 19 This purpose has been sufficiently complied with, the
petitioner having filed an opposition to the said motion.

At any rate, the questioned judgment on the pleadings is a final judgment; hence, it is appealable.
Petitioner therefore could have appealed from the aforesaid judgment, but she did not. Having failed
to appeal from the said judgment, she may not avail of the writ of certiorari to offset the adverse
effect of her omission. 20

WHEREFORE, the petition is this case is DISMISSED with costs against petitioner.

SO ORDERED.

Melencio-Herrera (Chairperson), Paras, Sarmiento and Regalado, JJ., concur.

30B. When Judgment in the Pleadings should not be rendered

[G.R. No. L-17454. July 31, 1963.]

CORNELIO ARROYO, Plaintiff-Appellee, v. WENCESLAO CALDOZA, CALIXTA BALDERIAN, PASCUAL

BALDERIAN, AGATON TOLOSA and BEBIANO LUBAN, Defendants-Appellants.

Antonio C. Veloso for Plaintiff-Appellee.

Cornelio L. Balderian, for Defendants-Appellants.

SYLLABUS

1. PLEADING AND PRACTICE; JUDGMENT ON THE PLEADINGS WHEN NOT PROPER. The Court can not
render a judgment on the pleadings when, as in the case at bar, the allegations of the defendants answer
are sufficient to raise the issue of ownership and possession over the land described in the complaint.

DECISION

DIZON, J.:

Appeal taken by Wenceslao Caldoza, Calixta Balderian, Pascual Balderian, Agaton Tolosa and Bebiano Luban
from the judgment on the pleadings rendered by the Court of First Instance of Leyte in Civil Case No. 2477
"declaring the plaintiff the true owner and possessor of the land described in the second paragraph of the
complaint, ordering the defendants to respect plaintiffs ownership and possession thereof, and to pay
P200.00 attorneys fees and the costs."

Appellee Cornelio Arrojo filed an action in the Court of First Instance of Leyte to recover from appellants a
parcel of land located in the municipality of Dagami, Leyte, and more particularly described in the second
paragraph of his complaint, plus damages.

Appellants answer to the complaint (paragraphs II and III thereof) states the following: chanrob1es virtual 1aw library

II.

"That the defendants have no knowledge or information sufficient to form a belief as to the truth of the
allegations in paragraphs two and three of the complaint. The truth of the matter is that the defendants
have not occupied or taken any property belonging to the plaintiff. They took possession and ownership only
of the land belonging to them, which properties were possessed and owned originally by their predecessors-
in-interest, who were the parents of the defendants. The plaintiff did not make any demand mentioned in
paragraph three of the complaint, knowing that he is not the owner of the lands occupied by the
defendants." cralaw virtua1aw library

III.

"That the defendants have no knowledge or information sufficient to form a belief as to the truth of the
allegations in paragraph four of the complaint, the truth of the matter is that defendants did not occupy any
land belonging to the plaintiff and as such he has no cause of action against the defendants for actual and/or
moral damages . . ." cralaw virtua1aw library

Appellee moved for a judgment on the pleadings on the ground that appellants answer did not tender an
issue.
Acting on said motion, the Court rendered the judgment appealed from. Hence, this appeal.

The paragraphs of the answer reproduced above are sufficient, in our opinion, to raise the issue of
ownership and possession over the land described in the complaint. In other words, it appears clearly from
the allegations thereof that the appellants denied appellees claim of ownership and previous possession, and
clearly asserted their own claim.

WHEREFORE, the decision appealed from is set aside and the record of this case is remanded below for
further proceedings. With costs.

30C. Bases of summary judgment

[G.R. No. 118438. December 4, 1998]

ALLIED AGRI-BUSINESS DEVELOPMENT CO., INC., vs. COURT OF

APPEALS and CHERRY VALLEY FARMS LIMITED, respondents.

DECISION

BELLOSILLO, J.:

ALLIED AGRI-BUSINESS DEVELOPMENT CO., INC. assails in this petition the

decision of the Court of Appeals which affirmed the judgment of the trial court granting the
motion for summary judgment filed by Cherry Valley Farms Limited based on the implied
admissions of petitioner.

On 14 October 1986 respondent Cherry Valley Farms Limited (CHERRY VALLEY), a

foreign company based in England, filed against petitioner Allied Agri-Business Development
Co. Inc. (ALLIED) a complaint with the Regional Trial Court of Makati City for collection of
sum of money alleging, among others that: (a) CHERRY VALLEY is a foreign corporation with
principal office at Rothwell, Lincoln, England; (b) on 1 September 1982 up to 16 February 1983,
or for a period of less than six (6) months, petitioner ALLIED purchased in ten (10) separate
orders and received from respondent CHERRY VALLEY several duck hatching eggs and
ducklings which in value totaled 51,245.12; (c) ALLIED did not pay the total purchase price of
51,245.12 despite repeated demands evidenced by a letter of Solicitor Braithwaite of England in
behalf of CHERRY VALLEY; (d) instead of paying its obligation, ALLIED through its president
wrote CHERRY VALLEY on 17 July 1985 inviting the latter to be a stockholder in a new
corporation to be formed by ALLIED, which invitation however was rejected by CHERRY
VALLEY on 26 September 1985; and, (e) ALLIED's president Ricardo Quintos expressly
acknowledged through a letter of 8 October 1985 the obligation of his corporation to CHERRY
VALLEY. The complaint also prayed that ALLIED be made to pay the sum of 51,245.12 or its
peso equivalent at the time of payment, plus legal interest from date of filing of the complaint
until full payment, and twenty percent (20%) of the total amount being claimed from petitioner
as attorneys fees; and, to pay the costs of suit.

On 27 February 1986 ALLIED filed an answer [1] denying the material allegations of the
complaint and contended that: (a) private respondent CHERRY VALLEY lacked the legal
capacity to sue; (b) the letter of Quintos to CHERRY VALLEY was never authorized by the
board of petitioner ALLIED, thus any admission made in that letter could not bind ALLIED; (c)
the alleged amount of 51,245.12 did not represent the true and real obligation, if any, of
petitioner; (d) to the best of the knowledge of ALLIED, not all ducks and ducklings covered and
represented by CHERRY VALLEYs invoices were actually ordered by the former; and, (e)
private respondent had no cause of action against petitioner.

On 19 July 1988, CHERRY VALLEY served on ALLIEDs counsel a Request for

Admission[2]dated 15 July 1988 worded as follows:

1. That the chairman of the board of directors and president of your corporation is Mr.
Ricardo V. Quintos;

2. That out of the 3,000,000 subscribed shares of stock, 1,496,000 shares is (sic)
owned by Mr. Ricardo Quintos and 1,432,000 shares is(sic) also owned by his wife,
Agnes dela Torre;

3. That for a period of six (6) months starting from 1 September 1982, your
corporation ordered and received from CHERRY VALLEY duck eggs and ducklings
with a total value of 51,245.12 as reflected on CHERRY VALLEY invoices issued to
you;

4. That you received a letter dated 22 March 1985 from Mr. P.R.C. Braithwaite,
solicitor of CHERRY VALLEY, demanding settlement of your unpaid account of
52,245.12 for the above-stated purchases;

5. That instead of paying your obligation to CHERRY VALLEY, Mr. Ricardo Quintos,
in his capacity as president of your corporation, sent a letter to CHERRY VALLEY
dated 17 July 1985 proposing the setting up of a new corporation with CHERRY
VALLEY refusing acceptance of your proposal;

6. That you received a letter dated 26 September 1985 from Mr. J. Cross, Director and
Secretary of CHERRY VALLEY refusing acceptance of your proposal;
7. That Mr. Ricardo Quintos in a letter dated 8 October 1985 admitted your
indebtedness in the sum of English Sterling Pounds 51,245.12.

It is further requested that said sworn admission be made within 10 days from receipt
of this request.

ALLIED filed its Comments/Objections[3] alleging that: (a) the admissions requested were
matters which the private respondent had the burden to prove through its own witness during the
trial and thus petitioner need not answer; and, (b) the request for admission regarding the
ownership set-up of petitioner corporation was immaterial and improper for not having been
pleaded in the complaint.

In its Reply[4] to Comments/Objections to Request for Admission, CHERRY VALLEY

maintained that there was no need on its part to produce a witness to testify on the matters
requested for admission, for these pertained to incidents personal to and within the knowledge of
petitioner alone. Thereafter, on 2 August 1998, CHERRY VALLEY filed a motion with the trial
court to resolve the objections of ALLIED to the request for admission.

On 11 August 1988 the trial court issued an Order [5] disregarding

ALLIEDsComments/Objections to Request for Admission in view of its non-compliance with
Sec. 2, Rule 26, of the Rules of Court and directing ALLIED to answer the request for admission
within ten (10) days from receipt of the order, otherwise, the matters contained in the request
would be deemed admitted.ALLIED moved to reconsider the order; however, on 8 November
1988 the lower court denied[6]ALLIEDs motion for reconsideration and directed the latter to
answer the request for admission within a nonextendible period of five (5) days from receipt of
the order.

ALLIED failed to submit a sworn answer to the request for admission within the additional
period of five (5) days granted by the trial court. Hence, CHERRY VALLEY filed a motion for
summary judgment[7] alleging that there was already an implied admission on the matters
requested for admission pursuant to Rule 26 of the Rules of Court.

On 23 October 1990, the trial court rendered judgment[8] against petitioner: (a) Ordering
defendant to pay plaintiff the sum of -51,245.12 or its peso equivalent at the time of payment
plus legal interest from the date of filing of this complaint until fully paid; and, (b) Ordering
defendant to pay plaintiff ten percent (10%) of the total amount due from defendant by way of
attorneys fees since no protracted trial was held in this case, plus cost of suit.

ALLIED appealed to the Court of Appeals. On 6 September 1994 the Court of Appeals
rendered a decision[9] affirming the summary judgment rendered by the trial court with the
modification that ALLIED should pay the monetary award to CHERRY VALLEY in Philippine
currency and that the award of attorneys fees and costs of suit be deleted.

Hence, the instant petition by ALLIED alleging that serious errors were committed by the
Court of Appeals in affirming the summary judgment of the trial court; that the complaint should
have been instantly dismissed on the ground of lack of personality to sue on the part of
respondent CHERRY VALLEY; that the summary judgment was tantamount to a denial of
ALLIEDs right to due process for not requiring CHERRY VALLEY to produce its own witness;
and, that the admission requested were matters which CHERRY VALLEY had the burden to
prove during the trial.

The petition must fail. We cannot sustain the allegation that respondent CHERRY VALLEY
being an unlicensed foreign corporation lacked the legal capacity to institute the suit in the trial
court for the recovery of money claims from petitioner. In fact, petitioner is estopped from
challenging or questioning the personality of a corporation after having acknowledged the same
by entering into a contract with it.[10] The doctrine of lack of capacity to sue or failure of a foreign
corporation to acquire a local license was never intended to favor domestic corporations who
enter into solitary transactions with unwary foreign firms and then repudiate their obligations
simply because the latter are not licensed to do business in this country.[11]

Petitioner cannot also successfully argue that its failure to answer the request for admission
did not result in its admission of the matters stated in the request. Section 1 of Rule 26 of the
Rules of Court provides:

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.

The purpose of the rule governing requests for admission of facts and genuineness of
documents is to expedite trial and to 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. Each of the
matters of which an admission is requested shall be deemed admitted unless within a period
designated in the request which shall not be 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 either
denying specifically the matters of which an admission is requested or setting forth in detail the
reasons why he cannot truthfully either admit or deny those matters. [12] Upon service of request
for admission, the party served may do any of the following acts: (a) he may admit each of the
matters of which an admission is requested, in which case, he need not file an answer; (b) he may
admit the truth of the matters of which admission is requested by serving upon the party
requesting a written admission of such matters within the period stated in the request, which
must not be less than ten (10) days after service, or within such further time as the court may
allow on motion and notice; (c) he may file a sworn statement denying specifically the matter of
which an admission is requested; or, (d) he may file a sworn statement setting forth in detail the
reasons why he cannot truthfully either admit or deny the matters of which an admission is
requested.[13]

The records show that although petitioner filed with the trial court its comments and
objections to the request for admission served on it by private respondent, the trial court
disregarded the objections and directed petitioner after denying its motion for reconsideration, to
answer the request within five (5) days from receipt of the directive; otherwise, the matters of
which the admission was requested would be deemed admitted. Petitioner failed to submit the
required answer within the period. The matter set forth in the request were therefore deemed
admitted by petitioner, i.e., (a) that for a period of six (6) months starting from 1 September
1982, petitioner ordered and received from respondent CHERRY VALLEY duck eggs and
ducklings amounting to 51,245.12; (b) that petitioner received a letter dated 22 March 1985 from
private respondents lawyer demanding payment of the amount of the purchases; (c) that instead
of paying the obligation to respondent CHERRY VALLEY, petitioners president Ricardo Quintos
sent a letter to the former proposing the establishment of a new corporation with CHERRY
VALLEY as one of the stockholders; (d) that the proposal was refused by the Director of
CHERRY VALLEY; and, (e) that petitioners president Ricardo Quintos admitted the
indebtedness of his corporation to CHERRY VALLEY in the sum of English Sterling Pounds
51,245.12.

The burden of affirmative action is on the party upon whom notice is served to avoid the
admission rather than upon the party seeking the admission. [14] Hence, when petitioner failed to
reply to a request to admit, it may not argue that the adverse party has the burden of proving the
facts sought to be admitted. Petitioners silence is an admission of the facts stated in the request.[15]

This Court finds that the motion for summary judgment filed by respondent CHERRY
VALLEY on the ground that there were no questions of fact in issue since the material
allegations of the complaint were not disputed was correctly granted by the trial court. It is a
settled rule that summary judgment may be granted if the facts which stand admitted by reason
of a partys failure to deny statements contained in a request for admission show that no material
issue of fact exists.[16] By its failure to answer the other partys request for admission, petitioner
has admitted all the material facts necessary for judgment against itself.[17]
 WHEREFORE, the Petition is DENIED. The decision of the Court of Appeals dated 6
September 1994 which AFFIRMED the trial court in "ordering defendant to pay plaintiff the sum
of 51,245.12 or its peso equivalent at the time of payment plus legal interest from the date of
filing of this complaint until fully paid;" and "ordering defendant to pay plaintiff ten percent
(10%) of the total amount due from defendant by way of attorney's fees since no protacted trial
was held in this case plus cost of suit," with the modification that "Allied shall pay the monetary
award of attorney's fees and costs of suit be deleted," is AFFIRMED. Costs against herein
petitioner Allied Agri-Business Development Co., Inc.

SO ORDERED.

30D. Form of Affidavits and supporting papers.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-46892 September 30, 1981

HEIRS OF AMPARO DEL ROSARIO, plaintiffs-appellees,

vs.
AURORA O. SANTOS, JOVITA SANTOS GONZALES, ARNULFO O. SANTOS, ARCHIMEDES O.
SANTOS, ERMELINA SANTOS RAVIDA, and ANDRES O. SANTOS, JR., defendants-appellants.

GUERRERO, J.:

The Court of Appeals, 1 in accordance with Section 31 of the Judiciary Act of 1948, as amended, certified
to Us the appeal docketed as CA-G.R. No. 56674-R entitled "Amparo del Rosario, plaintiff-appellee, vs.
Spouses Andres Santos and Aurora Santos, defendants-appellants," as only questions of law are
involved.

On January 14, 1974, Amparo del Rosario filed a complaint against the spouses Andres F. Santos
and Aurora O. Santos, for specific performance and damages allegedly for failure of the latter to
execute the Deed of Confirmation of Sale of an undivided 20,000 square meters of land, part of Lot
1, Psu-206650, located at Barrio Sampaloc, Tanay, Rizal, in malicious breach of a Deed of Sale
(Exhibit A or 1) dated September 28, 1964.

Amparo del Rosario died on Sept. 21, 1980 so that she is now substituted by the heirs named in her
will still undergoing probate proceedings. Andres F. Santos also died, on Sept. 5, 1980, and he is
substituted by the following heirs: Jovita Santos Gonzales, Arnulfo O. Santos, Archimedes O.
Santos, Germelina Santos Ravida, and Andres O. Santos, Jr.
The Deed of Sale (Exh. A or 1) is herein reproduced below:

DEED OF SALE

KNOW ALL MEN BY THESE PRESENTS:

I, ANDRES F. SANTOS, of legal age, married to Aurora 0. Santos, Filipino and

resident cf San Dionisio, Paranaque, Rizal, Philippines, for and in consideration of
the sum of TWO THOUSAND (P 2,000.00) PESOS, Philippine Currency, the receipt
whereof is hereby acknowledged, do hereby SELLS, CONVEYS, and TRANSFERS
(sic) unto Amparo del Rosario, of legal age, married to Fidel del Rosario but with
legal separation, Filipino and resident of San Dionisio, Paranaque, Rizal, Philippines
that certain 20,000 square meters to be segregated from Lot 1 of plan Psu-206650
along the southeastern portion of said lot, which property is more particularly
described as follows:

A parcel of land (Lot 1 as shown on plan Psu-206650, situated in the

Barrio of Sampaloc, Municipality of Tanay, Province of Rizal.
Bounded on the SW., along lines 1-2-3, by Lot 80 of Tanay Public
Land Subdivision, Pls-39; on the NW., along lines 3-4-5, by Lot 2; and
along lines 5-6-7-8-9-10-11, by Lot 6; on the NE., along lines 11-12-
13, by Lot 3: and along lines 13-1415, by Lot 4, all of plan Psu-
206650; and on the SE., along line 15-1, by Lot 5 of plan Psu-
206650 ... ; containing an area of ONE HUNDRED EIGHTY ONE
THOUSAND FOUR HUNDRED TWENTY (181,420) SQUARE
METERS. All points referred to are indicated on the plan and are
marked on the ground as follows: ...

of which above-described property, I own one-half (1/2) interest thereof being my

attorney's fee, and the said 20,000 square meters will be transferred unto the
VENDEE as soon as the title thereof has been released by the proper authority or
authorities concerned:

That the parties hereto hereby agree that the VENDOR shall execute a Deed of
Confirmation of Deed of Sale in favor of the herein VENDEE as soon as the title has
been released and the subdivision plan of said Lot 1 has been approved by the Land
Registration Commissioner.

IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of September,
1964, in the City of Manila, Philippines.

s/ ANDRES F. SANTOS t/ ANDRES F. SANTOS

With My Marital Consent:

s/ Aurora O. Santos (Wife) t/ Aurora O. Santos (Wife)

SIGNED IN THE PRESENCE OF: s/ Felicitas C. Moro s/ Corona C. Venal

REPUBLIC OF THE PHILIPPINES) ) SS.

 BEFORE ME, a Notary Public for and in Rizal, Philippines, personally appeared
Andres F. Santos, with Res. Cert. No. 4500027 issued at Paranaque, Rizal, on Jan.
9, 1964, B-0935184 issued at Paranaque, Rizal on April 15, 1964, and Aurora 0.
Santos, with Res. Cert. No. A-4500028 issued at Paranaque, Rizal, on Jan. 9, 1964,
giving her marital consent to this instrument, both of whom are known to me and to
me known to be the same persons who executed the foregoing instruments and they
acknowledged to me that the same is their free act and voluntary deed.

IN WITNESS WHEREOF, I have hereunto signed this instrument and affixed my

notarial seal this lst day of October, 1964, in Pasig, Rizal, Philippines.

Doc. No. 1792; Page No. 85; Book No. 19; Series of 1964.

s/ FLORENCIO LANDRITO t/ FLORENCIO LANDRITO

NOTARY PUBLIC Until December 31, 1965 2

Plaintiff claimed fulfillment of the conditions for the execution of the Deed of Confirmation of Sale,
namely: the release of the title of the lot and the approval of the subdivision plan of said lot by the
Land Registration Commission. She even enumerated the titles with their corresponding land areas
derived by defendants from the aforesaid lot, to wit:

(a) TCT 203580 30,205 sq. meters

(b) TCT 203581 19, 790 sq. meters

(c) TCT 167568 40,775 sq. meters

In a motion to dismiss, defendants pleaded, inter alia, the defenses of lack of jurisdiction of the court
a quo over the subject of the action and lack of cause of action allegedly because there was no
allegation as to the date of the approval of the subdivision plan, no specific statement that the titles
therein mentioned were curved out of Lot I and no clear showing when the demands were made on
the defendants. They likewise set up the defense of prescription allegedly because the deed of sale
was dated September 28, 1964 and supposedly ratified October 1, 1964 but the complaint was filed
only on January 14, 1974, a lapse of more than nine years when it should have been filed within five
years from 1964 in accordance with Article 1149, New Civil Code.

Defendant also claimed that the demand set forth in the complaint has been waived, abandoned or
otherwise extinguished. It is alleged that the deed of sale was "only an accommodation graciously
extended, out of close friendship between the defendants and the plaintiff and her casual business
partner in the buy and sell of real estate, one Erlinda Cortez;" 3 that in order to allay the fears of plaintiff
over the non-collection of the debt of Erlinda Cortez to plaintiff in various sums exceeding P 2,000.00,
defendants, who were in turn indebted to Erlinda Cortez in the amount of P 2,000.00, voluntarily offered to
transfer to plaintiff their inexistent but expectant right over the lot in question, the same to be considered
as part payment of Erlinda Cortez' indebtedness; that as Erlinda Cortez later on paid her creditor what
was then due, the deed of sale had in effect been extinguished. Defendants thereby characterized the
said deed of sale as a mere tentative agreement which was never intended nor meant to be ratified by
and acknowledged before a notary public. In fact, they claimed that they never appeared before Notary
Public Florencio Landrito.
Finally, defendants alleged that the claim on which the action or suit is founded is unenforceable
under the statute of frauds and that the cause or object of the contract did not exist at the time of the
transaction.

After an opposition and a reply were filed by the respective parties, the Court a quo resolved to deny
the motion to dismiss of defendants. Defendants filed their answer with counterclaim interposing
more or less the same defenses but expounding on them further. In addition, they claimed that the
titles allegedly derived by them from Lot 1 of Annex A or I were cancelled and/or different from said
Lot I and that the deed of sale was simulated and fictitious, plaintiff having paid no amount to
defendants; and that the deed was entrusted to plaintiff's care and custody on the condition that the
latter; (a) would secure the written consent of Erlinda Cortez to Annex A or I as part payment of what
she owed to plaintiff; (b) would render to defendants true accounting of collections made from
Erlinda showing in particular the consideration of 2,000.00 of Annex A or I duly credited to Erlinda's
account. 4

Plaintiff filed a reply and answer to counterclaim and thereafter a motion for summary judgment
and/or judgment on the pleadings on the ground that the defenses of defendants fail to tender an
issue or the same do not present issues that are serious enough to deserve a trial on the
merits, 5 submitting on a later date the affidavit of merits. Defendants filed their corresponding opposition
to the motion for summary judgment and/or judgment on the pleadings. Not content with the pleadings
already submitted to the Court, plaintiff filed a reply while defendants filed a supplemental opposition.

With all these pleadings filed by the parties in support of their respective positions, the Court a
quo still held in abeyance plaintiff's motion for summary judgment or judgment on the pleadings
pending the pre-trial of the case. At the pre-trial, defendants offered by way of compromise to pay
plaintiff the sum of P2,000.00, the consideration stated in the deed of sale. But the latter rejected the
bid and insisted on the delivery of the land to her. Thus, the pre-trial proceeded with the presentation
by plaintiff of Exhibits A to Q which defendants practically admitted, adopted as their own and
marked as Exhibits 1 to 17. In addition, the latter offered Exhibit 18, which was their reply to plaintiff's
letter of demand dated December 21, 1973.

From the various pleadings filed in this case by plaintiff, together with the annexes and affidavits as
well as the exhibits offered in evidence at the pre-trial, the Court a quo found the following facts as
having been duly established since defendant failed to meet them with countervailing evidence:

In February, 1964, Teofilo Custodia owner of a parcel of unregistered land with an

area of approximately 220,000 square meters in Barrio Sampaloc, Tanay, Rizal, hired
Attorney Andres F. Santos "to cause the survey of the above-mentioned property, to
file registration proceedings in court, to appear and represent him in all government
office relative thereto, to advance all expenses for surveys, taxes to the government,
court fees, registration fees ... up to the issuance of title in the name" of Custodia.
They agreed that after the registration of the title in Custodio's name, and "after
deducting all expenses from the total area of the property," Custodio would assign
and deliver to Santos "one-half (1/2) share of the whole property as appearing in the
certificate of title so issued." Exh. B or 2).

On March 22, 1964, Custodio's land was surveyed under plan Psu-226650 (Exh. D
or 4). It was divided into six (6) lots, one of which was a road lot. The total area of the
property as surveyed was 211,083 square meters. The respective areas of the lots
were as follows:
 Lot 1 181,420
square
meters

Lot 2 7,238
square
meters

Lot 3 7,305
square
meters

Lot 4 5,655
square
meters

Lot 5 5,235
square
meters

Road Lot 6 4,230

square
meters

TOTAL 211,083
square
meters

xxx xxx xxx

On December 27, 1965, a decree of registration No. N-108022 was issued in Land
Registration Case No. N-5023, of the Court of First Instance of Rizal, LRC Record
No. N-27513, in favor of Teofilo Custodia married to Miguela Perrando resident of
Tanay, Rizal. On March 23, 1966, Original Certificate of Title No. 5134 (Exh. Q or 17)
was issued to Custodio for Lots 1, 2, 3, 4 and 5, Psu- 206650, with a total area of
206,853 square meters. The areas of the five (5) lots were as follows:
 Lot 1 181,420
square
meters

Lot 2 7,238
square
meters

Lot 3 7,305
square
meters

Lot 4 5,655
square
meters

Lot 5 5,235
square
meters

In April to May, 1966, a consolidation-subdivision survey (LRC) Pcs-5273 (Exh. E or

5) was made on the above lots converting them into six (6) new lots as follows:

xxx xxx xxx

Lot 1 20,000
square
meters

Lot 2 40,775
square
meters

Lot 3 50,000
 square
meters

Lot 4 40,775
square
meters

Lot 5 50,000
square
meters

Road Lot 6 5,303

square
meters

TOTAL 206,853
square
meters

On June 22, 1966, the consolidation-subdivision plan (LRC) Pcs-5273 (Exh. E or 5)

was approved by the Land Registration Commission and by the Court of First
Instance of Rizal in an order dated July 2, 1966 (Entry No. 61037 T-167561, Exh. Q).
Upon its registration, Custodio's O.C.T. No. 5134 (Exh. Q) was cancelled and TCT
Nos. 167561, 167562, 167563, 167564 (Exh. G), 167565 (Exh. H and 167566 were
issued for the six lots in the name of Custodio (Entry No. 61035, Exh. Q).

On June 23, 1966, Custodio conveyed to Santos Lots 4 and 5, Pcs-5273 with a total
area of 90,775 square meters (Exh. B or 2) described in Custodio's TCT No. 167564
(Exh. G or 7) and TCT No. 167565 (Exh. H or 8), plus a one-half interest in the Road
Lot No. 6, as payment of Santos' attorney's fees and advances for the registration of
Custodio's land.

Upon registration of the deed of conveyance on July 5, 1966, Custodio's TCT Nos.
167564 and 167565 (Exhs. G and H) were cancelled. TCT No. 167568 (Exh. I or 9)
for Lot 4 and TCT No. 167585 (Exh. J or 10) for Lot 5 were issued to Santos.

On September 2, 1967, Santos' Lot 5, with an area of 50,000 square meters was
subdivided into two (2) lots, designated as Lots 5-A and 5-B in the plan Psd-78008
(Exh. F or 6), with the following areas:
 Lot 30,205
5-A
square
meters

Lot 19,795s
5- quare
B meters

TO 50,000
TA square
L meters

Upon registration of Psd-78008 on October 3, 1967, Santos' TCT No. 167585 (Exh.
J) was cancelled and TCT No. 203578 for Lot 5- A and TCT No. 203579 for Lot 5-B
were supposed to have been issued to Santos (See Entry 6311 in Exh. J or 10).
Actually, TCT No. 203580 was issued for Lot 5-A (Exh. K or 1 1), and TCT No.
203581 for Lot 5-B (Exh. L or 12), both in the name of Andres F. Santos.

Out of Custodio's original Lot 1, Psu-206650, with an area of 181,420 square meters,
Santos was given a total of 90,775 square meters, registered in his name as of
October 3, 1967 under three (3) titles, namely:

TCT No.
167585 for

Lot 4 Pcs- 40,775 sq.

5273 m.

(Exh. J or 10)

TCT No.
203580 for
 Lot 5-A Psd- 30,205 sq.
78008 m.

(Exh. K or 11)

TCT No.
203581 for

Lot 5-B Psd- 19,795 sq.

78008 m.

(Exh. L or 12)

90,775 sq.m.

plus one-half of the road lot, Lot 6, PCS-5273, with an area of 5,303 square meters,
which is registered jointly in the name of Santos and Custodio (Exh. B & E) 6

The court a quo thereupon concluded that there are no serious factual issues involved so the motion
for summary judgment may be properly granted. Thereafter, it proceeded to dispose of the legal
issues raised by defendants and rendered judgment in favor of plaintiff. The dispositive portion of the
decision states as follows:

WHEREFORE, defendants Andres F. Santos and Aurora Santos are ordered to

execute and convey to plaintiff Amparo del Rosario, within ten (10) days from the
finality of this decision, 20,000 square meters of land to be taken from the
southeastern portion of either Lot 4, Pcs-5273, which has an area of 40,775 square
meters, described in TCT No. 167568 (Exh. I or 9) of from their LOL 5-A. with an
area of 30,205 square meters, described in TCI No. 203; O (Exh. K or 11). The
expenses of segregating the 20,000 square meters portion shall be borne fqually by
the parties. rhe expenses for the execution and registration of the sale shall be borne
by the defendants (Art. 1487, Civil Code). Since the defendants compelled the
plaintiff to litigate and they failed to heed plainliff's just demand, they are further
ordered to pay the plaintiff the sum of P2,000.00 as attorney's fees and the costs of
this action.

SO ORDERED. 7
Aggrieved by the aforesaid decision, the defendant's filed all appeal to the Court of Appeals
submitting for resolution seven assignments of errors, to wit:

I. The lower court erred in depriving the appellants of their right to the procedural due
process.

II. The lower court erred in holding that the appellee's claim has not been
extinguished.

III. The lower court erred in sustaining appellee's contention that there are no other
unwritten conditions between the appellants and the appellee except those express
in Exh. "1" or "A", and that Erlinda Cortez' conformity is not required to validate the
appellants' obligation.

IV. The lower court erred in holding that Exh. "l" or "A" is not infirmed and expressed
the true intent of the parties.

V. The lower court erred in declaring that the appellants are co-owners of the lone
registered owner Teofilo Custodia.

VI. The lower court erred in ordering the appellants to execute and convey to the
appellee 20,000 sq. m. of land to be taken from the southeastern portion of either
their lot 4, Pcs-5273, which has an area of 40,775 sq.m., described in T.C.T. No.
167568 (Exh. 9 or 1), or from their lot No. 5-A, with an area of 30,205 sq.m.
described in T.C.T. No. 203580 (Exh. 11 or K), the expenses of segregation to be
borne equally by the appellants and the appellee and the expenses of execution and
registration to be borne by the appellants.

VII. Thelowercourterredinorderingtheappellantstopayto the appellee the sum of

P2,000. 00 as attorney's fee and costs. 8

The first four revolve on the issue of the propriety of the rendition of summary judgment by the
court a quo, which concededly is a question of law. The last three assail the summary judgment
itself. Accordingly, the Court of Appeals, with whom the appeal was filed, certified the records of the
case to this Court for final determination.

For appellants herein, the rendition of summary judgment has deprived them of their right to
procedural due process. They claim that a trial on the merits is indispensable in this case inasmuch
as they have denied under oath all the material allegations in appellee's complaint which is based on
a written instrument entitled "Deed of Sale", thereby putting in issue the due execution of said deed.

Appellants in their opposition to the motion for summary judgment and/or judgment on the pleadings,
however, do not deny the genuineness of their signatures on the deed of sale.

(Par. 3 of said Motion, p. 101, Record on Appeal). They do not contest the words and figures in said
deed except in the acknowledgment portion thereof where certain words were allegedly cancelled
and changed without their knowledge and consent and where, apparently, they appeared before
Notary Public Florencio Landrito when, in fact, they claimed that they did not. In effect, there is an
admission of the due execution and genuineness of the document because by the admission of the
due execution of a document is meant that the party whose signature it bears admits that voluntarily
he signed it or that it was signed by another for him and with his authority; and the admission of the
genuineness of the document is meant that the party whose signature it bears admits that at the time
it was signed it was in the words and figures exactly as set out in the pleading of the party relying
upon it; and that any formal requisites required by law, such as swearing and acknowledgment or
revenue stamps which it requires, are waived by him. 9

As correctly pointed out by the court a quo, the alleged false notarization of the deed of sale is of no
consequence. For a sale of real property or of an interest therein to be enforceable under the Statute
of Frauds, it is enough that it be in writing. 10 It need not be notarized. But the vendee may avail of the
right under Article 1357 of the New Civil Code to compel the vendor to observe the form required by law in
order that the instrument may be registered in the Registry of Deeds. 11 Hence, the due execution and
genuineness of the deed of sale are not really in issue in this case. Accordingly, assigned error I is without
merit.

What appellants really intended to prove through the alleged false notarization of the deed of sale is
the true import of the matter, which according to them, is a mere tentative agreement with appellee.
As such, it was not intended to be notarized and was merely entrusted to appellee's care and
custody in order that: first, the latter may secure the approval of one Erlinda Cortez to their
(appellants') offer to pay a debt owing to her in the amount of P2,000.00 to appellee instead of
paying directly to her as she was indebted to appellee in various amounts exceeding P2,000.00; and
second once the approval is secured, appellee would render an accounting of collections made from
Erlinda showing in particular the consideration of P2,000.00 of the deed of sale duly credited to
Erlinda's account.

According to appellants, they intended to prove at a full dress trial the material facts: (1) that the
aforesaid conditions were not fulfilled; (2) that Erlinda Cortez paid her total indebtedness to appellee
in the amount of P14,160.00, the P2,000.00 intended to be paid by appellant included; and (3) that
said Erlinda decided to forego, renounce and refrain from collecting the P2,000.00 the appellants
owed her as a countervance reciprocity of the countless favors she also owes them.

Being conditions which alter and vary the terms of the deed of sale, such conditions cannot,
however, be proved by parol evidence in view of the provision of Section 7, Rule 130 of the Rules of
Court which states as follows:

Sec. 7. Evidence of written agreements when the terms of an agreement have been
reduced to writing, it is to be considered as containing all such terms, and, therefore,
there can be, between the parties and their successors in interest, no evidence of the
terms of the agreement other than the contents of the writing, except in the following
cases:

(a) Where a mistake or imperfection of the writing, or its failure to express the true
intent and agreement of the parties, or the validity of the agreement is put in issue by
the pleadings;

(b) When there is an intrinsic ambiguity in the writing. The term "agreement" includes
wills."

The parol evidence rule forbids any addition to or contradiction of the terms of a written instrument
by testimony purporting to show that, at or before the signing of the document, other or different
terms were orally agreed upon by the parties. 12

While it is true, as appellants argue, that Article 1306 of the New Civil Code provides that "the
contracting parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided that they are not contrary to law, morals, good customs, public order, or public
policy" and that consequently, appellants and appellee could freely enter into an agreement
imposing as conditions thereof the following: that appellee secure the written conformity of Erlinda
Cortez and that she render an accounting of all collections from her, said conditions may not be
proved as they are not embodied in the deed of sale.

The only conditions imposed for the execution of the Deed of Confirmation of Sale by appellants in
favor of appellee are the release of the title and the approval of the subdivision plan. Thus,
appellants may not now introduce other conditions allegedly agreed upon by them because when
they reduced their agreement to writing, it is presumed that "they have made the writing the only
repository and memorial of truth, and whatever is not found in the writing must be understood to
have been waived and abandoned." 13

Neither can appellants invoke any of the exceptions to the parol evidence rule, more particularly, the
alleged failure of the writing to express the true intent and agreement of the parties. Such an
exception obtains where the written contract is so ambiguous or obscure in terms that the
contractual intention of the parties cannot be understood from a mere reading of the instrument. In
such a case, extrinsic evidence of the subject matter of the contract, of the relations of the parties to
each other, and of the facts and circumstances surrounding them when they entered into the.
contract may be received to enable the court to make a proper interpretation of the instrumental. 14 In
the case at bar, the Deed of Sale (Exh. A or 1) is clear, without any ambiguity, mistake or imperfection,
much less obscurity or doubt in the terms thereof. We, therefore, hold and rule that assigned errors III and
IV are untenable.

According to the court a quo, "(s)ince Santos, in his Opposition to the Motion for Summary Judgment
failed to meet the plaintiff's evidence with countervailing evidence, a circumstance indicating that
there are no serious factual issues involved, the motion for summary judgment may properly be
granted." We affirm and sustain the action of the trial court.

Indeed, where a motion for summary judgment and/or judgment on the pleadings has been filed, as
in this case, supporting and opposing affidavits shall be made on personal knowledge, shall set forth
such facts as may be admissible in evidence, and shall show affirmatively that the affiant is
competent to testify as to the matters stated therein. Sworn or certified copies of all papers or parts
thereof referred to in the affidavitshalibeattachedtheretoorservedtherewith. 15

Examining the pleadings, affidavits and exhibits in the records, We find that appellants have not
submitted any categorical proof that Erlinda Cortez had paid the P2,000.00 to appellee, hence,
appellants failed to substantiate the claim that the cause of action of appellee has been
extinguished. And while it is true that appellants submitted a receipt for P14,160.00 signed by
appellee, appellants, however, have stated in their answer with counterclaim that the P2,000.00
value of the property covered by the Deed of Sale, instead of being credited to Erlinda Cortez, was
conspicuously excluded from the accounting or receipt signed by appellee totalling P14,160.00. The
aforesaid receipt is no proof that Erlinda Cortez subsequently paid her P2,000.00 debt to appellee.
As correctly observed by the court a quo, it is improbable that Cortez would still pay her debt to
appellee since Santos had already paid it.

Appellants' claim that their P2,000.00 debt to Erlinda Cortez had been waived or abandoned is not
also supported by any affidavit, document or writing submitted to the court. As to their allegation that
the appellee's claim is barred by prescription, the ruling of the trial court that only seven years and
six months of the ten-year prescription period provided under Arts. 1144 and 155 in cases of actions
for specific performance of the written contract of sale had elapsed and that the action had not yet
prescribed, is in accordance with law and, therefore, We affirm the same.
The action of the court a quo in rendering a summary judgment has been taken in faithful
compliance and conformity with Rule 34, Section 3, Rules of Court, which provides that "the
judgment sought shall be rendered forthwith if the pleadings, depositions, and admissions on file
together with the affidavits, show that, except as to the amount of damages, there is no genuine
issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. "

Resolving assignments of errors, V, VI, and VII which directly assail the summary judgment, not the
propriety of the rendition thereof which We have already resolved to be proper and correct, it is Our
considered opinion that the judgment of the court a quo is but a logical consequence of the failure of
appellants to present any bona fidedefense to appellee's claim. Said judgment is simply the
application of the law to the undisputed facts of the case, one of which is the finding of the court a
quo, to which We agree, that appellants are owners of one-half (1/2) interest of Lot I and, therefore,
the fifth assignment of error of appellants is without merit.

By the terms of the Deed of Sale itself, which We find genuine and not infirmed, appellants declared
themselves to be owners of one-half (1/2) interest thereof. But in order to avoid appellee's claim,
they now contend that Plan Psu-206650 where said Lot I appears is in the exclusive name of Teofilo
Custodio as the sole and exclusive owner thereof and that the deed of assignment of one-half (1/2)
interest thereof executed by said Teofilo Custodio in their favor is strictly personal between them.
Notwithstanding the lack of any title to the said lot by appellants at the time of the execution of the
deed of sale in favor of appellee, the said sale may be valid as there can be a sale of an expected
thing, in accordance with Art. 1461, New Civil Code, which states:

Art. 1461. Things having a potential existence may be the object of the contract of
sale.

The efficacy of the sale of a mere hope or expectancy is deemed subject to the
condition that the thing will come into existence.

The sale of a vain hope or expectancy is void.

In the case at bar, the expectant right came into existence or materialized for the appellants actually
derived titles from Lot I .

We further reject the contention of the appellants that the lower court erred in ordering the appellants
to execute and convey to the appellee 20,000 sq.m. of land to be taken from the southeastern
portion of either their Lot 4, Pcs-5273, which has an area of 40,775 sq.m., described in T.C.T. No.
167568 (Exh. 9 or 1), or from their Lot No. 5-A, with an area of 30,205 sq.m. described in T.C.T. No.
203580 (Exh. 11 or K), the expenses of segregation to be borne equally by the appellants and the
appellee and the expenses of execution and registration to be borne by the appellants. Their
argument that the southeastern portion of Lot 4 or Lot 5-A is no longer the southeastern portion of
the bigger Lot 1, the latter portion belonging to the lone registered owner, Teofilo Custodia is not
impressed with merit. The subdivision of Lot I between the appellants and Teofilo Custodio was
made between themselves alone, without the intervention, knowledge and consent of the appellee,
and therefore, not binding upon the latter. Appellants may not violate nor escape their obligation
under the Deed of Sale they have agreed and signed with the appellee b3 simply subdividing Lot 1,
bisecting the same and segregating portions to change their sides in relation to the original Lot 1.
Finally, considering the trial court's finding that the appellants compelled the appellee to litigate and
they failed to heed appellee's just demand, the order of the court awarding the sum of P2,000.00 as
attorney's fees is just and lawful, and We affirm the same.

WHEREFORE, IN VIEW OF THE FOREGOING, the judgment appealed from is hereby AFFIRMED
in toto, with costs against the appellants.

SO ORDERED.

31A. Summary Judgment

G.R. No. L-43882 April 30, 1979

ANGELICA VIAJAR and CELSO VIAJAR, plaintiffs-petitioners,

vs. HON. NUMERIANO G. ESTENZO, Presiding Judge, Court of
First Instance of Iloilo, Branch III, RICARDO LADRIDO and
ROSENDO TE, defendants-respondents.

G.R. No. L-45321 April 30, 197

ANGELICA VIAJAR and CELSO VIAJAR, plaintiffs-appellants,

vs. RICARDO LADRIDO and ROSENDO TE, defendants-appellees.

Ramon A. Gonzales for petitioners. chanrobles virtual law library

Corazon Miraflores for respondent Ricardo Ladrido. chanrobles virtual law library

Tirol & Tirol for respondent Rosendo Te.

GUERRERO, J.:

Appeal from the summary judgment of the Court of First Instance of

Iloilo, Branch III, issued in Civil Case No. 9660 entitled "Angelica
Viajar and Celso Viajar, plaintiffs, versus Ricardo Ladrido and
Rosendo Te defendants."

On February 15, 1974, plaintiffs-petitioners filed a complaint for the

recovery of possession of property premised on the allegations that
they were the registered owners pro-indivisoof a parcel of
agricultural land at Guibuangan, Pototan, Iloilo with an area of
2.0089 hectares, more or less, identified as Lot No. 7340, Pototan
Cadastre and more particularly described as follows:

A parcel of land (Lot No. 7340 of the Cadastral Survey of Pototan,

with improvements thereon situated in the Municipality of Pototan
and bounded on the Northeast by Lot No. 7339; in the Southeast by
Lot No. 7342-1 Southwest by lots Nos. 7341 & 7470 and on the
West by the Suage River.

their ownership thereof being evidenced by Transfer Certificate of

Title No. T-77367 of the Register of Deeds of Iloilo (par. 2,
Complaint); that the above-described parcel of land was acquired
through purchase by the plaintiffs on September 6, 1973 following
which they caused to be undertaken by a license Geodetic Engineer
the relocation survey of the property for the purpose of determining
the exact metes and bounds thereof (par. 3, Complaint): that as a
result of the said relocation survey, plaintiffs came to know and
discover that the northeastern half portion of Lot No. 7340 has been
eaten up and occupied by the new waterbed of the Suage River as a
result of the natural change in its course, while the remaining
southwestern portion of the property is occupied and possessed by
defendant Ricardo Ladrido (par. 4, Complaint); that plaintiffs also
later came to know that the defendant has occupied and possessed
for more than (2) years not only the aforesaid Parcel 2 but also the
old abandoned riverbed of the Suage River which was the original
boundary on the West of the land in question, lot No. 7340 (par. 5,
Complaint); that the northeastern portion of their property having
been occupied by the new riverbed of the Suage River, as
aforestated, plaintiffs have become by law ipso facto the owners of
the aforesaid abandoned riverbed in proportion to the area they lost
(par. 6, Complaint); that notwithstanding demands made by the
plaintiffs, defendant without any justifiable reason has refused and
until now still refuses to vacate the aforesaid area occupied by him
or surrender the possession thereof to the plaintiffs to the latter as
great damage and prejudice in the amount of P6,000.00 per year,
P5,000.00 for moral damages and P500.00 for expenses of litigation
(pars. 7, 8 and 9, Complaint). chanroblesvirtualawlibrary chanrobles virtual law library

In his answer dated March 12, 1974, defendant-respondent Ricardo

Ladrido denied the substantial allegations in the complaint and
averred as special and affirmative defenses that he is the owner of
Lot No. 7511 situated at Barrio Cawayan Pototan, Iloilo, which lot is
bounded on the east by Suage River (par. 6, Answer); that since
1926 or 1927, the Suage River gradually deposited soil
accumulations on the eastern portion of Lot 7511 which the
defendant promptly took possession and worked the same as his
own as soon as said Suage River gradually, slowly and consistently
moved farther to the East (par. 7, Answer); that Lot 7340 claimed
by plaintiffs and allegedly titled in their names, is separated from
Lot 7511 of the defendant by the Suage River, and the gradual
action of the Suage River, admitted by the plaintiffs in their
complaint, had eaten up said lot 7340 (par. 8, Answer); that the
land in dispute which is indicated as parcel 2, Lot 7340, of Annex
"A" of the complaint, as wen as the old Suage River bed, is the soil
accumulation or accretion attached to Lot 7511, owned by the
defendant (par. 9, Answer); that defendant possessed the portions
formed by the accumulations of soil deposits made by the Suage
River gradually from 1926-27 up to 1940, at the latest, when the
Suage River remained on a more or less stationary course up to the
present (par. 10, Answer); that defendant is owner of the soil
accumulations and the dried up riverbed now attached to his Lot
7511 (par. 11, Answer). Defendant-respondent filed as counterclaim
the amount of P1,500.00 for attorney's fees and P5,000.00 as moral
damages. chanroble svirtualawlibrary chanroble s virtual law library

In a reply filed on April 4, 1974, plaintiffs-petitioners averred that

they never admitted that the change in the course of the Suage
River was through a gradual action resulting to an accumulation of
soil deposits to the eastern part of Lot No. 7511 owned by the
defendant. Plaintiffs had emphatically and continuously insisted that
the Suage River changed its course through natural action by
passing through the northeastern portion of Lot No. 7340 owned by
plaintiffs (par. 1, Reply); that said lot in question indicated as Parcel
2 of Lot No. 7340 of Annex "B" is not the soil accumulation or
accretions attached to Lot No. 7511 owned by defendant inasmuch
as parcel 2 retains its Identity, and in fact the old river bed of Suage
River formerly running between Lot No. 7511 and Lot No. 7340 is
still existing (par. 2, Reply); that the defense of accretion interposed
by defendant in the instant case does not apply; instead it falls with
the contemplation of Article 461 of the New Civil Code on change of
course of rivers (par. 4, Reply); and that by reason of the natural
change of the course of the Suage River, the abandoned river bed
which is existing as admitted by defendant himself, exclusively
belongs to the plaintiffs for reasons above stated (par. 5, Reply).
la w library
chanroble svirtualawlibrary chanroble s virtual

On June 14, 1974, plaintiffs-petitioners amended their complaint by

impleading Rosendo Te as defendant from whom they purchased the
land in question upon the latter's assurance that the title is clean
and the landholding is not possess nor subject to any lien,
encumbrances or claims by third persons. Plaintiffs-petitioners
prayed in the alternative that should possession of defendant-
respondent Ricardo Ladrido be sustained, an order be issued
annulling the contract of sale and direct the vendor Rosendo Te to
return the purchase price thereof with interest from the date of
execution of the sale.chanroble svirtualawlibrary chanroble s virtual law library

Defendant-respondent Rosendo Te filed his own answer to the

amended complaint acknowledging the deed of sale but alleging
that he only sold to plaintiffs-petitioners whatever rights he had
over the property under the Torrens Title and Tax Declaration over
the land transferred to him by the original owner; that complainants
are precluded from including defendant Rosendo Te in the case
because the former had never previously demanded from the said
vendor the cancellation of the sale, but on the contrary, plaintiffs-
petitioners have always maintained that they were entitled as a
matter of right to the ownership of the remaining portion of Lot No.
7340 and the dry riverbed which are under the possession of
defendant Ladrido. chanroblesvirtualawlibrary chanrobles virtual law library

On August 8, 1975, defendant-respondent Ricardo Ladrido filed a

Motion for Summary Judgment dismissing the action of plaintiffs
and declaring defendant Ricardo Ladrido the owner of the land in
question on the basis of the alleged admission of the plaintiffs in
their complaint as well as of the law and jurisprudence on the
matter. Quoting par. 4 of the complaint which reads:

That as a result of the said relocation survey, plaintiffs came to

know and discover that the northeastern half portion of Lot No.
7340 has been easten up and occupied by the new waterbed of the
Suage River as a result of the natural change in its course, while the
remaining southwestern portion of the property is occupied and
possess by defendant Ricardo Ladrido,

movant Ricardo Ladrido argues that said allegation of plaintiffs is an

admission on their part that the change of course of the river was
gradual and not sudden or abrupt; that it is therefore a case of
alluvion in Article 457 of the Civil Code (366 of the Old Civil Code)
and not abandoned river bed in Article 461 of the Civil Code (370 of
the Old Civil Code) as in the latter the change of course is sudden or
abrupt; that being alluvion, the land in question is accreted land on
Lot 7511 (Article 457 of the Civil Code; Article 366 of the Old Civil
Code).chanroblesvirtualawlibrary chanrobles virtual law library

Defendant Rosendo Te filed his "Opposition to Motion for Summary

Judgment" on the ground that there is a clear controversy between
the parties as to how the Suage River had changed its course,
whether abruptly as contended by the plaintiffs and defendant
Rosendo Te or gradually as contended by defendant Ricardo Ladrido.
Moreover, oppositor claims that the abandoned river bed which in
reality does not form part of Lots Nos. 7511 and 7340 is likewise
involved in the case and the question as to whom such land should
now belong is also a matter of controversy. chanroble svirtualawlibrary chanroble s virtual law library

On August 19, 1975, respondent Judge issued the Summary

Judgment, which is quoted fully hereunder:

SUMMARY JUDGMENT

Paragraphs 5, 6 and 9 of the amended complaint read, as follows:

xxx xxx xxx

5. That as a result of the said relocation survey, plaintiffs came to

know and discover that the northeastern half portion of Lot No.
7340 has been eaten up and occupied by the new waterbed of the
Suage River as a result of the natural change in its course, while the
remaining southwestern portion of the property is occupied and
possessed by defendant Ricardo Ladrido. The portion now occupied
by the Suage River is Identified as Parcel 1 and the portion occupied
by the defendant Ricardo Ladrido is Identified as Parcel 2 in the
sketch marked as Annex "B " and is found attached to the original
complaint; chanroble s virtual law library

6. That plaintiffs also later came to know that the defendant Ricardo
Ladrido has occupied and possessed for more than two (2) years
not only the aforesaid Parcel 2 but also the old abandoned riverbed
of the Suage River which was the original boundary on the West of
the land in question, Lot No. 7340;

xxx xxx xxx

9. That plaintiffs upon knowing that a portion of the landholding in

question is being possessed by defendant Ricardo Ladrido,
immediately informed and complained to the defendant t Rosendo
Te that the land sold to them is not free from any claim and
possession of third persons, as it is in fact possessed and claimed
by defendant Ricardo Ladrido, but instead defendant t Rosendo Te
when he received the information merely told the plaintiffs that it
was their own lookout and for them to fight their own legal battle;

xxx xxx xxx chanroble s virtual law library

Then paragraphs 2 and 10 of defendant Rosendo Te's answer read:

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chanrobles

xxx xxx xxx

2. It is admitted that on September 6, 1973 answering defendant

executed a Deed of Sale in favor of the plaintiffs herein selling to
the latter for the sum of P5,000 all his rights, title and interest over
Lot No. 7340 of the Cadastral Survey of Pototan of which he was
then the registered owner under Transfer Certificate of Title No. T-
50333; but all and each of the other allegations in Par. 3 of the
Amended Complaint, specially the assurances supposedly given by
answering defendant, are specifically denied, the truth of the matter
being as follows: that answering defendant was only selling to the
plaintiffs an and whatever rights he might have over the said parcel
of land under and by virtue of the aforesaid Torrens title and the tax
declaration covering the land; that the plaintiffs themselves were
the ones who approached and proposed to the defendant the
purchase from the latter of his registered rights on the said land,
stating that they would visit the land before the purchase was going
to be consummated; and that answering defendant in turn acquired
in good faith his rights over said land by purchase from its former
registered owners, the spouses Francisco M. Militants and Consuelo
M. Cordova, by virtue of a document of sale executed on January 2,
1966.

xxx xxx xxx

10. The plaintiffs are precluded by estoppel from including Rosendo

Te as a defendant in the present case because they had never
previously demanded from the latter for the cancellation of the sale
in their favor; and, on the contrary, based on the facts of the case,
they have always maintained as they have so manifested to
answering defendant that they were entitled as a matter of right to
the ownership of the remaining portion of Lot No. 7340, as well as
to the dry abandoned bed of the Suage River.

xxx xxx xxx chanroble s virtual law library

Then paragraph I of the reply read as follows:

1. That plaintiffs never admitted that the change in the course of

the Suage River was through a gradual action resulting to an
accumulation of soil deposits to the eastern part of Lot No. 7511
owned by the defendant. Plaintiffs had emphatically and
continuously insisted that the Suage River changed its course
through natural action by passing through the northeastern portion
of Lot No. 7340 owned by plaintiffs;

xxx xxx xxx chanroble s virtual law library

The foregoing judicial admission of plaintiffs supports the motion for

summary judgment per comments of Chief Justice Moran and
Justice Martin cited by defendant Ladrido. chanroblesvirtualawlibrary chanrobles virtual law library

In the opposition of defendant Rosendo Te it is contended that no

admission has been made as to the ownership of defendant Ladrido
but the foregoing paragraph 1 of the plaintiffs' reply clearly
indicated and admitted the ownership of defendant Ladrido on Lot
7511. Then defendant Te has filed no claim against defendant
Ladrido, so it is Te who is in estoppel to oppose Ladrido's motion for
summary judgment. chanroblesvirtualawlibrary chanrobles virtual law library

The presence of the clause 'eaten up and occupied by the new

waterbed of the Suage River' clearly admitted a case of alluvion
referred to in Article 457 of the New Civil Code, so that the doctrine
laid down in the case of 'Payatas Estate Improvement Co. vs.
Tuason, (53 Phil. 55) is applicable to the present claim of defendant
Ladrido.chanroblesvirtualawlibrary chanrobles virtual law library

Then plaintiff is a purchaser in bad faith as at the time of the

purchase in 1973, defendant Ladrido was already in possession of
the land for more than 2 years before the filing of the complaint on
February 15, 1974, pursuant to paragraph 5 of the original and
amended complaint pursuant to the ruling in the case of Comspecto
vs. Fruto, 31 Phil 144, found on page 316 of the Philippine Torrens
System by Ponce, to wit:

Precaution when property is in possession of another. One who

purchases real property which is in actual possession of others
should, at least, make some inquiry concerning the rights of those
in possession. The actual possession by others other than the
vendor should, at least, put the purchaser upon inquiry. He can
scarcely in the absence of such inquiry, be regarded as a bona-fide
purchaser as against such possessors. Comspecto vs. Fruto, 31 Phil.
144, 149).

WHEREFORE, summary judgment is hereby rendered against the

plaintiffs and in favor of the defendants, hereby dismissing this
case, without pronouncement as to costs chanroble s virtual law library

SO ORDERED.

From the above judgment, plaintiffs-petitioners filed the notice of

appeal to the Court of Appeals. This was followed by the submission
of their Record on Appeal on September 25, 1975. But before the
petition for review could be filed, counsel for petitioners moved for
the certification of the case to the Supreme Court after realizing
that the appeal involves pure questions of law. The motion was
granted by the Seventh Division of the Court of Appeals in the
resolution of September 2, 1976 which certified the case to Us for
final determination pursuant to Section 31 in relation to Section 17
of the Judiciary Act, as amended. In Our resolution of December 17,
1976, the certified case was docketed as G.R. No. L-45321 and
consolidated with G.R. No. L-43882, a petition for review on
certiorari of the same summary judgment filed by plaintiffs-
petitioners in the meantime on July 2, 1976 and given due course
as a special civil action in Our resolution of September 1, 1976. chanroble svirtualawlibrary chanroble s virtual law library

Having considered the petition as an original action, the principal

issue is whether or not the trial court gravely abused its discretion
in deciding the case by Summary Judgment dated August 19, 1975.
Plaintiffs-petitioners contend that the lower court erred in
promulgating summary judgment in view of the questions of fact
disputed in the pleadings. They maintain that by invoking Article
461 of the Civil Code in relation to their allegation that there was a
natural change in the course of Suage River, they, in effect, alleged
the abrupt or sudden change in the course of the waters. They point
out that this contention was contradicted by defendant-respondent
Ricardo Ladrido in his answer when the latter claimed that the
change was instead gradual under the contemplation of Article 457
of the same Code. On the other hand, this defendant-respondent
supports the propriety of the summary judgment on the ground that
the complaint failed to aver categorically the sudden and abrupt
change in the course of the river, but on the contrary, the allegation
therein that the land was eaten up by the current amounts to an
admission on the part of complainants that the change was in fact
gradual.chanroblesvirtualawlibrary chanrobles virtual law library

From a careful reading of the complaint and answer, there are two
conflicting theories respecting the occurrence of a natural
phenomenon, the effects and consequences of which are governed
either by Article 461 1or Article 457 2 of the Civil Code. The obvious
task laid before the trial court is to determine whether there actually
occurred an abrupt and sudden change of the water current, or that
the river had gradually veered through the years leaving alluvial
deposit of soil now composing the portion claimed by the parties.
virtual law library
chanroble svirtualawlibrary chanroble s

We cannot subscribe to the interpretation that the phrase "eaten up

and occupied by the new waterbed" imports an admission by
plaintiffs- petitioners of a gradual action of the water current, thus
stripping the complaint of its only contestable issue, and hence,
needs only to be disposed of in a summary judgment. We hold that
the phrase "eaten up" is a vague expression of what complainants
wanted to convey, since the phrase can either mean gradual or
sudden action of the river. This ambiguity, though, cannot deprive
the complaint of its merit because the pleader is required to state
only the ultimate facts constituting his cause of action. At least, by
the reading of the entire complaint, it is clear enough that the
pleader did not take its own expression to mean the gradual shifting
of the river current, so much so that defendant-respondent in his
answer countered with a diametrically opposed explanation as
demonstrated in his factual allegations. Moreover, plaintiffs-
petitioners in their reply alleged that they never admitted that the
change in the course of the Suage River was through a gradual
action resulting to an accumulation of soil deposits to the eastern
part of the lot owned by defendant. chanroblesvirtualawlibrary chanrobles virtual law library

Besides, co-defendant Rosendo Te conceded in his answer to the

amended complaint that the Suage River suddenly changed its
course by channeling its bed at the northeastern strip of Lot No.
7340 (Records, p. 28). Considering that the interests of the parties
clashed on the proprietary effect of the natural phenomenon, the
issue all the more became genuine and ripe for adjudication.
Plaintiffs-petitioners claim ownership over the abandoned river bed
in proportion to the area they lost when the river opened a new
channel within their property. On the other hand, defendant-
respondent Ricardo Ladrido claims ownership to the disputed
portion because its consists of accretion attached to his land as a
result of the gradual accumulation of solid brought by the action of
the water current. With these conflicting claims, a factual dispute
certainly arises which can only be properly settled by means of a
trial on the merits. Summary judgment was therefore,
unwarranted. 3 chanrobles virtual law library

Relief by summary judgment is intended to expedite or promptly

dispose of cases where the facts appear undisputed and certain
from the pleadings, depositions, admissions and affidavits. But if
there be a doubt as to such facts and there be an issue or issues of
fact joined by the parties, neither one of them can pray for a
summary judgment. Where the facts pleaded by the parties are
disputed or contested, proceedings for a summary judgment cannot
take the place of a trial. 4 chanroble s virtual law library

An examination of the Rules will readily show that a summary

judgment is by no means a hasty one. It assumes a scrutiny of facts
in a summary hearing after the filing of a motion for summary
judgment by one party supported by affidavits, depositions,
admissions, or other documents, with notice upon the adverse party
who may file an opposition to the motion supported also by
affidavits, deposition ' or other documents (Section 3, Rule 34). In
spite of its expediting character, relief by summary judgment can
only be allowed after compliance with the minimum requirement of
vigilance by the court in a summary hearing considering that this
remedy is in derogation of a party's right to a plenary trial of his
case. At any rate, a party who moves for summary judgment has
the burden of demonstrating clearly the absence of any genuine
issue of fact, or that the issue posed in the complaint is so patently
unsubstantial as not to constitute a genuine issue for trial, and any
doubt as to the existence of such an issue is resolved against the
movant. 5 chanrobles virtual law library

We find that in the case at bar, the aforementioned guidelines were

not observed, The mere reliance on an "admission" arrived at by
construction and dubitable by its terms, rather than a clear and
positive concession cannot be a basis for a summary judgment.
Respondent's motion is not supported by an affidavit of merit or any
document attesting the state of facts relied upon in the motion.
Neither has the court afforded the parties a hearing on both the
motion and opposition to the same. Clearly, the trial court in
cursorily issuing a summary judgment, committed a correctible
error. chanroblesvirtualawlibrary chanrobles virtual law library

WHEREFORE, the summary judgment is set aside and the case is

hereby remanded to the trial court for further proceedings. Without
costs. chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.

31B. Summary Judgment

G.R. Nos. 82282-83 November 24, 1988

ANTONIO M. GARCIA, DYNETICS, INC., and MATRIX MANAGEMENT

CORPORATION, petitioners,
vs.
COURT OF APPEALS and SECURITY BANK AND TRUST COMPANY, respondents.

Sycip, Salazar, Hernandez & Gatmaitan for petitioners.

Bengson, Zarraga, Narciso, Cudala, Pecson & Bengson for private respondent.

GUTIERREZ, JR., J.:

In a summary judgment rendered by the Regional Trial Court of Makati in Civil Case No. 10398, the
complaint was dismissed for lack of merit and the petitioners were ordered to pay the private
respondent the following: (a) the unpaid principal sum of P15 million remaining unpaid out of
Chemark's availment of the P20 million credit line, plus 18% interest per annum and 36% as penalty
per annum for Promissory Note No. DLS/74/540/83 from March 23, 1984 until fully paid; and plus
24% interest per annum and 36% as penalty per annum for Promissory Note No. DLS/74/1358/83
from August 9, 1983 until fully paid; (b) attorney's fees equivalent to 10% of the total amount of
plaintiffs' obligations and (c) costs of suit.
The summary judgment was affirmed by the Court of Appeals. The appellate court's decision and the
resolution denying a motion for reconsideration are now challenged by the petitioners in the instant
petition.

The antecedent facts relevant to the instant petition are as follows:

On April 23, 1985 petitioners Dynetics, Inc., Matrix Management and Trading Corporation and
Antonio M. Garcia filed a complaint for declaratory relief and/or injunction with damages against
respondent Security Bank and Trust Company (SBTC). The plaintiffs sought a judicial declaration
that they were not liable to the defendant bank under certain Indemnity Agreements they executed in
favor of Chemark Electric Motors, Inc. which had been extended a credit accommodation of about
P20,000,000.00 by the defendant bank. They also prayed for payment of attorney's fees and costs of
suit. Thus, they alleged in their complaint:

xxx xxx xxx

a) There is no valid consideration for the execution of the said instruments;

b) The said instruments had become invalid and ineffective at the time the defendant
finally extended the loan accommodation to Chemark and that the parties to the said
instruments did not intend the said instruments to cover Chemark's obligations to the
defendant which were subsequently granted under separate and independent
transactions;

c) Assuming, without conceding, that there is a valid consideration for the execution
of the aforesaid instruments and that the said instruments continued to be valid and
effective when the defendant extended a credit accommodation to Chemark, said
instruments are null and void insofar as Dynetics is concerned as it is ultra vires,
being contrary to the purposes of Dynetics, its powers, licenses and franchise;

d) Assuming, without conceding, that the Indemnity Agreement instruments are valid
and enforceable, the obligations of the plaintiffs thereunder have been extinguished,
either by novation or by the acts and conduct of the defendant, who, under the
circumstances, in refusing the valid and legitimate plea of Chemark for a reasonable
restructuring plan of its obligations has practically rendered it impossible for Chemark
to pay its obligations to its creditors and to the plaintiffs in the event plaintiffs are
legally obligated to pay Chemark's obligations to the defendant;

e) In the light of present economic conditions, in general, and the condition of

Chemark in particular, as well as the financial condition of the plaintiffs, the demand
of the defendant for the plaintiffs to pay the Chemark obligations would constitute an
abuse of right as defined in the New Civil Code;

f) Considering the present adverse economic conditions plaguing the entire country,
the terms and conditions of the credit accommodation and the Indemnity Agreement
instruments, assuming that the latter are valid and enforceable, have become so
 manifestly difficult as to be beyond the contemplation of the parties. Under the
provisions of Human Relations of the New Civil Code, as well as the general
principles of equity, especially the doctrine of the "rebus sic stantibus" and "the
frustration of the commercial object or frustration of enterprise" and under Article
1267 of the New Civil Code, when the service has become so difficult as to be
manifestly beyond the contemplation of the parties, the obligor may be released
therefrom;

g) In addition to the reasons stated in paragraphs e and f hereof, Chemark, the

principal obligor, is not liable for its obligations under the credit accommodations
extended to it by the defendant because it has been prohibited from complying
therewith by a lawful authority. Under the law on guaranty and surety, the guarantor
or the surety, not being a principal debtor, is not liable for the obligations unless the
principal obligor is likewise liable. (Article 2054 of the New Civil Code; Hospicio de
San Jose v. Fidelity and Surety Co., 52 Phil. 926; Uy Isabelo v. Yandoc, CA-G.R. No.
8801-R, June 20, 1956). The debtor in obligations to do shall also be released when
the prestation becomes legally impossible without the fault of the obligor. (Article
1266 of the New Civil Code);

h) Assuming, without conceding, that the plaintiffs are liable under the Indemnity
Agreement instruments, they are not liable for the amounts being claimed by the
defendant, considering that the said amounts include the payment of exorbitant
interests, excessive penalties and amounts imputed to be due which are not, in fact,
due. (Rollo, pp. 106-107)

On June 11, 1985 the respondent bank filed its Answer and Counterclaim with prayer for preliminary
attachment. The defendant alleged in its counter claim:

ALLEGATIONS COMMON TO ALL DEFENDANTS

21. Sometime in August, 1981, Chemark was granted by plaintiff a credit line of P4.0
million consisting of an import LC-TR line of P2.0 million and an export loan line of
P2.0 million.

22. Said credit line was increased in February, 1982 from P4.0 million to P20.0
million, to wit:

Export loan linefrom P2.0 million to P15.0 million

Import LC-TRfrom P2.0 million to P5.0 million

The terms and conditions of this P20.0 million credit are reflected in the Amended
Credit Line Agreement dated February 8, 1982 attached as Annex "1" hereof,
23. Chemark availed of said credit line and as evidence of said availments, Chemark
executed several promissory notes covering the following amounts drawn against
this credit line, viz;

a) The sum of P6,350,750.00 drawn on March 23, 1983 with interest

and penalty at the rate indicated in promissory Note No.
DLS/74/540/83 to mature on June 21, 1983, a copy is attached as
Annex "3";

b) The sum of P8,649,250.00 drawn on August 9, 1983 with interest

and penalty at the rate indicated in Promissory Note No.
DLS/74/1358/83 to mature on September 8, 1983, a copy of which is
hereto attached as Annex "4".

24. Chemark defaulted in paying its obligations under the aforesaid promissory notes
when these became due. Despite repeated demands, Chemark failed and refused to
pay its valid and just obligations to the defendant which, as of December 11, 1984,
amounted to P13,130,596.93 under Promissory Note No. DLS/74/540/83 and
P17,357,117.51 under PN No. DLS/74/1358/83.

CAUSE OF ACTION AGAINST ANTONIO M. GARCIA

25. Plaintiff Garcia personally bound himself jointly and severally with Chemark, to
pay defendant upon demand and without benefit of excussion of whatever amount or
amounts Chemark may be indebted to defendant under and by virtue of the aforesaid
credit line accommodation, including the substitutions, renewals, extensions,
increases and other amendments of the aforesaid credit accommodations, as well as
all other obligations that Chemark may owe the defendant.

26. Accordingly, plaintiff Garcia executed two (2) Indemnity Agreements, one dated
January 20, 1982, a copy of which is attached hereto and made integral part hereof
as Annex "E" and the other, an Indemnity Agreement dated February 8, 1982, as
Annex "B" of the Complaint;

27. Under the terms of the foregoing Indemnity Agreements executed by plaintiff
Garcia, he further bound himself solidarily with Chemark in favor of defendant for the
faithful compliance of all the terms and conditions contained in the Amended Credit
Line Agreement (Annex "l ").

28. Defendant demanded from plaintiff Garcia the payment of the outstanding
obligation of Chemark in a letter dated October 26, 1984, a copy of which is made
Annex "5" to form part hereof. Defendant reiterated said demand on April 15, 1985.

29. Notwithstanding said demands, plaintiff Garcia failed and refused, as he still fails
and refuses to pay his obligation pursuant to the indemnity agreements he executed.
CAUSES OF ACTION AGAINST MATRIX MANAGEMENT & TRADING
CORPORATION

30. Plaintiff Matrix bound itself jointly and severally with Chemark in favor of the
defendant for the payment, upon demand and without benefit of excussion, of
whatever amount or amounts Chemark may be indebted to defendant under and by
virtue of the aforesaid credit line accommodation including the substitutions,
renewals, extensions, increases and other amendments of the aforesaid credit
accommodations, as well as of the amount of such other obligations that Chemark
may owe the defendant.

31. Accordingly, Matrix through its duly authorized officers, executed an Indemnity
Agreement dated February 8, 1982, a copy of which is attached hereto as Annex "A"
and incorporated herein by reference.

32. Under the terms of the foregoing indemnity agreement executed by Matrix, it
further bound itself solidarily with Chemark in favor of defendant for the faithful
compliance of all the terms and conditions contained in the Credit Line Agreement
(Annex "B").<re||an1w>

33. Defendant demanded from Matrix the payment of the outstanding obligation of
Chemark in a letter dated October 26, 1984, a copy of which is made Annex "5" to
form part hereof. Defendant reiterated said demand on April 25, 1985.

34. Notwithstanding said demands, Matrix failed and refused, as it still fails and
refuses, to pay its obligation pursuant to the indemnity agreement it executed in
plaintiffs favor.

CAUSE OF ACTION AGAINST DYNETICS, INC.

35. Plaintiff Dynetics bound itself jointly and severally with Chemark in favor of the
defendant for the payment, upon demand and without benefit of excussion, of
whatever amount or amounts Chemark may be indebted to defendant under and by
virtue of the aforesaid credit line accommodation including the substitutions,
renewals, extensions, increases and other amendments of the aforesaid credit
accommodations, as well as of the amount of such obligations that Chemark may
owe the defendant.

36. Dynetics executed an indemnity agreement dated February 8, 1982, copy of

which is attached as annex "A" of the Complaint.

37. Under the terms of the foregoing Indemnity Agreement executed by Dynetics, it
further bound itself solidarily with Chemark in favor of defendant for the faithful
compliance of all the terms and conditions contained in the Amended Credit Line
Agreement (Annex "I")
 38. Defendant demanded from Dynetics the payment of the outstanding obligation of
Chemark in a letter dated October 26, 1984, a copy of which is made Annex "5", to
form part hereof. Defendant reiterated said demand on April 25, 1985.

39. Notwithstanding said demands, Dynetics failed and refused, as it still fails and
refuses to pay its obligation pursuant to the indemnity agreement it executed in
defendant's favor. (Rollo, pp. 108-111)

On August 21, 1985, the petitioners manifested that ... they are adopting all allegations in their
Complaint as their answer to the respective counterclaim against each of them." (Original Records,
p. 229)

On September 18, 1985, the respondent bank filed a motion for summary judgment on the ground
that the answer to the counterclaim "tenders no genuine issue as to any material fact, and consists
of mere conclusions of law and fact, and in paragraph 4 thereof, plaintiffs expressly acknowledged
their obligation to defendant and indemnity agreements dated February 8, 1982 when they admitted
"under said instruments, it was basically provided that for and in consideration of the credit
accommodation in the total amount of Twenty Million (20,000,000.00) Pesos, granted by defendant
in favor of Chemark Electric Motors, Inc., a corporation duly organized and existing under the laws of
the Philippines, plaintiffs agreed to indemnify defendant in the event Chemark should fail to comply
with its obligations."' (Original Records, p. 248) In support of the motion, the respondent bank
attached the affidavit dated September 17, 1985 of Ms. Charis Marquez, Senior Assistant Manager,
corporate banking group, SBTC including its annexes.

The petitioners filed an opposition to the motion for summary judgment but to no avail. The lower
court rendered a decision granting the motion for summary judgment. The petitioners' complaint was
dismissed and they were ordered to pay the respondent bank under the indemnity agreements.

The petitioners then filed with the Court of Appeals: 1) an appeal from the summary judgment and 2)
a special civil action for certiorari and prohibition with a prayer for preliminary injunction to annul the
orders of the lower, court granting motion for summary judgment and granting motion for execution
pending appeal. The two cases were consolidated.

The appellate court sustained the summary judgment. Both petitions were dismissed with costs
against the petitioners. A motion for reconsideration thereto was denied.

Hence, this petition.

On March 30, 1988, we issued a temporary restraining order to enjoin the enforcement of the
questioned decision of the appellate court. In a Resolution dated June 6, 1988, we gave due course
to the petition.

The issue raised in the petition is whether or not the appellate court committed reversible error when
it sustained the trial court's summary judgment.

The petitioners submit that the appellate court committed such an error, to wit:
 a. The rendition of Judge Mendoza's Summary Judgment was improper because
petitioners' Complaint and SBTC's Answer with Counterclaim raise triable issues of
fact. The Court of Appeals, therefore, erred when it sustained Judge Mendoza's
Summary Judgment.

b. Assuming (the untrue) that there were no "genuine issues as to any material fact,"
the awards set out in Judge Mendoza's Summary Judgment were rendered in
violation of rules of evidence and laws and jurisprudence on interest, penalties and
attorney's fees. The appellate court, therefore, committed the same violation when it
upheld Judge Mendoza's Summary Judgment. (Rollo, p. 325).

A Summary Judgment may be rendered by a court upon motion of a party before trial and after
submission of pleadings, admissions, documents and/or affidavits and counter affidavits when it is
clear that "except as to the amount of damages, there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law." (Rule 34, Rules of Court). By
genuine issue is meant an issue of fact which calls for the presentation of evidence Cadirao v.
Estenzo, 132 SCRA 93) as distinguished from an issue which is sham, fictitious, contrived, set up in
bad faith, or patently unsubstantial as not to constitute a genuine issue for trial. (Vergara, Sr. v.
Suelto, et al., G.R. No. 74766 December 21, 1987, Cadirao v. Estenzo supra; Mercado, et al. v.
Court of Appeals, G.R. No. L-44001 June 10, 1988) This can be determined by the court on the
basis of the pleadings, admissions, documents, affidavits and/or counter-affidavits submitted by the
parties to the court. (Section 3, Rule 34, Revised Rules of Court; Vergara v. Suelto supra; Cadirao v.
Estenzo supra).

The pleadings, admissions and affidavits submitted in court in this case reveal the following facts:

In August 1981, Chemark was granted by respondent bank a credit line of P4.0 million which was
increased in February 1982 to P20.0 million, to wit; Export loan line from P2.0 million to P15.00
million; Import LC/TR-from P2.0 million to P5.0 million. The terms and conditions of this P20 million
credit are stated in the Credit Line Agreement dated February 8, 1982 (p. 254, Records). On this
same day, February 8, 1982 the petitioners executed separate, but with similar terms, indemnity
agreements whereby they bound themselves jointly and severally with Chemark to pay respondent
bank upon demand and without excussion of whatever amount Chemark may be indebted to said
bank by virtue of said credit line accommodation including the substitution, renewals, extensions,
increases and other amendments thereof; and that upon default of Chemark, proper demands to pay
were made on the petitioners to comply with their obligations. The three indemnity agreements
binding each of the petitioners contain the following provisions:

INDEMNITY AGREEMENT

KNOW ALL MEN BY THESE PRESENTS: That

DYNETICS, INC., a corportion duly organized and existing under and by virtue of the
laws of the Philippines, with offices at the FTI Complex, Taguig, Metro Manila for and
in consideration of the credit accommodation in the total amount of TWENTY
MILLION (P20,000,000.00) PESOS granted by the SECURITY BANK & TRUST
COMPANY, a commercial banking corporation duly organized and existing under and
by virtue of the laws of the Philippines, with offices at 6778 Ayala Avenue, Makati,
Metro Manila, hereinafter referred to as the BANK, in favor of CHEMARK ELECTRIC
MOTORS, INC., ... a corporation duly organized and existing under and by virtue of
the laws of the Philippines, with offices at the 2nd Floor, Princess Building, Esteban
Street, Legaspi Village, Makati, Metro Manila, hereinafter referred to as the CLIENT,
with the stipulated interests and charges thereon, evidenced by that/those certain
AMENDED CREDIT LINE AGREEMENT made and executed by and between the
CLIENT and the BANK on even date hereby bind(s) himself/themselves jointly and
severally with the CLIENT in favor of the BANK for the payment, upon demand and
without benefit of excussion, of whatever amount or amounts the CLIENT may be
indebted to the BANK under and by virtue of aforesaid credit accommodation(s)
including the substitutions, renewals, extensions, increases, amendments,
conversions and revivals of the aforesaid credit accommodation(s), as well as of the
amount or amounts of such other obligations that the CLIENT may owe the BANK,
whether direct or indirect, principal or secondary, as appears in the accounts, books
and records of the BANK, plus interest and expenses arising from any agreement or
agreements that may have heretofore been made, or may hereafter be executed by
and between the parties thereto, including the substitutions, renewals, extensions,
increases, amendments, conversions and revivals of the aforesaid credit
accommodation(s), and further bind(s) himself/themselves with the CLIENT in favor
of the BANK for the faithful compliance of all the aforesaid credit accommodation(s),
all of which are incorporated herein and made part hereof by reference.

IN WITNESS WHEREOF, these presents are signed at Makati, Metro Manila on this
8th day of February, 1982. ... and/or its trust accounts funding this loan

DYNETICS, INC.

(SGD.) ANTONIO M. GARCIA (SGD.) DOMINADOR GAMEZ

Signed in the Presence of.

(SGD.) JONA C. CAJUYONG (SGD.) TERESITA A. DE GUZMAN

(Original Records, pp. 306-307)

Both Dynetics and Matrix were authorized by their respective board of directors to
execute the indemnity agreements. In the case of Dynetics, Corporate Secretary
Antonio Pastelero certified that during a meeting of the Board of Directors held on
December 29, 1981 at its office address, it was unanimously adopted that the
corporation "... undertake to jointly and severally guarantee the credit line of
CHEMARK ELECTRIC MOTORS, INC. in favor of the SECURITY BANK & TRUST
COMPANY, in an amount not to exceed TWENTY MILLION (20,000,000.00) PESOS"
(p. 264, Original Records). In the case of MATRIX, Corporate Secretary Rene J.
Katigbak certified that at the meeting of the Board of Directors held on December 28,
 1981, a resolution was unanimously adopted to have the corporation "... jointly and
severally guarantee the credit line of CHEMARK ELECTRIC MOTORS, INC. in favor
of the SECURITY BANK & TRUST COMPANY, in an amount not to exceed TWENTY
MILLION (P20,000,000.00) PESOS. (Original Records, p. 262)

Chemark then availed of the P20.0 million credit line and executed two (2) promissory notes
covering the following amounts drawn against the Export Loan Line, to wit:

a) The sum of P6,350,750.00 drawn on March 23, 1983 with interest and penalty at
the rate indicated in Promissory Note No. DLS/74/540/83 to mature on June 21, 1983
(p. 255, Original Records)

b) The sum of P8,649,250.00 drawn on August 9, 1983 with interest and penalty ac
the rate indicated in Promissory Note No. DLS/74/1358/83 to mature on September
8, 1983 (p. 256, Original Records)

These obligations were not paid by Chemark when they became due. Hence, the respondent bank
demanded from the petitioners under the indemnity agreements the payment of the outstanding
obligations of Chemark.

Undoubtedly, the obligations of the petitioners to the respondents are clearly defined in the
pleadings, admissions and the unrebutted affidavit of Ms. Marquez who handles the Chemark
account.

Nevertheless, the petitioners insist that their complaint for declaratory relief tenders genuine issues
which should be threshed out in a full-blown trial, to wit:

xxx xxx xxx

11.1 First Defense: that the principal obligation has not yet matured because SBTC,
agreed to allow Chemark a grace period within which to recover its liquidity and pay
the debt.

11.1A This defense is pleaded in the following allegations of the Complaint:

6. In the aftermath of the assassination of Senator Benigno S. Aquino, Jr., on August

21, 1983, the Philippine economy was plunged into a deep crisis. There was a
massive flight of capital; the country's balance of payments deteriorated; business
and industry practically stood still; and the foreign debts of the country could not be
serviced; banks collapsed, the exchange rate between the Philippine Peso and US
Dollar tripled and there was practically no foreign exchange available in the country.
The resultant extremely adverse economic conditions were not foreseen or
contemplated by persons or entities who became parties to a contract. None of the
parties to a contract expected nor did they intend that the terms and conditions they
agreed upon would operate under extreme adverse economic conditions.
7. Because of the recent economic developments here and abroad, the failure of one
of the stockholders of Chemark to comply with its commitments and Chemark's
inability to collect substantial receivables from its marketing representatives in the
United States, Chemark started to suffer liquidity problems. As a consequence, it was
unable to pay its creditors, among whom is the defendant. However, Chemark had
more than sufficient assets to pay all its obligations including its obligations to the
defendant, except that its liquidity problems prevented it from paying its creditors.

8. Chemark started negotiating with the defendant for the restructuring of its
obligations to the latter. For this purpose, it submitted several proposed courses of
action to the defendant whereby in time all of its obligations to the defendant would
be paid.

9. In the meantime, the defendant demanded payment from the plaintiffs of the
obligations of Chemark. Although plaintiffs are not legally liable for the payment of
such obligations, they nonetheless, proposed to the defendant that the latter allow
Chemark to recover its liquidity until such time that it shall have recovered its ability
to pay its obligations. An agreement in principle was reached on this proposal and
the defendant committed itself to allow Chemark to recover from its liquidity
problems and to refrain from demanding payment of the loans of Chemark from the
plaintiffs. (Emphasis supplied). (Rollo, pp. 328-329).

xxx xxx xxx

11.2 Second Defense: that SBTC and the petitioners did not intend to use petitioners'
Indemnity Agreements as collateral security for Chemark's loans and that SBTC
extended the loan solely on Chemark's viability as a business enterprise.

11.2A The Complaint pleads this defense in the following paragraphs:

5. ... when the defendant finally extended the loan to Chemark, it did so not because
of the aforesaid instruments (referring to the Indemnity Agreements) previously
executed by the (petitioners) which, in the meantime, were no longer valid and
effective and intended by the parties as collateral security for future Chemark loans,
but because of defendant's assessment of the viability of Chemark's business
operations and interest income expected to be generated from the loans to Chemark.
(Emphasis supplied) (Rollo, pp. 329-330)

xxx xxx xxx

11.3 Third Defense: that Dynetic's execution of the Indemnity Agreement is contrary
to its purposes and is therefore ultra vires and unenforceable against it.

11.3A This defense is pleaded in the Complaint as follows:

 13. Plaintiffs are not liable to the defendant under the Indemnity Agreement
instruments xxx for the following reasons:

xxx xxx xxx

(c) Assuming, without, conceding, that there is a valid consideration for the execution
of the aforesaid instruments and that said instruments continued to be valid and
effective when the defendant extended a credit accommodation to Chemark, said
instruments are null and void insofar as Dynetics is concerned as it is ultra vires,
being contrary to the purpose of Dynetics, its powers, licenses and franchise:
(Emphasis supplied) (Rollo, pp. 332-333)

We find no material questions of facts tendered by these defenses as to the main issue on whether
or not the petitioners can be held liable to the respondent bank under their indemnity agreements.

The issue tendered in the first defense is "sham and fictitious" in the light of the terms of the
indemnity agreements. Thus, under the indemnity agreements, the petitioners bound themselves
jointly and severally with Chemark in favor of the respondent bank for the payment, upon demand
and without benefit of excussion, of whatever amount or amounts Chemark may be indebted to the
respondent bank under and by virtue of the credit accommodations. (Emphasis supplied) The
economic conditions of the country are immaterial to the issue on the liability of the petitioners under
their indemnity agreements.

The issue raised in the second defense, on whether or not the indemnity agreements were intended
as collaterals for future Chemark loans is likewise sham and fictitious. Under the indemnity
agreements, the petitioners bound themselves to pay whatever amount Chemark may be indebted
to the bank "under and by virtue of aforesaid credit accommodation(s) including the substitutions,
renewals, extensions, increases, amendments, conversions and revivals of the aforesaid credit
accommodation(s) ... (Emphasis supplied)

The argument as to whether or not Dynetics' execution of the indemnity agreement is contrary to its
purposes and therefore ultra vires and unenforceable against it does not tender a genuine issue.
The record shows that Dynetics was authorized to execute the indemnity agreements evidenced by
the Corporate Secretary's certificate (p. 38, 264 Original Records).

This was not rebutted.

Indeed, we find no genuine issues raised in the complaint which can not be resolved by the
pleadings, admissions and the affidavit of Charis Marquez submitted to the court. As the appellate
court said:

Dynetics, Garcia and Matrix attempted to avoid liability by trying hard to create
factual issues fit for trial. The attempt is but a hodgepodge of legal arguments and
conclusions which can be resolved without the rituals of trial. Thus, Dynetics urges
that there is need for trial to determine whether it can be compelled to pay
considering that SEC by its Order of September 27, 1984 has prohibited Chemark
 from paying its creditors. The issue is strictly legal and can be decided by
determining the character of liability of Dynetics as joint and solidary debtor. Dynetics
also argues that it raised the issue of lack of consideration which must be tried on the
merits. The issue deserves scant consideration for the parties' Indemnity Agreement
specifies the consideration to be the grant of credit accommodation to Chemark in
the sum of P20 M. Also what is posed is a legal issue resolvable in light of the
character of Dynetics as a joint and solidary debtor. Dynetics also asseverates that it
did not intend its Indemnity Agreement as collaterals for future Chemark loans. This
is a clear pretense considering that again under its Indemnity Agreement, Dynetics
clearly bound itself to pay whatever amount Chemark may be indebted to Security
Bank "under and by virtue of the aforesaid credit accommodation(s) including the
substitutions, renewals, extensions, increases, amendments, conversions and
revivals of aforesaid credit accommodation(s.)" There is nothing on record to
substantiate the pretense of mistake of Dynetics. (Rollo, p. 121)

xxx xxx xxx

Then Dynetics argues that it has raised the issue of novation in light of the new loan
contracts between Security Bank and Chemark. Again, the alleged new contracts are
established facts and need not be the subject of trial. Upon their basis, the court can
conclude whether there is novation of contract. (Rollo, P. 125)

The petitioners also assail the awards of penalty charges at 36% per annum and interest at 18% and
24% per annum respectively on the loans. They contend that the interests are excessive and are not
sustained by the evidence because the rate of interest stipulated in the promissory notes is only 11
% per annum.

The lower courts based the computation of interests and penalty charges on the affidavit of Charis
Marquez, Assistant Manager of the Corporate Banking Group of Security Bank & Trust Co. Marquez
was the account officer who handled the account of Chemark. The pertinent portions of the affidavit
read as follows:

22. As per statements of Accounts dated June l5, 1985, under the said promissory
notes (Annexes "2" and "3" hereof) covered by the subject Indemnity Agreements
(Annexes "4", "7" and "8" hereof), the total outstanding obligation of Dynetics, Inc.,
Matrix Management & Trading Corporation and Antonio M. Garcia to Security Bank &
Trust Co. was P38,189,038.27, including interest and charges. Attached hereto as
Annexes "9" and "l0" are copies of said Statements of Accounts dated June 15,
1985;

23. In the said Statements of Accounts dated June 15, 1985, we charged 18% and
25% per annum, respectively, because the subject loans (Annexes "2" and "3"
hereof) were intended to be rediscounted at the Central Bank at 11% per annum.
However, when Chemark Electric Motors, Inc. failed to give us the required letter of
credit which was a requirement of the Central Bank, we charged them 18% and 24%
instead of 11% interest per annum. These higher interest charges were based on
 and authorized under our Credit Proposal, copies of which are hereto attached as
Annexes "11" to "11-B". (Original Records, p. 252)

The increased interest rates are expressly provided for in the amended credit line agreement and in
the two promissory notes executed by Chemark in favor of Security Bank & Trust Co. We find no
reversible error in the award of interests.

The penalty of 36% per annum is provided in the promissory notes (Annexes "3", "4" Affidavit), as
follows:

If this note is not fully paid when due, the undersigned shall pay, in addition to the
stipulated interest, a penalty of 3% per month on the total outstanding principal and
interest due and unpaid. ... (Original Records, p. 256)

The affidavit and supporting documents were attached to the respondent bank's motion for summary
judgment. The petitioners failed to oppose Marquez' affidavit in their "Oppositions" to the motion for
summary judgment. Neither did they submit counter- affidavits, as was their right, to oppose these
amounts due from them including the increased interests and penalty charges. Under these
circumstances, the respondent bank was entitled to summary judgment (Philippine National Bank v.
Phil. Leather Co., Inc., et al. 105 Phil. 400; See also Mercado, et al. v. Court of Appeals supra). As
<re||an1w>

earlier stated, the lower court committed no reversible error in awarding the questioned interests. We
cannot, however, agree with the appellate court as regards the award of penalty charges at 36% per
annum.

Penalty interests are in the nature of liquidated damages (Cumagun v. Philippine American
Insurance Co., Inc., et al. G.R. No. 81453 August 15, 1988; Lambert v. Fox, 26 Phil. 588) and may
be equitably reduced by the courts if they are iniquitous or unconscionable. (See Articles 1229,
2227, New Civil Code).

The records show that on the first loan, the principal of which is P6,350,750.00, the penalty charges
as of June 15, 1986 are already equivalent to P6,774,378.06 (p. 265, Original Records) and that on
the second loan, the principal of which is P8,649,250.00 the penalty charges as of June 15, 1985 are
equivalent to P8,662,008.53. (p. 266, Original Records) The P6,774,378.06 penalty charges in the
first loan would have been earned by the private respondent after only 725 days (1 year and 360
days) of delay in the payment of the loan while the P8,662,008.53 penalty charges would have been
earned by the private respondent after only 646 days (1 year and 281 days) of delay in the payment
of the loan. The figures from 1985 to 1988 would amount to several times the principal loans.

We agree with the petitioner that the penalty charges are excessive and unconscionable. The
interest charges are enough punishment for the petitioners' failure to comply with their obligations.

Finally, the petitioners question the amount for attorney's fees equivalent to 10% of their obligation.

Again, Chemark's promissory notes provide for the award of attorney's fees in case of default to pay
the loans, to wit:
 xxx xxx xxx

If this note is not fully paid when due, the undersigned shall pay, in addition to the
stipulated interest, a penalty of 3% per month on the total outstanding principal and
interest due and unpaid. The undersigned shall also pay, as and for attorney's fee, a
sum equivalent to 20% of the total amount due under this note plus expenses and
costs of collection, in case this note is placed in the hands of an attorney for
collection. (See Annexes "2", "3", Affidavit of Charis Marquez) (Original Records, p.
255)

The award for attorney's fees is justified and, in fact, is even lower than that agreed upon by the
parties.

WHEREFORE, the instant petition is DISMISSED. The questioned decision and resolution of the
Court of Appeals are AFFIRMED except for the award of penalty charges which is stricken from the
judgment. The Temporary Restraining Order issued on March 30, 1988 is LIFTED. Costs against the
petitioners.

SO ORDERED.

32A. Fraud, Accident, Mistake, or Excusable Negligence as grounds for New Trial or
Reconsideration/Petition for Relief from Judgment.

G.R. No. L-62781 August 19, 1988

PAN-ASIATIC TRAVEL CORP., petitioner,

vs.
COURT OF APPEALS, HON. AMANTE S. PURISIMA, as Presiding Judge, Court of First
Instance of Manila, Branch VII, CITY SHERIFF OF MANILA, and DESTINATIONS TRAVEL
PHIL., INC., respondents.

Bengzon, Zarraga, Narciso, Cudala, Pecson, Azcuna and Bengson Law Offices for petitioner.

Carmelo, Guerrero, De Silva & Associates for private respondent.

CORTES, J.:

On March 21, 1980, Destinations Travel Phil., Inc. (hereafter, DESTINATIONS) filed a complaint
against Pan-Asiatic Travel Corp. (hereafter, PAN-ASIATIC) for the refund of the price of alleged
unutilized airplane tickets issued by the latter for passengers recruited by the former, which refund
allegedly totalled P48,742.33.
On June 4, 1980, DESTINATIONS filed a Motion to Declare Defendant in Default. After receipt of
said Motion, PAN-ASIATIC, by way of special appearance, filed a Motion to Dismiss for the sole
purpose of objecting to the trial court's jurisdiction over its person on the ground that it was not
properly served with summons. Two days after the filing of the Motion to Dismiss, DESTINATIONS
filed on June 25, 1980 an amended complaint increasing its claim for reimbursement of refunds to
P103,866.35. At the hearing of said Motion to Dismiss, PAN-ASIATIC was informed of the filing of
the amended complaint; hence, it withdrew its Motion to Dismiss.

Subsequently, a copy of the amended complaint and summons were served on PAN-ASIATIC. PAN-
ASIATIC filed several motions for extension of time within which to file its answer. However, instead
of filing an Answer, it filed a Motion for Bill of Particulars which was granted by the trial court.

DESTINATIONS did not file a Bill of Particulars. Instead, on May 9, 1981, it served and filed a Motion
to Admit attached "Second Amended Complaint" which Second Amended Complaint detailed the
causes of action, to wit:

a. Claim for reimbursement of refunds

for unutilized tickets (Paragraphs 5

and 6 of the Complaint) P86,459.85

b. Claim for commissions Paragraphs

and 8 of the (Complaint). 2,077.33

c. Claim for incentives (Paragraphs 9

and 10 of the Complaint) 5,868.57

d. Claim for reimbursement Paragraphs

11-17 of the Complaint) .5,868.57

Total Claims (Paragraph 18). .P103,866.35

(Should be .P100,274.32)

Said Second Amended Complaint was admitted by the trial judge in an Order dated May 28, 1981,
which Order was served on petitioner on June 9, 1981. However, no new summons was served on
petitioner. On July 15, 1981 DESTINATIONS filed a Motion to Declare Defendant in Default which
was granted. Then, trial was held ex parte. On January 4, 1982 the trial court rendered judgment by
default against PAN-ASIATIC, which received a copy of the decision on January 25, 1982.

On February 24, 1982, petitioner filed its Omnibus Motion to Lift Order of Default and to Vacate
Judgment by Default, alleging that the trial court's decision was rendered without jurisdiction
because petitioner was never served with summons on the Second Amended Complaint, and that it
was deprived of its day in court on account of fraud, accident, mistake and/or excusable negligence.
The motion was denied by the trial judge in an Order dated March 31, 1982. A copy of the Order was
served on petitioner on April 2, 1982. On the same date, April 2, 1982, PAN-ASIATIC filed a Motion
for Reconsideration of the Order of March 31. While the Motion for Reconsideration was pending,
petitioner filed on April 30, 1982 its notice of appeal, appeal bond and record on appeal, and at the
same time withdrew its Motion for Reconsideration which withdrawal was granted by the trial court.

On May 19, 1982, DESTINATIONS filed a Motion for Execution which the trial court granted on June
15, 1982. Meanwhile, the appeal of PAN-ASIATIC, was Dismissed on the ground that the Decision of
January 4, 1982 had become final and executory and that the appeal was filed beyond the
reglementary period.

On July 7, 1982, PAN-ASIATIC filed a petition for certiorari and mandamus before the Court of
Appeals, alleging that the trial court acted without jurisdiction in dismissing the appeal and in issuing
the writ of execution. The appellate tribunal dismissed the petition. Hence, this present action to
which this Court gave due course on November 23, 1983.

The parties present the following issues for resolution by the Court:

WHETHER OR NOT THE TRIAL COURT HAD JURISDICTION OVER THE PERSON OF
PETITIONER WHEN IT RENDERED THE DECISION OF JANUARY 4, 1982.

II

WHETHER OR NOT PETITIONER'S APPEAL IN CIVIL CASE NO. 130608 WAS FILED WITHIN
THE REGLEMENTARY PERIOD.

1. Petitioner contends that the Second Amended Complaint introduced new causes of action not
alleged in the original nor in the first amended complaint. Hence, it is argued that new summons had
to be served on petitioner, for the court to acquire jurisdiction over its (petitioner's) person.

The Second Amended Complaint does introduce new causes of action. For while in the first
amended complaint, DESTINATIONS prayed for reimbursement of refunds for unutilized airplane
tickets only, in the Second Amended Complaint, there were claims for commissions and incentives,
although the total amount of the claims was the same as the amount claimed in the first amended
complaint.

But was there need to serve new summons on PAN-ASIATIC?

In the 1923 case of Atkins, Kroll and Co. v. Domingo, [44 Phil. 681 (1924)], this Court had occasion
to lay down the rule that if the defendant had appeared in the action, service of an amended
complaint (which introduces a new cause of action) in the same manner as any other pleading or
motion is sufficient, even if no new summons is served. This ruling was reiterated in the case of Ong
Peng v. Custodio [G.R. No. L-14911, March 25, 1961, 1 SCRA 780] in more categorical terms:

If he (defendant) had not yet appeared, a new summons must be served upon him
as regards the amended complaint, otherwise the court would have no power to try
the new causes of action alleged therein, unless he had lodged an answer thereto.
Simply sending a copy of the amended complaint to the defendant by registered mail
is not equivalent to service of summons in such case. However, if the defendant had
already appeared in response to the first summons, so that he was already in court
when the amended complaint was filed, then ordinary service of that pleading upon
him, personally or by mail, would be sufficient, and no new summons need be
served upon him.

In the instant case, summons on the first amended complaint was properly served on PAN-ASIATIC.
After which, the company filed several motions for extension of time within which to file responsive
pleading, and then a Motion for Bill of Particulars, all of which motions were granted by the trial
court. With the filing of these motions, PAN-ASIATIC had effectively appeared in the case and
voluntarily submitted itself to the jurisdiction of the court. Hence, no new summons on the Second
Amended Complaint was necessary, ordinary service being sufficient.

In cases where a complaint is amended, the Rules of Court provide for the period within which the
defendant must answer thus:

SEC. 3. Answer to amended complaint.If the complaint is amended, the time fixed
for the filing and service of the answer shall, unless otherwise ordered, run from
notice of the order admitting the amended complaint. An answer filed before the
amendment shall stand as an answer to the amended complaint, unless a new
answer is filed within ten (10) days from notice of service as herein provided.

There is no question that PAN-ASIATIC was properly served with a copy of the Second Amended
Complaint and that on June 9, 1981, it received a copy of the Order admitting said Second Amended
Complaint. Since it failed to serve and file its Answer within fifteen (15) days from June 9, 1981, the
trial court was correct in declaring the company in default, in holding trial ex parte, and in eventually
rendering judgment by default.

2. Anent the second issue, petitioner contends that its Omnibus Motion to Lift Order of Default and to
Vacate Judgment by Default is in the nature of a Petition for Relief under Rule 38. Hence, the Order
denying the Omnibus Motion which was received by petitioner on April 2, 1982, is itself appealable.
PAN-ASIATIC thus argues that it had thirty (30) days from April 2, 1982 within which to appeal said
Order. Since it filed its notice of appeal, appeal bond and record on appeal on April 30, 1982, then, it
is claimed, the appeal was perfected on time.

Petitioner's premise is incorrect. The Omnibus Motion to Lift Order of Default and to Vacate
Judgment is in the nature of a Motion for New Trial under Rule 37, and-not a Petition for Relief under
Rule 38.
Be it recalled that a copy of the Judgment by Default was received by PAN-ASIATIC on January 25,
1982. The Omnibus Motion was filed on February 24,1982, which was within the period to appeal.
Since the motion was filed before the decision became final, it could not be a Petition for Relief
under Rule 38, but a Motion for New Trial.

... It is a well-known rule that (a petition for relief under Rule 38) may be filed only
when the order or judgment from which it is sought has already become final and
executory (Veluz vs. J.P. of Sariaya, 42 Phil. 557; Anuran vs. Aquino, 38 Phil. 29;
Quirino vs. PNB, 101 Phil. 705; 54 Off. Gaz. [14] 4248), so that as long as the
judgment against which relief is sought has not yet become final, the petition
aforesaid is not available as a remedy. Instead, the aggrieved party may file a motion
for new trial, under Rule 37 in courts of first instance, and under section 16, Rule 4,
in inferior courts, in order that the court may correct any errors, mistakes or injustices
committed in its judgment. [Punzalan v. Papica, et al., 107 Phil. 246 (1960).]

Since the Omnibus Motion is in the nature of a Motion for New Trial, the Order denying said motion
is NOT itself appealable. However, the time during which the motion was pending must be deducted
from the thirty-day appeal period. Pursuant to section 3, Rule 41 which reads:

SEC. 3. How appeal is taken.Appeal may be taken by serving upon the adverse
party and filing with the trial court within thirty (30) days from notice of order or
judgment, a notice of appeal, an appeal bond, and a record on appeal. The time
during which a motion to set aside thejudgment or order or for a new trial has been
pending shall be deducted, unless such motion fails to satisfy the requirements of
Rule 37.

But where such a motion has been filed during office hours of the last day of the
period herein provided, the appeal must be perfected within the day following that in
which the party appealing received notice of the denial of said motion.

From January 25, 1982 (the date when PAN-ASIATIC received a copy of the Judgment by Default)
to February 24, 1982 (the date when the Omnibus Motion was filed) is twenty-nine days. Petitioner
therefore had one more day from April 2, 1982 (the day when PAN-ASIATIC received a copy of the
Order denying the Omnibus Motion), within which to appeal. Instead of appealing, however,
petitioner filed on the same day, April 2, 1982 a motion for reconsideration of the Order, only to
withdraw it on April 30, 1982, as it filed its notice of appeal, appeal bond and record on appeal.

Since the motion for reconsideration was withdrawn, then it is as if no motion for reconsideration was
ever filed. Thus, the one day remaining period remained unchanged. Clearly, therefore, the appeal
interposed on April 30, 1982 was filed out of time.

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

SO ORDERED.
33A. Execution, Satisfaction and Effect of Judgment

G.R. No. 100626 November 29, 1991

CITY OF MANILA, represented by Mayor Gemiliano C. Lopez, Jr., petitioner,

vs.
HON. COURT OF APPEALS and THE ARMY & NAVY CLUB, INC., respondents.

The Chief Legal Officer for petitioner.

Ramon A. Gonzales for private respondent.

CRUZ, J.:p

Respondent Court of Appeals is faulted in this action for certiorari for having set aside the order of
execution dated June 10, 1991, and the writ of execution issued by Judge Wilfredo Reyes of the
Regional Trial Court of Manila in Civil Case No. 9156335.

This was a complaint for unlawful detainer filed by the City of Manila against private respondent
Army and Navy Club for violation of the lease agreement between them over a parcel of land on
Roxas Boulevard in the said city. A summary judgment in favor of the petitioner was rendered by the
Metropolitan Trial Court of Manila 1 and seasonably elevated to the Regional Trial Court. To stay its execution, ANC filed a
supersedes bond in the amount of P2,700,000.00, which was approved by Judge Reyes. 2 He subsequently affirmed the appealed judgment
on June 7, 1991. 3

On June 10, 1991, the petitioner filed an ex parte motion for execution on the ground that the
judgment had already become final and executory under RA 6031. Judge Reyes granted the motion
the same day 4 and at 4:00 o'clock that afternoon the writ of execution was served on ANC.

ANC moved to quash the writ on June 11, 1991, but hours later, sensing that the motion could not be
acted upon, filed a petition for certiorari and prohibition with the Court of Appeals.

On July 3, 1991, that court issued the questioned decision, 5 prompting the filing of the present petition for certiorari.

The petitioner assails the action of the respondent court and contends that decisions of the regional
trial court in cases exclusively cognizable by inferior courts and are final and executory under RA
6031. Thus:

Sec. 1. . . .

In cases falling under the exclusive original jurisdiction of municipal and city courts
which are appealed to the courts of first instance, the decision of the latter shall be
final: Provided, That the findings of facts contained in said decision are supported by
 substantial evidence as basis thereof, and the conclusions are not clearly against the
law and jurisprudence; in cases falling under the concurrent jurisdictions of the
municipal and city courts with the courts of first instance, the appeal shall be made
directly to the Court of Appeals whose decision shall be final: Provided, however, that
the Supreme Court in its direction may, in any case involving a question of law, upon
petition of the party aggrieved by the decision and under rules and conditions that it
may prescribe, require by certiorari that the case be certified to it for review and
determination, as if the case had been brought before it on appeal. (Emphasis
supplied.)

The respondents argue on the other hand that under BP 129, decisions of the regional trial court in
cases originating from and within the exclusive jurisdiction of the metropolitan or municipal trial
courts are not final but subject to appeal in a petition for review to the Court of Appeals. Such
decisions cannot be executed where the period of time for the defendant to perfect his appeal has
not yet expired. Thus:

Sec. 22. (BP 129) Appellate jurisdiction. Regional Trial Courts shall exercise
appellate jurisdiction over all cases decided by Metropolitan Trial Courts, Municipal
Trial Courts and Municipal Circuit Trial Courts in their respective territorial jurisdiction.
Such cases shall be decided on the basis of the entire record of the proceedings had
in the court of origin and such memoranda and/or briefs as may be submitted by the
parties or required by the Regional Trial Courts. The decision of the RTC in such
cases shall be appealable by petition for review to the Intermediate Appellate Court
which may give it due course only when the petition shows prima facie that the lower
court has committed an error of fact or law that will warrant a reversal or
modifications of the decision or judgment sought to be reviewed.(Emphasis
supplied.)

It is useful at this point to review the distinction between a "final" judgment and one which has
become "final and executory."

In PLDT Employees Union v. PLDT Free Telephone Workers Union, 6 the Court observed:

. . . (A)n order or judgment is deemed final when it finally disposes of the pending
action so that nothing more can be done with it in the trial court. In other words, a
final order is that which gives an end to the litigation . . . when the order or judgment
does not dispose of the case completely but leaves something to be done upon the
merits, it is merely interlocutory.

The case of Antonio v. Samonte 7 elaborated on this matter thus:

A final order of judgment finally disposes of, adjudicates, or determines the rights, or
some right or rights of the parties, either on the entire controversy or on some
definite and separate branch thereof, and concludes them until it is reversed or set
aside . . .Where no issue is left for future consideration, except the fact of compliance
 or non-compliance with the terms of the judgment or order, such judgment or order is
final and appealable.

By contrast, in Investments, Inc. v. Court of Appeals, 8 we declared:

Now, a "final judgment" in the sense just described becomes final "upon expiration of
the period to appeal therefrom if no appeal has been duly perfected" or, an appeal
therefrom having been taken, the judgment of the appellate tribunal in turn becomes
final and the records of the case are returned to the Court of origin. The "final"
judgment is then correctly categorized as a "final and executory judgment" in respect
to which, as the law explicitly provides, "execution shall issue as a matter of right." It
bears stressing that only a final judgment or order, i.e., "a judgment or order that
finally dispose of the action of proceeding" can become final and executory.

A judgment becomes "final and executory" by operation of law. Finality of judgment becomes a fact
upon the lapse of the reglementary period to appeal if no appeal is perfected. In such a situation, the
prevailing party is entitled to a writ of execution, and issuance thereof is a ministerial duty of the
court.

Both RA 6031 and BP 129 provide that decisions of the regional trial court in its appellate capacity
may be elevated to the Court of Appeals in a petition for review. In effect, both laws recognize that
such judgments are "final" in the sense that they finally dispose of, adjudicate, or determine the
rights of the parties in the case. But such judgments are not yet "final and executory" pending the
expiration of the reglementary period for appeal. During that period, execution of the judgment
cannot yet be demanded by the winning party as a matter of right.

In the present case, the private respondent had up to June 25, 1991, to appeal the decision of the
regional trial court. The motion for execution was filed by the petitioner on June 10, 1991, before the
expiration of the said reglementary period. As the decision had not yet become final and executory
on that date, the motion was premature and should therefore not have been granted. Contrary to the
petitioner's contention, what the trial court authorized was an execution pending appeal.

While it is true that execution pending appeal is allowed under Rule 39, Sec. 2, of the Rules of Court,
this provision must be strictly construed, being an exception to the general rule. The reason allowing
this kind of execution must be of such urgency as to outweigh the injury or damage of the losing
party should it secure a reversal of the judgment on appeal. Absent any such justification, the order
of execution must be struck down as flawed with grave abuse of discretion. 9

We see no such justification in the case before us.

It is worth remarking that as the case was not tried under the Rule on Summary procedure, the writ
of execution did not even fall under the following Section 18 thereof :

d) Sec. 18. Appeal. The judgment or final order, including that rendered under
Section 5 hereof, shall be appealable to the appropriate regional trial court which
shall decide the same on the basis of the records, in accordance with Section 22 of
 Batas Pambansa Blg. 129. The decision of the regional trial court in such civil cases
shall be immediately executory.

To stay the execution, a supersedes bond is necessary except where one has already been filed in
the lower court. This bond continues to be effective if the judgment of the regional trial court is
appealed. But during the pendency of the appeal, the defendant-appellant must continue to
depositing with the appellate court the payments required in the appealed judgment. The rentals
accruing during the pendency of the appeal must be deposited on or before the date stipulated, if
there is one, and in the absence thereof, on or before the dates provided for in Sec. 8 of Rule 70.
Failure to make such deposits or payments is ground for execution of the judgment. 10

Since the private respondent in the case at bar has filed a supersedeas bond and the stipulated
rental is yearly, 11execution may issue only when it fails to make the yearly deposit of the rental, and after notice and hearing. Such
default has not yet been established.

The Court notes with disapproval the arbitrary manner in which Sheriff Dominador Cacpal and
Deputy Sheriff Reynaldo Cordero acted in delivering possession of the leased premises to the
petitioner. The evidence shows that they enforced the writ of execution on the same date they
received it, forcibly taking out movables from the said premises, including chandeliers, furniture and
furnishings, music organs, stereo components, lighting fixtures and computers. They turned off the
water, cut off the electricity and disconnected the telephones. They also unreasonably prevented
ANC members from entering the premises to get their personal belongings.

Cacpal and Cordero are hereby sternly reprimanded and warned that a repetition of similar
arbitrariness will be dealt with more severely. Their conduct was a clear violation of the requirement
that:

Under the Rules of Court the immediate enforcement of a writ of ejectment execution
is carried out by giving the defendant notice of such writ, and making a demand that
defendants comply therewith within a reasonable period, normally from three (3) to
five (5) days, and it is only after such period that the sheriff enforces the writ by the
bodily removal of the defendant and his personal belonging. 12

On the issue of the propriety of a special civil action for certiorari to assail an order of execution
pending appeal, this Court has held that

. . . Although Sec. 1, Rule 66 of the Rules of Court provides that the special civil
action of certiorari may only be invoked when "there is no appeal, nor any plain,
speedy and adequate remedy in the (ordinary) course of law" this rule is not without
exception. The availability of the ordinary course of appeal does not constitute
sufficient ground to prevent a party from making use of the extraordinary remedy
of certiorari where the appeal is not an adequate remedy or equally beneficial,
speedy and sufficient. It is the inadequacy not the mere absence of all other legal
remedies and the danger of failure of justice without merit that usually determines the
propriety of certiorari. 13
While appeal is normally employed to question an order or writ which varies the terms of the
decision being executed, it is nevertheless not the sole and exclusive remedy. The special civil
action of certiorari and prohibition under Rule 65 was available to the private respondent on the
allegation that the regional trial court, in issuing the writ of execution, committed grave abuse of
discretion and acted beyond its jurisdiction and that the ordinary remedy of appeal was inadequate.

The last question to be resolved is, assuming that the decision of the regional trial court had already
become "final and executory," could the said court order its execution?

The rule is that if the judgment of the metropolitan trial court is appealed to the regional trial court
and the decision of the latter is itself elevated to the Court of Appeals, whose decision thereafter
became final, the case should be remanded through the regional trial court to the metropolitan trial
court for execution. 14 The only exception is the execution pending appeal, which can be issued by the regional trial court under Sec.
8 of Rule 70 or the Court of Appeals or the Supreme Court under Sec. 10 of the same Rule.

As previously observed, the petitioner has shown no weighty justification for the application of the
exception. Hence, the respondent court committed no error in reversing the Regional Trial Court of
Manila and annulling the writ of execution issued by it on June 10, 1991, pending appeal of its
decision.

ACCORDINGLY, the petition is DISMISSED, and the challenged decision of the Court of Appeals is
AFFIRMED intoto. No costs.

SO ORDERED.

33B. Execution, Satisfaction and Effect of Judgment

[G.R. No. 102965. January 21, 1999]

JAMES REBURIANO and URBANO REBURIANO, petitioners,

vs.HONORABLE COURT OF APPEALS, and PEPSI COLA
BOTTLING COMPANY OF THE PHILIPPINES, INC., respondents.

DECISION

MENDOZA, J.:

In Civil Case No. Q-35598, entitled Pepsi Cola Bottling Company of the Philippines, Inc. v.
Urbano (Ben) Reburiano and James Reburiano, the Regional Trial Court, Branch 103 rendered
on June 1, 1987 a decision, the dispositive portion of which reads:
ACCORDINGLY, judgment is hereby rendered in favor of plaintiff Pepsi Cola
Bottling Co. of the Philippines, Inc.

1. Ordering the defendants Urbano (Ben) Reburiano and James Reburiano to pay
jointly and severally the plaintiff the sum of P55,000.00, less whatever empties (cases
and bottles) may be returned by said defendants valued at the rate of P55.00 per empty
case with bottles.

2. Costs against the defendants in case of execution.

SO ORDERED.

Private respondent Pepsi Cola Bottling Company of the Philippines, Inc. appealed to the
Court of Appeals seeking the modification of the portion of the decision, which stated the value
of the cases with empty bottles as P55.00 per case, and obtained a favorable decision. On June
26, 1990, judgment was rendered as follows:

WHEREFORE, the decision appealed from is SET ASIDE and another one is
rendered, ordering the defendant-appellees to pay jointly and severally the plaintiff-
appellant the sum of P55,000.00 with interest at the legal rate from January
1982. With costs against defendants-appellees.

After the case had been remanded to it and the judgment had become final and executory,
the trial court issued on February 5, 1991 a writ of execution.

It appears that prior to the promulgation of the decision of the trial court, private respondent
amended its articles of incorporation to shorten its term of existence to July 8, 1983. The
amended articles of incorporation was approved by the Securities and Exchange Commission on
March 2, 1984. The trial court was not notified of this fact.

On February 13, 1991, petitioners moved to quash the writ of execution alleging -

3. That when the trial of this case was conducted, when the decision was rendered by
this Honorable Court, when the said decision was appealed to the Court of Appeals,
and when the Court of Appeals rendered its decision, the private respondent was no
longer in existence and had no more juridical personality and so, as such, it no longer
had the capacity to sue and be sued;
4. That after the [private respondent], as a corporation, lost its existence and juridical
personality, Atty. Romualdo M. Jubay had no more client in this case and so his
appearance in this case was no longer possible and tenable;

5. That in view of the foregoing premises, therefore, the decision rendered by this
Honorable Court and by the Honorable Court of Appeals are patent nullity, for lack of
jurisdiction and lack of capacity to sue and be sued on the part of the [private
respondent];

6. That the above-stated change in the situation of parties, whereby the [private
respondent] ceased to exist since 8 July 1983, renders the execution of the decision
inequitable or impossible.[1]

Private respondent opposed petitioners motion. It argued that the jurisdiction of the court as
well as the respective parties capacity to sue had already been established during the initial
stages of the case; and that when the complaint was filed in 1982, private respondent was still an
existing corporation so that the mere fact that it was dissolved at the time the case was yet to be
resolved did not warrant the dismissal of the case or oust the trial court of its jurisdiction. Private
respondent further claimed that its dissolution was effected in order to transfer its assets to a new
firm of almost the same name and was thus only for convenience.[2]

On February 28, 1991, the trial court issued an order[3] denying petitioners motion to
quash.Petitioners then filed a notice of appeal, but private respondent moved to dismiss the
appeal on the ground that the trial courts order of February 28, 1991 denying petitioners motion
to quash writ of execution was not appealable. [4] The trial court, however, denied private
respondents motion and allowed petitioners to pursue their appeal.

In its resolution[5] of September 3, 1991, the appellate court dismissed petitioners

appeal.Petitioners moved for a reconsideration, but their motion was denied by the appellate
court in its resolution, dated November 26, 1991.

Hence, this petition for review on certiorari. Petitioners pray that the resolutions, dated
September 3, 1991 and November 26, 1991, of the Court of Appeals be set aside and that a new
decision be rendered declaring the order of the trial court denying the motion to quash to be
appealable and ordering the Court of Appeals to give due course to the appeal.[6]

On the other hand, private respondent argues that petitioners knew that it had ceased to exist
during the course of the trial of the case but did not act upon this information until the judgment
was about to be enforced against them; hence, the filing of a Motion to Quash and the present
petition are mere dilatory tactics resorted to by petitioners. Private respondent likewise cites the
ruling of this Court in Gelano v. Court of Appeals[7] that the counsel of a dissolved corporation is
deemed a trustee of the same for purposes of continuing such action or actions as may be
pending at the time of the dissolution to counter petitioners contention that private respondent
lost its capacity to sue and be sued long before the trial court rendered judgment and hence
execution of such judgment could not be complied with as the judgment creditor has ceased to
exist.[8]

First. The question is whether the order of the trial court denying petitioners Motion to
Quash Writ of Execution is appealable. As a general rule, no appeal lies from such an order,
otherwise litigation will become interminable. There are exceptions, but this case does not fall
within any of such exceptions.

In Limpin, Jr. v. Intermediate Appellate Court, this Court held:[9]

Certain, it is, . . . that execution of final and executory judgments may no longer be
contested and prevented, and no appeal should lie therefrom; otherwise, cases would
be interminable, and there would be negation of the overmastering need to end
litigations.

There may, to be sure, be instances when an error may be committed in the course of
execution proceedings prejudicial to the rights of a party. These instances, rare though
they may be, do call for correction by a superior court, as where -

1) the writ of execution varies the judgment;

2) there has been a change in the situation of the parties making execution inequitable
or unjust;

3) execution is sought to be enforced against property exempt from execution;

4) it appears that the controversy has never been submitted to the judgment of the
court;

5) the terms of the judgment are not clear enough and there remains room for
interpretation thereof; or,

6) 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 the judgment debt
has been paid or otherwise satisfied, or the writ was issued without authority;
In these exceptional circumstances, considerations of justice and equity dictate that
there be some mode available to the party aggrieved of elevating the question to a
higher court. That mode of elevation may be either by appeal (writ of error
or certiorari) or by a special civil action of certiorari, prohibition, or mandamus.

In this case, petitioners anchored their Motion to Quash on the claim that there was a change
in the situation of the parties. However, a perusal of the cases which have recognized such a
ground as an exception to the general rule shows that the change contemplated by such exception
is one which occurred subsequent to the judgment of the trial court. Here, the change in the
status of private respondent took place in 1983, when it was dissolved, during the pendency of its
case in the trial court. The change occurred prior to the rendition of judgment by the trial court.

It is true that private respondent did not inform the trial court of the approval of the amended
articles of incorporation which shortened its term of existence. However, it is incredible that
petitioners did not know about the dissolution of private respondent considering the time it took
the trial court to decide the case and the fact that petitioner Urbano Reburiano was a former
employee of private respondent. As private respondent says,[10] since petitioner Reburiano was a
former sales manager of the company, it could be reasonably presumed that petitioners knew of
the changes occurring in respondent company. Clearly, the present case does not fall under the
exception relied upon by petitioners and, the Court of Appeals correctly denied due course to the
appeal. As has been noted, there are in fact cases which hold that while parties are given a
remedy from a denial of a motion to quash or recall writ of execution, it is equally settled that the
writ will not be recalled by reason of any defense which could have been made at the time of the
trial of the case.[11]

Second. The Court of Appeals also held that in any event petitioners cannot raise the
question of capacity of a dissolved corporation to maintain or defend actions previously filed by
or against it because the matter had not been raised by petitioners before the trial court nor in
their appeal from the decision of the said court. The appellate court stated:

It appears that said motion to quash writ of execution is anchored on the ground that
plaintiff-appellee Pepsi Bottling Company of the Philippines had been dissolved as a
corporation in 1983, after the filing of this case before the lower court, hence, it had
lost its capacity to sue. However, this was never raised as an issue before the lower
court and the Court of Appeals when the same was elevated on appeal. The decision
of this Court, through its Fourth Division, dated June 26, 1990, in CA-G.R. CV No.
16070 which, in effect, modified the appealed decision, consequently did not touch on
the issue of lack of capacity to sue, and has since become final and executory on July
16, 1990, and has been remanded to the court a quo for execution. It is readily
apparent that the same can no longer be made the basis for this appeal regarding the
denial of the motion to quash writ of execution. It should have been made in the
earlier appeal as the same was already obtaining at that time. [12]

We agree with this ruling. Rules of fair play, justice, and due process dictate that parties
cannot raise for the first time on appeal from a denial of a Motion to Quash a Writ of Execution
issues which they could have raised but never did during the trial and even on appeal from the
decision of the trial court.[13]

Third. In any event, if the question of private respondents capacity to sue can be raised for
the first time in this case, we think petitioners are in error in contending that a dissolved and non-
existing corporation could no longer be represented by a lawyer and concomitantly a lawyer
could not appear as counsel for a non-existing judicial person.[14]

Section 122 of the Corporation Code provides in part:

122. Corporate Liquidation. - Every Corporation whose charter expires by its own
limitation or is annulled by forfeiture or otherwise, or whose corporate existence for
other purposes is terminated in any other manner, shall nevertheless be continued as a
body corporate for three (3) years after the time when it would have been so
dissolved, for the purpose of prosecuting and defending suits by or against it and
enabling it to settle and close its affairs, to dispose of and convey its property and to
distribute its assets, but not for the purpose of continuing the business for which it was
established.

At any time during said three (3) years, said corporation is authorized and empowered
to convey all of its property to trustees for the benefit of stockholders, members,
creditors, and other persons in interest. From and after any such conveyance by the
corporation of its property in trust for the benefit of its stockholders, members,
creditors and others in interests, all interests which the corporation had in the property
terminates, the legal interest vests in the trustees, and the beneficial interest in the
stockholders, members, creditors or other persons in interest.

Petitioners argue that while private respondent Pepsi Cola Bottling Company of the
Philippines, Inc. undertook a voluntary dissolution on July 3, 1983 and the process of liquidation
for three (3) years thereafter, there is no showing that a trustee or receiver was ever
appointed. They contend that 122 of the Corporation Code does not authorize a corporation, after
the three-year liquidation period, to continue actions instituted by it within said period of three
years. Petitioners cite the case of National Abaca and Other Fibers Corporation v.
Pore[15] wherein this Court stated:

It is generally held, that where a statute continues the existence of a corporation for a
certain period after its dissolution for the purpose of prosecuting and defending suits,
etc., the corporation becomes defunct upon the expiration of such period, at least in
the absence of a provision to the contrary, so that no action can afterwards be brought
by or against it, and must be dismissed. Actions pending by or against the corporation
when the period allowed by the statute expires, ordinarily abate. [16]

This ruling, however, has been modified by subsequent cases. In Board of Liquidators v.
Kalaw,[17] this Court stated:

. . .The legal interest became vested in the trustee the Board of Liquidators. The
beneficial interest remained with the sole stockholder the government. At no time had
the government withdrawn the property, or the authority to continue the present suit,
from the Board of Liquidators. If for this reason alone, we cannot stay the hand of the
Board of Liquidators from prosecuting this case to its final conclusion. The provision
of Section 78 (now Section 122) of the Corporation Law the third method of winding
up corporate affairs finds application.[18]

Indeed, in Gelano vs. Court of Appeals,[19] a case having substantially similar facts as the
instant case, this Court held:

However, a corporation that has a pending action and which cannot be terminated
within the three-year period after its dissolution is authorized under Sec. 78 [now 122]
of the Corporation Law to convey all its property to trustees to enable it to prosecute
and defend suits by or against the corporation beyond the three-year period. Although
private respondent did not appoint any trustee, yet the counsel who prosecuted and
defended the interest of the corporation in the instant case and who in fact appeared in
behalf of the corporation may be considered a trustee of the corporation at least with
respect to the matter in litigation only. Said counsel had been handling the case when
the same was pending before the trial court until it was appealed before the Court of
Appeals and finally to this Court. We therefore hold that there was substantial
compliance with Sec. 78 [now 122] of the Corporation Law and such private
respondent Insular Sawmill, Inc. could still continue prosecuting the present case even
beyond the period of three (3) years from the time of dissolution.
...[T]he trustee may commence a suit which can proceed to final judgment even
beyond the three-year period. No reason can be conceived why a suit already
commenced by the corporation itself during its existence, not by a mere trustee who,
by fiction, merely continues the legal personality of the dissolved corporation should
not be accorded similar treatment allowed to proceed to final judgment and execution
thereof.[20]

In the Gelano case, the counsel of the dissolved corporation was considered a trustee. In the
later case of Clemente v. Court of Appeals, [21] we held that the board of directors may be
permitted to complete the corporate liquidation by continuing as trustees by legal
implication. For, indeed, as early as 1939, in the case of Sumera v. Valencia,[22] this Court held:

It is to be noted that the time during which the corporation, through its own officers,
may conduct the liquidation of its assets and sue and be sued as a corporation is
limited to three years from the time the period of dissolution commences; but there is
no time limit within which the trustees must complete a liquidation placed in their
hands. It is provided only (Corp. Law, Sec. 78 [now Sec. 122]) that the conveyance to
the trustees must be made within the three-year period. It may be found impossible to
complete the work of liquidation within the three-year period or to reduce disputed
claims to judgment. The authorities are to the effect that suits by or against a
corporation abate when it ceased to be an entity capable of suing or being sued (7
R.C.L., Corps., par. 750); but trustees to whom the corporate assets have been
conveyed pursuant to the authority of Sec. 78 [now Sec. 122] may sue and be sued as
such in all matters connected with the liquidation. . . .[23]

Furthermore, the Corporation Law provides:

145. Amendment or repeal. - No right or remedy in favor of or against any

corporation, its stockholders, members, directors, trustees, or officers, nor any liability
incurred by any such corporation, stockholders, members, directors, trustees, or
officers, shall be removed or impaired either by the subsequent dissolution of said
corporation or by any subsequent amendment or repeal of this Code or of any part
thereof.

This provision safeguards the rights of a corporation which is dissolved pending litigation.

There is, therefore, no reason why the suit filed by private respondent should not be allowed
to proceed to execution. It is conceded by petitioners that the judgment against them and in favor
of private respondent in C.A. G.R. No. 16070 had become final and executory. The only reason
for their refusal to execute the same is that there is no existing corporation to which they are
indebted.Such argument is fallacious. As previously mentioned, the law specifically allows a
trustee to manage the affairs of the corporation in liquidation. Consequently, any supervening
fact, such as the dissolution of the corporation, repeal of a law, or any other fact of similar nature
would not serve as an effective bar to the enforcement of such right.

WHEREFORE, the resolutions, dated September 3, 1991 and November 26, 1991, of the
Court of Appeals are AFFIRMED.

SO ORDERED.

33C. Execution, Satisfaction and Effect of Judgment

G.R. No. 95625 October 4, 1991

HIYAS SAVINGS AND LOAN BANK, petitioner,

vs.
COURT OF APPEALS, SPOUSES DELFIN MENDOZA AND SOLITA SANTOS AND SPOUSES
FELIX SANTOS AND DEMETRIA PACHECO, respondents.

Nestor S. Romulo for petitioner.

Amado A. Amador, Jr. for private respondents.

MEDIALDEA, J.:p

This is a petition for review on certiorari of the decision of the Court of Appeals in CA-G.R. SP. No.
21002 dismissing the special civil action for certiorari filed by the herein petitioner against the order
of the Regional Trial Court of Bulacan, Branch 15.

Herein petitioner Hiyas Savings and Loan Bank (Hiyas Savings) was one of the defendants in Civil
Case No. 6821-M entitled "Delfin Mendoza, et al. v. Victoria Evangelista, et al." for annulment of a
mortgage contract with a prayer for a preliminary injunction seeking to restrain the foreclosure sale
and public auction of the properties subject of the mortgage. After trial, a decision was rendered in
favor of the defendant Hiyas Savings and Loan Bank, the dispositive portion of which read:

WHEREFORE, premises considered, judgment is hereby rendered dismissing

plaintiff's complaints' complaint for lack of merit and ordering the lifting and setting
aside or (sic) the preliminary injunction previously issued in this case.

The plaintiffs are ordered, jointly and severally to pay defendant Hiyas Savings and
Loan Association, Inc., within ninety (90) days from receipt hereof, the following
sums:
 1. P200.000.00 representing the principal amount of loan payable by plaintiffs to
private defendant, with 14% interest per annum thereon from January 10, 1982 (date
of maturity until the same is fully paid by the plaintiffs or satisfied out of the sale of
the mortgage properties;

2. Ten percent (10%) of the amount due as and by way of attorney's fees; and

3. The costs of this suit.

In default of plaintiffs to pay said money judgment, let the mortgaged two (2) parcels
of land and their improvements covered by TCT Nos. T-8930 (M) and
T-24.7070 (M), be sold at public auction by the Provincial Sheriff of Bulacan under
Rules 39 and 68 of the Revised Rules of Court.

SO ORDERED. (p. 16, Rollo)

No appeal was taken by the parties from the decision of the trial court. Hence, it became final.
Motion for execution was filed by Hiyas Savings.

On June 7, 1989, private respondents deposited in court two (2) treasury checks in the amount of
P428,600.00 in satisfaction of the judgment. Of the amount deposited, P40,735.35 was applied by
petitioner as attorney's fees. However, on August 18, 1989, petitioner filed an amended motion for
exeucution. Petitioner claimed that the total liability of private respondents was P448,941.92
computed as follows:

P200,000.00 - Principal

207,436.6 - Interest from 1-10-82

6 to 6-07-89

40,743.66 - Attorney's fees [10%

of (200,000.00 +
207,436.66)]

761.60 - Cost of suit and legal

expenses

..

P448,941.92 - Total
Hence, there was still an unsatisfied balance which it claimed to be P20,250.38.

The motion was denied on September 4, 1989 and reconsideration was likewise denied on
November 16, 1989.

Petitioner filed a special civil action for certiorari with the Court of Appeals on the lone issue:

Whether the respondent-Judge acted in excess of its jurisdiction in stating in the

assailed order that the ten (10) percent of the amount due as and by way of
attorney's fees refers to the principal amount and in denying the motion for
reconsideration which acts are correctible by certiorari. (p. 17, Rollo)

On September 28, 1990, the Court of Appeals dismissed the petition. It ruled:

By and large, We believe that the respondent-Judge acted correctly in fixing the
reasonable attorney's fees to P20,000.00 the amount of ten (10) per cent from the
amount due as appearing in the agreement of the parties. Consequently, the
respondent Judge has not exceeded his jurisdiction in denying the motion of the
petitioner to amend the writ of execution, and the subsequent motion for
reconsideration. Suffice it to state, that the petition for certiorari is devoid of merit and
therefore should be DENIED DUE COURSE.

WHEREFORE, the petition for certiorari is ordered DISMISSED. No costs. (p. 19,
Rollo)

The petitioner is now before Us submitting the same issue which the respondent appellate court had
allegedly decided in a way not in accord with law or the applicable decisions of this Honorable Court.

Petitioner advanced the argument that the trial court cannot modify nor amend its judgment which
had become final and executory. By awarding attorney's fees of ten percent (10%) of the amount
due, it cannot, in the pretext of interpreting its own decision, order that the 10% attorney's fees shall
be taken only from the principal amount of the loan and not from the principal and interests, the latter
being total amount due.

There is no question that a court may still amend a final and executory judgment to clarify an
ambiguity caused by an omission or mistake in the disposition of the decision. In Republic Surety
and Insurance Co., Inc. v. IAC, Nos. 71131-32, July 27, 1987, 152 SCRA 309. We allowed the
clarification of the dispositive portion of a final and executory judgment of the then Court of First
Instance declaring a Deed of Sale with Assumption of Mortgage in favor of the defendant null and
void but omitting to order also the Register of Deeds to recall and cancel the TCT to the defendant
and to issue a new TCT in favor of the prevailing plaintiff. Likewise, cited in the above case was the
case of Locsin, et al. v. Paredes, et al., 63 Phil. 87, where We allowed a final and executory
judgment "to be clarified by supplying a word which had been inadvertently omitted and which, when
supplied, in effect changed the literal import of the original phraseology."

We do not agree that in the case at bar, there is an ambiguity as regards the amount of attorney's
fees awarded. It is clear that the final and executory decision of the Regional Trial Court awarded ten
percent (10%) of the amount due as attorney's fees. Since there was no qualification that the ten
percent attorney's fees shall be taken only from the principal, the ordinary and literal meaning of the
words should prevail, that is, from the amount due which is the total amount due on the loan
obligation (principal + interest). Had the decision really intended that the attorney's fees shall be ten percent (10%) of the principal
only, it could have so provided. In fact, even the promissory note and the real estate mortgage, which was the subject of the main case
between the parties provided on attorney's fees in case of litigation of ten percent (10%) on the total outstanding obligation which is 10% of
the unpaid principal plus interest.

The Regional Trial Court acted without jurisdiction when it denied the amended motion for execution
filed by petitioner in Civil Case No. 6821-M which resulted in the substantial amendment of the final
and executory judgment rendered therein.

It is well settled that a court has plenary power to alter, modify or even set aside, its
own decisions, and even order a new trial, at any time before the decision becomes
final, or before an appeal from that decision has been perfected. However, after the
decision has become final and executory, it can no longer be amended or corrected
by the court except for clerical errors or mistakes. This principle of immutability of
judgments already final and executory has invariably been adhered to by this Court
regardless of any occasional injustice, for the equity of a particular case must yield to
the over-mastering need' of certainty and unalterability of judicial
pronouncements. Any amendment or alteration which substantially affects a final and
executory judgment is null and void for lack of jurisdiction, including the entire
proceedings held for that purpose. ... (Francisco v. Bautista, G.R. No. 44167,
December 19, 1990, 192 SCRA 388, emphasis supplied)

Courts are cautioned to be careful in writing their decisions, to be clear and precise in the use of
words, especially in the dispositive portion. Ambiguities must be avoided. And, when the dispositions
in the decision are clear, courts must avoid interpretation which result in the substantial amendment
thereof which are violative of the rule on immutability of final and executory judgments.

ACCORDINGLY, the petition is GRANTED. The decision of the Court of Appeals is REVERSED.
Judgment is rendered granting the amended motion for execution and declaring that the total
amount of the judgment debt unsatisfied in Civil Case No. 6821-M is P20,250.38 plus 14% interest
from June 7, 1987 until full payment.

SO ORDERED.

33D. Execution, Satisfaction and Effect of Judgment

[G.R. No. 132250. March 11, 1999]

ROSALIA P. SALVA and her children JESUS RAMON SALVA, JOSE

ALBERTO SALVA, MELCHOR LEON SALVA, ALFREDO FAUSTO
SALVA, JR., MA. TERESITA SALVA YUMANG, MA. ROSALYN
SALVA, and ANTHONY RALFTH SALVA, petitioners, vs. COURT OF
APPEALS (Former Sixteenth Division) GOVERNOR JOSEPHINE R.
SATO, respondents.

DECISION

PUNO, J.:
 Before us is a Petition for Review by Certiorari praying for the reversal and
nullification of the Resolution [1] of the respondent Court of Appeals [2] in CA-G.R. SP
No. 40430 which granted respondent Governor Josephine R. Sato's Motion for
Reconsideration of its earlier Decision [3] which dismissed respondent's Petition
for Certiorari and Prohibition[4] assailing an already final and executory decision for
forcible entry of the Municipal Trial Court of San Jose, Occidental Mindoro. [5]

There is no dispute as to the facts of this case. Squatters' shacks mushroomed

around the San Jose Airport in Occidental Mindoro and resulted to its closure. As the
shutdown of airport operations severely affected the commercial life of the province,
officials of the province, led by respondent, initiated measures to re-open the airport.

The squatters had to be relocated. Thus, the Sangguniang Bayan of the

Municipality of San Jose passed Resolution No. 5210, Series of 1994, choosing Lot
No. 1626-C-2 with an area of 59, 977 square meters covered by TCT No. T-5587 in
the name of the National Food Authority (NFA), to be their relocation site.

The Department of Environment and Natural Resources surveyed and subdivided

the vacant space on the NFA lot. In the resulting survey and subdivision, certain areas
were marked off as containing residential structures which were constructed, not by
the NFA which owned the land, but by herein petitioners.

After the implementation of the relocation program on the NFA lot, petitioners
filed with the Municipal Trial Court a Complaint for Forcible Entry against the
relocated families and respondent.The Complaint was docketed as Civil Case No.
1425 and amended[6] on July 21, 1994.

In support of the allegations in their Complaint, petitioners offered as evidence

numerous affidavits[7] of their neighbors attesting to their actual, physical and
notorious possession of the NFA land for more than thirty (30) years, photographs [8] of
their houses, poultry sheds and plantations on the NFA land, and various realty tax
declarations and realty tax receipts [9] in the name of petitioners covering said land.

Respondent filed her Answer to petitioners' Complaint but she neither submitted
any affidavits of her witnesses nor presented any other evidence during the trial.

On October 7, 1994, the Municipal Trial Court, through the Honorable Judge
Inocencio M. Jaurigue, rendered judgment against respondent Governor Sato and the
relocated families who were found to have unlawfully entered the disputed property at
the time it was actually possessed and occupied by herein petitioners. Thus the
dispositive portion of that judgment ordered them to:

"l. Vacate the land subject matter of the complaint and to return the peaceful
possession of the same to the plaintiffs [herein petitioners] or their representative;

2. Jointly and severally pay to plaintiffs [herein petitioners] the sum of twenty five
thousand (P25,000.00) pesos for and as attorney's fee;

3. Jointly and severally pay to plaintiffs the sum of five thousand (P5,000.00) pesos a
month as rental value of the premises, starting July 1994 until the possession thereof
is returned to the plaintiffs [herein petitioners], and

4. Jointly and severally pay to plaintiffs [herein petitioners the sum of three thousand
(P3,000.00) pesos for and as litigation and other incidental expenses and cost." [10]

Respondent appealed to the Regional Trial Court of San Jose. The appeal was
docketed as Civil Case No. R-879 and raffled to Branch 45.

Before the Regional Trial Court, respondent claimed that the parcel of land being
occupied by petitioners was different from that allocated as relocation site. To resolve
this issue, the Honorable Judge Fernando Z. Caunan conducted an ocular inspection of
the lot where all parties were represented. Also present were the officers of the
Municipal Planning and Development Council and the Engineer's Office. The
relocated squatters were called and asked to confirm whether or not they have actually
entered the property in question.

The following are the pertinent findings of the Regional Trial Court:

"In the course of the ocular inspection, it was ascertained that a total of thirty one (31)
persons named in the complaint and in the decision of the lower court x x x did not
enter the premises in question and they were not found therein at the time of the
ocular inspections. Neither was there any showing that they introduced any
improvements thereon.

xxx
In its memorandum, appellants [among whom is herein respondent] contend that the
area being claimed by the appellees [herein petitioners] is different from the area
entered and occupied by the appellants [i.e., the relocated families] and that the
appellees [petitioners] are not the owners of said parcel of land. In this connection, as
correctly observed by the lower court, the plaintiffs-appellees [herein petitioners] were
in the actual physical possession of the said property until they were forcibly
dispossessed by the defendants, appellants herein [including herein respondent] of
said land on July 5, 1994. These findings of the lower court were confirmed in the
ocular inspection of the area conducted on February 9, 1995. And, as correctly
pointed out by the lower court, the only issue in this case, is the actual physical
possession of the land subject matter of the complaint. Such possession had been
sufficiently shown to have been with the plaintiffs at the time of the forcible entry
of the defendants."[11] [Emphasis ours.]

Accordingly, the Regional Trial Court affirmed the Judgment of the Municipal Trial
Court but voided it with respect to the thirty one (31) defendants, who were found to
have never been relocated to the property in question.

On March 27, 1995, respondent filed a Notice of Appeal from the foregoing
Decision. It was approved by the Regional Trial Court in an Order dated April 3,
1995. The appeal was assigned to the Special Thirteenth Division [12] of the Court of
Appeals and docketed as CA-G.R. CV No. UDK-3880-A. For adopting a wrong mode
of appeal, however, respondent was rebuffed. Her petition was dismissed pursuant to
Section 22, Batas Pambansa Blg. 129 and Circular No. 2-90 [13] in a Resolution[14] dated
October 9, 1995.

The period for appeal lapsed on January 4, 1996 without respondent filing a
Motion for Reconsideration on the foregoing Resolution or seeking its review by this
Court through a petition for review on certiorari under Rule 45.

Thus, on January 10, 1996, the Court of Appeals ordered that entry of judgment
be issued and that the records of that case be returned to the Municipal Trial Court for
execution.[15] Entry of judgment was promptly made on January 24,1996.

On March 25, 1996, the Municipal Trial Court issued a Writ of Execution for the
enforcement of its Decision in Civil Case No. 1425 as affirmed by the Regional Trial
Court and the Court of Appeals.[16]
 On April 24,1998, respondent filed a Petition for Certiorari and Prohibition with
Prayer for a Writ of Preliminary Injunction and/or Temporary Restraining Order .
[17]
She prayed that the Municipal Trial Court be enjoined from implementing its final
and executory Decision in Civil Case No. 1425 and that the same be declared null and
void for having been issued in grave abuse of discretion. The petition was docketed as
CA-G.R. SP No. 40430.

On October 22, 1996, respondent Court of Appeals rendered a

Decision[18] dismissing the Petition for Certiorari and Prohibition for having been filed
as a substitute for a lost appeal. It held:

"The well-settled rule, buttressed and strengthened by [a] long line of cases, is that
certiorari will not lie as substitute for the lost remedy of appeal. Having lost the right
to appeal, a party cannot be permitted to avail of the remedy of certiorari under Rule
65 of the Rules of Court.

The only exception to this rule is when if [sic] such right is lost through no fault of the
party, which is not so in this case.

When the case was dismissed by this Court, petitioner did not bother to file a motion
for reconsideration or petition for review to the Supreme Court. Petitioner just
allowed the period to appeal to lapse.

Consequently, this petition must fail for this petition was indeed filed as a substitute
for the lost right to appeal."[19]

Respondent Court of Appeals went further. It discussed the untenability of

respondent's rehashed argument that petitioners did not have prior possession of that
portion of the NFA land earmarked as the relocation site. It ruled:

"The main argument of petitioner to support her petition is that the site where [the]
relocated families stayed is not the land being occupied and possessed by private
respondent. Thus, it cannot be said that private respondents were deprived of their
property.

We do not agree with petitioner.

In this case, it has been proven that the relocated families forcibly entered the land
being occupied by private respondents.

The Municipal Trial Court found that private respondents were in actual physical
possession of the land where the squatter families were relocated. The Regional Trial
Court affirmed the findings. In fact, an ocular inspection was even conducted by the
public respondent to fully appraise himself of the situation and it was confirmed that
private respondents were in actual physical possession of the land where the squatter
families were relocated. x x x

It is a well settled rule that the findings of fact of trial courts are given great weight on
appeal because they are in a better position to examine the real evidence. Findings of
fact of a trial court are not to be disturbed on appeal unless the trial court has
overlooked, ignored or disregarded some facts or circumstance of weight or
significance which if considered would have altered the case.

In this case, We find no reason to disturb the findings of the trial court.

It cannot be argued that the municipal trial court and the appellate court (RTC)
overlooked the fact that private respondents were claiming to have occupied Lot
1626-A while the site where the families were relocated is Lot 1626-C-2.

Whatever may be the number of the lot is no longer important in this case. Evidence
clearly appears that the squatter families entered and occupied the land which was
then in actual physical possession of private respondents. Whether it be Lot 1626-A or
1626-C, the fact remains that the squatter families occupied a land then in possession
of private respondents.

xxx

Moreover, petitioner in her answer before the Municipal Trial Court categorically
admitted that the squatter families entered the land owned by NFA and that this land
which is owned by NFA is in possession of private respondents. Petitioner averred:

"x x x

x x x [T]he act of a possessory character done by the Plaintiffs, by virtue of

mere tolerance on the part of the National Food Authority, is not sufficient x x x.
At this stage, petitioner can no longer insist that private respondents are exercising
acts of possessory character over a land different from that land given to the squatter
families.

Although admittedly, petitioner may validly claim ownership based on the muniments
of title she presented, such evidence however does not responsively address the issue
of prior actual possession raised in a forcible entry case. It must be stated that
regardless of the actual condition of the title of the property, the party in peaceful,
quiet possession shall not be turned out by a strong hand, violence or terror. Thus, a
party who can prove prior possession can recover such possession even against the
owner himself.

Therefore, whatever may be the character of private respondents' prior possession,

whether it be legal or illegal, since they had in their favor priority in time, private
respondents have the security that entitles them to remain on the property until they
are lawfully ejected by a person having a better right by accion publiciana or
accion reivindicatoria."[20]

On November 12, 1996, respondent filed a Motion for Reconsideration. [21] On

January 12, 1998, respondent Court of Appeals reversed itself. It granted respondent's
Motion for Reconsideration and dismissed petitioners' Complaint for Forcible Entry in
Civil Case No. 1425. It justified its volte-face in this wise:

"The motion [for reconsideration] is principally anchored on her contention that

certiorari is the proper recourse from the assailed decisions which are 'patently null
and void' in that the lot occupied by private respondents is different from the land set
aside by the provincial government for relocation purposes.

xxx

As a general rule, certiorari will not lie as a substitute for a lost appeal. However, as
correctly pointed out by petitioner, there are some recognized exceptions to the
rule. Thus, certiorari has been accepted as a substitute for a lapsed appeal where the
equities warrant such recourse and dismissal was based on technicalities; or where
rigid application of the rule will result in a manifest failure or miscarriage of justice x
x x or where the orders of the lower court were issued either in excess of [or] without
jurisdiction x x x.
xxx

In this connection, it is worthy to note that this case arose out of the relocation of
squatters who used to live within the vicinity of the San Jose airport in Mindoro
Occidental. Their immediate relocation was of paramount importance to re-open the
airport and ensure their safety as well as that of airplane passengers. As we had earlier
pronounced, petitioner's act in relocating the squatters was 'noble'. x x x

Thus the ends of justice and the greater good of the community would be better served
if the case is decided on the merits and the petition be given due course.

Anent petitioner's second argument, we agree with her that a determination of the lot
used as a relocation site vis-a-vis that of the area occupied by private respondents is
material to the case.Although this issue was properly raised in petitioner's answer to
the complaint, this issue was not addressed by the municipal trial court. An ocular
inspection should have been conducted by the trial court to ascertain the said issued
[sic]. And to complicate matters, the RTC was the one which conducted the ocular
inspection. Although the RTC likewise failed to resolve the issue, in conducting the
ocular inspection however, the RTC clearly went beyond its jurisdiction because in
this case, it was acting in its appellate jurisdiction and should have decided the
appealed case solely on the basis of the evidence submitted or presented before the
Municipal Trial Court, without anymore receiving new or additional evidence from
the parties.

xxx

A judicious scrutiny of the assailed decisions would reveal that both courts skirted or
simply brushed aside the point raised by petitioner that the squatters were relocated on
a different lot. x x x [S]ince in ejectment cases the only issue to be determined is who
had actual prior possession of the property, it is of utmost importance that the lot
being claimed by the petitioner is first identified, otherwise the court can not assume
jurisdiction over the case, if the lot claimed by the petitioner is different from that
occupied by the relocated squatters. This identification was not done by the Municipal
Trial Court x x x.

Further, even granting arguendo that the lot occupied by private respondents and the
relocation site is [sic] the same, it is not disputed that the said relocation site is titled
in NFA's name. In such a case, private respondents would then be occupying a portion
of said lot by mere tolerance of NFA. When the squatters were then relocated to a
vacant portion of said lot, it cannot be said that private respondents were deprived of
their possession or forcibly ejected therefrom. NFA as the titled owner of the said
property had every right to allow other people to also occupy the unused or vacant
portion of its lot and private respondents have no right, as mere squatters thereon, to
allocate for themselves the entire property and deprive its legitimate owner of its right
to use the property.

x x x"[22]

On March 17, 1998, the instant Petition for Review by Certiorari was filed by
petitioners Rosalia P. Salva and her children, Jesus Ramon, Jose Alberto, Melchor
Leon, Alfredo Fausto, Jr., Ma. Teresita, Ma. Rosalyn and Anthony Ralfth, against
respondent Governor Josephine R. Sato.

Petitioners pray for this Court to set aside the Resolution dated January 12, 1998
issued by the respondent Court of Appeals and to reinstate its Decision dated October
22, 1996 on the following grounds:

"A

"THE PETITION FOR CERTIORARI FILED BY RESPONDENT SATO WAS

PROPERLY DENIED AS A WRONG REMEDY IN THE DECISION DATED
OCTOBER 22,1996 AND THE RESPONDENT COURT GRAVELY ERRED IN
ACCEPTING THE SAME UNDER THE ALLEGED RECOGNIZED EXCEPTIONS
OF THE RULE THAT CERTIORARI WILL NOT LIE AS A SUBSTITUTE FOR A
LOST APPEAL.

"B

"THE RESPONDENT COURT ERRONEOUSLY ASSUMED, WITHOUT PROPER

AND LEGAL EVIDENCE PROVING SUCH ASSUMPTION, THAT
RESPONDENT SATO-'S CO-DEFENDANTS ARE ACTUALLY OCCUPYING
LOT 1626-C-2 TITLED UNDER THE NAME OF THE NATIONAL FOOD
AUTHORITY (NFA).

"C
"'SINCE OVERWHELMING EVIDENCES HAVE BEEN PRESENTED PROVING
PREVIOUS ACTUAL POSSESSION OF THE LAND IN QUESTION, FORCIBLE
ENTRY WAS PERPETRATED BY RESPONDENT SATO AND HER CO-
DEFENDANTS WHOSE STAY IN THE PREMISES IN QUESTION
CONTINUOUS [sic] TO BE AN ILLEGAL ACT OF TRESPASS AND
SPOLIATION."

We grant the petition.

First. The respondent Court of Appeals gravely abused its discretion when it
reversed its original decision to uphold the validity of the Municipal Trial Court
judgment which had already become final and executory. The filing of a petition
for certiorari to nullify and set it aside was without procedural sanction. As we have
held in Amigo v. Court of Appeals:[23]

"The Court must remind the parties that the case brought up to the Court of Appeals is
an extraordinary action that has sought to annul the writs of execution and demolition
issued under and by virtue of a final judgment that is alleged to be void for want of
jurisdiction. The petition should not thus be used as a strategem to once again reopen
the entire controversy and make a complete force of a duly promulgated decision that
has long become final and executory x x x."[24]

It is a settled rule that a judgment which has acquired finality becomes immutable
and unalterable, hence may no longer be modified in any respect except only to
correct clerical errors or mistakes. Once a judgment becomes final, all the issues
between the parties are deemed resolved and laid to rest. [25] Litigation must end and
terminate sometime and somewhere, and it is essential to an effective and efficient
administration of justice that, once a judgment has become final, the winning party be
not deprived of the fruits of the verdict. Courts must therefore guard against any
scheme calculated to bring about that result. Constituted as they are to put an end to
controversies, courts should frown upon any attempt to prolong them. [26]

Second. In granting the Motion for Reconsideration filed by respondent Governor

Sato, the respondent Court of Appeals made the finding that she brought the airport
squatters to settle on Lot 1626-C-2, not on Lot 1626-A-2 which is the one claimed by
petitioners. This important finding of fact is totally devoid of evidentiary support for
respondent Governor Sato did not present any evidence on this issue. All the
respondent appellate court had were the bare allegations of respondent Governor Sato
in her Motion for Reconsideration which was even unverified. Allegations can never
be considered as repositories of truth, and hence cannot serve as foundations of
decisions resolving rights of litigants.

Respondent Court of Appeals took to task the Municipal Trial Court for having
dodged the issue of identity of the subject property. The Regional Trial Court, in
exercise of its appellate jurisdiction, squarely addressed said issue. It took decisive
steps to determine the identity of both the subject property and its actual occupants at
the time that respondent -relocated the airport squatters. The Regional Trial Court
went to the actual relocation site to survey the area and called each of the defendants
named in petitioners' complaint for ejectment. Its findings categorically established
that the relocation site and the land occupied by petitioners are identical. They are one
and the same, and petitioners were found to have indeed possessed the same at the
time it was taken over by respondent and the airport squatters. Significantly,
respondent never denied the holding of this ocular inspection where all parties were
represented. Certainly, between these strongly substantiated and undisputed findings
of a court that obtained first hand knowledge of the issues of the identity of the
disputed lot and its prior possessors, and the unproved allegations in an unverified
motion for reconsideration of the respondent Sato on the other, the former instead of
the latter ought to have been adopted by the Court of Appeals.

Third. The unsubstantiated claim that respondent Sato relocated the airport
squatters to Lot 1626-C-2, not on Lot 1626-A-2 which petitioners occupy, is further
attenuated by her equally unproved allegation that petitioners were occupants of the
disputed land by mere tolerance of its owner. Again in grave abuse of discretion,
respondent Court of Appeals swallowed this stance of respondent as it even branded
petitioners as "squatters".

It is self-evident that in the first place, these two claims equally asserted by
respondent are contradictory to each other. Petitioners either occupied the disputed
land or not. They cannot be said to have simultaneously possessed and not possessed
the same. The lower courts resolved the issue in favor of petitioners, for not only did
respondent fail to proffer any convincing proof of any of its submissions, but more
importantly, petitioners submitted overwhelming proof of their prior possession of the
subject property. Extant on the record are the following evidentiary documents:
Exh. A - Affidavit of Rosalia P. Salva dated September 9, 1994

Exh. B - Supplemental Affidavit of Rosalia Salva dated September 16, 1994

Exh. C - Sworn Statement of Melchor Leon Salva dated September 9, 1994

Exh. D - Sworn Statement of Pablo Dulay dated September 9, 1994

Exh. E - Sworn Statement of Perlita Gran dated September 9, 1994

Exh. F - Joint sworn statement of Perlita Aguilar and Joel Antaran dated September
12,1994

Exh. G - Sworn statement of Marcelo Abeleda dated September 12,1994

Exh. H - Sworn Statement of Luz Jimenez dated September 9, 1994

Exh. I - Close-up picture of the house of plaintiffs inside the area in question, wherein
the picture of the late husband Alfredo Salva appeared

Exh. I-1 - Picture of the portion of the area, showing petitioners' house, the fruit
bearing trees and the farmland

Exh. I-2 - Picture of the area, showing some growing trees which were destroyed and
cut by the defendants

Exh. I-3 - Picture of the barb wire fence which was destroyed by the defendants

Exh. I-4 - Another picture of the area with fence

Exh. I-5 - Another picture

Exh. I-6 - Another picture showing the poultry house

Exh. I-7 - A picture showing the banana plantation

Exh. I-8 - A picture of the area with picture of the late Alfredo Salva

Exh. J - Receipt of payment for survey authority dated January 21, 1989 issued by
Feliciano Cayayon
Exh. K - Realty Tax Receipt No. 9157617 dated April 4, 1975

Exh. L - Realty Tax Receipt No. 015703 dated April 4, 1975

Exh. M - Realty Tax Receipt No. 6452423 dated March 3, 1978

Exh. N - Realty Tax Receipt No. 645309 dated March 3, 1978

Exh. O - Realty Tax Receipt No. 9059517 dated September 18, 1980

Exh. P - Sketch plan prepared for Alfredo Salva by Engr. Tomas Abella dated Nov. 15,
1969

Exh. Q - Realty Tax Declaration No. 10156 dated October 22, 1976

Exh. Q-1 - Another Realty Tax Declaration NO. 10157 dated October 22,1976

Exh. R - Unapproved survey plan of the area occupied by the petitioners since May
21, 1979

Exh. S - Certification issued by CENRO dated September 5, 1994

Exh. T - Official Receipt for payment of certification fee dated September 5, 1994

Exh. U - MTC Lease Application dated September 26, 1978

As the records of this case bear out, respondent never repudiated any of these
documents. She failed not only to present evidence to support her claims but also to
cast doubt on the veracity of petitioners' claims.

Fourth. There is no justifiable reason for the respondent Court of Appeals to junk
the entrenched rule that certiorari is not a substitute for a party's failure to appeal.
[27]
While there are exceptions to this rule, this case fails to distinguish itself as one. We
made it clear in the case of Oriental Media, Inc. v. Court of Appeals,[28] thus:

"Oriental fell into and committed serious procedural lapses which resulted not only in
the decision of default becoming final and executory but also in the order dismissing
the petition for relief from judgment likewise attaining the character of final and
executory order, for which reason both are now beyond the reach and review of any
appellate court.

xxx

We have reiterated in many cases that certiorari is not a substitute for appeal x x x
especially a lost appeal. Certiorari should not be allowed where the petitioner has-or
had--other remedies available x x x. The remedies of appeal and certiorari are
mutually exclusive and not alternative or successive x x x.

Surely, there are cases, where certiorari was allowed although appeal was the proper
remedy. The Court has in a number of cases given due course to a petition for
certiorari although the proper remedy is appeal especially where the equities warrant
such recourse and considering that dismissals on technicalities are viewed with
disapproval x x x. Where an appeal would not be an adequate remedy under the
circumstances, since it would not promptly relieve the petitioner from the injurious
effects of the acts of the inferior court or tribunal, e.g., the court has authorized
execution of the judgment, a resort to the special civil action of certiorari may
exceptionally be allowed x x x, especially so if the petition is filed while the period
for appeal has not expired.

xxx

x x x [P]etitioner squandered its opportunities to question and assail the decision dated
July 8, 1986 of the trial court and the order dated February 24, 1987 of the trial court
dismissing its petition for relief from judgment. Petitioner, as aforestated, filed a
motion for reconsideration of the decision dated February 24, 1987, which was denied
by the trial court in its order dated October 9, 1986.After receiving the denial order,
petitioner did not avail itself of the right to appeal; rather, a petition for relief from
judgment was filed and when said petition was dismissed in the order of February 24,
1987, petitioner did not interpose an appeal therefrom which it had every right to do
so. It is now much too late in the day to resort to the present petition to set aside said
decision and orders which have become final and executory." [29]

Fifth. Respondent insists that while it is true that a petition for certiorari is not
proper where appeal was available, the failure to appeal was not her fault.
 In her Comment dated August 6, 1998, respondent blamed her former counsel for
everything that went wrong in this case. According to her, it was her former counsel
who, in the course of the proceedings before the Municipal Trial Court, failed to
present any evidence of petitioners' non-occupation of Lot 1626-C-2 earmarked as the
relocation site. It was also her former counsel who erroneously filed a Notice of
Appeal instead of a Petition for Review in elevating the Decision of the Regional Trial
Court to the Court of Appeals. When the Court of Appeals dismissed the same for
being a wrong mode of appeal, it was also her former counsel who failed to file a
motion for reconsideration or to elevate such dismissal to this Court on petition for
review via certiorari.

Citing our 1991 decision in the case of Legarda v. CA,[30] respondent Governor
Sato argued that she should not be made to suffer for the mistakes and omissions of
her former counsel. The respondent governor claimed that the reckless and gross
negligence of her counsel was of such degree as to have deprived her constituency,
namely, the Province of Occidental Mindoro, its rightful day in court.

Respondent's reliance on Legarda is inapropos. Notably, the decision in said case

was not yet final in 1991. The private respondent therein then filed a timely motion
for reconsideration. In granting the motion for reconsideration, the Court en
banc held:

"Under the Gancayco ruling, the order of reconveyance was premised on the alleged
gross negligence of Legarda's counsel which should not be allowed to bind her as she
was deprived of her property without due process of law.'

It is, however, basic that as long as a party was given the opportunity to defend her
interests in due course, she cannot be said to have been denied due process of law, for
this opportunity to be heard is the very essence of due process. The chronology of
events shows that the case took its regular course in the trial and appellate courts but
Legarda's counsel failed to act as any ordinary counsel should have acted, his
negligence to act as an ordinary counsel should have acted, his negligence every step
of the way amounting to 'abandonment', in the words of the Gancayco decision. Yet, it
cannot be denied that the proceedings which led to the filing of this case were not
attended by any irregularity.The judgment by default was valid, so was the ensuing
sale at public auction. If Cabrera was adjudged highest bidder in said auction sale, it
was not through any machination on his part. All of his actuations that led to the final
registration of the title in his name were aboveboard, untainted by any irregularity.

xxx

Neither Cathay nor Cabrera should be made to suffer for the gross negligence of
Legarda's counsel.If she may be said to be 'innocent' because she was ignorant of the
acts of negligence of her counsel, with more reason are respondents truly 'innocent.' x
x x In this case, it was not respondents, but Legarda, who misjudged and hired the
services of the lawyer who practically abandoned her case and who continued to
retain him even after his proven apathy and negligence." [31]

At any rate, we find that respondent Governor Sato, as well as the Province of
Occidental Mindoro which she represents, were not denied their day in
court. Responsive pleadings were filed before the lower courts, and respondent was
given all the opportunities to prove her case. Her chosen counsel did not diligently
exhaust all legal remedies to advance respondent's cause, yet respondent did not
terminate his services. She was aware of the repeated negligence of her counsel and
cannot now complain of counsel's errors. Hence, there is no justifiable reason to
exempt her from the general rule that clients should suffer the consequences of the
negligence, mistake or lack of competence of the counsel whom they themselves hired
and had the full authority to fire at any time and replace with another even without
any justifiable reason.[32]

Sixth and finally. Ultimately, amidst its contradictory arguments and dubious
premises, respondent Court of Appeals anchored its reversal of its original decision on
the tardy submission of respondent that the decisions of the Municipal Trial Court and
the Regional Trial Court were void ab initio for want of jurisdiction.

We have carefully studied the complaint for ejectment, however, and find the
same to be in order. It is settled that jurisdiction is conferred by law based on the facts
that are alleged in the complaint [33] since the latter comprises a concise statement of the
ultimate facts constituting the plaintiff's causes of action. [34] There is no question that
based on the allegations in petitioners' Amended Complaint, their cause of action is
for forcible entry and its exclusive jurisdiction is vested in the Municipal Trial Court
of San Jose, Mindoro.
 We note that in the Answer of respondent to petitioners' Amended Complaint, she
never raised the issue of jurisdiction. During the pre-trial, the issue of lack of
jurisdiction was not also raised. In respondent's appeal to the Regional Trial Court, she
also never brought to fore the issue of jurisdiction. When petitioner's appeal was
dismissed by the Court of Appeals, she did not elevate the case to the Supreme Court
on the ground of lack of jurisdiction; in fact, she allowed the period to appeal to lapse
and the Decision of the Municipal Trial Court to become final and executory.

In a long line of decisions, this Court has consistently held that while an order or
decision rendered without jurisdiction is a total nullity and may be assailed at any
stage, a party's active participation in the proceedings in the tribunal which rendered
the order or decision will bar such party from attacking its jurisdiction. [35] So we held
in the leading case of Tijam v. Sibonghanoy:[36]

"A party may be estopped or barred from raising a question in different ways and for
different reasons. Thus we speak of estoppel in pais, or estoppel by deed or by record,
and of estoppel by laches.

xxx

The doctrine of laches or of 'stale demands' is based upon grounds of public policy
which requires, for the peace of society, the discouragement of stale claims and,
unlike the statute of limitations, is not a mere question of time but is principally a
question of the inequity or unfairness of permitting a right or claim to be enforced or
asserted.

It has been held that a party can not 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 x x x. x x x [T]he question whether
the court had jurisdiction either of the subject matter of the action or of the parties was
not important in such cases because the party is barred from such conduct not because
the judgment or order of the court is valid and conclusive as an adjudication, but for
the reason that such a practice can not be tolerated--obviously for reasons of public
policy.

xxx
Upon this same principle is what We said x x x to the effect that we frown upon the
'undesirable practice' of a party submitting his case for decision and then accepting the
judgment, only if favorable, and attacking it for lack of jurisdiction, when adverse x x
x."[37]

Public policy dictates that this Court must strongly condemn any double-dealing,
by parties who are disposed to trifle with the courts by taking inconsistent positions,
in utter disregard of elementary principles of right dealing and good faith. [38] This
applies not only to parties who are plaintiffs, complainants or others who initiated the
case by actually filing the action, but also to parties who are defendants or
respondents, if the latter fail to timely raise the jurisdictional issue and instead actively
participate in the proceedings.[39]

There is no denying that in all the proceedings held in the Municipal Trial Court,
the Regional Trial Court, and the Court of Appeals, the issue of jurisdiction was never
raised by respondent Governor Sato. Instead, she voluntarily and willingly submitted
herself to the jurisdiction of those courts. It is thus now too late in the day for
respondent to repudiate those very courts whose jurisdiction she invoked.

WHEREFORE, the Petition for Review is hereby GRANTED. The Resolution

dated January 12, 1998 rendered by the Court of Appeals in CA-G.R. SP No. 40430 is
REVERSED AND SET ASIDE and its Decision dated October 22, 1996 is
REINSTATED.

No pronouncement as to costs.

SO ORDERED.

33E. Execution, Satisfaction and Effect of Judgment

[G.R. No. 126158. September 23, 1997]

PHILIPPINE BANK OF COMMUNICATIONS, petitioner, vs. THE COURT

OF APPEALS, HON. PEDRO T. SANTIAGO, as Judge, RTC of
Quezon City Branch 101, FALCON GARMENTS CORPORATION,
QUALITY LABELS, INC., ROBERT SY doing business under the
name and style Jobert Printing Services; EUGENIO POA, MAGIN
 TABUSO, MAKILITO MAHINAY, EFREN CACHERO, CESAR M.
TORIO and EFREN C. GUMBAC, respondents.

DECISION

MELO, J.:

Assailed and sought to be set aside in the instant petition is the decision of
respondent Court of Appeals promulgated on September 13, 1996 dismissing
herein petitioner Philippine Bank of Communications petition
for certiorari impugning an order granting the motion for the issuance of a writ
of execution pending appeal issued by the Regional Trial Court of the National
Capital Judicial Region (Branch 101, Quezon City), in Civil Case No. Q-95-
22625, entitled Falcon Garments Corporation, et al. vs. Philippine Bank of
Communications.

The antecedent facts of the case as gathered from the record are as
follows:

Sometime in 1989, private respondent Falcon Garments Corporation

(Falcon) opened Current Account No. 25-00640-7 at BMA Quezon City
Branch of petitioner Philippine Bank of Communications
(PBCom). Subsequently, on November 27, 1992, private respondent Falcon
obtained a loan from petitioner in the principal sum of Four Million Seven
Hundred Thousand Pesos (P4,700,000.00) with interest at 17% per annum
and penalty at 12% per annum in case of default. Falcon failed to pay its loan
on due date and went in default in December, 1993.

On February 9, 1995, Falcon filed a complaint with the Regional Trial

Court of Quezon City against PBCom which was docketed as Civil Case No.
Q-95-22625 and raffled to Branch 78, presided over by Judge Percival
Mandap-Lopez. The complaint prayed for the restoration to Falcons current
account of alleged unauthorized withdrawals totalling P12, 729,092.78 which
were made from 1990 to 1992, plus interest, damages, and attorneys fees.

In its answer, PBCom denied liability and interposed a compulsory

counterclaim in the sum of P4,700,000.00, plus the stipulated interest and
penalty, damages, and attorneys fees.
 On January 2, 1996, the trial court rendered a decision against PBCom
the dispositive portion of which reads:

WHEREFORE, defendant is ordered to restore immediately to plaintiffs Current

Account No. 25-006407 the sum of P12,729,092.78, plus interest at the rate of 12%
per annum to commence from the date of the filing of the complaint until the said
amount is fully restored and operate the said account in accordance with the
instructions of plaintiff, acting through its board of directors. And to pay plaintiffs the
following sums:

a. P 500,000.00 as exemplary damages;

b. P 500,000.00 as attorneys fees; and

c. P 200,000.00 as litigation expenses.

Plaintiff FALCON is ordered to pay defendant its loan at P 4,700,000.00 plus interest
at the rate of 12% per annum to commence from the date of filing of the
complaint. All other claims and counterclaims are dismissed for lack of merit.

(Rollo, p.34)

Petitioner PBCom seasonably filed a notice of appeal, while private

respondent Falcon filed a Motion for Execution Pending Appeal dated
February 7, 1996. However, before Branch 78 could resolve said motion,
Judge Lopez inhibited himself and the case was re-raffled to Branch 101,
presided over Judge Pedro T. Santiago.

Private respondent Falcon filed an Ex-Parte Manifestation and Motion

dated May 7, 1996, claiming that with its strained relations with PBCom, it was
no longer practicable to bank with petitioner, and prayed that the money
judgement be not restored to its current account but instead be directly paid to
it (Rollo, p. 132).

On the very same day of the filing of the motion, Judge Santiago granted
the same and authorized the issuance of a writ of execution pending
appeal. The dispositive portion of said order provides:
WHEREFORE, premises considered, finding merit and justification in plaintiffs
motion, the Court hereby grants its motion for execution pending appeal hereby
ordering defendant Bank to immediately pay the plaintiff the sum of P12,729,092.78
with 12% per annum and plaintiffs obligation to defendant Bank be likewise paid by
plaintiff in the amount of P4,700,000.00 with interest also at 12% per annum, as well
as the other damages stated in the decision of Branch 78 dated January 2, 1996, upon
a plaintiffs bond of P5,000,000.00 conditioned to answer for whatever damages which
defendants may suffer by virtue of this Order.

(Rollo, p. 41.)

The writ was issued on May 14, 1996, and on May 16, 1996, the writ was
served upon PBCom which sought the intercession of the Court of Appeals
(CA-G.R. SP No. 40636). On June 4, 1996, a writ of preliminary injunction was
issued by the Court of Appeals restraining its implementation.

On September 13, 1996, the Court of Appeals eventually upheld the

validity of the writ of execution pending appeal and forthwith dissolved the writ
of preliminary injunction.

On the same day, private respondent Falcon obtained an alias writ of

execution which served upon petitioner on the same afternoon.

On September 16, 1996, the present petition was filed, with prayer for a
temporary restraining order, preliminary writ of injunction and mandatory
injunction alleging that:

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION IN AFFIRMING THE ORDER OF JUDGE PEDRO SANTIAGO
GRANTING THE ISSUANCE OF A WRIT OF EXECUTION PENDING APPEAL
CONSIDERING THAT GOOD REASONS DO NOT EXIST FOR THE ISSUANCE
OF A WRIT OF EXECUTION PENDING APPEAL UNDER SECTION 2, RULE 39
OF RULES OF COURT.

(Rollo, p. 8.)

Petitioner further avers that:

 3.01 The privelege respondents in this case ILLEGALLY and
UNLAWFULLY implemented a writ of execution pending appeal on 13
September 1996 using an expired writ, and an Order of the Court of
Appeal subject of this petition which was promulgated only at 10 a.m. of
13 September 1996. On that day, herein petitioner has not receive copy
of said decision which is not yet final.

3.02 PBCom and counsel became aware of the questioned Decision of the
Court of Appeals when PBCom Ayala Branch, Makati City, called up
and told them that private respondents with about 30 people, brandished
the questioned writ and decision enabling private respondents to coerced,
forced and intimidated the personnel of the said petitioners branch
resulting in the unlawful taking of about P1.7 million

3.03 Private respondents have foisted to petitioner and counsel that they
(private respondents) will again go to PBComs other branches to get in
full balance of the money judgement which is still on appeal.

(Rollo, pp. 92-93.)

Upon the above representation of petitioner duly verified by its counsel,

Atty. Daniel Y. Laogan, of Laogan Silva Baeza & Llantino Law Offices, we
issued a temporary restraining order at the same time requiring private
respondents to comment.

On November 11, 1996, the Court issued a resolution, which among other
things, noticed petitioner urgent manifestation and motion dated September
17, 1996, praying that (a) counsel for private respondent be required to
explain why they claimed in their ex partemotio for issuance of an alias writ of
execution pending appeal before respondent RTC that the Court of Appeals
had already dissolved the injunction one hour before the promulgation of the
Court of Appeals decision in CA-G.R. SP No. 40636; (b) to require Judge
Pedro T. Santiago of RTC Branch 101, Quezon City, to explain why he issued
the order dated September 13, 1993 granting the alias writ of execution
pending appeal prior to the courts receipt of its official copy of said decision
dissolving the injunction and even before the finality of the same.
 Judge Santiago submitted his explanation on December 11,1996 which
the Court noted on January 17, 1997.

With the filing of the memoranda of the parties, the petition is now ripe for
resolution.

The pith of the matter before us is the existence of good reasons which
would justify execution pending appeal. In the absence of such good reasons,
it is incumbent upon the reviewing court, such as the Court of Appeals, to
issue the writ of certiorari and failure to do so would constitute grave abuse of
discretion on its part.

It is in this regard that we find that the Court of Appeals committed grave
abuse of discretion in sustaining the trial court.

When Judge Santiago resolved the first ex parte manifestation and

motion, the applicable provision was Section 2, Rule 39 of the former Rules of
Court which provided

Sec. 2. Execution pending appeal On motion of the prevailing party with to

notice to the adverse party, the court may, in is discretion, order the execution
to issue, even before the expiration of the time to appeal, upon good reasons to
be stated in a special order. If a record on appeal is filed thereafter the motion
and the special order shall be included therein.

The prevailing doctrine an principle then which continues to be the same

as provided in Paragraph 2, Section 2, of Rule 39 of the 1997 Rules of Civil
Procedure is that discretionary execution is permissible only when good
reasons exist for immediately executing the judgment before finality or
pending appeal or even before the expiration of the time to appeal.

Good reasons consist of compelling circumstances justifying the

immediate execution lest judgment becomes illusory, or the prevailing party
may after the lapse of time become unable to enjoy it, considering the tactics
of the adverse party who may apparently have no case except to delay. A long
line of jurisprudence indicates what constitute good reasons as contemplated
by the Rules, the following being merely representative of the same:
 1. When in an intestate proceeding which has been pending for almost 29 years,
one group of heirs has not yet received the inheritance due them when the others
have already received theirs, or are about to do so (Borja vs. Encarnacion, 89 Phil.
239 (1951);

2. The advanced age of the prevailing party (Borja vs. Court of Appeals, 196
SCRA 847 [1991]; De Leon vs. Soriano, supra);

3. When the defeated party is in imminent danger of insolvency (Hacienda

Navarro vs. Sabrador, 65 Phil. 536 [1938]; Lao vs. Mencias, 21 SCRA 1021
[1967]; Santos vs. Mojica, 26 SCRA 607 [1969]; City of Manila vs. Court of
Appeals, 72 SCRA 98 [1976]; De los Reyes vs. Capulong, 122 SCRA 631
[1983]; PVTA vs. Lucero, 125 SCRA 337 [1983]);

4. When the appeal is dilatory and the losing party intends to encumber and/or
dispose of the property subject of the case during the pendency of the appeal in
order to defraud or deprive the plaintiff of proprietary rights an defeat the ends of
justice (Home Insurance Company vs. Court of Appeals, 184 SCRA 318 [1990]);
and

5. Deterioration of commodities subject to litigation (Federation of United

Namarco Distributors, Inc. vs. National Marketing Corp., 4 SCRA 867 [1962]).

The supposed good reasons relied upon by Judge Santiago to justify the
discretionary execution pending appeal are spelled out in the May 7, 1996
Order, reading in relevant part as follows

This Court has given serious thoughts on the restrictive application of Section
2, Rule 39 of the Rules of Court. Attached to the Reply to the Opposition filed
by plaintiffs, are two public documents. As annex A, the original carbon
copies of the summons and complaint in the case entitled Solid Bank
Corporation vs. Falcon Garment Corporation et al., in Civil Case No. 96-
76567, a case for collection of sum of money and replevin (hereafter, referred
to as Complaint). And as Annex B, the original copy of a police blotter of the
Center Police District Command, Police Station No. 2, Baler St., Quezon City
(hereafter referred to as police blotter). It is observed the complaint filed by
Solidbank against Falcon supports the material allegations of plaintiffs in the
 hearing as reproduced above and as also quoted by defendant in its
opposition. The threats of impending criminal and civil cases alleged by
plaintiffs are now proven and established to be real. The complaint shows that
Falcon is now being sued for non-payment of its loan with Solidbank. The
checks issued by Falcon to Solidbank, forming part as Annexes D, E, F, G, H,
and I of the complaint, bounced for being drawn against insufficient
funds. Annexes J, J-1, J-2, J-3, and J-4 also for the complaint, are written with
demands which carry the threat of criminal action for violation of Batas
Pambansa Blg. 22 against Falcon Garment Corporation and/or its officers by
Solidbank on February 14, 1996, seized the machineries, office and factory
equipments of Falcon. The police blotter even enumerates these machines and
office equipments. With the seizure of plaintiffs instruments in the operation
of its business, the filing of collection cases against it, the threat of criminal
prosecution against its officers, the imminent threat to its industrial peace, it is
not remote that plaintiffs survival hangs on the balance. There is truth
therefore to plaintiffs claim that its only hope for survival and arresting threats
of civil and criminal cases, is the immediate execution of the judgment. This
Court, also takes into consideration, that plaintiffs ownership over the funds
sought to be reinstated to Current Account No. 25-00640-7, is not in
dispute. All the circumstances enumerated by plaintiffs under par. 3 of its
motion combined with the facts established by the complaint of Solidbank
against Falcon and the police blotter, viewed from the above quoted
opposition of defendant, to the mind of this Court, constitute a sufficient
evidence of good reason in support of plaintiffs subject motion. Further and
significantly taking into consideration plaintiffs readiness to pay defendants
counterclaim of P4,700,000.00 by deducting the same from the principal
account.

(Rollo pp. 40-41.)

The above stated order quotes the following transcribed testimony of

Magin Tabuso, witness for private respondents, thus

ATTY. MAHINAY: (on direct examination)

QUESTION:
Now, as an overall effect of the unauthorized withdrawal or transfer of account of your
corporation, can you tell what is its effect insofar as the operation of your
corporation is concerned?

ANSWER:

It has great effect on the corporation as a whole, because as our credit today we have
an amount of P12,000,000.00 plus and one of the prominent creditors of PBCom
and also Solid Bank.

Q Do you have complete list of those creditors which you mentioned you have not paid
as a result of the unauthorized withdrawal or transfer of your account?

A Yes, we were not able to pay them as a result of those unauthorized withdrawals.

Q There are list of your creditors in paragraph 5.3 of your complaint, are they the same
creditors you are talking about?

A Yes, sir.

Q Inasmuch as you said that these creditors were not paid, what particular action were
undertaken by these creditors against your company?

A Our credit lines from the banks and from the other creditors were closed, sir.

Q What else?

A And we were not able to serve orders of valued customers because were not able to
meet the production due to financial difficulties.

Q Your claims of alleged illegal transfer of withdrawals, does this affect also the
industrial peace of your company?

A Yes, sir. There was a growing threat in the industrial peace of our company.

Q How many employees are holding your staff?

A We have about 200 workers, sir.

Q What particular threat are you talking about?

A Usually these workers are dependent from our production and so they started to feel
restless and insecure sometimes and they feel demoralized, at times which led us
to attack, it paralyzes the whole operations.
 (Rollo, pp. 39-40.)

The trial court concluded that the foregoing statements presented during
the hearing of the motion for execution pending appeal constitute good
reasons for the discretionary execution. The Court of Appeals agreed, but this
Court is of a different persuasion and view.

The reasons relied upon are not compelling and thus can not constitute
good reasons.

It is significant to stress that private respondent Falcon is a juridical entity

and not a natural person. Even assuming that it was indeed in financial
distress and on the verge of facing civil or even criminal suits, the immediate
execution of a judgment in its favor pending appeal cannot be justified as
Falcons situation may not be likened to a case of a natural person who may
be ill or may be of advanced age. Even the danger of extinction of the
corporation will not per se justify a discretionary execution unless there are
showings of other good reasons, such as for instance, impending insolvency
of the adverse party or the appeal being patently dilatory. But even as to the
latter reason, it was noted in Aquino vs. Santiago (161 SCRA 570 [1988]), that
it is not for the trial judge to determine the merit of a decision he rendered as
this is the role of the appellate court. Hence, it is not within competence of the
trial court, in resolving a motion for execution pending appeal, to rule that the
appeal is patently dilatory and rely on the same as its bases for finding good
reason to grant the motion. Only an appellate court can appreciate the dilatory
intent of an appeal as an additional good reason in upholding an order for
execution pending appeal which may have been issued by the trial court for
other good reasons, or in case where the motion for execution pending appeal
is filed with the appellate court in accordance with Section 2, paragraph (a),
Rule 39 of the 1997 Rules of Court.

What is worse, only one case was actually filed against Falcon and this is
the complaint for collection filed by Solidbank. The other case are impending,
so it is said. Other than said Solidbank case, Falcons survival as a body
corporate can not be threatened by anticipated litigation. This notwithstanding,
and even assuming that there was a serious threat to Falcons continued
corporate existence, we hold that it is not tantamount nor even similar to an
impending death of a natural person. The material existence of a juridical
person is not on the same plain as that of human life. The survival of a
juridical personality is clearly outweighed by the long standing general policy
of enforcing only final and executory judgments.

In the recent case of David vs. Court of Appeals (G. R. No. 126556, July
28, 1997), we reiterated our pronouncement in Roxas vs. Court of
Appeals (157 SCRA 370 [1988]) that --

Execution pending appeal in accordance with Section 2, of Rule 39 is, of course, the
exception.Normally, execution of a judgment should not be had until and unless it has
become final and executory -- i.e., the right to appeal has been renounced or waived,
the period for appeal has lapsed without an appeal having been taken, or appeal
having been taken, the appeal has been resolved and the records of the case have been
returned to the court of origin -- in which case, execution shall issue as a matter of
right.

On the other hand, when the period of appeal has not expired, execution of the
judgment should not be allowed, save only if there be good reasons therefor,
in the courts discretion.As provided in Section 2 Rule 39 of the x x Rules x x,
the existence of good reasons is what confers discretionary power on a Court
x x to issue a writ of execution must constitute superior circumstances
demanding urgency which will outweigh the injury or damages should the
losing party secure a reversal of the judgment.

(p. 377.).

Additionally, we cannot help observing that the May 7, 1996 order of

execution issued by Judge Santiago deliberately modified and failed to
conform to the dispositive portion of the January 2, 1996 decision rendered by
Judge Percival Mandap-Lopez, which is the decision Judge Santiagos order
intended to execute, and that this variance was upon express motion to
Falcon (See: prayer of Falcons Ex parte Manifestation & Motion, Annex 2-
Comment, pp. 130-132, rollo.)

The January 2, 1996 decision ordered petitioner to restore immediately to

plaintiffs Current Account No. 25-00640-7 the sum of P12,729,092.78, plus
interest at the rate of 12% per annum to commence from the date of the filing
of the complaint until the said amount is fully restored, and to operate the said
account in accordance with the instructions of plaintiffs, acting through its
board of directors. In contrast, the May 7, 1996 order directed petitioner to
immediately pay the sum of P12,729,092.78, plus interest and other damages.

At first glance the order to restore private respondents current account in

the aforementioned amount and the order to immediately pay the same
amount directly to private respondent may seem to be same, for, after all,
upon restoring the said amount, what may prevent the depositor from
withdrawing the entire amount?

However, after more careful and deliberate consideration, one will notice a
whale of distinction between the two aforementioned orders. For one thing, if
petitioner PBCom were ordered to credit the money judgment to Falcons
current account with its BMA Quezon City Branch and to operate said account
in accordance with the instructions of the board of directors of Falcon, once
credited, release of any amount from said account may be done only upon
proper resolution of private respondent Falcons board of directors. On the
other hand, the order dated May 7, 1996 directed the immediate payment to
Falcon of the corresponding money judgment which may thus be used or
misused with or without proper instructions of Falcons board of directors.

Besides, the harassment complained of by the petitioner bank would not

have happened had respondent trial court issued a writ which faithfully
conformed to the judgment sought to be enforced. If Falcons current account
were merely credited in accord with the judgment, a simple and orderly
banking procedure may just have taken place. In fact, it would have been
absolutely unnecessary to deputize anybody, other that the sheriff of the trial
court concerned, to enforce the writ ordering petitioner bank to restore the
current account of private respondent.

It is well-settled general principle that a writ of execution must conform

substantially to every essential particular of he judgment
promulgated. Execution which is not in harmony with the judgment is bereft of
validity. It must conform particularly to that ordained or decreed in the
dispositive portion of the decision (GSIS vs. Court of Appeals, 218 SCRA 233
[1993]). An order of execution which varies the tenor of the judgment or
exceeds the terms thereof is a nullity (Foremost Farms, Inc. vs. Dept. of Labor
and Employment, 251 SCRA 123 [1995]; Gamboas Inc. vs. Court of Appeals,
72 SCRA 131 [1976]; Villoria vs. Piccio, 95 Phil. 802 [1954]).

Falcon has ignored and has remained silent in regard to PBComs charge
of harassment and irregular resort to armed policeman and civilians with
acetylene torches in the enforcement of the writ of execution pending appeal,
thus lending credence to PBComs complaint. However, it also appears that
petitioner PBCom does not intend to pursue the administrative aspect of these
alleged irregularities, its prayer in the petition being completely silent on these
points. Nevertheless, we find necessary to exhort both private respondent and
its counsel, as well as public respondent sheriffs not to resort to such forms of
harassment by using the strong arms of the law to the prejudice of any
party. Barbaric acts such as those complained of have no place in a civilized
society. It is even more abhorrent when such acts are with the participation or
at the very least the acceptance of a member of the bar who, under his oath,
has sworn to uphold the rule of law.

WHEREFORE, premises considered, the instant petition is

GRANTED. The decision of the Court of Appeals dated September 13, 1996
in CA-G.R. SP No. 40636 is hereby ANNULLED and SET ASIDE. The order of
the Regional Trial Court of the National Capital Judicial Region, Branch 101,
stationed at Quezon City, dated May 7, 1996 in Civil Case No. Q-95-22625 is
likewise ANNULLED and SET ASIDE. Accordingly, the trial court is hereby
ORDERED to determine the exact amount taken by private respondent by
virtue of the writ or writs of execution issued pursuant to the annulled order
dated May 7, 1996, which amount private respondent is hereby ORDERED to
return to petitioner Philippine Bank of Communications. No special
pronouncement is made as to costs.

SO ORDERED.

34A. Fresh Period Rule; Governing period to file an Appeal

 EN BANC

DOMINGO NEYPES, LUZ G.R. No. 141524

FAUSTINO, ROGELIO FAUSTINO,
LOLITO VICTORIANO, JACOB
OBANIA AND DOMINGO Present :
CABACUNGAN,
Petitioners, DAVIDE, JR., C.J.
PUNO,
PANGANIBAN,
QUISUMBING,
YNARES-SANTIAGO,
SANDOVAL-GUTIERREZ,
CARPIO,
- v e r s u s - AUSTRIA-MARTINEZ,
CORONA,
CARPIO MORALES,
CALLEJO, SR.,
AZCUNA,
TINGA,
CHICO-NAZARIO and
GARCIA, JJ.
HON. COURT OF APPEALS, HEIRS
OF BERNARDO DEL MUNDO,
namely: FE, CORAZON, JOSEFA,
SALVADOR and CARMEN, all
surnamed DEL MUNDO, LAND BANK
OF THE PHILIPPINES AND HON.
ANTONIO N. ROSALES, Presiding
Judge, Branch 43, Regional Trial
Court, Roxas, Oriental Mindoro,
Respondents. Promulgated :
September 14, 2005
x-----------------------------------------x
 DECISION

CORONA, J.:

Petitioners Domingo Neypes, Luz Faustino, Rogelio Faustino,

Lolito Victoriano, Jacob Obania and Domingo Cabacungan filed an

action for annulment of judgment and titles of land and/or

reconveyance and/or reversion with preliminary injunction before

the Regional Trial Court, Branch 43, of Roxas, Oriental Mindoro,

against the Bureau of Forest Development, Bureau of Lands, Land

Bank of the Philippines and the heirs of Bernardo del Mundo,

namely, Fe, Corazon, Josefa, Salvador and Carmen.

In the course of the proceedings, the parties (both petitioners

and respondents) filed various motions with the trial court. Among
these were: (1) the motion filed by petitioners to declare the
respondent heirs, the Bureau of Lands and the Bureau of Forest
Development in default and (2) the motions to dismiss filed by the
respondent heirs and the Land Bank of the Philippines, respectively.

In an order dated May 16, 1997, the trial court, presided by

public respondent Judge Antonio N. Rosales, resolved the foregoing
motions as follows: (1) the petitioners motion to declare respondents
Bureau of Lands and Bureau of Forest Development in default was
granted for their failure to file an answer, but denied as against the
respondent heirs of del Mundo because the substituted service of
summons on them was improper; (2) the Land Banks motion to
dismiss for lack of cause of action was denied because there were
hypothetical admissions and matters that could be determined only
after trial, and (3) the motion to dismiss filed by respondent heirs of
del Mundo, based on prescription, was also denied because there
were factual matters that could be determined only after trial. [1]

The respondent heirs filed a motion for reconsideration of the

order denying their motion to dismiss on the ground that the trial
court could very well resolve the issue of prescription from the bare
allegations of the complaint itself without waiting for the trial
proper.

In an order[2] dated February 12, 1998, the trial court

dismissed petitioners complaint on the ground that the action had
already prescribed. Petitioners allegedly received a copy of the order
of dismissal on March 3, 1998 and, on the 15 th day thereafter or on
March 18, 1998, filed a motion for reconsideration. On July 1,
1998, the trial court issued another order dismissing the motion for
reconsideration[3] which petitioners received on July 22, 1998. Five
days later, on July 27, 1998, petitioners filed a notice of
appeal[4] and paid the appeal fees on August 3, 1998.

On August 4, 1998, the court a quo denied the notice of

appeal, holding that it was filed eight days late. [5] This was received
by petitioners on July 31, 1998. Petitioners filed a motion for
reconsideration but this too was denied in an order dated
September 3, 1998.[6]

Via a petition for certiorari and mandamus under Rule 65 of

the 1997 Rules of Civil Procedure, petitioners assailed the dismissal
of the notice of appeal before the Court of Appeals.

In the appellate court, petitioners claimed that they had

seasonably filed their notice of appeal. They argued that the 15-day
reglementary period to appeal started to run only on July 22, 1998
since this was the day they received the final order of the trial court
denying their motion for reconsideration. When they filed their
notice of appeal on July 27, 1998, only five days had elapsed and
they were well within the reglementary period for appeal. [7]

On September 16, 1999, the Court of Appeals (CA) dismissed

the petition. It ruled that the 15-day period to appeal should have
been reckoned from March 3, 1998 or the day they received the
February 12, 1998 order dismissing their complaint. According to
the appellate court, the order was the final order appealable under
the Rules. It held further:

Perforce the petitioners tardy appeal was correctly

dismissed for the (P)erfection of an appeal within the
reglementary period and in the manner prescribed by law is
jurisdictional and non-compliance with such legal requirement is
fatal and effectively renders the judgment final and executory.[8]
Petitioners filed a motion for reconsideration of the aforementioned
decision. This was denied by the Court of Appeals on January 6,
2000.

In this present petition for review under Rule 45 of the Rules,

petitioners ascribe the following errors allegedly committed by the
appellate court:

THE HONORABLE COURT OF APPEALS ERRED IN

DISMISSING THE PETITIONERS PETITION FOR CERTIORARI
AND MANDAMUS AND IN AFFIRMING THE ORDER OF THE
HON. JUDGE ANTONIO N. ROSALES WHICH DISMISSED THE
PETITIONERS APPEAL IN CIVIL CASE NO. C-36 OF THE
REGIONAL TRIAL COURT, BRANCH 43, ROXAS, ORIENTAL
MINDORO, EVEN AFTER THE PETITIONERS HAD PAID THE
APPEAL DOCKET FEES.

II

THE HONORABLE COURT OF APPEALS LIKEWISE ERRED IN

RULING AND AFFIRMING THE DECISION OR ORDER OF THE
RESPONDENT HON. ANTONIO M. ROSALES THAT
PETITIONERS APPEAL WAS FILED OUT OF TIME WHEN
PETITIONERS RECEIVED THE LAST OR FINAL ORDER OF
THE COURT ON JULY 22, 1998 AND FILED THEIR NOTICE OF
APPEAL ON JULY 27, 1998 AND PAID THE APPEAL DOCKET
FEE ON AUGUST 3, 1998.

III

THE HONORABLE COURT OF APPEALS FURTHER ERRED IN

RULING THAT THE WORDS FINAL ORDER IN SECTION 3,
RULE 41, OF THE 1997 RULES OF CIVIL PROCEDURE WILL
 REFER TO THE [FIRST] ORDER OF RESPONDENT JUDGE
HON. ANTONIO M. MORALES DATED FEBRUARY 12, 1998
INSTEAD OF THE LAST AND FINAL ORDER DATED JULY 1,
1998 COPY OF WHICH WAS RECEIVED BY PETITIONERS
THROUGH COUNSEL ON JULY 22, 1998.

IV.

THE HONORABLE COURT OF APPEALS FINALLY ERRED IN

FINDING THAT THE DECISION IN THE CASE OF DENSO, INC.
V. IAC, 148 SCRA 280, IS APPLICABLE IN THE INSTANT CASE
THEREBY IGNORING THE PECULIAR FACTS AND
CIRCUMSTANCES OF THIS CASE AND THE FACT THAT THE
SAID DECISION WAS RENDERED PRIOR TO THE
ENACTMENT OF THE 1997 RULES OF CIVIL PROCEDURE.[9]

The foregoing issues essentially revolve around the period within

which petitioners should have filed their notice of appeal.
First and foremost, the right to appeal is neither a natural right nor
a part of due process. It is merely a statutory privilege and may be
exercised only in the manner and in accordance with the provisions
of law. Thus, one who seeks to avail of the right to appeal must
comply with the requirements of the Rules. Failure to do so often
leads to the loss of the right to appeal. [10] The period to appeal is
fixed by both statute and procedural rules. BP 129, [11] as amended,
provides:

Sec. 39. Appeals. The period for appeal from final orders, resolutions,
awards, judgments, or decisions of any court in all these cases
shall be fifteen (15) days counted from the notice of the final
order, resolution, award, judgment, or decision appealed from.
Provided, however, that in habeas corpus cases, the period for
appeal shall be (48) forty-eight hours from the notice of judgment
appealed from. x x x
Rule 41, Section 3 of the 1997 Rules of Civil Procedure states:

SEC. 3. Period of ordinary appeal. The appeal shall be taken

within fifteen (15) days from the 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 the notice of judgment or final
order.

The period to 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.
(emphasis supplied)

Based on the foregoing, an appeal should be taken within 15 days

from the notice of judgment or final order appealed from. A final
judgment or order is one that finally disposes of a case, leaving
nothing more for the court to do with respect to it. It is an
adjudication on the merits which, considering the evidence
presented at the trial, declares categorically what the rights and
obligations of the parties are; or it may be an order or judgment
that dismisses an action.[12]

As already mentioned, petitioners argue that the order of July 1,

1998 denying their motion for reconsideration should be construed
as the final order, not the February 12, 1998 order which dismissed
their complaint. Since they received their copy of the denial of their
motion for reconsideration only on July 22, 1998, the 15-day
reglementary period to appeal had not yet lapsed when they filed
their notice of appeal on July 27, 1998.

What therefore should be deemed as the final order, receipt of

which triggers the start of the 15-day reglementary period to
appealthe February 12, 1998 order dismissing the complaint or the
July 1, 1998 order dismissing the MR?
In the recent case of Quelnan v. VHF Philippines, Inc.,[13] the
trial court declared petitioner Quelnan non-suited and accordingly
dismissed his complaint. Upon receipt of the order of dismissal, he
filed an omnibus motion to set it aside. When the omnibus motion
was filed, 12 days of the 15-day period to appeal the order had
lapsed. He later on received another order, this time dismissing his
omnibus motion. He then filed his notice of appeal. But this was
likewise dismissed for having been filed out of time.
The court a quo ruled that petitioner should have appealed
within 15 days after the dismissal of his complaint since this was
the final order that was appealable under the Rules. We reversed
the trial court and declared that it was the denial of the motion for
reconsideration of an order of dismissal of a complaint which
constituted the final order as it was what ended the issues raised
there.

This pronouncement was reiterated in the more recent case

of Apuyan v. Haldeman et al.[14] where we again considered the order
denying petitioner Apuyans motion for reconsideration as the final
order which finally disposed of the issues involved in the case.

Based on the aforementioned cases, we sustain petitioners view

that the order dated July 1, 1998 denying their motion for
reconsiderationwas the final order contemplated in the Rules.
We now come to the next question: if July 1, 1998 was the
start of the 15-day reglementary period to appeal, did petitioners in
fact file their notice of appeal on time?

Under Rule 41, Section 3, petitioners had 15 days from notice

of judgment or final order to appeal the decision of the trial court.
On the 15th day of the original appeal period (March 18, 1998),
petitioners did not file a notice of appeal but instead opted to file a
motion for reconsideration. According to the trial court, the MR only
interrupted the running of the 15-day appeal period. [15] It ruled that
petitioners, having filed their MR on the last day of the 15-day
reglementary period to appeal, had only one (1) day left to file the
notice of appeal upon receipt of the notice of denial of their MR.
Petitioners, however, argue that they were entitled under the Rules
to a fresh period of 15 days from receipt of the final order or the order
dismissing their motion for reconsideration.
In Quelnan and Apuyan, both petitioners filed a motion for
reconsideration of the decision of the trial court. We ruled there
that they only had the remaining time of the 15-day appeal period
to file the notice of appeal. We consistently applied this rule in
similar cases,[16] premised on the long-settled doctrine that the
perfection of an appeal in the manner and within the period
permitted by law is not only mandatory but also jurisdictional.
[17]
The rule is also founded on deep-seated considerations of public
policy and sound practice that, at risk of occasional error, the
judgments and awards of courts must become final at some definite
time fixed by law.[18]

Prior to the passage of BP 129, Rule 41, Section 3 of the 1964

Revised Rules of Court read:

Sec. 3. How appeal is taken. Appeal maybe taken by

serving upon the adverse party and filing with the trial court
within thirty (30) days from notice of order or judgment, a
notice of appeal, an appeal bond, and a record on appeal. The
time during which a motion to set aside the judgment or order or
for new trial has been pending shall be deducted, unless such
motion fails to satisfy the requirements of Rule 37.

But where such motion has been filed during office hours of
the last day of the period herein provided, the appeal must be
perfected within the day following that in which the party
appealing received notice of the denial of said motion.
[19]
(emphasis supplied)

According to the foregoing provision, the appeal period previously

consisted of 30 days. BP 129, however, reduced this appeal period
to 15 days. In the deliberations of the Committee on Judicial
Reorganization[20] that drafted BP 129, the raison d etre behind the
amendment was to shorten the period of appeal [21] and enhance the
efficiency and dispensation of justice. We have since required strict
observance of this reglementary period of appeal. Seldom have we
condoned late filing of notices of appeal, [22] and only in very
exceptional instances to better serve the ends of justice.

In National Waterworks and Sewerage Authority and Authority

v. Municipality of Libmanan,[23] however, we declared that appeal is
an essential part of our judicial system and the rules of procedure
should not be applied rigidly. This Court has on occasion advised
the lower courts to be cautious about not depriving a party of the
right to appeal and that every party litigant should be afforded the
amplest opportunity for the proper and just disposition of his cause,
free from the constraint of technicalities.

In de la Rosa v. Court of Appeals,[24] we stated that, as a rule,

periods which require litigants to do certain acts must be followed
unless, under exceptional circumstances, a delay in the filing of an
appeal may be excused on grounds of substantial justice. There, we
condoned the delay incurred by the appealing party due to strong
considerations of fairness and justice.
In setting aside technical infirmities and thereby giving due
course to tardy appeals, we have not been oblivious to or unmindful
of the extraordinary situations that merit liberal application of the
Rules. In those situations where technicalities were dispensed with,
our decisions were not meant to undermine the force and effectivity
of the periods set by law. But we hasten to add that in those rare
cases where procedural rules were not stringently applied, there
always existed a clear need to prevent the commission of a grave
injustice. Our judicial system and the courts have always tried to
maintain a healthy balance between the strict enforcement of
procedural laws and the guarantee that every litigant be given the
full opportunity for the just and proper disposition of his cause. [25]
The Supreme Court may promulgate procedural rules in all
courts.[26] 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, [27] 43[28] and
45,[29] 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. [30]

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[31] to the Court of Appeals and Rule 45 governing
appeals by certiorari to the Supreme Court.[32] 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
reconsideration (whether full or partial) or any final order or
resolution.
We thus hold that petitioners seasonably filed their notice of
appeal within the fresh period of 15 days, counted from July 22,
1998 (the date of receipt of notice denying their motion for
reconsideration). This pronouncement is not inconsistent with Rule
41, Section 3 of the Rules which states that the appeal shall be
taken within 15 days from notice of judgment or final order
appealed from. The use of the disjunctive word or signifies
disassociation and independence of one thing from another. It
should, as a rule, be construed in the sense in which it ordinarily
implies.[33] Hence, the use of or in the above provision supposes that
the notice of appeal may be filed within 15 days from the notice of
judgment or within 15 days from notice of the final order, which we
already determined to refer to the July 1, 1998 order denying the
motion for a new trial or reconsideration.

Neither does this new rule run counter to the spirit of Section
39 of BP 129 which shortened the appeal period from 30 days to 15
days to hasten the disposition of cases. The original period of
appeal (in this case March 3-18, 1998) remains and the
requirement for strict compliance still applies. The fresh period of 15
days becomes significant only when a party opts to file a motion for
new trial or motion for reconsideration. In this manner, the trial
court which rendered the assailed decision is given another
opportunity to review the case and, in the process, minimize and/or
rectify any error of judgment. While we aim to resolve cases with
dispatch and to have judgments of courts become final at some
definite time, we likewise aspire to deliver justice fairly.

In this case, the new period of 15 days eradicates the

confusion as to when the 15-day appeal period should be counted
from receipt of notice of judgment (March 3, 1998) or from receipt of
notice of final order appealed from (July 22, 1998).

To recapitulate, a party litigant may either file his notice of

appeal within 15 days from receipt of the Regional Trial Courts
decision or file it within 15 days from receipt of the order (the final
order) denying his motion for new trial or motion for
reconsideration. Obviously, the new 15-day period may be availed
of only if either motion is filed; otherwise, the decision becomes
final and executory after the lapse of the original appeal period
provided in Rule 41, Section 3.
Petitioners here filed their notice of appeal on July 27, 1998 or
five days from receipt of the order denying their motion for
reconsideration on July 22, 1998. Hence, the notice of appeal was
well within the fresh appeal period of 15 days, as already discussed.
[34]
We deem it unnecessary to discuss the applicability of Denso
(Philippines), Inc. v. IAC[35] since the Court of Appeals never even
referred to it in its assailed decision.

WHEREFORE, the petition is hereby GRANTED and the

assailed decision of the Court of Appeals REVERSED and SET
ASIDE. Accordingly, let the records of this case be remanded to the
Court of Appeals for further proceedings.

No costs.

SO ORDERED.

35A. Perfection of Appeal

[G.R. No. 132425. August 31, 1999]

THE REPUBLIC OF THE PHILIPPINES, THROUGH THE DEPARTMENT

OF EDUCATION, CULTURE AND SPORTS, represented by its
Division Superintendent Region 2, Tuguegarao, Cagayan, petitioner, vs.
COURT OF APPEALS, LUCAS TANGUILAN, JULIANA
TANGUILAN, assisted by her husband, ROBERTO TANGUILAN,
DOMINGO TANGUILAN, JUAN TANGUILAN, JOSE TANGUILAN,
CATARINA TANGUILAN, PAULINO TANGUILAN, PEDRO
TANGUILAN and INES TANGUILAN, respondents.

DECISION

BUENA, J.:

This is a petition for review on certiorari seeking the reversal and setting aside of the
decision of the Court of Appeals dated January 28, 1998 in CA-G. R. SP No. 45579 entitled The
Republic of the Philippines through the Department of Education, Culture and Sports, etc. versus
Hon. Rolando V. Salacup, et al.
 The antecedent facts of the case are as follows:

A complaint for recovery of possession and ownership with damages was filed by plaintiffs
Lucas Tanguilan, Juliana Tanguilan assisted by her husband Roberto Tanguilan, Domingo
Tanguilan, Juan Tanguilan, Jose Tanguilan, Catarina Tanguilan, Paulino Tanguilan, Pedro
Tanguilan, Digna Tanguilan, and Ines Tanguilan (herein private respondents) against the
Department of Education, Culture and Sports, represented by its Division Superintendent of
Schools of Cagayan, Region 2, Tuguegarao, Cagayan (DECS, for brevity).[1]

The parcel of land in question is designated as Lot No. 7133 of the Cadastral Survey of
Tuguegarao, Cagayan with an area of three thousand four hundred ninety-four (3494) square
meters and covered by OCT No. 2145 issued in the name of the spouses Domingo Tanguilan and
Modesta Addun.[2]

On January 18, 1996, summons was served upon the defendant DECS (petitioner herein).
Peregrino N. Alan, the Schools Division Superintendent, filed a motion for extension of time to
[3]

file a responsive answer.[4] In the order of the trial court on February 2, 1996 the motion was
granted whereby the defendant was given until February 17, 1996 within which to file its answer.
[5]

On February 22, 1996, defendant DECS filed a manifestation and motion for new period to
file answer to the complaint.[6]

On February 23, 1996, the plaintiffs moved to declare defendant DECS in default for failure
of the latter to file an answer within the period fixed by the court.[7] A hearing on the said motion
was set on March 1, 1996.[8]

On even date, in open court, an order was issued (1) finding that there is no more legal basis
to grant the motion for extension to file an answer since the same was filed after the expiration of
the original 15-day period, (2) declaring defendant in default, and (3) setting the reception of
plaintiffs evidence that afternoon.[9]

The following motions were thereafter filed by the defendant: a motion for reconsideration,
a motion to admit attached answer[11] with the corresponding answer,[12] and a rejoinder.[13] An
[10]

opposition to the motion for reconsideration[14] and an opposition to the motion to admit
answer[15]were filed by plaintiffs.

On September 10, 1996, a resolution was issued denying, for lack of merit, the motion for
reconsideration.[16]

On October 29, 1996, the trial court rendered its decision,[17] the dispositive portion of which
reads:
WHEREFORE, in view of the foregoing, this Court renders judgment in favor of the
plaintiffs and against the defendant by:

1. Ordering the defendant to pay the amount of TWO THOUSAND (P2,000.00)

PESOS from January, 1972 up to this date representing the monthly rentals of its
occupancy or a total amount of FIVE HUNDRED SEVENTY SIX THOUSAND
(P576,000.00) PESOS;

2. To vacate the land in suit;

3. To pay attorneys fee in the amount of TWENTY THOUSAND (P20,000.00)

PESOS; and

4. Payment of costs of this suit.

IT IS SO ORDERED.[18]

A copy of the decision was received by defendant on November 5, 1996. Consequently on

November 20, 1996, a motion for reconsideration[19] was filed. An opposition thereto was filed by
plaintiffs.[20] The motion for reconsideration was denied for lack of merit in the resolution of
March 14, 1997.[21]

A motion for the issuance of a writ of execution was thereafter filed by the plaintiffs. [22] An
opposition to the said motion was filed by defendant DECS. [23] Reply to the same was
subsequently filed.[24]

A notice of appeal dated March 31, 1997 was then filed by defendant. [25] A motion to dismiss
the notice of appeal was filed.[26] Comment (re: motion to dismiss the notice of appeal and reply
to the opposition to the motion for the issuance of writ of execution)[27] and rejoinder to the
comment[28]were filed.

On August 1, 1997, a resolution was issued by the trial court dismissing the notice of appeal
for being filed out of time and ordering the issuance of a writ of execution for the enforcement of
the decision dated October 29, 1996.[29]

Subsequently a writ of execution was issued on August 21, 1997.[30]

On October 9, 1997, an Order was issued authorizing the Sheriff to withdraw the amount
garnished from the Land Bank of the Philippines to satisfy the obligation of the defendant and to
immediately deliver the same to the plaintiffs.[31]
 Accordingly a petition for certiorari and prohibition with urgent prayer for a temporary
restraining order and/or preliminary injunction was filed with the Court of Appeals docketed as
CA-G.R. SP No. 45579.[32]

After the requisite pleadings had been filed, the Court of Appeals issued its questioned
decision dated January 28, 1998 dismissing the petition for lack of merit.[33]

Hence this petition.

Petitioner assigns the following lone error:

THE HONORABLE COURT OF APPEALS ERRED GRAVELY IN RENDERING

THE QUESTIONED DECISION

The petition is without merit.

The right to appeal is not a constitutional, natural or inherent right. It is a statutory privilege
of statutory origin and, therefore, available only if granted or provided by statute. [34] As such it
may be exercised only in the manner and in accordance with the provision of law.[35]

Section 39 of Batas Pambansa Blg. 129 provides:

Sec. 39. Appeals. The period for appeal from final orders, resolutions, awards,
judgments, or decisions of any court in all cases shall be fifteen (15) days counted
from the notice of the final order, resolution, award, judgment, or decision appealed
from: x x x (Underscoring supplied)

Petitioner admits the following in the Opposition to the Motion for the Issuance of a Writ of
Execution it filed with the trial court: (1) that it should have filed its notice of appeal on March
26, 1997; (2) that the same was not filed until April 1, 1997 because from March 24-27, 1997,
Ma. Zorayda V. Tejones-Zuniga, the Associate Solicitor handling the case was in General Santos
City attending the hearing in Civil Case No. 5026 entitled Board of Liquidators v. Munsayac, et
al.; (3) that it was only around 4:00 oclock in the afternoon of March 31, 1997 that she (Tejones-
Zuniga) received the resolution denying the motion for reconsideration of the decision dated
October 29, 1996; (4) that the notice of appeal was filed two (2) days late (excluding March 27,
28, 29 and 30, being holidays).[36]

It is well-settled that failure to perfect an appeal within the period provided for by law has
the effect of rendering the decision or judgment final and executory.
 Petitioner acknowledged that the appeal was filed two (2) days after the expiration of the
period to appeal. This being the case the decision of the trial court dated October 29, 1996
became final and executory upon the expiration of the period to appeal.

Perfection of an appeal within the statutory or reglementary period is not only mandatory
but also jurisdictional and failure to do so renders the questioned decision final and executory,
and deprives the appellate court or body of jurisdiction to alter the final judgment much less to
entertain the appeal.[37] (Emphasis ours)

We can not and must not countenance the practice of asking that a final judgment or order be
set aside or be reopened every time the counsel fails to personally receive a copy thereof because
at the time it was delivered to her office she was absent therefrom. For to do so would mean that
the end to litigations would be speculative, if not dependent upon the will of the parties and/or
their lawyers.[38] Not to mention that it would result in cases dragging and clogging the already
congested dockets of the court.

Petitioner cites the ruling in Dimayacyac vs. Court of Appeals [39] to bolster its argument that
the petition for certiorari they filed before the Court of Appeals is the appropriate remedy.

We disagree. Certiorari cannot be used as a substitute for the lost or lapsed remedy of
appeal especially if such loss or lapse was occasioned by ones own neglect or error in the choice
of remedies.[40] And it is undisputed that the cause for the late filing of the notice to appeal is the
neglect of the counsel for petitioner to do so.

WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby DISMISSED.

SO ORDERED.

36A. Grounds for Annulment of a Judgment

[G.R. No. 120587. January 20, 2004]

MILAGROS M. BARCO, as the Natural Guardian and Guardian Ad

Litem of MARY JOY ANN GUSTILO, petitioner, vs. COURT OF
APPEALS (SPECIAL SIXTEENTH DIVISION), REGIONAL TRIAL
COURT (BR. 133-MAKATI), NCJR; THE LOCAL CIVIL
 REGISTRAR OF MAKATI; and NADINA G.
MARAVILLA, respondents.

DECISION

TINGA, J.:

The story behind the present petition is a portrait of dysfunction. The

familial situation of the parties is complicated, to say the least. The judicial
conferment of the status of illegitimacy on a daughter who is by law legitimate
has created a tangled braid of various legal doctrines that, like the Gordian
knot of yore, is in this case ultimately unbound through one fell swoop of the
sword.

On 24 December 1970, private respondent Nadina Maravilla (Nadina)

married Francisco Maravilla (Francisco). By February of 1977, the spouses
had opted to live separately, and in February of the following year they
[1]

obtained an ecclesiastical annulment of marriage issued by the Catholic

Diocese of Bacolod City. On 9 June 1978, Nadina gave birth to a daughter
[2]

named June Salvacion (June) in Makati, Metro Manila. Junes birth certificate
listed Francisco Maravilla as the father, and Maravilla as the childs surname.
[3]
Nadina signed the birth certificate shortly after it was accomplished.

Despite the notation in Junes birth certificate, Nadina subsequently

claimed that all along, the real father of her child was Armando Gustilo
(Gustilo), a former Congressman with whom she maintained a relationship. At
the time of Junes birth, Gustilo was married to one Consuelo Caraycong, who
would later perish in the MV Don Juan naval accident of 1981. On 21 August
[4]

1982, Nadina and Gustilo were married in the United States. This marriage
[5]

took place two and a half years before Nadinas marriage to Francisco was
alleged to have been annulled in the Philippines. On 12 March 1985, Nadina
apparently was able to obtain a judicial declaration annulling her marriage to
Francisco. [6]

On 17 March 1983, Nadina filed in her own name a Petition for Correction
of Entries in the Certificate of Birth of her daughter June with the Regional
Trial Court (RTC) of Makati. Therein, she alleged that she had been living
[7]
separately from her lawful spouse Francisco since February of 1977, and that
Gustilo was the real father of June. She claimed that she did not allow
[8]

Francisco to have any sexual congress with her within the first 20 days of the
three hundred days preceding the birth of June. She prayed that the Local
[9]

Civil Registrar of Makati be directed to correct the birth certificate of June to

the effect that the latters full name be made June Salvacion C. Gustilo, and
that the name of her father be changed from Francisco Maravilla to Armando
Gustilo. Notably, Francisco affixed his signature to the Petition signifying his
conformity thereto. [10]

On 20 March 1983. Gustilo filed a Constancia, wherein he acknowledged

June as his daughter with Nadina, and that he was posing no objection to
Nadinas petition. [11]

The Petition was docketed as SP Proc. No. M-130. On 26 July 1983, the
RTC, in accordance with Rule 108 of the Rules of Court, issued
an Order setting the case for hearing and directing that a copy of the order be
published once a week for three consecutive weeks in a newspaper of general
circulation. On 7 September 1983, Nadina filed an Amended Petition, this [12]

time impleading Francisco and Gustilo as respondents. Correspondingly, the

RTC amended the Order on 22 September 1983 to reflect the additional
impleaded parties. [13]

The Office of the Solicitor General filed a Motion to Dismiss the petition on
the ground that the RTC had no jurisdiction over the subject matter and/or the
nature of th[e] suit. They cited various jurisprudence holding that only
[14]

innocuous or clerical errors may be corrected under a Rule 108 petition for
correction of entries, and that the Petition seeks changes are substantial and
controversial in character which directly affect the filiation and legitimacy of
petitioners daughter. On 23 February 1984, the Motion to Dismiss was
[15]

denied by the RTC, which also subsequently denied a Motion for

Reconsideration thereto filed by the Solicitor General.

On 7 January 1985, the RTC issued an Order (RTC Order) granting the
petition and ordering the requested corrections to be effected. The RTC
considered the claim of Nadina that she had relied completely on her uncle
William R. Veto to facilitate the preparation of Junes birth certificate, that it
[16]
was through his inadvertence that the mistaken entries were made, and that
she was in intense physical discomfort when she had affixed her signature to
the birth certificate containing the incorrect entries. The RTC also noted that
[17]

Francisco had signified his conformity to the action by signing the original
petition, and that Gustilo had manifested through a Constancia dated 20
March 1983 that he was acknowledging June as his daughter and expressing
no objection to the petition. [18]

Gustilo died in 19 December 1986. Two estate proceedings arose from

[19]

his death, one lodged in Makati, the other in Harris County, Texas. Among
[20] [21]

the participants in both estate proceedings was Jose Vicente Gustilo (Jose
Vicente), allegedly a biological child of Gustilo. On 5 March 1993, he filed
[22]

with the Court of Appeals a Petition seeking the annulment of the

[23]

RTC Order of 7 January 1985 which had effected changes in the civil status of
June. Jose Vicente amended his Petition in July of 1993 to implead Nadina as
an indispensable party. In her Comment, Nadina countered that Jose
[24]

Vicente had not sufficiently proven that he was a child of Armando, and there
was neither extrinsic fraud or lack of jurisdiction that would justify the
annulment of the RTC Order. Nadina also pointed out that the Makati
[25]

intestate court had approved a compromise agreement wherein the parties

had agreed that the only heirs of the decedent Armando are the surviving
spouse, Nadina G. Gustilo, the daughter, June Salvacion G. Gustilo, the son,
Jose Vicente Gustilo III, and another daughter, Mary Joy Ann Gustilo.
However, this compromise agreement was subsequently voided on petition
[26]

by Jose Vicente to the Court of Appeals, on the ground that the Civil Code
prohibited compromise as to the civil status of persons. [27]

After the Court of Appeals commenced hearings on the petition, petitioner

Milagros Barco (Barco), on 11 January 1994, filed in her capacity as the
natural guardian and/or guardian ad litem of her daughter, Mary Joy Ann
Gustilo (Mary Joy), a Motion for Intervention with a Complaint-in-
Intervention attached thereto. Barco alleged that Mary Joy had a legal
[28]

interest in the annulment of the RTC Order as she was likewise fathered by
Gustilo. In her Complaint-in-Intervention, Barco claimed that she and Gustilo
had maintained a relationship since 1967, and to them was born Mary Joy in
1977. Barco also alleged that she actually moved in with Gustilo after the
[29]
death of the latters wife in 1980, and maintained her affair with Gustilo until
1983, when she was purportedly supplanted by Nadina as Gustilos common-
law companion after Gustilo had become gravely ill. [30]

After the parties had filed their respective memoranda, the Court of
Appeals rendered a Decision on 13 March 1995, dismissing both
the Petition and the Complaint-in-Intervention. The appellate court held that
[31]

neither Jose Vicente nor Barco were able to establish the existence of lack of
jurisdiction and extrinsic fraud, the two grounds that would justify the
annulment of a final judgment. It ruled that while Jose Vicente and Barco
[32]

had not been made parties in the Petition for Correction, the subsequent
notice and publication of the Order setting the case for hearing served as
constructive notice to all parties who might have an interest to participate in
the case. The publication of the Order conferred upon the RTC the jurisdiction
to try and decide the case. It also found no merit in Jose Vicentes claim that
[33]

he learned of the RTC Order only in November of 1992, pointing out that as
early as 1987, he filed a pleading with the intestate court alleging that Junes
birth certificate had been amended to record the name of her true father. [34]

Only the intervenor Barco filed a Motion for Reconsideration of the Court
[35]

of Appeals Decision, which the appellate court denied on 16 May 1995.

Thus, Barco filed the present Petition for Review on Certiorari seeking the
[36]

reversal of the Court of Appeals Decision and the annulment of the 1985
RTC Order.

Before this Court, Barco assails that RTC Order on the ground of lack of
jurisdiction.That was the same ground she invoked in the Court of Appeals.
Specifically, she raises the following issues:

1) Barco should have been made a party to the Nadinas petition and the
failure to implead her deprived the RTC of jurisdiction;

2) This RTC could not have entertained Nadinas petition, since the Courts
ruling in a long line of cases, beginning with Republic v. Valencia, that a[37]

petition for correction of entries in the civil register is not limited to innocuous
or clerical mistakes, applies only to citizenship cases;
 3) The petition for correction was filed out of time, as Article 263 of the
Civil Code of 1950 sets a prescriptive period for impugning the legitimacy of a
child which is one year from the recording of birth in the Civil Registry, if the
husband should be in the same place, or in a proper case, any of his heirs;

4) Nadinas petition should have been treated as a petition for change of

name, which can only be filed by the person whose name is sought to be
changed;

5) The RTC Order contravenes the legal presumption that children born
during the pendency of a marriage are legitimate and the rule that legitimate
children cannot adopt the surname of a person who is not their father; and

6) The RTC should have excluded as hearsay the Constancia allegedly

signed by Gustilo and that the surrounding circumstances under which it was
issued gave reason to doubt its authenticity and credibility.

Interestingly, the questions that Barco raised would tickle the fancies of
erudite civilists yearning for a challenge. However, the ultimate resolution of
this case hinges on whether the de rigueur requirements of the extraordinary
remedy of annulment of judgment have been satisfied.

First, a brief revisit of the action to annul judgment.

The recourse is equitable in character, allowed only in exceptional cases,

as where there is no available or other adequate remedy. Annulment of
judgments is a remedy long authorized and sanctioned in our jurisdiction. As [38]

far back as 1918, this Court in Banco Espaol-Filipino v. Palanca recognized

[39]

the availability of a direct attack of a final judgment on the ground that it is void
for want of jurisdiction. In Reyes v. Datu we held that the validity of a final
[40]

judgment or order of the court may be attacked only by a direct action or

proceeding or by motion in another case on the ground of lack of jurisdiction.

Yet, it was only in the 1997 Rules of Civil Procedure that for the first time
the procedure for the annulment of judgments or final orders and resolutions
in civil cases of regional trial courts, through a petition before the Court of
Appeals, was formally provided. Rule 47 thereof under which the procedure
was integrated incorporates settled jurisprudence on annulment of judgment.

Statutory basis for the remedy was laid way back in 1980, with the
enactment of The Judiciary Reorganization Act of 1980. Section 9 thereof
[41]

vests in the Court of Appeals exclusive original jurisdiction over actions for
annulment of judgments of the lower courts.

Section 2, Rule 47 of the 1997 Rules of Civil Procedure explicitly provides

only two grounds for annulment of judgment, namely: extrinsic fraud and lack
of jurisdiction. This express limitation is significant since previous
jurisprudence recognized other grounds as well. The underlying reason is
[42]

traceable to the notion that annulling final judgments goes against the grain of
finality of judgment. Litigation must end and terminate sometime and
somewhere, and it is essential to an effective administration of justice that
once a judgment has become final the issue or cause involved therein should
be laid to rest. The basic rule of finality of judgment is grounded on the
fundamental principle of public policy and sound practice that at the risk of
occasional error, the judgment of courts and the award of quasi-judicial
agencies must become final at some definite date fixed by law. Even if the
[43]

rule on annulment of judgment is grounded on equity, the relief is of an

extraordinary character, and not as readily available as the remedies obtaining
to a judgment that is not yet final.

There are two aspects of jurisdiction which are vital for disposition of this
case - jurisdiction over the nature of the action or subject matter, and
jurisdiction over the parties. Barco claims that the RTC failed to satisfy both
[44]

aspects of jurisdiction. She opines that the RTC did not acquire jurisdiction
over the parties due to the failure to implead her as a party to the petition for
correction. On the other hand, the remaining issues that she raises as errors
put into question whether the RTC had jurisdiction over the subject matter of
Nadinas petition.

We shall first tackle the question of whether the RTC had acquired
jurisdiction over Barco and all other indispensable parties to the petition for
correction.
 The essential requisite for allowing substantial corrections of entries in the
civil registry is that the true facts be established in an appropriate adversarial
proceeding. This is embodied in Section 3, Rule 108 of the Rules of Court,
which states:

Section 3. Parties When cancellation or correction of an entry in the civil register is

sought, the civil registrar and all persons who have or claim any interest which would
be affected thereby shall be made parties to the proceeding.

The Court of Appeals held that jurisdiction over the parties was properly
acquired through the notice by publication effected in conformity with Section
4 of Rule 108. Barco assails this holding and claims that the failure to implead
her as a party to the petition for correction deprived the RTC of jurisdiction.

Undoubtedly, Barco is among the parties referred to in Section 3 of Rule

108. Her interest was affected by the petition for correction, as any judicial
determination that June was the daughter of Armando would affect her wards
share in the estate of her father. It cannot be established whether Nadina
knew of Mary Joys existence at the time she filed the petition for correction.
Indeed, doubt may always be cast as to whether a petitioner under Rule 108
would know of all the parties whose interests may be affected by the granting
of a petition. For example, a petitioner cannot be presumed to be aware of all
the legitimate or illegitimate offsprings of his/her spouse or paramour. The fact
that Nadina amended her petition to implead Francisco and Gustilo indicates
earnest effort on her part to comply with Section 3 as quoted above.

Yet, even though Barco was not impleaded in the petition, the Court of
Appeals correctly pointed out that the defect was cured by compliance with
Section 4, Rule 108, which requires notice by publication, thus:

Section 4. Upon the filing of the petition, the court shall, by order, fix the time and
place for the hearing of the same, and cause reasonable notice thereof to be given to
the persons named in the petition. The court shall also cause the order to be published
once a week for three (3) consecutive weeks in a newspaper of general circulation in
the province.
 The purpose precisely of Section 4, Rule 108 is to bind the whole world to
the subsequent judgment on the petition. The sweep of the decision would
cover even parties who should have been impleaded under Section 3, Rule
108, but were inadvertently left out. The Court of Appeals correctly noted:

The publication being ordered was in compliance with, and borne out by the Order of
January 7, 1985. The actual publication of the September 22, 1983 Order, conferred
jurisdiction upon the respondent court to try and decide the case. While nobody
appeared to oppose the instant petition during the December 6, 1984 hearing, that did
not divest the court from its jurisdiction over the case and of its authority to continue
trying the case. For, the rule is well-settled, that jurisdiction, once acquired continues
until termination of the case.[45]

Verily, a petition for correction is an action in rem, an action against a thing

and not against a person. The decision on the petition binds not only the
[46]

parties thereto but the whole world. An in rem proceeding is validated

[47] [48]

essentially through publication. Publication is notice to the whole world that

[49]

the proceeding has for its object to bar indefinitely all who might be minded to
make an objection of any sort against the right sought to be established. It is [50]

the publication of such notice that brings in the whole world as a party in the
case and vests the court with jurisdiction to hear and decide it. [51]

Since the RTC properly acquired jurisdiction over the parties, what
remains for determination is whether it had acquired jurisdiction over Nadinas
cause of action. It should be emphasized that jurisdiction over the nature of
the action or the subject matter is conferred by law. This Courts recent holding
in Durisol Philippines, Inc. v. Court of Appeals is instructive in this regard:
[52]

[I]t should be stressed that in a petition for annulment of judgment based on lack of
jurisdiction, petitioner must show not merely an abuse of jurisdictional discretion but
an absolute lack of jurisdiction. Lack of jurisdiction means absence of or no
jurisdiction, that is, the court should not have taken cognizance of the petition because
the law does not vest it with jurisdiction over the subject matter.[53]

The question of whether a court has jurisdiction over the subject matter
can be answered simply by determining if on the basis of the complaint or
petition the court has, under the law, the power to hear and decide the case.
Barcos remaining arguments are to be tested against this standard.

One of Barcos striking assertions is that the general rule still is that the
jurisdiction of the court in the correction of entries in the civil register is limited
to innocuous or clerical mistakes, as what she insinuates as the apparent
contrary holding in Republic v. Valencia applies only to citizenship cases.
[54]

Since the promulgation of the Valencia ruling in 1986 the Court has
repeatedly ruled that even substantial errors in a civil registry may be
corrected through a petition filed under Rule 108, with the true facts
established and the parties aggrieved by the error availing themselves of the
appropriate adversarial proceeding. Barco, by seeking to limit the application
of the Valencia doctrine to citizenship cases, is flogging a dead horse. This
argument was debunked in subsequent cases, notably the recent case
[55]

of Lee v. Court of Appeals. The exhaustive disquisition therein of Justice

[56]

Sabino de Leon should preclude any further arguments on the scope of Rule
108.

The Court in Lee acknowledged that there existed a line of decided cases,
some of them decided after Valencia, stating that Rule 108 cannot be used to
effect substantial corrections in entries of the civil register. The doctrine was
[57]

traced back to the 1954 case of Ty Kong Tin v. Republic, the rationale of [58]

which the Court reevaluated in Lee:

We venture to say now that the above pronouncements proceed from a wrong premise,
that is, the interpretation that Article 412 pertains only to clerical errors of a harmless
or innocuous nature, effectively excluding from its domain, and the scope of its
implementing rule, substantial changes that may affect nationality, status, filiation and
the like. Why the limited scope of Article 412? Unfortunately, Ty Kong Tin does not
satisfactorily answer this question except to opine that the procedure contemplated in
Article 412 is summary in nature and cannot, therefore, cover cases involving
controversial issues. Subsequent cases have merely echoed the Ty Kong Tin doctrine
without, however, shedding light on the matter.

The flaw in Ty Kong Tin lies in its theory that Article 412 contemplates a summary
procedure.
First of all, Article 412 is a substantive law that provides as follows:

No entry in a civil register shall be changed or corrected, without a judicial order.

It does not provide for a specific procedure of law to be followed except to say that
the corrections or changes must be effected by judicial order. As such, it cannot be
gleaned therefrom that the procedure contemplated for obtaining such judicial order is
summary in nature.

Secondly, it is important to note that Article 412 uses both the terms corrected and
changed. In its ordinary sense, to correct means to make or set right; to remove the
faults or errors from while to change means to replace something with something else
of the same kind or with something that serves as a substitute. The provision neither
qualifies as to the kind of entry to be changed or corrected nor does it distinguish on
the basis of the effect that the correction or change may have.Hence, it is proper to
conclude that all entries in the civil register may be changed or corrected under Article
412. What are the entries in the civil register? We need not go further than Articles
407 and 408 of the same title to find the answer.

Art. 407. Acts, events and judicial decrees concerning the civil status of persons shall
be recorded in the civil register.

Art. 408. The following shall be entered in the civil register:

(1) Births; (2) marriages; (3) deaths; (4) legal separations; (5) annulments of
marriage; (6) judgments declaring marriages void from the beginning; (7)
legitimations; (8) adoptions; (9) acknowledgments of natural children; (10)
naturalization; (11) loss, or (12) recovery of citizenship; (13) civil
interdiction; (14) judicial determination of filiation; (15) voluntary
emancipation of a minor; and (16) changes of name.

It is beyond doubt that the specific matters covered by the preceding provisions
include not only status but also nationality. Therefore, the Ty Kong Tin
pronouncement that Article 412 does not contemplate matters that may affect civil
status, nationality or citizenship is erroneous. This interpretation has the effect of
isolating Article 412 from the rest of the articles in Title XVI, Book I of the New Civil
Code, in clear contravention of the rule of statutory construction that a statute must
always be construed as a whole such that the particular meaning to be attached to any
word or phrase is ascertained from the context and the nature of the subject treated.
[59]

Lee also points out that Republic Act No. 9048, enacted in 2001, has
effectively changed the nature of a proceeding under Rule 108. Under this
new law, clerical or typographical errors and change of first name or nickname
may now be corrected or changed by the concerned city or municipal registrar
or consul general, without need of any judicial order. The obvious effect is to
remove from the ambit of Rule 108 the correction or changing of such errors
in entries of the civil register. Hence, what is left for the scope of operation of
Rule 108 are substantial changes and corrections in entries of the civil
register.
[60]

It may be very well said that Republic Act No. 9048 is Congresss response to the
confusion wrought by the failure to delineate as to what exactly is that so-called
summary procedure for changes or corrections of a harmless or innocuous nature as
distinguished from that appropriate adversary proceeding for changes or corrections of
a substantial kind. For we must admit that though we have constantly referred to an
appropriate adversary proceeding, we have failed to categorically state just what that
procedure is. Republic Act No. 9048 now embodies that summary procedure while
Rule 108 is that appropriate adversary proceeding. xxx[61]

Republic Act No. 9048 may not find application in this case, yet it is clearly
another indicium of how entrenched the Valencia ruling is today. With the
enactment of the law, the legislature acknowledged the potency of the ruling.
To repeat, substantial corrections to the civil status of persons recorded in the
civil registry may be effected through the filing of a petition under Rule 108.
Any further attempt to limit the scope of application of Rule 108 runs against
the wall of judicial precedent cemented by legislative affirmation.

Next, Barco argues that the petition for correction had prescribed under
the Civil Code; and that the petition for correction should be treated as a
petition for change of name which can only be filed by the person whose
name is sought to be changed. These arguments can be decided jointly. They
both are not well taken as they cannot allude to a lack of jurisdiction that
would render the RTC Order subject to annulment.
 Assuming arguendo that Nadinas petition for correction had prescribed
and/or that the action seeking the change of name can only be filed by the
party whose name is sought to be changed, this does not alter the reality that
under the law the Makati RTC had jurisdiction over the subject matter of the
petition for correction. The Judiciary Reorganization Act of 1980, the
applicable law at the time, clearly conferred on the Makati RTC exclusive
original jurisdiction in all civil actions in which the subject of the litigation is
incapable of pecuniary estimation. In complementation of grant of
[62]

jurisdiction, Section 1 of Rule 108 provides that the verified petition to the
cancellation or correction of any entry relating thereto should be filed with the
Court of First Instance (now Regional Trial Court) of the province where the
corresponding civil registry is located.

Prescription and lack of capacity to bring action cannot be ignored by a

court of law in properly resolving an action, to the extent that a finding that any
of these grounds exist will be sufficient to cause the dismissal of the action.
Yet, the existence of these grounds does not oust the court from its power
[63]

to decide the case. Jurisdiction cannot be acquired through, waived, enlarged

or diminished by any act or omission of the parties. Contrariwise, lack of
[64]

capacity to sue and prescriptions as grounds for dismissal of an action may

generally be rendered unavailing, if not raised within the proper period. [65]

It thus follows that assuming that the petition for correction had prescribed,
or that Nadina lacked the capacity to file the action which led to the change of
her daughters name, the fact that the RTC granted the Order despite the
existence of these two grounds only characterizes the decision as erroneous.
An erroneous judgment is one though rendered according to the course and
practice of the court is contrary to law. It is not a void judgment.
[66] [67]

As for Barcos remaining arguments, they similarly fail, as the worst they
could establish is that the RTC Order is an erroneous judgment.

Barco correctly notes, however, that the RTC erred in directing that the
name of Nadinas daughter be changed from June Salvacion Maravilla to June
Salvacion Gustilo. Following the trial courts determination that Gustilo was the
father of June, but prescinding from the conclusive presumption of legitimacy
for the nonce assuming it could be done, the child would obviously be
illegitimate. The applicable laws mandate that June, as an illegitimate child,
should bear the surname of her mother, and not the father. From another[68]

perspective, the RTCs error in ordering the change of name is merely an error
in the exercise of jurisdiction which neither affects the courts jurisdiction over
Nadinas petition nor constitutes a ground for the annulment of a final
judgment. As the seminal case of Herrera v. Barretto explains:
[69]

xxx Jurisdiction should therefore be distinguished from the exercise of jurisdiction.

The authority to decide a cause at all, and not the decision rendered therein, is what
makes up jurisdiction. Where there is jurisdiction of the person and subject matter xxx
the decision of all other questions arising in the case is but an exercise of that
jurisdiction.
[70]

In the same vein, it is of no moment that the RTC Order contravenes the
legal presumption accorded June of being the legitimate child of Francisco
and Nadina. A review of the records does indicate the insufficiency of the
[71]

evidence offered to defeat the presumption, against which the only evidence
admissible is the physical impossibility of the husbands having access to his
wife within the first one hundred and twenty days of the three hundred which
preceded the birth of the child. It seems that the RTC relied primarily on the
[72]

testimony of Nadina in adjudging that Gustilo, and not Francisco, was the
father of June. Yet, Article 256 of the Civil Code renders ineffectual any
pronouncement against legitimacy made by the mother. The testimony [73]

proffered by the mother has no probative value as regards Junes

paternity. The RTCs cognizance of Gustilos Constanciamight likewise be
subject to critical scrutiny. But the Court is now precluded from reviewing the
[74]

RTCs appreciation of the evidence, however erroneous it may be, because

the Order is already final. The RTCs possible misappreciation of evidence is
again at most, an error in the exercise of jurisdiction, which is different from
lack of jurisdiction. These purported errors do not extend to the competence of
the RTC to decide the matter and as such does not constitute a valid ground
to annul the final order.

The law sanctions the annulment of certain judgments which, though final,
are ultimately void. Annulment of judgment is an equitable principle not
because it allows a party-litigant another opportunity to reopen a judgment
that has long lapsed into finality but because it enables him to be discharged
from the burden of being bound to a judgment that is an absolute nullity to
begin with. The inevitable conclusion is that the RTC Order, despite its
apparent flaws, is not null and void, and thus cannot be annulled.
Consequently, the Court of Appeals committed no reversible error in issuing
the assailed decision.

This Court has been constrained in the past to leave erroneous decisions
as they were. Our fealty to justice in its pristine form the upholding of right
[75]

over wrong is equipoised with our adherence to due process, and the rules
that emanate from that principle. The Court takes great care in drafting rules
of procedure so that the axioms that govern the legal battleground may live up
to Justice Frankfurters approximation of due process as the embodiment of
the sporting idea of fair play. Due process dictates that litigants be afforded a
[76]

reasonable opportunity to attack erroneous judgments and be shielded from

the adverse effects of void judgments. Due process likewise demands that a
party, after trekking the long road of litigation should be permitted to enjoy the
fruits of an auspicious final judgment. Absent any convincing demonstration
that the RTC Order is patently null and void, there is no reason under law and
jurisprudence to upset it, given the reality that it has long become final.

WHEREFORE, the above premises considered, the Petition is hereby

dismissed for lack of merit. Costs against petitioner.

SO ORDERED

36B. Grounds for Annulment of a Judgment

THIRD DIVISION

HON. DOMINADOR F. G.R. No. 121165

CARILLO, Presiding Judge,
R.T.C. XI-19 Digos, Davao del Present:
Sur, BONIFACIO J.
GUYOT, Clerk of Court and QUISUMBING, J., Chairperson,
 Provincial Sheriff of Davao del CARPIO,
Sur, ALFREDO C. CARPIO MORALES,
SENOY, Deputy Prov. Sheriff TINGA, and
assigned to R.T.C. XI-19 Digos, VELASCO, JR., JJ.
Davao del Sur, MARCOS D.
RISONAR, JR., Registrar of
Deeds of Davao del Sur,
and MARIA
GONZALES, Petitioners,

- versus -

HON. COURT OF APPEALS, Promulgated:

MARIA PAZ
DABON andROSALINA September 26, 2006
DABON, Respondents.

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

RESOLUTION
QUISUMBING, J.:

For review on certiorari is the Decision[1] dated February 22, 1995 of the
Court of Appeals in CA-G.R. SP No. 23687, which annulled and set aside the
judgment and orders of the Regional Trial Court (RTC) of Digos, Davao del Sur,
Branch 19, in Civil Case No. 2647, Maria Gonzales v. Priscilla Manio and Jose
Manio.

The facts as culled from the records are as follows:

On April 2, 1990, petitioner Maria Gonzales filed a complaint against the spouses
Priscilla and Jose Manio with the RTC of Digos, Davao del Sur, Branch
19. Gonzales sought the execution of the deed of sale in her favor for the property
she bought from Priscilla Manio. She also asked for damages and attorneys fees.
 Gonzales alleged that on April 26, 1988, she paid P10,000 to Priscilla as
downpayment on the P400,000 purchase price of the lot with improvements, since
Priscilla had a special power of attorney from her son, Aristotle, the owner of the
land. They also agreed that the balance would be paid within three months after the
execution of the deed of sale. Yet, after the lapse of the period and despite repeated
demands, Priscilla did not execute the deed of sale. Thus, Gonzales filed an action
for specific performance against the spouses Priscilla and Jose Manio.

For failure to file an Answer, the Manios were declared in default and
Gonzales was allowed to present evidence ex parte.

After trial, the court rendered judgment in favor of Gonzales, which we

quote verbatim:
WHEREFORE, premises considered, it is hereby ordered that
judgment is rendered in favor of plaintiff and against defendants,
ordering defendants:

1) To execute the final deed of sale and transfer of the property

mentioned in paragraph 4 above to plaintiff, or should the
defendant refuse to execute the deed of sale, the Clerk of Court
be directed to execute the same upon plaintiffs depositing of
the sum of P390,000.00 with the Clerk of Court as complete
and valid payment thereof to defendant Priscilla Manio;

2) To pay plaintiff the sum of P100,000.00 for moral damages

and P50,000.00 for exemplary damages;

3) To pay plaintiff the sum of P50,000.00 for attorneys fees

plus P700.00 per appearances of plaintiffs counsel before this
Honorable Court as appearance fees;

4) To pay plaintiff the sum of P5,000.00 as litigation expenses.

SO ORDERED.[2]

Gonzales deposited with the Clerk of Court the P390,000 balance of the price and
filed a motion for execution.[3] She later withdrew the motion because the trial
courts decision was not properly served on the defendants. After numerous delays,
the sheriff finally personally served a copy of the decision on Priscilla on August 4,
1990, at the ungodly hour of 12:00 midnight at Sitio Wilderness, Barangay Mount
Carmel, Bayugan, Agusan del Sur.[4]

Since there was no appeal, the trial courts decision became final and
executory.But the writ of execution was not served upon the defendants, since
according to the Sheriffs Return, the defendants could not be located. The sheriff,
likewise, informed the trial court that the money judgment could be readily
satisfied by the petitioners cash deposit should the trial court grant the motion to
release the cash deposit filed by Gonzales.[5]

Subsequently, Gonzales filed a motion asking that the Clerk of Court be

directed to be the one to execute a deed of conveyance. Gonzales also filed a
motion to withdraw the cash deposit for the balance of the price to offset the award
of damages. The trial court granted both motions but later modified the amount
to P207,800.

On October 29, 1990, Gonzales filed a petition for the nullification of the Owners
Duplicate Certificate of Title No. 16658 and asked that a new certificate be issued
in her name to give effect to the deed of conveyance since Priscilla refused to
relinquish the owners duplicate copy.

Consequently, the trial court declared the owners duplicate copy of TCT No.
16658 void, and directed the City Civil Registrar to issue a new certificate of title
in favor of Gonzales. The orders were reiterated in subsequent orders and TCT No.
T-23690 was issued under the name of Gonzales.

On December 14, 1990, herein respondents Maria Paz Dabon and Rosalina Dabon,
claiming to have bought the aforementioned lot from Aristotle Manio filed before
the Court of Appeals a petition for annulment of judgment and orders of the RTC
in Civil Case No. 2647. The case was docketed as CA G.R. SP No. 23687,
entitled Maria Paz Dabon and Rosalina Dabon v. Hon. Dominador F. Carillo,
Presiding Judge, RTC Branch 19, Digos, Davao del Sur; Bonifacio J. Guyot, Clerk
of Court and Provincial Sheriff of Davao del Sur; Alfredo C. Senoy, Deputy Prov.
Sheriff assigned to RTC Br. 19, Digos, Davao del Sur; Marcos D. Risonar, Jr.,
Registrar of Deeds of Davao del Sur; and Maria Gonzales. The Dabons alleged
therein that the judgment of the trial court was void ab initio because of lack of
jurisdiction over their persons, as the real parties in interest, and that they were
fraudulently deprived of their right to due process. They also prayed for a
Temporary Restraining Order and for Preliminary Prohibitory Injunction against
Gonzales. They gave the trial court a notice of their action for the annulment of the
judgment and subsequent orders in Civil Case No. 2647.[6]

Meanwhile, Gonzales filed before the trial court a motion for the issuance of
a writ of possession. The Dabons filed an opposition on the following grounds: (1)
The writ of possession cannot be enforced because the defendants named in the
writ, the Manios, were no longer in possession of the property; (2) They had
bought the lot with the improvements therein and had taken possession, although
they had not yet registered their ownership with the Register of Deeds; and (3) The
court did not acquire jurisdiction over them as the real parties in interest.

On December 17, 1990, the Court of Appeals, without giving due course to the
petition, issued a resolution restraining the trial court from implementing its
Decision dated June 19, 1990[7] and its subsequent orders thereto in Civil Case No.
2647 until further notice from the Court of Appeals. It also required Gonzales to
file her Comment.[8]

The Court of Appeals in a resolution denied the application for preliminary

injunction and appointed a commissioner to receive evidence of the parties.[9]

Following the Commissioners report, the Court of Appeals found that (1) the
contract of sale between Gonzales and Priscilla was unenforceable because the sale
was evidenced by a handwritten note which was vague as to the amount and which
was not notarized; (2) the trial court did not acquire jurisdiction over the
indispensable parties; and (3) the proceedings were attended with fraud. The Court
of Appeals nullified the judgment of the RTC in Civil Case No. 2647 and cancelled
TCT No. T-23690. The dispositive portion of said judgment reads as follows:

WHEREFORE, premises considered, the questioned decision, dated

June 19, 1990 (and all orders arising therefrom), of the Regional Trial
 Court (Branch 19) in Digos, Davao del Sur is hereby ANNULLED and
SET ASIDEand the Transfer Certificate of Title No. T-23690 which was
issued thereafter declared null and void and ordered canceled. Costs
against the private respondent.

SO ORDERED.[10]

On July 17, 1995, Gonzales Motion for Reconsideration was denied. Hence,
the instant petition, assigning the following errors:
I

THE HONORABLE COURT OF APPEALS ERRED IN NOT

HOLDING THAT THE PURCHASE OF THE DISPUTED PROPERTY
BY PETITIONER MARIA GONZALES FROM ARISTOTLE MANIO
THRU THE LATTERS MOTHER AND ATTORNEY-IN-FACT WAS A
VALID CONTRACT AS BETWEEN THE CONTRACTING PARTIES.

II

THE HONORABLE COURT OF APPEALS ERRED IN NOT

HOLDING THAT PETITIONER MARIA GONZALES WAS IN GOOD
FAITH IN BUYING THE DISPUTED PROPERTY FROM
ARISTOTLE MANIO THRU THE LATTERS MOTHER AND
ATTORNEY-IN-FACT.

III

THE HONORABLE COURT OF APPEALS ERRED IN NOT

APPLYING IN THE INSTANT CASE THE DOCTRINE IN
DOUBLE SALE UNDER ARTICLE 1544 OF THE CIVIL CODE OF
THE PHILIPPINES.

IV

THE HONORABLE COURT OF APPEALS GRAVELY FAILED TO

APPRECIATE THE FACT THAT PRIVATE RESPONDENTS
[PETITIONERS BELOW] CLAIM IS HIGHLY INCREDIBLE,
IMPROBABLE, AND FRAUDULENT.

V
 THE HONORABLE COURT OF APPEALS ERRED IN NOT
HOLDING THAT PRIVATE RESPONDENTS MARIA PAZ DABON
AND ROSALINA DABON HAVE NO RIGHT TO BRING THE
INSTANT SUIT.

VI
COROLLARILY, THE HONORABLE COURT OF APPEALS ERRED
IN NOT SUSTAINING PETITIONER MARIA GONZALES [PRIVATE
RESPONDENT BELOW] CLAIM FOR DAMAGES AGAINST THE
PRIVATE RESPONDENTS [PETITIONERS BELOW].[11]

Simply, the threshold issues in this petition are: (1) whether the Court of
Appeals erred in declaring the sale of the land to Gonzales by Priscilla invalid; (2)
whether there was basis to annul the judgment of the RTC; and (3) whether the
Dabons could file the action for annulment of judgment.

We shall discuss the issues jointly.

Prefatorily, we note that named as petitioners are Presiding Judge

Dominador Carillo; Bonifacio Guyot, Alfredo Senoy, Clerk of Court and Deputy
Sheriff of the same court, respectively; Marcos D. Risonar, Registrar of Deeds of
Davao del Sur; and Maria Gonzales. In our view, petitioner Gonzales apparently
had impleaded Judge Carillo, Guyot, Senoy and Risonar in this petition by
merely reversing the designation of said public officers among the respondents
below in the Court of Appeals, as now among the petitioners herein. Since they
are not interested parties and would not benefit from any of the affirmative
reliefs sought, only Maria Gonzales remains as the genuine party-petitioner in
the instant case.

We now come to the main issues: (1) Was there sufficient basis to annul the
judgment in Civil Case No. 2647? (2) Are the Dabons proper parties to file the
petition for annulment of judgment?

Petitioner Gonzales contends that the respondents do not have standing

before the Court of Appeals to file a petition for annulment of the judgment in
Civil Case No. 2647 because respondents were not parties therein. Petitioner
maintains that respondents have no right that could be adversely affected by the
judgment because they are not the owners of the property. Petitioner claims that the
Court of Appeals should have applied the doctrine of double sale to settle the issue
of ownership and declare her the true owner of the property. Petitioner concludes
that respondents not being the owners and are not real parties in interest in the
complaint for specific performance have no right to bring the action for annulment
of the judgment. According to petitioner Gonzales, she did not implead Aristotle as
defendant in Civil Case No. 2647 since a decision against Priscilla, Aristotles
attorney-in-fact, would bind Aristotle also.

Respondents (Maria Paz and Rosalina Dabon) now insist that they are
parties in interest as buyers, owners and possessors of the contested land and
that they had been fraudulently deprived of their day in court during the
proceedings in the trial court in Civil Case No. 2647. They have no remedy in
law other than to file a case for the annulment of judgment of the trial court in
said case.

Petitioner Gonzales should be reminded of Section 3 of Rule 3 of the Rules

on Civil Procedure which explicitly states that an action should be brought against
the real party in interest,[12] and in case the action is brought against the agent, the
action must be brought against an agent acting in his own name and for the benefit
of an undisclosed principal without joining the principal, except when the contract
involves things belonging to the principal.[13] The real party in interest is the party
who would be benefited or injured by the judgment or is the party entitled to the
avails of the suit. We have held that in such a situation, an attorney-in-fact is not a
real party in interest and that there is no law permitting an action to be brought by
and against an attorney-in-fact.[14]

Worth stressing, the action filed by Gonzales before the RTC is for specific
performance to compel Priscilla to execute a deed of sale, involving real property
which, however, does not belong to Priscilla but to Aristotle Manio, the son of
Priscilla. The complaint only named as defendant Priscilla, joined by her spouse,
yet Priscilla had no interest on the lot and can have no interest whatever in any
judgment rendered. She was not acting in her own name, nor was she acting for the
benefit of an undisclosed principal. The joinder of all indispensable parties is a
condition sine qua non of the exercise of judicial powers, and the absence of
indispensable party renders 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.[15] Accordingly, the failure to implead Aristotle Manio as defendant renders
all proceedings in the Civil Case No. 2647, including the order granting the
cancellation of TCT No. 16658 and issuance of a new title, null and void.

It is settled that a person need not be a party to the judgment sought to be

annulled.[16] What is essential is that he can prove his allegation that the judgment
was obtained by fraud or collusion and he would be adversely affected thereby,
[17]
because if fully substantiated by preponderance of evidence, those allegations
could be the basis for annulment of the assailed judgment.

In the present case, even if respondents were not parties to the specific
performance case, any finding that there was extrinsic fraud in the institution of the
complaint, i.e. exclusion of the real party in interest, and collusion between
petitioner and Sheriff Senoy, would adversely affect the respondents ownership and
thus, could be their basis for annulment of the judgment.

Pertinently, Section 2 of Rule 47 of the Rules on Civil Procedure explicitly

provides the two grounds for annulment of judgment, namely: extrinsic fraud and
lack of jurisdiction.[18]

There is extrinsic fraud when a party has been prevented by fraud or

deception from presenting his case. Fraud is extrinsic where it prevents a party
from having a trial or from presenting his entire case to the court, or where it
operates upon matters pertaining not to the judgment itself but to the manner in
which it is procured. The overriding consideration when extrinsic fraud is alleged
is that the fraudulent scheme of the prevailing litigant prevented a party from
having his day in court.[19] It must be distinguished from intrinsic fraud which
refers to acts of a party at a trial which prevented a fair and just determination of
the case, and which could have been litigated and determined at the trial or
adjudication of the case.[20]
 In its Decision dated February 22, 1995, the Court of Appeals found that
indices of fraud attended the case before the trial court: First, the plaintiff
deliberately excluded the Dabons as party to the case despite knowledge that the
Dabons had alleged that they had bought the land from Aristotle. Second, the
Sheriffs Return was suspiciously served on a Saturday, at midnight, on August 4,
1990. Third, the trial court ordered the plaintiff to deposit the full payment of
property, but subsequently ordered its withdrawal. Lastly, there was no notice
given to the person named in the certificate of title which Gonzales wanted to be
annulled.

Of the indices of fraud cited by the Court of Appeals, the failure to comply
with the notification requirement in the petition for the cancellation of title
amounts to extrinsic fraud. Under the Property Registration Decree, all parties in
interest shall be given notice.[21] There is nothing in the records that show Gonzales
notified the actual occupants or lessees of the property. Further, the records
show that Gonzales had known of the sale of the land by Aristotle to the Dabons
and despite her knowledge, the former did not include the Dabons in her petition
for the annulment of title. Deliberately failing to notify a party entitled to notice
also constitutes extrinsic fraud.[22] This fact is sufficient ground to annul the order
allowing the cancellation of title in the name of Gonzales.

Likewise, under Rule 47, a judgment is void for lack of jurisdiction over the
persons of the real parties in interest, i.e., Aristotle Manio and the Dabons.

Lastly, petitioner insists that the contract of sale between her and Priscilla
was valid and enforceable because under the provision on double sale,[23] she
owned the land because she bought the lot on April 26, 1988, while the same was
allegedly sold to the Dabons on October 19, 1989. In our view, the doctrine on
double sale holds no relevance in this case. The pertinent article of the Civil Code
provides:
ART. 1544. If the same thing should have been sold to different
vendees, the ownership shall be transferred to the person who may have
first possession thereof in good faith, if it should be movable property.
 Should it be immovable property, the ownership shall belong to
the person acquiring it who in good faith recorded it in the Registry of
Property.

Should there be no inscription, the ownership shall pertain to the

person who in good faith was first in possession; and in the absence
thereof; to the person who presents the oldest title, provided there is
good faith.

Otherwise stated, where it is immovable property that is the subject of a

double sale, ownership shall be transferred (1) to the person acquiring it who in
good faith first recorded it in the Registry of Property; (2) in default thereof, to the
person who in good faith was first in possession; and (3) in default thereof, to the
person who presents the oldest title, provided there is good faith. The requirement
of the law is two-fold: acquisition in good faith and registration in good faith.[24]

At this juncture, we must emphasize that the action for annulment of

judgment under Rule 47 of the Rules of Court does not involve the merits of the
final order of the trial court.[25] The issue of whether before us is a case of double
sale is outside the scope of the present petition for review. The appellate court only
allowed the reception of extraneous evidence to determine extrinsic fraud. To
determine which sale was valid, review of evidence is necessary. This we cannot do
in this petition. An action for annulment of judgment is independent of the case
where the judgment sought to be annulled is rendered [26] and is not an appeal of the
judgment therein.[27]

The extraneous evidence presented to the appellate court cannot be used to

supplant the evidence in the records of the specific performance case because the
extraneous evidence was not part of the records on the merits of the case. Again,
the extraneous evidence was only allowed merely to prove the allegations of
extrinsic fraud. Accordingly, we hold that the issue of ownership of the subject real
property cannot be addressed in this petition for review.

Annulment of judgment is not a relief to be granted indiscriminately by the

courts. It is a recourse equitable in character and allowed only in exceptional cases
as where there is no available or other adequate remedy.[28] This case falls under
said exception. In this case, where it was found that the trial court did not have
jurisdiction over the real parties in interest, and that notices were deliberately not
given, amount to extrinsic fraud. The Court of Appeals did not err in granting the
annulment of the judgment in Civil Case No. 2647 and the orders subsequent thereto,
for lack of jurisdiction and extrinsic fraud.

WHEREFORE, the petition is DENIED for lack of merit. The assailed

Decision dated February 22, 1995 of the Court of Appeals in CA-G.R. SP No.
23687, is AFFIRMED. Costs against petitioner Maria Gonzales.

SO ORDERED.

37A. Dismissal of an Appeal

[G.R. No. 137761. April 6, 2000]

GABRIEL LAZARO and the heirs of FLORENCIA PINEDA and EVA

VIERNES, petitioners, vs. COURT OF APPEALS and Spouses JOSE and
ANITA ALESNA, respondents. brando

DECISION

PANGANIBAN, J.:

Failure to pay docket and other lawful fees within the prescribed period is a
ground for the dismissal of an appeal. This rule cannot be suspended by the
mere invocation of "the interest of substantial justice." Procedural rules may
be relaxed only in exceptionally meritorious cases.

The Case

Before us is a Petition for Certiorari under Rule 65 assailing two Resolution,

dated July 31, 1998 and December 28, 1998, both promulgated by the Court
of Appeals (CA) in CA-G.R. CV No. 60094. In the first Resolution, the CA
[1]

ruled:
 "For resolution is a motion to reconsider this Court's Resolution
dismissing the appeal for failure of appellants [herein private
respondents] to pay the prescribed docketing fees pursuant to
Section 4, Rule 41 of the 1997 Rules on Civil Procedure.

"x x x x x x x x x

"Copy of the judgment appealed from was received by appellants

on December 16, 1997 and their notice of appeal was filed on
December 19, 1997.

"The motion for reconsideration of this Court's Resolution was

filed on time, but the attached official receipt No. 2768290
evidencing payment of the required docketing fees was dated
June 26, 1998, almost six (6) months after the last day to file
notice of appeal. However, appellants prayed that this Court's
June 17, 1998 resolution be set aside, lifted, and this appeal
reinstated, citing interest of substantial justice.

"In the light of the foregoing, appellants' June 26, 1998 motion is
hereby GRANTED." [2]

In its second Resolution, the CA denied reconsideration in this wise:

"For all the foregoing, there being no cogent or compelling reason

to warrant reconsideration of this court's resolution dated July 31,
1998, the motion of appellees is hereby DENIED." micks
[3]

The Facts

Before the Regional Trial Court (RTC) of Bayombong, Nueva Vizcaya (Branch
27), Spouses Jose and Anita Alesna, private respondents herein, filed a civil
action for annulment of title, reconveyance and damages (with prayer for
preliminary injunction) against Petitioners Gabriel Lazaro and the heirs of
[4]

Florencia Pineda and Eva Viernes.

After trial, the RTC rendered judgment in favor of the petitioners. Thereafter,
the private respondents filed a Notice of Appeal before the trial court.[5]
In a Resolution dated June 17, 1998, the CA dismissed the appeal for failure
[6]

of herein private respondents to pay the required docket fees within the
prescribed period. Thereafter, it issued its first assailed Resolution dated July
31, 1998 granting their Motion for Reconsideration and reinstating the appeal.

Subsequently, the petitioners also filed their own Motion for Reconsideration
assailing the said Resolution. As earlier stated, the CA denied their Motion.

Hence, this Petition. [7]

Ruling of the Court of Appeals

In reinstating the appeal despite the failure of herein private respondents to

pay the docket fees within the prescribed period, the Court of Appeals invoked
"the interest of substantial justice." It did not elaborate however. No specific
circumstance or any other explanation was cited in support of its ruling. nigella

Issue

In their memorandum, petitioners submit for the consideration of the Court this
lone question: "x x x [H]as the respondent appellate court acted without or in
excess of jurisdiction, and/or with grave abuse of discretion in issuing the
questioned Resolutions dated July 31, 1998 and December 28, 1998"? [8]

This Court's Ruling

The Petition is meritorious.

Main Issue: Timely Payment of CA Docket Fees

The Rules of Court, as amended, specifically provides that appellate court

docket and other lawful fees should be paid within the period for taking an
appeal. Hence, Section 4 of Rule 41 reads:

"Section 4. Appellate court docket and other lawful fees. -- Within

the period for taking an appeal, the appellant shall pay to the
[9]

clerk of the court which rendered the judgment or final order

appealed from, the full amount of the appellate court docket and
 other lawful fees. Proof of payment of said fees shall be
transmitted to the appellate court together with the original record
or the record on appeal."

Contrary to the submission of private respondents that the aforecited rule is

merely directory, the payment of the docket and other legal fees within the
prescribed period is both mandatory and jurisdictional. Section 1 (c), Rule 50
of the Rules of Court provides: "Failure of the appellant to pay the docket and
other fees as provided in Section 4 of Rule 41" is a ground for the dismissal of
the appeal. Indeed, it has been held that failure of the appellant to conform
with the rules on appeal renders the judgment final and executory. Verily, the
[10]

right to appeal is a statutory right and one who seeks to avail of that right must
comply with the statute or the rule.[11]

In the present case, the private respondents failed to pay the required docket
fees within the reglementary period. In fact, the Court notes that they paid the
fees only after the CA had dismissed the appeal, or six months after the filing
of the Notice of Appeal. Clearly, existing jurisprudence and the Rules mandate
that the appeal should be dismissed. Sc

The appellate court nonetheless reinstated the appeal "in the interest of
substantial justice." But as earlier observed, it did not cite any specific
circumstance or any other explanation in support of its ruling. For their part,
private respondents failed to offer a satisfactory explanation why they paid the
docket fees six months after the prescribed period. Indeed, neither they nor
the Court of Appeals showed fraud, accident, mistake, excusable negligence,
or any other reason to justify the suspension of the aforecited rule. [12]

We must stress that the bare invocation of "the interest of substantial justice"
is not a magic wand that will automatically compel this Court to suspend
procedural rules. "Procedural rules are not to be belittled or dismissed simply
because their non-observance may have resulted in prejudice to a party's
substantive rights. Like all rules, they are required to be followed except only
for the most persuasive of reasons when they may be relaxed to relieve a
litigant of an injustice not commensurate with the degree of his
thoughtlessness in not complying with the procedure prescribed." The Court
[13]

reiterates that rules of procedure, especially those prescribing the time within
which certain acts must be done, "have oft been held as absolutely
indispensable to the prevention of needless delays and to the orderly and
speedy discharge of business. x x x The reason for rules of this nature is
because the dispatch of business by courts would be impossible, and
intolerable delays would result, without rules governing practice x x x. Such
rules are a necessary incident to the proper, efficient and orderly discharge of
judicial functions." Indeed, in no uncertain terms, the Court held that the said
[14]

rules may be relaxed only in "exceptionally meritorious cases." In this case, [15]

the CA and the private respondents failed to show that this case is one such
exception.

WHEREFORE, the Petition is hereby GRANTED. The Court of Appeals'

assailed Resolutions, dated July 31, 1998 and December 28, 1998, are SET
ASIDE. The Decision of the Regional Trial Court of Bayombong, Nueva
Vizcaya (Branch 27) in Civil Case No.4058 is
declared FINAL and EXECUTORY. No pronouncement as to costs.

SO ORDERED.

38A. Form of Decision rendered by the Appellate Court.

G.R. No. 166051 April 8, 2008

SOLID HOMES, INC., petitioner,

vs.
EVELINA LASERNA and GLORIA CAJIPE, represented by PROCESO F. CRUZ, respondents.

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil
Procedure seeking to annul, reverse and set aside (1) the Decision1 dated 21 July 2004 of the Court
of Appeals in CA-G.R. SP No. 82153, which denied and dismissed the Petition filed before it by the
petitioner for lack of merit; and (2) the Resolution2 dated 10 November 2004 of the same court,
which denied the petitioners Motion for Reconsideration.

The factual antecedents of this case are as follows:

On 1 April 1977, respondents Evelina Laserna and Gloria Cajipe, represented by their attorney-in-
fact, Proceso F. Cruz, as buyers, entered into a Contract to Sell3 with petitioner Solid Homes, Inc.
(SHI), a corporation engaged in the development and sale of subdivision lots, as seller. The subject
of the said Contract to Sell was a parcel of land located at Lot 3, Block I, Phase II, Loyola Grand
Villas, Quezon City, with a total area of 600 square meters, more or less. The total contract price
agreed upon by the parties for the said parcel of land was P172,260.00, to be paid in the following
manner: (1) the P33,060.00 down payment should be paid upon the signing of the contract; and (2)
the remaining balance of P166,421.884 was payable for a period of three years at a monthly
installment of P4,622.83 beginning 1 April 1977. The respondents made the down payment and
several monthly installments. When the respondents had allegedly paid 90% of the purchase price,
they demanded the execution and delivery of the Deed of Sale and the Transfer Certificate of Title
(TCT) of the subject property upon the final payment of the balance. But the petitioner did not
comply with the demands of the respondents.

The respondents whereupon filed against the petitioner a Complaint for Delivery of Title and
Execution of Deed of Sale with Damages, dated 28 June 1990, before the Housing and Land Use
Regulatory Board (HLURB). The same was docketed as HLURB Case No. REM-073090-4511. In
their Complaint, respondents alleged that as their outstanding balance was only P5,928.18, they
were already demanding the execution and delivery of the Deed of Sale and the TCT of the subject
property upon final payment of the said amount. The petitioner filed a Motion to Admit
Answer,5 together with its Answer6 dated 17 September 1990, asserting that the respondents have
no cause of action against it because the respondents failed to show that they had complied with
their obligations under the Contract to Sell, since the respondents had not yet paid in full the total
purchase price of the subject property. In view of the said non-payment, the petitioner considered the
Contract to Sell abandoned by the respondents and rescinded in accordance with the provisions of
the same contract.

On 7 October 1992, HLURB Arbiter Gerardo L. Dean rendered a Decision7 denying respondents
prayer for the issuance of the Deed of Sale and the delivery of the TCT. He, however, directed the
petitioner to execute and deliver the aforesaid Deed of Sale and TCT the moment that the purchase
price is fully settled by the respondents. Further, he ordered the petitioner to cease and desist from
charging and/or collecting fees from the respondents other than those authorized by Presidential
Decree (P.D.) No. 9578 and similar statutes.9

Feeling aggrieved, the petitioner appealed10 the aforesaid Decision to the HLURB Board of
Commissioners. The case was then docketed as HLURB Case No. REM-A-1298.

On 10 August 1994, the HLURB Board of Commissioners rendered a Decision, 11 modifying the 7
October 1992 Decision of HLURB Arbiter Dean. The decretal portion of the Boards Decision reads:

WHEREFORE, in view of the foregoing, the [D]ecision of [HLURB] Arbiter Gerardo Dean dated 07
October 1992 is hereby MODIFIED to read as follows:

1. [Herein respondent]12 is hereby directed to pay the balance of P11,585.41 within the (sic)
thirty (30) days from finality of this [D]ecision.
 2. [Herein petitioner] is hereby directed to execute the necessary deed of sale and
deliver the TCT over the subject property immediately upon full payment.

3. [Petitioner] is hereby directed to cease and desist from charging and/or collecting fees
other than those authorized by P.D. 957 and other related laws. 13 (Emphasis supplied).

Petitioner remained unsatisfied with the Decision of the HLURB Board of Commissioners, thus, it
appealed the same before the Office of the President, wherein it was docketed as O.P. Case No.
5919.

After evaluating the established facts and pieces of evidence on record, the Office of the President
rendered a Decision14 dated 10 June 2003, affirming in toto the 10 August 1994 Decision of the
HLURB Board of Commissioners. In rendering its Decision, the Office of the President merely
adopted by reference the findings of fact and conclusions of law contained in the Decision of the
HLURB Board of Commissioners.

Resultantly, petitioner moved for the reconsideration15 of the 10 June 2003 Decision of the Office of
the President. However, in an Order16 dated 9 December 2003, the Office of the President denied the
same.

The petitioner thereafter elevated its case to the Court of Appeals by way of Petition for Review
under Rule 4317 of the 1997 Revised Rules of Civil Procedure, docketed as CA-G.R. SP No. 82153,
raising the following issues, to wit: (1) the Honorable Office of the President seriously erred in merely
adopting by reference the findings and conclusions of the HLURB Board of Commissioners in
arriving at the questioned [D]ecision; and (2) the Honorable Office of the President seriously erred in
not dismissing the complaint for lack of cause of action. 18

On 21 July 2004, the appellate court rendered a Decision denying due course and dismissing the
petitioners Petition for Review for lack of merit, thus affirming the Decision of the Office of the
President dated 10 June 2003, viz:

WHEREFORE, in view of the foregoing, the instant [P]etition is hereby DENIED DUE
COURSE and DISMISSED for lack of merit.19 (Emphasis supplied).

Petitioner moved for reconsideration of the aforesaid Decision but, it was denied by the Court of
Appeals in a Resolution dated 10 November 2004.

Hence, this Petition.

Petitioner raises the following issues for this Courts resolution:

I. WHETHER OR NOT THE [HONORABLE] COURT OF APPEALS SERIOUSLY ERRED IN

HOLDING THAT THE DECISION OF THE OFFICE OF THE PRESIDENT, WHICH MERELY
ADOPTS BY REFERENCE THE FINDINGS AND CONCLUSIONS OF THE BOARD OF
COMMISSIONERS OF THE [HLURB], IS IN ACCORDANCE WITH THE MANDATE OF THE
 CONSTITUTION THAT THE DECISION SHOULD BE BASED ON THE FINDINGS OF
FACTS AND LAW TO ARRIVE AT A DECISION; AND

II. WHETHER OR NOT THE [HONORABLE] COURT OF APPEALS SERIOUSLY ERRED IN

NOT REVERSING THE DECISION OF THE OFFICE OF THE PRESIDENT CONSIDERING
THAT THE COMPLAINT OF THE RESPONDENTS LACKS CAUSE OF ACTION.20

In its Memorandum,21 the petitioner alleges that the Decision of the Office of the President, as
affirmed by the Court of Appeals, which merely adopted by reference the Decision of the HLURB
Board of Commissioners, without a recitation of the facts and law on which it was based, runs afoul
of the mandate of Section 14, Article VIII of the 1987 Philippine Constitution which provides that: "No
decision shall be rendered by any court without expressing therein clearly and distinctly the facts and
law on which it is based." The Office of the President, being a government agency, should have
adhered to this principle.

Petitioner further avers that a full exposition of the facts and the law upon which a decision was
based goes to the very essence of due process as it is intended to inform the parties of the factual
and legal considerations employed to support a decision. The same was not complied with by the
Office of the President when it rendered its one-page Decision dated 10 June 2003. Without a
complete statement in the judgment of the facts proven, it is not possible to pass upon and
determine the issues in the case, inasmuch as when the facts are not supported by evidence, it is
impossible to administer justice to apply the law to the points argued, or to uphold the rights of the
litigant who has the law on his side.

Lastly, petitioner argues that the Complaint filed against it by the respondents stated no cause of
action because the respondents have not yet paid in full the purchase price of the subject property.
The right of action of the respondents to file a case with the HLURB would only accrue once they
have fulfilled their obligation to pay the balance of the purchase price for the subject property.
Hence, the respondents Complaint against the petitioner should have been dismissed outright by
the HLURB for being prematurely filed and for lack of cause of action.

The Petition is unmeritorious.

The constitutional mandate that, "no decision shall be rendered by any court without expressing
therein clearly and distinctly the facts and the law on which it is based," 22 does not preclude the
validity of "memorandum decisions," which adopt by reference the findings of fact and conclusions of
law contained in the decisions of inferior tribunals.23In fact, in Yao v. Court of Appeals,24 this Court
has sanctioned the use of "memorandum decisions," a specie of succinctly written decisions by
appellate courts in accordance with the provisions of Section 40,25 B.P. Blg. 129, as amended,26 on
the grounds of expediency, practicality, convenience and docket status of our courts. This Court
likewise declared that "memorandum decisions" comply with the constitutional mandate. 27

This Court found in Romero v. Court of Appeals28 that the Court of Appeals substantially complied
with its constitutional duty when it adopted in its Decision the findings and disposition of the Court of
Agrarian Relations in this wise:
 "We have, therefore, carefully reviewed the evidence and made a re-assessment of the
same, and We are persuaded, nay compelled, to affirm the correctness of the trial courts
factual findings and the soundness of its conclusion. For judicial convenience and
expediency, therefore, We hereby adopt, by way of reference, the findings of facts and
conclusions of the court a quo spread in its decision, as integral part of this Our decision."
(Underscoring supplied)

In Francisco v. Permskul,29 this Court similarly held that the following memorandum decision of the
Regional Trial Court (RTC) of Makati City did not transgress the requirements of Section 14, Article
VIII of the 1997 Philippine Constitution:

"MEMORANDUM DECISION

After a careful perusal, evaluation and study of the records of this case, this Court hereby
adopts by reference the findings of fact and conclusions of law contained in the decision of
the Metropolitan Trial Court of Makati, Metro Manila, Branch 63 and finds that there is no
cogent reason to disturb the same.

"WHEREFORE, judgment appealed from is hereby affirmed in toto." (Underscoring

supplied.)

Hence, incorporation by reference is allowed if only to avoid the cumbersome reproduction of the
decision of the lower courts, or portions thereof, in the decision of the higher court. 30

However, also in Permskul,31 this Court laid down the conditions for the validity of memorandum
decisions, to wit:

The memorandum decision, to be valid, cannot incorporate the findings of fact and the
conclusions of law of the lower court only by remote reference, which is to say that
the challenged decision is not easily and immediately available to the person reading
the memorandum decision. For the incorporation by reference to be allowed, it must
provide for direct access to the facts and the law being adopted, which must be
contained in a statement attached to the said decision. In other words, the memorandum
decision authorized under Section 40 of B.P. Blg. 129 should actually embody the
findings of fact and conclusions of law of the lower court in an annex attached to and
made an indispensable part of the decision.

It is expected that this requirement will allay the suspicion that no study was made of the
decision of the lower court and that its decision was merely affirmed without a proper
examination of the facts and the law on which it is based. The proximity at least of the
annexed statement should suggest that such an examination has been undertaken. It
is, of course, also understood that the decision being adopted should, to begin with,
comply with Article VIII, Section 14 as no amount of incorporation or adoption will rectify
its violation.
 The Court finds necessary to emphasize that the memorandum decision should be sparingly
used lest it become an addictive excuse for judicial sloth. It is an additional condition for
the validity that this kind of decision may be resorted to only in cases where the facts
are in the main accepted by both parties and easily determinable by the judge and
there are no doctrinal complications involved that will require an extended discussion
of the laws involved. The memorandum decision may be employed in simple litigations
only, such as ordinary collection cases, where the appeal is obviously groundless and
deserves no more than the time needed to dismiss it.

xxxx

Henceforth, all memorandum decisions shall comply with the requirements herein set
forth both as to the form prescribed and the occasions when they may be rendered.
Any deviation will summon the strict enforcement of Article VIII, Section 14 of the
Constitution and strike down the flawed judgment as a lawless disobedience.32

In the case at bar, we quote verbatim the Decision dated 10 June 2003 of the Office of the President
which adopted by reference the Decision dated 10 August 1994 of the HLURB Board of
Commissioners:

This resolves the appeal filed by [herein petitioner] Solid Homes, Inc. from the [D]ecision of
the [HLURB] dated [10 August 1994].

After a careful study and thorough evaluation of the records of the case, this Office is
convinced by the findings of the HLURB, thus we find no cogent reason to depart from the
assailed [D]ecision. Therefore, we hereby adopt by reference the findings of fact and
conclusions of law contained in the aforesaid [D]ecision, copy of which is hereto attached as
"Annex A."

WHEREFORE, premises considered, judgment appealed from is hereby AFFIRMED in

toto.33 (Emphasis supplied).

It must be stated that Section 14, Article VIII of the 1987 Constitution need not apply to decisions
rendered in administrative proceedings, as in the case a bar. Said section applies only to
decisions rendered in judicial proceedings. In fact, Article VIII is titled "Judiciary," and all of its
provisions have particular concern only with respect to the judicial branch of government. Certainly, it
would be error to hold or even imply that decisions of executive departments or administrative
agencies are oblige to meet the requirements under Section 14, Article VIII.

The rights of parties in administrative proceedings are not violated as long as the constitutional
requirement of due process has been satisfied.34 In the landmark case of Ang Tibay v. CIR, we laid
down the cardinal rights of parties in administrative proceedings, as follows:

1) The right to a hearing, which includes the right to present ones case and submit evidence
in support thereof.
 2) The tribunal must consider the evidence presented.

3) The decision must have something to support itself.

4) The evidence must be substantial.

5) The decision must be rendered on the evidence presented at the hearing, or at least
contained in the record and disclosed to the parties affected.

6) The tribunal or body or any of its judges must act on its or his own independent
consideration of the law and facts of the controversy and not simply accept the views of a
subordinate in arriving at a decision.

7) The board or body should, in all controversial question, render its decision in such a
manner that the parties to the proceeding can know the various issues involved, and the
reason for the decision rendered.35

As can be seen above, among these rights are "the decision must be rendered on the evidence
presented at the hearing, or at least contained in the record and disclosed to the parties affected;"
and that the decision be rendered "in such a manner that the parties to the proceedings can know
the various issues involved, and the reasons for the decisions rendered." Note that there is no
requirement in Ang Tibay that the decision must express clearly and distinctly the facts and the law
on which it is based. For as long as the administrative decision is grounded on evidence, and
expressed in a manner that sufficiently informs the parties of the factual and legal bases of the
decision, the due process requirement is satisfied.

At bar, the Office of the President apparently considered the Decision of HLURB as correct and
sufficient, and said so in its own Decision. The brevity of the assailed Decision was not the product
of willing concealment of its factual and legal bases. Such bases, the assailed Decision noted, were
already contained in the HLURB decision, and the parties adversely affected need only refer to the
HLURB Decision in order to be able to interpose an informed appeal or action for certiorari under
Rule 65.

However, it bears observation that while decisions of the Office of the President need not comply
with the constitutional requirement imposed on courts under Section 14, Article VIII of the
Constitution, the Rules of Court may still find application, although suppletory only in character and
apply only whenever practicable and convenient. There is no mandate that requires the application
of the Rules of Court in administrative proceedings.

Even assuming arguendo that the constitutional provision invoked by petitioner applies in the instant
case, the decision of the OP satisfied the standards set forth in the case of Permskul.

Firstly, the Decision of the Office of the President readily made available to the parties a copy of the
Decision of the HLURB Board of Commissioners, which it adopted and affirmed in toto, because it
was attached as an annex to its Decision.
Secondly, the findings of fact and conclusions of law of the HLURB Board of Commissioners have
been embodied in the Decision of the Office of the President and made an indispensable part
thereof. With the attachment of a copy of the Decision of the HLURB Board of Commissioners to the
Decision of the Office of the President, the parties reading the latter can also directly access the
factual and legal findings adopted from the former. As the Court of Appeals ratiocinated in its
Decision dated 21 July 2004, "the facts narrated and the laws concluded in the Decision of the
HLURB Board of Commissioners should be considered as written in the Decision of the Office of the
President. It was still easy for the parties to determine the facts and the laws on which the decision
were based. Moreover, through the attached decision, the parties could still identify the issues that
could be appealed to the proper tribunal."36

Thirdly, it was categorically stated in the Decision of the Office of the President that it conducted a
careful study and thorough evaluation of the records of the present case and it was fully convinced
as regards the findings of the HLURB Board of Commissioners.

And lastly, the facts of the present case were not contested by the parties and it can be easily
determined by the hearing officer or tribunal. Even the respondents admitted that, indeed, the total
purchase price for the subject property has not yet been fully settled and the outstanding balance is
yet to be paid by them. In addition, this case is a simple action for specific performance with
damages, thus, there are neither doctrinal complications involved in this case that will require an
extended discussion of the laws involved.

Accordingly, based on close scrutiny of the Decision of the Office of the President, this Court rules
that the said Decision of the Office of the President fully complied with both administrative due
process and Section 14, Article VIII of the 1987 Philippine Constitution.

The Office of the President did not violate petitioners right to due process when it rendered its one-
page Decision. In the case at bar, it is safe to conclude that all the parties, including petitioner, were
well-informed as to how the Decision of the Office of the President was arrived at, as well as the
facts, the laws and the issues involved therein because the Office of the President attached to and
made an integral part of its Decision the Decision of the HLURB Board of Commissioners, which it
adopted by reference. If it were otherwise, the petitioner would not have been able to lodge an
appeal before the Court of Appeals and make a presentation of its arguments before said court
without knowing the facts and the issues involved in its case.

This Court also quotes with approval the following declaration of the Court of Appeals in its Decision
on the alleged violation of petitioners right to due process:

The contention of the [herein] petitioner that the said [D]ecision runs afoul to the
Constitutional provision on due process cannot be given credence. The case already had
gone through the Offices of the HLURB Arbiter and the Board of Commissioners
where petitioner was given the opportunity to be heard and present its evidence,
before the case reached the Office of the President which rendered the assailed
[D]ecision after a thorough evaluation of the evidence presented. What is important is
that the parties were given the opportunity to be heard before the [D]ecision was
rendered. To nullify the assailed [D]ecision would in effect be a violation of the
 Constitution because it would deny the parties of the right to speedy disposition of
cases.37

Petitioners assertion that respondents complaint filed with the HLURB lacked a cause of action
deserves scant consideration.

Section 7 of the 1987 HLURB Rules of Procedure states that:

Section 7. Dismissal of the Complaint or Opposition. The Housing and Land Use
Arbiter (HLA) to whom a complaint or opposition is assigned may immediately dismiss the
same for lack of jurisdiction or cause of action. (Emphasis supplied).

It is noticeable that the afore-quoted provision of the 1987 HLURB Rules of Procedure used the
word "may" instead of "shall," meaning, that the dismissal of a complaint or opposition filed before
the HLURB Arbiter on the ground of lack of jurisdiction or cause of action is simply permissive and
not directive. The HLURB Arbiter has the discretion of whether to dismiss immediately the
complaint or opposition filed before him for lack of jurisdiction or cause of action, or to still proceed
with the hearing of the case for presentation of evidence. HLURB Arbiter Dean in his Decision
explained thus:

This Office is well aware of instances when complainants/petitioners fail, through excusable
negligence, to incorporate every pertinent allegations (sic) necessary to constitute a cause of
action. We will not hesitate to go outside of the complaint/petition and consider other
available evidences if the same is necessary to a judicious, speedy, and inexpensive
settlement of the issues laid before us or when there are reasons to believe that the
[com]plaints are meritorious. "Administrative rules should be construed liberally in order to
PROMOTE THEIR OBJECT AND ASSIST THE PARTIES IN OBTAINING A JUST, SPEEDY
AND INEXPENSIVE DETERMINATION OF THEIR RESPECTIVE CLAIMS AND
DEFENSES" (Mangubat vs. de Castro, 163 SCRA 608). 38 (Emphasis supplied).

Given the fact that the respondents have not yet paid in full the purchase price of the subject
property so they have yet no right to demand the execution and delivery of the Deed of Sale and the
TCT, nevertheless, it was still within the HLURB Arbiters discretion to proceed hearing the
respondents complaint in pursuit of a judicious, speedy and inexpensive determination of the
parties claims and defenses.

Furthermore, the Court of Appeals already sufficiently addressed the issue of lack of cause of action
in its Decision, viz:

The Offices below, instead of dismissing the complaint because of the clear showing that
there was no full payment of the purchase price, decided to try the case and render
judgment on the basis of the evidence presented. The complaint of the respondents does
not totally lack cause of action because of their right against the cancellation of the
contract to sell and the forfeiture of their payments due to non-payment of their
monthly amortization.
 xxxx

The HLURB Arbiter in his [D]ecision, stated that it is undisputed that the contract price is not
yet fully paid. This was affirmed by the HLURB Board of Commissioners and the Office of the
President. No less than the respondents admitted such fact when they contended that they
are willing to pay their unpaid balance. Without full payment, the respondents have no right
to compel the petitioner to execute the Deed of Sale and deliver the title to the property. xxx.

xxxx

Lastly, notwithstanding such failure to pay the monthly amortization, the petitioner
cannot consider the contract as cancelled and the payments made as forfeited.

Section 24, PD 957 provides:

"Section 24. Failure to pay installments. - The rights of the buyer in the event of
his failure to pay the installments due for reasons other than the failure of the owner
or developer to develop the project shall be governed by Republic Act No. 6552. x x
x."

Section 4, RA 6552 or the Realty Installment Buyer Protection Act provides:

"Section 4. In case where less than two years of installments were paid, the seller
shall give the buyer a grace period of not less than sixty days from the date the
installment became due. If the buyer fails to pay the installments due at the
expiration of the grace period, the seller may cancel the contract after thirty days
from receipt by the buyer of the notice of cancellation or the demand for rescission of
the contract by a notarial act."

It is therefore clear from the above provisions that the petitioner cannot consider the
[C]ontract to [S]ell as cancelled. The requirements above should still be complied
with.39 (Emphasis supplied).

Hence, during the hearing conducted by HLURB Arbiter Dean, it became apparent that respondents
cause of action against petitioner is not limited to the non-execution and non-delivery by petitioner of
the Deed of Sale and TCT of the subject property, which is dependent on their full payment of the
purchase price thereof; but also the wrongful rescission by the petitioner of the Contract to Sell. By
virtue thereof, there is ample basis for HLURB Arbiter Dean not to dismiss respondents complaint
against petitioner and continue hearing and resolving the case.

As a final point. Based on the records of this case, respondents have tendered payment in the
amount of P11,584.41,40 representing the balance of the purchase price of the subject property, as
determined in the 10 August 1994 Decision of the HLURB Board of Commissioners, and affirmed by
both the Office of the President and the Court of Appeals. However, the petitioner, without any
justifiable reason, refused to accept the same. In Ramos v. Sarao,41 this Court held that tender of
payment is the manifestation by debtors of their desire to comply with or to pay their obligation. If the
creditor refuses the tender of payment without just cause, the debtors are discharged from
the obligation by the consignation of the sum due. Consignation is made by depositing the
proper amount with the judicial authority, before whom the tender of payment and the announcement
of the consignation shall be proved. All interested parties are to be notified of the consignation.
Compliance with these requisites is mandatory.42 In the case at bar, after the petitioner refused to
accept the tender of payment made by the respondents, the latter failed to make any consignation of
the sum due. Consequently, there was no valid tender of payment and the respondents are not yet
discharged from the obligation to pay the outstanding balance of the purchase price of the subject
property.

Since petitioner did not rescind the Contract to Sell it executed with the respondents by a notarial
act, the said Contract still stands. Both parties must comply with their obligations under the said
Contract. As ruled by the HLURB Board of Commissioners, and affirmed by the Office of the
President and the Court of Appeals, the respondents must first pay the balance of the purchase price
of the subject property, after which, the petitioner must execute and deliver the necessary Deed of
Sale and TCT of said property.

WHEREFORE, premises considered, the instant Petition is hereby DENIED. Costs against the
petitioner.

SO ORDERED.

39A. Forcible Entry and Unlawful Detainer.

G.R. No. 169793 September 15, 2006

VICTORIANO M. ENCARNACION, petitioner,

vs.
NIEVES AMIGO, respondent.

DECISION

YNARES-SANTIAGO, J.:

This petition for review assails the June 30, 2005 Decision1 of the Court of Appeals in CA-G.R. SP
No. 73857, ordering the remand of Civil Case No. Br. 20-1194 to the Regional Trial Court of
Cauayan, Isabela, Branch 20, for further proceedings.

The antecedent facts are as follows:

Petitioner Victoriano M. Encarnacion is the registered owner of Lot No. 2121-B-1, consisting of 100
square meters and covered by TCT No. T-256650; and Lot No. 2121-B-2 consisting of 607 square
meters with TCT No. T-256651, located at District 1, National Hi-way, Cauayan, Isabela. Said two
lots originally form part of Lot No. 2121, a single 707 square meter track of land owned by Rogelio
Valiente who sold the same to Nicasio Mallapitan on January 18, 1982. On March 21, 1985,
Mallapitan sold the land to Victoriano Magpantay. After the death of the latter in 1992, his widow,
Anita N. Magpantay executed an Affidavit of Waiver2 on April 11, 1995 waving her right over the
property in favor of her son-in-law, herein petitioner, Victoriano Encarnacion. Thereafter, the latter
caused the subdivision of the land into two lots3 and the issuance of titles in his name on July 18,
1996.4

Respondent Nieves Amigo allegedly entered the premises and took possession of a portion of the
property sometime in 1985 without the permission of the then owner, Victoriano Magpantay. Said
occupation by respondent continued even after TCT Nos. T-256650 and T-256651 were issue to
petitioner.

Consequently, petitioner, through his lawyer sent a letter5 dated Febuary 1, 2001 demanding that the
respondent vacate the subject property. As evidenced by the registry return receipt, the demand
letter was delivered by registered mail to the respondent on February 12, 2001. Notwithstanding
receipt of the demand letter, respondent still refused to vacate the subject property. Thereafter, on
March 2, 2001, petitioner filed a complaint6 for ejectment, damages with injunction and prayer for
restraining order with the Municipal Trial Court in Cities of Isabela which was docketed as CV-01-
030. In his Answer, respondent alleged that he has been in actual possession and occupation of a
portion of the subject land since 1968 and that the issuance of Free Patent and titles in the name of
petitioner was tainted with irregularities.7

On October 24, 2001, the Municipal Trial Court in Cities rendered judgment, which reads:

WHERE[FO]RE, there being a preponderance of evidence, a JUDGMENT is hereby

rendered in favor of the plaintiff VICTORIANO M. ENCARNACION and against the
defendant NIEVES AMIGOE (sic) as follows:

a) ORDERING the defendant to vacate the portion of the parcels of land described in
Transfer Certificates of Title Nos. T-256650 and T-256651 he is now occupying and
surrender it to the plaintiff;

b) ORDERING the defendant to pay the plaintiff the sum of FIVE THOUSAND PESOS
(P5,000) as attorney's fees, and

c) ORDERING the defendant to pay rentals equivalent [to] P500.00 per month from
February, 2001 until the portion of the land occupied by him is surrendered to the plaintiff.

COSTS against the defendant.

SO ORDERED.8

On appeal, the Regional Trial Court of Cauayan, Isabela, Branch 20, ruled as follows:

WHEREFORE, judgment is hereby rendered dismissing the case on the ground that as the
Municipal Court had no jurisdiction over the case, this Court acquired no appellate
jurisdiction thereof. Costs against plaintiff-appellee.
 SO ORDERED.9

Aggrieved, petitioner filed a petition for review10 under Rule 42 of the Rules of Court before the Court
of Appeals which promulgated the assailed Decision remanding the case to the Regional Trial Court.
The dispositive portion thereof reads:

WHEREFORE, premises considered, this case is hereby REMANDED to Branch 20,

Regional Trial Court of Cauayan, Isabela for further proceedings.

No costs.

SO ORDERED.11

Hence the present petition raising the sole issue:

[WHETHER] THE COURT OF APPEALS ERRED IN HOLDING THAT THE PROPER

ACTION IN THIS CASE IS ACCION PUBLICIANA AND NOT UNLAWFUL DETAINER AS
DETERMINED BY THE ALLEGATIONS IN THE COMPLAINT FILED BY PETITIONER.12

The petition lacks merit.

In this jurisdiction, the three kinds of actions for the recovery of possession of real property are:

1. Accion interdictal, or an ejectment proceeding which may be either that for forcible entry
(detentacion) or unlawful detainer (desahucio), which is a summary action for recovery of
physical possession where the dispossession has not lasted for more than one year, and
should be brought in the proper inferior court;

2. Accion publiciana or the plenary action for the recovery of the real right of possession,
which should be brought in the proper Regional Trial Court when the dispossession has
lasted for more than one year; and

3. Accion reinvindicatoria or accion de reivindicacion, which is an action for the recovery of

ownership which must be brought in the proper Regional Trial Court.13

Based on the foregoing distinctions, the material element that determines the proper action to be
filed for the recovery of the possession of the property in this case is the length of time of
dispossession. Under the Rules of Court, the remedies of forcible entry and unlawful detainer are
granted to a person deprived of the possession of any land or building by force, intimidation, threat,
strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any
land or building is unlawfully withheld after the expiration or termination of the right to hold
possession by virtue of any contract, express or implied, or the legal representatives or assigns of
any such lessor, vendor, vendee, or other person. These remedies afford the person deprived of the
possession to file at any time within one year after such unlawful deprivation or withholding of
possession, an action in the proper Municipal Trial Court against the person or persons unlawfully
withholding or depriving of possession, or any person or persons claiming under them, for the
restitution of such possession, together with damages and costs.14 Thus, if the dispossession has not
lasted for more than one year, an ejectment proceeding is proper and the inferior court acquires
jurisdiction. On the other hand, if the dispossession lasted for more than one year, the proper action
to be filed is an accion publiciana which should be brought to the proper Regional Trial Court.

After a careful evaluation of the evidence on record of this case, we find that the Court of Appeals
committed no reversible error in holding that the proper action in this case is accion publiciana; and
in ordering the remand of the case to the Regional Trial Court of Cauayan, Isabela, Branch 20, for
further proceedings.

Well settled is the rule that jurisdiction of the court over the subject matter of the action is determined
by the allegations of the complaint at the time of its filing, irrespective of whether or not the plaintiff is
entitled to recover upon all or some of the claims asserted therein. What determines the jurisdiction
of the court is the nature of the action pleaded as appearing from the allegations in the complaint.
The averments therein and the character of the relief sought are the ones to be consulted. 15 On its
face, the complaint must show enough ground for the court to assume jurisdiction without resort to
parol testimony.16

From the allegations in the complaint, it appears that the petitioner became the owner of the property
on April 11, 1995 by virtue of the waiver of rights executed by his mother-in-law. He filed the
complaint for ejectment on March 2, 2001 after his February 1, 2001 letter to the respondent
demanding that the latter vacate the premises remained unheeded. While it is true that the demand
letter was received by the respondent on February 12, 2001, thereby making the filing of the
complaint for ejectment fall within the requisite one year from last demand for complaints for unlawful
detainer, it is also equally true that petitioner became the owner of the subject lot in 1995 and has
been since that time deprived possession of a portion thereof. From the date of the petitioner's
dispossession in 1995 up to his filing of his complaint for ejectment in 2001, almost 6 years have
elapsed. The length of time that the petitioner was dispossessed of his property made his cause of
action beyond the ambit of an accion interdictal and effectively made it one for accion publiciana.
After the lapse of the one-year period, the suit must be commenced in the Regional Trial Court via
an accion publiciana which is a suit for recovery of the right to possess. It is an ordinary civil
proceeding to determine the better right of possession of realty independently of title. It also refers to
an ejectment suit filed after the expiration of one year from the accrual of the cause of action or from
the unlawful withholding of possession of the realty.17

Previously, we have held that if the owner of the land knew that another person was occupying his
property way back in 1977 but the said owner only filed the complaint for ejectment in 1995, the
proper action would be one for accion publiciana and not one under the summary procedure on
ejectment. As explained by the Court:

We agree with the Court of Appeals that if petitioners are indeed the owners of the subject lot
and were unlawfully deprived of their right of possession, they should present their claim
before the regional trial court in an accion publiciana or an accion reivindicatoria, and not
before the metropolitan trial court in a summary proceeding for unlawful detainer or forcible
entry. For even if one is the owner of the property, the possession thereof cannot be wrested
 from another who had been in physical or material possession of the same for more than
one year by resorting to a summary action for ejectment. 18

Hence, we agree with the Court of Appeals when it declared that:

The respondent's actual entry on the land of the petitioner was in 1985 but it was only on
March 2, 2001 or sixteen years after, when petitioner filed his ejectment case. The
respondent should have filed an accion publiciana case which is under the jurisdiction of the
RTC.

However, the RTC should have not dismissed the case.

Section 8, Rule 40 of the Rules of Court provides:

SECTION 8. Appeal from orders dismissing case without trial; lack of jurisdiction.
If an appeal is taken from an order of the lower court dismissing the case without a
trial on the merits, the Regional Trial Court may affirm or reverse it, as the case may
be. In case of affirmance and the ground of dismissal is lack of jurisdiction over the
subject matter, the Regional Trial Court, if it has jurisdiction thereover, shall try the
case on the merits as if the case was originally filed with it. In case of reversal, the
case shall be remanded for further proceedings.

If the case was tried on the merits by the lower court without jurisdiction over the
subject matter, the Regional Trial Court on appeal shall not dismiss the case if it has
original jurisdiction thereof, but shall decide the case in accordance with the
preceding section, without prejudice to the admission of amended pleadings and
additional evidence in the interest of justice.

The RTC should have taken cognizance of the case. If the case is tried on the merits
by the Municipal Court without jurisdiction over the subject matter, the RTC on appeal
may no longer dismiss the case if it has original jurisdiction thereof. Moreover, the
RTC shall no longer try the case on the merits, but shall decide the case on the basis
of the evidence presented in the lower court, without prejudice to the admission of the
amended pleadings and additional evidence in the interest of justice.19

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated June 30, 2005 in
CA-G.R. SP No. 73857 ordering the remand of Civil Case No. Br. 20-1194 to the Regional Trial Court
of Cauayan, Isabela, Branch 20, for further proceedings, is AFFIRMED.

No costs.

SO ORDERED.

40A. Contempt of Court

IN THE MATTER TO DECLARE G.R. No. 150274

IN CONTEMPT OF COURT HON.

SIMEON A. DATUMANONG in the

latters capacity as Secretary of the

Department of Public Works and

Highways.

JIMMIE F. TEL-EQUEN, Present:

Petitioner,
Panganiban, C.J. (Chairperson),
Ynares-Santiago,

Austria-Martinez,

Callejo, Sr., and

Chico-Nazario, JJ.

Promulgated:

August 4, 2006

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

DECISION
YNARES-SANTIAGO, J.:

Petitioner Jimmie F. Tel-Equen, District Engineer of Mountain

Province, DPWH Cordillera Administrative Region, filed this
present petition to cite the former Secretary Simeon A.
Datumanong of the Department of Public Works and Highways
(DPWH) in contempt of court for issuing Memorandum Order
dated October 5, 2001dismissing him from the service.

The facts of the case are as follows:

The Ombudsman Task Force on Public Works and Highways filed

with the Office of the Ombudsman an administrative complaint for
dishonesty, falsification of official documents, grave misconduct,
gross neglect of duty, violation of office rules and regulations, and
conduct prejudicial to the service against petitioner Tel-Equen and
several others, relative to the anomalous payment of P553,900.00
of the bailey bridge components owned by the government. The
case was docketed as OMB-ADM-0-91-0430.[1]

On March 28, 1994, the Administrative Adjudication Bureau

of the Office of the Ombudsman found respondents guilty of
dishonesty, falsification of public documents, misconduct and
conduct prejudicial to the best interest of the service and ordered
their dismissal from the service with accessory penalties pursuant
to Section 23 of Rule XIV, Book V of Executive Order No. 292,
otherwise known as the Revised Administrative Code of 1987.[2]
After the denial of the motions for reconsideration, three petitions
were filed before this Court which were consolidated and referred
to the Court of Appeals in light of the ruling in Fabian v.
Desierto[3] where appeals from decisions of the Office of the
Ombudsman in administrative cases should be referred to the
appellate court under Rule 43 of the Rules of Court. [4]

On March 2, 2000, the Court of Appeals affirmed with modification

the decision of the Administrative Adjudication Bureau of the
Office of the Ombudsman finding petitioner and two co-accused
guilty as charged and dismissed them from the service while the
other two respondents were exonerated from administrative
liability for lack of evidence.[5]

Petitioner, together with his two co-accused, appealed from the

decision of the Court of Appeals which was docketed as G.R. No.
144694.[6] Meanwhile, while appeal was still pending, Secretary
Datumanong issued the assailed Memorandum Order, [7]which
reads:

October 5, 2001

MEMORANDUM TO:

Messrs:

JIMMIE F. TEL-EQUEN
District Engineer

RUDY P. ANTONIO
Chief, Construction Section

All of Mountain Province Engineering District

This Department
 This is with reference to the Order of the Ombudsman
dated December 11, 1995 in OMB ADM. 0-91-0430
entitled OMB TASK FORCE ON DPWH versus JIMMIE F. TEL-
EQUEN, ET AL. (Annex A), affirming the March 28, 1994
Resolution (Annex B) in the same case finding you guilty
of having committed acts of dishonesty, falsification of
public documents, misconduct and conduct prejudicial to
the best interest of the service and recommending that
you be DISMISSED from the service together with its
accessory penalties pursuant to Sec. 23, Rule XIV, Book V
of Executive Order No. 292.

The Order was affirmed by the Court of Appeals (Eight

Division) in its Decision (Annex C) promulgated on March
02, 2000 in CA-G.R. SP No. 50324 entitled ROMULO H.
MABUNGA, ET AL. versus THE OMBUDSMAND, ET AL.

Inasmuch as the Order dismissing you from the service is

not a subject of any injunction or restraining order from
the Supreme Court, the same is immediately
executory. Wherefore, you are hereby ordered
DROPPED/DISMISSED from the service effective upon
receipt hereof.

(Sgd.) SIMEON A. DATUMANONG

Secretary

Hence, the instant petition to cite Secretary Datumanong in

contempt of court.

Petitioner contends that in issuing the Memorandum Order

despite knowledge of the pendency of G.R. No. 144694, Secretary
Datumanong committed a contumacious act, a gross and blatant
display of abuse of discretion and an unlawful interference with
the proceedings before the Court, thereby directly or indirectly
impeding, obstructing and degrading the administration of justice,
and pre-empting the Courts sole right to make a decision in
accord with the evidence and law.[8]

Petition lacks merit.

The power to declare a person in contempt of court and in

dealing with him accordingly is an inherent power lodged in courts
of justice, to be used as a means to protect and preserve the
dignity of the court, the solemnity of the proceedings therein, and
the administration of justice from callous misbehavior, offensive
personalities, and contumacious refusal to comply with court
orders.[9] This contempt power, however plenary it may seem,
must be exercised judiciously and sparingly with utmost self-
restraint with the end in view of utilizing the same for correction
and preservation of the dignity of the court, not for retaliation or
vindication.[10] It should not be availed of unless necessary in the
interest of justice.[11]
After careful consideration of the facts and circumstances of the
case, we find that the issuance of the Memorandum Order by
Secretary Datumanong was not a contumacious conduct tending,
directly or indirectly, to impede, obstruct or degrade the
administration of justice. A conduct, to be contumacious, implies
willfulness, bad faith or with deliberate intent to cause injustice,
which is not so in the case at bar. If it were otherwise, petitioner
should have been dismissed immediately after the Administrative
Adjudication Bureau of the Office of the Ombudsman rendered its
decision on March 28, 1994. It was only after the Court of Appeals
rendered its decision on March 2, 2000 affirming the dismissal
that Secretary Datumanong issued the memorandum and after
ascertaining that no injunction or restraining order was issued by
the Court.
 At most, it may be considered only an error of judgment or a
result of confusion considering the different rules regarding
execution of decisions pending appeal.

Decisions of the Civil Service Commission under the

Administrative Code of 1987[12] are immediately executory even
pending appeal because the pertinent laws [13] under which the
decisions were rendered mandate them to be so. [14] Thus, where
the legislature has seen fit to declare that the decision of the
quasi-judicial agency is immediately final and executory pending
appeal, the law expressly so provides.[15] Otherwise, execution of
decisions takes place only when they become final and executory,
like decisions rendered by the Office of the Ombudsman.

Thus, in Lapid v. Court of Appeals,[16] the Court held:

Petitioner was administratively charged for

misconduct under the provisions of R.A. 6770, the
Ombudsman Act of 1989. Section 27 of the said Act
provides as follows:

Section 27. Effectivity and Finality of

Decisions. All provisionary orders of the Office
of the Ombudsman are immediately effective
and executory.

A motion for reconsideration of any order,

directive or decision of the Office of the
Ombudsman must be filed within five (5) days
after receipt of written notice and shall be
entertained only on the following grounds:

xxxxxxxxx
 Findings of fact of the Office of the
Ombudsman when supported by substantial
evidence are conclusive. Any order, directive or
decision imposing the penalty of public censure
or reprimand, suspension of not more than one
months salary shall be final and unappealable.

In all administrative disciplinary cases,

orders, directives or decisions of the Office of
the Ombudsman may be appealed to the
Supreme Court by filing a petition for certiorari
within ten (10) days from receipt of the written
notice of the order, directive or decision or
denial of the motion for reconsideration in
accordance with Rule 45 of the Rules of Court.

The Rules of Procedure of the Office of the

Ombudsman likewise contain a similar provision. Section
7, Rule III of the said Rules provides as follows:

Sec. 7. Finality of Decision where the

respondent is absolved of the charge and in
case of conviction where the penalty imposed
is public censure or reprimand, suspension of
not more than one month, or a fine not
equivalent to one month salary, the decision
shall be final and unappealable. In all other
cases, the decision shall become final after the
expiration of ten (10) days from receipt thereof
by the respondent, unless a motion for
reconsideration or petition for certiorari, shall
have been filed by him as prescribed in Section
27 of R.A. 6770.
 It is clear from the above provisions that the
punishment imposed upon petitioner, i.e. suspension
without pay for one year, is not among those listed as
final and unappealable, hence, immediately
executory. Section 27 states that all provisionary orders of
the Office of the Ombudsman are immediately effective
and executory; and that any order, directive or decision of
the said Office imposing the penalty of censure or
reprimand or suspension of not more than one months
salary is final and unappealable. As such the legal
maxim inclusio[n] unius est exclusio alterius finds
application. The express mention of the things included
excludes those that are not included. The clear import
of these statements taken together is that all other
decisions of the Office of the Ombudsman which
impose penalties that are not enumerated in the
said Section 27 are not final, unappealable and
immediately executory. An appeal timely filed, such
as the one filed in the instant case, will stay the
immediate implementation of the decision. This
finds support in the Rules of Procedure issued by the
Ombudsman itself which states that (I)n all other cases,
the decision shall become final after the expiration of ten
(10) days from receipt thereof by the respondent, unless
a motion for reconsideration or petition for certiorari
(should now be petition for review under Rule 43) shall
have been filed by him as prescribed in Section 27 of R.A.
6770.

xxxx

A judgment becomes final and executory by

operation of law. Section 27 of the Ombudsman Act
 provides that any order, directive or decision of the Office
of the Ombudsman imposing a penalty of public censure
or reprimand, or suspension of not more than one months
salary shall be final and unappealable. In all other cases,
the respondent therein has the right to appeal to the
Court of Appeals within ten (10) days from receipt of the
written notice of the order, directive or decision. In all
these other cases therefore, the judgment imposed
therein will become final after the lapse of the
reglementary period of appeal if no appeal is perfected
or, an appeal therefrom having been taken, the judgment
in the appellate tribunal becomes final. It is this final
judgment which is then correctly categorized as a final
and executory judgment in respect to which execution
shall issue as a matter of right. In other words, the fact
that the Ombudsman Act gives parties the right to
appeal from its decisions should generally carry
with it the stay of these decisions pending
appeal.Otherwise, the essential nature of these
judgments as being appealable would be rendered
nugatory. (Emphasis supplied)

Petitioner was charged administratively before the Office of

the Ombudsman.Accordingly, the provisions of the Ombudsman
Act and its Rules of Procedure should apply in his case. It is a
principle in statutory construction that where there are two
statutes that apply to a particular case, that which was specially
designed for the said case must prevail over the other. [17]

In fine, Secretary Datumanong cannot be held in contempt of

court for issuing the Memorandum Order in the absence of malice
or wrongful conduct in issuing it.The remedy of the petitioner is
not to file a petition to cite him in contempt of court but to
elevate the error to the higher court for review and correction.

However, two events supervened since the filing of this

petition that would support its dismissal. First, on March 28, 2005,
the Court in G.R. No. 144694 affirmed the decisions of the Court
of Appeals and Administrative Adjudication Bureau of the Office of
the Ombudsman ordering petitioner dismissed from the service
for dishonesty, falsification of public documents, misconduct, and
conduct prejudicial to the best interest of the
service. Second, Section 7, Rule III of the Rules of Procedure of the
Office of the Ombudsman was amended by Administrative Order
No. 17[18] wherein the pertinent provision on the execution of
decisions pending appeal is now essentially similar to Section 47
of the Uniform Rules on Administrative Cases in the Civil
Service and other related laws, thus:

Rule III

PROCEDURE IN ADMINISTRATIVE CASES

Section 7. Finality and execution of decision. - Where

the respondent is absolved of the charge, and in case of

conviction where the penalty imposed is public censure or

reprimand, suspension of not more than one month, or a

fine equivalent to one month salary, the decision shall be

final, executory and unappealable. In all other cases, the

decision may be appealed to the Court of Appeals on a

verified petition for review under the requirements and

conditions set forth in Rule 43 of the Rules of Court, within

fifteen (15) days from receipt of the written Notice of the

Decision or Order denying the Motion for Reconsideration.

An appeal shall not stop the decision from

being executory. In case the penalty is suspension

or removal and the respondent wins such appeal,

he shall be considered as having been under

preventive suspension and shall be paid the salary

and such other emoluments that he did not receive

by reason of the suspension or removal.

A decision of the Office of the Ombudsman in

administrative cases shall be executed as a matter of

course. The Office of the Ombudsman shall ensure that

the decision shall be strictly enforced and properly

implemented. The refusal or failure by any officer without

just cause to comply with an order of the Office of the

Ombudsman to remove, suspend, demote, fine, or

 censure shall be a ground for disciplinary action against

said officer.

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
procedural laws cannot be considered violative of any personal
rights because no vested right may attach to nor arise therefrom.
[19]

In the case at bar, the Rules of Procedure of the Office of the

Ombudsman are clearly procedural and no vested right of the
petitioner is violated as he is considered preventively suspended
while his case is on appeal. Moreover, in the event he wins on
appeal, he shall be paid the salary and such other emoluments
that he did not receive by reason of the suspension or
removal. Besides, there is no such thing as a vested interest in an
office, or even an absolute right to hold office. Excepting
constitutional offices which provide for special immunity as
regards salary and tenure, no one can be said to have any vested
right in an office.[20]

WHEREFORE, in view of the foregoing, the petition to cite

former Secretary Simeon A. Datumanong of the Department of
Public Works and Highways in contempt of court for issuing
Memorandum Order dated October 5, 2001 dismissing petitioner
Jimmie F. Tel-Equen from the service is DISMISSED for lack of
merit.

SO ORDERED.
40B. Contempt of Court

[G.R. No. 112869. January 29, 1996]

KELLY R. WICKER and ATTY. ORLANDO A. RAYOS, petitioners,

vs. HON. PAUL T. ARCANGEL, as Presiding Judge of the RTC,
Makati, Branch 134, respondent.

DECISION

MENDOZA, J.:

This is a petition for certiorari, assailing the orders dated December 3,

1993 and December 17, 1993 of respondent Judge Paul T. Arcangel of the
Regional Trial Court, Branch 134 of Makati, finding petitioners guilty of direct
contempt and sentencing each of them to suffer imprisonment for five (5) days
and to pay a fine of P100.00.

The antecedent facts are as follows:

Kelly Wicker, with his wife Wynee Dieppe and the Tectonics Asia Architects
and Engineering Co., brought suit in the Regional Trial Court of Makati against
the LFS Enterprises, Inc. and others, for the annulment of certain deeds by
which a house and lot at Forbes Park, which the plaintiffs claimed they had
purchased, was allegedly fraudulently titled in the name of the defendant LFS
Enterprises and later sold by the latter to codefendant Jose Poe. The case,
docketed as Civil Case No. 14048, was assigned to Branch 134 formerly
presided over by Judge Ignacio Capulong who later was replaced by
respondent Judge Paul T. Arcangel.

It appears that on November 18, 1993, Wickers counsel, Atty. Orlando A.

Rayos, filed a motion seeking the inhibition of respondent judge from the
consideration of the case. The motion alleged in pertinent part:
[1]

1. That before the Acting Presiding Judge took over, defendant LFS Enterprises, Inc.
was able to maneuver the three (3) successive postponements for the presentation for
cross-examination of Mrs. Remedios Porcuna on her 10 August 1992 Affidavit, but
eventually, she was not presented;

2. Meantime, Judge [Ignacio] Capulong who had full grasp of this case was eased out
of his station. In one hearing, the Acting Presiding Judge had not yet reported to his
station and in that set hearing, counsel for defendant LFS Enterprises, Inc. who must
have known that His Honor was not reporting did not likewise appear while other
counsels were present;

3. Plaintiffs have information that the Acting Presiding Judge was personally recruited
from the south by Atty. Benjamin Santos and/or his wife, Atty. Ofelia Calcetas-Santos,
one time member of the Judicial and Bar Council, against whom plaintiff Kelly R.
Wicker filed Administrative Case No. 3796, and although said case was dismissed,
nevertheless, plaintiffs feel that it was the reason for Atty. Ofelia Calcetas-Santos
relief;

4. Plaintiffs have reason to doubt the partiality and integrity of His Honor and to give
a fighting chance for plaintiffs to prove their case, since this will be the last case to
recover the partnership property, plaintiffs feel that His Honor inhibit himself and set
this case for re-raffle;

5. This move finds support in the Rules of Court and jurisprudence that in the first
instance that a litigant doubts the partiality and integrity of the Presiding Judge, he
should immediately move for his inhibition.

The motion was verified by Kelly Wicker.

Considering the allegations to be malicious, derogatory and

contemptuous, respondent judge ordered both counsel and client to appear
before him on November 26, 1993 and to show cause why they should not be
cited for contempt of court. [2]

In a pleading entitled Opposition to and/or Comment to Motion to Cite for

Direct Contempt Directed Against Plaintiff Kelly R. Wicker and his Counsel,
Atty. Rayos claimed that the allegations in the motion did not necessarily
express his views because he merely signed the motion in a representative
capacity, in other words, just lawyering, for Kelly Wicker, who said in a note to
him that a young man possibly employed by the Court had advised him to
have the case reraffled, when the opposing counsel Atty. Benjamin Santos
and the new judge both failed to come for a hearing, because their absence
was an indication that Atty. Santos knew who the judge may be and when he
would appear. Wickers sense of disquiet increased when at the next two
hearings, the new judge as well as Atty. Santos and the latters witness, Mrs.
Remedios Porcuna, were all absent, while the other counsels were present. [3]

Finding petitioners explanation unsatisfactory, respondent judge, in an

order dated December 3, 1993, held them guilty of direct contempt and
sentenced each to suffer imprisonment for five (5) days and to pay a fine of
P100.00.

Petitioners filed a motion for reconsideration, which respondent judge

denied for lack of merit in his order of December 17, 1993. In the same order
respondent judge directed petitioners to appear before him on January 7,
1994 at 8:30 a.m. for the execution of their sentence.

In their petition before this Court, Kelly Wicker and Atty. Orlando A. Rayos
[4]

contend that respondent judge committed a grave abuse of his discretion in

citing them for contempt. They argue that when a person, impelled by
justifiable apprehension and acting in a respectful manner, asks a judge to
inhibit himself from hearing his case, he does not thereby become guilty of
contempt.

In his comment, respondent judge alleges that he took over as Acting

[5]

Presiding Judge of the Regional Trial Court of Makati, Branch 134 by virtue of
Administrative Order No. 154-93 dated September 2, 1993 of this Court and
not because, as petitioners alleged, he was personally recruited from the
South by Atty. Santos and/or his wife, Atty. Ofelia Calcetas-Santos; that he
assumed his new office on October 11, 1993 and started holding sessions on
October 18, 1993; that when all male personnel of his court were presented to
petitioner Kelly Wicker he failed to pick out the young man who was the
alleged source of the remarks prompting the filing of the motion for inhibition;
that he was not vindictive and that he in fact refrained from implementing the
execution of his order dated December 3, 1993 to enable petitioners to avail
themselves of all possible remedies; that after holding petitioners in contempt,
he issued an order dated December 8, 1993 inhibiting himself from trying Civil
Case No. 14048; that Atty. Rayos claim that he was just lawyering and acting
as the vehicle or mouthpiece of his client is untenable because his (Atty.
Rayos) duties to the court are more important than those which he owes to his
client; and that by tendering their profuse apologies in their motion for
reconsideration of the December 3, 1993 order, petitioners acknowledged the
falsity of their accusations against him; and that the petitioners have taken
inconsistent positions as to who should try Civil Case No. 14048 because in
their Motion for Inhibition dated November 18, 1993 they asked that the case
be reraffled to another sala of the RTC of Makati, while in their petition dated
November 29, 1993, which they filed with the Office of Court Administrator,
petitioners asked that Judge Capulong be allowed to continue hearing the
case on the ground that he had a full grasp of the case.

In reply to the last allegation of respondent judge, petitioners claim that

although they wanted a reraffle of the case, it was upon the suggestion of
respondent judge himself that they filed the petition with the Court
Administrator for the retention of Judge Capulong in the case.

What is involved in this case is an instance of direct contempt, since it

involves a pleading allegedly containing derogatory, offensive or malicious
statements submitted to the court or judge in which the proceedings are
pending, as distinguished from a pleading filed in another case. The former
has been held to be equivalent to misbehavior committed in the presence of
or so near a court or judge as to interrupt the proceedings before the same
within the meaning of Rule 71, 1 of the Rules of Court and, therefore, direct
contempt. [6]

It is important to point out this distinction because in case of indirect or

constructive contempt, the contemnor may be punished only [a]fter charge in
writing has been filed, and an opportunity given to the accused to be heard by
himself or counsel, whereas in case of direct contempt, the respondent may
be summarily adjudged in contempt. Moreover, the judgment in cases of
indirect contempt is appealable, whereas in cases of direct contempt only
judgments of contempt by MTCs, MCTCs and MeTCs are appealable. [7]
 Consequently, it was unnecessary in this case for respondent judge to
hold a hearing.Hence even if petitioners are right about the nature of the case
against them by contending that it involves indirect contempt, they have no
ground for complaint since they were afforded a hearing before they were held
guilty of contempt. What is important to determine now is whether respondent
judge committed grave abuse of discretion in holding petitioners liable for
direct contempt.

We begin with the words of Justice Malcolm that the power to punish for
contempt is to be exercised on the preservative and not on the vindictive
principle. Only occasionally should it be invoked to preserve that respect
without which the administration of justice will fail. The contempt power ought
[8]

not to be utilized for the purpose of merely satisfying an inclination to strike

back at a party for showing less than full respect for the dignity of the court. [9]

Consistent with the foregoing principles and based on the

abovementioned facts, the Court sustains Judge Arcangels finding that
petitioners are guilty of contempt. A reading of the allegations in petitioners
motion for inhibition, particularly the following paragraphs thereof:

2. Meantime, Judge Capulong who had full grasp of this case was eased out of his
station. In one hearing, the Acting Presiding Judge had not yet reported to his station
and in that set hearing, counsel for defendant LFS Enterprises, Inc. who must have
known that His Honor was not reporting did not likewise appear while other counsels
were present;

3. Plaintiffs have information that the Acting Presiding Judge was personally recruited
from the south by Atty. Benjamin Santos and/or his wife, Atty. Ofelia Calcetas-Santos,
one time member of the Judicial and Bar Council, against whom plaintiff Kelly R.
Wicker filed Administrative Case No. 3796, and although said case was dismissed,
nevertheless, plaintiffs feel that it was the reason for Atty. Ofelia Calcetas-Santos
relief;

leads to no other conclusion than that respondent judge was beholden to the
opposing counsel in the case, Atty. Benjamin Santos, to whom or to whose
wife, the judge owed his transfer to the RTC of Makati, which necessitated
easing out the former judge to make room for such transfer.
 These allegations are derogatory to the integrity and honor of respondent
judge and constitute an unwarranted criticism of the administration of justice in
this country. They suggest that lawyers, if they are well connected, can
manipulate the assignment of judges to their advantage. The truth is that the
assignments of Judges Arcangel and Capulong were made by this Court, by
virtue of Administrative Order No. 154-93, precisely in the interest of an
efficient administration of justice and pursuant to Sec. 5 (3), Art. VIII of the
Constitution. This is a matter of record which could have easily been verified
[10]

by Atty. Rayos. After all, as he claims, he deliberated for two months whether
or not to file the offending motion for inhibition as his client allegedly asked
him to do.

In extenuation of his own liability, Atty. Rayos claims he merely did what he
had been bidden to do by his client of whom he was merely a mouthpiece. He
was just lawyering and he cannot be gagged, even if the allegations in the
motion for the inhibition which he prepared and filed were false since it was
his client who verified the same.

To be sure, what Wicker said in his note to Atty. Rayos was that he had
been told by an unidentified young man, whom he thought to be employed in
the court, that it seemed the opposing counsel, Atty. Santos, knew who the
replacement judge was, because Atty. Santos did not show up in court on the
same days the new judge failed to come. It would, therefore, appear that the
other allegations in the motion that respondent judge had been personally
recruited by the opposing counsel to replace Judge Capulong who had been
eased out were Atty. Rayos and not Wickers. Atty. Rayos is thus understating
his part in the preparation of the motion for inhibition.

Atty. Rayos, however, cannot evade responsibility for the allegations in

question. As a lawyer, he is not just an instrument of his client. His client came
to him for professional assistance in the representation of a cause, and while
he owed him whole-souled devotion, there were bounds set by his
responsibility as a lawyer which he could not overstep. Even a hired gun
[11]

cannot be excused for what Atty. Rayos stated in the motion. Based on Canon
11 of the Code of Professional Responsibility, Atty. Rayos bears as much
responsibility for the contemptuous allegations in the motion for inhibition as
his client.
 Atty. Rayos duty to the courts is not secondary to that of his client. The
Code of Professional Responsibility enjoins him to observe and maintain the
respect due to the courts and to judicial officers and [to] insist on similar
conduct by others and not [to] attribute to a Judge motives not supported by
[12]

the record or have materiality to the case. [13]

After the respondent judge had favorably responded to petitioners profuse

apologies and indicated that he would let them off with a fine, without any jail
sentence, petitioners served on respondent judge a copy of their instant
petition which prayed in part that Respondent Judge Paul T. Arcangel be
REVERTED to his former station. He simply cannot do in the RTC of Makati
where more complex cases are heared (sic) unlike in Davao City. If nothing
else, this personal attack on the judge only serves to confirm the
contumacious attitude, a flouting or arrogant belligerence first evident in
petitioners motion for inhibition belying their protestations of good faith.

Petitioners cite the following statement in Austria v. Masaquel: [14]

Numerous cages there have been where judges, and even members of the Supreme
Court, were asked to inhibit themselves from trying, or from participating in the
consideration of a case, but scarcely were the movants punished for contempt, even if
the grounds upon which they based their motions for disqualification are not among
those provided in the rules. It is only when there was direct imputation of bias or
prejudice, or a stubborn insistence to disqualify the judge, done in a malicious,
arrogant, belligerent and disrespectful manner, that movants were held in contempt of
court.

It is the second sentence rather than the first that applies to this case.

Be that as it may, the Court believes that consistent with the rule that the
power to cite for contempt must be exercised for preservative rather than
vindictive principle we think that the jail sentence on petitioners may be
dispensed with while vindicating the dignity of the court. In the case of
petitioner Kelly Wicker there is greater reason for doing so considering that
the particularly offending allegations in the motion for inhibition do not appear
to have come from him but were additions made by Atty. Rayos. In addition,
Wicker is advanced in years (80) and in failing health (suffering from angina),
a fact Judge Arcangel does not dispute. Wicker may have indeed been the
recipient of such a remark although he could not point a court employee who
was the source of the same. At least he had the grace to admit his mistake
both as to the source and truth of said information. It is noteworthy Judge
Arcangel was also willing to waive the imposition of the jail sentence on
petitioners until he came upon petitioners description of him in the instant
petition as a judge who cannot make the grade in the RTC of Makati, where
complex cases are being filed. In response to this, he cited the fact that the
Integrated Bar of the Philippines chose him as one of the most outstanding
City Judges and Regional Trial Court Judges in 1979 and 1988 respectively
and that he is a 1963 graduate of the U.P. College of Law.

In Ceniza v. Sebastian, which likewise involved a motion for inhibition

[15]

which described the judge corrupt, the Court, while finding counsel guilty of
direct contempt, removed the jail sentence of 10 days imposed by the trial
court for the reason that

Here, while the words were contumacious, it is hard to resist the conclusion,
considering the background of this occurrence that respondent Judge in imposing the
ten-day sentence was not duly mindful of the exacting standard [of] preservation of
the dignity of his office not indulging his sense of grievance sets the limits of the
authority he is entitled to exercise. It is the view of the Court that under the
circumstances the fine imposed should be increased to P500.00.

The same justification also holds true in this case.

WHEREFORE, the order of December 3, 1993 is MODIFIED by

DELETING the sentence of imprisonment for five (5) days and INCREASING
the fine from P 100.00 to P200.00 for each of the petitioners.

SO ORDERED.